Caspian Summit: Azerbaijan opens cooperation opportunities in the region
Review by Caliber.Az

ANALYTICS  30 June 2022 - 14:32

The 6th summit of the Caspian littoral states gathered in Ashgabat the heads of the five Caspian states - Azerbaijan, Russia, Kazakhstan, Turkmenistan, and Iran. Current issues of trade, economic, and transport cooperation of the region's countries, as well as the ratification of the Convention on the Legal Status of the Caspian Sea, signed four years ago, were discussed at the forum. Bilateral meetings of heads of states discussed the current state and future of business relations, in particular the prospects of economic cooperation between Azerbaijan and Turkmenistan.

The Forum of the Heads of the Caspian States has undoubtedly become a landmark event contributing to the expansion of regional cooperation. President of Azerbaijan Ilham Aliyev also took part in its work, who met in Ashgabat with Chairman of the Halk Maslahaty of the Milli Gengesh (Parliament) of Turkmenistan Gurbanguly Berdimuhamedov and Head of the Turkmen state Sardar Berdimuhamedov. The leaders of Azerbaijan and Turkmenistan discussed the priorities of business relations, including joint prospects for expanding trade, developing the fuel and energy, transport, and communication sectors, as well as the agricultural sector, textile, and chemical industries.

In a broader format, a wide range of topics was put on the forum's agenda, including peace, stability and security in the Caspian region, development of trade and economic cooperation, aspects of transport cooperation, as well as cooperation in the environmental, tourism and humanitarian spheres.

The meeting of the heads of Caspian littoral states was preceded by a meeting of foreign ministers, who worked out the agenda of the jubilee Caspian Summit, which was held in the Turkmen capital again, this time after 20 years since the organization of regional forums. In particular, having agreed on regular meetings, the diplomats spoke in favor of expanding the powers of the High-Level Working Group on the Caspian Sea and adopted the text of the Communiqué, which will become the final document of the summit after its approval at the highest level.

It should be noted that the Caspian Summit organized back in 2002 on the initiative of Turkmenistan has over the years become a unique platform for discussing important and often very complex issues of cooperation between the Caspian states. In particular, four years ago, at the Fifth Caspian Summit in Aktau, Kazakhstan, the long-awaited breakthrough was achieved by signing the Convention on the Legal Status of the Caspian Sea. Negotiations on this most important document had been taking place with varying degrees of intensity for more than 20 years. This historically important document for the region worked on since 1996, was signed on August 12, 2018, by the heads of the five states. Among other things, the Convention established five states' exclusive rights to the Caspian Sea, responsible development and use of its subsoil and other resources, as well as outlined the basic principles of commercial activities in the sea, including oil and gas production projects, laying pipelines and other communications. So far, four parties have ratified the Convention: Turkmenistan in December 2018, Kazakhstan and Azerbaijan in February 2019, and Russia in October 2019. As for the Islamic Republic of Iran, the issue is still under consideration by its parliament.

It is not surprising that the prospects for early ratification of the Convention on the Legal Status of the Caspian Sea by all five states and the entry into force of this document was also the most important topic of the Ashgabat forum. Speaking at the summit, Turkmen President Serdar Berdimuhamedov called for expanding the mechanism of cooperation at the level of foreign ministers and special representatives of the Caspian states on legal issues of the Convention, including completion of the agreement on the method of establishing direct baselines in the Caspian Sea. The President of Turkmenistan also noted that experts from the Caspian countries are preparing joint documents on combating poaching, drug trafficking, maritime safety, and search and rescue at sea. He noted that the work on these regulations is expected to be completed in the near future. According to the President, the key task of the five-party cooperation in the Caspian Sea is to ensure strong, long-term, and indivisible security in the region. Such interaction should be uncompromising, systematic, and transparent. "International business and financial institutions understand the potential and geo-economic value of the Caspian region, and in this regard, the Caspian countries need to create conditions for entrepreneurship, free it from obsolete barriers and obstacles, making the Caspian attractive for serious and long-term investments", said Serdar Berdymuhamedov, who voiced a proposal to establish the Business Cooperation Council of Caspian countries as an independent platform of business communities.

Russian President Vladimir Putin holds a similar view, saying that the settlement of legal aspects of the Caspian Sea has opened up significant opportunities for the region's states to cooperate in energy and joint exploitation of offshore oil and gas fields, as well as the implementation of joint green energy projects and deepening mutually beneficial investment, industrial and high-tech cooperation. "The volume of Russian trade with the Caspian countries is constantly growing: for example, in 2021 the trade turnover grew by 35%, increasing even more in the first third of this year," said the President of Russia.

A meeting between the presidents of Azerbaijan and Russia was also held on the sidelines of the summit. Russian President Vladimir Putin emphasized the importance of implementing the plan of Russian-Azerbaijani cooperation until 2024, and expressed satisfaction with the steady growth of trade turnover between the two countries: in 2021 the growth exceeded 16%, and by the end of the first quarter of this year it was 5.5%. In turn, expressing satisfaction with the expansion of trade links and industrial cooperation with Russia, as well as the strengthening of cooperation in transport and energy spheres, President Ilham Aliyev said that the Caspian Summit opens good opportunities to discuss regional issues in a broad format.

According to the President of Azerbaijan, bilateral and multilateral agreements between Caspian littoral states in the sphere of transport create a basis for the Caspian region to become a major international transport hub. "Azerbaijan plays an important role in the development of East-West and North-South international transport corridors. We are making efforts to effectively use the Trans-Caspian international transport route, which will enable to maximize the potential of Caspian littoral states, contributing to the development of transport infrastructure," Ilham Aliyev added. The head of state noted that after the victory in the Patriotic War, the country carried out large-scale reconstruction and restoration work in the Karabakh region, as well as formed the infrastructure of the Zangazur transport corridor which is to become a major element of international logistics. The prospects of new transit opportunities in the region will also be considered at the 8th meeting of the Coordinating Council of the North-South International Transport Corridor scheduled for this year.

In addition to the transport and energy sectors, a number of other areas of vital interest to the countries of the region were discussed during the 6th Summit of the Caspian states. In particular, the President of Kazakhstan Kassym-Jomart Tokayev touched upon the topic of food security and proposed the Caspian countries to create a food hub, which would allow increasing mutual trade turnover with minimal costs. "Last year, the volume of mutual trade in food between Kazakhstan and the Caspian countries amounted to approximately $3.4 billion, of which about 70% was with Russia via the overland route. In order to strengthen trade cooperation between our states, it is necessary to develop consistently a modern logistical infrastructure by forming a Caspian food hub," said the head of state. Kazakhstan has already made the first steps in this direction: the construction of modern wholesale and distribution centers with a technologically advanced system of warehousing, storage, and sale of food products has started.

The prospects of Iranian-Turkmen business ties were also discussed at the forum, with Baku's participation in the joint undertakings with Ashgabat and Tehran. In particular, as a result of the tripartite agreement on gas swap supplies concluded last November between Azerbaijan, Turkmenistan, and Iran, about two billion cubic meters of "blue" fuel has been supplied from Turkmenistan to Iran since the beginning of the current year with the subsequent transfer to Azerbaijan.

In the next three to five years after the final agreement between Azerbaijan and Turkmenistan, it is planned to start joint development of offshore gas deposits at the Dostlug field. At the same time, Baku and Ashgabat are active participants in the Lapis Lazuli project, which provides for the transshipment of transit cargo and connects transport lines of Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Türkiye into a single route. This project is attractive for Baku from the viewpoint of increasing the transit potential of the Baku-Tbilisi-Kars railway line and, in the future, the additional load of the Zangazur transport corridor, which is under construction.

Turkmenistan and Azerbaijan intend to accelerate the implementation of several other promising projects: in November 2019, Azerbaijan and Turkmenistan signed an interstate agreement that provides for the laying of 300 km of optical cable line with a capacity of 2-4 terabits per second on the seabed. This document was ratified by the Parliament of Azerbaijan and approved by the head of state in spring 2020. In the coming years, it will be implemented by AzerTelecom and Turkmentelecom companies, which will provide high-speed Internet traffic between Azerbaijan and Turkmenistan and further in the direction of Uzbekistan, Afghanistan, Pakistan, and India.

In addition to other prospects, expansion of cooperation with Central Asian countries envisages an increase in the transit of mineral fertilizers, including those produced in Turkmenistan and supplied from Turkmenbashi port to Alat harbor of Azerbaijan. To this end, it is planned to complete the construction of a special terminal for the reception and storage of fertilizers in Yeni Baku port by the end of this year, capable of handling 2.5 million tons of products per year.

Caliber.Az