There was standing room only when around 200 delegates crammed into the prestigious Hôtel de l’Industrie, Siège de la Société d’Encouragement pour l’Industrie Nationale in Paris, which has played a central role in the development of French industry since 1852. The event brought together personalities from both countries during three roundtables focusing on the economic environment, the potential for development and diversification of the economy, and the opportunities for co-operation in the environmental and energy sectors.
Introducing the spheres of activity
Following words of welcome by Marie–Laetitia Gourdin, Director, TEAS France, and Henri Baissas, Chief Operations Officer, Business France, the day began with a description of the strategic nature of the economic partnership that exists between France and Azerbaijan.
H.E. Elchin Amirbayov, Azerbaijani Ambassador to France, and H.E. Pascal Meunier, French Ambassador to Azerbaijan, outlined the strength of Franco-Azerbaijani relations that have developed following multiple governmental meetings at the highest state level. This has been reinforced by the solidity of commercial exchanges, despite a lack of equilibrium – hydrocarbon imports to France amounted to €1.361bn in 2014, whereas Azerbaijani purchases of equipment and high technology accounted for €208m. The Ambassadors’ speeches particularly focused on how some of the most important French companies are working with their Azerbaijani counterparts to further develop the economy, which is the most dynamic in the South Caucasus.
In his introduction, Ambassador Amirbayov outlined the priorities of the Azerbaijani government, which aims to diversify the economy in a sustainable manner and reduce dependence on hydrocarbons, the principal wealth of the country. It places particular emphasis on the resurgence of agriculture in a country previously considered the garden of the Soviet Union. Emphasis is also being placed on tourism, due to Azerbaijan’s exceptional nature, history and culture. Moreover, Ambassador Amirbayov stressed that the Azerbaijani government was focusing on the public sphere in order to modernise and develop essential infrastructure and to expand the private sector. Independent for 24 years, the country has also gained experience in organising events of global significance. From 12–28 June, Baku would host the inaugural European Games, bringing together some of the best European athletes over 15 exceptional days of competition.
From his perspective, Ambassador Meunier spoke of the resilience of the Azerbaijani economy, despite the reduction in hydrocarbon revenues this year and the impact of the devaluation of the national currency (AZN) by 25 per cent. These factors have led the government to revitalise the rhythm of their investments. He commented on the strength of Franco–Azerbaijani bilateral economic co-operation, particularly in urban and intercity train links (Alstom and Thalès), aircraft construction (Airbus) and in the space sector (the launch of Azerbaijan’s first communications satellite and its incorporation in the Spot constellation). Altogether, expected trade turnover between France and Azerbaijan should amount to €5bn in 2015. Ambassador Meunier was also pleased to note the informal twinning between Ismayilli and Sheki – two historic Azerbaijani towns – and Evian-les-Bains and Colmar in France, respectively. This is a durable and significant initiative by Business France. He concluded by commenting on Franco–Azerbaijani collaboration in the educational sphere, exemplified by the opening of a French school and Franco–Azerbaijani University in Baku.
The following speakers – Jane Amilhat, Deputy Head of Russia–CIS Unit, DG Trade, European Commission; Lionel Zetter, Director, TEAS; Orkhan Mammadov, Head of Interstate Economic Co-operation Department, Azerbaijani Ministry of Economy and Industry; and Philippe Gautier, Acting CEO, MEDEF International, spoke of the opportunities provided by the Azerbaijani economy, its stability, favourable business environment and, in each instance, its development. MEDEF International, which supports trade and investments by French companies globally, operates in Azerbaijan as a potential partner in conjunction with other regional economies. The European Commission is present in Azerbaijan and works to foster business relations and develop the private sector through the work of the European Bank for Reconstruction and Development (EBRD).
Doing business in Azerbaijan
Within this context, the first round table was moderated by Eric Fajole, Director, Turkey–Azerbaijan–Georgia, Business France; and the panel comprised James Hogan, Managing Partner, Denton’s; Nuran Kerimov, Managing Partner, Deloitte & Touche; and Vahid Bagirov, AzInsurance, who continued by outlining and detailing the conditions for market access and the great investment opportunities available in Baku due to the development of the ‘one-stop-shop’ and various bilateral agreements (France and Azerbaijan currently co-operate on fiscal matters, the protection of investments and judicial assistance) and assurances. He explained that AzInsurance covers all areas that carry some element of risk. Nathalie Komatitsch, Vice President, TOTAL Exploration and Production in Azerbaijan, spoke of her company’s involvement with Azerbaijan over more than 20 years, and its wish to intensify its role in the gas industry of Absheron, in partnership with SOCAR and ENGIE.
The importance of trade routes was central to the comments made by Selim Makzume, CEO of French shipping and transportation company CGM–CGA, who outlined the potential trading infrastructural role of Azerbaijan with regard to its combination of airports, seaports and relationship with local trading partners, although the weakness of local customs clearance agencies was cited. The moderator reminded those in attendance that, in order to cover any risks, COFACE (Compagnie Française d’Assurance pour le Commerce Extérieur) would underwrite insurance in the short-, medium- and long-term.
The necessity of economic diversification
The second roundtable was moderated by Mrs Catherine Mantel of the ENGIE Group (formerly GDF-Suez), and was dedicated to the diversification away from hydrocarbons-based economies – a central theme of the day. This was illustrated with presentations from three companies – Thalès Group, which runs an important knowledge exchange programme with Azerbaijani transportation organisations; Gilan Holding of Azerbaijan, the foremost local private investor in the agricultural sector and fervent promoter of private enterprise, represented by Michael Gerlich, FMCG Group Director; and CIFAL Group, which focuses on energy efficiency, represented by Jürgen Krahn, Deputy CEO.
The importance of agriculture in establishing social equilibrium and sustainable development was underlined by Elmar Mammadov, Economic Advisor, the Azerbaijani Embassy in France, who recognised that the sector was a priority for the Azerbaijani government during the 2012–20 period, and had particularly moved into focus this year. Agriculture would remain fragile and relatively inefficient without public support, which is why the government now has the will to develop this market in a way that was previously impossible, with the assistance of the Azerbaijan Investment Company (AIC) and the EU. A high level of support for the development of this sector is now being generated in collaboration with French companies. For example, 600 Charolais cows were recently exported to Azerbaijan, and there will be regular knowledge exchange across the agricultural sector between France and Azerbaijan, in one way or another.
During dinner, a representative of the Baku European Games Organising Committee (BEGOC) presented the Baku2015 European Games as ‘an unprecedented effort.’
Energy and environmental challenges
Thea Khitarishvili, Senior Programme Manager, Caspian and Black Sea Desk, International Energy Agency, moderated the third roundtable, naturally concentrating on energy, the motor of the Azerbaijani economy. However, she outlined the importance and necessity of linking energy efficiency to the need to initiate a progressive transition towards renewable and non-polluting energy. This oil- and gas-producing country has already invested in this sector, but much remains to be done and relevant measures need to be accelerated and intensified. This also applies to the efforts to establish energy connections between the South Caucasus and Turkey to optimise production of oil and oil-based products.
The presentations which followed, by Vusal Mammadov, Director, Brussels Office, State Oil Company of the Azerbaijani Republic (SOCAR), focused on the challenges related to developing the Southern Energy Corridor (comprising the South Caucasus, TANAP and TAP pipelines) and their impact on the countries traversed by these pipelines, such as Albania, which benefit from gas transfer revenues and diversity of gas supply.
‘Doing business in Azerbaijan’ session moderated by
Eric Fajole, Country Director, Turkey and Azerbaijan,
Business France. Photo: Stylin’CO
Jamil Melikov, Deputy Chair, Azerbaijani State Agency for Alternative and Renewable Energy Sources (ABOEMDA) explained the government strategy to attract investment from the private sector that focuses on Azerbaijan’s ambition to develop wind, wave and solar energy.
Echoing the comments of their colleagues from the preceding roundtable, Eric de la Guéronnière, Water and Waste Learning Director, Suez Environnement and Paulo Salvato, Thalès, outlined his company’s experiences, which resulted in a contract with AZERSU, the national water agency, and the concept of a ‘smart city’, which Thalès installed and manages in a Mexican town.
Catherine Mantel, Director, Russia and CIS, ENGIE, spoke of the original and interesting ‘Astainable’ project, constructed in Astana at the initiative of the Vivapolis Group of Companies to rehabilitate and develop zones to achieve maximum energy efficiency and sustainable development, thereby reducing pollution. The project was financed following a public competition amongst French companies (FASEP) and officially presented during the following days in the Kazakh capital. A comparable initiative is certainly envisaged for implementation in Baku and work is underway to improve systems in the Azerbaijani capital.
As stated during the conclusion by Senator André Reichardt of the Bas-Rhin and President of the France–Caucasus Friendship Group in the French Senate, this forum demonstrated a high level of interest in economic partnership between France and Azerbaijan, focused on diversifying the Azerbaijani economy. At the initiative of TEAS, these important subjects and others of equal importance were covered. Olivier Mousson, President, Société d’Encouragement pour l’Industrie Nationale, which hosted the event, concluded the day by recalling that Napoleon had created the institution in 1801 to promote national industry, and it was therefore highly appropriate to dedicate the day to further developing business partnerships between France and Azerbaijan.
About the author: Daniel Patat is a former Economic Counsellor for the French Ambassador to Azerbaijan.