Israel, Azerbaijan Trade and Investment Opportunities

Over the past three decades, friendly interstate relations between Israel and Azerbaijan have reached a strategic alliance based on mutual understanding on most international issues. Strong ties have been created from defense to energy. In 2023, the two countries are making every effort to bring trade and cooperation in various fields to a new level.

In November 2022, Baku announced a historic decision to open an Azerbaijani Embassy in Tel Aviv. The decision to open a diplomatic mission reflects the depth of relations between the two countries and is the result of the efforts to build strong diplomatic bridges.

The visit of Israeli Foreign Minister Eli Cohen to Azerbaijan, which took place from April 18-19, is yet another proof of rapidly evolving bilateral relations.

Israel’s trade turnover with Azerbaijan’s during the first two months of 2023 amounted to US$334.1 million, a 26.36% increase on the previous period in 2022, while Israel’s share in Azerbaijan’s total trade turnover grew by 4.66%. According to Israeli Ambassador to Azerbaijan George Deek, bilateral trade turnover between the two countries is expected to double this year – good news for manufacturing exporters.

Hi-Tech

One of the areas with high potential for development is the high-tech industry. In July last year, Israel’s OurCrowd, the leading global capital crowdfunding platform, and Azerbaijan’s Sovereign Investment Company signed an investment agreement. In February this year, Azerbaijan’s Economic Ministry announced that the first investment, worth US$1 million had already been made from Azerbaijani investors, who placed capital into Israeli startup LARGIX, which specializes in the development of industrial products.

The Israeli-Azerbaijani partnership in innovation and IT has significant potential and will expand further within the framework of joint projects aimed at creating startup ecosystems, developing specialized incubation centers and technology parks, cybersecurity, and so on.

Energy

Cooperation in the energy sector is another pillar of successful relations development. Israel already imports one third of its oil needs from Azerbaijan. Azerbaijan’s State Oil Company (SOCAR) is likely to expand its sales to Israel.

Cooperation in green energy is one of the most important areas on the expansion of which both the countries will concentrate on in the coming years. Having tremendous experience in renewables, Israel has repeatedly expressed its readiness to take part in the implementation of green energy projects in Azerbaijan.

According to the latest data, some 10-15 Israeli companies have already applied to take part in projects in Karabakh through the Israeli Embassy in Azerbaijan. The actual number of companies willing to contribute to the restoration of Azerbaijan is even higher. In this regard, Israel has a lot to propose in several fields, beside green energy, such as water management, agriculture, health, innovations, and smart cities.

Agriculture

Another rapidly developing field in bilateral cooperation is the agriculture sector. There are several projects in the pipeline within the Israeli agricultural private sector, which include grain and stock storage project, some projects on dairy farms, orchid cultivation and others. The Azerbaijan-Israel Innovation Forum on the “Agriculture and Education” held recently in Baku is confirmation of how this cooperation is important for both the countries. With its innovative technologies, Israel will contribute to the increase in Azerbaijan’s agriculture production and export.

The two countries can already be classed as the biggest players of their own regions. Despite the fact that geographically Azerbaijan and Israel are not so close, both countries have been able to establish successful ties. Azerbaijan is now a forefront actor when it comes to such global issues as transport connectivity and energy security. This is also where Israel’s experience and technology is vital. By strengthening bilateral ties, the two countries can exploit new opportunities for the benefit of all countries in the wider region, and open new horizons.

Dezan Shira & Associates have partner firms in Israel and Azerbaijan. For introductions, please contact us at dubai@dezshira.com

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