What does deepening of trade & economic co-op with Kyrgyzstan promise for Azerbaijan?

Recently, the presidents of Azerbaijan and Kyrgyzstan have signed a declaration on strategic partnership between the two countries. At the same time, an Interstate Council was established between the two countries. In general, 10 important documents were signed, including cooperation in the field of agriculture, information technology, air travel, antimonopoly regulation, and intellectual property protection. The new documents reflect the intention to bring the partnership between Azerbaijan and Kyrgyzstan to a qualitatively new level.

This Central Asian republic is an important market for the supply of Azerbaijani goods. Last year, in value terms, the total export of Azerbaijan to the region of Central Asia (Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan) amounted to 5%.

During the reporting period, Azerbaijan sold products to Kyrgyzstan in the amount of $6.023 million (0.1% of the total import from Kyrgyzstan). The main export products until 2015 were medicines and sugar. Thus, 47% of our total exports to Kyrgyzstan in 2011-2014 were precisely medicines. But, starting from this period, the supply of these products has practically ceased. Thus, from 2015-to 2020, the share of these products in total exports to Kyrgyzstan fell to 0.2%. Currently, the main product that we supply to Kyrgyzstan is sugar. This is Azerbaijan's second-largest sugar export market in 2021. Against the backdrop of the anti-Russian sanctions, the northern neighbor imposed a ban on the export of sugar due to the hype in the country's domestic market.

For Kyrgyzstan, which satisfies half of its sugar needs from external sources, the diversification of supply chains is important. In this sense, the new documents create broad opportunities for trade and economic cooperation between the two countries.

The sanctions are dealing a serious blow to the Russian economy. Economic activity has significantly dropped. There are problems with employment, including in terms of providing migrants with work. There is no doubt that the anti-Russian sanctions will remain in place for a long time to come. In Russia, hundreds of thousands of citizens of Kyrgyzstan work in the construction industry. Azerbaijan is carrying out large-scale restoration and construction work in the liberated territories. The scale of these works will only increase over time. All this requires both human resources and large financial investments. Azerbaijan at some point may face a shortage of labor. In this sense, it is possible to consider the involvement of labor migrants from Kyrgyzstan in the restoration of Karabakh.

According to the Kyrgyz media, the issue of creating an investment fund Kyrgyzstan-Azerbaijan is being discussed. Its capital is provided in the amount of $1 billion. It is assumed that this issue will be among the topics discussed yesterday at the meeting of the delegation of Kyrgyzstan with the leadership of the State Oil Fund of Azerbaijan.

Along with this, areas of cooperation with Azergold were discussed. It should be borne in mind that Kyrgyzstan has a significant potential for natural mineral resources. The main minerals include gold, silver, mercury, tungsten, and tin. The country has several gold deposits with reserves of more than 100 tons, and two large deposits of mercury with reserves of more than 20,000 tons.

Given the experience of Azergold in this area, these sectors can also become the target of Azerbaijani investments. Kyrgyzstan called on Azerbaijani investors to invest in small and medium-sized hydropower plants in the country. We are also talking about participation in the construction of the Kambarata hydroelectric power station.

Back in 2012, Azerbaijan and Kyrgyzstan agreed to build a joint oil refinery. But everything remained on paper. The capacity of the enterprise was calculated in the amount of 2 million tons of raw materials per year. Kyrgyzstan's need for fuel and lubricants is 1 million tons per year.

The rest was to be sold to Afghanistan, Tajikistan, and other countries. Given that the Kyrgyz delegation met with the leadership of the State Oil Company of Azerbaijan (SOCAR), we can talk about the rehabilitation of this project. The country's fuel and lubricants market is largely controlled by Russian companies (Gazpromneft Asia and Rosneft).

For Kyrgyzstan, which is represented in the Union of Turkic States, it is necessary to reduce dependence on Russia over time, or at least create alternative supply channels. Therefore, the deepening of trade and economic cooperation between Azerbaijan and Kyrgyzstan is beyond any doubt.