Hazar Raporu - Issue 02 - Winter 2012

Azerbaijan: Potential Catalyst for
Regional Dynamism
Azerbaijan is, and will remain, a pivotal
state in Central Eurasia, helping to shape
a common vision for the region and
facilitate its transformation. The country’s
vast natural resources could act as catalyst
for developing its non-oil economy
and reviving the non-oil trade of the
region—thus restoring Central Eurasia’s
historical position as a commercial hub
along the ancient Silk Road. But for this
to happen, Azerbaijan needs to formulate
a comprehensive vision to guide its
development and lead it to the desired
goal.
Today, the majority of Euro-Asian trade
bypasses the region, and so do the
attendant benefits. Large ships that can
carry thousands of containers at a time
have replaced the ancient caravans of the
Silk Road. Most of the trade between
Europe and Asia is conducted by maritime
transportation via Suez Canal, which
makes up more than 90% of total cargo
exchanged between the two continents.
The success of Central Eurasian hub
strategy largely depends on the ability of
the regional states to attract some of this
Euro-Asian continental container trade
by creating integrated and competitive
intermodal transportation and logistics
networks across Eurasia.
Azerbaijan is located at the crossroads
of major Eurasian land and air transport
corridors—a feature that is key to its
long-term success, if utilized properly.
Potentially, the country could serve not
only as a commercial bridge between
Europe and Asia, but also as a major
distribution hub in Eurasia. Unlike its
energy strategy, however, Azerbaijan’s
vision for development of its non-oil
economy is still a work in progress. Nearly
95% of the country’s exports and more
than 55% of GDP come from the sale of
oil and natural gas—a situation that is
unlikely to change in the immediate future.
The mid- and long-term prospects of the
country are promising, albeit conditioned
upon successful development of the nonoil
sector.
Looking Beyond Energy
Though many Azerbaijani government
officials have repeatedly acknowledged
that the country is ideally situated
to become a regional transportation
hub between Europe and Asia, these
statements are yet to be translated into a
long-term strategic vision that is coherent
and sustainable. Nonetheless, the idea
of “wanting to become a regional hub”
at least is in place. In fact, a number of
transportation and infrastructure projects
have already been launched to advance
this strategy. Among them is the strategic
Baku- Akhalkalaki-Kars railway, which will
link the Azerbaijani, Georgian and Turkish
rail networks and thus create a rail corridor
between China and Europe via Azerbaijan.
In addition, the government is investing
billions of dollars in modernization of the
country’s international highways along
the East-West and North-South axes in an
attempt to better prepare for anticipated
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