Spring 1994 (2.1)
The Economic Scene
New Labels: Old Deficits and Shortages
by Svetlana Turyalay
Translated from Russian by Umid Azari
Can you imagine a situation where you work every day and get nothing for pay? Don't think that such conditions existed only in the former Soviet Union. This is exactly what is happening in Azerbaijan today three years after the dissolution of the USSR. The majority of people in our Republic have not received salaries for the months of July, August, or September. The same situation again exists at this writing for the months of November and December, and we've been told the same situation is likely to occur again in 1994.
If something similar were to happen in the West, there would be massive demonstrations and strikes. But in Azerbaijan, people continue to work and patiently wait for their salaries to be paid.
Although Azerbaijan has become an independent country, in many respects, the consciousness of its people has remained Soviet. It is easy to change labels but very difficult to change the minds of people who have grown accustomed to deficits and shortages.
No Pay: Why?
This critical situation was accepted by the people so quietly and calmly. It had no visible negative impact on the outcome of the recent Presidential election (October 3) when the people universally elected Heydar Aliyev, who, according to public opinion, will succeed in resolving all these problems. It would be very easy to place all the blame on the government for this situation. But there are several factors that are not directly dependent upon the government of Azerbaijan.
Our Republic, quite naturally, used the single existing currency, the ruble, as did all the other Republics of the former Soviet Union. But soon after the Union's dissolution, people began to think about introducing a new currency as vital for the existence of our independent state.
Former President of the Republic, Abulfaz Elchibey, issued decrees for the adoption of the manat on several occasions. Unfortunately, such decisions were enacted so quickly and radically and were not based on sound economic policy.
Manats Printed in France
Another complication arose because Azerbaijan did not have its own press for printing the new currency so eventually the manats had to be printed in France. The printing of these manats saved Azerbaijan from the negative effect of the Russian economy caused by Russia's abrupt decision to devalue the ruble.
For a period of time in Azerbaijan, the manat co-existed with the Russian ruble but many people exploited the situation by inflating the manat. Originally, the relation of the manat to the ruble was 1:10, but it sold on the black market at 15% to 20% higher.
Russia Cancels Bank Notes
But on July 24, 1993, Russia surprised all the Republics of the former Soviet Union as well as its own citizens. The Central Bank of Russia unexpectedly announced cancellation of all ruble notes dated from 1961 through 1992. Only the 1993 notes maintained any value. The reaction to this news hit like a bomb shell.
The Minister of Finance, Mr. Saleh Mammadov, responded by charging that such acts of Russia contradicted trade agreements between Russia and Azerbaijan. Both parties had agreed to inform each other of any currency reform two months prior to enactment and Azerbaijan had honored this agreement by informing Russia of their intention to leave the ruble zone.
Fortunately, Russia's devaluation did not have as negative an impact on the economy on Azerbaijan as it did on many of the other Republics as the ruble comprised only about 20% of the total cash mass circulating in Azerbaijan at the time. But still, more than 44 billion rubles which the population was holding became worthless sheets of paper overnight.
This currency reform in Russia marked the beginning of currency deficit in Azerbaijan. The Azerbaijan government had not foreseen this course of events and thus had not arranged for sufficient bills to be printed. External reasons gave impulse for internal excuses, the result being that people did not receive their salaries for more than three months-July, August, September 1993. Within that period, the National Bank of Azerbaijan owed the public 4 billion manats.
Although the government attempted to resolve the problem in various ways, the problem was not resolved until a special flight came from France transporting bank notes-billions of bank notes.
Within those past three months, the Government of Azerbaijan has, I hope, learned many lessons. It should reconsider its policy in regard to its state and commercial structure to exclude the possibility of the same situation occurring again.
Unfortunately, another problem is that the State enterprises in Azerbaijan function but do not produce anything. While on the other hand, commercial entities avoid paying taxes and retain enormous sums of money for themselves-just one more difficulty of moving into a market economy.
Standard of Living Today
But people want more. People want to live well. This is the big question: How can you live well if you haven't received your salary for three months?
Me? Like the majority of the citizens of the Republic, I am greatly effected by this situation. How do I manage? First of all, I have to economize on everything. Despite my resolve, however, whatever I do, sooner or later, the money runs out. Then I run to friends and acquaintances asking assistance. The majority of the population do the same thing as I do.
It would be naive, however, to think that the entire population in Azerbaijan suffers equally. There are people, naturally, who have other sources of income. As a rule, usually these are owners of private enterprises and stores.
But the tragedy remains for those who receive a regular salary from the government-the majority of population. It is very difficult for them to live. Furthermore, prices continue to rise and the level of salaries never catch up.
Economic Realities for a Journalist
Let me describe my own situation. I'm a correspondent at one of the most popular newspapers in Azerbaijan. I work almost 12 hours a day and I receive about 3,500 rubles per month (US $15). In comparison, one can say that a regular journalist in the United States earns, at least, $2,000-3,000 per month.
Having such a small amount of money in my hand, I have to give serious thought and planning so that this money does not evaporate within two days (see chart). It's the truth that I have forgotten the taste of ordinary milk and fresh fish.
It is very difficult to buy shoes and clothing. You can spend your entire salary for just one pair of shoes. A pair of boots can cost 12,000 manats. I have long ago given up the idea of buying new furniture or a car-such commodities are luxurious. They would cost millions of manats.
Despite this, my salary is considered average. In Azerbaijan, there are some people who receive only 1,000 or 1,500 manats. The minimum salary in the Republic is 900 manats which is only enough to buy about 4 kilos of meat. As a journalist, I understand that transitional periods have their own rules and regulations-but, perhaps, they're like the "rules of the jungle."
Though it is very difficult to implement economic reforms, it is necessary. The Representative of the United Nations Development Program in Azerbaijan, Mr. Paolo Lambo, recently observed, "Delay in this direction may have very negative effects on the Republic. The Government must be brave enough to implement radical reforms in Azerbaijan. If it does, in two or three years, Azerbaijan could become one of the richest countries in the region."
Mr. Lambo believes that Azerbaijan is a country blessed by the Lord Himself. Sure, I understand all this. But as a journalist working for the benefit of my country, I want to receive from this country sufficient salary to live a dignified life. And not tomorrow, but today.
From Azerbaijan International (2.1) Spring 1994.
© Azerbaijan International 1994. All rights reserved.