A Baku Rendezvous with BRICS Destiny

The BRICS Summit in Kazan saw the Asian giants India and China, the world's two most populous nations, reach an agreement reducing their border tensions along the Himalayan Roof of the World. On Thursday, October 24, 2024 the two most bitter rivals of the strategic Caucasus region Azerbaijan and Armenia are holding head of state talks on the sidelines of the Kazan summit. Sources close to Nikol Pashinyan, Armenia's highly unpopular Western president who lost the Second Ngorno-Karabakh War to Azerbaijan, have claimed the two sides have agreed on 80% of a comprehensive peace treaty.

This peace pact reportedly would permanently delineate mutual borders while guaranteeing the Azeris access to their Nakhchivan (famous among Muslims for the Tomb of the Prophet Noah) exclave. The EU, which needs Azeri gas as an alternative to Russian hydrocarbons, badly desires such a treaty. The EUrocrats have been offering the Armenians all sorts of inducements to reach a deal, and Moscow in a rare conjunction of interests with its antagonists wants the Caucasus conflicts resolved as well. With big brotherly Türkiye joining the BRICS as a partner state during this week's summit, Azerbaijan joining the expanding club is only a matter of time.

Photo credit above: Baku Azerbaijan inner city cityscape, Flame Towers skyscrapers skyline

Uploaded to iStock by dszc Mar 2012 iStock photo ID: 157730672

As Russia’s major trading partner and co-founding and hosting state for the Organization of Turkic States (OTS), Azerbaijan holds strategic and economic significance due to its location in the Caucasus and large oil and gas reserves. As such, Baku plays an important part in Russian, Turkish, and Chinese plans for their respective headways in the Caucasus, including via the International North-South Transportation Corridor.

So far, BRICS+ consists of the founding states Brazil, Russia, India, China plus the final letter in the acronym South Africa. These states are joined by newly added members Saudi Arabia, Egypt, Ethiopia, Iran, and the UAE. Thirty more countries are seeking membership in the bloc.

The chances of Azerbaijan entering BRICS is quite high due to the aforementioned reasons, however, make no mistake, this is not an anti-Israel or anti-Western statement. The EU alongside America and Israel still make up over two-thirds of the total trade turnover for the country, and Azerbaijan will not risk alienating Brussels or Washington, although Baku has certainly had its tensions with the Armenians old patrons the French since the Second Karabakh War.

The BRICS will certainly contribute to the Azeri economy, especially via investment from the Gulf Cooperation Council heavyweights the Saudis and Emiratis (see our related article on GCC investment in Georgia).

Regarding GCC-Azeri relations, in 2022 bilateral trade reached $1.8 billion US dollars and grew by 76%. GCC investment in Azerbaijan amounted to $7 billion, and there are ambitious plans, whereby between 2024 and 2028, trade between Azeris and the Gulf States should increase significantly.

Meetings are held often, with the GCC Chambers of Commerce and the Azeri Export and Investment Promotion Agency holding regular conferences and forums to boost economic relations between these countries, especially between Riyadh and Baku--where there is much room for growth.

Regarding Bitcoin – it is important to note that the cryptocurrency market in Azerbaijan is quite small, despite a strong Soviet legacy of hydropower that could facilitate BTC mining. Despite crypto-regulating legislation in neighboring Turkey, Azeri law regarding cryptocurrencies remains quite unregulated. Cryptocurrency is still not recognized by Baku as legal tender.

Bitcoin and other cryptocurrencies are not well recognized in Azerbaijan because most of the population still prefers cash to any digital asset. The vast majority of the population use cash or bank cards in their daily shopping, and online commerce is still not a very large market in this country. Despite the relatively low baseload costs there are barely any registered cryptocurrency mining operations to speak of in the country.

Now I would like to introduce Westerners unfamiliar with the Caucasus to Baku, the capital of Azerbaijan.

It is a quite old and diverse city, with several empires stretching across centuries reconstructing it. This variation of rulers has left behind a unique blend of architectural styles, such as Persian, Russian Empire and Soviet buildings. Under the Soviets, Baku was a showcase city of socialist architecture. Soviet Azerbaijan contributed many veterans of the mighty Red Army that defeated Nazi Germany and was a major oil pump for the world's largest country, the Soviet Union standing at the height of its postwar prestige.

This beautiful city stands on the warm waters of the Caspian Sea. Since its initial oil boom during the late 19th century Russian Imperial era, it has been an important node for shipping and railways. Today examples of post-1992 modern architecture include the Flame Towers, three futuristic glass towers full of LED displays, plus the Heydar Aliyev Center. The city also has a UNESCO world Heritage Site – the Old City district, other important landmarks include the Maiden Tower and the Palace of Shirvanshahs. Important examples of Soviet architecture include the Government House of Baku , Nizami Museum of Literature, and many common Soviet-built housing blocks. Russian Empire structures include the neo-Gothic Palace of Happiness.

Baku, due to its multi-ethnic heritage of multiple empires, has opera and ballet as well as spoken Russian on the streets and in the cafes that would make Russian expats feel at home, alongside Caucasian and Persian culinary delights. Multiple museums are in the capital alongside the Azeri cuisine which contains a lot of different flavors, its modern appeal to Gulf Arab and Turkish-trained chefs alike is undeniable. As the Baku Boulevard stretches alongside the Caspian Sea like a corniche, the night clubs, luxury car dealerships and sports cars make for conspicuous consumption. Due to the stable economy with a strong petro-currency, Baku remains relatively affordable for expats. If a peace agreement can be reached between Azerbaijan and Armenia, we expect Azerbaijan to enjoy steady if not spectacular growth, with solid returns for foreign investors in Baku's best residential neighborhoods.