Baku, February 26 (AZERTAC). Britain should develop links with Azerbaijan, British MP, member of the Energy and Climate Change of the House of Commons, Chris Pincher believes.

Some observers may ask the question, “why does Azerbaijan matter?” Concerning its simmering conflict with Armenia, they may borrow from Neville Chamberlain by saying it is “quarrel in a far away country between people of whom we know nothing”. I think such attitudes are short-sighted. They fail to recognise the interconnected world of economics and geopolitics in which - like it or not - we now live.

Azerbaijan may be little known. It may be far away; but its reach extends beyond its grasp, from the remote Greater Caucasus mountain range in the north, to the shores of the UK and beyond.

It was not always so. Whilst Azerbaijan laboured under the yoke of the Soviet Union it was very poor. But with freedom and the development of huge hydrocarbon reserves in the Caspian Basin, Azerbaijan has become very rich.

The Caspian and Middle East region are estimated to have in excess of 88 trillion cubic metres of reserves, dwarfing Russia`s reported estimates of 43tcb. The International Energy Agency reported in its 2010 World Outlook report that Caspian natural gas exports are expected to more than triple during the next decade.

And since the Shah Deniz natural gas field was turned on in 2007, Azerbaijan has become a gas exporter, shipping increasing amounts of natural gas via Turkey to Europe.

Indeed, Azerbaijan supplies gas to the EU through the only current gas pipeline that avoids Russian territory. The South Caucasus Pipeline (SCP), also known as the Baku-Tbilisi-Erzurum (BTE) pipeline.

And as Europe`s energy supply changes, so its demands are changing too. Where once Russia was the overwhelming provider of gas into east and central Europe, now other players feed their growing hunger for hydrocarbons.

That is a positive development. The historic lack of competition and necessary transport and transmission infrastructure westward inhibited the development of a secure energy landscape to the heart of the EU.

Now the construction of southern corridor pipelines provides an alternative source to the petro-powers further north, which use their natural resources as a bargaining chip in foreign diplomacy.

Britain must support this greater diversification of supply to deliver greater energy security. Currently only three countries supply the vast majority of EU gas imports - Russia accounts for 40 per cent, Algeria 30 per cent and Norway 25 per cent. Most of our own gas supply comes from Norway but we are increasingly energy-dependent on foreign imports which could rise from 30 per cent now to 70 per cent by 2020.

Whereas a decade ago we were an energy exporter, we now face a clear and present challenge in securing reliable energy supplies for the future, particularly of natural gas. And our biggest market place - Europe - faces an even greater challenge. So we are not immune from the negative consequences of a continental energy crisis.

Instability in the Middle East and the petro-dollar-fuelled power of Russia should encourage policy makers to look more closely at the opportunities presented by Azerbaijan as a supplier and transit route. This is especially the case since the Shah Deniz field came on-stream and one considers that the estimate of exploitable reserves in the South Caspian region and Middle East is something like double those of Russia.

As Azerbaijan`s largest foreign investor, the UK is in pole position to help develop these abundant resources, develop its potential in other sectors, especially telecoms and banking, support its booming construction industry and promote relations with this small but strategically positioned state at the gateway between eastern Europe and Asia.

The UK`s economic involvement in Azerbaijan can also drive beneficial social and political change. As a young country, struggling to shake off the legacy of seven decades as a small Soviet satellite, Azerbaijan faces the usual challenges of democratisation, development of a civil polity, liberalisation of the media and state institutions and embedding individual liberty. These are not uncommon. What is uncommon is the conflict with Armenia, into which newly independent Azerbaijan was almost immediately plunged, over the Nagorno-Karabakh territory.

The impact of the loss of Nagorno-Karabakh, the displacement of hundreds of thousands of Azeri refugees and Internally Displaced Persons, and the on-going tensions remain key issues for the man on the Baku omnibus and undoubtedly hamper a more rapid development of western-style civic institutions.

Unequivocal British engagement, and the choice of former energy minister Charles Hendry as our trade envoy to the region is a very good sign of that engagement, and can help engender greater liberalisation and transparency. It is undoubtedly the case that there remains some distance to travel on the road to becoming a fully pluralistic civic society. The OSCE has reported that, despite improvements, there are still irregularities with Azeri elections, while press freedom remains an issue. But the new generation of Azeri politicians realises this. We must encourage them as critical friends, and not simply wag our fingers from afar.

There are encouraging signs in Baku. As the first secular Muslim state with fully functioning democratic institutions, Azerbaijan presents real opportunities for further development including leisure and tourism. The country is changing. Cash from the hydrocarbon bonanza is funding massive infrastructure investment. Roads, telecoms, water and power supplies are linking cities and towns together.

A nascent leisure industry, including a new winter sports airport at Gabala and luxury hotels, is beginning to attract foreign tourists. Even land reform is under discussion. The leadership is beginning to change too.

The Azeris running SOCAR, the state oil company, and SOFAZ, its sovereign wealth fund, are western-educated, westward-looking men (it is still men) who see Azerbaijan`s future in the WTO. This new generation of political leaders look to the British/American model, not the Chinese model, for inspiration.

With new wealth thanks to its energy pipeline, new leaders in its political pipeline, and as a gateway country in a new regional order, Azerbaijan - though small - has much to offer. Ministers, MPs and peers should work together to encourage the authorities in Baku to continue to look west.

Christopher Pincher is Conservative MP for Tamworth. He sits on the energy and climate change committee and chairs the Azerbaijan APPG.