Will pipeline development bring about another Armenian-Azerbaijani war over Nagorno-Karabakh?

Jun 26, 1999 02:00 AM

by Manos Karagiannis

The Karabakh conflict has left Azerbaijan in a state of "frozen instability" that reinforces the immature state of the country's political development and poses a considerable risk premium for pipeline development and operation in the region.
Although the Russian-mediated cease-fire signed by the parties to the conflict five years ago has largely held, recent shoot-outs across the line of contact show that conditions of nominal peace in the region should not be taken for granted.
Serious clashes, for example, occurred on June 14, 1999, in northern Nagorno-Karabakh between a 300-strong Armenian unit and units of the Azerbaijani army. While both sides have confirmed that the incident happened, it is still unclear who initiated the fighting, which was reportedly the worst in the last two years. The last clash on a similar scale took place in the spring of 1997 on the Armenian-Azerbaijani border, in the Gazakh district of Azerbaijan.

Border clashes are not an unusual phenomenon in the area, but this time things may not be so simple. When the war stopped in 1994, the Armenian side was the de facto victor, occupying, apart from Nagorno-Karabakh itself, significant areas of Azerbaijani territory east and south-east of the disputed region. Since Azerbaijan's armed forces have been too weak to challenge Armenian control of these areas, the result has been a reasonably stable status quo.

However, the recent completion of the Baku-Supsa pipeline is clearly upsetting the status quo between the two sides. The prospect of large inflows of export revenue has given rise to concerns in Armenia that the balance of power will shift in the future in Azerbaijan's favour, threatening Armenian territorial gains.
If Azerbaijan starts improving its military capabilities to the point that it could threaten Armenian control of the enclave, Yerevan might be tempted to strike a pre-emptive attack. If such a strike were launched against Azerbaijan early enough, the Armenian side would not need to carry out a Pearl-Harbour style destruction of much of Azerbaijan's military capacity; it would only need to cut off the source of Azerbaijan's rising power -- that is, its oil exports.
As many analysts have pointed out, one obvious target for an Armenian offensive would be the Baku-Supsa pipeline, which runs very close to territory occupied by Armenian forces in Nagorno-Karabakh. Although Azerbaijani military officials claim that the country's defence forces are capable of guarding the pipeline, it would be extremely difficult, if not impossible, to protect every single section of the line, which passes within the range of heavy artillery fire from forces in Karabakh.
Moreover, there has been a massive arms build-up in Armenia in recent years. Yerevan has imported more than $ 1 billion of weapons from Russia since 1996 to establish an offensive force in and around Nagorno-Karabakh. With SCUD and Luna-M tactical missiles -- as well as a Typhoon rapid-fire missile system recently obtained from China -- in its possession, the Armenian side certainly looks capable of disrupting the flow of oil from Azerbaijan by destroying the Baku-Supsa pipeline, either in Azerbaijan or Georgia. Considering the strategic importance of this pipeline to Azerbaijan, the disruption of oil flows could not but deal this country a stunning blow both politically and economically.

The populist and nationalistic fever surrounding the Armenian-Azerbaijani conflict make it difficult for any leader on either side to retreat. In Azerbaijan, for instance, the successful exploitation and transportation of offshore oil has contributed to a belief that time is on Baku's side and that there is less need to compromise now because the country's position will improve in the future. Opposition parties in Azerbaijan, for their part, are taking even a harsher line.
Such attitudes increase the risk that Baku will eventually resort to force if no progress is made at the negotiating table, for once oil revenues start to fill the nationalcoffers it will be harder for the Azerbaijani government to explain to its people why Azerbaijani lands are still occupied by Armenian forces. Indeed, the U.S. Arms Control and Disarmament Agency (ACDA) estimates that Azerbaijan's military expenditures have in recent years increased.

On the other hand, the government of Nagorno-Karabakh is made up of people who have served on the front lines of the war and whose survival, both in a mortal sense and in a political sense, depends on the maintenance of their territorial gains.With Azerbaijani army getting stronger and with military co-operation between Moscow and Yerevan intensifying, it is highly doubtful that this tragic conflict will be settled any time soon. This naturally translates into chronic political instability in the Caucasus -- a situation that seriously undermines pipeline development and operation. It is obvious that for as long as such conflict situations close to areas of oil and gas production persist -- and thereby create threats for assuredtransportation -- international oil companies will be seriously constrained in terms of investing in Caspian development projects.

* Manos Karagiannis can be contacted by e-mail at E.Karagiannis@pol-as.hull.ac.uk.

Source: NewsBase
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