Publication: Monitor Volume: 5 Issue: 234

Prime Minister Artur Rasizade of Azerbaijan announced on December 8 that the country’s long-awaited second privatization program would resume in early 2000. The announcement followed President Haidar Aliev’s removal of leading officials within the State Property Ministry (SPC) earlier this month (Reuters, December 6, 8). But while the promised resumption of Azerbaijan’s privatization program may keep Baku’s relations with the IMF and World Bank on track, it is unlikely to lead to rapid changes in the enterprise sector.

The IMF and World Bank have been waiting for Azerbaijan to implement its second privatization program, which was to have been enacted early in 1999. The program’s implementation was delayed by President Aliev’s health problems this year, and by interministerial conflicts over details of the plan. The program originally called for privatizing at least half of Azerbaijan’s medium- and large-scale firms by mid-2000. According to government statements, the sectors to be included in this privatization program included telecommunications, utilities, machine building and light industry. Vouchers have also been made available to Azerbaijani citizens to ensure broad popular participation in this program. But delays in selecting the specific enterprises to be included in the program caused voucher prices on the secondary market to fall from a high of US$100 in March 1997 to as low as US$7 during the second half of 1999.

But, despite the government shake-up, a rapid sell-off of many Azerbaijani firms is unlikely. For one thing, the voucher program is set to expire in mid-2000, necessitating the promulgation of additional laws or decrees in order to extend the vouchers’ validity. Also, according to Rasizade, the government is considering selling at least some of these via tenders to strategic investors, rather than exclusively through vouchers. Finally, Rasizade has come out against the privatization of Azerbaijan’s oil sector, which contains many of the country’s most lucrative assets. The time and effort needed to sort out the various policy and technical issues suggest that major progress in privatization in Azerbaijan is not imminent.