NEW STAGE

Azerbaijan and Turkey are moving to a new stage of economic relations. The two governments are thinking not only about the expansion of trade and mutual investment, but also about the possibilities of joint investments in third countries. It is significant that this initiative came not from Turkey, a country with a long history of economic development, but from Azerbaijan, which was, until recently, itself in need of foreign investment.

The proposal to invest jointly in third countries was voiced by Azerbaijan's Minister of Economic Development, Sahin Mustafayev, at an Azerbaijani-Turkish business forum in Baku in late July. "There are currently more than 100 Azerbaijani companies operating overseas. We believe that businessmen from Azerbaijan and Turkey can undertake joint investments in third countries. This is a new direction for cooperation between the entrepreneurs of both countries. I think it is a promising direction, and it can be effective," said the minister.

In turn, Turkish State Minister for Foreign Trade Zafer Caglayan noted that, to begin with, Azerbaijani and Turkish entrepreneurs could initiate joint investments in the economies of neighbouring countries. "It could be, for example, Georgia or Kazakhstan. There could also be investments in the economies of other countries," he said.

However, the opportunities for mutual investment are not exhausted yet. According to Caglayan, the total volume of investment between the two countries is $10 billion, and with SOCAR's (State Oil Company of Azerbaijan) investment in the construction of a refinery at the Petkim petrochemical complex in Turkey, this figure reached $15 billion.

Meanwhile, Azerbaijan is inviting Turkish businessmen to invest in new sectors, including agribusiness, the production, processing, packaging and transportation of agricultural products, IT, transit to the east and north, the service sector and tourism.

It should be noted that while investors previously sought to invest in Baku, Turkish businessmen are now interested in investing in Azerbaijan's regions. So the large-scale developments to the infrastructure being implemented by Baku in the regions are taking effect. The Turkish state minister also called on compatriot businessmen to invest more actively in the economy of the Naxcivan Autonomous Republic of Azerbaijan.

The two sides stressed the need to increase mutual trade turnover. "Azerbaijan and Turkey have the potential to increase mutual trade turnover from the current $2.2 billion to $5 billion. For our part, we are ready to render every support to entrepreneurs in order to achieve this objective," said Caglayan.

There are also problems concerning the business environment that Azerbaijan and Turkey must face together. Here Caglayan noted the need to eliminate bureaucratic problems with customs clearance of goods. "We hope that these problems will be eliminated through joint consultations with the Azerbaijani side," said the Turkish state minister.

In addition, he urged entrepreneurs to comply with the terms of contracts, stressing that some problems also exist in this area.

Further, Caglaylan noted the existence of a visa regime between the countries. "Removing the visa regime between Turkey and Azerbaijan will enhance our trade, tourism potential and fraternal relations," he said. The minister said that this would be discussed during Turkish President Abdullah Gul's visit to Azerbaijan. "Abdullah Gul will visit Azerbaijan soon and during this visit we will witness the adoption of important decisions," he said.

In addition to address existing problems and issues that hamper trade, and to expand economic relations, it was agreed to establish a working group; its first meeting will be held in November-December 2010, in Turkey.

Thus, Caglayan's visit to Azerbaijan heralded a new stage in economic cooperation between the two countries.

As for Azerbaijan's initiative on joint investments in third countries, this is an indication of the country's current economic power; it has already invested heavily in the economies of neighbouring countries and of Turkey itself. It is no accident that Minister of Economic Development Sahin Mustafayev said that 75 per cent of the economic potential of the South Caucasus lies with Azerbaijan.

The Turkish-Azerbaijani business forum also demonstrated the level of trust between the two strategic allies, outlining the challenges to enhancing cooperation and identifying ways of addressing them.

It now remains to await the Turkish president's visit, which will give new impetus to the economic expansion of the two Turkic states.