As a young and rapidly developing nation, the Republic of Azerbaijan is leveraging its position as an oil and gas center and developing strong regional ties while promoting economic diversification.

With a political infrastructure forged in the wake of the Soviet collapse and a diplomatic landscape shaped by the rough and tumble world of oil economics, Azerbaijan has emerged a strong and stable republic. Today, at the 20th anniversary of its independence, the government is focused on optimizing oil wealth, restoring territorial integrity, and aspiring to a more prominent diplomatic voice in the world.

Azerbaijan's political system is based on its 1995 constitution. Accordingly, the president is head of state and is elected for five-year terms by direct popular election. The prime minister, who is appointed by the president, is the head of government. The president also appoints the cabinet, a subordinate executive body consisting of the prime minister, his/her deputies, and 38 ministers, at present.

The incumbent, Ilham Aliyev, was elected for a second five-year term in 2008. Soon after, in 2009, a referendum was passed in which voters approved a package of 41 amendments to 29 articles of the 1995 constitution. The son of Heydar Aliyev, Azerbaijan's much respected President from 1993 to 2003, Ilham Aliyev is also the Chairman of the ruling New Azerbaijan Party (NAP) and head of the National Olympic Committee. As a previous Vice-President of the State Oil Company of Azerbaijan Republic (SOCAR), he was also a key figure in negotiating the “Contract of the Century," the international oil agreement that has been the driving force behind the country's growing prosperity.

The legislative branch consists of a unicameral National Assembly with 125 members elected from single-member constituencies. National Assembly elections are held every five years on the first Sunday of November. The president cannot dissolve the National Assembly, but he can veto its decisions. A 95-vote majority is necessary to override such a veto.

In the 2010 parliamentary elections, the ruling New Azerbaijan Party (NAP) strengthened its presence in the legislature, though independents also made notable inroads. Of the 125 seats, 73 went to the NAP, three went to the Civic Solidarity Party, two were won by the Motherland Party, while the remaining 48 seats went to independent candidates. The next National Assembly elections are slated for 2015. At present, there are 42 registered political parties in Azerbaijan. The legislature also makes strong use of the committee system, with 11 parliamentary committees established so far covering such issues as economic policy, education, and human rights.

The judicial branch consists of a Constitutional Court, a Supreme Court, and an Economic Court. The Constitutional Court, the highest court in the republic, consists of nine judges appointed by the National Assembly. The judicial system is considered nominally independent from the executive and legislative branches of government.

At a local level, Azerbaijan is divided into 78 rayons, or provinces, and 11 municipal areas. In addition, the constitution defines the Republic of Nakhchivan, a landlocked enclave of 5,300 square kilometers, as an autonomous state within the Republic of Azerbaijan. Mirroring Azerbaijan's political structure, it has its own National Assembly, cabinet of ministers, and judiciary. The enclave is divided into eight administrative divisions, including the capital Nakhchivan City.


Azerbaijan knew only two years of independence—1918-1920—before being made a part of the Soviet Union. In the waning years of the USSR, Azerbaijan declared its sovereignty in 1988 and full independence in 1991. It was a tumultuous transition overshadowed by war, and much of today's political landscape is informed by those events.

Under Mikhail Gorbachev's glasnost policy, ethnic strife and fighting broke out in Nagorno-Karabakh, a territory within the Azerbaijan Soviet Socialist Republic (SSR). On January 9, 1990, the Armenian SSR declared its intention to occupy Nagorno-Karabakh, thus disregarding Soviet authority and Azerbaijani jurisdiction and sovereignty. In response to Moscow's indifference, outraged Azerbaijanis took to the streets of Baku and began calling for full independence from the Soviet Union. The civil unrest culminated with “Black January", one of the few instances during glasnost and perestroika in which the USSR used armed force against dissidents. Over 100 protestors died during the crackdown, and later Gorbachov apologized to the Azerbaijani people, stating, “The declaration of a state emergency in Baku was the biggest mistake of my political career." The event is commemorated by an annual national holiday on January 20.

Following Black Sunday, Azerbaijan progressively moved toward full independence, while a protracted and undeclared war escalated in the mountains of Nagorno-Karabakh. The war ended following a Russian-brokered cease fire in 1994, with Armenian forces occupying over 20% of Azerbaijan's territory, around half of which was outside the borders of the disputed Nagorno-Karabakh region.

Approximately 30,000 people died in the fighting, while at least 800,000 Azerbaijanis from Armenia and Karabakh were forced from their homes and became refugees. Talks mediated by the OSCE Minsk Group have been held every year since, but with little progress. Restoring territorial integrity, according to President Aliyev, is still the government's first priority.

Following failure during the war, Azerbaijani President Abülfaz Elçibay was replaced by Heydar Aliyev in 1993, who was confirmed in that position following a popular election held in the same year. President Aliyev was re-elected for a second term in 1998.

The Heydar Aliyev years saw unemployment significantly reduced, a return to stability, the establishment of institutions dedicated to an independent state, and the opening up of the Azeri-Chirag-Guneshli oil field and Shah Deniz gas field. Equally, the President sought to provide the needed infrastructure to cope with the vast wave of refugees that Azerbaijan was forced to deal with, an overspill of the Nagorno-Karabakh issue. President Aliyev stepped down in 2003, citing failing health. His son, then prime minister, was nominated as the NAP's presidential candidate, and he was elected with around 77% of the vote in nationwide elections held in 2003.


Since independence, Azerbaijan has benefited from a cautious foreign policy orientation that has managed to engage both Russia and the West. However, increasing competition for Azerbaijan's energy resources may see this balancing act become more challenging in the medium term. As both sides clamor for new projects, Azerbaijan's foreign policy will be increasingly influenced by its desire to secure a reliable transit route for the gas from the second phase of the Shah Deniz project, which is expected to come onstream in 2016-17.

The position of Turkey as a long-standing ally may play a decisive role. Recent attempts by Turkey to improve relations with Armenia have opened the possibility of new Russian-Azerbaijani alliances. Russia currently has a standing offer to buy all of Azerbaijan's gas, which comes with an implicit promise of support regarding the Nagorno-Karabakh issue. If Azerbaijan makes such a move, it would render commercially inviable the EU-backed multi-country Nabucco pipeline, designed in large part to create an energy corridor through Turkey rather than Russia and Iran.

In 2009, Turkey signed two protocols with Armenia with the intention of opening their mutual border. However, the ratification of the protocols stalled in 2010, with Nagorno-Karabakh preconditions being a flashpoint. Azerbaijan's relations with Turkey have warmed in tandem. The two traditional allies—who often refer to the slogan “One people, two countries"—ended a long-standing process of negotiations over gas pricing and delivery volumes in June 2010. Two months later they signed a “Strategic Partnership and Mutual Cooperation" treaty, reconfirming friendly links.

As it has done with effect in the past, however, Azerbaijan still leverages the promise of closer energy ties to Russia. Azerbaijan began selling gas to Russia in 2010 and raised exports to 2 billion cubic meters per year in 2011. This increased trade and the looming challenge of an exclusive deal will likely exert significant foreign policy pressure on Turkey, which depends on the implementation of the Nabucco pipeline to fulfill its goal of becoming a transit country for Caspian gas.

The geopolitics of energy also heavily impact Azerbaijan's regional relations. Of the five Caspian countries, Russia and Iran argue that the construction of any pipeline that traverses the Caspian Sea requires the agreement of all five littoral states. Until recently, Turkmenistan had largely been quiet on the issue, owing largely to pressure from Russia. However, at the third summit of the Caspian littoral states in Baku in November 2010, Turkmen President Gurbanguly Berdymukhamedov suggested that pipelines should not require a five-state consensus. The statement indicates support for the proposed Trans-Caspian—which would carry Turkmenistan's gas under the Caspian, into Azerbaijan and on to Europe—and signals that Turkmenistan may be willing to put to one side its claims over disputed oil fields in favor of developing its geostrategic gas sector.

The Baku summit also set the stage for a delimitation of the Caspian, one of the trickiest diplomatic challenges created by the collapse of the Soviet Union. While no final agreement was reached, the five presidents committed to draw up delimitation plans to fix the width of national maritime zones of the inland sea to 24-25 nautical miles.

In terms of trade foreign relations, Azerbaijan's main trading partner is far-and-away Italy, accounting for nearly a quarter of total trade and a sizeable portion of Azerbaijan's oil and oil-product exports. Followed distantly by France and the US, Italy's position as a leading trade partner has been enhanced by strong bilateral support; the two countries have signed 26 agreements since 2008.

Azerbaijan has diplomatic relations with 158 countries and holds membership in 38 international organizations. It is a member of the United Nations, the Organization for Security and Cooperation in Europe, NATO's Partnership for Peace, the World Health Organization, the Council of Europe, the International Monetary Fund, the World Bank, and the Non-Aligned Movement. In 2006 it was elected to membership in the newly established Human Rights Council by the UN General Assembly. It is currently a candidate for a non-permanent seat in the UN Security Council in 2012-2013, with elections slated for October 2011.

Since 2004, Azerbaijan has more than doubled its diplomatic presence abroad. In order to staff the growing ranks, the state opened the Azerbaijan Diplomatic Academy in 2007 with the goal of training its recruits in Western-style diplomacy and foreign trade.