Baku, Astana target one-billion-dollar trade turnover Review by Caliber.Az

Azerbaijan and Kazakhstan, which celebrated 30 years of diplomatic relations last year, set a goal to bring bilateral economic ties to a whole new level, expand cooperation in transport and energy spheres and increase trade turnover. In order to intensify these plans, the Azerbaijan-Kazakhstan business forum and then the 19th meeting of the Intergovernmental Commission on trade and economic cooperation were held recently in Baku. Within the framework of these events, new contracts were concluded and memorandums signed. Expansion of interstate and business ties between Baku and Astana was discussed on April 10 during an official visit to Kazakhstan by Azerbaijani President Ilham Aliyev.

"Fraternal relations with Kazakhstan are the imperative of our ancestors, and it is also a vital necessity, because processes are taking place in the Caspian, Central Asian, and South Caucasus regions, which dictate the need for us to strengthen cooperation in all directions, from issues related to regional security to transport, logistics, energy, humanitarian cooperation, environmental issues," President Ilham Aliyev said during his visit to Kazakhstan.

In his joint press statement with Kazakh President Kassym-Jomart Tokayev in Astana, the Azerbaijani leader recalled a landmark document - the Declaration on Deepening Strategic Partnership and Expanding Allied Relations signed in Baku last August. He also mentioned the Comprehensive Development Programme of Cooperation between Azerbaijan and Kazakhstan for 2022-2026, as well as a number of other documents aimed at cementing ties and strengthening allied relations between the two countries. The declaration and other agreements signed in Astana on April 10 serve the same purpose.

"Within the framework of these processes, the transit of Kazakhstani oil through Azerbaijan has begun, serious work is being carried out to unite the transport and logistics infrastructures of our countries in order to fully use the opportunities of the Middle Corridor, specific figures, and a specific schedule for increasing the transportation of goods on the East-West route were discussed, and instructions were given to heads of relevant agencies to work out all these issues in the near future", President Ilham Aliyev emphasized.

Here it should be noted that last year and this year have been landmark years for the expansion and deepening of trade and economic relations of Azerbaijan with Kazakhstan, a long-standing and successful partner in energy and transport projects, which seeks even greater business integration within trade and investment projects implemented by member countries of the Organization of Turkic States (OTS).

The Russian-Ukrainian war and the sanctions regime that cut the traditional transport and logistics routes linking Central Asian (CA) countries to Europe have played a catalyst role, further reinforcing the intentions of the CA countries, Azerbaijan and Türkiye to develop a transit alternative to the Middle Corridor.

As the dominant vector in the development of joint ventures, transport projects are now actively developing both in the energy and non-oil track. This refers in particular to the agreement signed not long ago between the oil and gas companies of Azerbaijan and Kazakhstan - SOCAR and KazMunayGas - designed to transship 1.5 million tonnes of oil this year through the Trans-Caspian route.

"The Baku-Tbilisi-Ceyhan (BTC) pipeline is 40% full and remains available to transport the volume of 20 million tonnes we are aiming at: already in March this year 20 thousand tonnes have been transshipped via the BTC route, and another 125 thousand tonnes are planned for April. Kazakhstan subsoil users consider the first volumes of oil as a pilot to test the route," said Serik Zhumangarin, Deputy Prime Minister and Minister of Trade and Integration of Kazakhstan, during the 19th meeting of the intergovernmental commission in Baku.

Azerbaijan-Kazakhstan cooperation is seen as equally promising in further expanding freight traffic along the Trans-Caspian International Transport Route (TITR). According to Kazakhstan Temir Zholy (KTZ), the total volume of railway transportation between Kazakhstan and Azerbaijan in 2022 amounted to over 3 million tons, which is four times higher than the year before.

This positive trend continued in the first quarter of 2023 - the volume of freight transported between the countries via the TITR increased by 40%, including a noticeable increase in the transportation of grain and mining products.

Not long ago, CJSC Azerbaijan Railways and its partner KTZ established a joint dispatch centre to optimise the flow of information on freight traffic, at the same time simplifying cross-border and customs procedures and introducing a "one-stop-shop" mode to optimise the passage of non-oil cargo and its handling in ports, including container multimodal trains transiting from China along the Middle Corridor.

Noting the importance of acceleration of work on the creation of an Azerbaijani-Kazakh joint venture for activities within the framework of the TITR, Deputy Prime Minister Serik Zhumangarin underlined that to eliminate bottlenecks along the route of the Middle Corridor near the eastern borders of Kazakhstan the Dostyk-Moyinty railway line is under construction, which will increase the number of trains coming from China from 12 to 60 per day. The Aktau and Kuryk ports are also being expanded, and a container hub is under construction.

All these endeavours are fully supported in Azerbaijan, which is interested in realising new transit transport opportunities in the region. "The development of transport and logistics links to increase transit traffic from China and Central Asian countries to Europe is critical. We are ready to continue and deepen cooperation within the framework of the TITR, as well as new transit transport routes, including the Zangazur corridor, which in the future will become part of the Middle Corridor," says Azerbaijan's Energy Minister Parviz Shahbazov.

It is quite obvious that the expansion of cargo transportation with Kazakhstan and other CA countries, the increase of Chinese and Turkish transit contribute to the development of regional economic cooperation, strengthening of bilateral trade, development of infrastructure, and implementation of bilateral projects in the industry. Baku and Astana are certainly among the future beneficiaries of such joint undertakings. Having an extensive contractual and legal base comprising over 120 interstate and intergovernmental agreements, Azerbaijan and Kazakhstan consistently expand business contacts, including investment and trade relations.

At present, over 1,195 companies with Azerbaijani capital are operating in Kazakhstan and 210 joint ventures have been created. According to the Central Bank of Kazakhstan, in 2005-2020 the volume of attracted Azerbaijani investments in the economy amounted to $306.5 million. In turn, in recent years, the volume of investments of Kazakh companies has also increased: only in 2018-2019, $75.7 million was directed to the economy of Azerbaijan.

"Last year, trade turnover between the countries quadrupled compared to the previous year and reached $598 million. Today Azerbaijan and Kazakhstan initiate many regional and international projects," said Minister Shahbazov.

These positive trends will be further strengthened in the near future: eight contracts worth over $55 million were signed during the recent Kazakhstani trade mission in Baku. Astana has also submitted to Baku proposals for potential cooperation projects and a list of 100 goods worth $300 million to be sold in the Azerbaijani market. To optimise this work, state company Kazakhexport is ready to finance trade supplies on a long-term basis and an export credit agency will soon be established on the basis of this company, whose plans include the development of the Azerbaijani market. Azerbaijan's trade missions and trading houses are also aimed at expanding reverse shipments of goods to the Kazakh market.

President Ilham Aliyev announced plans to strengthen positive trends in trade and industrial cooperation during talks with President Kassym-Jomart Tokayev, where issues related to industrial cooperation, expansion of the range of export-import operations, including mutual placement of orders for industrial and agricultural products were actively discussed.

"Naturally, we have to complement each other's infrastructure and industrial capacities with what we can supply to each other, thus increasing trade turnover. Today we were quoted as saying that our mid-term goal is to reach $1 billion in trade turnover. I believe it is quite realistic," the Azerbaijani leader said.

Tokayev also expressed confidence that in the process of full disclosure of economic potential, the two countries will be able to bring the trade turnover up to $1 billion, for which there are considerable unused reserves in such areas as energy, transport, logistics, IT, agriculture, and industry.

"We have instructed the two governments to identify major projects for joint implementation. The huge potential for mutually beneficial cooperation exists in the field of agriculture: last year, the volume of bilateral trade in products of the agro-industrial complex tripled to $146 million, that is, more than a third of the total turnover falls on the agricultural sector," said Kazakh president.

According to him, a promising direction is also seen in strengthening cooperation in the field of IT technology: the two countries are implementing a project to lay a fiber-optic communication line along the Caspian Sea bed, cooperate in the space field, participate in joint projects for the digitalisation of public services.