AZERBAIJAN:Azerbaijan will receive a total of €92 million from the EU under the European Neighbourhood Policy in the three years to 2009.
The allocation under the policy, which aims to support political co-operation and reform in the EU's vast hinterland, will bring to €492 million the union's overall assistance to Azerbaijan in the period since the country declared independence from the Soviet Union in 1991.
While the EU has a clear interest in fostering political and economic stability on its doorstep, Azerbaijan's significant reserves of gas and oil underline the rationale for maintaining good neighbourly relations. This has strategic importance: Azerbaijan's supply of oil into the Mediterranean bypasses Russia, reducing its leverage in international energy markets.
As the Azerbaijani economy gears up for a rapid accumulation of wealth from its energy reserves, the EU policy is designed to provide practical assistance in modernising the country's administrative, legal and infrastructure systems. For example, EU money has been used to fund improvements to the electricity, water and irrigation systems in an impoverished area outside the capital, Baku.
Still, Azerbaijan is a country in which elections routinely fall far short of best international standards. Reports from several international agencies cite major problems with corruption, while journalists critical of the government are frequently imprisoned for infringing the country's severe libel code.
If all that raises questions about the merits of providing financial support to a government that subverts international standards, EU officials defend the policy by emphasising the union's interest in "reasonable relations" with countries such as Azerbaijan. The argument goes that the EU will be better able to persuade such countries to reform their systems if it has stable and secure relations with them and helps them to foster prosperity. EU officials express concern in private about the allocation of resources from the state oil fund of Azerbaijan, whose current assets are worth in excess of $2.15 billion (€1.52 billion).
However, Azerbaijani president Ilham Aliyev insisted in a group interview that there was "maximum transparency" in the fund and pointed out that it won a UN prize last June for "improving transparency and accountability".
Arthur Beesley travelled to Baku as a guest of the European Neighbourhood Policy programme