Azerbaijan is the key to unlocking Russian-Indian trade

Azerbaijan is perfectly situated to connect Russian-Indian trade via the proposed North-South Corridor between the two. If it can find a role in this arrangement, Baku can catapult its regional importance and become a global economic player.

The world is sitting at an historic crossroads, with regional and pan-continental integration processes dominating the current trends. While the EU aims to consolidate its economic sphere, Russia is seeking to do the same. All the while, Moscow wants to play the role of economic middleman in connecting Asian economies with the EU, and herein lays the opportunity for Azerbaijan. Russia and India are moving forward with the so-called North-South Corridor which aims to link their economies via Iran and the Caspian Sea. If Azerbaijan can position itself as a cost-effective and more efficient alternative to Iranian-Russian trans-Caspian shipment within this structure, then it can reap all of the economic dividends of Indian-Russian, and perhaps even Indian-European, trade.

The Unfolding Context

Russia’ economic pivot to Asia was motivated largely by the Ukrainian Crisis and the West’s attempts to isolate the country. In the year since the sanctions were first enacted, President Putin has engaged in a flurry of economic diplomacy, clinching notable deals with China, India, Turkey, and Egypt. Whereas the old adage said that ‘all roads lead through Rome’, Russia wants to show that ‘all Eurasian roads lead through Moscow’. Whether or not it will fully succeed in all of these mighty endeavors is yet to be seen, but nonetheless, such plans provide exciting economic opportunities for those who can get involved with facilitating them. Additionally, as is known, being of use to Russia typically carries with it unspoken diplomatic benefits, which in the case of Azerbaijan, can help aid in a constructive resolution of the Nagorno-Karabakh issue, more so if Baku can make itself an integral partner in Moscow’s Asian outreaches.

Integrational Plans

Qazvin-Rasht-Astara railway under construction connecting Iran and Azerbaijan is marked in red.
Qazvin-Rasht-Astara railway under construction connecting Iran and Azerbaijan is marked in red.

The most relevant Russian-Asian integrational plan for Azerbaijan is Moscow’s joint vision with New Delhi. When Putin visited India last December, the two countries discussed the North-South Corridor, whereby it is foreseen that Indian goods would pass through Iran’s Bandar Abbas port and northward through the Caspian Sea en route to the Russian marketplace. Likewise, Russian goods would follow the reverse path in order to help them access the massive Indian economy. Accordingly, goods are envisioned to go be transported via ship, rail, ship, and then back to rail again, but thus far, the model is inefficient in the sense that goods must be unnecessarily offloaded to sea twice, wasting valuable time and increasing the cost of shipment. This is precisely the problem that Azerbaijan can help solve.

Azerbaijan’s Advantage

It would be much more efficient for goods to simply travel from rail via Bandar Abbas through Azerbaijan and then on to Russia, thereby completely removing the lengthy Caspian detour out of the equation and thus saving on both time and money. This would not only facilitate Russian-Indian trade, but also give Azerbaijan an opportunity to sell more of its goods to the booming Indian market. Through these means, Azerbaijan can diversify its economic partnerships, raise its global prestige, and buffet its multipolar policy. In such a situation, every factor plays to the country’s benefit, and its leadership has everything to gain by increasing its importance to Russia, Iran, and India. Even more importantly, other than positively influencing Russia’s role in resolving the Nagorno-Karabakh conflict, Azerbaijan may be able to use its new pivotal position to help bring India (a close Russian partner) diplomatically on board as well, which would help throw some heavy weight behind any future talks on the issue.

Source in Russian:

English version exclusively for ORIENTAL REVIEW.

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