Azerbaijan, officially the Republic of Azerbaijan is the largest country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to the south. The exclave of Nakhchivan is bounded by Armenia to the north and east, Iran to the south and west, while having a short borderline with Turkey to the northwest.
The Constitution of Azerbaijan does not declare an official religion but the majority of people adhere to the Shia branch of Islam, although Muslim identity tends to be based more on culture and ethnicity rather than religion and Azerbaijan remains as one of the most liberal majority-Muslim nations. After gaining its independence, Azerbaijan has reached a high level of human development, economic development, standard of living, and literacy as well as a low rate of unemployment and intentional homicide compared to other Eastern European and CIS countries. On 1 January 2012, the country started a two-year term as a non-permanent member of the United Nations Security Council.
The structural formation of Azerbaijan's political system was completed by the adoption of the new Constitution on 12 November 1995. According to the Article 23 of Constitution, the state symbols of the Azerbaijan Republic are the flag, the coat of arms and the national anthem. The state power in Azerbaijan is limited only by law for internal issues, but for international affairs is additionally limited by the provisions of international agreements.
The government of Azerbaijan is based on the separation of powers among the legislative, executive and judicial branches. The legislative power is held by the unicameral National Assembly and the Supreme National Assembly in the Nakhchivan Autonomous Republic. Parliamentary elections are held every five years, on the first Sunday of November. The Yeni Azerbaijan Party, and independents loyal to the ruling government, currently hold almost all of the Parliament's 125 seats. During the 2010 Parliamentary election, the opposition parties, Musavat and Azerbaijani Popular Front Party, failed to win a single seat. European observers found numerous irregularities in the run up to the election and on election day.
The executive power is held by the President, who is elected for a 5-year term by direct elections. The president is authorized to form the Cabinet, an inferior executive body, subordinated to him. The Cabinet of Azerbaijan consists primarily of the Prime Minister, his Deputies and Ministers. The president does not have the right to dissolve the National Assembly, but he has the right to veto its decisions. To override the presidential veto, the parliament must have a majority of 95 votes. The judicial power is vested in the Constitutional Court, Supreme Court and the Economic Court. The President nominates the judges in these courts.
The Security Council is the deliberative body under the president, and he organizes it according to the Constitution. It was established on 10 April 1997. The administrative department is not a part of the president's office but manages the financial, technical and pecuniary activities of both the president and his office.
Although Azerbaijan has held several elections since regaining its independence and it has many of the formal institutions of democracy, it remains classified as "not free" (on border with "partly free") in Freedom House's Freedom in the World 2009 survey.
After gaining independence in 1991, Azerbaijan became a member of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank and the Asian Development Bank. The banking system of Azerbaijan consists of the Central Bank of Azerbaijan, commercial banks and non-banking credit organizations. The National (now Central) Bank was created in 1992 based on the Azerbaijan State Savings Bank, an affiliate of the former State Savings Bank of the USSR. The Central Bank serves as Azerbaijan's central bank, empowered to issue the national currency, the Azerbaijani manat, and to supervise all commercial banks. Two major commercial banks are the state-owned International Bank of Azerbaijan and the UniBank.
Pushed up by spending and demand growth, the 2007 Q1 inflation rate reached 16.6%. Nominal incomes and monthly wages climbed 29% and 25% respectively against this figure, but price increases in non-oil industry encouraged inflation in the country. Azerbaijan shows some signs of the so-called "Dutch disease" because of the fast growing energy sector, which causes inflation and makes non-energy exports more expensive.
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