Artyom Pylin: "Azerbaijan confidently enters Russian market"

The 'Economic and Investment Cooperation of Azerbaijan and Russia: New Points of Growth' video conference with Baku was held in Moscow yesterday. On the sidelines of the event,  scientist of the Center for Post-Soviet Studies of the RAS Institute of Economics Artem Pylin told Vestnik Kavkaza about Russian-Azerbaijani economic contacts.

- Artyom Gennadievich, what are current points of reference of Russian-Azerbaijani economic cooperation?

- At present, we have seen an improvement in trade terms for Azerbaijan due to the faster growth of food supplies - vegetables and fruits - which partly replace the market lost by the EU after the introduction of Russian counter-sanctions. As for Russian supplies to Azerbaijan, there have been certain changes associated with a decrease in volumes, due to the restructuring of the Azerbaijani economy and the development of import-substituting industries in agriculture (in particular, wheat cultivation) and industry (automobile assembly plants), as well as pharmaceuticals, chemical industry and building materials - before this all these goods were supplied to Azerbaijan by Russia.

In this regard, the question of how to increase Russian supplies to the Azerbaijani market is more relevant than ever. One of the options is creating joint assembly plants for deliveries to third countries - Iran, Turkey, Vietnam, the countries of Southeast Asia, that is, those which need traditional engineering products due to rapid economic growth, in which both Russia and Azerbaijan are strong. The second option is everything related to digital transformation. Both the Azerbaijani and Russian governments are paying special attention to the digital economy development, corresponding state programs have been adopted. Here it is important to coordinate the interaction, in particular, in applying best practices and guidelines for digitizing public administration services and developing joint platforms. We have very good companies - Yandex, Mail.ru Group, Kaspersky Lab - that could interact with relevant partners in Azerbaijan.

The third option is cooperation in the service industry. At the international level, trade in traditional goods either stagnates or shrinks due to the growing number of protectionist actions, which is why trade in services is the most promising type of trade in the 21st century. This also applies to trade in transport services through the realization of the transit potential of the two countries, as well as tourism and humanitarian cooperation. Azerbaijan is investing heavily in the development of tourism and the growth of the regions, in this sense it becomes even more attractive travel destination for Russian tourists.

Of course, it is also necessary to think about how Russia and Azerbaijan will interact in the global gas market and the global oil market. In our view, Russian gas, which will go to Europe via the Turkish Stream, and Azerbaijani gas, which will be supplied via the Southern Gas Corridor, cannot be direct competitors since the end user are different countries. We know that Azerbaijani gas will mainly go to Italy, while Russian gas will go via the Turkish Stream to the countries of Central and Eastern Europe. These are different markets, and there can be no direct intersection between us. Therefore, the issue is our engagement, cooperation within the framework of Turkish hubs.

- How are possible ways to promote economic cooperation in the Russia-Azerbaijan-Iran triangle?

- In the Russia-Azerbaijan-Iran format, the main joint project is the International North–South Transport Corridor, whose potential is very large. Successful implementation of this project will significantly increase mutual trade and trade with third countries, because the insufficient development of checkpoints and insufficient equipment of cross-border infrastructure are barriers in the mutual trade of any neighboring state. It is necessary that the movement of goods and commodities was sufficiently rapid, which requires appropriate investments in modernization.

In addition to the North–South Transport Corridor, another promising area of cooperation is the creation of Russian-Azerbaijani assembly facilities in Iran, since Iran has a rather strong economy, with good potential for traditional industries. This also applies to the automotive industry, the chemical industry and refining - that are in demand on the Iranian market.

- How do you assess the presence of Azerbaijani agricultural products in the Russian market and Azerbaijan's efforts to promote its products in Russia?

"According to statistics, Azerbaijan's fruit and vegetable exports have been growing for two years in a row, and it's not just about the supply of certain types of vegetables and fruits, but also about commercial agricultural production. Wine, potato and textile exports to Russia are very promising. With the creation of powerful agro-complexes, Azerbaijan is confidently entering the Russian market. An important element of strengthening Azerbaijani products in our market could be the creation of a commodity distribution network, small shops under the Made in Azerbaijan brand, which would sell textiles or wine. So, entry of new products to Russia's market would be more efficient, because it is quite difficult to get into large supermarkets. Setting up such small shops, especially in the Russian regions, could significantly increase trade.