“Risky Business”: The EU’s gas deal with Azerbaijan; its challenges and implications
By Karina Meyer, 5 minutes
The Russian invasion of Ukraine and subsequent deterioration of relations between Russia and the European Union (EU) have ‘turned off the tap’ on one of the EU’s main gas sources. The EU has turned to new and old partners in search of supplementing its supply. Azerbaijan has become a strategic partner in that respect. The partnership, however, comes with many hurdles. What have been the main challenges in the partnership and how is the EU dealing with it?
Almost a year ago, on July 18th 2022, the EU signed a Memorandum of Understanding (MoU) with Azerbaijan; an agreement that included a commitment by Azerbaijan to boost its supply of natural gas to the EU to 20 billion cubic meters by the year 2027. This year on April 25th national gas companies in Romania, Bulgaria, Slovakia, and Hungary signed an agreement with Azerbaijan agreeing to boost gas transfers to Europe. However, many have raised concerns about the increased partnership calling it a ‘risky business’ due to Azerbaijan’s accusations of corruption and human rights violations, its ongoing conflict with Armenia and its close ties to Russia. Despite this, the EU has made a pledge to pursue the partnership.
What have been the main challenges in a closer partnership with Azerbaijan?
Azerbaijan and Armenia have been involved in a conflict going back centuries over the Nagorno-Karabakh region, which is situated within Azerbaijan’s internationally recognized borders but has historically been inhabited by ethnic Armenians. Decades of conflict have led to two outsight wars and incessant attacks, forcing thousands of civilians to flee their homes and leaving them displaced. The countries reached a Russian-brokered ceasefire in 2020 which entailed Russian peacekeepers being deployed to the region. However, fighting resumed in September 2022, sending a signal to other countries that further mediation is required.
Amid the escalation of tensions between Armenia and Azerbaijan, in response to Yerevan’s request, the EU has deployed 100 unarmed monitors to the region within a European Mission in Armenia (EUMA). The action has been seen as a major win by Yerevan as it hopes to secure the support of the EU in case of another attack. In response, Moscow has accused the EU of trying to “squeeze Russia out of the region”. Azerbaijan’s government has also criticized the action, with President Aliyev stating that it “will not improve security” and could further damage the relationship between Armenia and Azerbaijan. The EUMA exposes difficulties the EU must face in balancing its economically based relationships with those based on shared values. Overall, the EU’s actions can be seen as an effort to remain neutral towards the conflict by pursuing relationships with both countries.
Forming a partnership with Azerbaijan has also been problematic due the state of politics in the country. The country has a strong record of human rights abuses, democratic deficit, and censorship of free speech. Succeeding his father, President Ilham Aliyev came to power in 2003 through elections that have by many been regarded as fraudulent. According to Transparency International, the country scores very high on corruption, with an elite said to be siphoning off public funds for personal gains. The EU has condemned Azerbaijan for its violations in a report produced by the Foreign Affairs Committee, stating that: “[the EU] highlights Azerbaijan’s poor record on respect for human rights and fundamental freedoms, and stresses the need to make further EU-Azerbaijan cooperation conditional on the country’s effective and tangible progress towards respect for international standards and commitments.”
Lastly, Azerbaijan’s close ties to Russia pose a difficult navigating ground for the EU. Currently, the EU hopes that with Russia preoccupied with the war it is waging in Ukraine, it can boost its presence in the region. However, both Azerbaijan and Armenia still hold strong ties with Russia due to both being former members of the USSR, although Armenia has become increasingly critical towards Russia and support of the EU is at high levels in the country. Currently, Russia still has peacekeepers stationed in Nagorno-Karabakh. Therefore, the EU’s involvement in the Caucuses is not only closer to geographical proximity to Russia, but also political.
President Urusula von der Leyen and President Ilham Aliyev
What is the Memorandum of Understanding?
In its official name, the Memorandum of Understanding on a Strategic Partnership in the field of Energy, is an agreement committing Azerbaijan to double its natural gas supply to the EU. Gas is to be delivered to the EU using the Southern Gas Corridor pipeline, a which runs through Georgia, Turkey, Greece and into Italy.
In 2021 Azerbaijan had already been delivering 8.1 billion cubic meters (bcm) of gas to Europe and by 2027 it is set to be delivering 20 bcm annually. For comparison, the Netherlands consumption of gas for the year 2022 was set at an average of around 3.8 bcm. Although Azerbaijan is a strategically very important partner, the numbers are nowhere near that of Russia which imported 155 bcm to the EU in 2021.
The agreement is part of a wider Repower EU plan issued by the Commission which aims to diversify the EU’s energy sources and make Europe independent from Russian gas by 2030.
In line with the REPowerEU plan, the MoU also mentions efforts of both countries to cooperate on clean energy. During her visit in Baku in July of 2022 President Ursula von der Leyen stated: “We are also laying the foundations of a long-term partnership on energy efficiency and clean energy, as we both pursue the objectives of the Paris Agreement”. Such statements imply the partnership to be a long-term commitment.
However, the MoU itself has many ‘escape routes’ for both parties. The agreement states that both parties should be under “(...) any binding legal or financial obligations” nor does the MoU “(...) constitute obligations to allocate funds.”
There have also been allusions to expanding the relationship beyond the energy sector. The EU has mentioned a larger agreement focused on enhanced cooperation on human rights, civil society, and independent media. Such an agreement could help Azerbaijan build up its democracy to aid fighting its issues of corruption and democratic deficit.
Critics of the partnership, however, have argued that the partnership is placing the EU in dependance of another autocracy. Many have also argued that it will only strengthen the autocratic government and enable Azerbaijan to continue its military offensive against Armenia.
These criticisms are not completely groundless, as over the course of President’s Aliyev’s 19 years in power media freedom has become severely restricted and civil society groups have faced persecution from the government.
It remains to be seen whether the EU will be able to persuade the Azeri government into scaling back its autocratic control and respecting democratic principles.
The Future of the Relationship
Presently it seems as though the EU and Azerbaijan are both dedicated to strengthening ties with each other. Agreements in the sector are significant signs that the countries plan to cooperate more closely.
However, the relationship comes with its many challenges, especially for the EU as it struggles to balance its interests with protection of its values. The EU will most likely continue promoting democracy and human rights in the region and pressuring the Azeri government to peacefully resolve its conflict with Armenia.
The future of the partnership rests on both parties’ willingness to work together on joint resolutions, despite their differences.
To find out more about the future of EU energy and EU-Azerbaijan relations look here!
