The Azerbaijani President in Washington: An Important Test for Democracy

The rubber hits the road for President George W. Bush's "Freedom Agenda," when he meets with President Ilham Aliyev of Azerbaijan at the White House on April 28. Aliyev sits atop a tightly controlled system known for its denial of political or economic freedom to those who aren't members of the tiny and insular ruling elite.

The agenda for the meeting between the two presidents is likely to focus on major geopolitical issues now making headlines, including Iran's nuclear program, energy security and the global campaign against terrorism.

While these issues unquestionably deserve high billing, President Bush should also emphasize Azerbaijan's lagging performance on democratic reform. Letting the country's leadership off the hook for its resistance to democratization would be a strategic mistake. Encouraging democratic reforms in Azerbaijan not only would serve the long-term interests of the West, it would benefit all Azerbaijani citizens.

Azerbaijan is a Muslim country of roughly 8 million located in the pivotal trans-Caucasus region. To the east is the Caspian Sea, key to the region's energy riches and a pathway to Central Asia. To the north lies Russia. To the south, Iran. To round out this tough neighborhood, the former Soviet republics of Georgia and Armenia are to Azerbaijan's west. Nagorno-Karabakh, over which Azerbaijan and Armenia remain embroiled in a territorial dispute, is one of the world's most bitter "frozen" conflicts. [For background see the Eurasia Insight archive].

Azerbaijan's oil wealth, poised to balloon in the coming years, adds another wrinkle. Oil and gas accounted for less than 20 percent of Azerbaijan's industrial output a decade and a half ago. Today, it represents more than 60 percent, as well as more than half of Azerbaijan's budget revenue – figures that are both rising.

For countries with sound and independent institutions, such resources can benefit wider society. In a country where more than 40 percent of the population now lives below the poverty line, well managed oil proceeds could help lift Azerbaijan to a level of prosperity unique to the region. [For background see the Eurasia Insight archive].

In Azerbaijan's case, however, economic experts worry that the oil wealth will fuel even more rapacious corruption among the ruling elite, rather than genuine reform of the country's closed, Soviet-oriented institutions. The government is now setting in motion a host of large scale infrastructure projects underwritten by oil proceeds, projects that on their face seem sensible enough. However, given the country's rampant corruption and weak institutions, there is a great danger that much of this money will find its way into the corrupt patronage networks that steer the country's economic and political activity.

A report issued in December 2005 by the Caspian Development Advisory Panel, a body established by British Petroleum to study the impact of the Baku-Tbilisi-Ceyhan pipeline project, said that "in the longer term, development of the rule of law, transparency and good governance, including full participation by the public, will be prerequisites if Azerbaijan is to manage effectively its substantial oil and gas wealth and avoid the