Why Azerbaijan Merits Greater Strategic Attention From Washington

COMMENTARY Europe

Why Azerbaijan Merits Greater Strategic Attention From Washington

Jul 21st, 2022 3 min read
COMMENTARY BY
Anthony B. Kim

Research Fellow and Editor of the Index of Economic Freedom

Anthony B. Kim researches international economic issues at The Heritage Foundation, with a focus on economic freedom and free trade.
Since Azerbaijan’s independence from the Soviet Union, the U.S.-Azerbaijan relationship has grown comprehensively in advancing energy security in Europe. ekavector / Getty Images

Key Takeaways

Azerbaijan, the only country in the world that borders both Russia and Iran, proactively seeks to broaden its relations with the West as a balancing factor.

The United States has long supported Azerbaijan’s efforts to develop and export its energy resources to Western markets.

Azerbaijan has measurably advanced its economic freedom. Its overall rating improvement has become one of the highest.

America’s engagement with Azerbaijan matters more than ever, with 2022 marking the 30th anniversary of diplomatic relations between the two nations. 

From Washington’s foreign policy perspective, the strategic importance of the country is undeniable. Its capital, Baku, is the largest port on the Caspian Sea and an important transportation hub for goods shipped between Europe and Central Asia.

Azerbaijan, the only country in the world that borders both Russia and Iran, proactively seeks to broaden its relations with the West as a balancing factor.

Over the past three decades, since Azerbaijan’s independence from the Soviet Union, the U.S.-Azerbaijan relationship has grown comprehensively in advancing energy security in Europe, combating transnational threats, and boosting bilateral trade and investment, among other policy priorities.

The Caspian Sea nation’s vast hydrocarbons and other natural resources—the backbone of its economy—have been enabling it to serve as a significant alternative to Russia for oil and gas. That in turn has helped Europe’s energy security and, by extension, the security of the United States.

Indeed, it’s in the clear, pragmatic interest of the United States and Europe to prioritize and advance relations with Baku as the critical trade, energy, and economic link between the east and west of the Eurasian landmass.

The United States has long supported Azerbaijan’s efforts to develop and export its energy resources to Western markets, with U.S. companies having been involved in offshore oil development projects there.

The recently completed Azerbaijan Southern Gas Corridor has further brought vital energy resources from the Caspian region to the European market.

As underscored by BP, a British oil and gas company, in December 2020:

Europe’s energy supplies have received a much-needed boost today as one of the world’s most complex energy projects begins full operations.

The newly completed Southern Gas Corridor (SGC) pipeline system is now transporting natural gas from beneath the Caspian Sea offshore Azerbaijan to European customers thousands of miles away.

The mammoth engineering milestone involved seven national governments, 11 different companies, and more than 30,000 people.

The result is a 3,500-[kilometer] pipeline system that climbs over mountains, crawls under seas and stretches the entire width of Turkey—opening up a new energy supply route to the European Union.

The Southern Gas Corridor consists of three pipelines—the South Caucasus Pipeline through Azerbaijan and Georgia; the Trans-Anatolian Natural Gas Pipeline across Turkey; and the Trans-Adriatic Pipeline via Greece and Albania to Italy.

In a particularly welcome development on Monday that will help the European Union reduce its reliance on Russian energy, the European Commission signed a deal with Azerbaijan to double imports of natural gas by 2027. 

During her visit to Baku for the important announcement, European Commission President Ursula von der Leyen noted, “Today, with this new Memorandum of Understanding, we are opening a new chapter in our energy cooperation with Azerbaijan, a key partner in our efforts to move away from Russian fossil fuels.”

Azerbaijan is and will continue to be a country of geopolitical importance, with its relevance to Europe and the United States elevated, particularly in the context of expanding and securing alternatives to Russia as an energy source.

Greater utilization of the Southern Gas Corridor from Azerbaijan to global markets have many benefits for the region, as well as for the U.S.

In that strategic context, more than ever, continuing to adopt greater reform measures and to advance economic freedom is critical to Azerbaijan.

Over the past decades, the country has succeeded in reducing its poverty rate and directed revenues from its oil and gas production to develop more modern and much-needed infrastructure.

According to The Heritage Foundation’s annual Index of Economic Freedom that measures important policy areas of the rule of law, fiscal health, regulatory efficiency, and market openness, Azerbaijan has been on a notably upward trend of economic freedom since the country was first included in the index in 1996, with its overall score consistently above the world average over the past decade. (The Daily Signal is the news outlet of The Heritage Foundation.)

Azerbaijan has made meaningful progress in liberalizing its economy. In 1996, the first year that The Heritage Foundation included the country in its index, Azerbaijan was regarded as a repressed economy. Since then, however, Azerbaijan has measurably advanced its economic freedom. Its overall rating improvement has become one of the highest.

Yet more can and should be done as Azerbaijan moves forward. Washington can support this important and reliable partner in the Caspian Sea region by widening and deepening the frank, open, and forward-looking dialogue between the two countries on issues of mutual concern.

To that constructive end, Azerbaijan deserves strategic and practical attention from U.S. policymakers more than ever.

This piece originally appeared in The Daily Signal