AZERBAIJAN PRESIDENT ALIYEV BRIEFS ENERGY,

C O N F I D E N T I A L USNATO 000166

NOFORN
SIPDIS

E.O. 12958: DECL: 05/04/2019
TAGS: NATO PGOV PREL AJ AM GG TU RS
SUBJECT: AZERBAIJAN PRESIDENT ALIYEV BRIEFS ENERGY,
NAGORNO-KARABAKH AND THE CAUCASUS TO THE NAC

Classified By: Ambassador Kurt Volker for reasons 1.4 (b) and (d)


1. (C/NF) SUMMARY: Appearing before the North Atlantic
Council (NAC) for the first time in two and a half years,
Azerbaijan President Ilham Aliyev (joined by Foreign Minister
Elmar Mammadyarov) briefed the Allies on Azerbaijan's role as
a regional energy supplier, his commitment to resolve the
Nagorno-Karabakh dispute, and his perspective on the August
2008 Georgia war. He also discussed relations with Russia
and Iran. Aliyev engaged in a tense exchange with the
Turkish PermRep, passionately protesting that Azerbaijan was
not consulted nor given much notice of the signing of the
Turkey-Armenia roadmap. Allies thanked Aliyev for
Azerbaijan's contributions to NATO and asked Aliyev to
consider contributing to civilian reconstruction efforts in
Afghanistan. U.S. Ambassador Volker expressed his hope that
Azerbaijan will participate in Operation LANCER/LONGBOW as
planned. END SUMMARY.

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Aliyev: Azerbaijan is a "reliable" partner
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2. (C/NF) In an effort to demonstrate to Allies the depth of
Azerbaijan's commitment to NATO, Aliyev noted that Azerbaijan
had participated in almost 200 NATO events last year, had
decided to double the number of troops it contributes to the
International Security Assistance Force (ISAF) in
Afghanistan, and had continued to implement economic and
political reforms consistent with those stated in its
Individual Partnership Action Plan (IPAP). He said
Azerbaijan received "very positive and instrumental
cooperation" from NATO, confirmed that his country had made a
strategic choice to seek close relations with both NATO
and the European Union, and characterized Azerbaijan as a
"reliable" partner for the Alliance.


3. (C/NF) As evidence of Azerbaijan's upwards trajectory,
Aliyev said that in the last five years Gross Domestic
Product had increased more than two and a half times, adding
that in that same period the poverty level had fallen from 49
percent to 13 percent. Aliyev portrayed the decrease in
poverty as evidence that Azerbaijan had properly established
and managed its energy policy, resulting in greater wealth
distribution throughout the population. Much of this money
had been invested in infrastructure improvements, with funds
used to construct three international airports, railroad
lines, roads, and
pipelines. It had also been used to build up Azerbaijan's
Caspian fleet.

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From energy importer to exporter in two years
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4. (C/NF) Aliyev proclaimed that for Azerbaijan, energy
security is synonymous with general security. He said that
Azerbaijan tries to avoid "energy blackmail" and -- in an
indirect reference to Russian Foreign Minister Lavrov's
linkage of energy policy to foreign policy -- any attempts to
link energy policy to a political agenda. Aliyev said that
as recently as 2007 Azerbaijan was an energy importer. When
Gazprom unilaterally canceled its contract with Azerbaijan,
however, Baku was forced to become an exporter. Now
Azerbaijan supplies gas to Turkey (which resells the gas to
Greece) and Iran, as well as functions as the sole supplier
of energy to Georgia (which has negotiated a fixed price with
Azerbaijan for the next five
years). Currently Azerbaijan is negotiating to expand supply
to Greece and Bulgaria. With 50 percent of Gazprom's supply
of gas originating in Central Asia, Aliyev emphatically
stated that the world can not delay the process of getting
Central Asian gas to the West, arguing for increased
cooperation between producers, transiting countries, and
consumers. In response to Ambassador Volker's question about
the security of Azerbaijan's energy supply and
infrastructure, Aliyev responded that Azerbaijan's Naval and
Coast Guard services are so well-financed and well-equipped
that they can detect "even one boat" in the area.


5. (C/NF) When asked by the Romanian PermRep what it would
take to get the Nabucco project going, Aliyev expressed
frustration that the project had been stalled for the last
year and responded that transit agreements between all
affected nations were needed. He also called for a strong
political commitment and financial package from European
Union structures to rejuvenate the project. Another problem
Aliyev cited was the growing demand for gas, and the need to
balance demands from both Azerbaijan's existing
consumers and Nabucco's additional requests. He stressed
that consumers must keep their demands reasonable and honest.
As an example, Aliyev said that Azerbaijan received a
request from Georgia to furnish that country with 16 billion
cubic meters of gas, when Georgia only uses about 1 to 1.5
billion cubic meters of gas currently. This unreasonably
large request leads Azerbaijan to the conclusion that Georgia
must want to resell Azerbaijani gas.


6. (C/NF) Aliyev noted that the experience of Azerbaijan is
that infrastructure drives resource development, and not --
as is the popular belief -- the other way around. As such,
he believes investors should invest in Nabucco now, not
insist on more proven gas reserves first. For Azerbaijan's
part, Aliyev said he wants to invest another USD 15 billion
in gas field preparation and infrastructure. He placed
Azerbaijan's current natural gas reserves at 2 trillion cubic
meters, but thinks the number could be as high as 5 trillion
cubic meters.

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Nagorno-Karabakh (and other Armenian communities)
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7. (C/NF) With the situation over the status of
Nagorno-Karabakh (N-K) still unresolved after nearly 20
years, Aliyev argued that seven Azerbaijani regions were
under Armenian occupation, in contravention of numerous UN
and OSCE resolutions. He argued that the events in Georgia
in August 2008 demonstrated to the region that no such
conflicts are truly "frozen," and reminded the NAC that what
happened in Georgia last year mirrors what happened in N-K in
1992 and 1993. Aliyev reiterated his support for the work by
the Minsk Group Co-Chairs and its "Basic Principles," the
development of a corridor from N-K to Armenia, and the
establishment of a high degree of self-rule for N-K. He said
that the negotiations had been difficult, but successful.
Nevertheless, he lamented that the progress that had been
achieved in prior years stalled with the 2008 election of
Armenian President Sargsyan.


8. (C/NF) The Czech Republic and Romania reiterated their
support for the territorial integrity of Azerbaijan, as
stated in paragraph 58 of the Strasbourg-Kehl Summit
Communiqu. The U.S., Latvia, and Italy voiced support for
the Minsk process and for Aliyev's commitment to find a
resolution to the N-K conflict.

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Turkey-Armenia
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9. (C/NF) The Turkish PermRep, who opened his statement by
saying that Turkey was committed to supporting the peaceful,
fair and lasting settlement of the N-K dispute, said that
without resolution of this dispute there can be no good
neighborly relations in the region. However, he also stated
that Turkey will continue to "pay due consideration to the
well-being of our Azeri friends in the future," adding that
Ankara had consulted with Baku before the issuance of the
recent Turkey-Armenia joint statement.


10. (C/NF) While stating that Azerbaijan had no intention of
meddling in Turkish-Armenian affairs, Aliyev strongly
rejected the claim that he had been consulted on the recent
joint statement, arguing that his government was only
"informed" several hours before the joint statement was
issued. He further accused Armenia of trying to manipulate
public opinion on N-K, and proclaimed that the dispute must
be settled under international law (otherwise, Aliyev
sarcastically commented, Armenian communities in California,

the south of France and Sochi will all claim similar
disputes). Aliyev stated that he was told by Turkish
President Gul that the Turkey-Armenia border would not open
until the N-K dispute was resolved, and now the lingering
question for Azerbaijanis is whether resolution of the N-K
conflict is part of the roadmap deal. He said that his
citizens wanted a simple answer to a simple question: Is N-K
still a part of the deal or not?

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Mr. Aliyev's Neighborhood
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11. (C/NF) Regarding the August 2008 events in Georgia,
Aliyev said that it was not his place to talk about who was
to blame for the hostilities. Nevertheless, he did say that
both Georgia and Russia were at fault and that there are
"illegal entities" present in the Caucasus. Aliyev said that
the August events disrupted energy transport in the region to
such an extent that Azerbaijan suffered USD 1 billion in
losses. Aliyev took credit for Azerbaijan's being the first
country to provide practical support to
Georgia, supplying it with oil, gas and petrol for one week
without payment.


12. (C/NF) Aliyev characterized Russia as a "friendly
country" with which Azerbaijan has solid relations. Aliyev
specifically stated that Russia has made no attempts to
interfere in Azerbaijan's internal affairs. Responding to
questions from Poland, Greece and Hungary on Azerbaijan's
relations with Iran, Aliyev said that in light of the fact
that there are three times more Azeris living in Iran than in
Azerbaijan, he did not want to make trouble with Iran. In
regards to both countries, Aliyev stated that he wants normal
relations with Russia and Iran, but would not do so "with
concessions."

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The Allies respond
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13. (C/NF) Romania, speaking as Contact Point Embassy for
Azerbaijan, applauded Azerbaijan for leading the Partnership
Action Plan-Terrorism working group on the protection of
energy infrastructure, and for its contributions in the
Euro-Atlantic Partnership Council/Partnership for Peace
framework during the last 15 years. Echoing these comments,
Ambassador Volker stated that the Allies fully intend to go
forward with Operation LANCER/LONGBOW and hoped that
Azerbaijan will also. Estonia stated that it is ready to
support Azerbaijan's western integration "at (Azerbaijan's)
speed."


14. (C/NF) The U.S., Romania, Lithuania, Canada, Poland and
Latvia thanked Azerbaijan for its contributions to ISAF;
several Allies asked Aliyev to consider contributing further
to ISAF through civilian reconstruction projects. Aliyev
stated that Azerbaijan had finalized negotiations with the
U.S. Transportation Command for the transit of U.S. supplies
to Afghanistan, adding that Azerbaijan would
always provide a reliable route through the Caucasus.
VOLKER