Iran interested in economic co-operation with Azerbaijan

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(Khankishiyeva Ellada – Baku) :-

Azerbaijan, being a close neighbor of Iran and an important partner in many areas, however, will not feel the negative effects of economic sanctions imposed on Iran by the United States. On the contrary, we will observe the growing dependence of the Iranian economy on Azerbaijan. First, our country, as the initiator of major transport and energy projects (such as the North-South and the Southern Gas Corridor, in which Iran is a participant), will continue its independent policy on the implementation of these projects. In this situation, Iran is extremely interested in the successful outcome of Azerbaijani initiatives.

Secondly, if we consider the foreign trade relations between Azerbaijan and Iran in the period of January-September 2018, the import of Iranian goods to Azerbaijan exceeded the export of Azerbaijani goods to this country 12 times. However, since Iran has been supplying Azerbaijan with mainly agricultural products while Azerbaijan expects its own annual high yield of various crops and growth in food industry, the need for Iranian products would probably lessen.

Thirdly, because US restrictive measures will concern mainly Iran’s energy sector, this course of event will contribute to the rise in oil prices on the world market. And for Azerbaijan, as a country exporter of oil and oil products, high oil prices mean more petrodollars coming into the country from oil projects and great opportunities to use this capital to strengthen the non-oil sector.

Nevertheless, Azerbaijan has never used its privileged position and in its foreign policy builds healthy relations with all countries, particularly with its closest neighbors.

But there is still a second side to the question. The second package of sanctions will adversely affect Azerbaijan. US sanctions against Tehran will significantly limit the prospects for expanding Azerbaijan’s cooperation with Iran in the trade, economic and energy sectors. Because of the fear of getting under sanctions, large Azerbaijani companies that have interests outside of Azerbaijan will try to find workarounds for projects without the participation of Iran. Also, Azerbaijani banks will be avoiding cooperation with Iran, which depend as much as possible from being disconnected from the international financial system.

The volume of trade and economic relations between Azerbaijan and Iran 2-3 times less than possible due to the fact that Iran has been under sanctions for a long time. In January-October 2018, the trade turnover between the two countries amounted to about $324 million, which is 61 percent more than in January-October 2017. The investments of Iranian companies in the economy of Azerbaijan reached $ 3.1 billion. In Azerbaijan, there are 450 companies with Iranian investments. The number of tourists from Iran to Azerbaijan is growing every year, and by the end of 2017, this figure was

363 thousand people. Iran tops the list of countries whose citizens receive a visa to Azerbaijan through ASAN viza.

Cooperation in the economic sphere is one of the important directions of Azerbaijani-Iranian relations. Between Azerbaijan and Iran, important steps have been taken in various sectors of the economy, including in the areas of transport, industry, health, tourism, energy, finance and banking.

Consider which joint projects link Azerbaijan and Iran.

Free Economic Zone (FEZ)

Iran supports the proposal of Azerbaijan to create an FEZ in the Iranian Astara. The creation of the FEZ will free Azerbaijan from a number of regulations. This will allow Azerbaijan to benefit from its investments in Iran’s Astara.

Agricultural products for Iran

Iran wants to lease land in Azerbaijan for growing agricultural products. Iran has similar projects in Ukraine, Kazakhstan, Brazil, in South Africa. By growing and harvesting products abroad, Iran satisfies part of its demand for agricultural products. In addition, such cooperation can play an important role in expanding trade turnover between Azerbaijan and Iran.

In general, Iran is very interested in cooperation with Azerbaijan in the agriculture and is ready to share considerable experience and necessary technologies in this field. There is the possibility of creating a joint venture for the production of agricultural machinery, the creation of various joint ventures in the agricultural sector, as well as the possibility of cooperation in the fields of seed production, beekeeping, animal husbandry and other areas.

Creating an independent bank

The parties are discussing the possibility of creating an independent bank in order to facilitate financial ties between Azerbaijan and Iran, as well as the use of national currencies in bilateral trade.

Expansion of cooperation in the banking sector is the path for the further development of economic and industrial relations between the two countries. Also, Azerbaijan and Iran are studying the issue of integration of card systems.

Co-op the field of shipping, energy and customs services

There are plans to expand Iran’s cooperation with Azerbaijan in other areas, including shipping, power generation and the provision of customs services.

In particular, the development of the Iranian ports of the Caspian Sea and Amirabad, as well as the port of Alat in Azerbaijan will create the necessary conditions for the implementation of cargo and passenger traffic. Azerbaijan and Iran are discussing ways to increase the working hours of customs points at the border, which will simplify the transit of goods.

There are plans to expand cooperation in the electricity supply between Azerbaijan and Iran, in the construction, operation of hydro power plants, in particular, Khudaferin and Gyz Galasy on the Araz River, the use of energy and water resources.

Railways and air flights

The construction of the Astara-Rasht railway is of particular importance for the rapprochement of the two countries. Upon completion of the construction of the Rasht-Astara railway, a rail link will be established between the countries of the Caucasus and Iran. Azerbaijan intends to invest 60 million euros in the development of railway facilities in Iran’s Astara.

As for the increase in the number of flights between Iran and Azerbaijan, a large number of pilgrims come from Azerbaijan to the Iranian city of Mashhad. Given this, Azerbaijan air company can carry out direct flights to this city.

Business cooperation

In the Neftchala industrial quarter of Azerbaijan, operates an automobile plant – a joint project of the company Azevrocar LLC of Azerbaijan and the Iran Khodro company of the Iran. All cars produced at the plant comply with Euro-5 standards.

Construction of a pharmaceutical plant in the Pirallahy industrial park of Azerbaijan joint with the Iranian VPS Healthcare company is expected. This plant will be the second joint pharmaceutical factory with the Iranian side, which is currently under construction in Azerbaijan. Azerbaijan is building the first pharmaceutical plant together with the Iranian company Tamin Pharmaceutical Investment Company.

(Khankishiyeva Ellada is an economist, author of many analytical articles published in the periodicals and a participant of research works on the economy of Azerbaijan)

Disclaimer – views expressed are not of The London Post

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