Abstract. The Caspian Sea basin, relations with seaboard states is the key for Azerbaijan, both in geopolitical and geo-economic point of view. Throw Caspian Sea, Azerbaijan neighbors with Russia, Iran, Kazakhstan and Turkmenistan. At that, Azerbaijan also has land boundaries with Russia and Iran - this fact increases the importance of developing relations with these states. It’s worth remarking that until 1991 Azerbaijan has been within one state – Soviet Union with its 3 of 4 neighbors. Only after collapse of this state, new reality has emerged; within this reality, former Soviet republics have started to form relations on independent state’s level. In this article, author describes the formation of Azerbaijan and its Caspian Sea neighbors’ bilateral relations, influencing factors of these relations and trends of its development.
The course of events in the former Soviet Union space is quite rapid in recent years. After twenty years, many countries of the former Soviet Union managed to create their own way of development which is directly connected with their potential and foreign policy influences. Azerbaijan is not an exception in this aspect. Since the moment of independence this country has managed to overcome the hardest economic and political crisis inherited from the Soviet Union. However, unlike other countries, the situation in Azerbaijan was complicated by the Armenian-Azerbaijani Nagorno-Karabakh conflict; about 20% of the territory of the country was occupied by the Armenian armed forces. Therefore, about one million Azerbaijanis became refugees or internally displaced persons, in other words, every eighth citizen of the country. Provision of the emaciated people who had lost all their property became a heavy burden on the state.
Only through formation and implementation of an enlightened energy policy, Azerbaijan has managed to resolve all these problems. Azerbaijan has become a stable state, a regional leader without participation of which it is impossible to implement any interstate project. At the same time it concerns not only South Caucasus. If to consider energy transport projects for the last twenty years, only those of them were realized where Azerbaijan took part in the construction or initiated them. All other projects, such as Nabukko's gas pipeline and Trans-Caspian Gas Pipeline, have been remained on paper. At the same time, the energy factor became the basic one in determination of tools for Azerbaijan’s foreign policy. However if in the first years of independence they had a geopolitical context and their main objective was to strengthen the statehood and stability in the country, so in the process of following this purpose, the energy factor began to increasingly resolve geo economic tasks of Azerbaijan.
Azerbaijan’s economy has developed rapidly through successfully implemented strategy. During the period between 2003 and 2013, the Internal Gross Product of the country increased by 253% . Azerbaijan was included into a group of the countries with the highest average earnings on incomes per capita . At the same time for this period the country from the receiver of international aid had turned into the donor. Azerbaijan actively helps undeveloped countries of Asia and Africa . Besides, the issue on the return of the immigrants to their native land, because of the occupations proceeding from Armenia, is still not solved. However Azerbaijan has significantly improved conditions of their temporary residence, having built for this purpose hundreds of modern settlements and residential massifs. The problem of providing refugees and displaced persons is not as urgent as it was ten years ago. Nevertheless, these people wait for the day when the sovereign territories of Azerbaijan are released and they will be able to return to their native land.
The energy factor is significant as well in the relations with the countries neighbors in the Caspian region. It should be noted that all five countries have considerable energy inventories and this fact already influences the relations between Azerbaijan and the countries of the region: Russia, Iran, Kazakhstan and Turkmenistan. However, depending on a number of factors they can have a different denominator in relation to each of the states on the coast of the Caspian Sea. However, first things first.
Relations with Russia and influencing factors
In 1991 the Soviet Union collapsed and independent states appeared on its place. It was necessary to start building new legal relations. Generally it wasn't difficult as traditional ties between the countries, the republics of the former USSR, had still remained. It also concerns Russia, the northern neighbor of Azerbaijan. In a word, it is about the relations between them which have developed for the last 200 years, during the time when Azerbaijan had been a part of the Russian Empire, and then the Soviet Union. For this reason agreement on a free trade between the Russian Federation and Azerbaijan signed on September 30, 1992  became not a basis for creation of new commercial ties, but rather a confirmation of a new format of the relations forming which appeared after both countries became independent.
In general it should be noted that, despite some problems, in the 90th years of the last century when there were disagreements between two countries, the relations between the countries developed upwards. It was also promoted by the president Vladimir Putin; with his coming to power in Russia the relations between the countries began improving. A new page in the relations of both countries has opened with his visit. So, a number of problems between two countries were resolved: the parties agreed about division of a bottom of the Caspian Sea by national sectors, Radar Station's status in Gabal was determined, foundation for a goods turnover growth between two countries were determined . For comparison, the president Boris Yeltsin never officially visited Azerbaijan. Subsequently, the president Vladimir Putin visited Azerbaijan several times . Visits of the Russia’s presidents became sign ones. And during their visit to the capital of Azerbaijan, the relation between two countries gained a new impulse: the third president of Russia Dmitry Medvedev visited Azerbaijan three times.
One of Medvedev’s visits, which took place in 2010, was marked by a number of important agreements signed by two countries. For the record, there was an agreement on the state frontier according to which the process on differentiation of the territories between two states was completed. In so doing, Russia became the first of neighboring countries with which Azerbaijan had signed the similar agreement. In parallel, the agreement according to which the parties determine the mode on use and protection of water resources of the cross-border river Samur was signed. Besides, the parties signed the supplementary agreement to the contract on purchase and sale of natural gas . According to it, Azerbaijan undertakes to increase the supply of natural gas to Russia to 2 billion cubic meters a year, with the subsequent possibility of a growth in volumes of export. Signing of this agreement is significant, as since the moment of signing of the first agreement on natural gas sale to Russia, the approved amounts increased already by 4 times . The reason of determination of this agreement as a significant one, but not essential, is that amounts of the gas imported from Russia are the still modest.
The truth is that Russia’s interest in the process of the agreement on increase in supply of natural gas to this country proceeded subsequently as well. Thus, on January 23, 2011, the parties signed an addition to the current contract of purchase and sale of the Azerbaijani natural gas between "Gazprom" and State Oil Company of the Azerbaijan Republic "SOCAR". According to the document, in 2012 gas purchasing amounts from Azerbaijan increased from 1.5 to 3 billion cubic meters of gas . In spite of the fact that the parties approved increase in deliveries, it wasn't realized in a completly. In a word, in 2013 according to cooperation between "Gazprom" and "SO- CAR", Azerbaijan delivered 1.37 billion cubic meters of gas to Russia .
The president of Russia Vladimir Putin’s visit to Azerbaijan on August 13, 2013 became very important. His visit reminded his arrival to the capital of Azerbaijan twelve years ago, when key disagreements between two countries had been solved. During the visit a number of agreements in the energy and transport sphere were also signed. Signing of an agreement on cooperation between the Russian and Azerbaijani energy companies "Rosneft" and "SOCAR" was also significant . The questions on legal status of the Caspian Sea and the Nagorno-Karabakh conflict were also discussed. However, the most important result of this visit was not agreements. Current visit took place on the eve of presidential elections in Azerbaijan, and arrival of the president Putin in Baku was characterized as support to the current president of Azerbaijan Ilham Aliyev. In doing so, the president Vladimir Putin dispelled the concerns of official Baku that Moscow supports the oppositional candidate, wishing the change of power in Azerbaijan. For that time there was an opinion that the choice of the single candidate from the Azerbaijani opposition, Aliyev’s competitor, was predetermined by the influence of the Azerbaijani diaspora in Russia. Now, the official Moscow’s point of view became clear and dispelled all suspicions.
The visit also had a character of certain "the psychological pressure" upon Armenia which unlike Azerbaijan for that time wished to sign an agreement on Association with the European Union. Russia wished to show by these that in case of change of the direction in a foreign policy of Armenia, Russia will change a balance on South Caucasus for benefit of Azerbaijan. Armenia soon understood in what may turn her desire of independent foreign policy, without thinking about Russia. It was not necessary to wait for change of its position. As a result, only two weeks later after visit of the president Putin to Baku, the president of Armenia Serzh Sargsyan during his visit to Moscow declared about determination to enter into the Eurasian Customs Union, thereby in one day, having nullified three years' preparation concerning integration with the European Union .
Russia is also the main trading partner for Azerbaijan. So, in 2014 the goods turnover between two countries reached 4 billion US dollars . Besides Russia is the main market for sales of non-oil sector products for Azerbaijan. In 2014, Azerbaijan increased deliveries of food production to Russia approximately by 20 percent that constituted about 300 million dollars. Possibilities of increase in deliveries of agricultural production are very perspective as Azerbaijan can replace the formed deficit which arose because of sanctions. However, in 2015 the goods turnover decreased to 1855 billion US dollars .
As it became already clear, Azerbaijan didn't join sanctions which were imposed against Russia by the countries of the West because of annexation of the Crimea and events in Ukraine, in general. Azerbaijan in the relations with Russia tries to proceed from the national interests, but adheres to a constructive approach. Azerbaijan advances its regional transport projects, such as the Trance Anatoly pipeline and the Trance Adriatic pipeline by means of which natural gas from the Azerbaijani field Shakhdeniz 2 will arrive on the markets of Turkey and Eastern Europe. At first sight it can seem that Azerbaijan is ready to compete with Russia on supply of natural gas to the European markets. However, amounts of the Azerbaijani gas which will come to the European countries are incomparable to the Russian ones. Besides, in spite of the fact that Azerbaijan actively realizes these projects, Russia’s reaction is quite reserved. Russia pragmatically approaches this aspect as it understands that Azerbaijan did not participate in projects which do not serve interests of the country, in this case the "departed" project of the Nabukko gas pipeline and the Trance Caspian pipeline. Besides, Azerbaijan already showed ability to differentiate that thin line after which open confrontation begins. At the same time this country has opportunities for maneuvering.
So because of diversification of its energy deliveries, Azerbaijan is capable to prevent non-desirable scenarios of the relations with neighbors, including Russia. In a word, Azerbaijan has already declared that it does not wish the accession to the Eurasian Union offered by Russia as it does not serve its national interests. At the same time, Azerbaijan also considers Russia’s interests in the region, without joining other integration process within the program agreement of the Eastern Partnership in the European Union, the agreement on the deep and comprehensive free trade area as this project is very ambiguously perceived by Russia. In this case Azerbaijan prefers to build the bilateral relations, both with Russia, and with the European Union. It should be noted that such format of the relations quite suits Russia as well. It is confirmed as by growth of the economic relations, so frequent meetings of the leaders of the countries and intensive political connections.
Azerbaijan-Iran relations: practice of perception
The relations between Azerbaijan and its southern neighbor Iran are not clear enough and perception of each other can have diametrically polar nature. It should be noted that exactly Iran sets the tone for these relations and whether they are positive or negative depends on this country. In turn, the factors influencing Iran’s behavior are determined first of all by conjecture, formed for a certain moment within the country, and also the international condition. It should be noted that an important role on the relations forming is played by such factors as the common historical past, religious identity and availability of the numerous Azerbaijani population in this country. Thus, a historical, religious and ethnic community shall not necessarily have a positive effect in connection of two countries: sometimes it is the reason for dissociation and disagreement.
Iran was one of the first states in the world which recognized independence of Azerbaijan right after recovery of the independence by this country. On December 25, 1991 Iran recognized
Azerbaijan de facto, and only three months later, on March 12, 1992, raised the status of the consular representation functioning since 1969 in Baku to the level of embassy. In turn Azerbaijan also opened one of the first embassies in this country in December, 1992 . The fact that the president of Azerbaijan Ayaz Mu- talibov made the first official visit to Iran in August, 1992 says about the importance which was given to this country in Azerbaijan in the first years of independence.
However, if during Mutalibov’s time period the relations between Iran and Azerbaijan were on top level and satisfying for managements of both countries, with coming to power of the Popular front and the president Abul- faz Elchibey, after Mutalibov's resignation, in 1992, these relations sharply worsened. The second president Elchibey was known for the pan-Turk views. Even this factor would not become the reason of worsening of the relations between two countries and Iran’s vigilance in relation to Azerbaijan if there were no careless statements of a management of Azerbaijan in relation to the southern neighbor. Elchibey believed (perhaps, it was affected by the fact that he had a diploma of historian), and declared it in open that Iran, as well as the Soviet Union, is also the multinational empire and finally it will face the same destiny, namely it will break up. It will allow the Azerbaijani people who were divided in the light of the historical reasons to unite. Such vision of the president of the young state on its northern borders could not please leaders of Iran. Reaction was corresponding. Iran tried to balance possible negative attacks of Azerbaijan by means of balance: on irredentist sense of the statement of the government of the Popular Front, Iran, as a counter-measure began to strengthen the political and economic relations with Armenia . It is known that, Azerbaijan has a conflict with this country across Nagorno-Karabakh, inherited from the Soviet period.
Since this time Iran has formed the policy in relation to Azerbaijan, based on mistrust and skepticism. However, Azerbaijan paid Iran in kind. Especially for Azerbaijan became unforgettable the fact that on May 8, 1992 Armenian military forming occupied Shusha, in day when with mediation of Iran in Tehran between the president of Armenia Levon Ter Petrosyan and the acting president of Azerbaijan Yagub Mamedov the joint communique on the basic principles of the peace agreement was signed . Shusha's occupation has left a deep scar, and since this time, Azerbaijan remembering this day began to refuse numerous offers of Iran on intermediary mission in the conflict resolution between Azerbaijan and Armenia .
With coming to power of the president Heydar Aliyev Azerbaijan chose a course of the balanced foreign policy and improvement of the relations with neighbors as well, after that there was a slow progress in their development between these two countries. On June 29, 1994 the president Heydar Aliyev made the first official visit to Iran 19. During negotiations both countries agreed about opening of the Azerbaijani consular representation in Tabriz, and also concluded an agreement on the beginning of a broadcasting of the Azerbaijani and Iranian television in the territories of both countries. Thus, the consulate general of Iran in Nakh- chyvani was open in December, 1992. In spite of the fact that the Iranian television limited to several hours began the broadcasting in Azerbaijan within a day, Iranians did not see programs of the Azerbaijani television. After a while the broadcasting of the Iranian television in Azerbaijan was suspended as well. As for the Azerbaijani consulate in Tabriz, its opening had to be expected for the whole 10 years. After that it was solemnly opened on October 20, 2004 during official visit of the president Ilham Aliyev to this country.
Despite leadership change in Azerbaijan and Azerbaijan’s constructive approach to Iran, mistrust to Azerbaijan has still remained. So, during the next visit to Iran, the president of Azerbaijan Heydar Aliyev could not visit Tabriz — an administrative center of the Iranian province East Azerbaijan because of some concern of the Iranian authorities on possible influence of this visit on the local Azerbaijani population. At the same time, being guided by the same mistrust in relation to Azerbaijan, in January, 1993, parliament of Iran adopted the law on administrative-territorial change of the East Azerbaijan province. Therefore it was divided, and in the north of Iran there was a new province with the capital in the city of Ardebil with majority of the population constituted by Azerbaijanians. Besides, the part of the territories of East Azerbaijan departed to other neighboring Iranian provinces.
One more disagreement between two countries is determination of a legal status of the Caspian Sea. The matter is that the position of Iran in this question consisted of destructive approach, namely Iran is interested in no final decision on a legal status of the Caspian Sea. Iran worries are about possible western military presence on the Caspian Sea. Iran worries that after the Caspian Sea is divided, the Western countries will wish to place the naval forces, first of all, in coastal part of Azerbaijan and Kazakhstan.
For this reason Iran acts with a position which neighbors in the Caspian Sea simply will not accept. So Iran stands up for separation of the Caspian Sea into equal parts that cannot be accepted by Azerbaijan which in case of such separation can lose the main offshore oil and gas deposits . Azerbaijan adheres to the principle of the section on the median line as a result of such application Iran will possess at best only 14% of this closed reservoir .
Disagreement between the countries reached the apogee in July, 2001 when the Iranian patrol boats demanded to stop the prospecting works which were carried out by the research vessel "Geophysics-3" of the BP energy company on the Alov, Araz and Sharg fields which are very perspective ones and, on predesigns of experts, possessing oil inventories in amount to 900 million tons. With this respect the overland border of Azerbaijan was broken several times by military planes of this country. Iran which makes the demand of ownership of 20% of the Caspian Sea, considers that these fields are in borders of its marine territory. As a result of BP it was forced to suspend researches on these fields. Only after visit of the deputy minister of foreign affairs of Iran Ali Akhani in Baku it was succeeded to prevent further escalation of the conflict at the end of August, 2001 .
Improvement of the relations between two countries was promoted, strangely enough, by sanctions which began to be applied in relation to Iran because of its nuclear program. Especially after military actions in Iraq and Afghanistan it was expected that Bush's administration will decide on military intervention in Iran as well. Being afraid of such succession of events, Iran first of all tried to secure the backs. It was important for Iran that in case of any development of the scenario Azerbaijan will keep the neutrality. In turn Azerbaijan declared non-admission of the western military bases placement and uses in military operations of the airports against the third countries. With respect thereto, on May 16, 2005, Azerbaijan and Iran signed the Memorandum of cooperation in the military sphere according to which both countries undertake not to place military bases of the countries hostile to the counter party in the territory .
Along with the signing of this agreement, Azerbaijan had an opportunity of straight transport connection with Nakhchyvan through the Iranian territory to supply natural gas there. The parties agreed about delivery of 250 million cubic meters of gas to Nakhchyvan in exchange for gas export from Azerbaijan to the northeast regions of Iran.
However this circumstance did not become a basis for preserving the stable normal relations between two countries. In 2012 the relations between Iran and Azerbaijan began to worsen having from time to time hostile character. Iran negatively reacted to the events occurring in Azerbaijan: the reason for irritation was the statement of the president of Azerbaijan that he is the president of all Azerbaijanians living in the world (in the neighboring country saw implication concerning territorial claims of Azerbaijan to Iran in this quote), and a subject, "painful" for Iran — a head covering girls in educational institutions of Baku. As well as arrest of a number of the representatives in an unregistered Islamic Party in Azerbaijan accused of espionage for benefit of Iran became the reason of negative reaction. At the same time Iran has sent a double note to the Ministry of Foreign Affairs of Azerbaijan allegedly about provision by this country of the territory for use by the Israeli investigation in actions with the purpose of physical destruction of the Iranian nuclear physicists .
These attacks logically shall not serve the interests of, first of all, Iran as it can only promote the tendencies on strengthening of the relations between Azerbaijan and the West and Israel. Besides, it could force Azerbaijan to review of its neutral position in relation to Iran. Especially this circumstance could aggravate a situation when against Iran the international sanctions which already negatively affected economy of this country are imposed.
Iran began to understand that if it is impossible to force Azerbaijan to create priorities of the foreign policy according to interests of this country, it would be useful to have at least opportunity to trace processes and tendencies of their creation. Especially it began to be shown with election of the new president of Iran Hassan Rouhani, after that a recession of negative rhetoric and criticism to Azerbaijan began to be observed. After improvement of the relations, heads of Azerbaijan made a number of visits to Iran. On April 29, 2013 the head of the Security Council and presidential administration Ramiz Mekhtiyev went to Tehran. In a year, on April 9, 2014 the president of the Azerbaijan Republic Ilham Aliyev visited Iran with official visit where held meetings with the president of Iran Hassan Rouhani and the Supreme head of Iran Ali Khamenei. In turn on November 12, 2014 the president Rouhani made return visit to Azerbaijan. Results of visits became an indicator that the relations between two countries began to improve and are based on a pragmatic platform. First of all, Iran is interested in it. Mutual attacks to both states have stopped. Iran began to look for more constructive approach in the relations with Azerbaijan which is based on prevention of the scenarios which are not desirable for themselves and strengthening of bilateral ties. In this regard the country tries to develop not only the political, but also economic relations with Azerbaijan. Meetings of the bilateral commissions on questions of development of the economic relations found ordinary nature. In general it should be noted that the important factor influencing the relations between two states is readiness of the Iranian management for a constructive approach or confrontations. At the moment the relations between Azerbaijan and Iran entered the course of constructivism. Economic project started being developed; realization of the “North-South” transport project stands out from them. It concerns Azerbaijan’s cooperation with Russia and Iran – states that also have wide perspectives in freight traffic on Eurasian area. This project was agreed by Russia, Iran and India in 2000. Parties have decided to create a new transport way for goods trafficking between Europe and the Far East. In light of this, Azerbaijan can also become an active participant in goods trafficking upon the project, due to the fact that the state is situated between two links of this corridor: Russia and Iran. Azerbaijan is special interested in participating in railroad transportation.
Railroad between Azerbaijan and Russia is active since Soviet times. Concerning Azerbaijan and Iran railway junction, for this aim Azerbaijani side should build only 8.4 km of roadway to reach the border . In Iran, more large-scale work must be done: Resht-Astara railroad building and a bridge over the Araz river, Astara (Azerbaijan) – Astara (Iran), length – 7 km.
On August 8, 2016 the Presidents of Azerbaijan, Russia and Iran have met to sign an agreement to build a railway from Iran’s territory to the border of Azerbaijan: the aim was to realize Western branch of the “North-South” transport route. Realization of this project will give an impulse to develop other bilateral economic projects between two countries . This will open the floodgates to change the character of relations between two states from strictly geopolitical, adding geo-economic component.
Azerbaijan and Kazakhstan: inevitability of the relations
Azerbaijan and Kazakhstan, the friendly countries, which people have general ethnic roots. This factor strengthens the existing mutual sympathy between the countries. Both countries maintain the relations at the high level and cooperate on the international scene. Confirmation to this statement is the position of the president of Kazakhstan Nursultan Nazarbayev during the summit of the Eurasian Union where the candidacy was considered for membership of Armenia in this organization, expressed a position of Azerbaijan, having emphasized that Armenia can join the Eurasian union only within the borders recognized by the UN. The president Nazarbayev provided to the president of Armenia Serzh Sargsyan participating at a meeting the letter of the president of Azerbaijan Ilham Aliyev where it was emphasized that Armenia already has such experience. In a word, Armenia entered the World Trade Organization, on condition that the agreement will work only within the borders recognized by the UN that is without the occupied and controlled by this country Nagorno-Karabakh and seven regions of Azerbaijan . The principled stand of Kazakhstan took the effect, and Armenia entered into alliance on these conditions. This circumstance was very positively estimated in Azerbaijan.
Two former Soviet republics, neighbors in the Caspian Sea, at an early stage of formation of their independence, established among themselves diplomatic relations on August 27, 1992. Kazakhstan and Azerbaijan initially were interested in development of the relations between two countries, however, despite ample opportunities this potential was not used fully to this day. It should be noted that by the first six months of 2015 the goods turnover between two countries constituted 44 million 600 thousand US dollars, while in 2014 it was only 29 million 500 thousand dollars. The goods turnover in 2015 equaled 116 million 880 thousand dollars. The amount is very insignificant. Kazakhstan exports to Azerbaijan oil (for its further re-export), chemical raw materials, grain, barley, tobacco products, soft drinks, hire of carbonaceous steel, electric equipment. Oil products from bituminous materials, the ethylene polymers completing for machines and mechanisms, combined construction designs, foodstuff, tea are imported to Kazakhstan from Azerbaijan .
In general it should be noted that both countries, as however other Caspian countries, are generally producers of energy resources and their exporters on the world markets. However, development of the energy sector in both states in the period of independence has general features.
Also as well as Azerbaijan, Kazakhstan from first years of independence began to hold negotiations on involvement of the Western energy companies for joint operation of oil and gas fields. The reason for participation of the foreign companies was that for development of offshore and onshore fields, located in difficult geological structures, modern technologies, big capital investments and the corresponding experience were necessary. Azerbaijan, Kazakhstan for that period did not possess any of these components. By the way, for the same reasons many fields of both republics weren't developed and at the time of the Soviet Union. However, for obvious reasons, at that time the western companies were not attracted. Only after its disintegration there were conditions for change of a situation.
Thus, in 1992, together with consortium of the western companies, Kazakhstan began development of the Tengiz oil field, largest in the country. The construction of "Caspian Pipeline Consortium", the oil pipeline by means of which oil from Tengiz was transported to the Russian Black Sea port of Novorossiysk, and from there the Kazakh oil in tankers is delivered to the world markets. Similar to what happened in Kazakhstan, in September, 1994, the consortium which included the western energy companies for the purpose of development the Azeri-Chyrag- Gyuneshli field, was created in Azerbaijan. Also the construction plan of the main transport route was developed for the Azerbaijani oil: pipeline of Baku-Tbilisi-Ceyhan.
In spite of the fact that economies of Azerbaijan and Kazakhstan are created generally due to the realization and the income from energy resources, and consequently, these countries are competitors, both countries have a wide range of opportunities for a widening of the economic relations. In particular, the geographical arrangement of Azerbaijan, gives it the chance to export the oil on the European markets, alternative to Russia routes. In particular, quite long time Kazakhstan exports the oil extracted from the Tengiz field by tankers to Azerbaijan and further a railway track up to the Black Sea ports of Georgia. Besides, the parties agreed about export of the Kazakh oil on the pipeline of Baku-Tbilisi-Ceyhan. So, on January 24, 2007 Azerbaijan and Kazakhstan signed the memorandum of understanding on the project of creation of the Caspian oil transportation system which will allow to export oil from fields Kashagan and Tengiz through the Caspian Sea to Europe along Eskene's route— Kuryk — Baku — Tbilisi — Ceyhan . The project was quite ambitious. In a word, the parties at the initial stage planned annual transportation of 25 million tons of the Kazakh oil, and subsequent increase of deliveries to 38 million tons of oil. Not only Kazakhstan which will be able to diversify export transport route in the western direction is interested in this project, but also Azerbaijan. The matter is that roduction of oil on fields of Azeri-Chyrag-Gyuneshli began to be reduced, and additional amounts of oil are necessary for filling of the pipeline, such as the oil arriving from Kazakhstan and Turkmenistan. At the same time Azerbaijan, due to transfer of oil from these countries, turns into the transit state.
So far, amounts of the exported oil are small, however the main flow is expected after introduction in a system of the Kashagan field, from where oil through the pipeline will be repumped to the port of Kuryk, and from there by tankers to Baku. The cooperation in oil transportation does not limit possibilities of partnership between two countries. Azerbaijan and Kazakhstan expect possible transportation of natural gas on the European markets as well. However, due to an absence of necessary infrastructure, in this case, the prospect of soon implementation of this initiative is very illusive.
Other important sphere for cooperation is the agricultural industry. Being an important world exporter of grain, Kazakhstan is interested in creation of new export routes for an entry into the world markets. It is not accidental that one of such routes is Azerbaijan and Georgia. Kazakhstan purchased the Georgian port in Batumi through which this country plans to export the grain to Europe. Besides, a few years ago in Baku the joint grain terminal was constructed on which the grain imported from Kazakhstan is stored. This terminal is a peculiar link on an export route.
The agricultural production made in Azerbaijan has an important value for the Kazakh market. The tendency of development of communications is possible in this direction. Kazakhstan is really interested in deliveries of fresh vegetables and fruit and also industrially processed production of agricultural industry made in Azerbaijan. However because of the high prices, the Azerbaijani products cannot compete in the Kazakhstan markets with the agricultural production delivered from China, Turkmenistan or Uzbekistan. In turn Azerbaijan looks for the ways of solving this problem and reaching competitiveness of the production in Kazakhstan. For example, in 2014, the construction of the production and logistic center of the Azerbaijani company "Azersun" began in Aktau port, Mangyshlaksky area of Kazakhstan, coastal to the Caspian Sea . This center will promote development of trade between the countries in non-oil sector and an increase in transit and export opportunities.
Completion of Baku-Tbilisi-Kars rail road construction of may serve as one more opportunity for development of the relations between the countries. This road will allow Europe to be connected to the Far East. In this case, Kazakhstan will receive a railway exit to Europe, alternative to the Russian route. Kazakhstan already declared interest and readiness to use a new route. Even today, countries use Trans-Caspian transport route, connecting two seaports: Alyat (Azerbaijan) with Aktau (Kazakhstan) . In 2016, transportation throw this route has extremely increased, by reason of concern of regional states, such as China, Turkey, Ukraine. Transportation amount has increased by 10 times, and there is a trend to further growth .
Start of Kazakhstani container train “Nomad-Express” on August 3, 2015 has become an important event. This train made its way from Chinese city Shikhrezi throw Dostyk city to Kazakhstani port Aktau and further to Aly- at. From Alyat the train reached the railhead – Keshlya station near Baku. Container transportation took 5 days . 82 containers were delivered. Through using this corridor, faster delivery of this cargo type was provided. In common, transportation from China to Europe takes from 25 to 40 days . In this case there is an opportunity to increase traffic flow along this route. Furthermore, here the interests of Azerbaijan are in phase with interests of partner states – China and Kazakhstan. The point is that China currently supports the creation of transport infrastructure on Eurasian landscape in the framework of “One belt – One Road” initiative. Kazakhstan also develops transport infrastructure on its territory in the framework of new economic policy “Nurly Zhol”. In its turn, in 2013 Azerbaijan worked out a new development concept “Azerbaijan 2020: vision into the future” 34 ; according this program development of transport infrastructure, transit of goods and passengers across the state should become an alternative to oil sector of economy. It is expected that in case of the corridor effective using the transportable containers number may reach 300400 thousand to 2020. This will allow Azerbaijan to gain millions manats .
In general it should be noted that Kazakhstan and Azerbaijan, as two promptly developing economies, are also locomotives in their regions: South Caucasus and Central Asia. In this case, with the increase in potential and growth of economies, development of the relations between two countries is inevitable. However, the expected tendency needs forming of a strategy and implementation of specific steps. Certain actions in this direction are already realized. In this case the Caspian Sea will play a connecting, but not disconnecting role between two countries.
Relations with Turkmenistan: an inert state
Turkmenistan is one more republic of the former Soviet Union which declared the independence after its disintegration. The republic is located on East coast of the Caspian Sea and adjacent to Kazakhstan and Iran. Azerbaijan and Turkmenistan established diplomatic relations on June 9, 1992. Turkmenistan opened the diplomatic representation in Baku on June 8, 1999. In turn Azerbaijan sent the ambassador to Ashgabat on October 18, 2002 .
In the first years of independence Azerbaijan continued to purchase natural gas from Turkmenistan through the territories of Kazakhstan and Russia. For that period Azerbaijan did not get enough natural gas for internal consumption and therefore imported it from Turkmenistan, as however, did it since the period of the Soviet Union existence. One more communication, remained in inheritance from former "metropole" is ferry crossing between Baku and the Turkmen city of the Turkmenbashi (the former Krasnovodsk) which was entered into exploitation in 1963. The rail cars are transported by means of ferry boats which on arrival in port pass to a track and continue the way. Until recently only ferry boats under the Azerbaijani flag made transportations between the Azerbaijani and Turkmen coast . Since 2015, the Turkmen ferry boat "Berkarar" for the first time has begun to ply . Innovations were not limited by this: in 2014 in 70 km from Baku in the settlement of Alyat the new ferry mooring was opened, a Baku one was started to sort out. In turn, later, the same year, in Turkmenbashi city the new passenger terminal was opened . In general, both countries give great value to development of a cargo transportation and transportation of passengers between two countries, as well as from neighboring countries. Development of transport infrastructure will promote it, both in Azerbaijan, and in Turkmenistan.
It should be noted that the relations between two countries not always were smooth. So, the first disagreements began with determination of an amount of Azerbaijan’s debt on supply of the natural gas imported from Turkmenistan. Both parties insisted on their versions: while Turkmenistan considered that Azerbaijan has formed the debt, Azerbaijan claimed that all bills were paid. As a result, Turkmenistan ceased to deliver gas to Azerbaijan, and he had to import it from Russia.
But the question of determination of affiliation of an oil sea field on sea border of both countries under the name "Kyapaz" (the Azerbaijani name) or "Sardar" (the Turkmen name) with presumable inventories of oil numbering 80 million tons and also 32 billion cubic meters of gas became a basic reason of the actual gap of the relations. In 1997, Azerbaijan signed the contract with the Russian companies "Lukoil" and "Rosneft" on creation of consortium on development of this field. However, after intervention of Turkmenistan this consortium did not begin the activities. Turkmenistan considered that this field is in its national sector of the Caspian Sea. It is curious that declaring affiliation of this field, Turkmenistan indirectly recognized sectoral division of the Caspian Sea, though opposed it until this moment.
Turkmenistan, rather as reaction to Azerbaijan’s actions than real intention, has signed the contract with the Mobil Company on operation of a disputable field. Azerbaijan has already expressed a protest in its turn. As a result both consortia could not get to work on the reason of disagreements about affiliation of this field.
At the same time, Turkmenistan suspended the carried-out research works on determination of possible passing of the Trans-Caspian pipeline sponsored by the USA. Besides, on June 4, 2001, official Ashgabat withdrew the ambassador from Baku . Shortage of financial resources for maintenance of the embassy’s activities in Baku became the official version of this step. Therefore, the embassy continued its activities in Ashgabat. Besides, Turkmenistan introduced a visa regime in relation to Azerbaijan. Many experts predicted the armed confrontation between two countries; however, its probability was very small. In spite of the fact that disagreements on the matter still exist, field affiliation is still not determined to this day and the countries began rearmament of the naval forces, the probability of any collision between two countries is very low and even is excluded.
Only after death of the first president of Turkmenistan Saparmurad Turkmenbasha and election of the new president Gurbanguly Berdimu- hamedov, the relations between the countries began to improve again. The parties resolved a question of debt repayment on natural gas, Turkmenistan reopened embassy and appointed the ambassador in Baku on April 8, 2008 . The same year presidents of both states Gurbanguly Berdimuhamedov on May 19, and Ilham Aliyev on November 28 made official visits to the capitals of the states of each other .
At the moment, a coordination of transport ways through the Caspian Sea may become an important impulse for development of the relations between two countries. Two countries can turn into the transport bridge for transportation of goods and passengers between the European Union, the countries of the Black Sea region, Central Asia and the Far East. Both countries pay close attention to construction of the highways and railroads exiting to ports of the Caspian Sea. Besides, investments of China into transport infrastructure of this country are very considerable in Turkmenistan, which are carried out within the strategy of the developments of the Silk way. Due to this in the near future the trade turnover between the countries will increase.
One more important factor uniting two countries is the desire of the European Union to import natural gas from Turkmenistan as alternative for its source markets. Earlier, countries and companies from Europe wished to realize the construction project of the Nabukko gas pipeline. However, in a view of defects of geopolitical and geo economic nature, it was not realized. Now, the desire and expectation of the European Union are connected with transportation of the Turkmen gas through infrastructure which Azerbaijan creates for export of the gas to Europe. Namely, Azerbaijan initiated expansion of the South Caucasian pipeline passing on the territories of Azerbaijan and Georgia, construction of Trans Anatoliysky pipeline in Turkey and also supported construction the Trance Adriatic pipeline which will pass on the territories of Greece, Albania and Italy.
For this purpose the European Union tries to authorize construction of the Transcaspian pipeline. However, again makes the same mistakes that were made concerning the Nabukko project: The EU ignores geopolitical challenges again. So, Azerbaijan and Turkmenistan do not wish to face negative reaction of Russia and Iran, which categorically stand against construction of this pipeline. Both countries require safety guarantees which the EU cannot provide. Besides, if the European Union wishes to receive the Turkmen gas, coordination concerning expansion and construction of pipelines shall be carried out which are now calculated only for transportation of a certain amount of the Azerbaijani gas. For the Turkmen gas there can simply be no place. In this case, despite negotiations, expectations about transportations of natural gas should wait for a while.
In turn, supply of the Turkmen oil via the pipeline Baku-Tbilisi-Ceyhan increases every year and this sphere of cooperation is very perspective, and amounts of the transported oil will grow.
Azerbaijan’s relations with neighbors in the Caspian Sea can be divided into phases. If at the initial stage, after gaining of independence in the former Soviet republics, the relations had geopolitical character, over time they started heeling towards a geo economic format. No doubt, it is impossible to refer this development in different degree to all neighbors of Azerbaijan, however Azerbaijan applies maximum efforts to prevail economy over policy in the relations with neighbors.
In the relations with Russia and Iran the component of geopolitics prevails. Thus, this is a perception of these states by Azerbaijan and South Caucasus. However, even at this example there is some progress and it began rather recently. During the visit of the president Putin to Baku in the summer of 2013, with signing an agreement between "Rosneft" and "SOCAR", this country had economic interests in Azerbaijan in addition to geopolitical ones for the first time. And after the West sanctions against Russia there appeared a possibility of increase in cooperation in the agricultural sphere.
The same can be told about Iran: with coming to power of the president Rouhani, the economic component in the relations between two countries began to be concretized. Besides, there is a draft of the regional transport North-South project which can become an impulse for development of the relations in a tripartite format, between Azerbaijan, Russia and Iran.
Completion of rail road construction to the Azerbaijani border in Iran, will allow a new tendency of deepening of geo economic perception to be declared.
Concerning the relations with Kazakhstan and Turkmenistan, there is a tendency of expansion of the relations in the process of development of transport and logistics projects. In the next five years we can observe strengthening of this tendency and the countries will only promote it.
Azerbaijan is completely satisfied with transition of the relations to the geo economic plane which serves to its national interests. First of all, it is connected with the fact that it reduces risks and challenges of political nature. Besides, in the process of development of Azerbaijan’s economic capacity, such format of the relations will allow this country to increase a goods turnover to its neighbors.
Azerbaijan being in the process of development of regional infrastructure will facilitate the development of mutually beneficial economic cooperation between the two countries.
And if it currently has a bilateral tendency, over time, it can take the form of tripartite or more contacts. The example of such format is already available - a successful cooperation between Azerbaijan, Georgia and Turkey which developed in process of construction of transport infrastructure. The countries of the Caspian region are in order.