Speech by Ilham Aliyev at the meeting on the results of six months of 2023 year
11 July 2023, 16:10
Many steps have been taken to meet the goals I set early this year. Six months of the year are now in the past. To some extent, we can already talk about conclusions. I am sure that the successful development of our country will be ensured by the end of the year. In six months, our main direction was to secure the sustainable development of our country, the expansion of the non-oil sector, the restoration of Karabakh and East Zangezur and the continuation of reforms in the economic and social spheres.
Our economy has developed over the past six months, although the absolute figures are not exceptionally high. However, our non-oil sector and the industrial area of the non-oil sector have grown to a sufficient degree. Our non-oil industry grew by 6.5 percent, and the non-oil sector grew by more than 3 percent overall.
Meanwhile, our financial situation has also significantly improved, which has happened for several reasons. First of all, the strengthening of discipline in the financial sector, the ongoing reforms of tax and customs authorities, and transparency – all these factors have allowed us to review the budget in the middle of the year and conduct reconciliation. This is very gratifying because the collected funds have significantly exceeded the forecast. Our state budget this year has already reached a record level – it has risen to the level of more than 33 billion manats. However, the acquisition of additional revenues in the first half of the year allowed us to make additions to the budget to address pressing issues, and we did that. Today, our budget is over 36 billion manats. Of course, this has also enabled us to implement the main investment projects. First, I want to repeat that we should give further impetus to extensive construction work in the liberated lands and increase our military power.
Our two critical directions during the reconciliation are very clearly defined. More than 3 billion manats were added, of which 1.8 billion was channeled into the restoration of Karabakh and East Zangezur, and 1.1 billion manats were allocated to strengthen our military potential. In other words, the lion’s share of this amount has been channeled into these two directions, which is only natural because these are the two main tasks facing the country today.
We are also working in the direction of foreign debt management based on the instructions I gave a few years ago. I said a few years ago that we should set a goal, and we did set it, that our foreign debt should remain around 10 percent of our GDP. We have already achieved this. In absolute terms, our debt totals 6.7 billion dollars, which accounts for about 10 percent of our GDP. Of course, the final figures for our gross domestic product will be calculated at the end of the year. But it is possible to make a prediction even now. In the first six months, gross domestic product amounted to more than 60 billion manats.
This is one of the positive aspects which should be underlined explicitly because, in many countries, in most of them, we see a completely different picture. Our foreign trade balance is positive, i.e., the surplus is substantial. The vast majority of countries import more than they export. In our case, however, it is the opposite – in the first six months of the year, our surplus was close to 10 billion dollars. If these rates are maintained, imagine what figures we will reach by the end of the year and, of course, another advantage it brings is macroeconomic stability. Macroeconomic stability has been maintained for many years. The exchange rate of the manat has been stable for six years, which is a rare phenomenon in the world, especially in the current conditions. So, this is a manifestation of a thought-out policy, which, of course, is centered around the people of Azerbaijan. Because macroeconomic stability naturally affects the country's economy. But above all, of course, this is the most significant impact on people’s living standards. In our country, both minimum wages and minimum pensions are regularly increased. In parallel to this, the manat is stable. Of course, double-digit inflation gives us food for thought, and I hope that by the end of the year, inflation can drop to a single-digit level. In addition to natural reasons, there are also subjective reasons. They should be analyzed more vigorously, and proposals should be made regarding steps to be taken before the end of the year. Because against the backdrop of Azerbaijan’s overall economic potential and the results achieved in the economic field, it is certainly not desirable for inflation to be 12 percent.
As I mentioned, our two main directions after the budget reconciliation were the restoration of Karabakh and East Zangezur and the increase of our military power. Regarding the first direction, everything is being implemented faster than we envisioned, i.e., faster than we planned. We have mobilized all our resources. Already this year, we have succeeded in returning IDPs to the Talish village and the city of Lachin, and by the end of the year, IDPs will also return to the Zabukh and Sus villages of the city of Lachin. The return program is being carried out consistently, so by the end of the year, residents of five settlements – one city and four villages – will be fully settled in their ancestral lands. In total, 100 settlements will be reconstructed in the first phase of the Great Return program. I participated in the groundbreaking ceremonies of 30 residential settlements, eight cities and 22 settlements and villages. Master plans have been prepared and approved, and extensive construction work is underway in many places.
Of course, first of all, there are infrastructure projects. Because we cannot return our people without implementing these projects. At the same time, the construction of residential houses is going fast. In the example of the city of Lachin, in just eight months, most of the city has been completely restored, and both individual houses and multi-apartment houses are being prepared for more than 700 families there. Further steps will be taken regarding the future development plan of the city of Lachin.
Of course, we must always focus on the work in this area. This is the most crucial issue in my daily work, and we constantly monitor this work. Government members and other officials are regularly delegated to liberated regions. Everything we do is done in a planned manner. The highest standards are and should be applied here. By the end of this year, based on the overall investment program, we will ensure spending up to 12 billion manats in Karabakh and East Zangezur. I should also note that all this work is being carried out at the expense of Azerbaijan. Except for two schools, all remaining infrastructure and construction works are financed from Azerbaijan’s state budget and are carried out by Azerbaijani state companies. At the same time, the Heydar Aliyev Foundation is rebuilding or performing a major overhaul in more than ten mosques.
When the following year's investment program is prepared, we will discuss next year's budget shortly. Of course, we will look at the investment costs of Karabakh and East Zangezur, and we must ensure that we save time due to financial constraints. Our financial means are expanding. However, this should not mean we have no problems in this area. There are many tasks facing the country. Infrastructure projects are being implemented in Karabakh and East Zangezur and throughout the country. Enormous financial resources are involved and mobilized concerning industrial development and other issues. Of course, we should approach all allocated funds cost-efficiently and ensure complete transparency in collecting and spending budget revenues.
As I mentioned, when additions were made to our budget, the second main direction was to increase our military strength. And this is also natural. The international situation is clear. What I have said for many years is manifested today. International law in different parts of the world does not work. International law, decisions and resolutions of international organizations cannot be relied upon. We have always been in favor of law, including international law. We have always been in favor of justice. Even today, we support justice and international law and defend this position internationally. Both as a country and as chair of the Non-Aligned Movement, which brings together 120 countries, and the last ministerial meeting showed it.
However, we see that rules are entirely violated in the world, and the rules of conduct and international law are not upheld, and we see this almost every day. Every day, the great powers, which have assumed the role of guarantors of international law, first violate this law and then justify their actions. When I talk of countries, I mean all major countries. Everyone violates conventions, violates international legal norms, violates established international rules of conduct, and makes no secret of it.
Therefore, we must be more robust to protect ourselves, our independence, our choice, our way of life and our territorial integrity. After the Second Karabakh War, we took serious steps in this direction. I have already stated this, but I want to repeat that the Armed Forces of Azerbaijan now have more significant military potential. We will become stronger both in terms of combat capability and equipment because this process does not and should not stop. I have said that we will allocate as much funds as necessary for two directions – restoring the liberated lands and building up our military potential.
By pursuing this policy, we are also increasing the power of our country. Because in today's world, the power factor is at the forefront. Power is reckoned with. Power is avoided. And we have shown it several times in the last two and a half years, and no one can interfere with our determination. On the contrary, we were able to break all the arrows aimed at us and protect our dignity and interests. There is no need for additional words; everything is obvious. I don't want to go into too much detail, but everyone can and should see and know that no one can speak to Azerbaijan in the language of threats and ultimatums, and I think there will be no such attempts from now on.
In the following years, the modernization of our Armed Forces, the deepening of reforms in this area, in the direction of creation and improvement of new armed units, including the acquisition of the most advanced weapons and equipment, will be carried out according to plan. The reforms carried out in the Armed Forces after the Second Karabakh War are not yet completed, including structural reforms, and we must bring our Armed Forces to the level of the world’s most advanced armies – of course, considering the size of Azerbaijan. Regarding structural reforms, governance and self-defense, we are building a force to keep us confident in this geography. It is the case today, but more must be done. And I want to repeat that this is a domain where we need to talk less and do more. This is why I don't want to say anything more. In any case, the people of Azerbaijan can rest assured that our security is in safe hands; the people of Azerbaijan can and should live comfortably from now on.
One of the tasks we are facing is, of course, the relations with Armenia. In this field, the outcome does not depend on us alone. However, our policy pushes the Armenian side to take essential steps. But, of course, it is a two-way street. Our position regarding peace negotiations is clear, logical and based on international law. By following this principle, a peace agreement can be signed based on the norms and principles of international law. At any rate, there are such opportunities. The latest rounds of negotiations and high-level contacts scheduled for the next few days have one goal - getting closer to the peace agreement. We are interested in that and put it forward as an initiative. However, let me repeat that it is not totally up to us; the other party must be ready for this and must put the principles expressed in words on paper.
One of the positive aspects observed recently is some progress in the position of the Armenian side. Whereas it accepted Azerbaijan's territorial integrity, sovereignty and borders in October last year, this May, they went further. They officially recognized the parameters of the territory of Azerbaijan, including Karabakh and enclave villages. This should be viewed as a positive development. It is now time for the exact words to be put on paper. Sign it and establish relations. In any case, we will continue our efforts in this direction.
Regarding our duties in other areas, the importance of the transportation sector has been growing, especially recently. Because some restrictive measures have led to new transport routes opening, Azerbaijan’s favorable geographical location certainly creates additional opportunities for us. As you know, we have pursued a consistent policy for developing the transport sector for many years. We have completely modernized the entire infrastructure in our territory based on the latest requirements. But today, the demand has further increased. Because the cargo is increasing, while transport routes are limited, as I mentioned. An increase in cargo transportation from North to South and the other way round, from East to West and vice versa, is apparent. Here too, Azerbaijan acts as a very reliable partner, is in close contact with its neighbors and does not spare help in solving the transport problems of the neighbors. At the same time, this area is one of our priority spheres. I have said this several times, but I want to repeat it today, our desire is not only to be a transit country that transmits large shipments. We desire that production areas should be created on these transport routes, business opportunities should be created, investments should be made, and we should work in this direction, including through contacts with neighboring countries. A legal framework is in place, and industrial zones have been operating for many years. The Alat Free Economic Zone was officially opened, and the investment made by the state has already started to bear fruit. Private investors have already been attracted, and we are seeing the results.
In a nutshell, we should conceptualize the impact of transport corridors on business, define a goal for ourselves, and see what we want. Roads running from South to North and from East to West in the country cover most of our districts. Therefore, each direction should have a unique business opportunity according to the specifics, climate, and specialization. Government must prepare its proposals on this issue. We have a general business development concept and various tools, including soft loans and other instruments. In other words, it would be good to analyze this from the perspective of transport routes.
I should also note that we were recently able to expand our transportation capabilities beyond our borders, first of all, in the Black Sea. Three large tankers have been purchased, each with a capacity of 115,000 tons. This is the first time in Azerbaijan’s history which was done on my instruction. Tankers were named Shusha, Karabagh and Zangezur.
Transportation of Azerbaijani goods by an Azerbaijani company will bring us additional revenues, and we are already present in the Black Sea. We were already there anyway. We had small ships, but today three of our largest tankers, Aframax vessels, are already operating in the Black Sea. We can increase their number if necessary.
Therefore, we must re-evaluate our shipbuilding capabilities in the Caspian Sea because orders come from neighboring countries. Our shipyard’s project capability is for available shipping capacity. At the same time, we also considered decommissioning ships that have been operating for many years. Because they fall into disrepair and must be upgraded. But there is a greater demand now – our own and neighboring countries. So, it is not ruled out that someday we can start expanding the production areas of the shipyard. So, do keep this in mind. In any case, the orders coming from abroad – we have already started preliminary negotiations – are a positive development. This shows yet again that we do everything at the right time.
Where would we buy tankers and ships if we did not have a shipyard today? This is a rhetorical question. No one can buy ships where we used to buy them. Therefore, it was a timely strategic step, and I instructed to expand the capabilities of the Alat International Trade Port. We have to do this too. This was enough for the previous period because our handling capacity is calculated at 15 million tons. After a year or two, it may not be enough. Again, I don't want to say anything in advance. Still, the negotiations with neighboring and partner countries show that it will be possible to transport several times more cargo through Azerbaijan.
I want to touch upon another issue now. It is an issue related to environmental balance. Karabakh and East Zangezur were very close to the zone of environmental disaster. Because Armenia has dealt a massive blow to our nature due to the operation of enterprises in Armenia and, at the same time, as a result of the savage exploitation of our natural resources in the lands occupied in Karabakh and East Zangezur at the time. Suffice it to say that the Armenians destroyed, looted, and sold more than 60,000 hectares of forests. They made parquet out of it and sold it. We have all these satellite images. Transboundary threats must now be taken into account. And Azerbaijan's position here is still based on international experience, based on international conventions, including the Espoo Convention, which anyone can look up on the Internet. It states that transboundary pollution of rivers and the creation of enterprises close to the borders of countries, enterprises that can be considered a source of ecological danger, must be coordinated with neighboring countries. We demand this from Armenia.
Today, the Azerbaijani public and non-governmental organizations have already sent an appeal to the government of Armenia regarding this issue. Experts and representatives of non-governmental organizations working in the field of international ecology have also joined this appeal. Therefore, the government of Azerbaijan should not be left on the sidelines here either. Our civil society is taking this step, and it is very good. Yet we must see which organizations should be addressed officially, i.e., through state channels, so that Armenia abandons these perilous practices. If they want to set up an enterprise, we certainly can't have anything to do with it. It's their internal business. But if this enterprise is located 500 meters from our border and if hazardous substances were to be utilized there and later discharged into the Araz River and the Okhchu River, this is our concern. How can we tolerate that? Of course, we must keep these issues in the spotlight within the framework of law, international conventions, and diplomacy. So, this is my instruction – seek legal ways of thwarting Armenia’s dangerous practices.
In this regard, I can say that a state program on the future development of the Nakhchivan Autonomous Republic was recently adopted on my instructions. The program has been published in the media and is available. It is a program that can ensure the successful socioeconomic development of Nakhchivan in a short time. I am sure it will be fully implemented because this program is based on our resources. Why am I bringing this up now? The issue of turning Nakhchivan into a green energy zone along with Karabakh and East Zangezur was initiated by me. Most of the electricity in the Nakhchivan Autonomous Republic is now produced by hydropower plants. Solar and wind power plant construction is also envisaged there – perhaps 1,000 megawatts or even 1,500 megawatts. We will meet all the needs of the autonomous republic for green energy. We will also export green energy to neighboring countries. Having said all this, we can already see that a significant part of our country has already been officially declared a green energy zone.
And against this background, the incident in the Gadabay district was utterly unacceptable. I believe that the Ministry of Ecology and Natural Resources was negligent as a minimum; it showed a lack of control and acted as a passive observer, resulting in a foreign investor contaminating our nature. People raised their legitimate voices of protest, but did anyone listen to them? No! One day, two days, three days, five days had passed. What was the Ministry of Ecology and Natural Resources thinking? Wasn’t it aware that there was such a problem? It was either aware but paid no heed to it or oblivious. Both are unacceptable. Some of the citizens were provoked and committed inappropriate and illegal acts, which is intolerable and unacceptable. Some provocateurs have gone into hiding in Azerbaijan, and others have fled abroad. Those in Azerbaijan have already been identified, and several have been brought to justice. We will bring those abroad to account. Let no one think that we have forgotten this. Chaos, arbitrariness and provocations in Azerbaijan ended in 1993. If someone has forgotten that, we can remind them. Therefore, citizens should also show decency and manners, abide by the law, and refrain from throwing objects at the police. Throwing stones at the police does not flatter anyone. This is one thing. Secondly, it is a crime. If the Azerbaijani police show tolerance, it does not mean that people can throw stones at the police. This is absolutely unacceptable. I am saying to everyone that we are not going to play with anyone’s whims here, and if we believe that it is necessary, we will punish those involved so that they will regret it.
At the same time, there was a natural reason for what happened. And this reason is that a foreign company came here to make money. We do not object; they have made investments and created jobs. Of course, they didn’t come here for charity but to earn money. But this does not mean our nature should be destroyed along the way. It does not mean people's pastures and grazing areas should be occupied. It does not mean they should build a second wastewater lake without obtaining permission from anyone. Who gave them permission? It seems they either colluded with the Ministry of Ecology and Natural Resources or did it alone. So, it should be thoroughly investigated. All instructions have been given to the prosecutor's office and other relevant agencies. After I heard the news, I called the Prime Minister and told him to establish a commission and send them there immediately.
Why did I have to say that? Didn’t the Minister of Ecology know that he should go there? I told them they must go there, talk to the people, take air samples, and invite international experts because it is quite possible that the ministry was the cause of this incident. You may involve international experts to receive their feedback as to what extent is the exploitation of these fields harmful to people's health and nature.
There is no answer so far. Yes, a meeting was held, and the Cabinet of Ministers released a statement, but whoever reads that statement cannot understand a thing. What does it state? What was the purpose of that statement? To downplay the issue or play with general phrases. I gave a specific task, a specific one. Where are the results of the assessment? How much time has passed? Almost a month has passed. I am still waiting for someone to get back to me. The Cabinet of Ministers and the Ministry of Ecology and Natural Resources failed to do it. They think that I have forgotten about it. I remember everything. I want to repeat that those who attacked the police should be ashamed of themselves in the eyes of their families, their children, and the public in general. I am giving you a week because the public saw those ugly scenes. I and the public should be informed, and the matter should be investigated. Why didn’t the Ministry of Ecology and Natural Resources pay attention to this issue, it was indifferent, and even after I gave them the task, they went there and returned. However, there is still no information about the result.
Foreign companies and local companies working here must respect the laws of Azerbaijan. If they do not respect our laws, their activity here will be impossible. Although foreign investors operate the gold deposits in Gadabay based on a production-sharing agreement, although they have been working here for many years, the laws of Azerbaijan and the ecological balance must be respected. I should also inform you that our state company, “AzerGold,” operates gold deposits too. But according to the information provided to me, all environmental norms in that area are complied with. Among other things, they engaged local communities, conducted humanitarian campaigns and recruited people en masse. So, this is the attitude of the Azerbaijani company. And that was the approach of a foreign company.
This cannot be tolerated. The representatives of the foreign company must be invited; if they have not been already. They should give an explanation to the Cabinet of Ministers, and let me repeat this, myself and the public should be informed within a week. If the slightest danger exists to nature and people's health, that activity should be stopped. That's it!
Companies damaging the environment in the world are going bankrupt today. Could they behave like this in their own country? They build a lake and discharge poison into it. They would be hung by their heels. They would see a sentence sending them to prison for the rest of their days. But they think that they can do anything they want here. Because they have colluded and conspired with someone, sending some gifts here and there. There can be no other explanation. It is unacceptable – the actions of the provocateurs there, the activities of the foreign company and the performance of our ministry.
The only party that acted with dignity here was the Azerbaijani police. Everyone should know this. Some are frowning now. Open your eyes and see how many people the American police kill every year. Nearly a thousand. How many people do the French police kill, and why? Recently, the whole world saw the actions of the French police. I do not justify them. It is unacceptable, and it is a shame that the police, the absolute majority of the police who kill those people, evade responsibility. After a while, they either release them in court or sentence them conditionally.
Our police maintain order day and night in the cold, heat, mountains, and Karabakh. Our Internal Troops were martyred during the war. How can anyone come and smear the police? I will not allow that to happen; everyone should know that: provocateurs, those who followed their lead and the whole public.
I should also mention another issue. It is related to the importance of early gas produced from the Absheron gas condensate field these days. This is indeed a milestone. Because as far as export is concerned, our primary gas resource to this day is the Shah Deniz gas condensate field. Today we already have two large gas condensate fields. The Absheron gas field. We had high hopes and knew that the Absheron gas condensate field contained significant reserves. It was reported to me a few days ago that early gas was produced. The flow rates are also very good. One well produces even more gas and condensate than the “Shah Deniz” gas field. Of course, the Absheron field is smaller than “Shah Deniz,” i.e., regarding reserves. Initial estimates were somewhere around 300 billion cubic meters. But I am sure there will be more. It would certainly be wrong to say anything at this stage. But this will better ensure our energy security. Also, the volume of gas going for export will increase yearly, not only because of “Shah Deniz” but also because of “Absheron.”
The first phase of “Absheron” is already being implemented, and SOCAR should probably start more active negotiations with foreign partners regarding developing the second phase of this field. Let me repeat that we expected that there would be exploration, but honestly, we did not expect such beautiful results. This was very good news and a solid answer to certain experts trying to cast a shadow on Azerbaijan's energy potential. Therefore, from now on, our gas export plans will be executed faster and in larger volumes.