Oil delivery from Baku to Soviet Russia grew from 25,000 tons in February,
to 94,000 tons in April to 492,00 tons in July.(5)
The export to Russia with no compensation of such a tremendous amount of
oil, constituting a significant portion of the national wealth of the region's
people was clearly against Azerbaijan's interests. The country was in a
deep economic crisis and could not use its own oil to make its way out
of the situation. From this standpoint, the Bolshevik nationalization act
which was adopted without the consent and approval of Azerbaijan
National Government was unlawful; also it restricted the rights of
the Azerbaijani people. This was one of the reasons why the Azerbaijani
government located in Gyanja was eager to get rid of the Bolshevik
regime in Baku.
After a long battle for the liberation of Baku in September, 1918 the
national government. led by Prime-minister Fatali-khan Khoyski moved
to the capital. The legitimate Azerbaijani government established its power,
ending the 4- month long diarchy. Peaceful life started to take shape
in Baku. However, the government which inherited many difficulties
from the communists was continuously facing more and more problems
due to both internal and external factors; at the same time it was trying
to carry out economic and social reforms.
One of those factors was the presence of Turkish military authorities
in Azerbaijan. During World War I the Turkish economy was in a poor
shape and in a great need of oil. A special agreement between Azerbaijan
and Turkey obligated Azerbaijan to provide oil, cotton, wool, and other
products at a cost of 1 million liras to Turkey (6). The Turkish
command took measures for the refurbishment of the Baku-Batumi kerosene
pipeline to transport the oil products. Simultaneously, the trains
with oil tanks for Turkey and Germany started moving: from Baku through
Batumi at a rate at least 23 tanks per day. (7) At that time the
tankers were leaving Batumi for Istanbul one after another.(8)
Even under those conditions Azerbaijan's government was using maximum
effort to pursue its own independent policy. The denationalization
of the oil industry was being prepared for implementation.
On October 6, 1918 the Council of Ministers issued a resolution on
the denationalization of the oil industry. On October 7, 1918 a governmental
decree was published returning the oil fields and plants to oil companies,
and ships of Caspian Trade Fleet to their former owners: this constituted
a rehabilitation of private property by the government (9). The
eight-hour work day, collective agreements and labor control over the production
was abolished. On December 12, 1918, during a reception for a delegation
of oil producers the Minister of Trade and Industry Jevanshir Behbudov
stated that "the attention of the government will be aimed
at having the workers do their job without interfering in management
of enterprises".(10)
In spite of the steps taken by the government, the situation
in Azerbaijan became more complicated due to international circumstances,
especially with the defeat of Germany and Turkey in World War I.
On October 30, 1918 Turkey signed an armistice with the Entente in
Mudros. In accordance with the conditions of that agreement, British
troops were deployed in Azerbaijan. However, General Thomson - Commander-in-Chief
of British troops - did not recognize Azerbaijan's government as
legitimate, regarding it as pro-Turkish. Martial law was introduced
until the moment "when civil power becomes strong enough to absolve
the troops from responsibility of providing the social order." (11)
Effective November 29, 1918 the trade ships of Caspian Fleet were turned
over to the disposal of the British command. Besides Baku, the British
occupied Batumi in accordance with Mudros agreement. They had a very
important strategic bridgehead from the Black to the Caspian Sea
in hand. They were intending to take control over the oil industry by founding
a British Oil Administration. In December 1918, the chairman of British
Bibi-Eybat oil company Herbert Allen stated in London that: "The
Russian oil industry extensively financed and properly organized by British
management may become a valuable acquisition for the British Empire."(12)
Within nine months (from December 1918 to August 1919) the British
exported up to 30 million poods of oil at cost of 113.5 million rubles
from Baku. (13) All oil products exported by them were
not subject to any excise deductions and were cleared without any
delays. Regardless of such an attitude on the British command's attitude
and the difficulties it created for Azerbaijan's government, Baku did overcome
them and thereby proved its democratic orientation by achievements in the
economy, such as denationalization etc., and in politics particularly by
establishing a parliamentary republic. For that reason the British command
recognized the new government headed by Khoyski as the sole legitimate
one on December 26, 1918. (14)
However, the new government did not manage to overcome the numerous
difficulties and deep economic crisis which inescapably led to severe
governmental emergency. After long political debates Nasib bay Ussubayov
of Musavat party, former Minister of Education and Minister of Finance,
was assigned to form a new government. One of the first priorities
of this new government was to review its economic orientation with regard
to traditional economic partners of Azerbaijan. The subject of discussion
was Soviet Russia which was in a bad need of oil and constituted
a main sales market for Azerbaijani oil.
The impossibility of exporting the tremendous reserves of oil products
which were accumulating in the republic caused a decline in oil production.
This decline in oil production in its turn led to a shrinkage of
operations in the oilfields and resulted in the dismissal of workers, a
huge increase in prices, rapid inflation of paper money, along with
intensification of strike movement in Baku. Most strikes occurred in 1919
- total number of striking workers was 6,189 (1918 - 849 workers,
1920-3,263).(15) The majority of strikes were of economic nature.
The Prime-Minister at the parliamentary session on April 14, 1919,
in analyzing the difficult economic situation, said that "all vital difficulties
we are facing are a result of well-known anomalous conditions in
our trade. The wealth and prosperity of our country is oil. Meanwhile,
connections with Russia, the main consumer of our oil, are interrupted.
This factor may put us in very difficult conditions." (16)
In connection with this, N. Ussubayov started establishing economic connections
with Soviet Russia under the condition that it not interfere with the internal
affairs of Azerbaijan. However, it never became a reality, as it encountered
strong resistance by Britain which was implementing a military-economic
blockade against the RSFSR, though eventually the British presence in Baku
started to weaken. After 9 months of presence in Baku, on August 29,1919
the British troops began a massive pull out.
This, however, did not improve internal political conditions. On September
13, 1919 N. Ussubayov resigned from his position as prime-minister,
aggravating the governmental crisis. Encouraged by that, Bolshevik agitation
became more visible, even though they still lacked any internal support.
The threat from Soviet Russia significantly increased. A new government
was never formed, and economic reforms were not a high priority for the
Azerbaijani parliament which continued its work on the eve of the Russian
aggression. On the night of 27-28 April 1920, the Russian 11th army crossed
the Azerbaijani order and started its march into Azerbaijan, resulting
in the cessation of democratic development in Azerbaijan for as long as
70 years.