Caspian Energy Journal Caspian European Club
Friday, 17 November 2017 15:45

“If you don’t have information about opportunities of business doing in certain parts of the world, you will never discover them and make investments”, - Ignacio Sanchez Taboada Featured

We do not finance oil and gas, we lay taxes on them…


Caspian Energy (CE): Your Excellency, as the newly appointed head of the Spanish diplomatic mission in Azerbaijan, how would you assess the results of the previous mission? Mr. José Luis Diez has done a great job. What are the goals of your mission in Baku?

Ignacio Sanchez Taboada, Charge d'Affaires a.i., Embassy of the Kingdom of Spain: I completely agree with you. I think Jose Luis Diez has made a fantastic job as the Charge d'Affaires of Spain to Azerbaijan, and I will try to follow his path. He made the most difficult things at this stage – opening the Embassy and putting down first roots. Currently I am trying to figure out the essence of relations, to form the first impression of the country.

The first and very important step that we had to take in the last two months was to move from the office of the European delegation, where we were in the last three years, to new premises, to this separate embassy that we have now. But we are very happy to be here, in these premises.


CE: Have you already met with your colleagues from the EU countries, compared your positions?

Ignacio Sanchez Taboada: I have visited all the European colleagues. Here in Baku we have meetings with the Head of the European Union Delegation to Azerbaijan on a weekly basis. The diplomatic life in Baku is very active. I have also visited most of the Ambassadors of the diplomatic corps. I would say I had already the opportunity to visit 80% of them. I still have some visits to pay. I had the opportunity to meet with the Minister of Foreign Affairs and also with the Minister of Culture and Tourism.

I also had meetings with the officials in the Ministry of Agriculture, the Ministry of the Industry, the Ministry of Communications and High Technologies. We are fulfilling our task here step by step.


CE: What were the main topics of your discussions at meetings?

Ignacio Sanchez Taboada: Well, it depends… In the Ministry of Foreign Affairs we made a review of our relations in every field. We reviewed the ministerial visits that were realized in 2014 and 2016 by the representatives of Ministry of Foreign Affairs of Spain to Baku. In 2015 Minister of Defense of Spain was here also. In the same year Minister of Defense of Azerbaijan made a visit to Madrid.  The most important event will be the visit of H.E. Mr. Ilham Aliyev, President  of Azerbaijan to Spain, which will hopefully take place next year. There are no certain dates yet, but we are working on it.


CE: Which projects and plans will serve as a basis for building bilateral relations?

Ignacio Sanchez Taboada:  Well, obviously what we are here for is to strengthen the relations between Spain and Azerbaijan. Our political relations have been fairly well over the last decade. I mean Spain and Azerbaijan have established very friendly relationships. We cooperate within the framework of the European Union, the Eastern Partnership, Council of Europe and the United Nations. Bilateral ministerial visits were made.  However we lag behind in terms of the economic cooperation which we would like to strengthen. For this reason, we have developed a strategy which aims mainly at disseminating information about business communities. It means submission of the relevant information about Spain to the Azerbaijani businessmen and vice versa, provision of the corresponding information about Azerbaijan to the Spanish entrepreneurs.  For instance, such areas as trade and investments are strategically important for Azerbaijan. Azerbaijan has developed a strategic economic plan which is based on the diversification of the economy and which shows that telecommunications, transport, agriculture and tourism have a strategic potential for development. We convey this information to the Spanish business communities, so that they can consider trade and investment opportunities in Azerbaijan. The same process is running in Azerbaijan as well.


CE: What can be the size of bilateral investments?

Ignacio Sanchez Taboada:  Economic relations between Spain and Azerbaijan are very low. For instance, Spain bought goods approximately of 700 mln EUR from Azerbaijan in 2014 and sold products worth 80-90 mln EUR to Azerbaijan. There is a great gap between the countries in this sphere. At present the turnover fell down to 400 mln because of the economic recession.

Most of the products sold by Azerbaijan to Spain were oil products. The volume of goods sale from Spain to Azerbaijan fell from 70 mln to 35 mln. They are mainly construction materials, textile products and some machinery. Figures are falling down because of the economic recession in Spain and in Azerbaijan for the last 3-4 years. It has also been reflected in the trade balance. But there is no any particular problem and any specific measure. Obviously we would like Azerbaijan to join the WTO and we know that negotiations are ongoing in this direction. We expect that friendly relations between the EU and Azerbaijan will also promote the development of trade and investment ties between the European countries and Azerbaijan.


CE: Will the launch of the Baku-Tbilisi-Kars railway help in this somehow?

Ignacio Sanchez Taboada:  It is an amazing and promising infrastructure which is going to promote trade and lower transportation costs. It is quite probable that Spain, as any other country in Europe, will enjoy this infrastructure. And we hope that it will enhance the trade. It is something that we will have to wait. 



CE: Spain is the influential European country. Does Spain support the Azerbaijan's position in the negotiations on the Strategic Partnership Agreement?

Ignacio Sanchez Taboada: We have great expectations for a new legal framework of the relations between the European Union and Azerbaijan. And we expect that it will help to promote the economic and political relations.

CE: Do you support the positions of Azerbaijan in the negotiation process on the Strategic Partnership Agreement?

Ignacio Sanchez Taboada: We support the negotiations. And we support that both parties come to an agreement, which is favourable for both sides.


CE: What could you say about the position of Azerbaijan in this agreement?

Ignacio Sanchez Taboada: This is the Azerbaijani authorities, who will have to tell it. But we strongly believe that we will see a result of a new framework agreement, which is expected to have many paragraphs, especially in the field of economy. I mean, we think that the agreement is going to be very useful for both Azerbaijan and the European Union, and also for the bilateral relations. We think it will boost notably the economic relations of both sides.  


CE: What prospects do you see in reforms implemented in Azerbaijan?

Ignacio Sanchez Taboada: I think Azerbaijan is doing a good job in terms of economic reforms. According to the results of the presentation which I have recently attended and was made at AMCHAM’s meeting with a representative of the Azerbaijani government, on average 30% of economic and structural reforms, which were offered and determined, have already been completed or are about to get completed. It means that there is still a lot of work to do. But the openness of the economy, establishment of the favorable and safe environment for investments, provision of appropriate conditions for local and foreign businessmen, has been the right decision. When facing a recession and a country aspires to come out of it as soon as possible and of course makes strategic decisions to diversify its economy.


CE: If we have all conditions for the foreign business, then why the investment turnover with Spain leaves much to be desired? What is the reason and how can it be overcome?

Ignacio Sanchez Taboada: Making investments requires availability of information. If you don’t have information about opportunities of business doing in certain parts of the world, you will never discover them and make investments. Secondly, you need to have information on how particularly and precisely this business opportunity can materialize in a certain country. For instance, Azerbaijani authorities can hold workshops in the field of real estate and property rights in Azerbaijan. This is some one of the measures that you have to take in order to attract foreign investment to your market. This will be the first stage. Afterwards you are always competing with different business opportunities in different sectors and countries. Recessions and economic crisis are not the best moment to make investment abroad. What you normally try to do is to recover your financial situation locally in order to have the strength to look for business opportunity abroad. 


CE: Which Spanish companies are interested now to work in the Azerbaijan market?

Ignacio Sanchez Taboada: Many Spanish companies have worked here. The companies providing materials and equipment for the railway have been working in Azerbaijan in the last 15 years. There are also the Spanish companies engaged in the shipyard, in infrastructure projects, in construction of roads. At the same time some engineering companies worked in Azerbaijan at some of the major building projects. Some of these projects were stopped during the recession in Azerbaijan, and that is why those companies moved away. What can we see in the future? Well, the first thing that we have to do is to go to the Government of Azerbaijan and ask them (the Government – editorial note) what their main strategies are and how they see the cooperation with foreign companies. Which companies they have in mind, in agriculture, tourism industry, and also in the development of new infrastructure projects? Then we will disseminate this information among the Spanish business community and see which of them are interested to come here.


CE: Which economic problems will Spain and Catalonia face if Catalonia separates? For example, in the case of Brexit the population will lose up to 2% of its income?

Ignacio Sanchez Taboada: First of all, Catalonia is not going to separate from Spain. If you allow me, I would like to elaborate a little bit more on this issue, because the question of Catalonia is very relevant for Spain at this moment. We are talking about our national integrity and the sovereignty of the Spanish people. I promise to answer your question. But let me explain the situation a little bit.

The question of Catalonia is surrounded by a lot of deliberate intoxication and propaganda. We have managed to dispel some of them, and at the end of the day the reality is showing up.

Probably, the first wrong idea is that the people of Catalonia want to secede from Spain. No, this is totally false. The majority of the people of Catalonia want to remain a part of Spain and they like to be Spanish, Catalonian and European people at the same time. They do not have any problem with this. So, it is only a minority of the people of Catalonia, who supported different separatists that worked together in a coalition. But it is only a minority. The second wrong idea is that of oppression. First of all, there has never been a separate Kingdom of Catalonia or the Republic of Catalonia, or the people of Catalonia. Catalonia was part of the Kingdom of Aragon. And the Kingdom of Aragon merged with the Kingdom of Castile 5 centuries ago. This is the history that every 15-year-old kid in Spain could easily describe. We are talking about the 15th century, when Spain merged.


There is no nation such as Catalonia. There is only one nation - the Spanish nation. It is whole Spanish nation, not part of it. This nation is the sovereign of the Kingdom of Spain.

The third point is that the people, who live in Catalonia, live in a democratic state where the rule of law is respected. I mean the autonomous powers of the Government of Catalonia have more autonomy than those of Quebec or Scotland. They have the Parliament, they make their own laws. They have the Government. They have their own budget and they also make use of the national budget of Spain. For instance, in this recession the Government of Catalonia has enjoyed the liquidity facility created by the Central Government of Spain to solve the problems of the heavy budgetary deficit in Catalonia. There is nothing like the oppression of the people of Catalonia. What we are witnessing now is what happens in a normal democratic state with separate powers. Some public officials have acted beyond the law and beyond the Constitution, breaking the law which has been approved by both the Government of Spain and the National Regional Governments and an independent judiciary power.  So, coming now to the answer to your question: there is not going to be separation of Catalonia from Spain and from the rest of Europe. And if something like this happens, it would be a complete disaster for Catalonia, as well as for Spain. So, the separation of Catalonia is not going to happen.



CE: Which local problems do you see in the EU-Spain relations?

Ignacio Sanchez Taboada: I don’t have any comment on the issues on the European Union, but I think there are no problems.


CE: To what extent are the activities of the Government of Spain and the EU coordinated today?

Ignacio Sanchez Taboada: The ties inside the European Union are not like bilateral relations. The European Community is the community of interests and to the community of law, which is a completely different situation. The issue is not that you make some activities or political relations together. It is that you share the community of law, and this is essentially what the EU implies for its each member state. For instance, 60-70% pieces of legislation in the Spanish legal system are common for all EU member states. So, it is totally different situation.

However, as we all know, the European Union has always been in the process of growth and crisis of deepening the relations between the states. And now we are in one of such moments of crisis and development at the same time. The announced exit of the United Kingdom from the European Union means the moment of reflection for all member states. But, as I said, we need new perspectives to understand the relations between one country and the European Union. Since our relations with the European Union or with other member states are not bilateral relations.


CE: For example, President of France Mr. Emmanuel Macron suggests reforming the EU, but it seems as if he himself does not know how to do this in practice and how this mechanism will work further. Does Spain have a stance on what France is proposing?

Ignacio Sanchez Taboada: As you know, we adopted the last European treaties not so long ago. As I mentioned, the process of reforming and adapting has been ongoing in the European Union since its origins. And we probably will not ever stop it. This is not something that the President of France or the President of Spain can solve by themselves. I mean, if you consider all the processes of the Treaty of Lisbon, which was called the first European Constitution, and the Convention, and how we implemented all this, this is not something that any European politician can do alone, be it the President of France or the German Chancellor. It is always a global process of reflection among different authorities, both the national authorities and the authorities of the European community. The European Union has institutions that reflect only the interests of the Union and seek only well-being of the EU, mainly of the European community and European commission. It has its own court. It has the separate institution that deals with the affairs of the Commission. It is the European institution, which looks after the interests of the European Union as such. They also have their part in this global reflection, and this process has been ongoing since the founding of the European Union in 1950. This is the history of the European Union.


CE: Mr. Taboada, let’s talk about the energy security of Spain. To what extent is vulnerable today?

Ignacio Sanchez Taboada: We don’t have problems except for some acute problems in our energy market. As a matter of fact, one of the problems that Spain has is that we produce at the moment more energy than we consume. So, for us supply of gas from Azerbaijan to Italy and Bulgaria, Eastern and Southern part of Europe is very important because it is a new source of supply from other areas or regions.


CE: How will the Southern Gas Corridor impact on the energy security of Spain?

Ignacio Sanchez Taboada: Positively. That is to say, it will enhance energy supply to the European market even if not directly to Spain. We normally use the supply of gas from North of Africa, Algeria, Nigeria and many other regions. Most of it comes from the Southern Middeteranean, also with tankers from Algeria, Qatar or other places. But the fact that Italy gets a new source means that Italy will be less dependent on Algerian gas and great amount of supplies will flow to Spain.


CE: But Spain’s contract with Algeria expires in 2020 …

Ignacio Sanchez Taboada: I know nothing about it.


CE: Do you plan to diversify sources of supply?

Ignacio Sanchez Taboada: Over the last 10 yearsSpain has made tremendous efforts in the field of renewable energy, which made the country one the main renewable energy exporters in the world. We made a huge breakthrough in the field of renewable energy. Over the last 10-15 years we increased the consumption of renewable energy in Spain more than 10 times. Especially, in regard to sun, wind and biomass energies.


CE: It is another sphere for cooperation. Are there plans to attract these technologies to Azerbaijan?

Ignacio Sanchez Taboada: It would be a very interesting field to explore. We know that some Spanish companies are already researching the market and have established contacts with the relevant ministries and agencies. But no contracts have been signed yet. I would say that the main reason is the price.  Renewable sources of energy are very sensible to the price. Of one kilowatt costs too high, then the renewable energy cannot compete with natural gas. In other words, if you provide subsidies for natural gas and do not finance renewable sources of energy, then they will not be competitive at such market. For instance, in Spain we impose a lot of taxes on conventional types of fuel as we want to change the structure of consumption of energy resources from the conventional to the renewable sources of energy. We do not finance oil or gas. We impose taxes on them and finance the renewable energy. A number of Spanish companies are working to develop wind and solar energy consumption. I think we can expect the results in 6 months.


CE: The large commercial port is being built in Azerbaijan. Is any work currently conducted to establish cooperation, coordinate its work with the major ports of Spain?

Ignacio Sanchez Taboada: The Spanish companies have taken part in this project. And, as you know, we have the partnership project (twinning project) with the State Maritime Administration of Azerbaijan on which the Spanish civil servants have been working for 3 years. We have cooperated as widely as possible under the project of the Maritime Administration at the invitation of Azerbaijan.



 Thank you for the interview


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