Big Oil Comes Back To Baku

by Mark Jacobson

March 1999

International dealers have flocked back to post-Soviet Azerbaijan to cash in on its great store of Caspian Sea oil. The big question is when the Azeri people, including one million war refugees, will benefit.

THE TEMPLE OF CAPITAL

The central Asian republic of Azerbaijan – with its venerable Mediterranean-style capital, Baku – has always been a crossroads, a place to pass through. At the margin of Europe and Asia, wedged between Russia and the Caucasus Mountains to the north and Iran to the south, Azerbaijan served historically as a key point on the trade route between the Caspian and Black Seas. A tramping ground for a murderer's row of conquerors (Cyrus the Great, Alexander the Great, Pompey, Genghis Khan, Tamerlane, and Peter and Catherine the Great are just a few who have sacked this place), and for seventy-one years a Soviet socialist republic, Azerbaijan is now hosting a reprise of what Rudyard Kipling once referred to as The Great Game: the nineteenth-century scramble by England, Russia, and other countries for geographic position in central Asia. Now a new breed of foreign presence – bearing the standards of Exxon, Chevron, Pennzoil, et al. – has arrived in Baku, seeking to conquer geology. The 5.5-million-year-old sand and clay sediments of the Middle Pliocene Productive Series of the Caspian Basin seabed have been determined to contain the earth's largest relatively accessible petroleum cache. In our hydrocarbon-addicted, forever consuming world, which many geologists believe has already used up more than half its oil reserves, the game – at least for now – is here.

Upward of $40 billion has been slated by various corporations for mining the underwater oil reserves of the Caspian Sea, but this figure is likely to go up, since littoral Caspian nations, such as Azerbaijan, Kazakhstan, and Turkmenistan are still very much in the "early oil" stage. Much remains to be settled. Arguments over whether the Caspian, the world's largest inland body of water, should be called a sea or a lake (an issue of huge legal and economic import for the littoral states, which will divvy up the potential oil bounty) have yet to be decided. Another bone of contention is pipeline politics – that is, how and by which route the prospective oil will be brought to gas guzzlers everywhere, once it is slurped up from beneath the Caspian's floor. Maps of the Caucasus region show numerous criss-crossing lines denoting various pipeline paths: working, nonworking, proposed, and discarded (see "Pipeline Politics," page 59).

The touchiest question of all is exactly how much oil lies under the choppy Caspian waters. Churlish petrol geologists put the hydrocarbon potential at a mere 75 billion barrels of crude (1 barrel = 42 U.S. gallons; 7.4 barrels = 1 ton), similar to the North Sea reserves. The government of Azerbaijan and international business sources, in a decidedly more glass-half-full mode, are fond of quoting U.S. Deputy Secretary of State Strobe Talbott, who gushes about there being at least 200 billion barrels, a bounty akin to a junior-league Kuwait. Until the well "drill strings" pierce the Caspian's sedimentary layers, no one will know for sure how "big" the sea will be; several sites on the Absheron ridge have proved disappointing or have yielded only gas, which is much more difficult to extract and more expensive to bring to market than oil. But suffice it to say that no impoverished, war-torn ex-Soviet republic ever attracted foreign investment by underestimating its oil reserves.

Oil – and its fire – have been a defining force in Azerbaijan for thousands of years. It was near here, in the Caucasus Mountains (said the ancient Greeks) that the Titan Prometheus stole fire from the gods for the use of mankind. The connection between fire and oil was made by the followers of the prophet Zoroaster, who was born in northern Iran (called South Azerbaijan by Azeri nationalists) nearly three thousand years ago. Postulating a dualistic universe overseen by opposing godheads of Light (Ahura Mazda) and Darkness (Ahriman), Zoroastrians saw fire as a sign of divine power and purity. In their fire temples, Zoroastrian priests, called magi, kept a flame permanently burning.

Then word came, from a place to the north (the Absheron Peninsula, site of Baku), of a magical black liquid that bubbled from the ground and burst into flame when hit by lightning. Once ignited, its fires (which were fed by surface-level oil and gas hydrocarbon deposits) would burn for years. Indeed, it seemed they would burn forever, thereby becoming what the magi imagined to be an eternal flame. For Zoroastrians, this made Azerbaijan – the home of the atesh adran, the oil-fed "fire of fires" – a holy place.

Other early travelers to take note of Baku's oil were of a more utilitarian mind. In the thirteenth century, Marco Polo, passing this way en route to the Far East, noted that a kind of "black gold," or neft, as it was called locally, was being extracted from the ground in the Absheron area. "One could load up to a hundred poods [a Russian measure equaling thirty-six pounds] of this neft at a time," the explorer reported. "It's inedible, but it can be burned or smeared on camels suffering from scabies and sores. People come here from afar for this oil, and it is burned all over the country." By 1479, when Venetian ambassador Iosafat Barbaro passed through, oil use had grown more sophisticated. Barbaro was amazed to find "a mountain which pours out this very stinking black oil which is used in lamps at night." Further progress was noted by the German physician Engelbert Kaempfer in 1683. By that time, there were hand-dug wells from which oil was extracted in sheepskin buckets raised and lowered by horse-drawn winches.

The genesis of the modern Baku oil industry reads like a who's who of late-nineteenth-century international plutocracy. In 1872 imperial Russia opened the Baku fields to foreign investment. Soon after, Robert Nobel, brother of Alfred, the dynamite tycoon for whom the Peace Prize would be named, arrived in Baku. Nominally charged with finding lumber to be used for rifle butts in his brother's Siberian munitions factory, Robert purchased some oil wells instead. By 1880, the Nobel brothers owned the largest oil company in Russia. They built the world's first pipelines, first modern refinery, and first oil tanker, the Zoroaster. In 1883, when the Rothschilds financed the Baku-to-Batumi rail line, allowing Azerbaijani petrol to reach the Black Sea and the rest of Europe, John D. Rockefeller's kerosene monopoly in the world market was shattered.

At the turn of the century in Baku, more than two hundred refineries were belching enough smoke to obscure the noonday sun over "Black Town," an industrial section of the capital. By then, Azerbaijan was exporting nearly 60 percent of the earth's available petroleum. Much of the profit was grabbed by foreign hands, but, as befitted a capital of world industry, a new class – the oil barons – arose in Baku. Like pre-TV "Beverly Hillbillies" peasant farmers, after generations of unhappily picking tar from sheep's wool, found that the bubbling crude on their land was worth a fortune. Cargo loaders and scrap leather dealers became millionaires. Avowed Muslims, the oil barons nevertheless looked to Europe, forging an eccentric syncretism between East and West. Renowned architects were summoned from Germany and Poland. Almost overnight, fanciful "oil palaces" arose along the low-slung Baku skyline. An impossibly ornate opera house, the first in the Islamic world, appeared on the Caspian shore.

In 1920 the oil baron Murtuza Mukhtarov shot dead two soldiers who had ridden their horses up the grand stairway of his block-long French Gothic home (called the Palace of Good Fortune); he then pressed the pearl-handled pistol to his own temple. Baku's oil boom had come to an end. With nationalization, the Bolsheviks dispersed Azeri oil throughout the fledgling U.S.S.R. – gratis. Residents of the former oil capital of the world, suddenly short of heating fuel, found themselves shivering through the winters. Under Stalin, as oil production rose and fell precipitously, depending on the often capricious needs of the Soviet "center," pipelines and refineries were picked up and moved like massive, smoke-choked chess pieces to places elsewhere in the empire. With the subsequent development of oil fields in Texas and the Middle East, Azerbaijan appeared to be largely relegated to the dustbin of hydrocarbon history.

Not everyone had forgotten the former oil capital, however, as documented in a grainy wartime home movie shot at a birthday party for Adolf Hitler. The Fuhrer's cake is adorned by a map of the Caspian Sea, with the letters B-A-K-U spelled out in chocolate cream. Hitler eats a piece and then avidly licks his fingers. "Unless we get Baku oil, the war is lost," he would declare. These words proved prophetic, as the Nazi leader, obsessed with Germany's failure to gain control of Azerbaijani oil during World War I, disregarded his generals' advice to attack Moscow immediately and chose instead to drive toward Baku, a futile campaign that led to the disaster at Stalingrad.

"Shortage of petrol!" wailed Field Marshal Rommel after running out of gas while also trying to reach the Caucasus oil fields. "It's enough to make one weep!"

Today Baku, where the kabobs are tasty and the weather excellent, is a model of post-Soviet cosmopolitanism. While nominally Shi'ite Muslim, Azerbaijan – which has always culturally aligned itself with Sunni Muslim Turkey – appears notably immune to the clerical zeal practiced by Iran, its neighbor to the south. There are few places in which Soviet-style atheism has been so successful. For the traveler, it is disorienting to walk around a predominantly Muslim country for days yet never hear a call to prayer. With the dismantling of the Communist-era iconography, almost every statue in Baku depicts a writer, artist, or musician. Verses of the grand twelfth-century national poet Nizami are quoted freely. Beaux-arts palaces, relics of the oil boom, have been made more seedily romantic by seven decades of comprehensive Soviet proletarian neglect.

Foreign oilmen are suckers for the ambience. Tap the surface of an "oily" (as they call themselves) – the smart ones anyway – and a closet romantic is bound to emerge. The best of them – nothing more or less than good old boys in corporate veneer – fancy themselves wildcatters at heart, men of the world, acutely aware of their Master of the Universe positioning in relation to one of the planet's dominant natural resources. After all, where would the Beach Boys, Chuck Berry's long freeway, or a million truck-stop short-order cooks be without them?

In Baku, older oilies can be seen hanging out at the seaside Cinema Club with the youngish workers from nongovernmental organizations, listening to local jazz at the stylish Mugam club in the Old City or trawling seamy downtown bars like the Sherwood and the Coral, although Americans have been known to favor the Ragin' Cajun or the Wild West, where country line-dancing is available. In keeping with this honky-tonk motif, a monoxide-spewing truck stop sits across the road from the Wild West, except that the drivers are Iranian and the windshields sport decals of Ayatollah Khomeini. While nothing near the Casablanca-style nest of spies and gangsters it is sometimes made out to be – a James Bond movie with a plot involving pipeline sabotage is reputedly in the works – Baku is nevertheless thick with industrial intrigue. Much of the gossip centers on the "royal family" of Heydar Aliyev, the steely seventy-five-year-old former senior KGB official who ruled Soviet Azerbaijan from 1969 to 1982 and now does so again as a duly elected semidemocrat. Azeri and expatriate alike were surprised recently when Aliyev converted Baku's gambling casinos to conference rooms. Some say, puckishly, that the conversion may have had something to do with the fabled losses of Aliyev's son Ilham, who, despite his gift position as vice president of the State Oil Company of the Azerbaijan Republic (SOCAR), is regarded as something less than the next stepping-stone in the dynasty.

The epicenter of Baku's new oil boom is the restaurant at the Hyatt Regency, the first and most expensive (rooms start at $300 a night) "international" hotel in town. Here the petrolspeak of "outsourcing," "rightsizing," and "debottlenecking" is carried on in whispers. In a country of clatter and bustle, the Hyatt's restaurant is an oasis of hushed tranquillity. Spacious, with huge sun-streaming windows and thirty-foot ceilings, the restaurant feels important beyond its tastefully displayed art or outrageous prices; it's like a library or a church.

Across town, by the sea, one can sit in a similarly sun-washed and high-ceilinged, if decidedly more threadbare, room inside a massive government building. In that room, inside a building constructed by forced German labor after World War II, Stalin ate under a huge chandelier. During his days as a revolutionary in Baku organizing oil workers, the murderous Soviet leader is said to have spoken of his nostalgic feelings for Azerbaijan while drinking tea in the dining room, which may or may not account for the painstakingly painted hammer and sickle (one of the very few still to be seen in Baku) adorning the otherwise shabby walls. More than fifty years later, a sense of power remains – and a somber respect for that power.

A similar, updated sense of reverence is felt at the Hyatt. It is a realm apart, a solemn place of linen tablecloths and privilege, a Temple of Capital. Eating a $17 continental breakfast in the quietude of the Hyatt, a visitor might find himself seated a few tables from Zbigniew Brzezinski, Jimmy Carter's former national security advisor and now a special consultant for BP Amoco in central Asia. Get up to speak to him and there is a mirror reaction from across the room: a bodyguard doing his job. Casual in his yellow cardigan, sitting alone eating a bowl of muesli, Zbig is friendly, happy to sign an autograph. As for the chance that the United States will relent concerning its opposition to the controversial proposal for an oil pipeline through Iran, he smiles and says, "No way."

It is business as usual once more in the Temple of Capital. Cutlery like this has not been seen in Azerbaijan since the days of the first oil barons. Indeed, as recently as five years ago, there was very little of anything here. The Hyatt itself was once the Nachijivan Hotel, a Soviet-run establishment sorely lacking in the current amenities. With the reconfigured industry still in the largely exploratory early-oil stage, the promised real money has yet to roll in. But confidence is very high. Why else would Brzezinski and hundreds of other oilmen be here if the country was not about to get rich?

THE SIX DOLLARS

"Where's my six dollars?" That's what the "normal people" in Azerbaijan want to know in these boom times, says Rauf Talishinsky, the urbane editor of Ayna Zerkola, a popular weekly newspaper. The six dollars has become something of a national obsession in Azerbaijan. "It is a matter of global market arithmetic – what the World Bank, the IME and the oil companies call nation building. For every dollar of profit in the oil industry, six dollars will be generated by the supporting non-oil economy."

The global scramble for natural resources has changed since the late nineteenth century, when Cecil Rhodes left England for southern Africa, cornered 90 percent of the world's diamond market, and wound up having three separate countries named after him, plus a dog (the Rhodesian ridgeback). The ideal modern production-sharing agreement between "source country" and "multinational supplier" is supposed to be more of a win-win thing. That's what President Aliyev was looking for in the 1994 agreement between his government and a consortium of international oil companies. In fact, as many of the expat oilmen crowding downtown Baku agree, for a country that until quite recently had no such thing as contract law (not to mention tax, banking, or export law), when it came to the so-called contract of the century, Aliyev cut a heck of a deal for his country. As for the "normal people" they await the promised trickle-down. The salary for a teacher is still only $14 a month. "Now, with oil, we are supposed to live in the land of opportunity," says Talishinsky. "They've got people's hopes up. They want their six dollars. That's the key to the future in Azerbaijan." His mood turning darker, Talishinsky asks, "What will happen if people get their six dollars […] and what will happen if they don't?"

One hundred fifty miles southwest of Baku, the distribution of this metaphorical six dollars (the price of a glass of orange juice at the Hyatt) is a particularly pressing matter. There are several refugee camps here in the heavily fortified southwestern corner of Azerbaijan. As a result of the country's devastating war with neighboring Armenia over the disputed Nagorno-Karabakh region (1992-94), which left twenty thousand people dead and the victorious Armenians in control of 20 percent of Azeri territory, there are now more than one million refugees, or what the United Nations calls IDPs (internally displaced persons), in Azerbaijan. This amounts to approximately 13 percent of the total population, the highest such ratio in the world.

Considered by many to be the inevitable legacy of Leninist divide-and-rule ethnic gerrymandering – which in 1923 established a primarily Armenian enclave within the territory of Azerbaijan – the war for the former Autonomous Oblast of Mountainous Karabakh ("Black Garden"), while not waged on the cataclysmic scale of Bosnia or engendering as much Western ink as Chechnya, has nonetheless taken its place in the knockabout moshpit of post-Soviet sectarian conflicts. A ceasefire has held since 1994, but there are no ongoing negotiations. With little settled, defeat continues to fester in the Azeri national mind. Worst of all are the refugee camps: one can't drive very far in Azerbaijan without encountering settlements where thousands who fled the fighting live in makeshift tents, railway cars, and holes in the ground.

Ninety-six-year-old Vafa lives in one refugee settlement. The children have no future here, he says, as he sits by his earthen dugout shelter, staring at a group of young boys playing in a dusty field. Nail-thin and silver-eyed, Vafa tells his visitors that back home in "beautiful" Lachin, a now Armenian-occupied mountain town, it was nothing to be ninety-six. Many people survived well past one hundred. To live so long in such a beautiful place was considered a great gift from God. As for being in "this hell," which is what Vafa calls the camp where he and 6,500 other refugees have lived since the Armenian takeover of Lachin in May 1992, the old man says he wishes he were dead. If he were, he wouldn't 'have to endure being where the nearest drinking water is more than a mile away and the earth is so dry "you can't even plant a tree so you can sit in the shade of it." The worst of it, he says, is looking at the children. According to studies conducted by the United Nations High Commissioner for Refugees, almost every child living in the Azeri camps suffers from some degree of malnutrition. It is unlikely that any of them will live to ninety-six. "They'll be lucky to last half that long," Vafa predicts.

Things are even bleaker in Saatli, where refugees live in a mile-long line of railway cars. In summer, temperatures in the metal carriages can reach 125 degrees. Smoke from burning dung used as fuel in winter has caused serious outbreaks of asthma. Taped to one railway car wall, alongside torn Bruce Lee posters, is a handwritten list of towns in Nagorno-Karabakh and the dates on which they were taken by Armenian forces. "Death is our only way back now," declares one man. Whenever anyone dies, he says, their body is driven as close to their former home as can be done without the drivers being shot, and there it is buried.

At a tent camp near windswept Barda, where four thousand people have been quartered for three years, patience has all but run out. Here, when aid workers arrive, there are no welcoming glasses of tea, no handshakes. Why hasn't the doctor been to the camp? people yell. Why haven't materials been provided to fix torn tents? In the crowd is a man who gives his name as Ilyas. To say that Ilyas – who is in his early thirties and has dark pinpoint eyes – exudes anger would be to miss the point. Kafkaesque disbelief is more like it. Before the war, Ilyas taught chemistry in high school. He was married, with two young children. When the Armenians started bombing his town, Agdam, Ilyas sent his family to Baku. He never heard from them again. Escaping the war zone, he searched in vain for a year; now he believes his wife left him for another man. Without home or money, he wound up in the tent camp. He says, "For me to end up in such a place – it is something difficult to accept."

As a teacher, Ilyas often discussed Azerbaijan's oil industry in his classes. The "science of petroleum" was an important part of the nation's history, he says. His own grandfather was an oil worker back in Soviet times. Listening to the radio in his tent, he's heard about the fifth Caspian Sea Oil and Gas Exhibition currently underway in Baku, which he describes as a gathering of "rich foreigners eating in restaurants." Considering his situation and that of the other refugees, Ilyas feels only despair. "In the old oil boom, when Azeris became rich, they helped other Azeris," he points out. Many of those first oil barons, cognizant that oil was "the property of God," spent much of their fortunes for the greater good of the society. But what about now? "You are American," Ilyas says. "Many of these oil companies here now are American. Americans have never helped Azerbaijan. We have lost all trust in the Americans. What might they do for us now?"

This seems a reasonable question, one worth pondering a few nights later at the American Embassy in Baku. Located in one of the nineteenth-century oil boom's most elegant buildings, the embassy is hosting a garden party in honor of delegates to the oil show.' The keynote speaker at the party is the U.S. Commerce Department Under Secretary of International Trade, David Aaron. That Azerbaijan is a country of "singular strategic and economic importance […] a good place to do business" is the message he will bring President Clinton, Aaron tells the assembled oilies. And things will be even better once 907 becomes history, the Under Secretary announces.

With this, a cheer rises over the embassy's garden. Product of a well-heeled lobbying program by Armenian-Americans, section 907 of the Freedom Support Act was passed in 1992 as an outline of American policy pertaining to the emerging nations of the former Soviet Union; it officially named Azerbaijan as the aggressor in the Nagorno-Karabakh war, resulting in full-scale U.S. sanctions against the Azeris. Since then Azerbaijan hasn't received a penny of American economic aid – the only former Soviet republic (including President Alexander Lukashenko's neo-fascist, mafia-prone Belarus) to be so denied. For the Azeris, who point out that the entire conflict took place on their still-occupied soil and who consider themselves staunchly pro-American, section 907 is galling and incomprehensible. Standing amid the corporate cheerers at this gathering, one can feel how the tide has begun to turn on 907, and on political/environmental sanctions in general. In the age of the global market, the global marketeers make the rules. And it has not escaped their notice that compared to Azerbaijan, Armenia is a resource-poor, hard-scrabble land. Certainly there is no oil there.

As evidenced by the greatly appreciated million-dollar gift to Azeri refugees from the Unocal Corporation, 907 does not preclude contributions from the private sector. Oil philanthropy has tended to be spotty, however. After opening the oil show the previous day, President Aliyev, accompanied by his Dolph Lundgren look-alike Russian bodyguards, chats with representatives of Exxon. Asked what was discussed, Exxon execs say Aliyev was keen to hear about the company's potential to help Azerbaijan in the "environmental sector," most specifically through Exxon's Save the Tiger Fund, a campaign pledging to protect the endangered big cats throughout the world. Upon hearing "But there aren't any tigers in Azerbaijan," the men from Exxon rebut vigorously, "Well, there used to be." They cite the Caspian tiger, a leading Eurasian predator ten to twenty thousand years ago. In Azerbaijan, the Save the Tiger program would take on "a symbolic meaning," one executive explains, noting that President Aliyev has been keen on Exxon's promotional use of big cat Beanie Babies. "He took two!" enthuses the exec, noting that the company is also offering for sale a Save the Tiger kit containing a National Geographic documentary on the imperiled animals. Part of the proceeds may go to aid environmental projects in Azerbaijan.

If anywhere ever needed investment in environmental protection, it's Azerbaijan. The country with the world's oldest petroleum industry also has the longest history of hydrocarbon pollution. Heydar Aliyev may have received an Order of Lenin in 1981 for spectacular increases in Azeri cotton and grape crop yields, but these goals were achieved through the equally spectacular use of DDT and dangerous chemical fertilizers, with predictably unfortunate consequences for soil and water quality. The potability of the Kur (or Kura) River, the main source of Baku's water supply, has been seriously undermined. But when it comes to Azeri eco-nightmares, there is little to compare to Sumgayit, the famously apocalyptic "chemical city" thirty miles north of the capital. In the years following World War II, thirty-plus major factories were constructed here, including those manufacturing DDT, various chlorinated compounds, and the toxic gas lindane. There were very few environmental controls; almost all waste products were dispersed into the air or dumped untreated into the Caspian Sea. Drivers had to have their headlights on at noon to see through the murk; women's nylons were said to disintegrate upon contact with the air. Nonetheless, considered a worker's paradise because of its relatively high wages, Sumgayit at one time had more than four hundred thousand residents, making it the second largest city in Azerbaijan. Tens of thousands of these people have since left.

Today, with all but two or three of the factories shut down and 90 percent of the population unemployed, Sumgayit is a quieter, albeit still chilling, place. Under stark blue skies, with birds chirping, one can tour the section of a local cemetery that is reserved for babies and children. By the wide beach, which resembles a more dystopian Daytona, half-drowned buses and abandoned ships dot the horizon as dead seals roll in the languid tide. Nevertheless, more than seventy-five thousand refugees from Nagorno-Karabakh have moved to Sumgayit in the past five years. Some of these displaced people can be seen skulking around shuttered factories, carrying buckets and large glass jars to collect discarded chemicals. Secondhand toxins provide a small-business opportunity here. Refugees take the poisons to Baku, where the shout of "Chlor!" means the chlorine bleach peddler is in the streets again. It's not unusual to answer a knock at the door and find a mottle-faced man hawking a foaming cocktail called "the terrible liquid." An ad-hoc Drano of widely varying composition, it is guaranteed to unclog Baku's notoriously balky plumbing. Prolonged contact with pipes is not recommended.

Not everyone is unhappy to call Sumgayit home. Certainly there are problems here, says sixtyish, thick-trunked Mustafayev, tending his small garden in the shadow of the now-closed glass factory where he worked for twenty-seven years. Glass from this very factory was shipped "across all of the Soviet Union, to Kazakhstan and the Ukraine." This is something to be proud of, Mustafayev says ruefully. Honest people worked hard there. That is what is wrong with the "new" Azerbaijan: people are ashamed of the past. He was never a Communist Party member and distrusted party people, but this is how life is, and it is stupid to throw away everything. Then Mustafayev reaches down to pick up one of the long purple eggplants he's grown in his garden. If Sumgayit is so awful, so full of death, he demands to know, thrusting the vegetable out in front of him, how can such healthy plants come from the ground?

Eventually, as with the discussion of so much else in Azerbaijan, talk of the environment turns to oil. Walking through Bibi-Eybat, one of the oldest oil fields on the shore of Baku Bay, one can see what a century of largely unregulated oil drilling can do to a stretch of real estate. As if from habit, hundreds of "nodding donkey" oil drills, their corroded gears whining in the wind, still scavenge the long-exhausted shoreline reserves, seeking to pump up one last stray molecule of hydrocarbon. Derricks, some as many as seventy-five years old, rust in the scratchy mid-afternoon light. Everywhere there are huge pools of spilled oil: modern tar pits trapping not woolly mammoths but pieces of discarded furniture, children's toys, and ancient newspapers. Much of the seepage, containing mercury and other heavy metals as well as radioactive material such as radium 226, has penetrated the water table or been washed into the adjacent shoreline. As a result, Baku Bay – which is all but totally depleted of oxygen – has become a dead zone; it is one of the dirtiest major bodies of water in the world.

Given this tableau, the advent of the new oil boom, with its hundreds of projected offshore drilling rigs, sub-sea pipelines, and supertanker traffic, creates a potentially explosive ecological scenario, especially given the uniquely vulnerable nature of the Caspian Sea itself. As a river-fed brackish lake (88 percent of the water comes from the Volga, Europe's longest river; the Kur; and the Terek) with no outlet to the ocean, the Caspian has a limited ability to flush contaminants. A major accident here – given the hundreds of endemic species of fish and plants – could result in disastrous biodiversity loss. Added to that is the sea's sheer idiosyncrasy. As Einar Tresselt, Norwegian geologist and senior executive at the Azerbaijan International Operating Company (AIOC), the leading consortium of foreign oil producers, says, "The Caspian is one odd duck, full of unsolved mystery." For instance, no one is quite sure why, having dropped almost thirty feet between the 1930s and the mid-1970s, the Caspian's water level has risen eight feet since then, resulting in widespread flooding and property loss. Also enigmatic are the "mud volcanoes" studding the southern seabed. These clay-belching calderas, some of which are several hundred feet high, are capable of quick, unpredictable growth – something to consider when laying extensive undersea pipelines and drilling what will be some of the deepest wells in the world. Beyond this are the environmental hazards involved with land pipelines. The existing Soviet-built conduits, especially those passing through Georgia, have been subject to incessant leakage, often in ecologically sensitive areas such as wetlands. These pipelines will be improved and upgraded, but accidents are difficult to prevent.

Recently, however, a ray of hope has arrived in the form of the UN-sponsored Caspian Environment Project (CEP), which promises what coordinator David Aubrey, a senior scientist at the Woods Hole Oceanographic Institution in Massachusetts, calls realistic sustainability goals. The project includes the bold and wholly indispensable involvement of neighboring Iran as a full partner. Also "realistic" is CEP's stated desire to work closely with the AIOC and other private oil producers. "If we want to have success in protecting the Caspian region, we have to create a situation everyone can live with," Aubrey says. "We won't get anywhere attempting to ignore the economic imperatives."

The AIOC/CEP meld of Big Oil and Big Relief cannot but be a vast improvement on the Soviet "zero tolerance" policy of first setting up impossible-to-comply-with eco-rules and then collecting bribes when the dictates were broken. Still, as for the raising of ecological consciousness in Azerbaijan, Shahin Panahov, director of ECOKES, one of the country's few active environmental organizations, despairs. "We have a very long way to go when it comes to any environmental education," he remarks glumly, holding up a softcover textbook in which an airplane is shown dusting fields with DDT. The caption reads "For the natural goodness of our crops." Other pages detailing "our waters" show pictures of blue whales, not known to frequent Caspian sea lanes. The text is obviously from the Soviet era, but it is no relic. As Panahov points out, the book's reprint date is 1997, which is when it was distributed to Azeri fourth-graders.

One Azeri eco-issue that captures the attention of Moscow blini-eaters and Manhattan socialites alike is the caviar emergency. The vast majority of the world's sturgeon population, source of the most fetishized fish eggs, reside in the Caspian Sea. Often called a living fossil, the spike-snouted sturgeon is among the most venerable species on earth. Despite a lineage dating back as much as 100 million years, the highly prized beluga sturgeon, as well as the smaller Russian and sevruga, has been disappearing at an astonishing rate. As recently as the mid-1980s, more than 30,000 tons of sturgeon were taken by Soviet and Iranian fishermen; by 1995 the official catch was down to 3,100 tons. Likewise, whereas in the 1970s it was not uncommon to find a nine-hundred-pound, sixty-year-old beluga (they have been known to live a century and weigh two thousand pounds), the current average weight of a fish caught is around eighty pounds. One reason for the decline is the damming of the Kur River in Azerbaijan, which has hindered sturgeon-spawning patterns. And many fish have been poisoned by the giant gas-extraction plant built at the mouth of the Volga River. Yet the main problem is overfishing. Back in the days of the Soviet Union, strict quotas on the sturgeon catch were enforced by the caviar commissars, but since then, the market has become a bit more ad hoc.

A visit to the nearly deserted state-owned caviar factory and sturgeon hatchery near the mouth of the Kur in Neftechala, seventy-five miles south of Baku, underscores the dire prognosis. Just the day before, 1.3 million sturgeon hatchlings were released from the factory's spawning pools into the river, from which they will enter the Caspian. If things were "normal," the factory manager shouts over the piercing caws of several hundred nesting crows, a goodly portion of these hatchlings would return in about fifteen years, matured and full of caviar. But things are "not normal."

"Very few, very few will come back," the manager says with disgust. "Some will go elsewhere, some will not bear eggs, the rest will be murdered."

"Murder? I wouldn't call it murder," says Azad as he flicks a five-inch machete-like blade through the fetid air of a makeshift hut on the Caspian shore. A squat, burly-chested man in his late twenties, Azad reveals that he has been a caviar poacher for almost two years. Mostly he goes out at night to set his (outlawed)jumbo drift nets, which catch sturgeons along with everything else. With large spoons, he scoops out the eggs and discharges them into big plastic buckets, ready to be either processed and packaged for the Baku black market or immediately shipped to Moscow. It's a dangerous business. Two years ago in Dagestan, sixty-seven people were killed in a war between caviar mafiosi and local police, a clash that included the bombing of a nine-story building where border guards were housed. The situation in Azerbaijan isn't that tense, but still, Azad says, winking, it's never a bad idea to keep a couple of Kalashnikovs under the bed.

At the local market – where people will swear on a stack of Korans that a flotilla of Armenian submarines has been torpedoing innocent sturgeons with underwater machine guns – Azad sells a kilo and a half of black caviar for about eight "shirvans," or $20. "In America it is $100 an ounce," he snorts, indicating he'll never see money like that.

To be Azeri is to be unlucky, Azad contends, imparting a portion of his life story. As a teenager from a poor family, he dreamed of going to Moscow State University, but then the Soviet Union fell apart. After that, he was sent to fight in Nagorno-Karabakh. Near the Iranian border, Azad's unit was routed by Armenians. "The Russians supplied them with everything, led them into battle with strategy. Our troops were disorganized. We had no chance." He was very happy to get out alive. "Azerbaijan […] I didn't care about Azerbaijan," he says. Since then, Azad has changed his mind. He heard that mujahideen fighters from Afghanistan, men who'd thrown the Russians out of their country, had come to Azerbaijan to aid their Muslim brothers against the Christian Armenians but soon left saying, "The Azeris did not want to fight." This embarrassed him. "I am not a good Muslim, I do not pray," he says, "but this was a dishonor." Slicing his blade through the sea air, Azad continues. "Soon there will be war again, and this time it will be different. This time we will have the better weapons." Azad is certain that oil money would rout the Armenians. With oil money, Azerbaijan would be whole again.

This is something to think about back in Baku, driving past Shahidlar Khiyabani, or "Martyr's Lane," where many of the dead from the fighting in Nagorno-Karabakh are now buried, red carnations surrounding their black marble gravestones. What might the Hyatt oilmen think of the caviar poacher Azad's vision of jihad? The answer is clear enough from reading one of the oil industry's several high-priced newsletters: anyplace with a massive refugee problem, 70 percent unemployment, and no clear successor to a one-man ruler is no shoo-in for long-term stability. Yes, Azerbaijan could blow up. But there are other places to headquarter the new Caspian oil boom. Kazakhstan doesn't have the creature comforts of Baku, but it does have plenty of oil. When it comes to extracting the world's fixed and finite natural resources, the big players in the global economy must assess the risks and be flexible, ever ready to move on.

THE BURNING HILL

For hundreds of years, mariners had noted the place called Neft Dashlari, or Oily Rocks – forty miles from the Absheron shore – where the Caspian became shallow and where large black rocks, surrounded by a rainbow sheen, broke the surface. It was here, during the 1940s, that the Soviets dug the first offshore well, consisting of a hammocklike platform over a rock outcrop. Soon a thirty-foot trestle was built across the twelve-foot-deep sea to a second group of rocks. More platforms were constructed, each attached to the last by a causeway. Without precedent, Oily Rocks continued to be developed according to no particular master plan: structures were added as deemed necessary, roadway pilings fanned out in irregular patterns. Eventually 158 wells would be dug here in the middle of the Caspian, linked by 120 miles of thoroughfare.

Nearly three thousand oil workers can still be found working one-week shifts here, whiling away their evenings gambling at backgammon in cramped dormitory rooms built in 1961. But time and the sea have taken quite a toll on Oily Rocks. Large sections of causeway have been washed away by storms, or they have simply collapsed through neglect. Drill towers have sunk into the water, with only their crowns now visible above the waves. Recent fluctuations in sea level have accentuated the rust-never-sleeps motif, convoluted loopings of steam-pipe shed orange flakes, and ruined potbellied separator tanks lie like sleeping hippos in the noonday sun. A hulking limestone statue depicting the glorious unity of oil workers – and a companion fifteen-foot-high mosaic of Lenin – bear permanent water stains. Encountering the tumbledown setting today, it is difficult to believe that Oily Rocks' causeway design was once considered a serious challenge to the now-standard Western-style detached platform towers. Oily Rocks appears to be 'just another loser, an inherently flawed, defeated system, cast off like Communism itself.

An eerie place, Oily Rocks. Of the so-called natural resources worth plundering, oil has the most ghosts. After all, it used to be alive. Oil is us, or at least the echo of life that has gone before us. It's stupefying: all that natural history – all that past – blown right out the exhaust pipe.

In the end, though, if you want to understand something about oil in Azerbaijan, you have to come to the Burning Hill, a short distance from Baku. It's not exactly certain when the Burning Hill, a forty-foot-high limestone berm rich in surface hydrocarbons, caught fire; no one can remember when it wasn't burning. During World War II the Red Army, fearful that German fliers might use the blaze as a landmark, tried to bury the hill under tons of cement. The effort was largely futile – the hill continued to burn, giving rise to the common belief that its enduring flame might be imbued with some of the magical qualities that the ancient Zoroastrians attributed to the atesh adran, the Holy Fire of Ahura Mazda, the Spirit of Light.

Soon, people say, the eternal flame at the Burning Hill will go out. The hydrocarbon reservoir beneath it is almost used up. Even sacred fire seems to be a finite substance. But tonight the fire's hot enough to sit in its roaring glow and watch the slickly dressed, young Azeri lovers who have just pulled up in a late-model Datsun. You might think they were yuppies, which is another sign of progress; six years ago, when even buying a roll of tape was a major problem, Azerbaijan had no yuppies. Giggling like characters in an early Fellini movie, the couple play tag with the eternal fire as if its flames were waves at the beach. Then they pause to talk on their cell phones before going over to the other side of the Burning Hill to make love.

FURTHER READING Russia and Azerbaijan: A Borderland in Transition, by Tadeusz Swietochowski (Columbia University Press, 1995)

The Azerbaijani Turks: Power and Identity under Russian Rule (Studies of Nationalities), by Audrey L. Altstadt, (Hoover Institute Press, 1992)

Azerbaijan Diary: A Rogue Reporter's Adventures in an Oil-Rich, War-Torn, Post-Soviet Republic, by Thomas Goltz (M. E. Sharpe, 1998)

Azerbaijan, Oil, and Geopolitics, by Cynthia Croissant (Nova Science Publishers, 1998)