In its latest report, titled “Azerbaijan: Vulnerable Stability,” the conflict-prevention advocacy group said Azerbaijani President Ilham Aliyev’s presidency has been marked by a stabilization of the country’s political life and economic growth driven by oil exports. The group, however, warned that the oil revenues are leveling off and are projected to gradually decline within a few years, which could lead to economic problems and growing public frustration.
“As oil production is about to begin its decline, easy-money euphoria should be replaced by a pragmatic policy review,” Sabine Freizer, the ICG’s Europe Program director, said.
“To protect state stability, a start on economic and political reform is essential,” the report said.
Noting that the continuation of “business as usual” runs the risk that Azerbaijan could squander a historic opportunity to use its energy resources to build a more durable state system and a prosperous nation, the report said the growing over-reliance on the energy sector, discrepancies in wealth distribution and public disenchantment with both the government and traditional opposition parties increase the likelihood of a surge in radicalism and instability in the medium to long term.
The report underlined that Azerbaijan has already reached the peak of its oil-driven gross domestic product (GDP) growth rates, which ran as high as 35 percent in 2006 but are expected to slow to about 3 percent in 2010 and 0.6 percent in 2011. “If the authorities further delay reform,” the report warned, “they may lose the ability to control future developments and meet growing public expectations.”
The report said Aliyev could reinforce both his domestic and international credentials by embracing deeper structural change and genuine steps towards reform could also engender a more sympathetic attitude from the international community towards his most important policy problem, the conflict with Armenia over Nagorno-Karabakh.
