Announcement

Collapse
No announcement yet.

BAKU: Azerbaijan Descending Into Third World After Decade of Indep.

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • BAKU: Azerbaijan Descending Into Third World After Decade of Indep.

    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    independence has been replaced by the somber realization that the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 www.rferl.org/newsline).
    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 (http://www.virtualmonitor.org).
    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 (http://www.transparency.de);
    Control Risks Group's Global Corruption Survey 2002 (http://www.crg.com).
    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 (http://www.itar-tass.com/news.asp).
    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" (http://www.eia.doe/gov).
    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
    (http://www.turaninfo.com).
    31. Agence France-Presse,, 22 October 2002 (http://www.afp.com).
    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
    (http://www.eurasianet.org/departments/insight).
    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
Working...
X