Azerbaijan-Iran; Tension That Should Not Turn Into a Bigger Problem

Military tanks are seen during an Iranian Army exercise in the northwestern parts of Iran, in this picture obtained on October 1, 2021 - REUTERS
Military tanks are seen during an Iranian Army exercise in the northwestern parts of Iran, in this picture obtained on October 1, 2021 - REUTERS
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Azerbaijan-Iran; Tension That Should Not Turn Into a Bigger Problem

Military tanks are seen during an Iranian Army exercise in the northwestern parts of Iran, in this picture obtained on October 1, 2021 - REUTERS
Military tanks are seen during an Iranian Army exercise in the northwestern parts of Iran, in this picture obtained on October 1, 2021 - REUTERS

Azerbaijan and Iran have deep historical, cultural relations. They share a border of about 760 kilometers. Since Azerbaijan gained its independence in 1991, ties between Baku and Tehran have been neighborly but at times difficult.

War in 1992 and the consequent Armenian occupation of its territories preoccupied Azerbaijan for almost 30 years. Occupation of the territories of a fellow Muslim country did not disturb Iran, which seemed to stand closer to Armenia. Iran’s stance throughout this period was not well received by Azerbaijan.

In the autumn of 2020 when large-scale fighting broke out, Azerbaijan inflicted a humiliating defeat on the Armenian side and took back the majority of its territories. Iran remained silent. Only towards the end of the conflict, it took a more visible stance, stating that the territories over which fighting was taking place belonged to Azerbaijan.

This war brought to the surface, once again, several issues of irritation for Iran.

-Victory of Azerbaijan over Armenia was overjoyed by ethnic Azeris in Iran. They demonstrated their support in city centers. They also staged protests demanding the closure of the Iran-Armenia borders.

Estimates of Azeris in Iran vary from 15 to 25 million, out of a total population of around 85 million. They mostly live in northwestern parts, with Tabriz and Urumiya being major Azeri cities. Some refer to this area not as north of Iran but south of Azerbaijan. Within this scope, the rise of nationalist sentiment among its Azeri population did not appeal to Iranian authorities.

-Turkey’s contribution to Azerbaijan’s war effort was a major factor in its victory. Very close ties between the two Turkic countries, which are popularly referred to as “one nation, two states”, were even further consolidated.

Victory parades in Baku, with the participation of Turkish army units and the leaders of the two countries standing next to each other on the podium, must have been not so pleasant sights for Iran.

Another actor who also contributed to the Azerbaijan war effort was Israel. These two countries have developed close relations over the years. At one point in the past, President Aliyev stated that relations with Israel are very diverse and especially strong in the field of the defense industry. These ties have been disturbing Iran for some time.

On top of all that, the outcome of the war had a bearing on Iranian trade activities. Throughout the occupation of Karabakh, Iran used to transport food, fuel, and other items to Karabakh and Armenia and also to other parts of West Asia, unhindered and through occupied Azeri land.

This all changed when Azerbaijan took back its territories. Iran’s transport routes were affected. They wanted to continue as if nothing had changed. Azerbaijan reminded the Iranians of the new circumstances. Iranians did not pay attention and it is said that they even attempted to cheat their way by putting Armenian plates on Iranian trucks.

Azerbaijan, as a sovereign state, continued its controls and imposed a “road tax” on Iranian trucks moving through its territory. In the process, some Iranian lorry drivers were detained. There was a case of a heroin seizure. Azerbaijani authorities also expressed concern about the possible transport of military equipment.

Iran must have felt under pressure on a number of fronts, especially in its home territory and what it considers as its “backyard”. Iran revealed its dismay and demonstrated its readiness.
Foreign Minister Abdullahian stated Iran’s objection to the presence of the “Zionist regime” near its borders.

In reference to a Turkey-Azerbaijan-Pakistan trilateral military exercise (Three Brothers 2021) which was held in September in Baku, Foreign Ministry of Iran stated that “these military exercises violated international conventions banning the military presence of countries other than the five states which border the Caspian Sea”.

In October, Iran started military exercises along its borders with Azerbaijan. The Iranian commander of Land Forces also voiced Iran’s stance against the “Zionist State” near its borders. In addition, he expressed concern about the presence of fighters (from Syria) that he claimed were brought in to Azerbaijan during the fighting over Karabakh.

Azerbaijan reacted in a cool manner. In an interview with Turkey's Anadolu Agency, Azerbaijani President Ilham Aliyev expressed his surprise about Iran’s reactions and steps.

Other major regional actors, Turkey and Russia, have kept silent. They are observing and probably expecting the flare-up to die out.

It seems that things are blown out of proportion and we may be following a case of being lost in translation.

In the case of the transport issue, it is a matter of adapting to changed circumstances and respecting the decisions of a sovereign state. Iran’s perceptions of threat on home ground and vicinities may be more complicated but again, diplomacy, goodwill, and cooperation are the remedies.

These recent developments have once again served as a reminder of the relevance and importance of regional cooperation.

Up until recently, Karabakh was an obstacle for most multinational cooperation efforts in the region. Now, this obstacle has been removed and the political environment is ripe for this kind of cooperation.
For many years, Turkey has been desirous to create regional cooperation platforms.

One such mechanism, Turkey-Iran-Azerbaijan Trilateral Meetings at the level of Foreign Ministers was established in 2010. Even though dates have not been set yet, the next meeting will be in Tehran. It would be a good opportunity to take up issues of contention.

Recently, Turkey came up with the idea of a six-party cooperation format, which included Armenia, Georgia, Azerbaijan, Russia, and Iran. There is no progress on that yet, but the proposal has been made.

In any case, such inclusive and cooperation-oriented initiatives should be encouraged as they offer countries a good opportunity to exchange views on bilateral and regional issues and explore possibilities of cooperation in various fields. Regional mechanisms could also complement and support bilateral efforts to overcome problems as in the case of the recent Azeri-Iranian situation.



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.