RONDELI BLOG

Growth of Military Spending and Relations with Russia: Azerbaijan trying to Gain Advantage over Armenia

2017 / 10 / 06

Author:  Mamuka Komakhia, Analyst 

 

After the 1994 ceasefire agreement in the Nagorno Karabakh conflict, the military confrontation of a varying scale between Azerbaijan and Armenia on the border regions has never really ceased. However, the relations between the neighbors has become especially tense for the past couple of years. The 2016 military confrontation was even qualified as a war (Four-Day War) due to its scale. According to the assessment of Baku, the success achieved in the Four-Day War has proved that the steps taken in the military field by Azerbaijan in recent years have achieved desired results, which should in the long-term perspective, ensure that the conflict is resolved in Azerbaijan’s favor. The ultimate goal of Azerbaijan is to reclaim Nagorno Karabakh and the seven regions around it occupied by Armenia.

In order to tip the military-political balance with regard to Armenia in its favor and achieve success in a possible military confrontation, Azerbaijan increased military spending with an accelerated pace, also improving its own military-industrial complex and the bilateral military cooperation with a number of countries. The accelerated pace of the development of military cooperation with Armenia’s strategic ally, Russia, has become more and more noticeable in recent years.

 

Growth of Military Budget

The recognition of the defeat in Nagorno Karabakh conflict in 1994 was unavoidable, and it was also accelerated by the military failures of Azerbaijan and the perspective of its participation in international energy projects. Baku chose the policy of waiting.

In order to gain military superiority over Armenia, Azerbaijan directed the revenues gathered from the implementation of energy projects towards boosting its military potential. The trend of growing military spending became apparent since 2006, when the resources exported through Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline became a significant source of income for Azerbaijan.

It is quite impossible to determine the exact military budget of Azerbaijan since apart from defense spending budget lines, military spending is also put down in lines such as “other expenses” or “special defense projects,” which differ from year to year. In 2006, with the help of petrodollars, the budget allocated for security reasons by Azerbaijan doubled. If the budget was USD 644 million in 2005, it increased to USD 1,322 million in 2006. The growth was hindered in 2009 due to the world financial crisis; however, the security budget doubled once again in 2011 and reached USD 3,079 million.

Regarding the growth of military spending, the President of Azerbaijan, Ilham Aliyev, stated in 2014:  “this is our priority and we continue increasing the military spending.” According to the data of the Stockholm International Peace Research Institute (SIPRI), Azerbaijan’s military spending increased tenfold in the period from 2005 to 2015, reaching USD 4.8 billion in 2015 whilst Armenia’s spending in the same field in the same year was just USD 447 million.

The spending allocated for the security field by Azerbaijan in 2016-2017 reduced due to the low prices on oil, however, compared to Armenia’s spending, it still looks quite impressive. The defense budget of Azerbaijan in 2017 is USD 1.55 billion, whilst in case of Armenia it is USD 440 million.

Increased revenues since 2006 also enabled Azerbaijan to enter the world weapons market. According to the existing data, weapons imports in 2006-2010 and 2011-2016 increased by 217%. According to SIPRI’s data, the imports of Azerbaijan in this regard was 20 times more than the imports of Armenia in the period from 2012-2016.

 

Development of Military Industry

Parallel to the imports of military products, Azerbaijan started developing its own military industrial complex, which was put under the authority of the Ministry of Defense Industry, created in 2005. In June 2017, at the opening of the factory of combat materials in Shirvan, Ilham Aliyev stated that about 30 military factories are operating in Azerbaijan already and over 1,200 types of military products are being manufactured. In order to popularize its achievements in this field, Azerbaijan periodically hosts international exhibitions of military technology.

In order to develop military industry and import modern weaponry Azerbaijan actively cooperates with partner countries, including the companies from Israel, dealings with which even became scandalous, when in August 2017, the Israeli company Aeronautics Defence Systems was accused that when signing the final stage of the agreement of the purchase of drones on 7 July, in Baku, the company was asked to conduct a strike on Armenian military position with the so-called suicide-drone. Azerbaijan manufactures drones itself as well, actively using them in its confrontation with Armenia. The April 2016 Four-Day War was an outstanding example in this regard.

Apart from Israel, Azerbaijan also actively cooperates with Belarus, Ukraine and Turkey. Cooperation with Russia has become especially intense in recent years. This has become a cause for concern and doubts for Armenia.

 

Developing Cooperation with Russia

The main reason for the defeat of Azerbaijan in the Nagorno-Karabakh conflict and freezing of the conflict is considered to be the pro-Armenian position taken by Russia. Hence, after years, it became very clear for Baku that in order to change the military-political balance in favor of Azerbaijan, deepening the relations with Russia would be a decisive factor. Utilizing its patience and the “caviar” diplomacy Azerbaijan managed to find supporters in the political and military elites of Russia. For example, the Vice Prime Minister of Russia, Dmitri Rogozin, often visits Baku in terms of military cooperation, lobbying for selling the weaponry in Azerbaijan and development of bilateral cooperation. The Chief of the General Staff of the Armed Forces of Russia, Valeri Gerasimov, also visited Baku on 8 September 2017, discussing the issue of the future development of military-technical cooperation with Ilham Aliyev.

 

Policies of Baku have delivered a concrete result and now Russia is supplying Azerbaijan with the weaponry of Russian production, at the detriment of the interests of Armenia, its ally. Since 2010, Azerbaijan acquired USD 4 billion worth of military technology from Russia alone. According to SIPRI, Azerbaijan took up about 5% of Russia’s weapons exports in the period from 2011 to 2015 whilst in the years before it was just 0.7%. In 2017, based on the agreement on military-technical cooperation, Russia supplied Azerbaijan with combat materials and military technologies for various purposes (including armored transport vehicles, tanks, infantry combat machines, helicopters, grenade launchers and others).

The sympathies shown by Russia towards Azerbaijan became a subject for special discussions in Armenia after the Four-Day War. As a result of the Four-Day War, the Azeri side managed to occupy and hold certain territories north and south of the Nagorno Karabakh conflict zone, which were controlled by the Armenian side since 1994. The idea that in April 2016 Russia betrayed Armenia and left it alone against Azerbaijan is prevalent. According to Yerevan’s opinion, supplying Azerbaijan with weaponry goes against the strategic cooperation spirit that should exist between Armenia and Russia. The Four-Day War also created some mistrust in Armenia towards other partners and allies as well. The allies from the Eurasian Economic Union (EEU) and the Collective Security Treaty Organization (CSTO), such as Belarus and Kazakhstan showed with the positions adopted during the Four-Day War that Azerbaijan is a more important partner to them than Armenia.

Armenians believe that despite the doubts towards Russia after the Four-Day War, given the geopolitical situation created after the Nagorno Karabakh conflict it is only possible to increase the level of security of Armenia by approximating with Russia. Consequently, the already close military-political partnership between Armenia and Russia moved to a new stage since the Four-Day War. For example, in 2016 the two sides agreed on creating a common air defense area in the Caucasus as well as a Russian-Armenian military grouping. In addition, Armenia also received the Iskander ballistic missiles from Russia.

 

Principal Conclusions

  • The constant growth of the military spending of Azerbaijan since 2006 and the development of a local military industrial complex was due to the revenues from the energy projects implemented since the end of the Nagorno Karabakh conflict.
  • The constant growth of the military spending of Azerbaijan as compared to Armenia aims to create a military as well as psychological superiority, which, in the long run, is supposed to ensure the return of the regions currently occupied by Armenia.
  • The purpose of the development of Azerbaijan-Russia partnership in the military field is to ensure that in the case of Armenia-Azerbaijan confrontation Russia will hold at least a neutral position.
  • Gaining superiority in terms of military spending and the recently activated partnership with Armenia’s strategic ally, Russia, among other factors, caused the success of Azerbaijan in a small scale war with Armenia. In a Four-Day War from 2 to 5 April 2016 Azerbaijan managed to take back two hills, which had a vital symbolic importance for Azerbaijan. This was the first serious defeat for the Armenian armed forces since the end of the Nagorno Karabakh conflict and hence it shattered the myth of the invincibility of the Armenian army.
  • The recent partnership between Azerbaijan and Russia, as well as dubious position taken by Russia during the Four-Day War caused distrust in Yerevan towards Russia; however, given the geopolitical situation in the region, Armenia has limited resources for maneuvers in foreign policy. Armenia was forced to once again address Russia to increase its level of security and further deepen cooperation in the military field.
  • The cooperation between Russia and Azerbaijan is moving forward parallel to deepening strategic ties with Armenia. Strengthening links with the both sides of the conflict, on the other hand, gives Russia a clear advantage over the West in terms of conflict resolution. This will ensure the maintenance and growth of Moscow’s influence on the processes taking place in South Caucasus.
  • Despite strengthened military rhetoric from Azerbaijan, as well as the success in the Four-Day War, the energy projects being implemented in the region significantly decrease the possibility of the renewal of large-scale confrontations in the region. Any large-scale military confrontation will not only endanger the functioning of already existing oil and gas pipelines but also put the future of the Southern Gas Corridor under question, which is to transport Azeri gas straight to Europe, through Georgia. 

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