People need to get to know each other…

Caspian Energy (CE):  Mr. Kiverik, how has 2017 passed in terms of bilateral relations?  Was this year significant in terms of events, as you have been here for 3 years?

Indrek Kiverik, Head of Office, Charge d’Affaires, Embassy of Estonia:  I have been Charge d’Affaires in the Estonian Embassy to Azerbaijan for the third year. This is my last year as the head of the office of our embassy in 
Ankara. In general, this year was monumental for Estonia over the last 3 years. Foreign Affairs Minister’s visit took place in the first half of the year (for the first time over the last 7 years). After Estonia assumed presidency in the EU from July till December 2017, a number of intensive visits were made by the officials from the EU countries within the framework of the Eastern Partnership. A program of meetings was implemented right before the Eastern Partnership summit. As I see and know, the summit turned out successful for Azerbaijan and Estonia. I am pleased that Azerbaijan has started working more actively in the European direction during Estonia’s presidency in EU. Signing of the new partnership agreement, a visa dialogue and cooperation in the energy area are on the agenda. Azerbaijan is becoming a more important and influential partner for Estonia as well. The session of the intergovernmental commission took place in April of this year. We held a bilateral business forum. The interest of Estonian businessmen towards Azerbaijan is growing year by year. Estonian entrepreneurs are interested in participation in projects concerning logistics, joint transport services, agroindustry, as well as joint production of pharmaceutical goods. Tallinn hosted a business forum of the Eastern Partnership and EU states in October. A delegation consisting of 30 representatives from the public sector and business circles represented Azerbaijan. Discussed at the forum were the options of cooperation and business development between Azerbaijan and EU states.

CE:  Are there big projects to be implemented by the countries?

I may be not attentive enough, but I have not heard about Estonian companies working in Baku…

Indrek Kiverik:  Yes, you are right. There are no Estonian companies yet, but everything is still ahead. We are waiting for the results of the negotiations on a number of projects. It is a digital economy in which our entrepreneurs have been actively cooperating with Azerbaijan for several years.

CE: Which concrete areas do you mean?

Indrek Kiverik:  These are e-government systems and the provision of electronic services. I mean everything that Azerbaijan finds priority in these technologies. Azerbaijan, in turn, is the first country which officially followed Estonia’s step, approving an M-Resident project which makes it possible for foreign businessmen wishing to start their business in the republic to get a Mobile ID.

We all in the EU are looking forward to Azerbaijan’s entering into the WTO.

CE: What is the sum of the current trade turnover?

Indrek Kiverik:  The turnover is small, even slight I would say. As far as Azerbaijan’s investments into Estonia are concerned, they are growing. It happens because the number of Azerbaijani entrepreneurs opening offices in Estonia is getting higher. They are engaged in logistics, consulting services, IT, wholesale distribution and restaurant business.

CE:  What conditions are created for foreign investments in Estonia? For instance, for Azerbaijani, Turkish, Kazakhstani and Georgian entrepreneurs.

Indrek Kiverik:  The conditions for foreign investments are the most favorable because we have a system of taxes which is favorable equally for all entrepreneurs. The tax system is transparent. We have a very low corruption rate. We have fair play conditions. It is also noteworthy that Estonia is a member of Schengen zone, WTO, OECD, NATO, etc. That is to say, investments are in safe and highly developed area.

CE:  Does an internal investor enjoy the same advantages as an external one?

Indrek Kiverik:  Yes. No taxes are levied from reinvested revenues. If an entrepreneur makes money and invests into an own business, then no taxes are levied from this revenue.

CE:   Does it work on the entire space of the EU?

Indrek Kiverik:  It concerns only Estonia’s tax payers. It involves enterprises registered in Estonia. Our country is the first in the EU to create to such conditions for entrepreneurs. 

CE: Which means that Estonia can become a good jump ramp for expanding geographic reach of business..…

Indrek Kiverik:  Yes. The thing is that if investors are in our country – it is not simply a two-sided business, it means they are inside of the EU. Estonia is a jump ramp for further business expansion towards the neighbor countries. Azerbaijan can be the same jump ramp for our business. Both Azerbaijan and Estonia are at the crossroads of trade routes.

CE:   Are there direct air flights between our countries?

Indrek Kiverik: Unfortunately no. It is a big minus. But even if there were direct flights, that would not be a basic argument for businessmen. Azerbaijan and Estonia are small countries located far from each other. But we have areas which we can cooperate in. Both Azerbaijan and Estonia are on the crossroads of trade routes. Estonia can join the North-South transport corridor. For Azerbaijan, Estonia is a jump ramp into the Scandinavian market. Estonia is a small market with a population reaching 1.5mln people. But we are on the crossroad, the Baltic and Scandinavian states are located next to us. Our domestic market is the EU market. On the other hand, Azerbaijan is a possible ramp for our businessmen towards the market of Iran, Near East and India. We are pleased with the fact that Azerbaijan is building both a political and a railway contact with Iran. If this route works, for our investors and entrepreneurs will be very easy to reach the mentioned markets right through Azerbaijan. For instance, our entrepreneurs are engaged in cargo transportation for Chinese goods all over the world. So far Tallinn has been a logistical center for these purposes. Our entrepreneurs visited Silk Way transportation junction in 2016 and were quite interested in cooperation. The transshipment point is widely developed in Baku and is operating dynamically. Goods brought into Baku are handledwithin 3 hours and shipped in the required directions. It is very beneficial for Estonian entrepreneurs. Secondly, we can cooperate in the area of mutual investments, joint production projects for further export to neighbor regions. There is a certain number of Estonian companies which are ready to invest in the agriculture, animal breeding, pharmaceutical productions and so on for further export into Central Asia, India and Turkey. 

Besides, Azerbaijani products have been available for two years on the Estonian market. Export from Azerbaijan to Estonia is growing, including investments. A big Azerbaijani community consisting of over 3,000 people is operating in Estonia. They are involved in business, trade and of course are tightly bound to Azerbaijan. There are almost no Estonian communities in Azerbaijan. There are a few people. It is also an important moment. 

Azerbaijan is still an unrecognized area for Estonian investors.

CE:  Still Mr. Ambassador, what do we have to change in Azerbaijan to attract an Estonian business?

Indrek Kiverik:  Azerbaijan is still an unrecognized area for Estonian investors. The reason lies not only in the long absence of the diplomatic mission here, Azerbaijan simply found it priority to develop an oil-gas industry which is why it was difficult for our business to understand the country’s market and financial system and also the way to enter this market.

Today, such areas as tourism, agriculture and international trade became more transparent. Now it is easier for us to hold negotiations, and the intergovernmental commission meeting which took place in April as well as the Azerbaijan-Estonia business forum is another proof for that. It is encouraging. One senses that Azerbaijan is interested in investments.

CE:  But almost year has passed since the conduction of the intergovernmental commission meeting and the forum. Once there are no contracts and investments, it means that this instrument is not effective in this case?

Indrek Kiverik:  The business-forum was held in April. I do not have all the information about the stage of projects. But I can say that if projects are not announced in public, it does not mean that they do not exist. They are under development. An interest at the business forum was mutual.

CE:  I understand. For instance, Nakhchivan is getting 65% of its energy generated out of renewable. Even the most developed European economies are far from such indicators. It tells about a big potential of this area in Azerbaijan… Do you see technological Estonian companies in this area?

Indrek Kiverik:  Alternative energy is one of the areas we can cooperate in. In the field of alternative energy Estonia has its interesting technological developments. It also concerns an agricultural production and scientific developments. It is the areas we are succeeding in. And of course there is a potential in the field of tourism. It is an absolutely unexplored area for us here. The cooperation in the field of tourism is very low between Azerbaijan and Estonia. From my point of view, in order to set business contacts people need to get to know each other first. Student exchange is growing, which is a positive factor. Tourists, students… The more people travel and communicate, the better they understand each other and wish to cooperate. An intensive cultural exchange helps to reach the same goal.

CE:  What is the turnover of tourists now?

Indrek Kiverik:  Unfortunately, the travel agencies are not deeply dealing with our directions. It is a mutual problem. There are things that have to be worked on here.

We addressed this issue in a different way and cancelled all import duties …

CE:  What would attract Azerbaijani tourists to Estonia?

Indrek Kiverik: We have developed a medical and spa tourism. A lot of Finnish and Russian tourists are visiting Estonia, getting rest at sanatoriums and tourism farms… The problem is that for Azerbaijanis it is more beneficial to go to Turkey, Israel and other neighbor countries. Though, the prices in Estonia are affordable and the quality is Scandinavian. Our tourism sector provides recreation on the landscape and resort facilities on the islands (we have hundreds of islands!). Tourists coming to our country make vehicular tours to the Baltic States and head to Sweden by ferries.  Estonian tourists, in turn, lots of whom are coming to Georgia today, could also visit Azerbaijan and vice-versa. If there is a logistical contact between Azerbaijan and Iran, tourists will also be able to visit Iran and neighbor countries. The goods turnover between our countries is not the only promising area for cooperation but the opportunity does exist. Azerbaijan is limiting import now. It has a negative impact on the goods turnover from our point of view. In 90s when Estonia was not an EU member and had no access to the European market, we addressed this issue differently and cancelled all import duties. It was very hard for our economy but we became more competitive. We did not exhaust ourselves but became stronger. We improved in terms of quality and our prices were more affordable. Of course, there were losses. Some people gave up, others got adjusted. Afterwards we became stronger. For the last 25 years Estonia has been famous for its liberal economy.

CE:  If we enter WTO, we simply will have to simplify import duties…

Indrek Kiverik:    We really would like Azerbaijan to enter WTO. Perhaps it is one of the most complicated moments in the negotiations about a new agreement between Azerbaijan and EU…

CE:  EU Ambassador Kestutis Jankauskas is quote optimistic about Azerbaijan’s entry into WTO. Even if it does not happen, all its terms will be fulfilled in the strategic partnership agreement …

Indrek Kiverik:  As to the agreement, I think we will reach its signing stage next year, Deputy Foreign Affairs Minister of Azerbaijan Mahmud Mammadguliyev said. I think the agreement will be probably signed in the second half of 2018.

In spite of the fact that I am in the thick of the negotiation process, I have not heard pessimistic assessments about this issue. Moreover, Azerbaijan now is more ambitious that it was two years ago and has an interest in it. The EU is not a country which has purely "national" interests or a goal to "to draw" some party into somewhere.  EU provides a choice. The eastern partnership for EU, especially for us, is a priority. We are interested in your more active cooperation with Europe.

CE:  What will be the impact of Brexit on the Estonian economy? Are there any calculations?

Indrek Kiverik:  It is difficult to make calculations regarding Brexit. Like many others, I do not quite understand why Great Britain has left EU. But this is the choice it made. I hope we will reach a certain agreement with UK. This country anyway will remain tied with EU by many knots. Estonia from its side is ready to increase a financial contribution to the common budget of the EU in case if such necessity arises.

For people living outside EU it is often difficult to understand the way EU functions. One gets the impression that it is a huge bureaucratic apparatus – officials who make decisions somewhere in Brussels… Indeed, it is permanent search for a consensus where each country has a right of vote and its interests. As a country presiding in the EU, we intensively faced an organizational side of decision making. It is a huge work on creation of coalitions of opinions. And I think that we successfully handled the task, bringing the European dialogue to certain solutions.

CE:  Considering this experience, can you help Azerbaijan, Moldova, Ukraine and Georgia to develop more competitive markets? What are your further plans in these countries?

Indrek Kiverik: As I have already noted, the eastern partnership is a priority for us. Politically and economically we maintain this work especially actively with Ukraine, Georgia and Moldova, associated EU members. 

There is an eastern partnership center operating in Estonia with projects aimed at developing governance, public structures and business in partner countries.

The delegation of the Eastern Partnership center together with Estonia’s Foreign Affairs Minister Mr. Sven Mixer visited Azerbaijan in June of this year. The center coordinated a visit of EU Ambassadors for Eastern Partnership to Azerbaijan in November. Apart from this, we are planning to establish cooperation between the eastern partnership center and Azerbaijan’s parliament committee for regions. It is gratifying that Azerbaijan is interested in much closer participation in the projects of the eastern partnership format. We have many opportunities to cooperate and share experience within the framework of this program.

Thank you for the interview.