Weekly economic review (Feb. 22-26)
Azerbaijan, Iran becoming closer
Azerbaijan and Iran historically have close relations and the potential for cooperation between the two countries is very high.
In this regard, the visit of Azerbaijan's President Ilham Aliyev to Iran is a catalyst for the two countries to bring their positions closer on a number of political and economic issues.
Baku and Tehran are bound by a large number of oil and gas projects. Iran participated in developing Azerbaijan's largest gas field Shah Deniz and has even expressed intention to increase its share in the project which means additional investments from this country.
Moreover, the two countries have gas swap infrastructure via which Azerbaijan supplies its fuel to Iran's northern provinces. Iran, for its part, ensures the gas demand of Nakhchivan Autonomous Republic. Currently, the sides discuss the possibility of transporting Iranian gas through Azerbaijan to Europe via the Southern Gas Corridor. Moreover, Iran's Oil Ministry is going to sign a memorandum with the State Oil Company of Azerbaijan (SOCAR).
The most important issue in Azerbaijani-Iranian relations is the disputed status of the Caspian Sea. Turkmenistan and Kazakhstan have an agreement on the status of the Caspian Sea for developing the offshore fields. This agreement can significantly speed up the process of resolving the issue related to the status of the Caspian Sea.
Baku can propose Tehran investment projects in various spheres to attract Iranian companies and businessmen to working in Azerbaijan. Taking into account the economic reforms carried out in Azerbaijan, the investment promotion measures, including tax and privileges and in general, the improvement of the business environment, Iranian investors will be very interested in making investments in Azerbaijan's economy. By the way, the sides have already reached an agreement on attracting Iranian investors to Sumgait Chemical Industrial Park.
To date, the volume of Iranian investments in Azerbaijan's fixed capital has reached $760 million. This is while the investments in Azerbaijan's non-oil sector stood at $145 million.
It is the right time for investors to take the advantage of all privileges offered by the Azerbaijani government.
Due to the fact that Azerbaijan will play a role of a railway bridge between Europe and Asia, investors can take advantage of these transit opportunities to export their products on reasonable terms.
We should also mention the North-South international transport project that will link Russian, Azerbaijani and Iranian railways and create opportunities for trade turnover between North Europe and South-East Asia.
Its implementation was significantly accelerated in 2015 on the initiative of President Ilham Aliyev.
The construction of the railway's Iranian section has already started. Therefore, the visit of Azerbaijan's president to Iran suggests that the project's implementation can be even more accelerated.