Trade is changing logic of Azerbaijan-Armenia relations: market before and after

As the world moves towards universal demarcation and confrontation, Azerbaijan continues to create an atmosphere of peace and cooperation in its region. Despite the current global trends that have put legal forces above international law, Baku is in no hurry to take advantage of them, but strives to create an island of stability and security in this corner of Eurasia. Stability and security in the South Caucasus have ceased to be a distant prospect after the end of the Karabakh conflict. Achieving these goals is already possible, and for this Azerbaijan has taken an unprecedented step, deciding to restore trade with the former aggressor in the absence of a peace treaty and repentance on the part of Armenia.

Trade between Azerbaijan and Armenia today is not just an exchange of goods. This is a kind of indicator of the sustainability of the peace process and an indicator of how ready the region is to move from conflict to development. If current trends continue, we should expect an expansion of trade relations.

Last Sunday, a third train with oil products for Armenia was sent from Baku. A train of 18 tankers will deliver 979 tons of AI-92 gasoline to Yerevan via Georgia. Earlier, on January 9, a train carrying 1,742 tons of AI-95 gasoline and 956 tons of diesel fuel left Balajary station for the border with Georgia.

The first batch of Azerbaijani fuel was sent to Armenia on December 18. At that time, the neighboring country received 1,220 tons of AI-95 gasoline.

Thus, Azerbaijan has decided to restore its role as the main supplier of petroleum products to Armenia. This is not just a gesture of goodwill on the part of Baku, but a strategic and pragmatic decision. In Soviet times, until the beginning of the Karabakh conflict, Armenia lived off Azerbaijani oil products and gas. In the 90s, this country found itself in a critical situation due to the military aggression against Azerbaijan and the occupation of its territories. And problems persist to this day due to the lack of funds, appropriate infrastructure, etc. In Soviet times, there was a well-developed infrastructure for pumping and transporting petroleum products from Azerbaijan to Armenia. With the outbreak of the conflict and military aggression, these arteries, of course, were blocked.

Now that the conflict is over, there is an opportunity for economic steps that will allow us to begin building the foundation of future relations. Until a final peace is signed and other obstacles to the establishment of State relations are removed, economic ties can help the peace process to continue. It is no coincidence that they say that economics makes politics. Where there is an economic interest, it eventually transforms into a political interest.

The first real fruits of the peace process between Azerbaijan and Armenia are manifested not in loud political declarations, but in a much more revealing area - in the economy. Trade is gradually returning to the regional agenda.

In early November, Azerbaijan unblocked the transit of goods for Armenia through its territory. But it wasn't trade yet, it was just transit. Now the countries have reached the level of direct bilateral trade.

Despite the noise made by the opposition, calls for a boycott and other criticism, car owners in Armenia lined up for Azerbaijani gasoline. The December shipment of gasoline was sold out in a few days, as reported by RA Minister of Economy Gevorg Papoyan. In his opinion, this is evidence that there is a demand for Azerbaijani gasoline.

It should be noted that this is also an indicator of the lack of a public order for a boycott of Azerbaijani products, which the opposition called for.

According to the estimates of the Ministry of Economy of Armenia, thanks to Azerbaijani supplies, by the end of 2026, the country will save about 16 billion drams (about 2.6 million dollars). For the domestic market, this means not only financial benefits, but also increased competition, lower logistical costs, and more sustainable supply.

However, petroleum products are only the first step. Today, Baku and Yerevan are discussing a much broader list of goods in respect of which there is mutual interest. According to Armenian Prime Minister Nikol Pashinyan, the parties are exchanging preliminary lists and exploring market opportunities. This process is still going on without unnecessary publicity. The most important thing is that he's coming. Armenia has already identified a number of export positions. According to Armenian media, Armenia is ready to supply aluminum foil and raw materials for its production, ferromolybdenum, tobacco and textile products, as well as cognac raw materials to Azerbaijan. The neighboring country can also offer agricultural products - tomatoes, peppers, roses, as well as livestock.

It cannot be said that Azerbaijan particularly needs some of these types of goods, especially tomatoes and peppers. But trade should be mutual in nature so that we can talk about cooperation.

As for other positions, the older generation probably remembers the Yerevan aluminum foil, which was littered with Baku household goods stores in the pre-conflict years. In Soviet times, Armenia was a major producer of aluminum, including foil, which was used everywhere for food packaging in the food industry and in everyday life. The Kanaker Aluminum plant in Yerevan produced various types of foil, and now it has been purchased by the Russian Rusal Corporation and operates under the name Rusal-Armenal. Interestingly, aluminum foil accounted for the majority of Armenia's exports to the United States four years ago, until a scandal broke out over it. The Department of Commerce, based on a complaint from its American factories, began proceedings on the expediency of importing foil from Armenia and a number of other countries. As a result, Armenia lost the American market. Today, it exports its foil mainly to countries of the European Union (Germany, France, Belgium and the Netherlands), as well as in Russia, UAE and CIS countries.

It is possible that Azerbaijan will appear on this list. The country itself does not produce such products, but at the same time there is no shortage of foil in our stores. Nevertheless, aluminum products have been traditional for Armenia since Soviet times, and, as always, they were claimed to be of high quality.

Azerbaijan has obvious advantages in the fields of energy, petrochemicals, fertilizers, and logistics. These are the positions that supported the Armenian economy during the Soviet era and without which the Armenian economy has been stagnating for thirty years. The Armenian industry has always been tied to Azerbaijani energy resources.

As parts of the unified Soviet system, the AzSSR and the ArmSSR exchanged products. This happened, of course, not on a market basis, but within the framework of the State Planning Committee. The Armenian SSR supplied brandy spirits, wine, and fruits to Azerbaijan, while the Azerbaijani SSR supplied oil, gas, and cotton. Armenia also supplied caustic soda to Azerbaijan, which was important for the oil refining industry. Unfortunately, the Armenian side often did not behave in a brotherly manner. In this regard, it is necessary to recall the scandal with the supply of Armenian donkey meat to Azerbaijan. In the USSR, planning took place centrally, and when drawing up the diet of the peoples of the state, the Armenian influence in the Council of Ministers could not but make itself felt. In the book "Types and prices of food products in the USSR" published in 1963, the Azerbaijanis were presented as the only people allegedly eating donkey meat. Later, this incident raised doubts about the quality of meat supplied from the Armenian SSR.

Times have changed. Let's hope that today's Armenian producers will start proceeding from the laws of the market and economic interests, and not from the nationalist propaganda currently being conducted in this country, and instead of peppers and tomatoes we will not see something else. The opposition is trying to denigrate the processes that have begun, and crazy rumors are spreading, including the "poisoning" of Russian and Kazakh grain in transit through Azerbaijan. They try to motivate the Armenian society not to purchase Azerbaijani products, and the Armenian government is accused of pre-election political PR.

Of course, the establishment of economic cooperation with Azerbaijan plays to enhance the image of the current authorities, but Armenia itself receives much more dividends from this process than Nikol Pashinyan and his team. Its citizens receive, for example, cheaper gasoline. And after the signing of the final peace, the gas pipelines built during the Soviet period can also be restored. And most importantly, mutual economic interests are the foundation of stability.

Someone may object, saying that thirty years ago Armenia needed trade with Azerbaijan, but this did not stop it. Yes, it is. Armenia sawed down the branch itself, which it was hanging on to while hanging over the abyss. But the situation was different then, the expectations were different. The fact is that by starting the conflict, Armenia hoped that what Azerbaijan has and what it urgently needs would become its property. Hardly anyone in the neighboring country has such illusions today.

By showing interest in specific Armenian-made goods, Azerbaijan has shown that launching trade with its neighbor is not just a symbolic step for Baku, but a decision based on a real business interest. The Armenian government is also actively demonstrating its unwillingness to turn the economy into a tool for political campaigns and emphasizes that the market should be open to all participants who are willing to work without ideological slogans.

Azerbaijan is honest in its intentions. He will not humiliate a trading partner and give him donkey meat for ideological reasons. Those Armenian companies that refused to fill their gas stations with Azerbaijani gasoline only lost.