By Qabil Ashirov (Baku, Azerbahijan)
2024 left a significant mark on Azerbaijani-Pakistani relations, with Azerbaijan purchasing Pakistani-made JF-17 Thunder military aircraft. Thanks to these aircraft, Azerbaijan not only managed to modernize its air force but also succeeded in making its air force the second most advanced in the region, after Russia.
The increase in mutual visits of officials foreshadows that relations between the two countries will gain further momentum in 2025. Currently, Baku is preparing for the visit of Pakistan’s Prime Minister, Shehbaz Sharif. The purpose and agenda of the meeting are being gradually released to the media. One of the main items that has been spotlighted is Azerbaijan’s foreign direct investment (FDI) in Pakistan. Azerbaijani President Ilham Aliyev voiced the intention to invest $2 billion in Pakistan during the summer of last year. At that time, Ilham Aliyev stressed that Azerbaijan had already considered several projects in the areas of energy, infrastructure, transportation, and many others, including the defense industry. Given the economic difficulties in Pakistan, the proposed FDI could play a pivotal role in bolstering Pakistan’s economy and could pave the way for Azerbaijan to strengthen its position in Asian markets.
Shedding light on the issue, the editor of the London Post Raza Syed spoke to Azernews and noted that that Pakistan is currently confronting one of the most severe economic crises in its history. A convergence of rising debt levels, persistent trade deficits, political instability, and a lack of investment has created a “perfect storm” for the nation’s economy.
“At this critical juncture, direct foreign investment from Azerbaijan could catalyze improving Pakistan’s economic situation. Recently, media reports have suggested that some of Pakistan’s closest allies and foreign investors intend to invest directly in the country. However, these statements have largely remained in the headlines without materializing into actual investments. While some friendly nations have been willing to roll over existing debts extended to Pakistan, this approach does not necessarily contribute to genuine economic recovery.
This raises an important question: Does rolling over debt genuinely improve a country’s economic condition?” he asked.
The editor emphasized that in this context, Azerbaijan’s announcement of a $2 billion investment is particularly significant. Not only does it have the potential to bolster Pakistan’s economy, but it also demonstrates that Azerbaijan is a steadfast and exemplary friend to Pakistan.
“Azerbaijan’s $2 billion investment provides a crucial boost to Pakistan’s struggling economy, which faces a perfect storm. This direct infusion of capital strengthens foreign exchange reserves, offering much-needed liquidity for international payments and stabilizing the national currency. By alleviating pressure on the Pakistani rupee, which has been weakened by devaluation and dwindling reserves, the investment plays a vital role in maintaining economic stability,” he said.
Raza Syed stressed that by targeting key sectors such as oil and gas exploration, renewable energy, and energy efficiency, the investment enhances Pakistan’s energy security by reducing reliance on costly imports through increased domestic production. He added that modernizing energy infrastructure is expected to attract further investment, spur industrial growth, and generate employment opportunities, thereby reducing unemployment and stimulating economic activity.
“Additionally, Azerbaijan’s financial commitment signals confidence in Pakistan’s economic potential, which may encourage other foreign investors, leading to increased capital inflows and further economic strengthening. Beyond financial support, this investment fosters technology transfer and innovation, particularly in modern optics and renewable energy, enhancing Pakistan’s industrial capabilities. Unlike debt rollovers that merely postpone repayment, this direct investment injects fresh funds into the economy, reducing reliance on borrowing and supporting long-term economic reforms. With a focus on sustainability, economic diversification, and environmental responsibility, Azerbaijan’s investment is a strategic step toward Pakistan’s economic revitalization, setting the foundation for long-term stability and growth,” the editor underlined.
He said that the prospective $2 billion investment from Azerbaijan marks a significant milestone in Azerbaijani-Pakistani relations, elevating a historically friendly relationship into a robust economic partnership. This investment signals a shift toward proactive economic engagement between the two nations and lays the groundwork for future collaborations across various sectors beyond energy, including technology, agriculture, and infrastructure development.
“Azerbaijan’s substantial commitment is likely to reinforce political alliances, as economic partnerships often strengthen diplomatic ties. This move can lead to stronger support in international forums and coordinated efforts on regional security matters.
Both countries stand to gain mutual strategic benefits from this partnership. For Azerbaijan, the investment provides access to Pakistan’s large consumer market of over 220 million people, enhancing its influence in South Asia and potentially opening doors to other regional markets. It also allows Azerbaijan to diversify its investment portfolio and reduce dependence on traditional markets. For Pakistan, the collaboration offers the opportunity to benefit from Azerbaijan’s expertise in oil and gas, aiding in the development of domestic resources. The much-needed capital will support critical sectors, and the strengthened international alliance comes amid regional challenges,” Raza Syed noted.
He expressed that enhanced relations can also lead to increased cultural exchanges, educational collaborations, and people-to-people contacts. Initiatives such as scholarships, student exchanges, and cultural programs can promote mutual understanding and goodwill. Furthermore, the partnership may encourage regional economic integration through initiatives aimed at connectivity, such as trade corridors and logistics networks.
“This could facilitate trade not only between Azerbaijan and Pakistan but also with neighboring countries, promoting regional stability and prosperity.
Azerbaijan’s investment might inspire other nations to engage more deeply with Pakistan, showcasing it as an attractive destination for foreign investment. This could create a ripple effect, drawing in investments from other countries. In essence, the $2 billion investment is poised to elevate Azerbaijani-Pakistani relations to a new strategic level. It represents a mutual commitment to shared prosperity and development, fostering a partnership that extends beyond diplomacy to tangible economic and social benefits for both nations. This move not only cements Azerbaijan’s role as a key ally of Pakistan but also opens avenues for collaborative growth and regional integration,” Raza Syed concluded.
Source:https://www.azernews.az/analysis/237366.html
About Author:Qabil Ashirov is a journalist from Baku, Azerbaijan, specializing in economics. He has a talent for highlighting the strong ties and cooperation between Azerbaijan and Pakistan.He is working with Azernews.
