Opening speech by Ilham Aliyev at the at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in nine months of 2011

At this meeting of the Cabinet of Ministers we will discuss the results of socioeconomic development in nine months of the year and talk about the work to be done by the end of the year.

With two months left until the end of the year, we can say that 2011 has also been successful. Over the course of this year we have resolved key social and economic issues facing the country and successfully implemented all our programs.

As regards statistics, we can say that dynamic development has continued although the gross domestic product did not grow as rapidly. There are reasons for that. It is gratifying that thanks to the work we carried out in previous years and the right policies, we have succeeded in diversifying our economic development.

Although the gross domestic product has only grown by 0.5 per cent, our non-oil economy developed by 8.2 per cent. I repeat that this growth is the result of work we did earlier. With regard to the fact that the gross domestic product grew only by 0.5 per cent, this is explained by reduced oil production this year. As a result, this drop has prevented the overall indicator from being high. But there is no such goal. Our economy, the structure of our economy has significantly changed for the better. Thanks to the work done in previous years and to be done in the coming years, our economy will reveal itself as a fully diversified economy.

So the projects launched earlier and under way now have made a truly immense contribution to the Azerbaijani economy.

As for the development of industrial production, the overall indicator is negative because of the reduced oil production. But the non-oil sector of the economy has achieved a growth of 9.2 per cent. This growth was achieved thanks to the investment made in the real sector of the economy and the development of entrepreneurship. This is the result of loans, programs on the development of entrepreneurship and a highly successful public policy.

Thus, the task we set a few years ago to create a powerful industrial potential in the country is being successfully fulfilled. Large enterprises are being set up, major industrial parks are beginning to operate. At the same time, the activities of small and medium-sized enterprises are expanding, their number is increasing, and I repeat that the reason for this growth is that the state provides great support for the private sector, allocates loans. Another reason for this growth is the fact that specific measures are taken to transform state-owned companies into international ones. Our state companies have now turned into strong entities in terms of professionalism, logistics and technical equipment.

Agriculture has also experienced growth over the nine months. This is a very positive development, because we are taking specific measures and implementing programs to develop agriculture. In particular, even larger programs will be realized next year. As you know, the government allocates significant resources for the development of this sector, provides benefits. The delivery of equipment, provision of low-interest loans and subsidies – all this serves agricultural development. It is no coincidence that agriculture grew by 7.6 per cent in nine months of this year. This sector also plays a great social role because about half of our population lives in rural areas. Thus, agricultural development leads to increased yields and bigger areas under crop. As a result of land reclamation, we will introduce even more land into circulation in the coming years. From now on the measures relating to agriculture will be carried out consistently. Along with this, we have to think very seriously and work hard on accessing new markets. This work is under way, especially when we consider that non-traditional markets are waiting for our agricultural products, for the products of our processing industry. We simply need to carry out our policies properly, harmonize domestic production with domestic consumption and access foreign markets, so that agricultural goods to be produced in Azerbaijan in even greater volumes in the future could make it to the buyer.

I can say that in nine months of this year our financial standing has significantly improved. Although we are implementing major infrastructure projects, our foreign exchange reserves are not reducing. In fact they are growing. In nine months our reserves have increased by about $11 billion. At present, Azerbaijan's foreign exchange reserves exceed $40 billion. This is a very high indicator. If we look at developed countries, we can see that Azerbaijan is not inferior to anyone in this regard, we are ahead of many countries. If we consider that we have a prudent oil and gas policy and strategy, that we always coordinate investment with expected revenue, there is no doubt that we will further increase our exchange reserves in the coming years without reducing investment and social spending. This is a great asset. It gives us economic power, enables us to implement investment projects, protects and will protect us from difficulties and crises. The main contributor to the accumulation of foreign reserves in such volumes is the establishment of the State Oil Fund of Azerbaijan in 1999 and its transparent operation.

All our revenue is stored and managed transparently and reliably. At this stage they are channeled into projects associated with the development of our country. At the next stage, starting from next year, in order to diversify our financial resources, we will use these funds as investment in various projects in different countries.

In short, our country is successfully handling economic development issues. Not surprisingly, international financial institutions appreciate the reforms ongoing in the economic and social spheres in Azerbaijan and raise our credit ratings. While credit ratings of developed countries are falling in the crisis years, the credit rating of Azerbaijan is rising. One of the world’s most influential organizations, the World Economic Forum, has released a regular report on the competitiveness of world economies. Praising the activities of Azerbaijan, it has placed us in 55th place. In terms of economic competitiveness, Azerbaijan is a CIS leader. We are in the leading position and I am sure that we will hold the lead. Because our successes are based on thought-out reforms, prudent and independent policies. The energy factor no longer plays a major role in our successes. As you know, we have done a lot in recent years to reduce our reliance on the energy factor even though the oil and gas potential still secures our political and economic interests today and will continue to do so in the future.

In 2011, very memorable events have occurred in the social sphere. These events, these steps also show that our policy is socially oriented. We are and will be committed to the principles of a market economy. But at the same time we are taking specific steps to protect the vulnerable population more effectively from a social standpoint. These steps are not limited to the adoption of programs, statements, these programs are quite specific.

This year, the pensions of about 900,000 people were raised by an average of 40 per cent. In general, pensions in Azerbaijan have been increased by 35 per cent in the first nine months. This is a very high figure, a great achievement, a very serious step, a timely, correct and fair step aimed at creating better material conditions for the older generation.

At the same time, the average salary has been increased. Currently, the average pension in Azerbaijan is $190 and the average salary is $450. It is a good indicator, but it should be even higher. We will strive to take further measures to address social issues in the coming years, so that pensions and salaries continue to grow, the living standards of our people improve and such a social evil as poverty is eliminated in Azerbaijan. For the most socially vulnerable population the government has developed a program of targeted assistance. Currently, the program covers 113,000 families. Over 500,000 people receive monthly assistance from the state. On average, each family receives aid in the amount of 102 manats, or about $130.

This is also a very correct step. It is a fair step. As long as these people live in poverty, the Azerbaijani government will assist them. When they break free from the grips of poverty and improve their financial situation, this assistance will certainly be suspended. Because the main issue is the principle of social justice. We have been living in a market economy for 20 years, our economy is regulated by these principles. The market regulates both demand and supply. But there are cases when people have no opportunities, when they have no job and financial security. We must not remain indifferent to their plight. The main objective of the program of social assistance is to improve the financial situation of the poor. With regard to the unemployment I can say that Azerbaijan has done a lot in this field. The rate of unemployment is about 5.5 per cent. If we look around, at developed countries, we can see that it is also a very good indicator. In some developed countries unemployment is at 20, 15 and 10 per cent, while in Azerbaijan it is 5.5 per cent. This may not reflect the real situation, as we know very well that, unfortunately, we do not employ a detailed and precise procedure in this area. There are cases when no registration is carried out. In some cases people are paid not officially, but in envelopes. We have repeatedly raised this issue. I can say that we have taken effective measures in recent years to normalize the situation in this area, and these measures should be continued. If we take into account this factor, we will see that the rate of unemployment in Azerbaijan is below 5.5 percent. It is likely that the level of poverty is also not 9.1 per cent, but lower. But, of course, as a result of specific administrative steps and institutional measures in the coming years, we will have a completely real picture of the economic situation. The innovations currently applied, the principles of “electronic government” and other progressive initiatives will provide the public with a picture that will reflect the real situation by 100 per cent.

This year, as always, we have implemented successful investment projects in our districts, additional measures have been taken to create new jobs. In nine months of this year, a total of 74,000 new jobs were created, including 50,000 permanent ones. Thus, about 950,000 jobs were created in Azerbaijan over the past eight years.

The program on the development of districts is successfully under way. This program is occasionally supplemented and amended. Sufficient funds have been allocated to districts from the Reserve Fund of the President this year. These funds largely focused on socioeconomic and infrastructure projects. In particular, we have been seriously engaged in repair and construction of rural roads lately. Major programs are being implemented. This area should be given even more attention in the coming years. In short, the program on the development of districts is ongoing, there is no reason for concern.

This year we have passed a very broad and specific program on the development of villages and settlements around Baku. I can say that the program was launched in the shortest possible time. We are already seeing the initial results of this program. Earlier, in 2005, we passed a three-year program on the development of suburban settlements of Baku, which has been completed. A new program was required. We did that, and we can say that large-scale creative, rehabilitation and landscaping work is under way in all suburban settlements. The entire infrastructure is updated, new gas, water and sewer lines are laid, electricity supply is improving, schools, hospitals, medical facilities and clinics are built. So there are specific proposals on each settlement, and they are reflected in the program.

This program has been published. When developing this program, we, of course, received the main information from the ground, i.e. residents of settlements submitted their proposals which were subsequently summed up and the program eventually adopted. It also contains specific proposals on employment opportunities for residents of suburban settlements. The allocation of loans to settlements has also begun, and there are already specific programs and proposals on some areas. I am pleased that the program on the development of Baku and suburban settlements is well under way. It suggests that all the social and economic issues existing in suburban settlements will be resolved within two to three years.

Throughout the nine months of this year, we have systematically built our work in all directions. This is already a wonderful tradition. There are specific programs on each sphere. We have a total of 50 targeted programs in Azerbaijan, financial sources, their procedures and deadlines are specified. Everything we do is of specific nature, and this is the guarantee of our success.

Unfortunately, there is no progress in our most difficult problem, the Armenian-Azerbaijani conflict over Nagorno-Karabakh. I have provided the public with sufficient information on this issue. I also spoke extensively on the issue at the ceremony marking the 20th anniversary of our independence, so possibly there is no need for repetition. I simply want to say that Azerbaijan has a principled position which is based on historical truth and international law. We will not back down from this position. Azerbaijan’s territorial integrity is not, has never been and never will be the subject of negotiations. We will try to restore our territorial integrity using all our opportunities. Let me repeat: although there are no results, the views expressed by international mediators in recent months, in particular regarding the unacceptability of the status quo, give us a glimmer of hope. So the status quo is unacceptable and should be changed, the conflict is not “frozen” and the change of the status quo clearly requires withdrawal of occupying forces from our occupied lands. This is where a solution should be sought. Occupying forces must withdraw from our lands. International law should serve as the basis for resolving any issues, especially those related to conflicts. We will do everything in our power to resolve this issue in our favor soon and in a fair manner, i.e. in line with international law. At the same time, the figures I have cited today, the economic development, economic potential, demographics and, of course, the military potential, play and will continue to play a role in a fair and speedy settlement.

We have also taken extensive measures in this direction, we are pursuing a precise policy. Economic indicators of the current and previous years, our military capabilities suggest that the gap between Armenia and Azerbaijan is increasing. These two countries are incomparable, the difference between us is like between heaven and earth. Everyone knows this – the international community, the sides and organizations dealing with the matter. Most likely, this reality has been the basis for recent statements about the status quo, i.e. changing the status quo. It is clear to us and any impartial observer that Azerbaijan is growing stronger, while Armenia is weakening, the population of Azerbaijan is increasing, while the population of Armenia is decreasing.

As for military issues, economic statistics clearly shows who is who. As the saying goes, suffice it to have an unbiased look of our cities to see what a great road Azerbaijan has covered and that our country is strengthening day by day. As for the military balance, I can say that until recently, probably as a result of Armenian propaganda, the difference in this area, i.e. the difference in our favor, was not fully realized by international organizations and observers. However, the parades recently conducted in both Azerbaijan and Armenia have demonstrated who is who. I think it was a big mistake to conduct a military parade in Armenia. Prior to that, as always, they had been trying through various myths or fantasies to convince others that the Armenian army is the most combatant of all, but their so-called “military parade” revealed the deplorable plight of the Armenian army. You, all the people, including myself, could see for the first time that their military hardware cannot move itself. During the parade it was towed by trucks. This may have several reasons. Either this hardware does not work, is in disrepair, or there is no fuel. Or both. Most likely, both factors have played a role. This parade has shown again that Armenia is not an independent state, it is an outpost. Earlier such statements were made by senior officials, but what we saw at the parade confirms that Armenia still is an outpost.

In addition, the event carried out in Armenia will probably be remembered by yet another novelty. To put it mildly, the participation of religious leaders is a little surprising, not to mention the fact that priests were marching like soldiers. It is hard to describe this in words. We appreciate that due to its aggressive policies Armenia is facing a demographic catastrophe, but we had no idea that the clergy are called up for military service.

This is both ridiculous and tragic. I think that they should soon realize that the settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh is in their own interests.

Finally, the possibilities of our country and its growing international authority are exemplified by the recent UN vote.

As you know, Azerbaijan has applied for admission to the UN Security Council. To achieve this goal, our diplomats have done a great job in recent months. The vote has been quite interesting. The people of Azerbaijan may not know this. I can say that Armenia had also nominated itself at the preliminary stage. But several months ago they probably thought and realized that they cannot compete with Azerbaijan on the diplomatic arena and withdrew their candidacy very quietly. This in itself shows that they are helpless in the face of Azerbaijan and acknowledge that. They know that their expansionist policies against Azerbaijan, their aggressive policy, dirty dealings and evil plans can never be supported by the international community. On the contrary, the international community condemns and will condemn them. As a result, Armenia withdrew its candidacy very quietly, so that this disgrace is not discovered by many people and countries.

I do hope that they demonstrate the same approach to the settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh, will think again, weigh all the pros and cons, and finally realize that they cannot and will never be able to compete with Azerbaijan in any field. The sooner they realize this, the better for them. It is not ruled out that their political and diplomatic failures, their failure in the UN Security Council vote will not be limited to the diplomatic arena. Azerbaijan is a strong state, and neighbors of strong states usually want to be friends with them.

As for the vote, it is still under way. Several rounds have already been held. In the first round, Azerbaijan was first. In the second and subsequent rounds Azerbaijan was also ahead by a wide margin. Next rounds are due today, on 24 October, but we can already say that it is our great victory. Regardless of the final outcome, I can emphatically say and I am absolutely convinced that this is a historic result. A total of 113 countries support Azerbaijan. This is a historic achievement. This is a sign of the international community’s attitude towards Azerbaijan, it is evidence of our country's development. I have repeatedly said in my speeches that Azerbaijan is a reliable partner. This sentence carries a great meaning. Maybe those hearing it now cannot fully comprehend how much sense this statement contains. Being a reliable partner is enormous responsibility and a great achievement. We are trusted partners indeed. Someone may like our policy, others not. We are not trying to please everyone. We conduct our own policy. Azerbaijan is a reliable partner. There is no discrepancy between our words and deeds. There is no discrepancy between our words and signature. To earn trust is not easy, especially for a young independent state. We have recently celebrated the 20th anniversary of our independence, spoken about great successes and future plans. I can say that the support of 113 countries is a logical outcome of these 20 years.

In short, let me repeat that we have specific programs, plans, policies related to the situation in the country, the reforms ongoing in the country and our foreign policy. This policy enables our country to develop rapidly and successfully.