Baku-Bratislava: Advancing progress through strategic partnership
Fortifying economic bonds

ANALYTICS  08 May 2024 - 11:53

Over the past few years, Azerbaijan has been focusing on strengthening its economic relations with the countries of Southern and Central Europe. This region is crucial to Azerbaijan's long-term export strategy within the framework of the Southern Gas Corridor (SGC) project, and it is also home to the buyers of Azerbaijani oil. The country has also been building stronger business ties with Eastern European countries, including Slovakia, in non-resource sectors. Recently, the Azerbaijan-Slovak business forum was held during Slovak Prime Minister Robert Fico's official visit to Azerbaijan to discuss expanding business ties.

The cooperation between Baku and Bratislava has been built on a foundation of mutual respect and partnership, including within international organizations. The two countries share similar views on the importance of international law, the inviolability of borders, territorial integrity and sovereignty of states, and the unacceptability of separatism. This foundation, along with complementary inter-state relations, has led to the strengthening of economic ties between the two countries. The success of this policy is evidenced by the official visit of Slovak Prime Minister Robert Fiсo to Azerbaijan and the outcome of his talks with Azerbaijani President Ilham Aliyev.

"Slovakia and Azerbaijan are guided by a policy based on respect for sovereignty and dignity. Today a new page in bilateral relations is being opened, I hope that our joint path will be very successful," Azerbaijani President Ilham Aliyev said in a press statement. Congratulating Slovak Prime Minister Robert Fiсo on his re-election as head of government, the Azerbaijani President noted that concrete steps were taken immediately afterwards with a number of reciprocal visits of high-ranking Slovak and Azerbaijani officials made.

"Despite being a member state of the European Union, we are united by a pragmatic approach, we are united by a sovereign foreign policy, a policy that you are implementing and to which we aspire. We are ready to be a bridge between Azerbaijan and the European Union and we want to present to the EU an objective situation in Azerbaijan," Slovak Prime Minister Robert Fico said at a press conference.

In general, the outcome of the talks between the Slovak prime minister and the Azerbaijani president was a momentous occasion resulting in a ceremony for signing a number of Azerbaijani-Slovak documents held in Baku. Thus, during the business forum a memorandum of understanding on cooperation between the Azerbaijan Investment Company (AIC) and Slovak Eximbank, as well as a memorandum of cooperation between Slovak company SEAK Energetics and Azerbaijani ITECH GROUP LLC were signed.

The main outcome of the meeting in Baku was the signing of the Joint Declaration on the Establishment of Strategic Partnership between Azerbaijan and Slovakia, the Memorandum of Understanding on Military-Technical Cooperation between the Ministries of Defence Industry of Azerbaijan and Slovakia, as well as the Agreement on Cooperation between the Ministries of Defence of Azerbaijan and Slovakia in the defence sector.

President Ilham Aliyev emphasized that among the documents signed today, there were agreements in the sphere of defence and defence industry. A wide-ranging exchange of views was held on these two areas, and the two countries are now initiating concrete negotiations for the establishment of joint production sites in the defence sector.

The defence sector is not the sole focus of cooperation between Baku and Bratislava. Unlike some Eastern and Southern European nations, Azerbaijan and Slovakia have historically maintained trade ties with less emphasis on raw materials. While oil exports constitute a modest portion of their trade volume, there is potential for expanding the energy sector within their bilateral relations.

In April of last year, a memorandum of understanding was signed to enhance cooperation between the State Oil Company of Azerbaijan (SOCAR) and its partners, including operators of gas transmission systems such as Bulgarian Bulgartransgaz, Romanian Transgaz, Hungarian FGSZ, and Slovakian Eustream. This memorandum outlined collaboration areas aimed at facilitating additional gas volumes from Azerbaijan to Europe through the modernized Solidarity Ring (STRING) system.

Initiated by Bulgaria, the STRING system encompasses countries with ample underground gas storage facilities and extensive pipeline networks, including Slovakia. This infrastructure positions them to receive and store Azerbaijani gas, thus facilitating the envisioned cooperation.

"Today, cooperation in the energy sector is discussed very widely: Azerbaijan currently exports its natural gas to eight countries, hopefully, the ninth country will be Slovakia. In April last year, a document called 'Ring of Solidarity' was signed, and thus good opportunities were created to transport Azerbaijani gas to the Slovakian market as well," Azerbaijani President Ilham Aliyev said.

At the same time, Bratislava sees Baku as a key partner in the South Caucasus for cooperation in trade and economic, transport, transit, investment, innovation and IT spheres, and Slovak companies are also interested in participating as contractors in construction and reconstruction projects in the liberated territories of Azerbaijan. As President Ilham Aliyev noted, one of the notable directions of Azerbaijan-Slovak cooperation is the activity of Slovak company in the liberated lands: "Reconstruction of Garvand village of Aghdam district will be carried out by Slovak company within the framework of the implementation of 'smart city' and 'smart village' concepts under the most modern standards".

In recent years, significant strides have been made to fortify the relationship between Azerbaijan and Slovakia. This includes a notable expansion of the bilateral legal framework, marked by the signing of 11 bilateral documents. Among these agreements is an intergovernmental agreement on economic cooperation inked in October 2021. This comprehensive agreement encompasses various sectors including industry, construction, transport, logistics, investment promotion, energy, mining, tourism, small and medium-sized enterprises (SMEs), agriculture, and other areas.

Furthermore, a recent agreement on the elimination of double taxation, slated to come into effect on January 1, 2025, is poised to enhance the business environment between the two nations. Economy Minister Mikail Jabbarov highlighted the significance of this agreement during the Azerbaijan-Slovak Business Forum in Baku, emphasizing its role in further strengthening economic ties.

Slovak partners also hold a similar opinion. Thus, according to Deputy Prime Minister and Minister of Economy of Slovakia Denisa Sakova, Azerbaijan plays a strategic role as an important partner of Slovakia. According to her, Bratislava is closely watching the economic growth of Azerbaijan, whose development strategy as a regional trade partner of Slovakia is being strengthened year by year.

"I am very glad that relations between our countries are steadily and actively developing. Representatives of 37 companies and structures of Slovakia have arrived in Baku, I believe in the success of negotiations during the current business forum, which has become a productive platform for establishing close ties between companies and businessmen of the two countries," the head of the ministry said.

During the business forum, Robert Simoncic, the head of the Agency for Investment and Trade Development of Slovakia, underscored the collaborative efforts between the two nations over the past years. He highlighted that approximately five joint events have been organized to foster cooperation, with ongoing discussions aimed at establishing new agreements to bolster bilateral trade.

Simoncic noted that current annual exports from Slovakia to Azerbaijan amount to €8 million, with reciprocal supplies valued at €1 million. However, he expressed optimism about the future trajectory of trade relations, citing the significance of the intergovernmental agreement on the avoidance of double taxation signed in April 2024, alongside other agreements concluded during the forum on May 7.

In particular, Slovakia stands ready to share its expertise in various sectors, including energy, electronics production, information and communication technology (ICT), the automotive industry, and space technology. Notably, the successful past collaboration between Azerbaijan and Slovakia in the Next Generation Network (NGN) optical networks is recalled, where equipment from the Slovak company Iskratel was utilized to build an NGN network in the Absheron Peninsula.

"Today's Azerbaijan-Slovak Business Forum is attended by 37 companies from Slovakia and 55 companies and state institutions from Azerbaijan, and we expect it to open new ways and opportunities for cooperation between the two countries," said Yusif Abdullayev, Executive Director of the Agency for Promotion of Export and Investment (AZPROMO). - Over the past 15 years, many joint events have been organised in our country and Slovakia, and currently, seven Slovak companies are operating in Azerbaijan".

At the same time, the head of AZPROMO emphasised that the trade exchange between the two countries is very small and does not correspond to the potential of the two countries: it should be expanded, and not only by exporting products but also services. In general, taking into account the new vectors, cooperation will be developed in industry, agriculture and the IT sphere.

Caliber.Az