Azerbaijan: Newly Independent but Mired in Corruption

Margaret A. Woodbury
May 22 2001

President Heydar Aliyev is determined to ferret out corruption.

It is a windy, crisp February evening, and a crowd of dignitaries in formal attire is filing into the Khagani Business Center in downtown Baku. United States Ambassador to Azerbaijan Ross Wilson and Deputy Prime Minister Ali Hasanov are scheduled to deliver speeches of thanks to the International Rescue Committee (IRC) for hosting the fundraiser for people forced from their homes by Azerbaijan's long war with Armenia over the disputed Armenian enclave Nagorno-Karabakh (see map below).

But the war ended with a Russian-mediated ceasefire in 1994. Azeris have had seven years to become inured to the fact that some 1.1 million people, or 13 percent of the country's population, were forced from their homes over the course of the six-year conflict. So perhaps it is not so strange that the talk among those present in the Khagani Business Center this evening is not so much about refugees, or internally displaced people, as it is about corruption.

Transparency International, an independent watchdog group founded by former World Bank officials, recently listed Azerbaijan as the third most corrupt nation in their annual survey of 90 countries. "Didn't you hear?" jokes a Swedish United Nations worker as she joins a discussion about the survey results. "Azerbaijan really got the first most corrupt country listing, but the government bribed someone to move them down to number three."

In Azerbaijan, it seems everyone can tell some story from her daily life about having to bribe a corrupt official. Visitors are warned never to open the door unless they expect company, since the police routinely come knocking to collect bribes. A traffic stop is almost certain to result in an immediate "fine," and arrests and fines for trivial offences such as being alone in the evening with a member of the opposite sex are common, locals complain.

EPA Nagorno-Karabakh

These countless examples from people's daily lives can add up to produce a serious macroeconomic effect. According to a World Bank report cited in the leading opposition daily Yeni Musavat last November, 60 percent of the Azeri economy is informal, and thus not subject to scrutiny, accountability, or taxation. Yeni Musavat reported that if the same ratio applies to the government's finances, then some $1.4 billion would be lost to corruption yearly, based on an official budget of $900 million. The paper warned the government that unless it undertook urgent reforms, Azerbaijan would run the risk of being compared to Nigeria - another oil-rich, notoriously corrupt state, which had the dubious distinction of being named the most corrupt country in the world according to the 2000 Transparency International survey.

Indeed, says World Bank Acting Country Manager Saida Bagirova, Azerbaijan will need an improved structure to manage its oil revenues to avoid "ending up like Nigeria." But Bagirova is optimistic and notes that an oil fund has been set up by presidential decree. "This will be an account, separate from the regular budget, strictly for oil revenue, with the limit that only dividends from the fund may be tapped during a one-year period," says Bagirova, who stresses that the World Bank is "very interested to see this fund be transparent." Currently the World Bank plans to distribute $300 million over a three-year period through the fund. But Bagirova says the amount could be tripled if the public sector shows an interest in implementing the World Bank's recommended reforms.

Azerbaijani President Heydar Aliyev has guarded his power jealously since 1993, when he seized power in a bloodless coup. International observers site corrupt voting practices in every post-Aliyev election. Observers from the Organization on Security and Cooperation in Europe (OSCE) and the United Nations reported widespread abuses in the country's first legislative elections in 1995. Likewise, the U.S. State Department reported that the 1998 presidential election that returned Aliyev to power were "marred by numerous, serious irregularities … and lack of transparency in the vote counting process."

Reports from the last November's parliamentary elections indicate that things may not have improved very much since. Jacob, an Englishman who came to Baku as a businessman and who did not want to give his last name, acted as an official observer for the OSCE last November. On night of the IRC fundraiser in Baku, he recalled his experiences:

"The election officials did everything they could think of to keep us away from the counting tables, They told me to go out to dinner, go for a walk, out for a smoke, and they seated us far away from the actual counting tables and the ballots. But when I asked, or rather demanded, to be close enough to actually see, the other observers gained courage and we all came across the hall to the tables. … The electricity failed twice, but everyone had cigarette lighters, so we held them up and watched as [the officials] pulled ballots from under the tables and switched them with those on the table. Only after that did the chairman start the vote count,"

Jacob estimates that about 400 ballots were swapped that night.

As Rauf Arifoglu, Yeni Musavat's editor in chief, has discovered more than once, openly criticizing government corruption can have unpleasant consequences. " This government does not like independent thinking," Arifoglu complains, pointing to one incident in which masked assailants severely beat a journalist from the paper shortly after his story on corruption in the Azeri government was published. The incident was not atypical. The U.S. State Department notes that journalists reported 60 cases of harassment and intimidation last year and that on April 29, 2000, police beat 17 journalists covering a local demonstration.

Arifoglu has spent time in prison, himself. Last August, a member of the Musavat opposition party hijacked a plane and demanded that President Aliyev respond to former U.S. Secretary of State Madeleine Albright's letter requesting that the elections be conducted fairly. Arifgolu conveyed the hijacker's demands to the chief of national security and was put in jail until October for concealing prior knowledge of the hijacking. The government argues that Arifoglu was party to a criminal publicity stunt. Arifoglu still maintains that he was imprisoned on trumped-up charges to keep him quiet during the period before the election.

As yet, no trial date has been set for Arifoglu, though he still faces up to 20 years in prison. He believes the charges are being kept pending to keep him in check without the need for a high-profile court case. According to the U.S. State Department, he may have reason to suspect as much. "The Azeri judiciary," it concluded last year, "does not function independently of the executive branch and is corrupt and inefficient."

But many here say that corruption in the judicial branch pales next to that in the Ministry of Health. "Absolutely, the most corrupt," says an English director of an NGO that works with Azeri orphans. Irina Stirbu, a maternal-child health program manager with Save the Children in Baku agrees: "Because of the level of corruption [in the Ministry of Health] reforms needed to advance our work from humanitarian assistance to meaningful development can not happen."

In fact, officials with the United Nations Population Fund, Mercy Corps International, and Pathfinder International, all of whom are involved in funding and advancing health care in the country, say the levels of corruption run so deep that often doctors even prefer to perform abortions on women rather that dole out contraceptives because of the bribe dollars they can collect from an abortion procedure. "Yes, it is true," says Dr. Elvira Anadolu, country director of Pathfinder International in Azerbaijan. "To make money, doctors may prefer abortions versus issuing oral contraceptives," she sighs but adds that the situation is improving with increased training efforts from international organizations.

Though it is perfectly willing to make political capital out of corruption in the current administration, the opposition has given little intimation of how they would do things differently if given power. Isa Gambar, head of the leading opposition party Musavat and chairman of the parliament during the time his party was in power from 1992-1993, is adamant about the need for change: "We need to change the laws to discourage bribe taking and decrease the level of dependence the people have come to expect from their government. And if some company is chosen for a government project, we will list all the reasons for our choice to make bids transparent."

When asked to elaborate on his anti-corruption plans, Gambar replied, "It is hard to explain all our programs," but insists he has sent a detailed package to the president.

Nara Aliyeva, a young Azeri woman who works for a humanitarian organization in Baku, is unimpressed by Gambar's pronouncements. "All his words are nice, yes, but why, when they were in power before did they not do these things?" she asks. "In 1992 to 1993, things were horrible - the streets were so unsafe that you would not dare to walk about after dark. Only when our [current] president took power did things settle down. He stopped the war with Armenia and took control of our streets."

Indeed, in a land where everything can be bought, many here are wondering what, exactly, is the price for peace and freedom?