Ilham Aliyev, President of the Republic of Azerbaijan, on his goal to double national GDP and the growing role of the country in international affairs.
Over the past 20 years, thanks to the rational use of its energy resources, Azerbaijan has become a diversified economy. After restoring its independence, the Azerbaijani people became masters of their own wealth. Our country is developing successfully. Our economic development indicators from the past several years have been truly impressive: our economy has grown by 300% since 2004. Of course, we realize that most of this growth has occurred in the oil and gas sector. And this is quite natural for a country that has been independent for only 20 years. All countries, in particular those in transition, should make the best of their resources and natural wealth to build a strong economy. This has been our goal and policy. The attraction of billions of dollars in investment to our oil and gas sector has helped us diversify our economy. We have now set a new objective. The new objective is to double our GDP, which we have already tripled in size since 2004. However, now we want to double the size of the economy by developing the non-oil sector.
As a country producing oil and gas, we always view GDP from both an energy and non-energy standpoint. In 2010, for instance, the non-oil industry grew by 11% and the non-oil sector by 9%. Our next objective is to modernize and diversify the country and develop it for the next 10-12 years. As the first program on regional development was adopted in 2004, in 2014 we will embark on a new 10-year development period.
The total volume of investment made in our economy in the last 15 years is $110 billion. In 2011 alone a total of $20 billion was invested in our economy, of which $7 billion was FDI. This shows that Azerbaijan is still attractive for foreign countries, and that this is not only due to the oil and gas sector. The volume of investment in the oil and gas sector is decreasing because all of the major projects have been completed. Investment in the manufacturing sector, tourism, and services is on the increase. We have channeled the financial resources fetched by the sale of oil and gas into the real sector of the economy, as well as IT and education.
Several years ago, I stated that we must turn our “black gold” into human capital. The experience of developed countries shows that it is possible to become a developed country only through technological and educational progress. For this reason, we are sending our young people to the leading universities of the world, and we are seeing the benefits of that.
We are already recognized as a country with a favorable investment environment. The volume of FDI in Azerbaijan is the highest in the CIS. The competitiveness of our economy is growing. According to the Davos Economic Forum, the Azerbaijani economy is ranked 55th in the world and first in the CIS in terms of competitiveness. This is a major achievement for us. It proves that our policy of diversification is paying off. Of course, the energy sector will continue to dominate our economy. This is natural because oil production constitutes about 50 million tons. Gas production this year will be close to 30 billion cubic meters (bcm). By implementing new projects and attracting investment, we can raise this figure to 50 bcm. So no matter how hard we may try to develop the non-oil economy, energy will always dominate our GDP. But this is natural, and it opens up new horizons for us, because Azerbaijan’s economic and energy policies are now transforming into our country’s political clout.
The EU views us as a country contributing to the Southern Gas Corridor that will deliver Azerbaijani gas to Europe; we are the country making this project possible. We have made several important achievements in the past several months, signed transit agreements and agreements on the construction of a gas pipeline that will transport large volumes of Azerbaijani gas to Europe. We will benefit from that even more than from the energy projects we started in 1994, because there were no companies capable of carrying out such large-scale activities then.
We talk a lot about diversification and energy security. These two issues are interrelated. But when we talk about diversification and energy security for European consumers, I think we need to talk more about diversification of sources rather than the diversification of routes from one source. However, the diversification of routes is also important. Thus, Azerbaijan is a new, large, close, and friendly source for European consumers. If we can implement our plans on the construction of the powerful Southern Corridor, we will enter a phase of very fruitful and mutually beneficial energy cooperation in the next decade. Therefore, energy security has become an important national security issue. We, as producers, understand this and want all of our partners to treat this issue in the same manner.
No country can build future development plans without energy security and prognostication. We are aware of the changes and approaches to the various sources of energy, especially after the tragedy at the Fukushima nuclear plant. Thus, it is clear that the demand for gas is set to grow. Azerbaijan is a resource-rich country committed to open policies and having strong links with European institutions.
I would also like to say a few words about our obligations not only as a country rich in energy resources, a producing, transporting, and potentially a transit state, but also as a country that treats its natural resources with great care. For more than a century, Azerbaijan’s oil reserves were developed without any attention being paid to the environment. The concept of the “environment” was not evaluated in due measure in the past. Today, our obligation is to clean up the “legacy” left over from the decades of oil production off- and onshore and to contribute to the global environmental cause. So even though we have oil, gas, and markets, we are now investing in renewable energy. We believe that this is part of our commitment. We are investing in hydropower engineering. In 2011, we began to invest in solar and wind energy. We are not investing because we desperately need these alternative sources, nor are we investing because this is an important part of our energy balance, but because we treat this as an obligation to the previous and future generations.
We also now have large companies engaged in the service, energy, and non-energy sectors. They will contribute a portion of the $20 billion investment in our gas fields. Thus this wealth will be spread out in a diversified manner. In general, one of our biggest achievements playing a role in the economy is transparency. Azerbaijan joined the Extractive Industry Transparency Initiative eight years ago, and is now a full member of it. We have achieved complete transparency in our energy sector.
Now we are changing the system. We are applying this approach to the financial system as a whole. Thus, the prospects for the future are positive, the economy is stable, sustainable, self-sufficient, and it receives strong support from the energy sector, as well as creates a completely clear picture of the strategic future of the country. Our ultimate goal is to turn Azerbaijan into a developed country. All of our structures and ministries are working toward that goal.
A very important event for our country occurred in 2011. Azerbaijan was elected to the UN Security Council for the first time. This is a major historic victory. I think that this is our biggest victory in the 20 years of independence. We have earned the confidence of the whole world in a difficult struggle. I have repeatedly stated in the last eight years that Azerbaijan is pursuing independent policies. Azerbaijan has a road of its own. This is a road of development, progress, and democracy, and the Azerbaijani people have chosen this road.
The problem worrying us the most is the unresolved status of the Armenian-Azerbaijani conflict over Nagorno-Karabakh. Azerbaijan is stepping up its efforts in all countries, especially in the recent period. However, the solution of this issue depends not only on us. Unfortunately, Armenia’s non-constructive stance, its hypocrisy in negotiations, and its practical defiance in talks have dealt a serious blow to the process. Sadly, the world community and the countries directly dealing with the issue are shying away from naming the party responsible for disrupting the talks.
There are, however, positive statements. We are hearing and supporting these statements. In particular, this year’s development has been the repeated indication by the co-chairs of the peace process that the status quo is unacceptable. We support these statements. However, specific steps should follow statements. Unfortunately, these steps have not been taken.
We will continue our diplomatic and political efforts. We have a principled stance in the negotiations. We will not back down a single step from this stance. Nagorno-Karabakh is native and historical Azerbaijani land. The international community and the UN recognize and support Azerbaijan’s territorial integrity. The international community views Nagorno-Karabakh as a part of Azerbaijan. The conflict must be resolved precisely on these principles. The territorial integrity of our country must be restored. The occuppying forces must withdraw from all our occupied territories. Azerbaijani citizens must be able to return to the occupied territories, including Nagorno-Karabakh and Shusha. Only then can a lasting peace be established. We will never tolerate a second Armenian state on native Azerbaijani lands. This is our principled position. I want to reiterate that this position is based on history, international law, and justice.
There have been both difficult and great days in these 20 years of independence. And I am absolutely sure that there are only great days in store for us in the future. Azerbaijan will continue to develop and grow stronger. The past 20 years of independence have shown that the people of Azerbaijan can live as an independent nation and live well. The state of Azerbaijan has asserted itself in the region as a stabilizing factor. No projects can be implemented in the region without Azerbaijan’s participation. The experience of recent years has shown this yet again. Azerbaijan is a force to be reckoned with in all economic, energy, political, diplomatic, and regional cooperation matters. We have achieved this ourselves, and we must protect this achievement. We must and we will protect our country.
© The Business Year