Bloomberg: Oil price drop shakes Aliyev family

YEREVAN, FEBRUARY 9, ARMENPRESS. For Azerbaijan, plunging foreign reserves and twocurrency devaluations last year provided a stern test for the energy-reliant nation. For its long-time leader, the economic and political challenges are just starting, “Armenpress” reports Balazs Penz writes in Bloomberg.

The author mentions that President Ilham Aliyev is on unfamiliar ground, facing a crisis that turned the manat intothe world’s worst performerlast year. “The president has no experience of dealing with a crisis of this kind -- he’s become accustomed to living standards and real wages rising year after year,” said Alex Nice, anEconomist Intelligence Unit analyst covering Azerbaijan. “Dependence on oil is similar in scale to Saudi Arabia, but Azerbaijan has smaller sovereign reserves.”

With an economy asreliant on oil as Iraq and Venezuela, the Azeri currency’s first annual loss against the dollar in more than a decade has sheltered government finances while stoking consumer prices and driving up poverty.

The president is using a carrot-and-stick approach to maintain order. In a country where protests are rare and unsanctioned rallies are punishable by heavy fines, riot police have been sent to quell nationwide demonstrations blamed on “religious radicals” and the secular opposition. The unrest is the worst since clashes in 2005 afterdisputed parliamentary elections.

“We need to understand that Azerbaijan’s oil era is over,” said Qubad Ibadoglu, a visiting professor of economics from Baku at Duke University who worked for more than 10 years at the Economic Studies Center research group, based in Baku. “We can’t defend the manat because we couldn’t build a diversified economy in time.”