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I suspect this may be related to your account? See https://github.com/terraform-providers/terraform-provider-azurerm/issues/3358 for a similar case. You can set

azure:skipProviderRegistration

to true to opt out of automatically trying to register providers - though that may lead to other errors when you first try to use new resource kinds that your subscription may not have yet registered.

right, where do I set this flag? I obviously cant use terraform, right? And I dont really initialize connection to Azure anywhere in pulumi

ok, that helps, thanks