The shops are closing one by one, prices are rising, wages are being delayed and people are panicking. This is how Azerbaijan, the Caspian Sea nation and ex-Soviet republic of nearly 10 million people, is ringing in the New Year.
The manat, Azerbaijan’s national currency, is plummeting with the price of oil — which accounts for 94 percent of the exports of the nation and 73 percent of the budget. The currency has lost most of its value against the dollar after the government dropped its support for the manat, but not before burning through half of the nation’s hard currency reserves, Reuters reported.
The first protests against price hikes and salary delays have began in the cities of Lankaran, Agjabady and Siyazan. In Lankaran, local residents closed the Baku-Astara road despite police attempts to prevent the protest, according to Meydan.TV.
And Azeri President Ilham Aliyev, the nation’s dictator, doesn’t seem to have a plan to rescue the nation beyond saying he will impose price controls.
Economic expert Natig Jafarly called president’s attitude to the current situation “Soviet-administrative”.
“The president and his team don’t understand or they don’t want to believe what is happening in Azerbaijan. We were waiting for the anti-crisis plan, but instead of that we saw kind of a Soviet-administrative attitude,” Jafarly said. “And this will cause a deeper crisis. It is more than clear that the present government is not able to save this country from the crisis, and the way of resolving of these problems is not the only economic reforms, but political reforms, the re-establishment of a management system – all these processes go through the parliament re-election as a first step,” Jafarly posted on his official Facebook account.
While waiting for Aliyev to come up with a plan, Azerbaijan will not have the benefit of civil society or an independent press, both long-repressed elements of society. Some of the main figures in civil society or journalism are in prison, including Intigam Aliyev, Anar Mammadov, Bashir Suleymanov, Khadija Ismayil and Rasul Jafarov.
And Aliyev’s poor human rights records mean it cannot count on help from the European Union, unlike other nations.
On Jan. 11, the price of oil fell to $31 a barrel, while Azerbaijan’s cost per-barrel of prodcution is $11.
Jafarly wrote that Azerbaijan’s state budget for 2016 counts on $50 a barrel for oil. But such a price rise is not expected this year. That means the government will have difficulty financing such projects as the the Baku-Tbilisi-Gars railway project.
The manat has tumbled by more than a third since the central bank abandoned its peg to the dollar last month. In the past week, the dramatic deterioration has sparked half a dozen protests in a country unaccustomed to widespread dissent.
“President Aliyev is in uncharted territory at the moment,” said Livia Paggi, central Asia and Caucasus analyst at risk consultancy GPW. “The government has been unable to stabilise the situation via conventional means. Now they are trying to restore currency stability by killing foreign exchange transactions.”
The wave of protests is unusual in a country where the government tolerates little opposition. In Siyazan, a small town north of the capital, 55 protesters were arrested last week. Further protests were reported in other towns this week in response to unemployment and rising prices, although the relatively affluent capital Baku has remained calm.
The government has announced measures to ease the impact of the manat’s fall, including a VAT exemption for bread and flour and a rise in pensions by 10 per cent.
