Azerbaijan-Croatia relations blossoming as nations move to diversify ties Writing success story together

Azerbaijan has been stepping up its economic cooperation with countries in Southern and Eastern Europe in recent years. This region is essential for Baku's long-term export strategy within the framework of the Southern Gas Corridor project. Additionally, many of the biggest buyers of Azerbaijani oil are located in this region. Recently, Azerbaijan has been strengthening its ties with Croatia in the sphere of non-resource economy. A business forum was held in Baku to discuss the prospects of diversifying economic relations, and the third meeting of the Azerbaijani-Croatian intergovernmental commission on economic cooperation took place the day before.

Baku's cooperation with Zagreb has been built on a foundation of mutual respect and partnership for many years. Both countries adhere to similar positions on the importance of international law, inviolability of borders, territorial integrity, sovereignty of states, and unacceptability of separatism. Over the past few years, Azerbaijan and Croatia have concluded around three dozen agreements and protocols mainly in the economic sphere. The total volume of trade turnover between the two countries surged by over $1 billion.

The economic relationship between Azerbaijan and Croatia is underpinned by a robust energy sector, which constitutes the foundation of their trade turnover. Recent years have evidenced positive dynamics in the supply of hydrocarbon raw materials, with Croatia importing over 1.15 million tonnes of Azerbaijani oil valued at 699.2 million euros last year alone. This made Croatia the second-largest European purchaser of Azeri Light oil, after Italy. The Ionian-Adriatic Pipeline (IAP) is expected to be constructed soon, and it will be connected to the South Gas Company, promising opportunities for Azeri gas exports to Croatia. The gas corridor through Albania will subsequently transport the gas northwards to Montenegro and ultimately to Croatia.

Croatia has traditionally exported food, pharmaceuticals, and various consumer goods, and about 15 years ago, the Croatian Uljanik shipyard in Pula completed four ferries on Azerbaijani orders. At present, Baku and Zagreb are collaborating to broaden bilateral trade and diversify economic ties to boost cooperation in the non-oil sector.

Azerbaijan's Ministry of Economy has told Caliber.Az that there are significant opportunities to expand partnerships with Croatia's private sector in non-resource trade, investment, industry, alternative energy, tourism, as well as demining and other areas. The investment direction is promising, with about 15 commercial institutions with Croatian capital operating in Azerbaijan, investing in agriculture, construction, trade and services, based on the "Agreement on Encouragement and Mutual Protection of Investments" signed in October 2007 and other bilateral legal frameworks. The positive trends in trade dynamics are reflected in the fact that the Azerbaijani-Croatian trade turnover in January 2024 increased almost four times compared to the previous year.

Croatian partners who participated in the Azerbaijan-Croatia Business Forum also share a positive outlook on the future of bilateral economic relations. Over 40 companies from the food industry, construction, trade, and energy sectors were represented at the event. After the official proceedings, participants continued with business negotiations in the B2B format.

On March 13, Azerbaijani Economy Minister Mikail Jabbarov met with the Croatian Minister of Economy and Sustainable Development Damir Habijan to discuss bilateral economic ties between Azerbaijan and Croatia. The ministry said they mulled the priorities of bilateral economic relations, including promoting joint investment and trade, supporting cooperation in the fields of industry and alternative energy, and expanding partnerships between the business communities of the two countries.

The Azerbaijani-Croatian IGC held its third meeting at the Heydar Aliyev Centre, chaired by Adil Kerimli, the Azerbaijani Culture Minister, and Damir Habijan, the Croatian Minister of Economy and Sustainable Development. The participants discussed cooperation in various fields, including economy, industry, energy, transport, culture, healthcare, education, and science. Following the forum, the co-chairs signed a cooperation protocol. The main focus of the bilateral events was the expressed intention of both sides to diversify their business ties.

According to Branko Zebic, the Croatian Ambassador to Azerbaijan, Baku and Zagreb have excellent opportunities for cooperation in IT, energy, agriculture, and tourism. Croatian companies have shown significant interest in the IT sector and have already completed several projects in Azerbaijan. It is worth noting that two Croatian IT companies, Sedam IT and Span, are active in the telecommunications sector and digital project implementation. Additionally, Sedam's subsidiary, Matison, is successfully collaborating with the well-known Azerbaijani company, Risk, on a joint project for Azerbaijani mobile operators.

Negotiations for new projects in various sectors have been under way for the last few years. Croatian companies will be able to participate in small hydroelectric power projects and other renewable energy sources (RES) projects, as well as in the agricultural sector. Additionally, Croatian companies may participate in projects in Karabakh and Eastern Zangezur. Furthermore, the government of our country has invited Croatian businesses to participate in contracting and investment projects in the territories of Azerbaijan that have been liberated from occupation. The business sectors of the two countries also have the potential for joint production of pharmaceutical products.

There are currently some eighteen Croatian companies registered in Azerbaijan, nine of which operate in the energy, transport and other related sectors. Silva Stipic Kobal, director of the Centre for Internationalisation of Business of the Croatian Chamber of Economy, stated that trade between the two countries has quadrupled compared to 2017. She also highlighted the significance of tourism for Croatia, which accounts for over 25% of the country's GDP. Azerbaijan is expanding its tourism sector, including in the recently liberated territories. There is great potential for cooperation with Croatia in the recreational sector.

Croatian diplomat Branko Zebic said that Zagreb was interested in further cooperation with Baku on oil purchases and gas procurement prospects, noting that Azerbaijan's importance as a transport hub had increased significantly, in addition to being a key supplier of fossil fuels for Europe's energy security. He underlined that Croatia, although a relatively small country, as a member of the European Union, is fully interested in the opportunities offered by the Middle Corridor. Croatia will support this project on EU platforms.