Our Analytics 13 november — 16:12

Three pillars of new Turkic coalition: Karabakh, Economy and Aliyev (Editorial)


The VIII summit of the Cooperation Council of Turkic-speaking states ended in Istanbul. Two years of a successful program for the development of the organisation, designed by Azerbaijan, allowed the Turkic Union to embark on the path of trans-regional unification -- the former Turkic Council has now turned into the Organisation of Turkic States (OTS). With a total GDP of more than $1 trillion and a growing market of over 150 million people, OTS will in the future become a serious regional system in the Eurasian integrational macrogroup.

Fulfilling the promise

Azerbaijan headed the Turkic Council and started implementing its strategy ten years after its foundation in Nakhchivan, in 2009. A serious start-up period was passed, where the conceptual foundations were laid for the future movement towards a free trade zone and visa-free travel of citizens towards Turkey.

Ilham Aliyev achieved the goal declared in Nakhchivan in 2009 -- Turkic integration

It is now obvious that the OTS will develop as an open trans-regional organisation using the mechanisms of free economic zones and free trade zones of neighbouring associations.

Recall that the Turkic Union consists of the CIS/EAEU members, and one of the members of the association is Hungary, which is the leading link for Central and Eastern Europe.

Therefore, it is in this combination of 'conjugate associations' that the economic activity of the Turkic association takes place. At the same time, its participants, primarily the leaders -- Turkey and Azerbaijan, are building their own free trade zone, where the initial list of goods exempted from duties has already been approved, in addition, a visa-free zone has been formed between them.

But one of the central problems of the trans-regional structure is discontinuity and infrastructure disruption in connection with the Karabakh conflict.

In October 2019, when Azerbaijan took over the 'captain's bridge' at the head of the structure, Ilham Aliyev in his report at the summit formulated the task as follows: 'As you know, Nakhchivan is separated from the mainland of Azerbaijan. Between them is Zangezur, an ancient Azerbaijani land. Its transfer to Armenia created a geographical split in the Turkic world.'

In essence, this phrase became the leitmotif and determined the subsequent actions and the actual achievements of Baku in solving this problem.

10 years later, a year before the second Karabakh war, and again in Nakhchivan, Ilham Aliyev suddenly spoke about the Zangezur corridor

And although in Armenia at that time it was assessed as a threat to its sovereignty, in fact it is about correcting the transport and infrastructural openness of the geographical space of the Turkic world, which plays the role of a bridge between the macroregions of Europe and Asia.

The forced military solution to the Karabakh conflict actually brought it as close as possible to the final splicing of this gap in the Zangezur/Nakhchivan corridor.

Therefore, it is natural that Ilham Aliyev became the main character and symbol of the transition of the Turkic Council to the Organisation of Turkic States -- the Supreme Order of the Turkic World was awarded to the President of Azerbaijan.

Aliyev, and with him Azerbaijan received a well-deserved award from Erdogan's hands

Let's briefly list what the main steps were taken by the Turkic group under the leadership of Baku over these two years:

- the strategy for 2020-2025 and the strategic document 'Turkic World Vision 2040' were prepared and approved. This document reflects the future project integration of the Turkic space -- in politics, economy, culture, education, tourism, youth policy;

- the model of free economic zones was chosen as the basis of the cluster industrial development of the common space. In October 2021, Ilham Aliyev signed a decree on the approval of the 'Memorandum of Understanding on the exchange of information and experience in the field of various economic zones between the state bodies of the member countries of the Cooperation Council of Turkic Speaking States.' This memorandum was signed on September 10, 2021 in Baku within the framework of the tenth meeting of the ministers of economy of the Council's member-states. The Ministry of Economy of Azerbaijan was appointed responsible for the implementation of the points of this document;

- Uzbekistan joined the Turkic Council.

Potentially, this will lead to an increase in mutual trade between the member countries from $7 billion to $12 billion per year.

The Ministry of Economy of Azerbaijan proposes to make a joint investment fund the key mechanism for development in the common space.

At the turn of 2020, the Turkic group invested about $12.3 billion in the economy of Azerbaijan. In turn, Azerbaijan invested about $15.3 billion in the economies of the Turkic-speaking countries. The share of the entire group in Azerbaijan's foreign trade is 17.9%.

Azerbaijan has invested about $15.3 billion in the economy of the Turkic world

The main core of investments is the Turkish economy. However, the entire Turkic group annually imports products worth more than $260 billion. Therefore, the expansion of trade to regions external to the group is the main task of the organisation, along with the increase in internal trade, which holds the common space together;

- creation of a common media platform and a group of related projects.

This step is a significant achievement in the agreed communications policy. The main node of this policy is the agreement on the formation of a joint media platform 'Turkey-Azerbaijan' dated December 10, 2020;

- tasks of post-conflict reconstruction of the Karabakh and West Zangezur economic regions.

In this case, two tasks are solved here at once.

First, on the basis of the 'Karabakh contracts' an experimental platform is emerging, where practical conditions are created for a multitude of associated and joint projects of economic entities of all Turkic states.

Second, the 'clean field' of the territories devastated by the conflict makes it possible to 'sow' on them a completely new economic, economic and social infrastructure, fully facing the future. A kind of blank slate, on which you can create your own original project of vision for the development of agricultural territories of the XXI century, which have been taking a break from economic activity for several decades. The Turkic world has been given a completely original and rare opportunity to formulate its 'morning of tomorrow' using the most advanced technologies.

Aliyev puts forward a new potential -- the 'clean field' of Karabakh

'Turkic metal' and reliance on Russia

In conclusion, a few words about the current and medium-term potential of trade and integration cooperation. One of the topics of the promising economic coordination of the Organisation of Turkic States is interaction in joint agricultural exports, primarily to Russia.

A number of forecasts for 2022 indicate an increase in food inflation, which will also be facilitated by a poor harvest for many crops in the Russian Federation. According to the Russian industry analysis by the AB Centre, in 2021 vegetables from open soil will be harvested in the range of 4.7-5 million tonnes (in 2020, 5.4 million tonnes were collected) -- that is, the collection of Russian vegetables will decrease by at least 10%.

The reason for the fall is not only late spring, dry summer, but also abnormally cold September.

The missing volumes of vegetables (potatoes, carrots, onions, etc.) will have to be obtained from foreign markets, and this, due to the weak rouble, will affect the final prices. One of the key resources of Russian imports of vegetables is in the group of Turkic states.

The second promising theme for the development of the organisation is coordination in non-ferrous metallurgy. The phrase 'Non-ferrous metals are new oil' has become a truism.

Energy transition leads to their supercycle

According to a recent analysis by Eurasia Review, prices for copper, nickel, cobalt and lithium could reach historic peaks over an unprecedented long period under a zero-emission scenario, with total production costs more than quadrupled from 2021 to 2040. This means that new reserves associated with production in Azerbaijan, Uzbekistan, Kazakhstan, Kyrgyzstan can be used both in consumer markets external to the organisation, and in Turkish auto enterprises producing electric vehicles.

New interaction of the Turkic world with Russia -- new geoeconomics

Bloomberg NEF predicts that electric cars and fuel cell vehicles will displace 21 million barrels per day of oil demand by 2050 -- this forecast already concerns Azerbaijan's main commodity flow, which will need to fit into the global energy transition. The production of lithium-ion batteries with a capacity of 1 GWh requires 1,731 tonnes of copper, 1,202 tonnes of aluminium and 729 tonnes of lithium. By 2040, their production will grow at least 10 times. One quick charger at 'gas stations' for an electric vehicle requires 25 kg of copper, while a smaller home charger requires about 2 kg of copper. This may not sound like a big deal, but economies of scale are important here: the number of charging points worldwide will increase from 1.3 million in 2020 to 30.8 million by 2027. The share of this pie will also go to the leading Azerbaijani producer -- AzerGold, which has every chance to become the leading Azerbaijani exporter of raw materials, competing with SOCAR.

Against the background of such an increase in demand for non-ferrous metals, as well as their upcoming increase in prices at times, the Turkic group faces the problem of increasing geological exploration, resource base, creating technologies, mines, energy supply, logistics and final production (and not only raw materials, but at least simple parts for all these units -- the same copper cable, lithium-ion batteries, solar panels, etc.). Probably, investments in all these stages will amount to hundreds of billions of dollars worldwide, including the Turkic group...

Thus, the historical platform of common values ​​of culture and traditions, a rich palette of languages, the polyphony of the views of the Turkic world, and the growing connectivity of the economy, will pave the way for joint development in the current century.

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