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U.S. Department of State

Diplomacy in Action

II. Country Assessments and Performance Measures - Azerbaijan


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2007
Report
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Country Overview

Country Facts
  • Map of AzerbaijanArea: 33,436 sq mi (86,600 sq km), slightly smaller than Maine 
  • Population: 7,961,619 (July 2006 est.) 
  • Population Growth Rate: 0.66% (2006 est.) 
  • Life Expectancy: Male 59.78 yrs., Female 68.13 yrs. (2006 est.) 
  • Infant Mortality: 79 deaths/1,000 live births (2006 est.) 
  • Gross Domestic Product (GDP): $37.92 billion (purchasing power parity, 2005 est.) 
  • GDP Per Capita Income: $4,800 (purchasing power parity, 2005 est.)

Overview of U.S. Government Assistance

In FY 2006, the USG provided an estimated $88.97 million in assistance to Azerbaijan, including:

  • $15.58 million in democratic reform programs; 
  • $14.38 million in economic reform programs; 
  • $10.66 million in humanitarian programs; 
  • $40.41 million in security, regional stability, and law enforcement programs; 
  • $6.48 million in social reform programs; 
  • $1.45 million in cross-sector and other programs; and 
  • Privately donated and USG excess humanitarian commodities valued at $16.54 million.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

Azerbaijan is a Western-oriented, Muslim-majority country that plays a key role in the Greater Middle East. The Global War on Terrorism has significantly raised U.S. interests in Azerbaijan, which revolve around three strategic goals: security, political and economic reform, and energy. U.S. Government (USG) priorities in its relations with Azerbaijan include: cooperation in combating terrorism and other trans-border threats; regional stability, especially the peaceful settlement of the Nagorno-Karabakh conflict; a successful transition to a democratic political system and market economy; and, the movement of Azerbaijan's hydrocarbon resources to international markets while ensuring that revenues from these resources lead to broad-based economic growth. The President's initial waiver of the FREEDOM Support Act (FSA) Section 907 restrictions in January 2002 on most forms of assistance to the Government of Azerbaijan (GOAJ) gave the USG new tools to advance its interests. Since then, USG assistance programs have focused on counter-terrorism, border security, law enforcement, corruption, human trafficking, and economic reform. Azerbaijan has lent its airspace in support of Operation Enduring Freedom (OEF), provided important information-sharing and law-enforcement cooperation, and deployed Azerbaijani soldiers alongside U.S. troops in Kosovo, Afghanistan, and Iraq. Azerbaijan is also the linchpin of the East-West energy corridor and in the future may be an important source of natural gas to European markets.

Azerbaijan is a staunch partner of the U.S. in the Global War on Terrorism, with security cooperation predating the 9/11 attacks. Overflight rights in Azerbaijani airspace are crucial to USG interests as it is the only route into Central Asia outside Russian or Iranian airspace. Azerbaijan also continues to participate in the North Atlantic Treaty Organization (NATO) Partnership for Peace (PfP) and in various U.S. training programs. The USG continues to work with Azerbaijan to strengthen its control of its maritime and land borders against the trafficking of narcotics, small arms, weapons of mass destruction (WMD) components, and other illicit articles. The USG also remains actively engaged, as one of the three co-chairs of the Organization for Security and Cooperation in Europe (OSCE) Minsk Group, in seeking a settlement to the conflict over Nagorno-Karabakh.

USG assistance for democratization and civil society development encourages the GOAJ to honor its international commitments to human rights and create an environment conducive to civil society, independent media, and the conduct of free and fair elections. The USG also seeks to assist the GOAJ in establishing rule of law and the professionalization of government agencies. USG economic reform programs encourage the continued transformation of Azerbaijan's economy to a market-based system integrated with the international economy, and helps develop mechanisms for oil revenue management so that Azerbaijan's economy can integrate increasing energy revenues without suffering hyperinflation.

It is longstanding USG policy that Caspian energy resources should be brought to world markets via multiple pipelines independent of existing Soviet-era monopolies. Azerbaijan, as both a major oil and gas producer and an important transit country, is key to the continued success of this policy. The centerpieces of this strategy are the recently opened Baku-Tbilisi-Ceyhan oil pipeline (BTC) and the South Caucasus gas pipeline (SCP). Azerbaijan and Kazakhstan completed an inter-government agreement in 2006 that will establish a system by which Kazakhstan's oil will cross the Caspian by tanker to enter BTC and be shipped onward to world markets. The U.S. strongly supports this project.

FOREIGN ASSISTANCE PRIORITIES

In FY 2006 USG assistance priorities included the development of a politically active civil society, establishment of media freedoms and freedom of information, improvement of the judicial and legal framework, promotion and support of free and fair elections, and economic growth. USG assistance aims to create an active civil society throughout the country (civic education and advocacy), a pluralistic and transparent political process, association building, legal reform and the rule of law (including respect for human rights), ethnic, minority, and women's equality, implementation of an anti-corruption regime, an independent and impartial judiciary, a strong and professional defense bar, conflict resolution skills, free flow of information (including support for independent media), support for free trade and a market economy, and a legal framework that encourages foreign investment and growth of the private sector.

Security and law enforcement assistance continues to be a priority area of U.S. assistance. The U.S. continues to focus on programs that strengthen Azerbaijan's ability to protect its borders, combat narcotics and human trafficking, money laundering, terrorist financing, corruption, WMD and contraband interdiction, and improve customs procedures to facilitate trade and regional cooperation.

As Azerbaijan begins to reap the financial and economic gains from its oil wealth, reform of the economic system and development of the non-energy sector - including efforts to combat incipient signs of Dutch Disease are a top priority. The U.S. will continue to focus its assistance upon private enterprise development and economic reform, and more transparent and effective revenue management.

OPERATING ENVIRONMENT

On May 13, 2006, Azerbaijan held re-run parliamentary elections in ten districts. As with the November 2005 parliamentary elections, the GOAJ publicly committed to meeting international standards and instituted some reforms. There was some progress in the conduct of the parliamentary rerun elections, specifically improvements in finger-inking, candidate registration, largely unimpeded campaigning, and quick posting of the results on the website of the Central Election Commission. There were large numbers of domestic election observers who participated, including representatives of the Election Monitoring Center. There was consistency between the official results and the results of the U.S. Government-supported exit poll. There were, however, reports of irregularities in the pre-election period, including the misuse of administrative authority in support of specific candidates, as well as allegations of fraud in specific precincts on Election Day. Also, there were reports that some domestic observers were restricted in their access to the electoral process.

Azerbaijan's media sector experienced some reforms in 2006, including expanded coverage of important political and social issues. The GOAJ's failure in November to renew the broadcast license of ANS Television and Radio, however, represented a severe blow to media freedom.

In 2006 the BTC pipeline came online and began transporting nearly 500,000 barrels of oil a day from Azerbaijan's offshore Azeri-Chirag-Gunashli (ACG) field. This marks the culmination of more than ten years of USG advocacy and support. Construction continued on the parallel South Caucasus Pipeline (SCP), which began transporting natural gas from Azerbaijan's offshore Shah Deniz field in late 2006. Shah Deniz gas will be piped to Turkey and onward to European markets.

Azeri Democratic Reform

The "radar" or "spider web" graphs below illustrate Azerbaijan's democratic performance during FY 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Azeri Democratic Reform:  Average of Romania and Bulgaria-2002, corruption, 1.5; electoral process, 1.5; civil society, 2.5; independent media, 1.7; governance/public admin, 1.7; rule of law, 1.8

The graph above shows Azerbaijan's democratic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's democratic reform scores in 2002 (the bold line) when they were invited to join NATO and receive favorable indications of future EU membership.

*Actual 2006 scores not yet available.

Graph shows Azeri Democratic Reform:  1999, corruption, 1.5; electoral process, 1.5; civil society, 2.5; independent media, 1.7; governance/public admin, 1.7; rule of law, 1.8

The graph above shows Azerbaijan's democratic reform scores in 2005* (the gray shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

Azeri Economic Reform

The "radar" or "spider web" graphs below illustrate Armenia's economic performance during 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Azeri Economic Reform: Average of Romania and Bulgaria-2002, external debt percent GDP, 4.5; private sector share, 3.0; share of employment in SMEs, 0.5; export share of GDP, 2.5; FDI pc cumulative, 4.0; GDP as percent 1989 GDP, 3.0; 3yr avg inflation, 4.0

The graph above shows Azerbaijan's economic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2006 scores not yet available.

Graph shows Azeri Economic Reform: 1999, external debt percent GDP, 4.5; private sector share, 3.0; export share of GDP, 2.5; FDI pc cumulative, 4.0; GDP as percent 1989 GDP, 3.0; 3yr avg inflation, 4.0
The graph above shows Azerbaijan's economic reform scores in 2005* (the gray shaded area) as compared to its economic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

FY 2006 Country Program Performance

Governing Justly and Democratically

Fostering democratic reform, the development of civil society and a more actively engaged citizenry, and ensuring protection of fundamental human rights and freedoms are top U.S. priorities for Azerbaijan. In the run-up to Azerbaijan's 2008 presidential election, assistance programs that encourage a free and fair election process will be needed. The U.S. government is working to allow normal political activity and encourage all political parties in Azerbaijan to conduct long-term grass-roots campaigns. Other ongoing U.S. assistance programs include the support of NGO and civil society development, political party development, independent media, anti-corruption, and legal reform.

In 2006, Azerbaijan's President Ilham Aliyev repeatedly affirmed his government's commitment to democratic development and political reform. Azerbaijan's human rights record remained poor and the government committed numerous human rights abuses. Government officials increased restrictions on media freedom, most notably by temporarily closing Azerbaijan's leading independent television and radio company, ANS, in late November. The government also opened numerous criminal libel lawsuits against independent newspapers. Journalists, particularly those affiliated with opposition parties, continued to face harassment and intimidation. Two opposition party journalists were physically assaulted, one in March, another in May, by unidentified assailants. In September, a court sentenced a leading political satirist to jail on narcotics possession charges most observers believed to be spurious.

The Government severely restricted the exercise of freedom of assembly, not granting authorization for a single opposition political rally in Baku during the entire year. Unsanctioned demonstrations attempted by the opposition were broken up by police intervention. In November police detained approximately 40 opposition persons, sentencing them to between two and 15 days in "administrative" detention for attempting to hold a protest near the Mayor's office. The judiciary remained corrupt, weak, and inefficient, and court proceedings did not meet international standards. In July, a Baku court convicted opposition youth activists of conspiring to overthrow the government by force, in a trial that failed to meet international standards. In September, a court sentenced an opposition party deputy to five years imprisonment on charges of supporting an alleged coup plot involving two former GOAJ ministers arrested in October 2005. The defense bar remained unreformed from its soviet predecessor and filled with many "pocket attorneys" willing to compromise a sound defense for a bribe. In a positive development, the Ministry of Justice held testing and recruitment examinations for new judges that met international standards; however at year's end the 55 examinees who passed the test had not yet been appointed to the bench.

Corruption, the lack of a well trained and independent judiciary and broad failures in the implementation of existing laws continue to undermine the rule of law, and likewise inhibit economic development outside of the oil sector. There appears to be recognition within the GOAJ that corruption is a problem but there is little sense of urgency or political will to take significant short term steps to investigate and prosecute corrupt practices. Some additional steps have been taken to implement the National Action Plan to Combat Corruption, including increased investigations by the Anti-Corruption Department within the Prosecutor General's Office, and the development of a hotline at the Prosecutor General's Office for reporting corruption and official abuses.

U.S. ASSISTANCE PRIORITIES

In FY 2006 the U.S. continued to focus assistance in the areas of political process, media, rule of law, educated and engaged citizenry/civil society and human rights promoting and supporting free and fair elections; strengthening democratic political parties; empowering citizens/civil society; establishing and ensuring media freedom and freedom of information; promoting and advancing the development and implementation of anti-corruption reforms; and improving the overall rule of law environment.

Assistance priorities included the training of prosecutors in implementing existing laws and applying the Azerbaijan Criminal Procedure Code in order to support due process and fair trial rights, and respect for human rights. In addition, assistance continued to focus on helping the GOAJ draft and encouraging them to adopt additional legislation in line with international standards (e.g., Council of Europe, FATF, GRECO and Moneyval) necessary to establish the legal framework necessary to combat terrorism, money laundering and corruption. Training and reform of the judiciary is also a necessary priority.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

USG programs and activities included efforts to promote and support free and fair elections, strengthen democratic political parties, support and strengthen civil society organizations, support media self-sustainability and professionalism, promote and support anti-corruption reforms, bringing the justice sector and legal framework in line with international standards, and improve the professionalism of the legislative body (Milli Majlis).

A new civil society support project funded by the U.S. helped local NGOs and civil society groups to work more intensely and aggressively with local government authorities and aims to provide balance in the support offered to the local NGOs by expanding the activities outside of Baku into the regions of Azerbaijan. At the same time, the project is working on creating a dialogue between the GOAJ and civil society in order to help further promote this sector. The U.S. also supports a community development project that works on helping the local communities along the southern and northern borders of Azerbaijan learn how to become actively engaged in identifying and prioritizing their problems, and solving them jointly with the participation of their local governments.

Democracy Programs, including the Democracy Commission small grants program, the book translation program, the American Corner, the regional library development program, the regional library information center program, the democracy outreach (alumni) program, and exchange and speaker programs, were critical tools in efforts to support the development of a civil society and democratic reform/rule of law. Additionally, in FY 2006, the USG implemented a new women in public policy and conflict resolution program.

The U.S. encouraged free access to media, and held trainings for lawyers, prosecutors and judges to further advance the legal profession. Two major new democracy projects that got off the ground during FY 2006 are aimed at promoting engaged citizenry/civil society through assistance to the existing non-governmental sector as well as encouraging community-level citizen participation in the U.S.'s community development activity that works on creating collaboration between citizens and their local government.

After the Parliamentary elections in 2005, the Council of Europe and OSCE criticized Azerbaijan for its lack of free and fair election standards in several critical areas. The U.S. has taken on an active role in working with the Central Elections Commission (CEC) to improve the situation. A major first-ever activity for Azerbaijan was a conduct of the national exit poll and the use of invisible ink for voters. The U.S. provided the invisible ink as well as the training necessary for the election officials to enable to use it successfully during both the November Parliamentary elections and the repeat elections in May 2006 in order to reduce fraud and build credibility for election processes.

Opposition parties are quite weak and subject to government pressure, including in the recent eviction of the opposition Popular Front Party and a loosely affiliated daily publication, Azadliq, from their downtown offices. Under USG funding political parties received direct training assistance ranging from the party development to party financing and election platform creation.

Widespread access to impartial news remains a challenge, since print media is divided along political lines. Private television companies remain in the de-facto control of the government. Recent attacks on the opposition media and the independent broadcast outlets (as well as the VOA, BBC and RFE/RL) make this area even more challenging. The U.S. supported a project that works with the regional TV stations helping them achieve financial sustainability through first creating a network, bringing in more interesting programming, attracting advertising and thus increasing its revenues while providing information of both regional and national interest.

With the goal of advancing fair trial and due process rights, as well to promote respect for the rule of law, USG assistance supported a series of practical training programs, staffed by US, European and Azerbaijani practitioner-trainers, on implementing Azerbaijan's reformed, COE-compliant Criminal Procedure Code (CPC) and the European Convention for Human Rights (ECHR) for Azerbaijani prosecutors, judges and defense attorneys throughout the country. These training programs also included instruction on ethics, the adversary system of justice and of the new Azerbaijani laws prohibiting trafficking in persons and corruption. Publications in Azeri on these topics and the CPC were also distributed to attendees.

OUTPUTS

The U.S.-funded program on electoral reform continued to provide technical assistance to the Central Election Commission (CEC) and its local election commissions in order to improve the election management practices, legislation and implement the regulations. Key areas of improvement included work on the procedures for handling complaints and appeals, voter registry, finger-inking and proper counting procedures in accordance with the Azerbaijani Election Code. In FY 2006, USG assistance continued to target pre-election and election-related activities for the national parliamentary elections as well as the repeat parliamentary elections. Two national exit polls were conducted during these elections by the U.S.'s Democracy and Governance program implementing partners. A domestic election monitoring organization was trained and placed thousands of local observers at polling sites across the country.

In cooperation with an implementing partner, the USG organized and sponsored training programs for more than 100 prosecutors, judges, and defense attorneys. A number of prosecutors and defense counsel who received training were also provided with additional instruction and have become trainers themselves. A U.S. based study tour was conducted for 12 prosecutors, judges, attorneys, and NGO members focused anti-corruption, trafficking in persons, and implementation of a criminal justice system based on the rule of law. The USG also provided training for the 56 candidates who passed the new transparent exam process. Throughout the year, technical support was given to the 15 member Anti-Corruption Commission and the 12 member Anti-Corruption Commission Legislation Working Group as the GOAJ worked to implement its National Action Plan to Combat Corruption.

With USG assistance, the Anti-Corruption Commission Legislative Working Group also worked with the GOAJ to develop drafts of Conflicts of Interest, Ethics and Corporate Criminal Liability laws. Following review and commentary by the USG and other experts, these drafts are expected to be presented to Parliament in 2007. An amendment was made to the Criminal Code making the legalization of money obtained from criminal acts a crime (money laundering), but the comprehensive draft anti-money laundering/counter-terrorist financing law developed with Department of Justice assistance has yet to be adopted. Likewise, the GOAJ has yet to adopt a financial disclosure form necessary to implement the financial disclosure provision in its 2004 anti-corruption law.

Eight support NGOs and two operational NGOs received training in active advocacy skills.

Seven Regional TV stations benefited from the U.S.'s Media Advancement project by receiving more powerful transmitters. Prior to the distribution of 1 KW transmitters, six out of seven regional stations operated at a maximum of only 100 watts. This allowed each of the stations to expand their coverage as evidenced on the digital frequency map, also developed and donated to the Ministry of Telecommunication under this project. The most significant changes took place in Tovuz, Guba, and Sumgayit. Simurg TV (Tovuz) is now able to broadcast into Ganja, Azerbaijan's second largest city, and has increased its potential audience from the 350,000 living in Tovuz to an additional 600,000 living in the surrounding areas of Ganja, an increase of 171%. Advertising revenues increased from $1,200 per month (prior to installation) to over $5,000 per month, an increase of over 400%. The additional revenues have been reinvested in the station for the purchase of new equipment.

Curriculum reform in two private law schools continued to improve the Azerbaijani legal education with topics ranging from trial advocacy and practical lawyer skills, to corporate law and ethics. Anti-corruption hot lines were established in the regions of Azerbaijan.

Fifty-two communities have been organized under the U.S.'s Community Development Activity in three geographic regions of Azerbaijan: North, North-West and South. Of these, 50 have initiated projects, of which 24 have been completed. These projects included road rehabilitation, transformer installation, electricity system rehabilitation, water/drainage/irrigation system rehabilitation and the small scale construction of different facilities.

In FY 2006, USG activities addressed gender issues through discussion forums which brought women from all walks of life together for advocacy skills training. Combating gender bias and bringing about broader participation by women in decision-making is integral to USG civil society and community development activities.

PROGRAM PERFORMANCE/IMPACT

The USG's Rule of Law program in Azerbaijan supports the creation of legal system based on the rule of law and improved access to justice. USG activities continue to improve access to justice through legal clinics. The U.S.-funded an anti-corruption liaison to the GOAJ Anti-Corruption Commission Legal Working Group, maintained the activities of three Anti-Corruption Legal Advocacy Centers (ALACs), and continued to advance its support of legal clinics at four universities. Due to the substantial and rising response rate of Government authorities and resolution of cases raised by the ALACs, the OSCE has funded a fourth ALAC in Guba. At these centers, citizens can telephone or walk in and receive assistance in preparing a legally-accepted written summary of their complaint, and in filing it with the appropriate authorities. This is the first opportunity that Azerbaijani citizens have had to receive knowledgeable and objective assistance in lodging complaints about and receiving appropriate remedy for existing corrupt practices. The RLA worked with the government to respond to these complaints and to appropriately address them. In FY 2006, an anti-corruption advisor continued to train staff and develop procedures. The advisor worked with the local advocacy group Education Without Bribes, consisting of several local NGOs and student organizations, and, along with the RLA, assisted the Legislative Working Group - a subcommittee of the GOAJ's Anti-Corruption Commission -- and with anti-corruption departments in various ministries.

While it is sometime difficult to measure the long term impact that the training of prosecutors, judges and defense counsel has had on improving fair trial rights and respect for the rule of law in the country, immediate changes were seen among individual participants during each of the trainings provided. Initially reluctant participants transformed into actively engaged students applying the Criminal Procedure Code in a proper and effective manner. Likewise with judges, the long term impacts are yet to be seen, but the short term positive impacts measured in terms of personal interest in the subject matter and engagement in the materials was readily observed. Also readily observed was the impact that taking judges, prosecutors and lawyers had on broadening their perspectives and transforming them into allies and partners in USG supported reform work.

Technical assistance provided by the USG in the drafting of proposed legislation has also had the measurable result of producing draft anti-money laundering/counter-terrorist financing, conflicts of interest, ethics and corporate criminal liability laws. Although it has not been implemented, a draft financial disclosure form was also created with USG assistance. By the end of FY 2006, the 56 candidates who passed the new transparent exam process were poised to be appointed as new judges, and another round of exams for yet more new judges was planned.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Please find below two important indicators in the area of Governing Justly and Democratically. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Independent Media Rating, drawing from Freedom House, Nations in Transit 2006 as adapted by "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, No. 10 (March 2006). The Freedom House rating addresses the current state of press freedom, including libel laws, harassment of journalists, editorial independence, the emergency of a financially viable private press, and Internet access for private citizens. 1=lowest, 5=highest. The data upon which this ranking is based comes from the previous calendar year. Found online at: http://www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

2.0

1.83

1.70

1.70



Impact of U.S. Assistance on the Above Indicator: USG efforts in media were channeled through the Media Advancement Project. In 2006, however, U.S. efforts were hampered by several events, including the imprisonment of several journalists on defamation; the kidnapping and beating of the Editor of the opposition newspaper Bizim Yol; a famous satiric poet was imprisoned for three years on charges of drug use in retaliation for satirizing the GOAJ and elites. The end of the year was marked by more attacks against the free media by the Government, which temporarily closed down Azerbaijan's only independent TV station ANS and evicted two opposition newspapers Azadliq and Turan from their offices.

Performance Indicator: Electoral Process index, drawing from Freedom House Nations in Transit (1= highest level of democratic progress, 7 = lowest level of democratic progress). The Electoral Process index measures factors such as universal and equal suffrage, regular, free and fair elections, barriers to political organization and registration, a viable political opposition, and openings for participation by ethnic and other minorities. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.freedomhouse.hu/nit.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

5.75

6.00

6.25

6.0



Impact of U.S. Assistance on the Above Indicator: USG Assistance in the electoral process included the Election Administration Assistance Program and Political Party Development and Strengthening Activities. Two elections were conducted in 2006: 1) the May 13th Repeat Parliamentary Election and 2) the October 6th Municipal By-Elections. Neither showed significant improvement in the overall election administration or the fairness of the process. Serious widespread procedural and legal violations occurred and the elections failed to meet international standards or the requirements of national legislation. The Municipal By-Elections on October 2006 were marked by a number of irregularities and the serious interference of executive authorities.

Performance Indicator: Judicial Framework and Independence (formerly Constitutional, Legislative, and Judicial Framework Rating). Highlights constitutional reform, human rights protections, criminal code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2006. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.freedomhouse.org/research/nattransit.htm.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

5.25

5.50

5.75

5.5



Impact of U.S. Assistance on the Above Indicator: During 2006, slight progress was seen among individual participants during each of the trainings provided to prosecutors and defense counsel by the Resident Legal Advisor. The long-term impact of training of prosecutors and defense counsel has focused on improving fair trial rights and respect for the rule of law. Initially reluctant participants were seen transforming into actively engaged students applying the criminal code in an adversarial manner. Likewise with judges, the long term impacts are yet to be seen, but the short term positive impacts measured in terms of personal interest in the subject matter and engagement in the materials was readily observed.

Performance Indicator: Corruption Perceptions Index - Measures how experts view the state of corruption in a country. Because Transparency International uses a country ranking chart, we have used their raw score to better evaluate change. The CPI score relates to perceptions of the degree of corruption as seen by business people and country analysts and ranges between 10 (highly clean) and 0 (highly corrupt). Source: Transparency International. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.globalcorruptionreport.org/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

2.0

1.9

2.2

2.2



Impact of U.S. Assistance on the Above Indicator: U.S. assistance provided an Anti-Corruption Advisor, to engage the Anti-Corruption Commission Legislative Working Group to develop drafts of Conflicts of Interest, Ethics and Corporate Criminal Liability laws, but to date none of these drafts have been presented to Parliament. An amendment was made to the Criminal Code making the legalization of money obtained from criminal acts a crime (money laundering), but the comprehensive draft anti-money laundering/counter-terrorist financing law developed with Department of Justice assistance has yet to be adopted.

Economic Growth

In 2006, Azerbaijan continued its efforts to manage macroeconomic stability while experiencing increasing oil revenues that exacerbated the imbalance between the energy and non-energy sectors of the economy. In FY 2006 Azerbaijan had one of the fastest growing economies in the world with its Gross Domestic Product (GDP) growing at over 30%, due almost entirely to oil and gas production. The energy sector accounts for 90% of Azerbaijan's exports, 40% of its GDP and 1.5% of its employment, and 60% of total budget. The country is experiencing inflationary tendencies as inflation is currently at 9% and this could increase in the coming years in the absence of more flexible exchange rates management policies. The national currency, the manat, appreciated slightly against the dollar (0.88 manat per U.S. dollar). The State Oil Fund, which serves as a savings fund for Azerbaijan's energy wealth, had assets of over $1.5 billion as of September 30, 2006. The GOAJ recognizes the challenges it faces in maintaining macro-economic stability, growing the non-oil sectors of the economy, and investing in long neglected infrastructure.

U.S. ASSISTANCE PRIORITIES

USG programs to assist in the diversification of Azerbaijan's economy operated in four areas: improving the GOAJ's financial management and capital budgeting capabilities so as to better manage energy revenues; improving the access of small and medium-sized enterprises and agricultural producers to capital by strengthening the commercial banking and non-banking sectors, both through training and improved regulations; assisting agricultural processors and producers to reach out to and meet market demand; and to support the financial sector. During the year, USG assistance helped the GOAJ prepare to restructure the energy sector to one governed by an independent regulator; however, this program will end due to the GOAJ's unwillingness to create an independent energy regulatory body.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

USG assistance is divided into two areas: assistance to the financial sector and support to the non-oil sector. Primary partners in the financial sectors include the National Bank of Azerbaijan (NBA), Ministry of Economic Development (MOED), Ministry of Finance (MOF) and Treasury, private agribusiness firms, and various small-medium enterprises. Work with the NBA includes support to auditors working with private banks, an increasingly important player in the financial sector. MOF support included the implementation of an information management system at the Treasury. This information system will make Treasury operations more efficient, accurate, open, and transparent. Once fully implemented, (targeted for the end of CY 2007) this system will put Azerbaijan's Treasury information system at or near the top of all the Commonwealth of Independent States management systems. USG, in cooperation with other donors, has supported the adoption of a Public Investment Policy framework. This work is designed to help the GOAJ effectively develop and prioritize major competitiveness and social development-enhancing capital projects funded through increases in State income. USG assistance also supports financial sector players through technical assistance to professional associations linked to financial institutions such as the Azerbaijan Microfinance Association and the Azerbaijan Credit Unions Association.

USG supports the non-oil sector by working in agribusiness, principally in improving supply at the local level and generating and identifying external demand, particularly export opportunities. The goal is to support processors through their interaction with farmers and local producers. This is accomplished through the establishment of Business Development Resource Centers. The centers provide services to communities, mobilize communities to identify and prioritize interventions, and serve as the focal point for micro and small enterprise development. Opportunities for sales is enhanced by strengthening a free market orientation and market institutions, improving business skills and domestic capacity to identify competitive products, and stimulating greater efficiency, innovation, and customer orientation among participating enterprises and entrepreneurs.

OUTPUTS

USG assistance to the NBA supported improved regulation of the commercial banking sector by developing a manual of procedures for bank inspectors and assisting in the drafting of international best practice-consistent banking regulations which cover corporate governance, minimum capital requirements, and consolidated reporting. The USG also supported the development of a software tool for the NBA that will allow it to produce uniform bank performance reports. Progress continued on the development of a Treasury Information Management System due to commence in December 2006. Once fully operational, this system will be an integrated financial management system in order to maximize benefits for the GOAJ. The Public Investment Policy program delivered two rounds of a three-week training program on all aspects of public investment program during February-March 2006. Each round of training was attended by about 20 junior and mid-level managers for two days' training on planning, budgeting, and investment programming and by 20 technical staff for 12 days' training in all aspects of the project cycle. The project also developed a public investment manual, which will be a guide for the preparation of efficient and integrated capital budgeting in line and central ministries. In addition, the project has selected line ministries with whom to work and has done a thorough assessment of current capital budgeting processes and practices in the MOF and MOED.

Four regional agribusiness centers and ten account managers support 70 agribusiness clients and over 8,000 farmers. Client needs were assessed through a SWOT analysis, clients and account managers collaboratively developed action plans that guided assistance. While assistance is tailored to the needs of each specific client, general areas of emphasis include trade and marketing, processing, finance and credit, and logistics and inputs.

PROGRAM PERFORMANCE/IMPACT

The USG has taken the lead in coordinating donor assistance to the GOAJ on revenue management. USG public investment assistance fits into a larger donor effort at policy coordination that seeks to link the GOAJ's public investment program, its poverty reduction and rural development strategies, its medium-term expenditure framework, and its annual budget in a manner designed to dramatically enhance the transparency and efficiency. The USG's partners in this effort include the World Bank, Asian Development Bank, and the United Nations. The USG's efforts to improve the GOAJ's public investment program have included diagnostic work on key ministries, the creation of a strategy to coordinate economic policy within the GOAJ, and the development of a technical document to develop a sectoral strategy. Pilot sectoral strategies of five ministries have been analyzed to study their divergence from the model.

USG-supported businesses have achieved $50 million in increased sales, $8.9 million in new trade, $6.19 million in investment and 1,500 new jobs. To implement a demand driven economic development approach in strategic geographic regions the U.S.'s Azerbaijan Business Assistance and Development Project promoted rural Business in targeted "Economic Corridors" of Lenkoran, Guba, Zagatala, and Gazakh. To date, the program has worked with more than 100 entrepreneurs and SMEs. Of these, MCs are actively working with 44 direct clients and five lease clients. Through its work to date, the program has generated $4.8 million in increased sales and an increase of nearly 87,862 person-days of direct employment.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Please find below two important indicators in the area of Economic Growth. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Agriculture, value added (% of GDP) - Measures the net output of the cultivation of crops and livestock production, as well as the forestry, hunting, and fishing sectors, as a percentage of GDP. Source: World Bank World Development Indicators 2006. Found online at http://www.worldbank.org/.

CY 2000 Baseline

CY 2003 Percentage

CY 2004 Percentage

CY 2005 Target

17%

13%

12%

13%



Impact of U.S. Assistance on the Above Indicator: Over the last year the agricultural share of GDP remained constant at 12% due to an unexpected increase in oil export levels. The USG has two agriculture programs: Rural Enterprise Competitiveness Program (RECP) and Agriculture Business Assistance and Development (ABAD) program. Both have worked with agricultural producers and processors aiming to strengthen their clients' production capacity, competitiveness, access to markets, and actual sales. As a result of USG assistance, client agricultural enterprises achieved over $23 million in increased sales, $8 million in increased investments, and 1,500 new jobs were created (46% of which are held by women).

Performance Indicator: GDP as a percent of 1989 GDP (1989 = 100), drawing from European Bank for Reconstruction and Development, Transition Report 2004 as found in "Monitoring Country Progress in Eastern Europe and Eurasia," USAID/E&E/PO, # 10, March 2006. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Percentage

CY 2005 Percentage

CY 2006 Target

64.2%

78.6%

94%

110%



Impact of U.S. Assistance on the Above Indicator: USG assistance contributed to this indicator through USG technical assistance programs with the National Bank of Azerbaijan. In the legal and regulatory area, primary banking laws, the law on the National Bank and the law on commercial banks have been extensively amended and approved by the country's lawmakers. Several new and critical regulations have been passed, including an increase in the National Bank's minimal capital requirements, regulation on consolidated reporting and a regulation involving the corporate governance structure and practices for commercial banks. These changes have helped build confidence in the commercial banking sector, a critical factor in GDP growth.

Investing in People

Azerbaijan continued to face challenges in the social and health sectors. Accessibility to quality health care services, reproductive health/family planning, primary health care, child survival, and community-based health systems all remain areas of concern. There are several forces driving further deterioration of the health situation in Azerbaijan. Access and quality of health services countrywide are the primary issues that must be urgently addressed. Only half of the population utilizes the existing health services when experiencing an illness, indicating that people either cannot or will not pay for the poor quality of the services offered.

The health system remains severely under funded, and its resources are poorly pooled and inequitably allocated. Public resources invested in the health sector represent only 20% of total health expenditures, with the remaining 80% being out of pocket, mostly informal. Government health spending was only 1% of GDP for 2005, compared to 4% of GDP for European and Central Asian countries. In per capita terms, public expenditure on health is about $20, or about six times lower than the average figure for Europe and Central Asia (approx. US$130).

The lack of a proactive and systematic reform by the Ministry of Health has had deleterious effects on the quality of health care services. The current system has not changed at all since Soviet times, with only a handful of unsuccessful attempts made at reform during the last 15 years.

Since the appointment of a new health minister in November 2005, increased cooperation and commitment to reforming Azerbaijan's health sector has occurred. This Minister of Health is the first minister in the GOAJ to undertake cost-sharing with the USG, World Bank, and World Health Organization. In Azerbaijan's 2007 budget approved November 2006, there is a 79% increase for health sector spending. In addition, President Aliyev identified health as a priority, stating that no progress is possible without a sound health care system

U.S. ASSISTANCE PRIORITIES

USG health-related assistance targeted child survival, reproductive health and family planning, emergency medicine, and community mobilization to strengthen local health care services. Under the leadership of the new Minister of Health, the government of Azerbaijan is working to improve health care financing and the quality of health care services. Key issues and challenges in this sector that are addressed through U.S. funded activities include: working with the government to develop and implement policies and a legal framework that are supportive of health care reforms; Improving health care financing and the allocation and use of health care resources; Improving the quality of primary health care services, including maternal and child health; Improving the quality of emergency medical services; Improving family planning and reproductive health services; and ensuring that people are better informed about and can advocate for health care services, healthy life styles, and patient rights and responsibilities.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

The USG's flagship Primary Health Care Strengthening project is a two-year, $5 million-activity. It is designed to help the Ministry develop appropriate health policies, reform health finance, strengthen clinical services, and encourage programs to promote healthy lifestyles. These reforms will be tested in selected "pilot demonstration" districts. If they prove to be effective, they will be expanded nation-wide. The project works in close collaboration with the World Bank. Total planned funding includes $50 million from the World Bank, $28 million from the GOAJ and $11 million from the U.S.

The USG and the International Medical Corps, in partnership with a number of international oil firms including BP, Amerada Hess, Chevron and others, recently launched the Emergency Medicine Development Initiative Project to strengthen emergency medical response by working with "first-responders" and health care workers in the Emergency Medicine departments in hospitals. This Emergency Medicine Development Initiative will: upgrade emergency medical services in Yevlakh, Shamkir, and Kurdamir; create training centers in Ganja and Baku; and support national policy development for emergency medicine.

The U.S. is providing technical assistance to design an in-service training package for doctors, nurses and first responders, and a communications program to promote safety and injury prevention. Working closely with staff on the practical nature and execution of these initiatives will help to advance this project.

The mandate of the Reproductive Health/Family Planning (RH/FP) Project is to serve as a key mechanism for scaling up and expanding access to family planning services, and is part of the U.S.'s broader effort to improve the availability, quality and use of primary health care services. The Project builds upon important early steps taken through the U.S.'s Azerbaijan Family Planning Reproductive Health Initiative (AFPRHI) Consortium partners (Save the Children, IRD and UMCOR) in 17 districts of Azerbaijan. Unlike all previous family planning programs in Azerbaijan, this project is designed with a broad mandate to implement strategies that address policy change, contraceptive security, demand creation and service expansion. The goal of the project is to improve the availability, quality and sustainability of FP services through a range of activities, including empowering potential users through better information and training providers in contraceptive technology, counseling and informed choice. Activities are being implemented in five core districts (Aghsu, Goychay, Ismayilli, Kurdemir, and Shamakhi) in addition to eight districts previously supported by the AFPRHI. In 2007, the Project will expand further to additional eight to ten districts.

OUTPUTS

USG health-related assistance supported the improvement of first level health care facilities serving conflict-affected areas. Through renovations, equipment and staff training these facilities now meet World Health Organization (WHO) and national standards. Close to 1,100 (97.5%) of health care providers applied the training they received. Over 156,400 people utilized the 234 USG supported clinics. Integrated Management of Childhood Illnesses (IMCI) protocols were initiated in nine districts. Community health action committees provided a venue for health education activities. One urban polyclinic, through a Health Partnership, developed a model for strengthening adult primary health care services.

PROGRAM PERFORMANCE/IMPACT

With USG assistance, networks of local health departments, NGOs, communities, and the private sector worked together to strengthen reproductive health/family planning (RH/FP) capacity by increasing knowledge about and use of family planning services. Four hundred and ninety-five health providers in the regions were trained by national trainers to address the demand for family planning services. Over 440 community peer educators were trained on family planning and reproductive health messages. A social marketing strategy to promote family planning and increase contraceptive availability was also developed

Various partners assisted USG activities in the health sector. UNICEF provided support on the Demographic and Health Survey; a consortium of oil companies assisted on the emergency response and emergency care initiative; and the Vishnevskaya-Rostropovich Foundation, UNICEF, and the WHO supported a mass immunization campaign against measles and rubella. In addition, the World Bank and the USG have been coordinating on primary health care reform activities.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Investing in People. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Under 5 Mortality. Under-5 mortality rate is the probability that a newborn baby will die before reaching age five, if subject to current age-specific mortality rates. Ratings are based on a scale from 1 to 5, with 5 representing the best score. Source: USAID "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (March 2006), drawing from World Bank, World Development Indicators 2005 and UNICEF Social Monitor 2005. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 1997 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

0.5

0.5

1.0

1.0



Impact of U.S. Assistance on the Above Indicator: The U.S. through the Primary Health Care (PHC) Strengthening Project provided assistance to GOAJ in identifying key policy options for strengthening health financing system and the organization and delivery of health services, with particular emphasis on PHC.

Peace and Security

Azerbaijan maintained a full peacekeeping company in Iraq, guarding the strategic, flood-control, and electricity generating Haditha dam in cooperation with U.S. Marines, with a staff officer embedded at the headquarters of the Multi-National Force - Iraq (MNF-I) in Baghdad. In addition, Azerbaijan continued its peacekeeping force presence in Kosovo and in Afghanistan, both working in cooperation with Turkish forces. In November, President Aliyev announced plans to double Azerbaijan's peacekeepers in Afghanistan. The GOAJ continued to grant the U.S. overflight rights.

Azerbaijan's export control system remained underdeveloped, owing in large part to insufficient resources, an imprecise legal-regulatory environment, and corruption that undermines efforts to administer and refine the system. The legal basis of the Azerbaijani export control system still lacks comprehensive controls on transit and transshipments, and dual-use and arms export licensing has not been fully implemented. Training for enforcement officials is inadequate. Accordingly, physical checks of cargo stand little chance of detecting items shipped in defiance of export control law and the GOAJ has compiled a poor record of investigating, prosecuting, and imposing sanctions for export control-related violations. The weak partnership between government and industry - particularly the freight forwarding community - increases overall vulnerability. However, the recently adopted export control law and the corresponding requirements for systematic restructuring indicate the GOAJ's desire to improve trade controls.

U.S. ASSISTANCE PRIORITIES

The U.S. continues to focus assistance on border security and law enforcement programs that strengthen Azerbaijan's ability to protect its borders, combat narcotics and human trafficking, money laundering, terrorist financing, corruption, WMD and contraband interdiction, and improve customs procedures to facilitate trade and regional cooperation. In addition, the U.S. and Azerbaijan continued to work together to modernize Azerbaijan's law enforcement infrastructure and develop regimes to fight terrorist financing.

FY 2006 security-related assistance priorities included training and equipment purchases, particularly those which enhance security on the Caspian Sea. Additional USG priorities include building GOAJ capacity to detect secure biological agents, funding research by former weapons scientists to prevent the proliferation of WMD expertise, encouraging efforts to halt trans-shipment of narcotics across Azerbaijan's borders, and promoting military interoperability with U.S. and NATO forces.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

Military training reinforced Azerbaijan's capability to contribute forces and personnel to international stability and support operations, to secure its maritime domain, and to understand U.S. and NATO air operations. Additionally, training increased Azerbaijan's capability to prevent or react to terrorist attacks on critical hydrocarbon infrastructure. Equipment purchases included air traffic control equipment used to establish a NATO-compatible airfield, new electronics used to upgrade Azerbaijan's navy, and a brigade-level simulations center used to teach NATO standard operating procedures for coalition operations.

The USG worked with Azerbaijan's State Border Service (SBS) and Customs to improve their counter-proliferation capabilities. USG training and equipment enhanced Azerbaijan's ability to intercept and interdict weapons of mass destruction and other contraband, as well as protect the country's natural resources and deter illegal migration.

The USG is in the process of installing vehicle, rail, and pedestrian radiation detection devices at major ports of entry. This equipment, controlled by the SBS, will supplement equipment donated by IAEA that is under Customs management. Beginning in December, the USG will sponsor combined training of both agencies to ensure inter-agency consistency in use of the equipment as well as with alarm response. Customs and the SBS have agreed that the Institute of Radiation Problems, a part of the National Academy of Sciences, will oversee training and will be responsible for the calibration, maintenance and repair of radiation detection devices held by all GOAJ agencies.

U.S. assistance funded rule of law reform projects for police, prosecutors, defense attorneys and judges. USG assistance provided a technical advisor to assist the Ministry of Internal Affairs in the development and implementation of policies and procedures to investigate police corruption.

OUTPUTS

A significant investment was made during CY2006 in improving basic border control infrastructure between ports of entry with the donation of fencing and construction material to rebuild watchtowers. Assessments were made of SBS operations on the Iranian border as well as the ability of the SBS Air Wing to conduct border surveillance during night hours. Although willing, SBS capabilities in both study areas were deemed to be virtually non-existent in comparison to modern standards. Recommendations were made for improvements to be implemented in CY2007.

USG experts trained GOAJ personnel on issues including Safe Boat (Fast Response Boat) operations, dual-use commodity identification, investigative analysis, export control enforcement, licensing procedures and practices, search and secure of orphan radioactive sources, targeting and risk management of cargo, and tracking techniques for effective border control. A software control system specifically tailored to complement the new Export Control Law is currently under development.

USG assistance provided equipment, spare parts, maintenance, and training, much of which was used for routine vessel maintenance, dry-docking and shore side maintenance for the Coast Guard patrol boats. USG assistance built a boat basin with piers and a boat ramp to accommodate the permanent stationing of two 47' patrol boats, facilities for visiting vessels from Baku, and the future stationing of two 42' Safe Boats in early 2007. USG assistance also continued to support the improvement of the Coast Guard resident training center, and provided ongoing English language instruction. The Coast Guard training center has been outfitted with marine electronics installed on Coast Guard vessels to facilitate classroom instruction on proper electronic equipment operation. Additionally, the Coast Guard has made a renewed commitment to English language training with the goal of sending four to six Coast Guard personnel to the USA for specialized resident training in mechanics, electricity and damage control.

Improvement of enforcement capabilities within Customs began with the completion of an executive observation trip to the US for top GOAJ Customs managers early this year, and continues with equipment and training support. Trucks and tools to improve both the mobility and effectiveness of Customs Contraband Team members will be donated to coincide with the completion of subject training.

USG assistance provided almost 600 hours of training to more than 200 police officers and personnel from non governmental organizations in the areas of anti corruption, combating trafficking in persons, forensics and tactical police skills development.

PROGRAM PERFORMANCE/IMPACT

USG-provided maintenance to Azerbaijani patrol boats will dramatically increase Azerbaijan's ability to monitor and protect the southern Maritime border. With USG assistance, GOAJ Boarding Team operations and response continued to improve as well. The entire Azerbaijan Coast Guard fleet attained 'ready for sea' status and participated in their annual maritime exercises. Of particular note during 2006 are the efforts towards improving the infrastructure of the southern maritime base in Astara. The Astara shore based radar was replaced with a more appropriate, capable, and reliable radar.

The GOAJ was promoted to a Tier Two status rating on the USG human trafficking watch list, reflecting GOAJ progress in addressing this issue. In 2006, the GOAJ opened a shelter for TIP victims and designated a toll-free number (accessible both internationally and locally) that will become the trafficking hotline. The GOAJ also prosecuted several TIP cases, and created a new anti-TIP unit within the Ministry of Internal Affairs. With USG guidance assistance, the GOAJ conducted a standardized written testing process for police officers aspiring for a position within the anti-trafficking in persons unit. USG programs for NGO's in coalition building and TIP victim shelter and hotline operations also provided for the development of a coalition of NGO's dedicated to working with victims of human trafficking.

Technical assistance provided by the USG in the drafting of proposed legislation has also had the measurable result of producing draft anti-money laundering/counter-terrorist financing, conflicts of interest, ethics and corporate criminal liability laws. Although it has not been implemented, a draft financial disclosure form was also created with USG assistance. By the end of FY 2006, the fifty-five candidates who passed the new transparent exam process were poised to be appointed as new judges, and another round of exams for yet more new judges was planned.

Humanitarian Assistance

Despite significant private investment in Azerbaijan's natural resource industries and the resulting increase in government revenues millions of Azerbaijani's remain in desperate poverty. People displaced by the many years of conflict continue to live in desperate poverty with no jobs, no access to healthcare, and insufficient means to provide food and clothing for themselves or their families. The government of Azerbaijan is working to improve the plight of its poorest citizens but the task is enormous and progress is very slow. By all the latest estimates, at least 30% of Azerbaijani's live below the international poverty level even as total GDP and average monthly earnings increase by double digits every year. In FY 2006, the U.S. funded Humanitarian Program continued its efforts to meet basic survival needs of vulnerable groups through distributions of commodities and provision of basic services while other U.S. programs help the Government of Azerbaijan institute sustainable solutions.

U.S. ASSISTANCE PRIORITIES

Humanitarian programs in Azerbaijan continued to focus on improving the daily lives of the most vulnerable, often institutionalized, persons living in remote areas without even the most basic of necessities. The provision of medicines, clothing and adequate shelter remains the top priority for humanitarian efforts. In addition, emphasis is put on bolstering local and U.S. Government (USG) disaster and crisis response capability.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

For FY 2006, the U.S. funded humanitarian program included an-ongoing commodity distribution project, an ongoing healthcare services project, and four small reconstruction projects.

The distribution of donated and USG excess medical and other relief items was accomplished through a partnership between the U.S. Government and three U.S. Private Voluntary Organizations(PVOs) funded needs assessments, sourcing of requested items, distribution and in-country monitoring. Transportation and other logistical requirements were competitively bid directly by the U.S. Government. While target recipient populations included all vulnerable people in Azerbaijan, particular attention was given to the large number of Internally Displaced Persons (IDPs) and refugees from the Armenian border area.

USG funded Small Reconstruction Projects (SRPs) included the renovation of three children's boarding houses and a tent camp for IDPs. The boarding houses were Children's TB Boarding House #13, the Republican Boarding House for Deaf Children and the Nursing Home for Young Disabled Persons. These projects repaired roofs, re-installed plumbing and renovated living areas of institutions identified as those most in need.

In addition to the above activities, the USG funded a program that provided free shipping to any registered U.S. charitable organization that wished to send humanitarian commodities to local partners in Azerbaijan.

OUTPUTS

The primary focus of the USG humanitarian program is the distribution of humanitarian commodities, for which need has been verified, to vulnerable persons beyond the reach of other USG assistance programs and Government of Azerbaijan social welfare spending. Overall in FY 2006, the humanitarian program delivered 77 surface containers and 2 airlifts of various humanitarian commodities valued at $16.54 million. The cost to transport, distribute and monitor these commodities was just over $1.35 million. Commodities delivered included, medicines, medical supplies, shelter items, clothing, shoes, food, blankets, linens, hygiene kits and school supplies. Specific outputs are described below including non-commodity services and infrastructural rehabilitations.

An implementing partner installed a new water system, providing clean drinking water for over 12,000 IDPs housed in the Galagayin Tent camp in Sabirabad. An implementing partner delivered over $4 million in assistance in FY06, reaching approximately 530,000recipients. In addition to their delivery of urgently needed medicines and medical supplies, a US funded NGO in 2006 trained 78 doctors in the use and prescription of donated antibiotics.

PROGRAM PERFORMANCE/IMPACT

Humanitarian programs, while significantly impacting the day-to-day lives of recipients, are not designed to have long lasting impacts on recipient countries; however, some aspects of these programs assist in sustainable development. The provision of relief supplies and the renovation of facilities alleviate some of the burden placed on the Government of Azerbaijan and allow for resources to be focused on democratic and economic reforms that will enable the country to care for its own. In addition, humanitarian programs foster greater cross cultural understanding between our two countries and can stand as a foundation for future economic and cultural exchange activities. Lastly, humanitarian programs can help the local government identify areas in need of improvement and act as a blueprint for how to begin solving social welfare problems.

FY 2006 Funds Budgeted for U.S. Government Assistance to Azerbaijan [PDF format]



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