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AZERBAIJAN


  
  

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 7,124 6,090 5,600 102
         
GNI per capita
 US $ 810 710 650 146
Ranking is given out of 208 nations - (data from the World Bank)

Books on Azerbaijan


 


Update No: 319- (26/07/07)

A vital player
A predominantly Muslim country of about 8 million people, Azerbaijan is part of a strategic energy corridor that allows oil from the Caspian region to be exported to the West without going through Iran or Russia. The US$4bn Baku-Tbilisi-Ceyhan pipeline that runs through Azerbaijan, Georgia and Turkey is capable of carrying one million barrels of oil a day more than 1,000 miles to the Mediterranean Sea.

Ilham Aliyev won the presidency in a disputed election in October 2003, replacing his father, Heydar A. Aliyev, who was hospitalised at the time and later died. Opponents criticized the power transfer as a quasi-monarchical succession, whereas supporters said it was the only way to guarantee stability in the former Soviet state.

Both the government and the opposition are basically secular and pro-Western, but some critics warn that if democratic forces are repressed, radical Islamic groups could become the main opposition.

Azeri political divide deepens
They would have much to complain about. Azerbaijan is a by-word for corruption and nepotism. The clan in charge, the Aliyevs, dominate its power structures. But 'Aliyev' is a common name in Azerbaijan, like Smith in the UK. Not all Aliyevs are part of the clan, which hails from the enclave of Nakhichevan, between Armenia and Iran.

The Azeri president, Ilham Aliyev, is targeting rivals in corruption trials, which could trigger a backlash. He wants his country to have a cleaner image. 

Farhad Aliyev (no relation), the former minister of economic development in this oil-rich country bordering the Caspian Sea, was arrested nearly two years ago and is now on trial on corruption charges. Some critics of the government, however, describe the prosecution of the former minister and 18 co-defendants as an effort by the president and associates to destroy rivals. They say that the president is fully aware of developments in the trial. "On the one hand, the regime is getting rid of its internal political opponents, and on the other hand we see a process of redistribution of wealth and property in favour of high-placed figures loyal to Ilham Aliyev," said Isa Gambar, head of the opposition Musavat Party.

Show trail continues
Authorities have not filed charges on the allegation that the minister was plotting a coup, and it is unclear whether they will. But Gambar said the corruption charges and counter-charges by the defendants that have come out in the trial already have hurt the government.

"Society knows quite well that the authorities are corrupt," he said. "But it is one thing when only opposition leaders talk about it and rank-and-file citizens discuss it among themselves. It is quite different when people who for a long time worked in the government … talk about those things." 

Farhad Aliyev's trial on charges of abuse of office, bribery, embezzlement of state property, smuggling and tax evasion began in May. His brother Rafig, who was arrested on the same day in October 2005, is among the co-defendants, facing charges of embezzlement and tax evasion. At the time of his arrest, Rafig Aliyev was head of Azpetrol, the country's largest private oil company. The government has seized its assets, estimated to be worth about US$250 million.

Testifying in his own behalf, Farhad Aliyev said authorities told him he could be released if he met a number of demands. They included admitting that he had lent money intended to be used in a coup and that he had plotted against the government, apologizing to the president, appealing for a pardon, and handing over US$100 million.

According to a transcript released by his legal team, the former minister said he rejected those demands.

Presidential administration head Ramiz Mehtiyev ridiculed the allegation that authorities had demanded US$100 million for his release. "His statement is groundless; that is fantasy," Mehtiyev said, according to the Azer-Press news agency.

The charge that has received the heaviest coverage in Azerbaijan's pro-government media is the allegation that Farhad Aliyev misappropriated "privatisation vouchers" worth about US$3.35 million. These vouchers were a kind of coupon distributed to citizens that could be resold to investors and then used in the purchase of state assets. He is also accused of distributing off-the-books supplemental salary payments to ministry employees.

Farhad Aliyev and his supporters charge that other senior officials were responsible for any misappropriation of vouchers. And they say that many government employees receive off-the-books salaries.

"The main motive is political," said Rauf Mirkadyrov, a commentator with the Zerkalo, or Mirror, newspaper. "The authorities don't want people to know how much money officials get. But the bulk of that extra money comes from corruption anyway…. Here we see a typical case of selective enforcement because any minister can go to prison for that crime."

Elton Guliyev, a lawyer for the ex-minister, said his client was targeted because of his efforts to fight corruption and move Azerbaijan politically closer to the West and away from Russia. 

Gambar, the opposition leader, said he did not believe that Farhad Aliyev and his co-defendants were blameless, but the government has been hurt by this trial and that of former Health Minister Ali Insanov, also arrested in October 2005 on charges that included plotting a coup. Tried separately, Insanov was convicted in April on corruption charges. 

"Everybody knows that the ministers put on trial are not the richest or the most corrupt figures in the government," Gambar said. "Now that they are arrested and tried, and state television shows their villas, seized ingots of gold and millions of euros and dollars, how do you think the population is supposed to take all that in? … Naturally this is all very damaging for the Aliyev regime."

The perpetual conundrum - Nagorno-Karabakh
Azerbaijan should have everything going for it. It has an abundance of oil and gas and a central position in the Caucasus between two geopolitical giants, Russia and Iran, while it is the natural gateway for Europeans to Central Asia. Baku before the First World War was the hub of a thriving regional economy, the Paris of the Caucasus. It should be so again.

But there is a snag - there has been no resolution of the Nagorno-Karabakh problem. 

A network of a civil society "Refugees and International Law" presenting the interests of 500,000 Armenian refugees from Azerbaijani SSR and Nakhijevan appealed to the President of Azerbaijan Ilham Aliyev for recognition of the independence of Nagorny Karabakh.

In their appeal, the refugees, in particular, say that in response to the political issues raised by the Armenian population, the authorities of the Azerbaijani SSR applied force, organizing pogroms, murders and deportation of Armenians from Sumgait, Kirovabad, Gazakh, Tovuz, Baku and other towns having large Armenian population.

However, local Armenians could not defend themselves. Afterwards, a second stage-expulsion of the autonomous Armenian population from the villages of Karabakh started. Then, the Azerbaijani authorities initiated large scale military actions against the Nagorno-Karabakh Republic that declared independence basing on the will of the population of Nagorno-Karabakh Autonomous Region, Shahumyan region and Getashen sub-region. Then, NKR was in a full blockade due to its enclave geographical position. The Azerbaijani Republic was defeated.

The borders of NKR and AR were changed as well. The Constitutional Act on the state independence of Azerbaijani SSR dated 18 October 1991 contains a refusal of Azerbaijan from legal succession of the Azerbaijan SSR. It not only means that Armenians expelled from the Azerbaijani SSR cannot rely on the AR authorities in protection of their rights, but also that AR can claim only part of the territories of Azerbaijani SSR, created as "union of Armenians and Muslims."

The atmosphere of armenophobia in AR, the memory of the tragic past makes impossible the return of Armenians refugees to Azerbaijani SSR and Nakhijevan. Taking into account the given realities, Armenian refugees recognize NKR as the only legal successor of Azerbaijani SSR, the refugees say. In their statement dated June 30, the refugees applied to NKR authorities for relevant conditions for their resettlement in the territories under the jurisdiction of NKR and transfer of these territories to them on the private property rights.

It will partially cover their direct material losses. As regards indirect losses, the refugees connect them with the privatisation in Azerbaijani Republic. They were illegally deprived of participation in this process. The refugees believe it fair if Azerbaijani authorities propose acceptable and adequate mechanisms of providing Armenian refugees with a share from the profits from recovery, processing, transportation and sale of oil and gas. And about the most important. Of course, they are for durable peace based on mutual protection and respect of interests. Recognition of NKR's independence by Azerbaijan will be the best guarantee of peace and prosperity in the region they say.

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ENERGY

Athens, Baku to ink energy deal


Azerbaijan attaches great importance to the signing of a quadrilateral agreement with Greece, Turkey and Italy and a bilateral agreement with Greece in the energy field, Azerbaijan's Economic Development Minister Heyder Babayev told reporters after meeting with Greek Development Minister Dimitris Sioufas in Athens. Babayev said he hopes the bilateral agreement may be discussed and signed during Sioufas' visit to Baku, the Hellenic News Agency reported.
Babayev praised Greece's constructive attitude in energy cooperation. "Greece is a gateway to Europe," he said. "We want to reach the European markets and we appreciate Greece's help."
The Greek minister suggested earlier the signing of the bilateral agreement with Azerbaijan to cover bilateral cooperation on oil and natural gas and he handed over to his Azeri counterpart a draft deal. Sioufas also recommended the signing of the quadrilateral agreement with Turkey and Italy clearing all details over the supply and distribution of natural gas through a Turkey-Greece-Italy natural gas pipeline.
The Greek-Turkish pipeline is expected to be inaugurated in the next few weeks, while the Greek-Italian end of the pipeline will enter construction in 2008. Sioufas noted that also pending is the signing of a Turkey-Greece-Italy agreement. The Greek minister noted that the government's energy policy was moving within the framework of a European policy to diversify sources, routes and forms of energy and noted that supplies of natural gas from Azerbaijan was a priority for the Greek-Italian pipeline. 
Sioufas informed Greek Prime Minister Costas Karamanlis on July 5 about cooperation with Azerbaijan as well as developments on the planned South Stream natural gas pipeline.
Azerbaijan has rich oil and gas reserves and its energy resources are seen as an alternative to Europe's increasing reliance on Russia.

Petroleum product exports down 20.5% in 6 months

Azeri state oil company, SOCAR, saw petroleum product exports plummet 20.5 per cent year-on-year in January-June to 1.688 million tonnes, including 364,686 tonnes in June, the company told Interfax News Agnecy.
SOCAR exported 710,591 tonnes of diesel, 197,854 tonnes of gasoline, 209,886 tonnes of aircraft fuel, 192,514 tonnes of fuel oil, 17,871 tonnes of bitumen and 14,578 tonnes of lubricants. The country's two oil refineries are capable of refining 22 million tonnes of crude per year.

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FOREIGN LOANS

World Bank loan to improve water supply systems

The World Bank said it has approved a 230 million Euro loan to Azerbaijan to improve the quality of water supply and sanitation services in at least twenty regional centres across the country, New Europe reported. 
The total cost of the project is 310 million Euro, including the institutional development of Azersu. The 230 million Euro loan is being provided for twenty years with a five-year grace period, the World Bank said in a statement on its website.
The Azeri government will provide 80 million Euro to the project. The project is made up of four components: investment in Azerbaijani regions (the World Bank share is 215 million Euro); a plan for the regional development of Greater Baku (3.5 million Euro); institutional development (10 million Euro) and implementation and management (1.5 million Euro). Azerbaijan has been a member of the World Bank since 1992.
The World Bank has provided Azerbaijan with loans totalling 1.025 billion Euro during that period to finance 36 projects. Azerbaijan will receive 1.026 billion Euro in loans from the World Bank in 2007-2010.

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TELECOMMUNICATIONS

Azerbaijan, Israel hold telecom forum in Baku

The First Telecommunication Forum was held on June 26th in Baku between the Israeli embassy and Azerbaijan Communications and Information Technologies Ministry. The Israeli ambassador, Arthur Lenk, said his country's companies are showing great interest in cooperation with Azerbaijan and they are planning to invest in the country, Interfax News Agency reported on June 27th.
"This is their first visit to Azerbaijan. Representatives of Israeli companies met yesterday at Azercell Telecom JV and AzTelecom. We want every Israeli firm to meet 10-12 Azeri companies," he noted. Lenk added that Azerbaijan has good potential as both customer and partner in ICT sector. He invited Azeri companies to participate in joint projects.
Azerbaijan Communications and Information Technologies Minister, Ali Abbasov, added that Azerbaijan has recently started to deepen relations with Israel and this forum will further bring closer businesspeople of the two nations. He noted that Israeli companies could also penetrate the regional market through wining a good name in Azerbaijan. 
The Azeri government should invest 250 million Euro to 300 million Euro in telecommunications sector within two years, Abbasov said. He added that some spheres of this sector need assistance for growth. "Thirty percent of telephone exchanges still remain analogue. We need digital and Internet television system. We can also cooperate with Israeli companies in this field," he noted.
"Azerbaijan's annual growth has not declined from 30-35 per cent during recent years. 12-15 in 100 people are fixed line customers, 42-45 in 100 people are mobile phone users, six-seven in 100 people have computers and 10 per cent of population are internet users," he noted. Abbasov added that Azerbaijan should also step up activities in an e-Government establishment project.

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