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Azerbaijan faces oil industry strike

By JOHN C.K. DALY, UPI International Correspondent

WASHINGTON, June 20 (UPI) -- The philosopher George Santayana famously observed that those who forget the past are condemned to repeat it. The aphorism should serve as a stark warning to the bureaucrats of the former Soviet Union, where rising labor unrest in 1917 overthrew a 300-year-old monarchy and ushered in 74 years of the most brutal social engineering the world has ever seen. Unfortunately, some businessmen in Azerbaijan seem to suffer from historical amnesia.

On June 12, 1,000 workers employed by the Caspian Shipyard Co. Ltd. in Azerbaijan's capital, Baku, went on strike over poor wages and discrimination against Azeri laborers. The workers ceased their action the next day after giving CSC management a week to address their grievances before returning to industrial action. The action has ominous historical precedents.

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On Jan. 22, 1905, Cossacks attacked a mass demonstration of workers in Baku, during which more than 200 were killed. The incident ignited the 1905 Russian Revolution, during which riots, peasant uprisings and ethnic massacres convulsed the Russian Empire. One of the agitators in Baku at the time was a young Georgian, Iosef Vissarionovich Dzhugashvili, who later generations would know as Stalin. Vladimir Lenin called the 1905 Revolution a "dress rehearsal" for 1917.

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After the first oil well was drilled in Baku's Bibi-Heybat suburb in 1846, the city became the world's first oil "boom town," and after large-scale oil development started in 1872, Baku became known as the "Black City." By the beginning of the 20th century, nearly half the world's oil production was centered in Baku, whose petrochemical wealth drew investors from as far afield as Britain, America, Belgium, Germany, Switzerland, France and Sweden. The immense wealth, however, largely eluded the burgeoning proletariat, whose frustration eventually exploded into revolution.

CSC was established in 1997 as a subsidiary of Singapore's Keppel FELS Ltd. CSC's yard built Azerbaijan's first Western-specification jack-up rig, the Gurtulush. According to its Web site, "Keppel FELS Ltd. is the world leader in the rig-building industry, having built every harsh environment jack-up rig delivered since 1986." Keppel FELS Ltd. now owns 75 percent of CSC, Azerbaijan's Gosneftekompanii 20 percent and Russia's Lukoil the remaining 5 percent. CSC repairs and upgrades oil industry equipment, vessels and floating rigs.

The CSC workers' grievances sound eerily like those of their ancestors, and the action has ominous implications for Western oil operations in Azerbaijan.

The chairman of the Committee for the Protection of Oil Industry Workers' Rights, Mirvari Gakhramanly, succinctly elaborated the reasons for the industrial action in an interview in Baku's Ekho newspaper, telling journalists, "The basic reason for the strike is the low level of wages, the salary of the company's essential workers is only $140, at best $400; moreover, workers can obtain this 'high' salary only after working in the company for eight years."

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Gakhramanly gave additional reasons for the industrial stoppage, saying, "Another reason for the strike is discrimination, the violation of the rights of the workers of Azeri nationality. Those striking require that at least the maximum wages of Azeri workers would be raised to the level of the minimum wages paid to British, Indian, Singaporean and Malaysian workers, who currently receive wages 10 to 15 times greater than Azeris." The CSC's roughly 300 foreign workers are currently paid a minimum of $1,200 per month.

Another grievance of the workers is they are required to work longer hours than mandated in Item 2 of Article 89 of the Labor Code of the Azerbaijan Republic, which stipulates a workday not exceeding eight hours.

In a further demand redolent with irony, one of the workers' major reasons for seeking salary increases is they are currently paid in dollars, whose declining value is contributing to rising oil prices, and they consequently want to be paid in the local currency.

The strikers have won broad labor support; on June 12 Dzhakhangir Aliyev, chairman of the republic committee of the trade unions of the workers of the petroleum and natural gas industry of Azerbaijan, said the CSC must improve workers' social benefits compensation, provide equitable labor contracts, wage increases and protect workers' rights.

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Gakhramanly is confident of both the rightness of their action and their eventual success, noting that since the beginning of the year Azeri workers in similar conditions have carried out work stoppages at six other companies working in Azerbaijan, including China's Great Wall Drilling Co. and Scotland's Rigblast, which in one case resulted in workers receiving 30 percent salary increases and medical insurance.

Labor unrest in Azerbaijan over inequitable working conditions dates back nearly three years. On Nov. 29, 2005, more than 1,000 local workers struck against American oil services company McDermott to protest low wages, discrimination and poor working conditions in the first serious protest action by local employees of foreign companies operating in Azerbaijan. The action ended the next day after McDermott agreed to raise wages and provide health insurance.

So far CSC management is hanging tough; according to a striker who wished to remain anonymous, on June 19 the company offered to raise the wages of Azeri workers by 6 percent, adding, "We plan to go on a sit-down strike if our demands are not fulfilled within a week." Azerbaijan has presidential elections scheduled for October; if CSC management continue to pursue the "hang tough" route, then the capital may face a long, hot summer, and how the Aliyev administration handles possible unrest will occur in the full glare of global publicity.

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