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New Azerbaijani Law Tailored To Boost Former Aliyev Son-In-Law's Luxury 'Dream Liner'

The artificial peninsula sprang up between March 2023 and May 2024 at the Sea Breeze Resort on the Caspian coast, a 30-minute drive from Baku.

The first family of Azerbaijan and regime insiders have amassed enormous fortunes across a wide range of economic sectors thanks to two generations of dynastic leadership.

The methods to enlarge their holdings have included the alleged use of shell companies, graft, and piggybacking on key permits.

But carefully crafted, well-timed legislation has also helped some of those same relatives of autocratic President Ilham Aliyev wring (mostly) untold profits from the former Soviet republic's most lucrative sectors.

Azerbaijani President Ilham Aliyev
Azerbaijani President Ilham Aliyev

A new RFE/RL investigation has found that Emin Agalarov, a former Aliyev son-in-law and scion of a Russian oligarch, is benefiting from a new Azerbaijani law aimed at legalizing his and future projects creating and exploiting artificial land along the Caspian seaside.

RFE/RL's reporting also confirmed that the new law, passed on May 7 and signed by President Aliyev, ignored what officials confirm was a lack of even the most basic approvals or documentation to assess the environmental impact of Agalarov's Caspian Dream Liner project on a prime chunk of coastline within the company's luxury Sea Breeze Resort, a 30-minute ride from the capital, Baku.

Building The Dream Liner

Throughout the second half of 2023 and the first half of 2024, Agalarov's Crocus Group company, or its contractors, built a 5-hectare artificial peninsula to provide a foundation for the planned Dream Liner, an 11-story apartment complex in the shape of a cruise ship. Construction of the jetty-like piece of manmade land was finished just in time for the passing of the new law in May.

There was nothing but beach where the peninsula now juts 800 meters into the sea. Much of the construction seems to have been done on the down-low, with no mention of the Dream Liner project in a zoning and development plan that the government finalized just six months ago. That was well after Agalarov and members of Aliyev's family began promoting the project to potential buyers and the public and half a year before Azerbaijan's rubber-stamp parliament approved such manmade islands.

The legislation -- officially titled On The Creation Of Artificial Land Plots In The Section Of The Caspian Sea (Lake) Belonging To The Republic Of Azerbaijan -- also carved out a loophole allowing developers like Agalarov to be exempted from rent or lease payments on their projects, although in the Dream Liner's case that amounts to a mere $12,000 or so in annual savings, based on rates for other seaside commercial leases.

The presidential press office did not reply to questions from RFE/RL about Aliyev's former son-in-law and his budding apartment project.

Agalarov and the Sea Breeze Resort did not respond to RFE/RL requests for comment for this story. The Agalarov Development company said only that it was unable to process the request for questions "due to a huge amount of upcoming projects."

The law appears to set Agalarov and potential future investors on firmer footing after the spectacular failure of another "artificial islands" development -- the $100 billion Khazar Islands project -- attempted by a well-connected entrepreneur, Ibrahim Ibrahimov, whose project was seemingly stalled by financial and regulatory problems that led to significant debt and his being questioned by authorities in 2015.

"This unique building, reminiscent of a giant liner floating in the Caspian Sea, will undoubtedly make Sea Breeze a new attraction on the world tourism map," Dream Liner's developer boasts in promotional materials for the new venture.

Prices start at $6,500 per square meter, or roughly 10 times the average rate in Baku, for 226 apartments that range in size from 55 to 660 square meters. The developer says the apartments will be available in 2027.

The Sea Breeze Resort was opened by Emin Agalarov in 2006 and has grown to encompass 500 hectares, including more than 6 kilometers of "landscaped beach" and 150 hectares of green space, according to its official website. It is said to represent a $700 million investment that includes 50 restaurants, cafes, and bars; 60 swimming pools, spas, and fitness centers; and multiple piers for yachts and other craft.

From Pop To Property

Agalarov is the son of Azerbaijani-Russian billionaire developer Aras Agalarov and vice president of his father's Russian-based construction and development company, the Crocus Group, which owns and operates the Sea Breeze Resort in a gentrifying community called Nardaran, 20 kilometers from Baku.

Crocus Group declined to respond to RFE/RL questions during its investigation into the Sea Breeze Resort and the Caspian Dream Liner project.

Charismatic and well-traveled, Agalarov launched a moderately successful career as a pop singer (which, among other things, landed him in a Miss Universe music video alongside a dozen beauty queens and Donald Trump) and became a senior executive at Crocus Group while still in his mid-teens.

He married Aliyev's elder daughter, Leyla, in 2006, and the two had twin sons before their separation and eventual divorce in 2015.

Emin Agalarov (far right) with (from left to right) Heydar Aliyev, Mehriban Aliyeva, President Ilham Aliyev, and Leyla Aliyeva at the opening of the Heydar Aliyev Center in Baku in May 2012.
Emin Agalarov (far right) with (from left to right) Heydar Aliyev, Mehriban Aliyeva, President Ilham Aliyev, and Leyla Aliyeva at the opening of the Heydar Aliyev Center in Baku in May 2012.

Despite the breakup of his marriage, Agalarov has continued to pursue his business interests in Azerbaijan and was quoted by Russia's TASS news agency as saying in May 2023 that the Caspian Dream Liner would cost between $200 million and $250 million. But he also acknowledged that there was a catch: "I'll start [work on it] immediately if I get a permit."

Azerbaijani authorities are eager to attract investors to the Caucasus nation of 10 million people as part of their strategy to diversify the country's oil- and gas-rich economy. In addition, the authorities are keen to maintain economic growth despite the consequences of the conflict in Ukraine and the allocation of resources toward reconstruction and resettlement after Baku's triumph in a protracted conflict with neighbor Armenia over Nagorno-Karabakh.

Stealthy Construction

But the fast-rising artificial peninsula that will be home to the Dream Liner is nowhere to be seen on Baku's official 15-year zoning and development road map -- known as the Baku General Plan 2040 -- that was presented by the Azerbaijani government on the last day of 2023. That plan merely zones the Sea Breeze Resort for tourism and large-scale commercial projects.

The peninsula, which was built in the span of just a few months in 2023, is also not listed among the construction permits issued to the Sea Breeze Resort by the Azerbaijani State Committee on Urban Planning and Architecture. A source with knowledge of the situation who fears retribution for speaking freely told RFE/RL that no such permit had been issued to Sea Breeze but the case might be regarded as "an exception." The source, who spoke on background because he was not at liberty to discuss the project publicly, declined to provide further details.

The Ecology and Natural Resources Ministry confirmed to RFE/RL that Agalarov never filed an environmental-impact assessment for the artificial peninsula.

Contacted by RFE/RL via e-mail, neither the state committee nor Agalarov or his company responded to questions about possible permits.

Satellite images from Google Earth and Planet Labs over the past 14 months show the progress on construction of the peninsula, on the resort's north-facing beachfront.

Planet Labs images show construction on the artificial land was well under way by October 23, 2023, and the peninsula had already taken its near-final shape by April 17.

Dream Liner Site Timelapse Oct 2023-Apr 2024
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Dream Liner Site Timelapse Oct 2023-Apr 2024

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Multiple lawmakers from Aliyev's long-ruling New Azerbaijan Party approached by RFE/RL outside parliament on May 7, the day the law was passed, declined to respond to questions about the new legislation and its effect on the Sea Breeze Resort projects.

"We created the law so that these things are not illegal," lawmaker Tahir Karimli, whose Unity Party supports the New Azerbaijan Party, told RFE/RL.

Karimli also said the new law grants no ownership rights to the creators of such reclaimed land. On the contrary, he and other lawmakers said, the law ensures such artificially built land remains the property of the Azerbaijani state and may only be leased out to commercial or other partners.

"He just rented the land," Karimli said of Agalarov and the Caspian Dream Liner.

But the law allows exclusions from lease or rent payments for investors like Agalarov once such artificial lands are erected. "Tax breaks and other concessions are made to attract investors -- this approach is often used in international practice," Natiq Jafarli, an economist specializing in tax and customs issues, told RFE/RL. But he said such sweeteners are insufficient on their own to draw sufficient investment and "create a free and competitive environment in Azerbaijan."

"Investors need confidence that there should be a free judicial system. Investors should be sure that tomorrow no one will take away the business they have invested in," economist Jafarli said. "That's why big officials, oligarchs, and their close people could take advantage of such opportunities and concessions."

Asabali Mustafayev, a Baku-based rights lawyer familiar with the new law who has had high-profile clashes with regime authorities including a license suspension, noted the land built for the Caspian Dream Liner was created before the legislation was passed.

"Now you might ask: Will the state require [Agalarov] to update the documents? Will they ask for permission again? My guess is that won't happen, because he passed this stage a long time ago," said Mustafayev. "So, I can't say how he will legitimize [those] properties, because this isn't in the law and neither is there such a practice."

Rashad Ismayilov, chief of staff of the State Committee for Urban Planning and Architecture, has indicated that Azerbaijan plans to create, or allow the creation of, artificial plots of land on the Caspian shore with the goal of attracting and involving investors.

But the new legislation, as published on the official parliamentary website, lists requirements for such projects that include environmental-impact assessments and environmental expertise and bans developments that pose a danger or obstacles for bathers.

Courting Russian Buyers

Promotional videos shared by the Agalarov Development company show a towering, terraced building that approximates the shape of a cruise ship on an artificial peninsula that could hold 10 soccer fields.

Agalarov pitched the Sea Breeze Resort to around 250 guests from Russia, Turkey, United Arab Emirates, Israel, and other countries at an investment forum in Baku in March 2023, before there were any signs of the finger-like strip of reclaimed land that should house the Dream Liner.

By this March, with the artificial peninsula in place and the legislation on "artificial land plots" in progress, the Sea Breeze Resort was visited by a group from Redis Business Class, a members-only club uniting owners of some of Russia's largest commercial retail, real-estate, and distribution groups.

In April, Sea Breeze announced that one of its representatives delivered a presentation at the Moscow branch of Rosbank, owned by one of Russia's wealthiest men, Vladimir Potanin, who has been identified in U.S. and U.K. sanctions as a "key supporter of the Kremlin."

Forbes magazine underscored Azerbaijan's popularity as a destination for real-estate investment from Russia in 2022, when international sanctions were being imposed in response to the all-out invasion of Ukraine. The magazine said Russians were becoming a distinct target audience for pitches.

Azerbaijan has increased its cooperation with Russia as Baku has clawed back Nagorno-Karabakh and nearby territory from ethnic Armenians since 2020, and President Aliyev has steered his country away from joining the international sanctions effort aimed at punishing Russian aggression. Azerbaijan has a program in place to grant temporary residency to foreigners -- including Russians -- if they invest at least $295,000 or own real estate in the country worth at least $59,000. One of the presentations held in Moscow in April was titled How And Why To Relocate To The 'Land of Fire.'

It is unclear how successful Agalarov and his promoters' pitches have been at attracting Russian buyers, but social media accounts suggest the resort is frequently visited by Russian real estate representatives. Neither Agalarov nor his company responded to RFE/RL questions about the project.

If it was failing, it wouldn't be for lack of effort. Social media accounts from Aliyev's inner circle shared photos in June 2023 that showed President Aliyev and the first lady, Mehriban Aliyeva, who has also been the country's vice president since 2017, at the Sea Breeze Resort. The president's official website never announced the visit.

Emin Agalarov attends the opening of the Zhara music festival at the Sea Breeze Resort hotel in Baku in July 2018.
Emin Agalarov attends the opening of the Zhara music festival at the Sea Breeze Resort hotel in Baku in July 2018.

An advertisement for Caspian Dream Liner apartments has also appeared on the Instagram account of Nargis Magazine, which is controlled by the sister of first lady Aliyeva.

Sea Breeze disclosed on its website in April that Azerbaijan's national agency for highways and road communication had started construction on a six-lane highway that should decrease travel time from Baku to the resort to just 23 minutes.

Environmental Concerns

A historical dispute over the way Crocus Group obtained beachside property underneath Sea Breeze Resort points to earlier intervention by President Aliyev that appeared to benefit the Agalarovs and their Caspian dreams.

In 2021, Crocus Group was found by the European Court of Human Rights (ECHR) to have benefited from illegal actions by officials in the community where Sea Breeze was built. In a decision first reported by the Organized Crime and Corruption Reporting Project (OCCRP), the ECHR concluded that the Nardaran municipality improperly ignored its own lease contracts with 18 residents in 2007 to illegally sell 30 hectares of beachfront property to Crocus Group in a move that paved the way for the luxury resort.

The Strasbourg court noted the improper sale followed an order, also in 2007, from President Aliyev disbanding the office that concluded the leases and it ordered Crocus Group to pay some $344,000 in damages. A lawyer for the plaintiffs noted that the judgment was welcome but "the sum of the compensation is not so big compared to what Crocus Group earned with Sea Breeze."

On a recent visit to the Sea Breeze stretch of beach, entrance cost the equivalent of nearly $30. The average monthly wage in Azerbaijan is around $550.

The country's only comparably ambitious reclamation-based project fared less successfully after entrepreneur Ibrahim Ibrahimov, brother of the former head of the State Committee for Work with the Diaspora Nazim Ibrahimov, announced plans for a $100 billion investment to create and develop his Khazar Islands project on the Caspian seabed south of Baku in 2011. The artificial archipelago of 41 islands was to provide homes and infrastructure for 1 million residents, include a Formula One racetrack and the world's tallest skyscraper, in addition to 150 schools and 50 hospitals.

But Ibrahimov reportedly ran afoul of regulators at least in part for starting construction before providing appropriate documentation. The Ecology Ministry told local media in 2015 that it declined to present a formal opinion because the environmental assessment for Khazar Islands was provided after work on the seabed had begun.

A ship sprays its water canons outside the port in Baku.
A ship sprays its water canons outside the port in Baku.

Ibrahimov was purportedly questioned over tens of millions of dollars in debt in 2015, one year after a ballyhooed opening of a Khazar beach but amid a fall in global oil prices that hit Azerbaijan and other oil-dependent countries hard. Ibrahimov has since vowed to revive Khazar Islands, but the project appears to have mostly stalled.

Meanwhile, Agalarov and the Sea Breeze Resort are boasting of plans to create another major artificial piece of land along the same stretch of beach, although few details are publicly available and satellite images suggest none of the groundwork has yet been laid.

Agalarov shared an image via social media in March of himself alongside several other people standing over a table with an artist's rendering of a crescent-shaped island with a star-like object between its tapered points -- resembling Azerbaijan's flag and national symbol. The island is connected via two roads to the shore.

"Let there be a moon island created together with the amazing group of people in Azerbaijan," Agalarov said.

Written and with contributions by Andy Heil based on reporting by RFE/RL's Azerbaijani Service

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