Clinton in Baku amid Russian-Iranian friction over Azeri stake in Israeli energy

US Secretary of State Hillary Clinton arrives in Baku, Azerbaijan Wednesday, June 6, to kick off a South Caucasian tour amid President Ilam Aliyav’s worsening relations with the Iranian leader Ali Khamenei and Russian President Vladimir Putin. Baku’s pro-Western orientation and its fast-growing military and energy ties with Israel are thorns in both their sides.
But for Washington, Azerbaijan is an expanding strategic asset: Since Pakistan closed its overland route for supplies to US and NATO forces in Afghanistan, the US is increasingly reliant on Azerbaijan’s airfields. Its logistical value will rise with the advance of the 2014 date for troop withdrawal from Afghanistan.
Clinton will have another go, after several failures, at resolving the long-running Nagorno-Karabakh conflict over which Russia and Iran side with Armenia against Azerbaijan. The day she landed in Baku, Armenian forces killed five Azerbaijani soldiers in a border clash.
Washington has never admitted its direct involvement in the bilateral ties unfolding between Baku and Jerusalem but its generally understand that those ties act as a thin wedge through America’s door to the region. It is significant that the party welcoming the US secretary in the Azerbaijan capital includes Richard L. Morningstar, whom President Barack Obama picked in May as ambassador to the small oil republic. He is still awaiting congressional endorsement.
debkafile’s Middle East sources report that Morningstar is the architect of the Obama administration’s oil and gas policy in Central Asia opposite Russia and Iran, as well as the linchpin of US energy policy in the Middle East. He was present at all the negotiations leading up to the contracts signed by Israel, Greece and Cyprus for the distribution of offshore Mediterranean gas and oil beds. His presence bespoke the administration’s support for the investment in their exploitation by American oil interests.
It may be presumed that Morningstar was in on the newly-signed $1.6 billion contract for the sale of Israeli arms to Azerbaijan – although Washington is unlikely to confirm this.
Moscow and Tehran are particularly put out by this deal in the regional context, concerned that it will enhance Azerbaijan’s military clout in the Caucasian and the Caspian Sea. With a well-equipped militlary, he will be a lot freer to pursue an independent energy policy and less vulnerable to pressures from Tehran and Moscow.

Regarding the second side of the relatationship, towards the end of 2011, the Azerbaijan state-owned Caspian Drilling Company quietly signed a contract for the acquisition of a 5 percent share in the firm controlling the Israeli Med Ashdod, which is developing an offshore field estimated to hold 280 million barrels of oil. This was the first Azeri investment in a foreign energy project.
Soon after the signing, in November 2011, a secret meeting took place in London between representatives of the Russian energy colossus Gazprom and Israel to discuss a Russian bid to acquire a stake in Med Ashdod.
Moscow also put out secret feelers for stakes in additional Israeli gas and oil Mediterranean projects. One offer was for the Russians to provide and finance pumping facilities and pipelines for the Israeli fields and take charge of marketing to Europe. Vladimir Putin, while running for president, quietly lobbied top Israeli officials to gain their support for Moscow’s partnership proposition.
In the last week of April this year, Israeli Foreign Minister Avigdor Lieberman spent two days in Baku. The talks he held there with Azeri leaders were veiled in secrecy, but sources in Baku said they were concerned with the highly important laying down of guidelines for the rapidly-evolving security and energy ties between the two countries.
In 2011, Israel purchased one-third of its oil consumption from Azerbaijan – 2.5 million tons worth $2 billion dollars, and the volume of trade between them rose to $4 billion, making that Caspian country Israel’s biggest trading partner in the former Soviet bloc.
The military and intelligence ties between Baku and Jerusalem have been consistently kept under wraps, but while Moscow and Tehran knew about them, they never expected them to expand to their present magnitude.
The deal today holds Azerbaijan’s investments in Israel’s burgeoning energy industry contingent on the scale of its arms purchases.  Both elements of this trade-off are earmarked for massive growth.
According to European energy sources, Azerbaijan’s aspirations go beyond investment in developing Israel’s Mediterranean gas and oil fields and extend to bidding for a role with American energy firms in laying the pipelines planned to carry the oil to European outlets. This would make Baku a rival for Putin’s ambitions to carve out a place in the new markets for Gazprom.
In the view of some Western military experts, the interface between the Azerbaijani and Israeli energy and military spheres offers Jerusalem a strategic pathway to the Caspian region under Iran’s nose, as well a lucrative source of revenue for its arms industry for years go come.

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