Newsletter from, date: 31-03-2004 to 06-04-2004

[03-04-2004 ‘Karabagh Conflict’]
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Source : `Echo’ newspaper (Azerbaijan)
Author: R. ORUJEV

There is an opinion in Turkish media that Washington is ready to
publicize the `Cyprus option’ of settlement for the territorial
problem of Azerbaijan

By May 1, international community anticipates final resolution of the
Cyprus issue. As `Radical’ Turkish newspaper reported yesterday, the
current option of Cyprus problem settlement is considered by official
Washington and European Union as quite applicable for other conflicts
of the Middle East, in particular Mountainous Karabagh. `Radical’
newspaper reports that Washington has `more than one aim in Cyprus
problem settlement”. Resolution of the conflict in Eastern
Mediterranean may serve as an example for the conflicts between Israel
and Palestine, Armenia and Azerbaijan. However, the newspaper states
that Armenian Diaspora in USA may serve as an impediment. At the same
time, the author of the article asserts, `Cyprus settlement might help
USA in making Armenians change their minds”.

It is common knowledge that EU and USA worked out a joint plan for
conflict settlement in Europe. Initially it was planned to be
pre-tested in Cyprus and later to apply the experience of successful
resolution of a rooted dispute to Armenian-Azerbaijani and
Georgian-Abkhaz conflicts. The idea rests on the proposal initiated by
UN Secretary General Kofi Annan.

The Cyprus example suggests the following: united Cyprus emerges as `a
bizonal, bicommunal federation’. Greek Cypriotes will get the
reunified island and regain part of the territory under their control;
Turkish Cypriotes will be ensured autonomous territory. The main
attraction of this plan is accession to the European Union, right of
the citizens for work and residence in any EU country, as well as
funds provided to post-conflict parties through European Union
assistance programs.

In case of Karabagh conflict, it is probably something close to
`common state’ that is meant – Baku rejected this concept at the time,
as you know. The bait, as in case of Cyprus settlement, is most likely
the same – European integration, European money, etc.

But there are doubts that the European Union pays as much attention to
Mountainous Karabagh problem as to the Cyprus issue. The Cyprus
problem certainly raises concern of the Brussels because it is purely
a European issue for Greece is involved in this conflict, and is a EU
member. Besides, Turkey and Greece are members of NATO, and
aggravation of conflict between them may have direct consequences for

The Cyprus option may hardly be applicable in our case since the
countries of our region are not even included in the list of
candidates for accession to EU.

Among other things, as `Echo’ already reported, at the Istanbul summit
of 1999 the idea of immediate integration of Azerbaijan and Armenia as
NATO members was put forward, in case they quickly resolve the
Karabagh problem. At that time, Turkish President Suleyman Demirel
proposed his Caucasus stability pact. He also considered those options
for resolution that are now suggested to Cyprus. The three states of
the Caucasus were proposed to withdraw all foreign armed forces from
their territories, to sign a security agreement among themselves,
after which EU and USA were to provide vital investments (in millions
of dollars) in the development of Armenian, Azerbaijani and Georgian
economies. Russia and Turkey were to act as parties ensuring agreement
compliance. Initially, Armenia accepted this plan but later evidently
under Russia’s pressure, refused to sign the pact. This document was
very similar to the Cyprus option of settlement; it also contained the
factor of encouragement for the parties to the conflict.

It is interesting how seriously the Foreign Office of Azerbaijan
considers such settlement options of our territorial conflict. Also
whether the activity of RA MFA pays due attention to studying foreign
experience in conflict resolution.

Unfortunately, MFA press service failed to provide a more or less
satisfactory answer to these questions. As press secretary of the
Ministry, Metin Mirza declared to `Echo’, “the officials directly
involved in Karabagh conflict settlement need to be addressed in this
case”. However it is always very difficult to directly contact these

“For the time being, even the attempts to settle the situation in the
Cyprus did not succeed’, former Ambassador to China Tamerlan Garaev
says. `And commenting on how the Cyprus option is applicable for
Mountainous Karabagh conflict is no easy task for present. Will this
plan really work in Cyprus and lead to the results aspired for by the

According to the expert, “The situation we have is somewhat
different. In our case, it is not a sort of enclave that is meant. The
point is that a war broke out between the two countries, as a result
of which Armenia, taking advantage of USSR disintegration and absence
of troops in Azerbaijan, occupied part of our state territory. I do
not know how the Cyprus situation may be related to the development of
events in our region”.

As for the programs of large financial assistance to the parties of
the conflict and guarantees for their future accession to EU,
T. Garaev holds that this instrument of influence should primarily be
directed at Armenia, “at the attempt to convince Armenia to take more
constructive position”. “The point is how successful will be the
option of urging Armenia towards peaceful resolution of Karabagh
conflict on the part of USA and EU, taking into consideration
territorial integrity of Azerbaijan? It is not easy to discuss, yet
basically possible because in accordance to commonly accepted
international standards, Karabagh conflict resolution is possible only
through ensuring territorial integrity of our country”, the expert

[01-04-2004 ‘Economic Development’]
Source : `Golos Armenii’ newspaper (Armenia)
Author: Edward Safarian, Master of Energy
Politics, Delaware University, USA

For the past 10 years, the Caspian Sea has been the focus of attention
for world superpowers and large energy companies. It interests experts
in different spheres – political scientists, economists, power
engineering specialists – due to its abundance of natural resources,
oil and gas fields in the first place. There are certain opinions that
the Caspian is rich in hydrocarbon resources, which may be competitive
with the oil deposits of the Persian Gulf. Others assert that the
attempts of international energy companies, to get multimillion
profits out of oil and gas extraction from the bottom of the lake,
resemble a venture similar to the `Gold Rush’ in Wild West at the
beginning of the past century.

The truth, as usual, is somewhere in the middle. For instance, Energy
Information Administration (EIA) of US Energy Department estimates the
official oil deposits in the Caspian at 10 milliard barrels. Still 233
milliard more barrels, as the source states, may potentially be
discovered. It is to be noted, that EIA has a reputation of a too
optimistic information source among the experts. According to USA
Geological Inspection (the most reliable source for the experts),
there is 50% confidence that Azerbaijani sector of the Caspian
contains up to 5.8 milliard barrels of oil and about 68 trillion cubic
feet of gas. Besides, American expert Lagerer asserts that among
developing CIS countries and states there is a tradition of
deliberately inflating data on oil and gas deposits to attract foreign
capital in the country.

In expert evaluations, construction of Baku-Ceyhan main export
pipeline, enabling to transport Azerbaijani and potentially Kazakh and
Russian oil to the Turkish Mediterranean coast, will be economically
viable if in the course of pipeline exploitation no less than 6
milliard barrels of oil are pumped through it. According to
information stated, there is 50% possibility of Azerbaijan’s having
these oil resources. In other words, if exclusively Azerbaijani oil is
pumped through the pipeline, the completed project will finally cover
only its prime cost. The construction of Baku-Ceyhan pipeline may
bring profit only in case Kazakh and/or Russian oil is transported
through it. Then why Western companies and `British Petroleum’ (BP) in
the first place, as the main investor and operator of the project, are
eager to have this dubious project implemented?

First, BP, despite its name, is essentially an American company. In
USA this company develops activity equal to the United Kingdom in its
scale and, similarly to all large companies, it is dependent on the
political forces of this country. This dependence became more obvious
after George Bush’s victory in 2000 USA presidential elections; his
family has old ties with oil business. After accession to the White
House, Bush administration sharply reduced financing of projects on
alternative energy sources and started to support large projects on
extraction and transportation of hydrocarbons. One of the instances of
such projects, provoking public discontent in USA, is extraction of
the deposits on the territory of national natural reserve in
Alaska. Despite the fact that the initiative of constructing
Baku-Ceyhan pipeline came from Bill Clinton administration, yet it is
during George Bush’s government that this project got a chance for

One of Bush administration’s top priorities was provision of new
routes of oil import (the portion of imported oil in USA amounts to
over 55%) and decreasing the dependence of the country on supply from
such unstable countries- exporters as Columbia, Venezuela and
Nigeria. Therefore, Bush administration supported even such
inefficient projects as Baku-Ceyhan, placing the burden of financing
on the dependent oil companies. In any case, oil giants will pay off
only about 30% of the project costs, while the rest of financing will
be provided by international structures – World Bank and European Bank
for Reconstruction and Development. State Oil Company of Azerbaijani
Republic (SOCAR), BP and ExxonMobil already expressed their desire to
finance their shares.

It is now the turn of international financial structures that do not
yet hasten to provide funds for implementation of this project, whose
costs surpass 3 milliard USD. Certain experts even think that pipeline
construction costs will be much higher than previously expected,
amounting to 4 milliards. The decision-makers, responsible for
provision of credits, are primarily concerned over the circumstance
that the pipeline is very close to the hotbeds of open ethnic
conflicts – such as Mountainous Karabagh, Abkhazia, South Ossetia. One
more crisis point, Ajaria, was added in the list. Besides, a
considerable part of the pipeline passes through Eastern regions of
Turkey, mostly populated by the Kurds not very loyally disposed to the
Turkish authorities. Inspired by the success of their compatriots in
Iraq, they are ready for resistance. In all these regions, military
operations may potentially be resumed, which cannot but impede regular
exploitation of the pipeline.

But the truth is that American authorities, which are most interested
din this project implementation, are not very much concerned with
these circumstances. The priority for them is getting one more
alternative route for import of the oil so essential for its
economy. According to USDA special representative in the Caspian
region, Steven Mann at the conference devoted to Caspian energy
resources (New Orleans in 2003), this project is more political than
economic. Apparently, USA is least interested in economic profit of
the countries participants of the project or the countries on whose
territory it will be implemented.

One more interesting factor is that Azerbaijan has considerable
reserves of natural gas, in particular Shakh Deniz deposit, which
contains up to 1 trillion cubic meters of gas according to expert
estimates. This volume of gas is sufficient to be commercially
attractive for Western energy companies. But there are certain nuances
here. It is a disadvantage for Azerbaijan that this deposit is located
in the region where various countries have much larger gas reserves,
which they would willingly export on the world energy markets.
Suffice it to say that cumulative gas reserves of Russia and Iran
equal almost 50% of world reserves of this energy
resource. Turkmenistan, where the ratio of gas reserves to the volume
of production is 180 years, does not lag far behind.

It is to be noted that the characteristic of gas as an energy source
considerably differs from that of oil. And if the portion of
transportation in the oil cost, delivered to the immediate consumer,
does not surpass 10%, allowing to transport this product at farther
distances with no considerable expenses, then in case of gas this
portion is higher than 40%. Therefore, usually natural gas is not
transported at long distances from those regions where it is produced.

The exception is a technology of liquefying natural gas when it is
cooled up to 160 degrees and as a result passes to liquid phase, which
allows transporting gas in special tankers at long distances,
similarly to oil. But this option is not acceptable for Azerbaijan
since it is common knowledge that this country has no access to high
seas, making this type of transportation a complex task. To make
things worse, the technology itself (terminals for gas conversion, as
well as special tankers which are far more expensive than oil)
requires tangible investments.

It was initially planned that the gas extracted in Shakh Deniz deposit
will be delivered to Turkey, where economic boom was expected, and as
a result – sharp increase of gas consumption. However, the
expectations of Turkish economists and BOTAS state oil company were
not justified. For the past few years, economic recession and decrease
of GDP were observed in Turkey. For this reason the Turkish company,
having already signed the agreement with `Gasprom’ on the supply of
gas through `Blue Stream’ gas pipeline via Black Sea bottom, even
turned to the Russian side with a request for decrease of the supply
volume. Thus, the economic expediency of Azerbaijani gas supply to
Turkey is out of the question. At best, Turkey may serve as a transit
country for Azerbaijani gas, whose streams will flow to Europe, though
this option is hardly likely, given the mentioned specifics of gas
transportation economy.

In conclusion, it needs to be sated that Azerbaijan possesses
hydrocarbon resources, which through advantageous development of
events on world energy markets, may yield profits for this
country. However, too many factors come to prove that these profits
will be much lower contrary to the expectations of our neighbors and
those in our country who are too much concerned over fast enrichment
of the Azerbaijanis and, consequently, over the possibility of
breaking the balance in the region.

[01-04-2004 ‘Region’]
Source : `Radikal’ newspaper (Turkey)
Author: Murat Yetkin

Greek Cypriots are most reluctant to see the problem resolved. The
settlement is beneficial for EU, USA and Russia.

Not far ahead is the outcome of the disputes on Cyprus problem
resolution. To discuss the current state of affairs, Ankara convened a
session of the Ministry of National Security again. Conferences of
similar type will be conducted in other capitals as well. It really
makes sense for everyone to discuss what expectations and prospects
they have from resolving one of today’s most acute problems.

CYPRUS GREEK STATE: It is the side least of all supporting Cyprus
problem resolution to be adopted on May 1, 2004. Despite the economic
and political embargo imposed by the Turkish part of the island, there
is a certain progress. Although no option of dividing the island is
proposed, the Greek side already feels comfortable as a member of EU.
However, the issue of relations with the Turkish part of the island
and the international pressure induced by it are still on the agenda.

CYPRUS TURKISH STATE: The greatest expectations of Lefkosia are
getting international recognition, accession to EU, preserving the
guarantees of Turkey and the status quo. The position of President
Rauf Denktas on the referendum appears to have no future for
present. In case the people approve of the agreement, the coalition
between Mehmet Ali Talat and Serdar Denktas may prove to be the
victorious party.

GREECE: If the sides do not come to agreement, Greek Cypriotes will
become members of EU, and the Athens will keep the promise given by
the Greek side to Lefkosia. But in this case EU may be placed under
still greater pressure having problems not only with division of the
island but with alienation of Turkey as well. If no solution is found
for Cyprus problem, it will have consequences for the whole Aegean

TURKEY: Stable resolution of the Cyprus problem will be advantageous
for Turkey from various aspects. In the first place, this option will
allow removing the greatest obstacle for Turkey’s accession to
EU. Second, it will prove that Turkey keeps to the framework of the
European culture of political agreement. And it is has much to do with
Copenhagen criteria. Third, Turkey will be able to more efficiently
use all the potential of its foreign policy directed at Cyprus in the
past 30 years. Middle East, Balkans and the Caucasus will have a
chance to take more active steps for consolidating their independence.

ENGLAND: England, one of the three guarantor states in Cyprus, will be
more secure in case of simultaneous accession of Greek and Turkish
sides to EU. The Cyprus problem will become a part of EU system as a
whole. If this process eventually ends up with Turkey’s accession to
EU, stability and security will be ensured on southern borders of

EUROPEAN UNION: The Cyprus problem resolution will undermine the
positions of those who are against Turkish EU membership or view this
prospect with certain fear. It will also strengthen the position of
Turkish supporters. Thus there will be an impetus to Germany’s
conception by which Muslim and Soviet Turkey, becoming a part of
Europe and adopting European values, will serve as a sort of bridge
between the Old World and many powerful Muslim countries. France,
with its ties enlarged, will also strengthen its positions. With
Turkish influence in EU, Europe’s southern and eastern borders will be
expanded; consequently it will become a more integral and strong

USA: Washington is one of the capitals to receive most benefit from
Cyprus problem resolution. Such an outcome of solving this political
problem, in USA opinion, may serve as an example for settling
conflicts between Israel and Palestine, also between Azerbaijan and
Armenia. Israel is one more proponent of this scenario. However, in
case of Armenian-Azerbaijani conflict, the Armenian Diaspora in USA is
the greatest obstacle to `world for security’ principle applied in
Cyprus. At the same time, any option on Cyprus may result in the fact
that USA, with Turkey’s and most likely Russia’s assistance, will
induce Armenia to comply with this plan.

RUSSIA: Moscow will benefit from the stable and predictable policy of
Turkey in the Caucasus, which is one of the most problematic regions
for Russia. Strengthening of democracy in Turkey, necessitated by this
country’s possible accession to EU, will contribute to
it. Consequently, Cyprus problem resolution will help Russia defend
its most vital interests.

Yerevan Press Club of Armenia, ‘Yeni Nesil’ Journalists’ Union of
Azerbaijan and Association of Diplomacy Correspondents of Turkey
present ‘Armenia-Azerbaijan-Turkey: Journalist Initiative-2002’
Project. As a part of the project web site has
been designed, featuring the most interesting publications from the
press of Armenia, Azerbaijan and Turkey on issues of mutual
concern. The latest updates on the site are weekly delivered to the