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Azerbaijan Report: May 31, 2004

31 May 2004
Freedom House: Azerbaijan Regressed Democratically
Azerbaijan experienced setbacks last year in areas of democratic practice, including electoral process, civil society, independent media, the constitution, legislation, and the judiciary. The level of corruption and governance remained unchanged, according to a report, "Nations in Transit 2004," released by Freedom House on 24 May. In comparison, Armenia is also criticized for worse ratings for electoral process and independent media, while the events leading to the ouster of President Eduard Shevardnadze are evaluated as a turning point in the development of Georgian democracy.

Freedom House's Budapest director, Kristie Evenson, told RFE/RL that the latest report was a part of a study begun nearly 10 years ago. The U.S.-based pro-democracy group found that "the non-Baltic post-Soviet states have regressed over the term of the study. Russia has registered the most significant decline since last year, with Azerbaijan, Moldova and Ukraine also showing significant downturns."

Freedom House annually provides every country a comparative rating based on a 1-7 scale by reviewing electoral processes, civil society, independent media, governance, corruption, and legal frameworks, with 1 representing the highest level of democratic development and 7 the lowest. Azerbaijan's overall "democracy score" declined to 5.63 due to the criticism of the fraudulent presidential elections last year, leading to a crackdown on the opposition.

A new registration procedure of grants and the taxation of nongovernmental organizations are referred to as setbacks for civil society, aiming at strengthening the governmental control over the third sector.

Compared with last year, there were setbacks for independent media as well, with a rating of 5.75 against 5.50 in 2003 reflecting governmental pressures on it before the presidential elections.

The plight of governance has remained unchanging, the report says. Stability in the country still relies on the power and authority of the central government and ruling elite, and its readiness to use force.

The study also draws attention to regression in the rating for constitutional, legislative, and judicial structure. Though the rights and freedoms of citizens are widely ensured in the constitution, they are in fact violated frequently, which was especially evident during the presidential elections.

The situation with corruption has yet to be improved, compared with last year, the study says. Though the government has adopted a law on combating corruption and ratified corresponding international conventions, in practice it did little in this area.

(Rovshen Rahib-oglu)

Can Russia Enter Azerbaijan's Energy Market?
The recent visit of Russia's Unified Energy Systems (EES) Chairman Anatolii Chubais to Baku has further stirred up speculations on the question of Russian involvement in Azerbaijan's energy market.

Local experts welcome energy cooperation with neighboring countries and foreign investment in the field, but at the same time call attention to the country's strategic interests.

Expert Orkhan Karimov notes that undoubtedly EES is trying to gain ascendancy over the post-Soviet territory. It has enough resources and economic potential to do this. Karimov suggests that today the interest in Azerbaijan's energy sector is high and nearly half a billion dollars has been invested here to date by foreign companies. But from a purely technical standpoint, Russia is a more advantageous partner for Azerbaijan than the West.

Muslum Imanov, former chairman of the Azerenergy company, notes that Azerbaijan has cooperated with Russia since 1991. And this collaboration produces an effect. Commenting on Russia's possible involvement in Azerbaijan's electricity-distribution market, Imanov says that from a legal standpoint, it is impossible to conclude a new bargain until the agreement with the present distributor is canceled.

Tanriverdi Mustafaev, spokesman for Barmek-Azerbaijan company, which sells electricity to Baku and Sumgait, says that the company has a 25-year contract with Azerbaijan's government and so far the authorities have never complained about the execution of the agreement.

(Zerkhanim Ahmedli)

Azerbaijan Agrees On Rise in Oil Prices
In the near future the Azerbaijani government is expected to consider a price increase in petroleum products, according to John Wakeman-Linn, head of the International Monetary Fund (IMF) Department for the Middle East and Central Asia.

In the past, the IMF complained of a delay by the Azerbaijani government in carrying out reforms, warning this might negatively affect the perspectives of reduction of poverty and economic development.

Commenting on the results of the IMF mission's negotiations in Baku, Wakeman-Linn said at a press conference that the parties have reached agreement on reforms in the financial sphere and working out a long-term strategy of management of oil income. Under this strategy, oil revenues are to be directed at improving economic infrastructure, such as health, education, and social facilities. Draft laws on the bank sector and on strengthening the independence of the National Bank and ensuring its transparency will soon be submitted to the parliament for consideration.

Nevertheless, the differences over an increase in domestic oil prices to global rates and the privatization of Azerbaijan's International Bank have yet to be reconciled.

Wakeman-Linn pointed out that the IMF has yet to make a final decision on the next tranche of credit to Azerbaijan within the framework of the Poverty Reduction Program. In the next few weeks, Azerbaijan's government will declare its decision on an adjustment in energy carrier prices, he said. The next IMF mission is to come to Baku at the end of July or at the beginning of August to get the government's letter of intent. After discussing this letter in late September, the IMF Executive Council will decide whether to approve the next credit tranche or not.

(Natig Zeinalov)

(Compiled and translated by Etibar Rasulov)