INDICATIVE FIGURES

In 2019, Azerbaijan and Russia enjoy yet another rise in economic relations. Over the years of independence, both states have done a lot to ensure manifold growth in mutual trade and investment activities. Both Azerbaijan and Russia steadily increase the volume of mutual investments and show their readiness to participate in a number of joint regional projects.

The last visit of Russian delegation led by the Minister of Economic Development Maxim Oreshkin to Baku demonstrated that businesses express mutual interest in taking bilateral trade and economic relations to a qualitatively different level of development.

23 percent increase in turnover

This year was quite successful in terms of the development of economic relations between Azerbaijan and Russia. As President of Azerbaijan Ilham Aliyev noted, "we end this year with good results in terms of the turnover of our goods, which is growing every year. We see the results of active cooperation, which are expressed in the growth of trade and investments."

In 2018, the trade turnover between Azerbaijan and Russia increased by 19%, compared to the results of ten months of 2019 (23%). At the same time, Azerbaijan hosts 950 companies with Russian capital, while the total volume of Russian investments in the Azerbaijani economy has reached $4.9 billion. In turn, Azerbaijan has invested $1.2 billion in the Russian economy.

"We have crossed the bar of commodity turnover, which is now $2.5 billion. It is expected that by the end of 2019, our indicators will approach $3 billion. These are important indicators," Russian Deputy Minister of Economic Development Azer Talibov said.

During his meeting with the President of Azerbaijan, Minister Oreshkin emphasized that according to current indicators of trade turnover and dynamics, Russia has negative dynamics with the EAEU in 2019. "Therefore, growth with Azerbaijan is about 30%, which is in fact, one of the strongest indicators with any country in general. The first measures that we took as part of the intergovernmental commission was to remove barriers and open markets, which allowed us to rise economically and show such good results," Russian Minister said.

Development of economic relations is carried out in line with existing road maps, which seems to be an appropriate format for cooperation.

During the meeting of the Azerbaijani-Russian intergovernmental commission on economic cooperation in December, Azerbaijani Deputy Prime Minister Shahin Mustafayev and Mikhail Oreshkin signed two more cooperation programs for 2020-2022, including the agreement on agriculture and tourism, and the protocol on the results of the meeting.

According to President I. Aliyev, during the visit of Azerbaijan’s First Vice-President Mehriban Aliyeva to Russia in November 2019, the extend list of road maps that would cover new areas of economy was agreed. "This is very important because the implementation of roadmaps is successful. Therefore, adding new directions to this list, of course, is a logical continuation of our cooperation," President of Azerbaijan said.

In December, the economic departments of the two countries signed a Protocol of Intent in Baku, which assumes the development of cooperation in innovations and human capital. According to the protocol, another roadmap for cooperation in innovative development and the digital economy will be developed within three months until 2024. Moreover, Azerbaijan and Russia agreed to create a joint expert group, Centre for Innovation, Science and Technology in Azerbaijan, and to conduct a study on the possibility of organizing a Joint Venture Fund.

Satellite communications operators of two countries, Azerkosmos OJSC and RSCC have already agreed on cooperation. They will share the potential of space satellites Azerspace-1, Azerspace-2, as well as the RSCC Express-AM satellites, which provide stable coverage of the territories of the CIS countries as well.

Traditional and new areas

As for the more traditional sphere, in which cooperation did not stop even during the first difficult years of independence, according to Deputy Prime Minister Shahin Mustafayev, the volume of Azerbaijani agricultural products to Russian markets is about $600 million annually. But there is a chance to double this indicator. "The use of modern technologies in the tax and customs spheres is very important," Sh. Mustafayev said. At present, Russian authorities can electronically track goods from Azerbaijan. However, we need to make a step further and digitalise all procedures in general, all parameters of relations. "Both sides are interested in this," Mustafayev added.

According to Oreshkin, in December the parties will sign a comprehensive program (for 2020–2022) on cooperation in in agriculture. That is why it is important to create an effective and high-quality infrastructure on the Russian-Azerbaijani border. "The construction of a bridge across the Samur River should be completed soon, which will have a direct effect on bilateral trade and the movement of people across the bridge," Oreshkin added.

During the recent visit of the Russian economic delegation to Baku, new joint ventures were opened that could replenish the list of traditional spheres of Azerbaijani-Russian economic relations. Thus, the Russian delegation launched R-Pharm drug manufacturing joint venture on the territory of the Pirallahinsky Industrial Park (c. $80 million). The annual production capacity of the plant will be 22.5 million packs, or 500 million pieces of tablets and capsules. In general, at the initial stage, the plant will produce 89 types of medicines. The products will be exported to Georgia, Iran, Turkey, Germany, Switzerland, Ukraine, and Central Asian countries.

Another very ambitious project is the creation of a helicopter service centre at the Zabrat Airport. In the early years, the centre plans to repair 4-6 helicopters annually. This number will rise to 8-10 helicopters in the following years. The project will be implemented by AZAL and the Russian Helicopters holding. "A modern service centre will be able to provide comprehensive technical support for operators and a high level of airworthiness of Russian Mi helicopters. This work is carried out within the framework of the Rostec State Aviation Cluster’s strategy, which envisages expanding the network of service centres in the regions of operation and providing comprehensive support for the equipment supplied throughout the entire life cycle," Andrey Boginsky, General Director of Russian Helicopters, said.

It is expected that Russian Helicopters will own 25% of the authorized capital of the service centre. Russia and Azerbaijan will sign a corresponding purchase and sale agreement in the first quarter of 2020. At the same time, the technology used at the centre will provide services for the maintenance and repair of Russian and Soviet helicopters.

In September 2020, Azerbaijan will also start the production of Gazelle trucks. According to the Deputy Minister of Industry and Trade of Russia Alexander Morozov, the company will produce 1,000 cars of various makes annually: Gazelle, Gazelle-Next, Gazelle-Business, and special equipment. The cost of the plant is ₼14 million, while the Azerbaijani side will make investments in the project.

"The creation of joint ventures provides an opportunity to enter the markets of third countries, and here industrial cooperation begins to play in a completely new way. This provides even greater potential for all parties," Russian Deputy Minister A. Talybov said.

Interaction between businessmen of the two countries is carried out within the framework of the Azerbaijani-Russian business council, which includes 145 companies and organizations. "During 2019, we held six meetings of the business council, and its composition has expanded. At the beginning of next year, we will hold the first meeting of the new business council," Samed Gurbanov, COB of the Council, said in December.

However, both sides note the need to move on. The governments of both countries are determined to overcome the challenges and solve the problems of entrepreneurs. Therefore, we can expect new records and stronger indicators in economic relations of our countries next year.