11 December 2018

Tuesday, 22:35



Leaders of Azerbaijan and Iran reach extremely important regional agreements



The first meeting of the presidents of Azerbaijan and Iran, Ilham Aliyev and Hasan Rouhani, took place in winter 2013. Since then, the heads of the two neighbouring countries have held 11 meetings both in bilateral and international format. At the same time, Ilham Aliyev visited Iran four times, and Hassan Rouhani made his third visit to Baku at the end of March 2018.

Such intensive contacts at the level of presidents is an indicator of the high level of relations between the two states. The current visit of the Iranian president was also a landmark event, as Mr. Rouhani’s trip was preceded by a mass inflow of tourists from Iran to Azerbaijan during the Novruz holidays, when the Iranian tourists, like in previous years, topped the list of the guests of Baku during Novruz. Thus, both presidents noted historical and cultural commonalities between our nations as one of the key features of good-neighbourly relations between Iran and Azerbaijan.

The heads of states expressed their satisfaction with the level of relations both in the political and economic spheres, while emphasizing the potential for further development of mutually beneficial cooperation.

The current visit of Hassan Rouhani to Baku was more memorable for its economic component. Although the parties signed eight bilateral documents in various fields, the agreement on financing the construction of the Astara-Resht railway section in Iran and a memorandum of understanding on the joint development of oil and gas blocks in the Caspian Sea should be considered the "main event of the program".

"We signed many documents today and I would like to especially note the two of them. These documents are related to our joint work on the Caspian Sea and the construction of the Astara-Rasht railway. They are of historical significance, as the implementation of these documents will rise our cooperation both on the Caspian Sea and in the transport sector to an even higher level. At the same time, they will have a very positive impact on regional cooperation," noted the Azerbaijani President during the press conference.

Mr. Aliyev said that Baku and Tehran successfully cooperated in the energy field. Iran and Azerbaijan have agreed to jointly operate the hydro facilities Khudaferin and Ghiz Galasi, as well as the construction of the Ordubad and Marazad hydroelectric power stations. "Today we agreed to develop a format of multilateral cooperation in the energy field," said I. Aliyev.

"In a broad sense, our cooperation in the mutual use of resources and deposits of the Caspian Sea can serve the interests of the two peoples," said the Iranian president.

Experts believe that the agreement between Baku and Tehran on the joint development of the Caspian blocs will allow the parties to stop focusing on the legal nature of the disputed deposits, which in many respects hampered the conclusion of the convention on the status of the Caspian.

"The legal conflict will simply be monetized by joint incomes," said Russian political analyst Alexander Karavayev in his interview to Nezavisimaya Gazeta. According to him, a similar scheme was used to settle the problem of the Khvalynskoye field at the border of the Russian Federation and Kazakhstan, which is now operated by a joint venture. "And if Rouhani and Aliyev achieve progress on this topic, it will be a significant step towards to conclude the Convention on the Legal Status of the Caspian Sea," said Mr. Karavayev.

Meanwhile, the agreement on crediting the construction of the Astara-Rasht railway by Azerbaijan has a great regional importance. This section of the Iranian territory is a part of the North-South project implemented jointly by Baku, Tehran, and Moscow.

"The North-South corridor connects the waters of the southern region of Iran, the Persian Gulf, the Oman Sea and the Indian Ocean, including roads and railways, with the Caucasus, Central Asia and Russia, and with Northern and Eastern Europe. This shows the great importance of the North-South transport corridor," said the Iranian president.

Baku is obviously interested in this project because it will connect the railways of Iran, Azerbaijan and Russia and will ensure Azerbaijan’s access to the Persian Gulf, Indian Ocean, and Southeast Asia.

According to A. Karavayev, given the fluctuating oil prices and growing competition in the European market of raw materials, Baku and Tehran are trying to find new sources of transit revenues. "Both countries are seeking large shippers between Europe and Asia, are negotiating with global online retailers such as Alibaba Group. As follows from the agenda discussed with China, both countries are interested in the transportation of Chinese cargo through the above corridor. It seems they gradually achieve success. In any case, Beijing has recently agreed to allocate $845m for the construction of a railway line connecting Tehran with the western cities of Hamadan and Sanandaj. In parallel with Moscow, Tehran and Baku are trying to attract India to this route," said the Russian political scientist.

By promoting the development of the North-South project, Baku also stimulates the implementation of a new quadrilateral format of regional cooperation. "The format of trilateral cooperation between Azerbaijan, Iran, and Turkey has been effective for many years. Recently, a new quadrilateral format of cooperation was implemented between Baku, Azerbaijan, Iran, Georgia, and Turkey," said President Ilham Aliyev said, recalling the first meeting of the foreign ministers of the four countries.

Region Plus will provide the details of this topic in another article of this issue. We only note here that the quadrilateral format will ensure the integration of the North-South project with a new transit initiative, the South-West.

"On the day when cargo from the port of Bender Abbas or the port of Imam or the port of Charbahar will be loaded from ships to railcars and this train will reach the north of the country, that is Astara, from the southern Iranian waters and then will be shipped to Georgia, Russia, Turkey, Northern and Eastern Europe or China from the territory of Azerbaijan, one will realise the impact of our decision to create the North-South transport corridor and the construction of the Rasht-Astara railway on the relations of our states," said the Iranian president in Baku.

Another important event of Hassan Rouhani's visit to Azerbaijan was the opening of the joint automobile plant Khazar created in the Neftchala industrial district jointly by Azmash OJSC and Iran Khodro company.

According to AzerTAG news agency, 75% of the shares of this $15m-worth plant belong to Azmash OJSC, and 25% to Iran Khodro company. It will produced cars of various models based on Iranian and European technologies.

According to the CEO of Iran Khodro, Hashem Yekke Zareh, the joint venture will manufacture 10 thousand cars annually at the initial stage of production. "The next phase is planned to increase the production to 15 thousand cars. We are planning to manufacture 50 thousand cars annually in the near future. Our cars will be sold in the local and foreign markets. They are produced in compliance with the advanced technologies and Euro-5 standards," said Zareh. The cars will be sold under a brand name of Made in Azerbaijan. At the same time, the plant will also produce spare parts for its cars.

The implementation of previous agreements stimulates further growth of cooperation both at the state level and between private business entities. At the business forum with the participation of businessmen from both countries, the Iranian president stressed his country's interest in increasing the volume of mutual investments, trade, development of cooperation in the fields of pharmaceuticals, healthcare, the financial and banking sector and, of course, tourism. By the way, as President Ilham Aliyev noted, according to the decision taken two weeks ago, Iranian citizens will receive visas in Azerbaijan at airports. Aliyev noted that if in 2016 240,000 Iranians visited Azerbaijan, then last year this figure reached 360 thousand tourists.

The interest of Baku and Iran in good-neighbourly relations and mutually beneficial cooperation is dictated by many factors, including historical and cultural affinity of both nations, the presence of a large Azerbaijani community in Iran, geopolitical challenges, as well as the great economic potential of our countries, etc. The parties have a political will to deepen bilateral and multilateral cooperation, and in the near future, we will witness the implementation of new initiatives laid during the last visit of Iranian President Hassan Rouhani to Azerbaijan.