Azerbaijan: Recent Developments and
U.S. Interests
Jim Nichol
Specialist in Russian and Eurasian Affairs
June 29, 2012
Congressional Research Service
7-5700
www.crs.gov
97-522
CRS Report for Congress
Pr
epared for Members and Committees of Congress

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Azerbaijan: Recent Developments and U.S. Interests

Summary
Azerbaijan is an important power in the South Caucasus by reason of its geographic location and
ample energy resources, but it faces challenges to its stability, including the unresolved separatist
conflict involving Nagorno Karabakh (NK). Azerbaijan enjoyed a brief period of independence in
1918-1920, after the collapse of the Tsarist Russian Empire. However, it was re-conquered by
Red Army forces and thereafter incorporated into the Soviet Union. It re-gained independence
when the Soviet Union collapsed at the end of 1991. Upon independence, Azerbaijan continued to
be ruled for a while by its Soviet-era leader, but in May 1992 he was overthrown and Popular
Front head Abulfaz Elchibey was soon elected president. Military setbacks in suppressing
separatism in the breakaway Nagorno Karabakh (NK) region contributed to Elchibey’s rise to
power, and in turn to his downfall. In June 1993, forces in Ganja challenged Elchibey’s power,
spurring Elchibey to invite Heydar Aliyev—the leader of Azerbaijan’s Nakhichevan region and a
former communist party head of Azerbaijan—to Baku to mediate the crisis. The Ganja forces
marched on Baku, causing Elchibey to flee the city. Heydar Aliyev was elected chairman of the
National Assembly of Azerbaijan, and was granted temporary presidential powers. A national
referendum held in August 1993 formally stripped Elchibey of the presidency, and Heydar Aliyev
was elected president of Azerbaijan in October 1993. In July 1994, a ceasefire agreement was
signed in the NK conflict. Heydar Aliyev served until October 2003, when under worsening
health he stepped down. His son Ilkham Aliyev was elected president a few days later.
According to the Obama Administration, U.S. assistance for Azerbaijan aims to develop
democratic institutions and civil society, support the growth of the non-oil sectors of the
economy, strengthen the interoperability of the armed forces with NATO, increase maritime
border security, and bolster the country’s ability to combat terrorism, corruption, narcotics
trafficking, and other transnational crime. Cumulative U.S. assistance budgeted for Azerbaijan
from FY1992 through FY2010 was $976 million (all agencies and programs). Almost one-half of
the aid was humanitarian, and another one-fifth supported democratic reforms. Budgeted aid to
Azerbaijan was $26.4 million in FY2011 and an estimated $20.9 million in FY2012, and the
Administration requested $16.3 million for FY2013 (the numbers for FY2011, FY2012, and
FY2013 include “Function 150” foreign aid, and exclude Defense and Energy Department funds).
After the terrorist attacks on the United States on September 11, 2001, Azerbaijan granted over-
flight rights and approved numerous landings and refueling operations at Baku’s civilian airport
in support of U.S. and coalition military operations in Afghanistan. More recently, the country is a
major land, air, and sea conduit of the Northern Distribution Network for supplies in support of
U.S. and International Security Assistance Force (ISAF) operations in Afghanistan. Azerbaijan
has contributed troops for the ISAF since 2003. The country increased its contingent from 45 to
90 personnel in 2009, including medical and civil affairs specialists. From 2003 to 2008, about
150 Azerbaijani troops participated in the coalition stabilization force for Iraq.
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Azerbaijan: Recent Developments and U.S. Interests

Contents
Political Background ....................................................................................................................... 1
The November 2010 Milli Majlis Election................................................................................ 3
Human Rights............................................................................................................................ 8
Economic Conditions....................................................................................................................... 9
Energy...................................................................................................................................... 10
Building the Baku-Tbilisi-Ceyhan and South Caucasus Pipelines.................................... 11
Other Export Pipeline Proposals ....................................................................................... 12
Regional Energy Cooperation with Iran............................................................................ 14
Foreign Policy and Defense........................................................................................................... 15
The NK Conflict ...................................................................................................................... 18
U.S. Relations ................................................................................................................................ 21
Contributions to Counter-Terrorism .............................................................................................. 23

Figures
Figure 1. Map of Azerbaijan and Region....................................................................................... 24

Contacts
Author Contact Information........................................................................................................... 24

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Political Background
Azerbaijan enjoyed a brief period of independence in 1918-1920, after the collapse of the Tsarist
Russian Empire. However, it was re-
conquered by Red Army forces and thereafter
Area and Population: Land area is 33,774 sq. mi.;
incorporated into the Soviet Union. It re-
about the size of Maine. The population is 9.5 million
gained independence when the Soviet Union
(The World Factbook; mid-2012 est.). Administrative
collapsed at the end of 1991. Upon
subdivisions include the Nakhichevan Autonomous
Republic (NAR) and the Nagorno (“Mountainous”)
independence, Azerbaijan continued to be
Karabakh Autonomous Region (NK). NK’s autonomy
ruled for a while by its Soviet-era leader, but
was dissolved in 1991.
in May 1992 he was overthrown and Popular
Ethnicity: 91% are Azerbaijani; 2% Lezgins; 1.3%
Front head Abulfaz Elchibey was soon elected
Russian; 1.3% Armenian (estimate for NK), 1.3% Talysh,
president. Military setbacks in suppressing
and others (State Statistic Committee, 2009 census). An
separatism in the breakaway Nagorno
estimated 12 million or more ethnic Azerbaijanis reside
Karabakh (NK) region contributed to
in Iran.
Elchibey’s rise to power, and in turn
Gross Domestic Product: $93.0 billion; per capita
contributed to his downfall. In June 1993,
GDP is about $10,200 (World Factbook; 2011 est.,
forces in Ganja challenged Elchibey’s power,
purchasing power parity).
spurring Elchibey to invite Heydar Aliyev—
Leaders: President: Ilkham Aliyev; Prime Minister: Artur
the leader of Azerbaijan’s Nakhichevan region
Rasizade; Foreign Minister: Elmar Mammadyarov; Defense
Minister: Elmar Mammadyarov; Chairman of the Milli Mejlis
and a former communist party head of
(legislature): Oqtay Asadov.
Azerbaijan—to Baku to mediate the crisis.
The Ganja forces marched on Baku, causing
Biography: Ilkham Aliyev, born in 1961, graduated with
a kandidata (advanced) degree from the Moscow State
Elchibey to flee the city. Heydar Aliyev was
Institute of International Relations in 1985 and then
elected chairman of the National Assembly of
taught history. In 1991-1994, he was in business in
Azerbaijan, and was granted temporary
Moscow and Baku, then became head of the State Oil
presidential powers. A national referendum
Company (SOCAR). He was elected to the legislature in
held in August 1993 formally stripped
1995 and 2000. In 1999, he became deputy, then first
deputy chairman, of the ruling New Azerbaijan Party. In
Elchibey of the presidency, and Heydar Aliyev
August 2003, he was appointed prime minister, and was
was elected president of Azerbaijan in October
elected president in October 2003. He was re-elected in
1993. In July 1994, a ceasefire agreement was
2008.
signed in the NK conflict (see below). Heydar
Aliyev served until October 2003, when under worsening health he stepped down. His son Ilkham
Aliyev was elected president a few days later.
The Azerbaijani constitution, approved by a popular referendum in November 1995, strengthened
presidential power and established an 125-member legislature (Milli Mejlis) with a five-year term
for deputies. The president appoints and removes cabinet ministers (the Milli Mejlis consents to
his choice of prime minister), submits budgetary and other legislation that cannot be amended but
only approved or rejected within 56 days, and appoints local officials. The U.S. State Department
viewed an August 2002 constitutional referendum as flawed and as doing “very little to advance
democratization.”
After the October 2003 presidential election, protests alleging a rigged vote resulted in violence,
and spurred reported government detentions of more than 700 opposition party “instigators.”
Trials reportedly resulted in several dozen prison sentences. In early 2005, the OSCE issued a
report that raised concerns about credible allegations of use in the trials of evidence derived
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through torture. Aliyev in March 2005 pardoned 114 prisoners, including many termed political
prisoners by the OSCE.
A presidential election was held on October 15, 2008. In early June 2008, the legislature approved
changes to the electoral code. Some of the changes had been recommended by the Venice
Commission, an advisory body of the Council of Europe. However, other recommendations of the
Venice Commission were not considered, including those on eliminating the dominance of
government representatives on election commissions.1 The opposition Azadliq (Freedom) party
bloc decided on July 20 that it would boycott the election on the grounds that the election laws
were not fair, their parties faced harassment, and media were constrained.2 Incumbent President
Aliyev won a resounding victory, gaining nearly 89% of the vote against six other candidates.
According to a report by election monitors sponsored by the OSCE, the voting process was
peaceful, well organized, and efficient, but there was a “lack of robust competition” and there
appeared to be “significant procedural shortcomings [in vote counting] in many cases, and
manipulation in some instances.”3 The next presidential election is scheduled for October 2013.
Proposed amendments to the constitution were overwhelmingly approved by citizens in a
referendum held on March 18, 2009. According to a small delegation from PACE, the voting
“was transparent, well organized, and held in a peaceful atmosphere.” They criticized the dearth
of discussion in the media of the merits of the constitutional amendments and voiced regret that
some changes to the amendments proposed by the Venice Commission were not made before they
were voted on. Some opposition parties had in particular objected to an amendment lifting term
limits on the presidency during a “state of war,” and had called for a boycott of the referendum.4
On December 23, 2009, municipal elections were held throughout the country. Opposition parties
and local election monitors reported interference in the candidate registration process. A Council
of Europe delegation alleged that there were shortcomings in the counting of voters in the polling
stations, the legibility of ballot papers, and the reliability of the vote count.
During a July 2010 visit to Azerbaijan, Secretary Clinton stated that the country had made
“tremendous progress” in democratization since it gained independence and reported that the
United States was providing democratization assistance to facilitate a free and fair legislative
election in November 2010.5 The U.S. Department of State issued a statement on November 8,
2010, just after the election, that while peaceful, the election “did not meet international
standards.” The State Department remarked that the inclusion of record numbers of domestic
observers and an increase in the number of female candidates were improvements over past
elections, but reported that observers from the U.S. embassy witnessed “serious violations of
election procedures, including ballot box stuffing.” The State Department urged that the
Azerbaijani government “focus now on adjudicating election grievances fairly, transparently, and

1 European Commission for Democracy Through Law (Venice Commission). Joint Interim Opinion on the Draft
Amendments to the Electoral Code of the Republic of Azerbaijan. 74th Plenary Session, March 14-15, 2008, Opinion
no. 390/2006, CDL-AD(2008)003, March 18, 2008.
2 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), April 24, 2008, Doc. No. CEP-950216.
3 OSCE/PACE/EP. Republic of Azerbaijan Presidential Election, 15 October 2008: Statement of Preliminary Findings
and Conclusions, October 16, 2008.
4 CEDR, January 23, 2009, Doc. No. CEP-950024 and Doc. No. CEP-950276; February 23, 2009, Doc. No. CEP-
950103; March 19, 2009, Doc. No. CEP-950277.
5 U.S. Department of State, Hillary Rodham Clinton, Secretary of State, Joint Press Availability With Azerbaijani
Foreign Minister Mammadyarov, July 4, 2010.
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Azerbaijan: Recent Developments and U.S. Interests

expeditiously [in order to ensure] accountability for officials who are suspected of interfering
with the proper conduct of elections.”6 The next day, the Azerbaijani Foreign Ministry criticized
the State Department’s assessment, viewing it as less favorable than that issued by the OSCE. The
Foreign Ministry claimed that the OSCE monitoring report, while noting some shortcomings,
“show[ed that] the elections have gained the people’s confidence.”7
The November 2010 Milli Majlis Election
In June 2010, the Azerbaijani Milli Majlis (National Assembly) approved a bill calling for it to
coordinate its yearly agenda with the presidential administration. Oppositionists criticized the law
as further demonstrating that the legislature was controlled by the executive branch of
government.
A constituency-based election for Azerbaijan’s 125-member Milli Majlis was held on November
7, 2010. Candidates wishing to run were required to gather 450 signatures. About 1,400
individuals were nominated by parties or by voter initiatives or self-nominations, but only about
1,100 reportedly submitted the required signature sheets and other information. Electoral officials
accepted all of the prospective candidates of the ruling New Azerbaijan Party (NAP) but rejected
many from other parties and blocs, so that eventually 690 candidates were approved (or won
appeals). These rejections seriously impacted the ability of the opposition to field candidates in
more than a few constituencies. While the NAP was able to field candidates in 111 constituencies,
the opposition PFP-Musavat bloc, for instance, could only field candidates in 38 constituencies.
In addition to candidates nominated by parties, 387 were self-nominated “independent”
candidates or were nominated by voter initiative groups, although many of these candidates in
fact were members of parties. Historically, most independents who have won election have
supported the NAP in the legislature.8
In the run-up to the election, three major developments appeared to assure that the ruling NAP
would retain or increase its dominance in the legislature: (1) media, assembly, and campaign laws
and practices greatly restricted the ability of opposition parties to publicize their concerns and
counter claims of the ruling party; (2) the numerous opposition parties failed to unite and instead
ran as party blocs and as individual parties; and (3) rising incomes for most of the population may
have predisposed a large measure of support for the ruling party, despite some stresses caused by
the global economic downturn. According to the OSCE, restrictions on an open campaign
environment and a free and fair vote included reducing the number of campaign days to about
three weeks; eliminating an electoral provision permitting individuals to run by submitting a
financial deposit; doing away with public financing of elections; denying the holding of campaign
rallies except in far-flung, officially approved locations; filing of defamation lawsuits and
carrying out other harassing measures against journalists; providing dominant representation to
the ruling NAP on electoral commissions and expert electoral appeal panels; and allowing opaque
military voting. As a result of these restrictions, there were no public debates between candidates

6 U.S. Department of State, Press Statement: Parliamentary Elections in Azerbaijan, November 8, 2010.
7 Azerbaijan Press Agency, November 10, 2010.
8 One local non-governmental organization (NGO) reported that there were myriad efforts by local officials and others
to pressure citizens not to endorse the candidacy of oppositionists and to force prospective opposition candidates to
drop out of the race. Parliamentary Elections in the Republic Of Azerbaijan: Report on the Stage of Candidate
Nomination and Registration, Democracy Learning Public Union, October 22, 2010.
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and virtually no television coverage of opposition candidates except for four minutes of time
permitted for candidates to set forth their platforms.
According to the Central Electoral Commission, about 50% of 4.9 million registered voters
turned out, and most voted for members of the NAP. The NAP increased its number of seats in the
Majlis from 61 in 2005 to 74 in 2010.9 The number of nominal independents also increased from
37 in 2005 to 39 in 2010. Nine minor parties won 12 seats, down from 20 in 2005. One
opposition party candidate—İgbal Agazade of the Umid (Hope) Party—won a seat in the new
Majlis. The Popular Front-Musavat bloc, which had won six seats in 2005 (as individual parties),
won no seats in 2010. According to one report, about two-thirds of the deputies of the outgoing
Majlis were reelected. Many of the reelected and new members are officials or are related to
current officials, according to this report.10
OSCE election monitors reported that the election was peaceful but “was not sufficient to
constitute meaningful progress in the democratic development of the country.” They stated that
“fundamental freedoms of peaceful assembly and expression were limited and a vibrant political
discourse facilitated by free and independent media was almost impossible. A deficient candidate
registration process, a restrictive political environment, unbalanced and biased media coverage,
disparity in access to resources to mount an effective campaign, misuse of administrative
resources as well as interference by local authorities in favor of candidates from the ruling party
created an uneven playing field for candidates.” The OSCE monitors assessed voting procedures
negatively in 11% of 1,247 polling stations visited, and the vote count was assessed negatively in
over 30% of 152 polling stations visited. In one case, the monitors received a filled-out precinct
results sheet before the election that closely matched what the precinct reported after the race.
The court of appeals and the Supreme Court rejected all complaints by opposition candidates
about the election.11 The Election Monitoring and Democracy Studies Center, a local non-
governmental organization (NGO), alleged that their monitors witnessed ballot-box stuffing in
over one-fourth of polling places it covered.12
Addressing the newly elected NAP deputies just before the convocation of the Milli Majlis on
November 29, 2010, President and NAP head Aliyev hailed the election as “held in a fully
transparent and democratic manner.”13 He reappointed all of the members who held top posts in
the previous legislature, including Oqtay Asadov, who was reappointed speaker.
The U.S. Department of State issued a statement after the election that while peaceful, the
election “did not meet international standards.” The State Department remarked that the inclusion
of record numbers of domestic observers and an increase in the number of female candidates

9 The NAP won 56 seats on November 6, 2005, and 5 more seats in repeat elections held on May 13, 2006.
10 CEDR, November 8, 2010, Doc. No. CEP-950216.
11 OSCE, Office for Democratic Institutions and Human Rights, International Election Observation, Republic of
Azerbaijan, Parliamentary Elections, 7 November 2010, Statement of Preliminary Findings and Conclusions,
November 8, 2010; Republic Of Azerbaijan Parliamentary Elections, 7 November 2010, Final Report, January 25,
2011.
12 Preliminary Statement on the Results of the Monitoring of the 7 November 2010 Elections to the Milli Majlis
(Parliament) of the Republic of Azerbaijan, Election Monitoring and Democracy Studies Center, November 8, 2010.
See also the report of the Democracy Learning Public Union, a local NGO, Parliamentary Elections in the Republic Of
Azerbaijan: Report on the Stage of Candidate Nomination and Registration, October 22, 2010.
13 President of Azerbaijan, Ilkham Aliyev Met With MPs of the Ruling Party Elected to the Milli Majlis, November 29,
2010.
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were improvements over past elections, but reported that observers from the U.S. embassy
witnessed “serious violations of election procedures, including ballot box stuffing.” The State
Department urged that the Azerbaijani government “focus now on adjudicating election
grievances fairly, transparently, and expeditiously [in order to ensure] accountability for officials
who are suspected of interfering with the proper conduct of elections.”14 The next day, the
Azerbaijani Foreign Ministry criticized the State Department’s assessment, viewing it as less
favorable than that issued by the OSCE. The Foreign Ministry claimed that the OSCE monitoring
report, while noting some shortcomings, “show[ed that] the elections have gained the people’s
confidence.”15
The Civic Movement for Democracy/Public Chamber was established in early 2011 by the
Popular Front, Musavat, and other opposition parties that failed to win seats in the Majlis
election. The aim of the Public Chamber was proclaimed by Musavat head Isa Gambar to be the
establishment of representational government that was denied by the fraudulent Majlis election.16
The 2011-2012 Protests
Accusing foreign-based NGOs of fomenting dissent, on March 7, 2011, the Justice Ministry sent
the U.S.-based National Democratic Institute (NDI) a letter referencing permissible actions of
NGOs in the country, and police reportedly closed down NDI’s Baku office in mid-March 2011.
The Cabinet of Ministers subsequently issued a new regulation requiring foreign NGOs applying
for registration in Azerbaijan to swear to uphold “national spiritual values and not [to] carry out
political or religious propaganda.” They also are forbidden to carry out activities in NK.17 NDI
reportedly was permitted to resume some activities in Azerbaijan in late 2011.
An Internet-launched “great people’s day” protest was planned for March 11, 2011, reportedly
supported by thousands of Internet users. Organizers of the protest stated that the date was set to
commemorate the date a month previously that Egyptian President Hosni Mubarek had been
ousted. In the days leading up to March 11, up to a dozen or more Internet users reportedly were
detained, and some allegedly were held secretly. One organizer, Bakhtiyar Hajiyev, a Harvard-
educated resident of Ganja, was arrested on March 4, 2011, on charges of draft evasion. Several
dozen people were arrested on March 11, and some received prison sentences of a few days. The
next day, the Musavat Party held a protest at Baku’s Fountain Square that reportedly involved
several hundred people, but many were prevented from entering the square and several activists
were detained in advance or arrested the day of the protest.
In the run-up to the Internet-launched protest, authorities reportedly deployed military troops in
Baku and teachers at universities and secondary schools reportedly were ordered to lecture their
students not to attend protests or otherwise become involved in “anti-Azerbaijani” actions. On
March 9, 2011, the Interior Ministry claimed that the protests were fomented by “radical
oppositionists” financed by foreign countries aiming to trigger further “color revolutions” in
Soviet successor states. Various Azerbaijani officials stated that it would be unpatriotic to protest
while Azerbaijan is at war with Armenia and that heavy Internet users were mentally ill. Baku

14 U.S. Department of State, Press Statement: Parliamentary Elections in Azerbaijan, November 8, 2010.
15 Azerbaijan Press Agency, November 10, 2010.
16 “Sidelined Azerbaijani Opposition Plans 'Public Chamber,’” RFE/RL, December 29, 2010.
17 “NDI: National Democratic Institute Has Not Been Asked to Close in Azerbaijan,” APA News Service, March 11,
2011; CEDR, March 24, 2011, Doc. No. CEP950161.
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State University allegedly forbade students from leaving the campus on March 11. Reacting to
Internet intimations that another protest might be held on March 14, the university closed and
deployed police to the campus. This protest did not materialize. On March 18, youth branches of
the Popular Front Party, the Hope Party, the Civic Solidarity Party, Democratic Party, Musavat,
and various youth groups issued a statement calling on the security services to halt arrests of
opposition youth and other activists. The next day, authorities arrested some officials of the Baku
branch of Moscow Open University on grounds of fomenting dissent.
The government detained several opposition activists ahead of a planned April 2, 2011, protest by
the Public Chamber; a coalition of non-partisan politicians, members, and officials of the
opposition Popular Front, Musavat, and National Independence parties; and sympathetic NGOs.
Those attempting to gather on April 2, 2011, to call for the government's resignation, new
legislative elections, and the freedom of speech and assembly were forcibly dispersed and several
people were arrested. The U.S. Embassy in Baku raised concerns about the government actions.18
Commenting on the protests, on April 15, 2011, President Aliyev stated that since the turmoil of
the early 1990s, the “Azerbaijani nation” has not supported the political elements leading the
protests. He averred that “Azerbaijan is so powerful, [its] socio-political stability is so strong ...
[the] Azerbaijani nation said ‘no’ to those who try to hinder our activity, damage successful
development of Azerbaijan and who are sometimes ordered by foreign forces.”19
The Public Chamber announced that it planned another protest in Baku on April 17, 2011.
Authorities denied the group permission for the requested venue. Police control was tightened
before the planned protest and dozens who attempted to protest were detained.
In early May 2011, a protest against the ban on wearing the hijab in public schools by 150 or
more people at the Education Ministry was forcibly suppressed. Reportedly, 65 were detained,
with the government claiming that the protest was led by “radical” Muslims and resulted in
property damage and injuries to 26 policemen. In late May 2011, reportedly 150 women wearing
hijab held a march in Baku. In early October 2011, five men received sentences ranging from
probation to 2.5 years in prison for organizing the early May 2011 protest and using force against
government representatives. The chairman of the banned Islamic Renaissance Party of
Azerbaijan, Movsum Samadov, also denounced the ban on the hijab, and he and six other party
members subsequently were arrested and convicted in October 2011 on charges of planning a
coup.
On June 19, 2011, the Public Chamber attempted to hold an unauthorized protest, but police
quickly thwarted the attempts of protesters to gather at various locations in Baku and detained
about two dozen.
In October 2011, four more participants in the April 2, 2011, demonstration received sentences
ranging from 18 months to 4 years for violating public order and using force against government
representatives, bringing the number of those sentenced for this protest to 14. Those sentenced
have included officials and members of the Popular Front and Musavat parties. Reportedly, the
trials and sentences have elicited protests from family members and others. In December 2011,

18 CEDR, March 29, 2011, Doc. No. CEP-950156; U.S. Embassy in Baku, Azerbaijan, U.S. Embassy Statement on
April 2 Protests.
19 APA News Agency, April 16, 2011.
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outgoing U.S. Ambassador Bryza stated that he did not think the “Arab Spring” would come to
Azerbaijan.
As in the attempted March 2011 protest, social media appeared to play a large role in triggering a
protest in the northern town of Guba on March 1, 2012, against a local official whose filmed
comments denigrating the populace were posted on the Internet. Reportedly, 1,000 or more
citizens rallied and marched to the local government headquarters to demand the official’s
resignation, but later that day some individuals vandalized government facilities and burned the
official’s home. Local police and security forces (augmented by forces rushed from Baku) shut
down the local Internet and harshly attempted to disperse the crowds. The protesters only
completely dispersed when it was announced the next day that the official had been sacked.
Police have announced that about two dozen residents of the city have been arrested, including
several accused of posting the official’s comments on the Internet.
Some observers linked some easing of restrictions on assembly and other measures in recent
months to Azerbaijan’s desire to present itself in a good light during the May 22-26, 2012,
Eurovision Song Contest in Baku. On March 16, 2012, Aliyev pardoned prisoners, including two
regarded by activists as “political prisoners,” including one alleged organizer of the April 2011
attempted protest, who reportedly pledged that after his release, he would join the ruling party.
On April 8, 2012, Baku authorities for the first time permitted the Public Chamber to hold a
protest at an obscure locale in the suburbs under tight security and alleged restrictions on access.
The reported 3,000 protesters called for the release of political prisoners, democratic reforms, and
other demands. Although seven oppositionists were sentenced for up to two weeks in jail for
distributing leaflets, President Aliyev appeared to refer to this rally on April 16 when he stated
that “the Azerbaijani public have seen that there is freedom of assembly in our country.”20
Another rally by the Public Chamber, approved by the government, was held on April 22, 2012,
also in the Baku suburbs. The government claimed that about 1,200 attended the rally, but the
opposition estimated the crowd at between 5,000 and 10,000 individuals. There was a reportedly
large police presence, and police allegedly attempted to restrict the number of demonstrators.
Musavat Party head Isa Gambar reportedly called for President Aliyev to resign and for new
elections to be held.
The Public Chamber held several small demonstrations in the run-up to the late May 2012
Eurovision Song Contest, including a protest at the Baku mayor’s office on May 14 to call for
free elections and the freeing of political prisoners and a hunger strike at the Musavat Party
headquarters beginning on May 15. A Popular Front member who had been imprisoned for the
April 2011 demonstration, Elnur Macidli, was released in mid-May 2012. During the Eurovision
events, opposition protests were efficiently prevented or quickly quashed by the authorities,
according to some Western reports.
Azerbaijani political and religious authorities were adamant in asserting that no diversity/gay
rights demonstration would be permitted on the sidelines of the Eurovision Song Contest,
countering rumors circulated by Iranian authorities and media that such an “un-Islamic”
demonstration would occur.21

20 CEDR, April 17, 2012, Doc. No. CEP-950147.
21 CEDR, May 18, 2012, Doc. No. CEP-950051; May 17, 2012, Doc. No. CEP-950072.
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Democratic activist Bakhtiyar Hajiyev (mentioned above) was released from prison on probation
on June 4, 2012, just before Secretary Clinton visited the country. On June 22, 2012, media
reported that Aliyev had granted amnesty for 66 prisoners, including deputy Musavat head Arif
Hajily and 8 other individuals who had been sentenced for involvement in the April 2011
demonstration.
In April-May 2012, Azerbaijani security forces reportedly carried out operations against several
terrorist cells in towns in the northern part of the country and in Baku, the capital. In Ganja, one
security officer was killed by a suicide bomber, said to be the first such bombing in Azerbaijan.
Authorities alleged that the suicide bomber was Azerbaijani citizen Vugar Padarov, head of an al
Qaeda-linked terrorist group called the “forest brothers,” largely based in the trans-border
Dagestan republic of Russia. Azerbaijani state television reported that in early 2011, the “forest
brothers” group allegedly had decided to carry out jihad in Azerbaijan and assigned Padarov to
head the effort. Targets allegedly included Shiite mosques and shrines; Christian churches; Jewish
synagogues; police, defense, and security offices; and hotels and the main hall to be used for the
Eurovision singing contest. The group also planned to assassinate Azerbaijani President Ilkham
Aliyev. Some of the Azerbaijanis in the group allegedly had been trained at al Qaeda-affiliated
Islamic Movement of Uzbekistan camps in Pakistan and had then fought with Taliban forces in
Afghanistan against coalition forces and in Dagestan. Other training had been received at al
Qaeda camps in Iran and Syria. Over 40 arrests have been reported so far.22
Human Rights
According to the State Department’s Country Reports on Human Rights Practices for 2011, there
were three significant areas of human rights problems during the year. The first involved the lack
of due process, police violence, and politically motivated court cases; the second involved
restrictions on freedom of expression, assembly, and association; and the third involved violations
of property rights. On the first area, arbitrary arrest, often based on spurious charges of resisting
police, remained a problem. There were credible reports that police beat detainees to extract
confessions and assaulted demonstrators and journalists. Human rights advocates reported that
police tortured or abused 136 persons in custody during the year, slightly fewer than in 2010, and
seldom were held accountable. The judiciary remained corrupt and reportedly took orders from
the executive branch in sensitive cases. The bar association allegedly also was under government
influence. Some NGOs claimed that there were several dozen political prisoners. Police continued
to intimidate and harass members of some human rights NGOs and their relatives, and there were
reports that individuals were fired from jobs in retaliation for the political or civic activities of
other family members.
On the second area, the government continued to limit media independence. Broadcast media
adhered almost exclusively to a pro-government line in their news coverage. The government
reportedly constricted the publication and distribution of opposition newspapers, including by
discouraging businesses from advertising in the newspapers. One media-monitoring group
reported that there were 90 physical assaults on journalists, slightly fewer than in 2010, but still
very high compared to other countries. Many reporters and newspapers were sued for libel, which
remained a criminal offense. Authorities continued to require all rallies to be preapproved and

22 Open Source Center, Central Eurasia: Daily Report (hereafter CEDR), April 25, 2012, Doc. No. CEP-950068; June
3, 2012, Doc. No. CEP-950057; Washington Post, May 30, 2012.
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held at designated locations far from city centers, and they usually ignored such requests,
effectively barring the freedom to assemble. Unsanctioned rallies were forcibly broken up and
demonstrators were detained. The OSCE’s Venice Commission complained in late 2011 that the
law on NGOs violated civil rights by setting strict constraints on the views, activities, and
conduct of NGOs as conditions for granting them legal status. The Ministry of Justice routinely
denied registration to NGOs whose names contained the words “human rights” or “democracy.”
The Council of State Support to NGOs provided $2.5 million to 338 NGOs, a few of which were
sometimes critical of the government. The government continued to restrict the religious freedom
of some unregistered Muslim and Christian groups. On the third area, according to one
international survey, private property rights are only weakly protected in Azerbaijan. One NGO
reported that about 20,000 inhabitants of 400 buildings in Baku had lost their residences and had
often received compensation well below market value and had few options for legal recourse.
According to the State Department’s 2012 Trafficking in Persons Report, Azerbaijan continued to
be a source, transit, and destination country for forced labor and sex trafficking, and the
government made less progress this year than last year in investigating, prosecuting, or convicting
labor trafficking offenses or in identifying victims of forced labor. The government did increase
funding and support for victims at its one shelter. Since 2008, the State Department has placed
Azerbaijan on its Tier 2 Watch List for countries that do not fully comply with the minimum
standards for the elimination of trafficking.23
Economic Conditions
The collapse of the Soviet Union and the NK conflict in the early 1990s contributed to the decline
of Azerbaijan’s GDP by over 60% by 1995. Beginning in the late 1990s, rising oil and gas exports
(and rising world prices for oil) fueled GDP growth in Azerbaijan. The global economic downturn
and decline in oil prices contributed to lower, but still positive, GDP growth in 2008 through
2010. The Economist Intelligence Unit (EIU) reports that GDP growth slowed substantially in
2011 to a scant 0.1%, mainly because maintenance work in the oilfields contributed to reduced oil
exports. This reduced economic activity was compensated somewhat by growth in the
construction, agricultural, and service sectors. These non-energy sectors have become essential
supplements to the energy sector as drivers of economic growth. The EIU projects that GDP will
grow 3.2% in 2012.
Less robust GDP growth in Azerbaijan over the next few years owing to a leveling-off of oil
production and a hiatus until new oil and gas fields come on-line will probably lead the
government to continue to draw on the assets of the State Oil Fund—a sovereign wealth fund
containing profits from energy exports—to alleviate budget deficits. Higher energy and food
prices, combined with the continuation of higher government spending, contributed to consumer
inflation reaching 8.1% in 2011. The EIU predicts that inflation will ease to 3.9% in 2012.

In its 2009 Doing Business report, the World Bank commended Azerbaijan as one of the top 10
global economic reformers because of business regulatory reforms it had undertaken over the

23 U.S. Department of State, Country Reports on Human Rights Practices for 2011, May 24, 2012; Trafficking in
Persons Report 2012, June 19, 2012.
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previous two years. However, the pace of such reforms reportedly has slowed. Authorities had
hoped that the reforms would facilitate Azerbaijan’s admission to the World Trade Organization
(WTO). Substantial corruption and monopolies continue to constrain business development.
Up to one-fourth of the population lives and works abroad because of high levels of
unemployment in Azerbaijan. Income inequality is substantial, but the World Bank has reported
that poverty levels have decreased substantially in recent years.24
Energy
The U.S. Energy Department reports estimates of 7 billion barrels of proven oil reserves, and 30
trillion cubic feet of proven natural gas reserves in Azerbaijan.25 In addition, added gas has been
discovered in 2011 at the Umid and Apsheron offshore fields. Critics argue that oil and gas from
Azerbaijan will amount to a tiny percent of world exports of oil and gas, but successive U.S.
Administrations have argued that these exports could nonetheless boost energy security somewhat
for European customers currently relying more on Russia.
In testimony in June 2011, Richard Morningstar, the then-U.S. Special Envoy for Eurasian
Energy, stated that U.S. policy encourages the development of new Eurasian oil and gas resources
to increase the diversity of world energy supplies. In the case of oil, increased supplies may
directly benefit the United States, he stated. A second U.S. goal is to increase European energy
security, so that some countries in Europe that largely rely on a single supplier (presumably
Russia) may in the future have diverse suppliers. A third goal is assisting Caspian regional states
to develop new routes to market, so that they can obtain more competitive prices and become
more prosperous. In order to achieve these goals, the Administration supports the development of
the Southern Corridor of Caspian (and perhaps Iraq) gas export routes transiting Turkey to
Europe. Of the vying pipeline proposals, the Administration will support the project “that brings
the most gas, soonest and most reliably, to those parts of Europe that need it most.” At the same
time, Morningstar rejected views that Russia and the United States are competing for influence
over Caspian energy supplies, stating that the Administration has formed a Working Group on
Energy under the U.S.-Russia Bilateral Presidential Commission.26 According to some observers,
the construction of such pipelines will bolster the strategic importance to the West of stability and
security in the Caspian region.27
U.S. officials have argued that Azerbaijani gas is critical to the development of the Southern
Corridor.28 In March 2007, Azerbaijan and the United States signed a memorandum of

24 The World Bank, World Bank –Azerbaijan Partnership Program Snapshot, April 2012.
25 U.S. Energy Department. Energy Information Administration. Azerbaijan: Country Analysis Brief, January 9, 2012.
The BP Statistical Review of World Energy, June 2011, reports proven gas reserves of 44.9 trillion cubic feet in
Azerbaijan at the end of 2010.
26 U.S. House of Representatives, Committee on Foreign Affairs, Subcommittee on Europe and Eurasia, Hearing on
European and Eurasian Energy: Developing Capabilities for Security and Prosperity, Testimony of Ambassador
Richard L. Morningstar, Special Envoy for Eurasian Energy, June 2, 2011. See also U.S. Department of State, Remarks
at The Economist's Investment Energy Summit, Richard Morningstar, Special Envoy for Eurasian Energy, The
Economist Conference, Athens, Greece, March 28, 2012.
27 Sedat Laciner, “Turkey’s Pipeline Politics,” The Journal of Turkish Weekly Online, International Strategic Research
Organization, September 16, 2009.
28 Speech to Plenary Session of Caspian Oil and Gas Conference, Ambassador Richard L. Morningstar, June 8, 2011;
“Former U.S. Envoy [Matthew Bryza] Says Gas Project ‘Impossible’ without Azerbaijan,” APA News Agency, March
(continued...)
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understanding on energy cooperation that called for discussions on the proposed ITGI and
Nabucco gas pipelines. In August 2007, the U.S. Trade Development Administration granted
Azerbaijan $1.7 million to fund feasibility studies on building both an oil and a gas pipeline
across the Caspian Sea to link Central Asia to the BTC pipeline and the SCP.
Building the Baku-Tbilisi-Ceyhan and South Caucasus Pipelines
During the Clinton Administration, the United States in 1995 encouraged the building of one
small oil pipeline (with a capacity of about 155,000 barrels per day) from Azerbaijan to the
Georgian Black Sea port of Supsa as part of a strategy of ensuring that Russia did not monopolize
east-west export pipelines. As part of this strategy, the United States also stressed building the
Baku-Tbilisi-Ceyhan (BTC) pipeline (with a capacity of about 1 million barrels per day) as part
of a “Eurasian Transport Corridor.” In November 1999, Azerbaijan, Georgia, Turkey, and
Kazakhstan signed the “Istanbul Protocol” on construction of the 1,040-mile long BTC oil
pipeline. In August 2002, the BTC Company (which includes U.S. firms Conoco-Phillips,
Amerada Hess, and Chevron) was formed to construct, own, and operate the oil pipeline. The first
tanker on-loaded Azeri oil at Ceyhan at the end of May 2006. Azerbaijan’s state oil firm SOCAR
reported in April 2012 that the BTC pipeline had transported 1.33 billion barrels of oil to the
Ceyhan terminal since 2006. Reportedly, some Azerbaijani oil reaches U.S. markets.
A gas pipeline from Azerbaijan to Turkey (termed the South Caucasus Pipeline or SCP) was
completed in March 2007. Exports to Georgia, Turkey, and Greece were 53 billion cubic feet of
gas in 2007, the first year of operation, and most recently were reported to be 159 billion cubic
feet in 2011. The ultimate capacity of the SCP is about 706 billion cubic feet per year, according
to British Petroleum. The joint venture for the SCP includes Norway’s Statoil (20.4%); British
Petroleum (20.4%); Azerbaijan’s Ministry of Industry and Energy (20%); and companies from
Russia, Iran, France, and Turkey. Some in Armenia object to lack of access to the BTC and SCP
pipelines.
The August 2008 Russia-Georgia conflict did not result in physical harm to the BTC pipeline or
the SCP. The BTC pipeline was closed due to other causes. The SCP and the small Baku-Supsa
oil pipeline were closed temporarily as a safety precaution. Russian gas shipments via Georgia to
Armenia decreased in volume for a few days at the height of the conflict. Rail shipments of oil by
Azerbaijan to the Kulevi oil terminal (owned by Azerbaijan) on Georgia’s Black Sea coast were
disrupted temporarily.
At the end of October 2008, the first oil from Kazakhstan started to be pumped through the BTC
pipeline, but a transit price increase by Azerbaijan in 2011 led Kazakhstan to restrict its use of the
BTC. Some Kazakh oil is barged to Azerbaijan to be shipped by rail to Georgia’s Black Sea port
of Batumi, where Kazakhstan owns an oil terminal. Kazakhstan and Azerbaijan continue talks on
expanding the barging of oil to the BTC pipeline. Some Turkmen oil began to be transported
through the BTC pipeline in June 2010. Some observers argue that the completion of the BTC
and SCP boosted awareness in the European Union and the United States of the strategic
importance of the South Caucasus.29

(...continued)
28, 2012.
29 Jaba Devdariani and Blanka Hancilova, “EU Broaches Peacekeeping Possibility in Georgia,” Central Asia-Caucasus
(continued...)
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Other Export Pipeline Proposals
In mid-November 2007, Greek Prime Minister Kostas Karamanlis and Turkish Prime Minister
Recep Tayyip Erdogan inaugurated a gas pipeline connecting the two countries. Since some
Azerbaijani gas reaches Greece, the pipeline represents the first gas supplies from the Caspian
region to the EU. If a pipeline extension is completed to Italy, this Interconnector Turkey-Greece-
Italy (ITGI) gas pipeline could permit Azerbaijan to supply gas to two and perhaps more EU
members, providing a source of supply besides Russia.
The Nabucco pipeline has faced numerous delays, some of them attributable to Russia’s counter-
proposals to build pipelines that it asserts would reduce the efficacy of the Nabucco pipeline and
to questions about supplies for the pipeline. In September 2010, the European Investment Bank,
the European Bank for Reconstruction and Development, and the World Bank announced a
commitment—pending environmental and social feasibility studies—to provide $5.2 billion to
build the Nabucco pipeline. EU planning called for construction of the 1.1 tcf-capacity Nabucco
pipeline to begin in 2012 and for shipments to begin in 2017. In 2011, new higher cost estimates
for building the pipeline, and BP’s call for building a “South East Europe Pipeline” (SEEP; see
below), appeared to jeopardize these plans.
At a meeting in early May 2009 in Prague, the EU, Azerbaijan, Georgia, Turkey, and Egypt
signed a declaration on a “Southern [energy] Corridor” to bolster east-west energy transport. The
declaration called for cooperation among supplier, transit, and consumer countries in building the
Nabucco gas pipeline, finishing the Italian section of the ITGI gas pipeline, and other projects.
In 2009, Azerbaijan stepped up its efforts to diversify the routes and customers for its gas exports
beyond the SCP and the planned Nabucco pipeline. President Aliyev attributed some of this
increased interest in added gas export routes—including to Russia and Iran—to the country’s
difficult negotiations with Turkey over gas transit fees and prices (excluding the agreed-upon
arrangements for Nabucco). In October 2009, Azerbaijan’s State Oil Company (SOCAR) and
Russia’s Gazprom gas firm signed agreements that SOCAR would supply 17.7 billion cubic feet
of gas per year to Russia beginning in 2010. The gas would be transported by a 140-mile gas
pipeline from Baku to Russia’s Dagestan Republic that was used until 2007 to supply Azerbaijan
with up to 283 billion cubic feet of gas per year. During a visit by then-President Medvedev to
Azerbaijan in September 2010, the two countries agreed that Azerbaijan would provide up to 35.4
billion cubic feet of gas per year beginning in 2011 (this increase had been under consideration
since the signing of the 2009 accord). President Aliyev stressed that this small supply agreement
would not jeopardize plans to supply gas for Nabucco, since Azerbaijan possessed huge gas
reserves.30 These amounts were boosted to 106 billion cubic feet for 2012.
As another alternative to gas shipments through Turkey, a memorandum of understanding was
signed by Azerbaijan, Romania, and Georgia in April 2010 to transport liquefied natural gas
(LNG) from Azerbaijan to the EU through Georgia and Romania. This Azerbaijan-Georgia-
Romania-Interconnection (AGRI) project envisions the construction of a gas pipeline from
Azerbaijan to the Georgian port of Kalevi, where the gas would be liquefied, shipped across the

(...continued)
Analyst, March 7, 2007; Rovshan Ismayilov, “Azerbaijan, Georgia and Turkey: Building a Transportation
Triumvirate?” Eurasia Insight, February 7, 2007.
30 CEDR, September 6, 2010, Doc. No CEP-950267.
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Black Sea, and regasified at the Romanian port of Constanta. The output is expected to be 247
billion cubic feet per year, with 71 billion cubic feet of the gas used by Romania and the rest by
other EU countries. The presidents of the three countries (and the prime minister of Hungary,
which joined the project) met in Baku on September 15, 2010, to sign the Baku Declaration of
political support for the project.
Some of the tensions between Turkey and Azerbaijan involving energy issues appeared resolved
in June 2010, during President Aliyev’s visit to Turkey, when the two countries signed accords on
the sale and transportation of Azerbaijani natural gas to Turkey and to other countries via Turkey.
A memorandum of understanding permitting Azerbaijan to conclude direct sales with Greece,
Bulgaria, and Syria involving gas transiting Turkey was signed.
In January 2011, President Aliyev and the President of the European Commission, Jose Manuel
Barroso, signed a joint declaration committing Azerbaijan to supplying substantial volumes of gas
over the long term to the European Union. Nonetheless, some analysts raised concerns that there
would not be enough Azerbaijani gas to fill the proposed ITGI and Nabucco pipelines (deliveries
would be 406 billion cubic feet per year for ITGI and 158 billion to 459 billon cubic feet per year
for Nabucco) and to provide for the proposed AGRI project without a trans-Caspian gas pipeline
or participation by Iran or Iraq. Others suggested that Azerbaijan would be able to supply at least
most of the needed gas for both the ITGI and Nabucco pipelines and the AGRI project, including
because of recent results from exploratory drilling off the Caspian seacoast.31
In September 2011, the Council of the European Union approved opening talks with Azerbaijan
and Turkmenistan to facilitate an accord on building a trans-Caspian gas pipeline. Such a link
would provide added gas to ensure adequate supplies for the planned Nabucco and other
pipelines. Hailing the decision, EU Energy Commissioner Günther Oettinger stated that “Europe
is now speaking with one voice. The trans-Caspian pipeline is a major project in the Southern
Corridor to bring new sources of gas to Europe. We have the intention of achieving this as soon as
possible.”32 The Russian Foreign Ministry denounced the plans for the talks, and claimed that the
Caspian Sea littoral states had agreed in a declaration issued in October 2007 that decisions
regarding the Sea would be adopted by consensus among all the littoral states (Russia itself has
violated this provision by agreeing with Kazakhstan and with Azerbaijan on oil and gas field
development). It also claimed that the proposed pipeline was different from existing sub-sea
pipelines in posing an environmental threat. In Baku in April 2012, Lavrov stated that the EU
should show “respect” to the Caspian littoral states, and that it was “unacceptable” for the EU to
advocate for a trans-Caspian pipeline before the littoral states have concluded a convention on the
legal status of the sea.33 The plans for a trans-Caspian pipeline appeared jeopardized in June 2012
when Azerbaijan protested against alleged Turkmen exploratory work in the disputed offshore
Kyapaz/Serdar oil field.
Meeting an October 1, 2011, deadline, the Shah Deniz Export Negotiating Team—led by the State
Oil Company of Azerbaijan (SOCAR) and including BP, Statoil, and Total—received what were
then claimed to be final proposals for pipelines to export gas from the second phase development
of the Shah Deniz offshore oil and gas fields. Proposals were received from consortia backing the

31 Eric Watkins, “New USGS Report Confirms Big Caspian Stakes,” Oil & Gas Journal, January 3, 2011.
32 European Commission, Press Release: EU Starts Negotiations on Caspian Pipeline to Bring Gas to Europe,
September 12, 2011.
33 CEDR, April 4, 2012, Doc. No. CEP-950050.
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ITGI, Nabucco, and Trans Adriatic Pipeline (TAP; from Turkey through Greece, Albania, and the
Adriatic Sea to Italy) projects, as well as from BP, which reportedly proposed building an 808-
mile “South East Europe Pipeline” (SEEP) from western Turkey through Bulgaria, Romania, and
Hungary to Austria. A proposal for AGRI was not reported.
On October 25, 2011, Azerbaijan and Turkey announced that they had signed accords on the
transit of Shah Deniz phase 2 gas through Turkey. The agreements—signed during President
Aliyev’s visit to Turkey—specified that 565 billion-706 billion cubic feet of gas would transit
Turkey, of which 212 billion cubic feet would be available for Turkey’s domestic use. Another
significant accord provided for the possible construction of a new Trans-Anatolian Pipeline
(TANAP), so that the gas from Shah Deniz Phase 2 would not have to go through the Turkish
pipeline system. This pipeline could link to BP’s proposed SEEP or to a new version of the
Nabucco pipeline termed “Nabucco West” (stretching from the Turkish border to Austria).
In late December 2011, the Azerbaijani and Turkish governments signed a memorandum of
understanding on setting up a consortium involving SOCAR, the Turkish state-owned TPAO
energy firm, and TPAO’s pipeline subsidiary, BOTAS, to construct TANAP. SOCAR was initially
expected to hold an 80% share in the consortium. Contract negotiations on setting up the
consortium reportedly were contentious, however. On June 27, 2012, visiting President Aliyev
and Turkish Prime Minister Erdogan signed an intergovernmental agreement, and energy officials
signed organizational accords, on building TANAP. The pipeline, with an initial capacity of 565
billion cubic feet of gas per annum, was estimated to cost $7 billion with completion set for 2020.
Subsequent pipeline upgrades are envisaged to boost capacity.
The Shah Deniz Export Negotiating Team announced in February 2012 that it preferred the TAP
proposal over the ITGI pipeline proposal. In May 2012, the Nabucco consortium submitted new
pipeline proposals to the Shah Deniz consortium, reportedly including the original route as well
as the shorter “Nabucco West” route. At the end of June 2012, the Shah Deniz team announced
that “the Nabucco West project with a route running from the Turkish-Bulgarian border to
Baumgarten has been selected as the single pipeline option for the potential export of Shah Deniz
Stage 2 gas to Central Europe.” The team stated that it had confidence in the “maturity” of the
Nabucco proposal and it would cease development work on SEEP. The team averred that it would
make a final investment choice between these projects in mid-2013.34
Regional Energy Cooperation with Iran
On March 19, 2007, Armenia’s then-President Robert Kocharyan and Iranian President Mahmoud
Ahmadinejad inaugurated an 88-mile gas pipeline from Tabriz in Iran to Kadjaran in Armenia.
Work was completed on the second section of the pipeline, a 123-mile section from Kadjaran to
Ararat, in December 2008. The Russian-controlled ArmRosGazprom joint venture built this
second section and operates the pipeline. Initial deliveries reportedly are 10.6 billion-14.1 billion
cubic feet of gas per year, with plans for more gas deliveries in future years. Some of this gas will
be used to generate electricity for Iran and Georgia, but the remainder eventually may satisfy all
Armenia’s consumption needs, alleviating its dependence on Russian gas transported via
Georgia.35

34 Shah Deniz Selects a Second Export Route Option to Europe, Press Release, British Petroleum (BP), June 28, 2012.
35 Platt’s Commodity News, May 31, 2007.
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At the end of 2005, Azerbaijan began sending about 7 billion cubic feet of gas per year through a
section of Soviet-era pipeline to the Iranian border at Astara, partly in exchange for Iranian gas
shipments to Azerbaijan’s Nakhichevan exclave. On November 11, 2009, Azerbaijan signed an
accord with Iran to supply 17.7 billion cubic feet of gas annually through the pipeline. These gas
supplies could increase in coming years.
Foreign Policy and Defense
President Ilkham Aliyev has emphasized good relations with the neighboring states of Georgia
and Turkey, but relations with these and other countries have often been guided by their stance
regarding the NK conflict. Azerbaijan has viewed Turkey as a major ally to balance Russian and
Iranian influence, and Armenia’s ties with Russia. Relations with Turkmenistan are strained by
competing claims over offshore oil and gas fields (see below). Azerbaijan is a member of the
OSCE, Black Sea Economic Cooperation group, Council of Europe (COE), Economic
Cooperation Organization, and Organization of the Islamic Conference. In May 2011, Azerbaijan
joined the Non-Aligned Movement, although it does not claim neutrality and its National Security
Concept posits Euro-Atlantic integration as a “strategic goal.”
Ethnic consciousness among some “Southern Azerbaijanis” in Iran has grown, which Iran has
countered through increasingly repressive actions. Azerbaijani elites fear Iranian-supported
Islamic fundamentalism and question the degree of Iran’s support for an independent Azerbaijan.
Azerbaijan’s relations with Iran were roiled in February 2012 when Iran accused Azerbaijan of
harboring Israeli intelligence agents who had crossed the Azerbaijani-Iran border to carry out
operations, allegedly including assassinations of Iranian nuclear scientists. That same month,
Azerbaijan sentenced seven individuals it had arrested in 2008 that it claimed had been trained in
Iran to carry out terrorism, including plans to bomb the Israeli embassy. In late February,
Azerbaijan confirmed that it had reached a large arms deal with Israel, but stated that the weapons
purchase was aimed not against Iran but to “liberate” occupied territories.
Attempts to ease Azerbaijani-Iranian tensions included a meeting between the foreign ministers of
Iran, Azerbaijan, and Turkey in Nakhichevan, Azerbaijan, on March 7 and a trip by Defense
Minister Safar Abiyev to Tehran on March 12, 2012. Abiyev stressed that Azerbaijani territory
would not be used to launch attacks on Iran. Two days later, however, the Azerbaijan National
Security Ministry announced that nearly two dozen terrorists trained in Iran, who had been
planning attacks on Israeli and U.S. embassies and other Western interests, had been arrested. At
the end of the month, the ministry reported that two other Iranian spy networks had been
uncovered in 2011. Also in late March 2012, Iran increased its accusations that Azerbaijan was
providing Israel with military access to launch attacks on Iran after such allegations appeared in
Western media. In early April, Iran arrested some individuals it claimed were Israeli agents being
directed from an unnamed nearby country, presumably Azerbaijan. On April 12, Azerbaijani
media reported that the government had arrested several Iranians and Azerbaijanis involved in
weapons and drug smuggling from Iran.
On May 21, 2012, Iran recalled its ambassador to Azerbaijan for “consultations” following anti-
Iranian protests outside Iran’s embassy in Baku against Iranian criticism of the Eurovision Song
Contest to be held on May 22-26, 2012, in Baku. Iran claimed that the recall occurred because the
protesters had maligned its Supreme Leader, Grand Ayatollah Sayyid Ali Khamenei, and had
made other anti-Islamic statements. The Azerbaijani Foreign Ministry reportedly responded to the
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recall by announcing that “some people are jealous about Azerbaijan’s development [and] the
organization of a grand event such as Eurovision,” and requested that Iran apologize for
“insulting statements” about Azerbaijan.36 On May 8, 2012, Iranians had protested against
Azerbaijani “immorality” at the Azerbaijani consulate in Tabriz, Iran.
In June 2012, the Azerbaijani Foreign Ministry warned citizens that travel to Iran was not safe,
pointing to the holding of two Azerbaijani poets since May. In late June 2012, the Iranian
ambassador returned to Baku.
Frictions in Azerbaijani-Russian relations have included Azerbaijan’s allegations of a Russian
“tilt” toward Armenia in NK peace talks. In 1997, Russia admitted that large amounts of Russian
weaponry had been quietly transferred to Armenia, and in 2000 and 2005-2007, Russia
transferred heavy weaponry from Georgia to Armenia, fueling Azerbaijan’s view that Russia
supports Armenia in the NK conflict. Azerbaijani-Russian relations appeared to improve in 2002
when the two states agreed on a 10-year Russian lease for the Soviet-era Gabala early warning
radar station in Azerbaijan and reached accord on delineating Caspian Sea borders. Perhaps
seeking Russian support for his new rule, Ilkham Aliyev in March 2004 reaffirmed the 1997
Azerbaijani-Russian Friendship Treaty. After the August 2008 Russia-Georgia conflict,
Azerbaijan appeared to move toward better relations with Russia. During Russian President
Medvedev’s late June 2009 visit to Baku, Azerbaijan agreed to send small amounts of gas to
Russia (see below). Azerbaijan’s relations with Russia appeared even closer in 2010 as a reaction
against the Turkish initiative to improve relations with Armenia and U.S. Administration backing
for this effort.
According to former Armenian Foreign Minister Vartan Oskanyan, Article 4 of the
Commonwealth of Independent States’ Collective Security Treaty (signatories including Russia,
Armenia, Belarus, and all the Central Asian states except Turkmenistan) pertains to aggression
from outside the commonwealth, and therefore does not pertain to the NK conflict (since
Azerbaijan is a member of the commonwealth).37 After the CST Organization agreed to form
large rapid response forces in February 2009, however, some policymakers in Armenia claimed
the forces could be a deterrent to possible Azerbaijani aggression.38 Some policymakers in
Azerbaijan likewise viewed the formation of the forces as a threat.39 The Secretary-General of the
Collective Security Treaty Organization (CSTO), Nikolai Bordyuzha, has proclaimed that the
CSTO would never intervene in the NK conflict, but also has stressed that Armenia and Russia
have close bilateral military ties.40 Uzbek President Islam Karimov criticized and refused to sign
an agreement at the CSTO summit in December 2010 that provided for use of the forces for
internal security in member-states. In May 2011, Armenian Defense Minister Seiran Oganian
reportedly asserted that Armenia would expect CSTO members to support Armenia in case of
aggression against NK, which elicited a protest from the Azerbaijani presidential office.41 The
agreement signed in August 2010 that extends the lease on Russia’s military facilities in Armenia

36 Interfax, May 22, 2012; May 24, 2012.
37 CRS interview, October 26, 2006.
38 CEDR, February 5, 2009, Doc. No. CEP-950302.
39 CEDR, February 8, 2009, Doc. No. CEP-950079. The head of Azerbaijan’s presidential foreign relations department,
Novruz Mammadov, however, stated that he did not view the creation of the forces as a threat, because Azerbaijan has
good relations with all the CSTO members except Armenia. CEDR, February 5, 2009, Doc. No. CEP-950290.
40 CEDR, March 20, 2009, Doc. No. CEP-950105; June 1, 2009, Doc. No. CEP-358003.
41 Joshua Kucera, “Armenia, the CSTO and Collective Security,” The Bug Pit, Eurasianet, May 23, 2011.
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pledges Russia to defend Armenia’s security, which appeared to be interpreted by Armenian
President Serzh Sargisyan to include a possible Azerbaijani attack on NK.
In September 2008, Turkey’s President Abdullah Gül visited Armenia, ostensibly to see a soccer
game, and this thaw contributed to the two countries reaching agreement in April 2009 on a “road
map” for normalizing ties, including the establishment of full diplomatic relations and the
opening of borders. After further negotiations, Turkish Foreign Minister Ahmet Davutoglu and
Armenian Foreign Minister Edvard Nalbandian initialed two protocols “On Establishing
Diplomatic Relations,” and “On Development of Bilateral Relations” on August 31, 2009, and
formally signed them on October 10, 2009. Azerbaijan strongly criticized Turkey for moving
toward normalizing relations with Armenia without formally linking such a move to a peace
settlement of the NK conflict. This criticism quickly elicited pledges by Turkey’s leaders that the
Turkish legislature would not approve the protocols until there was progress in settling the NK
conflict. On April 22, 2010, the ruling Armenian party coalition issued a statement that
“considering the Turkish side’s refusal to fulfill the requirement to ratify the accord without
preconditions in a reasonable time, making the continuation of the ratification process in the
national parliament pointless, we consider it necessary to suspend this process.”42
The United States reportedly actively supported Switzerland in mediating the talks that led to the
signing of the protocols. On April 14, 2010, President Aliyev warned that the Obama
Administration’s backing of the protocols threatened U.S. interests in Azerbaijan, stating that
“how can we defend and support the interests of someone who is acting against our interests?”43
The next day, Azerbaijani presidential administration official Ali Hasanov asserted that “we are
not happy with the activities the United States demonstrates within the Minsk Group towards the
settlement of the Armenian-Azerbaijani conflict over NK…. If the United States continues to
demonstrate a biased position on the NK issue, Azerbaijan may reconsider its strategic
partnership ties with the United States.”44 The U.S. State Department responded that the United
States remained evenhanded in its mediation efforts. A few days later, Azerbaijan cancelled a
military exercise scheduled with the United States for May 2010.
Azerbaijani armed forces consist of 66,940 army, air force, air defense, and navy troops. There
also are about 5,000 border guards and more than 10,000 Interior (police) Ministry troops. The
military budget was about $1.6 million in 2010 and $1.7 billion in 2011.45 In June 2012, Aliyev
reportedly stated that the 2012 defense budget was $3.6 billion.46 Azerbaijan has agreements for
military training with Russia, Turkey, and NATO (see below), and purchases arms from Russia,
Turkey, Ukraine, Israel, and others. A military doctrine approved by the legislature in mid-2010
terms the continued occupation of Azerbaijani land and external support for the occupation to be
the major threats.47 Under a 10-year lease agreement that expires at the end of 2012, about 1,400-
1,500 Russian troops are deployed at Gabala (Qabala). Negotiations to extend the lease have been
contentious, with Azerbaijan reportedly insisting that lease payments be raised from the current
$7 million to $300 million per year. Azerbaijan reportedly received foreign-made weapons of

42 “Armenia Suspends Normalization of Ties with Turkey,” BBC News, April 22, 2010.
43 Open Source Center, “Azerbaijan Rebukes US Stance on Turkey-Armenia Relations,” OSC Feature, May 20, 2010,
Doc. No. FEA-5172.
44 CEDR, April 16, 2010, Doc. No. CEP-950076; April 15, 2010, Doc. No. CEP-950119.
45 The Military Balance, International Institute of Strategic Studies, March 7, 2012.
46 Interfax, June 25, 2012.
47 “Azerbaijan Adopts Military Doctrine At Long Last,” RFE/RL, June 9, 2010.
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uncertain origin and armed volunteers from various Islamic nations to assist its early 1990s
struggle to retain NK. In 1994, Azerbaijan joined NATO’s Partnership for Peace (PFP) and began
its first Individual Partnership Action Plan (IPAP) in 2005, but President Aliyev has not stated
that the country seeks to join NATO. Some Azerbaijani troops have participated in NATO
peacekeeping in Kosovo since 1997 and operations in Afghanistan since 2003 (see below). The
bulk of Azerbaijani weapons reportedly come from Russia, Ukraine, and Belarus, although some
NATO-compatible communications and other equipment has been received.48 In a June 2011
military parade, Azerbaijan showed S-300 air defense missiles supplied by Russia (following
reports in mid-2010 that Russia would sell the S-300s to Baku, Armenia announced that it already
had them). In accordance with recommendations by the IPAP, a civilian agency to manage
conscription was established in 2012.
The NK Conflict
In 1988, NK petitioned to become part of Armenia, sparking ethnic conflict. In December 1991,
an NK referendum (boycotted by local Azerbaijanis) approved NK’s independence and a
Supreme Soviet was elected, which in January 1992 futilely appealed for world recognition.
Conflict over the status of NK continued until a ceasefire agreement was signed in July 1994 and
the sides pledged to work toward a peace settlement. The “Minsk Group” of concerned member-
states of the Organization for Security and Cooperation in Europe (OSCE) facilitates peace talks.
The United States, France, and Russia co-chair the Minsk Group. The U.S. Department of State
reports that “ethnic Armenian separatists, with Armenia's support ... control most of the NK
region of the country and seven surrounding Azerbaijani territories. The government did not
exercise any control over developments in those territories.”49 The non-governmental
International Crisis Group (ICG) estimates that this area of control constitutes about 13%-14% of
Azerbaijan’s land area, while the Central Intelligence Agency estimates about 16%.50 The conflict
resulted in about 30,000 casualties and over 1 million Azerbaijani and Armenian refugees and
displaced persons.51 The U.N. High Commissioner for Refugees reports that there remain about
599,000 displaced persons in Azerbaijan, one of the highest concentrations in the world, most of
whom remain economically vulnerable.52
On November 29, 2007, then-Under Secretary of State Nicholas Burns, Russian Foreign Minister
Sergey Lavrov, and French Foreign Minister Bernard Kouchner presented the Foreign Ministers
of Armenia and Azerbaijan with a draft text—Basic Principles for the Peaceful Settlement of the
Nagorno-Karabakh Conflict—for transmission to their presidents. These officials urged the two
sides to accept the Basic Principles (also termed the Madrid proposals, after the location where
the draft text was presented) that had resulted from three years of talks and to begin “a new phase
of talks” on a comprehensive peace settlement.53

48 Shahin Abbasov, “Azerbaijan Mum About Israeli Spy Plane, Satellite Projects,” Eurasia Insight, August 17, 2009.
49 U.S. Department of State, Country Reports on Human Rights Practices for 2011, May 24, 2012.
50 ICG. Nagorno-Karabakh: Viewing the Conflict from the Ground, September 14, 2005. CIA. The World Factbook,
http://www.cia.gov.
51 The casualty estimate is from the U.S. Department of State, Background Note: Azerbaijan, March 23, 2012.
52 U.N. High Commissioner for Refugees, Azerbaijan: Statistical Snapshot, January 2012, at
http://www.unhcr.org/pages/49e48d1e6.html; World Bank, World Bank-Azerbaijan Partnership Program Snapshot,
April 2012.
53 U.S. Department of State, Office of the Spokesman, Media Note: Support for Basic Principles for Peaceful
(continued...)
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In the wake of the Russia-Georgia conflict in early August 2008, Armenian President Sarkisyan
asserted that “the tragic events in [Georgia’s breakaway South Ossetia region] confirm that every
attempt in the South Caucasus to look for a military answer in the struggle for the right to self-
determination has far-reaching military and geopolitical consequences.”54
The presidents of the United States, France, and Russia publicized an updated version of the
Basic Principles in July 2009 and June 2010 that calls for the return of the territories surrounding
NK to Azerbaijani control; an interim status for NK providing guarantees for security and self-
governance; a corridor linking Armenia to NK; future determination of the final legal status of
NK through a legally binding expression of will; the right of all internally displaced persons and
refugees to return to their former places of residence; and international security guarantees that
would include a peacekeeping operation.55
The co-chairs presented “renovated” Madrid principles to President Aliyev in Baku in December
2009 and to President Sarkisyan in Yerevan in January 2010. Then-President Medvedev hosted
Aliyev and Sargisyan in Sochi, Russia, in late January 2010, and the two sides reportedly agreed
on many parts of a preamble to an agreement. In December 2010, a declaration by the Minsk
Group co-chairing countries and the presidents of Armenia and Azerbaijan was signed during the
Astana Summit of the OSCE that pledged the parties to a peaceful settlement of the conflict.
However, the presidents of Armenia and Azerbaijan gave speeches criticizing each other’s
commitment to negotiations and refused to meet at the conclave.
On June 24, 2011, Presidents Sargisyan and Aliyev met in the Russian city of Kazan, and issued a
joint statement that agreement had been reached on some issues and that further talks would be
held. A couple of weeks later, then-President Medvedev, reportedly disappointed that there was
scant progress at the talks, sent letters to the two leaders calling for suggestions on how to move
the talks forward.
During Aliyev’s summit with Medvedev in Sochi, Russia, in early August 2011, then-President
Medvedev called for “an absolutely frank conversation with you about our future steps” to
resolve the NK conflict. Aliyev called for the “settlement of the conflict, so that all displaced
persons can return to their homes and peace, tranquility and cooperation are restored in the
region.” Azerbaijani analyst Khikmet Khadzhizade alleged that Medvedev warned Aliyev against
military action against NK at this meeting.56
The presidents of Armenia and Azerbaijan denounced each other’s perceived unwillingness to
settle the NK conflict during the celebratory anniversary meeting of the Commonwealth of
Independent States in Dushanbe, Tajikistan, in early September 2011. Mutual denunciations also
were delivered at the late September 2011 opening session of the U.N. General Assembly. In his
speech, President Sargisyan alleged that Azerbaijan had tried during the Kazan talks to “reject[]
the previously elaborated arrangement and … in fact, to break down the negotiation process.” In

(...continued)
Settlement of the Nagorno-Karabakh Conflict, November 29, 2007.
54 Open Source Center. Europe: Daily Report, August 27, 2008, Doc. No. EUP-085016.
55 The White House. Joint Statement on the Nagorno-Karabakh Conflict by U.S. President Obama, Russian President
Medvedev, and French President Sarkozy at the L’Aquila Summit of the Eight, July 10, 2009.
56 The Kremlin, President of the Russian Federation, Meeting with President of Azerbaijan Ilham Aliyev, 9 August
2011, August 9, 2011; CEDR, August 25, 2011, Doc. No. CEP-6010.
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his speech, Azerbaijani Foreign Minister Eldar Mammadyarov protested that “Azerbaijan still
maintains its interest, motivation and patience in this very hard and sensitive process of
negotiations. We believe that the international community will convince the Armenian side to
respect the generally accepted norms and principles of international law and cease abusing the
right of Azerbaijanis to live within their own territory.”57
In October 2011, the Minsk Group co-chairs issued a statement after talks with Presidents Aliyev
and Sargisyan that the two presidents had agreed in principle on some border incident
investigation procedures that the presidents had called for developing at their meeting in Sochi in
March 2011. A call for finalizing these procedures was issued at the OSCE Ministerial Council
Meeting in Vilnius in early December 2011.
Before a planned meeting of the Armenian and Azerbaijani presidents in Sochi, Russia, on
January 23, 2012, President Aliyev stressed that “no one wants war, least of all Azerbaijan, which
has made such great achievements. However, this does not mean that negotiations ... will be
focused on the prevention of war.”58 At the Sochi meeting, the two presidents issued a joint
statement pledging to “accelerate” talks to reach a settlement and requesting Russia to act to
facilitate humanitarian ties between the two countries. The co-chairs of the OSCE Minsk Group
also presented the Armenian and Azerbaijani presidents with a draft plan for setting up a group to
investigate incidents along the line of contact, and the presidents called for further work on the
plan. In March 2012, however, President Sargisyan reportedly condemned Azerbaijan for refusing
to further discuss such an incident investigation mechanism or other “confidence building”
measures, allegations that Azerbaijan rejected.59
In late March 2012, Azerbaijani presidential administration official Ali Hasanov acknowledged
that Baku regards the talks mediated by the president of Russia as the most significant means to
settle the NK conflict, given Russia’s close ties to Armenia. Hasanov claimed that Russia has
overwhelming influence over Armenia, and appeared to argue that Azerbaijan’s major goal is to
persuade Russia to use its influence to settle the conflict.60
On June 4-5, 2012, violence on the line of contact between Armenian and Azerbaijani forces
resulted in three dead Armenian troops and five dead Azerbaijani troops, according to authorities
in the respective countries. Secretary Clinton, visiting the region, deplored the violence and called
for both countries to continue to seek a peaceful settlement of the NK conflict. Up to two dozen
more casualties were alleged over the next few days.
The Minsk Group co-chairs hosted a meeting in Paris on June 18, 2012, between the Armenian
and Azerbaijani foreign ministers, that they reported was constructive but apparently resulted in
no breakthroughs. The next day, the presidents of the United States, France, and Russia, meeting
on the sidelines of the Group of Twenty (G-20; grouping of major developed and developing
countries) summit in Mexico, issued a joint statement regretting that there had not been

57 CEDR, September 26, 2011, Doc. No. CEP-964113; Embassy of Azerbaijan in the United States, Statement by Elmar
Mammadyarov, Minister of Foreign Affairs, at the General Debate of the sixty-sixth session of the United Nations
General Assembly, September 27, 2011; United Nations, U.N. News Center, Armenia and Azerbaijan Express Views on
Nagorno-Karabakh During U.N. Debate, September 27, 2011.
58 Interfax, January 16, 2012.
59 Interfax, March 6, 2012; March 16, 2012; CEDR, April 2, 2012, Doc. No. CEP-950107.
60 CEDR, March 29, 2012, Doc. No. CEP-950123.
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substantial progress since the presidents of the three countries made a statement in mid-2011. The
presidents called on both sides to eschew hostile rhetoric and argued that “military force will not
resolve the conflict and would only prolong the suffering ... by peoples of the region.”61
U.S. Relations
The United States has endeavored to reassure Azerbaijan that it continues to be a “strategic
partner” in counter-terrorism cooperation and energy security and has appeared to balance these
U.S. interests against its concerns about democratization in Azerbaijan. According to some
observers, relations between the United States and Azerbaijan had cooled after the Administration
supported reconciliation efforts in 2009 between Armenia and Turkey which Azerbaijan opposed,
and after President Ilkham Aliyev was not invited to the U.S. Nuclear Security Summit in early
2010. Although relations may have cooled somewhat during this time, Azerbaijan continued to
supply troops for NATO operations in Afghanistan and played a significant role as part of the
Northern Distribution Network for the transit of U.S. and NATO supplies to Afghanistan (see
below).
U.S.-Azerbaijani relations appeared to generally improve—with some fits and starts—during
2011-2012 with the recess appointment of Ambassador to Azerbaijan Matthew Bryza, after more
than a year without an ambassador (the appointment expired at the end of the year, however). In
late 2011, the United States backed Azerbaijan’s successful bid for a two-year term on the U.N.
Security Council (UNSC). In April 2012, the Obama Administration “re-launched” meetings of
the U.S.-Azerbaijan Intergovernmental Commission on Economic Cooperation, which had last
convened in 2008. At the session in Washington, DC, Azerbaijani co-head Samir Sharifov
reported that President Aliyev had instructed the delegation to “intensify efforts” to expand the
current “strategic partnership” between the two countries.62
In May 2012, President Aliyev twice visited the United States. He presided at a U.N. Security
Council meeting on counter-terrorism on May 4 and attended the NATO Summit in Chicago on
May 19-22. In a speech on May 4, he stated that “Azerbaijan is a reliable partner of the United
States and these relations have turned into a strategic partnership.” In a speech at the NATO
summit, he pledged that Azerbaijan would continue to assist Afghanistan after the pull-out of
NATO forces in 2014.63 An extended meeting with President Obama was not reported.
During her June 6, 2012, visit to Azerbaijan, Secretary Clinton stated that she discussed the key
issues of security, energy, and democratization with President Aliyev. She thanked Azerbaijan for
its “essential” role in the transit of personnel and supplies to Afghanistan, and its “central role” in
Europe’s efforts to diversify sources of energy and transport routes. She called for further
democratization and for the release of individuals detained for expressing their views in print or
on the streets. She commended the government for releasing Bakhtiyar Hajiyev (mentioned

61 The White House, Joint statement by the Presidents of the United States, the Russian Federation and France on
Nagorno-Karabakh, June 19, 2012.
62 The Ministry of Finance of the Republic of Azerbaijan, The 3rd Meeting of the Azerbaijan – U.S. Intergovernmental
Commission on Economic Cooperation Has Been Finished, April 19, 2012, at
http://www.maliyye.gov.az/en/node/1323.
63 CEDR, May 6, 2012, Doc. No. CEP-950004; President of Azerbaijan, Ilham Aliyev Attended a Meeting of Heads of
State and Government on Afghanistan in Chicago, May 21, 2012, at http://en.president.az/articles/4918.
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above) and held a meeting with civil society leaders. She also condemned violence along the line
of contact between Armenian and Azerbaijani forces, and urged restraint.64 At his June 2012
confirmation hearing to become Ambassador to Azerbaijan, Richard Morningstar stressed that the
“wide range of shared interests” between the United States and Azerbaijan in the areas of security,
energy, democratization, and regional peace “intersects with many of the United States’ highest
foreign policy priorities.”65 He was confirmed as Ambassador by the Senate on June 29, 2012.
U.S. cumulative budgeted assistance to Azerbaijan from FY1992 through FY2010 was $975.75
million (all agencies and programs). Budgeted aid to Azerbaijan was $26.4 million in FY2011
and an estimated $20.9 million in FY2012. The Administration requested $16.33 million for
FY2013 (“Function 150” foreign assistance programs, excluding Defense Department funding).
The FY2013 request includes $2.7 million for Foreign Military Financing (FMF) and $600,000
for International Military Education and Training (IMET). The same amounts for FMF and IMET
were requested for neighboring Armenia. Because of Azerbaijan’s substantial economic
development, the United States seeks co-financing with Azerbaijan in implementing economic
growth and other programs.66
In FY2013, the Administration plans to devote the largest share of assistance to democratization,
followed by peace and security and support for economic growth. In the realm of
democratization, the Administration plans to address “a restrictive environment for democratic
activists” by assisting in training journalists, increasing Internet access, and providing legal
assistance for citizens and activists. Peace and security assistance will focus on supporting
Azerbaijan’s participation in U.S. and NATO operations in Afghanistan, developing maritime
security, and modernizing the military. Other aid will be provided to support counter-terrorism
and counter-narcotics efforts, prevent trafficking in persons, bolster border security, improve arms
stockpile security, and destroy landmines. Economic aid will focus on bolstering agricultural
income and exports; sharing best practices on banking supervision; and technical assistance to
increase competitiveness, the investment climate, foreign trade, and Azerbaijan’s efforts to join
the WTO.67
Since FY2004, Azerbaijan has been designated as a candidate country for enhanced U.S.
development aid from the Millennium Challenge Corporation, but it has not been selected as
eligible for aid because of low scores on measures of political rights, civil liberties, control of
corruption, government effectiveness, the rule of law, accountability, and various social
indicators.
Congressional concerns about the ongoing NK conflict led in 1992 to Section 907 of the
FREEDOM Support Act (P.L. 102-511) that prohibited most U.S. government-to-government
assistance to Azerbaijan until the President determined that Azerbaijan had made “demonstrable
steps to cease all blockades and other offensive uses of force against Armenia and Nagorno-
Karabakh.” Congress eased many Section 907 restrictions on a year-by-year basis until the
terrorist attacks on the United States in September 2001, after which it approved an annually

64 U.S. Department of State, Remarks With Azerbaijani Foreign Minister Elmar Mammadyarov, June 6, 2012.
65 U.S. Senate, Committee on Foreign Relations, Nomination Hearing, Statement of Richard Morningstar,
Ambassador-Designate to Azerbaijan, June 13, 2012.
66 U.S. Department of State, Congressional Budget Justification for Foreign Operations for FY2013, Annex: Regional
Perspectives, April 3, 2012.
67 U.S. Department of State. Congressional Budget Justification for Foreign Operations.
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renewable presidential waiver (P.L. 107-115). The conference managers stated that the waiver
was conditional on Azerbaijan’s cooperation with the United States in combating terrorism and
directed that aid provided under the waiver not undermine the peace process. Congress has called
for equal funding each year for Foreign Military Financing and International Military Education
and Training for Armenia and Azerbaijan. Other congressional initiatives have included the
creation of a South Caucasus funding category in FY1998 to encourage an NK peace settlement,
provide for reconstruction, and facilitate regional economic integration. Congress also has called
for humanitarian aid to NK, which has amounted to over $36 million expended from FY1998
through FY2011. Congress passed “The Silk Road Strategy Act” in FY2000 (as part of
consolidated appropriations, P.L. 106-113) calling for enhanced policy and aid to support conflict
amelioration, humanitarian needs, democracy, economic development, transport and
communications, and border controls in the South Caucasus and Central Asia.
Contributions to Counter-Terrorism
After the terrorist attacks on the United States on September 11, 2001, Azerbaijan “granted
blanket overflight clearance, engaged in information sharing and law-enforcement cooperation,
and approved numerous landings and refueling operations at Baku's civilian airport in support of
U.S. and Coalition military operations” in Afghanistan.68 Azerbaijan has contributed troops to the
International Security Assistance Force (ISAF) in Afghanistan since 2003. It increased its
contingent from 45 to 90 personnel in 2009, and there are currently 94 personnel deployed,
including medical and civil affairs specialists. Azerbaijan also has contributed to Afghan
demining and civil service training. From 2003-2008, about 150 Azerbaijani troops participated in
the coalition stabilization force for Iraq.
Azerbaijan and Kyrgyzstan reportedly are the main overflight, refueling, and landing routes for
U.S. and coalition troops bound for Afghanistan, and Azerbaijan also is a major land, air, and sea
transport route for military fuel, food, and construction supplies. The Azerbaijani route is one of
several routes through Russia, the South Caucasus, and Central Asia to Afghanistan—together
termed the Northern Distribution Network (NDN)—that supplement supply routes through
Pakistan. On July 5, 2011, an Azerbaijani private cargo aircraft (under U.S. contract and carrying
a U.S. military cargo) which had taken off from Baku crashed near the Bagram Air Base in
Afghanistan, killing nine crew members.



68 U.S. Department of State. Country Reports on Terrorism 2008, April 30, 2009.
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Figure 1. Map of Azerbaijan and Region

Source: CRS
Notes: Administrative borders of the former Nagorno Karabakh Autonomous Region


Author Contact Information

Jim Nichol

Specialist in Russian and Eurasian Affairs
jnichol@crs.loc.gov, 7-2289

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