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As Oil Prices Drop, Azerbaijan Looks For Help From International Loans

STEVE INSKEEP, HOST:

The drop in oil prices has a huge effect on the countries that sell it. It cost Iran a lot of money, for example, which is one reason Iran faces pressure to reform its economy. Then there's Azerbaijan. The country was a big spender but now wants to know if the world can spare a few bucks. NPR's Corey Flintoff reports.

COREY FLINTOFF, BYLINE: Azerbaijan is a small, former Soviet country on the Caspian Sea. But it likes to promote itself as a dynamic economic hub. The country's oil wealth allowed it to host pricey sports events like last summer's first-ever European Games.

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UNIDENTIFIED MAN #1: Azerbaijan.

UNIDENTIFIED MAN #2: Azerbaijan.

FLINTOFF: The $1.2 billion event was a showcase for Azeri President Ilham Aliyev, with festivities that included a concert by Lady Gaga. But even as the party was going on, world oil prices had lost half their value. Analyst Sijbren de Jong says that's a threat to stability in a Muslim country with a history of Islamist extremism.

SIJBREN DE JONG: You get a dangerous cocktail of increased unemployment, economic downturn and young males that are vulnerable to radicalization by jihadist organizations.

FLINTOFF: De Jong, an analyst with The Hague Centre for Strategic Studies, says that's a concern for the United States and Europe as well as Azerbaijan's immediate neighbors, Iran, Armenia, Georgia and Russia. De Jong says the drop in oil prices didn't have to be this dangerous.

DE JONG: The real problem is that during the boom times, during the times when the oil price was well about $100, they made no effort whatsoever to diversify their own economy.

FLINTOFF: Azerbaijan still depends on oil and gas exports for about 75 percent of its government revenues. Another problem is systemic corruption. Azeri officials says the government is battling corruption with tough legislation and a commission appointed to fight graft. But the country still ranks in 119th place on Transparency international's Corruption Index, tied with Russia, Sierra Leone and Guyana.

SARAH CHAYES: I would say the Azerbaijan government looks less like a government with the interest of its people at heart than it does like a pretty tightly structured criminal organization. That's not the type of organization that you necessarily want to be bailing out.

FLINTOFF: That's Sarah Chayes of the Carnegie Endowment for International Peace, a Washington think tank. The bailout she's referring to could come from two major international lenders. But Chayes points out that an international loan could come with very stringent conditions for the Azeri government.

CHAYES: This is an opportunity to make some real requirements in terms of opening this government up to input by its citizens, citizen oversight for how this money is going to be spent with real enforcement powers.

FLINTOFF: Human rights groups also see an opportunity for leverage. Groups such as Human Rights Watch are demanding that international lenders pressure Azerbaijan's government to release prisoners like Khadija Ismayilova, the Azeri journalist who was convicted in what rights groups say was an unfair trial after she investigated government corruption and the business interests of the president's family. Corey Flintoff, NPR News, Moscow. Transcript provided by NPR, Copyright NPR.