TODAY.AZ / Business

Utilities price hike sparks anger in Azerbaijan

11 January 2007 [22:25] - TODAY.AZ
The Azerbaijani government has provoked popular anger with a series of price rises for public commodities and services. The hikes hit gasoline and public transportation, as well as natural gas, water, and electricity.

It's not hard to see why many Azerbaijanis are angry about the price hikes. The price of gasoline has gone up overnight by 50 percent. Diesel has risen by 25 percent.

Residents of the oil-producing country now pay on average between $0.64 and $0.68 for a liter of gasoline. By comparison, Americans only pay $0.62

On the streets of the capital, Baku, the anger was palpable.

One man said: "I disapprove of this decision. We already live under such difficult conditions, but now they're raising prices. How long will it continue? We can't take it anymore. They have created a situation where people keep quiet and can't say anything, because they've scared everybody."

A woman said: "I don't like this. These people are capable of starving people. Now, we are barely surviving, we are not living. Only God knows what kind of life people have."

Another man said, "When the government raises prices, they say that they are trying to bring prices up to an international level, but they are forgetting that salaries should also be brought up to an international level."

And that is where the problem lies: wages. Azerbaijan has some of the lowest average monthly salaries and pensions in the region. On average, they are 50-100 times lower than in the United States.

But the government has said that the price increases will "help develop Azerbaijan's economy."

Speaking to RFE/RL's Azerbaijan Service, government spokesman Oktay Haqverdiyev defended the initiative. "This is not an economic issue, but a political issue for the government or state to resolve," he said. "In order to prevent goods moving cheaply out of Azerbaijan, the government has revised the prices."

The World Bank has repeatedly urged the Azerbaijani government to raise domestic oil prices. The head of the World Bank mission in Baku, Viktor Kramarenko, said in June last year that reducing subsidies on oil products would enable the government to increase social spending.

And European Bank for Reconstruction and Development President Jean Lemierre said in April 2006 that the government should raise electricity tariffs gradually in order to free up funds for modernization and maintenance.

That's unlikely to reassure most Azerbaijanis, who fear that the move will result in higher prices for everyday goods. Experts have warned that the price rises will affect the country's construction, agricultural, and industrial sectors.

"I think that the price increase will affect all areas of the economy and will hurt the low-income population the most," says independent economist Azer Mehdiyev. "All of the government efforts to address the problems of the low-income population will be eaten away."

The consequences may already be visible. In Baku on January 9, many minibuses, usually full of passengers, stopped work, saying higher costs have made their work unprofitable.

Three daily newspapers have already increased their prices by 50 percent, their editors saying the rise was unavoidable because of higher energy costs.

Whether the public anger will translate into popular protests -- a rarity in Azerbaijan -- is unclear.

The opposition Azadliq bloc has called for the government to resign, due to what it calls its "incompetent policy."

The opposition Azerbaijan Popular Front Party has said the price increases  are intended to "destroy the Azerbaijani people." The opposition bloc has also announced that it is planning protests, but has not specified when or where they will take place.

And there are signs that the government is already trying to quell public opposition to the move. The operators of two opposition websites that criticized the government's policy have said their sites have been blocked in Azerbaijan. RFE/RL


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