The guarantee of that are the new joint transport and logistics projects launched at the end of last year, the recent opening of air communication with the Pakistani cities of Lahore and Karachi, as well as plans of Pakistani companies to be involved in the revival of the Karabakh region, to invest in the industry and agriculture. Prospects for expansion of bilateral relations were also stressed during the event dedicated to the Republic Day held on Thursday at the Pakistani Embassy in Baku.
Based on the principles of strategic partnership and traditionally strong, the military and political ties between Azerbaijan and Pakistan will also expand in other areas and fields of business and social sphere in the immediate future.
“The year 2022 is very significant for us, as it is marked by the thirtieth anniversary of the establishment of diplomatic relations between Baku and Islamabad. Our countries continue to work together and relations are developing in all areas. For example, direct flights between Pakistan and Azerbaijan have been launched recently,” Pakistan’s Ambassador to Azerbaijan Bilal Hayee said at the event on the occasion of the Islamic Republic’s national holiday, Pakistan Day (celebrated on March 23).
According to Minister of Defense Industry of Azerbaijan Madat Guliyev, who attended the event, the mutually beneficial cooperation between the two countries is particularly successful in the fields of defense industry, agriculture, energy, tourism, science and education.
Apparently, the two states intend to further expand cooperation in the civilian sector with an emphasis on business partnership. On Wednesday, Pakistan International Airlines (PIA) operated its first passenger flight from Karachi to Heydar Aliyev International Airport in Baku. The next PIA flight to Azerbaijan took off on March 18 from the Pakistani city of Lahore.
“The Pakistani air carrier will operate flights to Baku twice a week, and in the future AZAL also plans to launch flights from Baku to Lahore. In the long term, air travel between our two countries contributes to the sustainable development of business and tourism relations, while also providing convenient connections with other countries through Baku airport,” AZAL Vice President Eldar Hajiyev said at the ceremony.
The importance of establishing direct air communication between Pakistan and Azerbaijan is difficult to overestimate, given the growing interest of businesses and especially Pakistani tourists to travel to our country. Keep in mind that during the first years of Azerbaijan’s independence AZAL and PIA were able to maintain regular air travel for some time, but in the late 1990s it was interrupted due to commercial inefficiency. In recent years the two countries considered the possibility of resuming flights, but the coronavirus pandemic in 2020-2021 hampered the implementation of these projects.
Experts estimate that in contrast to the 1990s, the current undertakings in the field of air travel are built on a more solid foundation: for example, almost 30,000 Pakistani tourists arrived in Azerbaijan in the affluent year of 2019. Then after the Karabakh war, the number of mutual visits of official delegations grew substantially, and business meetings and business forums with the participation of Pakistani investors and potential contractors are expected to be held in Baku soon, which will also increase flight occupancy.
The opening of direct air communication is also expected to contribute to the growth of trade relations between the two countries. This is extremely important because so far the trade turnover between Azerbaijan and Pakistan has not been consistent with the high level of interstate relations. The trade turnover between the countries has been growing dynamically since 2015, rising almost sevenfold, to $14.792 million, in the pre-crisis year of 2019. Trade dynamic slowed slightly during the pandemic, dropping to $13.3 million last year. Pakistani exports are dominated by textile and leather products, rice, tropical fruits, cotton fiber, and partly medicines, furniture and sporting goods. Azerbaijani supplies, on the other hand, are mostly petrochemical products, polymer raw materials, rolled aluminum, telecommunications equipment, etc.
In order to overcome this inertia, the work within the framework of the joint intergovernmental commission and joint working groups for trade and agriculture has recently been intensified. In turn, the recently established Azerbaijan-Pakistan Economic Cooperation Chamber takes steps to improve and expand economic and trade relations between the countries: new joint working groups in energy, health, IT, transport and education have been set up. In particular, Baku has recently sent Islamabad a draft agreement on preferential trade, the adoption of which will certainly give a huge impetus to the trade turnover.
Investment remains another underutilized vector of cooperation: over the past decade, Pakistan has invested $4.2 million in the economy of Azerbaijan, whereas no reciprocal investments in Pakistan have been recorded so far. In order to overcome this lag, the Ministry of Energy of Azerbaijan is studying the prospects of mutual investment in the energy sector: the segment of renewable energy sources (RES) is regarded as promising, including the involvement of Pakistani companies in the development of alternative energy in the liberated areas of our country and the Caspian Sea sector. The Ministry of Energy is also studying the possibility of supplies of liquefied natural gas (LNG) and Azerbaijani petrochemical products to Pakistan. There is also work underway on the initiative of the Azerbaijan-Pakistan Economic Cooperation Chamber to involve Pakistani companies and contractors in the process of reconstruction of the liberated territories. In particular, business proposals in agriculture, including rice and wheat production are being considered.
The most important step to expand trade and economic cooperation between the two countries was the implementation of a pilot transport project last October: Pakistan’s logistics company National Logistics Cell (NLC) arranged a test cargo delivery to Baku by two heavy-duty trucks in transit through Iran. After coordinating a number of formalities with the Azerbaijani government, NLC cargo flights can be made regular, becoming the foundation for expansion of trade turnover on both sides. Pakistan’s large market has a great potential, and Islamabad, in turn, is willing to expand the import of Azerbaijani agricultural and industrial products. Moreover, given the geographical location and economic potential of Azerbaijan, and taking into account the customs agreements with the CIS countries and the agreement on preferential trade with Turkey, our country can play the role of a regional hub for the introduction of Pakistani products to the markets of neighboring countries. Russia may be particularly interested in transit access to the Pakistani market today, given the pressure of the Western sanctions, which led to restrictions on export-import operations, and the de facto blockade of traditional logistical hubs for Russian companies.
