CC BY
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Nikolai Silayev,
Ph. D. (Hist.) (MGIMO), Foreign Ministry
of the Russian Federation
THE POST-SOVIET PATH OF AZERBAIJAN
The countries of the South Caucasus have shared a common fate. After gaining independence Georgia, Armenia and Azerbaijan have suffered from wars, ethnic conflicts, break-up of previous communications and ties, and the disintegration of state structures. However, rather equal starting positions and almost similar foreign-policy conditions gave different results. We shall look at one of these states - Azerbaijan.
After several years of tossing, Azerbaijan has practically returned to the "patron-client" system of networks, which existed in Soviet time, as the foundation of the political regime. The inflow of petrodollars makes it possible to ignore the losses engendered by this system and suppress potential conflicts within the ruling elite, because the wealth to be divided between its members constantly grows, although rather slowly.
It is indicative that differences between these three South Caucasian countries do not seem to depend on the degree of their democratization. But it should be admitted that public criticism of the authorities of Azerbaijan may be fraught with very unpleasant consequences for the critic. The country has not gained much experience of the legitimate change of power as a result of elections, and this is why there are no visible signs of democracy there.
The course of political transformations in Azerbaijan can be described as follows, if it is regarded as a result of the four factors given below: they are:
The place of the country in the international and regional division of labor; 36
The result of confrontation for control over state institutions between the different groupings inside the ruling elite;
The role of "people with arms" in the political system;
The degree of the dependence of the state on the resources it takes from the population.
Azerbaijan has never been a most developed part of the former Soviet Union. In the Soviet epoch it was quite well industrialized and by the time of the disintegration of the U.S.S.R. the structure of the GDP of Azerbaijan was dominated by industry. According to the data of the Russian Institute for Strategic Studies, by the end of the Soviet epoch the engineering industry of Azerbaijan satisfied up to 80 percent of all requirements for the equipment of the country's oil industry.
The degradation of the Soviet Union and the wars and conflicts accompanying it, as well as the break-up of the traditional transport communications and the economic crisis have resulted in Azerbaijan's deindustrialization. By the mid-1990s the share of industry in the structure of the republic's GDP diminished by 50 percent (from 60 to 30 percent). It should be added that the collapse of the Soviet system of trade restrictions has also led to a sharp reduction of the export potential of Azerbaijani agriculture - its products have lost their exclusive position on the markets of Russia and other post-Soviet states. Thus, the country's economic advantages created by its people have largely ceased to exist, only natural ones remained.
The only way to achieve rapid rates of economic growth for Azerbaijan and increase its state budget was to expand the extraction of oil and gas and increase their export. At a certain time, the export of fuel and energy to world markets along new routes and in cooperation with major western companies was regarded as a panacea, which was supposed to ensure Azerbaijan an economic upsurge, greater state
sovereignty (due to an end of the influence of Russia) and foreign political advantages in its conflict with Armenia.
The growing world prices of oil, an increase of hydrocarbon production (in 2000-2010 oil extraction in Azerbaijan grew from 14 to 50.4 million tons) and the increased export of oil, oil products and gas to other countries have ensured the country an economic boom. According to the World Bank estimates, in 2006 the growth of the GDP in Azerbaijan amounted to 34.5 percent, and in 2007 - 25 percent. Further on the rates of its growth have diminished, however, as compared with its regional neighbors and most countries of the world, for that matter, Azerbaijan suffered from the global economic crisis much less. In 2008-2010 the average annual growth rates of its GDP reached 8.4 percent, with the average annual world rates 1.2 percent.
However, the economic success brought about by oil was followed by the firmly established status of the single-branch structure of the economy. In 2005 the extraction of hydrocarbons gave about 40 percent of Azerbaijan's GDP, and in 2008 this figure increased to 60 percent. The growth rates of the "non-oil" industry in the country have been much lower that the growth rates of the economy as a whole.
The influx of the petrodollars makes it possible to maintain the outward attributes of affluence, like high-rise buildings under construction and enormous defense expenditures compared with those of its neighbors. However, Azerbaijan still remains a comparatively poor country. The per capita GDP is $10.2 thousand (according to the IMF data for September 2011), which is almost double the figure of the neighboring Armenia and Georgia (approximately $5.4 thousand each), but lower than Kazakhstan (13.0) or Russia (16.7).
Indicative in this respect is a subjective attitude to this boom of representatives of the Azerbaijani population. According to the poll of the Puls-R (Baku) sociological service, the number of the
respondents who assess the situation of their families by saying "We can hardly make both ends meet" dropped from 50.8 percent in 2006 to 49 percent in 2010. "Acute need" experienced 10.1 percent and 9.1 percent respectively against the background of the vast state programs to combat poverty. The share of those who do not suffer from material difficulties (they are referred to as the "middle class") increased from 28.0 percent to 32.5 percent respectively. In other words, the rapid economic growth has not led to any noticeable shifts in the social structure of the population.
The latter circumstance largely explains the stable character of the political order in Azerbaijan. The social groups which were the driving force of changes at the end of the Soviet epoch have disappeared along with the economic structure which created them. Hydrocarbon growth concerned only the elites and the section of the middle class dependent on them. On the whole, society remained as it was during the 1990s, that is, it consists of the poor masses, a narrow section of the rich elite and a small middle class servicing its interests. There are no big groups whose interests would need expression and accommodation, and this narrows down the social conditions for political competition.
The hydrocarbon boom has another consequence. The extraction and export of oil and gas dominate in the national economy due to the absence of other large-scale and important branches of it. Outside the boundary of the hydrocarbon sector economic growth is concentrated in construction and on the real estate market, the latter bearing a speculative character (just like the pre-crisis Moscow market of real estate when flats in the Russian capital were regarded as an investment instrument). In Azerbaijan there are comparatively few industrial enterprises turning out finished goods, and the high rate of the national currency objectively contributes to the growth of import.
The political regime of Azerbaijan imposes restrictions on active policy in the sphere of diversification of the economy. Despite its harshness, it is still suffering from a whole number of "birth traumas" of the post-Soviet statehood, that is, the influence of the autonomous centers of power in the form of various nomenclatura groups, weakness of institutions, corruption, etc.
The prolonged stability of the personnel composition of the higher echelons of power in Azerbaijan shows that the process of transferring power from father to sun in 2003 took place in the conditions of the preservation of the bureaucratic clans staying in power. Some of them - those who threw an open challenge to President Ilkham Aliyev - were suppressed. But the very principles of power remained unchanged.
Although an experienced analyst from another country might well think that the political reality in Azerbaijan could be likened to that in the Middle Eastern oil monarchies, it would be incorrect to make conclusions about the authoritarian character of the regime in Baku. Politics is not based on diktat from the single center, but rather on an intricate poly centric balance of interests. The Azerbaijani political regime is distinguished by such specific feature as the actually atomized resource of forces. Apart from the army, there are about seven ministries and departments in the country which have their own armed units - ministry for the interior, border-guard service, ministry of national security, ministry of justice, state service of protection and defense, and ministry for emergency situations. These structures of force are part of the sphere of interests of some or other influential bureaucratic groupings, maintaining the balance of power within the elite.
The future of Azerbaijan's political regime, probably, depends on how the ruling groupings will react to the slowing down and then a stop of hydrocarbon growth. An answer should be sought within a short
space of time. In recent years the authorities, apparently, retarded the extraction of oil quite consciously, keeping it at a level not exceeding 50-55 million tons a year. The purpose of this policy was to prolong the peak of mining for as long as possible. According to certain forecasts of five years ago, the peak (71 million tons) should have been reached in 2010, after which there would have been a slump going up to the level of mining at 20 million tons by 2020 (the Republic of Tatarstan extracts about the same amount of oil). The policy of "lowering the peak," as Baku believes, will make it possible to keep the present level of extraction until 2020. According to other estimates, the lowering will begin after 2015. Further on, economic transformation will be bolstered up by any financial resources comparable to the present ones. Besides, they will have to be implemented in a more difficult socio-political situation.
The strategies of diversification which are now discussed in Azerbaijan, are not convincing enough. First, the point is to turn the state-owned oil company SOCAR into a transnational player having a production and resource base abroad and selling not only oil as such, but licenses for its mining. However, SOCAR may not have enough resources for implementing such strategy. The acquisition of a production base abroad will require either big investments, which will have to be withdrawn from the country, or merger with a major foreign player on the oil market, which will be fraught with the danger of the loss of control by Azerbaijan over the joint venture. As to licenses for oil mining, SOGAR, despite a century-old experience of Azerbaijani oil workers, will hardly be able to compete with world leaders of the oil industry.
Secondly, in the context of the diversification of the economy the usual of weakly developed countries and regions - tourism and agriculture - are discussed. There have been no precedents in the world when countries succeeded in overcoming poverty on the basis of these
branches. A vivid case in point is Greece which has proclaimed at one time: "Tourism is our industry." Besides, Azerbaijan will have to compete with Turkey in these spheres, which is quite disadvantageous for the former. A natural market for the Azerbaijani tourist service is Iran, but Azerbaijan is poorly prepared for developing cheap tourism (too high prices, too expensive hotels). Another aspect of diversification is oil refinery; in recent years the country has achieved considerable success in this branch.
The implementation of a harsher and more purposeful economic policy aimed at fighting corruption, the development of its own industries, import substitution, and more effective protection of the right of investors are fraught with the opposition on the part of the groups of the bourgeoisie which may lose their benefits, and that will undermine the intra-elite consensus in Azerbaijan.
Theoretically, the president can overcome his position of the "first among the equals" by two methods. First, by forming a broad public and political coalition with the view to eliminating the old elites - a kind of a "rose revolution from above." This method is very risky: a liberalization of the regime can destabilize the country before such coalition is formed. The emergence of such coalition will also be hampered by the weakness of political institutions. Besides, such method presupposes an increase of populist elements in the policy of the president, whereas the reserve of populism in Azerbaijan has almost completely been exhausted.
Another method will be a notable achievement in foreign policy, which will make him the indisputable leader in the Azerbaijani elite. It can be assumed that Aliyev's harsh position on the Karabakh issue can be explained by striving for such success.
The Islamization of Azerbaijan at the present moment is hardly possible; the country remains largely secular. According to Puls-R
sociological pole, the number of people who consider themselves deeply religious and observe all religious orders and rites is negligible. In 2006 there were 15.8 percent such people among those polled, whereas in 2010 - only 9.5 percent. The same is true of those adhering to Islamic values: 14.5 percent in 2007 and 10.7 percent in 2010. Apparently, the authorities succeeded in arresting the trend toward Islamization which was observed in the mid-2000s. There are three reasons for this. First, the Islamic radicals were forcibly suppressed by the authorities and, contrary, to the situation in the Russian North Caucasus, these measures were not countered by human rights organizations. Secondly, the noticeable economic growth in the past four years has reduced the number of opponents to the regime and consequently, radical ideology was not too popular. And thirdly, the authorities agreed to make certain concessions to "systemic" or moderate Islamic leaders (for example, Sheikh-ul-Islam Allahshukyur Pashazade) who wanted to play a more active and influential role in political and public life.
At the same time a number of Azerbaijani experts admit that in case of the weakening of the ruling group, the country my move not to democratization, but to Islamization. Despite a relatively small number of the confirmed adherents of political Islam, they are distinguished by high mobilization and cohesion, in contrast to other political forces. One of the Baku experts believes that with the share of Islamists at 10 percent, they can receive up to 30 percent of votes at free elections. One of the potential resources of Islamists can be a spontaneous protest movement of the grass roots on the basis of local conflicts provoked by the attempts of the authorities to infringe the economic rights of citizens.
"Rossiya v globalnoi politike", Moscow, 2012, January-February, pp. 180-186.
