AZERBAIJAN FINALLY UNFREEZES SOVIET SAVINGS
By Shahla Sultanova

Institute for War & Peace Reporting
CAUCASUS REPORTING SERVICE, No. 367
April 23, 2012
UK

Recipients unhappy that payouts will fall far short of what they
put in.

When Javanshir Aghamaliyev was a boy in Soviet Azerbaijan in 1986,
his parents established a trust fund for when he turned 18.

By early 1992, his account in the state-owned Sberbank, which had
branches across the Soviet Union, had 8,000 roubles in it. But by
then, the Soviet state had collapsed and Azerbaijan was a separate
country. Hyperinflation slashed the value of the rouble and the
authorities froze bank accounts like Aghamaliyev's.

Two decades on, Aghamaliyev is about to be get access to some of the
cash at last, but he is far from happy with what he will actually
receive. Like many who entrusted money to Sberbank, he says the payout
on offer represents only a fraction of his savings. He expects to
receive 832 Azerbaijani manats, equivalent to 1,060 US dollars.

In the Soviet planned economy, the rouble exchange rate was officially
set at one to one with the US dollar. Many account-holders believe the
Azerbaijani government should have honoured this nominal exchange rate
despite currency devaluations and the switch from roubles to manats.

"Eight thousand roubles was enough to buy the most expensive car at
that time," Aghamaliyev said. "Now I can't even buy the cheapest one."

Soviet citizens were encouraged to open accounts in Sberbank, and
since there was little to buy in the shops, many did so in order to
save up for big purchases or holidays.

When the Soviet system broke up, Azerbaijan's Capital Bank inherited
Sberbank's network in the republic, and the new government became
responsible for clearing debts and dealing with the funds in personal
savings accounts. The freeze on bank accounts was supposed to be a
temporary measure to give the banks of the newly independent states
time to disentangle themselves from the old financial system and
introduce their own national currencies.

But in Azerbaijan, the money remained in limbo, despite government
promises to release the funds over the years.

On March 14, 2012, President Ilham Aliyev finally signed a decree
ordering payments to reimburse creditors. The process will start in
June this year and end in late 2013, with payments being made through
Capital Bank.

The government envisages that the payouts will total one billion
manats, or 1.27 billion dollars. The finance ministry says that from
a figure of two million people with Sberbank savings as of January 1,
the number of eligible claimants has grown to 2.4 million.

Some question this calculation, and predict that payments will go to
a far smaller number because of a proviso that only people currently
registered as resident in Azerbaijan will be able to claim funds.

The Nagorny Karabakh war displaced hundreds of thousands of
Azerbaijanis and Armenians, and since then large numbers of Azerbaijani
nationals have gone abroad to Russia and other countries in search
of work. Ethnic Azerbaijanis who arrived as refugees from Armenia
have their Soviet-era savings in that country, and cannot claim it
from Capital Bank, even though it is the local successor to the same
Sberbank where they once deposited money. (See Karabakh War Refugees
Denied Soviet-Era Funds.)

Gadir Ibrahimli, a financial journalist with the Azadliq newspaper,
estimates that the Azerbaijani state will end up paying less than
half the one-billion-manat figure cited by the finance ministry.

Ali Alirzayev, a member of the ruling Yeni Azerbaijan Party and
former deputy chairman of parliament's economic affairs committee,
welcomed the decision to return the money but expressed reservations
about the amounts on offer.

He said that together with fellow-parliamentarian Settar Seferov, he
devised a plan ten years ago that would have seen far higher payouts,
especially for the smaller savers who account for over two-thirds
of depositors and had less than 2,000 roubles in their accounts. His
plan envisaged paying them back at a rate of one dollar to one rouble.

"Those who saved... up to 2,000 roubles were working-class people. They
wanted to help their children out with those hard-earned savings," he
said. "The government should at least have paid that money out fairly.

We are a wealthy country."

Gular Ahmadova, a member of parliament who sits on Yeni Azerbaijan's
policy council, said creditors needed to realise that the government
was doing all it could.

"Of course I would like people to get a higher percentage of their
savings back," she said. "However, if this is what the president has
decided, it means there are strong reasons for it."

Zahid Oruj, also a member of parliament, agreed that the restrictions
were intended to limit the economic impact of a large injection of
cash into the monetary system, and said the purpose of the payouts
was to boost public confidence in the banking sector, which had been
low ever since Sberbank collapsed.

"This presidential decree will make the banks function better,"
he said.

With no prospect of an improved offer, Sberbank savers have little
option but to lower their expectations.

Nigar Aliyeva, a pensioner in the western city of Ganja, said that
as of 1992, her mother had saved 19,000 roubles which she was hoping
to use to buy a house.

She says her mother, now 90, can expect to receive 1,450 manat, less
than 1,900 dollars, which will just about cover her funeral expenses.

Shahla Sultanova is a freelance journalist in Azerbaijan.



From: Emil Lazarian | Ararat NewsPress