VZCZCXRO7029
PP RUEHDBU RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHKB #0339/02 1131009
ZNR UUUUU ZZH
P 231009Z APR 09
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 1104
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHBUL/AMEMBASSY KABUL PRIORITY 0106
RUEHAK/AMEMBASSY ANKARA PRIORITY 3350
RUEKJCS/SECDEF WASHDC PRIORITY
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
RHMFIUU/CDR USTRANSCOM SCOTT AFB IL PRIORITY

UNCLAS SECTION 02 OF 03 BAU 000339 
 
SENSITIVE 
SIPDIS 
 
TRANSCOM FOR POLD 
 
E.O. 12958: N/A 
TAGS: PGOV PREL MARR AF TU AM AJ
SUBJECT: AZERBAIJAN: SCENESESTTER FOR GEN MCNABB'S BAKU 
VISIT 
 
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BAKU 04230339  002 OF 003 
 
 
security concerns stemming from the conflict, the issue is 
the one question that unites the Azerbaijani public on a 
visceral level.  Azerbaijan is willing to pursue the 
political track to solve the matter; however any solution 
that does not guarantee the territorial integrity of 
Azerbaijan is anathema.  Azerbaijanis' views on this issue 
have intensified in the context of Turkish-Armenian moves 
toward opening the border.  If the issue is raised in your 
meetings, we recommend that you emphasize that the United 
States views the Turkey-Armenia process and Nagorno-Karabakh 
as processes that both need to move forward - a point 
recognized by POTUS during his address to the Turkish 
Parliament -  and strongly reiterate the commitment of the 
United States to the Minsk Group peace process.  Presidents 
Aliyev and Sargsian last met in Zurich on the sidelines of 
the World Economic Forum, and are expected to do so next 
during the summit on the EU Eastern Partnership in Prague or 
Brussels in early May. 
 
Energy 
------ 
 
¶6.  (SBU) Energy is one of the three essential areas of 
United States engagement with Azerbaijan, along with security 
and political and economic reform.  Azerbaijan's massive oil 
and gas reserves and strategic location place the country at 
the epicenter of Eurasia energy policy.  Azerbaijan currently 
exports oil through two non-Russian pipelines to European 
markets (Baku-Supsa (Georgia/Black Sea) and 
Baku-Tbilisi-Ceyhan), in addition to the Baku-Novorossiysk 
(Russia/Black Sea) pipeline, and produces natural gas for 
export via Georgia and Turkey.  As a producing and transit 
country, Azerbaijan is key to the development of a Southern 
Corridor to transport Caspian hydrocarbons to European and 
world markets, including Kazakh oil and Turkmen gas.  The 1 
million barrel per day BTC pipeline was disrupted during the 
August crisis by an explosion in Turkey unrelated to the 
Russian invasion of Georgia, but Russian bombing near Tbilisi 
did destroy a rail crossing vital to Baku's back-up transport 
plan.  For this reason, the USG has conveyed to the GOAJ the 
United States' interest in cooperating on critical energy 
infrastructure protection. 
 
¶7. (SBU) Bilateral difficulties centering on the price of 
Azerbaijani gas now being sold to Turkey and the 
unwillingness of Turkey to grant transit to Azerbaijani gas 
that would be exported in the future to European markets are 
the major obstacles to the success of the "Southern Corridor" 
project, which seeks to diversify routes for Caspian gas to 
European markets.  Azerbaijan's diplomatic difficulties with 
Turkey at the moment intensify this problem. 
 
¶8. (SBU) Azerbaijan's oil production at offshore fields, 
which are mainly operated by a consortium led by British 
Petroleum (BP), have the capacity of 1 million barrels per 
day; however technical disruptions in the fall and winter 
reduced that output.  Meanwhile, international oil companies 
are urging Azerbaijan to conclude agreements with Kazakhstan 
to allow oil to flow by tanker to BTC from the mammoth North 
Caspian Kashagan field, which should come on line in 2013. 
Chevron has already begun shipping small volumes of oil from 
Kazakhstan's Tengiz field to BTC.  In this connection, we are 
noting to the GOAJ that the goals of transparency, security 
and safety will be e best served by including the 
International Energy Companies who are partners in the 
Kashagan and Tengiz fields in any cross-Caspian 
transportation arrangements. 
 
 
Democracy and Reform 
-------------------- 
 
¶9. (SBU) Generally speaking, the October 2008 presidential 
election and the hastily conducted March 2009 referendum that 
amended the Constitution, inter alia, to lift the two-term 
restriction on the President were  not positive moments in 
Azerbaijan's democratic transition.  The referendum in 
particular was arranged with lightning speed by the ruling 
party, with parliamentary approval, and Embassy observers 
reported widespread fraud during voting.  However, the fraud 
appeared to be directed at padding the vote totals, and we 
assessed that especially considering the low bar that 
 
 
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