Three days in Baku

On October 24, President of Croatia Kolinda Grabar-Kitarović arrived in Azerbaijan on a three-day visit. She has already met with President Ilham Aliyev, still there are many interesting events in store for her.

The three-day visit is a notable event in recent Balkan diplomatic activities. It is taking place during the 25^th anniversaries of the two countries’ statehoods and the mutual recognition of their independence (December 28, 1991). However, in the world of pragmatism, anniversaries have turned into excuses to avoid addressing specific issues. What is the current agenda between the two countries?

For one thing, the relationship is nothing exotic. According to the National Security Concept of the Republic of Azerbaijan (Paragraph 4.1.5.2), “to deepen integration into the European economic and legal space” it is essential to promote relations with the countries of Eastern and South-eastern Europe, as well as the Baltic States. Since 2005, Azerbaijan has actively developed relations with all the countries in the region, from Poland to Bulgaria. For Croatia, the eastern dimension is important from the perspective of new markets, investment and involvement in gas transport projects. As soon as they had dealt with the political crisis and established a stable government, the Croatians can now pursue an active foreign policy and conclude long-term agreements.

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The relationship between Azerbaijan and Croatia is viewed as friendly; there are no fundamental differences. It is governed by 20 interstate agreements, including the Declaration on Strategic Partnership, which was signed on March 11, 2013. The document opened a new page in the bilateral relationship: although diplomatic relations were originally established back in 1995, the Croatian Embassy opened in Baku only three years ago.

The two countries refer to untapped economic potential. The gap should be filled by a major economic conference scheduled for October 25, which is expected to be attended by 35 Croatian and 100 Azeri companies. The main areas of focus are trade, shipbuilding, transport, agriculture and tourism. Other potential areas for cooperation include pharmaceuticals, weapons and oil production. Croatia is a leader in pharmaceutical production (Pliva), it produces high quality firearms (the HS Produkt VHS assault rifle and the HS2000 pistol), and seeks opportunities for promoting its export. Finally, oil production solutions may also be of interest, given the discovery of hydrocarbon reserves on the Adriatic shelf.

As for Azerbaijan, the country may be interested in investing in the Croatian economy and expanding the portfolio of orders for Azvirt, which specializes in road construction. The company has been present on the Serbian market for a few years, where it is involved in the construction of the E763 Belgrade–Bijelo Polje (Montenegro) highway as part of European Corridor XI.

No wonder the political “superstructure” of the relationship looks clear. Zagreb promises to promote Baku’s interests in the EU; Croatia supports Azerbaijan with respect to its territorial integrity (albeit, just like Baku, it voices solidarity with Belgrade in the Kosovo issue, because it needs to further its relations with Serbia as well). The two countries show no discrepancies over the Syrian issue.

A separate issue is the cooperation within the framework of the Southern Gas Corridor (SGC). The Trans Adriatic Pipeline (TAP) is part of the SGC, and work on the TAP has intensified over the last few months. On September 30, 2016, TAP construction began in Albania. On September 27, a memorandum was signed between the State Oil Company of Azerbaijan (SOCAR) and the governments of the Balkan states on the construction of the 516-kilometre Ionian Adriatic Pipeline (IAP) with a capacity of 5 billion cubic metres running from Fier in Albania through Montenegro, Bosnia and Herzegovina, to Split in Croatia. The coastline route has a special value for Croatia. First, it will eliminate the country’s dependence on the oil pipeline (and, potentially, on the gas pipeline) from Serbia. Second, the Adriatic pipeline will probably go through the land of Herzegovinian Croatians, which will contribute to the association with Zagreb. Third, this will improve the integration of the Croatian coast into regional projects and create a counterbalance to Serbia, which will become an important transport hub if the implementation of the Pan-European Corridor X project is successful. Fourth, the implementation of the project in Croatia will increase its authority among its northern and eastern neighbours and enhance its role in regional affairs.

One limitation is the weak connection between the Balkans and the South Caucasus, along with the dependence on the broad context of international relations, and modest two-way trade, of which Azeri energy supplies account for 99%. On the other hand, the project is supported by the EU, no sanctions are applied, and small trade volumes will enable Croatia to restructure its foreign trade through the promotion of its export deliveries.