AZERBAIJAN - Part 1 - Decision-Makers.

Editor's Note: The current volume will cover decision makers in the Central Asian countries that are members of the Commonwealth of Independent States (CIS). Starting with Azerbaijan, it will examine the way in which leaders in these countries have adjusted to the realities of the post-cold war era in oil diplomacy. The complex challenges they face in dealing with the competing big power interests in the region, seen in terms of the pipeline politics of the area, and how these leaders have tried to deal with these challenges will also be addressed. The survey will cover the following: Part 1 - Azerbaijan Part 2 - Kazakhstan Part 3 - Turkmenistan Part 4 - Uzbekistan Part 5 - Kyrgyzstan & Tajikistan Part 6 - Conclusions & Prospects

The decision-making system in Azerbaijan revolves around President Gaidar Aliyev, be it related to oil or any other sector. He is virtually an absolute ruler and, although he has developed a personality cult like the Turkmen leader Saparmurad Niyazov, very little authority in this sector resides with anyone else. The state organisations and ministries are frequently paralysed by the need to refer decisions to him. It is not unusual for foreign oil executives to complain of waiting for months to get deals sorted out. No Azeri minister or bureaucrat dares to act without clearance from the very top.

The entity in charge of the petroleum sector is the State Oil Company of Azerbaijan Republic (Socar), which is a huge conglomerate of companies for the various upstream and downstream branches of the industry. Azerigaz is the country's gas utility and is in charge of the gas pipelines. Azerenergi is the country's power utility controlling both generation and distribution. The State Fuel and Energy Committee is in charge of distribution of petroleum products. Azerikimya oversees the petrochemicals sector.

On April 18, 2001, in a somewhat unexpected move, Aliyev decreed the creation of several new state structures. One of these was the Ministry of Fuel and Energy. The man appointed as minister was the relatively unknown Majid Kerimov. On May 16, Aliyev issued a decree establishing a state commission to oversee the development by the Azerbaijan International Operating Company (AIOC) of the Azeri, Chirag, and Gyuneshli oil fields, the construction of the Baku-Ceyhan oil export pipeline, and the export of gas from the Shah Deniz field to Turkey. Aliyev named Kerimov to head the commission.

The existing decision making system allows for widespread corruption, and it is prevalent to the extent that some critics call Aliyev's regime a kleptocracy - although other Central Asian rulers are much wealthier with Kazakhstan's President Nursultan Nazarbayev now being among the richest men in the world (see Part 2). But some of Aliyev's opponents are very corrupt as well, as in the case of former parliament speaker Rasul Kuliyev, who once was his close ally.