As Pakistan invites Azerbaijan to join China-Pakistan corridor, for Azerbaijan CPEC can become a godsend.

As the Azerbaijani economy continues to decline – with  nearly all branches of the economy sinking down in the past few years and the GDP further contracting in 2017 – Baku joining China-Pakistan Economic Corridor (CPEC) could bring positive economic shifts for the nearly 10-million populated country in the South Caucasus region.

Azerbaijan CPEC
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Pakistan gave Azerbaijani a glimmer of hope to boost its economy when Islamabad invited Baku to join the game-changer project in a formal statement on Monday. CPEC, which is part of China’s ambitious Silk Road plan, is set to boost trade and regional connectivity in the region, experts predict.

Azerbaijan joining CPEC would not only bring positive economic changes for Baku, but also benefit the Pak-China corridor itself, as Azerbaijan holds a strategic location as a transit hub for East-West China Europe Corridor, a part of the Silk Road plan.

Silk Road’s biggest project, the flagship CPEC project, offers enormous investment opportunities for the investors from Azerbaijan as well as Central Asian Republics (CARs). As CPEC has the potential to expand to other nations interested in joining the ambitious multi-billion dollar project, the corridor could “fortify inter-regional connections,” according to a 2016 study published in the International Journal of Social Science and Humanities Research.

For Economy of Azerbaijan CPEC Can Do What It Has Done to Pakistan

Studies show that the Pakistan economy has maintained steady growth in the past few years – mostly spurred by CPEC – despite the setbacks it has suffered in the past few weeks due to the political drama surrounding Prime Minister Nawaz Sharif’s ties to corruption as well as his subsequent disqualification by the Supreme Court last week.

The economy has seen unprecedented growth since Pakistan and China launched the implementation of CPEC, with Pakistan’s stock market out-performing all others in Asia last year. Earlier this year, The Economist magazine forecasted Pakistan to be the world’s fastest growing Muslim economy and the fifth fastest growing economy in the world in 2017.

For the economy of Azerbaijan CPEC could bring similar positive shifts if the nation agrees to join the game-changer $62 billion project.

Why Azerbaijan Joining CPEC Would Benefit the Entire Region

Pakistan and Azerbaijan are already enjoying strong economic partnership, as their bilateral trade reached new heights a record three times in 2016. With a lot more potential to further boost economic activities for the two nations, Baku joining CPEC would not only improve trade and economic relations between Islamabad and Baku, but also benefit the entire region.

Both Pakistan and Azerbaijan are strategically vital locations in Asia, which is why an immense economic partnership between the two could improve connectivity and boost trade and economic activities in the region. Former PM Sharif, who was ousted just last week, even ordered the ministry of commerce to establish joint working groups on trade, investment and communications with Azerbaijan.

If Islamabad formally inviting Baku on Monday – three days after the ouster of Sharif – is any indication, the change of leadership in Pakistan is not expected to slow down or negatively affect the progress of Pak-Azerbaijan cooperation, nor is it expected to be an obstacle to the CPEC implementation.

For Azerbaijan CPEC would bring an even more effective engagement on trade and economic issues as well as turn it into a favorable investment environment. Islamabad’s decision to invite Azerbaijan to join CPEC comes a few days after Pakistani and Azerbaijani officials held meetings on preferential tariffs, customs and trade cooperation.

No Obstacles of Azerbaijan Joining CPEC, as China-Azerbaijan Trade Soars

There are no obstacles of Azerbaijan joining CPEC, as both Pakistan and China enjoy growing bilateral ties with the strategically viable country in the South Caucasus region. Trade turnover between Beijing and Baku reached more than $640 million in just nine months last year. The two partners are boosting their cooperation in the fields of energy, transport, agricultural products trade.

During last week’s inaugural meeting of Pakistan-Azerbaijan joint working group on trade, the two sides signed a memorandum of understanding, which is set to further increase Pak-Azerbaijan trade and economic cooperation as well as facilitate both Pakistani and Azerbaijani businessmen.

Earlier this year during a visit of a 16-company delegation of Azerbaijan to Islamabad, Azerbaijani officials revealed that many companies in their country were keen to do business with Pakistan. For Azerbaijan CPEC would be a profitable opportunity to help its companies to boost cooperation with Pakistan. Earlier this year, Islamabad and Baku signed a milestone Inter Governmental Agreement for Cooperation in the field of energy.

A 2016 study published in the China Institute of International Studies offered a Chinese perspective of Azerbaijan being part of the Silk Road Economic Belt. The study concluded that “Azerbaijan is among the few countries involved in realization of the Belt projects that have the capacity, experience and willingness to invest in upgrading its transport infrastructure and thus can be considered very suitable partner for China in this regard.”

Pakistan’s Great Military Importance to Azerbaijan

Aside from the growing economic ties, Pakistan and Azerbaijan have also substantially increased military cooperation in the past few years. Baku is eyeing to boost defense imports from Islamabad, including JF-17 aircraft, as the nation is at war with neighboring Armenia over the latter’s territorial claims.

Last week – during the talks between Pakistani and Azerbaijani officials that led to Islamabad inviting Baku to join CPEC – Pakistan and Azerbaijan signed an agreement to sell 10 Super Mushshak training aircraft to Azerbaijan Air Force. With the Pakistan Air Force calling the deal a “landmark agreement” that will “further strengthen the bilateral ties between the two brotherly countries,” Pakistanis also agreed to provide its partner’s Air Force with operational training, technical support and assistance.

Pakistan’s importance to Azerbaijan cannot be underestimated, as Islamabad is the only country in the world that has not established diplomatic relations with Azerbaijan’s enemy, Armenia. For Azerbaijan CPEC would become a yet another factor driving Pak-Azerbaijani economic-military cooperation forward at the time when it requires advanced military equipment from both Pakistan and China to be prepared for any outcome of the unresolved territorial conflict in the Nagorno-Karabakh region.