Nakhchyvan impressed me very much
Caspian Energy (CE):Mrs. Cardoso, you have been working in Azerbaijan for more than two years. What prospects do you see in development of regional cooperation between the two counties?
Chargé d´Affaires a.i of Portugal to the Republic of Azerbaijan Maria Joao Lopes Cardoso: Portugal has great expertise in information and communications technology, construction, engineering, machinery and equipment, tourism, healthcare, wine production, clothing and footwear. I think there is a great potential here for deepening our cooperation in all these fields.
For example, last year I made official visits to Ganja and to the Nakhchyvan Autonomous Republic.
When I arrived to Ganja, I found out that they were already in touch with two Portuguese cities. In 2016, Ganja was the European Youth Capital, the Portuguese city Braga was awarded the title in 2012 and Cascais will hold it in 2018, so a lot of bilateral visits have been taking place between them. In Ganja, I think we could have joint projects in wine production. In the last 15 years we have expanded our wine sector and this know-how could definitely be shared with Azerbaijani companies.
As for Nakhchyvan, after a number of very fruitful meetings, I understood that we had great scope for cooperation in ICT, construction and health sectors. In fact, during my visit I found out that we already cooperate in water management and experts from both countries exchanged visits. And water management is a sector where we can also collaborate in other regions of Azerbaijan, namely the Absheron Peninsula. Anyway, Nakhchyvan impressed me very much. And I hope to be able to visit it again.
We have had a big increase in the number of companies that are now exporting to Azerbaijan
CE: Does Portugal plan to invest in the manufacturing sector in the longer term?
Maria Joao Lopes Cardoso: Bilateral trade between Portugal and Azerbaijan is still not very significant. In 2016, bilateral trade flows amounted to roughly € 457 million (Portugal exported € 1.8 million and imported € 455 million from Azerbaijan). This year, Azerbaijan was the 149th customer (0.00% share) and the 20th supplier (0.75% share) of goods and services.
National exports were concentrated in machinery (26.1% of the total), medicines, cork, food products, ceramics, furniture and clothing. Imports were made up almost entirely of energy products, notably crude oil. There is considerable room for growth and diversification of trade flows between the parties.
It is worth noting the growing interest of Portuguese companies in exporting to Azerbaijan (the number of exporting companies increased from 39 in 2011 to 83 in 2015). The sectors of greatest dynamism and potential are: footwear, prepared or preserved fish, wine, textiles, ceramics, transport (construction of infrastructures), tourism, communications, engineering, information technology, clothing (franchising), energy and health.
Regarding investment in Azerbaijan, I have been contacted by some Portuguese companies which are interested in sectors like healthcare, pharmaceuticals. One pharmaceutical company is already selling medicines, several others expressed interest in investing in health infrastructure. We also have many food exporters who would like to export to Azerbaijan. You have a great variety of delicious agricultural products, but I believe that Portuguese companies could easily find customers for high-quality olive oil, canned fish and wine.
We need to organize more business forums…
CE: Are there any plans on the agenda to host visits, business meetings, forums this year?
Maria Joao Lopes Cardoso: Our Foreign Minister visited Azerbaijan in 2012. In 2015, the Secretary of State for Tourism participated in the Intercultural Dialogue Global Forum and the Portuguese Secretary of State for Sports paid a visit to Azerbaijan to attend the European Games. Last November, Foreign Minister Elmar Mammadyarov made an official visit to Portugal. And this year we hope to host two or three Azerbaijani Ministers who are planning to visit Portugal. Portuguese and Azerbaijani people have many similarities and feel very comfortable dealing with each other, but these visits are important to foster closer ties and even better understanding.
When our Foreign Minister of Portugal came to Azerbaijan in 2012, we organized a joint business forum. We look forward to organizing another one soon, here or in Portugal. I think we need to organize more business forums.
CE: Which other steps should Azerbaijan take to attract Portuguese companies to the Azerbaijan market and vice versa?
Maria Joao Lopes Cardoso: I think we still need to hear more about Azerbaijan in Portugal. The Azerbaijani Government is following a very intelligent policy by organizing many international events of different kinds in the field of culture, energy, religious dialogue and sports. Many foreigners who come to Azerbaijan for the first time are positively surprised with what they see. And this is very important because it creates awareness and attracts massive tourist flows into the country.
Exports were the most important growth factor…
CE: Portugal is an attractive country for tourists. What could you tell about the progress of cooperation between Portugal and Azerbaijan in the field of tourism? Are there prospects of opening of the direct flight?
Maria Joao Lopes Cardoso: We are currently negotiating a Cooperation Protocol in the field of Tourism, between the Ministry of Economy of Portugal and the Ministry of Culture and Tourism of the Republic of Azerbaijan. We are looking forward to signing this Protocol soon.
Azerbaijan has been developing its tourism sector with great success. Portugal has been a tourist destination for a long time and, recently, the tourism industry has expanded considerably. The number of foreign tourists reached 10.18 million in 2015. In 2016, there was a 1,7% increase in the number of overnight stays which reached 60 million, a third of which (20 million) were foreign tourists.
There is no charter flight from Baku to Lisbon yet, but Azeri tourists are slowly discovering Portugal. Many visitors travel first to Spain and then to Portugal. Azeri friends who have visited tell me that Portugal is Europe’s best kept secret. In 2015, we had 1283 visitors from Azerbaijan (there was a 20% reduction in 2016 due to the economic crisis in Azerbaijan), up from 314 in 2010.
CE: Several years ago Portugal’ economy went through a crisis. After a loan worth 78 billion euros from the EU, IMF and ECB, the Portuguese economy began to grow. Which sectors of the economy have become the drivers of the economic growth?
Maria Joao Lopes Cardoso: The Economic Adjustment Programme for Portugal, usually referred to as the Bailout programme, was a Memorandum of understanding on financial assistance by which a loan was granted to implement certain measures and policies. The three-year programme was signed in May 2011 by the Portuguese Government, the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). In May 2014, Portugal successfully completed the programme without any kind of precautionary program.
The latest forecasts by the international institutions revised upward the economic growth for 2017, which is expected to be around the 1.4% mark verified in 2016. The acceleration of economic growth in the second half of 2016 was boosted by exports and a reduction of unemployment to pre-crisis levels.
As far as the economic components were concerned, exports were the most important growth factor. The sector that contributed most to growth was wholesale and retail trade, repair of motor vehicles and motorcycles, accommodation and food service activities, as well as industry and other services.
Tourism has played a very important role. In addition to this, machinery and equipment continued to be the most exported product group in the first half of 2016 (15.3% of the total), followed by vehicles and other transport material (12,1%), plastics and rubber (7.7%), common metals (7.5%) and clothing (6.2%). These five main product groups accounted for around 48.8% of the total exports by Portugal in this period (against 47.8% in the first half of 2015).
We hope to have 30% of our electricity produced through renewable energy by 2020
CE: What about energy security in Portugal?
Maria Joao Lopes Cardoso: Portugal is playing a leading role in renewable energy, having a high availability of endogenous renewable resources and a very high share of renewable energy, in particular wind and hydropower (27% in 2014). The goal for 2020 is 31%.
In the Electricity sector, the reinforcement of interconnections linking the Iberian Peninsula to France will allow Portugal to provide renewable electricity to the rest of the European market.
In the Natural Gas sector, Portugal and the Iberian Peninsula have all the conditions to become a major entry point for natural gas and liquefied natural gas (LNG) in Europe, thus increasing both import capacity and supplier diversification. North-South Interconnection in Western Europe ("NSI West Gas") is a route that will facilitate the transport of gas between Northern and Southern Europe, diversifying supply sources and increasing the availability of gas in the short term. We should not forget that the first shale gas deliveries to Europe arrived through the Portuguese Port of Sines in August 2015.
Portugal imports natural gas mainly from Algeria and Nigeria. However, 39% of oil is imported from Portuguese speaking countries. It should also be noted that 29% of world recent deep-water discoveries of gas and oil were made in Portuguese Speaking Countries Community countries (30% in Brazil, 15% in Mozambique and 5% in Angola).
The deep water Port of Sines, south of Lisbon, can receive LNG tankers up to 225.000 m3, its LNG terminal has a total storage capacity of 390.000 m3 and is equipped with a re-gasification plant.
CE: How did Brexit impact the trade and economic relations of the Caspian region countries with the EU and Portugal in particular? Will Portugal face an impact in case if the USA leave the Trans Atlantic Trade and Investment Partnership (TTIP)?
Maria Joao Lopes Cardoso: Brexit is not likely to change the context of bilateral economic relations between Portugal and Azerbaijan (and the other Caspian countries), at least in the short and medium term.
Portugal has been, and continues to be, committed to the idea that TTIP will increase trade and investment between the US and EU Member States, with a positive impact on economic growth and employment. Even without TTIP, the US is already one of Portugal's preferred trading partners (5th customer of goods and services, only surpassed by EU partners). In 2015, bilateral trade amounted to more than € 5.7 billion, an increase of 38.7% over the previous five years and it continued to grow in 2016. A possible withdrawal from the TTIP negotiations by the United States would not change the importance that this trading partner already holds for Portugal, although it may limit the growth potential of business opportunities between operators on both sides.
The ‘One Belt, On Road’ project is also very important for us. Our projects are complementary and Azerbaijani gas could reach Portugal through the NSI West Gas corridor that I mentioned before. As you know, we already purchase around € 455 million worth of crude oil from Azerbaijan every year and I am convinced that Shah Denis gas may also be of interest to us.
Thank you for the interview