Trusting, corrupt Azerbaijan

I’ve been in Azerbaijan for just over six weeks now, but I this is my first blog post since my arrival.

I haven’t known what to say, really. It’s not that I’ve been awed into silence by the exoticness of this Caucasus nation. I live in Baku, and we have six McDonald’s (so I hear — I’ve managed to visit two). Anyplace with that many McDonald’s fails some kind of exoticness test somewhere. Well, maybe if it was Japan and there was shrimp-burger on the menu, but the most exotic thing you can order at my McD’s is a MacArabic — basically, a really mediocre chicken wrap.

No, Azerbaijan’s foreignness reveals itself in small ways. The streets full of Land Rovers and Hummers and Mercedes and BMWsalso share space with Opels and Daewoos, and tiny, box-like Soviet Ladas and Zhigulis. You can buy a Snickers and some milk at the market, and a goat’s head as well. And, everywhere you look, there’s a cat. (More on that in another posting…)

I’ve had trouble pinning down just what makes this place tick. I’ve given it a lot of thought, and talked to a lot of people, foreigners and locals alike, but I still don’t know.

Azerbaijan is a study in overlap. It’s a Venn diagram country. If you took eastern Turkey, northern Iran and southern Russia and forced them all to share a room, you’d get Azerbaijan. If you took Shi’ia Islam — like you’d find in Iran — but diluted their vigorous, all-pervading faith with the atheist hangover of a formerly Soviet state and the secular flavor of Turkey’s Islam, you’d get Azerbaijan’s approach to religion. They speak Azeri, which is kissing cousins with Turkish, but a lot of people speak Russian and the more educated people might speak some English. On the subway, you’re apt to see advertisements in English, Azeri, Cyrillic and Farsi. The nation straddles Eastern Europe and Central Asia. It could be grouped with the ‘stans, the Middle East, or its Caucasus neighbors, Armenia and Georgia.

The people are amazingly trusting, and yet, somehow, it’s one of the most corrupt nations on the planet.

On the one hand, here’s an example a friend in the Peace Corps, who is working in microfinance in the north of the country, shared with me.

People in Azerbaijan often refuse to use banks. This is understandable, as a banking crisis not that long ago wiped out the savings of some. But the banking system is much improved, and one bank is trying to lure people into opening accounts by explaining how the account might help a family share funds. The bank explains to prospective customers that a son or daughter working in the capital, Baku, can deposit money that family members in an outlying region can then withdraw.

What’s the point of that? they ask. Why not just give the 100 Manat to a taxi driver — along with 3 Manat for the drive — and have him bring the cash up from Baku to the village, two hours away? Azeris think nothing of trusting a stranger that way.

I’m from New York City, so I’m paranoid. I watch my belongings like a hawk wherever I go. But I would feel better about leaving a bag or a jacket unattended in Baku than in London or Paris or my hometown. Violent crime doesn’t exist, and even petty theft such as bag-snatching and pick-pocketing is hardly a problem. Women walk home alone after 1 a.m. through downtown Baku without looking over their shoulders.

And the people are hospitable to a fault. I’m treated like an honored guest at each of the three MFI’s where I’ve been working, Komak, Aqroinvest and Normicro. Tea is brought, lunch is paid for. The other day Ayyub, my boss at Aqroinvest, took me to a hamam, Turkish bath, to steam away my troubles. If you try to go outside with wet hair or a wet shirt, someone will get in your face about how you’re going to catch cold. That’s just how it is here.

But, oh, the corruption! As a foreigner, I’ve heard many stories but had little personal interaction with that ever-present force. (No one thinks twice of overcharging me for any purchase I make, but I’m not sure that qualifies as corruption.) Rather, I glean what I can from my reading and from the stories I hear. I can’t vouch for any of them, but everyone seems to have a story.

The most corrupt country in 2008, according to the watchdog group Transparency International, is Somalia, ranked 180. Iraq and Myanmar are tied for one spot better. The least corrupt countries in the world, sharing top honors on the list, are Denmark, New Zealand and Sweden. Transparency International rates countries on a scale called a Corruption Perceptions Index. It’s a 10-point scale. Those three countries range from 9.1 to 9.5 on the scale.

I’ve read that a good rule of thumb is that in any country under a 3 on the scale, corruption pervades all aspects of the daily lives of its citizens. In the 3 range you will find countries such as Niger, Egypt, Belize, Mauritania, Togo, Thailand and Saudi Arabai. Azerbaijan barely musters a 2, with an index range of 1.7 to 2.1. It’s tied with Burundi, Venezuela, Angola, Gambia, Guinea-Bissau, Sierra Leone and the Republic of the Congo for a dismal 158th place.

On a drive to the regions with two of my friends from one of my MFIs, we were pulled over by a cop. We hadn’t been speeding or anything like that, so I was a bit alarmed as the cop got out of his car and approached the driver of ours. But our driver said not to worry.

He hopped out, greeted the police officer, and they shook hands and turned around and walked back to the police car. The policeman rejoined his partner inside the police car and my friend chatted with them through their window. No tickets were written, no admonishments made. It wasn’t until later that someone explained to me how it works. The supervising highway police have a quota they give their highway patrol to fill. The highway patrol must pull over X number of drivers each day. The standard bribe is 5 Manat (1 Azeri Manat=1.24 U.S. Dollars). When he shook hands with the cop, my friend was paying the bribe as you or I might pay the toll on a bridge. Any bribes the policeman can take beyond the quota he gets to keep.

Another example, much worse: schoolchildren pay for grades. It’s not that the poorest students bribe their teachers not to fail them: ALL students must pay. If a bright student who knows the material doesn’t pay, she fails. If a student who never opened the textbook pays the price, he passes with high marks. That’s the system. All the incentives that might produce an educated elite are out the window. Apparently, it’s gotten worse in recent years, with teacher’s assistants lining up the students before exams so they can pay the bribes one by one.

Azerbaijan doesn’t face the kind of poverty you find in many Kiva countries: people are poor, and often hungry, but they aren’t dying of easily curable diseases left and right, or one meal away from starvation. The incredible oil and natural gas wealth that supplies the dozens of high-end retail shops in Baku with customers has managed to trickle down a bit to the masses. But, despite its wealth relative to the very poorest nations, I still think Azeri schoolchildren lining up to pay the bribe before the exam is a singularly hopeless, discouraging image.

I hear other stories. Politicans buy appointments. Official document are only delivered with some baksheesh, and if any of your documents are out of order, expect to pay the price. Successful owners of large businesses — from doctors’ offices to supermarkets — must periodically pay thousands of Manat to police who march in and demand that the doors be shut. Bribes lubricate the gears of this country, both large and small.

I’m not sure what makes me more upset: that this goes on, or that no one seems bothered enough to speak up about it. I think, however, that it bothers many people, probably much more than it bothers me, but they lack the tools — a true democracy, a free press — to do anything constructive with that anger, and so they hold it inside.

When you leave the capital — and most of the Kiva clients at my MFI’s live outside the capital — it’s really like travelling back in time. You go from Cosmo Magazine, the Bulgari store and Japanese restaurants right into an agrarian society. Picture the 18th century, but with cell phones and cars, and all the farmers and sheep herders wearing pinstripe suits.

Driving through the regions, it has the look of a Disney movie — ducks crossing the road here, a puppy and kitten wrestling there, a cow grazing on the left and a herd of sheep on the right. Of course, you’re apt to have some enormous metal contraption the USSR left behind, something meant to leech the gas or oil from the earth, rotting in the background, but ignore that.

There is no industry for these people. The oil boom that makes Baku so Western — all of those petrodollars being pumped out of the Caspian into someone’s pocket — don’t reach these people. They survive on their wits. They find simple business opportunities. They raise cattle and sell the milk, or make it into yogurt or butter and sell that. If a calf is born, they might sell its meat. They raise chickens for the family to eat. Pomegranates from the tree in the backyard are sold at bazaar.

If they can raise enough capital, they might start a more formal business: a general store, a shop peddling auto parts, a hardware store, a butcher shop. This is where microfinance comes in. Kiva and its three partner MFIs in Azerbaijan does such good work for these people. The capital is the missing piece. It’s often the difference betwen a family of four or five living on $2-3 U.S.D. or living on $10. Nearly every entrepreneur I’ve had the chance to interview has made a point of asking for another loan.

If Azerbaijan weren’t so corrupt, microfinance might not be so important. But as it is, measures of this nation’s wealth are misleading. The richest, best-connected people, making millions off oil, skew estimates for everyones’ wealth. They hide the reality that outside the petrol industry, people have to build their own livelihoods. Thanks to microfinance, hardworking, honest people don’t have to be confined to poverty here.


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