Azerbaijan’s Covid curbs flip into moneyspinner regardless of it being over

By Zulfugar Agayev

 

Most international locations couldn’t wait to dismantle journey curbs that had been used to include the coronavirus. Azerbaijan is gaining a lift to authorities funds by clinging to them months after the worldwide pandemic was declared over.

 

For all of the disruption to the $79 billion economic system, the choice by the South Caucasus nation in June to maintain its land crossings shut for an additional three months is closing off the largest channel by which onerous forex leaks out at a time when Azerbaijan’s oil output hovers close to the bottom since 2007.

The self-isolation from its neighbors that embrace Russia and Iran is the final remaining security measure imposed by Azerbaijan through the pandemic, with necessities resembling sporting face masks lengthy deserted.

“Land borders are the primary gates for the outflow of {dollars},” Samir Aliyev, an analyst on the Middle for Help to Financial Initiatives group in Baku, stated by telephone. 

Azerbaijan, as soon as a Silk Street cease on the western shore of the Caspian, is amongst a handful of nations with strict journey restrictions nonetheless in place two months after the World Well being Group introduced that the emergency part of the pandemic was over.

And greater than three years right into a border lockdown, Azerbaijan’s steadiness sheet has by no means appeared higher. 

The sovereign wealth fund that manages the nation’s earnings from oil and pure gasoline noticed its belongings rise to a report excessive of over $53 billion as of March 31. 

Central financial institution reserves swelled by 1 / 4 from final yr as greenback demand by lenders dried up at auctions held twice per week. The federal government’s gross debt as a share of gross home product shrank by essentially the most in many years final yr, in line with the Worldwide Financial Fund.

Azerbaijan has additionally benefited from larger oil costs and more and more emerged as an essential provider of pure gasoline to Europe as states seek for alternate options to Russia. A yr in the past, the European Union reached a deal to double pure gasoline imports from Azerbaijan.

Journey to and from Azerbaijan — a rustic of simply over 10 million folks — is now solely potential by air, a expensive proposition in a nation the place GDP per capita remains to be under its 2014 peak. 

The closed land borders are drastically capping worldwide journey by Azeris, with visits overseas final yr nonetheless greater than 73% under their stage in 2019. The quantity spent by Azeris overseas virtually halved in 2022 from the final full yr earlier than the pandemic in 2019.

Coronavirus Toll

 

Azerbaijani President Ilham Aliyev has stated his solely intention in holding the borders closed is to guard residents from the an infection, which has killed greater than 10,000 folks, in line with authorities knowledge. 

However by now, not everyone seems to be satisfied. Politicians and even lawmakers from the ruling occasion specific doubt the restrictions are a response to the coronavirus. As of July 7, Azerbaijan reported simply eight “lively” Covid-19 circumstances, whereas claiming two to 3 new infections every day. 

Although the federal government hasn’t stated if it has broader goals past making certain public security, the results had been widespread because the area was coming to phrases with Russia’s February 2022 invasion of Ukraine. 

The closed-door coverage deterred a whole lot of hundreds of Azeri immigrants in Russia from returning residence after the battle broke out. Skyrocketing costs for flights meant many selected to remain in Russia regardless of a deteriorating financial state of affairs and fears that these with twin citizenship may very well be mobilized into the Russian military.

Totally different Path

 

Regardless that Azerbaijan hasn’t joined sanctions in opposition to Russia and cargo transportation by way of land borders continues as regular, it’s seen little of the windfall skilled by neighboring Georgia and Armenia. Azerbaijan’s frontier with arch enemy Armenia has been shuttered for over three many years due to the battle over the Nagorno-Karabakh area.

Cash transfers from Russia and the arrival of individuals fleeing the battle have contributed to a growth that pushed financial development above 10% in Georgia and Armenia final yr — twice the tempo of growth in Azerbaijan — and turned their currencies into a few of the world’s greatest performers. 

The Azeri manat has been pegged to the greenback since 2017 and financial development is near zero within the first 5 months of this yr.

The variety of Russian nationals who visited Azerbaijan final yr was down 52% from 2019, in line with official knowledge, in contrast with solely a 1% drop in Turkish visits.

The affect was equally stark on the Iranian border, Azerbaijan’s longest after its frontier with Armenia. Though Iran unilaterally lifted the visa regime with Azerbaijan greater than a decade in the past, the Baku authorities — a detailed ally of Israel — by no means reciprocated, fearing the intentions of the Islamic Republic. 

A choice by the Azeri authorities to toughen visa rules with Iran briefly fed optimism that the borders would reopen from July. 

“The closed borders are inflicting a variety of difficulties in folks’s every day lives and the federal government should reopen them within the close to future,” stated Vahid Ahmadov, a outstanding member of parliament.