Ilham Aliyev chaired a meeting of the Cabinet of Ministers

President Ilham Aliyev has chaired a meeting of the Cabinet of Ministers of the Republic of Azerbaijan dedicated to the results of the socioeconomic development in the first quarter of 2012 and future goals.

The President made opening remarks at the meeting.

Opening remarks by President Ilham Aliyev

- This meeting will discuss the socioeconomic results of the first quarter. Year 2012 started well. I can say that all our goals for the first quarter have been met. Our key economic indicators are also very positive.

While the overall economic development is not particularly rapid, our non-oil economy is growing fast. In the first quarter our gross domestic product grew by 0.5 per cent, but in non-oil sector the GDP grew by 7.7 per cent. This is an excellent indicator, the indicator of recent months and years.

Our efforts to diversify the economy are bearing fruit. If you look at the manufacturing sector, we can see that overall industrial production dropped by 0.3 per cent, but the non-oil industry grew by 16.5 per cent. If I am not mistaken, this is the highest, a record figure in the years of independence, which is also the logical result of the reforms carried out in recent years. I have repeatedly issued appropriate instructions regarding the development of the non-oil industry, so specific steps were taken. These issues are also part of the state investment program. The support for the private sector, both political and material, the loans help us develop the non-oil industries. I am pleased that this sector is developing very fast.

These realities are made possible by the new small, medium-sized and large businesses created in our country. Thus, we can say that the industrialization policy is already yielding great results. When they become operational, the large industrial enterprises under construction now will contribute even more to the development of our non-oil sector in the future.

The macroeconomic indicators are positive. Inflation is only at 3.1 per cent. Personal incomes have risen by about 14 per cent. This balance, in general, has been traditional in recent years – it is wrong to calculate inflation separately from personal incomes. The latter exceed the inflation by 10 per cent or more. Overall, this suggests that our budget grows every year. The state budget for this year is in excess of $20 billion dollars, while the consolidated budget is nearly $25 billion. Social programs are well under way. In particular, we are starting the repayment of the deposits left over from Soviet times. Keeping inflation so low is a great result. Thus, we are taking further important steps to improve the well-being of our people.

Our strategic foreign exchange reserves are growing. This is also our strategic course. We must constantly increase our strategic reserves – every year, every quarter. Although a fairly large transfer was made from the State Oil Fund into the state budget this year, this process continues. Our revenue exceeds expenditure. And this is a very positive indicator. We are using our material resources to the possible extent.

The ongoing global financial and economic recession shows that the countries living at the expense of others are implementing social programs through borrowing. As a result, they will encounter serious difficulties. Sooner or later, this borrowing will reach a limit.

We are implementing our investment and social programs at our own expense. Thus, in the first quarter of this year our strategic foreign exchange reserves increased further to exceed $43 billion. This is an excellent indicator not only for our country but also globally, among sovereign countries that have strategic reserves. We will be increasing these reserves every year, every quarter. The effective use of these funds and the additional revenue to be derived from it in the future will, of course, improve our financial standing and create conditions for the implementation of more investment projects in the country.

A new strategy of the State Oil Fund has been defined. This strategy meets the requirements of our time. We must always look ahead. Of course, when creating the State Oil Fund we primarily considered a conservative storage of the accumulated revenue there. This is still relevant today. Our primary goal is to save this money. But at the same time, due to the fact that the global recession has led to a significant decline in the interest rates, we are turning to new forms.

Today, the investment and placement portfolios of the State Oil Fund are also expanding. This is natural. Just as we diversify the economy and give preference to new industries, so our strategic foreign exchange reserves should be safely and effectively invested in required fields.

Generally, we should pursue a more flexible policy in managing our major foreign exchange reserves in the future, so that they serve the interests of the country. I have some ideas on this. They will be disclosed in the near future. I think it is time for Azerbaijan to assert itself in the world, in global financial and economic markets.

Azerbaijan is already contributing to the solution of global issues as a political force. Given our financial resources, we should also be a financial force. First initiatives have already been made. Previously, in the early years of independence, we carried out most of the reforms using foreign loans, aid and grants. Now Azerbaijan is becoming a donor country, and this is a new phase. We are ready for it. So we are entering this period and this is our initiative. This initiative gives us both economic and political dividends, and it will bring us even more in the future.

All work in our country progresses in accordance with plans and programs. The state investment program is ongoing, and we must try to complete it by the end of the year. Sometimes we have been unable to fully implement the state investment program in recent years because in some cases our resources exceed our technical capabilities. Or, in some cases, the orders of relevant ministries and government agencies are so large that they can’t complete them within one year. We must pay attention to that. We should place realistic orders. Every ministry and state agency must calculate its possibilities accurately, not make unrealistic proposals. I understand that every agency and ministry wants things in their industry to develop faster and, therefore, make more proposals for the State Investment Program. But these proposals should be based on reality.

Of course, the government conducts the necessary analyses. But each state agency and civil servant should be more responsible, so that the State Investment Program can be implemented in full, on time and, most importantly, with high quality. Our current successful development is already a reality. Our key infrastructure projects have been completed, are drawing to a close or have been started.

Thus, some time ago we set the goal of completing the major infrastructure projects within the next two years, after which we will approach the State Investment Program from a new angle. At present, major infrastructure projects are ongoing throughout the country. The vast majority of them are financed by the government. Roads, water and sewer projects, gasification, power lines, rural roads. This is another issue requiring the greatest attention in the past few years. Every time I travel to districts now I take part in the opening of a new rural road. These are the realities of modern Azerbaijan. Of course, when we started to invest in roads, our focus was on trunk roads. But the time has come to improve rural roads.

The roads built in Azerbaijani villages now are very good and comfortable. These roads bring people comfort and provide a more rapid development of our districts.

In short, the State Investment Program is the main driving force of our development. The state is investing billions. Of course, the private sector, seeing this development, invests in the economy more readily and with greater interest. I am very pleased Azerbaijan’s investment portfolio is dominated by domestic investment. This is natural because the vast majority of domestic investment is public, which is also natural. But the time will come when there will be more private investment. We must strive for this. We must bear in mind that the amount invested by the state will reduce in the future because, I repeat, we need to complete our major infrastructure projects in 2014. And the private sector will invest even more.

Our development is comprehensive and diversified. Azerbaijan is expanding its export potential. We are interested in enhancing this potential, and the state of Azerbaijan, in turn, plays a very active role in this. We have always wanted Azerbaijani companies, including private ones, to access foreign markets.

Currently, there are no serious problems associated with the development of entrepreneurship. A class of entrepreneurs is emerging and strengthening. The National Fund on Support for Entrepreneurship is to provide concessional loans worth 200 million manats this year. These loans work well, are repaid and contribute to the creation of new jobs. As for new jobs, 24,000 jobs were created in the first quarter, including 20,000 permanent ones. My regular visits to districts have always led to the creation of new jobs. Every time I attend the opening of a plant and factory, I enquire how many jobs have been or will be opened. My latest trip to the western region has also revealed the overall dynamics of Azerbaijan’s economic development. Small businesses, medium-sized processing companies and large enterprises are opened and built.

These are our plans associated with economic policies. We have pursued this policy for many years, continuing economic reforms. These reforms have yet to be continued. In particular, there is a great need for system reforms.

Azerbaijan is always ranked highly in international economic development ratings. The World Economic Forum, the Davos Economic Forum, has placed Azerbaijan in first place in the CIS for economic competitiveness. The international rating agency Standard & Poor's has raised Azerbaijan’s credit rating, while the credit ratings of developed European nations have been lowered.

Also evaluated quite highly are our steps to simplify business procedures and expand business opportunities. This year, Azerbaijan is in one of the highest places in terms of the business program. I have issued instructions on further measures to be taken so that we could secure an even higher place. In short, the infrastructure projects, the development of districts and overall economic initiatives are further strengthening our economy. Our economy is growing every year, and I am very glad that we can also talk about great successes of the non-oil sector. We can see this progress. This progress should be even more significant.

In the first quarter we took important steps to address social issues. This area is always in the spotlight. Our policies are centered, above all, on people. We will continue to make every effort to address social issues in the future too.

In the first quarter we put forward the initiative of repaying the deposits left over from Soviet times. This is a very fair and positive initiative. I believe that the independent state of Azerbaijan is not responsible for Soviet deposits. Despite this, considering the strong social policy of our state and, I repeat, the fact that our focus is on people, the decision was made and I signed a decree on the payment of compensations for the lost deposits. I can say that this is a very substantial compensation. Only a few formerly Soviet republics have put forward similar initiatives. But I can say that Azerbaijan is the only republic which proposes to repay the money over just two years. We have provided almost 1 billion manats for compensation payments, and the process must be completed within two years.

I should also note that I usually don’t like to make comparisons with other countries because I think this is not entirely correct. You may have noticed that although Azerbaijan is ahead of many countries in all respects, I never focus on someone else's problems for the sake of comparison or for a more graphic demonstration of our success. I think it is unethical.

But in general terms I can say that such a high coefficient is not applied elsewhere. I can say that sufficient information about this has been provided, it was also available in the media. I want to recall that back in 1992, during the transition to the national currency, 10 Soviet rubles were equal to 1 Azerbaijani manat – in a 10 to 1 proportion. On 1 January 2006, the manat was redenominated. Thus, 5,000 old Azerbaijani manats were equal to 1 new manat. Despite this, people who have 1,000 rubles will be paid a compensation of 150 manats or almost $180. Those who have 2,000 rubles will get 300 manats or $400. This table can go on. This in itself shows that the highest coefficient and the shortest period are in Azerbaijan. It is another indication of how sensitive the Azerbaijani government is to the matter. I know that the citizens of Azerbaijan have welcomed this initiative. Of course, this will have a positive effect on people's lives. In addition, in a way we are restoring justice. In total, there were 2.4 million private deposits in Soviet times. Now we will have to do a lot of technical work to ensure that these funds are repaid in a timely manner and with absolute precision.

In the first quarter, the international standing of our country strengthened further. Azerbaijan is a country enjoying great respect in the world. As of this year we are members of the UN Security Council and treat this obligation with great responsibility. When we were elected to this authoritative body, I said and I want to repeat that we will first of all defend international law and justice in the Security Council. Our position is fair, it is based on the independent policy of our country. We will defend and uphold justice. From the very first days Azerbaijan has taken a principled stance in the Security Council. We have never hidden and will not hide our position because it is a fair position.

Next month Azerbaijan will assume the function of presidency in the Security Council. This is also an event that will happen for the first time. Azerbaijan will preside in the most prestigious and important organization in the world, and I sure it will do a good job.

In the first quarter Azerbaijan took part in very important international events. We participated in a Nuclear Security Summit in Korea. Although we don’t have a nuclear industry or nuclear power plants, Azerbaijan was invited to this prestigious forum and announced its fair position. Azerbaijan has said its word as an important player of the international community.

In the first quarter, our country participated in two major international events – the World Economic Forum in Davos and the Munich Security Conference. I can say that these two events are very important for Europe and perhaps the world.

One covers economic issues, the other –security and political matters. Azerbaijan was represented at both. At both events I outlined the views, positions and policies of our country. In particular, I spoke about the Armenian-Azerbaijani conflict over Nagorno-Karabakh, the occupation of our lands and the suffering of one million of our countrymen, and drew the world’s attention to these issues.

The second session of the Euronest Parliamentary Assembly was also held in Baku in the first quarter. I can say that such a session has been held outside the European Union for the first time. Baku was not chosen as a venue by chance. The session was held at a very high level, it gave us the opportunity to inform members of the European parliament about the work ongoing in Azerbaijan, our position, in particular, on the history and realities of the Armenian-Azerbaijani conflict over Nagorno-Karabakh, the genocide against Azerbaijanis, the Armenian fascism. Those who perpetrated a bloody tragedy, an act of genocide in Khojaly are fascists, there is no other name for them. Taking the opportunity, I spoke about the realities and shared my thoughts on Azerbaijan's position and its general outlook for the future.

In short, the first quarter saw very interesting and serious discussions concerning Azerbaijan in the international arena. As a respectable member of the international community, our country has and will continue to have a say.

Our foreign policy is a logical continuation of the internal one. Our foreign policy is aimed at deepening cooperation. We are taking steps in that direction. Our foreign policy is open, clear and unambiguous. Our role in the region and the world is growing. This must be reckoned with.

At all international events I have spoken about the Armenian-Azerbaijani conflict over Nagorno-Karabakh and exposed Armenia’s policy of aggression. I will continue to expose it at all international events. Our principled position on the settlement of the conflict remains unchanged. The territorial integrity of Azerbaijan must be restored unconditionally, the occupying forces must withdraw from our land. The internationally recognized territorial integrity of our country will be fully restored. I have no doubt about that. We are growing stronger both economically and internationally. Our military capacity is also growing. This area is and will always be in the focus. We are creating a powerful military industry. At the same time, we buy and will continue to buy large volumes of military equipment, weapons and ammunition. Not to mention anti-aircraft guns. We are and will be buying tanks, artillery units, combat aircraft, weaponry, all modern equipment needed for combat. I can say that, as in other areas, we are pursuing a diversified policy in this area too, we don’t rely only on one producer. A growing number of countries want to cooperate with us and we have the opportunities for that. Unlike some other countries, we don’t get anything for free, we buy everything, and this policy will be continued.

Azerbaijan already has a strong army. All the armed forces are ready and capable of fulfilling any task in the interests of our country. They are ready to restore Azerbaijan’s sovereignty over Nagorno-Karabakh and other occupied lands. We simply want to do this without bloodshed, by peaceful means, through talks, and every minute and every day brings us closer to victory. Armenia is plunging into a deep recession, while Azerbaijan is growing stronger. Victory day is nearing us. The day will come when the Azerbaijani flag will fly in Khankandi and Shusha.

Х Х Х

Then, Tax Minister Fazil Mammadov, Health Minister Ogtay Shiraliyev, Ecology and Natural Resources Minister Huseyngulu Bagirov informed the meeting about the results of the socioeconomic development of the country in the first quarter of 2012.

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Closing remarks by President Ilham Aliyev

- I believe that things will go even faster in the second quarter. Because it usually takes some time for things to begin to work in the first quarter. At the same time, the State Investment Program is also approved in the first quarter. I think the State Investment Program will be executed more fully in the second quarter. In general, a proposal has been made and I support it – the State Investment Program should be approved at the end of the year, so that we could start implementing it in the early months of the year without wasting any time.

All the goals for the second quarter are clear, the instructions have been issued, there are programs. Macroeconomic stability must be preserved, the level of inflation of 3.1 per cent, as I said, is good. We should try to keep the inflation in single digits until the end of the year. Of course, personal incomes should always exceed inflation.

Considering the fact that Soviet bank deposits will be repaid this and next year, there will be factors capable of boosting inflation. This is an additional burden – about 1 billion manats will be put into circulation. We need to exercise rigorous control over prices. There is good control now, prices are stable. Even on traditional holidays relevant agencies are trying to keep the prices stable. In previous years prices went up on the eve of holidays and did not go back down afterwards.

So prices are artificially raised twice a year, at least twice. We are and will be fighting these unpleasant trends. The fight against those raising the prices artificially should be even more rigorous. Sanctions against such people should be more effective.

Let me repeat that the repayment of deposits will boost inflation. Also, salaries and pensions are rising. Last year the average pension was raised by about 40 per cent and pension reforms will be continued.

At present, the average pension in Azerbaijan is 150 manats or $190. The average salary is 370 manats or $470. These are rising and will rise further, so we need to constantly keep prices under control. Of course, a transition to new approaches is highly important. POS terminals must be installed and non-cash payments applied more broadly.

Relevant instructions have been issued, the tax minister has spoken about that. About 20,000 POS terminals have been installed in a short period of time. This process has now gained momentum. I am sure this is the result of the launch of POS terminals. In general, our consumer market and financial system will become more transparent.

I would like to touch upon another issue. The vast majority of our salaries and pensions are paid into plastic cards. But pensioners cash the money from the ATM immediately. Why? First, this is a psychological issue. This is more of a habit.

On the other hand, pensioners don’t use their cards for other payments. Due to a lack of POS terminals, these cards only had one function – to put an end to the unpleasant phenomena during the payment of salaries and pensions. We all remember the salaries and pensions being paid by cashiers, which was fraught with some unpleasant phenomena.

This had actually become a tradition. Everyone receiving a salary used to think he owed it to the cashier. Why did people have to give cashiers any money?! It isn’t his grandfather’s money, is it? It is state money. But this was a widespread tradition. We all know this too well. So the transfer of salaries and pensions into plastic cards put an end to that. But that wasn’t the only objective. It was supposed to open the way for non-cash settlements. Therefore, the broad application of POS terminals and non-cash payments in Baku and other cities and subsequently throughout the country will have a positive effect for our entire financial system.

The fight against corruption and bribery should be even more rigorous. Appropriate instructions have been issued and orders signed. The international experience must be fully applied. Both administrative and punishment measures must be stepped up. Besides, system and institutional reforms should be sped up. The fight should not let up for a day or for a minute. This issue must always be in the spotlight.

The broad application of electronic services is a major contributor to the fight against corruption and bribery. Appropriate instructions have been issued and orders signed for all agencies to provide e-services. But according to my information, this is not the case everywhere. There are agencies and ministries that provide a full range of e-services. The list I have says there are bodies that provide e-services only in part and there are others that don’t provide e-services at all. I wouldn’t like to name these agencies as yet, you have two weeks, all government agencies must provide e-services. My orders must be fulfilled unconditionally and without delay. Orders are issued and everyone should know that there is strict control over their execution.

We are conducting a policy of modernization. We are building a modern state. We are building a strong state which, however, relies only on itself. We should apply everything that is typical of a modern state – in political and economic reforms, in all other areas. We are attaching a great importance to this area. We need to fight corruption and bribery more broadly and consistently. We are and will be doing that.

This quarter and earlier we have paid special attention to import-substituting production. The number of such products is increasing in Azerbaijan. We have a huge potential and financial opportunities in processing and construction materials sectors. We also have sufficient credit resources. We should try to support import-substituting production to the maximum extent. This depends on both private institutions and on public support. The loans allocated through the National Fund on Support for Entrepreneurship serve this very goal. More attention is paid to the production of goods we can’t supply ourselves with yet. All the necessary proposals and instructions were made at a regional development conference held earlier this year in February. I don’t want to repeat anything, but will say that this issue will remain in the spotlight until we fully supply the domestic market with local products.

This year very serious and effective steps should be taken to establish industrial parks. All relevant orders have been issued, decrees signed and lands allocated. We already have some experience – the Sumgayit industrial park is a great example. The process of establishing similar industrial parks is now under way in Ganja, Balakhani and Sumgayit. I think we need to start specific work this year. Because all the legal framework and the infrastructure are already in place, lands have been identified. We will establish these industrial parks with support from of the private sector. But the government should channel its credit resources into this sphere, so that the private sector could take advantage. Thus, local production will be bolstered. Growth in our non-oil sector is 16.5 per cent and it is set to grow further. We are building a very strong non-oil sector in Azerbaijan in the true sense of the word.

Work is progressing well in different directions. I have recently examined the construction of a new cement plant. This cement plant, plus the cement plant built in Baku – the Garadagh cement plant – and other cement plants will meet our demand for cement and create an export potential in the future. There should be more such directions in our country. We know these directions, are setting goals and work consistently to meet them. Work in this area, i.e. in the area of establishing industrial parks, is not progressing too badly. I just think we need to start specific work before the end of the year.

Agriculture grew by 3.1 per cent in the first quarter. This growth has been at 6.4 per cent in plant growing and 3.2 per cent in livestock breeding. There is a positive dynamics. I think we should apply the latest technologies to agricultural development. Again, the new agricultural services enterprise I reviewed during my latest visit to districts is proving very effective. First of all, the structure of this company is very commendable. It is based on a partnership of the private and public sectors. The Azerbaijan State Investment Company has a share of 25 per cent. This is exactly why we established the Azerbaijan State Investment Company – in order to create more confidence in local and foreign investors. I am very pleased that foreign businesses are investing in this sphere. The equipment I was shown there is in line with the latest standards. In general, the approach to this area, to agro-technical matters is very positive. In other words, it is a comprehensive approach. This enterprise is based on international experience. I was told there that the operation of the Agstafa Agricultural Services Company would enable production of 50 hundredweights of grain per hectare, perhaps even more. If we look at developed countries with good experience, we can see that their production is even higher. Our productivity is 25 hundredweights per hectare. This is very low, we can’t increase productivity. One year it rises, another it goes back down. This is how the idea of establishing large farms emerged, so that we could use all the lands available.

But if we also pay more attention to productivity, we can yield twice as much from the lands currently in circulation and thus fully supply ourselves with grains.

So using the example of the Agstafa agricultural services enterprise we should implement a broad national program.

The Ministries of Agriculture and of Economic Development should make joint proposals. If necessary, additional loans may be allocated. Extra funds can be included in the statutory capital of the State Investment Company.

I was informed there that the new enterprise with its technical capacity and agricultural services will cover an area of about 15,000 hectares. If we set up 10, 20 or 50 such enterprises, this will contribute a lot to food security. Therefore, I ask that both ministries submit additional proposals in the second quarter: where can we establish similar agricultural services companies? How can the state support them? How can we encourage the private sector?!

The Agstafa enterprise was mainly established using foreign investment. I think local investors should also be interested. Because this approach benefits all stakeholders – farmers, the company and the state. It is economically very profitable. We will thus ensure our food security.

In general, we need to apply the best practices to agriculture. Our specialists have been delegated to developed countries to learn from their experiences. They have studied the drop irrigation technology. The time has come to apply these technologies. Again, instead of inventing anything, we need to apply the practices of developed and experienced countries.

In general, perhaps new suggestions should be made on subsidies and benefits provided by the state. Initially, we allocated the subsidies to encourage agricultural production, especially the production of grain. Cash subsidies are allocated for fuel, fertilizer and sown produce. It was a very good initiative which improved people’s well-being. I suggest that we improve the subsidies. I am not saying we should reduce or eliminate them completely. On the contrary, I want them to be more effective. Maybe we should allocate even more. But we should also expect a better result. The volume of subsidies does not correspond to the result now. The result should be more palpable and effective. So please provide further proposals on deepening reforms in this area, so that we could work with maximum efficiency.

Speaking of food safety, we also mean the quality of food. This issue should also be in focus. We have achieved major changes in this area lately. I can say that previously this area was generally ignored, while relevant institutions unfortunately did not conduct adequate examinations. Their examinations were of a formality nature. Or, after an examination, they made unlawful demands. Thus, our market was flooded with poor-quality goods – both local and foreign.

This had a negative impact on people’s health. Recently, there have been positive changes in this area. This process should be constant. Local entrepreneurs should also know that if they produce low-quality goods, not only will they be removed from the market, they will also be punished. Control over imports should be even stronger. Of course, this issue can be resolved, let me say again, by increasing domestic production. We will achieve this in a few years. But so far, we are dependent on imports to some extent. We must try to import high-quality products, because food security also means people’s health.

Our people must eat clean and quality food, drink clean and quality water.

The Health Minister has spoken about the investments being made in improving the healthcare system. So much money is invested and there are such excellent results! The World Health Organization enthusiastically cites our achievements as an example. The work carried out in Azerbaijan in this field is an example indeed. We are building diagnostic centers, district hospitals, central hospitals and sports facilities, taking environmental measures, implementing drinking water projects. This has been spoken about by the Minister of Environment and Natural Resources as well. A waste disposal plant is under construction, so that our air is not polluted.

All these steps have a direct positive impact on people’s health. Also, poor-quality food is, of course, a source of danger. I think even more attention should be paid to this area. Once we are talking about this, I want to draw your attention to another issue. Our TV channels, practically all of them, now run cooking shows. First, I want to say that this is also a tendency that has come from abroad. For countries where cooking at home is not very common, this may be more relevant. Of course, in Azerbaijan the meals cooked at home are better and tastier than in any restaurant. But this is fashion which has reached us. I do not mind this, let it be. But on the condition that cooking recipes do not adversely affect people’s health. Sometimes I watch these shows and observe with a bleeding heart that very fatty meals are advocated. This is wrong. People eating such meals every day are sure to get sick. It would be funny if it weren’t so sad. We are promoting a healthy lifestyle, trying to keep people away from bad habits and advocate sports. There can’t be a positive attitude to smoking. Those addicted to alcohol should be condemned. So the offers made by some of our channels are, of course, very disappointing.

I have no intention to interfere in the policies of private channels. But I can advise them to promote healthier food.

This year we will take important steps to improve the living standards and employment of the IDPs. This year’s allocations for this purpose are at a record level. We have allocated 300 million manats to improve the living standards of the IDPs this year. Earlier this year, we envisaged 100 million manats but then, on my initiative, the figure was tripled in order to create normal conditions for our compatriots who are still in a difficult plight as soon as possible.

As you know, this area has seen fundamental changes. Tent-camps were removed five years ago. New homes, villages, apartment buildings, schools, etc. are built. All this is extensively reported. We need to further speed up this work, so 300 million manats have been allocated from the Oil Fund. The main goal is to quickly achieve a qualitative solution to this issue. This is a very large amount. Of course, it would be good if this project is fully implemented until the end of the year.

The program on the development of suburban settlements of Baku is ongoing. We will meet separately to discuss it. I can say that this is a very serious and time-limited program. It must be realized before the end of 2013. There are some very serious issues. Infrastructure, roads, water and sewer lines, gasification, power lines, hospitals, health centers, schools – i.e. we are realizing these projects comprehensively in all the settlements. There should also be control on the part of the city executive authorities, the Ministry of Economic Development and the government. This work must be carried out with high quality.

Azerbaijan is successfully resolving energy security issues. We have long provided for our own energy security and are now involved in ensuring the energy security of other countries. Our activities in this area will be continued. We will be addressing energy security issues with partner countries on the basis of mutual interest and benefit.

Azerbaijan is now becoming an important global player in the oil and gas sector, the number of our partners is growing. The number of countries with which we cooperate is also rising. Azerbaijan is recognized as a reliable and excellent partner in this area. We are ready to continue our activities in this area.

We are accessing external markets. We invest a lot in foreign markets. We also invest within the country. I always instruct our agencies operating in the energy sector to invest primarily in Azerbaijan. The biggest investment should be made in Azerbaijan and then in foreign markets.

I can say that a very important and historic step in this area was taken in the first quarter. A preliminary presentation of new petrochemical, oil refining and gas processing plants has been held in Baku. The State Oil Company of Azerbaijan has been working on these projects for some time. Previously I issued the instruction to implement these projects. This instruction is being implemented now. The investments to be made in this sector, in the new enterprises I mentioned, are measured in billions. Perhaps they will exceed 10 billion manats.

This is an investment in the future. This investment will enable us to build all our work in this area at a modern level. The construction of a major refinery will enable us to produce higher quality products, our export potential will be significantly increased. At the same time, the operation of the old two refineries will be suspended. There is a great need for that too. These two plants will operate until the new refinery is built. But I want the new refinery to be built as soon as possible. This refinery will produce fuel meeting the latest environmental standards. So the area under the current refineries will also be landscaped. The territory of one of them may be used to extend the boulevard. We intend to extend the seaside area all the way to Zykh. As for the other plant – although it is rather premature to talk about it now – I think we could establish a new beautiful park there. In general, we seek to create new parks and green areas in the city, there is a great need for that. Parks should be established wherever possible.

Now the process is under way to resettle people from the buildings that were in some cases built illegally. I want to address this issue too because there has been some speculation regarding this matter, especially in foreign media. This is also an integral part of the smear campaign against Azerbaijan. False information and slander is spread. I regret to say that television channels or newspapers that consider themselves to be respected media are involved in such provocations.

The compensation paid in Azerbaijan is at the highest level. A total of 1,500 manats is paid for every square meter. I can say that the vast majority of those receiving compensation are happy with this amount. But there are provocative forces that want to use this for their own goals. They try to link the overall improvement of our city with some activities. We have a general course, policies, urban development programs. What directions will Baku develop in? We have repeatedly met and talked about this. I have approved a new town-planning concept of Baku and personally reviewed all these issues. Therefore, the process of renewal, creation and resettlement is conducted in line with an existing procedure. This has nothing to do with international events. Wherever possible, we set up parks and green areas. In parts of the city center where resettlement has been carried out, there are parking lots and underground parks. There is a great need for that. And above them there are green areas, parks and public spaces, and we will continue this policy.

The implementation of water and sewer projects is ongoing across the country. The work has either commenced or will begin shortly everywhere, in each district center.

But I want to address another issue now. It is a very big project indeed. Most of our cities have never had sewer. There were no water lines either. So we are creating them from scratch. Even in Baku the problem of drinking still exists today. True, we have resolved this problem to some extent. I am sure that it will be completely eliminated in the next two years.

The implementation of quality drinking water and sanitation projects will go ahead in Baku.

In the districts this project covers district centers and cities, i.e. the districts where 80-90 per cent of the population live in villages. There are districts with a 50-50 ratio of the urban and rural population. So we need to look into the future. Now we will build sewer and water lines to district centers and towns. What about the villages? I understand and know that we are weighing up all our investment opportunities. This is a project requiring great resources and expertise. But we must be prepared for it.

Of course, first of all our cities and district centers must be provided with drinking water and sanitation before the end of 2014. Preparatory work should be carried out now to ensure that such projects are also implemented in major settlements and villages located near district centers.

We have mentioned modular water treatment plants. This was also our initiative. Thanks to these projects, hundreds of thousands of people can drink clean water now. This project should be further expanded. If necessary, we can slightly increase investment this year so that these projects are implemented in the villages along riverbanks – I am not talking only about the Kura and Aras rivers, but also other rivers.

A project on the desalination of the Caspian Sea water is about to commence. This is our first initiative. As you know, our main water sources are formed outside the country. So it would be natural to use the water of the Caspian Sea. Although the agreements with neighboring countries will fully secure our interests and demand for water, new reservoirs are under construction.

The Takhtakorpu reservoir is a major step in this direction. The Shamkirchay reservoir will contribute to the solution of both land reclamation and drinking water problems. But we should also use the water of the Caspian Sea. There are international practices here which we must apply. I expect a pilot project to be realized. I think large-scale work should begin right after the pilot project. We must use it primarily for irrigation and then, if need be, to address drinking water issues.

I want to raise another issue. I think it is also very relevant now. Information security. We talk a lot about energy and food security. It is very important. But information security is also very important at this stage. I think a lot still needs to be done in this area. Work should be carried out in different directions. We live in an era of the Internet. It is a reality and we are ready for it. Azerbaijan is one of the countries where there is a free Internet. Let those who sometimes want to criticize us remember this.

The number of Internet users is on the increase, it accounts for more than half of our population. We are arranging broadband Internet in every village and settlement, and we will achieve this.

Of course, information security issues are getting increasingly relevant because the global information space also has a lot of provocations. In some cases such provocations are open, in others they are of secret and hidden nature.

Cyber-warfare is waged against us. This is true. I am absolutely sure of this, this is beyond doubt. Particularly active in this war, of course, is the Armenian lobby. The attempts to discredit Azerbaijan, deny its realities, portray Azerbaijan in the world as a backward and undemocratic country are the dirty job of the Armenian lobby.

Their sphere of influence is quite broad. They are represented in the leading print media of various countries.

Sometimes they go under different names and conceal their origin. This is a secondary issue now. A person shouldn’t conceal his nationality. Anyone should be proud of his nationality. But they are different even in this respect in other countries.

Sometimes they conduct open campaigns against Azerbaijan and try to harm our image in a coordinated manner. Their activities are straightforward, Azerbaijan is number one target for the Armenian lobby. For us too, I repeat, the Armenian lobby is number one enemy. We must be prepared for this fight.

In recent years we have succeeded in changing the situation in our favor. The Azerbaijani Diaspora, our strong non-governmental organizations, embassies, our people, our ability to access the foreign media and our positions are strengthening. But we still need to take into account the realities. The Armenian lobby has been operating in Europe and large countries for decades, maybe even centuries. It is a well-organized, very aggressive and negative force. The driving force of the negative information against us is the Armenian lobby, so to speak. There are politicians in some countries that are under the influence of the Armenian lobby and live on its dirty money. We know their names, we know them.

Suffice it to look at the number of their voyages to the so-called “Nagorno-Karabakh republic” to understand why they go there. This is a second force.

The third force. Unfortunately, some countries are experiencing a growing trend of Islamophobia. This is also a reality. It is very negative, but it is a reality. And we must reckon with this reality. As the trend of Islamophobia intensifies, the attitude towards Muslim countries also changes for the worse. We must be aware of and talk about it. The number of politicians “infected” with Islamophobia is growing. When these forces see Azerbaijan stand out in a positive way, being noted for modernity, an independent policy and committed to Islamic values, they clearly feel unhappy and disappointed. We must always take this factor into account and try to change this situation in our favor with our policies.

Representatives of all nationalities and religions live like one family in Azerbaijan. There is multiculturalism in Azerbaijan. We are and will be making sure that it lives on. The politicians talking about the failure of multiculturalism “bring grist to the mill” of Islamophobia. This is a very dangerous trend. We remember what similar trends brought to in the 20th century.

Other forces waging information war against us include those who simply can’t accept Azerbaijan’s independent policy.

They think a country such as Azerbaijan should not have independent policies. It should go under someone's wing and not be independent. There are such forces, we know them, they are engaged in a covert struggle against Azerbaijan. In some cases, they are waging this fight not openly, but in a cowardly way, in the information space.

Of course, Azerbaijan’s independent policies, its resolute position on every international issue, the fact that this position is strong generate great respect of the international community for Azerbaijan.

Our election to the UN Security Council is a great success and victory. We were supported by 155 countries. This is the international community. The international community is not some kind of a regional organization. The international community is the UN. And the UN supports us. Of course, there are forces that can’t come terms with the idea of our independence. They are annoyed with our policies.

Using new opportunities, they try to engage in information sabotage and circulate false and defamatory reports. At present, the media are not only a source of information, they are also a source of provocation. Unfortunately, this is so.

We, in turn, must be prepared for that. And we are. We must and we do respond to all the unfounded attacks.

I want to repeat that Azerbaijan has its own way to go. Unfortunately, the information sabotage against us is not limited to the mentioned facts. There are forces that want to aggravate the situation in the region.

There are forces trying to set Azerbaijan against its neighbors. They also use information sabotage for that. What else can they use? It is impossible. Our relations with neighboring countries have historical roots. We have established normal, good and friendly relations with all our neighbors, except Armenia of course. We are and will be strengthening this friendship. We have no problems with any of our neighbors.

Azerbaijan will never participate in the plans of other countries. I have repeatedly said this. I said this at the beginning of my presidency. Azerbaijan will never become an arena of confrontation. If someone wants to turn Azerbaijan into an arena of confrontation, let them seek another place. We can never allow our territory to be used in negative plans against neighbors, and everyone knows this. Thus, the issue of information sabotage emerges again. The influential world media publish dirty lies. Then, other media under their influence start spreading this lie. This is how an opinion is formed. Or they try to create an opinion that Azerbaijan has some other plans in the region.

We have only one wish: we want peace, stability and calm in the region. Our relations with neighbors are a priority. We are living and will continue to live in this region. Neighbors also have a positive attitude towards Azerbaijan and I am very pleased with that. So we must know this, talk openly about it, we must and we do express our principled position on this.

And finally, the dirty campaign against our country over the Eurovision song contest is unfortunately ongoing. We know very well what forces are behind this campaign. We know well which country’s media are particularly aggressive. There are countries where dirty and defamatory stories against Azerbaijan are published not just every week, but every day. Of course, this is a coordinated plan. But this plan does not and will not have any effect. Because there is no force that can affect our policies, and as long as I am in this position, there won’t be.

We will go our own way. We will go along the way of independence, the way of freedom!

There are all the freedoms in Azerbaijan. Those who want to accuse us of something, i.e. of anti-democratic steps, should look at what is happening in their own countries. Every day and every week people going to demonstrations in these countries get beaten, trampled, their heads are smashed, hundreds of protesters are arrested. These are the countries whose print media conduct a smear campaign against Azerbaijan. There is a good saying: “the hunchback does not see his own hump, but sees his companion's”. It is very relevant.

We have democracy, freedom of speech, freedom of conscience and freedom of assembly. The people of Azerbaijan see that our country also has the freedom of assembly. If those who want to use these opportunities abide by the rules of normal behavior and conduct their activities where the mayor's office has indicated to them, then they can exercise their right of assembly. I think the mayor's office has made a very wise move by choosing the most acceptable venue for rallies and demonstrations, i.e. a place that is most appropriate and suitable for these people. It is possible to conduct any actions there. This is where such activities should be held.

As for our future plans, I want to reiterate that we are moving forward with confidence. There will be more provocations against. The information struggle against us will be waged in the future too. We are not worried about it. We simply need to talk about it, take measures and ensure a happy future for the Azerbaijani people. Thank you.