This report focusses on the efforts by Azerbaijan to carry out reforms looking at key developments in the country’s relations with the European Union since the publication of the previous report on EU-Azerbaijan relations on 20 December 2017, in particular in the priority areas identified in the EU-Azerbaijan Partnership Priorities.
The EU-Azerbaijan Cooperation Council under the Partnership and Cooperation Agreement (PCA) held its fifteenth meeting on 9 February 2018, for the first time since 2013. The meeting took place following an intensification of relations between the EU and Azerbaijan, which included the launch of negotiations in 2017 of a new bilateral agreement. The Cooperation Council — co-chaired by the High Representative for Foreign Affairs and Security Policy / Vice-President of the European Commission (HR/VP) and Azerbaijan’s Foreign Minister — completed the cycle of PCA sub-committee and committee meetings held in 2017-2018. It reviewed the state of EU-Azerbaijan relations in the framework of the European Neighbourhood Policy (ENP) and the Eastern Partnership (EaP) and followed up on the EaP summit held in Brussels on 24 November 2017.
On 28 September 2018, the EU-Azerbaijan Partnership Priorities were endorsed by the EUAzerbaijan Cooperation Council by written procedure. The document guides bilateral cooperation in four key areas: i) economic development and market opportunities; ii) strengthening institutions and good governance; iii) connectivity, energy efficiency, environment and climate action; and iv) mobility and people-to-people contacts. EU assistance in 2018-2020 will support these areas.
The EU-Azerbaijan Subcommittee on Justice, Freedom and Security and the Human Rights Dialogue met on 5-6 February 2019 in Baku. Issues related to human rights situation in the country, including the situation of people considered political prisoners, were systematically raised during bilateral meetings with the leadership of Azerbaijan. Longer-term stability, security and prosperity in Azerbaijan will also depend on ensuring respect for human rights and fundamental freedoms, where significant challenges remain. The challenge of ensuring freedom of expression and association and an enabling environment and legislation for civil society to operate is particularly acute.
The EU continued to fully support the confidence/peace-building and conflict prevention activities of the Co-Chairs of the OSCE Minsk Group (Organisation for Security and Cooperation in Europe). This included support through the EU Special Representative (EUSR) for the South Caucasus and the crisis in Georgia. The HR/VP supported continued efforts towards peace, which included holding bilateral meetings with the leadership of Azerbaijan and Armenia, and providing support through the EUSR.
The EU’s Strategic Energy Partnership with Azerbaijan to improve energy security and the diversification of energy supplies was followed up by the ongoing implementation of the Southern Gas Corridor. Although substantial progress was made in 2017 with negotiations on an EU-Azerbaijan civil air transport agreement almost finalised, no progress could be reported in 2018. The first high-level transport dialogue between the EU and Azerbaijan took place on 19 February 2019.
The EU remains Azerbaijan’s first trading partner, representing 36.2 % of Azerbaijan’s total trade in 20174 . The EU is also a key foreign investor in Azerbaijan5 . Over the last 10 years, it invested around 18 billion EUR in Azerbaijan (24 % of the total foreign direct investments in the country). Currently, around 385 EU companies are doing business in Azerbaijan. Azerbaijan’s economy is slowly recovering from the oil price shock and the subsequent policy response in 2015-2017, which included exchange rate devaluations and a tightening of fiscal and monetary policies. The EU supports the economic diversification of the country and promotes reforms to improve the business climate in Azerbaijan, including through assistance for agriculture and rural development as well as vocational education and training. The EU Business Climate Report Azerbaijan presented in June 20186 suggested that the business climate was on an upward trend.
The full report is in the attached pdf document.