TODAY.AZ / Politics

Azerbaijan and Russia: deputy minister talks trade, FTAs, joint projects

05 October 2018 [13:53] - TODAY.AZ

By  Trend

Relations between Russia and Azerbaijan are developing in accordance with the formula of strategic partnership, and this trend is increasingly strengthening. This is confirmed by mutual visits at a high level and the agreements reached.

The trade and economic cooperation remains as the core of relations between Russia and Azerbaijan, which determines the pragmatic and balanced nature of the partnership dialogue. At the end of September, the 9th Russia-Azerbaijan Interregional Forum was held in Baku, the main purpose of which was to ensure the development of relations between the regions of the two countries.

Olga Rukhullayeva, Deputy Minister of the Russian Federation for the North Caucasus, spoke about the prospects of deepening the bilateral cooperation in an exclusive interview with Trend.

Priority areas of cooperation

“In general, the relations between Azerbaijan and Russia are friendly and good-neighborly; we have a common history and culture, there is a high level of interstate relations, which are the basis for bilateral cooperation in many areas,” the deputy minister said.

She believes there are great prospects for development and expansion of bilateral cooperation between the countries. “The recent meeting of the presidents of Russia and Azerbaijan in Sochi in September, which resulted in the signing of 15 documents as well as a joint statement on the priority areas of economic cooperation between Azerbaijan and Russia, showed that our countries are committed to long-term and mutually beneficial cooperation based on the national interests of the two states.”

“If we talk specifically about the North Caucasus, then again the priority is the development of trade, because we are neighbors of Azerbaijan, and our North Caucasian regions are considered one of the main trade partners of Azerbaijan, primarily in food products.”

“The second direction, which we consider promising, is the joint development of tourism for attraction of tourists from Azerbaijan to Russia, in particular to the North Caucasus, and vice versa, as well as creation of joint tourism products for citizens from other countries who could get acquainted with Russia (in particular with the North Caucasus), and Azerbaijan, staying in Russia,” the deputy minister said.

During discussions at the Russia-Azerbaijan Interregional Forum dedicated to the development of bilateral cooperation, “we and our Azerbaijani colleagues and representatives of the Federal Agency for Tourism of Russia agreed to outline steps for implementation of our joint projects in the future.”

Cooperation potential untapped

The deputy minister said there are a lot of talented people in Azerbaijan, who may not have enough space to develop here, so they are already implementing and can implement in the future some of their projects in Russia.

“For example, in Russia, there are niches in which women's entrepreneurship could also be involved. We talked this at the round table discussions, which were attended by prominent representatives of women's business in Azerbaijan. Given the fact that we are close, speak the same language and understand each other very well, all these opportunities should be used to the maximum,” Rukhullayeva said.

Increasing tourist flow

Tourism industry, as one of the most profitable areas, is attractive to the Russian side, in particular the North Caucasus region, and big work is being carried out to expand it, she added.

“For the development of tourism we have a perfect potential, namely, mountains, a sea, an ancient culture, a rich cuisine and sanatorium resorts,” Rukhullayeva said. “That is, there is a whole range of possibilities that can attract people, but at the same time our potential is far from being realized. Presently, the Caucasus receives about two million tourists annually, although we believe the potential of the Caucasus is about 10 million tourists a year. Therefore, we plan to develop all the niches, which will gradually increase the tourist flow."

“The idea of developing maritime tourism in the Caspian Sea was also discussed with Azerbaijani colleagues during the round table talks at the interregional forum,” she said. “On this occasion, Russian President Vladimir Putin also made a statement in Baku.”

“It will be a unique project, which has no analogues yet,” she said. “We think its implementation can bring mutual benefit and have a good prospect for long-term and effective cooperation between our countries. The project is in demand from an economic point of view. Moreover, it will contribute to the development of cultural, regional relations among the Caspian countries.”

Sanatoriums and spas

“There is still interest in sanatoriums and spas, and every year they are gaining more and more popularity,” she said. “This industry in Russia is actively developing, especially if we talk about the resorts of the Caucasian Mineral Waters. There sanatoriums are full all year round and are in great demand. People come from different countries, including the countries of the former Soviet Union.”

“I would like to stress that in the North Caucasus there are several sanatoriums built by using Azerbaijani investments. One of them is a very modern sanatorium, Istochnik, in Yessentuki.”

Istochnik with 444 beds was opened in 2016. The total investment amounted to 1.5 billion Russian rubles.

“Currently, a joint project is underway to build a SPA complex in Kislovodsk and a sanatorium in Zheleznovodsk. In Zheleznovodsk, the project has moved to the active stage of preparation. A land plot for construction has been determined and documents are being prepared for the construction of a sanatorium with 400 beds. The deadline for the facility’s construction is set for 2020. At the same time, the Russian side provided the land where it is possible to develop business.”

“Another project is planned in the resort town of Kislovodsk,” Rukhullayeva said. “On April 6, 2017, an agreement of intent was signed with the Azerbaijani side to reconstruct the Akademichesky Sanatorium, which is state-owned. The investor expressed willingness to create a modern spa complex. The facility is located on a plot of 4.9 hectares in two minutes’ walk from Kislovodsk National Park. The government of the Stavropol Krai plans to provide the investor with tax benefits for the project's implementation.”

Free economic areas in the North Caucasus

In order to expand trade and economic cooperation between Russia and Azerbaijan, there are several options for interaction in a multilateral format. One of them is the expansion of cooperation within the CIS and, above all, Azerbaijan’s accession to the free trade area (FTA) of the CIS, and subsequently to the FTA services, Rukhullayeva said.

“Undoubtedly, this is interesting. Negotiations are underway and the parties are looking for a compromise. I believe the rapprochement of our countries is necessary and attractive for both parties. As a person close to the economy, I believe such areas are necessary, and the agreements concluded, first of all, should be mutually beneficial.”

Free economic areas involve simplified customs and administrative procedures for crossing borders and some goods may be exempted from duties, the deputy minister said.

Expected joint infrastructure projects

One of the most important areas of the current Russia-Azerbaijan cooperation is the launch of the movement along the international North-South transport corridor, particularly, along its western branch via Azerbaijan, which is the shortest route, she said.

“There is a great interest of Russian and international companies in cargo transportation via the North-South transport corridor on the Russia-Iran-India route and in the opposite direction.”

Therefore, Azerbaijani partners are invited to consider the possibility of introducing Russian Platon and GLONASS systems in Azerbaijan, which will create a safe and transparent environment for the internal and transit transport of passengers and cargoes, the deputy minister said.

“As for the North Caucasus region, by the end of 2019, the work related to the reconstruction of the Yarag-Kazmalar checkpoint will be completed,” she said. “This work includes the creation of a pedestrian crossing over the Samur River, as well as the inclusion of this checkpoint in the list of checkpoints for transshipment of alcohol products via the state border of Russia, and the creation of a specialized customs post in the territory of the North Caucasus Federal District for clearance of excisable goods.”

Azerbaijani companies in Russia

Azerbaijan cooperates with more than 70 regions of the Russian Federation, and the relations with the federal subjects of the North Caucasus are of priority importance, Rukhullayeva said.

“Business relations with Dagestan and Stavropol Krai are especially good. Azerbaijani companies actively operate in construction in Dagestan, supply construction materials and concrete. Azerbaijani companies are interested in projects to create farms for growing and processing agricultural products, manufacturing canned products. Projects are being considered to create logistics centers in the Stavropol Krai, which is one of the main suppliers of grain to Azerbaijan.”

“The Azerbaijani side is interested in ensuring continuous supply of grain. Such projects as a tea plant in Krasnodar are being implemented, which, although not being a part of the North Caucasus Federal District, is very close and the products manufactured there are delivered to the North Caucasus.”

Popularity of “Made in Azerbaijan” brand in Russia

Russia ranks ninth in terms of import of products from Azerbaijan, and the country mainly exports fruit and vegetable products to Russia, Rukhullayeva said.

In 2017, imports from Azerbaijan to Russia grew 55 percent, showing the best dynamics among Russia’s partners in the CIS. This speaks of the great prospects for the sale of Azerbaijani products in Russia. However, in the opinion of the deputy minister, in order to take advantage of the available opportunities in conditions of increasing competition in the Russian market, coordinated efforts and, possibly, development of a program of joint actions are needed from both sides.

“Of course, the sale of products under a common brand will affect its recognition in the Russian market and, I am sure, will have a positive impact on demand. However, an important aspect of joint work is the adaptation of Azerbaijani agricultural producers and their products to the requirements of the Russian market and Russian regulators.”

“If I answer this question as a consumer, and not as a state representative on the Northern Caucasus, I can say that Baku tomatoes are mostly in demand in the Russian consumer market,” the deputy minister said. “We consider them a real brand of Azerbaijani products in the first place. Well, we also like Azerbaijani dried fruits, nuts and pomegranate juice. I am telling you this as a buyer. By the way, I bought Azerbaijani tea in Baku, and I hope I will like it, too.”


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