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Azerbaijan/Russia: Presidents To Discuss Oil, Defense Issues

Moscow, 2 July 1997 (RFE/RL) - Azerbaijan's President Heydar Aliyev arrives today in Moscow for key talks with Russia's President Boris Yeltsin. The two president are expected to sign a number of agreements, and to discuss oil and defense issues.

Yeltsin's spokesman Sergei Yastrzhembsky said Aliev, who will stay in the Russian capital through Saturday, is expected to meet Yeltsin in the Kremlin tomorrow. Interfax said that immediately after his arrival Aliyev will meet Russia's Prime Minister Viktor Chernomyrdin, Foreign Minister Yevgeny Primakov and Moscow Mayor Yury Luzhkov.

Russian news agencies quote a spokesman for the Russian Embassy in Baku as saying the 12 agreements to be signed are aimed at settling both sides' financial claims and helping strengthen economic cooperation. Itar-Tass also quoted Aliyev as telling the Russian ambassador in Baku yesterday that Aliyev expects to hear from Moscow a clear answer about the probe into alleged illegal Russian arms exports to Armenia.

Yesterday, Chernomyrdin denied the Russian government had sanctioned illegal arms supplies to Armenia. Earlier this year, Duma Defense committee chairman Lev Rokhlin and former CIS Minister Aman Tuleev said Russian weapons had been exported to Armenia during the armed conflict between Azerbaijan and its breakaway, mostly ethnic Armenian enclave of Nagorno-Karabakh. Also yesterday, Yeltsin appointed Tuleev governor of Kemerovo Oblast, and simultaneously removed him as CIS affairs minister.

Observers say the Azerbaijani delegation and Russian oil and government officials will also discuss the transport of Caspian oil across Chechnya to Russia's Black sea terminal of Novorossiisk. And Itar-Tass said Aliyev and Russian officials from Russia's oil giant LUKoil are expected to discuss plans for Russian participation in the development of the Caspian oil field of Yalma. LUKoil is hoping to obtain a big stake in the large, lucrative project.

In an unexpected development, Chechnya's President Aslan Maskhadov met Aliyev in Baku yesterday. Speaking to journalists before the meeting, Maskhadov said Russia is aiming at blockading Chechnya and added that he had "not come to Baku to beg, but to discuss issues of mutual interest."

Aliyev said Azerbaijan is ready to develop ties with Chechnya in all spheres. Chechnya considers itself independent, but Russia considers it a Russian Federation republic. Aliyev and Maskhadov did not speak to reporters after the meeting, but Maskhadov aide Kazbek Khadzhiev was quoted as saying Maskhadov planned to discuss broad political issues and the transit of Caspian oil through Chechnya.

Some observers said Aliev's remarks seemed to indicate that Azerbaijan would support Chechnya's claim to sovereignty. No state has recognized Chechnya. But Reuter news agency quoted other political observers as saying Aliyev aims at showing Russia he has trump cards to play against Moscow, if the Kremlin fails to exert pressure on Armenia over the Nagorno-Karabakh dispute. No political settlement has been found, despite diplomatic efforts by Russia and Western countries to put pressure on Armenia to accept a deal giving Nagorno-Karabakh wide autonomy within Azerbaijan.

There has been no official response to the Aliev-Maskhadov meeting from Russia. Chechen and Russian officials this week continued negotiations on a key accord on the use of 150-kilometers of the pipeline across Chechnya and other bi-lateral economic agreements. Chernomyrdin and Maskhadov signed an agreement in mid-June on repairing the Chechen section of the route. But Chechen officials have said that the pipeline - since it runs underground - emerged relatively undamaged after the Chechnya conflict.

Russia and Chechnya are anxious to get the pipeline ready to receive the first oil from the rich Caspian fields that a multi-national consortium -- the Azerbaijan International Operating Company (AIOC) -- plans to use for the transport Westward of so-called "early oil." First deliveries are expected in October.

The route for exporting high-volume, full production capacity in the next century has not been chosen, and several countries, including Georgia and Turkey are fiercely competing for the lucrative deal. Proposed alternative routes -- particularly one through Georgia-- have found the consortium's favor. The Georgia route to the Black Sea port of Supsa has also been chosen for the transport of "early," or limited-production-capacity oil.

Chechnya's First Deputy Prime Minister Movladi Udugov said yesterday that the interest of Russia and Chechnya on the issues "practically coincide." But he said that "they only coincide on the oil deal." And he added that the oil question "will not be solved, until Russia and Chechnya solve the customs and banking issues."

Udugov, who during this week's round of Moscow talks met First Deputy Prime Minister and Finance Minister Anatoly Chubais, said the two sides are getting closer to agreements on customs and banking relations. He said Moscow agreed that Chechen banks will have the right to open branches in foreign countries and foreign banks will be able to operate in Chechnya. He said a compromise was found on Chechen banks being able to carry out foreign currency and securities transactions in Russia, but only with Maskhadov's personal clearance and guarantee.

Yesterday's meeting between Maskhadov and Aliyev seems aimed at linking all pending issues and puting pressure on Russia. The president of Chechnya's oil company, Kozh-Akhmed Yarikanov said this week that he is confident Russia, Chechnya and Azerbaijan will sign a broad tri-partite agreement on the transport of Caspian oil.

But Russia's First Deputy Prime Minister and Fuel and Energy Minister Boris Nemtsov said today that he does not expect any political agreement among Russia, Chechnya and Azerbaijan on the issue. Our Moscow correspondent reports that officials believe that such an agreement could be viewed as Moscow's tacit recognition of Chechnya's independence

According to Nemtsov, the issue could be solved in the frame of a tri-partite agreement signed by the directors of pipeline and oil companies involved in the project. He said that "this is the position of the Russian side and I believe it is also Azerbaijan's position."