Opening speech by President Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of the first quarter of 2016 and objectives for the future
09 april 2016
First of all, I want to ask you again to observe a minute of silence to honor the bright memory of Azerbaijani soldiers who died heroically preventing the Armenian armed provocation. May Allah rest the souls of our martyrs! Sit down. May Allah grant their families patience and perseverance, and healing to our wounded soldiers.
As you know, earlier this month Armenia committed yet another armed provocation against Azerbaijan. The provocation was foiled and the enemy was given a fitting rebuff. Azerbaijan managed to defend its land and further strengthen its military positions. This bloody standoff shows once again that Armenia continues its occupying policy, does not want peace and is trying to undermine the negotiating process. We have enough reasons to say that. First of all, the fact that negotiations have been held for more than 20 years shows that Armenia simply wants to see the negotiations as a never-ending process. On the other hand, as soon as there is some progress in the talks, Armenia tries to disrupt them in various ways. This is evidenced by examples from recent history. At the end of 2014, a meeting of the Presidents of Armenia and Azerbaijan was held in Paris on the initiative of the French President. Both sides assessed the meeting positively. After the meeting, we expected even more positive dynamics in the talks. But less than two weeks after the negotiations, Armenia launched large-scale military exercises on the occupied territories, on the territory of Agdam District. That step was purely provocative. For some days the armed forces of Azerbaijan did not respond to this provocation but then the Armenian armed forces attacked our positions using helicopter gunships. The Azerbaijani army had to bring down one of the helicopters. Armenia needed that as a pretext to once again accuse Azerbaijan of aggression. After that, negotiations were not conducted for more than a year. At the request of the Minsk Group, the Presidents of Azerbaijan and Armenia met in December last year, but that meeting was fruitless. The mediators are trying to resolve the issue. As you know, the leadership of Russia, the United States and France are making efforts and issuing statements. This includes very valuable statements regarding the status quo, saying that the status quo is unacceptable and must be changed. But Armenia ignores it. I am aware that this year the co-chairing states have put forward new proposals for the continuation of negotiations. During my visit to the United States, among other issues, the Nagorno-Karabakh conflict was widely discussed with the political leadership of the United States. They noted that they support the territorial integrity of Azerbaijan. All co-chairing countries –the USA, Russia and France – support the territorial integrity of Azerbaijan. There is no country in the world, except for Armenia, that would not support our territorial integrity. Obviously, the discerning positive dynamics in the negotiations prompted Armenia to resort to this provocation. I want to note once again that Azerbaijan is defending its own land. We are not after the land of another state, but we will not give our land to anyone. We will never allow a second Armenian state to be created on Azerbaijani land.
As you know, after the bloody clashes the international community expressed concern over this issue. The leaders of co-chairing countries made a statement reaffirming their commitment to the peace talks and negotiated settlement of the problem. We also want that. We have repeatedly stated that we want a peaceful and negotiated settlement of the issue. We only want to resolve the problem. We are declaring today that we remain committed to the negotiations. We hope that these talks will lead to a solution of the problem. The solution is very simple – the Armenian armed forces must vacate the occupied lands, Azerbaijani citizens must return to their native homes and then peace and security can be established in the region. As for the principle of self-determination of peoples, this principle should not violate the territorial integrity of countries, and that these expressions are reflected in the Helsinki Final Act. All conflicts must be resolved on the basis of the territorial integrity of countries.
As you know, the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict is our primary goal. The stronger Azerbaijan becomes in political, economic and all other fields, the closer a solution to the conflict, of course. We must further accelerate the momentum of our development. The sustainable development in Azerbaijan should be continued. The progress made in economic and political spheres in recent years indicate that we are on the right track.
In the first quarter we, as always, conducted a very active foreign policy. I believe that we worked ever harder in the first quarter. In the first quarter, I paid a number of visits abroad – both official and working ones. I have taken part in the Davos Economic Forum, the Munich Security Conference and the London Conference "Supporting Syria and the region". I have paid visits to the United Arab Emirates, the Islamic Republic of Iran, Turkey and the United States of America. The geography of all these visits is an indicator in itself. It shows that Azerbaijan is pursuing a very active and multifaceted foreign policy and the number of our friends is growing. On the basis of mutual respect and interests, Azerbaijan fruitfully cooperates even with countries that do not have particularly close relationships with each other.
Thus, the confidence of the international community in us is growing. Azerbaijan is known as a very reliable partner. It plays a stabilizing role in the region. I should also note that in the first quarter Azerbaijan received 10 foreign heads of state and government. There have also been official visits. Heads of state and government also attended the Fourth Global Forum in Baku.
I want to say again that this is evidence of our successful foreign policy. This policy will be continued. I want to note once again that the world treats Azerbaijan with great respect and sympathy. It is no coincidence that we were a member of the UN Security Council a few years ago. It was no coincidence at the time, and the success we have achieved today shows that again.
At the same time, a new format of regional cooperation is emerging. There is a regional format of Azerbaijan-Iran-Russia. Our foreign ministers have met. A day or two earlier, Iran hosted a meeting of the foreign ministers of Azerbaijan, Iran and Turkey. There are other trilateral formats. There is a format of Azerbaijan-Georgia-Turkey. All these tripartite initiatives are very important for security and cooperation in the region. As you can see, Azerbaijan participates in all formats.
In the first quarter, economic reforms were carried out even faster. In general, I should note that 2016 will be a year of deep economic reforms. From the beginning of the year, we have been working very hard in that direction. Many orders have been signed and laws adopted. Improving the business environment, increasing our export potential, attraction of foreign investments to Azerbaijan and increasing local production – very serious decisions have been made in all these areas. Financial discipline and transparency – I want to say that further measures will be taken in this direction.
The entire economic and financial sector in Azerbaijan should develop based on the experience of the most advanced principles of leading countries. First of all, it is necessary to improve control mechanisms and ensure complete transparency. Thus, our revenues will and should increase even though the oil prices have fallen sharply and are still at a very low level. This, of course, has a serious impact on our revenues. However, I believe that thanks to the development of the non-oil sector we will be able to successfully overcome this situation.
The economic indicators of the first quarter are not very positive. The gross domestic product has dropped. And it is natural. We expected this to happen. But I think that during the year the gross domestic product must be increased. In any case, we are trying and will continue trying to achieve that. This is suggested by the fact that the non-oil industry in Azerbaijan increased by more than 5 per cent in the first quarter. This indicates that the reduction of the gross domestic product is primarily due to the fall in oil prices and the resulting situation. Of course, our revenues have declined. Investments made by the state have also dropped. We, of course, take into account this situation.
But growth of the non-oil industry by more than 5 per cent, of course, is a good indicator that gives us hope for more rapid development of the non-oil sector in Azerbaijan. Today, the non-oil sector forms a major part of the Azerbaijani economy. We have achieved that and, of course, we should try to enable the non-oil sector to play a greater role in our exports in the future.
In the first quarter, 37,000 jobs were created, including 31,000 permanent ones, while 13,000 jobs were closed. We see a positive balance here too. I should also note that jobs were mainly created in the public sector. This issue was addressed on my instructions, because some work in the construction and other sectors had been postponed. Therefore, to keep the unemployment rate at a low level, I decided that jobs should be created by state-owned companies and government agencies. Jobs involving public works are being created. The creation of this number of jobs in the first quarter, of course, is meant to ensure social protection of our people.
The social policy has always been and will be a priority. The steps taken in the first quarter show once again that Azerbaijan is a social state. Our policy is centered on the people of Azerbaijan. The interests of Azerbaijani citizens are above everything for us. All economic reforms and our successful oil and gas policies are aimed at improving people’s lives.
The world is experiencing a crisis now. The economic and financial crisis is not over yet. Azerbaijan is a part of the global economy, but, at the same time, we are one of the countries that have overcome this crisis with minimal losses. I can give you another example: although oil prices have dropped three to four times, wages and pensions have been increased by 10 per cent this year. This is also one of the rare phenomena. Usually even the countries not rich in oil and gas either freeze and reduce salaries, or experience problems with the payment of salaries. Despite the global crisis, we have raised salaries and pensions. Other measures of social orientation are being taken, including the launch of new initiatives and new forms of income generation. I am sure that the unemployment rate in Azerbaijan will be very low as usual.
Thus, we have carried out serious economic reforms, and these reforms should be deepened further. We are conducting a very strong social policy, so that people do not suffer from this during economic reforms. Additional steps will be taken to improve the welfare of our people.
This year we should implement large-scale projects in the field of regional development. The implementation of the planned projects will require about 2 billion manats. Part of these funds should be provided through preferential loans of the state, while others at the expense of entrepreneurs. At least we have set this goal. We must try to achieve this goal. Thus, the investment to be made in the country’s economy, the non-oil sector will contribute to further recovery and creation of new jobs. Therefore, we will have new export products.
In the first quarter, we worked hard in other areas as well. The transport sector. As I have already mentioned, we were very active in the field of North-South transport corridor. The main prerequisite for the creation of this corridor is the Azerbaijan-Iran-Russia trilateral cooperation. As you know, during meetings with both the President of Iran and the President of Russia I have repeatedly raised and discussed these issues. I can say that there is overall agreement. This transport corridor is necessary for us both in economic terms and in terms of security and tourism. We will thus offer our transit opportunities to other major countries, while the state budget of Azerbaijan will receive huge economic benefits from this. This will not only speed up existing and potential trade among the three countries. At the same time, this corridor will be joined by Pakistan, India and Nordic countries, and the volume of goods passing through our territory will increase significantly.
Of course, everything is being done to create the East-West transport corridor. We are working in a tripartite format here too, but it is different – the Azerbaijan-Georgia-Turkey format. My visit to Georgia at the end of last year and to Turkey this year have been very instrumental for the creation of this corridor. Note that Azerbaijan is again at the center of two corridors. If we did not have very positive relations with neighboring countries based on friendship and partnership, none of these projects could be implemented. I have always said that relations with the neighbors are very important for us. We have no problems with any of the neighboring countries except for Armenia. On the contrary, our relations with neighboring countries are expanding and strengthening day by day. This is the main condition for security, stability, economic development and cooperation. Let me repeat: Azerbaijan's role in this area is valued highly, and there are already excellent results.
At the same time, we are developing relations with all countries and international organizations. As you know, high-ranking officials of the European Commission, two of its vice-presidents, visited Azerbaijan in the first quarter. We discussed energy, political and economic issues, security and other matters. The President of the European Commission visited Azerbaijan last year. We are currently working on a new format of cooperation. My participation in the Washington summit on nuclear security is an indicator in itself. It was attended by more than 50 countries, including Azerbaijan. If we consider that Azerbaijan is not a nuclear state, that there is no nuclear power station in Azerbaijan and the nuclear industry is not developed, the invitation of Azerbaijan to this prestigious event is a manifestation of the US government’s and President’s respect for us, and reflects our role in this region. It is stated that Azerbaijan is a reliable partner in the prevention of illicit traffic of nuclear materials.
During the visit, I had very good, fruitful and sincere conversations and talks with the political leadership of the United States. These negotiations show once again that the relations between us are very important for both sides. We work together in many areas, and these ties open up new possibilities for both sides. The main issues on the agenda here are political ties and cooperation in the fields of energy, security, trade and economic issues.
As for our energy policy, the second meeting of the Southern Gas Corridor Advisory Council was held in Baku in the first quarter. This event has been held in Baku for the second time. This was made possible because of our initiative. Two years ago, we put forward the initiative to hold such a meeting, and it has already become traditional. The second meeting of the Advisory Council was a great success, as very important decisions were made. The Declaration adopted in the end reaffirmed the leading role of Azerbaijan in this sphere. The implementation of the Southern Gas Corridor is progressing according to plan. The necessary investment is being made. Coordination between countries and companies is at a high level. I am confident that this strategic project will be implemented in a timely manner.
The Fourth Baku Global Forum was also held in the first quarter. It was attended by representatives from more than 50 countries, current and former heads of state and government. The Forum, which has become one of the leading international forum in the world, is an ideal platform for discussions. The fact that such forums are held in Baku, of course, multiplies our value. And at the end of this month, Baku will host the Seventh Global Forum of the Alliance of Civilizations. I believe that this is also a result of the successes Azerbaijan has achieved in the field of multiculturalism and dialogue between civilizations. This year has been declared a Year of Multiculturalism in Azerbaijan. Our achievements in this field are highly appreciated by the international community. Of course, there were other important events in the first quarter. We simply have no time to talk about all of them now. In short, despite the fact that the world is going through a financial and economic crisis today and our revenues have decreased, we have reduced the risks to a minimum thanks to operational steps, deep economic reforms and elaborate foreign policies. I do hope that the positive dynamics will be maintained in 2016. In the second quarter, the economy will grow even faster and we will meet all the goals set at the beginning of the year.
Closing speech by President Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of the first quarter of 2016 and objectives for the future
I would like to note once again: I have no doubt that all the objectives facing the country will be met before the end of the year. Azerbaijan will continue its path of successful development.
Regarding the next issues on our agenda, first of all, of course, we should pay more attention to the construction of the army.
In recent years, we have made great strides in this area. A lot has been done. The material and technical infrastructure of our army has strengthened. Today, the Azerbaijani army is among the strongest armies in the world both in terms of material and technical equipment, and in terms of combat capability. We live in a time of war. Our lands are under occupation. Of course, under such circumstances, more attention should be, is and will be paid to the construction of the army.
Of course, in order to achieve this, our economy should grow even faster. Therefore, as I said, economic reforms and economic development precondition our overall development. Economic independence facilitates political independence of our country. Today we are conducting an independent foreign policy. As I have already noted, it is a policy of good will. We want conflicts in the world to be settled, we want there to be no hotbeds of standoff and we want stability, especially in our region. Therefore, I want to note once again: Azerbaijan is one of the countries pursuing a successful independent foreign policy on a global scale. Of course, the foundation and the basis of this is economic independence, the unity between the people and the government. Therefore, all necessary steps will be taken in the economic field to ensure sustainable development of our country.
I should note that in order to improve the business environment, very important steps have been taken to provide businesses with even greater support. In particular, I want to note that my instructions related to audits are being implemented. I must say that in the first quarter of 2016, a total of 34 businesses were examined. This does not include tax audits. For comparison, let me say that 19,300 inspections were carried out in the first quarter of 2015. And this year there are 34. There is no need to comment on these figures. Thus, Azerbaijan is rapidly developing free enterprise and free competition. We still are at the beginning of this road. I am confident that through these measures and further transparency in the economic sphere, entrepreneurship in Azerbaijan will develop even faster. Azerbaijan will attract even greater foreign investment. The attraction of foreign investment requires legal framework, a transparent economic and financial system, and the rule of law. If we look at the experience of other countries, we can see that countries that have embarked on a path of dynamic development went this way and managed to become very attractive for foreign investment. Any country today is trying to attract foreign investment. Even the states possessing large financial resources do that, because it means additional money, financial resources and the creation of additional opportunities. We should also go this way.
Steps have been taken to encourage investment. In January of this year, a decree was signed. A decree on additional measures related to investment promotion was signed in January. I am sure that this decree will significantly increase the amount of investment to be made in Azerbaijan.
The process of strengthening and rehabilitation of the banking sector is under way. important steps have been taken in this direction. Important steps have been taken in the area of financial control and in other directions. I believe that this will serve the development of the banking sector. The decision has been made on complete insurance of deposits. This is also of social nature and, of course, increases public confidence in the banking sector. Currently, all deposits are insured. I believe that dollarization trends will be prevented in the future. Unfortunately, a significant portion of deposits today is kept in dollars, which, of course, is not a positive development for the economy.
The exchange rate of the manat has stabilized. I think that situation in this direction will gradually evolve for the better. But it is a natural process. Of course, as confidence in the local currency increases, people will decide themselves. No-one can force anyone to do anything. The state and the government should take steps for people to be more interested in keeping their deposits in manats.
The rapid development of the non-oil sector should be provided in the future too. As I said in my opening remarks, projects worth about 2 billion manats have been developed. Business people need to implement these projects now. Of course, private banks have to play a fairly large role here. In general, the recovery of the banking sector will facilitate that. In order to lend funds, banks are now looking for projects that would generate income themselves. Therefore, the public and private sectors here work in partnership. We are pursuing one same goal – to develop the country's economy even faster.
Entrepreneurs on the ground should have all the conditions. I have repeatedly spoken about this issue. These conditions should be created by local executive bodies. The activities of local executive agencies will be determined primarily by the pace of economic development in these regions and districts, because the main task today is to ensure socioeconomic development of each district. It is necessary to create new jobs, new production areas and production sites of export orientation. Industrial zones will be established in each district.
I am told that there is a lot of unused land in the districts. We must seriously address this issue. We could take both administrative and incentive measures. Companies and people receiving land but not using them for a long time should behave more responsibly. If they do not use these lands, certain mechanisms must be applied.
As long as we have not provided ourselves with food products by 100 per cent, we cannot allow these lands to remain unused for many years. So this is another objective I am setting today. Both local and central executive authorities should work together here.
In the near future, a program on the construction of social housing will be presented to the public. This is a new initiative. Some countries are applying this practice. We have studied and are still studying the best practices. There is a great need and demand for that. In the near future, we will begin the process of building social housing.
In order to reduce unemployment in the regions and address the housing problems of the low-income population with limited material possibilities, the construction of social housing will begin in all the cities and regional centers. I want to emphasize this: not only in Baku and major cities, but also in all cities and district centers. Using international experience, we will set the rules of ownership of such housing, and the procedures for providing the people placed in such homes with property rights. The main goal of social housing is to resolve the housing problems of low-income people by providing them with such housing at a low price and on long-term loans, thus improving their well-being. The construction of such housing will be carried out extensively both in Baku and all other cities and districts. Given the fact that provision of new housing to the population will generate new consumer needs, the construction of social housing, along with the creation of additional jobs and meeting the needs of the population needing such homes, will also promote the development of up to 20 other industries. Naturally, it will give a huge boost to the construction sector. People who once worked in the construction sector but have lost their job today will once again it will be provided with employment, which will give a have multiplier effect.
Additional measures will be taken to create jobs. In my opening remarks, I noted that by taking prompt action, we have created 31,000 permanent jobs in a short time, most of them in the public sector. Private entities were also encouraged to try to avoid cuts. The social responsibility of businesses comes to the fore here. At the same time, as a result of additional measures, particularly in the private sector, we should create tens of thousands of new jobs, as I have already noted, in the construction and agricultural sectors. I will focus on our plans related to agriculture later.
It was mentioned here that issues related to targeted social aid are being addressed. We need to create the conditions for people to be provided with jobs. However, targeted social assistance is a very important social initiative, and we are implementing it. But in some cases this intensifies dependency tendencies. Therefore, we have to conduct a very serious and thought-out policy here in order for people to work and earn money. To this end, we are launching public works in the districts, in Baku and other large cities. State companies have been instructed to create thousands of new jobs. But sometimes we see that people do not want to take advantage from these jobs and prefer to receive targeted assistance from the state. Therefore, we need to pursue a very precise policy in this area. The state will always pay attention to those who are truly in need. But able-bodied people, young citizens should have a job, work, earn and thus build their future life. After all, dependency is a bad thing. Azerbaijan has made great strides in fighting poverty. Poverty in Azerbaijan is at a low level. Of course, for people to work, there should be jobs, and they are being created. Funds have been allocated to ensure self-employment both in the public and private sectors. So, this is a very serious matter, which must be resolved.
The implementation of infrastructure projects by the state continues. This includes gasification, power supply, water supply and the construction of rural roads. This year we will implement over 40 rural road projects. For this purpose, funds in the amount of 250 million manats are envisaged. In all our districts, the construction of rural roads will become even more widespread this year. This is a social and economic project. At the same time, thousands, tens of thousands of new jobs are being created within these projects, so that citizens are provided with jobs. In general, we must work hard to revive the construction sector. In the city of Baku there are quite a few buildings that are in disrepair. Pilot projects are being implemented. The first project began to be implemented in Sabunchu District. People are very happy with that. They are temporarily housed elsewhere. These houses are knocked down and beautiful and modern buildings constructed instead. They are given the opportunity to get rid of old apartments which are in disrepair. They will live in new houses and apartments. They will have a wider living area. This is very important in economic terms. But first of all, we have started to implement it as a social project. Now this process has begun in other districts: in Garadagh and in all districts. In each district of Baku there are buildings that are in disrepair. Of course, these structures have to be demolished and people living there should be provided with good housing either in the public or private sector. Public and private sectors can work together in this. To do this, we just have to create conditions, and we are doing that. I believe that this year this process will become widespread. The construction of social housing, as well as the construction of buildings instead of those in poor condition, i.e. beautiful high-rise buildings, will give a huge boost to the construction sector.
In my opening remarks, I noted that work is under way in the transport sector to create the East-West and North-South corridors. To create the East-West corridor, Azerbaijan suggested to neighboring countries, in order to attract more cargo, pursuing a common tariff policy. This issue was discussed with our Georgian and Turkish counterparts. It was discussed within the framework of my state visit to China at the end of last year. The project on the restoration of the ancient Silk Road is of paramount importance. We should not consider our work finished after the construction or connection of railways. We need to pursue a proper and consistent tariff policy so that all goods could pass through our territory. We cannot do that alone. We are doing it and, as you know, quickly transport cargo in a number of cases with a 40-per cent discount. But this should be doing by all the countries participating in these corridors. If we reduce the tariffs and other countries do not and actually raise them, then we will simply lose. Therefore, we have initiated the creation of a Coordinating Council to conduct a uniform tariff policy, so that the shipper could know the cost of transportation. This process has been given a boost on the initiative of Azerbaijan again.
This year, we need to do more work to establish the Alat international seaport. As you know, we are doing this in stages. We have now completed the first part of the first stage, but the first step should be fully implemented in the near future. Additional funds should be allocated to ensure that our infrastructure and logistics capabilities are consistent with the increasing needs. The creation of all roads and corridors requires exactly that. It is good that we have launched this project. The Alat port will become the largest trading port in the Caspian Sea. As you know, the construction of ports is carried out in neighboring countries of the Caspian, and coordination is very important here. We are taking the necessary measures in this direction.
It is important to continue environmental measures. In recent years, a huge amount of work has been done in this direction both in Baku and the regions. I think that the people of Baku are feeling it every day. The air in Baku is much cleaner now. Air criteria in Baku are currently at a high level. Every citizen feels that. Some people forget what it was like before. But we remember that.
Several strategic projects have been implemented. Among them, of course, I want to emphasize the elimination of the Balakhani landfill and the construction of a large incinerator there. The air of our city used to be poisoned by the Balakhani dump. It kept burning, the smoke enveloped our city and air pollution in that area was too high. This was a major environmental and health project. I am glad that it has been implemented, and the whole area has been cleaned. This site has been landscaped and become prettier. The Balakhani Technology Park is being set up there.
Last year, the first stage of cleaning Lake Boyukshor was completed. It is also located near the Balakhani landfill. Produced water and sewage were dumped here for decades. It was a zone of an environmental disaster.
Today, the lake is used by migratory birds. A beautiful boulevard has been created around it. Landscaping work is under way and this area has turned into a beautiful place for recreation. Currently the second phase of cleaning Lake Boyukshor is on the agenda.
The cleaning of the Bibi-Heybat Bay has been successfully completed. It used to be the site of an environmental disaster as well. There are beautiful parks there now. A part of the European Games was conducted there. A large aquatic center and other sports facilities have been built. Landscaping areas and boulevards have been created on the area between the Flag Square and the Bibi-Heybat Bay. Of course, the bay was polluting our city. Balakhani was on one side and the Black City was on the other. There, too, a lot of cleaning work has been done and land formations have been removed. All oil refinery wastes used to accumulate there. We are now transforming the Black City into the White City. These are truly grandiose projects. Today we are creating miracles in Baku, so that our city becomes prettier, the environmental situation improves and our people are healthy. A drinking water project has been implemented. The world's largest ultrafiltration water treatment plant has been built and put into operation in Azerbaijan. Currently, a large portion of our population is provided with water that meets the standards of the World Health Organization. Each of these projects has a historic significance.
All traces of the Baku iodine plant have been eliminated. It also used to pollute the environment. Look at all the harm it was causing to human health. None of that is there now. All of that has been done in a short period of time. We have spent huge resources on that. Why? For people to be healthy, for our air to be clean and for the environment to improve! Both in Baku and in the regions, we have planted millions of trees, and this process continues.
The development of agriculture has always been a priority for us. Its importance has further increased in the current environment. I am delighted that, despite the global economic crisis, agricultural production in Azerbaijan has increased by 2.7 per cent. The issue of food security is a top priority. I hope that we will soon become self-sufficient in food. To this end, a lot of work has been done in recent years, but there is even more to do. Support has been provided to farmers and new approaches to subsidies are offered. I am sure that for each region and district, it is necessary to carry out a special subsidies policy because Azerbaijan is a country that has many climatic zones. We have nine climatic zones. In each zone we need to cultivate special agricultural products, and each district and each economic zone should have its own package of subsidies. Then agriculture will develop in a specialized manner and with even greater effect.
We must further accelerate the exports of agricultural products. To this end, a system of encouragements is being deployed. This is the first experience for us. The state will provide compensation to companies delivering their products abroad. We will see how this system works. In many countries it has paid off, and I think that should justify itself here too. And yet, it is a kind of a test for us. We have put forward the initiative to promote exports. I hope that we will achieve this.
Food security has always been a priority for us and it remains a priority today. It enables us to provide ourselves with our own products, high quality and clean products, and to reduce dependence on imports, so that currency does not go abroad. This is the first stage. If we consider that our foreign exchange earnings have significantly declined – if the oil price has fallen three or four times, it means that our foreign exchange revenues have also dropped three to four times – we have compensate for this with exports of agricultural products to some extent. We need to restore the once highly developed sectors in Azerbaijan. In the times of great leader Heydar Aliyev, in the 1970s, oil factor accounted for a small share of the gross domestic product in Azerbaijan. I am told that, for example, light industry was 23 per cent, and agriculture and mechanical engineering were perhaps even higher.
We must develop the agricultural sectors that rapidly evolved at that time, primarily cotton-growing, because cotton is a product that does not need to search for markets. There is a struggle for markets now. In particular, in recent years, because of the sanctions, certain markets have been closed for some products. Of course, this does not apply to us. But we must make effort to deliver our agricultural products to other markets. There is no problem in selling cotton to stock exchanges. At one time, thanks to the work and efforts of great leader Heydar Aliyev, cotton production in Azerbaijan reached one million tons. In 1969, when he came to power, we produced, if I remember correctly, about 100,000 or 200,000 tons of cotton. Subsequently, this figure reached a million. On average, Azerbaijan produced 800,000 and 900,000 tons of cotton a year.
Last year, a total of 35,000 tons of cotton were picked in Azerbaijan. Look at this difference: a million tons and 35,000 tons! Private companies cannot do it alone. To develop cotton-growing, the state is playing a major role. Then come local executive authorities and then the private sector. Therefore, the instruction was given to analyze the situation, and it has been analyzed. I have already received proposals. We must restore cotton-growing. Last year, 18,000 hectares were sown. This year I set the task of sowing 50,000 hectares, and the sowing will probably start in the near future. Whereas we were able to pick 35,000 tons of cotton last year, this year, on the condition of sowing of 50,000 hectares and the lowest yield of 20 quintals, it will amount to 100,000 tons of cotton, or three times more than last year. But there are new technologies now, including irrigation ones, and by increasing productivity, we can achieve even better results. In 1970-1980, we sowed 200,000-250,000 hectares, and only 18,000 last year. Therefore, we must resolve the issues of increasing productivity and putting new areas into circulation. We need to ensure normal irrigation and seed supply. This year we expect 100,000 tons of cotton. But during the year and before the sowing for next year, we need to take all necessary measures, so that several times more than 100,000 tons are picked in 2017 – I do not want to cite a figure now. Cotton will be sold and our country will receive currency.
Along with this, we have lost such an important branch of agriculture as silkworm breeding. Of course, an important role is played by the price: at what price it will be acquired from workers. We have raised it in cotton-growing, and if necessary we can increase it again. It is necessary to create suitable conditions. At the same time, we should develop sericulture. In Soviet times, this sector developed very successfully in a number of districts. We picked a rich harvest and people earned well. I have issued specific instructions to other industries. We should also develop tobacco-growing and tea-growing.
Viticulture. In recent years, thanks to the support of the state, this sphere has been developing. Vineyards are expanding. The activities of large farms, particularly in the area of crop production, will create a watershed, so that we do not depend on grain imports. I believe that this can be achieved. At the same time, we are creating Agroparks and new processing plants. Azerbaijan should gain prominence as a country exporting high-quality agricultural products to world markets. Such a task has been set, and I am sure we will achieve it.
In short, we have to work hard this year to accomplish these tasks, so that the Azerbaijani economy develops and people live better. Thank you.