Turkey vs. Azerbaijan

Modern Turkey was founded in 1923 from the remnants of the defeated Ottoman Empire by national hero Mustafa KEMAL, who was later honored with the title Ataturk or "Father of the Turks." Under his leadership, the country adopted radical social, legal, and political reforms. After a period of one-party rule, an experiment with multi-party politics led to the 1950 election victory of the opposition Democrat Party and the peaceful transfer of power. Since then, Turkish political parties have multiplied, but democracy has been fractured by periods of instability and military coups (1960, 1971, 1980), which in each case eventually resulted in a return of formal political power to civilians. In 1997, the military again helped engineer the ouster - popularly dubbed a "post-modern coup" - of the then Islamic-oriented government. An unsuccessful coup attempt was made in July 2016 by a faction of the Turkish Armed Forces.

Turkey intervened militarily on Cyprus in 1974 to prevent a Greek takeover of the island and has since acted as patron state to the "Turkish Republic of Northern Cyprus," which only Turkey recognizes. A separatist insurgency begun in 1984 by the Kurdistan Workers' Party (PKK), a US-designated terrorist organization, has long dominated the attention of Turkish security forces and claimed more than 40,000 lives. In 2013, the Turkish Government and the PKK conducted negotiations aimed at ending the violence, however intense fighting resumed in 2015. Turkey joined the UN in 1945 and in 1952 it became a member of NATO. In 1963, Turkey became an associate member of the European Community; it began accession talks with the EU in 2005. Over the past decade, economic reforms, coupled with some political reforms, have contributed to a growing economy, although economic growth slowed in recent years.

From 2015 and continuing through 2016, Turkey witnessed an uptick in terrorist violence, including major attacks in Ankara, Istanbul, and throughout the predominantly Kurdish southeastern region of Turkey. On 15 July 2016, elements of the Turkish Armed forces attempted a coup that ultimately failed following widespread popular resistance. More than 240 people were killed and over 2,000 injured when Turkish citizens took to the streets en masse to confront the coup forces. The government accused followers of the Fethullah Gulen transnational religious and social movement ("Hizmet") for allegedly instigating the failed coup and designates the movement's followers as terrorists. Since the attempted coup, Turkish Government authorities arrested, suspended, or dismissed more than 130,000 security personnel, journalists, judges, academics, and civil servants due to their alleged connection to Gulen's movement. Following the failed coup, the Turkish Government instituted a State of Emergency from July 2016 to July 2018. The Turkish Government conducted a referendum on 16 April 2017 in which voters approved constitutional amendments changing Turkey from a parliamentary to a presidential system. The amendments went into effect fully following the presidential and parliamentary elections in June 2018.

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.

severe earthquakes, especially in northern Turkey, along an arc extending from the Sea of Marmara to Lake Van; landslides; flooding

volcanism: limited volcanic activity; its three historically active volcanoes; Ararat, Nemrut Dagi, and Tendurek Dagi have not erupted since the 19th century or earlier

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

Turkey's largely free-market economy is driven by its industry and, increasingly, service sectors, although its traditional agriculture sector still accounts for about 25% of employment. The automotive, petrochemical, and electronics industries have risen in importance and surpassed the traditional textiles and clothing sectors within Turkey's export mix. However, the recent period of political stability and economic dynamism has given way to domestic uncertainty and security concerns, which are generating financial market volatility and weighing on Turkey's economic outlook.

Current government policies emphasize populist spending measures and credit breaks, while implementation of structural economic reforms has slowed. The government is playing a more active role in some strategic sectors and has used economic institutions and regulators to target political opponents, undermining private sector confidence in the judicial system. Between July 2016 and March 2017, three credit ratings agencies downgraded Turkey's sovereign credit ratings, citing concerns about the rule of law and the pace of economic reforms.

Turkey remains highly dependent on imported oil and gas but is pursuing energy relationships with a broader set of international partners and taking steps to increase use of domestic energy sources including renewables, nuclear, and coal. The joint Turkish-Azerbaijani Trans-Anatolian Natural Gas Pipeline is moving forward to increase transport of Caspian gas to Turkey and Europe, and when completed will help diversify Turkey's sources of imported gas.

After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth, averaging more than 6% annually until 2008. An aggressive privatization program also reduced state involvement in basic industry, banking, transport, power generation, and communication. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey's well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP growth rebounded to around 9% in 2010 and 2011, as exports and investment recovered following the crisis.

The growth of Turkish GDP since 2016 has revealed the persistent underlying imbalances in the Turkish economy. In particular, Turkey's large current account deficit means it must rely on external investment inflows to finance growth, leaving the economy vulnerable to destabilizing shifts in investor confidence. Other troublesome trends include rising unemployment and inflation, which increased in 2017, given the Turkish lira's continuing depreciation against the dollar. Although government debt remains low at about 30% of GDP, bank and corporate borrowing has almost tripled as a percent of GDP during the past decade, outpacing its emerging-market peers and prompting investor concerns about its long-term sustainability.

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.

following earthquake damage to infrastructure in 2020, telecom sector undergoing rapid modernization and expansion, especially in mobile-cellular services; mobile broadband becoming increasingly popular; near saturation of 4G LTE coverage for the population; strides made with 5G through investment by Huawei and Ericcson; fixed and mobile infrastructure will help to underpin Smart City initiatives; tight government control on social media platforms; importer of broadcasting equipment and computers from China (2021)

Turkish Radio and Television Corporation (TRT) operates multiple TV and radio networks and stations; multiple privately owned national television stations and 567 private regional and local television stations; multi-channel cable TV subscriptions available; 1,007 private radio broadcast stations

complex maritime, air, and territorial disputes with Greece in the Aegean Sea; status of north Cyprus question remains; Turkey has expressed concern over the status of Kurds in Iraq; in 2009, Swiss mediators facilitated an accord reestablishing diplomatic ties between Armenia and Turkey, but neither side has ratified the agreement and the rapprochement effort has faltered; Turkish authorities have complained that blasting from quarries in Armenia might be damaging the medieval ruins of Ani, on the other side of the Arpacay valley

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