Why Azerbaijan Matters
Azerbaijan has become one of the most frequently discussed countries in international circles. Since independence, the world community has been instrumental in helping to solve problems that are important to the Azerbaijani population. In recent years major international donors in Azerbaijan have implemented various programmes aimed at cultivating a democratic society and an open market. Likewise, Azerbaijan receives solid political support from most of the world and within international organizations, as this newly independent state endeavours to restore territorial integrity and consolidate national sovereignty.
Indeed, energy-rich Azerbaijan deserves special consideration, as a pivotal country with the largest population in the South Caucasus. Today this secular Muslim state has close contact with the Islamic world, while it is simultaneously influenced by neighbouring Christian countries oriented towards Western culture. Its position on the junction of the West and East has enabled Azerbaijan to develop a synthesis of the values of both cultures.
Meanwhile, Azerbaijan is growing closer to the Western world for the three major reasons that make this Caucasian state a special case. These are Azerbaijan's energy resources, the contribution of a settlement over Nagorno-Karabakh to regional stability and the country's democratisation through profound modernization. It is the combination of the aforementioned issues that has placed Azerbaijan at the core of international relations.
Azerbaijan - Caspian keystone of the wider Black Sea region
The wider Black Sea-Caspian basin area is increasingly becoming a place of utmost importance in terms of energy production, transportation and distribution. The entire region finds itself on the crossroads of transportation corridors to connect Europe with the South Caucasus, Central Asia and the Middle East. From an economic standpoint, the wider Black Sea-Caspian basin is one of the fastest growing regions globally. In this context, the South Caucasus-Caspian basin offers enormous strategic benefits to member states of the European Union (EU). This strategically vital region is not only energy-rich, but also links Central Asia with Europe. Most importantly, Azerbaijan serves as a hub connecting energy and transportation infrastructure between Asia and Europe. The entire region has a huge potential to become a gateway between the Balkans and the South Caucasus, linking Romania to Georgia, and, via energy-rich Azerbaijan, to the Caspian Sea basin.
Azerbaijan's perceived willingness to cooperate closely with the enlarged Euro-Atlantic alliance has attracted an unprecedented level of international attention for the country. The country's energy wealth constitutes an important counterpoint to the volatile Persian Gulf for Western democracies, which will help Europe to diversify its energy imports. Currently, Azerbaijan uses the possibilities to export oil and gas via the Baku-Supsa oil pipeline to Georgia, via the Baku-Novorossiysk oil pipeline to Russia, via the main export oil pipeline Baku-Tbilisi-Ceyhan (BTC) to Georgia, Turkey and the world market and via the Baku-Tbilisi-Erzurum (BTE) gas pipeline to Georgia and Turkey, where it connects to the Turkish gas network through which Azerbaijan can deliver natural gas all over Europe. Besides this, there is a gas pipeline to Russia (Hajikabul-Mosdok) through which Azerbaijan imported Russian gas until Azerbaijan's self-production became sufficient.1 Azerbaijan also exports gas to Europe via the Turkish-Greek pipeline. The Turkish-Greek pipeline was filled with Azerbaijani gas through the BTE pipeline for the first time in July 2007 and it is planned that the pipeline will be extended to Italy by 2012.

In fact, the newly inaugurated BTC and BTE pipelines, were mainly built to relieve the Western world's oil and gas dependency on the Middle East, and underscores Azerbaijan's geopolitical importance for the European market. It also gives the country more control over its own destiny by providing strategic alternatives to Russia. As an energy supplier, Azerbaijan's natural gas production from the Shah Deniz field will rise sharply in the next few years, the scale of which is not only expected to make the country self-supporting in natural gas but also to result in substantial export revenues and position the country as a major gas exporter from the Caspian basin. According to local media reports, the State Oil Company of Azerbaijan Republic (SOCAR) has planned to extract 8 billion cubic meters of natural gas from the Shah Deniz field in 2008. It was also announced that the annual production will make up 20-22 billion cubic meters in 2020. The Shah Deniz field with its huge gas reserves is the most important field not only in Azerbaijan but also in the world. By recent estimates, the reserves of the field top 1.2 trillion cubic meters of gas.2
Interestingly, resource-rich Azerbaijan forms a transit hub in an evolving geo-strategic and geo-economic system that stretches from Europe to the South Caucasus and Central Asia. Azerbaijan's participation in the transnational energy projects is aimed at protecting its strategic interests in the wider Black Sea-Caspian basin area and moving forward in accomplishing measures for closer integration into the European Community. Today the EU seeks alternative energy supplies that could satisfy Europe's growing consumption. More precisely, the EU strongly supports the multiplicity of both suppliers and transport pipelines as a means of diversifying its supply of energy resources and lowering energy prices. Accordingly, the EU seeks to enhance its relations with Central Asian states in order to establish a long energy corridor, which could bring Eastern Caspian hydrocarbon resources to Western Europe via Azerbaijan, Georgia, Turkey and Southeastern Europe.
The Challenge of frozen conflict: the case of Nagorno-Karabakh
Restoration of territorial integrity of Azerbaijan and return of the ethnically cleansed internally displaced people (IDP) to their homelands remain a chief priority in the foreign policy of the country. The lack of resolution of the Armenian-Azerbaijani conflict prevents security cooperation and impedes economic development across the region. The current situation of no war, yet no peace in the conflict zone plays a crucial role in the political instability of the entire South Caucasus and even beyond. In recent years Azerbaijan has tried its utmost to use every opportunity to move the negotiation process forward in the peace talks on the conflict settlement. The negotiations have been held at the level of presidents and ministers of foreign affairs in the framework of the so-called Prague process. However, the lack of progress in conflict resolution presents a serious challenge to durable political stabilization in this rapidly developing region.
Meanwhile, the EU welcomes the dialogue between the presidents of Azerbaijan and Armenia and the regular meetings between the foreign ministers, hoping these negotiations will result in a peace deal. Many in Azerbaijan are keen to see a larger EU role in resolving the conflict. Compared with the OSCE and the CoE, the EU offers a unique combination of economic power and possibilities for solid political dialogue, adding value to conventional multilateral diplomacy under the OSCE's aegis. Diplomatic efforts continue to further consolidate the position of the international community based on support of territorial integrity and inviolability of internationally-recognized borders of Azerbaijan, as well as condemnation of the occupation and ethnic cleansing. EU, OSCE, Council of Europe (CoE) and principal powers declared the so-called presidential and municipal elections in the occupied Nagorno-Karabakh region of Azerbaijan illegal and with no legal effect.3 In turn, this proves that the international community expresses support and respect for Azerbaijan's territorial integrity and demonstrates that international organizations and leading nations send a clear signal to those destructive forces who try to attempt to lead the peace process into a deadlock and accept the occupation of Azerbaijani lands as fait accompli.
Recently, frequent breaches of the ceasefire in Nagorno-Karabakh have demonstrated the fragility and instability of the situation at the front, even if there has been no return to full-scale hostilities. Yet the OSCE Minsk Group co-chairs realise that a serious breakthrough is needed in the negotiating process to make sustainable progress in finding a mutually acceptable political settlement. However, the wider public in Azerbaijan is not satisfied with the diplomatic activity of the co-chairs of the OSCE Minsk Group. Azeri people demand that conflict in Nagorno-Karabakh be resolved in accordance with the norms of the international law, UN and OSCE principles. Indeed, the lack of progress in finding an enduring solution to this protracted ‘frozen' territorial conflict is a worrying and destabilizing factor that continues to impact wider European security and calls for far greater efforts by the European security organizations. Certainly, much will also depend on how successfully EU institutions develop multilateral cooperation with the OSCE and the CoE and create new possibilities for intensifying constructive dialogue.
Promoting democratisation through profound modernization
The development of democracy, good governance and an open society is an additional problem Azerbaijan has been facing since regaining independence in 1991. Azerbaijanis are proud that they established the first democracy in the Muslim world as far back as 1918.4 Modern Azerbaijan is a proving ground where tools and models for breaking old stereotypes and establishing new democratic values are being tested. This secular Muslim country aspires to build democratic institutions and create a market economy. Azerbaijani authorities strongly believe that the main task faced by the ruling elite during the last few years has been the formation of a new political space of the country where citizens would realize their own rights and obligations.5 Besides, political stability and democratisation are the two priority areas for Azerbaijan, and are essential for the authorities to demonstrate that their country shares values with the EU in practice. In recent years Azerbaijani authorities have proved that they can mobilise resources to implement political, economic and social reforms so as to attain European standards.
Certainly, Azerbaijan can still attain a true democracy, as Azeri society is prone to evolutionary democratic change. In turn the EU can add unique value in promoting the country's democratic transition, but EU relations and cooperation with Azerbaijan are partly going to be determined by the advances made by the authorities in Baku towards political and economic transformation. In this regard, Azerbaijani leadership's strategy is aimed at conducting extensive reforms notably in law enforcement, industrial monopolies, human rights and the judicial system so as to move closer to the EU and meet European political and economic criteria. Clearly, success in developing democratic standards and a market economy in Azerbaijan could serve as a model for diffusing similar reforms across the post-Soviet Muslim states of Central Asia, particularly Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan - creating a new ‘corridor of democratic values' that would add to the security and stability of Eurasia as a whole.

Geopolitical determinants of Azerbaijan's foreign and security policy
Recognition of being an integral part of a wider and closely interlinked Black Sea-Caspian region has enabled the Azerbaijani leadership to pursue a balanced interest-based policy in foreign relations with major regional powers. Azerbaijan cultivates warm and friendly relations with Russia, Turkey, Iran, the United States and the EU, thus trying to satisfy the interests of all nearest and distant powerful actors. From a geopolitical standpoint, only through such a balanced diplomatic stance, has Azerbaijan been able to guarantee national security and good economic prospects. This Caucasian state has always been able to play a more independent role because of Caspian energy riches and a very experienced political leadership.6 Even despite Russian and Iranian jealousy in regard to Azerbaijan's endeavours to expand cooperation with Euro-Atlantic structures, the ruling elite in Baku continues to foster better relations with Moscow and Tehran while maintaining strong strategic partnership with the United States. Striking the proper diplomatic balance is proving tricky for Baku, given the long-standing animosity that exists between Washington and Tehran. Since the U.S. stance toward Iran is hardening, Azerbaijani authorities realize that they must tread carefully as they seek to improve ties between Baku and Tehran. For this reason, balancing Azerbaijani interests between the U.S. and Iran will be a major test for the country's ruling elite since it is going to be difficult to abstain from U.S. policy towards Iran.
On the other hand, Azerbaijan is looking to Russia to support its regional interests, as President Ilham Aliyev tries to strengthen already warm and friendly ties between the two countries. In recent years Azerbaijani-Russian relations have considerably improved and led to increased economic transactions, including a bilateral deal on the delimitation of the Caspian Sea and an agreement on the Qabala radar station.7 Therefore, Baku's tactics is dedicated to addressing Moscow's immediate strategic interests. More exactly, relations between Azerbaijan and Russia have presently been brought to a new strategic level. Both Azerbaijan and Russia recognize each other as important neighbours and strategic partners. The two countries are bound by commercial and economic ties and from this perspective the friendly relations that exist between Azerbaijan and Russia can only be strengthened.
For Azerbaijan, national interests have indeed begun to take on a more pronounced role in the country's strategy for developing bilateral and multilateral ties. Azerbaijan's strong support of the anti-terrorism campaign has significantly extended security ties with the United States, mainly deepening American strategic interests in the entire region. The strengthening of U.S.-Azeri security relationships has also cleared the way for wide-ranging cooperation with other Western democracies, most notably the EU member states such as Germany, Great Britain, France, and Italy. Azerbaijan's participation in the transnational energy projects is aimed at protecting its strategic interests in the wider Black Sea-Caspian basin area and moving forward in accomplishing measures for closer integration into the European Community. Today the EU seeks alternative energy supplies that could satisfy Europe's growing consumption. More precisely, the EU strongly supports the multiplicity of both suppliers and transport pipelines as a means of diversifying its supply of energy resources and lowering energy prices. Accordingly, the EU seeks to enhance its relations with Central Asian states in order to establish a long energy corridor, which could bring Eastern Caspian hydrocarbon resources to Western Europe via Azerbaijan, Georgia, Turkey and Southeastern Europe.
Conclusion
As a pivotal country in the wider Black Sea-Caspian basin, Azerbaijan is a plausible location from which to influence economic and political trends not only in Central Asia and the Caspian basin but also in the Middle East, where Western democracies are in a serious quandary over Iran's nuclear programme. With respect to energy and trade, the country's oil and gas fields further reinforce the importance of the TRACECA route, designed to bypass the Russian Federation by crossing Georgian territory. Investments by major European energy companies and the growing presence of some EU member states demonstrate that Azerbaijan is seen today as a reliable partner with which the EU is trying to cultivate trade.
In practice, Azerbaijan has already taken a lead in developing the East-West energy and transportation corridor, the most ambitious initiative in the Black Sea-Caspian basin to date. Yet again, it is a regional approach that determined Azerbaijan's strong push for major transnational energy projects, such as BTC and BTE which have underscored not only the closer relationship between Azerbaijan, Georgia and Turkey but also have highlighted the activation of EU involvement in the wider Black Sea area. All of these factors are necessary elements of any successful EU strategy for the wider Black Sea-Caspian basin. Given today's debate on the future of the entire region, the success of the Azeri-Georgian-Turkish alliance in building reliable partnership with Greece and Ukraine and in advancing European strategic interests in the wider Black Sea area is quite notable.
Currently, the Azerbaijani leadership is formulating a new comprehensive strategy, aimed at bringing about drastic political change and extensive economic modernization of their society. Much of the work is to be done by the Azerbaijani society, although the international organizations should also come up with their part of the new agenda as the major contributors to Azerbaijan's future success. It is about a new vision of how to respond to existing and future challenges in an ever-changing world. The restoration of territorial integrity and the consolidation of the balanced interest-based foreign policy are absolutely necessary to keep that vision strong. The United States, the European Union and Russia should better coordinate their policies to help Azerbaijan consolidate stability and security in the long run. All three principal powers could assert a more vigorous role in fostering regional stability and durable peace through their cooperative policy actions. For this to occur, Russia, US and EU need a fresh, comprehensive strategy, which will aim at asserting their more active role by taking practical steps to contribute significantly to conflict resolution and formulating a Russia-US-EU response to regional security challenges.

* Dr. Elkhan Nuriyev is currently Director of the Centre for Strategic Studies under the President of the Republic of Azerbaijan and Professor of Political Science at Western University in Baku, speaking on the Conference ‘Azerbaijan's road to prosperity: economic, political and foreign policy challenges' organised by the International Institute for Strategic Studies (IISS), LINKS and SAM in London, 20th June 2008. He can be contacted through elkhan.nuriyev@gmail.com

Endnotes
1 Nezavisimaya Gazeta, Moscow, 22 January 2008.
2 Azerbaijan Press Agency (APA), Baku, 9 January 2008.
3 While de jure part o Azerbaijan, Nagorno-Karabakh is claimed by Armenia. The territory is largely populated by Armenians who themselves proclaimed a self-styled ‘independent' republic in 1991, which did not receive international recognition. In the early 1990s, Armenian troops took control of Nagorno-Karabakh as well as seven predominately Azeri-populated districts on its perimeter. So far, these lands have remained occupied by Armenian forces.
4 An orientation towards political democracy in Azerbaijan was evident during the period 1918-20, when the Azerbaijan Democratic Republic (ADR) was established on 28 May 1918. The ADR was recognised by the League of Nations and had a wide spectrum of democratic freedoms, political pluralism and multiparty structures of power. The ADR was also first among Muslim states to use the Latin alphabet instead of Arabic script. The democratic development of Azerbaijani society was forcibly disrupted on 28 April 1920, when Russia's 11th Red Army invaded Azerbaijan and the Bolsheviks overthrew the democratic administration. For details, see Balayev, A, Azerbaijan Democratic Republic (in Russian), Baku, Elm, 1991; see also Balayev, A, Azerbaijani National Movement in 1917-1918 (in Russian), Baku, Elm, 1998; and also Swietochowski, T, Russian Azerbaijan, 1905-1920: The Shaping of National Identity in a Muslim Community, Cambridge University Press, 1985.
5 For an interesting overview on this issue, see Mehdiyev, Ramiz, Defining the Strategy of Tomorrow: Course Towards Modernization, (in Azeri, English, Russian), Sharg-Qarb Printing House, Baku, 2008.