Azerbaijan - Context and Land Governance

^{Village of Laza, Caucasus Mountains, photo by Adam Jones, Creative Commons Attribution-Share Alike 2.0 Generic license.}

In the early 19th century, Transcaucasia, an area including modern-day Georgia, Azerbaijan, and Armenia, was incorporated into the Russian empire² . Following the fall of the empire, in 1918 the Azerbaijani Democratic Republic was established, only to be brought under Soviet rule in 1920. As part of the Soviet Union all land and means of production were kept under state ownership, with productive land divided into state-owned farms (sovkhoz), collective farms (kolkhoz) and auxiliary plots for household production³ .In October 1991, Azerbaijan declared independence amidst the breakdown of the Soviet Union. Around this time, territorial conflict with Armenia over the Nagorno-Karabakh region escalated into all-out war (see land conflicts section). Although a ceasefire was agreed in 1994, conflict continues between the two countries, a further war breaking out in 2020. Since 1993, the New Azerbaijan Party has been the ruling political party, initially under leadership of Heydar Aliyev and later through his son Ilham Aliyev.

The Azerbaijan economy has benefitted considerably from reserves of oil and gas. Oil regularly provided more than 30% of GDP through 2000s. The revenue has contributed to a steep overall drop in poverty rates through the country, despite the industry having a low employment rate of under 10% of the population⁴.In 2014, the economy took a downturn due to falling oil prices. This has been compounded by recent challenges of the outbreak of the COVID-19 pandemic, the escalation of conflict with Armenia in 2020, and then the Russian invasion of the Ukraine in 2022. To avoid an economic dependence on oil, heightened by depleting resources and market volatility, the country is looking to diversify its economy and has looked to agriculture as a source of exports, domestic employment, and food security. The country is also developing infrastructure to emphasise its economic potential as a land-bridge between Europe and Asia, operating as a regional logistics hub⁵.

Land legislation and regulations

In 1995, Azerbaijan adopted a new constitution by national referendum.⁶ Article 13 sets out three forms of property (state, municipal, private). Article 29 allows for citizens to own, use and dispose of private property, including land.

After independence over 52 decrees were issued up to 2003, guiding land reform. However, only a few first initiatives were taken to start the process of land privatisation, including:

•  Establishment of the State Geodesy and Cartography Committee in 1991 and State Land Committee in 1992. In 2001, the committees merged to become the State Land and Cartography Committee (see land tenure classifications section for more details). 
• 1993 Law on Privatization of State Property which set out the general principles and procedures to privatise land.

It was only later that the mechanics of reform were set in motion, later than neighbouring Transcaucasian countries of Armenia and Georgia⁷.This was instigated through the Presidential decree of March 2, 1995, No. 155-IQ establishing a State Agrarian Reform Commission (SARC). The 1996 Law on Land Reform then set up responsibilities and procedures for the process of dissolving state and collective farms and auxiliary plots. The State Land Committee divided land into parcels, with citizens initially issued with unspecified land shares. The remaining land was divided into state and municipal land.

After a slow start, the process accelerated in 1998⁸ .This period was instigated by the Presidential Decree of January 10, 1997, No. 534 “On confirmation of some legal acts providing implementation of agrarian reform”. Laws to support the implementation of reform included:

•  The Law on State Land Cadastre, Land Monitoring and Land Use Organization (1998) supports the conversion of land shares into titles for designated parcels.
• The Law on Land Lease (1998) regulates on the conditions of leaseholds, which could involve state, municipal, and private land. Foreigners, like citizens and legal entities, can lease land.
•  The Law on Land Markets (1999) sets up rules and regulations on land markets, stating that both legal entities and Azerbaijan citizens can act as owners, users, mortgage lenders and borrowers, participating in several types of land transaction.

The 1999 Land Code is now the guiding overall legal framework for principles on land ownership, use and lease, transfer and compensation⁹.It provides details on land registration, valuation and taxation, and prohibits foreigners from buying land. The Land Code further allows privatisation of arable land and meadows, but places pastures under state control¹⁰.

From 2000 onwards, further reform involved continued privatisation of agricultural plots as well as state manufacturing units. There was an overhaul of the land administration systems to cope with all the changes of the previous decade. Regulation from 2009 states that state and municipal land can only be privatized through open auction, with the aim to create a more transparent process.

Land tenure classifications

Following the independence of Azerbaijan, the three forms of land ownership, as stated in the constitution, were:

• State land: State owned agricultural land is mostly pastures, with any arable land in state ownership leased to corporate farms¹¹.
•  Municipal land: Municipalities are self-governing institutions representing civil society rather than being part of the overall public administration. Yet there are concerns that they lack the necessary capacities to manage and maintain their lands¹² .
• Private land: Private landowners have right to use, lease or own their land, with an obligation to pay annual land taxes. In agriculture this has resulted in the prevalence of small farms and households, where 88% of farms operate on less than 5 hectares of land¹³ .

A 2018 report by the Asian Development Bank reports that 57% of land is state-owned, 24% municipal and 20% private¹⁴ .Leaseholds are possible on all types. The 1999 Land Code further subdivides land into the following categories:

• Land of agricultural purpose
• Land of residential settlements (cities, settlements and rural residential settlements)
• Land of industry, defence, transport, communication, and other purposes
• Land of specially protected territories
•  Land of the forest fund
•  Land of the water fund
•  Land of the reserve fund

Reform involving the privatisation of land was completed in 2004, a process perceived by several commentators as taking place equitably. In agriculture, this involved the privatisation of 76% of total arable land and 70% of total meadowland, with pastures remaining in state ownership¹⁵. Land distribution included parcels for cultivation and backyard plots for personal consumption¹⁶. Initially, rural households received only paper certificates with a right to shares in as yet unspecified land. 1997 to 1998 saw the distribution of physical parcels. Parcels of equal size (accounting for location and soil quality) were distributed via lottery at village level. Overall, the process established some 870,000 family farms with an average of 1.6 hectares of agricultural land¹⁷. The sector comprises small and medium-sized farms, mostly cultivated by household landowners themselves, with a few larger corporate farms. Since 2016, Azerbaijan has been working on a National Consolidation Strategy, with fears that the increasing fragmentation of family farms is negatively impacting upon agricultural productivity.

^{Tea plantation in Lankaran district, photo by Presidential Press and Information Office, Creative Commons Attribution 4.0 International license.}

The State Land Committee (established in 1992) took the chief administrative role leading land reform between 1995 and 2000. It 2001, it merged with the State Geodesy and Cartography Committee (which had been formed in 1991) to become the State Land and Cartography Committee (SLCC). Further support for the privatisation and management of state lands was provided through the establishment in 2005 of the State Committee for Management of State Property. In 2009, it changed to the State Committee on Property Issues (SCPI), and further to the State Service for Property Issues under the Ministry of Economy of the Republic of Azerbaijan in 2019.

Also in 2005, the State Registry Service of Real Estate was formed, followed by the State Real Estate Registration Project running from 2007 to 2013 (see land governance innovations section). The Rayon Executive Powers are responsible for the local management of state lands within Rayons or districts, and for municipal land management. However, there is a lack of cheap and affordable housing, while existing apartment blocks are deteriorating since privatisation failed to account for management and maintenance needs¹⁸.

Land use trends

According to FAOSTAT, in 2020 croplands comprised 27.2% of national land. This represents a slight rise from 23.2% of all land in 1992¹⁹ . Although the agricultural sector has a decreased contribution to GDP (5.9% in 2021), it retains a high level of national employment (36% in 2019)²⁰ . The most important crops include wheat, maize, cotton, potatoes, melons, sugar beet, sunflower, and tobacco.

Livestock is the most important agricultural activity, with 27.9% of national land as permanent pastures²¹. Periods under tsarist and then Soviet rule saw attempts to suppress nomadic activities, particularly during campaigns for collectivisation²² . Between 1991 and 1999, the livestock sector diminished as animals were eaten or sold to cater to immediate needs in post-Soviet Azerbaijan, while the initial privatisation of land did little to support nomadic activities. The 1999 Land Code placed all pastures under state control, land which could then be leased to pastoral farms commonly under a contract for up to 15 years. As the economy improved, prices for meat increased and pastoralism became more attractive, with new entrepreneurs entering the sector and with land lease prices growing accordingly. There was a rise in competition as a result.

Forests take up 13.1% of national land (2020 figure from FAOSTAT), a rise from 11% in 1992 that is attributable to natural regeneration rather than newly planted areas. There is an uneven distribution of forests through the country, although 85% of cover is found in mountainous regions²³ . Forests are state owned and managed by the Department of Forest Development of the Ministry for Ecology and Natural Resources. Governance is informed by the 1997 Forest Code and the 1999 Law on Environmental Protection.

Azerbaijan represents a high-risk site for the impacts of climate change, and is in particular prone to flooding, resulting in landslides and mudslides through its mountainous terrain²⁴. Land degradation is further attributable to overexploitation of land (including overgrazing), deforestation, and poor irrigation methods²⁵ .

A majority of people live in urban areas of Azerbaijan, which in 2020 comprised 56.4% of the national population²⁶ . By far the largest conglomeration is found in the capital city of Baku, with 2.4 million people in 2022. The city was built upon the discovery and proceeds of oil in the area. Following independence, Baku underwent extensive restructuring as Soviet buildings were torn down, becoming a centre for commerce, tourism and culture. Policy and regulation on urban land use planning is guided by the State Committee for Town Planning and Architecture (SCUPA), which was established in 2006, using the 2012 Town Planning and Construction Code²⁷ .

^{Baku, the capital of Azerbaijan, at night, photo by Presidential Press and Information Office, Creative Commons Attribution 4.0 International license.}

Land investments and acquisitions

Although it is one of the world’s oldest oil-producing nations, Azerbaijan only became a significant oil-based economy upon completion of the Baku–Tbilisi–Ceyhan pipeline in 2005. Foreign investment expanded considerably from this point, contributing to the country reaching upper-middle-income status in 2009²⁸ . The oil and gas sector attracts over half of all foreign investment coming into the country, providing 90% of exports²⁹ . At the end of 2020, commercial gas for the first time passed from Azerbaijan through the Trans-Adriatic Gas Pipeline to the European market³⁰ . Further large-scale infrastructure programmes focussing on connectivity include the Baku-Tbilisi-Kars railway, the New Baku International Sea Trade Port, and the construction of a railway into Iran.

^{Oil freight train, Baku 1875-1900, source: Romanov empire, no known copyright restrictions}.

To diversify the economy, the government of Azerbaijan has long been trying to stimulate the agricultural sector. In 1999, a presidential decree granted agricultural producers a five-year land tax exemption, with a law two years later giving further incentives to both firms and individual producers³¹.

Foreign individuals and companies cannot buy but can lease land in Azerbaijan. They can buy dwellings, although the land beneath must be rented³². On land acquisition, the constitution guarantees that no-one will lose their land without their consent or through a decision by a court of law, in both cases warranting the payment of fair compensation. This is confirmed in the Land Code, the Civil Code, and the Land Acquisition Law. The latter specifies on involuntary resettlement, an acquisition process, compensation and valuation, and grievance mechanisms³³. A key related institution is the Land Acquisition Inspectorate, established in 2011 for reporting on, supervising and monitoring acquisitions. However, much reporting, including that from Bertelsmann Stiftung with its Transformation Index, question the actual security of private property, with poor enforcement of laws, and state needs for expropriation given a broad interpretation to acquire land³⁴.

Territorial conflicts

Post-Soviet history in Azerbaijan has been shrouded in an ongoing territorial conflict with Armenia³⁵ . At the formation of the Soviet Union, the region of Nagorno–Karabakh, with a majority Armenian population, was placed as an autonomous region within the Azerbaijan Soviet Socialist Republic. During glasnost (the Soviet policy of openness and transparency), Armenians explored the possibility of incorporating Nagorno–Karabakh into their republic, a move perceived by Azerbaijanis as representing a plan to take the land by force. In 1991, Nagorno–Karabakh declared itself an independent republic without the consent and participation of Azerbaijani Nagorno-Karabakh residents, leading to the First Karabakh War (1992-1994). When a ceasefire to this war was agreed in 1994, Armenia claimed most of Nagorno–Karabakh and surrounding districts, which comprised around 20% territory of pre-1991 Azerbaijan.

From 27th September to 10th November 2020, a second war resulted in much territory taken by Armenia during the First Karabakh War being recaptured by Azerbaijan³⁶ . Despite a subsequent ceasefire, a lasting peace agreement is yet to be signed, and the conflict continues to play out in various media beyond the battlefield.

Women’s land rights

There is a strong legal base for gender equality in Azerbaijan, but a lack of gender mainstreaming across state policy to achieve it. The Constitution asserts equal rights and freedoms for all citizens, regardless of gender (article 25), and equal rights of ownership (article 29)³⁷ . The Marriage and Family Codes asserts equal rights on property acquired in marriage, and violations are punishable under the Criminal Code. The State Committee for Family, Women and Children’s Affairs of the Republic of Azerbaijan was established in 2009, with a mandate to coordinate across government agencies and programmes³⁸ . However, the committee has a lack of embeddedness throughout government.

Social structures remain dominated by men in Azerbaijan. Even with the same legal rights as men, there is a gender pay gap discriminating against women³⁹ . There is relative parity for gender participation in general education up to higher level, but little participation of women in vocation training. Employment is also stratified around certain professions, such as high government positions being held by men. At present there is only one woman taking up a cabinet position, namely Bahar Muradova, the head of the State Committee for Family, Women and Children’s Affairs. However, the speaker of the recently elected parliament is female, and there are 21 women out of 121 members in the National Assembly. A Gender Inequality index score from 2019 places Azerbaijan behind East European countries, Turkey, Georgia and Russia.

Land ownership in the formal cadastre is not aggregated by gender. According to most recent state household budget survey, men who head a household are more likely to own land than a woman who is head of a household⁴⁰ . Households under women also tend to have smaller plots. This means that women generally have less access to agricultural services, finance and resources. This is despite a trend that men migrate to urban areas, leaving women to tend to rural abodes. It is generally accepted that men inherit and manage land, even if there are no legal impediments to women doing so.

Land governance innovations

There are several large-scale projects that have contributed to land ownership and administration, linking to land reform, particularly the privatisation of state land. Some key projects are given below:

•  The State Real Estate Registration Project took place from 2007 to 2013 and was financed by the World Bank. The objective of the project was to develop a unified, reliable, transparent and efficient real estate registration system with which to register property rights involving both rural and urban lands. The system has national coverage and uses digital technologies with decentralised ‘one-stop’ shops. The aim is to benefit land markets, while supporting the management of state-owned property⁴¹ .
•  The European Community and the Swedish Mapping Cadastral and Land Registration Authority have provided support to the State Committee for Land and Cartography. The aim of this initiative was to develop a modern system of land registration. The improvement of cadastre databases followed land evaluation and economic assessment rules fitting EU evaluation standards⁴².
• From 2016 to 2019, the UN Food and Agriculture Organisation supported a project to address land fragmentation following privatisation in the late 1990s, with an aim to improve agricultural productivity as the economy moves away from a dependency on oil production. The project involved formulating a draft National Land Consolidation Strategy, implementing a land consolidation pilot project, and training and capacity building⁴³ .

Where to go next?

The author’s suggestion for further reading includes two reports by the Asia Development Bank. Firstly, there is the 2014 Country Assessment on Land Acquisition and Resettlement Azerbaijan, which gives a good overview of reform and land privatisation, then linking it to acquisition processes⁴⁴. Secondly, for an analysis of urban land and development issues, please consult the 2017 report Strengthening Functional Urban Regions in Azerbaijan⁴⁵. In 2022, the UN Food and Agriculture Organisation published a National Gender Profile of Agriculture and Rural Livelihoods, which carries useful information on both agricultural land holdings and how gender roles influence rural livelihoods and food security⁴⁶ .The 2015 paper Implementation of pasture leasing rights for mobile pastoralists – a case study on institutional change during post-socialist reforms in Azerbaijan by Regina Neudert, Michael Ruehs and Volker Beckmann offers an important view of the challenges pastoralists have faced, both during the Soviet era and then under land reform in an independent Azerbaijan⁴⁷.

Timeline - milestones in land governance

1920 – Azerbaijani Democratic Republic incorporated into the Soviet Union

This follows the establishment of the Republic two years earlier after the fall of the Russian empire.

1991 – Azerbaijan declares independence

This is amidst the breakdown of the Soviet Union.

1920 – Azerbaijani Democratic Republic incorporated into the Soviet Union

This follows the establishment of the Republic two years earlier after the fall of the Russian empire.

1991 – Azerbaijan declares independence

This is amidst the breakdown of the Soviet Union.

1992-94 – First Karabakh War

Territorial conflict between Azerbaijan and Armenia that continues to the present day.

1995 – A new constitution is adopted by national referendum

Article 13 sets out three forms of property (state, municipal, private).

1996-2004 – Land redistribution and privatisation

The process established some 870,000 family farms with an average of 1.6 hectares of agricultural land.

1999 – Enactment of the Land Code

This operates as a key legal framework for principles on land ownership, use and lease, transfer and compensation.

2005 – Completion of the Baku–Tbilisi–Ceyhan oil pipeline

This facilitates increases in national wealth as an oil-based economy.

2020 - Second Karabakh War

Azerbaijan recaptures occupied territories.

2022 – The capital city of Baku has 2.4 million inhabitants

As a primate city, Baku holds nearly one quarter of the national population.

1992-94 – First Karabakh War

Territorial conflict between Azerbaijan and Armenia that continues to the present day.

1995 – A new constitution is adopted by national referendum

Article 13 sets out three forms of property (state, municipal, private).

1996-2004 – Land redistribution and privatisation

The process established some 870,000 family farms with an average of 1.6 hectares of agricultural land.

1999 – Enactment of the Land Code

This operates as a key legal framework for principles on land ownership, use and lease, transfer and compensation.

2005 – Completion of the Baku–Tbilisi–Ceyhan oil pipeline

This facilitates increases in national wealth as an oil-based economy.

2020 - Second Karabakh War

Azerbaijan recaptures occupied territories.

2022 – The capital city of Baku has 2.4 million inhabitants

As a primate city, Baku holds nearly one quarter of the national population.