Interview 180: Examining the Oil Boom in Kazakhstan and Azerbaijan

In 1993, Chevron Corporation established a joint venture with the Kazakh government, signing on to a $40 billion commitment over the next 40 years to develop oil extraction in Kazakhstan. The following year, Azerbaijan opened its doors to foreign oil companies with the so-called Contract of the Century that would begin a long path toward building multiple pipelines to supply petroleum to Russia and Europe. With the recent collapse of the Soviet Union, the rush to exploit the Caspian region, the world’s third-largest oil reserve, was on.

Seventeen years later, both Kazakhstan and Azerbaijan have developed booming economies largely dependent on the production of oil and natural gas. While production has slowed in the last year in Azerbaijan, both countries continue to boast of growing GDP figures despite a worldwide economic slowdown. Yet the boom cannot last forever, and with large portions of the population living in poverty in both countries, it is also clear that the recent boom raises many questions, if not problems.

In a recent paper presented at a meeting of the International Council for Central and East European Studies, former Woodrow Wilson Center fellow Andreas Heinrich asks what are the possible negative consequences of a resource boom on the politics and economy in the Caspian. Here, Heinrich, who now works as a researcher at Bremen University’s Institute for East European Studies, answers three questions based on his research.