In 2006 Caspian oil is loaded onto a tanker in the Mediterranean port of Ceyhan. It was pumped near Baku, travelled well over 1,700 kilometres and crossed the territory of two neighbouring states. The reason is simple: the Caspian is a closed sea and Azerbaijan has no access to the World Ocean. To reach the market, the oil needed agreements with neighbours. That is why foreign policy is a matter of both security and economy for Azerbaijan. This lesson follows the road from the first years of independence to COP29 (see «The First Karabakh War and the Khojaly genocide» and «Building a law-based democratic state: the 1995 Constitution and reforms (1993–2003)»).
Aims and tasks
Restored Azerbaijan had to appear on the world map as a state again. Recognition came first: on 9 November 1991 Türkiye was the first state to recognise independence, and Iran followed in December. In 1992 Azerbaijan became a member of the CSCE (later the OSCE) and of the UN. The main aims of foreign policy were to defend independence and sovereignty, restore territorial integrity, ensure security, build foreign ties for economic growth and protect citizens’ rights abroad.
In the first years the course was changeable. Under the Popular Front government (1992–1993) Azerbaijan preferred closeness to Türkiye and the West and did not join the CIS. In the autumn of 1993 it became a CIS member. Under Heydar Aliyev a balanced foreign policy took shape: cooperation with every neighbour and great power on the basis of national interests, without being tied one-sidedly to any centre of power.
The oil strategy: the «Contract of the Century»
In the first years of independence the economy lay in ruins and fighting went on at the front; there was no capital or technology to develop the deep Caspian fields. Heydar Aliyev chose to make oil an instrument of foreign policy: if leading companies were interested in Azerbaijan, their states would be interested in its stability too. A ceasefire was reached on 12 May 1994, and on 20 September 1994 the «Contract of the Century» was signed in Baku, in the Gulustan Palace.
«Contract of the Century»Definition
The production-sharing agreement signed on 20 September 1994 between the State Oil Company (SOCAR) and a consortium of foreign oil companies on the joint development of the «Azeri–Chirag–Guneshli» fields.
The contract was politics as well as oil: foreign investment raised outside interest in the country’s security. Then came the question of routes. Early oil was exported from 1997 through the Baku–Novorossiysk pipeline and from 1999 through Baku–Supsa. But these routes depended on Russian territory and on tanker traffic through the Black Sea straits. A route of its own to the Mediterranean was needed.
Pipelines and transport corridors
By documents signed in Istanbul in 1999, Azerbaijan, Georgia and Türkiye confirmed the Baku–Tbilisi–Ceyhan (BTC) pipeline project. The foundation was laid at Sangachal on 18 September 2002 and the pipeline opened in 2006 — President Ilham Aliyev completed Heydar Aliyev’s oil strategy. For the gas of the Shah Deniz field, discovered in 1999, the Baku–Tbilisi–Erzurum (BTE) gas pipeline was built (2006–2007).
The next stage was transport and the European gas market. On 30 October 2017 the Baku–Tbilisi–Kars (BTK) railway opened: an East–West corridor from the Caspian to Türkiye and Europe. In gas the Southern Gas Corridor was built: Shah Deniz-2 → the South Caucasus (BTE) pipeline → TANAP across Türkiye → TAP through Greece and Albania and under the Adriatic to Italy. The opening ceremony was held in Baku in May 2018, and at the end of 2020 gas reached Europe.
Interactive
| Project | What it carries | Route | Year |
|---|---|---|---|
| Baku–Novorossiysk | oil | across Russia to the Black Sea | 1997 |
| Baku–Supsa | oil | across Georgia to the Black Sea | 1999 |
| BTC | oil | Azerbaijan → Georgia → Türkiye (Mediterranean) | 2006 |
| BTE | Shah Deniz gas | Azerbaijan → Georgia → Erzurum | 2006–2007 |
| BTK | freight and passengers (rail) | Baku → Tbilisi → Kars | 2017 |
| TANAP and TAP | gas | Türkiye → Greece → Albania → Italy | 2018–2020 |
Relations with neighbouring states
| State | Key points |
|---|---|
| Türkiye | First to recognise independence in 1991; closed its border with Armenia in 1993 after the occupation of Kalbajar; 2010 Agreement on Strategic Partnership and Mutual Support; BTC, BTE, BTK, TANAP; 15 June 2021 — the Shusha Declaration (allied relations). |
| Georgia | The transit state: Baku–Supsa, BTC, BTE and BTK all run across its territory; the Azerbaijan–Georgia–Türkiye trilateral cooperation format. |
| Russia | The largest neighbour; a mediator of the 1994 ceasefire (Bishkek Protocol); co-chair of the OSCE Minsk Group; CIS member from 1993; 22 February 2022 — the Declaration on Allied Cooperation. |
| Iran | Recognised independence in December 1991; the Convention on the Legal Status of the Caspian Sea (Aktau, 12 August 2018) was signed by the five littoral states; the North–South transport corridor. |
International organisations
In multilateral diplomacy Azerbaijan relied on international law over Karabakh. The UN Security Council resolutions of 1993 (822, 853, 874, 884) demanded the withdrawal of the occupying forces but were not carried out; read about that stage in «The First Karabakh War and the Khojaly genocide». The table below shows the country’s main organisations. For more on the economy and foreign policy of independent Azerbaijan, see the lesson «The economy and foreign policy of independent Azerbaijan».
| Organisation | Year | Azerbaijan’s role |
|---|---|---|
| CSCE / OSCE | 1992 | joined on 30 January; the Minsk Group (1992) deals with the conflict |
| UN | 1992 | joined on 2 March; non-permanent member of the Security Council (2012–2013) |
| NATO (Partnership for Peace) | 1994 | joined the programme on 4 May |
| Council of Europe | 2001 | became a full member on 25 January |
| Turkic Council | 2009 | created by the Nakhchivan Agreement; Azerbaijan is a founder |
| Non-Aligned Movement | 2011 | joined; Baku summit in 2019, chair in 2019–2023 |
| UN climate conference (COP29) | 2024 | held in Baku (November) |
The Organisation of Islamic Cooperation also adopted resolutions supporting Azerbaijan’s territorial integrity over Karabakh.
- 9 November 1991
Türkiye is the first to recognise Azerbaijan’s independence
- 30 January 1992
Azerbaijan joins the CSCE (OSCE)
- 2 March 1992
UN membership
- 20 September 1994
“Contract of the Century”
- 1997–1999
Early oil is exported through the Baku–Novorossiysk and Baku–Supsa pipelines
- 1999
The BTC project is confirmed in Istanbul; the Shah Deniz field is discovered
- 25 January 2001
Membership of the Council of Europe
- 18 September 2002
The foundation of the BTC pipeline is laid at Sangachal
- 2006
The BTC opens; the BTE gas pipeline starts work
- 2011
Azerbaijan joins the Non-Aligned Movement
- 2012–2013
Non-permanent member of the UN Security Council
- 30 October 2017
The Baku–Tbilisi–Kars railway opens
- 29 May 2018
The Southern Gas Corridor is inaugurated in Baku
- 2019
The Non-Aligned Movement summit in Baku; Azerbaijan chairs until 2023
- 15 June 2021
The Shusha Declaration
- 2024
COP29 in Baku
| Person | Years | Role in foreign policy |
|---|---|---|
| Abulfaz Elchibey | 1992–1993 | closeness to Türkiye and the West; no CIS membership |
| Heydar Aliyev | 1993–2003 | balanced policy; oil strategy; the «Contract of the Century» |
| Ilham Aliyev | from 2003 | BTC, BTK, the Southern Gas Corridor; UN Security Council, NAM; the Shusha Declaration; COP29 |
| Cause | Result |
|---|---|
| The Caspian being a closed sea | pipelines across Georgia and Türkiye for oil and gas, the BTK railway |
| War, economic crisis, no capital | the «Contract of the Century» (1994): foreign capital and technology |
| The first routes depending on Russia and the straits | the BTC (2006) and the Southern Gas Corridor: Azerbaijan becomes a supplier of European energy |
| The occupation of Karabakh | UN Security Council resolutions (1993), a UN General Assembly resolution (2008), OIC support |
Source (adapted): Guests have gathered in the Gulustan Palace in Baku. On one side of the table sits the country’s state oil company, on the other a consortium of oil companies from several states. The agreement provides for the joint development of three offshore fields in the Caspian: output will be shared on agreed terms, while the foreign side will bring capital and technology.
In his speech the head of state says this is not only a document about oil but about the country’s future and the strengthening of its independence. Months have passed since a ceasefire was declared at the front, and part of the land is still in enemy hands.
Source tasks
Problem
1) Name the event that is not named in the text, its year, its city and the head of state at the time of signing.
2) Explain one political and one economic reason for signing this agreement.
3) Give two consequences of the agreement that are NOT stated in the text.
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Solution
2) Political: to raise the interest of leading companies and states in the country’s stability after the ceasefire and to win international support. Economic: a ruined economy and deep offshore fields needed capital and technology. Marks: both — 1; one — ½.
3) For example: (i) early oil exports (1997–1999) and the BTC pipeline (2006); (ii) rising oil revenue and the creation of the State Oil Fund in 1999; (iii) a bigger role for Azerbaijan in energy security and more international weight. Marks: two correct consequences — 1; one — ½.
Exam task: «not related»
Problem
Which does NOT belong to Heydar Aliyev’s oil strategy?
A) turning oil into an instrument of foreign policy
B) attracting foreign capital and technology
C) signing the «Contract of the Century» in 1994
D) Azerbaijan’s admission to the UN in 1992
E) the search for new export routes for oil
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Solution
Step 2: D has nothing to do with oil — joining the UN in 1992 was a step in the recognition of independence and came before the oil strategy.
Answer: D.
Exam task: chronology
Problem
Put the events in chronological order:
1. Early oil is exported through the Baku–Supsa pipeline
2. Türkiye recognises Azerbaijan’s independence
3. The foundation of the BTC pipeline is laid
4. The «Contract of the Century»
5. The Non-Aligned Movement summit in Baku
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Solution
Step 2: Baku–Supsa — 1999 (1), the BTC foundation — 2002 (3).
Step 3: The latest is the NAM summit, 2019 (5).
Answer: 2, 4, 1, 3, 5.
Exam task: «similar, different»
Problem
The BTE gas pipeline was similar to the BTC oil pipeline and different from the BTK railway. Which feature is this?
1. Running across Georgia
2. Being a pipeline
3. Opening in 2017
4. Carrying Shah Deniz gas
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Solution
Step 2: Feature 3 belongs only to the BTK, not to the BTE or BTC. Feature 4 belongs only to the BTE, not to the BTC.
Step 3: Being a pipeline is shared by the BTE and BTC but not by the railway.
Answer: only 2.
Remember
- Aims of foreign policy: independence, territorial integrity, security, economic ties; a balanced policy took shape under Heydar Aliyev.
- The «Contract of the Century» was signed in Baku on 20 September 1994 — a production-sharing agreement for the «Azeri–Chirag–Guneshli» fields.
- The BTC (2006) carries oil, the BTE (2006–2007) gas, the BTK (2017) is a railway; the Southern Gas Corridor reaches Europe by the BTE – TANAP – TAP.
- Türkiye was first to recognise independence (1991); the Shusha Declaration was signed on 15 June 2021; Georgia is the transit state.
- Years of membership: CSCE and UN — 1992, Council of Europe — 2001, NAM — 2011; UN Security Council — 2012–2013; chairmanship — 2019–2023; COP29 — 2024.