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AZERBAIJAN : keystone in energy rich Caspian Basin

Paper NO. 687                                                             16/05/2003

by K.Gajendra Singh 

South Asian visitors to Azerbaijan's capital Baku, built on the Caspian Sea, must not miss Atishgah, a fire worship temple, situated at a distance of some 15 Kms from the city centre.  The present structure was begun in the l7th century, although the original Atishgah goes back to very ancient times when the region used to change hands and came under the influence of Zoroastrians.  Since times immemorial, natural gas seeps out and catches fire at the temple.  The Zoroastrians and the Indian Aryans, being of the same stock i.e. Indo- Iranians, worshipped fire.  Parsees in India still do so, as Hindus worship Agni (fire) during hawans etc.  The temple was supposed to have many miraculous powers.  It brought happiness and well-being to visitors and devotees. Atishgah, thus, historically had religious and sacred significance, before the advent of Islam to Iran and Azerbaijan.  Once the writer espied a hippy couple taking marriage vows in front of the temple fire.

The Azeri Foreign Minister told the writer that in ancient times his country was known as Aagban, Aagbaan etc., which could perhaps mean forest of fire or an arrow of fire (!)   As Baku was located on the silk route, it attracted a number of traders- Parsees, Punjabis, Gujaratis and others from Hindustan ((sub-continent ) throughout  history.  They built rooms for their stay and for their horses, a process which  begun in the 17th century and continued till mid l9th Century on the present site.  Exchanges  between Hindustan and Turkistan had continued even when they were ruled by the British and the Russians respectively.  The place now looks more like a spread out Dharamshala in India than a regular Caravansaray in the region.  The rest rooms were perhaps built at different times and phases all around the fire temple, where a number of fires keep burning all the time.  At the top of the doors to most of the rooms writings have been etched in rectangular stone slabs, commemorating the builders ( with father and grand father's names ) as is the Indian practice in temples and Dharamsalas.  The scripts are in Devanagri, Urdu, Gujarati and Punjabi. During the Soviet era some of the rooms were converted to attract tourists  and dummies representing what the local artists thought looked like Indian traders, holy men and sadhus were  installed. 

An old lady in-charge told the writer that Pandit Jawahar Lal Nehru with his daughter Indira Gandi had also come to Atishgah.  During the Soviet era, when Azerbaijan and other Turkic speaking countries across the Caspian, were part of the Soviet Union, most Indian visitors were taken to Baku, Tashkent, Bukhara ,Samarkand etc, places which are culturally close to India.  There is also an old Caravan Saray in the centre of Baku, which used to have an Indian eating house from l7th century onwards till mid l9th century. 

Discovery of Oil

Atishgah’s fires from seeping natural gas symbolize immense gas and oil reserves not only around Baku and in Azerbaijan but in the whole Caspian Sea basin, i.e. also Iran, Turkmenistan, Kazakhstan and  Russia.  The area around Baku assumed great importance with the discovery of petroleum in the 1890s.  In 1901, Azerbaijan produced 50% of the world production which was more than that of USA and 90% of Russian production.  It is the birthplace of oil refining industry and as one of the earliest centres, Baku has many petroleum and other engineering training institutes.  It remained so during the Soviet era.  As part of  USSR it helped  petroleum industry in many developing countries including India.  Many Azeris (then Russians ) who went out to help in India were trained in the institutes here as were many engineers and geologists from India.

Discovery of oil attracted many outsiders; Armenians, Jews, Russians, Ukranians, Germans and others.  Use of oil in lighting and industry and its location have given Baku a cosmopolitan outlook.  Before the Soviet era, rich oil magnates built Western style opera houses, music conservatories, a tradition which was not only carried on but expanded during the Soviet era, not only here but elsewhere in other Turkic speaking central Asian countries.  The system thus produced Western style Turcoman singers, Kazakh ballet dancers, Uzbek tenors and Tajik sopranos.  In Baku, one can now enjoy opera and music performances of very high caliber. 

Coming Importance of Caspian Energy Basin

With growing tensions and instability in the middle east after the US invasion of Iraq and its inability to stabilize the country fast in the near future, possible explosion of terrorism in and around Saudi Arabia, the heartland of  Islam, particularly the fanatic Wahabi type,  the Caspian basin though not free from tensions, is likely to attract investors as alternative source of  energy and in related industry.  Many more might look to the Caspian basin for secure energy supplies.  It could become a major petroleum producing area like the Gulf, North Africa, etc.  It is potentially world's third largest oil producer, with reserves of more than 200 bn/b ( Saudi Arabia' s are around 250 bn/b ) and 800 bn /cm of gas. But next door to Daghestan and Chechenya, Azerbaijan remains a centerpiece in the strategic multiethnic and explosive mosaic called the Caucasus.  In order to reduce the role of  Russia and Iran in this strategic and economic arrangement from US view point, Azerbaijan and Georgia are important  for transport of gas and petroleum to west via Turkey or Black Sea and the Balkans from not only the Caspian basin but also from Central Asian republics (CARs)  like Kazakhstan, Turkmenistan and even Uzbekistan. 

President Haidar Aliev of Azerbaijan

Tenth of May, 2003 was to be a grand occasion for some nostalgia.  The coming together of the some of the  former Russian communist party leadership to celebrate the 80th  birthday of president of Azerbaijan, Haidar Aliev, perhaps the senior most living politburo member ( than Mikhail Gorbachev or Boris Yeltsin ).  Among the invitees were Eduard Sheverdnadzde, now  president of Georgia, former president of Russian federation Yeltsin, and Vladimir Putin, the young president of Russia, a junior appartchik in the heydays of Aliev's power.  Also some new friends like former Turkish president Suleiman Demirel and others.  Alas the celebrations have been put on hold as Aliev became critically ill and had to be flown to Ankara's military hospital a week earlier.  His sudden ill health has increased tensions between the government supporters and the opposition groups.  Recently while speaking in Baku, Aliev had collapsed twice hurting himself. He had a heart attack in 1987 and had undergone bypass surgery in USA in 1999. He also underwent prostate and hernia surgeries in recent past.  Twice elected president (1993 and 1998 ) in votes that the opposition claimed were unfair, Aliev has announced his intention to run again in October.  But many believe that he is paving the way for his 41 year old son, Ilkham, to succeed him.  Born in Nekhichevan, an Azeri enclave adjoining Turkey, Aliev was the first Muslim to be raised to the Politburo in 1982, the sanctum sanctorum of power in the Kremlin.  A few decades earlier, when the communist ideology was still hot, and not eclipsed by Slav nationalism, Aliev could have made a bid for the very top, like Georgia's Josef Stalin and Nikita Khruschev of Ukraine.  In central Asia and the Caucasus, barring perhaps Tajikistan, Communist leaders in Soviet republics took over the reigns when power fell like manna into their lap after the grandstand fight between Gorbachev and Yeltsin, which legally destroyed the Soviet Union.  

To begin with, most central Asian leaders  felt like orphans and unhappy at the disintegration, but soon, gingerly following the lead from the Baltics and European Russia, Muslim majority republics from central Asia and Azerbaijan, first declared sovereignty, allowed in the Soviet Union's constitution and then full independence. Since then most have ruled their fiefs with a communist style iron hand with political linkages based on family, tribal, ethnic and regional ties.  They get themselves re-elected regularly with the same high percentage of votes, after making opposition candidates ineffective or disappear.  It would be interesting to see if Haidar Aliev succeeds in handing power to his son and thus establish a dynasty, an example which others could also follow. Written also as Geidar Ali Rza ogly, he had joined the security service (KGB) and the Communist party in Azerbaijan as a young man and quickly rose in the ranks of the parties  of both Azerbaijan and of the Soviet Union (CPSU).  He remained the party chief of Azerbaijan republic from 1969 to 1982 and joined the Central Committee of the CPSU in 1971.  In 1982 Aliev achieved full membership in the CPSU Politburo helped by general secretary Yuri Andropov, a former KGB Chief. But after Mikhail Gorbachev took over in 1985 and Aliev opposed his sweeping reforms, the latter was removed from the Politburo in 1987.  Aliev went into obscurity and shifted to Nakhichevan to bide his time.  This resilient politician's rise  began in 1990, when donning the mantle of Azerbaijani nationalism, he denounced Soviet intervention to put down anti-Armenian riots in Baku.

Aliev in new Incarnation

News about Aliev's ill health brought back memories of the writer's meetings with him in late 1993 and early 1994, soon after he had helped ease out Azerbaijan's democratically elected but embarrassingly pro-Turkish, anti-Russian and anti-Iranian President Ebulfez Elcibey, with help from a modern day buccaneer Surat Hassanov, who had rebelled against Elcibey. (Hassanov became  prime minister but was later ousted when he tried to oust Aliev himself, reportedly with Russian support.) Known in the West  as the shadowy major general from the Soviet KGB and a very senior  member of the Politburo, Aliev had muscled his way back to power. 

After becoming president, Aliev was still trying to find his feet and acquire legitimacy at home and respectability abroad.  Neither Turkey, which was close to Elcibey and with some pretensions still left to shape things in the Caucasus as a US proxy, nor Russia, with Aliev having supported Gorbachev against Yeltsin and opposed to Russian defence installations on Azeri territory , nor Iran were happy at his bouncing back to power. USA, except for the oil companies, was going through its recurrent phase of with drawl and had put Central Asia on the back-burner.  But all had warily watched Aliev's coronation in Baku, from where, he had  hacked his way to the Kremlin.  He did go and meet with Russian president Yeltsin and tried to soothe Turkish fears. 

Somewhat shunned, Aliev felt isolated and insecure.  He was frantically trying to establish contacts with western leaders.  In my meetings, some fully telecast live on TV, he would recall his visit to India where he had met with prime minister Moraraji Desai after Indira Gandhi had lost the 1977 elections.  But Aliev also knew many in the Indian leadership from his Moscow days, where they met him as a senior party member, a success story from Turkic speaking republics, which has  historic linkages and ties with India. To break out from isolation Aliev was ready to fly to India at short notice.  Invitations were arranged for him and his foreign minister.  But with India treating Azerbaijan and Armenia at par, visits from its leaders took place later.  My efforts to ferret the reasons for the collapse of the communist system did not succeed much.  He only cited some similarities with Yugoslavia break up.

Aliev had inherited an ongoing war with Armenia in its enclave of Nagorno-Karabakh (black garden)  which has 80% Armenian population.  Soviet Russia had trained few military officers from Azerbaijan or central Asian republics (CARs), so Azerbaijan had done badly in the war.  It was used as a pretext to remove Elcibey and other Azeri leaders earlier.  By 1993 -94 Nagorno, Karabakh's  Armenian forces, supported by Armenia, had gained control of much of southwestern Azerbaijan, including the enclave and the territory connecting it to Armenia.  Aliev was able to arrange a cease fire with Armenia in 1994 which is still in place and there has been  no fighting.  Azerbaijan with a population of nearly eight million has more than a million refugees from Nagorno- Karabakh. Twenty percent of Azeri territory remains under Armenian occupation.

A new constitution was approved in 1995.  Political life is now dominated by Aliev's New Azerbaijan Party and Azerbaijan Popular Front party, which had led the fight for independence.  Apart from being a member of the Commonwealth of Independent States and the Organisation of Islamic Conference, Azerbaijan is also a member of the  Organisation for Security and Co-operation in  Europe and the Council of Europe.  It also wants to join NATO.  During the war on Iraq, Azerbaijan sided  with USA and is considering sending some troops  to post- war Iraq.  Aliev would like to go down as the father of the nation.  He certainly has brought stability and peace in the country, enacted economic reforms and brought  massive foreign investment.  Baku-Tbilisi-Ceyhan project, to transport Azeri oil to Western markets through the Turkish Mediterranean port of Ceyhan is under construction.

Nagorno-Karabakh Dispute

 Nagorno-Karabakh, historically known as Artsakh, was acquired by Russia in 1813, but in 1923 in spite of  Armenian majority, because of being separated  from Armenia by Karabakh mountain range, it was made an autonomous oblast (province) of Azerbaijan, thus becoming a minority enclave.  While there were murmurs earlier , in late 1980s ethnic Armenians of Nagorno-Karabakh began agitating for its transfer to Armenia, which was strongly opposed by Azerbaijan and the Soviet government.  Ethnic antagonisms between Armenia and Azerbaijan soon got inflamed and when they gained their independence from the collapsing Soviet Union in 1991, they went to war.

The Organization for Security and Cooperation in Europe (OSCE)'s Minsk Group, is now charged with mediating a political settlement of the agorno-Karabakh conflict.  But after years of discussions and several missions to the region to persuade the two nations to agree to peace plans including one which calls for the withdrawal of Armenian forces from occupied Azerbaijani territory and broad autonomy to the enclave within Azerbaijan, no agreement has yet been reached.  Even during the Soviet rule the enclave has been as passionately disputed between the two republics as are settlements and occupied territories in Palestine between the Arabs and the Jews, with Susha and Lachin evoking some what the same fervour as Jerusalem and Hebron. 

Aliev the Consummate Political Chess Player

While Azeri foreign minister Hassan Hassanov, much to the chagrin of the western Ambassadors, followed  Islam-based policy, including on Jammu and Kashmir, encouraged by Turkey, who used him and the Albanians as stalking horses for their objectives, Aliev, needing Turkey then, like a chess champion (Kasparov is Baku born) moved stealthily and aggressively to achieve acceptability and credibility.  He would turn up in Istanbul and elsewhere for meetings with western leaders.  Finally he succeeded in meeting French President Francois Mitterrand,  Britain's John Major and the Israelis (there were still a hundred thousand Jews in Azerbaijan and fifty thousand Azeri Jews had migrated to Israel) and others.  Israeli prime minister BB Netanyahu, another despair of the Arabs, himself visited Baku.

Israel was happy to have a watch post over  neighbouring Iran, one of its bitterest and strongest opponents in the region.  Azerbaijan has to constantly take internal measures to counter the strong Iranian presence and influence in south.  Iran has twice as many Turkish speaking Shia Azeris as Azerbaijan.  In general Azeri Shias are not fanatic. 

Aliev's contacts with European leaders paved the way to establish direct contacts with the Americans, specially the powerful Jewish lobby to counteract the influential Armenian Diaspora in USA.  In September 1994, a $7.4 billion deal with oil giants led by BP to exploit Azerbaijan's extensive energy resources  was a watershed.  It brought the West on his side in the new great game of acquiring and controlling scarce energy resources by the west led by USA.  During his 1997 visit to USA Aliev had a meeting with US president Bill Clinton.  In Washington and other US cities he signed oil deals worth nearly $ 10 billion with giant US oil corporations. 

The results of Aliev's efforts were really stunning.  In Washington, he was treated as a star  and statesman, over four hundred American VIPs including  many  senior officials and others like Brezezinsky, Carl Weinberger, now lobbyists, consultants, investors and facilitators attended a $ 250 per plate banquet in his honour.  In a few years from being a pariah Aliev had become a US darling.  Verily, the qualities to reach the top ladder in any system are perhaps not that different.  There was no longer need to worry that much from the big neighbour up north, not that problems have not cropped up specially with US policies of going off and on  Central Asia and the Caucasus.  But Azerbaijan has established good relations with Russia too. 

With direct links to USA, Jewish and Israeli lobby Azerbaijan did not need Turkey as before.  Turkey, which needs Baku to watch its north east , had expected it to play a second fiddle and was not amused.  It  did show some displeasure by making overtures to Armenia from time to time.  Aliev still remains angry and wary after a botched attempt by a Turkish group to topple him in 1995.  The Turkish ambassador had to leave.  But on the whole Turkish President Demirel was helpful and even forewarned him in time on a few more attempts to topple Aliev. 

Azerbaijan is rich not only in energy  resources , but unlike many CARs, it has good soil and enough water to become self sufficient in food.  It has underground mineral wealth too.  It has signed US$ 500 million worth  contracts for exploitation of its gold and non ferrous metal mines. Measure to reform and encourage foreign investment have paid.  Baku announced on 8 May that projected foreign investment in the country over the next three years would reach $10 billion.  This will surpass the $9.6 billion in total foreign investment during 1996-02.  Azerbaijan received $900 million in aid from the World Bank and the International Monetary Fund (IMF) to "carry out economic reforms and to support macroeconomic stability and structural reorganization."   A World Bank official announced that  Baku will receive another $235 million as aid during 2003-05. 

Baku, the Capital City

Baku is a very pleasant city .Its carpet museum, with a fantastic collection, is worth visiting.  It has many beautiful buildings from its rich past.  It might have had cosmopolitan culture with its opera houses and fine buildings, but in November 1993 it looked grey, bleak and depressing, when five Ankara based Ambassadors and the writer went there to present letters of credence to Aliev.  Lodged in a former dilapidated Intourist hotel , some had intermittent hot or cold water and others had none at all.  The food was inedible and the ambassadors from Ankara were miserable.  But the world famous Caspian Caviar was amazingly cheap.  The facilities reminded the writer of the worst period of Ceausescu's rule in some remote province of Romania.  There was a state but no state apparatus yet.  Azeries were used to receive orders from Moscow and implement them.  Salaries were very low.  Many Azeri musicians and conductors had transferred to Turkey's Western style   opera,  musical orchestra establishments founded by modernising and westernising Kemak Ataturk.  So had many learned professors of science and mathematics.  But conditions improved very fast with every subsequent visit, with investment money flowing in and then pouring in. 

The Afghan war Mujahaddins, who had fought for Azeris in Nagorno Karabakh and been flown in Pakistani planes, swaggered about in the same hotel lobby but had proved to be expensive and not that good mercenaries against Armenian forces  armed by Russia.  It was not guerilla warfare on home territory.  But it had brought Pakistan, which had a resident Embassy, closer to Azerbaijan.  India opened a resident Embassy in Baku in 1999.  Barring western embassies like USA, UK and Germany, most embassies functioned from temporary hotel suites.  But while the Israeli Embassy was housed in a big mansion, Azerbaijan's  erstwhile ruler Russia's  ambassador, operated from a suite of rooms in a dilapidated Intourist hotel.

In later visits  the writer saw a new watering hole cum restaurant come up, staffed mostly by Indians.  It had been opened to cater for US and other oil rough-necks including a Gujju based in Houston.  It provided Indian curries and samosas.  The number of Indians in Baku was increasing.  Earlier they were mostly  students,  mostly from Bihar, who had gone there to study in the Soviet era.  Now there were businessmen, company representatives, salesmen, technicians and workers for the burgeoning oil industry. Many students had started doing business and were doing well.

Brief History

The population of Azerbaijan, which adjoins the Iranian region of Azerbaijan, was originally Persian (Iranian) but became Turkicized by the 9th century.  In the ensuing centuries the region was fought over by Arabs, Turks, Mongols, and Iranians.  Following Russian expansion southwards, after several wars, Russia acquired most of what is now independent Azerbaijan from Iran in the early 19th century and annexed it in 1828.  But majority of Azeris live inside Persia( almost twice as many ) When the Russian Czarist Empire collapsed in 1917 Baku was occupied by the Ottoman Turks.  Later there was a short-lived Azerbaijan Republic in 1918-20.  But Russian Communists gained control of the area in 1921 and it was incorporated into the Trans-Caucasian Federated Soviet Socialist Republic.  It became a separate republic within the USSR in 1936, the Nakhichevan enclave was also added to Azerbaijan, but the Nagorny-Karabakh region, with an Armenian majority was made an autonomous region within Azerbaijan.

This writer believes that if south Russian Steppes or the near about is taken as the home of Indo-Europeans and thus of the Aryans, then they, at least some, probably passed through here, south of Caucasus, always an area of turmoil, on their way to Iran.  But certainly through here could have passed the Proto- Indo Iranians, an ancient pre-Vedic Sanskrit speaking Mitannis, a horse chariot riding aristocracy among the Hurrians.  Their confederation of states in what is now south Turkey and north Syria, had ruled the region from 1500 BC to 1200 B.C. Cuneiform tablets discovered in Bogaz Koy, 250 km north east of Ankara and Amarna in Egypt throw light on their gods; Indra, Varuna, Natasya and a treatisc on horse-training using Sanskrit terms written by one Kakuli- a Mitanni. Present day Armenia, Azerbaijan, and North East Turkey have also been suggested as original home of Indo- Europeans.

(K Gajendra Singh, served as Indian Ambassador to Turkey and Azerbaijan in 1992-96. He is currently chairman of the Foundation for Indo-Turkic Studies)