A lot of statements at the level of officials and experts were made during and after the November 24 summit of the Eastern Partnership in Brussels. Russian and South Caucasus media were especially interested in signing of an agreement on comprehensive cooperation between the EU countries and Armenia.
Yerevan celebrates this agreement as a major diplomatic success, while Baku tries to analyze its possible consequences in the context of geopolitical situation in the region. Despite its confidence in monopoly for political influence in Armenia, Russia views Yerevan's flirt with Europeans with a certain degree of mistrust. Gazeta.ru even wrote that "Russia's allies are leaving it for the West." Meanwhile, the final declaration of this summit noted that "participants also welcome serious progress in work on the expanded agreement between the bloc states and Azerbaijan." There's nothing new about the fact that Azerbaijan and the EU are preparing a separate agreement. Media already reported that active negotiations are underway, but at the same time it was noted that they are pretty tense. This tension is quite understandable, since Azerbaijan, which hasn't joined any military bloc or integration association yet, has a higher level of sovereignty on the international arena than neighboring Armenia. Accordingly, Baku doesn't build relations with the European Union based on conditions set by Brussels and Moscow. However, a greater level of autonomy means higher political risks for the country.
Professor Wilfried Fuhrmann from Potsdam told about the prospects of Azerbaijan's strategic partnership with the European Union to Vestnik Kavkaza.
"Azerbaijan has to fight for its independence and is still fighting to protect its territorial integrity. When it comes to economy, Azerbaijan follows the process of transformation into a developed, modern country with a diversified industrial and "service" society, wishing to avoid "resources curse" syndrome. Azerbaijan has the same dependence on resources, which account for about 85% of the country's exports, as countries like Saudi Arabia and even Norway.
However, and this is especially important when we discuss strategic partnership, the country is heavily burdened by occupation of seven districts and the region of Nagorno-Karabakh. Due to this problem, at the time when the old political blocs are being actively created and reformatted, Azerbaijan is trying to maintain independence in relations with Russia and the US, China and the EU, and also at the regional level with Iran and, to some extent, with Turkey. If it will be successful, Azerbaijan can become a regional bridge or hub. Such hubs contribute to global stability, in particular to stability of the South Caucasus.
A small country that can function as a bridge can't afford to be isolated - on the contrary, it must be open for transit and transportation of goods and services. Then it will pave the way for countries like Turkmenistan and so on. They will be able to conduct trade without depending on the Russian infrastructure (roads, railways, pipelines). This strengthens the development and regional importance of Azerbaijan. Economic and political relations that have been formed over many years, including with European countries, can then become a basis for establishment of strategic partnerships and structured cooperation in mutual interests. At the same, it's important time to take balance of powers in the region into account. In other words, strategic partnerships shouldn't be created just to compete against others. The only exception here is Armenia due to occupation. Ultimately, structured partnership means "partial integration" in the long term.
In order to achieve a state that will contribute to sustainable development, the desired partnership shouldn't be overloaded with political demands and accusations. It shouldn't create an impression that there are political double standards.
In this situation, Germany can and should do more to return occupied territories to Azerbaijan and find a peaceful solution to the Nagorno-Karabakh conflict. And it shouldn't avoid open conversation with France on this issue. Despite all the criticism, and the media in Germany is free and it should be this way, we must be concerned about stability of our partner. Even diplomacy, despite its peculiarities, must achieve results. The Nagorno-Karabakh problem is not resolved for 25 years. It's a very long period, considering average life expectancy in Azerbaijan - 75.1 years for women and 69.5 years for men. Uncertainty of the future of about a million internally displaced persons is too painful and inhuman. Or is the current state is viewed as a desired resolution of the conflict? Does Germany try to find solution to the conflict based on the German experience? It's necessary for everything to be clear, there should be more meetings in the framework of the OSCE Minsk Group.
Strategic partnership requires common approaches of civil society and politicians, as well as sustainable economic cooperation and development. As for the latter, I would like to highlight the expansion of the oil and gas industry of Azerbaijan, including due to commissioning of the Shah Deniz-2 gas field in 2018 and the Southern Gas Corridor in 2020. In 2016, Azerbaijan accounted for 4.33% of the EU's oil import - after Russia, Norway, Iraq, Saudi Arabia, Kazakhstan and Nigeria, ahead of Algeria, Iran, Angola, Libya. This increase in import to the EU shows Azerbaijan's strategic political importance in the EU's energy strategy. It's expected that import of oil and gas from Azerbaijan will increase even more in the future.
Possible price of this strategic partnership may be determined after the response of Russia and other oil and gas exporters, if this shift will not only lead to redirection of export routes that have existed so far, but also to lower prices for gas and oil and changes in trade balance. After all, the decline in production and various conflicts - just like it happens between Iran and Saudi Arabia - or restoration of oil production in Libya, as well as other factors, already overload the energy market.
Although the Southern Gas Corridor will help to increase Azerbaijan's export earnings, it also increases dependence on it. This situation will lead to increase of the Azerbaijani manat exchange rate, just like decline in oil prices led to its devaluation. For this reason, as well as due to inevitable growth of salaries, international competitiveness of new enterprises, created in the framework of economic diversification policy, will decrease, which will likely negatively affect their profitability, and Azerbaijan's import tariffs won't be reduced.
What's more important for Azerbaijan's economic development and strengthening of its independence is the growith of export of goods and services from non-oil sector. Diversification requires new, innovative products and services, the development of joint products or components. The problem is that it's hard to determine future advantages and potential innovative products of Azerbaijan. Azerbaijan has no partners in this field, like Germany, for example.
Of course, Azerbaijan has some ideas. In particular, since the end of 2016 it created several "road maps" for diversification and modernization. Perhaps they were created due to decrease of the country's export revenues. Along with improvement infrastructure, Azerbaijan also pays a lot of attention to petrochemical complex. Saudi Arabia is following the same path right now. The problem is, however, that there's a lack of human resources and market opportunities."
