When Azerbaijan became the elected member of the United Nations Security Council in 2012-2013 for the first time in its independent history the achievement may have seemed surreal for this small country in the South Caucasus region. However, it was a long road for Azerbaijan to having overcome many imponderables along its way to make it to the top. Today Azerbaijan has managed to establish itself as an energy state, but not only the mere exporter of the crude, but also as the exporter of energy security. Azerbaijan is active on many international fronts and its trust on multilateralism, balanced and pragmatist foreign policy has earned it many friends and strengthened its partnerships.This piece aims to explore some important aspects of Azerbaijan’s current development, focusing first and foremost on energy and navigating from there to touching upon the reforms, then covering the country’s battle with COVID-19, alongside offering optimism from the bleak picture created by the pandemics.
Since the inception of its independence Azerbaijan has built reliable partnerships not only within its neighbourhood, but also with the EU, the U.S. and other countries in the West as well as East. Azerbaijan’s multi-vectored and pragmatic foreign policy, which is also very well aligned with its national (including economic) interests enabled it to build equally strong, well-thought and balanced relations with all partners. The only exception from this list is the neighboring Armenia, with whom Azerbaijan has no relations due to the existence of unresolved conflict over Azerbaijan’s Nagorno-Karabakh region. Azerbaijan’ s successful model of collaboration with its western partners has begot its ever-evolving energy cooperation with Europe. Together with some large multinational corporations that are its international partners in the West, Azerbaijan has established a successful model of energy cooperation through the construction of the Baku-Tbilisi-Ceyhan and the Baku-Tbilisi-Erzurum oil and gas pipelines—both of which transport hydrocarbons extracted from the Caspian Sea to international markets. It is on the cusp of commencement of the multimillion megaproject – the Southern Gas Corridor that stands as a valuable contribution to Europe’s energy security by not only being a mere provider of crude energy, but also by ensuring diversification of sources and routes. Azerbaijan’s energy strategy thus, during the last 25 years aimed at contributing to stability, cooperation and mutually beneficial partnerships in its neighborhood and beyond.The revenues acquired from Azerbaijan’s hydrocarbon resources have been channeled to the socio-economic development of the country; as a result, every aspect of Azerbaijan’s statehood has flourished.
Azerbaijan’s trajectory of becoming an “energy state” could be considered to be rather natural and therefore linear. The country became the motherland of the first industrially drilled oil well in the world in 1846. In 1899Azerbaijanwas the world frontrunner in oil production and refining and provided the half of oil production volume. It provided 75% of all fuel for the tanks, aircrafts and all sorts of artillery of the Soviet Army during the World War II in the fight against fascism. Azerbaijan has managed to become self-sufficient and economically independent state by virtue of its oil and gas projects upon the signature of the “Contract of Century” in 1994, despite the fact that it also had to deal with the occupation of its territories and bear the socio-economic burden of large army of refugee and IDP population created in the consequence of Armenia-Azerbaijan conflict. Its reliance on oil should therefore come as natural escape to deal with variety of challenges to its statehood.
Beyond oil, the weight of natural gas, which is a low carbon energy source is lately increasing, including in Azerbaijan, in the overall global energy balance. The growing role of natural gas in the 21st century has increased the importance of issues related to diversification of sources and routes as well as energy security. Azerbaijan, which has made its name largely as an oil country, has been working intensively to build international partnerships towards exploration of the country’s gas resources.
The estimated gas reserves of the country are 2,6 trillion cubic meters. The existing Baku-Tbilisi-Erzurum gas pipeline did not suffice for the exploration of these fields and transportation of large production volumes. The necessity to explore these reserves and turn them into a strategic commodity for energy security of a broader region begot the strategic project such as the Southern Gas Corridor.
Thus, the Southern Gas Corridor project, initiated in 2013 and inaugurated in May, 2018, has become an important chain of energy security, economic development and global partnership. This Corridor of 3500 km length consists of four integral parts – “Shah Deniz-2” project, Southern Caucasus Pipeline Extension (SCPX), Trans Anatolian Pipeline (TANAP), Trans Adriatic Pipeline (TAP). The significance of this project is also enhanced due to fact that it is the first tangible megaproject existing in Europe that unites all components of energy security. It involves close cooperation of seven nations – Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and Italy, participation of numbers of international oil and gas companies as well as the support of major financial institutions, like the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and Asian Development Bank (ADB).Together with its partners and through the Southern Gas Corridor, Azerbaijan is working towards the creation of European gas market that envisages competitiveness and diversification of sources and routes. This project requires solid partnership, continuous political and donor support.
In the spirit of this cooperation and respect for its commitments, Azerbaijan’s priority is to deliver first gas to Europe in 2020. Strategic importance of the Southern Gas Corridor is not only confined to Azerbaijan and the countries involved. This megaproject has the potential to expand to Balkans, Central and Western Europe as well, to attract new supplier, transit and consumer countries. BRUA project (Bulgaria-Romania-Hungary-Austria gas pipeline), IGB (Interconnector Greece Bulgaria) and IAP pipeline (Ionian Adriatic Pipeline) are the potential interconnecting pipelines that could deliver Shah Deniz gas to other destinations through the Southern Gas Corridor. The completion of the TAP as expected in 2020, will enable the import of about 8,8 billion cubic meters of Azerbaijani gas to Italy, with potential growth capacity of more than 10 billion cubic meters per year.
The works on all four segments of the Southern Gas Corridor project are successfully implemented. The inauguration of TANAP became the bedrock of the Southern Gas Corridor. Turkey is already receiving volumes of gas since the formal inauguration of the Southern Gas Corridor and as the completion of the project as this fall as expected, Europe will also start receiving 10 billion cubic meters of Azerbaijani gas per year. As of June 2020 Turkey is set to receive 6 billion cubic meters of gas. With the onset of the final implementation stage of the Southern Gas Corridor, successful completion of works on TAP become ever more important, since it is an essential element to deliver gas to Europe. With the completion of TAP, Azerbaijan will contribute to the energy security of Italy as well as of the countries in South Eastern Europe and will ensure the diversification of routes and sources and contribute to the de-carbonization efforts of the continent.
The Corridor was built with the real vision so that the future opportunities can also be explored. This is an expandable diversification network with the capacity to expand up to 31 billion cubic meters in SCPX and TANAP and doubling up to 20 billion cubic meters for TAP. It is stated that market demand tests for the Corridor’s possible extension are already being carried out and if conditions are suitable additional gas volumes could reach the EU and South-East Europe already within this decade. Such plans could though be challenged by virtue of the fact that the EU’s energy policies maybe changing in a long-term future with the adoption of the “Green Deal” which sets the stage for Europe’s becoming carbon-neutral by 2050. With EBRD becoming a “climate bank” and mostly focusing on public and private “green” investments, it will therefore not invest in any future fossil fuel projects, including gas, starting from 2022. However, it is stated that the situation with already functional projects like the Southern Gas Corridor could be assessed differently. As was voiced by the EU officials themselves, becoming carbon-neutral in fact does not mean that the EU will no longer need natural gas. Natural gas is also said to be a significant back up commodity for the renewables for some time.
The Southern Gas Corridor project also brings social benefits, such as new employment opportunities in the countries through which the Corridor passes, which doubtlessly, has positive impact on the economy of these countries.
The latest, 6th meeting of the Advisory Council on the Southern Gas Corridor that took place on 28 February, 2020 in Baku, offered another valuable opportunity to review the achievements in this field. It was reported that works were progressing at a steady pace and TAP is almost complete (93,5%as of March 2020). Growing number of countries joining the Advisory Council each year also testifies to the increasing interest to the project. Azerbaijan is about to complete this megaproject, which is a great stride towards strengthening Azerbaijan’s regional and global stance as an energy exporter. However, Azerbaijan acts not only as a mere exporter of crude energy, but also as an exporter of energy security by providing alternatives and diversification of routes and sources of energy.As President Ilham Aliyev said during the opening ceremony of the Southern Gas Corridor on May 29, 2018: “We are implementing such giant projects together with our partners and redrawing the energy map of the world”.
Looking beyond oil and Reforms unleashed
Beyond energy, Azerbaijan’s economy has also been witnessing major transformations since 2014. They say global trends are called “global” because of their global ramifications. Azerbaijan had to suffer two currency devaluations in 2015, nevertheless, it was not something that happened only to Azerbaijan. It was the period of economic perturbations in many countries brought by fluctuating oil prices in global oil markets since 2014. However, the country adapted fast by undertaking necessary measures to adjust to the associated challenges. Putting more premium on the development of non-oil sector of the economy and embarking on the development of its renewable energy sector in order to increase the share of renewable energy in overall energy balance of the country are some, however very direct examples of how Azerbaijan manages the challenges associated with fluctuating oil prices.
Before the onset of COVID-19 pandemics and the worldwide lockdowns that negatively affected everyday and economic life, including in Azerbaijan, forecasts on Azerbaijan’s economy was very optimistic and positive. For instance, in October 2019 the then Minister of Economy Shahin Mustafayev declared that “In 2020, real growth in Azerbaijan’s GDP will be three percent, including 1.6. percent for the oil sector and 3.8 percent for the non-oil sector. The growth of the non-oil industry is projected at 8.8. percent, and agriculture – at 4.8 percent”. His successor, a young and western educated former Minister of Taxes Michael Jabbarov later also reiterated this objective with a new and steady commitment to achieve more. Azerbaijan’s unemployment rate has dwindled from 5,02 percent in 2018 to 4,99 percent in 2019 and was projected to further decrease in the years to come. On another front, Azerbaijan aims to increase the share of renewable energy resources in the overall energy consumption balance of the country by 30% till 2030, while currently this number is 18-19%, including hydropower stations. It aims to hold auctions in 2020 in order to attract the best business partners for the development of renewable energy projects (mostly solar and wind) at specifically allocated sites of the country. In January 2020 it has signed implementation agreements of pilot projects on renewable energy with two leading companies of Saudi Arabia and United Arab Amirates – “ACWA Power” and “Masdar”, respectively, and more such undertakings could come in future.
Azerbaijan’s relations with the European Union – one of the biggest economic actors – is also developing dynamically. EU-Azerbaijan Strategic Partnership Agreement, unlike the Association Agreements and Deep and Comprehensive Free Trade Agreements envisaged by the Eastern Partnership (EaP) is based on more equal conditions for partnerships that capitalizes on mutually beneficial partnership for both sides, having thus, eliminated the need for Azerbaijan to one-sidedly comply with EU standards and expectations. The successful conduct of the second round of EU-Azerbaijan Security Dialogue in Baku on 19 December 2019 once again underscored common positions on political, economic, security and energy related issues, while also stressing the importance of continuing to work towards the finalization of EU-Azerbaijan Strategic Partnership Agreement. The open chapters within the Agreement are currently being negotiated and there is a genuine interest on both sides to find a common denominator soon.
Moreover, the country is undergoing a comprehensive reform process in all areas of its statehood and the very nature of the current reforms in all political, economic, administrative strata of Azerbaijan implies the peaceful transition of state management to younger generation that carry more zest and energy alongside also being competent for such a leadership. This does not, however, obviate the fact that older generation are also given their due respect and recognition for their service and their experience are valued and kept at hand’s reach if needed. This evolutionary example of “rejuvenation” of state management while maintaining the synergy of “institutional memory and experience” with “youthfulness and energy” is thought to deliver the needed results in the overall scheme of things.
The reforms have brought number of palpable changes in the state administration, the results of which are already showing in terms of concrete achievements and progress attained in various areas. The leadership of the country has chosen the path of “evolution” in its efforts to adapt the country to ever changing nature of international relations and boost the country’s resilience in the face of evolving global political, socio-economic and other challenges. The snap parliamentary elections held on 9 February was therefore also an important achievement that reshaped the composition of the Parliament and attracted many young parliamentarians. 1314 candidates (independents and representatives of 19 parties) were registered in the race for 125 seats in the Azerbaijani Milli Maclis and 50 per cent of the candidates were under 40 years old. For the first time in the history of independent Azerbaijan a female speaker of the Parliament, Sahiba Gafarova was elected.
COVID-19 and Azerbaijan’s response
Despite the positive picture above, when the scales of global pandemics acquired bigger proportions, Azerbaijan did not also remain immune to the contagion. The news about the first infection case broke on 28 February and the government was swift to close down country’s borders, restrict international and domestic transportation, schools in early March, and all the shopping malls restaurants, etc. gradually. The entire country was put into the lockdown and quarantine was enhanced incrementally as the situation so demanded. From 5 April onwards, people are only allowed to leave their houses for basic needs, like grocery shopping, pharmacy needs, attending the funeral of the closest family member via the SMS permission system. As of this writing there were 1197 coronavirus patients in the country with 351 cured, 13 dead and 833 active patients.
The special Coronavirus Support Fund was established with 19 March 2020 Presidential Decree and the government, and other type of organizations, entrepreneurs were very swift to extend financial support to the Fund. Moreover, the government prepared 9 programs worth 2,5 billion manats – 3 % of the GDP to support the economy and the entrepreneurship as well as social benefits containing compensations for unemployed population as well as educational fee rescue package for socially vulnerable parts of the population in the aftermath of the total lockdown of the economy. The idea is to put the economy back on track as soon as possible and weather the COVID-19 storm with minimum losses.
Obviously, pandemics has affected not only global health but also global economy. Some even compare its magnitude and potential effects to those of the Second World War, while others predict severe economic crisis unseen since 1929-1930. Azerbaijan obviously is not immune to the consequences of the pandemic. Granted, the acute slump in oil prices as a consequence of worldwide lockdowns and therefore suppressed demand for crude, and the failed OPEC+ endeavor to find a common denominator on 6 March, put further strain on the economy, which otherwise was on an upswing before the COVID-19. Azerbaijan’s 2020 budget has envisaged 55 USD per barrel of oil. However, with oil prices in the first two months of the year being above 60 USD and budget proceeds surpassing the expenditures for about 400 million manats in January alone, plus the proceeds from tax and customs services testifies to the increasing income to the state budget. Azerbaijan’s strategic currency reserves are estimated to be over 50 billion USD, which provides extra fiscal security. The overview of the extra financial reserves acquired since beginning of the year in fact enables to compensate for the losses incurred due to the coronavirus induced decline in oil prices.
This is more so, in the light of the recent OPEC+ deal, which pledged to reduce oil production by 9,7 million barrels per day (bpd) in May and June of 2020 (plus 300 thousand barrels the US will cut instead of Mexico’s proposed share), plus voluntary reductions up of 2,7 million bpd by Saudi Arabia, Kuwait and United Arab Amirates planned for April. The US, Canada, Indonesia, Norway and Brazil are thought to also cut their output by 4-5 million bpd, while oil production in Iran, Venezuela and Libya is expected to drop by 2,8 million bpd. as well. In total, 20 million bpd. oil is expected to be withdrawn from the markets, which should help to stabilize the market and maintain balance between supply and demand. Further cuts will be 7,7, million bpd. from July till end 2020 and 5,8 million bpd from January 2021 till April 2022.It is yet to be seen how the deal will operate under the current conditions and in future, but early market reactions have been rather positive.
The ramifications of COVID-19 and its impact on world economy and everyday lives of citizens are yet to be seen as the debate is still ongoing. However, one thing is clear that there will be no winners and losers of this global calamity as everyone is affected. So is Azerbaijan. However, Azerbaijan’s strong standing before the outbreak as an energy and reformer state and swift measures to contain the virus as well as operationalization of state support mechanisms can offer the cause for optimism that the country could quickly return back to normal and continue the works interrupted with greater rigor. There definitely is a political will and hopefully the way will be unhindered soon too.
China Still Ambivalent About the Middle Corridor
Despite the oft-touted momentum behind the Eurasian Middle Corridor circumventing Russia, China still appears not to be fully behind the project beset by geopolitical challenges and infrastructure hurdles.
Russia’s war on Ukraine has been a game-changer for Eurasian connectivity. The route through north Eurasia running from China to Europe that served as a major conduit between the two is now less attractive as a result of the Western sanctions imposed on Moscow. China-EU shipments along the Northern Corridor have decreased by 40 percent according to data from October 2022. This new reality serves as a major incentive for finding alternative routes.
It is rare in geopolitics that so many states in such a short timeframe would agree on advancing a certain project. The Middle Corridor, connecting China and Europe via Central Asia, the Caucasus and the Black Sea, is a good example of a vision where different countries from across Eurasia have accelerated the work not only on promoting the idea, but also laying the ground for its expansion.
In the months following the invasion of Ukraine, the EU has re-invigorated its policies toward the wider Black Sea region and has actively engaged Central Asia through high-level visits, pledging economic and political support. No longer willing to trade with China through Russia, Brussels is now pushing for the expansion of the Middle Corridor.
Small nations along the Corridor, too, have upped their diplomatic game. Leaders of Azerbaijan, Georgia, and Central Asian states have grasped the emerging opportunity and begun inter-state cooperation through bilateral visits and the signing of memorandums on the minimization of tariffs and border crossing hurdles.
The effects of such cooperation are already evident. Indeed, emerging connectivity opportunities push the governments to reconsider their previous position on long-stalled projects such as the Anaklia deep sea port in the case of Georgia or the China-Kyrgyzstan-Uzbekistan railway, which the cooperating states pledged to begin work on in 2023.
Then, there is Turkey. Seeing an opening in the region, Ankara has increased its outreach to Central Asia already following Azerbaijan’s victory over Armenia in 2020. Effectively the initiator of the Middle Corridor idea back in 2000s, Turkey is now arguably one of the critical players driving the concept. A series of “block train” transports were initiated in recent years, traversing the corridor. In February 2021, a train reached China from Turkey’s eastern provinces after nearly twenty days of transit. In April 2022, another train was dispatched via the same route. Turkish President Recep Tayyip Erdogan and his Kazakh colleague Kassym-Jomart Tokayev commended during their summit in Ankara in 2022 “the growth of cargo transit via the Baku-Tbilisi-Kars railroad and the East-West Middle Corridor.” Moreover, the two sides “stressed the importance of strengthening coordination between the relevant institutions for the effective and sustainable use of the Middle Corridor.”
Yet, one critical player– China – is largely missing. Beijing has rarely commented on the Middle Corridor and Chinese analysts write exceptionally little on the issue. Most importantly, Beijing has invested very little in the actual development of the corridor.
China’s reticence so far can be explained by pure pragmatism. Of course, there is a major imperative for Beijing to find alternative routes as transit through Russia becomes problematic. In that regard, the Caspian Sea and the South Caucasus indeed constitute geographically the shortest link to Europe.
Yet, the route is not an easy one – it is multimodal, i.e. consists of both sea lines and land routes and crosses multiple countries which have made little effort to synchronize their transit capabilities and develop infrastructure before 2022.
Currently, there is close to no joint tariff coordination, effective inter-governmental dialogue and adequate infrastructure to process the throughput which has been shipped through Russia. For instance, lack of infrastructure in the Caspian Sea prevents convenient transit from Central Asian ports to Azerbaijan. Similar troubles beset the Georgian side of the Black Sea, especially as there is no deep sea port. The construction of the Anaklia port was postponed due to political infighting in the country with new construction plans only recently announced. In 2022, the Middle Corridor could only absorb 3-5 percent of the China-EU trade, which limits Beijing’s interest in the route.
Finally, geopolitical factors, such as instability in the South Caucasus, have contributed to making the Middle Corridor not as attractive for China as it might seem on the first sight. Russian influence is a primary factor. Despite Russia’s current weakness and incrementally growing dependence on China, the latter will have to carefully measure how Moscow will be responding to the development of a route which circumvents it from the south, in the region where Moscow has four military bases.
Kremlin could potentially rupture the connection both politically and through the use of more radical measures if deemed necessary. Much will depend on how Moscow fares in Ukraine. Perhaps a victory might even embolden it to prevent the corridor from materializing. But even if defeated or bogged down in a protracted war, Russia’s behavior will remain unpredictable, keeping China at unease.
From the South Caucasus, the Middle Corridor continues to either the Black Sea or Turkey. The former is currently a war theater, with chances for peaceful implementation of the corridor quite limited. This leaves China with Turkey.
Ankara and Beijing have promoted inherently competing visions of Eurasian connectivity. There were even hints that Turkish and Chinese influence clashed in Azerbaijan, which limited China’s engagement in the expansion of the Middle Corridor. After the outbreak of the war in Ukraine, the situation seems to have changed and Turkey and China have opened more active talks on cooperation along the corridor. For instance, China-Turkey Communication Forum was held in September 2022, focusing, among other things, on synergizing the Belt and Road Initiative (BRI) with the Turkey’s Middle Corridor. Yet, the pace of cooperation remains slow with little practical steps taken so far.
China might eventually grow interested in the re-invigorated Middle Corridor as a part of a hedging strategy. As was the case with silk roads in ancient and medieval times, trade corridors rarely remain static. They constantly adjust to emerging opportunities and evade potential geopolitical dangers. In the same vein, China’s massive BRI is far from stationary, but constantly evolving and adjusting to varying circumstances instead.
Although the South Caucasus and the Caspian Sea have not featured high in the BRI documents published by Beijing, the region can rise to rank higher among Chinese interests amid a new emerging geopolitical reality. This is especially the case if Russia grows even more sidelined in Eurasian geopolitics and Beijing realizes that betting on Russia long-term is a dead-end.
Author’s note: first published in chinaobservers
A turning moment in Ukraine Crisis
Germany’s decision to send tanks to Ukraine is a major moment in the Ukraine Crisis. It will have a far-reaching impact and may turn it into World War III. It is a tradition of the US to gang up to counter its adversaries. Iraq war, Libyan attacks, Syrian aggression, and the Occupation of Afghanistan, all were the result of allied forces, the US has the skills to make allies in addition to NATO and achieve its political objectives.
The US lobbies against its adversaries, and use all dirty tricks including media to malign its adversaries. They mislead the public and level the ground for the next stage – armed intervention. Looking at US interventions in any part of the world, you may conclude a similar approach.
Ukraine is also no exception. The US was preparing grounds for this crisis for a long and dragged Russia into it. Including Ukraine in NATO, was a red line for Russia, but, deliberately, this path was chosen to spoil global peace.
After failing all negotiations, Russia was left with no option except launch a special military operation on the same line as the 2014 Crimea operation. It was just a limited operation and should have been over after securing Russian borders only.
Unfortunately, the US had different intentions and trapped Russia in Ukraine and a full-scale war started. It was purely American war against Russia, but, as usual, America ganged up with NATO and also sought assistance and support from friendly countries.
German Chancellor Olaf Scholz announced the move on Wednesday, bowing to intensifying international pressure – led by the United States, Poland, and a bloc of other European nations, which called on Berlin to step up its military support and commit to sending their sought-after vehicles. The influx of Western tanks into the conflict has the potential to change the shape of the war. The shipments are a breakthrough in the West’s military support for Kyiv, signaling a bullish view around the world about Ukraine’s ability to reclaim occupied territory. Crucially, they may allow Ukraine to take the fighting to Moscow’s forces and re-capture more occupied land, rather than focusing primarily on beating back Russian attacks.
The US has increased its defense budget and military aid to Ukraine. It is aimed to attack Russia, not limited to liberating Ukraine only. It will prolong the war and let Russia bleed for longer.
Participation of Europe in conflict may worsen the situation and may harm Europe more. Although there are public rallies, protests, and agitations in major cities in Europe to end the Ukraine war or at least oppose Europe’s active participation. Some were chanting slogans to leave NATO. It seems the public understands the consequences but the rulers are blindly following US policies. It might create a rift between the public and rulers.
Blunders made by rulers, but, the price is being paid by the public, in the form of inflation, hikes in the price of fuel, energy, food, etc., are a common phenomenon all over Europe. The danger of spreading the war is at high risk.
Imagine, if Russia also seeks assistance from its allies and gangs up to conform to NATO aggression, it will be certainly a Word War III. Today, the World is obviously polarized and blocks are emerging rapidly.
It also can turn into nuclear war too. The 8 declared nuclear states have enough piles of nuclear weapons to destroy the whole world completely. It is scaring scenario.
But despite knowing the consequences, no one is taking any initiative to end the war and seek political solutions to the crisis. The US is not interested in the peaceful resolution of the disputes and Europe is blindly following America.
It is urged that the UN may intervene proactively and initiate a dialogue to reach an acceptable solution for all stakeholders. Unbiased, non-partisan nations may come forward to initiate peace dialogues. All peace-loving countries and individuals may act proactively and struggle to end the Ukraine crisis. Satisfying all concerned parties may achieve sustainable peace and avert any big disaster.
Humankind is the most precious thing in this universe and must be respected. Value human lives, save human lives, and without any discrimination protects human lives across the board all over the globe.
Lithuanian society is left shaken by plans to raise retirement age
This month Lithuanian society is left shaken after spreading the news about the increasing of the retirement age. In Lithuania, the retirement age has increased every year since 2012 and by 2026 it will be 65 years. Previously, discussion surfaced on whether raising the retirement age to 72 would help offset Lithuania’s ageing population issues.
As Lithuania’s demographic situation continues to worsen, the European Commission estimates that the number of working-age people capable of supporting pensioners will go down in the future. Brussels says that increasing the retirement age could be a solution.
The existing average in Lithuania is now 57.5 years. It should be said that Lithuania expects to reach a life expectancy of 65 years only in 2030.
In some years there will be 50 retirees per 100 working people and it will have crucial implications for public finances and may require raising taxes. At the moment, 35% of the country’s population are aged over 55.
Before prolonging its working age, Lithuania should address the relatively poor health and low life expectancy of its population. Before they even reach retirement age, many people in Lithuania are unable to work due to high prevalence of chronic, non-infectious conditions.
It’s necessary to focus on increasing healthy life expectancy in Lithuania, instead of weighing up the idea of increasing the retirement age, Irena Segalovičienė, presidential adviser has said.
Taking into account the fact that men in Lithuania live an average of 14 more years from the age of 65, and women an 18 more years, Vilnius residents are not impressed with such an idea.
The officials are afraid of possible protests which could lead even to the government resignation.
Thus, late Thursday afternoon millions of French workers were still on the streets protesting against President Emmanuel Macron’s planned pension reforms.
Lithuanian officials were quick to announce that it’s inadequate to consider a 7-year increase in the retirement age at this stage. Most likely, the news was deliberately disseminated in order to study public opinion on this issue.
Discussion is most toxic now, and will continue in Lithuania because wasting money on defence, government puts aging population at risk of poverty and death.
At the same time, the government calls for more defense spending. Together with Poland and the UK, Lithuania is leading a push within the NATO to agree to higher spending goals. In 2023, the country’s national defense budget will reach 2.52% of its gross domestic product (GDP). According to Zilvinas Tomkus, Lithuania’s vice minister of defence, Lithuania is ready to spend even more on the modernization of its armed forces and military infrastructure. The more so, spending money on defence procurement today will not improve Lithuania defence today. The modernized weapons, vehicles and equipment will be available only in some years while old Lithuanians need money right now just to survive.
Thus, chosen political priorities do not reflect the current social and economic situation in the country and even worsen it.
China Still Ambivalent About the Middle Corridor
Despite the oft-touted momentum behind the Eurasian Middle Corridor circumventing Russia, China still appears not to be fully behind the...
European farms mix things up to guard against food-supply shocks
By ETHAN BILBY ‘Items in this section have limited availability due to supplier production issues,’ ‘Sorry, temporarily out of stock’ and...
Astana hosts 18th Iran-Kazakhstan Joint Economic Committee meeting
The 18th meeting of Iran-Kazakhstan Joint Economic Committee meeting was held on Thursday in Kazakhstan’s capital Astana, at the end...
The importance of Iran’s membership in the SCO
The members of Majlis (the Parliament) have approved the emergency of the plan of Iran’s commitments to achieve the position...
Sabah: ‘The Americans have deceived themselves, the Europeans and Ukraine’
The US is repeating the same mistakes as in Iraq, Afghanistan, Libya and Syria. Now – in Ukraine. So it...
Saudi-Chinese Friendship: Should India be Concerned?
Saudi Arabia hosted the grand China-Arab summit in December last year and leaders of the two nations deliberated on future...
China’s assurance of Rohingya repatriation between Myanmar-Bangladesh
We now have new hope thanks to news reports that were published in the Bangladeshi dailies on Tuesday and contained...
Eastern Europe4 days ago
Why there is New Escalation in Ukraine War?
Africa4 days ago
Sergey Lavrov Embarks on Geopolitical Lecturing Tour to Africa
Economy2 days ago
Egypt’s “Too Big to Fail” Theory Once Again at Test
Economy3 days ago
Pakistan’s geo-economic policy and regional connectivity
Finance2 days ago
Ray Dalio: Dollar-dominated global order is ‘fading away’
Economy4 days ago
Trade and Gender in South Asia
Africa3 days ago
Janet Yellen: U.S. Focuses on Business Investment and Infrastructure Development in Africa
South Asia3 days ago
Decoding Donald Lu’s Visit: A Positive Upward in US-Bangladesh Relations?