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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: 272 - (29/08/03)
Political crisis
On August 4th the Azeri parliament appointed a new premier, the son of the ailing president no less. Some suspect that the president, 80-year old Haidar Aliyev, may actually be dead. He went to a Turkish hospital for treatment in July and has not been heard of since.
He has had a series of ailments before and been hospitalised in the US. Turkey and the US are Azerbaijan's closest allies. Both are keen to see some of the action as the Caspian Sea oil and natural gas riches are further tapped in the years ahead. Azerbaijan has an estimated 31bn barrels of oil and perhaps an equivalent amount of gas, if the recent finds at Shah Deniz in the Caspian are anything to go by.
Ilham Aliyev, the son and likely successor of the president, was given a unanimous vote by parliament. His startling elevation means that he is virtually certain to take over the top job soon, probably in October when presidential elections loom.
Opposition cries foul
The opposition forces, a highly beleaguered bunch in Azerbaijan, have called the move a de facto coup, which of course it is. As an astute Russian analyst, Sergei Markov of the Institute of Political Studies in Moscow, puts it concerning, not just Azerbaijan, but all the FSU states, except the Baltic ones: " These countries have failed to create stable politics based on institutions, so they rely on personalities." He went on:" Politics is clan-based in Azerbaijan. Civil society does not exist. People see the State as a big family and want a father at its head."
In Azerbaijan the dominant clan hails from Nakhichevan, the Azeri enclave between Armenia and Turkey. Proximity to Turkey seems to be the key to success in Azerbaijan, not just metaphorically but even physically, at least in origin.
Leaders from Nakhichevan dominated even in the years of Islamicist rule, 1991-93, when the war with Armenia over Nagorno-Karabakh, the Armenian enclave in Azerbaijan, was still raging. Turkish support has always been seen as vital to obtaining a better result by diplomacy then the Azeris were able to achieve on the battlefield. Some 15-20% of Azeri territory remains in Armenian hands. In July there was a renewed outbreak of violence on the border, leaving up to seven dead.
The future ahead
Ilham is very likely to continue his father's pro- Western policy. Even in the old days in the 1980s when Aliyev pere was then president, and a member of the Soviet politburo to boot, he was not that hostile to the West. When a British journalist was in Baku in 1986 he was surprised to find how full of admiration the leading Azeri politicians were of Margaret Thatcher. He said " 'but you realise that she is not a communist!' Well, came the lightning response, 'neither are we.' "
Azeri leaders need to be on good terms with Western frontrunners, notably BP, the leader of the Caspian Sea consortium on which so much depends. Oil accounts for about 90% of Azeri exports, almost 90% of foreign direct investment and 40% of state budget revenues.
As an Azeri analyst at the Economist Intelligence Unit in London, Leila Butt, says: "Oil is the backbone of the Azeri economy. Oil companies would be wary of extending investments in Nagorno-Karabakh if it erupted into war again."
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ENERGY
Baku-Ceyhan pipeline company allocates US$6m for Azeri community projects
The BTC Co has allocated US$6m for the implementation of community development programmes along the Azerbaijani sector of the route of the Baku-Tbilisi-Ceyhan [oil export] pipeline, Turan News Agency has reported.
These projects are being implemented through the international organizations CHF, Save the Children, IRC, etc.
First pipes installed on Azerbaijan's Baku-Ceyhan pipeline
BP has started laying and installing the first pipes of the Baku-Tbilisi-Ceyhan pipeline [BTC] at the Sanqacal terminal near Baku, ANS TV has reported , quoting a company report has said.
As of 31st July, 288 units of pipes have been brought to Azerbaijan. The pipes will be used to lay the Azerbaijani section of the pipeline. A 12-km section of the pipeline has been completed. At the same time, the construction of pumping stations is under way. The construction of the pipeline in Azerbaijan is being implemented by Greece's CCIC company.
A US-French joint venture is overseeing the construction of two other pumping stations. In all, 15 per cent of all the work on the BTC pipeline has been completed, the report said.
A group of shareholders in BTC Co., the company which will build and operate the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, have agreed to lend a total of US$200m to the State Oil Company of the Azerbaijani Republic (SOCAR) to finance the pipeline's construction, a spokesman for BP Azerbaijan told Interfax News Agency.
BP Azerbaijan did not specify the details of the agreement, saying only that it meant the project could go ahead without any delays.
SOCAR told Interfax that BTC Co. shareholders BP, Unocal, Statoil, TPAO, Itochu, INPEX and Amerada Hess would provide the capital. Three other shareholders, namely ENI, TotalFinaElf and ConocoPhillips, declined to lend.
SOCAR said it would pay the creditors US$4m interest. The loans themselves would be paid off after credits from international financial organizations have been received, in November this year.
The pipeline project will cost about US$2.95bn all told. BTC shareholders are due to provide 30 per cent of the funds and the rest will be borrowed. The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are thinking about issuing US$150m in loans each. Private banks, export and insurance agencies and other institutions will provide the rest. The IFC and EBRD will have to hold public hearings on the BTC project by 12th October, following calls by NGOs. Then, a decision to release the finance can be expected.
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FOREIGN ECONOMIC RELATIONS
Azeri tax minister, visiting Iranian customs chief discuss commercial ties
A meeting has been held between the Azerbaijani Tax Minister, Fazil Mammadov, and an official Iranian delegation led by the director-general of the Customs Administration, Mas'ud Karbasian, MPA News Agency has reported. The sides discussed the development of commercial and economic ties, particularly border and customs trade between the Islamic Republic of Iran and the Azerbaijani Republic, MPA reported. The head of the Iranian Customs Administration noted that businessmen from his country wished to set up an association or an industrial chamber in Azerbaijan.
Minister Mammadov stressed that he was positive about the guest's proposal. The minister stressed that partnership agreements might be signed with a similar organization of Iranian businessmen.
Azeri government, Saudi fund sign US$9.5m credit agreement
The Saudi Fund for Development and the Azerbaijani government on 19th August signed an agreement on the allocation of a privileged credit worth US$9.5m, ANS TV has reported. Azerbaijani Deputy Prime Minister Abid Sarifov and the vice-chairman and managing director of the Saudi Fund for Development, Yousef bin Ibrahim Al-Bassam, signed the document.
According to the agreement, the credit allocated for 20 years will be spent on the construction of five modern education facilities in
Baku.
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PRIVATISATION
Azerbaijan privatises Baku steelworks
The Azerbaijani Ministry of Economic Development and the Birlik small enterprise have signed an agreement on the purchase and sale of shares in the Baku steelworks.
Under the terms of the contract, Birlik is to transfer 1.8bn mantas [IUS$367,346] to the state budget and 30,000 vouchers to the department for privatisation and management of state property for the purchase of the works. Moreover, 300m manats [US$61,224] will be transferred to the steelworks' accounts to carry out the initial work envisaged in the investment programme.
The ministry has told Media-Press News Agency that the investment programme of the new owner is to be implemented in two years and four stages during which
10bn manats [overUS$2m] will be spent on the restoration and upgrade of the works, the purchase of new equipment and introduction of new technology.
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TELECOMMUNICATIONS
Baku-Moscow fibre-optic telecom link commissioned
A Baku-Derbent-Moscow fibre-topic communications cable has been commissioned within the Trans-Asia-Europe project, Turan News Agency has reported.
A Communications Ministry press release says that the communications line was opened upon the completion and testing by Aztelekom and Rostelekom of the main and back-up sections of the communications cable on the territory of the two states (Baku-Derbent), as well as two-megabit communications channels (40 channels in total).
The length of the Azerbaijani section - Siyazan-Davaci-Xacmaz-Quba-Qusar up to the border with Russia - is over 220 km.
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