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  2003 2002 2001 Ranking(2003)
Millions of US $ 7,124 6,090 5,600 102
GNI per capita
 US $ 810 710 650 146
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Principal ethnic
Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3


Azeri Manat

Ilham Aliyev

Ilham Aliyev

Update No: 291- (29/03/05)

'Stone in the shoe' Journalist's murder
The murder of a prominent opposition journalist has raised Azerbaijan's political temperature, ahead of parliamentary elections in November 2005. An unknown assailant shot and killed 38-year-old Elmar Huseynov on March 2nd in the hallway outside his apartment on the outskirts of Baku. Huseynov, the editor-in-chief of the opposition Monitor magazine, was buried March 4th. 
One of Azerbaijan's best-known dissident journalists, Huseynov had frequently tangled with authorities. Lawsuits brought by officials and Aliyev relatives resulted in large fines against Monitor in recent years. In 2002, Huseynov received a six-month prison term for allegedly slandering the mayor of Baku, but was pardoned and released within two months.
Opposition members, human rights activists and journalists understandably take the view that the killing was a politically motivated crime. Authorities, including President Ilham Aliyev, have vigorously denied any involvement, blaming the murder instead on a mysterious force that seeks to "discredit Azerbaijan in a parliamentary election year." 
Dismissing official rhetoric, many Azerbaijani journalists remain sceptical that the government will vigorously pursue the Huseynov murder case. In an interview with the New York-based Committee to Protect Journalists, Baku Press Club Deputy Director Chingiz Sultansoy said that Huseynov had received several threats recently and feared for his safety. Expressing little confidence in official investigators, a group of journalists have announced plans to carry out their own murder investigation. 
Clues to the culprit's identity appear sketchy, even though a pistol with a silencer, believed to be the murder weapon, was found near the crime scene. Neither Huseynov's family members, nor his neighbours reported hearing the shots, and no witness sightings have been made. The electricity and telephone service to Huseynov's apartment were cut off at approximately the same time as the shots were fired, estimated at 8:30pm on March 2nd. Calls from the journalist's cell phone were also reportedly blocked, thereby allegedly preventing his family from immediately summoning an ambulance, and inferring more than one murderer - indeed a team operation. 
Huseynov's murder is the latest in a string of violent attacks on Azerbaijani journalists over the past year by unknown assailants. Eynulla Fatullayev, the deputy editor of Monitor, was badly beaten last year, and the editor of another newspaper, Baki Habar, was kidnapped several months ago. In late February, Lider TV aired footage that showed the editor of the opposition newspaper Azadliq, Ganimat Zahidov, and a colleague nude in the accompaniment of two prostitutes. Zahidov claims that the photos were taken under threat of violence. 

A contract killing
With the crime bearing the signs of a contract killing, opposition leaders immediately focused their suspicions on the Aliyev administration, labelling Huseynov's death an act of "state terror" designed to stifle criticism of the government. 
"We could expect this murder. This action is directed at intimidation of the people," Ali Kerimli, leader of the Popular Front Party, said at a March 3 conference in Baku on media rights. "It is not just the assassination of a journalist. It is an encroachment on the will of the people toward democracy." 
One international human rights organization largely echoed that evaluation. "This looks like an organized murder that aimed to silence criticism by one magazine and scare off anyone else who was thinking of following in Huseynov's footsteps," Rachel Denber, acting executive director of Human Rights Watch's Europe and Central Asia division, said in a March 4th statement. 
International reactions also tended to assess the killing as a blow against civil society development in Azerbaijan. The European Union's mission said Huseynov's death was "an attack on free media, democracy, pluralism and the people of Azerbaijan." A US embassy statement described Huseynov as "a dedicated champion of media freedom" and "a man who stood up for his beliefs and principles, even in the face of great adversity."

Aliyev tries to quiet the perturbation 
Aliyev and other officials responded immediately, seeking to dispel the obvious impression that the government was somehow connected to the crime. Administration officials are clearly concerned about the murder's potential to aggravate Azerbaijan's domestic political situation. A March 3rd government statement urged that "regardless of its motives, Huseynov's assassination cannot be used for political purposes," (they wish)!
In a March 3rd interview with local television stations, Aliyev reinforced that stance, terming Huseynov's murder "barbarism" and telling viewers that the attack was not in keeping with the country's democratic and economic development. "Those who have committed the crime attempted to damage Azerbaijan's international image, to discredit it before the [parliamentary elections and present the country as an unstable and non-democratic state, where freedom of speech is violated and acts of terrorism are committed," Aliyev told a meeting of the Security Council that same day, the presidential press office reported. 
Meanwhile, a statement issued by the ruling New Azerbaijan Party appeared to blame the killing on an unnamed "third force" seeking to destabilize the country. It characterized Huseynov's murder as a "provocation intended to whip up tension ... and deal a blow to Azerbaijan's international image." It has certainly done that.
Aliyev pressed law-enforcement officials to capture and try the killer, the Lider television channel reported. To help assuage potential public doubts, Azerbaijani officials have also welcomed the arrival of a US Federal Bureau of Investigation expert to assist Azerbaijani police in the murder probe. 
Beyond the investigation, Aliyev urged government officials to refrain from taking legal action against media outlets, potentially signalling that the government intends to ease pressure on opposition media outlets. Human rights advocates have said such lawsuits have been used in the past to impede freedom of expression and prevent opposition parties from conveying their political messages to the public.

Decisive parliamentary elections 
The president's appeal for restraint -- provided that government officials act according to Aliyev's stated desire -- could have a significant impact on Azerbaijan's political life in 2005. The country is gearing up for parliamentary elections in November. It will be the first nationwide ballot since the controversial 2003 presidential vote, when widespread evidence of vote-rigging in favour of Aliyev prompted opposition protests that were forcefully suppressed. 
Azerbaijani opposition groups have not fully recovered from the government crackdown. Still, political observers believe the November parliamentary vote could provide an important test for opposition parties, helping to gauge the popular appetite for political reforms in this oil-rich South Caucasus state. A freer media climate in Azerbaijan could benefit the opposition, making it easier for presidential critics to present alternative points of view to official policies. 
New opposition media outlets have so far experienced numerous operational delays and difficulties. For example, the registration process for the television and radio station Yeni TV, envisioned as an alternative to Azerbaijan's planned public television system, has ground to a halt with no immediate resolution in sight. Government supporters, citing examples from Georgia and Ukraine, have stated that the station could be used to foster a popular uprising. In response to the delay, Yeni TV's founders are reportedly considering establishing operations outside of Azerbaijan as a satellite news channel. 
In a recent report, the US State Department qualified human rights conditions in Azerbaijan as "poor," noting that the Azerbaijani government in 2004 "continued to restrict freedom of speech and of the press" and that defamation lawsuits by government officials and stiff court penalties pose "significant problems" for independent media. It is by any criteria one of the least democratic countries in the world - a byword for corruption, widely believed of course to start at the top, and justly famous for political thuggery.

Geopolitical conundrum
Azerbaijan is wrestling with a geopolitical dilemma following President Aliyev's recent visit to Iran, which with a large Azeri population in the northern Iranian province of Azerbaijan, larger than in Azerbaijan itself, is a key partner. Azerbaijani officials naturally want to foster better relations with Iran, while maintaining a strong strategic relationship with the United States. Striking the proper diplomatic balance is proving tricky for Baku, given the long-standing animosity that exists between Washington and Tehran. 
Aliyev's January 23rd-26th trip to Tehran produced no major breakthrough in bilateral relations. Throughout the visit, however, the mutual benefits of cooperation were readily evident. From the viewpoint of Azerbaijani officials, stronger Iranian-Azerbaijani ties could strengthen Azerbaijan's position in several key diplomatic areas, especially the Nagorno-Karabakh conflict and energy development. Iran has close political and economic ties with Armenia. Officials in Baku hope that an improvement in Iranian-Azerbaijani relations could cause Iran to exert pressure on Armenia to revise its stance on Karabakh peace talks. 
During a meeting with Aliyev, Iranian President Mohammad Khatami voiced support for Azerbaijan's stance on the Karabakh issue. "Our position is clear and Iran is one of the very few countries that support Azerbaijan's position," AzerNews reported Khatami as saying. "We support resolution not by force, but through talks and diplomacy." 
For Iran, an improving relationship with Azerbaijan could enhance Tehran's image as a "good neighbour," countering US claims that the Islamic Republic is a destabilizing force in the region. More broadly, closer Iranian-Azerbaijani cooperation could help diminish the impact of growing US pressure on Tehran. 
One Azerbaijani government official, speaking on condition of anonymity, said that Baku's cautious rapprochement with Tehran is fuelled in part by the lack of high-profile attention paid by the White House to Aliyev. Unlike his Georgian counterpart, Mikheil Saakashvili, the Azerbaijani leader has yet to be invited for an official visit to the United States. Likewise, few top Bush administration officials, outside of Defence Secretary Donald Rumsfeld, have made stops in Baku of late. Washington also did not send a high-profile delegation to commemorate the 10th anniversary of the signing of the so-called "contract of the century," a $7.4 billion production sharing agreement for Azerbaijan's Caspian Sea oil reserves. 
Shortcomings are also seen in Washington's efforts to resolve the Karabakh conflict, the official said. Azerbaijan's opposition media, in fact, took Aliyev's trip to Tehran as a sign of official dissatisfaction with the US role in the Minsk Group, the body set up by the Organization for Security and Cooperation in Europe to negotiate a deal on the disputed territory. Meanwhile, in addition to Iran, Baku is also looking to Russia to support its regional interests, as Russian Foreign Minister Sergei Lavrov's February 1st-3rd visit to Azerbaijan indicated. "Washington's inadequate presence and support amidst increasing Russian and Iranian influence in the region is troubling," the Azerbaijani official said. 
Several obstacles must be cleared away before Iran and Azerbaijan can forge a genuinely close partnership. Perhaps the biggest difference concerns energy development, namely the two countries' competing claims to portions of the resource-rich Caspian Sea. 
Of late, Tehran has made several good-will gestures. For example, Iranian officials sanctioned the opening of an Azerbaijani consulate in the Iranian city of Tabriz, a centre of Iran's sizeable ethnic Azeri minority. Iran also plans to extend $4 million worth of loans to Azerbaijan for construction of a highway from Astara, a town near the Iranian border, to Baku. In addition, Iran has provided $1 million for construction of a bridge over the Araz River in the Azerbaijani exclave of Nakhichivan, which borders Iran, and is home territory and seat of power of the ruling Aliyev clan. 
Aliyev's visit generated speculation that visa-free travel could soon be introduced between the two countries. But in a February 10th statement to reporters, Azerbaijani Deputy Foreign Minister Araz Azimov said that the step would be premature so long as "issues like regional security" remained undefined, Baku Today reported. 
The cultivation of Iranian-Azerbaijani friendship is taking place against the backdrop of a hardening US position toward Iran. In recent months, American criticism of Iran, especially of its nuclear research program, has intensified. In his February 2nd State of the Union address, US President George W. Bush described the Islamic republic as "the world's primary state sponsor of terror -- pursuing nuclear weapons, while depriving its people of the freedom they seek and deserve." 
Such rhetoric has prompted political analysts in the region to wonder if the United States, despite its difficulties in promoting stabilization in Iraq, is planning to undertake regime-change action against Iran. A January 27th commentary in the Azerbaijani opposition newspaper, Zerkalo, expressed the belief that US action against Iran is inevitable. "It is just a matter of when," the commentary said. 
Given the US hostility towards Iran, Azerbaijani officials realize that they must tread carefully as they seek to improve ties between Baku and Tehran. Balancing Azerbaijan's interests between the US and Iran, will prove a major challenge for the Aliyev administration, commented Nasib Nasibli, a former Azerbaijani ambassador to Iran who now works as an independent political scientist. "It will not be easy to make the right decision . . . It will be a major test for the authorities' foreign policy," Nasibli said. "Yet, in the end, it will be difficult to abstain from US policy towards Iran." 
In the end, some analysts say, Aliyev's trip did little to advance Azerbaijan's long-term goals. "In my mind, the timing of the trip was poorly chosen, because the geopolitical situation around Iran is quickly changing," said political analyst Gabil Huseynli. "From this perspective, the economic interests of Azerbaijan should not outweigh the political ones." 

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AIOC kick-starts Azeri field oil production

Azerbaijan International Operating Company (AIOC), the operator for the Azeri-Chirag-Gunashli (ACG) project in the Azerbaijani sector of the Caspian Sea, recently began to produce oil at the central section of the Azeri field, the company's press service said, Interfax News Agency reported.
Production began at one of 10 pre-drilled wells, drilled from the central Azeri platform. "In 2005 oil production from the platform will grow as the remaining nine pre-drilled wells are launched," the group said in a statement. Phase 1 of the project, worth 3.4bn Euro, involves the development of the central part of the Azeri field with 48 wells drilled from the central Azeri platform.
The full development of the field will require the installation of another two such platforms in the eastern and western parts of the field. These will be built as part of phase two. Oil production during phase one will amount to 1.425bn barrels of oil. According to the statement, AIOC plans to produce 35m barrels of oil at the Azeri field (93,000 barrels per day) this year.
Participants in the ACG contract include British Petroleum - 34.1367%, the state oil company of the Azerbaijani Republic (SOCAR) - 10%, the US companies Unocoal - 10.2814%, ExxonMobil - 8.006%, and Amerada Hess - 1.0413%, Japan's INPEX Corp - 10% and ITOCHU Oil - 3.9205%, Norway's Statoil - 8.5633%, Turkey's TRAO - 6.75% and Delta Hess - 2.7213%.

Azerigaz prepares reservoir reconstruction project

Azeri gas transportation and distribution monopoly ZAO Azerigaz has prepared a project for the reconstruction of two gas storage facilities - Kalmaz and Karadag - at a total cost of US$160m, Deputy CEO, Nazim Samedzade, said recently, Interfax News Agency reported.
"According to the latest estimates, the reconstruction of the gas storage facilities will cost US$160m. We plan to increase the active volume of both facilities to three billion cubic metres from 1.4bn cubic metres at present," he said.

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EBRD offers 1m Euro credit to Azerbaijan Bank

The European Bank for Reconstruction and Development (EBRD) assigned a one million Euro credit to Bank of Baku to help diversify the Azeri economy away from the dominant oil and gas sector, Azertaj reported recently.
The Bank of Baku received from EBRD its first credit tranche in the frame of project Multilateral Bank Structure in Azerbaijan in 2004, which was used efficiently. Longer term financing in international markets strengthens the bank's customer base, diversifies its funding and competes more successfully with dominant state-owned players in the banking sector. The EBRD is working with five Azeri banks, including Bank of Baku, to build strong institutions capable of surviving future consolidation in the sector. Technical cooperation funding for the Azerbaijan Multi-Bank framework is provided by Tacis, the European Union's technical assistance programme for Eastern Europe and Central Asia.

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Dutch keen for Azerbaijan aluminium sector sell-off

The Azerbaijani government put Azerbaijan Aluminium, which controls Azerbaijan's aluminium industry, into Dutch company, Fondel's trusteeship for a period of 25 years in July 2001, New Europe reported recently.
Fondel Metal is eager to see Azerbaijan Aluminium, which it runs, privatised, Azerbaijani Economic Development Minister, Farhad Aliyev, said.
However, Aliyev said that the government should decide on the matter of privatising the company and it would take a special instruction for that to happen. Azerbaijan Aluminium is Azerbaijani's only aluminium producer. It consists of three enterprises, which are Zeilik alunite quarry, Ganja alumina refinery and Sumgait aluminium smetler. The company produced 30,000 tonnes of aluminium and around 300,000 Tonnes of aluminium oxide or alumina in 2004. It had not produced as much aluminium oxide in 20 years. Last year Azerbaijan Aluminium's exports reached 100m Euro.

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