In the autumn of 1994 an outstanding Azerbaijani economist, Ziyad Samedzade, published an article, in which he said: "I'm trying to remain an optimist, but the situation is close to catastrophe." In fact, the situation in the Azerbaijani economy was very tough. Production amounted to only 33 per cent of the national income, most plants were not operating, and the war in Karabakh was extremely harmful for the country.
In July 1994 the minimum salary was 2,000 manats, while the average basket of goods cost 12,000 manats. In other words the minimum salary was almost $1. A production crisis was evident. The Azerbaijani market was full of imports. The reason for this was the lack of protectionism after the collapse of the USSR.
Now it is clear that the authorities should have supported individual entrepreneurs, encourage production and elaborate a special governmental strategy for the economic development of the country.
The economic reforms were undertaken by people whose ideas appeared to be unrealistic. In 1994 alone the minimum monthly salary allowed one to buy only 33 kg of bread, 1.1 kg of meat and 20 litres of gasoline, while in 1993 it was 150 kg, 3.7 kg and 100 litres respectively.
In these circumstances in July 1993 General Heydar Aliyev came to power and, in the autumn of 1994, the State Oil Company of Azerbaijan signed an agreement with the world’s most prominent oil companies. The agreement touched upon the development of the Azeri, Chirag and Guneshli deposits and was soon called "the contract of the century".
According to common belief, the first agreement between Azerbaijani and American companies was signed in September 1994. In fact, it was signed much earlier, on the 10th of August 1994, in Washington.
The contract allowed an American company to take part in the development of 2 oil deposits in Azerbaijan for 10 years. It was estimated that this would allow the Americans to extract several hundred million barrels of oil.
President Heydar Aliyev postponed the signing of the document, as he believed that the agreement was more interesting to the western companies than to Azerbaijan. In an interview to the Chicago Tribune he said that government should act in the interests of the people, rather than in the interests of corporations.
At the same time, President Aliyev decided to joint the Commonwealth of Independent States. The reason was the never-ending conflict with Armenia, the continuing war in Karabakh and a belief in Russia's potential as a possible mediator.
The role of Turkey in the region has also changed. Its influence has become stronger with the help of its overseas ally, the USA. British influence was also evident. Some experts even believe that theAzerbaijani-Armenian conflict was provoked by the British Petroleum corporation.
President Heydar Aliyev decided to cooperate with NATO in order to settle the conflict in Karabakh. On the 3rd of May 1994, the Azerbaijani delegation in Brussels signed an agreement entitled Partnership for Peace.
The harmonization of Azerbaijani-American relations was complicated by the influence of the Armenian diaspora in the United States on national policy. However, the situation eventually changed, and the image of Azerbaijan in the US media became less of an aggressor.
Ismail Agakishiyev, the Head of the Center for Caucasian Studies at the Moscow State University for the Humanities
