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Azerbaijan Report: June 7, 2004

7 June 2004
Oil Industry Still Not Transparent
Transparency in Azerbaijan's oil industry has yet to be established, local experts say following British Prime Minister Toni Blair's recent congratulations to President Ilham Aliyev on progress in implementing the Extractive Industries Transparency Initiative (EITI). In a letter to President Aliyev, U.S. President George W. Bush also praised the transparency of the National Oil Fund.

U.S. envoy on Caspian energy Steven Mann agrees that the situation in this area has improved, but adds that extra measures are still necessary for establishing of full transparency.

Announced by Blair at the World Summit on Sustainable Development in Johannesburg in September 2002, the EITI is an appeal to the governments of resource-rich countries and foreign companies working in these countries, former State Oil Company (SOCAR) President Sabit Bagirov said. The initiative is aimed at increasing transparency in payments by companies to governments, as well as transparency of revenues by host country governments.

Baku-based energy analyst Ilham Shaban said that in late March the state commission on transparency in the oil industry pledged to publicize all information on oil revenues for 2003. Two months later, it has yet to do so. Shaban also pointed to the necessity for the government to report where the money goes.

Bagirov suggested that a delay by the government in publicizing oil-income information is worrying. But this is still not the greatest problem, he said. The main issue concerns the use of these revenues in the future. If misused, they may soon be gone.

(Shahnaz Beilergizi)

Trial of Opposition Leaders Set
After a month of pretrial hearings, the trial of Musavat party Deputy Chairmen Arif Hajili, Ibrahim Ibrahimli, and Rauf Arifoglu, who is also editor in chief of the opposition newspaper "Yeni Musavat"; Democratic Party of Azerbaijan General Secretary Sardar Jalaloglu; People's Party and Umid Party leaders Panah Huseinov and Igbal Agazade, respectively; and Organization of Disabled Veterans of the Karabakh War Chairman Etimad Asadov has been set to begin 10 June.

Earlier, the defendants had refused to participate any further in the process and waived their defense, to protest the court's refusal to grant their petitions.

Lawyer Mirismail Hadi called the court decision "predictable." He said that the inevitability of the trial was evident from the very beginning: the defense was constantly turned down in its requests to drop the trial due to the lack of evidence. As for ensuring the defendants' participation in the trail, by law they can be brought to trial by compulsory means.

Meanwhile, the trial is expected to be watched by a special observer from the OSCE Office for Democratic Institutions and Human Rights. Ulvi Akhundlu, spokesman for the OSCE Baku Office, noted that a monitoring group of local OSCE experts previously observed the trial of lower-level oppositionists who were charged following the October events. A preliminary report on these trials is finished, Akhundlu said, but they do not yet intend to make it public. A final report on both trials will be submitted for open discussion only 10 days after the court brings in a verdict on the opposition leaders.

The OSCE Office for Democratic Institutions and Human Rights plans to discuss with the Azerbaijani government shortcomings observed by the monitors. The aim of the monitoring is to clarify whether reforms are truly under way in Azerbaijan's judiciary.

(Babek Bekir and Shahnaz Beilergizi)

Azerbaijan's Participation In Odesa-Brody Pipeline Impossible, Local Economists Say
Azerbaijan will allow Ukraine to purchase oil "in necessary amounts on a commercial, nondiscriminatory basis" for the Odesa-Brody pipeline, ITAR-TASS reported on 3 June. This is part of an intergovernmental agreement that was signed here on 3 June during Azerbaijani President Ilham Aliyev's visit.

The Odesa-Brody pipeline runs from the port of Odesa on the Black Sea to Brody on the Polish border and was designed to transport Russian oil to the Black Sea. But it stands idle because of unsolved problems with oil shipments. Only Russia has shown interest in delivering oil through the pipeline, but Ukraine turned down an offer from Russia this year, and hopes to reverse the pipeline and transport Caspian oil to Europe.

It would be more reasonable to talk about the pipeline's difficulties rather than its advantages, Azerbaijani experts say. Energy analyst Ilham Shaban said that the profitability of the pipeline has yet to be proved. Ukraine wants to deliver Caspian oil to Europe, but refuses to assume responsibility for shipments, throwing it upon the producing country.

Fuad Alizade of the "Zerkalo" newspaper suggests that there is no need for Azerbaijan to use the Odesa-Brody pipeline. It supplies oil to the world market via other two pipelines. He said it may be only a political decision, where Baku simply states its support for the Odesa-Brody pipeline and nothing more. Generally, there is nothing that would make Azerbaijan's participation in this project necessary.

But economist Gubad Ibadoglu of Musavat party says that Odesa-Brody has both certain political and economic advantages. Though it is off the agenda in any case, this pipeline will hardly propose an alternative to the Baku-Tbilisi-Ceyhan pipeline. As for the advantages, Ibadoglu suggests that it would increase Azerbaijan's possible access to Europe, as well as improve cooperation within the regional GUUAM alliance.

Other analysts argue that the Odesa-Brody pipeline mainly serves political interests, in ending Europe's dependence on Russian oil.

(Shahnaz Beilergizi)

(Compiled and translated by Etibar Rasulov)