Despite geopolitical differences, Azerbaijan and India are invested in co-operation

A view over Baku. Photo by Retan / Shutterstock

Azerbaijan and India have long enjoyed friendly relations and co-operation on a wide range of issues. Baku has been New Delhi’s major trade partner in the South Caucasus for many years. Yet diplomatic relations could go south after India recently acted in ways Azerbaijan perceived as somewhat hostile.

On June 9th 2022 Azerbaijan’s foreign ministry summoned India’s ambassador to Azerbaijan Bavitlung Vanlalvavna to express Azerbaijan’s condemnation of the use of insulting remarks by India’s ruling party members against the Prophet Muhammad and called the Indian government to take strict measures against these officials. In August, Azerbaijan’s public TV ran an episode about India’s diplomatic attempts to block Azerbaijani initiatives on different international platforms.

Accordingly, India objected to inviting Azerbaijan to the BRICS summit although it was approved by the other members – Russia, China, Brazil and South Africa. New Delhi also poured cold water on the Azerbaijani proposal to transform the Non-Aligned Movement (NAM) Youth Summit held in Baku on July 25th-29th into an international organisation. To Azerbaijan’s mounting ire, India and Bhutan reportedly prevented the signing of a declaration voicing NAM countries’ solidarity with Azerbaijan after radical Shia groups stormed the Azerbaijani embassy in London on August 4th.

This growing divide between the two countries emanates mainly from their diplomatic and ideological affinities in the Nagorno-Karabakh and Kashmir conflicts. Having Pakistan’s staunch support on the Karabakh conflict, Azerbaijan has openly backed Pakistan’s position on the Kashmir issue for many years. In parallel, India was getting closer to the Armenian cause in the Karabakh conflict, creating linkages between two far-away conflict centres in the wider Eurasian region.

What was striking was that although this policy divergence had the potential to damage bilateral ties for some time, it had been on the back-burner due to burgeoning economic relations between Baku and New Delhi. The two countries went a long way to keep this opposition from spilling over to other policy areas with possible serious ramifications for bilateral co-operation. After Azerbaijan’s victory in the Second Karabakh War in 2020 and the changing power realities in the South Caucasus, keeping the Azerbaijan-India partnership on pragmatic rails became a hard feat to pull off. The 44-day war led to the further crystallisation of informal alliances between Azerbaijan, Turkey and Pakistan on the one hand, and India and Armenia on the other. 

In the aftermath of the war, Azerbaijan doubled down on deepening ties with Turkey and Pakistan in diplomatic and military spheres. Baku and Islamabad became more vocal in their support of each other on regionally important issues. In July 2022, parliament speakers of Azerbaijan, Turkey and Pakistan signed the Istanbul Declaration where Ankara and Baku reaffirmed their principled stance on the Jammu and Kashmir conflict and expressed their support for peaceful resolution of conflict in accordance with relevant UN Security Council resolutions.

On its side, India elected to become more pronounced in its support of Armenia while keeping its “principled position” on the Karabakh issue. After a new round of border clashes between Armenia and Azerbaijan on September 13-14 2022, India’s foreign ministry, referring to Azerbaijan, called upon the aggressor side to immediately cease hostilities.

When it comes to military co-operation, the Azerbaijan-Pakistan partnership enjoyed good prospects of development in terms of joint military exercises and military education programmes. In September 2021 Azerbaijan, Turkey and Pakistan conducted “Three Brothers” trilateral military exercises where special forces units practiced the tasks of infiltration behind imaginary enemy lines by land, sea and air. In August 2022, Azerbaijan’s National Defence University and Pakistan’s National Management College discussed possible areas of co-operation in the field of military education. Baku is also interested in Pakistan’s JF-17 fighter jets as one of the best options to boost its post-war air force capabilities.     

Military co-operation between India and Armenia entered a totally new phase when India delivered 4 Swathi weapon locating radar systems to Armenia in January 2021. The $40 million platform does not only suit the Armenian military’s operational plans in the mountainous terrain such as in Karabakh but its purchase also aims to decrease Yerevan’s dependence on Russia. In April Suren Papikyan, Armenia’s defence minister, received the Indian ambassador to discuss the signing of an agreement on military co-operation between the defence ministries of the two countries. In July, India’s Mumbai-based news service Dnaindia.com reported the visit of the Armenian delegation to India “with a shopping list” where drones figured prominently.

Despite all this, Russia’s invasion of Ukraine and the ensuing sanctions on Russia created new opportunities for Azerbaijan and India to put differences aside and co-operate on mutually beneficial areas. India became Azerbaijan’s fourth largest export partner in the first six months of 2022. Compared to the same period last year, Azerbaijan’s exports to India increased by 107 per cent, reaching 896 million US dollars. At the same time, India emerged to be an important source of cereals and rice for Azerbaijan in the context of increasing volatility in the global food markets. These developments once again brought to the fore the importance of the International North-South Transport Corridor (INSTC) for Baku and New Delhi’s geo-economic position in a destabilised neighbourhood.

The INSTC is a multimodal transport route and was established by an intergovernmental agreement between Russia, India and Iran in 2000. The 7,200-kilometer corridor links Mumbai to St Petersburg through Iran and Azerbaijan’s railway networks. According to the Indian Federation of Freight Forwarders Associations report, the INSTC is 30 per cent cheaper and 40 per cent shorter than the traditional maritime route passing through the Suez Canal.

Azerbaijan joined the group in 2005 and has since then been actively involved in the further development of the route. In June 2021, the first train jointly operated by the Azerbaijani, Russian and Iranian railway companies carried thirty 40-foot containers of paper-based products from Finland to India. In August 2022, Belarusian and Russian railway companies started to transport goods to Azerbaijan within the framework of the INSTC, and the first express train loaded with timber products reached Azerbaijan’s Absheron station in only seven days. A possibility to link the north-south route to the east-west Middle Corridor via the Baku-Tbilisi-Kars railroad is expected to establish Azerbaijan as one of the main transit hubs in the wider Eurasian region.

The North-South Transport Corridor. Image (CC): commons.wikimedia.org

For India, the INSTC has long served the purpose of creating alternatives to China and Pakistan-led projects to link Asian markets with Europe. With this, New Delhi also aimed to redirect some transportation routes away from the Suez Canal to the railroad system of Iran, Azerbaijan, Turkmenistan, Kazakhstan and Russia which would unlock the untapped trade potential of these markets by catalysing economic growth.

Although the INSTC did not deliver the expected results in the past, due to a lower amount of economic exchange and an underdeveloped transport network, an urgent need for alternative routes for growing Russia-India trade after the Ukraine-related sanctions might give the route a new life. Already in July 2022 Russia sent its first train carrying two 40-foot containers with wood laminate sheets to Mumbai, passing through Russian and Iranian ports in the Caspian Sea and in the Persian Gulf. On September 9th Azerbaijan, Iran and Russia signed the Baku Declaration on the further development of the INSTC, envisioning mechanisms for simplification of transport and transit operations along the route.

For Azerbaijan, the INSTC is a strategic desideratum, an opportunity to take advantage of moving production activities, value and supply chains from coastal regions to once peripheral locations. In March 2018 Azerbaijan and Iran launched the rail link between Astara in Azerbaijan and the Iranian namesake city, extending Azerbaijan’s 1,520-mm gauge rail network 1.5 kilometres into Iranian territory. Baku also financed the construction of a $60 million bridge over the Astarachay River. After Iran finally put the Qazvin-Rasht railway section into use in 2019 Azerbaijan has been pushing to complete the 164-kilometre long Rasht-Astara railroad that will provide smooth transit of cargo between India and Russia through Azerbaijan and Iran. In July 70 per cent of the Rasht-Astara railway was already complete and Russia declared it would finance the construction of the remaining part via barter with Iranian oil.

The INSTC countries have also recently stepped up efforts to improve the soft infrastructure potential of the route. Russia has been especially active in pushing for the establishment of a joint railway operator for end-to-end logistics in the INSTC analogous to UTC Logistics which brings together Russian, Kazakhstani and Belarusian national railway companies to provide easy transit along the Northern Corridor linking China to European markets. Bilaterally, Azerbaijan and India have facilitated negotiations on the Double Taxation Avoidance Agreement and the Bilateral Investment Treaty. Further regulatory approximation together with a more developed transport infrastructure will deepen trade ties among the INSTC countries in general, and India and Azerbaijan in particular. Although it will not push away the policy differences between Baku and New Delhi, it will still create opportunities for papering over differences in pragmatic ways.

This trend in India-Azerbaijan relations should be seen in the context of Azerbaijan’s “align without alienating” strategy that has been an essential component of its approach to international co-operation in the post-Karabakh war period. Accordingly, Baku’s allied relations with Turkey are designed in ways that should not preclude mutual co-operation with Greece; or military-economic ties with Israel being expanded while keeping channels open for politico-economic engagement with Iran. Similarly, Azerbaijan is careful that its growing alignment with Pakistan does not come at the expense of pragmatic co-operation with India. Baku’s increasing commitment to cooperation under the INSTC after February 2022 has been a part and parcel of this strategy. 

Mahammad Mammadov is a Research Fellow at the Topchubashov Center in Baku, Azerbaijan. His research covers geopolitical and transitional developments in the post-Soviet space and Azerbaijan’s foreign and security policy.

Azerbaijan, economic relations, India, South Caucasus, trade