Impressions from Azerbaijan

The highway from Heydar Aliyev International Airport to Baku is brand new, with impressive buildings on either side of the road. There is even a miniature version of the Great Wall of China, which stretches for a few kilometers next to the highway.

My driver told me that the wall was meant to block the shantytown behind it from view. I did in fact see a similar attempt from my hotel room. Many buildings that looked great from the outside had run-down courtyards. The old town was completely renovated a few years ago and looked like a movie set from Anna Karenina. I was certainly impressed, but the Azeris I talked to felt money was being wasted on such white elephants, when a teacher makes just $180 a month.

I visited Azerbaijan for the first time last week in order to participate in a conference titled: “Policy Options for Social Market Economy: National and International Perspectives.” The presentations were great, but I was most fascinated by the cult of Heydar Aliyev: All the Azeris began their speeches by paying respect to the late president, who is also the father of current President Ilham Aliyev. That was at least until the government officials left toward the end of the conference.

As for the economy, a cursory look reveals that Azerbaijan is doing well. Like Turkey, it is rated at the lowest investment grade by Fitch, and it has the strongest sovereign balance sheet among countries with this rating. The country had a current account surplus of more than 20 percent of GDP last year thanks to oil and gas revenues, which are mainly channeled into construction or invested abroad by SOFAZ, the sovereign wealth fund. Turkey has emerged as a top investment destination.

The country’s structural indicators are equally impressive. Azerbaijan is at the top of several indicators of the World Bank’s “Doing Business” or the World Economic Forum’s “Global Competitiveness” indices. The former even made a case study of the country’s improvement in starting a business. Unfortunately, rule of law and corruption are two areas that need major improvement.

The government is well aware of the problem. In fact, at a Cabinet meeting to discuss the country’s socioeconomic development on April 14, Aliyev reiterated the government’s resolve to fight corruption and bribery. However, I am not very optimistic because there are serious allegations against the president himself.

Washington Post ran a story back in 2010 claiming that Aliyev’s teenage son owns nine mansions in Dubai. More recently, radio reporter Khadija Ismayilova provided evidence that his family has ownership stakes in banks, a construction company, a gold mine and a mobile operator. His and his daughters’ offshore companies also appeared in the recent offshore accounts leak.

Aliyev maintains there is a conspiracy against him. As for Ismayilova, she caused Aliyev to “win” an Organized Crime and Corruption of the Year award, but she was then blackmailed with a sex tape and was briefly arrested in January. As a Turk, I am very proud to be exemplary to our Azeri brothers.