By Will Stewart

Cleopatra, queen of ancient Egypt, bathed in asses’ milk for the good of her complexion, but here in Baku, capital of Azerbaijan, an even more surprising treatment is on offer. Disrobing from their Gucci or Oscar de la Renta outfits, the ladies who lunch lie naked in baths of crude oil, believing, as did Marco Polo, that the warming effects of 40C crude cure skin diseases, rheumatism, arthritis and even ‘nerves’.

Medical science says that, beyond ten minutes, the effects are more likely to be carcinogenic.

Oil is everywhere in Baku, even the spas. It is in the sharp, acrid taste of the wind blowing in from the Caspian and in the army of derricks marching far out to sea. Solidified into glass and concrete, it is changing everything in this ancient town once known for dusty streets and traditional carpets, creating instead a city of staggering ostentation.

Baku is openly vying to become the Dubai of the Silk Road. Earlier this year, it played host to the Eurovision final, staged in the new Crystal Hall with its swirling lasers.

By 2019, Baku will boast the tallest building on the planet (or so it is claimed): the £1.25 billion Azerbaijan Tower, soaring 3,445ft and 189 floors, or more than one kilometre, into the sky. It will be 30 per cent higher than Dubai’s Burj Khalifa tower, the current record holder. And this in a region prone  to earthquakes

As night falls, the city becomes a noisy, pulsating LED show, competing with the well-head flares in the darkness beyond.

No one knows quite how much of Azerbaijan’s extraordinary oil wealth has made its way into  the bank accounts of 50-year-old President Ilham Aliyev and his family, or their retinue of friends and hangers-on. But it is safe to say they are all unimaginably rich. According to independent research, SOCAR, the state oil and gas company may have brought in revenues of £19 billion last year – in a country with fewer than ten million people.

Aliyev himself was educated in Russia, but nothing less than a British school was acceptable for his children, so he sent daughters Leyla and Arzu Aliyeva to the exclusive £15,000-a-year Queen’s College for girls in London.

Today, the sisters are believed  to share a property portfolio of £50 million – across Dubai, Paris and London – and to share  construction interests with their mother.

Leyla’s personal business empire is said to include lucrative airline and mobile-phone concerns, but the opaque commercial world of Baku makes it hard to be sure. It has even been claimed she owns Azerbaijan’s London embassy.

Leyla, 26, has now settled in Britain with her husband, Russian singer Emin Agalarov, the son of a billionaire property tycoon, and their two sons. They lead an enviable life, occupying an extravagant penthouse overlooking Hyde Park.

Styling herself as an artist and socialite, she has gathered an influential social circle, including Elisabeth Murdoch, Lord Mandelson and Prince Andrew.

She once spent nearly £300,000 on vintage champagne at a dinner party for a dozen girlfriends.

She recently launched Baku, a vanity magazine to promote her country to wealthy Westerners.

Her arrival in London has prompted a flood of Azeri oil money into UK property and business interests. At Baku, a new Azeri restaurant in Knightsbridge, Leyla and friends can choose from a menu offering caviar, gutab (minced lamb pancakes), pomegranate-and-rose soufflé and a £4,400 bottle of 1999 Cristal. A recent London Fashion Week cocktail party there was sold out.

The site of the restaurant –  formerly Gordon Ramsay’s La Noisette – is owned by Azeri government minister Kamaladdin Heydarov’s London-based billionaire sons, Tale, 27, and Nijat, 26. Former LSE student Tale has been dubbed the ‘Abramovich of Azerbaijan’ after pouring millions into his local football team, Gabala, and recruiting former England captain Tony Adams on a £1 million annual contract.

Tale was introduced to Princes William and Harry at a charity match at the Beaufort Polo Club in Gloucester, when they reportedly discussed hosting a polo event in Azerbaijan to raise money for the Prince’s Trust, Prince Charles’s charity.

Leyla is not the only Aliyev who likes to spend. In 2010, the story emerged of an extraordinary two-week shopping spree in Dubai conducted by an Azeri boy aged 11. Over this happy fortnight, he became owner of nine waterfront mansions for £28 million, a sum that would take the average Azeri citizen 10,000 years to earn.

The boy’s identity? Heydar Aliyev, son of the president, if the Dubai Land Department records are to be believed.

‘I have no comment on anything. I am stopping this talk. Goodbye,’ snapped the presidential spokesman when asked about the purchases.

If rich Azeris seem fond of life in Britain, it is as nothing to the deepening love affair between British businessmen and the oil wealth of Baku. The relationship has been growing inexorably stronger. Political delegations visit every year at the behest of SOCAR and the European Azerbaijan Society, or TEAS, based in London.

Ex-Defence Secretary Liam Fox, Lord Fraser, Lord Sheikh, Bob Blackman MP, Mark Field MP, Transport Minister Stephen Hammond – all Tories – and Ulster Unionist peer Lord Kilclooney have all enjoyed trips to Azerbaijan.  Discreet visits by military big-wigs are not unknown.

Tony Blair, another traveller to these parts, was reportedly paid £90,000 for a 20-minute speech on a visit in 2009: £75 a second.

But none has been so high- profile or controversial as Prince Andrew, a regular guest of President Aliyev.

In Azerbaijan, Prince Andrew is routinely described as a ‘dear guest’ by the leader of a country that ranks as one of the most  corrupt in the world on the Transparency Index.

But in Britain, the Prince has been heavily criticised for a friendship that appears to be continuing, though he has now stood down from his role as trade envoy. Last month, he met with Britain’s Ambassador to Azerbaijan at Buckingham Palace.

Prince Andrew has made eight visits to Azerbaijan in six years; two of these were private, arousing suspicion that he has business interests there, including a soon-to-be-built golf complex. These claims have been vigorously denied by Buckingham Palace.

The UK is Azerbaijan’s biggest investor, mainly through BP, though via dozens of other oil-related companies, too: about £20 billion has been pumped into the country since 1991.

Still, it is clear who is boss here: Aliyev recently condemned BP for ‘grave errors’ and sharp declines in oil output, leading to a £5 billion loss for Azerbaijan. BP quickly replaced its top man in Baku.

The British auction house Christie’s organised its first exhibition in Baku at the newly opened Four Seasons Hotel in September, flying in dealers, collectors, experts and its chairman, Viscount Linley, to accompany the works of art. Rolls-Royce are here, as are accountancy giant PricewaterhouseCoopers and travel and corporate services giant Hogg Robinson. Stella  McCartney has an outlet too. In preparation for Eurovision, Azerbaijan purchased 1,000 London black cabs to whisk visitors from one freakish new building to another.

Mocking Azerbaijan is such easy sport that you wonder if it was this Caspian potentate that was Sacha Baron Cohen’s real target when he invented Borat, not Kazakhstan. WikiLeaks did not help. Leaked cables showed US diplomats likening moustachioed despot Aliyev and his ruling clan to the mafia family in the Godfather films, quoting the line: ‘I don’t feel I have to wipe  everybody out – just my enemies.’

The same documents revealed his First Lady, Mehriban, 48, ‘wears dresses that would be considered provocative even in the Western world’, and lacks a ‘full range of facial expression’ following ‘substantial cosmetic surgery, [done] presumably overseas’.

Aliyev assumed power from his KGB-boss father in the 2003 election that is widely believed to have been rigged. It is said the Duke of York makes him laugh and that the  two men share a taste for risque jokes – and the services of a blind Russian masseur with ‘the best hands in the world’.

However, if the vulgar ostentation of Baku is pure comedy, the darker side of the regime is no joke at all.

Take, for example, the locking up of irreverent youths for slight impoliteness towards the ruler’s late, and deified, mother Zarifa. Or how ordinary people were evicted from apartment blocks to make way for the totemic towers and esplanades, including the £85 million palace  for Eurovision.

When grandmother Shirinbazhi Rzayeva refused to move out of her flat near the site, somebody used  a mechanical digger to drop a  concrete block through the roof.

‘We called the fire department but all they did was ask us why we wouldn’t sell. The president wants to build his new city at my expense. I refuse to be part of that.’

More sinister still is Aliyev’s crushing of any serious opposition, as confirmed by groups including Human Rights Watch and Amnesty. Phones are routinely tapped. Four years ago, the interior minister publicly admitted that suspects have been tortured in pre-trial detention.

Last year, Turac Zeynalov, 31, was detained on espionage charges. Relatives who visited him felt he had been beaten and said he could not move. He died three days later ‘of skin cancer’, according to officials.

Aliyev’s feared secret police like nothing better than to snoop on female investigative journalists, the hidden cameras rolling as they have sex in the privacy of their own apartments.

In an infamous case, Khadija Ismailova, 36, a reporter with Radio Liberty, received a warning letter which read: ‘Whore! Behave, or you will be defamed!’ She ignored the threat and continued to investigate allegations of gross corruption within the first family and the Byzantine court that encircles them.

‘I focused too closely on the daughters of Ilham Aliyev, they didn’t like that,’ she said. As a result, her most intimate moments with her boyfriend were exposed on the internet.

Says a friend: ‘For any woman this would be painful, for an unmarried Muslim woman more so, yet Ismailova knows how low they will stoop and refuses to be intimidated.’ Another potential victim of such tactics slept in a tent in her bedroom.

There are plenty of reporters and activists in the gruesome Baku prison whose ‘crime’ is being simply that: journalists, activists, bloggers.

Walking the streets as a reporter is a dangerous activity.

And what are these 4m-high sandstone walls on the new highway into Baku from the airport? Taxi driver Malik explains as he speeds into the city at the wheel of a ‘black cab’ now painted purple: ‘To stop you and other foreign visitors seeing the poverty on the other side.’

Vagrants are routinely cleared off the streets, while the poor, disabled and orphaned are shipped out to makeshift care homes.

But to dwell on the cartoonish excesses of this sinister regime is to miss the main point. ‘Dubai on the Caspian’ has developed a hydrocarbon hold over the whole of Western Europe, Britain included – and its grip will last for decades.

No wonder the Foreign Office has turned an almost blind eye to human- rights abuses, including curbs on freedom of expression, assembly and association, political interference in courts, and repeated claims of torture and abuse of foes.

Instead, the FO has been only too happy to assist Prince Andrew with visits here, while US Secretary  of State Hillary Clinton has been half-hearted in her denunciations of the regime.

Perhaps they have a point. Aliyev might be a tyrant, but he’s a pro-British tyrant, is the argument. Certainly, a steady stream of mega-contracts is flowing to the hundreds of our companies now linked to Baku. It is likely Prince Andrew has been far more important to the cause of UK business in Azerbaijan than anyone realises, or at least will acknowledge.

It is also true that the stakes here are far bigger than most people realise: they include European ‘energy security’ for generations to come. Aliyev claims to have enough gas for a hundred years – a fuel supply that is beyond the reach of Gazprom and the Russian bear, and free of the fundamentalist despotism of Saudi Arabia or Iran.

For all its absurdities, Azerbaijan is a Western-facing Muslim country, an oasis of calm and stability in a region of notorious turmoil. Go south little more than a hundred miles from Baku and you’re in the nuclear-ambitious theocracy of Iran.

Here is a Muslim country where women generally do not cover their heads, and couples stroll hand in hand and kiss on park benches close  to delightful fountains. Nightclubs are common.

In Iran, the mullahs despise all they see in Azerbaijan, including its open business and diplomatic ties to Israel and the West. Tehran withdrew its ambassador in protest at the staging of Eurovision so nearby.

Jennifer Lopez, Rihanna and Shakira, all known for provocative costumes and dance routines, have recently filled Baku concert halls. No one batted an eyelid. It has been suggested Azerbaijan poses the greatest threat to Iran simply by being itself: a (relatively) outward-looking Shi’ite state, in stark contrast to its neighbour. A high-ranking Azeri official at the Jo-Lo extravaganza was quoted saying: ‘You could almost feel the Iranians seething. This stuff makes them crazy.’

Azerbaijan means the Land of Fire in Persian. Zoroastrians built temples round burning gas vents in ancient times. Marco Polo wrote of a ‘fountain from which oil springs in great abundance .  .  . not edible but good for burning and to treat men and animals with mange, and camels with hives and ulcers’. Other places have bounteous fruit orchards – this country has spewing geysers of flaming gas.

By the 19th Century, half the world’s oil gushed from here; families including the Nobels and the Rothschilds built grandiose mansions in what was then known as the Paris of the Caucasus. Yet it is not so long since Soviet rule, when Azerbaijan was a bankrupt backwater, almost wholly cut off from the world outside the USSR.

Its fortunes declined still further thanks to the devastating war with Armenia over the disputed enclave of Nagorno-Karabakh (still a huge bone of contention). Then, in the ‘Eldorado Era’ immediately after the collapse of the Soviet Union, educated but impoverished local ‘Nastashas’ flung themselves at British oil workers for $100 a night at seedy clubs. In this Wild East, drunk foreigners drooled at Azeri belly dancers, clumsily stuffing hard currency into their bras and knickers.

This was the period when I bumped into a grumpy Mark Thatcher who kept a bolthole in Baku as he touted, like many other Western wheeler-dealers, for a slice of the Azeri action.

Sir Mark was unsuccessful in Baku, like most foreign cowboys. People here are among the most skilled and exasperating negotiators in the world. Some of the best oil brains on Earth drank themselves silly (and several went certifiably mad) waiting for Aliyev’s ruthless father Heydar – former head of the KGB in the region and another man familiar with torture – to agree the ‘deal of the century’ with Western giants.

Heydar finally clinched it in 1994 with a consortium of oil companies headed by BP, triggering $18 billion in investment and setting Azerbaijan on course to its current riches.

Even in death Heydar stares threateningly from the posters and statues: almost everything else about Baku has changed dramatically.

Chinese, Arab and US money is pouring in to the Khazar Islands. Described by the regime as a new Venice, Baku’s 41 artificial islands are expected to become one of the most desirable residential areas in the world, with 50 hospitals, 150 schools, beautiful parks and recreation facilities, gargantuan shopping malls, university campuses and, inevitably, a Formula 1 racetrack.

The Hotel Crescent is due to open soon, a 33-storey half-moon shaped structure by the sea. It will be followed by the seven-star Full Moon Hotel with a design that has been likened to the Death Star from Star Wars. ‘Baku White City’, built by Atkins UK, and with architects including Sir Norman Foster, will, say one report, ‘cover  an area greater than Monaco, becoming the biggest development in  the Caucasus’.

‘The scale of what’s happening is mind-boggling,’ says a UK oil executive as he sips whisky in a revolving bar atop the Baku Hilton. ‘There’s every designer boutique known to man. Streets are filled with Bentleys and Ferraris. Here’s the crunch: the Azeris have only begun. In another dozen or so years it will be one of the smartest, most fashionable locations in the world. It’s a cut above the normal Corruptistan stereotype of old Soviet states.’

Here is a prediction: it is likely you or those close to you will, in years ahead, come here for an exotic weekend. It is equally likely you will rather enjoy its often balmy weather, relaxed atmosphere and opulence.

Visa rules are still restrictive for Westerners, except oil or gas experts on expensive organised package tours; prying journalists are unwelcome. Yet the expectation is that Baku will open up in the coming years to compete with Dubai. The big international hotel chains are well established, doffing caps to serious money in a once drab communist outpost.

Qatar Airways has started regular flights, even if they are not cheap (you can’t get a flight for less than £600, plus £60 entry visa). Baku is already a playground to Middle Eastern visitors.

Meanwhile, the Old City, a maze of cobbled streets, charming garden cafes and traditional rug sellers dating back to the 12th Century, is eerily silent. Above it looms Baku’s Flame Towers, futuristic high-rises shaped like tongues of fire in glass and steel.

For all the mockery and criticism of Aliyev, Western leaders are secretly grateful to a man who has brought stability and the prospect of oil and gas. They hold on to the thought that,  compared with Iran, the suppression and torture is on a lesser scale.

But realpolitik has its dangers. A former ambassador in the region remembers the enthusiasm that greeted Bashar al-Assad coming to power in Syria: ‘One Labour Foreign Minister described him as “good news”, “very impressive” and “a warm  individual”, adding for good measure,  “I found him as somebody who had a very modern outlook, who will take Syria forward.”

‘The Minister was Peter Hain, but never mind. Hindsight makes us all wise. All I can say is this: don’t be too sure about throwing all your support behind the “stable” Aliyev dynasty and their skyscraper palaces. Things may turn out differently one day.’

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