January 2023 was a very interesting time for development of the Azerbaijan-Kazakhstan relationship. Cooperation between the nations in several “traditional” fields, including politics, transport, and energy are not surprising, considering the shared history and development priorities of both nations.

What makes January a very special month, however, is that Azerbaijan and Kazakhstan took their cooperation in the field of high technology to a new level. However, cooperation between Azerbaijan and Kazakhstan always has subtle elements that are rarely noticed by the general public. Previously, we have talked about how cooperation in one field leads to a positive spillover effect in the other field.

The recent developments observable in the relations between the nations indicate that cooperation in the field of communications and high technology may become an important milestone and another breakthrough for both countries.

Key transformations

In the beginning of 2023, AzerTelecom and Kazakhtelecom, the leading telecommunications companies of Azerbaijan and Kazakhstan, have signed an "Agreement on the terms of cooperation" within the framework of the project on laying a fiber-optic communication line (FOCL) along the bottom of the Caspian Sea.

The Trans-Caspian FOCL project along the bottom of the Caspian Sea on the Azerbaijan-Kazakhstan route is part of the large-scale “Digital Silk Way” project, which envisages the formation of digital telecommunication corridor between Europe and Asia.

The high-speed digital information network, with two branches that will stretch from China to Azerbaijan and Russia will be created. During the construction, old fiber-optic communication lines along the China-Russia route will be reduced by 650 kilometers up to 3,000 kilometers, and by 700 kilometers (up to 2,800 kilometers) along China-Azerbaijan route.

Alikhan Smailov, the Prime Minister of Kazakhstan, urged Kazakhstan’s National Welfare Fund Samruk-Kazyna to work out the details of financing the project before March 10.

This illustrates the significant level of interest that the Kazakh government has in the project. Upon the completion of the project, Kazakhstan will become a major regional digital hub. This will enable Kazakhstan to become a centerpiece of a new digital architecture in the Asian region.

Implications of cooperation between Azerbaijan and Kazakhstan

The implications of cooperation between Baku and Astana can be broken down into two major categories - obvious and subtle.

From the perspective of obvious benefits, things are relatively straightforward. The implementation of the project will enable the sides to have economic and technological benefits. From the standpoint of technological benefits, both nations will experience better connectivity, which will boost the further development of technology.

There is an established and known correlation between data connectivity and economic output. An improved data connection will provide businesses on both sides of the Caspian Sea with better access to information, which will lead to an improved economic performance. Additionally, better connectivity will ultimately lead the availability of a higher volume of information for analysis and decision making, which will enable easier market penetration for enterprises representing both countries.

High technological cooperation is an area of partnership that lags behind. Addressing this area gives Azerbaijan and Kazakhstan an opportunity to focus on achieving progress in an area with a high growth potential.

However, subtle implications are significantly more interesting to look at. Increasing the level of cooperation between Azerbaijan and Kazakhstan will stimulate the growth of relationships between the nations via two mechanisms. First, any economic cooperation will lead to more cordial political communication between the sides, which is a positive side effect of the said cooperation. The second mechanism that will enable Baku and Astana to improve their relations is a higher level of institutional interdependence, which will be created by participation in the joint project.

The institutional link created by this project will lead to an important development. Norms and procedures between the sides will be balanced. This will make further cooperation between the nations in this field more predictable and compatible.

High-technology cooperation is more important than it may seem

Another factor to consider in this context is information security. Considering the geopolitical realities of both countries, this matter is of paramount importance, even more than economic advantages. Modern realities require ensuring information security because it becomes a matter of national security.

Today, both countries face potentially contentious, unpredictable, and volatile political environments due to the presence of external threats. In these circumstances, it is a politically wise move to bolster information cooperation, as the modern conflict doctrine increasingly favors hybrid warfare.

In other words, by jointly participating in this project, Azerbaijan and Kazakhstan are not looking only to cooperate in the high-technological sector of the economy, they are looking to cooperate in an effort to strengthen political and information security.

Cooperating in the field of security is only possible when there is a high level of trust present between the states. This sort of cooperation suits the nature of cordial relations between Azerbaijan and Kazakhstan, which are very much alike in many aspects.

The systemic approach the nations pursue in shaping the cooperation, suggests that the mechanisms driving these relations forward are similar in every field of cooperation between Baku and Astana.

Perhaps it is too early to tell, but there is a level of optimism that the high-technology cooperation signals a beginning of a new era in the relations between Azerbaijan and Kazakhstan. Baku and Astana are exploring new opportunities available to them, which can only bring new benefits for both countries.

Implications for Europe and other Asian countries

Successful implementation of the Digital Silk Way project will not only benefit Azerbaijan and Kazakhstan, however.

From the perspective of European countries, it is an excellent opportunity to benefit from emerging economic markets in Asia. European companies and enterprises may benefit from a better connectivity provided by the project to areas in Asia, which previously lacked reliable connectivity. European businesses will have an opportunity to use the options available to them to increase the efficiency of their operations, build new links with counterparts located in the Asian region and generate additional economic benefits in the process.

In the context of potential implications of the project, things get a little more intriguing for Asian countries. The possibilities offered to Asian countries are significant.

First and foremost, if Asian countries can harness the benefits of improved connectivity efficiently, this will offer them the access to the same opportunities that businesses operating in more advanced economies have. In other words, a lot of companies and enterprises in Asian states will have a chance to expand at higher pace. The growth of Asian enterprises will enable them to attract a qualitatively different level of investments, as investors representing advanced economies will be interested in participating in the expansion of Asian businesses.

There are a myriad of opportunities and potential scenarios that may unfold, regarding the cooperation between Europe and Asia. It is certain, however, that the "Digital Silk Way" will bring additional economic and political benefits to each country participating in the project, including Azerbaijan and Kazakhstan.