The first half of 2011 is now in the past. By tradition, we will discuss the results of the first six months of the year at this Cabinet of Ministers meeting. In general, I would like to say that all the socioeconomic issues facing the country were successfully resolved in six months. The overall economic growth was not particularly high. The gross domestic product grew by only 0.9 per cent. The reason for that has been a drop in oil production which did not depend on us.

However, it is gratifying that Azerbaijan’s non-oil sector has expanded. This growth has reached 7.2 per cent. This is the result of the reforms we have carried out in recent years because our main goal is to develop the non-oil sector and diversify the Azerbaijani economy. The non-oil sector indicators, having grown by 7.2 per cent, are very gratifying. This shows that the country is developing dynamically. The Azerbaijani economy’s dependence on the energy factor is reducing. At the same time, this makes us hopeful that additional opportunities will be created in the coming months and years to diversify the Azerbaijani economy.

We have achieved solid growth in agriculture – 6.2 per cent. This is a good indicator. Population incomes have increased by 17 per cent. Inflation has risen by only 8.8 per cent. This shows again that there are good conditions for well-being.

In other words, our overall development in the past six months has been very successful and dynamic. I want to repeat that all the economic, infrastructure and social issues have been resolved. In the first six months we amended the budget. As a result, the state budget, our budget expenditure has reached $20 billion for the first time. This is a record figure. Of course, this allows us to allocate additional resources for critical infrastructure and social issues before the end of the year.

Our country’s strategic exchange reserves are growing. Our reserves have increased by $9 billion this year. This is an excellent indicator. We are committed to spending our revenue on the spheres that are necessary for economic development. At the same time, we are expanding our reserves. In general, our strategic exchange reserves currently stand at $38 billion. This is a very big amount, and I am sure that it will grow further by the end of the year. This enables us to develop the country's economy and attract additional financial resources to the solution of social problems, i.e. to achieve comprehensive development of the economy.

In the first half of this year, as always, social issues were the focus of our attention, and very important steps have been taken in this direction. The salaries of some categories of the population working in the organizations financed from the budget have been raised. Our biggest achievement is associated with the increase of pensions. As a result of the decisions made several days ago, the average pensions of those who retired before 2006 has been increased by approximately 40 per cent starting from 1 July. Some corrections and calculations are currently under way. This is a sizable increase. I can say that there has been nothing similar over the years, perhaps even worldwide. In some countries, where the implications of the financial and economic recession are still manifesting themselves, pensions are not raised. In fact, they are even reduced, salaries and social programs are cut, the wages and social security payments of those working in the public sector are reduced.

In Azerbaijan, the pensions of about 900,000 people have been raised by 40 per cent. This is further evidence that the policies of the Azerbaijani authorities are socially oriented. The citizen of Azerbaijan is at the heart of our policy. All our economic successes are giving us the opportunity to take even more serious steps in the social sphere. I am sure that as a result of improved welfare of pensioners, the financial status of about one million Azerbaijani citizens will significantly improve.

We are implementing a program of targeted social assistance. Currently, the program covers 125,000 households. Each family receives an average of 104 manats monthly. This is the care the Azerbaijani government is taking of the destitute population. The goal I set a few years ago is to eliminate the social evil of poverty. The experience of recent years shows that we are achieving this goal. Over the past seven years, the number of people living in poverty has dropped five times. I do hope that this figure will reduce further by the end of this year.

To do this, of course, comprehensive measures are being taken. The economic policies, political stability, private enterprise and agricultural development, the allocation of loans and subsidies, the purchase of equipment to be leased to farmers, provision of farmers with fertilizer and fuel on beneficial terms – all these comprehensive measures, as well as the major infrastructure projects being implemented in our country, laying of power lines, construction of roads, including those in the countryside, gasification, etc. have brought about the current situation.

Let me repeat that we worked very hard in recent years to achieve these goals. Several programs are being implemented in Azerbaijan. Each of them has a specific meaning. Not a single program is of declarative nature. There are implementation mechanisms, financial resources and a thought-out work schedule at the core of each program.

A total of 38,000 new jobs were created in the regions in six months of this year alone, including those generated as a result of the program on the socioeconomic development of districts, and this process is ongoing. We have created about a million new jobs in recent years.
Two important programs were adopted in the first half of this year. One of them is called “The Azerbaijani youth in 2011-2015”. This program has been adopted recently and is quite specific. I am sure that important issues will be resolved as a result of its execution.

The program covers practically all the issues young people have raised in meetings with me. An analysis has also been made of the proposals from the ground. I am sure that all the issues identified in the program will be resolved before 2015. Thus, youth employment issues, problems associated with young people’s education, recreation, formation of a special youth fund and implementation of various programs through it will be addressed. The program has been published and there is no point in speaking about it extensively. I want to note that the program will have a great impact and we will start implementing it soon.

The second important program is a program on the socioeconomic development of Baku and suburban settlements. It is even more short-term – it covers the 2011-2013 period. If we consider that the first half of 2011 is already in the past, massive creative and landscaping work is to be carried out in Baku and all suburban settlements over the next two years. We have started this work. New water lines are being laid in settlements now. Measures are being taken to build sewage lines and roads. Most roads in these settlements were unpaved and unusable. When it rained or snowed, they became impassible for both people and vehicles. Today, great roads, new schools, health centers, outpatient clinics and hospitals are built in every settlement, while the existing ones are being renovated. So the entire infrastructure of settlements should be renewed by 2013. This is a very ambitious goal, a great program, and it will be very difficult to implement it in two and a half years. I understand that, but at the same time the goal has been set to do this job in a short time. I think that if we mobilize all our resources, it will be feasible. At the same time, we have defined specific measures to improve employment opportunities for those living in settlements. This includes the provision of suburban settlements of Baku with loans through the National Fund on the support for private enterprise. In the coming years, we will probably do this in greater proportions, so that small processing enterprises, plants, factories could be set up and necessary agricultural development projects implemented.

These two programs are a product of 2011 and are further evidence that we have a thought-out policy that covers all the spheres.

Today I would also like to inform the people of Azerbaijan of the latest talks regarding the Armenian-Azerbaijani conflict over Nagorno-Karabakh. The negotiations have been under way for many years, and we can say that we are now at a crucial stage in the talks. So I would like to inform the people of Azerbaijan of the latest developments.

First, I want to say that the latest joint statement by heads of the Minsk Group co-chair countries is very reassuring and causes satisfaction. The statement refers to the provisions of the Helsinki Final Act. The Helsinki Final Act is indicated as the basis for resolving the conflict. The principles of territorial integrity of countries are not in conflict with those of self-determination of nations. Issues of conflict resolution within the framework of territorial integrity are also defined explicitly.

The second important point is that the statement, as well as subsequent statements, said that the status quo must be changed, the status quo is unacceptable. This means that the change of the status quo will ensure liberation of Azerbaijani lands from occupation. The Armenian side has been trying for the past 20 years to leave the status quo unchanged. So there were no changes in the situation.

The third important point is the overall activity of Minsk Group co-chair countries on this matter. We are seeing this activity, and so is the public. Prior to the meeting in Kazan, I had a telephone conversation with US President Mr. Obama. On the eve of the Kazan meeting French President Mr. Sarkozy sent me a letter over the Nagorno-Karabakh conflict. The Kazan meeting, as you know, was held on the initiative of Russian President Medvedev. After the meeting, US Secretary of State Mrs. Clinton sent me a letter, and then I had a telephone conversation with Mrs. Clinton. After the meeting in Kazan, our Foreign Minister met with the Minister of Foreign Affairs of France, and finally President Medvedev sent his foreign minister to Baku who handed me a message from President Medvedev. So the mere enumeration of all these developments shows that the level of activity is quite high, and we are very pleased and encouraged by that because we hope that this activity will produce tangible results. We are seeing that co-chair countries are trying very hard to have the basic principles agreed as soon as possible, so that conditions could be created for the preparation of a peace treaty. We also want this, we want this perhaps more than anyone else because these are our lands, and Armenian invaders have been occupying them for nearly 20 years. So Azerbaijan is interested in having the issue resolved more than any other party.

At the same time, I want to inform the Azerbaijani public of some realities in the latest stage of negotiations to ensure that everyone knows that Azerbaijan has always been constructive to the maximum extent possible. In 2004, a format of the talks called the “Prague process” emerged, and this process moved forward, albeit rather slowly, exchanges on complex issues were carried out and some important issues were agreed. As a continuation of the Prague process, the parties were provided with the Madrid principles. These principles consisted of several paragraphs and were very general in nature. Azerbaijan generally accepted the principles with a few minor exceptions. On the basis of these principles, the OSCE Minsk Group co-chair countries, all three co-chairs – I want to emphasize this: America, France and Russia, submitted the updated Madrid principles to the parties.

That was in late 2009. In early 2010, to be more exact, in January 2010, Russian President Mr. Medvedev invited the Presidents of Armenia and Azerbaijan to Sochi where a trilateral meeting was held. Azerbaijan unequivocally stated at that meeting that it accepts the updated Madrid principles.

I want to reiterate that these principles weren’t written by us. We did not invent these principles, as it were. These principles were jointly elaborated for many years and submitted to the parties by America, France and Russia. The Armenian side did not accept the principles, and a period of certain stagnation started in the negotiations. The next meeting was held only six months later, in June 2010, in St. Petersburg.

What is the essence of the updated Madrid principles? I believe that there should be no doubts and misunderstanding on this issue. I think that time has come when we must talk about it openly. First of all, the principles envisaged a withdrawal of Armenian occupying forces from occupied lands. It was envisaged that Armenian troops would immediately withdraw from five districts, while in five years they would withdraw from two other districts and Azerbaijani citizens would return to their native lands. The proposals also envisaged the provision of Nagorno-Karabakh with a temporary status. The functioning of a corridor between Nagorno-Karabakh and Armenia was also part of the principles.

To ensure the safety of both Armenian and Azerbaijani population, it was necessary to introduce peacekeeping forces to the region. It was also to be ensured that all the victims of occupation would return to their former places of residence.

This is, briefly, the essence of the said principles. The parameters of a corridor that would connect Nagorno-Karabakh with Armenia were also part of the principles. I think that this option may be accepted. Of course, these are fundamental principles. Talks should be conducted on this basis and a peace treaty is to be prepared in the end. Of course, when a peace treaty is ready, the final decision will be made by the people of Azerbaijan. The updated Madrid principles the co-chair countries put forward to continue the negotiations could have been accepted. Unfortunately, the Armenian side did not accept them, rejected them, and then, as I said, a period of stagnation set in and lasted until mid-2010. Then new proposals started being made. Sometimes these proposals changed the gist of the negotiations and the main principles of the talks we had held for the past seven years.

This is why we are facing a new situation now. I want to repeat that Azerbaijan is interested in constructive negotiations. Azerbaijan demonstrated its will in 2009 and in early 2010. We showed again that Azerbaijan is committed to peaceful negotiations and these negotiations must lead to a peace treaty.

We are negotiating not for the sake of negotiations or to imitate and create a vision of dialogue. There is quite a big difference between Azerbaijan and Armenia in this respect. Armenia is always trying to keep the status quo unchanged, wants to show that it is allegedly involved in the negotiations and demonstrating a constructive approach. However, they have always tried to disrupt the talks.

Meanwhile, Azerbaijan has clearly demonstrated a constructive approach. And we are ready to demonstrate it today too, on the basis of the principles I have described. All Azerbaijani citizens must return to the areas that are currently under occupation. After that, there can be peace. After that, there can be cooperation. With regard to the legal status of Nagorno-Karabakh, the 2009 principles stated that this was a matter of the future, and if the parties reach an agreement it may be resolved. So Nagorno-Karabakh cannot have any legal status without Azerbaijan’s consent. This is why I have repeatedly stated in the past and want to say today that alienation of Nagorno-Karabakh from Azerbaijan, provision of Nagorno-Karabakh with independence or its joining to Armenia has never been and will never be a subject of negotiations. Neither the government nor the people of Azerbaijan will ever accept this.

I want to reiterate that the enumeration of all these issues shows Azerbaijan’s goodwill to the world again. We have always demonstrated a constructive approach in negotiations. At the current stage, the whole world is paying great attention to the issue. The European Union. I have recently paid a visit to the EU. Overall, the visit was very successful. It was very important to the strengthening relations between the European Union and Azerbaijan. Most importantly, the visit was very important to choosing the right directions for future cooperation between the European Union and Azerbaijan. I think we are feeling that our positions on the future of our cooperation are close enough, and that is the way it should be because we intend to have long-term cooperation with the European Union. Therefore, each question must be identified clearly and explicitly. We also discussed ways of resolving the Nagorno-Karabakh conflict.

Let me again point to the letters and telephone calls from leaders of Minsk Group co-chair countries. Despite all this activity and a positive atmosphere, the extremely inappropriate, absurd and hysterical statements made by the Armenian government recently run counter to the spirit of negotiations. We are trying not to waste this opportunity. At this stage we are trying to take necessary steps, so that fundamental principles are agreed soon.

The Armenian side is doing the opposite. Let me repeat that recent statements of Armenian leaders show their intent. In essence, they are threatening us with war. The savages who waged a war against us, carried out a policy of ethnic cleansing against the Azerbaijanis and perpetrated the Khojali genocide are now threatening Azerbaijan with war again. They are shaking with fear of war themselves and are still threatening us with it.

Perhaps one of the reasons behind the international activity observed in recent months is that Azerbaijan is a strong state and has a strong army. Everyone, including Armenia, a country wallowing in abject poverty and surviving only thanks to foreign handouts, knows that Armenia and Azerbaijan are at incomparable levels. We are developing, getting stronger, our people are becoming richer, the country is strengthening, while they live in poverty. Over the past six months 70,000 Armenians have left this country for good. In a matter of 5-10 years, there will be less than one million Armenians left there. So everyone understands that the processes are developing in this direction. Azerbaijan’s financial resources and political clout are growing, our regional standing is strengthening, the army is becoming stronger and population figures are rising. Our population is growing, while theirs is declining. In 5-10 years from now, we will have a population of 11 million people, while Armenia will have one million. It is obvious for everyone what that means.

We can resolve this issue in our favor in these ways. So one of the reasons for this activity is the desire to resolve the issue as soon as possible. This is what we want. But, again, based on the suggestions made by the Minsk Group proper.

This is the current state of negotiations. We now have to think about future plans. The Minsk Group is to visit the region again. This is the situation now. I would like the history of the issue, the current status and, most importantly, Armenia’s desire to disrupt the peace process again to be clear to both the Azerbaijani and world public.