Azerbaijan International

Autumn 1995 (3.3)
Pages 62-63

Diplomatic Interview

United Nations Development Program (UNDP) Representative
by Paolo Lembo

Related Articles:
(1) Lest We Forget: The UN in Iraq - Sergio Vierira de Mello - Paolo Lembo
(2) Another Wind: Memories of the Birth of a Nation: Azerbaijan - Paolo Lembo

(3) Letter from Kosovo - Paolo Lembo
(4) Infinitesimally Short (Why Are We Killing Each Other?) - Paolo Lembo

Interview by Betty Blair

Each time, I've dropped by to see you in the UN office these past three years, I've always found you incredibly positive and supportive of this country and its people. This, despite the fact that you've been here during the most devastating stages of war, and you've seen the refugee population swell to an incredible 15% of the entire population. You've witnessed the leadership of two Presidents and numerous organizational changes in the government, not to mention several attempted coups. You've observed the abject poverty that many people have been reduced to. So how is it that you're so optimistic about Azerbaijan?

I've always believed that in seven or eight years if there is political stability, this country can become one of the most powerful and richest in the whole region. We all know this could be a little paradise. There's so much diversity in the potential resources; it's not just oil. The climate and soil for agricultural development could make Azerbaijan self-sufficient enough to export fruit and vegetables throughout the region. A strong industrial base exists with the factories in Sumgayit and other major cities.

In other words, you don't have to start from scratch in Azerbaijan. Given the geographic centrality as a gateway between the east and west, north and south, there's incredible potential. And there's another critical factor, too. Apart from being highly educated, these people are very mild.

What do you mean when you say that Azerbaijanis are mild?

They're very soft and gentle-natured people. For example, you rarely hear anyone speaking aggressively against the Armenians with whom they've been in conflict over the territory of Nagorno Karabakh since 1988. I've been working here three years now and have been involved with the UN for 10 years. In some countries, you sense an immense hatred that has penetrated so deep in the psyche that it almost seems it has become an instinctual part of human nature. I'm not just referring to established cultural patterns. It's like the animosity has perpetrated through to the genes and become an integral part of the mental behavior.

But in Azerbaijan, you don't feel this. In fact, you sense only that the people are astonished and deeply pained that this war could ever have happened and that so many have suffered from it. This war just doesn't make sense to them.

The significance of such an attitude indicates that Azerbaijanis are ready to melt with different cultures-different trading cultures, and different intellectual cultures. All of these things add up to a land that is fertile for investment as a regional center.

What kind of projects has the UN been involved with here?

I was the first UN staff member to be posted in Azerbaijan. I came three years ago with a blue UN flag and a small suitcase. Today, we have more than 100 staff members representing several UN organizations: UN's High Commissioner for Refugees (UNHCR), World Food Program (WFP), World Health Organization (WHO); International Monetary Fund (IMF), World Bank, and the UN Development Program (UNDP) of which I am the Representative.

What has the UNDP been doing here?

You can't have development without funding. One of our main tasks has been promoting the establishment of a global environment which is hospitable to private investment, both domestic and foreign. This means that economic reforms have to be set in place to attract private foreign investors and bilateral donors. This has been the most difficult challenge for us but I now believe we have the attention and support of Azerbaijan's top leadership so that economic and monetary reform can be fully implemented.

For example, after many uncertainties last April there was a long and frank meeting with the President, the Prime Minister, the Regional Bureau Chief of the World Bank for Central Asia, Mr. Yurukoglu, and myself. The President decided to establish the External Resources Coordination Agency, directly responsible to the Prime Minister. It is a very important decision which has established a high-level institution responsible for co-ordinating the overall flow of external resources in the economic sphere in an efficient and transparent manner.

The Prime Minister has decisively implemented the President's decision initiating a new process aimed at bringing to an end the mismanagement and the lack of transparency of the foreign resources flow to Azerbaijan which was previously dispersed among several ministries, each one fighting to divert as many funds as possible in its own direction.

The future of Azerbaijan depends entirely on the efforts of the government and the people. The assistance of the world community can only be proportionate to the desire of members of the local government to carry out economic and democratic reforms. We're here to assist in that process.

Progress which has lately been achieved in the implementation of the World Bank lending program, indicates that the Government of Azerbaijan has gained the trust of major international financial institutions. This is critical because without loans, it is impossible to fund major projects and foster a global development plan.

Economic development is closely linked with cultural and social development. This past June, under the sponsorship of UNDP, Prof. Urkhan Alekberov, VP of Azerbaijan's Academy of Sciences, organized experts to provide an analysis of contemporary life. This was published as the "Azerbaijan Human Development Report-1995". The report was prepared entirely by Azerbaijanis themselves writing about their own social conditions. It took one year to complete. At the UN, we are immensely proud of their efforts. On June 15th, we presented this Report to President Heydar Aliyev, Speaker Rasul Guliyev, and Prime Minister Fuad Guliyev along with heads of the diplomatic missions who attended the ceremony at the Hyatt.

What issues does the Human Development Report address?

Azerbaijani scholars and scientists have identified eight strategic imperatives that are critical to the social welfare of the country. These include: (1) protecting refugees and internally displaced persons, (2) providing general relief to non-refugees who used to have access to facilities such as medicine and clinics but don't anymore, as well as (3) finding a way to create safety nets for severely vulnerable groups such as pensioners and the "new poor". It also calls for (4) reforming education and (5) health systems. (6) They urge Azerbaijan to develop gas production, wind energy and agricultural resources and (7) urge progress in transforming Azerbaijan into a market economy, as reform is desperately needed. (8) They see the need for responsible government so the vast resources of the country, which, in essence, belong to everybody, don't become concentrated in the hands of a few. They support a strong government to maintain a central role to guarantee equity, infrastructure and social institutions.

I was particularly impressed with one area which deals with gender inequalities. Soviets had always declared that there was absolutely equality. But, it simply wasn't true. To succeed in making a career is much more difficult for women here than for men. The report disclosed that the number of women in "non-traditional" occupations and high-level, decision-making positions is very low and strikingly disproportionate to their educational achievements and total number employed. Women account for nearly half of the country's work-force (45%), but only 1.5 % have leading positions in the national economy.

The Report describes how housework has remained a difficult, time-consuming responsibility of women. Food preparation is complicated by the lack of processed foods, limited access to mechanized kitchen and home appliances, and a deteriorating public transport system which makes it difficult to shop for daily necessities. Particularly problematic is the shortage and poor quality of potable running water. Women don't get much help from men at home because of strict cultural traditions of gender-based division of labor. As a result, they suffer from a "double burden" and the strain of dual roles which, in turn, inhibits their career development in the socio-economic, scientific and political fabric of society.

Let me move on to the subject of Sumgayit becoming a Free Economic Zone (FEZ). Are there really plans to create such a zone?

Along with our UNIDO colleagues we are completing the design of a global industrial restructuring plan of Sumgayit, comprising also the establishment of a Free Economic Zone. After one year of work and four UNDP-sponsored missions we are now in the final stages of the process. On August 19th, we brought a high-level UNDP-UNIDO mission, including Thomas Kelleher, who is probably the world's best known expert in "Free Economic Zones" (known as the "father" of the Shannon Free Economic Zone in Ireland 20 years ago) to Baku for one week to finalize the agreement. On Friday, August 25th, we signed the project document with Prime Minister Fuad Guliyev.

What would it mean if the FEZ is established?

The concept of a Free Economic Zone is not rigid. It can be interpreted in several ways, usually identified by a location that is geographically favorable to various transport routes and which has a legal infrastructure to promote and protect the investments with a particularly favorable tax regime (frequently, but not necessarily, tax free). It generally is categorized as a series of services in terms of airports, seaports, railroads, highways, storage facilities, industrial processing facilities, banking facilities and administration services.

Why create a FEZ in Azerbaijan?

Because Azerbaijan is a geographical gateway between the east and west, north and south. And Sumgayit (located 50 km north of Baku on the Caspian) is particularly favorable because of its well-developed transport infrastructures (air, land and sea transport), storage facilities, and large industrial estates.

What are the main obstacles for the initiative?

In Sumgayit (which just celebrated its 50th anniversary), some of the industrial structures are aging. There's been poor maintenance of transport infrastructures. The legal environment will have to be tailor-made. A large number of highly qualified personnel would be needed to manage the zone professionally. The labor force in some industrial facilities needs to be retrained. And most important, the Caucasus has not yet gained the necessary aura of stability.

FEZ is not only Dubai, it's more. In our perspective, it is the establishment of an environment particularly fertile for direct foreign investment, production development and economic synergies. It's not only a place of commercial interests for consumers to go on shopping sprees tax-free.
We intend to foster the flow of direct foreign investment which would then become the main vehicle for the renaissance of a zone which is currently affected by a very serious state of obsolescence. Neither the Government of Azerbaijan, nor major international institutions alone have the resources to rehabilitate the area.

The President and the Prime Minister have made the FEZ one of their priorities for the next few months. UNDP is funding all the technical assistance and feasibility studies. We are aware that it is a gigantic undertaking but, we'll keep plugging away, trying to transform what is now a dream into reality. After all, that's what the United Nations is all about, isn't it?

As long as the supply lasts, you may order a free copy of the 67-page "Azerbaijan Human Development Report-1995", described above. Contact the UN office in New York: Juliette El Hage, Tel: (212) 906-5979; Fax: (212) 906-6595.

From Azerbaijan International (3.3) Autumn Issue.
© Azerbaijan International 1995. All rights reserved.

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