Azerbaijan

Strategic Alignment and Economic Synergy: The Deepening Partnership Between Azerbaijan and Italy

by CASPRI

Azerbaijan and Italy’s relationship has grown significantly over recent years, driven by shared strategic, economic, and geopolitical interests. The recent visit of Azerbaijani President Ilham Aliyev to Italy in early September, commemorating 30 years of diplomatic ties, underscored the countries’ deepening cooperation. This visit not only marked the evolution of their partnership since the signing of the Joint Declaration on Strengthening the Multidimensional Strategic Partnership in 2020 but also demonstrated both nations’ commitment to expanding and diversifying their collaboration across energy, trade, investment, and geopolitical domains.

A cornerstone of Azerbaijani Italian relations is energy. Italy, Azerbaijan’s largest trade partner in Europe, relies heavily on Azerbaijani oil and gas, especially following the joint development of the Trans Adriatic Pipeline (TAP). TAP supplies approximately 10% of Italy’s gas, a figure expected to double as Azerbaijan increases its exports to Europe. This growing energy partnership not only meets Italy’s energy demands but also strengthens its position as an energy hub, especially given Italy’s ambition to become less reliant on Russian energy sources. Azerbaijani oil, much of which is transported through Italian ports, makes Azerbaijan Italy’s largest oil supplier. This mutual dependence reflects an alignment of strategic priorities, as Azerbaijan seeks reliable markets in Europe and Italy pursues energy security and diversification.

Beyond energy, economic cooperation between Azerbaijan and Italy spans various sectors, with nearly a hundred Italian companies active in Azerbaijan in construction, logistics, and infrastructure. Italian businesses have invested around €800 million in Azerbaijan, while Azerbaijani investments in Italy are estimated at €1.7 billion. This bilateral economic relationship has also led to a positive trade balance for Azerbaijan, with Azerbaijani exports comprising the bulk of the trade volume. Both countries have prioritized expanding investment and joint ventures, particularly in industrial projects and reconstruction efforts in Azerbaijan’s liberated Karabakh region, where Italian companies are involved in infrastructure projects. This cooperation serves a dual purpose: advancing Azerbaijan’s post-conflict redevelopment and offering Italian companies a foothold in emerging opportunities within the South Caucasus.

Aliyev’s visit also facilitated the signing of several Memoranda of Understanding (MoUs) between Azerbaijan’s state oil company SOCAR and Italy’s energy giant Eni S.P.A., focusing on biofuels, energy transition, and greenhouse gas reduction. These agreements reflect Azerbaijan’s strategic shift towards sustainable energy, aligning with Italy’s own climate goals. The collaboration between SOCAR and Eni aims to enhance technological innovation in energy production, transition, and supply security, thus reinforcing both countries’ ambitions to lead in sustainable energy development.

Aliyev’s participation in the prestigious Cernobbio Forum during this visit highlighted Azerbaijan’s growing influence in Europe, particularly in energy security. Addressing a special session titled “The Role of Azerbaijan in the New Geopolitical Conditions,” Aliyev articulated Azerbaijan’s contributions to European energy stability, its efforts to uphold regional security, and its stance on territorial integrity. The forum allowed Aliyev to underscore Azerbaijan’s alignment with European security interests and signal its readiness to play a broader role in European geopolitical affairs.

In a unique diplomatic gesture, Aliyev disclosed that both Russia and Ukraine had approached him to facilitate the transit of Russian gas through Ukraine to Europe, given the imminent expiration of their current agreement. This development underscores Azerbaijan’s role as a bridge between Europe and other regional powers, positioning it as a potential mediator in the Russo-Ukrainian conflict. Aliyev expressed willingness to support peace processes in the region, emphasizing Azerbaijan’s commitment to the sovereignty and territorial integrity of Ukraine and other nations, while maintaining a neutral stance in the sanctions campaign against Russia. This pragmatic diplomacy enhances Azerbaijan’s regional standing as a mediator capable of navigating complex geopolitical rivalries.

The strengthening of Azerbaijani Italian relations also intersects with both countries’ strained relations with France. Italy and France have been strategic competitors, especially in the Mediterranean, where energy and foreign policy interests frequently clash, as seen in Libya. Italy’s aspiration to become a leading energy hub and a key player in Southern European affairs contrasts with France’s regional ambitions, particularly after Britain’s exit from the EU. The deepening Azerbaijan-Italy partnership can be seen within this competitive framework, as both countries seek to bolster their strategic autonomy and counterbalance French influence.

In sum, Azerbaijan and Italy are deepening a strategic partnership that extends beyond energy to encompass economic investment, diplomatic cooperation, and shared geopolitical interests. This relationship exemplifies a pragmatic alliance where each country benefits from the other’s resources, capabilities, and regional ambitions. Azerbaijan’s role as a reliable energy supplier aligns with Italy’s goals of energy diversification and regional leadership, while Italy’s investment and support in post-conflict areas of Azerbaijan reflect an expanding influence in the South Caucasus. Together, they form a partnership that reflects mutual economic interests, reinforces European energy security, and contributes to the reshaping of regional power dynamics in both Southern Europe and the South Caucasus.