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by government and party functionaries, including ministers, members of the Revolutionary Council and Politburo of the ruling People's Democratic party.
In the North Caucasus such extortions under theological cover were widespread during the first Chechen war. But by 2010 this practice acquired a systemic character. However, quite often separatism and radical Islamism were simply a cover for ordinary criminal activity, mainly racket, counterfeit money production, drug trafficking, etc.
Under the impact of certain circumstances, the key of which are globalization processes, transfer to network organizations, and curtailment of foreign assistance, the character of this process has undergone essential changes. At present financing is made through a ramified network constantly changing its geography and structure. As to the tendencies of recent years, mention should be made of a reduction of foreign transfers, and increase and diversification of domestic sources. And finally, it is the gradual financial "optimization" of the activity of the bandit underground, which has now switched over to self-restraint and thriftiness due to harsh pressing on the part of the state.
"Mirovaya ekonomika i mezhdunarodniye otnosheniya, " Moscow, 2013, No 4, pp. 79-86.
Thomas de Vaal,
Research Associate at the Carnegie Foundation AZERBAIJAN - WHAT LIES AHEAD?
As expected, the incumbent President of Azerbaijan Ilham Aliyev scored a decisive victory in the presidential elections on October 9, 2013, having gained over 84.6 percent of all votes. This result was
not doubted, although international observers criticized the organization of elections.
However, the principal question is "What should be expected further on?" One can safely say that by 2018 (the end of the third presidential term of office of Aliyev) Azerbaijan will become quite a different country.
In the early 1990s, when Azerbaijan just gained independence, it was a poor, war-ravaged country. Since then it has traversed a great path. In the past several years, after the commissioning of the Baku -Tbilisi - Ceyhan oil pipeline in 2006, its economy has greatly developed, and today Azerbaijan's GDP equals $70 billion, or 20-odd times more than in the mid-1990s. At the same time Azerbaijan has time and again been heard in the international arena. In January 2012 it became member of the UN Security Council, and that very year it was the venue of the regular Eurovision contest.
Within the next five years Azerbaijan will definitely come across new problems. The correlation of demand for and supply of energy carriers on world markets and, accordingly, Azerbaijan's strategic priorities have begun to change. The local public will, most probably, discuss socio-economic problems more loudly and demand political freedoms. The leadership of the country will have to react and adjust to the new reality more rapidly.
The next stage of the development of Azerbaijan, which coincides with Aliyev's third presidential term of office, will definitely be more difficult than the previous ones. The oil boom in the country will soon end, but Azerbaijan will try to compensate it by becoming a big supplier of gas to Europe.
In foreign policy Azerbaijan is balancing between its bigger neighbors, with the energy bearers being the key factor in its relations
with them. Its relations with the southern neighbor - Iran - are cool, and with Russia - pragmatic.
Turkey, whose language is very close to the Azerbaijani language, is definitely its best partner. Baku is ready to sign a big gas deal with Ankara. But their relations are not too serene as they could have been expected. This is partly due to a sharp difference in the ideological views of the moderate Islamist R.T. Erdogan and openly secular I. Aliyev who do not trust each other implicitly. Although Turkey helps Azerbaijan "to go west," the neighbor is not always included in Turkey's priorities. Thus, Azerbaijan's leadership became surprised and angry when Turkey began the process of normalizing relations with Armenia in 2008 and 2009. And it was only yielding to pressure of Baku that Ankara abandoned these attempts.
It should also be said that relations between Azerbaijan and Russia are somewhat enigmatic. In August 2013 President Putin visited Baku with a delegation of high-ranking Russian officials. Both countries, whose political and economic models are much alike, publicly declare friendship and cooperation in a number of spheres, but at the same time have certain suspicions concerning each other's intentions.
In the 1990s Azerbaijan was the main channel of the penetration of Islamic fighters from abroad in Chechnya to take part in the Chechen war. In our days Moscow and Baku cooperate in their efforts to make the border between the two countries impenetrable so that Islamists should not worm their way into Daghestan. Moscow has published information recently about the sale of a big consignment of weapons to Azerbaijan. While in Baku, President Putin said that the volume of military-technical cooperation between Russia and Azerbaijan was worth $four billion.1
However, there are less positive aspects in the relations of the two countries. In 2012 Azerbaijan actually forced Russia to close down the Gabalin radar station, having asked an exorbitant rent for its lease.
Domestic political factors can also prevent achievement of foreign-policy aims of Russia. For instance, the Azerbaijani mass media and parliamentarians constantly accuse Russia of backing Armenia in the Nagorno-Karabakh conflict, in the course of which Azerbaijan has lost a considerable part of its territory.
Azerbaijan reacted rather painfully to the events in the Moscow suburb of Biryulevo in October 2013 when an ethnic Azerbaijani and citizen of Azerbaijan Orkhan Zeinalov killed a young Russian. This provoked an explosion of aggression and violence which had an antimigrant and xenophobic character in Russian cities. Orkhan Zeinalov was apprehended and taken to custody in a brutal manner, which was shown on Russian TV.
Azerbaijan is also striving to build good relations with the West, primarily on the basis of cooperation in the sphere of energy and security.
In 2018 the Trans-Adriatic gas pipeline is to be commissioned, along which no less than ten billion cubic meters of gas will be supplied by Azerbaijan to Europe. According to forecasts, the export of oil from Azerbaijan will diminish by that time (it is already less than the peak index of 2010).
The construction of the Trans-Adriatic gas pipeline will make Azerbaijan a strategic partner of the European Union. However, for the United States the strategic value of Baku in 2018 will also diminish. At present one of the most important transit routes to Afghanistan passes through Azerbaijan, but by that time the withdrawal of the U.S. troops from Afghanistan should be completed. Perhaps, the relations of Washington and Tehran will improve. This means that the United
States will be less concentrated on containing Iran with the help of its neighbors, Azerbaijan included.
The former U.S. Ambassador in Azerbaijan Richard Kozlarich, speaking about the situation, said that in connection with the changes in the sphere of regional security (along with the withdrawal of the western coalition forces from Afghanistan and in view of the situation on the oil and gas markets) Azerbaijan comes across growing competition on these markets and its significance in the world has diminished in the past few years. From this follows that Azerbaijan will have to create a new foundation for maintaining positive relations with the West, the United States in particular, as well as with its close neighbors.
Inasmuch as Azerbaijan's neighbors will remain the same within the next five years, the problem of Nagorny Karabakh, which is 25 years old, will remain the most acute one for both Azerbaijan and Armenia. Public opinion polls show that this unresolved territorial dispute remains problem No 1 for all rank-and-file Azerbaijanis. Almost twenty years after Azerbaijan's major defeat in the military confrontation with Armenia, the Karabakh problem is still at a dead end, and, as a western diplomat in Baku has noted recently, this is precisely the problem on which President Aliyev should be especially cautious.
In recent years the government of Azerbaijan has augmented the military budget to $4 billion a year. It is to surpass the entire state budget of Armenia. President Aliyev asserts that he wishes to solve this dispute by peaceful means, but his country retains the right to resort to force, in long-term perspective, with a view to returning the territories lost. Meanwhile, the ceasefire line, or the contact line, remains the most dangerous militarized zone in Europe. Each side has deployed there more than 20,000 troops against each other, as a result of which
skirmishes break out quite frequently, which take a toll of over thirty lives annually. Thus, this conflict can hardly be called "frozen." Although the degree of real violence is not too great, the level of rhetorical violence is threateningly high. Both parties, especially Azerbaijan, use an exclusively bellicose language on any disputed issue. A greater part of this aggressive rhetoric is nothing more than a political show; it should be noted that ultimately both Armenians and Azerbajanis get along quite peacefully not far from the zone of conflict - in Georgia. Anyway, wrathful rhetoric undermines hopes for a peaceful solution of the problem.
To maintain peace around Karabakh becomes more difficult with every passing year. The Armenians are gradually getting used to being masters of this land now and are not inclined to agree with the formula "land in exchange for peace," which could be taken as the basis for a peace agreement. The leader of Azerbaijan is confronted with unreal, overstated expectations in society, when its considerable section advocates a solution of the problem by the use of force. Meanwhile, all external forces are striving to avert a new potentially destructive conflict because of this disputed land.
All this means that the most probable scenario of the forthcoming developments in the next few years will be the preservation of the existing situation, which is "neither peace nor war," although a possibility of a new flare-up of military hostilities caused by somebody's miscalculation or political crisis is growing with every passing year and calls for the most serious attention.
Opaque Policy
Ten candidates took part in the elections on October 9, but only two of them had real weight: the incumbent president and the candidate from the united opposition Jamil Gasanli.3 The fact that Aliyev stood
for the third term caused heated arguments. Previously, the president of Azerbaijan could stay in office two terms, that is, in 2013 Aliyev should have resigned. However, in March 2009 he organized a constitutional referendum4 whose results allowed him to stand for the third term in succession.5
Gasanli gained 5.5 percent of all votes and came second. Representatives of the opposition claimed that their candidates became victims of falsifications. They were supported by the most influential group of observers from OSCE who stated that the election results were distorted because of restrictions of freedom of expression, meetings and associations, which did not allow them to ensure equal conditions for all candidates. The election campaign was accompanied by frequent complaints of candidates and voters about intimidation and restrictions with regard to the mass media.6
The election results reflect the existence of complex problems in the ranks of the Azerbaijani opposition. The two latest election campaigns had demonstrated their very poor organization. Many leaders of the opposition were veterans of the short-lived government of the Popular Front (1992-1993), whose popularity had fallen during the past years. True, the opposition managed to put forward a single candidate, a very respected person, Rustam Ibragimbekov, film director of international renown. Despite the fact that he was highly valued by Geidar Aliyev and his son Ilham Aliyev, Rustam Ibragimbekov sharply criticized the present government of Azerbaijan for corruption and the situation concerning human rights,
However, Ibragimbekov had to withdraw his application because he had dual citizenship - Azerbaijani and Russian. He tried to renounce the latter, but could not make it in due time. Then the opposition put forward the 61-year-old Jamil Gasanli as its candidate.
But neither before nor after the elections the opposition could bring many people out in the streets. It is difficult to say whether it was due to the lack of popular support or simple fear. Of course, the Azerbaijani opposition has to work in rather unfavorable conditions. The opposition parties are not allowed to hold meetings in the center of Baku, they have a very limited access to TV and radio, and moreover, some of opposition activists have been arrested recently.
In 2013 the government used very harsh measures against all dissidents. The two leading opposition politicians, Ilgar Mamedov and Tofik Yagublu, were arrested in February under false charges and are still in custody. An open persecution campaign was unfolded against journalist Khadiji Ismailova, who was active in denouncing corruption among the Azerbaijani elite.8
The "Human Rights Watch" organization has published a paper about the onslaught against democracy in Azerbaijan, which asserts that the government of the republic is undertaking coordinated efforts to restrict the political activity of the opposition, punishes those who criticizes its actions or accuses it of corruption, as well as steps up control over non-governmental organizations.9 In reply, Elnur Aslanov, a high-ranking official of the presidential administration, called this paper "politically motivated" and stated that the "Human Rights Watch" works on assignment of various foreign centers.10
All this goes to show that political rivalry in Azerbaijan in the coming years will, most likely, be possible only within the ruling elite.
The former president Geidar Aliyev had been the leader of Azerbaijan from the end of the 1960s up to 2003, first as the leader of the communists and then (with a short interval) as the elected president. He created a vertical of power within the framework of which he personally controlled every serious decision, and gained enormous authority.
Under his son, who became president in 2003, the system of power has somewhat changed. Having been elected president for the third term Aliyev Jr will emerge from under the powerful shadow of his father, who had been elected president only for two terms. Ilham Aliyev will be able to push aside several influential veterans from his father's team, such as the 75-year-old Ramiz Mehtiyev, the head of the presidential administration.
He will hardly be able to maintain total control, like that established by has father, inasmuch as the enormous growth of national wealth during the past few years made it possible for other political figures to muster strength. The present political system is more oligarchic, and quite a few ministers, like Kemaleddin Geidarov (Minister for emergency situations) or Ziya Mamedov (Minister of transport), who have access to economic resources and regional support, hold very strong positions in it.
It is rather difficult in such countries as Azerbaijan to follow the ups and downs of public opinion, yet, there are data showing that the incumbent president is as popular as ever, and public discontent is mostly spearheaded against the oligarchs.
According to the "Caucasian Barometer-2012" public survey data, 83 percent of those polled in Azerbaijan trust the incumbent president implicitly or partly. Forty-nine percent of the respondents answered that the government "treated them justly," and 39 percent disagreed with these words.
People's discontent comes to the fore in Azerbaijan not too often. At the beginning of 2012 there were several scattered protest manifestations of various groups of the local population. These demonstrations were conditioned mainly by socio-economic and local problems. Shannon O'Lyre, professor of geography of Kanzas University, emphasized that these public protests were mostly caused
by local problems: for instance, a mosque was closed somewhere, or a relative of a local official was not apprehended after committing an act of misdemeanor, or local traders protest against the emergence of new traders on their market, etc. But sometimes, public protests are caused by common national problems. For example, in January 2012 an unsanctioned protest meeting took place in Baku caused by the death of a soldier due to bullying.
Professor O'Lyre explains why people do not present claims to the supreme leadership of the country by the fact that President Aliyev's power seems too firm to them, Perhaps, they prefer to express discontent with local problems because, as they believe, they might have a chance to change the situation.
Observers in Azerbaijan adhering to different views agree that so far society does not see an alternative to the present ruling elite. Professor Brenda Sheffer of Haifa University, expert on Azerbaijan, asserts that Azerbaijani society has made a choice in favor of stability which is ensured by the present leadership. She says that most people in the world living through the "Arab spring" recognize the fact that an ineffective state cannot ensure human rights satisfactorily, and that an effective power, even with definite drawbacks, is better than instability and lawlessness. The idea of gradual evolution of the political system is more popular in Azerbaijan and enjoys broad support of the public, and the idea of a sharp change of ideology seems unattractive.
In the view of the active democrat Khikmet Gajizade, the opposition cannot exist and function in a system, which existed in the U.S.S.R. under Leonid Brezhnev. It is possible to talk of two hundred brave activists who still try to protest and who can be called "dissidents..." But they have no broad popular support. Although, even according to the official data, there were 200,000 people who voted for
Gasandi (unofficially, there were many more of those who voted for him).
Political Islam continues to be an unknown quantity. Officially, Azerbaijan follows the example of Kemalist Turkey - secular state in which most inhabitants are Muslims. Baku is one of the few Muslim cities in the world where one may not hear the voice of a muezzin calling the faithful for prayer. Nevertheless, it can be seen that many Azerbaijanis, especially young people, prefer a more vividly expressed Muslim identity. This is shown, among other things, by the growing number of young men attending mosque, and girls wearing headscarf.
Most Muslims in Azerbaijan are Shi'ite. Azerbaijan fears the increasing influence of Shia Iran in the South and rebel-Salaphites from the North Caucasus in the North. But by suppressing various outward manifestations of Islam the government of Azerbaijan has only worsened the situation. In November 2011 it introduced a ban on wearing headscarf and closed down several mosques. However, this removed only outward signs of militant Islam but not its causes, and drove dissidents underground.
Azerbaijan is calm and quiet outwardly, but the situation may change within the next five years. And the main reason for this will definitely be economics.
After several years of constant economic growth, the main problem facing Azerbaijan in the near future is as follows: is its present economic model stable, which largely depends on the export of oil...
Thanks to the incomes from the export of oil transported along the Baku - Tbilisi - Ceyhan oil pipeline, the growth rates of Azerbaijan's economy between 2005 and 2007 were the world's highest. But now oil extraction is going down. Speaking in Washington in September 2013, Gyulmira Rzayeva, expert from the Center of Strategic Studies in Baku, stated that beginning from 2015-2016 oil
extraction would noticeably diminish. The incomes reached their peak in 2010 and are now going down, although the State Oil Foundation set up in 2001 was meant to support the state budget in case of such
reduction.11
A slump of the world prices of oil will deal a blow at the economies of Azerbaijan's neighbors rich in oil - Iran and Russia, rather than Azerbaijan itself. This is said by Brenda Shaffer. This is due to the fact that Azerbaijan regularly includes in its state budget the lower price of oil than its actual price. Besides, Azerbaijan has a comparatively small population, and this is why it will be able to keep government services to the population at a proper level, even if the price of oil falls down. Whereas countries with a big population whose economy is also based on the export of oil, like Iran and Russia, will have it more difficult to maintain the level of social services at the previous level, especially if the price of oil goes down for a long time, Brenda Shaffer added.
Although Azerbaijan succeeds in softening the effect of a short-term lowering of incomes from sales of oil, it has to consider the new grim reality, namely, that the easy time of great incomes from oil is coming to a close. In order to cope with this problem Azerbaijan is going to become a big exporter of gas within the next five years.
The European Union has for many years already promoted the "Nabucco" construction project for transporting gas from the Shah Deniz deposit in Azerbaijan to countries of Central Europe. This is a sufficiently big project, although all its economic pros and cons have not yet been studied thoroughly enough. This pipeline is to start in Greece and pass through the territory of Albania and the Adriatic Sea to Italy. According to Lorain Rusekas from "IHS Cambridge Energy Research Associates, the most important aspect of the project is that the route of the pipeline will go directly from the Caspian Sea to Western
Europe. The realization of the second stage of the Shah Deniz project will make Azerbaijan a big supplier of gas.
Meanwhile, the state-owned oil and gas company of Azerbaijan "SOGAR 12 is expanding its activity in the world and will remain one of the players in European energy politics. It is a serious investor in Georgia and Turkey. Recently, "SOGAR" has bought two-thirds of the shares of the Greece's gas-distribution network.13
Although TAP is more modest and smaller than "Nabucco," it is less vulnerable to fluctuations of demand for gas in Europe. The experience accumulated during work on the Baku - Tbilisi - Ceyhan project makes it possible to evaluate the prospects of the Trans-Adriatic gas pipeline optimistically.
However, compared to the oil market, the world gas market is more volatile and incomes on it are lower. According to Gyulmira Rzayeva (September 2013), whereas Azerbaijan received about $800 per 1,000 tons of oil previously, it will get about $50 per 1,000 cubic meters of gas. This is a vivid example of the great difference between the country's incomes from oil and gas. Even according to the most optimistic forecasts, within the next decade the country will receive for gas less than half of what it earns from the export of oil at present. Meanwhile, there are other producers and exporters of hydrocarbons catching up with Azerbaijan, for example Algeria, countries of the East Mediterranean, Northern Iraq, as well as countries producing liquefied natural gas in other regions of the world.
The more incomes from oil and gas go to the state budget of Azerbaijan, the more questions are asked in society as to how these incomes are distributed. The volume of corruption in the country is a matter of serious concern of the Azerbaijani people. For instance, a big scandal broke out in 2012 when the former university rector, who had fled to France, circulated damaging information about selling and
buying seats in the country's parliament.14 In 2012, Azerbaijan held 139th place (out of 176) in the index of corruption level determined by the "Transparency International" organization, being at the same level with Russia.15
According to the view of O'Lear, an analysis of the experience of countries in a similar situation, that is, those largely depending on the export of oil, shows that the uneven distribution of benefits from the oil rent enables the ruling political elite to ignore the problems of improvement of the state management system with a view to creating the basis for affluent society.
Ilham Aliyev begins his third presidential term of office in a relatively safe situation. Azerbaijan is now living through a period of an unprecedented prosperity. It has succeeded to sign an important international agreement envisaging supplies of gas directly from the Caspian Sea to the European Union.
However, the political system of Azerbaijan remains close and non-transparent and this causes serious concern, because the experience of the leaders of two neighboring countries (Erdogan in Turkey and Putin in Russia) shows that even leaders whose power seems unshakeable, come across dangerous and unexpected challenges seemingly coming out of nowhere. To stay immovable when the surrounding world is changing rapidly is not a way out for the Azerbaijani leadership. The next five years will be crucial for Azerbaijan, it will have to adapt to changes and implement reforms necessary for solving absolutely new economic and international problems.
In September 2013 several experts on Azerbaijan were asked to answer the following question: "Is the Azerbaijani economic model stable?" Here are their answers.
Gubad Ibadoglu, member of the directorate of the Center of economic research (Baku):
"Yes, for a short term, but risky for medium-term and long-term prospect."
Richard Kozlarich, former U.S. Ambassador in Azerbaijan: "In the context of stagnancy or reduction of the export of energy carriers and absence of a serious economic diversification in the non-energy sector the present economic model does not look stable. If the economic model is unstable, the present political system based on corruption will experience serious overloads."
Lorain Rusekas, senior adviser of the company "IHS Cambridge Energy Research Associates":
"Yes, possibly for some ten years, but not for a long-term period, because the Azerbaijani model is based on the incomes from the export of oil, which are dwindling gradually. Most likely, Azerbaijan will turn into a big exporter of gas, and incomes from it will help it survive. But it is quite possible that in view of the downfall of the world prices of oil, Azerbaijan will show the general trend of a gradual reduction of incomes from hydrocarbons export. This will be accompanied with smaller investments of oil money in the local economy, which will have an adverse effect on the development of other sectors."
Brenda Shaffer, professor of Haifa University and invited researcher at Georgetown University:
"More than half of all incomes received from the export of oil is transferred to the State Oil Fund thanks to which the country with its relatively small population can withstand possible price shocks. In contrast to oil export, incomes from the realization of gas projects are received after some time, usually in more than ten years. However, the implementation of new projects of gas export will give an incentive to economic activity and creation of new jobs. A considerable part of the
Shah Deniz deposit is in gas condensate, and export of this product can bring in rapid profit, whereas the export of natural gas involves the construction of pipelines, and it takes long time to receive the first profit."
Notes
http://www.bloomberg.com/news/2013-08-13/azeri-russian-arms-trade+billion-amid-tension-with-armenia.html
http://camegieendowment.org/2013/06/19/new-narrative-for-karabakh-conflict/gb2e
http://hiostory.bsu.edu.az/en/content/jamil_poladkhan_hasanly_248 http://humanrightshouse.org/Articles/10357.html
http://www.rferl.org/content/Azerbaijani_Parliament_Approves_Referendum_On_ Presidential_Term_Limit? 136+057.html http://www.osce.org/odihr/elections/106901
http://www.amnesty.org/en/for-media/press-releases/azerbaijan-opposition-candidate-arrested-ahead-presidential-elections-2013 http://www.freedomhouse.org/article/smear-campaign-escalates-against-azerbaijani-rferl-reporter
http://www.hrw.org/reports/2013/09/01/tightening-screws http://en.apa.az/xeber_azerbaijan _s_presidential_administration_198788.html http://www.jamestown_org/press/events/video-azerbaijan-and-the-southern-gas-corridoe-energy-security/
http://www.invest.gov:tr/en-US/infocenter/news/Pages/220513-sogar-signs-turkey-
refinery-deal.aspx
http://abc.az/eng/news/76138 .html
http://www.theatlantic.com/international/archive/2013/01/how-to-buy-a-seat-in-
azerbaijans-parliament/267065
http://www.transparency.org/country#AZE
"Pro et Contra, " Moscow, 2013, November, pp. 76-87.
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