NEIGHBORS SHOW TACIT SUPPORT

Caspian Business News, 9 August 2004
By Khadija Ismayilova

BAKU, Azerbaijan - Iranian President Mohammad Khatami, on his first-ever official visit to Azerbaijan, said the two Muslim countries had a historic obligation to move closer together. The president did not voice any criticisms, although a minor controversy occurred just before the visit due to a statement by Azeri Foreign Minister Elmar Mammadyarov.

As Iranian Keyhan newspaper reported on Thursday, a number of Iranian members of Parliament refused to accompany Khatami on his trip in protest against the remarks made by Mammadyarov, who allegedly said that the Azerbaijan province in Iran is a "guest" in the country, seemingly suggesting it could become part of the sovereign state of Azerbaijan.

Azerbaijan's Foreign Ministry denied that the minister cast doubt on the territorial integrity of Iran and said that the statement of Mammadyarov was misunderstood, Iranian parliamentarians from the Azeri Ardabil province changed their plans and did not come to Baku.

"[Members] Azarvash, Pir-Mo'azzen and Now'i-Aqdam were preparing to take part in the delegation Keyhan reported. "However, the report of the insulting remarks of Azerbaijan's foreign minister about our Azeri compatriots caused the Majlis deputies from Ardabil to refuse to leave for Azerbaijan half an hour before the flight time."

Now'I-Aqdam was quoted as saying "the remarks of Azerbaijan's foreign minister against the territorial integrity of Iran and the distortion of historical facts forced us not to give preference to our economic interests over maintaining our national honor and strength. Therefore, we decided to cancel our visit to that country as a sign of protest."

While the incident failed to cast a shadow to the visit of the Iranian president to Azerbaijan, the presidents surprised observers not signing any joint political statements or declarations. During usual visits, such documents are the result of talks between leaders and shape common positions on major issues.

However, after several hours of talks in the Azeri capital between Khatami and Azerbaijan's President Ilham Aliyev, the Iranian leader made no public mention of any discord but hinted that relations could be better.

He also said that Iran considers Nagorny Karabakh as the territory of Azerbaijan and suggested Iran's assistance in conflict resolution.

"History and geography have tied our fates together," Khatami, the first Iranian leader to visit Azerbaijan since 1993, told reporters at a news conference.

The Iranian president, who quoted Azeri poet Shahriyar while delivering speech in Parliament, called events in Iraq and Palestine tragedies and said the people of the region should not put up with a "unipolar" world.

The president also said that Iran would allow Azerbaijan to open a consulate in the northwest Iranian city of Tabriz, a subject of years of wrangling. Tabriz is the largest city in the largely ethnic Azeri northwest of Iran.

Economic harmony

Khatami and Aliyev did sign 10 bilateral agreements covering economic cooperation, with Iran pledging to contribute a total of $115 million towards improving communication links between the two countries. "The implementation of these agreements will create thousands of new jobs in Azerbaijan," Aliyev said after the signing ceremony.

Gas and electricity swap deals were signed Thursday, but the leaders of the two Caspian states did not give details how they planned to solve problems of disputed oilfields once tapped by BP. Gas swaps will start with small volumes in 2005 and rise to 350 million cubic meters (mcm) of gas per year by 2009. The swaps will allow Azerbaijan to supply its remote Nakhchivan province via Iranian territory. Baku cannot supply the region directly as it is separated from the rest of the country by the territory of Armenia, still formally at war with Azerbaijan.

The State Oil Co. of Azerbaijan (SOCAR) will sell 80 mcm of gas in the last quarter of 2005, awaiting the launch in 2006 of the large Shah-Deniz offshore gas field, led by BP and Norway's Statoil. SOCAR is involved in the giant project, which will be exporting the bulk of gas to Turkey, but the state firm wants to use its share of output for domestic needs.

It will be sending 200 mcm to Iran from 2006, 250 mcm in 2007, 300 mcm in 2008, and 350 mcm in 2009. Iran will, in exchange, supply its own volumes to Nakhchivan, keeping 15 percent of volumes as a service commission. Tehran also agreed to lend Baku $75 million to build new equipment and facilitate trade in electricity.

Although the Caspian dispute was not addressed, Khatami said the two states were keen to resolve all disagreements. The head of SOCAR, Natik Aliyev, told journalists the issue was not discussed during the summit. "There is no problem which cannot be solved by talks," Interfax news agency quoted him as saying.

In July 2001, Iranian gunships and a military aircraft chased off two of BP's oil exploration ships from a disputed Caspian Sea sector.

BP suspended exploration work around its Araz-Alov-Sharg oil concession, which experts say may contain significant reserves. Iran calls the block Alborz.

The division of the Caspian between the five littoral states - Iran, Russia, Kazakhstan, Azerbaijan, and Turkmenistan - remains unresolved despite protracted talks.

Russia, Kazakhstan and Azerbaijan have agreed on how to divide the sea in their sectors, but Iran and Turkmenistan are still reluctant to agree with the proposed division principles.