The first priority is agriculture
Caspian Energy (CE): Your Excellency, this year is very important for Azerbaijan in terms of negotiations on strategic cooperation, construction of SGC and diversification of economy. What role would you assign to the Netherlands in all these three areas of cooperation with the EU?
Onno Kervers, Ambassador Extraordinary and Plenipotentiary of the Kingdom of the Netherlands to Azerbaijan: We have quite an active and an important role in all three areas of cooperation. I think strategic cooperation will mostly be defined in the negotiations with the European Union on the strategic partnership agreement. As you know this process started with the visit of President of the Azerbaijan Republic Ilham Aliyev to Brussels early this month and I think that my country will be actively contributing during the negotiations in Brussels. We see that the strategic partnership agreement will try to reach goals which are importance both to the European Union and Azerbaijan. Now we are talking about visa policies, economic cooperation, about access to both our markets and human rights. The contribution of member states is very important to give the negotiation process shape. My country, our delegation in Brussels and the Embassy of the Netherlands in Azerbaijan will give substantive input into this process. We also attach importance to the construction of the SGC, although we are not direct benefiters of it. The route will go via Turkey to Albania, Greece and Italy. But it bears importance in political and in a strategic sense because it means that Europe – and the Netherlands as part of it - diversify our energy sources. We are dependent on Russia whereas this project is an important source of diversification and implementation of more independent energy policy. Lastly, the diversification of economy is something which positively affects our bilateral cooperation. Azerbaijan and Netherlands have established a broad economic, trade and investment cooperation. The adoption of the Road Map in December last year and the plans to diversify the economy of Azerbaijan do very well combine with what Netherlands aspires to achieve in the course of cooperation with Azerbaijan because the first priority is agriculture where the two countries have set contacts for deepening these relations. It also involves the use of Dutch technology and knowhow cooperation with Dutch companies. So, now we have focused all our efforts on achievement of these goals. There were a number of missions last year – trade missions with agriculture companies. The Minister of Agriculture of your country Heydar Asadov visited the Netherlands last October, visited a number of companies and had a discussion with our Minister of Agriculture. That visit promoted deepening of cooperation in this area. It’s very timely that you asked this question because next week there will be a delegation going to the Netherlands to attend a seminar organized by the Dutch Ministry of Economic Affairs and dedicated to the matters of cooperation and agribusiness between the two countries. Government representatives, as well as Pasha Holding, Gilan Holding, SOCAR, Bank Respublika and other companies will visit the event. They will consider the possibilities of establishment of Business to Business mode relations and I am confident that it will be a very successful seminar.
CE: Could you please tell us more about trade relations between Azerbaijan and the Netherlands? What are the main areas of cooperation? In which areas do companies face difficulties and in which are there many opportunities for development? How many Dutch companies are operating in Azerbaijan and what do you think is needed to attract a higher amount of investments into the economy of Azerbaijan?
Onno Kervers: In general, an intensive economic cooperation is carried out. A couple of years ago we even were one of the most important investors in your country. And of course, the fall in the oil prices caused a general decrease of economic activity. But we are still active in the number of areas of cooperation. We are very much involved in something which of course is a very Dutch specialty, water management and also environmental protection. We were engaged in the cleaning of the Boyuk Shor Lake which was polluted as you know. We are engaged in various projects which are aimed at improving water management in Azerbaijan. We have number of Dutch engineering companies which are involved in various projects. For instance, Royal Haskoning is the Dutch engineering company which is involved in Alat port development. There are Dutch engineering companies involved in petrochemical projects to be implemented around Baku. And of course more and more companies are involved in agricultural projects. For instance, one of your companies Azersun is operating with Dutch Green Houses, applying the Dutch technology. We hope to intensify works in this area. I would say that the number of Dutch companies operating in Azerbaijan at this moment lies between 20-30. I once again would like to repeat that implementation of the Road Map, adopted in Azerbaijan, and provision of the best conditions play an important role in attraction of a high amount of investments. There are a number of initiatives which have been put into your Road Map and need to be implemented. Sometimes it is difficult here to find the right counterpart. The Road Map also broadly covers your wish to organize small and medium enterprises. SMEs are the backbone of our economy. I think these SMEs which exist in Azerbaijan will create sectoral organizations. Sometimes it causes difficulties when for instance a Dutch company wants to sell toys in Azerbaijan but there is no single organization to which we could apply for this matter on our own and which could give us the right advice. So, it is still rather complicated to find the best way of cooperation in the market. But I believe that the access will be broadly facilitated after the implementation of the Road Map and organizing many SMEs in Azerbaijan.
I find it important when all investors enjoy the equal rights
CE: How do you assess the investment climate and bureaucratic impact on investments?
Onno Kervers: I think that the climate is becoming more positive. A lot has been done to improve the investment climate, particularly changes in the law. I find it important to establish a level playing field when all parties, no matter whether it is an investor from Azerbaijan, China or Holland, enjoy the equal rights. I know that as far as ASAN service provision is concerned, it mainly covers citizens of Azerbaijan getting services from the government, as well as services in the field of economy.
CE: In his recent interview with the Caspian Energy China’s Ambassador Mr. Wei Jinghuahas has also expressed interest in production of products here and their export to China. Is the Netherlands interested in this?
Onno Kervers: I have already mentioned about the presence of big potential here. I believethat agricultural production in Azerbaijan is small scale. But there can be an enormous potential if forces are joined. If you create cooperatives between small enterprises to increase the production and once the production is increased, then you will certainly be able to increase sales to Russia. Achievement of much higher production will make it possible to sell products to China as well. So, we believe that the Dutch technology is the best for reaching these goals.
CE: You mentioned about perspectives of cooperation in agricultural sector, have you already visited the regions of Azerbaijan? Are there any opportunities for cooperation between Dutch companies at Azerbaijani regions?
Onno Kervers: Last October we went to Massali where there are ASAN and ABAD Centers. ABAD is a new initiative envisaging a professional development of the small scale agricultural production, as well as development of what we call a value chain. Here observed are the health regulations right from the start up of food production to its delivery to warehouses and sale. ABAD is interested in cooperation with the Netherlands in production of fruit and meat. I did not manage to visit Ganja where you have your agricultural university. I also would like to visit your agro parks. I know that Azerbaijan’s companies are interested in cooperation in the field of green house technologies, poultry and production of seeds. We have a number of companies in the Netherlands which are the world leaders in developing the best quality of seed for your agriculture products. I know that there is a lot of horticulture here, tomatoes, cucumbers and we are considering the options of cooperation. The first contacts have already been set. The Netherlands in their turn are interested in the sale of seeds, for instance by the company Rijk Zwaan. In general, the options of cooperation are favorable.
CE: Are there visits of officials scheduled for this year?
Onno Kervers: We still have to look because there will be elections held in the Netherlands this year, which are scheduled for the 15th of March. There are coalition governments working in our country. Normally it takes a long time to form the coalitions. So, the politicians in the Netherlands are getting ready for the elections. I would say that no visits by the Dutch Ministers are expected in the first half of 2017. However, we still expect the arrival of important officials to CaspianAGRO (Agricultural and Food Fair) to be held in May. The Netherlands are the partner of Azerbaijan in this exhibition.
We are looking at ways to promote our cultural cooperation
CE: What is your vision about bilateral relations of our countries for coming years?
Onno Kervers: I hope that we will find ways to intensify this process more. Apart from political cooperation and cooperation in the field of trade, economy, agriculture and particularly in agribusiness, we also hope for establishment of relations in the field of tourism. I know that this area is of big interest to Azerbaijan and that by developing the infrastructure here we can have Dutch tourists coming not only to the beautiful city of Baku but also to the rest parts of Azerbaijan. We are looking at ways to promote our cultural cooperation. The embassy has been operating here for about 10 years. We have made a good start in developing intensive relations. There have been visits from Azerbaijan to the Netherlands and from the Netherlands to Azerbaijan. This in its turn provides a good platform for further cooperation. I think the broader is the development of relations between the EU and Azerbaijan, which in a certain moment can lead to the conclusion of the strategic partnership agreement, the stronger will be the basis of our relations.
In 2050 our complete energy needs to be a renewable
CE: The Netherlands is the traditional gas supplier to the domestic market of Europe. Which new sources of energy are considered after offshore fields have been exhausted?
Onno Kervers: I would say that the agreement reached in Paris last year and the agreements to limit global warming to a maximum of 2 degrees Celsius by year 2100 are leading towards the Dutch position on renewable energy and the way in which we will phase out our dependence on gas. On the basis of that my country had an energy agreement between the government, between employers, between environmental organizations and the trade unions. This energy accord gives a time frame and an agenda with agreements until 2050 because in 2050 our complete energy needs to be a renewable. That means that gas will have to be phased out. We measure that by CO2 emission which has to be 80 to 95% less. Any fossil fuel emits CO2. So, the share of renewable energy has to be somewhere between 80-95%. We will concentrate our efforts on promoting renewable energy, as well as on reducing energy consumption which implies isolating homes, making people aware to put out the lights, use less air conditioning and etc. We have a number of alternative energy sources: solar energy, wind energy (generated onshore and offshore) bio-energy and geothermal energy. So, basically not only because of earthquakes in the region where we extract gas, but mainly because of the needs to reduce global warming, these two combinations need to reach the goal by the year 2050 and we hope to have completely phased out gas by then.
CE: The Advisory Council meeting of SGC has been held recently. Which prospects open for your country within the framework of this project?
Onno Kervers: Again as a relative outsider, I find this meeting very positive because it reconfirms the political commitments of all the participating countries to the Southern Gas Corridor. As I have explained before, for a number of reasons related to energy dependency, we do support this project though we are not a prime user. Of course, if you ask me about the prospects, we hope that once Shah Deniz and SGH projects become operational it will provide opportunities for establishment of energy cooperation with the Dutch companies. We are not the main contractors, but as we see with the Baku-Tbilisi-Ceyhan pipeline, a number of companies operating as subcontractors are given opportunities to cooperate. Thus, we expect the SGC to open the same opportunities.
We are the first country in the world which has its trains operating on wind energy
CE: Railways of the Netherlands have recently switched to full electricity supply, generated by means of wind plants. Is there an experience of use of these technologies in other countries?
Onno Kervers: That’s an interesting question because if I understand it correctly we are the first country in the world which has its trains operating on wind energy. It does not mean that this experience will not be applied in other countries. I know that there is a lot of interest. When we announced it at the beginning of this year it aroused big interest in countries from Ukraine to France and from Australia to United States. Indication of interest by all countries generates confidence that this experience will be shared with the mentioned countries and the Netherlands is more than happy to do it. If the railway system of the world countries operates on wind energy, then it will have a positive impact on the environment and the policy in the field of renewable energy.
Rotterdam port’s experience can be applied in development of the Baku International Sea Trade Port
CE: What prospects of expansion of trade relations via the sea trade port do you see? How do you assess the development of the new Baku International Sea Trade Port and creation of the Free Trade Zone there?
Onno Kervers: I think this development creates opportunities not only for Azerbaijan but also for other countries. Considering different international initiatives and the location of Azerbaijan, the Baku International Sea Trade Port is an interesting venture. We have the North-South Transport Corridor planned from Saint-Petersburg to Mumbai and if we look at the map the route will also cross this region. Thus, development and improvement of the infrastructure, as well as free trade zone in the Caspian Sea can certainly help in this respect. And of course, in addition to the North-South route, there is also an East-West route, a new Silk Way or as our Chinese friends call it one belt one route (OBOR). It provides broad opportunities. Several years ago Azerbaijan and the Netherlands established contacts on the level of the management of the Rotterdam port. Rotterdam used to be the biggest port in the world when I was a child. Now it is of the largest and most modern ports of Europe. The mayor and the officials of the Rotterdam port visited Azerbaijan in 2014 and signed an agreement on experience exchange. Common visits are also made against the background of the infrastructure and political development of the North-South and East-West routes. I have already contacted a number of people regarding further contacts aimed at practical cooperation between Rotterdam, its port authorities and Baku International Sea Trade Port.
CE: What has been the impact of Brexit on Holland’s economy?
Onno Kervers: That’s a very difficult question and I fear that it will affect both the UK and the Netherlands. But I am a lawyer not an economist. You hear a lot of opinions about it. I think that EU with UK inside was enjoying a win-win situation for many years and that situation unfortunately will come to an end. Precise effects are still to be assessed, but I don’t think we will have that win-win situation again.
CE: How will it affect gas trade between Great Britain and the Netherlands?
Onno Kervers: The fact that UK goes out of the EU does not mean that we will sell them nothing anymore. I am sure that we will continue our trade relations, but I don’t know on which conditions. Yes, their consumption rate account for 20% of our gas production in the North Sea. As I have already mentioned, we will anyway reduce gas consumption to zero by 2050. It is a very special issue.
Thank you for the interview