Baku-Bishkek: Strategic partnership based on trade, logistics Review by Caliber.Az

The member countries of the Organisation of Turkic States (OTS) are consistently forming a strategic alliance based on joint energy and transport projects. Azerbaijan's long-standing integration with the leading economies of Central Asia - Kazakhstan, Uzbekistan and Turkmenistan - is quite indicative in this regard. And recently, another member of the OTS, Kyrgyzstan, has been increasingly involved in common trade and transport projects.

This year Baku and Bishkek have significantly increased trade turnover and are expanding cooperation in various spheres. The 7th International Economic Forum "Issyk-Kul 2023,” which was attended by Azerbaijani Deputy Prime Minister Ali Ahmedov, was a landmark step in terms of Turkic business cooperation.

In recent years, Türkiye, Azerbaijan and the brotherly Turkic-speaking states in Central Asia (CA) have created new platforms for expanding trade and freight transport, with non-oil trade increasing for the second year alongside the traditional transit of energy and other raw materials. Besides, the cooperation in investment among the OTS countries is also strengthening, with the recent establishment of the Turkic Investment Fund (TYF).

The partner countries are also making joint efforts to minimise external risks: food security is being strengthened to combat imported inflation, transport tariffs are being unified, customs and transport legislation is being harmonised, and cooperation in the telecommunications and IT sectors is expanding.

Given the geopolitical changes caused by the war in Ukraine in the last year and a half, the need for trade and transport cooperation between the OTS states is especially relevant today. Against the backdrop of the pressure that the sanctions cause on the Northern Corridor and the breakdown of traditional logistics between East and West, Baku and Astana, together with other states of the Caspian region, are deepening their cooperation within the framework of the Europe-Caucasus-Asia transport route (TRACECA) and the Trans-Caspian International Transport Route (TITR).

Azerbaijan and Turkmenistan are very active in this respect, developing other directions of the "Middle Corridor", including the LapisLazuli route. Landlocked Uzbekistan is very actively involved in all of these endeavours, and recently Kyrgyzstan has also started to show interest in the OTS’ integration projects.

All these issues were discussed in Kyrgyzstan’s Cholpon-Ata city, where the seventh International Economic Forum "Issyk-Kul 2023" was held.

"Located at the crossroads between Europe and Asia, Azerbaijan, together with its partners in the region, is involved in a number of projects aimed at developing transport communications and is an initiator of increasing regional and continental trade. Our country is an important link in a number of projects, such as the ‘North-South’ and ‘Middle Corridor’ international transport corridors including such a component as the Baku-Tbilisi-Kars [BTC] railway. And recently the relevance of these transit routes connecting Central Asia with the South Caucasus has significantly increased," Azerbaijani Deputy Prime Minister Ali Ahmedov said, speaking at the forum.

He stressed that Azerbaijan's strategy to revive the "Great Silk Road" and develop the "Middle Corridor" is largely compatible with the implementation of China's "One Belt, One Road" project, and this vector is fully supported in Baku.

"Against this positive background, we observe annual growth of cargo traffic through the territory of Azerbaijan on various routes: by the end of 2022, the increase was 75 per cent, and in the current and subsequent years a rapid growth of transit transhipment of cargo through our territory is expected," the deputy prime minister said.

Since last year, Bishkek has also set itself the goal of diversifying transport communications: with the expected financial support from China, the construction of the China-Kyrgyzstan-Uzbekistan railway is planned. Moreover, within the framework of this and other projects it is planned to expand railway infrastructure for transshipment of cargoes to the Caspian Sea water area through the ports of Kazakhstan.

In particular, the Kyrgyz Temir Jolu railway operator is involved in the implementation of a project to create a multimodal trade corridor designed primarily for container trains. The new corridor will connect China, Kyrgyzstan, Uzbekistan, Turkmenistan, Azerbaijan, Türkiye and Georgia by railway with access to Europe.

In this regard, Kyrgyzstan considers Azerbaijan's transport and logistics capabilities as an optimal option for expanding trade, including transit trade, as evidenced by the positive developments in Azerbaijani-Kyrgyz business contacts since 2022. It should be noted that a few days before the Issyk-Kul 2023 Economic Forum, the fifth meeting of the Joint Intergovernmental Commission on Economic and Humanitarian Cooperation between Azerbaijan and Kyrgyzstan was held in Cholpon-Ata.

During the meeting, it was noted that by the end of 2022, cargo traffic between the two states increased almost 1.7 times, and transit transhipment of goods doubled. And these positive trends continued in the first half of this year: according to Azerbaijan’s State Customs Committee, trade turnover between Azerbaijan and Kyrgyzstan totalled $17.038 million, which is four times higher than in the first half of last year ($4.228 million).

Moreover, Azerbaijani exports clearly dominated the mutual trade: during the reporting period, the country exported products worth $14.882 million, which is 15 times more than the indicators of the corresponding period last year.

The high trade dynamics are certainly a good sign, but both Baku and Bishkek believe that the current figures do not correspond to the level of economic development and potential of the two countries. That is why the participants of the intergovernmental commission considered a number of steps to expand trade and economic cooperation, including the importance of accelerating the development and signing of a comprehensive "Programme for the development of bilateral cooperation for 2023-2028".

Other measures were also planned to expand business cooperation between the two countries. For example, on July 26, business delegations from Kyrgyzstan and Azerbaijan met near Lake Issyk-Kul, and entrepreneurs from both countries discussed further steps for cooperation and prospective agreements. During the business forum, several prospective contracts were signed in the field of agriculture, on the supply of meat and meat products. They also discussed joint projects in the field of logistics and prospects for partnership between the stock exchanges of the two countries.

"I am confident that the forum will be a promising step for the emerging fruitful cooperation between the business communities of our states. Kyrgyzstan is interested in attracting investments from Azerbaijan and is ready to create all necessary conditions for successful joint activities in this area," Kyrgyz Cabinet of Ministers Deputy Chairman Bakyt Torobayev said during the forum.

He stressed that the direct air service recently established between Bishkek and Baku will have a positive impact on the development of tourism and increase the volume of trade turnover between the two countries.
Another promising undertaking in the field of transport is the coordinated work on the digitalisation of the Middle Corridor and joint efforts to increase the commercial attractiveness of this direction to attract additional cargo.

The two sides also discussed the prospects of developing joint projects in renewable energy, agriculture, tourism, etc.