Opening speech by Ilham Aliyev at the meeting of the Cabinet of Ministers of the Republic of Azerbaijan dedicated to the results of socioeconomic development of Azerbaijan in the first nine months of 2013 and objectives for the future

Opening speech of President Ilham Aliyev

- Today's meeting of the Cabinet of Ministers will focus on the social and economic results of the first nine months of this year. At the same time, we will talk about the work to be done before the end of the year. I can say that these nine months have been very successful and all the objectives have been met.

The Azerbaijani economy has developed successfully this year, and I am sure that this rapid development will manifest itself in the coming years too. The reforms conducted so far and the results achieved suggest that Azerbaijan’s successful development will be ensured in the future as well. All macroeconomic indicators are at a high level.

Economic growth in the first nine months was 5.4 per cent. I believe that at the present time, especially given the ongoing crisis in the world, this is a fairly high indicator, which allows us the opportunity to successfully implement our investment programs. The most gratifying fact is that our non-oil sector is growing rapidly and this growth has been maintained from the beginning of the year to the present day. In the first nine months of the year our non-oil sector grew by 10.4 per cent. I think that this is the highest rate in the world. This result has also been facilitated by the reforms carried out in Azerbaijan because the dependence of our economy on the oil and gas factor has been reducing every year. Thus, issues of economic diversification are also being resolved.

At the same time, this indicator is evidence that the successful development of the country’s economy will be maintained in the future too because I am sure that the investment made at the current stage, the jobs being created, the new areas ready for development and the new areas of industrial production will ensure high growth rates of the non-oil sector in the coming years. Thus, the Azerbaijani economy will completely eliminate its dependence on the oil and gas factor in the future. At the same time, the development of the non-oil sector is certainly the result of the state policy. I regularly express my thoughts on these issues and emphasize that the main priority in the economic field is the development of the non-oil sector. We have achieved that and the growth of 10.4 per cent is a clear indication of that.

There is an increase in industrial production as well. Growth in agriculture has been at around 5 per cent, and there is a great potential for further growth here too. Inflation is only 2.3 per cent, which is also a great indicator. Incomes of the population have increased by 7.6 per cent. In other words, as was the case in the last 10 years, the growth of population incomes this year has been several times faster than that of inflation. Therefore, there are additional opportunities for improving people’s well-being.

The macroeconomic situation is stable. I can say that Azerbaijan is among top ten countries of the world for this parameter. According to the recent calculations of the Davos World Economic Forum, Azerbaijan is in 39th place in the world in terms of economic competitiveness. It is a historic result and a great victory to be among top 40 countries of the world. It is the result of reforms, judicious policies and our overall success. Of course, this presents Azerbaijan in the world as a rapidly and dynamically developing country and will help us in attracting foreign investment to the non-oil sector of Azerbaijan.

The process of attracting investment is ongoing. In terms of the investment climate, Azerbaijan is a very attractive country in the former Soviet space and in the region. By attracting foreign investment, we managed to get out of a difficult situation at the beginning of the 1990s. Today, foreign investors enjoy even better conditions because the country is developing, the infrastructure is upgraded, our domestic market is expanding and access to foreign markets is created.

This being the case, the issues of attracting investment from abroad will remain a priority in the future even though Azerbaijan is now no longer dependent on foreign investment and our investment portfolio is largely made up of domestic investment. In the first nine months of this year, $17.7 billion was invested in the economy, of which $10.5 billion is domestic and $7.2 billion foreign investment. This is a very high indicator for a country such as Azerbaijan, and if can maintain this rate until the end of the year, it is expected that the country's economy will receive about $25 billion in investment this year – only in a matter of one year! If we consider that about $20 billion was invested last year and another $20 billion in previous years, it is easy to imagine how important these issues are for the economy. The attraction of investment is the result of many years of stability in Azerbaijan. Foreign and domestic investors place their money only in stable countries. The investment made in Azerbaijan is channeled into different areas. Whereas in previous years, in the 1990s, investment was mostly made in the oil and gas sector, now more emphasis is placed on tourism, services, high technology and the creation of industrial parks. Thus, the placement of domestic and foreign investment in Azerbaijan, I am sure, will give a greater impetus to the economy of the country.

Our foreign exchange reserves have grown during the year. This, I believe, is also a very good result, because we have a lot of expenses and our budget spending is increasing every year. I set the goal of increasing our foreign exchange reserves every year, and we have achieved this goal. During the year, our foreign exchange reserves have grown and currently constitute $49.4 billion. This is a very high figure for a country with a population of 9.4 million people. I think that in terms of monetary reserves per capita Azerbaijan is among leading countries of the world, which is the result of a deliberate and consistent policy. We, of course, allocate funds to resolve important issues facing the country. This is the goal of the state investment program, which is increasing year by year, foreign investment and funds allocated for infrastructure projects.

At the same time, we need to make efficient use of our resources and plan our budget so that in Azerbaijan’s foreign exchange reserves could grow steadily. For us, it is a security issue, a matter of economic and political security. At the same time, we need to think about future generations, and we think about them. We need to build and leave behind a strong economy, so that future generations do not experience any problems related to the future development of Azerbaijan. Therefore, the careful and balanced steps in the financial sector and economical use of the resources are strategically important. I want to reiterate that the growth of foreign exchange reserves ensures sustainable development of Azerbaijan. At the same time, our relations with foreign partners rise to a higher level. Today, there is no problem in attracting any amount of foreign financial resources to Azerbaijan. In order to avoid the increase of the foreign debt, we are conducting a very conservative policy in this area. Today, Azerbaijan is in one of the leading places in the world for this indicator too.

Our foreign debt accounts for only 7-8 per cent of the gross domestic product. In some developed countries, it is close to 100 per cent. The countries where it is 70 per cent are considered to be in a good financial situation. In Azerbaijan it is 7-8 per cent. This means that we are laying a strong foundation for the present and future, so that Azerbaijan is never – neither today nor in 10 or 20 years from now – faced with the problem of debt. The debt problem is a very serious problem. The events unfolding in some countries today are the result of this unjustified debt.

Our national debt constitutes only 7-8 per cent. In general, we can fully repay this debt at any time, but some economic and financial issues do not require that. But we can reduce our foreign debt to zero at any time. These are our main economic parameters that ensure the sustainable development of the country’s economy. Of course, all of these economic and macroeconomic figures are an indicator in themselves. But the main thing is that these parameters have an impact on people's daily lives, on the development of our country and on the implementation of infrastructure projects.

Of course, our strong social policy is underpinned by a strong economic policy. We are implementing all our social programs. Salaries and pensions were raised this year. Over the past 10 years salaries and pensions have been raised several times. This year we have also resolved the issue of repayment of the deposits left in the banks from Soviet times.

The Azerbaijani state demonstrated its social engagement and succeeded in repaying these deposits. So the implementation of social programs is constantly in the spotlight.

The establishment of the social infrastructure is also well under way. This year, we have overhauled or rebuilt about 200 schools. All the other social facilities are renovated and modernized. Azerbaijan can serve as an example in the social policy too. I want to say again that this program and these policies are underpinned by powerful economic factors.

We have been able to achieve all our goals associated with the development of the regions. This year we will complete the second program on the development of regions. This program has actually been exceeded. In the first nine months of this year alone about 90,000 jobs have been created. In general, over the last 10 years we have created more than 1,200,000 jobs, which has also led to a reduction of unemployment. According to the latest information, the unemployment rate in Azerbaijan is below 5 per cent. Poverty, which is directly related to unemployment, is also reducing. There are still two months left for the year’s end, but we can already say that the level of poverty in Azerbaijan will be below 6 per cent by the end of the year. So in the last 10 years, we have made progress in this direction and consistently reduced poverty. As I noted in previous years, the social problem of poverty should be completely eliminated in Azerbaijan. The people of Azerbaijan should live better. Of course, social programs are implemented to achieve this goal.

Very serious steps are also taken to improve the business environment. The state allocates concessional loans to entrepreneurs. Loans with great benefits are provided for agricultural development. Infrastructure projects are implemented. The state has assumed tremendous responsibilities related to the activities of large farms. Issues of irrigation and land reclamation – all these steps support and give an impetus to entrepreneurship. A comprehensive solution of economic and social issues, of course, facilitates the development of the national economy. Thus, I am sure that we will be able to maintain this positive trend in the coming years.

A special importance among social issues is attached to the problems of the IDPs. For several years now, we have been providing at least 20,000 displaced people with houses and apartments every year. Beautiful settlements and towns are built, and this process continues. These programs will be continued at the expense of the State Oil Fund in the years to come.

Azerbaijan has a very serious stance and an independent approach to the regional situation and the developments unfolding in the region. We always have an independent position. Our position is based on international law and justice. I can say that thanks to such an approach, the number of our friends in the world is on the increase.

Unfortunately, there has been no progress in the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict in recent months. But over these months, as was the case in previous years, we have significantly strengthened Azerbaijan.

Today, the gap between Armenia and Azerbaijan is deepening further. Azerbaijan is a rapidly developing and strong state, while Armenia is becoming weaker and poorer every year. The recent events have shown once again that Armenia is not capable of living at its own expense and is in a dependent position. Even high-ranking Armenian officials recognize that Armenia can’t provide for its own security. This actually means recognition of a collapse. In essence, this is recognition of defeat because if a country which has been trying for 22 years to introduce itself as an independent state admits that it can’t provide for its own security, it can’t exist as an independent state. It simply takes time, and I am sure that the processes taking place in the region, the strengthening Azerbaijan and the completely changed balance of powers will lead us to success and Azerbaijan will restore its territorial integrity. I have no doubt that this will be so. We simply need to continue our policy. Our policy is based on historical justice. At the same time, international law protects our position.

Economically, we are at least 10 times stronger than Armenia. We have gained an edge in the military sphere too. The geopolitical situation and the processes taking place in the region simply call for peace talks for the time being. We hope that these talks will be productive and Armenia, having seriously analyzed everything and understood the real situation, will vacate our lands and the territorial integrity of Azerbaijan will be restored without bloodshed.

However, we also know that international legal norms are often grossly violated and ignored, and that there are double standards. In some cases, UN Security Council resolutions are executed in a matter of a few hours. In our case, however, the resolutions adopted over 20 years ago are not fulfilled and no-one forces Armenia to fulfill them. Here too, we are faced with double standards. This is no longer a secret. It is certainly not a secret for us. I am sure that the people of Azerbaijan are also well aware of these issues and understand that double standards, in some cases a biased attitude towards Azerbaijan and unreasonable kindness towards Armenia are the biggest obstacles to the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict. But we will continue our efforts. We have to be even stronger. We must and we will continue to keep Armenia in isolation – diplomatically, politically, economically and in terms of regional initiatives. There is rapid depopulation in Armenia. Every year its population shrinks by 80,000-90,000 people, and if things go on like this, then in five to 10 years there will be less than a million people there and the demographics will decide many issues.

Meanwhile, our demographic situation is very positive. The population is growing. In fact, the population is made up mainly of young people, who are very active. So the resolution of the conflict is inevitable.

Azerbaijan will restore its territorial integrity. The Azerbaijani flag will be raised in Nagorno-Karabakh, Shusha, Khankandi and all other occupied lands. As I mentioned in my earlier speeches, the Azerbaijanis should be able to live not only on the occupied but also on all other historically Azerbaijani lands. This is our sovereign right. Our compatriots were driven out and deported not only from Nagorno-Karabakh, but also from our historical lands of Erivan, Zangezur and Goycha – first in the 1940-1950s and then in the 1980s. This is a huge injustice. We will go back to these lands too. We will definitely go back there. The younger generation should live with this dream and with these thoughts. There will come a time when we will live there. In general, the Azerbaijanis should be able to and will live on all the historically Azerbaijani lands. To do this, we are already conducting our policies.

Therefore, Azerbaijan, which has grown stronger in the developments unfolding in the region, has become an international factor. I do hope that this will send a strong message to the Armenian leaders that the early settlement of the conflict is in everyone’s interest, including themselves.

We have successfully addressed other issues of foreign policy. My numerous contacts throughout the year and meetings with colleagues show once again that the number of Azerbaijan’s friends in the world and countries interested in working with us is growing. Azerbaijan is known worldwide as a reliable partner. The visits of senior state and government officials to Azerbaijan in the last quarter are further evidence of the successful steps Azerbaijan has taken in its foreign policy. There was a successful visit of Prime Minister of Italy to Azerbaijan last quarter. Italy is one of the leading countries of Europe and the world. We have a great relationship. An Italian Prime Minister has paid a visit to Azerbaijan for the first time ever. The results of the visit were very positive. A few days later the President of Russia paid a visit to Azerbaijan. That visit was also very successful. It was very important to the development of Russian-Azerbaijani strategic relations. The agreements reached on all the issues will ensure the successful development of Russian-Azerbaijani relations in the future. I am sure that there will be excellent results both in the political and economic spheres in the future. A few days after that Azerbaijan hosted a summit of Turkic-speaking states. Presidents of Turkey, Kazakhstan and Kyrgyzstan came to Azerbaijan. So all of these visits took place over the course of one week to 10 days. In fact, this is an indicator of the fact we have very close relations built on mutual respect and trust with Europe, with our neighbors and with Turkic states. The fact that these relations will continue to develop is beyond doubt.

I want to say again that Azerbaijan’s relations with all foreign partners are based on mutual respect, noninterference in each other's affairs and mutual interest. I believe that the experience gained in this area in the years of independence could be a model for other countries. We are protecting our national interests and doing so effectively. At the same time, we are open to cooperation with all countries. Our foreign political approach is based on cooperation. We do not interfere in the internal affairs of any country. When we see someone trying to interfere in our internal affairs, we certainly issue a harsh response and do not allow this to happen. The experience of the last 10 years shows that such efforts are futile. Whereas earlier someone thought that it would be possible to exert pressure on Azerbaijan and influence it in addressing certain issues, now most countries, foreign and international agencies realize that it is impossible to talk to us in the language of force because there will be an appropriate response. The most important thing is that Azerbaijan is a completely self-sufficient country. It does not depend on anyone, is not indebted to anyone, goes and will continue to go its own way, the way of independence and development. We build our relations with any country on this basis. I believe that our experience in this field, as I said, can be very interesting for some countries.

For nine months we have conducted a successful policy in other areas as well. Very important events have taken place in the energy sphere. The Trans-Adriatic Pipeline project was launched earlier this year. The implementation of this project will be a historic matter. It will be a historic project. Such opportunities have emerged thanks to the signing of the TANAP project between Turkey and Azerbaijan last year. All the doors have been opened. Today, there are new opportunities for delivering Azerbaijan’s natural resources to Europe and world markets. I believe that the Trans-Adriatic Pipeline, TAP, will be a historic project that will enable Azerbaijan to deliver its resources to world and European markets by safe routes for decades to come.

Gas contracts related to the "Shah Deniz-2" project have also been signed recently. We have already identified our partners and export destinations. We have not deviated from our path and have adhered to our course in the energy policy. We have created a situation where these projects will serve the people of Azerbaijan for at least 100 years. This is where our vision for the future lies. We need to look 30, 50, 100 years ahead, be able to predict Azerbaijan’s development and properly analyze the developments unfolding in the region. We should and we make the right decisions.

Issues related to our energy policy are important not only for our country and the region, but also for the world. A lot depends on the position of Azerbaijan, on the decisions made in Azerbaijan and Baku. This is clear both to us and the organizations collaborating with us on these issues. Under such circumstances, mutual interest and the principle of noninterference in each other's affairs should certainly provide an even greater advantage.

This year we have taken serious steps related to industrialization. I stated my thoughts on these issues earlier too. We have consistently pursued efforts to create a powerful non-oil industrial complex in Azerbaijan. This year we have already implemented a number of significant projects. Therefore, I am sure that the successful industrial development of Azerbaijan will manifest itself in the coming years too. Issues related to job creation and increase of non-oil exports will also be resolved. The Takhtakorpu water reservoir and the Valvalachay-Takhtakorpu and Takhtakorpu-Jeyranbatan water utilities have been commissioned lately. This is a great historic achievement. We have created an artificial lake in the mountains. For comparison, I want to say that it is about twice as big as Lake Jeyranbatan. It will significantly improve irrigation, land reclamation, agricultural development and provision of our population with drinking water. At the same time, a shipyard has been commissioned in Baku. This is also a historic achievement. Although we did have shipyards before, we had never had shipbuilding plants. This plant is based on the latest technologies. It can build all types of vessels, which will reduce the need for purchasing ships abroad. I am not saying that it will be completely eliminated because our needs exceed the capacity of the plant. But most issues will be resolved in Azerbaijan. A few days ago, we laid the foundation of a chemical industry park in Sumgayit. This is also a historic event. An industrial estate will be set up on an environmentally clean area, i.e. an area of 200 hectares that is free of any pollution. Thousands, tens of thousands of jobs will be created. New enterprises – roughly about 40 large enterprises – will be established. Investments worth tens of billions will be made. The products to be manufactured there will also be worth billions. This

is very important for the development of our non-oil industry and the country’s economy.

I have listed only a few projects. There are many such projects. Their implementation shows that we have achieved our goal. These results have been achieved thanks to the industrialization policy pursued over the last 10 years. I am confident that all of these positive trends will be further intensified until the end of the year and in subsequent years, and Azerbaijan’s successful development will be continued.