Monday, January 7, 2008

Window on Eurasia: ‘Not By Oil Alone’— Azerbaijan’s Wine Industry Bounces Back

Paul Goble

Baku, January 7 – Azerbaijan’s wine industry, nearly destroyed by Mikhail Gorbachev’s anti-alcohol campaign, the Armenian occupation of 20 percent of that country in the 1980s, and the political and economic disorders of the early 1990s, is rapidly recovering both in terms of output and quality.
And while there is little chance that Azerbaijani wine sales will be more important than oil exports as a source of income – and believe it or not, wine earned Baku more than oil as recently as 35 years ago – viticulture there is already playing an increasingly important economic and social role.
In a delightfully upbeat assessment published last week under the title “Not By Oil Alone,” Ismail Agakishiyev, a Moscow State University specialist on the post-Soviet states, traces the complicated rise, fall and recovery of viticulture in Azerbaijan and the production of wine and cognac there (
Grapes have been cultivated and wines produced in what is now Azerbaijan for millennia, as classical writers like Herodotus and Strabo testify and more recent archeological investigations confirm, Agakishiyev notes, a reflection of the more than 450 different categories of wild grape found there.
But the modern period of wine production has its origins in the arrival of Germans from Württemberg who were settled in the region by tsar Aleksandr I in 1817-18 as part of St. Petersburg’s effort to tighten its grip on what was then one of its southern provinces.
In the course of the 19th century, German firms there took the lead in developing both wine and cognac, shipping both north to Russian markets. Following the Bolshevik revolution, these firms were nationalized and continued to produce some of the highest quality wines and cognacs in the Soviet Union.
Azerbaijani wine and cognac production peaked at the end of the 1970s and beginning of the 1980s, the Moscow State University scholar says, with more than 1.5 million tons of grapes harvested annually and more than 100 million rubles earned from wine production alone.
But these accomplished were nearly wiped out in the late 1980s and early 1990s by three events. First, Soviet leader Mikhail Gorbachev’s ill-conceived and badly carried out anti-alcohol campaign led to the destruction of more than 130,000 hectares of vineyards as well as the closure of 192 processing plants.
Those actions entailed an estimated direct cost of more than 630 million rubles but more seriously they ravaged rural Azerbaijan by throwing thousands of people out of their traditional line of work and leaving them with little hope for employment save to flee to the already overburdened cities.
Second, Gorbachev’s anti-alcohol campaign by throwing thousands of ethnic Armenians in Karabakh out of work helped spark the conflict over that region and led ultimately to the Armenian occupation of nearly 20 percent of Azerbaijan’s territory and the additional loss to Baku of access to 43,000 hectares of wine.
And third, the economic dislocations of the end of the Soviet Union also played a role, disrupting traditional relationships between producers and consumers and leading to the collapse of many firms, including those involved in all stages of wine and cognac production, and leading to a further retrenchment in this sector.
As a result, while there had been 276,000 hectares of vineyards in 1985, by the early 1990s, there were only 20,000 hectares still being cultivated. The rest had been destroyed either at Moscow’s order, by military conflict, or by the departure of those who had long taken care of them.
There the situation might have remained, Agakishiyev writes, had it not been for Azerbaijan’s decision in 2001 to use oil revenues to begin restoring vineyards at the rate of 500 to 800 hectares a year. So far, that project, decreed by then President Heydar Aliyev, has led to the renewed cultivation of 8,000 hectares.
Azerbaijan has been assisted in this process both by the International Institute of Genetic Resources which is interested in maintaining the genetic diversity of grapes and other crops and by foreign firms, both from the Russian Federation and Western Europe, who believe there is profit to be made.
According to the Moscow scholar, the latter have every reason for such beliefs. After a brief bout of problems with fraudulent production in the 1990s, Baku has reestablished effective quality control and its wines have won 27 prizes at international competitions since 1991.
But as important as these profits are in powering the recovery of Azerbaijan’s wine industry, there is another and potentially far more important consequence of that development. It can help rural Azerbaijan recover and that by itself will help the country as a whole escape the time of troubles the last 20 years have been.

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