Opening speech by Ilham Aliyev at the meeting of Cabinet of Ministers dedicated to results of socioeconomic development of 2016 and objectives for future
10 january 2017, 12:30
Today we will discuss the results of 2016 and talk about the work to be done this year.
While analyzing 2016, we should certainly take into account the processes occurring in the region and the world. In 2016, the threats, risks and dangers in the world and in our region increased, bloody conflicts and wars continued, and new hotbeds of conflict emerged. In other words, stability in our region was disrupted and the situation related to economic development become more complicated. In 2016, dangerous processes were observed in various parts of the planet. The migration crisis in Europe exacerbated further and the processes taking place in the CIS were of great concern. As I have already noted, unfortunately, the bloody clashes, wars and acts of terror in our region and in the Middle East caused a great blow to stability in the region.
As for our country, Azerbaijan continued to develop in 2016. Security in our country is provided and the Azerbaijani people live in peace and tranquility. The source of stability in our country is the will and the choice of our people. Today, our country is one of the countries noted for stability on a global scale. Of course, the work we are doing can’t be viewed in isolation from the global context. If we pay attention to the dangerous processes taking place in the world and the region, we can see yet again that Azerbaijan remains committed to its chosen path of independence and development. We have sought and will endeavor to continue to defend our country and people from possible risks and ensure our independence. History and the events happening around us suggest that the path we have chosen is the only true one. This is a path of independence, a path of stability and development.
In 2016, we resolved practically all the tasks on our agenda. As you know, Azerbaijan, as is the case with other oil-rich countries, suffered the repercussions of the falling oil prices. But if we look at the steps taken by all oil-exporting countries, we can see that Azerbaijan is among the countries that have successfully overcome this crisis. There are a number of other oil-rich countries which, like us, managed to successfully overcome this situation. Oil prices have fallen three- to fourfold. This means that oil, which is our main source of income, has brought us three to four times less profit. Of course, we had to find a way out of this crisis, and I think we did find it. Despite all the difficulties and losses, we have managed to maintain economic stability and get out of this difficult situation with dignity. In 2016, our country also took very important steps related to economic development. I want to note once again that the main condition for the development of any country is security, stability and civil accord. We have that. Security is protected. I want to say once again that stability, unity and civil concord based on the will of the nation further strengthened in 2016. The entire Azerbaijani people are rallied around a common goal: to achieve further development of the country and further strengthen our independence.
In 2016, we marked the 25th anniversary of the restoration of our independence and celebrated this wonderful holiday with good results and successes.
In 2016, important steps were taken in the field of economy. Year 2016 will go down in history as a year of deep economic reforms. The resolutions and laws adopted this year, as well as the orders I signed have further deepened economic reforms and allowed us the opportunity to expand non-oil sector growth in the future. The decisions made are already bearing fruit. I am sure that this year and in the following years, the results manifest themselves even more clearly.
Although the gross domestic product has decreased, which was mainly caused by the three- to fourfold decline in oil prices, the resulting reduction in investment and public spending, other important indicators are quite reassuring. In particular, non-oil industrial production in the country increased by 5 per cent last year. This means that the policy we have pursued over many years is yielding results. Industrialization, non-oil sector and private enterprise development have contributed to this great performance. I believe that the increase of our non-oil industry by 5 per cent in a year of crisis is a very good figure.
Another important indicator is the development of agriculture. The development of any country is largely preconditioned by industry and agriculture. As a result of operational measures taken, we have achieved the development of agriculture, which has increased by 2.6 per cent in Azerbaijan.
These two figures suggest that we have succeeded in overcoming these difficult conditions of crisis. The work already done and to be done this year will further strengthen this trend. The economy will grow steadily. We will develop the non-oil sector, ensure the creation of jobs, and I am sure we will meet all the objectives I have identified.
Although our revenues have dropped three to four times, the wonderful investment climate available in Azerbaijan has allowed us to attract foreign investments in the amount of $8 billion to the country. This is also an excellent indicator, because the world is experiencing an economic crisis today. There are financial difficulties, and it is extremely difficult to attract investment from abroad under such circumstances. We have achieved that. A total of $8 billion of foreign investment was channeled into the economy of our country. Domestic investment totaled $3.7 billion. This figure is lower than in previous years, which is understandable. The reasons are well known. Thus, investment in the amount of $11.7 billion was made in the country's economy last year. I want to say again that this is a great indicator. In absolute terms, this figure is also very high. If we calculate this in per capita terms, we can see that we are probably in one of the leading positions in the world.
In 2016, one of the main objectives was to preserve our foreign exchange reserves, in particular, the resources of the Oil Fund. We managed to achieve that. Today I want to draw the attention of our people to the processes taking place in the world again. We can say that foreign exchange earnings of all oil-rich countries have significantly declined. Oil funds, sovereign funds, other funds, retirement funds – they are called differently – the funds accumulating in such funds have fallen sharply. In Azerbaijan, we can say that we have managed to preserve the revenues of the Oil Fund. Oil Fund revenues have decreased by only 4 per cent, because we have taken steps to diversify our foreign exchange reserves. Our currency is kept in dollars, euros and British pounds. As a result of the strengthening of the dollar and the decline of the euro and pound, the foreign exchange reserves of our Oil Fund have decreased by 4 per cent in dollar terms. If it hadn’t been for the difference in the exchange rate, even this minor decline wouldn’t have occurred. The resources of the State Oil Fund of Azerbaijan today amount to $33 billion dollars. We have preserved that, we will preserve that, and I am sure that these funds will be even increased this year.
Of course, the easiest way to overcome a crisis is to spend foreign exchange reserves, and we are seeing that in some places. But we are thinking about the future. We are building a long-term strategy. We have kept and saved our foreign exchange reserves for years, channeled them into infrastructure and social projects the country needs, and we are still keeping and should further increase them.
The work we are doing is valued highly by leading and influential international economic and financial institutions of the world. This is also very important because it is one thing when we say this ourselves and it is completely different when this is noted by international organizations. The Doing Business report of the World Bank ranks Azerbaijan in 65th place. This is a good indicator. Of course, we should try to climb to a higher level. But in the current environment, taking into account all the factors I have mentioned, I think this is a fairly high indicator. According to the calculations of the leading international economic forum of the world, the Davos World Economic Forum, Azerbaijan's economy has moved three steps up in terms of competitiveness on a global scale and climbed from 40th to 37th place. I think this is a record figure. We are still first in the CIS and have preserved this superiority. Such are the reports of leading international economic entities.
However, there are various non-governmental organizations – we all know where they are financed from – which aim to tarnish and blacken us and cast a shadow over our work. The anti-Azerbaijani campaigns they have been engaged in for years do not yield any fruit. It is not worth even paying attention to their ratings. In addition, some local representatives who call themselves outstanding economists make statements and provide different estimates. They share completely absurd ideas. We have a saying: "Someone is not capable of dividing oats between two donkeys but wants to edify us”. So we should not pay attention to all this. The main thing is our successful development, the assessments of leading international economic entities and our realities. And the reality is that we managed to come out of the crisis with dignity in 2016, more than 100,000 permanent jobs were opened in our country, and the development of agriculture and the non-oil industry allows us to be optimistic about the future. We will also talk about the work to be done. We have fairly ambitious plans, and as a result of their implementation the country's economy will accelerate its momentum.
In 2016, social issues were also resolved. Social policy has always been one of our top priorities. In 2016, wages increased by 7 per cent and pensions by 8 per cent. We should increase them further. I believe that there will be a positive dynamics in this area in 2017. We have taken very important steps in connection with targeted social assistance. In other words, the state has always and will always provide assistance to those living in poverty. The size of this assistance is increasing and should continue to be increased. At the same time, very important steps were taken in 2016 in the sphere of social justice, particularly in connection with tariffs for public utilities. Again, the government always extends a helping hand to those who living in poverty and will always do so. We are conducting serious institutional reforms to protect the interests of the middle class. We are taking steps associated with the creation of jobs. The rich should not expect subsidies and help from the state. Therefore, the differentiation of utility tariffs is based on the principle of social justice, and I believe that we can be proud of the successes we achieved in addressing social issues in 2016. Our revenues are falling, while people’s wages are rising. Social infrastructure projects have been implemented. We have refurbished 485 and constructed 29 schools, built or renovated 41 hospitals. We allocate sufficient funds for these projects, which demonstrates our social policy again.
Last year, further steps were taken to address the problems of internally displaced persons and build new settlements for them. This process will be continued in the current year as well. This issue is always in the spotlight. We are doing and will do everything possible to improve the plight of internally displaced persons.
In 2016, successful work was carried out in the field of public services. The number of “ASAN xidmət” centers has reached 11. In recent years, there have been 13 million applications, and public approval rating is close to 100 per cent. This has been some kind of a revolution in the field of public services, public relations as a whole, and has become a brand of Azerbaijan. Some countries have already started to borrow our experience. Last year, “ASAN xidmət” expanded its functions. Initiatives such as “ASAN Kommunal”, “ASAN Qatar” and “ASAN Viza” have been put forward. It should also be noted that as a result of the launch of “ASAN Viza”, the number of visitors to our country will increase further. In 2016, we managed to create a turning point in this direction. In general, the flow of tourists is associated with the economic situation in the world. If the situation is good, more people travel to foreign countries as tourists. But today, the whole world and practically all regions of the world are experiencing an economic crisis. Despite this, the number of tourists visiting our country in 2016 increased by 11 per cent. I am sure that this figure will increase further this year.
Last year, 35 hotels were built in our country, 25 are under construction. In general, there are more than 500 hotels in Azerbaijan. But demand is growing and domestic tourism is developing. I am very glad that our citizens prefer to rest in Azerbaijan. We have wonderful natural conditions, great facilities, excellent hotels and recreation areas. Today, tourists from all over the world come to Azerbaijan. And this brings the country's economy large profits. In the future, we will receive billions of dollars from tourism, which will provide great support for our economic situation.
Last year, our international relations expanded further. For many years, Azerbaijan has been known internationally as a very reliable and worthy partner. In particular, in the circumstances of a deepening crisis, wars and instability in the world in recent years, our example certainly attracts great attention. We are treated with more sympathy.
Azerbaijan has a very positive international image. International organizations heed our word. Our influence is growing. We will expand our international relations this year too. Last year, about 20 heads of state and government paid official and working visits to our country. This is also an indicator. We have worked hard in international organizations. The Organization of Islamic Cooperation in its summit set up a contact group in connection with the Armenian-Azerbaijani Nagorno-Karabakh conflict and the aggression unleashed by Armenia against Azerbaijan in April. This group is already beginning to operate. It is a huge success for us. In recent years, as a result of our activity, the Non-Aligned Movement adopted resolutions related to the settlement of the Nagorno-Karabakh conflict within the framework of Azerbaijan’s territorial integrity.
The ways of resolving the Nagorno-Karabakh conflict are well known. Our position remains unchanged. The territorial integrity of our country must be restored. All occupying forces must withdraw from our lands. Four UN Security Council resolutions must be implemented. The status quo is unacceptable and must be changed. Last year, the OSCE also expressed a serious position on the issue – the status quo is unacceptable. This is an axiom – it must be changed. Changing the status quo means a withdrawal of occupying forces from our lands. These are the ways to resolve the conflict. There is no other option. Azerbaijan will never agree to the creation of a second self-styled Armenian state on its land. Azerbaijan will never put up with this situation. The sooner the occupying regime and the Armenian authorities realize that, the better for them.
In April 2016, the state of Azerbaijan and the Azerbaijani army inflicted severe blows to the invaders. In response to yet another Armenian military provocation, the Azerbaijani army launched a counter-offensive and liberated thousands of hectares of lands from occupiers. This is our glorious and historic victory, which demonstrates the strength of our state, our people and our army. This shows once again that we are capable of resolving the problem by military means at any time. The invaders were evicted from thousands of hectares of our lands. Currently, a cleaning operation is under way there. Cleaning work in all senses. Today, the Azerbaijani army controls tens of thousands of hectares of land. There is no trace of occupiers on these territories now. We will take the necessary measures in these regions to ensure that our citizens return there, and this process has already begun.
The April battles are a glorious history, a great victory for us. We are proud of our soldiers. During these battles, the Azerbaijani people demonstrated their unity once again. Therefore, I believe that 2016 was very important in terms of the settlement of this conflict, because the opposite side, Armenia, was in a panic and asked the mediators to facilitate an early end to the fighting and expressed its readiness to return to the negotiating table. The people of Azerbaijan are well aware that they addressed various international organizations, including the Collective Security Treaty Organization even though the Collective Security Treaty Organization has no relation to this issue. The persons who led the Collective Security Treaty Organization until now made a big political mistake by expressing a pro-Armenian position and voicing unacceptable thoughts. We are well aware of their fate today. So the April battles are a brilliant victory for us. They have demonstrated the power of the Azerbaijani state again. At the same time, they showed once again that we will never put up with this situation. We will give an adequate response to all provocations. At the same time, we have completely dispelled the myth Armenia had been creating for years. Without receiving the weapons, money and other assistance from outside, they can’t cope with us even for a week. They recognize that themselves. We have long been aware of that.
As always, we take a constructive approach. Justice is on our side, as are the norms of international law. Our position is reinforced by history. Our military power, the economic potential and political authority are also on our side. So we will resolve the issue the way we want. Our desire is to restore the territorial integrity of our country and to raise the flag of Azerbaijan in all occupied lands. This is our goal, and we are moving towards it. The April fights are a very important historic step in this direction.
There were other important events last year as well. We have taken further steps to improve our energy policy. The implementation of the Southern Gas Corridor project was successfully continued. Although our oil revenues have dropped three to four times, we have received loans from abroad. At the same time, using our internal funds, we have taken all the necessary steps relating to the implementation of the Southern Gas Corridor and Shah Deniz-2 projects. I can say that as far as the Shah Deniz-2 project is concerned –Shah Deniz-2 is one of the largest gas condensate fields on a global scale today – 90 per cent of the work has already been completed and will be finished next year. A significant part of the TANAP project has been implemented and work is under way on other segments of the Southern Gas Corridor. Last year, we hosted the second meeting of the Advisory Council of the Southern Gas Corridor in Baku. All countries participating in this session, the European Commission, the United States and all members of the Southern Gas Corridor pointed to Azerbaijan’s leadership in a statement. We are the leaders, the initiators, the driving force behind this project. We are implementing this project together with all our friends, partner countries and international organizations.
Important developments occurred in the transport sector last year. In particular, serious steps were taken in the area of the North-South corridor. In the spring of last year, I issued the instruction to build our railroad to the border with Iran before the end of the year, and we have already achieved that. In approximately seven to eight months, we built the remaining part. In addition, we have built a bridge across the Astarachay River and put it into operation. So Azerbaijan completed its task in relation to the North-South corridor in just eight months. We have now put forward additional initiatives related to the commissioning of this major project in order to expedite the process. It is necessary for us, for the neighboring countries and for the whole world. As a result of this project, the cargoes coming from India and Pakistan will pass through the territory of Azerbaijan and head for Iran, Russia, Northern Europe and back. This will contribute to greater traffic. Millions tons of cargo will pass through our territory. Thousands of jobs will be created. As a result of this project, we will also break through the railway blockade of Nakhchivan. Nakhchivan will be linked to Azerbaijan by railway through the territory of Iran. So this is a historic project we are implementing together with neighboring and friendly countries.
In 2016, our athletes also delighted us with a great victory. In the Rio Olympic Games, we won a historic victory. We won 18 medals, finishing in 14th place globally, in seventh place in Europe, second only to Russia among former Soviet republics and first in the Muslim world. I think that these indicators demonstrate it all. This is yet another big win for us.
At last year's referendum, the people of Azerbaijan expressed their will once again. They voiced their great support of our policy. They have demonstrated once again that our policies are supported by the people. We knew about that. Opinion polls are conducted, public opinion is studied, and of course we were aware of the atmosphere in our country. But the referendum has demonstrated this to our people and the whole world. Representatives of international organizations observing the referendum did not reveal any violations. Exit-poll results coincided with official results. International organizations, in particular the Council of Europe, provided a very positively assessment of the referendum, confirming that in a subsequent decision in Strasbourg. The referendum was held in a transparent, fair and free manner. This is yet another step towards democracy, which is also evidence that the electoral process in Azerbaijan has significantly improved. In addition, I would like to note once again that this is tremendous support provided to us by the people, and it was provided in 2016, the most difficult year for the economy. I would like to express my gratitude to the Azerbaijani people for their support and note again that Azerbaijan will continue to develop confidently.
Last year was declared a Year of Multiculturalism in Azerbaijan. I think that this was a unique occasion in the world. I do not know if any other country had ever declared a Year of Multiculturalism. But this is not the point. The point is that our declaration of 2016 as a Year of Multiculturalism carried a huge meaning. It demonstrates our policies, the mood of the society, our current and future work. Azerbaijan is indeed a center of multiculturalism in the world. When we started to talk about that and to hold international events, migration crisis had not even started and discrimination in Europe and elsewhere was not so obvious. Last year it reached its climax. Last year we witnessed humiliating actions against migrants in some European countries and openly aggressive policies related to Islamophobia. Against this background, our declaration of 2016 as a Year of Multiculturalism and its successful completion demonstrates our policy, strength and intent once again.
Last year we hosted a series of important events. Among them, I want to highlight the Seventh Global Forum of the UN Alliance of Civilizations. Also successful were the traditional Baku International Humanitarian Forum and other events. I should also note the Pope's visit to Azerbaijan and the statements he made during the visit. This is the contribution of Azerbaijan to this cause. Not only do we deal and resolve ethnic and inter-religious relations in the country at the highest level, we are also setting an example around the world. This is how we need to develop. Multiculturalism should have no alternative. I believe that by showing this example, we are expanding influence opportunities in other places too.
Of course, many events took place in 2016. We could talk for hours about them and even about important events only. I have simply pointed out what I believe are important moments both in the order of analyzing them and as a future platform. We will continue to follow this path.