Germany-Central Asia: A Strategic Pivot Toward Economic Diversification

In a move that underscores Russia's strategic interest in the South Caucasus, Sergei Naryshkin, Director of the Russian Foreign Intelligence Service (SVR), visited Baku earlier this week, holding high-level meetings with Azerbaijani President Ilham Aliyev and officials from Azerbaijan's intelligence agencies. The visit, held on October 2-3, highlights Moscow’s intention to reinforce its influence in the region amid a backdrop of growing anti-Western rhetoric from both Russian and Azerbaijani leadership.

Kazakhstan, situated at a complex geopolitical crossroads in Central Asia, is striving to maintain a delicate balance as Western powers tighten sanctions against Russia amid the ongoing war in Ukraine. While adhering to sanctions remains part of the national strategy, the country faces significant challenges in maintaining this precarious position without compromising its own economic interests or regional stability.

The outcome of the 44-day Second Karabakh War in 2020 has also influenced the geography of foreign direct investments directed at Azerbaijan's economy. According to recent statistics, after the Second Karabakh War, investments from the Russian Federation, Turkey, and the People's Republic of China into Azerbaijan's economy, particularly in the liberated territories, began to grow. However, the attraction of Western-origin foreign investments continues to face significant hurdles. The Azerbaijani government's classification of states as friendly or unfriendly is a factor, but traditional problems such as monopolies dominating the national economy, as well as the lack of an independent judiciary and legal system, are ongoing challenges that need to be addresed.

The legal basis of cooperation between the Russian Federation and the Republic of Azerbaijan consists of more than 170 interstate, intergovernmental, and interdepartmental agreements, including nearly 50 documents in the economic sector. Key agreements include the Treaty on Friendship, Cooperation, and Mutual Security signed on July 3, 1997, the Declaration on Friendship and Strategic Partnership on July 3, 2008, the Declaration[1] on Allied Cooperation between the Russian Federation and the Republic of Azerbaijan on February 22, 2022, and the "Roadmap for the Development of Cooperation in Key Areas for 2024-2026," [2] signed on January 22, 2024.