Centuries of migration through the Caucasus Mountains by scores of people groups have rendered the region ethnically diverse, and borders of empires and countries have rarely coincided with homes of the indigenous communities. Azerbaijan is no exception. Split between Turks and Persians for much of their history, ethnic Azeris have taken on characteristics of each group. The Persian influence is strong – Shia Islam dominates among Azerbaijan’s Muslims – and a significant ethnic Azeri population lives in northern portions of neighboring Iran. Yet Azerbaijan shares close kinship – if not much of a border – with Turkey: the language of the Azeris is virtually identical to Turkish.

Treaties in the early nineteenth century set the border between Russia and Persia along the Aras River, and the territory of modern Azerbaijan was officially incorporated into the Russian Empire. The Russians oversaw drilling of the world’s first oil wells in the Azerbaijani capital of Baku in the mid-1800s, and, by the turn of the century, the region was producing nearly half of the world’s oil.

The establishment of a communist system after the Red Army invasion of the Caucasus in 1920 ushered in a new era. The Soviets seized all private property, freezing oil production for profit and prompting international investors to flee. Disputes over regions inhabited by both Azeris and Armenians were resolved by the Soviets in divide-and-rule manner. Azerbaijan ended up with the exclave of Nakhichevan, a region completely detached from Azerbaijan proper (much like Alaska to the United States) and wedged between Armenia and northern Iran. The ethnic Armenian region of Nagorno-Karabakh was made an autonomous region within Azerbaijan.

The years immediately preceding and following the dissolution of the Soviet Union were marked with chaos and violence in Azerbaijan. Encouraged by the more liberal political environment under Mikhail Gorbachev’s program of perestroika, ethnic Armenians in Nagorno-Karabakh sought transfer to Armenian jurisdiction in 1988. Pogroms against Armenians outside of Baku broke out; and violence against Azeris in Armenia followed. The Soviet Army invaded Azerbaijan on two separate occasions over the next three years to restore order and to help the Azerbaijani army push back Karabakh Army offenses. In October 1991, Azerbaijan declared independence from the Soviet Union, and the Soviet Army withdrew its military support. Abulfaz Elchibey was elected president in Azerbaijan’s first elections in June 1992. Barely one year in office, Elchibey was overthrown by military coup, and Soviet-era leader Heidar Aliev came to power.

By the time Aliev took charge, nearly one-fifth of Azerbaijani territory was occupied by the Karabakh Army, and an estimated one million Azerbaijanis had been displaced. The violence came to a standstill in 1994 after Aliev agreed to a ceasefire. Unlike his predecessors who had alienated Russia, Aliev charted a more nuanced foreign policy, keeping Russia close yet reaching out to other members of the international community.

Azerbaijan’s economy depends almost solely on the country’s significant oil and natural gas reserves in the Caspian Sea. Since 1994, Azerbaijan has attracted a number of international investors to develop these off-shore fields and expand infrastructure for transport. One large undertaking is the Baku-Tbilisi-Ceyhan pipeline project that will eventually carry up to one million barrels of oil a day through Georgia to a Turkish port on the Mediterranean Sea. Much of Azerbaijan’s current exports are routed through an existing network of Russian pipelines. Oil revenues have buoyed the economy during Azerbaijan’s post-socialist transition, and Azerbaijan currently enjoys a relatively small external debt.

The maritime division of the Caspian Sea is still under dispute. Azerbaijan, Russia and Kazakhstan have signed agreements stating that the seabed should be divided in proportion to each country’s coastline. Iran insists on equal partition between the five littoral states, and Turkmenistan has not made its position clear. Future ventures under consideration, such as trans-Caspian projects with Kazakhstan or Turkmenistan, cannot be realized until the status of the seafloor is resolved.

Preparations for the succession of presidential power began in 2002, when Aliev nominated his son, Ilham, to the post of Prime Minister. Both father and son were registered as candidates for Azerbaijan’s presidential elections in October 2003, but Heidar, citing health issues, eventually dropped his name from the ballot. Ilham Aliev’s overwhelming victory at the polls was met with protests from the political opposition. Demonstrations in Baku were violently put down by police. Fears that Ilham’s relative political inexperience would lead to instability have been largely quelled, and Azerbaijan has maintained an atmosphere attractive enough for investors.