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Azerbaijan: heaven for foreign capital, hell for its people
27 January 2014. A World to Win News Service. To understand the situation in the Republic of Azerbaijan, we need to consider the country’s position in the world imperialist division of labour and its role in creating wealth, and in the defence and advance of the interests of the Western imperialists, particularly the U.S., in the strategic and oil-rich regions of Central Asia, the Caucasus and the Caspian Sea.
Azerbaijan is a small country with a population of 9.3 million. It borders on Iran, Russia, Georgia, Armenia and Turkey.
Azerbaijan lost 10 percent of its territory in the war with Armenia in the early 1990s. Nearly a million war refugees are still living in harsh conditions, a section of them still in makeshift camps.
The country has become a haven for reactionary fundamentalists fighting against Russian rule in Daghistan and Chechnya, as well as an expanding territory of influence by the rulers of the Islamic Republic of Iran. Iran has provided a huge amount of financial and human resources under the cover of “humanitarian activity” among war refugees to obtain popular influence. The IRI unconditionally sponsors and pays good wages to any young Azeri male who wants to come and study in Iran – on the condition that he become a mullah.
Azerbaijan became a separate country after the collapse of the Soviet Union in 1991. The separation was not a smooth process. Wars with neighbouring countries and brutal and bloody repression and massacres internally were and still are the message Russia left behind: Never underestimate our power!
Following independence came a short period of instability due to the effects of repeated defeats suffered in the war with Armenia, and violent political contradictions within the ruling class due to their tendencies to ally with one or another power. Gradually Western and mainly U.S. influence became predominant. Under these conditions Heydar Aliyev came to power in 1993 and ruled brutally until 2003. During the Soviet era, he was their number one man in Azerbaijan from 1969-1982, when he was promoted to a higher level and went to Moscow. After independence he tirelessly paved the way for Western influence and penetration in Azerbaijan and managed to stop the war with Armenia by leaning toward the U.S.
His son, Ilham Aliyev, took over from his father and changed the constitution to eliminate the restriction on the number of presidential terms, indicating his ambition to be president for life.
Huge oil and gas revenues and foreign debts
A country with enormous oil and natural gas resources, Azerbaijan is ranked as nineteenth in the world. Its pipelines now carry a million barrels of oil abroad every year. It has seven billion barrels in estimated reserves and explorations for more are ongoing. Due to the oil boom, the size of Azerbaijan’s economy tripled over the last decade, creating a trade surplus of $12 billion.
The country’s sovereign wealth fund stands at over $12 billion. This money is in the fist of the regime, particularly the president.
But from 2006 until the first half of 2011, the state’s foreign debts increased from $1.9 billion to $14. 5 billion, according to Finance Ministry of Republic of Azerbaijan. Private sector debt underwent a similar increase, according to the same source.
Where does this money go?
Under the clans and circles grouped around the Aliyev family, Azerbaijan’s government is one of the world’s most corrupt. According to the constitution of Azerbaijan, the president cannot enter into economic activities, but through his family and close relatives they have a web of inter-knitted businesses stretching from Panama to Dubai. Working through eleven off-shore companies in Panama, they have set up branches in Azerbaijan, basically controlling most of the country’s highly profitable companies in sectors such as telecommunications, construction, banking, tourism, imports and exports (including monopoly control over cotton exports), aviation, mining and the sale of Caspian Beluga caviar. The family income stream also includes money from the sale of high governmental positions, its direct control and privatizing of income from customs and investments in real estate in Dubai. The president’s 12-year-old son owned $75 million in property in Dubai and many more investments.
The drama of the Eurovision song contest
In a PR stunt meant to garner international respectability for a corrupt regime, two contestants from Azerbaijan won the highly political and commercial Eurovision song contest in 2011. Consequently, Baku, the country’s capital, became the host city for the event the following year. Many houses were demolished to build the infrastructure and the contest hall. Often homes were razed to the ground in the early hours of the morning, leaving their inhabitants with nowhere to live. The government moved them into poorly built and serviced high-rise apartment buildings. Many were beaten and imprisoned during the protests against the evictions.
All these operations were carried out by Azinko Holding LLC. In Azerbaijan, people know that this company is owned by the ruling Aliyev clan.
The final cost of such projects is always highly inflated because budget allocations, pricing and quality control are determined at the top. The huge amount of bribery, the lack of transparency and many other factors contribute to the shrinking of oil revenues and the transfer of funds from government accounts to the private accounts of the head of government and his family. This is how many governments of countries under the domination of imperialism are run, giving ruling bureaucrat capitalists in power direct access to funds. The imperialists are the direct beneficiary of such client regimes. This can be observed by studying the small and even large print in the oil and gas contracts.
An example of how such regimes allow foreign monopoly capitalists to grab a country’s resources for almost nothing is a gold mine in Azerbaijan bought under the company name of Inglis, which originates from Panama offshore companies. The land belonging to the local community was confiscated, fresh water resources were directed to mining use and local roads destroyed due to explosions and excavations. Highly toxic waste seeps down towards local villages, ruining people’s sources of income – very small-scale livestock and farming – and health. At the same time consumer goods have become highly overpriced. The interests of the ruling clan and imperialist investment are intertwined. Local profits go to shore up a regime whose “corrupt” rule allows foreign capital to make totally legal super-profits at the expense of the people and the country.
Khadija Ismaeilova, an investigative journalist looking into the business activities of the president and his family, has been repeatedly threatened with death. Secret cameras were placed in her flat, her private life secretly filmed and posted on the Internet.
The chief editor of Monitor magazine, Ilmar Hoseinov, who was not pro-government, was killed – shot five times in the mouth in front of his house. This was a message to those who want to speak up. The murderers were never found.
When journalist Baha addin Hazif asked the First Lady where she gets the money for her private school building programme, Hazif was kidnapped and his lips cut.
Jabbar Savalan, a young activist, posted his opinion regarding corruption and social injustices. He was arrested, tortured and charged with drug possession.
There is no free social media. Public gatherings are under strict supervision. During the election period, Freedom Square and the open space on the boulevard were boarded up and closed.
Nevertheless, in October 2013 the Azerbaijan government was awarded a non-permanent UN Security Council membership for the first time.
The dire situation of the people – women the hardest hit
Despite enormous reserves of gas and oil, the supply of gas and electricity to Azerbaijan’s towns and villages is extremely irregular. Even in Baku, power and gas cuts are normal routine. The country’s energy resources have to be exported. An absolute majority of people find it hard to feed their family. Apart from the export-orientated production of a few raw materials, agriculture and industrial production has become almost extinct.
Managers, high-level technicians and skilled workers in the export sectors obtain good wages, but for the rest of the people life is an uphill struggle. A secondary school teacher makes around $250-350 a month, while a kilo of meat costs more than $11. In the war refugee camps, young women are sexually abused for a loaf of bread. In some cases police act as pimps, selling prostitutes to potential customers. Azerbaijan has become a major centre in the international trafficking of women. Azeri teenage girls are forced into prostitution in many neighbouring countries. Hundreds also work as prostitutes in hotels and casinos in Georgia. Tens of thousands work in Iran, Turkey, the UAE, Russia and as far away as Afghanistan. Domestically, a significant number of brothels are making huge profits by enslaving women.
In April 2013, the Azerbaijan parliament debated the legalization of prostitution as a measure against human trafficking and corruption!
Government officials at different levels reap big money from domestic and international human trafficking. The legalization of such trade only serves the monopolization of the resulting income in the hands of higher officials, who already benefit to a great degree. Legalized or not, those women will still have to sell their bodies.
The U.S. and Azerbaijan
Azerbaijan is one of the most important and reliable American client states in the Caucasus and Central Asia. The use of its airspace, land, airports and fuel has been vital for the U.S. war in Afghanistan. It also serves the U.S. geographically, in that its existence means that Russia has no border with Iran.
The political and military training of its new rulers has taken place mainly under the supervision of U.S. officials. The regime gives the U.S. and Israel access to an airport near the Iranian border. The country’s two billion dollars worth of anti-aircraft weapons purchased from Israel and the huge presence of foreign military personnel in Azerbaijan are part and parcel of threatening Iran as well as keeping Russian influence under control.
The U.S. has dominance over oil and gas exploration, production and export. U.S. political influence through its military and economic might also suits the regime in Azerbaijan, as well as vice-versa. The regime relies on such support to stay in power, and acts as a very junior partner in robbing the country. That is why in recently-revealed secret U.S. embassy cables, the country’s president is referred to as “Michael Corleone”, referring to the Mafia head in the film The Godfather. The point is that President Aliyev may be a gangster, but he is the U.S.’s gangster.
The regime’s energy and military co-operations with the West, mainly the U.S., has improved Baku’s negotiating positions over Nagorno-Karabakh and other lands lost to Armenia. The solidification of Azerbaijan’s ties with the West, particularly the U.S., is the main factor in Baku’s refusal to dance to Moscow’s tune. But the whole situation still remains extremely fluid, as we witnessed in the case of Georgia, which underwent a Russian invasion and regime-change enforced by the Russian imperialists.
The role of Russia
The Russian imperialists have not only closely monitored events in their ex-back yard, they have also capitalised on any chance to dispute Western control there. Russia took advantage of the political, military and economic problems caused by the U.S.-led invasions of Afghanistan and Iraq as well as the recent Western financial crisis to push for maximum gains in the region.
Nearly ten percent of Azerbaijan’s population benefits from the remittances sent by family members working in Russia, and the number of its people in Russia has increased by almost half in the past few years.
In 2012, Russia signed a $4 billion sale of military equipment to Azerbaijan, including S-300 air defence systems. This volume is expected to increase.
When Russian President Vladimir Putin visited Baku in August 2013, he was accompanied by the heads of most Russian ministries. In this visit, Russia secured its involvement in gas exploration and exports via Russia. The Russian monopoly Rosneft signed an oil and gas agreement with the Azerbaijan state oil company. The details are still to be disclosed. At the same time, Russia made almost no concessions in terms of its support for the Armenian regime and the stalemate in Nagorno-Karabakh. Similarly, Baku resisted joining the Collective Security Organization and Eurasian Union, the Russian-led military and political alliances of former Soviet republics.
Still, damaged relations with Russia due to Azerbaijan’s closure of the Baku-Nororossiysk oil pipe line and the Gabala radar station near the Iranian border in 2012 are on the mend. Talks to reopen the pipeline and station 2,000 Russian military personnel on the same military base have reportedly been positive.
Russia tries to recruit a political opposition
An Oscar-winning film scriptwriter, Rustam Ibragimbekov, 74, tried to register as a candidate for the Azerbaijan presidential race. But he was disqualified over his Azeri-Russian dual citizenship.
Ibragimbekov is extremely influential amongst powerful Azerbaijan businessmen in Russia. In 2012 he co-established the Union of Azeri Organizations in Russia whose membership includes power brokers such as Aras Agalaro, now the father of the president’s son-in-law. Moscow’s attempts to gain influence in Azerbaijan may continue and gain even more momentum as rivalry for control over the region and beyond intensifies. Ibragimbekov complained that the European countries would turn a blind eye to multiple violations in electoral procedures, because of Azeri oil. The possibility of political unrest is strong because of the intolerable conditions of so much of the population.
The October 2013 presidential elections book place in these conditions. The day before the elections, the U.S. television channel CBS reported that Azerbaijan’s electoral authorities had announced Ilham Alyiev as winner with 72 percent of the total votes, even before a single ballot was cast. The next day, after the election, he was again announced as the winner, this time with 85 percent voter support.
Monitors from the Organisation for Security and Cooperation in Europe (OSCE) described the elections as “seriously flawed”. But then, this is Azerbaijan, a pro-Western regime bordered on one side by Iran and the other by Russia. None of the Western powers is seriously going to oppose the regime or call for a new election!