Azerbaijan, like many resource-rich countries, decided to set up a sovereign wealth fund in order to avoid income volatility, to achieve intergenerational equity and to transform resource wealth into more productive assets. Azerbaijan established the State Oil Fund of the Azerbaijan Republic (SOFAZ) in late 1999 to accumulate income from hydrocarbon exports. SOFAZ has gradually become the leading part of the country's public finance system. Azerbaijan was the first country to fulfill all requirements of the Extractive Industries Transparency Initiative (EITI), an international agreement to implement global standards of transparency in the resource extracting sectors. However, SOFAZ's contribution to an effective resource revenue management and long-run economic development is still questionable: transparency applies only to the income side of Azerbaijan's oil fund while the expenditure side remains opaque. Unlimited and unconditional transfers from SOFAZ to the state budget have threatened fiscal sustainability and the overall macroeconomic equilibrium.

Natural resource dependence is believed to have potential impact on institutional development, and there is growing consensus in the academic literature that institutional weakness is central to the explanation of the negative e¤ects of resource booms. Generally, the quality of institutional framework and natural resource dependence interact mutually. Natural resources rents can damage institutions by removing incentives to conduct reforms and even to establish a well-functioning bureaucracy. Also, weak institutional quality is the ultimate cause for a disadvantageous management framework of natural resources and process of converting revenue ‡ows into economic development. This paper examines the connection between institutional quality and resource dependence in resource-rich Caspian Basin countries (Azerbaijan, Kazakhstan, Russia, Turkmenistan) with transition economies. The analysis for the total natural resources rents suggests that, in aggregate, revenues on total natural resources have a negative impact on government e¤ectiveness.

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The article aims to examine and explore with pros and cons of High-Level (“Strategic”) Cooperation Councils (HLSCC) mechanisms in Turkish foreign policy and evaluate its effectiveness in foreign trade, foreign policy cooperation, and crisis management capacity of Turkey concerning the relations with Russia. Turkey has already started to establish High-Level Cooperation Councils to build institutional infrastructure for strategic partnerships in foreign policy and strengthen institutional power in the bilateral cooperation after 2006. The study of Turkish foreign policy is an academically attractive topic mostly in terms of its geopolitical dimensions. The institutional mechanisms that enable the country to interact with other states in a dynamic regional and international environment remain less researched heretofore. The article attempts to highlight the evolution of Turkish foreign policy in terms of institutional changes in the bilateral and multilateral mechanisms. The article applies a case study method with descriptive analysis examining Councils’ functions such as foreign policy coordination and determination of collective commitments and official bilateral targets in the case of Russia - Turkey High-Level Cooperation Council. The article found out that these institutional mechanisms partly justified themselves as a coordination mechanism, but they were relatively weak for achieving the pledged commitments. The Councils were flexible and innovative cooperation mechanisms of the foreign policy to develop bilateral and multilateral ties in the age of the global power restructuring and the volatile conjuncture in world politics.

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