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BP has a growing Azerbaijan problem

Just last year, British Petroleum, or BP, the world’s eighth-largest oil and gas company by revenue, proudly celebrated 30 years of partnership with Azerbaijan. It remains that country’s largest foreign investor.

While the British company brags about its "social investment" in the country, the real beneficiary of the partnership has been Azerbaijan’s ruling family. Heydar Aliyev, a former Soviet KGB officer, was president when BP and Azerbaijan signed a production-sharing agreement for a major Caspian oil field. His son Ilham took over both the BP relationship and country upon his father’s death two decades ago. For the Aliyevs, it has been a lucrative relationship. As of 2021, the BP field accounted for 95% of Azerbaijan’s oil exports. That translates into well over $10 billion annually, much of which appears to flow into the Aliyevs' private accounts or network of businesses rather than the public budget. For many in the oil industry, that is par for the course. Many OPEC members are undemocratic. Oil companies do business, they don't make value judgments.

Circumstantial evidence suggests that alongside the BP partnership has been an unspoken agreement for the British government to protect the Aliyevs. The Aliyev family owns property worth perhaps $700 million in London and has spent tens of millions more to prop up "cultural" organizations. At the United Nations Security Council, the United Kingdom often votes alongside Russia and against the United States to shield Azerbaijan from condemnation of its aggression and human rights abuses. During a Security Council meeting last month to discuss Azerbaijan’s blockade of food and medicine supplies to the Armenian population in Nagorno-Karabakh, for example, an Azeri diplomat bragged that Britain and Russia blocked action. The BBC, meanwhile, has provided counterfactual cover for Azeri propaganda in documentaries, some of which it produced with BP and Azeri support.

When it comes to Azerbaijan, however, the protection that the BP partnership provides may soon change. Freedom House ranks Azerbaijan as one of the world’s most repressive states, and Transparency International ranks it among the world’s most corrupt. The "caviar diplomacy" that once bought the favors of politicians on both sides of the Atlantic Ocean increasingly leads to questions of credibility if not legal jeopardy.

The real problem is that Aliyev increasingly acts erratically. He follows a path hewed by Saddam Hussein. Whether because of wishful thinking, greed, or geopolitical desire, diplomats in both Washington and London once described Saddam as a moderate and made excuses as he grew more detached from reality. This came to a head, of course, when he not only denied Kuwait’s right to exist (as Aliyev does today with Armenia) but then sent his military to act on his ambition (as Aliyev now threatens to do). While Aliyev seeks to sanitize news, the starvation of 100,000 Armenians by a prominent client is not something any British corporation can ignore. The reputation damage would simply be too great. Even if businessmen were inclined to look the other way, 21st-century British diplomats cannot.

Indeed, British diplomats involved with Azerbaijan act increasingly uncomfortable behind the scenes and no longer feign belief in their own talking points. BP’s Caspian holds might have brought great profit, but may soon prove Exhibit A in why coddling dictators can be a losing proposition.


(c) 2023, Washington Examiner



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