For Azerbaijan, Hungary is possibly the most important partner in the European Union. For Budapest, Baku is the most significant actor in the South Caucasus. But what is the major driver of the Hungarian-Azerbaijani strategic partnership?
Back in November of 2014, the two nations signed the Joint Declaration on the establishment of a strategic partnership. The document, as well as a series of other agreements they reached, paved the way for a fruitful economic cooperation. At the time, their business ties were rather modest, with trade balance reaching approximately $69.3 million. Ten years later, Hungary invested in the Azerbaijani economy more than $1 billion—making it the third top investor in the country—while in 2023 the two nations trade volume reached around $200 million.
“Those who once criticized us for our relations with Azerbaijan are now lining up to take a photo with the President of Azerbaijan,” Hungarian Foreign Minister Peter Szijjarto said on April 24 following the meeting he held in Baku with his Azerbaijani counterparts.
Szijjarto seems to be a regular guest in the Azerbaijani capital. Last year, he was one of the major attendees at the Baku Energy Week, where he openly stated that his nation aims to strengthen energy ties not only with Azerbaijan but also with Russia, despite alleged pressures coming from the European Union. Coincidentally or not, during last year’s event, Hungarian power company MVM Group signed an agreement with Azerbaijan to acquire a five percent stake in the Shah Deniz field, one of the largest gas-condensate fields in the world.
The summit, scheduled to take place this year as well, undoubtedly underscores the long-standing importance of Azerbaijan’s role in the global energy sector. At the same time, it also represents yet another opportunity for Baku and Budapest to expand their energy cooperation.
“From now on, Brussels has no say in how and from where we manage our energy supply, and we will not accept any guidelines, instructions, or even advice on this matter,” Szijjarto emphasized in Baku on April 26, 2024.
Five months later, Hungary’s MOL, the third-largest shareholder in the Azeri-Chirag-Deepwater Gunashli (ACG) field, and Azerbaijani State Oil Company (SOCAR) signed a memorandum of understanding on exploration and production at the onshore Shamakhi-Gobustan oil and gas field. Budapest, therefore, amid the Ukraine war and the potential escalation of various conflicts in the Middle East, aims to secure its energy security. That is why it seeks to strengthen energy ties with Baku, diversify gas imports, and secure flawless supplies from Azerbaijan, where the Serbia-Hungary Gas Interconnector handles the final segment of gas delivery to the Central European nation of around 9.5 million people.
Budapest, therefore, amid the war in Ukraine and the potential escalation of various conflicts in the Middle East, aims to secure its energy security. This is why it seeks to strengthen energy ties with Baku, diversify gas imports, and ensure reliable supplies from Azerbaijan via Turkey. In this process, the Serbia-Hungary Gas Interconnector handles the final segment of gas delivery to the Central European nation of approximately 9.5 million people.
Given that energy plays an important role in Budapest’s foreign policy, it is no surprise that Szijjarto and Azerbaijani Energy Minister Parviz Shahbazov recently met to discuss gas supplies from the former Soviet republic to Europe. Their meeting was part of the preparations for the Southern Gas Corridor Advisory Council, which took place on April 4. As a result of the summit, Azerbaijan, Georgia, Turkey, and Bulgaria agreed to establish a Green Energy Corridor to enhance regional electricity transmission and trade.
Hungary is also interested in this project, given that Azerbaijan could eventually become a key exporter not only of natural gas but also of renewable energy to the Central European nation. Last year, Budapest, Baku, as well as Tbilisi and Bucharest, launched a joint venture to install a power line under the Black Sea aimed at bringing more renewable energy into the European Union. The Green Energy Corridor is considered to have substantial potential to generate power from Caspian Sea wind farms, with Azerbaijani “green electricity” being delivered to EU members Hungary and Romania via Georgia.
The bilateral relations between Hungary and Azerbaijan, therefore, extend beyond natural gas imports. As an EU member, Hungary is also seeking to position itself as a key advocate for Azerbaijan within the 27-nation bloc. Reports suggest that it has blocked the European Union from providing “modest military assistance” to Baku’s archenemy Armenia. Moreover, Budapest has openly supported Azerbaijan in the Nagorno-Karabakh conflict, which impacted Hungary’s relations with Yerevan. However, from the economic perspective, for Budapest, Azerbaijan is a far more important economic partner than Armenia. Also, Hungary’s pragmatic approach to international alliances in its foreign policy allowed it to not only normalize relations with Armenia but also to seek to take part in the reconstruction of Nagorno-Karabakh—a territory that Azerbaijan fully reclaimed in 2023.
Thus, Budapest and Baku will almost certainly continue to strengthen their political ties. Their membership in the Organization of Turkic States can play an important role in that process. At the same time, they are expected to focus on fostering economic relations, especially in the field of pharmaceuticals. However, for the time being, energy is likely to remain a central pillar of their cooperation.
