Politics

Looking Back To Major Political & Economic Indicators Of Outgoing Year

Fuad Muxtarlı Analysis 28 December 2018
Looking Back To Major Political & Economic Indicators Of Outgoing Year

No doubt, every citizen of Azerbaijan will say that the outgoing year was rich in events in all areas - political, socio-economic, and cultural and sports. Of course, every person, every family had their own significant and important events in 2018. But today we, by no means claiming full coverage, since this is simply not possible, recall the events that we experienced this year together and which caused us different emotions - both positive and negative.

Politics

The outgoing year was rich in political events, including one way or another influencing the settlement of the Nagorno-Karabakh conflict. Unfortunately, the main thing - a breakthrough in this problem did not happen. But, as President Ilham Aliyev said, it should definitely be noted that the legal basis for resolving the Nagorno-Karabakh conflict has been fully established today; no state recognizes and never recognizes the self-proclaimed “Nagorno-Karabakh republic”.

Moreover, the attempts of Armenia’s new leadership to change the format of the negotiations, having connected this so-called “republic” to them, were unsuccessful. At the same time, power change in Armenia as a result of the popular streets, the subsequent elections, which have strengthened the position of the new Prime Minister Pashinyan, have practically not affected the negotiations process. But, perhaps, Armenia simply didn’t have time for negotiations since she was engaged in sorting out her internal problems.

At the same time, we should note that this year the Azerbaijani president had three brief meetings with the new leader of Armenia. Within the framework of the meeting of the CIS heads of state in Dushanbe at the end of September, President Ilham Aliyev talked with Armenian Prime Minister Nikol Pashinyan "on the move".

As a result of this meeting, as reported by Azerbaijan, "the parties committed themselves to continue negotiations around the Armenian-Azerbaijani Karabakh conflict and to strengthen the cease-fire on the contact line and prevent incidents on the border between Armenia and Azerbaijan." The parties also decided to develop mechanisms for establishing operational communication between the relevant structures.

And the first meeting between Ilham Aliyev and Nikol Pashinyan was held in Moscow as part of the opening ceremony of the FIFA World Cup. A meeting was also held between Aliyev and Pashinyan at the informal CIS summit in St. Petersburg in early December. Meetings were also held between the foreign ministers of Azerbaijan and Armenia. Azerbaijan assesses this positively, taking into account the fact that the intensity of the attacks on the contact line has decreased significantly, and conditions have been created for establishing communication if necessary at the lower level.

Azerbaijan’s position on resolving the conflict remains unchanged - Armenian troops must be withdrawn from all the occupied territories of the country, and Nagorno-Karabakh can be given the highest status of autonomy within the territorial integrity of Azerbaijan. According to the Azerbaijani Foreign Ministry, next year the issue of the settlement of the Nagorno-Karabakh conflict will be a priority of the country's foreign policy.

As for the Azerbaijan’s situation in general internationally, the country's position continued to strengthen. It is important to note that Azerbaijan has good-neighborly relations with all countries, with the exception of neighboring Armenia, which are built on the basis of mutual interests and respect.

Relations with neighboring countries - Russia, Iran, Turkey, and Georgia - developed particularly intensively. Recall that in the middle of March, a quadripartite meeting of the foreign ministers of Azerbaijan, Georgia, Iran and Turkey was held in Baku for the first time, following which a joint declaration was adopted. Meetings in this format will continue.

During the year, the presidents of Russia and Azerbaijan repeatedly met in various formats and confirmed the course towards strengthening strategic cooperation between the two countries in all spheres. An important political event of this year was the signing on August 12 after many years of negotiations of the Convention on the legal status of the Caspian Sea. All parties to this convention noted the importance of this document for the development of the region, the expansion of economic opportunities and cooperation.

This year, many international events were held in the country, including in early April - the conference of the Non-Aligned Movement ministers. Starting next year, Azerbaijan will preside over the NAM.
Of the internal political events, the most important was the early presidential elections in Azerbaijan. The head of state was for the first time elected for a seven-year term. The victory was won by incumbent President Ilham Aliyev, who won more than 86 percent of the votes with the turnout of 74.3 percent.

Economy

In the outgoing year, many important events occurred in the economic sector. The launch of new facilities, cooperation within OPEC+, the signing of oil contracts - all of these events were and will be of great political and economic importance for the country and the region as a whole.

Just such an event was the launch on May 29 of the Southern Gas Corridor, which provides for the creation of pipeline infrastructure for transportation of Azerbaijani gas to Europe via Turkey. Azerbaijani gas supplies to Europe are expected in 2020 in the amount of 10 billion cubic meters. In addition, 6 billion cubic meters of gas will be supplied to the western regions of Turkey.

And on June 12, the Trans-Anatolian Gas Pipeline (TANAP) was commissioned in the Turkish city of Eskisehir, which is part of the Southern Gas Corridor and is intended to transport Azerbaijani gas from the Georgian-Turkish border to the western borders of Turkey.

On July 18, SOCAR Polymer commissioned a polypropylene production plant in Sumgayit. 70 percent of the plant’s products will be exported.

Another major event for the region was the commissioning of the STAR refinery, built by SOCAR in Izmir on 19 October. The plant's operation will provide the Petkim petrochemical complex with raw materials and provide SOCAR with access to the large Mediterranean market with its diesel fuel and jet fuel, as well as with raw materials for the chemical industry.

On December 21, SOCAR put into operation a new bitumen unit and a gas station for liquefied gas at the Heydar Aliyev Baku Oil Refinery, thus completing the first stage of reconstruction and modernization of the enterprise.

This year both new enterprises were also commissioned in the non-oil sector. For example, on February 27, two spinning mills of Mingacevir Textile LLC were opened in the Mingacevir industrial park. On March 29, the joint automobile plant of Azarmash and the Iranian company Khodro with a capacity of 10,000 cars a year were opened in the Neftcala industrial park.

On May 14, the opening of the Baku International Sea Trade Port complex in the Alat village of Baku took place. The cargo handling capacity of the port is 15m tons, including 100,000 containers per year.

The negative event of the year was the accident at the Mingacevir hydroelectric station on July 3, as a result of which almost all of Azerbaijan remained without electricity. As a result, the work of sewage treatment plants in the water supply system stopped, a number of enterprises, including oil-producing ones, the movement of trains in the Baku metro stopped. On the same day, there was a repeated power outage. This event was a serious signal of trouble in the field of energy and the unpreparedness of vital facilities for energy supply in an autonomous mode.

It should be noted that during the year, significant investments were made in infrastructure - roads, water supply and sewage system in various cities of the country, in power engineering, hospitals, schools and other social facilities were built, work was carried out on the improvement of cities, housing renovation.

Over the year, a number of documents were adopted aimed at creating conditions for the development of small and medium-sized businesses, privileges were granted and subsidies were given to agricultural producers, in particular cotton and tobacco producers, beekeepers, etc. The development of industrial parks and quarters, agro-parks, etc. continued. Non-oil exports were strongly encouraged, trade missions to foreign countries were organized and trading houses of Azerbaijan were opened abroad.

That is, a lot was done for the intensive growth of the economy, especially its non-oil sector, and for increasing non-oil exports, which, according to the Central Bank, grew by 11.8 percent for nine months. But, judging by economic indicators, so far, there is still no reason to talk about the rapid development of the country's economy, moreover, it was not possible to get rid of the dependence of both the country's budget and foreign exchange earnings from the oil and gas sector. In connection with this, we present some figures.

If in the first quarter of the year, the country's GDP grew by 2.3 percent, in the first 11 months, it was only one percent. In the first quarter, the non-oil sector grew by 2.9 percent, and in January-November 2018 - by 1.3 percent. In the oil sector, the corresponding figures were 1.5 percent and 0.3 percent.

The decline in the construction sector increased: if in the first quarter, it was 11.2 percent, then in the first 11 months, it was 13.1 percent. There were hopes that by the end of the year, thanks to investments, the growth rates would accelerate, but this did not happen.

On the other hand, it should be noted that no matter how the non-oil exports of Azerbaijan increase, it still amounted to only 7.2 percent of all exports, and the rest is oil and gas. At the same time, the approved budget for the next year shows that almost 60 percent of budget revenues come from the oil sector, and the largest source of income for the state treasury is a transfer from the State Oil Fund.

So the dependence on the country's oil and gas sector remains high, and the growth rate of the economy, despite all the measures taken, has not yet reached the desired ones. Against this background, of course, Azerbaijan’s participation in OPEC+ agreements on reducing oil production is significant, since only stable and fairly high oil prices guarantee the prosperity and economic stability of the country.
 

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