Mr. Chairman, Members of the Commission, thank you for inviting me to speak to you today about our bilateral relationship with Azerbaijan. I would also like to thank you for the Commission’s strong efforts to promote the principles of the Helsinki Final Act at this critical moment in the region’s history. Your participation in the OSCE Parliamentary Assembly election monitoring mission in Ukraine two weeks ago sent a powerful signal that the United States will support free and fair elections in the OSCE region and throughout the world. Your upcoming participation in the OSCE Parliamentary Assembly Annual Session in Baku will serve as an important means of examining how OSCE member states are living up to the pledge to provide “human security” for all their citizens.
Our partnership with Azerbaijan remains an important aspect of our engagement in the Caucasus. For over twenty years, the United States has been working with Azerbaijan to promote a secure, prosperous, and democratic society. Since 1992, we have provided approximately $1.1 billion in assistance to pursue these goals.
My testimony today will focus on three core areas of this bilateral relationship. First, I will talk about our security cooperation. Second, I will look at our evolving economic relationship, including energy diversification and our efforts to promote economic reform. Finally, I will briefly examine the country’s democratic development—DAS Melia will cover this in greater detail.
First, Azerbaijan has been a key partner for the United States and NATO from Kabul to Kosovo. Azerbaijan currently has 94 troops serving in Afghanistan and has committed to remain involved in the country beyond 2014. It has completed missions to Iraq and Kosovo. Azerbaijan is a key node in the Northern Distribution Network and air route sending non-lethal goods in and out of Afghanistan. Thousands of containers go through customs and thousands of state and commercial flights transit Azerbaijan each year.
As such, strengthening Caspian security, countering terrorism, stemming the proliferation of weapons of mass destruction, and enhancing maritime domain awareness continue to be top priorities for U.S. assistance to Azerbaijan. Since we began providing security assistance in 2002, the United States has been working to strengthen Azerbaijan’s capacity to monitor the Caspian and protect critical energy infrastructure. Over the past 12 years, we have provided $44.4 million in Foreign Military Financing and $9.9 million in International Military Education and Training and Export Control and Border Security programs that focus on military professionalization, building operability, and enhancing border security. And we are providing approximately $4 million in fiscal year 2014.
Where we do provide security assistance to Azerbaijan, we are careful to ensure it is used in full compliance with the law – including Section 907 of the 1992 Freedom Support Act and the waiver authorities for U.S. efforts to counter terrorism, support the operational readiness of U.S. Armed Forces or coalition partners to counter terrorism, ensure Azerbaijan’s border security as long as it is determined that such assistance will not undermine or hamper ongoing efforts to negotiate a peaceful settlement to the Nagorno-Karabakh conflict between Armenia and Azerbaijan or be used for offensive purposes against Armenia.
And the United States is working diligently to facilitate a peaceful settlement to the Nagorno-Karabakh conflict. As a co-chair country of the OSCE Minsk Group, along with France and Russia, the United States has worked in recent months to articulate the substantial benefits that peace would bring to people across the region. In doing so, we are focusing on pragmatic steps to bring the sides into negotiations on a peace agreement based on the core principles of the UN Charter and the Helsinki Final Act. We hope the presidents of Armenia and Azerbaijan will agree to meet in the near future to continue the constructive dialogue begun at their summit last November. It also is important that both governments support Track II efforts to build people to people contacts between Azerbaijanis and Armenians. These kinds of confidence building measures can help to prepare citizens of both countries for peace. We are troubled by the recent arrest of well-known journalist Rauf Mirkadirov, the subsequent investigation of Leyla Yunus and her husband Arif Yunusov, their poor treatment by the authorities, and confiscation of their passports. All three have been strong proponents of the Track II process and the Azerbaijani government’s actions will have a chilling effect on any contact between Azerbaijanis and Armenians. DAS Melia will elaborate further on this point in his testimony. Helping both sides resolve this conflict is a key element of our relationships with both Azerbaijan and Armenia, and we fully support the Minsk Group co-chairs in their efforts to facilitate a more constructive phase of negotiations.
Second, the United States enjoys growing economic cooperation with Azerbaijan, particularly in the area of energy. As Europe looks more resolutely to diversify its sources of energy away from its dependence on Russia as part of its energy security strategy, Azerbaijan is emerging as a potentially crucial supplier of diversified natural gas supplies for our European allies, and the United States has been a longstanding supporter of Azerbaijan’s efforts to provide its energy resources to European markets. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which began operating in June 2006, represents the first direct transportation link between the Caspian and the Mediterranean seas. At full capacity, it can deliver more than one million barrels of oil per day to market. The BTC pipeline was an early success for our Southern Corridor diplomacy, and now we are focused on developing a gas link between Azerbaijan and Europe. The construction of the Trans-Anatolian Pipeline across Turkey and the Trans-Adriatic Pipeline to southern Italy will complete the Southern Gas Corridor, bringing Caspian gas to western Europe for the first time. Last December, after more than a decade of U.S.-led energy diplomacy in support of the Southern Gas Corridor, a final investment decision was made on this project, which will bring 10 billion cubic meters of natural gas – and potentially more – through this network of pipelines from Azerbaijan across six countries to western Europe starting in 2019.
While energy remains an important part of our bilateral economic relationship, it is not the only focus. Given our close cooperation on the Northern Distribution Network (NDN) and our ongoing transition in Afghanistan, we are actively encouraging Azerbaijan and its neighbors to take advantage of this important window of opportunity to transform the NDN into a commercial network for trade and investment when many freight forwarders are still in the region. Azerbaijan and its neighbors could become a premier trade and transportation corridor between Europe and Asia, but to do so, they must first reduce costs associated with high customs and tariffs and address delays caused by a lack of regional coordination. Time is of the essence, and the United States supports reforms that will create sustainable sources of non-oil revenue in Azerbaijan and new opportunities for U.S. exports and investment. For instance, Azerbaijan likely will obtain the necessary certifications to operate direct passenger and cargo flights to the United States this year.
The United States also promotes the export of U.S. goods and services to Azerbaijan. Azerbaijan has already purchased hundreds of millions of dollars worth of airplanes and a communications satellite from the United States, and it will undoubtedly purchase more in the future. U.S. agricultural firms are interested in selling heavy equipment and technology, and American oil companies want to explore and develop new oil and gas fields in the Caspian to supply the Southern Corridor. The United States also supports Azerbaijan’s accession into the World Trade Organization and the rules-based system in which its members participate. Opportunities for U.S. exports could increase significantly.
In this context, it is important to note the role that corruption plays in the entire OSCE space, and Azerbaijan is no exception. It is a blight that tears at the economic, political, and social fabric of society, weighing on the country’s economic potential, driving up inefficiencies, and scaring away foreign direct investment. Working with the Government of Azerbaijan and local partners, the United States is committed to enhancing our efforts to address corruption. Ultimately, countries with strong checks and balances—including a strong and independent judiciary and apolitical civil service—are most likely to be effective in combating corruption.
Finally, our strongest relationships world-wide are with democracies that respect the full range of human rights of their citizens. We seek strong cooperation on democratization with Azerbaijan, just as we collaborate closely on security and economic issues. Azerbaijan’s respect for human rights and fundamental freedoms, and progress on democratic reform is key not only to strengthening our bilateral relationship, but also to Azerbaijan’s own long-term stability. We have some serious concerns about the environment for democratic development and the protection of human rights in Azerbaijan, which has been deteriorating. My colleague Tom Melia will touch more on that in a moment.
I want to emphasize that the United States remains committed to a constructive dialogue with Azerbaijan based on friendship between our people and mutual respect between our governments. But a constructive dialogue means that we can and must have frank and honest discussions in areas where we disagree. Discussing matters of agreement and disagreement in a candid way is part of the nature of a serious dialogue. We therefore have been disappointed by allegations by some of Azerbaijan’s authorities that the United States is interfering in the country’s domestic affairs when we share our views or send democracy-related delegations to Azerbaijan.
Going forward, our relationship will continue to be based on these three core areas—security cooperation, economic and energy cooperation, and democratic development. Our mission remains to address each of these three areas with equal rigor and resolve. And we are committed to working with Congress in a bipartisan manner in our efforts to realize each of these and the full potential of this relationship.