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World Mission

Azerbaijan

Basic info

  • Area: 86,600 sq km
  • Population: 9,961,396
  • Infant mortality: 23.8 deaths/1,000 live births
  • Life expectancy: 72.8 years
  • Urbanisation: 55.7% of total population
  • Literacy: 99.8%

History

Azerbaijan - a nation with a majority-Turkic and majority-Shia Muslim population - was briefly independent (from 1918 to 1920) following the collapse of the Russian Empire; it was subsequently incorporated into the Soviet Union for seven decades. Azerbaijan has yet to resolve its conflict with Armenia over Nagorno-Karabakh, a primarily ethnic Armenian-populated region that Moscow recognized in 1923 as an autonomous republic within Soviet Azerbaijan after Armenia and Azerbaijan disputed the territory's status. Armenia and Azerbaijan reignited their dispute over the area in 1988; the struggle escalated militarily after both countries attained independence from the Soviet Union in 1991. By May 1994, when a cease-fire took hold, ethnic Armenian forces held not only Nagorno-Karabakh but also seven surrounding provinces in the territory of Azerbaijan. The OSCE Minsk Group, co-chaired by the US, France, and Russia, is the framework established to mediate a peaceful resolution of the conflict. In the 25 years following its independence, Azerbaijan succeeded in significantly reducing the poverty rate and has directed revenues from its oil and gas production to significant development of the country’s infrastructure. However, corruption in the country is widespread, and the government has been accused of authoritarianism. The country’s leadership has remained in the Aliyev family since Heydar ALIYEV became president in 1993 and was succeeded by his son, President Ilham ALIYEV in 2003. Following two national referendums in the past several years that eliminated presidential term limits and extended presidential terms from 5 to 7 years, President ALIYEV secured a fourth term as president in April 2018 in elections that international observers noted had serious shortcomings. Reforms to diversify the country’s non-oil economy remain dependent on subsidies from oil and gas revenues, while other reforms have not adequately addressed weaknesses in most government institutions, particularly in the education and health sectors, as well as the court system.

Environment

The climate is dry and a semiarid steppe. The terrain is a large, flat Kur-Araz Ovaligi (Kura-Araks Lowland, much of it below sea level) with Great Caucasus Mountains to the north, Qarabag Yaylasi (Karabakh Upland) to the west; Baku lies on Abseron Yasaqligi (Apsheron Peninsula) that juts into Caspian Sea.

Economy

Prior to the decline in global oil prices since 2014, Azerbaijan's high economic growth was attributable to rising energy exports and to some non-export sectors. Oil exports through the Baku-Tbilisi-Ceyhan Pipeline, the Baku-Novorossiysk, and the Baku-Supsa Pipelines remain the main economic driver, but efforts to boost Azerbaijan's gas production are underway. The expected completion of the geopolitically important Southern Gas Corridor (SGC) between Azerbaijan and Europe will open up another source of revenue from gas exports. First gas to Turkey through the SGC is expected in 2018 with project completion expected by 2020-21. Declining oil prices caused a 3.1% contraction in GDP in 2016, and a 0.8% decline in 2017, highlighted by a sharp reduction in the construction sector. The economic decline was accompanied by higher inflation, a weakened banking sector, and two sharp currency devaluations in 2015. Azerbaijan’s financial sector continued to struggle. In May 2017, Baku allowed the majority state-owed International Bank of Azerbaijan (IBA), the nation’s largest bank, to default on some of its outstanding debt and file for restructuring in Azerbaijani courts; IBA also filed in US and UK bankruptcy courts to have its restructuring recognized in their respective jurisdictions. Azerbaijan has made limited progress with market-based economic reforms. Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors. The government has, however, made efforts to combat corruption, particularly in customs and government services. Several other obstacles impede Azerbaijan's economic progress, including the need for more foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region. While trade with Russia and the other former Soviet republics remains important, Azerbaijan has expanded trade with Turkey and Europe and is seeking new markets for non-oil/gas exports - mainly in the agricultural sector - with Gulf Cooperation Council member countries, the US, and others. It is also improving Baku airport and the Caspian Sea port of Alat for use as a regional transportation and logistics hub. Long-term prospects depend on world oil prices, Azerbaijan's ability to develop export routes for its growing gas production, and its ability to improve the business environment and diversify the economy. In late 2016, the president approved a strategic roadmap for economic reforms that identified key non-energy segments of the economy for development, such as agriculture, logistics, information technology, and tourism. In October 2017, the long-awaited Baku-Tbilisi-Kars railway, stretching from the Azerbaijani capital to Kars in north-eastern Turkey, began limited service.

Ethnic groups

Ethnic Groups(%)

Azerbaijani

91.6

Lezghin

2

Russian

1.3

Armenian

1.3

Talysh

1.3

Religion

Religion(%)

Muslim (predominantly Shia)

96.9%

Christian

3%

Languages

  • 92.5%

    Azerbaijani (Azeri) (official)

  • 1.4%

    Russian

  • 1.4%

    Armenian

  • 4.7%

    Other