HISTORIC SUMMIT

The first ever trilateral summit of the Russian, Azerbaijani and Iranian leaders was truly historic. It is no exaggeration to say that the Baku summit, in fact, set the stage for a new format of regional cooperation. As noted by the Azerbaijani president, Ilham Aliyev, this new format has great potential, and it will serve to ensure peace, security and stability. Mr. Aliyev has also stressed that good neighborly relations and mutual respect, goodwill and sincere aspirations make it possible to deepen cooperation even in an unstable region full of crises and conflicts. The observers hope that the new trilateral dialogue will, likely and most importantly, help promoting the settlement of the Karabakh problem.

A number of factors has contributed to making this meeting possible including the removal of international sanctions against Iran, the revival of Russian-Turkish relations, the surmounting of economic recession in Russia, etc. But most importantly, and this was acknowledged both by Tehran and Moscow, it was Baku which played a key role as a mediator and without which such a high-level initiative would have not been realized. A wide range of issues has been discussed during the trilateral meeting, as well as bilateral discussions including but not limited to the cooperation on transport and communications, the collaboration in financial, banking and insurance sectors, free trade and respective reduction of trade tariffs, investments, new production facilities, security, the fight against terrorism, the status of the Caspian Sea. The parties have reached, in varying degrees, an agreement on all subjects. It is, therefore, no coincidence that the Baku summit has drawn attention of the world media being the trending topic of their analytical reviews. And we believe that the perspective transformation of the region as a result of these agreements will draw even more attention.

Economy: Transportation and Energy

The Iranian President Hassan Rouhani arrived to Azerbaijan on the day before the appointed date of the summit. In recent years, the Azerbaijani-Iranian cooperation has invariably gained momentum. Six months ago, in February, Ilham Aliyev made an official visit to Tehran. Thanks to the lifting of sanctions against Iran, as well as the structural economic reforms and the export promotion in Azerbaijan, it is expected that the volume of medium term bilateral trade will increase to $1 billion. Mr. Rouhani has emphasized that Iran hopes to establish free-trade relations between the two countries.

"Iran is negotiating with the Eurasian Economic Union (EEU) on custom tariffs, and is interested to reach similar agreements with Azerbaijan as well", said the Iranian president.

The cooperation with Iran is improving in many areas. The automobile plant of "Iran Khodro" with a production capacity of 10 thousand cars per year was established in the city of Neftchala. Also, it is planned to launch a medical factory in Azerbaijan, which will be based on the Iranian technology. Iran is interested in pumping its natural gas into the underground gas storage facilities in Azerbaijan, as well as in the export of natural gas to Europe. Both countries are negotiating on the prospects for developing oil and gas fields in the Caspian Sea. The development of tourism sector, which has a number of essential prerequisites including the number of flights, the simplification of the customs procedures, and the abolition of the visa regime, was a particular topic of discussions.

As for the bilateral Russian-Azerbaijani relations, the Russian delegation headed by President Vladimir Putin included the prominent state figures such as the Deputy Prime Minister Dmitry Rogozin, Foreign Minister Sergei Lavrov, Minister of Energy Alexander Novak, Minister of Transport Maxim Sokolov, Minister of Economy Alexei Ulyukayev, Vice-President of the Russian Railways Alexander Misharin, and CEO of Rosneft Igor Sechin. According to Mr. Putin, Azerbaijan is the fifth largest foreign trade partner of Moscow in the post-Soviet area. However, there is still much room for increasing the trade turnover - from transport and transit to the military-technical cooperation. During his visit to Baku, Dmitry Rogozin has publicly announced a plan to open an aircraft assembly plant and a helicopter maintenance center in Azerbaijan. Also, it is planned to launch in the nearest future a joint Azerbaijani-Russian venture for the production of drugs. At the same time, Azerbaijani investments in the Russian economy amount to millions of dollars.

Economy was the cornerstone of discussions topping political and security issues during the meeting of presidents of Azerbaijan, Iran, and Russia in Baku. The parties have focused on the rail transport of goods under the international transport project "North-South", as well as other infrastructure projects.

The transport corridor "North-South" is intended to connect the Northern Europe to South-East Asia for the transportation of goods primarily from India, Iran, the Persian Gulf to Russia and Europe. This route is going to be an alternative to the Suez Canal, since it would reduce the time and, therefore, the cost of transport by more than twice. During the first phase of the project, it is planned to use this corridor for the transportation of 5 million tons of cargo annually. This figure should reach more than 10 million tons in the future. The idea is not new since the first proposals on this transport corridor were announced back in the 1990s. Russia, Iran, and India were determined to take concrete steps starting in the early 2000s but nothing significant has been done so far. Now there are ideal geo-economic conditions to implement this idea.

The TC "North-South" is a project of great importance for the member states, underlined President Aliyev. Azerbaijan becomes an important transit transport hub with an access to the Gulf countries and Asia. Meanwhile, Russia will get the same benefits plus markets like Iran interested in Russian grain crop. In return, Russia may import the Iranian vegetables, fruits, and other products such as commercial cargo, as well as petroleum products and crude oil. As for Iran, it is much more profitable to get the goods just from the north where most of the Iranian population lives. It is worth noting that the Deputy Minister of Foreign Affairs of India Sujata Mehta visited Baku in late July, just before the Baku summit, and also discussed the "North-South" transport corridor. Tehran and Delhi had had separate negotiations on this subject.

The primary objective of the project is to connect the railways of Azerbaijan and Iran. This implies the completion of the 172-km line between Rasht (Iran) and Astara (Azerbaijan), which is the missing element of the smooth communication line among the three neighboring states of Iran, Azerbaijan, and Russia. This complex infrastructure project with lots of tunnels, bridges, and mountainous areas is funded fifty-fifty by Iran and Azerbaijan. One of the most important aspects of this project is to connect Astara of Iran and Astara of Azerbaijan with a railway line. The groundbreaking ceremony of the 82.5m double-lane railway bridge across the Astarachai River was held in April 2016.

In addition, one of the significant projects jointly implemented by all three countries is the interconnection of power supply systems of Azerbaijan, Iran, and Russia, as well as the setting of a network of energy corridors for piping the natural gas from Russia and other Caspian countries. The "North-South" corridor connecting Iran, Azerbaijan, and Russia may well become a basis for the connection of European and Asian power systems. Initially it will be used to export electrical power from Russia to Azerbaijan and further down to Iran. As a result, Baku is strengthening its position as an exporting and transiting country.

The Karabakh conflict: Armenia is left out, as always…

The stability of the region is a must for implementing all of these ambitious but very real and sought-after projects. Therefore, the parties of the Baku summit have emphasized the importance of establishing regional security and the efforts on countering the terrorism. The main danger is, however, the Karabakh conflict.

It is clear that the resolution of the conflict was the hottest topic of discussions along with the economic issues. As highlighted in the Baku Declaration, "the unresolved conflicts in the region are a major obstacle to regional cooperation", and "the importance of early settlement through negotiations on the basis of principles and norms of international law, as well as the decisions and documents adopted within the framework of this process". This wording is identical with the position of Azerbaijan, which insists on changing the status quo. And now only the real steps in this direction are required.

There are no specific decisions yet but that does not mean the lack of progress in this direction. Given the external background of negotiations, there is no doubt that an intensive work is underway. President Rouhani has particularly underlined in Baku that Iran respects the territorial integrity of Azerbaijan and has always made efforts to maintain it. President Putin has said that "reaching the compromise implies finding an optimal balance between the principles of territorial integrity and the right of peoples to self-determination". "We need an agreement that would make anyone feel neither victorious nor defeated, where the concessions would be mutually beneficial and clear for the public opinion of both Azerbaijan and Armenia. And Russia, as well as some other countries of the Minsk Group, would act as a guarantor", said the Russian president.

Many observers have noticed that the President of Russia, to which all now seem to turn in great expectation again, had tried to evade the question, not answering it directly. It is still unclear what practical steps can be followed to solve the Karabakh problem. There were a lot of theories and assumptions during the years of negotiations. However, it is clear more than ever that any further steps must start with the de-occupation of Azerbaijani territories, plain and simple! It is unknown if Mr. Putin has discussed the same issue with his Armenian colleague Serzh Sargsyan who arrived in Moscow the day after the end of the Baku Summit.

Mr. Sargsyan has noted Yerevan had closely followed the intensive contacts of the Russian president in Baku and later during the meeting with his Turkish counterpart Recep Tayyip Erdogan. Incidentally, many Armenians did not like the recent movements and the talks of Mr. Putin. The local media and the public have sarcastically noted Putin’s visit to Ilham Aliyev’s house for a tea party while Sargsyan had been summoned to Moscow, although the head of the Kremlin could visit Yerevan after Baku to respect the balance. But Putin, for whatever reasons, had not. It is difficult to judge if there was a hidden meaning in the route of the Russian president. But this is even unnecessary if one simply checks the obvious facts.

Given the new transport project, Armenia is left out of this regional initiative due to its continued aggressive policy. Yerevan has previously showed an interest in the North-South route. In 2009, North-South Railway Construction Directorate was founded Armenia, which was responsible for the construction and funding the construction of the communication line between Armenia and Iran. But this initiative had failed - the length of line from Armenia to Iran was twice the length of the route between Azerbaijan and Iran. Furthermore, the Armenian proposal was technically sophisticated and more expensive. The expected financial support of Yerevan was also very doubtful. In addition, geographically, the Iran-Armenia interconnector leads nowhere since it cannot connect Iran to Russia. All of these are pure facts and Armenia, which is cut off from the rest of the world communication-wise, has no political will to change the situation. Sadly, the aggressive occupation policy of Armenia always outweighs the common sense. As a result, it turns out that only a few countries are interested to see Armenia as their economic partner and a reliable transit country. According to Armenian media, the key topics of Putin’s agenda in Baku were major international projects and ambitious contracts, while during the meeting with his Armenian counterpart Sargsyan just two days later, the head of the Kremlin has mentioned the growth in the supply of agricultural products from Armenia only. Even though these events occurred upon deteriorating relations with Turkey, which, apparently, is already an event of the past.

As far as the Karabakh problem is concerned, following the negotiations with Mr. Sargsyan, the Russian president has again emphasized the role of economic factors stating that the resolution of the conflict would be good for Armenia since this would allow for “removing all infrastructural and economic restrictions in order to develop its economy, improve life for its people". Mr. Putin has specifically singled out the economic power of Azerbaijan answering the questions of Armenians concerned with the "continued military support of Russia to Baku". According to Putin, "a country such as Azerbaijan, an oil-producing country of almost 10 million people with a fast-growing economy, as well as sufficiently large gold and currency reserves can, of course, buy weapons anywhere it likes". No comment.

The conductor of positive changes

Most observers have noted the great potential of the Baku summit. It is worth noting that the three hydrocarbon powers - Russia, Azerbaijan, Iran – have discussed not the "black gold" but, instead, have focused on the issues of transport communications and logistics. This is important for Azerbaijan since it becomes a country significant for energy cooperation and effective diplomatic engagement, both at the same time. The "triangles" offered by Baku as a convenient format of cooperation are indeed productive since they assume holding of dialogues among Iran, Azerbaijan, and Turkey, as well as Azerbaijan, Georgia, and Turkey. However, there are plans to extend the current format by establishing cooperation ties among Turkey, Russia, Azerbaijan, and Kazakhstan: shortly before the Baku summit, the Kazakh President Nursultan Nazarbayev has made a very productive visit to Turkey.

The new geopolitical initiative based on common historical background, geographical proximity, and joint projects, is highly capable including, hopefully, the stimulation of the efforts to find a solution for the Karabakh conflict. Ultimately, it is the economic benefits that determine many positive developments and peace initiatives. It was a deliberate policy of Azerbaijan once set by the late President Heydar Aliyev, which starts yielding the results. The stubbornness and the aggressive policy of Armenia can cost billions of dollars for Iran, Russia Turkey, Georgia, and other countries. We hope that Armenia will be exposed to collective pressure of the interested parties.