Azerbaijan, Russia to resume talks on mutual protection of investments

Azerbaijan , Baku, Sept. 14 / Trend I.Khalilova /

The Russian government submitted a new version of the intergovernmental agreement to Azerbaijan "On promotion and reciprocal protection of investments," the Azerbaijani government told trend.

"Russia has made significant changes to the draft agreement. Today, the country's respective ministries and departments are working on this," the source said. "The new version reflects Russia's entirely new approach and only 20-30 percent is kept from the earlier version."

Russia 's trade representative in Azerbaijan Yuri Shedrin believes that Azerbaijan and Russia continue to disagree on the draft agreement titled "On promotion and reciprocal protection of investments."

"We are now working on organizing another round of negotiations for the parties to finally decide on compromises over the agreement text," Shedrin said. "Today, fundamental questions remain unresolved ."

He said the two governments cannot yet find a compromise on extending the agreement for a particular period of time. Azerbaijan suggests applying it to the entire history of Azerbaijani-Russian cooperation, while Russia insists on the coverage period beginning in 1992.

"This remains the main issue in negotiations which took place last December in Moscow and which we hope to resume. I believe the next round of talks will be held in Baku," he said.

He said perhaps these issues will also be mulled during the Deputy Prime Minister Alexander Khloponin's visit to Baku in early October.

The agreement is very important, as Azerbaijani investment in Russia's economy is under serious consideration. Investments of Russian investors in Azerbaijan are also increasing.

"Revitalization is observed in activities of Azerbaijani investors in the Russian market, which is very gratifying," Shedrin said.

In turn, the Azerbaijani company "Azersun Holding" put into operation a tea-packing factory in the Belorechensk city (Krasnodar Territory) worth $2.5 million in September 2010 and plans to invest an additional $6 million to revive tea plantations. The company launched a project to build a canning plant for processing fruits and vegetables, with a capacity of 50 million standard cans. Investment worth $8 million is planned for this project.

"However, there are a number of other private Azerbaijani companies interested in the Russian investment market," he said.

While the governments agree, Russian investors are forced to resort to third-country nationals for investment in Azerbaijan's economy, Shedrin said earlier. In general, he believes the country's compatriots play the leading role in investing in Azerbaijan.

Russian direct investments in Azerbaijan's non-oil sector million. USD

2005

5.1

2006

4.6

2007

10.7

2008

5.8

2009

50.3

2010

11.7

Business people have contributed a great deal in the development of Russian-Azerbaijani economic relations at the regional level. More than 500 Russian enterprises and organizations are involved in foreign trade with Azerbaijan. The largest Russian companies in Azerbaijan are Lukoil-Azerbaijan, Baltika-Baku (a 21st century company), and VTB Bank (Azerbaijan).

Russia 's Vneshtorgbank (VTB) bought 51 percent of Azerbaijan's AF Bank in 2009, carried out its re-branding, and was renamed as VTB Bank (Azerbaijan). Today, the bank is considers five projects, with the possibility of providing loans worth up to $100 million.

Opportunities for expansion exist from Rosselxozbank in the banking and financial sector of Azerbaijan, due to the opening of its office in Baku in June 2010. A Russian-Azerbaijani joint venture, producing bentonite clay, operates in Azerbaijan, with more than $3 million investment from the Russian party. A brewery in the Khirdalan town was modernized, a project which ran in the range of $20 million (purchased in 2009 by "Baltika", St. Petersburg), after which it began to produce its own products.

Russian Crocus International will also invest in the country, with construction of a resort in Nardaran.

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