In the following days,our generous - and omnipresent - government hosts whiz us in and out of a fleet of black Mercedes,intent on sharing the best - and only the very best - of modern Baku.

Twenty years have passed since the collapse of the USSR and almost every trace of Soviet Baku has been erased. A sovereign oil fund,built up since the country's main export pipeline began operations in 2006 and with assets now worth $US29 billion,has paid for a transformation of its down-at-heel predecessor into a high-rise capital of floodlit squares and fountains,lush public gardens,gargantuan shopping districts and some of the most audacious architectural projects outside western Europe.

Everything in Baku is large. And all exudes wealth. The shops and boutiques reek of money:Gucci,Tiffany,Versace,Prada,Bulgari are among the hectares of shopping space behind football field-size glass windows. Boulevards are wide and imposing,new hotels luxurious,the lighting at night dazzling while the world's tallest flagpole sits high above the seaside site where a 23,000-seat arena is planned for next year's Eurovision finals.

Still flushed with their status as national heroes,Nikki confides that until the win,she lived in North London with her husband and two daughters:''I was a housewife a few months ago.''

Now,it is clear that the duo's mother country,perhaps fuelled by the desire to escape theBorat-style stereotypes that blight its former Soviet neighbours,has placed much of its global public relations drive on their slight shoulders. This year's song competition will introduce Baku to more than 125 million viewers the world over. So far,40 countries will compete and an estimated 100,000 tourists are expected to visit the capital.

The mayor of Baku's Old City,Mikayil Jabbarov,sees the event as a once-in-a-lifetime opportunity to present Azerbaijan to the world:''I hope it is not one single thing they take away but many - the way we think,our history,our architecture … the modern and ancient,our food,our music and art.''

The man in the driving seat of the country's international PR drive is Ilham Aliyev,the country's president. He is everywhere;peppered among the myriad billboards spruiking Europe's greatest fashion names are giant hoardings advertising his smiling face.

But despite recent,well-publicised attempts to clamp down on the black economy,it is endemic:The Economist estimated last year that between 2003 and 2009,the gap between the volume of goods exported to Azerbaijan and the volume of the same goods recorded as imports reveals a hole of more than $10 billion.

Sitting in the VIP lounge at the airport on the way out,I watch open-mouthed as two enormous sturgeons,wrapped in plastic and tape,are wheeled out to an aircraft by a well-dressed lady with her luggage. Prized both for their meat and caviar,they are banned for export and there are strict fishing quotas.

According to Transparency International,the anti-corruption organisation,Azerbaijan has made some moderate advances in fighting institutional corruption,including new mechanisms to monitor conflicts of interest among politicians and civil servants. But the national reform blueprint is ad hoc at best.

During our visit,a group of students - assembled to talk about a generous state-funded program to educate Azerbaijani youth in foreign universities on the proviso they return to work for a period at home to stymie the national brain drain - speak proudly about national attempts to tackle corruption in the post-Soviet era.

''It's three years since I gave a bribe,''one says.''Much has been done. Now if the police stop you when you are driving,you are not asked for money any more.''

With oil funds,Baku's Old City,a mediaeval jewel,has been restored and is back on the UNESCO World Heritage list without the endangered warning. Baku's love affair with the modern,on the other hand,is probably best seen on the hill high above the city,where the massive Parliament building,its innards bedecked in chandeliers and marble,sits surrounded by fountains.

In front,the $US350 million Flame Towers thrust into the sky,glass high-rise apartments built to echo the ancient Zoroastrians.

For now,on the edge of the PR coup Eurovision is hoped to bring,modern Baku seems to have held on to the best parts of its ancient past. It's a captivating city,exotic,energetic and,at times,highly eccentric. But its boundless desire to grow ever bigger,higher,better could just as easily backfire. Azerbaijan needs to remember that autocratic leadership and monumentalism left unchecked anywhere in the world lead almost always to disaster.

Paola Totaro travelled to Baku as a guest of the Azerbaijan government with The Leadership Agency,London.