Baku, April 8, AZERTAC

The Republic of Azerbaijan is located at the “heart of Eurasia” and has been dubbed as a “keystone of Caspian”. It holds 75-80 per cent of GDP of South Caucasus region which has further enhanced its strategic importance and utility for achieving the dreams of greater Eurasian region. It has rich energy resources which are contributing to further strengthening and “diversification” of its socio-economic development, transformation towards green journey, modernization and qualitative development in the country. Moreover, it is a key territory for regional integration projects.

The latest high level political consultations, economic integration, social cooperation and security coordination between Azerbaijan and Central Asian countries mainly Uzbekistan, Kazakhstan, Turkmenistan and Turkic organizations have become a “paradigm shift” in the region which would be “instrumental” for further strengthening of Eurasia region in the days to come. Interestingly, Azerbaijan has now become a “preferential” energy partner of the European Union and exporting its energy resources to it via Türkiye which has further increased its trans-regional “outreach” and vividly reflects persuasions of a “balanced” and pragmatic foreign policy.

Furthermore, Azerbaijan has also enhanced its bilateral relations with Pakistan which is a “connecting hub” between South Asia and Central Asia. The volume of trade, investment, tourism, culture, agriculture, energy (oil & gas), renewables, education, science & technology and last but not the least, military cooperation is getting momentum which has become a “balancing act” in the socio-economic integration, greater regional connectivity and security, peace and stability of South Caucasus region.

In this connection, “innovative” means of Azerbaijan foreign mission in Islamabad is brightening the scope of greater energy & food security mechanism, infrastructure development, aerial connectivity, trading capacity and cultural cooperation. Inauguration of Azerbaijan & CIS desk in Rawalpindi and Islamabad Chambers of Commerce and availability of easy business and tourism visas have succeeded to disseminate “good-will” gesture in the business community and potential businessmen in the country which would hopefully pay its dividends in the days to come.

Azerbaijan since its independence in 1991, its government has sought to make it a bridge between Europe and Asia. It has invested millions of dollars in commercial infrastructure and transport projects over the last decade, aiming to position Azerbaijan as a “reliable” regional link between Central Asia, the South Caucasus and Europe and increasing bilateral relations with China and inauguration of the “One Belt & One Road” has further enhanced Azerbaijan’s status of “connecting hub” and “powerhouse” of regional integration.

Baku understands the importance of implementing diversification strategies ahead of the depletion of the country’s hydrocarbon reserves and has already started massive “diversification drive” in the country by developing other key sectors of its macro-economy mainly, service, green energy, tourism, real estate, banking & finance, agriculture, organic production, health, and last but not least, hospitality sectors which are gradually inching towards further economic stability and sustainability.

According to official data around 70 percent of its trade came from oil and gas transport between Georgia and Azerbaijan. Baku and Tbilisi benefited most from this corridor, which was also good for Kazakhstan and Turkmenistan. Both Astana and Ashgabat used the corridor extensively to bypass Russia when transporting oil. During the ongoing Russia-Ukraine conflict the “alternative route” has been further flourished and matured, befitting to all the stakeholders and regional countries’ economies.

It is hoped that the Chinese investments help to further widen Azerbaijan’s strategic plan, allowing many projects to go ahead. In August 2015, the first container to take the BRI route, or Silk Road, travelled time more than 4,000km from China in a record six days’, arriving at the newly constructed Baku International Sea Trade Port. It signalled a new era in regional transport links.

China, together with partners from Azerbaijan and Kazakhstan, was a major player in implementing the project. It demonstrated to Chinese partners that cargo could reach Europe much faster via the Silk Road than by sea or by transiting through Russia. Both Kazakhstan and Azerbaijan used the project to encourage Chinese establishments to begin infrastructure in their territories so they could reap the benefits. Azerbaijani authorities believe that by 2030 some 300,000-400,000 containers will be transported via this route, bringing billions of profits.

Obviously, the ties between Central Asia and the Caucasus have been strengthened. Especially with the Ukrainian War, the destabilization of the Northern Corridor, especially, has pushed Eurasian countries, including China, to look for new routes. The rapprochement process between the countries in the east and west of the Caspian Sea, where the Middle Corridor is located, has accelerated. Undoubtedly, the will of Azerbaijan, brought peace to the Caucasus by winning an important victory in the Second Karabakh War which has now brightened the prospects of the opening of the Zangezur Corridor. Now, the possibility of regional cooperation and integration between the countries of the Turkish world has further strengthened strategic role of Azerbaijan in the region and beyond.

In this regard, an agreement was signed between Azerbaijan and Turkmenistan in February 2021, and the states agreed on the disputed regions in the Caspian Sea. Afterwards, various developments took place in the relations between Azerbaijan and Kazakhstan. Both states agreed to deepen strategic partnership and expanding comprehensive cooperation. A consensus has been reached in areas such as defence, foreign policy, trade, economy, investment, industry, oil, gas, chemistry, textile, construction, food and agriculture. The issues of development of transportation corridors and the improvement of transportation tariffs were also discussed between the governments. An agreement was reached on Uzbekistan’s utilization of the Baku-Tbilisi-Kars Railway. Afterwards, an agreement was reached between the Ministries of Energy of Azerbaijan and Uzbekistan on a road-map the goals and plans of which will be determined until the end of 2023. According to this agreement, joint projects will be carried out in the fields of renewable energy, oil, gas and petrochemicals.

It is also known that the parties have agreed on issues such as developing joint projects for the exploration and production of hydrocarbon resources of JSC Uzbekneftegas and SOCAR, as well as sharing of experience, encouraging mutual investment and privatizations. In addition, it is claimed that cooperation will be made in Karabakh-based projects. At this point, the strongest possibility is the possibility of Uzbekistan using the Zangezur Corridor to open up to the West. The role of Azerbaijan in Central Asia, South Caucasus, Middle East, and South Asia has further enhanced its constructive role in the further strengthening of Eurasia region.

Dr Mehmood Ul Hassan Khan

The writer is Executive Director, the Centre for South Asia & International Studies (CSAIS) and regional expert, Azerbaijan & South Caucasus.