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Qabil Ashirov

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Azerbaijan is celebrating the 32nd anniversary of the "Contract of the Century." Looking back over the past 32 years, we can clearly see the visionary economic course of National Leader Heydar Aliyev and the resulting surge in the Azerbaijani economy.

As is well known, the early 1990s went down in history as a period of deep political, social, and economic crisis for many post-Soviet states. Immediately following the collapse of the USSR, the disruption of centralized planned economic ties, hyperinflation, and the Karabakh conflict resulting from Armenia's military aggression completely paralyzed the Azerbaijani economy. It is no exaggeration to state that during that period, Azerbaijan, with a total population of just 7 million, was hosting over 1 million refugees and internally displaced persons (IDPs). In other words, 1 out of every 7 people in the country was a refugee or IDP who had lost their home.

Undoubtedly, all these factors severely impacted the national economy. A look back at the first years of independence reveals that Azerbaijan experienced severe hyperinflation, with Gross Domestic Product (GDP) per capita standing at a mere 60 USD in 1992, which was a striking reflection of that socio-economic decline.

However, macroeconomic stabilization measures and institutional reforms implemented from the mid-1990s onward fundamentally transformed the country's economic model. With the signing of the "Contract of the Century" on September 20, 1994, Azerbaijan brought its rich hydrocarbon resources to global markets while securing a massive influx of foreign direct investment. This historic step laid the foundation not only for the energy sector, but for the reconstruction of the entire national economy.

The trajectory observed in Azerbaijan’s foreign trade and macroeconomic indicators over the more than 30-year period spanning 1994–2026 represents a model of growth rarely seen in the global economy. In 1994, due to wartime conditions, stalled industrial enterprises, and a lack of direct access to world markets, Azerbaijan's annual exports amounted to just 652 million USD.

The strategic line inaugurated by the "Contract of the Century," the commissioning of global infrastructure projects such as the Baku-Tbilisi-Ceyhan (BTC) pipeline and the Southern Gas Corridor (SGC), along with the parallel promotion of the non-oil industry, sharply increased the country’s exports over the past 32 years. Compared to the 1994 figure, exports grew more than 38-fold, reaching 25 billion USD by 2025. In greater detail, the Compound Annual Growth Rate (CAGR) averaged over 12% during this period, a rate of dynamic expansion seldom encountered in global trade history.

To fully grasp the significance of these figures, it is helpful to compare them with Türkiye, currently considered a rising star both regionally and globally. It is worth noting that brotherly Türkiye was deliberately chosen for this comparison because it is well known to local audiences and continues to grow stronger day by day.

This comparison makes the analysis even more compelling and grounded:

Türkiye (1994–2025): Raised its exports from 18.1 billion USD to 273.4 billion USD, achieving an ~15-fold increase. It should also be noted that Türkiye already possessed an established industrial base in the 1990s.

Azerbaijan (1994–2025): Increased its exports from 652 million USD to 25 billion USD, representing an ~38-fold increase. Starting from a near-zero base, Azerbaijan made a significantly sharper leap thanks to the "Contract of the Century" and strategic energy and industrial projects.

This comparison demonstrates that Azerbaijan's relative growth rate during this period (38-fold / CAGR ~12%) outpaced even that of Türkiye, one of the region's largest industrial and trade hubs.

Observers examining the Azerbaijani economy might argue that this development is an instance of "Dutch Disease" and that oil accounts for over 90 percent of Azerbaijan’s exports. At first glance, such claims may appear to have some foundation. However, a closer inspection of the data reveals that these assertions are unfounded.

First and foremost, it should be noted that prior to the Soviet occupation in 1920, Azerbaijan supplied over half of the world's oil production. However, during 70 years of Soviet rule, onshore and shallow-water oil reserves were heavily exploited and largely depleted. By the time the Soviet Union collapsed, the country was left with depleted fields, outdated infrastructure, and a lack of technology to access deep-water hydrocarbon reserves, resulting in virtually zero crude oil exports by the early 1990s.

With no significant oil revenue coming in, every 7th person in the country being a refugee or IDP, and the population facing severe social and demographic hardship, Azerbaijan was in desperate need of an immediate economic lifeline to alleviate the crisis. It was under these precise, dire circumstances that launching a new, modern energy strategy became an absolute necessity for survival.

Nevertheless, the Azerbaijani government was acutely aware of the dangers of relying on a single export commodity. To mitigate this vulnerability, it developed new initiatives, most notably, natural gas projects.

Looking back at the early 2000s, the share of oil in Azerbaijan’s exports was around 90%, occasionally reaching 92–93%. Following the launch of natural gas exports, this share dropped sharply. For instance, data for 2025 shows that out of Azerbaijan’s total exports of 25 billion USD, oil accounted for 12 billion USD (48%), while natural gas represented 8 billion USD (35%). However, in the first 8 months of 2026, diversification progressed even further: total exports reached 21 billion USD, with oil accounting for 42%, gas for 26%, and the remainder coming from the non-oil and gas sector.

As mentioned earlier, alongside the oil and gas sector, the government has actively supported non-oil development. In the first 8 months of 2026, Azerbaijan’s non-oil exports reached an all-time high of 6.27 billion USD. For comparison, this single figure is nearly 10 times higher than Azerbaijan's total national exports in 1994. Thus, over these 32 years, Azerbaijan did not merely increase its total exports 38-fold—it also diversified them substantially, creating a robust buffer against external financial shocks. With the planned start of green energy exports by 2030, this diversification is set to deepen and strengthen further.

Undoubtedly, the achievements gained since independence are not merely numbers on paper. All these macroeconomic successes have directly translated into enhanced public welfare and national financial sovereignty. Indeed, Azerbaijan’s GDP per capita has grown more than 120-fold, rising from 60 USD to 7,400 USD. At the same time, the country's strategic foreign exchange reserves—now exceeding 90 billion USD—have also transformed Azerbaijan into one of the largest net-creditor nations in the region.

Ultimately, the "Contract of the Century" signed 32 years ago was not merely an oil and gas agreement, but the cornerstone of a modern, resilient Azerbaijani economy. As a result of this strategic course, Azerbaijan today has achieved full economic independence and established itself as the region's primary economic driver and a critical pillar of global energy security.