GENERAL

• Country Map

 

• Historical Outline

Scientists included into Azerbaijan «…lands inhabited by the Azerbaijani Turks, the people, which inhabited the region ranging from the northern slopes of the Caucasian mountains along the Caspian Sea to the Iranian plateau». Azerbaijan is one of the regions of ancient human settlements; its territory was inhabited during the Palaeolithic period. In 7-6 millennia B.C. the agricultural and cattle-breeding settlements were spread here. Scientists dated the rock drawings in Gobustan near Baky as belonging to the end of the 7th or the beginning of the 6th millennium before the B.C. The famous Norwegian explorer Thor Heyerdahl, who specially travelled to Baky in 1979 and 1994 to study these drawings, believed that the Caspian Sea shores were, in fact, the cradle of civilization that later spread southwards and northwards via waterways. T.Heyerdahl found the confirmation of his hypothesis not only in the pictures of the Gobustan pirogues repeatedly drawn thousand years later by the Vikings on the rocks in Norway, but also in sagas that were written as late as the Middle Ages. The rock drawings, depicting ships with the Sun over them, which were discovered in Gobustan, also confirm the connection between the early settlements in Azerbaijan and the Shumer-Akkadian civilization of Mesopotamia, which has bequeathed the similar cultural monuments to history.

In the 3rd and the beginning of the 2nd millennium B.C. the prerequisites for the early class societies, early urban civilisation and early state formations were created. Tribal unions of Aratta, Kuti and Lullubi appeared here. The first state to be formed on the territory of historical Azerbaijan, according to Shumer cuneiform sources, was the State of Aratta, which sprung up to the south and southeast of the Lake Urmia in the first half of the third millennium B.C. In the 23rd century B.C. the second ancient State to arise on the territory of Azerbaijan - the State of Lullubum - came into being to the south of the Lake Urmia. In the second half of the 3rd millennium B.C. the State of Kutium was established to the west and southwest of the Lake Urmia. In the year 2175 B.C. the forces of Kutium conquered Shumer and Akkad, where they ruled for 100 years.

The most ancient Azerbaijani States maintained political, economic and cultural ties with Shumer and Akkad, were part of the overall region of the Mesopotamian civilization and were ruled by the dynasties of Turkic origin. The Turkic-speaking peoples that inhabited the territory of Azerbaijan from the ancient times were fire-worshippers and professed one of the world's oldest religions - Zoroastrianism. The name of the state originates from the present-day form of the Turkic word combination meaning «land, noblemen who keep the fire».

Since the second half of the 9th until the 8th century B.C. the State of Manna existed in the region near the Lake Urmia. The Cimmerian-Scythian-Saka kingdom existed in 7-6th centuries B.C. in the western part of South Azerbaijan.

In the 70s of the 7th century B.C. a Midian kingdom appears on the territory of Azerbaijan, which was replaced by the Persian State of Akhaemenids in the middle of the 6th century B.C.

The State of Atropatene, which was formed in the southern part of the territory around the year 320 B.C. and played an important role in the history of Azerbaijan.

In the third century B.C. the State of Caucasian Albania was formed in the north of Azerbaijan with its southern borders extending along the river Araks. The people of Albania (one of the ancestor nations of contemporary Azerbaijanis) consisted of various ethnic groups, the overwhelming majority of whom spoke Turkic languages. Albania was converted to Christianity in the year 313 B.C. Albania comprised also the mountainous part of Karabakh.

In the 1st-4th centuries when the whole Caucasus was subjected to Rome, Albania remained the only independent state, the political independence of which provided for the flourishing of the Albanian writings, language and literature. During that period the influence of the office of auto cephalic Albanian Catholicos, Albanian Church, which was independent of other Christian churches and even spread Christianity among North Caucasian and Turkic peoples.

The fact that the population of Albania and Atropatene lived within a unitary state and professed common religion helped to consolidate the people of Azerbaijan. The Khurramite movement in Azerbaijan, headed by Babak, at the beginning of the 9th century, incorporated the ideas of freedom, independence and universal equality.

As a result of anti-Caliphate struggle of the local population in the 9th century several new states appeared in Azerbaijan, the strongest of them being the Shirvan state with the capital city of Shamakhi, where the Shirvanshah dynasty ruled. That state existed until the 16th century and played a big role in the history of a medieval Azerbaijan. In the 9th to the 11th centuries independent States of the Sajids, Salarids, Ravvadids (with the capital city of Tabriz) and the state of Sheddadids (with the capital city of Ganja) appeared on the territory of Azerbaijan.At the end of the 11th century the dynasty of Seljukids ruled in Azerbaijan. In 1136-1225 the Atabay Eldeghizid State existed in Azerbaijan.

Common Turkic language, ethnic Turkic origin, Islamic religion of the native population led finally to consolidation of the Azerbaijani people, which finished, mainly, in the 11th-12th centuries. At that period the culture of Azerbaijan flourished when Azerbaijani philosophers, architects, poets and scientists became known to the world. The works of the poet and philosopher Nizami Ganjavi who contributed into the golden treasury of the world culture became the peak of the public and cultural thought in the Azerbaijan of the that period.

During the 12th and 13th centuries the Khachen Principality came to the fore in the mountainous part of Karabakh under the rule of Albanian kings. The rule of Hassan Jalal (1215-1261) ushered in the Albanian revival and saw the completion of the construction of the Gandzasar monastery complex, which became the foremost cathedral of the country. This monastery was sanctified by the catholicos of Albania.

Since the mid-13th century the Azerbaijani states became vassals of the Mongol State of Khulaguids (1258-1356). In the middle of the 14th century a local feudal lord Jalayir, who founded the state of Jalairids, supported by Azerbaijani nobility came to power as a result of the struggle of the local population against foreign oppression.

Since the end of the 14th century Azerbaijan became the object and arena of Timur the Great’s struggle with the Golden Horde.

In 1410-1468 the Turkic dynasties of Garagoyunlu and in 1468-1501 Aghgoyunlu ruled in Azerbaijan, when it reached a considerable influence. In 1501 the state of Safavids (named after the ruling dynasty) with the capital in Tabriz appeared, which in the beginning of the 16th century for the first time in the history of Azerbaijan united all Azerbaijani territories into one Azerbaijani state of Safavids. The territory of the Safavid state extended from the Amu–Darya to the Euphrates and from Derbent to the Persian Gulf. It was formed and developed as an Azerbaijani state, the political power being in the hands of the Azerbaijani nobility. High-ranking court dignitaries, militaries, regional rulers were designated from among it. The army consisted of units of the biggest Azerbaijani tribes. The state language of the Safavid state was Azerbaijani. To the end of the 16th century the capital of the Safavid state was transferred to Isfahan. The Shah relied on the Persian nobility and the state governed by the Azerbaijani dynasty acquired Persian features.

In the 40s of the 18th century as a result of weakening of the Shah power 20 independent khanates appear on the territory of Azerbaijan, such as Ardebil, Baky, Ganja, Derbent, Kavad, Karabakh, Garadag, Irevan, Guba, Maku, Maraga, Nakhchivan, Salyan, Urmia, Khoy, Tabriz, Talysh, Sarab, Shirvan, Sheki khanates. Besides khanates, there existed Gazakh-Shamsadil, Borchali, Ilisu, Arash, Gutgashen, Gabala sultanates. Moslem Azerbaijani- and Christian Albanian-populated Upper Karabakh was a part of the Azerbaijani Karabakh khanate, which, on the whole, consisted of territories between the Kura and the Araks rivers. This khanate included as vassals Dizag, Varanda, Khachin, Jilabort and Gulistan melikates, covering the mountainous part of Karabakh.

Occupying a beneficial strategic and geopolitical position, Azerbaijan becomes the arena of struggle for domination between Iran, Russian and Ottoman empires at the end of the 18th – the first third of the 19th centuries. Some khanates defended their statehood with arms in their hands. Others were forced to conclude vassal agreements in order to protect their interests.
Thus, on May 14, 1805 at the river Kurak a tractate was signed with the Azerbaijani Khan Ibrahim on submission of the Karabakh khanate under the Russian rule, which is an important document testifying to that Karabakh historically belonged to Azerbaijan.

The first Russian-Iranian war (1804-1813) for the establishment of the domination over the Azerbaijani khanates resulted in the first division of the Azerbaijani territories between Russia and Iran. The Gulistan peace treaty signed on October 12, 1813, between Russia and Iran de jure recognized joining to Russia of the North Azerbaijan khanates, excluding Nakhichevan and Irevan khanates, that actually taking place during 1800-1806. As a result of the second Russian-Iranian war (1826-1828) the Turkmenchai peace treaty was signed on February 10, 1828, according to which Iran confirmed its refusal to claim North Azerbaijan and finally recognized, including Nakhichevan and Irevan khanates, its joining to Russia. It is important to note that all above-mentioned khanates, including Karabakh, were joined to Russia as purely Azerbaijani property. They were Azerbaijani lands from the point of view of the Azerbaijani population dominating on these territories and national identity of the feudal elites (khans, owners of large arable lands, clergy, etc.).

According to Turkmenchai treaty and the peace treaty concluded in Edirne in 1829, Armenians living at that time in Iran and Ottoman Empire were resettled to Azerbaijan, mainly to Nakhchivan, Irevan and Karabakh khanates.

Thus, the Russian scientist K.Shavrov admitted that only from 1828 to 1830 40 thousand Armenians from Persia and 84 thousand Armenians from Turkey were resettled to Transcaucasus, who were «placed on the best lands of Yelisavetpol (Karabakh) and Erivan provinces, where the Armenian population was insignificant and they were given 200 thousand dessiatinas (measure of land) of government lands».

As the famous Russian diplomat and poet A.S.Griboyedov wrote, «Armenians were mostly settled on the territories of Moslem landowners ... The settlers... press Moslems… We also discussed a lot about suggestions to be made Moslems in order to convince them to reconcile with their present difficulties, which will not last for a long time, and to eradicate their fears on that the Armenians will get into possession of the lands they were let in for the first time (temporarily)».

The American scientist Justine McCarthy gives the following information on the settlement of South Caucasus, namely, Azerbaijan, by the Armenians. During 1828-1920 in the process of implementation of the policy aimed at the transformation of demographic structure of Azerbaijan in favour of Armenians at the expense of Azerbaijanis, «more than 2 million Moslems were forcefully ousted, their unestablished number was killed… Two times, in 1828 and 1854 the Russians invaded Eastern Anatolia… and twice were forced to leave, taking 100 thousand Armenians to the Caucasus, where the latter were settled instead of the Turks (Azerbaijanis) who emigrated or died.

During the war of 1877-1878 Russia seized Kars-Ardagan region, ousting Moslems and settling 70 thousand Armenians there... Approximately 60 thousand Armenians resettled to the Russian Caucasus during the events of 1895-1896… The migration that occurred during World War I resulted in an almost equal exchange of 400 thousand Armenians from Eastern Anatolia to 400 thousand Moslems from the Caucasus».

According to the American scientist, from 1828 to 1920 560 thousand Armenians were resettled to Azerbaijan. Thus, it was after Russia conquered South Caucasus that the Armenian population on the territory of Azerbaijan to the North of the River Araks began to increase sharply.

As for Karabakh, according to official data of 1810, i.e. shortly before joining to Russia, there were up to 12 thousand families in the Karabakh khanate, including 9500 Azerbaijani and only 2500 Armenian ones. According to the data of 1823, there was one town in the Karabakh khanate, namely Shusha, and about 600 villages (including 450 Azerbaijani and about 150 Armenian villages), where there were about 90 thousand inhabitants. In Shusha there were approximately 1048 Azerbaijani and 474 Armenian families, and in the villages 12902 and 4331 families, respectively.

Armenians, living in Karabakh, are actually descendants of the Armenianized local Albanian population. The Armenian historian B.Ishkhanian wrote: «The Armenians, living in Nagorno-Karabakh, are partly aborigines, the descendants of ancient Albanians…, and partly refugees from Turkey and Iran, for whom the Azerbaijani land became a refuge against persecutions».

In accordance with the decree of the Russian emperor Nikolai I of March 21, 1828, the Azerbaijani khanates of Nakhichevan and Irevan were abolished and instead of them a new administrative unit called «Armenian Region» was created, governed by the Russian officials. In 1849 the mentioned region was re-named to Erivan province.

Pursuing their far-reaching goals, in 1836 the Armenians achieved the liquidation by the Russian authorities of the Albanian Christian patriarchate that functioned in Azerbaijan and the transfer of its property to the Armenian Church. When the western provinces of the former Albania, i.e. the Karabakh region where the Armenian elements penetrated, were losing their state and religious independence, some time later the Gregorianization (Armenianization) of the local Albanian population began.

After the revolutionary developments of 1917 centrifugal tendencies in Russia intensified, and the prerequisites for the formation of independent states on the territory of the national outlying districts of the former Russian empire were created. On May 28, 1918, the Azerbaijan Democratic Republic (ADR) was proclaimed on the territory of the eastern part of South Caucasus. It was the first parliamentary democracy in the Moslem Orient, which played a historic part in the revival and further development of national consciousness and statehood of the Azerbaijani people.

The official doctrine of the national and state development of the ADR became the notion of «Azerbaijanism», main elements of which became the principles of modernism, Islamism and Turkism, symbolizing the strive of the Azerbaijani people for the progress on the basis of preservation of belonging to Moslem civilization and Turkic cultural and ethnic originality.

During short 2 years the multiparty Azerbaijani parliament and the coalition governments managed to take a number of measures in national and state building, education, creation of army, independent financial and economic systems, international recognition of the ADR as the subject of world community of nations. On January 11, 1920, the Supreme Council of the Paris (Versailles) conference recognized de facto independence of the ADR. By that time in the capital of the ADR – the city of Baky – there were already representatives of 20 countries of the world.

However, in 1919-1920 the internal and foreign political situation of the ADR considerably complicated. The country found itself at the crossing of the bitter struggle between the members of the Entente, Turkey, Russia and Iran. Each of them pursued its own geopolitical goals in this strategically important region, which was rich in oil. The policy of non-recognition of the ADR carried out by the government of the Bolshevist Russian Soviet Federative Socialist Republic (RSFSR), a reach of the 11th Red Army of the ADR boundaries in spring of 1920, the aggression of the Dashnak Armenia against the ADR in Karabakh and Zangezur, terrorist actions of the Armenian and Bolshevik parties against the peaceful Azerbaijani population, socio-economic crisis in the country – all these factors resulted in weakening of the ADR and the occupation of its capital city by the 11th Red Army on April 27-28, 1920 – in accordance with the telegram of the Headquarters of the Caucasian Front to the Command of the 11th Red Army of May 1, 1920, the troops of the RSFSR were ordered to further «seize the whole territory of Azerbaijan within the boundaries of the former Russian empire without crossing the border of Persia».

70 years of membership in the USSR became a new and important stage in the Azerbaijani statehood, during which the Azerbaijan SSR achieved a considerable success in social, economic and cultural development. At the same time during the Soviet period of development, like in the whole USSR, there were also many negative tendencies in Azerbaijan.

Economically the country became an appendix of fuel and raw materials, as well as agricultural products of the Soviet economy. In the cultural sphere, as a result of the change of alphabet – from Latin to Cyrillic – the links to the written sources of spiritual culture of the Azerbaijani people were lost. The Soviet regime did everything to suppress any strive of the Azerbaijani intelligentsia to show national originality, to study the true history of its country.

During the Soviet times the territories of Zangezur, Goycha, a part of Nakhchivan and other regions were taken from Azerbaijan in favor of the neighboring Armenia. As a result the territory of Azerbaijan that during the times of the ADR in 1920 constituted 114 thousand sq. km, reduced to 86.6 thousand sq. km during 1920-1991. Besides, on July 7, 1923, at the initiative of the Moscow leadership of the Bolshevik party, the Nagorno-Karabakh Autonomous Region with dominating Armenian population was artificially taken out of the part of historic Karabakh, the majority of its population being Azerbaijanis. This decision became the first step on the way of goal-oriented policy of separation of Nagorno-Karabakh from Azerbaijan.

In 1988-1990 national democratic movement of Azerbaijan led an active struggle for the restoration of country’s independence. With the aim of suppressing this movement the units of the Soviet Army were brought to Baky on January 20, 1990 with the permission of the USSR leadership headed by M.Gorbachev. As a result of punitive measures carried out with unseen brutality hundreds of citizens of Azerbaijan were killed and wounded. A state of emergency was introduced in the country, which lasted until mid-1991. Despite this as a result of the continued struggle of the patriotic forces of the Azerbaijani people for independence the Supreme Soviet of the Azerbaijan SSR adopted a declaration «On the restoration of the state independence of the Azerbaijan Republic» on August 30, 1991.

On October 18, 1991, the Constitutional Act of the Republic of Azerbaijan «On the state independence of the Azerbaijan Republic» was adopted, which laid basics of the state, political and economic structure of independent Azerbaijan. Since that moment the Azerbaijan Republic, after the 71-year interval, again became an independent subject of international law.
 

PRESIDENT OF THE REPUBLIC OF AZERBAIJAN

H.E. Ilham ALIYEV

Biography

Ilham Heydar oglu Aliyev was born in December 24 of 1961 in Baku.

From 1967 through 1977 he studied in school in Baku.

In 1977 he entered Moscow State University of International Relations (MSUIR).

After his graduation in 1982 Mr. I.Aliyev continued his education as post graduate student in MSUIR.

In 1985 he finalized his research and received PHD in history.

From 1985 through 1990 he was a lecturer of Moscow State University of International Relations.

From 1991 through 1994 he led a group of private industrial-commercial enterprises.

From 1994 through 2003 he was a vise-president, and later a first vise-president of State Oil Company of the Republic of Azerbaijan (SOCAR). He was actively involved into the implementation of "Heydar Aliyev's oil strategy".

He is author of a number of researches on geopolitical aspects of oil strategy of sovereign Azerbaijan. He is Doctor of Political Sciences.

In 1995 and 2000 he was twice elected to Milli Majlis (Parliament) of the Republic of Azerbaijan. In 2003 he stopped his activity as a member of Parliament due to the appointment to the post of Prime minister of the Republic of Azerbaijan.

Since 1997 he is the President of National Olympic Committee of Azerbaijan. For his great contribution to the development of sports and Olympic movement Mr. Aliyev was awarded the highest order of International Olympic Committee.

Was elected in 1999 deputy chairman of the New Azerbaijan Party in power, first deputy chairman in 2001 and chairman of the Party in 2005.

From 2001 through 2003 he was the head of Azerbaijani Parliamentary delegation to Parliamentary Assembly of Council of Europe (PACE).
In January of 2003 he was elected as Deputy-Chairman of Parliamentary Assembly of Council of Europe and member of bureau of PACE.

In April of 2004 for his active participation in PACE events and commitment to European values Mr.Aliyev was awarded a medal and diploma of honorable member of PACE.

In August 4 of 2003 after confirmation of Milli Majlis (Parliament) he was appointed as the Prime Minister of the Republic of Azerbaijan.

In October 15 of 2003 he was elected as the President of the Republic of Azerbaijan. More than 76 % of voters supported Ilham Aliyev's candidacy during the elections. He assumed his post in October 31 of 2003.

Mr. Aliyev is fluent in Azerbaijani, Russian, English, French and Turkish.

Mr. I. Aliyev is married, has three children.  

NATIONAL SYMBOLS

The state symbols of the Republic of Azerbaijan are the state flag, state emblem and state anthem.
 

• The State Flag




The state flag of the Republic of Azerbaijan consists of three horizontal stripes of the same width. The upper stripe is blue, the middle stripe is red and the lower stripe is green, with a white crescent and eight-pointed star in the middle of the red stripe. The blue color is the color of Turkic (Azerbaijani) ethnos, red color symbolizes the adherence to freedom, democracy and human rights, and the green is the color of Islam. There is a white crescent and eight-pointed star in the middle of the red stripe. The star is the reflection of the eight different branches of the Turkic people. The ratio of the height of the flag to its length is 1 to 2.

• The State Emblem



The star, also seen in the flag, has the same meaning, namely, the eight different branches of the Turkic people. This eight-pointed star framed by gold, is superimposed on three circles: the inner one is green, the middle one is red, and the outer one is blue. These colors match the flag colors. Between each star point, on the blue circle, there are also smaller gold-framed eight-pointed stars. Inside the main central star there is a fire. The fire recalls the country's other name: Land of fire. This fire symbolizes also freedom. The shield stands on a golden ear of corn.

NATIONAL ANTHEM

On January 30, 1920 government of Azerbaijan Democratic Republic adopted resolution on working-out the National Anthem of republic. With this aim it was announced a competition of the best National Anthem. But in the result of fall on April 28, 1920 of Azerbaijan Democratic Republic Anthem wasn't adopted.
On May 27, 1992 Milli Majlis adopted the law "About the State Hymn of the Republic of Azerbaijan", according which the "Azerbaijani march" of the great composer Uzeyir Hajibeyov and the poet Ahmed Javad, which was created in 1919, was approved as the State Anthem of Republic of Azerbaijan.

 

Music by Useir Hajibayov
Words by Ahmad Javad

Azerbaijan, Azerbaijan!
You are the country of heroes!
We will die so that you might be alive!
We will shed our blood to defend you!
Long live your three-colored banner!
Thousands of people sacrificed their lives
You've become the field of battles.
Every soldier fighting for youhas become a hero.
We pray for your prosperity,
We sacrifice our lives to you.
Our sincere love to you
Comes from the bottom of our hearts.
To defend your honor,
To hoist your banner,
All the young people are ready.
Glorious motherland,
Azerbaijan, Azerbaijan!

POPULATION AND RELIGIONS
1. Demography
1.1. Population (January, 2006)
8.436 million

1.2. Urban-Rural (2001)

Urban	4130,1	50.7%
Rural	4011,3	49.3%

1.3. Gender Politics (2001)

Males	3988,8	49.0%
Females	4152,6	51.0%

1.4. Major Ethnic Groups (2001)
The population of the Republic of Azerbaijan is multy-ethnic and includes the Azerbaijanis, who compose the majority of population as well as Lezgins, Russians
and others

• Religions

2.1.Islam
Islam was introduced into Azerbaijan in the 7th century by the Arabs, who were ruling Azerbaijan at that time. At present about 93 percent of the more than 8 million Azerbaijanis have a Muslim background, and from this majority, 65 to 75 percent are connected with Shiite tradition. Azerbaijanis form by far the largest Muslim ethnic group in Azerbaijan and belong mostly to the Twelver Shiite branch of Islam (about 75 percent). According to a recent survey, 4 to 6 percent of the population may be called "active" believers, meaning that they obey the various Islamic customs; 87 to 92 percent consider themselves Muslims but comply with only a few religious rules and customs. Only about 3 percent call themselves atheists. Whereas in 1976 there were only 16 registered mosques and one mədrəsə (Islamic school) in Azerbaijan, by the end of the Soviet period the figure had risen to about 200 mosques, and today this figure has increased dramatically to more than 1,300 mosques, innumerable Islamic schools, a working Islamic university, "Ilahiyyat Department" under Baku State University. This phenomenon of "religious renaissance" is taking place in parallel with a strong "national birth" or "rebirth".

2.2. Christianity
Christianity started to be introduced in Caucasus and Azerbaijan at the beginning of Common Era. Christianity in Albania covered two stages, Apostolic (1st to 3rd century) and Greekophil (4th to 6th century). After that the Albanian Church started to follow the Albanian national development, which resulted in organization of the Albanian written language and development of the Albanian literature. Nowadays there is no doubt that the Albanian Apostolic Church is the most ancient in the Caucasus, and one of the earliest in Christianity. The way of this development to some extend differs from the Armenian Church. Roots of the Albanian Church (as well as the Georgian Church) are related directly to the Jerusalimian Church and Jerusalimian Patriarchate, whereas the Armenian Church stems from the churches of Hellenic Ospoene and Kappadokia. The origin of the early Christian community in Albania was related to Apostles Thaddeus, Bartholomew, Eliseus. Albanian Catholicosate (patriarchate) was autocephalous in contrast to the Armenian and Georgian Catholicosates. The Albanians residing in the mountainous Karabakh region retained their Christianity until 1836, when the Russian authorities, on the instigation by the Armenian Church, abolished the Albanian patriarchate.

3.3. Zoroastrism
The first religion in Azerbaijan was Zoroastrianism. The people of Manna believed in natural phenomena; the Sun and the Moon. The official religion, Zoroastrianism, was based on fire worship, the spread of which was propagated by the spontaneous ignition of shallow oil deposits and escaping gas. The object of worship was Ahura Mazda, or Ohrmazd. Ahura Mazda is goodness, holy, supreme, and the creator of all things. The opposite of Ohrmazd was Ahriman - an evil soul. Zarathushtra, the creator of the religion, was born somewhere along the Oxus river, in present-day Iran and close to South Azerbaijan's Tabriz. As for Azerbaijan, the center of Zoroastrizm, a place called Atashkag (wish still exists as Ateshgah in Surakhani, just outside Baku) was in Gazaka town in Midia.

REGIONS AND CITIES

The Republic of Azerbaijan is situated on the junction of Asia and Europe, occupying south-eastern part of South Caucasus. It borders on the Russian Federation in the north, the Islamic Republic of Iran in the south, Turkey, Georgia and Armenia in the west, Kazakhstan and Turkmenistan in the east across the Caspian Sea. The Republic of Azerbaijan consists of the Nakhichevan Autonomous Republic.

The Republic of Azerbaijan consists 65 regions, 69 cities, 13 urban regions, 130 settlements of urban type and 4354 rural settlements.

POLITICAL

• Constitution
• Following a referendum on 12 November 1995, the new Constitution of the Azerbaijani Republic was adopted and entered into force on 5 December 1995.  The country’s basic law was developed in line with the fundamental principles and norms of international law.

• As stipulated by article 1 of the Constitution, “In the Republic of Azerbaijan, the Azerbaijani people shall be the sole source of State power”.

 

• Under article 2 of the Constitution, the people of Azerbaijan shall exercise their sovereign right directly through nationwide voting (referendums) and through representatives elected on the basis of universal, equal and direct suffrage by free, secret and personal ballot.

• Article 7 of the Constitution stipulates that the Azerbaijani State shall be a democratic, constitutional, secular and unitary republic.  In Azerbaijan, the power of the State shall be restricted in domestic matters only by the country’s law and, in foreign affairs, only by the provisions arising from international treaties to which the Republic of Azerbaijan is a party.  State power in the Republic of Azerbaijan shall be based on the principle of the following division of powers:

 

(a)     Executive power rests with the President of the Republic of Azerbaijan;

(b)     Legislative power is exercised by the Milli Meclis (parliament) of the Republic of Azerbaijan;

(c)     Judicial power is exercised by the courts of the Republic of Azerbaijan.

Pursuant to the Constitution, the legislature, executive and judiciary interact with one another and be independent within their various jurisdictions.

• In compliance with Article 8 of the Constitution the President of the Republic of Azerbaijan is the head of State.

 

• For the purpose of organizing the administration of executive power, the President of the Republic has established a cabinet of ministers, which serves as the supreme organ of executive power of the President of the Republic and is answerable and subordinate to the head of State.

• As stipulated by article 125 of the Constitution, judicial power in Azerbaijan is exercised only by the courts and on the basis of due process.  The courts comprise the Constitutional Court, the Supreme Court, the Economic Court, and the general and special courts.

 

• President 

In accordance with the Constitution of the Republic of Azerbaijan the President is the head of the Republic of Azerbaijan. He represents the Azerbaijan state in home and foreign policies. President of the Republic of Azerbaijan embodies the unity of the Azerbaijan people and ensures the continuity of the Azerbaijan state. The President of the Republic of Azerbaijan guarantees independence, territorial integrity and fulfillment of international Agreements to which the Republic of Azerbaijan is a party as well as ensures independence of Judicial power.  The President of the Republic of Azerbaijan is Commander in Chief of the Armed Forces. The Executive power in the Republic of Azerbaijan belongs to the President of the Republic of Azerbaijan. The President of the Republic of Azerbaijan has the right of immunity. The honor and dignity of the President are protected by Law.
The Office of the President creates the conditions for realization of constitutional responsibilities of the President. The President forms his Office and appoints its head.
The Office prepares the bills for submitting it to Milli Majlis by the President, and also the drafts of decrees, directions, instructions of the President, and submits him the corresponding reports.
The Office of President controls and checks the execution of laws, decrees, instructions and orders of the President, presents him corresponding reports.
The Office of President provides the interaction between the President and political parties, public organizations, professional and creative unions in Azerbaijan, and also state bodies and officials of foreign states, local and foreign political and public figures, international organizations.
The Office of President analyzes the information on social-economical, political and legal processes in country and allover the world, the appeals and proposals of institutions of local governing, public associations and citizens, prepares corresponding reports.
The President presides via his Office.
The functioning of the Office is managed by a head of Office.
Everyone can contact the Office via writing or calling or visiting the responsible official.
The branch of letters of Office analyzes all letters and appeals received, sends it to the departments of Office or bodies of state power managing corresponding issues.
The most important information from letters and appeals are included into different reports and presented to the President.
Financial-technical and pecuniary ensuring of activity of the President and Office is managed by Administrative Department of the President. The Administrative Department is not the part of the Office.
The Security Council is the deliberative body under the President and he organizes it according to the Article 109 (section 27) of the Constitution of the Republic of Azerbaijan. The Security Council provides the conditions for the realization of the constitutional authorities of the President on the protection of people rights and freedoms, independence and territorial integrity of the Republic of Azerbaijan.
The Security Council was established on 10 April, 1997 according to the decree of the President. According to the Decree the following officials have been appointed to the Council:
The President presides at the sessions of the Security Council. The Head of the Office of the President acts as the Secretary of the Security Council. The Head of the Office provides the activity of the Security Council, manages the preparation of sessions. The President determines the agenda and order of the discussion of issues at the session of Security Council according to the submission of the Head of the Office.

• Executive Branch 

The executive power is vested in a President of the Republic of Azerbaijan. The Cabinet of Ministers is the supreme Executive body of the President of the Republic of Azerbaijan headed by the Prime Minister.
The President of the Republic of Azerbaijan forms the Cabinet of Ministers with the aim of implementing the executive power. The Cabinet of Ministers is the supreme executive body of the President of the Republic of Azerbaijan, subordinate and accountable to the President.
The Cabinet of Ministers consists of the Prime Minister of the Republic of Azerbaijan, his Deputies, Ministers and Heads of other central bodies of Executive power. The Cabinet of Ministers:

• makes up the draft of the state budget of the Republic of Azerbaijan and submits it to the President and ensures its implementation;
• ensures realization of the financial, credit and monetary policy, putting into life state economic and social programs;
• ensures realization of the financial, credit and monetary policy, putting into life state economic and social programs;
• settles other issues which are attributed by the President to the Cabinet's jurisdiction.

On the day when the newly elected President has taken office and has entered upon his duties the Cabinet of Ministers shall resign.
The Prime Minister is appointed by the President in co-ordination with the Milli Majlis. Milli Majlis gives consent to the candidature to the post of the Prime Minister no later that one week from the day of the candidature representation. If the mentioned order is violated or consent is not given thrice to the appointment to the Prime Minister post of the candidatures represented by the President of the Republic of Azerbaijan, then the President can appoint the Prime Minister without the consent of Milli Majlis.
A citizen of the Republic of Azerbaijan no younger than 30 years old, having a University degree, no obligation in relation to any foreign State can be appointed Prime Minister. During the term of the office the Prime Minister enjoys personal immunity.
The members of the Cabinet of Ministers are appointed and removed from holding position by the President. A citizen of the Republic of Azerbaijan at the age no less than 25 years can be appointed Deputy Prime Minister, Minister, Head of other central Executive bodies.

• Milli Majlis (Parliament)

The legislative power is executed by Milli Majlis of the Republic of Azerbaijan. One chamber Milli Majlis consists of 125 deputies, elected for 5 years on the basis of majority election systems and universal, equal, direct elections by free, individual and secret ballot. Elections of the Milli Mejlis members shall be held every five years on the first Sunday of November. 
The term of office for the members of the Milli Mejlis of the Azerbaijan Republic shall be limited by the term of office of the Milli Mejlis of the Republic of Azerbaijan. 
If the new elections are held to replace the Deputies, that have quit the Milli Mejlis membership, with the new ones, the term of office of the newly elected Deputy shall be limited to the term of office of the Milli Mejlis of the Republic of Azerbaijan. Every citizen of the Azerbaijan Republic who has reached the age of 25 can be elected a Deputy – member of the Milli Mejlis of the Republic of Azerbaijan in the order determined by the Law. 
Persons who have dual citizenship, are in State service in other countries, work in Executive or Judicial bodies, Persons engaged in a different paid activity with the exception of scientific, creative and teaching work, ministers of religion, Persons whose inactivity has been confirmed by court, Persons who serve their sentence in places of confinement by the court's verdict cannot be elected Deputies.  The correctness of the results of the elections shall be checked and confirmed by the Constitutional Court of the Republic of Azerbaijan. 
The term of office of the members of the Milli Mejlis of the Republic of Azerbaijan shall expire on the day of  the first sitting of the newly elected Milli Mejlis of the Republic of Azerbaijan.
The elections to replace the Deputies who have left the Milli Mejlis of the Azerbaijan Republic shall not be held if less than 120 days remains till the expiration of the term of office. 
The Milli Mejlis of the Republic of Azerbaijan shall have power provided the authority of 83 members be confirmed. 
The Milli Mejlis shall summon two regular Sessions every year. The spring Session shall start on 1st of  February and it shall last till 31 of May. The fall Session shall start on 30th of September and it shall last till 30th of December. In case 1st of February and 30th of September fall on days off then the Session shall start its work the first following working day. If after elections to the Milli Mejlis the authority of its 83 members are confirmed till 1st of February, then Constitutional Court of the Republic of Azerbaijan shall fix the date of the first Session of the Milli Mejlis of the Republic of Azerbaijan.

• Judicial system

On accordance with the Constitution of the Republic of Azerbaijan Judicial power is executed by the Constitutional Court of the Republic of Azerbaijan, the Supreme Court of the Republic of Azerbaijan, Economic Court of the Republic of Azerbaijan, general courts and other specialized courts of the Republic of Azerbaijan.
Judicial power shall be exercised via constitutional, civil, administrative and criminal legal proceedings and in other means specified by the Law.
Judges shall be subordinate only to the Constitution and the Laws and shall be irremovable in accordance with the Law. Judges decide the cases in an unbiased, fair way, following the legal equality of the sides, on the basis of facts and in accordance with the Law.
Judges shall take decisions on behalf of the State and implementation of these decisions shall be binding on everyone.
The Supreme Court of the Republic of Azerbaijan is the highest judicial body in civil, criminal, administrative and other cases, referred to the activity of general courts; it exercises control over the activity of general courts in the order specified by the Law, gives explanations on issues concerning the practice of general courts.
The Judges of the Supreme Court are appointed by the Milli Mejlis of the Republic of Azerbaijan on the presentation of the President.
The Constitutional Court of the Republic of Azerbaijan - the first body of the judicial constitutional control in the history of Azerbaijan - was formed on July 14, 1998. The issue of establishment of the Constitutional Court of the Republic of Azerbaijan was finally solved after acceptance of the new Constitution on November 12, 1995 and since 1998 the Constitutional Court has been carrying its activity. Seven judges were elected by Milli Mejlis of the Republic of Azerbaijan upon presentation of the President of the Republic of Azerbaijan. The Constitutional Court of the Republic of Azerbaijan, as well as other bodies of judicial branch, is independent from other two branches of power - Legislative and Executive ones. At the same time its legal status differs in a number of features. Being ruled only by the Constitution of the Republic of Azerbaijan the Constitutional Court decides constitutional cases and deals exclusively with issues of the law. Constitution of the Republic of Azerbaijan and the Law on the Constitutional Court stipulate the status of the Court, its competence and forms of activity. The Law on the Constitutional Court and the Regulations, adopted by the Court itself, set the rules of constitutional case management. The basic principles of activity of the Constitutional Court are based on the principles of supremacy of the Constitution of the Republic of Azerbaijan, justice, independence, collective responsibility and openness. The competence of the Constitutional Court is determined directly by Article 130 of Constitution of the Republic of Azerbaijan.

• Commissioner for Human Rights (Ombudsman)

One of the most important actions, envisaged in the field of protection of rights and freedoms of a human in Azerbaijan, was setting up the institution of Ombudsman –
the Commissioner on Human Rights in the Republic of Azerbaijan. The activity of the Commissioner is secured and respectively regulated in the Constitutional Law of the Republic of Azerbaijan “On the Commissioner on Human Rights” adopted by Milli Majlis (Parliament) dated December 28, 2001.

According to the Article 1.1 of the Constitutional Law of the Republic of Azerbaijan “On the Commissioner on Human Rights”, the position of Ombudsman is set to secure the rehabilitation of human rights and liberties, as defined by the Constitution of the Republic of Azerbaijan and International Agreements Azerbaijan is party to and violated by the state authorities and local self-governing authorities and officials.

In July 2, 2002 there was a Resolution of Milli Majlis of the Republic of Azerbaijan on Appointment of the Commissioner of the Republic of Azerbaijan on
Human Rights (Ombudsman).

3 months since appointment on October 28, 2002, Ombudsman started receiving and considering the complaints of applicants: according to the provisions of the abovementioned law, for the purpose of implementation of legal, organizational, scientificanalytical, material and technical, financial and economical provision of the activity of the Commissioner the respective Apparatus was established.

The Apparatus functions in accordance with the Regulations “On Apparatus of the Commissioner of the Republic of Azerbaijan on Human Rights” approved by Ombudsman. The structure, manning-table and budget of the Apparatus of the Commissioner are approved by the Commissioner (Article 17 of the mentioned Law).

The operation of the Apparatus is financed on account of the state budget of the Republic of Azerbaijan (Article 19 of the above-mentioned Law). Ombudsman considers complaints of the citizens of the Republic of Azerbaijan and foreign citizens, as well as those without citizenship and legal entities with regards to violation of human rights (Article 8 of the Law).

• Local Government

In accordance with the Constitution of the Republic of Azerbaijan local self-government is carried out by municipalities. The Municipalities are formed based on elections. The foundations of the status of municipalities shall be determined by the Constitution and the regulations of elections to the municipalities shall be determined by law. The activity of municipalities is carried out by way of meetings, permanent and other commissions. The meetings of municipalities are summoned by their chairmen.
The Municipalities may be given additional authorities of legislative and executive power. To implement these authorities respective financing is required. Implementation of such authorities will be controlled respectively by legislative and executive power bodies.
Decisions at the meetings of municipality are taken by simple majority of voting members of municipality. Decisions related to local taxes and duties are taken by majority of two thirds of votes of municipality members.
Legal protection of municipalities, compensation of additional expenditures resulted from decisions made by state bodies are guaranteed.

• Foreign Policy of Azerbaijan

PRIORITIES

Promotion of the establishment of pluralistic democracy based on market economy and the rule of law;

Conduct of an independent foreign policy aimed at the soonest restoration of sovereignty and territorial integrity of Azerbaijan over its territory;

Elimination of threats and risks to the security, political independence, sovereignty and territorial integrity of Azerbaijan;

Peaceful settlement of the conflict with Armenia over Nagorno-Karabakh region of Azerbaijan through negotiations within the framework of the OSCE Minsk Group on the basis of the principles of the OSCE Lisbon Summit;

Elimination of the consequences of military aggression of Armenia against Azerbaijan;

Development of good-neighbourly and mutually advantageous relations with neighbouring countries;

Promotion of security and stability in the region;

Prevention of illegal arms and other transfers in the region;
Adherence to existing global non-proliferation regimes and establishment of a nuclear-free zone in the Southern Caucasus;

Demilitarization of the Caspian Sea basin;

Integration into European and Transatlantic security and cooperation structures, including NATO, EU, WEU, CE;

Facilitation of the development of various sectors of the country's economy with due consideration of Azerbaijan's crucial geostrategic location at the crossroads between the East and West;
Development of the Eurasian Transport Corridor of which Azerbaijan is a part.

• Political Parties and Public Organizations

Azerbaijan is a pluralist democracy. All citizens have the right to form and join political parties, free from government interference or coercion. Political parties are free to participate, unhindered, in the political process, according to the laws and Constitution of Azerbaijan.
Registered political parties number 32, with the largest being the New Azerbaijan Party. Other key political parties include: Azerbaijan Party of Popular Front, Azerbaijan National Independence Party, Musavat Party, Social Democratic Party, Azerbaijan Liberal Party, and Motherland’s Party. During the independent Azerbaijani Democratic Republic (May 28, 1918 – April 28, 1920) 22 political parties were represented in the Milli Majlis of Azerbaijan. They ceased to exist in April of 1920, when Azerbaijan was occupied by the Soviet Russia. In the period of Azerbaijan’s incorporation into the former USSR there was only one party - the Communist Party, which was dissolved in 1991 when Azerbaijan had regained its independence after the collapse of the former USSR.
Some of the political parties presently functioning in Azerbaijan and being relatively small are as follows:
Party of Revival and Progress, People’s Democratic Party, Party of National Democratic Conscience, Peasants’ Party, Party of Civil Consent, Party of Unity, National Party of Reunion of United Azerbaijan, Party of Azerbaijani National Movement, Azerbaijani Democratic Party of Independence, Azerbaijani Democratic Party of Owners, Party of National State, Azerbaijani Party of Patriots, Alliance in the Name of Azerbaijan, Azerbaijani Party of Democratic Enlightenment, Azerbaijani Party of Social Welfare, Communist Party of Azerbaijan.
Side by side with the political parties there are different public organizations functioning in Azerbaijan, which unite citizens according to professions such as the Azerbaijani Union of Writers, Azerbaijani Union of Composers, Azerbaijani Union of Musicians, Azerbaijan Union of Actors, Azerbaijani Union of Architects, etc.

There are 49 trade unions, numerous women, youth associations, and charity foundations. There are also cultural organizations for numerous ethnic minorities, unions and organizations supporting peace, uniting disabled persons and war veterans, education and science organizations, sport organizations, federations, and clubs.

• Human Rights overview

As stipulated by article 12 of the Constitution of the Republic of Azerbaijan, it is the paramount objective of the State to uphold human and civil rights and freedoms.
Chapter III of the Constitution is devoted to fundamental human and civil rights and freedoms.
A rapid process of legal and judicial reform has been conducted in Azerbaijan, embracing the adoption of, such instruments as the Criminal Code, the Code of Criminal Procedure, the Civil Code, the Code of Civil Procedure and etc. In addition, statutes have been adopted on the Constitutional Court, on the courts and judges, on the prosecutor system, on the bar and the legal profession, on the police, and on other important matters.  A totally reconfigured three-stage judicial system has been set in place.  New judges have been selected on the basis of examinations and appointed to their posts.  The country’s penitentiary system has been brought into line with international standards.

An act has been passed establishing an ombudsman’s office and amendments made to the acts on the Central Electoral Commission and on the mass media.  Appropriate changes have been made to the country’s laws to take into account of the views and recommendations of international organizations.

Section VIII of the Azerbaijani Criminal Code, which entered into force on 1 September 2000, deals with offences against the individual.  It contains chapters on offences against life and health (chap. 18, arts. 120-143); the freedom and dignity of the individual (chap. 19, arts. 144-148); the sexual inviolability and sexual freedom of the individual (chap. 20, arts. 149-153); constitutional human and civil rights and freedoms (chap. 21, arts. 154‑169); and matters relating to juveniles and families (chap. 22, arts. 170‑176).

The procedures for legal defense are also set forth in the Code of Criminal Procedure, the Penal Enforcement Code and the statutes on the consideration of applications by citizens, of 10 June 1997; on compensation for injury caused to individuals through the unlawful acts of the initial inquiry, pre-trial investigation, prosecutor and court authorities, of 29 December 1998; and on the submission of complaints to the courts regarding decisions and actions or omissions which infringe citizens’ rights and freedoms, of 11 June 1999. 

As stated in article 1 of the Unlawful Acts by the Initial Inquiry, Pre-trial Investigation, Prosecutor and Court Authorities (Compensation to Individuals) Act, compensation must be paid for any injury caused to any person in the territory of the Republic of Azerbaijan through the unlawful actions of the country’s initial inquiry, pre-trial investigation, prosecutor or court authorities.  The act contains a list of such unlawful actions.

The Decision and Actions or Omissions Infringing Civil Rights and Freedoms (Complaints to the Courts) Act sets out rules for the lodging of challenges in the courts against decisions and actions or omissions which infringe the rights and freedoms enjoyed by Azerbaijani citizens established by the Constitution and by international treaties to which the Republic of Azerbaijan is a party and also contains provisions on judicial procedures to uphold the rights and freedoms of citizens.

Pursuant to article 1 of the Decisions and Actions or Omissions Infringing Civil Rights and Freedoms (Complaints to the Court) Act, all citizens of the Republic of Azerbaijan who consider that their rights and freedoms have been infringed as a result of decisions and actions or omissions by State authorities, local authorities, enterprises, institutions, organizations, voluntary associations or officials, shall be entitled to appeal to the courts.  Aliens and stateless persons may appeal to the appropriate court in the manner prescribed by law, except as otherwise stipulated in international treaties to which the Republic of Azerbaijan is a party.

A court ruling which has entered into force shall be binding on all State and local authorities, enterprises, institutions, organizations, voluntary associations and officials.  In the event that a court ruling is not observed, the court shall adopt the appropriate measures, as prescribed by Azerbaijani legislation (see article 7 of the Decisions and Actions or Omissions Infringing Civil Rights and Freedoms (Complaints to the Courts) Act. 

The Parties to Criminal Proceedings (State Protection) Act of 11 December 1998 sets out a system of measures to ensure the safety and social protection of victims and witnesses in criminal proceedings and of other parties to such proceedings.  The safety measures defined by this act shall be applied whenever the safety of those persons cannot be guaranteed by other means. 

The Republic of Azerbaijan is a party to all the major multilateral human rights treaties and regularly submits reports on its implementation of the provisions of those treaties to the appropriate treaty bodies. 

On 25 December 2001, the Azerbaijani Parliament ratified the European Convention for the Protection of Human Rights and Fundamental Freedoms.

Under the Azerbaijani legal system, the provisions of international treaties may be cited in the courts and in other administrative bodies. 

Pursuant to paragraph 2 of article 12 of the Azerbaijani Constitution, the human and civil rights and freedoms enumerated in the Constitution shall be exercised in accordance with the international treaties to which the Republic of Azerbaijan is a party.

Paragraph 2 of article 148 of the Constitution states that international treaties to which the Republic of Azerbaijan is a party form an integral part of the legislative system of the Republic of Azerbaijan.

Article 151 of the Constitution stipulates that, in the event of conflict between the laws and regulations forming part of Azerbaijani law (except for the Constitution and statutes adopted by referendum) and the provisions of international treaties to which the Republic of Azerbaijan is a party, the international treaty provisions shall prevail.

In accordance with the presidential decree of 22 February 1998 on measures to uphold human and civil rights and freedoms, the Cabinet of Ministers of the Republic of Azerbaijan and the President’s own executive office are responsible, together with the appropriate State authorities, for taking the necessary steps, in connection with the legal reforms currently under way, to ensure that the country’s laws and regulations are fully consistent with international human rights standards.

With a view to promoting and protecting human rights, the President of Azerbaijan has promulgated a number of decrees, including on a State human rights programme; on additional measures to uphold the freedom of speech, opinion and information; and on celebrations for the fiftieth anniversary of the Universal Declaration of Human Rights.

In February 1998, on the recommendation of the President, the Azerbaijani Parliament abolished the death sentence in Azerbaijan.

Under the International Treaties of the Republic of Azerbaijan (Conclusion, Application and Denunciation Procedure) Act, the Republic of Azerbaijan is required to comply faithfully with its international treaties in accordance with the rules of international law.

Article 17 of that act stipulates that the Cabinet of Ministers, ministries, State committees, departments and other government agencies of the Republic of Azerbaijan with jurisdiction over the various issues governed by the country’s international treaties shall be responsible for ensuring compliance with the obligations entered into under such treaties.

3. ECONOMIC OVERVIEW

Azerbaijan is an industrial-agricultural country rich with natural resources including oil, natural gas, mineral resources, cotton and large areas of farmland. As a result, the country’s economy is built on manufacturing, mining and agriculture. Besides oil and gas, the reserves of iron ore, zinc ore, molybdenum ore, alunite, rock salt, boring waters containing iodine and bromine, gypsum, lime stone, bitumen, clay, and marble are used in industrial exploitation, including, hydro-electric power resources. The agriculture is specialized in the cultivation of vegetables, fruits, cotton, tobacco, subtropical cultures, silkworm and sheep breeding.

After the collapse of Soviet Union in 1991 country experienced the economic shock. Real GDP declined by about 60 percent. During short period, high inflation had eroded real incomes, the exchange rate had weakened and international reserves were nearly depleted. These developments aggravated by collapse of traditional trade links with the other republic of former Soviet Union and the military aggression by the neighboring Armenia.

In 1995 Azerbaijan began a successful stabilization program, which has brought inflation down to 2-3 % a year 2001. In 2002 GDP grew up to 10.6% (during last 5 years GDP growth averaged 9.9%, economic growth for 2003 projected 9-10%). National currency manat has become stable in 2001 with depreciation of 3.9% against US dollar. Since 1995 macroeconomic situation stabilized and steadily improved, as demonstrated by a resumption of growth, a drastic reduction in inflation, and substantial inflows of foreign investment.

Macroeconomic indicators 2002 GDP - USD 6,090 million
GDP per capita - USD 742.7
Real GDP Growth - 10.6 %
Consumer Price Index - 2.8 %
Annual Average Exchange Rate - 4860.7 manat per US dollar
Structure of GDP by Main Sectors - Industry 34.9%
Agriculture - 14.2%,
Transport and communications - 9.8%
Trade - 7%,
Construction - 10.8%,
others - 23.2%

Major Industrial Products - Oil and natural gas, petroleum products, oilfield equipment, steel, iron ore, cement, chemicals and petrochemicals, textiles.

Major Agricultural Products - Cotton, grain, rice, grapes, fruit, vegetables, tea, tobacco, livestock, wine

Private Sector Contribution to GDP - 73%

OilFor more than century oil has been the main wealth of Azerbaijan. Being one of the oldest known oil producing regions in the world, Azerbaijan served as the major refining center of Former Soviet Union. After gaining independence in 1991, Azerbaijan entered the new oil era. On September 20, 1994 Azerbaijan signed the “Contract of the Century” with International Consortium of Oil Companies on exploration of Azeri, Chirag and Guneshli (ACG) oil fields, located in the Azerbaijani sector of the Caspian Sea. The contract provides development of oil deposits for the term of 30 years. It created favorable conditions for investments in the petroleum sector and beyond and opened once again the door to the world markets for Azerbaijani oil.

In 1997 Azerbaijan acquired early oil from “Chirag” field. Initially it was transported through Baku – Novorossiysk pipeline (northern direction). At the same time Azerbaijan was in the process of construction of Baku – Supsa pipeline in the western direction, which has began operational since April 1999. However, two pipelines were not sufficient for the transportation of existing and potential oil and in November 1999 Azerbaijan, Georgia and Turkey signed an agreement on construction of Main Export Pipeline Baku – Tbilisi – Ceyhan (BTC), which is aimed at bringing rich oil resources of Caspian Sea to the world markets through Mediterranean port Ceyhan (July 2005 first delivery for BTC). The partner companies involved in the construction of the main pipeline were BP, SOCAR, Unocal, STATOIL, TPAO, ENI, Itochu, Delta Hess, TFE and INPEKS. Azerbaijan has undertaken 25 % of the project finance. By July 2003 15% of BTC has been completed.

By the year 2002, 20 Production Sharing Agreements (PSAs) with a total value of almost $60 billion have been signed

Recent explorations of ACG have shown that deposits of oil which could be developed increased from 4.2 billion barrels to 5.4 billion barrels, which is equaled to 730 million tons. For the rational use of these opportunities the full-scale exploration project was launched in August 2001. This project focuses on the exploration of central part of Azeri field. Oil from this platform will be transported to Sangachal terminal through 187 km sub-water pipeline. To proceed large amounts of oil and gas enlargement of Sangachal terminal is of a great importance. As a result of the implementation of this part of the project development of oil in the platforms Chirag – 1 and Markezi Azeri will reach 250 thousand barrels a day by the first quarter of 2005. Next stage of the project will focus on the development of eastern and western areas of Azeri fields, which will complete the exploration of Azeri field. As a result of development of oil in Azeri field will increase to 800 thousand barrels a day (40 million tons a year). The third phase of the development of ACG will come to an end by 2007 and by that date total exploitation only in those three fields will exceed one million barrels a day. In 21-th century the oil recovery in Azerbaijan is forecasted at a rate of 30-50 million tons.

Non-oil sector

Following this initial recovery after the collapse of economic regime established in former Soviet Union, the Azerbaijani economy is now poised to meet the challenges of the transition to a market economy, while at the same time, developing oil resources that will provide the engine for long-term sustainable growth and rising per capita incomes across all segments of the population.

The government is aware of the potential dangers of building an economy that is overly dependent on a single industry or economic sector — oil — and the risk that this industry could inadvertently hinder the development of other sectors of the economy. The goal of Azerbaijan’s economic policy is to achieve balanced growth. To attain this goal, Azerbaijan has been implementing economic reforms supported by advice and the financial resources of the International Monetary Fund (IMF), the World Bank and other bilateral and multilateral creditors. The government’s broad program of reforms includes the following:

• Liberalization of prices;
• Widespread cuts in government subsidies;
• Tight budgetary and fiscal controls to limit inflation;
• Restructuring the banking sector to improve transparency;
• Modernizing the tax structure;
• Instituting a land reform program; and v Privatizing state-owned assets.

During the years the reforms have been in place, Azerbaijan’s economy has been undergoing a structural shift, in which services, transportation, communications, trade and construction sectors are rapidly expanding.

Macroeconomic stability was regained and inflation has been brought to lower level. Investment activity in both oil and non-oil sector of the economy have ensured the growth of the economy. As the result of recent achievements international rating agency Fitch IBCA has upgraded Azerbaijan’s long-term foreign exchange credit rating to “BB-”.

Privatization process as an important part of structural reforms in the country has continued. As the result of the first stage of privatization by January 2000, 21544 small companies and units have been privatized and 996 joint-stock companies has been established. By March 2001 this number was 23539 and 1230 correspondently. Since the commencement of privatization process by the year 2002, 33700 companies have been privatized.

Manufacturing: The oil equipment and related machine-building sectors constitute the most promising manufacturing sectors. Since Azerbaijan’s independence, there has been a shift in manufacturing from oil-based industries, such as chemicals, to sectors such as finished metal goods, including pipes, machine tools and computers. Petrochemical products, including synthetics, rubber, detergents and polymeric materials, as well as aluminum smelting, textiles and clothing, and food and beverages, comprise the bulk of other manufacturing operations. The government has designated the industrial zone of Sumgayit, country’s third large city, as a free economic zone in an effort to attract foreign investors to produce goods for export.

Agriculture: Agriculture has always been the important part of Azerbaijan economy. More than 30 percent of Azerbaijan’s workforce is engaged in some form of agriculture. Most of the country’s farming activity is centered in the fertile lowlands of central Azerbaijan, along the Kura and Araz rivers. Territory of Azerbaijan is divided into 59 agricultural regions extending across 10 geographic zones. Crops, including cotton and grapes, and livestock are evenly spread across these regions, while tobacco production is concentrated in specific regions.

Crops constitute over two-third of agricultural production, while livestock accounts for the rest. Major cash crops in Azerbaijan are grapes, cotton and tobacco, which have traditionally been produced and marketed by the state.

After the collapse of the Soviet Union the deregulation and liberalization took place in the economy, which led to the rapid changes in the agricultural sector as well. After the 1996 Law on Land Reforms land has been distributed to individuals. Former state-owned farms have been granted operational autonomy, which has greatly increased their productivity. Private farming, especially in the areas of vegetable, fruit and livestock production, is gradually gaining strength.

Mining: Azerbaijan is endowed with iron, gold, aluminum, zinc, copper, marble and fire clay. In particular, the country has large reserves of iron ore and aluminum ore. Foreign investment is needed to develop and modernize existing mining operations.

Infrastructure: There are 2,089 km of railways, which provide the main source of transportation for freight. The network of roads for vehicles serves domestic cargo traffic and provides access to international highways. Sea cargo transportation is very important for Azerbaijan, connecting the country with other states of Central Asia, Iran and Russia. Baku is the largest port on the Caspian Sea for cargo-handling facilities and for ferry lines connecting Europe and Asia. Azerbaijan maintains regular flights with Commonwealth of Independent States (CIS) countries, as well as with Germany, Israel, Iran, Turkey, Austria, Pakistan, the Netherlands, Greece, Poland, China, Italy, the United Kingdom and the United Arab Emirates. Azerbaijan Airlines (AZAL), British Airways, Lufthansa, Austrian Airlines, Turkish Airlines, Aeroflot and other regional carriers maintain air service. The country’s telecommunications infrastructure is in the process of being rebuilt and modernized, but additional investments are needed for the future.

Banking

Banking system of Azerbaijan Republic includes the National Bank and credit organizations. The regulation of the banking activity is conducted by the Constitution of the Azerbaijan Republic, present Law, the Law "About National Bank of the Azerbaijan Republic", other legislative and normative acts of the National Bank of Azerbaijan (NBA). National bank was created in February 1992 on the base of Azerbaijan State Bank (former affiliate of Soviet State Bank). NBA serves as Azerbaijan’s central bank and in that capacity manages the monetary affairs of the state as well as supervising all commercial banks. National Bank is the regulatory agency responsible for government capitalization and liquidity policy. Commercial banking sector is represented by two state-owned banks, International Bank of Azerbaijan (51% of shares owned by the state) and United Universal Joint-Stock Bank (created as a result of merger of Savings Bank, Industrial Bank and Agriculture Bank, 100% shares owned by the state), and large number of private commercial banks. In 2001 the restructuring of state banks was completed and significant steps have been taken toward privatization of state-owned International Bank and United Universal Joint-Stock Bank. As a result of reforms in banking sector new electronic payment system was introduced and accounting and banking supervision was brought to international standards level.

Trade and Foreign Investment

Azerbaijan has traditionally depended heavily on trade. Since re-establishing its independence, Azerbaijan has swiftly reoriented itself towards new markets outside of the former Soviet Union. Major export markets include Iran, Russia, Georgia and Turkey. Major import markets are Turkey, the United Arab Emirates, the Ukraine and Germany. Major exports are oil, chemicals, textiles, machinery, equipment and food industry products. Major imports are food products, machinery and equipment, light industry materials and chemicals.

Foreign Investments to Azerbaijan during 1993 - 2000 by sectors of economy (millions of USD):

Industry (without oil)	922
Oil Industry	3430
Construction	395
Trade & Service	335
Transportation & Telecommunication	127
Other	223

Foreign Investments to Azerbaijan during 1993 - 2000 by countries(millions of USD):

Turkey	723	France	151
USA	1,407	Norway	342
UK	1,407	Saudi Arabia	58
Germany	135	UAE	38
Russia	308	Sweden	63
Russia	308	Sweden	63
Italy	83	Iran	92
Japan	243	Other Countries	928

Export - USD 2,167.5 millions

Major Export Products - Oil and oil products, food products, machinery and equipment, textiles, chemicals, metals and plastics

Major Export Partners by Region (in 2002) -

EU - 67.5% CIS - 11.2% other - 21.3

Import - USD 1,665.3 million
Major Import Products - Machinery and equipment, transport facilities, mineral products, metal, chemicals, plastics, food products

Major Import Partners by Region (in 2002) -

CIS - 39.1% EU - 23.6 % Other - 37.3 %

Environment

    Azerbaijan is the largest country in South Caucasus. Almost 50 percent of the total area is agricultural land, 2.5 percent is urban land (with Baku comprising 2.15 percent) and 13 percent is forest territory. Lowlands occupy more than half of the country. Azerbaijan is notable for its ecological diversity. Its territory includes vast plains below sea level, mountain peaks with heights of over 4,000 meters, deserts, Alpine meadows, salt marshes and sub-tropical woods. The country has nine of the twelve climate zones.
    Azerbaijan accounts for 15 percent of all water resources in the South Caucasus countries. All of the country’s rivers flow into the Caspian Sea. The irrigation system is regulated by water reservoirs. The Caspian Sea fishing stock is capable of producing six times more fish than the Black Sea, however, water pollution is a growing concern that must still be addressed.
    Azerbaijan is notable for its diversity of species, both flora and fauna. Of the 4,500 plant species, 143 are considered endangered. Of the 20,000 fauna species, 109 types of animals are endangered. More than 2,100 century-old trees are protected by the state.
    The State Committee for Ecology and the Use of Natural Resources, which reports directly to the President, has responsibility for developing and managing environmental protection programs. The Committee has made important progress by introducing a number of important laws and regulations to safeguard Azerbaijan’s natural resources.

4. DOING BUSINESS IN AZERBAIJAN

• LEGAL SYSTEM
  
• LEGAL ENTITIES IN AZERBAIJAN
• TAXATION
• REGULATION OF FOREIGN INVESTMENT

LEGAL SYSTEM

    Azerbaijan is a civil law system country. The Constitution is the supreme legal authority of the Republic of Azerbaijan. The legislative system consists of the following legal acts, in the order of hierarchy: (1) Constitution; (2) acts adopted by referendum; (3) laws of the Republic of Azerbaijan; (4) Presidential decrees; (5) Cabinet of Ministers resolutions; and (6) acts of other central executive bodies.
    Acts located higher on this list take priority over lower acts. In the event of a discrepancy between two acts of the same dignity (e.g., two laws), the later act takes precedence over the earlier one with regard to the conflicting provisions. In addition, the act containing a more specific rule controls over the one containing a more general rule.
    International treaties to which Azerbaijan is a party form an integral part of the legislative system. Provisions of international treaties of Azerbaijan take precedence over all conflicting acts of the Republic of Azerbaijan, except the Constitution and acts adopted by referendum.

LEGAL ENTITIES IN AZERBAIJAN

    Legal entities in Azerbaijan are regulated mainly by the Civil Code (effective September 1, 2000), as well as a number of specific laws and regulations, including the Law on State Registration of Legal Entities (February 6, 1996), the Law on Joint Stock Companies (July 12, 1994), the Law on Securities (July 14, 1998), the Law on Limited Liability Companies (December 29, 1998), and others.
    Legal entities in Azerbaijan are grouped into two categories – business entities and non-commercial organizations. In addition, entities belonging to each category may have branches or representative offices, which are subdivisions of a head entity.

Forming a Legal Entity in Azerbaijan

    In order to establish a legal entity in Azerbaijan, founders must comply with a number of procedures, including adoption of foundation documents (a charter and, if necessary, a foundation agreement), payment of a charter fund (if necessary), establishment of a bank account, etc. The Ministry of Justice of the Republic of Azerbaijan is the agency vested with the power of the state registration of legal entities. If all the registration documents conform to the requirements of the law, the Ministry of Justice registers a legal entity and issues a registration certificate. Legal entity comes into existence upon issuance of the state registration certificate. However, within a specified period after the certificate is issued, the new entity must also comply with a number of mandatory post-registration procedures, such as tax and social insurance registration.

Business Entities

    Business entities are associations carrying on activity for profit. Azerbaijani Civil Code provides for the following types of business entities: (1) general partnership; (2) limited partnership; (3) limited liability company; (4) additional liability company; (5) joint stock company; and (6) cooperative. Below is a very brief description of each business form.
    General Partnership. At least two persons (individuals and/or legal entities), each of whom is a general partner, may form a general partnership. Although the general partnership is a legal entity with distinct personality, each general partner is personally liable for all of the partnership’s obligations. General partners’ shares in the partnership are not freely transferable. Transfer of a share usually requires consent of all the remaining partners who have the right of first refusal to purchase the share. Withdrawal of one partner does not automatically result in the dissolution of the partnership.
    Limited Partnership. A limited partnership is a partnership consisting of at least one general partner and at least one limited partner. General partners of a limited partnership are personally liable for the partnership’s obligations and exercise managerial control over the partnership. In essence, general partners in a limited partnership have the same rights and obligations as general partners in a general partnership. Limited partners are liable only to the extent of their respective participation shares in the partnerships (i.e., the amount they contributed into the partnership). However, limited partners may not exercise any managerial functions.
    Limited Liability Company. A limited liability company (LLC) is an entity consisting of one or several participants who contribute their participatory interests to LLC’ charter fund (or charter capital). There is no statutory minimum for the amount of LLC’s charter fund. Liability of each LLC participant for LLC’s obligations is limited to its participatory interests in the charter fund. Participants’ interests in LLC are not freely transferable: as a general rule, remaining partners have a preemptive right to purchase the withdrawing participant’s interest, pro rata to their respective interests in the charter fund. Participants have the right to take part in LLC’s management through their voting at the General Meeting of Participants, where they can elect members of LLC’s governing bodies as well as vote on issues of significant corporate importance. LLC’s governing bodies include the Board of Directors or a single Director, and may also include a Supervisory Council and an Audit Commission.
    Additional Liability Company. An additional liability company (ALC) is essentially the same as LLC, except participants of ALC may assume liability for company’s obligations in the specified amounts higher than their participatory interests in the company’s charter fund.
    Joint Stock Company. A joint stock company (JSC) is an entity formed by one or more individuals or legal entities. JSC’s charter fund is divided into shares owned by JSC’s shareholders. Unlike participatory interests in LLC or ALC, shares in JSC are securities. Any newly created JSC must register an issuance of its authorized shares. Shareholders’ liability is limited to the value of their respective shares. A JSC may be either open or closed. A newly created open JSC must hold an initial public offering of its shares. Shares of an open JSC are freely transferable and may be publicly traded subject to no restrictions by the company.
    On the other hand, shares in a closed JSC are subject to limited liquidity: they are originally distributed to founding shareholders and, thereafter, their alienation is restricted. Non-selling shareholders have a right of first refusal with respect to the selling shareholder’s shares. If the non-selling shareholders do not exercise this right, then the company itself has a right to redeem the selling shareholders share at the fair market price.
    JSC’s management bodies include the Board of Directors, Supervisory Council and Audit Commission, which are elected at the General Meeting of Shareholders.
    Cooperative. Cooperative is an association of individuals created for the purpose of satisfying commercial needs of its members. If cooperative reports losses at the end of the financial year, these losses must be covered by additional contributions of its members. Liability of members of cooperatives obligations is to the extent of the unpaid portions of their respective contributions. Cooperative members have a right to participate in the management of the cooperative by way of voting at the General Meeting of Members and electing the cooperative’s management bodies, which include a Chairman and (or) a Board of Directors.

Subsidiaries, Branches and Representative Offices

    Local as well as foreign legal entities may open wholly or partially owned subsidiaries in Azerbaijan in one of the available legal forms. A subsidiary is a separate legal entity and, as a general rule, the parent company is not liable for the obligations of its subsidiary except to the extent of its contribution to the subsidiary’s charter fund. As a separate legal entity, the subsidiary is subject to heavier regulation than a branch or representative office.
    Both local and foreign legal entities may also open and operate branches or representative offices in Azerbaijan. Subject to prior state registration, the branch or representative office may engage in types of activities typically performed by its parent company. As opposed to the subsidiary, neither a branch nor a representative office is a separate legal entity and is merely a subdivision of the parent entity. The parent entity, consequently, is fully liable for the obligations incurred by its branch or representative office.

Non-Commercial Organizations

    Non-commercial organizations are not-for-profit entities engaged in various charitable and humanitarian activities. In Azerbaijan, non-commercial organizations may be created in one of the three forms: (i) public associations; (ii) funds; and (iii) unions of legal entities.

TAXATION

    The tax system of the Republic of Azerbaijan is governed by the recently adopted Tax Code, effective January 1, 2001. The Tax Code is a comprehensive instrument covering the overall structure of the tax system, procedural rules for calculation and payment of taxes, powers and duties of the taxation authorities, as well as relevant penalties for non-compliance with the taxation laws and regulations. The Ministry of Tax and its subdivisions is the state authority vested with the power to implement tax laws and regulations as well as exercise general tax control.
    The Tax Code establishes the following types of taxes: (1) individual income tax; (2) corporate profits tax; (3) value added tax (VAT); (4) excise tax; (5) land tax; (6) property tax; (7) mining tax; (8) highway tax. Taxes are levied either on the state level (e.g., income tax, corporate profits tax, VAT, etc.), or on the level of the Nakhchivan Autonomous Republic (most taxes paid in Nakhchivan), or on the local level (e.g., land tax, property tax, mining tax, etc.).
    Azerbaijan is a party to a number of bilateral treaties on avoidance of double taxation, which allow individuals or entities that may be subject to tax in both Azerbaijan and another contracting State to avoid being taxed twice from the same tax base in both countries. Also, parties to production sharing agreements (PSAs) concerning oil and gas exploration and production in Azerbaijan are generally exempt from the requirements of the Azerbaijani Tax Code. The tax obligations of such entities are typically regulated by each particular PSA which is adopted into law by Milli Majlis.

REGULATION OF FOREIGN INVESTMENT IN AZERBAIJAN

    The term “foreign investment” has a broad meaning under Azerbaijani law and includes foreign direct investment in projects carried out in Azerbaijan, participation in joint ventures with Azerbaijani entities, establishment of wholly-owned subsidiaries or opening branches of foreign entities in Azerbaijan, acquisition of various types of property that may be lawfully owned by foreigners in Azerbaijan, commercial agreements with Azerbaijani entities contemplating various forms of foreign financing, and others.
    Foreign investments are regulated by the Law on the Protection of Foreign Investment, dated January 15, 1992, Law on Investment Activity, dated January 13, 1995, Azerbaijani privatization laws, as well as other laws and regulations pertaining to economic sectors attractive for foreign investment.
    Foreign investment laws provide a number of guarantees to foreign investors, including the “most favored nation” regime, rights to adequate and effective compensation in case of nationalization or expropriation, right to international arbitration of investment disputes, right to repatriation of profits after payment of applicable Azerbaijani taxes and duties, and others. Importantly, under the Law on the Protection of Foreign Investment, foreign investors are protected against legislative changes adversely affecting their investment, for a period of ten years from the legislative change. The only exception is the changes in legislation concerning the issues of national security, public order and the like.
    In addition, Azerbaijan is a member to a number of multilateral and bilateral treaties on encouragement and protection of investment, that provide for additional guarantees and incentives for foreign investors. Among others, Azerbaijan has a bilateral investment treaty with the U.S., which was signed on August 1, 1997, and entered into force on August 2, 2001).

5. INDUSTRY REGULATION

Oil and Gas

    All natural resources of the subsoil in Azerbaijan are in the state ownership and may not be owned by any private persons. Private persons may acquire only exploration or production rights from the state pursuant to tenders, licenses and/or other arrangements (such as production sharing agreements). The ownership and exploitation rights to subsoil resources and energy-related activities are governed by the Law on Subsoil Reserves, adopted on February 13, 1998, Law on Energy, adopted on November 24, 1998, and other acts and regulations. These laws establish a system of permits, licenses and energy contracts granted to successful applicants wishing to engage in oil and gas exploration and/or production. The State Oil Company of Azerbaijan (SOCAR) and the Ministry of Fuel and Energy exercise the various government authorities concerning the oil and gas sector.
    Although the Law on Subsoil Reserves and the Law on Energy establish a comprehensive regulation regime for the oil and gas sector, so far the exploration and production rights have been granted to foreign oil companies through a device known as a production sharing agreement (PSA). Currently, there are more than 20 PSA signed between SOCAR and foreign companies. Each PSA creates a specific regulation regime for the exploration/production activities the relevant oil fields. After being signed, PSA is submitted to the approval by Milli Majlis. Milli Majlis adopts the PSA into law of the Republic of Azerbaijan, which takes precedence over existing and future laws and regulations of Azerbaijan. This provides foreign investors additional guarantees against possible adverse changes in law. Moreover, PSAs usually provide less requirements for foreign investors, compared to the general regulatory scheme of Azerbaijani law. For example, most foreign PSA participants are exempt from paying the majority of otherwise applicable taxes (such as VAT, excise, etc.), and are only required to pay the profits tax. This is due to the Government’s commitment to provide additional incentives to the investors in the oil and gas sector.

Non-Oil Sector

    The Law on Licensing and relevant industry-specific laws and regulations provide a framework for government’s regulation of business activities requiring permits and licenses. Presidential Decree issued on September 2, 2002, significantly decreased the number of activities requiring licenses. Currently, only about 30 activity types require obtaining licenses from relevant government agencies, a decrease from more than 200 types of permits and licenses that were required before. Generally, rules and requirements for obtaining licenses are the same for Azerbaijani and foreign persons. Licensed activities include sale of oil and gas products, sale of tobacco and liquor products, insurance services, stock exchanges, investment funds, banking activities, audit services, pharmaceutical and medical activities and services, educational services, communication services, and others.

6. LAND OWNERSHIP AND USE

    Issues related to ownership and use of land are governed by the Land Code effective June 25, 1999; Law on Land Reform, adopted on July 16, 1996; Law on Land Lease, adopted on March 17, 1999; the Civil Code, and other laws and regulations. Land in Azerbaijan may be owned only by the citizens of Azerbaijan and Azerbaijani legal entities. Foreign citizens and legal entities may not own land in Azerbaijan and may only lease land. However, Azerbaijani legal entities with foreign capital may own land. If a foreigner lawfully receives title to land (i.e., through some arrangement other than outright sale and purchase, such as mortgage foreclosure or gift), such foreigner must sell this land within one year of obtaining title. All rights to land and all transactions related to land (such as land sales, mortgages, and easements) are subject to state registration.

7. INTERNATIONAL ARBITRATION; FOREIGN ARBITRAL AWARDS

    Azerbaijani law allows for resolution of disputes between foreign investors and Azerbaijani entities (including the governmental authorities) by international arbitration pursuant to the agreement between the parties. The parties may choose to arbitrate in Azerbaijan or abroad. Arbitration procedure for international arbitration taking place in Azerbaijan is regulated by the Law on International Arbitration.
    Azerbaijan also recognizes and enforces foreign arbitral awards and judgments of foreign courts in accordance with the procedure and subject to the exceptions provided for in the Law on International Arbitration and the new Civil Procedure Code, effective January 1, 2001. Azerbaijan is also an accessory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, dated June 10, 1958, and the Convention in Foreign Commercial Arbitration, dated April 21, 1961.

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8. Transport and Communication

    The serious changes that occurred in the structure and development of all spheres of economy during the 1990’s also touched the transport sector. The inter-connected transportation system of the former Soviet Union disintegrated along with customer demand and coordination. Matters were worsened by political events in the Caucasus region during the first half of the decade. In comparison with 1990, freight transportation in Azerbaijan had decreased 6.6 times by 1995. This problem was particularly acute as regards railway and road transport. 80.3 million tons of freight transported by the railway in 1990 were 8.9 times or 9.0 million tons less than in 1995. 153.1 million tons of freight transported by car in 1990 were 10.9 times or for 14.0 million tons less than that in 1995. In 1996 the negative trends were stemmed and the sector has grown year on year since. One stimulus was Azerbaijan’s participation in all major logistic projects related to the Euro-Asian region (e.g., the TRACECA program). In addition, the sector has experienced a general increase in the level of transport and logistic activity in line with the transition to a market economy and privatization.
    Freight transport volumes have grown in line with more ship movements, the greater movement of oil and oil products by rail and pipeline, and generally improved transport infrastructure.
    According to figures for 2000, transport enterprises and owner-drivers moved 80.2 million tons of freight and 871.5 million passengers, an increase over 1996 levels of 90.9% and 20.8% respectively. By the end of 1999, 54.0% of freight transportation and 83.3% of passenger transportation was in the private sector.
    The development of communications in the country was particularly noticeable by the end of the 1990’s. Free competition and greater demand gave an impetus to the development of both state and private communication sector. The installation of digital telephone exchanges since 1992 that meet international standards and the development of cellular telephone networks in Azerbaijan since 1995 have promoted the provision of high-quality services in the sphere of communications. In 1990 there were 617,000 telephone subscribers, By 2000 the number had risen to 869,000, one third being customers of digital exchanges. By the beginning of 2002 the mobile telephone communication sector had 644,300 subscribers.

Transportation figures for 2001

	Freight %	Passenger %
Railway	19.5	0.5
Sea	10.8	0.00
Air	0.05	0.1
Pipelines	20.0	-
Road	49.6	85.5
Tram	-	0.2
Trolley bus	-	0.4
Subway	-	13.3

4.SOCIAL DEVELOPMENT