The Strategic Union of Uzbekistan and Azerbaijan: New Horizons of Economic Cooperation and Investment Projects

In the wake of the recent state visit of Azerbaijani President Ilham Aliyev to Uzbekistan, the bilateral relations between the two countries have undergone a qualitative transformation, with the two states now aligned as allies. On 23 August 2024, Azerbaijan and Uzbekistan allied the signing of a treaty.

"As of today, we have formally established an alliance." This is, I concur, a momentous occasion. "A treaty on allied relations represents the pinnacle of international diplomacy, establishing a framework for collaboration between two nations," Azerbaijani President Ilham Aliyev observed.

The alliance between Azerbaijan and Uzbekistan, which has developed based on historical, cultural and economic ties between the two countries, will facilitate the development and deepening of trade and investment relations. Both states have expressed interest in expanding the mutual supply of goods and services, as well as cooperation in the fields of agriculture, energy, transport, and logistics. One of the principal objectives is to facilitate the development of transport corridors and enhance the connectivity between Europe and Asia via the territory of these countries. These states play a pivotal role within the framework of the 'One Belt, One Road' initiative, serving to ensure the stability and efficiency of trade routes. Azerbaijan and Uzbekistan will also intensify their collaboration in the realms of culture, science and education. This will serve to reinforce mutual understanding and friendship between the two peoples. In the context of the strategic partnership, security cooperation is a pivotal element, encompassing the fight against terrorism, drug trafficking and other threats. This contributes to the stabilisation of the region. Furthermore, Uzbekistan and Azerbaijan are keen to expand their cooperation in the energy sector, particularly in the supply and transportation of oil and gas.

The alliance between the two countries and the Turkic peoples appears to represent a natural progression in the process of rapprochement between the countries of historical Turan and the Turkic world. The alliance between Uzbekistan and Azerbaijan is entirely consistent with the prevailing economic trends in Eurasia, particularly the development of the Middle Corridor as the most optimal route for the movement of commodity flows and investments between Europe and East Asia.
During a meeting with Uzbek President Shavkat Mirziyoyev, Azerbaijani President Ilham Aliyev put forth a proposal to enhance the efficacy of collaboration within the context of maritime freight transportation, particularly in light of the construction of the China-Kyrgyzstan-Uzbekistan railway.

At a previous meeting, I informed Shavkat Miromonovich that we are now engaging with the Black Sea region more actively. Four Aframax tankers have been purchased. It should be noted that vessels had previously operated in the Black Sea. Consequently, should you be interested in future collaboration, we could work together in the Black Sea region on transportation matters, given the considerable volume of orders and the acknowledged difficulties of the Black Sea basin. "Consequently, there are specific areas where collaboration could be beneficial," stated Ilham Aliyev.

Union Azerbaijan is poised to become Uzbekistan's primary gateway to the West and Europe, facilitating maritime trade via the Caspian Sea, the South Caucasus, and the Black Sea. Consequently, Uzbekistan, particularly with the construction of a railway to China, will become Azerbaijan's most direct route to East Asia.

During the Azerbaijani President's visit to Uzbekistan, the two countries also agreed to develop the Trans-Caspian corridor and to accelerate the implementation of the project to export surplus 'green' energy to Europe via the Caspian Sea.

It is anticipated that Uzbekistan and Azerbaijan will engage in active investment in promising economic projects within each other's territories. For Azerbaijan, it is of particular significance to attract Uzbek investment for the restoration and development of the liberated region of Karabakh. It is noteworthy that Uzbek President Shavkat Mirziyoyev placed particular emphasis on the importance of restoring Azerbaijan's territorial integrity during the inaugural meeting of the Supreme Interstate Council of Azerbaijan and Uzbekistan in Tashkent.

In the presence of the delegation, I would like to reiterate the historical significance of your role, esteemed Ilham Heydarovich, in restoring the territorial integrity of the country and returning the ancestral Azerbaijani lands. You have achieved the ambitious goal set by your father and your people. The region of Karabakh is currently undergoing a process of regeneration and growth, with the potential to become a prosperous area. I was gratified to observe the remarkable progress in Fizuli and Shusha with my own eyes.

Significant socio-infrastructure and industrial projects are currently being implemented. Mr. Mirziyoyev stated that the potential for expanded collaboration in the development of shared territories was thoroughly discussed, and that a distinct program and roadmap have been agreed upon for the third Forum of Regions. Additionally, the creation of tourist complexes in the capitals was addressed.

In total, seven projects with a combined value of $520 million have been agreed upon by Uzbekistan and Azerbaijan. In February 2023, an agreement was reached between Uzbekistan and Azerbaijan to establish a joint investment fund with an authorised capital of $500 million. The governments of Uzbekistan and Azerbaijan have agreed to augment the capital of the joint Uzbek-Azerbaijani investment fund and to penetrate the markets of third countries, including Afghanistan.

Among the large-scale joint projects is the plan of the Uzbek company Global Textile to construct a textile cluster in the Yevlakh district of Azerbaijan, with an estimated cost of $104 million. The project encompasses the entire production cycle, from the initial cultivation of cotton to the manufacture of finished products.

On the Uzbek side, three further projects are planned, including two in the liberated region of Karabakh. TST Group will construct a textile cluster with an estimated cost of $54 million in the Imishli district. Business Tex will establish a textile factory with an estimated cost of $6 million in Khankendi. Additionally, a $3 million friendship garden between the two countries is planned for the Fizuli district.

A bilateral agreement has been reached between Uzbekistan and Azerbaijan, whereby the two countries will collaborate on the construction of 'Eternal City' complexes in their respective capital cities, Baku and Tashkent. "Baku will receive Uzbek territory, and Tashkent will receive Azerbaijani territory," stated Uzbek President Shavkat Mirziyoyev.

Among the Azerbaijani investment projects in Uzbekistan is the construction of a plant for the production of gypsum and gypsum plasterboard products in the Kamashi district of the Kashkadarya region. The projected cost of the project is $20 million, with an anticipated production volume of 350 tons per day.

Azerbaijani company Agalarov Development has announced its intention to commence implementation of projects in Uzbekistan. These include the construction of a residential complex, Agalarov Residence, in the Mirabad district, which is estimated to cost $133 million, and the development of an apart-hotel comprising 750 apartments. Additionally, the Azerbaijani state-owned oil and gas company SOCAR has initiated geological exploration activities on the Ustyurt plateau in Uzbekistan's Karakalpakstan region.

The alliance between Uzbekistan and Azerbaijan serves as a symbol of the cultural and historical unity of the two Turkic peoples, while also representing an important factor in the economic development of the region. This is acquiring a concrete economic content, which has the potential to provide impetus for the realisation of larger-scale joint investment projects.


Elbrus Mammadov,
Director of the Azerbaijan-Georgia-Turkey Strategic Partnership Information Support Centre

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