In September 2017, 10 European media organizations investigated Azerbaijan’s government and found that Aliyev was laundering money to the United Kingdom. Now known as the “Azerbaijani Laundromat”, the Organized Crime and Corruption Reporting Project (OCCRP) drafted a document exposing Azerbaijan’s laundering of USD $2.9 billion through European companies and banks between 2012 and 2014. The reason for the laundering, which paid off several European politicians, was an attempt to whitewash Azerbaijan’s reputation abroad so it could gain support for the heavily contested Southern Gas Corridor project.
The Southern Gas Corridor is a proposed natural gas supply line from the Caspian and Middle Eastern regions to Europe. As of 2017, the corridor would pass through Georgia, Turkey, Greece, Albania and Italy. Europe’s advantage for the pipeline is to reduce its dependency on Russian gas. However, Azerbaijan’s benefit is more of a life and death matter. With gas prices hitting all time lows and dependency for hydrocarbon plummeting globally, exporting natural gas may be the only solution for Azerbaijan’s volatile oil economy.
Azerbaijan’s dependency on the production of oil and gas is one of the highest in the world. A whopping 95% of the country’s exports are hydrocarbons while 80% of the country’s GDP is generated by the oil and gas sector. Reliant heavily on external conditions, any fluctuation in global commodity prices could make Azerbaijan susceptible to major economic shifts as was the case in the 2014 oil crisis.
Since 2014, global oil prices have fallen by more than 70%. While this makes consumers happy, oil producing nations like Azerbaijan are thrown in the swamps. Data from the World Bank shows that since the crisis, Azerbaijan’s GDP was cut in half from $60 billion in 2014 to just under $30 billion in 2016. As a result, the GDP per capita in Azerbaijan decreased by almost 40% between 2014 and 2018.
Despite popular belief that oil-producing countries are wealthy, economists say that frankly it’s the opposite. Most oil-producing countries have average public debts of up to 170%. The effectiveness of oil money on health care, education and income per capita is also questionable as their level of development are often similar to their neighbouring countries who lack oil deposits.
According to Transparency International, Azerbaijan is 126th of the 180 countries on the corruption index. The ruling family, the Aliyevs, have been in power since the country’s independence in the early 1990s. The current president, Ilham Aliyev, took over from his father just like North Korea’s Kim Jong-un would do later. In a leaked document from the US Embassy in Azerbaijan, it was revealed that Aliyev’s wife will be next to take the throne and maintain the dynastic rule of her predecessors. Such corruption at the highest level coupled with a global decarbonization movement puts Azerbaijan at risk for a major economic collapse into poverty line.
As mentioned earlier, Azerbaijan’s survival now is based on its reliance on exporting natural gas. Armenia and Armenians abroad should do everything in their power to lobby against the Southern Gas Corridor project by pushing the environmental concern narrative. This will have the backing of a number of governments, media and the public who are for alternative renewable energies.
All you have to do is look at the trends. Between 2010 and 2015, gas demand in the European Union dropped by more than 20%. Since 2015 to 2017, there has been an increase in gas consumption, but at a low of only 7%. The EU goals for energy efficiency could dramatically reduce gas demand in the next few years. More importantly, the key target for the EU is to cut greenhouse gas emissions by 40% before 2030.
It’s no wonder Azerbaijan chose to attack Artsakh when it did. Its economic armageddon clock is ticking while the future of the Southern Gas Corridor remains unclear.