The Economy of Azerbaijan: Oil and Gas

Swiss Study Foundation Summer School States and Societies in Transition – History, Threats and Opportunities. The Case of Georgia and Azerbaijan 26 August – 4 September 2015 ESTABLISHED 1991 3 | Preface Delia Imboden and Timo Welti 7 | The Rose Revolution, Democratization and Regime Change in Georgia Jörn Kohlschmidt and Monika Wehrli 17 | The Political System of Azerbaijan Dirk Lauinger, Liliane Stadler and Tobias Vuillemin 25 | The Economy of Azerbaijan: Oil and Gas Jasmin Stadler and Judith Suter 35 | Relations between the South Caucasus and the European Union: Past Efforts and Future Prospects Philippe Valmaggia and Raphael Widmer 43 | The Georgian-Abkhazian Conflict Sandrine Gehriger and Jan Richer 53 | The Georgian-South Ossetian Conflict and the 2008 Georgian-Russian War Anja Forrer and Therese Palm 63 | The Nagorno-Karabakh Conflict 3 | Preface A summer school conducted by the Swiss Study Foundation (SSF) once again set out to explore the region of the South Caucasus – for the first time including Azerbaijan. During the editing process of this publication renewed clashes between Armenia and Azerbaijan over the disputed territory of Nagorno-Karabakh brought the region back to the attention of the world’s news. It is a region that has been at the crossroads for centuries, a region in which to this day different geopolitical and energy interests collide. These circum- stances, coupled with the historical legacies, complicate the economic, political and societal transformation processes that set in after the collapse of the Soviet Union. So- called ethnic conflicts emerged in Armenia and Azerbaijan as well as in Georgia, further impeding the development of these countries. The SSF brought together a group of students to study on location the history, politics, economics and culture of Georgia and Azerbaijan between August 26 and September 4, 2015. The group consisted of undergraduate, graduate and doctoral students re pre- senting the fields of Medicine, Psychology, Energy Management and Sustainability, Nano science, Food Science, Mathematics, Law and Political, Legal and Economic Philo- sophy and International Relations – an apt array of disciplines to explore the complex reality of two diverse countries. The SSF delegation was accompanied by students of Slavic Studies, History and Eastern European Studies from the University of Berne and Fribourg, the latter also being the host institution of the Academic Swiss Caucasus Net (ASCN). The ASCN is a programme that aims to promote the Social Sciences and Hu- manities in the South Caucasus, initiated and supported by the GEBERT RÜF STIFTUNG. The programme of the summer school combined lectures and a cultural programme discovering historical, religious and natural sites. In Georgia it compromised Mtskheta, Nekresi Monastery, Gremi and the cities of Signaghi, Telavi and Tbilisi as well as the mountains of the Greater Caucasus surrounding the town of Stepantsminda (formerly Kazbegi). In Azerbaijan the city of Baku as well as the Bibi-Heybat Mosque, Gobustan Rock Art Cultural Landscape and mud volcanoes on the coast of the Caspian Sea were visited. On the way back, the city of Istanbul served as a sensible stop-over destination, given Turkey’s multifaceted ties with the South Caucasus in general and Azerbaijan in particular. This cultural programme was interspersed with lectures on various topics by academics and practitioners, helping the students to deepen their knowledge of history, politics and society in the region. Following the SSF’s principles of curiosity, motivation and responsibility, the students were assigned different topics for pre-reading and further study during the summer school. The topics were broadly divided into two categories: political and economic structures and change and conflicts. This publication collects the resulting essays. In the first category, two essays reflect on the overall transformation process in post-Soviet Georgia and the political system of Azerbaijan, a third focuses on Azerbaijan’s economy, while a fourth sheds light on the relationship between the European Union and the South Caucasus. The second part in- 4 | Preface cludes three essays on the conflicts in the region, focusing on the conflict over Abkhazia, South Ossetia and the 2008 Russo-Georgian War as well as Nagorno-Karabakh. Delia Imboden and Timo Welti examine The Rose Revolution, Democratization and Regime Change in Georgia. After briefly sketching the colour revolutions that emerged in the post-Soviet space, the authors outline the political situation in Georgia before 2003. They regard the system of «weak authoritarianism» as a precondition for the Rose Revolution. In the second part of the essay, an in-depth analysis of the Rose Revolution and its outcomes is offered. While the reforms are considered a success with regard to state-building, the democratization process is seen as limited by several factors, such as the restricted media freedom and a weak civil society. The authors regard the upcoming elections in the autumn of 2016 as an important test for Georgia’s democratic future. In The Political System of Azerbaijan, Jörn Kohlschmidt and Monika Wehrli take a closer look at post-independence Azerbaijan, assessing the current system as «stagnated authoritarianism». By examining the role of nationalism and the country’s political development, including the patronage system, they seek to explain how the present situation came into being. The revenues from the oil industry are directed towards the stabilization of the present system in which the opposition remains week and the regime undertakes crack-downs on media and civil society activists. The authors conclude that the political regime exploits the conflict over Nagorno-Karrabakh to prevent serious political challeng- es from the opposition and profits from a patronage network that rewards loyal supporters and deters potential opposition. Dirk Lauinger, Liliane Stadler and Tobias Vuillemin write on The Economy of Azerbaijan, examining the Azerbaijani economy’s dependence on oil and gas and the implications for the country’s political system and foreign policy. The authors first outline the historical development of this situation. They consider the oil revenues to have fuelled the country’s development over the last two decades – at great cost however. The oil and gas rents both lead to significant inequalities in Azerbaijani society and make it easier for the regime to consolidate its power. In terms of foreign policy, the oil industry has served to provide balance against Russia and to enable strategic alignment with the West. However, taking into account the looming depletion of resources, the authors consider Azerbaijan’s political and the economic systems to be in desperate need of reorientation. Jasmin Stadler and Judith Suter examine the Relations between the South Caucasus and the European Union. They provide a brief retrospective on relations between the EU and the countries of the Southern Caucasus, and the role Russia is increasingly playing in conditioning those relations. While Georgia has committed to a very dominant West- ern-oriented development, for Azerbaijan the ties to the EU are mainly economic and born of necessity. Armenia is said to pander to Russian demands whilst simultaneously trying to keep options open regarding technical cooperation with the EU. The authors conclude that any perceived inconstancy of the EU’s commitment to its partnerships with countries of the South Caucasus could encourage Russian efforts to destabilize the region and thus undermine EU security policy. | Preface 5 Raphael Widmer and Philippe Valmaggia seek to provide a short overview of The Geor- gian-Abkhazian Conflict and analysis of the current situation. The authors argue that the reason for this persistence of the frozen conflict is that none of the major actors have either the will to resolve the conflict or the power to do so. In order to illustrate this argument the first section of the essay outlines the origins and history of the conflict. The second part employs the theory of political realism, focusing on the state level to present the actors of the conflict and provide an in-depth analysis of their interests, while the third part explains the current deadlock based on the contrasting interests of the actors involved. Sandrine Gehriger and Jan Richner, in The Georgian-South Ossetian Conflict and the 2008 Georgian-Russian War, take up the topic of the ethno-political struggle over Geor- gia’s formerly autonomous region of South Ossetia. The authors ask whether this conflict is sufficient to explain the outbreak of the 2008 Georgian-Russian war. To answer this question they first trace the historical roots of the conflict and subsequently provide an overview of different perspectives on how the 2008 war was provoked. Without determin- ing which party started the August war, the authors assert that both Russia and Georgia had deeper political motivations for engaging in the war. It is suggested that the conse- quence of 2008 is that the initial conflict between Georgia and the separatist territories was reformulated as a conflict between Georgia and Russia. European and international reaction to the 2008 war is regarded as rather cautious and characterized by the interests of the individual countries. Anja Forrer and Therese Palm examine The Nagorno-Karabakh Conflict. After provid- ing a historical overview of the origin and developments of the conflict, they analyse the current status quo of «no war

Load more