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 | | Converting
Black Gold
Into Human Gold |
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| By Marco Borsotti, UN Resident Coordinatorand UNDP Resident Representative in Azerbaijan |
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Which of the transition countries in Eastern Europe and the former Soviet Union has the best performing economy with rapid growth, low inflation and the highest ratio of foreign investment to GDP? Is it Poland, Hungary or one of the other dynamic transition countries of Eastern Europe queuing up for EU accession? In fact, it is none of them. A recent UN report reveals that the correct answer is Azerbaijan.
Apart from being an economic success story, Azerbaijan has many other claims to fame. It is a relatively new sovereign state that recently celebrated its eleventh anniversary as an independent republic since the collapse of the Soviet Union. Located in the South Caucasus, it is geographically at the crossroads of Europe and Asia. Hugging the Cas-pian Sea, it extracts oil and gas from its waters but does not belong to OPEC. It is also a pro-Western democracy with a predominantly Moslem population which is unusual for this part of the world.
Azerbaijan had a painful birth in the early-1990s when the Nagorno-Karabakh conflict resulted in the occupation of a large chunk of its territory. This has left a legacy of nearly 1 million refugees and IDPs (internally-displaced persons), said to be the highest proportion of IDPs of any country in the world. Like many other transition countries, political instability and negative growth marred its early years.
A little over a decade later, President Heydar Aliyev, who was in charge of Azerbaijan in Soviet times, is leading the country once again but this time with a democratic mandate. Order has been restored and the oil sector is booming, ever since the so-called 'deal of the century' brought together the government of Azerbaijan and foreign oil companies to invest billions of dollars in oil and gas production in the Caspian. Despite these oil riches, the government recognises that half of Azerbaijan's population is still living in poverty.
What makes Azerbaijan different to the vast majority of the world's other oil-rich countries is that it is doing something about the poverty in its midst. Acting on the advice of the World Bank and the IMF and with the support of UNDP, the United Nations Development Programmme, the President recently signed a decree approving Azerbaijan's first State Programme for Poverty Reduction and Economic Development. Commonly known in development community circles as a PRSP (poverty reduction strategy paper), it is only the second country in the CIS to have produced one. In the case of Azerbaijan, it provides a national framework and roadmap for converting the black gold of oil into Azerbaijan's most precious natural resource, the human gold of its people.
The economic reality is that the oil sector is a capital-intensive in-dustry and in Azerbaijan generates less than 1% of the country's jobs. It is therefore essential that jobs and other income-generating opportunities be created in the non-oil sector if the poor are to have a better life. Job creation is one of the government's six key poverty reduction strategy goals, alongside maintaining macro-economic stability, improving he-alth and education services, investing in infrastructure, reforming social protection and supporting IDPs and refugees.
UNDP and the international development community are currently working with the authorities to implement the government's new poverty reduction strategy that should both improve the living standards of the poor and contribute to the achievement of the UN's Millennium Development Goals (MDGs). With Government leadership and international support, Azerbaijan may become the exception to the rule: an oil-producing country where black gold is converted into human gold and all the people benefit from its oil wealth, especially the poor.
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