EU-Azerbaijan Relations: For Better or for Gas

Azerbaijan has always been a distant partner to the European Union (EU). The Aliyev family dictatorship does not seek democracy for its population nor European subsidies. However, Azerbaijan and the EU have managed to find common ground on the issue of energy, which is not without consequences.

Until the dissolution of the Soviet Union in 1991, Azerbaijan had few contacts with non-Soviet States. Formal relations with the European Union began in 1996, with the signing of a Partnership and Cooperation Agreement that came into effect in 1999.

In 2004, following its enlargement to ten new Member States, the EU established its European Neighborhood Policy, which was further subdivided in 2009 to create the Eastern Partnership. Azerbaijan is included alongside five other post-Soviet States: Armenia, Belarus (which suspended its participation in June 2021), Georgia, Moldova, and Ukraine.

Human rights outside of the Priorities

In 2018, the EU and Azerbaijan concluded their Partnership Priorities, which define four key areas guiding their bilateral cooperation:

• "Strengthening institutions and good governance", including the fight against corruption,
• "Economic development and market opportunities", including support for accession to the World Trade Organization,
• "Connectivity, energy efficiency, environment, and climate action", including support for the Southern Gas Corridor connecting Azerbaijan to Italy,
• "Mobility and people-to-people contacts", including facilitation of visa issuance and the Erasmus+ university exchange program.

Azerbaijan prefers its dictatorship to European subsidies

The EU funds its Neighborhood Policy through the European Neighborhood Instrument, which has a budget of over 19 billion euros for the period 2021-2027. Under the bilateral cooperation, Azerbaijan receives 60 million euros for the 2021-2024 part. This is relatively small compared to the 180 million euros for Armenia, 340 million euros for Georgia, 640 million euros for Ukraine, and 260 million euros for Moldova.

Other European fundings are provided to Azerbaijan through thematic programs focusing on human rights and civil society (EU4Azerbaijan, EU4Business), as well as energy (EU4Energy) and institutional cooperation of public administrations (Twinning).

Former European official Jean-François Drevet notes that "unlike its two South Caucasus neighbors, Azerbaijan does not need European support and is wary of the democratic and environmental conditions of close cooperation with the EU.”[1]

A divided Caucasus towards the EU

Among the Caucasus States, Azerbaijan has indeed maintained the greatest distance from the EU.

Armenia, as a member of the Eurasian Economic Union and the Collective Security Treaty Organization led by Moscow, cannot apply for EU or NATO membership. A Comprehensive and Enhanced Partnership Agreement signed in 2017 and effective as of 2021 deepened the 1996 Partnership and Cooperation Agreement. Unsure of which side to align with – the West or Russia – Armenia found itself entirely isolated during Azerbaijan's first aggression against Nagorno-Karabakh in September 2020 and the second one in September 2023.

Georgia, having lost Abkhazia and South Ossetia, which have de facto come under Moscow's control, maintains a much closer relationship with the EU. It transformed the Partnership and Cooperation Agreement into an Association Agreement in 2014. Following Russia's invasion of Ukraine, Georgia officially applied for EU membership on March 3, 2022.

As for Azerbaijan, it refused to further associate with the EU in 2014. The EU insisted on a comprehensive partnership that put pressure on democracy and human rights, while Azerbaijan only sought a means to regain control of Nagorno-Karabakh. Furthermore, the EU subsidies seemed insignificant compared to the revenues generated by the sale of the hydrocarbons with which the Caspian Sea is filled. Azerbaijan's GDP has multiplied by 45 between 1995 and 2022, compared to 15 for Armenia.

Relying on Azerbaijani energy: a bad bet for the EU

The only area where the EU and Azerbaijan agree is energy. In 2021, the EU depended on imports for 55.5% of its energy consumption, compared to 44% in 1990. The EU has long sought to diversify its supply, especially from Russia following the gas crisis with Ukraine in 2006. The sanctions against Russia following its invasion of Ukraine in 2022 only confirmed this dynamic of substitution.

However, the Azerbaijani gas transiting through the Southern Gas Corridor since December 2020 is neither a genuine nor a good alternative to Russian gas.

Firstly, Russian gas remains in the picture. The Russian energy giant Lukoil owns about 20% of the Shah Deniz gas field, which is supposed to supply the pipeline. Additionally, since the current production from the Caspian Sea wells is unable to meet both domestic and external demand, Baku has signed a contract with another Russian giant, Gazprom, to fulfill all its obligations. So the EU is actually buying Russian gas from Azerbaijan, but it is also buying it at almost twice the price (and three times the price of Algerian gas), according to a report from the Oxford Institute for Energy Studies published in May 2021.

On the other hand, it is highly unlikely that Azerbaijan will be able to double its gas exports by 2027, despite the grand promises of its president Ilham Aliyev and the president of the European Commission Ursula von der Leyen in July 2022. In fact, the Trans Adriatic Pipeline (TAP), which supplies Greece and Italy, is already operating at full capacity. Additionally, the Oxford report notes that "sales in Europe are inhibited by transport costs " and that "there is limited volume flexibility upstream."

The Oxford report concludes that "even the most optimistic assumptions about upstream development do not suggest that substantial quantities of additional gas will be available in the 2020s. There are no plausible scenarios under which the transport infrastructure expansion will be completed in this decade.”

The EU funds the Azerbaijani dictatorship and its ethnic cleansing in Nagorno-Karabakh

According to international relations specialist Nerses Kopalyan, "the display of Azerbaijan's oil wealth is essentially a publicity stunt. The existing wealth has supported a dictatorial regime, allowing the Aliyev family to consolidate power over the past decade through brutal repression." Nerses Kopalyan warned in July 2022 that "the Aliyevs will again target Armenia if they need to divert attention from internal dissent."

In the end, the EU is still buying its gas from an authoritarian regime, only switching from Vladimir Putin's regime to Ilham Aliyev's. In the Azerbaijani dictatorship, one of the 16 most repressive countries in the world according to a 2022 Freedom House report on Freedom in the World, human rights are constantly violated. No journalist can report on it as the press is muzzled. In 2023, Reporters Without Borders ranked the country 151st out of 180 on the press freedom scale.

The human rights abuses in Azerbaijan should have been enough for the EU to reject the gas purchase from Baku project. But that was without considering the large-scale corruption system that is greasing the palms of European political elites: 2.5 billion euros just between 2012 and 2014, according to a joint investigation by the Organized Crime and Corruption Reporting Project in 2017. The Council of Europe even fell victim to this: in 2013, its Parliamentary Assembly voted against the publication of a key report on political prisoners in Azerbaijan. In 2022, Transparency International ranked Azerbaijan 157th out of 180 on the Corruption Perceptions Index.

But there is something even more disastrous than the EU's support for a repressive dictatorship towards its own population: the indirect funding of its aggression in September 2023 and its ethnic cleansing campaign targeting the 120,000 Armenians of Nagorno-Karabakh, who were forced to flee their ancestral land in the painful memory of the 1915 genocide and the pogroms of the 1980s and 1990s. The false dependence on Azerbaijani gas (5% of European imports in 2022) and the ongoing caviar diplomacy from Baku have led the EU to only issue simple condemnations.

Article published in French in Valeurs Actuelles (November 3, 2023).

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[1] Jean-François DREVET, « Quel avenir pour les pays du Partenariat oriental ? », In Futuribles 2023/3 (N°454) pages 87 to 96.