Bryza: Growing Friendship between Azerbaijan and Turkmenistan Unlocks New Opportunities for Greater Caspian Region

Interview of Report News Agency with the former US Ambassador to Azerbaijan, former US Deputy Assistant Secretary of State for European and Eurasian Affairs, Mr. Matthew Bryza.

Mr. Bryza, we are glad to welcome you again. We have already met with you at Caspian Week 2020, where you one of the speakers, during the World Economic Forum in Davos; we interviewed you then about a range of developments in the Caspian region.

Having seen your recent remarks at the Horasis Extraordinary Meeting on the USA on March 18, we would like to hear your point of view today on how the Central Asia region has changed over the past year and what you predict for the region in the future.

-The Memorandum on Joint Exploration and Development of the “Dostuk” Field in the Caspian Sea was signed on January 21, 2021 and subsequently ratified by the Parliaments of Azerbaijan and Turkmenistan. How will this historic event affect the region and what sorts of new opportunities can it create?

-The January 21 agreement on the joint exploration and development of the Dostluk field is historic indeed. It creates a range of new opportunities for cooperation not only between Azerbaijan and Turkmenistan, but for all the countries of the Greater Caspian Region. The agreement removes the primary obstacle to broader and deeper cooperation between Azerbaijan and Turkmenistan. During my time as a U.S. diplomat focused on the region, it was the dispute over this oil field, then known as Kyapaz or Serdar, that constantly hung over the two countries’ relations. For three decades, thus disagreement generated a sense of mistrust between the two countries. So, with that dispute now resolved, the road is clear for cooperation on many issues where it was previously not possible.The first of these issues is obviously the two countries working together to develop the Dostluk field itself. This will require them to reach a range of additional agreements to ensure the project will be commercially viable. Their successful experience in working together on this first project could lead to investments and new business ventures in economic sectors beyond oil and natural gas Another of these new areas of cooperation could be exports of Turkmenistan's gas across the Caspian Sea to Azerbaijan and beyond. Azerbaijan's industries, especially petrochemicals, could benefit from new supplies of gas from Turkmenistan. Additionally, such new supplies of gas could be delivered even further west to help Azerbaijan and Armenia, perhaps with Turkey as well, develop new industrial projects that could provide jobs and generate economic growth, thereby helping heal the wounds of the Second Nagorno Karabakh War. Another issue on which Azerbaijan and Turkmenistan might now cooperate is protection of the Caspian Sea's marine environment. Oil spills in the sea do not respect countries’ borders. Therefore, Azerbaijan and Turkmenistan, along with their as well as Russia, Kazakhstan, and Iran all have an interest in Turkmenistan and Azerbaijan working together to reduce the damage caused by previous oil spills in the Caspian Sea, to prevent future ones, and to mitigate the consequences of any such accidents that may occur despite best efforts to avoid them. And as all of these new patterns of cooperation become real, they will strengthen the transportation corridor linking Central Asia, including Afghanistan, and the South Caucasus, and Europe via the Black Sea and Turkey. By transportation corridor, I don't mean only for oil and gas, but also container transport via rail, highways, and ships, as well as digital transport via emerging fiber optic networks. Taken together these various transportation networks could provide tremendous business opportunities while helping to stabilize Afghanistan, reinforce peace between Armenia and Azerbaijan, and provide countries located along the southern borders of both China and Russia transportation options that create a competitive business environment. In my personal experience, healthy cooperation among businesses and countries can actually stimulate cooperation, as long as everyone is competing fairly.

-In your speech at the Horasis Extraordinary Meeting on the USA on March 18, you touched on the Trans-Caspian gas pipeline project. Could you please share with us a few more details about how you think this project might develop?

-With the Dostluk agreement now in place, the primary political obstacle to a trans-Caspian gas pipeline has been removed. The next step is to make sure such a project is commercially attractive to potential investors. Because the Dostluk field has not yet been developed, it is impossible to know what volumes of oil natural gas might eventually be produced there. But Dostluk is not the only possible source of gas supply for a transCaspian pipeline. The Turkmenistani gas field known as Block One, which is located fewer than 90 kilometers from Azerbaijan's major natural gas production infrastructure, is another option. For years, I have believed that gas from Block One, given its geographic location, has a natural market to the west of Turkmenistan, meaning Azerbaijan and beyond. So, I now think that the main task is for Azerbaijan and Turkmenistan to work together and with potential investors to determine a plan that makes commercial sense for exporting these potentially new supplies of Caspian natural gas westward.

-It is impossible to ignore the fact that after 30 years, Nagorno-Karabakh has returned to Azerbaijan. As you know, President Ilham Aliyev pays great attention to the development of the returned lands, and now there are plans to establish transport links from the main part of Azerbaijan to Turkey via southern Armenia and Nakhichevan.

-Yes, the November 9/10 statement by President Aliyev, Prime Minister Pashinyan, and President Putin marks the greatest military and diplomatic victory in Azerbaijan’s history. That statement fulfills the conditions of four United Nations Security council resolutions that demand the return of Azerbaijan's occupied territories to Azerbaijan’s control. I am saddened that the United Nations Security Council could not find a way during more than three decades to enforce its own resolutions peacefully. But I am pleased that the framework defined by the November 9/10 statement is broadly in line with the so-called “Madrid Principles” negotiated by the OSCE’s Minsk Group, which define a framework for a peace agreement between Armenia and Azerbaijan that the two countries leaders informally accepted in January 2009. In this new situation, it is important for both Azerbaijan and Armenia to take full advantage of the November 9/10 statement’s final paragraph, which declares that all transportation routes in the region are reopened. This provision clears the way for Armenia to restore its transit links with both Azerbaijan and Turkey and, over time, reintegrate into the regional economy. Today, however, Armenia’s current political crisis makes such cooperation psychologically impossible. Armenian society is deeply split between those who are ready to accept the war’s outcome and move forward to build a new and prosperous Armenia versus those who favor a return to armed conflict. Azerbaijan seems to be betting on those Armenians who seek a more secure and wealthier future for that country via economic cooperation with Azerbaijan, and with Turkey, too. The Government of Azerbaijan is therefore preparing infrastructure investments in projects that will generate economic growth and jobs both for Azerbaijanis in their recovered lands and for their Armenian neighbors. These will include new highways, railroads, natural gas pipelines, electricity and water connections, and industrial facilities. One idea is a possible industrial zone that could be located on the territories of Azerbaijan (in Nakhchivan), Armenia, and Turkey. Taken together, these projects can enable Armenia to reintegrate into the regional economy and develop new trade and investment connections across a vast region stretching from Central Asia to Europe. It is important to note in this regard that throughout the war and still today, President Aliyev has consistently stated his hope that Armenian residents of Nagorno Karabakh will remain in their homes and eventually welcome a chance again to live side-by-side with the Azerbaijanis who will return to their homes. A key way to achieve that is to restore a vibrant local economy to the region. I believe it is important for the United States, the European Union, and international financial institutions such as the World Bank, European Bank for Reconstruction and Development, and the Asia Development Bank to offer strong supports for these projects as a way to heal the wounds of war and build a future base on economic cooperation.

- In December of last year, we interviewed a former ambassador of Azerbaijan to Turkmenistan and Afghanistan, Vahdet Sultanzade, who is familiar to you in the context of your previous diplomatic activities. In his interview, Mr. Sultanzade expressed his opinion about which sectors of Azerbaijan’s economy could be promising for Turkmenistani companies. What are your thoughts on this topic, and how do you think Western companies can make use of such cooperation between the two countries?

-It is difficult to imagine any person who is not a citizen of Turkmenistan who could know as much about the culture, history, and people of that country as does Ambassador Vahdet Sultanzade. It would not be an exaggeration to call him a legendary figure in the history of AzerbaijaniTurkmenistani relations. He served for 13 years as an advisor to Ambassador on Turkmenistan and as Azerbaijan’s Ambassador Extraordinary and Plenipotentiary to Turkmenistan and Afghanistan. I enjoyed reading last December the interview with Ambassador Sultanzade that you mentioned. In it, the ambassador mentioned potential joint investment projects among companies from Turkmenistan and Azerbaijan in petrochemicals, textiles, agribusiness, and transportation and logistics. While the markets for most of these products will be the Greater Caspian Region, transportation and logistics companies could have a much broader geographic reach, connecting markets from South Asia to Europe. There is even an emerging project called the Digital Silk Way, which will provide fiber optic linkages between Europe and Central Asia, including perhaps via a cable under the Caspian Sea between Azerbaijan. This new network will significantly improve the quality of internet service while lowering prices for consumers.

-Turning to other issues pertaining to Central Asia, I would also like to know your prognosis for the development of the Lapis Lazuli Corridor.

-The Lapus Lazuli Corridor provides an ambitious organizing concept to stimulate the multifaceted transportation and logistics linkages that I just mentioned. And perhaps more dramatically, it provides an opportunity for landlocked Afghanistan to become an East-West gateway both to India and Pakistan and to Central Asia, the South Caucasus, Turkey, and Europe. The Lapus Lazuli Corridor can therefore offer Afghanistan a chance to reposition itself in the world in a positive and historic way. From the perspective of the United States, this new corridor could be of great strategic importance by offering the people of Afghanistan opportunities to generate economic growth, attract investment, and restore stability to their lives. These very days, the Biden administration is launching a fresh and intensive diplomatic effort in pursuit of a peace agreement between the Government of Afghanistan and the Taliban. Turkey is in fact about to host the first major meeting within this initiative. If an agreement can indeed be reached, the Lapus Lazuli Corridor can play a critical role in maintaining and strengthening the resultant peace.

-As we conclude our interview and given the tremendous changes in the region in recent years, we seek your opinion on the types of projects in the countries of Central Asia that might be of interest to Western investors.

-Western companies have been major investors in Central Asia over the past few decades primarily, of course, in the oil and natural gas sector. During the administration of President Bill Clinton in the late 1990’s, I myself was intensively active in US efforts, together with Turkey, to develop oil and natural gas pipelines from the Caspian Sea to Turkey and beyond via Azerbaijan and Georgia, and via Russia as well. Those efforts we're highly successful as we see today in the form of the Baku-Tbilisi-Ceyhan, Baku-Supsa, Baku-Novorossiysk, and Caspian Pipeline Consortium oil pipelines, as well as the South Caucasus natural gas pipeline, which is the foundation of the European Union's Southern Corridor. These projects now bind Azerbaijan and Georgia to the Transatlantic community, providing regional oil producers, including from Turkmenistan and Kazakhstan in addition to Azerbaijan, access to global markets. Back during President Clinton's administration the US also very much wanted to include Turkmenistan in what has become the Southern Corridor via a trans-Caspian natural gas pipeline. As I mentioned earlier, the prospects for such a gas pipeline now look brighter than at any time in the past two decades, thanks to the Dostluk agreement and Azerbaijan’s eagerness to rebuild its recovered lands. Beyond oil and natural gas, other opportunities for investment by Western companies are arising, including the Digital Silk Way that I already mentioned. As ambitious economic and political reforms advance in Uzbekistan and Kazakhstan, new opportunities for Western investment are emerging in banking, agribusiness, consumer goods manufacturing, and logistics. Finally, I would like to offer my heartfelt congratulations to Report.az for becoming an accredited journalistic entity in Turkmenistan. Congratulations as well for Report.az’s participation in Caspian Week in Davos during the World Economic Forum. This is a very important gathering, which in my personal case, has helped me to stretch my mind to think in new and creative ways while connecting me with some amazing people from business, government, and cultural spheres, including journalists from Report.az.