European Commission President Ursula von der Leyen and Azerbaijan President Ilham Aliyev in Baku, July 18, 2022
Azerbaijan’s Balancing Act with a Trump Presidency
With Russian supplies weaponized and dwindling, Azerbaijan’s vast oil and gas reserves have helped to keep European lights burning. But does Baku see its hydrocarbons as commodities or as geopolitical leverage? With a government condemned for its democratic shortcomings, Azerbaijan’s newfound role as Europe’s energy partner raises uneasy questions about reliability.
Since Russia’s full-scale invasion of Ukraine in 2022, Azerbaijani leverage over European energy security has surged, elevating Baku from a minor supplier to a serious partner almost overnight. The partnership is still relatively young and seen by many as purely transactional, a marriage of convenience born of necessity rather than shared values.
But European leaders have not hesitated to embrace President Ilham Aliyev in pursuit of energy stability. In July 2022, European Commission President Ursula von der Leyen stood beside Aliyev in Baku to sign a deal doubling gas imports to the EU. Almost three years later, at a summit in Tirana, Von der Leyen and European Council President António Costa lauded Azerbaijan as an “important and reliable partner”, thanking Aliyev for his country’s support during Europe’s energy crunch.
A High-Risk, High-Reward Partnership
Azerbaijan’s oil boom and the “Contract of the Century” opened Caspian crude to global markets in the 1990s. The Southern Gas Corridor, a 3,500-km pipeline network from the Caspian Sea to Italy, delivers billions of cubic meters of gas to Europe each year. The 2022 memorandum of understanding pledged to boost gas deliveries from 8 to 20 billion cubic meters by 2027.
Meeting about 5% of Europe’s demand, Azerbaijan has become a buffer against supply shocks. But in embracing Baku, Europe is also entangling itself in the South Caucasus, a region fraught with conflict, authoritarian rule, and the influence of rival powers. The factors that make Azerbaijan an attractive alternative to Russia — its strategic pipelines and petro-wealth — are rooted in a complex geopolitical gamble.
This gamble pits Europe’s energy needs against long-term risks stemming from Azerbaijan’s politics and neighborhood. It entangles the EU in Azerbaijan’s own turbulence from the unresolved tensions with Armenia over Nagorno-Karabakh to the unlawful arrests of journalists and abuses of human rights to President Aliyev’s grip on power and his balancing act between Ankara and Moscow.
The Strategic Pipeline
The Southern Gas Corridor — comprising the Shah Deniz offshore gasfield, the South Caucasus Pipeline through Georgia, the Trans-Anatolian Pipeline across Turkey, and the Trans-Adriatic Pipeline into Italy — is the crown jewel of Azerbaijan–EU energy cooperation.
This $40 billion pipeline chain, completed in 2020, was designed to bring Caspian gas to Europe without transiting Russia. It ships about 16 billion cubic meters annually (6 bcm to Turkey and 10 bcm to the EU). That volume could double if new fields or connections, such as gas from Turkmenistan, comes online.
EU officials have lauded the corridor’s “significant contribution” to Europe’s supply diversification. In 2023, Azerbaijan supplied roughly 13 bcm of gas to the bloc’s members, a 57% increase from 2021 levels, with further expansion planned.
The EU is now Azerbaijan’s largest trading partner, accounting for more than 40% of its external trade. European firms have poured capital into Baku’s energy sector, which in turn has allowed Baku to arm itself with the latest military technology, including the recent $4.2 billion procurement of 40 JF-17 multi-role combat jets.
Europe’s commitment was demonstrated at the 2025 SGC Advisory Council when officials from 24 countries convened in Baku to chart the expansion of gas exports and new energy investments. Oil and gas have become the currency of Azerbaijan’s foreign policy and Europe has eagerly cashed in, viewing the country as a cornerstone of its post-Russia energy architecture.
The Risks of Over-Reliance
Azerbaijan is a classic petro-state. Oil and gas revenues drive its economy, making up more than 90% of export earnings. This has brought wealth and influence, but also extreme vulnerability to commodity price swings. The International Energy Agency notes that Azerbaijan’s heavy dependence on extractives has left it exposed to boom-bust cycles and hampered the development of a diversified economy.
In 2024, for instance, lower oil prices and declining investment led to slowed growth and fiscal strains, affecting Azerbaijan’s ability to invest in maintaining and expanding energy infrastructure. The Azerbaijani government has launched initiatives to diversify, from the “Azerbaijan 2030” economic roadmap to encouragement of non-oil sectors, but progress has been limited. Hydrocarbons still overwhelmingly dominate, and other exports remain comparatively small.
Compounding this are the issues of governance and corruption. With Aliyev in power for two decades, Azerbaijan is ranked among the most authoritarian systems in Eurasia. The concentrated power structure under a ruling family dynasty has fostered monopolization and opaque decision-making, stifling economic diversification and reform.
In his analysis of Azerbaijan’s 2024 economy, Guba Ibadoghlu warned that without structural changes, the country’s over-reliance on oil and gas will continue to pose risks to its financial stability. He was subsequently arrested for his outspoken views, amid a crackdowns on activists and journalists who criticize the government.
An entrenched elite benefiting from oil wealth has little incentive to pursue the governance reforms that the EU encourages. Any sudden political upheaval would disrupt the flow of energy or alter Baku’s strategic orientation. So Europe’s energy contracts with Baku tie it to a government that faces minimal public accountability.
The lesson being set aside by the Europeans? Over-reliance on any single supplier is a vulnerability. When that supplier is a non-democratic regime with internal fragilities, the vulnerability is compounded.
Human Rights on the Back Burner
The EU prides itself on projecting democratic values and human rights in its external relations. Its courtship of Azerbaijan tests those principles.
Aliyev’s government is frequently criticised by international observers over its authoritarian practices, imprisonment of opposition activists and journalists, curbing of civil society, and the mass displacement of ethnic Armenians from Nagorno-Karabakh.
In March, the European Parliament the detention of the Armenians and urged suspension of the EU-Azerbaijan energy deal pending human rights improvements. MEPs called for future agreements being conditioned on Azerbaijan’s respect of fundamental rights.
But Brussels has tried to hedge the position by coupling its energy outreach with polite reminders on reforms. Official EU statements “stress the importance of defending human rights…and freedom of expression in Azerbaijan” as an “essential part” of the partnership. In practice, realpolitik often prevails.
There is scant evidence that energy engagement is moderating Baku’s domestic conduct. On the contrary, flush with new European deals, Aliyev has been vindicated that his strategy of playing hardball at home and selling hydrocarbons abroad is working.
Europe knows the President can pivot east or raise prices if pushed too hard on reforms, while Azerbaijan knows Europe’s hunger for gas gives Baku a degree of immunity from harsh repercussions. The result is an uneasy middle ground which is diplomatic statements of concern, but no real conditions on energy cooperation.
The Azerbaijani gamble is not only about pipelines and politics, but also about whether the EU can reconcile its strategic interests with its identity as a community of values. In the end, as one analyst summarizes, “it is impossible not to take Azerbaijan into account” — not over human rights, but over oil and gas.
