Ukraine reveals priority directions for expanding interaction with Azerbaijan [INTERVIEW]

By Azernews

By Amina Nazarli

Azerbaijan and Ukraine which enjoy sustainable prospects of bilateral relations in political, economic, energy, transport and humanitarian fields plan to breathe a new life into the economic cooperation.

Azerbaijan, the largest nation in the South Caucasus with rich hydrocarbon resources, can offer a large variety of products, in particular oil and agricultural products, to Ukraine, which is very interested in their supplies.

Based on huge opportunities the two nations possess, Vadim Sidyachenko, Head of the Economic Department of the Ukrainian Embassy in Baku, told Azernews about the prospects of increasing the bilateral trade turnover this year.  

Question: How can you describe the development of relations between Ukraine and Azerbaijan over the past 25 years?

Answer: Relations between Ukraine and Azerbaijan were comprehensive and inclusive over the past 25 years of establishment of diplomatic ties. Indeed, there were ups and downs, even stagnation recorded in the early 1990's when Azerbaijan experienced difficult time of war for its territorial integrity. Ukraine fought on the side of Azerbaijan and helped both arms and humans. 

The relations developed more dynamically in 2010-2011, when the trade turnover between the two countries amounted to over $1 billion per year, which was the most peak figure at the time.

In the end of 2015 Ukraine and Azerbaijan found a quick dialogue and visit of Ukrainian President Petro Poroshenko to Baku in July 2016 significantly brought the positions of the two countries closer. So, 2016 was a breakthrough in relations between the two states.

Beginning from 2014 until the beginning of 2016 the trade turnover between the two countries tended to decrease by 30 percent a year compared to previous year. In the second half of last year this decline stopped and was stable.

During the negotiations in Davos this January President Ilham Aliyev and President Poroshenko held a friendly meeting, where they confirmed an interest in the projects which have been agreed. Also, it is planned to hold the 12th session of the intergovernmental commission under the chairmanship of First Deputy Prime Minister of Azerbaijan Yagub Eyyubov and Deputy Prime Minister of Ukraine Gennadiy Zubko.

Besides, an Azerbaijani delegation of 15 companies are scheduled to visit Ukraine.

Q.: What spheres are the most attractive and promising for the development of bilateral economic relations? Which fields of Azerbaijani economy represent particular interest for Ukrainian businessmen?

Answer: Analysis into the bilateral turnover show that ferrous metallurgy. topped the exports to Azerbaijan. In particular, Ukrainian rolled metal had a particular share, almost 50 percent, in construction market when Azerbaijan experienced the construction boom during the preparations for Eurovision Song Contest, housing building and Baku Shipyard in 2010 to 2015. However, Ukrainian supplies reduced automatically following a decrease by 30-40 percent in the volume of construction activities beginning from 2014.

I would emphasize here a tremendous increase in the volume of supplies of agricultural products, sugar, confectionery and meat to Azerbaijan over the past few years. So, these products substituted metal exports to some extent. At the same time, 18 percent of Ukrainian exports to Azerbaijan account for cigarettes, which are produced in Ukraine by world leading companies such as British-American Tobacco and Japan Tobacco.

Ukraine, in turn, purchases products of chemical industry, polymers and plastics from Azerbaijan.

Q.: Ukraine is interested in Azerbaijan's oil and its transit to Europe. How do you assess the energy cooperation between Azerbaijan and Ukraine?

Answer: Ukraine is interested in importation of oil products from Azerbaijan, which Ukraine purchases mainly from Russia, and gasoline acquired from Belarus. So, Ukraine is much more interested in supply of high-quality Azerbaijani oil for its refineries, as well as further transit to Eastern Europe. 

For instance, Ukrainian UkrTransNafta signed a three-year agreement with SOCAR to purchase 4 million tons of Azerbaijani oil for processing at Krichevsky refinery. It will be exported to the refinery from Black Sea and Southern Port.

Along with crude imports Ukraine is also interested in transit of Azerbaijani oil. Another memorandum of UkrTransNafta with Azerbaijan provides for supply of Azerbaijani oil to the refineries of Eastern Europe. Of course it should have commercial interest for Azerbaijan and be attractive for SOCAR. Today SOCAR delivers oil mainly to Europe including Eastern Europe via the Mediterranean sea.

Belarus is also considering the ways to diversify its oil supply sources and regards Azerbaijani oil supplies through Ukraine as a possible option.

Q.: How can you assess the current level of Azerbaijani-Ukrainian economic cooperation? Can we call the current level of trade turnover between the two sides satisfying? What can you tell about the prospects of increasing bilateral trade?

A.: Ukraine takes an interest in import of Azerbaijani agricultural products such as pomegranate, tangerine, persimmon, hazelnut, tomatoes and cucumbers. Now, Ukrainians can easily differ Azerbaijani pomegranate from other countries’ as Azerbaijani are sweeter and tastier. We also know that Azerbaijan hazelnut is precisely one of the most high-quality varieties. However, many people alongside the quality also pay attention to its price, which is higher compared to hazelnuts from other countries.

Today grand part of Azerbaijani tomatoes and cucumbers is exported to Russia, but I think that it would be in demand in Ukraine as well. And now we are working on export of Azerbaijani products to Ukrainian market.  

Besides goods export, Ukraine is also interested in development of tourist trips between the two sides. Recently, Ukrainians began paying increasingly much attention to Azerbaijan, especially Baku -- a romantic capital with beautiful infrastructure and different restaurants. But we also advise our tourist companies to organize tours to the regions of the country including Gabala, Sheki, Guba, Gusar, Shahdagh, and Mingachevir.

Ukrainian International Airlines are also engaged in this process. Two flights are carried out between Kyiv and Baku on a daily basis. One is performed by Azerbaijani side and the other one by Ukrainian. There is also increase in passenger flow, which increased from 150 a day in 2014 to 220-240 a day. Now we work on increasing the number of flights and directions.

Q.: How do you assess the prospects of participation of the two countries on major international projects? What are your predictions about the economic profitability of these projects?

A.: Azerbaijan is developing as a transit country. Azerbaijani and Ukrainian railways, as well as Baku Sea Port and Caspian Shipping Company seriously cooperate in development of New Silk Road.

In January 2016 the first train functioned through the Ukraine-Georgia-Azerbaijan-Kazakhstan-China route, thus testifying for competitiveness of the route. The train smoothly passed the territory of Azerbaijan (Alat Port), whilst a little problem occurred in Aktau port, Kazakhstan, which is carrying out definite work to fix the shortage.

In 2016 Ukraine joined Trans Caspian Transit route together with Azerbaijan, Georgia, Kazakhstan and Turkey. And this project is very important for Ukraine and the country is planning to actively participate in it.

The second route passing through Azerbaijan is the North-South Transport corridor in the direction of Iran, the Persian Gulf, and India. Ukraine is also interested in this project, though there is still no goods in demand in this direction compared to eastern route. However, the project is still interesting on terms than to import goods around the whole of Africa. 

Talking about investments between the two sides, we consider not only trade, but the most interesting is the establishment of industrial cooperation on the basis of mutual investments.

As Ilham Aliyev underlined at a meeting with President Poroshenko in Davos this January, Azerbaijani investments amounted to $200 million in Ukraine, in particularly, in construction and automaintenance. One of the expected projects is construction of asphalt plant in Ukraine by Azerbaijani investments. Today Ukraine has established itself in the construction and reconstruction of roads.

Ukraine also plans to invest in Azerbaijani market in particular in joint production of medicines. And this is the nearest projects that the two sides are expected to implement. The two countries plan to build a plant for production of infusion solutions.