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Key Economic Data 
  2002 2001 2000 Ranking(2002)
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)


Area (


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


Azeri Manat

Ilham Aliyev


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: 278- (01/03/04)

New president
The election of the new president of Azerbaijan has given nepotism a new lease of life. For Ilham Aliyev is the son of his recently deceased predecessor, Gaidar Aliyev. Not that nepotism really needed a new birth in the Caucusus republic. It is part of the way of life.
This fact is what gives Aliyev's rule a semblance of legitimacy, despite the patently rigged character of the presidential election in October. He is really reigning as well as ruling, a true dynast.
The dynasty hails from Nakichevan, the enclave to the west of Azerbaijan proper, between Turkey and Armenia. There is a suitable symbolism here, for the two Aliyevs have been pulling Armenia to the West.

The West beckons
This was shown by Aliyev's choice of whom to visit first, Russia or a Western country. He chose France, where he went in January, going to Moscow only in February.
The West has effusively welcomed his success in the election; the opposite to its reaction to the manifestly flawed election of Shevardnadze in Georgia last autumn, annulled in November by the Rose Revolution. But then Azerbaijan has oil and a long tradition of autocracy, while Georgia is a Christian country after all. 
Anyway, as a certain Richard Cheney, former CEO of Halliburton private security firm, which stands to reap profits from Caspian pipeline deals, puts it "The good Lord didn't see fit to put oil and gas only where there are democratically elected regimes friendly to the United States. Occasionally we have to operate in places where, all things considered, one would not normally choose to go. But, we go where the business is."
On October 30th the EU representative for the Caucusus, Heikki Talvitie, announced that "the EU will be working with Ilham Aliyev." That it certainly will be.

Government policies to remain the same
At his inauguration last autumn Ilham vowed to keep existing policies in place, while promising to devote more resources to reducing poverty and addressing other social ills. The government has been reporting GDP growth rates of 10% annually. The president promised that 60% of the budget would be spent on social services and the like. The eradication of poverty is a prime goal, he said. 
Aliyev said the continued development of the country's oil and gas sector would serve as the cornerstone of overall economic growth. He pledged that oil profits, invested by the State Oil Fund, would "effectively serve the Azerbaijani people."
"The stability and public and political order that have reigned in Azerbaijan in recent years have enabled us to take great steps in the sphere of attracting investment," Aliyev said. "It is the duty of all of us to preserve, retain and strengthen this stability in Azerbaijan. No one can disrupt stability ... and if someone tries to do so, we will not allow this to happen." 
Dictatorship will remain the name of the game in other words. No surprises there.

The nature of the political 'dialogue'
The sting, indeed, was in the tail in Aliyev's speech. At first he had indicated that he was prepared for a dialogue with the opposition. Those who allege massive electoral fraud find that it becomes a monologue, often conducted in prison. Even for those who are more circumspect the 'dialogue' has a strange character: "The establishment of solidarity between political parties is necessary, " said the new president. There is a word for this in the lexicon of politics - authoritarianism.
It is abundantly clear that any dialogue would occur on terms set by the government. Officials have blamed opposition activists, especially those belonging to the Musavat Party, for attempting to foment unrest during the aftermath of the election on October 15th, a failing which has led to hundreds of arrests of loyalists to Musavat, the main opposition grouping. Since mid-October, officials have pressured Musavat loyalists, arresting hundreds. According to various media reports, up to 100 people have been fired from state jobs because of their affiliation with opposition political parties. 

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Azerbaijan bank issues manat bond

Azerbaijan, the former Soviet republic situated on the Caspian Sea, recently joined the ranks of emerging market countries with nascent capital markets reported The Financial Times reported.
Unibank, a commercial bank part-owned by the European Bank of Reconstruction and Development (EBRD), became the first company to issue corporate bonds denominated in manats, the Azerbaijani currency.
Unibank's 5bn manat (US$1m) six-month issue was priced to yield 12% compared with 7.5% for equivalent government treasury bills.
Until now, the only form of financing for Azerbaijani companies has been the domestic loan market.
Salim Kriman, head of the Baku Stock Exchange, said about the new bond: "The size is, of course, not very big but this is just the first issue, and we hope there will soon be others. It is Azerbaijan's first transparent issue of corporate bonds - we've prepared the prospectus according to international standards."
The issue becomes only the second listed security on the Baku Stock Exchange, following a US$100m bond issued by Azer Yapi Market, the retailer. No equities are yet listed on the exchange, because privatisation has been slow to take off and corporate transparency remains insufficient for initial public offerings.
Bids for Unibank's domestic bonds amounted to twice the amount offered, with domestic investors taking the bulk of the issue. Russian investors bought 5% of the deal.
The issue is part of the project funded by the European Union to advise the State Securities Commission of Azerbaijan on the development of a local securities market. Unibank was advised by Denholm Hall, a UK company specialising in securities markets in eastern Europe and the CIS.
Azerbaijan is an energy-rich but poor country, which has struggled to develop the economy following the collapse of the Soviet Union in 1991. However, high oil prices helped gross domestic product grow by 10% last year, with a rise of 9% expected for 2004.

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Azerbaijan plans to start building gas pipeline in third quarter of 2004

The construction of the Baku-Tbilisi-Erzurum gas pipeline is expected to start at the end of the third quarter this year, after the construction of the Azerbaijani part of Baku-Tbilisi-Ceyhan (BTC) is completed, the president of the Azerbaijani state oil and gas company SOCAR, Natiq Aliyev, said, Prime-TASS News Agency reported
The construction of the 960-kilometre pipeline, linking the Azerbaijani capital of Baku to Turkey's northeastern city of Erzurum via the Georgian capital of Tbilisi, is expected to cost US$900m. The construction will be carried out in Azerbaijan by Greece's CCIC, in Georgia by France-US Spie Capaq/Petrofac, and in Turkey by Turkey's Botas, which are all engaged in the construction of BTC.
The Baku-Tbilisi-Erzurum pipeline is expected to be launched in September 2006.
The construction of the pipeline is part of the project to develop the Sah Daniz natural gas field on the shelf of the Caspian Sea, whose reserves are estimated at about 1,000bn cu. m of gas. Gas supplies to Turkey via the pipeline are planned at 2.2bn cu. m a year during the initial phase with a possible increase to 6.6bn cu. m later.
BP Azerbaijan is the project's technical operator and supervises the construction and utilization of the pipeline, while Norway's Statoil is its commercial operator, responsible for the development of the new company's business.
BP holds a 25.5 per cent stake in the project and SOCAR has a 10 per cent stake.

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Baku-Ceyhan credit agreement to be signed soon

The official signing of a credit agreement for the Baku-Tbilisi-Ceyhan pipeline project is to take place in Baku, a source in BP-Azerbaijan said, Interfax News Agency reported.
"The heads of companies participating in BTC Co and representatives from international financial organisations are expected to arrive in Baku to participate in the signing of the document," the source said. One agreement will be signed with all creditors - BTC Co shareholders and the governments of Azerbaijan, Georgia and Turkey, he said.
The total amount of funds attracted for the project, including interest, will amount to US$2.5bn, with a total project cost of US$3.6bn, the source said. Direct construction costs will amount to US$2.95bn, of which 30% will be invested by shareholders and 70% will be received as credits. Other expenditure includes the acquisition of 10m barrels of oil to fill the pipeline - about US$250m - and servicing of credits.
The construction of the Georgian section of the Baku-Tbilisi-Ceyhan pipeline is proceeding according to schedule, the project operator said on January 9th.
Oil will start flowing through the pipeline early next year, as planned, David Woodward, president of BP Azerbaijan company, the Baku-Tbilisi-Ceyhan project operator, told reporters in Tbilisi after meeting with Georgian Acting President Nino Burjanadze. Work on the Georgian section stalled for several days in December when workers went on strike for higher wages. Half the work on the section had been completed, and 25% of the pipes had been welded together by the end of last year.
The future pipeline will stretch 1,767 km (443km through Azerbaijan, 248km through Georgia and 1,076km through Turkey) and will have a capacity of 50m tonnes of oil per year. Participants in the BTC project are: British Petroleum (30.1%), SOCAR (25%), Unocal (8.9%), Statoil (8.71%), TPAO (6.53%), Eni (5%), Itochu (3.4%), ConocoPhilips (2.5%), Inpex (2.5%), and Amerada Hess (2.36%).
The project organisers are targeting four groups of creditors: shareholders in the project, who are expected to provide 30% of the costs; the European Bank for Reconstruction and Development and the International Finance Corporation, which will both provide credits and credit guarantees; export-credit agencies, which will provide credit guarantees; and commercial banks.

SOCAR announces tender for oil consignment

Azerbaijani state oil company SOCAR recently announced a tender for a first consignment of Azerbaijani Urals oil exported via the Baku-Novorossiisk pipeline, a source in the SOCAR marketing department said. This consignment will amount to 130,000 tonnes, to be shipped in mid-February, the source said. SOCAR planned to export a total of 210,000 tonnes of oil in February, the same amount as in January. France's TotalFinaElf and Switzerland's Glencore bought the January consignments. SOCAR plans to export 2.5m tonnes of oil in 2004, the same as in 2003, New Europe reported.

Statoil invests US$ 1.23bn in Azerbaijan

Norwegian oil and gas company Statoil invested over US$1.23bn in Azerbaijan from 1992 to 2003, the company's Baku office said, New Europe reported recently. 
Statoil invested US$473m in 2003 alone. The company is involved in five projects in Azerbaijan. It is participating in the development of the Azeri-Chirag-Guneshli field, with an 8.5633% share, and the gas condensate field Shakh-Deniz, with a 25.5% stake, and in the exploration of the Araz-alov-Sharg structure, with a 15% share. Statoil is also involved in the construction of the Baku-Tbilisi-Ceyhan pipeline, with 8.71%, and is the operator of the Baku-Tbilis-Erzurum pipeline project.

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