Baku’s splurge on the musical extravaganza dwarfs that of past hosts – and might carry a cost in clean water and pension payments.by Shahla Sultanova 20 April 2012
BAKU | Ask Hikmet Hasanov to name the biggest problem his family faces, and he will talk about water. Every day, like their neighbors, they must fetch a new supply from an artesian well, one of the few sources of water in their village of Kemerli, in the far northwest corner of Azerbaijan.
"The water is not drinkable. It's salty," Hasanov said. "We carry that salty water in containers for everyday use, mainly for cleaning. It's hard. While the men are working, women and children have to walk to the well and carry big containers back. We buy containers of drinking water every day. It costs a lot of money.”
Water supply is a problem across Azerbaijan, according to a 2007 World Bank report, which said much of the country’s distribution system is more than 50 years old and reaching the end of its usability. “The subsequent state of many water pipe networks and the associated problems such as intermittent supplies and heavy leakages affect the quality and reliability of services and pose risks to public health,” the report said.
Last June, Azerbaijan’s government took action on the issue, earmarking 252 million manats ($320 million) to renovate water and sanitation systems in 18 of the country’s 64 administrative regions. A few months later, however, a new cabinet order – No. 331s – diverted more than a fifth of the water allocation to construction of Crystal Hall in Baku, which next month will host the 57th Eurovision Song Contest.
“Instead of providing people with water, the government reduces water-supply expenditures and uses them for public relations,” said Natig Jafarly, an economist with the opposition Republicanist Alternative Movement (REAL) who has worked on World Bank water projects. “It has access to many resources. Why [take] money from water-supply projects? There are many regions in the country that suffer from lack of water in summertime. It’s a danger to health.”
Water isn’t the only resource seemingly being drained to pay for the fruits of Azerbaijani singing duo Eldar & Nigar’s 2011 Eurovision victory, which brought the 2012 contest to Baku. Cabinet order No. 258s reduced by $63.6 million a fund for increasing salaries and pensions and put that money into Crystal Hall. Orders 202s and 233s shifted $108 million from the country’s reserve fund and other projects for apparently Eurovision-related expenses.
A TOL review of spending orders by the president and cabinet ministers shows that just in terms of money explicitly allocated for Eurovision, Azerbaijan’s hosting of the hugely popular song contest will be the most expensive in the event’s history. Direct orders – those that specifically mention Eurovision – amount to 59.5 million manats ($75.7 million): $63.6 million for organization of the event; $10.8 million to state television for financial guarantees to the European Broadcasting Union, which runs Eurovision; and $1.3 million for travel by the national performers in the contest.
The 2009 Eurovision in Moscow, reckoned by Russian media at the time to have been the most expensive edition of the contest, cost between $40 million and $44 million. The 2010 edition in Oslo had a $37 million price tag, approximately matching the highest reported estimate for last year’s event in Dusseldorf, Germany.
But the true cost of Baku’s Eurovision could actually be several times higher than the official estimate. Several government spending orders worth hundreds of millions of dollars appear to indirectly support the event’s organization – allocating money, for example, for construction of an athletic and concert complex; beautification of Flag Square, where Crystal Hall was built; renovation of Baku’s Tofig Bahramov Stadium, a potential backup Eurovision site if the new venue was not finished in time; and purchasing transportation stock for an international event.
Samaya Mammadova, spokeswoman for the Ministry of Youth and Sports, confirmed that the athletic/concert complex mentioned in the orders is Crystal Hall. The project employed some 500 people, according to the website of its builder, German firm Alpine Bau Deutschland AG, and was completed on 16 March.
● renovations and lighting for Flag Square: $120.7 million (orders 24s, 156);
● a new, 2-kilometer section of road linking the square and downtown Baku: $108 million (24s, 156);
● relocation of residential and other facilities to make way for the road: $15.6 million (24s);
● purchase of “motor vehicles required for organization of international event”: $34.3 million (202s).
All told, TOL’s examination of 11 spending orders indicates a total cost to the state for Eurovision and related items of 566.6 million manats ($721 million), of which 507.1 million manats ($645 million) is in indirect expenses. That does not include order No. 370s, which allocated 50 million manats for organization of international events, four of which are specified (among them Eurovision, which is by far the largest of the cited events).
Other cost estimates differ. The highest figure cited in Azerbaijani media is 400 million manats. Gubad Ibadoglu, head of the Economic Research Center think tank in Baku, calculates the cost at around 500 million manats but says with all so-called indirect expenditures factored in, it could end up close to 1 billion.
“An unbelievable amount of money is being spent to host the contest,” said Ibadoglu, a one-time opposition candidate for parliament. “It’s a record in the history of Eurovision. It’s too high.”
Nazim Mammadov, an economist and former member of parliament with the ruling New Azerbaijan Party, said all that expense should not be laid to Eurovision. Most of the projects cited in accounts of the event’s cost were in government plans before Azerbaijan won the 2011 song contest, he said.
“Those numbers are exaggerated in the media, because they are not explained clearly. That is why the media can easily link them to Eurovision,” Mammadov said. He blames cabinet ministers for not more clearly explaining the projects and costs.
Zohrab Ismayil, head of the Public Association for Assistance to Free Economy, dismisses that argument.
“Crystal Hall was built to host Eurovision. Flag Square is being renovated and work is going on 24 hours a day because Crystal Hall is located there. [The extended] Baku-Alat road is taking people from downtown to the hall. Tofig Bahramov Stadium is ‘plan B’ as required by the European Broadcasting Union. The minister of sport told local media about 50 buses that they purchased for the song contest,” Ismayil said.
“The expenditures should not be categorized as direct or indirect. They are all directly related to the organization of Eurovision.”
Mehish Ahmedov, head of the economic regulation department at the State Economic University and a member of the ruling party, does not dispute that the expenditures are for Eurovision. But he does defend them as a valuable investment.
“It is very important for Azerbaijan to make itself recognized in the world,” he said. “There is no better opportunity than Eurovision to show the world that we are secular, not a radical Islamic country. We should demonstrate to the world that we have a developed economy, we have good infrastructure. The world should see that we are a peaceful nation, not aggressive as Armenia describes us.
“Constructing a small bridge can cost several hundred million manats,” Ahmedov continued. “This is a bridge to the future. We should spend as much money as necessary to make it good.”