German investments do not reflect the great potential of Azerbaijan for economic cooperation, - Wolfgang Büchele, the Head of the Committee on Eastern European Economic Relations
Caspian Energy (CE): Which countries have attractive markets for more than 200 German member companies of the Committee on Eastern European Economic Relations?
Wolfgang Büchele, the Head of the Committee on Eastern European Economic Relations: Since 1952, the Committee on Eastern European Economic Relations has represented German business interests in Eastern Europe and Central Asia. We currently concentrate on 21 countries: Russia, Belarus, the Ukraine, Moldavia, the EU countries Romania, Bulgaria and Croatia, the EU membership applicants in the Western Balkans and the countries of South Caucasus and Central Asia. The individual partner countries naturally have different market potential, but German enterprises are active in different ways in all the countries, whether in trade, the provision of services or with investments.
As far as trade volume is concerned, Russia remains by far the largest market among the Eastern Committee countries, followed by Romania and Bulgaria. In 2015, Azerbaijan was ranked seventh among the 21 Eastern Committee partner countries with trade turnover amounting to almost 2.9 billion Euro. Unfortunately, the exchange of goods between Germany and the CIS countries dropped by a total of more than 22 % last year. The exchange of goods with Azerbaijan decreased by 10 %, but the country remains by far our most important trade partner in the South Caucasus.
CE: What are the expectations of German business on the Azerbaijan market? Could you please tell us what you discussed with the President of Azerbaijan and Chairman of the Caspian European Club, Mr. Ilham Aliyev, in Munich?
Wolfgang Büchele: I conducted a very open discussion with President Aliyev in Munich in an atmosphere of trust. We talked about ways and opportunities to deepen economic relations between our countries. We agreed that German business can make an important contribution to the modernisation and diversification of the Azerbaijan economy. After all, Germany was Azerbaijan’s fourth largest supplier in 2014 after Russia, Turkey and Great Britain.
Azerbaijan has great potential for economic cooperation. Regrettably, investments by German enterprises do not yet sufficiently reflect this. This is certainly in part because the oil and gas sector is the major developed economic sector in Azerbaijan, but Germany is not one of the leading players internationally in the extraction field. In addition, it is difficult for many German enterprises to orientate themselves on the Azerbaijan market. A broader range of available information could contribute to extending the view of the Azerbaijan market and the opportunities it offers in this context. In addition, Azerbaijan’s attraction should also increase significantly together with growing regional cooperation.
CE: Which sectors of Azerbaijan are the most attractive for German companies and how much investment it is possible to expect?
Wolfgang Büchele: Traditionally, German enterprises are active in all sectors connected with the modernisation and diversification of the economy. In particular, attractive fields of cooperation for German enterprises include engineering, the manufacturing sector, agriculture and the food industry, in fact almost all sectors outside the oil and gas sector. Current developments regarding the oil price and the realignment of Azerbaijan to the “post-oil era” especially harbour enormous potential for bilateral cooperation. We are well-prepared for this and currently perceive a special opportunity for such projects.
CE: Do you think that the degree of protection of foreign investments, at the bilateral juridical and legislative levels, is sufficient to attract strategic investments to the non-oil sector of Azerbaijan's economy?
Wolfgang Büchele: This question is difficult to answer, because we currently do not have any larger German investments in Azerbaijan and therefore have no such experience.
However, I have the impression – unchanged after discussions with President Aliyev – that Azerbaijan is open to German investment and also guarantees the corresponding framework conditions for this. The Eastern Committee represents German business in Azerbaijan in the high-ranking “Trade and Investment” working group which addresses enterprises’ requirements and problems at the highest level.
CE: You are CEO of the global gases and engineering company Linde. What opportunities do you see for your company in Azerbaijan and in the eastern markets in general?
Wolfgang Büchele: The opportunities for Linde, as for many other German companies, lie in the further modernisation of the Azerbaijan economy and the increasing depth of value creation in the country. We have numerous proposals for this, which we can contribute together with partners.
As a leading technology enterprise, we are globally successful in international plant construction, from the planning and projection phase to the construction of turnkey industrial facilities. In doing so, we participate in numerous ways in the entire natural gas value creation and process chain, from exploration through further processing to use.
We also supply gases – such as, for example, nitrogen and carbon dioxide – for enhanced oil and gas recovery, for efficient access to crude oil and natural gas deposits. In addition, Linde builds facilities for natural gas processing and the extraction of natural gas liquids. In addition, our technologies play an important part in the liquefaction, storage, transportation and use of natural gas.
CE: Is the Committee on Eastern European Economic Relations ready to cooperate with the Caspian European Club, which brings together more than 500 member companies and organisations?
Wolfgang Büchele: As an economic association, we are interested in any form of cooperation which helps our enterprises and theirs to work together better and therefore promote bilateral business relations. We work together with local and international associations and chambers in many partner countries. In Azerbaijan, the Eastern Committee represents German business in the high-ranking “Trade and Investment” working group and cooperates with the German-Azerbaijan International Chamber of Commerce and the German-Azerbaijan Forum.
CE: What do you think about future possibilities for German businesses in the Russian market?
Wolfgang Büchele: We recently conducted our annual survey amongst German enterprises which are active in business with Russia. In spite of the current economic crisis, three quarters of the enterprises questioned are planning to maintain or even expand their activities in Russia. In total, around 5,600 companies in Russia are funded by German capital. Business would naturally be easier if the sanctions between Russia and the EU no longer existed. Our companies therefore hope for a “start to the end” of the sanctions soon. However, politics take priority here.
CE: How can the Southern Gas Corridor help the EU, since according to European Commissioner Cañete it can only meet up to 20% of gas needs of the European market?
Wolfgang Büchele: The Southern Corridor primarily serves to diversify the gas sources and supply routes of the EU. This is a strategic aim of the EU within the framework of the intended energy union. EU Commissioner for External Relations Mogherini once again made this clear on her visit to Baku at the end of February. At the same time, the Southern Corridor can also provide a closer connection between the economies of Azerbaijan and the EU, which will have a positive effect on cooperation in other sectors. Precisely this represents the additional value of this cross-border project in our opinion.
Interview made by Olga Nagiyeva