CRITERIA FOR U.S. ASSISTANCE
UNDER SECTION 498A (a) OF THE FOREIGN ASSISTANCE ACT OF 1961
Section 201 of the FREEDOM Support Act amended Section 498A of the Foreign Assistance Act of 1961 to require that the President "take into account not only relative need but also the extent to which that independent state is acting to:"
Section 498A(a)(1): "make significant progress toward, and is committed to the comprehensive implementation of, a democratic system based on principles of the rule of law, individual freedoms, and representative government determined by free and fair elections."
Azerbaijan has made efforts toward developing a democratic system, and it has joined the Organization for Security Cooperation in Europe (OSCE), NATO's Euro-Atlantic Partnership Council and Partnership for Peace, and the Council of Europe, as well as engaging with the European Union. There remain significant areas for improvement, however. Azerbaijan's politics are still dominated by the party created by the late father of President Ilham Aliyev, former President Heydar Aliyev. The New Azerbaijan Party has been the ruling party since the elder Aliyev came to power in 1993 and opposition parties make up only a small minority of parliament. The judiciary, although guaranteed independence under the Constitution, does not provide an effective check on executive power.
The November 6, 2005 parliamentary elections saw key improvements in the pre-election period, including amendments to the electoral code, registration of more than 2,100 candidates (including opposition leaders who had been convicted of potentially fabricated charges related to post-election violence in 2003), improved media access for candidates, finger inking to prevent fraud and the use of exit polls. On Election Day, voting was generally calm but was marred by serious irregularities during vote counting and tabulation. There were also credible reports of local government officials' interference in the electoral process and use of administrative resources to promote pro-government candidates. The U.S. and the OSCE issued statements following the elections indicating that the elections did not meet some international standards. In response to reports of fraud, the Central Election Commission and the Constitutional Court annulled results in 10 constituencies and reversed the results in an additional constituency. The Government fired the heads of four of Azerbaijan's administrative districts and opened criminal cases against 15 individuals accused of election fraud. The Government used force against opposition supporters at a sanctioned, post-election rally and arrested 57 participants on charges of "hooliganism." In the campaign season, the Government routinely arrested and jailed opposition supporters before political rallies.
An active and independent print media exists and press censorship was officially abolished in 1998. The Government made important improvements in freedom of speech and of the press in 2005, including starting a new public television station, and allowing parliamentary candidates free air time on state and public television in the run-up to the parliamentary elections. Nevertheless, the press faced continued harassment by the Government during the year, including defamation suits against journalists. The total number of suits, however, declined significantly due to mediation efforts by international and national NGOs. Some opposition and independent newspapers reduced circulation and periodicity during the year and at times stopped printing because of a lack of funds. In connection with media coverage of unauthorized political rallies prior to the November election, police detained and later released 24 journalists. Police seriously beat three journalists covering pre-election political rallies, despite the journalists' wearing unmistakable blue "press" vests identifying them as reporters. Print media generally enjoy more freedom than the broadcast media, and independent and opposition newspapers are generally available in regions outside of Baku. According to some Baku-based journalists, however, authorities in the exclave of Naxchivan actively prevented distribution of opposition newspapers. In August 2005, the Government launched independent public television channel ITV, which, consistent with the law's requirements, provided free airtime to parliamentary election candidates before the November elections. The Government loosened controls on official radio and television, the primary source of information for most of the population. On March 2, 2005, the widely respected founder and editor of The Monitor newsmagazine, Elmar Huseynov, was killed in front of his apartment. The Government characterized the murder as a terrorist act meant to destabilize the regime and launched an investigation into the case. In July, press reports indicated that the Government's investigation identified two Georgian citizens, Tahir Khubanov and Teymuraz Aliyuev, as suspects. However, the investigation is ongoing and no arrests have been made. Some human rights activists described the killing as a warning to voices critical of the regime - a notion Government officials have rejected.
In 2005 the Government made some improvements in freedom of assembly, which had been completely restricted since demonstrations following the October 2003 presidential elections had turned violent. Several opposition political party rallies were permitted between June and November 2005. However, the Government often forcibly dispersed demonstrations that were held without a permit, and in some cases detained and used excessive force against protesters. In the aftermath of the election on November 26, the riot police and security forces violently disrupted an authorized opposition rally in Baku.
During the parliamentary campaign period in the summer of 2005, the Government arrested and accused three youth leaders of plotting to overthrow the government. In the fall, the Government arrested and charged a number of government officials whom it fired in November under as yet unsubstantiated accusations of plotting a coup.
On a positive note, President Aliyev has pardoned a number of political prisoners since 2004, including high-profile opposition figures arrested in the aftermath of the 2003 presidential election.
In August 2004, the Government enacted the Law on Advocates and Advocate Activity. This law was expected to reform the legal profession; however, the Government used a narrow interpretation of the law's wording to limit access by the accused to lawyers even more severely. In June 2005, the parliament approved the passage of an amendment to the Law that was expected establish a more independent bar association by allowing all licensed lawyers to join.
Section 498A (a) (2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."
Azerbaijan is a member of the International Bank for Reconstruction and Development (IBRD), the European Bank for Reconstruction and Development (EBRD), the International Monetary Fund (IMF) and the Asian Development Bank. Azerbaijan is making progress in preparing for WTO membership with the assistance of a U.S. Trade and Development Agency-funded WTO advisor. Azerbaijan has a bilateral trade agreement with the United States providing for Normal Trade Relations subject to its continued compliance with the freedom of emigration provisions of the Jackson-Vanik amendment (Title IV of the Trade Act of 1974). The U.S.-Azerbaijan bilateral investment treaty (BIT) entered into force in August 2001. Azerbaijan also has an Overseas Private Investment Corporation agreement, which was entered into force in 1992. Azerbaijan has applied to become a beneficiary of the Generalized System of Preferences (GSP), a request currently under consideration.
The oil industry is Azerbaijan's financial lifeline. Twenty-five signed Production Sharing Agreements (PSAs) with over 30 international companies attest to the rapid development of Azerbaijan's energy sector, which attracted 75-80 percent of the more than $5 billion in foreign direct investment (FDI) made through 2000. The Baku-Tbilisi-Ceyhan oil pipeline is online and other key regional energy projects, such as the Baku-Tbilisi-Erzerum gas pipeline, are nearing completion. These projects will form the backbone of an East-West transportation corridor that will carry Caspian energy resources to western markets and help ensure the independence of participating states. However, the Government of Azerbaijan has had a mixed record on implementing structural reforms, especially outside the energy sector.
In June 2003, Azerbaijan became one of the first countries to join the Extractive Industries Transparency Initiative (EITI). Government, NGO, international and domestic energy companies signed a memorandum of understanding on EITI implementation in Baku on November 24, 2004. This committed Azerbaijan to public, independently audited, twice-yearly reports detailing payments by domestic and international energy companies to the Government and payments received by the Government; the first of was published in March 2005.
Economic development outside the energy sector has been incremental. In cooperation with the international community, the Government has begun implementation of both a rural economic development program and a poverty reduction strategy. Government efforts at land privatization have helped reverse the collapse of agriculture production as well as engender sustained growth in agricultural production.
In contrast to its mixed track record on structural reform, Azerbaijan has received praise from IFIs for achieving macroeconomic stability. Azerbaijan has maintained a conservative stance on the assumption of debt - total public sector external debt is projected to be 13.5% of GDP in 2005. Inflation has been under control in 2005 and the national currency, the manat, has appreciated against the dollar. Azerbaijan has experienced continued strong economic growth, with GDP expected to increase by over 20 percent in 2005. The IMF has supported Azerbaijan's economic reform program since 1995. In July 2001, the Government of Azerbaijan reached agreement with the IMF on a three-year, $100 million Poverty Reduction and Growth Facility which was completed in 2005. The Government of Azerbaijan established a State Oil Fund in 1999, with the cooperation of the International Financial Institutions, to save and manage its growing energy revenues. The Fund, which began operating in January 2001, has been transparently managed and is projected to have assets of $1.3 billion by year-end 2005. Expenditures from the Oil Fund are made through the state budget with the approval of parliament. The creation of the Oil Fund has had a positive impact on fiscal discipline and has contributed to better transparency and accountability of oil revenue management.
Section 498A (a) (3): "respect for internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."
The Government's human rights record remains poor. As part of its application to join the Council of Europe, Azerbaijan passed several progressive pieces of legislation to replace outdated Soviet legal codes in 2000. The institutions required to implement these new laws, however, are weak, and implementation has faced difficulties. For example, the 2000 criminal code bans torture, but local human rights NGOs report that authorities continue to torture suspects to extract confessions. Although there were some prosecutions and reprimands over the past year, most allegations of police abuse went uninvestigated. Local and international human rights groups visit prisons and meet regularly with political prisoners after sentencing, and in August 2005, the Government granted domestic prison monitors access to pre-trial detainees.
Although "traditional" religious groups - Muslims, Russian Orthodox Christians and Jews - enjoy the respect and support of the Government, authorities periodically harass and interfere with other, foreign-origin, "non-traditional" religious groups such as Pentecostal and evangelical Christians, Jehovah's Witnesses, Hare Krishna's and "Wahhabi" Muslims. Following President Heydar Aliyev's public commitment to religious freedom in late 1999, the Government redressed most individual cases of harassment and registered several non-traditional religious groups. The establishment of a state commission regulating religious associations in June 2001, however, required that all religious groups re-submit their registration documents. There have been considerable delays in registration and some denials. Several Protestant congregations of separate churches were denied registration when they refused to accept the state's plan for organizing themselves into a common union with a particular church at the head. Most religious groups have continued to operate while their re-registration is pending. There have also been some problems with importing religious materials, with groups at times citing lengthy delivery delays and only receiving permission for reduced quantities. Some Muslim groups, mostly Wahhabi and Iranian groups, have reported government interference in their affairs. Some Muslim communities have complained of authorities denying permission for female students and teachers to wear Muslim head coverings.
In June 2004, authorities carried out the court-ordered eviction of the Juma Mosque community in Baku. The community had refused to reregister with the State Committee on Work with Religious Associations. In addition, authorities cited the partisan anti-government political activity of the community's Imam, Illgar Ibrahimoglu as one reason for its eviction. Authorities also claimed the mosque needed renovation. Currently the congregation does not have a place to hold prayers. Ibrahimoglu remains restricted from leaving the country in connection with his conviction for his alleged involvement in the post-election violence of October 2003 and continues to work in support of the political opposition.
The Government respects the right of freedom of emigration, and is considered compliant with the freedom of emigration provisions of the Jackson-Vanik amendment (subject to a semi-annual report on continued compliance with these provisions). The remaining ethnic Armenian population in Azerbaijan numbers approximately 10,000-30,000, almost exclusively persons of mixed descent or mixed marriages. While official government policy is that ethnic Armenians are free to travel, low-level officials seeking bribes have harassed citizens of Armenian ethnicity who sought to obtain passports. There are approximately 800,000 Azerbaijani refugees and internally displaced persons (IDPs) from the war with Armenia. Armenians have settled in some parts of Azerbaijan occupied by Armenia, and Azerbaijanis are unable to return to these locales.
Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."
Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."
Section 498A(a)(6): "implement responsible security policies, including—
(A) Adhering to arms control obligations derived from agreements signed by the former Soviet Union;
(B) Reducing military forces and expenditures to a level consistent with legitimate defense requirements;
(C) Not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and
(D) Restraining conventional weapons transfers."
Azerbaijan has declared its acceptance of all of the relevant arms control obligations of the former Soviet Union. Azerbaijani actions to support this commitment include accession, as a non-nuclear-weapons state, to the Nuclear Non-Proliferation Treaty (NPT) on September 22, 1992. Azerbaijan's NPT safeguards agreement with the International Atomic Energy Agency has been in force since April 29, 1999. The Additional Protocol has been in force for Azerbaijan since November 29, 2000. Azerbaijan was one of the original signatories of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (CWC) and deposited its instrument of ratification to the Convention on February 29, 2000. On February 26, 2004, Azerbaijan acceded to the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxic Weapons and on Their Destruction (BWC). The United States considers Azerbaijan to be a party to the Intermediate and Shorter Range Nuclear Forces (INF) Treaty as a successor state to the Soviet Union. Although Azerbaijani officials have questioned that conclusion, they have taken no steps inconsistent with their obligations under the INF Treaty.
The Conventional Armed Forces in Europe (CFE) Treaty was approved by Azerbaijan's Parliament in July 1992. Until late in 1999, Azerbaijan had significant overages above its Treaty limits for ground equipment, but by a series of notifications of reduction events and decommissioning, Azerbaijan stated they had been eliminated. Azerbaijan's data since January 1, 2000 has shown compliance with all limits. However, questions about the accuracy of this data have not yet been fully resolved, and Azerbaijan's compliance with other CFE obligations has been uneven. Azerbaijan participates in the CFE Joint Consultative Group, the Treaty's implementation body, which meets in Vienna. Azerbaijan has hosted on-site inspections as provided for in the Treaty and has provided data on equipment as required by the Treaty. However, since 1997 Azerbaijan, citing the exigencies of the conflict in Nagorno-Karabakh, has continued a unilateral suspension of certain notification provisions, a practice not permitted under the CFE Treaty. Although Azerbaijan has continued to periodically notify and carry out reduction events, it has not properly completed the reductions required by the Treaty. Since the Treaty entered into force, Azerbaijan has continuously insisted that it cannot complete required reductions - or fulfill certain Treaty obligations - as long as the dispute over Nagorno-Karabakh continues with Armenian troops and equipment in occupied Azerbaijani territory. Azerbaijan is engaged in discussions both in the CFE context and in the context of the Minsk process, which may help lay the basis for improved Treaty compliance.
Azerbaijan regularly submits Confidence and Security Building Measures (CSBM) annual data and has received CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document 1994 and its successor Vienna Document 1999.
Azerbaijan supports the worldwide moratorium on nuclear testing, and was an original subscribing state to the November 25, 2002, Hague Code of Conduct Against Ballistic Missile Proliferation. Azerbaijan is not a significant exporter of conventional weapons. The USG also cooperates with Azerbaijan under the auspices of the Cooperative Threat Reduction program, Weapons of Mass Destruction Proliferation Prevention Initiative, to improve Azerbaijan's capability to prevent illicit trafficking of WMD and WMD components, materials and expertise on the Caspian Sea. In 2003, Azerbaijan acceded to the Agreement to Establish the Science and Technology Center in Ukraine (STCU), which provides former weapons scientists with opportunities to conduct legitimate research.
Azerbaijan's 2006 State Budget includes a 98% increase in defense spending, a significant increase over 2005. However, between 40-50% of this increase is earmarked for salary increases as Azerbaijan strives to professionalize its armed forces and pay a living wage to troops. Infrastructure improvements, many undertaken in the context of Azerbaijan's commitments to NATO through its Individual Partnership Action Plan (IPAP), account for a large percentage of the defense budget as well. At the same time, Azerbaijan's military will likely embark on a program of arms procurements as it continues the defense modernization process.
Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."
Soviet-era oil development, air and water pollution, and urban industrial pressure on the land have created serious environmental challenges. Deterioration and erosion of soil and salination of agricultural lands contribute to extensive soil loss. Poor air and water quality contribute to increasing public health risks. The rising level of the Caspian Sea and the prospective development of Caspian energy resources have brought serious new environmental challenges. Azerbaijan acceded to the Convention on International Trade in Endangered Species on November 23, 1998; to the Basel Convention (on transboundary movement of hazardous waste) on June 1, 2001; and to the Kyoto Protocol on September 28, 2000.
Legislation to address environmental problems and the use of natural resources, based on modern Western practice, has been enacted, but government funding remains inadequate to meet the breadth of existing problems. International consortia currently drilling for oil and gas in the Caspian Sea are following international industry-wide environmental practices.
The Government draws attention to environmental issues through its support of an annual International Environmental Congress that brings together government officials, scientists, politicians, international oil companies, and private organizations to address Caspian region development issues. Azerbaijan also participates in the Caspian Environmental Program, a five-nation project supported by United Nations Development Program (UNDP) and the IBRD. Under this project, Azerbaijan has established a pollution abatement research center and a database management center to help the coastal states protect the sensitive Caspian Sea environment. On November 4, 2003, Azerbaijan signed a five-party Framework Convention for the Protection of the Marine Environment of the Caspian Sea with Iran, Turkmenistan, Russia, and Kazakhstan. In November 2001, the Caspian Environment Program sponsored a series of workshops on oil spill contingency planning which many hope will be a building block for Azerbaijan in a regional contingency plan for the coastal states. Azerbaijan is also working with neighboring states, including Armenia and Georgia, through the EECCA strategy to address common environmental and development issues.
In October 2001 the Government combined five agencies into a new Ministry of Ecology and National Resources, which is responsible for implementing the Government's ecology policy. In December 2000, Azerbaijan joined co-founders Georgia and Armenia in a Regional Environmental Center for the Caucasus. The United States and the European Union are supporting and co-financing this independent, non-profit, and non-political organization, the mission of which is to strengthen civil society and support sustainable development by promoting public awareness and participation in regional environmental decision-making. In November 2001, the Ministry of Ecology advised that Azerbaijan had completed a national sustainable development plan. Azerbaijan is participating in a three-country USAID project on management of the Kura/Aras River, the basin of which encompasses Georgia, Azerbaijan and Armenia.
Section 498A(a)(8): "deny support for acts of international terrorism."
Azerbaijan is a staunch partner in the U.S.-led global war on terrorism. Azerbaijan has signed the recently adopted International Convention for the Suppression of Acts of Nuclear Terrorism is party to the other twelve international counterterrorism conventions. Azerbaijan has cooperated with the U.S. and other countries on anti-terrorism efforts.
U.S.-Azerbaijan counterterrorism cooperation predates the September 11, 2001 attacks. Azerbaijan provided evidence to U.S. authorities that contributed directly to the conviction of the 1998 East Africa Embassy bombers, and cooperates with the U.S. Embassy in Baku against terrorist threats to the mission. In the wake of the September 11 attacks, the Government of Azerbaijan expressed unqualified support for the U.S. and offered whatever means necessary to the U.S.-led antiterrorism coalition. To date, Azerbaijan has granted blanket over flight clearance, offered the use of bases, and engaged in information sharing and law enforcement cooperation. In November 2002, a platoon of Azerbaijani soldiers was deployed to the international peacekeeping force in Afghanistan, and in August 2003, a company of Azerbaijani soldiers was deployed to Iraq. They continue to serve in both countries.
Azerbaijan has taken steps to combat terrorist financing, making a concerted effort to identify and shut down groups engaged in terrorist-related funding. Azerbaijan closed three organizations that were suspected of supporting terrorist groups. It has taken steps to prevent the use of Azerbaijani territory by Chechen militants and those seeking to aid them. Azerbaijan has also detained individuals associated with terrorist groups crossing the Iran-Azerbaijan border illegally. Azerbaijan's Department of Aviation Security increased security at Baku's Bina Airport and has implemented International Civil Aviation Organization (ICAO) recommendations on aviation security. Azerbaijan has turned over 30 foreign citizens with suspected ties to terrorists, including eight to Egypt and three to Saudi Arabia. The Government of Azerbaijan does not grant sanctuary from prosecution to individuals or groups that have committed actions of international terrorism or otherwise support international terrorism.
With assistance from the Department of Justice and the United Nations, Azerbaijan has been diligently drafting new legislation to bring its criminal code up to international standards on money laundering, terrorist financing, and terrorism.
Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."
In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics, including Azerbaijan, signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the former Soviet Union (FSU). In December 1991, Russia and seven other republics signed an agreement that assigned to each of the Newly Independent States a share of all the external assets and foreign debt of the FSU. Azerbaijan did not sign the December 1991 agreement.
Beginning in 1992, Russia sought to replace the joint and several liability principles by seeking full liability for the foreign debt of the FSU in return for all the external assets of the FSU. In September 1993 Azerbaijan signed a "double-zero option" agreement with Russia under which Russia agreed to assume Azerbaijan's share of the foreign debt of the FSU in return for Azerbaijan's share of the FSU's external assets.
Please see section 498A(a)(9) of the Russia assessment regarding indebtedness to the U.S. incurred by the former Soviet Union.
Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."
The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs, which was established in March 1992. The Commission met with Azerbaijani officials in June 1996, and the Azerbaijani Government pledged its cooperation with the Commission's efforts.
Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."
We do not have evidence from which to conclude that the Government of Azerbaijan is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.
AZERBAIJAN
Section 498A(b)(1): Has the President determined that the Government of Azerbaijan has "engaged in a consistent pattern of gross violations of internationally recognized human rights or of international law"?
No, the President has not made such a determination at this time. However, there have been serious shortcomings in the observance of human rights. We will continue to monitor the Government of Azerbaijan's human rights performance and maintain this issue as a key part of our bilateral relationship. We remain committed to addressing these problems not only through diplomatic efforts but also through assistance programs.
Section 498A(b)(2): Has the President determined that the Government of Azerbaijan "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?
No. The President has not made such a determination at this time.
Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Azerbaijan "knowingly transferred to another country --
(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or
(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?
No. The President has not made such a determination at this time.
Section 498A(b)(4): Is the Government of Azerbaijan "prohibited from receiving such assistance by section 101 or 102 of the Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991"?
No.
Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Azerbaijan "is providing assistance for, or engaging in non-market-based trade (as defined in section 498B(k)(3)) with the Cuban Government? If so, has the President taken action to withhold assistance from Azerbaijan under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"
No. The President has not determined that the Government of Azerbaijan is providing military and intelligence, economic, nuclear, or other assistance to or engaging in any non-market-based trade with, the Government of Cuba.
