Richard Morningstar: The charges are ridiculous...

U.S. Ambassador to Azerbaijan Richard Morningstar, in an interview with Turan Information Agency and The Voice of America, spoke on the US-Azerbaijan diplomatic relationship, the situation on the Armenian-Azerbaijani front and his country's energy policy in the Caspian region. The Ambassador also responded to those who accused him of plotting a coup.

Q.  Mr. Ambassador! It has been 22 years since the establishment of U.S. Azerbaijani-diplomatic relations. Could you please elaborate or share your views on the ups and downs, or the advantages and disadvantages of the US-Azerbaijani relationship? 

A. First of all, it is hard to believe that it has been 22 years already. I first came to Azerbaijan 19 years ago, and time does fly by.  I think that, overall, the relationship has been very good.  We have many areas of shared interests.  We are, of course, very concerned about democratic and economic reform.    Those are areas that we need to continue to work together on. As you know, we were disappointed with how the elections went, from the standpoint of process, which emphasizes that is an area we need to keep working on. At the same time, we have many shared interests that we both have a stake in, and we have to continue working together. There are geopolitical and security issues, such as Nagorno-Karabakh, counter-terrorism, and our very good cooperation, especially, in Afghanistan.  These issues are all very important both to the USA and Azerbaijan and it is in our common interests to work on these issues.  It is also important-we believe-to continue to work on energy issues-which I know you are going to ask me more about-and also the non-energy sector of the economy, including issues such as WTO accession. Having said that, our strongest relationships are with democratic countries and this is an area we need to continue to work closely together on with Azerbaijan.     

Q. This month marks the 22nd anniversary of our two countries' diplomatic relationship.  During this special time, some local media outlets have accused you and the U.S. Government of attempting to overthrow the Azerbaijani Government.  What are your thoughts about this? 

A. Well, I will categorically say that the United States is not at all interested in regime change or the overthrow of the government.  That is just patently ridiculous. The political future of Azerbaijan is up to the people of Azerbaijan. 

Q. Mr. Ambassador, Currently there is tension on the line of contact between Armenia and Azerbaijan. Do you think this affects the negotiation process?  

A.  I am very concerned about it, and we have made very clear to both Azerbaijan and Armenia that escalating tensions on the line of contact are not at all helpful to the peace process. And there is always a danger of miscalculation and inadvertent consequences that could make the situation worse, and we want to make sure that this will not happen.  We regret the tragic loss of life on both sides of the line. At the same time, the two presidents did meet in November, and had some constructive negotiations as to how to resolve the conflict.  We think it is very important that those conversations continue and the two presidents work towards a resolution.  The Minsk group is there to mediate, to facilitate, and to offer ideas.  So, we can only hope that there will be progress. 

Q.  This year marks the 20th anniversary of the Contract of the Century. Generally speaking, how would you characterize the successes and failures of the America's Caspian energy policy during this time?

A. Well, I think, first of all, the relationship between the United States and Azerbaijan in the energy area has been excellent, and I think there have been some very major successes. The Baku-Tbilisi-Ceyhan pipeline has been a major success and I had the privilege to work on it. There have also been recent successes in the development of the so-called Southern Gas Corridor with the selection of a pipeline and the final investment decision to go for the Shah-Deniz project.  I think we were able to play a constructive role with respect to the Southern Gas Corridor, and I think we will continue to do so. I cannot think of anything that I would characterize as a failure at this point. I want only to emphasize that the relationship with respect to energy is very good, and I am sure it will continue to be so. 

Q. Let me say that, over the past five years, American companies have not been actively investing in the Caspian region. In 2013 Conoco Philips left the Kazakhstan Kashagan project. What are the reasons behind all of that?

A. Well, first of all, I think there has been strong investment in the Caspian by American companies.  The Azeri-Chirag-Guneshly project has involved major American companies, Baku-Tbilisi-Ceyhan likewise.  It is true that there are no American companies as partners in Shah-Deniz, but BP, is certainly a global company, that-you may remember-merged with a major American company, and has many assets in the USA. I would also add that American companies are still very much interested in new projects in Azerbaijan. 

I talk to major American international companies often about the projects that they have interest in. American companies would be very able to provide technical cooperation, as well as share the financial risk, on some very complicated new projects that will take place or begin over next few years.

Q. What are the main dangers for foreign investors in Azerbaijan? Are these dangers more related to political, economic, financial, democratic, or human rights issues?

A. I think you have to look at it in a couple of ways. Economic and financial risks would be the most important thing from the stand point of companies. I think very significant economic opportunities for American companies are not just in the energy area, but also in non-energy sectors, such as information technologies, agriculture, and other areas. There are issues that Azerbaijan needs to continue work on. Customs reform will be important, and an updated competition code will also be important. Investors will have to be satisfied that they will be able to deal in a very straightforward and transparent way with the government, and not face undo competition issues with some of the large monopolistic firms that are here in Azerbaijan. WTO accession will also be very important because, in the WTO, the government will have to make reforms that very much encourage investors. You mentioned political, democratic, and human rights issues and I do not want to ignore those from the stand point of investment. I think investors will look at them more on a longer term basis.   We believe that democratic and economic reform are very important to the stability of Azerbaijan over the medium and long term, and companies would also very much have an interest in that kind of stability, so that they will be able to operate in a predictable environment. So at the end of the day all these issues do relate to each other.  

Q. The United States declares that it supports the Trans Adriatic Pipeline (TAP). How will the US deal with the possible political risks if they arise?

A. Well, when you talk about the Trans Adriatic Pipeline (TAP) you are really talking about that part of the project that will go through Greece and Italy, as well as into some Balkan countries. So, I assume that you are not talking about risks in the Caucasus, but the political risks under Trans Adriatic Pipeline are issues for them to consider. We think that the risks in the countries like Greece and Italy are very acceptable. Greece, Italy, and some of the Balkan countries that would be involved, are part of the EU or are becoming associated with the EU, and I think that there ultimately is certain political stability in these countries, even with various changes in government.     I suppose the biggest issues might revolve around local permitting issues such as those.  I think they will ultimately be taken care of.  

Q. How do you evaluate the possibility of realization of Trans-Caspian Pipeline? Is it possible? 

A. We hope so. We have always been a supporter of a Trans-Caspian Gas pipeline. I have been working on such pipelines since 1998, but this is a matter that is being negotiated between the European Union, Azerbaijan, and Turkmenistan. It is really up to those countries. I am hopeful that, with the final investment decision on Shah-Deniz, and the fact that there is much more certainty of a gas pipeline coming from Baku, that Turkmenistan will become even more interested  in a Trans-Caspian gas  pipeline over the next few years. We certainly believe that, if Turkmenistan, Azerbaijan, and the EU agree on such a pipeline, that it should happen. 

Q. Are negotiations underway between Azerbaijan-Turkmenistan, EU- Turkmenistan, and US-Turkmenistan in this regard? 

A. Well, the USA is certainly interested in such a pipeline, but we are not involved in negotiations. It is a matter between Azerbaijan, Turkmenistan, and the EU. I should add that Turkey, and Georgia also, certainly, have an interest, but they are not involved direct in three-way negotiations.  

Q.  The USA wants to implement a   project to secure the energy infrastructure in Azerbaijan. Does this project still exist and activities implemented within that project?

A. Yes, we certainly are cooperating with Azerbaijan with respect to how they might best protect energy infrastructure, and I think that is an important area of our cooperation. 

Q. Have U.S. companies started activities related to the shale gas and development oil exploitation in the Mesozoic structures. What is the current state of these activities?

A. I think the process is in the very beginning stage, and there are some companies that do have some interest, but it is too soon to tell how the process will turn out 

Q. Back in mid 1990s U.S. companies were interested in investing in oil refining and petrochemical operations in Azerbaijan? What is the current state of that endeavor in the country?

A. There are still companies that are interested in getting involved in oil refinery processes, and potential projects here, but I am really not able to speak about particular companies because that is so-called a business confidential information.

Thank you very much for the interview. -0--