Azerbaijan International

Autumn 1996 (4.3)
Page 65

United Nations Developments

The Launching of "Azerbaijan Human Development Report 1996" in Sumgayit, June 2, 1996. (l-r, Rasul Guliyev (Speaker of Parliament), President Heydar Aliyev holding up Development Report, Sumgayit's Mayor (behind the President), Paolo Lembo (UN Resident Coordinator in Baku), and James G. Speth, (UNDP Administrator from UN Headquarters as Special Guest for the occasion).

New UNDP Handbook: How to Rid Poverty
The United Nations Development Program (UNDP) has just published the "Azerbaijan Human Development Report-1996." Again for the second year, Dr. Urkhan Alekberov coordinated the project.

Last year's report provided a great impetus for the vision to convert Sumgayit into a dynamic trade center with SEZ (Special Economic Zone) status. Sumgayit, the petro-chemical industrial hub of Azerbaijan, located about 30 miles north of Baku, used to be known by environmentalists as "Dead Zone" because of its concentration of toxic poisons. But it was dying in another sense as well; factories had disintegrated to the point that they were operating at about 20% capacity after the collapse of the Soviet Union. The city supports a population of 360,000 (See AI 2:3, 26; Summer 1994. "Sumgayit: Soviet's Pride, Azerbaijan's Hell").

Poverty in Azerbaijan
This year's report focuses mainly on issues of resettlement in the context of the one million Azerbaijanis who have been become refugees and internally displaced people (IDPs) as a result of the war. The majority of these people are immensely poor, having in most cases, abandoned everything in their flight. Many fled their homes and communities with only "the shirt on their backs."

But these days poverty permeates the entire society. Official statistics indicate that more than 90% of the population live in poverty. World Bank, by using a different standard of measurements, identifies 61.5% of the population in poverty of whom 20.4% are considered extremely poor. In 1995, the annual per capita GDP was estimated at $318.50; however, this figure does not take into account the informal economy which is quite active. Fortunately, inflation has reversed itself from 55.2% in December 1994, down to 4.7% in December 1995.

This year's report cautions that alleviation of poverty is not a natural consequence of economic growth despite the potential for developing the country's rich oil reserves. There is "no magic bullet." It challenges the government to create an anti-poverty strategy to initiate policies that would stabilize the fiscal and external balances, privatize where appropriate, and guarantee that land reform that won't inversely effect the poor. Unfortunately, employment policy cannot necessarily alleviate the worst aspects of poverty, as the poorest may be outside the labor force-the old, infirm and incapacitated.

Other concerns in the report deal with social protection (natural disasters, economic security, community cohesion, environmental security, safety from military aggression, cultural and scientific security and freedom from crime); rehabilitation of victims of war; agricultural reforms; development of human capital; recognition of women's contribution; and environmental awareness.

For a copy of this attractive publication (80 pages) illustrated with numerous graphs and photos, contact UNDP in Baku. FAX: (994-12) 98-32-35.

Sumgayit: Transformation is Coming
So much has happened since the spring of 1994, when the UNDP (United Nations Development Program) Office in Baku was approached by the Government of Azerbaijan to formulate a project for the reconstruction of Sumgayit, one of the largest and, in the past, one of the most productive industrial centers of the former Soviet Union. The Government had previously approached other international institutions which had declined, overwhelmed by the magnitude of the project.

But by September or October this year, Parliament is expected to pass into law the Sumgayit Development Zone Law, which lays the foundation for an SEZ, (Special Economic Zone). Currently, legal infrastructure is being drafted which is designed to protect foreign investment, guarantee revenue repatriation, provide favorable fiscal regimes and offer special transport fares.

Particular attention is being devoted to the restructuring of transport facilities (airport, seaport, railway, motorways), logistic infrastructures, storage facilities, processing facilities, and administrative and financial services.

Sumgayit's Phase II, the implementation stage, was approved on July 31, 1996, and mandated that the Government of Azerbaijan actually create an SEZ in Sumgayit and set up its governing body, the SEZ Development Agency, to administer it. Phase II also, calls for an Industrial Forum to be scheduled for May 1997.

Attracting Investors
The next task is to begin to attract direct foreign investment. The Sumgayit Investment Center (SIC), a project co-financed by the Government of Israel, is currently being set up and should be operational by February 1997. It will aim to attract potential partners and facilitate the flow of new investments into existing and new industries in Sumgayit.

According to Paolo Lembo, UN Resident Coordinator in Baku "Sumgayit stands as an example of how nothing is impossible when the government, the private sector and individuals in the community unite in constructive cooperation. These efforts should all contribute to the rapid privatization, restructuring and revival of the Sumgayit zone." Azerbaijanis often refer to Lembo as "Mr. Sumgayit" because of his tireless, single-mindedness in getting this project "off the ground." He has been involved from the inception of the project.

If the SEZ succeeds and, all indication confirm that it will, Sumgayit will be transformed from one of the most polluted and industrially disintegrated zones of the former Soviet Union, into a commercial gateway between the West and the East, North and South. It will be a vital center serving not only Azerbaijan, the Caucasus and Central Asia, but the entire region.

Contact Paolo Lembo at the UN in Baku, 3 Istiglaliyat Street, 370001. Baku: Tel: (994-12) 98-05-81 or Fax: 98-32-35.

Azerbaijan International (4.3) Autumn 1996.
© Azerbaijan International 1996. All rights reserved.

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