In late February 2020, days before Italy became the first European nation to succumb to a COVID-19-enforced lockdown, Azerbaijan’s President Ilham Aliyev travelled to Rome for bi-lateral talks with his Italian counterpart, President Sergio Mattarella.
The resulting Joint Declaration on Strengthening Multidimensional Strategic Partnership has laid the foundation for an extremely promising trading relationship between the two countries. Blossoming from the traditional cornerstone of energy trade, Italy and Azerbaijan’s tactical alliance now encompasses a more holistic trading arrangement that spans defence, infrastructure, and investment. Many experts and insiders now consider Italy to be Azerbaijan’s foremost European ally, touting that the partnership offers an insight into the growing opportunities for European countries outside the traditional Euro-centric scope.
Azerbaijan’s oil rich Absheron Peninsula ? the easternmost extension of the Caucasus, where the mountains finally drop into the Caspian Sea ? has attracted merchants for thousands of years. It is thought to have been referenced by Marco Polo, the great Italian explorer, who described his travels through modern day Azerbaijan and along the Silk Road in Il Milione. It is from this peninsula that Azerbaijan has built some of its strongest trading relationships over the centuries. In recent years, it has also served as the starting point for one of its most intriguing modern relationships.
The Southern Gas Corridor (SGC) connects Azerbaijani gas to Italy, passing through Georgia, Turkey, Greece and Albania before reaching its final destination in the Italian industrial port of Brindisi. The final part of the Southern Gas Corridor ? the Trans-Adriatic Pipeline (TAP) ? was completed last year, with gas first arriving from Azerbaijan on Italian shores on 30th December 2020.
The TAP is the final piece in a line that will form the backbone of Italo-Azeri energy trade, building on an already formidable relationship that has made Italy Azerbaijan’s number one trading partner. Trade between the two countries in 2019 amounted to $6bn, with 17% of Italy’s gas coming from Azerbaijan. The SGC is expected to expand this relationship, delivering 10 billion cubic metres of Azeri gas to Italy ever year.
Commissioned by the European Commission, the SGC aims to reduce the reliance of Europe on Russian and North African gas, diversifying its sources. Russia remains the EU’s biggest external supplier, accounting for 40% of the EU’s total gas imports in 2018 1. For the EU, and for Italy in particular, the SGC represents a new alternative in the east. For Azerbaijan, the SGC is a golden opportunity to engage with Europe in a more meaningful way, with Italy representing a potential route into Europe.
When President Ilham Aliyev left Rome in February, however, he was leaving more than an energy agreement. He had gained a powerful European ally that would ultimately help him resolve the Nagorno-Karabakh conflict, that would erupt seven months later.
Azerbaijan’s territorial dispute with Armenia began on the morning of 27th September and would last until a ceasefire was brokered by Russia on 10th November. Despite hesitancy from Western powers, a resolution to the conflict appears to have been reached and a steady ceasefire has held in the region now for a number of months.
Although Turkey has received a great deal of the international recognition for helping to end the conflict, with President Recep Tayyip Erdogan invited as a guest of honour to Azerbaijan’s victory celebrations in Baku’s Freedom Square last month, it was Italy’s involvement that helped to win tacit support from the West. As a member of the OSCE Minsk Group, a multilateral group set up to encourage the peaceful resolution of tensions between Azerbaijan and Armenia, Italy was the first member to argue for the principles of sovereignty, territorial integrity, and the inviolability of national borders ? the three pillars of international law that Azerbaijan has traditionally based its claim to the Nagorno-Karabakh on 2. This recognition has helped to give international credence to Azerbaijan’s territorial claims.
Although certainly informed by the existing energy relationship with Azerbaijan, Italy’s decision to act marked a new stage in the bi-lateral arrangement. Where previously Italy and Azerbaijan had simply had an economic arrangement, there now exists a political alliance that could form the basis of a blossoming alliance.
For its part in resolving the conflict, Italy was awarded an energy infrastructure contract in Karabakh. The agreement, which was signed in December 2020, will see Italy contribute to the creation of energy infrastructure in the liberated territories.
Italy’s willingness to show friendship to Azerbaijan could yet have implications for the wider EU. Political leaders in Europe are suspicious of Russia and will be interested to explore alternatives to the existing reliance on Russian energy. Particularly as the geopolitical landscape adapts to a new US president, one who has previously described Russian President Vladimir Putin as a “KGB thug”, it is possible that Western powers will be on the lookout for new alternatives. For Azerbaijan, it might be a case of being in the right place at the right time.
Patrick Landau is the Chairman of Maydex AG, a leading consultant for some of the largest companies in the world in the spheres of energy, transportation & defence.
1 https://ec.europa.eu/eurostat/cache/infographs/energy/bloc-2c.html
2 https://ecfr.eu/article/commentary_almost_an_ally_italys_new_approach_to_azerbaijan_and_the_nagorno/
