Ilham Aliev “ IS ACCUSTOMED TO RELYING ONLY ON ITS OWN RESOURCES AND THEREFORE DOES NOT JOIN COALITIONS”

Sergey Brilev, the member of Security Index editorial board, talks with President of the Republic of Azerbaijan Ilham Aliev.1 SECURITY INDEX: Mr. President, 15 years after the collapse of the only a very naїve person or a hopeless dreamer would call the CIS countries “postSoviet” or “newly inde pendent.” One might, however, ask to what degree they have succeeded in their selfrealiza tion. How would you characterize your country today? ALIEV: It is too late to call the former republics of the Soviet Union “newly independent.” That time is over. The initial formative stage is over, and making the excuse that we are still “new” and “young” and therefore have many flaws is no longer acceptable. Fifteen years is long enough. Today, Azerbaijan is a dynamic, rapidly growing country that is relying exclusively on its own economic and political resources while becoming integrated into the global communi ty. It enjoys excellent relations with its neighbors and has succeeded in raising living standards year after year. SECURITY INDEX: You even said once that you do not feel comfortable disclosing Azerbaijan’s economic growth rate, for fear of embarrassing your colleagues among other presidents and prime ministers… INTERVIEWS ALIEV: (laughing) It’s true. I usually try to avoid the subject when talking to heads of state, because Azerbaijan’s numbers are indeed impressive. Last year the economic growth rate in Azerbaijan was 26%, and through the first half of 2006 it amounted to 35%, while the industri al growth rate in 2006 was in excess of 40%. In the last three years almost 500,000 new jobs were created, mostly in the oil business. The state budget has quadrupled in the last three years. These overall numbers show the country’s economic explosion. SECURITY INDEX: Have Azerbaijanis started coming back home as a result of this rapid growth? Has the brain drain of professionals out of the country stopped? ALIEV: Yes, the outflow of professionals has stopped, and signs of new immigration are already visible. It is worth noting, however, that the majority of the Azerbaijanis who sought to earn a living in other countries, with the bulk going to , came from rural areas. And since we launched a comprehensive and specific development program targeting rural regions three years ago, many of those who had departed have come back to their original places of resi dence. I would also like to point out that while in many cases nonethnic Azeris holding Azerbaijani passports left the country in the early 1990s due to an unstable political and eco nomic environment, they are coming back now that the situation has stabilized and business conditions have become favorable. Azerbaijan has always been known for its ethnic tolerance and cultural internationalism. The notion of “internationalism” has been undeservedly forgot

SECURITY INDEX No. 1 (81), Volume 13 11 ten, but, in my opinion, it is one of the deciding factors in the country’s progress. Azerbaijan is a multinational state and its overall development success will depend on the wellbeing of each of its ethnic groups. SECURITY INDEX: If you happened to discuss with an ethnic Russian citizen of Azerbaijan the reasons that prompted that individual to stay in the country, or if you were to advertise Azerbaijan to a Russian audience, what would you say? ALIEV: Not a single Russian school has been closed down. All institutions of higher learning have maintained departments that hold instruction in Russian. The Baku Slavic University is working quite successfully. The number of Russian newspapers, by the way, is now several times higher than during the Soviet Union. And it is no accident that an important event like the first Congress of Russian Compatriots who live beyond Russia’s borders was conducted in Azerbaijan. Our aim is that the younger generation growing and maturing in an environment of national independence maintain their Russian language proficiency. Let me give you an exam ple. Since long ago, Russian communities have resided in Azerbaijan in concentrated settle ments. I visited one last summer, and the people requested a new school. Relevant instructions were issues right away and now the school is already functioning. Generally speaking, we do not need any additional propaganda. The state’s economic devel opment, its social policies, safe and secure living conditions, in addition to ethnic tolerance and interethnic peace–these factors ensure that all of the nationalities residing in Azerbaijan hold a positive view of their country. SECURITY INDEX: Do you find it disappointing that so few Russian tourists come to Azerbaijan, even though the country is every bit as attractive as, say, , which has so cap tivated the Russians’ fancy? One must admit that even with respect to language things are much better off here? ALIEV: You must not forget that calm was established in Azerbaijan fairly recently. In the early 1990s, a civil war broke out in the country and until 199697 the situation remained unstable. If we look at the economic growth dynamics, we see that the economic boom only began in 1996. That is why Azerbaijan at the time had many political, economic, and social problems, the most urgent of which was the matter of a million refugees who had lost their homes as a result of military aggression. In a word, tourism was far from our minds. However, as soon as we became economically solvent and acquired considerable material resources, one of the highest priorities in our economic development became tourism. Today we invest significant amounts into tourism infrastructure. The state subsidizes it and so does private business. Therefore, I believe that in two or three years tourists from Russia will find it more attractive and convenient to vacation here rather than elsewhere. SECURITY INDEX: Azerbaijan, to use the old political terminology, is a classic nonaligned state. At least, if we compare it with any of your other neighbors in the former Soviet Caucuses: Georgia has unequivocally stated its desire to join NATO; Armenia is a member of the Collective Security Treaty Organization (CSTO). Why does Azerbaijan adhere to the policy of nonalign ment? ALIEV: Basically, since Azerbaijan acquired independence it differed from other postSoviet states in that we received practically no assistance from anyone. If you consider the amounts of aid given to all other former Soviet republics by various international organizations and funds, as well as by other countries, we were in last place. This has taught us to rely only on our own resources. And the fact that we do not join coalitions is probably also the result of this. I believe that a country should first depend on itself, on its own economic and intellectual capa bilities, on competent policies that minimize external risks. SECURITY INDEX: Azerbaijan is a member of GUAM, which unlike the CIS–unfortunately a rather amorphous organization to date–at least lays claim to becoming a force to reckon with in the postSoviet realm, as well as overall in southern and southeastern Europe. Do you find cooperation with GUAM rewarding? I know that Azerbaijan is now seriously engaged in military

12 “AZERBAIJAN IS ACCUSTOMED TO RELYING ONLY ON ITS OWN RESOURCES AND THEREFORE DOES NOT JOIN COALITIONS” cooperation with Ukraine, and that it plans new energy corridors not only toward Ceyhan (Turkey), but also through Georgia into Ukraine and . How does Azerbaijan generally manage its cooperation with international organizations? ALIEV: Every state, including Azerbaijan, joins those organizations with which it finds it com fortable to work. For instance, as far as our membership in GUAM is concerned, one should keep in mind that this organization was founded in 1997, under completely different circum stances. The environment for regional cooperation and relations among states stood in drastic contrast to what we have today. In general, we consider participating in various international organizations (CIS, GUAM, the Council of Europe, and the Organization of the Islamic Conference) from the point of view of making maximum use of the organization’s capabilities in the service of our national interests. Participation in one organization does not contravene participating in another. I think that others may find Azerbaijan’s experience useful in this area. We build relations with our neighbors and friends not to the detriment of our relations with other states, but, on the contrary, we strive to utilize our geographic, political, and economic capabilities to our maxi mum ability. The energy factor certainly assists us in setting up more effective cooperative efforts. And when it comes to our energy projects, they are not carried out through some international organization, but rather under bilateral or multilateral agreements. Basically, we have complet ed all of our energy projects. There are now three major oil pipelines out of Azerbaijan, which are capable of transporting up to 70 million tons of oil and, possibly, even up to a 100 million tons. This should be sufficient for Azerbaijan’s oil production levels. SECURITY INDEX: There is a certain type of state whose government’s only thought is oil prices. Russia has seen its share of discussions about a stabilization fund, and about ways to spend its “oil dollars.” How does Azerbaijan spend its oil revenues? ALIEV: Several years ago we established the State Oil Fund of Azerbaijan, in which the bulk of oil revenue is accumulated. The amounts are already substantial: Azerbaijan’s reserve is now over $3 billion, which is a significant number given our economic scale. With impending future oil extraction growth, these sums will reach hundreds of billions of dollars. According to World Bank projections, over the next 20 years Azerbaijan stands to make a profit of over $140

billion from oil projects alone. This is an enormous amount for us and thanks to it we’ll be able INTERVIEWS to do a lot for the country. For the moment, however, the monies are invested primarily in social projects: education, medicine, military, and infrastructure development. For example, in two years we have constructed over 600 new schools, as well as modern hospitals in all of the country’s regions. The military is rapidly growing too: next year over a billion dollars will be allo cated for our military budget, whereas just a year ago the amount was slightly over one hun dred million. The same may be said about infrastructure development projects. Six power plants are currently under construction in Azerbaijan. We are building highways and rural roads. As much as we can, we must use our economic resources to modernize the country. It is essential, however, to find a clear balance between macroeconomic stability and satisfying the needs of the state and its citizens. We are proponents of a cautious policy; therefore, about a third of the oil revenue that does not go into the oil fund is allocated to satisfy various needs of the state. SECURITY INDEX: Mr. German Gref, Russia’s minister of economic development and trade, visited you in October 2006. I understand that you discussed the issue of the diversification of Azerbaijan’s economy, possibly with Russian participation. Which branches of industry do you intend to develop now and what is the possible role for Russia in this process? ALIEV: Despite the very positive investment environment in Azerbaijan, Russian compa nies–and Russia by now has some major international companies–have not shown much inter est in Azerbaijan. This is especially regrettable, since over the past decade almost $30 billion in mostly foreign investments have poured into our economy.

SECURITY INDEX No. 1 (81), Volume 13 13 We now intend to modernize the entire industrial infrastructure, because the infrastructure left since Soviet times has for the most part become obsolete, with the exception, of course, of the oil and heavy industries. We need to develop new branches of industry, create new jobs. That is why we ought to expect that any industrial branch into which we pour investments should bring a positive return. Consequently, we expect to become less dependent on fluctuations of oil prices. In order not to be worried about oil prices, we need to diversify our economy. Cooperation with Russia in this area may benefit us greatly in the form of exchanging valuable experience, as well as con sultations, and cooperation. SECURITY INDEX: The situation unfolding around Iran’s nuclear program has been the most discussed topic in international politics over the past several months. In your opinion, as head of a state that borders Iran, where do the solutions to this complex problem lie? ALIEV: I’d rather not contemplate the worstcase scenario with Iran. Azerbaijan shares more than 1,000 kilometers of a common border with Iran. We have established active transborder ties. More than half of ethnic Azeris reside in Iran, the same Azeri people as here. Any escala tion of the situation in the region will undoubtedly bear heavy consequences for all local states, since politically, as well as economically and militarily, the countries of the region are fairly interdependent. Destabilization of one of them may have catastrophic consequences that are difficult even to imagine. Our main goals, in my opinion, must be alleviating tension and developing mechanisms that, on the one hand, calm world community concern about Iran’s nuclear program and, on the other, allow Iran to exercise its legitimate right to develop peaceful nuclear energy. I believe that in such a context a mutually agreeable solution can be found. Of course, it must be based not on political ambitions but on pragmatism, realism, and the pursuit of peace. In other words, if all sides are interested in reaching a peaceful resolution, it could easily be achieved.

Note

1 Sergey Brilev’s interview of President Aliev took place on October 18, 2006.

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