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Azerbaijan: President Welcomes Iran's Power-Sharing Proposal

Iran has proposed linking the electricity networks of the countries in the Caspian Sea region. Our correspondent Michael Lelyveld reports that the plan could have many benefits, but it is likely to face a series of political obstacles.

Boston, 4 April 2001 (RFE/RL) -- Azerbaijan President Heidar Aliyev has praised an Iranian proposal to link the power grids of the Caspian states, but the plan faces the barriers of ethnic tensions and regional strife.

Iranian Energy Minister Habibollah Bitaraf raised the idea last week in Baku during a ceremony to mark the opening of a 59-kilometer link between the two countries, allowing a seasonal exchange of electricity.

The new line from Iran's northern city of Parsabad Moghan to the southern Azerbaijani city of Imisli will carry Iranian power north across the border for four months of the year, while Azerbaijan returns power south for the remaining eight months.

The system will also make it possible for Azerbaijan to supply electricity to its isolated autonomous republic of Nakhichevan through Iran. The enclave is separated from the rest of Azerbaijan by Armenia.

The deal replaces a 1992 contract under which Iran supplied power to Nakhichevan until last October when Tehran cut the territory's electricity, citing Azerbaijan's failure to make payments on $45 million in bills. Service was restored in late December after Baku paid an installment of $3 million. Nakhichevan has relied on Iran for 60 percent of its power.

The episode underscored problems in both countries. Azerbaijan seemed helpless to deal with the trouble. After years of publicizing its oil wealth, it proved too short of cash to settle its debt. The shutoff at the start of the winter coincided with power shortages throughout Azerbaijan, adding to unrest after a parliamentary election that was widely criticized as unfair.

On its side, Iran insisted that the power cut was strictly a business matter. But the Iranian press took the occasion to air a list of grievances against Azerbaijan.

The country was accused of unfriendly acts, including frequent postponements of a visit by President Aliyev and Baku's opposition to Tehran's formula for dividing the Caspian Sea. As in all such disputes, issues related to Iran's large ethnic Azerbaijani population added to tensions.

But in recent weeks, Iran's criticisms have eased. The new power deal comes as Tehran is trying to avoid isolation on the Caspian legal issue in the days before a scheduled summit meeting of the five shoreline states in Turkmenistan.

Perhaps to improve its position, Iran has proposed its plan to connect the electric networks of its Caspian neighbors. The country recently opened a line to carry power from Turkmenistan to Turkey. It has also had a seasonal arrangement for trading electricity with Armenia since 1997.

The idea of electricity trade is potentially important for the region, which has focused its efforts on pipelines for exports of its remote gas supplies. Countries like Turkmenistan have excess generating capacity, which could allow it to export its energy by using gas to produce power locally.

Power pooling has been used in North America for years to relieve temporary shortages. But electricity trade in the Caspian has been limited largely to border areas, so far. Aside from the benefits for energy exporters, such a plan could help settlements in the region that have had limited access to electricity.

Iran's offer suggests that it may also be ready to seek larger opportunities for cooperation with Azerbaijan. But Tehran may also face hostile responses to its initiatives.

At Bitaraf's meeting in Baku, he urged Azerbaijan to complete a dam project for which agreements have already been signed. According to Azerbaijan's ANS television news, President Aliyev was angered by the reference to the project, which is in territory that has been occupied by Armenia.

Aliyev reportedly said, "We don't know when Azerbaijan will liberate its lands, in one or 15-20 years. Who are you going to build that dike with? I can't allow this. Then it turns out you will cooperate with Armenia on our lands?" Reports by Iran's official news agency did not carry the Aliyev quote.

It is unclear whether Bitaraf raised the issue of the dam project in error. But the Azerbaijani report is a measure of the resentment that Iran faces for dealing with Armenia, with which Azerbaijan has had a long-standing dispute over Nagorno-Karabakh, a mainly ethnic Armenian enclave within Azerbaijan.

In a region filled with disputes and rivalries, it may be hard to pursue cooperation with one country without being held accountable for trade with another. The Iranian plan to link the Caspian power grids seems likely to face a series of similar political obstacles, no matter how much economic sense it makes.