24 April 2014 | 20:56
In The Region Armenia Georgia Turkey Iran Russia

Money from oil changes the face of Azerbaijan

Fri 22 July 2011 10:17 GMT | 15:17 Local Time
60198

News.Az reprints an article by Ipek Yezdani from Hurriyet Daily News.

The main reason behind the change in Azerbaijan is the rise in oil prices and oil revenue. Today it is the production center for 70 percent of the Caucasus’ economy.

With skyscrapers starting to tower over the city, impressive five-star hotels being built and luxury boutiques opening everywhere, Baku has changed dramatically in the last three years due to a rise in oil revenue.

Mud along the Caspian Sea shore has been transformed into walking promenades, parks and social facilities for the public. Three “flame towers” are being built as a business center, hotel and residence in the shape of Azerbaijan’s national symbol, a flame.

A consultant for Azerbaijani President Ilham Aliyev, Elnur Aslanov said five years ago that all the construction companies in Azerbaijan came from abroad; today, however, almost all of them are Azerbaijani.

Obviously, the capitalist system has been the first to discover the change in Baku: Shopping malls have already been opened, and prices are being raised higher and higher by the day.

Not only are the buildings changing: the people’s appearance in Azerbaijan is also changing. Gone are the days of old women with golden teeth – most young women are dressed up and sporting a trendier fashion style.

“Women in Azerbaijan tend to take First Lady Mehriban Aliyeva as a ‘role model’ for themselves; we adore her style and the way she looks after herself,” said Nigar, an Azerbaijani girl who did not provide her last name.

Production center

The main reason behind the major change in Azerbaijan is the rise in oil prices and oil revenue. Azerbaijan today is the production center for almost 70 percent of the Caucasus’ economy. Azerbaijan’s oil and gas is exported in seven different directions.

Shahmar Movsumov, the executive director of the State Oil Fund, said the country has begun to receive nearly 80 percent of the profits from the oil companies in the last three years, thanks to Production Sharing Agreements, or PSA, that have been signed with oil companies.

“There were 270m dollars in the State Oil Fund in 1999; however, today this number is more than 30bn dollars. Ten years ago even the whole Gross Domestic Product of Azerbaijan was not [even] 30 billion dollars,” Movsumov told the Hurriyet Daily News in a recent interview.

'Huge amount of money'

Movsumov is the executive that decides how the oil revenues will be used in Azerbaijan. “This is a huge amount of money, so we need to sort out how to use it in a more efficient way for Azerbaijan. Some oil countries like Libya and Nigeria could not manage this money in the most sufficient way, so the State Oil Fund was founded only with this objective in mind,” said Movsumov.

Most of the money coming from the oil is invested abroad, especially in the US, European and Asian markets, to ensure Azerbaijan’s macro-economic stability. “If we didn’t take this money abroad and use it there, our economy could become overheated. And this oil will finish one day, so we need to … save money for the future generations,” Movsumov said.

Some of the oil money is set aside for the internal budget in Azerbaijan. “This year more than 12bn dollars will be directed to the internal budget,” said Movsomuv.

Almost 5,000 new establishments opened in Azerbaijan in 2010, including universities, new roads and bridges, according to figures given by the state authorities.

Baku’s old city becoming tourist hub

Baku has long been famous for its 2,000-year-old old city but the capital has seen a growth in tourism in recent years thanks to the increased restoration of buildings in the historical quarter.

The mayor of the old city (which is governed separately from Baku), Mikail Jabbarov, said the number of foreign tourists had risen dramatically in recent years.

“We received almost 1 million tourists mostly from Turkey, Russia, Iran and Georgia in 2010. We expect more than 1 million in 2011,” Jabbarov recently told the Hurriyet Daily News.

This article was published in  Hurriyet Daily News.

Share Share Share Share Share