BAKU, Azerbaijan: President of the Republic of Azerbaijan Ilham Aliyev has emphasized that foreign and local companies must respect and abide by the laws of Azerbaijan if they have to run their businesses in the Caucasus Country.
The following is the full speech by President Ilham Aliyev at the meeting;
“– Many steps have been taken to meet the goals I set at the beginning of the year. Six months of the year are now in the past. To some extent, we can already talk about conclusions. I am sure that the successful development of our country will be ensured by the end of the year. In six months of this year, our main direction was to secure sustainable development of our country, the expansion of the non-oil sector, the restoration of Karabakh and Eastern Zangazur and the continuation of reforms in the economic and social spheres.
As a whole, I can say that our economy has developed over the past six months, although the absolute figures are not particularly high. However, our non-oil sector and the industrial area of the non-oil sector have grown to a sufficient degree. Our non-oil industry grew by 6.5 percent and the non-oil sector grew by more than 3 percent overall.
Meanwhile, our financial situation has also significantly improved, and this has happened for a number of reasons. First of all, the strengthening of discipline in the financial sector, the continued reforms of tax and customs bodies, and transparency – all these factors have allowed us the opportunity to review the budget in the middle of the year and conduct reconciliation. This is very gratifying because the collected funds have significantly exceeded the forecast. Our state budget this year has already reached a record level – it has risen to the level of more than 33 billion manats. However, the acquisition of additional revenues in the first half of the year allowed us the opportunity to make additions to the budget to address urgent issues, and we did that. Today, our budget is in excess of 36 billion manats. Of course, this has also enabled us to implement the main investment projects facing the country. First of all, I want to say again that we should give further impetus to extensive construction work in the liberated lands and increase our military power.
Our two key directions during the reconciliation are very clearly defined. In total, more than 3 billion manats were added, of which 1.8 billion was channeled into the restoration of Karabakh and Eastern Zangazur, and 1.1 billion manats were allocated for strengthening our military potential. In other words, the lion’s share of this amount has been channeled into these two directions, and this is only natural. Because these are the two main tasks facing the country today.
We are also working in the direction of foreign state debt management on the basis of the assignments I gave a few years ago. I said a few years ago that we should set a goal, and we did set it, that our foreign public debt should be below 10 percent of our gross domestic product. It should be at that level. We have already reached this. We have reached this goal. In absolute terms, our debt totals 6.7 billion dollars, which accounts for about 10 percent of our gross domestic product. Of course, the final figures for our gross domestic product will be calculated at the end of the year. But it is possible to make a prediction even now. In the first six months, gross domestic product amounted to more than 60 billion manats.
This is one of the positive aspects, and this one should be specifically underlined, because in many countries, in most of them in fact, we see a completely different picture. Our foreign trade balance is positive, i.e. the surplus is at a very high level. The vast majority of countries import more than they export. In our case, however, it is the opposite – in the first six months of the year, our surplus was close to 10 billion dollars. If these rates are maintained, imagine what figures we will reach by the end of the year, and, of course, another advantage of this is macroeconomic stability. Macro-economic stability has been maintained for many years. The exchange rate of the manat has been stable for six years, which is a rare phenomenon in the world, especially in the current conditions. So, this is a manifestation of a thought-out policy, which, of course, is centered around the people of Azerbaijan. Because macroeconomic stability naturally affects the country’s economy. But above all, of course, the biggest impact of this is on people’s standard of living. In our country, both minimum wages and minimum pensions are regularly increased. In parallel to this, the manat is stable. Of course, double-digit inflation gives us food for thought, and I hope that by the end of the year, inflation can drop to a single-digit level. In addition to natural reasons, there are also subjective reasons. They should be investigated more seriously and proposals should be made regarding steps to be taken before the end of the year. Because against the backdrop of Azerbaijan’s overall economic potential and the results achieved in the economic field, it is certainly not desirable for inflation to be at the level of 12 percent.
As I mentioned, our two main directions after the budget reconciliation were the restoration of Karabakh and Eastern Zangezur and the increase of our military power. Regarding the first direction, I can say that everything is being implemented faster than what we envisioned, i.e. faster that we planned. We have mobilized all our resources. Already this year, we have succeeded in returning IDPs to the Talish village and the city of Lachin, and by the end of the year IDPs will also return to the Zabukh and Sus villages of the city of Lachin. The return program is being carried out in a consistent manner, so, by the end of the year, residents of five settlements – one city and four villages – will be fully settled in their ancestral lands. In total, 100 settlements are to be reconstructed in the first phase of the Great Return program. I personally participated in the groundbreaking ceremonies of 30 residential settlements, eight cities and 22 settlements and villages. Master plans have been prepared and approved, and very extensive construction work is underway in many places.
Of course, first of all, there infrastructure projects. Because we cannot return our people without implementing these projects. At the same time, the construction of residential houses is going fast. On the example of the city of Lachin, I can say that in just eight months, most of the city has been completely restored, and both individual houses and multi-apartment houses are being prepared for more than 700 families there. Further steps will be taken regarding future development plan of the city of Lachin.
Of course, we must always focus on the work to be done in this area. I can say that this is the most important issue in my daily work, and we constantly monitor this work. Government members and other officials are regularly delegated to liberated regions. Everything we do is done in a planned manner. The highest standards are and should be applied here. By the end of this year, on the basis of the overall investment program, we will ensure the spending of up to 12 billion manats in Karabakh and Eastern Zangezur. I should also note that all this work is being carried out at the expense of Azerbaijan. Except for two schools, all remaining infrastructure and construction works are financed from Azerbaijan’s state budget and are carried out by Azerbaijani state companies. At the same time, the Heydar Aliyev Foundation is rebuilding more than 10 mosques, or performing their major overhaul.
When the next year’s investment program is prepared, we will start discussing next year’s budget in the near future. Of course, we will look at the investment costs of Karabakh and Eastern Zangezur, and we should make sure that we do not lose time due to financial constraints. Our financial opportunities are expanding. However, this should not mean that we have no problems in this area. There are many tasks facing the country. Infrastructure projects are being implemented not only in Karabakh and East Zangezur, but throughout the country. Our huge financial resources are involved and mobilized in connection with industrial development and other issues. Of course, we should approach all allocated funds in a cost-efficient manner and ensure complete transparency – both in collecting and spending budget revenues. As I mentioned, when additions were made to our budget, the second main direction has been to increase our military strength. And this is also natural. The international situation is clear. The words I have been saying for many years are being clearly manifested today. International law in different parts of the world does not work. International law, decisions and resolutions of international organizations cannot be relied upon. We have always been in favor of law, including international law. We have always been in favor of justice. Even today, we support justice and international law and defend this position at the international level. Both as a country and as chair of the Non-Aligned Movement, which brings together 120 countries, and the last ministerial meeting showed it.
However, we see that rules are completely violated in the world, the rules of conduct, international law are not followed, and we see this almost every day. Every day, the great powers, which have assumed the role of guarantors of international law, first violate this law and then justify their actions. When I talk of countries, I mean all major countries. Everyone violates conventions, violates international legal norms, violates established international rules of conduct, and does not hide it at all. Therefore, of course, we must be stronger, first of all, to protect ourselves, protect our independence, protect our choice, protect our way of life, protect our territorial integrity. After the Second Karabakh War, we took very serious steps in this direction. I have already stated this, but I want to say again that the Armed Forces of Azerbaijan have greater military potential. We will become stronger both in terms of combat capability and equipment, because this process does not and should not stop. I have said that we will allocate as much funds as necessary for two directions – restoration of the liberated lands and building up our military potential.
By pursuing this policy, we are also increasing the power of our country. Because in today’s world, the power factor is at the forefront. Power is reckoned with. Power is avoided. And we have shown it several times in the last two and a half years and no one can influence our resolve. On the contrary, we were able to break all the arrows aimed at us, protect our dignity and interests. There is no need for additional words, everything is obvious.
I don’t want to go too much into detail, so to speak, but everyone can and should see and know that no one can talk to Azerbaijan in the language of threats and ultimatums, and I think that there will be no such attempts from now on.
In the following years, modernization of our Armed Forces, the deepening of reforms in this area, in the direction of creation and improvement of new armed units, including the acquisition of the most advanced weapons and equipment, will be carried out according to plan. The reforms carried out in the Armed Forces after the Second Karabakh War have not yet been completed, including structural reforms, and we must bring our Armed Forces to the level of the most advanced armies of the world – of course, considering the proportion of Azerbaijan. In terms of structural reforms, governance and self-defense, we are building a force that we can feel confident in this geography. It is the case today, but even greater things must be done. And I want to say again that this is a field where we need to talk less and do more. This why I don’t want to say anything more. In any case, the people of Azerbaijan can rest assured that our security is in safe hands, the people of Azerbaijan can and should live comfortably from now on. One of the tasks we are facing is, of course, the relations with Armenia. In this field, the result does not depend on us alone. However, our policy pushes the Armenian side to take important steps. But, of course, it is a mutual activity.
Our position regarding peace negotiations is clear, logical and based on international law. I believe that by following this principle, a peace agreement can be signed on the basis of norms and principles of international law. At any rate, I think there are such opportunities. The latest rounds of negotiations and high-level contacts scheduled for the next few days have one goal of getting closer to the peace agreement. We are interested in that and we put it forward as an initiative. However, let me say again that everything does not depend on us alone, the other party must be ready for this and must put the principles expressed in words on paper.
One of the positive aspects observed recently is that there is some progress in the position of the Armenian side. Whereas it accepted the territorial integrity, sovereignty and borders of Azerbaijan in October last year, in May of this month they went further and officially recognized the parameters of the territory of Azerbaijan, including Karabakh and enclave villages. This should be viewed as a positive development. It is now time for the same words to be put on paper, sign it and establish relations. In any case, we will continue our efforts in this direction.
Regarding our duties in other areas, I can say that the importance of the transport sector has been growing, especially recently. Because some restrictive measures have led to the opening of new transport routes, and Azerbaijan’s favorable geographical situation certainly creates additional opportunities for us. As you know, we have been pursuing a consistent policy for the development of the transport sector for many years. We have completely modernized the entire infrastructure in our territory in accordance with the requirements of the earlier period. But today the demand has further increased. Because the cargo is increasing, whilst transport routes are limited, as I mentioned. An increase in cargo transportation from North to South and the other way round, from East to West and vice versa is obvious. Here too, Azerbaijan acts as a very reliable partner, is in close contact with its neighbors and does not spare help in solving the transport problems of the neighbors. At the same time, this area is one of our priority areas. I have said this several times, but I want to say it again today, our desire is not only to be a transit country that transships large shipments. Our desire is that production areas should be created on these transport routes, business opportunities should be created, investments should be made, and we should do our work in this direction, including through contacts with neighboring countries. There is a legal framework, industrial zones have been operating for many years. The Alat Free Economic Zone was officially opened and the investment made by the state has already started to bear fruit. Private investors have already been attracted and we are seeing the results.
In a nutshell, we should make a conceptual study of the impact of transport corridors on business and define a goal for ourselves and see what we want. Roads running from South to North and from East to West in the country cover the majority of our districts. Therefore, there should be a special business opportunity for each direction, according to the specifics, according to the climate, according to the specialization. Members of the government must prepare their proposals on this issue. We have a general business development concept, various tools, including soft loans and other tools. In other words, I think it would be good if we analyze this from the perspective of transport routes.
I should also note that we were recently able to expand our transportation capabilities beyond our borders, first of all, in the Black Sea. Three large tankers have been purchased, each with a capacity of 115,000 tons. This is the first time in the history of Azerbaijan and that was done on my instruction. Tankers were named Shusha, Karabagh and Zangezur.
Transportation of Azerbaijani goods by an Azerbaijani company will bring us additional revenues, and we are already present in the Black Sea. We were already there anyway. We had small ships, but today three of our largest tankers, “Afromax” tankers, are already operating in the Black Sea. If necessary, we can increase their number.
Therefore, we have to re-examine our shipbuilding opportunities in the Caspian Sea, because orders are coming from neighboring countries. Our shipyard is calculated for the available shipping capacity. At the same time, we also took into account the decommissioning of ships that have been operating for many years. Because they fall into disrepair and must be upgraded. But there is a greater demand now – both our own and from neighboring countries. So, it is not ruled out that someday we can start expanding the production areas of the shipyard. So, do keep this in mind. In any case, the orders coming from abroad – we have already started preliminary negotiations – are a very positive development. This shows yet again that we do everything at the right time.
If we did not have a shipyard today, where would we be buying tankers and ships? This is a rhetorical question. No one can buy ships where we used to buy them. Therefore, it was a timely strategic step, and it was me who gave the instruction to expand the capabilities of the Alat International Trade Port. We have to do this too. Because our handling capacity is calculated for 15 million tons. This was enough for the previous period. After a year or two, it may not be enough. Again, I don’t want to say anything in advance, but the negotiations with neighboring and partner countries show that it will be possible to transport several times more cargo through Azerbaijan.
I would like to touch upon another issue now. It is an issue related to environmental balance. Karabakh and Eastern Zangezur were very close to the zone of environmental disaster. Because Armenia has dealt a massive blow to our nature as a result of the activities of enterprises operating in Armenia and, at the same time, as a result of the savage exploitation of our natural resources in the lands occupied in Karabakh and Eastern Zangezur at the time. Suffice it to say that the Armenians destroyed, looted, removed and sold more than 60,000 hectares of forests. They made parquet out of it and sold it. We have all these satellite images. Trans-boundary threats must now be taken into account. And Azerbaijan’s position here is still based on international experience, based on international conventions, including the Espoo Convention, which anyone can open and see on the Internet. It states that trans-boundary pollution of rivers and creation of enterprises close to the borders of countries, enterprises that can be considered a source of ecological danger, must be coordinated with neighboring countries, and we demand this from Armenia. Today, the Azerbaijani public and non-governmental organizations have already sent an appeal to the government of Armenia regarding this issue. Experts and representatives of non-governmental organizations working in the field of international ecology have also joined this appeal. Therefore, I think the government of Azerbaijan should not be left on the sidelines here either. Our civil society is taking this step, it is very good, but it is necessary to look, which organizations should be addressed officially, i.e. through state channels, so that Armenia gives up these dangerous practices. If they want to set up an enterprise, we certainly can’t have anything to do with it. It’s their internal business. But if this enterprise is located 500 meters from our border, if dangerous substances are going to be used there and these substances are going to be discharged into the Araz River and the Okhchu River, this is our issue. How can we allow this happen? Of course, within the framework of law, within the framework of international conventions, within the framework of diplomacy, we must keep these issues in the spotlight. So, I am giving this task now – see what legal ways there are to make Armenia abandon these dangerous practices.
In this regard, I can say that a state program on the future development of the Nakhchivan Autonomous Republic was recently adopted on my instructions. The program has been published in the press and anyone can pick it up and read it. It is a program that can ensure the successful socioeconomic development of Nakhchivan in a short period of time, and I am sure that it will be fully implemented. Because this program is based on our own resources. Why I am bringing this up now? The issue of turning Nakhchivan into a “green energy” zone along with Karabakh and East Zangezur was initiated by me. Most of the electricity in the Nakhchivan Autonomous Republic is now produced by hydropower plants. The construction of solar and wind power plants is also envisaged there. Maybe 1,000 megawatts, maybe even 1,500 megawatts, and we will meet all the needs of the autonomous republic for “green energy”. We will also export “green energy” to neighboring countries. Having said all this, we can already see that the greater part of our country has already been officially declared a “green energy” zone, and against this background, the incident in the Gadabay district is completely unacceptable. I believe that the Ministry of Ecology and Natural Resources was negligent as a minimum, it showed lack of control, acted as a passive observer, as a result of which a foreign investor contaminated our nature. People raised their legitimate voice of protest, but did anyone listen to them? No! One day, two days, three days, five days. What was the Ministry of Ecology and Natural Resources thinking? Wasn’t it aware that there was such a problem? It was either aware but turned a blind eye to it, or it was unaware. Both are not acceptable. It is true that some of the citizens were provoked and committed inappropriate and illegal acts, and this is intolerable and unacceptable. Some of those provocateurs have gone into hiding in Azerbaijan, others have fled abroad. Those in Azerbaijan have already been identified and several have been brought to justice. We will bring those abroad to account. Let no one think that we have forgotten this. Chaos, arbitrariness and provocations in Azerbaijan ended in 1993. If someone has forgotten that, we can remind them. Therefore, citizens should also show culture, as they say, show enlightenment, obey the law, and not throw stones at the police. Throwing stones at the police is not an act that brings honor to anyone. This is one thing. Secondly, it is a crime. If the Azerbaijani police show tolerance, it does not mean that people can throw stones at the police. This is absolutely unacceptable. I am saying this to everyone that we are not going to play with anyone’s whims here and if we believe that it is necessary, we will punish those involved in such a way that they will regret it.
At the same time, there was a natural reason for what happened. And this reason is that a foreign company came here to make money. We do not object, they have made investments and created jobs. Of course, they didn’t come here to do charity, they came here to earn money. But this does not mean that our nature should be destroyed in the process. It does not mean that people’s pastures and grazing areas should be occupied. It does not mean that they should build a second wastewater lake without obtaining permission from anyone. Who gave them permission? It seems that either they colluded with the Ministry of Ecology and Natural Resources or did it on their own. So, it should be seriously investigated. All instructions have been given to the prosecutor’s office and other relevant institutions. After I heard the news, I called the Prime Minister and told him to immediately establish a commission and send them to the place. Did I have to actually say that? Didn’t the Minister of Ecology know that he should go there? I said to them that they should go there, talk to the people, take air samples, involve international experts. Because it is quite possible that the ministry was the cause of this incident. It is quite possible that you should involve international experts to give their opinion. To what extent is the exploitation of these fields harmful to people’s health and nature? There is no answer so far. Yes, a meeting has been held, a statement was made in the Cabinet of Ministers, but whoever reads that statement cannot understand a thing. What does it actually state? What was the purpose of that statement? To downplay the issue or just say some general words like that. I gave a specific task, a specific one. Where are the results of the examination? How much time has passed? Almost a month has passed. No one has got back to me. The Cabinet of Ministers does not do it, the Ministry of Ecology and Natural Resources does not do it either. They think that I have forgotten about it. No, I don’t forget anything. I want to say again now that those who threw stones at the police should be ashamed in front of their families, in front of his children, in front of family members, in front of the whole public. Because the public saw those ugly scenes. This is why I am giving you a week’s time. Both me and the public should be informed and the matter should be investigated. Why didn’t the Ministry of Ecology and Natural Resources pay attention to this issue, was indifferent, and even after I gave them the task, they went there and came back, but there is still no information about the result.
Foreign companies and local companies working here must respect the laws of Azerbaijan. If they do not respect our laws, their activity here will be impossible. Although foreign investors exploit the gold deposits in Gadabay based on a production sharing agreement, although they have been working here for many years, the laws of Azerbaijan, the ecological balance, all this must be respected. I should also inform you that our state company “AzerGold” operates gold deposits too. But according to the information provided to me, all environmental norms in that area are complied with. Among other things, there were contacts with local communities, various humanitarian campaigns were held, and people were recruited en masse. So, this is the approach shown by the Azerbaijani company. And that is the approach of a foreign company. This is intolerable, so, representatives of the foreign company should be invited. If they have not been invited so far, they should give an explanation to the Cabinet of Ministers, and let me say this again, myself and the public should be informed within a week. If there is the slightest danger to nature and people’s health there, that activity should be stopped. That’s it!
Companies damaging the environment in the world are going bankrupt today. Could they act like this in their own country? They build a lake and discharge poison into it. They would be hanged by their feet there. They would receive a punishment that they would spend the rest of their lives in prison. But they think that they can do anything they want here. Because they have gone and seen someone, given someone a greeting, given something to someone. There can be no other explanation for this. It is unacceptable – the actions of the provocateurs there, the activities of the foreign company and the activities of our ministry. The only party that acted with dignity here was the Azerbaijani police. Everyone should know this. Some are frowning now. Open your eyes and see how many people the American police kill every year? 1,000 people. How many people does the French police kill and why? Recently, the whole world saw the actions of the French police. I do not justify them. It is unacceptable, and it is a pity that the police, the absolute majority of the police who killed those people are evading responsibility. After a period of time, they either release them in court or give them a conditional sentence. Our police maintains order day and night, in the cold, in the heat, in the mountains, in Karabakh. Our Internal Troops were martyred during the war. How can anyone come and smear the police? I will not allow that to happen and everyone should know that. Provocateurs, those who followed their lead and the whole public.
I should also mention another issue. It is related to the importance of early gas produced from the Absheron gas condensate field these days. This is indeed a very important event. Because our main gas resource to this day was the Shah Deniz gas condensate field, in relation to exports. Today we already have two large gas condensate fields. The Absheron gas field. We had high hopes and we knew that the Absheron gas condensate field contained major reserves and it was reported to me a few days ago that early gas was produced. The flow rates are also very good. One well produces even more gas and condensate than from the “Shah Deniz” gas field. Of course, the Absheron field is smaller than “Shah Deniz”, i.e. from the point of view of reserves. Initial estimates were somewhere around 300 billion cubic meters. But I am sure there will be more. It would certainly be wrong to say anything at this stage. Therefore, this will ensure our energy security at a higher level. Also, the volume of gas going for export will increase year by year, not only because of “Shah Deniz”, but also because of “Absheron”.
The first phase of “Absheron” is already being implemented, and SOCAR should probably start more active negotiations with foreign partners regarding the development of the second phase of this field. Let me repeat that we expected that there would be exploration, but to be honest, we did not expect such wonderful results. This was very good news and a very good and solid answer to certain experts who were trying to cast a shadow on Azerbaijan’s energy potential. Therefore, from now on, our gas export plans will be provided faster and in larger volumes.”