What next for Azerbaijan?

LJUBLJANA, Slovenia. That the ruling Yeni Azerbaijan party won in the parliamentary elections in Azerbaijan on Sunday was no surprise. The good news is that the election was far less fraudulent than the last, even though the OSCE reported that the voting fell short of international standards.
Much now hangs in the balance for this Caspian Republic, which under President Ilham Aliyev, the son of long-time ruler Haidar Aliyev, may be on the verge of making a break with its difficult past. Broader political freedoms are definitely part of what the country needs, along with greater transparency and a stricter application of the rule of law.
The immediate priority is restraint. Restraint by the opposition when it challenges the results of the vote, and restraint by the government, which has pledged not to allow a Ukraine-style "orange revolution." Constitutional order and the rule of law must be the standards by which events unfold.
Europe and the United States, both keen on deepening engagement with the oil-rich republic, can and must play a role.
First, they should be firm but fair. Reforms take time, and any progress requires institutional and human capacity and a level of social stability.
They must take note of the shortcomings of the electoral process and result, but also acknowledge the improvements that occurred and press the government toward further and faster reform. The government in Baku cannot be let off the hook, but its reformist trends should not be ignored.
Second, they should act quickly and together. The international community was taken by surprise in Georgia, Ukraine and Kyrgyzstan, and much vital time was lost.
In Azerbaijan, it is critically important that we insist on restraint in post-election developments. The last thing the country needs now is a new period of internal instability, which would surely curtail any strategic dialogue between Baku and the West.
Beyond our interest in supporting democracy in the Caucasus, Azerbaijan carries immense strategic importance for the West. Oil is part of the story. The recently completed Baku-Tblisi-Ceyhan pipeline will soon be carrying up to 2 million barrels a day to Western markets. The unexplored oil and gas reserves of Azerbaijan are large.
Unlike most Middle Eastern countries and now Russia, Azerbaijan welcomes foreign energy investors. It is not surprising that the biggest global energy players jostle for market access to Azerbaijan.
But there is more than just oil to the Azeri tale. Azerbaijan is relatively poor in terms of qualified human resources and functioning infrastructure. Much was destroyed during the turmoil of the early 1990s, which included the struggle with Armenia over Nagorno-Karabakh.
The conflict remains unresolved, casting a shadow over the entire region, impeding the development of regional trade and hampering greater foreign direct investment. There are indications that Aliyev may be in a position to resolve Nagorno-Karabakh as early as next year, but his ability to do so will depend heavily on the legitimacy of his authority.
Aliyev knows this; the question is whether members of the old guard do too. That is why Aliyev's job is also one of maintaining a balance between pressures to reform and keeping would-be spoilers in check.
Economic and political reforms are now a priority if Azerbaijan is to capitalize on its massive oil income which will start filling state coffers as early as next year. Without political stability however, economic planning will be impossible, sectoral adjustment difficult and overall integration of Azerbaijan into the Euro-Atlantic community uncertain. A positive transition in Azerbaijan would also go a long way in underpinning nascent progress throughout the South Caucasus, in Georgia and in Armenia.
Further, Aliyev heads a secular government in a predominantly Muslim country. A decisive move towards progress and reforms in Azerbaijan will send a positive message through the Middle East and Central Asia, regions where the United States and Europe are struggling to promote democracy. Azerbaijan could serve as a model for change in Iran and beyond.
The Azeri elite is oriented westward; EU and NATO memberships are long-term objectives. It is in the interest of Europe and America to work closely with Azerbaijan in coming years to cement democratic and market reforms throughout the South Caucasus and to gain momentum for change in Central Asia.
The immediate priority is political restraint. At the same time, this may be the last warning Aliyev gets: broad reforms are inevitable and they are due.
(Borut Grgic is the Director of the Institute for Strategic Studies, Ljubljana. Dov Lynch is Senior Research Fellow at the EU Institute for Security Studies, Paris.)