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Spring 1994 (2.1)
Pages 18-19
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.
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