PROGRESSIVE TIES

It can be said with confidence that Azerbaijani-Russian economic relations have entered a new phase of development. The gas deal signed between the two countries last month confirmed that, despite Azerbaijan's slant towards European markets, Russia still holds top position on Azerbaijan's trade and economic agenda. This also explains the fact that against a backdrop of global recession, with which Azerbaijan is coping quite easily while Russia is in a much more painful position, the volume of trade has not reduced significantly and both countries are still important, perhaps even key, business partners for each other inside the CIS. This has been made possible by the businessmen who have established mutually beneficial cooperation which, in turn, has given rise to enterprises with direct and joint investment and facilitated the promotion of different brands within the neighbouring country.

Deserved reward

Achievement, as is well known, should be rewarded, in order to maintain interest. There is a whole system of awards, both within the narrow frames of companies and at state level. There are also interstate awards, conferred upon different individuals for outstanding achievements in the development of bilateral and multilateral relations.

In this regard, the Progress award, established in 2008 by the Russian embassy in Azerbaijan, the Azerbaijani-Russian Chamber of Business Cooperation and Russia's trade representation, is a somewhat unique phenomenon, because it highlights not only the achievements of people, but also the work of companies which have contributed to the strengthening of business ties. "I think it is no secret for anyone why the Russian embassy established this award - Russia is interested in friendly relations with Azerbaijan, while economic relations are the basis of all relations," said Russian ambassador to Azerbaijan, Vladimir Dorokhin, explaining the importance of this award to both countries.

He also pointed to the enormous role played by the humanitarian and news organizations of the two countries in the enhancement of bilateral relations. It is gratifying that the organizers of the Progress award have remembered this by including the Region Plus magazine in the list of winners of the Progress award for two consecutive years. There is indeed not a single significant event affecting bilateral relations which has gone unnoticed by the magazine. Region Plus is doing its best to provide objective coverage of all political, economic, social, cultural and sporting achievements of local and regional importance. The same holds true for our colleagues in the news business - the Trend news agency has received two awards this summer: Progress and an award signed by Russian Prime Minister Vladimir Putin for its contribution to the preservation of the Russian language and culture, the development of a single Russian-language area and the strengthening of humanitarian relations. Another "humanitarian" nominee for the award was Smolnyy University, of the Russian Education Academy. 

Temporary problems

Going back to the importance of encouraging business relations, which is indeed very topical these days, it is worth indicating that the volume of trade between Azerbaijan and Russia fell this year, although, as Dorokhin said in remarks to Progress nominees, this is no reason for pessimism. "The recession is indeed in evidence, but it is less significant here than in Russia's relations with other countries and less than in the CIS in general," the diplomat said. Russia's trade relations with CIS countries in the first quarter dropped by 46.6 per cent - including exports by 46 per cent and imports by 47.9 per cent. The slump in trade relations with Azerbaijan constituted only 11.3 per cent, but both countries are still hoping to reach last year's record level of $2.5 billion (in 2008, the volume of trade amounted to $2,402.5 million, a 40 per cent increase on the previous year).

According to the head of Russia's trade representation in Azerbaijan, Yuriy Shchedrin, the only aspect of trade and economic relations now causing concern is the significant decline in the exports of Russian mechanical engineering and technical products to Azerbaijan. "This sector is experiencing hard times and the operations of several major enterprises have been suspended due to the unfavourable situation in world markets. But I think this is a temporary phenomenon and the situation will soon stabilize, albeit only next year," Shchedrin said.

Dorokhin thinks that the recently signed gas agreement has opened up a new page in bilateral relations. Thanks to the new deal, the volume of trade may rise by $500 million over the next two years. We recall that, at the first stage, the volume of gas deliveries will be 500 million cubic metres a year, but this may increase later on. Moreover, the Russian Gazprom has been included in the list of potential buyers of gas from the second stage of the Shah Deniz project. Agreement has also been reached that if several buyers are equally qualified, preference will be given to Gazprom.

As is clear, the framework for further development of Russian-Azerbaijani trade and economic relations is quite strong. This year the situation can only be rectified by cooperation between business entities of the two countries. Dorokhin said that the opening of the Baltika-Baku brewery in Xirdalan in 2009 could serve as a good example of economic cooperation. It may be considered a major Russian investment in the Azerbaijani economy. This fact was also highlighted by the Progress award, the very purpose of which is to encourage mutual investment.

The main principle in the operation of Baltika-Baku is to maintain already existing national beer brands; this will also contribute to the strengthening of Azerbaijani brands in the Russian market.

Carry on brand!

In fact, Azerbaijani brands and trademarks are gradually becoming something to be proud of. More than half of the 23 Progress nominations involved our products which have earned recognition in the Russian market. For instance, the Azercay brand of tea, the achievement of Azersun Holding LLC, is steadily becoming an easily recognizable commodity in Russian grocery stores, which shows again that Azerbaijani tea is quite capable of competing with the world's leading trademarks.

The same holds true for the Zolotoy Sad juices produced by Gilan Holding specifically for Russian producers. Despite the competition in the region's juices market, Zolotoy Sad has already blazed a trail to the Russian consumer. In general, Russian consumers have always valued Azerbaijani products highly, while our fruit and vegetables have always been very much to their taste. Even representatives of the Russian government have said they liked Azerbaijani persimmon, quince and pomegranates. It is particularly gratifying that Azerbaijani producers have learned how to make high-quality fruit juices - our pomegranate juice Grante was even a winner at the Prodekspo-2009 international exhibition in Moscow, beating off competition from 37 countries! Products of the Goycay factory Aznar, which, in fact, has been purchased by the Russian senator of Azerbaijani descent, Farhad Ahmadov, were also recognized by the Progress award. Hopefully, these will not be their last awards, because Aznar has set itself the target of becoming world leader in the production of pure pomegranate juice. 

Azerbaijani producers are also trying to access Russia's alcoholic beverages market, so far not without success. The organizers of Progress have already pointed to the success of the NAIGS C Tovuz-Baltiya enterprise in promoting the best traditions of Azerbaijani wine-making in Russia.

Direct communication 

It may appear from the above that trade relations between Azerbaijan and Russia are focused entirely on the sale of grocery products - this is not the case. Certain successes have already been accomplished in the export of Gazelli cosmetic products, the promotion of AzRosPromInvest products and others in the Russian market - also recognized by Progress.

A number of companies nominated for the award are making efforts to promote Russian products in Azerbaijan. These include the Baku branch of Lukoil-Volgograd NIPImorneft (which produces scientific and technical products for the protection of the environment), the well known Rossiyskiye Samotsvety, the TMK shopping centre (pipes) and Fuadakva LLC (constructing water facilities).

There are also companies contributing directly to the improvement of bilateral relations. For example, Azercell, which provides a stable mobile telephone connection between Azerbaijan and Russia, has become so popular that Russian users are second only to Azerbaijani subscribers to Azercell - 3.5-million people. Direct communication is also achieved by using the products of Azerbaijan Electronics, which specializes in the introduction of advanced information technology into Azerbaijan. And, of course, there would be no communication without transport companies - Avtolucks Expedition & Logistics has been operating in the transportation and freight forwarding services market since 2002. The TSL Group is its strategic partner in Azerbaijan.

It is also worth pointing to the development of Azerbaijani-Russian relations in the financial sector: secure financial communication is provided by the Azerbaijani ZaminBank; a branch office of the Russian VneshTorgBank (VTB) is to open in Baku soon, while the Russian Ingosstrakh is a reliable bridge between the insurance markets of the two countries.

All the above holds true not just for the capital cities of the two states - both Azerbaijan and Russia attach special importance to rural development and the establishment of inter-regional ties. For instance, Azerbaijan has already established trade relations with 30 areas of the Russian Federation. With 10 of them, the annual turnover exceeds $100 million every year. Contact with different parts of the RF remains on the intergovernmental agenda. The Russian side says that 72 of the 83 divisions of the RF are currently involved in economic relations with Azerbaijan. Of these, nine have a turnover with Azerbaijan of at least $100 million per year. Among them are Moscow, the Moscow Region, St Petersburg, Nizhniy Novgorod, the Stavropol Region, the Sverdlovsk and Samara Districts, Tatarstan and Dagestan. 

The fact that serious attention is being paid to interregional relations is confirmed by the fact that Progress has been conferred on businessman Ali Evsen, head of the Evsen Group, which has done much to promote the development of the Samaxi District of Azerbaijan by establishing the AzSamand automobile plant and the STAR TV and Azerelektronika factories.

In conclusion, we would like to say that Azerbaijani-Russian trade and economic relations are not confined to these companies alone - these are only examples of the contributions made. As the implications of the global recession subside, the number of Progress nominees will increase, especially since this is the objective of not only the organizers of the award, but also of the governments of the two countries, who aim to take the volume of trade to $3 billion.