Vol. 5, No. 18 (September 15, 2012)

Azerbaijan—A Caucasian Dubai?

Alum Bati
Independent expert

There has been much loose talk over the past decade about turning Azerbaijan into the “next Dubai.”  Can that happen?  And if so, how can it be achieved and at what cost? 

As part of the government’s emphasis on developing tourism, as well as an unsuccessful bid to win the Olympics, new hotels and sports complexes have been opening or are under construction.  In 2010, intensive construction got underway at the Shahdag tourism complex in Gusar.  In 2011, a few new hotels opened in the regions, with one in Naftalan, the Ramada Plaza Hotel in Ganja and the Qashalti Sanatorium complex.  But the center of attraction and investment has been Baku.  In anticipation of the Eurovision Song Contest earlier this year, Baku hotel and infrastructure construction received added impetus.  In and around Baku, several new five-star hotels came into operation and more will open soon.  Without doubt, downtown Baku is looking splendid, especially at night.  Visitors are impressed by the glitz, but does it have the glamour?

No doubt, over time and given considerable investment, the tourism industry will develop in Azerbaijan.  Dubai has proved, if proof were necessary, that almost any location can be turned into a shopping and recreational paradise given the right incentives.

But at the same time, Azerbaijan lacks some of Dubai’s obvious advantages—territorial cohesion for one: Nakhchivan is out on a limb and Nagorno-Karabakh and surrounding territories are still occupied by foreign forces.  Dubai also had free land at the time, yet another asset Azerbaijan no longer has.  In Dubai, the ruler basically owned the land and could do with it what he willed.  That, together with cheap foreign labor, naturally makes a considerable difference to the capital cost of any project.  Even more, the land that was available in Dubai was generally not polluted by Soviet industrial mismanagement.  Another Dubai success factor, which Azerbaijan lacks, is being surrounded by repressed, conservative but wealthy societies.  The exception is Iran, but what are the chances of encouraging mass Iranian tourism? 

Such geographical, economic and structural issues aside, Dubai’s leaders understood early on what attracts visitors in droves: “freedom.”  There are always limits, but Dubai knew where its visitors would come from: neighboring Arab countries, which still provide a considerable share of its tourist dollars.  Dubai was the alternative to Lebanon, the Arab playground that has shot itself to pieces in civil wars. 

So what sort of freedom does Dubai present?  Open skies, allowing airlines of any country to have passenger rights, cheap alcohol and dazzling night spots.  Moreover, in an attempt to develop into a financial center, Dubai introduced English law and English judges into its arbitration courts so that foreigners could feel comfortable doing business in Dubai.  The city-state has made it easy for inward investment and the hiring of cheap foreign migrant workers.  Is Azerbaijan ready for that level of openness?

Dubai has shown that any country or city can become a tourism hub, but at what cost?  Could the huge sums now being sunk into tourism in Azerbaijan have been spent more wisely elsewhere for a better return?

As the decision to make tourism a priority has already been taken, there seems little point griping about the sense of it.  But has it been carefully planned?  What thought is going into making it a success?  To answer these questions, we should look at the five “Ws:” Who, What, When, Why, and Where.

Who are the visitors that Azerbaijan wants to attract?  Azerbaijan is especially attractive for the Russian-speaking world, but how well does this mesh with the legacy of President Heydar Aliyev in building a definable Azerbaijani identity?  How will the potential of the Russian language once again dominating life in Azerbaijan be dealt with?  Of course, tourism cannot rely entirely on Russian-speaking visitors.  Wealthy Americans, Japanese, Chinese and Europeans are a natural target, but with so many competing destinations, why would they come to Azerbaijan?  Any coordinated plan for the development of tourism would surely have first asked who are the tourists we want?  It seems a decision has been taken not to cater for the mass-market, hence the burgeoning of five-star hotels with relatively few lower grade establishments.  If, then, wealthier individuals are being targeted, why would they choose Azerbaijan?

If we have established the “who,” the “why” is much less certain.  What does the average wealthy American know about Azerbaijan?  Why would he travel to Azerbaijan rather than, say, Turkey?  Such travellers do their research before visiting an off-beat destination.  Slick advertising on international news networks highlighted 2011 as Azerbaijan’s Year of Tourism, but that and a few glossy brochures are hardly sufficient.  An educated tourist wants to read something serious about the history of the country—something more than a Wikipedia page.  However, there is no serious history of Azerbaijan in print.  It is an unfortunate fact of life that no country in the world is taken seriously without an academic history of it written by Westerners in English.  Any judicious tourist would turn to such a history, if not to read it in its entirety, then at least to recognize that the place is worth a visit.

Next we turn to the “what.”  What attractions will keep our hypothetical tourist busy and tease money from his/her wallet?  This, of course, is closely related to the “why” and the “where.”  Well, it is not going to be the shopping.  We have all the luxury shops one could imagine, but no one is going to come to Baku and pay 50 per cent more for the same item available in shops in Europe, America, or Dubai.  So, will the attraction be sun and sea?  Baku gets enough sun but what about the sand (not to mention the wind)?

Azerbaijan lacks good beaches and a clean sea, and consequently, at least in the near-term and absent events like the Eurovision Song Contest, tourism has limited potential.  A necessary consideration if tourism is to succeed will be environmental clean-up programs, more high-profile cultural events, the creation of unique resorts and special interest attractions, such as high-quality museums, aimed at wealthier tourists.  Though some piecemeal work has already started in this area, including the Shahdag ski resort and the Baku Museum of Modern Art, the quality of what is on offer to tourists is generally inadequate.  The Tagiyev History Museum in Baku is much improved, but where are the new archaeological discoveries?  Where are the special exhibitions?  Azerbaijan is a long way to travel for Americans and the Japanese, so if they are going to come, the cultural possibilities have to be greatly expanded.  For the Middle Eastern visitor, Azerbaijan is nearer, but, contrary to expectations, is in some ways culturally alien—for instance, it is hard to find halal food for Muslim tourists or any special events for Ramadan.  If Arab visitors are to be encouraged, then the catering and food processing industry has to take such matters more seriously.

Next we come to the “where.”  Obviously, Baku occupies center-stage.  With the Eurovision Song Contest being held in Baku in 2012, tourism received a much-needed boost, but, despite the hype, the number of visitors was much less than expected and there are few tourists to be seen in Baku.  The city can also now host large conferences, especially off-season, but that means large groups of people arriving simultaneously for a short duration.  Currently, the country is simply not ready for this.  Without a more liberal visa regime, easier and cheaper flight connections, better and safer public transport connections between downtown Baku and its airport and so on, the conference business is not going to develop (other than by government inducement).

Finally, a brief comment about the “when.”  Naturally, hotels want to be full all year round.  That will be a neat trick in the height of summer or the depths of winter.  Conferences have already been mentioned as an off-season possibility.  Azerbaijan as a wedding/honeymoon destination is another, though that will require the law on marriage to be reviewed.  Encouraging more internal tourism is another potential area for development.

But, of course, there is more to Azerbaijan than Baku.  There is tremendous natural beauty—national parks that could be developed for hunting fauna with binoculars rather than with guns.  One might have thought that this had a more obvious potential for tourism development than ski resorts or golf courses.

Care must, however, be taken not to waste resources in developing industries which lack the basic infrastructure to support them.  There needs to be a well-developed plan to ensure the infrastructure is first in place.  Perhaps this is the case with tourism, but if there is a detailed plan, it has not yet been publicized.  The impression given to date is one illustrative of an overall trend with some other macro-projects of the sort: a seeming lack of a coordinated plan, ending in piece-meal initiatives championed by one ministry or another, but without the constructive support of the rest of the government.  Let us hope this will change.