Aliyev Rides High on Geographical Legacy: Oil in Azerbaijan’s Hands at Last

Ilham Aliyev looks set to win a third term as Azerbaijan’s President, having secured a reputed 83% of the vote. Despite a clampdown on political opposition and accusations of human rights abuses, Aliyev remains so popular in Azerbaijan that he did not feel the need to campaign for re-election.

The reason for this popularity is simple; Azerbaijan, particularly its capital Baku, is booming and living standards are rising all the time. The source of the boom? Oil and plenty of it. However, the extraction of oil did not begin during Aliyev’s reign. Indeed, Azerbaijan’s petroleum reserves have been a source of revenue for centuries.

The grandeur of the state oil company's HQ testifies to Azerbaijan's oil wealth
The grandeur of the state oil company’s HQ testifies to Azerbaijan’s oil wealth

Arab historians from as early as the 9th century make reference to Baku’s oil reserves and its export across the Middle East. Marco Polo, during his 14th century travels, describes the rich abundance of Baku oil:

there is a fountain from which oil springs in great abundance, insomuch that a hundred shiploads might be taken from it at one time. This oil is not good to use with food, but ’tis good to burn, and is also used to anoint camels that have the mange. People come from vast distances to fetch it, for in all the countries round about they have no other oil.

Because of its geographical location, near vast oil reserves and the strategically important Caspian Sea, Baku and its environs was always under the subjugation or vassalage of a foreign power and the establishment of an indigenous kingdom or state was virtually impossible.

Arabs, Mongols and Persians all controlled the city and the other territories that today make-up Azerbaijan, with the Iranian Safavid Dynasty controlling the region from 1539 until 1736. During this time another European traveller, the German Adam Olearius, recounted the continuing prestige of the Baku oil industry. He described 30 wells gushing black and brown fluid in a constant stream, in addition to noting the wealth derived from the Caspian fisheries and the salt mines on the outskirts of Baku.

Of course, little of this wealth was seen by the indigenous people of the region. After the Safavid decline, a succession of short-lived Iranian dynasties ruled Azerbaijan until it came under the sway of the Russian Empire in 1812.

As the Russians Tsars dragged their Empire out of its feudal morass, outlying territories like Azerbaijan benefited. Between 1885 and 1920, Baku underwent one of the first modern oil booms, as Russian and German investment – both in monetary terms and in technological terms, such as the invention of rotary drilling – fuelled growth of the industry.

Oil wells in a Baku suburb circa 1900
Oil wells in a Baku suburb circa 1900

Before the Azerbaijani people could benefit from the windfall in profits, Communism arrived and Baku was thrown under the dark shadow of the Soviet Union for the next 70 years. The oil industry belonged to the Soviet State and its proceeds were diverted towards the heavy industrialisation pursued by Stalin prior to WWII and the Cold War militarisation of his post-WWII successors.

Ilham Aliyev has the good fortune to be only the second real leader of an independent Azerbaijan (the first being his predecessor and father Heydar). As such he has been able to open up Azerbaijan to foreign investment and has been uninhibited as to where he can export Baku’s oil. The Baku–Tbilisi–Ceyhan (BTC) pipeline, completed in 2005, has allowed oil to be pumped from the Caspian oil fields straight to Europe, without going through Russian territory and the inevitable transport quotas.

In a country with a relatively small population (9.3m), the trickle-down affect from the oil economy has been swift. Investment in infrastructure, tourism, cultural activities and the country’s image abroad has indirectly increased the economic opportunities for Azerbaijan’s working class.

Azerbaijan sponsors Atletico Madrid - Spain's third biggest football club - as part of its international charm offensive
Azerbaijan sponsors Atletico Madrid – Spain’s third biggest football club – as part of its international charm offensive

Whilst a disproportionate percentage of the wealth is in the hands of Aliyev’s cronies, economic development necessarily precedes political development. As a new middle-class develops in Azerbaijan, there will be greater calls for political reform which Aliyev may try and resist.

For now, however, he can rest easy on his country’s historical legacy, safe in the knowledge that it is unlikely to run out soon.

Author: Stefan Lang

An interested observer of current affairs, researcher and writer

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