The first - after the presidential elections in Azerbaijan sitting of the Republican Government presided by President of the Republic of Azerbaijan Ilham Aliyev was held at the Cabinet of Ministers’ sitting hall on November 17.

The sitting was attended by responsible officials of the Presidential Administration, the Cabinet of Ministers, heads of Ministries, Committees, companies, concerns and main boards.

Head of State Ilham Aliyev has made a big speech at the sitting.

SPEECH OF PRESIDENT OF AZERBAIJAN ILHAM ALIYEV

This is the first sitting of the Cabinet of Ministers after presidential elections. So, I decided to preside the first sitting by myself.

In the October 15 presidential elections, overwhelming majority of the Azerbaijani people voted for the policy of Heydar Aliyev carried out in Azerbaijan for the last years. The elections have shown that there were not alternatives to this policy in Azerbaijan, and it should be continued for all-sided development of Azerbaijan. Of course, this policy has resulted in great progress in economic sphere.

The economy of Azerbaijan has been very successfully developing in all fields. All the main economic showings as a result of the reforms carried out for the last decade allow us to declare that Azerbaijan is a very steadily and dynamically developing country.

We all remember well that chaos and anarchy of 1991-1993 caused great damage to economy as well. One could say that our economy was destroyed and the country was on the brink of an abyss. And if Heydar Aliyev had not come to power at the people’s demand in 1993, our economy would have most likely been completely ruined. There were a lot of difficulties during the first years, our country was at war. At the same time, there was a civil war and attempts of coup d'etat were made. The economic recession was stopped after 1995, and our economy started gradually developing. Resolute steps were taken to this end, as a result of the reforms in various spheres, economic revival began shortly.

The main economic showing – GDP was increased within 1998-2003 by 60 percent; huge investments were made in the country. Everybody knows that today, Azerbaijan ranks one of the leading positions on the per capita volume of investments not only among CIS but also Eastern European countries. This is very high index. It should be kept in mind that there was no reliable stability at those times in Azerbaijan. On the other hand, as a result of the aggressive policy of Armenia, 20 percent of Azerbaijani lands were under occupation. In spite of that, the attraction of the foreign investments had become possible due to the wise and far-sighted policy by Heydar Aliyev. The investments were made first in oil sector and the progress achieved was recognized and given high assessment on only in Azerbaijan but also throughout the world.

For the short period, Azerbaijan has defined its own oil strategy. Huge investments have been made in Azerbaijan, new infrastructure has been created, and oil pipelines have been constructed. In a one word, the oil strategy allows us to comprehensively develop Azerbaijan and create favorable conditions for the people of the country by effective use of the oil revenues.

I have to note at the same time that if the modern oil infrastructure had not been established by Mr. Heydar Aliyev in 70s, it would have been very difficult to realize the new oil strategy started in 1993. In exactly those years, drilling rigs were built, and the deep-water bases plant was put into operation, where new platforms are now being assembled.

Although Azerbaijan is not yet able to completely realize its economic potential – there are objective reasons for this, of course - at the instructions of the head of our states, social issues used to be the focus of the attention, as well: pensions, allowances and salaries were raised. The citizens of Azerbaijan must live better, and there is a related plan of actions to be realized in the future.

We are also taking measures aimed at improvement of the living conditions for refugees and displaced people. By the instructions of the Mr. President, large funds have been allocated to this end. Due to the means of the Oil Fund, new settlements and towns have been built. This process will certainly be continued in future.

I told more than once during my pre-election campaign and want to state again that no an encampment will remain in Azerbaijan as a result of the measures undertaken; new settlements with modern building will be built instead.

In other words, the economic policy carried out in Azerbaijan for the last years was very successful, it has created good foundation for Azerbaijan’s further development. Our task is to continue this policy, achieve more progress and create modern Azerbaijan. I am confident that we will reach the goal.

First of all, serious actions must be taken about poverty elimination. The work in this direction is already in progress; relevant measures jointly with the World Bank are being undertaken. Unemployment is Azerbaijan’s greatest problem. I would touch upon this during my pre-election campaign. I would state: our goal is open 600 00 jobs within the next five years. This was not simply a pre-election promise, but is a concrete program. I am certain that as result of the measures to be taken in this sphere by the government and private sector, we will do reach the goal.

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To satisfy the demands of Azerbaijan, supply population and enterprises with the electricity and gas, the Azerbaijani state, State Oil Company purchases great volume of natural gas and electricity. For these goals, for purchase of gas is allocated over 200 million USD, while for purchase electricity, SOCAR allocates over 40 million USD annually. This natural gas and electric energy consequently are given to the “Azerenergy” and “Azerigaz” stock companies.

However, unfortunately, the realized natural gas and electivity is not paid to the Oil Company. And if even the accumulated means is paid, this cannot cover the expenditures. For, the Oil Company buys gas and electric energy in world prices, while inside the country they are realized in local prices. The accrued difference is great. In any case, first, the collected means are not paid. Secondly, only 50 percent of the due payments are collected. This is a very low index. I can say, in the developing countries with market economy, do not face such problems. If a company, in particular, state company, buys abroad gas and electric energy to supply population and enterprises with fuel, then it sells it to the population and enterprises in higher prices. In Azerbaijan, it is quite the contrary, it is realized in lower price, in addition, and their cost is not paid.

I would say that because of this, budget of Azerbaijan annually loses minimum 500 million USD. We should treat this problem attentively and seriously. It is not a new problem for us. We have dwelt many times on the item in the past, exchanged views. We have many times spoken with the Prime Minister and sure that recently the Cabinet will submit a plan of activities on solution of the said problem.

Assistance to the entrepreneurship should be continued. This is our strategic goal. It is pleased that greater part of GDP of Azerbaijan is formed by the private sector. This means that in Azerbaijan, the conducted economic reforms yield their fruits, in Azerbaijan, the market economy is underway.

To assist entrepreneurship in the next year, the budget envisions 100 billion manats. Of course, this is more than previous year. However, this indication satisfies us completely. We, nevertheless, should know what lets us to make true our opportunities and should realize it. I believe that the care, which is paid and will be paid by state, and the conditions set for private sector, let the entrepreneurship in Azerbaijan should develop with more intensively, while the entrepreneurs played more active role in the economy of Azerbaijan. In this way, it will be provided all-round development of Azerbaijan.

To achieve all-round development of Azerbaijan, it sold be realized regional programs. I must state that two third of the economic potential of Azerbaijan was formed in Baku and in the Absheron peninsula. This evidences that in the regions economic development goes slowly. Of course, it has objective reasons. But, to reach turning point in this field, we should spare great attention to the regional programs.

Currently, it is elaborated a large Decree on regional development of Azerbaijan. Sure, after its signing, we shall achieve positive results in this field either. Azerbaijan consists of not only Baku and Absheron. Every region should develop in Azerbaijan.

As a result of the conducted reforms in the field of agriculture, were gained great achievements. The land was given to private property. Due to it, there are great accomplishments in agriculture. This tradition should be continued, and the second stage of reforms in agriculture should be launched. We will do all what depends on the state. But, at the same time, the question should be locally paid much more attention.

I think that in the agrarian sector should be set up centers of technical service. The farmers should be supplied by techniques. Seed-growing base should develop, and of course, be created processing industry. Successful step were made in this direction. In numerous regions, of Azerbaijan, are being set up new processing enterprises meeting modern world standards. This will help to resolve unemployment problem, also set up remarkable ground for development of local production. And our goal is to develop local production in Azerbaijan, reduce import, and Azerbaijan provided the inner market with its own products. I think that if the measures being realized in agriculture up to date will be continued, then, we shall reach this.

Unchangeable is the role of the Oil Fund in the future development of Azerbaijan. Creation of the Oil Fund was an extremely important event in the modern history of our Country. All should know that this Fund has been created directly on the initiative of Mr. President Heydar Aliyev. The Fund accumulated great currency resources and it functions in a transparent form. Every citizen of Azerbaijan is able to receive enough information on activity of the Fund. Media gives regular information on means of the Fund, is conducting international audit.

The basic goal of the Fund is to reliably maintain and multiple the received oil revenues, set up bright economic base for the future generations, at the same time, take part in the important projects, finance them. As you know, the first payments made from the Fund, were considered for improvement of lifestyle of the refugees and IDPs, living in hard plight in Azerbaijan. I consider that further the State Oil Fund should continue this function. To assist in realization of the projects that is important for our country.

Of course, I think, misapplication of the Fund in the frame of general expenditures of budget is wrong. True, thanks to care, shown in Azerbaijan in social issues, were increased pensions and wages, and one of these sources for the increase is the Oil Fund. But I consider that every citizen of Azerbaijan should know for which goals are spent means of the Oil Fund. Therefore, we should take into account it in forming the budget in future and point separately. So that misapplication of means of the Fund in the frame of general expenditures of budget - this is economically and politically wrong.

Economy of Azerbaijan will develop. And after the BTC is put into operation in 2005, development of the economy of Azerbaijan will be accelerated. Gas production will rise also. Part of the gas from “Shahdeniz” prospect will be processed in the inner market, at the same time, as the result of high quality measures taken in at the “Azeri” prospect, will be created great volume of gas reserves. Of course, for complete supply of the population with natural gas and delivery of gas to the electric power stations of Azerbaijan, the existing gas-storages should be mounted. I have given appropriate instructions. During a year, volume of gas reservoirs increased twice, and in the future volume of the gas reserves in Azerbaijan will make up to 3 billion cubic meters. We shall reach this, and in the coming years, we shall have no problems with in gas supply.

Of course, in account of percents and incomes, received after operation of the BTC MEP and oil production makes up 50 million tons a year, Azerbaijan will develop all-rounded. We should be ready for this just now. Should be efficiently spent huge means that will return after two-three years. Therefore, it has to be elaborated numerous socio-economic programs. First, should be prepared programs on development of infrastructure. In this field, works are going, and as you know, it is planned construction of power station in Azerbaijan. Should be build power station “Shimal”. At the same time, should be built a new power station in Sumgait. We should reach this in short period, and, in this way, may be, Azerbaijan can export enough quantity of electricity.

Also should be realized other infrastructure projects. First, should be realized construction of motorways, important for all-round development. As you know, works are underway in the western direction. Successfully is realized the project on the terminal Baku-Gazakh-Georgia. At the same time, it is necessary to build ways in such level in other directions. IT is nece4ssary to build ways in the direction Baku-Gusar-Russian border, Baku-Astara-Iran border. Sure, proposals on this will be made shortly.

In general, I consider that every minister, every chief of Committee knows well the problems in his sphere, weak points, and along with all the achieved successes, should spare attention to the problems. I consider that every ministry should submit to the Cabinet, President of Azerbaijan package of proposals on the priorities of the programs, to be realized for settlement of the concerned problems. I consider that the said proposals should be elaborated in detail. Should have maximum program form and this program should be realized.

After my appointment as Prime Minister on 4 August, in the first meeting with the members of the Cabinet just in this hall, I told my suggestions. I said then: this is a great responsibility for me. I shall try to justify this trust. I also stated: I think that the present staff members of the Cabinet successfully scopes with its tasks. Simultaneously I noted: I want to work with this Cabinet. As you see, I always keep my word. At the same time, along with all these, future activity of each of us will depend on the results. And they should be in all fields.

In the beginning of my speech, I said that to achieve high results, there are bright conditions. The economic climate created in Azerbaijan by Heydar Aliyev is so good that there is remarkable condition to achieve new results.

Of course, I demand from all responsible approach to their duties and honestly fulfillment their official duties. Of course, all should attentively regard the people. We work for the people of Azerbaijan. It trusts us and we should justify it. I am convinced, it will be. Sure, the Cabinet of Ministers will try for further strengthening of future economic potential of Azerbaijan. In this way, all we together in recent years will make Azerbaijan a rich and mighty state. I wish you success in this field. Thank you.