Azerbaijan-European Union Relations: Successes and New Perspectives

Azerbaijan-European Union Relations: Successes and New Perspectives

Dr. Vugar Bayramov, Member of the Parliament of Azerbaijan

Brussels as the de facto capital, of the European Union have a long history of hosting a number of partnership summits. The Heads of State of the Republic of Azerbaijan, the Republic of Armenia, Georgia, the Republic of Moldova and Ukraine, the representatives of the European Union and the Heads of State or Government of its Member States including the heads of the EU institutions contributed to the event with their participation in Brussels on 15 December 2021 in the Eastern Partnership Summit, in which President of the Republic of Azerbaijan Ilham Aliyev had a joint meeting with President of the European Council Charles Michel and Prime Minister of the Republic of Armenia Nikol Pashinyan in Brussels dealing with a number of important issues in a constructive atmosphere among which demining of the liberated territories of Azerbaijan, opening communication and transport lines, ensuring customs and border control, delimitation of cross-country border through establishing a temporary working group was brough up to discussions.

Among the issues, new evolving situation in South Caucasus was on top agenda. President of the European Council Charles Michel assured both leaders and strongly emphasized the EU’s commitment to work closely with Azerbaijan and Armenia in bilateral peace-building process in South-Caucasus creating cooperation and an atmosphere of trust with the aim towards sustainable stability in the region ultimately underpinned by a comprehensive peace agreement. The common aim of all three leaders is to build a region that is secure, stable and prosperous for the benefit of all people living in.

President Michel commended steps taken by both sides to ensure the de-escalation of tensions following recent clashes along the border zone. Moreover, President Michel stated the resolving of the crucially important key humanitarian issues. He touched upon the issues of detainees and handover of mine-maps by Armenia. He welcomed the release of ten detainees by Azerbaijan calling for full and speedy resolution of all humanitarian issues while recognizing humanitarian issues in both sides promote confidence and create an environment towards peace and reconciliation. The EU’s future role in de-mining efforts, confidence-building measures, expert advice, reconstruction and rehabilitation was specially indicated.

The leaders discussed key existing and prospective trade and economic partnerships between the EU and Azerbaijan. The EU’s intention in launching an economic advisory platform to build confidence, contribute to peaceful coexistence and build up economic cooperation in the region was also discussed. Delegations of the both countries agreed that in the context of  the negotiations on the delimitation and demarcation of the state border tangible steps need to be taken to reduce tensions to ensure an appropriate environment for talks, where ensuring the distancing the forces is an essential element of peace-building process. In addition, restoring the communications between Azerbaijan and Armenia covering the region more broadly while fully respecting the sovereignty of all three countries was emphasized.

Azerbaijan and the European Union are developing ties on an equal footing. By implementing an independent policy based on national interests, Azerbaijan successfully cooperates with all international countries, including the European Union. Priorities of cooperation by 2024 between European Union and Azerbaijan have already been approved. According to the Ministry of Foreign Affairs of Azerbaijan, new bilateral agreement between 2 parties is expected to be signed in 2022 for more cooperation and better life.

 Looking back to the history, the Republic of Azerbaijan and the European Union have developed positive relationships through the years of independence and have become more closely linked since 1991. The Republic of Azerbaijan is currently a part of the European Neighborhood Policy, Eastern Partnership Program, and the Council of Europe. The EU is the largest foreign donor and plays a significant role in the investment environment of Azerbaijan. European Union is Azerbaijan’s first trading partner and biggest export and import market. The bilateral relations between both parties are based on the EU-Azerbaijan Partnership and Cooperation Agreement which came into force in 1999 which envisages the approximation of Azerbaijan’s legislation and procedures with the EU as well as trade-related laws and standards. Cooperation between the EU and Azerbaijan is also guided by the joint Partnership Priorities in place since 2018. The EU is a key reform partner in the country that brings best practices to a wide range of sectors. Azerbaijan is one of the main beneficiaries of the Twinning instrument, profiting from peer-to-peer training and exchange with the EU Member States.

 Bilateral economic relations are regulated by the Partnership and Cooperation Agreement. Azerbaijan is a significant energy partner of the European Union supplying the continent with Caspian energy sources through the Southern Gas Corridor. Around 5% of the EU’s oil demand is provided by Azerbaijan. Over the course of cooperation, mutual economic relations firstly and mainly developed in the energy field that is based on the Memorandum of Understanding on a Strategic Partnership between the Republic of Azerbaijan and the European Union in the field of energy signed in 2006. President of the European Commission and the President of Azerbaijan signed a joint declaration on the Southern Gas Corridor in January 2011 that is an important diversification tool for the energy security of Europe and an opportunity to expand revenue sources for Azerbaijan.

The substantial development of economic and political conditions in Azerbaijan brings new opportunities to widen the scope of cooperation beyond the energy sector putting more emphasis on the non-oil economy. The key sectors of tourism, entrepreneurship, and education are three areas where the EU and Azerbaijan have mutually beneficial relations with the need for additional reforms. Deepening cooperation in the tourism, education and entrepreneurship sectors will connect expertise, individuals, civil society and of course governments linking both parties closer in multiple dimensions. The tourism industry is an important area of focus for mutual cooperation between the EU and Azerbaijan which is set to be a key economic driver in Azerbaijan and one of the sectors that promote investment and development. This sector can act as a bridge between people in Azerbaijan and Europe. Its development is enshrined in the executive order by the President passed on the diversification of the national economy. Among the most notable events contributing to the promotion of tourism, the signing of a Visa Facilitation Agreement between the EU and Azerbaijan, creation of the Asan Visa Portal are considered. For the sector’s further development, the liberalization of the visa regime as well as increasing the number of low-cost air flights would be essential steps contributing to economic growth and political relations between the EU and Azerbaijan. On the other hand, the parties should continue negotiations on a ‘common aviation area’ agreement that make it simpler to organize flights between the EU member states and Azerbaijan and to deepen commercial and economic ties. Additionally, it will increase the number of commercial flights and reduce the cost of the tickets.

 The development of entrepreneurship (Small and Medium Enterprises) is one of the main engines of economic growth in all countries as it can lead to both economic and social development. Entrepreneurship is one of the sectors to which the EU intends to provide support. Rural development is one of the top priorities for Azerbaijan, and it has direct links with entrepreneurship as the central force of economic growth. In 2016 the EU announced a grant titled ‘Support to Community Based Initiatives for Market-Driven Income and Employment Generation in Rural Areas in Azerbaijan’ to foster economic regeneration and job creation in rural areas with an overall budget of EUR 4.3 million. Micro-finance can have a very important role in economic development being one of the ways to help people to start their own business. However, there is still no EU-Azerbaijan cooperation in the provision of microfinance services in the war-affected regions of Azerbaijan. On the other hand, cooperation in the field of entrepreneurship is necessary to build awareness and inspiration among young people about the entrepreneurial environment. Creating networks are important in increasing the education level and business skills among young people. The exchange of expertise across several programs will support the deepening of integration between the EU and Azerbaijan, with clear benefits for both partners.

Collaboration in the field of Education with Azerbaijan is considered a top priority for the EU. The EU has strong links with the ministry of education in Azerbaijan. In 2014, as part of the EU support program, the EU allocated EUR 19 million for improving the education system and employability in Azerbaijan. A further example of cooperation in the education sector is the European Commission‘s ‘eTwinning’ network. The EU and Azerbaijan work through Erasmus+, supporting exchanges between students from EU and Azerbaijani universities. The challenge for EU-Azerbaijan cooperation in education is that there is no single education system within the EU that can be applied in Azerbaijan as each member state has its own education standards. In partnership with the EU, Vocational education and training (VET) is a further area of cooperation. Double degree programs between the Universities of Azerbaijan and the EU should be increased, and universities should implement more joint educational and R&D programs. It should be noted that the EU and Azerbaijan do not have any specific structure for cooperation in the education sector. However, they work through Erasmus+ supporting exchanges between students from the EU and Azerbaijani universities

Agriculture is another favorable sector for Azerbaijan to cooperate with European Union. EU supports the development of a draft law on agricultural advisory services in Azerbaijan. The European Union Delegation to the Republic of Azerbaijan has informed that 4 grant contracts in the area of agriculture with a total value of about 2 million Euros. On the other hand, there is a need to foster international cooperation to promote advances in the field of medicine.

With theliberation of the Karabakh territory from occupation, Azerbaijan entered a  new phase creating new realities that present new opportunities in the direction of the development of conventional as well as non-conventional sectors of the economy as well as provide numerous spheres of investment and cooperation between European Union and Azerbaijan. For restoration and rebuilding of the region, 2.2 billion manats was immediately allocated from the state budget and a new economic development model was prepared, which enshrined tax incentives, creation of industrial parks, attracting foreign investment, development of the innovative sphere of the economy for the benefit of entrepreneurs and citizens. Moreover, agriculture and tourism are considered priority sectors to develop in the region. Availability of productive lands and rich water resources creates favorable conditions for the development of agriculture, and a suitable climate and geographical position creates a basis for the development and investment in tourism. Investment is a key element for the development of the potential non-oil sector and heavy industry in these newly liberated regions of Azerbaijan, and to achieve import substitution. Joint collaboration and investments from the European Union to the development of high-tech innovative sectors, creation of smart cities and modern infrastructure in accordance with international standards, use of renewable energy sources, attracting foreign investment and development of human capital, which are envisaged in the new economic development model thanks to the available potential, could be new steps of partnership process between both parties. A Particular area for potential cooperation between the EU and Azerbaijan is support for the regions of Azerbaijan that have suffered from the Nagorno-Karabakh war.

       To sum up, the EU supports Azerbaijan’s economic diversification agenda in many ways and has always been an important ally for Azerbaijan. The union supports Azerbaijan with concrete investments to help post-pandemic recovery and improve the lives of Azerbaijani citizens. Together, both parties work to promote energy security, expand bilateral trade and combat transnational threats. Expanding the scope of cooperation will have positive implications for the process of fostering EU-Azerbaijan integration beyond energy and investment in the Nagorno-Karabakh region has the potential to further develop the partnership in a variety of sectors.