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  AZERBAIJAN

REPUBLICAN REFERENCE

Area (sq.km)
86,600

Population
7,771,092

Principal ethnic
groups

Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3

Capital
Baku

Currency
Azeri Manat

President
Heidar Aliyev

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Background:
Azerbaijan - a nation of Turkic Muslims - has been an independent republic since the collapse of the Soviet Union in 1991. Despite a cease-fire, in place since 1994, Azerbaijan has yet to resolve its conflict with Armenia over the Azerbaijani Nagorno-Karabakh enclave (largely Armenian populated). Azerbaijan has lost almost 20% of its territory and must support some 750,000 refugees and internally displaced persons (IDPs) as a result of the conflict. Corruption is ubiquitous and the promise of widespread wealth from Azerbaijan's undeveloped petroleum resources remains largely unfulfilled.

Update No: 256 - (23/04/02)

The Azeris are experiencing a real energy boom, as oil and now gas flows in abundance, with foreign help to the fore. But this is not assisting the great bulk of the population, only the clique in charge around President Haidar Alivey and his son and would-be successor, Ilham, vice-president of the national energy company, SOCAR.

Morally bankrupt regime
Nepotism and corruption are the absolute norm. The general population must feel great resentment with the venal elite, who are ensuring that instead of trickle-down effects there are trickle-out effects into foreign financial havens.
The Aliyev clan hail from Nakhichevan, the Azeri enclave between Armenia and Turkey. They are seen as provincials and are much despised by the majority; the regime has no serious legitimacy.

End-game scenario
Some of the oil revenues are being used on welfare measures of course, but not enough to stem mounting disaffection. Once Aliyev goes (he is 76 and has health problems) a social explosion is perfectly possible. Ilham and his like might well have to decamp to where they put the money. Moderate Islamicists could then come to power, but more likely another political family from the traditional power broking clans of Baku, that have been impatiently waiting for their turn at the trough.

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BANKING

US company to set up automated clearing system for Azeri National Bank


The US company, Hewlett-Packard, has won a tender held by the Azerbaijani National Bank to set up an automated clearing system (ACS) for instalment transactions. MPA News Agency learnt from the National Bank on 28th March that the first deputy chairman of the bank's board, Alim Quliyev, and the director-general of the European department of Hewlett-Packard, Hilmar Lawrence, had signed an agreement on setting up a clearing system for instalment transactions. 
Under the terms of the document, the Swiss company, CMA, will also participate in the project by providing software support. A working group has been set up in the National Bank to implement the project. Aclearing system on instalment transactions will be created and put into operation by the end of November.

PricewaterhouseCoopers wins tender to audit Azeri National Bank

The winner of the tender to carry out an audit of the financial-economic activities of the National Bank of Azerbaijan [NBA] in 2001 in line with international standards of accounting procedures, is the Dutch company PricewaterhouseCoopers, which has been endorsed by the country's president. The NBA has invited the company to sign a contract, Sarq News Agency has reported .
The applications for the tender, opened on 7th December, were submitted by companies included in the "big five" - the American audit company Arthur
Andersen, the British consulting company KPMG and France's Deloitte Touche. Companies, which had a licence to carry out audits in Azerbaijani and work experience in central banks, had the right to participate in the tender. Apart from other documents, the participants in the tender had to provide a bank statement about their financial situation during the last year.
The winner of the tender is to start work on the day the contract is signed and the auditing should be completed in a period of six weeks.

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ENERGY

About US$200m to be invested in Baku-Ceyhan oil pipeline, Azeri oil chief


By mid 2002 some US$200m will be invested in the Baku-Ceyhan oil pipeline's planning and engineering work, Turan News Agency has reported.
The president of the State Oil Company of the Azerbaijani Republic [SOCAR], Natiq Aliyev, has told journalists that the funds will be invested in preliminary engineering works (about US$25m) and in the feasibility study of the main export pipeline (more than US$150m).
Moreover, before the sanctioning of its construction (end of June 2002), a contractor will be chosen and the main orders will be placed for purchasing the materials and equipment necessary for the construction of the pipeline. "This fact already shows that the shareholders believe in the success of the project," the president of SOCAR said.
He noted that to date Azerbaijan had produced over 19m tonnes of oil from the Ciraq platform alone. He said that the consortium would have enough oil for the Baku-Tbilisi-Ceyhan oil pipeline once oil extraction begins within the Phase-1 project.

Exxon quits Azeri oil field

The successor to Exxon Mobil, Exxon Azerbaijan Operating Company, has quitted the Oguz oil field because the exploration well it drilled was empty, Space TV in Baku has reported. The president of the State Oil Company of the Azerbaijani Republic [SOCAR], Natiq Aliyev, indirectly justified Exxon's decision in his interview with Space TV. Exxon will cease drilling at the Oguz structure because it is small, both in size and in oil reserves, Aliyev said.
Aliyev continued: "In my opinion, it is possible that Exxon will decide to quit the Oguz structure altogether. Because if the first exploration well did not find anything then this means that a part of the structure lacks oil and gas. Reserves in the second part of the structure will probably prove insufficient for them."
Geological prospecting implies risk and can be either successful or not, Aliyev said. But drilling one or two wells does not prove that there are no reserves in a structure. If a foreign company quits an oil structure that does not mean that the structure does not interest SOCAR. Each exploration well drilled for geological prospecting is important for Azerbaijan, Aliyev said.
Exxon will not pay compensation to SOCAR for abandoning the Oguz structure because the agreement signed by the two companies stipulates Exxon's responsibility to drill only one well. This is what Exxon did.

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FINANCIAL NEWS

Azeri economy ministry draws up regional development plan

The Ministry of Economic Development has drawn up a draft plan for the economic development of the country's regions for 2002-05 in accordance with a presidential decree on applying the law "On the 2002 state budget." The press service of the ministry told Sarq News Agency that the plan envisages a comprehensive development of the country's regions, including the mountainous and border districts, and the Naxcivan Autonomous Republic.
According to the plan, the country is divided into eight economic districts (Naxcivan, Abseron, Aran, Quba-Xacmaz, Ganca-Qazax, Lankaran-Astara, Saki-Zaqatala and Sirvan). It envisages the implementation of measures to increase the employment rate, establish privileged tariffs for electricity, provide tax holidays and allocate privileged credits to develop production. This document is now being revised in the light of observations and proposals from departments.

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