AT HISTORY’S CENTRE

Economist.com
Oct 6th 2008

Oil, war and stirring imperial ghosts

INTREPID travellers have long had a penchant for visiting the
Caucasus. This is a land of mountains and seas, squeezed into the
borders of three old empires–Persian, Ottoman and Russian. As such it
has been strategically important (and remains so, as we learned again
in the short war that Russia fought against Georgia in August). And it
has an enticing whiff of exoticism, associated with all the old images
of fierce mountain tribesmen who spent the 19th century resisting
successive attacks by the Russians, always keen to incorporate the
Caucasus into their empire.

The city of Baku, where I begin my trip to the three countries of the
south Caucasus (Azerbaijan, Armenia and Georgia), was an important
Russian base during most of those wars. The old walled town in the
centre retains an appealing medieval look. But what attracts the eye
more are the garish modern buildings, extravagantly large cars and
jeeps, massive traffic jams and the city’s general gaudiness. For
this is today an oil town: the equivalent of a Gulf emirate dumped
on the shores of the Caspian.

Baku got there first, of course. Amid today’s glitz can be discerned
some sturdy late 19th century mansions, many of them put up by the
French, when Baku went through its first oil boom. At that time,
this region was responsib le for as much as half of the world’s oil
output. The industry went into decline during the late 20th century
under Soviet rule, but it has boomed in the past decade or so, on the
back of more offshore discoveries in the Caspian and rising oil prices.

Because of its oil and, increasingly, gas, Azerbaijan has become
a key country for the West. A stream of top American officials have
visited. The Russians are also courting the country, hoping to persuade
it to ship more of its oil and gas northwards. But the government, led
by President Ilham Aliev, is wary. There are big advantages in selling
energy to all comers, not just to a monolithic unfriendly company like
Russia’s gas giant Gazprom. And BP, the biggest Western oil company in
Baku, has been a great friend to the country for a decade and a half.

The president, who would not grant us an interview, is no democrat,
even though his economic advisers insist that he has liberalised the
economy and cut back on red tape. So much so, indeed, that Azerbaijan
recently came top for most rapid improvement in the World Bank’s
annual report "Doing Business".

Next weekend Mr Aliev faces an election that the leading opposition
candidates have boycotted. In a café, we meet one opposition
leader who wanted to run, but he notes that elections are rigged,
the opposition is harassed and the media is not free. Indeed, he
suggests t hat things are a lot worse than they were in the days of
Ilham’s father, Heidar, who ran the country from 1994 to 2002 before
passing it on to his son like some oil-rich satrapy.

In the streets of Baku, plenty of people complain about soaring
inflation, and most also suggest that the benefits of high oil
prices have not trickled down to ordinary folk. Azerbaijan has a bad
reputation for corruption, although BP (which by some measures accounts
for half of the country’s GDP) says it has no problems. Certainly the
oil money is going somewhere–the restaurant in the old town where
we have dinner, and the hotel in which we stay, are both almost as
expensive as in Moscow, which is now the costliest city in Europe. And,
given the country’s reputation for corruption, it is no surprise to
find that the cost of an entry visa at Heidar Aliev international
airport has risen sharply to $100–or that an army of dubious-looking
fixers swarm around the arrivals hall offering to sort out all the
documents and jump the long queues. For a price, naturally.

–Boundary_(ID_4b41DPgWchRxAdfk4U0b6A) —

From: Emil Lazarian | Ararat NewsPress