Attracting Western capital into the Soviet economies, particularly into the oil industry of Azerbaijan, was the dictate of the times (the late 1980s and 1990s) and was determined by economic necessity. Without big investment and modern world technology there was no way to produce hydrocarbons out of the Caspian. After the collapse of the Soviet Union, the accusations made by some political scientists, that Azerbaijan could separate by solving this task, had no grounds. The Soviet international system was not integrated into the financial system of Western Europe and the US. Mutallibov explained the difficulties that the partners had to risk, saying "our government cannot provide bank credits for international oil companies".
The state structure of the republic also changed. The state symbols changed. The republic became the Republic of Azerbaijan. By the spring of 1991, oil and gas were not the most important things in the Azerbaijani economy. Without investment in the oil and gas sectors, there was no way of overcoming the economic crisis.
On the 5th of July 1990, the basic law on foreign investment was approved. This law provided the same legal conditions for foreign companies as national ones. The state allowed for the creation of joint companies.
It also allowed foreign investors to export and import without license and there were no customs duties. All this was supposed to realize the strategic economic course of the country - attracting investment.
After perestroika began, big US oil companies became more active in participating in the oil economy of the Soviet Union. The companies reaped the first fruits of their activities in 1990.
Cooperation in the oil sphere between the Soviet oil industry and big international corporations became mutual by 1990. In the sphere of energy the USSR cooperated not only with European countries, but also with Iran. The USSR imported gas from Iran. In April 1990, after a 10-year break, Iran re-established deliveries of natural gas to the Soviet Union.
According to the contract between the Soviet Union and Iran, over the course of 15 years 3 billion cubic meters of fuel were to be delivered annually.
As it had no currency funds, the USSR made an agreement with Iran with advantageous barter conditions. Moscow had to help Iran construct energy facilities, to expand the integrated iron-and-steel works in Isfahan and build other industrial factories. The reason for re-establishing gas deliveries from Iran was the decrease in gas production in the Caspian. Another reason was the lack of facilities to transport gas to the country from the Eastern parts of the country. Another advantage of the oil pipeline between Iran and the USSR was the possibility of converting some Azerbaijani power plants to natural gas. Gas was supposed to replace the sulphurous black oil used at the time. The authorities of the country (when there was no internal or external market) could not realize the black oil and get more benefit from replacing it at the power plants, but this conversion improved the ecological situation.
To be continued.
Ismail Agakishev, the director of the Center for Caucasian Studies at the Russian State University for the Humanities.
