Under the leadership of President Ilham Aliyev, the victorious advance of the Azerbaijani Army continues, and Karabakh is being liberated from occupation. At the Center for Analysis of Economic Reforms and Communication (CAERC), the economic development prospects of Karabakh in the post-conflict period are being thoroughly analyzed. The Head of CAERC, Doctor of Economic Sciences Vusal Gasimli, gave an interview on Karabakh’s industrial potential. According to him, Karabakh has strong prospects for the development of mining, metallurgy, processing industries, food production, electricity generation, the forestry industry, and creative industries.

In Vusal Gasimli’s view, the potential for industrial development in Karabakh is significant, and a more precise development program will be prepared following a reassessment of resources: “The large forest massif of the mountainous zone of the Lesser Caucasus is of particular importance for the development of the forestry industry and tourism. The total forest area of the region is approximately 246.7 thousand hectares, including 13.2 thousand hectares of valuable forest lands. The area of specially protected natural territories in Azerbaijan has now reached 890 thousand hectares, of which 42.3 thousand hectares were under occupation.”

According to Gasimli, after the end of the occupation, the mountainous and lowland (Aran) parts of Karabakh will be integrated from an industrial production perspective. He noted that during the Soviet period, Nagorno-Karabakh developed in close economic ties with the Aran part of Karabakh and other economic regions of Azerbaijan: “Roads in all directions firmly linked these two areas economically. The vast majority of enterprises located in Nagorno-Karabakh operated on the basis of fuel, raw materials, and inputs supplied from other regions of Azerbaijan, while many functioned as branches of large enterprises based in Baku. In 1985, only 8 percent of the cocoons processed by the Silk Combine in Khankendi were produced in Nagorno-Karabakh itself, while the remaining 92 percent were supplied from other regions of Azerbaijan. In 1986, only 0.3 percent of the foreign economic relations of the Nagorno-Karabakh Autonomous Oblast and 1.4 percent of its imports accounted for the Armenian SSR, whereas 33.3 percent of the products manufactured in the former oblast were sold in the rest of Azerbaijan. Khankendi, the administrative center of the former Nagorno-Karabakh Autonomous Oblast, was once directly connected to Azerbaijan’s railway and road networks and to the republic’s overall transport and communications system. The railway distance from Khankendi to Baku is 392 kilometers. In short, prior to the occupation, Karabakh always developed as an integral part of the Azerbaijani economy.”

Speaking about industrial sectors, Gasimli also highlighted the potential for electricity generation based on Karabakh’s water resources: “In the post-conflict period, the Sarsang Hydropower Plant with a capacity of 50 MW and the Khudafarin Hydropower Plant with a capacity of 280 MW, together with other large and small power generation facilities, will be capable of meeting Karabakh’s energy demand. Overall, integrating these power plants into the national energy system will not only increase capacity but also ensure geographic diversification of energy sources—reducing the load on Absheron, Shirvan, and Mingachevir—and increase the share of alternative (renewable) energy in total production.”

According to Gasimli, the region’s industrial recreation potential will also be widely utilized in the post-conflict period: “It is estimated that up to 40 percent of Azerbaijan’s mineral water resources were under occupation. The occupied territories contain around 120 mineral water deposits of various compositions with significant therapeutic value, amounting to approximately 7,805 cubic meters per day of mineral water supply. Among them, the Upper and Lower Istisu, Bagirsag, and Keshdek springs in the Kalbajar district; Ilysu and Minkend in the Lachin district; and Turshsu and Sirlan in the Shusha district are of particular interest. The Istisu mineral waters in Kalbajar stand out due to their favorable gas and chemical composition, high temperature, and large natural reserves. The large resort and mineral water bottling industry that existed at the Istisu spring in the 1980s could be revived. A similar approach could also be applied to the Turshsu mineral spring in Shusha.”

According to CAERC estimates, there are opportunities to bring 250 thousand hectares of land that were under occupation and 120 thousand hectares of unused land near the former contact line into agricultural circulation in the post-conflict period. Gasimli believes this will provide a solid foundation for the development of processing and food industries in Karabakh.

Gasimli also emphasized the strong potential for the development of the mining industry and metallurgy in Karabakh: “Naturally, industrial reserves must be reassessed. The occupied territories contain 155 different types of mineral deposits, including 5 gold, 6 mercury, 2 copper, 1 lead and zinc, 19 facing stone deposits, and others. Just imagine that the global market value of the 132.6 tons of gold with confirmed industrial reserves alone is around USD 8 billion. The region is rich in rare and valuable mineral deposits. Significant copper-zinc ore reserves are concentrated in the Mehmana deposits located in the eastern part of the Lesser Caucasus. Industrially significant mercury reserves are found in the Shorbulaq and Aghyataq areas of the Kalbajar district. The occupied territories are also extremely rich in various types of construction materials that are of great importance for Azerbaijan’s industry and construction sector. Large reserves of such materials are located in the Chobandag, Shahbulag, Boyahmadli, and other deposits in the Aghdam district. In addition, large building stone deposits are located in Khankendi, while marble deposits are found in Harov.”

Gasimli believes that Karabakh can also become a center for Azerbaijan’s creative industries: “Music, literature, craftsmanship, theater, carpet weaving, and other creative industries can be successfully developed in Karabakh.”