Richard Morningstar in Baku - Reliable or Uninspired?

Seeking to fill a gap in the Baku embassy which has hindered US policy in the region for months, the Obama Administration has nominated Richard Morningstar, longtime Caspian hand and current Special Envoy for Eurasian Energy, as ambassador to Azerbaijan. He is likely to fare better in the nomination process than his predecessor Matt Bryza.

Bryza was sent to Baku in February 2011 after the White House gave him a recess appointment, a temporary fix to circumvent congressional opposition from Senators representing constituencies with large Armenian-American populations (Bryza is regularly accused of being too close to Azerbaijan and Turkey, and correspondingly biased against Armenia). His appointment ended in December, and he has since taken up the think-tank and conference circuit.

Charge D’Affaires Adam Sterling has been minding the shop in the absence of an ambassador. This is becoming the usual state of affairs – since Obama took office, the embassy has been run by a lower-ranking diplomat for the better part of two years. The perceived slight has provoked consternation in Azerbaijan, which was used to being assiduously courted by the US under the Bush Administration.

Hungarian Surprise Exposes Crisis of Confidence in Nabucco

Below is my latest article for Natural Gas Europe, original here:

In a surprise late-game announcement, Hungary has apparently switched its support from Nabucco to Gazprom’s rival South Stream pipeline, leaving the once-mighty pipeline consortium looking weaker than ever. If, as rumoured, Hungary’s MOL is pulling out of the project, it may – as analysts are already predicting - be a ‘terminal blow’.

The news emerged on 23 April at an event hosted by the European Policy Centre in Brussels, at which one of the speakers was Hungary’s controversial, Eurosceptic Prime Minister Viktor Orbán. When asked to comment on a 17 April meeting with Russia’s Gazprom at which two sides discussed giving South Stream “national significance status”, Orbán focused his response on the woes of Nabucco.

“Nabucco is in trouble”, he said, and that although he did not have all the details, “what I have seen is that even the Hungarian company MOL is leaving the whole project”. His comments prompted a flurry of articles saying that MOL was pulling out of the pipeline to bring gas from Azerbaijan’s Shah Deniz field to Europe. A decision on either a southern or central European route will be made by June – if a central European route is chosen, the contest will be between BP’s South East Europe Pipeline and a shortened version of Nabucco.

Untangling Turkey’s Gas Pricing Knot

Leaked figures on the cost of Turkey’s gas imports, and sharp hikes in domestic electricity and gas prices, have refocused attention on the country’s energy strategy. With economic growth beginning to slow, the high price of imports may become an increasing burden. Analysis of the leaked figures suggest that, despite Turkey’s commercial stand-off with Iran, the real problem lies to the north.

On 1 April the government hiked domestic gas prices by 18.7%, with electricity prices (which are linked, since most power plants are gas-fired) rose 9.3%. The rises were intended to stop losses occurring at state energy firm BOTAŞ and followed three consecutive rises in gasoline prices last month.

Energy Minister Taner Yıldız, taking what some called a “defensive” stance on the issue, sought to deflect anger from both the opposition and the wider public by insisting that he too was displeased by the price hike but that it was unavoidable in the current climate. He said that the prices rose due to a weak lira and increasing oil prices on the back of geopolitical tensions, which had a knock-on effect on natural gas prices.

Most significantly, Yıldız asserted that the price rises would be even higher without the – still unspecified - discount obtained from Russia at the end of last year. That discount was obtained after Turkey gave permission for Gazprom’s giant South Stream pipeline to cross Turkey’s Black Sea waters.

Bankers and Bombers in Kazakhstan

The Kazakh authorities claim to have foiled a major terror plot linked to fugitive banker and persona non grata Mukhtar Ablyazov. According to the Prosecutor General, Ablyazov provided $25,000 to Alexander Pavlov, who has been on the run since 2009 and who has served as Ablyazov’s personal bodyguard since 2005.

The money was allegedly used to buy bombs which would be set off in a number of locations in downtown Almaty on March 24, including parks and office buildings. The government says that the attacks were intended to “frighten the population, create an atmosphere of chaos and panic and destabilise the social and political situation in the country.”

Ablyazov was once Energy and Industry Minister before he fell from grace and set up an opposition party. Although he managed to regain favour, things changed when BTA began to collapse in 2008. He fled to the UK soon afterwards, claiming persecution. He is currently wanted for $4.5 billion in embezzlement and fraud.

He was able to stonewall the torturous court proceedings, although he lamented that being stuck between his luxurious office and his nine-bedroom mansion was “not dissimilar to a prison”. But when a UK High Court judge sentenced him to 22 months in February for contempt of court, he promptly vanished, allegedly on a bus to France. He has filed an appeal in absentia, which BTA is seeking to remove.

With the latest twist, the government is looking to paint Ablyazov as not just a crook but a dangerous terrorist with links to “representatives of radical religious groups”. This is not new – Ablyazov was, to begin with, also accused of masterminding the deadly unrest in Zhanoezen last December in connection with Rakhat Aliev, another of the exiled oligarchs. Both accusations seem paranoid or farcical by turns.

The Murky Story of Israel’s ‘Azerbaijan Airfields’

The Iran-Azerbaijan-Israel triangle is one of the foreign affairs subjects du jour, and most of it is fairly basic rehashing of the same points, but Mark Perry at Foreign Policy has come up with something eye-opening:

"The Israelis have bought an airfield," a senior administration official told me in early February, "and the airfield is called Azerbaijan."

According to US officials Perry spoke to, Israel has a quiet and informal agreement to base its aircraft at disused Azerbaijani airfields in the case of an attack on Iran. Although they would take off from Israel, the challenges posed by fuelling such a long mission means that having a handy nearby airbase to return to – such as Azerbaijan – would make things a lot easier.

Natural Gas Europe -‘Nabucco West’ Heralds the End of the Southern Corridor Vision

Below is my latest article for Natural Gas Europe. Original available here.

Nabucco is dead – long live Nabucco. That seems to be the message of the revised concept for the huge, flawed Caspian pipeline. Although some changes were necessary given the challenges facing the project, the implications for the EU’s Southern Corridor strategy, and its broader policy goals in the region, are serious.

Nabucco has been declared all but dead for several months due to lack of confirmed suppliers, lack of financing, shifting trends in global gas markets, and competition from more nimble rival pipelines. It remains on the table as an export option for Azerbaijan’s Shah Deniz Phase Two gasfield, but was widely considered to be the least likely choice.

In particular the unexpected decision by Turkey and Azerbaijan to build a Trans-Anatolian Pipeline, thus replacing much of Nabucco’s planned route with a smaller capacity, essentially turned the project into a south-eastern European pipeline (or southern Europe if the pipeline runs to Italy).

Evaluating Turkey’s ‘new’ Kurdish strategy

After clashes between the PKK and Turkish security forces left at least 13 dead, and amid growing concerns over the role of the Kurdish militants in Syria, the Turkish government’s new strategy towards the Kurds has been leaked to newspapers - but it is already coming under fire for being vague and uninspired.

The renewed fighting in Şırnak and Siirt comes on the heels of Nowruz celebrations which were marred by clashes between Kurds and police in towns across the south-east. Police also found a number of explosive caches across the country in PKK-targeted operations. It seems that the winter lull in fighting is over.

The Kurds are also emerging (or rather, re-emerging) as a crucible of tension between Ankara and Damascus. As Turkey has grown increasingly hostile to the Assad regime, there has been speculation that Damascus will rebuild its relationship with PKK cadres in Syria as a proxy against Turkey. This is despite high-level warnings from Turkey.