Opening speech by Ilham Aliyev at the meeting of the Cabinet of Ministers, dedicated to the outcomes of social-economic development of 2010

Today we will discuss the socioeconomic results of 2010 and the main directions of our development in 2011. In general, I can say that 2010 was very important for the development of the country. In 2010, the country's economy continued to develop. By and large, 2009 and 2010 will go down in history as a period of economic crisis. These years were a test for us too. I am very pleased that thanks to the reforms under way in Azerbaijan and the sound economic policies, our economy continued to develop both in 2009 and in 2010. In 2009, our Gross Domestic Product grew by 9.3 per cent, while last year our economy grew by a further 5 per cent. If we consider that most countries registered decline both in 2009 and in 2010, then, of course, the value of our successes will further increase.

Over the years of crisis, we confidently pursued our economic policies. All the tasks we had set forth have been fulfilled. All social programs have been realized. Last year we raised the minimum wage and the basic pension. At the same time, in many European countries these processes went in the opposite direction – wages and pensions were reduced.

Of course, underlying all our successes are the sound economic policies and reforms we have been conducting for many years. Our economy is already diversified and no longer relies solely on one sector. Our goal has been to build a diversified economy. Although the oil price dropped almost four times in 2009, our economy continued to grow.

I am confident that 2011 will also be successful for the country's economic development. There is every reason to believe in that. If we look at the results of last year, we can see that not only did our economy grow by 5 per cent, but also our macroeconomic situation remained stable. In 2009, the exchange rate of national currencies in the countries of our region reduced and the currencies depreciated. However, our Manat has remained stable. We have thus made a valuable contribution to the social protection of our population. Besides, the stability of the Manat is an important factor for the economy. We have maintained macroeconomic stability, inflation made up only 5.7 per cent, while population incomes grew by 12.3 per cent. This shows that incomes exceed inflation. In 2010, the level of poverty further declined to 9.1 per cent. I think that this is our greatest achievement. Over seven years, the level of poverty in Azerbaijan dropped 4-5 times. This shows again that the ongoing reforms and economic growth are first of all intended to improve the well-being of Azerbaijani citizens. It also suggests that the funds accruing in the state treasury due to the operation of Azerbaijan’s energy sector are distributed fairly. Therefore, the principle of social justice is always applied at a high level.

In 2010, a total of $15.5 billion was invested in the country's economy. This is a very large amount. The structure of investment is very encouraging and positive. Domestic investment exceeds foreign. This has been the case for several years now. It suggests that both the state and the private sector are investing heavily in the country’s economy. The investment in the non-oil sector exceeds the investment in the oil sector. Of the $15.5 billion invested, $9.3 billion is the investment in the non-oil economy. This is another key direction of our policy. Specific and practical measures are being taken to reduce the economy's reliance on the oil sector. This also indicates that the program we declared a few years ago and our conceptual approach are being successfully implemented. In other words, our plans are being fulfilled, all the programs we have scheduled are being implemented, which is illustrated by the figures I have provided. I am confident that large amounts will be invested in the country's economy this year too. We must further increase this investment, so that the economy develops even more intensively.

In 2010, all social programs were implemented. As I have noted, the minimum wage and the basic pension were raised from AZN 75 to 85. The program of targeted social assistance is being implemented, whereby 550,000 people are receiving assistance from the state. We will continue to pursue this policy because there are still people living in poverty. Although the level of poverty is reducing, we still need to ensure that the state provides all possible care for those who are experiencing difficulties.

A lot of work has been carried out to build the social infrastructure. More than 40 hospitals and over 70 schools have been built or renovated. Five Olympic Centers have been commissioned. Funds are being allocated for the construction and renovation of cultural institutions. In short, the social sphere, which represents tremendous importance for the economy and the country as a whole, is, as always, at the center of our attention. This must be the case in 2011, and of course the investment program will envisage social projects.

Work in our districts is progressing well, a program on the development of districts is being implemented. Last year we created over 70,000 jobs, including 53,000 permanent ones. Since the beginning of the program, i.e. February 2004, more than 900,000 jobs have been created in the country, which is perhaps the main contributor to the elimination of unemployment. On a par with that, as a result of the opening of jobs and commissioning of new plants, the number of goods produced in the country is also increasing. Our dependence on imports is reducing. We already have a non-oil export potential and are demonstrating our products in other countries. This year, this policy must conducted be more intensively.

In short, the development of districts is already a reality. The modern infrastructure being established in districts – health care facilities and schools being built, roads and gas lines being laid and, more recently, major water projects being implemented – all this investment in districts has been made both by the state and the private sector. In 2011, these processes will also be continued.

In the main sector of our economy, the oil and gas sector, all our plans for last year were fulfilled. We produced 51 million tons of oil, most of which was exported. We also produced 27 billion cubic meters of gas. I believe that this year's production and exports of gas must be further increased. Last year, the State Oil Company of Azerbaijan discovered a major gas field. The Umid (Hope) field will contribute additional volumes to our gas potential. Our confirmed reserves of gas already stand at 2.2 trillion cubic meters. I do hope that the exploration to be conducted this year and afterwards will further increase this figure.

Massive investment was made in the transport sector last year. This has already become a tradition in Azerbaijan. This sector represents tremendous importance for the economy. New roads are being built, new aircraft being purchased. We have laid the foundation for a large international trading port in Alat and begun the construction of a shipyard. All these projects require major investment. We are and will be doing everything we can to establish a modern and efficient transport infrastructure that would correspond to our geographical location. We can say that the top priority projects we have identified have either been completed or their implementation has already begun. In subsequent years, as a result of the implementation and completion of these projects, we will resolve practically all the problems in the transport sector. Work is under way on all trunk and inter-city roads, while on some of them it has already been completed. Tankers and bulk carriers are being purchased for the development of the maritime transport. In the future, we will be exporting such vessels from Azerbaijan. A railway development program is being implemented. I have already mentioned the air transport. We have a fleet of modern aircraft which consists only of the best planes. International airports have been built. In other words, most of the work in this area has been done.

In 2011, the construction of the Baku-Tbilisi-Kars railway will be continued. We are attaching great importance to this project. We can say that the initiative to start this project was made by Azerbaijan, and now, thanks to the joint efforts of the three countries, we are successfully implementing it. All the work must be completed in the coming years, and this will be further success for us.

The year 2010 was declared “The Year of the Environment” in Azerbaijan. I am very pleased that within this framework the state has done a great job, while the private sector has contributed a great deal to it. It is very gratifying that the population has also joined this initiative and made an valuable contribution to improving the environment. Over 6 million trees were planted. This process will be continued this year. I believe that we shouldn’t slow down our pace. The improvement of the environment is of great importance for the successful development of the country and for public health.

Environmental activities should not be confined to tree-planting though. Following the commissioning of treatment plants in riverside villages, 300,000 Azerbaijani citizens now have drinking water conforming to World Health Organization standards. At the end of last year, we commissioned the Oguz-Gabala-Baku water line. In the near future, in about one to two months, this line will work at full power. This will provide for additional opportunities in supplying Baku with clean drinking water. The construction of the water pipeline is a purely social project. It is not a commercial project, but we invested heavily in it. We were obliged to do that because citizens of Azerbaijan must live in the best conditions. We must apply the most advanced technologies in Azerbaijan. State-of-the-art medical equipment is being installed at public health facilities in Azerbaijan. We are delivering the equipment used in best clinics around the world. We must deliver only top quality products to Azerbaijan. Azerbaijani citizens deserve that. We are modernizing our country and should always keep abreast of the latest technological achievements. We must use the latest technologies so that all the work in Azerbaijan could be conducted at the highest possible level. As a result of this work, we are creating good conditions for the citizens, while our country is becoming even stronger. I am sure that we will continue our successful development in the coming years.

I can say that we have achieved great successes in all other directions in 2010. There were no serious problems in the country last year, although we did encounter a natural calamity. In 2010, as a result of landslides and floods, thousands of hectares of our lands were inundated, an area of over 70,000 hectares was flooded, thousands of homes were destroyed or became unusable. But thanks to the prompt and flexible measures we took, no-one was killed. All those affected were promptly relocated to safety. There were all the necessary conditions in places of their temporary settlement. Shortly afterwards, as soon as weather conditions improved, we started the repairs. I can say that thousands of homes were built and repaired over 4-5 months. As of the end of 2010, more than 3,000 homes were renovated, 1,500 houses built, while the construction of 700-800 homes is still ongoing. This shows that we are prepared for difficulties. We have the technical capacity, qualified professionals and financial resources. Also, I must say that we have done all this work at our own expense and did not ask anyone for help. We rely only on ourselves. To do this, of course, we need to have a strong economic potential.

Azerbaijan has already become an important regional factor here. Our capabilities are growing and will continue to grow in the coming years. I must say that our currency reserves have also increased in 2010 even though in some countries they declined because they were used to address social issues. Our currency reserves keep growing. As of the end of the year, our foreign currency reserves amounted to $29.1 billion, while according to the information I received yesterday, the figure has already reached $29.4 billion. That shows how much our resources have grown in a matter of ten days. Of course, they will further increase in the coming years.

In other words, we are now able to and are implementing any infrastructure and investment projects both in and outside Azerbaijan. Azerbaijani companies are already investing in projects in foreign countries. I believe that these are important factors for the economy and for the implementation of our future plans.

Unfortunately, we could not achieve progress in resolving the Armenian-Azerbaijani conflict over Nagorno-Karabakh in 2010. There is only one reason for that – the Armenian side is deliberately trying to derail the talks. It is trying to revert to the issues agreed on at the negotiating table, to stall for time. In short, we have the impression that Armenia does not want to vacate the occupied lands and is trying to keep these lands under occupation as long as possible. By doing so, it is trying to secure suitable concessions from Azerbaijan over the issue of status for Nagorno-Karabakh. But this is impossible. We have repeatedly stated that Nagorno-Karabakh is a historical part of Azerbaijan and is recognized as such by the international community. Azerbaijan's territorial integrity is recognized by the international community. The UN and all international organizations respect our territorial integrity. The Azerbaijani state will never tolerate a second Armenian state on historically Azerbaijani lands. This is not and will never be a subject of negotiations. To resolve the issue, Armenia must withdraw its occupying forces from our lands. Only after that can there be peace. Azerbaijani citizens must return to their native lands, including Nagorno-Karabakh, and live there in the conditions of autonomy. As is the case in all civilized countries, work must be organized there on the basis of all democratic principles. A solution of the issue outside these frames and in any other way is impossible. Azerbaijan will never agree to that.

We will strive to further strengthen our positions in 2011. I can say that very important events occurred in international organizations on this subject in 2010. The European Parliament adopted a very fair resolution of the Armenian-Azerbaijani conflict over Nagorno-Karabakh. This issue is also being discussed in other international organizations, and our position is widely supported. The NATO summit on the issue adopted a very valuable and fair resolution supporting the territorial integrity of Azerbaijan. The position of the European Commission and the European Union on this issue was expressed at a joint press conference with European Commission President Mr. Barroso yesterday. This position is that the EU supports the territorial integrity of Azerbaijan.

Such is the international framework for resolving the issue, and it can be solved only within these frames. There is no other option on the agenda. I believe that Azerbaijan is demonstrating a constructive approach in the negotiations. We are trying to resolve the issue peacefully. But the main role here is played by the principles of international law. Azerbaijan’s territorial integrity must be unconditionally restored.

On the other hand, it is no secret that while conducting the negotiations, we are paying great attention to army construction issues. We have made great strides in this area. The enemy is also aware of that and is shaking in fear. Graphic evidence of that is its hysterical, nervous and fearful statements of recent months. They are well aware that the Azerbaijani army can deal a crushing blow to them at any moment. As a result of such a blow, the situation not only in Nagorno-Karabakh, but also in Armenia can take a dramatic turn. We simply want this issue to be resolved peacefully. But we feel very confident. In recent years, the funds we have channeled into the construction of the army are increasing, modern weaponry and hardware are being purchased, including planes, artillery, the most sophisticated air-defense systems, armored vehicles. It would take hours just to enumerate all this. Military products of about 500 denominations are manufactured in Azerbaijan to serve our own army. At the same time, we export them to external markets and participate in international exhibitions. In 2011, very important events will take place in this sector as well. Azerbaijan must start the production of the most advanced equipment, hardware and ammunition.

In 2011, our military and defense spending will exceed $3 billion. Most of these funds will again be spent on arms, ammunition and military hardware. We will continue to pursue this process. I am confident that Azerbaijan’s strong army must and will have its say when the time comes to resolve the Armenian-Azerbaijani conflict over Nagorno-Karabakh.

I believe that our country will not face any serious problems in 2011. I think we will not experience any problems in dealing with economic, social and international issues this year. In 2010, we conducted a successful international policy. Numerous meetings were held both within the framework of international organizations and in a bilateral format. Baku hosted several international summits. Our relations with neighboring countries have further strengthened. In other words, the international situation and the current situation in the region are quite positive. Azerbaijan is making a valuable contribution to the deepening of cooperation in the region. I want to reiterate that Azerbaijan is already a serious regional factor. Azerbaijan is a country with growing regional influence. We must ensure that this process becomes permanent, so that our country could grow stronger and develop.