Azerbaijan has hosted the Eurovision Song Contest and has obtained a seat on the United Nations Security Council. Now officials in Baku seem intent on raising the country’s profile as an international donor.
“Azerbaijan already plays a role globally as a political force,” Azerbaijani President Ilham Aliyev proudly declared at an April 16 cabinet meeting, local media outlets reported. “Taking our financial resources, we will play a role as a financial force, too.”
Putting the country’s money where Aliyev’s mouth is, the Azerbaijani governing recently extended a $370.7 million (300-million-euro) loan to Serbia for the construction of 40 kilometers of a highway (E-763) that runs to Romania, Montenegro, and Italy. The project includes the construction of 78 bridges and five tunnels. The loan to the Balkan state is Baku’s second largest after the 2011 outlay of $755 million to Georgia to finance construction of the Baku-Tbilisi-Kars railway.
The 15-year Serbian loan, ratified by Azerbaijan’s parliament on April 6, comes with a 4-percent interest rate and a three-year payback holiday. The funds were extended on two conditions: that an Azerbaijani company performs the work; and that no attempt is made to attract Armenian investors to the project.
While in Georgia’s case Baku had clear strategic reasons for extending a mega-loan, Azerbaijan’s choice of Serbia as a loan recipient is more of a head-scratcher. Officials have not explained their rationale, nor has there been public discussion of the decision. “The problem is that the process was very non-transparent, and it is not clear how the government calculated the risks and Serbia’s ability to repay the loan,” said Togrul Juvarly, an independent economist in Baku.
The Cabinet of Ministers and Ministry of Economic Development did not respond to several EurasiaNet.org requests to explain the criteria for deciding on the Serbia loan, or to discuss grants made to several other countries in 2011.
One Ministry of Economic Development official commented, however, that “all decisions were taken by the country’s political leadership.”
“No one asked us. All projects, including the loan to Serbia, are the personal order of President Aliyev,” added the official, who asked not to be named.
AzVirt Organak, a Belgrade-registered subsidiary of AzVirt, one of Azerbaijan’s most prominent road construction companies, already has started work on the highway with the Serbian state-owned Corridor Serbia.
Information about AzVirt’s ownership structure is not available in the Azerbaijani Ministry of Taxes’ online company registry. What is known is that the company for the past decade has worked on major infrastructure projects financed by the Azerbaijani government, including the construction of airports.
Azerbaijani business analysts told EurasiaNet.org that AzVirt appears to have an especially close relationship with a state-run, entity, Azerbaijan Hava Yollari (AHY), which runs Azerbaijan’s airports and the national airline, AZAL. AHY is headed by Jahangir Askerov, who also happens to be a personal friend of President Aliyev. AzVirt and AZAL have collaborated on a number of infrastructure projects, including the construction of an airport in Zagatala and the creation of service roads at Baku airport.
Askerov could not be reached for comment.
Zohrab Ismayil, a member of the National Budget Group, a Baku-based coalition of non-governmental organizations that tracks government budget expenditures, suggested that the opportunity for large companies with ties to the Azerbaijani government to gain “beneficial conditions for doing business in Serbia” may have been a factor in the highway loan deal. Otherwise, it is hard to explain “such a love from Baku for Belgrade,” said Ismayil.
Since 2011, Azerbaijan also has extended grants worth millions of dollars to Serbia for various feel-good cultural projects. Topping the list is the restoration of Belgrade’s 16th-century Bajrakli Mosque, a project costing 1.14 million euros ($1.42 million). Baku also made 647,619 euros ($803,302) available for the restoration of the St. Petka Church outside the city of Novy Sad. Another 325,300 euros ($403,536) was extended for restoration of Belgrade’s Tashmaydan Park, which includes a monument to the late Azerbaijani President Heydar Aliyev.
As with the highway loan, officials have not elaborated on the reasons for Azerbaijan’s interest in the Serbian cultural projects. “It is unclear to me why Baku should renovate churches and mosques in Serbia, when there are lots of social-welfare problems in Azerbaijan,” commented Baku-based political analyst Elhan Shahingolu.
Serbia is not the only Balkan nation where Baku has made a mark. In December 2011, Bosnia, with a predominantly Muslim population and strong ties to Azerbaijani ally Turkey, received 404,564 euros ($501,891) from Baku for construction of a “Friendship Bridge” linking the Muslim and Christian quarters of the Bosnian capital, Sarajevo.
Romania, where the State Oil Company of the Azerbaijani Republic is involved in a liquefied natural gas project, received 463,500 euros ($575,024) for the restoration of Bucharest’s Heydar Aliyev Park.
Azerbaijan’s donor activities have even extended to the Americas. In 2011, Mexico received $8 million for the construction of an Azerbaijani-Mexican Friendship Park in Mexico City. The Mexican Senate later adopted a resolution condemning the 1992 massacre of ethnic Azeris at Khojaly in breakaway Nagorno-Karabakh.
Smaller sums have gone to Afghanistan for the training of police (1 million euros or $1.24 million), and to Somalia and Pakistan in the form of humanitarian aid.
In a country where memories of the foreign aid that once kept Azerbaijan afloat still run strong, such measures, whatever their motivation, play a key psychological role. Asserted President Aliyev: “[W]e ourselves have turned into a donor country and it shows the success of our policy.”
Shahin Abbasov is a freelance reporter based in Baku. This article was amended on June 7, 2012 to correct the description of the Mexican Senate's 1992 resolution.