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AZERBAIJAN


  
  

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 6,090 5,600 5,300 102
         
GNI per capita
 US $ 710 650 600 145
Ranking is given out of 208 nations - (data from the World Bank)

Books on Azerbaijan

REPUBLICAN REFERENCE

Area (sq.km)
86,600

Population
7,830,764

Principal ethnic
groups
Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3

Capital
Baku

Currency
Azeri Manat

President
Ilham Aliyev
 

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: 282- (30/06/04)

Wobbly power-base?
Things are getting sticky in Baku, with rumblings of dissension within the ranks of the regime itself. The new president since October, Ilham Akiyev, is nothing like so authoritative a figure as his father and predecessor, Haidar Aliyev. 
There are older members of the Nakichevan clan running the country who must resent the elevation of the young cub, renowned for his hell-raising playboy style of life, leaving a trail of bankrupt casinos behind him. His father had far more gravitas, albeit that conferred by decades in the Soviet Politburo as a crony of Brezhnev's.
Ilham then had the ill fortune to see Shevardnadze, his father's chum, booted out by the Rose Revolution in Georgia, only a month after his brazenly rigged election in Azerbaijan. Mikhail Saakashvili, Shevardnadze's successor, is a fresh figure, with whom comparison is embarrassing. He has the legitimacy of being the leader of a democratic revolution and of a glittering career in the West behind him, not the nepotistic ascent of a clan member.

Mayor of Baku in the limelight 
The focus of the power struggle under way is the mayor of Baku, Hacibala Abutalibov, who is a member of the clan, a Nakichevani. A former deputy premier, he was appointed to the key post of mayor of the capital city in January 2001, indicating a new broom was needed for the new millennium.
His mayoralty, however, has not been a great success, despite, or rather because, it has coincided with a breakneck oil boom, with GDP growing at 10% per annum in the 2000s. The Azeri official newspaper has criticised him for failing to regulate the city's expansion and to improve communal services, all in desperate need of regeneration as a construction boom proceeds parallel to the energy one. From such a source, it seems he is being set-up to be the fall-guy.
Other criticisms have followed. The mayor has been blamed for building fountains during a water shortage and for closing down the city's commercial kiosks, a particularly foolish move that has swollen the already large army of unemployed.
An oil boom, particularly offshore, does not necessarily generate jobs elsewhere in the economy, there is massive unemployment, while it breeds resentment at the inevitable disparity of wealth that develops, particularly wide in the case of Azerbaijan. The population do not benefit from 'trickle-down' effects, but deeply resent the 'trickle-out' ones benefiting the elite.
The scale of corruption, cronyism and nepotism is gargantuan in Azerbaijan and everybody there knows it. A powder keg has long been building up, which only needs a match to ignite it. Hence why the regime is trying to clean up its act in the most visible place, the capital, Abutalibov had better pull his socks up or he will have to quit.

Inner-party struggle
In the good old days of communism there was often an inner-party struggle afoot, but it was always conducted discreetly behind closed doors. Haidar Aliyev carried on that tradition sedulously. There would have been no controversy such as the present one on his watch.
But his son has been quite unable to stop the feuding from going public. Eldar Namazov, a close aide to the father in the 1980s, told Jean-Christophe Peuch, correspondent of Eurasianet, that the political succession has brought about a major change in the conduct of domestic politics. 
"That at the top of the executive different groups are vying for influence has long been an open secret. These groups do exist, and in this respect Azerbaijan is no exception. The problem is that Heydar Aliyev, who was a shrewd politician, was able to arbiter these conflicting interests. Never before had this infighting become so obvious. In any case, it had never made the headlines of newspapers or was discussed on television. But the situation has changed since the last elections. These groups are now openly trading accusations, and the problem has become much more acute than it used to be under Heydar Aliyev," Namazov said. 
Since the first criticisms targeting the mayor appeared in the media, Baku residents have been witness to a string of campaigns aimed at vilifying a number of government officials, including Education Minister Misir Mardanov, Transport Minister Ziya Mammadov, Health Minister Ali Insanov, and Customs State Committee Chairman Kamaletdin Heydarov. 
The current dispute once again is pitting members of the Nakichevani clan against their traditional Yeraz rivals. However, "blood connection" is no longer the decisive factor. Sahin Abbasov is deputy editor in chief of the Baku-based independent "Ekho" newspaper. He says political clans are no longer solely organized along regional relationships. "The situation is much more intricate today. Regional belonging is no longer the driving force behind these groups. Different sub-groups with different interests have formed within these regional groups, and today it is more financial interests that link people together," Abbasov said.
It was generally believed that, after the election, Aliyev would introduce a new team that would progressively evict the presidential "old guard." Yet, with the exception of Foreign Minister Vilayat Quliyev and a few middle-ranking officials, the 42-year-old Azerbaijani leader has kept most of his father's ministers and advisers. He even reappointed former Prime Minister Artur Rasuzade -- whom he had replaced a few months earlier at that position -- to head the government. 
Former presidential aide Namazov, who heads a nongovernmental organization known as Civic Forum, says Aliyev is now paying the price for failing to bring in new blood. "Everyone was expecting that after the October elections Ilham Aliyev would launch a few purges and that all of those officials who were tainted with corruption and bribe-taking, or those who were holding very conservative political views and opposing democratic values, would be progressively replaced with younger reformist cadres. Unfortunately, [Ilham Aliyev's] cadre policy is the same as that of the previous president. These groups are now fighting each other to preserve their corporatist interests, and this poses a serious problem to Azerbaijan," Namazov said.
Among the factors that have contributed to the present situation, political analysts cite Ilham Aliyev's lack of experience in pulling the strings of shadow politics. They also point to the vacuum left by Heydar Aliyev's death, which brought an end to the apparent cohesiveness of the ruling team needed to ensure a smooth political transition. But these are not the only reasons. 

Before the ballot, most experts predicted the opposition would pay a high political price for failing to unite behind a single candidate. The crushing defeat suffered by Musavat Party leader Isa Qambar and the police crackdown that followed the disputed polls profoundly modified Azerbaijan's political landscape. Today, the opposition is a mere shadow of its former self and, despite Aliyev's offers of dialogue, remains under constant threat of renewed harassment. 
"Ekho" deputy editor in chief Abbasov believes Aliyev has fallen victim to his own success against the opposition. "Before the elections, there was an opposition. One can argue whether this opposition was strong or weak, but it had a certain influence. After the elections, the opposition has been wiped out and the political struggle that before pitted the party in power against the opposition has moved and is now limited to the ruling elite," Abbasov says. 
Political infighting has reached such a scale as to become a potential embarrassment to the Azerbaijani leader. Aliyev recently entered the fray, warning he would not let himself be influenced by "politically motivated" newspaper articles. Whether he will be able to stop the political infighting and restore control over his father's team remains uncertain, however. 
"One thing is clear," Abbasov says. "The system that was elaborated by Heydar Aliyev is starting to misfire. Will this have serious consequences? It is too early to say. In any case, this 'war of compromising materials' that is splashing across the front pages of newspapers shows that the system is misfiring and that something needs to be done. Everyone expects the president to do something about it and try to reassert his control, either by structurally changing the system, or by appointing new people." 
There are however no alternative leaders on the horizon that appear likely to grasp the nettle of corruption which is at the root of this nation's problems. On the contrary the political clans are primarily motivated by their hunger for power, which in this corrupt but rich state equates with massive personal wealth for the real power holders. 

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ENERGY

Output stabilisation to come

The State oil company of Azerbaijan (SOCAR) has worked out the development programme for 2004-2008, which has stimulated the stabilisation of oil production, company President Natik Aliyev told the state information agency of Azerbaijan on May 18th. "Stabilisation means keeping the production capacity at a current level - 8.8m tonnes per year," he said. The reason for reduction of the production level on SOCAR's deposits is obvious. In his opinion, the task is to halt reduction by using the reserves of the deposit. He did not disclose the cost of the programme. Also, the development of some prospective structures in the Caspian Sea is not stipulated under the programme, New Europe reported.

SOCAR opens core library in Baku

Azerbaijani state oil concern SOCAR officially opened a core library at the joint venture AzLab on May 15th. "The opening of the core library is an important step for the Azerbaijani oil sector. It will make it possible to store up to 15,000 metres of core from various fields. The absence of such a facility has made it difficult to store core. Now it will be possible to study the characteristics of various fields based on core samples received during well drilling," AzLab Director, Rafiga Guseinzade, said, Interfax News Agency reported.
Azneft chief geologist, Akif Narimanov, said that over 1.3m metres of core have been extracted since oil production began in Azerbaijan, but only about 2,000 metres was retained.

Azeroenergy, UES up cooperation

Russia's United Energy System (UES) and Azeri state-owned Azeroenergy have signed a memorandum on cooperation in the energy sector. UES CEO Anatoly Chubais and Azeroenergy President Etibar Pirverdiyev signed the document, Interfax News Agency reported recently. 
The document cites that both sides are interested in long-term cooperation on providing energy. Russia and Azerbaijan are ready to build electric power grids in the two countries in order to achieve this. In addition, the development plan for power grids in Russia and Azerbaijan will consider ideas to transport Russian electrical energy through other countries. The document states that, in the near future, the sides will determine "technical possibilities for transporting energy to other countries." A representative of UES said that this refers, above all, to exporting Russian energy to Iran. If recommendations and partnership terms are formulated, this memorandum will make it possible to have specific agreements signed between the participants.

Major Azeri oil pipeline completed by 65 per cent

The Baku-Tbilisi-Ceyhan [BTC] oil pipeline is 65% complete and some US$2bn has been spent on the project, the BTC Co (which is the operator of the construction and exploitation of the BTC) executive director, Michael Townsend, has said speaking at the 11th Caspian Oil and Gas-2004 International Exhibition and Conference, Turan News Agency reported.
Of the overall 1,762km of the pipeline, 950km, or 54 per cent, have been welded, including 327km (74 per cent) in Azerbaijan, 177km (71 per cent) in Georgia and 446km (41 per cent) in Turkey. 
Whereas 14,000 people were initially expected to be employed at the peak of the construction, some 17,000 have been recruited and another 1,000 will join them in coming months.
The construction will be complete by early 2005, the pipeline and terminal in Ceyhan will be filled with oil over a period of five or six months and the first tanker will be dispatched at the beginning of the second half of 2005.
One million barrels of oil will be transported via the BTC per day, which will account for 1.3 per cent of the worldwide oil supplies, and for 25 per cent of the increase in oil consumption.

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FOREIGN ECONOMIC RELATIONS

Azeri-Russian business chamber, Russian official discuss economic ties


Members of the Azerbaijani-Russian chamber of business cooperation met the Russian deputy foreign minister and the Russian president's special envoy for Caspian issues, Viktor Kalyuzhnyy, at the Russian embassy in Azerbaijan recently, Bilik Dunyasi News Agency reported.
The meeting discussed issues of economic cooperation and conditions for developing business and the investment climate in Azerbaijan. 
The Russian diplomat was particularly interested in the effective development of Russian-Azerbaijani trade cooperation, the expansion of mutually beneficial relations in business circles and in the prospects for the further expansion of the business of Azerbaijani-Russian joint ventures.

Georgia, Azerbaijan sign accord on expansion of economic ties

A protocol on expanding economic cooperation was signed at a session of the Azerbaijani-Georgian intergovernmental commission in Tbilisi on June11th. The co-chairmen of the commission, Georgian Prime Minister, Zurab Zhvania, and Azerbaijani Deputy Prime Minister, Abbas Abbasov, signed the document, Trend News Agency reported.
Zhvania pointed out the importance at this session of the official visit by Azerbaijani President, Ilham Aliyev, to Georgia. "Georgia and Azerbaijan are strategic partners. Therefore, the main task is to strengthen this partnership through specific agreements," Zhvania said.
Amongst other things, the prime minister emphasized the "need in the next 18 months to form, if not a single economic space between Georgia and Azerbaijan, then a space that is as harmonious as possible." He said, "The potential for cooperation between the two countries is much greater than actual cooperation today."
Abbasov said that Azerbaijan and Georgia are interdependent countries and Baku pays as much attention as Tbilisi to bilateral relations.

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FOREIGN LOANS

World Bank endorses US$15m credit for Azeri infrastructure

The World Bank has approved a US$15m credit to implement an agricultural investment project in Azerbaijan. It envisages developing village infrastructure and is directed at backing the state programme for the social and economic development of the regions, Turan News Agency reported.
The agricultural investment project aims to resolve infrastructure issues in farming districts by providing households and rural communities with micro-project investments. The project will help build the necessary infrastructure for the economic development and to raise the standards of living in Azerbaijani districts, the head of the authors of the project, Julian Lampietti, said. Moreover, the regional population will acquire skills to develop and implement local infrastructure projects.
The project of agricultural investments consists of three components. The financial component envisages the allocation of grants to realize some 350-450 infrastructure micro-projects selected on the basis of priority wishes of the rural communities. The second component will consist of training programmes and rendering other technical assistance to broaden the skills of the project participants in terms of implementation, financial management, monitoring and appraisal of infrastructure micro-projects. The management component envisages financing implementation and administration of the project. The project will begin in three economic zones: Sirvan [central Azerbaijan], Mugan-Salyan [southeastern Azerbaijan] and Naxcivan [Azerbaijan's exclave].
The credit is given for 35 years with a 10 year grace period. In all, since becoming a World Bank member in 1992, Azerbaijan has received more than US$600m for the implementation of 21 projects.

European Bank gives Azeris US$41m for road construction

The board of directors of the European Bank for Reconstruction and Development (EBRD) has endorsed the funding of the construction of a Qazi-Mahammad-Kurdamir road, a source in the Azerbaijani government said, Trend News Agency reported.
The EBRD will allocate a US$41m credit for the project. The 15-year credit will be given under state guarantees with an interest rate of LIBOR (London Interbank Offered Rate) plus one per cent.
It is the first time that within the framework of its cooperation with Azerbaijan, the EBRD intends to fund the entire project, not 85 per cent of its cost as the bank usually does. The length of the Qazi-Mahammad-Kurdamir road is 80 km.

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TELECOMMUNICATIONS

Azerbaijan to sell its stake in Azercell 


The Azerbaijan government expects to sell its 36.4% stake in mobile phone operator Azercell by September 2004, the country's Economic Development Minister, Farhad Aliyev, said, Interfax News Agency reported. 
"A financial consultant is currently evaluating the market value of Azercell, and if this is completed in the near future, the company will be privatised before September 2004," Aliyev said. Otherwise, the sale of the stake will be postponed until 2005, he added. 
The preliminary estimated market value of Azercell is US$400m - US$500m, Telecommunications Minister, Ali Abbasov, said. A consortium consisting of CA IB Corporate Finance Beratungs Gmbh and Omni (Austria and the United States) is carrying out the valuation of Azercell. 
The founders of Azercell, which was set up in 1996, are Dutch Fintur Holding (63.6%) and Azerbaijan's Ministry of Communications & Information. Azercell has more than 1 million subscribers, while the total number of cellular subscribers in Azerbaijan exceeds 1.2 million.

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