The cost of Azerbaijan’s leaving the Extractive Industries Transparency Initiative (EITI): Analysis of the impact on the economy and civil society

As a founding member of EITI, Azerbaijan has enjoyed the benefits of its membership in the organisation. However, the changes to NGO legislature in Azerbaijan have strained the relations between the parties, and in order to have a fully functional local NGO community, the EITI has demanded the reversal of changes to the NGO legislation in the country. Due to the lack of adequate developments in this field, according to EITI standards, the EITI Board suspended the membership of Azerbaijan. Following the decision, Azerbaijan announced its intention to leave the Initiative.

Azerbaijan’s revoking EITI membership is expected to have a negative effect on the economy of Azerbaijan. It will make the economy of the country less attractive for foreign investment, which is vital for economic reforms in Azerbaijan, and it will limit the government’s options for advancing its ambitious infrastructure plans, such as those regarding the Southern Gas Corridor Project (TAP&TANAP). Exiting the EITI may also have negative effects on the environment of civil society in Azerbaijan. Additionally, the current positive situation in EU-Azerbaijani relations raises hopes for the avoidance of any negative effects on civil society in Azerbaijan, despite leaving the EITI.

Nevertheless, considering the importance of the Southern Gas Corridor Project (TAP&TANAP) for the European gas market, the government of Azerbaijan may expect that European and international investments in this project will remain actual.