FOCUS

The State Side

Ties run deep between the US and Azerbaijan, with security, economic, and political facets keeping relations warm and fruitful for all.

Among the nations forming the CIS, Azerbaijan is one of America’s most important trading partners, with bilateral trade coming in at $2.3 billion in 2010, with the surplus falling on the Azerbaijani side. Having first established relations in 1919, the US recognized Azerbaijan’s independence on December 25, 1991. Relations have also been strengthened by cooperation on security issues within the framework of NATO’s Partnership for Peace (PfP) and Caspian energy security programs. Relations also take on a political aspect in regard to the ongoing occupation of Nagorno-Karabakh, with the US vocal on the need for a peaceful and just settlement.

Economic relations between the US and Azerbaijan began with the signing of the “Contract of the Century” in 1995, which saw a consortium of 11 companies known as the Azerbaijan International Operating Company sign a deal to develop the Azeri-Chirag-Guneshli oil fields. Of the initial 11 companies in the consortium, five were US-based, including Amoco, Pennzoil (now Devon), UNOCAL, McDermott, and Delta Nimir (now Amerada Hess). Since then, Exxon, now ExxonMobil, has also joined the consortium.

In addition to oil and gas ventures, bilateral trade in other areas is also increasing. Azerbaijan Airlines signed a deal with Boeing worth $1 billion in a deal that included Dreamliner Boeing 787 aircraft, which will substantially increase the routes of the national airline. Other major bilateral trade projects include the development of Azerspace, Azerbaijan’s first national satellite. The design of the satellite was carried out by US-based Orbital Sciences Corporation, a contract that has seen Azerbaijan provide the salaries of thousand of US workers. In addition, 12% of the Azerbaijan State Oil Fund’s assets—approximately $3 billion—is invested in the US securities markets.

Encouraging deeper bilateral trade is the US-Azerbaijan Chamber of Commerce (USACC). Since 1995 it has built up a diverse group of members from all sectors of the economy with the aim of providing services to US companies seeking to establish long-term business ties with Azerbaijan.

Seen as a key driving force behind the Baku-Tbilisi-Erzurum (BTE) and Baku-Tbilisi-Ceyhan (BTC) oil pipelines, the chamber has been increasingly active in promoting other sectors, including agriculture, construction, information technology, alternative energy, and tourism. In addition, the International Bank of Azerbaijan opened a New York representative office in 2009, with the aim of improving and developing trade and economic ties between the two countries.

Owing to its importance as an oil and gas hub, Azerbaijan has established a firm working relationship with the US on a variety of security issues. Participating in NATO’s PfP initiative, the country has had a presence in US-led missions in Kosovo, Afghanistan, and Iraq. Bilateral military ties have also developed in the context of Caspian energy assets, and the security operations around the BTC pipeline. The country has even been cited as the location of a possible NATO base in the future.

Azerbaijan, like the US, is keen to see relations continue. In a letter of congratulations sent to President Obama to mark the 4th of July, President Ilham Aliyev commented that “Our cooperation is developing steadily both on a bilateral basis and within international organizations, thus, covering more fields.”