ECONOMIC BROTHERHOOD: Turkey’s Karabakh investments

PART III

One of the Shusha declaration topics, signed earlier this month by the presidents of Azerbaijan and Turkey, Ilham Aliyev and Recep Tayyip Erdogan, was the development of trade and economic relations between the countries, the use of vast investment potential.

The leading position of Azerbaijan in the Turkish economy has already been noted in the previous article. The role of the neighboring country’s capital investments in the Azerbaijani economy is quite adequate: it invested $12 billion in Azerbaijan and ranks first in terms of the volume of investments in Azerbaijan’s non-oil sector.

Meanwhile, according to the historical declaration, it is assumed that by 2023 the volume of mutual trade will approach the $15 billion mark - 3.3 times more than in 2020 ($4.6 billion). Thus, the goal is reasonably achievable, given that Turkish investors respond with great enthusiasm to the call to invest in the restoration of the lands of Karabakh liberated from occupation.

All-round support

Turkish businessmen expressed their readiness to implement projects in the liberated territories almost immediately after Azerbaijan’s victory in the Karabakh war, and during the visits of representatives of entrepreneurial organizations of the fraternal country this year, the proposals took on more concrete outlines. “Turkish companies hope to play a big role in restoring the liberated Azerbaijani territories,” Turkish Trade Minister Mehmet Mus said at an investment forum in Baku in February.

However, Turkish investments have already been involved in almost all Azerbaijani economy sectors; successful work experience has been accumulated in Azerbaijan’s market, interaction with government agencies, and solutions to emerging problems. The nature of bilateral trade and economic relations can be traced in the statistics of the growth of trade turnover - for example, even last year, it grew by 5 percent, despite the pandemic and a general recession in the economies of both countries. The growth trend continues. Currently, there are 4,200 companies with Turkish capital in Azerbaijan. They have implemented more than 300 projects worth $16.3 billion.

At the same time, it should be recognized that it was against the background of the large-scale reconstruction campaign unfolding in Karabakh that additional steps were taken to make Turkish entrepreneurs as comfortable as possible to operate in Azerbaijan.

So, very high hopes are pinned on the Agreement on Preferential Trade signed in March this year, which provides for the reduction or abolition of tariffs for 15 groups of goods and the elimination of tariff and other barriers in bilateral trade. The Turkish side even stated that its positive impact is already being felt on the volume of trade.

Again, this year the idea of ​​creating a joint investment fund between the two countries was on the agenda - as Minister of Economy Mikayil Jabbarov noted, the task will be implemented by the Azerbaijan Investment Company OJSC and the Turkish Wealth Fund. So far, of course, there is no talk about how much money will be accumulated in the fund, but the goal here is to ensure uninterrupted financing of essential projects.

All this shows how loyal the country’s government is to cooperate with Turkish business in the framework of the Great Return strategy. “We give priority to Turkish companies as part of various restoration works,” Jabbarov said.

Not a gift, but a business!

At the same time, this attitude comes not only from the political and moral support of the brotherly country during the war in Karabakh - friendship is friendship, but in business, as is known, there should be nothing personal. The Karabakh projects are significant for Azerbaijan. Their high-quality and timely execution is essential so that the population can return to their ancestral lands in the shortest possible time, live, and work there in safety and comfort. These projects are not a ‘gift,’ as some foreign ‘experts’ and the media are trying to present - to get them, companies must provide commercially reasonable and lucrative offers.

Why should it be surprising that it is Turkish construction companies that carry out large-scale projects in Europe, Russia, and Asia that are preferred when choosing a partner in projects for the construction of infrastructure facilities, roads, as well as the Fuzuli airport? Today 44 companies of this country are included in the TOP-250 of the world rating of construction companies. Moreover, Turkey ranks second in the world in terms of the number of the biggest construction companies. In general, in the global construction market, the share of contractors from Turkey is almost 5 percent, which is a significant indicator. Turkish construction companies are actively and successfully building various projects worldwide, from residential complexes to airports, bridges, and other complex objects.

Also, Turkish companies have got hold of projects for the development of mining deposits in Karabakh. So, according to the order of President Ilham Aliyev, the study, research, exploration, development, and operation of the Gashgachay ore deposit based on an agreement for 30 years is transferred to Eti Bakir A.S., and the study, research, exploration, development, and operation of the Elbeydash and Agduzdag ore deposits - to the company Artvin Maden A.S. Both companies are part of one of the biggest Turkish holdings, Cengiz Holding, which is known for its commitment to investing in the introduction of new technologies to maximize the automation of the mining process.

Another area where Turkish companies are invited is renewable energy projects in Lachin and Kalbajar districts. Energy Minister of Azerbaijan Parviz Shahbazov reported that the Turkish side’s interest has already been expressed, in particular, on projects for the construction of wind power plants. It is known that the liberated lands have been declared a zone of ‘green energy,’ their potential in solar energy is more than 4,000 MW, in wind power - 500 MW. Turkish companies were not invited here by chance - investments in the renewable energy sector in Turkey last year amounted to about $7 billion, and this is a record figure for this country. This increase in the number of renewable energy plants there is due to the approaching deadline for filing applications for the use of the Renewable Energy Resources Support Mechanism (YEKDEM), being implemented by the Turkish government. According to the strategic plan of the Ministry of Energy and Natural Resources of Turkey for 2019-2023, power plants with a total installed capacity of 2,100 megawatts will be put into operation this year. The total cost of projects for the construction of these power plants will exceed $2.5 billion. Naturally, the vast majority of projects are carried out by local companies, so they have enough experience and skills.

High potential

Of course, this is not the whole list of potential areas for cooperation with Turkish investors in the liberated territories. Karabakh, with its thermal waters, extraordinary nature, rich history, is undoubtedly a region with high tourism potential. In addition, there is a vast potential for the development of agriculture, in particular, animal husbandry, mining and the production of building materials, etc. Furthermore, the passage of essential transport junctions, the possibilities of the Zangezur corridor make the industrial and export potential of the region even more attractive for investors. Chairman of the Turkish Association of Business People and Entrepreneurs (Tumkiad) Ilhami Ozturk reported that Turkish businessmen are ready to invest $50 million in creating industrial enterprises in the liberated Azerbaijani territories in the initial stage.

In the next ten years, it is planned to attract up to $50 billion of investments to the region as a whole. Taking this into account, as the DEIK/Turkey-Azerbaijan Business Council President Selcuk Akat noted, this part of the country will become one of the drivers of Azerbaijan’s economic growth. Moreover, Turkish businessmen’s involvement in the reintegration and rehabilitation of the liberated Azerbaijani lands forms a new area of ​​economic relations with Turkey, allowing not only to achieve but also to surpass the target indicator of trade turnover indicated in the historic Shusha Declaration.

Expert Gulu Nuriyev