Multi-Billion-Dollar Resort Planned For Defense Ministry’s Caspian Sea Island
$6-billion project to build a “carbon-neutral” luxury resort on a Caspian Sea island owned by Azerbaijan’s Ministry of Defense is focusing attention on the relationship between the government and the country’s real estate market.
Located nine miles off the coast of Baku, Beyuk Zira Island, known to Azerbaijanis as Nargin, is a rock-strewn clump of territory that two former defense ministers assert has strategic importance for the Azerbaijani capital. The ministry, however, claims to have no knowledge of the planned resort.
The company financing the project, AvroCityHolding, is cloaked in obscurity. In a February 3 interview with the Turan news agency, AvroCityHolding Chief Executive Officer Oguz Erkan, a Turkish citizen, would only state that his firm is Azerbaijani and had itself proposed the project to the Azerbaijani government. Despite multiple attempts, Erkan could not be reached for comment.
The company has struck a deal with the Copenhagen-based architectural firm Bjarke Ingels Group, known by the acronym BIG, to lay out 300 villas, a golf course, an undefined number of hotels and entertainment facilities, and a beach on the one-square-kilometer island. The resort will feature seven glass and metal structures modeled after the seven peaks of Azerbaijan’s northern mountain range on the border with Georgia. An assortment of solar heat panels, photovoltaic cells, wastewater and rainwater collection systems and an offshore wind farm will eliminate all carbon emissions on “Zira Zero Island,” the BIG website affirms.
How AvroCityHolding managed to secure permission from the Defense Ministry to use the island is unknown. Rahim Gaziyev, who served as defense minister from 1992 to 1993, believes that Nargin holds a strategic location for defending the Azerbaijani capital against a sea or air attack. “[T]he government should not allow the construction of a resort there,” Gaziyev told Radio Free Europe/Radio Liberty’s Azeri-language service. Gaziyev’s successor, Dadash Rzayev, has also confirmed the island’s strategic value for Baku’s defenses.
While the defense ministry states that a military unit is still stationed on the island, a EurasiaNet reporter saw no evidence of such a presence on a February 2009 trip to Nargin.
Nonetheless, the ministry appears to have had Nargin in its sights fairly recently. In November 2008, the Azerbaijani State Oil Company (SOCAR) reported that its divisions had built new water and gas pipelines to Nargin from Baku at the Defense Ministry’s request.
Contacted by EurasiaNet to clarify the Defense Ministry’s relationship to the resort project, ministry spokesperson Eldar Sabiroglu stated that “Beyuk Zira is a strategic place and the ministry does not issue any comments to the media concerning its use.”
To many Azerbaijanis, the prospect of such a resort on Nargin Island seems a touch bizarre. Fog cloaks this windswept, treeless island most of the time. A ferry or helicopter is the sole means of transport. Aside from stray dogs, the island is empty, cluttered with the remains of about 100 ruined military buildings, some bearing Russian-language graffiti and Soviet work notices. A solar-battery-powered lighthouse still functions to guide ships into Baku’s bay. Off the coast stands a cemetery of derelict ships.
Nargin is best known for its past. Azerbaijani historians say that thousands of victims of the Stalin terror of the 1920s and 1930s were executed here. The island is believed to contain multiple mass graves, although no investigation has yet been carried out.
Some descendants of terror victims believe that plans to build a resort on such a site are wrong. “Excavations are needed on Nargin so that the public could learn the scope of the Stalin repressions,” said journalist Farid Gahramanov, whose grandfather perished during the terror.
AvroCityHolding CEO Erkan told Turan that he is aware of 1930s-era executions, but said that the issue of erecting a memorial to the victims on the island “will be considered later.”
Meanwhile, other considerations — namely, tourism — are dominating discussions. The Nargin project fits with Azerbaijan’s aim to market itself as a high-end tourism destination, commented Faig Gurbatov, the national coordinator of the United Nations Development Programme’s Azerbaijan Tourism Development project.
“There are mostly expensive hotels and resorts here, and I believe it is the right policy,” said Gurbatov. “It is better to have fewer tourists, but rich ones.”
Recouping the resort’s projected $6 billion construction cost will depend on how well AvroCityHolding promotes the resort abroad, he added. Earlier this month, the company presented the project to potential foreign investors in Cannes. Details on what interest, if any, was expressed among foreign investors or travel companies were not disclosed.
Nor is it clear what promotion the government will lend. Azerbaijani Minister of Culture and Tourism Abulfaz Garayev told a February 26 press conference that he first learned about the Nargin project from the media. The ministry, he said, has plans to promote tourism on the island, but he did not elaborate.
One former head of Baku’s construction department sees other problems.
Nargin “is located in the Caspian, just a few kilometers from major oil rigs, which are not an environmentally clean area,” said Emil Akhundov. “It will be very difficult to attract foreign tourists to Nargin.”
Attracting foreign investors amidst the global financial crisis could also prove a challenge, commented economist Natik Jafarly, editor of the CEO.az web portal. The $6 billion price tag means the project would cost roughly $6,000 per square meter, he calculated. “It is more expensive than even most luxury resorts in Dubai,” said Jafarly.
The proposed carbon-neural resort, though, is not the first such scheme for Nargin. After Azerbaijan declared its independence in 1991 and Soviet troops left, proposals were made to set up casinos on Nargin or a Disneyland-style amusement park. Nothing ever came of the ideas.
Editor’s Note: Shahin Abbasov is a freelance correspondent based in Baku. He is also a board member of the Open Society Institute-Azerbaijan.
Copyright (c) 2003 Open Society Institute. Reprinted with the permission of the Open Society Institute, 400 West 59th Street, New York, NY 10019 USA, wwwEurasiaNet.org. or www.soros.org.