BACKGROUND: Soon after independence, post-Soviet elites discovered that gas export is not just a major source of revenue but also a potent foreign policy tool in their dealings with, especially, Europe. Europe’s gas supply has become increasingly complicated among other due to Ukrainian politics over the last decade, while Moscow has accused Kiev of neglecting its gas debts and even of stealing gas. In order to avoid these complications, Moscow built the North Stream pipeline through the Baltic Sea and plans to construct the South Stream pipeline through the Black Sea, both of which are intended to bypass chokepoints in Eastern Europe.

While Moscow acknowledges the potential competition that Liquefied Natural Gas (LNG) will present to pipeline-delivered gas, it expects such problems to materialize only in a distant future. The delivery of LNG from Qatar is limited, while Turkey does not permit massive transport of LNG through the Bosporus and Dardanelles into the Black Sea, allegedly for security reasons. U.S. LNG will not constitute a serious problem, in the view of Moscow observers. Even if shale gas production would increase considerably in the future, Moscow expects Transatlantic LNG delivery on a large scale to be overly expensive and hardly a competitor to Russian gas export. Conversely, gas from Central Asia and the Caucasus, and from Azerbaijan in particular, is considered to present more serious competition, and Russia has alternatively courted and threatened Azerbaijan in relation to its gas projects. And judging from Dugin’s statement, Moscow presently regards sticks as more viable than carrots. The tension between Moscow and Baku is likely to benefit Yerevan.

Azerbaijan first emerged as a challenge to Russia’s energy strategy in the 1990s, when it was a crucial player in planning the twin Baku–Tbilisi–Ceyhan and Baku-Tbilisi-Erzurum oil and gas pipelines, which provided outlets for Azerbaijan gas to Turkey and then to Europe. The discovery of new gas deposits in the country raised concerns in Moscow that gas from Azerbaijan could compete with Russian gas, and especially that Azerbaijan together with Turkmenistan could play a crucial role in filling the Nabucco pipeline, which would deliver gas directly to Europe rather than through Russia. Moscow was especially concerned over Iran’s implicit support for Turkmenistan’s participation, which would imply that Iran could send gas to European markets via Turkmenistan and Azerbaijan.

Nabucco did not materialize, yet Azerbaijan and Turkmenistan maintained the possibility of westward gas export as an option. At that point Moscow decided to employ carrots, and Russia’s then President Dmitry Medvedev visited Baku in September 2010, offering that Russia would commit to buying all Azerbaijan’s gas. President Putin made a similar visit to Baku in August 2013 and substantiated Moscow’s appeal by announcing large sales of Russian weaponry to Baku. Thus, Moscow sent clear messages to both Yerevan and Baku. For Yerevan, it signaled that Moscow did not consider its relationship with Armenia as crucially important and that it could be sacrificed if Yerevan failed to follow Moscow’s line. For Baku, it implied that under the right conditions, Moscow would not intervene in case of renewed war between Azerbaijan and Armenia. 

IMPLICATIONS: Yet Baku proceeded with its plan to deliver gas to the West with the help of Turkey. Moscow’s apprehension was enhanced by Azerbaijan’s continued flirtation with NATO, and NATO’s vice chairman recently praised Baku as one of its most important partners. Moscow is increasingly concerned that Azerbaijan’s association with NATO could lead to the emergence of a NATO presence on the Caspian Sea. A stronger NATO presence might well revive plans to construct a Trans-Caspian pipeline and enlist Turkmenistan’s participation in this project. Turkmenistan has entertained this dream for a long time but has been unable to accomplish it, in part due to strong Russian objections. Ashkhabad also hopes to deliver gas to Europe through the TANAP project in which Azerbaijan also participates.

Turkmenistan’s participation would be bad news for Russia, but Iran’s potential involvement would be catastrophic for Russia’s standing on the European market, due to Iran’s enormous gas reserves. Moscow’s concerns are enhanced by the possibilities opened by the relaxation of sanctions against Iran and that Moscow was seemingly not able to reach agreements with Teheran on a variety of issues related to the Caspian Sea. In addition, Teheran was clearly displeased by the fact that it was not even mentioned as a potential partner in the emerging Eurasian Union.

In light of these developments, Moscow appears to have decided to move decisively toward the use of sticks in its relations with Azerbaijan. In May 2013, Moscow stated that it will end its agreement with Baku on sending Azerbaijani oil through the Novorossiysk pipeline in 2014 – but a new agreement was inked in February 2014. However, Moscow has also implicitly threatened the use of force against Azerbaijan. In April 2014, Russia’s Southern Military District announced a “non-planned check of military readiness of the Caspian flotilla,” involving around ten ships and 400 sailors. In all likelihood, the main message intended for Azerbaijan and Turkmenistan by the maneuvers was that if Baku and Ashkhabad were to move forward with the construction of a Trans-Caspian pipeline, Moscow would seek to prevent this by all means, including the use of force.

The Kremlin has expressed its displeasure with Baku through various spokesmen and Dugin’s comments can be taken to reflect the opinions of parts of the Russian elite. Yet the practical implications of this thinking are still unclear. For example, Moscow’s actual willingness to respond militarily to the construction of a Trans-Caspian pipeline is an open question, especially if combined with a stronger NATO presence. The recent events in Ukraine demonstrate that Moscow is predatory but at the same time opportunistic. It annexed Crimea facing little resistance but has refrained from invading Eastern Ukraine, which could entail a more serious confrontation with the West. Moscow has continued to avoid direct military involvement despite passionate appeals to Putin from Dugin and similar intellectuals to send troops. The importance of European gas markets for Moscow might also decline in the future due to the increasing demand in Asia, especially China, as demonstrated by the recent agreement between Moscow and Beijing. Moscow also seems determined to continue delivering weapons to Baku as stipulated by old contract.

Still, Moscow’s policies toward Baku have clear implications for the South Caucasus; they clearly indicate that Armenia will retain its position as Russia’s only ally in region and that Moscow will deter attempts by Azerbaijan to retake Nagorno–Karabakh by force.

CONCLUSIONS:      Dugin’s recent hostile statement on Azerbaijan was directly connected to Azerbaijan’s policy of intensifying its delivery of gas Europe and the competition this implies for Russia’s own gas export strategy. Moscow is especially concerned over the prospect of a gas alliance between Azerbaijan, Turkmenistan and Iran, which could create a serious challenge to Russia’s standing as the primary supplier on the European gas market. While the concrete implications of Moscow’s tougher line toward Baku remain unclear, it constitutes positive news for Armenia, which can now rest assured that it will retain Moscow’s backing in its conflict with Azerbaijan.

AUTHOR’S BIO: Dmitry Shlapentokh is Associate Professor of History, Indiana University at South Bend.

(Image Attribution: Wikimedia Commons/Bill Ebbesen)