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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)

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Update No: 318- (28/06/07)

In the eye of the storm
Azerbaijan is becoming a key player in world politics right now. The most contentious issue therein concerns the placement of a US anti-missile shield in Poland and the Czech Republic, that the Russians naturally regard as directed against themselves. 

The US keeps denying it, saying that the shield is to keep out the missiles of rogue states. Iran in particular is the potential offender.

Right, says Putin; why not put it in Azerbaijan, then, jointly with us? Or he adds, a little flippantly perhaps, in Turkey, Iraq or in the sea?

This is naturally ruffling feathers in Tehran. Iranian MP Kazem Jalali called on the Iranian Foreign Ministry on June 10th to strongly respond to the Russian proposal on the placement in Azerbaijan of a key component in a joint U.S.-Russian antimissile radar system. 

Russian President Vladimir Putin made the offer to President George W. Bush at the Group of Eight Summit in Heiligendamm, Germany, on June 7th. The Russian proposal counters a US plan to build missile-shield facilities in Poland and the Czech Republic. 

Jalali, who is the rapporteur of the Majlis National Security and Foreign Policy Committee, told reporters that Iran should not be a "tool" for settling disputes between world powers. Nor by implication should Azerbaijan.

Washington has claimed that the radar is needed as part of a shield to intercept missiles launched by countries like Iran and North Korea. 

On June 10th, Putin stated that the US should "hurry" to make a decision on his proposal to share a European missile shield with Russia. Russia's offer to deploy a radar warning and control system in Azerbaijan, a neighbour of Iran, is "the best of all solutions," Putin said in an interview at the St. Petersburg International Economic Forum on June 10th. "The U.S. should accept my proposal," Bloomberg quoted Putin as saying. "They have to hurry up with their decision, I'm not giving them much time."

Missile shield intended to contain Russia
Saying the obvious, Middle East expert Mohammad-Ali Mohtadi argues that the missile shield is intended to contain Russia, and it is unlikely that US officials will accept the Russian proposal. 

"Today, the US is following the same approach toward Russia that it used in the past toward the Soviet Union," Mohtadi told the Mehr News Agency. "The U.S. wants to contain Russia and powerful Asian countries like Iran and China, and the Russians have realized this," he added.

Putin is calling the Americans' bluff by suggesting Azerbaijan as the appropriate venue for the shield.

Putin, Aliyev discuss Russia's Gabala initiative
Putin and Prersident Ilham Aliyev of Azerbaijan have discussed the Russian initiative of using the Gabala radar station as an alternative to US radars, a source at the Russian delegation said. "I am positive that they have discussed the issue [on the sidelines of the St. Petersburg forum]," the source said. 

Azerbaijan does not mind the Russian initiative, he said, adding that Putin and Aliyev had discussed the issue by phone before the proposal was made to the United States. It would be interesting to have an account of the phone-call. Putin doubtless gave the broadest hint that the whole thing was a charade.

Baku hosts GUAM summit
The presidents of Georgia and Ukraine, Mikheil Saakashvili and Viktor Yushchenko, were in the Azerbaijani capital, Baku, for a summit with Azerbaijani President Ilham Aliyev and Moldovan Prime Minister, Vasile Tarlev, on June 18th. Their four countries make up the GUAM (Georgia, Ukraine, Azerbaijan and Moldova) group of former Soviet states, which is seen as a counterweight to the Kremlin-led Commonwealth of Independent States (CIS) that had held a meeting just beforehand in St Petersburg. 

The latest GUAM summit in Baku became the stateliest one in the entire history of the organization. Beside the leaders of the four member states, Azerbaijan's capital also welcomed presidents of Poland Lekh Kachinsky, of Romania Trajan Basesku, and of Lithuania Valdas Adamkus. Delegates from 30 countries and international organizations from all over the world, including China, Japan, and even Turkmenistan, were invited to attend the summit. They all gathered in Baku so as to plan the cooperation between the member states in 2007-2008 in economy, energy policy, transport, and military partnership, in the presence of US Deputy Assistant Secretary of State David Kramer (The US is an observer state in GUAM). The military cooperation means creating GUAM's own peacekeeping forces, to eventually replace Russian peacekeepers in the conflict regions of Transdniestria, Abkhazia, and South Ossetia.

Several days before the summit, Azerbaijani President Ilham Aliev spoke very optimistically about GUAM's future. "GUAM is undergoing its second important stage of development, and is turning into an important international organization," proclaimed Aliev. "GUAM member states are very close to each other, and are working together on energy and transports programmes, as well as programmes of political dialogue." 

At their meeting the four GUAM states promised to pursue plans to ship oil from Azerbaijan through Georgia and Ukraine to Europe. 

Their efforts were heartily welcomed by Kaczynski, while the staunchly pro-Western Saakashvili hailed the meeting as "a geopolitical revolution." In a clear reference to Russian control of European energy supplies, Poland's Kaczynski said that "under conditions of energy blackmail, energy projects (with GUAM states) are of great interest." 

Azerbaijan is the start point of a strategic new oil pipeline to the West that has been backed by Washington as a way of reducing Moscow's grip on oil supplies from the former Soviet Union, the Baku-Tbilisi-Ceyhan (BTC) pipeline. Aliyev, whose country's oil and gas reserves are keenly sought by fellow members of GUAM and by the European Union, said the organisation was gaining in international weight. "GUAM, in a short time, has turned into a serious organisation. Its goals are of interest to many countries," Aliyev said. 

By boosting transport and energy links, GUAM members are "building a bridge between Europe and Asia," he said. Saakashvili thanked Azerbaijan for increasing gas exports to his country after a large price-hike by Moscow at the end of last year that some critics saw as politically motivated. "It was a heartfelt gesture and an important strategic decision," he said, adding that GUAM was surpassing the CIS as a basis for cooperation. "GUAM seriously differs from the CIS, which has become only a club for meetings of heads of state," he said. 

Kaczynski, Lithuanian President Valdas Adamkus and Romanian President Traian Basescu attended the talks in a show of support for GUAM's pro-Western aspirations. Kaczynski said he would support the efforts of some GUAM members to join the European Union and NATO. 

Aliyev said the members would also present a united front in dealing with separatist conflicts in their countries. Azerbaijan, Georgia and Moldova are all dealing with breakaway regions. 

But Russian newspapers on June 19th detected cracks within the GUAM group. While Georgia and Ukraine have primarily viewed GUAM as a pro-Western regional bloc, Azerbaijan has been more cautious and Moldova's position is unclear. 

The Russian newspapers said Moscow would take comfort from the absence of Moldovan President Vladimir Voronin and the sending of his prime minister instead. Voronin met Russian President Vladimir Putin in Moscow on June 22nd, Kommersant newspaper reported. "Moscow managed to strike a pre-emptive blow against its opponents," the paper wrote. "Voronin has apparently decided to stay away from the company of Russia's enemies." This was Voronin at his most tactful ahead of difficult negotiations.

New Azerbaijan Party Holds Press-Related Conference 
It is a curiosity that both Armenia and Azerbaijan are run by enclavists, Robert Kocharian in the former case, former president and warlord of Nagorno-Karabakh, and Aliyev in the latter, a scion of a ruling clan of Nakhichevan.

The New Azerbaijan Party (NAP) is the governing party of the country. It was founded in the Nakhchivan Autonomous Republic of Azerbaijan (NAR), the Azeri enclave between Iran and Armenia, in 1992. The first Chairman of the Party, who lead it for fourteen years, was the late Azerbaijani President and former KGB General, Heydar Aliyev. The current chairman of the NAP is his son, Azerbaijani President, Ilham Aliyev.

The NAP held a conference on 21 June, the summer solstice, dedicated to the state of the Azerbaijani press, the Executive Secretary of the NAP, MP Ali Ahmadov, announced ahead of time on 11th June in Baku. Ahmadov noted then that the current state of Azerbaijani media was to be discussed at the conference. Representatives of opposition newspapers and pro-opposition media would be invited to the conference for participation.

There is of course strict press censorship in Azerbaijan. It is likely to remain that way for a long time yet.

Nazarbayev has a new idea - a Eurasian canal 
President Nursultan Nazarbayev of Kazakstan has had a brainwave of an idea - to construct a canal between the Caspian sea and the Black Sea, where has yet to be specified. Azerbaijan would be a logical part of the route in common with Georgia that has a Black Sea coastline. This would have the narrowest gauge of the caucasus and the furthest from Russia, against whom the idea is obviously conceived.

If it materialises, the canal would transform the economies of the region - and very notably that of Azerbaijan. It would be able to ship its oil and gas from the Caspian to world markets without crossing land.

This is an idea with a lot of mileage in it, quite literally. But it is early days yet. 

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ECONOMIC NEWS

EBRD cuts investment in economy 45% to 134.4m Euro


The European Bank for Reconstruction and Development (EBRD) reduced investment in the Azerbaijani economy by 45 per cent to 134.4 million Euro in 2006 from the previous year, the EBRD said in an annual report posted on its website. 
Azerbaijan has raised 737.7 million Euro in loans from the EBRD since 1992 to implement 60 investment projects, and 51 per cent of the resources were sent to the private sector.
Azerenerzhi received a loan of 87.3 million Euro to refurbish the Azerbaijan GRES, the country's biggest power plant. The EBRD provided more than 32 million Euro last year to small and mid-sized business in the country in credit lines and to banks in the form of trade financing lines. Moreover, two leading non-bank credit organisations - CredAgro and Finca have received 2.5 million euro from the EBRD in 2006.
The EBRD invested 100,000 Euro to buy the MilkPro dairy last year and provided it with 700,000 Euro in credit resources to improve quality and its productive potential. Soft drink producer Taj Aqua-Vita received a loan of 3.4 million Euro to expand production. Moreover, the EBRD used 800,000 Euro to acquire stakes in shareholder capital at the Azerbaijan Microfinance Bank and 7.6 million Euro for Garadag-Cement capital.
EBRD has approved a third syndicated credit for Azerbaijan's UniBank, the EBRD said in a statement. "At the moment the EBRD has informed us of its readiness to act as organizer of this syndicate and provide 7.5 million Euro. The total volume of the syndicate is 30 million Euro," UniBank said in a press release.
The EBRD share in the credit is for three years, and the share of commercial organizations for 18 months, with the possibility of extending by a further 18 months. The credit will be used for general corporate financing, particularly the financing of micro, small and mid-sized businesses, and trade financing.
In addition, the EBRD board confirmed its plans to buy part of an additional share issue by the bank to maintain its 15 per cent stake in the bank's charter capital.
An agreement on a first credit of five million Euro was signed in April 2005 and for a second credit of 7.5 million Euro in September 2006.
UniBank is one of the ten largest banks in Azerbaijan. Shareholders include the European Bank for Reconstruction and Development (with 15 per cent) and DEG. At present, the bank has charter capital of 6.6 million manat. UniBank was 360th on the Interfax-1000 ranking of CIS banks by assets for 2006 and fourth among Azerbaijani banks.

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ENERGY

SOCAR sees oil production doubling by 2011

Azerbaijan is planning to double oil production to 65 million tonnes a year by 2011, the president of Azeri state oil company, Rovnag Abdullayev, said at the 14th Caspian Oil&Gas conference, Interfax News Agency reported.
"Oil production was 32.3 million tonnes in 2006, which was a record. Oil production will be 43 million tonnes this year and 65 million tonnes in 2010," he said.
The growth will not only be a result of a growth in production from the Azeri-Chirag-Gunashli fields, but due to the reconstruction of oil fields, the drilling of new wells and by reviving infrastructures and communications, he said.
"SOCAR has the task today to increase gas output," Abdullayev said. "SOCAR is planning to provide up to eight billion cubic metres of gas to the government in 2008," he said.
Azerbaijan does not only export oil, but also gas, Abdullayev said. "Thanks to the implementation of the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Erzurum pipeline projects, Azerbaijan has become one of the biggest players in providing energy security to Europe," he said.
Industrial production at the Shah Deniz field began in December 2006, he said. There has been 480 million cubic metres of gas produced at the field in this period and production will reach 20 billion cubic metres of gas a year in 2015, he said.
The Azeri-Chirag-Gunashli fields have reserves of around one billion tonnes of oil and the Shah Deniz field has reserves of approximately 1.2 trillion cubic metres of gas.

Gaz de France to develop Azeri-Chirag-Gunashli

Gaz de France plans to take part in developing deep-lying productive deposits at the Azeri-Chirag-Gunashli block in Azerbaijan, French company's diplomatic envoy Alain Azouoau said during a meeting with Azeri Industry and Energy Minister, Natik Aliyev, in Baku on May 31st, the Azeri Industry and Energy Ministry's press service said in a statement, cited by Interfax News Agency.
Azouoau announced that Gaz de France intends to implement projects in the country in three main areas. "The first area involves our plans to take part in exploring new gas fields, and also in the development of deep-lying deposits at the Azeri-Chirag-Gunashli block with gas reserves of 500 billion cubic metres," he said.
The second area - is a desire to take part in a project to reconstruct underground gas storage facilities in Azerbaijan. In addition, the company is looking into receiving gas distribution networks for long-tem management.
Gaz de France representatives who took part in the meeting said the company has real infrastructure and a market to sell gas from the Shah Deniz field in Italy and Romania. Gaz de France annually sells seven-eight billion cubic metres of gas in each of these countries. However, recently gas supplies to these countries from outside have fallen and the French company plans to resolve this problem with gas from the Shah Deniz field.
In turn, Aliyev noted that for talks to start with Gaz de France on these projects, the company's management should make an official proposal to the Azeri government.

IFC to provide US$15m to BP contractors in Azerbaijan

The International Finance Corporation and BP have started to implement a project to credit the British company's contractors in Azerbaijan to the tune of US$15 million, BP-Azerbaijan said in a press release. According to the statement, the pilot of this project was started last year. The project involves crediting Azeri companies that are subcontractors on BP projects, to improve their technical level. During the second phase of the Supplier Finance Facility (SFF) project local companies that are BP contractors will receive additional credits totalling US$15 million, New Europe reported.
Of this amount US$ six million will be paid out by BP and its partners on projects, US$ six million - the IFC; and US$ three million - by the Micro Finance Bank of Azerbaijan (MFBA). The IFC has signed a separate agreement with the MFBA to implement this project, the statement said. Local companies that may receive loans under the project will be selected based on a pre-qualification selection, then they will undergo a credit evaluation by the MFBA and should be approved by a management committee, which will contain representatives from all three parties.

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