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Azerbaijan: Human Capital Forum Helps the Country Orient Itself for the Future

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Panelists and high-level participants discuss human capital investments at the forum in Baku, Azerbaijan. Photo Credit: Zaur Rzayev / World Bank

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.

Why now?

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.

Forum Highlights

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.

Communications

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.

What next?

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.

World Bank

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Eastern Europe

Unhappy Iran Battles for Lost Influence in South Caucasus

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Events that might not matter elsewhere in the world matter quite a lot in the South Caucasus. Given a recent history of conflict, with all the bad feelings that generates, plus outside powers playing geostrategic games, and its growing importance as an energy corridor between Europe and Central Asia, the region is vulnerable. 

This has been worsened by the two-year-long Western absence of engagement. In 2020, Europe and the U.S. were barely involved as the second Nagorno-Karabakh war broke out between Armenia and Azerbaijan, leaving about 7,000 dead. With tensions now on the rise between Azerbaijan and Iran, Western uninterest is again evident, even though this might have wider ramifications for future re-alignment in the South Caucasus. 

The drumbeat of Iranian activity against Azerbaijan has been consistent in recent months. Iran is getting increasingly edgy about Israel’s presence in the South Caucasus — hardly surprising given Israel’s painfully well-targeted assassination and computer hacking campaigns against nuclear staff and facilities — and especially its growing security and military ties with Azerbaijan, with whom Iran shares a 765km (430 mile) border. Iran has also voiced concern about the presence in the region of Turkish-backed Syrian mercenaries, who were used as Azeri assault troops last year.  

Much of the anger has been played out in military exercises. The Azeri military has been busy since its victory, exercising near the strategic Lachin corridor which connects the separatist region to Armenia, and in the Caspian Sea, where it has jointly exercised with Turkish personnel. Iran, in turn, sent units to the border region this month for drills of an unstated scale. 

This week, the Azeri and Iranian foreign ministers agreed to dial down the rhetoric amid much talk of mutual understanding. Whether that involved promises regarding the Israeli presence or a pledge by Iran to abandon a newly promised road to Armenia was not stated. 

Iran’s behavior is a recognition of the long-term strategic changes caused by the Armenian defeat last year. Iran has been sidelined. Its diplomatic initiatives have failed, and it has been unwelcome in post-conflict discussions. 

It is true that Iran was never a dominant power in the South Caucasus. Unlike Russia or Turkey, the traditional power brokers, it has not had a true ally. Iran was certainly part of the calculus for states in the region, but it was not feared, like Russia or Turkey. And yet, the South Caucasus represents an area of key influence, based on millennia of close political and cultural contacts. 

Seen in this light, it is unsurprising that Iran ratcheted up tensions with Azerbaijan. Firstly, this reasserted the involvement of the Islamic Republic in the geopolitics of the South Caucasus. It was also a thinly-veiled warning to Turkey that its growing ambitions and presence in the region are seen as a threat. In Iran’s view, Turkey’s key role as an enabler of Azeri irridentism is unmistakable. 

Turkish involvement has disrupted the foundations of the South Caucasian status quo established in the 1990s. To expect Turkey to become a major power there is an overstretch, but it nevertheless worries Iran. For example, the recent Caspian Sea exercises between Azerbaijan and Turkey appear to run counter to a 2018 agreement among the sea’s littoral states stipulating no external military involvement. 

The Caspian Sea has always been regarded by Iranians as an exclusive zone shared first with the Russian Empire, later the Soviets, and presently the Russian Federation. Other littoral states play a minor role. This makes Turkish moves in the basin and the recent improvement of ties between Azerbaijan and Turkmenistan an unpleasant development for Iran — fewer barriers to the Trans-Caspian Pipeline threatens the Islamic Republic’s ability to block the project.  

This is where Iranian views align almost squarely with the Kremlin’s. Both fear Turkish progress and new energy routes. The new Iranian leadership might now lean strongly toward Russia. With Russia’s backing, opposition to Turkey would become more serious; Iran’s foreign minister said this month that his country was seeking a “big jump” in relations with Russia. 

The fact is that the region is increasingly fractured and is being pulled in different directions by the greater powers around it. This state of affairs essentially dooms the prospects of pan-regional peace and cooperation initiatives. Take the latest effort by Russia and Turkey to introduce a 3+3 platform with Armenia, Azerbaijan, and Georgia, as well as Iran. Beyond excluding the West, disagreements will eventually preclude any meaningful progress. There is no unity of purpose between the six states and there are profound disagreements. 

Thus, trouble will at some point recur between Iran and Azerbaijan, and by extension Turkey. Given the current situation, and Iran’s visible discontent, it is likely it will take some kind of initiative lest it loses completely its position to Turkey and Russia. 

Author’s note: first published in cepa

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Eastern Europe

Right-wing extremist soldiers pose threat to Lithuania

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It is no secret that Lithuania has become a victim of German army’s radicalization. Could this country count on its partners further or foreign military criminals threaten locals?

It is well known that Germany is one of the largest provider of troops in NATO. There are about 600 German troops in Lithuania, leading a Nato battlegroup. According to Lithuanian authorities, Lithuania needs their support to train national military and to protect NATO’s Central and Northern European member states on NATO’s eastern flank.

Two sides of the same coin should be mentioned when we look at foreign troops in Lithuania.

Though Russian threat fortunately remains hypothetical, foreign soldiers deployed in the country cause serious trouble. Thus, the German defence minister admitted that reported this year cases of racist and sexual abuse in a German platoon based in Lithuania was unacceptable.

Members of the platoon allegedly filmed an incident of sexual assault against another soldier and sang anti-Semitic songs. Later more allegations emerged of sexual and racial abuse in the platoon, including soldiers singing a song to mark Adolf Hitler’s birthday on 20 April this year.

It turned out that German media report that far-right abuses among the Lithuania-based troops had already surfaced last year. In one case, a soldier allegedly racially abused a non-white fellow soldier. In another case, four German soldiers smoking outside a Lithuanian barracks made animal noises when a black soldier walked past.

Lithuania’s Defence Minister Arvydas Anušauskas said later that the investigation was carried out by Germany and that Lithuania was not privy to its details. The more so, Lithuania is not privy to its details even now. “We are not being informed about the details of the investigation. […] The Lithuanian military is not involved in the investigation, nor can it be,” Anušauskas told reporters, stressing that Germany was in charge of the matter.

Ms Kramp-Karrenbauer, German defence minister, said that these misdeeds would be severely prosecuted and punished. Time has passed, and the details are not still known.

It should be said Germany has for years struggled to modernize its military as it becomes more involved in Nato operations. Nevertheless problems existed and have not been solved yet. According to the annual report on the state of the Bundeswehr made in 2020 by Hans-Peter Bartel, then armed forces commissioner for the German Bundestag, Germany’s army “has too little materiel, too few personnel and too much bureaucracy despite a big budget increase.” Mr Bartels’ report made clear that the Bundeswehr continues to be plagued by deep-seated problems. Recruitment remains a key problem. Mr Bartels said 20,000 army posts remained unfilled, and last year the number of newly recruited soldiers stood at just over 20,000, 3,000 fewer than in 2017. The other problem is radicalization of the armed forces.

Apparently, moral requirements for those wishing to serve in the German army have been reduced. Federal Volunteer Military Service Candidate must be subjected to a thorough medical examination. Desirable to play sports, have a driver’s license and be able to eliminate minor malfunctions in the motor, to speak at least one foreign language, have experience of communicating with representatives of other nationalities, be initiative and independent. After the general the interview follows the establishment of the candidate’s suitability for service in certain types of armed forces, taking into account his wishes. Further candidate passes a test on a computer. He will be asked if he wants study a foreign language and attend courses, then serve in German French, German-Dutch formations or institutions NATO.

So, any strong and healthy person could be admitted, even though he or she could adhere to far-right views or even belong to neo-Nazi groups. Such persons served in Lithuania and, probably, serve now and pose a real threat to Lithuanian military, local population. Neo-Nazism leads to cultivating racial inequalities. The main goal of the neo-Nazis is to cause disorder and chaos in the country, as well as to take over the army and security organs. Lithuanian authorities should fully realize this threat and do not turn a blind eye to the criminal behaviour of foreign military in Lithuania. There is no room to excessive loyalty in this case.

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Eastern Europe

Lithuanian foreign policy: Image is everything

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It seems as if Lithuanian government takes care of its image in the eyes of EU and NATO partners much more than of its population. Over the past year Lithuania managed to quarrel with such important for its economy states like China and Belarus, condemned Hungary for the ban on the distribution of images of LGBT relationships among minors, Latvia and Estonia for refusing to completely cut energy from Belarus. Judging by the actions of the authorities, Lithuania has few tools to achieve its political goals. So, it failed to find a compromise and to maintain mutually beneficial relations with economic partners and neighbours. The authorities decided to achieve the desired results by demanding from EU and NATO member states various sanctions for those countries that, in their opinion, are misbehaving.

Calling for sanctions and demonstrating its “enduring political will”, Lithuania exposed the welfare of its own population. Thus, district heating prices will surge by around 30 percent on average across Lithuania.

The more so, prices for biofuels, which make up 70 percent of heat production on average, are now about 40 higher than last year, Taparauskas, a member of the National Energy Regulatory Council (VERT) said.

“Such a huge jump in prices at such a tense time could threaten a social crisis and an even greater increase in tensions in society. We believe that the state must take responsibility for managing rising prices, especially given the situation of the most vulnerable members of society and the potential consequences for them. All the more so as companies such as Ignitis or Vilnius heating networks “has not only financial resources, but also a certain duty again,” sums up Lukas Tamulynas, the chairman of the LSDP Momentum Vilnius movement.

It should be said, that according to the Lithuanian Department of Statistics, prices for consumer goods and services have been rising for the eighth month in a row. According to the latest figures, the annual inflation rate is five percent.

Earlier it became known that in 2020 every fifth inhabitant of Lithuania was below the poverty risk line.

Pensioners are considered one of the most vulnerable groups in Lithuania. In 2019, Lithuania was included in the top five EU anti-leaders in terms of poverty risk for pensioners. The share of people over 65 at risk of poverty was 18.7 percent.

In such situation sanctions imposed on neighbouring countries which tightly connected to Lithuanian economy and directly influence the welfare of people in Lithuania are at least damaging. The more so, according Vladimir Andreichenko, the speaker of the House of Representatives of the Belarus parliament, “the unification of the economic potentials of Minsk and Moscow would be a good response to sanctions.” It turned out that Lithuania itself makes its opponents stronger. Such counter-productiveness is obvious to everyone in Lithuania except for its authorities.

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