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Azerbaijan Experiencing Economic Boom: Is Oil Money Too Alluring And Corrupting A Force To Sustain A Nation's Economy?  

With oil prices reaching record highs, oil-producing countries like Azerbaijan are getting rich. Located in the energy rich Caspian region of Central Asia, Azerbaijan is expected to export one million barrels of oil a day in the coming year. But some analysts question whether oil money is too alluring and corrupting a force to sustain a nation's economy. As part of his series on Caspian Sea and the politics of oil, VOA's Brian Padden reports on Baku's boom.

A new, Russian Lada costs about $7,000 dollars in the Azeri capital. But, big, expensive American and European cars are becoming more common on the streets of Baku. With the price of oil reaching close to $100 a barrel, the rich are getting richer. New car dealerships have appeared on empty lots and are prospering.

Car salesman Etibar Abbssob says he just sold an American luxury car for $41,000.

"The last two or three years, people are getting richer and can afford cars like this," said Abbssob.

Revenues from Azerbaijan's oil exports are expected to increase to more than $15 billion a year by 2010.

While this is a prosperous time for Azerbaijan, Foreign Ministry official Shamil Alserov says, the government knows it must focus on the future.

"While we are enjoying this increasing revenue from oil, we have to take care of the development of the country to make it diversified, the economy," said Alserov.

Alserov points to new roads, bridges and education projects as signs of progress. In a further sign of the country's new wealth, new construction projects dot the city skyline.

But outside the city, there are areas of high unemployment and discontent.

In the village of Nardiram, people protested recently against a government plan to end subsidized electricity.

"We are being neglected by the government," said a protester.

Vugar Bayramov with the Center for Economic and Social Development in Baku, says the gap between rich and poor is growing in Azerbaijan.

"People have low salary," said Bayramov. "At the same time, people, they have to pay with high price."

Bayramov and others say Azerbaijan seems to be falling into a pattern they say is familiar from other oil producing countries. The influx of oil wealth, they say, leads to greed and corruption among the elite, while the poor are excluded.

Ilgar Mammadov, with the Baku Political Research and Advocacy Institute, says, only through a closer alliance with the West and conforming to international standards of conduct can Azerbaijan and its neighbors move beyond the boom and bust cycle.

"The more you are integrated in the global economy, the stronger is your economy and the stronger is your independence," said Mammadov.

To be effective, Mammadov says, economic restructuring must go hand in hand with real democratic reform.