International Policy Digest

Christof Sonderegger
World News /22 Jul 2017
07.22.17

Rethinking U.S. Foreign Aid Toward Azerbaijan

Azerbaijan has emerged as an important asset for the US and its allies in a turbulent region; it is a key oil exporter, a NATO partner for peace, and is located at a geopolitically advantageous position between Russia, Iran and Turkey. However, Azerbaijan requires more attention by the US government due to growing concerns regarding human rights violations and its rapid increase in defense spending. The US must pay more attention to how Azerbaijan’s military escalation may threaten peace and stability in the Southern Caucus, especially since US energy security is at stake. To address democratic backsliding in Azerbaijan and prevent regional security instability, the US should reevaluate its military aid policy by applying strict conditions and monitoring mechanisms on aid recipients.

Azerbaijan has been a key ally of the US since 2001 due to its geostrategic significance and a recipient of US foreign aid. As an emerging supplier of oil to Europe and Asia, the Azerbaijanis have been a priority for US energy security and national interests and they have also enjoyed the benefits of US business investments. US oil interests in Azerbaijan are primarily demonstrated through its share in the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has Russian leverage over energy supply to America’s European allies. However, the current state of Azerbaijan poses a concern for US policy to the region, as the exponential buildup of the Azeri military threatens peace and stability in the South Caucus.

The US has utilized military aid as a tool to exert its interests concerning cooperative threat reduction and the security of oil trade in the Caspian and South Caucuses. It is important to analyze whether this tool has been genuinely effective in these states’ objectives, which calls into question the outbreak of war in 2016 between the Armenian separatist forces in the Azerbaijani region of Nagorno-Karabakh. The failure of Washington to prioritize conflict prevention between Azerbaijan and Armenia has allowed for a self-seeking Russia to exert its influence in the region at the cost of US energy and regional security interests (vis-a-vis its military agreements and arms deals with both Armenia and Azerbaijan).

US should be concerned about how Russia has wielded its influence over Azerbaijan and Armenia in order to benefit from the regional resources and geostrategic positions to strengthen itself and bolster its sphere of influence. As a state that has directly challenged international norms (by the annexation of Crimea), Russian influence in this region threatens US interests, as the South Caucus region has been vital in reducing the European energy dependence on Russia. The outbreak of war between Armenia and Azerbaijan risks a spill over into Georgia (a potential NATO member), as well as spill over into Turkey (another NATO member), and could reignite separatist intentions in Georgia and Turkey. Moscow holds leverage over both Armenia and Azerbaijan, because Azerbaijan is a signatory to a $4 billion arms deal with Russia, and Armenia is a signatory to the Collective Security Treaty Organization.

The current US military aid program to Azerbaijan requires re-evaluation as developments in Azerbaijan in terms of press freedom, economic liberty, democratization and human rights indicate troubling signs of democratic backsliding. Moreover, asserting US interests and national security concerns can yield strategic benefit, by disrupting Russia’s influence in the region. US oil interests in the Caspian are at risk by the growing tensions in the security climate between Armenia and Azerbaijan over Nagorno Karabakh. This is especially significant given that the OSCE Minsk group recently identified Azerbaijan as responsible for a ceasefire violation- the first instance of the OSCE Minsk group labelling one of the sides as the aggressor.

In 2015 alone, the US assigned 35.33 million dollars in aid to Azerbaijan, 44% of which was for military aid and 56% for economic development. However, in 2015, Azerbaijan was recorded to have spent 5.5% of its GDP on its military budget, almost doubling since 2010 (by an increase in 2.79%), as opposed to the world average of 2.2%. If spending occurred for the sake of border security against Armenian separatist forces, these increases were still unwarranted; as Azerbaijan’s military expenditure of 1931.8 USD million in 2016 outpaced Armenian spending by a margin of 1508.8 USD million.

Pre-existing Policies

Section 907 of FREEDOM Support Act

Under section 907 of the FREDOM Support Act, the US was prevented from providing Azerbaijan with any form of governmental aid, “until the President determines, and so reports to the Congress, that the Government of Azerbaijan is taking demonstrable steps to cease all blockades and other offensive uses of force against Armenia and Nagorno-Karabakh.”
Reorientation of Policy (2002 onwards)

Following the 2001 attacks on the World Trade Centre, US policy reoriented due to counterterrorism concerns. In 2002, the FREEDOM Support Act was amended to extend the presidential waiver for US national security concerns. However, Public Law 107-115 posed a serious concern with policy orientation, within section 2c and 2d of the amendment as to whether the ambiguous wording of the act calls into question consistency between US action and objectives. The law states that in section 2C of the waiver the president can waive the section 907 of FREEDOM Support Act, if it “is important to Azerbaijan’s border security.” The lack of specificity within the amendment has given Azerbaijan a license to further militarize and escalate tensions on the border with Armenia. The Department of State has reaffirmed its commitment to the US aid program for Azerbaijan, especially regarding Azerbaijan’s border security, stating that “U.S. security assistance aims to increase Azerbaijan’s ability to contribute more effectively to international efforts on peacekeeping, counterterrorism, counter-narcotics, and combating the proliferation of weapons of mass destruction (WMD)” as well as bolstering “Azerbaijan’s border security.” This is particularly problematic when America’s role in the OSCE Minsk group is accounted for. The US has been a co-chair for peace resolution in the Nagorno Karabakh dispute in the Minsk Group, however, the US must account for the relative stagnation in steps to achieve this objective. For the US to properly assert peace and democratic principles in the region, it must reconsider the standards it holds to its military aid recipients.

Policy Options

1. Conditional Military Aid: This would involve restricting the provision of aid to only the purchase of US arms, along with greater presence of OSCE monitors on the border. One of the conditions is that there is a reduction in military expenditure, which in turn is used for efforts to democratize Azerbaijan and contribute to domestic reforms. Moreover, another condition of military aid would be the monitoring of elections by the Department of State and investments in social reforms.

Advantages

The significant advantage of a conditional military aid program toward Azerbaijan would be to incentivize the Azeri military’s de-escalation and democratization, which would act as a deterrent to developing tensions in the region. Whilst this option holds a risk of Azerbaijan falling further into Russia’s sphere, this risk is low. If Azerbaijan adheres to the conditions the US poses, they can leverage their compliance for the endorsement of a favorable solution to negotiations regarding Nagorno Karabakh. Unlike the pre-existing military aid policy, this policy would address the serious issues regarding anti-democratic practices in Azerbaijan.

As it stands, Freedom House categorizes Azerbaijan similar to Russia and Iran when it comes to civil freedoms, and the Transparency International’s Corruption perception ranked Azerbaijan as equal to Kazakhstan and Pakistan at 126. In addition to this, Azerbaijan also recognizes the value of economic and security opportunities by allying with the US rather than Russia, as Russia’s growing isolation from the international community (after Crimea) has affected its economic growth. Their decision to not join the EAEU highlights their rejection of Russia’s integrationist security alliances.

Disadvantages

The disadvantage associated with conditional military aid policy would be the costs and resources required for implementation. In addition to this, ensuring compliance of Azerbaijan on issues of de-militarization and compliance with democratic rubrics risks signaling offensive intentions by the US. For example, the EU’s attempt to enforce Azeri compliance towards democratic values has failed completely, due in part to Europe’s desire to free themselves from Russian dependency on oil supply, as well as the low level of interest in the Azerbaijani government.

2. Cessation of Military Aid: The second policy option is to coerce Azerbaijan through the temporary suspension of military aid, until certain pre-requisites are met. Re-launching military aid will require the agreement by the Azerbaijani government to meet the necessary pre-requisites. These requirements involve de-escalation tensions on the line of contact with Armenian separatist forces in Karabakh, a reduction in military aid, and the monitory fulfilment of the OSCE Minsk conditions.

Advantages

The second policy would be placing a temporary halt on military aid to Azerbaijan, to compel it to take measures to move towards transparency.

While Azerbaijan is not dependent on military aid from the US, the cessation of aid would send an important signal about the benefits Azerbaijan gains from foreign investment and cooperation with the West, and therefore Azerbaijan would seriously consider compliance. Military aid is an important signal that symbolizes the intentions of the sender and the state of relations between said sender and the recipient. With the US taking strides to condemn instances of democratic back-sliding, Azerbaijan will be compelled to pay attention for the sake of safeguarding an alliance with the US and its foreign investors that has been vital to its economic growth. This argument was articulated by President Obama, who remarked in 2014 that: “In places like Azerbaijan, laws make it incredibly difficult for NGOs even to operate.”

Disadvantages

The main disadvantage of suspending military aid to Azerbaijan is the risk of Azerbaijan falling into Russia’s orbit. This risk was evident through the domestic outcry in Azerbaijan that occurred in the Zurich protocols (that aimed to open border between Armenia and Turkey), as a string of anti-Turkish, pro-Russian sentiment emerged from the public and opposition parties. Moreover, this option may be unfavorable domestically, as Congress would prefer not to cease giving military aid to a strategic partner. Ultimately, economically coercive diplomacy will only encourage further democratic back sliding by motivating the government to undertake further repressive activities against civilians to consolidate its power.

3. Multilateral Enforcement: The third option would involve the US endorsement of Azerbaijan’s integration into Europe’s political and economic order. Through multilateral enforcement from European institutions such as the European Union, the Organization for Security and Cooperation in Europe and the Council of Europe, issues concerning democracy, human rights and economic reform can be addressed, while also enforcing responsibilities concerning counter-terrorism objectives.

Advantages

Policy option three allows the US to promote interests of democratic reform without engaging in direct coercive action that may undermine the bilateral relationship. Azerbaijan has been a key actor that has allowed for the reduction of Europe’s dependence on oil, and further ‘Europeanization’ of Azerbaijan could further objectives in this region. Azerbaijan demonstrated willingness to cooperate with EU democracy demands in 2008 at the Joint Program election project, which succeeded in implementing legislation on election conduct. This will limit US direct action against Azerbaijan while allowing for multilateral enforcement of democratization requirements, subsequently safeguarding the US-Azeri relationship. Moreover, while Europe is reliant on the Caspian for oil, in 2015 statistics showed that $6.37 billion out of $11.1 billion worth of imports to Azerbaijan were from Europe. This indicates that Europe has sufficient leverage over Azerbaijan to engage in a multilateral effort to work towards democratization.

Disadvantages

The problem with this approach is that it is not direct enough for the US to work towards democratic objectives and standards in Azerbaijan. As a multinational institution, the European Union is ineffective in implementing a unified policy due to diverging member interests and a lack of a unified regional foreign policy. In addition to this, leaning on the EU cooperation of Azerbaijan to impose democratic standards and obligations is highly flawed due to a lack of laws within the EU for this specific purpose. The treaties that the EU does have for imposing compliance to democratic values are also flawed, as the provisions are purely political rather than legal and therefore they lack the proper pressure to achieve US objectives for Azerbaijan. Moreover, while the EU and Azerbaijan’s current relationship has been rooted in mutual strategic gains, this has proved ineffective, as human rights, democracy and rule of law requirements of the Organization for Security and Cooperation in Europe agreements are consistently ignored by Baku. In the bilateral relationship Azerbaijan has had with the EU, compliance requirements about bottom up democratization are consistently neglected due to lack of regulation and monitoring of the EU.

Conclusion

Ultimately, in the context of instability in the South Caucasus, the US aid program has been ineffective in promoting democratization, human development and positive progress towards conflict de-escalation. The US should view Azerbaijan as an important ally and the failure to hold Azerbaijan accountable for their failings on democratic principles calls into question the credibility of the partnership. To distract its own population from its government’s failures, especially the suppression of dissident voices, freedom of the press, crackdowns on non-government organizations, persecution of human rights lawyers (through disbarment) and concerns with nepotism (the appointment of Mehriban Aliyeva as Vice President) the government has engaged in militarization.