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26, 1921, in the meeting of the South Caucasian republics in Tiflis, along
with the creation of the South Caucasus Department of Foreign Trade
(SCDFT), on August 7, with the conclusion of agreement on co-operation
with the same structure of the RSFSR clarified a great deal of issues. Under
the terms of the contract, the South Caucasian republics had to implement
the foreign economic and trade activities on the permission of Russia and
based on the regulations developed by government agencies managing the
RSFSR's foreign trade, starting from that day. Thus, the Soviet Russia got a
chance to intervene the commercial activity and the import-export opera-
tions of the republics of South Caucasus in foreign countries directly. Russia
began exercising the direct control over the foreign trade operations, includ-
ing contracting with foreign countries, the granting of concessions to foreign
companies in the territory of Azerbaijan, exporting of goods with foreign
exchange capacity, regulation of customs duties and issues being in the re-
public’s authority through the authorized representative appointed to the
South Caucasus Foreign Trade Department. And beginning from Septem-
ber, began the implementation of a common customs tariff of the RSFSR in
the republics of the South Caucasus.
On November 14, 1920, an agreement on transit trade between Azer-
baijan, Georgia and the RSFSR was signed in Tiflis. According to the
agreement, Baku oil was considered to be exchanged with coal extracted in
Georgia, wood and timber and other products. Establishing economic ties
between the South Caucasus republics, in fact, in line with the strategic
goals of the RSFSR chiefs, on April 14, 1921, the agreement on the incor-
poration of the South Caucasus railway, and on June 2, the agreement on the
incorporation of foreign trade management was signed. Was established the
single Department of Foreign Trade, managed by the board including repre-
sentatives of all the three Republics.
Archival documents confirm that during May-December 1920, and in
1921, the government of Azerbaijan SSR displayed interest towards con-
ducting its foreign trade relations independently and though partly applied
changes in the customs tariff rules. The meeting of Azerbaijan National
Economic Council held on June 3, 1920, decided to strengthen the control
on the transportation of food products and first-necessity goods by individu-
als and military personnel while moving by railway and by the ship's crew.
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420
Department of Water Transport was commissioned with the examining of
cargoes of the passengers who traveled by the sea way, but in land and rail-
way border stations to the Customs Protection office subordinated to the
Commissariat of Finance. Commissariat of Food defined the norms for food
and other first-necessity goods that passengers, the ship crew and military
personnel would be able to take freely [2, p.27].
A number of structural changes were made in the financial system of
Azerbaijan SSR. In accordance with the order 149 issued on the Commis-
sariat of Finance and signed by Deputy Commissioner H.Taghiyev dated
June 28, 1920, the new institutions were created under the Commissariat: 1)
The central administrative support center of the Commissariat; 2) Taxes De-
partment - containing a) Direct taxes and duties, and b) the indirect tax de-
partments; 3) Department of budget-computing - containing a) The Depart-
ment of Budget and b) the Credit department. In Paragraph 3 of the Order
was stated that the Department of Customs and Border Protection, including
Customs and Border Protection Departments should function on the previ-
ous bases until the reorganization. On the other hand, the local organizations
of Commissariat of Finance, including all custom-houses and Border Pro-
tection detachments were ordered to continue their activities until a special
instruction [3, pp.182-183].
By decree of the Azerbaijan Military Revolutionary Committee dated
July 19, 1920, the solution of all issues relating to foreign trade was given
under the authority of a special commissioner. The department of customs
duties had warned all customs stations under the department that the docu-
ment allowing the transportation of goods at a distance of 7 versts away
from the border strip should be signed by a special commissioner of the
Revolutionary Committee of Azerbaijan on foreign trade or other person
appointed by it [4, pp.74, 76].
It appears from the letters of the Department of Customs Duties which
was under the subordination of the Department of Finance to the local cus-
toms-houses that in accordance with the order of the Council of Azerbaijan
National Economy dated July 19, 1920, the export of seedless raw cotton,
wool (local and Spanish type), cocoon, silk and frieso was stopped [5, p.36].
In accordance with the instruction sent to customs offices locating in the ter-
ritory of Baku province, dated August 8, 1920, as the Lankaran and Javad
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districts were the state grain procurement regions, taking out those products
from this areas was prohibited, representatives of the Food Commissariat in
places were commissioned with control over the transportation of grain and
grain products to border areas [6, p.79].
Azerbaijan SSR government’s efforts to establish free trade relations
with Western countries did not evade from the attention of the RSFSR gov-
ernment. In particular, the application of the new customs tariffs and regula-
tions to strategic raw materials was always met with government's objection.
For instance, the decision of the Soviet of People's Commissariat of Azer-
baijan Soviet Socialist Republic on the levy of customs duty in size of 50-70
per cent of the cost of oil and oil products that were sent to Iran had troubled
the RSFSR government. The content of the telegram sent to the Azerbaijan
government and Azneft in July 31, 1922, by Frumkin, deputy commissioner
of RSFSR Foreign Trade Commissariat proves this. The telegram demanded
the immediate removal of high fees for oil products [7, p.104].
Fixing the prices for export sales, including prices of oil products by
Azerbaijan without the consent of the foreign trade organs of the RSFSR
was regarded in Moscow as separatism. The head of Soviet Union's foreign
trade L.B.Krasin, who was in the visit to London hearing the news about the
measures of Azerbaijan government did not met it with sympathy and under
the pretext of drop in Russia’s oil revenues from the sale in Western Euro-
pean market asked the government to put an end to Azerbaijan’s “anarchy”
[8, p.180].
In order to provide its political and economic interests in the region
Russia further increased the pressure on the Azerbaijan's activities in the
field of foreign trade and customs affairs. Seizing control over Azerbaijan’s
economic and trade relations with foreign countries Russia tried to increase
its influence in the markets of neighboring Iran and other Eastern countries.
In September 1921, the oil industry and its subordinate branches were taken
from the composition of the Council of Azerbaijan National Economy and
were directly subordinated to Moscow. As a result, oil and other strategic
raw materials were transported to the RSFSR and other Soviet republics al-
most without remuneration. However, granting to free concession the Azer-
baijan’s oil industry and fishery to foreign countries it could get a great
profit due to normal apply of import and export tariffs and customs taxes. In
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