Remarks from a Naval Postgraduate School interview with Amb. Richard Morningstar of the Global Energy Center on energy security and challenges in the Caucasus region, with Dr. Daniel Nussbaum and Prof. Brenda Shaffer, senior fellow in the Global Energy Center.

Transcript (Modified for the web)

Dr. Daniel Nussbaum: Ambassador Morningstar; You’ve spent over 25 years of your life promoting the East-West Energy and Infrastructure Corridor. How did a nice guy like you get involved in a business like that? 

Ambassador Richard Morningstar: Well, I can get into that. But first, before getting into that, let me thank you, Dan. And thank the Diplomatic Academy and all my friends in Azerbaijan. I wish I were with you in person in Baku. It is hard to believe that it’s been six years since Faith and I left Baku and I had been ambassador. And we certainly have many wonderful memories of Azerbaijan—such a beautiful country, such a wonderful people. I had the opportunity many times to speak at ADA.  I remember so many wonderful conversations with Hafiz Pashayev. I just learned that his wife had passed away recently, she was just a very generous and kind person who we knew very well when we were in Baku. Our condolences go out to his family. I could go on, Dan, for a half hour with memories of Azerbaijan, but I know you want to get to your questions, and I’ll do so.

How did I get involved? It was somewhat random. Back in the nineties, I’ll give a shorthand description of what I was doing. I was special advisor to the president, coordinating all of our programs in the former Soviet Union. And right from the beginning we all felt very strongly, including the president and the vice president—Vice President Gore was very much certain that developing the Caspian resources was extremely important. And I had and I guess still have a big mouth and I was pushing at the highest levels that we have a person whose job was dedicated to doing that and then Strobe Talbott, who was the deputy secretary of state at the time, said to me, “Well, you’ve got such a big mouth,  you do it.” So that is literally how I got involved. 

I had been involved tangentially, but that’s how I got fully involved, which was a full-time job, that was in 1998, and I’ve been involved ever since. So it’s really been 25 years since the deal of the century that I have been involved in the Caspian, and if somebody had told me before—I had a long career as a lawyer and in business before going into the government with the Clinton administration—if somebody had told me 10 years before that that I would be doing that, I’d say, “What, are you out of your mind?”

Nussbaum: So, when this Deputy Secretary of State Talbott said, “go off and do good things. Get out of my office.” Did he say that there were some US policy goals to be supported in this endeavor? 

Morningstar: Yeah, absolutely. And that had been even before I was working full time on these issues. We wanted to develop Caspian resources—there were really three reasons at the time. At that time, we were thinking about and we really wanted there to be a diversity of pipelines, not just pipelines going through Russia. We didn’t want to see pipelines going through Iran—I could talk more about that if you like. But it was important that pipelines go west. And so at that time, the idea of a Baku-Tbilisi-Ceyhan pipeline made a lot of sense. So diversification was one positive. 

The second part of the policy is that it was only a few years after the breakup of the Soviet Union, and we really wanted to emphasize and ensure the sovereignty of the new states, Azerbaijan, Georgia, and Central Asian countries. That was very important. And we also felt that it was important that Turkey be involved in the region and BTC and Southern Corridor obviously involves Turkey. So that was the policy. 

What was important is that this was a bipartisan policy. Republicans and Democrats both supported it. And it’s been consistent since that time. With all of the issues in the United States, all the fighting back and forth between Republicans and Democrats, our Caspian policy has been fully consistent for 25 years. And I think that’s been very important because it gave us credibility. It made it possible for us to work with countries in the region and to work with the EU, so it was very important. But it also couldn’t be done and then—interrupt me if I’m going on too long.

Nussbaum: You’re not, and I’m taking notes so I can come back with follow-ups.

Morningstar: It was also very important that there be regional cooperation and high-level leadership within the countries in the region, and there was. There was incredible support for the Southern Corridor going back to President Heydar Aliyev, President Shevardnadze in Georgia, and from President Demirel in Turkey. And they worked closely together. And when there were issues, they worked them out. I can remember one time sitting in President Demirel’s office in Ankara and something had come up. I don’t even remember what the issue was, but something that president Aliyev was concerned about. President Demirel said, “I’ll take care of that.” And literally, while I was sitting there, he got on the phone, I could hear him say, “Heydar bey what’s going on? What’s this issue all about.” Anyway, they talked for about three minutes and it was resolved. 

The point being that, without that kind of high-level participation, it may not have been able to be done at lower levels, with people like me negotiating, for example, which I did a lot of. But the high-level participation was critical. 

It happened again with gas. There were all sorts of issues with respect to the Southern Gas Corridor with for example, transit fees through Turkey. I was having really difficult conversations with BOTAŞ Turkey. They were acting in good faith; they were certainly looking out for Turkey’s interests, but the negotiations were difficult. It finally got resolved because President Ilham Aliyev and President Erdogan said this is going to be fixed, now you’ve got to come to an agreement. So this was all a very, very important part of it.

Nussbaum: So those goals that we had of diversification keep Turkey involved. Are they still true? That is, is the mix still sufficient for this cooperative enterprise to go forward? 

Morningstar: I think so. The Southern Gas Corridor is very much continuing to be, I think, very much in the interest of Azerbaijan, Georgia, Turkey. I know you have people on your program this week from Turkey and Georgia as well as Azerbaijan. And those countries have played and continue to play a critical role. I think that the Southern Gas Corridor has been an incredibly successful project. It’s come in under budget. Once it got up and going, things have gone very smoothly. Cooperation between Turkey and SOCAR has been incredibly successful. The TAP pipeline—Trans-Adriatic Pipeline—is just about completed. Uh, I could get into what I think about the future of the Southern gas corridor now, or later whether you ask me those questions.

Nussbaum: Well, before you answer that there has to be a community of interest which you’ve talked about—leaders in the area, US bipartisan support. But one other ingredient, I think, is necessary: if someone recognizes that community and can stitch it together. How did that happen? Were you the catalyst? Was there somebody at state or somebody who was a catalyst? Or was it magic? 

Morningstar: Oh, you know, I’m not going to give myself credit for that. There are a lot of people who have been involved in the development of those resources. I had several successors in my envoy role after I left to do other things. But I do think that the US, as a government and in various administrations, has played an important role in doing that and has had the credibility to work on these issues and to push the issues during difficult times. 

I’ll give you a very good example of this and it also relates the relationship between geopolitical and commercial issues, which I know Brenda has been talking about during your program. But when I came back into government when Obama was elected, Hillary asked me to be her energy envoy. Nabucco was the flavor of the month and there were all sorts of enthusiasts for a major Nabucco pipeline to go from the Caspian through Azerbaijan, Georgia, Turkey, and across into Europe. And it was going to be a 30 BCM pipeline and the geopolitics of that really supported it because it was an interest in Europe, the US, the Caucasus region and Azerbaijan for those kinds of volumes of gas to go to Europe and up into the Balkans. That pipeline would have gone from Turkey to Greece and up into the Balkans as opposed to what really did happen with it going to Italy. And it would have supplied a lot of gas to the Balkans and Central and Eastern Europe and create an alternative to Russian gas. 

But it quickly became apparent—certainly after I got involved, and I loved Nabucco—but it was “just wait a second, this doesn’t make any commercial sense, right?” There’s no way that there is going to be 30 BCM available or enough to justify a large, large pipeline into Europe. And that took a lot of diplomacy to work through. Frankly, we had spent a lot of time convincing the EU and some of the other companies involved that this wasn’t going to work. I remember Joschka Fischer, who is the former German foreign minister representing RWE, saying that “you gotta build trust, gotta build it. The gas will be there.”

Well, it really doesn’t work that way. So, we did change our position and said that we would support any pipeline that went to Europe, including what finally happened as long as the pipeline was expandable and had the capability of supplying some gas into the Balkans. The Trans-Adriatic Pipeline was chosen.  Right now, it’s only going to be 10 BCM, but has the ability to expand. And we had to play, I think played a major role in convincing all of the stakeholders that commercially, that was the only pipeline, at least at that time, that was going to make sense. So basically, in that case, the geopolitics fell to the commercial aspects. Any project has to be commercially viable. And I think we played a major role in that. 

On the other hand, the Baku-Tbilisi-Ceyhan decision resulted from major geopolitical considerations. The companies really wanted a major pipeline going to Supsa on the Georgian coast and then out through the Bosporus. They recognized that not all the pipelines should go through Russia. Companies really didn’t want the pipeline to go through Iran. They wanted the Supsa-Bosporus route because it was the cheapest. But Turkey took the position that “No way. We are not having more tankers going through of Bosporus.” We took the position with the companies that yeah, commercially, maybe a pipeline to Supsa makes more sense.

And Baku-Tbilisi-Ceyhan did make sense. And if you want oil to leave the Caspian, that’s the only way it’s going to leave the Caspian. But having said that, we helped the commercial aspects. Turkey said that the pipeline would be a lot less expensive than the companies were saying. And so we said to Turkey, “Well, if you believe that, you guarantee the maximum cost.” And they did, they did agree. You know there were some issues later, but it basically worked out. So we always have to remember the importance of geopolitics and the commercial aspects. Any project has to be commercially viable, and I think diplomats have to understand that and can help. And I think we did a lot of that very well. 

We helped push the process along. I’ll just say one of my favorite memories was when we had a meeting in the White House. The companies came in and the late Sandy Berger was the national security adviser at that time, and he and I were running the meeting. And one of the major companies, I won’t name the company, said that you have to let us go through Supsa because it’s cheaper. And I said to this fellow yes that may be, but it’s irrelevant. Turkey won’t let you have it.

Nussbaum: Exactly. And you need those catalysts who understand conditions of other folks and can bring them together. Diplomats can do that. When I read the newspapers, I almost never see the Caucasus mentioned in the newspapers. It’s never the news item of the day, or hardly ever. Yet, you have had a bi-partisan American policy. How did that happen? 

Morningstar: Well, I agree with that. We don’t see enough news about the Caucasus.

One of the things that has occurred is that our policy towards Azerbaijan, maybe with a lot of countries, has become compartmentalized. Energy issues are something that we have agreed on. We have common interests. The US has the interests that we already spoke about, Azerbaijan has interests in wanting to maintain its sovereignty, not wanting to be dependent on Russia, wanting to get its oil out a different way. So, we were always on the same wavelength. There were other issues that are critically important, security issues. Look at where Azerbaijan is located. 

Everybody on this call knows how close Azerbaijan is to Iran, and to the north Caucasus in Russia, and so we have security interests, which we have to look at. And, additionally, for example, Azerbaijan has been tremendously helpful in our getting our non-lethal equipment to Afghanistan. We have all sorts of security relations given its location. Karabakh is another area which I do have views on and could talk about. I think we need to pay more attention to Karabakh. I think that Russia takes the position that there should be no hot war between Azerbaijan and Armenia, but that it is fine for the dispute to continue, because it allows Russia to maintain its leverage in the region. I think Russia has to play a major role to resolve this issue. 

Finally, we’ve worked on other issues with Azerbaijan, including various democracy issues and so forth. So we have to look at these and keep them as important, separate issues. We need to recognize the importance and never forget the importance of Azerbaijan’s sovereignty, the importance of the energy relationship, and the importance of the security relationship. 

While we also talk about other issues, I would say we’re paying plenty of attention to the energy side. Maybe more needs to be paid to some of these other baskets, and I hope, whatever happens in this election, that attention will be much greater—that the Caucasus and Central Asia will play a much greater role in our overall strategy. It is critically important; we haven’t mentioned China and the importance in countering—trying to counter—China’s influence and creating balance of interests. So, a long answer. But I agree that it’s not enough attention. 

Nussbaum: But, what about where is the press? Where is the interest in the region coming from there? Two possibilities: one, it comes from a top level of an administration, the other comes from a dedicated group deep within the State Department. And you said, whatever happens in this new administration or the new election, you are suggesting that the administration plays a role. This is not something that happens only in the bowels of the State Department. It’s the attention that the administration pays.

Morningstar: Yeah, I think the administration has to play a role. At the highest levels, we have to send the signal. that certainly happened during the Clinton administration, and to some extent, that even happened at Clinton’s level back in the nineties and to some extent at that level afterwards. 

But there’s also a real opportunity. When I was at work and maybe I was somewhat in the bowels of the State Department. But the bottom line is, when I was a special adviser to the president and secretary of state, what did that mean with respect to Caspian issues. What it meant was in effect I had no boss.  I may have talked to Clinton once, twice on these issues, I talked to Gore, to Madeleine Albright on occasion and Strobe Talbott on occasion, but basically as long as I wasn’t screwing up, they weren’t going to get involved. And so, if you have committed people taking initiative, there is I think the bandwidth on these kinds of issues to really get a lot accomplished. That may not be so on higher-visibility issues—arms control, weapons to Ukraine, Iran. But on these issues, it is possible.

Nussbaum: I’m switching topics a bit here now. There’s an old joke about the reason we formed NATO was to keep France in, Russia out, and Germany down. So I wonder if there’s some pithy remark about what we’re trying to do in this area, and it might be, for it might start with keep Turkey in. 

Morningstar: I think that’s right. I think that definitely Russia and Turkey had an interest in being in and still have an interest in being in. Turkey because of the Turkic nations in the region and wanting to be a transit country, wanting to be a hub, always wanting more gas. So, Turkey certainly had an interest, and we supported Turkey’s interest of being in. 

As far as Russia, I wouldn’t go so far. It’s wasn’t just to keep Russia out because Russia is never is going to be out of that region of the former Soviet Union. Given the geography and Russian’s interests, they’re clearly going to always be involved and should be involved in the Caucasus and Central Asia. But they shouldn’t have a monopoly in the region. And that’s why we thought that in the energy area that the support was important. I think Russia’s role is going to continue to be important even though there are agreements on Caspian boundaries which we’ll be talking about at some point. Oh, so yeah, Turkey in and Russia balanced. And let’s say the US and EU being involved.

Nussbaum: I’m going to propose a slight gloss on that—Turkey in, diversification of sources in. But that meant Russia balanced, and Iran balanced. Right? 

Morningstar: The diversification. Yeah, right. Yeah.

Nussbaum: So, what do you think the next stage is? How can the corridor be expanded to further strengthen the independence of the states? 

Morningstar: Well, that’s, you know, that’s an interesting question. We can’t ignore the elephant in the room, which is the pandemic and the reduction in demand of oil and gas and very low prices of both. And so, I don’t see a lot of expansion of the Southern Gas Corridor over the next couple of years—or any expansion. But I think that might change by 2022, 2023. As demand may increase and gas is going to continue to be very important. Even if prices continue to be low, I think gas is a necessary part of the energy transition, at least for the midterm. 

So the question is what to do between now and say 2023. And I don’t think that projects should be ignored during that time. And maybe it’s an opportunity to really plan as to what makes sense and what strategies makes sense over the next over the next few years. I do think as far as expansion of the Southern Gas Corridor and there could be more from outside of the immediate region from the Eastern Med, LNG coming in and through Greece, and Turkey, at some point gas from the KRG. But from the standpoint of the Caucasus and Central Asia, I think that the most likely expansion is Azerbaijan continuing to develop its own resources. And I think there are opportunities for Azerbaijan to do that. The Trans-Caspian Pipeline—Brenda will laugh because she’s heard this for 20 years—I always said that’s not going to happen during my lifetime. My concern is that I am 75 years old and if all of a sudden, the Trans-Caspian Pipeline develops, I will put my affairs in order. But seriously, and I know there’s been a push on the Trans-Caspian Pipeline before the pandemic and in recent months. I know Azerbaijan feels positively about it because it could supply gas even domestically. And it would be potential transit fees and Turkmenistan seems to be a little more willing than in the past.

I still think there are major problems for a trans-Caspian pipeline. One who is going pay for it, who is really going to do it? I mean, if the price of gas is too low, if demand isn’t going up in huge amounts and prices remain low because of Russia competing with low gas prices, because of US LNG and other LNG, and generally the development of new green technologies, which will reduce dependence on fossil fuels. So who is going to invest in it? Why is it going to be a commercially viable project? At least the way things look right now. 

And there are still issues within Turkmenistan. Berdimukhammedov, as was his predecessor, have not been the most consistent people. Would he allow production-sharing agreements, which may be necessary for a real project?  I know we’re talking about small connections at the at the beginning, but is he going to insist, as he has over the years on 30 BCM coming from Turkmenistan. Where is the demand going to be? It may not make a whole lot of sense.  I also still think, and some people disagree with this, that Russia will play a major role in dissuading any kind of trans-Caspian pipeline. In spite of Caspian boundary agreements, Russia can use a tremendous amount of political influence in the region to stop a pipeline. And they’ve always looked at a trans-Caspian pipeline as a red line. It is one thing with the Southern Gas Corridor which will deliver only 10 BCM to Europe, which is a factor, but maybe not as huge a factor as we would like. But 30 BCM, ultimately from Turkmenistan, would be something else.  That’s something to watch. 

Would I like to see a trans-Caspian pipeline? I’d love to see it, but I still have serious doubts. So I don’t see any major breakthroughs in the Southern Gas Corridor over the next few years during this time of low prices. But I do think Azerbaijan needs to continue to do its homework and develop its own resources, both for its own use as well as for ultimate exporting. 

Nussbaum: Sure, so there are two competing threads of thought here. One is the commercialization is necessary, not geopolitics alone, Brenda said yesterday in the context of the Eastern Med. Great idea, but I don’t see any commercial firm stepping up, so until that happens, it’s not gonna happen.

Morningstar: Even apart from the geopolitics, for the same reasons that I’m saying with respect to the Trans-Caspian Pipeline, who’s going to build a pipeline in the Eastern Med right now?

Nussbaum: So, you need a necessary condition for getting to yes, is that it makes commercial sense and you’ll know that when a commercial firm shows up in your office as part of the conversation. On the other hand, the Russians will exert influence, not to have a trans-Caspian pipeline because that’s geopolitics. Those could be sort of competing imperatives. So can you deconflict them is it just the West that requires commercialization? And the other guys are doing geopolitics?

Morningstar: Well, as far as the Caspian goes, I don’t know. I have serious doubts whether Russia would allow anything major coming across the Caspian. Can you get them to agree? As part of some bargain. as part of some overall reset of relations with Russia. I doubt it. You know, things are pretty difficult with Russia right now. So, I again I have my doubts. Brenda, you’ve thought about it a lot you may want to pipe in. 

Professor Brenda Shaffer: On the Trans-Caspian? 

Nussbaum: Yeah, and also deconflicting with the Russians, but also deconflicting between the imperatives of the need for a commercial basis to get to Yes, but you also have the geopolitical argument which may not be aligned with the commercial argument, right? 

Shaffer: It’s obvious that countries like Russia and Iran, Saudi Arabia, where their state oil companies that are subsidized by the state have an advantage over the West since our companies have bottom-lines. If you look for instance, when oil prices crashed this spring, the first production to be knocked out as the American production, since it doesn’t have a state backer. I’m not advocating that it should. But this is just stating the fact that companies that have state backers, have a certain advantage. They don’t have to be commercial. They can be an instrument of geopolitics. American companies can’t play this role because we’re guided by commercial considerations. We have had though an incredible renaissance in the US, like the shale revolution that is a product of American innovation and the free market, so not worth leaving this model. The Trans-Caspian Pipeline is more feasible if it is an intra-Caspian that wouldn’t go shore to shore. But in-between Azerbaijani and Turkmen fields in the Caspian Sea, which would be a lot cheaper and hopefully maybe a lot less politically sensitive. However, either way, the minute you make that link in the Caspian, there are some that are going to try to oppose it.

Morningstar: So we’ll see. You know what? One interesting development that could happen in the gas market, which I hope it won’t. Well, if Biden wins the election, will exports of US LNG be restricted? I’ve certainly made the argument against that. That would be a huge mistake from a geopolitical standpoint.  US LNG and other LNG is critically important in a lot of places but particularly to Central and Eastern Europe to reduce dependence on Russian gas and to force Russian to operate competitively and transparently. But if somehow there was no US LNG around, well, that could have an effect on the marketplace. That’s something to watch. I hope that that will not happen and don’t think it will. 

Nussbaum: What would the argument be in support of restricting exports? 

Morningstar: Basically the environment. I think it would be the environmental argument against fracking gas, and I think there’s a conflict to some extent or could be a conflict between people looking—and I’m speaking for myself here—looking at environmental issues with respect to gas and those looking at it from a more practical national security standpoint. 

Nussbaum: Well, that allows me to ask a question about what would your policy recommendations be for the next administration towards the South Caucasus and greater a Caspian? The first one is, do not restrict exports? 

Morningstar: Well, one recommendation which indirectly relates. One, continue to support the Southern Gas Corridor and to work with countries in the region and other interested stakeholders like the EU and companies as to what the best strategy is as market conditions unfold over the next couple of years. 

My recommendation with respect to US LNG is not to restrict exports. Not to ban fracking, but at the same time, to work with various stakeholders, whether it be the EU,  the companies, the countries in the region, in the Caucasus region and really throughout the world, to work together to develop appropriate regulations and standards which would reduce the environmental footprint of gas, such as to reduce methane emissions, flaring, and encourage carbon capture so that gas, which I think does have an important role for all the reasons that we are talking about, would be more accepted, even more acceptable from an environmental standpoint. 

[Democratic candidate for president Joe Biden has since stated that he does not support a general ban on fracking]

Nussbaum: So that environmental aspect was not part of our original vision when we got involved. 

Morningstar: I think, in the nineties we weren’t thinking about that. So, I don’t know. I mean, I look at the present, I look at the present situation as an opportunity for gas if in fact, everybody can work together to reduce that footprint. And I think the companies are willing to work towards it. I think the US and the EU can play an important role in developing standards, working with stakeholders to reach those goals. It’s also going to be important that any carbon border adjustment mechanism, as the EU is proposing, be based on objective, transparent data. US LNG, Caspian gas, Russian gas shouldn’t be treated differently. Any carbon border adjustment or tariff must be non-discriminatory. 

Nussbaum: So we’ve had some successes: Turkey involved. Diversification. Russia balanced Iran balance. There are still some things yet to be done. I’ll ask you about what’s yet to be done, but you’ve already addressed one of them, which is a newcomer, which is the climate piece. What else from our original plate is yet to be done or done better? 

Morningstar: Well, the climate piece is important, and it goes more, even more than what I was talking about. I think the countries in the region are interested in reducing emissions, and I think that we can work with Turkey, with Azerbaijan, Georgia, Central Asian countries to develop green technologies and help these countries meet climate goals. 

I think that if there is a Biden administration, they’ll be much more willingness to do that than with the present administration. That could be an important step, and then beyond that, I think countries like Azerbaijan have to continue to diversify their economies, so they are less dependent on energy resources. Those energy resources are going to continue to be important, should continue to be developed. I know that Azerbaijan is concerned and wants to diversify its economy. And I think we should be able to play a role there. 

And I’ve already talked about Azerbaijan developing its resources. Issues with respect to whether or not there’s a trans-Caspian pipeline. And I’ll go back to one of your original points. I think it’s really important that more focus be put on the Caucasus and Central Asia with respect to the whole compartment of issues. All of the compartments that we talked about. The last thing we want, and we faced this at times in the past, is that Azerbaijan believes that America only cares about Azerbaijan for its energy. Well, it is a lot more than that. It is a lot, and I think we need to show that. 

Nussbaum: So, as you say, Azerbaijan wants to diversify its economy. The Saudis were saying the same thing, right? Are the Russians saying that?

Morningstar: Well, frankly, I don’t know what they’re saying, how much they’re saying or not saying. I guess they’re getting into the vaccine business. But let’s put it this way. They have to and I’m sure somewhere that’s recognized.

Nussbaum: And as Brenda said, one of the advantages some countries have over the commercially driven West is that they have state backing, so they have this cushion to fall back on. But I wanted to ask you about the flip side of that. Both Ambassador Morningstar and Professor Shafer. Sometimes that’s a burden. It’s like when a country subsidizes gasoline. It just drains money from their treasury and there are opportunity costs; money put into energy subsidies can’t go into schools, hospitals, etcetera, etcetera.

Morningstar: Yes, I think that’s absolutely right. And I think that one of the areas that we we’ve been looking at in the Global Energy Center at the Atlantic Council are the consequences of peak oil and what happens when oil demand starts dropping off and maybe could drop off faster than people think, given the kinds of things even that we’ve been seeing in the last year, as green technologies develop, as policy decisions are made potentially to move away from fossil fuels. And what happens, for example, to Russia, if volumes decrease and the price of oil 10 years from now is $20 a barrel? Then if they’re if they’re not diversified, they could be in real trouble. The Saudis are trying to address this issue, but it’s a difficult issue for them.  Saudi Aramco announced their earnings yesterday, which were beaten up terribly because of the present situation, so these are real issues, and we’re not going to have answers for them in this discussion. That’s something to which a lot of attention has to be paid.

Nussbaum: Yes. So, I’m hoping that, dear students, you have some questions also for the ambassador. I know that Alan is monitoring that. Maybe somebody knows about Azerbaijan’s attempt to diversify, or something about the Southern Gas Corridor, the Trans-Caspian. Things of that sort. For the Americans on here: Can you remember the last time you saw the Caucasus in a newspaper that you read online or real? 

Morningstar: I will say Dan, on that—others can pipe in—there was a reasonable amount of publicity when things blew up on the line of contact a few weeks ago.

Nussbaum: Or that north of the line of contact.

Morningstar: Yeah, that got attention.

Audience: I had one question for our ambassador. We  can  say that you were one of the architects of Baku-Tbilisi-Ceyhan. Well, yes, so during that period there were a lot of challenges and, like political and economical challenges. People in Azerbaijan who worked in oil fields had very little knowledge of English and people in Azerbaijan who knew English had very little knowledge of oil production and the oil industry. For today, which challenge other than geopolitics and economics are for Azerbaijan to be involved in such an international project? 

Morningstar: Well, you know, I think that Azerbaijan, as you say, has been making a lot of progress, certainly with respect to language. And I know that the international companies that have that are located in Azerbaijan are very anxious to have more and more Azerbaijanis working within those companies and English is obviously an important part of it. So I think it’s getting better. I think it’s also important that Azerbaijani students get the opportunity to work or to study outside of Azerbaijan. As well as obviously in Azerbaijan as well. But hopefully go to Europe, United States to study for a period of time and take courses, relevant courses to what’s going to be important to Azerbaijan. Unfortunately, I know that’s become a little more difficult, given situations with respect to visas, but I do think progress has been made in that area. But I think Azerbaijan also has to look at other sectors. Agriculture is obviously a major possibility. Information technology is another area. So, there are opportunities. 

Audience: Thank you. Thank you so much for your answer. 

Nussbaum: Perhaps one of the students from Georgia wants to come in on the same frequency on the same line of questions. Diversification of the Georgian economy?

Shaffer: Students, It’s also your historical opportunity to get information. Ambassador Morningstar met with Heidar Aliyev, Shevardnadze and  President Clinton and others, when all these issues were being planned. If you have any questions about what happened during this period, this is a great, great historical opportunity. 

Nussbaum: That sounds like the title of a book. I was in the room. Yes, something from you. 

Audience: I’ve read somewhere that in one off the conferences you answered a  question about the  Trans-Caspian pipeline. You mentioned that if it’s happened, you’re going to dance in the streets in Baku? Is that still valid? I understand from your comments that is still the case in terms of your position on the Trans-Caspian pipeline. 

Morningstar: Yeah. You know why I have doubts about it, but I also don’t want to be misunderstood. I hope it happens. And I think it would be good for the region. But if it’s going to happen, I think Turkmenistan is going to have to take a very constructive approach. I think the countries in the region are, if there is opposition, for example, from Russia, are going to have to stand up to it. 

Speaking of Heydar Aliyev, I think Heydar Aliyev in the nineties, was really very, very courageous because Russia during that time had no interest in there being a Baku-Tbilisi-Ceyhan pipeline. But he stood up to that. And the situation in the nineties, right after the breakup of the Soviet Union, Russia’s situation was a little different than it is today. But Russia didn’t like it and stood up to it. I remember in 1998, I was in Ankara, for, among other things, the 75th anniversary of Atatürk Revolution and I was introduced to Russian foreign minister Ivanov, who actually I got to know more since then. And actually, I like him very much. 

But when I was introduced to him, he said, I don’t need to be introduced to Ambassador Morningstar. We know who he is. We don’t like what he’s doing. So you know Russia at that time wasn’t very happy about the pipeline. Russia, today, may be even more willing to really assert its influence than they were back then. 

Bakhtiyar AslanbayliThank you, Ambassador. Thank you. And I think we’re all looking forward at some point to read your book about your interactions and engagements with the different heads of  state and for the different projects. That would be really fascinating reading for all of us. 

Morningstar: You know, it’s funny you say that. My wife who wants to keep me busy, keeps telling me I need to write a book. But I think I have attention deficit disorder. Whether I have the concentration to ever do it, I don’t know. I appreciate your saying that; my wife would appreciate you saying that.

Nussbaum: By the way, I’m now wondering if we’re married to the same woman! Good, thank you. There’s a question in the chat. Please let me read it:  It would be great to hear the ambassador’s reflections about the recent skirmishes from the impact on the critical infrastructure perspective. Do you think this could get worse? Does it have legs? 

Morningstar: Well, you know, I hope it won’t get worse, it’s terrible that it erupted. My condolences to the families of the people who lost their lives in a very, very serious situation. And I think that is an area that the United States needs to pay even more attention to. But I really believe the Russians have a major role to play. And I wish they had more willingness to do so.

With respect to infrastructure, it has always been an issue of some concern. The pipeline isn’t far from that area. I think over the years, there has been concern about pipeline security in Georgia, but also in Azerbaijan, and basically, I think that the pipelines have escaped any serious damage in both cases. I would like to think that the parties involved, including the Armenians, would recognize that any interference with the pipeline will put them in an untenable political situation and create great risk. So, they never have, at least it is my understanding—somebody correct me If I’m wrong—I don’t know that they’ve ever attacked a pipeline and I hope that they never do it. 

Likewise, in Georgia, in spite of disputes at various times, and war between Russia and Georgia, that was a red line which was not crossed. So I hope that that concern about raising the stakes by interfering with the pipeline, would basically keep that from happening. But I’ll never say never in this world.  A good question, though, and something that we need to continue to be concerned about. 

Nussbaum: Ambassador, you did say you had some thoughts about Nagorno-Karabakh. Did you want to share them in this forum? 

Morningstar: Well, I alluded to them. I can certainly understand the frustration within Azerbaijan that for 26 years, 20 percent of the territory of Azerbaijan has been occupied and hundreds of thousands of Azerbaijanis have been displaced. And I can understand why Azerbaijan takes the position that this has been an outrageous insult to their sovereignty. 

I do have a concern. To get it resolved, there has to be political will on both sides. Any solution will require politically difficult compromises. 

I’ll also point the finger at Russia, because I really do think that Russia is content to let the situation go on as it is. They have security relationships in Armenia that you’re all aware of that and maybe doesn’t it get enough attention. It is selling weapons as I understand it to Azerbaijan. Maybe Russia is giving them to Armenia? I’m not sure. So they get the benefits from that. They have leverage over both countries. And I think if Russia ever made the determination that the situation needed to be resolved once and for all that that would be a major step forward. I hope that the US can play even more of a role. Look, it’s an incredibly difficult issue. There’s a long history. Hopefully, at some point it’ll be resolved. When Hillary Clinton sent me off to Baku, she said, “make sure there is no war.” I do think that the Minsk group has helped to minimize casualties, as bad as the casualties have been, but still, this whole situation needs to get resolved.

Nussbaum: There’s a question, Ambassador, from the audience.  She’d like to ask what you think about the prospects of renewable energy in Azerbaijan. What possible directions could Azerbaijan take regarding the development of the renewable energy sector? 

Morningstar: Well, I would think, and I haven’t looked into it very deeply, but I think it could be a major point of diversification in Azerbaijan. Azerbaijan has a lot of sun and solar energy should be able to play a role. Wind energy could play a role. I think that’s worth developing, and I think that the US should play a role in pushing – and Europe as well – in pushing that along. 

Audience: Thank you. Ambassador, first thank you for you also provoking us on. And secondly, I have a question about the Soviet legacies. As you talk about the Caucasus becoming comparatively independent energy security wise on and the need for Central Asia to be more proactive, how possible it is for this country to do so, given Russia.  Russia considers this country’s as its own backyard. China is considerably investing in energy in Central Asia and additionally, with the withdrawal  of the US troops from Afghanistan, it appears that Central Asia is losing its momentum. Would it ever become appealing to the West to the US specifically to heavily invest in the region? 

Morningstar: That question is very well put. I think it’s a really important question. You know, we can’t deny Russia is there. Russia is a two-hour drive from Baku? Azerbaijan has a history of being part of the former Soviet Union, Russia is a neighbor of the Central Asian countries, and so it would be naive to say that, countries in the region should be so independent that it doesn’t have to pay attention to Russia. Obviously, it does. And countries have to have at least a decent working relationship with Russia as a very powerful neighbor. 

So, yes, you can’t ignore Russia. But I think that the policy of Azerbaijan has been relatively successful, which we need to keep pushing from a US standpoint. Azerbaijan maintains a balance of interests with its neighbors and the United States. Yes, Azerbaijan is going to have a relationship with Russia. It has to have a decent relationship with Russia. But that can’t be its sole foreign policy. Azerbaijan needs also to have a good relationship with the West, with the United States, Europe, Turkey, with which it has such a strong historical relationship.  It has to have a relationship with Iran. I think Azerbaijan has done an incredible job maintaining that relationship and still having a very good relationship with Israel, which we haven’t talked about. So I think what the United States can do, recognizing, that Russia and China will play a major role in the region, is to continue its support for sovereignty of the countries in the region, and to work on the whole series of issues that we have talked about. 

Audience: Thank you. 

Nussbaum: So tell me, do you think that was an optimistic response or pessimistic response more or an objective response? 

Audience: I think there are  elements of these three paradigms in it. In general, these countries have found themselves in the particular stance after the collapse of the USSR. Some are being very successful with the support from the West, some are still struggling with becoming more energy independent, leaving their internal affairs asid., As the ambassador rightly pointed out, there should be a very fine balance. Some of the countries are being very successful in balancing all the powers and benefiting, and some of them are just working things out and not progressing as they should. 

Nussbaum: Thank you, Ambassador. You do think that there is some recognition of that area within, the State Department and other parts of the US Government? 

Morningstar: Yeah, you know, I think so.  I don’t know whether it’s at the top priority list. But I do think it is. I think it’s generally recognized. 

Nussbaum: Good. Are there other questions for the ambassador? Because if not, I know what time it is for you in Baku and what I’d like to do is on behalf of the Naval Postgraduate school and ADA University, Ambassador, thank you very much for sharing your time for sharing your wisdom and for all the service you’ve given both to the United States but also to the world and in particular, to this region. Let me reiterate my invitation to you to escape the heat and humidity of Massachusetts come to visit us in Monterey, California. 

Morningstar: Well, thank you. And you’re overly kind. But I will just again emphasize how much I miss Azerbaijan. What a great experience my two years there was. What a wonderful country and it is a wonderful people. And it’s just terrific to have had the opportunity to reconnect, even if only virtually. 

Nussbaum: Well, thank you. So, apparently, he’ll visit Monterey. But after Baku.

Morningstar: Right.

Nussbaum: I understand more wisdom. Well, thank you very much to everybody. 

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