Germany, as the EU’s largest member state, has pursued a more active foreign policy to enhance its international role and ensure its security. For the first time in recent years, Germany’s defence spending in 2024 reached the NATO target of 2% of GDP, with military expenditures exceeding €69 billion ($75.4 billion USD), according to reports.
Over the last three decades, Germany and Azerbaijan have successfully cooperated in various fields, including politics, economics, and culture. Azerbaijan is Germany’s principal economic partner in the South Caucasus. The visit of President of the Federal Republic of Germany Frank-Walter Steinmeier to Baku on April 1st marked a potential turning point in bilateral relations between Berlin and Baku. During the visit, President Steinmeier and Azerbaijani President Ilham Aliyev held an expanded meeting where they discussed key areas of cooperation such as energy, trade, transport, and green technologies.
This high-level visit underscores the mutual commitment of both nations to strengthening ties across political, security, economic, and cultural spheres. Notably, Germany’s only Chamber of Commerce Abroad in the region is based in Baku, further highlighting its economic engagement with Azerbaijan. Additionally, Azerbaijan is one of Germany’s ten most important suppliers of crude oil. German exports to Azerbaijan include machinery, motor vehicles and components, iron and steel products, and industrial equipment.
Beyond trade, cultural and academic cooperation remains strong. Azerbaijan hosts a Goethe-Zentrum and an office of the German Archaeological Institute (DAI). German is widely taught in schools and universities, ranking as the most frequently learned foreign language after English and Russian. Furthermore, town twinning initiatives exist between Sumgait and Ludwigshafen, as well as between Baku and Mainz.
Political and economic co-operation
The bilateral relationship between Germany and Azerbaijan is currently positive, but there is significant potential for further cooperation, as both nations align on strategic objectives. For Azerbaijan, Germany’s stance on the Karabakh issue is particularly important. Unfortunately, in recent days, we have witnessed an anti-Azerbaijan stance on the German DW podcast. Also, following a controversial Instagram post from the official account of President Steinmeier, Germany issued a formal apology to Azerbaijan. Additionally, during a joint press conference with President Aliyev, President Steinmeier explicitly stated: “We have always said that this is your [Azerbaijani] territory and today we confirm this position of Germany”, reaffirming Berlin’s clear and direct position on the matter.
In terms of trade, Azerbaijan is Germany’s primary trading partner in the South Caucasus. Trade turnover between the two countries nearly tripled in 2024. Germany’s foreign direct investment (FDI) in Azerbaijan’s economy reached $75.3 million in 2024, marking a 2.83-fold increase ($48.8 million) compared to the previous year. Germany’s share of total foreign direct investment in Azerbaijan stands at 1.1%. According to the State Customs Committee, Germany accounted for 3.3% of Azerbaijan’s total trade from January to November 2024, making it the country’s sixth-largest trade partner. During this period, the volume of trade operations between Azerbaijan and Germany amounted to $1.4 billion. Imports accounted for 52.2% of this total, while exports made up 47.8%.
Energy Cooperation
Energy remains a crucial pillar of cooperation between Germany and Azerbaijan. In the first two months of 2024, Azerbaijan exported 500,001.1 tons of oil worth $276.5 million to Germany, making Germany Azerbaijan’s second-largest oil buyer. Additionally, Azerbaijan contributes to Europe’s energy security by supplying natural gas via the Trans Adriatic Pipeline (TAP) to European markets. As noted by President Steinmeier : “In 2022, Azerbaijan played a major role in Germany. When the gas supply we received from Russia had stopped, Azerbaijan took on a great responsibility, and I would like to thank you very much for that”. The country aims to expand gas exports to Europe up to 20 billion cubic meters (bcm) per year by 2027. In 2024, Azerbaijan exported 12.9 bcm of natural gas to Europe, reflecting a 9.3% increase compared to 2023. Currently, Türkiye, Georgia, Italy, Greece, Bulgaria, Romania, Hungary, Serbia, Slovenia, and Croatia receive Azerbaijani natural gas.
President Steinmeier’s visit to Azerbaijan could also advance cooperation in green energy. In 2024, Azerbaijan successfully hosted the 29th Conference of the Parties on Climate Change (COP29) in Baku, showcasing its ambition to accelerate the green transition and attract investment in renewable energy. Azerbaijan has signed agreements with major energy companies—including Masdar, ADNOC, ACWA Power, TEPSCO, BP, and China Gezhouba Group Overseas Investment – to develop its renewable energy sector.
Germany, a leader in renewable energy, can play a crucial role in Azerbaijan’s green transition. One of the most promising projects is the Black Sea Submarine Cable (BSSC), supported by Georgia, Azerbaijan, Hungary, and Romania, which aims to export electricity from the South Caucasus to Southeast Europe. Bulgaria has also expressed interest in joining the project.
Another potential area of collaboration is green hydrogen. Germany considers green hydrogen a key component of its future energy strategy and aims to secure energy supplies by scaling up production and transport. Under its National Hydrogen Strategy, Germany has set a production target of 5 GW by 2030, with an additional 5 GW planned by 2035-2040. The EU-Azerbaijan energy dialogue already includes discussions on hydrogen, making this a promising area for further cooperation. Strengthening energy ties between Germany and Azerbaijan could benefit Europe as a whole by supporting both energy security and the green transition.
In conclusion, the visit of President Steinmeier to Azerbaijan has the potential to strengthen economic relations and create new investment opportunities. Azerbaijan’s growing role as a reliable energy supplier and transit hub in the South Caucasus is increasingly attractive to Germany. Azerbaijan’s geographical position makes it a gateway for European nations to develop trade relations with Central Asia, Southwest Asia, and China. At the same time, Germany’s heightened interest in the South Caucasus and Central Asia signals its ambition to become one of the key geopolitical players in the region.
Shahmar Hajiyev, head of department at the Center of Analysis of International Relations (AIR Center).
