EU, Azeri Authorities Spoke in favour of the SGC Although Differences Remain

European and Azeri authorities were in unison speaking in favour of the Southern Gas Corridor at a conference Wednesday, but minor divergences between Baku and Brussels indicate that continuing efforts from both sides are needed: Europe has to avoid cases of double-standard when considering countries out of its reach, and Azerbaijan should promote transparency in order to attract more European investment. 

On Wednesday, Baku’s commitment to realise the pipeline connecting Azerbaijan to Italy came without “if” and “but”, while European institutions’ remarks indicate Brussels’ intention to ask Baku not only to proceed with economic reforms, but also to replicate parts of its political structures based on a “clear separation of powers”.

AZERBAIJAN: SOUTHERN GAS CORRIDOR, THEN IF POSSIBLE OTHER PROJECTS

“The Southern Gas Corridor as a concept was originally coined by the European Union a decade ago, but apparently it has been Azerbaijan that since then has taken the role of the enabler of this corridor” said Vusal Mammadov, Director at State Oil Company of Azerbaijan (SOCAR), Representative Office in Belgium. 

The point here is that Azerbaijan has already signed gas Purchase and Sale Agreement (PSA) in September 2013. In other words, Azeri gas is already sold. 

“These contracts enabled Azerbaijan to market Azerbaijani gas for 25 years starting as of 2020” Mammadov conceded, underlining that the country is ready to invest its part to finish the $45 billion project. 

Explaining that Azerbaijan is ready to play a role also in the expansion of the Southern Gas Corridor to other gas-rich countries in the region, Mammadov said that the government will support the Trans-Caspian Pipeline, “but at the moment our main goal is to implement the commitments that we already have.”

EUROPEAN POSITION: LET’S GO ON WITH SOUTHERN GAS CORRIDOR, OTHER PROJECTS REMAIN CONDITIONAL

“The EU is sticking to the construction of the Southern Gas Corridor” Dirk Schuebel, Head of Division Eastern Partnership bilateral at the European External Action Service, said at the conference organised by The European Azerbaijan Society. 

On the other hand, the EU official said that the country has to fight corruption, which was defined as “a serious impediment” for further economic ties. 

Similarly, during the morning session, other European officials recognised the role of Azerbaijan, but also asked Baku to do more. 

“Azerbaijan is a strategic partner for the EU and not just for the country itself, but also for its geographic position” said Luc Pierre Devigne, DG Trade of the European Commission.  

Devigne then went on comparing Azerbaijan with Georgia, saying that Baku should learn from Tsibilisi how to create better conditions for business, and how to promote freedom of press. 

WHAT ARE THE COMPLEXITIES? 

“Azerbaijan needs political understanding of its situation. In such a difficult period of time, for such a small country still at war, in such a difficult neighbourhood, we would like to have political support for our economic reforms” Ambassador of Azerbaijan to Belgium Fuad Isgandarov said on Wednesday, referring to the Nagorno-Karabakh “frozen” conflict.

In this sense, Azerbaijan suggested that the European Union should focus more on economics and bilateral ties, especially in delicate moments.

Parliamentary elections will be held in Azerbaijan in November, just weeks after Russia’s launch of rockets towards Syria from warships in the Caspian Sea. 

WHAT ARE THE HOME-WORKS? HOW TO FINISH THEM ON TIME?

Ambassador Isgandarov outlined that Azerbaijan was the only country that had managed to create infrastructures in the Caspian Sea. This is a reason to praise the country, but this achievement itself will not allow Baku to attract European companies. Azerbaijan will be probably called to comply more with European standards, at least to a certain degree.

From its perspective, European officials told Natural Gas Europe that it is difficult to understand what Baku wants. Brussels is asking for clarity not only for one single project, but for future ties. This is the traditional European approach based on soft powers that made sense for a long period. Nevertheless, Brussels is asking for an exercise of clarity when its own moves are often difficult to read, while EU’s paternalism might wear its partners’ nerves out, Azerbaijan included.

Negotiation and flexibility are probably the only solution. Instead of being overly critical, the European Union should understand how to collaborate with countries that do not share its same culture and values. Conversely, Azerbaijan should equally understand how to deal with a block made up by several countries, and with a strange architecture where the European Parliament (with diverse and critical voices) and the European Commission often have different takes on the same opportunities and complexities.

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci