Azerbaijan’s relations with the European Union

 

Overview

EU relations with Azerbaijan date back to 1991 and are based on the EU-Azerbaijan Partnership and Cooperation Agreement (signed in 1996, entering into force in 1999), which provides for wide-ranging cooperation in the areas of political dialogue trade, investment, in economic matters, legislation and culture. Since then, the European Union has gradually expanded the scope of its assistance to and cooperation with Azerbaijan. In 1998, the EU appointed a Special Envoy to Azerbaijan, whilst in 2000, Azerbaijan established its Mission to the European Communities. In July 2003 the EU appointed a Special Representative for the South Caucasus. This role, which now includes the crisis in Georgia, has been held by Mr Herbert Salber since 8 July 2014. Since 2004, Azerbaijan has been included (as a southern Caucasus country) in the European Neighbourhood Policy (ENP), and also in the Eastern Partnership initiative since its inauguration in 2009.

In 2014, a Protocol on Azerbaijan's participation in EU Programmes and Agencies was signed which was approved by Presidential decree dated 30 September 2014. Protocol was ratified by the European Parliament in 6 July 2016 which eventually marked its entry into force.

Adoption of groundless and biased resolutions in 2015 by the European Parliament in respect to Azerbaijan triggered the withdrawal of National Parliament (Milli Majlis) from the Euronest Parliamentary Assembly as well as resulted in suspension of inter-parliamentary cooperation. However, Azerbaijan agreed to fully restore parliamentary dimension of its engagement with the EU upon the request of the European Parliament. The EU-Azerbaijan Parliamentary Cooperation Committee paid an official visit to Azerbaijan in September 2016. 

During Eastern Partnership Riga Summit held in May 2015, Azerbaijan presented draft Strategic Partnership Agreement through which Azerbaijan intends to upgrade its contractual relations. Azerbaijan and the EU has successfully concluded scoping exercise and on 14 November 2016, the Foreign Affairs Council adopted a mandate for the European Commission and the High Representative for Foreign Affairs and Security Policy to negotiate, on behalf of the EU and its member states, a comprehensive agreement with the Republic of Azerbaijan.

 Trade, investment and economic relations

EU-Azerbaijan trade relations are currently regulated by the Partnership and Cooperation Agreement. The European Union is Azerbaijan's first trading partner representing 37.12% (4.730 billion USD) of Azerbaijan's total trade. The EU is Azerbaijan’s biggest export and import market with a 45.87% and 27.89% share in Azerbaijan's total exports and imports respectively. The EU's exports to Azerbaijan consist primarily of machinery and transport equipment whereas EU imports from Azerbaijan cover mainly oil and gas (98% of total imports)[1].

The largest trade partners of Azerbaijan in the EU is Italy (1,445 billion USD, 30,5%), Germany (768.70 million USD, 16,25%), Great Britain (449,71 million USD, 9,5%).

Until February 2014 Azerbaijan enjoyed Generalized System of Preferences which allowed the exporters from Azerbaijan to pay less or no duties on their exports to the EU. According to the Commission delegated Regulation No.154/2013 of 18 December 2012 Azerbaijan was removed from the list of GSP beneficiary countries due to the fact that it was classified as upper-middle income country by the World Bank in previous three consecutive years. 

Armenia-Azerbaijan Nagorno-Karabakh conflict

The unresolved Armenian-Azerbaijan Nagorno-Karabakh conflict remains an obstacle to increasing stability and prosperity in the region. Since 2003, the EU Special Representative for the South Caucasus and the Crisis in Georgia has been working to facilitate dialogue between the EU and the countries of the region and to assist the EU in developing a comprehensive policy towards the countries of the region. The mandate of Special Representative Ambassador Herbert Salber is to support and complement the efforts of the Co-Chairs of the OSCE Minsk Group to facilitate the conflict's resolution.

The EU supports territorial integrity, sovereignty and independence of the Republic of Azerbaijan. The EU and its Member States do not recognize Nagorno-Karabakh.

Energy cooperation

Azerbaijan is a strategic partner of the EU in the field of energy, currently supplying around 5% of the EU's oil demand and playing an enabling role in bringing Caspian gas resources to the EU market through the Southern Gas Corridor.

The basis for bilateral cooperation in the energy field was laid down in the Memorandum of Understanding on a Strategic Partnership between the Republic of Azerbaijan and the European Union in the Field of Energy signed in 2006. The MoU identified 4 priority areas of cooperation: harmonisation of legislation, enhancing security of supply and transit systems, development of RES and increased EE and technical cooperation.  

EU-Azerbaijan energy cooperation does, however, go beyond the MoU on a Strategic Partnership. Former President of the European Commission José Manuel Barroso and H.E. Mr.Ilham Aliyev President of the Republic of Azerbaijan signed a Joint Declaration on the Southern Gas Corridor back in January 2011 in Baku. The Southern Gas Corridor is a strategic initiative to bring Caspian, Central Asian and Middle Eastern gas resources to the European markets and is the main diversification tool for the security of energy supply. The infrastructure that is to bring gas from the Caspian basin, notably from Shah Deniz II field, consists of the expansion of the existing South-Caucasus pipeline from Azerbaijan via Georgia to Turkey; the Trans-Anatolian pipeline, crossing Turkey and connecting Georgia with Europe; and the Trans-Adriatic pipeline, transporting gas from the Turkish border via Greece and Albania to Italy. A giant offshore gas field in the Azerbaijani sector of the Caspian Sea – Shah Deniz II will provide initial 10 billion cubic metres of gas per year to the European markets plus additional 6 billion cubic meters per year to Turkey.

In order to ensure better coordination of project implementation between relevant stakeholders Azerbaijan has launched Southern Gas Corridor Advisory Council of which meetings are held annually at Ministerial level with active involvement international financial institutions and relevant companies. The Meetings are attended by Mr.Maros Sefcovic, Comissioner for Energy Union, Vice-President of the European Commission. The recent meeting was held in February 29, 2016 in Baku which was also joined by EU High Representative Federica Mogherini. The participants of the Ministerial Meeting of the Southern Gas Corridor Advisory Council signed a joint statement for the press.     

Mobility and facilitated travel

The EU and Azerbaijan signed a Mobility Partnership in December 2013. The Mobility Partnership establishes a set of political objectives and identifies a number of areas in which further dialogue and cooperation between the EU and Azerbaijan will continue in order to ensure that the movement of persons is managed as effectively as possible. The two other cooperation instruments in the field of migration are the Visa Facilitation Agreement and the Readmission Agreement, which both entered into force on 1 September 2014. The Visa Facilitation Agreement makes it easier and cheaper for citizens of Azerbaijan, in particular those who travel most, to acquire short-stay visas allowing them to travel throughout most EU countries.

Development cooperation

From 1991 to 2006, Azerbaijan received technical assistance from the EU, including through the TACIS programme, which focussed on support for institutional, legal and administrative reform; addressing the social consequences of transition; and providing assistance with implementing Azerbaijan’s poverty reduction strategy. The Country Strategy Paper for Azerbaijan for 2007-2013 outlined the European Union's financial assistance under the European Neighbourhood and Partnership Instrument (ENPI). It was accompanied by the ENPI National Indicative Programmes for 2007-2010 and 2011-2013. During 2007-2015, the EU committed €179 million in bilateral assistance to Azerbaijan.

The European Neighbourhood Instrument (ENI) is currently the key EU financial instrument for the period 2014-2020, replacing the European Neighbourhood and Partnership Instrument of 2007-2013. EU assistance to Azerbaijan takes mainly the form of country Action Programmes funded every year under the ENI. The three priority sectors for 2014-2017 are: 1)regional and rural development; 2) justice sector reform and 3) education and skills development

The strategic framework, key results and indicative financial allocations for the EU’s bilateral cooperation with Azerbaijan in 2014-2017 are set out in the Single Support Framework. Azerbaijan is also eligible to participate in regional programmes funded under the ENPI/ENI (mainly in energy, transport, and border management), in the Eastern Partnership Flagship Initiatives, in cross-border cooperation and in initiatives open to all Neighbour countries: Erasmus+, TAIEX, SIGMA, and the Neighbourhood Investment Facility (NIF). In addition to the ENI, there is funding available under the EU thematic programmes: the European Instrument for Democracy and Human Rights, Instrument contributing to Stability and Peace, Civil Society Organisations and Local Authorities, Human Development and Migration & Asylum.

Education cooperation: Erasmus+ in Azerbaijan

The EU's Erasmus+ programme supports higher education institutions, staff, and students in third countries such as Azerbaijan. Erasmus+ funds the studentmobility of Azerbaijani students for between 3 and 12 months in a host institution or short-term mobility of academic staff. In 2015, nearly 250 students and staff members from Azerbaijan travelled to Europe and more than 85 European students and staff went to Azerbaijan. In addition, Erasmus+ funds capacity building for the modernisation and development of higher education, including three projects involving Azerbaijan. Azerbaijani institutions also have access to funding from the Jean Monnet programme, which aims at promoting excellence in teaching and research in the field of EU studies. Finally, the Commission provides high-level scholarships to excellent students and staff worldwide, as well as joint master and doctoral degrees, which may include Azerbaijan. One example is the Joint Doctoral Degrees offered under the Marie Skłodowska-Curie actions.



[1] January – September 2016 source: Azerbaijan State Statistics Committee