Weekly actual topics in Azerbaijan (Nov. 18-22)

Analysis Materials 26 November 2013 11:05 (UTC +04:00)

Syrian recovery important to global economy

No country facing internal armed conflict benefits from the continuation of this war.Syria is facing great economic problems after 32 months of civil war. These problems negatively affect the economic processes not only within the country but also in the world economy.

According to Syria's official data, the country's financial losses due to the military conflict hit $ 100 billion. The country's GDP declined by at least 30 percent. Oil production in Syria has recently decreased by 95 percent - to 20,000 barrels per day. Moreover, gas production halved in Syria. Syria extracted 30 million cubic meters of gas per day in March 2011, while today this figure dropped to 15 million cubic meters of gas per day.

Syrian authorities estimate the damage caused to the country's infrastructure during the conflict at $ 11 billion. The industrial sector of the Syrian economy suffered losses worth over $ 2.2 billion. The consumer price growth rates in the country have amounted to 68 percent since May 2012. The inflation growth is associated with a sharp increase in food prices in the country.

Four out of ten Syrians need humanitarian aid to survive. The number of refugees has reached 9.3 million people, including 6.5 million internally displaced persons.

Great capital outflow from the country is being observed. Syrian investors now prefer to invest in the economy of stable countries, in particular the Turkish economy. Thus, Syrian investors are interested in making investments in the Turkish south-western province of Gaziantep. According to mayor of Gaziantep province Asim Guzelbey, Syrian investments in various spheres of the province exceeded $1.475 million over two years. The flow of investors from this country to Turkey is expected to grow.

Moreover, the country is suffering from sanctions unilaterally imposed by Damascus's opponents. Syrian Permanent Representative to the UN Bashar Jaafari said that Syria has to deal not only with its armed conflict, which is being fueled by foreign forces. Several wars, including informational, financial-economic, political, diplomatic conflicts are simultaneously conducted.

After the conflict, Syria will recover very slowly. Economic recovery is possible only with foreign assistance. Economic revival without any foreign assistance is out of the question. Today, the Syrian government cannot buy food and fuel without loans from Iran, Russia and China. Humanitarian aid from different countries supports the civilian population and refugees.

Today, Syria is a deep debtor with giant losses in infrastructure, production base, sales market and human capital. Syrian Minister of Electricity Imad Khamis said that ongoing military actions in Syria is a big financial burden on the state.

From all this, we can conclude that the post-conflict reconstruction of Syria will take decades and a full recovery will cost billions. The international community is aware that the task of rebuilding the economy of Syria is not easy. It was said in the UN that about $ 3.5 billion will be needed to resolve the crisis caused by the flight of more than two million Syrians. Donor countries should reconsider their contribution to solving of the problem and to be generous, UN Deputy Secretary General for Humanitarian Affairs Valerie Amos said.

Syria needs help, otherwise the sprawling negative economic background in this country will eventually affect neighbouring states and as a result they can intervene in the situation and this in turn will cause instability and the weakening of global economy. Until now, the Syrian conflict did not have a significant influence on the world economy only because Syria does not have a large amount of hydrocarbons. This was a clash of more political rather than economic interests of several countries.

Nevertheless, the conflict has led to the disruption of foreign trade turnover of Syria's trade partners and higher prices for goods because of violations of the supply chain. The dynamics of oil prices is changeable for a long period due to the fear of Saudi Arabia and Iran's participation in the Syrian conflict, as well as the threat of U.S. military intervention.

Constant expectation of a rise in oil prices in terms of global growth plays a negative role. Not only oil prices, but also the stock and currency indexes are galloping.

As world economic history shows, any military conflict doesnt do anything good for the the world economy and only benefits a few in small circles. Today, at the current high level of globalization, the world economy is particularly vulnerable to the conflict in Syria.

Azerbaijan, Belarus to expand range of co-production

Azerbaijan and Belarus have many opportunities to further increase economic cooperation and maintain the positive attitudes that have been accumulated over the years, president of Azerbaijan, Ilham Aliyev said at a meeting with President of Belarus, Alexander Lukashenko, that in recent years, relations between Azerbaijan and Belarus have come a very long way and reached a very high level.

Belarus and Azerbaijan are traditional trading partners. From 2006 to 2012, the trade turnover between the countries increased six-fold. Belarus' major exports to Azerbaijan consist of mechanical engineering products, petrochemistry, woodworking industry and construction industries, food products, medicines and household appliances. In turn, Belarus imports oil, agricultural products, and fabrics made of synthetic filament yarn, as well as chemical industry products from Azerbaijan. According to Alexander Lukashenko, "the trade between the two countries in terms of volume could be the best, the greatest".

Cooperative ties between the two countries, including joint production of Azerbaijani-Belarusian products are developing stably and steadily. Starting with the usual assembly of technology, today many of them, including joint production of tractors, trucks, buses, and so on, have achieved the degree of localization of 40-60 per cent. At present, Azerbaijan assembles Belarusian tractors, trucks, cranes, equipment for communal services, optical equipment and elevators.

Azerbaijan's Ganja Automobile Plant is the leader of the Belarusian-Azerbaijani cooperation in the field of industrial cooperation. The joint project is being carried on its base, will allow this enterprise to become the region's largest producer of complex technological engineering products.

Taking into account all these factors, the sides came to the conclusion that Azerbaijani- Belarusian products that meet all quality standards must be delivered to foreign markets. Competitiveness of these products can guarantee the demand for them in third country markets.

The expansion of joint production in the areas that were greatly developed in Belarus, in particular the medicament production, was widely discussed. Belarus is ready to offer its technologies and share the process details, from packaging to production of the remedy and medicaments in the shortest possible time, which can also be delivered on the global trading platform in the future.

The lack of raw materials in Belarus also contributes to the convergence of economic interests of the two countries in the energy sector. As it is known, Azerbaijani oil supplies to Belarus started in 2011.

Azerbaijani entrepreneurs are also interested in entering the Belarusian market through the establishment of joint ventures for the production of food and trade-logistics centers and opening of representative offices of Azerbaijani banks, restaurant business, activity in the tourism area, hotel construction and so on.

President Lukashenko has called for greater investments in Belarusian projects that may catch the interest of Azerbaijani businessmen and the country. "We are ready and waiting for your proposals, if you are interested and ready to grow your petrochemistry, agriculture and pharmaceutical industries," President Lukashenko said. In particular, the possibility of Azerbaijani participation in the privatization process in Belarus was stressed.

As one can see, the economic relations between the two countries are being fully developed. According to the expectations, doubling of the trade turnover, the number of joint projects, as well as the expansion of the cooperation areas may become results of the Belarusian president's visit to Azerbaijan.