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Country profile

Geography

Azerbaijan Republic is situated in the eastern part of the South Caucasus in the South-North of Europe. The mountains from three sides surround Azerbaijan territory. The mountains occupying near the half of its square. The Large Caucasus with the highest top named Bazar-Dhuzu (4480 m), raised its bulk in the North (only the South-East part of the Large Caucasus is in the boundaries of AR). In the Southwest, the massive Tran Caucasian plateau running into Armenia and Georgia, is restricted by the ridges of the Small Caucasus. This plateau joins the Talysh Mountains in the South. All the space between these mountains is occupied by Kure-Araz lowlands that is the largest in Azerbaijan.

The sloping plains and low mountains edge it. From the East, Azerbaijan is washed by the Caspian Sea (the shore length makes 173 km). Thus, the surface of Azerbaijan looks like the giant vat with the steep mountain rims straightly tilted to the Caspian Sea. All the rivers of Azerbaijan belong to the basin of the Caspian. Kure River the largest river is used for the local navigation with its lower flow.

Azerbaijan borders on the Russian Federation, in particular on Dagestan (390 km) in the North, on Armenia (1007 km) in the West, on Georgia (480 km) in the Northwest, on Turkey (15 km) in the Southwest and on Iran (765 km) in the South. The square of Azerbaijan Republic in which Nakhichevan Autonomous Republic enters, it is 86600 sq. km. The numerous small islands (Baku and Absheron archipelago) are amongst given above. Azerbaijan Republic is divided out among 65 administrative - territorial regions. The capital of Azerbaijan is Baku-city having about 2-million population. This largest country's city occupies 192 thousand hectares.

Occupation of territories of Azerbaijan by Armenian armed forces  

As a result of the planned and implemented last etnic cleansing policy by Armenia during 1988-1992 years, 250 thousand Azerbaijanis, who historically lived in its territory, violently were exiled till the last person from their native lands and came for protection to Azerbaijan. At the same time, also 50 thousand Ahiska (Mesketian) Turks, which were exiled from Central Asia in 1990, came and found refugee in Azerbaijan.

Following military aggression of Armenian armed forces against our country in 1988-1993, 20 percent of Azerbaijan territory Nagorny Karabakh, as well as 7 regions adjoining to Nagorny Karabakh were occupied, 60 thousand persons from Nagorny Karabakh, and about 700 thousan compatriots from environed territories lost their constant living residences and became IDPs, and temporarily settled in 1600 living residences of 62 cities and regions of the republic.

In addition to Nagorny Karabakh and territories joint to this place, one village of two occupied villages of the Nakhchivan Autonomous Republic, 80 villages of 81 occupied villages of Aghdam region, 54 villages of occupied 76 villages of Fuzuli region, 13 villages of Terter region and 6 villages of occupied 12 villages of Gazakh region are still under occupation.

Advantages

- Being between Europe and Asia, since ancient times Azerbaijan was situated on the fork of the sea and caravan ways that was one of key links of the Great Silk Way. And today Azerbaijan is sure not to lose the same connecting role. In 1993 Europe Council passed special program of creating the transport corridor from Europe across the Black Sea and Caucasus into the Central Asia. This program result in expanding the regional trade and restoring the connections lost after USSR disintegrating. In 1998 12 states within the framework of this program signed the multilateral agreement named Baku Agreement that meant the economical cooperation for the purpose of developing the transport infrastructure. New "Silk Road" turned into the reality and trade amount exceeded the original plans.

- In republic all the kind of transport means (land, air, railway, automobile) are developed very well. Considering the numerous transport and communicating lines, coming through the Azerbaijan territory and connecting Asia and Europe (Eurasian corridor) one can confidently demand that strategic situation of Azerbaijan turns it into geographically more important country of that region. Azerbaijan is already significant point in the relation of the West-East and can play no less important role in the relations of the South-North. Azerbaijan is rich of natural resources among which oil has the main place. The prospected and proposed resources of oil in Azerbaijan, of cause will play the important role on the world oil market in XXI century.

- On the Azerbaijan territory there are 9 from 11 existing in the global climatic zones from the climate of mountain tundra on the slopes of Big Caucasus to the dry and wet subtropics in Lencoran low-lying place. It, certainly, determinates the generosity and favourability of Azerbaijan nature creating the splendid perspectives for the successful development of agriculture.

Disadvantages

- The absence of the general borders with Nakhichevan Republic, that in the blockade conditionals by Armenia leads to the complete isolation of this region from the remain part of Azerbaijan territory. The communications are carried out by only air.

- Six administrative and territorial regions of Azerbaijan Republic are under the full or practical occupation by Armenia. It is approximately 20% Azerbaijan territory and about million refugees.

- The Caspian Sea geographically introduced the largest lake in the world. It hasn't the direct way out on world ocean. And it is one of the main limitation for oil export. The Caspian level annual fluctuates and it has an effect on the transport and communicational mains coming along the seaside, oil output on the shelf, fishery and other branches of economy. The serious problem is unsolved legal status of the Caspian Sea. And the consequence of that Iran and Turkmenistan bear a grudge against Azerbaijan because of arguments about the sea oil and gas deposits.

Population

By the first April 2006  of  all Azerbaijan population had consisted of 8 million    460 thousand. There were 4 million 380  thousand (near 51%) city dwellers and rural population reached 4 million 60 thousand (49%).

The most part of citizens consisted of females  51% and respectively the country's male population composed  49%). One of factor restricting the population growth it is the rather high level of migration. So in 2001 year 7.3 thousand people left the republic and quantity those who arrived had only 2.3 thousand. Azerbaijan is remarkable for rather life expectancy 72-years (women 75.2 years, men - 68.8 years). In every 100 thousand in habitants there are more 80 persons having the age of 100 and more years.

Labour Migration

In 2005 1.342 men and 1,564 women left the country (46.18% and 53.82%, respectively

Persons seeking a "refugee" status  in Azerbaijan now.

There are more than 11 thousand people seeking "refugee" status (asylum seekers) in Azerbaijan. Most of them are Russian citizens of Chechen origin, as well as persons from Afghanistan, Iran, Iraq, and Palestine.

So, there are about one million refugees, IDPs and persons seeking a "refugee" status (asylum seekers) in Azerbaijan now.

Azerbaijan is a polytechnic and multireligious country

Historically Azerbaijan always was a polytechnic and multireligious country. On data of the last population census (1999 year) the ethnic background is divided up in such way the Azerys - 90.6%, Lezgy -2.2%, Russians - 1.8%, Armenians - 1.5% (they are concetrated inside of separatical Mountain Kharabach or they live in the mixing families). Talyshes - 1%, Avarians - 0.6%, Tatars - 0.4%, Turkeys - 0.5%, Ukrainians - 0.4%, Kurds - 0.2%, Georgians - 0.2%, Kahurs - 0.2%, Tats - 0.13%, Jews - 0.1%, Udins - 0.05% and the others - 0.12%. The general number of those who speaks motherland language among the national minorities is 99.2%. The representatives of different ethnic group have been taking in the cultural and economic life of country. The separatist nationalistic movements (if we detach ourselves from Armenian separatism) whose the activity peak was in 1993-1994 years had not the real mass support. Azerbaijan government officials and society always go to meet the needs and wishes of minorities at all points as for culture, education, and representation in power structures. It is sure to stabilize interethnic relations and promote minorities integrating into Azerbaijan society.

The State

Azerbaijan is a civil, democratic Republic. The National Referendum passed and approved Azerbaijan Constitution in the 12 of November, 1995. in October 18th, 1991 Republic proclaimed its independence. The Azerbaijan political system is based on power-sharing principles: executive, legislative and judicial. The president is a state head. He possesses the executive power. The post of the Azerbaijan Republic President was set up in 1991. The President is elected by private voting for the universal election. His term of office is 5 years, but no more two times. The highest authority of the executive power is the Minister Cabinet appointed by the President and approved by Parliament. The activity of officials is determined by Azerbaijan Constitution passed for the referendum in November, 1995.

The legislative power is realized by Parliament named Milli Medjlis. It consists of 125 deputies elected by universal voting for 5 years. Respectively the last parliament election conducted in November  6th 2005.

The Azerbaijan judicial power belongs to independent courts: the Constitutional Court, the Supreme Court and the Highest Economic Court. The highest court authority is the Supreme Court elected by Parliament for 5 years. The Supreme consists of two chambers on criminal and civil affairs. Local courts realize the legal proceedings.

Economic

In may 1994 after concluding Azerbaijan - Armenian Agreement on the Cease-Fire and stabilizing of political situation, the economy fall was stopped off. In Republic they got under way of stabilization program. The leadership of Azerbaijan conducts the structural and branch reforms calling for helping Azerbaijan economy to get out of crisis. The government progressed to significant degree decreasing the inflation level. The consistent monetary program in the close cooperation with ICR promoted enjoying the population's confidence to national currency -manat.

There conducted the reforms in the financial-banked system, passed tax, custom, civil and civil-proceeding codes, laws on foreign investments protection, securities, leasing, tenders. Banks, join-stock companies and other founding laws and normative acts. There created necessary legal base normalizing free enterprise. The government has been conducting the successful privatization of state property. Passing the law of land reforms the very important step establishing the private property land rights for the country's citizens. The share of non-state sector for forming GDP has already reached more than 85%. Trade, agriculture, consumer services, public transportation belong to private enterprise.

MAIN FORECASTED ECONOMIC INDICATORS OF THE REPUBLIC OF AZERBAIJAN FOR 2003-2005
Indicator	Unit	2000	2001	2002	2003	2004	2005
Gross Domestic Product (GDP)	billion manat	23590,3	26341,8	28797,1	32800,0	35600,0	41500,0
real growth rate	%	111,1	109,9	109,2	109,5	107,5	116,0
index deflator	%	112,0	101,6	100,1	104,0	101,0	100,5
share of private sector	%	69,6	70,7	72,0	72,5	74,0	75,0
From the volume of GDP:
- non-oil sector	billion manat	16569,3	18582,7	20785,4	23706,4	26383,3	28505,9
real growth rate	%	113,2	110,7	109,5	111,3	110,6	107,3
index deflator	%	99,1	101,3	102,1	102,5	100,7	100,7
- oil sector	billion manat	7021,0	7759,1	8011,7	9093,6	9216,7	12994,1
real growth rate	%	102,1	107,9	108,9	105,1	99,4	141,0
index deflator	%	141,3	102,4	94,8	108,0	102,0	100,0
Share of oil sector in GDP	%	29,8	29,5	27,8	27,7	25,9	31,3
Average yearly export price of 1 barrel oil	USD	28,9	24,8	23,0	19,5	20,0	20,0
GDP per capita	thsd manat	2919,2	3235,7	3502,3	3959,9	4263,5	4934,6
	USD	652,5	695,0	722,1	792,0	827,9	939,9
Structure of GDP
Industry	billion manat	8494,5	9257,1	9705,6	10995,2	11641,2	14940
real growth rate	%	106,9	107,7	105,9	106,1	104,3	126,4
price index	%	124,6	102,6	99,0	106,8	101,5	101,5
Agriculture	billion manat	3755,3	4173,3	4480,0	4833,5	5162	5810
real growth rate	%	112,1	111,1	107,3	107,9	106,8	112,6
price index	%	100,0	100,0	100,0	100,0	100	100
Construction	billion manat	1539,6	1632,3	2343,2	3345,1	3844,8	4980
real growth rate	%	102,6	106,0	143,6	142,8	114,9	129,5
price index	%	100,0	100,0	100,0	100,0	100	100
Trade	billion manat	1574,9	1777,8	1985,5	2200,0	2420,8	2656
real growth rate	%	109,8	110,6	109,0	108,6	107,9	107,6
price index	%	102,9	102,1	102,5	102,0	102	102
Transport	billion manat	2266,5	2513,7	2732,8	2975,4	3204	3444,5
real growth rate	%	112,3	110,9	108,7	108,9	107,7	107,5
price index	%	109,3	100,0	100,0	100,0	100	100
Communication	billion manat	569,1	648,0	754,8	851,0	925,6	996
real growth rate	%	133,9	113,9	116,5	112,7	108,8	107,6
price index	%	100,0	100,0	100,0	100,0	100	100
Social and non-formal services	billion manat	3934,4	4277,0	4587,0	4910,4	5901,6	6173,5
real growth rate	%	105,8	106,6	105,1	105,0	118,3	102,8
price index	%	100,0	102,0	102,0	102,0	101,6	101,8
Net taxes on product and import	billion manat	1456,0	2062,6	2208,2	2689,4	2500	2500
Structure of GDP (at current prices)	%	100,0	100,0	100,0	100,0	100,0	100
of which:
- industry	%	36,0	35,1	33,7	33,5	32,7	36
- agriculture	%	15,9	15,8	15,6	14,7	14,5	14
- construction	%	6,5	6,2	8,1	10,2	10,8	12
-services, total	%	41,5	42,8	42,6	41,5	42,0	38,0
of which:
Trade	%	6,7	6,7	6,9	6,7	6,8	6,4
Transport	%	9,6	9,5	9,5	9,1	9	8,3
Communication	%	2,4	2,5	2,6	2,6	2,6	2,4
Other sectors (supplement, community, health, education, science, VAT)	%	22,9	24,1	23,6	23,2	23,6	20,9
Investments by all sources (including foreign investments)	billion manat	6574,5	7273,1	10822,5	13189,5	13655,4	14475,8
	USD mln	1469,5	1562,1	2231,4	2637,9	2651,5	2757,3
growth rate	%	101,6	110,6	148,8	121,9	103,5	106,0
1.Internal investments	billion manat	2301,5	2188,7	2335,0	2924,5	3046,4	3503,3
	USD mln	514,4	470,1	481,4	584,9	591,5	667,3
growth rate	%	116,5	95,1	106,7	125,2	104,2	115,0
2.Foreign investments, total	billion manat	4273,0	5084,4	8487,5	10265,0	10609,0	10972,5
	USD mln	955,0	1092,0	1750,0	2053,0	2060,0	2090,0
growth rate	%	95,1	119,0	166,9	120,9	103,4	103,4
Project credits	USD mln	263,0	192,0	222,0	213,0	160,0	160,0
Direct investments	USD mln	692,0	900,0	1528,0	1840,0	1900,0	1930,0
of which:
oil sector	USD mln	574,0	820,5	1448,0	1720,0	1750,0	1750,0
Retail commodity circulation at all branches of sale	billion manat	10599,0	11877,0	13325,0	15000	16753,2	18626,2
real growth rate	%	109,8	109,9	110,0	110,9	109,5	109
price index	%	102,2	102,0	102,0	101,5	102	102
Money income of population	billion manat	17554,0	19381,8	21700,0	24900,0	27000	29200
growth rate	%	108,8	110,4	112,0	114,7	108,4	108,1
Expenditure of population	billion manat	17347,0	18800,0	20700,0	23200,0	25700	28000
growth rate	%	108,9	108,4	110,1	112,1	110,8	108,9
Average monthly wages and salaries of employed persons	thsd manat	221,6	260,0	320,0	407,1	468,2	538,4
growth rate	%	120,2	117,3	123,1	127,2	115	115
of which:
Public sector	thsd manat	192,4	211,5	250,0	293,2	351,8	415,2
growth rate	%	116,0	109,9	118,2	117,3	120	118
of which:
Budget organizations	thsd manat	121,0	139,4	162,8	210,0	247,8	285,0
growth rate	%	120,0	115,2	116,8	129,0	118	115
Non -government sector	thsd manat	418,0	586,5	650,0	735,0	823,2	905,5
growth rate	%	101,7	140,3	110,8	113,1	112	110
Volume of paid services to population	billion manat	2386,0	2486,9	2648,5	2807,4	2975,9	3154,4
growth rate	%	105,8	105,6	106,5	106,0	106	106
price index	%	99,5	98,7	100,0	100,0	100,0	100,0
Consumer price index (inflation)	%	101,8	101,5	102,5	102,5	102,5	102,5
Average yearly rate of national currency to USD	manat	4474,0	4656,0	4850,0	5000,0	5150	5250
Volume of foreign trade	USD mln	2917,0	3745,0	3450,0	3500,0	3600,0	4400,0
of which:
Export	USD mln	1745,0	2314,0	2000,0	1950,0	2000,0	2750,0
Import	USD mln	1172,0	1431,0	1450,0	1550,0	1600,0	1650,0
Trade balance (+/-)	USD mln	573,0	883,0	550,0	400,0	400,0	1100,0
Balance of payments
Account of current transactions	USD mln	-167,7	-51,8	-610,0	-871,0	-1156,0	-570,0
Volume of foreign trade on goods and services	USD mln	4142,0	4700,0	4975,0	5225,0	5390,0	6210,0
of which:
Export	USD mln	2118,0	2604,0	2325,0	2315,0	2380,0	3150,0
Import	USD mln	2024,0	2096,0	2650,0	2910,0	3010,0	3060,0
Trade balance (+/-)	USD mln	94,0	508,0	-325,0	-595,0	-630,0	90,0
Capital and finance account	USD mln	441,9	317,4	897,0	1198,0	1485,0	1340,0
Reserve assets	USD mln	-274,2	-265,6	-287,0	-327,0	-329,0	-770,0

Economicy

Since launching the State Programme for Poverty Reduction and Economic Development for 2003-2005, the poverty level was pushed down from 49% in 2003 to 40.2% at the end of 2005. Poverty reduction as a fundamental component of the Millenium Development Goals is a major target for the State Programme of Regional Socioeconomic Development for 2004-2008. According to the State Statistical Committee, 29% of population lived below the poverty line in 2005.  Poverty is highest (72.5%) among the internally displaced persons (IDPs); out of 300,000 able-bodied IDPs, about 200,000 are unemployed.

According to official statistics, GDP per capita is USD 939.9. The average monthly wage is AZM 534,000, a figure quite significant by CIS standards. From 1 July 2005 the minimum wage was raised by 20% to AZM 150,000. The monthly minimum consumption, AZM 194,000 in 2004, rose because of inflation to AZM 213,000 in 2005. The 2005 state budget allocated AZM 1,539,128,067,000 for social protection.

The minimum consumption basket in Azerbaijan is defined to contain the monthly minimum of foodstuffs (at the requisite 2,250 kcal per day level) and a number of non-food goods and services and is inclusive of mandatory payments, dues and taxes.

In 2005 20.9% of GDP from the state budget went to the social sector. Budget allocation for education was 25% more and for health care 44% more than in the preceding year.

From 2005  mandatory social contributions are fixed at 25% of the salary, of which employers pay 22% (out of their payroll provision) and the employee contributes 3%. By the amount of the average pension, Azerbaijan is currently in the fifth position among the CIS countries, after Kazakhstan, Russia, Belarus and Ukraine. The average pension in Azerbaijan is 25%.