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. Last Updated: 07/27/2016

THE GREAT GAME: Season Can't Shake Baku's Depression

There was a string of Christmas parties last week in Baku before everyone sloped off on vacation. The embassies and hotels were decked out with Christmas trees and served up very un-Azeri fare such as mulled wine and mince pies.

The British Embassy served the best eats but the Soros Foundation surpassed everyone with the quality of its wine. It was a good time to catch up with everyone among all the good cheer.

The trouble was there was not much to cheer about in Baku other than Christmas itself. There was one very loud American who seemed to be at every party. He had just arrived and was thoroughly over-excited about the boom town Baku is supposed to be. But he looked about two years out-of- date.

Everyone else was pretty muted. The low oil price is taking its toll and companies, calculating it will stay low for some time, are contracting sharply.

The flagship consortium, Azerbaijan International Operating Co., has slashed its budget for next year by half and is laying off staff in preparation for lean times. All its executives have been ordered to fly economy class, among other things.

There are graphs being passed around in the offices of Western businessmen that show if the oil price remains as low as it is, there will be not much money to be made out of the AIOC oil fields over their 30-year life.

The BP-Amoco merger has also caused deep changes and senior executives are being recalled, in some cases to be offered early retirement. I don't feel so sorry for them since they are bound to get very handsome handshakes.

It is bad news, though, for the local employees. Two oil consortiums, CIPCO and NAOC, are by all accounts going to pull out, having failed to strike oil in anything like commercial volumes. An estimated 1,000 Azeris are going to lose their jobs as these oil consortiums and other companies close down, economists reckon.

The informal work force will also be affected. Cleaners, drivers and local landlords, just starting to get used to good money, are now facing the chop. Baku's famously pushy landlords are suddenly having to drop their rents. Suddenly it is a buyer's market.

I for one pulled out of my apartment, tired of the hassling for more rent. The aggravation seemed a waste of time when other people offered a warmer welcome. Foreign investors are even more daunted by the general business climate.

Corruption is rampant, there is no end to "extras" that crop up and add unexpectedly to costs and the usual tax and legislative burdens and lack of transparency serve as perpetual deterrents.

Many Azeris, especially those in the government, have not yet cottoned on to the downturn. The government is feeling the pinch from low oil prices, of course, and is casting around to plug the hole in its budget. Yet there is no conception that the oil bonanza could actually fizzle out.

The government is still presuming that Azerbaijan's renown as an resource-rich country with a long history of oil production is enough to attract investors. As one ambassador said: "They are overrating the brand name Azerbaijan."

The next few months are going to be rather miserable for everyone.

Businessmen hope it will serve as the necessary wake-up call to the leadership. But I don't think they are listening.