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The collapse of the hydrocarbon-based economy incited a wave of protests across the whole territory of Azerbaijan. Will the regime reform? Maurice Alessandri, a researcher specialized in the history and geopolitics of the Caucasus from the Complutense University of Madrid, analyses the country’s social and economic situation in an article titled “Azerbaijan: the petroleum era comes to an end” published in El Confidencial, a Spanish newspaper.

According to Alessandri, the beginning of 2016 was very hard for Azerbaijan. Protests reminding “Arab Spring” with tens of thousands of impoverished citizens participating gradually started to break out in Baku, Guba, Siazan, Nardaran, Lankaran, Agcabedi and other cities. The people demanded political and economic reforms from the President Aliyev’s government amid the aggravation of the situation. The authorities’ response could be anticipated – troops were mobilized and sent to disperse the demonstrations detaining the participants and opening fire at them. January ended leaving an atmosphere of uncertainty about the future of the country. A large number of articles covering Azerbaijan focuses on its new role in the geopolitics of the energetic security and fail to pay attention to countless internal factors without which the perspectives for its development will remain questionable for a long time.

The post-Soviet republic appeared on the international arena as an exporter of energetic resources thanks to the so-called “Contract of the Century” with Western multinational oil companies at the beginning of the past decade.

The Azerbaijani citizens’ euphoria and hopes grew as quickly as the national revenue of the country, as Alessandri puts it. According to the World Bank, Azerbaijan saw a stable annual economic growth of approximately 14 percent between 2003 and 2012. The per capita income of the population was even more impressive – from 900$ in 2003 it grew to 8000$ in 2012. Azerbaijan’s double role of both a hydrocarbon-producing exporter and a transit country could guarantee a prosperous future for its citizens. However, the events unfolded during the past weeks indicate the contrary.

According to the expert, everything started on 20 December of the last year when the national currency of the country experienced a second devaluation against dollar losing 50 percent of its value. Since the first devaluation (32 percent) in February 2015, the financial authorities of the country have spent more than half of the reserves only to maintain the value of the currency. The crisis, initially provoked by the drop of oil prices, resulted in a loss of thousands of millions of savings and credits, inflation, cut of imports, deficit of products of nutrition and closure of thousands of enterprises across the whole country.

Alessandri argues that the events of the past weeks demonstrate the regime’s inability to reform the economy where hydrocarbon resources make up the 95 percent of the export and 75 percent of the state revenues. According to Gubad Ibadoglu, an economy professor and founder of a local NGO, the petroleum era has come to an end in Azerbaijan. The consequences of not diversifying the economy on time are already telling on the citizens’ everyday life.

Despite the internal situation, the Baku regime has tried to create an image of an economically developed multicultural young democracy, which embraces European values like secularism, tolerance and political pluralism. In an attempt to attract foreign investments and incline the settlement of Karabakh conflict to its favor, huge financial resources were allocated from the treasury for bribing politicians from other countries and funding grandiose projects like Eurovision 2012, European Games 2015 or Atletico Madrid football club. The regime is also going to host Formula 1 in Baku in 2016, the author notes.

The expelled activists – Emin Huseynov in Switzerland, Ganimat Zahid in France, Emin Milli in Germany, Arzu Geybulayeva in Turkey – and many others in the country, who are either imprisoned or persecuted, like the famous journalist Khadija Ismayilova, Ilgar Nasibov, Leyla Yunus and her husband Arif, call the optimism of the government into question. These dissidents shed light on the unemployment, widespread corruption, increased human rights and freedom of speech violations accompanied by a severe control over the economy by the political elite led by the President Ilham Aliyev, Alessandri highlights.

“Today, the concentration of the political power in the hands of the so-called ‘Nakhijevan clan’ (named after the region of origin) led by president Aliyev is considered the main obstacle for the formation of an independent and impartial judicial system, without which citizens remain unprotected,” the author writes noting that entire economic sectors are in the hands of several dominant families. Their monopoly starts from the customhouse and banks and ends with licenses for construction, means of communication, and markets of goods import.

The combination of the clans’ economic and political power brings about a hyper-monopolization of both sectors becoming an obstacle on the way of any initiative of economic diversification and political pluralism. Several officials confess that they have to donate a part of their income to the Heydar Aliyev Foundation. Of course, there are families that consider themselves untouchable but this does not apply to Nizami Piriyev, Rashad Mamadov, Mehdi Aliyev, Abdul Antsukhski and others, whose careers were destroyed last year, when they were detained for their extremely great economic power, Alessandri notes.

According to Transparency International, more than the 40% of the citizens consider the judicial system and the national policy of Azerbaijan corrupt or very corrupt. Azerbaijan’s scores dropped from 5 points to 6.5 out of 7 since the start of the economic “boom” until 2016 in a Freedom House index assessing the absence of freedom of speech. In the index of freedom of the press of the organization Reporters Without Borders, the country worsened its position from 101 to 160, which reflects the persecution of critical voices by the regime. In addition, rating agencies like Standard & Poors, Fitch and Moody’s lowered Azerbaijan’s marks because of the vulnerability of the banking system and the weak economic institutions.

Amid the decay of the internal political and economic situation, Aliyev’s regime will further resort to its last bastion of safety – the nationalism and escalation of Nagorno Karabakh conflict. The demonstrations against the authoritarian regime are certainly nothing new for the country; still this time, the number of the participants was a blow to the hopes of life of the regime, whose only support have been the petrodollars for years. This year will be a test for the civil society of Azerbaijan, where the democratization will depend on a hypothetic end of the hereditary dictatorship and an overall reform of political, economic and social institutions,” Alessandri sums up.