The upcoming parliamentary elections in Azerbaijan are being closely followed in the United States and Europe. Economic development, the role of the oil and gas industry in Azerbaijan's economy, civil society, corruption, geopolitical challenges, relations with Iran, and the rising profile of radical Islamic ideology in the Caspian region continue to confound policy makers around the world.

What can the Unites States expect after this round of parliamentary elections in Azerbaijan? What are the chief U.S. interests in the Caspian region?

A panel of experts on the region discussed these issues at The Heritage Foundation on October 27, 2005. This WebMemo summarizes that event.

Ariel Cohen, moderator

Senior Research Fellow for Russia and Eurasia Studies, The Heritage Foundation

As the November 6 elections approach, the U.S. should consider its interests in Azerbaijan. It has three major interests:

1. A Source of Oil: The Caspian Basin is a prime non-Persian Gulf source of oil for global markets.
2. A Strategic Partner: Azerbaijan's location next to Iran is critical to prevent smuggling of materials and components of weapons of mass destruction and in case of the U.S. decision to pursue military action against Iran.
3. A Moderate Example: Azerbaijan is a model of a Muslim Shi'a secular state that has a functioning democracy.

It is important that Azerbaijan remain stable, and both the U.S. and Russia have no conflicting interests there. The U.S. and others should work on peaceful resolution of the Karabakh conflict between Armenia and Azerbaijan.[1]

Matthew Bryza

Deputy Assistant Secretary of State for Europe and Eurasia, U.S. Department of State

Azerbaijan is at the center of three major U.S. interests:

1. Regional Energy Strategy: The United States will consume little oil from the Caspian Sea; the bulk will go to Europeans. The U.S. interests here are to preserve stability in global energy markets and prevent the monopolization of oil supplies by any one region. The Baku-Tbilisi-Ceyhan (BTC) pipeline is central to these ends. As well, BTC ties Azerbaijan to the West and gives the country control over own destiny by providing strategic options apart from Russia.
    
2. Security: The United States has security interests in Azerbaijan stemming from the war on terrorism. So far, the United States has received useful cooperation from Azerbaijan on this front. For that to continue, the United States must help protect Azerbaijan's sovereignty and territorial integrity, especially when it comes to the Nagorno-Karabakh issue. The U.S. is working on that issue through the Minsk group of countries, which also includes France and Russia.
    
3. Freedom Through Reform: The United States wants to ensure that Azerbaijan enjoys political and economic freedoms because freedom is the most stabilizing force in the world. In Kyrgyzstan, there was a revolution because there was no freedom and, many people believed, no justice.

Some people say that we should maintain the status quo to ensure stability, but absent political and economic freedom, tensions inevitably arise. There is no stability in the status quo. It is better to be on the positive side of freedom than to let events run their course and for a revolution to erupt.

The U.S. needs to balance these three interests. So far, it has done a good job with war on terrorism and energy, but less so with democratic reforms. The U.S. wants these reforms, and it hopes to see clean elections. The U.S. wants to bolster stability through legitimate democracy.

What progress is being made? According to Reno Harnish, the U.S. ambassador to Azerbaijan, President Ilham Aliev has pledged to bolster the fairness of elections. What he is doing reflects what the international community wants him to do. He has allowed the opposition open discourse so that there is no reason for them to take to the streets. Aliev seems fully serious about implementing the reforms he has promised. If the elections go well, they will elevate the U.S.-Azerbaijan relationship to a new level of strategic partnership.

H.E. Hafiz M. Pashayev

Ambassador of Azerbaijan

The Azerbaijani government is working to convince the people and the international community that there will be free and fair elections. Since 1991, Azerbaijan has been developing democracy and a market economy. It has followed the suggestions of the international community to implement democratic reforms. Over the last 13 years, Azerbaijan has had four presidential elections and two parliamentary elections that have been held in a timely manner. In the last parliamentary election, about 2,000 candidates competed for 125 seats. President Aliev has issued two major decrees on elections, and Azerbaijan has hosted high-level officials from the United States. On September 30, the Organization for Security and Cooperation in Europe (OSCE) acknowledged that Azerbaijan is doing a good job with elections. A public television station in Azerbaijan airs candidate advertisements. People prefer seeing TV commercials and community outreach to demonstrations and protests.

In his October 25 decree, President Aliev said that he would receive election observers from both inside and outside the country. He has lifted restrictions on foreign observers and implemented finger inking and ID cards as international groups have suggested.

The quality of life in Azerbaijan has improved of late. Economically, there is strong growth and low inflation. GDP growth has averaged 10 percent per year over the past 7 years. The BTC pipeline is the crown jewel of our energy policy. And Azerbaijan has proven that a secular government can exist with a Muslim population.

S. Enders Wimbush

Director, Center for Future Studies and Senior Fellow, The Hudson Institute

This election is important to define the future of the US relationship with Azerbaijan. It is important to consider the landscape where these elections are taking place-both in the near term and far out on the horizon.

Azerbaijan is not a Saudi Arabia when it comes to oil production. At most, the Caspian region will make up no more than 4 or 5 percent of the world's total oil production. This production is, however, extremely important to make up for shortfalls elsewhere. Experience with oil disruptions in Iran, Iraq, and other places have taught us that diversification is important to energy security. The BTC pipeline links Azerbaijan to Southern Turkey through Georgia. It is Georgia's biggest state enterprise. The pipeline is strategically important for the future of the region. It will increase the linkages between the three countries it crosses and between them and the West. Without constant attention, these links could break.

Azerbaijan is a master-link that connects U.S. interests and strategies. Azeris are ethnically Turkish, culturally Persian and religiously Shiite. There are 30 million Azeris in Iran, and separatist Azeri demands calling for reunification with Azerbaijan could destabilize that country. Any U.S. strategy towards Iran must take Azerbaijan into account. On Azerbaijan's northern frontier are the conflicts in Chechnya and the North Caucuses. The route from Azerbaijan through Dagestan to Chechnya is dangerous because terrorists use it. Russia is concerned about Islamic terrorism spreading into its Muslim heartland, and so Azerbaijan is key concern for Russia.

On the horizon, there is a lot that can happen that is of strategic importance. Throughout Eurasia, realignments are taking place. Since the fall of the Soviet Union, alignments between powers have become very fluid. For Azerbaijan, there are many different power players with which to align. China and India are interested in Caspian energy. Russia is interested in reasserting its influence in the Caucuses. Turkey is re-identifying its interests, especially now that the likelihood of its accession to the EU looks bleak. Azerbaijan will certainly be part of Turkey's new "neo-Ottoman" strategic focus. The United States has an interest in establishing long-term bases in Azerbaijan. In Eurasia, a large, fluid, and mobile landscape is in motion. Countries are not stuck in place, as they were when the Soviet Union was dominant. This new playing field is tricky for the U.S., and new strategies are being written. This is a field that favors strategists, not tacticians. This election will bring focus to our relationship with Azerbaijan.

Zeyno Baran

Director, International Security and Energy Program, The Nixon Center

The U.S. must pay more attention to Azerbaijan. Azerbaijan is a secular Muslim democracy. These days, there is a lot of attention on the Middle East and on the question of whether an oil-rich Muslim country can have a democracy. Shi'a Azerbaijan, with its considerable Sunni minority, has no Sunni-Shiite tensions. Azerbaijan is one of two Muslim countries-the other being Kazakhstan-that has sent troops to Kosovo, Iraq, and Afghanistan. The Azerbaijani people are proud that they established the first democracy in the Muslim world in 1918.

I think that President Aliev will gain more legitimacy with these elections. In addition to the October 25th phone call from Vice President Dick Cheney, President George W. Bush sent Aliev a letter on October 18th that put political pressure on Aliev to hold free and fair elections. This may not seem that important until you consider it in context. The United States has kept Aliev at arms length for too long. U.S.-Azerbi relations were put on the wrong track after the last presidential elections in 2003, when then-Deputy Secretary of State Richard Armitage made it appear that the U.S. was supporting Aliev even before elections took place.

Aliev issued an executive order in May that put in place measures for a free and fair election. Aliev learned lessons from the Tulip revolution in Kyrgyzstan. There will not be a color revolution in Azerbaijan, and that is a good thing. Revolutions are a result of a failure of democratic processes. We should pursue the model of evolutionary change in Azerbaijan.

Aliev is very popular in Azerbaijan, unlike the leaders of the countries of the colored revolutions. In Georgia and the Ukraine, there were strong and charismatic opposition leaders with clear alternate visions for their countries. In the case of Azerbaijan, the opposition has an agenda that is no different than the government's. The opposition wants to do the same things that Aliev is doing but claims that it lessen corruption.

The colored revolutions came after elections that the international community saw as unfair. There has already been a revolution in Azerbaijan, and it has been done by Aliev's reforms. Some see Aliev's recent dismissal of five ministers as a bad sign, but it should not be seen that way. Those ministers were some of the most corrupt people in Azerbaijan. The U.S-must continue to engage Azerbaijan and encourage the country to do the right thing.

Kevin DeCorla-Souza, an intern at The Heritage Foundation, contributed to this summary.