Aliyev regime can’t afford war when its economy is falling apart – Forbes

YEREVAN, JULY 8, ARMENPRESS. The American financial-economic magazine Forbes has touched upon the frequent Azerbaijani aggression in the Artsakh line of contact and analyzed its causative link with Azerbaijan’s declining economy.

“On May 18, Azerbaijan drew the ire of theOSCE Minsk Groupand the Russian Foreign Ministry when it broke the shaky ceasefire agreed to by the warring parties last year.These were rare condemnations by historically neutral organizations”, Movses Ter-Oganesyan, author of the article says.

He mentions that by using an Israeli Spike missile, Azerbaijan destroyed an air-defense system of Artsakh’s military.

The article says that this happened when Azerbaijan made numerous claims of violence by Artsakh.

“Azerbaijan made similar claims of increasing violence by its arch-foe after it devalued its national currency, the manat, by nearly half in 2015. The depreciation of the currency caused the average Azeri to lose nearlyhalf of their life savingsin two 2015 devaluations.

This crisis preceded the biggest flair up of violence along the Line of Contact (LoC) between NKR and Azerbaijan since the 1994 trilateral ceasefire agreement signed in Bishkek byArmenia, Nagorno-Karabakh and Azerbaijan”, the Forbes article says.

“The same week that Azerbaijanattackedthe air-defense system, the International Bank of Azerbaijan (IBA) defaulted on a $100 million loan payment and filed for Chapter 15 bankruptcy in New York courts. This came as a shock to markets given that the IBA had reported a 24% increase in y/y operating income in the first quarter of 2017. With more payments due in June and October, Azerbaijani news is alreadyforecastingthe potential bankruptcy of the biggest bank in the country. To make matters worse, IBA has given a $2 billion loan to Azerbaijan’s state energy giant, State Oil Company of Azerbaijan Republic (SOCAR).

In December 2016,the S&P Global Rating affirmed SOCAR’s credit rating at ‘BB’ with a negative outlook”, Ter-Oganesyan writes.

“The downgrade of the credit ratings comes on the heels ofdecreasedoil and gas production, adeclinein country’s construction sector, andincreasedinflation. As the country battles a serious case of the Dutch Disease, therulingAliyev clan – dependent on oil revenues to maintain power -- has much reason to attempt to pacify its domestic population by rallying them around the flag. The massive Azerbaijani aggressioninlast April’s warcame on the eve of the release of the Panama Papers,whichimplicatedAzerbaijan’s first family in massive fraud and nepotism involving off-shore bank accounts.

With a 10-fold increase in defense spending over the past decade, Baku has acquired offensive weaponry from Turkey, Israel and Russia. Azerbaijan certainly hastheimpetus to find out what its military hardware is capable of. This necessity, coupled with a potential economic meltdown of the nation’s economy, provides the perfect opportunity for increased violence along the LoC. The recent deployment and withdrawal of10 tanksnear the village of Talish is an example of aruse de guerreby Baku meant to desensitize the Armenian troops in the area. The Azerbaijani military is certainly testing the waters.

The Aliyev regime cannot afford to fight a long-term war where its oil infrastructure may come under threat, therefore it would aim for a restricted show of force in limited clashes as witnessed last year.”