Russia vs. Azerbaijan

Founded in the 12th century, the Principality of Muscovy was able to emerge from over 200 years of Mongol domination (13th-15th centuries) and to gradually conquer and absorb surrounding principalities. In the early 17th century, a new ROMANOV Dynasty continued this policy of expansion across Siberia to the Pacific. Under PETER I (ruled 1682-1725), hegemony was extended to the Baltic Sea and the country was renamed the Russian Empire. During the 19th century, more territorial acquisitions were made in Europe and Asia. Defeat in the Russo-Japanese War of 1904-05 contributed to the Revolution of 1905, which resulted in the formation of a parliament and other reforms. Devastating defeats and food shortages in World War I led to widespread rioting in the major cities of the Russian Empire and to the overthrow in 1917 of the ROMANOV Dynasty. The communists under Vladimir LENIN seized power soon after and formed the USSR. The brutal rule of Iosif STALIN (1928-53) strengthened communist rule and Russian dominance of the Soviet Union at a cost of tens of millions of lives. After defeating Germany in World War II as part of an alliance with the US (1939-1945), the USSR expanded its territory and influence in Eastern Europe and emerged as a global power. The USSR was the principal adversary of the US during the Cold War (1947-1991). The Soviet economy and society stagnated in the decades following Stalin's rule, until General Secretary Mikhail GORBACHEV (1985-91) introduced glasnost (openness) and perestroika (restructuring) in an attempt to modernize communism, but his initiatives inadvertently released forces that by December 1991 led to the dissolution of the USSR into Russia and 14 other independent states.

Following economic and political turmoil during President Boris YELTSIN's term (1991-99), Russia shifted toward a centralized authoritarian state under President Vladimir PUTIN (2000-2008, 2012-present) in which the regime seeks to legitimize its rule through managed elections, populist appeals, a foreign policy focused on enhancing the country's geopolitical influence, and commodity-based economic growth. Russia faces a largely subdued rebel movement in Chechnya and some other surrounding regions, although violence still occurs throughout the North Caucasus.

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.

permafrost over much of Siberia is a major impediment to development; volcanic activity in the Kuril Islands; volcanoes and earthquakes on the Kamchatka Peninsula; spring floods and summer/autumn forest fires throughout Siberia and parts of European Russia

volcanism: significant volcanic activity on the Kamchatka Peninsula and Kuril Islands; the peninsula alone is home to some 29 historically active volcanoes, with dozens more in the Kuril Islands; Kliuchevskoi (4,835 m), which erupted in 2007 and 2010, is Kamchatka's most active volcano; Avachinsky and Koryaksky volcanoes, which pose a threat to the city of Petropavlovsk-Kamchatsky, have been deemed Decade Volcanoes by the International Association of Volcanology and Chemistry of the Earth's Interior, worthy of study due to their explosive history and close proximity to human populations; other notable historically active volcanoes include Bezymianny, Chikurachki, Ebeko, Gorely, Grozny, Karymsky, Ketoi, Kronotsky, Ksudach, Medvezhia, Mutnovsky, Sarychev Peak, Shiveluch, Tiatia, Tolbachik, and Zheltovsky; see note 2 under "Geography - note"

note 1: largest country in the world in terms of area but unfavorably located in relation to major sea lanes of the world; despite its size, much of the country lacks proper soils and climates (either too cold or too dry) for agriculture

note 2: Russia's far east, particularly the Kamchatka Peninsula, lies along the Ring of Fire, a belt of active volcanoes and earthquake epicenters bordering the Pacific Ocean; up to 90% of the world's earthquakes and some 75% of the world's volcanoes occur within the Ring of Fire

note 3: Mount El'brus is Europe's tallest peak; Lake Baikal, the deepest lake in the world, is estimated to hold one fifth of the world's fresh surface water

note 4: Kaliningrad oblast is an exclave annexed from Germany following World War II (it was formerly part of East Prussia); its capital city of Kaliningrad - formerly Koenigsberg - is the only Baltic port in Russia that remains ice free in the winter

46 provinces (oblasti, singular - oblast), 21 republics (respubliki, singular - respublika), 4 autonomous okrugs (avtonomnyye okrugi, singular - avtonomnyy okrug), 9 krays (kraya, singular - kray), 2 federal cities (goroda, singular - gorod), and 1 autonomous oblast (avtonomnaya oblast')

oblasts: Amur (Blagoveshchensk), Arkhangel'sk, Astrakhan', Belgorod, Bryansk, Chelyabinsk, Irkutsk, Ivanovo, Kaliningrad, Kaluga, Kemerovo, Kirov, Kostroma, Kurgan, Kursk, Leningrad, Lipetsk, Magadan, Moscow, Murmansk, Nizhniy Novgorod, Novgorod, Novosibirsk, Omsk, Orenburg, Orel, Penza, Pskov, Rostov, Ryazan', Sakhalin (Yuzhno-Sakhalinsk), Samara, Saratov, Smolensk, Sverdlovsk (Yekaterinburg), Tambov, Tomsk, Tula, Tver', Tyumen', Ul'yanovsk, Vladimir, Volgograd, Vologda, Voronezh, Yaroslavl'

republics: Adygeya (Maykop), Altay (Gorno-Altaysk), Bashkortostan (Ufa), Buryatiya (Ulan-Ude), Chechnya (Groznyy), Chuvashiya (Cheboksary), Dagestan (Makhachkala), Ingushetiya (Magas), Kabardino-Balkariya (Nal'chik), Kalmykiya (Elista), Karachayevo-Cherkesiya (Cherkessk), Kareliya (Petrozavodsk), Khakasiya (Abakan), Komi (Syktyvkar), Mariy-El (Yoshkar-Ola), Mordoviya (Saransk), North Ossetia (Vladikavkaz), Sakha [Yakutiya] (Yakutsk), Tatarstan (Kazan'), Tyva (Kyzyl), Udmurtiya (Izhevsk)

autonomous okrugs: Chukotka (Anadyr'), Khanty-Mansi-Yugra (Khanty-Mansiysk), Nenets (Nar'yan-Mar), Yamalo-Nenets (Salekhard)

krays: Altay (Barnaul), Kamchatka (Petropavlovsk-Kamchatskiy), Khabarovsk, Krasnodar, Krasnoyarsk, Perm', Primorskiy [Maritime] (Vladivostok), Stavropol', Zabaykal'sk [Transbaikal] (Chita)

federal cities: Moscow [Moskva], Saint Petersburg [Sankt-Peterburg]

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

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy towards a more market-based system. Both economic growth and reform have stalled in recent years, however, and Russia remains a predominantly statist economy with a high concentration of wealth in officials' hands. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking, and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector.

Russia is one of the world's leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum. Russia is heavily dependent on the movement of world commodity prices as reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The economy, which had averaged 7% growth during the 1998-2008 period as oil prices rose rapidly, has seen diminishing growth rates since then due to the exhaustion of Russia's commodity-based growth model.

A combination of falling oil prices, international sanctions, and structural limitations pushed Russia into a deep recession in 2015, with GDP falling by close to 2.8%. The downturn continued through 2016, with GDP contracting another 0.2%, but was reversed in 2017 as world demand picked up. Government support for import substitution has increased recently in an effort to diversify the economy away from extractive industries.

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.

telecom market is largest in Europe, centered in large cities; competition active in Moscow and St Petersburg; most users access Internet through mobile platforms; fiber broadband sector is growing, supported by government in aim to extend reach to outlying regions; tests of 5G with Moscow adopting smart city technology; government justifies censorship and website blocks under a range of laws and regulations; government program aims to provide 97% of households with fixed broadband by 2024; publicly accessible Internet connections in institutions such as hospitals, libraries, schools, and mass transit available in cities; in rural areas, the availability of public Internet connections remains limited; major importer of broadcasting equipment and computers from China (2021)

Russia remains concerned about the smuggling of poppy derivatives from Afghanistan through Central Asian countries; China and Russia have demarcated the once disputed islands at the Amur and Ussuri confluence and in the Argun River in accordance with the 2004 Agreement, ending their centuries-long border disputes; the sovereignty dispute over the islands of Etorofu, Kunashiri, Shikotan, and the Habomai group, known in Japan as the "Northern Territories" and in Russia as the "Southern Kurils," occupied by the Soviet Union in 1945, now administered by Russia, and claimed by Japan, remains the primary sticking point to signing a peace treaty formally ending World War II hostilities; Russia's military support and subsequent recognition of Abkhazia and South Ossetia independence in 2008 continue to sour relations with Georgia; Azerbaijan, Kazakhstan, and Russia ratified Caspian seabed delimitation treaties based on equidistance, while Iran continues to insist on a one-fifth slice of the sea; Norway and Russia signed a comprehensive maritime boundary agreement in 2010; various groups in Finland advocate restoration of Karelia (Kareliya) and other areas ceded to the Soviet Union following World War II but the Finnish Government asserts no territorial demands; Russia and Estonia signed a technical border agreement in May 2005, but Russia recalled its signature in June 2005 after the Estonian parliament added to its domestic ratification act a historical preamble referencing the Soviet occupation and Estonia's pre-war borders under the 1920 Treaty of Tartu; Russia contends that the preamble allows Estonia to make territorial claims on Russia in the future, while Estonian officials deny that the preamble has any legal impact on the treaty text; Russia demands better treatment of the Russian-speaking population in Estonia and Latvia; Russia remains involved in the conflict in eastern Ukraine while also occupying Ukraine's territory of Crimea; Lithuania and Russia committed to demarcating their boundary in 2006 in accordance with the land and maritime treaty ratified by Russia in May 2003 and by Lithuania in 1999; Lithuania operates a simplified transit regime for Russian nationals traveling from the Kaliningrad coastal exclave into Russia, while still conforming, as an EU member state with an EU external border, where strict Schengen border rules apply; preparations for the demarcation delimitation of land boundary with Ukraine have commenced; the dispute over the boundary between Russia and Ukraine through the Kerch Strait and Sea of Azov is suspended due to the occupation of Crimea by Russia; Kazakhstan and Russia boundary delimitation was ratified on November 2005 and field demarcation should commence in 2007; Russian Duma has not yet ratified 1990 Bering Sea Maritime Boundary Agreement with the US; Denmark (Greenland) and Norway have made submissions to the Commission on the Limits of the Continental Shelf (CLCS) and Russia is collecting additional data to augment its 2001 CLCS submission

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