“CONTRACT OF THE CENTURY”: 1994 KARABAKH CEASEFIRE AND AZERBAIJAN’S FUEL DIPLOMACY
12.05.11
By Aris Ghazinyan
ArmeniaNow
Ceasefire agreement signing in 1994
The agreement on a ceasefire along the whole perimeter of the Karabakh
frontline, which despite sporadic skirmishes largely holds today, came
into force on May 12, 1994. Very often when viewing this important
event the accent is put on its humanitarian role, but this agreement
also had its quite tangible pragmatic political consequences.
No Baku-Tbilisi-Ceyhan pipeline yet existed in 1992, and fuel supplies
to the West were still being carried out by railway, in cisterns. Back
then former British Prime Minister Margaret Thatcher visited Baku as a
representative of British Petroleum, however it was when the Karabakh
war was at its height and no serious investment company could afford
putting large money into Azerbaijan.
The 1994 ceasefire protocols putting a halt to hostilities in Karabakh
changed the picture – the “Contract of the Century” was signed later
that year in September launching a successful implementation of the
‘new oil strategy’ and doctrine.
After the signing of the contract Azerbaijan International Operating
Company was founded. The ceasefire agreement “opened a path” for
contracts with 41 oil companies from 19 countries.
The Azerbaijani authorities were hesitating for a while and, as opposed
to Yerevan and Stepanakert, couldn’t make up their mind on whether
they should sign the protocol or not. The thing is that based on the
overall state of affairs by May 1994 signing the ceasefire protocol
nearly amounted to “legalizing” – even if temporarily – the sovereignty
of Nagorno-Karabakh. And that was Azerbaijan’s main concern.
On the other hand, Baku had no way out other than signing the
agreement, as otherwise a prospect was opening up for Armenians
to establish control over the Baku-Tbilisi railroad section, a
communication artery vitally important for oil-rich Azerbaijan.
Obviously, under such a layout, Azerbaijan would be deprived not only
of the opportunity of transporting its hydrocarbon raw materials
to Georgia’s Black Sea ports, but also of the prospect of possible
regional conflict solution via the same “fuel diplomacy”. Hence,
the agreement was more in Azerbaijan’s interests, because the risk
of losing control over its main railway bed was fraught with the loss
of the very essence of fuel policy.
In 1994 the Armenian military forces reached the valley of the
Kura river and were in a position to establish control over the
Yevlakh-Mingechaur railway junction; if implemented this would have
fundamentally changed the geopolitical situation in the region and
drastically reduced Azerbaijan’s post-war ardor conditioned by its
“oil diplomacy” as well as have had a critical impact on Karabakh
peace talks.
Consequently, Azerbaijan would have no other option but make
concessions in the Karabakh issue, as the then authorized
representative of the Russian president, Russia’s top Karabakh
negotiator Vladimir Kazimirov later confessed: “In the spring of 1994
the fierce fighting at Terter, north of [Karabakh capital] Stepanakert,
threatened with a new disaster: the Armenians’ exit to the Kura
river would have cut off Azerbaijan’s north-western projection –
Baku wasn’t even putting forward preconditions and was ready for a
long-term truce.”
Hence, the ceasefire agreement signed on May 12, 1994 had quite
distinct political consequences.
Ever since then the concept of “fuel diplomacy” has been part of all
political research on the Karabakh issue and Baku has been pinning
hopes on major oil corporations.