In 2018, the main challenge for Azerbaijan is maintaining recovery momentum and reinforcing economy’s resistance to external shocks. Additionally, the country is expected to continue its struggle with employment and poverty. Azerbaijani economy is predicted to grow by 1.8% in 2018, mainly in the middle of the year.
Domestic Policy: Aliyev secured his fourth term
The presidential election, which was supposed to take place on October, 17, was moved to April, 11 in order to avoid presidential and parliamentary elections overlapping in 2025. Seven candidates other than the incumbent president ran for the office. All of them were evaluated as “not a viable choice for the voters” by Giorgi Gogia, South Caucasus director at Human Rights Watch. Thus, Ilham Aliyev, who has been in power since 2003, guaranteed his fourth term with more than 86% of votes.
Two referendums, one in 2009 lifting the two-term presidential limit and the other in 2016 lengthening the presidential term from five years to seven, created favorable conditions for Aliyev’s candidacy. Some opposition parties complained about the improper environment for competition, while others refused to run, blaming the election date advancement for constraints on their campaigns and meaningful participation. OSCE International Election Observation Mission mentioned that the restrictions in legislation limit the freedom of expression in the country.
Society in snap elections
Some representatives of the civil society criticized the snap election in the country for its pressured environment and restraints imposed on the opposition and the media. They called the election illegitimate because “the pre-election environment and electoral legislation do not provide the conditions for free and fair elections“. Turan Agency reported that elections took place without main opposition structures, namely the National Council of Democratic Forces, the Musavat Party, the Popular Front and the REAL movement. According to the Committee to Protect Journalists (CPJ), the government attempted to prevent any possible way of expressing different opinions by blocking websites, persecuting social media accounts, putting journalists in jails etc. On March, 31 nearly thousand people from opposition demanded fair elections and freedom for political prisoners. And following the election, on April, 11 approximately 1500 people protested election results.
On June, 27 during the summer session of the Parliamentary Assembly of the Council of Europe, a resolution on Civil society rights violation in the Council of Europe member states was adopted. According to the document, Azerbaijan is among the countries in which healthy environment for civil society engagement is severely restricted. Within the last few years, the government has curtailed the rights of NGOs and has taken the full control over them. What is more, NGOs have been prohibited to receive foreign grants.
The first century of the first Democratic Republic in the East
On May, 28 a hundred years ago, the Azerbaijan Democratic Republic was established in Tbilisi by Mahammad Amin Rasulzade. Within a short period of twenty-three months, ADR ensured voting rights for women, launched national bank and issued national currency. Moreover, a remarkable recognition was achieved in the international arena through close relations with other states despite the challenging socio-political situation. To honor the hundred years of the Azerbaijan Democratic Republic, 2018 was declared a year of ADR by President Ilham Aliyev. Various centennial celebrations took place both inside and outside the country.
Economy: The 3rd most inclusive emerging country
Annual Inclusive Growth and Development Report http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2018.pdf by the World Economic Forum was published for the year of 2018. It had evaluated 103 countries based on eleven indicators of economic progress. Azerbaijan ranks third out of 74 emerging economies on this year’s Inclusive Development Index. The country’s overall score in the Index is mainly pulled up by its performance on Intergenerational Equity, which includes adjusted net savings, carbon intensity of GDP, age dependency ratio, and public debt dimensions. Such growth and development indicators of the country as healthy life expectancy, employment, and labor productivity are trending positively according to the report. However, Azerbaijan still has unfavorable scores on Corruption and Financial System Inclusion scale.
Modest recovery
After the 2015-2016 economic shock, Azerbaijan experienced modest growth in GDP at the beginning of 2018 which mostly derives from the expansion in the non-oil sector. According to the research, conducted by the Center for Economic and Social Development, transportation, information technology and tourism account for most of this progress. In the first four months of 2018, the inflation rate was 3.5% which was almost four times lower than that of the previous year. Furthermore, there was an increase in revenues and expenditures of the government budget and they both exceeded the expected amounts. In the first three months of the year, the total investment that mainly comes from organizations, bank loans, state budget funds and private funds was 2.86 billion manat ($1.68 billion), 50.8% of which was allocated in the non-oil sector. Funds were mainly spent on construction.
Discussions over 200 manat banknote
The Central Bank of the Republic of Azerbaijan declared the issuance of 200 manat banknote on May, 24. It is worth approximately $117.6 and will be the largest currency value in the country.
The government attempted to prevent any possible way of expressing different opinions by blocking websites, persecuting social media accounts, putting journalists in jails
Experts say that new larger denomination may lead to an increase in inflation rate and further depreciation of the currency. Vugar Bayramov, the chairman of the Center for Economic and Social Development argues that “maybe in the future introducing a new and higher banknote will be necessary, but at the moment, we’re not supporting this decision”. On the other hand, the Chairman of the Central Bank of Azerbaijan, Elman Rustamov stated that new denomination is issued in order to decrease state expenditure on currency printing and it will not influence inflation dynamics.
Loan agreement with ADB
Azerbaijan and Asian Development Bank (ADB) signed a loan agreement on June, 8 to improve governance and public efficiency. ADB agreed to lend $250 million capital resources. Within the framework of the program, legal and institutional structure of the state-owned enterprises management will be improved and financial accessibility will be secured.
Foreign policy: Legal status of the Caspian Sea: almost solved
Important developments in the first half of the year include two meetings of Special Working Group on the development of the Convention on the Caspian Sea Legal Status. The meetings were held in Russia and Kazakhstan respectively. Delegations from Azerbaijan, Russia, Iran, Kazakhstan, and Turkmenistan discussed the implementation of the previously reached decisions and worked on the convention draft to agree on the rights and obligations of the parties as well as the extent of their use of the Caspian Sea. In Astana, the parties also came to an agreement upon cooperating in different fields such as trade and transport sector, avoidance of incidents in the Caspian Sea, and security. The Russian government followed with the approval of the convention draft in late June. Next summit is scheduled for early August to sign the agreement.
Commissioning of TANAP
Linking seven countries, Trans-Anatolian Natural Gas Pipeline (TANAP) is one of the four projects in the Southern Gas Corridor scheme that serves the purpose of gas transfer from Azerbaijan’s Shah Deniz field to Turkey and Europe. The official opening ceremony took place in Baku on May, 29, followed by the commissioning ceremony in Eskisehir in Turkey on June, 12. The first commercial supplies are expected to commence in early July. A.S. Saltyk Duzel, CEO of TANAP, stated that they plan to import 2 billion cubic meters of gas within the first year of the project.
Spotlight on collaborations
At the beginning of the year, the Corporation Council between the European Union and Azerbaijan held its fifteenth meeting in which EU-Azerbaijan relations, economic growth in Azerbaijan, and democracy-related issues were discussed. High Representative of the European Union for Foreign Affairs and Security Policy, Federica Mogherini mentioned the importance of democratic institutions promoting civil society engagement and expressed the readiness of the EU to provide support to Azerbaijan for further improvements. Negotiations on a new bilateral agreement, mutual effort in trade, energy, and transportation sectors, and collaboration within the framework of the Eastern Partnership were on the agenda.
Several plans about Eastern Partnership initiative, which aims to foster the relationship of the six neighbor countries with EU, were discussed in Brussels on March, 12. Since Azerbaijan is in the process of developing a new strategic cooperation with EU, this event was absolutely essential for the country. The significance of democratization and human rights issues were discussed. The representative of Azerbaijan, Deputy Foreign Minister, Mammad Guliyev emphasized the recent developments in civil society and their importance for strategic purposes of the government.
