October 9th 2013 Azerbaijan A phoenix rising While Azerbaijan’s pipeline diplomacy has transformed it into a key player in Europe’s quest for energy security, its government’s canny oil revenue reinvestment strategy has seen its economy diversify rapidly, opening up new opportunities for cooperation. Building on its close commercial ties with the UK, which accounts for over 51 percent of foreign investment, Azerbaijan hopes to expand the range of its partners, and sees the inaugural European Olympic Games in Baku as an opportunity to show the world what it has to offer. the-report.net/azerbaijan

Tourism Oil and gas Opinion | p. Something for everyone p. Stabilising the pipeline dreams of Europe p. 04 Fuad Akhundov 15 08 An economic miracle

Sports p. 14 Baku: Olympic city

Baku Foreign policy p. 12 Investment capital p. 06 Seeking regional peace

Culture Information and communication technologies Diversification p. 16 A font of cultural trends p. 11 2013 – The Year of ICT p. 10 Vision 2020

GLOBAL BUSINESS FEATURES: EXCLUSIVE INTERVIEWS. INSIGHTFUL ANALYSIS. ANOTHER LOOK. 2 _ AZERBAIJAN > INTRO 3

Azerbaijan’s strategic importance

Unique geopolitical position From ancient land of fire Sitting between Russia and Iran, Azerbaijan’s stability in a traditionally volatile part of the world is a shining example to the region. The country’s to modern powerhouse determination to maintain an Writer: Oliver Moss independent foreign policy has contributed greatly to facilitat- ing its economic development, and as a member of the UN Security Council, this robust, secular state seeks to maintain 2 positive relations both within and outwith its immediate surroundings.

Western European energy security Along with state-owned SOCAR, BP is leading a consortium to develop Azerbaijan’s Caspian Sea gas field and has confirmed the Trans Adriatic Pipeline as the means to link it to the rest of Europe. No longer leaving much of the west reliant on Russian supplies, the pipeline will bring gas into south-east Europe and, crucially, to Italy, from where it will compete for the French, Ger- man Swiss and UK markets. 3 4 Cultural diversity Azerbaijan’s culture is one of the most diverse in the world – com- bining aspects of its European and Islamic heritage, as well as its more recent Soviet and West- ern influences. The country’s diversity and secular approach 1 to religion is one of its great strengths and the constitution it adopted in 1995 clearly states that nobody should be deprived of the right to speak their native Standing at the crossroads of Europe and Asia, Azerbaijan has been the world’s fastest language. In 2012, a conference growing economy over the past decade and is set to become a key regional partner for the west. at Westminster concluded that Azerbaijan’s example should be used to promote religious toler- Azerbaijan is a name that con- yev, began using its vast oil and gas 39th out of 144 countries in the eyeing the government’s incentives ance throughout Central Asia and the world. jures images of the exotic but until wealth to set the country on a new World Economic Forum’s Global for the production of renewable At a glance: recently was little known. How- path to rapid growth and devel- Competitiveness Report and has sources of energy. 5 6 ever, this republic in the Caucasus opment. Between 1995 and 2012, been ranked 1st among CIS coun- Azerbaijan has shaken off its So- 340% is becoming a rising star on the US$144.4 billion was invested in tries four years in a row. viet past to become an exporter Estimated GDP growth international stage and is develop- the country, with almost half com- Today, the nation is undergoing a of peace, security, stability and over the past decade ing into a key energy, security and ing from foreign investors – the transition from a purely oil-based tolerance in the region through US$144.4 billion trade partner for Europe. large majority of them British. But economy to one which encompass- dialogue, engagement and co- Investment received In 2012 Azerbaijan’s booming cap- with over 7 billion barrels of prov- es agriculture, industry, culture, operation. Today, its goal of ob- between 1995-2012 ital Baku played host to the Euro- en oil reserves, what steps is the tourism and much more. UK inves- taining developed country sta- vision Song Contest and in 2015 government taking to re-invest the tors are already taking note: An- tus by the mid-2020s looks ever 7 billion barrels will host the inaugural European oil wealth in emerging sectors and glo-Asian Mining has developed more achievable. <<< Estimated oil reserves Olympic Games. A non-permanent ensure the nation’s future wealth? the country’s first operating gold 476 seat on the UN Security Council In 2003 current President Ilham and copper mine, while shoppers British companies has given it further international Aliyev spoke of the need to turn in Baku can buy clothes from both registered in Azerbaijan standing while a series of oil and oil capital into human capital Debenhams and Stella McCartney. Over the today gas pipeline projects and ICT with ICT, infrastructure and edu- Meanwhile, the country’s tourism and transport corridors look set cation pushed to the forefront of sector received a massive boost af- past decade to place Azerbaijan firmly at the the government’s agenda. The fig- ter it hosted the Eurovision Song junction of east and west. ures have been astonishing: over Contest. With nine of the world’s Azerbaijan’s Finally sealing its independence the past decade Azerbaijan’s GDP 11 climatic zones, almost anything in 1991 with the break-up of the has more than tripled, with a 34.6 can, and does, grow in Azerbaijan GDP has more Soviet Union, Azerbaijan, under its percent growth in GDP registered – a boon to farmers, while solar 7 former national leader Heydar Ali- in 2006 alone. This year it came panel and wind turbine makers are than tripled

1 Baku’s Flame Towers have become a city icon Directors: Jose Powell, Art Director: Joana Pessanha This feature has been prepared 2 Medieval castles and archaeological sites abound in Azerbaijan Rafael Muñoz Graphic Design: Carlos Robledo as part of an exclusive partner- 3 Baku’s cultural and musical heritage has been recognised by UNESCO 4 One of Azerbaijan’s cultural centres, Nakhchivan is a landlocked exclave 450 km west of Baku, separated from Assistant Design: Charles Kushner ship with Trend News Agency, the rest of the country by Armenia a leading news company for the Editorial Coordinator: Oliver Moss Illustration: Belen Isasi 5 Baku’s Martyrs Memorial remembers victims of the independence struggle Writers: Oliver Moss, Doug Gray Photos: Trend News Agency, Caucasus, Central Asia and Cas- 6 Fountains Square in downtown Baku boasts dozens of fountains constructed during the Soviet rule of Azerbaijan 7 The centre of Baku has seen extensive regeneration Editing: Eleanor Wragg Region Plus Magazine (Baku) pian region. 8 A view of Crystal Hall, where Eurovision 2012 took place 8 4 _ AZERBAIJAN > OPINION 5

About the author 1. Azerbaijan has made significant progress in recent years in caring Fuad Ramiz oglu Akhundov was for the internally displaced born in 1962 and graduated from “A politician thinks persons (IDPs) who were forcibly the Azerbaijani University of Con- evicted from Nagorno-Karabakh Briefs struction Engineering in 1984. In and seven surrounding districts 1990, he defended his thesis on of the next election; by ethnic Armenian forces nearly applied mechanics and obtained two decades ago, and has so far his DPhil in physics and math- granted state-funded housing, Azerbaijan goes to ematics. Since the mid-1980s, he a statesman of the schools and hospitals in villages such as the one pictured to more the polls today has published analytical articles than 150,000 IDPs and refugees. Campaigning in Azerbaijan’s presiden- on a wide range of issues in the next generation” Today in Azerbaijan there are field of the socio-political life of about 1.2 million refugees, IDPs tial election kicked off in September, Azerbaijan, and has produced James Freeman Clarke and asylum seekers. and voting by the approximately five dozens of brochures, books and million citizens who are eligible will take TV documentaries. 2. President Ilham Aliyev (right) in place today – a week earlier than usual 2011, spending his 50th birthday due to the Muslim festival of with the first lady Mehriban Eid Al-Adha. Aliyeva visiting IDPs in the remote 1 2 Aghjabedi region. Both local and international observers will monitor the country’s presidential election, and the Azerbaijani govern- ment has invited groups, including the Organisation for Security and Opinion by Fuad Akhundov Co-operation in Europe (OSCE) Office for Democratic Institutions and Human Rights, to be present. The Central Elec- tion Commission will also be providing webcam coverage of polls throughout An economic miracle the country. The Azerbaijani people are proud of their country, and believe President Ilham Aliyev’s So far, polls indicate that Aliyev will be re-elected: 81.2 percent of people development plan could be a model for other nations to follow. questioned by the Ryay Monitoring Centre of Azerbaijan say that they will vote for him. Fuad Akhundov Since taking power in 2003, President good, while 60 percent are satisfied propelling it into the ranks of the World in the regions from 2004 to 2013 has led tolian Gas Pipeline) between Political scientist Azerbaijan is now an emerg- Meanwhile, in a survey carried out Ilham Aliyev has implemented forward- with the results of ongoing democratic Bank’s Upper Middle-Income Coun- to the creation of 1.1 million jobs. The Baku and Ankara, which is the among 100 British MPs by UK polling looking initiatives and projects in energy, processes. tries (UMI) group. Today, Azerbaijan is state has a strong social welfare policy and starting point for the creation ing regional power that is organisation Dods, almost three-quar- social welfare, education and the econo- a country with high human development provides free public healthcare and edu- of the Southern Gas Corridor. ters of the respondents reportedly said my, which improve the quality of daily life A growing economy potential. cation – including scholarships for over- With the decision by the Shah transitioning from an indus- they “appreciated Azerbaijani President in Azerbaijan, strengthening the image of Over the last decade, Azerbaijan’s econ- The president’s term in office has been seas students, who currently number over Deniz consortium to approve Ilham Aliyev’s activity,” adding that he trial to a knowledge economy is a reliable partner of the west, particu- the country worldwide and changing the omy has increased by 3.5 times, hitting characterised by dedication to his coun- two thousand. the construction of TAP (the larly of the UK. The MPs polled by Dods face of its regions and capital city. US$68.8 billion in 2012. This success has try’s development. The country’s internal- Azerbaijan’s outdated and poorly-main- Trans Adriatic Gas pipeline) to also said they supported Azerbaijan’s Aliyev has extremely high approval rat- not gone unnoticed: despite a gloomy in- ly displaced persons (IDPs) and refugees tained water and sanitation infrastruc- transport Azerbaijani gas to EU countries manned drones to grenade launchers. integration into Europe. ings – in a survey of 1,000 adults carried ternational outlook during the global eco- are an important cause to him – he chose ture has also become a major focus for the via Turkey, Azerbaijan has become a key Azerbaijani investment is not limited Azerbaijan strengthens out by British polling company Populus nomic and financial crisis, the country’s to celebrate his 50th birthday not with president, and the government is working guarantor of the EU’s energy security. to within its borders. The country has its position with the EU in September 2011, he scored 95 percent credit rating was boosted from stable to an extravagant party but instead by vis- to reconstruct and develop the water sup- Despite its long history as a producer of emerged as an important regional inves- 1.1 million jobs trust and 96 percent approval rates, with positive by Fitch Ratings, Moody’s and iting the remote Aghjabedi region, home ply and sewerage system in every major gas, until recently Azerbaijan’s regions tor, as the second-highest investor in the Azerbaijan and the EU are tipped to sign respondents saying they generally think Standard & Poors due to low indices of to thousands of refugees from the Arme- settlement and regional centre by the end had no gas supply. Today, 95 percent of Georgian economy and with US$17 billion an agreement on strategic cooperation created between in a number of spheres, including visa that Azerbaijan is secure, improving, sta- public debt and favourable medium-term nian-occupied Lachin region. The follow- of 2013. homes in the country are connected to expected to be invested into Turkey over system facilitation and readmission, 2004 and 2012 ble, successful, and strong. and long-term prospects. ing year, he spent his birthday at Sumgait, natural gas networks, compared to just the coming years. during the Eastern Partnership (EaP) The survey also showed that 79 percent Meanwhile, the World Economic Forum’s where he awarded new apartments to 411 A key energy player 70 percent in western countries. Despite the global financial crisis, Azer- summit, which will be held in Vilnius, Through economic diversification of respondents think that in general, Azer- global competitiveness index placed Azer- families of disabled veterans of the Kara- In the energy sector, Azerbaijan made key Meanwhile, Azerbaijan’s Baku-Tbilisi- baijan became the first CIS state to repay Lithuania on 29th - 30th November. and establishing an economic baijan is developing in the right direction, baijan 1st among CIS countries, while in bakh war, bringing the total apartments progress in the transportation of Caspian Ceyhan oil pipeline and Baku-Tbilisi-Er- its debt to the International Monetary The EaP is an EU initiative directed at and legal environment which while 70 percent felt the economy was on 2008, Azerbaijan was cited as the top provided by his government to the veter- gas to European markets in the signing of zurum gas pipeline have laid the founda- Fund (IMF) in 2008 and is the first CIS six countries of Eastern Europe and the is conducive to private sector South Caucasus: Armenia, Azerbaijan, development, the government the right track. reformer by the World Bank’s Doing ans to five thousand. an agreement on TANAP (the Trans Ana- tions for a new transport corridor in the state to become a donor country to both In late 2012, the European Union’s Neigh- Business report as a result of its broad region. The construction of the Baku- Belarus, Georgia, Moldova and Ukraine of Azerbaijan has been slashing Another key initiative has been the state the World Bank and IMF, allocating sig- and aims to tighten the relationship be- poverty and creating sustainable bourhood Barometer – an opinion poll- economic reforms. The country has laid funding of cars for low-income social Tbilisi-Kars international railway – tipped nificant funds for the financing of projects tween the EU and the Eastern partners employment opportunities, add- ing and media monitoring device which is the foundations for the strengthening groups. More than 3,500 citizens have In numbers as the rebirth of the Silk Road – is about in the Sahara region. by deepening their political cooperation ing over a million jobs between part of the EU-funded Regional Commu- of its non-oil sector through economic been provided with cars so far under the to be completed. and economic integration. 2004 and 2012. Poverty level in Azerbaijan nication Programme – indicated that 92 liberalisation and improved conditions plan. Car ownership continues to rise, and Continued progress Visa facilitation and readmission is a percent of Azerbaijan’s population trusts for business. Azerbaijan has seen the number of cars on 49% An important regional investor Through his initiatives, Ilham Aliyev has step preceding visa liberalisation, which its government. Azerbaijanis questioned its roads double between 2003 and 2012 Azerbaijan’s non-oil sector continues become the author of an Azerbaijani eco- relaxes visa requirements so that certain in the poll were optimistic about their Socio-economic development to 1.1 million – an unequalled figure in the 2003 to expand. Last year saw the economy nomic miracle; no mean feat in a country groups, like students and businesspeo- ple, can obtain multiple-entry visas. lives – much more so than other countries Azerbaijan has seen a tremendous reduc- CIS, central and eastern European coun- 6% receive more than US$20 billion of in- with 1 million refugees after it suffered in the region – with 65 percent satisfied tion in poverty during the last decade and tries. Car ownership is expected to reach vestment and over 100,000 new jobs the loss of 20 percent of its territory as a As well as the visa deal, Azerbaijan and with the life they lead and life satisfaction has a burgeoning middle class – pegged at 72 cars per 100 families by 2020, in-line were created. Massive construction pro- result of Armenian occupation. Azerbai- the EU are set to sign a protocol expand- 2013 ing the country’s participation in EU Azerbaijan at its highest level among young people. 20 percent of the population according to with the most developed countries in Eu- jects are being carried out across all of jan, which gained the votes of 155 coun- programmes, as well as an agreement Economic sentiment was also high: International Labour Organization (ILO) rope, and the USA. Number of cars per 100 families Azerbaijan’s cities, and new industries tries to become a non-permanent mem- on cooperation between the agencies has seen a 69 percent of the respondents con- figures. Its GNI per capita leapt from The implementation of various state so- 24 have emerged. ber of the UN Security Council in October of Azerbaijan and the EU. This will con- sider the economic situation to be US$720 in 2002 to US$5,290 in 2011, cio-economic development programmes 2004 Once such new industry is the space in- 2011, is now an emerging regional power tribute to institutional reforms and staff training in the country. 48 dustry: in February 2012, Azerbaijan’s that is transitioning from an industrial to tremendous 2012 first telecommunications satellite, Azer- a knowledge economy. Azerbaijan takes on space 1, was launched and is expected Aliyev plans to provide his people with a 72 the UN Security Council to bring in US$600 million in revenue modern lifestyle – perhaps best illustrated presidency reduction in 2020 (est) over the next 15 years. The country plans by the ultra-modern architecture of the Azerbaijan leaps 7 places in WEF’s Global Competitiveness Report This month, Azerbaijan takes on the Annual residential development to launch a second telecommunications national capital Baku. “Our goal is for UN Security Council presidency for the satellite in two years, with four research Azerbaijan to join the ranks of the devel- poverty dur- Azerbaijan has been ranked in the The Global Competitiveness stability, public health and pri- tiveness of companies and inno- 1.35 million m2 second time since becoming a non- top 40 most competitive coun- Index is based on a survey of mary education, higher educa- vative potential. satellites – to be utilised in the fields of oped countries,” he said. “I am sure this permanent member in January 2012. 2003 tries in the world by the World 14,000 business leaders from tion and professional training, Azerbaijan was judged to be the agriculture and meteorology – also in the will happen as we have talented people, The presidency of the Council is held Economic Forum’s Global Com- more than 140 countries. It as- commodity market efficiency, most competitive of all of the ing the last 2 million m2 pipeline. economic potential and natural resources by each of the members in turn for one petitiveness Report 2013-2014. sesses country competitiveness labour market efficiency, finan- CIS countries, of which Kazakh- month, and the country hopes its turn The country came 39th, up 7 on 12 indicators, including eco- cial sector development, devel- stan came 50th, Russia came 2012 A high-tech military industry has also as well as an excellent geographic posi- places from the previous year and nomic and legal environment, opment of technologies, volume 64th, Georgia came 72nd and at the helm will give it the opportunity decade 16 places higher than in 2011. infrastructure, macroeconomic of domestic market, competi- Armenia was placed 79th. *Over 17 million m2 of residential development been created; 21 companies now produce tion. We provide transparency and politi- to make itself better known globally and projects were completed from 2003 to 2012 750 types of defence technology from un- cal reforms are underway.” <<< increase its reputation. All figures provided by the author and the government of Azerbaijan of government the and author the by provided figures All 6 _ AZERBAIJAN > INTERNATIONAL RELATIONS 7

Profile Ali Hasanov Read the Deputy Prime Minister of the Republic of Azerbaijan full Q&A the-report.net/ Azerbaijan’s Azerbaijan is a member azerbaijan of the United Nations, place in the world the Non-Aligned Move- ment, the Organisation for Security and Coop- “The solution of the Nagorno-Karabakh eration in Europe, NATO’s conflict will open up opportunities for the Russia Partnership for Peace, Georgia Euro-Atlantic Partnership, Caspian the World Health Organi- long-term economic development of the Sea sation, the European Bank Azerbaijan for Reconstruction and countries in the region.” Development; the Council Ali Hasanov of Europe, CFE Treaty, the Deputy Prime Minister Community of Democra- cies; the International Iran Monetary Fund; and the In November 1998, former presi- ing and employment opportunities Azerbaijan cannot fix this issue Elmar Mammadyarov World Bank. Minister of Foreign Affairs dent Heydar Aliyev created the for the refugees and IDPs, and without international support. position of deputy prime minister pushes for their return to their “We would like the international The policies of Azerbaijan’s – acting at the same time as a homeland. “The government has community to take more decisive minister of foreign affairs chairman of the State Committee done a lot to meet the demands actions and have a more consist- A handful of crucial international relations have forged Elmar Mammadyarov could on Refugees and IDPs – to over- of this sensitive segment of the ent position towards the fair the basis of Azerbaijan’s foreign policy, but one in par- hardly be more important at Seeking regional see the government’s response population and continues to do resolution of the conflict, and urge ticular must be resolved for progress to follow freely. a time when the country is to the problem of refugees and so,” he says, pointing out that it Armenia to work on the final peace looking to assert itself on the IDPs since the Nagorno-Karabakh is impossible to put a price on the agreement based on the funda- world stage. Having taken a conflict. damage done, both material and mental principles set out by the non-permanent seat on the Armenia: a frozen conflict psychological, as a result of OSCE Minsk Group,” says Hasa- UN Security Council in 2011, peace for global gains Nagorno-Karabakh is the focus of an ongoing dispute between Deputy prime minister Ali Hasanov the conflict. nov. “We have been impatiently the key now is for Azerbaijan Writer: Doug Gray Azerbaijan and a Russian-backed Armenia that began in 1987 and to forge strong economic and works in cooperation with state But without a resolution to the waiting for this for 20 years and erupted into war in 1991, displacing hundreds of thousands of political relations with both structures, international organisa- conflict, the fate of these dis- hope that the world community Azerbaijanis. The region together with seven neighbouring districts, east and west. In the two decades since its independence from the Soviet Union, Azerbaijan has become tions and NGOs to improve hous- placed people is uncertain, and will at last take a just position.” while internationally recognised as Azerbaijani sovereign terri- tory, are to this day occupied by Armenian armed forces. Four UN What have been the coun- an important strategic partner for both east and west and a symbol of Eurasian stability. Security Council Resolutions, and similar statements from the EU, try’s main achievements on NATO and Organisation of Islamic Cooperation, which have called an international level since independence? for the withdrawal of Armenian forces have so far gone unanswered. Azerbaijan has become a With an economy heavily fuelled by peace and stability and expanding prosper- Indeed resolving the Nagorno-Karabakh example of religious tolerance. jan is seeking intermediary help Industrial Park (SCIP), just outside “Overall, as a result of Armenian military aggression, 20 percent of regional leader and reliable plentiful natural resources, Azerbaijan is ity. Further integration into Euro-Atlantic question is the key starting point for a na- Military support for the UK in to finally resolve its own disputes of Baku, represent real opportuni- Azerbaijan’s land – Nagorno-Karabakh and seven adjacent regions partner in international rela- determined to utilise its current buoyancy structures is a strategic path consistently tion looking to assert itself on the world Afghanistan and the opening of and position itself within the ex- ties for UK companies to get in- – has been occupied,” says deputy prime minister Ali Hasanov, who tions, significantly increasing as a platform for greater internal, regional pursued by Azerbaijan… and we want this stage and one that the foreign minister be- the country’s airspace to NATO tended UN framework, with the volved in areas from project man- points out that independent international experts put the loss to its influence to now play an the economy of Azerbaijan at over US$300 billion. “The number of active role in the interna- and even global stability. Part of the USSR strategic partnership to expand into vari- lieves will be helped by its influence on the supplies in and out is evidence shared goals that will continue to agement to telecommunications. until 1991, upon its independence Azerbai- ous other areas,” says Mammadyarov. As the UN. “Our seat at the UN Security Council of a determination to take part make the nation a crucial Eura- English is rapidly becoming the internally displaced peoples (IDPs) and refugees in Azerbaijan has tional arena. As the president reached 1.2 million over the last 20 years,” he adds. Elmar Mam- said during his address to jan emerged as an important gateway to largest foreign investor in the country, the has put Azerbaijan’s foreign engagement in international peacekeeping sian crossroads. language of business, especially madyarov’s foreign ministry is working to return the land and bring the UNSC, Azerbaijan will east and west, and a link between Russia, UK is increasingly focussing its attentions on a different level,” says Mammadyarov. operations. amongst the younger generation, lasting peace to the area, while the OSCE Minsk process, led by always support international Turkey and Iran at one of Europe’s more on Azerbaijan as an energy provider and “We will redouble our efforts in reaching The fostering of trade links is an- A partner for the UK while a new drive from Azerbai- law and justice, and we the US, Russia and France, is heading up international efforts to have actively contributed to volatile extremities. Hamstrung by porous business partner. With hundreds of British out to new countries and regions to raise other important mechanism to With over 5,000 British expatri- jan’s education ministry to bring broker a peaceful solution and bring assistance to the thousands of discussions on global issues borders and the ongoing conflict with Ar- companies registered in the country today, awareness about the conflict and will stick create closer ties with the West, ates working in the country, mostly the level of education in the coun- displaced Azerbaijanis forced into refugee camps. The precarious ranging from international menia, however, regional factors have pro- the conflict’s swift and peaceful resolution to our position that the Armenian armed and Azerbaijan needs to extend be- centred on the capital Baku, UK- try in line with European and in- ceasefire continues to be punctuated by skirmishes, and a swift terrorism and crises to envi- duced testing conditions in which to try has important repercussions further west. forces must withdraw from the occupied yond hydrocarbon reserves to exert Azerbaijan trade ties are very vis- ternational standards has created solution is essential to the long-term development of the region. ronmental protection. and ground a solid foreign policy in the last Christopher Pincher MP, chairman of the territories.” a lasting influence. Along with its ible. British companies outnum- openings for UK educational in- Azerbaijan is located in a 20 years. UK parliament’s All-Party Parliamentary Non-permanent membership of the UN neighbour Turkey, the country to- ber those of any other Western stitutions. The British Council, EU relations UN Security Council very sensitive region; what Of growing importance within Europe, Group on Azerbaijan certainly believes that Security Council was a big step forward for day represents one of the world’s country operating in the nation which will host the first and biggest Brussels has been discussing Azerbaijan’s emergence as an is the likelihood of a full Azerbaijan is well aware of its worth to the the UK should firmly “encourage the au- the country’s global esteem, a recognition few secular Muslim states, with and range from FTSE 100 firms, Education UK fair in the country with Baku the feasibility of the influential global player was resolution of the Armenia- UK and United States. thorities in Baku to continue to look west.” both of its geography and the progress of a long history of cultural and re- such as BP, Petrofac, AMEC, Rolls in November 2013, is working to Southern Gas Corridor since talks recognised in October 2011 when Azerbaijan conflict? at a 2009 summit in Prague. Azer- it was offered a non-permanent The conflict over Nagorno- At a time when the weakness of much of “Sandwiched between the power players a once little-known country now being cit- ligious tolerance as well as wom- Royce and GlaxoSmithKline, to bring together British universities baijan clearly wants to maximise seat on the United Nations Se- Karabakh threatens the Europe makes it susceptible to a powerful Russia to the north and Iran to the south, ed as a culturally rich tourism centre and en’s rights. One element of those small and medium enterprises. and their Azerbaijani counterparts. income from its resources and curity Council ahead of Slovenia security and stability of the Russia determined to keep a tight grip on and with Nagorno-Karabakh as a bruise trade links influencing foreign UK businesses are highly regarded The UK and Azerbaijan have en- the European Union desperately and Hungary. The Council has region and beyond. Peace gas supplies heading west, viable alterna- that just will not fade,” he says, ‘there re- policy is the re-establishment of in Azerbaijan, and the country re- joyed diplomatic relations since wants to loosen Russia’s grip on already called for a speedy talks have been ongoing for tives are thin on the ground. Antagonism mains the possibility that Azerbaijan might the Silk Road, the historic com- mains the largest foreign investor. 1992, and both sides take pains to its fuel supply, but meaningful and peaceful resolution of the more than twenty years with “Our seat at the UN negotiations have been slow to Nagorno-Karabakh conflict and, no concrete outcome but with neighbouring Armenia remains a criti- choose a different route. And that would be mercial route that once thrived In fact, according to Azerbaijan’s ensure that this relationship con- emerge with important exter- like the EU, the UN has formally Azerbaijan continues to show cal flashpoint however. US secretary of state a mistake for all.” off the back of east-west trade and State Statistical Committee, UK tinues to blossom. Last month, UK nal criteria still to be met first. recognised the territorial integ- its commitment to a peaceful John Kerry is a leading figure in the OSCE “The solution of the conflict will open up Security Council and whose connections helped the investments made up over 51 per- foreign secretary William Hague Meanwhile a growing number of rity of Azerbaijan. In October, solution. Minsk Group which seeks the resolution of opportunities for the long-term economic early dissemination of religion cent of all foreign inflows in 2012, met with foreign minister Elmar companies from EU countries, Baku will host the International has put Azerbaijan’s most significantly Holland and Model UN Security Council Con- a dispute that forms the highest priority development of the countries in the region,” and philosophies throughout the with a similar figure expected for Mammadyarov in London where What can Azerbaijan offer the Belgium, are following the UK’s ference for the first time, with the UK as a partner in the region? for foreign minister Elmar Mammadyarov explained Ali Hasanov, Azerbaijan’s deputy foreign engagement region. That backdrop of history 2013, and the country has consist- they discussed issues ranging from lead and setting up in Baku to take graduates of 45 universities from The two countries have and which would further boost the whole prime minister, whose post was established has been used to convene impor- ently been in the top five countries the two countries’ collaboration in advantage of a booming economy 15 UN member states taking part developed a strong and reli- region’s stability. by former president Heydar Aliyev to oversee on a different level” tant international forums discuss- exporting goods to Azerbaijan. The Afghanistan to the opportunity and widespread redevelopment in the event. able partnership, the core of “As a fundamental principle we strive to the government’s reaction to the needs of ing transport policy and trade opening up of other, non-oil, sec- for the UK to share its experiences at a time when much of Europe which is in energy and trade. Elmar Mammadyarov remains grounded for investors. Turkey relations However, as with the Euro- make our own contribution to maintaining the people displaced by the conflict. Minister of Foreign Affairs tariffs between Asia and Europe, tors of the economy – whose year- from the London Olympics with Turkey was the first nation to pean Union, the scope of our but strong international relations on-year growth had topped 10 per- Azerbaijan ahead of the 2015 Eu- recognise Azerbaijani inde- relations expands into new are the only way to successfully cent as at 1st September, versus the ropean Games. UK relations pendence in 1991 and a shared areas. We value the UK’s sup- As well as being the biggest linguistic heritage, culture and GLOBAL BANKING see through Azerbaijan’s role as a 5.2 percent overall GDP growth in Azerbaijan values the UK’s support overseas investor in the country, port of our efforts to integrate crucial bridge for routes between the same period – is set to provide in the conflict over Nagorno-Kara- history, as well as a short border, into European structures and the UK’s aid organisations includ- continue to make for close rela- have been cooperating with IBA has in recent years risen IBA was chosen because it has China, Turkey and on to France plenty of opportunities to consoli- bakh, and the UK has also been ing Oxfam and United Aid have tions between the two. Turkey to regional and international proven itself a standard-bearer the UK in energy, interna- “The IBA actively promotes and the UK. Due in part to its geo- date that position. supportive of Azerbaijan’s integra- been carrying out projects to help also, therefore, has a vested in- tional security, trade and prominence and now promotes for international best practices internally displaced Azerbaijanis. opportunities for global financial in financial services and diversi- the country’s integration into political position and hydrocar- The UK is seeking to leverage its tion within European structures, terest in the peaceful settlement business. UK energy firms, in Christopher Pincher heads up a institutions to participate in Azer- fied growth. The bank has led bon riches, Azerbaijan’s global in- City of London expertise to help welcoming the Association Agree- of the conflict with Armenia, and particular BP, have been at the world community, system- Westminster group dedicated to baijan’s growing banking sector. numerous investments in non-oil fluence is steadily increasing, and with the development of Azerbai- ment that is currently being negoti- a strategic partnership for the the forefront of the imple- atically expanding its presence improving ties between the two movement of gas to the west sits sectors such as financial ser- the EU and US are actively court- jan’s nascent financial services sec- ated between the EU and Azerbai- nations, extending the UK pres- mentation of large-scale In 2007, the bank became a vices, infrastructure, technology abroad and enjoys international at the heart of their politics. regional energy projects and ing the state to promote regional tor, while industrial parks such as jan, which will significantly deepen ence therein as well as paving founding member of the World and consumer services that are banking ratings.” the way for an important energy looking ahead, new opportu- Economic Forum’s Community stimulating economic growth at stability, provide alternative gas the Information and Communica- Azerbaijan’s political association agreement as North Sea gas re- nities are emerging to further of Global Growth Companies, home and accelerating Azerbai- Jahangir Hajiyev supplies and become a new market tions Technology (ICT) High Tech and economic integration with the serves continue to rapidly decline. deepen this cooperation. and the first member from the jan’s integration into the global Chairman of International Bank of Azerbaijan Caucasus and Caspian region. economy. for business. Meanwhile, Azerbai- Park and the Sumgayit Chemical bloc of nations. <<< 8 _ AZERBAIJAN > OIL AND GAS 9

RUSSIA

GEORGIA Tapping into Europe The successful TAP pipeline TURKMENISTAN bid was chosen by the Shah Deniz consortium to open up the transport of natural gas Turkmenbashi from the Caspian and Middle East to Italy, and joins a vast network radiating out from Gas Elshad Nassirov AZERBAIJAN Baku that includes the Trans- Vice-President of Marketing Anatolian Pipeline (TANAP) and Investments at SOCAR and Baku-Tbilisi-Erzurum. TAP will start on the Turkish Through important partner- border with Greece, cutting ships and investments, across Albania to its final SOCAR, Azerbaijan’s state- destination, from where it owned oil company, is at the can reach major European forefront of the industry’s Baku-Novorossiysk oil pipeline Baku-Tbilisi-Ceyhan oil pipeline markets, offering an attrac- development. Baku-Supsa oil pipeline Baku-Tbilisi-Erzurum gas pipeline tive alternative supply to Baku-Tbilisi-Kars (planned) Trans-Caspian gas pipeline (proposed) that from Russia and North What is behind SOCAR’s heavy Africa. overseas investment? The Deepwater Gunashli Complex. Massive investment and new technologies have enabled Azerbaijan to tap its offshore oil and gas reserves As a landlocked country, it is very important we reach other markets, so for us it’s essen- tial to construct pipelines to south-east Europe in competition to Russian and Oil and Gas the European Union. We have SOCAR has invested every year. “TAP is Norwegian supplies will be key invested half a billion dollars also likely to have for countries like the UK and in numbers into the Georgian market constructing ports on the Stabilising the an effect on west- Germany to be able to drive down US$60 billion in the 165 years Black Sea. In Turkey, we have ern Europe and may energy costs. How long Azerbaijan has been invested in infrastructure and have an impact on The mature Azeri–Chirag– producing oil. The country was the have purchased a petrochemi- sector since the coun- helping to reduce Guneshli (ACG) oil field is an- world’s biggest petroleum producer cal complex. We also have pipedreams of Europe at the start of the twentieth century. commercial enterprises in gas prices more other key part of the Azerbaijani Romania, Greece and Swit- try’s independence 3 generally through energy makeup. Dubbed the ‘con- 2.6 trillion m zerland, so we’re growing increased compe- tract of the century’ when it was The proven reserves held in Azer- internationally. Natig Aliyev The Southern Gas Corridor, an initiative started by the European Commis- Briefs tition,” says Kjetil signed in 1994, the deal between baijan’s enormous gas fields. Minister of Energy and Industry “Everything has to be completed Tungland, the company’s man- the government and BP (as part How do you see UK-Azerbaijan sion in 2009, will open up Azerbaijan’s landlocked gas reserves to markets relations developing? Azerbaijan’s hydrocarbon in- Shah Deniz by the end of 2018,” insists SO- aging director. of the Azerbaijan International Cleaning up the Without this relationship there dustry is driving both foreign across Europe. By attracting foreign expertise and investment and creating The huge gas field under the CAR vice-president Elshad Nas- “Once in Italy, TAP will plug into Operating Company) enabled ef- would be no support for the and domestic policy. the transport links to reach its markets, the country is now reaping huge Azerbaijani sector of the Cas- Black City sirov of the TAP project which the Snam Rete gas network from ficient exploration of the vast oil investments made here by pian Sea holds an estimated An unfortunate legacy of Azerbai- How important is Azerbaijan’s rewards from its abundant natural resources. 1.2 trillion cubic metres of was approved back in June. “The where gas can then be supplied reserves. ACG’s fields, holding an BP, and as an enabler of the jan’s rapid Soviet industrialisation Southern Gas Corridor we rely oil and gas sector to the coun- Writer: Doug Gray gas, of which 10 billion a first flow of gas will be one billion to Switzerland, France, Austria, estimated 5-6 billion barrels of and oil development is the pollu- try and the region? year will be made available on the further support of the cubic metres. It will then take sev- Germany, Belgium and the UK oil, account for the vast major- tion and environmental damage to UK. Nobody can be secure The sector has created to European consumers. First eral years to reach peak produc- through various pipeline sys- ity of Azerbaijan’s total output, Baku and the Absheron peninsula. great opportunities for us to gas from the TAP pipeline is when the supplier of energy Azerbaijan’s existing pipelines have long companies such as BP are flocking to the coun- tion of 16 billion cubic metres, tems. As more and more gas in- which is then pumped to the San- The government, as part of a wider itself is not. establish strategic relation- expected in 2019. national mood of ambition and ships at a global level and to propped up energy supplies in much of Europe, try to participate in its thriving oil and gas out of which six billion will be terconnectors are built, Europe’s gachal Terminal south of Baku renewal, is making a serious at- Does SOCAR take environmen- create and broaden new col- and its future networks can offer a solid back- industry. The state-run energy giant SOCAR Azeri-Chirag-Guneshli sold in Turkey and ten billion will energy market will become even and sent along another series of tempt to deal with these issues, tal concerns seriously? laborations. It is impossible Since the 30-year production- bone to Europe’s energy security. A multibillion stands at the heart of the sector’s growth, with be available for the gas consum- more integrated with the result key pipelines including Baku-Tb- with initiatives ranging from the In 1848, Baku was the first to imagine the energy map of sharing deal between BP-led dollar deal signed with Turkey means the re- US$60 billion invested in the sector since the ers in Europe.” that I’m sure we will frequent- lisi-Ceyhan (BTC). Partly funded planting of trees to the replacement city in the world to start oil our region and Europe without AIOC and the Azeri govern- of topsoil, while also seeking ways production. We have now been Azerbaijan. cently approved Trans-Adriatic Pipeline (TAP) country’s independence and continuing expan- ment –dubbed the ‘contract Leading foreign investment has ly find Azerbaijani gas being by the World Bank and opened in to avoid future hazards arising from instructed by the government will carry gas from the Shah Deniz fields to sion into Europe. According to OPEC figures, of the century’ – in 1994, been BP who, together with SO- used in the UK in the future,” 2006, the BTC was widely consid- the continued development of its to clean up the effects of 165 How much foreign participa- the underwater oil field ACG Italy before going on to consumers in Germany, Azerbaijan’s oil reserves amount to 7 billion CAR, represents more than one he added. ered one of the most important energy resources. The efforts are years of oil production. We’re tion is there in the sector? has been developed in three France, Switzerland and, potentially, the UK. barrels as of last year. The country also boasts third of the Shah Deniz consor- Delivery of gas to the pipeline projects the region had ever seen, paying off: the 2012 Yale Environ- spending billions of dollars on Today, dozens of British phases, producing over one mental Performance Index ranked the re-cultivation of soil, the companies participate in con- Providing energy is a familiar role for the coun- 2.6 trillion cubic metres of proven natural gas million barrels of oil equiva- tium that in June chose the TAP is expected in 2019, with close providing a crucial Mediterranean the country as having made the cleaning up of the Caspian Sea struction, energy, commerce try. As long ago as the turn of the last century, reserves, and SOCAR’s investments have been lent per day from all wells project to eventually deliver up to 900km of construction to be port outlet in Turkey via Georgia second-best progress on environ- and on planting thousands and other sectors of Azerbai- Azerbaijan supplied approximately half of the invaluable in tapping into the nation’s vast by 2009. to ten billion cubic metres of carried out to realise the new and another much-needed alter- mental standards of all countries of trees. jan’s economy as investors world’s oil needs, while today international hydrocarbon wealth. natural gas to Greece, Italy and corridor project, and the increase native to Russian supplies. <<< surveyed over the past decade. and contractors. A striking ex- ample of that is the BP-SOCAR energy cooperation. What is Azerbaijan’s ap- Perspectives: TAP Renewable energy proach to environmental What do you believe were the of their collective balance reduce the price of energy and country’s overall energy mix. By 2020, he for Reconstruction and Development to protection? key factors and advantages sheets means that we were the What’s the alternative? improve supply security for the estimates that the country will be able to be around 1,500MW. Traditional energy sources that resulted in TAP’s selec- only pipeline which doesn’t entire region of south-eastern take advantage of its 2,400-3,200 hours are not inexhaustible and a tion for the Southern Gas rely on public subsidies. In a Like many oil-producing countries, Europe. of sunshine per year to boost its solar Azerbaijan hopes to raise over US$7 number of state-run pro- Corridor? time of global recession, this Azerbaijan is keenly aware of the production capacity to 600MW, while billion in alternative energy investments grammes have already been TAP’s offer was an extremely was an important factor. What is the estimated time- environmental threats caused by the waste-to-energy, biomass and thermal by 2020, with opportunities ranging from implemented in alternative strong one. Our route is not frame for the completion and hydrocarbon industry, and has made sources are also being looked at. the construction of wind power plants in and renewable energy. We only the shortest and most What will be the benefits of implementation of TAP and the conscious decision to apply new In addition, Azerbaijan’s rivers have the Absheron Peninsula, the installa- also cooperate with the IFC to cost effective of the differ- TAP in the regions it passes the Southern Gas Corridor technologies to reduce of pollution and a hydropower potential of 40 billion tion of small hydropower plants in the encourage small and medium ent options; it also delivers through? Project? promote new, clean ways of power- businesses to use alternative to Europe’s third largest gas In Greece we expect the TAP ing the nation. To this end, Azerbaijan kWh, of which 16 billion kWh would be Nakhchevan Autonomous Republic, energy sources. Azerbaijan “We will frequently market, Italy. project to cost approximately We’ve very deliberately syn- established in 2009 the State Agency economically viable. Preferential tariffs the building of solid waste recycling also successfully cooperates Our shareholders E.ON and €1.5 billion – one of the larg- chronised our project with the for Alternative and Renewable Energy are already in place for the development plants around Baku,to supply residential with the World Bank, Asian find Azerbaijani gas Statoil have world-leading est foreign direct investments Shah Deniz consortium’s own Resources (SAARES), which is dedicated of small hydropower plants. settlements with electricity and heat, Development Bank and Ger- being used in the UK technical expertise in develop- in the country. In Albania we delivery timetable. When gas to exploring and producing environmen- and the development and production of man Development Bank in this ing and constructing projects estimate that we will create is delivered to TAP, which is tally sustainable energy, from solar to Meanwhile the country – whose capital renewable energy technology – including area. We are also a member of in the future” like this, so we were able to in the region of 2,000 jobs expected during 2019, we will wind power. city’s name Baku is widely believed to photovoltaic panels and wind turbines the International Organisation demonstrate the technical ca- during construction alone. And be ready to ship it to markets be derived from Persian words meaning – at the Sumgayit Technologies Park, Kjetil Tungland “wind-pounded city” – is starting to taking advantage of the financial incen- for Alternative and Renewable Managing Director of pability to build the TAP pipe- of course there’s the impact in south-east Europe, Italy and Akim Badalov, head of SAARES, calcu- tives, tax exemption and infrastructure Energy Sources. Trans Adriatic Pipeline line. In addition, the strength of the gas itself, helping to on into western Europe. lates that renewable energy could com- harness its considerable wind power po- The Gobustan experimental hybrid polygon is a test site for alternative energy, 50 miles fortably make up to 20 percent of the tential, estimated by the European Bank offered by the state. from Baku. 10 _ AZERBAIJAN > DIVERSIFICATION > ICT 11

Azerbaijan is reinvesting its oil revenues into emerg- Read the full Q&As ing sectors and social programmes to fuel devel- the-report.net/ Azerbaijan 2020 azerbaijan opment. Through the ‘Azerbaijan 2020’ national development concept, the country aims to double its sets out vision GDP per capita by 2020 with an annual average GDP Social programmes and policies growth rate of 7 percent in non-oil sectors. for diversification More than 150,000 refugees and IDPs (internally displaced people) have been housed in new settlements financed by SOFAZ, while every citizen Shahin Mustafayev under 35 years old who is admitted to an eligible Minister of Economic Development international university gets full scholarship. The AzerSpace-1, run by national satellite operator How successful has Azer- Industry Science and ICT Azercosmos, will tap into the baijan been promoting grammes an wholesale satellite lease mar- foreign investment? ial pro d polic Over 40 industrial enterprises were built Soc ies Azerbaijan has declared 2013 the Year ket serving retail VSAT and Azerbaijan was the first and commissioned last year, including the of ICT and is providing high-speed other satellite communica- country to declare the Cas- Sumgayit Hi-Tech Park and chemical internet access for every single tion service providers in Eu- pian Sea open to foreign “The very first financial resources of the residence in the country at a cost of industrial plant. State Oil Fund of Azerbaijan (SOFAZ) were rope, Asia, Middle East and investors, and attracted The government wants to allocated to the improvement of refugee US$550 million. Africa. The satellite’s launch US$144.4 billion in invest- increase SME activity in the and IDP living conditions in 2001.” Azerbaijan launched its first is the latest venture as ment between 1995 and industrial sector and satellite, AzerSpace-1, into Azerbaijan seeks to become 2012. Almost half of this invite investment into Ali Hasanov orbit on 8th February an ICT hub and information figure came from foreign this field. Deputy Prime Minister 2013. National hub between East and West investors; Azerbaijan satellite operator and will soon be followed by ranks first among the CIS Azercosmos is further launches. countries for FDI volume planning a per capita. second "State-of-the-art “The government’s launch. What are Azerbaijan’s infrastructure projects have strategy is to transfer oil been implemented in the capital into human capital, advantages as an invest- y country, creating hundreds making Azerbaijan an ICT ment destination? r of thousands of jobs." and business hub for the S Azerbaijan is the most t c 2013 – The Year of ICT s region.” i stable country in the sur- u Natig Aliyev e US$5.5 billion n Writer: Oliver Moss rounding area from both d Minister of Industry Kirill Gaburich c n allocated to refugees an economic and a politi- I & Energy CEO of Azercell e and IDPs between cal point of view. Being the a ICT has become the second most profitable sector in Azerbaijan’s economy and the gov- natural bridge between 1993-2012 n Europe, Central Asia d ernment has put its development at the forefront of its agenda as the nation seeks to be- and the Middle East, Azer- I “Our Gazakh Cement Plant 100 “A lot of money is flowing C come an ICT hub for the region. baijan is a logistics centre has a production capacity of 3 industrial US$3.6 billion from the oil sector, which is T million tons of cement per year coming into the non-oil for the region. facilities are the government’s and will enable us to meet 75 Oil reserves sector and attracts What is your future vision percent of the domestic currently under planned ICT spend investors.” * As the government’s ‘Azerbaijan 2020’ vi- One of the key programmes this year is the link Frankfurt to Hong Kong and con- for the economy? demand.” 7 billion between now construction in sion gathers pace, the ICT sector has become national broadband development project nect 20 countries is seen as an integral Our priorities and key and 2020 Richard Shearer Khagani Guluzade Azerbaijan Production CEO of Bakcell one of the country’s leading growth areas that will bring high-speed internet access part of Azerbaijan’s vision to become objectives are to maintain Chairman of Akkord 930,000 and a major recipient of investment as the into every home in the country at a total cost an east-west transport and logistics macroeconomic stability, barrels per day (2012) authorities look to transfer resource wealth of US$550 million, to be financed by the corridor. increase the competitive- ness of the national econo- Top 20 world oil to human resources. state oil fund SOFAZ. Through this project These achievements have not gone unno- my and accelerate efficient exporter Over the past decade the ICT sector has the government hopes to provide 100Mbps ticed by international organisations integration of the country grown by an average of 25-30 percent per internet access to all of Baku by 2015. with the World Economic Forum’s net- into the world economy. US$435 year, and although growth figures for 2012 The ministry also funds around 200 stu- work readiness index placing Azerbai- By 2020 our goal is for the 2 million millionSOFAZ dropped off the pace a little at 17.3 percent, dents who have gone to study ICT-related jan 56th out of 144 countries while it country’s GDP per capita tourists in 2012, up to more than double to funds allocated to the the it is now a US$2 billion industry and the programmes in foreign universities. On ranked 20th on the affordability in- from almost 1.2 construction of the US$13,000. Our aim is to second largest recipient of foreign direct in- their return they should find plenty of work dex. In addition, Azerbaijan is look- turn the country into the million in 2006 Baku-Tbilisi-Kars vestment after the oil industry. with the construction of a Hi-Tech Park ing to bolster its international stand- region’s commercial cen- railway project Indeed the ICT is fundamental for the within a ‘special innovation zone’ which ing in the ICT world by hosting the tre, bringing the per capita “The reserve of Gobustan and “Like in 2011, Azerbaijan’s January 2013 of * As Administration. Information Energy US Journal, and Gas Oil Sources: government’s vision to double GDP per aims to link the scientific and production inaugural UN global conference on non-oil export figure to the Old City of Baku were GDP growth in 2012 was US$1,000. We’re target- both recently incorporated provided entirely by the SOFAZ capita by 2020 through the development of fields of ICT. cyber security in Baku in December ing an average pace of Through the into the UNESCO World non-oil sector.” Financed the a knowledge-based society. So much so in To encourage further investment in the ICT of this year. annual real GDP growth in 2010-2014 Heritage List.” government’s state Shahin Mustafayev fact, that President Ilham Aliyev declared sector, the government has established a With a 70 percent internet penetra- the non-oil sector of more Abulfaz Garayev Minister of Economic share of the programme for s Baku-Tbilisi- 2013 the ‘Year of ICT’, launching a raft of state fund for the development of informa- tion rate, there is still plenty of than 7 percent. I would like Minister of Culture and Development ic to establish an innova- tourism T Tourism t Ceyhan pipeline measures and programmes for further de- tion technologies under the ministry. “It room for Azerbaijan’s ICT sector o s tive economy, ensure the development, the u “[The tourism sector] “We will construct almost i and is financing the r g velopment of the sector. supports production-oriented activity in the to grow further and the govern- economy’s transition to first tourism is contribution to the GDP 900km of pipeline across three o Baku-Tbilisi-Kars education institution m increases every year, and many countries, including a L railway project “This year will see the improvement of the field of information technology and attracts ment sees it as an integral part an export model, and has been established. a people are subsea section.” nd legal and regulatory framework, ICT capac- local and foreign investment to this field,” of its vision for long-term sus- ensure the sustainable A winter and summer tourism n now employed by the sector.” a The TRACECA and North-South and balanced develop- d Kjetil Tungland ity building and the development of the says Dr. Abbasov. tainable development. “ICT in complex including ski facilities re International Corridor are ment of the regions of the ho Muzaffar Agakerimov Managing Director of u information society and human capital,” Azerbaijan is looking to capitalise on this Azerbaijan has become both has opened in the mountain resort s ct currently being constructed and a country. In this way we will p Advisor to the Chairman of AzTA Trans-Adriatic Pipeline (TAP) u highlights Dr. Ali Abbasov, minister of com- growth and investment by becoming a re- an independent economic sec- of Shahdag, while six new five-star ita str new international sea port is being eliminate poverty and see hotels have been opened in Baku. lity fra developed south of Baku. munications and information technologies. gional ICT hub through the implemen- tor and a driver of the over- Azerbaijan included in the In “The IT University, IT Development Fund tation of projects such as TASIM, EPEG all socio-economic develop- With increasing advances ranks of the developed in technology, Azerbaijan Tourism and hospitality and High-Tech Park will all be established and EuraCA. TASIM (Trans-Eurasian ment of the country,” states countries. Infrastructure & Logistics now competes in the in 2013.” Super Information Highway), which will Dr. Abbasov. <<< global satellite market.

The State Oil Fund of Azerbaijan such a way so as not to distort Where does SOFAZ invest around What are your long-term objectives How much investment are you E-government is one of the devel- into the ICT sector? investment environment. The (SOFAZ) was set up to administer the economy. The second objec- the world? for the fund? expecting in the sector? opment priorities of our country We take bold actions to encourage establishment of the State Fund for Azerbaijan’s oil and gas revenues tive is intergenerational equality. Last year, we started diversifying our The idea is to build an internation- Between now and 2020, the and we have based our policy on foreign investment and to ensure the Development of Information and today manages a fund roughly We cannot allow only the current asset classes. We are an investor in ally-renowned investment house government plans to spend about international best practices. We participation of the private sector Technologies under this ministry equal to half of Azerbaijan’s GDP. generations to benefit from oil and the UK financial markets as well as with a high reputation for profes- US$3.6 billion on the implementa- have set up a central portal to citi- in ICT infrastructure projects. Our is one example. Steps are being gas; everyone should have access in real estate. We still have invest- sionalism and I think we are quite tion of various projects. Foreign zens with a one-stop shop access main goal is to reach an annual taken for the development of the What are SOFAZ’s objectives? to the benefits so we provide for ments in Europe but we’re starting successful. We are known every- and domestic private investment is to state e-services. The portal has US$1 billion fixed capital invest- sector including a change of fiscal SOFAZ has three major objec- the future generations as well. The to look more and more at the Asian where. If you go into the financial expected to be the same amount. more than 50,000 monthly users ment in the field of ICT, an increase policy, the application of customs tives. The first is the preservation third is the question of how to use markets. We’re a global investor. We world, everyone knows SOFAZ, and so far. on 2011’s figure of US$530 million. and taxes concessions and the es- of macroeconomic stability. We this money for the diversification of are investing in every single market everyone knows that we are very What progress have you made on We are currently establishing an tablishment of more advantageous Shahmar Movsumov Dr. Ali Abbasov the development of e-government? How are you promoting investment Executive Director of SOFAZ have to manage the revenues in the economy. everywhere around the world. prudent, professional investors. Minister for Communications and IT improved material, financial and monetary conditions. 12 _ AZERBAIJAN > BAKU 13

A New Baku The face of Baku is changing rapidly as a series of mega-projects push architectural boundaries, all part of the greater Baku regional develop- ment plan, which is a sustainable vision for the future sustainable growth and development needs of the city and its surrounding areas. The plan, which envisages over US$6 billion of investment into Baku, includes the expansion of the street and road network by hun- dreds of kilometres, the introduc- tion of new types of public trans- port such as light rail, skytrains and metrobuses, the reduction of pollution and the creation of parks and public gardens in an area of 34,000 hectares. 1. Heydar Aliyev Centre Designed by renowned British-Iraqi architect Zaha Hadid, the curved, pearl-white cultural centre was named as one of the best architec- 1 2 3 tural projects of 2012 and was built to reflect the philosophy of post- independence leader Heydar Aliyev. 2. Khazar Islands Spread over 55 different artificial islands to the south of Baku, this Baku project is the most ambitious yet and will become a city accommodat- ing up to one million people over its four stages of development. Investment capital The centrepiece will be the world’s Writer: Oliver Moss tallest building, Azerbaijan Tower, at 1,050 metres. Baku has been undergoing an enormous transformation in recent years. The city’s 3. Flame Towers These three towers shaped as skyline is changing dramatically as increasingly ambitious mega-projects spring up, flames resemble the ‘land of fire’ that is Azerbaijan. The towers have juxtaposing old and new and attracting plaudits and visitors alike. quickly become a modern emblem of Baku and host offices, apart- ments and the five-star Fairmont Ho- tel. Completed in 2012, the towers cost an estimated US$350 million. 4. Baku Boulevard Originally established as a prom- enade in 1909, Baku’s Caspian seafront is being expanded along the city’s entire shoreline and is a popular place for an evening stroll. 5. Maiden Tower Built in the 12th century and located in the Old City, the Maiden Tower is one of Azerbaijan’s most recognis- able emblems and is also inscribed on the UNESCO World Heritage list. 4 5 6 6. White City Designed by Atkins and Foster+Partners, the award-winning White City Project will transform Profile the formerly run-down ‘Black City’ Akkord area of East Baku into a thriving and Read the sustainable business and residen- full Q&A Azerbaijan’s infrastructure infrastructure systems and billion,” points out Guluzade, Construction in South Caucasus the-report.net/ boom and Baku’s mega- has 11 projects underway in six who says the company’s aim is and Central Asia at the Institute tial community spread over azerbaijan projects provide fantastic regions of Azerbaijan, with a to “expand beyond Azerbaijan of Directors by the Europe Busi- 220 hectares. opportunities for construc- total contract value of almost and become an internation- ness Assembly in London, while 7. Palace of the Shirvanshahs tion companies. Akkord has US$400 million. “Through heavy ally competitive transnational in 2013, the company became Similarly recognised by become a construction giant investments into industry and corporation.” a corporate affiliate member of UNESCO, the palace was the seat of within Azerbaijan and its sur- manufacturing, the introduction the International Tunnelling and rounding region, with ongoing of new technologies and know- It’s already well on the way: in Underground Space Association power of the Shirvanshah dynasty, large-scale infrastructure how, and the creation of new April 2012, Akkord was awarded (ITA-AITES) and World Road As- prominent in the region in the 15th projects worth US$2 billion, workplaces, Akkord Corporation Best Enterprise in the Field of sociation (PIARC). century and a classic example of including the expansion of makes a substantial contribu- medieval Azerbaijani architecture. Baku’s metro system and the tion to the development of the 8. National Flag Square “The development plan for Gazakh Cement Plant, which non-oil sector,” says Guluzade. 7 National Flag Square in Baku covers has a production capacity of 3 60 hectares and features the state the metro envisages the million tonnes per year. Building on the success it has achieved in its home market, symbols of Azerbaijan, a map of construction of more than In real estate, the corporation the company is now active in the country, and most notably the 50 metro stations and 165 has constructed and commis- several countries including country’s 70 metre by 35 metre flag, sioned 10 housing estates Turkey, Georgia, Kazakhstan, flying on a pole 162 metres high. km of tunnels in the next covering a residential area Uzbekistan and Ukraine. In ad- 9. Baku Taxis of more than 775,000 square dition, in 2012 the corporation A curious sight for Londoners, 1,000 metres, and more than 56,000 opened a representative office 20 years.” TX4 cabs, in purple, currently serve square metres of commercial in Frankfurt, Germany. “Our Khagani Guluzade space in Baku. Recently, Akkord current portfolio of ongoing road Baku and thousands more are being Chairman of the Board and General Director of Akkord has moved into the construction infrastructure projects in foreign ordered in preparation for the Euro- Industry Construction Investment Corporation of water supply and sewerage countries amounts to US$1.1 pean Olympic Games in 2015. Akkord owns and operates several cement plants within Azerbaijan. 8 9 14 _ AZERBAIJAN > SPORTS > TOURISM 15

Luxury option Jumeirah Bilgah Beach Hotel Read the In 2012 Dubai’s Jumeirah hotel the Azerbaijani tourism sector? now this is possible. If the posi- full Q&A the-report.net/ group became the latest five-star Azerbaijan is recognised for its tive economic climate continues azerbaijan brand to open a hotel in Azer- rich energy resources and all the then investor confidence in the baijan’s tourism and hospitality business opportunities related tourism sector will grow. sector. Set on the Caspian Sea, to the oil and gas industry. It is just 35 kilometres from the centre now very encouraging to see the How would you characterise the of Baku, Jumeirah Bilgah Beach world coming to Azerbaijan for five-star sector in Baku? Hotel offers 176 luxurious rooms different purposes, hence the The five-star hotel sector has and suites and a vast array of fa- progress and development within flourished over the last 18 cilities for business conferences or the tourism sector. Baku is at the months with most of the major family holidays. As the only luxury forefront but due to Azerbaijan’s hotel companies establishing “The five-star hotel sector has international city resort in Baku, many unspoilt nature reserves, themselves in Baku. Baku is not flourished over the last 18 the Jumeirah Bilgah Beach Hotel parks and the genuine culture of only a business destination but a Azerbaijan won 10 medals at London 2012 months with most of the major has been able to tap into both the hospitality in the regions you see city with a fascinating history, a hotel companies establishing business and leisure traveller seg- more and more investment in the vibrant arts and cultural hub and ments and sees Baku as a gateway areas outside of Baku which is a a remarkable balance of old and themselves in Baku.” to the CIS region. very promising sign for everybody new architecture. As Jumeirah, Mete Atakuman involved. A few years ago no-one we consider it both a privilege General Manager of Jumeirah Bilgah How would you describe the cur- would have thought of coming to and an opportunity to be in Baku Beach Hotel rent investment climate within Azerbaijan for a skiing holiday; in such exciting times. www.jumeirah.com

Baku’s Tofik Bakhramov football stadium

1 2 Rhythmic gymnastics is one of Azerbaijan’s most New stadia, gymnastics and sporting facilities are being constructed as Baku builds up to Europe’s first Olympic Games in 2015 successful sports 1. Azerbaijan recently inaugurated the Shahdag Winter Complex and ski resort as it looks to diversify its tourism offerings Tourism in numbers 2. Baku’s Old City forms the walled historic core of Baku. Some researchers believe that it dates as far back as the seventh century. In 2000 it was included on the UNESCO World Heritage list Baku: Olympic city 27% 1,986,000 US$2.4 billion Writer: Oliver Moss Annual growth in Inbound tourists 2012 international In recent years, Azerbaijan has been increasingly successful in the field of sports and is tourism arrivals in 2012 in 2012 tourism receipts now looking forward to 2015, when its capital Baku will play host to the inaugural European Source: UNWTO Olympic Games. On December 8th 2012, the European augural games in Baku will cover 19 differ- ing place for many years, as part of efforts to Factbox Olympics Committee (EOC) voted to hold ent sporting disciplines and incorporate an re-invest Azerbaijan’s oil and gas wealth in Something for everyone Writer: Oliver Moss 1996 the inaugural European Olympic Games in estimated 6,351 athletes. The ministry of other areas of its economy and development. Azerbaijan wins just one medal at the the Azerbaijani capital Baku in 2015. The youth and sports estimates that the total “We have opened 36 Olympic sport com- Atlanta 1996 Olympic event, which will be held between the 12th investment will come to between US$200- plexes since 2000 and every year two or three Attracting over two mil- Packing nine of the world’s eleven climate lights Abulfaz Garayev, minister of culture the ninth century and boasts a mountain- Games and 28th of June, is seen as a major coup 300 million and will attract 15,000-20,000 are being built”, explains Azad Rahimov, zones and several UNESCO World Heritage and tourism. ous resort area known for its extraordinary 2012 for Azerbaijan and further evidence of its visitors to Baku. Azerbaijan’s minister of youth and sports. lion visitors in 2012, Azerbai- sites into an area slightly bigger than Scot- Recent events such as the 2012 Eurovision natural beauty. Known locally as the ‘Swit- Azerbaijan achieves its increasing role and exposure on the Euro- Since the announcement, the authorities in This investment in sports and infrastruc- land, Azerbaijan, with its 2010-2014 state Song Contest have had a positive effect on zerland of the Caucasus’, Gabala offers an best medal haul yet at jan is set to become a rising London 2012, bringing pean and international stage. Azerbaijan have set about developing major ture has led to great improvements on the programme for tourism development, has attracting international attention. Accord- abundance of attractions, including the home 10 medals and “Azerbaijan will ensure excellent or- sporting infrastructure to accommodate the international stage for Azerbaijan’s ath- star in international tourism made great strides in recent years to develop ing to the United Nations World Tourism stunning five-star Qafqaz hotel complex finishing 30th in the ganisation of this event, and Baku will event, with an eye on hosting further major letes. After picking up just one medal in its tourism potential and place this country Organisation (UNWTO), over 2 million and the 3,000-capacity Tufan Alpine Ski- medals table rankings as it seeks to at- be part of the history of the European international sporting events in the future. the 1996 Atlanta Games, Azerbaijan’s medal in the heart of Eurasia on the international foreign tourists visited Azerbaijan in 2012 ing Summer and Winter Recreation Com- 2015 tract visitors to its diverse Baku will hold the Olympic Games”, announced President The main Olympic stadium will hold some haul began to improve and they won ten in travellers’ circuit. and the authorities are hoping for a 70-80 plex, which began construction in February inaugural European Ilham Aliyev when Baku was chosen by 68,000 spectators while an Olympic Village London 2012, finishing 30th in the overall landscapes and ancient “Azerbaijan has all the necessary elements percent increase in tourist flow over the next 2013. As a member of UNWTO’s Silk Road Olympic Games in June the EOC. and various other major sporting complexes medals table. culture. to become a successful tourism destina- five to six years. New offerings such as the Programme, Azerbaijan today plays a vital 2020 The European Olympic Games were devised are being built. “For a small country like Azerbaijan to have tion: hospitality, a rich history and cultural Shahdag ski complex add to the country’s role in boosting the region’s tourism indus- Baku is bidding to be- to run parallel to other continental games But although the announcement came in won ten medals in the Olympic Games really heritage, beautiful natural landscapes, de- diverse attractions. Another of the jewels in try by enticing increasing numbers of visi- come one of the host cities for the Euro 2020 such as the Pan-Asian, Pan-American and December, the development of Azerbaijan’s shows a logical development of sports in our licious cuisine and at the same time a very Azerbaijan’s tourism crown is Gabala, which tors to this ancient and distinctive part of football championship All African Games every four years. The in- sporting infrastructure has been quietly tak- country,” Rahimov highlights. <<< favourable geographical location,” high- was the capital of Caucasian Albania until the world. <<<

How does the UK assist Azerbaijan in real crossroads between north and south, What is your key objective? What aspects of Azerbaijan will you perceived by tourists and business travel- Azerbaijan is situated at the crossroads of areas of investment in sport? west and east. Azerbaijan is located on the The 2015 Games. That’s what’s on my mind highlight at the World Travel Market in lers? the continents, between West and East. We are very grateful for the assistance we Silk Road and we can deliver culture, his- all the time. It’s very important to organise London? Azerbaijan has the potential to develop Our country boasts nine of the world’s 11 have received from Lord Sebastian Coe. tory, tradition and cuisine to the world. The these inaugural Games correctly. Every- This year, we will emphasise the cultural various types of tourism, from sun and climate zones and a very rich and ancient Immediately after we won the bid for the Olympics are very important to us because thing depends on the first event. I want to and historical uniqueness of Azerbaijan. beach tourism to meetings, incentives, culture. On the territory of the present-day European Games, he visited the country they can actually change the face of the create very modern conditions, from the We are planning the involvement of na- conferencing and exhibitions (MICE). republic, which, in ancient times, was a and offered his expertise and knowledge. city. We have created the infrastructure in sport venues to the medical support and tional dancers.We consider our participa- We established the Azerbaijan Conven- junction of trade routes from Asia to Eu- Some of this team are now here on the Baku. At the moment we have three huge doping control. I want more people to get tion at the WTM as a great opportunity to tion Bureau on 10th June 2013 to attract rope, more than 7,000 historical, archaeo- ground in Baku working with us. sport venues under construction; one is involved in sport and I want to achieve expand our international networking, to congresses and conferences to Azerbaijan logical and architectural monuments have a swimming pool complex, the second is more success in team sports. A very impor- exchange knowledge and to attract more and increase the MICE tourism segment. been found. The famous archaeological What does Baku have to offer as an inter- a football stadium of more than 65,000 tant point for us and for the Olympic family international tourists to Azerbaijan. reserve of Gobustan and the Old City of Azad Rahimov national Olympic city? seats and the third is a gymnastic is building a legacy. Abulfaz Garayev What sets Azerbaijan apart as a tourism Baku were both recently incorporated into Minister of Youth and Sports Baku is the world’s best-kept secret. It’s a complex. Minister of Culture & Tourism How would you like Azerbaijan to be destination? the UNESCO World Heritage List. 16 _ AZERBAIJAN > CULTURE

A font of cultural trends Writer: Oliver Moss

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Located on the ancient Silk Road, Azerbaijan’s centuries-old cultural heritage is experiencing a renaissance as recent events place Baku centre-stage.

Azerbaijan and its people and streets and unique architectural with sweet Azeri wine, fresh green culture rarely fail to impress and patterns.” lemonade and the ubiquitous tea, surprise those who venture to Many sites and traditions have poured straight from the samovar. these ancient lands at the cross- been recognised in recent years Azerbaijan seized its chance in roads of Europe and Asia. Situ- by UNESCO, with the Old City 2012 to put its country and culture ated on the historic Silk Road, of Baku, including Shirvanshah’s in the spotlight by hosting the Eu- 4 Azerbaijan has for centuries been Palace and the Maiden Tower, and rovision Song Contest, watched by a melting pot of different cultures, the Gobustan petroglyphs added an estimated 200 million people. traditions, peoples and religions to the World Heritage list. Simi- “The country understood that this that have given it a rich and diverse larly the mugham and ashugs dances, was a unique chance to present to cultural heritage. the tar performance art, Azerbaija- Europe its culture, arts and tradi- Over millennia, Azeri culture de- ni carpets and the Nowruz spring tions,” reflects Garayev. “Since the veloped under Turkish, Islamic, holiday are all on UNESCO’s In- event Azerbaijan’s tourism indus- European, Russian, and Persian tangible Cultural Heritage list. try has not had to explain what influences and today all of these The government has moved to Azerbaijan has to offer to foreign elements can be found. “Azerbai- recognise these aspects of Azeri visitors.” jan’s culture and heritage is very culture by building a carpet mu- Azerbaijan is also one of the diverse,” explains minister of cul- seum and mugham centre as Baku world’s few genuinely secular Mus- ture and tourism Abulfaz Garayev, experiences an oil-fuelled cultural lim states and religious and social “ranging from Stone Age petro- renaissance. tolerance is a key part of its cul- 5 glyphs and burning mountains Azerbaijanis are justifiably proud ture. Walk around Baku and you to the 12-hectare Old City with its of their cuisine and foreign visi- will pass mosques, synagogues, city walls, bastions, gates, narrow tors will likely be treated to their churches and Zoroastrian temples. legendary hospital- Women were given the right to vote ity at family feasts in 1918 – before the UK. involving an array “The Azerbaijani government “Azerbaijan has a rich of delicious foods, is determined to protect and culture and history and from grilled meats promote its secular approach to unique Caspian to right of worship,” says Chris- the people are fiercely Sea fish, giant or- topher Pincher MP, chair of the ganic vegetables and Azerbaijan All-Party Parliamen- proud of that.” herbs, the ever-pre- tary Group. “The place has a rich Christopher Pincher sent plov rice dishes culture and history and the people Chair of the Azerbaijan All-Party Parliamentary Group and all washed down are fiercely proud of that.”<<< 6

A varied culture 2. Alim Qasimov 3. Azerbaijan carpets role in the development of the country’s sical repertoire includes 200 songs and Winner of the 1999 International Music Azerbaijan is an ancient centre of carpet musical heritage. nearly 2,000 poems. It was inscribed on 1. Eurovision madness Council-UNESCO Music Prize, inter- weaving, and in November 2010 the Azer- the Representative List of the Intangible Baku’s Crystal Hall hosted the glitz and nationally-renowned Alim Qasimov is baijani carpet was proclaimed a Master- 5. Azerbaijan’s troubadours Cultural Heritage of Humanity by UNESCO The art of Azerbaijan’s troubadours, the glam of Eurovision in 2012. The event was Azerbaijan’s best-known mugham singer piece of Intangible Heritage by UNESCO. in 2009. Ashugs, combines poetry, storytelling, designed around a fire theme as a refer- and featured as part of the opening act dance and vocal and instrumental music ence to the country’s nickname ‘The Land of the grand final of the Eurovision Song 4. Traditional instruments 6. Celebrations into a traditional performance art. Charac- Each year, on the first day of spring, of Fire’. Forty-three countries participat- Contest in 2012. Azerbaijan’s musical traditions date back ed, with Sweden eventually winning first to antiquity. Today, the mugham trio (tar, terised by the accompaniment of the saz, Novruz Bayram is celebrated throughout place with ‘Euphoria’. kamancha and gaval) play a significant a stringed musical instrument, the clas- Azerbaijan with music, food and games.