Azerbaijan Human Development Report 1999

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999

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United Nations Development Programme Printed by , 1999 Baku, Azerbaijan Republic Third, a complex task of institutional transition and development lies ahead. Foreword Appropriate institutions are essential to well-functioning markets and democracy. The rule of law, respect for human rights and freedoms, free and fair elections, an active civil society, and public sector accountability depend entirely on the institutions that support them. The necessary institutions have begun to emerge in Azerbaijan, but an unwavering dedication to their continued creation and development is needed.

As a final note, I would like to call attention to some areas where improved data collection and dissemination would enhance local and international efforts to analyze and address human development concerns. Azerbaijan would benefit greatly from regular, comprehensive studies of household income, income distribution, unemployment, and health. Disaggregated data by gender, region, and the displaced and resident populations are also needed. The publication and ready availability of such data to all interested parties—including government officials, non-governmental organizations, the international community, academics, the media, and the general public—would facilitate the design of policies and programs to advance human development.

For the past ten years, the United Nations Development Programme (UNDP) has It is my sincere hope that this edition of the Azerbaijan Human Development Report advocated the concept of human development: the expansion of economic, political, will expand current understanding of human development concerns in Azerbaijan and and social choices for all people in society. In contrast to the traditional view of devel- will generate fruitful debate on ways to advance the human development process. opment, the concept of human development encompasses the social aspects of human lives in addition to economic well-being. Economic growth is vital to the human development process, but human development cannot arise from economic growth alone. The expansion of choices for people throughout a society is possible only if those peo- Baku Ercan Murat ple are empowered by good health, access to quality education, and respect for their 1 November 1999 UNDP Resident Representative in Azerbaijan United Nations Resident Coordinator in Azerbaijan human rights and freedoms.

The Azerbaijan Human Development Report has analyzed human development in Team for Preparation Azerbaijan each year since 1995. Like earlier editions of the Report, the 1999 edition of the Azerbaijan Human Development Report 1999 shows that Azerbaijan’s abundance of human and natural resources give the country tremendous capacity for human development. Azerbaijan has achieved remarkable National Coordinator: Urkhan Alekperov, Academician, Prof., Dr. Sci. economic growth and stability and has accepted the challenge of building a market economy and democratic political system. Several crucial development concerns have UNDP Programme Officer Translators Mahir Aliyev Khatira Iskenderova arisen in recent years, however, and have become increasingly evident in the Elshad Musayev Azerbaijan Human Development Reports. Consultant and Editor Karen Turner Dunn, Ph.D. Graphic Design, Layout First, Azerbaijan’s recent economic growth is largely concentrated in a single sector of Novruz Novruzov Editor the economy: energy. An intense need has arisen for policies and programs that enable Bekir Nabiyev, Academician, Cover the translation of economic growth into human development for the population as a Prof., Dr. Sci. Yaver Sultanov whole. This will require the creation of a business environment that encourages entrepreneurial activity in the non-oil sectors of the economy and in all regions of the coun- Contributors Photographers Ali Hasanov Oleg Litvin try. It will require expanded attention to the social sectors, particularly health and edu- Aliaga Mamedov, Ph.D. Karen Turner Dunn cation, and attention to gender balance in all development activities. It will also Arif Veliev Fatali Fataliyev require new modes of assistance that strengthen the self-reliance of the most vulnera- Aydin Balayev, Ph.D. Mirnaib Hasan ogli ble members of society, in particular the country’s sizeable displaced population. Azer Amiraslanov, Ph.D. Bakhtiyar Muradov, Ph.D. Providers of Supporting Materials Fuad Akhundzadeh Academy of Sciences A second area of concern is the extraordinarily difficult and pervasive set of problems Fuad Mamedov, Prof., Dr. Sci. Ministry of Education that Azerbaijan faces as a result of armed conflict. One-fifth of the country remains Husein Bagirov Prof., Dr. Sci. Ministry of Health under military occupation, and a large proportion of the population is displaced from Mubariz Agayev, Prof., Dr. Sci. Ministry of Economy Namik Aliev, Prof., Dr. Sci. Ministry of Labor and Social Protection their homes in war-torn areas. The process of reconstructing and rehabilitating these Oktai Hakverdiyev State Statistical Committee areas is underway, enabling some of the internally displaced people (IDPs) to begin Rauf Muradov State Committee for Ecology returning, but the task remains daunting. Many IDPs have been displaced for more Rena Ibrahimbeyova, Ph.D. State Committee for Refugees and than seven years and face little hope of returning to their homelands in the near future. Vafa Mamedova Displaced Persons Yashar Orudjev State Property Committee For this reason, the Government’s increasing focus on helping IDPs to achieve self- Yashar Pasha reliance while they remain displaced is a welcome new policy direction.

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 3 4 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 3.3 The Health of Population 33 Contents 3.4 Activities to Improve Public Health 35 3.5 Environmental Conditions in Azerbaijan 36 3.6 Activities to Improve the Environment 38 3.7 Conclusion 39

Chapter 4. Education and Culture 40 4.1 Introduction 40 4.2 Education 40 4.2.1 School Enrollment and Attendance 40 4.2.2 Expenditures on Education 41 4.2.3 Effect of Conflicts 41 4.2.4 Challenges in the System of Education 42 4.2.5 Steps toward Improving Primary and Secondary Education 42 4.2.6 Trends in Higher Education 43 Foreword 3 4.3 Science 43 4.4 Culture and Arts 44 Abbreviations 9 4.5 Religion 45 Basic Information about Azerbaijan 10 4.6 Recreation and Sport 46 4.7 Conclusion 47 Executive Summary 12 Chapter 5. Refugees and Internally Displaced Persons: the Chapter 1. Human Development in Azerbaijan 14 Situation Today 48 1.1 Introduction 14 5.1 Introduction 48 1.2 Human Development in Azerbaijan: An Overview 14 5.2 History of Displacement Crisis 48 1.3 Gender and Human Development in Azerbaijan 17 5.3 Shelter 49 1.4 Regional Patterns of Human Development in Azerbaijan 19 5.4 Income and Employment 50 1.5 Human Poverty in Azerbaijan 20 5.5 Health and Nutrition 51 1.6 Conclusion 21 5.6 Reconstruction and Rehabilitation of the War-torn Territories 52 Chapter 2. Economy and Human Development 22 5.7 Government Strategy for IDPs and Refugees 54 2.1 Introduction 22 5.8 Conclusion 55 2.2 Economic Performance 22 2.2.1 Gross Domestic Product 23 Chapter 6. The Process of Democratization 56 2.2.2 Industry: Increasing Dependence on Energy 23 6.1 Introduction 56 2.2.3 Agriculture: Strong Reform with Continuing 6.2 Human Rights and Legal System 56 Bottlenecks 25 6.3 Decentralization and the Roles of Central and Local 2.2.4 Investment Trends: Favoring the Oil Sector 26 Authorities 57 2.2.5 Inflation 26 6.4 The Media 58 2.2.6 Foreign Trade: The Deficit Widens 26 6.5 Civil Society 59 2.3 Public Finance 27 6.6 Political Parties 60 2.4 Privatization and Private Sector Development 27 6.7 Elections and the Election Process 61 2.5 Household Income and Consumption Patterns 28 6.8 Conclusion 62 2.6 Employment and Unemployment in Transition 29 2.7 Conclusion 31 Appendix Tables 64

Chapter 3. Health and Environment in the Human Development References 70 Process 32 3.1 Introduction 32 Tables 3.2 The Health Care System 32 1.1 AzerbaijanÕs Human Development Index and component indexes 15

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 5 6 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 1.2 AzerbaijanÕs Human Development Index in global Boxes comparison 16 3.1 Structure of the public health system in Azerbaijan 34 1.3 The Human Development Index and component indexes of 3.2 Human resources for health reform 37 Azerbaijan and selected countries 17 4.3 Gender and education 42 1.4 WomenÕs share of employment and wages by sector 18 4.4 The international community and cultural life 45 1.5 AzerbaijanÕs Human Development Index by gender 18 5.5 Minimum monthly food basket for an IDP family 1.6 AzerbaijanÕs Human Development Index and Gender-related in Azerbaijan 52 Development Index in global comparison 19 5.6 Govermental strategy for IDPs and refugees 54 2.7 Change in real GDP from previous year 23 6.7 The Universal Declaration of Human Rights and the 2.8 Structure of GDP by sector 23 Constitution of the Azerbaijan Republic 57 2.9 Structure of industrial production at current prices 24 6.8 Presidential Decree on Human Rights 58 2.10 Production of main crops products 24 6.9 WomenÕs Rights are Human Rights: a Regional 2.11 Production of main of lifestock products 25 Conference 58 2.12 Share of the private sector in GDP 28 6.10 WomenÕs NGOs 60 2.13 Employment by sector 30 3.14 Annual consumption of food products in Azerbaijan relative of physiological norms 36 4.15 Number of students enrolled in institutions of higher education 43 4.16 Graduates of state-funded institutions of higher education by field of study 44 4.17 Number of cultural institutions 44 4.18 Attendance of cultural institutions 45 4.19 Athletic competitions in which Azerbaijani athletes parcitiated 46 4.20 Medals earned in international athletic competitions 46 5.21 Occupied territories of the Azerbaijan Republic 49 5.22 Types of shelter in which IDPs live 50 5.23 Damage to liberated territories and war-tern territories that are not under occupation 53 6.24 Newspapers issued by political parties 60

Figures 1.1 Human Development Index in Azerbaijan 15 1.2 Birth rates in Azerbaijan 16 2.3 Contribution of the energy sector (fuel and electricity) to the value of industrial production 24 2.4 Inflation in Azerbaijan 26 2.5 Public expenditures by sector 27 2.6 Index of real wages 29 3.7 Public health expenditures as a share of GDP 33 3.8 Number of newly reported HIV cases among citizens of Azerbaijan 35 3.9 Volume of air pollutants emitted 37 4.10 Public expenditure on education as a share of GDP 41 4.11 Number of students enrolled in institutions of higher education 43 5.12 Share of ethnic Azeries in the total population living in the territory of modern Armenia 49 5.13 Sources of income for rural IDP households receiving WFP food rations 51

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 7 8 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Abbreviations Basic Information about Azerbaijan

Form of Governance Presidential Republic AIOC Azerbaijan International Operating Company AET Azerbaijan Economic Trends Head of State Heydar Aliyev ASSC Azerbaijan State Statistical Committee BICEX Baku Interbank Currency Exchange Area 86,600 square kilometers CIS Commonwealth of Independent States (About one-fifth under occupation) EIA Environmental Impact Assessment Population density 92 persons per square kilometer FAO Food and Agriculture Organization FSU Former Soviet Union Population 7,949,300 (January 1, 1999) GDP Gross Domestic Product 51.7 percent reside in urban areas, 48.3 percent in rural areas HDI Human Development Index More than 10 percent of the population are refugees and IDPs HPI Human Poverty Index Currency Manat (3,869 manats: 1 USD) IDP Internally Displaced Person ILO International Labor Organization Economic Indicators Per capita GDP: 520 USD IMF International Monetary Fund Annual real GDP growth rate: 10 percent IOM International Organization for Migration Inflation rate: -0.8 percent NGO Non-governmental Organization Infant Mortality Rate 16.6 per 1,000 live births NEAP National Environmental Action Plan OICM Organized Interbank Currency Market Life Expectancy at Birth 71.6 years (75.0 for women, 67.9 for men) SME Small and Medium Enterprise SOCAR State Oil Company of the Azerbaijan Republic Participation of Women 12 percent of seats in Parliament (Milli Mejlis) in Governance 6 percent of ministerial-level positions TACIS Technical Assistance to the Commonwealth of Independent States 9 percent of regional heads of administration (European Union) 9.5 percent of ambassadors to foreign countries UNAIDS Joint United Nations Programme on HIV/AIDS UNDESA United Nations Department of Economic and Social Affairs Language The official language is Azerbaijani UNDP United Nations Development Programme Other languages: Russian, Georgian, Armenian, Lezghi UNEP United Nations Environment Programme Religion Majority of the population is Muslim UNESCO United Nations Educational, Scientific and Cultural Organization Other religions include Orthodox Christianity, Catholicism, UNFPA United Nations Population Fund Protestantism, Judaism UNHCR United Nations High Commissioner for Refugees UNICEF United Nations ChildrenÕs Fund Employment 10.5 percent of total employment is in industry and construction 29.3 percent in agriculture, 60.2 in services UNIDO United Nations Industrial Development Organization UNOCHA United Nations Office for the Coordination of Humanitarian Affairs 46.3 percent of total employment is in the state sector UNOPS United Nations Office for Project Services (compared to 70.7 percent in 1990). WFP World Food Programme

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 9 10 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Executive Summary

Human development is the process of expanding the economic, political, and social choices of all people in society. This edition of the Azerbaijan Human Development Report shows that human development is underway in Azerbaijan but that the country is struggling with some substantial obstacles to the process. The Report surveys the human development situation in the areas of economics, health, education, and democratization. One chapter is specifically devot- ed to the displacement of a large proportion of AzerbaijanÕs population from war-torn areas and the pervasive constraint to human development that human displacement imposes.

Chapter 1: Human Development in Azerbaijan

Chapter 1 presents AzerbaijanÕs Human Development Index (HDI)Ña composite index reflecting standards of living, health, and educationÑand other measures of human development introduced by the United Nations Development Programme (UNDP). The chapter shows that Azerbaijan has tremendous capacity for human development and that the HDI has risen in recent years. Nonetheless, AzerbaijanÕs HDI remains below the world average, and human development prospects remain grim for much of the population. An urgent need has emerged for efforts to strengthen the capacity of the social sectors and for policies and programs that enable the countryÕs recent economic growth to extend beyond the energy sector.

Chapter 2: Economy and Human Development

Azerbaijan Republic (Geographical data): Chapter 2 discusses AzerbaijanÕs achievement of economic growth and stability amid the immense challenges of economic and political transition. The chapter shows that despite favor- 0 000 able trends in many economic indicators, a number of obstacles to economic strength remain. Location: Between 44 and 52 east longitude, 38 and 42 north latitude 0 The economy has become highly dependent on oil and therefore perilously vulnerable to external shocks. Real incomes remain unacceptably low for the majority of households. Capital city: Baku (located in the eastern part of the country, on the Caspian Sea) Improvements in the non-oil business environment are desperately needed. Translating the countryÕs impressive economic growth and potential into improvements in the quality of life of Territory: 86,000 square kilometers the general population is a central challenge for Azerbaijan. 11.5 percent is covered by forests; 1.6 percent is covered by water; 50 percent is Chapter 3: Health and Environment in the Human Development Process agricultural land

Chapter 3 shows that AzerbaijanÕs health profile is suffering from weaknesses in the public Coastline: 713 kilometers (Caspian Sea) health sector and the consequences of economic hardship and military conflict. At the same time, the country is experiencing severe environmental problems, many of which stem from the Highest peak: Bazarduzu, 4,466 meters Soviet approach to industrial and agricultural development. The Government, non-governmental organizations (NGOs), and the international community have begun to address a number of Borders: Iran (756 km.), Turkey (13 km.), Russian Federation (390 km.), Georgia the environmental problems of highest national concern. The areas of both health and the environment stand to benefit significantly from policies that stimulate sustainable economic growth (480 km.), Armenia (1,007 km.) and rising standards of living.

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 11 12 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Chapter 1 HUMAN DEVELOPMENT IN AZERBAIJAN

Chapter 4: Education and Culture resources. Threats to AzerbaijanÕs abili- Chapter 4 shows that the people of Azerbaijan have historically benefited from a strong system of education, scientific advancement, and cultural richness. The economic difficulties and mil- ty to maintain its traditional strengths in itary conflict of recent years, however, have substantially disrupted progress in each of these education and health are shown to give areas. Long-term human development prospects depend in large part on the quality of the edu- further cause for concern. cational and cultural services available to people throughout society. The following two sections examine dis- Chapter 5: Refugees and Internally Displaced Persons: The Situation Today parities in human development within Azerbaijan. Gender disparities are mini- Chapter 5 addresses the plight of the hundreds of thousands of people in Azerbaijan who are mal in health and education, but wage displaced from their homes as a result of armed conflict. The majority of the countryÕs refugees and employment profiles show women to and internally displaced people (IDPs) endure alarmingly poor living conditions, including be at a clear disadvantage. When indica- inadequate shelter and food supplies, sharply limited income-earning potential, and dispropor- tors of human development are consid- tionately poor health relative to the countryÕs resident population. For most of this decade, the consequences of military occupation and human displacement have adversely affected the ered by region, the Baku area is shown to social and economic life of the entire country. To facilitate the voluntary return of IDPs to their fare better than other parts of the coun- homelands, the Government and the international community have supported substantial recon- try. struction and rehabilitation efforts in the war-torn areas. The persistence of the displacement 1.1 Introduction problem, however, has led the Government to focus increasingly on helping refugees and IDPs The chapter turns finally to the persis- to achieve self-reliance while they remain displaced. Human development is the process of tence of human povertyÑdeprivations expanding the economic, political, and among the countryÕs most vulnerable Chapter 6: The Process of Democratization social choices of all people in society. people in the essential dimensions of Achievements in education, health, and human life. AzerbaijanÕs recent econom- Chapter 6 shows that while notable progress has been made toward establishing a viable democ- economic and political empowerment ic gains strengthen the potential for racy in Azerbaijan, a number of hurdles lie ahead. The future of democracy in Azerbaijan will are all vital dimensions of the process. depend on the acceleration of legal reforms, improvements in the elections process, the creation human development, but in many ways of a favorable environment for NGOs and political parties, and the decentralization of political they have not yet benefited the popula- power through the establishment of democratically elected municipal authorities. This chapter provides an overview of tion broadly. human development in Azerbaijan. The first section shows that severe social 1.2 Human Development in and economic upheaval caused a sub- Azerbaijan: An Overview stantial setback in human development in the early 1990s. The economic Azerbaijan faces substantial challenges growth of recent years has reversed this to the human development process. The trend, but still the countryÕs relatively country was one of the poorest republics low per capita income level prevents it of the Soviet Union before it regained from achieving human development independence in 1991, and independence commensurate with the potential afford- was followed by a period of political tur- ed by its substantial natural and human moil and sharp economic decline. The

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 13 14 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Table 1.1 AzerbaijanÕs Human Development Index and component indexes, 1992-1998* Figure 1.2 Birth rates in Azerbaijan, 1990-1998 (per 1,000 population) reaching a peak of 7.4 per 1,000 population in 1994, the year a cease-fire was 1992 1993 1994 1995 1996 1997 1998 30 reached with Armenia. The marriage rate 26.3 27.0 Human Development 25.2 0.718 0.707 0.696 0.692 0.697 0.706 0.712 25 24.2 dropped from 10.6 per 1,000 population Index (HDI) 21.4 19.1 in 1991 to 5.1 in 1996 and has risen Life expectancy 20 0.745 0.742 0.743 0.735 0.753 0.770 0.772 17.1 17.4 slightly since then. index 15.7 15 Education index 0.870 0.880 0.880 0.880 0.868 0.871 0.878 Despite its recent upward trend, 10 GDP index 0.540 0.498 0.464 0.462 0.470 0.477 0.487 AzerbaijanÕs HDI remains below the 5 world average. Income is the primary fac- * UNDP’s global Human Development Report 1999 introduced a new methodology for calculating the GDP index. This edition of the Azerbaijan Human Development Report uses the new methodology. To ensure comparability through time, the HDIs and GDP tor responsible for the countryÕs relatively indexes for 1992 through 1997 have been recalculated using the new formula. Also, the life expectancy index has been recalculated 0 using new Government data. The indexes appearing in this table therefore differ from those presented in previous editions of the 1990 1991 1992 1993 1994 1995 1996 1997 1998 low HDI level. Although the economy has Azerbaijan Human Development Report. For full explanations of the formulas used to construct the HDI and the other indexes discussed in this chapter, see UNDP, Human Development Report 1999, pp. 159-62. grown in recent years, the GDP index for Source: ASSC 1999, Statistical Yearbook of Azerbaijan, p. 38. Azerbaijan is only two-thirds of the world countryÕs former economic system and In order to analyze levels and trends in steadily between 1990 and 1995. average and 73 percent of the average for trading relationships collapsed in the human development, the United Nations Accordingly, the countryÕs HDI ranking Eastern Europe and the CIS. In contrast, early 1990s, and the social safety net Development Programme (UNDP) has in UNDPÕs global Human Development AzerbaijanÕs life expectancy and educa- maintained during the Soviet years has introduced the Human Development Report fell from 62nd among 173 coun- tion indexes compare favorably with deteriorated ever since. Index (HDI). The HDI is based on three tries to 104th among 174 countries. The world averages and are similar to the conceptsÑlongevity, knowledge, and decline in the HDI derives mainly from a averages for other countries of Eastern Compounding the difficulties of transi- standard of livingÑand is calculated as a deterioration in standards of living, as Europe and the CIS. (See Table 1.2.) tion, all aspects of the countryÕs social, simple average of three corresponding captured in the GDP index. A reversal in political, and economic life have been indexes. The life expectancy index uses this trend has been seen since 1995, as AzerbaijanÕs strengths in the areas of disrupted by military conflict in and life expectancy at birth to reflect longevi- economic progress and increases in the health and education give the country around Nagorno-Karabakh. One-fifth of ty. The education index uses the adult lit- GovernmentÕs official life expectancy great potential for human development, the territory of Azerbaijan remains eracy rate and the combined gross enroll- estimates have pushed the HDI steadily but these strengths are currently in jeop- under occupation. The conflict and ment ratio to reflect knowledge. The GDP upward. ardy. Real public expenditures on the occupation forced a large number of index is a proxy for the populationÕs aver- social sectors have declined sharply dur- people to flee from their homes in age standard of living, using the concept Other demographic data that are not ing this decade, and health facilities and Armenia and the war-torn areas for safer of purchasing power parity to ensure directly captured in the HDI similarly schools have deteriorated in terms of both areas in Azerbaijan. These refugees and international comparability. The HDI thus reflect the trend of socioeconomic dis- physical infrastructure and the services internally displaced people (IDPs) have captures essential information on human tress, particularly in the first half of the they provide. In addition, the economic been living for many years in settle- development, though it does not, and can- decade. According to Government statis- difficulties facing many people in ments that are socially and economical- not, incorporate all dimensions of the tics, the birth rate has fallen sharply and Azerbaijan, combined with increases in ly isolated and unsuitable for long-term process. fairly consistently throughout the 1990s, the costs of obtaining social services, habitation. The great majority of them as shown in Figure 1.2. The mortality have reduced their access to quality health suffer from deprivations in all aspects of Reflecting the difficulties of the first half rate rose every year in the early 1990s, care and schooling. The long-term effect human development. of this decade, AzerbaijanÕs HDI fell Table 1.2 AzerbaijanÕs Human Development Index in global comparison, 1997 Figure 1.1 Human Development Index in Azerbaijan, 1992-1998 Life In spite of these hardships, improve- HDI expectancy Education GDP index index ments in AzerbaijanÕs level of human index 0.8 development are now evident. Political Azerbaijan 0.695* 0.75 0.88 0.46* 0.718 0.712 stability has been achieved. Sound 0.7 0.707 0.696 0.692 0.697 0.706 Eastern Europe macroeconomic policies and substantial 0.6 0.754 0.73 0.91 0.63 and CIS foreign investment, particularly in the oil 0.5 Industrialized sector, have generated economic growth 0.919 0.88 0.96 0.91 0.4 countries every year since 1996. In addition, the 0.3 Government has developed a new strate- World 0.706 0.69 0.73 0.69 gy to help refugees and IDPs achieve 0.2 Source: UNDP, Human Development Report 1999. self-reliance, giving hope that human 0.1 * In calculating AzerbaijanÕs 1997 GDP index for use elsewhere in this Report, the UNDP Country Office in Azerbaijan used updated preliminary estimates of per capita GDP in purchasing power parity dollars provided by the World Bank in development will reach this particularly 0.0 June 1999. For comparability across countries, the 1997 GDP index and HDI shown for Azerbaijan in Tables 2 and 3 1992 1993 1994 1995 1996 1997 1998 are those presented in the global Human Development Report 1999, which used earlier World Bank estimates. They vulnerable population in the years ahead. therefore differ from those presented elsewhere in this Report.

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 15 16 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 of the collapse in social services may not by characteristics other than resources, Table 1.4 WomenÕs share of employment and wages by sector, 1998 yet be reflected in the data used to calcu- such as institutions, culture, history, and late the HDI. political and economic structure. Share of women employed Average wages paid Sector (as a percentage of total to women as a percentage Progress in the areas of health, education, employment in the sector) of wages paid to men Azerbaijan has an unquestionably high income distribution, and institutional potential for human development arising development are immediately needed in Oil refining 38.6 74.4 from its natural and human resources. Azerbaijan to accelerate the human Chemical/petrochemical 42.2 62.5 Table 1.3 shows the relatively high levels development process. industry of human development achieved by many Communications 45.1 83.7 countries with similarities to Azerbaijan 1.3 Gender and Human Health 80.9 64.8 in terms of such factors as population Development in Azerbaijan Education 65.5 70.1 density, per capita agricultural land, per Source: ASSC 1999, Women and Men in Azerbaijan, p. 50. capita oil production, history as part of When indicators of human development the Former Soviet Union, and/or geo- are disaggregated by gender, important apparent everywhere in the world. In Unemployment is likely to be particularly graphical location. Ultimately, however, differences in the levels of human devel- Azerbaijan, women and men possess severe among women. Government statis- the level of human development is driven opment enjoyed by women and men are equal rights and liberties under the tics show that women accounted for about Constitution. The countryÕs labor law also 60 percent of the registered unemployed Table 1.3 The Human Development Index and component indexes of Azerbaijan and selected countries, 1997* explicitly prohibits wage discrimination throughout the 1990s. The sharp output on the basis of gender. Gender inequali- and employment declines observed this HDI ranking Life among 174 HDI expectancy Education GDP index ties persist, however, especially with decade in fields where female employ- countries index index regard to economic empowerment. ment was significant, such as light indus- Australia 7 0.922 0.89 0.99 0.89 try and the food industry, further suggest U.K. 10 0.918 0.87 0.99 0.89 WomenÕs employment is concentrated in a high level of unemployment among France 11 0.918 0.89 0.97 0.90 lower-paying sectors of the economy, and women. In addition, the transition period Denmark 15 0.905 0.84 0.96 0.91 women are poorly represented at higher has brought a collapse in the availability Austria 16 0.904 0.87 0.95 0.90 levels of management, even in sectors that of adequate and affordable childcare employ predominantly women. For options to most Azerbaijani families, and Spain 21 0.894 0.88 0.95 0.85 example, women account for more than this is likely to have caused many women Cyprus 26 0.870 0.88 0.90 0.83 two-thirds of employment in health, edu- to drop out of the labor force. Portugal 28 0.858 0.84 0.91 0.83 cation, and cultural work, where remuner- Hungary 47 0.795 0.76 0.91 0.71 ation levels are particularly low, and yet One important area where Azerbaijan has Mexico 50 0.786 0.79 0.83 0.74 they represent only about 35 percent of achieved near gender equality is educa- the heads of clinics and polyclinics and tional enrollment. More significant asym- Bulgaria 63 0.758 0.77 0.89 0.62 less then 20 percent of management in the metries arise, however, in the structure of Romania 68 0.752 0.75 0.88 0.63 education system. The average wages employment in the education sector, as Russia 71 0.747 0.69 0.92 0.63 paid to women are lower than those paid discussed above, and in the awarding of Kazakhstan 76 0.740 0.71 0.91 0.60 to men in all sectors. high academic degrees. Among the peo- Georgia 85 0.729 0.80 0.90 0.50 Table 1.5 AzerbaijanÕs Human Development Index by gender, 1998* ple with AzerbaijanÕs highest scientific degree, Doctor of Science (D.Sc.), only Turkey 86 0.728 0.73 0.76 0.69 Women Men All Azerbaijan about 10 percent are women, and only Ukraine 91 0.721 0.73 0.92 0.52 HDI 0.700 0.724 0.712 about 30 percent of those with the degree Uzbekistan 92 0.720 0.71 0.91 0.54 of Candidate of Science (Ph.D.) are Jordan 94 0.715 0.75 0.80 0.59 Life expectancy women. 0.792 0.757 0.772 Iran 95 0.715 0.74 0.73 0.68 index The UNDP Country Office in Azerbaijan Turkmenistan 96 0.712 0.67 0.95 0.51 Education index 0.867 0.890 0.878 has quantified the gender disparity in Azerbaijan 103 0.695 0.75 0.88 0.46 human development by calculating sepa- Moldova 104 0.683 0.71 0.89 0.45 GDP index 0.440 0.525 0.487 rate HDIs for women and men. The HDI

Tajikistan 108 0.665 0.70 0.89 0.40 * Following methodology used in the global Human Development Report for the Gender-related for women in 1998 is 0.700 while the HDI Development Index, the gender-specific life expectancy indexes in this table are adjusted to Sources: UNDP, Human Development Report 1999, and Interstat (Statistical Committee of the CIS), account for the tendency of women to live longer than men. The gender-specific GDP indexes for men is 0.724. (See Table 1.5.) Income Commonwealth of Independent States and Countries of the World, 1999. use the female share and male share of earned income, which are estimated from the percentage shares of women and men in the economically active population (45.2 and 54.8 percent is the main factor driving this disparity; * The countries selected for this table have similarities to Azerbaijan in terms of population density, per capita agricul- respectively, according to Government statistics) and the ratio of female wages to male wages tural land, per capita oil production, history as part of the Former Soviet Union, and/or geographical location. (taken as 0.75, the weighted mean of the wage ratios for all countries with wage data). the GDP index is 16 percent lower for

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 17 18 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 women than for men. The education index Country Office in Azerbaijan, however, has More regular collection and publication per capita GDP in 1998 remained less is also somewhat lower for women, estimated the countryÕs GEM as 0.463. of regionally disaggregated data would than half of its 1990 level, and the aver- reflecting slightly lower literacy and This level compares favorably with the enable more thorough assessments of age real wage in 1998 was just 30 percent enrollment rates, but womenÕs higher life GEM values reported in the global Human regional trends in human development. of its level in 1990. Households spend the expectancy compensates for their lower Development Report 1999 for neighboring This could in turn facilitate the design of great majority of their income on food, income and educational attainment to Turkey, Iran, and Georgia but is lower than policies to help people in all areas of the yet average household food consumption some extent in the overall human devel- the GEM values for most of the countries of country to realize benefits from the coun- falls far short of the amount required for opment measure. Eastern Europe for which the measure has tryÕs new economic gains. healthy diets. The most recent World been calculated. Bank poverty assessment, conducted in UNDP has devised two indexes to assess 1.5 Human Poverty in Azerbaijan 1995-96, found 60 percent of Azerbaijani gender balance: the Gender-related 1.4 Regional Patterns of Human households to be living in poverty, and Development Index (GDI) and the Development in Azerbaijan The HDI provides a perspective on aver- poverty is particularly intense among Gender Empowerment Measure (GEM). age well-being. As such, it gauges IDPs and refugees. The GDI is essentially the same as the Sharp disparities are evident in the level of progress for a community as a whole but HDI only discounted to account for gen- human development across regions in can easily mask a high level of distress Most of the recent economic growth in der inequality. The greater the disparity Azerbaijan, and these appear to have inten- among the most deprived members of the Azerbaijan derives from expansion of the between the achievements of women and sified during the transition period. In most community. For this reason, UNDP has energy sector, and this expansion has not men, therefore, the larger the difference respects, the Baku region exhibits a higher introduced the concept of human poverty, spread significantly to the other sectors of between the HDI and the GDI. According level of human development than other which encompasses deprivations in the the economy. Despite the economic to UNDPÕs global Human Development parts of the country. Less than one-third of essential dimensions of human life. The growth of recent years, standards of living Report 1999, the percentage difference the population lives in this region, which human poverty concept includes measur- simply have not improved for the popula- between AzerbaijanÕs HDI and GDI, includes Baku and Sumgait, yet it accounts able deprivations, such as short life tion broadly. reflecting the extent of gender inequality, for most of the countryÕs GDP. The majori- expectancies, low levels of literacy, low is greater than the averages for industrial- ty of the investment in Azerbaijan has been incomes, and unemployment, as well as Many people in Azerbaijan suffer from ized countries and countries of Eastern channeled toward economic activity in deprivations that are difficult to measure, the other dimensions of human poverty Europe and the CIS but lower than the Baku. In addition, the people of Baku have such as restrictions on political freedom as well. The comprehensive social ser- world average. (See Table 1.6.) realized most of the benefits of the coun- and personal security. vices provided under the Soviet regime tryÕs nascent civil society, as indicated by have collapsed as real public expendi- The Gender Empowerment Measure the concentration of non-governmental Substantial human poverty is evident in tures in sectors such as health and edu- (GEM) quantifies the relative empower- organizations (NGOs) in Baku. Azerbaijan, in spite of recent improve- cation have fallen to small fractions of ment of women and men in political and ments in the overall level of human their pre-transition levels. Most of the economic spheres of activity. It incorpo- As was first reported in UNDPÕs development. Income poverty is particu- people of Azerbaijan continue to live rates the relative incomes of women and Azerbaijan Human Development Report larly prevalent. AzerbaijanÕs per capita without access to safe water or modern men and their relative prevalence in 1998, the border regions of Nakhchivan, GDP was low among Soviet republics sewage networks. Unemployment is Parliament, in administrative and manager- Lenkoran, and Ganja-Kazakh have particu- prior to independence (less than half of undeniably widespread. Finally, the ial jobs, and in professional and technical larly low income levels, leading to dispro- RussiaÕs in terms of purchasing power), processes of democratization and legal jobs. Twelve percent of AzerbaijanÕs seats portionately low levels of human develop- and the country is now even poorer. Real reform remain in an early stage, limiting in Parliament are held by women, which, ment. This finding is especially disappoint- the ability of the general population to according to the global Human ing given that these regions have favorable participate meaningfully in governance Development Report 1999, is equivalent to climatic characteristics and are well-located and denying many people a genuine the world average and higher than the aver- for trading activity with neighboring coun- sense of personal security. age for Eastern Europe and the CIS. tries. The great majority of all imports and According to Government statistics, exports pass through these regions. To assess the intensity of human poverty, women hold 32.3 percent of the manageri- Table 1.6 AzerbaijanÕs Human Development Index and Gender-related UNDP has introduced a Human Poverty al positions in Azerbaijan and 44.8 percent Development Index in global comparison, 1997. Index (HPI). For industrialized coun- of the specialist positions. Eastern Industrialized tries, Eastern Europe, and the CIS, the World Europe and Azerbaijan the CIS countries HPI incorporates deprivations in four The global Human Development Report HDI 0.706 0.754 0.919 0.695 dimensions of human life: longevity, 1999 makes GEM estimates for too few GDI 0.700 0.752 0.915 0.691 knowledge, economic provisioning, and countries to offer meaningful world and Percentage differ- social participation. These deprivations regional averages, and it does not give a ence between 0.9 0.3 0.4 0.6 are represented, respectively, by the per- HDI and GDI GEM value for Azerbaijan. The UNDP Source: UNDP, Human Development Report 1999 centage of people not expected to sur-

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 19 20 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 vive to age 60, the percentage who are as measured by the Human Development functionally illiterate, the percentage liv- Index (HDI). The economyÕs recent Chapter 2 ECONOMY AND HUMAN ing below 50 percent of the median dis- upturn has contributed to a reversal of this posable personal income, and the rate of trend over the past few years. DEVELOPMENT long-term unemployment. Nonetheless, human progress continues to According to the global Human be compromised in Azerbaijan in two Development Report 1999, 22.1 percent of important ways. First, per capita income the people of Azerbaijan are not expected remains low compared to that of many to survive to age 60. This component of countries with similar capacities. The eco- human poverty is less severe in Azerbaijan nomic growth of recent years has been than either the world average (25.3 per- concentrated in a single sectorÑenergyÑ cent) or the average for Eastern Europe and has not yet benefited the population and the CIS (24.7 percent). Unfortunately, as a whole. Second, AzerbaijanÕs histori- however, the HPI cannot be calculated for cal strengths in the areas of health and Azerbaijan because of data gaps in other education are currently jeopardized by areas. At present, for example, official low public investment in the social sec- data on unemployment are underestimates tors. The poverty facing many of the peo- based on registered unemployment only. ple of Azerbaijan has further reduced Azerbaijan would benefit greatly from their access to quality health and educa- mance are discussed first, showing eco- reliable, nationwide studies of income, tional services. If not addressed, these nomic growth and stability but heavy income distribution, and unemployment. problems will have adverse long-term dependence on the oil sector. The chapter effects on human development. turns next to trends in public finance, A comprehensive national poverty allevi- including declining expenditures and ation strategy, and solid commitment to The pattern of human development with- problems with revenue collection. carrying it out, would help to make in Azerbaijan shows some persistent dis- Progress in the privatization process is human development a reality for the pop- parities. The displaced population is dis- then reviewed, along with continuing ulation of Azerbaijan broadly. Concrete tinctly disadvantaged in all aspects of obstacles to private sector development. measures, ranging from training programs human development. The people of the Indications of continuing povertyÑin to improvements in the business environ- Baku region realize higher average levels spite of recent improvements in real ment, are needed to enhance the potential of human development than others, and incomeÑare then discussed. Finally, for income generation among the most men enjoy higher average levels than employment patterns are shown to deprived members of the population. women. The gender and regional dispari- reflect both the transition toward a mar- Strengthening the provision of health care ties derive primarily from disparities in 2.1 Introduction ket economy and the countryÕs economic and education, improving public infra- income. difficulties. structure such as drinking water and A strong economy provides the necessary sewage facilities, and accelerating the Human povertyÑor the level of distress foundation for human development. 2.2 Economic Performance process of democratization and legal among the most deprived people in soci- reform will also contribute importantly to etyÑis substantial in Azerbaijan. Income Economically developed countries can the alleviation of human poverty. poverty is prevalent, many people are have low levels of human development, AzerbaijanÕs economy suffered tremen- unemployed, access to quality health care but high levels of human development are dously following the breakup of the 1.6 Conclusion and education is declining, and in many never realized in countries with weak Soviet Union, but economic stabilization ways the benefits of democracy and the economies. In Azerbaijan, economic and growth have now been achieved. The Azerbaijan has tremendous capacity for rule of law are not yet realized. For many growth and stability have been achieved. Government has pursued a highly suc- human development arising from its people in Azerbaijan, the recent improve- Translating economic strength into sus- cessful economic reform program in con- wealth of natural and human resources. ments in economic indicators have not tainable human development is the chal- sultation with the IMF, the World Bank, The hardships of military conflict and translated into human development. lenge that lies ahead. and other international financial institu- economic transition, however, brought Enabling the extension of human devel- tions since early 1995. The reform pro- sharply declining standards of living to opment to the population as a whole is a This chapter provides an overview of the gram and the revival of the countryÕs oil many people in the first half of this fundamental challenge facing Azerbaijan. countryÕs economic conditions. The sector have enabled the economic recov- decade. These hardships were reflected in major indicators of economic perfor- ery. The increasing dependence on the oil declining levels of human development,

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 21 22 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Table 2.7 Change in real GDP from omy vulnerable to severe macroeconomic Table 2.8 Structure of GDP by sector (percent) Table 2.9 Structure of industrial production at current prices (per- previous year, 1995-98 (percent) cent), 1990 and 1995-98 shocks. Many effects of an oil boomÑ Real per YEAR Real GDP 1995 1996 1997 1998 capita GDP 1990 1995 1996 1997 1998 such as upward wage and price pressures, Industry 27.3 25.9 24.8 22.3 Electricity 4.1 19.2 17.9 14.0 16.6 1995 -11.8 -12.4 appreciation of the real exchange rate, and Agriculture 25.2 24.8 20.1 20.3 Fuel 11.7 46.2 52.4 54.3 51.7 the absorption of scarce financial and 1996 1.3 0.7 Metallurgy 3.8 1.1 0.3 0.7 0.4 Construction 3.7 9.3 13.8 16.4 Machinery 18.0 3.6 3.6 3.9 3.3 human capitalÑtend to adversely affect 1997 5.8 5.2 Transport and communications 17.4 10.2 11.9 12.9 Chemicals and petrochemicals 6.0 5.4 4.5 3.3 3.0 the non-oil sectors. Moreover, the expec- 1998 10.0 9.2 Trade 4.8 5.2 5.5 5.7 Construction materials 3.1 1.5 1.1 1.1 1.2 tation and realization of large oil revenues Source: AET, Azerbaijan Economic Trends, Other 21.6 24.6 23.9 22.4 Light industry 19.6 9.5 8.2 4.2 2.5 First Quarter 1999 have tended, in many countries, to lead to TOTAL 100 100 100 100 Food industry 25.6 6.6 7.4 16.6 16.6 inefficient investments and weak fiscal Other 8.1 6.9 4.6 1.9 4.7 Sources: AET, Azerbaijan Economic Trends, Fourth Quarter 1998, p. 25 ; discipline. ASSC, Statistical Yearbook of Azerbaijan 1999, p. 211 TOTAL 100 100 100 100 100 sector, however, has also made the econo- causing a substantial increase in the share Source: AET, Azerbaijan Economic Trends, Monthly Update, March 1999 Two recent international developments my vulnerable to external shocks and of the value of industrial output that aris- into the oil sector since that time. While have highlighted the dangers of jeopardized the economic potential of the es from energy production (from 16 per- growth of the energy sector promises AzerbaijanÕs reliance on oil. First, the col- non-oil sectors. cent in 1990 to 68 percent in 1998). The increased wealth, the economyÕs growing lapse of oil prices in 1997 and 1998 fuel industry alone has accounted for dependence on the fuel industry is an reduced oil-sector revenues and slowed 2.2.1 Gross Domestic Product more than half of the total value of indus- ominous trend. the investment rate (and therefore the pro- trial production for the past three years. jected rate of production). Second, the Following a seven-year decline, International experience shows that Russian and Asian economic crises low- AzerbaijanÕs Gross Domestic Product Growth in the energy sector has recently dependence on a single export product ered the demand for AzerbaijanÕs refined (GDP) has increased each year since reversed the downward trend in overall complicates economic management con- oil. These developments greatly reduced 1996. In 1998, real GDP grew by 10.0 industrial production. The fuel and elec- siderably and that inappropriate manage- the export earnings of the State Oil percent overall and by 9.2 percent per tricity industries grew by 7.5 percent and ment of oil revenues can have dire conse- Company of the Azerbaijan Republic capita. Nominal GDP reached 15,930 bil- 5.9 percent respectively in 1998, leading quences for the economy. Unpredictable (SOCAR), and since SOCAR is the coun- lion manats ($4.1 billion), and per capita to an increase in total industrial produc- oil price movements and other interna- tryÕs largest taxpayer, this in turn ham- GDP was 2.0 million manats ($520). The tion of 2.2 percent. New production from tional developments can lead to sharp pered the GovernmentÕs capacity to raise economic expansion is closely connected the offshore oil wells of the Azerbaijan fluctuations in budget revenue and for- revenue. with oil exploration and development. International Operating Company eign exchange earnings, making the econ- (AIOC), an international consortium led This year has seen some positive develop- Figure 2.3 Contribution of the energy The sectors that contribute the most to by BP Amoco, largely accounts for this sector (fuel and electricity) to the value ments for the energy sector. The price of GDP are industry and agriculture, though strong growth in fuel production. of total industrial production, 1990-1998 (percent) oil has been climbing, and a large natural the shares of both have fallen in recent gas field was discovered, promising a years. (See Table 2.8.) The share of con- At the same time, all other industrial out- 80 substantial increase in AzerbaijanÕs natur- struction in GDP increased significantly put has continued to decline. In 1998, for 70 70.3 68.3 68.3 65.4 al gas production in coming years. These between 1997 and 1998, reflecting the example, the levels of real output in the 60 developments, however, further demon- dominant role that construction has played light industry and machinery subsectors 50 strate the volatility of the energy sector. in the economic recovery, largely in con- were only 15.6 and 14.2 percent, respec- 40 30 nection with the expanding oil sector. tively, of their 1992 levels. These two AzerbaijanÕs abundant energy resources 20 industries each accounted for nearly 20 15.8 and surplus of skilled labor present 2.2.2 Industry: Increasing Dependence percent of industrial production in 1990 10 0 tremendous opportunities for the develop- on Energy but now represent only 2.5 and 3.3 per- 1990 1995 1996 1997 1998 cent respectively. (See Table 2.9.) Industrial production has collapsed to less Table 2.10 Production of main crops, 1990 and 1995-98 (Index 1990 = 100) Cereals Cotton Tobacco Potatoes Vegetables Grapes Tea than one-third of its 1991 level, and the AzerbaijanÕs energy sector began to 1990 100.0 100.0 100.0 100.0 100.0 100.0 100.0 composition of industrial output has expand rapidly soon after independence, 1995 65.2 50.5 22.1 84.0 49.5 25.8 30.6 changed greatly. The production of ener- when the country regained worldwide 1996 72.0 50.5 21.2 115.9 66.6 23.0 9.8 gyÑincluding fuel and electricityÑ recognition for the productive potential of 1997 79.7 23.0 28.5 120.6 57.9 12.1 5.2 declined much less significantly than pro- its offshore oil and gas reserves. 1998 67.0 20.7 28.7 167.4 58.7 12.0 2.9 duction in any other industrial subsector, Substantial foreign investment has flowed Source: AET, Azerbaijan Economic Trends, Fourth Quarter 1998, Annex 1.5

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 23 24 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 ment of the non-oil sector. Appropriate Table 2.11 Production of main livestock products, 1990 and 1995-98 Figure 2.4 Inflation in Azerbaijan (per- ment and growth that will cushion the economic managementÑrecognizing the (Index 1990 = 100) cent) economy and the labor force from exter- importance of the non-oil sector to long- Meat Wool nal shocks cannot be overstated. (carcass wt.) Milk Eggs Cocoons term economic securityÑis imperative in (greasy wt.) 2000 1664 Azerbaijan today. 1990 100.0 100.0 100.0 100.0 100.0 1500 2.2.5 Inflation

1995 46.7 85.2 46.3 80.4 22.4 1000 1129 2.2.3 Agriculture: Strong Reform with 912 The GovernmentÕs commitment to strict 1996 48.8 86.9 48.4 81.3 16.3 500 Continuing Bottlenecks 412 financial policies brought inflation under 20 3.7 -0.8 1997 51.6 90.8 49.9 85.3 8.2 0 control in the mid-1990s. After climbing The output of nearly all agricultural prod- 1992 1993 1994 1995 1996 1997 1998 to nearly 1,700 percent in 1994, the infla- 1998 54.0 95.2 51.5 88.4 2.0 -500 ucts has fallen markedly during this tion rate fell to 20 percent in 1996 and Source: AET, Azerbaijan Economic Trends, Fourth Quarter 1998, Annex 1.5 decade, reflecting a variety of problems in outside the banking sector are clarified, became negative (-0.8 percent) in 1998. March 1999 Presidential Decree on the agricultural sector. Nonetheless, agri- these programs can be expected to have a Deflation continued through the first half Measures to Accelerate the Reforms in culture remains an important sector of the positive impact on agricultural productivity. of 1999, though moderate inflation is economy, contributing 20 percent to GDP the Agricultural Sector. expected later in the year as a result of a and employing 29 percent of the labor 2.2.4 Investment Trends: Favoring the depreciation of the manat in July 1999. The international community has assisted force. The structure of agricultural produc- Oil Sector tion has been stable since 1995 at 59 per- with AzerbaijanÕs process of developing an 2.2.6 Foreign Trade: The Deficit Widens effective, market-oriented agricultural sec- cent crop production and 41 percent live- The liberalization of AzerbaijanÕs econo- tor. The World Bank, for example, is sup- stock production. my brought a burst of investment, partic- Lower oil prices and regional financial porting land privatization and farm restruc- ularly in oil exploration and development. crises led to a sharp rise in the trade turing by providing short-term loans to pri- The privatization process in the agricultur- About $5.4 billion was invested between deficitÑfrom $567 million in 1997 to vate farmers, rehabilitating irrigation and al sector began in late 1996 and has pro- 1994 and 1998, nearly three-quarters of $1,046 million in 1998. The volume of oil drainage works, assisting with the develop- gressed rapidly. The prices of agricultural which was foreign investment. exports increased in 1998, but the lower ment of an extension service, strengthening products have been decontrolled, and trade Investment has grown rapidly in recent oil prices offset the effect of this increase land registration services, and establishing has been liberalized. The system of state years, at a rate of nearly 80 percent each on the trade balance. The financial crises water usersÕ associations. In cooperation and collective farms has been dismantled, year between 1994 and 1997, but it affecting many important CIS trading with the World Bank and other donors, the and a wide variety of small-holder farming slowed to a 12 percent increase in 1998. partners reduced their demand for Government plans soon to implement a structures have emerged, ranging from The deceleration, which mainly reflected AzerbaijanÕs non-oil exports. At the same rural credit project using credit unions. small family farms to medium companies. slower growth of foreign investment, was time, the depreciation of the currencies of The privatization of livestock is complete. largely associated with the fall in oil many CIS countries made imports from In addition, some international organiza- About 80 percent of rural land titles have prices. the CIS relatively inexpensive, leading to been issued, with the remainder scheduled tions and NGOs have begun to fund micro- an increase in non-oil imports. credit programs to finance the start-up of to be assigned by the end of this year, and While strong and growing investment is a small private agricultural enterprises. Once state-owned machinery and equipment are good sign for the economy, the concentra- In response to concerns that the depreciat- government regulations on credit programs being distributed to private farmers. The tion of investment in the oil sector is ed currencies of major trading partners share of households and private farms in alarming. In the years 1994 to 1998, the had reduced the competitiveness of total agricultural production rose from 67 oil sector received 64 percent of foreign Azerbaijani producers through a real percent in 1996 to 94 percent in 1998. investments and 41 percent of domestic appreciation of the manat, the investments. Weak public participation in Government allowed the manat to depre- The market-oriented reforms have been the privatization process and the collapse ciate substantially in July 1999. This strong and successful, but a number of in the market price of privatization vouch- change in exchange rate policy is expect- structural bottlenecks continue to impede ers over the past two years are indicators ed to help lower the trade deficit in 1999 agricultural productivity. Most important of the weak investment climate in the to some extent. among these are the lack of rural financ- non-oil sector. Press reports indicating ing, the poor condition and management that Azerbaijani citizens are largely Improving the non-oil business environ- of the irrigation system, and the absence choosing to invest abroad rather than in ment will be necessary for a sustainable of extension and support services. Some Azerbaijan have become common. The reduction in the trade deficit. Businesses of these problems are addressed in a need to encourage broad-based invest- outside the oil sector can develop new

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 25 26 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 offset by pay increases intended to GDP exceeded 50 percent for the first The privatization process was slow to get Figure 2.5 Public expenditures by sector, 1998 (percent) close the gap between wages in the time in 1998. started in Azerbaijan but is now well 5.8 public and private sectors. In 1998 underway. A Law on Privatization was 8.6 30.5 10.4 wages and salaries amounted to about 5 Nonetheless, considerable obstacles to adopted in January 1993, but the first pri- percent of GDP and about 31 percent of entrepreneurial activity remain evident. vatization program, designed for 1996- total public expenditure. Many laws and regulations that apply to 1998, was adopted by Parliament only in businesses and investors are unclear or con- September 1995. Implementation of the 21.4 23.3 The targets set forth in the 1998 state bud- tradictory, and the current structure of the program began with the first cash auc- social security (23.3 percent) get were not met in terms of either expen- legal system makes the courts inaccessible tion for small-scale privatization in

education (21.4 percent) ditures or revenues. In 1998 public expen- to many business people. Moreover, cor- February 1996. defense, justice, security institutions ditures and net lending reached only 69.6 ruption and the discretionary interference (10.4 percent) economy and infrastructure percent of their budgeted levels, and the of state bodies in the activities of private Almost all small enterprises (more than (8.6 percent) amount collected in revenues and grants enterprises are widely believed to be preva- 21,000) have now been privatized, but the health care (5.8 percent) reached only 75.5 percent of its target. lent. privatization of medium and large enter- other (30.5 percent) prises has progressed more slowly. The poor revenue collection resulted in The Government has begun to take steps to Medium and large state enterprises are Source: ASSC, Statistical Yearbook of Azerbaijan 1999, p. 244 large part from the economyÕs depen- improve the business environment. A required to be transformed into joint stock dence on oil at a time when oil prices fell. Presidential Decree on Measures to companies before they are privatized. export markets and meet domestic The impact of the oil price decline was About 4,500 medium and large enterpris- demand for many imported goods. This especially evident in excise tax revenues Table 2.12 Share of the private sector in GDP, industrial output, and es were envisioned for privatization in the agricultural output, 1995-1998 (percent) would also reduce the vulnerability of the (the great majority of which arise from the 1995-98 program, but at the end of the Share of the private sector 1995 1996 1997 1998 trade balance to changes in oil prices. sale of oil products) and royalties from oil first quarter of 1999 only 1,000 of them in GDP 34 38 46 55 production, both of which fell by at least in industrial output 5 7 15 26 had been transformed into joint stock 2.3 Public Finance half of their 1997 level as a share of GDP. in agricultural output 60 68 85 90 companies. The Government has drafted a Profit tax revenues also fell as lower oil new privatization program for 1999-2000, Over the past four years the government prices reduced the export earnings of the Improve State Control and Eliminate but the new program has not yet been budget deficit has fallen both in real terms state oil company (SOCAR), which is the Artificial Obstacles to the Development of approved. and relative to GDP, primarily as a result countryÕs largest taxpayer. Private Entrepreneurship was issued in of expenditure reductions. Health care has January 1999. The Decree acknowledged Public participation in the privatization seen particularly drastic cuts; in 1998 The drop in oil prices is not, however, the corruption in the law enforcement agencies process has been disappointing. Only health care accounted for only 5.8 percent only reason for weak revenue collection. and called for significant restrictions on about 10 percent of the privatization of total expenditure and 1.0 percent of The tax system is complex and unclear in their powers to interfere in the activities of vouchers, which were distributed to the GDP. Actual health care expenditures many regards, and tax evasion is com- private businesses. It has been followed by population, have been redeemed, and the reached only one-half of the amount bud- mon. The Government has begun to concrete actions, such as the elimination of market price of the vouchers has col- geted for the health care sector. address these problems by improving tax economic control units in key law enforce- lapsed. The weak public participation Expenditures on infrastructure, such as administration and expanding the tax ment agencies. stems largely from delays in the privatiza- housing, public services, transport, and base. The Parliament is expected to enact tion of some of the most potentially prof- communication, were also significantly an improved tax code by the end of 1999. Addressing the problem of corruption will itable enterprises and from a lack of the reduced in 1998. Expenditures on educa- require deeper structural reforms, however, financial resources needed to develop pri- tion stayed fairly constant. The only sec- 2.4 Privatization and Private Sector such as those envisioned in a new public vatized enterprises. tor receiving notable expenditure increas- Development sector reform program under discussion es in recent years is social security. between the Government and the World 2.5 Household Income and Consump- Expansion of the private sector has been Bank. The Government is aiming to tion Patterns Public expenditures on wages and a national priority since Azerbaijan achieve reforms in public expenditure man- salaries have been increasing, however, regained its independence and began the agement, administrative and civil service The income levels of most Azerbaijani since 1996. Public sector reform and transition toward a market economy. reforms, and legal and judicial reforms. The households remain low, though several the privatization process have led to Economic reforms and the privatization effectiveness of these reforms will largely indicators suggest that real household smaller numbers of public employees, process have led to steady growth of the determine AzerbaijanÕs ability to create a incomes have increased in recent years. but the employment reduction has been private sector, whose contribution to successful business environment. From 1997 to 1998 (a period of no infla-

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 27 28 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 tion), per capita household income rose ing sectors, but they are disproportionate- Figure 2.6 Index of real wages, 1990-1998 (Index 1990 = 100) Table 2.13 Employment by sector, 1990 and 1995-98 (percent) from 119,492 manats (about $30) to 1990 1995 1996 1997 1998 ly represented at higher levels of manage- 134,146 manats (about $35), according to 100 100 Industry 12.7 9.8 7.7 6.6 6.5 ment in all sectors, including those that Government statistics. About 40 percent 90 Agriculture 30.9 30.8 31.8 29.0 29.3 employ predominantly women. For 80 79 Construction 6.8 5.1 4.4 4.1 4.0 of this income derives from wages, 8 per- 70 66 example, only about 35 percent of the Transportation and cent from social transfers, and the remain- 60 communication 5.8 4.4 4.6 4.5 4.5 heads of clinics and polyclinics are 50 der from informal employment, sales of 44 Trade and public catering 9.9 14.0 15.8 20.8 20.9 women. 40 30 Other 33.9 35.9 35.7 35.0 34.8 agricultural products, and other sources. 30 25 20 17 16 TOTAL 100.0 100.0 100.0 100.0 100.0 14 Unemployment is widely believed to be 10 Source: ASSC, Statistical Yearbook of Azerbaijan 1999, p. 52 Real wages per capita have increased signif- 0 high in Azerbaijan, but no reliable esti- icantly during the past three years: by 19 1990 1991 1992 1993 1994 1995 1996 1997 1998 mate is presently available. The percent in 1996, 53 percent in 1997, and 20 Source: AET, Azerbaijan Economic Trends, Fourth Quarter 1998, p. 51 largest source of employment (29 per- Government records only the number of percent in 1998. Nonetheless, the average holds concentrated their expenditures on cent). Recent years have seen important people who have registered as unem- monthly wage was just 168,419 manats food products as their ability pay for other employment increases in the areas of ployed, which amounts to just 1 percent (about $44) in 1998, and real wages categories of productsÑsuch as medical trade and public catering, reflecting the of the labor force. Most of the unem- remained 70 percent below their 1990 level. care, education, clothing, and recreationÑ movement toward a market economy. ployed are unregistered because registra- Wages are highest in construction, financial fell sharply after the transition period tion procedures are complicated and the services, transportation, and industry and began. According to Government statis- The gender profile of employment across unemployment allowance offered to those are lowest in agriculture and the public sec- tics, households spent less than half of their sectors reveals a concentration of women who register is very low. tor. In the fields of health and education, income on food products in 1990 but have in lower-paying jobs and shows the per- average monthly wages in October 1998 spent nearly 70 percent on food every year sistence of traditional roles for men and Moreover, the official figures for total were only 50,961 manats (about $13) and since 1994. women. For example, women account for employment may be overestimates. In 133,439 manats (about $34) respectively, more than two-thirds of employment in some cases, for example, unprofitable according to a Government survey. In spite of the large share of household health, education, and cultural activities. state enterprises have created hidden expenditure allocated to food products, Remuneration is particularly low in these unemployment by putting their employ- AzerbaijanÕs Law on Labor prohibits wage average annual household food consump- fields, and the preponderance of women ees on long-term unpaid leave, causing discrimination on the basis of gender. The tion in 1998 failed to meet the require- in them is consistent with the stereotype these people to be counted among the actual wages paid to women, however, are ments of a healthy diet. (See Chapter 3.) that women are best suited for providing employed. Further complicating the task lower than those paid to men in all sectors, The inability of most Azerbaijani house- social services. of measuring employment is the increase even in the fields where the majority of holds to afford a healthy diet, appropriate in self-employment and informal employ- employees are women. In the health and medical care, and reasonable levels of In contrast, women account for less than ment that has been observed during this education sectors, for example, average recreation is damaging to the countryÕs 15 percent of employment in the con- decade. wages paid to women are only 65 and 70 health profile and reduces the potential for struction and transportation sectors, percent, respectively, of those paid to men. human development. where pay levels are much higher. Not Unofficial labor markets where people are only are men concentrated in higher-pay- hired on a daily basis at low rates of pay Monthly pensions for elderly and disabled 2.6 Employment and Unemployment now exist in practically all large settle- pensioners, which were doubled in August in Transition ments throughout the country. The emer- 1997, average around 56,000 manats ($14.5 gence of these markets is a signal that vast in 1998) and are often received with substan- According to Government statistics, total numbers of working-age people are des- tial delays. The pension amount varies employment changed little during the perately searching for work. In addition, according to the recipientÕs work experience. 1990s, except for a slight dip in the mid- substantial labor migration to foreign In addition, pensions are higher for women dle of the decade, but the profile of countries has been observed in recent who have many children or have disabled employment has changed considerably. years. The deterioration of national children. This provision benefits women in Public sector employment declined human capital resulting from long periods one respect, but it also reinforces the tradi- steadily throughout the decade but was of unemployment and from the emigra- tional role of women in the family. offset by increases in employment in the tion of skilled labor presents an obstacle private sector. Employment in both indus- to the countryÕs long-term potential for Changes in household consumption pat- try and agriculture has fallen markedly, economic and social development. terns during this decade reveal that house- though agriculture remains the countryÕs

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 29 30 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Unemployment is a particularly serious nomic growth and stability. Economic lib- Chapter 3 problem among the displaced population. eralization has enabled steady expansion of HEALTH AND ENVIRONMENT IN According to government statistics, only the private sector and has drawn substan- THE HUMAN DEVELOPMENT one-third of the internally displaced peo- tial foreign investment to the country. Price ple (IDPs) who are able to work are stabilization has stopped the rapid decline PROCESS employed. Thirty-six percent of the IDPs in real household income that was experi- interviewed in a recent World Bank-spon- enced in the first half of the decade. sored survey consider themselves formally unemployed, whereas only 8 percent In spite of these positive developments, considered themselves unemployed however, the country faces a number of before they were displaced from their serious economic problems that present homes. Many IDPs (at least 40 percent) obstacles to human development. The have agricultural backgrounds, but most economy has become increasingly depen- of them live in circumstances that prevent dent on oil and is therefore perilously vul- them from working in agriculture. The nerable to external shocks. The non-oil need to make sustainable income generat- sector has suffered in the wake of the inherited from the Soviet years. The system ing opportunities available to IDPs while expanding oil sector, and this problem is consists of a complex, hierarchical network they remain displaced has become acute. compounded by weaknesses in the non-oil of medical structures that remain almost business environment. completely within the public sector. Staffing Unemployment is also believed to be concentrates heavily on specialized medical severe among women. According to gov- Finally, while real incomes appear to have professionals; there are few general practi- ernment statistics, women account for rebounded somewhat in recent years, they tioners and non-medical professionals, such about 60 percent of registered unemploy- remain unacceptably low. The population as social workers. Moreover, the ability to ment. Some important sectors where suffers from the effects of low public evaluate the system and the countryÕs health female employment was significant prior expenditure in the social sectors, particu- profile is limited by a lack of systematic col- to the transition period, such as light indus- larly in the health sector. Unemployment lection, analysis, and dissemination of try and the food industry, have experienced appears to be high, especially among national health data. sharp output and employment declines women and the displaced. during this decade. Moreover, adequate Inadequate public funding hampers all areas childcare options have become unafford- Immediate action is needed to improve the 3.1 Introduction of health care. Public health expenditures as able to most Azerbaijani families, which is general business environment, especially a share of GDP have fallen to one-third of likely to have discouraged many women for small and medium enterprises, which A countryÕs level of human development is their level in the early 1990s, and real from participating in the labor market. hold the greatest promise for expansion of determined largely by the health of its popu- expenditures have declined especially dra- the non-oil sector and growth in employ- lation and the quality of its environment. In matically given the fall in real GDP. In A great need has emerged for training in ment. The challenge now facing economic Azerbaijan, serious concerns have arisen in 1998, public expenditure on health amount- the skills needed in the new market econ- policy makers in Azerbaijan is to translate both of these areas. Economic difficulties ed to less than 6 percent of total expenditure omy and for policies that encourage the the countryÕs impressive economic growth and problems in the public health sector and only 1.0 percent of GDP. Of the amount development of productive employment and potential into improvements in the have caused the health of the population to budgeted for the health care sector in the opportunities. The greatest potential for quality of life of the general population. suffer greatly since the breakup of the Soviet State Budget Law for 1998, only half was future employment growth lies in the Union. At the same time, the country faces actually spent. private small and medium enterprise continuing industrial and agricultural pollu- (SME) sector. Policies that improve the tion alongside new environmental problems The lack of public attention to the health business environment for SMEs are created by military conflict and the displace- sector has resulted in deteriorating medical therefore essential. ment of a large proportion of the population. buildings and equipment and the near collapse of emergency services in most rural 2.7 Conclusions 3.2 The Health Care System areas. No effective family planning program is in place, and abortion is the most common In the midst of difficult times of transition The quality of health care in Azerbaijan is method of birth control. Government statis- and conflict, Azerbaijan has achieved eco- compromised by structural characteristics tics indicate immunization coverage of

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 31 32 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Figure 3.7 Public health expenditures as a share of GDP, 1991-1998 the cases among men) and heterosexual Box 3.1 Structure of the public health system in Azerbaijan more than 90 percent, but doubts have been (percent) contact (30 percent of the reported cases). raised about these figures, and the country is 3.5 3.3 dependent on humanitarian assistance for its 2.9 In the Soviet years, AzerbaijanÕs public health system consisted of a dense 3.0 International experience shows that an 2.7 immunization program. network of medical facilities. Individuals were assigned to policlinics for HIV/AIDS epidemic can emerge very 2.5 basic care, and rural areas were served also by feldsher-midwife stations. 1.9 rapidly in countries that do not take active In spite of the low level of public funding, 2.0 There were hospitals at the local, district, and national levels, with emer- 1.4 1.5 measures to combat the spread of the dis- the Soviet tradition of excessive medical 1.5 1.2 gency services provided separately. Local sanitary epidemiological stations ease. Recognizing this concern, the 1.0 staffing and infrastructure has continued. 1.0 (SES) were responsible for environmental health, water and food quality, Ministry of Health and five United According to Government statistics, for control of infectious and parasitic diseases, and logistical support and mon- 0.5 Nations agencies initiated a project in example, there were 36 doctors and 90 hos- itoring for immunization programs. Specialized centers at the raion and July 1998 to build capacity at the commu- pital beds per 10,000 population in 1998. 0.0 1991 1992 1993 1994 1995 1996 1997 1998 national level provided care for patients with cancer, tuberculosis, mental ill- nity and national levels to prevent the This is partly a result of the continuing prac- nesses, and venereal diseases. In addition, some ministries and major state spread of HIV/AIDS and other sexually tice of allocating health funding on the basis also established a program to introduce enterprises provided medical facilities for employees and their families. transmitted diseases. The project involves of inputs (e.g., number of hospital beds) WHO data standards and modern comput- case management, public information and rather than according to the size and risk er technology to the process of collecting education, and the establishment of a While the physical infrastructure and level of services provided by the sys- factors of the population served. and compiling health data. resource center to support local non-gov- tem have deteriorated dramatically, todayÕs health system in Azerbaijan ernmental organizations (NGOs) interest- retains the basic organizational structure that it inherited from the Soviet Excessive staffing and poor public health Unfortunately, however, little progress ed in working in this area. The commit- Union. The Government continues to own almost all medical facilities and funding result in extremely low formal has been seen to date toward comprehen- ment of the Government and people of salaries for medical professionals. This sively reforming the health care system. to employ almost all health care providers. Under a complex system of Azerbaijan to addressing the HIV/AIDS encourages them to supplement their Since 1996 the Government and the accountability, district health departments report to the Ministry of Health for problem in an earnest and straightforward incomes by charging patients informally for World Bank have held discussions on a health issues but are funded from local budgets, and the SES units report way will determine the countryÕs ability health services, a practice that has become major program of technical and financial to the Republican Center on Hygiene and Epidemiology. Policy develop- to prevent an epidemic. almost universal. Private health costs have assistance for health sector reform, but this ment takes place in both the Ministry of Health and the Office of the Prime increased greatly in recent years as patients dialog still has not resulted in an agree- Minister. The poor quality of health services pre- pay formal and informal charges for health ment. A Health Reform Commission was sents a particular hardship for people care services and also pay for medications, established by Presidential Decree in 1998 AzerbaijanÑSheki, Oghuz, Gakh, suffering from congenital diseases such which are now often available only from to develop a reform strategy, but a com- Shamkir, Zagatala, Balaken, and Ordubad as sickle cell anemia and thalassemia. private pharmacies. The increase in private prehensive draft program and timetable in NakhchivanÑnow meet WHO criteria The size of the population affected by health costs has made formal health care have not yet been issued. for severe iodine deficiency. This problem these diseases is not large, but the human unaffordable for many households, and the appears to be particularly significant suffering associated with the poor ser- low quality of services further discourages 3.3 The Health of the Population among internally displaced people vices offered to them is enormous. There its use. Many people have therefore stopped (IDPs), who were found to suffer from a is an urgent need for appropriate action using official health facilities even for child- The weaknesses in the public health sys- disproportionately high prevalence of goi- in this area, including not only medical birth and emergencies. tem and the persistence of poor standards ter in a 1996 survey by USAID, WHO, programs but also social support activi- of living are reflected in the health status of and UNICEF. ties and information programs that, for Addressing the health sectorÕs many the population. Diarrhea is extremely example, discourage marriages among problems will require serious commit- prevalent among children, particularly The number of Azerbaijani citizens close relatives. ment to health care reform, and some children of the displaced, and this decade known to be infected with HIVÑ152 as steps have been taken in this direction. has seen major outbreaks of measles and of 1 July 1999Ñis not high by interna- The economic difficulties facing a large UNICEF and the Ministry of Health are diphtheria. A shortage of the anti-malarial tional comparison, but the number of proportion of the population of leading pilot primary health care reform drugs and insecticides necessary for malar- newly reported cases has increased rapid- Azerbaijan are reflected in their dietary projects in six districts, which could prove ia control, combined with inadequate shel- ly in the past two years. Only two new patterns. The Government estimates that useful as models for the rest of the coun- ter, have allowed a resurgence of malaria. cases were reported in 1996, but 64 new low incomes force Azerbaijani house- try. In an effort to address the health sys- Insufficient supplies of anti-thyroid drugs cases had already been reported in just the holds to spend the great majority of their temÕs severe financing problems, the and iodization have led to a high inci- first half of 1999. The main transmission income on food, yet they are still unable Ministry of Health is developing a cost- dence of iodine deficiency disorder, modes have been intravenous drug use to maintain adequately nutritious diets. recovery scheme with fee exemptions for which is associated with goiter and men- (41 percent of all cases and 65 percent of (See Table 3.14.) As a result, malnutri- selected social groups. The Ministry has tal retardation. Seven major areas of

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 33 34 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 tion and diseases related to poor diet Figure 3.8 Number of newly reported HIV cases among citizens of Table 3.14 Annual consumption of food products in Azerbaijan rela- 3.5 Environmental Conditions in composition are prevalent. The 1996 sur- Azerbaijan, 1992-1998 tive to physiological norms, 1998 Azerbaijan vey by USAID, WHO, and UNICEF 70 Phys. norm Consumption Deviation (kg.) (kg.) (%) found that nearly one-quarter of the coun- 60 The quality of the environment is impor- Bread and bakery products 126 158.7 +26 tryÕs children were malnourished and 50 tant for human well-being because of its Potatoes 50 38.9 -22 40 more than two-fifths of them were suffer- Vegetables and melons 106 87.2 -18 effects on both health and the economy. 30 ing from anemia. Fruits and berries 54.4 57.6 +6 Over the course of this century, the envi- 20 Meat and meat products 38 16.3 -57 ronment of Azerbaijan has suffered con- 10 Surveys have consistently found these Fish 12 1.9 -84 siderably. The Absheron peninsula was problems to be particularly prevalent 0 the source of half the worldÕs oil produc- 1992 1993 1994 1995 1996 1997 1998 Milk and milk products 312 189.7 -39 among IDPs. For example, recent surveys Eggs (number) 211 107 -49 tion in the early 20th century, and it of subsets of the displaced population expectancy estimate increased by at least Sugar 22 19.8 -10 became increasingly industrialized and conducted by UMCOR and World Vision one year. Vegetable oil and margarine 5.5 4.8 -13 urbanized during the Soviet years. As was found 79 percent of surveyed non-preg- Butter 9 6.4 -29 typical in countries of the Former Soviet nant women to be anemic and 30 percent 3.4 Activities to Improve Public Source: Azerbaijan State Statistics Committee Union, rapid industrial and agricultural of surveyed children to be malnourished. Health development took place amid almost In the area of reproductive health and complete environmental neglect. The AzerbaijanÕs official maternal and infant Numerous donors, international organiza- family planning, UNFPA and UNHCR result has been unsustainable economic mortality rates are not extraordinarily high tions, and NGOs are working with the lead a set of interventions in cooperation growthÑgrowth at the expense of the by international standardsÑ41.1 per Government to improve AzerbaijanÕs with the Ministries of Health and environment. 100,000 births and 16.6 per 1,000 births health profile. UNICEF and the Ministry Education. Their activities include train- respectively in 1998Ñbut these figures of Health, for example, are conducting a ing, clinical services, information dissem- This section evaluates environmental con- are likely to be lower bounds. AzerbaijanÕs maternal and child health program that ination, and the provision of medical sup- cerns in Azerbaijan with regard to water official definition of live births excludes involves breast-feeding promotion, drug plies, contraceptives, and essential drugs. resources, air quality, soil erosion and many infants who die in the first seven distribution to maternity and pediatric The activities supported by UNHCR tar- contamination, and the vitality and diver- days of life, which results in an infant hospitals, efforts to combat malaria, and get IDPs and refugees specifically and are sity of flora and fauna. The steps under- mortality rate that is 25-30 percent lower training of medical staff. The countryÕs implemented through NGOs, such as way to improve the environment are dis- than the level that would be found if immunization program is made possible Relief International, the International Red cussed in the following section. WHOÕs definition of live births were used. by UNICEFÕs provision of vaccines and Cross, ChildrenÕs Aid Direct, and the In addition, deaths following home deliv- related expertise. Medecins Sans United Methodist Committee on Relief. Water resources and quality. Water eries are less likely to be reported, and Frontiers and the International Federation In addition, as discussed above, five UN resources are scarce in Azerbaijan, and many deliveries now take place at home. of the Red Cross and Red Crescent also agencies recently joined forces to support the problem of scarcity is compounded by carry out important primary health care the GovernmentÕs efforts to prevent the extremely inefficient water use. The Life expectancy at birth fell during the programs in Azerbaijan. spread of sexually transmitted diseases dilapidated and poorly managed irrigation first half of the decade, reflecting declin- and HIV/AIDS. system is responsible for agricultural ing standards of living and military con- water losses of about 50 percent, and in flict. It has been rising since 1995, how- industry the recycling of water is virtually ever, and reached its highest level of the nonexistent. About half the drinking decade in 1998. At 71.3 years, it has water distributed to the Absheron penin- slightly surpassed its 1990 level. sula is lost in the pipe distribution system.

Abrupt changes have been seen in official Water quality in many parts of Azerbaijan health-related indicators in recent years. is very poor. More than 80 percent of the Between 1997 and 1998, for example, the population lives in areas without modern official maternal mortality rate increased water or sewage networks, and most peo- from 31.0 to 41.1 per 100,000 births and ple do not have access to safe water. The the official infant mortality rate fell from Kura and Arax rivers, which provide most 19.6 to 16.6 per 1,000 births. Each year of AzerbaijanÕs fresh water, are contami- between 1995 and 1997, the official life nated with industrial, agricultural, and

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 35 36 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 domestic wastes that are generated both prioritizes the policy actions that need to inside and outside Azerbaijan. Box 3.2 Human resources for health reform be taken. Industrial pollution, damage to the sturgeon stock, deteriorating water The Caspian Sea, the worldÕs largest Efforts to reform the public health sector in Azerbaijan are hindered by quality, and a weak environmental man- inland water body, is vital for economic human resource limitations. People capable of effectively designing, imple- agement system are among the most livelihoods in Azerbaijan because of both menting, monitoring, and evaluating health programsÑsuch as qualified pressing concerns raised in the NEAP. its hydrocarbon resources and its biologi- public health specialists and health economistsÑare in very short supply. cal resources. Substantial oil exploration More than 1,500 physicians and 1,000 nurses receive diplomas in To begin addressing these concerns, the and development activities are underway Azerbaijan every year, but the curricula of the medical schools and training Government and the World Bank initi- in AzerbaijanÕs sector of the Caspian, and institutes continue to embody the traditional approach to the delivery of ated an Urgent Environmental historically the Caspian has been the health care, emphasizing hospitalization and curative health services over Investment Project in 1999. This pro- source of more than 90 percent of the outpatient and preventive care. The subject of public health urgently needs ject envisages building a new sturgeon worldÕs output of sturgeon and caviar. A to be introduced as a separate discipline. hatchery, demonstrating mercury number of severe ecological problems cleanup in an area near Sumgait, and now threaten the vitality of the Caspian In addition, the level of remuneration for health care professionals, includ- estimated 270 endemic plant species, but testing cleanup methodologies in an Sea, however, including water pollution ing those responsible for implementing public health programs, is extreme- the countryÕs biodiversity is now threat- onshore oil field. In addition, the World and flooding caused by water level fluctu- ly low. The average monthly salary for a physician, for example, is only ened. About 38 plant and 75 animal Bank and the British Know-How Fund ations. The stocks of sturgeon are declin- about $22. Attracting qualified personnel to the challenge of reforming the species are rare or endangered. The man- will support efforts to strengthen the ing rapidly as a result of both pollution public health system will require substantial improvements in the conditions agement of AzerbaijanÕs state reserves GovernmentÕs environmental manage- and over-fishing. of employment in the sector. and protected areas is poorly funded, and ment system. many of these areas are in the occupied Air quality. Notable air quality improve- parts of Azerbaijan, where they are In recognition of the multinational char- ments have been observed in Azerbaijan emitted relative to GDP was more than believed to have been severely damaged. acter of the environmental problems fac- during this decade, though they have been six times higher than in the European ing the Caspian Sea, the governments of offset somewhat by increased vehicular Union in 1995 (the most recent year for The forests of Azerbaijan, which cover Azerbaijan and the other four countries traffic. Unfortunately, the improvements which data are available). about 11 percent of its territory, are also in bordering the Caspian have jointly initiat- stem from the collapse of industrial out- danger. Shortages of rural energy sup- ed a comprehensive Caspian put rather than from sustainable environ- Soil. Water and wind erosion, saliniza- plies, increased population pressures Environmental Program with support mental management practices, and in tion, and industrial wastes pose serious caused by the presence of IDPs and from UNDP, the World Bank, the U.N. spite of the improvements, air pollution threats to AzerbaijanÕs land resources. refugees, and a sharp decline in wood Environment Programme, and the remains inordinately high. Nearly half of the countryÕs total land area imports since the Soviet years have result- European Union (TACIS). The first phase is eroded and 14 percent is subject to ed in substantial deforestation. of this program involves analyzing priori- The State Committee on Ecology moni- salinization and a high underground water ty environmental problems and formulat- tors ambient concentrations of air pollu- table. Industrial wastes, particularly oil, 3.6 Activities to Improve the ing a regional strategic action program tants in eight cities and has found that contaminate more than 60,000 hectares. Environment and a set of national action plans. 96 percent of the air pollution in Azerbaijan is concentrated in five of Flora and fauna. Azerbaijan has a wide The Government and people of With support from UNDP, Azerbaijan is them: Baku, Sumgait, Ganja, Ali- diversity of flora and fauna, including an Azerbaijan have begun to assess the coun- addressing two other important interna- Bayramly, and Mingachevir. Monitored tryÕs environmental problems and to tional environmental issues: climate Figure 3.9 Volume of air pollutants emitted, 1990-1998 pollutants in these cities have been (thousand tons) address them, often with support from the change and ozone depletion. Preparation found at levels up to five times higher international community. The State of the countryÕs first national communica- than those allowed by AzerbaijanÕs air 2500 tion to the Conference of the Parties of the 2109 Committee on Ecology and the World quality standards. 2000 1919 Bank recently prepared a comprehensive UN Framework Convention on Climate 1692 As is the case in many transition 1533 National Environmental Action Plan Change has begun, and four separate pro- 1500 1326 economies, highly polluting production 1163 (NEAP) in collaboration with several jects to reduce the use and emission of 1000 857 840 technologies continue to be used. This 717 government agencies, the Academy of ozone-depleting gases are now underway. can be seen by evaluating the volume of 500 Sciences, and environmental NGOs. The emissions relative to GDP. In NEAP identifies the most important envi- In addition, Azerbaijan has begun adapt- 0 Azerbaijan, the volume of sulfur oxides 1990 1991 1992 1993 1994 1995 1996 1997 1998 ronmental problems in Azerbaijan and ing to international environmental stan-

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 37 38 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 dards in a number of ways. The country is AzerbaijanÕs most severe environmental Chapter 4 now a full partner to seven international problems have begun to receive the atten- EDUCATION AND CULTURE conventions related to the environment, tion of the Government, NGOs, and the and many of the foreign companies in international community. A number of Azerbaijan apply internationally programs are underway to address them approved environmental procedures and and to strengthen the countryÕs environ- train local specialists accordingly. mental management capacity. Continuing Environmental impact assessment (EIA) regional and international cooperation is procedures, to be followed in all signifi- essential to the effective resolution of cant economic projects, were introduced many environmental concerns, such as the to Azerbaijan in 1996 when the State pollution of AzerbaijanÕs rivers, ecologi- Committee on Ecology published the EIA cal conditions of the Caspian Sea, and Handbook for Azerbaijan. Produced with depletion of the ozone layer. support from UNDP, the Handbook incorporates internationally approved policies AzerbaijanÕs human development and procedures but also reflects the coun- prospects depend importantly on the to be nearly universal, and primary and tryÕs unique environmental circum- countryÕs ability to resolve problems in secondary school enrollment rates remain stances. the areas of health and the environment. high. As is the case in many countries of Both of these areas will benefit from poli- the FSU, however, AzerbaijanÕs educa- 3.7 Conclusions cies that stimulate sustainable economic tional progress is now jeopardized by growth and rising standards of living. funding problems and structural weak- The health of AzerbaijanÕs population is nesses within the education system. In suffering from structural and funding Azerbaijan, these difficulties are com- inadequacies in the public health sector pounded by consequences of the conflict and from the consequences of economic over Nagorno-Karabakh. hardship and military conflict. At the same time, the country faces severe envi- 4.2.1 School Enrollment and ronmental problems stemming from a tra- Attendance dition of pursuing industrial and agricultural development without regard for 4.1 Introduction The Constitution of the Azerbaijan environmental consequences. The mili- Republic guarantees eleven years of free tary occupation of a large proportion of All people need opportunities to expand education to all citizens starting from the the countryÕs territory and the problems of their creative and productive potential. age of six. In general education (primary human displacement exacerbate difficul- The availability of these opportunities and secondary levels), enrollment rates ties in the arenas of both health and envi- depends on access to quality education exceed 90 percent and there are no signif- ronment. and cultural enrichment. In Azerbaijan, icant gender differences in enrollment. the economic hardships of transition and Among the population of age 15 and Focused attention on making primary military conflict have severely impaired older, according to Government statistics, health care accessible to all people in most aspects of educational and cultural 92 percent have completed at least eight Azerbaijan is immediately necessary. This life. This chapter reviews conditions in years of schooling and 72 percent have will require restructuring the public health Azerbaijan in the areas of education, sci- completed secondary education. system, upgrading medical practices and entific progress, culture, religion, and procedures, and reorienting and increas- recreation. The enrollment figures may disguise actu- ing public expenditures on health. Public al attendance levels, though. According to information campaigns and other activi- 4.2 Education World Bank household survey data, about ties to encourage healthy behavior pat- 10 percent of enrolled children are absent terns, such as those that have been initiat- Azerbaijan inherited from the Soviet from school for extended periods (one ed to contain the spread of HIV/AIDS, are Union a strong and comprehensive sys- month or more during an academic year), also essential. tem of education. Adult literacy continues and regional differences in extended

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 39 40 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 absence are significant. Among very poor Figure 4.10 Public expenditure on education as a ratio of about 10:1. Current budgetary 6-to-16 year olds, for example, extended share of GDP, 1991-1998 (percent) mechanisms allow districts and schools absence rates range from 43 percent in the 8 7.6 very little flexibility to allocate educa- 7 6.9 far south and 38 percent in Nakhchivan to tion budgets in accordance with local 6 only 2 percent in the Absheron peninsula. circumstances. In addition, the educa- 5 4.9 tion system is in need of improved 4 3.5 3.7 3.6 3.5 An increasing number of students appear 3 financial management and more trans- to be dropping out of school before com- 2 parent mechanisms of financial pleting their general education. In 1998, 1 accountability. 133,400 students completed their ninth 0 year of education but only 85,300 gradu- 1991 1992 1993 1994 1995 1996 1997 1998 General education curricula have changed ated from secondary school. Preschool schooling and tutoring for their children little since Soviet times. Vocational and enrollment is particularly low, at only 12 in response to the perception that the technical programs still focus on narrow percent of children of corresponding age, quality of public education has declined. specialties. They therefore often fail to and there is a large disparity between 4.2.4 Challenges in the System of meet the needs of a market economy and preschool enrollment in urban areas (18 Private educational institutions are Education democratic society and are poorly linked percent) and rural areas (6 percent). allowed to register and operate in to the evolving labor market. Azerbaijan. Low levels of teacher pay in A number of difficulties are experi- Anecdotal evidence suggests that poverty the state-funded schools have encouraged enced in the system of education, 4.2.5 Steps toward Improving Primary has induced many families to withdraw many well-qualified teachers to seek including low student-teacher ratios, and Secondary Education their children from school on temporary employment at the private schools, which problems with education financing, and or permanent bases. Some families find generally offer higher wages. The avail- weaknesses in curriculum design. The Government has taken important school-related clothing and transportation ability of private education expands the According to Government statistics, steps toward addressing many of the expenses unaffordable, and some children choices of Azerbaijani citizens who can state-funded day general schools had problems experienced in the education are taken out of school so they can earn afford to pay tuition, but the growing dis- 1,611,000 students and 158,000 teach- sector. A Commission on Education incomes to help support their families. parity between the quality and funding ers at the start of the 1998/99 academic Reform was established by Presidential levels of state schools and those of private year, implying a low student-teacher Decree in March 1998. The Commission 4.2.2 Expenditures on Education schools is restricting the opportunities for prepared a strategy for education reform,

children from low-income families to Box 4.3 Gender and Education which was adopted by the President in Public expenditures on education have obtain high-quality education. June 1999, and has drafted a law on edu- fallen markedly during this decade. As a One important achievement of AzerbaijanÕs system of education is the cation that is currently under review by share of GDP, they are now about half 4.2.3 Effects of Conflict absence of significant gender disparities in enrollment. Asymmetries do the Parliament. their level in the early 1990s. This repre- arise, however, in the structure of employment in the education sector and sents a particularly sharp decline in real The conflict over Nagorno-Karabakh has in the awarding of the countryÕs highest academic degrees. The GovernmentÕs education reform strat- terms given the real decline in GDP over compounded the strains on the education- egy envisions a wide range of improve- that time period. The low level of funding al system. Eight-hundred schoolsÑjust According to Government statistics, women represent 65.5 percent of total ments in curriculum design, teacher train- has led to substantial deterioration of under 20 percent of the national totalÑ employment in the education sector but less then 20 percent of employment ing and compensation, education finance physical infrastructure, shortages of text- have been abandoned and their students at the sectorÕs managerial level. The average wages paid to women in the and management, the quality of educa- books and teaching equipment, and low displaced. As a result, schools throughout education sector are about 70 percent of those paid to men. tional materials, and the physical condi- teacher pay and morale. the country have absorbed additional stu- tions of schools. The reform process will

dents, and many schools and kindergartens Among the people with AzerbaijanÕs highest scientific degree, Doctor of require particular attention to issues of Private spending has increased signifi- are now used as shelter for displaced peo- Science (D.Sc.), only about 10 percent are women. Among those with the access and equity in order for quality edu- cantly in recent years, partially offsetting ple. These trends have contributed to the degree of Candidate of Science (Ph. D.), about 30 percent are women. The cation to be made broadly accessible. the collapse in public spending but leav- overcrowding of schools; 75.9 percent of majority of those with advanced degrees in architecture, art history, psy- ing the poor at a disadvantage. The pri- schools now offer two or three shifts chology, and biology are women, while men predominate in the fields of mil- The international community has been vate costs associated with education, such (compared to 59.5 percent in the 1990/91 itary sciences, physical-mathematical sciences, economics, and geology. active in helping the Government to pro- as uniforms, materials, and transportation, academic year), and 35.4 percent of stu- Approximately equal numbers of men and women hold advanced degrees mote improvements in the education sec- have risen sharply. In addition, increasing dents attend second or third shifts (com- in chemistry, geography, and philology. tor. For example, the World Bank is sup- numbers of families are arranging private pared to 27.4 percent in 1990/91). porting the GovernmentÕs education

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 41 42 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 reform process and providing assistance Figure 4.11 Number of students enrolled in institutions of higher edu- Table 4.16 Graduates of state-funded institutions of higher education tions along with other areas of public cation per 10,000 population with curriculum development and teacher by field of study, 1990 and 1992-98 (percent of total graduates) investment. 160 training. Pilot projects for the develop- 146 1990 1992 1993 1994 1995 1996 1997 1998 140 132 127 135 128 ment of community self-financing mech- 146 26 31 Scientific institutions have inadequate 120 16 26 Education 39.6 35.6 32.4 32.9 41.6 43.9 44.4 40.9 anisms and increased community partic- 100 financial resources to maintain and mod- 112 106 104 ipation in the school system are underway 80 101 Engineering 37.4 33.2 39.4 34.2 29.5 26.7 24.2 25.1 ernize their equipment and to ensure that with support from UNICEF. UNICEF is 60 they receive new scientific information on also building national capacity in the 40 Agriculture 6.6 9.9 11.2 9.3 6.4 7.0 5.4 4.1 a timely basis. Average wages in science 20 areas of special education for mentally and scientific services are low, having 0 Economics 6.6 8.4 4.3 8.7 8.7 10.7 13.9 15.8 disabled children and psycho-social reha- 1990/91 1995/96 1996/97 1997/98 1998/99 fallen sharply during the decade in real bilitation for displaced children. UNHCR terms and relative to average wages. The State-funded institutions Health and sport 7.1 9.9 10.1 11.8 11.0 8.6 7.6 10.5 and its implementing partners are work- reduced investment in science and the Art and 2.7 3.0 2.7 3.1 2.9 3.2 3.6 2.9 ing in communities of displaced people to Privately funded institutions cinematography lower wages have made scientific work rehabilitate schools, educate children in less attractive to well-qualified and moti- Source: UNDP calculations from ASSC data: ASSC, Statistical Yearbook of Source: ASSC, Statistical Yearbook of Azerbaijan 1999, pp. 115, 117, and UNDP Azerbaijan 1999, p. 116 peace and tolerance, and provide voca- calculations from ASSC data vated people, leading many scientists to tional training for young adults. abandon scientific pursuits or to seek cerns have been raised about the decline employment in other countries. 4.2.6 Trends in Higher Education in professional training in the productive According to Government statistics, spheres of engineering and agriculture. employment in science and scientific ser- Azerbaijan has 25 state-funded and 17 The trend toward the fields of law and vices in Azerbaijan has fallen from 1.5 private institutions of higher education. economics, however, gives reason for percent of total employment in 1990 to The proportion of the population enrolled optimism that the new graduates will be 0.9 percent in 1998. in higher education fell during the early well-prepared to meet the needs of the years of the decade and remains consider- emerging market economy and democrat- 4.4 Culture and the Arts ably lower than its pre-transition level, ic system. though enrollment in private universities The private costs of pursuing cultural and has increased significantly in recent years. 4.3 Science artistic interests have increased markedly (See Figure 4.11) during this decade, while real household Azerbaijan is a scientifically advanced incomes have declined. Cultural activities An examination of the fields of study pur- country, but the economic decline of the country has just begun to recover, has have therefore become unaffordable for sued by students of higher education first half of this decade, from which the jeopardized its scientific potential. Public many people. At the same time, public reveal some notable trends. First, the Table 4.15 Number of students enrolled in institutions of higher expenditure on science amounted to 0.3 expenditures on culture have fallen countryÕs tendency toward overstaffing in education: state-funded and private (at the beginning of the acade- percent of GDP in 1998 and has been rel- sharply, leading to a deterioration in the mic year, thousand people) the education sector is reflected in the atively stable as a share of GDP through- quantity and quality of cultural services. high proportion of graduates from state- 1995/961996/97 1997/98 1998/99 out the decade. Given that GDP remains The public libraries, for example, have vir- funded universities who specialize in the far below its level in the early 1990s, this tually stopped procuring new titles, and Students in state-funded institu- field of educationÑmore than 40 percent tions of higher education 86.382.4 79.8 82.3 means that in real terms investment in sci- their stocks are rapidly diminishing; their in each of the past four years. of which: ence has suffered from significant reduc- number of books and periodicals has fallen by 13 percent since 1992. daytime 58.661.6 61.2 68.2 The most significant changes are declines Table 4.17 Number of cultural institutions in the study of engineering and agricul- evening/correspondence 27.720.8 18.6 14.1 As cultural activities have become ture and increases in the study of law and 1992 1995 1998 less affordable and the quality of cul- economics. The proportion of economics Students in private institutions of tural services has declined, attendance higher education 12.520.3 20.4 24.2 Theaters (professional) 22 26 26 graduates from state-funded institutions of which: at cultural institutions such as the- reached its highest level of the decade in Museums 128 145 152 aters, museums, and cinema houses daytime 10.816.0 16.5 20.0 1999 (16 percent). More than half of the Cinema houses 1,025 790 671 has fallen considerably. The number students in private universities are study- of readers in public libraries has evening/correspondence 1.74.3 3.9 4.2 ing law, and more than one-quarter of Public libraries 4,909 4,794 4,522 dropped even though the prices for them are studying economics. Some con- Source: ASSC, Statistical Yearbook of Azerbaijan 1999, pp. 115, 117 purchasing books and periodicals Source: ASSC, Statistical Yearbook of Azerbaijan 1999, pp. 128-30

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 43 44 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Table 4.18 Attendance of cultural institutions (per 1,000 population) Table 4.19 Athletic competitions in which Azerbaijani athletes partic- reconstructed in 1998. Relations among ipated, 1996-1998 1992 1995 1998 people of different confessions are char- 1996 1997 1998 acterized by an exceptional degree of Theaters (professional) 186 156 106 International competitions attended mutual respect. in other countries 105 126 133 Museums 275 201 174 International competitions held in Azerbaijan 10 12 8 Cinema houses 763 38 15 Religious education has been reintro- National competitions 80 91 93 duced in Azerbaijan, both within the Public libraries 198 193 177 new religious establishments and by Source: ASSC, Statistical Yearbook of Azerbaijan 1999, pp. 128-30 and UNDP calculations from Local competitions 894 1,714 1,809 ASSC data some educational institutions. The state universities, for example, now have risen. Even in cases where the offer a course covering humanistic phi- number of institutions has increased, losophy and the history of modern reli- such as the number of museums, gions. attendance rates have fallen. (See Tables 4.17 and 4.18) 4.6 Recreation and Sports

Like all other aspects of life in Before the transition period began and the Azerbaijan, cultural life has been severely conflict over Nagorno-Karabakh erupted, impaired by the conflict over Nagorno- Azerbaijan was a popular vacation desti- Karabakh. Cultural infrastructure in the nation for tourists from throughout the occupied and war-torn areas has been Soviet Union. Today, however, the coun- completely destroyed. The former resi- tryÕs recreational infrastructure is suffer- dents of these areas, who are now dis- ing from financial difficulties and the placed and typically very poor, are almost effects of conflict. The number of sanato- completely deprived of access to cultural their religious values as long as these riums and rest establishments has fallen opportunities. activities do not contradict national or from 106 in 1991 to 88 in 1999, and their public security. Given AzerbaijanÕs recent required to ensure full implementation of capacity has dropped by nearly 50 per- The levels of remuneration received by history as part of the Soviet Union, the the countryÕs legal provisions regarding cent. Many of the most attractive vacation people who work in culture and the arts concepts of religious freedom and free- religion. and recreation sites were located in parts are among the lowest in the country. dom of assembly are very new. For this of the country that are now occupied or According to Government statistics, in reason, particular diligence will be A number of new religious establish- damaged by war, and many recreational 1998 the average monthly wages paid to ments have opened in Azerbaijan in facilities in other parts of the country are Box 4.4 The International Community and Cultural Life employees in culture and the arts were recent years. People of a wide range of now used as accommodations for dis- 76,016 manats (about $20) and 68,730 religious faithsÑincluding Muslims, placed people. manats (about $18) respectively. The international community has played an important role in preserving Christians, and JewsÑcongregate in these establishments to worship and teach and enhancing cultural life in Azerbaijan. International organizations, Rehabilitating and developing the coun- the tenets of their faiths. BakuÕs Bibi- tryÕs recreational services is important for 4.5 Religion embassies, and foreign companies have sponsored cultural events ranging Aybat Mosque, a religious institution of the human development process. from Azerbaijani musical concerts and art exhibits to traditional puppet shows Human developmentÑthe process of great cultural significance that was Expanded recreational opportunities will expanding the economic, social, and and art and music contests. The United Nations Development Programme destroyed during Soviet times, was benefit Azerbaijani citizens who make use political freedoms of all people in soci- (UNDP) has supported a variety of local efforts to preserve Azerbaijani cul- etyÑrequires an environment of genuine ture, including enhancement of the Azerbaijan State Opera and Ballet Table 4.20 Medals earned in international athletic competitions, 1994-1998 religious freedom. The Constitution of the Theater, preparation of a book on traditional Azerbaijani carpets and textiles, 1994 1995 1996 1997 1998 Azerbaijan Republic and the Law on and translation and publication of a traditional collection of folklore (Dedeh Freedom of Religion and Religious Total 49 54 68 136 168 Gorgut). The World Bank will soon begin building national capacity to con- Organizations (adopted in 1992 and Gold medals 12 23 22 54 60 amended in 1996 and 1997) grant all citi- serve and restore the countryÕs cultural monuments, many of which have fall- Silver medals 15 19 17 45 45 zens the legal right to confess their reli- en into disrepair. Such international support for culture in Azerbaijan is help- gions, go on pilgrimage, and advocate ing to fill the gap created by the constraints on local funding. Bronze medals 22 12 29 37 63

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 45 46 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 of them and will also benefit the economy Long-term human development prospects Chapter 5 by drawing foreign tourists. Tourism has depend in large part on the quality of the REFUGEES AND INTERNALLY begun to increase in recent years, and the educational and cultural services avail- DISPLACED PERSONS: potential for increased foreign tourism is able to people throughout society. The considerable. According to Government Government and the international com- THE SITUATION TODAY statistics, 483,000 foreign tourists came to munity have begun to address some of Azerbaijan in 1998, primarily from other the difficulties in these areas, particularly CIS countries and Iran. the needs for education reform and cultural revival. Intensified efforts are need- Most of the countryÕs sports facilities ed to develop and implement policies that have deteriorated greatly during this effectively preserve and expand decade, especially in the rural areas, as a AzerbaijanÕs intellectual and cultural result of inadequate resources for recon- strengths. struction and maintenance. A number of new sports facilities have recently opened in Baku and other large cities, usually in conditions facing IDPs and refugees, par- luxury hotels and clubs, but their entrance ticularly with regard to shelter, income and membership fees are prohibitive to and employment opportunities, and health most local people. and nutrition. The actions taken by the Government and the international com- Nonetheless, the participation of munity to address the problems of the dis- Azerbaijani athletes in local, national, and placedÑby facilitating their return to international competitions has increased their homes when possible and strength- over the past two years, and the number of ening their self-reliance while they international awards earned by Azerbaijani remain displacedÑare then explored. athletes has also increased. (See Tables 4.19 and 4.20.) For the general population, 5.2 History of the Displacement however, the level of athletic activity Crisis remains low. Improving the athletic opportunities available to all people is important 5.1 Introduction The past two centuries have seen at least for the countryÕs overall health profile. five waves of ethnic Azeri refugees from Armed conflict has adversely affected the the territory of modern Armenia to 4.7 Conclusion lives of virtually all the people of Azerbaijan Azerbaijan. The most recent flow of for more than a decade. The most severe refugees started in the late 1980s as con- The people of Azerbaijan have historical- consequence of this conflict is massive pop- flict over Nagorno-Karabakh began to ly benefited from a strong system of edu- ulation displacement, which has left escalate. According to Government sta- cation, substantial scientific progress, Azerbaijan with one of the largest per capita tistics, nearly 250,000 ethnic Azeris fled and the countryÕs richness in culture and refugee and displaced person burdens in the to Azerbaijan from 380 settlements in the arts. The economic difficulties of the world. Deprived of their basic human right Armenia between 1988 and 1991. transition period, however, are now to return home, AzerbaijanÕs internally dis- reflected in deteriorating infrastructure in placed people (IDPs) and refugees are dis- An even larger population has become all of these areas, and funding problems proportionately represented among the internally displaced as a result of the con- are compounded by the consequences of military conflict. Educational, scientific, countryÕs poor and vulnerable. Their sur- tinuing occupation of one-fifth of the ter- and cultural facilities in the occupied and vival continues to depend in large part upon ritory of Azerbaijan. The occupation has war-torn areas have been completely assistance from the Government and interna- left the country today with about 576,000 destroyed, and the people displaced from tional humanitarian organizations. IDPsÑpeople who fled the occupied ter- these areas are deprived of adequate ritories for safer areas within Azerbaijan. schooling and recreational opportunities. This chapter describes the history of the A cease-fire has been in place with displacement crisis and the difficult living Armenia since 1994, but still no formal

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 47 48 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 peace agreement has been reached. Figure 5.12 Share of ethnic Azeris in the total population living in the Table 5.22 Types of shelter in which IDPs live, October 1998. territory of modern Armenia, 1850-1991 (percent) Hopes of an imminent peace agreement 80 that would enable the IDPs to return to Shelter Number of IDPs Percent of Total 70 their homes have now faded. 60 Public buildings, schools, kindergartens, and hostels 167,133 29.0 With relatives and friends 149,843 26.0 In addition to the IDPs and refugees who 50 Tented camps and other settlements 94,517 16.4 fled their homes as a result of the conflict 40 with Armenia, the displaced population Uncompleted buildings 42,648 7.4 30 in Azerbaijan includes nearly 50,000 Railway wagons and roadside settlements 39,190 6.8 Meskhetian Turks. Most of these 20 Illegally occupied apartments 34,003 5.9 refugees came to Azerbaijan in the early 10 Farms and dugouts 31,121 5.4 1990s to escape ethnic conflict in 0 Sanatoria, rest houses, tourist bases, and health camps 17,866 3.1 Uzbekistan. 1850 1910 1948 1991 TOTAL 576,321 100.0 Source: Government of Azerbaijan IDPs are dispersed throughout the coun- Source: Government of Azerbaijan tryÑwith just under half of them in rural Table 5.21 Occupied territories of the Azerbaijan 5.4 Income and Employment eration. A number of international organi- Republic (sq. km.) areasÑyet they remain largely isolated zations and NGOs have responded to this Area from the mainstream of the communities District (sq. km.) Most IDPs have been displaced from their need by funding programs that give start- where they have settled. The capacities of Kelbajar 1,936 homelands for five to seven years, during up loans and training to IDPs wishing to their host communities to assimilate them Fizuli 1,386 which their employment opportunities have establish small businesses. Programs of been severely limited. According to govern- this sort have supported small enterprises economically and to provide them with Gubatli 802 basic social services are sharply con- ment statistics, only one-third of the IDPs ranging from bakeries and car repair shops Jebrail 1,059 strained by the economic difficulties fac- who are able to work are employed. Thirty- to womenÕs cooperatives. Some of them Zangelan 707 ing the country as whole. six percent of the IDPs interviewed in the are expected to become self-sustaining, Agdam 1,903 recent World Bank-sponsored survey con- with the money from repaid loans being 5.3 Shelter Gazakh 20 sider themselves formally unemployed, used to finance additional businesses. Sadarak 4 whereas only 8 percent considered them- AzerbaijanÕs IDPs and refugees are enti- Lachin 1,835 selves unemployed before warfare forced The reach and effectiveness of the micro- tled to free housing and utilities under the Nagorno Karabakh (without Shusha) 4,388 them from their homes. WFP estimates that credit programs have been weak, howev- 1992 Law on the Status of Refugees and Shusha 970 about two-thirds of the countryÕs rural IDPs er, because of the absence of clear regula- Displaced Persons. The economic crisis Total 15,010 are unable to meet their minimal food and tions on credit programs outside the bank- and the GovernmentÕs limited revenue- non-food requirements. ing sector. WFP estimates that only 4 per- Source: Azerbaijan Reconstruction and Rehabilitation Agency 1998 raising capacity, however, have made it cent of rural IDP household income is impossible to fulfill this commitment to 5.22) In a recent survey of its benefi- Many IDPs (at least 40 percent) have agri- generated by these programs and that the full extent that was originally envi- ciaries, which include the majority of cultural backgrounds, but most of them income earned from the programs covers sioned. The majority of the displaced IDPs living in rural areas, the World live in circumstances that prevent them only about one-quarter of the total needs have inadequate shelter, poor access to Food Programme (WFP) found that from working in agriculture. They are of the IDP households that participate in clean water and sanitary services, and about two-thirds of households live effectively excluded from owning land them. A recent Presidential Decree on severely limited supplies of energy. in one-room shelters, 70 percent do because Azerbaijani citizens are eligible Internally Displaced Populations and not have kitchens, and 40 percent to participate in land privatization only in Refugees gave support to the expansion According to government statistics, share toilets with other families. their home raions. The recent WFP survey of micro-credit programs, raising hopes about one-quarter of the internally Another recent survey, sponsored by found that only about ten percent of that the regulatory gap in this area will be displaced live with friends and rela- the World Bank, found similarly dire WFPÕs rural IDP beneficiaries have addressed in the near future. tives, while the remainder live in shelter conditions: the majority of access to land for cultivation and that tent camps, public buildings (such as surveyed IDP households in both financial constraints prevent one-third of IDPs typically depend heavily for their schools), partially constructed build- urban and rural areas live in one- them from cultivating that land. survival on subsidies and pensions from ings, tourist and health facilities, room shelters, and 18 percent are the Government and food aid from railway wagons, dugouts, and other without access to water inside or A tremendous need has emerged for skill international humanitarian organizations. temporary settlements. (See Table even nearby their residences. development, retraining, and income gen- The government subsidies include a

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 49 50 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 monthly "bread subsidy," which was Figure 5.13 Sources of income (cash and in- Box 5.5 Minimum monthly food basket for an IDP family in Azerbaijan Several international humanitarian orga- kind) for rural IDP households receiving WFP recently increased to 15,000 manats food rations nizations are working actively to abate (about $3.50), and a children subsidy of The World Food Programme (WFP) estimates that the cost of a minimum hunger and malnutrition among IDPs. 43% 9,000 manats (about $2.10) for each child 4 % monthly food basketÑexcluding meat, fish, chicken, and milkÑis $68 for a WFP, which coordinates the largest vol- whose per capita household income is less family of five. This food basket includes relatively inexpensive food items ume of food aid in Azerbaijan, provides than 16,500 manats (about $3.85). IDP that still provide minimal energy, protein, and fat requirements: two-third of the rural IDP population and refugee households are also eligible (200,000 people, or one-third of the total Wheat flour 60 kg Beans 9 kg for a monthly government subsidy of 30 23% IDP population) with monthly food bas- liters of kerosene during the three winter 30% Oil 3.8 kg Sugar 2.3 kg kets sufficient to cover half their mini- Rice 2.5 kg Onions 5 kg months. Government salaries, pensions, and subsidies (43 percent) mum energy requirements. Another Potatoes 10 kg Peas 6.3 kg Household activities, including casual labor, cultivation of gardens, 100,000 IDPs are served by other organi- These subsidies are not large, but they raising of livestock, and the sale of privatization vouchers, livestock, Tomatoes 12.5 kg Eggplants 5 kg zations, including the Adventist and other possessions (30 percent) Cheese 1.3 kg Butter 0.6 kg contribute a significant proportion to most WFP food rations (23 percent) Development and Relief Agency and the Salt 0.6 kg Tea 0.6 kg IDP household budgets, and many IDPs International Federation of the Red Cross. Small business activities financed with micro-credits from Seasonal fruits 8.8 kg Eggs 40 are willing to incur substantial travel humanitarian organizations (4 percent) The food aid programs have enabled their expenses to obtain them. The recent WFP beneficiaries to maintain their nutritional The components of the basket were selected for purposes of calculating a survey showed that all of the IDP families Source: WFP 1999 status, but food insecurity remains severe familyÕs cost of achieving minimum nutritional requirements; a family can receiving WFP food rations collect the among IDPs. WFP estimates that even exchange individual items in the basket for similar items and still maintain bread subsidy and almost half of them with its assistance and government subsi- resident population as a result of lower liv- the basketÕs nutritional value. collect the subsidy for children. Together ing standards, poorer diets, and poorer dies, families can face up to a 35 percent these subsidies cover 18 percent of the quality drinking water. The food rations received by WFP beneficiaries cover about one-quarter of deficit in their food security. total cash and in-kind income of WFPÕs the value of this minimal food basket and about half of the beneficiariesÕ beneficiaries. The study found that IDP children under minimum energy requirements. Nonetheless, two-thirds of the WFP benefi- 5.6 Reconstruction and Rehabilitation five were significantly more likely than ciaries remain unable to meet their minimal food and non-food require- of the War-torn Territories Future income earning prospects in IDP children of the resident population to have ments. communities are likely to be constrained had diarrhea in the two weeks prior to the One-fifth of the territory of Azerbaijan is by the persistence of inadequate educa- survey (23.4 percent compared to 15.2 poor general health of the IDP population still under occupation, but some parts of tional opportunities. The recent World percent). It also found that goiter was is provided in the recent World Bank- Azerbaijan that were once occupied have Bank-sponsored survey found that 8 per- more prevalent among IDPs than residents sponsored survey (March 1999), which now been liberated, and IDPs have begun cent of school-age IDP children are not in (23.0 percent compared to 9.8 percent). found that 39 percent of IDP households returning to 22 villages in these areas. school. Anecdotal evidence suggests that The prevalence of goiter is an important had a person who had been sick in the last Surveys have consistently found that the the quality of schooling for most IDP health concern because it indicates iodine month. great majority of IDPs want to return to children who do attend school is low deficiency, which is the primary cause of their homes; this was indicated, for because of severely limited educational preventable mental retardation in the Chronic malnutrition was found to be example, by 99 percent of the IDPs inter- materials, temporary classrooms, and a world. A more recent indication of the prevalent among young IDP children in viewed in the recent World Bank-spon- lack of heating in the winter. the 1996 survey. IDP children under sored survey. five years of ageÑthose most likely to 5.5 Health and Nutrition have been born after their families were As the displaced look toward opportuni- displacedÑwere at a significantly high- ties to return to their homelands, however, The health status of the IDP and refugee er risk for stunted growth compared to the country faces a staggering task of population has not been studied systemat- older IDP children. Surveys conducted reconstruction and rehabilitation. The ically for several years, but the results of a by UMCOR (1997) and World Vision war-damaged areas are contaminated with 1996 nationwide survey conducted by (1998) of subsets of the IDP population land mines, and homes, schools, hospi- USAID, WHO, and UNICEF remain reinforced concerns about malnutrition tals, and all other forms of social and instructive since there is no evidence of among IDPs; the UMCOR study found physical infrastructure have been dam- improvement in the living conditions of 79 percent of surveyed non-pregnant aged or destroyed. The total damage to the displaced since then. Several of the women to be anemic, and the World the war-torn areas under Azerbaijani con- findings of this study indicate that IDPs Vision study found 30 percent of sur- trol has been assessed by the Government suffer adverse health effects relative to the veyed children to be malnourished. at $922 million. (See Table 5.23)

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 51 52 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 Table 5.23 Damage to liberated territories and war-torn territories that are not under occupation, USD millions tiated a major humanitarian mine action Box 5.6 Government Strategy for IDPs and Refugees TOTAL Housing Industry & Personal program, involving de-mining actions, Regions education, Infrastructure Demining damage health, culture agriculture property victim assistance, and mine awareness A September 1998 Presidential Decree on Internally Displaced Populations activities. The program has begun to build Gazakh 29.29 19.41 3.06 0.95 0.07 5.8 and Refugees bolstered ongoing efforts to enable voluntary repatriation of national capacity in this area through the Agstafa 0.60 0.57 0.01 0.02 - - IDPs to the liberated areas and set forth a comprehensive strategy to bring establishment of a national mine action Tovuz 3.94 3.50 0.03 0.41 -- the standards of living of IDPs and refugees who cannot yet return to their home communities into line with those of the rest of the countryÕs popula- agency and the training of national de- Gedabek 3.95 2.11 0.02 0.02 - 1.8 tion. The new strategy formally recognizes that the displaced population miners. Khanlar 30.95 10.93 15.34 3.28 1.4 - cannot achieve self-reliance while continuing to live in temporary situations Terter 117.12 57.66 36.75 3.81 - 18.9 and without access to land. 5.7 Government Strategy for IDPs Agdam 353.98 8.17 74.98 42.43 - 228.4 and Refugees Agjabedi 17.78 2.4 14.21 1.17 -- The GovernmentÕs strategy for IDPs and refugees incorporates four primary objectives: Beylagan 12.40 1.27 10.55 0.58 -- The reconstruction and rehabilitation process has enabled some IDPs to return Fizuli 241.44 46.89 85.25 22.0 5.2 82.1 1) to continue helping IDPs who originate from liberated areas to return to to their homes, but the absence of a polit- Goranboy 98.47 47.03 28.78 5.26 - 17.4 their homes and resume their livelihoods; ical solution to the conflict with Armenia Nakhchivan 12.35 4.87 3.94 2.96 - 0.58 has dampened hopes of massive repatria- 2) to enable as many as possible of the IDPs originating from areas that are TOTAL 922.27 204.81 272.92 82.89 5.27 356.38 tion in the near future. An important still occupied or considered unsafe to relocate to compact settlements in Source: Government of Azerbaijan need has therefore arisen to identify accessible locations within their home districts, and to provide them with ways to enable IDPs to achieve sustain- The Government and the international Building on the successes of the pilot pro- land suitable for farming and raising livestock; community have taken significant steps jects, the Government has developed a able improvements in their quality of life toward facilitating the voluntary repatria- $117 million Programme for Resettlement 3) to help the remaining IDPs and refugees to relocate, wherever feasible, while they remain displaced. The dis- tion of IDPs to the liberated areas. A and Reconstruction of the Liberated to areas of the country where they will have better prospects for self- placed population cannot achieve self- Presidential Decree has extended the gov- Areas, which envisions returning more reliance; and reliance while continuing to live in tem- ernment benefits provided to IDPs and than 36,000 IDPs to liberated and war- porary situations and without access to 4) to create income-earning opportunities, through micro-credit facilities and refugees to returnees for one year from damaged areas. The program encompass- land. job training, for the IDPs and refugees who remain in camps and public the date of their return, and the process of es shelter reconstruction and rehabilita- buildings. reconstructing and rehabilitating the tion, employment generation, and rehabil- In recognition of these concerns, a accessible war-torn areas is well under- itation of health care facilities, schools, September 1998 Presidential Decree set financing projects in support of this way under the leadership of the State power and water supplies, transportation forth a comprehensive strategy to bring national program. Commission for Reconstruction and facilities, and communication links in the standards of living of IDPs and The presence of landmines and unexplod- Rehabilitation and its implementing arm, the Fizuli, Agdam, and Terter dis- refugees who cannot yet return to their ed ordnance in the war-damaged areas the Azerbaijan Reconstruction and tricts. The World Bank, UNDP, home communities into line with those presents a major obstacle to all efforts to Rehabilitation Agency (ARRA). UNHCR, the European Union, and of the rest of the countryÕs population. help IDPs repatriate. To address this prob- WFP have jointly committed to The Government has called upon UNDP, lem, UNDP and the Government have ini- The reconstruction and rehabilitation UNHCR, and the World Bank to help process started in 1996 with a UNDP- implement the strategy. funded pilot project in the severely damaged settlement of Horadiz in the Fizuli The new strategyÕs objectives include district. During the past three years, helping IDPs relocate to areas where UNDP, UNHCR, the World Bank, and the they will have better prospects for self- European Union have helped the reliance and providing them with land Government to reconstruct homes, irriga- suitable for farming and raising live- tion systems, power and water supplies, stock. It further envisions providing and public buildings through a variety of micro-credit facilities and job training projects. The focus of support in the liber- opportunities to enhance the income- ated areas is now shifting increasingly earning capacities of IDPs and refugees toward income generation and local who remain in camps and public build- capacity building. ings. Its implementation is hoped to

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 53 54 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 reduce IDPsÕ dependence on humanitari- Chapter 6 an assistance. THE PROCESS OF DEMOCRATIZATION 5.8 Conclusion

More than ten years have passed since the beginning of the conflict over Nagorno-Karabakh, yet the consequences of the conflict continue to aggravate the countryÕs economic and social problems as it struggles through the transition period. Hundreds of thousands of people remain displaced, and a large proportion of the countryÕs territory is still occupied. The displaced population endures alarmingly poor living reforms. These include legal and institu- conditions, including inadequate shelter tional changes, the decentralization of and food supplies, sharply limited political power, the creation of an income-earning potential, and dispropor- enabling environment for the private tionately poor health relative to the coun- media and civil society, and strengthening tryÕs resident population. of the election process. This chapter reviews the countryÕs progress and prob- The option for uprooted people to return lems in each of these areas. to their places of originÑfreely, safely, voluntarily, and in dignityÑis a basic 6.2 Human Rights and the Legal human right. To enable some IDPs to System realize this right, the Government of Azerbaijan and a number of internation- Recent years have seen some important al organizations have begun the arduous legal and institutional reforms that task of reconstructing and rehabilitating 6.1 Introduction strengthen the prospects for consistent war-torn areas. Nonetheless, most IDPs observance of human rights. The face grim prospects of returning to their Human development requires a system of Constitution of the Azerbaijan Republic, homelands in the near future. The need governance that enables all people to par- adopted by national referendum in 1995, has therefore arisen to enable those who ticipate meaningfully in the political provides a sound basis for the protection remain displaced to achieve self-reliance process. Since their independence from of human rights, and a Constitutional and sustainable improvements in their the Soviet Union, the people of Court, envisioned as an independent body standards of living. The Government has Azerbaijan have chosen to pursue the to uphold the Constitution, was estab- set forth a new strategy to reach this transition toward a democratic political lished in 1998. The process of ratifying objective with assistance from the system. The country is now struggling international human rights agreements is international donor community. with the difficult challenge of reversing well underway, and a number of recent the former totalitarian approach to gover- laws and presidential decrees aim to rein- nance, which embodied little respect for force respect for human rights. the civil and political rights of the individual, and establishing the institutions of At present, however, the positive impact a democracy. of these reforms is inhibited by the persistence of outdated legislation and adminis- The successful achievement of democra- trative deficiencies. Existing laws and cy and respect for human rights in administrative procedures enable govern- Azerbaijan will require extensive ment officials to resist legitimate activi-

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 55 56 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 ties on the part of civil society, for exam- Box 6.7 The Universal Declaration of Human Rights and the local constituencies through elections or Box 6.8 Presidential Decree on Human Rights ple, and the criminal justice system fails Constitution of the Azerbaijan Republic any other means, the population has little to reflect the constitutional rights of peo- opportunity to influence their decisions. The Presidential Decree on Measures for Ensuring CitizensÕ and Human ple detained on suspicion of crimes. In December 1998, the Government and the people of Azerbaijan joined The current system is thus inconsistent Rights and Freedoms, issued in February 1998, envisions the following International and local human rights orga- nations throughout the world in celebrating the fiftieth anniversary of the with both the principles of democracy and steps toward promoting and protecting human rights in Azerbaijan: nizations continue to report serious Universal Declaration of Human Rights. The Universal Declaration, which the countryÕs Constitution. human rights violations. Azerbaijan ratified in 1992, is an historic proclamation of the fundamental - improved governmental relations with national and international human and inalienable rights of all members of the human family. It brings togeth- The Constitution required municipal elec- rights organizations; Enabling the rule of law to prevail will er common elements of different ideologies and recognizes all kinds of tions to be held within two years of the - preparation of a state programme on protection of the rights of women, require acceleration of the legal reform human rightsÑcivil, political, economic, social, and cultural. date the Constitution came into force, children, and national minorities; process, the establishment of effective which was 27 November 1995. Slow - establishment of a central government official dedicated to addressing mechanisms for implementing the new The Universal Declaration provides that no one shall be tortured, held in progress toward the development and human rights issues; laws, and strengthening of the judicial slavery, or arbitrarily deprived of property. It proclaims the right of all people adoption of related legislationÑsuch as - creation of a national human rights institution; systemÕs integrity and independence. to equality before the law, to fair and public hearings, and to participation in laws on municipal election procedures - acceleration of the process of ratifying international human rights Progress in this direction is envisioned government. It sets forth the right to freedom of thought, conscience, reli- and the status of the municipal bodiesÑ treaties; and under a public sector reform program that gion, opinion, expression, and assembly. It declares the right to education, has delayed the elections. The establish- - progress toward the full and effective implementation of international the Government is preparing in collabora- the right to own property, and the right to a standard of living adequate for ment of municipal authority is also com- health and well-being. The Universal Declaration extends these rights to all human rights treaties. tion with the World Bank. The United plicated by the dispersion throughout people, without distinction on the basis of race, gender, religion, ethnic ori- Nations Development Programme Azerbaijan of the many people who have gin, or any other status. In accordance with this decree, the Cabinet of Ministers prepared a State (UNDP) and other international organiza- been displaced from the countryÕs occu- Programme on Human Rights, including various educational and promo- tions are also providing training and other pied and war-torn areas. The municipal AzerbaijanÕs Constitution was drafted in the spirit of the Universal tional activities. The Programme was approved by Presidential Decree in support to strengthen the administration elections are now scheduled for Declaration. It grants all people freedom of thought and speech, con- June 1998. In May 1999, an Institute on Human Rights was established to of justice and the capacity of civil society December 1999. science, assembly, and information, and it extends to everyone the right to conduct human rights research. The Institute is funded by the Government to contribute to the promotion and protec- social protection, health, education, property ownership, safety, participa- but is designed to operate as an independent entity. tion of human rights. tion in cultural life, and the use of their mother tongues. It extends rights to The postponement of municipal elec- those detained, arrested, or accused of crimes, including the right to a tions is among the reasons that Recognizing that mechanisms for human lawyerÕs advice from the moment of detention, arrest, or accusation and the Azerbaijan has not yet achieved mem- rights protection can be effective only if presumption of innocence until guilt is proved legally. These rights and lib- Box 6.9 WomenÕs Rights are Human Rights: A Regional Conference bership in the Council of Europe. In a culture of human rights comes into erties are extended to all people irrespective of characteristics such as gen- addition to preventing democratization at being, United Nations organizations and der, race, nationality, origin, religion, political convictions, and membership Representatives of governments and non-governmental organizations the local level, the failure to hold the the Government have begun collaborat- in political parties and other public organizations. (NGOs) from 13 countries of the region gathered for a conference entitled municipal elections damaged the credi- ing in efforts to raise human rights "WomenÕs Rights are Human Rights: Women in Conflict" in Baku in May bility of the 1998 presidential election awareness. These include the organiza- It mandates the creation of locally elect- 1998. The conference served to raise awareness of womenÕs concerns and (discussed below). The lack of indepen- tion of seminars and workshops, the ed municipal bodies with authority over to facilitate regional cooperation in the promotion of gender equality. dence of the local executive authorities establishment of libraries, and the dis- local taxation and budgets, the posses- Particular emphasis was placed on the problems of women living in worn- from the central government called into semination of relevant publications. In sion and use of municipal property, and torn areas and women who have become displaced as a result of war. question their ability to carry out their December 1998, the Government and local programs for social protection, eco- roles in the election process in an impar- people of Azerbaijan participated in a nomic development, and environmental The conference participants prepared a regional programme of action for tial manner. wide range of events in celebration of protection. governments, NGOs, and United Nations agencies. The programme of Human Rights Day 1998Ñthe fiftieth action calls for recognition and enhancement of the role of women in con- 6.4 The Media anniversary of the Universal Declaration The existing system of local governance, flict prevention, resolution, and peace-building; the elimination of violence of Human Rights. (See Box 6.7.) however, is essentially a continuation of against women; and the protection and promotion of the human rights of Significant progress has been made the old Soviet system. Local executive women displaced by conflict. recently toward the achievement of free- 6.3 Decentralization and the Roles authorities are appointed by the President dom of speech in Azerbaijan. Most of Central and Local Authorities and are subject to strict vertical subordi- The United Nations Development Programme (UNDP), the United Nations importantly, the government body former- nation to the central government. They High Commissioner for Refugees (UNHCR), and the United Nations ly responsible for censorshipÑthe The Constitution of the Azerbaijan have little incentive or ability to make Development Fund for Women (UNIFEM) organized the conference with Department for Protection of State Republic provides for separation of pow- decisions based on local circumstances, support from the Government of Azerbaijan. Secrets in the Press and Other Media, ers between central and local authorities. and since they are not held accountable to which operated under the Cabinet of

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 57 58 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 MinistersÑwas abolished by Presidential wide range of areas such as health, educa- Box 6.10 WomenÕs NGOs tance from several international organiza- Decree in August 1998. The state monop- tion, environmental protection, and gen- tions, and a Law on Grants, adopted in oly on newsprint and printing processes der concerns. A number of charities, pro- Twenty-three womenÕs NGOs have officially registered in Azerbaijan. Some April 1998, clarified the taxation of grants was also broken, and several new private fessional societies, and cultural organiza- of them, such as Mejlis "Sevil" of Azerbaijan Women and the Aliyeva that NGOs receive from international printing houses have been established. tions have also formed. Some local NGOs Society for the Protection of WomenÕs Rights, have branches throughout the organizations. The important role of sponsor training and awareness-raising Republic. Mejlis "Sevil" of Azerbaijan Women is represented in many enter- human rights NGOs was acknowledged in The involvement of the private sector in programs on civil society development, prises, universities, and the Academy of Science. Although most womenÕs the February 1998 Presidential Decree on the media remains limited, however. the rule of law, the election process, and NGOs are poorly funded, they play an important role in promoting womenÕs Measures for Ensuring CitizensÕ and This is particularly true with regard to other mechanisms of democracy. Still oth- rights and ensuring gender balance in Azerbaijan. Representatives of local Human Rights and Freedoms, which television and radio programs, which ers provide business training to entrepre- womenÕs NGOs have participated actively in international conferences and called for further governmental coopera- reach many more people than the print neurs, thus helping to encourage and workshops, and they regularly represent the countryÕs gender concerns in tion with human rights organizations. media. One of the two state television strengthen small enterprises. programs of the Government and international organizations. Continuing efforts are needed to increase channels, AzTV-1, is the only electronic the understanding among all people in outlet able to cover the whole country. Some local NGOs promote citizensÕ Expansion of the role of NGOs in society of the ways that the Government Independent radio and television compa- rights and freedoms, such as the rights of Azerbaijan is hindered by a number of and civil society can work together to nies have very small broadcasting areas prisoners, the rights of consumers, and the administrative and legislative barriers. improve governance. and are concentrated in Baku. Private freedoms of expression, assembly, and The adoption of a law that defines NGOs, television, radio, and printing companies association. These organizations raise specifies the criteria and procedures for 6.6 Political Parties are subject to licensing by the Ministry awareness of the mechanisms for protect- registering them, and clarifies their tax of Press and Information. ing human rights and freedoms and status is desperately needed. The absence The emergence of many political parties inform the Government and the public of such a law enables some government in Azerbaijan since independence in 1991 6.5 Civil Society about human rights violations. officials to handle NGO affairs in an arbi- exemplifies the countryÕs progress toward trary and discretionary manner. For exam- a democratic political system. As of The development of civil society is vital In the early years of AzerbaijanÕs transi- ple, some NGOs have been able to regis- January 1999, the Ministry of Justice had to the process of democratization. In tion toward democracy, almost all NGOs ter with the Ministry of Justice in a quick registered 34 political parties, and many well-developed democracies, organiza- were affiliated with political parties either and straightforward way, but others, par- additional parties function without regis- tions of civil societyÑor non-govern- directly or indirectly. Since the mid- ticularly human rights NGOs and those tration. The parties have different levels mental organizations (NGOs)Ñplay an 1990s, however, many representatives of affiliated with opposition political parties, of organization and influence, however, indispensable role in governance. NGOs local NGOs and people interested in have encountered excessive difficulties in and only a few of them represent real conduct independent research on prob- forming them have been exposed to the the registration process or have been political forces with activity throughout lems of public importance and promote ways NGOs operate in other countries denied registration on the basis of ques- the country. policy options for addressing them. through training programs sponsored by tionable motives. They advocate the interests of their international organizations and donors. Many of AzerbaijanÕs political parties members and other groups in society by As a result, an increasing number of Progress toward improving trust and are formed around popular individual influencing both the policy process and NGOs are learning to function as inde- cooperation between the Government and leaders or groups of leaders, leading to public opinion, and they often provide pendent bodies. civil society is underway. The Parliament the existence of multiple parties with direct services to specific social groups. is working on an NGO law, with assis- similar platforms and, in some cases, They are typically flexible enough to The Ministry of Justice has registered react quickly to evolving social, eco- more than 1,000 NGOs, and some NGOs Table 6.24 Newspapers issued by political parties nomic, and political problems. NGOs are functioning without registration. In Number of issues Title Party affiliation Circulation can therefore benefit the Government spite of the growing number of NGOs, per week both by supplementing government ser- however, the process of building civil Azadlig PeopleÕs Front Party 5 5,700 vices to the public and by providing society remains in its early stages. Very Jumhuriyyet PeopleÕs Front Party 1 5,030 effective channels of communication few of AzerbaijanÕs NGOs can be consid- Azerbaijan Democratic Khurriyet 3 16,500 between policy makers and the general ered genuinely active at this stage. Most Party population. of them are very small and under-funded, Azerbaijan National Millet 3 3,480 and knowledge of how NGOs operate Independence Party Civil society has begun to develop in remains weak. NGO activity is particular- Yeni Azerbaijan New Azerbaijan 6 4,435 Azerbaijan. NGOs have emerged in a ly limited outside the capital city of Baku. Yeni Musavat Musavat 6 21,700

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 59 60 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 poorly defined platforms. Cooperation ed. The need for impartiality on the part of among parties with similar platforms is state bodies and for a clear distinction achieved through bilateral and multilat- between campaigning and the official eral agreements and the establishment of duties of state authorities was not well inter-party blocs. understood or respected. International observers reported that election procedures The role of political parties in the coun- were carried out in an appropriate manner tryÕs political life is limited to some extent at many polling stations but that serious by administrative and legislative obsta- irregularities and violations occurred in the cles. A number of opposition political voting, counting, and aggregation phases at parties have been denied registration by a number of others. the Ministry of Justice or have faced long delays in the registration process. In 1998, The municipal elections scheduled for a presidential election year, five parties 1999 and the parliamentary elections were registered, one of which is an oppo- election since regaining independence In the pre-election period, the Government scheduled for 2000 provide two opportuni- sition party. Under existing election law, was held in November 1995 simultane- pursued a series of important measures to ties in the near future for Azerbaijan to parties obtain representation in ously with a referendum on the new improve the election process. As amended strengthen its election process. In the Parliament only if they receive a full eight Constitution. President Heydar Aliyev in July 1998, the Law on the Election of meantime, concerted efforts are needed to percent of the vote. was elected through presidential elections the President of the Republic sets forth an increase respect for the constitutional free- in 1993 and 1998. improved method of selecting election doms of speech, association, and assembly. Newspapers issued by some of the main commissioners, allows monitoring by political parties play an important role in The 1995 parliamentary election, which domestic and international observers, pro- 6.8 Conclusion informing the public of the partiesÕ activ- international observers found to be incon- hibits the presence of unauthorized persons ities and platforms, particularly during sistent with international standards in at the polling stations, and guarantees all Notable progress has been made in campaigns. Some of these newspapers many ways, resulted in a Parliament that registered candidates equal coverage by Azerbaijan toward the creation of a demo- have large audiences. (See Table 6.24.) is closely aligned with the President. the public media. The abolition of official cratic society that guarantees the protec- Candidates ran for 100 of the 125 parlia- censorship in August 1998 enabled the tion of human rights. Important initial 6.7 Elections and the Election mentary seats on a majority basis, and the expression of a wide variety of views dur- steps toward reforming the legal system Process remaining 25 seats were distributed pro- ing the campaign, particularly in the print- have been taken, and the process of portionally among political parties. Of the ed media. A new Citizenship Law was decentralizing political power is expected Free and fair elections are central to a 25 proportional seats, the PresidentÕs adopted in September 1998, giving citizen- to begin with municipal elections late this democratic system of governance. party (New Azerbaijan) won 19 and two ship, and therefore voting rights, to many year. The degree of media freedom in the Making this fundamental democratic opposition parties won three each. Some of the countryÕs refugees. country has expanded as a result of the practice a reality in Azerbaijan is an extra- of the deputies who were originally affili- abolition of official censorship and the ordinary challenge given that the coun- ated with the PresidentÕs party have sub- These measures led to improvements in the collapse of the state monopoly on tryÕs 70 years of Soviet control ended sequently joined an opposition bloc. electoral process relative to earlier elec- newsprint and printing processes. NGOs only eight years ago. Other countries tions in Azerbaijan, but international and political parties have emerged, and emerging from totalitarian systems have The year 1998 was tremendously impor- observers still found that the election failed some government officials have begun to shown, however, that rapid progress tant for AzerbaijanÕs political develop- to meet international standards. Some recognize the merits of cooperation with toward viable elections is possible. ment because of the presidential election degree of media censorship was reported, civil society. in October. According to the official elec- such as harassment of journalists, and tele- The Constitution of the Azerbaijan tion results, about 77 percent of the regis- vision news coverage and political adver- Nonetheless, a number of obstacles to Republic provides for legislative power to tered electorate voted, and the incumbent tising heavily favored the incumbent. The democratic processes remain in place. be implemented by a 125-seat Parliament President Heydar Aliyev won the election Ministry of Justice denied the registration The legal reform process has only just and calls for parliamentary elections to be with 76 percent of the vote. Six candi- of several political parties and domestic begun, and the perpetuation of outdated held every five years. It also creates a dates ran for president, but several influ- NGOs that were willing to participate in legislation and weaknesses in the judicial strong presidency and calls for the ential opposition parties boycotted the election observation. Some opposition system compromise the effectiveness of President to be elected for a five-year election. demonstrations were not allowed or were the legal reforms undertaken so far. Some term. The countryÕs first parliamentary directed to venues other than those request- NGOs and political parties face undue

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 61 62 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 resistance to their activities, and this is particularly evident in the registration process. Finally, in spite of some improvements, the countryÕs election process has continued to fall short of international standards.

Concerted efforts are needed on the part of government officials and the general public to overcome the ways of thinking and approaches to governance that char- acterized the countryÕs years of Soviet control. Continuing progress toward legal and institutional reform, the development of civil society, and the implementation of free and fair elections will bolster public confidence in government institutions and set the country on the path toward human development.

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 63 1 ¥ HUMAN DEVELOPMENT INDEX

Year Life Adult Average GDP Life Education GDP Human expectancy literacy years of per expectancy index index development at birth rate (%) schooling capita index index (years) (USD)

1998 71.6 97.3 10 520.3 0.772 0.878 0.487 0.712

APPENDIX TABLES

2 ¥ PROFILE OF HUMAN DEVELOPMENT

Year Life Maternal Popula- Scientists Enro- Tertiary full-time Daily Televi- GDP per GNP per expec- mortality tion per and tech- llment equivalent gross news- sions capita capita enrollment ratio tancy at rate (per doctor nicians ratio, papers (per 100 (USD) (USD) Total Female birth 100,000 (per ages 6- (%) (%) (copies people) (years) live 1,000 23 (%) per 100 births) people) people)

1998 71.6 41.1 279 3.2 68.7 82.9 29.9 22.3 86.0 520.3 ---

3 ¥ PROFILE OF HUMAN DISTRESS

Year Adults Ratio of Female Average Years of Injuries Inten- Reported SO Unemployment 2 with less house- wages annual life lost to from road tional rapes and rate* (%) than hold (as % of rate of prema- accidents homi- (per NO2 Total Youth upper- (15-24) income: male inflation ture (per cides by 100,000 emis- secon- highest wages) (%) death 100,000 men (per women sions dary edu- 20% to (per people) 100,000 aged (kg per cation (as lowest 1,000 people) 15-59) capita) % of pop- 20% people ulation aged 15-64)

1998 1.13 ------70.0 - 0.8 --- 25.0 7.7 2.0 8.0

* Registered unemployment only.

66 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 4 ¥ STATUS OF WOMEN 7 ¥ EDUCATION PROFILE

Enroll- 19-year Tertiary Tertiary Expen- Annual Public Year Life Average Maternal Secondary Upper- Tertiary Tertiary Women in Ministerial Parlia- Upper- Upper- Total education ment ratio, secondary olds in full-time natural and diture on public expendi- expectan- age at mortality net enroll- secondary full-time natural labour -level ment (% secondary expenditure technical full-time equivalent applied tertiary expen- ture on ages 6-23 full-time (as % of GDP) cy at birth first rate (per ment ratio graduates equivalent and force (as positions of seats enrollment science (%) equivalent education gross education diture education (years) marriage 100,000 (as % of gross applied % of total in govern- occupied (as % of enrollment 1960 1998 1998 total (%) enrollment (as % of allper tertiary (as % of (years) live births) females of enrollment science labour ment (% by gross (as % of upper- 1996-98 ratio levels) student GDP) 1998 enrollment 1998 total ter- normal ratio enrollment force) female) women) secon- tiary) 1998 (USD) graduate (as % of ratio 1998 dary) 1996-98 1998 1996-98 age) female tertiary)

68.7 98 9.9 14.1 82.9 ------120.4 ------3.5

1998 75.0 23.7 41.1 --- 55.4 29.9 --- 48.7 6.0 12.0

8 ¥ HUMAN CAPITAL FORMATION

5 ¥ DEMOGRAPHIC PROFILE Scientists Expen- Upper - Tertiary Average years Total fer- Fertility Contra- Depen- Popula- and diture on secondary graduates Science graduates Life expectancy at of schooling Population Annual population tility rate rates ceptive dency tion aged technicians research graduates (as % of age 60 (years) Total Female Male as % of % % (millions) growth rate 1998 over time preva- ratio 60 and (per 1,000 and devel- (as % of population Male Female 1998 1998 1998 total female male (1998 as lence 1998 over (%) people) opment (as population of normal 1998- graduates 1998-99 1998-99 2000 1960- % of rate 1998 1998 % of GDP) of normal graduate 1960 1998 2000 1998 1998 (est.) 1998 1998 graduate age) 1998-99 (est.) 1960) 1992-98 age) 1998 1998

4.0 7.95 8.0 2.08 1.01 2.00 --- 2.8 71.7 9.0 ------

10 9 11 3.2 0.3 55.4 18.7 2.5 25 75

6 ¥ HEALTH PROFILE

Year Years of Deaths Deaths HIV Alcohol Tobacco Popula- Health Public Private Total life lost to from cir- from cases consum- consum- tion per bills paid expendi- expendi- expendi- 9 ¥ NATIONAL INCOME ACCOUNTS prema- culatory malignant (per ption ption doctor by public ture on ture on ture on ture system cancers 100,000 (liters per (kg per insurance health (% health (% health (% GDP Agricul- Industry Services Gross Gross Tax Central Exports Imports Consumption death disea- (as % of people) adult) adult) (%) of GDP) of total of GDP) (USD ture (as % of (as % of domestic domestic revenue govern- (as % of (as % of Private Govern- (per seas (as all health ment billions) (as % of GDP) GDP) invest- savings (as % of GDP) GDP) (as % of ment 1,000 % of all deaths) expendi- expen- 1998 GDP) 1998 1998 ment (as (as % of GNP) 1998 1998 GDP) (as % of diture people deaths) ture) 1998 % of GDP) 1998 (as % of 1998 GDP) GDP) 1998 GNP) 1998 1998 1998

1998 --- 42.2 10.7 1.9 5.1 0.8 279 --- 1.0 ------4.12 20.3 22.3 57.4 80.9 12.8 ------25.3 58.3

AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 67 68 AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 10 ¥ EMPLOYMENT References

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AZERBAIJAN HUMAN DEVELOPMENT REPORT 1999 71