🇦🇿 Azerbaijan

Azerbaijan is a Caspian Sea nation of 10.2 million that straddles Europe and Asia, with a $78 billion GDP built overwhelmingly on oil and gas. Baku, the capital, is a jarring mix of medieval old town (UNESCO-listed) and futuristic skyscrapers like the Flame Towers. The country's been flush with petrodollars since the Baku-Tbilisi-Ceyhan pipeline opened in 2006. Azerbaijan won the 2020 Nagorno-Karabakh war against Armenia, reclaiming territory it had lost in the 1990s. It hosted COP29 in 2024 — an ironic choice given its fossil fuel dependence.

Oil and gas account for about 90% of exports and 50% of government revenue. The State Oil Fund (SOFAZ) holds over $45 billion in assets. Turkey, Italy, and Israel are major energy customers. Non-oil GDP growth has been a government priority, with agriculture, tourism, and IT targeted for expansion, but progress has been slow — hydrocarbons still dominate.

Azerbaijan is called the "Land of Fire" — natural gas seeping through the ground creates flames that have burned continuously for thousands of years at Yanar Dag. The country also invented the first secular democratic republic in the Muslim world in 1918, granting women the right to vote before the US and UK did.

Azerbaijan's military victory and energy leverage have boosted its regional standing, but the oil-dependent model has an expiration date. The next decade will reveal whether the diversification talk was real or just talk.