CPC - Caspian Policy Center


azerbaijan seeks foreign companies’ engagement in rebuilding returned territories

Azerbaijan Seeks Foreign Companies’ Engagement in Rebuilding Returned Territories

Author:Priya Misra

Jul 1, 2021

Over one million refugees and internally displaced persons (IDPs) living in Azerbaijan for decades have been looking to return to the homes they lost in the early 1990’s during the war with Armenia over Nagorno-Karabakh. With Azerbaijan’s military successes in 2020, this return is now possible. Yet, many, if not most, of their former towns and villages are in rubble. Building infrastructure in the reclaimed Azerbaijani lands carries a significant price-tag, but offers opportunities to put in place 21st century sustainable systems along with new housing and other facilities and systems. International companies have the chance to join Turkish and Chinese firms in securing multi-million dollar contracts. Moreover, reconstruction can be done in ways that reestablish connections between Armenia and Azerbaijan, strengthening the prosperity of both while broadening ties with other European and Eurasian countries.

The November 2020 Russian-brokered ceasefire between Armenia and Azerbaijan concluded six weeks of fighting, returning regions occupied by Armenian forces for three decades to Baku’s control. Numerous reports indicate housing, business, communal and physical infrastructure in much of these regions is completely leveled. “Towns’ social and economic infrastructure, everything, is non-existent at the moment,” said Emil Majidov, Advisor to the Azerbaijani Minister of Economy, at the 5th Annual Trans-Caspian Forum in June 2021.

The Government of Azerbaijan is developing master plans for each city, including roads and airports as well as housing construction, telecommunications, and electricity — efforts whose  price-tag that could run well into tens of billions of dollars. 

Rehabilitating Nagorno-Karabakh is not just a chance to rebuild, but with the right investment, to build back stronger with systems designed for 21st century needs. Renewable energy, for example, is a stated key pillar of Baku’s plans for integrating the war-torn territories into the modern economy. President Ilham Aliyev declared the liberated lands a “green energy zone,” with hydro, solar, and wind supplying all of its electricity. A first step in this effort was the restoration of the Gulebird Hydroelectric Power Plant in the Lachin district. Building new sub-stations and transmission lines along with restructuring distribution systems are also parts of the plans for a greener grid. The first “smart village” project, which aims to supply homes with renewable sources of energy and promote technologically advanced agricultural practices, is likewise underway in the village of Aghali in the Zangilan district. These projects align with Azerbaijan’s goal to reduce its greenhouse gas emissions by 35 percent from 1990 levels before 2030.

Huawei is among the first international firms to respond to Baku’s call for investment partners in its ‘smart’ infrastructure projects. The Chinese ICT company won a contract to supply Aghali with “AirPON,” a technology capable of bringing fast broadband coverage to rural areas, with reduced costs, through a state-of-the-art condensed optical-fiber cable design. Top Azerbaijani officials stress, however, that they highly encourage U.S. companies to compete and participate in projects to rebuild the region’s telecom and IT infrastructure.

President Aliyev and a range of top Azerbaijani figures have been clear on their desire for U.S. and other foreign companies to participate in rebuilding initiatives. Azerbaijan also has significant funds at its disposal, such as the State Oil Fund (SOFAZ), to undertake the needed projects.

Yet, to attract a diverse range of top-notch foreign businesses and investors, the Azerbaijani government should take preemptive steps to leave accusations of rigged public procurement contracts in its past. Reconstructing Nagorno-Karabakh is a chance for Baku to demonstrate its commitment to business integrity by awarding contracts through transparent and predictable processes, and opening budgets and records of expenditure to the public. By showcasing a more competitive business climate, Azerbaijan will not only attract excellent firms to modernize returned lands, but will keep domestic capital at home and attract foreign capital for future investment projects more broadly.

Reconstruction has the potential, furthermore, to advance regional stability and diversify trans-Caspian economies. Elin Suleymanov, Ambassador of Azerbaijan to the United States, noted the point many top many figures in Azerbaijan have made when he said rebuilding Nagorno-Karabakh’s infrastructure is a chance to develop a “fully integrated region, including Armenia and other partners in communication and transportation projects, finally breaking the stalemate which has been here for 30 years.” The greater Caspian region is the focus of multiple projects aimed at connecting and stimulating adjoining economies, such as the Belt and Road Initiative (BRI). Building long-overdue connections among Armenia, Azerbaijan, and Turkey would benefit all parties and advance the long-standing U.S goal of a Europe whole, free, and at peace.

Image Source: Jeremy Cohen/Caspian Policy Center

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