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Britain, Brexit and Baku

Bob Blackman MP
October 1, 2017

Our European Union membership prevents us from fully capitalising on the trade opportunities stemming from our existing relationships with developing nations like Azerbaijan. Free from the EU we can focus on what really matters: true economic cooperation and trade based on mutual respect and friendship, says Bob Blackman MP. 

On Thursday 23 June, 2016, the UK voted to leave the European Union in a referendum which split the country almost down the middle. On a turnout of 72 per cent the British people voted by 52 per cent to 48 per cent to leave the EU, and Article 50 was tabled on 30th March 2017 to formally trigger the process.

Whilst this decision baffled and even angered some of our European friends and neighbours, it caused excitement elsewhere in the world. The prospect of having relatively unfettered access to the world's fifth largest economy has proved enticing, and although the UK cannot formally enter in to any trade deals before it leaves the EU, discussions are being had.

One of the countries which fully understood the UK's decision to leave, and which is keen to strike an early trade deal, is Azerbaijan. Over the past twenty-five years the UK has emerged as the largest foreign investor in Azerbaijan, and BP as the largest foreign company in the country. In recent years Azerbaijan has started to invest in Europe and the UK, so that this is now a two-way process.

As a sign of Azerbaijan's faith in the relationship post-Brexit, the multi-billion pound oil contract signed over two decades ago for the Azeri Chirag fields and the Gunashli field (ACG) has just been extended with rights given to BP till 2050. Foreign Minister Sir Alan Duncan was in Baku on the 14th of September to ratify this huge new contract.

BP also plays a major role in developing Azerbaijan's considerable natural gas reserves and delivering them to European markets via the ambitious Southern Gas Corridor, currently under construction. This is a $45bn project, , which saw William Hague fly out to Baku to sign the deal during his time as Foreign Secretary.

Trade between Azerbaijan and Britain is booming across all sectors. It is not just energy which is flourishing, but also financial service, hospitality, engineering and construction. Hundreds of UK companies have invested in Azerbaijan and trade turnover between the two countries stands at £150 million in the first quarter of 2017, most of which accounted for imports from the UK according to Azerbaijan's State Customs Committee. This success comes despite the severe limitations EU membership places on Britain's ability to pursue full trade relations with countries such as Azerbaijan.

Instead of trade deals Brussels insists on exclusive political affiliations via Association Agreements, which come with political conditions that have nothing to do with business and commerce. After years of negotiations Azerbaijan rejected EU's offer of an Association Agreement. Armenia did the same, but then went a big step further by signing up to the Russian-led Eurasian Union, thereby demonstrating its near-total economic and military dependence on that country.

The EU's inability to negotiate successful trade deals without causing conflicts with other powers, such as Russia, seems largely rooted in its political philosophy.  Instead of focusing on economic cooperation and trade and securing flexible arrangements which take into account geo-political realities, the EU has for years sought to enlarge and expand its borders. The EU's policy has on occasion run counter to the interests of both the UK and Azerbaijan. For example, the ban on arms sales to Armenia and Azerbaijan, while in principle understandable, is in fact ineffective and ill thought out because the net result is that both Armenia and Azerbaijan have gone to Russia for their arms purchases, making the situation no more secure while increasing Russian leverage on both countries. The UK has also lost out on lucrative Azerbaijani shipbuilding and navy training contracts, even though this would have had no direct impact on the conflict with Armenia.

Asia, Africa, and South America are the regions of future global economic growth. This is where we must go to trade and invest post-Brexit. There is now no market too small or too large for Britain. Leaving the EU comes with obvious risks, but opportunities can potentially be immense in the long run. Brexit could herald the return of Britain as an independent global trading power.

Contrary to the running commentary from the doom-mongers, on my last trip to Azerbaijan in 2016 a few weeks after Brexit, I found that that there was genuine excitement and enthusiasm among our hosts for the prospect of a trade deal with the UK. The extension of the ACG deal with BP shows faith and confidence on both sides and gives us a platform to build on in the future.

Being part of the European Union prevented us from establishing tailored solutions to maximise the relationship with developing nations like Azerbaijan. Now that we are free from the political considerations that accompanied the EU's agenda we can focus on what really matters, true economic cooperation and trade based on mutual respect and friendship.


Bob Blackman is the Conservative MP for Harrow East and Chair of the APPG for Azerbaijan.

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