UK encourages British investment in Azerbaijan's reconstruction of Karabakh

The UK government is encouraging British businesses to get involved in the reconstruction of regions of Azerbaijan - chiefly outside Karabakh - that Baku recovered from Armenian control in recent years. 

The distinction between the traditionally Azerbaijani-populated areas surrounding the former Soviet autonomous region and the lands that have been emptied recently of their Armenian residents is not a clean one, however. And it's not a distinction being made by the Azerbaijani government, whose "Great Return" program envisages the settlement of the entirety of the reclaimed lands, according to Eurasianet. 

In early November, the British Embassy in Baku held an online event for businesses interested in investing in the rebuilding drive, which it called the "biggest commercial opportunity outside of oil and gas" in Azerbaijan. The event was held about six weeks after Azerbaijan's military takeover of Karabakh triggered the displacement of the territory’s population of about 100,000 Armenians.

The embassy told Eurasianet that it is "not currently involved in reconstruction efforts in the area recently recovered by Azerbaijan in September 2023," and that it supports the return of the Karabakh Armenians to their homes.  

The First Karabakh War of 1991-94 ended with de facto Armenian control over the former Soviet Republic of Azerbaijan's Nagorno-Karabakh Autonomous Oblast (NKAO), as well as seven surrounding regions of Azerbaijan. 

The NKAO's population, according to the last Soviet census in 1989, was 77 percent Armenian with a substantial Azerbaijani minority. The surrounding regions were almost entirely populated by Azerbaijanis. The first war resulted in the displacement of the entire Azerbaijani population – upwards of 620,000 people - from both the former NKAO and the surrounding regions. Azerbaijan retook the surrounding regions and several parts of the former NKAO in the 2020 Second Karabakh War, with the remaining rump territory left under de facto Armenian administration until Baku's September 2023 offensive. 

Webinar promotes British investment in reclaimed territories

The registration-only webinar on November 6 featured an embassy presentation referring to the UK as "a favored partner" in Azerbaijan's "National Rebuilding Project," indicating that British energy, architectural and demining companies have either secured contracts or are actively pursuing commercial projects. 

One UK embassy official told the 50 or so attendees present - mostly British executives - that the region "was just an empty land ready to be filled in from scratch." 

Indeed, the Azerbaijani regions around the former NKAO have been largely uninhabited since the Azerbaijani population fled in the early 1990s, though there were scattered attempts at Armenian settlement over the years. Azerbaijan’s resettlement process has been slow due in large part to the presence of as many as a million landmines. 

There was scant mention at the webinar of the Armenian refugee crisis from Karabakh after Azerbaijan's September offensive, which followed a nine-month blockade of the region. 

British Embassy Baku told Eurasianet in an emailed statement that "the UK will continue to assess where we can provide further support and assistance as reconstruction efforts continue," and that it is "assisting in regions including Tartar, Shusha, Fuzuli, Aghdam and Goranboy." 

The embassy said that it is "not currently involved" in reconstruction efforts in areas brought under Azerbaijan's control in September, but that the UK Government "will continue to keep our policy under review as the domestic and regional situation develops."

"During [UK] Minister for Europe Leo Docherty's visit to Baku on 22 November, the Minister underlined the UK's desire to see both Karabakhi Armenians and Azerbaijani IDPs return and a sustainable peace with Armenia," the embassy statement added.

Rebuilding Shusha

At a separate online event in early November, British Embassy Baku highlighted architectural opportunities for UK businesses in the reclaimed territories.  

In his remarks to participants, the UK's deputy country director in Baku, Eden Clayton, stressed the distinction between supporting reconstruction works in historically "Azerbaijani dominant" lands recovered in the 2020 war, and majority Armenian areas in Karabakh, like "Khankendi." Khankendi is the Azerbaijani name for the town known to Armenians as Stepanakert that served as the de facto Nagorno-Karabakh Republic's capital throughout its three-decade existence.

As the diplomat spoke, photos on-screen showed visits by British ambassador Fergus Auld in October to construction works in Jabrayil and UK-led demining efforts in Agdam (both in areas surrounding the former NKAO).

The UK official was joined by Adrian Griffiths, the owner of the British firm Chapman Taylor, which in 2021 won contracts in Azerbaijan to plan cities in the recovered territories, namely Jabrayil and Shusha.

The town of Shusha is a special case for the UK initiative. It was one of several areas inside the former NKAO that was retaken by Azerbaijan and emptied of its Armenian population in the 2020 war. Unlike most parts of the former NKAO, Shusha’s population was traditionally majority-Azerbaijani - 85 percent according to the latest available figure from 1979. 

Shusha - or Shushi as it is known in Armenian - holds symbolic significance for both nations.

In 2022, Azerbaijan criticized the United States and France (both co-chairs of the OSCE Minsk Group, a body created in the 1990s to mediate between Azerbaijan and Armenia) after their embassies refused an invitation to visit a reconstruction conference in Shusha. 

The challenge of doing business in Azerbaijan

Doing business in Azerbaijan is not without challenges, UK embassy officials acknowledged, flagging a "lack of transparency in the tender process, [with] concept designs generally approved by senior [Azerbaijani] officials." All the same, UK officials at the architectural event offered to introduce British businesses to Azerbaijani government representatives and firms, and to share opportunities from President Ilham Aliyev's special representative for the returned territories, with whom the embassy is "constantly in touch."

One of the embassy's presentation slides displayed a list of "key [Azerbaijani] market players . . . [who] have all shown willingness to work with British firms", including Pasha Construction, which is part of a holding company associated with Azerbaijan's ruling family.

During the talk, Chapman Taylor's owner Adrian Griffiths spoke about his firm's collaboration with Pasha Construction on shopping malls and hi-rise projects in the Azerbaijani capital. He also discussed ongoing work since 2017 on planning a historic quarter in Baku at the behest of Azerbaijan's State Committee for Urban Planning and Architecture (SCUPA).

Griffiths went on to say that Chapman Taylor, given its planning work in Baku, “got a call in November [2020] after the [second] war had just come to an end for the reclaimed regions and [SCUPA] wanted a new master plan for Shusha." Representatives of the firm were invited to go to Shusha in February 2021. "We spent a week with the Urban State Committee, and we agreed a contract to produce a masterplan."

Eurasianet previously reported on concerns over a lack of transparency and public consultation about Shusha's reconstruction, noting that no official tender for the revitalization of Shusha appeared to have been published online in the months following Azerbaijan’s recovery of the town.

Chapman Taylor did not respond to Eurasianet's request for comment. In January 2024, a new law will come into force in Azerbaijan envisaging greater transparency in the public procurement process.

UK support for demining

UK embassy officials also highlighted a "market challenge" for British firms - the fact that the broader Karabakh region remains covered with landmines. Landmines and other unexploded ordnance have killed and maimed hundreds of Azerbaijanis since the 2020 war’s conclusion, mainly in the reclaimed territories. They also pose a major obstacle to Azerbaijan's resettlement plans. In 2022, President Aliyev estimated that it will take 30 years and $25 billion to completely clear them.

UK firms operating in the region have also grappled with disruptions due to landmines. In March, local media reported that the site of energy giant BP's planned solar power plant in Jabrayil had been completely cleared of mines - almost two years after the company signed the contract with Azerbaijan's Energy Ministry.

“The UK government has provided over £1.5 million to support Mine Action in Azerbaijan to prevent injuries, save lives and support the safe return of families to their homes. [...] UK firms are actively supporting this process including in Jabrayil, Fuzuli and Agdam," British Embassy Baku said in its written statement to Eurasianet.