Opinion by Fuad Akhundov – An economic miracle
Since taking power in 2003, President Ilham Aliyev has implemented forward-looking initiatives and projects in energy, social welfare, education and the economy, which improve the quality of daily life in Azerbaijan, strengthening the image of the country worldwide and changing the face of its regions and capital city.
Aliyev has extremely high approval ratings – in a survey of 1,000 adults carried out by British polling company Populus in September 2011, he scored 95 percent trust and 96 percent approval rates, with respondents saying they generally think that Azerbaijan is secure, improving, stable, successful, and strong.
The survey also showed that 79 percent of respondents think that in general, Azerbaijan is developing in the right direction, while 70 percent felt the economy was on the right track.
In late 2012, the European Union’s Neighbourhood Barometer – an opinion polling and media monitoring device which is part of the EU-funded Regional Communication Programme – indicated that 92 percent of Azerbaijan’s population trusts its government. Azerbaijanis questioned in the poll were optimistic about their lives – much more so than other countries in the region – with 65 percent satisfied with the life they lead and life satisfaction at its highest level among young people.
Economic sentiment was also high: 69 percent of the respondents consider the economic situation to be good, while 60 percent are satisfied with the results of ongoing democratic processes.
A growing economy
Over the last decade, Azerbaijan’s economy has increased by 3.5 times, hitting US$68.8 billion in 2012. This success has not gone unnoticed: despite a gloomy international outlook during the global economic and financial crisis, the country’s credit rating was boosted from stable to positive by Fitch Ratings, Moody’s and Standard & Poors due to low indices of public debt and favourable medium-term and long-term prospects.
Meanwhile, the World Economic Forum’s global competitiveness index placed Azerbaijan 1st among CIS countries, while in 2008, Azerbaijan was cited as the top reformer by the World Bank’s Doing Business report as a result of its broad economic reforms. The country has laid the foundations for the strengthening of its non-oil sector through economic liberalisation and improved conditions for business.
Azerbaijan has seen a tremendous reduction in poverty during the last decade and has a burgeoning middle class – pegged at 20 percent of the population according to International Labour Organization (ILO) figures. Its GNI per capita leapt from US$720 in 2002 to US$5,290 in 2011, propelling it into the ranks of the World Bank’s Upper Middle-Income Countries (UMI) group. Today, Azerbaijan is a country with high human development potential.
The president’s term in office has been characterised by dedication to his country’s development. The country’s internally displaced persons (IDPs) and refugees are an important cause to him – he chose to celebrate his 50th birthday not with an extravagant party but instead by visiting the remote Aghjabedi region, home to thousands of refugees from the Armenian-occupied Lachin region. The following year, he spent his birthday at Sumgait, where he awarded new apartments to 411 families of disabled veterans of the Karabakh war, bringing the total apartments provided by his government to the veterans to five thousand.
Another key initiative has been the state funding of cars for low-income social groups. More than 3,500 citizens have been provided with cars so far under the plan. Car ownership continues to rise, and Azerbaijan has seen the number of cars on its roads double between 2003 and 2012 to 1.1 million – an unequalled figure in the CIS, central and eastern European countries. Car ownership is expected to reach 72 cars per 100 families by 2020, in-line with the most developed countries in Europe, and the USA.
The implementation of various state socio-economic development programmes in the regions from 2004 to 2013 has led to the creation of 1.1 million jobs. The state has a strong social welfare policy and provides free public healthcare and education – including scholarships for overseas students, who currently number over two thousand.
Azerbaijan’s outdated and poorly-maintained water and sanitation infrastructure has also become a major focus for the president, and the government is working to reconstruct and develop the water supply and sewerage system in every major settlement and regional centre by the end of 2013.
A key energy player
In the energy sector, Azerbaijan made key progress in the transportation of Caspian gas to European markets in the signing of an agreement on TANAP (the Trans Anatolian Gas Pipeline) between Baku and Ankara, which is the starting point for the creation of the Southern Gas Corridor. With the decision by the Shah Deniz consortium to approve the construction of TAP (the Trans Adriatic Gas pipeline) to transport Azerbaijani gas to EU countries via Turkey, Azerbaijan has become a key guarantor of the EU’s energy security.
Despite its long history as a producer of gas, until recently Azerbaijan’s regions had no gas supply. Today, 95 percent of homes in the country are connected to natural gas networks, compared to just 70 percent in western countries.
Meanwhile, Azerbaijan’s Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzurum gas pipeline have laid the foundations for a new transport corridor in the region. The construction of the Baku-Tbilisi-Kars international railway – tipped as the rebirth of the Silk Road – is about to be completed.
An important regional investor
Azerbaijan’s non-oil sector continues to expand. Last year saw the economy receive more than US$20 billion of investment and over 100,000 new jobs were created. Massive construction projects are being carried out across all of Azerbaijan’s cities, and new industries have emerged.
Once such new industry is the space industry: in February 2012, Azerbaijan’s first telecommunications satellite, Azerspace 1, was launched and is expected to bring in US$600 million in revenue over the next 15 years. The country plans to launch a second telecommunications satellite in two years, with four research satellites – to be utilised in the fields of agriculture and meteorology – also in the pipeline.
A high-tech military industry has also been created; 21 companies now produce 750 types of defence technology from unmanned drones to grenade launchers.
Azerbaijani investment is not limited to within its borders. The country has emerged as an important regional investor, as the second-highest investor in the Georgian economy and with US$17 billion expected to be invested into Turkey over the coming years.
Despite the global financial crisis, Azerbaijan became the first CIS state to repay its debt to the International Monetary Fund (IMF) in 2008 and is the first CIS state to become a donor country to both the World Bank and IMF, allocating significant funds for the financing of projects in the Sahara region.
Through his initiatives, Ilham Aliyev has become the author of an Azerbaijani economic miracle; no mean feat in a country with 1 million refugees after it suffered the loss of 20 percent of its territory as a result of Armenian occupation. Azerbaijan, which gained the votes of 155 countries to become a non-permanent member of the UN Security Council in October 2011, is now an emerging regional power that is transitioning from an industrial to a knowledge economy.
Aliyev plans to provide his people with a modern lifestyle – perhaps best illustrated by the ultra-modern architecture of the national capital Baku. “Our goal is for Azerbaijan to join the ranks of the developed countries,” he said. “I am sure this will happen as we have talented people, economic potential and natural resources as well as an excellent geographic position. We provide transparency and political reforms are underway.”