What will the alliance with Uzbekistan bring to Azerbaijan?

On August 23, in Tashkent, in the presence of President Ilham Aliyev and President of Uzbekistan Shavkat Mirziyoyev, an allied document was signed between Azerbaijan and Uzbekistan.

In addition to the agreement on allied relations between the two states, 12 documents were signed by the governments. Among the signed documents, an important place is occupied by the "Practical Action Plan ('Roadmap') for 2024-2025 on further expanding trade, economic, and investment cooperation between the Ministry of Economy of the Republic of Azerbaijan and the Ministry of Investments, Industry, and Trade of the Republic of Uzbekistan," which provides for deepening economic cooperation, as well as the "Agreement on Basic Terms between the State Oil Company of the Republic of Azerbaijan (SOCAR) and Uzbekneftegaz."

To increase mutual investments, Azerbaijan and Uzbekistan may increase the volume of their created Investment Fund from USD 500 million to USD 1 billion. The office of the Azerbaijani-Uzbek Investment Company was opened in Tashkent.

In recent years, there has been a rapid growth of Azerbaijani investments in Uzbekistan. For instance, in 2021, the volume of direct investments from Azerbaijan into the economy of Uzbekistan amounted to USD 8.6 million; in 2022, it was USD 23.9 million, and in 2023, USD 23.2 million. In the first quarter of this year, the volume of investments reached USD 15.4 million.

Over the past five years, the trade turnover between Uzbekistan and Azerbaijan has tripled. Last year, the trade turnover between the two countries amounted to USD 178 million 771 thousand. This included exports amounting to USD 47 million 115.58 thousand, and imports amounting to USD 131 million 656.15 thousand. In the first seven months of this year, mutual trade turnover increased to USD 118 million 281.19 thousand. This included exports amounting to USD 18 million 604.47 thousand, and imports amounting to USD 99 million 676.72 thousand.

Economist Zohrab Ismail discusses the prospects of allied relations between the two states on the program "Complex Issue."

He characterized Uzbekistan as a rapidly developing Central Asian country. According to him, thanks to the reforms carried out in recent years, the country has been experiencing stable economic growth – at least 5% annually.

According to the expert, the construction boom in Uzbekistan, unlike in Azerbaijan, extends not only to the capital, Tashkent, but also to other cities like Samarkand, Andijan, and others. Additionally, the country is implementing infrastructure projects such as the construction of railroads and highways.

Ismail noted that, unlike Azerbaijan, Uzbekistan has preserved its production sector, particularly in the automotive industry.

"For these reasons, Azerbaijan's interest in Uzbekistan is understandable," said the economist, adding that Uzbekistan is also showing interest in Azerbaijan. For example, in 2021, Uzbekistan's exports to Azerbaijan amounted to just USD 73 million, but by 2023, they had doubled to USD 144 million. Naturally, Azerbaijan also increased its exports to Uzbekistan during this period – from USD 42 million to USD 100 million.

Ismail suggests that in the future, the trade turnover between Azerbaijan and Uzbekistan may increase significantly since the "Middle Corridor" passes through the territories of both countries.