BAKU, Azerbaijan, August 23. The allied relations between Azerbaijan and Uzbekistan are gradually entering a new phase, in which political trust is increasingly underpinned by economic ties. Growing trade, the development of joint ventures, investment mechanisms, industrial cooperation and expanding transport routes are creating the foundation for closer integration of the markets of Central Asia and the South Caucasus.

The current model of relations has developed over several decades. An important role in this process was played by the official visit of National Leader Heydar Aliyev to Uzbekistan on June 18–19, 1997, during which a number of documents were signed laying the groundwork for further cooperation.

In recent years, political dialogue has gained particularly strong momentum. Over the past five years, President of Azerbaijan Ilham Aliyev has made two state and four working visits to Uzbekistan, while President of Uzbekistan Shavkat Mirziyoyev has made two state and seven working visits to Azerbaijan.

As a result, the two countries signed the Declaration on Deepening Strategic Partnership and Expanding Comprehensive Cooperation, the Treaty on the Establishment of the Supreme Interstate Council, and the Treaty on Allied Relations.

“Today, our relations are already going far beyond traditional political dialogue. Trade and investment cooperation, industrial cooperation, and interaction in the fields of energy, agriculture, transport and logistics are actively developing,” Shakhodat Khoshimova, chief research fellow at the Center for Foreign Policy Studies of Uzbekistan, told Trend.

In her assessment, the next stage should involve moving from individual projects toward more sustainable transregional ties.

“The next stage of Uzbek-Azerbaijani cooperation is the transition from individual joint projects to the formation of sustainable transregional production, transport and energy chains. This can become the main economic substance of the allied relations between the two countries,” the expert said.

Trade and investment as the foundation for industrial cooperation

Economic dynamics already reflect the strengthening of bilateral relations. In 2025, trade turnover between Azerbaijan and Uzbekistan more than tripled, reaching $795 million. In January–May 2026, it increased by 33 percent compared with the same period of the previous year, reaching $144 million.

At the same time, experts associate further trade expansion with changes in its structure. The focus is shifting from mutual supplies toward the creation of production chains in which companies from the two countries complement each other.

“The next stage of economic interaction between the two countries should be associated with a transition from trade in finished products to the creation of joint production chains. This is where the greatest potential for mutual investment lies,” Uzbek political analyst and Candidate of Philosophical Sciences Ravshan Nazarov told Trend.

According to him, promising areas include mechanical engineering, electrical engineering, chemical and petrochemical industries, construction materials, textiles and pharmaceuticals.

One of the mechanisms for realizing this potential is the Azerbaijan-Uzbekistan Investment Company, established in 2023 with a capital of $500 million. It is designed to finance projects in various sectors of the economies of the two countries and may also participate in projects in third countries.

“This means that the partnership is gradually acquiring the character of a regional investment mechanism,” Nazarov said.

More than 130 Uzbek companies already operate in Azerbaijan, including companies involved in projects in the liberated territories.

One of the most notable examples of industrial cooperation remains the automotive sector. The AzerMash joint venture cooperates with Uzbek companies in the production of Chevrolet and Isuzu vehicles. As part of this cooperation, more than 10,000 Chevrolet vehicles and more than 300 Isuzu vehicles have been produced.

Nazarov believes that cooperation could go beyond vehicle assembly in the future.

“Uzbekistan has a large industrial base and a developed automotive industry, while Azerbaijan has a favorable geographical location, access to international transport routes and opportunities to promote products to the markets of the Caucasus, Türkiye, Europe and the Middle East,” the expert said.

According to him, potential next areas include the production of automotive components, electric vehicles and commercial vehicles, as well as the development of service infrastructure.

From energy trade to joint production

Energy is another area where a transition toward more sophisticated forms of cooperation can be observed.

The joint venture Neftgaztechnology, established on the basis of Uzbekistan's OZLITINEFTGAZ Institute and SOCAR NIPI Nefteqaz, has been operating since 2016. In 2024, SOCAR and Uzbekneftegaz also established Turan Energetika APESCO.

Professor Saifiddin Juraev told Trend that cooperation in petrochemicals could become the basis for export-oriented production chains.

“The new trend is the transition from trade in raw materials to joint production of polyethylene, polymers and other gas-chemical products,” he said.

The expert believes that combining the production capabilities of the two countries makes it possible to create higher-value-added products and enter third-country markets.

Renewable energy is another area of cooperation. Azerbaijan, Uzbekistan and Kazakhstan are working on the development of a “green corridor”, which could take energy cooperation beyond the bilateral agenda.

“The Green Corridor project, linked to the export of renewable energy across the Caspian Sea, goes far beyond the bilateral agenda,” Juraev said, emphasizing its potential importance for the European market.

Middle Corridor as a connecting link

The transport component is becoming the element capable of bringing together trade, investment and production projects. In 2025, the volume of transit transportation between Azerbaijan and Uzbekistan amounted to 1.4 million tons.

For Uzbekistan, the development of the Trans-Caspian route provides an additional route to global markets, while Azerbaijan gains an opportunity to strengthen its position as a transport hub for cargo from Central Asia.

“For Uzbekistan, as a landlocked country, the importance of Azerbaijan is exceptionally high: through the Caspian Sea, Azerbaijan, Georgia and Türkiye, an alternative route to European markets is opened,” Nazarov said.

Khoshimova points out that the importance of the Middle Corridor is already extending beyond transportation itself.

“More efficient transport connectivity creates conditions for the development of trade, investment, warehouse infrastructure and new production chains. Therefore, transport infrastructure is becoming one of the factors shaping broader economic interdependence between the countries of the region,” she said.

At the same time, further growth in cargo flows will require coordinated efforts across all links of the route. Juraev identifies tariff coordination, customs procedures and digitalization among the priorities.

“It is necessary to create through tariffs, introduce the ‘single window’ principle, coordinate schedules and digitalize the corridor. The systematic integration of the logistics systems of Azerbaijan and Uzbekistan increases transit attractiveness,” he emphasized.

Additional potential could come from the China–Kyrgyzstan–Uzbekistan railway. Its integration with the Middle Corridor could increase the cargo base from Central Asia moving across the Caspian Sea, Azerbaijan and onward to European markets.

From bilateral partnership to regional connectivity

Economic rapprochement between the two countries is developing alongside their expanding interaction within regional and international formats. The Organization of Turkic States, as well as Azerbaijan's participation in the Consultative Meetings of the Heads of State of Central Asia, are particularly important in this regard.

In November 2025, a decision was made to grant Azerbaijan full participation in this format, giving Baku's cooperation with Central Asia an additional institutional dimension.

“Baku and Tashkent are capable of connecting the economic, transport and cultural-humanitarian potential of two major regions — the South Caucasus and Central Asia,” Nazarov said, speaking about the role of the two countries in the OTS.

Juraev, in turn, views transport and energy cooperation as the material foundation for broader Turkic integration.

“The Middle Corridor is the physical backbone of economic integration within the OTS, while the Green Corridor is its energy dimension,” he said.

At the same time, cooperation between the regions of the two countries is developing. Sister-city ties have been established between Baku and Tashkent, Shusha and Khiva, Shaki and Kokand, Lankaran and Bukhara, among other cities. In the humanitarian sphere, joint cultural and educational projects are being implemented, including the Mirza Ulugbek School in Fuzuli and the Uzbekistan Park project in Baku.

In agriculture, the “Garden of Friendship” project is being implemented to establish a 100-hectare pomegranate orchard in the Fuzuli district. The project provides for the cultivation of Uzbek and Azerbaijani pomegranate varieties.

Ultimately, the current model of Baku-Tashkent relations is increasingly moving beyond individual bilateral projects. Trade is generating demand for new production ties, investment is creating the financial foundation for their implementation, energy is expanding opportunities for technological cooperation, while transport is providing these projects with access to broader markets.

According to experts, it is precisely the combination of these areas that could become the next stage in the allied relations between Azerbaijan and Uzbekistan — extending beyond bilateral trade and contributing to closer economic connectivity between Central Asia, the Caspian region and the South Caucasus.