Recognizing the key role of human capital in growth and competitiveness, the Government of Azerbaijan and World Bank Group organized a three-day, high-level Human Capital Forum in Baku from December 19 to 21, 2018. Each day, approximately 150 participants including government ministers, top policy experts, academics, development and business community leaders, and media representatives gathered to discuss how best to support the Government of Azerbaijan in accelerating the development of its people.
Over the past two decades, oil wealth has helped Azerbaijan achieve high growth rates, significant poverty reduction, and a middle-income status. However, Azerbaijan is facing new and emerging challenges such as how to achieve broad-based, private sector-led growth and make key public services and economic opportunities accessible to all citizens across the country.
Further, on the recently released Human Capital Index, Azerbaijan ranks 69th out of 157 countries. A child born in Azerbaijan today will be 60 percent as productive when she grows up as she could be if she enjoyed complete education and full health. Already, the country’s development strategy documents—the Azerbaijan 2020: Vision for the Future and the Strategic Roadmaps for Economic Reforms —envision human capital development and its effective engagement in the development of Azerbaijan.
The Forum provided a way to explore a “whole-of-government” approach to nurturing human capital by engaging ministers and officials from education, health, tax, labor and other fields.
On Day 1, with the focus on jobs, Sahil Babayev, Minister of Labor and Social Protection of Population, emphasized the country’s commitment to the formation of human capital and measures to stimulate the labor market. He particularly appreciated that human capital development is looked at through the prism of economic growth and social cohesion.
The World Bank presented the World Development Report 2019 The Changing Nature of Work, a study on how the nature of work is changing as a result of advances in technology today and how governments can best respond to these changes by investing in human capital and offering social protections to all people. Sahil Babayev was joined by Khagani Abdullayev, Adviser to the Minister of Taxes, Kestutis Jankauskas, Head of the EU delegation, and Maleyka Abbaszadeh, Chairperson of the State Examination Center of Azerbaijan, as panelists.
While discussing how investing in human capital must be a priority for governments for workers to build in-demand skills, Mr. Abdullayev said, “Experience shows that properly implemented tax policies contribute to the implementation of a mechanism for encouraging investment in human capital; in this context, Azerbaijan is paying attention to areas which require unique skills.
This year, it was proposed to introduce tax incentives for a period of ten years for investments in such areas as education, science, sports and culture. At present, educational institutions where people with disabilities study are exempted from income tax in 2019.”
Day 2 focused on education. Setting the stage for discussion, Naveed Naqvi, World Bank Country Manager for Azerbaijan, stressed that the people of Azerbaijan were the country’s only true resource and for them to fully utilize their potential, increased investment in education and skills was needed.
Jeyhun Bayramov, Minister of Education of Azerbaijan, confirmed this in his opening remarks, stating, “Our world requires well-educated, skills-equipped graduates from our schools who will shape our today and tomorrow. And achieving this is a shared responsibility of education, business and government leaders.”The topic was further elaborated in the WB presentation on the 2018 World Development Report: Learning to Recognize Education’s Promise.
In the discussion following the presentations, Jeyhun Bayramov was joined by William Gill, U.S. Chargé d’Affaires; Edward Carwardine, UNICEF Country Coordinator; Fariz Ismailzade, Vice Rector of ADA, Maleyka Abbaszadeh (mentioned above), and Cem Mete, Social Protection and Jobs Global Practice Manager, Europe & Central Asia, World Bank, as panelists. Participants debated measures to ensure that schooling and learning went hand in hand, how to act on evidence to maximize learning outcomes, and how to align various actors in the system to make it work for learning. Mrs. Abbaszadeh said, “It is necessary to change the nature of education to make it career-oriented.”
A presentation on the changing nature of wealth and a discussion centered around The Human Capital Index and Human Capital Project set the agenda for Day 3. Panelists for the latter included Vusal Gasimli, Head of the Center for Analysis and Communication of Economic Reforms, Hijran Huseynova, Chairperson of the State Committee for Family, Women and Children Affairs, Zakiya Mustafayeva, Head of Apparatus, Ministry of Health, Zaur Aliyev, State Agency for Mandatory Health Insurance, Dr. Hande Harmanci, WHO Representative, Garay Garaybayli, Rector of Azerbaijan Medical University, and Ghulam M. Isaczai, UN Resident Coordinator.
Issues for discussion included: Why should countries invest in human capital? Can early health care and education prepare children to succeed and prosper as adults in a rapidly changing world? What are the barriers to nurturing human capital and how can countries overcome them?
Additional forum sessions included the World Bank’s analytical work on employment, higher education, health financing, and early childhood development in Azerbaijan.
Finally, at the end of the three-day forum, the main presentations, key messages and recommendations from the event were presented at the National Parliament of Azerbaijan (Milli Mejlis). Mr. Ziyad Samadzade, Chairman of the Economic Policy Committee, led an engaging discussion on the state of human development in Azerbaijan and ways to accelerate the transformation of Azerbaijan’s oil wealth into human capital.
Extensive communication, both before and during the event, helped achieve broader public conversation around the themes of the Forum. A dedicated event webpage detailed the agenda and included links to key World Bank publications and the Human Capital Project page. One-to-one meetings with key government officials ensured their participation and contribution. The event had impressive media coverage. In the run-up to the event, World Bank officials gave numerous media interviews to promote interest in it. During the Forum, presenters and experts talked extensively to the media.
One of the main conclusions of the 3-day event was that Azerbaijan needs to invest more and better to harness the potential of its human capital, and that its current human capital index is not commensurate with its income level. “With the confluence of rapid technical change and globalization and the need to engage in the global knowledge economy, Azerbaijan’s investments in human capital will be key to its ability to collaborate and compete with other nations,” said Lire Ersado, Program Leader, World Bank.
By championing human capital formation through a whole-of-government approach, Azerbaijan can prepare its citizens for the challenges and opportunities that lie ahead. With this in mind, the WBG is making a strategic shift to focus its support more on human development in Azerbaijan.
Armenia-Iran: Good neighbourly relations absolute necessity
Some experts believe that Iran’s cooperation with Armenia could become costly for the latter owing to the ever increasing hostility demonstrated by US President Donald Trump towards the Islamic Republic of Iran. They predict that American sanctions and extensive pressure on Iran could throw Armenia into a kind of blockade.
What comes to mind in connection with this is the words that are thought to have been said by Napoleon Bonaparte: geography is destiny. Even though it could not always be the case but it definitely is with the Caucasus. There are few if any regions whose military, strategic and economic significance would combine with unprecedented ethno-religious diversity on a fairly small territory with historically conditioned disputable issues. This naturally creates all the conditions for an atmosphere of permanent tension which over the last two centuries has repeatedly exploded in armed conflicts and wars.
In the 21st century, the situation in the Caucasus is formed by a most sophisticated political gamut of bilateral and multilateral relations among three former Soviet republics of Transcaucasus – Azerbaijan, Armenia and Georgia, and also, not in the last place, by the Caucasian states of Russia, Turkey and Iran. Besides, one should not forget about the military and political influence of non-regional countries, first of all, the United States, the European Union and Israel.
Undoubtedly, today we are witnessing the influence of multiple forces in different areas of Caucasian politics, and these forces are dragging Caucasian states into various alliances. Moreover, the regional policy of each of the South Caucasian states is determined by a variety of factors that spring from the specifics of bilateral and multilateral relations.
But we will not analyze the whole spectrum of complicated and entangled relations between groups of countries and within groups proper. We will focus on relations beween Iran and Armenia.
What is the role of Armenia, taking into account the US anti-Iran sanctions?
Iran is the largest multi-ethnic state in the Middle East. Present day Iran is home to more than 40 nationalities, each at a different level of socio-economic development. The multi-million population of Iran is ethnically related to the peoples of the Transcaucasus and Central Asia, the Middle East, and South Asia.
For centuries, Iran has been maintaining close economic and cultural ties with the peoples of the Transcaucasus. But its relations with Armenia stand out as somewhat specific.
Significantly, the first state formations of Armenia and Iran appeared in the VII – VI centuries BC, that is, nearly 3 thousand years ago. Since then their territories and regimes have undergone numerous changes, but Armenians and Persians, as state-forming ethnic groups, have passed through the centuries unchanged.
An idea which is deeply rooted in both the Iranian and Armenian consciousness is that Persians and Armenians boast ancient culture that cannot be thrown into oblivion. This explains cultural ties between the two nations and a comprehensive respect for the specifics of each other’s national and religious mentality.
At present, Iran is home to more than 200 thousand Armenians. Iranian Armenians enjoy substantial rights. Under the Constitution of Iran, they have guaranteed representation in parliament and local councils. Not so long ago, Russian Orientalist Karine Gevorkian reported that in 2018, a young Armenian woman was appointed head of the financial department of the Iranian oil company.
The Armenian Christian community is the largest of its kind in Iran. Functioning throughout the country are about 200 Armenian churches and about 30 Armenian schools. Some universities have departments of the Armenian language and culture. Iran publishes books and magazines in Armenian. Also, there are Armenian theatrical, cultural, and sports societies, and the Armenian Club.
It should be pointed out that Iranian Armenians are taking an active part in the social and political life of the country.
Naturally, Iranian Armenians maintain permanent ties with the Republic of Armenia, which undoubtedly cements Iranian-Armenian relations at the state level.
Although Iran and Armenia are not comparable in their scope and position, as history and current geopolitics show, they need each other.
Iran is interested to maintain ties with Armenia, in the first place, because, as it was already mentioned above, the country is home to an influential Armenian community. Secondly, given that the Armenian diaspora exists in many countries of the world, it could become a kind of bridge connecting Tehran with the capitals of other, not always friendly, states where an Armenian community is also active. Also, it is through authoritative Armenian lobbies that Iran could secure favorable political and economic solutions. Thirdly, the territory of Armenia, as a neighboring country, is important for Iran as a corridor to the North (through Georgia) and further to Russia, which is clearly beneficial for Iran considering the current geopolitical situation.
Armenia, in turn, is also interested in friendly relations with neighboring Iran, not only on account of links between the Armenian diaspora and the Islamic Republic of Iran. Iran assumed a fairly balanced position regarding the Nagorno-Karabakh conflict between Armenia and Azerbaijan, by refraining from backing fellow believers from a neighboring country and complying with the Minsk format, the decisions of the Minsk Group (OSCE).
Moreover, the continuing trade and economic ties between Armenia and Iran have become, to a certain extent, a lifeline for Yerevan. Blocked by Turkey and Azerbaijan from two sides, Armenia has only two windows to the outside world: via the borders with Georgia and Iran. Therefore, for Armenia Iran is of vital importance. The Armenian-Iranian border, running through the Araks River, is the shortest for two countries – a mere 35 km. Nevertheless, this border is of great importance, both for Armenia and for Iran, being used for developing trade and economic relations between the two countries and promoting touristm. Statistical data say Iranians (and not only Armenian) enjoy visiting Armenia.
In recent years, Armenia and Iran have seen a successful implementation of various economic programs. One of the first projects was a bridge erected across the Araks River. Also, two high-voltage power transmission lines have been built, a third one is currently under construction.
One of the key areas of economic cooperation between Armenia and Iran is provided by an interim agreement signed in May 2018 between Iran and the Eurasian Economic Union (EAEU) on the creation of a free trade zone. Thus, there have appeared opportunities for merging the 180-million market of the EEU with the 80-million Iranian market. Since Armenia is the only EAEU country that has a land border with Iran, it plays a crucial role in cooperation between the EAEU and Iran, which provides it with an opportunity to develop its relations with Iran.
Undoubtedly, Armenia and Iran’s shared interest in bilateral cooperation envisages good prospects for the future. However, it is not that simple, as there have arrived new times, both for Yerevan, and Tehran.
In 2018 Armenia saw a change of government, as a result of which Nikola Pashinyan was elected Prime Minister. There have been changes in domestic policy. As for foreign policy, at least in relation to Iran, there have been no particular changes and, in all likelihood, there will not be any. Given the present-day conditions, good-neighborly relations between Yerevan and Tehran are not a luxury, but an urgent need.
In this regard, Nikola Pashinyan’s official visit to Iran in February 2019 is of special significance. During the visit the two parties held high-level talks with the participation of Iran’s Supreme Leader Ayatollah Khomeini, who rarely receives foreign guests. The negotiations were held in a fairly warm atmosphere, with both sides underscoring the importance of bilateral relations and expressing readiness to exert efforts to develop them.
In the course of above-mentioned talks, representatives of Armenia and Iran signaled the high level of political cooperation, emphasizing yet again that the current level of economic cooperation does not match the full potential of the parties involved. Although by the end of 2018, trade turnover between Armenia and Iran had reached $ 364 million, which is the highest figure since 1991.
Among major projects of the Armenian-Iranian bilateral economic cooperation program is the construction of the third power line, the implementation of the Meghri hydropower project, the North-South highway corridor, trilateral and quadrilateral economic cooperation with Georgia and Russia.
What makes the visit to Iran by Armenia’s Prime Minister Pashinyan special is that Iran is under the US sanctions. In 2018, a transitional year for Armenia, the United States subjected Iran to unprecedented pressure. In addition, the US “secondary sanctions” were imposed against all countries, legal entities and physical persons of foreign countries which dare to maintain relations with Iran. This meant a challenge for Armenia, in many ways economically connected with Iran.
In October 2018, US National Security Advisor John Bolton visited Armenia, Azerbaijan and Georgia to secure support for US plans to further isolate Iran. Reports say Washington is lobbying for the closure of the Armenian border with Iran through opening the border with Turkey.
While in Yerevan, Bolton told Prime Minister Pashinyan that since the United States will pursue the policy of sanctions against Iran, the Armenian-Iranian border is a “big problem.” Pashinyan responded by saying the following: “We respect the requests and national interests of any country, but Armenia has its own national interests, which do not always coincide with the interests and ideas of other countries.” But as they say, there could be options.
It is necessary to emphasize that Washington, despite its hostile policy towards the IRI, has always had to tolerate cooperation between Armenia and Iran. Such tolerance is due to the US awareness of the geo-economic situation of Armenia, which, without extensive ties with Iran, will face social and economic problems. In addition, as said before, the Armenian lobby has a lot of sway in Washington, especially in the US Congress, which does not give much say to Iran’s opponents with regard to Armenia. That this is true is confirmed by the absence of any US sanctions against Armenia. That’s why John Bolton all but voiced proposals, and not warnings or threats. Suren Sargsyan, Chairman of the Armenian Center for American Studies, said recently, “Washington is fully aware of the situation and the realities that exist in the region. This means that the United States will never pressure Armenia into rejecting Iran or Russia. And this is good, because Washington knows that we will not survive without Iran and Russia … “
As is known, besides the United States Iran has another “big friend” – Israel. Apparently, the strengthening of Armenian-Iranian relations is not welcome in Jerusalem, and Yerevan is aware of this. The Armenian diplomacy has taken sophisticated measures to neutralize the negative Israeli reaction. Right after Prime Minister Pashinyan’s visit to Iran, Armenian Deputy Foreign Minister Grigor Hovhannisyan paid a visit to Israel, where he discussed opening an embassy in Israel “in order to bring bilateral relations to a new high”. The Armenian delegation also focused on organizational issues related to the upcoming visit to Israel by Armenian Prime Minister Nikola Pashinyan and Armenian Foreign Minister Zohrab Mnatsakanyan.
In all likelihood, the main point of Prime Minister Pashinyan’s foreign policy agenda and the main goal of his government is tolerance and absence of problems in relations with foreign countries: with Moscow, with Tehran, th Washington, with Brussels, with Jerusalem.
Thus, it is possible to conclude that the change of government in Armenia and large-scale US sanctions against Iran and its partners did not affect the stable nature of Armenian-Iranian relations. In these conditions, the Armenian-Iranian border is unlikely to ever be closed – a complete blockade of Armenia is highly impossible. Moreover, the small Armenia, pursuing a multi-vector foreign policy, has become an important factor in ensuring security in the South Caucasus.
From our partner International Affairs
China Set to Increase its Influence in Georgia
China-Georgia relations since the break-up of the Soviet Union in 1991 have been positive in both the economic and overall political sense. However, they are often overestimated by analysts in Georgia and elsewhere. Bilateral trade growth as well as a gradual increase in Chinese investments in Georgia have oft been hailed as exceptional and a marked sign of increased Chinese influence over Tbilisi.
True, economic growth has been taking place, but this has been but a small portion of the real potential. In fact, despite analysts’ positive views, Georgia and the South Caucasus transit corridor has yet to feature in official versions of the Chinese Belt & Road Initiative (BRI). Overall, China has been cautious. Russia’s factor too might have been at play when Beijing only minimally involved itself in the economy of Georgia. But the biggest obstacle has been geographic barriers such as the Caspian Sea, the Caucasus range, difficult Georgian terrain as well as the Black Sea.
Still, in a number of articles for GT, I have suggested that the Belt & Road Initiative (BRI) is not static in nature and, like any other trade routes in ancient or medieval periods, it does respond to rising challenges and opportunities. Another suggestion was that Georgia, if it improves its railroads, roads and ports infrastructure inside the country, will become more attractive to China and its BRI.
Indeed, there are signs proving this scenario. On 24 May, the Chinese Foreign Minister Wang Yi visited Georgia. This is crucial as it is the first official visit of a Chinese foreign minister to Georgia in 23 years. According to the Georgian Ministry of Foreign Affairs, the focus of the minister’s visit was to understand more about Georgia’s future and its potential as an important transit state.
The visit to Georgia came as a part of the Chinese delegation’s regional trip. China and Armenia on Sunday signed an agreement for mutual visa exemption for ordinary passport holders.
The Georgian Ministry of Foreign Affairs said that the visit to Georgia confirmed the “clear vision” of China regarding Georgia and its role in China’s plans for large-scale projects. Here, most likely BRI was meant, a clear emphasis on Georgia’s potential as a transit state. “Trade, investments, transport, as well as partnership within the frames of international organizations, were set as the major priorities for future cooperation,” states the Georgian Foreign Ministry.
The Chinese Foreign Minister said that “China is implementing a foreign policy which is based on the principles of peaceful coexistence. We are ready to develop friendly relations between our countries further. We have a firm position that all countries are equal, regardless of their size. We respect the independence, sovereignty and territorial integrity of Georgia and other countries.”
China’s interests in Georgia are also intricately linked to the latter’s territorial problems with Russia. For Tbilisi, it is important that China supports it on the issue of Abkhazia and Tskhinvali. Indeed, the issue of the Georgian occupied territories was also raised during the meetings and Georgian officials mentioned the “high importance” of Chinese support for Georgia’s sovereignty and territorial integrity.
The Chinese delegation’s visit follows the Georgian Minister of Infrastructure and Regional Development, Maya Tskitishvili’s, trip to Beijing, where she attended the second Belt and Road Forum for International Cooperation. More importantly, she signed an agreement on cargo and passenger transportation with Chinese Minister of Transport Li Xiaopeng.
Overall, the Chinese Foreign Affairs Minister’s visit to Tbilisi has been important, but attention in the Georgian media was only paid to official statements; no analysis has yet been made. However, what is crucial is the timing of the visit, as China and the US are locked in a geopolitical battle over influence in the Indo-Pacific world. Since Georgia is close to the US in terms of military and political cooperation, it will be interesting to see how far China-Georgia cooperation will go. One thing is likely to happen: Beijing will try to increase its influence in Georgia through economic and various political moves.
Author’s note: first published in Georgia Times
Quality of Life in Latvia is not a priority
Four presidents, 14 governments and eight Seimas have changed in Latvia over the past 20 years. The country joined the European Union and NATO, and then switched to the euro. But have Latvians become better off? Has their quality of life improved? Statistics shows that the general well-being of population remains very low. Political turbulence only worsens the situation.
Thus, according to Numbeo.com portal, one of the largest databases on the cost of living and quality of life worldwide, Lithuania and Latvia are the worst Nordic countries for quality of life.
Quality of Life Index by Country 2019
The leaders of the rating are Denmark, Finland and Iceland. Latvia
showed the lowest result, the quality of life index here is 149.15 points. In
Lithuania, the result is slightly higher – 156.36 points.
Numbeo experts took into account the purchasing power of the population, safety, health care, the cost of living and some other factors.
It is noted that the world ranking of countries for the quality of life is led by Denmark, Switzerland and Finland. Estonia took 11th place, Lithuania – 29th, and Latvia – 34th.
The more so, experts said that the proportion of shadow economy in Latvia rose by 2.2 percentage point last year to 24.2 percent.
The shadow economy proportion in Latvia has risen for the past two years in a row.
EU-SILC survey gives another frightening indicator. According to eurostat.ec.europa.eu, Latvia, as well as Estonia and Lithuania are top three EU countries in terms of poverty risk among pensioners.
Political and economic short-sightedness has lead to the state when the Baltic States have become the first battlefield in case of war between NATO and Russia.
The United States is preparing for the use of nuclear weapons in Europe along with non-nuclear countries, said Vladimir Ermakov, director of the Department for Non-Proliferation and Arms Control of the Russian Foreign Ministry. Experts point out that military airfields in the Baltic States and Poland have already been prepared to receive NATO aircraft that can carry tactical nuclear weapons. If take his words seriously, this means the end of the Baltic States’ existence.
The behavior of the authorities guaranteed Latvia, Lithuania and Estonia the status of the first battlefield, despite the fact that in the event of war, economy would be completely destroyed and population would disappear.
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