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Azerbaijan: First Flow Of Oil Brings New Challenges

By David Nissman

Washington, 18 November 1997 (RFE/RL) - This week the first of Azerbaijan's oil begins to flow to the market place. This presents many new challenges to Azerbaijan.

Some of the challenges are domestic. Profits coming into Azerbaijan's coffers will initially be small. According to a recent article in the London newspaper, "The Independent," only 88,000 barrels per day will flow through the pipelines from the Caspian to Novorossiysk. This is a mere drop in the bucket in worldwide oil production. The real money will begin to arrive only after the flow of what is called "main oil" begins in a couple of years.

The government will have to explain all this to the public. It may be difficult to contain rising expectations of the population with the reality of the situation.

The second domestic challenge is that, until now, only problems involved in bringing the oil to the marketplace have preoccupied the media. Now the media can begin turning to other issues as well, such as human rights and democracy. These issues have long been relatively neglected but may regain the importance they had in the late Soviet period. A presidential election is approaching, and the basic issue is likely to focus on what is being done with the income from oil

Other challenges are regional. Azerbaijan must define its position both among the Caspian littoral states and in the South Caucasus. The conflict with Armenia over Karabagh and the occupied territories is still not resolved as is the dispute over the status of the Caspian Sea.

Turkmen President Saparmyrad Niyazov refused to attend the last week ceremonies in Baku marking the beginning of the movement of oil from Baku to Novorossiysk. Turkmenistan disputes the ownership of the oilfield from which this oil is to flow and argues with Russia and Iran that since the Caspian is really a lake rather than a sea its resources should be shared jointly by all the Caspian littoral states.

Azerbaijan and Kazakhstan argue that the Caspian is a sea and should be divided into national sectors, with each nation exploiting its own sector. Niyazov claimed that the opening of the Chirag field set an "unwelcome precedent, which could have serious consequences." He did not say what these consequences might be.