Caspian Business News, 28 June 2004

By Gulnaz Guliyeva

BAKU, Azerbaijan - Azeri-Greek negotiations, as part of the official visit of Greek President Konstantinos Stephanopoulos to Baku June 20-22, resulted in the signing of three bilateral agreements dealing with the protection and encourage of investment, mutual assistance in customs' affairs, and cooperation in road cargo transportation. In addition to the intergovernmental agreements, Azeri and Greek business delegations also signed protocols on cooperation in a number of different areas, particularly on the development of information technologies, and establishment of joint ventures for promoting increased volumes of road and railway transportation. Greek and Azeri vintners also came to a pact on collaboration in winegrowing and winemaking, as well as the supply of necessary equipment. More than 100 Greek and 200 Azeri companies came together last week in Baku to discuss opportunities for expanding trade and economic relations between the two countries.

Deputy Foreign Minister of Greece, Euripides Stilianidis, said the business forum, the first of its kind involving Greek businesses in Azerbaijan, mostly brought together companies doing business in the chemical and petrochemical industries, construction, telecommunication, metallurgy, food processing, shipbuilding industry, and tourism industries.

"The government of Azerbaijan is highly interested in Greek investment and involvement of Greek companies in the development of the non-oil sector of Azerbaijan," said Farhad Aliyev, minister of economic development, during the forum. "Azerbaijan and Greece have large potential to expand trade and economic relationship."

The minister told the forum that, like other developing countries, Azerbaijan faced difficulties on the way to the establishment of a market-based economy, but "today, the country shows growth in gross domestic product every year and has the lowest amount of external debt among [Commonwealth of Independent States] countries."

"By 2003, Azerbaijan had attracted investment with value of $17 billion. By the end of 2004, this amount will reach more than $20 billion," said Aliyev. "As result of investment rising, Azerbaijan will have the highest amount of investment per capita among CIS countries."

Aliyev said that the country's top goal is to push the development of non-oil sectors, "however, implementation of oil and gas projects promotes activity in non-oil sectors, including construction, telecommunication, services, trade, etc., not only in the country, but also in the region on the whole."

The minister invited Greek businessmen to take part in development of the rural economy in Azerbaijan and be involved in implementation process of the state program on socio-economic development of the regions for 2004-08. Ion Steriotis, president of EuroBusiness, an association of 260 Greek companies doing business in the oil, construction, agriculture and service industries, told CBN that some members of his group had shown interest in working with companies from Azerbaijan.

"I think that Greek businessmen don't know Azerbaijan very well. So, we have to start establishing a relationship between the two countries and making our acquaintance better," he said. "From the Greek point of view, Azerbaijan has a favorable geographical location on the boundary of Europe and Asia, and this is of interest to us."

At the same time, he said, Greece is an entry point to Europe and a member of European Union, which should be enticing to Azeri businesses.

"So, if Azeri businessmen want access to the European market, they will be able to get it through Greece," Steriotis said. "Azeri businessmen can export their products to Greece, but their quality must comply with Greek and European standards."

In order to sustain a business relationship, Azeri and Greek business figures must identify areas of priority. Agriculture and food processing are potential focal points. Greek companies have strong experience in these areas and are willing to share their expertise and knowledge with Azeri partners, Steriotis said.

We can bring retired production equipment and technologies, for instance, for fruits processing and production of juice," Steriotis said.

Unlike most European countries, production facilities in Greece are not large and these small manufactures will be able to transfer their units to Azerbaijan. This could be advantageous for Azeri businesses, as most are unsuitable or unable to afford larger equipment.

In order to promote cooperation between Azeri and Greek business leaders and provide them with necessary information for operating in either country, the Confederation of National Entrepreneurs of Azerbaijan and the Federation of Greek Industries signed agreement during the business forum.

Alakpar Mammadov, president of the Azeri confederation, said that trade relations between Azerbaijan and Greece are not satisfactory, as turnover for the last five years was only $182.6 million in total. "It demonstrates the necessity of expanding relations in trade and other sectors of the economy. The goal of this agreement is to encourage the establishment and expansion of close relations between businessmen from Azerbaijan and Greece," he said. "We have agreed to exchange information about the Azeri and Greek economies. Cooperation with Greece is important to us, because it one of entrance to the European market." In addition to the forums, the two bodies agreed to hold joint training sessions for managers of Azeri and Greek companies. The agreement covers a spectrum of activities, such as exhibition sponsoring, conference organization and business tours, although the focus is on the exchange of information.

"We will regularly send our members concrete business offers from Azeri businessmen and vice verse. Also, we will provide our Azeri colleagues with information about the Greek economy and potentials [opportunities]," said Patsiavos Ioonnis, the representative of the Greek federation. "We feel that we don't know very much about Azeri companies. Thus, the first goal of the agreement is an exchange of information."

The federation is the central business organization in Greece and has 4,500 members in total, including 70 members from regional and sector associations.

Ioonnis told CBN that they were planning to establish a global network with similar organizations in other countries.

"It is our first visit in Azerbaijan. We are happy to establish this collaboration with the Azeri confederation of employees and entrepreneurs," Ioonnis said. "It will be very useful for our members to identify potential partners in this country." He said some Greek delegates had already identified potential sectors for collaboration, such as in energy, telecommunications and construction.

The confederation has also taken the initiative to provide business leaders from the different countries with facilities to meet with each other and do business during the Olympic Games, which will be held in Athens this summer. Ioonnis also said: "Of course, it depends on the business environment and investment climate in the country. But our effort will try to promote this initiative."

Stilianidis said the embassies of both countries should have a positive impact on making the economic relations between the two countries more active.

"Greece has an embassy in Azerbaijan. I hope that Azerbaijan will open an embassy in Greece too in near future," he said.

Like most of the Greek delegates, Theodore Douros, the representative of DUR, a producer of men's clothing, was making his first visit to Azerbaijan. The company also has 25 shops and is trying to expand its business into former Soviet countries, including Azerbaijan.

"When we take decision about new market, first of all, we [must] find answers to the question of whether there is a market in the country for our clothes," Douros said. "If we find out that we have a market, we have to determine what kind of business we can start in that country. It would be a franchise business, my own business, a joint venture or cooperation with local businessman on export-import goods. After that, we start to solve the bureaucracy issue." Douros said he considered Azerbaijan "a fertile land" for investment.

"I really hope to move some of our business to your country. I think that our quality clothes, that are not high priced, can enter the market," Douros said.