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UPDATE January 2002

The Azeri republic is in the throes of an incipient oil and gas boom. Recent events make it more rather than less attractive as an alternative source of energy supply to the West. The republic's oil reserves are reckoned to be 8 billion barrels, but this could be a considerable underestimate, with possible reserves of 15 billion barrels. Natural gas reserves are in the region of one trillion cubic metres, but possible reserves could be as high as two trillion.
All this energy wealth is a mixed blessing. It could be that it will be the undoing of the existing regime. President Haidar Aliyev and his clan of close supporters hail from the Azeri enclave, Nakhichevan, between Armenia and Turkey. This alone makes them far from popular.
Then they are plundering the oil and gas wealth for themselves, while there are hundreds of thousands of destitute refugees from the fall-out of the early 1990s war with Armenia over another enclave, the Armenian one on Azeri territory, Nagorno-Kharabakh.
The regime is a by-world for nepotism and corruption. There must be any number of Azeris who would like to send the swarm of scoundrels packing. They may get their chance when the ailing 72-year old Aliyev dies. His son, Ilham, the designated successor, is a vice-president of SOCAR, the national oil company. He is no more popular than his father. But then the security forces are solidly behind pater, whether they will stay so behind his son remains to be seen.
There is of course an attempt made to address the energy wealth as a common property; this consists of the National Fund. But its modus operandi are a secret, as is the disposition of its funds, well over one billion dollars. An audit of its accounts would be a revealing affair. It is never likely to be made public.
Despite the lack of natural justice, the most likely outcome if the Aliyev clan loses out when the patriarch goes is that one of the competing Baku-based political clan will take over and similarly become seriously rich, by the same means. The ordinary Azeris, let alone the refugees who have seen little benefit so far, may well continue in that way.

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BANKING

Mostbank JSCB open branch in Moscow

Mostbank-Azerbaijan JSCB is about to operate one more Azeri bank in Moscow. Until recently, Azeri banking interests in Moscow were only represented by the International Bank of Azerbaijan. According to Mostbank-Azerbaijan's Board Chairman, Asim Mamedli, quoted by Sharg News Agency, all the bank's relevant papers have already been submitted to Russia's central bank for registration and it is planned to start working early next year. 
Mamedli's recent visit to Russia was targeted at defining Moscow Mostbank's equity share within its branch bank. Mamedli noted that the offer of the Azeri side on redemption of Russian stock holders' equity share was met positively, not to mention that until now they have not got an alternative variant. Mostbank-Azerbaijan's current authorised fund totals US$2.94m. The delay in redemption of Russian stockholders equity share will not create problems when the central bank equates minimum authorised fund to US$2.5m next year.
Whilst talking to the press, Mamedli did not exclude the possibility of increasing its authorised fund in the future.

IBA inks Diner Club card deal

The International Bank of Azerbaijan is to sign an agreement on acceptance of the Diner Club international payment system cards. According to IBA card department director, Rovshan Kerimov, quoted by Sharg News Agency, all organisational issues were resolved, including creation of relevant infrastructure.
Kerimov stated that these cards would be like those of American Express International Servies Ltd., which give the IBA, the first of the Azeri banks, the right to carry out acceptance of these cards in its trade points and their issue. The bank only receives them, and gradually their volumes grow. If in the first quarter of 2001 the bank's turnover on card acceptance was at the level US$758,198, today's card acceptance operations are estimated to be conducted on an average of US$800,000 per quarter.

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ENERGY

BP denies press reports on resuming work at Azeri fields in Caspian's south

After Iran's threats this July against the "Geofizik-3" ship, which was exploring the Alov deposit, BP abandoned this deposit for security reasons, Yeni Musavat, has reported.
BP's representative in Azerbaijan, David Woodward, recently said that the results of work on this deposit had been discussed. Some media outlets described Woodward's words as BP's return to Alov. However, the head of the BP press service, Tamam Bayatli, said that this report was incorrect. She said that the results of seismic work had been examined, but unfinished scientific work could only be resumed after relations with Iran were clarified. 
Observers think that during Azerbaijani President Heydar Aliyev's visit to Iran, issues connected with Alov might be discussed.

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FOREIGN INVESTMENT

Azeris attract Greek investments

The potential of Azeri-Greek trade and economic opportunities is much larger than the current level of these relationships, the Greek embassy's trade adviser, Sarantis Moskovis, recently told the press, Sharg News Agency has reported.
Moskovis, emphasised that the most profitable area drawing Greek business circles to Azerbaijan was the energy sector but explained that Greece could not participate in oil and gas development in Azerbiajan as this field has been widely engaged by the world's largest companies. For this reason, Moskovis foresaw more prospects in non-oil co-operation such as food, perfumery, textile and other industries.
The trade adviser revealed that Greek entrepreneurs are interested in the creation of foot-wear and clothes joint ventures since there are some advantages in such jvs mainly due to lower labour costs in Azerbaijan that makes the production of such goods much cheaper than in Greece.

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FOREIGN LOANS 

World Bank to allocate US$60m to Azerbaijan

The government of Azerbaijan and the World Bank have reached a preliminary agreement on allocating a US$60m credit within the framework of the second stage of the Structural Adjustment Credit (SAC-2). The Azerbaijani Finance Ministry told Trend News Agency that this sum would be allocated in two tranches.
The Baku representative office of the World Bank said that a mission led by the World Bank's senior economist, Christian Petersen, and the bank's senior specialist on development of the private sector was in Baku at the moment. This is an extraordinary visit and its goal is to complete preparations for the allocation of the SAC-2 credit, as well as to become acquainted with the implementation of the project on Institutional Development and Technical Aid (IBTA-1).

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TELECOMMUNICATIONS

Western Azerbaijan linked up with TransAsian-European fibreoptic line

The Aztelecom production association has completed the connection of Mingacevir [northwestern Azerbaijan] to the western section of the TransAsian-European fibreoptic communication line [TAE] (Baku-Qazax-Georgian border) and republican communication traffic has already been launched, Aztelecom has told Turan News Agency.
Besides Mingacevir, the traffic is going through the Xaldan-Mingacevir section (10 km). The cable laying works will soon be completed on the Agdas-Saki section (70 km) and the section will be connected with the TAE communication line.
The project is being implemented by the consortium of the Azerbaijani company ABSA Insaat Ltd, Azarrabitatikinti [Azeri communication construction] and the Xazri technology and assembly agency. Construction is being carried out in the following directions - Agdas-Xaldan-Saki-Zaqatala-Balakan and Agdas-Xaldan-Mingacevir. The work includes the laying of Balakan-Zaqatala-Qax-Saki-Oguz-Mingacevir fibreoptic communication line with further connection to the TAE line.

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