Cover of The Region of Eternal Fire
Introduction
Imagine a land where the seas can burst into flames and the ground spurts oil hundreds of meters into the air. This was the Land of Fire that the British writer and pamphleteer Charles Thomas Marvin wrote about in his 1883 trip to the historic city of Baku in his book The Region of the Eternal Fire: an Account of a Journey to the Petroleum Region of the Caspian.
Baku holds a special place in the annals of history as the first oil capital of the world. In the late 19th and early 20th century, this single city supplied over half of global oil demand. Its rapid development from an arid, unpopulated region to a thriving, wealthy city in just twenty years at the end of the 19th century defined the dream of the oil industry. The city was one of Russia’s most valuable economic and political assets, allowing it to draw significant foreign investment and influence global policy in late Tsarist Russia and the Soviet Era. Understanding the development of Baku and the oil trade provides context into the economic, political, and social challenges of industrialization in late Tsarist Russia and the strengths of the early Soviet Union. In this paper, we will study how foreign investment impacted the economic, infrastructure, and social development of Baku from 1882 to 1917. And conversely, we’ll discuss how Russian policy and ethnic conflict impacted the scale and influence of foreign investment on the city.
We’ll be using the works of Charles Thomas Marvin during his trip to Baku in 1883 to understand the challenges and early development of the city, as well the British Journal of the Institute of Petroleum from 1914-1917 and the British Times newspaper to understand the perspective of foreign investment into the region. In addition, we will draw on John D. Henry’s 1905 work Baku: An Eventful History, the research of historian John P. McKay including his book Pioneers for Profit: Foreign Entrepreneurship and Russian Industrialization, as well as the dissertation of Rebecca Hastings Oil Capital: Industry and Society in Baku, 1870-Present to provide historical context on the development of the region. Through this work, we will find that the foreign investments made by the British and early European investors into Baku allowed for the construction of new railroads, critical infrastructure like water reserves, and the economic development of local populations through job creation. It also led to the development of new sectors including a thriving hospitality industry. However, private investment also exacerbated existing ethnic conflict in the region, contributing to the bloody massacre between Armenians and Azeris in 1905. Russian policy impacted the extent of Baku’s development by creating an unstable political and economic environment for ventures. Although the policies of Sergei Witte partially corrected these challenges and attracted a high volume of foreign investment, the bureaucratic state continued to delay economic progress in multiple instances and eventually led to foreign investors moving capital to new regions.
Background
In this section, we will cover the events that led up to the beginning of the oil boom in Baku and the circumstances that prevented this period of progress from occurring prior to foreign investment into the region. In summary, a combination of poor policy making from the Tsarist State combined with non-ideal economic conditions and an absence of technology, capital, and entrepreneurial spirit among local oil producers delayed the Russian state from taking advantage of its vast oil reserves in Baku prior to 1882.
- Pre-Russian History of Baku
Baku holds a rich cultural and economic history that contextualizes the economic potential and challenges of the region. The name Baku derives from the old Persian word Bagavan, which translates to “The City of God,” fitting the religious context of early Baku. For millennia, fire worshiping people practicing Zoroastrianism would travel to Baku and across the Caspian region to pray to the relentless gas fires that burned despite the wind and rain (Henry, 17).
Beyond its religious roots, the city has also had a long commercial history. As early as the thirteenth century, petroleum trade occurred throughout the Caucasus. Marco Polo described seeing petroleum being carried by camels as far as Baghdad to be used as a source of light and for medicinal purposes (Henry, 20). The region was controlled by various powers over the first millenia interested in its religious sites and commercial possibilities. Peter the Great took special attention to Baku for its petroleum rich land and its advantageous position as a port on the Caspian Sea. He believed controlling this port would help centralize trade with the East and open new commercial opportunities (Henry, 21). Although Peter the Great was able to take Baku in the aftermath of the Russo-Persian War, Russia would not be able to stabilize its control over the Caucasus until over a century later. Though, Peter the Great’s intuition was right: this oil-rich region would be one the greatest economic and political strengths of the Russian State through the late 19th and 20th centuries.
- Early Russian Petroleum Extraction
Upon the acquisition of the Baku Khanate from Persia through the Gulistan Treaty of 1813, the Russian Empire looked for means to commercially develop the region’s oil resources. The market for petroleum products prior to the mid-19th century was relatively small and the Russian State had little experience in the oil industry. Despite this, the Empire declared monopoly control over all petroleum extraction sites in the Caspian Region and attempted to develop a state-led oil industry. Their inexperience caused revenues to collapse by 50% in the first year. To improve this situation, the Russian Empire began offering four-year petroleum extraction contracts to private investors starting in 1825 through the Lease System (Martellaro, 81). These contracts were also unsuccessful in encouraging growth in the industry because their short contract periods discouraged producers from investing into their own operations. Upon the recommendation of the Tsar’s advisors, the Lease System was abolished in 1872 and was replaced with a state-led auction system. The system allowed investors to bid on land for twenty-four year leasing periods and gave the owners rights to the extracted resources. This new system proved successful, resulting in more oil being extracted in the first ten years than in the previous fifty years under the Lease System. This restructuring of the industry, coupled with a growing global demand for petroleum products, began the age of development for Baku.
Early businessmen like Ivan Mirzoev began the first private drilling operations in the region and were rewarded with remarkable results. Each well they drilled produced oil with more force and at higher quantities than any well that had ever been discovered. The largest challenge investors faced was transporting these petroleum resources at a low enough cost to compete with Standard Oil in the US. Standard Oil had already spent the previous thirty years developing a truly robust global supply chain capable of shipping petroleum across Europe and Russia, so Baku producers had difficulty beating them on cost. Additionally, the Russian state was heavily taxing revenues on refined oil products like kerosene, resulting in businesses shipping low-quality petroleum to avoid this cost. The combination of a lack of innovation and seed capital to reduce these transportation costs and the antagonistic tax policies of the Russian State made it difficult for Baku’s petroleum to even capture the nearest markets. Russians in cities as close as Tiflis – just a few hundred kilometers away – were purchasing petroleum products like kerosene from the US because of its higher-quality and lower costs compared to products from Baku (Henry, 111).
Nevertheless, in 1876, the Swedish Nobel Brothers and the German Rothschilds were attracted by the potential of this new market. They built their own operations, and began developing innovations to lower the cost of petroleum transportation and refinement. Noticing the inefficiency of shipping oil barrels in trains, the Nobel Brothers invented oil tankers to ship petroleum across Russia and to Europe at remarkably lower costs. Meanwhile, the Rothschilds funded the expansion of Russian railroad routes, allowing oil producers and refineries to access both domestic and foreign markets. By early 1886, the Nobel Brothers’ Branobel company was the largest petroleum company in Baku and invigorated the entrepreneurial spirit of local oil producers to similarly begin innovating on their own drilling and transport systems (McKay, Foreign Enterprise in Russia 349). Suddenly, this arid, undeveloped region of the Caucasus had become the second largest petroleum exporter in the world. Though, this was just the beginning. The successful initial investments of these two foreign families into Baku would spark a trend of foreign investment that would continue for the next four decades and change the landscape of the city and its surrounding regions forever.
When Charles Thomas Marvin arrived at the train station in Baku in 1883, he saw a land that he believed had the potential to power the whole world occupied by men with the fervor to fulfill this possibility. Through his account, he aimed to encourage British statesmen and businessmen to invest into the region to strengthen British trade and foster closer relations with Russia. As he states early on, “A splendid market exists at Baku ready to be exploited … and all that is needed is that English men of business should avail themselves of the new opening before Continental rivals appear upon the scene.”(Marvin, 5). This emphasis on competition between nations reveals both Marvin’s bias for his home nation and embodies the entrepreneurial drive of foreign investors in Baku. Marvin was a British writer born in 1854 and raised by his father during his teenage years in St. Petersburg. After returning to England, he spent much of his early career as a copy clerk employed by the Foreign Office for his proficiency in the Russian language. He spent his later career publishing pieces on foreign affairs related to Russia, covering topics such as the Russo-Turkish War and Russo-Indian relations. Following his trip to the Caspian Region in 1883, Marvin spent the final decade of his life writing relentlessly about the potential of British investment into Baku, authoring eight works in seven years on the topic. Within a decade of his passing in 1890, an explosion of British investment into Baku occurred. By 1915, the British controlled over 70% of all petroleum products and over 50% of all foreign investment into Russia (McKay, Pioneers for Profit 35). Marvin was one of the earliest pioneers and strongest advocates for British investment into Russian petroleum – a trend that would come to define both nations over the coming century. His work serves as the earliest comprehensive, first-person account of Baku’s economic potential through the petroleum industry from a foreign perspective, and it provides insight into the early stages of Baku’s growth. By analyzing his work in the following section alongside secondary sources on the later development of Baku, we can understand the impact that foreign investment had on the region and the challenges investors faced in launching oil enterprises.
The Impact of Foreign Investment into Baku
Dependent development refers to a period of intensive economic development financed by foreign capital (Evtuhov, 475). Russia’s industrialization in the late 19th century is a classic example of this form of growth. Between 1880-1900, the Russian State quadrupled its industrial production through an influx of investment from France, Britain, Germany, and Belgium totaling to over a billion roubles (McKay, Pioneers for Profit 32, Table 6). This foreign investment was spurred by the policies of Ministers of Finance Ivan Vyshnegradskii and Sergei Witte who both had aimed to attract foreign enterprises by providing investors more financial stability (McKay, Foreign Enterprise in Russia 348). Baku’s oil industry was no exception to this growth. Baku’s crude oil exports accelerated with increased foreign investment from 1880-1900, growing twenty five times larger over the period. Early foreign investment into Baku came primarily from Northern and Western Europe – Sweden, Germany, and Britain – and were the driving force in Baku’s oil industry in the late 19th century. As in the case of the Nobel brothers, these investors often brought more than just capital. They also brought technical capabilities and a dynamism that had been lacking among domestic oil producers who were content with the scale of their facilities. With a combination of capital resources, technical capabilities, and a relentless determination to grow, foreign enterprises dominated Baku’s oil production. By 1885, the largest oil producers in the city were all foreign enterprises (McKay, Pioneers for Profit 34). By funding research and development to compete with Standard Oil, these new firms began innovating new drilling and refining technologies, railroads, and pipelines that changed the way the industry operated (McKay, Foreign Enterprise in Russia 340). As the size of Baku oil production operations outgrew the available labor in the region, it began attracting tens of thousands of laborers across the Caucasus and Persia. The explosion in Baku’s population resulted in a corresponding development of its public services and local economies to support the growing city. This included more reliable water reserves, train stations, and local businesses. In this section, I will detail the transformation of Baku as influenced by foreign enterprises in terms of the development of oil infrastructure, labor opportunities, and local industry and the consequences this growth had on the city and its people.
- Development of Oil Infrastructure
On his way to Baku, Marvin commented extensively on the poor infrastructure of the Caucasus. He described how the Trans-Caucasian train line from Tiflis to Baku moved at a mere fifteen miles per hour and was “notoriously ill-managed” (Marvin, 145). This line had been extended to Baku just two years prior to Marvin’s trip, funded by a loan from the German Rothschilds (Henry, 113). The line allowed for oil from Baku to be transported to the Black Sea, providing oil producers with access to a significantly larger portion of the domestic petroleum market. Without the Rothschilds providing this investment, many local oil producers would have gone bankrupt, unable to compete with the lower transportation costs of Standard Oil.
Though, as Marvin described, the railroad still faced many problems that discouraged investors such as its speed and mismanagement. Unreliable and expensive transportation of petroleum was still one of the greatest limiting factors for the growth of Baku’s industry. The Trans-Caucasian train line was primarily approved by the Russian Empire to provide more military control over the Caucasus (McKay, Transcaucasian Pipelines 609), so it was not a reliable route to support a global-scale oil industry. As an alternative, the Nobel brothers began building pipelines to ship oil independent of these railroad lines. The Russian state opposed this project because it needed to guarantee revenue for the railroad to recoup its investment, but after years of negotiations, it allowed its construction (Marvin, 343). We will further detail this and subsequent pipeline disputes in the next section on the impact of Russian policies on foreign investment.
Marvin believed supplying these pipelines to be one of the most promising businesses for potential investors in Baku (Marvin, 345). This prediction proved correct. The innovation of the Branobel pipelines would mark a major infrastructure growth phase in the Baku oil industry. During this period, several companies would follow in the footsteps of the Nobel Brothers and build pipeline routes to increase the export of both refined and crude petroleum products. By 1896, there were pipeline projects spanning from Baku to Batumi, allowing oil to be transported directly to the Black Sea. This decoupled the production of petroleum from the unreliable train schedules of Trans-Caucasian train lines, increasing the scale and decreasing cost at which the industry could operate. With this new potential for larger scale production and greater access to markets came collaboration and a consolidation of smaller companies merging into larger ones. This allowed companies to access more capital to invest into infrastructure as well as to reduce local competition and stabilize oil prices. This resulting control of the oil market significantly reduced the risk of oil projects for private investors by preventing unexpected “boom-bust” cycles that characterized the early oil industry and caused numerous bankruptcies (Henry 121). By the end of the 19th century, just a few companies controlled over forty percent of Baku’s oil exports – a trend that would continue through the end of the private oil industry in Baku.
- Growing Labor Force and Ethnic Conflict
Baku’s population had already begun to take off by the time of Marvin’s visit to the Caspian region. At the train station in Batumi, he described seeing thousands of Armenian merchants smuggling goods along the Trans-Caucasian Railroad to sell to Baku’s growing populations (Marvin, 107). The low cost of merchandise in Batumi paired with the wealthy populations of Baku formed a profitable market opportunity for these locals to exploit. But the city offered much more than just an opportunity for trade. Upon arriving in Baku, Marvin described the land as a “thriving city” with more active construction than in any other place in the Russian Empire (Marvin, 155). Not only was this account numerically accurate, but it also underestimated the scale of development that was coming. The news of opportunities for labor in Baku’s foreign oil enterprises quickly spread across the Caucasus through word of mouth and newspaper advertisements. By the early 1880s, Baku was drawing tens of thousands of laborers annually, beginning a period of population growth that rivaled the largest cities in the world.
In the years surrounding Marvin’s stay in Baku from 1879 to 1886, the city’s population expanded from just fifteen thousand to nearly ninety-thousand people. By the turn of the century, this population had once again doubled (Hastings, 54). This growth was driven by the working class population from three demographics: Azeris from Persia, Armenians from the Caucasus, and Russians from several major cities across the Empire. This economic and ethnic diversity provided a strong driver for growth in the city, but it also laid the groundwork for a hotbed of ethnic conflict.
The fastest growing demographic in Baku was the Azeris from northern Persia. They were the underlying hard-labor workforce of Baku that enabled the continued growth of the oil industry. These Azeri migrants were fleeing from Iran to escape the famine and oppressive state control they experienced under the Qajar King. Babi-Azeris were being persecuted and massacred across the region. To them, Baku was a new world where they would have political and religious freedom as well as economic opportunity (Atabaki, 406). Tens of thousands of laborers entered the region both legally and illegally each year. Some accounts described regularly seeing cargo ships filled with hundreds Azeri migrants arriving each day in Baku’s port (Atabaki, 414). Although the Russian Empire attempted to control this migration from their southern border through visas and migration documents, the State loosened restrictions when it became clear that these migrants were critical to sustaining the city’s economic growth. By 1887, Azeri laborers could work without any visa for six-months intervals. And by 1897, a Russian government census revealed that Azeri migrant laborers made up the largest demographic group in Baku. (Hastings, 53).
Despite the opportunities that drew Azeri migrants to Baku, the reality they faced in the city was often bleak. Azeris were relegated to the worst paid and most dangerous unskilled roles on oil fields such as digging and bailing wells. They were treated as disposable labor, and deaths were a daily occurrence. This only became worse as Russian State policies started discriminating against these migrant populations, physically segregating their work and living spaces from the local populations in an attempt to reduce the risk of conflict. Although some local Azeri populations had been able to move to the central district as small business owners, the majority of Azeri migrants were forced to live in the polluted, industrial regions on the fringes of the city (Heyat, 47). By 1903, the Russian state passed a policy stating that oil companies were no longer liable for the deaths of migrant workers, cementing the place of Azeri migrants as second-class citizens (Atabaki, 163). As a result, Azeris were physically, socially, and economically marginalized from the growth of Baku over its early period of growth.
Armenian laborers in Baku came from all across the Caucasus. They formed the wealthier working class and local business class of Baku. Having immigrated to the Caspian region in the wake of the Russo-Persian War in the early 19th century, many Armenians were able to capitalize on the early economic growth of Baku. Some Armenians had been able to purchase their own oil wells during the early state-led auctions in 1872-1876, while others had been able to capitalize as merchants for the growing foreign population. Armenian laborers were also often offered safer and higher-paid, skilled labor roles such as in clerical work and as security forces (Heyat, 49). Additionally, the Russian State often passed policy in favor of the Armenian populations because of their Christian background. These differences in access to opportunity created a vast economic disparity between Armenian and Azeri populations, visible in the different living conditions of the groups. Unlike the Azeris, the Armenians lived in the wealthier, more central districts of the city alongside the Russians and foreign investors with access to restaurants, hotels, and other resources. They also often hired Azeri labor to help with housework. Overall, the Armenians had benefited much more directly by the growth of foreign enterprise in the region than the Azeris.
Russians in the city also profited handsomely from the oil boom. Wealthy Russian investors relocated to Baku to invest into foreign enterprises. Meanwhile, these foreign enterprises preferred hiring Russians for high-level positions to manage the migrant labor force and negotiate with Tsarist officials (McKay, Foreign Enterprise 349).
Azeris and Armenians already held tense relations prior to the Baku oil boom based on religious and cultural differences as well as historical conflicts heightened in the wake of the Russo-Persian Wars. The discrimination against Azeris in hiring practices within foreign oil enterprises and the vast wealth inequality between Azeri and Armenian populations only increased tensions between these groups. As an Azeri from Baku described, “The Tartars[Azeris] abhor the Armenians on religious and economic grounds because they are getting the trade of Baku and the large town into their own hands” (Henry, 154). This frustration from the Azeri population reflected the seemingly hopeless circumstances many of them inhabited. These tensions finally snapped in February of 1905 when Armenian and Azeri civilians entered an armed conflict in the streets of Baku. The feud, known as the Armenian-Tatar Massacre of 1905, lasted several days and involved the indiscriminate killing of men, women, and children on both sides. Each group disputes who began the altercation, but both Azeris and Armenians contributed to the murder of hundreds of civilians. This conflict had a far reaching impact on the oil industry, causing severe damage to the oil wells of many foreign enterprises and causing a temporary crash in oil production (McKay, Transcaucasian Pipelines 622). This tragedy began the start of a loss in trust from foreign investors in Russia and a permanent decrease in oil production.
Although foreign enterprises in Baku were not directly responsible for this conflict, the influx of capital from foreign investors and the discriminatory practices of foreign enterprises in their treatment of Azeri migrants were primary factors in creating an environment of unrest that led to this massacre. This situation slowly began to improve with the economic rise of the Azeri working class. By 1910, Azeri laborers began occupying higher-class, white collar roles in the Baku oil industry and had been able to use their growing influence and large population to win control of the City Council of Baku. This would eventually set the context for the conflict between the Azeris and Bolsheviks after the Russian Revolution of 1917.
- Local Industry and Public Services
Marvin also wrote about the growing hospitality and restaurant industry of Baku. On route to the city, he stayed at a number of recently developed hotels that were marketed towards the growing population of foreign investors in the region including the “Hotel de France” (Marvin, 92), “London Hotel” (Marvin, 124), “Hotel Dominique” and “Hotel D’Europe” (Marvin 155). The hotels and shops in Baku were often owned and operated by either local Azeris or Armenians and located directly on the Caspian sea front. Initially, these businesses catered directly towards the needs of foreign businessmen – primarily upper-class hotels and European department stores. As success from the oil industry expanded wealth across more of Baku’s upper class, these local businesses grew to serve a larger demand. This led to a diversification of the city’s local economy and a stratification of resources between the wealthier and poorer districts of the city. By the turn of the century, Baku’s central district became a center of trade for goods from across the world. The Port of Baku, which had initially developed as a means of shipping petroleum to the East, now became a lively import hub. Products from France, Germany, Turkey, India, and China were all being sold in shopping arcades near the port, attracting customers from across the Caucasus (Heyat, 47). As Marvin predicted, driven by economic success of its booming oil industry and the initial capital of its foreign upper-class, Baku had become the capital of trade on the Caspian Sea, rivaling Tiflis as the center of commerce in the region.
Foreign enterprises also played an important role in developing public infrastructure to serve a larger population in Baku. For example, prior to the development of oil transportation infrastructure, Baku had poor water reserves. Noticing the need to support a growing population to sustain their oil production, the Nobel Brothers began using their newly invented oil tankers to bring water back to the city at a low cost (Marvin, 250). Similarly, the train station and lines of Baku had been significantly improved in the years after Marvin’s trip to meet the needs of Baku’s expanding population allowing greater populations to travel to the city. Without these developments in public infrastructure, the growth of the city’s population would have quickly been checked by its limited resources.
Impact of Russian State on Foreign Investment
Despite the influx of capital from foreign investors into Baku, foreign enterprises still faced significant difficulties in handling the Russian State and operating under the Tsar’s autocratic regime. Marvin acknowledged the hesitancy of British investors from entering Russia given its untrustworthy reputation among the British. Rather than attempting to allay these fears – which would have fallen on deaf ears given the longstanding history of economic insecurity in Russia- he argued that Baku’s growth would be too profitable to not take a risk on the region (Marvin, 345). Although the policies of the Minister of Finance Sergei Witte helped attract foreign capital, it didn’t prevent the State from implementing ruthless tax policies, short-sighted trade restrictions, and long approval periods for the development of oil infrastructure. Despite these policies damaging investor confidence, they did not stop many foreign investors in pursuit of Baku’s resources. As mentioned earlier, to mitigate these challenges, foreign businesses often hired Russian managers to negotiate with Tsarist officials and sought Russian investors to invest into their enterprises (McKay, Foreign Enterprise 348). This often was not sufficient, and these foreign enterprises often needed to simply accept these challenges as a cost of operating in Russia. By 1914, these unfavorable political conditions combined with labor strikes led to British investors gradually pulling out of Baku and looking elsewhere for reliable sources of petroleum.
- The Transcaucasian Pipeline
The Transcaucasian pipeline offers a great case study into the impact of slow and vacillating Russian policies on Baku’s oil industry. The Transcaucasian pipeline was first suggested in 1883 to carry crude oil directly from Baku to Batumi on the Black Sea. This line would allow petroleum resources to be exported directly to Europe and northern Russia without relying on the Transcaucasian railroad, increasing the capacity for foreign exports and improving competition among oil producers. However, this line could not be built without the approval of the Russian State. The State’s divided opinions on foreign investment and its slow-moving, bureaucratic leadership led to constant delays on the approval for the line’s construction. After three separate reviews of the project, two investment periods, and a brief attempt at nationalizing all existing, private petroleum transportation infrastructure, the Transcaucasian pipeline was finally approved by the Tsarist State in 1896. The line began exporting oil in 1903 and quickly became an economic failure because of the crash of Baku’s oil industry shortly after in 1905. The delays in this line’s approval heavily impaired the growth of Baku’s petroleum exports and severely stifled development in the region. It also impacted the willingness of investors to operate within these conditions, leading to many permanently exiting this market. Similar instances occurred in regards to tax policies on kerosene and limits on foreign exports (McKay, Transcaucasian Pipelines, 609).
- Slowing Foreign Investment
By 1914, much foreign investment into Baku began looking elsewhere for new potential oil reserves. Many saw the oil crash that followed the Revolution of 1905 as a sign of deep instability within the Russian State. In a piece on the global oil market in 1913, The British Times (The British Times, The Oil Outlook 1913) wrote about how Russian wells had been falling off in production since these strikes. Signs of another wave of political and social unrest in the region grew as strikes in the summer of 1913 and 1914 once again stalled oil production. This sparked doubt on the future of Baku amongst investors. By 1917, mentions of Baku within The British Journal of Petroleum were rare. Instead, investors were looking to Persia and India as new destinations for oil investments. Too large to move, existing foreign oil enterprises in the region continued to operate and even grow through the fall of the Tsarist State until the nationalization of the oil industry by the Soviets in the early 1920s. It is evident that, in spite of Baku’s incredible growth in the late 1800s, the region likely never experienced its full developmental potential under the Tsar’s rule. The policies of the Russian State and the unstable and politically charged environment it caused stifled foreign investment in the region and impeded the city’s growth.
Conclusion
Foreign enterprises played an important role in the development of Baku’s economy over the late 19th and early 20th century by developing its oil and transportation infrastructure, attracting a strong labor force, and generating the demand and capital needed to bolster its local economy. These investments set the groundwork for Baku’s continued success through the 20th century as a dominant oil producer in the global economy and allowed the city to become one of the largest centers of trade in the Caucasus. Though, they also contributed to ethnic conflicts by not considering the impact of their discriminatory hiring and management practices on marginalizing groups and heightening existing tensions. By the early 20th century, poor policies and political unrest from the Russian State discouraged investors from continuing to operate in the region. This led to a gradual decline in Baku’s oil exports, ultimately stunting its growth. The story of Baku provides important lessons into the multi-fold impact that foreign investments can have on bolstering a region’s economy, and conversely, the influence poor governance has on suppressing such development. This is relevant today as we see foreign investments grow in resource rich countries in Africa, and the complex interactions that occur between foreign enterprises, local populations, and governments. Understanding the successes and failure points of Baku’s development could help maximize the growth of these nations’ economies, while minimizing the effect on existing conflicts. Future work should be conducted into understanding the exact mechanisms that allowed for the rise of Azeris in Russia between the 1905 massacres and their 1908 victory of Baku’s city government election. This could provide insight into how systemic inequalities can be overcome by local populations in high growth regions. I’ve truly enjoyed studying this topic and hope I can continue at some point in the future.
Works Cited:
Primary sources:
Marvin, Charles Thomas. The Region of the Eternal Fire; an Account of a Journey to the Petroleum Region of the Caspian in 1883 . London : W.H. Allen & Co., 1891. Internet Archive, http://archive.org/details/regionofeternalf00marv.
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