Azerbaijan lies in the South Caucasus, a key region where Turkey, Russia and Iran
compete for influence. The country is facing complex territorial issues, with the
secessionist region of Nagorny Karabakh being the subject of an unresolved conflict
with Armenia. This conflict remains Azerbaijan's top foreign and domestic policy
priority and is an essential part of its balanced attitude both towards key regional
powers and the EU.
The country's neutral geopolitical orientation is supported by its vast energy reserves, which make it an important producer, and transit country for gas and oil from Central
Asia to the EU. For many years, this wealth helped sustain vigorous economic growth, yet recently there has been a persistent slowdown which has revealed the need to
diversify the economy and invest in non-energy sectors. Azerbaijan has a vibrant secular Muslim society and its political apparatus is often
criticised for the concentration of power in President Aliyev. The European Parliament
has repeatedly denounced the situation of political prisoners; negotiations for a new
comprehensive agreement were launched on 7 February 2017 following the release
of some key prisoners in recent months.