AZERBAIJAN DESCENDING INTO THE THIRD WORLD AFTER A DECADE OF INDEPENDENCE

Journal of Third World Studies
Spring 2004
Volume 21, Issue 1
Pg. 191, 29 pgs

By Dr. Alec Rasizade

INTRODUCTION

Frequent travelers to Baku are struck almost immediately by the
pervasive bitterness and growing sense of deprivation that most citizens
feel about their deteriorating lives. The short-lived euphoria of
independence has been replaced by the somber realization that the
so-called “transition period” could extend well beyond most people’s
lifetimes. The promise of peace, freedom and prosperity, which seemed to
come with the end of communism, has disappeared into the distance a mere
ten years later. After the demise of the USSR, Azerbaijan has been
relegated to the category of a Third-World nation. Capitalism has won
and the class struggle for power and wealth relapsed here as the driving
force of history. The quintessence of profound popular wrath is that the
country has moved backward rather than forward since the beginning of
reforms. This is the principal outcome of the first decade of Azeri
independence.

THE SOCIAL BRUTALITY OF AZERI CAPITALISM

As our academic and intelligence circles are still preoccupied with the
lofty strategic and energy topics, there are also less visible
consequences of the end of communism, those omitted mundane,
non-petroleum anxieties of downtrodden masses. Whereas the international
financial institutions focus on macroeconomic reforms, the people who
live in Azerbaijan are more concerned with keeping jobs and getting
salaries that let them keep up with the rising cost of living.

Most Azeris live below the poverty line, inasmuch as graft infects the
nation, from the traffic cops who demand bribes to relatives of the
president widely believed to be fleecing the state, to government
officials who have built themselves palaces with fountains while
ostensibly living on paltry civil service wages. These popular
grievances are the universal driving force of history, generally
disregarded by our foreign policy planning pundits until another
upheaval would goad them to inquire:
“Who lost Azerbaijan?”

Perhaps the keenest measure of impoverishment in Azerbaijan can be taken
from the scenes at places like Jafar Jabbarly Square across the railway
terminal in
central Baku. The square, like similar sites in all Azeri cities, has
been transformed into a vast flea market. Here, the sellers of household
bric-a-brac, of plumbing fixtures, of old books and music records, of
plastic sandals, of anything with even vestigial monetary value, are not
the illiterate underclass so much as the newly destitute middle class:
engineers, teachers, lawyers, writers, musicians, artists, academics,
war veterans and white-collar pensioners, some of them jobless, others
seeking a few extra dollars to augment salaries and pensions rendered
virtually worthless by the inception of free market reforms.

One of them, a Karabakh war veteran with a pension equivalent to about
$25 a month, said he was trying to support on this a family of seven;
another, a gray-haired academic salaried at $50 a month at the National
Academy of Sciences, dispensed to me the usual praise of President
Aliev, whose beaming portrait, on a concrete plinth, looked down as he
spoke. But even taken on the evidence visible to all Azeris and the
foreigners, what has developed under his presidency is a pitiable
society of social and economic extremes, contrasting the record of
Soviet equity in free-for-all health care, education, housing,
sanitation, employment and the 80-percent
middle-class level.

Today, in the teeming outskirts of the capital that is now home to
almost half of the entire population of the country displaced by the
Armenian occupation of
Karabakh and the economic plague elsewhere, small children can be seen
clambering amid mountains of refuse at garbage dumps looking for scraps
of food or other salvageable items for barter. Begging is common,
every-where, among tousled street urchins, mothers with infants clutched
to their breast, widows in black cloaks and scarves and toothless old men.

But another, new Azerbaijan, also exists conspicuously, unimaginable in
the old Soviet times. Cruising the seafront boulevard at night are
expensively groomed men and women in their open-topped sports cars, many
of whom make purchases from wads of American dollars. In downtown Baku
money can buy almost any luxury. Merchants offer Armani suits, Escada
blouses, L’Oreal perfumes, Sony digital television sets and $2,500
American-made, double-door refrigerators. At Baku’s thriving car market
showrooms are filled bumper-tobumper with luxury cars. Eager salesmen
offer a brand new, gleaming Mercedes-Benz for $72,000, along with new
BMWs and Jaguars.

The “new Azeris” (as the nouveau-riche are commonly known here) rarely
give interviews, so where their money comes from is a matter for
speculation. But less
favored Azeris have little trouble providing theories. They say that the
“transition” capitalism has created boundless opportunities for
black-marketeering that were quickly monopolized by those with
connections to the most powerful family in the land. One of the most
lucrative enterprises has been oil smuggling, in tankers that run to
Georgia, Turkey, Ukraine, Russia, and even to Armenia, earning millions
of dollars in revenues outflanking the controls on Azerbaijan’s main oil
sales.

The best vantage points for watching the “new Azeris” are the swank
restaurants that line the main streets. There, in glitzy interiors with
marbled fountains, and
in alfresco settings around crystal-clear pools, diners can choose from
thick menus that offer European and Caucasian specialties, and relax to
live music. By midnight, they return home to sprawling villas that brood
behind steel gates guarded by men with AK-47 rifles.

In places like these, an outsider instantly realizes that Azerbaijan is
a country of brutal and potentially explosive social divisions. Among
its eight million people, a favored few have access to the most
extravagant luxuries. In general, the “new Azeris” seem blithely
indifferent to others’ suffering in a society where a vast majority of
population have been reduced to penury by the decade of capitalism.

In this atmosphere of dread, the self-indulgence of those with favored
positions resonates Bob Fosse’s 1972 film “Cabaret,” with its depiction
of the decadence in the 1920’s Berlin that accompanied the rise of
Hitler’s nationalsocialism. Much of the decadence in Baku is out of
sight behind the walls of villas and palaces of the “new Azeris.”
However, for any visitor spending a few weeks in Baku, it is this
contrast in lifestyles between Mr. Aliev’s elite and ordinary Azeris
that seems to be the major characteristic of Azerbaijan, apart from the
prevalent comments in Western media about the alleged Caspian oil wealth
and strategic pipelines.

More troubling is the drastic decline in the ability of the government
to maintain even minimal levels of public services and social welfare
protection, not to mention the kinds of benefits that the
pre-independence population enjoyed. Public education has broken down,
health care has deteriorated, meager pensions have gone unpaid, and a
relatively egalitarian social structure has been destroyed. In one of
the most fundamental indications of decline, expenditures on food have
sharply risen above 70% of a family income on average, compared with
below 30% before 1991.(1)

Ironically, in the “energy-rich” Azerbaijan, energy shortages have
become worse, affecting homes, schools, hospitals and workshops. Water
supply is severely
rationed. Only 10% of Azeri cities have a sewage system. Worse diets and
sanitation have helped speed the deterioration in public health with the
relapse of
epidemics long forgotten during the Soviet era.

Before independence, Azerbaijan was rightfully proud of its extensive
educational system. Approximately 90% of the adult population had at
least secondary and
more than 30% had college education. Today, Azeri officials privately
estimate that one-third of all school-age children do not attend
classes, helping their parents to earn for living. Given the
government’s minimal expenditure on education, the disincentives of
unemployment and corruption, poorly paid teachers, decrepit and unheated
schools, the system has broken down completely.

If, as the United Nations Development Program (UNDP) suggests, the
education, new training and information technology are the sources of
growth, Azerbaijan’s
prospects are appalling. The higher educational system is equally
chaotic with about 150 unregulated private institutions. Patronage and
bribery ensure that only those with connections matriculate in the
better colleges abroad through several Western government-paid programs.
The quality of instruction, student attendance and the curricula at
Azeri universities are extremely low and obsolete.

In his speech marking the eleventh anniversary of Azeri independence,
President Aliev trumpeted Azerbaijan’s economic achievements, citing
that the GDP over the last six years has increased by 68%.(2) Of
course, since independence, Azerbaijan has suffered such an economic
collapse that even marginal increases in economic activity can generate
eye-catching GDP growth. However, the recent report published by the
EBRD has estimated that the GDP of Azerbaijan in 2001 constituted only
44% of the GDP of Azerbaijan SSR in 1991.(3)

According to a World Bank assessment, 78% of Azerbaijan’s population
live on less than one dollar a day; the average income per capita
(including the “new
Azeris”) in 2000 was $618 or $1.7 a day.(4) A UNDP report indicates an
almost 80-percent poverty level of Azeri citizenry, marking one of the
lowest standards
of living in Europe, lower than in Bosnia, Albania, Armenia, and ahead
only of Georgia and Moldova, at the time when stores are brimming with
free-market
abundance in anticipation of the promised oil boom.(5) The economic
disaster in Azerbaijan is greater than in the worst years of the Great
Depression in the USA.
The gravity of human deprivation is exemplified by the fates of
Azerbaijan’s second largest city of Ganja where, out of the total
population of 300,000, only about 18,000 inhabitants officially have a
job.(6)

The minimum monthly wage in Azerbaijan is 27,500 manat ($5.5). Laborers,
if they find a job, are commonly paid 100,000 manat ($20) a month.
Average monthly
salary is 250,000 manat ($50). Teachers are paid 220,000 manat ($44). In
contrast, administrative assistants in foreign non-profit organizations
earn about $100, and those who work for profit-making foreign companies
make more. The average monthly pension is 73,000 manat ($15, compared to
$45 in Russia).(7)

The contrast of prices to these wages is distressing. In the new
restaurants, a pizza costs 10,000 manat, a fish or meat entree can cost
15-20,000. One glass of beer, local or foreign, will cost 5,000. A
hardback book can cost 25-50,000 and a paperback is 5-10,000. Newspapers
are sold for 1000 manat. Most people do not
have cars. They can afford the jitney bus (which has replaced all
regular city buses), costing 1000 one way, or can buy the family’s daily
bread costing 1000 manat for a loaf. They can afford food sold by
villagers at the farmers’ market or on street corners, but are
effectively excluded from the new supermarkets with their expensive vast
array of goods.

Where is the oil-export revenue? Reports of presidential family, members
of “the clan” and inner circle stashing away millions of petrodollars
into personal foreign bank accounts are regularly released by
international watchdog groups as well as the opposition press. There,
not in Baku, is the repository of the many “signing bonuses,” “gifts”
and “fees” to facilitate business operations, as well as of the outright
bribes and kickbacks.

But the general public see little of this. What is obvious to the people
of Baku is the conspicuous consumption by the “new Azeris:” expensive
clothes and casino gambling,(8) fancy cars and opulent villas with
artificial waterfalls (while the water supply to general public is
limited to 2-3 hours a day), outrageous tuition paid by the elite for
their offspring’s private education abroad. A top-of-the-line Mercedes
is the ultimate status symbol. Those who drive them pay little attention
and never yield not only to pedestrians, but to traffic red lights as
well, and park their vehicles on sidewalks blocking the fearful
pedestrians in full sight of the indifferent police.

The whole picture of social inequality and blunt lawlessness is aptly
described by Bakuvians with the Russian expression “bespredel”
(unrestricted iniquity,
pandemonium). Azerbaijan is not merely an autocratic state, it is a de
facto oligarchy (or, strictly speaking, plutocracy) of the rich
protected by an authoritarian regime. Remarkably, there is little of the
anger or resentment one might expect. There is only resignation and
sadness. “Things are terrible,” people say, then add, “we’ll have to see
what happens.”

In these conditions, it is not surprising that Azerbaijan’s population
is fleeing their independent motherland physically and abandoning it
mentally, fairy tales of oil-boom prosperity notwithstanding. Azerbaijan
has suffered proportionally the largest decline in population of all
former Soviet republics. According to the 1999 census, Azerbaijan’s
population currently numbers eight million. Russian researcher A.
Arsenyev has claimed that the official results were fabricated, and the
country’s current population cannot possibly exceed four million.(9)
Indeed, the leadership of Azerbaijan has a vested interest in
downplaying the extent of the outmigration and the
social discontent it implies.

The previous USSR census conducted in 1989 had counted the population of
Azerbaijan at seven million. In the course of Nagorno-Karabakh conflict
of 1988-1994, the entire Armenian population of Azerbaijan, numbering
about half a million, were driven out. A similar number of Russians,
Jews and others left in the early 1990s. Dr. Arsenyev concludes that as
a result of the flight of non-indigenous population, Azerbaijan lost no
less than 1.2 million people.

But in addition, following the radiant “Deal of the Century” signed in
1994, which has pledged billions of dollars in foreign investment,
millions of native Azeris have also left their country, moving mainly to
Russia and Turkey. According to Russian statistics, the number of Azeris
resident in Russia has reached 2.5 million. Specifically, the Azeri
population in Moscow and its vicinity is now 1.2 million, compared with
21,000 in 1989. The Russian scholar estimates total emigration of Azeris
in recent years at no less than three million. He thus deduces that,
allowing for modest natural increase, Azerbaijan’s population has shrunk
by half during the decade of independence.

Leaders of opposition parties charged the government with inflating the
census figures to conceal this loss of men and, in smaller numbers,
women (who prostitute
themselves in the Persian Gulf emirates). Young men starting around age
20 are fleeing the republic. There are no official statistics on this
problem since the
government denies it exists. But everyone has a story of a relative or
acquaintance working in Russia or Turkey, and fewer in Europe or
America. They send money home (about $2 billion annually, twice the size
of state budget)(10) when they can, but have no plans to return until
“things get better.” Privately, intellectuals worry about the future of
Azeris as a nation: “The women are alone in the countryside; there are
no men in some villages.”(11)

Both Armenia and Georgia have also lost one million people to Russia
each. It is paradoxical to watch how, instead of moving away from their
former colonial master after gaining national independence, millions of
Caucasians are moving now into Russia, voting with their feet for
economic reintegration with the power which their leaders are still
blaming for all their perils and for conspiracy to undermine their
independence. Among them are thousands of pauperized and disillusioned
intellectuals whom I saw ten years ago leading crowds and shouting
anti-Russian slogans in central squares of Baku and denouncing in
firebrand speeches the very Russia where they today seek refuge and relief.

Even more ironic is to observe by contrast the dramatic transformation
of their antagonists (and our new “friends”) – the formerly pro-Moscow
local communist honchos and the omnipresent KGB types, who are nowadays
mostly successful businessmen engaged in the “global economy.” Their
leaders are calling for the expansion of NATO to cover Transcaucasia
against the “Russian imperialism” in almost the same cliches which they
had been using a decade ago to denounce the
“American imperialism.”

The aforementioned social woes are only the tip of the iceberg of
horrendous problems facing this little republic with great oil revenue
ambitions. It can smash the Caspian oil concessions at any time
regardless of the double-standard criteria by our businessmen and
politicians. Verily, the real life, ignored by our policymakers, is more
grotesque than any fiction, as we have learned from the September 11
tragedy.

INSTITUTIONALIZED CORRUPTION

“Never ask a ‘new Azeri’ where he made his first million,” advised an
old friend at the foreign ministry in Baku. Ten years of chaos allowed
many opportunists to get rich quick. Some did so honestly; but most
cheated and swindled fellow citizens, bribed and purloined from the
state or small investors. That era is coming to an end. Some former
officials and “businessmen” who lined up their pockets are now in jail
or exile, but many more of those formerly on the take are walking free.
In this new brave world of Azerbaijan, why question too closely how some
people, many of whom, the conflict of their official and commercial
interests notwithstanding, are now ministers, ambassadors, generals,
judges, party leaders, members of parliament and other pillars of Azeri
society, made their early fortunes?

Illegal business has infiltrated all levels of government and is
inseparable from the state. The state has become privatized by
clientalistic networks; it, along with the legislature and the political
opposition, has become a means for realizing private interests. When
corruption persists at the top, it percolates throughout the society:
people expect to pay and receive bribes, and that culture of corruption
becomes institutionalized. Azeris are fond of saying that corruption is
so endemic that the country would come to a stop without it. American
foreign policy does not address this problem in Azerbaijan where it
pervades every nook and cranny.(12)

Neither the Russian, nor Western understanding of corruption apply to
the Azeri pattern of kleptocracy: it is not a chaotic profiteering,
where anybody can grab anything, for it is tightly controlled. The
institutionalization of corruption has evolved, as I found out in
Azerbaijan, into two intertwined systems: 1) the distribution of bribes
through the chain of superiors; 2) the buying of lucrative positions
through payments to top officials.

1) For example, a customs controller ordinarily gives 75% of his illicit
profits to higher executives. His supervisor keeps 25% and passes the
rest on to the next level, and so forth. The border guardsmen extort
their cut directly from local smugglers in return for turning a blind
eye. Captains at each of the border crossing points have to pay a flat
monthly “tribute” of $7,000 to their top brass in Baku who have
appointed them.(13)

Shopkeepers pay regular cuts to local police “for protection” and
payoffs to all inspecting officials, from fire marshals to tax
collectors. Such a system leaves no room for Russian-style racketeering
as it is substituted by officials performing the same function. In his
excellent report from Baku about the oil rush and total corruption
there, American journalist J. Goldberg asked average Azeris a simple
question: why, in spite of all that graft, there was no Mafia in
Azerbaijan? A local businessman explained: “When corruption comes from
the state, there is no need for Mafia, the state itself is the Mafia.”(14)

2) Almost all government jobs in Azerbaijan come with an unwritten price
tag. (As well as many high-wage positions with international companies
operating in
Azerbaijan, which are obtained by locals for bribes).(15) The higher the
official’s potential for bribe taking, the higher the price will be.
Positions in law-enforcement bodies like the interior ministry,
prosecutor’s office, and the judicial, tax and customs services, as well
as most national and local executive positions, are all considered
desirably ripe with possibilities for graft. If the head of customs
directorate K. Geydarov has allegedly paid $3 million for his
appointment, he has done so with an intention to double or triple the
original “investment” through systemic graft and extortion in his
office. (Which brings us back to the chain system No. l above).(16)

When the demoted chief of Baku international airport police decided to
carry overseas several suitcases with the cash of his “life savings,” he
simply paid $800,000 to the new chief of airport police. In another case
involving the Azeri law enforcement officers, a fugitive banker who fled
the country with all deposits of his investors, paid off in a Persian
Gulf emirate $11 million to the squad of Azeri agents that arrived on a
special flight to arrest him, and his case was eventually closed. On the
very top of Azerbaijan’s power pyramid (which, according to general
public belief, is the final destination of all these “tributes”) in only
one widely quoted case, the chief of presidential staff Ramiz Mehtiev
allegedly received $6 million for exoneration of a group of rural bosses
charged with a large-scale cotton-export fraud.

But all this malfeasance pales in comparison with the oil smuggling
scheme being perpetrated on a national scale by the presidential family,
which holds virtual
monopoly on the export, as well as domestic distribution, of petroleum
production. President Aliev’s brother Jalal Aliev owns the national
gas-stations cartel called Azpetrol. Ilham Aliev, whom his father
appointed vice-president of SOCAR (State oil Company of Azerbaijan
Republic), controls every shipment of crude oil produced by the national
monopoly. According to Georgian government statistics, every year SOCAR
exports via the Georgian Black Sea ports of Batumi and Poti about 6.5
million tons more crude oil than is officially reported by Azeri
government. These unreported shipments bring into the pockets of
presidential clan around $1 billion annually.(17)

The existence of such illicit shipments has been confirmed, as a well
known fact, by senior executives of all American oil companies operating
in Azerbaijan in our private conversations in Baku last year. They said
that SOCAR has never been “independently audited,” that it manages the
country’s oil-related receipts through the opaque National oil Fund
created in 2001 and accountable only to the president of the republic,
instead of through the country’s central bank as required by law.

It is unclear whether the local graft suggests a correlation to the
behavior of our corporate investors in the region, who are subject to
the US Foreign Corrupt Practices Act of 1977. A recent study conducted
by the European Bank for Reconstruction and Development confirms these
allegations. According to the study, 25% of foreign firms doing business
in Kazakhstan reported frequent solicitations for bribes and kickbacks.
In Azerbaijan, 80% of companies reported systematic extortion and
complained of incessant delays and unlawful charges requested to move
business matters along. The EBRD study concluded that corruption incurs
an unofficial “tax” of sorts on business ventures operating in
Azerbaijan, averaging at 10% of companies’ annual revenue.(18)

I have never heard of any investigation by the US Department of justice
into such practices in the Caucasus, which are customary in dealings
with local authorities. Such an ingrained graft and cronyism permeates
the whole political and social fabric of those nations, plaguing the
nascent Caucasian democracies. Democracy means more than free elections;
it cannot flourish in countries where hardly ever anyone goes to jail
for stealing from the public till or draining the foreign aid. Corrupt
governments, no matter what they say and how friendly to us they are,
only invite popular unrest, often with nationalization of foreign oil
concessions. Yet the justice Department allows the Foreign Corrupt
Practices Act to lay dormant in the case of Azerbaijan as we learn more
that American investors were misled on the amount of Caspian oil reserves.

Take the case of British Bank, which has recently ceased its operations
in Azerbaijan. When I was visiting Baku last winter, its officials held
a press conference to declare that the bank has stopped its activity in
Azerbaijan. The bank had deposits from local residents worth $50 million
and was the second largest after the International Bank of Azerbaijan,
and ranked first among foreign banks there.

Why would the bank close whilst Azerbaijan is experiencing an oil boom?
This bank successfully works in Armenia, where no oil has been found. It
becomes clear that British Bank stopped its activity in Azerbaijan as it
went bankrupt. According to unofficial information, the reason for the
British Bank’s stopping its activity in Azerbaijan was that the $50
million worth of deposits belonging to top Azeri officials were
withdrawn within two months upon the deterioration of President Aliev’s
health, and the simultaneous outflow of capital made the bank bankrupt.

Several international surveys have shown that Azerbaijan has become one
of the most corrupt nations in the world. Corruption level indices
rendered for the last years by both Transparency International
organization based in Berlin and Control Risks Group based in London
have consistently ranked Azerbaijan as the third most corrupt country in
the world after Cameroon and Angola, and first among the former Soviet
republics.(19)

It remains mysterious, why President Aliev, who had a splendid record of
anti-corruption crusades when he was the communist boss of Azerbaijan,
nowadays is not
questioning the legitimacy of unconscionable fortunes, endorsing in fact
the robber-baron breed of national bourgeoisie and kleptocracy. Such
countenance, under
the subterfuge of privatization and free market reform, has raised
doubts about his commitment to open society and social justice.
Opposition leaders aver that, in addition to oil export, the most
successful businesses, real estate and trade monopolies (such as caviar,
cotton, tobacco) are controlled by his relatives with close ties to
fiscal authorities, which let them make millions in return for hefty cuts.

The Azeri press boasts today of some of the “richest men in Europe”
whose sources of self-enrichment in this impoverished country remain
inconceivable. The
bulk of personal lucre is drawn from the access to national oil-export
revenue and illegal dividends from privatization of state property. To
understand the depth of despoliation, look no further than the
ex-speaker of parliament Rasul Guliev, who allegedly depredated $76
million through the illegal proceeds in a state-owned oil refinery at
his disposal, before jetting into a comfortable exile in New York in
1997.(20)

Another illustration for government-level embezzlement and the degree of
impunity was presented by former foreign minister Hasan Hasanov who
misappropriated a
$10 million Turkish credit meant for the establishment of Azeri
legations abroad, and used the funds to build his privately owned hotel
and casino in Baku. After the criminal investigation directed by prime
minister Artur Rasizade in 1998, the minister was merely sacked, but
remained a member of parliament, and that was regarded as enough by
President Aliev.

The only home-grown capitalist class able to reinvest into the national
economy, thus creating new jobs, consists of the remnants of communist
leader-ship, the
ubiquitous KGB types, and the unbridled rural and industrial bosses, who
have appropriated the most productive and profitable parts of the state
property prior to its legal devolution officially aimed at creating
equal starting terms for every citizen. Well organized in a vast
patronage network that ensures them a stranglehold on power, they don’t
conceal their opulence and brazenly flout the proclaimed ideals of
democratic equality, stirring up the egalitarian instincts of bedeviled
masses. That discontent, in turn, prevents the “new Azeris” from making
serious investments at home beyond their lavish lifestyle, luxurious
villas and prestigious cars.

HEYDAR ALIEV: “L’ETAT, C’EST MOI!”

Our aging Indispensable Man in Baku, Heydar Aliev, who has failed to
deliver on his fabulous promises to create, in his own words, a “Second
Kuwait around
Baku,”(21) essentially runs the country as his private syndicate
blandished by luminaries and supplicants from abroad. Political power
often tends to increase the longer it is held. Aliev has been
Azerbaijan’s supreme ruler for the last 33 years since 1969, with a
six-year break in 1987-1993.

After the death of Brejnev in 1982, the new Soviet leader Andropov made
Aliev a Politburo member in Moscow, from where he was dismissed by
Gorbachev in
1987. Some Politburo memoirists claim that the first Armenian pogroms in
Sumgait and Baku in 1988 reflected this power struggle in the Kremlin
and were
orchestrated by Aliev’s old cadre hoping to restore his leadership in
Azerbaijan instead of Gorbachev’s appointee A. R. Vezirov, who was “too
honest for the
organized corruption” in the republic.(22)

According to Aliev himself, he will again run for the presidency in
2003, when he turns 80 years old (in a country where average life
expectancy is 63 years). “I have held the post of the president of
Azerbaijan for nine years, and God willing, I will hold it for a long
time,” said Aliev, speaking in his native town of Nakhichevan.(23)

Political maneuvering within both the government and opposition blocs,
however, is centered on one issue – the succession to Heydar Aliev.
Given his age and
declining health (he underwent heart surgery in 1999 in Cleveland), it
is not believed that he will run again in 2003. Instead, his main
concern seems to be to pave the way for his son Ilham to succeed him,
something that has been discussed for several years.

As part of a careful process to legitimize him as the heir to the
presidency, President Aliev proposed 39 separate amendments to
constitution, and held a referendum on the proposed changes in August
2002. The government announced that 97% of voters, who participated in
the referendum, endorsed those changes. Opposition politicians claimed
that the authorities resorted to massive manipulation of the referendum
outcome.

The most important amendments provide for transfer of presidential
duties to the prime minister if the president dies, steps down, or is
incapacitated. (Under the 1995 constitution, in such circumstances the
president’s duties devolved on the parliament speaker). The minimum
number of votes a candidate must receive in the first round to be
elected president is lowered from two-thirds of all votes cast to 50
percent plus one vote.

Local politicians unanimously construed that the rationale for the
amendments is to enable Aliev to name his son as prime minister, a
position in which he can succeed him as president. Under the
constitution, it is the president who is empowered to appoint the
premier, who is answerable to him, not to the legislature. Naming Ilham
Aliev as prime minister would be one way to allow him to demonstrate his
efficiency as an economic manager, at a time when increasing oil
revenues could bring the long-hoped-for economic upswing.

It appears that the Alievs have gained a tacit endorsement of the
Washington political establishment, where Aliev-junior pays regular
“charm” calls. During his last visitation, as an American reporter
noted, “He was guest of honor at a fancy dinner that pulled in
[secretary of energy] Spencer Abraham, [undersecretary of state] Richard
Armitage and [vice president] Dick Cheney. When I caught up with Mr.
Aliev, he had lunched earlier that day with a group of high-profile
has-beens including [former secretary of state] Madeleine Albright and
[former national security advisor] Brent Scowcroft.”(24)

But other observers have pointed to another innovation, namely the
provision that the prime minister must not necessarily be a citizen of
Azerbaijan, and suggested that this change was made in order to install
the Russian oil tycoon Vagit Alekperov (an ethnic Azeri) as Azerbaijan’s
prime minister, and that Alekperov would work in tandem with Ilham Aliev
as president as the latter’s eminence grise. But by the same token, the
provision allowing foreign citizens to serve as prime minister could
become a liability. If, for example, Heydar Aliev were to die suddenly,
pro-Russian forces might seek to take advantage of the resulting chaos
to engineer the return to Baku of either the former president Ayaz
Mutalibov, or the former KGB chairman Vagif Huseinov, both of whom have
acquired Russian passports during their respective exiles in Moscow.

Today, Azerbaijan is neither a democracy nor a clear-cut authoritarian
state of the sort found in Central Asian republics. An active and
diverse opposition, a relatively free press, and a vibrant political
life exist in Azerbaijan. Opposition leaders criticize the regime openly
and harshly; they even organize demonstrations and rallies, something
unthinkable in Central Asia. But opposition parties lack a comprehensive
political platform that could stir Azeris out of their conditioned
torpor and attract large numbers of supporters.

In addition, the country’s political opposition is plagued by
infighting, which has inhibited a coordinated pressure on the
government. Voters get further disoriented by the practice of Azeri
authorities to establish alternative eponymous “parties” under their own
control to neutralize the “real” opposition parties, using renegade
members of political forces against whom these counter-balance parties
are being established. As a result, presently two “Islamic,” three
“Popular Front,” four
“Democratic,” and five “Communist” parties are functioning in Azerbaijan.

Most alarming is the widespread apathy and general aversion to politics
in Azeri society. As the country modernizes, leaving its ideology of
collectivism behind, for an overwhelming majority of the population,
stability and survival are now more urgent concerns than the abstract
concepts of democracy and liberation of Nagorno-Karabakh, which are
generally seen as having brought nothing but lawlessness, war and
poverty. This is the real political climate in which the Alievs hope to
smoothly pass the power from father to son despite the opposition’s
vitriol.

A significant number of people in Azerbaijan depend on patronage from
the Aliev regime for their privileged position and have a vested
interest in retaining the regime in power in order to preserve their
illegally privatized property and illicit incomes. That is the main
reason for Ilham’s strong support within the state structures and among
the “new Azeris.” They are largely conservative and profit from the
status quo. The “new Azeris” will not lead the charge for reform, and
although they compete and conflict, they have created what Italians call
“garantismo,” or an agreement by the major stakeholders of the regime to
stick to the rules of self-preservation.

The opposition vehemently attacks any plans to create a “dynastic state”
and smears Ilham, often unfairly, in every possible way. But the
opposition has neither
economic nor political leverage of significant public support to promote
its agenda. A regime with oil revenue is less accountable to ordinary
citizens; it does not have to collect their trifling taxes or meet their
tedious demands. A portion of the petrodollars must be spent on the
armed forces to keep the benighted masses in line, but the rest can be
split among the political elite.

Azeri leadership seems to have spent much more time thinking about the
external trappings of power and independence than about the
responsibilities of good
statesmanship. They argue that the Azeris whom they rule prefer the
decisive leadership of a “strong man.” Although some may actually
believe that their actions help their people, they have little objective
information upon which to make this judgment. All of these
“apparatchiks” had long lived in the secluded world of communist
“nomenklatura” which afforded them minimal contact with ordinary
citizens. They have become even more remote now, as the material
disparity in society based on affluence has deepened. Even if the Azeri
elite wished to reform and democratize, they would find it very
difficult to convince a profoundly alienated population that they were
genuine.

THE FICTION OF CASPIAN OIL BOOM

The subject of oil rush is inescapable when anyone talks about
Azerbaijan. Our analysts and newsmen have shaped the country’s profile
in one stereotype formula: “energy-rich former Soviet republic on the
Caspian Sea,” which pops up importunately in every story. At the expense
of other vital issues, they continue to dwell on minor details of
Caspian oil contracts and proposed routes for export pipelines, closely
following every twist in negotiations around them and superficially
linking to petroleum output and even to a traversing pipeline the
prosperity of entire nations in the Caucasus (such as Georgia),
shortchanging the complexity of the region’s economic woes.

As in other countries with valuable mineral resources, the prospect of
billions of dollars in potential foreign investment has also raised
popular expectations of Azeris. But the grandiose oil and gas projects
are still in their “early stages” (to put it mildly), with their
economic feasibility and size uncertain. The reality of postcommunist
decade has instead been an increase in corruption and a sharp drop in
living standards once protected by a comprehensive socialist welfare
net. Growing poverty has also rendered the population more susceptible
to the appeal of Islamic radicalism. And ironically, Azeri leaders have
taken the tactical laudations from Washington as proof that their own
position will be protected from either internal unrest or outside attack.

Being preoccupied with the purported oil bonanza and endorsing the
patently unprincipled leaders who all were only ten years ago zealously
antiAmerican communist honchos, while ignoring the straits of a nation
which, still seething from the loss of social welfare, is wallowing in
poverty despite its alleged energy wealth, is a stupendously delusional
policy for the US government. We run the risk of dealing with a renegade
Azerbaijan, should it opt for the oil industry nationalization remedies
undertaken by Iran, Iraq, Syria, Algeria, Venezuela and other frustrated
outcasts in the Third World. The destitute Azerbaijan cannot be an
exception to this general rule.

Nonetheless, austere insights that challenge our big-oil policy in the
region are not encouraged, and the veracious interlopers, known for
particular diligence in trying to ferret out facts, even endanger their
personal safety. The few skeptical studies that predicted in the
mid-1990s the foreshortening of Caspian oil reserves, the emergence of
personality cult and ruling kleptocracy, institutionalization of
corruption and massive poverty, could not gain currency neither in
foreign policy press, nor in Washington. If some scholars were more
prescient than the corporate view, their ideas were filtered out in the
bureaucratic process; and it was the corporate view that counted
because, through the powerful oil lobby, that is what reaches the
president and Congress.

America’s honeymoon decade with Azerbaijan, induced by the anticipated
oil bonanza, ended when the iridescent hydrocarbon bubble ballooned by
sensationalist media burst with confusion. Instead of the politically
bloated appraisal of 200 billion barrels in Caspian oil reserves valued
at 4 trillion dollars, exuberantly postulated for the decade by the
Department of State to entice American investors into the region and
justify its own strategy there,(25) we are talking today about only 18
billion to 34 billion potential barrels of oil reckoned by the US Energy
Information Administration, 14 billions of which are under the
Kazakhstan section of the sea.(26)

It is hard to think of an industry that has a hype machine as phenomenal
as the Caspian energy potential industry. A fresh piece of lingering
massmedia hype was presented by Newsweek magazine: “It is apparently
beyond the limits of journalistic restraint to tell the story of Caspian
oil as anything but a breathless spy thriller… The Caspian Basin, at a
conservative estimate, contains about 70 billion barrels of oil.”(27)

Speaking on the same day, when this story appeared, in Almaty at the
Eurasian Economic Summit, G.M. Gros-Pietro, chairman of Italy’s ENI oil
company, said that the Caspian contains only 7.8 billion barrels of
oil.(28) ENI is the only Western company that has discovered a new
oilfield in the Caspian Sea after the USSR, the Kashagan in Kazakhstan
section, and the estimate given by its president deserves more
confidence than a thrilling journalistic account.

Unfortunately, our current oil-fixated approach to Azerbaijan is still
remarkably quaint and naive. Our think-tankers, along with the
intelligence establishment, tend to overestimate the significance of
certain aspects in Azerbaijan’s prospects, such as the Nagorno-Karabakh
conflict and the Caspian oil potential, and neglect the ineffable social
distress, the factor of irrepressible forces of social discontent that
ordinarily lead to uncontrollable bouts of popular uprising and can
overturn the
regional balance of power as swiftly as it happened in neighboring Iran,
which “suddenly” switched in 1979 from pro-Americanism to
anti-Americanism.(29) They love to tell us in the prevailing trivial
publications that an oil-boom panacea is right around the corner. Let us
look around that corner, to see what is behind the facade of good
fortune proudly exhibited to the world.

The “Deal of the Century” concessions, first of which was signed in 1994
at an ostentatious ceremony in Baku, began to crumble in 2001 when three
of the 21
international contracts, signed during the oil rush of 1994-1998, were
terminated after their exploratory wells failed to yield commercially
viable quantities of oil or gas. Then the fourth company, Exxon-Mobil,
announced that in 2003 it will end its agreement with Azerbaijan to
develop the offshore Caspian oil fields.(30) That $2 billion project was
signed in 1997. The Russian oil giant Lukoil became the fifth to
announce selling its shares in all Azerbaijan consortia, including its
10-percent stake in the 1994 first and largest consortium called
Azerbaijan International Operating Company (AIOC).(31)

Of the remaining 16 projects, only five are actually in the works. Of
the pledged $42 billion, no more than $8 billion was invested in
Azerbaijan in the past decade, 85% of which has gone directly to the oil
sector.(32) Ry contrast, over the same period, the “energy-poor” Hungary
attracted $20 billion in diversified foreign investment. The “new
Azeris” meanwhile have managed to siphon off into private investments in
Turkey alone about $800 million, not to mention other countries,
pleading at the same time for foreign aid and investment into their
homeland.(33)

Of the five working international consortia, only one, the AIOC led by
British Petroleum, is currently producing considerable amount of crude
oil, not only incomparable with the Persian Gulf levels, but even not
justifying the construction of a new main export pipeline. Such major
companies operating in Azerbaijan and Kazakhstan as Exxon-Mobil,
Chevron-Texaco and Lukoil had been asked but declined to join the
Baku-Tbilisi-Jeyhan (Mediterranean coast of Turkey)
pipeline project so insistently promoted by the US and local governments.

After a decade of reveling in a much-publicized exuberance, questions
are now being asked about the true extent of the Caspian reserves around
Baku. First
question is why the USSR government, after 100 years of intensive
depletion, shifted its emphasis from the Caspian Sea to the permafrost
oil fields of Siberia? It is unlikely that Soviet engineers were unequal
to the problems of extracting oil from the deep Caspian deposits: in
fact, they were pioneers in offshore extraction beginning with the 1947
Neft Dashlary oil rigs constructed in the Caspian Sea. Long-term surveys
conducted by the USSR petroleum research institutes examined the
development of deep-water fields discovered by Soviet geologists, but
proposals were always rejected on the grounds of poor potential returns
and the high cost of extraction.(34)

There is no shortage of evidence to support their common sense. The US
Energy Information Administration has put the proven Caspian oil
reserves at somewhere
between 18 and 34 billion barrels (of which about 5 billion is estimated
in the Azerbaijan section of the sea), while the State Department, until
the last year, had been maintaining its outlandish assessment that the
Caspian contains 200 billion barrels of oil worth $4 trillion in
potential revenue. As I mentioned above, the chairman of Italy’s ENI oil
company, the only Western company that has actually discovered a new
oilfield in the Caspian, went even further saying that the Caspian
contains only 7.8 billion barrels of oil.

The combined Caspian potential dwarfs by comparison with the reserves of
Saudi Arabia, which total 262 billion barrels, and Iraq’s 112 billion
barrels. Figures released by the AIOC predict that its peak production
will reach 500,000 barrels per day (bpd) by 2005 (25 million tons a
year) from the current level of 100,000 bpd.(35) The little Kuwait
produces 2.1 bpd, its quota from the OPEC, and has enough oil to pump
about 2 million bpd for 132 years. Russia produces 7.1 million bpd,
Saudi Arabia – 8.8 bpd, Iran – 3.7 bpd, and Iraq 2.4 bpd.(36)

Moreover, extracting oil from under the Caspian Sea is very expensive.
Heavy soil, deep seas, special rig equipment and the complicated
geological nature of the
depleted deposits raise the price of Caspian offshore oil above the
world average threefold. On top of that, compared to the Persian Gulf
tanker terminals, the cost of moving crude oil from the landlocked
Caspian Basin through the multinational pipeline system with multiple
transit tariffs is to be added as well.

There is also a prospect of collapsing world oil prices, once the UN
trade sanctions against Baghdad are removed with the fall of Saddam
regime there, and Western investment begins to pour into the neglected
Iraqi oil sector. According to an estimate by the Center for Strategic
and International Studies in Washington, a $6 fall in the price of a
barrel of oil would slash Azeri oil revenue in half. If the price fell
to $13 a barrel, most Caspian oil consortia would no longer be
profitable.(37)

All post-Soviet Western geological explorations have as yet failed to
find sufficiently large new deposits in the Caspian, except for the
Kashagan oil field in Kazakhstan. Whatever the final size of reserves,
it is now clear that much of the talk of Caspian oil was a spectacular
bluff. The litmus test has been the reluctance to build the
controversial new main export pipeline. Studies by two independent
research groups in Washington have calculated that the Baku-Jeyhan
pipeline would need $200 million per year in subsidies from the US
government to remain viable.(38)

After eight years of negotiations, at another ostentatious ceremony near
Baku, the presidents of Azerbaijan, Georgia and Turkey finally broke
ground for the construction of Baku-Tbilisi-Jeyhan “pipeline to
prosperity” on 18 September 2002. This 1,730-kilometer line is projected
to have an annual capacity of 50 million metric tons of oil, whereas
Azerbaijan officially produces only about 15 million tons a year: 9
million by the SOCAR, 5 million by the AIOC, and the rest by other
consortia. The existing Baku-Supsa (Georgian Black Sea coast) pipeline
is being currently filled only to one-quarter of its 18 million-ton
annual capacity.(39) Where will the oil needed to fill the 50
million-ton Baku-Jeyhan line come from? Even AIOC’s own projections for
its peak production level come short of the minimum throughput of 1
million bpd needed for financial feasibility of this $3 billion
boondoggle. Whatever its economic payoff, the pipeline marks a deepening
American
influence in the region.

THE RATIONALE FOR SUSTAINING THE CASPIAN OIL MYSTIFICATION

If the Caspian oil reserves are not so extensive, why is it so essential
for the USA to be there?

The first reason is political. In our “Silk Road Strategy,” the Caucasus
represents an important geopolitical isthmus, linking the Black and
Caspian Seas and providing a “silk route” to Central Asia. Furthermore,
Washington is trying to limit Russia’s influence in the region, while at
the same time restricting the number of potential allies for Iran.
American investment, attracted by the alleged energy resources, would
extend financial backing to friendly local regimes and encourage them
toward our strategic goals.

As for the government of Azerbaijan, it needs Western patrons in its
confrontation with Armenia and fortitude vis-a-vis the overpowering Iran
and Russia – so why dissuade the West by confessing that Azerbaijan’s
only alleged attraction is a deceit? Besides, the Azeri regime is fully
aware of the obvious truism in international politics: the greater are
oil reserves – the more tolerant are Western governments in overlooking
a poor human rights record of any petroleum-based regime. A regime with
less significant oil production provokes more international scrutiny
into the status of local democracy.

Secondly, the interest of international oil companies in sustaining the
Caspian oil phantom can be easily explained: they are motivated by
profit. All of the ventures are joint-stock companies and shareholders
of these companies derive their main profit not from increasing
dividends based on successful commercial activity, but from the rising
price of their shares on the stock exchange and oil futures on the
mercantile exchange. The recent collapses of Enron, Worldcom and other
giant American corporations revealed that share prices are dictated not
by real economic indicators but by the aura of promise affirmed by Wall
Street analysts.

This is the very essence of Western business investment in Azerbaijan.
By participating in high-profile Caspian projects and issuing rosy
reports of great resources, companies improve their stock image,
generating an instant profit without pumping a single barrel of oil. In
fact, to begin seriously extracting oil would be counter-productive
given the danger that the true extent of oil reserves would then be
exposed. The affair of Viktor Kozeny, a rogue Czech businessman, has
brilliantly illuminated this ethos.(40)

For $6.3 million, Kozeny obtained 25% of the 7.5 million vouchers issued
by the Azeri government in 1997 for privatization of state property
amongst its citizens. Then he raised $450 million from an American
investment group, which includes such dignitaries as the vaunted Wall
Street hedge fund manager Leon Cooperman and former US Senate majority
leader George Mitchell, with the intention of participating in the
anticipated privatization of Azerbaijan’s national oil company SOCAR.
The Azeri leadership subsequently ruled that SOCAR should remain
state-owned.

Investors now say that they took part in the buying of vouchers after
Kozeny’s assurances that the Azeri government intended to privatize
SOCAR by the end of
1998. Azeri officials deny that any promises were made. The would-be
American investors are now suing Heydar Aliev, his son Ilham and three
Azeri privatization officials, in London and New York for $100 million.
Kozeny has claimed in the court that Azeri president personally demanded
hefty kickbacks in exchange for his favorable decision, and insisted
that he gave $83 million to Heydar and Ilham Alievs, and three other top
Azeri officials.(41)

Third motive: why do the Azeri authorities cheat on the contracts they
are only too willing to sign, and how do they benefit from that? Aside
from the tumid sense of self-importance that the Caspian oil bestows
upon them, their objective is entirely pragmatic: the more foreign
investment – the easier to perpetuate autocratic rule and keep popular
discontent at bay with tales of a “Second Kuwait” prosperity lying
ahead, not to mention the Western corporate slush funds and huge
contract kickbacks for the ruling elite which do not even enter the
country and are directly deposited to personal bank accounts abroad. In
a retort to estimates by his Azeri counterpart Aliev of the size of
Azerbaijan’s Caspian oil deposits, Armenian president Kocharian famously
remarked at the World Economic Forum in Davos: “Is there any water in
the Caspian, or is it only oil?”(42)

While our Department of justice ignores Azerbaijan, the world’s third
most corrupt country, Swiss authorities are conducting an ongoing
investigation into alleged bribery and the use of secret bank accounts,
involving American oil conglomerates and officials in Kazakhstan. A
story published in the New Yorker magazine exposed how our Mobil and
Chevron corporations paid tens of millions of dollars in commissions to
top officials, including President Nazarbaev, through shady deals during
the government sale in 1996 of its 20-percent stake in the Tengiz oil
field.(43) After the Swiss prosecutors froze the bank accounts held by
Nazarbaev, who insisted that he possesses no foreign bank account, his
prime minister confirmed the existence of secret accounts registered
under Nazarbaev’s name, on which the president has accumulated about 1
billion dollars.(44)

Deals of the same scale have been signed by Azeri leaders many times
over the past decade, but there is no account of the whereabouts of the
vanished “signing
bonuses,” and the opposition’s incessant demands of audit have so far
been flagrantly ignored both in Baku and in Washington. For instance,
the huge bonus
payments that oil companies paid to secure drilling rights for
Azerbaijan’s offshore deposits, have been grossly underreported. The
government told the IMF that it received $285 million in bonus payments
after auctioning the rights to a prime deep-water block in 1994. But the
consortium companies claim they paid about $400 million.(45)

Finally, as we live in the age and under the influence of mass media
cheer-leaders, let us point out the articulate lobby that has emerged
and cultivated since 1991 the legend of Caspian bonanza in collaboration
with our sensationalist press. It comprises a welter of numerous
Washington think-tanks, law firms, investment bankers (such as Kozeny),
trade associations, pipeline construction companies, effusive
journalists, television talking heads, big oil-controlled politicians,
aspiring academics,
retired diplomats who “consult” oil corporations, hungry local officials
and opposition leaders in Baku, our agile expatriates there and
unemployed Caucasian
emigres here – they all profess in unison that Azerbaijan is sitting on
an “enormous” sea of oil as they all are united in the desire to slice
off pecuniary pieces from the promoted huge investment pie in the form
of research funding, construction contracts, personal assignments and
consulting fees.

The 2 March 2000 New York Times story mentioned one of them, a certain
Edwin Graves, a sole practitioner who received $70,000 every six months
from oil
corporations to push for the repeal of Section 907 of the Freedom
Support Act of 1992, which had singled out Azerbaijan from receiving
direct US assistance until
it discontinues its economic blockade of Armenia. The same measure
ending the ban on aid was attached to the Silk Road Strategy Act in 1999
by senator Sam
Brownback. Big oil financially supports scores of other political
flunkies, influential celebrities and lobbyists, US-Azerbaijan “business
councils,” provides funding for academic studies and publications
confirming the Caspian mythology, and withdraws high-priced advertising
from those polemical periodicals which sow the seeds of doubt and rock
their Caspian boat.(46)

These lobbyists are having the upper hand over the few timid opponents
who are trying to filter through the hedges of establishment and alarm
public opinion about
the consequences for US national interest. If a veracious researcher
dares to debunk the Caspian megalomania and calls into question the
degree of competence of the established school of thought, this nimble
crowd will fling charges of interfering with the efforts to develop
American business strategy in the region, disparaging his views with
remarks ranging from “illconceived orientalizing” to “unpatriotic
conduct,” especially after September 11.(47)

But the hard fact remains that, after 100 years of thorough extraction,
there is not as much oil left under the Caspian Sea as we want to
believe. The reserves are sufficient to provide with energy the
Caucasus, where supplies of electricity, gas and fuel are niggardly
rationed, including in the “energy-rich” Azerbaijan, which has turned
into an importer of Russian natural gas and electricity, consuming more
energy than it produces. But they are not commensurate to taking on the
Silk Road Strategy Act, which is just another of our futile and
resource-wasteful attempts to police and correct the region’s ills.

Another side of this “strategy,” pertaining to the presumed economic
significance of the region, has become equally absurd since the 16th
century when it lost its value as part of the Great Silk Route
(transcontinental trade route that linked China to the Mediterranean for
1500 years) due to the great maritime explorations and the fact that the
cheapest way to ship goods between Europe and Asia is by water, not
land. Remaining since then on the periphery of “global economy,”
Transcaucasia does not constitute by itself an area of vital national
interest for the USA. For instance, the combined GDP of Armenia, Georgia
and Azerbaijan, at around $10 billion, is minuscule in international
terms compared with British Petroleum’s turnover of $148 billion for the
year 2000.(48)

THE NAGORNO-KARABAKH IMBROGLIO AND PATRIOTIC BLUSTER

The Azeri official press on 21 February 2001 published what it claimed
were the texts of three successive draft proposals for resolving the
Nagorno-Karabakh
conflict offered by the OSCE Minsk Group in July 1997, December 1997,
and November 1998.(49) Article 1 of the would-be peace deal stipulated
that the
Nagorno-Karabakh Republic and Azerbaijan Republic shall form a “common
state” to be governed by a “joint commission” comprising representatives
of the two
entities, both of which would bring their constitutions into conformity
with the peace agreement. Public reaction in Baku to the publication of
peace proposals was overwhelmingly negative. But, although the uproar
among opposition leaders for a reconquest war is growing (along with
their hopes for a resulting dethronement of the incumbent president),
the Azeri armed forces, with their massive draft-dodging, are not ready
and capable to launch a new offensive.

In fact, the pro-military bluster of some ministers, members of
parliament and media outlets is part of Azerbaijan’s negotiating
strategy, designed to hurry the peace process along by demonstrating
that President Aliev is resisting domestic pressure for war. Discussion
of the possibility of winning it back Nagorno-Karabakh militarily have
become something of a national obsession. It is the rare public forum
that does not showcase officials competing to prove their patriotic
credentials by invoking force if Aliev cannot win the region by
negotiation. But such tactics – apart from being demonstrably
ineffective could seriously threaten the Azeri authorities.

Since 1988, when the Armenian enclave seceded from Azerbaijan, the
recurring cycles of succession in Azeri leadership culminated, as a
rule, in piecemeal
losses of the Azerbaijan SSR titular territory and the ensuing
displacement by incited mobs of a next scapegoat from the presidential
palace: K. Bagirov, A.R. Vezirov, A. Mutalibov, A. Elchibey, plus
several interim figureheads.

Heydar Aliev is too astute a Machiavellian statesman to let that vicious
cycle repeat itself in his tenure. He could himself fall a casualty to
social explosion of his fatigued people, as it happened to his
predecessors. But, being wiser and unwilling to give the opposition such
a chance, Aliev, immediately upon his return to power, reached in 1994
an armistice agreement with the Armenians (who had by then accomplished
their strategic goals), and has managed to maintain it so long, averting
any engagement in a self-destructive reconquest effort, thus cutting
short expectations of him to follow in the beaten path of his bellicose
predecessors.

Aliev told a two-day parliament session on 23-24 February 2001 that all
three drafts of the Minsk Group were unacceptable to Azerbaijan. At the
same time, he
defended his own efforts to reach a settlement, noting that he has met a
total of 98 times with the Minsk Group co-chairs, and discussed the
conflict 18 times with the US president or secretary of state, 16 times
with the French president, 28 times with the Russian president and 78
times with various Turkish leaders. Referring to the possibility of a
military solution, Aliev said however, that Azerbaijan’s armed forces
are not strong enough to do so.(50)

Aliev’s policy of peaceful resolution of the conflict reflects, at the
same time, the extreme unwillingness of general Azeri public, on both
ends of social ladder, to galvanize warfare. Lacking martial traditions,
ordinary Azeris have become openly cynical about their patriotic duty,
having witnessed over the past decade the ravenous venality of
politicians, generals and businessmen, none of whose offspring have
served on the front-line, being employed instead in the profitable oil
business and murky export-import operations.

The Azeri elite, in turn, emulates the paradigm evident on the pinnacle
of power where Ilham Aliev, whom his father is grooming for presidency,
acts as a supreme boss of the moneymaking national oil company instead
of spearheading the national craving for Nagorno-Karabakh and the return
of one million refugees home. Even academics, the main source of
patriotic rhetoric in the early 1990s, have become subdued now.

In April 2001, the American, French, and Russian co-chairmen of the OSCE
Minsk Group conducted several rounds of shuttle talks at Key West
(Florida) with the
presidents of Armenia and Azerbaijan, which produced no concrete result.
Topics discussed included the withdrawal of Armenian forces from
occupied territories, the lifting of the blockade of Armenia, the return
to their homes of displaced persons and refugees, and the status of the
unrecognized Nagorno-Karabakh Republic under a final peace settlement.
In a written statement, the co-chairmen noted that they are preparing a
“new comprehensive proposal that addresses all the problems.”(51)

Observing the past decade of this peace process, one cannot refrain from
pointing out that Transcaucasia is a region of wounded sensibilities and
needs a special
treatment from the great powers imposing their way of solving local
problems. Due to Caucasian historic experience, the traditional
diplomatic cures, such as the “land for peace” formula or an
international peacekeeping force, will not work here. Unlike Israel, all
Caucasian nations have committed ethnic clcansings, which seem to be
final in their national psyche. Unlike the former Yugoslavia where NATO
peacekeepers are deployed, the republics of Transcaucasia are wedged
between formidable regional powers: Russia, Iran and Turkey, each having
special interests there, including territorial claims.

US POLICY IN AZERBAIJAN

We all want to believe that the abstract Azerbaijan in our energy
assessments and strategic designs has reached a certain level of
stability, democracy and economic sufficiency. just listen to our
exuberant experts who return from their regular “fact-finding” trips to
Baku, presumably for a reality check. After fretting a little about
democracy and ignoring the social welfare at all, they start touting the
country’s strategic value and oil -boom progress, judging by the number
of modern shops that have popped up in downtown Baku (unaffordable to
ordinary Azeris save a few thousand who work for foreign companies),
elegant restaurants and foreign cars, reconstructed turn-of-the century
mansions and new glass-covered high-rises.(52)

It is a perplexing task for an American orientalist to fathom the
driving forces of Azeri society beyond the acclaimed anthropological
studies, historical research, human rights issues, immediate political
advice and economic analyses, and consistently caution our government
against the complications engendered by the oil-driven policy of double
standards in a land of distinctive political culture.

The Department of State has elected a no-rebuke policy to overlook that
Azerbaijan did not live up to its Big Brother’s expectations. We are
currently consumed,
until the next obvious blunder, with a simplistic illusion of the
increasing oil production as a panacea for all the maladies of
Azerbaijan, misguided by the special interest of oil corporations. But
my scholarly obligation is to remind that there is no stability without
democracy and middle-class prosperity. Azerbaijan lacks both, and we
shall lose much more than just oil when the Aliev era comes to close
with the natural finale of the 80-year-old leader.

The cordial receptions for President Aliev at the White House elucidated
that, conniving at the ethnic cleansing, human rights violations,
electoral travesties, total corruption, international aid embezzlement,
political oppression, autocratic rule and personality cult, both Clinton
and G.W. Bush administrations have clearly opted for a double-standard
stability over democracy in Azerbaijan the policy, which Congress would
have never tolerated in application to any European nation; for
instance, to Belarus.

The principal constraint for the US government concerning Azerbaijan for
the past decade was Section 907 of the Freedom Support Act passed by
Congress in
1992, which singled out this nation from any assistance program extended
to former Soviet republics, until Azerbaijan lifts its economic blockade
of Armenia imposed as a contingency of the Karabakh war.(53)

The September 11 crisis and our Afghanistan intervention were
instrumentais in lifting the Azerbaijan embargo. President G.W. Bush
finally signed on 25 January 2002 the long-anticipated waiver of Section
907, which barred direct US government aid to Azerbaijan as long as that
country persisted in its blockade of Armenia. The waiver was in
acknowledgment of Aliev’s support for the international antiterrorist
coalition and enabled Azerbaijan to receive $50 million in American aid
in the year 2002.

With the waiver of Section 907, a Pentagon delegation visited Baku in
March 2002 and reached an agreement on the establishment of a joint
military committee. We
are now directly assisting Azerbaijan to enhance its naval capacity to
secure its maritime borders. This move signifies for the first time that
Washington has directly confronted Iran with the possibility of military
support for Azerbaijan against Tehran’s open desire to expand its
territorial sector in the Caspian Sea and to use force to that end.
Recently Iran deployed 38 new warships there. In summer 2001, these
warships forced two Azeri oil exploration vessels out of what Tehran
considers to be Iranian territorial waters and compelled the cessation
of the field’s concession to British Petroleum.

Emulating G.W. Bush’s 20 September 2001 speech to a joint session of
Congress, Azeri officials have learned to use the international
counterterrorist rhetoric to justify their stance on the Karabakh issue
and to screen their political prisoners at home from international
scrutiny, classifying the NKR as a “terrorist heaven” and seeking
American support against Armenian irredentism.(54) They were not alone,
as all conflicting parties in the Caucasus started to label their
adversaries as “terrorists” in the mode of the day and hoping for
American support: Georgian officials designated the breakaway Republic
of Abkhazia a “renegade terrorist formation,” while Russia branded its
Chechen rebels “Islamic terrorists,” etc.

Although Azerbaijan has been relegated to the category of a Third World
nation, its people perceive their perils in a way different from other
backward societies, raising many unexpected obstructions for American
political and economic strategy. The basic psychological problem we are
doomed to face in Azerbaijan for years ahead is that, due to socialist
legacy, wide segments of population are well educated and have seen much
better days of a welfare state. It is not easy to persuade them towards
the benefits of “free society” and foreign investment. The bulk of the
population, those millions of people who are not employed in the oil
industry, do not know any English or do not have the youth and the right
look for work in a shop that serves Westerners, cannot participate in
this economy driven by foreign investment and foreign tastes.

The second exigency for a realistic American policy in Azerbaijan
derives from the intrinsic Caucasian spirit of equality and social
justice. Strong egalitarianism is in the blood of any Caucasian native,
impeding the implantation of capitalist values. Distinctive from the
surrounding big nations, none of the Caucasian peoples can endure any
form of tyranny, special privileges and gaping social disparities for a
long time. Unless a tangible recovery is extended to average Azeri
families, the “stability” and “transition” prescriptions imposed by the
West and the IMF, will be eventually rejected, and a radical popular
outrage is likely to be leveled at the oil
concessions as the most salient symbols of inequality, corruption,
frustration and national humiliation.

Washington has a substantial experience in dealings with such classic
strongmen as Fulgencio Batista and the Shah of Iran, but the same
historic experience
shows that whatever short-term benefits a particular oil corporation or
American diplomacy may gain for compromising our democratic principles,
there is an
inevitable public backlash that follows, as it happened in Cuba and
Iran. Azerbaijan cannot be immune to this social law of history. We must
as well take into consideration the long history of outwardly display of
fealty to regional patrons by Azeri satraps. Given their treacherous
past, how reliable will our new “friends” in Baku will be tomorrow, with
imperial resurgence of Russia and the rise of Islamic radicalism in
Central Asia?

Azerbaijan may present our policymakers with a considerable quandary,
following in the path of other outcasts lost in the Middle East. We have
to learn
from their lessons over and over again, that corrupt governments, no
matter how loyal they are to us now, are not the best guarantees of
stable democracy and free development, let alone the long-term US
national interest. Before long, having pumped off handsome fortunes, our
powerful “best friends” safely abscond to the civilized and secure
Europe, leaving Uncle Sam culpable in the shambles of their respective
countries.

NOTES

1. Monitor: monthly analytical survey (Baku), March 2002, p 8.
2. Azerbaycan (Baku), 18 October 2002.
3. The Transition Report: November 2001 (London: EBRD, 2001), p 36.
4. Social Assessments for Better Development: case Studies from Albania,
Azerbaijan and Moldova (Washington: World Bank, 2002), p 36.
5. United Nations Development Program, Human Development under
Transition: Annual National Reports (New York: United Nations, 2001), p 87.
6. Yeni Musavat (Baku), 11 January 2002.
7. Azerbaijan: weekly analytical-information bulletin (Baku), No.23, 6
june 2002.
8. The first son Ilham Aliev alone lost $6 million in his 1996-1998
gambling season: Turkish Daily News (Ankara), 25 August 1999.
9. Nezavisimaya gazeta (Moscow), 1 December 1999.
10. This amount equates the remittances sent home from France in 2000 by
Moroccan workers, which further typifies Azerbaijan as a Third-World
country: The
Economist (London), 2 November 2002, p 11.
11. Author interview at the National Academy of Sciences in Baku,
January 2002.
12. The United Nations High Commission for Refugees, for instance,
suspended its activities in Azerbaijan in the wake of accusations by
Chechen refugees that
its local office staff in Baku demand bribes in return for the
allocation of humanitarian aid and allowances. (RFE/RL Newsline, 28
March 2002, at ).
13. There is, naturally, no documentary proof, but this is the practice
verbally described to me by many a dismissed officer. One of my
relatives, a high-ranking border guard officer, was killed in a highway
“traffic accident” after refusing to whack up with his superiors.
14. Jeffrey Goldberg, “Getting crude in Baku,” New York Times Magazine,
4 October 1998, p.69.
15. Read just a few stories in Bakuvian newspapers: Adalet, 4 December
2002; Azadliq, 15 January 2002; Exo, 18 September 2002; Muxalifet, 19
November 2002.
16. Documentary evidence compiled by the national security ministry
investigations of this and the following instances of government
corruption adduced in this article, were presented by the ministry’s
renegade officer Ramin Nagiev in his confessions in the online
publication Virtualny Monitor ().
17. G. Ibadov, Azerbaijan i Rossia: obschestva i gosudarstva (Moscow,
2001), pp 81-82.
18. Financial Times, 22 November 2001.
19. 2002 Corruption Perceptions Index ();
Control Risks Group’s Global Corruption Survey 2002 ().
20. His government investigation report, published in the newspaper
Bakinsky Rabochy on 26 August 2000, claimed that Mr. Guliev is not a
political opponent of
President Aliev but a convicted criminal who robbed his own country and
thereby has managed to fund his opposition activities, and reproved the
governments of
“those countries that criticize corruption in Azerbaijan, but refuse to
comply with repeated requests for his extradition.”
21. Cumhuriyet (Istanbul), 1 july 1993.
22. N.I. Ryzhkov, Perestroika: lstoria predatelstv (Moscow, 1992), pp.
204-208; E.K.Ligachev, Kak eto bylo (Novosibirsk, 1995), pp. 183-184.
23. Quoted by ITAR-TASS, 12 April 2002 ().
24. Claudia Rosett, “Potentate Jr.: An interview with Azerbaijan’s
dictator-in-training,” Wall Street Journal, 6 November 2002.
25. see the State Department’s Dispatch magazine, October 1996, p. 14;
May 1999, p. 12.
26. United States Energy Information Administration, “Caspian Sea
Region” ().
27. Owen Matthews, “The next move is check,” Newsweek, 8 April 2002, pp.
44-45.
28. Financial Times, 9 April 2002.
29. For striking similarities between the contemporary Azerbaijan and
the pre-revolutionary Iran, showing how exactly Azerbaijan is following
in the path of its
greater neighbor, see my opinion piece “The next Iran” in the Washington
Post, 28 September 1998.
30. Turan Information Agency (Baku), 5 june 2002
().
31. Agence France-Presse,, 22 October 2002 ().
32. The Economist (London), 26 October 2002, p. 47.
33. Turkish Daily News (Ankara), 23 November 2001.
34. L. Agaev & I. Veliev, Kontrakt veka i problemy neftedobychi na
Kaspii (Baku, 1997), pp. 83-114.
35. oil and Gas Journal (Houston), 24 October 2001, p. 34.
36. The Economist (London), 14 September 2002, p. 26.
37. Washington Post, 22 November 2002.
38. Stanley Kober, The Great Game, Round 2: Washington’s Misguided
Support for the Baku-Ceyhan oil Pipeline (Cato Institute publication
No.63: Washington, 2000), p. 14; An Agenda for Renewal: US-Russian
Relations (Report by the Russian and Eurasian Program of the Carnegie
Endowment for International Peace: Washington, 2000), p. 28.
39. Zerkalo (Baku), 14 December 2002.
40. “The incredible half-billion-dollar Azerbaijani oil swindle,”
Fortune (New York), 6 March 2000, pp. 78-85.
41. Yeni Musavat (Baku), 29 October 2002.
42. Le Monde (Paris), 6 February 2001.
43. Seymour Hersh, “The price of oil: What was Mobil up in Kazakhstan
and Russia?” New Yorker, 9 july 2001, pp. 48-65.
44. A. Kusainov, “Kazakhstan prime minister admits to existence of
secret government fund,” Eurasia Insight, 5 April 2002
().
45. Wall Street Journal, 4 January 2002.
46. For a lineup of former top government officials in the pay of oil
corporations, including Lloyd Bentsen, James Baker, John Sununu, Brent
Scowcroft, Zbigniew
Brzezinski, Richard Armitage (who is now undersecretary of state) and
other prominent personalities who chair several US-Azerbaijan lobby
groups, see the Washington Post, 6 July 1997.
47. Quoted from comments by my anonymous referees.
48. Given the limited space for historic validation of this
disheartening truth, I would refer the reader to “The (not so) Great
Game” by Anatole lieven in the
Winter 1999/2000 issue of the National Interest (Washington), pp. 69-80.
49. Azerbaycan (Baku), 21 February 2001.
50. In an interview with the Los Angeles Times published on 3 April
2001, the NKR president Arkady Gukasian also said that he will not agree
to a settlement that creates a confederation with Azerbaijan, and all
options other than independence or unification with Armenia will be
rejected by Stepanakert and could lead to a resumption of war.
51. OSCE Newsletter (Vienna), May 2001, p. 8.
52. Read, for example, Azerbaijan Diary by Thomas Goltz (Armonk, N.Y.,
1998); his “Letter from Baku” in the National Interest (Washington),
Summer 1997,
pp.37-45; and similar success stories in almost every issue of
Azerbaijan International magazine published in California.
53. The clause reads: “United States assistance under this or any other
act… may not be provided to the government of Azerbaijan until the
President determines and so reports to Congress, that the government of
Azerbaijan is taking demonstrable steps to cease all blockades and other
offensive uses of force against Armenia and Nagorno-Karabakh.”
54. See a host of Bakuvian periodicals, both government and opposition,
among them: XaIq, 27 September 2001; Azadliq, 11 October 2001; Ulus, 23
October 2001.

Author Affiliation: Dr. Alec Rasizade is a Doctor of History
Author Address: 501 Seward Avenue, S.E., Washington, DC 20003
Author Bio: Dr. Rasizade, an internationally-known authority on
Azerbaijan, is the author of numerous publications on the Caucasus and
Central Asia, and he has lectured on these areas at many prestigious
universities both in the U.S. and overseas.

The Journal of Third World Studies is a Publication of the Association
of Third World Studies, Inc.

From: Emil Lazarian | Ararat NewsPress