Trade and economic cooperation between Azerbaijan, Turkey, and Turkmenistan

53


The Governments of Azerbaijan, Turkiye and Turkmenistan have signed a decree approving the “Agreement between the Government of the Republic of Azerbaijan, the Government of the Republic of Türkiye and the Government of Turkmenistan on trade and economic cooperation.”

These decrees contain provisions in science, education, culture, energy, trade, customs, and transportation. All the nations involved are key member of the INSTC network, with Turkiye and Azerbaijan to the West coast of the Caspian Sea with links through to Europe, and Turkmenistan on the East with links through to Central Asia.

Energy cooperation will largely involve gas from Turkmenistan being processed and sold onto Azerbaijan and Turkiye, probably as part of the new Russia-Turkiye Gas Hub plan. That calls for Turkiye to emerge as a gas hub for Europe and will use gas supplies redirected to Turkiye from the Nord Stream pipelines under the Baltic Sea, which have been sanctioned and partially destroyed by mysterious and still unaccounted for explosions in late 2022. Russia already supplies Turkiye’s TurkStream pipeline gas under the Black Sea, however the pipeline has limited extra capacity.

The EU has permitted Russian energy to be sold in Europe provided it is not supplied directly and includes some processing by a third country. This adds costs to the final product but is seen as ‘keeping Russia at political arm’s length’ while allowing Turkiye to develop as an EU energy hub with supplies from other countries in Central Asia – such as Turkmenistan. That decision is almost certainly an inducement to keep Turkiye within NATO.

The INSTC network includes trade between Europe via its Black Sea Ports in Bulgaria and Romania to ports in Georgia and Turkiye, from where they are transported via rail to Azerbaijan’s Baku port. They can then head in various directions: south to Iran and access to the Gulf and South Asia, east via Kazakhstan and markets onto China, and south east to Turkmenistan and markets in Central Asia, with a specific eye on Turkmenistan’s neighbour, Uzbekistan. Uzbekistan has a substantial trade agreement with the EU covering thousands of products and is seen by the EU as a gateway to Central Asian trade.

source: silkroadbriefing