The Caspian Region:
The $1 Trillion Opportunity

The final discussion of Day Two at Caspian Week 2017 was perhaps the most central to the conference: The Caspian Region: The 1 Trillion $ Opportunity. To illuminate this opportunity, three guest panellists were invited: Giulio Haas, Switzerland's ambassador to the Islamic Republic of Iran; Stuard Detmer, chairman of Nobel Oil of Baku, Azerbaijan; and Ketevan Bochorishvili, Georgia's Deputy Minister of Economy and Sustainable Development. Habertürk's Afsin Yurdakul chaired the talk.

Giulio Haas began by describing the Caspian region, and especially Iran, as one of the world's "last untapped goldmines". Because Iran, the Caucasus and all the "Stans" are situated on a historical and geographical crossroads, he feels the region's potential is enormous. "There are many Ifs," he said, "But this could be the next big thing." Ketevan Bochorishvili answered the question as to why Georgia was even represented on this panel, as it has no Caspian coastline and possesses no significant natural resources. But as she explained, this small South Caucasus country has a great geostrategic position, and its government is committed to transforming it into a regional hub. Georgia has a growing consumer market and free trade agreements with the CIS countries, Turkey, Europe, and China. This, coupled with the acclaimed ease of doing business in the country, makes Tbilisi one of the leading players in the Caspian region.

Stuard Detmer then explained some of the region's historical background. According to him, the states around the Caspian Sea are experiencing their most prosperous era in history, largely thanks to huge oil and gas reserves. However, many of these countries, such as Azerbaijan, are overly dependent on these natural resources and therefore rely on high oil prices. Their challenge, according to Detmer, is to try and diversify. Taking up this topic, Giulio Haas explained that Iran, due to its more diverse economy, has perhaps the biggest potential in the region. Iran is the biggest automobile producer in the Middle East – Renault produce one tenth of its cars in Iran last year. The problem, Haas said, is the lack of cooperation between competing neighbours in the Caspian area. In addition, doing business is difficult in Iran – the fact that the state is so removed from the capitalist system means a lot of patience is required when investing there.

Stuard Detmer added that other countries in the area are worth a closer look for investors, as many of their economic enterprises are well-planned, long-term projects. Ketevan Bochorishvili told the audience that cooperating with other countries will be of utmost importance in achieving a prosperous Caspian region. Some countries, she said, have commodities but cannot transport them, while others have the transportation means, but no commodities. In order to facilitate close international economic cooperation, Georgia has been working on cutting bureaucracy and improving infrastructure, such as the new deep-sea port at Poti and the New Silk Road project with China. Finally, Giulio Haas offered a word of warning: despite the region's booming economies, the political stability of the countries there is in danger. Increasingly young populations and poor wealth distribution mean that the systems in many Caspian states are not sustainable – a fact that investors should take into account. Afsin Yurdakul then opened the floor to questions. Ambassador Haas made an optimistic case for the future of clean energy in Iran and reiterated that the area could be the next big thing. Ketevan Bochorishvili answered a question about opportunities for Swiss companies to invest in Georgia – she highlighted the mountain tourism industry and growth in the manufacturing sector. All in all, the discussion painted a bright picture of a part of the world with huge potential, but also with challenges to be faced. In many ways, foreign investment is just what the Caspian region needs to help make our world great again!