Oil and tourism: Dodging the resource curse, before it's too late

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Accounts of the oil wealth of Azerbaijan date back to the 3rd and 4th century CE, and many that I talk to boast that drilling off the shores of Baku in 1846 was the world's first mechanically aided oil well. Yet more historical records (and folklore) talk of the open fire on hillsides and caves and of the early Zoroastrians who built temples around the natural gas springs. While, most of these wells were tapped, a few still burn freely today  -Yanar Dag, for instance - and teahouses have used them to brew tea (and you can bet your boots I'm going to find them!) The fame of these oil fields may feel overstated, but James Bond fans will be surprised to know that they've already seen Pierce Brosnan testing out an BMW Z8 between the Caspian shore and Azerbaijani pumps.

Pierce Brosnan next to his BMW in the Baku Oil Fields (stolen from wikipedia.org)
Pierce Brosnan next to his BMW in the Baku Oil Fields (stolen from wikipedia.org)

The cosmopolitan center of Baku stands in stark contrast to the oil fields that surround it. The "Fountain Square" (Fəvvarələr meydanı) often referred to as "Targova,"  is a sleek walking mall with high-end boutiques (far to pricey for me to even set foot inside) surrounded by bran-spankin-new skyscrapers, towering over Old City (İçəri Şəhər).  (Less than a decade prior, an oil expat told us, one of these same glamorous drags was known as "stinky alley" due to sewage problems in the central city.) The power of petro has transformed the streets as the spirit of development  captures the minds of the Azerbaijani leaders. Seventy years ago, Adolf Hitler obsessed over the great potential encapsulated in Caspian oil and struggled to usurp the wells from the Soviet Union. The Irish Times quoted the Führer himself "Unless we get the Baku oil...the war is lost.”  In a moving picture of his birthday, he is handed a slice of cake with "Baku" written in bright white against the black chocolate.

Economists and financiers are quick to warn against relying too heavily on any one resource. "Diversification" is a mouth-full of a word that is better suited by the cliche "don't put all your eggs in one basket." Currently, Azerbaijan, and much of the world, has put most of their eggs in the basket labeled "petroleum." Despite various parties arguing and urging the necessity for "alternatives" to oil, potential candidates seem to be losing their grip.

For over a half-century, nuclear power has been a forefront contender. Extending beyond the practical, the idea of transforming the most destructive force in human history into an equalizing force, by offering affordable energy for all, is almost poetic. As if the science of splitting the atom can be purified for past crimes.  The anti-nuclear campaign has been strong for many years, with the Three Mile Island and Chernobyl disaster, but appeared to be cooling off. Until the Fukushima disaster in Japan which reinvigorated skepticism toward man's ability to control the atom. The Economist even went as far as to proclaim nuclear energy "The dream that failed."

On the other hand, wind and solar are considered the most non-invasive alternative energies, but as of right now without government subsidies (which so many oppose) most companies are sputtering to keep from burning up. It is likely that technological advancement may change this, but as of yet, there are no shining champions. And for countries like Azerbaijan, that is a good thing - at least until they have developed alternative economic engines. With no obvious, transcendent means of powering our cities, petroleum will continue to bring the riches of the "advanced" economies into the hands of the oil brokers of the "developing" world. For better or worse.

Our Lady of the Rockies, the second tallest statue in the United States, overlooking Butte, MT. This photo of Butte is courtesy of TripAdvisor

Back in my homeland, many parallels emerge. Montana is known for being resource rich and tourists flock to experience "nature." At the same time, it is often touted as being "behind the times" or similarly backward or underdeveloped in some respects. (Do new movies ever get to Montana? Yes, they do. Sometimes.) Cruising through the country roads and vast farmlands, it is not uncommon to stumble upon quaint "ghost towns" and magnificent, empty mansions - often preserved for tourists, and housing a nearly lost history of mining riches.

The city of Butte, while not a ghost town, witnessed a vast diaspora as its population was cut in half from 1920 to 1970, during the decline in copper prices. And that is only those who made it on the books; many of the workers were (unregistered) Irish and Chinese immigrants. The actual population of Butte during this period is oft debated. (And if you are part of such a debate, you are obviously in Montana. Say hello to the Big Sky for me.)

Panorama of The Berkeley Pit, the largest super fund site in the United States, result of open-pit mining. Butte, Montana © William E. Rosmus
Panorama of The Berkeley Pit, the largest super fund site in the United States, result of open-pit mining. Butte, Montana © William E. Rosmus

Aside from empty streets, and boarded up buildings, Butte was home to the world's longest running brothel, (shutting down just a few years after I was born). As well as the birthplace of Evel Knievel and hosts his annual namesake festival. The city also hosts the largest per capita St. Patrick's Day celebration in the world (which may just be something Montanans say, but prove me wrong). As a result of the strong sense of blue-collar pride, Butte  - known as the "Gibralter of Unionism" - was a bastion of early socialism in American (back when that word meant something else). Out of this working-class solidarity sprang political activist Barbara Ehrenriech, author of the best selling Nickel and Dimed and Bait and Switch. Even more ominous, however is Buttes epithet as "The Richest Hill on Earth." At its peak during the boom of the copper industry in the early twentieth century, Butte, America was the richest city on the face of the planet.

 

If not for the mansions that once housed metal magnates, and the vacant hospital that once served mobs of miners, a contemporary passerby would be hardpressed to uncover the decadence of the Copper Kings. During one trip to the "Ugliest Town in Montana," I remember scooting around a hole in the wooden floor, and seeing the concrete floor of the two-storied home rented by my friends. If the city condemned all the homes like this, I was told, there would be few places to live. As Butte can attest, exploiting natural resources doesn't always result in local economic development (unless tourism at the Berkeley Pit, the largest Superfund Site in the United States, counts). However, in spite of - or because of - this colorful history, few people have more pride in their hometown than those fortunate to call themselves Butte natives.

The 39 Story, Baku Flame Towers. Baku, Azerbaijan. www.diaholding.com - www.thebriefnote.com
The 39 Story, Baku Flame Towers. Baku, Azerbaijan. www.diaholding.com - www.thebriefnote.com
 

Back in Azerbaijan, oil goes out, wealth comes in and money is spent. In the same Irish Times article, the VP of marketing for Socar (State Oil Company of Azerbaijan) asks:

"Is BP constructing schools in the UK or Total doing something for France other that paying profit tax? Socar pays taxes and builds schools, hospitals, roads and sponsors just about everything in this country."

The Baku Flame Towers under construction
The Baku Flame Towers under construction

The world scuttles about in search of a suitable alternative energy, while Azerbaijan is trying to outpace the energy race by replacing oil with tourism - à la Dubai. These recent constructions are not without a flair of the grandiose - the current administration hopes to make the small Caucasus country a "world tourism center." Quoted in New.Az, the President states:

"In the future, as a result of the flow of tourists to Azerbaijan, our country will take its place on the tourism map of the world. Azerbaijan is today the political and economic centre of the region. Azerbaijan is today the energy center of the continent. I want Azerbaijan to become one of the tourism centers of the region and the world."

While, new luxury hotels springing up in the heart of Baku, such as the 5 star JW Marriott Absheron - which the current administration cited as setting a new standard for the Caucasus region - the "rayons" are also seeing similar appeals to tourists. Out in the northwest rayon of Gusar, the $2 billion "Winter and Summer Tourism Complex" is set to have its first skiiers this coming season, and boasts a capacity of 5000 guests. What influence this large-scale investment in the "World's Largest Industry" will have on the local economic (or cultural) condition, and whether or not the "resource curse" will come back to burn the land of fire, remains to be seen.