Azerbaijan vs. Kazakhstan

Azerbaijan - a secular nation with a majority-Turkic and majority-Shia Muslim population - was briefly independent (from 1918 to 1920) following the collapse of the Russian Empire; it was subsequently incorporated into the Soviet Union for seven decades. Azerbaijan remains involved in the protracted Nagorno-Karabakh conflict with Armenia. Nagorno-Karabakh was a primarily ethnic Armenian region that Moscow recognized in 1923 as an autonomous oblast within Soviet Azerbaijan. In the late Soviet period, a separatist movement developed which sought to end Azerbaijani control over the region. Fighting over Nagorno-Karabakh began in 1988 and escalated after Armenia and Azerbaijan attained independence from the Soviet Union in 1991. By the time a ceasefire took effect in May 1994, separatists, with Armenian support, controlled Nagorno-Karabakh and seven surrounding Azerbaijani territories. Following a Second Nagorno-Karabakh War that took place in September-November 2020, Azerbaijan recaptured much of the territory it had lost a quarter century earlier and under the terms of a cease fire agreement, Armenia returned the remaining territories it occupied to Azerbaijan.

In the 25 years following its independence, Azerbaijan succeeded in significantly reducing the poverty rate and has directed revenues from its oil and gas production to develop the country's infrastructure. However, corruption remains a problem, and the government has been accused of authoritarianism. The country's leadership has remained in the Aliyev family since Heydar ALIYEV became president in 1993 and was succeeded by his son, President Ilham ALIYEV in 2003. Following two national referendums in the past several years that eliminated presidential term limits and extended presidential terms from 5 to 7 years, President ALIYEV secured a fourth term as president in April 2018 in an election that international observers noted had serious shortcomings. Reforms are underway to diversify the country's non-oil economy and additional reforms are needed to address weaknesses in government institutions, particularly in the education and health sectors, and the court system.

Ethnic Kazakhs, a mix of Turkic and Mongol nomadic tribes with additional Persian cultural influences, migrated to the region in the 15th century. The area was conquered by Russia in the 18th and 19th centuries, and Kazakhstan became a Soviet Republic in 1925. Repression and starvation associated with forced agricultural collectivization led to a massive number of deaths in the 1930s. During the 1950s and 1960s, the agricultural "Virgin Lands" program led to an influx of settlers (mostly ethnic Russians, but also other nationalities) and at the time of Kazakhstan's independence in 1991, ethnic Kazakhs were a minority. Non-Muslim ethnic minorities departed Kazakhstan in large numbers from the mid-1990s through the mid-2000s and a national program has repatriated about a million ethnic Kazakhs (from Uzbekistan, Tajikistan, Mongolia, and the Xinjiang region of China) back to Kazakhstan. As a result of this shift, the ethnic Kazakh share of the population now exceeds two-thirds.

Kazakhstan's economy is the largest in the Central Asian states, mainly due to the country's vast natural resources. Current issues include: diversifying the economy, obtaining membership in global and regional international economic institutions, enhancing Kazakhstan's economic competitiveness, and strengthening relations with neighboring states and foreign powers.

66 districts (rayonlar; rayon - singular), 11 cities (saharlar; sahar - singular);

rayons: Abseron, Agcabadi, Agdam, Agdas, Agstafa, Agsu, Astara, Babak, Balakan, Barda, Beylaqan, Bilasuvar, Cabrayil, Calilabad, Culfa, Daskasan, Fuzuli, Gadabay, Goranboy, Goycay, Goygol, Haciqabul, Imisli, Ismayilli, Kalbacar, Kangarli, Kurdamir, Lacin, Lankaran, Lerik, Masalli, Neftcala, Oguz, Ordubad, Qabala, Qax, Qazax, Qobustan, Quba, Qubadli, Qusar, Saatli, Sabirabad, Sabran, Sadarak, Sahbuz, Saki, Salyan, Samaxi, Samkir, Samux, Sarur, Siyazan, Susa, Tartar, Tovuz, Ucar, Xacmaz, Xizi, Xocali, Xocavand, Yardimli, Yevlax, Zangilan, Zaqatala, Zardab

cities: Baku, Ganca, Lankaran, Mingacevir, Naftalan, Naxcivan (Nakhichevan), Saki, Sirvan, Sumqayit, Xankandi, Yevlax

Ambassador Yerzhan ASHIKBAYEV (since 7 July 2021)

Prior to the decline in global oil prices since 2014, Azerbaijan's high economic growth was attributable to rising energy exports and to some non-export sectors. Oil exports through the Baku-Tbilisi-Ceyhan Pipeline, the Baku-Novorossiysk, and the Baku-Supsa Pipelines remain the main economic driver, but efforts to boost Azerbaijan's gas production are underway. The expected completion of the geopolitically important Southern Gas Corridor (SGC) between Azerbaijan and Europe will open up another source of revenue from gas exports. First gas to Turkey through the SGC is expected in 2018 with project completion expected by 2020-21.

Declining oil prices caused a 3.1% contraction in GDP in 2016, and a 0.8% decline in 2017, highlighted by a sharp reduction in the construction sector. The economic decline was accompanied by higher inflation, a weakened banking sector, and two sharp currency devaluations in 2015. Azerbaijan's financial sector continued to struggle. In May 2017, Baku allowed the majority state-owed International Bank of Azerbaijan (IBA), the nation's largest bank, to default on some of its outstanding debt and file for restructuring in Azerbaijani courts; IBA also filed in US and UK bankruptcy courts to have its restructuring recognized in their respective jurisdictions.

Azerbaijan has made limited progress with market-based economic reforms. Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors. The government has, however, made efforts to combat corruption, particularly in customs and government services. Several other obstacles impede Azerbaijan's economic progress, including the need for more foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region. While trade with Russia and the other former Soviet republics remains important, Azerbaijan has expanded trade with Turkey and Europe and is seeking new markets for non-oil/gas exports - mainly in the agricultural sector - with Gulf Cooperation Council member countries, the US, and others. It is also improving Baku airport and the Caspian Sea port of Alat for use as a regional transportation and logistics hub.

Long-term prospects depend on world oil prices, Azerbaijan's ability to develop export routes for its growing gas production, and its ability to improve the business environment and diversify the economy. In late 2016, the president approved a strategic roadmap for economic reforms that identified key non-energy segments of the economy for development, such as agriculture, logistics, information technology, and tourism. In October 2017, the long-awaited Baku-Tbilisi-Kars railway, stretching from the Azerbaijani capital to Kars in north-eastern Turkey, began limited service.

Kazakhstan's vast hydrocarbon and mineral reserves form the backbone of its economy. Geographically the largest of the former Soviet republics, excluding Russia, Kazakhstan, g possesses substantial fossil fuel reserves and other minerals and metals, such as uranium, copper, and zinc. It also has a large agricultural sector featuring livestock and grain. The government realizes that its economy suffers from an overreliance on oil and extractive industries and has made initial attempts to diversify its economy by targeting sectors like transport, pharmaceuticals, telecommunications, petrochemicals and food processing for greater development and investment. It also adopted a Subsoil Code in December 2017 with the aim of increasing exploration and investment in the hydrocarbon, and particularly mining, sectors.

Kazakhstan's oil production and potential is expanding rapidly. A $36.8 billion expansion of Kazakhstan's premiere Tengiz oil field by Chevron-led Tengizchevroil should be complete in 2022. Meanwhile, the super-giant Kashagan field finally launched production in October 2016 after years of delay and an estimated $55 billion in development costs. Kazakhstan's total oil production in 2017 climbed 10.5%.

Kazakhstan is landlocked and depends on Russia to export its oil to Europe. It also exports oil directly to China. In 2010, Kazakhstan joined Russia and Belarus to establish a Customs Union in an effort to boost foreign investment and improve trade. The Customs Union evolved into a Single Economic Space in 2012 and the Eurasian Economic Union (EAEU) in January 2015. Supported by rising commodity prices, Kazakhstan's exports to EAEU countries increased 30.2% in 2017. Imports from EAEU countries grew by 24.1%.

The economic downturn of its EAEU partner, Russia, and the decline in global commodity prices from 2014 to 2016 contributed to an economic slowdown in Kazakhstan. In 2014, Kazakhstan devalued its currency, the tenge, and announced a stimulus package to cope with its economic challenges. In the face of further decline in the ruble, oil prices, and the regional economy, Kazakhstan announced in 2015 it would replace its currency band with a floating exchange rate, leading to a sharp fall in the value of the tenge. Since reaching a low of 391 to the dollar in January 2016, the tenge has modestly appreciated, helped by somewhat higher oil prices. While growth slowed to about 1% in both 2015 and 2016, a moderate recovery in oil prices, relatively stable inflation and foreign exchange rates, and the start of production at Kashagan helped push 2017 GDP growth to 4%.

Despite some positive institutional and legislative changes in the last several years, investors remain concerned about corruption, bureaucracy, and arbitrary law enforcement, especially at the regional and municipal levels. An additional concern is the condition of the country's banking sector, which suffers from poor asset quality and a lack of transparency. Investors also question the potentially negative effects on the economy of a contested presidential succession as Kazakhstan's first president, Nursultan NAZARBAYEV, turned 77 in 2017.

one of the most progressive telecom sectors in Central Asia; vast 4G network; low fixed-line and fixed-broadband penetration; moderate mobile broadband penetration and high mobile penetration; mobile market highly competitive and growth is slow due to saturation (2020)

Azerbaijan, Kazakhstan, and Russia ratified the Caspian seabed delimitation treaties based on equidistance, while Iran continues to insist on a one-fifth slice of the sea; the dispute over the break-away Nagorno-Karabakh region and the Armenian military occupation of surrounding lands in Azerbaijan remains the primary focus of regional instability; residents have evacuated the former Soviet-era small ethnic enclaves in Armenia and Azerbaijan; local border forces struggle to control the illegal transit of goods and people across the porous, undemarcated Armenian, Azerbaijani, and Georgian borders; bilateral talks continue with Turkmenistan on dividing the seabed and contested oilfields in the middle of the Caspian

in January 2019, the Kyrgyz Republic ratified the demarcation agreement of the Kazakh-Kyrgyz border; the demarcation of the Kazakh-Uzbek borders is ongoing; the ongoing demarcation with Russia began in 2007; demarcation with China completed in 2002