Edited dy LEILA ALIEVA THE BAKU OIL AND LOCAL COMMUNITIES: A HISTORY The CENTER for NATIONAL and INTERNATIONAL STUDIES Az2 Published by the Centre for National and International Studies with the support of Royal Embassy of Norway to Azerbaijan Baku, Azerbaijan www.cnis-baku.org The Center for National and International Studies (CNIS). The Baku Oil and Local Communities: A History. (edited by Leila Alieva) Baku, Qanun, 2009, -276 p. Translator: Emil Gazi English language editor: Ann Dubina Drawings (part 2): Fazil Mamedov Photos (introduction, part 1,3,4): Takhmina Ahmedova Design: Fakhriye Mamedova, Sahib Ganiyev Map (attachment): Turakhanim Agabekova ISBN 978-9952-26-036-6 G 1500005104 registered - 09 AB022051 Az2 Qanun, 2009 CNIS Contents Acknowledgments 5 Introduction 7 Leila Alieva Part 1. The Reforms and Oil Revenues: Consequences and Implications for the Communities in the Historical Perspective 16 Leila Alieva Part 2. History of the Baku "Black Gold": Fate of the Communities and Formation of National Bourgeoisie 35 Idris Aliyev, Orkhan Mamed-zade. Part 3. Social-Economic Conditions of the Baku Villages 155 (From 1991 to 2004) Azer Amiraslanov (From 2004 to 2008) Gubad Ibadoglu Part 4. Oil Producing Villages: Ethnography, History and Sociology 185 Aydin Balayev Part 5. Environment of the Absheron Peninsula: The Communities' Survival in the Oldest Oil fields 225 Fikret Jafarov Conclusions 265 Leila Alieva Attachments 270 3 4 ACKNOWLEDGMENTS The Center for National and International Studies would like to express its deep gratitude to the people and organizations whose assistance made this research and publication possible. The first stage of the study, initiated and proposed by the CNIS in 2004, would not have been realized were it not for the support and encouragement of personalities like the former Ambassador of Norway, Steinar Gil, Dr Charles Fairbanks, the director, and Dr Frederick Starr, the president of the Central Asia and Caucasus Institute (at SAIS, Johns Hopkins University), where the first presentation of the project took place, director of National History Museum Dr. Nailia Velikhanli, who kindly helped us with materials and a venue for the presentation in Baku and the late Dr Arif Abbasov, direc- tor of the Institute of Ethnography and Sociology of the National Academy of Sciences. Invaluable help and assistance came from many devoted people - aca- demicians, journalists and local people, some of whom are no longer with us. They include the prominent marine archeologist, the late Victor Kvachidze and the renowned journalist, the late Mila Faradjullayeva, whose enthusiasm and help during the whole first stage of the project (2004-2005) was much appreciated by all participants. Valuable support came from the staff of the CNIS - coordinator of the first stage of the project Maryam Orujlu and operators Tutu Salmanova and Ilahe Mamedova. At all stages of this research, CNIS was consistently supported by the Royal Embassy of Norway, our sponsor, without whom the study and publi- cation of this book would not have been possible. Special thanks go to the Ambassador of Norway, Ion Ramberg, for support of the second stage of the project - publication of this book. The field work was greatly facilitated by the productive and helpful coop- eration and assistance of the local government bodies of the three villages 5 on the Absheron Peninsula and primarily by the residents of the village of Balakhani, such as Telman Jafarov, who worked as driver, guide and an irre- placeable source of information. Our warm acknowledgments go to the descendants of the oil magnates, who provided us with valuable memories of the first "oil boom" in Azerbaijan and representatives of the local communities, who served as a unique source of oral history in our study. The editor of the book, Leila Alieva, extends special thanks to her father, Aga Aliyev, whose knowledge, enthusiasm and partnership during the field trips to the Baku villages helped her to document the artifacts of forgotten corners of the Absheron peninsula. 6 INTRODUCTION he aim of this book is to shed light on parts of the history of the oil industry which are usually neglected, namely, the lives and Tfaith of the communities living in oil-bearing areas. Scholarly lit- erature on the subject suggests that the "paradox of plenty" makes areas rich in hydrocarbon resources prone to poverty and conflict, with the Niger Delta in Nigeria, Africa, offering an outstanding example of this. Although the case study of Baku villages focuses on the historical impact of oil development, given that half a century ago oil production had moved away from this area to the sea, the region nevertheless matters from the point of view of the consequences which many cen- turies of oil production has had on local communities. The Absheron peninsula is the oldest oil-producing area in the world. Historical sources refer to the extraction of oil here centuries before its industrial production. The Baku villages of Sabunchi, Balakhani, Ramani and Surakhani witnessed conflicts, oil-field fires, strikes as well as poverty and inequality at the end of the 19th-early 20th century, when the area was the centre of international commercial oil production. The population of this area benefited from developments in this sphere in terms of access to jobs and the land, but at the same time they suffered discrimination, resource pressure, poverty and envi- ronmental degradation. The main focus of this research is the transfor- mation of the life of the communities of the Absheron peninsula in the context of the history of oil. The study tries to focus attention on the historical importance of these villages - both in the area of artifacts and the ethnography of these communities. It also highlights an asset or tool to develop this for- mer world centre of oil production - its industrial heritage - which can be utilized for tourism purposes or as a way of attracting investors. The other no less important objective of the study is to highlight certain 7 ways in which oil extraction influenced the communities living in the areas where these oil resources were located. Thus, the documents in this book reflect the diversity of these objectives - some are more descriptive and factual, while others analyze the mechanisms of the effects and consequences of industrial oil production on the population. After onshore oil supplies were exhausted under Soviet rule, largely because of outdated technologies and over-exploitation of the Absheron fields, the industry moved offshore into the waters of the Caspian in the 1940s. This move left the villages and communities on these lands, which had been environmen- tally polluted by years of oil extraction, fac- ing the problem of underinvestment. The social conditions of the local communities on these former oil- producing areas became highly dependent on the state. However, the state did not come up with special programmes for the development or environmental improvement of the region, particularly when Moscow switched investment from Baku to the Siberian oil industry. The Soviet system provided for infrastructure and utilities such as gas and electricity, but this system almost totally collapsed after the dis- integration of the Soviet Union. The post-Soviet conditions of the Baku villages in terms of infrastructure were reminiscent of pre-Soviet times, when these communities lacked fuel for lighting and heating, rather than the period prior to the industrial production of oil. This book is based on research which was initiated by the CNIS in 2004 and it was realized with the support of the Embassy of Norway. The interest to the topic was caused by the stark contrast between the wealth which these lands produced over the last two centuries and the modern conditions faced by the heirs of those who owned these lands, the local villagers. The study concluded with a proposal to cre- 8 Introduction ate an Open Air Oil History Museum on the territory of three Absheron villages. The suggestion to create such a museum was put forward to attract investment and as a means of promoting the prosperity and develop- ment of an area which, for centuries, has made an enormous contribu- tion to the world energy market and yet nowadays suffers from under- investment, social contrasts and centuries of oil waste. The book covers all aspects of the unique importance of these regions and reveals previously unknown facts about the life of these communities. Some of the most outstanding features of the Absheron peninsula are the well-preserved hand-built oil wells and famous oil reservoirs, described by Kaempfer in the 17th century and re-discovered by the co-author of the first chapter, the archeologist Idris Aliyev. In the first chapter, the authors Orkhan Mamed-zade and Idris Aliyev paint a picture of the transformation of the life of communities during the histo- ry of oil extraction in Azerbaijan. Describing the artifacts of Baku's indus- trial heritage, they trace the development of oil technology and the role which oil and its production have played in the life and times of Baku vil- lages throughout different historical periods. This chapter contains unique archive references, materials and photographs which reflect the complex effect of oil development on local communities. Entrepreneurship in colonial Azerbaijan faced fierce discrimination during tsarist times - the law and its protection was on the side of the Christian brethren, Armenians. This fact had a major effect on their rel- ative power in the oil business. The role of land as the main source of "black gold" becomes obvious in the conflicts which provided a context for the history of the oil boom of the late 19th-early 20th centuries. The relative weakness of rule of law left the communities vulnerable to the practices of re-settlement, extor- tion and injustice.