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Filthy rich: Britain’s favourite dictatorship had so much oil its heiresses bathe in it… but beneath the fabulous wealth of Azerbaijan lurks very murky secrets

  • Oil generated £19  billion in revenues last year, yet much is believed to have gone straight into  the pockets of President Ilham Aliyev and his family
  • Azeri government  has threatened journalists and activists are tortured
  • Leaked documents  recently compared President Aliyev and his ruling clan to the mafia family in  the Godfather films

By  Will Stewart

PUBLISHED: 17:00 EST, 24  November 2012 |  UPDATED: 17:58 EST, 24 November 2012

Cleopatra, queen of ancient Egypt, bathed in  asses’ milk for the good of her complexion, but here in Baku, capital of  Azerbaijan, an even more surprising treatment is on offer. Disrobing from their  Gucci or Oscar de la Renta outfits, the ladies who lunch lie naked in baths of  crude oil, believing, as did Marco Polo, that the warming effects of 40C crude  cure skin diseases, rheumatism, arthritis and even ‘nerves’.

Medical science says that, beyond ten  minutes, the effects are more likely to be carcinogenic.

Oil is everywhere in Baku, even the spas. It  is in the sharp, acrid taste of the wind blowing in from the Caspian and in the  army of derricks marching far out to sea. Solidified into glass and concrete, it  is changing everything in this ancient town once known for dusty streets and  traditional carpets, creating instead a city of staggering  ostentation.

Petrol cure: The oil baths of Baku's spas are popular among the Azeri women, despite the high price tag, believing it will cure everything from skin diseases to arthritisPetrol cure: The oil baths of Baku’s spas are popular  among the Azeri women, despite the high price tag, as they believe it will cure  everything from skin diseases to arthritis

Baku is openly vying to become the Dubai of  the Silk Road. Earlier this year, it played host to the Eurovision final, staged  in the new Crystal Hall with its swirling lasers.

By 2019, Baku will boast the tallest building  on the planet (or so it is claimed): the £1.25 billion Azerbaijan Tower, soaring  3,445ft and 189 floors, or more than one kilometre, into the sky. It will be 30  per cent higher than Dubai’s Burj Khalifa tower, the current record holder. And  this in a region prone  to earthquakes.

As night falls, the city becomes a noisy,  pulsating LED show, competing with the well-head flares in the darkness  beyond.

No one knows quite how much of Azerbaijan’s  extraordinary oil wealth has made its way into  the bank accounts of  50-year-old President Ilham Aliyev and his family, or their retinue of friends  and hangers-on. But it is safe to say they are all unimaginably rich. According  to independent research, SOCAR, the state oil and gas company may have brought  in revenues of £19 billion last year – in a country with fewer than ten million  people.

Aliyev himself was educated in Russia, but  nothing less than a British school was acceptable for his children, so he sent  daughters Leyla and Arzu Aliyeva to the exclusive £15,000-a-year Queen’s College  for girls in London.

High hopes: A digital prediction of the £1.25 billion Azerbaijan Tower, which is predicted to become the world's tallest building upon its completionHigh hopes: A digital prediction of the £1.25 billion  Azerbaijan Tower, which is set to become the world’s tallest building upon its  completion

Today, the sisters are believed  to  share a property portfolio of £50 million – across Dubai, Paris and London – and  to share  construction interests with their mother.

Leyla’s personal business empire is said to  include lucrative airline and mobile-phone concerns, but the opaque commercial  world of Baku makes it hard to be sure. It has even been claimed she owns  Azerbaijan’s London embassy.

Leyla, 26, has now settled in Britain with  her husband, Russian singer Emin Agalarov, the son of a billionaire property  tycoon, and their two sons. They lead an enviable life, occupying an extravagant  penthouse overlooking Hyde Park.

Styling herself as an artist and socialite,  she has gathered an influential social circle, including Elisabeth Murdoch, Lord  Mandelson and Prince Andrew.

She once spent nearly £300,000 on vintage  champagne at a dinner party for a dozen girlfriends.

She recently launched Baku, a vanity magazine  to promote her country to wealthy Westerners.

Any serious opposition against President Aliyeva is crushed – activists are  tortured

Her arrival in London has prompted a flood of  Azeri oil money into UK property and business interests. At Baku, a new Azeri  restaurant in Knightsbridge, Leyla and friends can choose from a menu offering  caviar, gutab (minced lamb pancakes), pomegranate-and-rose soufflé and a £4,400  bottle of 1999 Cristal. A recent London Fashion Week cocktail party there was  sold out.

The site of the restaurant –  formerly  Gordon Ramsay’s La Noisette – is owned by Azeri government minister Kamaladdin  Heydarov’s London-based billionaire sons, Tale, 27, and Nijat, 26. Former LSE  student Tale has been dubbed the ‘Abramovich of Azerbaijan’ after pouring  millions into his local football team, Gabala, and recruiting former England  captain Tony Adams on a £1 million annual contract.

Tale was introduced to Princes William and  Harry at a charity match at the Beaufort Polo Club in Gloucester, when they  reportedly discussed hosting a polo event in Azerbaijan to raise money for the  Prince’s Trust, Prince Charles’s charity.

Leyla is not the only Aliyev who likes to  spend. In 2010, the story emerged of an extraordinary two-week shopping spree in  Dubai conducted by an Azeri boy aged 11. Over this happy fortnight, he became  owner of nine waterfront mansions for £28 million, a sum that would take the  average Azeri citizen 10,000 years to earn.

The boy’s identity? Heydar Aliyev, son of the  president, if the Dubai Land Department records are to be believed.

‘I have no comment on anything. I am stopping  this talk. Goodbye,’ snapped the presidential spokesman when asked about the  purchases.

If rich Azeris seem fond of life in Britain,  it is as nothing to the deepening love affair between British businessmen and  the oil wealth of Baku. The relationship has been growing inexorably stronger.  Political delegations visit every year at the behest of SOCAR and the European  Azerbaijan Society, or TEAS, based in London.

Ex-Defence Secretary Liam Fox, Lord Fraser,  Lord Sheikh, Bob Blackman MP, Mark Field MP, Transport Minister Stephen Hammond  – all Tories – and Ulster Unionist peer Lord Kilclooney have all enjoyed trips  to Azerbaijan.  Discreet visits by military big-wigs are not unknown.

Tony Blair, another traveller to these parts,  was reportedly paid £90,000 for a 20-minute speech on a visit in 2009: £75 a  second.

Royal pals: President Ailyeva's wife Mehriban Aliyeva talking to Prince Andrew at an oil conference in Baku with her eldest daughter Leyla (left)Royal pals: President Ailyeva’s wife Mehriban Aliyeva  talking to Prince Andrew at an oil conference in Baku with her eldest daughter  Leyla (left)

But none has been so high- profile or  controversial as Prince Andrew, a regular guest of President Aliyev.

In Azerbaijan, Prince Andrew is routinely  described as a ‘dear guest’ by  the leader of a country that ranks as one of the  most  corrupt in the  world on the Transparency Index.

But in Britain, the Prince has been heavily  criticised for a friendship  that appears to be continuing, though he has now  stood down from his  role as trade envoy. Last month, he met with Britain’s  Ambassador to  Azerbaijan at Buckingham Palace.

Prince Andrew has made eight visits to  Azerbaijan in six years; two of these  were private, arousing suspicion that he  has business interests there,  including a soon-to-be-built golf complex. These  claims have been  vigorously denied by Buckingham Palace.

The UK is Azerbaijan’s biggest  investor,  mainly through BP, though via dozens of other oil-related  companies, too: about  £20 billion has been pumped into the country since 1991.

Still, it is clear  who is boss here: Aliyev  recently condemned BP for ‘grave errors’ and  sharp declines in oil output,  leading to a £5 billion loss for  Azerbaijan. BP quickly replaced its top man in  Baku.

The British auction house Christie’s  organised its first exhibition in Baku at the newly opened Four Seasons Hotel in  September, flying in dealers, collectors, experts and its chairman, Viscount  Linley, to accompany the works of art. Rolls-Royce are here, as are accountancy  giant  PricewaterhouseCoopers and travel and corporate services giant Hogg  Robinson. Stella  McCartney has an outlet too. In preparation for  Eurovision, Azerbaijan purchased 1,000 London black cabs to whisk  visitors  from one freakish new building to another.

Mocking Azerbaijan is such easy sport that  you wonder if it was this Caspian  potentate that was Sacha Baron Cohen’s real  target when he invented  Borat, not Kazakhstan. WikiLeaks did not help. Leaked  cables showed US  diplomats likening moustachioed despot Aliyev and his ruling  clan to the mafia family in the Godfather films, quoting the line: ‘I don’t feel  I  have to wipe  everybody out – just my enemies.’

The same documents revealed his First Lady,  Mehriban, 48, ‘wears dresses  that would be considered provocative even in the  Western world’, and  lacks a ‘full range of facial expression’ following  ‘substantial  cosmetic surgery, [done] presumably overseas’.

Aliyev assumed power from his KGB-boss father  in the 2003 election that is  widely believed to have been rigged. It is said  the Duke of York makes  him laugh and that the  two men share a taste for  risque jokes – and the services of a blind Russian masseur with ‘the best hands  in the world’.

However, if the vulgar ostentation of Baku is  pure comedy, the darker side of the regime is no joke at all.

Take, for example, the locking up of  irreverent youths for slight  impoliteness towards the ruler’s late, and  deified, mother Zarifa. Or  how ordinary people were evicted from apartment  blocks to make way for  the totemic towers and esplanades, including the  £85 million palace  for Eurovision.

When grandmother Shirinbazhi Rzayeva refused  to move out of her flat near the site, somebody used  a mechanical digger  to drop a  concrete block through the roof.

‘We called the fire department but all they  did was ask us why we wouldn’t sell. The president wants to build his new city  at my expense. I refuse to be part of that.’

More sinister still is Aliyev’s crushing of  any serious opposition, as confirmed by groups including Human Rights Watch and  Amnesty. Phones are routinely tapped. Four years ago, the interior minister  publicly admitted that suspects have been tortured in pre-trial detention.

Last year, Turac Zeynalov, 31, was detained  on espionage charges. Relatives who visited him felt he had been beaten and said  he could not move. He died three days later ‘of skin cancer’, according to  officials.

Aliyev’s feared secret police like nothing  better than to snoop on female investigative journalists, the hidden cameras  rolling as they have sex in the privacy of their own apartments.

Ruling friend: British Prime Minister David Cameron shakes Ilham Aliyev's hand on the steps of No.10 Downing Street in August this yearRuling friend: British Prime Minister David Cameron  shakes Ilham Aliyev’s hand on the steps of No.10 Downing Street in August this  year

In an infamous case, Khadija  Ismailova, 36,  a reporter with Radio Liberty, received a warning letter  which read: ‘Whore!  Behave, or you will be defamed!’ She ignored the  threat and continued to  investigate allegations of gross corruption  within the first family and the  Byzantine court that encircles them.

‘I focused too closely on the daughters of  Ilham Aliyev, they didn’t like  that,’ she said. As a result, her most intimate  moments with her  boyfriend were exposed on the internet.

Says a friend: ‘For any woman this would be  painful, for an unmarried Muslim woman more so, yet Ismailova knows how low they  will stoop and refuses  to be intimidated.’ Another potential victim of such  tactics slept in a  tent in her bedroom.

There  are plenty of reporters and activists  in the gruesome Baku prison whose  ‘crime’ is being simply that: journalists,  activists, bloggers.

Walking the streets as a reporter is a  dangerous activity.

And what are these 4m-high sandstone walls on  the new highway into Baku  from the airport? Taxi driver Malik explains as he  speeds into the city  at the wheel of a ‘black cab’ now painted purple: ‘To stop  you and other foreign visitors seeing the poverty on the other side.’

Vagrants are routinely cleared off the  streets, while the poor, disabled and orphaned are shipped out to makeshift care  homes.

But to dwell on the cartoonish excesses of  this sinister regime is to miss  the main point. ‘Dubai on the Caspian’ has  developed a hydrocarbon hold  over the whole of Western Europe, Britain included  – and its grip will  last for decades.

No wonder  the Foreign Office has turned an  almost blind eye to human- rights  abuses, including curbs on freedom of  expression, assembly and  association, political interference in courts, and  repeated claims of  torture and abuse of foes.

Instead, the FO has been only too happy to  assist Prince Andrew with visits  here, while US Secretary  of State  Hillary Clinton has been half-hearted in her denunciations of the  regime.

Perhaps they have a point. Aliyev might be a  tyrant, but he’s a pro-British tyrant, is the argument. Certainly, a steady  stream of mega-contracts is flowing to the hundreds of our companies now linked  to Baku. It is likely Prince Andrew has been far more important to the cause of  UK business in Azerbaijan than anyone realises, or at least will  acknowledge.

It is also true that the stakes here are far  bigger than most people realise: they include European ‘energy security’ for  generations to come. Aliyev claims to have enough gas for a hundred years – a  fuel supply that is beyond the reach of Gazprom and the Russian bear, and free  of the fundamentalist despotism of Saudi Arabia or Iran.

For all its absurdities, Azerbaijan is a  Western-facing Muslim country, an oasis of calm and stability in a region of  notorious turmoil. Go south little more than a hundred miles from Baku and  you’re in the nuclear-ambitious theocracy of Iran.

Here is a Muslim country where women  generally do not cover their heads, and couples stroll hand in hand and kiss on  park benches close  to delightful fountains. Nightclubs are  common.

In Iran, the mullahs despise all they  see in  Azerbaijan, including its open business and diplomatic ties to  Israel and the  West. Tehran withdrew its ambassador in protest at the  staging of Eurovision so  nearby.

Violent clash: Azeri riot police beat a man during a protest in 2003 after the rigged election which saw Ilham Aliyev was declared the winnerViolent clash: Azeri riot police beat a man during a  protest in 2003 after the rigged election which saw Ilham Aliyev declared the  winner

Jennifer Lopez, Rihanna and Shakira, all  known for provocative costumes and  dance routines, have recently filled Baku  concert halls. No one batted  an eyelid. It has been suggested Azerbaijan poses  the greatest threat to Iran simply by being itself: a (relatively)  outward-looking Shi’ite  state, in stark contrast to its neighbour. A  high-ranking Azeri official at the Jo-Lo extravaganza was quoted saying: ‘You  could almost feel the Iranians seething. This stuff makes them  crazy.’

Azerbaijan means the Land of Fire in Persian.  Zoroastrians built temples round  burning gas vents in ancient times. Marco Polo  wrote of a ‘fountain from which oil springs in great abundance .  .  . not  edible but good for  burning and to treat men and animals with mange, and camels  with hives  and ulcers’. Other places have bounteous fruit orchards – this  country  has spewing geysers of flaming gas.

By the 19th Century, half the world’s oil  gushed from here; families  including the Nobels and the Rothschilds built  grandiose mansions in  what was then known as the Paris of the Caucasus. Yet it  is not so long  since Soviet rule, when Azerbaijan was a bankrupt backwater,  almost  wholly cut off from the world outside the USSR.

Its fortunes declined still further thanks to  the devastating war with  Armenia over the disputed enclave of Nagorno-Karabakh  (still a huge bone of contention). Then, in the ‘Eldorado Era’ immediately after  the  collapse of the Soviet Union, educated but impoverished local  ‘Nastashas’  flung themselves at British oil workers for $100 a night at  seedy clubs. In  this Wild East, drunk foreigners drooled at Azeri belly  dancers, clumsily  stuffing hard currency into their bras and knickers.

This was the period when I bumped into a  grumpy Mark Thatcher who kept a  bolthole in Baku as he touted, like many other  Western wheeler-dealers,  for a slice of the Azeri action.

Sir Mark was unsuccessful in Baku, like most  foreign cowboys. People here  are among the most skilled and exasperating  negotiators in the world.  Some of the best oil brains on Earth drank themselves  silly (and several went certifiably mad) waiting for Aliyev’s ruthless father  Heydar –  former head of the KGB in the region and another man familiar with  torture – to agree the ‘deal of the century’ with Western giants.

Heydar finally clinched it in 1994 with a  consortium of oil companies headed by BP, triggering $18 billion in investment  and setting Azerbaijan on course to its current riches.

Even in death Heydar stares threateningly  from the posters and statues: almost everything else about Baku has changed  dramatically.

Chinese, Arab and US money is pouring in to  the Khazar Islands. Described by the regime as a new Venice, Baku’s 41  artificial islands are expected to become one of the most desirable residential  areas in the world, with 50 hospitals, 150 schools, beautiful parks and  recreation facilities, gargantuan shopping malls, university campuses and,  inevitably, a Formula 1 racetrack.

The Hotel Crescent is due to open soon, a  33-storey half-moon shaped structure by the sea. It will be followed by the  seven-star Full Moon Hotel with a design that has been likened to the Death Star  from Star Wars. ‘Baku White City’, built by Atkins UK, and with architects  including Sir Norman Foster, will, say one report, ‘cover  an area greater  than Monaco, becoming the biggest development in  the Caucasus’.

‘The scale of what’s happening is  mind-boggling,’ says a UK oil executive as he sips whisky in a revolving bar  atop the Baku Hilton. ‘There’s every designer boutique known to man. Streets are  filled with Bentleys and Ferraris. Here’s the crunch: the Azeris have only  begun. In another dozen or so years it will be one of the smartest, most  fashionable locations in the world. It’s a cut above the normal Corruptistan  stereotype of old Soviet states.’

Here is a prediction: it is likely you or  those close to you will, in years ahead, come here for an exotic weekend. It is  equally likely you will rather enjoy its often balmy weather, relaxed atmosphere  and opulence.

Visa rules are still restrictive for  Westerners, except oil or gas experts on expensive organised package tours;  prying journalists are unwelcome. Yet the expectation is that Baku will open up  in the coming years to compete with Dubai. The big international hotel chains  are well established, doffing caps to serious money in a once drab communist  outpost.

Qatar Airways has started regular flights,  even if they are not cheap (you can’t get a flight for less than £600, plus £60  entry visa). Baku is already a playground to Middle Eastern visitors.

Meanwhile, the Old City, a maze of cobbled  streets, charming garden cafes and traditional rug sellers dating back to the  12th Century, is eerily silent. Above it looms Baku’s Flame Towers, futuristic  high-rises shaped like tongues of fire in glass and steel.

For all the mockery and criticism of Aliyev,  Western leaders are secretly grateful to a man who has brought stability and the  prospect of oil and gas. They hold on to the thought that,  compared with  Iran, the suppression and torture is on a lesser scale.

But realpolitik has its dangers. A former  ambassador in the region remembers the enthusiasm that greeted Bashar al-Assad  coming to power in Syria: ‘One Labour Foreign Minister described him as “good  news”, “very impressive” and “a warm  individual”, adding for good  measure,  “I found him as somebody who had a very modern outlook, who will  take Syria forward.”

‘The Minister was Peter Hain, but never mind.  Hindsight makes us all wise. All I can say is this: don’t be too sure about  throwing all your support behind

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