Why is EU external governance in Azerbaijan so limited?

None of the numerous articles on EU-Azerbaijani relations has addressed them from the increasingly influential perspective of EU external governance. Instead, all of them have focused on what can be called the EU foreign policy approach. This article seeks to fill that gap and clarify the differences of these two approaches. On the one hand, while the foreign policy approach focuses mainly on agents, the external governance approach focuses on structure. And on the other, unlike the EU foreign policy approach, the EU external governance approach considers systems of rules. As a result of the enlargement of the EU in 2004 and 2007, the number of countries in the EU’s neighborhod increased, and that in turn generated a perceived need for a different approach to the EU’s external actions. The reasons for that are two-fold. First, the enlargement increased challenges to the European Union itself, and second, the enlargement itself created new expectations for EU action in the neighborhood region. Because of these two factors, EU external governance approach prospered in the academic literature.

This approach is consistent with the argument of Michael Smith (1996, p. 5), who suggests that “after spending most of its life practicing the “politics of exclusion,” the European Union has moved toward a “politics of inclusion” to reflect the changing demands of the European order.” The European Neighborhood Policy proposed by the Commission in March 2003 as a new framework for relations with the EU’s eastern and southern neighbors also resonates well with the EU external governance approach.

The mode of external governance in a particular case can be explored by analyzing the degree of institutionalization and legalization of relations between the EU and a third country. The mode of external governance could be determined by discovering ways of rule transfer in accordance with the three ways of EU rule transfer—convergence toward EU rules, convergence toward international rules, convergence based on bilaterally developed rules—provided by Barbế, et al. (2009, pp. 835-838).

The EU began to cooperate with Baku after the collapse of the Soviet Union. Since the start of negotiations, the EU has emphasized three groups of issues: democracy, human rights, good governance, economic and social reforms; trade and energy; and the Nagorno-Karabakh conflict. This prioritization is reflected in the documents concerning relations between the parties including National Indicative Programs of European Neighborhood and Partnership Instrument. In particular, the ENP Azerbaijan Action Plan lists these priorities in the following order: a peaceful solution of the Nagorno-Karabakh conflict; the strengthening of democracy in the country; and the strengthening of the protection of human rights and fundamental freedoms and the rule of law. Additional priorities in order are about investment climate, fighting corruption, economic reforms, as well the strengthening of EU-Azerbaijan energy bilateral relations. The last two priorities are related to Justice and Human Affairs (JHA) and regional.

In analyzing the attitudes of the parties toward these objectives, it becomes evident that one of the parties is reluctant to seek the achievements of either of these objectives or does not want to be involved in its implementation. One of the reasons of this containment could be the EU’s hesitance to intervene in the area of Russian influence. If the EU decides to participate as a co-chair of Minsk Group of the OSCE instead of France, its partner in the group will be Russia with whom it should work on the Nagorno-Karabakh conflict.

For its part, Azerbaijan is lagging in meeting the requirements of the second group of objectives. The government is unwilling or not yet able to launch substantial reforms in the sectors mentioned above. As ENPI NIPs for 2007-2010 and 2010-2013, ENPI CSP for 2007-2013 mention, Azerbaijan’s commitments to the implementation of ENP AP remains slow and uneven, albeit there are few developments. The 2007 report of Azerbaijan National Committee on European Integration also confirms this fact (ANCEI 2007). However, the European Union continues to follow closely the situation of human rights and rule of law in Azerbaijan.

The situation with regard to the third group of objectives is different. Both parties are strongly interested in enhancing trade relations, especially in energy. Indeed, economic and political links between Azerbaijan and the European Union began in 1991 within the framework of TACIS (Technical Assistance to the Community of Independent States). This cooperation was primarily based on energy and transportation. However, bilateral cooperation between the EU and Azerbaijan was in fundamental ways only implemented following the signing of Partnership and Cooperation Agreement, which entered into force in 1999. Moreover, according to the EU-Azerbaijan ENP AP, until the signing of new Association treaty, the PCA remains the main legal basis of EU-Azerbaijan relations.

As a rich country with oil and natural gas resources, Azerbaijan is an alternative supplier of energy to Europe, which could decrease the EU’s dependence on Russian energy supplies. The energy crisis between Russia and Ukraine in 2006 and 2009 underscored the importance of Azerbaijan for the European Union, and that importance is stressed in the 2006 Memorandum of Understanding on a Strategic Partnership between the European Union and Azerbaijan in the field of energy. The latter explicitly mentions the perspective of “gradual convergence with the EU’s internal energy market aimed at integration” as a shared priority of both parties. In addition to the Memorandum, President Ilham Aliyev and the president of European Commission José Manuel Barroso signed a Joint Declaration on Southern Gas Corridor during the latter’s visit to Baku (President.az 2011). In addition to its role as an energy supplier, Azerbaijan is also a transit country for Central Asian energy resources.

The bargaining power of Azerbaijan in energy relations is much stronger than it is in the other two groups of objectives. Convergence in energy relations thus is toward bilaterally produced rules, rather than toward EU-originated rules. The EU’s failure to exert influence on Azerbaijan in the achievement of the second group of objectives convert EU-Azerbaijan relations from integration to cooperation, because the second group of objectives are the main elements of integration or in other words, external governance. There is also, what can be called, “the politics of discourse” by the Azerbaijan government. President Aliyev has said several times that Azerbaijan is aiming toward integration with Europe or Euro-Atlantic world (Trend 2009; Yeni Azerbaycan 2009), while Foreign Minister Elmar Mammadyarov noted that “Azerbaijan aspires toward cooperation with European Union and NATO, but it is not going to join these organizations” (News.az 2010).

A major constraint on EU-Azerbaijani relations is Russia-Azerbaijan and CIS-Azerbaijan relations. Since 1991, the role—economic and political—of the Russian Federation in the post-Soviet space has precluded all the former Soviet republics, except the Baltic states, from pursuing a fully Western orientation. Moreover, the collapse of the USSR sparked ethnic-territorial conflicts in many of post-Soviet republics, including Azerbaijan. And it remains the view of most in Baku that “the key” to the resolution of the Nagorno-Karabakh conflict lies with Moscow. Indeed, basing itself on its National Security Concept, the Russian Federation has simultaneously maintained a military presence in Armenia and been a co-chair of the OSCE Minsk Group.

Russia remains Azerbaijan’s third largest trading partner, and at least in the first post-Soviet years, Azerbaijan was forced to export its energy resources via Russian territory, something that made Baku even more dependent on Moscow. Following the construction of the Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline, Azerbaijan gained some room for maneuver, but Russian pressure on Azerbaijan increased with SOCAR and Gazprom agreeing in October 2009 to the export of Azerbaijani gas to Russia (Socor 2009). The amount of Azerbaijan’s gas exported to Russia was increased in 2011 to reach 2 bln. cubic meters (Krishtalyev 2010a). At the same time, Azerbaijan continues to export oil through Russia’s Novorossiysk pipeline. Russia-Azerbaijan relations are thus clearly network-mode relations, which means that convergence is toward mutually produced rules, but informal patterns of relations cast shadow over formal relations.

In contrast to its relations with Russia, Azerbaijan’s ties with the CIS are quite limited. At one point, in fact, Russian analysts talked about the possibility of Azerbaijan leaving that organization (Vlasov 2008). More recently, however, Baku made clear that Azerbaijan supports the continued existence of the CIS (ActualComment 2010). Relations within the CIS are based on equal rights and convergence toward both bilaterally and collectively produced rules. Azerbaijan, however, is not participating in Organization of Treaty on Collective Security, neither it is part of Customs Union. The sole rationale behind its remaining within the organization is to maintain good relations with Russia. Thus, unlike the case of Russia, the CIS as such does not represent a constraint on EU-Azerbaijan relations.

As this article has shown, since external governance is a way of dealing with interdependence, and interdependence cannot be controlled by rule-transfer only, the concept of governance does not only consist in rule-transfer, but also involves avoiding obstacles and problem-solving. At the same time, both Azerbaijan-Russia and Azerbaijan-CIS relations are network-mode relations based on equal rights and bilaterally produced rules. However, because of the Nagorno-Karabakh conflict and Russian influence over its possible resolution, Moscow retains strong influence over Azerbaijan and over Azerbaijan’s relations with the EU.

In this situation, the EU is seeking to apply the conditionality method on its relations with Azerbaijan, but fails to meet the requirements for the effectiveness of conditionality: speed and size of rewards, credibility of conditionality and veto players and costs. First, not all of the EU’s rewards are attractive for Azerbaijan. Nor is Azerbaijan ready to conduct the comprehensive reforms the EU seeks. That is unlikely to change, because the EU does not possess enough mechanisms to influence Azerbaijani government. Second, the EU is reluctant to intervene in Nagorno-Karabakh conflict, because of the strong Russian influence over the conflict and in the entire region. And third, in the field of energy, Russia and the EU are competing over Azerbaijan’s energy resources.

Thus, EU-Azerbaijan relations are formally hierarchical and aimed at economic integration and political cooperation through convergence on EU rules. However, in practice, these relations remain largely confined to cooperation in the field of energy and transit, based on equal rights and network mode of relations, rather than integration. In contrast to EU-Azerbaijan relations, Russia-Azerbaijan relations are formally network-mode relations with convergence on bilaterally produced rules, but Russia’s strong mechanisms of influence cast shadow over formal relations. Thus, EU external governance in Azerbaijan is constrained by Russian informal influence, on one hand, and—at least partially—Azerbaijan’s reluctance to embrace the latter.

To cope with these constraints, the EU almost certainly will have to become more actively involved in the resolution of Nagorno-Karabakh conflict, and thereby lessen the Russian influence over Azerbaijan. In addition, the EU will have to make its “rewards” more attractive to Azerbaijan. Finally, the EU will have to devote more attention to transforming economic integration into other forms of cooperation with Azerbaijan, even as it keeps an eye on Russian-Azerbaijani relations.

Source: http://biweekly.ada.edu.az/vol_4_no_22/Why_is_EU_external_governance_in_Azerbaijan_so_limited.htm