CONNECTING THE TWO BRIDGES

If Azerbaijan is Europe’s gateway to the East then Ukraine should be a gateway of the East to Europe. The geographical location and a common history are pushing both countries for closer cooperation and collaboration on a range of issues. In principle, this cooperation has been ongoing through the entire period of independence of Azerbaijan and Ukraine, and the change in leadership does not affect the overall trend.

2014 was a period of stagnation between the two countries. This is understandable since Ukraine was at war with the separatists in Donbass and was suffering from recession and building a new system of government. As soon as the majority of domestic issues have been solved, it was time for Ukraine to revive the old ties. And the visit of the Ukrainian president Poroshenko to Azerbaijan has provided the best conditions to achieve this.

There have never been any problems in the relations of the two countries. "We discussed the issue of mutual defense of the sovereignty and territorial integrity of our countries. Ukraine supports Azerbaijan's position on the status of Nagorno-Karabakh and we are pleased to know that Azerbaijan has a clear stance on territorial integrity of Ukraine ", said Poroshenko in his joint a press statement with the Azerbaijani president Aliyev.

This issue is particularly important since Ukraine is one of the members of the UN Security Council: "Azerbaijan has been a non-permanent member of the UN Security Council, and Ukraine has always enjoyed its support. I can assure you that Ukraine will stick to the same position in 2016-2017, and Azerbaijan's position will also be supported", said Poroshenko.

Moreover, the political support for Ukraine is not limited to statements - for all these years Baku has actively purchased weapons from Ukraine, including the MiG-29, which are the main element of the Azerbaijani Air Force fleet.

The main background of recent visit is related to economic cooperation. The potential of foreign trade and investment cooperation between the two countries is huge but only a small fraction of this potential is being used. This can be proven by the volume of trade turnover between the two countries, which was recorded at $350 million in 2015 (with a decrease of 45% compared to 2014). This shows that the potential is much greater.

This was a main topic of discussions between the presidents in Baku, and the optimistic tone of statements signals the changes in this area in the near future.

"We can say that very serious instructions were given regarding all of the issues discussed. I am confident that this will allow our countries to become even closer, and the turnover will increase. The current level of the trade turnover cannot satisfy us or the Ukrainian side", said president Aliyev after the negotiations.

Transit alternative

Trade relations is not the only element of cooperation between Azerbaijan and Ukraine.

The geographical position of both countries stimulates the natural cooperation in the field of transit.

Azerbaijan is actively involved in transportation projects linking Russia to the Persian Gulf, China and Europe. It is implementing a series of projects including the railways routes the Baku-Tbilisi-Kars and the North-South. In addition, the main highways of the country have been completely renovated, a new port has been constructed in Alat, and the fleet of the Caspian Sea Shipping Company has been renovated during the recent years.

Thanks to this great potential, Ukraine can conduct active trading with Central Asian countries and China.

In particular, the Trans-Caspian transport route has provided an alternative access for Ukraine to the Asian markets.

During the talks in Baku, the Ukrainian delegation has invited Azerbaijan to participate in the establishment of transport corridor between the three major seas: Baltic Sea, Black Sea, and Caspian Sea.

"This large transport corridor, which synchronizes multiple routes, will be of great importance in strengthening economic and trade relations. We also plan to establish a single governing body for this corridor to make up an integrated freight transport development strategy in the region", said the Ukrainian Deputy Prime Minister Gennady Zubko at a meeting of the bilateral intergovernmental commission on economic cooperation, which took place before the visit of Poroshenko.

Baku has positively appreciated this initiative. "In general, I consider that the format of cooperation within the corridor connecting Caspian Sea, Black Sea, Mediterranean Sea, and Baltic Sea has a great potential. Certainly, the transport corridors play a significant role in this initiative. The first pilot project has already been implemented. Some loads from Ukraine were transported to Central Asian countries through the territory of Azerbaijan. Today we decided to review the tariffs in order to make this corridor more economically attractive since the tariff rates should be acceptable for shippers going in both directions, and even for the large volumes of goods", said president Aliyev after the discussions with president Poroshenko.

Azerbaijan has also offered the Ukrainian companies to take advantage of the railway route Baku-Tbilisi-Kars, which will be launched before the end of this year. "This road is the restoration of the Silk Road, and there are new opportunities for Ukrainian companies. At the same time, Azerbaijan together with partner countries has made efforts to establish the North-South corridor. In the future, the Ukrainians can use this road. In short, there are great opportunities in the transportation sector, and I am sure that the documents signed today will lead to good results", said Aliyev.

These two areas will enhance the ability of the Ukrainian companies to deliver goods not only to Central Asia and China but also to Iran, India, and Pakistan.

In addition, the creation of such a vast corridor will increase the significance of Ukraine as a transit country for the transportation of goods to Europe.

In his interview to Haqqin.az, the Ukrainian Minister of Infrastructure Vladimir Omelian has said that the talks in Baku allow for creating an integrated transport and low-tariff policy to strengthen the southern branch of the Silk Road in a rather short period.

"I have set a concrete objective to return to Ukraine a status of a transit country. And the new Silk Road connecting China with Ukraine and the European Union is only one of the directions in this scope of works. In addition to this route, we are working on the route connecting the EU with Ukraine, Black Sea, and the the Gulf countries, as well as a transport corridor through Baltic Sea, Black Sea, and Caspian Sea. Potentially, all of these areas are very interesting. They are technically feasible, and economically grounded. The only problem now is to make up a small team that is able to provide the required logistics", said the minister.

He also noted that Azerbaijan has a highly developed transport infrastructure, and Ukraine intends to use the experience of Baku in this area, and also hopes that Azerbaijani companies will take an active part in road construction.

Ukraine has also suggested the renewal and update of the fleet of Azerbaijani railways.

"This is a promising trend in the context of intensification of rail traffic after the completion of the 2016 railway line Baku-Tbilisi- Kars", said Gennady Zubko.

A second life of the pipeline

Another important topic of discussions in Baku was an agreement on the transportation of Azerbaijani oil through the Odessa-Brody pipeline to Europe.

"Azerbaijan is exporting large volumes of oil to the world markets, including Europe. At the same time, Azerbaijan is a transport hub connecting the countries located on the east coast of the Caspian Sea. I believe there is a potential to revive the Odessa-Brody project”, said president Aliyev.

This pipeline was launched in 2002 to deliver the Caspian oil to refineries in Ukraine but has been underestimated by the producers. As a result, the Russian companies has used it in the reverse mode for some time - to deliver the oil from Brody to Odessa, then pumping it into tankers. Currently the pipeline is idle.

In early July, Gennady Zubko mentioned the possibility to use the pipeline during in Baku during a meeting of the bilateral intergovernmental commission. "Ukraine is interested in Azerbaijani oil supplies to Ukrainian refineries and its transit through the territory of the country to the European countries. We have already created all the necessary technical conditions".

The pipeline connects to the main oil pipeline Druzhba in Brody, which will lead to the supply of Azerbaijani oil to the refineries of the Czech Republic, Slovakia, and Hungary.

In addition, the Odessa-Brody pipeline can be extended further to the Polish city of Plock with the possibility of entering the port of Gdansk on the Baltic Sea.

The agreement on possible oil supplies through the pipeline has also encouraged the shareholders of the project supporting the extension of the route to Plock.

Sergei Skripka, General Director of Sarmatia – a company founded to manage the construction of the pipeline to Plock, said that reaching an agreement between the presidents Aliyev and Poroshenko is an important and a positive signal for the development of Euro-Asian Oil Transport Corridor. "We very much hope that the heads of Poland, Georgia, and Lithuania will also join to presidents of Ukraine and Azerbaijan since this is the only format the project should be implemented", reports news agency Trend Azerbaijan.

"The experience tells us that after such serious statements and meetings we must make some concrete steps", added Skripka. By the way, the Azerbaijani SOCAR is one of Sarmatia’s major shareholders holding 25 per cent of the shares.

By the way, of SOCAR is also one of the biggest investors in Ukraine, having invested more than $ 200 million. To the development of a network of filling stations, including 60 stations in different regions of the country.

The aircraft business

Another promising area of cooperation between the two countries is the production of aircraft, which is atypical for Azerbaijani economy. "I think this is one of the most promising projects. Mr. President (Ilham Aliyev. Ed.) has also noted that Azerbaijan will buy An-178 aircraft. It also seems attractive to start building these aircraft in Azerbaijan under a joint venture. I believe this will also be an interesting project allowing opening to new markets", said president Poroshenko.

Although the contract for the supply of a new cargo aircraft An-178 was signed between the state enterprise "Antonov" and the Azerbaijani Silk Way Airlines in May 2015, the interesting details and perspectives were voiced only during Poroshenko’s visit to Baku.

Under the contract, Silk Way buys 10 An-178 aircraft, the first of which will arrive in 2018.

As mentioned by Deputy Prime Minister Zubko of Ukraine, "Antonov" has offered Azerbaijan setup of the aircraft assembly line. According to preliminary estimates, it is expected to assemble  10-12 Antonov aircraft in Azerbaijan per year. These aircraft will be then sold in regional markets. Thus, according to Zubko, there is a real demand for Antonov aircraft in Turkmenistan, Kazakhstan and some other countries.

This project is to lay the foundation of the aviation industry of Azerbaijan, which is one of the most advanced in the world, requiring the introduction of modern technology that is fully compatible with the strategy of the development of non-oil sector currently implemented by the Government.

In general, the president Poroshenko's visit to Baku and the following discussions is an important and serious political step at the current stage of bilateral ties. It is worth noting the substantive nature of the talks regarding the specific projects designed to expand the relations between Azerbaijan and Ukraine significantly.

And the most important result is an agreement to merge two bridges connecting Asia to Europe, namely Baku and Kiev, into a single transit corridor.