Opening speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in the first quarter of 2015 and objectives for the future

- Today we will discuss the socioeconomic results of the first quarter and talk about future plans. I can say that the results of the first quarter are very positive. We successfully completed last year as well. Despite the fact that a crisis had already started in the region at the end of last year, Azerbaijan managed to ensure the dynamic development of the economy, and we finished last year with excellent indicators.

These positive trends were continued in the first quarter of this year too. At the end of last year I was confident that 2015 would also be successful for the national economy. The results of the first quarter confirm these words. The gross domestic product has grown by more than 5 per cent. This is an excellent indicator both for the region and the world. Only a handful of economies around the world have achieved growth of 5.3 or around 6 per cent.

Azerbaijan has secured dynamic development, and it is gratifying that our non-oil sector has grown by 7 per cent. This was made possible as a result of sound economic policies carried out in recent years. The funds invested in the Azerbaijani economy for many years, the policy of diversification and the development of the non-oil sector have enabled our economy to develop steadily and not depend on the oil and gas sector. Even the sharp decline of oil prices in the world has had no impact on our overall economic development. This is the uniqueness of Azerbaijan’s economic model, and these figures show once again how correct the path we have chosen is.

The non-oil sector remains a priority, because as of now the economy of Azerbaijan will develop in a diversified manner. I am glad that our non-oil sector has been accounting for a large part of the gross domestic product for some time now. I am sure that this percentage will gradually grow further, and thus the economy of Azerbaijan will be even less dependent on the oil and gas factor.

I want to say again that the drop in the oil price by more than a half has had no impact on our overall dynamic development, as the non-oil sector assumed much of the economic burden. From now on, it is the development of the non-oil sector that will ensure the successful economic development of our country.

It is gratifying that industrial production has increased in the first quarter. As you know, in recent years, as a result of a certain decline in oil production, we observed no growth in industrial production. Industrial production increased by nearly 4 per cent in the first quarter of this year. This is a result of the work done. The past year was declared a "Year of Industry" in Azerbaijan, and this area was given special attention. Thanks to the establishment of modern industrial complexes and industrial estates in previous years, the development of small and medium-sized businesses, our industrial capacity has been significantly increased. As a result, industrial production in Azerbaijan is growing.

There is growth in agriculture. Growth in agriculture constitutes more than 3 per cent. I think that in the future we will observe great agricultural development, because the ongoing reforms, the improving work and our thought-out policies will, I am sure, give an impetus to more rapid growth in the coming years.

Inflation in Azerbaijan is at a very low level. Last year it was just over one per cent. This year it is 2.8 per cent. It is noteworthy as well that although the rate of the manat was amended in February of this year, inflation is still very low. This shows that control over the consumer market is fully guaranteed in Azerbaijan and that the state and the government constantly keep these issues in the spotlight.

The low level of inflation, of course, has a positive impact on people's living standards. At the same time, we need to know that when inflation is at a very low level, it somewhat constrains economic development. Therefore, of course, we must select the right balance here. The macroeconomic situation in Azerbaijan is constantly in the spotlight. Inflation should cover social functions and, at the same time, ensure the development of our country, in particular, the expansion of our export potential. This year, as is the case every year, the incomes of the population exceed inflation. Incomes of the population have grown by 5.3 per cent, which is about twice the rate of inflation.

These are the key economic indicators. I believe that this is a very positive indicator for any country in 2015, especially for countries with the developed oil and gas sector. I can say that this is our great success. These successes have been achieved by us, by the Azerbaijani people. If we hadn’t paid great attention to the development of the non-oil sector of the country in good time, our results today might not have been so delightful. On the contrary, we would have been faced with stagnation and recession we are now seeing in some parts of the world and the region.

What makes the Azerbaijani economy special is the fact that it is built on a solid foundation, is self-sufficient and does not depend on external financial resources. On the contrary, as a donor country we provide financial resources both to other countries and international financial institutions. This brings us additional revenues. By securing full economic independence, Azerbaijan further enhances its political independence.

Positive trends were observed in the regions in the first quarter. The process of job creation is under way, about 30,000 jobs have been created, of which 25,000 are permanent. This is an ongoing process, because, as I have repeatedly pointed out, there is a positive demographic situation in Azerbaijan. The population is growing, so job creation should be a continuous process. Our economic potential must be consistent with population growth. Population growth is a very positive process, as it strengthens our country and, at the same time, demonstrates the rapid development of Azerbaijan. Looking at the demographic dynamics, we can see that our population has started to grow rapidly in recent years. The economy, in turn, should create excellent opportunities for this growth, generate permanent jobs and keep unemployment at a low level. Currently, unemployment and poverty are at the lowest level - at the level of 5 per cent.

Social issues are being addressed. This sphere is always in the spotlight. Our thought-out economic reforms have always been complemented by a strong social policy. This year we are fulfilling all our social obligations. Additional funds are allocated for the social infrastructure. Schools, kindergartens and medical institutions are built. Currently, more than 20 medical institutions are being built and renovated. Issues related to medical diagnosis of the population are being addressed. The process of health checks is well under way. Last year a total of 5 million people were examined and as many as 4 million citizens of Azerbaijan have already been examined this year. In recent years, we have created modern medical centers in all our regions. So there is no need to come to Baku to undergo a health check today. There are modern medical facilities everywhere, and they should provide people with an excellent service.

Other aspects of our social policy are always in the spotlight as well. The social sphere is an area that provides for the well-being and comfortable life of the people. Therefore, the Azerbaijani government always keeps this area in the spotlight. Of course, our revenues have declined, as oil revenues have dropped. However, the financial resources received in previous years, as well as a thought-out policy, the development of the non-oil sector and the attraction of foreign investments, have allowed us the opportunity to fulfill all our social obligations even in the face of declining revenues and to implement infrastructure projects important for the country.

The state investment program is fairly broad for this year too. This program reflects the main infrastructure projects, the completion of which will create better conditions for the development of our country. Infrastructure projects, of course, have an important role to play in providing for people’s comfort and improving the business environment.

Our reforms are praised by leading international financial institutions. The Davos World Economic Forum has honored Azerbaijan with 38th place in the ranking of the world’s most competitive economies. Our positions are improving with each year. We have gone up yet another step, and I think that 38th place in terms of competitiveness on a global scale is a great success for our young state. We have reached this place not because of oil and gas, but as a result of judicious reforms.

Our economic policy is prudent. It is based on national interests and internal resources. Therefore, Azerbaijan’s foreign debt is at a very low level. For this indicator we are among the most advanced nations of the world. This gives us economic independence. At the same time, we can attract any amount in funding from foreign markets to Azerbaijan. I simply believe that this is not necessary. In a sense, we are certainly doing that, but we largely do our job and future projects in the country at the expense of our own opportunities.

The international authority of our country is growing every day. Azerbaijan is a reliable and respected member of the international community. In all meetings with my colleagues I observe great respect for Azerbaijan. The work ongoing in Azerbaijan is monitored and greatly approved by the international community. Our foreign policy is very active and flexible. It is based on national interests, which form our top priority. This is probably why, if I may say so, Azerbaijan has come out of the crises occurring throughout the region in recent years without any losses and is now carrying out its policies with dignity. We do not take steps under any anyone's guidance. We take prudent steps. If these steps correspond to our national interests, we take them, if not, we do not! There is no power that could force us to do anything or involve us in a campaign that does not correspond to our interests. Therefore, this position and our principled stance on every issue have, of course, earned us a lot of respect. Today, Azerbaijan is a country enjoying great esteem and authority on a global scale. When I say "the international community", I mean all countries, because the international community is not some organization. The world community means all countries. All countries are represented at the UN and, as you know, our positions in the UN are very strong. Otherwise, 155 countries would not have elected us a member of the UN Security Council a few years ago.

We continue our principled foreign policy this year as well. Although only a little more than three months have passed since the beginning of the year, my numerous visits have further strengthened our international position. Since the beginning of this year I have paid two visits to Turkey, have been to Germany, Bulgaria, Vatican and Saudi Arabia. So these visits paid over the course of three months already show that Azerbaijan is pursuing a multi-vector foreign policy. Saudi Arabia is the center of the Muslim world. This country is home to our shrines, while the Vatican is the center of the Christian world.

Remaining committed to its religious, national and spiritual values, Azerbaijan successfully and confidently moves towards modernization. We have built equitable relations with all countries on the basis of mutual respect and noninterference in each other's affairs, friendship and partnership. The respect showed to us is, of course, very gratifying. At the same time, it shows again that our foreign policy is flawless. I want to publicly announce that. We have not broken ties with any country.

We do not have tensions with any country. In fact, look how many friends we have gained in recent years and many countries want to cooperate with us! This is evidenced by the visits of heads of state and government to Azerbaijan, as well as my participation in international events. Today, Azerbaijan is a country that has a firm place in the world. Respect for our country in the world is gradually enhancing.

Earlier this year, I also participated in two leading economic and political forums, in Davos and Munich: the Davos World Economic Forum and the Munich Security Conference. It is no secret that a limited number of guests are invited to these events. These meetings openly and confidentially discuss the challenges facing the world. At the same time, there is an opportunity for all participants to express their views and share ideas. Azerbaijan's position on many issues is very important. I am talking not only about energy policy, but also about geopolitical and security issues in general, economic cooperation and stability. Look at the confrontation, wars, conflicts, crises, coups and other negative phenomena all over the world. Everything around us has been ablaze for more than a year or two – for about 10 years. Azerbaijan is an island of stability and development, and, of course, this is highly valued by the world community.

Of course, anti-Azerbaijani forces incessantly work against us. I have repeatedly stated my thoughts on the matter. The circles that can’t come to terms with the successful development of Azerbaijan, want to cast a shadow over our achievements and tarnish us carry on with their efforts. However, their efforts don’t and can’t produce any result both in and outside Azerbaijan. I have just provided very accurate arguments, albeit rather briefly, of Azerbaijan’s authority outside the country and our international image. The situation in the country is also evident. The stability, development and unity between the people and the government show again that the ongoing campaign against us or attempts to provoke some disturbances here don’t and can’t have any effect. Azerbaijan is developing confidently.

But these attempts, of course, will be continued, because the circles that can’t digest our successes won’t get off us easily.

We, in turn, are giving them the best answer by what we do. We do not and will not attach any importance to their words, articles or statements.

Our main problem, the Armenian-Azerbaijani Nagorno-Karabakh conflict, unfortunately remains unresolved. I have repeatedly stated my thoughts on this issue. I want to say again that the only reason for this is the fact that Armenia does not want peace and wants to maintain the status quo even though the heads of the OSCE Minsk Group co-chair countries have repeatedly stated about the unacceptability of the status quo. Armenia ignores this, while these states are not taking any concrete steps except for making such statements. This is why these statements remain unfulfilled. Thus, the conflict is delayed and not resolved. In the middle of last year the leaders of co-chair countries began to display some activity. In August, September and October, the leaders of Russia, America and France held summits in order to quickly find a way out of the situation and put an end to the conflict. Azerbaijan, of course, supports this activity because, as I have always pointed out, we are the most interested party in resolving the conflict. However, Armenia displayed an insincere attitude at these meetings, did everything to leave the essence of the negotiations on the sidelines and talk more about some confidence-building measures. We are not opposed to that. Confidence-building measures are also important, but the essence is to end the occupation. Despite this, after the Paris meeting, we reached verbal agreement that both sides would try to reduce tension on the line of contact in the hope that it would have a positive impact on the negotiations. However, the hypocritical policy of Armenia manifested itself once again. Less than two weeks later they launched large-scale military exercises in Agdam District. These exercises had one goal – to drag Azerbaijan into provocation and disrupt the process of negotiations.

We tolerated this provocation for a few days, but then we gave a fitting rebuff to the enemy, pointing them to their place.

They immediately took advantage of that to start accusing Azerbaijan of aggressive behavior.

Of course, no-one took this thesis seriously. Azerbaijan has always displayed a very restrained position. Our participation in the talks for over 20 years shows that we want to resolve the issue in peace. Armenia does not want the issue to be resolved because it does not want to vacate our lands. Since late last year the Armenian side has been constantly attacking our positions, and this continues this year too. As a result of these attacks, dozens of Armenians have been killed. According to the information available to us, more than 50 occupiers have been killed on the frontline in the last three to four months. Armenia’s criminal regime, its leaders and the dictatorial leadership of this country are to blame for that. I have already expressed my thoughts about it. If you do not want to die, then get out of Azerbaijani lands.

Azerbaijan will not retreat from its position of principle. We will defend this position. Armenia, meanwhile, is paying a high price for this occupation – the economic downturn, the complete loss of the last remains of independence, the casualties on the contact line, the growing evidence of desertion in the Armenian army. The Armenian soldiers joining the Azerbaijani side are saying that the number of those who wish to go over to the Azerbaijani side is fairly large. They are simply afraid because there is an order there: if someone wants to join the Azerbaijani side, he should be shot in the back and killed. That is a reality. This is the price being paid by the aggressor, and as long as the Armenian-Azerbaijani conflict remains unresolved, they will be paying this price.

We must and we do wage a more active struggle with Armenia. We have isolated it from all international and regional projects. According to their own official statistics, 30 per cent of their population lives in poverty. Real data is around 50-60 per cent. According to their own official statistics, every year 60,000-70,000 people leave the country forever. The information we have indicates that this figure is close to 100,000. In other words, after a few years, there will be no Armenian population in Armenia, a state that was created on historically Azerbaijani lands.

I have repeatedly said that our society, especially the younger generation, should never forget that the Armenian state was created on historically Azerbaijani lands. This is our historical land, the land of our ancestors. All place names are of Azerbaijani origin. Suffice it to look at the maps published in Tsarist Russia in the early 20th century. You can’t find a single Armenian place name there. In the present-day Armenia, 80 per cent of all villages have place names of Azerbaijani origin. These are our historical lands, and we will definitely return to this land. It can’t be otherwise. This is our strategic goal, we are committed to it and we will try to achieve this goal. Our economic, political and military power, our demographics give reason to say that. In the near future Azerbaijan's population will exceed 10 million people, and this is of considerable importance in addressing the issue.

In short, we will continue to make effort to restore our territorial integrity. The conflict must be resolved within the framework of international law and Azerbaijan's territorial integrity. There is no other option. An end must be put to double standards. The territorial integrity of our country is no less important than the territorial integrity of other countries. If the Western world demands a resolution of conflicts in post-Soviet republics within the framework of territorial integrity, then our conflict must also be resolved on these principles. But when it comes to us, you can see that the attitude is different. This is hypocrisy, double standards and injustice. During every meeting and summit, I use the same wording when talking to my counterparts. This hypocrisy and double standards must end. Armenia has occupied historically Azerbaijani territories. But when it comes to official statements, very abstract expressions are used. We are speaking and will continue to speak our word. As I have said, our international authority is growing. It is no longer possible to ignore Azerbaijan, and no initiative can be put forward and resolved in the region without the consent of our country.

There were two important events in the energy sector in the first quarter. On our initiative, the first meeting of the Advisory Council of the Southern Gas Corridor was held in Baku on 12 February. As you know, the foundation of the Southern Gas Corridor was laid on 20 September of last year, and the holding of the Advisory Council meeting was a very important event.

This meeting was attended by all current and future members of the Southern Gas Corridor cooperating with us. The final statement for the media was also very positive. It noted the leading role of Azerbaijan. In March, the foundation of the TANAP project was laid in the Turkish city of Kars. This event, of course, attracted the attention of the world. The TANAP project is part of the Southern Gas Corridor. As you know, the Southern Gas Corridor consists of four parts, and TANAP is an important part of it. Azerbaijan participates in the TANAP project as the main shareholder. Work has already begun, and I believe that in 2018 the Azerbaijani gas produced from "Shah Deniz-2" will reach Turkey. The TAP project must also be implemented. I believe that the barriers artificially created for TAP sometimes will be eliminated, and the European countries involved in the project, the European Union will resolve these issues. In any case, Azerbaijan and Turkey will fulfill their obligations and commitments related to the implementation of the TANAP project in a timely manner.

The Southern Gas Corridor presents a completely new energy map, and the role of Azerbaijan is gradually increasing. As you know, the European Union has put forward a number of proposals on energy alliance, and Azerbaijan is already mentioned in the documents of the European Commission as an important partner. Of course, we keep track of all this work.

We know how important the role of Azerbaijan is. We know that at present Azerbaijani gas is the only new source for the European space. We are doing our job, and it brings results. In 2012, President Erdogan and I signed the TANAP project in Istanbul and in 2015 we laid the foundation for the TANAP project. Look how much has been done in a short period of time.

Prior to that, the TAP project was selected, the "Shah Deniz-2" project was launched and the South Caucasus Pipeline which will link Azerbaijan and Georgia is already under construction. This is our job. We don’t just talk, but do work designed for specific results. We have never made populist promises. We have always done what we said. Therefore, the words I have said regarding the overall economic development in the first quarter demonstrate our successful policy once again. At the same time, very important steps were taken in the first quarter to further our energy policies. I am sure that all our plans will be fulfilled by the end of the year, the dynamic development of the economy will be provided, our non-oil sector will grow, and Azerbaijan will reach even greater heights in 2015.