[NGW Magazine] SGC, Italy and the Nagorno-Karabakh Question

Italy is in a position to address the liberation of Azerbaijani territory occupied by nearby Armenia as the Southern Gas Corridor starts testing. It has an example from its own past to follow, and the signs are it is already at work on this.

Import-dependent Italy is chairing the United Nation’s Organization for Security and Co-operation in Europe (OSCE), and its foreign minister has put the resolution of the long-running dispute between Azerbaijan and Armenia over Nagorno-Karabakh on his list of priorities. The territory, made a part of Azerbaijan by Stalin, is mostly occupied by Armenians but is governed by Baku, with Moscow overseeing disputes in the traditional 'divide and rule' way it applied elsewhere in the Soviet Union.

In an interview with RIA Novosti, the minister Angelino Alfano said: “Italy, as part of its chairmanship in the OSCE in 2018, plans to attach maximum attention to the settlement of the Armenia-Azerbaijan Nagorno-Karabakh conflict and other conflicts in the region of the organisation’s activities.”

One proposed solution is to convince Yerevan to allow Nagorno-Karabakh to be incorporated into Azerbaijan, with the broadest autonomy. An article in Il Giornale said: “The author suggests that Italy can contribute to the resolution of the conflict by offering its Alto Adige model, which means the return of the occupied territories to Azerbaijan, restoration of the territorial integrity of Azerbaijan, the return of Azerbaijani refugees and internally displaced persons to their homelands, and giving Nagorno-Karabakh international guarantees that would consist of granting large autonomy which guarantees the security of Armenian minorities.” 

Italy’s involvement is directly connected with the prospect of Southern Gas Corridor (SGC) to deliver gas to Italy and enhance its status as a gas hub. Azerbaijan is the main oil supplier of Italy, the article says; the SGC originates in the Azerbaijani sector of the Caspian Sea and the last section of the corridor – the Trans Adriatic Pipeline (TAP) - will turn Italy into a hub for natural gas transportation to the entire southern Europe. Azerbaijan state oil company Socar has stakes in all the links of the SGC.

Rome has expressed a strong desire to assist Baku even though many European countries have been concerned by Baku’s poor human rights record; and the Armenian diaspora also exerted pressure not to act. Indeed, this diaspora could be credited with the 2015 European Parliament’s resolution, which not only acknowledged that the 1915 Armenian genocide took place, but also urged Turkey to recognise it as such. Moreover, the French and German governments criminalised denial of the Armenian genocide, further straining Turkey’s relationship with them. However, a number of European governments, including Italy, seem to have forgotten their criticism and now stand firmly behind Baku and Ankara.

Interestingly enough, Russia followed Italy’s path. It has continued to provide Azerbaijan with advanced weapons which could well be used against Armenia, supposedly its ally; and one reason could be Azerbaijan’s ability to allow more Russian gas into Europe.

The origin of the Nagorno-Karabakh problem

With premier Mikhail Gorbachev’s slackening of political control in the twilight of the Soviet Union, violence erupted in Nagorno-Karabakh in 1988, and later, in Baku in 1990, leading to pogroms of local Armenians and Moscow’s military intervention. Armenia and Azerbaijan were at war, despite the fact that both were then formally part of the Soviet Union. 

With the end of the Soviet Union, the war between Armenia and Azerbaijan was in full swing but after intense fighting, Armenia won. Nagorno-Karabakh became an independent state or an Armenian proxy. Armenian forces took over a good part of Azerbaijan’s territory outside Nagorno-Karabakh. And much as it would have liked to, Baku was unable to recover territory controlled by Armenian forces, themselves assisted by Moscow.

Baku has a powerful weapon – its rich deposits of gas such as Shah-Deniz, which could provide a substantial supply for Europe. It began in 2006 with the South Caucasus Pipeline, delivering gas to Turkey. Much more ambitious is the second gas line to deliver additional gas to Europe, following an agreement finalised in 2013. The gas will flow into Turkey this year and in later years, Greece and Italy.

Countries that could benefit from this gas have considered Baku’s needs, especially Italy, where the pipeline finishes. It would introduce a competitor to Gazprom and Sonatrach. But there is still the risk that the gas line could change direction, and this is the reason why they are anxious to please Baku.

SGC and the benefits for S Europe

Although Italy and Greece are not at all against Russian gas, the TurkStream 2 project is fiercely resisted by Washington and Brussels, the latter mostly because of pressure from eastern European countries such as Poland and Ukraine. Ukraine would lose most of its transit fees. Consequently, there is still doubt that the line, which will provide gas to Europe, will ever be built. Moscow itself is not sure about the final results of the project. Second, there is a problem with Nord Stream 2. If the project were completed, it will create a problem for southern Europeans as Germany could influence the gas flow to the rest of the EU. 

Germany is clearly the dominant force in Europe, and its position is resented by quite a few eastern and southern Europeans, as becomes clear from the debate over Nord Stream 2. At the same time, the SGC project implied that gas would go to Italy, which, theoretically, could emerge as the distributor of gas to a good part of Europe. Last but not least, the US was fully in support of the SGC.

And this was the reason why Rome and other European capitals are pleased that the SGC is actually entering the final stage, and gas delivery could be indeed in sight. It is also the reason why Rome and other capitals are so anxious to please Baku.At present, 45% of Italian gas comes from Russia. The SGC will reduce this dependence and it is not surprising that experts believe it will have positive implications for the Italians.

Pleasing Baku and avoiding danger

It is most likely that Italy will not receive the gas until 2020. The EU and Rome are anxious to prevent Baku from changing its mind and diverting the gas line in a different direction. And this possibility exists. Instead of going further west to Italy – and this would require laying the gas line on the bottom of the sea – the gas line could take a much easier and cheaper route. It could move to Hungary, and later to Austria. And in this case, it would follow the possible route of TurkStream. To avoid such a scenario, Rome assured Baku that Italians would take the leading positions in OSCE and do their best to solve the Nagorno-Karabakh problem. 

As well as Rome,  France also apparently believed that it could benefit from the deal, and this has a direct implication for Paris’ approach to the Nagorno-Karabakh problem. Indeed, France, with a large and supposedly influential Armenian diaspora, also experienced a change of heart and condemned Nagorno-Karabakh’s government as illegitimate. “France’s position is clear: the country doesn’t recognise the illegal regime in Nagorno-Karabakh," France’s foreign ministry represented by the country’s embassy in Azerbaijan told Trend on November 23.

There was also the suspicion that the EU’s collective change of mind was due not just to the desire to see Azerbaijani gas delivered to Europe, and the readiness to close their eyes to Baku’s human rights violations, but because of money from Baku. 

The change of heart was not just a phenomenon attributed to the people in the Western capitals. Russians also changed their priorities. Moscow also implied that despite the August 2017 agreement between Turkmenistan and Azerbaijan, and Sergei Lavrov, Russia’s foreign minister’s “sensational” announcement about the “agreement among the five littoral states over the text of a Convention establishing a Caspian Sea legal regime,” the TransCaspian gas line is not a sure deal, and Russia could provide extra gas through TurkStream. The SGC and TurkStream 2 could be connected and Gazprom has already said it could ship gas through TAP.

According to some reports, Gazprom has already signed an agreement with the Greek company Depa and the Italian company Eni to use the Poseidon line, part of the SGC, to send gas to Turkey, Greece and then Italy.

Dmitry Shlapentokh