Gaze out from the skyscrapers reaching for the clouds above Baku and four converging vistas describe the city’s history. Wrapped around the fortified walls of the old medieval settlement are the elegant avenues and boulevards built during Azerbaijan’s first oil rush. These ornamented, if now badly faded, monuments to late 19th-century European culture speak of the riches pumped from beneath the shores of the Caspian by the Nobel Brothers Petroleum Company. The almost Parisian enclave is encircled in turn, though, by the square-jawed architectural brutalism which marched into the city with Lenin’s Soviet Union. Finally, the flimsy, rotting apartment blocks of the Brezhnev era bear vivid testimony to the hollow bravado of a failing economic system.
The new Azerbaijan punches through the old; the garish steel and glass towers that pay homage to the country’s latest oil rush have no respect for the past. Baku is a desolate backwater-turned boom town, soon to be hit by what one resident western diplomat calls a “wall of money”. Sleek Mercedes jostle for space on the capital’s pot-holed streets with battered Ladas and Volgas, the designer boutiques strung along Nobel’s corniche with impoverished street traders and half-starved strays. This former way station on Asia’s silk road was a vital piece in the 19th-century game played out by Britain and Russia as they wrestled for control of the routes to India. Now Azerbaijan sits at the crossroads of another set of strategic power-plays.
Think of the forces reshaping the contours of the geopolitical landscape at the start of the 21st century. Some would cite first the struggle between authoritarianism and democracy. Others, the bloody conflict between the west and the militant Islam of the jihadis. Others still, the scramble for secure energy supplies in a world that cannot meet the soaring demand for hydrocarbons from rising great powers such as China and India. You could add to the list the more immediate battles being fought by the US in Afghanistan and Iraq, Iran’s quest for nuclear technology, or the broader competition between Washington and Moscow for influence in the former states of the Soviet Union. Whatever your preferred ordering, geography, history, religion and natural resources have somehow contrived to put the eight million people of Azerbaijan at every intersection.
For most of the last century, from its seizure by Moscow after the Russian revolution to the break-up of the Soviet Union, Azerbaijan nestled in a forgotten corner of the globe. Now it demands the west’s attention. Early in November, it will hold what its authoritarian president Ilham Aliyev promises will be free and fair elections to the nation’s parliament. If the poll is rigged, opposition parties are pledged to take to the streets in imitation of the recent popular uprisings in Georgia and Ukraine. At stake is the strategic balance in one of the world’s most combustible regions.
The map tells the story of Azerbaijan’s new significance. One of the five littoral states of the landlocked Caspian, it sits along an arc of insecurity sweeping eastwards from the Bosporus. To Azerbaijan’s north lies Russia, bent still on fomenting troubles in the former Soviet republics of the Caucasus and central Asia lest they are too warm in their embrace of the west. West of Baku, Georgia still lives in the shadow of Russian menace after its dash for democracy in the “rose revolution” two years ago. Closer to home, a large slice of Azerbaijan’s own territory is under the control of Armenian military forces, following an uprising in Nagorno-Karabakh, an ethnic Armenian enclave, more than a decade ago.
If that were not enough, Azerbaijan, a predominantly Muslim country with a secular outlook and constitution, looks uneasily at the radical Shia regime to its south in Tehran. Visitors to Baku often are reminded that there are more ethnic Azeris living in Iran than in Azerbaijan. Beyond Georgia, meanwhile, the bloody conflagration in Chechnya offers a constant reminder of the clash between militant Islam and the west. The present contest between authoritarian and democratic forces in Azerbaijan is about more than the distribution of the oil bonanza. Behind it lies the latent fear - felt acutely by the country’s new friends in the west - that, if the oil riches are stolen or squandered, popular discontent may eventually find an outlet in extreme Islam.
It is the oil, though, that grabs western headlines. A century ago, the Caspian met more than half of global demand. Operating in Baku, Sweden’s Nobel brothers ousted America’s Standard Oil as the world’s biggest producer. The money Alfred Nobel made in Azerbaijan was decisive in the establishment of the eponymous prizes. The archaeology of this earlier boom is still clearly visible from the hills around Baku. Just beyond the city centre, the Caspian shoreline is scarred with the detritus of ancient derricks and “nodding donkey” extraction machines, the blackened sand and stagnant pools of tar criss-crossed with rusting pipes. Further out lies a vast complex of rotting platforms, rigs and pipelines built just offshore during Soviet times. These ecological disaster zones still produce modest amounts of oil. But the output is as nothing compared to the quantities now being pumped from huge, western-built platforms 50km or so from the shore in deeper Caspian waters.
Depending on who you ask, David Woodward is the third, or at worst, fourth most important man in Azerbaijan. His office, a few miles from the centre of Baku, sits in the aptly named Villa Petrolea. Sixty years or so ago, this sprawling site was a people’s palace, a place where workers and their families came for the rest and recreation promised by a munificent communist state. Perhaps Baku was so blessed because Stalin had cut his revolutionary teeth in the city during workers’ protests at the turn of the century. Now, borrowing its name from the mansion built by the Nobel brothers on the other side of town, Villa Petrolea is headquarters to BP, the global energy company that has done more than any other to explore and exploit the country’s offshore oil reserves.
As director for the past six years of BP’s Caspian operations, Woodward has overseen the construction of the vast new oil and gas terminal at Sangachal and taken responsibility for a 1,000-mile pipeline that will carry Azerbaijan’s oil to the Turkish Mediterranean port of Ceyhan. A soft-spoken manner belies his status - shirt-sleeved and bearded, Woodward looks more the engineer than satrap. But no-one doubts his power. BP is betting some $20bn on Azerbaijan’s oil fields - its biggest single investment in global oil production. The pipeline, as politically controversial as it was fraught with technical challenges, was a huge gamble. BP could have reached the open seas along routes through Russia to the north, or Iran to the south. But politics - American as well much as Azerbaijani - demanded the pipeline follow the roughest, and potentially most dangerous, terrain through the southern Caucasus.
Woodward explains that, measured against total world production, the one million barrels a day that will soon reach the supertankers at Ceyhan amounts only to a little over 1 per cent. But it will represent about a quarter of the expected increase in global consumption during the next few years. It is these marginal shifts in supply and demand that set the price. Kazakhstan, another oil-rich former Soviet republic on the eastern shore of the Caspian, is already pumping crude to China. There is talk of linking its production platforms to those of Azerbaijan. Woodward’s Baku-Tblisi-Ceyhan pipeline could eventually be carrying close to two million barrels a day to western markets.
By far the largest foreign investor in the country’s oil industry, and provider of vital western expertise, BP is the central pillar of Azerbaijan’s economy. Hence the deference of locals to its boss. But it will be 20 years before BP has pumped enough oil to gain sufficient return on its investment. To be sure of securing its revenues, the company needs, above all, political certainty. Woodward faces constant pressure from opposition politicians to take a firmer stand against the overtly authoritarian government with which BP has struck its grand Caspian bargain. Some of the company’s local employees are also unhappy - the company’s silence after the fixing of presidential elections in 2003 sparked something of a backlash among Azerbaijan nationals in the Villa Petrolea.
Publicly discreet, Woodward walks a tightrope. He cannot press the present regime too hard for fear of being accused of interference in the country’s political contest. Yet he knows that BP’s interests lie in a stable transition to political pluralism. The company, he tells a group of visitors from the west, “needs to be seen as a force for good in the country” rather than simply a docile ally of the present regime. The only assured route to stability - and thus to a predictable profit on BP’s investment - is progress towards democracy.
Tall, broad-shouldered, and with the easy smile of the rich and powerful, Ilham Aliyev speaks from the same text. Greeting a group of American and European visitors, the 43-year-old president is charming and urbane. He knows the west. As vice-president of the state oil company during the 1990s, he travelled widely. His critics whisper that quite a lot of his youth (and too much of his country’s money) was spent at the tables of Europe’s smarter casinos. True or otherwise, the president speaks fluent English, and is relaxed in the company of foreigners. He also knows what they want to hear.
Ilham became president two years ago, after the death of his father. Heydar Aliyev had ruled the country for a decade, restoring order and rebuilding national pride after the disastrous war with Armenia. He still stares down from the walls of every government office and company boardroom. The visitor’s first instinct is that ever-present portraits are something of a slight to his successor. But it is soon apparent that the cult of Heydar serves Ilham well. The son took power after elections universally condemned outside Azerbaijan as overtly fraudulent. Opposition leaders were beaten and arrested, ballot boxes stuffed. Ilham escaped anything more than censure. Azerbaijan had proved itself a reliable ally by signing up early to George W. Bush’s war on terrorism and to the invasion of Iraq. Washington decided to give Aliyev another chance.
I meet the president as part of a visiting study group led by the German Marshall Fund of the United States, a transatlantic think tank that has been more alert than most to the strategic significance of the southern Caucasus and Caspian. The GMF, as it is known, has been building bridges between the old Europe and its new neighbours. Aliyev therefore is expansive in his welcome. Coming parliamentary elections on November 6, he begins, will show clearly Azerbaijan’s commitment to western-style democracy. “We need them to be free and fair to allow Azerbaijan to integrate more closely into the Euro-Atlantic community.”
That last phrase - the goal of integration in the Euro-Atlantic community - is repeated over and again by senior officials and ministers in Baku. Forget geography and religion; like those of its neighbour Turkey, Azerbaijan’s elites think of themselves as Europeans. The government has built links with the European Union and Nato. Along with Georgia, it sees itself as eventually a full member of those organisations.
As with many former Soviet republics, the ties that matter most at present are those with Washington. Reno Harnish, the US ambassador in Baku, jostles with BP’s Woodward for a place in the country’s top five players. Aliyev, who tells us that he had visited Washington 15 times or more, understands well both his country’s vulnerability and strategic importance. Russia’s military support for Armenia after the war in Nagorno-Karabakh gives Azerbaijan good cause to feel insecure. No European government would put its soldiers in harm’s way to defend Baku. The US alone has cause and means to guarantee its security.
So it is no accident that the constant US military air traffic to Afghanistan and Iraq is routed over Azerbaijan. One American diplomat describes the air corridor as a modern-day Suez Canal. Donald Rumsfeld, the US defence secretary, is a frequent visitor to Baku. Rumours abound that he is seeking a new US air base to fill the gap left by the enforced closure of the Pentagon’s operations in Uzbekistan. Washington already has a radar station close to the Iranian border, and admits it is helping to refurbish an old Soviet air base. For its part, Azerbaijan has a small contingent in the US-led coalition in Iraq. Its president, still waiting for an invitation to visit George W. Bush in the White House, insists Azerbaijan will stay in Iraq for as long as it takes.
Ambassador Harnish is probably as outspoken as you could expect of a diplomat from a friendly country in demanding that Aliyev live up to his commitment to fair elections. In public speeches and private meetings he insists that democracy alone can provide long-term security. During my stay in Baku, I saw one US diplomat publicly rebuke a senior presidential official after being snubbed in attempts to monitor the election campaign outside Baku.
But you get the impression, too, that Harnish and his fellow diplomats, like the managers at BP, are engaged in a delicate balancing act. They can push the regime so far - but not so far that it might consider a rapprochement with Moscow or opt for the violent repression of opponents now being seen in Washington’s erstwhile ally Uzbekistan. They also face an awkward question. Power in Azerbaijan is synonymous with wealth. The country, in the words of one European diplomat, is irredeemably corrupt. If the oil price stays above $50 a barrel, the state’s oil income is set to rise during the next five years from about $2bn a year to closer to $20bn. Why would those in power give up everything just as a steady flow of hydrocarbon revenues becomes a torrent?
Broad-shouldered, thick set and grey-suited, with his silver hair swept back from his forehead, Ramiz Mehtiev fits every westerner’s image of the Soviet-era commissar. While Heydar Aliyev served as the KGB’s chief in Azerbaijan, Mehtiev was secretary of ideology to the communist party. Now, though, the chief of the presidential staff is fluent in the language of engagement with the west and of orderly transition to democracy. The government’s goal, he declares, is the “full triumph of democratic values”. In return, it asked of friends and allies only that they understood that Azerbaijan had chosen its own path to a political pluralism - evolution not revolution. Trust us.
There are many in Baku who believe that Mehtiev wields more power than Ilham Aliyev. Western diplomats speculate that he struck a bargain with Heydar while the former president lay on his deathbed. Ilham would inherit the crown and with it ready access to the country’s oil riches, but Mehtiev would govern. When I ask him whether the geography of the presidential palace - his office in the former headquarters of Azerbaijan’s communist party sits five floors above that of the president - speaks to the realities of power, the chief of staff responds with a hearty laugh. He is a mere servant of the president, he says. My sense is that he is secretly flattered.
The distribution of power in Azerbaijan owes more to clan and familial ties than to nominal political hierarchies. Mehtiev, as well as being a close ally of the revered Heydar, is the most important member of the dominant Nakhichevani clan, even if Ilham is its titular head. The clans mirror Azerbaijan’s patchwork of regional identities. Though the country was briefly independent after the fall of Tsar Nicholas in 1917, its nationhood, paradoxically, was forged during the long period of Soviet rule. The Nakhichevanis hail originally from the Nakhichevan enclave bordering Turkey and Iran, which is now cut off from the rest of the country by a strip of Armenian territory. The more numerous Yerazi clan comprises Azeris originally from Armenia, while the Bakinets have their power base in the country’s capital. The Karabakhis come from Nagorno-Karabakh. Others - such as the Cheki or the Avars - have smaller regional bases.
These structures are far from monolithic. Regional networks are intertwined with business and political alliances. Strategic marriages are commonplace. Jalal Aliyev, the president’s uncle, leads the Yerazi clan. The importance of the tribal identities is that they elbow aside any independent, neutral political authority. It is no coincidence that the president is reputed to be the country’s richest man; nor, perhaps, that his close friend Kemaleddin Heydarov is at once head of the state customs committee and one of Azerbaijan’s most prominent businessmen. Heydar Aliyev was a master at dividing the spoils in a way calculated to guarantee his own power. His son is said to be less adept, leaving to Mehtiev much of the task - and the power that accompanies it - of balancing competing interests.
Clans also provide a substitute for political ideology. The New Azerbaijan party (YAP) founded by Heydar Aliyev and now headed by his son has no political platform to speak of. Instead it is a vehicle through which the regime exercises power. YAP’s promises to the electorate are couched in the broadest terms: stability, economic prosperity and, eventually, the return of the territory of Nagorno-Karabakh from Armenian control. The opposition parties are rooted in their own clan-based networks. They too eschew elaborate manifestos. The important distinction is that they are locked out of the positions of power that give access to the state budget and control over the country’s foreign trade.
The visiting GMF group meets with Azerbaijan’s main opposition leaders in Baku’s Hyatt Regency Hotel. Such are the inextricable ties between business and politics that the hotel in which the group is staying has apparently declined to provide a room for such meetings. We are told that the owners of the building believe it would be bad for business. There is nothing actually corrupt about that, but it is a reminder once again of how potent is the currency of political favours. Aliyev admits Azerbaijan has a problem with corruption, but says it is the inheritance of all the former Soviet republics. There is something in that. But to the visitor, the corruption seems to be woven into the very fabric of public life. From the most junior to the senior, public employees expect “tips”. Police officers supplement their meagre incomes by “fining” innocent motorists. Government ministries demand handsome commissions to lead foreign businesses through the bureaucratic maze. Corruption is not so much part of the system but the system itself.
Isa Gambar heads the Musavat, or Equality, party and is a leading figure in the Azadlig (”Freedom”) bloc of opposition groups. The alliance draws on the experience of the democracy movements in Ukraine and Georgia. Azadlig has followed Ukraine’s Victor Yushchenko in adopting orange as a unifying colour for its election posters and rallies. The red rose carried by supporters of Mikhail Saakashvili in Georgia has its counterpart in Azadlig’s pinker carnation. New political ties have been established between Baku, Tblisi and Kiev so that Azerbaijan might catch the wind of democratic change in the former Soviet Union.
Gambar, though, is pessimistic about the elections. He concedes that the government has stepped back from the unashamed repression and ballot-rigging that saw Ilham Aliyev installed in the presidential palace. Local officials have been told to be even-handed in their treatment of government and opposition candidates. A new publicly run television channel has given some voice to the president’s opponents, and the election commissions have been reconstituted. Hundreds of foreign election observers will check the ballots. But Gambar’s charge is that Aliyev is applying only a veneer of democracy, to placate his western friends. The election commissions are still dominated by government apparatchiks. Opposition rallies have been banned and candidates are routinely arrested and detained. A prominent journalist and critic of the government was recently murdered, according to western diplomats, by the state security services.
Ali Kerimli, the leader of the Popular Front party and an ally of Gambar in Azadlig, says one of the opposition’s best chances now is to create an international mood which restrains the regime from using violence when its opponents take to the streets. He worries, though, that western governments will not match their words with actions. A vacuous statement from the European Union on the coming elections seems to confirm his scepticism. The president’s strategy is to move far enough to satisfy politicians in Washington and in European capitals, but nowhere near enough to allow the people a genuine choice. Local people, Kerimli says, have not forgotten that France’s Jacques Chirac was one of the very first to congratulate Ilham Aliyev on his presidential election victory.
Kerimli may be right. The many diplomats I spoke to in Baku were careful to hedge their bets. Yes, they expected the elections to fall short of the required standards. Yes, they were exerting pressure, and if necessary, would be louder in their protests. But Aliyev was travelling in the right direction. Western governments, I heard many times, could not become allies of the opposition. In that latter judgment, of course, the diplomats are right. But the suspicion they leave is they don’t quite believe their own rhetoric - that short-term stability remains the priority, even if it comes at the expense of long-term security. They seem to judge that, for the time being, it is enough for Aliyev to make modest concessions. Maybe they are right. But a glance at the speed of events in Georgia and Ukraine testifies to the limits of such realpolitik. Experience further afield - think of Nigeria and Algeria - trumpets a warning that oil can be a curse rather than a bounty.
The vast majority of Azerbaijan’s people in the inhospitable regions outside the capital have seen nothing of the economic boom. Neither politics nor oil have thus far offered an escape from poverty. Discontent runs particularly deep among the the hundreds of thousands forced to flee the region around Nagorno-Karabakh. The president is right in his insistence that the conflict can only be settled by negotiation. Azerbaijan has nothing to gain and much to lose from another war. But the refugees feel abandoned to injustice. Militant Islam may see its opportunity. For their part, the emerging middle classes in and around Baku demand a voice that can only come with political engagement.
For outsiders, it is a salutary tale. The big geopolitical debate of our times is between the realism that says the west must treat with the world as it is, and the liberal interventionism that argues that global security and prosperity are ultimately dependent on the spread of democracy. The people of Azerbaijan don’t talk about it in those arid, high-flown terms, but this is the great game now being played in Baku. We all have a stake in the outcome.
