Azerbaijan-Israel strengthen strategic alliance through economic cooperation

Azerbaijan's foreign policy successes have positioned it as a pivotal player in international alliances, with Israel emerging as a key partner within these frameworks. The bilateral relationship between Azerbaijan and Israel is anchored not only in economic and strategic benefits but also in deep-rooted historical and cultural ties, symbolizing a model of coexistence amidst historical challenges.

Since Israel's recognition of Azerbaijan's independence in December 1991, bilateral relations have steadily progressed. In recent years, these ties have witnessed a notable surge characterized by strengthened cooperation, increased reciprocal visits, expanded trade volumes, heightened investment flows, and the exploration of new industrial sectors for mutual engagement.

A significant milestone in bilateral diplomacy occurred on June 28-29, 2009, when Israeli President Shimon Peres undertook an official visit to Azerbaijan accompanied by three ministers and a delegation of 50 business leaders. During this visit, agreements were signed focusing on cooperation in communications, as well as in education, science, and technology—a testament to the broadening scope of collaboration between the two nations.

Israel and Azerbaijan have forged significant collaborations in the defense industry sector, solidifying Israel's position as Azerbaijan's leading supplier of military equipment. According to Israeli military authorities in 2012, Azerbaijan procured defense systems totaling $1.6 billion from Israel. The latest generation drones, believed to be acquired from Israel, were notably deployed during skirmishes in April. Azerbaijan aims to further enhance its defense capabilities through technological advancements facilitated by Israel.

During Prime Minister Benjamin Netanyahu's visit, President Ilham Aliyev publicly disclosed the extensive scale of military cooperation between the two nations for the first time. President Aliyev emphasized that Azerbaijan has benefitted from approximately $4.85 billion in military technology from Israel, underscoring Israel's pivotal role as Azerbaijan's primary supplier of advanced weaponry and high-tech solutions. The total value of signed contracts between the two countries amounts to $5 billion.

Of particular note is the contract encompassing the supply of "suicide drones," a cutting-edge technology developed in Israel. These drones utilize radio waves for precise detection and elimination of enemy positions, marking a significant advancement in Azerbaijan's military capabilities. Prior to this collaboration, Azerbaijan had not integrated such sophisticated technology into its armed forces.

Throughout the Second Garabagh War and the subsequent period of reclaiming and restoring territories, Azerbaijan has acknowledged Israel's steadfast support. This strategic partnership underscores mutual trust and the strategic alignment of interests between the two nations in regional security affairs.

Furthermore, Israel has articulated its inaugural interest in exporting natural gas to Europe through Azerbaijan using the pipeline infrastructure jointly owned by Azerbaijan and Turkiye. Prime Minister Netanyahu underscored Israel's intention to leverage the Trans-Anatolian Natural Gas Pipeline (TANAP) project for this purpose. Israel's participation in TANAP is poised to significantly enhance energy cooperation between the two nations, marking a milestone in their bilateral relations.

The collaboration between Azerbaijan and Israel in the oil and gas sector, encompassing exploration, production, and hydrocarbon transportation, holds significant strategic importance, leveraging SOCAR's established expertise in the field. Recent discussions between Azerbaijan's Energy Minister Parviz Shahbazov and a delegation led by Israel's Regional Cooperation Minister David Amsalem underscored the ongoing positive trajectory of bilateral relations. Both parties expressed satisfaction with their cooperation in the energy sector, particularly in hydrocarbons.

Moreover, discussions highlighted joint efforts in oil supply, trading of petroleum products, and infrastructure development, with a focus on future prospects. Azerbaijan's initiatives to augment its share of renewable energy within its energy mix and projects aimed at integrating these energy sources through regional green energy corridors were also deliberated. The potential for advancing cooperation in green energy and other promising sectors was examined, underscoring the pivotal role of government-private sector collaboration in these endeavors.

It is worth noting Azerbaijan's successful implementation of its economic modernization agenda. Here, Israel's contribution is pivotal, particularly in knowledge exchange across advanced technologies such as green energy, smart city initiatives, and smart village concepts. Opportunities for Israeli firms to establish operations and initiate new projects within Azerbaijan's Alat Free Economic Zone were highlighted. Additionally, exploring avenues for SOCAR's engagement in hydrogen resource exploitation in Israel remains a crucial consideration for bilateral economic ties.

Concurrently, Azerbaijan stands to benefit significantly from studying Israel's expertise in water resource management, seawater desalination, desertification mitigation, and agricultural practices suited for arid and semi-arid conditions.

Drawing on these insights, collaborative efforts with Israeli enterprises are ongoing. Notably, an Israeli company has recently established a dairy farm in Agali village, Zangilan region. Discussions also encompass projects focused on water resource management, renewable energy utilization, and rural development.

The burgeoning economic ties between Azerbaijan and Israel, underscored by robust indicators of mutual economic engagement, are noteworthy. Israel ranks among the largest purchasers of Azerbaijani oil, reflecting deep cooperation in energy, trade, infrastructure, and high technology sectors. Conversely, Azerbaijan serves as a primary oil supplier to Israel, with its share of Israeli oil imports increasing from approximately 30% two years ago to about 40% last year. Additionally, Azerbaijan exports significant volumes of oil products to Israel.

The scope of bilateral cooperation extends beyond these sectors to encompass tourism, energy, agriculture, healthcare, cybersecurity, and others. Notably, the tourism sector is experiencing growth, evident in rising numbers of Israeli tourists visiting Azerbaijan. Israeli Foreign Minister Eli Cohen highlighted this trend during discussions with the Azerbaijani President, emphasizing opportunities for further bilateral trade enhancement.

Since 1993, Azerbaijan Airlines (AZAL) has operated regular flights connecting Baku and Tel Aviv, facilitating increased connectivity between the two nations. In Azerbaijan's mobile telecommunications sector, the initial investment from Israeli company Bakcell marked a pivotal milestone, establishing the first mobile phone operator in the Azerbaijani market. The bilateral economic framework was formally established with the signing of the Agreement on the Protection and Promotion of Investments in February 2007.

Significantly, forums such as the Azerbaijan-Israel Construction Forum in July 2009 and the Azerbaijan-Israel Business Forum in June 2009 have fostered direct engagement between Israeli and Azerbaijani companies, further enhancing bilateral economic cooperation. Israeli firms, including "Binui" and "Shikun," have actively participated in infrastructure projects such as the Muganli-Yevlakh highway reconstruction, spanning 156 km.

Currently, multiple Israeli companies are operational in Azerbaijan, contributing to the steady growth of bilateral trade, which reached $4 billion in 2009. Recent data indicates a notable increase in trade turnover, surpassing half a billion US dollars during January-April 2023, marking a 33.5% rise from the previous year. Moreover, significant strides in investments were observed, exemplified by the Azerbaijan Investment Company's agreement with "OurCrowd," Israel's prominent global crowdfunding platform, in July 2022.

In February of this year, Azerbaijan's Ministry of Economy announced a $1 million investment in LARGIX, an Israeli startup specializing in industrial product development, highlighting ongoing collaborative initiatives in innovative sectors.

The multifaceted approach adopted by the Presidents of Israel and Azerbaijan to expand cooperation across emerging fields underscores the limitless potential inherent in their bilateral relations. Notably, both nations are exploring opportunities in renewable energy sources, reflecting Azerbaijan's proactive integration of renewable energy in liberated territories and Israel's commitment to sharing its expertise in this pivotal area.

In conclusion, the evolving partnership between Azerbaijan and Israel exemplifies a robust alliance built on strategic economic cooperation, mutual respect, and shared ambitions across multiple sectors. From defense industry collaboration and energy projects like TANAP to advancements in agriculture, tourism, and high technology, both nations continue to expand their bilateral relations.

The substantial growth in trade turnover and investments underscores the mutual benefits derived from these collaborations, promising a future marked by innovative solutions and sustainable development initiatives. As Azerbaijan modernizes its economy and Israel shares its technological expertise, the partnership between these two nations appears poised to further flourish, driven by a shared commitment to progress and prosperity.