BakuThe impact of E.’s return was not limited toNaghorni carpet of Karabagh To Azerbaijani sovereignty – after a decades-long conflict with Armenia – on the geopolitical dimensions, and in addition to that, the economic importance of the region emerged, which was often overshadowed by repeated wars and conflicts.
Despite the deteriorating economic conditions and poor resources that Armenia (which controlled Karabakh) suffered from in previous years, it financed between 50% and 60% of the region’s budget expenditures, which were classified as “intergovernmental loans.” In 2022, the budget loan from Armenia to the region amounted to about $404 million, which provided approximately 88% of expenses.
In addition to financial assistance, Armenia has provided other forms of assistance to the region, including periodic in-kind donations from cars to computer services, the International Crisis Group said in a December 2021 report.
Moreover, Karabakh previously received aid from global Armenian diaspora organizations, but the total amount of aid was not mentioned in any official document, the same report says.
On the other hand, official statements by officials in Azerbaijan indicate that Baku is now racing with events to resolve the issue of integration with the region, including what concerns Armenian citizens, of whom the latest data indicate that more than 90% of them have left the region, which means that Baku has become closer. The focus is on launching a “rehabilitation” process for the collapsed economy in Karabakh.
According to Azerbaijani economist Orkhan Galilov, the country’s gross domestic product is expected to grow by 0.8% after regaining the region and launching the process of economic integration with it, knowing that the gross domestic product in 2022 reached a value of 78.7 billion dollars, according to data from the Azerbaijani Statistics Commission.
Galilov points out – in an interview with Al Jazeera Net – that about a quarter of the region’s gross domestic product, which amounted to about $700 million last year, comes from the mining of gold, silver, copper, and building stones, in addition to the fact that many local hydroelectric power stations make it possible to export electricity, Which will constitute an important addition to the Azerbaijani treasury.
Moreover, the stabilization of the situation in the region will significantly increase the volume of Azerbaijan’s trade with the rest of the world, especially with neighboring countries, which will reflect positively on Baku’s economic strength.
He adds that the role of Azerbaijan, with its large oil and gas resources and various transportation methods, increased after the restoration of the region, in addition to other factors that played a role in Baku’s favor, the most important of which is Europe’s urgent need for Azerbaijani gas more than ever before due to recent geopolitical changes, especially after the war on Ukraine and the transition from Russian gas.
He cites this as the operation of a large transportation infrastructure through a 3,500 km gas pipeline from the offshore fields in the Caspian Sea to Europe, which – in his opinion – is another contribution to the energy security of the region and the world more broadly.
Not that easy
A researcher in economic studies, Toral Azimzadov, disagrees with him, who explains that although Azerbaijan’s recovery of the region constituted a historical event, it is not permissible to rush to talk about the economic benefits expected from it because it requires pumping large funds and investments to repair the old and damaged infrastructure due to successive military conflicts.
In his opinion, an urgent package of stimulus measures is necessary, which includes – among other things – tax and customs benefits linked to a special economic system that must be provided in order to accelerate economic development in both the Karabakh and East Zangezur economic regions.
In addition, he believes that the Azerbaijani government must rush to provide special facilities to foreign businessmen and investors so that the region can transform over time into an effective and profitable economic zone for Baku, in addition to the necessity of raising the income level of the population to the levels found within Azerbaijan.
According to Azimzadov, the end of the armed conflict and the return of Karabakh to Baku’s sovereignty is important from the perspective of creating a favorable atmosphere for the start of economic projects, but the strategic transformation in the medium and long term depends on launching Zangzour Pass The strategic plan, which, if implemented, will become a vital global artery for international transport in which Azerbaijan plays the primary role.
The economic studies researcher continues that Russia and Turkey are also interested in implementing this project, to a degree that is no less important for Azerbaijan.