I believe that this may be a misunderstanding over English usage.
English-speakers often use the capital city of a nation as shorthand for a country's government. So they might also write 'Moscow is up to no good', 'Washington is full of corruption', or 'Canberra upset China' when they're actually criticising the governments of Russia, the USA, and Australia rather than the people who live in those cities
The post cited above is not, therefore, claiming that people living in Baku are Nazis, but rather that the Azerbaijani government is practicing 'lite-Nazism'. So this is strongly phrased criticism of a government rather than the characterisation of a people, ethnic group, or residents of a specific city.