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Azerbaijan Turns from International Borrower to Lender

Giorgi Lomsadze Jun 19, 2013

Energy-rich Baku could end up lending a helping hand to next-door enemy, Armenia, via a World Bank program which gives loans to the world’s neediest nations, including Armenia.

Last week, Azerbaijan's Central Bank Governor Elman Rustamov told World Bank Vice President Joachim von Amsberg that the South Caucasus state is interested in contributing as a donor, Azerbaijani news outlets reported.

Azerbaijan this year shed all of its $300 million debt to the International Development Association (IDA), a World Bank mechanism offering the poor a chance to borrow their way to prosperity via low or no-interest loans. Armenia along with fellow Soviet alumni Georgia, Moldova, Kyrgyzstan, Tajikistan and Uzbekistan are on the list of IDA aid recipients.

Just yesterday, Azerbaijan, too, was one of that crowd, but it has now gone middle-class with a per-capita GDP of $10,700, an indicator far above it ex-Soviet comrades in the neighborhood, bar Russia.

Among the various signs of its newfound wealth, Azerbaijan has contributed $5 million to a fund-raising project for the Palestinian territories, purchases weapons from Israel, and is witnessing the make-over of Baku into a glittering, skyscraper-studded metropolis.

With Azerbaijan's international prominence growing, overseas development funds might seem a natural next-step. At this stage, though, the possibility of such funds indirectly aiding Armenia is only theoretical.

With Armenia and Azerbaijan essentially at war over the disputed territory of Nagorno Karabakh, Azerbaijan may, perhaps, not necessarily be eager to lend a helping hand to Armenia. Although the State Oil Company of the Azerbaijani Republic recently offered to send gas to Armenia (to relieve pressure from a price hike in the cost of Russian gas), the offer was largely interpreted as more about PR than substance.

It was not immediately clear whether Azerbaijan could track where any donations to the IDA would go.

That said, nothing in Armenia's recent history suggests that it would be willing to let bygones be bygones and receive such assistance. Even though saddled with roughly $4.2 billion in debt.

Giorgi Lomsadze is a journalist based in Tbilisi, and author of Tamada Tales.

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