PATH TO LEADERSHIP

The thesis proclaimed by national leader Heydar Aliyev, "a state with a powerful economy is capable of many things", has been the main driver behind Azerbaijan's economic policy over the past twenty years. Thanks to high rates of economic development it was possible to secure Azerbaijan's triumphant liberation victory in the war for the de-occupation of Garabagh and Eastern Zangezur.

Since 2003, Azerbaijan has been in transition to a new socio-economic development model. Rapid steps have been taken to diversify and digitalise the economy, strengthen the role of the private sector and create a favourable environment for attracting investment and solving social problems. Since then Azerbaijan has been recognised as the most dynamic economy in the world, keeping in line with modern values as well.

From a gas importer to a major gas exporter

Twenty years ago, Azerbaijani economy began the recovery from the post-Soviet crisis period thanks to the oil strategy initiated by the national leader Heydar Aliyev. It soon reached the peak of its development, resulting in record growth in oil production and exports and the start of gas supplies to world markets.

On May 25, 2005, the Baku-Tbilisi-Ceyhan (BTC) oil pipeline was inaugurated. In 2006, Azerbaijani oil was transported worldwide from the Turkish port of Ceyhan. Today, the BTC pipeline also delivers oil from Kazakhstan to world markets. The pipeline has so far exported more than 4.1 billion barrels of oil. Azerbaijan's production and exports peaked in 2010 (50.2 and 32 million tonnes, respectively). 

To further secure the 'oil era', a new Contract of the Century was signed in Baku on September 14, 2017—the agreement on the joint development and production sharing of the Azeri, Chirag and Deepwater Guneshli (ACG) fields. Yet another agreement was reached on 2019 to build an additional production platform at ACG. In 2020, the Garabagh field was discovered with estimated reserves of more than 60 million tonnes of oil - the first in the period of Azerbaijan's independence.

The country's achievements in gas production and export are even more impressive. While Azerbaijan imported gas twenty years ago, today it has become a large and reliable exporter of gas to Europe thanks to long-term contracts with various countries. Since then Azerbaijan has become the initiator, shareholder and host of the strategically important Southern Gas Corridor worth about $40b and spanning 3,500 kilometres. On September 20, 2014, on the twentieth anniversary of the Contract of the Century, the groundbreaking ceremony of this great project was held in Sangachal.

In 2018, the official opening ceremony of the Trans-Anatolian Gas Pipeline (TANAP) took place. The transportation of commercial gas to Türkiye from Shahdeniz-2 field started on June 30, 2018. In 2020, the Trans Adriatic Pipeline (TAP) was commissioned. To date, a total of 25.8 billion cubic metres (bcm) of gas has been delivered to European countries via TAP. In 2023, the volume of deliveries will be at least 20bcm. Today, Italy, Greece, Bulgaria and Romania buy Azerbaijani gas in Europe. In addition, Hungary and Serbia will start receiving it by the end of 2023.

Non-oil sector as a priority

Money earned from the export of energy resources has been reinvested in the non-oil sector, which has been the focus of Azerbaijan's new economic model from the onset. That is why the State Programme for Socio-Economic Development of Regions (2004) was the first legal act that shaped the strategic direction President Ilham Aliyev's economic course. He also initiated the adoption of the State Programme on Poverty Reduction and Socio-Economic Development of Azerbaijan for 2004-2008. As a result, over the twenty years, the almost 50% poverty rate has been reduced to 5%. Thanks to these and many other measures, Azerbaijan's GDP grew by 10.2 per cent in 2004 (even before the start of big oil exports from ACG).

Compared to 2003, the volume of real and nominal GDP increased by 4 and 22 times, respectively! Investments in the national economy increased fourfold, with more than $300b coming from different sectors. In 2022, the total volume of investments in the Azerbaijani economy (from all sources) reached a record high of ₼29.135b, of which ₼14.9b were foreign investments.

In addition, the popular income and strategic foreign exchange reserves have increased 13.7 times and more than 40 times, respectively. External debt of Azerbaijan is less than 9 per cent of GDP, foreign currency reserves exceeding external debt ten times.

Investments in the non-oil and gas sectors have been the main driver of the private sector. Important steps have been taken to create a favourable environment for the development of entrepreneurship. Following successful structural and institutional reforms, its share in GDP reached 83.5% in 2022, with small and medium-sized enterprises accounting for 99% of economic facilities. As a result of these measures, non-oil exports from Azerbaijan reached a record $3b in 2022.

The industrialisation process is well underway thanks to the establishment of industrial and agricultural parks. As a result of modernisation in the agricultural sector, Azerbaijan has been able to substitute 80% of imported food thanks to local production (except for cereals). FAO ranks Azerbaijan among the prosperous countries in this regard. Azerbaijan is 100% self-sufficient in fruits, vegetables, melons and eggs thanks to domestic production. Self-sufficiency level in meat and dairy products reaches 85-86%.

Self-sufficiency, sustainability, development

Today Azerbaijan is the leading economy of the region. In addition to major oil and gas and transit projects, two transport megaprojects - the Baku-Tbilisi-Kars railway and the North-South International Transport Corridor - make an important contribution to the both the regional and international development.

In 2003, Azerbaijan imported electricity. But today the country is a stable supplier of electric power and annually increases production and export volumes. Over the past twenty years, 34 power plants have been built in Azerbaijan, with a generating capacity of approximately 3,400MW. While the volume of electricity exports from Azerbaijan in 2022 was just over 3 billion kWh, the same indicator was already reached in the first half of 2023.

Azerbaijan is rapidly developing the information and communication technology sector. Almost 85% of the local population already uses the Internet, while the global indicator is about 65%). As part of the Online Azerbaijan project launched in 2017, the existing ADSL equipment is being replaced with GPON technology, the old copper backbone infrastructure is being replaced with optical cables and an optical distribution network is being installed.

On February 8, 2013, Azerbaijan became the region's first space power thanks to launching the first telecommunications satellite Azerspace from Kourou Space Centre in French Guiana. It was a truly historic event for Azerbaijan. On June 30, 2014, Azerbaijan launched the Azersky observation satellite into orbit. The third satellite, Azerspace-2, was launched on September 28, 2018.

ASAN service centres were established in 2012. This was a revolutionary breakthrough in terms of the provision of unified and coordinated government services. The ASAN service is the brightest example of Azerbaijan's digital transition, being a fundamentally new and quality approach to the system of government services provided to citizens.

Indeed, it is impossible to list all the achievements of Azerbaijan over 20 years in a single article. The key achievement however is that the Azerbaijani economy could become fully self-sufficient with no need to external support. Moreover, in a short period of time the country has turned from a borrower of funds into a regional and international donor. In addition, FAO leadership recognises Azerbaijan as one of the most successful countries fighting against poverty. In the 2022 Sustainable Development Report published by the UN Azerbaijan showed the best result in the region and ranked 50th among 163 countries for the realisation of Sustainable Development Goals.

Thus, despite a relatively short period of 20 years, Azerbaijani economy has become so strong that it can easily meet the defence needs, provide funding for huge projects and ensure internal social stability. In other words, the path chosen 20 years ago has fully justified itself, creating the basis for sustainable development of the country in the future.