Ambassador: TAP will further strengthen Italy’s role as Azerbaijan’s first trade partner

Ambassador: TAP will further strengthen Italy’s role as Azerbaijan’s first trade partner

BAKU, Azerbaijan, Feb.19

By Leman Zeynalova – Trend:

Trend’s exclusive interview with Ambassador of Italy to Azerbaijan Augusto Massari

Question: Today the President of Azerbaijan lands in Italy to mark the start of a State visit to the Italian Republic. Can you share an anticipation of some of the highlights and main contents of this visit?

Answer: High-level visits are a good indicator of the degree of trust and mutual understanding between countries and governments. I think a quick glance at this indicator speaks volumes about the intensity of Italian-Azerbaijani dialogue. It is extraordinary that in only one year and a half we have had the first visit of an Italian President of the Republic in Azerbaijan, and now the visit of President Ilham Aliyev to Rome. In between, we have had the visit of the First Vice-President, Mehriban Aliyeva to Rome and the first-ever visit in Baku of a Speaker of the Italian Senate, the second highest-ranking official after the Head of State, in October 2019. Members of both Governments exchange visits very frequently and just one month ago, in January, Rome hosted the latest session of the Bilateral Intergovernmental Joint Commission. I think we have set the scene for a very successful few days of President Aliyev in Italy!

He will meet, of course, with our President of the Republic, Sergio Mattarella, and our Prime Minister, Giuseppe Conte, but also with the Speakers of both Chambers of our Parliament. Together with our Minister of Foreign Affairs, your President will open a large bilateral Business Forum, with the participation of hundreds of companies from both countries, and we expect to sign an unprecedented number of agreements. Among these, a new Declaration on strategic partnership stands out as a significant political step. The key aspect of this visit is its spirit and substance – the mutual acknowledgment that our countries can build on their political understanding and their commercial relationship in order to deepen their ties at all levels, especially in terms of industrial cooperation.

Question: Azerbaijan and Italy are bound by such a significant energy project as the Trans Adriatic Pipeline (TAP). TAP has recently achieved an important milestone by filling 2-km section of its Greek part with gas. This means Italy is one more step close to receiving gas from Azerbaijan. How do you assess the significance of TAP for ensuring Italy’s energy security and diversification?

Answer: The TAP project is proceeding according to plan and reached 92 percent of completion at the end of January. Work is speedily proceeding in the Italian segment of the pipeline. We expect the first gas from Azerbaijan to reach the Italian network in the autumn. The Italian government has consistently supported the project over the years, bearing in mind its role in further diversifying Italy and the EU’s gas supplies, and accelerating our transition toward a clean energy mix.

Q.: This year will mark the commissioning of the entire Southern Gas Corridor, which will for the first time deliver Azerbaijani gas to Europe. In this context, the discussions on the expansion of the Corridor’s capacity have been intensified. How does Italian side see the prospects and benefits of the capacity expansion? Is it possible for Italy to increase the volume of gas purchases via the Southern Gas Corridor in the long-term?

A.: Italy has the second-largest manufacturing sector in Europe, and produces only a tiny fraction of the huge amount of energy it needs. The initial supplies of gas through TAP (10 bcm/year, of which 8.8 earmarked for Italy proper) will be helpful, but our market may indeed demand more. I know that several hypotheses exist in this regard, among which the Trans Caspian Pipeline, but it seems that discussions in this regard are still at an early stage.

Q.: Aside from the energy field, Italian companies are successfully participating in a number of projects in Azerbaijan in the spheres of agriculture and many other fields. How do you see the prospects for even more developing the cooperation in the non-oil sector?

A.: Azerbaijan can certainly reap the benefits of diversification and a greater openness in terms of trade and industrial development. Italy, in turn, has much to offer across all sectors, thanks to its industrial and engineering prowess. This is why, starting with the visit from our Head of State in Baku, we launched a simple but ambitious concept: “Beyond oil & gas”. We are aware that extractive industries will remain at the heart of our relationship, thanks to our imports but also to the Italian companies working in Azerbaijan in this field. However, Azerbaijan is not only about oil, and Italy certainly isn’t! You mention agriculture and it is a good example. Only in 2019 we had many important highlights in this field, starting with the first-ever visit of our Minister of Agriculture, last July, and with the launch of an important EU Twinning project led by our Ministry in the field of subsidy reform. Many companies in this sector will take part in the Business Forum that will be held in Rome this Friday. Much can be done in the areas of renewable energies, water and soil remediation, and green technologies – these are fields we really want to emphasize in 2020, when Italy will host the “pre-COP26” meeting as well as the “Youth COP” summit. We see very important opportunities also in infrastructure and connectivity, where Azerbaijan displays great ambitions, and let’s not underestimate the fields of creativity and design, which saw a few months ago the opening of the Italian-Azerbaijani Design Centre with the Azerbaijan University of Architecture and Construction, the first academic hub dedicated to design in the entire Caucasus.

Q.: Currently, Italy is the largest trade partner of Azerbaijan. What is the potential to even more increase the volume of bilateral trade turnover?

A.: The answer to this question is an unequivocal “yes”. Once TAP goes online, the amount of trade between our countries will inevitably, and substantially, grow. Italy will not only be Azerbaijan’s first worldwide trade partner in oil (our imports in 2018 were roughly equal to 12 percent of Azerbaijan’s nominal GDP), but also the second importer of natural gas after Turkey. We can confidently say that this will further strengthen Italy’s role as Azerbaijan’s first trade partner. At the same time, Italy has a vast trade deficit with Azerbaijan. This is why we look to the next few years as an important opportunity to bolster the position of Italian companies here in Azerbaijan – both in terms of exports and industrial cooperation. Of course, as the Azerbaijani economy grows, the middle class rises with it, opening up new opportunities for thousands of our exporting companies. Regarding industrial cooperation, I would not like to repeat my previous comments, but just to recall the decision of our two Heads of State to jointly inaugurate the Sumgayit polypropylene factory in July 2018, during our President’s historic State visit to Azerbaijan. This is exactly the type of project that can become a blueprint on which to build a growing friendship and mutual success: based on strong partnerships, driven by advanced technology and supporting the long-term growth trajectory of the country.

Q.: Which spheres in Azerbaijan are attractive for Italian companies in terms of making investments? What are the prospects for cooperation and share of know-how in ports industry?

A.: I think that if we look beyond the oil & gas sector, there remains a vast potential for further investment and openness toward foreign players. We closely follow the reforms pursued by the President and the Azerbaijani government in terms of improving the business climate, and look forward to further measures in fields such as rule of law and the functioning of the courts, which may ideally be dedicated to international commercial and economic issues. Good logistics naturally favor investments, too, and I really appreciate the efforts this government is making in this regard. Italian companies are already active in this field. Since you mention ports, we have an excellent Italian SME, DBA Group, which for several years has supported Port of Baku in building the new IT infrastructure for the Alat terminal.

Q.: Historically, Italy and the UK are the two European countries with the most intense trade and investment relations with Azerbaijan. With Brexit taking place, how do you see Italy’s role evolving in facilitating the EU’s relationship with our country?

A.: I would not reduce our relationship to economic factors. This relationship originated centuries ago, and today it is a friendship between peoples, characterized by an increase in mutual tourist flows, by the Azerbaijani love for “Made in Italy” products and Italian lifestyle, and by an increasing interest in Italian culture, with our language now being taught in three Universities in Baku. The same is true from our side, as more and more Italians know and appreciate Azerbaijan as a cultural destination and as a place to work – we already have the largest expatriate community among EU countries! Italy consistently makes an effort to facilitate Azerbaijan’s relations with the EU – in this regard, a new EU-Azerbaijan Partnership Agreement is a major goal – as well as with other key organizations we are a part of – and, among these, let’s not forget Baku’s partnership with NATO. Our key aims are not only bilateral in nature: we see, appreciate and support Baku’s wish to maintain strong and mutually beneficial ties with European countries and institutions.


Follow the author on Twitter:@Lyaman_Zeyn

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