After the liberation of its lands from Armenia’s occupation in a 44-day war in 2020, Azerbaijan has started talks with countries that Baku aims to further cooperate in restoring and developing its war-torn liberated territories. Turkey, Italy, Hungary, Iran and the UK seem to be members of this informal alliance for the time being.
Azerbaijan entered the post-conflict recovery and rehabilitation phase. Baku is interested in the active inflow of foreign direct investments and foreign companies from friendly countries in Azerbaijan to get its liberated territories restored. Significant growth in the performance of the construction sector is expected in 2021 as IDPs are to move to liberated territories after they are demined and restored.
Azerbaijan plans to allocate $1.3bn for reconstruction in 2021. In particular, these funds will be used to restore the infrastructure (electricity, gas, water, communications, roads, education, health, etc), as well as cultural and historical monuments.
From the start of the war in late September, Turkey stood in the first ranks giving moral and political support to Azerbaijan that it has shared culture and ethnic ties with.
Turkey is the key county that will participate in restoration of Azerbaijan’s lands.
Apart from giving Azerbaijan political and moral support during the war, Turkey continues to be in the lead with its support during restoration stage. Turkey delivered to Azerbaijan 20 pieces of demining equipment in early February. Some 136 Turkish mine-clearance experts arrived in mid-December 2020 and begun training their Azerbaijani counterparts. The first group of Turkish sappers arrived in early December. The Turkish soldiers themselves are also involved in clearing Azerbaijan’s newly-liberated territories. Furthermore, the construction of the new Fuzuli-Shusha highway is being carried out by the State Agency of Azerbaijan Automobile Roads and a group of Turkish companies led by Kolin İnşaat with experience in the construction of roads in areas with difficult terrain.
Chairman of Turkish Association of Business People and Entrepreneurs Ilhami Ozturk has said that Turkish companies are planning to invest $50 million in the construction of textile factories in liberated lands. A memorandum of understanding on the construction of textile factories was signed between the association and the National Confederation of Entrepreneurs of Azerbaijan during Ozturk’s visit to Baku. Ozturk said that the construction of industrial plants and textile factories is envisaged as a priority in the support program for Azerbaijan in this direction.
Local economic experts predicted that the initial investment of $50 million by Turkish companies in the creation of textile factories in Azerbaijan’s Karabakh region will favour the opening of new jobs.
Turkey is Azerbaijan’s second-largest partner, with trade amounting to $3.9 billion in January-November 2020. Of the total turnover, export amounted to $2.5 billion, while import to $1.4 billion.
Italy is another country that has signed an agreement on projects to be implemented in Azerbaijan’s liberated territories.
A cooperation agreement on the construction of energy infrastructure in the liberated lands was signed between Azerenergy Director-General Baba Rzayev and Italian Ansaldo Energia CEO Marion Giuseppe and Italian Ambassador Augusto Massari. Under the accord, Ansaldo Energia will supply equipment for four 110 kV substations to be built in the Aghdam, Kalbajar and Gubadli regions.
Armenian occupants destroyed all the infrastructure, including power plants, substations and transmission lines in Aghdam, Fuzuli, Jabrayil, Gubadli and Zangilan regions. There are no signs of an energy system in these areas. In addition, in Lachin, Kalbajar, Shusha and other liberated territories, Armenian forces destroyed all energy infrastructure and moved or burned the equipment.
In meetings with Azerbaijani officials as part of their post-war visits to Baku, Italian delegations focused on the restoration of energy infrastructure, urban development, mine clearance, restoration of historical monuments, implementation of projects in the tourism and agricultural areas.
It should be noted that a large delegation led by Vice-Speaker of the Chamber of Deputies of the Italian parliament Ettore Rosato on December 7 was the first one from the EU visiting Azerbaijan after the war. At his meeting with this delegation, President Ilham Aliyev expressed his confidence about successful work with Italy in the liberated lands in the non-energy sector, the spheres of agriculture, tourism, creation of renewable energy sources.
Notably, Italy was Azerbaijan’s main trading partner in January and October 2020 with trade worth $4.2 billion out of the country’s total turnover of $17.8 billion. Italy was Azerbaijan’s top trade partner in 2019 as well with the mutual trade amounting to $7 billion and Azerbaijan was the largest supplier of crude oil to Italy in this period. Some 113 Italian companies, operating in various fields, are registered in Azerbaijan. Azerbaijan is one of Italy’s three main energy resources suppliers. The implementation of the Trans-Adriatic Gas Pipeline project is expected to further boost cooperation between the two countries.
Hungary is among the countries to cooperate with Azerbaijan to rebuild the liberated lands. In January, Hungarian Foreign Affairs and Trade Minister Péter Szijjártó wrote on his official Facebook page that Azerbaijan and Hungary had discussed Hungarian companies’ participation in restoring the liberated lands.
“Hungary has always stood up for the territorial integrity of Azerbaijan. After the end of the conflict, we have now discussed how Hungarian companies can participate in the reconstruction of areas previously affected by the war,” he said.
He emphasized that the Hungarian Exim Bank has opened $100 million credit line for Hungarian companies intending to participate in the reconstruction program. To reduce the consequences of the war, Hungary offered a grant of € 25,000 ($30,330) for demining activities.
In 2020, trade between two countries amounted to $34 million, with import amounting to $33.9 million, and export to $934,420.
As part of her two-day official visit on February 8, UK Minister for European Neighbourhood Wendy Morton stressed that the UK is ready to provide relevant assistance in demining activities in Azerbaijan.
At his meeting with Morton on February 9, President Aliyev said that “on the liberated territories, we have great potential for reconstruction and we already started our contacts with British companies. One of them is involved in the city-planning in the development of infrastructure on the liberated territories”.
He spoke about the big potential in renewable energy, saying that “there is interest from British companies to work on these issues. There is a very big potential of solar, wind, hydro. So we are already planning our future on the liberated territories, and I already declared these territories as a green zone territory”.
Morton stressed that “there are so many areas where we do work together. I am sure there will be a lot more in the future as well”. She wrote on her Twitter that the UK “is ready to support Azerbaijan’s transition to renewable energy”.
Azerbaijan’s southern neighbour Iran has also shown great interest in cooperation with Azerbaijan to rebuild the liberated territories. Close cooperation in this sphere was discussed at a meeting between President Ilham Aliyev and Iranian Foreign Minister Mohammad Javad Zarif in Baku on January 25. Aliyev welcomed Iran’s involvement in the restoration process.
Zarif said that “we look forward to engaging in those areas from the South-North Corridor to the South-West Corridor, to other power production, energy, Khudafarin, Qiz Qalasi [Maiden Tower], other probably good areas of cooperation”.
Aliyev stressed that the new regional situation opened up new opportunities for private investors and government agencies.
The restoration of control over the 132-km section of the Azerbaijan-Iran border creates new opportunities and prospects for broader cooperation between the two countries. So far, between the two countries there are projects for the construction of Ordubad and Marazad hydroelectric power plants and Khudaferin and Maiden Tower hydro junctions and hydropower plants on the Araz River.
Economic expert Ruslan Atakishiyev said that three Iranian companies had expressed their interest in working in the region. The construction of a new bridge in liberated Jabrayil region’s Khudaferin settlement will contribute to the creation of a new market.
“Tabriz, one of the major cities of Iran, is located near the liberated territories. Given this, it’s possible to create Azerbaijani-Iranian joint-stock companies involved in food, textile, tourism, and other sectors,” he said.
Head of Tabriz Chamber of Commerce, Industries, Mines and Agriculture Younes Jaele said that over 100 companies from Iran’s East Azerbaijan Province could participate actively in the restoration of the liberated territories. Jaele described this as a great opportunity for the economic sector of the East Azerbaijan Province, especially for technical and engineering companies.
Iranian Economic Affairs and Finance Minister Farhad Dejpasand has expressed Iran’s readiness to restore the mosques desecrated and destroyed by Armenians.
It should be noted that Azerbaijan’s trade with Iran amounted to $274 million, thus making Iran Azerbaijan’s largest trading partner among the Persian Gulf countries in January-October 2020. Of the total turnover, export from Azerbaijan to Iran amounted to $34.5 million, while the import from Iran amounted to $239.4 million.