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Lithuania finds the ways to maintain its energy security

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The last political events once again highlighted the political relevance of energy security issue for Lithuania. We must pay tribute to the government that struggle for reducing Lithuania’s dependence on Russian energy supplies and for receiving financial support from its EU and NATO partners by all possible means. It finds new ways to attract international attention to the problem.

The energy security issue for Lithuania has various aspects. One of them is insufficient funds for the dismantling work at Lithuania’s Ignalina Nuclear Power Plant (INPP). According to Audrius Kamienas, director of the Activity Planning and Finance Department at the INPP, another 900 million euros will be required starting in 2020. The government is continuing negotiations with EU in order to receive further financing of the project.

Deputy Energy Minister Rokas Baliukovas said that active negotiations on additional EU funding for the Ignalina plant closure would start in 2017 to 2018. Kamienas said that 941 million euros had been used for the INPP closure by the start of 2016, with another 745 million euros in EU and national budget funds planned to be used by 2020. Self-financing of the project is impossible for the country and even partial funding has become an unbearable burden for the national budget.

President Dalia Grybauskaite expects that Germany will support Lithuania in its efforts to raise concern about the safety of Belarus’ nuclear power plant under construction in Astravyets, some 50 kilometers from Vilnius. By the way, Belarus is the closest ally of Russia. Lithuanian government is not sure of the plant’s safety but can’t oppose the construction alone. So Lithuanian authorities follow a proven method by appealing to external help.

Another aspect of maintaining Lithuanian energy security the government considers preventing construction of the Russian-German pipeline project Nord Stream 2. Being dependant on Russian energy supplies for the long time Lithuanian authorities think that it poses “risks for energy security not only to the country but to the region of Central and Eastern Europe on the whole.” Earlier, on 17 March, Prime Ministers and leaders of 9 EU member states (Czech Republic, Hungary, Poland, Slovak Republic, Romania, Estonia, Latvia, Lithuania, Croatia) had sent a letter to Jean-Claude Juncker, President of the European Commission, speaking out against Nord Stream 2. But the matter is the EU is not directly involved in the decision-making process around Nord Stream 2: it is the national permitting authorities of the countries whose waters the pipeline will cross that must grant approval for the project. In this case, these are the permitting authorities of Russia, Finland, Sweden, Denmark and Germany. Lithuanian President Dalia Grybauskaite met with German Chancellor Angela Merkel on April 20 and tried to convince inefficiency of the project. However, if the German companies are able to defend their commercial interests, then the project will have a future. Taking into account the German pragmatism, economic expediency will prevail over the political one. Probably Germany does not pay so much attention to Russia’s threat as the Baltic States do.

It should be said that Lithuanian authorities effectively use geopolitical situation in the region in order to reach national goals by attracting international attention and persuading its partners that Lithuanian problems are their problems either. One couldn’t judge Vilnius for it. Probably for the government of small country it is the simplest way. For example “threat from the West” made it possible for Lithuanian authorities to ask for NATO support in military and energy security spheres.

The seventh meeting of the Steering Committee of Vilnius-based NATO Energy Security Centre of Excellence (NATO ENSEC COE) took place on 19-20 April in Chalon-sur-Saône, France.

In the meeting a lot of attention was dedicated to the protection of critical energy infrastructure and discussions on expansion of the Centre. NATO has assessed that the protection of critical energy infrastructure is one of the key elements for strengthening the Alliance’s resilience to hybrid threats. In this regard, Lithuania called on to increase funding for the centre’s activities in order to ensure necessary expertise in the field of the protection of critical energy infrastructure. Joining of new countries to the Centre (such as Germany and the US) will strengthen the capabilities of the structure and will made Lithuania more prominent in NATO and on the international arena.

So the event allowed receiving additional political and financial support from external sources, such as NATO.

Thus Lithuania today has at least two reliable ways of getting support in maintaining its energy security – from EU and NATO. It should be said that Vilnius uses such opportunities to reach national goals successfully.

Eastern Europe

Turkey crossed the red line with Armenia

Anna Barseghyan

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The red line has been crossed. Turkish Air Force F-16s were deployed against Armenia and shot down an Armenian military aircraft amid the Azeri attack on Artsakh. For the first time after the 1920 Armenian-Turkish war, Turkey is explicitly and directly involved in the war against Armenia.

Everything started on September 27th when the Azeri army launched a missile and aerial attack against Artsakh (Nagorno Karabakh). This September war against Armenia and Nagorno Karabakh is unprecedented based on scale, weapon caliber, and direct Turkish involvement. In July, Azerbaijan tested the waters by provoking a short term war in Armenia’s Tavush region; but, the attempt to start a new war was unsuccessful. However, it is clear from Azerbaijani president Ilham Aliyev and Turkish President Recep Tayyip Erdogan’s current actions that unlike the July provocation, this time the two nations mean war.

In this article, I would like to present the peculiarities of the September war—mainly Turkey’s involvement in the war. It first began on September 25th, when information was leaked stating that the Turkish-Azerbaijani Air Force carried out a minimum of six flights to Azerbaijan, of which four flights were carried out by Turkish Airbus A400M-180 and two by Azerbaijani IL-76TD transport planes. That same day, the Azerbaijani military transport plane made two flights to Azerbaijan, after flying from Turkey to Israel. Furthermore, the Azerbaijan-Turkey-Israel-Turkey-Azerbaijan flight was serviced by the Azerbaijani Silk Way IL-76TD-90VD (registration number 4K-AZ101) transport aircraft. The Azerbaijani Silk Way planes also transport military cargo to Azerbaijan. Turkey and Israel are the main weapon suppliers for Azerbaijan; the numerous flights raised major suspicions for Armenia.

According to the Greek City Times, Turkey transferred its militant proxies based in northern Syria to Azerbaijan. Award-winning journalist Lindsey Snell—who was once kidnapped by Turkish-backed terrorists in northern Syria and then thrown into a Turkish jail for two months after escaping from Syria—wrote on Twitter that fighters from the Hamza Division had arrived via Turkey to Baku, Azerbaijan’s capital city. After the September 27th war began, reputable sources such as Forbes, The Guardian, and Reuters brought this to light.

According to Reuters, “The two fighters, from Turkish-backed rebel groups in areas of northern Syria under Turkish control, said they were deploying to Azerbaijan in coordination with Ankara.”

The Guardian states, “The potential deployment is a sign of Turkey’s growing appetite for projecting power abroad, and opens the third theatre in its regional rivalry with Moscow.” 

Armenia is Turkey’s major obstacle—the only Christian country in the region, Armenia stands in the way of Turkey’s mission to succeed in the establishment of a pan-Turkic agenda. Pan-Turkism is a political movement of the late 19th and early 20th centuries; the mission was to politically unite all Turkish-speaking peoples in the Ottoman Empire, Russia, China, Iran, and Afghanistan. A century ago, when Armenia was once again considered an obstacle for Turkey, the solution was to genocide native Armenians. Fast forward one century, and unpunished Turkey once again tries to commit a new crime against humanity. And yet, the world is silent again…

***

The conflict between Armenia and Azerbaijan is over Nagorno Karabakh (Artsakh), a part of historical Armenia, and the Armenian populated autonomous region (89% of the population was Armenian during the Soviet time). By the will of Soviet leader Joseph Stalin, Artsakh was forced to join the Azerbaijan Soviet Socialist Republic (SSR) in 1920. Following Gorbachev’s reforms (Perestroika) which began in 1988, the people of Artsakh raised their voices, using their constitutional rights, to secede from Azerbaijani SSR. As a result, Azerbaijani SSR imposed a war which ended in 1994 with the victory of the Armenian forces. Since 1992, Nagorno Karabakh has proclaimed its independence, but is currently an unrecognized republic. The main mediator of the ongoing negotiations is the OSCE Minsk Group; the Co-Chairs are from France, Russia, and the U.S.A. 

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Perestroika Belarusian-Style: The Logic of the Systemic Crisis

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The massive street protests that have taken place in Belarus recently are only the tip of the iceberg of what we can expect to see in the coming months and years. Although, of course, the situation in the country bears little resemblance to the endless crises in Belgium and Italy, which are capable of existing perfectly well without a central government for decades. Belarus is slowly sinking under the weight of a political crisis that is affecting the very foundations of the social system and which may take some time to resolve, since the political establishment essentially controls all spheres of society. If the political system crumbles, governance in the country will effectively grind to a halt, and it will be a long and painful process to get the motor running once again.

Some have called the events in Belarus a colour revolution, likening it to the Euromaidan protests that took place in Ukraine in 2013–2014. And while there are clearly parallels between the two, it would perhaps be more accurate to say, as some commentators have, that the crisis more closely resembles a kind of “belated” perestroika. The ideas that have formed the cornerstone of Belarus’ foreign policy since 2014 — that it is a “security donor” in Eastern Europe and a “neutral state” — have come back to haunt the country’s leadership. Right now, the only thing stopping Belarus from becoming an “instability donor” is the continued political and economic support of Russia.

The Origins of the Crisis

At first glance, it would appear that the political crisis is a consequence of the supposedly botched presidential elections in August. But the elections only served as a trigger for the next phase of a crisis that had been unfolding for years, which involved people taking to the streets in their thousands. On the surface, there is an economic component to what is happening: the national economy is dominated by state enterprises, but their equipment is outdated and the country does not have the money for modernization.

In the 1990s, Belarus was able to avoid the most painful consequences of perestroika by buddying up to Russia. It set about building state capitalism with a “human face” (social benefits and guarantees) while at the same time relying on the Soviet industrial potential, the Russian market and economic support.

The Belarusian economy was effectively rebuilt from the ground up as a part of a single economic space with Russia. For example, Belarus has enjoyed a massive discount on Russian oil and gas over the past ten years compared to other importers, to the tune of approximately $70 billion, or 55 per cent of the state budget for that period [1]. Belarus has exported over $110 billion worth of industrial and agricultural products to the Russian market over the past decade [2. ]Russia accounts for between one half and two-thirds of all foreign direct investment into the Belarusian economy.

The system as it is currently set up can survive another year, and some elements may even develop if it continues to have free access to Russian investment and the Russian market. But there is a deep contradiction at the heart of this model — while the Russian and Belarusian economies are de facto the same, their management systems are not, and their regulatory bases are drifting further and further apart.

This problem has proved to be a sticking point, with intensive negotiations on possible “road maps” for the Union State bringing little to no progress over the past two years. And where integration fails, disintegration gathers steam, which is exactly what we have been witnessing in recent years. At the same time, the industrial facilities of most Belarusian enterprises are becoming obsolete. Belarusian industry is in a race against time, and it is losing, with hundreds of thousands of workers set to lose their jobs. Soon it will be no more, to be followed by the social and educational infrastructure, and then the schools of engineering and mathematics (which have been “feeding” the fledgeling Belarusian IT cluster “for free”). The belief of some business leaders that Belarus will rise like a phoenix from the ashes to become an IT leader, abandoning ties with Russia and thus leaving the outmoded industrial sector in the past, is based on nothing but ideology.

The root of the crisis that is unfolding in Belarus lies in the fact that the government is becoming increasingly out of touch with society. The political institutions in the country have proved unable to internalize public activity, engage in a meaningful two-way conversation with the people and respond to the requests of a significant part of society. Hence the numerous “mistakes” of the authorities in recent years — symptoms of systemic failures. Actions that in certain conditions were seen as the norm and brought results are in others seen as mistakes and turn out to be counterproductive.

It is not enough to simply replace the people in charge. It will take years of hard work for Belarus to emerge from the crisis, and there is an extremely high risk that the political system could break down completely, which would have a devastating effect on the country’s economy — far worse than the economic troubles experienced by Ukraine since 2014.

Components of the Crisis

Let us try to reconstruct the main phases of the Belarus crisis (some of the events overlap).

Economic. The obsolescence of the country’s backbone industries and the lack of money to modernize them became a serious issue back in the 2000s. This forced the authorities to quietly dismantle the post-Soviet social safety net, which had always been a source of pride within the country. Few even batted an eyelid when the retirement age was increased. But it was a different story with the new tax on the officially unemployed (the so-called “decree on parasites”), which was met with a flurry of protests in 2017.

Social. The structure of Belarusian society has changed. The number of self-employed persons and small businesses in the country has increased, and urban culture and international contacts have developed — all at a far quicker pace than the state management systems in the public and social spheres have been able to adapt. The government still uses the same mass command and obedience methods in its youth policy and social mobilization that were developed some 20–30 years ago, or even during the Soviet period, despite their shortcomings. Assistant to the President of Belarus Nikolai Latyshonok has said that “about 20 to 30 per cent” of the population is dissatisfied with the Belarusian authorities. Considering that this is 20 to 30 per cent of registered voters, it translates into 1.5 to 2 million people, which is a huge number for Belarus.

Generational. Sociologists have noted a real transformation over the past ten years in the dominant attitudes and values of the “post-Soviet generation” as its representatives move into adulthood. The younger generations are far less supportive of the authorities and do not share their style or aesthetics. The generational gap in Belarus in 2014–2015 was almost identical to that of Moldova and Ukraine, and there is no reason to believe that the situation has improved since then.

Ideological. The economic backwardness of the country, coupled with the reduction in social guarantees and the change of generations has led to a crisis of ideology in Belarus. To fill the growing ideological vacuum, the Belarusian authorities have placed increasing importance on so-called “soft Belarusization”, attempting to supplement the ideological matrix of the Byelorussian Soviet Socialist Republic with new symbols and meanings, from the Belarusian People’s Republic and “millennial statehood” to traditional Belarusian embroidered shirts and the restyling of the national emblem. But this did not have the desired effect of consolidating the country. Instead, it led to the erosion of guidelines within society and the state apparatus. The attempt to present the question of “Minsk or Mensk” (Belarusian versus Russian), which is irrelevant for the majority of Belarusian citizens as the main “nerve” of the election campaign, turned out to be a failure, causing mistrust among the government’s supporters. The nationalists, with the support of the ramified structure of Western NGOs that had been growing in the country over the course of the last 20 years and had penetrated the government bodies, seized the ideological initiative.

Foreign Policy. The Belarusian leadership tried to mitigate the growing systemic problems inside the country by pursuing an active foreign policy, but this tactic backfired. The balanced diplomacy of the Belarusian government between 2014 and 2016 allowed it to extract certain diplomatic and economic dividends from the Ukrainian crisis. But there would soon be a price to pay, with the contradictions inside the country starting to worsen and the goal of the state apparatus to pursue multi-vector development turning into an exercise in distancing itself from Russia and flirting with the “Russian threat.” All of this served to disorient and destroy the electoral base within the country. And the only thing that the Belarusian authorities have to show from this policy of the past four to five years is growing isolation from the country’s only ally — Russia.

These trends intertwine and reinforce one another, showing that the crisis in Belarus is much more than “just” a colour revolution, which is merely a symptom of a much more serious illness.

Perestroika does not mean that the existing system is wrong, completely bankrupt and without hope — it is by no means destined to collapse. Despite the crisis, the Belarusian system has a number of undeniable advantages, including the relatively low level of social stratification, well-developed social services, a quality education system and industrial expertise. The Belarusian “model” developed back in the 2000s and the politics we see today are not the same thing. Similar to the Soviet perestroika era, the way in which the authorities have handled the crisis is the main reason it is getting worse.

The Economic Dimension of the Crisis

The economic crisis is a result of the failure of the post-Soviet model of the Belarusian economy. The only thing left is either Balticization (but without access to the sea), in which case the country would lose its heavy industry and suffer the mass emigration of its “surplus” population, or optimization and modernization with the help of outside investors.

The European Union is Belarus’ second-largest foreign trade partner and, according to EU statistics, purchases 4 billion Euros’ worth of goods from the country per year. Belarus’ main exports are timber, mineral products (oil and oil products made using Russian oil purchased at heavily discounted prices) and base metals. Raw materials and semi-finished products make up over 80 per cent of Belarus’ exports to the European Union. Strikes at large Belarusian enterprises may lead to a drop in the supply of metals, oil products and potash fertilizers to the European Union.

These losses will hardly make a dent in the European economy and can be replaced using other suppliers. Belarus, however, will suffer, although the damage will not be critical, as the European Union accounted for approximately 20 per cent of the country’s foreign trade in 2019. The potash markets are now growing, which is primarily thanks to Asia.

Belarus could suffer greatly if the European Union refuses to import oil products, but this is unlikely to happen. Belarusian oil refineries will probably become unprofitable if the high cost of European logistics forces them to purchase oil elsewhere, at global prices.

Losing the Russian market, which accounts for half of Belarus’ trade turnover, would be an unmitigated disaster for the country’s economy. What is more, Russia’s imports include machinery with high added value. If the political crisis in Belarus results in forces coming to power that want to withdraw from the political and economic integration agreements that the country has with Russia, then this will lead to the destruction of Belarusian industry, and hundreds of thousands of highly qualified specialists will lose their jobs.

Many large state-owned enterprises in Belarus perform social functions — excessive hiring prevents unemployment from skyrocketing and alleviates social tensions. A similar situation exists in many industrialized countries. What complicates the issue in Belarus is the lack of a safety buffer, as well as sufficient internal resources, to maintain and develop such a system. Any radical market reform will invariably lead to an explosion of public anger.

Multi-Vectorality and Belarusization

Belarus officially set a course for a multi-vector approach in the 2000s, writing it into key legislative and regulatory acts 15 years ago. Experts and officials in Belarus have repeatedly stated that small countries must naturally pursue a balanced foreign policy, even though all of its Western neighbours have chosen the opposite strategy of “joining together” and bloc discipline.

The Ukrainian crisis only intensified this trend, with the Belarusian authorities trying to draw attention away from its domestic problems by pursuing a multi-vectored and largely symbolic policy. This was motivated first of all by the desire to gain economic bonuses by playing on the contradictions between Russia and the West, and secondly by the need to distract the Belarusian people from the social problems in the country and bolster the legitimacy of the authorities, adopting the nationalist agenda and framing it as “soft Belarusization.”

The increased pace of multi-vectorality had the opposite effect. Belarusian exports to the European Union fell by 9.4 per cent as of year-end 2019 to below the 2010–2011 figures. Russia still accounts for approximately half of Belarus’ foreign trade, but it has begun to move gradually towards import substitution amid troubles in the integration process.

Competitive growth on the Russian domestic market is both an objective and natural process. The only way to restrain this process or further boost advantages enjoyed by Belarusian producers is through specific political action and inter-state economic projects. But this has become impossible due to the gradual nullification of geopolitical guarantees that has taken place as Minsk’s multi-vectored policies have developed.

The idea of Belarus as a “security donor” in Eastern Europe was designed to help the country build its foreign policy around being a mediator between Russia and the West, without taking sides. But it turned out that the building had been built on sand, and now the Chancellor of Austria (a neutral country) has called for negotiations on the Ukrainian crisis to be moved from Minsk to Vienna.

Most have come to the conclusion in recent months that the Belarusian authorities have “lost the information space” — a consequence of new media and the appearance of various messenger services. However, it would seem that ideology is responsible for this loss, rather than a poor grasp of modern technology. And the “informational neutrality” declared in the 2019 Concept of Information Security of Belarus was the icing on the cake of this long-term trend. The document effectively tied the government’s hands in terms of putting up resistance to opposition forces and foreign NGOs inside the country.

The void that had appeared was slowly being filled with the concept of “sacrifice” taking root in the country (Belarus has taken part in the wars of others and suffered as a result of its neighbours “in both the West and the East). A big part in this process was played by Western funds, supported by a part of the Belarusian state apparatus. This directly contradicted the ideological foundations of the victory in World War II. Belarus’ Independence Day continues to be celebrated on July 3 — the same day that Minsk was liberated from the Nazis in 1944. For most millennials, however, Victory Day is nothing more than a national holiday that does not conjure up any particular feelings of patriotism. This is because there is a lack of modern meaning that young people can identify with, a dearth of ways to get them involved.

The obsession during the election campaign with the virtual “Russian threat” — something that even the nationalists did not believe — was thus no accident. Rather, it was a logical development of the government’s multi-vector strategy. This is the same path that the Baltic states have already travelled, moving from a “bridge between East and West” to “neutral countries,” then “frontline states” and, finally, “bastions against Russia.”

***

There are many layers to the crisis that is currently unfolding in Belarus, and political or economic instruments alone are not up to the task of dragging the country out of the mess it now finds itself in — public institutions and governance methods need to be brought into the present day. Even if Russia decides to prop up the Belarusian economy, which it is doing right now, this will not resolve all the differences that have built up over the years. All the more so because nothing is being done to revise the country’s multi-vectoral doctrine. At the same time that President of Belarus Alexander Lukashenko is accusing the United States of interfering in its domestic affairs, Minister of Foreign Affairs Vladimir Makei can be heard thanking the Department of State for “supporting the sovereignty of Belarus.”

If the Belarusian leadership cannot manoeuvre itself out of the situation by making qualitative changes, then the situation will become hopeless sooner rather than later. Continuing the policy of recent years will only make things worse, and will inevitably result in the current authorities losing their grip on power.

The main question now is how Belarus will emerge from the crisis — through gradual and deliberate transformations or by scrapping the system altogether and dealing with the severe consequences that that would entail. In any case, it will be very different from what happened with Ukraine, as we are not talking about access to fertile soil and sea routes; the domestic market and the demographic resources are far smaller.

The only viable way to make the reform as painless as possible is to remove the obstacles to the development of the Belarusian economy through its large industrial and economic complex, which would provide a safety net for the most vulnerable social groups, as well as investments for big business. However, the only country that would even entertain the idea of such an agreement is Russia.

Meaningful constitutional reform is taking shape, a political transition that aims to adapt the system of governance to modern realities. But it is not enough. The mass demonstrations that we see today are reminiscent of the “singing revolutions” that took place in the Baltic states in 1990–1991. Just like the popular fronts in these countries broke out of the control of the communist party and the KGB, the opposition forces in Belarus today, inspired by the official Belarusization, are turning against the authorities. The second step in these revolutions involved a change of leadership, the strengthening of the nationalists, reorientation to the West, the introduction of the concept of “non-citizens” for ethnic Russians living in the Baltics, etc.

This does not mean that Belarus is doomed to follow the same path, as its ties with Russia run far deeper. The Russian side is doing everything in its power to preserve stability in Belarus, keep external influence at bay, and hold on to the special relationship it has with its Belarusian friends. But the risks are exceptionally high. The situation in Belarus is not static and could take a turn for the worse at any moment. Alexander Lukashenko still has time to make the most important decision of his life.

 [1]Author’s calculations based on data from the National Statistical Committee of the Republic of Belarus, the Ministry of Finance of the Russian Federation and Gazprom.

 [2]Author’s calculations based on data from the Federal Customs Service of Russia.

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Eastern Europe

Azerbaijan Vision 2020

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After declaring its independence in 1991, Azerbaijan found itself fighting battles on multiple fronts against an economic collapse, political chaos, and an inter-ethnic conflict with Armenia over Nagorno-Karabakh. The staggering crisis within the country posed a great challenge for the Azerbaijani government under the leadership of Heydar Aliyev. However, several developmental strategies and effective policies introduced by the government helped Azerbaijan get back on its feet into time. By late 1990s,Azerbaijan was on its way to economic revival.

One of the first victories of Azerbaijan in the economic sector was brought about by the signing of “contract of the century”. New economic reforms established a favorable environment for investment and led to socio-economic development within the country. Similarly, comprehensive institutional changes allowed the government to prevent hyperinflation and regulate the macroeconomic balance. Soon, the dynamics of economic growth in Azerbaijan shifted. Through the extraction and export of natural resources, the country saw an economic boom. By 2011 Azerbaijan’s strategic country reserves reached up to 41.5 billion US dollars.

The transition was not limited to the economic sector; substantial efforts were made for the effective resolution of social problems. A new social security system was established in accordance with international standards. The quality of medical services was improved manifolds and all health-based institutions were given up to date equipment and hardware. Likewise, the educational infrastructure was also strengthened by increasing budget allocation. This allowed the government to modernize the educational system, renew the syllabus, and integrate the Azerbaijan education into the European education system. Moreover, computerizing education was one of the fundamental steps that took the education system of Azerbaijan to the next level.

Lastly, the chaos brought about due to the political transition within the country was addressed through the formation of a transparent democratic society. Political pluralism served as the basis of public progress and political parties were allowed to play a significant role in running the country’s political system and growth of the civil society. This new democratic system revolutionized the structure of the society allowing citizens to have a much active role in the politics of Azerbaijan.

The successful transition in almost all sectors of Azerbaijan was the result of a well-thought consistent state policy, strong leadership, and strategic implementation. The policy makers successfully deciphered the interconnectedness of all sectors namely: economy, health, education, and politics. Understanding this interplay between different sectors helped Heydar  Aliyev devise a policy that would help solidify the foundation of the state and this was to be done by inducing economic progress. In other words, once a strong and sound economy was established, it allowed the government to strengthen other state departments through the reallocation of budgets, thus boosting the overall progress of Azerbaijan. Soon enough the country was out of turmoil and on its way to become one of the most influential states in the South Caucasus.

Need for a New Vision

The socio-economic reforms introduced by Heydar Aliyev successfully mended various departments within the state. Once the foundation was solidified, the policy makers had a chance to dig deeper in order to resolve certain impediments that were still prevalent within the country and could hamper its progress in the future. Thus, President Iiham Aliyev soon signed a decree to approve a development concept known as “Azerbaijan 2020: A look into the future”. This concept was developed for two main reasons: to further strengthen all sectors of the country and to keep up with the rapid advancements in the world.

In the current situation, the reforms of Heydar stand short of what is required in the 21st century.The government faces new challenges that can only be addressed through the formulation of up to date policies and this development concept provides exactly that. Moreover, now the aim of the government isto not only focus on inward but outward reforms as well that would allow it to keep up with the volant spread of information and communication technologies. In addition, globalization has been affecting the socio-economic life of most countries and Azerbaijan is no exception. Thus, it needs an effectual state policy that will allow it to adapt to these changes. The Azerbaijan vision 2020 has successfully understood the challenges and provides a comprehensive outlook on how to counter them.

The principle strategic view of the concept is to avail all the current available opportunities and resources to attain sustainable economic growth, significant social welfare, supremacy of law, effectual state management and the same time ensure human rights, freedom and development of civil society[i]. The document was approved on the basis that by 2020, Azerbaijan would a competitive state that is economically and politically developed. The government wishes to increase employment, decrease poverty, develop human capital, and ensure that all citizens have access to health care and that the environment is protected. The development concept has clearly highlighted the principle agendas that Azerbaijan needs to invest its time and money into; it provides a vision of how the country should be by the end of 2020.

  1. Increasing the Competitive Power of the Economy

One of the first agendas of the concept is to ensure that the economic system of Azerbaijan is effective enough that it can compete globally. Statistics show that a state’s economic growth can increase manifolds through state regulations within the market and continuous improvement of these regulations in accordance with the market requirements. Thus, Azerbaijan must strengthen the states regulatory and administrative functions in order to improve the business environment, maintain macroeconomic stability and at the same time be able to carry out large infrastructure projects and ensure free competition. In the light of the current pandemic, the government has created four working groups that are to build special proposals to curtail the negative effects of coronavirus on the country’s economy, employment issues, macroeconomic stability and business entities thus ensuring that the country does not lose sight of the 2020 vision.

The document further states that an appropriate monetary policy will be conducted with the target to keep inflation in check and guarantee the stability of the financial sector. The development of fiscal disciple will be given special attention to increase the efficiency of expenses and the efficiency of fund distribution. Similarly, passive taxation policies are to be transformed into active taxation policies and the tax rates are to be improved to create an environment that is favorable for business activity. According to the 2019 World Bank Doing Business report, Azerbaijan reached the 24th position up from the 57th position in 2018.This brought the country one step closer to achieving its 2020 vision.

Furthermore, efforts are to be made by the Azerbaijani government to enhance and simplify foreign trade and support entrepreneurs to increase their competitiveness in the foreign market. Preferential loans given to businesses by the state will increase, the government will help small and medium size businesses to expand and strengthen their export capabilities. One of the most crucial steps taken to support small businesses was to restrict monopoly and strengthen anti-monopoly laws. This ensured that the markets had a fair competition. In addition, efforts will be made to eliminate factors that may put the local businesses at risk. In accordance with these policies in the year 2018, Azerbaijan exported goods worth $19.9 billion and imported goods worth $11.9 billion thus, resulting into a positive trade balance of 8.01billion dollars.

All the economic objectives set out in the development concept aim to modernize the economic system of Azerbaijan. It is clear that with these policies, Azerbaijan is leaning towards the west and wishes to inculcate their policies within its own sectors. The country is trying to move further away from Russian influence and wishes to abolish any major policies that were once a part of their economic system during the pre-independence era. At the same time, they want to launch their markets internationally which have been for long limited to the oil sector only.

1.1 Decreasing Dependency on the Oil Sector

While continuous work is being done on the oil sector by restructuring and modernizing the systems of extracting, transporting, and refining the oil, the government is also making efforts to develop the non-oil sector. New enterprises are to be created, other industries such as aluminum, cement and fertilizer will be developed. Alongside the development in non-oil processing industries, the main sphere of the state investment policy will be to stimulate the formation of industrial estate infrastructure in the economic districts. Similarly, foreign, and local investments in non-oil sector will be intensified through stimulating mechanisms. Creative and intellectual activities will be supported and encouraged. Special attention will be given to the agricultural sector by increasing production capability, banks will be encouraged to give out loans to farmers and modern equipment will be made available to them.

The Azerbaijani government seems ambitious and eager to reduce its dependency on the oil sector and while these reforms look promising, their proper implementation and outcomes are bound to take a lot of time. Azerbaijan for long has been generating its revenues through the export of oil and, thus a sudden shift is not only impossible but may also shake the economy. While some progress has been made in the recent years, studies show that the oil sector is still the primary economic driver as it directly makes up 44% of the country’s GDP and more than 90% of the exports however, only employs 5% of the total population of the country. Therefore, while Azerbaijan does not to strengthen other enterprises, businesses and industries, the shift must occur gradually and systematically.

  • Balanced Development and transport infrastructure

If Azerbaijan wishes to turn itself into a regional trade hub, it must make use of its geostrategic location by establishing effective transport and transit services and develop logistical centers in various regions throughout the country. This will not only lead to foreign and local investment, but also help give out employment opportunities. The development concept states that the government will take measures to integrate the national transport system of Azerbaijan with the international transport system. To stand out in the North-South and European-Caucasus-Asia transport corridors, the time of export and import operations will be reduced, the procedures will be made simpler and the cost of sending a cargo to Azerbaijani territory will be reduced. The country’s road in these corridors will be brought in line with the international standards. Similarly, new roads will be developed, and the railway system will be restored and modernized; same goes for air transport. Special development projects will be carried out to improve the infrastructure in rural areas and villages.

If Azerbaijan is successful in carrying out these plans, it will stimulate balanced socio-economic growth within all regions of the country. Inequality and sharp differences in the rural and urban areas will be reduced. Moreover, the burden on city centers will decrease and less people will migrate from the rural areas in search of jobs. Furthermore, once the time for exports and imports is reduced, more trade will be carried out using Azerbaijani territory hence, leading to greater revenue generation.

  • Development in Social Spheres

Social Developments must go by side the economic developments; thus the 2020 concept puts special emphasis on how social sectors in Azerbaijan will be upgraded.

      3.1 Health Sector

 Azerbaijan wishes to increase its funding to the health care system and aims to construct, reconstruct, and refurbish health institutions throughout the country. The extreme centralization of management will be abandoned, and the power will be distributed among various management entities. The state will work on fighting diseases and implement preventive measures. Educational programs will be carried out against smoking alcoholism and drug addiction. There will be mass health examinations and preventive checkups for children and teachers. Above all, the government will make sure that medicines are physically and economically available to the entire population and ensure that all medicines are licensed and of high quality.

3.2 Educational system

Reforms have been made to increase the quality of education; programs have been drafted and implemented to rationalize general education institutions. Systemic measures will be taken to encourage the intellectual thought process of students. Furthermore, electronic education technologies will be made available to schools in order to create a virtual yet, effective learning environment for students. The aim is that every classroom must have laptops, projectors, and an electronic table. Most importantly, teachers must be trained to specialize in interactive teaching technologies. Internationally speaking, the government wants to increase the participation of educational institutions especially higher education institutions in international programs.

One of the main objectives of these reforms is to integrate the Azerbaijani education system with the European system. Once the reforms are implemented in their full essence, the standard of their education will be enhanced, more international students are likely to enroll in Azerbaijani universities and take part in cultural exchange programs that will in turn help promote and secure the cultural heritage of the country. Increased international recognition of higher education in Azerbaijan will without doubt prove to be fruitful for their education system.

3.3 Social Security System

A new state program 2016-2020 has further deepened the current pension reforms. As a result of this, not only the state social system will improve, but in fact a saving mechanism for state pension will be established. Access to information about the social insurance fee present in an individual’s account will be made easy. Next, the process of registering insurers will be completely automated, these insures will automatically be registered in the insurance system. Unlike before, the citizens will not need to come up any documents to receive pensions. Moreover, the pensions will be appointed to citizens in an automatic way through a single center. Furthermore, the system that selects which families are in need for social aid will improve, rehabilitation centers will be created for the homeless, young displaced persons will be helped and work will be done to improve the conditions of labor that has migrated to foreign countries.

  • Protection of environment

One of the fundamental targets of this development concept is to carry out socio-economic development while keeping ecological factors in mind. For this reason, effective monitoring and supervision systems are to be developed. Measures will be taken to control deforestation and desertification. Land that has become unusable as a result of industrial activates will be restored. Progressive methods will be introduced in the waste management sector and the percentage of recycling will be increased. During construction projects the environment will be prioritized and most importantly the negative effect of extraction of oil and gas will be neutralized.

One of the biggest contributors of pollution in Azerbaijan is its oil industry; however, little attention has been given in the development concept to curtail its effects.No clear policy has been introduced to monitor the activities of oil industries that continue to degrade the air, land, and soil of the country. The Caspian Sea as a result of oil drilling has been severely contaminated thus killing the habitat of sea life. Special attention must be given to limit the devastating effects of oil industry on Azerbaijan in the long term. 

  • Strengthening legislation and government institutions

In order to achieve all the reforms mentioned above, consistent measures should be taken to improve and strengthen the legislation and governmental institution of Azerbaijan; only then will the vision of 2020 truly be achieved.

The objective of the 2020 concept in this case is to update the law enforcement agencies and bring them in line with the international standards. The infrastructure of the court must be improved, this means electronic services will be introduced and citizens will have a greater chance at getting justice. The potential of the institutions will be nourished for the effective implementation of laws and new reforms. The state will fight against corruption in all sectors, the transparency of the government will be increased, and citizens will be given greater access to state information.

Recommendations

The 2020 Azerbaijan development concept is a comprehensive and versatile understanding of the impediments currently hindering the progress of Azerbaijan and at the same time, it has successfully drafted policies that will help the government counter these impediments in order to secure and strengthen the socio-economic conditions of Azerbaijan in the long run. However, a few steps must be kept in mind for the successful and through implementation of the entire concept:

  • A new government agency must be created that determines through statistical analysis which sector should be prioritized first and how its improvement effects the other sectors
  • A special mechanized system must be established that monitors the implementation of all new reforms and finds out how they can be improved
  • Data regarding the progress in all sectors should be collected on a yearly basis
  • The reforms should not be limited to the 2020 development concept; new reforms should be introduced in accordance with the requirements as the world moves towards greater advancement
  • A special anti-corruption force should be created which keeps a check on the implementation of the reforms in their true essence

[i] Government of Azerbaijan,Azerbaijan 2020: Look into the Future” Concept of Development,(Baku, 2012),9.

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