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AZERBAIJAN, AS A HUB IN THE EURASIAN TRANSPORT CORRIDORS

by PPI

Assoc. Prof. Dr. Rovshan Ibrahimov

Hankuk University of Foreign Languages

      Introduction

Azerbaijan is located in the South Caucasus, which is unique in its characteristics and important in geopolitical location. As for Azerbaijan, its territory can be the only in the Eurasian region, which could be an alternative to Russia and Iran as the transport route between such important economic regions as the European Union and the Far Eastern states. If to draw a vertical line from the Barents Sea in the north to the Persian Gulf coast in the south, this line will cross the widen spaces of the European part of Russia, a small strip of Azerbaijan territory and then Iran. This means that Azerbaijan is the only land-based alternative to Russia and Iran for the transport of goods and passengers between West and East

Azerbaijan can also play a significant role as an additional transport corridor to the existing through the Suez Canal maritime route. In addition, Azerbaijan a connecting link between Russia and Iran, this formed another transport corridor: North-South. (more…)

Adopting to the New Economic Environment: The Case of Azerbaijan

by PPI

Introduction

When the U.S. economy entered into a recession in 2001, the Federal Reserve responded to the slowdown in economic activity by reducing the federal funds rate to historically low levels. In early 2001, the effective federal funds rate was higher than 5%. However, by the end of the year the rate was below 2%. The Federal Reserve continued to decrease the federal funds rate and by the end of 2003 the interest rates were at 1% which has not been seen since 1954. During the same time the Federal Reserve has also increased the money supply by more than 20%. These efforts paid off and during the period 2003-2006, the average real GDP growth in U.S. was higher than 3%.   (more…)

Infographic: State Oil Fund

by PPI

2-01 (1)

Infographic: Budget- Azerbaijan (2012-2016)

by PPI

Boosting Economic Growth in Azerbaijan Through Economic Diversification

by PPI

Introduction

Upon gaining independence from the Soviet Union in 1991, the Republic of Azerbaijan inherited a destitute economy and crippled infrastructure. The economies of the Republic were interconnected and once the states became independent, their economies suffered from a recession. Azerbaijan experienced the worst side effects of the recession along with other European transition countries[1]. According to the World Bank statistics, in five years, real income per capita evaporated over 60% falling from 8,500 USD in 1990 to 3320 USD in 1995[2]. In comparison, Kazakhstan’s fall in real per capita GDP was around 35% and 41% in Russia. To make matters worse, Azerbaijan was in war with Armenia over claims to the Nagorno-Karabakh region. Armenia occupied almost one-fifth of the total area of country thus infringing Azerbaijan’s territorial integrity. Breakdown of the economic and political system coupled with the war with Armenia threatened the country’s newly gained independence. When Heydar Aliyev came to power in 1993, his primary goal was to reconcile the nation and lay a foundation of prosperity in order to ensure the nation would have a future.

After achieving national solidarity and ceasefire at the battle-ground, Aliyev was able to focus on economic problems. Azerbaijan undertook a wide-range of economic reforms in order to restructure the centrally planned economy into a competitive free market economy. These reforms included trade liberalization, privatization, de-monopolisation, and establishment of fully functioning market establishments. At the time, major industrial plants had almost stopped production because either the lack in capital stock or from the breakdown of economic ties with other former Soviet Republics.  The  country lacked financial resources to develop the national economy and had a difficult time creating a favourable environment for foreign investment. Since Azerbaijan was endowed with rich hydrocarbon resources, oil (and gas) policies played a crucial role in the economic development of the country. The country’s economic policies were based on oil strategies laid out by H. Aliyev. This strategy also constituted the basis for Azerbaijan’s future economic policies. Azerbaijan attracted huge multinational oil companies in the development of hydrocarbon resources, which contributed to the country’s economic recovery. (more…)

Turkish Stream: An Ever Changing Russian Pipeline in Transition

by PPI

 by PPI

On December 1st 2014, Vladimir Putin, the President of the Russian Federation, had made yet another visit to Turkey. The announcement of the new pipeline project with Turkey was one of the most significant products of this trip. During the trip, Putin announced the cancelation of the South Stream Project, surprising the European energy pundits. He mainly blamed the EU for its unwillingness to cooperate with Russia on the pipeline and Bulgaria which stalled the construction of it.

By this decision, the project which was planned to be connected off the coast of Russia to Bulgaria through the Black Sea is renamed as Turkish Stream with a change of route within the Black Sea reaching land via the city of Edirne, situated in the European section of Turkey, called Thrace. This new name of the project is a result of the joint decision between both leaders, Erdogan and Putin. The Pipeline which is to be consisted of four phases is designed to supply Turkey with a single line (15.75 bcm) and access Europe with the other three lines (47.25 bcm). The pipeline is scheduled to pump gas by the end of 2016, initiating the transportation of gas towards the Turkish market. This way, Russia aims both to bypass the Ukrainian transit section and secure the transit route as well as attaining an assertive place in the energy market of Eastern Europe.

(more…)

Iran Nuclear Deal and its Implications

by PPI

By PPI

The agreement between Iran and the Permanent Members of UN Security Council plus Germany (P5+1) regarding Iran’s nuclear program in July 2015 has been considered historic on the global stage. Indeed, there are many ongoing conflicts in the world and an agreement between long time enemies over an issue as dangerous as nuclear power/weapon through negotiation is a welcome news. It is historic because it also illustrates that major players of the world can indeed get (at least some of) what they want without using arms. At the global stage this brings hope for the many ongoing conflicts and their sides to try the same path. However, at the regional level and in terms of Turkish-Iranian relations the deal has mixed implications. The following brief SWOT analysis of the Iranian nuclear deal’s impact on Turkish-Iranian relations, aims for the parties to take advantage of the opportunities and avoid the potential pitfalls.  (more…)

TURKEY AND GEORGIA: BEYOND TRADITIONAL DIPLOMACY

by PPI

Dr. Haluk KaradaÄŸ for PPI

Rapid increase of the technological developments has made the geographies and distances closer, and these progresses improved the interactions between communities. Widely usage of technological devices and facilities like radios, televisions, telephones and internet also affected the societies belong to almost all countries. These kinds of interactions between communities enhanced the importance of “public opinion” term. Governments had taken into account and tried to manipulate the public opinion. Governments not only redirect the public opinion of the country itself, but also societies of the other countries as well. At this point a term which is named “public diplomacy” came to the help of diplomats.

(more…)

TURKISH-AZERBAIJANI ENERGY RELATIONS: BASIS FOR PRAGMATIC RELATIONS BETWEEN THE TWO COUNTRIES

by PPI

Introduction

turkey-azerbaijanModern international relations are a reflection of successful coordination of various factors, close cooperation and strategic vision for the future. A very significant example of this aspect is the relations between Turkey and Azerbaijan. These two countries initially have their own specific relationship based on common culture and ethnic origin. Skillfully using advantage of these factors, two countries Turkey and Azerbaijan rapidly began to develop their relations in all spheres. Special attention should be paid to the mutually beneficial cooperation in the energy sector, which is the driving force of economic and political initiatives.

The ratios of these countries in the energy sector are complementary: Azerbaijan is a major oil and gas producer, in which Turkey, not having its own energy resources, actually needs. In turn, Azerbaijan, as the landlocked state which, is needs in Turkey, whose territory is located in an advantageous geographical position and has no access to the open seas. Through this country, oil and gas extracted in Azerbaijan has the opportunity to access to the global markets. Based on these circumstances of complementarities, relationship between the two countries in the energy sector has a degree of permanent development. A lot of projects in this sector have already been implemented and continue to emerge.

Turkey’s contributions to the development in the energy sector relations with Azerbaijan

  The basis for the first concrete cooperation between the two countries was the participation of Turkey in Azerbaijan International Oil Company (AIOC). Along with eleven companies from eight countries the Turkish company TPAO (Türkiye Petrolleri Anonim Ortaklığı) has took place in consortium. This consortium was established with the aim of exploiting Azeri, Chirag and Guneshli offshore oil fields. Hydrocarbon deposits are estimated up to 1 billion tons of oil and about 130 billion m3 of gas in those fields.[2]  (more…)

Air quality in Azerbaijan: Legal analysis.

by PPI

Author: Sadiga Mehdizadeh
For PPI.

Executive summary.

Air pollution is one of top global environmental problems causing severe damages on human health and ecosystems. WHO estimates 7 million people died as a result of air pollution exposure in 2012.  Acidification and eutrophication, reduced crop yield and forest growth are main negative impacts of air pollution on the ecosystems.

The developed oil and gas industry, spanning almost 150 years history and industrialized cities of the Soviet period, such as Baku, Sumgait, Ganja, Shirvan has made Azerbaijan vulnerable to air pollution.

Starting from 90ss several industrial sources stopped their operation due to the economic problems. As a result of such temporal change air pollution in Azerbaijan significantly decreased. But later in early 2000s air pollution from transport has visibly increased.  (more…)

GREEN GROWTH OPPORTUNITIES TO OVERCOME DEPENDENCY FROM “BLACK GOLD” SECTOR IN AZERBAIJAN

by PPI

green-economy

Gunel Jannataly Huseynova

Abstract

Being in transition from post-soviet to classic market system Azerbaijan needs to be pushed to the correct way of sustainable economic development. The main purpose of current research is to identify necessity of economy greening and propose appropriate measures for policy framework and capacity building. Globally, interest to green investments is very high – it is under close attention of both business and state actors, and simultaneously – on agenda of civil society and community organizations as well as media institutions. For the last decades concept of green investments has become of high importance for Azerbaijani realities as well, as lack of it affects life of all citizens and may damage future of our country development.  Some measures have already been taken, however they are mainly related to policy framework advancement. Novel practical tools are main issues described in article, which include encouragement of starting green businesses and innovative mechanisms promoting greening of existing industries. Some practical implications were noted during research due to unavailability and lack of statistical data regarding green investments in Azerbaijan. Research methodology used in this article includes quantitative and qualitative tools used for determination of correlation and developing progress analysis of the particular sphere.

Key words: green economy, green investments, sustainable development, capacity building, policy framework.

Introduction

The main challenge for Azerbaijan Republic over the past two decades of drastic changes in social-administrative system and life conditions brought by market economy has become integration of the country to the global market followed by linkage to the world main production and supply chains and adaptation to the structure and principles of world economy.

Azerbaijan’s national economy follows stable investment practices and invests into balanced and profitable businesses, such as Oil & Gas exploration and production industry. During last 23 years various important state financial and fiscal programs have been implemented, new legislative acts were adopted and new funds were established (such as State Oil Fund, Council of Entrepreneurs, AZPROMO, etc.), and all the activities were directed to the attraction of investments regardless their nature and trends on global market. As a result, volume of foreign direct investment increased and now Azerbaijan is considered as an effective and reliable Oil & Gas sector investee. Other fields have not been analyzed and developed, thus being invested enough; foreign and national investors are not interested to invest into potentially risky and concealed areas of business. So far, the market in Azerbaijan is still poor enough on investments experts who can build longterm investment proposals. (more…)