Translating Azerbaijan's oil into reform

Surrounded by a jumble of derelict Soviet-era oil rigs, the sprawling $350 million facility is an oasis of computerized efficiency. Soon, it will be pumping up to 1 million barrels of Caspian crude daily to thirsty Western markets through the new Baku-Ceyhan pipeline.

Thanks to the gusher of profits as Azerbaijan's new oil and gas fields come on-stream, this Caucasus country of 8 million has rocketed in just three years from near-stagnation to become the world's hottest economy. The economy's growth will be a dazzling 32 percent this year, according to Economics Minister Heydar Babayev.

"We need to use this unique opportunity to solve our social and economic problems," says Aliyev, speaking to a group of visiting journalists in his office. "We aim to build a strong, independent, economically self-sufficient, politically free state."

But the Moscow-educated, multilingual president has his work cut out for him: Azerbaijan is rated one of the world's most corrupt countries, and critics have voiced concern that the government is ill-prepared to preside over such a massive influx of wealth. But Aliyev, who's seen his state budget quadruple since 2004, insists the expected $150 billion in oil revenues over the next two decades will be put to good use, slashing poverty and unemployment, rebuilding Azerbaijan's crumbling infrastructure, and creating a sustainable, diversified economy.

Aliyev was parachuted into the presidency after the 2003 death of his father, Azerbaijan's longtime strongman Heydar Aliyev, in polls that few international observers ratified as free or fair. Many experts doubted the former Soviet Union's first political dynasty would last. But the junior Aliyev appears to have successfully held his father's fractious administration together, maintained the friendship of both Russia and the West - while presiding over an exploding oil boom. Last spring, he was invited to the White House for a visit.

The view of Baku from Aliyev's desk is a forest of construction cranes and choking traffic jams, with giant oil platforms hulking on the distant Caspian horizon. But beyond the bustling capital is another face of Azerbaijan: impoverished villagers living in shacks with no indoor plumbing, sporadic gas and electricity supplies, and connected to the world by deeply rutted dirt roads.

"Azerbaijan has so much oil and gas, but people can't even get light on a regular basis," says Kamran, a worker from the northern town of Quba, who asked that his last name not be used. He adds that people have little chance to address their grievances through political action. "There will never be an uprising here because people are too afraid. The minute the police find out that someone is starting to complain or organize others, that person will be jailed or beaten," he says.

Many international organizations that study Azerbaijan appear to share such concerns. "Our authorities are absolutely corrupt, and we can expect nothing good from them," says Leila Yunes, director of the independent Institute for Peace and Democracy in Baku. "Any attempt to assert popular control over the state, through the political process or the media, is immediately crushed."

The New York-based Human Rights Watch says that "Azerbaijan's government has a long-standing record of pressuring opposition parties and civil society groups and limiting critical expression."

Transparency International, which monitors global corruption, places Azerbaijan 137th in a list of 159 countries, while the world media-rights watchdog Reporters Without Borders describes Azerbaijan's situation as "difficult." The Washington-based Freedom House, which rates political openness, this year demoted Azerbaijan from "partly free" to "not free."

But Aliyev questions the accuracy of such judgments.

"I treat these kind of ratings with a high degree of skepticism," says Aliyev. And, like many Azeri officials, he suggests that the negative views of their country originate with Azerbaijan's beleaguered but still highly vocal opposition, which was nearly wiped out in parliamentary polls a year ago, and then violently crushed by police when it tried to protest the election results in the streets of Baku. "We see a complete fiasco of those who pretend to call themselves the opposition in Azerbaijan," says Aliyev. "They've done nothing but criticize, while the government has done a lot. It's the end of their history."

Though international monitors were sharply critical of the 2005 elections, most Western governments, including the U.S., offered Aliyev only mild reproaches. Opposition leaders accuse them of selling out Azerbaijan's freedom for oil. "Why did the West support the (pro-democracy) revolutions in Ukraine and Georgia but they did not support us here, when we had the chance?" says Sardar Jalaloglu, deputy chair of the opposition Democratic Party. "Now, we have no democracy at all here."

But that doesn't seem to have affected investor confidence. British Petroleum, which has managed most of Azerbaijan's oil and gas projects since the mid-1990s, gives Aliyev high marks for maintaining stability in a dangerous neighborhood. "BP has stayed here through very difficult times," says Rashid Javanshir, vice president of BP-Azerbaijan. "The desire of the government to make this work has been key to our decision to stay. Conditions are very favorable to foreign investors here." The Christian Science Monitor

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