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The new generation [ go to first page of report ]

Introduction - Oil & Gas - Tourism

The New Generation

This is a new era, led by a new generation.

The Presidential elections held in October 2003 witnessed the election of Ilham Aliyev as new President of Azerbaijan, thereby opening the doors to a new vision and a new generation of leaders in Azerbaijan.

This new era will witness major changes and face new realities.


Known as "the land of fires", the countryside of Azerbaijan is illuminated by its stocks of oil and gas, burning from the earth, which has given its country a reputation as a strategic oil nation. It has also helped build Azerbaijan's economic development and international influence in a world dominated by the search for renewable energy.

Upstream oil field development is harnessed by major investment projects, which will have a geo-political importance for Europe and Asia, positioning Azerbaijan as a key partner for oil and gas trade.

The established political stability has also allowed economic reforms to go ahead; in fact, since 1994 Azerbaijan has received billions of investments in the development of its oil and gas resources and the country now hosts the regional offices of multinational companies like BP, Exxon, Shell, as well as many other companies from the USA, UK, Italy, France, Germany, Norway, Russia, Turkey, China and Israel. One of the best-known projects of world value is the construction of the BTC oil and gas pipeline (Baku-Tbilisi-Jeyhan) and the SCP (the Southern-Caucasian gas) pipeline, which will deliver Caspian oil to world markets.


Plans are underway to privatize major state-owned companies in the financial, telecom and industrial sectors, opening the doors to new opportunities for strategic Asian investors.

Economic programs of the European Union are helping to move the economy in the right direction, and a major campaign for privatization of state properties is in the works. Shortly on auctions and tenders the enterprises oil and a process industry will be announced. Already, many enterprises which are reforming themselves and bringing a stable return on investment. The last impulse for development of a non-oil sector of economy became the program of regional development accepted by the president in the beginning of 2004, which provides the state support and the big investments. The development of an agrarian sector and a varied road infrastructure has also been a positive result of this growth.


The government also seeks the attraction of foreign investment in non-oil sectors, thus seeking economic diversity. Transport, tourism services and commerce are only a few of the main sectors that will require renewed attention in order to grow and modernize. Azerbaijan's strategic position establishes it as an ideal partner for Asian companies looking to expand to the west.

This active policy of market transformation was led by former president Heydar Aliyev, who ruled the country during Soviet time (1969-1982) and stayed in power for more than 10 years, effectively winning democratic elections in 1993 and leading the country's metamorphosis to implement a new era of industrial development. The result was an intensive attraction of foreign capital in the oil sector and a strong GDP growth which did not fall below 10% while annual inflation did not exceed 2%.

Ahmed Jehani Country manager World Bank, comments that, thanks to "sound economic stability" the country has "yielded striking results such as full stabilization since 1995, very low inflation rate, very low depreciation of the exchange rate, annual double digit GDP growth - and the last couple of years were also very good in terms non-oil GDP improvement".

Ahmed Jehani Country manager World Bank

Foreign Relations

Stability was bestowed to Azerbaijan in 1991 when it declared independence from the Soviet Union. Ever since then, the country has flourished, receiving a full mandate in the United Nations Organization, and adopting a new constitution in 1995 in which democratic principles are respected, standards of market economy are implemented and human rights are nurtured.

Today, accession plans to the WTO and economic partnership with the IMF places foreign relations on a high international level. Security is also an important issue. From the end of 1990s, Azerbaijan has successfully cooperated with NATO, taking part in the program "Partnership for peace". Azerbaijan also has joined the development programs of various Asian countries and has become a member of the Organization Islamic Conference, while cooperating closely with Asian and Islamic development banks.

Cultural bridges

As a main country within the Silk Route, Azerbaijan holds strong cultural ties with Asia. It will be looking to re-inforce these ties in order to improve it world position, regional recognition and to attract new partners on both political and economic levels.

Regionally, Azerbaijan is an important player among former republics of Soviet Union as one of the leaders of the Commonwealth of Independent States (CIS), the entity formed following the break-up of the USSR.

Thanks to its favorable geographical position, Azerbaijan was historically part of the Great Silk Route. In the north the republic borders on the Russian Federation, while in the south it borders with Iran. The east of the country is perched on the coast of the Caspian Sea, which offers direct contact with Asia and as well as its neighbors Kazakhstan and Turkmenistan. In the West Azerbaijan greets the borders of Georgia and Armenia. It must be said that there is a continuing dispute between Azerbaijan and Armenia since the 1980s, which has led the UNHCR (United Nations High Commission for Refugees) to maintain a presence in the area. Due to this continuing diplomatic conflict, Armenia is cut off from other Azerbaijan.

As a stop in the Silk Route, Azerbaijan has attracted a multi-ethnic population that brings together Turkish, Russian and Jewish citizens under one flag.

Political change

President Heydar Aliyev has dominated the country's politics for a full decade. Following a period of instability that threatened civil war, President Aliyev came to power in 1993 and was returned to office in a controversial October 1998 election. President Aliyev and his supporters dominated the multiparty, 125-member parliament. An August 2002 referendum on proposed changes to the Azeri constitution drew criticism from U.S. and international observers, citing concerns on polling irregularities and voter fraud. Then, throughout 2002, President Aliyev proclaimed his intention to run in the next scheduled presidential election in 2003, yet concerns about the health of the 79-year old ruler led him to appoint his son, Ilham Aliyev, as Prime Minister in August 2003.

Finally, the mantle was passed on when President Aliyev stepped down as Presidential candidate and his son Ilham presented himself to the October 2004 elections as Presidential candidate and head of the New Azerbaijan Party (NAP).

The result was a strong electoral victory by Ilham Aliyev as the new President of Azerbaijan, heralding a new chapter in the country's political scene.

Managing the Karabakh conflict

One of the issues that President Aliyev will have to deal with is the Karabakh conflict. At the end 1980s and the beginning of 1990s, the regional stage complicated itself when Azerbaijan and Armenia entered an armed conflict. Armenia claimed the northern territory of the country, including a pearl of Azerbaijan - Karabakh, which compelled immigrants to flee to the south. Since then, several U.N. resolutions have attempted to mediate the territorial conflict, and former president Heydar Aliyev attempted to reach peace in 1994 through an agreement which has set an armistice at the border, which is still observed by the Azerbaijan armed forces at the present time.

Peace talks are currently managed by the Organization on Security and Cooperation in Europe (OSCE), and it is hoped that, with the joint work of diplomats from the USA, Russia and France, a final process will soon formalize a lasting peace between both neighbors.


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