Andriy Chubyk, Energy security expert of the Security Studies program at the Foreign Policy Council “Ukrainian Prism”
Situation as of early 2021
In the autumn of 2020, the military campaign resulting in Azerbaijan regaining control over a large part of the territories around Nagorno-Karabakh provided a significant impetus to both domestic and international processes. Societal consolidation, the launch of several reforms (in education, medicine, partly in the energy sector), and regional players’ support contributed to the growth of the political weight of the President of Azerbaijan and a development course of his choice.
Having identified Azerbaijan as a strategic partner at the political level, Ukraine tries to pursue a consistent policy on the development of relations between the two countries. Both countries mutually support the other’s efforts in restoring their territorial integrity and share close positions and common interests on a number of national and regional interest-related issues.
At the same time, some peculiarities of the Azerbaijani political system, as well as the persecution of opposition forces, public activists, and journalists are those challenges making the political relations and public support in the international arena quite complicated.
Significant interest is currently focused on the relationship buildup in the economic sphere, especially in trade facilitation through the introduction of some electronic services, IT solutions, the implementation of innovations, and so on. Azerbaijan puts emphasis on recovery of the recently returned territories, which can be an important platform for cooperation and an exchange of experience.
It should be noted that in the case of Azerbaijan, the Eastern Partnership and the BSEC and GUAM regional cooperation initiatives — enlisting a wide range of the Black Sea region countries that are less sensitive to democracy, the right to vote, and freedom of speech issues — are competing to their full extent.
Strengthening of Russia’s involvement in the domestic political and security issues in the Karabakh region after the cessation of hostilities creates an additional factor that can affect both bilateral relations and the relations within the Eastern Partnership as a whole.
In fact, Russian troops obtained the right to control a large part of the territory along the line of demarcation between Azerbaijani and Armenian troops, as well as to influence further conflict settlement order. It is possible that Russia will try to use its presence, in particular, to influence Ukrainian-Azerbaijan relations and create some obstacles for the further cooperation between Baku and the EU.
Economic dimension
Traditionally, the Eastern Partnership program comprises energy relations where the Southern Energy Corridor development remains one of the strategic priorities for member countries. Within this framework, Ukraine has been developing mutually beneficial cooperation with Azerbaijan for many years, especially through importing hydrocarbons and exporting a wide range of products of the metallurgical, machine-building, food, and chemical industries. Azerbaijan is one of the most important suppliers of oil, as well as an investor in a number of companies engaged in the sale of petroleum products in Ukraine.
The countries failed to implement some joint projects in the past, such as the oil corridor project to the EU through the Odessa-Brody and Druzhba pipelines, and investment in the Odessa oil refinery. Today, the joint projects’ prospects are shifting to the gas sector – from the opportunities to receive Azerbaijani gas through the TANAP-TAP-Trans-Balkan gas pipeline to production in the Black Sea oil fields. Besides, Azerbaijan remains an important supplier of oil to the Kremenchug refinery, as well as the operator of the SOCAR gas station network.
Following the 12th meeting of the joint Ukrainian-Azerbaijani Intergovernmental Commission on Economic Cooperation (on January 31, 2020), the parties agreed to expand their cooperation on infrastructure and transport, most notably maritime transport and port activities, as well as tourism. In early 2021, they held a meeting of the working group on tourism development; among other things, it will coordinate capacity building issues in the air communication area.
COVID-19 impact
The coronavirus pandemic limited opportunities for bilateral contacts, but at the same time contributed to the development of electronic forms of communication. They held a number of international events focused on the history of relations and the search for new perspectives, with diplomats, politicians, and scholars taking part in these events.
The decrease in economic and trade relations in the first half of 2020 was somewhat compensated at the end of the year and during political contacts in early 2021, including a working visit paid by the Deputy Minister for Foreign Affairs V. Bodnar to Azerbaijan on February 23-24, 2021, aimed to reach the level of cooperation they had in 2010, when the total turnover had exceeded $900 million.
Forecast scenarios for the development of relations by 2025
Within the framework of the basic scenario for the development of relations, Azerbaijan and Ukraine will continue to cooperate, following current needs and their own foreign policy capabilities.
In the coming years the coronavirus, which is hindering the development of the tourism sphere, and approaches to the formation of the political system in Azerbaijan in particular—maintaining the Aliyev family’s influence and authoritarian governmental system with limited democratic rights and freedoms— will remain the main limiting factors.
Economic cooperation and contacts between people are the areas with a significant potential for further relations following the Eastern Partnership program. At the same time, both directions will be united by the strategic Azerbaijani goal to rebuild the territories returned by force in autumn 2020. In this context, Ukraine has an opportunity to join the programs designed for the reintegration of territories, restoration of infrastructure, as well as some plans for sustainable economic development and employment.
Bringing in international partners for the recovery of territories of the armed conflict zone, as well as providing support for the economic activity at the local level, can be named as another direction where Ukraine already gained some experience. Given the specifics of the state authorities’ centralized structure in Azerbaijan, Ukraine could share its already gained experience on the successful development of local communities.
Azerbaijan is still interested in taking part in the privatization in Ukraine, especially of the enterprises that can use hydrocarbons in their production processes, and ports and other infrastructure that can be used for logistics purposes. Offshore hydrocarbon deposits developing on the Black Sea shelf has promising potential, as Azerbaijan can become a partner for Ukrainian companies and support the gaining of investments.
At the same time, the political dialogue with Azerbaijan is important for Ukraine to prevent Russia’s influence in bilateral relations and to deter Baku’s possible involvement in Russia’s integration processes. Given the EU’s plans to pay more attention to democracy and the incumbent President’s of Azerbaijan political plans to retain his power, the above mentioned scenario can be quite realistic.
An optimistic scenario for relations is possible if, in the near future, Azerbaijan and Ukraine agree on an ambitious program of their relations and support, and they witness a democratic transfer of power to the new president, as well as some positive developments in protecting human rights and freedoms, including those concerning the press, NGOs, and opposition political forces.
Azerbaijan can attract significant international support if it is able to present the process of reintegration of the territories around Nagorno-Karabakh as a national unity project. At the same time, Ukraine and Georgia also will be able to take active part in its implementation as countries with occupied territories that need to gain experience in their reconstruction, in particular, in the improvement of the economy and local residents’ daily lives.
Successful preparation and privatization of state-owned enterprises and Azerbaijani companies’ involvement in some joint projects can be the factors contributing to the deepening of Ukrainian-Azerbaijani relations. For example, Azerbaijan could become one of the partners in the privatization of the Odessa port side plant, as well as in the development of offshore hydrocarbon deposits. Indirectly, strengthening the partnership with Azerbaijan would also have a positive impact on the relations with Turkey and counterbalance Russian influence in the region.
Recommendations
To the Ministry of Foreign Affairs together with the Embassy of Ukraine in Azerbaijan:
– to hold consultations on our state participation in the projects for reconstruction of the returned territories. In particular, Azerbaijan declares its volition to achieve a high level of energy efficiency and energy independence through the development of renewable energy sources, and, in this context, the Ukrainian experience in “Warm credits” usage, the Energy Efficiency Fund, and some projects with the international organizations GIZ and NEFCO can also be useful.
To the Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine:
– To study the Azerbaijani authorities’ experience in the liberated territories, and consider the possibility of joining some relevant projects.
To the State Property Fund of Ukraine, the Administration of Seaports of Ukraine, and the state enterprises:
– to consider options for establishing cooperation, inviting Azerbaijan to privatization and joint projects.