The Curse of Azerbaijan’s Black Gold The Correlation between Oil Wealth, the West and Authoritarianism

Much research has been done on the alleged resource curse. This resource curse, or the paradox of plenty, refers to the general idea that countries with an abundance of natural resources tend to be underdeveloped in terms of economic growth.[modal_text_link name=”source1″]1[/fusion_modal_text_link] However, in some cases the resource curse can also imply that democratic standards remain particularly low as well. This idea was put forward most explicitly by political scientist Michael L. Ross.[modal_text_link name=”source2″]2[/fusion_modal_text_link] (Featured Image © Abbasadze)

With the collapse of the Soviet Union in 1991, five non-democratic and oil-abundant newly independent countries emerged on the international scene.3 The Republic of Azerbaijan was one of these countries. This paper will focus on the causal link between the country’s oil wealth, its relations with the European Union (EU) and the United States of America (USA) and its authoritarian system. How does the South Caucasus country’s ‘black gold’ influence its authoritarian system?

The Rise of a Presidential Dynasty

Azerbaijan is a country that has been famous for its oil wealth throughout its entire history. In the 19th century when the country was under Tsarist rule, Azerbaijan experienced an unprecedented oil boom and a rapid increase in foreign investment. By the end of the 19th century Baku became the world’s oil centre and Azerbaijan counted for more than half of the world’s oil production.4 At the same time Azerbaijan is ranked 149th in The Economist’s Democracy Index 2015.5

Already in the Soviet era, the Aliyev dynasty secured its grip on Azerbaijan. From 1969 onwards Heydar Aliyev quickly rose in the hierarchy of the state bureaucracy of the Soviet Union. He has been successively First Secretary of the Central Committee of the Azerbaijan Communist Party, First Deputy Prime Minister and full member of the prestigious and powerful Politburo of the Communist Party.6In the face of a crumbling Soviet Union Aliyev effectively shook off his ideological wings and formally annulled his membership of the Communist Party. From that moment on he developed a more nationalist image.7

After the break-up of the Soviet Union in 1991, Aliyev took control over the Azeri exclave of Nakhchivan whilst the rest of the country was ruled by Abdulfaz Elchibey. After two years that were marked by political chaos as caused by two competing rulers and civil unrest, Aliyev ultimately assumed the presidency.8

The oil revenues were used to obtain legitimacy and popular loyalty, to construct a strong sense of national identity with Armenia as the hostile external other, to ease criticism from the international community and to create a communist-style personality cult.

In his years as President of Azerbaijan the oil wealth of the country turned out to be an efficient tool in securing legitimacy. The oil revenues were used to obtain legitimacy and popular loyalty, to construct a strong sense of national identity with Armenia as the hostile external other, to ease criticism from the international community and to create a communist-style personality cult.9 This personality cult became and still is visible in many buildings or institutions named after him and several extravagant billboards alongside alleged quotes on peace, freedom and wealth, and exist even after his death in 2003.10

This practice is in line with the concept of the ‘the rentier effect’. This concept helps us to understand why the so-called ‘rentier states’ tend to be less democratic. Rentier states are states that derive an enormous share of their revenues from external rent, such as minerals or oil. For instance, oil revenues are being used to tackle social pressures that eventually could embolden pro-democracy and reformist movements.11

In the fall of 2003 Aliyev’s health deteriorated drastically. In a most controversial move, he appointed his son Ilham as Prime Minister and the sole presidential nominee of his New Azerbaijan Party (NEP).12 After excessively fraudulent elections Aliyev Jr. assumed his father’s throne and secured the first dynastic transfer of power in the post-Cold War former Soviet Union.13 Aliyev Jr. inherited his father’s iron fist and secured re-election in 2008 and 2013, again amid major allegations of corruption.14

President Ilham Aliyev and First Lady Mehriban Pashayeva attending the Victory Day Parade in Moscow, Russia in 2015 © Kremlin

President Ilham Aliyev and First Lady Mehriban Pashayeva attending the Victory Day Parade in Moscow, Russia in 2015 © Kremlin

As former Vice-President of the State Oil Company of Azerbaijan (SOCAR), he also knew all too well how to benefit from the country’s large oil reserves. A rise in social conditions and economic boom since he took over boosted his legitimacy, albeit the ordinary citizens had to suffer from widespread corruption, nepotism and a complete lack of democratic standards and fundamental freedoms and rights.15

In the meantime, Azerbaijan’s oil wealth and strategic location attracted even more foreign investment and improved relations with the United States and the European Union (EU), who are keen on reducing Europe’s dependency on Russia for its energy consumption. In 2005 the West together with a consortium of oil giants partly financed the Baku-Tbilisi-Ceyhan pipeline (BTC). This pipeline is in operation since 2005 and is pumping crude oil from Azerbaijan via Georgia and Turkey to Europe.16 This suggests that there is a link with Azerbaijan’s foreign relations as well.

Azerbaijan and the West

Besides its natural resources, Azerbaijan’s strategic location near the Caspian Sea, squeezed between regional powers as Iran, Russia and Turkey makes it an important chess piece on the geopolitical chessboard. Azerbaijan itself also benefits from this position. After its independence it sought close relations with both the EU and the USA. As demonstrated earlier, the Western partners in turn were very keen on maintaining good relations with the Azeri’s, especially in terms of energy cooperation.17

In the face of the current diplomatic crisis between the EU and Russia over Ukraine, seeking alternative energy resources is considered to be more important than ever.

In the face of the current diplomatic crisis between the EU and Russia over Ukraine, seeking alternative energy resources is considered to be more important than ever.18 Azerbaijan promised in return to uphold to principles like the rule of law, democracy and respect for human rights.19 Whilst these principles remain largely ignored by the Aliyev regime, the European institutions do not really put an effort in changing the situation.20

Only the European Parliament recently issued a statement denouncing the repression against civil society organisations, activists and political opponents. The European Commission refrained from outspoken criticism.21 In March 2016 the High Representative of the EU for Foreign Affairs and Security Policy, Federica Mogherini was criticised by human rights organisations, like Human Rights Watch (HRW), for the fact that she barely spoke about democracy and human rights.22 It seems that the economic and strategic interests are considered to be more important in Brussels’ offices.

Azerbaijan’s ‘black gold’ in combination with its strategic location seems to be a major impediment to its democratic development.

In conclusion, it can be argued that Azerbaijan’s ‘black gold’ strengthens the authoritarian rule of the Aliyev dynasty. The natural wealth of the country helps to legitimise rule, as the oil revenues impacted social conditions relatively positive. In addition, oil helped the Aliyev’s to create and sustain a corrupted and authoritarian political system. In the meantime, Azerbaijan is seen as an attractive partner in both economic and strategic terms for the international community. Therefore, it is unlikely that the country will face meaningful criticism from actors like the EU and the USA. Azerbaijan’s ‘black gold’ in combination with its strategic location seems to be a major impediment to its democratic development. Sadly, the status quo in Azerbaijan is likely to be maintained.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of International Perspective. Please be advised that all works found on International Perspective are protected under copyright, more information in the Terms of Use.

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By | 2017-01-31T22:12:26+00:00 July 25th, 2016|Categories: Insight|Tags: , , |0 Comments

About the Author:

Jan-Hendrik van Sligtenhorst
Jan-Hendrik is a Dutch student of International Relations & Diplomacy, and a graduate in European, Russian and Eurasian Studies. He focuses on Europe, Russia and Eurasia.

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