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Location, location? Not any more. Israel, Azerbaijan and the globalisation of entrepreneurship

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Last month, I became the first Israeli businessman to sign a memorandum of understanding with the Azerbaijan Investment Company, the sovereign investment arm of the Azeri government, on the historic occasion of the opening of the Azerbaijan Trade and Tourism Office in Tel Aviv. The projected agreement will promote strategic cooperation in the field of investment by the Government of Azerbaijan in OurCrowd’s portfolio, while OurCrowd will encourage startups to establish a presence in Azerbaijan, writes Jon Medved.

Why is OurCrowd interested in Azerbaijan? Because it’s the future.

Our modest memorandum is a small step in the march toward the true globalization of entrepreneurship. The Azeri government has wisely seized the opportunity to be part of the innovation investment revolution.

The entrepreneurs and the investors of the future will come not just from Silicon Valley, or Midtown Manhattan, or the City of London. They will come from anywhere, because the world has shrunk to the dimensions of a Zoom screen. The innovators from these areas are aware of the urgent issues that pose the next big challenge for the rest of the world – not just the standard problems of rich, affluent western nations where so much technology is currently located and directed.

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The people who make California such a high tech hotspot are not just the local population but the newcomers who bring their skills from across the globe. More than half of the startups founded in Silicon Valley between 1995 and 2005 had at least one immigrant founder and many of its flagship brands are headed by immigrant executives. All the key figures in the development of the Moderna vaccine against Covid-19 came from outside the US. The Pfizer-BioNTech vaccine was developed by Turkish immigrants to Germany. Innovation thrives when different cultures and educational systems encounter each other. The blending of experience and different ways of thinking produce innovative approaches to problems. The cultural mix provides the technical color that separates startups from monochrome multinationals, like the diversity that marks out boutique hotels from bland international chains.

So in this era of remote working and electronic deals, why not connect with these innovators in their home locations?

From Menlo Park to Berlin’s Torstrasse and Tel Aviv’s Rothschild Boulevard, entrepreneurship has been guided by the old real estate adage: Location, location, location. Silicon Valley became the Mecca of megabytes as the new priests of tech and their acolytes made the pilgrimage to the center of the new tech world. No longer.

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Covid has redrawn the innovation map. Location really doesn’t matter anymore. There is no map – just an infinite variety of instantly accessible people with an infinite variety of skills, cultures and education. With the globalization of entrepreneurial activity, the next big companies can come from anywhere in the world.

My company is all about democratizing access to the private investing asset class. We are not just committed to helping the wealthy citizens of rich countries write checks, but to truly making access to capital global. Entrepreneurs will come from anywhere and investors should come from anywhere.

In an interconnected world, where you can complete a venture deal with Brazilian or Japanese venture funds you will never meet because it’s all done over Zoom, why not Azerbaijan – either as investors or as entrepreneurs?

From Jerusalem, we became interested in Azerbaijan because it has become such an important strategic ally of Israel and a major oil supplier. The positive and warm treatment by Azerbaijan of its small Jewish community and its ties to Israel demonstrate how Muslims and Jews, who thrived together during the Golden Age, can cooperate to forge a new future.

Central Asia, largely ignored by the business world, is a place to watch. Its strategic location, natural mineral resources, growing economic influence and fast-developing educational institutions make me think it will be the next big growth spot for tech and entrepreneurship. It represents a market that has been woefully underserved by the tech investment community. My colleague Ori Sobovitz, who heads our Government Relations team, correctly identified Azerbaijan as a timely opportunity: an oil-producing country with a sovereign wealth fund that has never invested in venture capital before.

The Israeli experience provides a useful guide for such countries to take their first steps in high-tech investment.

When I came to Israel and raised money for my first startup, there was not a single venture capital fund. Most people are not aware that the supercharged blossoming of innovation in Israel has essentially occurred in just three decades. That’s the blink of an eye. Three decades from now, alongside Silicon Valley, New York, China, Israel, London and Berlin, other countries will have caught up and be participating – including many in Africa, Latin America and Central Asia. 

We are excited to be doing this with our new friends in Azerbaijan. We hope that by helping to develop the high-tech ecosystem in Central Asia, we will also be helping the rest of the world.

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Armenia

Russia is trying to broker peace between Armenia and Azerbaijan

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The events of the last year in the long-standing confrontation between Armenia and Azerbaijan over the disputed territory of Nagorno-Karabakh give some hope to believe that Russia's mediation efforts in this matter are having some success. At least, the meeting of the leaders of the three countries held on November 26 at the residence of the Russian president in Sochi was perceived with cautious optimism, writes Alexi Ivanov, Moscow correspondent.

The initiator of the trilateral meeting of the leaders of Russia, Armenia and Azerbaijan was the Russian side. The agenda of the meeting included discussion of the implementation of the agreements of November 9 last year and January 11 this year, as well as further steps to strengthen stability in the region.

The meeting in Sochi is timed to coincide with the anniversary of the signing of the ceasefire agreement and all military operations in the Nagorno-Karabakh conflict zone in November 2020.

The conflict between Azerbaijan and Armenia over Nagorno-Karabakh escalated in the fall of 2020 and quickly shifted to hostilities. Both sides suffered losses in manpower and equipment, civilian buildings were destroyed.

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In November 2020, a ceasefire agreement was concluded with the mediation of Russia. Armenia was supposed to return to Azerbaijan part of the territories that came under the control of Yerevan back in the early 90s, leaving the Lachin corridor for communication with Nagorno-Karabakh. Russia has brought peacekeepers into the region. Baku and Yerevan have agreed on the principle of "all for all" in the exchange of prisoners in the Nagorno-Karabakh conflict zone.

The exchange of detained persons began in December 2020. Despite the agreement, there have been repeated clashes between Armenia and Azerbaijan. On November 16, 2021, fighting with the use of armored vehicles and artillery took place again on the border of Armenia and Azerbaijan. This is the most serious incident between the two countries over the past year: both sides suffered losses, several Armenian soldiers were captured.

Aliyev said that Azerbaijan is ready to begin the delimitation of the border with Armenia. "We also publicly offered the Armenian side to start working on a peace treaty to put an end to the confrontation, to recognize each other's territorial integrity, sovereignty and to live in the future as neighbors and learn to live again as neighbors," he added.

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In Sochi the leaders of the countries discussed the process of implementing the agreements of November 9 last year and January 11 this year. In addition, the heads of the three countries outlined further actions to strengthen stability and establish peaceful life in the region. As noted in the Kremlin, special attention was paid to the restoration and development of trade, economic and transport ties.

Putin also held separate talks with Aliyev and Pashinyan. Since the signing of the agreement on the cessation of hostilities between Armenia and Azerbaijan, clashes have repeatedly occurred.

Since November last year, the ceasefire in Karabakh has been supported by about two thousand Russian peacekeepers. There are 27 observation posts of the Russian military in the region, most of all in the zone of the Lachin corridor, which connects Karabakh with Armenia.
In addition, the Russians are engaged in mine clearance of the former war zone.

According to Armenian Prime Minister Pashinyan, "Russian peacekeepers and the Russian Federation play a key role in stabilizing the situation in Nagorno-Karabakh and in the region." At the same time, Yerevan believes that the situation on the line of contact with the Azerbaijani armed forces is not as stable as the Armenian side would like. After November 9 last year, several dozen people have already died on both sides, incidents occur in Nagorno-Karabakh, and since May 12, 2021, as the Armenian Government is convinced, a crisis situation has actually developed on the Armenian-Azerbaijani border.

In November 2021, another border dispute (this time away from Karabakh) turned into bloodshed and artillery duels and was stopped only after Moscow's intervention.

Thus, Baku today seeks to establish land communication with its enclave, the Nakhichevan Republic, the road to which should pass through Armenia. At the same time, the main task for Yerevan today is to return home all Armenian prisoners of war.

Following the talks in Sochi, the leaders of the three countries adopted a joint statement, in which, in particular, they reaffirmed their commitment to further consistent implementation and strict compliance with all the provisions of the statements of November 9, 2020 and January 11, 2021 in the interests of ensuring stability, security and economic development of the South Caucasus.

Both Baku and Yerevan highlight the important contribution of the Russian peacekeeping contingent to the stabilization of the situation and ensuring security in the region.

Armenia, Azerbaijan and Russia confirmed their determination to work towards the establishment of a bilateral Commission on the delimitation of the state border between the Republic of Azerbaijan and the Republic of Armenia with its subsequent demarcation with the advisory assistance of the Russian Federation at the request of the parties.

The Armenian and Azerbaijani sides highly appreciated the activities of the Trilateral Working Group on unblocking all economic and transport ties in the region. They stressed the need to launch concrete projects as soon as possible in order to unlock the economic potential of the region.

According to President Putin, Russia will continue to provide all necessary assistance in the interests of normalization of relations between the Republic of Azerbaijan and the Republic of Armenia.

Presidents of Russia and Azerbaijan Vladimir Putin and Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan have agreed to create mechanisms for demarcation and delimitation of the border between the two Transcaucasian republics by the end of the year. 

Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan, after telephone talks with the head of the European Council Charles Michel, agreed to hold another round of talks this year, namely, on December 15 in Brussels within the framework of the EU and Eastern Partnership summit, the European Union said in a statement. 

"The head of the European Council Charles Michel proposed to hold a meeting between Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan in Brussels on the sidelines of the EU-Eastern Partnership summit. The leaders agreed to hold a meeting in Brussels to discuss the regional situation and ways to overcome tensions

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Azerbaijan

There is real potential in peace, not conflict in Nagorno Karabakh

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Former MEP Sajjad Karim (pictured) has called for renewed efforts, including by the EU, to finding a “lasting and sustainable” peace in the troubled South Caucasus Region.

His comments, at an event in Brussels, come after he recently visited the Nagorno-Karabakh region on a fact finding trip.

A short war last year between ethnic Armenian forces and the Azeri army over the Nagorno-Karabakh enclave killed at least 6,500 people.

Thousands of land mines were left behind after the 44 day war that start on September 27 2020.  The conflict ended after Russia, which has a military base in Armenia, brokered a peace deal and deployed almost 2,000 peacekeepers to the region.

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On Wednesday (17 November), a conference on the issue was held at Brussels press club, along with a photo expo featuring various scenes from the region, both past and present.

The conference heard that a major problem today, though, is the “huge” number of mines still present in the region which pose a daily threat the lives of local people. There are numerous other challenges facing the region before it can fully recover, it was said.

Karim, a former UK Tory MEP, told the event, held both online and physically, that there was “huge interest” in developments in the region.

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He said: “This area has been and is a very dynamic and changing environment. I used to work on this issue in the European Parliament and still follow it closely.

“In order to study the situation on the ground, I took the chance to visit Azerbaijan   and Nagorno-Karabakh, including the  liberated areas. I saw a sharp contrast in the sense that it’s evident there had been neglect for many years and that towns and villages have been run into the ground. It was a great shame this has happened.

“Places of religious and historic interest have fallen into ruin and there is clear evidence of deliberate wrong doing.

“On a positive note I also witnessed a huge amount of capital structural development underway. I have never seen anything to compare with the extent of this. This presents a real opportunity for the entire South Caucasus   to come together and ensure that life opportunities for everyone in the region area greatly improved by this changing dynamic.

“This is a tremendous vision, particularly in today’s world with rising nationalism and populism. I hope this will rise out of an area that has suffered so much for decades because of religious and identity-based politics. I believe that we can now see a real force for good emerging.”

He said: “The aim for everyone should be to bring people together in the region to ensure that all sides are present at the table,playing their full part in finding a constructive future for this region.”

Former  Romanian MEP Ramona Manescu said: “I have never been there but what has happened in the region is quite tragic.”

The former foreign affairs minister added: “I have worked in the parliament to bring sides together to discuss their problems but through dialogue which is the only way to bring peace.  I hope the region that has known so much hate and war can be stabilised and finally see peace. If there was ethnic cleansing there should not be any more.  There are economic, human and environmental challenges which are so big that all sides have to get involved to get help and support. Azerbaijan needs support on this, for instance rebuilding the infrastructure. It cannot do it without international support."

Another speaker, Ramil Azizov, of ANAMA, said: “Much of this land has been under occupation for over 30 years and a lot of it has been completing destroyed.  Many people have been injured by the mines left by the former forces in the region. It is essential they are allowed to return to their homes safely.

Another keynote speaker at the event, “Post Conflict Challenges - South Caucasus Region”, was Fuad Huseynov, State Committee for Refugees and IDPs, or internally displaced persons.

He said:  “As a country, Azerbaijan hosts one of the highest number of refugees in the world and faces a huge arms of IDPs, people who have been displaced from their homes in NK.

“It is estimated that a total of 1m out of entire population of 7m are considered displaced: more than 10 percent of the population.”

He outlined efforts to help such people, saying: “Today, 115 new residential complexes have been erected for IDPs and 315,000 IDPs have been given housing. As a result, the poverty level for IDPs has dropped from 75  per cent to less than 10 per cent over the last 25 years which is substantial.”

Speaking online, he told the event, “This is a model for other countries who might be dealing with IDPs. The job now is the full restoration of liberated areas and return of IDPs to their homes in a safe and dignified manner.”

He said the area is said to be one of most mine polluted areas in the world  and that Armenia had refused to hand over land mine maps.

He added: “With the concerted efforts of the international community Azerbaijan will, I believe, be able to present a new model of post conflict zones in the coming years.”

He warned, though: “But at present the international community is turning a blind eye to what has happened in NK.”

The trilateral ceasefire agreement brokered last year by Russian President Vladimir Putin and co-signed by Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev reflected the fact that Azerbaijan had inflicted a military defeat on Armenia and recaptured lands that it had lost more than a quarter of a century before.

Divisive issues keep the two countries a long way from political agreement, however. These issues range from the future status of the Armenians of Nagorny Karabakh to the continuing detention of Armenian soldiers in Azerbaijan, the demarcation of borders, and the sharing of maps of minefields relating to districts formerly under Armenian military control now restored to Azerbaijan.

Leyla Gasimova, an Azerbaijan national who hosted the 2 hour seminar, said: “I have spent several years in peacebuilding activities and in trying to find a solution to the NK dispute. But people must know that peace cannot be achieved while land is under occupation.”

She said: “Today, Azerbaijan has liberated its land but we still face many challenges to maintain stability and peace in the region and the liberated zones. For instance, displaced Azerbaijani people cannot currently return to their homes due to mine pollution.

“These challenges, including other serious environmental issues, remain and we cannot apply confidence building measures. The aim of this event is to find common solutions to these challenges and enhance cross border cooperation through the engagement of third parties.

“Confidence building is needed to restore trust, including providing land mine maps, to protect both civilians and the environment.”

Swedish artist and photographer Peter Johansson, who presented a photo exhibition at the press club on the region, explained the reasons that attracted him to the issue.

photo exhibition

He said,  “I was very curious about Azerbaijan   and that is why me and my wife visited liberated areas around Nagorno Karabakh. We try to show the reconstruction work  of the area currently underway along as the potentially dangerous nature of this work. Unfortunately, many of the buildings are so badly damaged they cannot be restored and this is very sad and tragic.”

He added: “Despite all this, I felt positive that everyone wants to rebuild the towns and cities.

“I am glad to say that Sweden, my country, has supported humanitarian work in the conflict areas and finding a sustainable peace between the parties.”

Summing up, Karim said, the expo provided a real life account of the challenges - and opportunities – that face the region.

The former MEP concluded: “There is real potential in peace, not conflict. This is the time for the EU to engage to win the peace and move the region forward and this is something I want to encourage.”

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Azerbaijan

Economic integration and development as a catalyst for stability in the South Caucasus

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The geostrategic importance of the South Caucasus—located at the crossroads of Western Asia and Eastern Europe—makes the region valuable geostrategic meeting point, especially due to rich hydrocarbon reserves in the Caspian Sea - writes AIR Center Leading Advisor Shahmar Hajiyev

The end of the 44-Day War between Azerbaijan and Armenia established a new geopolitical landscape in the region that creates new opportunities for economic development and regional integration. While there are many challenges to realizing such integration – from Armenian domestic political opposition to influential networks of lobbies in the West – there are significant economic gains for the entire Caucasus region if such challenges can be overcome.   

Due to the occupation of Azerbaijani territories after the First Karabakh War, cities, villages, and all the infrastructure were destroyed. Different parts of the critical transportation infrastructure—highways and railroads—were cut off from each other. Armenia’s borders with Azerbaijan and Turkey have long been closed, and, consequently, regional cooperation and economic integration have been disrupted.

The Trilateral Declaration signed by the Russian Federation, Azerbaijan, and Armenia on November 10, 2020, that ended all hostilities in the conflict zone opened a new opportunity for win–win cooperation in reopening all transport corridors in the region. According to the Clause 9 of the Trilateral Declaration, “All economic and transport connections in the region shall be unblocked. The Republic of Armenia shall guarantee the security of transport connections between the western regions of the Republic of Azerbaijan and the Nakhchivan Autonomous Republic to arrange unobstructed movement of persons, vehicles and cargo in both directions”. This means that Azerbaijan will restore the infrastructure connecting its Nakhchivan Autonomous Republic with mainland Azerbaijan through Syunik province (Zangezur in Azerbaijani). The Zangezur Corridor is strategically important for all regional states because it will unblock both the railway and highway infrastructure in the region. It is very important for Baku to restore the Zangezur corridor to lift the years-long blockade imposed on the Nakhchivan region. Armenia will also get railroad and highway access via  Azerbaijan to Russia, and Armenian railroads could also be connected with Iran’s railway system. These factors will help Armenia to stimulate economic growth. According to research published by Berlin Economics, conflict resolution and the normalization of bilateral relations would have a substantial impact on Armenia’s trade. Benefits for Armenia would include an increase of total trade but also lower prices for imports from Azerbaijan and Turkey, and higher prices for its exports.

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At present, it is very clear that unblocking all communication and transportation connections will support economic development and integration, which, in its turn, would support the peace process. Armenia and Azerbaijan can open a new page in bilateral relations by unblocking the Zangezur corridor, because both countries will benefit from regional economic integration. Nevertheless, during the post-conflict period, there are still groups of people in Armenian society who are against the unblocking of the Zangezur corridor. These people consider reopening transport connections as political defeat and support a revanchist ideology. However, Armenian Prime Minister Nikol Pashinyan made a positive statement about reopening transport channels in the region. Speaking at a meeting of Commonwealth of Independent States (CIS) country leaders, the Armenian Prime Minister emphasized that, “We hope to achieve concrete results in the near future. This means that Armenia will receive railway and automobile communication with Russia and Iran through the territory of Azerbaijan, and Azerbaijan will receive railway and automobile communication with the Nakhchivan Autonomous Republic through the territory of Armenia.” Nikol Pashinyan also underlined that normalization between Yerevan and Ankara could accelerate a settlement between Armenia and Azerbaijan.

Azerbaijan also supports a fully operational corridor and, as noted by Azerbaijani President Ilham Aliyev, “We should be able to get in a car in Baku and comfortably go to Nakhchivan and Turkey.” All these developments indicate that the Trilateral Declaration arises from the strategic interests of all involved parties.

Azerbaijan has already started the reconstruction and rebuilding of all necessary infrastructure in the liberated territories. International companies from different countries such as Turkey, Italy, and Israel are actively participating in the reconstruction and development of the liberated Azerbaijani regions. Baku aims to build ‘smart cities’ in liberated Karabakh and use renewable energy sources to meet the energy needs of the region. Baku wants to transform the Karabakh region into an economic and tourism hub by rebuilding highways and cities, and opening new international airports in the Fizuli, Zangilan, and Lachin districts.

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Towards this end, the Khudaferin–Gubadly–Lachin and Khanlyg–Gubadly highways are among the important road infrastructure construction projects in the Karabakh and East Zangezur economic regions of Azerbaijan. These highways will pass through the territories of the Zangilan, Gubadly, and Lachin districts that have been liberated from occupation. The highway covers more than 30 settlements of the abovementioned districts; these include the cities of Gubadly and Lachin. Also, construction of the Ahmadbayli–Fizuli–Shusha highway, and others, is very important, and these road infrastructure projects will play a significant role in the socio-economic development of the liberated territories.

Azerbaijan is also continuing the reconstruction of the Barda–Agdam and Horadiz–Agband, and construction of the new Fizuli–Shusha railway lines. It is worth noting that the length of the Fizuli–Shusha electrified railway line is 83.4 km. The project provides for the design and construction of two new stations, Fizuli and Shusha, as well as about 200 engineered structures. Currently, topographic studies of the railway track have been completed and the design of the structures is under way.

İt is remarkable that Fizuli International Airport, known as “the air gateway to Karabakh,” has been already opened by Azerbaijani President Ilham Aliyev and Turkish President Recep Tayyip Erdogan on October 26, 2021. Fizuli Airport is the first international airport built in the liberated Karabakh region since the 44-Day War. It has the capacity to receive any type of aircraft. The runway is 3,000 meters long and 60 meters wide. Equipped with the state-of-the-art infrastructure, the airport’s terminal can process at least 200 passengers per hour. The International Air Transport Association (IATA) assigned the airport a three-letter code consisting of letters from the Latin alphabet: FZL. This makes it possible to operate flights from Fizuli International Airport in accordance with ICAO and IATA standards. Together, all of the international airports in the liberated Karabakh region will be the main catalysts for tourism sector growth, which will promote local economic development.

As can be seen, Azerbaijan has already started the rapid restoration of Karabakh, and, through this, the country is contributing to the regional economic integration process. The construction of international airports is extremely important for Baku for several reasons. First, the airports will boost cargo and passenger transportation to the Karabakh region. For instance, the Zangilan airport will be part of the Zangezur Corridor, thus cargo transportation from mainland Azerbaijan to the Nakhchivan region and from there to Turkey will be more profitable. Second, the tourism potential of the Karabakh region is very high, particularly in Kalbajar, Lachin, and Shusha. Therefore, airports will support the tourism sector and enable people to travel to these cities comfortably and in a short period of time.

In the end, it should be emphasized that the Armenian and Azerbaijani people have suffered enough from the long-lasting Karabakh war caused by Armenian occupation of Azerbaijan’s internationally recognized territory. The bloody war is over, and it is time for regional economic reintegration. European integration started after the Second World War began exactly from economic projects, namely in steel and coal, based on the mutual respect of territorial integrity and sovereignty of countries involved. This path awaits the people in Azerbaijan and Armenia as a Chinese proverb says, “Peace and tranquility are a thousand gold pieces”.

Author: AIR Center Leading Advisor Shahmar Hajiyev

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