Closing speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in the first quarter of 2014 and objectives for the future

- In the second quarter and for the rest of the year we have a lot to do. We have to do all this work to a high standard. In the first place, we must fully execute the state investment program. This year's investment program is quite large. Investment serves comprehensive development of our country and is aimed at improving our powerful economic potential.

Infrastructure projects are and should be implemented according to the program. We have not yet completed infrastructure projects but there is progress in this direction. This year we will traditionally implement projects on gasification, construction of rural roads, water and sewage lines. In some districts these projects have been completed, in others work is still under way. Projects of drinking water and sanitation are now our top priority because a significant share of the work in the fields of power supply and gasification has already been completed. Currently, the biggest investment is required by projects associated with rural roads, drinking water and sanitation. At the same time, we have recently allocated additional funds from the Contingency Fund of the President for the drilling of water wells. This will also be a very important step towards providing people with drinking water.

In other words, these issues are reflected in the state investment program, they must be implemented because there are no financial problems. At the same time, we are implementing social infrastructure projects. Here too we need to give priority to quality. The construction of schools and hospitals should be carried out at the highest level. I am confident that the implementation of the state investment program will be provided in its entirety this year.

The state budget also provides for the implementation of social programs. As I have said, this is an ongoing process. We must try to make sure that our citizens do not experience difficulties in terms of social welfare. In particular, social support for low-income families should be more effective.

Our investment program is extensive, therefore we need to pay constant attention to the macroeconomic situation. Currently, macroeconomic stability is fully ensured and inflation is only at 2 per cent. I do hope that we will be able to preserve inflation at this level until the end of this year. I can say that Azerbaijan, as I noted in my opening remarks, is one of a handful of countries where incomes of the population consistently exceed inflation two or three times. But they should consistently exceed it. This figure is not simply an excellent economic parameter, it is, in fact, a factor that plays a huge role in people's daily lives.

We need to try to attract foreign investment to the sectors that are necessary and represent priority to the development of our country. Our foreign investment is primarily channeled into the oil and gas sector. And this is quite natural. This has been the case for 20 years. And it will probably be the case in the future too, considering the fact that we are currently implementing major energy projects. But we need to try to attract major foreign and private investment to other sectors because the implementation of infrastructure projects is currently financed by the state. Using state loans, we are also revitalizing the real economy. But we need to try to attract foreign investment to accelerate the development of industry, agriculture, tourism, services and ICT sectors. This, of course, is a difficult task, as the world is still suffering the consequences of the economic and financial recession. The economic development of the world's leading countries is not provided at the appropriate level for them. Therefore, it is not so easy to attract foreign investment. We should note that most countries of the world are engaged in doing that. But in general, a very positive picture associated with reforms, improvement of the business environment and overall development is observed in Azerbaijan. This is why I think that if we create such conditions and properly organize these issues, we will be able to direct foreign investment into the necessary sectors. We need to work out these issues.

Work has already been started in relation to entrepreneurship development. Financial resources are allocated, measures of consultative and advisory nature are taken, so that entrepreneurs could benefit from the received soft loans more effectively. This, of course, will have a positive impact on the future development of the processing industry and agriculture.

Food security issues are a priority in this area. At the same time, I believe that we need to seriously tackle the production of other products consumed in Azerbaijan. Among them, I think we should pay special attention to the production of building materials. All the goods that can be produced should be produced in Azerbaijan, and we need to reduce our dependence on imports - first of all, in the interests of economic development and creation of jobs. At the same time, we need to increase our export capacity. I am sure that as a result of the ongoing reforms related to agriculture, the increasing productivity, the provision of transparency in the allocation of subsidies, the acquisition of agricultural machinery in an even larger volume and other measures, we will generate a large export potential, and our growing domestic needs will not be able to digest all the agricultural produce to be manufactured in Azerbaijan. Therefore, we have to increase our export opportunities. Exported products must meet the highest international standards. We must seek new export markets and be able to access them.

In this case, we will go down the path of a very dynamic development in terms of progress of private enterprise and agriculture in the future. This will secure our development. Our advantage lies in the fact that the demographic situation in Azerbaijan is very positive and our population is increasing every year. According to the latest information, it has already reached 9.5 million people. If we look at Armenia, about 80,000-100,000 people leave it every year. According to the statistics for the first quarter of this year, more than 20,000 people have left the country. This, of course, means depopulation. After some time, Armenia will have a population of less than 1 million people. But, as they say, to secure non-existent economic development this plays into their hands because if we assume that the population of Armenia increases like it does in Azerbaijan, in this case there will be complete impoverishment and the level of poverty will be measured by larger numbers. But even today the number of people living in poverty in Armenia is 35 per cent. In other words, I want to say again that the development of agriculture should also take into account the positive demographic dynamics in Azerbaijan.

During the discussion of the second state program on the socioeconomic development of districts I spoke at some length about these issues and gave relevant instructions. There is no need for any additions. I just want to say that a new executive order will be signed in the coming days to deepen reforms in agriculture, and I am sure that it will have a very positive impact.

A significant portion of our gross domestic product today is provided by the non-oil sector. This is a positive phenomenon, the result of our policy towards economic diversification. But if we have a look at the structure of our exports, we will see that the absolute majority is accounted for by the oil and gas sector. This is perhaps natural because these figures and production are so high that the non-oil sector, of course, cannot keep up with this pace. Nevertheless, we need to try to increase and strengthen our non-oil export potential. To achieve this, we need to ensure additional high quality production. We must and we will access new markets.

As you know, 2014 has been declared the "Year of Industry". We are conducting judicious policies associated with industrialization. I have already talked about that. I want to say again that each district should have industrial zones. This instruction was given in February and it must be fulfilled. Our main industrial centers, of course, have already been defined. These are traditional centers. Our main industrial centers are Baku, Sumgayit – which is the second largest industrial city not only in Azerbaijan but also in the South Caucasus – Ganja, Mingachevir. But as I have already mentioned, we need to create industrial zones in all our districts. The development of industry should go even faster.

Regarding the development of the transport sector, I want to say that a new terminal of the Heydar Aliyev International Airport will be put into operation in the coming days. It will be one of the most beautiful airport terminals globally. It has a beautiful appearance, is comfortable on the inside and meets the highest standards. If we consider that numerous international events have become commonplace in Azerbaijan, of course, this airport will play a huge role in the overall development of the country. It is some sort of a gate to our country. Of course, the construction of the new terminal building is a historic event, I think.

The construction of highways is progressing in accordance with schedule. Here too, we need to place the focus on quality. Most of our highways have already been built and work is currently under way. But quality should be at the forefront.

A project on the restoration of our railway is under way. New rail cars and electric locomotives are to be purchased. Relevant instructions have already been issued. Of course, the state program on the development of our railway is being implemented.

In the summer of this year, the first phase in the construction of a new international seaport should be completed. This is a major project. The port in Alat will be the largest international seaport on the Caspian Sea. The task has been given of putting into operation the first part of the port this summer. After that, work will be continued on the second stage.

I believe that this can be achieved. In this case, the current sea port will be moved out of the city center and public places will be set up there instead. A new boulevard, the White City Boulevard, is already being built from the port in the direction of Zikh. Its current length is a little over 2 kilometers. New public places are being established there. Of course, the soonest possible relocation of the port from there will allow us the opportunity to make this area available to people. Railway tracks will also be removed from there. An eight-lane coastal road and a beautiful boulevard are currently under construction. In other words, the new international seaport will be fully operational in the near future anyway. But we need to commission at least its first phase in the summer months.
Additional measures will be taken in relation to municipal transport. The construction of the underground is powering ahead. As you know, we intend to increase the number of underground stations to 70. We will achieve that. The entire work is progressing on schedule. We will import new passenger buses meeting the highest standards for the city. Underground car parks have been built in Baku. This is also of help in addressing the problem of traffic congestion. Above-ground parking lots should be established as well. As in developed cities, we will have parking meters installed in the streets in the coming months, so that our people could park their cars easily. Transparency should also be provided in this area.

Baku is a beautiful, modern and growing city. Of course, you will never see controllers with a batons in their hands helping people park in developed cities of the world. This doesn’t and can’t suit us at all. In fact, no-one knows where they work and to whom they pass on the collected money. I understand that due to a lack of above-ground parking lots they help drivers. I appreciate that. Therefore, I believe that we have to be patient. But after the installation of normal and transparent parking meters, we will certainly have to provide the people with batons with another job.

This year we have great programs related to army building. There is a program related to construction as well. We are not only acquiring weapons and ammunition but are also engaged in construction activity. Among them, I want to emphasize the base of the Navy. This large base has been under construction for many years now. I do hope that we will open it this year. Construction and installation work is under way in other military units. New military bases are being built as well. All of the military units and bases apply the highest standards because our officers and soldiers must serve in good conditions.

I do hope that there will be no old or dilapidated military units or structures in disrepair in the coming years.

Unfortunately, this area did not receive the necessary attention in previous years. We have to openly say that. Our soldiers and officers should live and serve in the best conditions. Therefore, the task has been set and funds allocated so that there is not a single unsafe or old building in the army in a short time, perhaps in the next two years.

At the same time, I believe that we have to use the newly built shipyard for this purpose. As you know, this plant can build any vessel. The plant has already started receiving first orders. I believe that the Ministry of Defense should also order the construction of military vessels by this plant. Of course, the Ministry of Defense should take care of the financial side of this issue. I think that we should begin this work in the current year, because the construction of a ship will take a long time to complete. We have no time to waste and should do everything possible to ensure that the plant operates at full capacity so that we could upgrade our navy.

This year we will continue the program on the provision of IDPs with houses. Last year, more than 20,000 displaced people moved into new homes and apartments. This year at least another 20,000 people will follow suit. This program is going on. Places have been identified. There should be no delays here. There should be no financial problems either. So everything is progressing on schedule.

We are also addressing the problems of veterans and people disabled in the Karabakh war. Following an executive order I have recently signed, the social welfare of 80,000 people belonging to this category has been improved. This process will be continued. Even better conditions will be created for war veterans, those disabled in the war and martyr families. As you know, houses have been built, apartments are distributed and cars are presented to the disabled people. I do hope that the disabled veterans of the war and martyr families standing in line for cars will receive them this year. Over the next three to four years, all martyr families and disabled veterans of the war will be provided with new apartments and houses. Such an instruction has been issued. The Ministry of Labor and Social Protection of the Population is engaged in this work. This issue should also be reflected in public investment expenses.

Things are also going well in the oil and gas sector. Both domestic and foreign investments are growing. The new platforms built and wells drilled will further enhance our energy potential. The gasification process is well under way, and I am sure that we will reach the desired level in the near future.

Of course, the implementation of the TANAP project has already started. TANAP is a project of the 21st century. Shah Deniz-2, TANAP and TAP are the largest infrastructure projects in Europe. Tenders have already been announced. I hope that we will begin the process of construction soon. This project was started at the end of last year. Preparatory work has begun. Azerbaijan demonstrates leadership in this project. I think, I am absolutely convinced and I know that if it hadn’t been for our policies, our energy policies, our courageous policies, this project would never have been realized. Azerbaijan is the initiator of these projects. Azerbaijan also plays the key role in them. Azerbaijan has assumed all the risks. Azerbaijan has assumed all the financial and technical risks. I am confident that we will successfully implement this project, because we have achieved success in all the energy projects we have initiated in the past. Oil and gas projects Baku-Supsa, Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum are already a reality. They have been in operation for many years. So I am quite sure that we will implement these major projects with dignity.

I would like to say a few words with regard to environmental protection. Several years ago, the "Year of the Environment" was declared in Azerbaijan. I remember saying during the discussion of the work done in the "Year of the Environment" that every year should be the "Year of the Environment" because the environment is one of the key issues, especially for Baku and the Absheron peninsula. For years and centuries, there were oil ponds and contaminated places here. The situation was unacceptable from an environmental point of view. In recent years we have come a long way in this regard. Since oil has been produced in Azerbaijan for about 200 years, unfortunately the attention paid to the environmental situation was not up to par. Just remember the condition of the Bibi-Heybat bay – it was a picture of a complete disaster. Today the place has been completely cleaned. Derricks remain in place, but the area around them has been cleaned. I have issued an instruction to launch a campaign of planting trees there, between those derricks. We have to turn this place into a green zone.

There used to be an iodine factory in the city center. Subsequently its activities were stopped. But the iodine deposits remaining there were causing an enormous damage to the environment. We have cleaned this place as well, and this issue was also resolved at the highest level. The Balakhani landfill was burning and fuming for years. This smoke was enveloping the whole city and it was impossible to breathe. The smoke was causing problems not only to Balakhani residents, but also to the entire city. We have cleaned this place too. Currently, there is no waste and garbage on the landfill. Trees have been planted and there is no smoke there. Large funds have been invested in the construction and operation of a plant for the incineration of garbage. There are many examples like this. As part of the campaign of planting trees, more than 10 million trees were planted, and this process continues.

Therefore, issues related to the environmental situation are always the focus of our attention. But the public, including myself, is concerned about the felling of trees. This cannot be allowed to happen. I think that we must apply greater liability in this issue. The felling of trees must be completely stopped. Only in exceptional cases and only on the basis of a conclusion of the Ministry of Ecology and Natural Resources can a tree be relocated or felled somewhere. I have repeatedly expressed my opinion on these issues. I can say that in comparison with previous years, the situation is more positive now. But we have failed to fully achieve our goal. People come at night, illegally cut down trees and level a place in order to build a house. This is dishonesty, this is a disgrace, this is a crime.

Therefore, relevant agencies should make proposals, so that we could take more serious action against those who cut down trees. They must be brought to justice. I want to reiterate that not a single tree can be cut down in the city without the permission and conclusion of the Ministry of Ecology and Natural Resources. This is my last warning.

Starting from this month, we switched to the "Euro-4" standard. I am sure that the move will significantly improve the composition of air. According to the available data, the main source of air pollution is vehicles, not industrial plants. I believe that the application of "Euro-4" will prevent this. At the same time, we certainly have to say that the quality of fuel produced in Azerbaijan should be improved. A new refinery is to be built in Baku. It will be built, but it will take time, perhaps three to four years. We need to try, and the government should also make suggestions on how we can improve the quality of fuel produced in Azerbaijan while the plant is built. I believe that we can allocate financial resources for that too.

A program on cleaning the lakes existing in Baku is about to begin. I have received a list of these lakes. There are nine lakes on it. But they can hardly be called lakes, because a lake is a natural basin with clean water, while these lakes are an environmental disaster. Sewage, effluents contaminated with oil and produced water were discharged to these lakes for years. These lakes represent an environmental disaster in the city, right in the city center. Therefore, all instructions on the subject have already been issued. We can no longer tolerate this situation. As much money as necessary will be allocated for this purpose. We will transform these sewage ponds into clear lakes. Baku today is a city of parks. And Baku will soon be a city of lakes. Today I set this objective and believe that we should start this work soon. In truth, we have already started it. We have already signed contracts with foreign companies experienced in this field. We have started with the most environmentally and technically challenging project. It is a project on cleaning Lake Boyukshor. Lake Boyukshor covers an area of 11,000 square kilometers. So it is more than a thousand hectares. Now we are dividing Lake Boyukshor into two parts. A dam will be built on it. This dam will also serve as a highway. We are doing this both in the interests of transport and to divide cleaning work into stages.

At the first stage, the part of the lake located near the Olympic Stadium under construction will be cleared. This area covers 300 hectares. There will be clean and clear water there. A beautiful boulevard will be built around the lake. We have the seaside boulevard and we will soon have the Boyukshor boulevard. Some wonderful landscaping will be carried out, trees and shrubs planted, there will be recreation areas and a clean lake.

The second stage will see the cleaning of the rest of the lake. Thus, we will create a beautiful recreation and health area in our city. As I have noted, in a few years Baku will become a city of clean and beautiful lakes. However, there is a lot to do, as we are talking about nine lakes. But we should try to complete the job in the next five to six years. All of this work, of course, should be reflected in the state budget. Financial resources, of course, will be provided because the entire work should be carried out at the highest level.

Finally, this year we are entering a crucial stage in preparations for the first European Games. All the work is progressing on schedule. The President of the European Olympic Committee and the Coordinating Committee visited Baku recently. They gave a very positive assessment to the preparatory work under way in Baku. Construction is under way on all sports facilities. The Olympic Stadium, the Aquatic Palace, the Gymnastics Arena and the Shooting Center are under construction, other facilities are being repaired, roads are built. The Olympic village for athletes is practically ready. So we are doing the necessary preparatory work.

I want to say again that we intend to conduct these Games at the level of Olympic Games. Some people don’t know that these games are very similar to Olympic Games both for the number of sports and the number of athletes involved. And in terms of preparations and scope of construction activity they are even more ambitious than Winter Olympics. The number of athletes to compete here next year is twice as high as the number of athletes involved in Winter Olympics. So it is a great challenge, especially when we consider that the period of preparations for Summer Olympics is seven years, while we have only two and a half years to prepare. But we are a strong state where all the work is organized and done correctly. We have a strong political will, technical and mobilization capacity. We will hold these games in an exemplary manner for future Olympic Games. Azerbaijan will reassert itself to the world as a modern, dynamic and strong state. A lot remains to be done until the end of this year. I wish you all success in this work.

Thank you!