The decision of the Tariff Council of Azerbaijan on the 7-th of January 2007 has become a real New Year surprise for Azerbaijani population. The increase of the price for electric energy to more than 3 times and for petrol to 50% influenced the tariffs of all other categories. Such a decision of the State Organ was explained by the intention to approach to the standards of the international market, which collapsed the fragile plans of the Azerbaijani population for better living. (09-JAN-07)

Written by Shahla Ismailova/HRH Baku on the basis of materials from Space TV Channel, Turan Info Agency, Day.Az, Yeni Musavat Newspaper.

The tariffs for sewerage system services and portable water were doubled twice too. The jump of prices on other products and services started immediately. Thus, the prices went up to all food products, the newspapers increased their price for minimum 50%, the tariffs in the publishing houses, conference centers, of so-key importance to the development of civil society has significantly been raised too.

Comparison
The main argument of the government for the increase is “to approach Azerbaijan to world prices”, but this argument can easily be ruined if to take into account the enormous gap in the income of Azerbaijani and European/American citizen. The president I.Aliyev supposes to increase the salaries of some categories of employees as well as pensions to 25% from March 2007.

Below see a few examples for comparison of prices:
Petrol – $0,64-0,68 (in Azerbaijan) – $0,62 (in USA)
Electricity – $0,07 (in Azerbaijan) – $0,06-0,09 (in USA, due to categorization of customers)
Natural gas – $53 per 1000 cubic meter (in Azerbaijan) – $42 per 1000 cubic meter (in USA)

While utility and energy prices appear to approach even surpass prices in the U.S., salaries remain comparably low in Azerbaijan. According to the U.S.  government the minimum wage per hour for workers in America is $5.15, however most states have set this figure even higher. For example in New York the minimum wage is $7.15. Based on this salary, the typical American, who works a 40-hour work week, makes at least $1,144 per month. Meanwhile in Azerbaijan the minimum wage is approximately $50; about 30 percent of Azerbaijan’s population subsists on this wage.

Experts’ Opinion
Chairman of the Economic Research Center NGO Gubad Ibadoglu said that the latest increase in the energy, fuel and essential public service tariffs will cause inflation that will most probably get out of control. He called the government’s decision to raise tariffs “shock therapy” that does not correspond to Azerbaijan’s economic situation and said that it bears a fiscal character. “The government pretends to try to get rid of indirect subsidies for the energy sector, but though the energy and fuel tariffs have been raised to the international level, the government will give this sector a subsidy of AZN 330 million in 2007, which means that the subsidization will be only decreased by AZN 5 million,” Ibadoglu stressed.  

Another expert from the same NGO, Rovshan Agayev, said the fuel and energy tariff increase will affect other sectors (building, agriculture, industry, etc.), which contradicts the declared non-oil sector development policy. Agayev said the government’s economic and social policies bear no relation to each other, because the Azeri government is trying to compete with the USA in  fuel and energy prices, but does not even realize that the incomes of the Azeri population are 50- 100 times less than the incomes of people in the USA. The State Tariff Council’s latest decision will have negative social consequences probably not anticipated by the government, independent economists say.

Reaction of Political Parties
Some political parties in Azerbaijan have called for the conduction of mass actions of protest against the increase of tariffs for energy resources.  

Musavat Party adopted a decision during a board meeting to begin consultation on this matter with other parties.

Umid party also made similar calls, and called this decision “a continuation of the government’s exorbitant policy against its people.”

AMIP party noted that the increase in prices will cause the socioeconomic situation to deteriorate, and demanded that the corrupt government resign.

Sardar Jalaloglu, the Azerbaijan Democratic Party’s first deputy chairman, called the jump in process “an incorrect price policy of the government.” This step will seriously affect the low-income population, while officials will win, added Jalaloglu. 

Ali Kerimli, Popular Front party’s leader, said that the government lacks well-reasoned social program. “If the government would like to bring the prices in accordance with the international prices, it should increase salaries, pensions and scholarships up to world standards,” added Kerimli. The current jump in prices is an attempt to misappropriate oil revenues through corruption and robbery, said PPFA’s leader.

The leader of the Movement “National Unity” Lala Shovket said “one decision of the Tariff Council completely eliminated the shaping middle class”. Those who belonged to the middle class on Sunday, on Monday turned to people, struggling for survival in this uneasy life”.