Azerbaijani president chairs meeting on results of 1H2022 [PHOTO/UPDATE]
Azerbaijani President Ilham Aliyev has chaired a cabinet meeting, to sum up the results for six months of 2022.
Opening speech by President Ilham Aliyev
- Today we will discuss the results of the first six months of the year and also talk about the work to be done in the future. The first six months of the year show again that our country is developing successfully and the tasks we have set for ourselves in all directions are being implemented.
Our foreign policy has been very active this year. I believe that important steps have been taken in the direction of foreign policy, and the international authority of our country has further increased. Speaking about the results, of course, I would like to mention our successful chairmanship of the Non-Aligned Movement. As you know, by a unanimous decision our chairmanship has been extended by one year until 2023. This shows that our country has gained a great reputation among 120 countries and their confidence in us has increased over the years. As a responsible country and active chair of the Non-Aligned Movement, we have made a great contribution to the institutional development of this organization. One of the important steps was the meeting of the Parliamentary Network of the Non-Aligned Movement Baku this year and the establishment of the Parliamentary Network. This important event held in Baku once again showed that this Movement has great potential, that it is a very important platform for deepening solidarity, as well as expanding cooperation and mutual international support. This was our initiative, and this initiative is already being manifested in real life. At the same time, the Youth Platform is being created. A youth forum will be held and a Youth Network of the Non-Aligned Movement will be established. Our chairmanship shows again that Azerbaijan remains true to its word. The role we play in the international arena, our solidarity and support for countries in need – humanitarian support, financial support, especially our support for more than 80 countries related to COVID – have significantly enhanced our international reputation, of course.
Active cooperation has also been maintained with other international organizations. Recently, the new Secretary General of the Organization of Islamic Cooperation visited Azerbaijan. We cooperate very extensively with this organization. In fact, we are a very active member of this organization and many events have been held in Azerbaijan on our initiative. This time, the newly elected Secretary General also visited our liberated lands – Fuzuli and Shusha. Of course, during the meeting, we talked about the vandalism committed by Armenia against Azerbaijan and against our cultural heritage. Everyone visiting the liberated lands now, whether they are Azerbaijani or foreign citizens, can see the manifestations of Armenian brutality with their own eyes. We will successfully continue our activities within the framework of the Organization of Islamic Cooperation.
This year, active cooperation was maintained with the European Union. As you know, we are working on a new agreement. A greater part of the text has been agreed and the issues that have not been agreed on are being discussed. I do hope that all issues will be agreed on in the near future. I have had several meetings and phone conversations with the President of the Council of the European Union and, of course, the main topic has been the normalization of Azerbaijan-Armenia relations. However, at the same time, extensive discussions are being held regarding the future development of European Union-Azerbaijan relations. In the near future, an important document will be signed between the European Union and Azerbaijan – a document on energy security, which will raise our cooperation to a higher level.
Active cooperation was also carried out with other international organizations. Of course, Azerbaijan has always been active within the framework of the Organization of Turkic States. Our contacts are expanding both within the organization proper and with individual member countries. This year, I have had three meetings with the President of Turkiye. In April of this year, the President of Kyrgyzstan visited Azerbaijan. At the same time, in June, I visited Uzbekistan and Turkmenistan, had meetings with the Presidents of Uzbekistan and Turkmenistan, and with the Chairman of the People's Council of Turkmenistan. The visit of the President of Kazakhstan to Azerbaijan is expected next month. In other words, these are just visible results, and they show how actively these contacts are developing. They are developing actively. Of course, our relations with the Turkic states are one of our top priorities. Mutual political support is expressed, important projects are discussed – both in bilateral and multilateral formats. Active cooperation is being carried out in transport, energy and other fields.
Our relations with neighboring countries have always been one of our top priorities, and steps have been taken in this direction this year – my meetings with the presidents of Russia, Iran and Georgia are further evidence of that.
At the same time, important steps had been taken in the direction of the development of US-Azerbaijani relations. Reciprocal visits of high-ranking officials have been organized. The President of the United States of America sent me a letter twice – on the occasion of Independence Day and in connection with the opening of the Baku Energy Week. The importance of our relations was highlighted in my reply letters and in the letters sent to me. These relations have both a great history and a bright future. In other words, in a nutshell, just notice how much work has been done together with the main power centers, with neighboring countries, with Turkic states, with the main international organizations in these six months. If we look at the history of recent years in general, we will see that Azerbaijan is making headway in all directions. Our position has always been an independent one. We have always openly demonstrated our position, and this one of the reasons we have gained great respect in the world. We always keep our word. We are always loyal to the word we give. Of course, these international relations, the policy we are implementing in the region and the world as a whole allow us the opportunity to address internal problems with greater success. Because every country needs a positive international background to conduct domestic policy correctly – first of all, with its neighbors, and also in the world as a whole. Today, the results of the first six months show that we have been able to achieve that. I am sure this will continue to be the case. Because we already have an established and in-depth cooperation format, so to speak, with the major international players.
Even though certain steps towards the normalization of Azerbaijan-Armenia relations were taken in the first six months of this year, unfortunately, there are no tangible results yet. Although a year and eight months have passed since the Patriotic War, unfortunately, Armenia has yet to fulfill the obligations it was forced to take upon itself.
If we look at the positive points, I can only say that the first meeting of working groups on delimitation had been held. We see this as a positive step. This is something that took place on the initiative of our country because it was Azerbaijan that tried to take steps on the delimitation of the border as soon as possible. The Armenian side was not particularly inclined to do this. However, the first meeting was held. Of course, this meeting was more of an introductory nature. A second meeting is scheduled for next month. I believe that the second meeting will be devoted to the discussion of specific issues. Of course, we do not expect quick results from our cooperation in this format because delimitation is a long process. But in any case, this process has started, and we can consider it as a successful development.
Another positive development is the fact that Armenia had accepted the five basic basic principles that will form the basis of the peace treaty at the initiative of Azerbaijan. The Armenian leadership has officially accepted these five principles. The Azerbaijani public knows what these five principles are, so I won't repeat them. However, this initiative of Azerbaijan was praised during my discussions with all the counterparts I was in contact with. It is possible to say that the resolution of the conflict on the basis of these principles has been confirmed. Armenia has accepted and officially recognized that. We have discussed this issue with several neighboring countries – Turkiye, Russia and Iran, and this position has received support. The European Union, the United States of America – we have discussed this issue with these partners as well, and the basis for starting peace talks has now been created. Again, Azerbaijan put forward the initiative, we are the ones who developed these five principles, and if we had not taken this initiative upon ourselves, there would have been no progress in this direction to this day.
It is true that while Armenia's acceptance of our proposals aligned with international legal norms and principles is a positive development, there are no concrete steps yet. Foreign ministers of Azerbaijan and Armenia are meeting tomorrow. This will be the first meeting between the ministers and we look forward to the meeting producing results. I have had several meetings with the Prime Minister of Armenia, representatives of Azerbaijan and Armenia have also had a meeting. But there hasn’t been a meeting between foreign ministers, this will be the first such meeting. But the issues to be discussed are already on the table. I think that a good outcome of this meeting could be the Armenian side establishing its own working group. Because the Azerbaijani side has already established its working group for the preparation of a peace treaty. Members of the group, those represented on that group have been identified. Armenia has yet to take this step. I think this could be viewed as a good result and then other issues can be discussed.
Unfortunately, even though a year and eight months have passed since the war, apart from that, I cannot recall any positive development. Regrettably, there are more negative developments. One of them is Armenia's refusal to address the issues identified in the Declaration signed on 10 November 2020. The Declaration of 10 November actually represents an act of capitulation on the part of Armenia, and as a side defeated in the war, Armenia assumed certain obligations. These obligations are explicitly stated there. One of them is the withdrawal of Armenian armed forces from Karabakh. This issue has not been resolved to this day. We have raised this issue many times, but Armenia keeps delaying it. At the same time, we raised this issue with the Russian military leadership, and a high-ranking official of the Russian Defense Ministry, while on a visit to Azerbaijan a few months ago, promised to our Defense Ministry that Armenian armed forces would withdraw from Karabakh by June. It is the middle of July now, but this issue has not been resolved yet. Armenia does not fulfill this obligations in contravention of the 10 November Declaration. Russian peacekeepers – the Russian side also signed the 10 November Declaration – do not force them to do so, so to speak. Of course, this is an intolerable situation because it is completely unacceptable for Armenian armed forces to remain on the territory of Azerbaijan. We are a victorious country and we have restored our territorial integrity. If Armenia does not intend to withdraw its armed forces from the territory of Azerbaijan, then it should let us know this in clear terms, and we will consider our further actions. What will be our response? It would probably be inappropriate to say it now, but this is a flagrant violation of the 10 November Declaration.
The second negative point is that in the 10 November Declaration is that contact was supposed to be established between the main part of Azerbaijan and the Nakhchivan Autonomous Republic, and Armenia obediently agreed to this and assumed this obligation. But so far we have not been given this opportunity. The Lachin road is open, and we made a commitment in the Declaration of 10 November that the Lachin road would work and that Azerbaijan guarantees the safety of that road. We have taken this upon ourselves as a commitment and we are following it. But we do not have the opportunity to go to Nakhchivan from the main part of Azerbaijan. Not only do we not have the opportunity to do that, we do not even see any work being done in this direction in the territory of Armenia.
To date, there is no feasibility study for the railway to be built in the Mehri section of the Zangazur corridor. No project can be implemented without a feasibility study, and it takes several months to prepare a feasibility study for the construction of a railway. So this work has not been started yet. The route of the highway has not been given to us. A year and eight months have passed. I have raised this issue many times, including three times during meetings with the Prime Minister of Armenia and President of the Council of Europe. To this day, we have not been given the route. The distance there is just 40 kilometers away. There cannot be multiple routes. It is also clear that there are not so many road routes that can be used in all seasons and 24 hours a day. So there is a reason why this route has not been given to us. Work in this direction has not been carried out, the feasibility study has not been prepared – Armenia does not want to fulfill this obligation, but it does not admit that. This is why we are demanding our own rights. If we are implementing all the provisions of the 10 November Declaration, we demand the same approach from Armenia. A year and eight months have passed since the end of the war, so everyone should take this into account.
Another issue is that the head of Armenia has once again started talking about some status lately. However, when the war ended, when Armenia signed the act of capitulation, there was a verbal agreement between us, the leaders of Azerbaijan, Russia and Armenia, that the issue of status would not be touched upon again. Armenia followed this for some time but this talk has recently become commonplace. Their prime minister and then their foreign minister have talked about the status of Karabakh. I said shortly after the war where the status went and what happened to it. I don't want to repeat myself. If someone in Armenia has forgotten this, I can repeat it. But I think it is not necessary for now. Therefore, I think that it is very dangerous for Armenia to talk about the status because we can also start talking about the status, we can demand status for Zangazur, the Zangazur that was severed from us in November 1920. We are not talking about it, but we can and see what the result is. There are a quite a few negative points of similar nature. Attempts are still being made to revive the now defunct Minsk group. The Minsk Group has now left the stage. We, a country participating in this process, are saying that there is no need for the Minsk Group. There is no need for a group that has not produced any result in 28 years. This is what we say. To put it mildly, a cold war is going on between co-chairs of the Minsk Group. They have actually admitted that the Minsk Group is not functional any more. The Russian side says that the Minsk Group is no longer active and that the other co-chairs have put an end to this institution. The Armenian side, meanwhile, says every minute that the Minsk Group has done this and that. What does this mean? Simply put, we see a territorial claim against our country behind this. On the one hand, Armenia accepts and acknowledges our five principles, including the mutual recognition of the territorial integrity of countries, the relinquishment of territorial claims against each other and other provisions, but on the other, it seems that the Minsk Group needs to be kept busy. Then the question is: what should it be doing? The Karabakh conflict has been resolved and the Karabakh issue has been closed. Karabakh is Azerbaijan! I said this, I said this quite rightly, and everyone is saying this now, including Armenia, which is forced to say this, says it unwillingly. All countries and organizations we are discussing this issue with are saying this.
So, as you can see and as you know, these negative trends are intensifying. In all matters, in order to resolve a problem or perform a proper analysis, you need to identify these trends correctly. So far, this has not brought about any serious complications. But if these harmful tendencies are not nipped in the bud, they may have consequences one day. We don't want that. We want peace. We don't want war. We never wanted war. Whatever we have done, we have done it on the territory of Azerbaijan, and we have done it in such a way that everyone can envy our military operation. But it is also impossible not to see these trends. This is why we see them, detect them, and warn. Let everyone draw a conclusion from our warnings, as they say. So much on this issue. I don't want to go into too much detail. Let me reiterate that we look forward to the meeting of foreign ministers tomorrow. We are waiting for the results of the meeting. And we will determine what steps will be taken after that.
Reforms were also carried out in the military sphere during the first six months. Structural reforms and reforms in military education have been carried out. Serious steps have been taken in connection with military exercises. New armed formations have been established. New contracts have been signed, military equipment, weaponry and ammunition are and will continue to be acquired. We are continuing our work in the field of army building. Part of our economic and financial opportunities, which have increased this year, is aimed precisely at these issues. Additions have been made to the state budget, adjustments have been made and military spending has been significantly increased. Why? There are reasons for this. We identified military spending last year, when the budget for this year was being approved, and we thought that this was sufficient. However, because of the issues I have mentioned and other issues I have not mentioned here, we then felt that military spending should be increased. This increase will be channeled specifically into the acquisition of weapons with high-tech capabilities. I want to talk about this too, because we see that there is a need for the signing of new contracts. This year, during the adjustment, our military spending was increased in order to acquire the most modern military equipment and weapons. We will increase it as much as necessary, because we know well what war is, we know what occupation is, and we also know what a threat is. We must be ready to secure our right at any moment.
The issues of social protection of servicemen are also provided at a high level in Azerbaijan. There is a lot of information about both the conditions of service and the living conditions of military personnel. I can say that the work carried out in this area in Azerbaijan barely has any analogues elsewhere in the world. Today, the state provides servicemen with apartments in recognition of impeccable service. All our military camps are being overhauled and about 90 percent of them have been rebuilt. Notice how much work has been done on liberated lands – military camps, bases, military roads, infrastructure – we are doing this in challenging climatic conditions. Of course, the social problems of servicemen who showed heroism in the war always in the spotlight, and relevant instructions have been issued. During this time, in the post-war period, the Ministry of Labor and Social Protection of the Population has done a lot of work, and everyone should know this. It is possible to say that all military personnel who became disabled in the war have already been provided with the most advanced prostheses – fourth-generation prostheses that allow a person the opportunity to live peacefully, walk, and even play football and run. We are doing this. This is a very expensive equipment, and this technology is such that it must be updated from time to time. We are doing and will continue to do this, because servicemen who have lost their health must always be surrounded by the care of the state. The state does this, and local officials should never forget this either.
After the war, the state provided apartments to many martyr families and those disabled in the war. I believe that this issue will be completely resolved in Baku this year. Last year, 3,000 apartments and houses were provided and a further 1,500 apartments and houses this year. In total, 12,500 apartments have been provided to the families of martyrs and those disabled of the first and second Karabakh wars. How many have been provided in Armenia? Zero! Not even a single hut. Of course, we do not want to compare ourselves with Armenia at all, but this is a reality. So many wars have taken place in the world – in our region, in places close to our geography and elsewhere. What country is doing this? Can someone tell me? I haven’t heard anything like that. We are not doing this to brag about it, but because we consider it a moral duty. We are doing and will continue to do it. All martyr families currently in line will receive apartments in the near future.
Rehabilitation centers equipped with the most modern technologies have been created. Thousands of services are provided, employment marathons are held for those disabled in the war, for veterans and families of martyrs. In general, a lot is being done to attract people of this category to active work. This tends to be overlooked, perhaps we should show and appreciate that more, although there are so many more things to do.
We are rebuilding and must rebuild Karabakh and Zangazur. How much money is required for this? We are doing everything at our own expense. In one year and eight months, we were not provided with any assistance. No-one has helped us with a single manat and we are doing everything ourselves. We are building cities and villages, we are constructing buildings and will do so much more. In parallel with this, we are solving and will continue to solve social issues. No-one should doubt that because, let me repeat, we consider it our moral duty, and our social policy has always been like that. Notice how much wages have increased in recent years. This year, for example, the average salary has grown by about 14 percent and pensions by more than 10 percent. This growth has a source, the state budget – a budget thanks to which we are building up and will continue to build up the power of our army for the reasons I have mentioned, a budget, thanks to which we are solving social issues, rebuilding Karabakh, providing for all other needs without receiving a single manat from anyone. Therefore, everyone should know this. Those who have forgotten this should refresh their memory, as they say, and be a little more attentive.
Of course, the economy is the basis for the implementation of all this work. Economic independence has been gained, and this is exactly why we have gained political independence and independence on the international plane. No-one can influence our will, no-one can dictate anything to us, we are not dependent on anyone and, I am sure, we never will be. If we depended on someone, then Karabakh would still be under occupation. Therefore, economic independence is one of the main factors, and there are great achievements there as well.
We have increased the state budget not only as a result of the rising oil price. In other words, it became possible as a result of adjustments, as well as the reforms carried out. Yes, the oil price in the world did rise, but at the same time there was a decline in the world’s capital markets, and everyone should know this too. People tend to think that oil prices have risen and Azerbaijan has become richer. Yes, oil prices have risen, but our reserves mainly consist of loans and shares. Let them look it up and see the decline the world’s capital markets are experiencing. Of course, this is a temporary phenomenon. All sovereign wealth funds have been faced with this situation. I don't want to talk about the losses of other sovereign funds now, but here we are talking about losses of tens of billions – large sovereign funds - as a result of this capital market shrinking. This has a negative impact on us as well. However, thanks to the measures taken, thanks to the reforms, we are making sure that no-one feels that.
Therefore, the reforms carried out in the economic sphere have made it possible to collect 2 billion manats in excess of the forecast in the tax sphere in six months. Why? Because there is transparency, accuracy and accountability. A few years ago, business people were given time to switch to normal tracks and shake off the shadow economy. Those who patronized them, as they say, were taught a lesson as well. Therefore, the tax authorities alone collected an additional 2 billion manats in six months, and we are using these funds. There are still about six months left until the end of the year. This is the key factor behind our financial and economic opportunities.
As for economic growth, of course, we always divide it into two parts – economic growth and the growth of the non-oil economy. There are good results in both directions. The economy grew by 6.2 percent, the non-oil economy by 9.6 percent, total production in the field of industry by 2.1 percent and in the field of the non-oil industry by 11.5 percent. These are very good results, and we are seeing them in real life, because it allows us the opportunity to raise salaries and pensions. The income of the population has increased by about 20 percent. True, inflation absorbs a part of this growth, so to speak. It is just over 12 percent, but this is a general trend all over the world. Even in countries where inflation may have been at 0-0.5 or 1 percent, it is approaching double digits now. In other words, this is a general trend, and we are part of the global economy.
I should also note that there is a lot of speculation today that the world economy will be in recession. That is, influential international institutions, financial institutions are talking of a recession as an inevitable fact. We must also be prepared for that. Economic development, the solution of social issues, army building in Azerbaijan, the restoration of Karabakh, giant infrastructure projects, transport, energy projects, stability, calm – everyone takes this for granted, so to speak, and this is very good. I am very glad that everyone sees it this way, and this should be the case. But what needs to be done to ensure this? Some don't see it or don't want to see this. We are living at our own expense. No-one is helping us, never has helped and never will. Therefore, we are creating our own life. We do not interfere in anyone's affairs, but at the same time we will not let anyone interfere in our affairs either. Let me say this again: economic independence is the cornerstone of political independence.
Our foreign trade has also significantly increased – by more than 70 percent. Our exports have more than doubled. Non-oil exports have grown by more than 25 percent. In six months, the positive balance of foreign trade amounted to $12.1 billion. All these figures can be a source of pride for any country. On 1 July last year, our external public debt accounted for 16.6 percent of the gross domestic product. This can be considered one of the best results on a global scale – in fact, it is.
A few years ago, I set the goal of reducing our external debt to 10 percent of the gross domestic product. According to the figures presented to me on 1 July this year, the external debt accounts for 10.7 per cent of the gross domestic product. Why? First of all, we do not take loans and are repaying the loans taken previously. I can’t say that we don’t take loans at all, as we are receiving a continuation of previously taken loans. But we do not take new loans. We are repaying them. Secondly, the economy has grown, and as the gross domestic product grows, the debt ratio decreases. Notice that the external debt of some developed countries is twice as high as the gross domestic product. Countries with an external debt accounting for 70 percent of the gross domestic product may do just fine. Ours is at 10 percent. What does this mean? We do not want arrears to accumulate. We do not want future generations to be burdened by this debt. We want to lower it further and cut our coat according to the cloth.
All this has been achieved by a country that has just overcome the pandemic. Unfortunately, there is information coming in, which, in fact, is being circulated by the World Health Organization, that some countries have to switch back to masks again. Of course, we are monitoring these trends. During the most difficult period of the pandemic, we also introduced certain restrictions, but after the situation improved, we canceled them. In other words, it is an ongoing process. Our overland borders are and should be closed. Why? So that people don't get infected. Because this disease mostly spreads across land borders. Therefore, we keep our borders closed and we are doing the right thing. We will keep them closed for as long as it is necessary – we are talking about land borders. We are doing this to protect the health of our people, in order not to lose them. This is our goal. During the COVID period, we allocated billions of dollars. I don’t want to repeat that now.
In other words, the work done in the economic sphere in the first six months, of course, is the result of the reforms carried out, and these results, these figures allow us the opportunity to say that all the plans we have outlined will be implemented before the end of the year.
I want to say a few words about the energy sector, because it has always been a priority for us. Our energy capabilities are of great importance for many countries today. We are systematically working in this area too. Of course, a lot of preparatory work has been done over the years so that renewable energy is developed in Azerbaijan, primarily at the expense of foreign investors, and we have finally been able to achieve this. Foreign investors are building three solar and wind power plants with a capacity of 710 megawatts in Azerbaijan at their own expense. Two are already under construction, and preparations are under way for the construction of the third station, in Jabrayil district. The construction of this station will probably begin next year. And this is just the beginning. According to the agreements we have already reached with foreign investors, there are plans to build solar and wind power plants with an additional capacity of 2,000 megawatts, as well as a further 2,000 megawatts. In addition, the generation capacity of hydroelectric power plants in Kalbajar and Lachin districts is being revaluated, because after the war we calculated the generation capacity of only hydroelectric power plants destroyed by the Armenians. There used to be a total of 32 hydroelectric power stations there, which the Armenians savagely destroyed when leaving Kalbajar and Lachin. Having calculated this, we announced a certain figure.
But a deeper analysis is being carried out now, because it is possible to build larger hydroelectric power plants there. An analysis is being conducted now, and we will probably be able to receive more than a thousand megawatts from small hydroelectric power plants alone in the future. Within a year and a half, the construction of nine hydroelectric power stations has either been completed or will be completed by the end of this year. This will provide us with an additional 50 megawatts. In other words, this area was a priority for us even before the second Karabakh war, but it has risen to a completely new level now. I want to say again that the state does not invest a single manat in the production of renewable energy – except for hydroelectric power plants. Only foreign investment is made. Of course, this will allow us the opportunity to export more electricity. Today we are exporting it in the conventional manner – through existing high-voltage lines. In the future, however, we can organize the exports of electricity through the Zangazur corridor, and Europe has presented a new project. There is also a project to lay a cable from Georgia to Romania along the bottom of the Black Sea, and we are interested in this project as well. So there are great prospects in this area. At the same time, this will allow us the opportunity to save natural gas and export it, especially considering that the demand for our gas has increased dramatically lately. The reason for this is very well known, and we, of course, are working in this direction. We have envisaged the gas that will be produced from promising fields both for the domestic needs and for exports. So far, the Shah Deniz field is our resource base for exports, but in the near future, gas production is also expected at Absheron, Shafag, Asiman, Umid-Babek fields and the deep-water portion of the Azeri-Chirag-Gunashli fields. So this is a tremendous resource, and extensive work is currently underway on all the projects I have mentioned. These are not just exploration projects – hard work is underway. On 18 July, there are plans to sign a memorandum in the field of energy between the European Union and Azerbaijan. In other words, this is also our contribution to the energy security of Europe and other countries.
Of course, the international authority and opportunities of our country are growing, its revenues will grow, and the conditions for doing business are improving. Energy, along with transport, will continue to be one of our key sectors. There is also growth in the transport sector. The volume of transit cargo has increased by about 30 percent. I am only talking about the results of the first five months. A 30-percent increase is a very good result. In some directions, in particular, along the North-West transport corridor, the growth constitutes 300 percent. Our geographical location and the infrastructure we have established, of course, allow us the opportunity to become a very important transit country. The transit of goods through Azerbaijan has already been on the increase for several years, but this year’s growth is even more impressive. Of course, it is also necessary to take into account the capacity of the Zangazur corridor too. Therefore, we are striving for the earliest possible creation of the Zangazur corridor.
The government has already received instructions related to the upcoming work in the transport sector. I want to say again that our shipbuilding plant must operate at full capacity, produce as many ships, tankers and ferries as it can. It is necessary to re-examine the possibilities of this plant. I have been informed that it can produce six tankers, ferries, dry cargo ships each year. We need to see what the needs are and how much the number of ships will increase in other Caspian countries. We must discuss these issues with neighboring countries. Perhaps we will come to some kind of an agreement with the neighboring Caspian countries on the types of ships to be produced so as not to produce the same types of vessels. Because the increase in the volume of transportation through the Caspian Sea is already a reality. In the current circumstances, we are ready for this, but we need to embark on the second phase of the International Trade Seaport, to expand this port. I was recently informed that we no longer have the capacity to transship cargo passing through our territory because we built the international trade seaport in accordance with the volumes of cargo of that period, and we completed the first phase. We now need to move on to the second phase as soon as possible. The government has also been instructed, and we will do everything that is necessary. Dredging should also be carried out, because the water level in the Caspian is falling. Therefore, it is necessary to dig new channels for a faster movement of ships. So dredging work is also on the agenda. The expansion of the port, the construction of new ships, the work of all our transport institutions as a single mechanism, because this was not the case before and everyone was pursuing their own interests, so to speak. Shipping, the port and the railway should work as a single mechanism today, and I have instructed the government to do this. Meetings have been held under the leadership of the Prime Minister. When developing the state for the next year, we, of course, should keep this area in the spotlight because this will increase our economic opportunities. At the same time, the transit capacity will increase and jobs will be created. We are a landlocked country and will become a serious transport and logistical center.
Of course, I would like to say a few words about the work under way in Karabakh. I do not want to talk a lot, because everything is obvious. All work is going according to plan. Infrastructure work – the construction of residential buildings has already begun, the village of Aghali has been put into operation, master plans of five cities have been approved, and the locations of new villages have been determined. Perhaps this year we will be engaged in construction and the creation of new villages. There is also the restoration of historical sites. So everything is going according to plan. As I have already mentioned, this region will become a model not only for Azerbaijan, but also for the whole world. We are doing everything according to plan. Of course, we are in a hurry, but at the same time, we should not allow haste. All tender procedures must be carried out, transparency must be fully ensured and there must be no monopolistic trends. Open tender procedures are and will be provided. The public must and will be regularly updated.
Of course, among the things related to Karabakh and Eastern Zangazur, food security issues also occupy an important place. This year, not only we but also the whole world have been faced with this problem. Today, extensive information about the shortage of grain is being circulated through news channels and in the media. Unfortunately, we are also a country heavily dependent on grain imports. Currently, a program has been prepared to eliminate this dependency. It is necessary for us to increase the production of grain as soon as possible, without wasting time, both on the liberated lands and in other parts of our country, and we will do that. According to the latest data provided to me, almost 100,000 hectares that have never been used before will be sown with grain this year, i.e. wheat, barley and cereals. This will enhance our food security.
In short, I want to say again that I have covered only a small part of the work done, but even this is enough for everyone to see that we are doing gigantic work and will fulfill all our plans.
President Ilham Aliyev made a closing speech at the meeting.
Closing speech by President Ilham Aliyev
- Thank you. I am sure that no-one has any doubts about the economic indicators of this year now and, in general, about the realization of our plans. Because the results of first six months show that we will achieve what we want.
Work on the next year's budget should start now and the government should lead all the work. There should be proper coordination between all the agencies and the next year's budget should enable us to fulfill the tasks ahead. After adjustments have been made, I believe that this year's state budget will be the largest budget in the history of Azerbaijan, and we want to channel the increased opportunities into the development of our country and the social well-being of our people with maximum efficiency. In the next year's budget – of course, budget parameters have yet to be discussed, there is still time – I still see social policy as the main direction. A lot of work has been done in this direction, in this area in recent years. However, we should always view this area as a priority. Therefore, have a look, make suggestions as to what additional steps can be taken to ensure social protection of our population is at the necessary level, especially to solve social issues of people of the most vulnerable category.
Of course, the implementation of infrastructure projects will be envisaged in next year's budget, and I think that the main goal here is to determine the extent to which these infrastructure projects will contribute to the growth of the real economy. As a whole, the work carried out in recent years has enabled Azerbaijan to reach its main goals related to the implementation of infrastructure projects. We are seeing this both in real life and in the reports of the Davos World Economic Forum. Because as an exporter of natural gas now, we have increased the level of gas supply within the country to 96 percent – of course, without Karabakh, I do not count that region. We used to import electricity, but now we are exporting it and expanding our export routes. Roads, railways, airports, drinking water projects, i.e. major projects have been implemented. Of course, social infrastructure projects must be implemented at the next stage. This time, we have provided additional funds especially for the construction of schools. Unfortunately, there are still schools that are in poor condition. We have identified them and, in addition to social infrastructure, let me say that again, infrastructure projects that serve the real sector should be looked at in particular.
I would like to draw your attention to the projects related to irrigation. The construction of large water reservoirs and water canals, as well as the supply of drinking water, is planned in liberated areas. By liberating East Zangazur, we have regained access to large water sources, which were also under occupation. At the same time, irrigation issues will be largely provided by Kalbajar and Lachin water sources. Recently, while I was in Kalbajar and Lachin districts, a project was presented to me. There is also a project of the Melioration and Water Management Open Joint Stock Company to deliver drinking water to the Aran region of Azerbaijan. In other words, this will contribute a great deal to the solution of problems related to drinking water. This is why it is necessary to look at these projects in particular.
When it comes to drinking water and irrigation, we should also use foreign investment here. I was recently informed that some companies have applied for the operation in the Alat Free Economic Zone, including a project on desalination of the Caspian water. This is also very important. These are projects that have already been tested in many countries around the world, and public-private sector partnerships are possible here as well. Of course, at the same time, the implementation of projects should be planned under the auspices of the state and through private investment.
Proposals regarding the restoration of Karabakh and Eastern Zangazur for the next year will probably be submitted to me in the coming months. Infrastructure, residential buildings, construction of villages – all these projects should be in reflected next year's budget because we have been preoccupied with infrastructure projects this year. Nevertheless, we have already started the construction of a residential complex in the city of Shusha with state funds. In the city of Aghdam, we have started the construction of residential buildings through the private sector. Therefore, these issues should be taken into account in the state budget. Here too, the private sector and public partnership can be very important in the construction of buildings on liberated lands, as well as in the implementation of other projects. I think the issue raised here is very correct. If additions need to be made to the legislation in respect of the public-private sector partnership, we must do that as well. We should do whatever is necessary to further improve the investment climate of our country as a whole. Because the country's economy cannot develop without foreign and local investments.
Our main goal now is to further develop the non-oil sector. All the prerequisites are there. Azerbaijan has asserted itself as a reliable partner in the world. The giant oil and gas projects have shown that we fulfill all our obligations. Not a single comma has been changed in the contracts signed. This is somewhat different compared to the situation observed in our region. Therefore, it is one of the main factors for investors to see the extent to which their investments are protected and how committed the state is to its obligations. We have that, we have a good investment environment, and we have trained personnel capacity. Today, this is a reality, and further steps will be taken in this direction.
As you know, we have re-launched the program on educating Azerbaijani youth in leading foreign universities. Personnel capacity, of course, is a very important issue.
Stability, peace, the unity between the people and the government, national solidarity in our country – all these are very important factors. When we look at the developments unfolding in the world today, we see that there are no conditions for investments in some places at all. Because investors will not go to a high-risk country. As a result of tireless efforts of the Great Leader, we succeeded in bringing billions of dollars worth of investment to our country, which was considered the most risky at the time, in the early 1990s. Where? To the oil sector. There wasn’t any particular interest in gas projects then. This was the most attractive sector for us. Today, large companies are applying to us for investment in the non-oil sector, and the number of such applications is on the increase. A unity of all these factors contributes to that. The investment environment, our cooperation with major companies, political stability and, of course, our Victory in the second Karabakh war convinced investors even more. Because there are no more risks of war. At the same time, the attitude towards Azerbaijan, the already positive attitude, has changed to an even more positive one. I think that to have waged war and won despite the difficult natural terrain in 44 days is duly appreciated by everyone in the world, of course. Therefore, we need to attract even more private sector and foreign investors to our country. To do this, of course, we should work harder in the countries that can potentially bring investment. The Ministry of Economy and other institutions, including the Tourism Agency, should also promote this area, not just our natural beauties. Business forums and investment conferences should be held in Azerbaijan on a regular basis so that we can showcase our opportunities.
I have also been updated on the work underway at the Sumgayit Chemical Industry Park. Very large investment projects are being implemented there. Of course, we would also like other industrial zones to implement investment projects taking into account the characteristics of those zones, maybe not exactly of the same proportions, but this process should not be stopped there either. After all, we have several zones where initial projects have been implemented, and we need to attract foreign investors to the regions – of course, to Jabrayil and Aghdam districts where work is already underway. I am sure that there are great prospects in store for that zone.
With regard to the work going on in Karabakh and East Zangazur, permanent jobs are already being created there. Of course, temporary jobs are also being created there for those working in construction, but permanent jobs are being created as well. For example, nine substations have been established where there are permanent jobs. Hotels are now operating in the city of Shusha. A five-star hotel is under construction and will be ready next year. Then there is renovation of historical buildings. In short, permanent jobs are being created in each field, and all relevant institutions must work so that people from those regions are hired for those jobs – the young generation, representatives of those regions, their children, their grandchildren. It is necessary to pay special attention to that.
A process should also be in place to conduct specialization-based selection among former internally displaced persons – for example, energy, the service sector, social sector, doctors, teachers. A school is being built in Aghdam city. Who will be teaching there? Teachers from Aghdam who used to live there, their children or grandchildren. It is necessary to pay special attention to that. In this way, we will return the former internally displaced persons to their native land even faster and, at the same time, provide them with jobs. A hospital, a school and several culture centers are under construction in the city of Shusha now. Of course, most of the people who will work there should be natives of Shusha. Do pay attention to that because this is a very important issue.
I spoke about renewable energy in my opening remarks – we have tremendous potential. Contracts have already been signed and are being executed, new contracts are to be signed, memoranda have been signed. We have a huge source of energy in the form of the Caspian Sea. This is already being acknowledged by international experts. The wind of the Caspian Sea may sometimes create problems for us, but it actually cleans the air of Baku. When the Khazri blows, we are all happy that fresh air is coming into the city. This wind can also prove very useful. We have received preliminary proposals for the construction of wind power plants in the Caspian Sea from several large companies. These proposals are now being studied and analyzed by both the Ministry of Energy and the Ministry of Economy. Of course, we know that there is potential and we know that it is attractive to foreign investors. I should also note that there is already competition between large companies in this field, and this competition is quite serious. I don't want to name the companies now but the number of those interested in investing in this field is fairly large. Therefore, we will make the right choice. I mean I don't see a shortage of investments here.
Main export routes. This is exactly why I mentioned that – the Zangazur corridor, the cable to be laid along bottom of the Black Sea, the traditional Azerbaijan-Georgia-Turkiye route, the Iran-Azerbaijan electricity link – all this infrastructure needs to be re-examined. If we are capable of exporting 1,000 megawatts of electricity per year on average, we should have the potential to export 5,000 megawatts of electricity. This is why I gave the instruction to “AzerEnerji” and am now instructing the government and other relevant institutions that we have to do this work in a comprehensive manner. In other words, we should not be content with an additional 1,000 or 1,500 megawatts. We should probably invest more, but we need to make sure that when we produce excess energy tomorrow, there will be no problem with exports. Negotiations should also be initiated with potential buyers. In my opinion, we should not wait for someone to come and knock on our door. We should identify the markets ourselves, the possible markets, this year. Delegations should be sent there, negotiations should be held and favorable conditions should be agreed upon. Because this is the future. We are all aware that investment in conventional energy sources will stop. Hydrogen, green hydrogen, electricity – these are the types of energy of the future. We should not lag behind at all. On the contrary, we have to go forward, and all possibilities for that are available.
Although good results have been achieved in the fight against the shadow economy, there is still a shadow economy and some issues of concern. Unfortunately, some of the personnel I trusted did not live up to my confidence. Of course, the shadow economy exists in every country, and what matters is the volume of it and the attitude of the state and government to it. The attitude of the state and the government is that this should not exist in Azerbaijan, and it is in our hands to prevent it from happening. After all, technology is developing and new possibilities of oversight are emerging. There should not be a negative factor called shadow economy here, or it should at least be minimized. Therefore, the most advanced technologies should be applied – accounting, control and, of course, personnel. If a person leading an institution works for his own pocket, no electronic control tools will produce the desired result. Therefore, there must be a combination of these factors here – institutional measures, of course, state control, public control and proper selection of personnel. This is why I think that even though our budget has increased, including a large increase as a result of transparency, there are still reserves. The shadow economy actually withdraws these reserves from the state and channels them into someone's pocket. This must be stopped and we must take advantage of every opportunity to do that.
Certain steps have been taken recently to expand the geography of our exports. We see this in the statistics as well, but we should pay more attention to that. Because we are developing an export-oriented economic model and increasing our non-oil exports. The figures I mentioned are also evidence of that. To produce competitive goods is not yet the solution, we you have to enter the markets. There is competition for markets, in fact giant companies are involved. The world’s main markets have long been provided and divided, and in order to enter a market you have to provide some added value. This is why we must pay serious attention to that. There should be certification, processing and light industries must also develop fast. Unfortunately, although certain steps have been taken, 50 percent of the harvested cotton is still exported as seedless raw cotton. The private sector built two or three factories in the city of Mingachevir, but then this work stopped. This is why we need to look at that. Presentations must be made, perhaps some privileges could be granted.
It was mentioned here that we had channeled some of the additional funds into loans during budget adjustment. It is necessary to see if this field is at all promising, because this wealth is in our hands. Why should we lose? Why can't we fully activate the value chain? There are many such directions.
Regarding agricultural processing. We need to product goods that can be exported to any market. In any case, certification and expansion of export markets are necessary, perhaps even more so in the current conditions. Because the diversification of exports will allow us the opportunity to strengthen our country at the expense of the non-oil sector in the future.
As I have already mentioned, we must all remember that a decline in the global economy, i.e. a recession is inevitable, and we must be prepared for it. A recession, of course, if it happens, will primarily affect the price of oil. Therefore, the price of oil should be chosen correctly for the next year's budget. We will talk about that later, there is still time. But, of course, we must follow the processes going on in the world because Azerbaijan is a part of the global economy.
I am sure that the work to be done next year will further strengthen our country. We have always been true to the word we give. We have always kept our promise. We have fulfilled what we promised to the people of Azerbaijan – in all areas, including economic and social. I am sure that we will always be true to our word and achieve what we want. We want our country to become stronger and our people to live better.
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