Weekly actual topics in Azerbaijan (april 13-17)

Russia threatens buyers of Azerbaijani gas

Faced with Europe's desire to reduce the dependence on Russian gas, including the purchase of "blue fuel" from Azerbaijan, Moscow has passed to direct threats.

The Russian media reported that Gazprom has threatened those opposing the construction of the South Stream and Turkish Stream gas pipelines with termination of supplies.

In this case, Gazprom intends to build the South Stream pipeline and to stop gas supplies through Ukraine after 2019. Thus, Moscow intends to force buying its gas from this proposed southern direction.

Today, the Southern Gas Corridor project, initiated by Azerbaijan, is being implemented and it is several years ahead of the Turkish Stream. Some contracts for the purchase of gas have been already signed. It envisages gas supply from Azerbaijani Shah Deniz field through Azerbaijan, Georgia and Turkey to Europe. The advantage of this route compared to the Russian one is that the gas pipeline to Europe - TAP will be also constructed for it.

Russia is paying attention to volumes. The Turkish Stream envisages supplying about 50 billion cubic meters of gas to the southern borders of Europe, whereas 10 billion cubic meters will be supplied through the Southern Gas Corridor at the first stage, so sttracting other suppliers to the Southern Gas Corridor becomes more relevant in this situation.

Contractors from other fields of Azerbaijan and Turkmenistan can be these suppliers. One must not exclude the supplies of Iranian and Iraqi gas via this route in the future. However, the EU is primarily responsible for solving all these questions. Russia threatens it now. Brussels must be most interested in attracting new suppliers to the Southern Gas Corridor.

Knowing that the Southern Gas Corridor may be a direct alternative to Russian supplies in the future and that Russia will fail to leave its implementation behind, Moscow is actually directly threatening the buyers of Azerbaijani gas as many countries covered by the Turkish Stream are the future buyers of gas from Azerbaijan.

Earlier, the resistance was carried out at the level of attempted influence via politicians sympathetic to Moscow, such as the new Greek government, then, achieving no result, Russia started to threaten. At the same time, feeling the tension in relations between Brussels and Athens, faced with serious economic problems, Moscow wants to further strengthen this divide. Greek Prime Minister Alexis Tsipras's recent visit to Russia can be cited as an example.

The effect of Moscow's threats is directly dependent on the EU. If the EU is able to consolidate and develop a consensus concerning the problem and as a result - a unified system of resistance, it will be able to resist gas dependence on Russia. Otherwise, as Gazprom head said, Russia is ready to build the Turkish Stream first and then wait for the construction of the infrastructure in Europe. This will allow Gazprom to "hold a pause" if it is forced. In fact, Russia intends to worry Europe into doing this.

Azerbaijan strengthens investment fight

The political map of the world has been recently changed. The global financial crisis, the conflict in Ukraine and the subsequent Western sanctions on Russia, retaliatory sanctions of the Russian Federation and the fall in oil prices - all this was the reason of searching for alternative markets and new sources of profit.

In these conditions, the Western countries often turn to the East, which proved to be more resilient to the external shocks than Europe.

Azerbaijan is not a traditional eastern country. It is located at the crossroads of East and West. That's why, such countries as Azerbaijan, has been recently seen as promising markets for investments.

For example, such a project as the construction of the Baku-Tbilisi-Kars (BTK), which will connect Europe and Asia, will allow opening a cheaper transport corridor. Thus, it is appropriate to speak not only about the investments, for example in joint ventures, but also the possibility of smooth delivery of goods to the markets of the third countries.

Every year Azerbaijan improves the conditions for attracting foreign investors. The new industrial, chemical-industrial and agrarian parks, high-tech parks are operating and are being established in the country. The investors wishing to work in these parks are provided with the tax and customs privileges. This allows them to reduce the production costs.

It is not surprising that foreign investments in the country are growing from year to year. They increased by 47 percent up to 1.5 billion manat in the first quarter of 2015 compared to the same period of 2014. For comparison, the investments in the first quarter of 2014 increased by almost 10 percent compared to the same period of 2013. This fact clearly demonstrates great attractiveness of the Azerbaijani market for foreign investments. In general, about 45 percent of all investments in fixed capital have been attracted from abroad since the beginning of the year.

But this is not the limit. Five business forums with the participation of businessmen from Belgium, Vietnam, Saudi Arabia, Russia, the Netherlands are expected to be held in Baku for 20-30 days. The Azerbaijani businessmen are expected to visit Hungary and the Netherlands. Moreover, they have recently had meetings with businessmen from Singapore, Italy and Serbia.

If Russia and Italy are long-term strategic and trade partners of Azerbaijan with a total turnover of around $7 billion (an index as of 2014), the foreign trade turnover with the rest of these countries during the same period amounted to about $ 600 million.

Therefore we can say that Azerbaijan is new, still unexplored market for these countries. But it is clear that Azerbaijan can cooperate with these countries on a number of areas, namely, agriculture, ICT sector, industry, including petrochemical industry.

Azerbaijan pays special attention to the development of non-oil sector, focusing on the establishment of high-tech production. Therefore, the country is looking for not only new financial but also human resources. The certain activity is conducted in this area. The procedure for obtaining a work permit in the country and so on is being simplified. But we must understand that this is the case when demand creates supply because the number of foreign workers wishing to work in Azerbaijan exceeds the country's quota.

So it would be more appropriate to speak not only of great interest in Azerbaijan as a country with a favorable investment climate, but also good opportunities for work.

While talking about investment, it is worth noting that the matter rests in the mutual investments. Azerbaijan has recently begun to actively seek new sales and investment markets. The devaluation of the manat (February 21) played a positive role in this regard. It has allowed domestic producers to reduce production costs in the country. This makes the Azerbaijani products more competitive on the foreign markets.

Azersun Holding director general Savas Uzan also said that the devaluation would open up new opportunities for local entrepreneurs. He said that the decline in domestic spending allowed the products produced on the holding enterprises to be delivered to the European market.

Most likely, an example of the holding will not be the last one. Many local companies will be able to expand their presence in other countries.

During such a difficult period for the global policy and economy, Azerbaijan has a unique opportunity to establish close ties with the new countries, by developing its economy and expanding influence in the world.

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