AZERBAIJAN AT CROSS-ROADS: EUROPEAN UNION OR EURASIAN UNION

Russia is one of the main trading partners of Azerbaijan while more than 600,000 Azerbaijanis work in various Russian cities and send home crucial remittances. According to Putin, more than a million Azerbaijanis reside in Russia. But, most importantly Russia is one of the chair-countries of the Minsk group of the Organization for Security and Cooperation in Europe, which is tasked to mediate a solution to the Nagorno-Karabakh conflict between Azerbaijan and Armenia. In addition, it has strong military presence in neighboring Armenia with its  102nd Military Base positioned in Gyumri city beside the defense pact between two countries that guarantees  security of Armenia.

Despite the political, economic and military weight of Russia in relation to Azerbaijan, if Azerbaijan chooses the integration to EU and signs the association agreement, it is highly unlikely that Russia will follow the course of actions that it took in case of Ukraine and Georgia.
First, the declining oil-prices and economic sanctions imposed by the USA and the EU sent the Russian Ruble into high devaluation and weakened the resource dependent economy of the country. Today’s Russia, which is engaged in costly military conflict in Eastern Ukraine and has to cover expenses of newly annexed Crimea, is not able to pose serious economic threat to its neighbors.  Economically weak Russia does not have resources and instruments to pressure Azerbaijan and cause serious economic problems for the country. Kremlin may decide to return Azerbaijani migrants to their home country in an attempt to pressure Baku. But, the Associative Agreement can potentially create enough jobs with even higher income possibility for returned Azerbaijani citizens.

On the contrary, the EU is the largest trading partner of Azerbaijan with bilateral trade flows worth €17.9 billion in 2013 (42% of Azerbaijan’s trade). In addition, if Azerbaijan to sign the DCFTA (upon its accession to the WTO) in the future, as former President of the Commission Barroso said during his visit in Baku these agreements are “perfectly compatible with the existing FTAs that Partner countries have with Russia”.  Furthermore, in comparison with economic opportunities offered by the Russia-led EEU, which has just 170 million consumers and a combined GDP of 3 trillion dollars, the EU, the largest economy of the world, has more than 500 million better-off consumers and combined economy of 18.4 trillion dollars. Even If Putin somehow manages, (it is unlikely to happen) to involve the remaining post-Soviet, excluding Baltic nations, the EEU’s market could jump to some 300 million members and under $4 trillion in combined GDP.

Secondly, with its armed forces deployed in Eastern Ukraine, Russia’s military capacity is over-stretched. Even with increased defense budget and attempt to modernize its armed forces, launching another full scale military operation in different post-Soviet state will be very costly for Putin’s administration both politically and militarily. Furthermore, weak economy unquestionably limits Russia’s ability to deploy military operation in another country. Therefore, when last month, pro-European majority was formed in the Moldovan parliament, there was no military action from Russia despite the presence of Russian army in Transnistria region in the form of peacekeepers.  Along with Russia’s declined military ability, there is no Russian military base (like in Ukraine) or military presence (like in Ossetia and Abkhazia in Georgia) in Azerbaijan. Therefore, any military operation against Azerbaijan or provocation that could lead to full-scale war would be very costly for Kremlin.

Finally, joining the Association Agreement and fostering the integration with the EU would have very limited negative political implications from the Russia. First of all, effectiveness of the Minsk group of the OSCE, which is tasked with mediating a solution to the Nagorno-Karabakh conflict, have proven to be very limited. In fact, there has been talks about moving the negotiation and mediation process to another international body, which could put more pressure on parties such as the EU. Secondly, with a current international image, Russia has very limited political support to offer and even its position as a permanent member of the UN is very little use to Azerbaijan, which usually choose the General Assembly to pass the resolution about the Nagorno-Karabakh. On the contrary, the EU is one of the main international actors and can offer great political support to Azerbaijan. Furthermore, joining the Customs Union would negatively affect the independence of Azerbaijani government, which repeatedly stated that the priority for the country is to keep the sovereignty over its foreign and economic policies, while the integration to the EU will enhance its international stand.

Conclusion

Declining oil prices and Ruble, along with economic sanctions seriously hit the Russian economy limiting Kremlin’s ability to exercise its power over Azerbaijan if the latter chooses the European integration. Military conflict in Ukraine has already overstretched the Russia’s military capacity,  while the country has very limited political influence over Azerbaijan. Lack of any strong reactions to Moldovan elections, which saw pro-European majority to be formed in the parliament, indicates the Russia’s inability and unwillingness for further conflicts with its immediate neighbors. Therefore, Azerbaijan should sign the Association Agreement, which will provide great opportunity for further economic growth and gain the country political support in the form of the EU.

Razi Nurullayev, Contributor, Strategic Outlook

Razi Nurullayev,political scientist, is a deputy-chairperson for Foreign Affairs of the Popular Front Party of Azerbaijan and chairperson at “REGION” International Analytical Center (RIAC).

“Region” International Analytical Centre (RIAC) is a Baku-based think-tank in Azerbaijan working on policy issues in Post-Soviet Space.

http://www.strategicoutlook.org/caucasus/news-azerbaijan-at-crob-roads-european-union-or-eurasian-union.html