Separated by nearly half the circumference of the globe and long divided by the political dichotomy of the Cold War, Azerbaijan and the United States in many ways seem an odd pair. Yet in the international order that has taken shape since the fall of the Soviet Union in 1991, these two countries have gradually realized that they share a similar global outlook and that many of their differences are complementary. Indeed, they are undoubtedly natural allies. Small, but resource-rich, Azerbaijan has for centuries served as a bridge between Europe and Asia, a link between East and West, and a convergence point of diverse forms of Christianity (Orthodox/Apostolic/Heretical) and diverse forms of Islam (Shiah/Sunnah). At the beginning of the 21st century the country is at the epicenter of global energy issues (and thus geopolitics) and is poised to serve as a hub of international trade and services between Europe, Russia, China, and the Middle East. Still, Azerbaijan is a country in transition. Like the rest of the independent states that formed in the wake of the Soviet empire’s demise, Azerbaijan is establishing and coming to terms with its political identity and role in the post-Cold War international framework. While the country’s abundance of natural resources and strategic location are great assets, they are also a liability, and Azerbaijan faces threats from regional powers on its road to becoming a modern, independent and democratic state. The United States is an important ally as the country continues to integrate into international organizations, assumes a position of regional leadership and develops its political, social and economic systems. Relations between the two states have come a long way since Azerbaijan achieved independence in 1991 amidst chaos and the Karabakh War with Armenia. Thanks to the meddling of the powerful U.S. Armenian lobby, the Karabakh War led to the historic low point in Azerbaijan-U.S. relations, namely the passage of Section 907 of the FREEDOM Support Act in the U.S. Congress in 1992, which banned all U.S. aid to the government of Azerbaijan. Bilateral ties were officially cemented two years later under Presidents Heyday Aliyev and Bill Clinton, and have accelerated substantially since Section 907 was waived in 2001 in the wake of 9/11, clearing the way for security cooperation and joint strategic initiatives. Today, Azerbaijan and the United States are working together to combat terrorism and international crime, and are fighting side by side in Afghanistan as well as in Iraq, where Azerbaijan is the Coalition Forces’ sole contingent from the Muslim world. Moreover, they share a vision for energy development and transport in the Caspian and South Caucasus that is based on regional integration and is free of meddling from neighboring powers. The United States supports a number of Azerbaijani initiatives aimed at internal and regional development, strongly encourages Azerbaijan’s integration into trans-Atlantic and international organizations such as the WTO and NATO, and has pledged support and technical assistance for the GUAM (Georgia/Ukraine/Azerbaijan/Moldova) alliance. The foreign aid program of the U.S. government, USAID, has been working with the Azerbaijani government since 2001 to develop programs in areas such as environmental protection, rural development, and health issues. Indeed, in order to fulfill its potential as a strong, independent regional leader, Azerbaijan should be able to count on the backing of the world’s lone superpower. As the United States increases its involvement in the South Caucasus and the Caspian, augmented security ties and ongoing energy security initiatives will continue to build up the Azerbaijan-U.S. alliance. Political ties are growing stronger each year, as evidenced by the three U.S. Congressional delegations that have visited Azerbaijan in as many months in 2008 and the recent Baku summit to discuss expanded military cooperation. Azerbaijan is a very important U.S. ally not only because of its natural resources and strategic location, but also because it is a secular democracy in a politically unstable region and is home to a Western-friendly Muslim populace. Still, there is much work to be done and several obstacles to be overcome for the U.S.-Azerbaijan relationship to reach its full potential. With an eye on a long-run sustainable alliance, both countries need to work to deepen and diversify their ties. Progress must continue on Azerbaijani reforms to encourage open markets, liberalize the government, ensure personal liberties and create the independent institutions that are the backbone of democracies. The United States is committed to helping Azerbaijan carry out these reforms, which will in turn add to Azerbaijan’s international influence and legitimacy. The Americans for their part need to do more to support Azerbaijan in its bid to regain control of its occupied territories and establish the sovereignty of its borders. The Armenian issue (perhaps better described as the issue of Karabakh) will be the Achilles Heel of all joint initiatives until it has been resolved. The United States and Azerbaijan will both hold elections in the autumn of 2008 and the outcomes will have a significant bearing on the direction of Azerbaijan-U.S. relations in the next decade, particularly since Armenia and Russia have also recently elected new governments. Many of the ways U.S.-Azerbaijan relations can be bolstered over the next ten years will entail adding to the foundations of the alliance rather than experiencing end results. Through cooperation and wise diplomacy, the next decade will advance the causes of economic prosperity and political hegemony for Europe, the United States and Central Asia, alike.

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Azerbaijan is the world’s fastest growing economy and America the world’s largest, so business ties should naturally be strong. U.S. oil companies have played a major role in shaping the current prosperity in Azerbaijan through large quantities of foreign direct investment. The signing of the “Deal of the Century” in 1994, which ultimately led to the construction and opening of the Baku-Tbilisi-Ceyhan pipeline in 2006, has arguably done more to promote the Azerbaijan-U.S. alliance than any other single event. By all accounts, the once much-maligned ‘pipeline to nowhere’ has been a great success. The BTC has given the United States and other Western consumer countries an efficient alternative to OPEC and Russian-controlled pipelines and provided Azerbaijan, Georgia and Turkey with a tremendous asset that is helping to bring prosperity to those countries and solidify their political alliance. The BTC is also an important link between the trans-Atlantic community and the South Caucasus that will serve as the basis for their joint energy plans for years to come. Negotiations over the Trans-Caspian Pipeline (TPC) have regained steam, largely because of the Russia-Ukraine gas standoff, and the development of such a route would be a victory for the United States and Azerbaijan and increase the latter’s esteem in the region and beyond. In the best-case scenario, the TPC would also encourage reforms in Turkmenistan and Kazakhstan that would boost regional stability and prosperity. While it is important that Azerbaijan and the United States work with their allies in Europe to create energy transport routes free from Russian meddling, they must still work closely and make compromises with Russia that encourage overall regional and global stability and prosperity. As the late Azerbaijani president Heydar Aliyev once told American journalist Thomas Goltz - in any realistic analysis, “Russia had an interest in the Caucasus yesterday, has one today and will have one tomorrow.” In other words, Azerbaijan must always regard the ‘Moscow factor’ when formulating international policies. A business alliance based on oil and gas will unquestionably be strong as long as extraction continues at steady levels. But these are finite resources, and the U.S. and Azerbaijan need to work towards developing more long-term, sustainable business ties in other sectors. Azerbaijan’s oil production will peak in 2012 and initiatives are underway to design a more diverse and stable economic base and counter the damaging effects of “Dutch Disease” – the over-reliance of economies on a single resource, in most cases hydrocarbons. Intelligent allocation of the financial surpluses afforded by the oil boom to develop more sustainable economic sectors such as infrastructure, Information Technologies and tourism will be imperative for Azerbaijan’s continued success. As the former American president Calvin Coolidge once remarked, “The business of America is business” and U.S. companies will be vital for helping its ally Azerbaijan diversify its economy, eliminate the remaining inefficiencies of the defunct Soviet system and expand business ties. This will only be possible, however, if more is done to improve the business and investment climate of the country. Success is imperative in the current measures to tame inflation, and in turn, ease pressure on the real exchange rate. Further, the government will need to increase its infrastructure dramatically and make substantial reforms in the areas of anti-trust laws and government interference in the economy. Above all, Azerbaijan will need to provide a good incentive for foreign investment such as large tax breaks for big businesses.

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Stability is the key to prosperity in the Caucasus and Central Asia, but numerous conflicts threaten to undermine the stability of the region and potentially halt the progress of economic and political reforms. A resurgent Russia is becoming increasingly aggressive in its external dealings; Iran looms as a risk to regional cooperation; nearby crises in Afghanistan and Iraq are far from settled; and smaller yet violently disruptive conflicts in Mountainous (‘Nagorno’) Karabakh, Chechnya, South Ossetia, and Abkhazia present the potential to undermine any security the region might achieve. Continuing in its traditional role as the world’s first secular Muslim democracy (May 28th, 1918) and as the economic motor of the Caucasus, Azerbaijan needs to concentrate on assuming the role of a regional leader. The Karabakh conflict continues to impede Azerbaijan, but the country has proven itself as an economic and diplomatic force and is poised to set the pace in the South Caucasus. Azerbaijan’s good relations with NATO – underscored by its contributions in Afghanistan and Iraq, the NATO International School of Azerbaijan (NISA), and through its Individual Partnership Action Plan (IPAP) – afford the country a sense of protection from its larger neighbors to the North and South as it builds its own armed forces. In recent years Azerbaijan and the U.S. have held military consultations and reached a number of defense and security agreements. Azerbaijan has allowed the U.S. to make use of its airspace (and airports) for its missions in Afghanistan and Iraq. The Americans have provided valuable support and technical advice in helping Azerbaijan with its goal of establishing a viable national armed force, such as the Caspian Guard Initiative, under which the U.S. is helping Azerbaijan refurbish its coast guard and prepare a plan to enhance Caspian security. Azerbaijan’s willingness to engage in bilateral and multilateral security initiatives has endeared the country to the trans-Atlantic community and acted as a check against the aggressions of regional powers. Still, progress has been slow on the single most important threat to the stability and sovereignty of Azerbaijan – the Armenian occupation of roughly 15 percent of its territory in the Karabakh region of the country. The Armenian occupation of Karabakh is a tragic situation for all involved, and further, represents the single thorniest issue hampering progress in the Caucasus, as well as the full development of relations between Azerbaijan and the United States. While the U.S. is committed to achieving a peaceful resolution of the conflict through the OSCE Minsk Group, in reality its abilities to achieve any breakthroughs are limited. It is increasingly apparent that the continued ascendancy of Azerbaijani diplomacy is the best hope for the country to regain its territorial sovereignty. This was most recently made manifest by the successful U.N. General Assembly Resolution of March 14, 2008, that reiterated the Azerbaijani position that the Armenian occupying forces leave immediately – a position endorsed by most member states of the Organization of the Islamic Conference (hosted in Baku in 2007), but rejected by the three ‘co-chairs’ of the peace-seeking Minsk Group, namely, Russia, France and the U.S., much to the disappointment of Azerbaijan. This was not exactly a surprise. Given its position as a global leader and ally of both Armenia and Azerbaijan, the U.S. is necessarily involved in the negotiations to resolve the conflict. But American politics are beholden to special interests, and due to a large and wealthy Diaspora, one of the most powerful lobbies in Washington is the Armenian-American group. The Armenian-Americans have been very successful in rallying U.S. congressmen to their cause and have ensured that it will be immensely difficult for the U.S. to go against the Armenian position on Karabakh in any way. Azerbaijan-U.S. relations have a long way to go before the U.S. government’s stance will shift directions, but given the diplomatic progress that has been made by Azerbaijan in the past sixteen years, it is not too much to hope for.

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Going beyond the top-down method, U.S.-Azerbaijan relations can, and should, be strengthened and made more sustainable through approaches at the “grassroots” level. Notoriously ignorant geographically, many Americans don’t even know where Azerbaijan is. Even among the better educated, many don’t know more than basic facts, and identify Azerbaijan only as a small post-Soviet state with plenty of oil. Conversely, the news media and Hollywood films often give unclear or false impressions of American culture, and stereotyping buzzwords like “imperialistic” and “profiteering” seem to be almost irresistible for many news stories about the United States. Encouraging cultural exchange and understanding between Azerbaijan and the United States would add a depth to relations between the two countries that is unattainable through business and political alliances. Measures such as establishing Azerbaijan studies programs and educational exchanges in U.S. universities, disseminating historical facts about Karabakh, promoting cultural events with distinctive Azerbaijani culture such as cuisine and Mugham, and seeking out publicity that highlights the finer aspects of Azerbaijan are good ways to bolster the country’s image across the broader American populace. Hosting the Olympics would of course be the ultimate mode of showing off Azerbaijan to the world at large. While Baku’s bid for 2016 is a long shot for many reasons, President Ilham Aliyev and his advisors would be wise to continue to modernize the city and make a more viable bid in 2020 or 2024. It would be the ultimate tool for establishing a favorable opinion of Azerbaijan among Americans and the rest of the world.

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Azerbaijan and the United States are clearly strategic allies. They have similar aspirations for the world in the 21st century and each possesses distinct strategic characteristics that the other needs. The last few years have yielded impressive progress in furthering and strengthening bilateral relations. If a few obstacles can be negotiated – primarily, continued reforms to Azerbaijan’s political and economic framework, and an end to conflict in Karabakh, or at least a clearer American commitment to Azerbaijan’s position – the next ten years will be the best the alliance has known.