Viewpoint: Azerbaijan's White Elephants
By Gorkhmaz Askarov
Prices are skyrocketing, the average Azerbaijani is feeling the pinch more than ever, but still the government keeps building: Bridges, which require reconstruction almost immediately after completion; highways, which are built and then reconstructed again and again; and a $300 million seaport in a town that has no access to the sea.
The people of Azerbaijan have seen it all -- and, with a bid for the 2016 Olympics, there's more grandiose government projects to come. So what is the problem?
For all of these projects, there is a significant disproportion between their social necessity and their implementation costs. Spending this much money on such "white elephants," which are not expected to generate wealth, has led to the rapid appreciation of the manat on the one hand, and on the other, the currency's declining purchasing power on the domestic market.
Azerbaijan is neither the first, nor the last country, to build "white elephants." At the beginning of the 20th century, the Siamese king would send a white elephant to a friendly Western power as a gift. One could not reject the gift and for the recipient, it was a burden to house and feed the elephant.
But the effect of modern-day "white elephants" is far from benign. Paulo Mauro, an expert at the International Monetary Fund, has analyzed the nature of corruption and its relation to such grandiose state-sponsored projects. In a 1997 article, Mauro pointed out the existence of a closed circle: rich natural resources and unchecked government control over them leads to corruption. Simply put, huge government-sponsored projects provide vast opportunities for corrupt governments to plunder the state budget.
The scheme has worked perfectly well in oil-rich Arabic countries, parts of Africa, and even in Russia -- anywhere there is a handsome amount of money to steal and an authoritarian government to do the job.
There are plenty of examples. The vast empty universities that Saudi Arabia built in the 1980s; the multibillion-dollar contracts for aircraft, military equipment, and weapons, which the Persian Gulf states signed with countries of Western Europe and the United States; vast dam projects, like the Turkwel dam in Kenya, which, in the end, generated only a few watts of electricity.
The problem is that there are many global construction giants making a lot of money preparing and implementing attractive projects for vainglorious governments. The forms might vary, but the historical essence of this relationship remains the same: greedy and ignorant tribal leaders willing to trade their gold for shiny and ultimately worthless objects.
Gorkhmaz Askarov is RFE/RL Azerbaijani Service's Washington correspondent