Germany-Central Asia: A Strategic Pivot Toward Economic Diversification

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.

The Ukrainian blogosphere has sparked a call to boycott the State Oil Company of Azerbaijan (SOCAR) after Azerbaijani President Ilham Aliyev hosted Russian President Vladimir Putin in Baku, followed by an agreement between SOCAR and Gazprom on cooperation in the gas business. This reaction reflects a complex web of emotions and political calculations in Ukraine, a country deeply scarred by Russia's ongoing aggression. Ukrainian authorities remain silent on the matter, and there seems to be a general sense of indifference in society, although the prevailing sentiments are far from straightforward.