Ayaz Rzayev

Center for Strategic Studies, Baku

Over the past two decades, Azerbaijan has been engaged in a massive effort to modernize and upgrade its military. War with Armenia over the breakaway Nagorno-Karabakh region forced Baku to drastically ramp up military spending and invest vigorously in various military technologies.

Encouraged by a tremendous influx in oil revenue, Azerbaijan has managed to achieve a twentyfold increase in military spending over the past decade. Concurrently with the process of building more capable and innovative armed forces, Azerbaijan has also worked to build its own military-industrial base. The massive military spending growth in recent years has allowed the Azerbaijani government to develop and strengthen its defense industrial base.

Since the creation of the Ministry of Defense Industry in 2005, there has been a swift rise in the number of arms-producing facilities in Azerbaijan. According to Defense Industry Minister Yavar Jamalov, between 2007 and 2016 Azerbaijani military production underwent a fortyfold expansion.

Domestic defense innovation has also helped Azerbaijan to raise its profile in the global arms market. Azerbaijan’s total export of domestically produced military hardware more than doubled in 2017 compared to the previous year, according to the MDI. Currently, Azerbaijan supplies defense products to more than 10 countries, including Turkey, Georgia, Iraq, Pakistan and Jordan.

A shift to joint development and production

Having finished the process of a major military buildup and diversified its weaponry away from aging Soviet equipment, Azerbaijan in recent years has also started to move away from the typical “buyer-seller” dynamic in its relationship with defense partners towards one based on co-development and co-manufacturing. To this end, Azerbaijan has established joint ventures with various foreign defense companies.

In 2009, Turkish defense company Roketsan and Azerbaijani military-scientific enterprise Iglim signed a deal for joint production of rocket launcher systems. In an interview with Defence Industry Bulletin last year, Azer Mammadov, a senior adviser to Minister Jamalov, said his department is currently working on developing a long-range missile system by 2020. In October 2017, Azerbaijan and Turkey signed an agreement on defense industry cooperation, recognizing it as a fundamental element of a larger institutionalized defense framework.

In 2009, Paramount Group, a South Africa-based defense and aerospace company, established a joint production facility with MDI to produce Matador and Marauder armored Mine Protected Vehicles. In 2017, Azerbaijan unveiled its first domestically developed Mine-Resistant Ambush-Protected vehicle, Tufan, the serial production of which MDI is preparing to launch this year.

Israel – an important partner

While total domestic defense self-sufficiency might be unattainable for small and medium-size states such as Azerbaijan, indigenous defense industrialization still has its own undeniable benefits. Despite the fact that security of supply through domestic defense industries is not something small countries can generally achieve on their own, having even limited indigenous production is still strategically rewarding. Even small defense industrial bases can provide massive military advantages in terms of boosting the capacity of armed forces to adapt to ever-changing circumstances on the battlefield.

Since indigenous engineers and technologists understand and address battlefield problems of the country’s armed forces better, domestic firms are able to offer more tailor-made solutions to the challenges faced by the military. All these efforts have certainly paid off and resulted in a better and smarter armed forces. In an interview with Russian news agency RIA Novosti in July 2017, Azerbaijan’s Defense Minister Zakir Hasanov noted that modernization of the military has moved to a qualitatively new level in recent years.

In this context, relations with Israel are particularly important for Azerbaijan. In 2012, Azerbaijan and Israel reached a $1.6 billion arms trade deal, mainly for UAVs and missile defense systems. From 2012 to 2016, Azerbaijan was the second-largest importer of Israeli military equipment after India, according to the Stockholm International Peace Research Institute. During a joint press conference with Israeli Prime Minister Benjamin Netanyahu in December 2016, President Ilham Aliyev noted that Azerbaijani and Israeli defense companies had so far entered into $4.85 billion worth of defense contracts.

Currently, production of UAVs is one the most dynamic and strategic branches of Azerbaijan’s defense industrial base. Between 2010 and 2014, Azerbaijan became the fourth-largest importer of drones in the world, receiving 7.8 percent of global deliveries. In fact, one of the hallmarks of the “four-day war” with Armenia in April 2016 was not only the extensive use of UAVs for surveillance, target acquisition and reconnaissance, but also reportedly the first-ever deployment of kamikaze drones for ground attacks on artillery systems and military facilities.

Since the requirements for target recognition and successful attack in armed UAVs are very high, developing such systems domestically necessitates having technologically advanced manufacturing base. Access to advanced Israeli UAV technologies and technical expertise has provided Azerbaijani engineers with opportunities to improve their own design and manufacturing capabilities.

In 2009, a deal was signed with Israel to set up a manufacturing facility for production of unmanned combat aerial vehicles in Azerbaijan. In 2011, based on the joint venture agreements established between the Ministry of Defense Industry and Israel’s Aeronautics Defense Systems – the third largest Israeli drone manufacturer – AZAD Systems began manufacturing Orbiter 2M and Aerostar UAVs. In 2016, under license from Aeronautics Defense Systems, AZAD Systems began manufacturing Zarba armed UAV, a local version of the Israeli-made Orbiter 1K loitering munition platform.

Azerbaijan is among the few countries in the world that equipped its coast guard vessels and boats with integrated missile systems. A recently released State Border Service promotional video highlighted, among other things, the Azerbaijani Coast Guard’s Saar 62 offshore patrol vessels and Shaldag Mk V fast patrol boats built by Israel Shipyards at the Azerbaijan Coast Guard’s Ship Construction and Repair Center in Turkan.

Saar 62 offshore patrol vessels are equipped with a Typhoon MLS-NLOS missile system for naval platforms, which has an eight-cell Spike NLOS missile launcher, integrated TopLite EO surveillance, stabilized observation and target acquisition system, a 23 mm ZU cannon in a Typhoon remotely controlled weapon system (RCWS), two 12.7 mm heavy machine guns in Mini Typhoon RCWS mounts, two pintle-mounted 7.62 mm Negev light machine guns, Elta’s EL/M-2228X radar, a Furuno navigation radar, and a diver detection sonar. Shaldag Mk V fast patrol boats are also equipped with Spike missile launchers.

What’s more, in 2017, the Azerbaijan State Border Service demonstrated its SPEAR 120 mm automatic mortar system developed by Israeli-based Elbit Systems and mounted on modernized BTR-70 chassis. It also presented a new configuration for the Cobra 4×4 armored personnel carrier vehicle developed by Turkish firm Otokar. This new configuration is equipped with Israel Aerospace Industries-made LAHAT (Laser Homing Attack) anti-tank missiles. LAHAT missiles are also mounted on Mi-17 helicopters.

Moving to multi-domain

Although Azerbaijan continues to depend heavily on foreign military equipment purchases, Baku has recently placed greater emphasis on strengthening its defense industrial base as part of a broader hedging strategy against future uncertainties. Arms imports are still obviously important for Azerbaijan, but equally important are the reliability of the sources of those imports.

According to SIPRI, Russia accounts for 65 percent of Azerbaijan’s arms purchases and deliveries. Although arms deliveries from Russia in line with the massive defense deal signed between the two countries in 2010 are almost complete, President Aliyev stressed recently that defense cooperation with Russia will continue in the future as well. At the same time, the need to mitigate overreliance on Russia – or even remove itself from this partnership if the costs of the relationship grow unacceptable – plays an important role in Azerbaijan’s desire to develop its own defense-industrial base.

What’s more, Azerbaijan’s overmatch in conventional arms today is sufficiently wide to deter most challenges. In terms of conventional firepower assets, the Azerbaijan military is now more than equipped. As a result, rather than conventional military equipment that Russia is willing to provide to Azerbaijan, Baku is currently more interested in acquiring more advanced multi-domain systems with effective long-range assault capabilities.

Moreover, recent fluctuations in Russo-Western relations also triggered the need to augment the hedging options for Baku to ensure security of future military hardware supplies. Despite the fact that the U.S. government eventually decided against imposing sanctions on countries that import Russian military hardware after passing the CAATSA bill, the current volatility in U.S.-Russian relations affects Azerbaijan’s desire to strengthen its indigenous defense production.

Overall, the pace and scope of change in Azerbaijan’s defense-industrial capabilities function as a crucial benchmark for evaluating the future direction of the Azerbaijani military. Fueled by the expansion of the national defense budget, over the past few decades Azerbaijan has built stronger and more capable armed forces, with the defense-modernization drive only continuing to accelerate.

Ayaz Rzayev is an Expert Advisor in the Foreign Policy Analysis Department of the Center for Strategic Studies in Baku, Azerbaijan. Follow him on Twitter @AyazRzayev2.

All views and opinions expressed in this article are those of the author, and do not necessarily reflect the opinions or positions of The Defense Post.

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