Speech of the Azerbaijan President Heydar Aliyev at the international conference on \"Business in Azerbaijan\" - London, hotel \"Royal Garden\", July 22, 1998

Dear Mister chairman!

Dear Mister Minister!

Dear ladies and gentlemen!

Today here, in London, in this majestic hall, I welcome you heartily and wish successes to the work of this conference.

I am in official visit in the United Kingdom, in London under the invitation of the Prime Minister of the United Kingdom Mister Tony Blair. Today is the third day of my official visit. But in two last days, very valuable work has been carried out for further development of relations between the United Kingdom and Azerbaijan, and I am very glad for it.

Especially yesterday`s meeting with Her Majesty the Queen has great value for me. Yesterday I have met with the prime minister mister Tony Blair. Negotiations, conversations, taken place with him and at last, the signed joint documents have created a favorable basis for the future development of relations between the United Kingdom and Azerbaijan, for the beginning a new stage of these relations. Therefore, I am happy for the visit and the work, which have been carried out. I thank the government of the United Kingdom and the minister, who has brought the contribution in realization of my visit and also all the organizations for the attention and care, shown to us, for warm business condition.

Today`s international conference is very important for me because businessmen not only from the United Kingdom, but also from other countries of the world, who wish to work in Azerbaijan, gathered here. Therefore, I express my gratitude to the company which has organized this conference. I wish to express hope that the conference will realize a question before it and reach its purpose.

Dear mister minister, you opened this conference with your speech. Participation of minister of the United Kingdom and his speech at the conference, certainly, raise value of this conference. Dear mister minister, I thank you for valuable opinion about the relations between the United Kingdom and Azerbaijan, about position and achievements of the Azerbaijan Republic and as a whole, for merits in development of relations between the United Kingdom and Azerbaijan.

Mister Minister, I completely agree with your opinion stated here, and I approve that great work has been done between the United Kingdom and Azerbaijan in all fields, in particular in the field of economic cooperation for last four years. Owing to this work and the received achievements we already think of the future prospects and we conduct teamwork.

Dear ladies and gentlemen! Azerbaijan is located in Caucasus. Our people, our country have been deprived of independence, freedom for a long time. At last, at the end of 1991, we found the state independence, national freedom connected with disintegration of the Soviet Union. We live in condition of independence for six years. These years have been hard for us. All republics, the countries, which have been the parts of the Soviet Union and found the state independence after its disintegration, experience now a transition period.

Today I can tell that all these countries have completely refused communistic ideology, socialist political-economical, a state system. Each country goes on its particular way. But my observations show that differing from each other, these countries try to go on a way of market economy to some extent. Therefore, the transition period for all these countries is complex.

This period is even more difficult and heavy for Azerbaijan. It has some reasons. One of them consists of that at the end of 1991, after finding independence, Azerbaijan was in the condition of war with neighbor Armenia. In 1988, the neighbor Armenia made an attempt to separate the small Mountainous Garabagh (Nagorno-Karabakh) region from Azerbaijan, which is in structure of Azerbaijan, because the most part of its population was Armenians, and to attach it to Armenia. As a result of it the conflict, which then was turned into war, started between Azerbaijan and Armenia. In 1991, there was already a war, fights between Armenia and Azerbaijan.

It distinguishes Azerbaijan from other countries. It has brought heavy consequences to Azerbaijan. As a result of war, Armenian armed forces for various reasons - it is unconditional, for special assistance by some large states to this country - occupied 20 territories of the Azerbaijan Republic. Mountainous Garabagh (Nagorno-Karabakh) and territories close to it were occupied by Armenian armed forces, and more than one million Azerbaijanis were expelled from their homes. It is six years that the majority of them live in heavy condition, in tents.

This factor aggravates and hampers a transition period. The second factor is that political situation in the country was not stable and very complex because of war during Azerbaijan`s getting the state independence and struggling of various illegal armed groups, criminal groups inside Azerbaijan for a power.

After Azerbaijan obtained the state independence, these two factors have impeded Azerbaijan to implement political, economic and other measures as the independent state and sometimes strongly detained them. But today with feeling of satisfaction I can tell that we have reduced or absolutely liquidated negative influence of these two factors. In May, 1994 we could stop war between Armenia and Azerbaijan. The agreement on cease-fire was signed between Armenia and Azerbaijan and here already more than four years as there is no fire, there are no fights, it does not shed blood, there is no war.

But there is no also a peace. We aspire to resolve the Mountainous Garabagh (Nagorno-Karabakh), Armenian-Azerbaijani conflict by peace way, by means of the OSCE Minsk Group, we carry on negotiations. These negotiations yield the certain results, but the basic result has not been reached yet. I hope that we will achieve it.

We have managed to achieve normalization of political condition inside Azerbaijan. The illegal armed groups, criminal groups, the criminals, used by separate political forces, available in the past in Azerbaijan, have already been neutralized. As a result of the measures, taken since 1995, political condition in Azerbaijan has completely been stabilized.

In November, 1995 the first Constitution of independent Azerbaijan was adopted and in November, 1995 the first parliament was elected on the basis of democratic elections. Thus, we want to fill the time, lost after finding independence, in the certain degree we have achieved it with prompt development.

All this has opened an opportunity for an establishment of equal in rights, mutually advantageous cooperation of Azerbaijan with all states of the world. In particular, now wide economic relations have been established between Azerbaijan and many countries of the world. Due to its rich natural resources, economic potential, geopolitical situation, many countries show big interest in Azerbaijan. We welcome this interest and even we conduct necessary work for its growth. Because we see the future of Azerbaijan only and only in its integration into the countries of the world, especially in economic field.

We conduct the process of construction of the legal, democratic, secular state in Azerbaijan. The way, selected by us in the state construction, is a way of democracy. We go on it, and I consider that we have achieved great results. We conduct Azerbaijan`s economy on the way of free economy, development of market business, integration into the world economy. There are a lot of achievements in this field. Political, state system, the policy that we carry out in economic field, the way selected by us - all these are connected with each other, with democratization of all spheres, realization of democratic reforms in the policy, public life and economy. These democratic reforms have already yielded the results in Azerbaijan. As a result of these, as I noted, interest by economically developed countries in Azerbaijan grows day by day. But it is not only interest. It has already been started to be carried out big works with Azerbaijan and we are witnesses of its fine results.

Both chairman of the conference and dear minister spoke here about economic relations, I consider, the relations, which are at very good level, between the United Kingdom and Azerbaijan, about activity of more than hundred companies of the United Kingdom in Azerbaijan. It is a reality. The company \"BP\" and other companies have invested great capitals in Azerbaijan. The companies of the United Kingdom have taken the most part of orders of the Azerbaijan International Operation Company, established for realization of the first oil contract of Azerbaijan - \"the Contract of a century\". The companies of this country in Azerbaijan have received orders for 350 million dollars concerning implementation of the first contract and successfully work in our country.

All this perfectly shows the situation created in Azerbaijan. We want to strengthen this work in all areas in the future as well. Our ministers will speak here about an economic situation of Azerbaijan, the conditions created for inflow of investments into the republic and achievements as a result of carrying out political-economical reforms and will show it on figures. Using this opportunity, I want to tell some words.

We are supporters for inflow of foreign investments into Azerbaijan and as I noted, development of business, market economy in our country is a strategic way of our economy. We, first of all, have passed necessary laws in order to provide these. We have accepted more than 200 laws for providing business activity, regulation of financial, tax systems, carrying out agrarian reforms, liberalization of foreign trade, as a whole, for carrying out process of liberalization in economy. These laws cover many areas; including protection of foreign investments takes the special place in these documents.

These laws and their realization in Azerbaijan have created this economic condition. We implement economic reforms in all spheres. The privatization is underway, I consider that our achievements in this area are noteworthy. We carry out reforms in agrarian sector too. I can say that these reforms are the most courageous reforms among the countries, being the members of the Commonwealth of Independent States. We have passed the law on transfer of the land to private property, on sale of the ground or giving to other person by its owner and we carry out it. Reforms in agrarian sector have brought its results for a short term - for two years. Now it is possible to tell that the cattle-breeding has completely been privatized in agrarian sector, the most part of the land has been transferred to its owners - to peasants and they use it effectively. As a result, if the agricultural production in Azerbaijan has fallen annually 10-15 percent, it has increased 4 percent for six months in this year.

The reforms, implemented in other spheres of the industry and economy, bring its results as well. Owing to all these, recession of Azerbaijan`s economy proceeded for 7-8 years has been prevented and beginning from 1996 growth is observed. In 1996 manufacture of the gross domestic product for the first time grew 1, 3 percent. In 1997, it grew 5, 8 percents and for six months of 1998 it is 9 percent. Imagine, if since 1990 till 1996 manufacture of the gross domestic product fell 20-25 percents, we could prevent this recession and in last years - in 1996, 1997 and 1998 - we could achieve appreciable growth.

Azerbaijan is the large industrial country with its diversified industry. Its many parts were a part of general industrial system of the Soviet Union. Unfortunately, during the Soviet period our industrial enterprises were created in such a manner that have been closely connected with the enterprises of other regions of the Union. After break of these economic relations and reduction or not being the Russian markets in need of production, made by us, work of many our industrial enterprises has become complicated.

Therefore, other features of a transition period were the big recession in the industry in last years. Industrial production annually fell 20-25 percents. But in 1996 we prevented this recession and though it was not so much but in 1997 industrial production grew 0, 3 percents.

For six months of 1998 manufacture has increased 0, 7 percents. It is small growth but if we compare it with the reduction 20-25 percents in last years, it is certainly, positive result. All this became possible owing to reforms implemented by us.

Many serious changes have occurred in our financial system. For example, in 1994, inflation in Azerbaijan made 1600 percents. In 1995, it was 600 percents. In 1996, we, it is possible to tell, completely prevented inflation - it made nearby 3-4 percents. In 1997 inflation was 0, 4 percents and for six months of this year - 0,6. I consider that we can be proud of such parameters. As a result of it, the rate of the national currency of Azerbaijan - manat - was stabilized, has become stronger and becomes stronger from year to year. We also have provided a currency turnover, all this is free in our country. In financial, currency systems of Azerbaijan we have completely applied principles of free economy, and it yields its results.

I already said that in Azerbaijan many laws for attraction of foreign investments have been accepted. I felt from the speech of dear minister that you wait for taking some additional measures. I do not know about what a talk is going on. I consider that now all opportunities have been created. At the same time, I declare that we develop, we improve everything and will improve every year. If there are any valuable suggestions on promotion of our economy in the specified direction today and in the future, we are ready to consider them and take necessary measures.

However, you should know that all opportunities for attraction and activities of the foreign companies have been created in Azerbaijan. Now, there must be 1500 foreign companies which act in Azerbaijan. It is not few, however their number increase and gradually will increase. Working of foreign investors and an opportunity of repatriation of their profit in Azerbaijan are regulated by our laws. That is, an opportunity to work here and to send his profit to his country has been provided. If it is necessary to create other opportunities for this purpose, we are ready to create them.

The majority of capitals invested in our country, is provided by the oil contracts, signed in Azerbaijan since September, 1994 up to now. You know that in September, 1994 Azerbaijan signed the big contract with many large oil companies of the world, including, with the company of the United Kingdom \"BP\". It is called \"the Contract of a century\". 11 companies have been united and established a consortium for joint development of deposits of Azerbaijan \"Azeri\", \"Chirag\" and \"Guneshli\".

This contract is already realized. You know that in November of the last year, we received the first oil and we export it to the foreign market. During this period, we could construct and put in operation an oil pipeline of Baku-Novorossiysk for this purpose and we export oil on it. The second oil pipeline from Baku to Black Sea port Supsa in Georgia is constructed. In the next year this oil pipeline will be put in operation.

According to the forecasts, taken by us for a basis during signing the contract, it was expected 510 million tons of oil from the contract area and it was intended to invest a capital amounting to 8 billion dollars for realization of the contract. Today with pleasure I declare that the implemented work has positively changed these forecasts. Now it is known that not 510 million tons but 630 million tons of oil are expected. And it is not casual, because 5 wells have been drilled on an oil deposit \"Chirag\" till now, we expected 500 tons of oil from each of them per day. But now it is extracted 2 thousand tons of oil from each well every day that is twice more. On this deposit 24 oil-wells will be drilled. Wells will be drilled as wells as on other deposits. Thus, you see that 630 million tons is not last figure yet, it will change.

The policy and decisions, made in this area by us, have justified itself. Since September, 1994 till now we have signed contracts on joint development of rich deposits in the Azerbaijan sector of the Caspian Sea. Number of these contracts was 12 till yesterday. The first contract was signed in September, 1994. Yesterday here, in a residence of the Prime Minister in London, three new contracts were signed.

First, the contract was signed between the companies \"BP\" of Great Britain, \"Statoil\" of Norway and SOCAR on joint development of perspective structures of rich oil deposits of Azerbaijan \"Araz\", \"Alov\" and \"Sharg\".

The second is \"Inam\". The contract on joint development of this deposit was signed between the company \"Monument oil and gas\" of Great Britain and the State Oil Company of Azerbaijan Republic. At the same time participants of this contract are the company \"АМОCО\" of the United States of America and the central fuel oil companies of Russia.

The third contract was signed between British company \"REMCO\" and SOCAR on joint development of onshore oil deposits of Azerbaijan \"Muradkhanli\" and \"Jafarli\" and perspective structure \"Zardab\".

Thus, now the number of contracts has reached 15. But we still have oil deposits and there are companies showing interest in Azerbaijan. I think that this process will continue.

These figures changes every day, but I can tell that about 26, 27, 28 companies from 14 countries conduct joint development of large oil deposits of Azerbaijan. I consider that they will provide cooperation of Azerbaijan with these countries and the oil companies from the beginning and up to the end of XXI century and will put in pawn a basis for the future.

In a word, the work carried out by us in this area, has yielded positive results. I consider that this in itself shows the conditions created in Azerbaijan for activities. Now each of these companies has opened the office in Azerbaijan. The number of offices of the foreign companies in Azerbaijan is too much. The new companies, which I have met here, say that one of these days, in a month or two, they will open their offices in Baku. I accept these offers with satisfaction, I approve and I welcome them. All opportunities for arrival of any company in Azerbaijan have been created and will be created.

What does it mean? It means that doors of our country are opened for the foreign companies, as a whole for foreign investments, trade.

For example, we have completely liberalized the foreign trade. As a result of liberalization, our foreign trade turnover has increased much more. Last year, it made 1 billion 600 million dollars. But several years ago it was impossible to speak about such figure.

In our country customs duties are very low, not above 15 percents. Certainly, it also creates good opportunities for an establishment of relations between Azerbaijan and the companies of the countries of the world, for goods turnover and trade.

I can tell with pride about inflow of foreign investments to Azerbaijan that we are on the first place by quantity of foreign investments per capita among the countries-members of the Commonwealth of Independent States.

Foreign investments per capita are 160 dollars in Azerbaijan. It is the highest parameter among the countries-members of CIS.

In our country the private sector develops. We have created all opportunities for this purpose. I already said that in agrarian sector we carry out the program in this area and get results. A privatization is underway, 18 thousand small enterprises have been privatized. Now we have started privatization of the middle and large enterprises. About 1200 middle and large enterprises have been turned into joint-stock companies. Approximately their 700 shares have been completely distributed. These figures speak about much in itself.

If you consider that privatization in Azerbaijan really started in 1996-1997, you will notice what good results this work made for two years. For example, as a result of development of a private sector, 50 percents of the gross domestic products of the last year were received due to a private sector. In agrarian sector 85 percents of the gross domestic products were received due to a private sector. It shows that the private sector has taken the worthy place in Azerbaijan and become stronger for a short term. If our laws, rules did not give such opportunity, the private sector could not develop for such a short term. Of course, it is only the beginning of our work. But this beginning opens the big way for the future and gives great hopes.

We closely cooperate with the International Currency Fund, with the World Bank, the European Bank of Reconstruction and Development, other authoritative banks, we receive credits. I can tell that our foreign debt is minimal. Our foreign debt is about 500 million dollars that makes 10 percents in manufacture of the gross domestic products. In other countries-members of CIS it makes 25 and even 30 percents. Our foreign debt was formed due to long-term and very advantageous credits, granted by the World Bank, the International Currency Fund and other financial structures. We have no other foreign debt.

I can tell that despite the certain difficulties in internal affairs of our republic, we do not allow increase of foreign debt of Azerbaijan and we try to solve questions due to the internal opportunities and also due to the profits which are received from the activity of the foreign companies in Azerbaijan.

We closely cooperate with the International Currency Fund, the World Bank. They supervise our parameters, reforms which are carried out by us. With feeling of satisfaction I can tell that they highly appreciate our works - both reforms and available achievements. Even when their delegations came to Azerbaijan and our delegations were in the International Currency Fund and in the World Bank in Washington, they show our economic, financial parameters as an example in comparison with other CIS countries.

Certainly, we should not calm down with these. Informing you this positive information, I do not consider that we have achieved much in the field of economy. No, we are simply at the initial stage of the way taken by us. You should know that we understand on which way we go.

Our way is a way of reforms. Our way is a way of development of market economy. Our way is a way of development of business. As a whole, our way is a way of establishment of free economy in Azerbaijan, finishing the process of privatization. We go on this way. It is a hard way. A number of countries, including the countries, which developed economically, passed this way for decades and sometimes for centuries. We are not visionaries at all and also do not consider that this way can be passed for a short term. We look at everything and bear a relation to everything really. But the basic question is that we trust in the way, selected by us and we believe that it will yield its results. An effective utilization of internal economic opportunities of Azerbaijan - both natural riches and economic potential, an intellectual potential and also the investments put in our country in the joint form with the large companies of the world, will provide development of Azerbaijan`s economy at a high level. As a result of these, we can raise well-being of the Azerbaijani people, citizens.

Thus, giving this information to you, I address to you that do not be late to make your business with Azerbaijan. Political stability in Azerbaijan is the first condition for each foreign investor. This has been provided. I give you a guarantee that it will be provided as well as in forthcoming years.

I said, more than 200 laws have been adopted to attract foreign investments into Azerbaijan. Necessary laws will be adopted in the future too. In our economy we will conduct the process of liberalization in the further. Doors of our country are opened. Who wishes to carry out healthy work in Azerbaijan, there are all opportunities for it in our country.

Dear ladies and gentlemen!

I consider today`s meeting with you very important. Taking an opportunity, I gave the certain information on situation of Azerbaijan to you and shared my ideas, wishes with you.

I wish each of you successes in your works. I wish each of you successes in establishment and development of relations with Azerbaijan.

Thank you for your attention.