From modest trade to $1 billion investment: Azerbaijan, Hungary evolving strategic relationship Article by Modern Diplomacy

The Europe-based Modern Diplomacy has published an article by Serbian journalist Nikola Mikovic, focusing on the evolving relationship between Azerbaijan and Hungary. Caliber.Az offers its readers an analysis of the piece.

The article from Modern Diplomacy sheds light on the growing strategic partnership between Azerbaijan and Hungary, highlighting the key drivers behind their flourishing relationship.

The piece traces the roots of their partnership back to November 2014 when the two nations signed the Joint Declaration on the establishment of a strategic partnership. Since then, their economic ties have grown significantly, as Hungary's investment in Azerbaijan has surpassed $1 billion, positioning Hungary as the third-largest investor in Azerbaijan. This stands in stark contrast to their initial trade relations, which were modest, with a trade balance of approximately $69.3 million in 2014.

A crucial factor in the development of the partnership is the shared focus on energy cooperation. Hungarian Foreign Minister Peter Szijjarto's remark, “Those who once criticized us for our relations with Azerbaijan are now lining up to take a photo with the President of Azerbaijan,” highlights the increasing acceptance and normalization of Hungary’s relationship with Azerbaijan, despite past criticisms from the European Union.

Szijjarto’s involvement in key events such as the Baku Energy Week underlines the significance Hungary places on energy cooperation with Azerbaijan, especially in the context of Hungary's desire to diversify its energy sources and reduce reliance on other suppliers, particularly Russia.

A notable example of this cooperation is the 2023 agreement between Hungarian power company MVM Group and Azerbaijan, where MVM acquired a five per cent stake in Azerbaijan’s Shah Daniz gas field, one of the largest gas-condensate fields globally. This is a testament to the deepening energy relationship between the two nations.

Szijjarto’s statement, “From now on, Brussels has no say in how and from where we manage our energy supply, and we will not accept any guidelines, instructions, or even advice on this matter,” reflects Hungary's defiance against European Union pressure, underscoring its strategic autonomy in energy matters.

The article also emphasizes Hungary’s role in the Southern Gas Corridor, a significant initiative aimed at facilitating gas transportation from Azerbaijan to Europe, and Hungary’s involvement in the Green Energy Corridor project, which promises to deliver renewable energy from Azerbaijan’s Caspian Sea wind farms to the EU.

A key aspect of Hungary’s foreign policy is its active support for Azerbaijan in the Karabakh conflict, which further solidifies the political relationship between the two countries. Hungary’s pragmatic approach allows it to maintain favorable economic relations with Azerbaijan while also balancing its diplomatic ties with Armenia. This approach has facilitated Hungary’s participation in the reconstruction of Karabakh, a region fully reclaimed by Azerbaijan in 2023.

As the article concludes, energy is likely to remain the cornerstone of Azerbaijan-Hungary relations. However, their expanding political and economic ties, particularly in areas such as pharmaceuticals and the Organization of Turkic States, indicate a long-term and multidimensional partnership. The growing cooperation between Azerbaijan and Hungary signals a shift toward strengthening bilateral relations, not just in energy but also in political, economic, and regional domains.