Country Overview
Country Facts
Overview of U.S. Government Assistance
In FY 2005, the USG allocated an estimated $88.05 million in assistance to Azerbaijan, including:
In FY 2005, a total of 294 Azeris traveled to the United States on USG-funded exchange programs.
FY 2005 Assistance Overview
U.S. STRATEGIC INTERESTS
Azerbaijan is a Western-oriented, Muslim-majority country which plays a key role in the Greater Middle East. The Global War on Terrorism has significantly raised U.S. interests in Azerbaijan, which revolve around three strategic goals: security, political and economic reform, and energy. U.S. Government (USG) priorities in its relations with Azerbaijan include: cooperation in combating terrorism and other trans-border threats; regional stability, especially the peaceful settlement of the Nagorno-Karabakh conflict; a successful transition to a democratic political system and market economy; and, the movement of Azerbaijan's hydrocarbon resources to international markets while ensuring that revenues from these resources lead to broad-based economic growth. The President's initial waiver of the FREEDOM Support Act (FSA) Section 907 restrictions in January 2002 on most forms of assistance to the Government of Azerbaijan (GOAJ) gave the USG new tools to advance its interests. Since then, USG assistance programs have focused on counter-terrorism, border security, law enforcement, corruption, human trafficking, and economic reform. Azerbaijan has lent its airspace in support of Operation Enduring Freedom (OEF), provided important information-sharing and law-enforcement cooperation, and deployed Azerbaijani soldiers alongside U.S. troops in Kosovo, Afghanistan, and Iraq. Azerbaijan is also the linchpin of the East-West energy corridor and in the future may be an important source of natural gas to European markets.
Azerbaijan is a staunch partner of the United States in the Global War on Terrorism, with security cooperation predating the 9/11 attacks. Overflight rights in Azerbaijani airspace are crucial to USG interests as it is the only route into Central Asia outside Russian or Iranian airspace. Azerbaijan also continues to participate in the North Atlantic Treaty Organization (NATO) Partnership for Peace (PfP) and in various U.S. training programs. The USG continues to work with Azerbaijan to strengthen Azerbaijan's control of its maritime and land borders against the trafficking of narcotics, small arms, weapons of mass destruction (WMD) components, and other illicit articles. The USG also remains actively engaged, as one of the three co-chairs of the Organization for Security and Cooperation in Europe (OSCE) Minsk Group, in seeking a settlement to the conflict over Nagorno-Karabakh.
USG assistance for democratization and civil society development encourages the GOAJ to honor its international commitments to human rights and create an environment conducive to civil society, independent media, and the conduct of free and fair elections. The USG also seeks to assist the GOAJ in establishing rule of law and the professionalization of government agencies. USG economic reform programs encourage the continued transformation of Azerbaijan's economy to a market-based system integrated with the international economy, and helps develop mechanisms for oil revenue management so that Azerbaijan's economy can integrate increasing energy revenues without suffering hyperinflation or "Dutch Disease."
It is longstanding USG policy that Caspian energy resources should be brought to world markets via multiple pipelines independent of existing Soviet-era monopolies. Azerbaijan, as both a major oil and gas producing country and an important transit country, is key to the continued success of this policy. The centerpieces of this strategy are the Baku-Tbilisi-Ceyhan oil pipeline (BTC) and the South Caucasus gas pipeline (SCP). SCP is expected to become operational in September 2006; BTC is already complete in Azerbaijan and should send its first oil to market in the first quarter of 2006. Azerbaijan and Kazakhstan are currently in final negotiations to establish a system by which Kazakhstan's oil will cross the Caspian by tanker to enter BTC and be shipped onward to world markets. The United States strongly supports this project.
KEY ISSUES
Azerbaijan continued to maintain a peacekeeping force in Kosovo and another in Afghanistan, both working in cooperation with Turkish forces. Azerbaijan also maintained a full peacekeeping company in Iraq, guarding the Haditha dam in cooperation with U.S. Marines, and a staff officer at the headquarters of the Multi-National Force - Iraq (MNF-I) in Baghdad. The GOAJ continued to grant the U.S. overflight rights. The USG worked with Azerbaijan's customs, export control, and border security officials to improve Azerbaijan's ability to interdict and prevent the proliferation of weapons of mass destruction and other illicit articles. USG assistance trained the Azerbaijan Border Guard Maritime Brigade to improve its ability to interdict on the Caspian Sea. The United States and Azerbaijan continued to work together to modernize Azerbaijan's law enforcement infrastructure and develop regimes to fight terrorist financing.
Azerbaijan held national parliamentary elections on November 6, 2005. In the pre-election period, the GOAJ publicly committed to meeting international standards and instituted some reforms, including free and paid television airtime on state and private television for candidates, positive changes to the election code, and finger inking. Domestic monitors were permitted to observe, a national exit poll was conducted, and more than 2,000 persons registered as candidates. Freedom of assembly was restored, although the venues and number of the largest opposition bloc's rallies were restricted. However, with widespread allegations of fraud in the vote tabulation process, the election ultimately failed to meet international standards and Azerbaijan's commitments to the OSCE. Municipal elections in December of 2004 had a similar outcome. GOAJ officials were credibly reported to have interfered in the election process to the benefit of pro-Government candidates. Police used excessive force to disperse unauthorized rallies and one authorized rally that took place after the election. Police also preemptively jailed opposition figures before rallies.
Azerbaijan's media sector saw important reforms in 2005, including the establishment of public television and expanded coverage of important political and social issues. The GOAJ also started the implementation of the anti-corruption law adopted in 2004 by opening hotlines and staffing an anti-corruption unit at the Prosecutor General's Office. The Anti-Corruption Commission and the President's Office established a working group to develop further anti-corruption legislation including codes on money laundering and terrorist financing. Azerbaijan achieved important reforms in the legal sector, especially in the area of education. The GOAJ followed through on its commitments to publicly post court decisions for some economic and appellate courts, and for the first time in its history went through a fully transparent examination process for judicial appointments. Progress was also made on financial disclosure laws for public officials. Azerbaijan's police authorities modernized aspects of their operations, including training, forensic sciences, and modern personnel administration. Parliament passed two key anti-human trafficking laws during the summer and fall of 2005, although progress was slow in implementing these measures.
The GOAJ moved to adopt a number of banking regulations, developed in cooperation with the United States and the international community, including procedures for bank inspections, and continued to develop a modern financial management system for its budget. Azerbaijan became one of the first countries to participate in the United Kingdom's Extractive Industries Transparency Initiative (EITI), involving a partnership between industry (both international and domestic companies), government, and a coalition of more than thirty NGOs. Azerbaijan's second EITI report, published two weeks ahead of deadline, was hailed by the NGO and international community as a clear demonstration of the GOAJ's commitment to the transparent management of hydrocarbon revenues.
In May 2005, Azerbaijan officially opened its segment of the BTC pipeline. Completion of the final, Turkish stage of BTC is expected in the first quarter of 2006, and BTC will begin delivering a million barrels of oil daily from Azerbaijan's offshore Azeri-Chirag-Gunashli (ACG) field. This marks the culmination of more than ten years of USG advocacy and support. Construction continued on the parallel South Caucasus Pipeline (SCP), which will begin transporting natural gas from Azerbaijan's offshore Shah Deniz field in the last quarter of 2006. Shah Deniz gas will be piped to Turkey and onward to European markets. Progress was made in the negotiations to bring Kazakhstan's oil into BTC, and the GOAJ adopted a pilot project developed with the USG for modernization and privatization of the heating sector.
COUNTRY PERFORMANCE MEASURES
Azerbaijani Democratic Reform
The "radar" or "spider web" graphs below illustrate Azerbaijan's democratic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country_progress/.
*Actual 2005 scores not yet available.
*Actual 2005 scores not yet available.
Azerbaijani Economic Reform
The "radar" or "spider web" graphs below illustrate Azerbaijan's economic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country progress/.
The graph shows Azerbaijan's economic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.
*Actual 2005 scores not yet available.
The graph shows Azerbaijan's economic reform scores in 2004* (the gray shaded area) as compared to its economic reform scores in 1999. Since 1999, four of the six indicators of economic growth have increased, one has remained the same and one has decreased.
*Actual 2005 scores not yet available.
FY 2005 Country Program Performance
Democratic Reform
National parliamentary elections on November 6, 2005, strongly influenced Azerbaijan's democratic reform performance in FY05. Widespread, credible allegations of fraud in the vote tabulation process on election night led the International Election Observation Mission to conclude that the elections did not meet a number of Azerbaijan's OSCE commitments and international standards for democratic elections. However, in the pre-election campaign period the GOAJ implemented several reforms with the assistance of the international community that improved some aspects of the process.
On May 11, 2005, President Aliyev issued the first of two decrees instructing national and local government officials to conduct an election process that met international standards. On June 4, the GOAJ restored the constitutional right to freedom of assembly, although it restricted the number and location of political rallies held by the largest opposition bloc. The Central Election Commission (CEC) adopted changes to the election code in June 2005 that made limited improvements to the campaign framework. The CEC approved a number of regulations to enhance the integrity of voting, counting, and the vote tabulation process. The CEC also successfully registered over 2,000 candidates for parliament and conducted an extensive voter education print and electronic media campaign to raise public awareness about the election. In compliance with the election code, state and private television allowed opposition and independent candidates to have access to free and paid campaign television airtime on a daily basis throughout the campaign period. Judges and lawyers received training on election law from international experts. However, the judiciary remained a corrupt and inefficient institution which did not function independently of the executive branch during the election period. On October 25, the President issued a second decree, instructing officials to finger-ink voters during the election. The CEC's efforts to implement this measure were largely successful. The decree also lifted the ban on election monitoring by domestic NGOs that receive more than 30 percent of their funding from outside Azerbaijan. Lifting this ban had been a longstanding U.S. policy goal.
In spite of the GOAJ's public commitment to improving the democratic process, there were numerous credible reports of municipal and local election officials interfering in the campaign process to benefit pro-Government candidates. In addition, police repeatedly used excessive force to disperse unauthorized political rallies and preemptively jailed members of the opposition to prevent their participation in election-related political activities in the months leading up to the election. Police also used excessive force in dispersing a rally which took place after the election. The GOAJ has not taken effective measures to reform the police force, which continued to commit human rights abuses. Although the GOAJ remained publicly committed to democratic reform, it did not effectively carry out many political reform measures that might have improved the democratic character of the parliamentary election campaign.
U.S. ASSISTANCE PRIORITIES
In FY 2005 USG assistance priorities included the development of a politically active civil society, the establishment of media freedoms and freedom of information, the improvement of the judicial and legal framework, the promotion and support of free and fair elections, and the promotion of anti-corruption reforms.
PROGRAM PERFORMANCE
Several positive outcomes resulted from the USG's robust collaboration with the GOAJ on democracy and governance issues. In FY 2005 USG assistance targeted pre-election and election-related activities. A small pilot exit poll was conducted for the municipal elections, which paved the way for a national exit poll during the parliamentary election. A domestic election monitoring organization was trained and began to prepare plans for the placement of thousands of local observers at polling sites across the country.
In FY 2005, President Aliyev implemented positive measures such as releasing political prisoners and allowing greater diversity in the electronic media. The Presidential Decree of May 11, 2005 called on election authorities and local officials to fully implement the election code and clearly laid out measures intending to ensure free and fair elections. These included instructions to officials to ensure freedom of assembly, the delivery of voter cards to all eligible voting citizens, the compilation of correct voter lists, and a warning that election officials would be held legally responsible for violations of the election process.
Some degree of improvement occurred in the media sector in 2005. There was expanded coverage of a wide-range of issues, including candidate debates, anti-corruption and gender equality, and the launching of public television, which played an active role in the pre-election period. The USG was pivotal in promoting the law instituting public television, and continued to support nine independent regional television stations by assisting with the creation of a regional television network. Registration of the network has not occurred yet, but the USG is encouraging the GOAJ to complete the registration process. Upon registration, networked stations will be able to share programming, thereby increasing the diversity and number of programs. This will attract a larger audience and more advertisers. Increased advertising revenues will contribute to financial sustainability of independent television across the country and in the regions where diversity of media has been limited.
The USG achieved a historical first for Azerbaijan in creating a digital frequency map of Azerbaijan's broadcasting television and radio spectrum. The frequency map allows the projection, licensing and viewing of frequencies for the country's broadcasting spectrum. Until this frequency map was created, Azerbaijan did not have any accurate information on actual coverage and thus could not issue new broadcasting licenses. The existence of this data, recognized by the International Telecommunication Union, will assist the GOAJ to submit official complaints in cases of transnational broadcasting interference.
The USG's Rule of Law program in Azerbaijan supports the creation of an effective Rule of Law system and the improvement of citizen access to justice. Its activities include increasing the professionalism of the legal community (legal education reform, legal professional development) and educating the public on fundamental rights and freedoms. With USG funding, the program organized 787 advocacy events and trained 28 organizations, associations, and advocacy groups in FY 2005. 779 public awareness events were held and over 17,000 people took place in these events, which focused on anti-trafficking, democracy training for secondary schools, anti-corruption, and citizens' legal rights. More than 8,000 people visited the USG-created legal library. Nearly 1,800 people were trained in advocacy skills. The USG launched a new Anti-Corruption Program, funding an anti-corruption liaison at the GOAJ Anti-Corruption Commission Legal Working Group, opened two Anti-Corruption Legal Advocacy Centers, and continued to advance its work on commercial law and judicial reform.
As a result of USG assistance, new modern law curricula were successfully introduced at Baku State University, which has the largest student body and is the premier law school in Azerbaijan. The USG supported the electronic publication of court decisions, as required by the January 2005 amendments to the law on courts and judges. USG assistance was instrumental in getting both the Constitutional and Supreme Courts to post their written decisions for the first time in the history of Azerbaijan.
Two notable events in FY 2005 were the registration of more than 2,000 candidates for the parliamentary elections and the television broadcast of several debates. The USG played an essential role in providing opportunities for candidates throughout the country to present their platforms to the public by organizing television debates on national and regional television stations. In FY 2005 USG partners organized 854 advocacy events and trained over 12,500 people in advocacy skills, surpassing the training target by over 2,300. 178 organizations, associations, and advocacy groups were trained. The USG organized close to 100 candidate debates throughout the country on local television stations, and provided training for over 1,200 political party operatives, candidates and civic organizations to engage in issue oriented debate, platform-building and domestic election monitoring.
The USG funded the creation of two anti-corruption advocacy centers and plans to open two more in FY 2006. At these centers, citizens can telephone or walk in and receive assistance in preparing a legally-accepted written summary of their complaint, and in filing it with the appropriate authorities. In the first three months of operations, the two offices received over 1,000 complaints. This is the first opportunity that Azerbaijani citizens have had to receive knowledgeable and objective assistance in lodging complaints about corrupt practices. In FY 2005, an anti-corruption advisor began to train staff and develop procedures. The advisor will work with the local advocacy group Education Without Bribes, consisting of several local NGOs and student organizations, and is slated to assist the Legislative Working Group -- a subcommittee of the GOAJ's Anti-Corruption Commission -- and work with anti-corruption departments in various ministries.
The USG continued to assist political parties with training in coalition-building and to assist in civic outreach. Over 200 Get-Out-The-Vote programs were conducted in Azerbaijan's regions, increasing youth voter participation in municipal elections. In FY 2005 USG partners organized nearly 200 advocacy-skill training events, at which over 3,000 people participated, and trained 163 organizations, associations, and advocacy groups.
In FY 2005, USG activities addressed gender issues through discussion forums which brought women from all walks of life together, supporting advocacy skills training on the International Convention of Elimination of Discrimination Against Women and providing training and awareness regarding applicable national laws and social issues. Combating gender bias and bringing about broader participation by women in decision-making is integral to USG civil society and community development activities.
Looking to the future, the GOAJ needs to refine existing election laws and further develop its exit polling capability so that local organizations will be able to carry out reliable and objective exit polls. In addition, the GOAJ should facilitate the registration of Azerbaijan's first-ever television network. The proposed network would be self-financed via advertising and produce a wide range of independent programming. The USG will continue to press for the full implementation of the presidential decree on election practices.
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below two important indicators in the area of Democratic Reform. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Rank" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.
Performance Indicator: Independent Media Rating. This indicator addresses the current state of press freedom, including libel laws, harassment of journalists, editorial independence, the emergence of a financially viable private press, and Internet access for private citizens. 7=lowest, 1=highest; 2005 ranking based on 2004 data. Source: Freedom House Nations in Transit 2005. Found online: www.freedomhouse.org/research/nattransit.htm.
|
CY 2002 Baseline |
CY 2004 Rating |
CY 2005 Target |
CY 2005 Rating |
|
5.5 |
5.75 |
6.00 |
6.00 |
Azerbaijan's independent media rating slipped due to the GOAJ's mistreatment of opposition journalists and press, particularly after recent elections. In the past year, USG assistance supported the creation of an independent public television station and the networking of nine regional television stations.
Performance Indicator: Electoral Process Index. The Electoral Process index measures factors such as universal and equal suffrage, regular, free and fair elections, barriers to political organization and registration, a viable political opposition, and openings for participation by ethnic and other minorities. Source: Freedom House Nations in Transit 2005. (1= highest level of democratic progress, 7 = lowest level of democratic progress). The 2005 ranking is based on 2004 data. Found online: www.freedomhouse.org/research/nattransit.htm.
|
CY 2002 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
|
5.75 |
6.00 |
6.00 |
6.25 |
Azerbaijan's rating for electoral process declined due to the GOAJ's dominance of the municipal election campaign, irregularities reported during the registration process, and the GOAJ's move to facilitate closure of political parties. While USG provided assistance for training in campaign and advocacy techniques for candidates, technical support to the CEC, and funding Azerbaijan's first-ever exit poll, this support was not sufficient to overcome government efforts.
Economic Reform
Azerbaijan's principal economic challenges in FY 2005 were to maintain macroeconomic stability in the face of surging oil revenues and to prevent those revenues from exacerbating the imbalance between the energy and non-energy sectors of the economy. Over the course of the year, this growth in the money supply was only partially successfully managed through the sale of Treasury bills and by keeping some hard currency revenue in the State Oil Fund of Azerbaijan. Macroeconomic indicators remained favorable. Inflation was stable at nine percent and the national currency, the manat, appreciated slightly against the dollar (4,600 manat per U.S. dollar). The State Oil Fund, which serves as a savings fund for Azerbaijan's energy wealth, had assets of over $1.2 billion by the end of FY 2005.
The GOAJ recognizes the challenges it faces in maintaining macro-economic stability, growing the non-oil sectors of the economy and investing in long neglected infrastructure. In FY 2005 Azerbaijan had one of the fastest growing economies in the world with its Gross Domestic Product (GDP) growing at over 20 percent. However, this was almost entirely due to oil and gas production. Hydrocarbon industries account for 90 percent of Azerbaijan's exports, 30 percent of its GDP and 1.5 percent of its employment. Azerbaijan experienced a substantial surge in oil and gas revenues in FY 2005, as production from the Azeri Chirag Guneshli (ACG) field ramped up and oil began flowing in its section of the BTC pipeline. For long-term stability, however, it is imperative that the GOAJ continue to diversify its economy, improve conditions in the non-energy sector, and improve the country's business climate. Outside of the energy sector Azerbaijan remains a difficult place to do business, and corruption is a serious impediment to full economic development. Reform of economic policymaking by the GOAJ, the development of a modern financial sector, and the privatization of large state-owned enterprises are all at an early stage.
U.S. ASSISTANCE PRIORITIES
USG programs to assist in the diversification of Azerbaijan's economy operated in four areas: improving the GOAJ's financial management and capital budgeting capabilities so as to better manage energy revenues; improving the access of small and medium-sized enterprises and agricultural producers to capital by strengthening the commercial banking and non-banking sectors, both through training and improved regulations; preparing the GOAJ to restructure the energy sector to one governed by independent regulation and market-driven costs; and, assisting agricultural processors and producers to reach out to and meet market demand.
PROGRAM PERFORMANCE
The USG has taken the lead in coordinating donor assistance to the GOAJ on revenue management. USG public investment assistance fits into a larger donor effort at policy coordination that seeks to link the GOAJ's public investment program, its poverty reduction and rural development strategies, its medium-term expenditure framework, and its annual budget. The USG's partners in this effort include the World Bank, Asian Development Bank, and the United Nations. The USG's efforts to improve the GOAJ's public investment program have included diagnostic work on key ministries, the creation of a strategy to coordinate economic policy within the GOAJ, and the development of a technical document to develop a sectoral strategy. Pilot sectoral strategies of five ministries have been analyzed to study their divergence from the model. Progress continued on the development of a Treasury Information Management System due to commence in May 2006. Ultimately, this system should be developed into an integrated financial management system in order to maximize benefits for the GOAJ.
In FY 2005, the GOAJ adopted the heating-sector strategy developed jointly with the USG and is implementing it through a privately held boiler demonstration pilot project.
USG assistance supported improved regulation of the commercial banking sector by developing a manual of procedures for bank inspectors and assisting in the drafting of banking regulations which cover corporate governance, minimum capital requirements, and consolidated reporting. The USG also supported the development of a software tool for the National Bank that will allow it to produce uniform bank performance reports. USG-assisted non-bank financial institutions disbursed $25 million in loans, increasing the number of clients by over 7,600.
The ten account managers of the USG's rural economic competitiveness project provided services to 48 companies. USG-supported businesses did over $2,326,300 in new trade and invested over $4,862,750 in plant improvements. During FY 2005, the Azerbaijan Business Assistance and Development Program (ABAD) promoted rural business in targeted "economic corridors" of Jalilabad, Zagatala, Gazakh, and Guba. Local organizations were contracted to operate Marketing Centers (MCs), two in each of the four corridors, to provide assistance other than finance in support of business and production activities. In FY 2005, ABAD completed the competitive bidding process for MC operators and provided start-up training to MC staffs. All eight MCs in the four economic corridors are now staffed and operational. Though work is still in the early stages, MCs have contacted hundreds of buyers and sellers and begun working with over 50 clients through the development of Client Development Plans, laying the foundation for developing market linkages in the corridors and beyond.
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below an important indicator in the area of Economic Reform. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Percentage" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.
Performance Indicator: GDP as a percent of Azerbaijan's 1989 GDP (1989 = 100). EBRD's Transition Report 2004 as found in "Monitoring Country Progress in Eastern Europe and Eurasia," USAID/E&E/PO, #9 January 6, 2005. The data upon which this ranking is based comes from the previous calendar year. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.
|
CY 2002 Baseline |
CY 2003 Percentage |
CY 2004 Percentage |
|
64.2 percent |
68.8 percent |
78.6 percent |
USG assistance contributed to this indicator through USG technical assistance programs with the National Bank of Azerbaijan. In the legal and regulatory area, primary banking laws, the law on the National Bank and the law on commercial banks have been extensively amended and approved by the country's lawmakers. Several new and critical regulations have been passed, including an increase in the National Bank's minimal capital requirements, regulation on consolidated reporting and a regulation involving the corporate governance structure and practices for commercial banks. These changes have helped build confidence in the commercial banking sector, a critical factor in GDP growth.
Social Reform and Humanitarian Assistance
Azerbaijan faces continued challenges in the social sector. Accessibility to quality health care services, reproductive health/family planning, primary health care, child survival, and community-based health systems remain areas of concern. The recent dismissal of the Minister of Health, whose dismissal of several district and national leaders had slowed reform considerable, has resulted in improved working relationships and the re-initiation of health activities. Public expenditure for health remains less than 1 percent of GDP.
Community-based civil society groups, which address social infrastructure and local economic growth, are increasingly self-sustaining, but "cluster" groups representing 15-30 communities have had difficulty registering. Micro-finance institutions also face challenges. Azerbaijanis who did not receive the new national identity card were unable to get loans from the National Bank of Azerbaijan. The local government in Nakhchivan interfered significantly in micro-credit activities, bringing about their temporary suspension. Both of the micro-finance institutions in Nakhchivan are exploring options to either merge or seek other sources of funds.
Internally displaced populations, particularly in regions along the conflict-affected zone, remain vulnerable and continue to live under difficult circumstances.
U.S. ASSISTANCE PRIORITIES
In FY 2005, USG efforts to support civil society focused on building individual and community capacity to address needs through open and democratic processes. Other activities sought to strengthen the capacity of local providers and agricultural networks to meet market demands for services. USG health-related assistance targeted child survival, reproductive health and family planning, emergency medicine, and community mobilization to strengthen local health care services.
PROGRAM PERFORMANCE
USG health-related assistance supported the improvement of first level health care facilities serving conflict-affected areas to a functional operating level, with renovations, equipment and staff training to meet World Health Organization (WHO) and national standards. Close to 1,100 (97.5 percent ) of health care providers applied the training they received. Over 156,400 people utilized the 234 clinics which were supported by the USG. Integrated Management of Childhood Illnesses (IMCI) protocols were initiated in nine districts. Community health action committees provided a venue for health education activities. One urban polyclinic, through a Health Partnership, developed a model for strengthening adult primary health care services.
With USG assistance, networks of local health departments, NGOs, communities, and the private sector worked together to strengthen local reproductive health/family planning (RH/FP) by increasing knowledge and use of family planning services. 324 health providers in the regions were trained by national trainers to address the demand for family planning services. Over 83,000 community members received family planning and reproductive health information from peer educators. RH/FP activities served the needs of adults as well as children. Additionally, a USG survey assessed the status of selected health facilities, contraceptive availability, and RH/FP knowledge among health providers, pharmacists, and the general population. A social marketing strategy to promote family planning and increase contraceptive availability was developed.
In FY 2005, community-based organizations spearheaded small social infrastructure, health, and economic development projects, and contributed over $490,000 (31.5 percent) in cash, labor and materials, toward the total cost of those projects, an increase from previous years. Among these community groups were 56 new associations that were mentored by more experienced ones. Over 515 local government employees participated along with the community groups. More than 528,000 people, of which 54 percent were women, were represented, directly benefiting close to 112,000 internally displaced persons (IDPs). Municipal governments signed memorandums of understanding with communities who then pledged to contribute to community-led micro-projects. In the December 2004 elections, over 400 community leaders that the USG had worked with were elected to Municipal Councils, some as Municipal Council leaders. These leaders are now in a position to strengthen local development programs and influence development at higher levels. Beginning in FY 2006, USG civil society and community-based activities will fall under the Democratic Reform sector.
In FY 2005, USG assistance supported economic opportunity for Azerbaijan's most vulnerable. Programs supported the establishment of micro-enterprises and micro-finance institutions offering individual and group loans to generate economic development in underserved areas. Over 8,600 micro-credit individual and group loans were dispersed. USG assistance strengthened Azerbaijan's rural micro credit system through capacity-building and sustainability programs for local financial institutions. Continued accessibility to and support services for credit assisted the growth of Azerbaijani private agriculture and small businesses, thanks in part to the opening of two branch office openings and development of new loan products. More than 8,600 micro-credit individual and group loans were dispersed and over 180 jobs were created, of which 40 percent were filled by women. The shareholders of two feed mills who had started their businesses with USG loans were able to function independently. Agricultural Extension Agents provided fee-based consulting services on livestock and poultry production to their farmer clients, indicating the perceived value placed on consulting services. Most of the community-based enterprises paid back grant funds to communities as a part of the initial agreement to reuse grant funds to implement other community driven projects. In the past year, 794 (9 percent) IDP beneficiaries received loans and 388 received part-time or full-time jobs. Beginning in FY 2006, USG assistance related to business capacity and scale, market orientation and skills, access to markets and quality/reliability issues will be categorized within the Economic Reform sector.
Various partners assisted USG activities in the health sector. UNICEF provided support on the Demographic and Health Survey; a consortium of oil companies assisted on the emergency response and emergency care initiative; and the Vishnevskaya-Rostropovich Foundation, UNICEF, and the WHO supported a mass immunization campaign against measles and rubella. In addition, the World Bank and the USG have been coordinating on primary health care reform activities.
Security, Regional Stability and Law Enforcement
In FY 2005, the GOAJ and the USG worked together to advance regional stability and border security, and increase cooperation law enforcement cooperation. The GOAJ continued to offer broad and crucial support to the United States for the War on Terrorism. This included, but was not limited to, blanket overflight rights crucial to OEF and Operation Iraqi Freedom, information sharing, law enforcement collaboration and troop contributions to the International Security Assistance Force in Afghanistan and the Multi-National Forces command in Iraq. Azerbaijan also contributed troops to the peacekeeping force in Kosovo.
Despite the 2005 passage of a comprehensive nonproliferation export control law, Azerbaijan's export control system remains underdeveloped, owing in large part to insufficient resources, an imprecise legal-regulatory environment, and corruption that undermines efforts to administer and refine the system. The legal basis of the Azerbaijani export control system still lacks comprehensive controls on transit and transshipments, and dual-use and arms export licensing has not been fully implemented. Training for enforcement officials is inadequate. Accordingly, physical checks of cargo stand little chance of detecting items shipped in defiance of export control law and the GOAJ has compiled a poor record of investigating, prosecuting, and imposing sanctions for export control-related violations. The weak partnership between government and industry—particularly the freight forwarding community—increases overall vulnerability. However, the recently adopted export control law and the corresponding requirements for systematic restructuring indicate the GOAJ's desire to improve trade controls.
Acute, systemic corruption remains a significant impediment to rule of law, undermining efforts for democratic and economic reform. Azerbaijan recently adopted a reformed anti-corruption law and a comprehensive, cross-cutting national anti-corruption plan, both in line with international standards and best practices. To date, however, the GOAJ has not enforced either instrument or enacted supplementary legislation or facilitated their proper implementation.
U.S. ASSISTANCE PRIORITIES
FY 2005 security-related assistance priorities included training and equipment purchases, particularly those which enhance security on the Caspian Sea. Additional USG priorities include building GOAJ capacity to detect secure biological agents, funding research by former weapons scientists to prevent the proliferation of WMD expertise, encouraging efforts to halt trans-shipment of narcotics across Azerbaijan's borders, and promoting military interoperability with U.S. and NATO forces.
PROGRAM PERFORMANCE
Military training reinforced Azerbaijan's capability to contribute forces and personnel to international stability and support operations, to secure its maritime domain, and to understand U.S. and NATO air operations. Additionally, training increased Azerbaijan's capability to prevent or react to terrorist attacks on critical hydrocarbon infrastructure. Equipment purchases included air traffic control equipment used to establish a NATO-compatible airfield, new electronics used to upgrade Azerbaijan's navy, and a brigade-level simulations center used to teach NATO standard operating procedures for coalition operations.
The USG worked with Azerbaijan's State Border Service (SBS) and Customs Services to improve their counter-proliferation capabilities. USG training and equipment enhanced Azerbaijan's ability to intercept and interdict weapons of mass destruction and other contraband, as well as protect the country's natural resources and deter illegal migration, particularly through support for the Azerbaijan Border Guard Maritime Brigade. The USG and the GOAJ co-hosted the 2005 Black Sea/Caspian Sea conference on Non-Proliferation and Maritime Domain Awareness which was attended by littoral countries of the Black Sea and Caspian Sea including Georgia, Turkey, Bulgaria, Romania, Moldova, Ukraine, Kazakhstan, and Turkmenistan. Additionally, USG experts trained GOAJ personnel on issues including Patrol Planning, Engine and Generator Maintenance, Commodity Identification, Investigative Analysis, Export Control Enforcement, Licensing Procedures and Practices, Search and Security, and Tracker Systems.
USG assistance provided extensive maintenance to Azerbaijani patrol boats, which facilitated increased readiness and the number of vessel-underway hours allowed. As a result, the entire Azerbaijan Maritime Brigade fleet attained 'ready for sea' status and participated in their annual maritime exercises, improving regional security by facilitating regular patrols of Azerbaijan's territorial waters in the Caspian Sea. A recent example of increased readiness was the ability of an underway patrol boat performing underwater pipeline security to quickly respond and interdict Russian vessels fishing in restricted waters near oil platforms. USG assistance provided equipment, spare parts, maintenance, and training, much of which was used for engine and generator replacement, dry-docking and shore side maintenance for the Maritime Brigade patrol boats.
With USG assistance, GOAJ Boarding Team operations and response improved dramatically as well. Additionally, maintenance training resulted in the Maritime Brigade forming a vessel maintenance team and increasingly accomplishing routine vessel maintenance. Other trainings and workshops improved the capacity of customs officials and border guards to more effectively man land border entry points. The Black Sea / Caspian Sea Maritime Non-proliferation conference resulted in increased dialogue between countries and sharing of operation methods and information-gathering techniques. The USG will follow-up this conference with a workshop for Caspian Sea littoral countries on information sharing. USG assistance also continued to support the improvement of the SBS resident training center, and provided ongoing English language instruction.
In FY 2005 USG engagement supported incremental improvement in Azerbaijan's justice sector. For the first time, Azerbaijan's Ministry of Justice conducted judicial exams in a transparent manner with international oversight and observation. A second success was an amendment of the financial disclosure law which requires the disclosure of the assets by public officials, their family members, and close relatives. Next steps to be taken include the establishment of mechanisms for reporting disclosures, ensuring their verification, and punishing their falsification. A third sign of success was the establishment of a legislative working group to develop anti-corruption legislation. While the working group has struggled with logistics and attendance, it is expected to draft codes of conduct for public officials and conflict of interest laws.
A U.S. Department of Justice law enforcement advisor assisted Azerbaijan in modernizing its law enforcement training and implementing democratic policing principles. The advisor also focused on training law enforcement officers in both practical and theoretical aspects of police work and on the implementation of standardized and modern hiring procedures. A U.S. Department of Justice attorney advisor focused on counter-terrorism and assisting Azerbaijan to develop comprehensive anti-money-laundering and anti-terrorist financing regimes. USG assistance also improved the ability of Azerbaijani law enforcement to handle narcotics investigations, terrorism, money laundering, and corruption. Law enforcement programs supported the implementation of the Criminal Procedure Code. Although draft legislation has not yet been adopted, USG experts worked with the GOAJ to revise terrorist financing laws.
The GOAJ has done little to address its Tier Two rating on the USG human trafficking watch list. Other than passing legislation against human trafficking—which was drafted with the support of USG expertise—the GOAJ has not yet followed through on its commitments to vet a specialized anti-trafficking police unit, create and staff a shelter for trafficking victims, open a toll-free hotline or conduct a human trafficking public awareness campaign. In order to help Azerbaijan improve its anti-trafficking programs and performance, the USG provided assistance to develop the policies and procedures of the projected GOAJ anti-trafficking unit. This training covered the internal operations of such a unit as well as a standardized recruitment, selection, and vetting process.
In FY 2005 USG assistance presented Azerbaijan with tactical training equipment, leveraging the defensive tactics training programs facilitated by USG experts. The U.S. Department of Justice law enforcement advisor, in cooperation with a U.S. Department of Justice legal advisor and the U.S. embassy's regional security officer, hosted a two-week study tour in the United States for police officers, prosecutors and judges in September 2004. The tour familiarized Azerbaijani participants with anti-corruption measures, task force development, personnel training development, and investigative practices.
The USG facilitated an opportunity for six Azerbaijani police officers to observe law enforcement operations with the Oklahoma City Police Department and Nevada law enforcement agencies in February 2005. The program provided first-hand observation of U.S. police infrastructure and law enforcement procedures. The Azerbaijani officers observed police academy development and training as well as criminal investigation techniques related to homicide and narcotics offenses. They also observed task force development related to counter-terrorism as well as command and control operations.
A USG forensics assistance program was initiated in order to provide technical support, equipment, and training to enhance the forensic science capacity of the GOAJ.
The ILRG facilitates cooperation between the USG and other donors. The USG and international partners meet regularly and coordinate their work to avoid inconsistent policy statements to the GOAJ and duplication of assistance.
MEASURES OF PROGRAM EFFECTIVENESS
In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.
Please find below two important indicators in the area of Security, Regional Stability and Law Enforcement. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of USG assistance programs. The "Rank" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.
Performance Indicator: Constitutional, Legislative, and Judicial Framework Rating. This indicator highlights constitutional reform, human rights protections, Criminal Code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2005. The 2005 rank is based on 2004 data. Found online: www.freedomhouse.org/research/nattransit.htm.
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CY 2002 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
|
5.25 |
5.50 |
5.50 |
5.75* |
*This indicator was renamed Judicial Framework and Independence by Freedom House in 2005.
Azerbaijan's rating for judicial framework and independence slipped because of the judiciary's continued lack of independence and violations of political rights and civil liberties. The USG-funded American Bar Association Central European and Eurasian Initiative (ABA/CEELI) judicial reform program published and disseminated information regarding the function, procedures, and decisions of Azerbaijani courts. This information fostered transparency and increased public oversight of the judiciary and provided access to Supreme Court decisions to regional judges who generally lack access to basic legal resources. These measures limited the impact of factors which led to Azerbaijan's worsened rating.
Performance Indicator: Corruption Perceptions Index. This indicator measures how experts view the state of corruption in a country. Because Transparency International uses a country ranking chart, their raw score better illustrates change within the country. The CPI score relates to perceptions of the degree of corruption as seen by business people and country analysts and ranges between 10 (highly clean) and 0 (highly corrupt). Source: Transparency International. The 2005 rank is based on 2004 data. Found online: www.globalcorruptionreport.org/index.html.
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CY 2002 Baseline |
CY 2004 Rank |
CY 2005 Target |
CY 2005 Rank |
|
2.0 |
1.9 |
2.0 |
2.2 |
The CY 2005 rank, which is based on CY 2004 data, shows a slight increase in people's perceptions of corruption. Although the GOAJ passed an anti-corruption law in 2004, it has yet to implement many of the measures contained in the legislation. The U.S. Department of Justice legal advisor continued to engage the GOAJ on this matter, offering assistance in vetting and developing and developing a new anti-corruption unit. The USG-funded ABA/CEELI anti-corruption program established two Legal Advocacy Centers, which provided free legal advice and created a toll-free hotline to register complaints. The centers allowed for citizens to take action against corruption by providing information and participating in awareness-raising campaigns.
Click for FY 2005 Funds Budgeted for U.S. Government Assistance to Azerbaijan [PDF format]
