A revival project in the Karabakh region, which is presented as a top priority policy goal for the time being.
As of 2022, the Azerbaijan government's most devoted and priority policy is reconstruction investment in the Karabakh region. Azerbaijan's finances have gained strength due to high oil prices due to the recent global energy crisis and the Russian-Ukrainian war. Although there are difficulties due to high inflation, as can be seen in the table below, Azerbaijan's economy is booming.

 

<GDP indicator of Azerbaijan >

구분

2017

2018

2019

2020

2021

2022.1-6.

Nominal GDP (A billion AZN)

70.33

80.09

81.89

72.43

92.86

63.3

Nominal GDP (billion dollars)

40.87

47.11

48.17

42.61

54.62

37.24

GDP per capita (current price) (AZN)

7 226

8,156,2

8 268,8

7 262,8

9,296.3

6,304.9

GDP per capita (current price) (US$)

4 198

4 797,8

4 864,0

4 272,2

5,468.4

3,708.8

Real GDP Growth (%)

0.2

1.5

2.5

-4.3

5.6

6.2

[Source: Azerbaijan Statistics Korea (www.stat.gov.az)]

 

The Azerbaijani government is more aggressively concentrating the additional finance secured by high oil prices on investment in the Karabakh region. Because there are so many construction projects in the Karabakh region, it is even said that construction sites in other regions have difficulties in procuring heavy equipment such as fork cranes and trucks.

 

Below, after examining the historical significance of Karabakh and the current status of reconstruction projects in Azerbaijan, we will examine what implications it has for our company.

 

Karabakh local Azerbaijan in history meaning

(위치 And 역사) The Nagorno-Karabakh region is located in the central western part of Azerbaijan and was inhabited by Azerbaijanis until the political immigration of Armenians by the Russian Tsar in the early 19th century. The Russian Empire intentionally settled in the Karabakh region where Muslim Azerbaijanis historically lived in order to contain ethnic minorities in the South Caucasus, and tens of thousands of Orthodox Armenians intentionally settled this, which naturally resulted in racial and religious conflict. led to

 

<Location of Armenia and Karabakh region of Azerbaijan>

[Source: Aljazeera website (https://www.aljazeera.com)]

 

(1War) As the number of Armenians in the Karabakh region increased, ethnic conflicts with the people of Azerbaijan arose. From around 1988, when the centrifugal force of the federal states became stronger as the Soviet Union weakened, the conflict between Azerbaijan and Armenia became explicit and intensified. A large-scale all-out war broke out (the First Nagorno-Karabakh War). The First Nagorno-Karabakh War ended with Armenia's victory, and although the area was a territory of Azerbaijan under international law, it actually became a disputed area occupied by Armenia.

 

< Nagorno-Karabakh Situation after the First War >

[Source: defense.az(https://defence.az/az/news/143959)]

 

(2War) The Second War broke out in 2, and the fierce 2020-day war ended with a great victory for the Azerbaijan side, which showed superiority in the quality and quantity of Turkish-made Bayraktar drones and overall defense equipment. Azerbaijan took over the area. Through this war, many areas that had been under Armenian occupation for 44 years were returned, and as the Azerbaijani occupied Shusa, which was very important culturally, historically and militarily, the rest of the unrecovered areas could easily be recaptured in case of emergency. gained a strategic advantage. In response, Azerbaijan's President Aliev said that Nagorno-Karabakh was the language of the old concept of conflict, and now the conflict has disappeared and Azerbaijan is calling it 'Karabakh' in the sense that it is the rightful ruler of the region. are requesting

 

<Karabakh region restored by Azerbaijan after the Second War>

[Source: BBC (https://bbc.co.uk)]

Azerbaijan top priority policy goal Karabakh local reconstruction investment

 

(restore Policy) The restoration of the territory, which had not been restored for 30 years, was given historical legitimacy, and the victory of the war made Azerbaijan more aware of its ethnicity, and its support for its leader, President Aliev, was also very high. Under these circumstances, after the peace agreement between Armenia and Azerbaijan, the Azerbaijani government immediately began work on decontamination, reconstruction, reconstruction and reintegration of the reclaimed Karabakh region, first of all, the President on the approval of “Azerbaijan 2030 - a national priority for socio-economic development” command was issued.

 

(economic zoneappointed) 2021년 7월 7일 대통령령 제1386호 “아제르바이잔 공화국의 새로운 경제구역 분할에 따라 카라바흐 지역과 7개의 인접지역 영토에서 2개의 새로운 경제지역이 승인되게 됐다. (https://president.az/az/articles/view/52389):

<Two Newly Approved Economic Zones>

[Source: Ministry of Economy of Azerbaijan (edited by KOTRA Baku Trade Center)]

 

(revival fund) 카라바흐 지역의 활성화, 재건과 아제르바이잔 기존 지역과의 통합을 목적으로 아제르바이잔 정부는 카라바흐 부흥 기금을 설치하였다. 부흥기금은 카라바흐 지역의 회복과 재건, 지속 가능한 경제 및 높은 번영을 가진 지역으로의 전환을 위한 재정적 지원에 전적으로 사용되게 된다. 2022년 정부 예산에서 카라바흐 재건을 위해 배정된 자금은 22억 마나트(13억 달러)였으며, 2022년 7월 의회가 및 대통령이 승인한 “2022년 국가 예산 수정안”에서 해당 기금에 4억7000만 마나트(2억5000만 달러) 증액한 26억 마나트(15억5000만 달러)가 됐다. 고유가로 추가 확보된 재정을 부흥기금의 증액에 적극적으로 투입하는 등 당분간 카라바흐 재건이라는 정부의 최우선 정책목표의 흐름은 계속될 것으로 보인다.

<Pictures before and after reconstruction investment in Akal village in Zhanggilan, Karabakh>

Appearance at the time of restoration

Appearance after reconstruction investment

[Source: azertag.az(https://azertag.az/xeber/Zengilan_rayonunun_Birinci_Agali_kendi-2224367), Vergiler.azhttps://vergiler.az/news/official/18437.html]

 

Karabakh local main reconstruction Project Status

Projects in the Karabakh region can be broadly divided into two categories. First of all, the infrastructure project that connects the restored Karabakh region with the existing Azerbaijan territory by land and air is progressing at a very fast pace. The other is the development of the Karabakh region, and its second project is to develop into a green and high-tech city that connects smart farms, smart grids, and smart villages, rather than simple construction.

 

infra erection Project

(land connection총 1,516.3km에 달하는 15개의 도로가 아르메니아 점령에서 해방된 지역을 기존 아제르바이잔 도시와 연결하는 공사가 진행되고 있다. 15개 도로 중 가장 중요한 프로젝트는 승리의 길(Victory Road) 건설이다. 왕복 2차선 101.5km 구간이 불과 10개월 만에 완공됐고 개통식은 2021년 November 7일에 열렸다. 이 도로는 알칸리 마을, 푸줄리 국제공항, 타글라르, 쉬샤 등 카라바흐 지역의 주요 도시를 연결하는 도로이다. 그 외에 토그하날리-켈베제르-이스트수 4차선 도로(80.7km), 켈베제르 라츤2차선 도로(72.8km) 등 다수의 도로건설 프로젝트가 터키 및 아제르바이잔 건설사를 중심으로 진행 중에 있다.

<A sign of Fujuli International Airport on the road to victory>

[Source: Azerbaijan News (https://www.azerbaijan-news.az/posts/detail/ilham-eliyevin-zefer-yolu-1634767721)]

(공항 erectionFujuli International Airport, the first airport to be built in the restored Karabakh region, will be operational in October 2021. The project, carried out by Azerbaijan and Turkish construction companies, was completed in just eight months from the start of construction, and was opened as an international airport with the approval of the International Air Transport Association (IATA) and the International Civil Aviation Organization (ICAO).

<View of Fujuli Airport>

[Source: FF Group(www.ffgroup.az)]

 

Janggilan International Airport is Karabakh's second airport after Fusli. The runway is 3000 m long and 60 m400 wide. AzVirt Construction Company started construction of the airport in May 2021, and the opening is scheduled for the end of 5.

<Estimated bird's eye view of Zhang Gillan International Airport>

[Source: Fedaz(https://fed.az/az/qarabag/zengilan-hava-limani-bele-olacaq-foto-117385)]

 

카라바흐 지역에서 건설하는 세 번째 공항은 라친공항이다. 공항의 기반 조성공사는 2021년에 마무리됐으며 현재 진행되는 공사는 2024년까지 완공될 전망이다. 공항은 라친과 칼바자르 시에서 각각 30km와 60km 이상, 수샤(Susha)시에서 약 70km 떨어진 라친 지구의 고르추 마을에 위치하게 된다.

 

<Location of Victory Road and New Construction Airport in Karabakh>

[Source: KOTRA Baku Trade Center in-house production]

smart village Furtherance Project

(policy goals) Azerbaijan aims to become a city that realizes the functions of green energy and smart city, rather than simply rebuilding the Karabakh region as an ordinary city. The Karabakh region has enormous potential for renewable energy, so it is to create a high-tech city by using it to produce new and renewable energy and combining it with smart technology. The Azerbaijani government has a long-term plan to make Azerbaijan's large cities such as Baku and Ganza smart with the know-how and experience accumulated through these projects.

 

(Green energyThe Azerbaijani government is focusing on green energy production in the Karabakh region. The region has a very suitable environment for the production of renewable energy, such as abundant water resources with adequate sunlight and high wind speed.

 

<Map of Solar Tube Power Generation Potential in Karabakh Region>

[Source: Global solar atlas(https://globalsolaratlas.info/)]

According to the Global Solar Atlas, the annual photovoltaic power potential (PVOUT) of Janggilan is 1,441.7kWh/KWP, Gubadli's PVOUT is 1,450.3kWh/KWP, Zebra's 1,479.3kWh/KWP, and Fujuli's PVOUT is 1,399.9kWh. It has great potential, such as having a /KWP. In addition, the wind energy potential of Calbazar and Rachin is about 500 MW. According to Global Wind Atlas, the average wind speed is the highest in the Rachin region, which borders Armenia, at over 11 m/s. (area marked with a black circle)

 

<Wind speed map of Kalbazar and Ratchun districts>

[Source: Global wind atlas(https://globalwindatlas.info/)]

 

About 25% of the total water resources of the country of Azerbaijan, or about 25 billion m6000 per year, are concentrated in Karabakh, and the Tartar, Bazarkai, and Hakhari rivers can be used for power generation.

 

<Map of the Tartar River, the Bazarkai River and the Hakkari River>

[Source: cografia blogpost(https://coqrafiya.blogspot.com/2013/09/azrbaycann-caylar.html)]

 

(smartvillageThe first smart village project in the Karabakh region was implemented in the Janggilan region. “Smart Village” started in April 2021 in Agali Village, focusing on three elements: “smart public administration, smart infrastructure and services, and smart economy and business environment.”

< Panoramic view of Smart Village in Agali >

[Source: Azernews(https://www.azernews.az/nation/194648.html)]

 

The direction of business promotion was centered on five items: housing, production, social services, smart agriculture and alternative energy.Regarding housing, 200 houses were built in the first phase of the project and an additional 2 houses are planned for the second phase. For production, a GillMed Sewing Factory Agricultural Laboratory, Veterinary Medicine, and Plant Conservation Department were set up in the village. For social services, a public service center was established in the town square. Post office, Asan Center (dong office in Korea), and Small and Medium Business Development Center are operated here.

Regarding smart agriculture, five pilot irrigation systems are being installed to irrigate 157 hectares of land. Next to the irrigation system, a climate station will be created to receive early warning of plant diseases, to carry out irrigation in a planned manner and to receive weather forecasts. A system will also be installed to remotely monitor pests and take high-quality seasonal photos of the farmland and areas under investigation. Regarding alternative energy, the energy required for 5 households in the village will be sourced from solar and wind power.

 

implication

 

Azerbaijan will focus its national resources on the reconstruction of the Karabakh region for the time being. Therefore, the priorities for general petrochemical and development of the Baku region are likely to be pushed back. Rather than general infrastructure construction projects in the Karabakh region, smart villages, smart grids, and smart farms where Korean companies have relevant technologies and experiences are easier to enter. It is also a good way for mid-sized companies and SMEs to form a consortium and enter the market, or to supply devices and parts to related systems.

In particular, in June 2022, the Ministry of Land, Infrastructure, and Transport selected the Azerbaijan Jangilan region as a K-City network project to support the creation of smart cities in overseas cities and expand international cooperation. With plans to establish a smart city master plan and feasibility study in the future, it is expected to be an opportunity to expand overseas networks at the corporate level as well as cooperation between governments in the future. The application of these smart city projects does not end only in the Karabakh region. When the project in the Karabakh region is completed in the first stage, the Azerbaijani government plans to promote smartization of large cities such as Ganja and Baku based on the know-how and experience accumulated here, so a step-by-step and strategic approach is needed to gradually accumulate references and advance into larger projects.

 

Source: KORTA Overseas Market News