Ilham Aliyev attended the opening of the World Economic Forum on the subject of Strategic Dialogue on the Future of the South Caucasus and Central Asia”

The World Economic Forum (Davos forum) on the subject of “Strategic Dialogue on the Future of the South Caucasus and Central Asia” has started in Baku.

The opening ceremony and the first session of the forum on the subject of the “Future of the South Caucasus and Central Asia” were attended by President of the Republic of Azerbaijan Ilham Aliyev and his wife Mehriban Aliyeva.

The attention of the world is focused on Azerbaijan once again. Baku, which has been hosting high-level international events in recent years, is the venue of the World Economic Forum. Renowned economists predicting the global economic situation, experts, state and government officials have chosen Baku as a center of discussions on important economic issues of concern to humanity.

The overall agreement on conducting the World Economic Forum in Baku was reached at a meeting of President of the Republic of Azerbaijan Ilham Aliyev with the founder and executive chairman of the Davos Economic Forum, Klaus Schwab, in Davos on 23 January.

In opening remarks at the forum, the founder and executive chairman of the Davos Economic Forum, Klaus Schwab, said:

-Dear Mr. President, distinguished guests, dear friends and members of the World Economic Forum.

I am infinitely pleased to welcome you all to the first World Economic Forum on the strategic dialogue on the future of the South Caucasus and Central Asia.

With your permission, I would like to thank you, Mr. President. I would like to thank the Government of Azerbaijan for the excellent organization of this forum in such a beautiful city as Baku. With your permission, I would also like to note that I last visited Baku 20 years ago. I must say that there have been tremendous changes since that time. Baku has become a beautiful city. We are honored to conduct the World Economic Forum in Azerbaijan. Azerbaijan is a country with enormous opportunities. In general, recent years have seen very high growth indicators. This has been made possible first of all thanks to the proper use of the country’s exceptional potential in the area of natural resources. At the same time, these successes have been achieved through the successful and skillful use of these resources for the diversification of the economy. Azerbaijan is an advanced country in the field of information technology, finance, and construction.

I should note that no country of the region can realize its potential on its own. Long-term economic success requires cooperation. In other words, success depends not only on natural resources.

Azerbaijan has a unique geographical location and a skilled and well-educated work force. Thanks to the sound atmosphere created here, as well as collaboration and cooperation, it is possible to achieve many successes. If we look at the European continent or the Asian region, we can see that success in the economic and social spheres definitely requires collaborative efforts based on trust and long-term cooperation. That is why the World Economic Forum provides a unique format.

The objective of the forum is not only to conduct certain meetings. Its goal is to launch long-term initiatives. Certain scenarios are proposed for the South Caucasus and Central Asia regions. These processes will be continued in the next 18 months. This process will involve leading personalities from the region and beyond. The goal is to achieve regional economic integration.

Different scenarios for the long-term future of the region are being created. The goal is to examine the unique evolutionary potential of the region and consider various alternative scenarios. Today we are beginning this process. The goal is to identify unique opportunities of the region.

I do hope that you will share your valuable thoughts and exchange views with the speakers represented on our panel.

Mr. President, at the same time I would like to take this opportunity to thank you for your friendship and cooperation with the World Economic Forum. For many years you have been participating in our annual meetings. In this respect, you have wonderfully represented Azerbaijan and the region in the international arena, helped us develop a complete idea about the economic potential of the region and the contribution the region will make to the economic prosperity of the world.

Then a video prepared by the World Economic Forum and describing the potential economic development of the South Caucasus and Central Asian regions was shown. Special attention in the video was paid to the successes and economic potential of Azerbaijan.

Then the voting took place to determine areas of discussion. The survey regarding the future of the region included three points – disunity, integration and polarization. During the voting participants of the event were unanimous on conducting a discussion on the topic of integration.

The director of the Johns Hopkins Institute of Central Asia and the Caucasus Institute (USA), Frederick Starr, described the voting results as positive. He said that if we pay attention to the energy sector over the past 15 years, we can see that the issue of diversification had become more relevant and in the future it would inevitably cover sectors such as telecommunications and transport.

Touching upon the importance of the region, Frederick Starr said that it was becoming a significant center of the continent and emphasized the importance of creating the Southern Corridor and other routes.

President Ilham Aliyev made a speech at the forum.

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Speech of President Ilham Aliyev

- Dear ladies and gentlemen.

Distinguished guests!

I want to welcome all of you to Azerbaijan. Let me express my appreciation for the opportunity to participate in such a great event.

My special thanks go to Professor Schwab and all the participating countries in this forum for supporting our country and accepting our invitation to attend the World Economic Forum being held in Baku.

As Professor Schwab has noted, I have participated in this forum seven times. I can say that this participation, the presence at discussions and communication with the world’s business elite have helped us a lot in diversifying our economy. Our economic development begins with the energy sector, and this sector is still quite attractive for foreign investment.

At present, our main goal is to diversify the economy. To do that, we have to assert ourselves in the international business community not only as a country with an important geographical location and natural resources, but also as a country committed to reform, transformation and diversification. I can say that the World Economic Forum and the opportunities opened up thanks to the meetings held in Davos have facilitated the establishment of relations with international companies which did not know anything about Azerbaijan in the past. Our country is relatively young – our independence is 21 years old. But Azerbaijan is a country with a great history, customs, traditions and culture. I am sure that you will have a chance to learn more about Azerbaijan. But we have been an independent country for only 21 years.

Professor Schwab has said that he first visited Azerbaijan in March 1993. Perhaps those days were the most difficult for our young independent country. Our independence was less than two years old at the time, and I think that the situation in Azerbaijan was the most difficult among all post-Soviet republics. There was internal strife and civil confrontation, there was war between Armenia and Azerbaijan, and these events led to the occupation of 20 per cent of our internationally recognized territory.

But 1993 was a turning point in terms of development. In the middle of 1993, the situation began to stabilize. We launched very serious, fundamental political and economic reforms, and Azerbaijan introduced itself to the international community. It was a period of transition from a planned economy to a market one, from a one-party rule to a multiparty system, from totalitarianism to democracy. I can say that from a historical point of view 21 years is, of course, a short period of time. But at the same time, it was a period of real change. At the initial stage of reforms Azerbaijan managed to attract major investment to its energy sector. We are grateful to foreign investors and major energy companies for investing in Azerbaijan. At the next stage, we managed to move the vector of economic development off the energy sector into the non-energy sector and attracted investment to the sector that is not associated with oil and gas. At the same time, we continued political and economic reforms, and this process is still under way. This will create opportunities for Azerbaijan’s sustainable development in the coming years.

We have a very favorable geographic location. But without the infrastructure this location does not really matter. We have natural resources, we have created a diversified network to transport our hydrocarbons. Azerbaijan does not have access to the open sea. Therefore, to transport our oil and gas we had to build pipelines. This was one of the biggest challenges facing us in the late 1990s and early this century. This task was completed successfully. At present, we have a diversified network of pipelines. There are seven oil and gas pipelines to transport Azerbaijani oil and gas to international markets, to European markets. At the same time, Azerbaijan has begun to play the role of a transit country in the transportation of hydrocarbons for our partners on the other side of the Caspian Sea.

But in the last 10 years our main goal has been to diversify the economy. If you pay attention to the economic development of Azerbaijan, you can see that in the last 10 years our economy has been one of the fastest growing economies in the world. The gross domestic product has grown three times –by 300 percent, while industrial production has increased 2.5 times. We have managed to reduce unemployment –at present the unemployment rate is 5.2 percent.

Ten years ago, almost half of our population lived in poverty. Now the poverty rate is 6 percent. Budget expenditures have increased almost 20 times, while inflation is at a level of about 1 percent. This development has been observed for the last 10 years.

We are also very pleased to see an assessment of our achievements by the World Economic Forum. In terms of economic competitiveness, the World Economic Forum has ranked Azerbaijan in 46thplace in the world. Our country has been ranked first in the CIS for the fourth consecutive year. Our economy continued to grow even during the financial crisis. And when the oil price fell sharply, our economy continued its development because our non-oil sector produced good results. Such major credit rating organizations as Fitch, Standard & Poor's and Moody's have recently upgraded the credit rating of Azerbaijan. This is also a good indicator of the reforms.

We are currently converting oil revenues into human capital, and one of our main forward-looking objectives is education.

Education is the most important factor in the successful development of any country. Investment in education, relations between our universities and the leading universities of the world enable us to plan our economic future on the basis of a very serious intellectual potential. At the same time, we are now investing in new technologies. Today, the sphere of information and communication technologies is becoming a priority in Azerbaijan. Azerbaijan has already joined the club of a limited number of countries with a space industry. In February this year, we successfully launched our first satellite Azerspace-1, and this is only the beginning of our space industry development.

In other words, the years of independence have not only been those to transformation of the political and economic systems. It was a period when invested was made that would bring revenues in the coming years.

At the beginning of reforms one of our priorities was to create a positive investment environment. Over the past 10 years more than $130 billion was invested in Azerbaijan. A certain part of this investment was foreign. The good investment environment, the predictable political situation, the stable situation in the country and, of course, the regional ties are among prerequisites for the success of each country.

One of the topics to be discussed today, of course, is regional cooperation and integration. I was very pleased to see the results of voting. In fact, I was expecting that because Azerbaijan is playing a part in regional cooperation. The projects we started in the mid-1990s were aimed not only at the economic development of Azerbaijan, but also at the broader regional cooperation. We became the first country to declare the Caspian Sea open to foreign investment. We are the first country to have created a corridor from the Caspian to the Mediterranean and Black Seas. Oil and gas corridors subsequently began to play the role of a common geopolitical and energy corridor. We are now nearing completion of an important railway project linking Azerbaijan, Georgia and Turkey, and as our friend Mr. Starr has said, it will not be a purely regional project. This will be a project that will link Europe with Asia through Azerbaijan and neighboring countries.

I am very proud to say that we are playing a major role in this project not only with our financial resources, but also with our commitments and political will. Of course, as far as our government is concerned, the energy factor is no longer a top priority. But our energy potential has played and will play an even greater role in the energy security of the region and Europe.

Two years ago we signed a memorandum on strategic partnership in the energy sector with the European Union. It is being implemented now. One of the most important achievements of the recent period has been the Trans-Anadolu pipeline project, TANAP. The project was initiated by Azerbaijan and received strong support from our partners in Turkey and Georgia. Azerbaijan undertook the major financial commitment to implement the project and began the construction of the pipeline which will serve for at least 100 years. When you consider the vast gas reserves of Azerbaijan and the potential resources of the region, this corridor may play an important role for decades to come. Of course, regional cooperation can take place only in politically stable and developing countries.

We will talk about transport routes, cooperation and integration. This is possible only if all the countries involved in the process have the same attitude. I am glad that the Caspian region, Central Asia and Azerbaijan are in this region – we see our future in close relations and cooperation, in integration and consolidation of our efforts to provide a better life for our peoples and a better future for our countries.

Dear friends! I want to welcome all of you to our country again. I want to express my gratitude to Professor Schwab and his delegation for conducting this forum in Baku. I am confident that the results of this event will have a very serious impact on our daily lives and the region will become more stable, predictable and prosperous. Thank you very much!

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Addressing the forum, First Deputy Prime Minister of Kazakhstan Bakytzhan Sagintayev said:

-Dear Mr. President!

Dear Mr. Chairman!

Dear ladies and gentlemen!

First of all, I would like to thank the World Economic Forum for the invitation to attend such a prestigious meeting. Central Asia and the Caucasus are an important geostrategic region of Eurasia. Located at the center of the continent, it plays a vital economic role on this vast area. Therefore, the growing interest in its future in the world is quite legitimate. We do hope that today's discussion will serve as a practical step in the search for new opportunities and enhancement of cooperation between our countries.

First of all, I would like to describe the current economic situation in Kazakhstan. Over the past decade, Kazakhstan has managed to double its economic potential. In absolute terms, the country's GDP has increased from $18 billion in 2000 to $200 billion at the end of 2012. The GDP per capita in the said period has increased from $1,200 to $12,000 in 2012. It is projected that by 2020 this figure will exceed $20,000. We have managed to maintain the macroeconomic stability in the conditions of the global economic recession and a difficult economic situation in a number of leading countries. In 2012, the economy grew by 5 percent, while the unemployment rate in recent years has remained at a stable level of no higher than 5.5 percent. According to experts, Kazakhstan is one of the most attractive countries of the CIS in terms of investment. Since 1993, the country has attracted more than $160 billion in direct foreign investment. According to estimates, Kazakhstan accounts for about 80 percent of direct foreign investment in the Central Asian region.

The financial potential of Kazakhstan is strengthening. International reserves, including the assets of the National Fund, exceed $87 billion. The success of the country is also evidenced by the World Economic Forum, which ranks Kazakhstan in 51st place in the Global Competitiveness Index, i.e. our country has advanced by 21 places in one year entering the group of countries with a higher level of development.

A new stage of world development associated with innovation, the latest knowledge and technology requires the upgrade of the country’s economic foundations. In this regard, since 2010 we have been implementing the State Program of enforced industrial innovative development aimed at large-scale diversification of the domestic economy. Today, there are plans to implement more than 775 projects with the creation of more than 200,000 jobs. Over the last three years more than 530 enterprises have been put into operation, which has enabled us to launch entirely new industries in the country and to upgrade the infrastructure. To support this program, there are nine free economic zones, technology and industrial parks, various financial and non-financial measures to support the private sector. In this regard, we invite countries of the region to cooperate with our companies and enterprises.

Taking into consideration the strategic goal set by President Nursultan Nazarbayev on making Kazakhstan one of the world’s 30 most developed countries by 2050, we are beginning work on the modernization and transformation of Kazakhstan’s economy in accordance with the parameters typical of this group of countries and best international practices.

The first practical step will be the transition to a "green economy". Sustainable development is impossible without a caring attitude towards the environment and natural resources. Therefore, the choice of the venue of the international exhibition Expo-2017, whose main topic will be the energy of the future, is not accidental. This will enable us to attract the advanced global technology and "green" solutions to the economy of our country.

Moving on the second part of my remarks, I would like to highlight some of the promising areas of cooperation with the countries of Central Asia and the Caucasus. There is already some groundwork on a number of areas. But in general there is still considerable potential for expanding cooperation and implementation of business initiatives.

First, considering our geographical location at the crossroads of Europe and Asia, there is a significant transport and logistical capacity. Since ancient times our region has been located on the historic Silk Road between the East and the West. It is here that strategically important goods were carried from China and India to Europe. Therefore, Kazakhstan has seriously stepped up its efforts to restore its transit function of a bridge between the East and the West. To this end, a number of important East-West and North-South cooperation projects are being implemented. These are transcontinental projects which open up new opportunities for Kazakhstan and other countries of Central Asia and the Caucasus that do not have access to the sea and are located at a distance from international markets to expand trade and economic exchange. In particular, we are carrying out the construction of an international highway Western Europe-Western China. In the country’s east we are implementing the "Khorgos - Eastern Gate" project which is aimed at improving trade ties with the rapidly growing region of South-East Asia and China. In the port of Aktau on the Caspian Sea we are realizing a project called "Western Gate of Kazakhstan". The implementation of these projects will eliminate many geographical barriers. This is a great scope for joint activities in the region.

Secondly, there is great potential in the agricultural sector. Today, Kazakhstan is one of the important centers of grain in the world and the world’s second largest exporter of flour. Given the global demographic processes and the structure of the population of Kazakhstan, systematic steps have already been taken to improve the food base. According to the Agricultural Development Program-2020, there are plans to increase the production of organic agricultural products. A total of $20 billion is to be spent on this by 2020. Kazakhstan is also ready for the close possible cooperation in this area.

Thirdly, the potential in the field of trade is not realized to the fullest. Thus, trade with countries of Central Asia and the Caucasus in 2012, according to estimates, was $4.7 billion, an increase by 27 per cent compared to 2011. But this represents only 4.2 percent of Kazakhstan’s foreign trade turnover. Trade with countries of the Caucasus constitutes only 0.4 percent of our total foreign trade. As we can see, the potential is vast and it is possible to increase the exchange of trade missions, conduct regional business forums and develop intergovernmental decisions.

In general, with regard to what has been said there is great potential and common interests. So there is a lot for us to think about.

Separately, I would like to inform you that the regular 6thAstana Economic Forum will be held in Kazakhstan on 22 May.

The purpose of the meeting is to look for solutions to pressing international and regional problems faced by many countries around the world. The key event of the 6th Astana Forum is the global crisis management conference under the UN auspices. Taking this opportunity, we have the honor of inviting all the participants of today's meeting to the Astana Economic Forum.

In conclusion, I would like to wish this wonderfully organized Baku forum productive work. Thank you.

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The Chairman of the Board and Executive Director of the Russian bank VTB, Andrey Kostin, said:

- Ladies and gentlemen, I believe that in the conditions of the economic and financial crisis in the European Union, we, as leading integration groups, are looking for extensive opportunities and new areas for economic growth.

Of course, the regions of the South Caucasus and Central Asia are one such area. As Mr. President Ilham Aliyev has said, Azerbaijan has achieved very high growth in the last 10 years.The results of economic development are truly admirable. President Ilham Aliyev has provided a picture of economic growth and I want to congratulate him on these achievements.

The economies of regional countries that have oil, gas and other mineral resources may grow more rapidly than other countries. But we understand that the time of oil and gas is not eternal. The world must be prepared for a more competitive market, as alternative sources of energymay be offered in the future. As I have mentioned, this region opens up excellent opportunities for growth. At the same time, one of the biggest issues for the region is the problem of security. From a military and political point of view, it is a very complex region. To ensure a safe future for the region, we, of course, should seriously deal with these issues and resolve them. But there are also opportunities for cooperation here. Integration of the strategies of countries that export energy is very important. From a practical point of view, Azerbaijan has achieved great successes in this area.

At the same time, we believe that it is in our common interest to cooperate closely. During Soviet times our economy was unified. Of course, a lot has changed. But there are extensive opportunities for cooperation in the fields of industry, economy and many other areas. Therefore, we offer other options. Our approach is that through integration with countries of the region we can use many approaches. We have already joined the customs union with countries such as Kazakhstan. At the same time, we are moving towards a single economic space. With other countries we can engage in a more lenient cooperation, a cooperation of a lower level. Perhaps in the future cooperation with them will be continued in another direction. We believe that Russia has no influence on the economic and political independence of the countries of the region. We do understand that countries of the region are at different levels of development. Therefore, cooperation can also be of different levels. But I still think that both from the economic and political points of view, the region will receive a substantial benefit.

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Addressing the forum, First Deputy Prime Minister of Kyrgyzstan Jomard Otorbaev said:

- Mr. President, Professor Schwab! Thank you very much for the excellent organization of the event. In general, the development of fraternal Azerbaijan has made a great impression on me. I regret that this is only my first time in Azerbaijan. The processes ongoing here have truly made a very deep impression on me.

Mr. President, of course, we must point to your personal role in this development process. Yesterday we had the opportunity to talk to ordinary people, young people and students in the street. We saw that they are in a good mood and are optimistic. Certainly, we can be proud of all these achievements of fraternal Azerbaijan.

We are participating in a unique forum. The Kyrgyz Republic will participate in similar forums in the future too. The region as a whole must be more dynamic and more ambitious. The world is changing and developing very fast. We have to move forward at least with the same speed. We must use the entire dynamics of the region. We heard some figures in the statements made here. The gross domestic product of all five countries of Central Asia put togetheris less than the gross domestic product of a small country such as Singapore. This means that there is great potential for development, there are huge natural resources. There is a very large human capital which is still not being used.

The Kyrgyz Republic is an open country. Our objective in the development of the political, economic and social spheres is to create a competitive environment. In this sense, our only priority is to strengthen the regional cooperation. The Kyrgyz Republic is rich in natural resources. The proven reserves of gold exceed 1,000 tons. At the same time, our country is very rich in hydropower resources. Our goal is to build the infrastructure to create a positive and favorable investment environment.

As President Aliyev has stressed, regional cooperation should play a major role in the development of the region. If Marco Polo had traveled to the region, it would take longer in our time because there are certain problems on our borders. They are associated with documentation and bureaucracy. We can not be happy with the current level of development. Let us achieve greater development. Thank you.