I.

Introduction

Azerbaijan, officially Republic of Azerbaijan, republic in the Transcaucasia region of western Asia, bordered on the north by Russia, on the north-west by Georgia, on the east by the Caspian Sea, on the south by Iran, and on the west by Armenia. Formerly a republic of the Union of Soviet Socialist Republics (USSR), the republic includes the regions known under the Soviets as the Nagorno-Karabakh Autonomous Oblast and the Nakhichevan Autonomous Soviet Socialist Republic (ASSR), which is separated from the rest of Azerbaijan by a mountainous strip in Armenia. Azerbaijan, which covers an area of about 86,600 sq km (33,400 sq mi), is a land of high mountain ranges and low river valleys. Baku, a large port city on the Caspian Sea, is the capital and largest city.

II.

Land and Resources

The Greater Caucasus mountains form much of the country’s northern border and contain Mount Bazardüzü, which reaches a height of 4,466 m (14,653 ft), the highest elevation in the republic. The tallest mountains of the Lesser Caucasus (Malyy Kavkaz) form the country’s south-eastern boundary and attain heights of 3,500 m (11,500 ft). The central portion of the country is dominated by the Aras-Kura river valleys. With the exception of the Länkäran Lowland in the subtropical south-east and upper elevations in the mountainous zones, the climate is generally arid.

A.

Rivers and Lakes

Large-scale canal systems divert water, primarily for agricultural purposes. The Verkhne-Karabakhskiy Canal channels water from the Mingechaurskoye Reservoir on the upper Kura to the River Aras. The Samur-Apsheronskiy Canal redirects water from the River Samur on Azerbaijan’s northern border to the Abşeron Peninsula, which juts into the Caspian Sea.

B.

Plants and Animals

Forests grow in the subalpine zone, which is inhabited by bear, deer, lynx, and wild boar. The arid and semi-arid lowlands support a great number of lizards, poisonous snakes, and other reptiles.

C.

Environmental Concerns

Severe pollution from heavy industries and agriculture has damaged the environment of Azerbaijan. The contamination of the Caspian Sea from oil drilling in Baku has been a problem since the 19th century, when the Russian Empire took control of the region and began to rapidly exploit its oil reserves. Although oil production waned during the Soviet period, petroleum waste was routinely dumped into the Caspian, and dilapidated and leaky pumps added to the problem. With the prospect of increased oil drilling in coming years, the industry may continue to pose an environmental hazard. In late 2003 a framework treaty was signed by the countries that border the Caspian Sea to reduce the amount of sewage and industrial waste pumped into waters.

Severe air pollution is a problem in Azerbaijan's major cities due to unregulated emissions from petroleum and chemical industries. During the Soviet period, dangerously high concentrations of pesticides and fertilizers were used to increase Azerbaijan's agricultural output. In the late 1980s, when environmental awareness began to surface, Azerbaijan's high infant mortality rate and high rates of infectious diseases were linked to toxic defoliants, fertilizers, and pesticides used in cotton growing. The use of these substances has also left much of the soil degraded and has destroyed fertile land. Although the people of Azerbaijan are generally aware of the need to protect their environment, the republic's environmental issues have not yet received significant attention from the government. Efforts to improve the environment are also hampered by Azerbaijan's ongoing conflict with Armenian separatists over the Nagorno-Karabakh (disputed) region. However, protected areas make up 5.5 per cent (1997) of Azerbaijan's total land area, and the government has ratified international environmental agreements pertaining to climate change, desertification, and ozone layer protection.

III.

Population

Although it contains people of many different nationalities, the republic has become more ethnically homogeneous in recent years. The proportion of Azeris, who have traditionally comprised about four fifths of the population, has increased since the start of the conflict with Armenia over Nagorno-Karabakh in 1990. Large numbers of Azeri refugees have flowed over the border from Armenia, and large numbers of Russians, Armenians, and other nationalities have left the country. The Armenian community, which comprised 6 per cent of the population in 1989, is now confined almost exclusively to the Nagorno-Karabakh enclave. Other nationalities include Lezgins, Kurds, Talysh, Tatars, Georgians, Ukrainians, and Avars. Most ethnic groups have resided in the area of present-day Azerbaijan for centuries, although Slavs arrived in large numbers with the industrialization boom of the last century. Lezgins, Kurds, and Talysh, who are geographically concentrated in the north, east, and south of the republic, have agitated for increased autonomy in recent years.

A.

Population Characteristics

Azerbaijan is the most populous country in Transcaucasia, with a population of 8,177,717 (2008 estimate), giving a population density of 95 people per sq km (246 per sq mi). Life expectancy in 2008 was 62 years for men and 71 years for women.

B.

Principal Cities

Azerbaijan is the least urbanized of the three Transcaucasia republics (the other two are Georgia and Armenia). Only 50 per cent of its population lived in cities in 2005. The largest city is Baku, the capital, with a population of 1,816,000 (2003 estimate). Other large cities include Gäncä, formerly Kirovabad, population 303,100 (2003 estimate), and Sumqait, 290,700 (2003 estimate).

C.

Religion

The traditional religion of the Azeris is Shiite Islam, which has experienced a revival in recent years. Orthodox Christianity is practised to varying degrees among the Georgian, Armenian, and Slavic minorities.

D.

Language

The official language of Azerbaijan is North Azerbaijani, an Altaic language, spoken by most people. While the Cyrillic script is used widely in Azerbaijan, the Latin alphabet was made official in 2001 and now all newspapers are required to use this script. Thirteen other indigenous languages are spoken (mainly from the Indo-Iranian and North Caucasian language families), including Talysh, Lezgi, and Avar. Immigrant languages such as Russian, Ukrainian, and Turkish are also heard.

E.

Education

The education system reflects the former Soviet one, but reforms were instituted in the early 1990s. During the post-independence years the education system was not only affected by the Nagorno-Karabakh conflict but also by the emigration of many academics. A law of 1992 provides for equal opportunity and access to education, and since then a Turkic version of the Latin alphabet has replaced Cyrillic script in Azerbaijani-language schools, which comprise about 85 per cent of the total. In 1998–1999 there were 691,259 pupils attending primary schools and 1,020,131 pupils attending secondary schools; 30,400 students receiving vocational and teacher training; and 121,156 students receiving higher education. Institutes of higher education include the Baku State University Mammadamin E Rasulwade (1919), and the Azerbaijan Technical University (1920). In 2002–2003, 3.4 per cent of gross national product (GNP) was devoted to education.

F.

Culture

Azerbaijan has a rich and diverse cultural history, dating from the scientists, poets, philosophers, and mathematicians of the 11th and 12th centuries. The ancient musical traditions, which were predominantly Eastern and Middle Eastern until the late 19th century, have survived in the art of the ashug, who improvise songs while accompanying themselves on the saz, a long-necked lute, and are frequently accompanied by the balaman, a cylindrical double-reed instrument. Music came under a strong Russian influence in the late 19th century, and an opera company, a symphony orchestra, and concert organizations were formed in Baku. Other cultural institutions located in Baku include the State Library of Azerbaijan and the Museum of the History of Azerbaijan, of the Azerbaijan Academy of Sciences. The Walled City of Baku with the Shirvanshah’s Palace and Maiden Tower was inscribed on the World Heritage site list in 2000. It is important because it shows evidence of Zoroastrian, Sasanian, Arabic, Persian, Shirvani, Ottoman, and Russian influences.

IV.

Economy

Azerbaijan has a GNP of US$7,832 million (2004), equivalent to US$1,840 per head. Industry was the leading sector of Azerbaijan’s economy and accounted for 23 per cent of gross domestic product (GDP)—51.2 per cent of net material production—in 1992, but it declined dramatically in 1994 and in 2006 it accounted for 70.1 per cent of GDP. Contracts were signed with a Russian-led consortium in 1995, worth US$1,700 million, and with four US oil companies in 1997, worth US$8,000 million. The oil and gas industry accounted for about 40 per cent of exports in the mid-1990s. Other products include copper, steel, aluminium, chemicals, and textiles.

A.

Agriculture, Forestry, and Fishing

Agriculture accounts for less than one quarter of GDP (7 per cent in 2006). Cotton, grain, grapes, and tobacco are the leading crops, although the production of cotton and grapes has fallen considerably in recent years. Cotton production has been adversely affected by the scarcity of fertilizers and defoliants, and spare parts for harvesting machinery. The 2006 cotton harvest amounted to some 49,958 tonnes; the potential harvest has been estimated at some 830,000 tonnes. Mountain pastures are used for sheep-grazing. In the subtropical Länkäran Lowland in the south-east, tea, citrus fruits, and olives are grown. Production plummeted in the 1990s, as the economy suffered from mounting costs associated with the war in Nagorno-Karabakh and the disruption of trade ties with other former Soviet republics. Net material production declined by an estimated 30 per cent in 1992 alone.

Agriculture is the largest sector in terms of employment. The agricultural labour force is almost three times that of industry. In 1995 agriculture and forestry accounted for more than one third of total employment (35.6 per cent). The dissolution of collective and state farms became less informal in the mid-1990s when there were more than 17,000 family holdings of around 12 hectares (29 acres). Privately owned farms produced 96 per cent of livestock products, 90 per cent of the fruit crop, 20 per cent of the vegetable crop, and 85 per cent of milk products in 1996. The fish catch from the Caspian Sea, for a given area, is potentially six times greater than the Black Sea, but pollution levels in the Caspian are causing concern. The total catch in 2005 was 9,016 tonnes.

B.

Mining

The rich mineral resources of the country include iron, zinc, and copper, but the most important to the economy is oil. It has been estimated that up to 60 per cent of the territory is capable of bearing oil and that reserves are potentially 1.2 billion to 1.5 billion tonnes, with known reserves of some 900 million tonnes. In 2004 production of crude petroleum was some 117 million barrels per year and production of natural gas some 5.13 billion cu m (181 billion cu ft). Construction has begun on a pipeline to transport oil from Azerbaijan to Turkey. The Caspian Sea region is rich in oil resources but the Caspian States (Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan) are currently in dispute over the division of them.

C.

Manufacturing

Sumqait is the centre of heavy industry that includes petrochemical products, metal-processing, textiles, and clothing. Since transition, finished metal goods, machine tools, and computers have made a significant contribution to export earnings. Manufacturing in 1995 was reported to be operating at 10 to 20 per cent of its capacity, but the economy showed signs of recovery in 1996.

Manufacturing of equipment for the oil and related industries represents about 20 per cent of potential, but because these industries are considered of strategic importance they have not been included in the privatization programme. Instead, foreign investment has been sought in joint ventures, but this initiative has been hampered by difficulties in harmonizing production of equipment with internationally recognized standards.

D.

Energy

Electricity is produced by 88 per cent thermal and 12 per cent hydro generation; total production in 2003 was 20 billion kWh. Generating technology and plant is outdated, and it is estimated that about 40 per cent of plant needs to be replaced. Gas production still falls short of domestic needs and imports are necessary; in 1994 some 30 per cent of domestic gas used was imported from Turkmenistan.

E.

Currency and Banking

The National Bank of Azerbaijan was founded in 1992 as the central bank and supervisory body. The monetary unit of Azerbaijan is the new manat of 100 gopik (0.85 manats equalled US$1; early 2008).

F.

Labour

The total labour force in 2006 was about 4.29 million, with about 1.3 per cent registered as unemployed, although the real figure of those without work was thought to be as high as 15 per cent. Agriculture employs more than 35 per cent of the workforce and industry now only employs about 12 per cent.

G.

Transport

There are about 2,100 km (1,304 mi) of railway track; about 700 km (434 mi) of which and 50 per cent of the rolling stock is in need of repair. There are about 59,141 km (36,749 mi) of road, of which 94 per cent is paved. In 1996 there were 278,300 cars and 79,680 commercial vehicles registered, giving a ratio of about 21 people to every vehicle. There is an international airport (Bina) at Baku; the national carrier is Azerbaijan Airlines.

H.

Communications

The telephone system is not very well developed and there were about 130 lines per 1,000 people in 2005. Broadcast communications include Radio Baku, founded in 1926, broadcasting in Azerbaijani, Arabic, English, and Turkish; Azerbaijan National Television, founded in 1956; and BM-TI TV, the first privately owned TV station, founded in 1993. A new media law was introduced in 2002 that allows publications to be issued without being sanctioned by the state.

V.

Government

The highest legislative body in Azerbaijan was the 360-seat Supreme Soviet, which voted in October 1991 to establish a smaller legislative body, which was then replaced by the 50-seat Milli Majlis (National Assembly) in May 1992 when the Azerbaijani Popular Front (APF) came to power and the Supreme Soviet was suspended. Elections for a new 125-seat Milli Majlis were held in November 1995.

A.

Executive and Legislature

Under the new constitution of 1995, executive power is vested in the president, who is directly elected for a five-year term and is the head of state and commander-in-chief of the armed forces. The Cabinet of ministers, headed by the prime minister, is the highest executive body and is appointed by the president. The supreme legislative body is the Milli Majlis; 25 members are elected by proportional representation, with the remaining 100 members elected in single-member seats. In 2002 new constitutional changes were brought in. Critics accused the government of rigging the referendum.

Despite international objections the breakaway enclave of Nagorno-Karabakh holds its own presidential elections. In 2002, the incumbent, Arkady Gukasyan, was re-elected. There is also a National Assembly of 33 members, each serving a five-year term. The last elections were held in June 2000.

B.

Political Parties

The New Azerbaijan Party (NAP; Yeni Azärbaycan Partiyasý) is the majority party in the Milli Majlis; other political parties include the Popular Front of Azerbaijan (PFA; Azärbaycan Xalq Cäbhäsi Partiyasi); the Party of National Independence of Azerbaijan (PNIA; Azerbaycan Milli İstiqlal Partiyasý); the Civil Solidarity Party (VBP; Vätändasş Hämräyliyi Partiyasý); the Azerbaijan Communist Party (AKP; Azärbaycan Kommunist Partiyasý); and the centrist Equality Party (M; Müsavat Partiyasý). In early 2002, about 40 parties were active in Azerbaijan.

C.

Judiciary

Judicial power is exercised by the Constitutional Court of the Azerbaijan Republic, the Supreme Court, and the Economic Court. The chair of the Supreme Court and the Economic Court are appointed and dismissed by the Milli Majlis on the recommendation of the president, but the chair and deputy chair of the constitutional court are appointed solely by the president. The justice system has changed little since the Soviet era and the operation of judicial power is poorly developed.

D.

Health and Welfare

A structure of universal health care was inherited from the Soviet era, but outdated technology and lack of resources and personnel have resulted in poor quality of service. Reforms to the health service that were proposed in the mid-1990s were envisaged to be self-financing, while still maintaining free medical care for the poorest. In 2006 there was a ratio of 1 doctor to every 276 people and in 2008 there was an infant mortality rate of 56 deaths per 1,000 live births. Expenditure on health amounted to 4.27 per cent of GDP in 1990. In 2000 it was reported that the occurrence of malaria in Azerbaijan had dropped by 80 per cent in two years, a world record in the fight against the disease.

E.

Defence

The armed forces were formed after independence and totalled some 66,490 personnel in 2004, comprising 56,840 in the army; 1,750 in the navy; and 7,900 in the air force. Military service is for a 17-month term, which may be extended for ground forces. In addition to the armed forces there is a paramilitary force of approximately 15,000 personnel. In 2003 Azerbaijan spent US$950 million (3.2 per cent of its GDP) on defence.

F.

International Organizations

Azerbaijan is a member of the United Nations (UN); the Commonwealth of Independent States (CIS), which it had left in October 1992 and rejoined in September 1993; the Organization of the Islamic Conference (OIC); the Organization for Security and Cooperation in Europe (OSCE); the Partnership for Peace (PFP); the Black Sea Economic Cooperation Pact (BSECP); and the Council of Europe (CE).

VI.

History

The area of Azerbaijan was settled from about the 8th century bc by the Medes, and the region later became part of the Persian Empire. A much-disputed area, it was conquered in the late 7th century ad by Arabs, who introduced Islamic culture. Turkic tribes controlled the area in the 11th and 12th centuries. Azerbaijan again came under Persian control in the 17th century and was ceded by Persia to Russia through treaties in 1813 and 1828. In 1918, after the Russian Revolution, Azerbaijan became an independent state. In 1920 it was proclaimed a Soviet Socialist Republic (SSR) of the USSR and united with Georgia and Armenia to form the Transcaucasian Soviet Federated Socialist Republic (SFSR). When that dissolved in 1936, Azerbaijan became a constituent republic of the USSR. The collapse of Communism in the USSR in 1991 led to the independence of Azerbaijan. It joined the UN in 1992.

Political turmoil characterized the first years of Azerbaijani independence, and the constitution was violated on several occasions. President Ayaz Mutalibov (1990-1992) was forced to resign in March 1992 after he was held directly responsible for the death of several hundred Azerbaijanis killed by Armenian forces in Nagorno-Karabakh, the primarily Armenian enclave claimed by Armenia. The interim president, Yagub Mamedov (1992), was unable to control the political situation. The APF attempted to take over local administrations, and Mutalibov made an aborted attempt to regain power. With the support of military units, the APF seized control in an almost bloodless coup in May 1992, after which the Supreme Soviet was suspended by the Milli Majlis. In June 1992 Aliyev Abulfaz Elchibey, the APF chairman, was elected president, with 55 per cent of the popular vote. Elchibey soon lost popularity, however, because of his inability to improve the economy or end the war in Nagorno-Karabakh. Pressure on him increased when he attempted to disarm a disobedient military garrison based in Gäncä in June 1993. The garrison, led by Colonel Surat Huseinov, marched on Baku and seized control, despite protests and appeals from Elchibey, who fled to Naxçıvan. The Milli Majlis voted to transfer Elchibey’s powers to Heydar Aliev, the 71-year old Communist Party leader and long-time KGB official who had been elected chairman of the Milli Majlis earlier the same month. A republic-wide referendum supported Elchibey’s removal, and in October 1993 Aliev was elected president with 98.8 per cent of the popular vote in an uncontested election. The Milli Majlis appointed Huseinov as prime minister and charged him with coordinating the country’s military effort in Nagorno-Karabakh. The position of both leaders was threatened by a series of Armenian victories in and around Nagorno-Karabakh in 1993 and the loss of control over large areas of Azerbaijani territory. In March 1995 Aliev crushed an attempted coup and extended the state of emergency imposed after the previous failed coup in October 1994.

The first International Monetary Fund (IMF) loan of about US$46 million was approved in April 1995. Armenia withdrew from peace talks on Nagorno-Karabakh in May following an explosion that badly damaged a pipeline supplying gas to Armenia; the talks were resumed in September. In May Fuad Guliyev was confirmed as prime minister, having served on an acting basis since October 1994. In August the APF and at least 15 other political parties were refused registration and effectively banned. A bloc of 21 opposition parties formed and threatened to boycott the elections. The first round of the first legislative elections since independence in 1991 was held in November to elect the new 125-seat parliament and vote on a new constitution. Voting irregularities were noted by observers from the Council of Europe and the UN.

The new constitution was approved by more than 90 per cent of the electorate. Inconclusive talks with Armenia over Nagorno-Karabakh were held in the Hague in December 1995. In July 1996, following the resignation of Prime Minister Fuad Guliyev, his deputy, Artur Rasizade, was chosen as acting prime minister, and his appointment was confirmed in November. The conflict between Armenia and Azerbaijan resumed in April, with the worst fighting since the implementation of the ceasefire in May 1994. President Aliev visited the United States in July; during his visit he signed an accord on military cooperation, and contracts worth some US$8,000 million for the development by US companies of oilfields in the Caspian Sea.

The Milli Majlis passed the abolition of the death penalty in February 1998. Aliev was returned with more than 75 per cent of the vote in October's presidential election, despite accusations of electoral irregularities. Azerbaijan withdrew from the collective security treaty of the CIS in February 1999 in protest at Armenia's continued occupation of Nagorno-Karabakh. Another round of talks with Armenia on the ownership of the enclave took place in June. In December the first local elections since independence were held in Azerbaijan, with over 21,000 local seats contested.

Azerbaijan condemned legislative elections that took place in June 2000 in Nagorno-Karabakh, though talks between the presidents of Azerbaijan and Armenia concerning the future of the territory were described as promising. In the same month, in preparation for the country’s membership of the Council of Europe, Aliev announced amnesty for political prisoners. The United Communist Party of Azerbaijan (UCPA) changed its name to the Communist Workers’ Party of Azerbaijan (CWPA) in August.

Legislative elections, which took place in early November, were, according to official sources, won by the ruling New Azerbaijan Party, which secured 78 out of 124 seats. Voting was, however, boycotted by certain opposition parties and condemned as undemocratic by Azeri protesters and foreign observers alike.

Efforts towards improving relations with other countries in the region were made in the latter part of 2000 and in 2001. At the United Nations (UN) Millennium Summit in New York in September 2000, Azerbaijan and other GUUAM countries (Georgia, Uzbekistan, Ukraine, and Moldova) mapped out improved trade relations, including the restoration of the ancient Silk Route. Armenia and Azerbaijan joined the Council of Europe in January 2001, and in February new initiatives relating to Nagorno-Karabakh, brokered by France and Turkey, were unveiled and cautiously welcomed by both sides; negotiations concerning the future of the region continued throughout the year. An agreement concerning sales of natural gas from gas fields from the Azerbaijani sector of the Caspian Sea to Turkey was signed in March 2001. Further privatization of state-managed companies in 2001 offered international investment opportunities, especially in the oil sector and heavy industry. In August, Azerbaijan officially replaced the Cyrillic script with the Latin alphabet—a controversial measure designed to bring the country closer to the West but, at the same time, alienating large parts of society.

In January 2002 the United States waived the ban on direct governmental aid to Azerbaijan, which had been in force since 1992, when the country had introduced a blockade of Armenia; the sanctions were lifted in recognition of Azerbaijan’s role in the US-led international campaign against terrorism. In May the country received a visit from the pope. President Aliev met with Robert Kocharyan of Armenia in talks to discuss the continuing situation in Nagorno-Karabakh, while in the secessionist region the president, Arkady Gukasyan, was re-elected by more than 88 per cent of the popular vote.

In a referendum held by the government in August 2002, 97 per cent of voters agreed to approve constitutional changes. The belief that the changes were intended to strengthen the Aliev dynastic line were proved correct when in August 2003 Ilham Aliev was appointed prime minister. Heydar Aliev stood aside at the 2003 presidential election, allowing Ilham to win comfortably. International observers declared the poll faulty and opposition supporters held street demonstrations that ended in violent clashes. In December Heydar Aliev died while undergoing medical treatment in the United States.

In late 2003 hopes were raised that the ongoing conflict over the disputed territory of Nagorno-Karabakh might be ended peaceably; in December, representatives of Azerbaijan, Armenia, and Georgia held talks in Scotland and decided to introduce a system of rotating presidency in the enclave.

The parliamentary elections of November 2005 were won by the ruling New Azerbaijan Party, which took 58 seats. However, neutral observers judged the elections unfair and cited fraud. Demonstrations decrying the rigged polls were organized by opposition groups in Baku (reminiscent of the “Orange Revolution” protests following the elections in Ukraine). They were heavily policed.