By Abdul Kerimkhanov
Over the last 15 years, UK companies have invested over $15 billion in Azerbaijan creating over 11,000 jobs, the Associate Dean (Graduate Studies) for the Faculty of Social Sciences and a Professor of International Business at Kent Business School, University of Kent, Fragkiskos Filippaios said in an interview with Azernews.
He was talking about relations between UK and Azerbaijan after Brexit.
"It has been declared by the UK government that the day after Brexit, the UK will seek to reposition itself in the global economy and form political and economic relations with other global players. This presents a big opportunity for countries such as Azerbaijan to form closer trade and economic ties with the UK and benefit from UK’s infrastructure, knowledge creation and human capital. UK will have to offer access to its market to countries around the world to maintain its competitiveness. For companies like BP, this will only be an opportunity to strengthen their ties with countries like Azerbaijan and capitalising on the successful operations of the last 25 years," the expert noted.
While describing how will the businesses of the two countries behave after Brexit occurs, the expert said that oil and gas, as well as transportation, are the two sectors that lead the investment trends with Metals and Warehousing following and companies like BP, Alegratrans, AstraZeneca, Harvey Nichols will see this as an opportunity to strengthen their presence in countries such as Azerbaijan.
Filippaios went on to say that there is a very big opportunity here for Azerbaijan as UK will look to establish itself as an independent trade and investment partner globally.
Commenting on relations with the South Caucasus region as a whole after leaving the EU, Filippaios said that it is not clear how far the UK will develop a completely separate foreign affairs policy in the post-Brexit era.
"This will be determined by UK’s need to remain part of the wider European safety and security agenda. Not aligning with the EU will have the danger of isolating the UK and this is not welcomed by any political party. We might see a gradual shift towards a more independent policy at the second part of the next decade when UK has settled in its post-Brexit global role. On the other hand, there is still a lot of potential in the region to further align with the EU as a key economic and political partner. This might actually have the opposite effect to what the UK is expecting by leaving the EU," he said.
Speaking about the possibility to cancel the Brexit and preserve the UK in the EU, the expert noted that the United Kingdom is just a few weeks away from an unprecedented decision.
"In the last 50 years of the European Union, the process has been to increase the number of members by expanding towards the East. This is the first time that a country has decided to leave the Union. Whilst the Lisbon Treaty has provided an overall framework for the process (this is the famous now Article 50) the detailed exodus is a far more complicated and time-consuming process. The UK will have to translate to national regulation all EU regulation and agree on the way all current arrangements which are governed by EU laws will become UK legislation. In addition, will have to pay the UK’s contributions to the EU budget for the next couple of years. This has been agreed to a staggering 39 billion British Pound Sterling," he said.
Regarding the question of re-referendum on Brexit, the professor noted that despite the limited time between now and the 29th of March (the final date UK remains a full member of the EU) it is unclear how the UK will leave the union.
"The Withdrawal Agreement that was negotiated between the UK and EU and has been ratified by the European Council has failed to reach a majority in the House of Commons (the British Parliament). The main point of disagreement appears to be the so-called Irish backstop which aims to keep the UK – Irish open and secure the free flow of goods and services between the Republic of Ireland and Northern Ireland. The Withdrawal Agreement will be discussed again in the House of Commons by mid-February and if it fails to receive a positive vote all outcomes are open. These include a no-deal Brexit, another referendum or even revoking Article 50 and remain a full member of the EU. European Court of Justice has already provided an interpretation of Article 50 and has confirmed that the UK can revoke this unilaterally, i.e. without seeking the agreement of the remaining 27 EU members," said the expert.
He added that it is too early to say which of the above scenarios will become a reality as Theresa May takes one step at a time and does not reveal her intentions.
Filippaios noted that May does so to maintain a strong negotiating position as the outcome of a no-deal Brexit is still on the table and this is possible through the worst outcome for both the UK and the EU.
Commenting on the possible implications of Brexit for the UK and EU economies, he underlined that the economic relationship is clearly imbalanced and favours the EU.
"The proportion of UK trade to EU is close to 50 percent whilst at the same time, UK represents less than 5 percent for the overall EU trade. Despite the relatively low numbers there it is important to appreciate that this 5 percent might be offering crucial intermediate goods and services that are important for the final assembly of products in the EU. Take Airbus and BMW for example. Both rely on their UK production for crucial intermediate products and any barriers in the supply chain can have wider implications for their operations. The UK will also find itself isolated and having to renegotiate a number of trade agreements that EU has with key players around the world. The most recent examples are the trade agreements between EU and Canada and EU and Japan. With the best intentions, these trade agreements take at least a few years and the UK will have to face trade under World Trade Organisation rules for at least the best part of the next decade," the expert said.
He mentioned that the UK economy has shown signs of recovery.
‘‘This is very fragile though and any change to the external environment can push the economy back into recession. Leaving the biggest trading block in the world will not come without any turbulence. The uncertainty that Brexit creates and its economic outcome has forced already a few companies to re-examine their presence in the UK or even put in place expensive contingency plans that draw resources from other profitable economic activities,’’ Filippaios concluded.
Diplomatic relations between the Republic of Azerbaijan and the United Kingdom of Great Britain and Northern Ireland were established on March 11, 1992.
The trade turnover between Azerbaijan and Great Britain stood at $525.2 million in 2018, according to the State Customs Committee. Around $261.4 million of this amount accounted for the export of Azerbaijani products. The trade turnover between the two countries increased by 46.5 percent compared to the same period of 2017.
Abdul Kerimkhanov is AzerNews’ staff journalist, follow him on Twitter: @AbdulKerim94
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