Zahra Zahid Durrani
Research Intern at Center for Global & Strategic Studies (CGSS), Islamabad
After The Collapse of Soviet Union Azerbaijan gained independence in 1991, despite facing many problems in the early 1990s. Azerbaijan was able to tackle them and preserved its national integrity along with forming a balanced foreign policy. On October 18, 1991, when Azerbaijan gained its independence it declared itself the political and legal successor of Azerbaijan Democratic Republic and demonstrated its commitment to its ancient traditions of statehood. Soon it restored state symbols of Azerbaijan Democratic Republic. The Armed Forces of the Republic of Azerbaijan were created according to the Law on the Armed Forces of 9 October 1991.
Soon after independence, Azerbaijan became a member of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank, and the Asian Development Bank. The banking system of Azerbaijan consists of the Central Bank of Azerbaijan, commercial banks, and non-banking credit organizations. The National (now Central) Bank was created in 1992 based on the Azerbaijan State Savings Bank, an affiliate of the former State Savings Bank of the USSR. The Central Bank serves as Azerbaijan’s central bank, empowered to issue of national currency, the Azerbaijani manat, and to supervise all commercial banks.
The first years of independence were extremely difficult for the Republic of Azerbaijan. The country was facing Armenia’s expanding aggression and the collapse of the economy. By the end of the hostilities in 1994, Armenians illegally controlled up to 20 percent of Azerbaijani territory, including Nagorno-Karabakh itself. During the war many atrocities were committed including the massacres at Malibeyli and Gushchular, the Garadaghly massacre, the Agdaban, and the Khojaly genocide. Furthermore, an estimated 30,000 people have been killed and more than a million have been displaced. Four United Nations Security Council Resolutions (822, 853, 874, and 884) demanded “the immediate withdrawal of all Armenian forces from all occupied territories of Azerbaijan. In the first years of its independence, i.e. till 1993 economy of Azerbaijan was seriously damaged by frequent change of political power, incompetence of the power, anarchy, and chaos. On the other hand, the involvement of the Republic of Azerbaijan in the war by Armenia, arrival of refugees from occupied districts in other districts, spending fantastic money on military operations hardly damaged the economy that was on the edge of crisis.
These processes left the country in the mid 1993 face to face with civil war and collapse. As a result of a crisis in the government, the country was on the verge of a civil war and faced the peril of losing independence, the people of Azerbaijan demanded to bring Heydar Aliyev to power, and the then leaders of Azerbaijan were obliged to officially invite Heydar Aliyev to Baku. Just in such a critical moment national leader Heydar Aliyev began fulfilling his historical mission – the salvation of Azerbaijan. Azerbaijan after gaining independence implemented new land policy and land reforms. The collapse of the dependent economic system of the Soviet Union drove Azerbaijan, like other republics, to a grave economic crisis. The only right way to get the republic out of this crisis was to form the economy with new economic bases in a short time, supplying the population with agricultural products and food. To assure all this it needed to carry out land reforms. Like all other issues important to start the new life of independent Azerbaijan, the implementation of land reforms is linked to the name of great leader Heydar Aliyev.
On 15 June 1993, Heydar Aliyev was elected chairman of the Supreme Soviet of Azerbaijan, and on 24 June, by a resolution of the National Assembly, he proceeded to fulfill the authorities of the President of the Republic of Azerbaijan. On October 3, 1993, as a result of the nationwide vote, Heydar Aliyev was elected President of the Republic of Azerbaijan. Independent state building, ensuring security and territorial integrity, restoration of the economy, democratic development, the establishment of international relations of Azerbaijan, and its integration into the world community were the key priorities of Heydar Aliyev’s national development strategy.
The great leader initiated and led the development of land reform programmes after long discussions and the legal base was created in the base of this programme for implementing land reforms.
In 1993-2003, under the leadership of Heydar Aliyev agrarian reforms and land reforms were carried out in the Republic of Azerbaijan, development of agriculture, production of agricultural outputs intensified, First, material welfare of producers lifted, production conditions improved, wish of Azerbaijani ploughman to become a landowner come true, lands were freely given to villager and new land-ploughman relations promoted.
After 1993 the people of Azerbaijan were saved from economic crisis, military-political confrontation, social decline, cultural depression, and moral erosion.
To turn an independent Azerbaijan into a modern, powerful state with sustainable economic development, national leader Heydar Aliyev determined the oil strategy, which was the base for the fundamental transformation of the political and economic reforms. This strategy ensured the involvement of foreign investors in the development of Azerbaijan’s oil fields, diversification of routes of transportation of crude oil, effective management of oil revenues and Azerbaijan`s entry into a new stage of development.— Two-thirds of Azerbaijan is rich in oil and natural gas and there are many pipelines in Azerbaijan.
Under the leadership H.E Heydar Aliyev, one of the landmark agreements in Azerbaijan`s 20th-century history due to its political, economic and strategic importance – the Agreement on the Joint Development and Production Sharing for the Azeri and Chirag Fields and the Gunashli Field in the Azerbaijani Sector of the Caspian Sea-“The Contract of the Century” was signed on September 20, 1994.
The $7.4 billion agreement involved 11 international oil companies (AMOCO, BP, McDermott, UNOCAL, SOCAR, Lukoil, Statoil, TPAO, Pennzoil, Ramco, Delta) representing 7 countries (Azerbaijan, USA, UK, Russia, Turkey, Norway, and Saudi Arabia) as contractor parties. They soon established several working structures – the Steering Committee, Azerbaijan International Operating Company (AIOC), and the Advisory Council.
The Contract of the Century was ratified on December 12, 1994, by the parliament of Azerbaijan.
Although according to initial evaluations Azeri, Chirag fields, and Deepwater part of the Gunashli field had 511,000,000 tons of crude oil, further evaluations set oil reserves at 1,072,000,000 tons.
The Contract of the Century paved the way for the signing of another 26 contracts with 41 oil companies from 19 countries.
The structural formation of Azerbaijan’s political system was completed by the adoption of the new Constitution on 12 November 1995. According to Article 23 of the Constitution, the state symbols of the Azerbaijan Republic are the flag, the coat of arms, and the national anthem. The state power in Azerbaijan is limited only by law for internal issues, but for international affairs is additionally limited by the provisions of international agreements. The Constitution of Azerbaijan states that it is a presidential republic with three branches of power – Executive, Legislative, and Judicial. The legislative power is held by the unicameral National Assembly and the Supreme National Assembly in the Nakhchivan Autonomous Republic. The Parliament of Azerbaijan, called Milli Majlis, consists of 125 deputies elected based on majority vote, with a term of 5 years for each elected member. The elections are held every five years, on the first Sunday of November. The Parliament is not responsible for the formation of the government, but the Constitution requires the approval of the Cabinet of Ministers by Milli Majlis.
Despite facing many initial issues Azerbaijan has risen like a phoenix from the ashes in the form of a sovereign diplomatic state having friendly diplomatic ties with many countries including Pakistan. Azerbaijan’s balanced foreign policy and great policies under the leadership of Heydar Aliyev has helped it to tackle all its problems faced in the early 1990s.