Azerbaijan Country brief

Introduction/overview

The Republic of Azerbaijan is situated the South Caucasus, bordering the Russian Federation to the north, Georgia to the north-west, Armenia to the west, Iran to the south and south-west, and the Caspian Sea to the east. Covering a total of 86,600 square kilometres (including the Naxcivan Autonomous Republic and the Nagorno-Karabakh region), Azerbaijan is a mountainous country with almost half its territory comprised of the wooded mountains of the Greater and Lesser Caucasus.

Of Azerbaijan's 8.4 million people, approximately 90 per cent are Azeri-Turkic speaking Shi'ite Muslims. In 2001, Azerbaijan adopted the Latin alphabet for Azeri About three per cent of the population is Russian speaking; two per cent Armenian speaking. The capital city of Baku has almost 2 million people.

The national day of Azerbaijan is Independence Day, celebrated on 28 May. It celebrates the founding of the Democratic Republic of Azerbaijan in 1918.

Political overview

The President of Azerbaijan is elected for a five year term. The President appoints the Prime Minister and the Council of Ministers (the Cabinet). In July 2003, the former President, Heydar Aliyev, was admitted to hospital, and on 15 October 2003 his son Ilham won a landslide victory with 77 per cent of the Presidential vote. Heydar Aliyev died at age 80 on 12 December 2003. The next Presidential elections are due by October 2008.

The Azerbaijani Parliament comprises a unicameral National Assembly of 125 seats. Members serve five-year terms. The last round of Parliamentary elections was held on 6 November 2005. In the lead-up, international observers welcomed improved candidate registration procedures and the Government's active engagement with international observer missions. Most observers, however, also noted that significant improvements were still needed to bring campaign procedures up to international standards.

Azerbaijan is a member of the Commonwealth of Independent States (CIS), the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD), the Organisation for Security and Cooperation in Europe (OSCE), NATO’s Partnership for Peace (PfP) and the Council of Europe. Azerbaijan has observer status at the World Trade Organization and is seeking membership. Azerbaijan's WTO membership Working Party was established on 16 July 1997, and the first meeting was held in June 2002. The latest meeting of the Working Party took place in March 2006. Bilateral negotiations between Baku and the WTO on market access are underway.

Economic overview

In 2007, real GDP growth is expected to reach 29.3 per cent making Azerbaijan one of the fastest growing economies in the world.

The high rate of growth is due almost solely to oil exports. Azerbaijan has 7.0 billion barrels of proven oil reserves, and oil currently accounts for around 84 per cent of all exports. By 2010, oil production is expected to reach 1.3 million barrels a day.

Oil exports to Europe through the newly constructed Baku-Tbilisi-Ceyhan (BTC) pipeline (a project reportedly worth some US$3.9 billion) began in June 2006. The pipeline extends over 1,770 kilometres from Baku via Georgia and into the Mediterranean Turkish port of Ceyhan where the oil is loaded onto super tankers for European markets. However, despite the opening of the BTC pipeline, Russia remains the primary route for Azerbaijan’s oil exports to Europe.

The challenge for the Government will be to maintain macroeconomic stability in the face of massive hard-currency inflows. Poverty and inequality are equally significant concerns. Approximately half of the population lives below the poverty line. In order to sustain economic growth and spread economic wealth more equally, the Government will need to forge ahead with financial and legal reforms which tackle corruption and create a favourable environment for the establishment of enterprises beyond the oil and gas industries.

Bilateral relationship

Australia recognised Azerbaijan's independence on 26 December 1991.

According to the 2006 census, 290 people living in Australia identified themselves as of Azeri ancestry, although the Australian-Azeri community is estimated to be larger.

Australia contributed to a NATO Partnership for Peace Trust Fund project for the clearance of unexploded ordnance in the Saloglu region of Azerbaijan in 2005.

Officials from the Australian Embassy in Ankara, which is accredited to Azerbaijan, visit Baku regularly.

Bilateral economic and trade relationship

Australia's trade and economic ties with Azerbaijan are limited by the country's small size and its distant geographic position. Australian exports to Azerbaijan in 2006-07 were worth almost A$8 million, down from A$8.6 million in the previous financial year. Butter made up the largest category of exports (A$7 million). Imports from Azerbaijan in 2006-07 were worth A$31,000.