FIVE MORE YEARS: ON THE CHALLENGES FACING AZERBAIJAN’S PRESIDENT
ISN, Zurich
Oct 22 2013
What major challenges will Ilham Aliyev confront in his third term
as President of Azerbaijan? According to Sabine Freizer, it’s an
increasingly familiar set of problems – declining oil revenues,
a poor track record on human rights and the possibility of renewed
conflict over Nagorno-Karabakh.
By Sabine Freizer for Atlantic Council
President Ilham Aliyev is about to start his third mandate in
Azerbaijan. Despite some hefty criticism by the main European
elections observation mission, the Organization for Security and
Cooperation in Europe (OSCE), the elections on 9 October were the
easy part. Azerbaijan has made impressive economic progress in recent
years, Baku’s sparking skyline standing as vivid proof. But the
country has a host of challenges to overcome. Economic growth has
already begun to slow and during his next mandate Aliyev will have
to manage a transition from mega-oil producer to a more diversified
and democratized country.
Over the past ten years high oil revenues brought Azerbaijan stunning
GDP growth, impressive poverty reduction, some development in non-oil
sectors and allowed it to become a major international investor in
its neighborhood.
The country’s role on the international stage has noticeably increased,
after Eurovision 2012 it will host the European Games in 2015. More
importantly it gained a seat on the United Nations Security Council as
a non-permanent member and has succeeded in maintaining an independent
multi-vector foreign policy where it is beholden to none of its bigger
regional neighbors – neither Russia nor the European Union and the
United States. Late last year it even marshaled the closure of Russia’s
last military outpost on its territory at the Gabala satellite station.
Trouble, however, lurks on the horizon. Gone are the days of double
digit growth rates, in 2012 the economy expanded by 2.2 percent and may
reach 6 percent this year. The country’s oil revenue has started to
decline and is predicted to decrease quickly after 2015. New natural
gas fields coming on line are unlikely to compensate fully the lost
oil revenues. Azerbaijan is also not the only gas provider in the
area, with Iraq, Iran, Israel and even tiny Cyprus as potential new
European suppliers, and new extraction technics being developed.
Diversification of the economy has begun but in 2012 92% of exports
were still oil or oil products. Substantial more investment and human
capital is needed to offer goods and services that can be competitive
in an already saturated region soon to be divided up by rivaling
trading groups led by the EU or Russia’s custom union.
While it was easy for a small group of individuals and companies to
manage oil extraction and export, with the vast majority of profits
going to a limited few, this will no longer be possible under a more
diversified economy and as growth rates drop.
Already there were public protests in 2012 and 2013, indicating
growing discontent with social inequality, corruption, lack of
opportunities in the regions and hazing in the military. Even though
the demonstrations quickly ended in mass detentions, the whole idea
of street action was striking for officials and the population with
both sides testing the boundaries of the allowed and possible –
often employing the new tools of social media.
The most common way to respond to public expressions of criticism has
been repression including the jailing of activists, political arty
representatives and journalists. But the President also fired several
regional executive authorities who had too clearly flaunted their
wealth and privileges. While it may be hard to dismiss close long
term allies in government in Baku, some who are from Ilham Aliyev’s
father’s generation, more anti-corruption efforts at the municipal and
regional level could already diminish some of the current unhappiness
not so far from Baku’s bustling Fountain Square.
Another less vivid, but nevertheless serious challenge for the current
government, is the growing influence of more conservative forms
of Islam – either sunni or shiite. Positioning itself as a secular
country, Azerbaijan with its predominantly Muslim population has a
new generation of believers who are very active. The government is
worried that they may be manipulated by a hyper active Shiite state
on its Southern border and a Salafi insurgency ragging on its Northern
flank with the North Caucasus.
To counter this, the government introduced strict and restrictive
religion laws in November 2011, an informal Hijab ban and the closure
of a number of mosques. These in turn have angered many and are
unlikely to encourage people to more moderate religious practice.
Instead some Islamist groups have joined opposition rallies or
mobilized people, like in October 2012 to protest the hijab ban.
Instead the government should make the work of the State Committee for
Work with Religious Organizations (SCWRO) and the Caucasus Board of
Muslims (CBM) more transparent and enter into a dialogue with peaceful
practitioners and representatives of non-official Islamic communities.
Systematic human rights abuses and absence of progress in the
democratization has been reported extensively on by groups like Human
Rights Watch and Amnesty International. The just completed presidential
elections were more harshly criticized than the last two presidential
polls which Aliyev won. According to the OSCE the election were
“undermined by limitations on the freedoms of expression, assembly,
and association that did not guarantee a level playing field for
candidates.”
In the past human rights concerns have done little to taint most
western countries’ relations with Baku. Even during this election the
European Parliament and Parliamentary Assembly of the Council of Europe
(PACE) came out with much more encouraging statements on the holding
of the poll. But Azerbaijan’s ties with its western allies are on
less solid ground than before. Baku is not planning to sign a trade
agreement with Brussels in Vilnus (because it is not a World Trade
Organization member) nor move forward in the association process as
Georgia, Moldova and Ukraine expect to do. As the country is les needed
as a corridor for the US supplying or withdrawing from Afghanistan,
Washington’s interest in the region is likely to keep decreasing.
As President Aliyev likes to repeat, the biggest challenge facing the
country is the non-resolution of the Nagorno-Karabakh conflict. The
current status quo is deeply damaging: 586,000 Azeri remain internally
displaced (IDPs) from Nagorno-Karabakh and adjacent areas, and some
14 per cent of the country’s territory is occupied. In response
Baku has been accumulating military assets at an increasing rate:
the military budget rising to $3.7 billion in 2013, from $3 billion
in 2012. Public opinion in Azerbaijan and Armenia, encouraged by the
arm race and provoked regularly by official and unofficial propaganda,
is turning increasingly against any compromise.
An open war, however, would have disastrous consequences for both
countries and the region. Now that Armenia has agreed to join the
Eurasia customs union it is more apparent than ever that Russia would
have much difficulty to let its partner’s territory be attacked from
the Azerbaijani side.
The chance of war increases as long as negotiations between Armenia
and Azerbaijan remain stalled. For twenty years the Organization for
Security and Cooperation in Europe (OSCE)’s Minsk Group has tried
to mediate a resolution of the conflict. Since 2005 it attempted to
get the sides to at least agree on six basic principles to guide a
comprehensive agreement. The effort has now virtually collapsed and
the best the mediators appear able to do is engage the parties on
confidence building measures like the pulling back of snipers or the
setting up of communication lines to inform about incidents along the
line of contact. Azerbaijan has refused to sign on to them claiming
that they strengthen the status quo.
But Aliyev has shown some courage in the past by calling for progress,
saying that he could contemplate a vote on the future status of
Nagorno-Karabakh and urging for discussion on a comprehensive
settlement to begin. He could demonstrate real commitment to these
proposals by agreeing to the confidence building measures being
suggested by Minsk Group negotiators. Already he has toned down some
of his most belligerent rhetoric. The resolution of the conflict is
deeply dependent on confidence building and the next needed step is
a beginning of withdrawal of occupied territories by Armenian forces
but they are not willing to do this until they see strong security
guarantees being implemented.
Nobody seriously doubted Aliyev’s electoral victory but the situation
is different from previous elections because of the seriousness of
the challenges ahead. Luckily Azerbaijan has a large number of young,
foreign educated, and patriotic youth to help in the transition
process if they are encouraged, rather than imprisoned or harassed
for any expression of dissent.
The President has declared an ambition for Azerbaijan in 2020 –
and he’s not the only regional leader who has aspirations for his
country’s next decade – but if he wants to get there, it’s not too
early to start reforms which his western partners will support, rather
than to isolate further, keeping the economy based on a handful of
commodities and the business of running the country in a few hands.
Sabine Freizer is a senior fellow with the Atlantic Council’s Dinu
Patriciu Eurasia Center.
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