February 16, 2014

“A Star of the South Caucasus”

Against the backdrop of negative trends in the economic processes in most CIS countries, a very different character has the situation in Azerbaijan, which demonstrates stable success of the national economy. Like in Russia, Azerbaijan's economy is based on mining and exports of energy carriers. However, in contrast to the Russian Federation, which actually is in the state of economic stagnation, Azerbaijan is dynamically increasing its capacity, despite the negative impact of global economic problems and unresolved conflict around Nagornyi Karabakh.

Evidence of this is the results of Azerbaijan's development in 2013, which were announced at the meeting of the government of the country in early January this year with the participation of the Head of the state of Azerbaijan I. Aliyev. According to official data of the Cabinet of Ministers of Azerbaijan, in 2013 the GDP grew by 5.8 %, which is one of the largest in the world. At this, the GDP per capita grew by 4.4% to about 8 thousand US dollars.

Structure of GDP in Azerbaijan

Structure of GDP in Azerbaijan
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At the same time foreign exchange reserves in Azerbaijan rose to $ 50 billion US dollars — 70% of GDP. For comparison, the external public debt of the country is only — 8% of GDP.

Economic achievements of the country allowed the government of Azerbaijan to provide support to small businesses as well as successful solving of social problems. Thus, in 2013 the average wage in the country increased by 6.3%, the minimum wage — by 13%, wages of public sector employees — by 10%, occupational pensions — by 17.6 %, all kinds of social grants — up to 70 %. The level of inflation was only 2.4%. As a result, the poverty rate in the country has dropped to less than 5%.

Besides, greater attention was paid by the leadership of Azerbaijan to reducing unemployment, solving issues of welfare of refugees and internally displaced persons from the zone of conflict in Nagornyi Karabakh, as well as to construction and reconstruction of medical, educational and cultural institutions. In particular, in 2013, were created more than 100 thousand new jobs (of which 80 thousand are permanent ones), which allowed to reduce the unemployment rate to 5%. At the same time were built 20 thousand apartments and houses for refugees, were open and reconstructed nearly 300 schools and 80 hospitals.

The above-mentioned achievements have been made within the framework of Azerbaijan's leadership's successful and effective policies in domestic and foreign spheres. First of all, in this respect, the main attention was focused by the leadership of Azerbaijan on oil and gas industry (has increased by about 10%), which is the basis of the Azerbaijani economy and a major source of foreign exchange earnings of the country and of filling the state budget.

President of  Azerbaijan Ilham Aliyev

President of  Azerbaijan Ilham Aliyev
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According to the President of Azerbaijan Ilham Aliyev, in the context of strategic interests of the country, the most important was the beginning of realization of the project “of the Southern Energy Corridor” within the framework of the signing of the investment agreement on the gas field “Shah Deniz-2” and choosing the “Trans-Adriatic” pipeline as the main route of transportation of Azerbaijani gas to Europe. Besides, there have been signed all the necessary contracts related to the sale of Azerbaijani gas to Europe.

At the same time, in order to reduce transition dependence on Russia, Azerbaijan nearly by a quarter has reduced the volume of oil transportation through the pipeline Baku-Novorossiysk. Instead, has increased the volume of oil transit through the Transportation System Baku — Tbilisi — Ceyhan (BTC). Negotiations continued on directing Kazakhstan's oil to the BTC (through the organization of tanker traffic from Kazakhstan to Azerbaijan) and on implementation of the project of building “Trans-Caspian” gas pipeline from Turkmenistan to Azerbaijan on the bottom of the Caspian Sea.

Apart from this, measures were introduced to diversify Azerbaijani economy through the development of other industries and infrastructure of the country.

Thus, a special direction of the Azerbaijani leadership was building up the capacities of the metallurgic industry. In particular, was begun the construction of a modern steel plant, oriented to the use of local raw materials and other natural resources.

Telecommunications satellite Azerspace / Africasat 1a [OSC] 1

Telecommunications satellite Azerspace / Africasat 1a [OSC] 1
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Significant achievements of the Azerbaijani side have become also creation of the national space industry and launching of the first satellite Azerspase-1 (for telecommunication purposes), commissioning transit information highways at regional and international levels (in particular, the Azerbaijani segment of the telecommunications network Europe-Middle East), and having increased the number of Internet users and mobile communications to the European level.

Due to the rapid growth of Azerbaijani economy, of particular importance was organization and activity of technology parks. In this regard, in addition to the existing technology park in Sumqayit was opened a new Chemical Technology Park. Technology parks will be created in some other cities.

A number of infrastructure projects have been implemented too, which included the reconstruction of the Samur-Apsheron irrigation system (provides drinking water to the city of Baku and surrounding areas), commissioning of a number of medium and small electric power stations, development of road network, gasification and reclamation of the country's territory. Continues also the construction of highways from Baku towards Russia, Iran and Georgia, of the new commercial sea port near the capital of Azerbaijan and of the railway Baku-Tbilisi-Kars (Turkey) as part of the international project to create a “New Silk Road”.

One of the priorities in Azerbaijan's non-oil industry has remained also support to the development of agriculture as a guarantee of the country's food security. In view of the specific environmental conditions of the region, the main efforts of the Azerbaijani authorities was focused on carrying out reclamation and irrigation works which allowed to put into circulation significant pieces of land. Besides, was commissioned one of the water reservoirs, and the construction of the other continued. The state support was provided in the purchase of agricultural machinery and producing food at Azerbaijan's own factories.

In terms of ensuring economic development of Azerbaijan, the most important was to attract domestic and foreign investments, which have reached a record level of 28 billion US dollars. The above-mentioned was the result of attractiveness of the Azerbaijani economy for national and foreign businesses, as well as Baku's targeted measures to create a favorable investment climate in the country.

In this regard, the main efforts of the Azerbaijani leadership focus on strengthening the struggle against corruption, bureaucracy and other abuses in the state government. In particular, an example of the above-mentioned is opening in Azerbaijan of special government centers which quickly respond to public complaints about cases of corruption.

Armed Forces of Azerbaijan

Armed Forces of Azerbaijan
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Stable development of the Azerbaijani economy has enabled the leadership of Azerbaijan to continue consistent measures to strengthen the military potential of the country, which is important for Baku in terms of the unresolved conflict around Nagornyi Karabakh and the overall tensions in the South Caucasus. Thus, in 2013 Azerbaijan's military spending accounted for over 5% of GDP — about 3.7 billion US dollars (three times more than in Ukraine). The bulk of the money was directed to upgrading of the national Armed Forces, to support of the military group in the conflict zone, as well as to military training of units and subunits, as well as to social welfare of military personnel.

Armed Forces of Azerbaijan

Besides, the economic achievements of Azerbaijan have increased the international prestige of Baku within the framework of the thoughtful and balanced foreign policy of the country. Evidence of this was the election of Azerbaijan a non-permanent member of UN Security Council for the 2012-2013 period, which showed the increased support to the Azerbaijani state on the part of the majority of the countries of the world.

At the same time, priority attention was paid by the Azerbaijani leadership to the development of relations with the European Union. The result was the signing in 2013 of the Agreement on simplification of visa regime between the EU and Azerbaijan. In 2014, the work will continue to establish a strategic format of relations between the parties.

However, during 2013 in Azerbaijan was held a number of important international cooperation activities, including: meeting of the Davos Forum — World Economic Forum; Conference to assist Palestine within the framework of Islamic Cooperation; the Third International Humanitarian Forum; the Second Forum for International Dialogue.

Map showing the disputed territory of Nagorno-Karabakh between Armenia and neighbouring Azerbaijan

Map showing the disputed territory of Nagorno-Karabakh between Armenia and neighbouring Azerbaijan
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At the same time, Azerbaijan's significant external problem is the continuing confrontation with Armenia because of the unresolved conflict around Nagornyi Karabakh. As part of the solution to this problem, Azerbaijan relies on achieving economic, military and demographic superiority over Armenia as a strategic factor of influence on Yerevan. Thus, today the state budget of Azerbaijan is 10 times as large as the state budget of Armenia, the gross domestic product — is 8 times larger, and the population — 6 times.

Comparison between Armed Forces of Azerbaijan and Armenia

Comparison between Armed Forces of Azerbaijan and Armenia
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In general, economic and political achievements of Azerbaijan show the maturity and self-sufficiency of the country that has achieved true independence and sovereignty after the collapse of the USSR. In its turn, this gives Baku powerful capabilities for defending its national interests, including in terms of counteracting the neo-imperialistic ambitions of the Russian Federation. Thus, in contrast to the claims to other CIS countries, Russia does not even raise the question of Azerbaijan's accession to the Customs and future Eurasian Unions.