Azerbaijan-Italy strategic partnership looks more promising with new dimensions
Unlocking more opportunities in the West
ANALYTICS 09 June 2023 - 15:29
On June 8, 2023, the Italian media confirmed that the Italian and Azerbaijan government had signed a contract to supply the C-27J Spartan manufactured by Leonardo S.p.A. The negotiations for purchasing the C-27J, a tactical transport aircraft with many years of proven experience in the most challenging operational scenarios, were finalised through a technical round table between the Italian Ministry of Defence and its Azeri counterpart.
Both countries sought a deeper security engagement in recent years, albeit with no real action. In a broader context, Italy and Azerbaijani partnership go beyond the energy, economy, and tourism field, as recently, security became another key dimension of the bilateral partnership.
As such, in 2020, during President Aliyev’s official visit to Rome, Azerbaijani Defense Ministry held a meeting with the chief executive officer of Italian aeronautics manufacturer Leonardo S.p.A, signed an agreement on the acquisition of M-346 Master trainers/light-attack aircraft. The contract allowed Azerbaijan to import around 10-25 small jets. Moreover, the contract cemented Azerbaijan's partnership with the company for ground base training aids.
Italy has been one of Azerbaijan’s top partners in the European Union (EU) since the beginning of the South Caucasus country’s post-Soviet independence. Moreover, during the long-term conflict in Karabakh between Armenia and Azerbaijan, Italy has always been supportive of Azerbaijan’s territorial integrity and sovereignty, which created a more suitable space for fruitful diplomatic relations and energy partnerships.
In February 2023, Azerbaijan and Italy announced the signage of a new bilateral energy contract. The $170.88 million deal involved Ansaldo Energia, an Italian power-generation service provider, and Azerenerji, Azerbaijan’s largest electrical power company. The agreement marked another milestone in Azerbaijani-Italian relations that has grown from an energy partnership to a strategic cooperation level in the last decade.
Indeed, the key component of Italy's and Azerbaijan's relationship is the Trans Adriatic Pipeline (TAP). The pipeline is a key transport route that transports gas from Azerbaijan to Apulia, Italy, via a 546-mile link and has a current capacity of 1.2 billion cubic metres (bcm) a year.
Considering the rich experience of comprehensive partnership, in early 2023, both made the announcement that they would begin increasing the volume of shipments to 20 bcm by the end of 2027.
The TAP and new energy deals have gained increasing importance as Italy strives to reduce its dependence on Russian energy resources. Before the Ukraine invasion, Italy was one of the major clients for Russian fossil fuels, though it reduced imports significantly in 2022 following international sanctions.
Currently, Italy relies only on a little over 10% of Russian gas while looking for alternative suppliers like Algeria, Libya, and Azerbaijan. While the war in Ukraine has been a catalyst for bringing these countries together in the energy sector, it is notable that their relationship extends beyond turbines and energy deals.
The main point that makes a partnership with Azerbaijan preferable for Italy is the existing vast network of critical infrastructure built within the Southern Gas Corridor project, ensuring the smooth flow of natural gas to Italy via the Adriatic Sea.
In addition to energy, trade turnover between the two countries amounted to $6 billion in 2019, which makes Italy Azerbaijan’s top trade partner in Europe. This bilateral trade accounts for 92 per cent of Italy's overall trade with the South Caucasus region.
Indeed, the positive accords of the bilateral partnership paved the way for Azerbaijani President Ilham Aliyev’s high-level state visits to Rome in 2022 and 2023 upon the invitation of his Italian counterpart Sergio Matarella.
Among the previous visits, the most important in terms of content and form was the state visit on February 19-21, 2020. Twenty-eight documents were signed between the two countries during that visit. These documents cover political, defence, economic trade, energy, high technologies, transport, infrastructure, cultural, scientific, tourism, sports, food safety, and cooperation areas at the level of capital cities.
The new agreements created a more favourable space for increasing bilateral trade. According to the Italian media, the country is particularly interested in providing more real made-in-Italy products, and in order to do so, has plenty of projects.
Thus, one of Italy’s key initiatives is its incoming project which is designed to support Italian enterprises interested in doing business in Azerbaijan and involves inviting buyers, business representatives, bloggers, and importers to various events held in Italy.
With positive vibes in bilateral diplomatic rhetoric, the Italian-Azerbaijani strategic partnership has the potential to grow in a large spectrum of fields in the coming years. Europe's energy deficit and security gap that emerged after Russia's invasion of Ukraine will enable Baku and Rome to explore more spaces for strategic partnership.
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