Fostering EU, Azerbaijan Co-operation

Natural Gas Europe had the pleasure to speak with Marc Verwilghen, Director of The European Azerbaijan Society  (TEAS) Benelux, an organisation focused on developing bilateral relations between the EU and Azerbaijan.

In advance of the TEAS Business Forum to be held in Brussels on October 14th, our discussion focused on the ties between Azerbaijan and the European Union in energy matters and opportunities for developing co-operation in other sectors.

Discussion of energy in Azerbaijan is mostly focused upon the Shah Deniz field and the Southern Gas Corridor.  What additional energy developments should we be looking at in respect of Azerbaijan.  How can the upcoming conference assist in facilitating cooperation on opportunities between The EU and Baku?

Through the conference, we hope to convey more clarity, and promote investments. There is indeed more than just the Southern Gas Corridor but also eventual alternatives to this major pipeline - LNG and CNG for example

The seaport of Baku and the development of the Caspian Sea is something to keep in mind too.  Kazakstan and Turkmenistan could use the Southern Gas Corridor too if we help promoting developments in the region.  Last but not least, investments in renewables are logical given the geography of the country.

Recently the European Parliament adopted a resolution critical of the human rights situation in Azerbaijan. What’s your reading of the current situation between Azerbaijan and the European Union and its impact on moving business co-operation forwards?

For me, the most evident example is a different approach between the European Commission and the European Parliament. The European Commission is saying that they have to discuss with Azerbaijan and to progress with tailor-made cooperation. On the other hand, you have the European Parliament saying that Azerbaijan should be left out of the European collaboration process and the European Neighbourhood Partnership, adding that all the money that has been invested in Azerbaijan should be blocked as long as the human rights issue is not solved.

This situation is difficult - different approaches among European Institutions is a recipe for complexity and uncertainty.  There is no clarity. The European Commission should come up with a proposal and a plan. Where is the clarity dealing with the Southern Gas Corridor? There is a possibility to work together with Azerbaijan to better understand each other and possibly, at some point, to be in the position to help stabilise the Caucasus. We are not at that stage at the moment. Inconsistencies remain.

Do you think that the European approach - let’s say an unclear and slow approach - can be mended by the effort of national governments? We are referring to two countries in particular that spoke in favour of Azerbaijan - Italy and Bulgaria. Bulgarian Vice President Margarita Popova recently declared that, at least in some sectors, the EU should cooperate with Azerbaijan on an equal footing. Are those efforts enough? Or do we need more support of the European Union for projects that were basically wanted and launched by the European Union itself?

If there is no clarity of the position of the European institutions, then countries have to make progress. It is normal that Italy is the first country that you mention. Indeed, it is the first export destination of Azerbaijan. It is good to register positive developments triggered by some countries, especially Italy. But let’s not forget France and the Netherlands: their governments have said that they have to invest more in Azerbaijan. Those are positive signals, but an European approach would be better and faster. In case this was not possible, you need countries to kick in.

Recently, Azerbaijan concluded a deal with Russia’s Gazprom.  It is also holding negotiations with Iran for temporary swap operations in the gas sector and in the energy industry. Do you think that these rapprochements might be a signal of the fact that Azerbaijan is getting more and more reluctant about creating ties with the EU?

Azerbaijan is in a difficult situation. Any country in a strategic position like Azerbaijan has to take into account its regional context. They are not living alone. Azerbaijan has three very strong international heavyweights around: it shares borders with Russia, Iran and it has Turkey at a short distance.

China has interests in Azerbaijan too.

Yes, of course. That said, it is clear that Azerbaijan has to live with everybody and try to leave an open window for the European Union. I think Baku is really appreciable: for such a small country, it is smartly working on different fronts. Personally, I believe that if the European institutions are not able to show their interest for Azerbaijan, they will miss an opportunity. Additionally, chances are that Azerbaijan will be put in a corner, pushed into the direction of Russia and Iran. Is it a good evolution I don’t know. I think not.

In addition to energy, the TEAS Business Forum will touch upon Agribusiness, Infrastructure, and Information and Communications Technology (ICT).  Do you see any difference between the treatment of investments in the energy sector and investments in other sectors? Are there more problems in the energy sector?

Azerbaijan is trying to diversify its economy, and it is trying to diversify its economic relations with Europe. Azerbaijan is not only relying on energy projects. It is an agricultural country. It is the first producer of pomegranate in the world. Not being on the European levels, businesses have to be developed and there is room for these developments. There is a market and there is an interest among European companies to invest there. Energy investments are very delicate and difficult matters. There are many stakeholders that need to agree before proceeding with the project. In Agrobusiness and ICT things are much easier.

French companies seem very active in the agribusiness and the Dutch also in the infrastructure sector Can you name others?

There are several international companies and holdings saying “We are ready to go”. It is not just French and Dutch. There are also institutions like the Boerenbond, the most important Belgian Farmers’ Association, that have an interest. They have knowledge and they can come up with solutions to supply the country and optimise agricultural production. They are ready. The same holds for investments in infrastructures like railway, roads, airports, seaports. Companies are ready to go to Azerbaijan. There are many things that need to be done. At the same time, the country made progress in ICT in public applications with ASAN [Azerbaijan Service and Assessment Network], which is a public-private partnership in the digitalisation of the social structure of the country. European companies active in the ICT sector are ready to go there too.