Opening speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in 2013 and the objectives for 2014

This meeting of the Cabinet of Ministers will discuss the results of 2013 and speak about the objectives on our agenda in 2014.

I can say that the past year as a whole was successful for our country. A great deal has been done in Azerbaijan. It would take a few hours to list everything that has been done. Today we will exchange views on major issues. But I want to say once again that the dynamic development of our country was invigorated in 2013. Major projects have been implemented in Azerbaijan and the international authority of our country has increased. We have further deepened the reforms under way in the country. In other words, we have secured a successful development of our country.

Azerbaijan’s international reputation has enhanced. There are excellent opportunities for the development of our international relations. We effectively use these opportunities. In 2013 Azerbaijan completed its mission in the UN Security Council. Over the course of two years Azerbaijan demonstrated its position. As I stated earlier, while in the UN Security Council we upheld international law and justice, demonstrated an unequivocal position and took a principled stance on every single issue. I can say that over the two years the trust and support of the international community for Azerbaijan have further increased even though Azerbaijan was supported by as many as 155 countries in the election to the UN Security Council. I think that this support has further increased now.

This suggests that the international community defends and supports the position of our state, approves our steps because Azerbaijan acts with dignity in all international organizations and a position of principle and national interests are above everything else for us. Undoubtedly, given these factors, the international community will further strengthen its support for Azerbaijan.

In early 2013, a significant event occurred in the Parliamentary Assembly of the Council of Europe. During the January session, the unfounded and biased attack on Azerbaijan, which was based on double standards, suffered a complete fiasco. The vast majority of the Assembly did not join the anti-Azerbaijan campaign, which disappointed its initiators, including backstage authors of the campaign, and protected Azerbaijan's fair position. The draft resolution motivated by political factors was not passed and Azerbaijan’s position Azerbaijan was supported. Thus, Azerbaijan has won yet another victory in the international arena.

This development also showed that justice must always get the upper hand. Azerbaijan demonstrated its principled and fair position, while the Assembly's decision dealt one of the most devastating blows to anti-Azerbaijani forces. I believe that they and the anti-Azerbaijani groups behind them will now make the right conclusions.

In 2013, Azerbaijan hosted a number of international events. Among them, I want to mention the conference to assist Palestine under the Organization of Islamic Cooperation. Azerbaijan initiated this conference, which I think reflects our position. We have demonstrated support for our Palestinian brothers again. Baku hosted a large donor conference of the Organization of Islamic Cooperation attended by ministers of member-countries, and Azerbaijan for its part provided Palestine with material assistance.

Last year we signed an important agreement with the European Union on visa facilitation. This is a manifestation of our relations with the European Union. These relations will develop further. Now, in 2014, we must certainly define the future format of the strategic relations between the European Union and Azerbaijan.

I have repeatedly stated that we want to establish effective working relations with the European Union and all other organizations we are not a member of. We have managed to achieve that. The principles of our relations with all the organizations we are not a member of are open, clear and do not go beyond international guidelines. These are principles of mutual respect, non-interference in each other's affairs, mutual support, mutual understanding and comprehensive cooperation. I am confident that we will create an even more efficient format with the European Union in the coming years.

Baku has also hosted the Third International Humanitarian Forum. It has become a wonderful tradition that attracts the world's attention. This event was joined by prominent politicians, scientists, more than 10 Nobel Prize winners. Azerbaijan already plays an important role on such issues on the global agenda as tolerance and humanitarian cooperation. Baku and Azerbaijan have become a center of multiculturalism and tolerance in the world. The international community also accepts and supports that.

The Second Forum on Intercultural Dialogue has been held. The agenda of this forum is about the same. In other words, the numerous activities held in Azerbaijan, including the meeting of the Davos World Economic Forum, the world’s top economic structure, have reinforced the importance of our country, enhanced its international authority and shown Azerbaijan to the international community as a dynamic and modern state. I have only enumerated the main international events held in Azerbaijan in a matter of one year. Look how much work has been done and how much the position of Azerbaijan has strengthened.

Our relations with other countries have also developed on a bilateral basis. My numerous visits abroad and the visits of foreign guests to Azerbaijan have further strengthened these ties. I am confident that this trend will be continued in the current year.

Unfortunately, there was no progress in the settlement of the fundamental issue of our foreign policy – the Armenian-Azerbaijani Nagorno-Karabakh conflict. During the year, the Armenian side adopted the tactics of delaying the negotiations under various pretexts. We can say that no progress has been achieved in the negotiations over the year. There was stagnation. At the end of the year there was some activity. Let's see if Armenia demonstrates a constructive approach to the settlement of the issue, so that an agreement could be reached soon. There is some hope and optimism, so in 2014 we will study that. In any case, the true intentions of Armenia will be fully clarified in 2014. Frankly, the past period does not give grounds for optimism, because Armenia has demonstrated an unconstructive position throughout the talks, adopted the delaying tactic and thus led the talks to a paralyzed state.

But if realistic approaches prevail in Armenia, then I think progress can be achieved in the conflict settlement in a short time. A realistic approach must be based on reality and on the balance of powers. The growing power of Azerbaijan also plays and will continue to play a role here. If we draw a comparison between Armenia and Azerbaijan, our advantage is obvious in all areas. Our state budget is 10 times bigger than that of Armenia. Our gross domestic product is eight times and the population six times bigger. Our potential is growing and strengthening, while Armenia is experiencing an extremely difficult situation both economically and demographically. I can even say that it is experiencing a demographic disaster, which is confirmed by the authorities of Armenia. Therefore, if Armenian leaders approach the issue with all seriousness and give preference to the interests of the Armenian state, they will clearly understand that they have neither the capacity nor the potential to compete with Azerbaijan.

I consider that relying solely on foreign aid doesn’t do any country a lot of honor. Every country should always seek to protect its independence, its choice and think about the future of the state. In any case, the balance of power has very seriously changed in favor of Azerbaijan. I expressed my thoughts about that five to six years ago. We have achieved this, and the Azerbaijani state will undoubtedly further strengthen its advantage in the coming years.

We hope that there will be positive changes in the negotiating process. International mediators are trying to make some headway. But I have to note that their activity has not produced any results. This is also a reality. We are hearing positive statements from mediators and the heads of their states. It should also be noted that the joint statements of the heads of OSCE Minsk Group co-chair countries point to the unacceptability of the status quo. This is a very positive thing. At the same time, they constantly repeat that there is no alternative to negotiations. You know, in today's world there are many alternatives in any field.

We simply want this issue to be resolved peacefully. Azerbaijan demonstrates a constructive approach, and I hope that the mediators will play an even more active role in the negotiating process. Armenia should simply fulfill four UN Security Council resolutions and withdraw from the occupied territories, and the territorial integrity of Azerbaijan must be restored. These are the principles of the agreement.

Azerbaijan will never tolerate a second Armenian state on its historical lands. The issue should and will be resolved within the territorial integrity of Azerbaijan. I have no doubt about that, and in order to achieve that we will continue the talks, but we will also step up our strength.

Our military power is growing. In 2013, significant steps were taken in terms of army building. We have started very serious reforms. These reforms are producing results. Our combat capability is increasing, and in 2014 it will significantly increase. I should note that our military potential, army reforms, new principles and new approaches related to combat tactics are promoting a completely new situation. If we consider that in recent years Azerbaijan has purchased a large amount of weapons, ammunition and hardware – the most modern hardware – our combat capability will significantly increase, which will have only a positive impact on the negotiating process.

Sometimes the organizations not dealing with this issue or politicians bringing grist to the mill of Armenia try to criticize us for increasing our military budget. In fact, this is said by representatives of the countries whose military budget is sky rocketing. It is our natural right. We are increasing and will continue to increase our military capability. Our military capacity will play a crucial role in a fair settlement of the Nagorno-Karabakh conflict in accordance with international standards. Today we are building a powerful army. Our army is one of the strongest armies of the world. Of course, army building will be continued.

Last year we also addressed the problems of our compatriots affected by the Armenian occupation, as 20,000 persons were resettled to new homes and apartments. This year we also plan to resettle at least 20,000 people to new homes. Thus, we practically build a whole city every year and will continue this policy, because there are still quite a lot of displaced persons living in harsh conditions in schools, kindergartens, military units and dorms. This process has already begun and will be continued.

Of course, the biggest momentum for the development of our country is provided by economic power. Azerbaijan has made great strides in deepening the economic reform. If we had not created such a strong economy, I am sure we could not achieve any of these successes in the international arena or in the region. In 2013 our economy continued to develop. The gross domestic product grew by almost 6 per cent. This is a very high indicator.

If we consider that GDP growth in most countries of the world constitutes half a per cent, 1 per cent and 1.5 per cent these days, the increase of the gross domestic product by about 6 per cent is a great result. It is particularly gratifying that our non-oil sector grew by 9.8 per cent. In other words, it has increased by almost 10 per cent, which is a result of the reforms carried out in recent years. The reforms have provided that. Currently we are implementing major programs to ensure further development of the non-oil sector. They will be implemented in the coming years too. I am sure that we will keep this momentum. Cash incomes of the population grew by 8 per cent and inflation was only 2.4 per cent. This is also a great indicator. Population incomes exceed the inflation more than three times. This gives grounds to say that the welfare of citizens is improving and the positive dynamics is manifested here as well.

During the year, a total of $28 billion was invested in the country’s economy. This is a record indicator. Never before has such an amount been invested in the course of one year. In the past few years the volume of investment averaged around $20-21-22 billion. Today we have a figure of $28 billion. Of these, $17.5 billion worth of investment is domestic. This trend has also been ongoing for several years. Domestic investment exceeds foreign investment. I think this is a positive development as well. Of course, the bulk of domestic investment is made up of public funds, but the private sector also invests heavily in the Azerbaijani economy.

Our foreign exchange reserves have also reached record highs. I have repeatedly said this but I want to reiterate that our foreign exchange reserves should increase every year, and this is the case. Over the past few years has there hasn’t been a single year when our foreign exchange reserves declined. Even though numerous investment projects are under way, they grew last year as well. Currently, Azerbaijan's currency reserves constitute $50 billion. This accounts for 70 per cent of the gross domestic product. According to this index, Azerbaijan is in one of the most advanced places in the world. This has been created by us, by our policy and by our strength. This is a great advantage of Azerbaijan, which makes us confident, gives us faith and the opportunity to continue the implementation of large-scale projects contributing to the development of our country.

Last year we also addressed the problem of unemployment, created 110,000 new jobs, of which 80,000 are permanent. The unemployment rate dropped to 5 per cent. The level of poverty has also decreased and now constitutes 5.3 per cent. Our foreign debt accounts for 8 per cent of the gross domestic product. This is also one of the best indicators in the world. It is no coincidence that the Davos World Economic Forum ranks the Azerbaijani economy in 39th place in terms of competitiveness.
There are our main economic indicators. I have no doubt that we will achieve economic development in the coming years too. We will talk about that a little later, so that 2014 also becomes successful for our country.

Important steps were taken in addressing social issues last year. First of all, we have completed the repayment the deposits left over from the Soviet era, more precisely, their payment to the population in the form of compensation. I can say that Azerbaijan's experience in the payment of these funds in the form of compensation is in first place in the CIS. We have paid this money to the population in the shortest possible time – in a matter of two years. We have paid this money to the population with the highest coefficient even though the independent state of Azerbaijan did not bear any responsibility in this issue – neither legal nor moral. But we have done that because our policy is focused on the citizens of Azerbaijan. We have allocated significant funds and have been able to resolve this issue in a short time.

Salaries and pensions were increased last year. This is also a positive development. We are well aware that some countries are cutting pensions, wages, axing jobs and costs. Meanwhile, not a single social program has been reversed in Azerbaijan. On the contrary, we have taken additional measures to improve the well-being of the people – measures of both social and investment nature. Of course, this is manifested in real life as well.

In 2013, we took very serious steps to develop the non-oil sector, and this is confirmed by statistical data. Among them I want to mention the creation of the space industry. 2013 will go down in history as the year when space industry was established in Azerbaijan. It is no coincidence that at the beginning of the year we declared 2013 the year of the information and communication technologies. We launched the first Azerbaijani satellite Azerspace-1 into orbit. This is a great historic achievement of our people and our state. We have joined the club of space-faring nations.

Major steps have been taken to develop tourism. In particular, we have opened several five-star hotels in the regions. New travel destinations are opening up. Azerbaijan's tourism potential is already contributing to the development of our country and the well-being of our people. I am confident that citizens of Azerbaijan will gradually give preference to spending their vacation in the country because the opportunities available in Azerbaijan correspond to global standards. This is acknowledged by both our citizens and foreign tourists. Therefore, this direction is also very important for the development of the non-oil sector.

Of course, the development of agriculture is perhaps one of the main contributors to non-oil sector development. Last year growth in agriculture amounted to almost 5 per cent, but the potential is far greater. I believe that even more will be done for the development of agriculture in 2014 and subsequent years. We have great programs and plans. Structural reforms must be continued and management improved. New proposals involving subsidies are being discussed at the moment. Of course, public investment, infrastructure projects, in particular the projects related to irrigation, will give a new impetus to the development of agriculture. The biggest funds from the National Fund on Entrepreneurship Support are provided to farmers. This trend will be continued in the current year. In other words, the development of the non-oil sector remains our top priority in the economic sphere this year as well.

But, of course, we must not forget about the oil sector and the transport sector. A great job has been done in the transport sector. We have laid 500 kilometers of roads, built both highways and rural roads linking 400 settlements. This has been financed both from the state budget and the Contingency Fund of the President. In other words, great importance is attached to this area too. We are implementing global transport projects. The construction of the Baku-Tbilisi-Kars railway is under way. Most of this work will be completed this year. I do hope that we will be able to celebrate the opening of the road in 2015. The shipyard has been opened as well. It will also serve to strengthen the industrial, non-oil and transport sectors. A new trade seaport is under construction in Alat. This year we expect to open its first phase. The process of renewal is under way in the railway and air transport spheres. In other words, the entire transport sector is developing.

Of course, 2013 will also go down in the history of the oil and gas sector. In 2013, we signed historic agreements for the development and strengthening of Azerbaijan’s oil and gas potential. The signing in 2012 of the agreement on the TANAP project contributed to the fact that in June 2013 the Trans-Adriatic Pipeline was selected as the primary route. After that, relevant contracts were signed. All contracts related to the sale of Azerbaijani gas to Europe beyond 2018 have already been signed. This was also a very important event. Finally, at the end of the year, on 17 December, the "Shah Deniz-2" investment agreement was signed in Baku. This is a historic achievement and our historic victory. This is a project of the 21st century.

This project will bring Azerbaijan huge dividends – both economic and political. The authority of our country will increase, as will our economic strength. Major investments will be made in our country. According to preliminary estimates, "Shah Deniz-2", TANAP and TAP, i.e. the implementation of all projects related to this issue, will pave the way for $45 billion in investment. If we consider that Azerbaijan already has public and private institutions and companies that have accumulated extensive experience in the construction sector, in the implementation of infrastructure projects and oil and gas operations, these companies will receive large orders of course. Thus, our non-oil sector will acquire new business opportunities. Of course, as we have already stated, we will try to make sure, wherever possible and where our work is carried out in accordance with existing standards, that all the contracts are awarded to Azerbaijani companies and they have favorable conditions. So this project will introduce Azerbaijan to the world as an indispensible exporter of gas.

You are well aware that this project has also received great support from the international community. Azerbaijan hosted a grand ceremony attended by senior officials from leading countries. Azerbaijan, as the initiator of the Southern Gas Corridor, has played a decisive role in this as well. I can say with full confidence that if Azerbaijan hadn’t assumed historic responsibility and shown its courage, foresight and principled position at the crucial moment, this project would not have been realized. We had been involved in various activities related to the Southern Gas Corridor for about 10 years. I personally attended almost 10 international conferences, events and meetings. But we saw that this issue was not developing, was standing still and was not moving forward. Therefore, we assumed responsibility again. It was clear to us that this project required a leader, and we assumed the leadership function. It is a big responsibility – both political and financial responsibility. But the strong economy we have created over the past years has allowed the opportunity to demonstrate leadership both in these projects and in projects of global nature.

Today, some of the issues of European energy security will be resolved thanks to the projects put forward by Azerbaijan. The importance of this project is enormous, and the coming years will confirm my words once again.

Finally, 2013 saw an important event in the public and political life of our country, as presidential elections were held in Azerbaijan. The people of Azerbaijan have again given their votes for our policy, for real policies. Our people have given preference to real policies and real work over chatter and empty promises. I want to express my appreciation to my people again for giving a high assessment to 10 years of my activities and showing great confidence in me. As you know, all of the authoritative organizations observing the election gave it a very positive assessment. The Council of Europe, the European Union, the OSCE Parliamentary Assembly, the Organization of Islamic Cooperation, the CIS and other reputable organizations, i.e. all global organizations, have unequivocally praised the way the election was held and expressed official opinions in their statements saying that the election was conducted in a free, fair and transparent manner. But I would like to say once again that the main opinion was expressed by the people of Azerbaijan. The atmosphere that prevailed in society on voting day and in the post-election period confirmed again that the election was held in a transparent and fair environment. Of course, such confidence should and does encourage all of us to work even harder in the future. We must continue to work hard to strengthen our country and ensure the well-being of the Azerbaijani people.