Azerbaijan, Uzbekistan involved in joint integration projects Baku, Tashkent intensifying cooperation

The growing dynamics of the Azerbaijan-Uzbekistan trade and economic relations have recently created stable long-term trends in business cooperation.

Today, the business circles of the two friendly countries intend not only to greatly expand trade turnover and logistics, but also to strengthen the investment component, striving to implement joint business ventures in the energy, transport, mining, agricultural and tourism sectors.

The prospects for bilateral cooperation were discussed at the recent negotiations between Azerbaijani President Ilham Aliyev and Uzbek Minister of Investment, Industry and Trade Laziz Kudratov in Baku, as well as during the second Azerbaijan-Uzbekistan Interregional Forum held in Azerbaijan’s Quba district.

“Azerbaijan is observing the development processes under the leadership of President of Uzbekistan Shavkat Mirziyoyev. This policy, aimed at economic reforms, development of social and all other spheres, brings concrete results,” President Aliyev said during a conversation with Kudratov.

Recalling his visit to Uzbekistan, President Aliyev said that he had noticed the successful settlement of the issues related to the industrial potential and protection of the historical and cultural heritage of the country, and also expressed confidence that interaction related to the development of bilateral cooperation would continue in the future.

The policy of expanding trade and business partnerships being pursued by Baku and Tashkent over the past few years has become a solid foundation. The business circles of the two countries are developing business cooperation on this basis.

The two countries are involved in joint integration projects within the Organisation of Turkic States and cooperate in regional transport, transit and logistics projects, as well as actively expanding passenger air transportation.

In particular, Uzbekistan, which does not have a direct way to the Caspian Sea, is an important cargo carrier and partner of the countries involved in the Trans-Caspian International Transport Route (TITR) and other routes of the “Middle Corridor”, making every effort to expand transit and diversify the cargo flow.

The agreements have been recently reached to provide Uzbek companies with a platform to create their own terminal at the Baku International Sea Trade Port, which will be used for transit transportation of sugar to Uzbekistan, as well as for other export-import operations with Azerbaijan.

In turn, the Azerbaijani subsidiary of the Azerbaijan Railways company (AZD) - ADY Container and the vessels of the Azerbaijan Caspian Shipping Company (ASCO) deliver mineral fertilizers produced in Uzbekistan to the Romanian port of Constanta via block trains.

The trade indicators also testify to the high dynamics of transport cooperation. For comparison, trade turnover between Azerbaijan and Uzbekistan was small - $31.2 million in 2017.

After several years, when the new business cooperation strategy was implemented, by the end of 2022 the trade turnover had already reached $183 million, increasing by more than half compared to the previous year.

Despite the global recession, mutual trade turnover was positive in 2023.

The regional transit and transportation across the Caspian Sea decreased during the global recession.

Uzbekistan supplies legumes, as well as dried fruits, peanuts, textiles and silk, hydrogen chloride, cars, buses, trucks, polymer products and other petrochemical products, paints and varnishes, copper concentrate, sugar, sucrose, tea, etc. to Azerbaijan.

At the same time, the two countries have much bigger economic potential and are aimed at intensifying the bilateral trade and economic relations.

There is also a large-scale legal framework, including over 130 interstate, intergovernmental and interministerial agreements, including the recent  “Declaration on the Deepening of Strategic Partnership and Expanding Comprehensive Cooperation between the Republic of Azerbaijan and the Republic of Uzbekistan”. This will be helpful for the projected powerful trade breakthrough.

Among other important drivers of business cooperation during the last two years are the efforts of the governments and business circles of the two countries, concentrating on the implementation of joint production projects in the automotive industry, the agricultural sector, and light industry.

In particular, a joint Azerbaijani-Uzbek enterprise assembling Chevrolet cars has been operating in the Hajigabul Industrial Zone for the third year.

Azerbaijan and Uzbekistan signed a roadmap for green energy in 2022. Together with Kazakhstan, the countries have recently begun developing a feasibility study for a project to integrate energy systems and lay a high-voltage cable along the bottom of the Caspian Sea to jointly export green energy to Türkiye and the EU.

Cooperation between Baku and Tashkent on the road map in the agricultural sector is developing perfectly.

Uzbekistan supplies seeds of highly productive varieties of cotton, as well as seedlings of mulberry varieties resistant to adverse climatic conditions to Azerbaijan, shares its rich experience in processing cocoons, breeding productive types and hybrids of silkworms.

In turn, Azerbaijan assists in providing Uzbek partners with seedlings of high-yielding hazelnut varieties and training Uzbek specialists in hazelnut growing.

The second Azerbaijan-Uzbekistan Interregional Forum, organised on the initiative of the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) through the support of the Azerbaijani Economy Ministry and the Uzbek Ministry of Investment, Industry and Trade has recently started in Guba to further expand the cooperation between Azerbaijan and Uzbekistan at the regional level and in various spheres, as well as discuss promising investment projects.

The fourth meeting of the Azerbaijan-Uzbekistan Business Council was also held, and several bilateral documents were signed as part of the event.

“Uzbekistan is working to improve the bilateral cooperation with Azerbaijan,” Kudratov noted during the forum.

“Azerbaijani President Ilham Aliyev intends to pay a state visit to Uzbekistan in August, and during this visit big results that will give a higher status and level to the relations between the two countries will be achieved,” he added.

He added that several joint business projects, which will facilitate an increase in trade turnover to $1 billion in the next few years, are being actively implemented.

These projects cover the joint production of textiles and silk, the projects in agriculture, production of electrical equipment and building materials. In particular, Uzbekistan is aimed at cooperation in joint production of household appliances and aluminium radiators in the territory of the Alat free economic zone.

In turn, the favourable atmosphere for the implementation of projects in Uzbekistan was offered to Azerbaijan to create retail facilities, a zone for packaging, processing and finishing of products, which will be supplied to the Afghan market.

Two friendly countries plan to create a joint online commerce platform to expand e-commerce.

The minister added that an Azerbaijani-Uzbek trading company supplying petrochemical products has already been created. Uzbekistan also plans to increase imports of Azerbaijani polymer products.

Finally, the two countries are aimed at increasing transit freight transportation through Azerbaijan to at least one million tons per year.

“We urge the State Oil Company of the Azerbaijan Republic [SOCAR] to participate in oil and gas production projects in Uzbekistan, and currently the issue of Uzbekneftegaz company’s joining gas production projects at the Azerbaijani Shah Deniz gas condensate field is also at the final stage,” Kudratov added.

Azerbaijan is also interested in expanding trade and investment projects, creating joint industrial and agricultural enterprises with Uzbekistan.

“Uzbekistan has become an important market where we confidently promote Azerbaijani business, our entrepreneurs are welcome in this market, we speak the same language in terms of approaches to the regulatory sphere,” Azerbaijani Minister of Economy Mikayil Jabbarov, who participated in the forum, said.

“A joint Azerbaijani-Uzbek fund with a capital of $500 million has been created, and 10 potential projects are currently being considered for financing,” he said.

The minister also said that a big joint venture is planned to be set up with the Uzbek side soon in the Azerbaijani territories liberated from occupation, more than 400 jobs will be created at the initial stage.

The aspects of financing investment projects will be thoroughly considered within the 13th meeting of the Azerbaijan-Uzbekistan joint intergovernmental commission in July 2024.

In turn, following the second Azerbaijan-Uzbekistan Interregional Forum in Quba, the economy ministers of the two countries signed a road map for preparing the state visit of Azerbaijani President Ilham Aliyev to Uzbekistan in August 2024.