Azerbaijan, a Caspian country in the southern Caucasus, was incorporated into the Russian Empire during the early 1820s through the Treaties of Gulistan and Turkmenchay with Persia. The discovery of petroleum in the 1870s resulted in an expansion of Russian interests in the region, particularly around the capital Baku. In the aftermath of World War I (1914–1918) and the Bolshevik Revolution, Azerbaijan was incorporated into the Transcaucasian Socialist Federative Soviet Republic, before becoming a Soviet Socialist Republic in 1936.
In the late 1980s, ethnic relations between the republic’s titular Turkic Muslim majority (Azeris) and minority Christian Armenians soured over the disputed Nagorno-Karabakh region, an Autonomous Soviet Socialist Republic within Azerbaijan. Violent pogroms against Armenian residents in Baku triggered an invasion of federal troops in 1990, during which more than 100 Azeri civilians lost their lives. As Azerbaijan transitioned to independence, the NagornoKarabakh War (1988–1994) with its neighbor Armenia grew in intensity. Baku’s relationship with Moscow worsened during the early 1990s as many in Azerbaijan saw Russia as a backer of Armenian aggression. Russia’s purported support of Orthodox Armenia against Shi’a Azerbaijan was viewed in certain quarters as an early instance of the coming “clash of civilizations.”
Resentful of Russia’s meddling in the conflict, Azerbaijan steadily gravitated toward Turkey and the United States, after its initially warm relations with Iran chilled in the wake of President Abulfaz Elchibey’s endorsement of autonomy for Iranian Azerbaijanis in the early 1990s.Azerbaijan, a major oil producer, soon became the site of fierce international competition among transnational energy companies including British Petroleum, Amoco, and Lukoil. Sovietera infrastructure directed oil exports toward two cities on the Black Sea coast, the Russian city of Novorossiysk and the Georgian city of Supsa.
In an attempt to more safely reach energy-hungry markets in Western Europe, Azerbaijan agreed to develop the Baku-Tbilisi-Ceyhan (BTC) pipeline in 1998. The BTC, the world’s second-longest pipeline, delivers oil from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea via Georgia and Turkey, much to the chagrin of Russia. The route avoids the need to transport petroleum through the environmentally sensitive Bosporus and circumvents regional trouble spots in Georgia. The more southerly route through Georgia proved valid in 2008 when the Baku-Supsa pipeline was closed due to the South Ossetian War. A shorter route via Armenia was rejected by Azerbaijan due to the conflict over NagornoKarabakh and by Turkey due to lingering issues related to the Armenian massacres of 1915. Azerbaijan’s plan to sell transit capacity to other Caspian nations, including Uzbekistan, Turkmenistan, and Kazakhstan, also figured highly in the decision to develop a Mediterranean-oriented rather than Russia-oriented oil and natural gas export infrastructure, though such a strategy places Baku in direct competition with Moscow as an energy provider to the West. In recent years, Russian corporations have trebled the price of natural gas exports to Azerbaijan. In response, the Caspian country rapidly modernized its infrastructure and exploited the newly discovered Shah Deniz field in the Caspian Sea; Azerbaijan is now an exporter of natural gas. The Russian energy giant Gazprom offered to sign a long-term deal to buy Azerbaijani gas at market prices, but fears that this was simply an attempt to divert gas from the European market and expand Moscow’s leverage over the southern Caucasus led Baku to reject the deal. Azerbaijan ships much of its natural gas to Georgia and Turkey via the Southern Caucasus pipeline, which parallels the BTC.
Vladimir Putin’s rise to power triggered a new era in Russia-Azerbaijan relations. After his official visit to Baku in 2001 and President Heydar Aliyev’s reciprocal trip to Moscow the following year, economic and political ties were expanded. Despite the rapprochement, Azerbaijan has continued to embrace a multivector foreign policy. In 2001, the state became a founding member of the GUAM Organization for Democracy and Economic Development. The organization brings together the more anti-Russian members of the Commonwealth of Independent States (CIS). Furthermore, it is backed by the United States and includes Turkey as an observer—and it is seen as a tool for balancing Russia’s dominance of the CIS. Aliyev’s son and successor upon his death in 2003, Ilham Aliyev, further irritated Moscow with a visit to Brussels in 2006 to sign a European Union (EU) Neighborhood Policy Action Plan; later that year, a Memorandum of Understanding on a strategic partnership between the EU and Azerbaijan in the field of energy was also finalized. In addition to uneasy energy and strategic relations, there are other complications as well. Two Azeri villages—Xraxoba (Khrakhoba) and Uryanoba—transferred to Russia’s Dagestan region decades ago were due to be returned to Azerbaijani control in 2004, but Russia has failed to do so, impeding a final delimitation of the two countries’ shared border. With more than 600,000 Azeris living in the Russian Federation, the Kremlin’s crackdown on illegal immigration and frequent instances of ethnic violence against people from the Caucasus and Muslims have negatively colored relations between Moscow and Baku.
The most important issue, however, remains the status of the selfdeclared republic of Nagorno-Karabakh. Armenia’s occupation of 16 percent of Azerbaijan and the failure of the Organization for Security and Co-operation in Europe’s Minsk Group, co-chaired by Russia, to settle the dispute has led to reports of a massive weapons buildup in Azerbaijan. Despite the tense situation in the southern Caucasus, Dmitry Medvyedev has made efforts to further improve relations by declaring Baku to be a “strategic partner,” and focusing on the issues of cross-border trade, which currently stands at $1.5 billion. The completion of the Olya-Astara-Qazvin rail line connecting Russia to Iran via Azerbaijan in the coming years is expected to increase this to $2 billion.
See also Foreign trade.