How Taxpayers Are Forced To Help Finance Azerbaijan’s Post-War Recovery

It may rank as the wealthiest country in the South Caucasus, but employers in energy-rich Azerbaijan, faced with an economic slump from the COVID-19 pandemic, are reportedly docking salaries or ordering employee contributions to a state fund that assists wounded military personnel and the families of soldiers slain during Azerbaijan’s 2020 war with Armenia and ethnic Armenian separatist forces.

Amidst longstanding concerns about government corruption, some Azerbaijanis question if their donations, whether compulsory or voluntary, will be used as intended.

Three government funds, all created after the November 2020 ceasefire that ended the conflict over the breakaway Nagorno-Karabakh region and seven adjoining territories, are the beneficiaries of these donations.

The YASHAT (Support for the Wounded and Families of Martyrs) Fund, created on December 8, 2020 by President Ilham Aliyev, helps finance care for Azerbaijan’s estimated 1,245 wounded military personnel and for the families of the approximately 2,783 soldiers who died during the September 27-November 9, 2020 conflict.

Two other funds collect donations for the armed forces (the Azerbaijani Army Assistance Fund) and for restorations and reconstructions throughout those parts of Nagorno Karabakh that Azerbaijan regained during the 2020 war.

All three of these funds were created with the understanding that strictly voluntary donations would provide their resources.

But since the beginning of 2021, government employees have complained frequently on social media that the “voluntary” contributions to YASHAT are, in fact, compulsory.

In their words, their employers either simply deduct part of their monthly salaries for the donations, or order them to make donations from their salaries.

'Whoever Doesn’t Want To Pay Is Not An Azerbaijani'

In Azerbaijan’s powerful energy sector, the government-backed Union of Oil and Gas Industry Workers has no objections to such a situation. The union, which claims a membership of 88,667, agreed that Azerkhimia, the State Oil Company of the Azerbaijani Republic’s petrochemical unit, should dock 10 percent of workers’ salaries to transfer to the YASHAT fund.

“We can’t ask each worker how much he can donate,” Union Chairman Jakhangir Aliyev commented to the news site Mikroskop on January 12.

“Whoever’s against it, let him say that he’s not an Azerbaijani and, therefore, does not want to pay,” Aliyev concluded.

This last remark immediately spread across social networks, enraging Azerbaijani commentators against government ministers, officials, parliamentary deputies, and Jakhangir Aliyev alike.

YASHAT managers have not yet responded to this criticism, but one member of YASHAT’s board of trustees stressed that the donations should be exclusively voluntary.

“If employers compel employees to transfer money to the fund against their will, then this is illegal,” Rena Safaraliyeva, head of the anticorruption watchdog Transparency International Azerbaijan, commented a week before Aliyev’s remarks.

Among those who have had to take a 10-percent salary deduction for YASHAT could be family members of those killed during the war and of veterans, Safaraliyeva stressed.

“Our fund doesn’t need employers to be arbitrary and, in the long term, this can lead to a reduction in voluntary donations,” Safaraliyeva warned.

She advised employees whose salaries had been charged for fund donations to sue their employers. No such lawsuits are known to have been filed yet.

‘They said ‘Give As Much As You Can’ ‘

Azerbaijani employers appear to define “voluntary donations” variously.

Talekh Alimardanov works in a firm that is half-owned by the government. In January, its director claimed that he had been ordered “from up above” – a reference to the government – to collect 50 manats (around $30) from each employee and transfer the money to the YASHAT fund.

Fifty manats are more than double the cost of a month of daily use of Baku’s public transportation system.

“The boss said that he himself can deposit the money for those who don’t want to pay,” said Alimardanov, who requested that his real name not be used. “But almost all our guys are still in euphoria over the victory” and did not object to the donations, he added.

Among company staff, Alimardanov believes that he alone opposed the hostilities with Armenia and ethnic Armenian separatists over Nagorno Karabakh and seven adjoining occupied territories. Now, he does not want to donate anything to a fund created by the state.

“If you need to help some veteran directly, I’m totally for that. But not this way,” he said.

Compared with some payouts, however, 50 manats is minimal.

One government employee in Baku told Current Time that she had to contribute around 20 percent of her monthly salary in December 2020 to a 500,000-manat ($294,000) contribution from city employees to the YASHAT fund.

“When I received my December salary, they requested me to give 300 manats ($176) to the YASHAT fund,” the woman recounted. Three hundred manats is just over Azerbaijan’s official minimal monthly salary of 269 manats ($158.33).

“Meanwhile, they told me that this is for six months. So, that means that in half a year, they’ll deduct another 300 manats?”

“But, on the other hand, giving up money to help people is not offensive,” she added.

At least one other public employer, the water department for the Gazakh, Tovuz, Aghstafa, Gadabay and Shamkir regions, will deduct 1 percent (about 6 manats or $3.53) from its employees’ monthly salaries for a year to contribute to the fund, the Azadliq (Freedom) newspaper reported.

Some public employers allow a degree of flexibility. Ilhar Huseynov, a government-employed engineer who also requested a pseudonym, said that his managers urged employees to “chip in” to a fund, but left the amount up to them.

“I don’t even remember for which fund exactly,” Huseynov recounted. “They said, ‘Give as much as you can.’” I gave 10 manats (roughly $6).”

The Azerbaijani government’s ongoing troubles with corruption impacted Huseynov’s decision. Transparency International’s 2020 Corruption Perceptions Index ranked the country the most corrupt in the South Caucasus.

“If I had known for sure that the money will go to its destination, I would have given more,” Huseynov explained. “But the thing is, I’m not sure that the donations aren’t going straight into someone’s pocket.”

Some private companies, though, do not look to employees to help top up their donations to any of the funds.

The owners of several private companies for which accountant Svetlana Isayeva works voluntarily allocated money to the Army Assistance Fund, but not, she claimed, out of the payroll.

“One of the companies paid 10,000 manats (about $6,000) into the fund. Two others, 5,000 ($3,000) each. But all of this is from pure profit; not at the workers’ expense,” said Isayeva, who also requested a name change to protect against recriminations.

Without any financial benefits to gain from the donation, the companies likely just wanted to display their patriotism and, perhaps, earn some publicity at the same time, she added.

Fund Finance

Government-run fundraising drives for state projects are not a fresh phenomenon for Azerbaijan or for other former Soviet republics, such as Russia and Uzbekistan.

In March 2020, President Aliyev also set up a fund to support the country’s campaign against the COVID-19 pandemic. To date, it has around 114 million manats ($67 million) in deposits. The Azerbaijani leader reportedly donated his entire annual salary of 126,900 manats ($74,692) to it.

But for a country whose energy revenues have enabled it to launch a satellite into space, host a mini-Olympics, and spend billions on defense, the rationale for these latest funds’ existence might not seem plain.

For economist Valiyev, a critic of the funds, the government is simply attempting “to monopolize charity.” The government has an extensive presence in the domestic economy, particularly in the energy, telecommunications, and banking sectors.

“It’s normal when private funds are created, and the state can deposit its bit in there. But the state shouldn’t be directly involved” in running the funds, he objected. “If only because it is already obliged to help veterans and the families of those who died by allotting budgetary resources for this.”

Azerbaijan’s 23.83-billion-manat (roughly $14 billion) 2021 state budget already includes 11.1 billion manats ($6.54 billion) for “socially oriented” programs; 4.85 billion manats ($2.7 billion) for defense and national security; and 2.2 billion manats ($1.3 billion) for reconstruction work in Nagorno Karabakh, including the restoration of public utilities, cultural sites, and historical monuments.

The government has not yet revealed how money from its post-war charity funds could affect or complement these expenditures from the state budget.

For a pandemic-slammed economy, though, the extra-budgetary funds might come in handy. The Caspian Sea country stands to lose 5 percent of its energy-driven 2020 Gross Domestic Product from the loss of energy sales and shutdown of businesses, the European Bank for Reconstruction and Development projects.

To date, nearly two months after its creation, the YASHAT Fund has received donations totaling 27 million manats (around $16 million); 16 million manats (about $9.42 million) from individuals and 11 million manats (over $6.74 million) from registered entities.

According to the fund, it has spent just over 1.2 million manats ($706,000) during this period – mostly on “the improvement of living conditions” for victims of shelling (38.23 percent) and on medical treatment for the wounded (36.92 percent).

As of early January 2021, the Army Assistance Fund reported total donations of around 212 million manats, or about $11.2 million.

The total donations to the fund for Karabakh’s renaissance, set up on January 4, 2021, are not yet known. By law, it does not yet have to make financial reports publicly available.

Whether or not President Aliyev donated to any of the post-war funds is unknown.

Economist Togrul Valiyev believes that, out of the three funds, YASHAT, which alone has its own website, appears the most transparent, though he advised that its reports should include a complete list of donors.

By contrast, the Army Assistance Fund only reports its total donations; not what the money is spent on.

No public accountability mechanism appears to exist for doublechecking the funds’ accounting or for comparing their donations with expenditures.

Attorney Alesker Mammadli, a political analyst, fears that bureaucrats and company heads “will compete” over who will transfer more money into President Aliyev’s three funds, Kavkazky Uzel reported.

As yet, neither the government, nor the funds’ managers have responded to such criticism.

‘The State Forces Citizens To Do Charity Work’

Azerbaijanis who object to the compulsory donations emphasize that they are not against charity.

During the 44-day war with Armenia and ethnic Armenian separatists, social media users took the initiative to collect not only money to help soldiers and homeless civilians whose residences in the cities of Ganja and Barda had been shelled, but also sent care packages with cigarettes, warm socks, and blankets.

Still, after nearly 20 years of corruption scandals under the current government, many remain concerned that the money will not reach the beneficiaries, but will be plundered or appropriated by officials.

“I requested help for one veteran from the provinces. You requested his phone number, and I gave it,” wrote one visitor to YASHAT’s Facebook page. “But already 17 days have gone by, and, so far, there’s been no assistance. Have a conscience!”

​Another user, also reporting no follow-through on an assistance request, exclaimed: “Do you need me to die so that you take action?!”

YASHAT’s Facebook administrator tends to respond relatively promptly and in detail to explain the status of these cases.

But straitened financial resources from jobs or business lost during the COVID-19 pandemic also add to commentators’ unease.

“It’s absolutely unacceptable that, with such miserly salaries that most publicly funded organizations/offices, etc. have, they also have to chip into the funds,” commented Leyla Ibrahimova, the owner of a small confectionery business that does not take compulsory donations. “And, meanwhile, refugees and families of the wounded, as before, are requesting help on social media,” she said.

Yet junior high school teacher Maksud Mamedov, who has not faced compulsory donations, sees benefits if the funds’ money actually goes to those who suffered from the war or to the army. But he still considers the charities to be “medieval measures.”

And not because of government corruption, which he considers unlikely and risky in these cases.

Rather, it all comes down to the government obligation to provide for its citizens’ social welfare.

With the three funds, Mamedov objected, “The state actually shifts its own financial responsibility onto the shoulders of ordinary people.”