Opening speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in the first quarter of 2014 and objectives for the future

- Today’s Cabinet meeting will discuss the results of the economic and social development in the first quarter of 2014. I remember expressing confidence during the discussion of the results of 2013 that 2014 would also be successful for our country in terms of economic development, and the results of first three months of this year confirm this. Azerbaijan has managed to preserve the dynamic pace of development. Our country is moving forward successfully in all areas. The economy grew by 2.5 per cent. I believe that this is a good indicator. The structure of our gross domestic product is also improving. Of course, the main indicator reflecting our economic development in recent years has been the performance of the non-oil sector. As was the case last year, we have managed to achieve rapid development in this area this year too.

Last year, our non-oil sector grew by 10 per cent, while in the first quarter of this year by a further 8.8 per cent. Of course, this growth is a result of the reforms carried out in Azerbaijan in recent years. The policies conducted in the field of economy have brought about the present realities.

Diversification of the economy is our top priority. I think we have managed to achieve that, as our non-oil sector has been growing fast for a long time.

I think that our policies in addressing social problems are going in the right direction. These policies have been conducted for many years and have withstood the test of time. Incomes of the population have increased by 4.5 per cent. Inflation is only at 2 per cent. Thus, the incomes of the population, as always, exceed the inflation more than twice. And it is also a key condition for addressing social problems of our people. At the same time, it shows that economic and social reforms in Azerbaijan are conducted in the right direction because fundamental economic reforms should also be underpinned by very serious social programs.

Agricultural growth constitutes slightly more than 3 per cent. This, too, can be seen as a positive development. I am confident that as a result of additional measures that will be taken in the coming years we will see even more impressive figures in this sphere.

Our foreign exchange reserves are growing. They have increased significantly in the first quarter. At the moment our foreign exchange reserves constitute $53 billion. This is a very large figure. If we consider the population of our country, we can see that in terms of this indicator – exchange reserves per capita – Azerbaijan is among leading countries of the world. Most importantly, despite the implementation of major investment programs, our foreign exchange reserves are not reducing but growing by the year. This is also our policy. I have repeatedly stated that we certainly need to use our financial resources for the development of our economy, entrepreneurship and infrastructure projects, but at the same time our foreign exchange reserves should continue to grow every year.

Today, our experience and policies towards channeling funds into the real sector of the economy, attraction of investmentand implementation of infrastructure projects are already perceived globally as an example.

There used to be different opinions in relation to this policy. Some international financial were giving us other advice and putting forward different recommendations. But we pursued our policies correctly. We used our foreign exchange reserves very effectively for the development of the country, creation of a powerful potential and development of the non-oil sector.

At the same time, our strong financial status preconditions our independent policy, because an economically free and independent country can speak its word in the international arena more confidently.

In short, our main economic parameters are very positive. This allows us the opportunity to be optimistic of the future. I am sure that this growth rate will be maintained for the rest of the year and we will complete 2014 with great success.

Deposits in banks grew by more than 20 per cent. This is also a very positive indicator. First of all, it shows that people’s financial situation is improving. On the other hand, it is also a sign of people’s confidence in banks. At the same time, it allows our banks to contribute to the economic development of the country more actively. As I said in previous meetings, it also helps us to direct more credit resources into the real economy. In this case, our business will go even faster.

For two months of the first quarter of this year, we observed the implementation of a major social initiative in Azerbaijan. A program of medical examination of the population has been implemented. This is a purely social project. The implementation of this project, of course, requires primary conditions. And this means the availability of advanced equipment and modern medical centers which we have created across the country in recent years. In this case, every part of the country has the opportunity to conduct examination using the most sophisticated equipment. In a short time – in a matter of two months – four million people were examined. I believe that this initiative should be put forward every year, this should be an ongoing process.

While attending opening ceremonies of new hospitals in recent years and during meetings in different regions I repeatedly stressed that everyone should undergo examination once a year. I am glad that people are responding to this initiative positively. After all, this is necessary for them, for every individual. Today, Azerbaijan has modern medical equipment and any examination can be carried out. So I think that it is a very important initiative, which is an integral part of our social policy. I am glad that we have been able to implement it.

In the first quarter, the average salary grew by nearly 7 per cent. Today the average salary in Azerbaijan is at the level of AZN 430, i.e. $550. The salaries grow every year and will continue to grow. As a result of the work to be done in the future, the economic development, the development of the non-oil sector and increase of salaries and pensions, the average salary and the average pension should and will be raised further.

In the first quarter of the year, the third state program on the socioeconomic development of districts was adopted. In February, we discussed the results of the second program. The adoption of the third program, I am sure, will give a great impetus to the solution of the outstanding social and economic issues in the next five years. As was the case in the previous program, it is also a very detailed document. The program covers all the issues.

There are specific tasks and assignments for each district. Naturally, the implementation mechanisms and financial resources also support this program. I am confident that the implementation of this program by 2018 will resolve major problems of social infrastructure and economic issues in the regions.

At the same time, we have adopted a program on the socioeconomic development of Baku and its suburban settlements. This program will be completed in 2016. All infrastructure projects will be implemented in the suburban settlements of Baku by then. Gasification will be completed, the provision of electricity will be further improved, projects on the supply of drinking water and sanitation, the construction of rural roads will be implemented. Jobs will be created, schools, hospitals and medical centers built. So this program is yielding fruit in every settlement.

Overall, important steps towards creation of the social infrastructure were also taken in the first quarter. This is already an ongoing process. There is still a lot to do in this area. Although we have built more than 2,000 schools and over 500 hospitals, there is still a need for that. We need to try to complete all renovation, restoration and construction work in this area by the end of 2018, so that the entire social infrastructure could be completely renewed.

In the first quarter, additional measures were taken aimed at the development of entrepreneurship. A very important Order was signed to improve the business environment. The implementation of this Order will enable us to raise up our position in the World Bank’s Doing Business rating. At the same time, the most important thing is to take further steps to improve the business environment in Azerbaijan. This, I can say, is one of the main directions of our policy. Today, the vast majority of the country's economy is generated in the private sector. In the future, the private sector will ensure the development of the Azerbaijani economy. The improvement of the business environment and the creation of favorable conditions for local and foreign investors are always in the spotlight. I am sure that the implementation of the provisions of this Order will enable us to achieve even better results in this area.

In general, Azerbaijan has successfully addressed issues related to entrepreneurship. The investment climate in the country is very positive. Azerbaijan maintains CIS leadership for the volume of direct foreign investment. I am glad that domestic investment has been exceeding foreign investment for several years now. We should try to facilitate an increase of investment in the national economy and ensure that these funds are fully consistent with our economic policies.

Foreign investors, of course, may have their own interests. Our country also has interests of its own. We should and do link them with each other. The present-day Azerbaijan is already known worldwide as a wonderful country for doing business. It is no coincidence that the leading financial institutions have a very positive opinion about the economic reforms in Azerbaijan. The competitiveness of our economy is enhancing. Leading rating agencies maintain our credit ratings at a high level. We can already attract any amount from foreign financial markets, as we have recently done. We have done this in a very limited quantity. But the demand or application was four to five times higher than what we offered. We have attracted additional financial resources on the most reasonable terms.

Our overall financial situation is such that we can receive any amount from the international credit market without limits and restrictions. We simply don’t do that in large quantities as it is not necessary. But I can say that for the level of external debt Azerbaijan is in one of the leading places in the world today. The external debt accounts for only 8 per cent of the Gross Domestic Product. It is possibly the lowest indicator globally, perhaps one of the lowest.

In other words, today we have our own financial capabilities. We have created them ourselves, through hard work, sound policies and the development of the energy sector. At the same time, we can attract any amount to the country's economy. But I want to say again that the share of our external debt in the GDP should be measured by a single digit. Today it is 8 per cent. So if it stays at this level, I think it is an acceptable level for the future and for the expansion of our capabilities.

In the first quarter, Azerbaijan further strengthened its global standing in relation to international policies. Azerbaijan is known internationally as a very reliable partner. Our foreign policy is open and principled and is based on international law and justice. This principled approach and the demonstration of our position on every issue certainly cause even more sympathy for Azerbaijan. Most of the world community is cautious in demonstrating its position on some international affairs. We do not intend to give an assessment to that. But Azerbaijan shows a principled position on each issue. This position is primarily based on the norms and principles of international law. Norms and principles of international law should be the main condition because the present-day international world is based on these principles. If these are disrupted, then the entire mechanism of international cooperation and relations is undermined. Such a principled stance on the international arena certainly earns us great respect. Azerbaijan further reinforces its position as an independent and principled country. This proper idea of our country in international organizations will create us additional opportunities in the future.

In the first quarter I participated in the World Economic Forum in Davos. I can say that Azerbaijan has been involved in this forum for about 10 years. I believe that this is the top forum of the world both in terms of the issues discussed and from the point of view of contacts. This is not only an economic but also a political forum. I believe that participation in this forum, the demonstration and explanation of our position are very important. At the same time, I paid a visit to NATO headquarters earlier this year. I have ​​visited NATO headquarters several times. This visit was also very positive. Our bilateral relations are positive. We have had an exchange of views on future cooperation. Azerbaijan's participation in the energy security and our contribution to peacekeeping missions are regarded with approval.

Azerbaijan successfully cooperates with international organizations. We are a member of various international organizations. We work closely with a number of organizations. I believe that this policy also brings us additional dividends. In the first quarter of the year I also participated in the Nuclear Security Summit. Azerbaijan's participation in this summit has a special meaning. Naturally, we are not a nuclear state. At the same time, we do not have nuclear power plants. However, the importance of our country, its role in the region and the world have, of course, contributed to the fact that Azerbaijan was among the countries attending the summit. This summit – both its public and closed-door sections – discussed very important issues. Issues of security in the world are, of course, top of the global agenda. Azerbaijan is making and will continue to make its contribution to this area as well. As you know, during our presidency in the UN Security Council we organized a discussion on the topic of fight against terrorism.

In the first quarter I had numerous contacts in the bilateral format. The number of delegations coming to Azerbaijan from different continents is gradually increasing. A growing number of countries want to cooperate with us. At the same time, high-level reciprocal visits have been paid. The Prime Minister of Turkey visited Azerbaijan. It was the first visit of the Prime Minister after the municipal election. The friendship, brotherhood and strategic nature of our partnership was reaffirmed during the visit.

At the same time, I have recently paid ​​an official visit to the Islamic Republic of Iran. This visit was also very successful. The documents signed, the talks and the exchanges held during the visit will elevate our relations to an even higher level. I can say that this visit is very important. In a spirit of friendship and sincere cooperation, we clarified a number of issues. We expressed a shared view that Iranian-Azerbaijani relations should continue to be on an upward trend. A new format of the intergovernmental commission is being put in place and it will be fully formed in the near future. A lot will be done on all fronts.

In general, I can say that we actively cooperate with international organizations. At the same time, our relations with neighboring countries are traditionally very close and positive. We have five neighbors. One of them is Armenia, the invader and our enemy. The other four are our friends. Relations with friendly neighbors are a priority for us. I believe that each country’s relations with its neighbors are particularly important. We have a shared history and past with our neighbors. As an independent country, we are building our bilateral relations on the principles of friendship, cooperation and non-interference in each other’s affairs. I am sure that the development of these relations in the future will benefit all countries.

I also want to note that Azerbaijan has initiated two trilateral formats in the region. These formats have existed for several years now. There is Azerbaijan-Iran-Turkey format. Our foreign ministers meet on a regular basis. At the same time, there is Azerbaijan-Georgia-Turkey format. Both economic and political blocs have emerged in this format. This was our initiative. I think that it was a very sound and wise initiative. Azerbaijan is actively involved in both formats.

Our biggest problems related to international affairs is the settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh. Unfortunately, there was no progress in this direction in the first quarter. The mediators expressed some optimistic views at the end of last year. But they are not coming true. Today we are witnessing again that Armenia is simply biding time, tried to maintain the status of “neither war nor peace”, while international mediators, unfortunately, are not putting serious pressure on it.

In essence, international sanctions should have been applied to Armenia long ago because Armenia has been occupying Azerbaijan’s internationally recognized territory for 20 years now. An act of genocide has been perpetrated against civilian population. The Khojaly genocide has been perpetrated. A policy of ethnic cleansing has been unleashed against our people. Four UN Security Council resolutions are being flouted. There have never been so many injustices and violations of law in any other similar situation. International norms are violated. No heed is being paid to the resolutions of other international organizations – the Council of Europe, the European Parliament, the OSCE, the Organization of Islamic Cooperation. They are ignored. Thousands of Azerbaijani citizens have been killed. But at the end of the day Armenia is not faced with sanctions.

One may ask: why? How much longer are we going to be faced with double standards? What is the reason for that? Why aren’t the leaders of the fictitious “Nagorno-Karabakh republic” subjected to sanctions? Why aren’t sanctions applied to them? This is an injustice, these are double standards! This is why we are speaking up in protest against double standards in international relations. We urge the western countries cooperating with us not to allow the leaders of the self-styled “Nagorno-Karabakh republic” into their territories. They should be subjected to sanctions. They go there and conduct illegal TV marathons and raise money. And then this money is used against Azerbaijan. Their so-called leaders are received in leading countries of the West. They get visas, establish so-called representative offices, travel back and forth, etc. Why?

I think that the time has come for us to express our opinion on this issue openly. We are tired of double standards. It is impossible to tolerate so many injustices.

Why hasn’t the aggressor been condemned to this day?! Why doesn’t the Parliamentary Assembly of the Council of Europe discuss the issue of suspending the credentials of the Armenian delegation?! We have raised this issue a number of times. As the head of the Milli Majlis delegation to PACE, I remember repeatedly raising this issue in 2001. But no-one seems to react to this in any way. They tell us to come to an agreement, to negotiate and to resolve it in peace. We have been a victim of ethnic cleansing and an act of genocide. After the Azerbaijanis were driven out of Nagorno-Karabakh, a so-called referendum was held there. It is considered acceptable. This is intolerable.

We need to expose these injustices through facts and arguments. I believe that this principled position will restore justice and expose hypocritical policies.

A hypocritical policy and a policy of double standards with respect to us is continuing. But we will never put up with it. As to the settlement of the conflict, it is no secret that the main factor in today's world is strength. This is a reality. So we need to be even stronger and first of all step up our military might. While discussing this issue again, we see how right we were in deciding to keep the process of army building in the spotlight. The weaponry, machinery and ammunition purchased over the years have significantly increased our strength.

The machinery available to the Azerbaijani army today is not far behind the machinery of the most powerful armies. At the same time, I recently visited Nakhchivan, and the demonstration of new machinery there suggests that the army in Nakhchivan also possesses the most sophisticated machinery available to the armies of the world today. There already are modern artillery units, combat and transport helicopters, anti-tank and antiaircraft installations, the most modern tanks T-72 and T-90, other weaponry and ammunition, and their number will grow. We must and we will be even stronger.