Baku, Belgrade raise cooperation level Following Ilham Aliyev's visit to Serbia

Azerbaijan has been boosting economic cooperation with southern European states in recent years. The priority of the Balkan states for Baku is evident: the region is the basis of long-term export strategy within the framework of the Southern Gas Corridor (SGC) project and there are many potential customers of Azerbaijani electric energy. At the same time, Azerbaijan is strengthening business ties with Southern European countries in the non-oil economy, and Serbia is certainly one of them. The prospects for expanding Azerbaijani-Serbian business ties were discussed during the official visit of Azerbaijani President Ilham Aliyev to Belgrade on November 23.

The current visit of the Azerbaijani President to this country is of a symbolic nature, especially amid complex geopolitical processes that have put the countries of Europe in front of an unprecedented energy crisis. Under the Memorandum on Strategic Energy Partnership signed between Azerbaijan and the European Union in July 2022, Azerbaijan's natural gas exports are set to double by the end of 2027, approximately to 20 billion cubic meters, which will allow covering more countries with supplies of the "blue fuel". Serbia will soon be among the new importers to whom Azerbaijani gas will be delivered in the near future. To realise these plans, the Nis-Dimitrovgrad-Bulgaria Interconnector Gas Pipeline (IBS) is being built, through which Azerbaijani gas will be exported to Serbia via the Bulgarian gas transmission system. The project is being implemented at an accelerated pace, and as European Commission President Ursula von der Leyen recently pointed out, the construction of the IBS is fully supported by the EU. So the work is expected to be completed next year. It is noteworthy that with the commissioning of the Serbian-Bulgarian interconnector there will be a technical opportunity to export Azerbaijani gas to Hungary as well.

"Azerbaijan's rich gas resources today play an important role in the energy security of many countries, and our role in this area will gradually grow. We intend to deepen cooperation in this and all other areas first of all with friendly countries", Azerbaijani President Ilham Aliyev said at a joint press conference with Serbian President Aleksandar Vucic in Belgrade. The head of state emphasised that Belgrade and Baku are strategic partners, and today they are forming an agenda for cooperation for years to come. And along with the energy track, including the supply of Azerbaijani gas and electricity, cooperation with friendly Serbia also envisages expanding partnerships in the defence sector, non-oil economy, tourism, and other areas.

"We discussed many important issues, talked about the lack of fertilizers, the work of petrochemical enterprises, considered a number of other areas, including military-technical cooperation, reached agreements in the agricultural and social sphere, and expanded ties between the ministries of the two countries. In order to discuss several issues of utmost importance to us, I am planning to pay an unofficial visit to Azerbaijan in the coming 20 days. To deepen the strategic partnership, the foundation of which has been laid today by specific agreements and practical steps, I will be accompanied by several ministers of the Government of Serbia", President of Serbia Alexander Vucic said.

One of the most important outcomes of the visit was the signing of a number of documents in various areas, including "Memorandum of Understanding between the Strategic Partnership Council of Azerbaijan and Serbia"; "Memorandum of Understanding between the Small and Medium Enterprise Development Agency of Azerbaijan and the Serbian Development Agency"; "Memorandum of Understanding between the Export and Investment Promotion Agency (AZPROMO) and the Serbian Chamber of Commerce and Industry", and approved the intergovernmental agreement on social security and several others.

Judging from the results of the Belgrade talks the two friendly countries, in addition to strengthening cooperation in the oil and gas sector, intend to strengthen partnerships in the energy sector. According to Serbian President Aleksandar Vucic, they are talking about the project of electric cable at the bottom of the Black Sea, which will connect Azerbaijan, Georgia, Romania, and Hungary. "We have discussed the prospects of participation of our European partners in this project and possibilities to connect our distribution network to the networks of Romania and Hungary. As a result, this project will ensure our energy security and provide an opportunity to guarantee a sustainable supply of electricity in the future. We are grateful for this to our Azerbaijani friends, especially President Ilham Aliyev," the Serbian head of state stressed.

It is worth mentioning that in September the State Energy Company of Serbia negotiated the purchase of 2600 MWh of electricity from Azerbaijan, and in the framework of this endeavor, negotiations are held with Ankara on the transit/receipt of this electricity via the Turkish energy system.

Although energy cooperation is at the core of the Azerbaijani-Serbian business agenda, the two friendly states intend to intensify trade relations as well as expand cooperation in various non-oil sectors. The existence of such opportunities has been reaffirmed at the Azerbaijani-Serbian business forum, held last Tuesday in Belgrade on the eve of the talks between the heads of state. The participants in the business meeting confirmed their readiness to boost trade and expand bilateral ties in potentially attractive areas - agriculture, industry, construction, energy, and information technology. The business forum also presented the potential of Azerbaijan's industrial clusters and free economic zones and outlined the prospects for attracting investment and establishing joint ventures in the non-resource sector.

In order to diversify economic relations, Baku and Belgrade signed a declaration on strategic partnership back in 2013, and since 2018 have started jointly implementing an action plan to expand economic cooperation. These steps are yielding tangible results and despite the fact that the trade turnover between the two states is not significant, it has shown positive dynamics in the last two years. For example, last year the bilateral trade turnover exceeded $48 million, having doubled compared to 2020, and according to the Serbian side estimates it will pass the milestone mark of $50 million by the end of this year.

Azerbaijani President Ilham Aliyev believes that Baku and Belgrade need to increase the volume of mutual trade: "Despite the growth of trade turnover in the current year, I believe there is room to work on this, and we hope that after the visit we will see a new dynamic in our business cooperation.

Currently, the supply of Serbian products - consumer goods, foodstuffs, medicine, seeds, and agricultural machinery - to the Azerbaijani market occupies the main share in mutual trade. However, this trade imbalance may radically change in the coming years once Serbia is connected to the South Caucasus. So the two countries plan to increase their trade turnover to a hundred million dollars and more, with a significant trade surplus in this case for Azerbaijan.

The Belgrade talks have once again confirmed that cooperation between Baku and Belgrade is built on a solid foundation of mutual respect and mutually beneficial cooperation between the two countries, including within international organizations. The countries have similar views on the primacy of international law on the inviolability of borders, territorial integrity, and sovereignty of states, as well as the unacceptability of separatism. And there is no doubt that a firm political basis will facilitate the consolidation of economic ties between the two countries on a long-term basis.