The relationship between Russia and Azerbaijan has evolved over two centuries, during which Azerbaijan spent most of the time in the Russian Empire and then as part of the Soviet Union until it broke up in 1991 and both emerged as independent states. The two countries established diplomatic relations in April 1992 and then signed a free-trade agreement that September.
Such is the difference in power between the countries that it is Russia and not Azerbaijan that sets the tone for relations. Azerbaijan has always been interested in good relations with its northern neighbour – but has consistently stuck up for its own national interest.
Chilly 1990s
This led to problems between 1994 and 1998, when Russia closed the land border between the two countries – officially, because Russia claimed that Azerbaijan was a source of military aid to the Chechen separatists (it sealed its Georgian border too). The background was that Azerbaijan had been signing contracts with Western energy companies to develop oilfields in the Caspian Sea, against strong opposition from Russia.
To put pressure on Azerbaijan, Russia began supporting Armenia in the dispute over the Azerbaijani region of Nagorno-Karabakh. The region has a high proportion of ethnic Armenians, whose desire to join their motherland sparked war in the early 1990s, several years after Armenia declared an interest in the territory. The result of the Russian intervention was that Azerbaijan lost control of the region, whose status remains unresolved today.
In February 1992 Armenians massacred hundreds of civilians in the city of Khojaly, which promptly led to the resignation of Azerbaijan’s first president, Ayaz Mutabilov, and fundamentally damaged relations with the Russians.
When the Russia/Azerbaijan border closed in 1994, Azerbaijan lost the traditional market for exporting its industrial and agricultural products. Simultaneously it stopped using Russian raw materials for its enterprises. This caused Azerbaijani industry to come to a standstill, which brought about huge declines in GDP. Huge numbers of unemployed people went to Russia in search of work (by aircraft) – a million-strong army of expat workers whose incomes have significantly helped supplement family budgets back home. It also meant that Azerbaijan turned its attention to Western markets, which eventually helped to bring the economic downturn to an end.
The relationship between the two countries only began to improve with the coming to power of Vladimir Putin. In January 2001 Putin became the first Russian president to pay an official visit to Baku. During the visit, a number of issues concerning relations between the two countries were resolved, including agreeing a 10-year lease to Russia of the security-critical Gabala radar station in northern Azerbaijan and boundary disputes in the Caspian. There was also much emphasis on developing trade relations.
