Opening of regional communications by Azerbaijan forms new economic architecture - CAERC

By Trend

Following a trilateral meeting between Russian President Vladimir Putin, Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan, the leaders issued a press statement, Head of the Azerbaijani Center for Analysis of Economic Reforms and Communication, Doctor of Economic Sciences Vusal Gasimli said, Trend reports referring to the Center.

"The statement is aimed at creating a completely new situation in the region - the restoration of transport communications," Gasimli added.

While commenting on the prospect of opening regional communications, Gasimli stressed that Azerbaijan has created a new reality that determines the economic architecture of the region.

"Economic and mathematical calculations carried out at the Center show that the opening of communications and the development of trade and economic ties will benefit both the region and certain countries," head of the Center said.

"As a result of the opening of communications, the share of Turkey in Armenia's trade turnover may increase from three percent to 13 percent while the share of Azerbaijan - from a minimum to 1 percent for the first time," Gasimli said.

"At the same time, the opening of communications in the region can increase Azerbaijan's export by 1.2 billion manat ($705 million), non-oil GDP by two percent, processing industry by three percent, and mining industry by 2.7 percent," Gasimli said.

"Our calculations based on the general equilibrium model show that the reintegration of the Nagorno-Karabakh region into the Azerbaijani economy in the medium term will have a positive impact on agriculture (an increase of 10.4 percent), tourism (an increase of 5.5 percent), the mining industry (an increase of 5.3 percent), transport services (an increase of 4.9 percent), manufacturing industry (an increase of 4.3 percent) and other services (an increase of 1.4 percent) while the formation of non-oil GDP as a whole will increase by 5.1 percent," Gasimli said.

"Armenia will be able to establish communication with Russia, which accounts for 25-30 percent of its trade turnover by using the transport capabilities of Azerbaijan in two directions (Gumri-Nakhchivan-Meghri-Baku and Yerevan-Gazakh-Baku)," Gasimli said.

"Taking into account that the railway from Kars to Gumri is also possible, in general, according to the foreign sources, about $434 million are required for Kars-Gumri-Nakhchivan-Meghri-Baku," had of the Center said. "The railway project can bring profit only during the 13th year of its activity, by transporting 10 million tons of cargo per year."

"At the same time, the planned railway line from Kars to Nakhchivan and from Nakhchivan to Zangilan through the corridor to Meghri completes the abovementioned project with even greater strategic importance of Turkey," Gasimli said. "The possibility of Armenia’s joining the integration of the railway lines of Azerbaijan and Turkey will depend on rationality of Yerevan’s policy."

"Armenia must assess not only the ports of the Mediterranean and Black Seas through Turkey but also the possibility of establishing ties with Iran through Azerbaijan as, in difficult geographic conditions, no investor will agree to invest $2-3 billion in the construction of the Armenia-Iran railway project," head of the Center added.

"The opening of communications in the South Caucasus makes it possible to access the Iranian and Oman gulfs, as well as the Indian Ocean through the Iranian Bandar Abbas cargo port and the Istanbul-Islamabad railway line," Gasimli said.

"The Kars-Nakhchivan-Meghri-Zangilan-Baku railway line is important in terms of lifting the blockade of Azerbaijan’s Nakhchivan Autonomous Republic, reducing transport costs, increasing foreign trade opportunities, intensifying tourism sector and increasing passenger traffic, as well as attracting investments to the region," head of the Center said.

"In fact, Azerbaijan is promoting further integration of the Mediterranean and Caspian Basins along the Great Silk Road and the North-South International Transport Corridor," head of the Center said. "New transport opportunities are emerging between Central Asia and Europe, Turkey and Russia, Iran and Europe, as well as between Turkey and Central Asia."

"The opening of communications in accordance with the new reality created by Azerbaijan in this region, lays the foundation for peace, security, stability, prosperity and mutually beneficial cooperation, which means an inflow of investments and sustainable development," the head of the Center said.

"Now, the projected communication projects will form the future transport and energy map of the region, as well as the economic, political and strategic architecture in general," Gasimli added.

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