Turkey and Azerbaijan: 30 years of allied relations

In 2022, Azerbaijan and Turkey celebrated the 30th anniversary of establishing diplomatic relations. Both countries believe that transformation of the Consulate General of the Republic of Turkey in Baku into the Embassy on 14 January 1992 was not the establishment, but «reinstatement» of the relations. In Baku and in Ankara they reckon the start of their relations from 28 May 1918, when the Democratic Republic of Azerbaijan (DRA) was proclaimed. On that day, the Ottoman Empire was the first country to recognize DRA.

Moral and historical aspect

Both nations perceive each other not only as allies, but as fraternal states. Turkey sees Azerbaijan as one of the areas habituated by Turkic-Speaking nations. Ankara is an advocate for the Turkic-Speaking countries alliance. On 12 November 2021, the existing Turkic Council was re-named as Organization of Turkic States at Istanbul summit of Turkey, Azerbaijan, Kyrgyzstan, Kazakhstan and Uzbekistan. This international organization unites modern states with the purpose of comprehensive cooperation between Turkic nations, and currently this geopolitical alliance has got to a totally new level.

In their turn, Azerbaijan authorities see Turkey as a fraternal country and support the integration processes under the auspices of Ankara. When Turkish President Recep Tayyip Erdogan meets his colleague, the President of the Republic of Azerbaijan Ilham Aliyev, he always emphasizes that the relations between the two countries are based on the formula proposed by Heydar Aliyev: «One nation – two states».

At the current stage Ankara maintains close relations with Baku. After Azerbaijan proclaimed independence, Turkey was the first country to recognize its sovereignty. The Council of Ministers of Turkey made such decision on 9 November 1991. Ankara used the cultural and historical factors to strengthen its positions in Azerbaijan in both political and economic sense. They are implementing a number of major projects in transport and energy spheres.

Trade and economic cooperation

The Republic of Turkey traditionally holds the leading position among the main trading partners of Azerbaijan. As of the end of 2021, Turkey moved to the second position in the list of importers and in the list of exporters. The trade and economic cooperation between Ankara and Baku is rather modest by global standards. During the recent 10 years its turnover was about USD 2-3 bn per annum. Sometimes, even a downward trend was observed. For example, in 2013, the annual turnover constituted USD 3 bn, and in 2020 – USD 2.2 bn. With the purpose of bilateral trade revival, in 2020 Erdogan and Aliyev signed the preferential trade agreement (effective since 1 March 2021). It is expected to increase the turnover significantly – up to USD 10 bn per annum. The agreement stipulates lifting the customs duties for exchange of goods between the two countries.

In April 2021, Rushar Pekcan, then the Minister of Trade of the Republic of Turkey, reported that Ankara and Baku were developing a list of 150 items to be included into the preferential trade. She also called for switching to payments in national currencies. In December 2021, the Azerbaijani currency Manat (AZN) similar to Emirati Dirham (Dhs) was included into the Turkish list of currencies for mutual settlements in trade. This list already covers 20 currencies, including Russian Rouble, Iranian rial (IRR) and Saudi Riyal, Kuwaiti Dinar (RWD) and Pakistani Rupee (PKR).

The direct and indirect investment of Turkey into Azerbaijan amounts to approximately USD 13 bn. As of now, Turkish contractors have participated in 455 Azerbaijani projects with a total budget of USD 15.4 bn, the Turkish Minister of Trade Mehmet Muş reported at the Azerbaijan – Georgia – Turkey business forum in Baku in December 2021. 4.3 thousand companies with Turkish capital are operating in Azerbaijan. Due to Turkish companies’ participation in rehabilitation of the Azerbaijani territories liberated from occupation, the amount of CAPEX coming from Turkey will grow. On 19 May 2022, Sakhib Mamedov, Deputy Minister for Economy of the Azerbaijan Republic, assessed the required CAPEX as USD 20 bn.

Azerbaijani investment into Turkey is about equal to that of Turkish investment into Azerbaijan. Last year, Mikayil Jabbarov, the Minister of Economy of the Azerbaijan Republic, emphasized that Turkey held the No.1 position among all the countries from the standpoint of the Azerbaijani investment. «Azerbaijani investment into Turkey is approaching USD 19 bn», he said. According to the study by IA Anadolu, in 2002-2020, Azerbaijan got into the top 10 investors into the Turkish economy.

Transport and energy

In the energy and transport sphere the mutual importance of both countries is rather significant. For Azerbaijan, Turkey is «a window to the world», the supply channel for Caspian energy sources. For Turkey, Azerbaijan is another opportunity to diversify the energy suppliers, thus contributing into the national energy security.

A number of joint projects have been implemented by Turkey and Azerbaijan:

• 1,768 km Baku – Tbilisi – Ceyhan (BTC) oil pipeline for transporting Caspian oil from Azeri-Chirag-Guinishli (ACG) block of oilfields and condensate from Shah-Deniz field to Turkish port Ceyhan located in the Mediterranean. BTC Co. International Consortium is the owner of the pipeline. British Petroleum is the operator of the pipeline, and the Turkish company BOTAŞ operates the Turkish section of it. The throughput capacity is 1.2 mln bbl. per day. The opening ceremony took place in 2006. 6.53% of equity belong to Türkiye Petrolleri Anonim Ortaklığı (TPAO).
• 970 km Baku – Tbilisi – Erzurum (BTE) gas pipeline (South Caucasian gas pipeline) for supplying gas from Azerbaijani Shah-Deniz field to Turkey. In the territories of Azerbaijan and Georgia it runs in parallel to BTC. 19% of the project equity belong to TPAO. The gas pipeline was extended to Southern Europe through the projects TANAP (Trans-Anatolian gas pipeline, operations started in 2018) and TAP (Trans-Adriatic gas pipeline, 2020).
• Baku – Tbilisi – Kars (BTK) railway is a transport corridor connecting the railway networks of Azerbaijan, Georgia and Turkey. It was open on 30 October 2017. BTK railway is 829 km long. This railway is part of one of the routes of the New Silk Road from China to Europe.

Azerbaijan is the second biggest supplier of gas to Turkey after Russia.

Turkey intends to cooperate with Azerbaijan not only in producing and transporting hydrocarbons, but in the alternative energy sphere as well. Azerbaijan – Turkey Energy Forum took place in December 2021. Fatikh Dönmez, the Minister of Energy and Natural Resources of Turkey, emphasized in his speech that Ankara was intending to support Baku within the «green energy» concept, especially in developing such green projects in the liberated territories in Karabakh. He stated that starting from 2019 Turkey organized five training programs for Azerbaijani experts in electricity market liberalization, legal framework for using the renewable energy sources, and investment models.

Cooperation of Turkey and Azerbaijan in the sphere of energy is strategically important for both countries. Recep Tayyip Erdogan emphasized it in his Address read by Jakhit Bagchi, the Turkish Ambassador to Baku, during the special session «Zero emissions pathway: developing the green energy potential of the liberated territories» in Shusha within Baku Energy Week (June 2022). It was emphasized that implementation of major projects (such as BTC, BTE, TANAP) makes an important contribution into the regional and global energy security.

The President Erdogan’s Address states: «15 bcm of gas were transported to Turkey and 10 bcm – to other European countries via the Southern Gas Corridor. We are now focused on increasing its throughput capacity. Today it is more and more understood that Turkish-Azerbaijani cooperation in the energy sphere is absolutely vital for the energy security of Europe as a whole. The Azerbaijani vision of cooperation on renewable energy sources proposed by Ilham Aliyev is a conduit track to the regional stability and prosperity. So, declaring Karabakh and East Zangezur “the green energy zone” is a very appropriate step».

Over the recent years, Azerbaijan and Turkey have ramped up their efforts to diversify national economies and export within their trade relations, to establish joint ventures in several promising areas, and to develop more favorable environment for mutually beneficial investment.

Military and political interaction and defense

Turkey believes assuring the security and territorial integrity of Azerbaijan to be its key geopolitical priorities. During his speech in Baku at the celebration of victory in the Second Karabakh War, Recep Tayyip Erdogan reminded the audience about the well-known words by Kemal Ataturk: «the joy of Azerbaijan is our joy, and its pain is our pain». When the First Karabakh War began in 1992, Ankara made a stand for the territorial integrity of Azerbaijan, and has been abiding by these lines during all the following years. Turkey also is a guarantor of the security of Azerbaijani enclave – the Nakhichevan Autonomous Republic, which has 10 km of the common border with Turkey, but is cut-off from the main territory of Azerbaijan.

The two countries are engaged in regular joint military exercises, and after the Second Karabakh War they increased in number. The exercises are both bilateral – the Enduring Brotherhood and Eagle TurAz, and multi-lateral – Ephesus 2022 (May 2022, the Aegean Sea, 37 countries), Three Brothers 2021 (September 2021, Turkey – Azerbaijan – Pakistan), Eternity 2021 (October 2021, Turkey – Azerbaijan – Georgia).

Turkey is an important supplier of weapons and military equipment for Azerbaijan. In January – November 2021, Azerbaijan raised to the second position among all the partners of the Turkish defense industry. According to the Turkish Ministry of Trade, during this period Azerbaijan purchase weapons for more than USD 192 mln from Ankara.

Surveillance and strike UAVs Bayraktar TB2 hold the leading position in Azerbaijani procurement. Their combat employment was one of the weighty factors of Azerbaijan’s victory in the Second Karabakh War. Later, the Turkish aviation company Baykar Makina announced their intent to manufacture promising UAVs Akinci in partnership with Azerbaijan.

On 26-28 May 2022, Baku for the first time organized International Aviation, Space and Technology Festival (TEKNOFEST), in which both Presidents – Recep Tayyip Erdogan and Ilham Aliyev – participated. In his speech at TEKNOFEST Aliyev addressed Erdogan saying: «We are always by each other’s side – both in the good days and in the bad days. And we should and will do everything to have only the good days ahead of us. The Turkish-Azerbaijani fraternity and unity are the main guide-book for our two nations, they constitute an extremely important factor both for the region and for the entire world, the factor of security and stability. The more firmly and surely Turkey and Azerbaijan are progressing together hand in hand, the stronger peace will be in our region».

Close military and political ties between Turkey and Azerbaijan are reflected not only in weapons procurement, military exercises and on-going contacts between the Defense Ministries of the two countries, but in a series of very important agreements as well. The major one was executed quite recently. On 15 June 2021, Aliyev and Erdogan signed the Shusha Declaration. It is based on the Agreement on Developing Friendship and Comprehensive Cooperation between the Azerbaijan Republic and the Republic of Turkey and on the Memorandum of Cooperation and Mutual Aid between the Azerbaijan Republic and the Republic of Turkey dated 9 February 1994, as well as on the Strategic Partnership and Mutual Aid Agreement between the Azerbaijan Republic and the Republic of Turkey dated 16 August 2010.

The Shusha Declaration proclaims the alliance of Baku and Ankara as the key founding principle for their relationship. In particular, it stipulates for joint consultations and rendering mutual military aid in case of any threat on behalf of any third party «against sovereignty, independence and territorial integrity of any of the two countries».

Mutual relations outlook

Close relations between Turkey and Azerbaijan are underpinned by cultural and historical factors. They are based on the support on behalf of the citizens and the leaders of both countries, not just on the rhetoric, but on the practical steps. Turkey supports the Azerbaijani position on the key foreign policy issue – the Karabakh problem. Baku expresses its solidarity with Ankara on many issues, which are key for Turkey – counteracting the Kurdish separatism, the pressure on behalf of the USA and the threat of coup d’état in Turkey. Ankara demonstrates its readiness for supporting the territorial integrity of Azerbaijan and repelling the external threats.

At the same time, close contacts with Ankara do not prevent Baku from maintaining its multi-vector policy, the foundations of which were laid by Heydar Aliyev. President Ilham Aliyev maintains partner relations with Russia, Israel, Iran and Western countries. In February 2022, after signing the Alliance Declaration, the relations between Baku and Moscow moved to a completely new level.

Azerbaijan keeps its neural status, and at the same time chairs the Non-Alignment Movement. Despite mud-slinging of various types, Azerbaijan did not issue a permit of locating Turkish permanent military bases in its territory.

Analyzing all the above-listed factors, we may expect that Azerbaijan will continue to enhance its alliance with Turkey. The rapprochement of Ankara and Baku together with normalizing the relations between Nikol Pashinyan’s government with Baku are agreed by Aliyev and Erdogan. Hence, the potential opening of the borders between Turkey and Armenia is linked with finalization of resolving the Karabakh issue within the framework of Azerbaijan’s territorial integrity.

At the same time, taking into account the Baku’s inclination for balancing and diversifying its external connections, getting closer with Ankara is unlikely to damage its relations with Moscow, Teheran, Brussels, London and Tel-Aviv, if only one of these players does not go for the deliberate aggravation of the relations or for imposing some kind of pressure on Azerbaijan. The role of intermediary and unifier between Turkey, Russia and Iran via the North – South and Zangezur Corridor projects remains the best option for Baku together with other multi-lateral formats.