On 9 October 2013, President Aliyev is likely to win a third mandate. After all, he is generally perceived as a guarantor for stability and economic development. He recently started a campaign to increase his popularity by resorting to military rhetoric over Nagorno-Karabakh, by increasing public servant salaries and by inaugurating a number of completed infrastructure projects. Moreover, the opposition is divided and weakened by state persecution. Elections are likely to be marked by irregularities but major public unrest is unlikely as fines are imposed for participation in unauthorised protests and well-equipped riot police will be mobilised to prevent anti-government protests.

Impact on country risk

The re-election of Aliyev would pave the way for policy continuity, which is particularly important for the oil and gas industry which the country relies so heavily on. Since the onset of on-going oil boom, Azerbaijan’s growth performance has been impressive. The country’s macroeconomic fundamentals like its external debt burden and current account balance are sound. Nevertheless, ONDD classifies the MLT political risk of Azerbaijan in category 5 as without any new discovery oil is expected to be depleted within 20 to 25 years and the country lacks economic diversification. Moreover, following years of high defence spending by Azerbaijan and to a lesser extent Armenia, tension over the unresolved Nagorno-Karabakh conflict is still high, with ceasefire violations on both sides.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com