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Oil and gas-rich Azerbaijan has high levels of poverty and a dynastic political succession

Around half of Azerbaijan comprises the central lowland area through which flow the two main rivers, the Aras and the Kura, which join before draining into the Caspian Sea. These plains are contained by spurs of two mountain ranges, the Greater Caucasus to the north and the Lesser Caucasus to the south-west. In addition, there is a small isolated section of its territory to the south-west, Nakhichevan, sandwiched between Armenia and Iran. Azerbaijan has a varied, and often strikingly beautiful, terrain.

Azerbaijan is ethnically fairly homogenous. Around 90% are Azeris who are Shia Muslims. But there have always been minority groups. This includes a significant number of Armenians, who are Christians, and who live in the Nagorno-Karabakh region in the south, which since 1994 has been occupied by neighbouring Armenia. There are also many ethnic Azeris elsewhere—indeed more live in Iran than in Azerbaijan itself.

In the past, Azerbaijan's population has achieved high standards of education and health but government services have been undermined by the conflict with Armenia, and by the emigration of many professionals. Although investment in the public healthcare system has increased in recent years and services are officially free, many people make informal payments to receive attention.

Despite the country's oil wealth around half the population live below the poverty line. Over 40% of the workforce are employed in agriculture, largely in the fertile lowlands. Most of the former state and collective farms have now been privatized. But agriculture remains very inefficient, production has been falling and now contributes only 6% of GDP. As a result the country has to import much of its food. Azerbaijan has been a major cotton producer. However, the toxic chemicals used for this have polluted the land and the water. Poor drainage has also led to salination and a threat from the Caspian Sea which is rising by 25 centimetres per year.

The mainstay of the country's economy remains oil, three-quarters of which is extracted offshore in the Caspian Sea. This area has been an oil producer since the 1850s and by the early 1900s it supplied half the world's oil. Baku still has the ornate grand houses built by the first oil millionaires.

Azerbaijan's significance declined with the discovery of larger deposits elsewhere. Nevertheless, the international oil companies have still congregated here looking for new deposits. At the end of 2004 the country had 0.6% of world reserves of oil and 0.8% of reserves of gas, so in global terms is a small player.

One of the most polluted places on earth

In addition to extracting oil and gas, Azerbaijan was a major producer of equipment for the oil industry— and the city of Sumgait was also one of the main suppliers of chemicals to the Soviet Union; now much of the plant there is rusting in what is probably one of the most polluted places on earth.

Efforts have been made to switch to lighter industries, and the country has some textile factories that use local cotton. But production generally has been held back by the slow pace of economic reform and is weakened by extensive corruption which deters foreign investors.


Subjects: World History.

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