Baku softens impact of falling oil prices

Baku softens impact of falling oil prices

The expansion of economic cooperation with Russia will give an additional impetus to the development of entrepreneurship in Azerbaijan, the deputy chairman of board of the Azerbaijan-Russia Business Cooperation Chamber, Intiqam Huseynov, told Trend. "Businessmen need a big export market for continuous development. To date, Russia is the largest export market for Azerbaijani entrepreneurs. Therefore, the expansion of economic cooperation with Russia will give an additional impetus to entrepreneurship. I would especially like to highlight the international transport corridor North-South, which will not only increase the transit potential of Azerbaijan, but will also be an additional shipping route to Russia," Huseynov said.

According to the State Customs Committee of Azerbaijan, in January-September 2015 the trade turnover between Azerbaijan and Russia amounted to $1.34 billion (8.74% of the total foreign trade turnover). Russia has invested more than $1.8 billion in the Azerbaijani economy, while Azerbaijan has invested more than one billion dollars in the Russian economy. Azerbaijan has about 600 companies with Russian capital. About 200 of them are fully Russian, 300 of them have joint capital. Among the major manufacturers and Russian companies are Gazprom, LUKOIL, KAMAZ and VTB Bank.

Meanwhile, the global economic crisis could not but affect the economic development of Azerbaijan.

The Deputy Director General of the Information and Analytical Center of Moscow State University, Alexander Karavaev, on the eve of the parliamentary elections in Azerbaijan which will be held on November 1st, said: "These elections draw some kind of Rubicon between the Azerbaijan of large oil prices and the new Azerbaijan, which will be built on the basis of other principles. Administrative management of economic processes will be primarily concentrated, first of all, on those areas of production which are not directly related to raw materials or related partially.

The inflow of funds from the sale of oil and gas resources, allowed Azerbaijan to intensively increase its domestic currency reserves and simultaneously, skillfully distributing these funds on domestic infrastructure development, for the infrastructural development of the regions, and for the restoration of industrial capacity, which Azerbaijan got from the Soviet period, and its transfer to a new quality, which corresponds to the requirements of modern production, which are facing different sectors today".

According to Karavaev, this challenge was accepted, first of all, by President Ilham Aliyev: "In a few quite important actions, prolonged for a long period, since the middle of the summer, he began to to implement the new economic program. And it matched the aspirations of the active part of the population. With those expectations, which have been facing the authorities for the last few years".

Among those steps the expert identified the fight against monopolies in transport. "Since the beginning of the summer, one of the first decrees influenced prices for air tickets. There are reforms at a ministerial level. A decline of volumes of transport commodities and logistical transit through the territory of Azerbaijan is possible. In order to proactively respond to these challenges, reforms in the sphere of the administration of transport communications are being carried out. Azerbaijan Railways, the Caspian Shipping Company, are deduced from the sphere of authority of the Ministry of Transport. A more effective structure is being created, it combines managers and officials from various departments".

The last month has been marked by very large, strong actions against corrupt groups, which are also present in Azerbaijan, just like in any other country. "Everyone remembers the decree that Aliyev signed, while he was in Kazakhstan at the CIS summit, on the resignation and dismissal of the head of the National Security Ministry and a number of officials from that Ministry. It greatly stirred the public, in a positive way, and added an additional impulse to the positive evaluation of the authorities," Karavaev said. 

According to him, today Baku is conducting the policy aimed at stimulating industrial production, and directing the agricultural sector on a path of innovation. It will allow to slow the decline in oil prices and prolong the momentum that was given to the country thanks to those incomes, which the country received in the past.


Vestnik Kavkaza

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