Azerbaijan and the EU Prepare to Finalize a New Partnership Agreement

On April 4, during a meeting, in Brussels, of the European Union–Azerbaijan Cooperation Council, Azerbaijani Foreign Minister Elmar Mammadyarov emphasized that the two sides “are very close” to reaching a new partnership agreement, with over 90 percent of the issues in question already decided. The EU’s High Representative Federica Mogherini stressed that the negotiations have now reached a “crucial phase” (Mfa.gov.az, Eeas.europa.eu, April 4).

Since starting talks, Baku has mainly focused on the quality of this framework agreement with Europe rather than its quick completion (see EDM, June 22, 2017; June 28, 2018). However, the timing for concluding the negotiations has now become critical due to the upcoming European Parliament (EP) elections (scheduled for May 23–26) and the subsequent formation of a new European Commission “cabinet” (College), which could prolong the process. Foreign Minister Mammadyarov said that Azerbaijan hoped the agreement could be initialed during the present Commission term, headed by President Jean-Claude Juncker (EurActiv, April 4, 2019).

Although certain fundamental issues within the relationship still need to be properly addressed, over the past year several key developments in a number of areas of Azerbaijani-EU relations have already positively contributed to the general dynamism of the negotiations (Eeas.europa.eu, March 11). For instance, last November, Baku and Brussels hold their first “Security Dialogue” on cooperation in combating terrorism, separatism, extremism, organized crime and threats to cyber security (Mfa.gov.az, November 3, 2018). More recently, the EP identified other prospective areas of cooperation, including information security as well as countering dangerous propaganda/disinformation activities (Europarl.europa.eu, March 13).

In February 2019, the two sides launched a high-level “Transport Dialogue” to discuss trans-regional logistics-infrastructure opportunities involving Azerbaijan, including the Baku–Tbilisi–Kars (BTK) railway, Port Baku facilities, as well as the North-South and South-West transport corridors (Mfa.gov.az, February 19). The North Atlantic Treaty Organization’s (NATO) Secretary General Jens Stoltenberg noted the BTK’s importance to the Alliance’s transit activities to/from Afghanistan, via Azerbaijan (Nato.int, April 4). Similarly, signing the European Common Aviation Area (ECAA) agreement (the first round of negotiations began in 2013—Trend, January 23, 2013) would present many new opportunities for Azerbaijan in terms of economic diversification and expanding its role as a strategic regional transport/logistics hub (Vocaleurope.eu, December 20, 2017). Azerbaijan’s unique geographical location makes it an important node for the growing number of air transportation links between Europe and Asia (Trend, February 19, 2019).

With the timely finalization of the Southern Gas Corridor (SGC), the strategic backbone of EU-Azerbaijani relations, Europe will begin receiving natural gas from an entirely new source—Azerbaijan. The SGC’s final, westernmost leg, the Trans-Adriatic Pipeline (TAP), recently approved by the Italian government (see EDM, March 6), will also supply Bulgaria through its northeastern bifurcation from Greece via Interconnector Greece–Bulgaria. Italy will not be the SGCs’ final destination, as most Balkan countries are themselves interested in connecting to this pipeline network (EurActiv, February 26, April 4). The SGC’s possible future expansion will reinforce Azerbaijan’s role both as a supplier and a potential transit country to Europe for other Caspian-basin energy producers (Eur-lex.europa.eu, July 24, 2018). The EP recently adopted a resolution on the internal gas market concerning competition rules for pipelines from non-EU countries (Europarl.europa.eu, April 4). Although derogations can be applied to existing pipelines (and indeed, TAP received a temporary “third party exemption”), the SGC’s future performance will have to consider this European legislation—particularly given Azerbaijan’s potential future gas streams and the BP’s possible dissociation from the EU’s gas market rules after Brexit. BP operates the offshore Shah Deniz II field in Azerbaijan’s Caspian waters, which will fill the SGC. During his talks with High Representative Mogherini last week, Foreign Minsiter Mammadyarov stressed that European partners could do more “to make the EU market[’s regulatory environment] more attractive to more gas from Azerbaijan” (Mfa.gov.az, April 4).

On March 16, Azerbaijan’s President Ilham Aliyev pardoned over 400 prisoners, including some individuals who had previously complicated EU-Azerbaijan relations (see EDM, March 26). Moreover, Aliyev signed another decree on reforming the judicial system, in view of making it more effective and transparent (Eeas.europa.eu, March 17; President.az, March 16, April 3).

Finally, Azerbaijan has implemented a number of reforms pertaining to trade regulations, customs tariffs, and trade-logistics infrastructure, since the country expects to join the World Trade Organization (WTO) as a developing country. Membership in the WTO would allow for more ambitious economic provisions in the new partnership agreement with the EU, thus boosting mutual trade turnover (Trend.az, December 14, 2018; Ednews.net, April 5, 2019). According to Mammadyarov, Azerbaijan demonstrated flexibility on some “technical issues” (reportedly on trade), and now expects the same from the EU, to be able to move the talks forward (EurActiv, April 4).

Until 2020, EU-Azerbaijan cooperation will be guided by “Partnership Priorities” (PP), which will replace the 2006 European Neighborhood Policy Action Plan (ENP AP) and manage the EU’s financial assistance to Azerbaijan for the latter’s economic resilience (Eeas.europa.eu, July 11, 2018). The PP, backed by the ENP Review’s differentiation principle, is a balanced and legally non-binding document, reflecting the interests of both sides. The PP expresses respect for Azerbaijan’s territorial integrity and international borders; but unlike the ENP AP, it does not specify Brussels’ role regarding the Karabakh conflict (Eur-lex.europa.eu, July 24, 2018).

Last month, Brussels rebuked Armenian Prime Minister Nikol Pashinyan’s attempts to change the negotiations format on resolving the Karabakh conflict. He had pushed for recognizing the Armenians of this breakaway Azerbaijani territory as independent parties in the talks (see EDM, March 4). EU Commissioner Johannes Hahn, while meeting Pashinyan, said “We should leave it to the current format [and] not to create something new” (Ec.europa.eu, March 3). Mogherini advocated Armenia’s full engagement in negotiations “without preconditions” (Eeas.europa.eu, March 5). Whereas, European Council President Donald Tusk told Pashinyan that “the status quo is unsustainable” and the conflict needs a settlement “in accordance with international law” (Consilium.europa.eu, March 5). The Azerbaijani government hailed Europe’s clear stance on this issue (President.az, March 6).

The EU’s support for Azerbaijan’s economic diversification is significant in terms of promoting reforms, improving the business climate, and developing the agricultural sector in this South Caucasus country (Europa.eu, March 15). Azerbaijan prefers more differentiated and flexible treatment in its partnerships with foreign actors. Therefore, instead of pursuing normative alignment with the EU through a traditional Association Agreement, Baku has proposed a partnership agreement text with the potential to raise relations to a more of strategic level. A conscious focus on points of mutual benefit rather than division will help move this process forward.