European Commission ready to support major transport projects in Azerbaijan

21 January 2019 18:45 (UTC+04:00)

By Leman Mammadova

Azerbaijan and the European Union (EU) successfully cooperate in various fields, and these partnership relations are constantly developing.  To date, important documents such as Partnership and Cooperation, Visa and Readmission Agreements, Action Plan under the European Neighborhood Policy and the Eastern Partnership Initiative that raised relations to a higher level have already been signed.

Currently, regular consultations on a comprehensive agreement on strategic partnership between Azerbaijan and the EU are being held.

The European Commission (EC) is ready to support three transport projects in Azerbaijan, worth 1.1 billion euros, the Indicative trans-European Transport Network (TEN-T) Investment Action Plan, co-authored by the EC and the World Bank, said.

The plans in Azerbaijan include creating five logistics centers (369 million euros) and a free trade zone in Alat (410 million euros) and modernization of the East-West Railway (328 million euros).

The first two projects are proposed to be financed via public-private partnership and the third project by the international financial organizations.

Together, the projects in the Eastern Partnership (EaP) countries will require an estimated investment of almost 13 billion euros and foresee a total of 4,800 kilometers of road and rail, 6 ports and 11 logistics centers, the European Commission said.

The projects will make possible the construction and rehabilitation of new and existing roads, rail, ports, airports, as well as logistics centers and border crossing points.

European Commission (EC) is the highest executive body of the EU, holding legislative initiative. EC is responsible for drafting laws, implementing decisions of the European Parliament and the Council, monitoring compliance with EU agreements and other legal acts.

The free economic zone is being created in the village of Alat on the basis of the presidential decree signed in March 2016. The territory of the new Baku International Sea Trade Port is also included in this zone.

The Baku International Sea Trade Port in Azerbaijan’s Alat settlement is expected to become one of the leading trade and logistics hubs of Eurasia.The New Port in Alat is a transportation hub linking the west (Turkey & EU), south (Iran & India) and north (Russia). Situated in the vicinity of the regions of Azerbaijan, it will also increase its connectivity as an efficient hub and so increase the volume of cargo being handled. In addition, new port location is linked to existing highways and railways, connecting the port to the inland regions of the country.

Presently, several routes from the East to Europe pass through the territory of Azerbaijan.

International North-South Transport Corridor, which is designed to transport goods from India and the Persian Gulf countries to Russia, Western Europe, the Baltic and Scandinavian countries.

In addition, the Baku-Tbilisi-Kars railway built at the initiative of Azerbaijan, which is part of the East-West Corridor, also allows supplying cargo to Europe. Another example is the Lapis Lazuli route, which runs from Afghanistan to Turkey and further to Europe.

The European Union holds the main place in the foreign trade turnover of Azerbaijan. Share of EU countries in Azerbaijan's foreign trade made 42 percent in 2017 and 43.5 percent in the first eight months of 2018. At the same time, the bilateral trade turnover in 2017 exceeded 11 billion euros. The largest part of Azerbaijan's imports to the EU are oil and non-ferrous metals, while about 45 percent of EU exports to Azerbaijan accounted for the machinery and chemical products.

The EU is also the largest investor in Azerbaijan. There are more than 1,500 European companies in Azerbaijan. Over the past 11 years, EU member states have invested more than $ 20 billion in Azerbaijan, accounting for 46 percent of the total foreign direct investment in the country. Today, the EU is the largest foreign investor in the country's oil sector as well as in the non-oil sector. In 2012-2017, the EU invested $ 15.3 billion in Azerbaijan, accounting for 38.2 percent of the total investment in Azerbaijan's economy.

Azerbaijan also cooperates with the EU within the framework of Twinning, TAIEX, Budget Support Instruments that has provided 595 million euros to Azerbaijan.

Recently, in EU-Azerbaijan relations the four main areas of cooperation under the Partnership Priorities reflect those identified under the Eastern Partnership framework, namely: strengthening institutions and good governance; economic development and market opportunities; connectivity, energy efficiency, environment and climate action; mobility and people-to-people contacts.

The Partnership Priorities will also provide the policy framework for our financial cooperation for 2018-2020.

The EU and Azerbaijan intend to agree on a draft strategic partnership agreement on cooperation until May 2019. The political and trade components of the agreement were discussed in early December 2018. The next round on the new agreement as a whole will be held in Brussels in late January 2019.

Currently, bilateral relations between the EU and Azerbaijan are regulated on the basis of an agreement on partnership and cooperation that was signed in 1996 and entered into force in 1999.

The new agreement should replace the 1996 partnership and cooperation agreement and should better take account of the shared objectives and challenges the EU and Azerbaijan face today. The new agreement envisages the compliance of Azerbaijan’s legislation and procedures with the EU’s most important international trade norms and standards, which should lead to the improvement of Azerbaijani goods’ access to the EU markets.

Azerbaijan and the EU will hold a high-level transport dialogue in February in Baku to discuss the cooperation issues in the field of transport.

Azerbaijan, as the initiator and active participant of such large projects as Baku-Tbilisi-Ceyhan and the Southern Gas Corridor, is a strategic energy partner of the EU.

The EU strongly supports the Southern Gas Corridor project, which is jointly implemented by Azerbaijan and its foreign partners, and interested in supplying Caspian hydrocarbon resources to Europe, as it comprehends diversification of the energy sources necessary to ensure Europe's energy security.

The Southern Gas Corridor provides for the transportation of 10 billion cubic meters of Azerbaijani gas from the Shah Deniz field of Caspian region through Georgia and Turkey to Europe.

The European Commission has approved a total of 1 million 871 million euros for the implementation of the South Caucasus Pipeline Expansion, Trans-Anatolian Pipeline (TANAP) and Trans-Caspian Pipeline (TAP) projects, which will transport Azerbaijani and Turkmenistan natural gas to the EU to allocate 725 euros.

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