Azerbaijan country profile
Land area: 90 000 sq km.
Capital: Baku.
Currency: Manat.
Language: The state language is the Turkic language Azerbaijani, although Russian is widely used.
Geography
Azerbaijan is situated in the southern Caucasus, with a shoreline to the east on the Caspian Sea.
It is bordered to the south by Iran, to the west by Armenia, to the north-west by Georgia and to the north by the
Russian republic of Dagestan. The enclave of Nagorno-Karabakh is on the Iranian border separated from the rest of
Azerbaijan by an Armenian corridor. The central regions of the country are relatively low-lying, whilst the border
areas are more mountainous, especially the Caucasus to the North. The main oilfields are to be found either offshore
in the Caspian, or along the coast.
The Azeri flag has three horizontal stripes, blue, red and green from top to bottom, overlaid with a white crescent
and eight-pointed star in the red field.
Recent history
In mid-1989 the Popular Front of Azerbaijan (PFA), was founded and within a brief space of time had enough political
clout to pressure the Azeri parliament into demanding withdrawal from the disintegrating USSR in October 1991.
Since the late 1980s Azeri politics has been dominated by the intermittent conflict in Nagorno-Karabakh, an enclave
claimed by Armenia. In the late 1980s majority ethnic Armenians in the Azeri province began agitating to secede to
Armenia, which in turn caused a rise in nationalist sentiment in Azerbaijan. The Soviet Union intervened in 1990 in
response to a massacre of Armenians in Baku.
In May 1992 independent Azeri forces were forced out of Nagorno-Karabakh and in June 1992 the PFA leader Abulfay
Elchibey was elected president. In June 1993 however military officers turned against him in revolt, causing him to
turn to Haydar Aliyev for assistance. This was granted, but he still fled the country. Aliyev then put himself
forward as a potential president and in October 1993 was elected to office, winning an extraordinarily high 98.9 % of
the votes.
In November 1995 a new constitution was adopted after a referendum (which brought accusations by international
observers of rigging), resulting in the expansion of presidential powers so that in practice all important decisions
require his approval. In the presidential elections of 1998 an opposition candidate stood, but Aliyev won 76.1 % of
the vote.
The Azeri parliament is called the Melli Majlis, and consists of 125 seats. It is elected every five years, and
principally exists to ratify presidential decisions. Aliyev's party, the New Azerbaijan Party (NAP), secured the
largest number of seats largest in the 1995 election. Aliyev is the NAP's chairman, and its members hold the majority
of important positions.
In addition to the NAP and the PFA, the Party of the Popular Front of Azerbaijan (PPFA) had a central role in the
campaign for Azeri independence, but only won three seats in 1995. The judicial structure is probably the least
developed of the variousinstitutions. Critics claim that it has seen only superficial reforms since Soviet times.
Azeri relations with the US and the EU are generally warm, bolstered by commercial interests in the oil sector. This
gives Western governments a direct interest in Azerbaijan remaining as stable as possible. Russia also has close
relations with Azerbaijan, but recently this relationship has chilled as Azerbaijan develops oilfields in the Caspian
without regard to Russia's competing claims to maritime sovereignty, and Azerbaijan courts western countries.
This is also causing friction with other states which border the sea, most recently Iran. Russia's open support for
Armenia in the Nagorno-Karabakh conflict has also done little to build on ties with Azerbaijan, although it is a
member of the Minsk Group, which is trying to mediate to find a peaceful conclusion. As is clear from the trade
figures, Azerbaijan has close relations with Turkey. The two countries share a religion, Turkic ethnicity, and Turkic
languages.
Government and politics
Major political players:
-- Haydar Aliyev: The current Head of State and president of Azerbaijan. He has been in power since 1993 with no
serious opposition to his rule.
-- Abulfay Elchibey: He has been the leader of the opposition party Popular Front of Azerbaijan (PFA) since 1989. He
was elected president in June 1992, but left in 1993. He returned to active politics in 1997.
-- Rasul Guliyev: Prime minister under Elchibey, and then speaker under Aliyev. He had a difference of opinion with
Aliyev in 1996, upon which Guliyev resigned and moved abroad. He is now wanted by the government on charges ranging
from embezzlement to sedition.
Population
For the period 1989 to 1999 average population growth rate was 1.3 %, a rate that is forecast to slow further in the
coming years. Contributing to the problem is the decline in the birth rate, whilst infant mortality is rising and
much of the population is emigrating. In 1999 the urban population was 51.7 % of the total, and agriculture was the
biggest employer, providing work for 36.6 % of the population in 1998.
The education system in use remains very similar to the one inherited from the Soviet Union, and improvements since
independence have been slow owing to lack of funds -- in 2000 it received 4.1 % of GDP. The health system has
suffered from similar funding problems. Despite the initiation of proposals in 1995 for a thorough reform of the
health system, little has actually been implemented; in 2000 health was allocated just under 1 % of GDP.
According to a survey conducted in 1989 82.7 % of the population was Azeri, 6 % was Armenian and another 6 % was
Russian. Since then almost all the Armenians outside Nagorno-Karabakh have left, and in return about 192 000 Azeris
have returned from Armenia. The Azeri government claims that 853 000 people have been displaced during the course of
the war.
The population is 80 % Muslim, of which 70 % are Shia and the rest Sunni. Deciding on which scriptto use would appear
to have caused some problems over the course of time. In 1929 the Latin script was introduced to replace Arabic, but
then in 1939 the Soviets introduced the Cyrillic alphabet. A modified form of the Latin script, close to the Turkish,
was reinstated in 1992, although it was only officially adopted in August 2001.
Nakhichivan in northern Azerbaijan is still an autonomous republic within Azerbaijan, as it was during the Soviet
era. It decides its own local economic matters and its own governors through its own parliament. Nagorno-Karabakh was
also autonomous within Azerbaijan during the Soviet era, but this status was abolished in 1991. However it is a de
facto republic (self-declared) with its own parliament and army.
Economy
The country's economy suffered in 1997/98 for a variety of reasons, especially the collapse in oil prices. Largely
because of these economic problems, the pace of privatisation and structural reform in Azerbaijan was not as rapid as
had been expected or promised by the government. In contrast monetary and fiscal policy was more positive.
More recent indications do seem to show a greater desire for privatisation, especially in the oil industry, and where
foreign companies are concerned. It remains to be seen how many of these plans will be fully realised.
As in many countries which depend on oil for revenue there has been much talk in Azerbaijan about economic
diversification, although there have been few substantial moves towards this.
In 2000 oil products -- largely oil and gas made up 85 % of export revenues, partly because of the weakness of some
other important sectors and high oil prices. Manufacturing and agriculture, which ought to provide a good amount of
revenue, are extremely weak, and there are few indications of this improving.
The economy saw real GDP more than halve in the three years from 1992 to 1995, although this trend has been reversed.
Internal investment is lacking; for the year 1998 foreign investment made up 69 % of all capital investment, although
this in part reflects the strength of foreign investment.
The banking sector is over-banked by most measures, with 210 banks in 1995, including four large Soviet-era state
banks. The Azerbaijan National Bank (ANB, the central bank) had reduced the number to 71 by April 1999. The ANB is
still continuing with this policy of reducing the number of banks and is raising the minimum capitalisation level for
prospective local and foreign banks.
Statistics
1998 1999 2000
GDP $ 4.4 bn $ 4.5 bn $ 4.9 bn
Per capita $ 570 $ 574 $ 619
Growth 12.4% 1.4% 8.7%
Inflation -1% -10.5% 2.1%
Debt $ 693 mm N/A N/A
Source : IISS, EIU, State Statistical Committee
