Azerbaijan turns SCO partnership into broader Eurasian economic strategy [ANALYSIS]

Eurasia is becoming less about distance and more about
connection, where trade routes are expanding, supply chains are
being redirected, and countries that once dealt with each other
mainly through diplomacy are increasingly connected by investment,
transport, energy and technology.

The Shanghai Cooperation Organization (SCO), which marks its
25th anniversary this year, is one of the clearest examples of this
shift.

The organization’s role for Azerbaijan as an SCO partner is
increasingly practical rather than symbolic, as the relationship
now covers security, trade, investment, energy, transport,
telecommunications, agriculture, education and culture. These are
the areas that increasingly overlap as Eurasian economies become
more interconnected.

The scale of the organization alone explains why it matters. The
SCO brings together 10 member states, including China, India,
Russia, Iran, Pakistan and the Central Asian countries,
representing roughly 40% of the world’s population and a
substantial share of global economic activity. Therefore, for Baku,
access to such a network creates opportunities well beyond
traditional bilateral relations.

Moreover, Azerbaijan’s geographical position gives it particular
relevance to the SCO’s growing economic network. As the country
sits on the western shore of the Caspian Sea, linking Central Asia
with Türkiye and European markets, its transport infrastructure is
becoming increasingly important to this role.

It is significant to note that the Middle Corridor, connecting
China and Central Asia with the Caucasus and Europe through the
Caspian Sea, has seen rapid growth. Freight volumes along the route
have increased roughly fivefold in seven years, reaching around 4.5
million tonnes. In the first seven months of 2025 alone, 225 block
trains from China travelled through the corridor.

Infrastructure investment is following the demand. The capacity
of the Baku–Tbilisi–Kars railway is being increased from about 1
million tonnes to 5 million tonnes a year, while Azerbaijan’s
railway operator ADY has purchased 300 new wagons.

These numbers show more than transport statistics by portraying
how Azerbaijan can turn geography into an economic asset. And the
same logic applies to trade and investment.

Azerbaijan’s non-oil exports reached about $3.3 billion in
January–November 2025, accounting for roughly 14% of total exports.
At the same time, Chinese investment in Azerbaijan reached
approximately $405 million in the first half of 2025.

The figures point in the same direction: the relationship with
Asian economies is moving beyond the sale and transit of
commodities towards investment, manufacturing, logistics and
broader commercial ties.

Furthermore, transport corridors only become economically
meaningful when companies use them. Therefore, cooperation in
customs, telecommunications, agriculture and support for small and
medium-sized enterprises can help turn infrastructure into actual
trade.

Experts say a new railway can move goods faster. In the
meantime, efficient customs can reduce costs, digital systems can
make transactions easier, investment can create production
capacity, and businesses can then use the same infrastructure to
reach new markets.

Azerbaijan’s economic strategy is already moving in this
direction. For example, industrial parks, the Alat Free Economic
Zone and expanding logistics infrastructure are designed to attract
investment and increase production rather than simply move goods
through the country.

The Alat Free Economic Zone, for example, offers companies
operating there exemption from customs duties for 15 years. Such
incentives become more significant when combined with access to
growing transport corridors connecting China, Central Asia, the
Caucasus and Europe.

Energy remains another pillar

Energy is another area where Azerbaijan and SCO countries have
obvious interests. Azerbaijan has spent decades building itself
into an energy producer and transit country. The Southern Gas
Corridor stretches roughly 3,500 kilometres, connecting the Caspian
region with European consumers.

But the energy relationship is changing, and cooperation is no
longer limited to oil and gas. Renewable energy, electricity
transmission, technology and energy infrastructure are becoming
increasingly important.

Azerbaijan has set a target of increasing the share of
renewables in installed electricity generation capacity to 30% by
2030. Solar and wind projects are already expanding, creating
another potential area for cooperation with Asian investors and
technology companies.

Perhaps the strongest link between Azerbaijan and the SCO runs
through Central Asia.

Baku’s relations with Uzbekistan, Kazakhstan, Kyrgyzstan and
other Central Asian states have expanded rapidly in recent years.
The Caspian Sea provides the physical connection, while the Middle
Corridor provides the economic logic. Besides, the SCO adds another
layer to this relationship by bringing these countries into the
same multilateral framework. President Ilham Aliyev’s participation
in SCO summits and his attendance at this year’s SCO+ meeting in
Bishkek reflect the growing political importance of this
engagement. But the more important question is what follows the
meetings.

The real measure of a partnership is not the number of
declarations signed, but the volume of trade, investment, cargo,
energy and business activity generated afterwards.

There is also a cultural side to Azerbaijan’s engagement. The
bust of Azerbaijani poet and thinker Nizami Ganjavi at the SCO
headquarters in Beijing, installed in 2021 on the
initiative of the Heydar Aliyev Foundation, is a small but
visible example of how the relationship extends beyond economics
and security.

Azerbaijan does not need the SCO to become its single most
important economic platform. Its value lies elsewhere: it gives
Baku access to a network covering some of the world’s most
important markets, producers, consumers and transport
corridors.