Statement of Heydar Aliyev, President of the Republic of Azerbaijan, at the meeting with members of United States-Azerbaijan Chamber of Commerce and Business council for international understanding - August 29, 1997

Ladies and Gentlemen,

Good morning! I welcome all of you today at this eminent hall and thank you for demonstrating interest and attention to the Azerbaijani President and the delegation headed by him.

I am on the first official visit in the U.S. at the invitation of President Bill Clinton. I have been holding various meetings during this visit. I have been conducting such meetings for the third day in New York. My meeting with you today has a special importance in these talks. I would like to thank the USA-Azerbaijani Chamber of Commerce, its co-chairmen Don Stacey and Riza Veziri, the USA companies and other individuals who assisted the organization of this meeting. At the same time, I am also grateful to the Organization on International Understanding, its chairman and members who sponsored and directed this meeting.

I would like to be brief for two reasons. First, we have very little time. Second, you seem to have already some information about Azerbaijan.

Azerbaijan is a country located in the Caucasus and broke away from the Soviet Union after its collapse. I would like to state that Azerbaijan is firmly following the path of independence and will adhere to this policy in future. A democratic, legal and secular state is being built in Azerbaijan. The Azerbaijani economy is based on the principles of market economy, and we have it our strategic objective. Azerbaijan has opened its economy for the world. Azerbaijan is working to integrate its economy into the world economy. Azerbaijan has immense natural resources and enormous economic potential. Our country needs foreign capital in order to tap this potential. All these developments reflect the realities of Azerbaijan today.

After the speech of the executive of J.P. Morgan bank I am not going to describe the eco­nomic processes and reforms in Azerbaijan and their results.

Indeed, the economic reforms in Azerbaijan are consistently bearing their fruits. We started the economic reforms in 1994 because the domestic political situation in Azerbaijan and external aggression and sabotage against our country prevented us from embarking on this project earlier. Despite our late start we are already surpassing many other countries in the implementation of a number of reforms.

You are businessmen, representatives of large financial organizations. You are experts in the world finance and economy. If the rate of inflation was 1800% in Azer­baijan in 1994, and today it is reduced to 0%, you can tell that this accomplishment was a splendid display of the success of our economic reforms.

Since 1989, the industrial output, agricultural production and Gross Domestic Production was declining year after year. In 1995, the industrial output fell 25-26%; GDP declined 10-15%, and the agricultural production decreased at the same rate. However, in 1996 the industrial output stabilized; the agricultural sector posted a 3% growth, and the GDP grew 1.2%. In the first half of 1997, the GDP increased even fur­ther showing 5.2% growth. This growth was the direct result of the economic reforms implemented into life within a short period.

We tend to compare the Azerbaijani economic development with the economies of the then republics of the Soviet Union, now the CIS countries. Russia is the country that has made the most substantial progress. Therefore, I would like to make some comparisons.

In 1996, we adopted the law on Land according to which we intended to transfer land to private ownership. We have already completed the process, and the privatization has shown its results. The domestic animal sector of agriculture has been completely privatized. The outcome of these reforms was the fact that the private sector accounted for 80 per cent of all the agricultural production in the country.

I was on an official visit to Russia early this year. Russia has not privatized the land, and has not passed such a law. They have failed to eliminate the Soviet system of collective and state farms. When I told the persons responsible for reforms in Russia about our successful land reform, they did not hide their astonishment.

The biggest problem which Russia faces today is its inability to pay the workers their wages and pensions for four or five months. I would like to inform you that we have no arrears wages and pensions in Azerbaijan. Both wages and pensions are paid in time. As I have men­tioned the inflation has been brought to a zero level. The Azerbaijani national currency, manat, is appreciated 10% against the U.S. dollar.

Please, do not think that I am trying to praise myself. I ask you to understand me correctly. I am simply adding these figures to the speech of JP Morgan executives. I am just stating these facts to counter those forces such as the opposition inside the country and some groups in foreign countries who claim that the economic reforms are slow in Azerbaijan and produce no results. Unfortunately most of these people are from our own country.

Today I am sitting here and listening to the representative of JP Morgan. I think about how wonderfully people can assess Azerbaijan from New York. The opposition and other groups inside Azerbaijan are blind to see our country like JP Morgan does.

The figures and opinions expressed here do not come exclusively from JP Morgan. The International Monetary Fund, World Bank, other international financial organiza­tions closely follow the processes in Azerbaijan and have high demands to our coun­try. We are very content with these relations. I would like to thank the IMF and the World Bank. I thank everyone who cooperates with Azerbaijan.

I would like to reiterate that Azerbaijan is open to everyone. We have established utmost favorable environment for investments and business in our country. Encouraged by this meeting with you, I would like to assure you that these opportunities will increase in future.

I invite you to visit Azerbaijan. Please, come to conduct business in Azerbaijan. Our country has a great economic future for businesspeople.

The 21st century will become the development century of Azerbaijan. All companies and businesspeople who operate in Azerbaijan will be part of this progress. I thank you for your attention. Now I will answer your questions.

Question: Mr. President, I represent a law firm. I have a question. Azerbaijan and other pre-Caspian states have different opinions on the status of the Caspian Sea and its division. Different states have divergent views on the energy reserves in the Caspian Sea and the ways of exploring these natural resources. I would like to find out what the problem of the division of the Caspian is. And what is your opinion on this matter? To what degree do you think this issue can affect the oil and gas projects in the Caspian Sea?

Answer: Thank you. The question of the status of the Caspian Sea appeared only in the September of 1994 after the Azerbaijani State Oil Company signed «The Contract of the Century», with large trans-national corporations. Until then there was almost no talk of the status of the sea. The signature of this major contract by Azerbaijan worried some pre-Caspian states, especially the largest countries around the Caspian. They were upset and decided to obstacle our projects by raising this issue. On the other hand, since the Caspian Sea is a unique water basin in the world, it is a formidable task to determine its legal status. The certain guidelines for the explo­ration of subwater energy reserves in the Caspian Sea have been shaped gradually throughout the years.

As you know, under the Soviets, the Caspian Sea belonged to the Soviet Union. Iran had access only to a small section of the sea in the south. Azerbaijan began the offshore explorations in the Caspian Sea some 50 years ago - in 1947-1949. From the inception of the offshore operations to the moment that the USSR dissolved, Azerbaijani oil and gas enterprise solely conducted all the work. As the offshore oper­ations stretched farther and farther from the Azerbaijani shores they penetrated distant sec­tions of the Caspian Sea. Thus, in the 1970s the Soviet government decided to divide the Sea into sectors in order to make the energy reserves accessible to other republics. I believe that until the final status of the Caspian Sea is arrived at, this principle should stay in force. Following this principle Azerbaijan is engaged in the oil and gas production in its sector.

The pre-Caspian states differ in their opinions on the status. Azerbaijan and Kazakhstan stand for the sectoral division. Russia, Iran and Turkmenistan suggest the condo­minium principle. But the condominium principle has never been in effect in the Caspian Sea. The sectoral division, however, has been a fact of life since the 1970s.

We advocate the continuation of the talks on the status. Nevertheless, I think the negotiations will drag on. Until these talks finish and bear fruit, Azerbaijan will con­tinue its projects in the Azerbaijani sector of the sea. Azerbaijan has a right to do so.

I would also like to note that all of the oil and gas deposits in the Caspian Sea have been discovered and developed by the Azerbaijani scientists. Thank you.

Question: Mr. President, as you know, the regional states came up with initia­tives aimed at establishing peace and stability in the Caucasus which has become one of the most unstable regions in the world. In order to foster the cooperation among these countries some political leaders have suggested the establishment of the Caucasian Parliament. There are also proposals to set up the peace-keeping forces within the framework of the Black Sea Economic Cooperation Organization that would be deployed in the Caucasus and the Black Sea regions.

Mr. President, I would like to hear your ideas about these proposals. What kind of contributions is Azerbaijan willing to make for the sake of peace and stability in the region?

Answer: You know, if I answer this question, you will have to listen to me for an hour. If you want to listen, I can go ahead. However, I will give you a short answer. The Caucasus is a very intricate region. Thanks to various outside forces several con­flicts erupted in the region. The first of such conflicts is the Armenian-Azerbaijani con­flict. This confrontation began in 1988. This is the most barbaric crime committed by the Soviet Communist Empire against the Caucasian peoples and the Azerbaijani peo­ple in particular. These forces artificially created this conflict. Later we witnessed the Abkhazian-Georgian, Inqushetian-North Ossetian, Chechnya-Russian, Southern Ossetia-Georgian conflicts flare up. The situation in other parts of the Caucasus is quite tense as well. We need to take serious and resolute measures in order to resolve these conflicts.

We signed a cease-fire agreement three years ago in order to settle the Armenian-Azerbaijani conflict. We are currently holding talks directed at establishing a permanent peace. Armenia has occupied 20% of the territory of Azerbaijan. Over one million Azerbaijanis have been expelled from the occupied lands. These refugees are now living in terrible conditions in tent camps. Azerbaijan has suffered enormous material and moral losses.

We are for the peaceful settlement of the Armenian-Azerbaijani conflict. However, there are some conditions. The Armenian armed forces must leave the occupied lands. The territorial integrity of Azerbaijan must be restored. The refugees must return home. We can grant broad autonomy to the Mountainous Garabagh within Azerbaijan. We should establish a long-lasting reliable peace between Armenia and Azerbaijan.

We are conducting the negotiations based on these principles. I will hold talks with President Clinton on these issues as well.

The Georgian President Mr. Shevardnadze visited the United States a week ago. 1 suppose that he gave details of the Abkhazian-Georgian conflict. There is no war in Chechnya today, but the situation is quite complicated. The relations between Ingu­shetia and the North Ossetia are strained right now. Such a state of affairs requires a very careful and prudent approach.

The ideas on the Caucasian Parliament and peace-keeping forces abound. But these arguments have to pass a number of tests. It is quite easy to suggest an idea. It is quite a different matter to attempt to carry it out. The Caucasus is such an important region that the world powers, to my mind, should always keep abreast with the events there. The United States should also pay more attention to the region. Thank you.

John Robert: Unfortunately, this will have to be the last question since the President`s time is limited, and he has a very tight schedule. He has planned numerous meetings. Mr. President, we thank you for your candid answers.

Heydar Aliyev: I thank you all again. I invite you to visit Azerbaijan. I am very satisfied with today`s meeting. I will see you in Azerbaijan. Good bye.

The document was taken from the edition of “Together towards the New Century”