COLUMN ONE : Hope Rises in Hapless Azerbaijan : Peace with Armenia and a Western oil deal may rescue the former Soviet republic from chaos and despair. Or they may not.

Consider the geopolitical implications of a bubble-gum cartoon.

The “love is . . .” couple sport the same long-lashed doe’s eyes here as they do around the world.

But in Baku, their saccharine messages come in triplicate--in Russian, in obeisance to the great power to the north; in Turkish, the native tongue of most Azerbaijanis, and in English, in a wistful nod to the rest of the world. All that is missing is a Farsi version, to acknowledge Iran’s baleful presence to the south.

This is the multinational collage of Azerbaijan, a Caspian Sea nation of 7 million where even bubble gum reflects the Byzantine, many-sided machinations of its politics.

“Nothing is simple and straightforward here,” said Anar Kadirli, editor in chief of the Azerbaijan News Service. “This whole place is so complex you can’t say anything without twists.”

The one thing that does seem clear is that Azerbaijan is in deep trouble. One of the least stable of the former Soviet republics, it is awash in nearly 1 million refugees. Average salaries are about $7 a month. Presidents are ousted, on average, once a year. One-fifth of Azerbaijan’s territory is occupied by Armenian troops in a spillover from the Nagorno-Karabakh war.

But here is the twist: This autumn, Azerbaijan appears to be closer than ever to attaining the two things it most needs to make good--billions of dollars in Western oil investment and peace in Nagorno-Karabakh.

A Western consortium that includes British Petroleum, Norway’s Statoil and several U.S. companies expects to sign a giant deal this fall that reportedly will bring in more than $100 billion from Caspian Sea offshore oil over the next few decades.

And Nagorno-Karabakh--the disputed enclave in Azerbaijan with a majority population of ethnic Armenians--is enjoying its longest cease-fire since the territorial conflict there began more than six years ago. With the shooting having stopped there May 12, the negotiations appear to be making unusual progress, building hope that the longest-running conflict in the former Soviet Union may finally be near an end.

“Not once in the last six years of fighting have we been so close to agreeing on ending the war,” Azerbaijani Parliament Speaker Rasul Guliyev said recently.

President Heydar Aliyev, 71, formerly a KGB general and member of the Soviet Communist Party’s ruling Politburo, has held on to his seat for nearly a year, despite devastating military defeats and economic woes. His KGB training, one aide suggested, may be just what is needed to rule in Baku.

All in all, Azerbaijan’s prospects at this moment look too good to be true.

“Now that the (oil) contract is near, we’re waiting to see what they throw at us next,” said Fuad Ahundov, a spokesman for Aliyev.

Like most Azerbaijanis, Ahundov is convinced that the country’s troubles come from outside and that the main outside manipulator is their overbearing old friend and neighbor--the Russian Empire.

Moscow has elbowed in on the Western consortium’s oil deal, announcing last spring that the Russian firm Lukoil had won Baku’s agreement to give it 10% of the Azerbaijani share. It is also doing its best to push the consortium into pumping the oil to its West European markets through Russia rather than building an easier route through Turkey.

If Russia gets too frustrated, Azerbaijani journalists and politicians believe, it may move to depose Aliyev and bring back Ayaz Mutalibov, the president ousted in 1992 who is now biding his time in Moscow.

Few here doubt that, in mid-1993, Moscow helped remove the last president, Abulfez Elchibey, whose Popular Front was anti-Russian and pro-Turkish. Many also adhere to the conspiracy theory that Russia is backing Armenia in the Karabakh war to bring Azerbaijan to its knees; they cannot bring themselves to accept Baku’s defeats by the seeming underdog Armenians otherwise.

But remember the bubble-gum wrapper. Other powers are at work, and many in Baku hope the oil conglomerates of the West can serve as a powerful counterbalance to the Kremlin.

“If the West has serious interests in Azerbaijan, they’ll also be interested in keeping Russia under control,” said Isa Gambar, former Parliament Speaker and a leader of Aliyev’s opposition.

He estimated that Azerbaijan lost $10 billion by giving Russia 10% of the consortium deal.

Then there is the Islamic world. Azerbaijanis may have a Soviet-bred lack of enthusiasm for religion. But their identity is solidly Muslim, and they are happy to be courted by Middle Eastern money. Saudi Arabia is already moving in on Azerbaijan’s oil, having recently promised to invest $2 billion in an offshore drilling area.

Turkey and Iran, which worries about unrest among the millions of ethnic Azerbaijanis who live near its northern border, also make their presence felt in everything from Red Crescent-sponsored refugee camps to squabbles over dividing the Caspian Sea.

In the 19th Century, the interplay of foreign interests in and around Azerbaijan was dubbed “The Great Game” and pitted mainly British maneuvering in Central Asia and the Caucasus against Turkey and Russia.

As far back as the turn of the century, Azerbaijani oil, discovered long before Texas cities like Houston came to fame, turned Baku into an eclectic petroleum town inhabited by Russians, Jews, Armenians, Turks--everyone eager to get in on the boom.

It maintains an air of exotic excitement even today, from the seaside promenade looking out at the distant oil derricks to its walled Old City with the labyrinthine feel of any casbah. Russia guarded Baku jealously from would-be conquerors such as Adolf Hitler, who set his sights on Baku’s oil to fuel his war effort.

Azerbaijan in 1994 is different. “This is nothing like the 19th-Century Great Game,” said a Western diplomat here. “It’s nothing like the 20th-Century Cold War. It’s a third thing--it’s about new countries trying to establish themselves.”

The problem is that Azerbaijan can hardly establish itself while it is at war. Torn between different influences, it would have a hard time anyway finding itself. But its involvement in Nagorno-Karabakh and the loss of one-fifth of its territory to Armenian troops have magnified the typical post-Soviet economic and political crises.

“These people are still struggling with their independence and getting their systems in place,” said a Pennzoil executive here who admits it is hard to nail down a major oil contract when the president keeps changing. “They’re still struggling to implement the democracy word and the free-market word.”

Opposition leader Gambar acknowledged that the Karabakh war is hindering Baku’s attempts to build its independent economy. Then, as is the habit here, he blamed Russia for Baku’s problems. “Moscow’s extra interest in Azerbaijan leads to internal instability in the country,” he said.

The circle closes. The oil brings war; the war brings instability; the instability prevents the investment in oil. Everything stays the same.

Except that the status quo is unbearable.

Especially for refugees like Barat Berdiev, patriarch of an extended family of 41 who were forced to leave their stone houses and vineyards in western Azerbaijan a year ago when the Armenians occupied their village.

The family members fled across the Araks River to Iran and have now ended up in an Iranian-run tent city in the Azerbaijani region of Sabirabad. They sleep on the ground, freezing in winter and sweltering in summer, each receiving about $2 a month in cash from the government and one small can of meat to supplement the camp rice and bread.

Berdiev, 63, sporting a fedora and fiddling his worry beads, said he dreams of going back to his land every minute of every day.

“Help us,” he said. “Only God knows how we’ll get through this winter. May this war just end so that we can all go home. What are we doing here?”

Overall, every sixth or seventh Azerbaijani is now a refugee--the equivalent of about 50 million displaced people in the United States. The burden is staggering.

Almost 10% of the government’s budget ($382 million in 1994) goes to refugee relief, said Towfik Azizov, head of the Parliament’s committee on the economy, and an additional 35% or so to building up the Azerbaijani armed forces. Other estimates of Azerbaijan’s defense burden range up to 70%.

The Karabakh war “is called a military conflict, but it is a real war with all its consequences--all its grief and destruction,” he said.

It does not help that the Azerbaijani economy was already in a deep tailspin from broken ties with Soviet trading partners. Inflation ran at 720% for the first half of this year, Azizov said, and the national bank appears to have largely lost control of Azerbaijan’s new currency, the manat.

Azerbaijanis on the whole are still not as bad off as Armenians, whose economy has been strangled by Azerbaijan’s blockade of most transport routes there.

Still, the Nagorno-Karabakh war, after an estimated 20,000 dead on both sides, mass movements of populations and economic disaster, does seem to have reached the point where the gladiators are almost too tired to raise their fists.

“There may be an element of fatigue at work,” said Deputy Foreign Minister Towfik Zulfugarov, who oversees the Azerbaijani side of the peace talks under way in Moscow. “But external forces don’t let the peaceful regulation happen, and here, oil and politics and geopolitics and sphere of influence are all mixed up.”

For all the obstacles, the outlines of what is known as the “Big Political Agreement” are in place, and more than half of its points have reportedly been agreed upon at marathon, Russian-brokered negotiations among Azerbaijan, Armenia and Nagorno-Karabakh.

Under the basic plan, the current cease-fire continues, Armenia gives back most conquered Azerbaijani territory, refugees from both sides are allowed to return, all blockades are lifted and, eventually, the status of Nagorno-Karabakh is agreed upon. A mixture of Russian and European troops will maintain the peace, it now appears.

The stumbling blocks remain many.

But there is a powerful incentive to reach an agreement fast: Winter is coming, a grim prospect for Armenians without fuel and for the hundreds of thousands of Azerbaijanis without homes.

The sense of being on the verge of a breakthrough comes across in Baku. So does the dreary conviction that every time Azerbaijan gets close to success at anything, it trips itself up or its feet are kicked out from under it.

“Everything is connected to the oil contract,” said Kadirli of the Azerbaijan News Agency. “Every time the oil contract is about to be signed, the political and social situation blows up.”