Hundreds of excited Eurovision Song Contest fans have already arrived in the oil-rich Azeri capital of Baku, which has undergone a $60 million facelift in preparation for the event with a shiny new 23,000-seat rectangular Crystal Hall on the shores of the Caspian Sea at the centre of the celebrations.

"People are very friendly in Azerbaijan and food is fantastic. We enjoy being here and we love Eurovision," said Dmitry, a 19-year-old flag-draped fan from Moldova, accompanied by new Azeri friends.

The multi-purpose Crystal Hall arena was built by a German firm in eight months for an undisclosed sum of money.

But human rights groups say some buildings in the centre of Baku were specifically torn down with the song contest in mind and that the forced eviction of residents, especially in areas around the Crystal Hall, casts a shadow over the event.

Azerbaijan won the right to host the annual contest last year in Germany with the victory of its entry, the love song "Running Scared", from Eldar Gasimov and Nigar Jamal, better known as Ell/Nikki.

It is the fifth former Soviet republic after Estonia, Latvia, Ukraine and Russia and the second Muslim country after Turkey to host the event.

DECORATIONS AND DEMONSTRATIONS

In preparation, Azerbaijan has trained thousands of police, temporary staff and volunteers in basic foreign language skills to welcome contest participants and cope with the thousands of fans arriving from around Europe.

"I have been trained for a few months and can speak basic English now," said Elchin Guluzade, a 43-year-old taxi driver, who drives one of the dozens of cabs bought ahead of the event.

Taxis as well as buses and streets of the capital Baku are decorated with Eurovision emblems and the slogan "Light your fire!" Locals and guests stroll around in Azeri national colors of red and green as well as blue Eurovision t-shirts and caps.

"I think that many more people will learn about our beautiful country after Eurovision and many more will come to see it," 19-year-old student Sabina Mehdiyeva said, adding her voice to many Baku residents who welcomed the contest.

Despite the effort to highlight progress that the oil-producing nation of nine million people has made since independence in 1991, critics of President Ilham Aliyev's government have taken the opportunity to air allegations of human rights abuses.

Critics accuse Aliyev, who in 2003 succeeded his father to the presidency of the Caspian Sea country north of Iran, of clamping down on dissent, but Baku says the country enjoys full freedom of speech and a vibrant opposition press.

Dozens of peaceful protesters were arrested this month in central Baku during rallies and marches demanding democracy and the resignation of the government.

"A stern crackdown of freedom of expression, dissent, NGOs, critical journalists, in fact anyone who criticizes the Aliyev regime too strongly, and we've seen this continue right up until the Eurovision Song Contest," Amnesty International Europe and Central Asia director John Dalhuisen told Reuters.

But senior Azeri officials responded to allegations by calling them "anti-Azeri propaganda."

"Their conclusions do not correspond with reality", said Ali Hasanov, head of the public and political issues department at the presidential administration.

The government is also under fire from Islamic figures as well who object to the Eurovision pageant. Senior Iranian cleric Ayatollah Sobhani has issued a statement urging Muslims in the region to protest what he described as "anti-Islamic behavior".

The song contest, which is a major showbusiness event in many participating countries, has also been marred by the decision of Armenia to pull out of the contest this month.

The move underscored tensions over Nagorno-Karabakh, a mainly Armenian-populated enclave inside Azerbaijan which Armenian forces seized control of after the collapse of the Soviet Union.

STOMPING GRANNIES

In the contest itself, 10 countries out of 18 have already qualified in the first Eurovision semi-final this week, while 10 more will be selected on Thursday to participate in the grand final on Saturday night.

Six more participants, including Azerbaijan, are already included in the final without participating in semi-finals.

Eurovision, which draws more than 100 million viewers almost every year, parades a wide array of musical styles in original songs, mostly from relatively unknown artists.

List of participants this year includes Russian rural folk group "Buranovskiye Babushki" (Grannies from Buranovo), septuagenarian British crooner Engelbert Humperdinck and eccentric pop duo Jedward - twins from Ireland, much beloved by teenagers in Europe.

Russian grannies and 28-year-old Swedish diva Loreen are regarded by bookmakers as top rivals ahead in the final.

Buranovskiye Babushki, clad in the traditional red headscarfs and long dresses of their Russian northern region of Udmurtia, stomping feet shod in tree bark shoes and urging the audience to dance, were a hit at this week's semi-finals.

Loreen is still to perform her emotional "Euphoria" song in the second semi-final on Thursday.

(Reporting by Margarita Antidze; editing by Paul Casciato)

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