Trade with the World Declines, Increases with Russia

On August 13, the State Statistical Committee of Azerbaijan announced that the country's foreign trade turnover decreased in the first six months of 2024. The total turnover amounted to $22.169 billion. Of this, $13.302 billion was from exports and $8.867 billion from imports. The decline was 6.3% in real terms (imports down by 6.7% and exports by 5.7%).

In contrast, trade relations with Russia increased from 8% to 10% of the total trade volume. On August 9, during a meeting of the Russia-Azerbaijan Intergovernmental Economic Cooperation Commission held in Baku, it was reported that trade turnover between the two countries increased by 17.5% in 2023, reaching $4.4 billion. It was noted that mutual cargo transportation increased by 10% last year and by 3% in the first six months of this year.

The rise in economic relations between Azerbaijan and Russia amid global sanctions against Russia due to its aggression towards Ukraine is not unequivocally interpreted in the country.

Former deputy Vahid Ahmadov, in an interview with Azadliq Radio, acknowledged that South Caucasus is a sensitive region and that Azerbaijan acts as a communication hub here: "Therefore, Azerbaijan tries to maintain foreign economic relations with any country. Despite serious issues in Ukraine, humanitarian aid is also provided to that country. Although Russia is in a difficult situation, it is a neighbor, and we cannot suddenly stop long-standing trade relations."

Ahmadov added that the expansion of relations with Russia is natural due to the serious problems in trade with Ukraine caused by the war, and there is a need to maintain a balanced policy: "There is no need to look for additional enemies."

Regarding the benefits and drawbacks of increased trade relations with Russia, Ahmadov noted that the questions arising are understandable, but the current situation demands it: "Yes, Russia is an occupying state. Ukraine is severely affected, and recent events in Kursk are a heavy blow for Russia, leading the entire world to support Kyiv. This should have happened sooner or later. However, there is no need to create enemies at this stage. Notice that after the Shusha Declaration (the alliance declaration with Turkey), the Moscow document was signed. This does not mean that we must follow whatever Russia says. We simply need to preserve the current situation. Anyway, our energy products are directed towards the West, and Azerbaijan maintains its connection with the European market."

Former deputy and economist Ali Alirzayev also commented to Turan that economic interest is natural, and the state's actions in this regard are understandable: "There are profits and investments in the economy, and if there is growth in this direction, we should view the strengthening of relations positively. Secondly, since Russia is a large market, the expansion of trade relations is normal. We export agricultural products there and earn revenue. Thirdly, the war is causing devastation in Ukraine, with cities and villages destroyed, making weaknesses in economic relations understandable. The points I mentioned show that the comparison is inappropriate."

Economist Razi Abbasbeyli also told Azadliq Radio that the sanctions imposed on Russia have created a significant demand for agricultural products in its domestic markets: "Alternative markets include South Caucasus countries and Turkey. Thus, the increase in trade turnover between Moscow and Baku is a normal situation. Additionally, Azerbaijan is conducting construction and restoration work in the liberated territories. Therefore, construction machinery, materials, and other necessary goods are imported from the northern country. This increased demand in this sector has positively impacted the trade turnover between the two countries."

Abbasbeyli believes that the current situation shows that Azerbaijan is not facing any harm: "Azerbaijan's economy has gained access to a large market, and bilateral cooperation prospects are emerging. Azerbaijan is also an economic partner with the US, Europe, and many countries in Asia, with a high level of trade turnover."

Economist Vahid Mammadov, however, has a different perspective. He believes that Azerbaijan should gradually reduce its import dependency on Russia. He thinks that Azerbaijan should work harder to produce higher-quality products and enter the European market: "Why can Georgia and Armenia do it, but Azerbaijan cannot?! Although Azerbaijan's agricultural conditions are more favorable and the European market is more stable. Alternatively, we could export more products to Central Asian countries, including expanding trade relations with Turkey. Although we import more wheat from Russia, wheat production there has sharply decreased this year. Therefore, we should consider that Russia's economic trade relations are not sustainable. At one point, they blocked our tomato and vegetable exports, resulting in losses for farmers."

Mammadov also emphasized the importance of reducing imports: "Azerbaijan has food products that it can fully supply itself. However, today we import these products, especially wheat, milk, meat, butter, vegetable oils, and even tea. The country has the potential to produce these products."

On February 22, 2022, in Moscow, the presidents of Azerbaijan and Russia signed a "Declaration on Allied Interaction" between the two countries. It emphasized the importance of strengthening cooperation in economic, political, financial, and many other areas.