Caspian Energy Journal Caspian European Club
Monday, 15 January 2018 17:00

Unique model of SGC can be used in other areas,Mahmud Mammad-Guliyev Featured

Unique model of SGC can be used in other areas,Mahmud Mammad-Guliyev

TANAP – the backbone of SGC

Caspian Energy (CE): Mr. Mammad-Guliyev, how successful was the last year for the Ministry of Foreign Affairs of Azerbaijan? How successful were the negotiations on a Partnership and Cooperation Agreement with the EU and on a country's accession to the WTO?

Mahmud Mammad-Guliyev, Deputy Minister of Foreign Affairs of the Republic of Azerbaijan: The year 2017 was marked by positive dynamics in the EU-Azerbaijan relations. The visit of Mr. Ilham Aliyev to Brussels in early 2017 played a key role in this respect. During the visit meetings were held with the senior government officials of the European Union and the issues on deepening equal and mutually beneficial partnership with the EU were discussed. The EU leaders expressed unequivocal support for the independence, sovereignty and territorial integrity of Azerbaijan. Official Brussels called Azerbaijan as an important and reliable partner for the EU, and the strategic cooperation in the energy sector plays an important role in the EU-Azerbaijan ties.

 …the document reflected the EU's unified position on the issues of territorial conflicts in the Eastern Partnership region.

The visit also marked an official start of the negotiation process for a new comprehensive agreement. The new bilateral document will bring the cooperation with the EU to a new strategic level and secure a solid legal framework for closer and effective development of equal and mutually beneficial partnership. It will also open up opportunities for large-scale cooperation in the field of political dialogue, trade, investment, economy, legislation and culture. During the past year the sides were involved in the intensive negotiation process, both in Baku and in Brussels, and in the format of video conferences as well. The negotiation process is divided into 3 big parts: political, trade-economic and sectoral. Certain clauses of the agreement have been already agreed, while on others discussions are being finalised. However there are still many questions on which the parties continue discussions to find common ground. In general, considering the progress achieved, the past year can be considered successful for the negotiation process.

As far as the process of Azerbaijan's accession to the WTO is concerned, in July 2017 our delegation visited Geneva. During the visit the Azerbaijan’s delegation held bilateral negotiations on goods and services with the representatives of the United States, the EU, Japan, Thailand, Brazil, Russia, Switzerland and India, held the multilateral meeting on domestic support for agriculture, and attended the 14th meeting of the Working Group on Azerbaijan.

The matter of setting a specific time frame for joining the WTO can be considered as soon as the process of diversification within the non-oil sector yields results and the priority sectors of economy show stable growth. In this regard, the first results of the economic reforms are expected by 2020.

We believe that the quality of the document along with principles to be laid down in it should prevail over harmonization in a hurry

CE: Why did you tell in summer (in June) that “the negotiations on a new agreement with the EU are not easy”, so “we need to be patient”. What do you think is the main problem?

Have you managed to advance the negotiation process since then, and which steps will you take in 2018 to improve the quality and foster the negotiation process with the EU?

Mahmud Mammad-Guliyev: When this question was asked, we just started the negotiation process. I have already mentioned satisfactory progress in the negotiation process. In a short time, the parties were successful to host 11 rounds of negotiations on all three blocks of the agreement. This shows the commitment of the parties to move the process forward.

Azerbaijan views the new agreement first of all as a long-term and solid framework for equal partnership. In this regard, we believe that the quality of the document along with principles to be laid down in it should prevail over harmonization in a hurry. Artificial forcing of the negotiations may affect the quality of the document.

At the same time Azerbaijan has always advocated the differentiated and adapted approach in the EU's relations with its partners. What is suitable for one EU partner country may be unacceptable or contradictory to a national legislation for another partner country. These moments should be necessarily taken into account in the new agreement and we hope for understanding from our European partners.

We will continue negotiations at the same pace as in the past year. And this also applies to the preparatory process and to the work with the relevant government agencies during short periods between the rounds. As you already know, interdepartmental working groups were established for each block. These groups regularly hold coordination meetings to coordinate and work out a unified position on the relevant areas. Such meetings of experts contribute to strengthening interdepartmental coordination and ensuring a wider coverage of our interests and proposals.

Nevertheless, there are a number of difficult matters such as the ubiquitous reference within the trade bloc to the rules and principles of the WTO, where Azerbaijan is not yet a member. At the same time the economy of Azerbaijan is growing and the process of diversification is underway. We are gradually integrating into the world trading system. With this in mind, the basic principles of the WTO, which simplify a closer trade relationship, are also being adopted in our economy.

CE: You mentioned that certain clauses of the Agreement with the EU have already been agreed. Which ones have been agreed? Could you please more details about the economic block, since the EU accounts for 50% of the foreign trade turnover of Azerbaijan and 46% of foreign investments into the domestic economy?

Mahmud Mammad-Guliyev: Without going into details, we can say that quite a lot of issues in the political and sectoral blocks of the Agreement have already been agreed. Azerbaijan and the EU take advantage of the close trade and economic ties. Azerbaijan is the EU's largest trading partner in the South Caucasus, and the EU countries are among the main trade partners of Azerbaijan and are among the main foreign investors of Azerbaijan’s economy. Only in the past 10 years the EU countries have invested more than $10 billion into our economy. In this regard, the trade and economic part of the Agreement can secure ample opportunities to simplify the trade relations and boost exports between the sides.

CE: After February’s visit of President of Azerbaijan Mr. Ilham Aliyev to Brussels Director for Neighbourhood East, Neighbourhood and Enlargement Negotiations (DG NEAR) in the European Commission Lawrence Meredith offered Azerbaijan the implementation of the EU4Business support program for small and medium-sized businesses. Could you please tell about today’s development of this area of cooperation?

Mahmud Mammad-Guliyev: The European Commission renders assistance to support the development of different sectors of our economy. Such assistance covers projects to support small and medium-sized businesses, as well as regional development. EU4Business is one of the new tools launched to that end. Currently the joint project is being implemented together with the Organization for Economic Cooperation and Development on introducing the component of the Strategic Road Map of the Republic of Azerbaijan on Small and Medium Enterprises and on its monitoring.

CE: What practical work has the Ministry of Foreign Affairs performed after the visit of the Head of State to Brussels?

Mahmud Mammad-Guliyev: The main result of this visit, as I already mentioned, was the beginning of the negotiation process on the new agreement, which has been ongoing at a fast pace to the present day.

Consistent and purposeful work during the year enabled to meet the main interests of our country in the Final Declaration of the 5th Eastern Partnership Summit hosted in Brussels on November 24. This important document reflected the EU's adherence to the principles of international law, including the territorial integrity, independence and sovereignty of the partner countries and the EU's unified position on the issues of territorial conflicts in the Eastern Partnership region. This position is also reflected in the Global Strategy for the European Union's Foreign and Security Policy. The attempts of the Armenian side to include provocative addendums contradicting our interests have been prevented.

The parties also began consultations to harmonize new Partnership Priorities for 2018-2020. This is a document intended to replace the previously applied ENP Action Plan.

Significant progress has also been made on the draft Agreement on Unified Aviation Space, and today the discussions on the document are close to completion.

Export missions to Qatar, the UAE, Kazakhstan, Germany, Afghanistan, China and Pakistan were organized in 2017.

CE: According to the order of Mr. President Ilham Aliyev, the state should ensure protection of the “Made in Azerbaijan” brand on foreign markets. What practical work did the Ministry of Foreign Affairs perform to that end in 2017 and what are its results?

Mahmud Mammad-Guliyev: In an effort to promote the economic potential of the country abroad, including promotion of export of goods and services of local producers to the international markets, the diplomatic missions of Azerbaijan conduct the necessary work to host business forums, support organization of economic events, study foreign markets with an aim to promote our goods and services, and also attend international exhibitions and open trading houses to promote the “Made in Azerbaijan” brand. The Foreign Ministry also contributed to including the matter on promoting the “Made in Azerbaijan” brand in the Roadmaps on Bilateral Economic Cooperation with Kazakhstan and Ukraine.

At the same time last year the Trade House of Azerbaijan was opened in Minsk with the assistance of our diplomatic mission. The opening of similar trading houses in Ukraine, Latvia, Kazakhstan and Russia is not far off. Export missions to Qatar, the UAE, Kazakhstan, Germany, Afghanistan, China and Pakistan were organized in 2017.

I think that Germany and its logistics companies could consider options for cooperation with Azerbaijan

CE: CE: In your speech at the celebration of the national day of Germany you said that Azerbaijan is interested in cooperation in the transport sector with Germany. Which transport projects do contribute to the development of the economic cooperation?

Mahmud Mammad-Guliyev: For a long time Azerbaijan and Germany have been enjoying the mutually beneficial and fruitful cooperation in the field of economy. Of course, we would like to see a faster pace of development of the trade and economic ties with this country. Given that our countries do not have a common border and are located at a sufficiently large distance from each other, we should approach such issues as trade, access to the market and development of mutually beneficial economic relations in a strategic sense. To develop trade relations, not only with Germany, but with Europe as a whole, is a priority for us.

If you look at the map of Eurasia, the potential for developing an additional transport and trade corridor between Europe and Asia, where Azerbaijan is a link, is being considered. Given Azerbaijan's vision for the New Silk Road, which reduces the distance between Europe and Asia, I believe that the transport and logistics sectors can be one of the opportunities for German companies in Azerbaijan. Everybody knows the experience and possibilities of Germany in these sectors. Not by chance Baku International Trade Port is developing close relations with the Port of Hamburg.

The development of cross-border infrastructure projects is critically important for establishing strong trade relations. For many years Azerbaijan has been working towards putting in place transport corridors. Currently most of the necessary transport infrastructure is already in place. We have the established railway communication with our neighbours, which are the big regional markets having large trade turnovers with the Asian countries, let’s say, for example, with China. Our cargo fleet is the leading in the Caspian Sea region. But the Government is aimed at even greater development of trade routes with the neighbouring countries.

Our ambition is to expand transport operations through the new largest port built on the Caspian Sea. Its first stage is almost fully operational, and its initial capacities are expected to be operational by the middle of next year. It will enable to handle additional 2-3 cargo ships per day.

Test container trains from China to Europe already move through Azerbaijan. Thus, the East-West transport corridor can be considered as already created. At the same time Azerbaijan extended over $700 million as financial assistance to Georgia to construct a new railway line. We are in the final phase of negotiations with Iran on financing the construction of a railroad in Iran that will connect the Iranian railways with the Azerbaijani ones, and thus ensure a through flow of trade between India, Pakistan, Persian Gulf and Russia, Turkey, and European countries. At the moment we are developing spot logistics routes along the North-South, East-West and South-West corridors. All these transport and transit corridors contribute to the development of ties in the field of transit trade between Azerbaijan and Germany. We are monitoring the increasingly growing Germany's trade turnover with Iran and the countries of the Persian Gulf. I think that Germany and its logistics companies could consider options for cooperation with Azerbaijan in this field.

CE: Minister of Transport of Turkey Mr. Ahmet Arslan in his interview with Caspian Energy said that Baku-Tbilisi-Kars connects 14 countries of the world today. Which benefits do you see in this strategic area of development of the international relations of Azerbaijan?

Mahmud Mammad-Guliyev: The commissioning of the Baku-Tbilisi-Kars railway (BTC) is a historic milestone in the economic life of not only Azerbaijan, but the entire South Caucasus region. The opening of this railway is one more important step towards improving trade and commercial ties in Eurasia as a whole. At the initial stage the railway will be able to transport 5 million tonnes of cargo per year, but the freight traffic along it can be raised to 17 million tonnes over time. The turnover just between Europe and China comprises several hundred million tonnes per year. However China's strategic trading agenda with Europe promises a much greater potential for transit flows. In the future, BTK will serve as a reliable link in the East-West corridor and will provide countries with an additional trading route connecting Europe with Asia.

The attractiveness of BTK for cargo transportation along the Trans-Caspian International Transport Route (TCITR) comes from such components as lowered costs of goods transportation, reduced travel time and safety of transportation. With the commissioning of Baku-Tbilisi-Kars there is no need for transport operations from Georgian to Turkish Black Sea ports via TCITR. In other words, it removes extra transportation costs for sea ferry transportation and harbour fees. This will notably improve competitiveness and attractiveness of the route. BTK is also of strategic importance for ensuring diversification of the economy and trade relations of Azerbaijan.

CE: The Head of the EU Delegation to Turkey and Turkmenistan in his interview with Caspian Energy said that the EU is interested in a strategic energy partnership with Turkey, and the relevant negotiations are currently underway. Do Azerbaijan and the EU have similar legal agreements and which benefits for Azerbaijan and Turkey do you see in this?

Mahmud Mammad-Guliyev: The strategic cooperation with the EU in the energy sector is based on the relevant legal documents, and one of the most important documents is the Memorandum of Understanding on a Strategic Partnership between the Republic of Azerbaijan and the European Union in the Field of Energy. Today, Azerbaijan is contributing notably to ensuring energy security of the EU by means of exporting large volumes of crude oil to the European markets. Currently, the energy cooperation also envisages export of natural gas from Azerbaijan via the ambitious global project - the Southern Gas Corridor (SGC) - which will be considered as an essential element in ensuring pan-European energy security and diversification of supplies. The SGC is an excellent example of cooperation between different groups of countries - the EU countries, the associative country and Azerbaijan, which is the main initiator and inspirer of the project. The unique cooperation model of SGC can be used in other areas of mutual interest, for example, in the transport sector. The issues of cooperation in the energy sector will be fully reflected in the new strategic agreement with the EU.

With fraternal Turkey Azerbaijan has historically established spiritual and cultural ties, traditions and customs. The close ties and well-established confidential dialogue, as well as exemplary cooperation in the energy sector have created necessary conditions for implementation of joint strategic projects. In this context, the TANAP project, the backbone of SGC, which will expand the export opportunities of Azerbaijan, is of special importance.

In general, implementation of international energy projects and operation of transport corridors is of strategic importance for strengthening regional security and sustainable development.


 Thank you for the interview

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