Vol. 2, No. 17 (September 01, 2009)

Azerbaijan and the Gulf region: Prospects of cooperation

Shahin Abdullayev, Amb.
Ambassador Extraordinary and Plenipotentiary
Embassy of the Republic of Azerbaijan to the State of Kuwait

Huge oil and gas reserves, among other things, make the Arabian Gulf region (including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) one of the most strategically important places in the world.  The countries of the region contain two-thirds of the world’s proven reserves of oil and produce more than a quarter of all the oil, thus meeting one-third of the world market for petroleum.  With the growing demand for oil, the Gulf States are set to become even more important.  The same conditions and trends hold for natural gas as well.

But as the recent discussion of Iran’s alleged nuclear program shows, the geopolitical and geo-economic importance of the Gulf region cannot be limited to the issue of hydrocarbons.  By virtue of geography, the region for centuries has served as a major commercial route between the Indian Ocean and the Mediterranean Sea.  In recent years, and building on inherited trade traditions, the Gulf States have established themselves as major banking, insurance, and investment centers of global business.
According to the International Monetary Fund, the cumulative current account surplus of the Gulf States for the period 2003 to 2007 amounted to USD 700 billion in 2007, and conservative estimates suggest that the Gulf States owned property and other assets abroad amounting to some two trillion US dollars in 2001.  The Sovereign Wealth Funds of these states have played a major role in efforts by the G20 countries to overcome the current economic crisis.  

The geopolitical weight of the region is also determined by its geographic position in the heart of the strategic shipping routes.  At the present time, the Gulf States are investing some 30 billion US dollars in developing their ports.  Among the biggest of these projects are the new Mesaieed Port and Ras Laffan port, both in Qatar; Saudi Arabia’s King Abdullah Economic City port; Abu Dhabi’s Khalifa Port and Industrial Zone and new container terminal and deepwater port of Bubiyan in Kuwait.  And given the increasing threat of sea piracy importance, these ports will play a key role in providing maritime security.  

The growing wealth of the Gulf States and their geopolitical position are contributing to a rise in their political influence in an increasingly globalized and multi-polar world.  As an oasis of stability and development surrounded by conflicts and wars, the Gulf States not only have played a role in promoting dialogue in the region but promoted sustainable development abroad through a generous set of assistance programs.  Kuwait, for example, in some years has contributed more than eight percent of its GDP to others, far more than the average 0.35 percent developed countries have offered.    

Being part of the Islamic world and sharing the progressive heritage and spiritual values of Islamic civilization, Azerbaijan, since recovering its independence, has attached great importance to developing relations with the Islamic countries of the world in general and those of the Gulf states in particular.  And this interest in closer ties has been fully reciprocated by the Gulf states.    

The countries of the Gulf supported Azerbaijan in the difficult years following 1991 and continue to back Azerbaijan’s territorial integrity as the basis of any resolution of the Armenian-Azerbaijan Nagorno-Karabakh conflict either within the United Nations or the Organization of Islamic Conference.  They have also helped to unite the Islamic world behind Azerbaijan on this point.  Indeed, the largest country in this region, Saudi Arabia, has chosen not to maintain diplomatic relations with Armenia because of Yerevan’s aggression against Azerbaijan.  And both it and other Gulf states, including Kuwait and Qatar, have provided humanitarian assistance to Azerbaijan even when some Western countries have restricted their aid.  Furthermore, the resolution on the situation in the occupied territories of Azerbaijan introduced by Baku at the UNGA’s 62d session and the way the Gulf States voted on it is indicative of an unwavering support the states in the region provide for Azerbaijan’s territorial integrity.  For its part, Azerbaijan has supported Gulf states and other Arab countries facing territorial problems.  Baku has supported the Arab Peace Initiative and backs the establishment of an independent Palestinian state with Al-Quds as its capital. 

Alongside these political ties, there exist numerous opportunities for expanding economic cooperation.  Unfortunately, despite the cooperative spirit our countries enjoy in their relationship with each other, the level of economic ties between the region and Azerbaijan is not all it could be.  The current level of trade does not match the level of political relations or satisfy us.  Clearly, mutual visits by businessmen, business forums in each country, market research and other forms of contact can help both sides achieve their goals.   

Given growing food security problems and the dependence of Gulf States on food imports, particular emphasis should be placed on agriculture where Azerbaijan can serve as a reliable partner.  Tourism is another area.  According to the Arab Tourism Organization, the Gulf States are in the leading position in the world in per capita spending on tourism.  Kuwait alone spends more than five billion US dollars on tourism annually.  Azerbaijan, as an attractive tourist destination, has much to offer visitors in this regard as well.  Such tourism can also serve as part of growing public diplomacy efforts, including people-to-people contacts with a particular emphasis on youth exchanges. 
And given the central role Azerbaijan has assumed in the redevelopment of the Silk Road and the development of North-South transportation corridors, as well as the Gulf States’ port capacities, there are possibilities for cooperation in the field of transportation.  Discussions between the Gulf States and Turkey on railway connections and on the exploitation of the Baku-Tbilisi-Akhalkalaki-Kars railway provide additional opportunities for cooperation.

Given the feelings and resources on both sides, there is every reason to expect that these ties will expand in the near term and that the relationship between Azerbaijan and the Gulf States will become ever closer.