The Socio-Economic Impact of Keeping Azerbaijan’s Land and Sea Borders Closed

Azerbaijan is divided into 14 economic regions, including the capital city of Baku[1], 67 administrative districts, 11 towns subordinate to the republic, six district-subordinate cities, 12 city districts, 262 settlements, 190 town territorial units, 40 sector territorial units, 1,724 village territorial units, and 4,244 villages[2]. In Azerbaijan, neither the districts nor the cities are considered independent subjects of the national economy.

Since March 2020, Azerbaijan's land and sea borders with Russia, Iran, and Georgia have remained closed. Every three months, the special quarantine regime has been extended, and the borders have not reopened so far. The most recent extension occurred on September 25, 2024, when the Cabinet of Ministers of Azerbaijan issued Decree No. 440[1], extending the special quarantine regime until January 1, 2025, to prevent the spread of COVID-19 and its potential consequences, despite the World Health Organization (WHO) announcing the end of the pandemic on May 5, 2023, after the virus claimed 69 million lives globally[2].

Azerbaijan's oil and gas sector accounted for only one-third of the country's gross domestic product (GDP) during January-September, but showed modest growth (close to 1%) due to high global oil prices in the third quarter of this year, despite declining oil production in the country.

Diversification, which has long been crucial for Azerbaijan's economy, is even more relevant in the current situation. However, without a competitive environment, a diversification policy implemented through the state's administrative and financial resources cannot ensure sustainable development in the medium and long term. Such policies, while having short-term effects, primarily serve to strengthen the dominance of more monopolistic companies.