TEHRAN – In a significant step toward deepening bilateral economic relations, Iran and the Republic of Azerbaijan have signed a customs cooperation memorandum of understanding aimed at facilitating and accelerating trade and transit between the two neighboring countries.
The agreement, signed at the Bileh Savar border zero point, represents the latest in a series of diplomatic and economic initiatives that signal a new era of strategic partnership between Tehran and Baku.
The high-level meeting brought together Foroud Asgari, Deputy Minister of Economy and Head of Iran’s Customs Administration, and Shahin Baghirov, Head of the State Customs Committee of the Republic of Azerbaijan, along with their respective high-ranking delegations. The two sides reviewed existing obstacles and challenges related to trade facilitation and transit development, agreeing on new programs designed to remove barriers and streamline cross-border movement of goods.
- Infrastructure development: Key to unlocking trade potential
One of the central themes of the discussions was the critical role of infrastructure in expanding trade volumes between the two countries. Foroud Asgari identified infrastructural shortcomings as a major obstacle to the development and expansion of commercial and transit exchanges, emphasizing that completing bridges under construction at the Astara and Nakhchivan border crossings would significantly strengthen connectivity and facilitate the smooth passage of trucks.
“The completion of these bridges by the Republic of Azerbaijan will bring prosperity to trade and ease the movement of commercial vehicles,” Asgari stated, highlighting the tangible benefits that improved infrastructure would bring to both economies.
The customs chief also pointed to border congestion as the primary challenge facing bilateral trade, noting that the smooth flow of trucks remains hampered by procedural and physical bottlenecks. He stressed the importance of continued interaction between the two countries to resolve these issues, expressing optimism that recent agreements would yield measurable improvements.
Significantly, Asgari revealed that Iran’s President has demonstrated a special interest in expanding trade exchanges with Azerbaijan, consistently emphasizing the development of economic relations in various meetings. This political will at the highest level has created momentum for closer cooperation across multiple sectors.
- Azerbaijani commitment to strengthening cooperation
Shahin Baghirov, Head of Azerbaijan’s State Customs Committee, reciprocated Iran’s positive sentiments, describing bilateral trade as “important” and expressing a shared vision for expanded cooperation. Baghirov emphasized Azerbaijan’s interest in broadening collaboration and pledged greater efforts to develop trade and transit exchanges.
“Holding these meetings is very important and significant,” Baghirov stated, noting that such engagements have a tangible impact on resolving problems and removing obstacles to trade. He particularly welcomed the establishment of 24-hour online communication with Iran’s customs chief, a mechanism designed to facilitate the immediate resolution of emerging issues and prevent delays in customs procedures.
The signing of the memorandum of understanding at the conclusion of the meeting formalized the commitment of both sides to accelerate customs clearance processes for commercial and transit goods, creating a framework for ongoing cooperation that extends beyond the current agreement.
- Broader economic engagement: Chamber of Commerce initiatives
Beyond the customs agreement, economic cooperation between Iran and Azerbaijan has been advancing on multiple fronts. In late June, the heads of the Iran Chamber of Commerce, Industries, Mines and Agriculture and Azerbaijan’s National Confederation of Entrepreneurs’ Organizations emphasized the expansion of joint investments and greater utilization of border trade capacity.
Samad Hassanzadeh, head of the Iran Chamber, speaking on the sidelines of the 40th meeting of the Islamic Chamber’s Board of Directors in Ankara, emphasized Iran’s commitment to peace and stability in the region.
Referring to the deep cultural commonalities between Iran and Azerbaijan, Hassanzadeh stressed the importance of trade delegations and called for updating the list of joint investment opportunities. He urged both sides to identify specific sectors where bilateral trade could be expanded, creating a roadmap for future economic engagement.
Qadir Qiyafeh, Vice President of the Iran Chamber, echoed these sentiments, describing Iran and Azerbaijan as “brotherly countries with a shared culture.” He called for overcoming negative propaganda aimed at preventing the expansion of relations between the two nations.
“We are interested in having joint investments and joint projects, and for our peoples to become closer to each other,” Qiyafeh stated, expressing hope for social and economic development and sustainable peace in the region. He dismissed the potential for external interference to disrupt regional development processes.
Mohammad Musayev, head of Azerbaijan’s National Confederation of Entrepreneurs’ Organizations, welcomed joint investment initiatives and emphasized the importance of leveraging shared border capacity for mutual economic benefit. The Iranian delegation to the meeting included Seyed Hamed Asgari, Deputy for International Affairs of the Iran Chamber, along with other senior officials, demonstrating Iran’s commitment to deepening economic ties.
- Investment cooperation and ioint committee framework
The momentum for bilateral economic cooperation extends to investment and project development. On June 19, Mehdi Heydari, Deputy Minister of Economic Affairs and Finance and Head of Iran’s Organization for Investment, Economic and Technical Assistance, met with Yusuf Abdullayev, head of Azerbaijan’s Export and Investment Agency, on the sidelines of the 51st Annual Meeting of the Islamic Development Bank’s Board of Executive Directors in Baku.
Heydari emphasized the exchange of experiences and identification of common points and projects for cooperation, highlighting the capacities and programs on his organization’s agenda to encourage and improve foreign investment. He referred to the signing of the memorandum of understanding for a Joint Investment Committee during President Pezeshkian’s visit to Azerbaijan, noting that while the first meeting of the committee had not yet been held, it could be convened at the earliest opportunity.
“Iranian companies possess significant capabilities,” Heydari stated, presenting a list of projects prepared for foreign investment in Iran to the Azerbaijani side and explaining the conditions of each sector.
Abdullayev, in response, declared Azerbaijan’s readiness to hold the first meeting of the Joint Committee. He evaluated recent measures and programs of his agency positively, particularly the design of information on investment opportunities. He also extended an invitation for Iranian economic activists, investors, and capable companies to participate in the Azerbaijan International Investment Summit scheduled for September 2026.
“The history of Iranians’ activities in Azerbaijan’s economy demonstrates the potential for increased cooperation,” Abdullayev noted, describing the Joint Investment Committee as a valuable advantage for structuring collaboration. Both sides described their respective measures and achievements in attracting foreign investment, exchanging views and learning from each other’s experiences.
- Comprehensive economic framework: 10-sector agreement
Perhaps the most significant indicator of growing bilateral economic integration is the cooperation document signed in late February, outlining joint economic initiatives across ten sectors. The memorandum was signed at the 17th session of the Iran–Azerbaijan Joint Economic Committee by Iran’s Minister of Transport and Urban Development Farzaneh Sadegh and Azerbaijan’s Deputy Prime Minister Shahin Mustafayev.
The document establishes a framework for bilateral cooperation in infrastructure, energy and water projects, as well as broader economic, social and cultural fields. In transport, the two sides agreed to expand cooperation in road transport, border management and railway development, with key infrastructure projects including the Kalaleh–Aghband bridge, the Astara bridge, the widening of the Kalaleh–Jolfa road, the Kalaleh–Siahroud rail link, and the launch of the Astara rail terminal at the shared border.
In the energy sector, cooperation was approved in oil blocks one and two, with the establishment of a joint working group to follow up on related memoranda of understanding. Electricity agreements covered plans to connect the power grids of Iran, Azerbaijan and Russia, as well as electricity exports from Azerbaijan to Iran. Water cooperation focused on joint projects related to the Khoda Afarin and Qiz Qalesi dams and power plants, along with the Marazad–Orduabad hydropower project.
The comprehensive agreement also includes understandings in tourism, agriculture, customs, industry, investment, sports and youth affairs, paving the way for deeper economic ties and expanded strategic cooperation between Tehran and Baku.
- Transit ambitions: NSTC Corridor
Speaking at the Joint Economic Committee meeting, Minister Sadegh highlighted Iran’s ambitious target to increase transit volumes on the western branch of the International North–South Transit Corridor (INSTC) to 15 million tons by 2030. This target represents a significant expansion of current transit volumes and underscores the strategic importance of the corridor for both countries.
Sadegh noted that trade between the two countries has reached approximately $650 million over the past two years, with exchanges following an upward trend. She suggested that drafting a trade cooperation roadmap could provide clearer prospects for expanding economic relations.
Transport and transit were identified as key pillars of cooperation. Over the past year, approximately 120,000 Iranian trucks transited through Azerbaijani territory, while more than 50,000 Azerbaijani trucks entered Iran, reflecting substantial cross-border freight activity. Sadegh emphasized that achieving the 15-million-ton transit target by 2030 would require more than tripling current fleet movements, underscoring the need to upgrade border infrastructure and streamline procedures.
Construction of the Kalaleh–Aghband bridge is in its final stages and is expected to play a significant role in facilitating transit flows and trade once completed. Energy cooperation and joint projects on the Aras River were cited as strategic areas of collaboration, alongside agriculture, tourism—particularly health tourism—and broader cooperation in industry, investment and infrastructure.
- High-level political engagement
The momentum for closer economic ties has been reinforced by direct engagement at the highest political levels. During her visit to Baku for the Joint Economic Committee meeting, Minister Sadegh met with President Ilham Aliyev, conveying greetings from President Masoud Pezeshkian and emphasizing Iran’s special interest in relations with Azerbaijan.
President Aliyev, while thanking Pezeshkian for his message, expressed satisfaction with the expansion of bilateral relations and emphasized that jointly implemented projects would provide extensive opportunities for both countries and the region. The discussions covered new railway infrastructures, joint oil fields, transportation cooperation, utilization of new border infrastructures, and energy sector collaboration.
The two sides also exchanged views on joint oil fields in the Caspian Sea and methods of extracting resources from these fields, as well as the development of bilateral and multilateral regional cooperation with neighboring countries in transportation and energy.
- A strategic partnership for regional integration
The series of agreements and initiatives between Iran and Azerbaijan reflects a shared vision for regional integration and economic development. Both countries recognize the strategic importance of their geographic position, linking Central Asia, the Caucasus, and the Middle East, and the potential for their partnership to facilitate trade flows across the broader region.
The customs agreement signed at Bileh Savar, combined with the comprehensive economic framework established through the Joint Economic Committee and the investment cooperation initiatives, positions the two countries for a new phase of economic integration. Infrastructure development, particularly the completion of border bridges and expansion of railway and road networks, will be crucial to realizing this potential.
The commitment demonstrated by both sides—at the ministerial level, through chamber of commerce initiatives, and through direct presidential engagement—suggests that the momentum toward closer economic ties is sustainable and politically supported. While challenges remain, including border congestion and the need for continued infrastructure investment, the framework for cooperation established through these agreements provides a solid foundation for addressing these obstacles.
As both countries work toward their ambitious transit and trade targets, the relationship between Iran and Azerbaijan stands as an example of how neighboring states can leverage their geographic proximity, cultural commonalities, and mutual economic interests to build a more prosperous and integrated region.
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