Glitz and Glamour, Oil Wealth, and the Left-Behind of Baku

Chris Paci | KF16 & KF17 | Azerbaijan

We Kiva Fellows are a lucky bunch. Not only do we do truly consequential work in the field to turn Kiva’s social mission into reality – we also get to travel to places we never could have imagined, experience brilliant flashes of cross-cultural connection, and come back with stories our friends in the developed world can’t match. But here in Baku, Azerbaijan, I’m having an experience few other Kiva Fellows have: I am working to alleviate poverty while surrounded by wealth as far as the eye can see.

The Bulvar, Baku, Azerbaijan

The Bulvar, Baku’s seafront promenade, built on pilings sunk into the bed of the Caspian Sea. A good two-thirds of the buildings in this picture have gone up within the last ten years.

The Flame Towers, Baku, Azerbaijan

The Flame Towers, a group of three glass skyscrapers designed as an internationally recognizable symbol of the city, tower over historic Old Town Baku. Construction is expected to be complete by the time Eurovision comes.

Baku City Hall, Baku, Azerbaijan

The Baku City Hall is one of a suite of ornately decorated institutional buildings that line İstiqlaliyyət, one of the main thoroughfares of central Baku – a miniature analog of Vienna’s Ringstrasse. Walking past this procession of opulent facades, I feel unsure of where I am... is this Western Europe or the developing world?

Fountain Square, Baku, Azerbaijan

Fountain Square has earned its name. A clutch of innovative fountains, doubling as pieces of public art, stand amid glitzy shopping malls and five-star restaurants (not including the McDonald’s that has also taken up residence here). State-of-the-art digital billboards blaze advertisements for foreign cars and expensive luxury goods.

High-end boutiques, Baku, Azerbaijan

High-end boutiques have taken up residence in the fin-de-siècle oil boom mansions that line the streets south of Fountain Square.

Baku is beautiful in many ways. Beautiful, but jarring. Thanks to its rapid accumulation of oil wealth since the 1990s, the city is reinventing itself as a flashy, ultra-modern metropolis that’s ready to take its place on the international stage. Towering glass-clad high-rises are popping up in every neighborhood; wildly futuristic museums, stadiums, and concert venues are being constructed at a breakneck pace; all of the city’s aging Soviet-era utility networks are being ripped out and replaced, leading to frequent outages. Right now, Baku is gleefully gearing up to host the 2012 Eurovision Song Contest this May, which it regards as its best opportunity yet to strut its stuff in front of the world.

Needless to say, practicing microfinance in such an environment has been weird.

Rendering of the planned Full Moon Hotel, Baku, Azerbaijan

Dubai meets the Death Star: a rendering of the Full Moon Hotel planned for the Baku waterfront.

I first came to Azerbaijan in November after completing my previous Kiva placement in Tajikistan – a place you can’t mistake for anything but one of the world’s most impoverished countries. The immense contrast between these two republics, which had both risen from the ash heap of the former Soviet Union, left me bewildered at first. I had been told that Baku and the rest of Azerbaijan were like night and day, that one needed to travel out to “the regions,” as rural Azerbaijan is known, to truly grasp the plight of the country’s poor. This was true – but it also struck me as simplistic. There are wealthy people in the regions too, and I was sure there were thousands of others here in Baku who had been cut out of the city’s renaissance. I’d traveled 6,000 miles from home to find these people and, in some small way, to help them raise themselves from poverty in a city notoriously unforgiving to the poor.

Why couldn’t I find them?

My epiphany came while drinking tea in a public men’s room in the middle of a traffic circle in western Baku.

No, really.

No, really.

When a stranger invites you to drink a cup of tea with them, always say yes. This is the rule I follow in the former Soviet world, and it’s never steered me wrong; it has sparked fascinating conversations, fostered transformative moments of cultural insight, and led me into some of the craziest situations I’ve ever had to wriggle out of. It’s also my only explanation for how I wound up in the ice-cold maintenance alcove of an underground public restroom, discussing politics with four motley park workers in stained coveralls while drinking tea off a tiny electric stove. It was one of those endearingly wacky experiences that make the post-Soviet republics such a blast.

The leader of the group was an interestingly round man in his early 70s, clad in one of those dubious sartorial adventures that I can only describe as “the Azeri sweater” (examples: here, here, here). “Откуда сам?” were his first words to me – “Where are you from?” “From America,” I told him, “the city of Philadelphia.” “Oh, I’ve been there!” he said brightly. “It was while I was in the KGB!” He had lived, it would seem, in Washington, D.C. for several years on a spy mission for the USSR. “But that was in the ‘70s. I’ve forgotten my English since then,” he told me apologetically. I really, really wanted to believe him.

Despite strenuous efforts to get him talking about his super-secret life as a Soviet spy, the conversation always returned to me. Most Azerbaijanis have never left the territory of the former Soviet Union – claims to KGB-hood aside – and that, coupled with their friendliness to guests, led to boundless curiosity about my life. I gave them a quick-and-dirty explanation of microfinance – “It’s very small loans to poor people!” – and explained that Kiva was about connecting these poor people with lenders in the developed world who wanted to help them.

My KGB friend laughed, a short, percussive bark. “Well, don’t work yourself to death! Everyone is poor in Baku!”

Wait a second. I leaned forward. “Can you say what you mean by that? To me, Baku looks so rich! New buildings going up in every neighborhood….”

“Yes, and who gets to live in them?” he asked rhetorically. “You know, Baku is one of the most expensive cities in the world. Just to live here costs 500 manat a month [about 633 USD]. Minimum! And as for me,” he continued, starting to get fired up, “I have a government pension. Do you know how much it is? One hundred fifty manat! That’s all. What can you use that for? Nothing! Where can you live? Nowhere! But what does the government care? The least expensive apartment in all of Baku is about 200 manat a month. And then, even if you can find one of those – how will you eat?”…

“Listen” – he leaned across the melted green tablecloth, appearing to forget about his coworkers around him – “I’m seventy-one years old, and I pick up trash in the park. I should be staying at home with my wife. But what will happen if I do? How will my wife and I live?”

An Azerbaijan oil rig

A nodding-donkey oil pump on Azerbaijan's Caspian coast.

Many economists sum up oil-rich Azerbaijan in two words: Dutch disease. In this all-too-common economic phenomenon, a country happens upon a natural resource windfall (in Azerbaijan’s case, oil) and begins to export it with abandon. The high demand for its natural resources causes its currency to become stronger relative to those of other nations. As a result, it suddenly becomes more expensive for the country to manufacture anything else; the country’s other export industries become uncompetitive in the global market and eventually collapse.

Azerbaijan fits the bill. Even as its oil extraction efforts continue to expand, many of the country’s huge Soviet-era factories have shut down. This is partly a blessing – Baku is among the world’s most polluted cities, in part because of the environmental disaster that was its industrial sector under the USSR – and partly a curse, as Azerbaijan’s formerly diverse economy continues to unravel. What’s going to happen when the oil runs out?

It’s a question that troubles the Azerbaijani government. Azerbaijan’s leadership is acutely aware that it can’t depend on oil forever – not even in this, the land where crude once bubbled freely through the sands of the Absheron Peninsula. It feels strongly that Azerbaijan is on a timeline, and that the country needs to develop as rapidly as possible before the wealth runs out. Breakneck infrastructural development is the name of the game, and an absurd percentage of that development centers on Baku, turning the city into a mix between ultramodern fantasy and construction site. Meanwhile, maintaining the country’s lackluster social services, and helping citizens displaced by the country’s rapid economic transformation, becomes ever less of a priority.

Ordinary Bakuvians, meanwhile, are getting triply hammered. They have to contend with Azerbaijan’s strong currency, which raises the cost of everyday goods; with rapid price inflation caused by the city’s out-of-control construction boom; and with the loss of countless industrial jobs after the fall of the Soviet Union (the oil industry is surprisingly lightweight). The difficulty of making ends meet in Baku, combined with the lack of meaningful assistance from the government, makes life especially hard here. And that’s without even mentioning those who have been most violated by Baku’s progress: the families evicted from their lifelong homes to make way for yet more new construction.

At the time, though, little of this crossed my mind. As I sat there in the maintenance alcove of an underground public restroom, listening to a former KGB aspirant agonize about not being able to make ends meet, all I could think about was how familiar it all seemed. How many times had I heard similar stories in America after the financial crisis? How many families who can no longer afford their homes? How many older workers who will never be able to retire?

And there was my epiphany. Why couldn’t I find Baku’s poverty? It was because I wasn’t looking at it properly. I had experienced extreme poverty in Tajikistan, and I was expecting to be smacked in the face by something similarly shocking, disturbing, and – yes – visibly different from home. But no, poverty in Baku is insidious. It’s hidden behind glitz and glamour. It’s ordinary people living once-ordinary lives that are turning ever more wretched as the ground shifts underneath them.

In short, it’s not so different from the reality many Americans face every day.

So what’s it like to live in Baku? Look around you. It’s more familiar, and more desperate, than you might imagine.

Chris Paci is a roaming Kiva Fellow (KF16 and KF17) currently wrapping up a four-month stint in Azerbaijan. He has been living in Baku and working with three diverse field partners: Komak Credit Union, which lends primarily to internally displaced persons (IDPs) from the Nagorno-Karabakh War; Aqroinvest Credit Union, which focuses on both IDPs and Azerbaijan’s rural poor; and VisionFund AzerCredit, Kiva’s newest and largest field partner in Azerbaijan. Join the lending team Supporters of Azerbaijan, and make a loan to a Komak, Aqroinvest, or AzerCredit borrower today!

Previous posts by this author:
Beginning of a Tajikistan Journey
Loan Use: Not As Simple As You Might Think
This Is Urban Poverty in Tajikistan

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