OIL DISEASE
By Gayane Movsissian

Yerkir.am
January 12, 2007

On the very first days of 2007 the population of Azerbaijan found out
that the promises delivered by the country’s leadership mean nothing.

All throughout 2006 President Aliyev had traveled to different regions
of the country presenting nice prospects for fast prosperity for
average Azeris.

Of course, this would happen due to oil revenues. However, on January
6 the government passed a decree that turned the New Year celebrations
into a nightmare.

According to the Azeri press, the population was shocked by the
increase in the prices for electricity, petrol and gas. Consequently,
the prices for transportation, water supply and utilities went up. The
prices for food products increased by 15%. The price of bread is
expected to rise as well. The prices of some newspapers, particularly,
Russian newspapers, Zerkalo and Ekho, as well as independent Azeri
newspapers went up by 50%.

The Azeri experts are very skeptical of the government’s explanation
that the prices for energy carriers should be equaled to those on the
international markets to prevent illegal sale to neighboring countries,
as well as the government’s claims that this can create favorable
conditions for development of private businesses in the energy sector.

The experts point out that Azerbaijan has left US behind in terms of
the petrol prices. Meanwhile, the average American has an average
annual income of 40 thousand dollars while the average Azeri’s
annual income is about 2 thousand dollars. The increase of the prices
for food products regulated by the government can cause a new wave
of devaluation in Azerbaijan’s consumer market for up to 50%, the
experts believe.

The opposition forces in Azerbaijan called the government’s decree
a continuation of robbery policies directed against own population.

"The drastic increase of the prices of oil products, electricity,
water, utilities and transport is a great shock for the majority of the
population in a country where 5% of the population are oligarchs while
the rest are striving at the edge of survival," leader of National
Unity Movement Lala Shovcat told Day.Az. According to Shovcat,
the decree comes to destroy the middle class that is emerging in
the country.

"Those who belonged to the middle class on Sunday, on Monday became
simply people striving for elementary survival. This shows that the
Azeri government does not have economic policies, that our country has
not yet undergone the necessary structural and institutional economic
reforms, the economy is not yet transparent, it is not only the oil
sector that is paralyzed but the whole economy gets increasingly
dependant on the oil", Shovcat stated.

The leaders of some political forces in Azerbaijan have called on the
population to organize mass protest actions. Some believe the drastic
sore of the prices might result in a social explosion in Azerbaijan.

"I am not sure that citizens of Azerbaijan, irrespective of their
political affiliation, will go to the streets to express their
discontent with the government’s policies trying to fight for their
rights. And I think the governm ent knows that the population will
not resort to such measures, and this is what makes such decisions
possible," Shovcat said.

In this context, the prognosis made for 2007 by South Caucasus Research
Centers is interesting to consider, "The country will be flooded with
petro-dollars which will drive the government towards more ambitious
undertakings. New infrastructure projects will be launched, and the
influence of the petro-dollars might be reflected on the industries.

The huge increases of capital will foster the government’s military
ambitions. The Dutch Disease will come to Azerbaijan. The fragmentation
and polarization of the society will become more obvious. The
government will spend money on improving the conditions of life for
the displaced persons, (insignificant) increase of salaries and social
benefits which will result in significant devaluation.

The prices for everything will go up. The increase of the prices for
energy carriers and utilities will result in increase of prices in
all sectors. If the Azeri labor migrants are driven out of Russia
some regions of the country will find themselves in a very difficult
situation. But this will not result in any social shocks since the
Azeri population’s sense of protest is minimized. Gas and electricity
supply will be disrupted during the winter months.

Overall, the country will become richer during the year while the
population will try to adjust to the increased prices".

The minimal salary in Azerbaijan is 50 dollars. Meanwhile, according
to the Azeri media, over 70% of the population lives below the poverty
line and only 7% are wealthy.

From: Emil Lazarian | Ararat NewsPress