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Azerbaijan
>> Regional Overview >> Azerbaijan Overview
Previous Years' Activities
2002, 2001, 2000, 1999, 1998, 1997
Last updated: 27
(text taken from the FY 2003 Congressional Budget Justification)
THE DEVELOPMENT CHALLENGE: Upon regaining independence in 1992, Azerbaijan was faced with significant political, economic, and social problems, many stemming from the military conflict with Armenia over Nagorno-Karabakh. A cease-fire has held since 1994, but Armenia and Azerbaijan have yet to resolve the status of this disputed enclave located within the territory of Azerbaijan. This conflict has constrained economic investment and trade, and has resulted in the displacement of more than 700,000 people. Meeting the immediate needs of the refugee and internally displaced (IDP) populations has distracted the Government of Azerbaijan (GOAJ) and donors from implementing meaningful, structural reforms in the key areas of rural development, infrastructure, legal and regulatory reform, and banking.
Sixty percent of Azerbaijan's population lives below the poverty line. Boasting substantial oil reserves, Azerbaijan has managed to attract significant foreign investment and capitalize on higher oil prices in recent years. Oil revenues, coupled with the GOAJ's conservative approach to debt, have enabled Azerbaijan to achieve an impressive measure of macroeconomic stability. However, this dependency on oil revenues leaves the country vulnerable to price fluctuations. The GOAJ recognizes the need to diversify the economy and support development of other economic sectors, particularly agriculture.
A 2000 World Bank report placed Azerbaijan's per-capita GDP at $664 - 98th out of the 189 countries of the world. The average monthly wage is $45.80, with those individuals working in agriculture and health care earning far less.
The United States has taken great interest in the development of a prosperous and democratic Azerbaijan, both as an active partner in the War Against Terrorism and a valuable source of trade in the energy sector. Azerbaijan is a critical link in the East-West corridor and a vital connection in the Trans-Caspian energy export system. The Government of Azerbaijan has supported the U.S. Government in its fight against terrorism.
THE USAID PROGRAM:
FY 2002 Estimate: $43.89 million FY 2003 Request: $46.0 million USAID's program seeks to support Azerbaijan's transition to a democratic society and an open market economy. For the past two years USAID has been implementing a transitional strategy designed to create the foundation for expanded reforms toward a market economy and participatory democracy, while observing the restrictions placed on the assistance program by the provisions of Section 907 of the FREEDOM Support Act. The current strategy comprises four objectives: economic growth; a better organized and represented civil society; reduced human suffering in conflict-affected areas; and a fourth objective that is crosscutting in nature and supportive of the other three. While continuing with these same objectives, supportive, but new, activities are now being designed in response to the potential waiving of Section 907 sanctions. While USAID's programs to date have been able to produce some targeted results, the inability to work with the GOAJ to create an enabling and supporting environment has hampered the achievement of more sustainable and far-reaching results, especially in the areas of private sector development and health. New work with the GOAJ will be limited and directly linked to and supportive of on-going assistance objectives. The specific activities are described in the attached Program Data Sheets. FY 2003 marks the last year of USAID's current programming strategy for Azerbaijan and there are no plans to significantly modify the strategy in the interim. It is also expected that many of the elements contained in the current strategy will form part of the new strategy, although there will likely be increased emphasis on implementing programs that support economic growth.
Ongoing Programs for Which no FY 2002 or FY 2003 Funding is Requested: USAID does not plan to discontinue any strategic objectives during the next two fiscal years.
OTHER PROGRAM ELEMENTS: A regional Caucasus farmer-to-farmer program funded through P.L.-480 proceeds operates in Azerbaijan with approximately $430,000 a year in funding. The activity assists rural farmers by placing volunteer technical advisors at their farms on a short-term basis. The technical advisors develop and disseminate a set of best practices to their local clients and assist in strengthening local credit providers. Advisors have assisted on issues of production, appropriate processing technology, and business management and planning. In 2001, 27 technical advisors visited Azerbaijan. In FY 2002, USAID/Azerbaijan anticipates the arrival of 29 volunteers, with an increased emphasis on improving the rural credit system.
OTHER DONORS: USAID is coordinating closely with other donors in the implementation of all activities. Several donors are active in economic restructuring and private sector development, including World Bank (agricultural development, infrastructure), EU/TACIS (bank training), the British Embassy (macroeconomic forecasting and advising the Ministry of Finance), and Germany's KfW (privatization). Donors working in democracy and governance include the British Embassy, the Soros Foundation/Open Society Institute, and the United Nations. UNHCR plays an important role in assisting refugees and internally displaced persons and the EU assists with refugee housing.
Program Data Sheets
- 112-0130 Accelerated Development and Growth of Private Small and Medium Enterprises in Targeted Areas
- 112-0210 Civil Society Better Organized and Represented
- 112-0310 Reduced Human Suffering in Conflict-Affected Areas
- 112-0420 Cross-cutting Programs
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
