Azerbaijan Grapples with Trade Centre Fires and Economic Shifts Amidst Geopolitical Tensions

BAKU, Azerbaijan – A major fire at the 'Sədərək' Trade Centre on 24 August 2025, which saw a rented warehouse containing synthetic materials engulfed in flames, has once again brought to the fore the persistent issues of safety and insurance in Azerbaijan's large commercial hubs. The fire, which started in the morning, was fully extinguished by the afternoon of 25 August after firefighters battled challenging conditions, including strong winds.

The Ministry of Emergency Situations (FHN) confirmed that a criminal case has been initiated by its Operational-Investigative Department under the relevant article of the Criminal Code, and an investigation is underway. The incident led to 12 individuals seeking emergency medical assistance due to smoke poisoning, as reported by the Association for the Management of Medical Territorial Units (TƏBİB). Taleh Babayev, Deputy Head of the FHN State Fire Protection Service, highlighted the complexity of extinguishing the fire due to the synthetic storage zone, but confirmed that the spread to a larger area, including a nearby petrol station and other warehouses, was prevented.

A Recurring Problem: Fires and Uninsured Businesses

The 'Sədərək' Trade Centre has been the site of numerous fires in recent years, with the latest prior incident occurring on 30 July of the current year, though that one was less severe. More extensive fires, such as one in 2020 which covered 600-700 square metres, have also been reported. Similar incidents have affected other large trade centres like 'Binə', as well as facilities in Sumgayıt and Sabirabad.

A significant concern highlighted by the media and affected entrepreneurs is the lack of compensation for damages. Businesses often remain uninsured despite paying rent and other fees to trade centre managements. Fires are frequently attributed to carelessness and a failure to adhere to safety measures.

Mandatory property insurance, introduced in 2020, requires all physical and legal entities to insure their buildings, with coverage amounts varying by location (e.g., 25,000 manats for Baku). While this mandatory insurance covers fire risks, its enforcement is weak, particularly for businesses and large trade centres. Economic expert Xalid Kərimli noted that the low mandatory coverage limits of 15-25 thousand manats are inadequate for large trade centres, rendering the insurance largely formal rather than a real compensation mechanism.

Furthermore, the voluntary property insurance market for fire and other risks remains underdeveloped. Insurers are often reluctant to cover businesses due to high risks stemming from non-compliance with safety regulations in areas like material storage, warehouse organisation, and electrical wiring. Kərimli explained that insurance is for probable risks, and high-risk situations lead to high premiums, which entrepreneurs find unaffordable. He also pointed to a lack of trust in the insurance market among entrepreneurs, citing past experiences of unfair treatment during claims. Insuring goods is also challenging as they are constantly in flux, increasing risks and making it an undesirable option for insurance companies and an expensive one for businesses.

Broader National Developments

Beyond the immediate crisis of trade centre fires, Azerbaijan has seen a mix of other significant developments:

Social Assistance and Demographics

The number of families receiving targeted social assistance has increased in the past year, reaching 80,300 families by 1 July 2025, comprising 353,300 members. However, the average monthly amount per person has decreased from 109.6 manats in 2024 to 100.37 manats in 2025.

Azerbaijan is experiencing a rapid decline in birth rates, with 45,616 births recorded in the first half of 2025, a 6.3 percent decrease compared to the same period last year. The birth rate per 1,000 population dropped from 9.6 to 9.0. This continues a decade-long trend of a 60 percent reduction in births since 2014. Despite this, the total population saw a slight increase of 0.2 percent to 10,241,722 by 1 July 2025. The prevalence of male births (53.3%) is attributed to selective abortions. Independent economists suggest social factors and inflation eroding wage increases also contribute, noting the abolition of child benefits in 2006.

Economic Trends

Despite increased subsidies for agricultural producers (over 2.2 billion manats between 2020-2024), decreases in crop production and productivity have been observed. There are allegations of "paper-based" farming and misuse of subsidies.

Car imports surged by 23.9 percent in the first seven months of 2025, while domestic car production fell by 12.7 percent, with 232 fewer passenger cars produced compared to the previous year. Experts argue that local car production is largely assembly, with most parts imported, and that high customs duties for imports, ostensibly to protect the domestic market, actually contribute to this dynamic.

The average export price of Azerbaijani oil decreased to 73.8 US dollars per barrel in the first half of 2025, down from over 77 dollars in the first quarter. Independent economists warn that continued drops could lead to state budget problems, as oil and gas constitute 90 percent of Azerbaijan's exports.

Political and Geopolitical Developments

Concerns have been raised by Gulmira Aslanova, wife of imprisoned journalist Polad Aslanov, that her husband's medical examination results are being deliberately delayed, despite an ultrasound in July suggesting a liver problem. Aslanov, serving a 13-year sentence for treason which he denies, claims his arrest is related to his journalistic activities.

Public activist Ahmad Mammadli and Hacı Vəliyev, former head of the "Young Veterans" Public Union, remain in pre-trial detention on charges they reject, claiming political motivation related to their activism and journalism. Human rights organisations report over 370 political prisoners in Azerbaijan, a claim routinely denied by officials who state arrests are for specific actions, not political reasons.

Trade relations between Azerbaijan and Turkmenistan have sharply declined, with bilateral trade falling by approximately half in 2024 compared to 2023. President Ilham Aliyev recently visited Turkmenistan, suggesting diplomatic efforts despite the economic downturn.

Trade between Azerbaijan and Russia continues to grow, with Russia increasing its positive trade balance with Azerbaijan. In the first seven months of 2025, Azerbaijan imported 2.35 billion dollars worth of goods from Russia, while exporting 721.2 million dollars, an increase in imports from Russia compared to the previous year. This economic ties persist despite recent strained political relations, marked by a Russian law enforcement operation against Azerbaijanis in Yekaterinburg and subsequent arrests of diaspora representatives in Russia, and arrests of Russian citizens in Azerbaijan.

The Azerbaijan Naval Forces conducted tactical exercises in the Caspian Sea on 14 August, focusing on the protection of marine energy infrastructure. This exercise occurred during a period of heightened tensions with neighbouring Russia.

The European Union has expressed support for the agreements reached between Azerbaijan and Armenia in Washington, including the initialling of a peace agreement and arrangements for regional transport links. These agreements, signed with the US President as a witness, include creating unimpeded transport links between Azerbaijan's mainland and its Nakhchivan region.

The multitude of these issues, from recurrent trade centre fires and insurance shortfalls to complex geopolitical dynamics and economic shifts, underscores a period of significant challenges and transformations within Azerbaijan.