President of Azerbaijan Ilham Aliyev and President of Latvia Edgars Rinkēvičs attended the event

Baku, April 22, AZERTAC

An Azerbaijan-Latvia business forum was held on April 22 with the participation of President of the Republic of Azerbaijan Ilham Aliyev and President of the Republic of Latvia Edgars Rinkēvičs.

The heads of state addressed the event.

The President of Azerbaijan made a speech first.

Speech by President Ilham Aliyev

- Mr. President, members of the official delegation, guests from Latvia, ladies and gentlemen,

I'm very glad to host the President of Latvia on an official visit. We had excellent discussions and documents signed, and among many things we discussed also the issue of economic partnership. And especially the business forum which is organized today really demonstrates a mutual aspiration to do business together.

I'm glad that the President is accompanied by a big group of business representatives from Latvia, and I'm sure that the interaction with the Azerbaijani colleagues will be interesting and productive. Of course, any kind of business activity has several factors in its background, and first of all is stability in the country where you do business, predictability, business climate, investment climate, and many others, including connectivity and accessibility to export markets, and also the size of domestic markets.

We tried in Azerbaijan hard in order to transform the country from being purely dependent on oil and gas into a country which can be proud of the process of diversification of our economy. If you look at the structure of our GDP, we see rapid growth during the last 4–5 years. The share of non-oil industry in our GDP grew from 50 to more than 70%, and it continues. So this means that diversification of the economy is already a reality.

Now we are actively working on diversification of our exports. Though it will be difficult to do because production of natural gas in Azerbaijan is growing and will grow, and the biggest part of the gas we produce is exported. So non-oil- and gas-related industry and economy have to match the growing production profile and the growing demand in the international markets, primarily European.

Financial stability is also important for any investor, whether it's local or foreign. And here also we can report good achievements. Our financial system is stable. We steadily, based on the strategic plan, reduced dependence on borrowings. Today we borrow only for projects which demand a high level of technological performance. And we borrow only from leading international institutions like the World Bank, EBRD, Asian Development Bank, Asian Infrastructure Investment Bank, and some others.

Reduction of foreign debt, I think this plan is done. We have a foreign debt which is equal to 6.1% of our GDP. Our currency and gold reserves exceed the foreign debt by more than 18 times. So in other words, we could reduce our foreign commitments to zero within probably a couple of months.

But of course, there is a big demand for additional investments, primarily aimed at the reconstruction and rehabilitation of the liberated territories of Garabagh and East Zangezur. Investment priorities are clear; probably we already discussed them partly and will continue to discuss.

And also I'm sure that Azerbaijani colleagues also informed our guests about the figures. During the last 20 years we had over 350 billion dollars of investments in our economy, almost half—$170 billion—in investments from foreign sources. So an investment-friendly business climate was also one of the targets in front of us, and it has mostly been achieved.

With respect to our plans, we are continuing investments in Azerbaijan and also outside, primarily in energy facilities in the neighborhood and also in the EU area. And this is also supported by the European Commission. We have several formats of cooperation with the European Commission. One of them is energy cooperation.

The European Commission in its public statements always refers to Azerbaijan as a reliable partner in the energy field. And this energy is growing. We started from oil sales; now we export natural gas, we export electricity, petrochemicals, and are planning to export green energy. So one of the areas of investments which is in our portfolio is renewables, with a huge potential for sun and wind.

We are already enjoying strong interest from major actors. Our plan, which is based not only on our aspirations but also on signed, legally binding contracts, is to have 8 gigawatts of solar, wind, and hydro power by 2032. And this is absolutely realistic. We will largely substitute natural gas, which we use for electricity production, with renewables, and that will save us several billion cubic meters of gas, which is so needed now on international markets.

It was needed always during the last several years, and during the last couple of months even more. And the plan is to increase production and definitely to increase exports. Today, 10 members of the European Union are receiving natural gas from Azerbaijan. The total number of countries is 16. And by this parameter, we are number one in the world.

We are not the largest producer and exporter; there are much bigger players, but among countries that export gas by pipelines, with respect to geography of supply, we are number one.

And for many countries in the European Union, Azerbaijani gas and oil make up the largest part of their energy consumption portfolio. Another area which we have largely concentrated on was, is, and will be connectivity. Here, geography is complemented by our investments and long-term policy to transform Azerbaijan, which is a landlocked country, into an international transportation hub. It has already happened. Transportation corridors from East to West and vice versa, North to South and vice versa, are already functioning. On Azerbaijani territory, all construction works have been completed. What we are doing now is only investing in modernization, in creating new physical infrastructure, in digitalization, including the opportunities provided by AI, in order to make transportation through Azerbaijan not only the safest in today's geopolitical situation but also competitive from the point of view of fees, transportation costs, and timing. And here, there is a big room for investments because connectivity between East and West today, without Azerbaijan, is rather problematic. We have already invested significantly, as I said, and also, in cooperation with friendly countries, with our immediate neighbors and neighbors of our neighbors, we have managed to provide a safe and reliable transportation route for cargo. By the way, the number of cargoes going through Azerbaijan is growing year after year.

We also discussed today largely the opportunities in agricultural cooperation between our countries, and the co-chairs of the Joint Economic Commission are both ministers of agriculture. So definitely this will continue to be one of the priorities for our government, taking into account that more than 40% of our population lives in rural areas, and this infrastructure has been created, as well as business opportunities in the regions. Of course, they are different from business opportunities in the capital. Therefore, agriculture, tourism, and water management—all these are projects which state and private companies are implementing in Azerbaijan, and I think they will be of interest to Latvian investors as well. Also, the Alat Free Economic Zone provides good services and very investment-friendly legislation, which already allows it to attract foreign investments in substantial volumes. Though today it is clear that attracting foreign investments is not an easy task, I think the legal framework and proximity to the main trading seaports and the railroad make the Alat Free Economic Zone attractive.

One of the issues which we also discussed and probably will also be a potential area of cooperation is the defense industry. We found out that both countries are actively developing their capabilities, and as far as we are concerned, we are already exporting products of our defense industry companies—private and state—to a large number of countries. So joint manufacturing, cooperation, and creating synergy, I think, are also something we can look at. And many others.

Today, in our brief remarks, it is difficult to embrace all the areas of partnership, but I'm sure that during the forum and follow-up—definitely there should be a follow-up, just not to make this event isolated—many other opportunities will be explored. And definitely, we as a country, and I'm sure our business community, are interested in investment opportunities in Latvia, in your priority projects.

As we discussed today, we can table a list of potential projects where both countries can successfully participate. And the last point is about the importance of the President's visit. I'm once again very grateful for accepting my invitation. I enjoyed very much our tête-à-tête conversation, as well as the meeting with delegations and our discussion during lunch. And thank you once again. I wish you a pleasant stay. I'm sure that our business delegations will also support all these positive trends. So welcome once again.

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Then, the President of Latvia delivered a speech.

Speech by President Edgars Rinkēvičs

- Mr. President, ministers, representatives of the business community of both Azerbaijan and Latvia.

First of all, Mr. President, thank you very much for hosting us and also being present at this business forum and addressing entrepreneurs from both countries. It is very easy to speak after you, because you covered everything. And I can actually agree, the only thing that I should probably add is a little commercial for Latvia and Latvia's opportunities, because you did such brilliant work highlighting the priorities and development of Azerbaijan that I think it is also important to highlight that Latvia is ready to cooperate and to deepen and broaden trade relations with Azerbaijan.

Actually, if we look back at history, when Baku became an oil-producing city, many Latvians, already at the end of the 19th century and beginning of 20th century found work here as engineers, worked also as teachers. And our connection, both economic and also cultural, are much broader and much longer than sometimes we tend to think. I think it is very important that during this time of turbulence, seeing what is happening in Europe and also in the Middle East, all the geopolitical challenges, we are trying to find new ways of cooperation with our very good and trusted partners. And Azerbaijan for Latvia is, was and will be the principal trading and political partner in the South Caucasus region and, actually, in the broader region.

As the President just said, we really had a substantial portion of our discussion devoted to economic and trade relations. I just want to echo what Mr. President said – that there is huge interest in developing cooperation in the field of the defense industry. We see that technologies in defense industry are developing very fast. Artificial intelligence, different solutions are actually being invented as we speak. And I know that there is very good potential here in Azerbaijan, but also I can highlight that also Latvia has a fast-developing defense industry. Drones, anti-drone systems are only those visible, but also our defense industry is working on different projects, and there is an interest in our defense industry to find partners or to deepen ties with partners both in Europe and beyond.

Knowing that we have representatives from that industry, I do hope we will see also some tangible and real results coming soon. I just, at the suggestion of the President, visited the White City. I was truly impressed. I was told, Mr. President, that in less than 15 years - because the idea developed back in 2011-2012 – you were able to, first of all, clean up polluted territories and then to develop an architectural marvel and to develop a modern 21st-century city.

That shows the potential of Azerbaijan. But I also believe that is a great invitation to investors – invitation to other countries to come and to participate in such projects to offer their expertise, be it architecture, engineering solutions, or design. And here I see that we do have a potential and Latvia has a lot to offer also in this area.

We also discussed a lot about agricultural cooperation. So it happens that from our side and yours, the co-chairs of the Intergovernmental Commission are ministers of agriculture. I think that there is great potential to explore how we can actually increase trade there because we are not competitors.

We can actually complement each other. Of course, there are always issues that need to be resolved – inspection, certifications – but we are also very positively viewing that authorities, the government in Azerbaijan recently made decisions that are going actually to allow trade and exchange to flourish in this area. Latvia is a forest country and we have a wealth of experience in forest management.

So it happens again that the Minister of Agriculture is also responsible for forest issues in Latvia and he is responsible for all the policy that the government in Latvia conducts in that field as well. So we are ready and interested to explore opportunities to also foster the development of the program you told me about – planting trees, afforestation of Azerbaijan, including the liberated territories. Here I do see both an opportunity for practical cooperation but also those in the field of education and training.

We were also talking about other areas, pharmaceutical industry. We are talking about connectivity. Again, Latvia always has been seen as a gateway to north of Europe to central Europe.

We do have some geopolitical events that actually should not be viewed as obstacles but rather as opportunities, and the development of cargo infrastructure in airports, air transportation, other ways of connectivity and logistics is something that both of our countries can offer and complement each other in. And here Latvia has also a lot of expertise. I'm running into some difficulty because if I'm not mentioning something that has not been mentioned here by me or by Mr. President, it doesn't mean that we have forgotten it or it's not important. There are simply some time constraints. So what I very much hope is that our talks with Mr. President and his ministers, and this business forum will give an impetus also to our business communities to find ways of cooperation, to have new ideas, to have maybe some old projects looked back, revived and put in place. I think what you see and hear from the presence of the President of Azerbaijan and of myself is the importance that we attach to trade and economic relations. Yes, we do have some history. We had the COVID period that actually impaired some economic and trade relations.

We do have some events as we speak happening in the region. But I think that those should not prevent both governments and business communities from working together. Latvia, as a member of the European Union, the OECD, as well as NATO, is very much ready to work and to support cooperation between Azerbaijan and those organizations, bilateral organizations, to use all the expertise that we also have to promote economic relations. And we also highly value the fact that Azerbaijan is a strategic partner not only for Latvia but for many European countries, be it political, be it economic field, but most importantly, as we speak, in the energy field.

Mr. President already outlined what Azerbaijan is currently doing. And believe me, that is highly valued in Europe and also in our region. In those times of uncertainty, reliable partners are very important asset to have.

Latvian economic development is a steady one. We do have a lot of challenges to address. But I'm absolutely convinced that through those strategies that we just outlined, and by trying to find ways where to invest.

Investment is not a one-way street. I think that there are ideas that investors from Azerbaijan would take up and to try to look into the opportunities to invest in Latvia. But also there are Latvian companies that would be interested in developing either the joint ventures or investing here, in different technological fields.

So what I would like to say; we had excellent political discussions. We had, and here I very much agree, a very, very good discussion on a variety of issues. But you know, someone must take this from here. Because we will meet after some time, as we have agreed, Mr. President. And I also extended my invitation to the President of Azerbaijan to pay an official visit to the Republic of Latvia. Most probably it's going to be the next year.

So all of us, – presidents, governments and business communities – have around one year before we meet. And I very much hope that when we meet in Riga, we will have not only great ideas to share, but also very concrete results that we can follow up from this business forum. So I wish you a very fruitful business forum.

I want to thank personally President Aliyev for his presence here and also for his very positive attitude towards Latvia and towards trade relations as well. And I very much look forward to continuing working with you. So, to be continued.

Thank you very much.