Diplomatic deep dive into Russian-Azerbaijani relations and Azerbaijan's global strategy Ahead of Putin's Baku visit

Russian President Vladimir Putin’s upcoming visit to Baku on August 18-19 has become a major topic of discussion among experts. The visit will focus on advancing Russian-Azerbaijani relations and addressing pressing international and regional issues. It is expected to result in a joint statement and the signing of various intergovernmental and other agreements.

In light of this visit, we will delve into the current state of Russian-Azerbaijani relations, emphasizing key areas of cooperation. Special attention will also be given to Azerbaijan’s foreign policy priorities amid global geopolitical changes.

Legal relations

Azerbaijan is a crucial strategic partner for Russia, with relations built on equality and good neighbourliness. Diplomatic ties were established on April 4, 1992, and are supported by over 170 treaties and agreements, including about 50 focusing on economic cooperation.

The core documents framing this partnership include the Treaty of Friendship, Cooperation and Mutual Security from July 3, 1997; the Declaration of Friendship and Strategic Partnership from July 3, 2008; and the Declaration of Allied Cooperation from February 22, 2022. These agreements form a comprehensive foundation for collaboration between the two nations.

In terms of practical cooperation, there is an intergovernmental agreement aimed at enhancing the development of state border checkpoints and transport infrastructure. Additionally, both countries have an agreement on the rational use and protection of the transboundary Samur River, ensuring its utilization is evenly divided.

The visa-free regime between Russia and Azerbaijan facilitates ease of travel for citizens of both countries. Moreover, Moscow and Baku have set out a roadmap for tourism development covering 2024-2026, with Russia ranking first in the number of tourists visiting Azerbaijan in 2023. This extensive legal and economic framework highlights the depth of the bilateral relationship and mutual interests.

Trade and investments

Trade and investments between Russia and Azerbaijan have demonstrated significant growth and depth. As reported by the State Customs Committee of Azerbaijan, Russia is the third-largest trade partner for the country, trailing only Italy and Türkiye. In 2023, trade volume between the two nations surged by 17.5% from the previous year, reaching $4.358 billion. Russia exports a range of goods to Azerbaijan, including food products, agricultural raw materials like wheat and grains, machinery, metals, equipment, vehicles, and wood. Conversely, Azerbaijan's exports to Russia primarily consist of mineral raw materials, textiles, cotton, and agricultural products.

In the first half of this year, trade turnover between the two countries saw a modest increase of 0.15%, totalling $2.168 billion. The investment landscape is equally robust, with over 1,400 companies involving Russian capital registered in Azerbaijan. Among these, nearly 300 are fully Russian-owned, while the rest operate as joint ventures. Major Russian entities such as Gazprom, Lukoil, VTB Bank, and Avtovaz are active in Azerbaijan, alongside projects focused on the production and assembly of Kamaz and Ural trucks, and a plant for Gazelle vehicle assembly.

In 2023, Russian investments in Azerbaijan's economy exceeded $8.7 billion, while Azerbaijan's investments in the Russian Federation totalled over $1 billion. Direct Russian investments in Azerbaijan's economy amounted to $295 million for the same year. This strong economic partnership underscores the growing and diverse nature of bilateral relations between Russia and Azerbaijan.

Oil and gas cooperation

Oil and gas cooperation between Azerbaijan and Russia has evolved significantly over the years. Since 1997, Azerbaijan has utilized the Baku-Novorossiysk oil pipeline, which transports oil through Russia to the port of Novorossiysk for European distribution. The pipeline's Russian segment is managed by Transneft. In October 2017, SOCAR (State Oil Company of Azerbaijan) and Transneft reached an agreement to export between 1.3 to 1.5 million tons of oil in 2018. However, the volume of oil transported varied in subsequent years: about 900,000 tons in 2019, 1.1 million tons in 2021, and 600,000 tons in 2022.

From 2000 to 2006, Azerbaijan imported gas from Russia, with annual purchases reaching up to 4.5 billion cubic meters. Due to rising fuel prices in 2007, Azerbaijan halted these imports and shifted to domestic gas production at the Shah Deniz field, which has reserves estimated at 1.3 trillion cubic meters. This shift enabled Azerbaijan to meet its domestic energy needs and begin exporting gas to Georgia, Türkiye, and Greece.

On June 29, 2009, Gazprom and SOCAR signed an agreement outlining the main terms for Azerbaijani natural gas sales, followed by a formal purchase and sale contract on October 14, 2009. Gas supplies to Russia commenced on January 1, 2010, but were discontinued in 2015 as Azerbaijan redirected its exports to Türkiye via the South Caucasus gas pipeline. On November 15, 2022, a new gas purchase and sale agreement was established, resulting in Gazprom delivering up to 1 billion cubic meters of gas to Azerbaijan until March 2023.

Additionally, Azerbaijan and Russia are collaborating on green energy initiatives. They have embarked on the North-South energy corridor project, which also involves Iran. Concrete work on this corridor is already in progress, reflecting the countries' commitment to advancing energy cooperation.

Priorities of Baku's foreign policy

Azerbaijan's foreign policy is characterized by its strategic approach to maintaining balanced relationships with major global powers, including the United States, China, the European Union, and Russia. This balanced stance is central to Azerbaijan's diplomatic strategy, as evidenced by its active membership in the Non-Aligned Movement (NAM) since 2011. Azerbaijan's leadership within NAM has been notable, particularly during its chairmanship from 2019 to 2022, which began with the Baku Summit in October 2019. The chairmanship was extended for an additional year, reflecting the positive impact of Azerbaijan's leadership on the organization.

During its tenure, Azerbaijan focused on strengthening the institutional framework of NAM. Initiatives included the establishment of the NAM Parliamentary Network in 2021, the NAM Youth Organization in 2022, and the proposed NAM Women's Platform in 2023. These efforts have enhanced Azerbaijan's international standing and the political influence of NAM.

In the current global climate, marked by tensions between the West and Russia over the war in Ukraine and increasing military conflicts in the Middle East, Azerbaijan's foreign policy remains dedicated to engaging with all international actors to safeguard regional stability. The country has consistently demonstrated a flexible and pragmatic approach to foreign relations.

A key example of Azerbaijan's role in facilitating international diplomacy is its hosting of significant meetings between NATO and Russian representatives. Notably, in February 2017, Baku served as the venue for a meeting between Russian General Staff Chief Valery Gerasimov and U.S. General Joseph Danford. Later that year, on September 7, Baku hosted a meeting between Gerasimov and NATO Military Committee Chairman Peter Pavel. In April 2018, Baku again hosted Gerasimov, this time for discussions with Curtis Scaparotti, NATO's commander-in-chief in Europe. These high-level meetings underscore the trust placed in Azerbaijan's diplomatic capabilities and its role as a neutral ground for critical negotiations.

Azerbaijan's stance on regional and international diplomacy is marked by its commitment to neutrality and security. Notably, there is no foreign military presence on Azerbaijani soil, reinforcing its independent position in global affairs. Furthermore, Azerbaijan is neither a member of the Collective Security Treaty Organization (CSTO) nor NATO, further underscoring its neutral status.

In addition to maintaining neutrality, Azerbaijan places a strong emphasis on countering regional and international terrorism. The primary objective of Azerbaijan's foreign policy, as articulated by President Aliyev, is to prevent the escalation of global powers' conflicts into its region. Throughout the Second Karabakh War, Azerbaijan faced attempts from various Western actors to drag the region into broader geopolitical confrontations. Despite these pressures, Azerbaijan remains committed to de-escalation and stability.

Baku's approach involves leveraging its political and diplomatic resources to reduce tensions in the South Caucasus and foster regional stability. The country's efforts are geared towards engaging constructively with all key global players who share an interest in maintaining peace in the South Caucasus. It is important to note that Azerbaijan's diplomatic interactions are conducted with a focus on stability and are not intended to target or undermine any third countries.