Azerbaijan’s €2 Billion Shakedown

European Commissioner for Enlargement and Neighbourhood Policy Oliver Varhelyi visited Baku in early February 2022. Varhelyi had been appointed to the post by Hungary’s Viktor Orban in 2019. At a meeting with Azerbaijani Minister of Foreign Affairs Jeyhun Bayramov, Varhelyi announced that the European Union will allocate a financial package of €2 billion to Azerbaijan. According to Azerbaijan’s APA News Agency, “[Varhelyi] also said that the EU was ready to participate in the process of restoration and reconstruction in Azerbaijan.” The specific sectors that this funding will flow to was not specified.

Commissioner Varhelyi was visiting Baku together with European Commissioner for Energy Kadri Simson (from Estonia) to attend the 8th Ministerial Meeting of the Southern Gas Corridor Advisory Council on February 4, 2022. Back in January 2022, Simson announced that the European Commission would seek potential increases in gas deliveries from its supply partners in the coming weeks, amid the intensifying crisis between Russia and the West over Ukraine. At the same time, EU foreign policy chief Josep Borrell wrote on his personal blog that “in case Russia decides to reduce or halt deliveries,” the European Union is negotiating possible gas supplies with the United States, Qatar and Azerbaijan. The visit to Baku took place in this context. During the meeting with President Ilham Aliyev of Azerbaijan, Simson said Brussels viewed Azerbaijan as a “reliable energy supply partner,” while Aliyev said that a new phase in energy cooperation between the EU and Azerbaijan had begun. Despite the cordial relations and pleasant exchange of courtesies between Aliyev and the EU commissioner, the reality is that Azerbaijan is not able to displace Russian gas exports to the EU. Nevertheless, Aliyev got what he wanted from the situation at hand.

In an interview with Bloomberg, Azerbaijani Ambassador to the UK Elin Suleymanov said: “If there is an urgent need, as we saw in Turkey, some volumes of course would be made available. But Azerbaijani volumes are not equal to the Russian volumes, that’s obvious.”

According to Istanbul-based journalist David O’Byrne, for the past 20 years, Azerbaijan has been working “to become a significant gas exporter to Europe, culminating in late 2020 with the commissioning of the Trans Adriatic gas pipeline (TAP) carrying Azerbaijani gas through Greece and Albania and across the Adriatic Sea to Italy.” O’Byrne goes on to say that Azerbaijan does not have the capacity to replace “anything more than a tiny fraction of Russian gas exports to Europe, which totaled 158.5 billion cubic meters in 2020.” Azerbaijani exports gas to Europe through a single pipeline with a capacity of 10 billion cubic meters a year, which already operates near its limit. Nevertheless, Azerbaijan has been able to leverage the tension over Ukraine to secure the €2 billion in assistance.

Armenia and the EU managed to develop their relationship on many fronts, taking them to a new level on March 1, 2021, with the European Union-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA). In July 2021, the EU declared its intention to muster another €1 billion in assistance to Armenia, in addition to the €1.6 billion already previously announced by EU Commissioner for Neighbourhood and Enlargement Oliver Varhelyi. At a joint press conference with Armenian Deputy Prime Minister Mher Grigoryan, Varhelyi said that the EU is allocating €1.6 billion for flagship initiatives such as transport connectivity, resilience and recovery of the southern provinces, including energy efficiency and renewable energy, digital transformation and support for SMEs, noting that “altogether, we are able to mobilize €2.6 billion for Armenia under this plan.”

 

“At Least the Same”

In direct response to the announcement, Ilham Aliyev expressed his dissatisfaction and complained about this decision. He stated that this was unfair since Azerbaijan is the largest country in the South Caucasus in terms of territory, population and potential and until now “such large funds have not been provided to the countries of the South Caucasus.” He went on to say that they will continue to discuss the issue through “regular contacts with the European Union” to fully understand the conditions of the funds provided to Armenia and “insist that at least the same should be provided to us.” Aliyev was irked that at the time, the EU had pledged only $150 million to Baku. By the end of 2021, in another interview to Italian Il Sole 24 Ore newspaper, Aliyev once again griped that Armenia was receiving almost 20 times more in financial assistance by the EU: “Is this fair? No… The economy of Armenia physically cannot absorb this huge package. So, it’s very surprising. After it was announced, starting from this summer when President [Charles] Michel visited Azerbaijan, we permanently discussed this issue, and we want a single standard approach. We want justice and of course, we ask for the same terms and conditions and for the same amount to Azerbaijan.” Undoubtedly, his complaints were accompanied by diplomatic work in Brussels, which eventually managed to produce results.

 

An Embarrassing Gas Problem

By meeting Aliyev’s demands, the EU clouds its reputation and real intentions in the South Caucasus region. Azerbaijan is not going to single-handedly solve the EU’s gas issue. Aliyev managed to meet Turkey’s gas demands mainly due to the gas deal signed recently between Azerbaijan, Iran and Turkmenistan, which will see 1.5 to 2 billion cubic meters of gas transported annually. Turkmenistan will supply Iran, and then Iran will separately deliver an equivalent amount of gas to Azerbaijan, which will be transported to Turkey through Georgia.

However, the main question is why the EU took a step that, in the long run, casts into doubt its sincerity in supporting democratic values in the South Caucasus region. By taking the same approach toward democracy and autocracy, the EU discredits democracy in general, as well as the struggle among many civic activists for the respect and protection of human rights. Among the Armenian public, the EU embodies democracy and transparency. Armenia has always tried to position itself as adhering to Europe’s democratic values system. Even after the political crisis in Armenia following the 2020 Artsakh War, Armenia chose a democratic solution by opting for a snap parliamentary election in June 2021. Meanwhile, in Azerbaijan, the same person has been in power for 19 years, since 2003, after taking over from his father, who had run the country since 1993. In comparison, with all its ups and downs, Armenia has had four different leaders during the same time period, with none of them ruling the country for more than two terms.

The EU’s unreasonable approach also creates problems for human rights in Azerbaijan itself. It’s not a secret that Azerbaijan already has a terrible record on human rights issues. A 2020 report by the U.S. State Department accused Azerbaijan of a wide variety of human rights abuses, including “unlawful or arbitrary killing”, “heavy restrictions on free expression, the press, and the internet”, and “the worst forms of child labor”. Also, the issue of Azerbaijani political prisoners still remains on the agenda of different European institutions. For instance, back in 2020, the Parliamentary Assembly of the Council of Europe (PACE) adopted a resolution, which highlighted that the problem of political prisoners in Azerbaijan is “systemic in nature” and needs to be solved. In response, Aliyev called it “a scrap of paper”, stating “we do not accept any of the far-fetched accusations made there, and we will not comply with any of their ‘demands’.” Just recently, an opposition activist was terribly beaten in custody for taking part in a rally in Baku.

After the military success of the 2020 war, Aliyev became even harsher in internal politics. One of his tactics is to make comparisons between the Azerbaijani opposition and Armenia’s current officials. “The random people who came to power are like twin brothers of those who came to power in Armenia in 2018. Inexperienced, illiterate, uncultured, incompetent, cowardly and deserters. Whatever epithets remain, anything negative would suit them. They governed Azerbaijan at the time. Like the people who came to power in Armenia in 2018, they destroyed the country and eventually brought us to the brink of the abyss. Could the Azerbaijani people tolerate this? Of course not! This was the historical necessity of establishing the New Azerbaijan Party,” Aliyev stated in his speech at the 7th Congress of his New Azerbaijan Party in March 2021.

Aliyev’s hate propaganda and anti-Armenian rhetoric is gaining new momentum. In his speeches, Aliyev repeats the line “Armenia will live forever with the mark of a defeated nation and state.” He uses dehumanizing language such as “they ran away like rabbits”, “this devil’s lair was destroyed”, “we have taught a lesson and what evil we have saved our region from”, “we smashed the head of Armenian fascism”, “one can’t call them humans”, etc., quite vividly trying to humiliate Armenians as a nation. Unfortunately, Europe is all too familiar with where such state policy and rhetoric can lead a nation. But by adopting a policy of parity between Armenia and Azerbaijan, Europe sends the message that this type of behavior is tolerable, if there is gas to be supplied. In the Armenian psyche, it leads one to draw the conclusion that ideals of democracy and human rights are just a facade to be trumpeted selectively when there are really other interests at stake.

Apart from their authoritarian rule and state-sponsored anti-Armenian hate propaganda, Aliyev and his family are also no stranger to corruption scandals. The most recent case came to light in 2021, when the Pandora Papers revealed that “Aliyev’s two daughters, his son, his father-in-law and two of the family’s close business associates have held, at their peak, a staggering £429 million ($694 million) in London real estate—including prominent historical buildings, commercial developments and luxury apartments in prestigious neighborhoods.” British Petroleum is the company with the sweetheart deal to pump Azerbaijan’s hydrocarbons. The names of the Azerbaijani President and his family members have appeared in a number of investigative exposes, from the Panama papers, the Daphne Project, the Azerbaijani Laundromat, the Pegasus Project and the Pandora Papers. All these examples include collaborators in Europe. Just yesterday, the new Suisse Secrets investigation unveiled how the sons of Nakhichevan’s Vasif Talibov stashed away millions in laundered money into Swiss bank accounts.

 

Walking the Talk

Thus, according to official statements, the EU wants a peaceful, democratic and sustainable South Caucasus. But actions speak louder than words, in suddenly deciding to allocate money and support to the Azerbaijani leadership, despite its aggressive, autocratic, corrupted and non-constructive approach. Obviously, there is a huge gap between declared values and factual policy undertaken by the EU.

Azerbaijan will not be able to solve Europe’s gas problems. At best, they can agree not to coordinate delivery reductions with Russia so as not to make the situation even worse. There is a corrosive irony in Europe trying to reduce its dependence on Russia by acceding to Azerbaijan’s shakedown. It eats away at Europe’s image in Armenia as a champion of human rights and democracy at a time when these concepts are at their most vulnerable.

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