Expert in International Relations Alexandros Petersen hails effective management of Azerbaijan`s economy

AzerTAc`s US-based correspondent Yusif Babanli has interviewed Dr. Alexandros Petersen, the renowned expert in international relations, energy and security matters, and the author of “The World Island: Eurasian Geopolitics and the Fate of the West”.
The following is the full text of the interview:

– Dr. Petersen, Moody`s has released a report on Azerbaijan`s creditworthiness, basically underlining the development of economy and re-allocation of funds obtained from oil profits to non-oil sectors of economy. What can you say about the economic development of non-oil sector in Azerbaijan and is it likely to potentially make Azerbaijan a competitive manufacturer in the wider region?

A major part of Azerbaijan`s success now and its expected success in the future has to do with the insightful strategic decision made by the country`s leadership in the late 1990s to provide a foundation for the diversification of Azerbaijan`s economy. This was a long-term strategy that is only now beginning to pay off because of the consistency of Azerbaijan`s leadership over the ensuing decade and a half. Azerbaijan has a lot of potential in agriculture, finance, light industry, telecommunications, transport, tourism and other areas, but if it were not for the creation of SOFAZ and early structural economic reforms that mitigated against the so-called resource curse, we would not now be able to even consider the immense potential in these non-oil sectors. It is consistently good economic management that has made this possible. A key component that makes me very optimistic about the development of the non-oil sector is the ability of Azerbaijani and regional capital to foster these new diverse projects. The country no longer has to rely on Western investment, although it will be important to attract that as well.

– Let`s talk about the Trans-Eurasian Information Super Highway (TASIM). What`s at stake and what will it do for Azerbaijan and regional and non-regional partners? Are we talking another BTC-type project? Please share your views on TASIM

TASIM is probably the most important non-energy project being developed in Azerbaijan. This is because while Azerbaijan is taking the lead, TASIM is a project of continental proportions, which when it is realized in full will not only provide an important trans-Eurasian telecom link, but re-shape the geopolitics of interconnectedness throughout the region. It is similar to the Southern Energy Corridor, in that it will provide a key alternative to other supplier-centered connections across the continent. It should also transform Baku into a regional and global telecom hub, which will in turn provide a number of other opportunities for non-oil sectors development. Finally, I would say that TASIM’s importance as a project encouraging regional cohesion should not be underestimated – it will help to tie together the greater Caspian region.

– In the last few years SOCAR has become a major component of regional development and security and it`s effectively turning into an international oil company, having invested in Europe and Middle East. How likely is SOCAR to become another international energy giant in the next decade?
I think the best analogy for SOCAR`s impressive development is Norway`s Statoil: a state-owned company that at first relied very heavily on its own in-country resources and retail business in Scandinavia, but which now has evolved into a global player across all continents competing with the supermajors such as Exxon, Shell and Chevron. SOCAR`s strategy also seems similar to Statoil`s in many ways: it is positioning itself as a value-provider for other companies and countries, playing a quiet, professional, constructive role to provide financing, to be a catalyst for difficult projects and to be considered a trustworthy, reliable partner. SOCAR`s interests in Georgia, Turkey, Southern and Central Europe and even Israel are very impressive, but even more impressive is the company`s professionalism and positive profile in the industry.

– Last week, the Minister of Foreign Affairs of Azerbaijan, Elmar Mammadyarov reiterated the position of the Azerbaijani government stating that if Armenian government abandons its illegal territorial annexation and occupation policy, it can join the regional projects which would benefit the Armenian people. In your opinion, how big of an economic effect would it be for Armenia to join the energy projects initiated by Azerbaijan, provided it withdraws from occupied territories of Azerbaijan? How much would it potentially bring to the Armenian economy? Is there a number?

It is noteworthy that Azerbaijani officials have stated openly on numerous occasions that Armenia would benefit economically from Azerbaijani-linked projects should Armenian forces end their occupation of Azerbaijani territory. Not only do these statements highlight Azerbaijan`s positive approach to the future of the conflict zone, but also to goodwill in the South Caucasus neighborhood. This is a detail that should not be lost by the Minsk Group co-chairs. How much Armenia benefits will of course depend on what projects will be on the table at the time of conflict settlement, but speaking generally, any regionally-oriented outside infrastructure investment in the Armenian economy could transform it overnight. At the moment, Armenia is entirely dependent on remittances from the diaspora and on Russian investment. This is a completely unsustainable economic model and the reality of that is manifested in the constant emigration from Armenia due to a lack of jobs and economic opportunities. The situation will only become worse as Armenia integrates into Russia`s neo-Soviet Customs Union. Due to the conflict, Armenia is also completely isolated and cut-off from the regional and global economies. If in the future major investment could come from Azerbaijan, it would revitalize, diversify and probably open the economy, and it would have the geopolitical effect of decreasing Armenia`s reliance on Russia. It is difficult to put a number on it, but I would assume that it could be in the realm of billions of USD. For a country with a GDP of just under 10 billion USD (one seventh of Azerbaijan`s) this would be transformative.

– Resolution of Nagorno-Karabakh conflict is one of the top priorities for Azerbaijan. While Azerbaijan has already proven its staunch commitment to partnership and security ties with the West, some of the Western governments, including the United States have not made a proactive engagement in resolution of Nagorno-Karabakh conflict. What should the administration do to amplify its commitment to the partnership with Azerbaijan and immediate resolution of Nagorno-Karabakh conflict?

The current U.S. administration is uniquely placed to achieve conflict settlement. The President and Secretary of State are both well acquainted with the realities of the conflict. The Secretary of State has a history of dealing with the conflict as a senator and has the trust of the Armenian diaspora community – an important element in making sure that they do not get in the way of settlement. The new Minsk Group co-chair, Ambassador James Warlick, is probably the most senior American diplomat to be assigned the position and has a deep background as a negotiator. The U.S. administration is also in need of a foreign policy victory after a number of very difficult experiences over the past few years. As we move into the last couple years of President Obama`s term, he will be looking for successes that contribute to his legacy. All of these factors contribute to a climate that is more positive about conflict settlement than at any time in recent memory. What is needed is a push from the Secretary of State to make the conflict a global priority. With high-level leadership on the issue, it can be solved soon.

Source: AzerTAc