Some time ago, the Azerbaijani Embassy in Vienna has received our request to conduct an interview on the questions of economic collaboration between Slovakia and Azerbaijan. These questions follow up on the presentation of investment possibilities in Azerbaijani economy which took place in Bratislava in March 2007. In view of the fact that we published an interview with the Armenian Ambassador Mr Ashot Hovakimian devoted apart from other things also to the relations between Armenia and Azerbaijan, according to the principle of balanced information we’ve also discussed the given questions in the interview with the Ambassador of Azerbaijan Fuad Ismayilov..

Your Excellency, what is the level of mutual goods exchange between the Slovak Republic and Azerbaijan like at present?

Speaking of goods exchange, unfortunately, I cannot boast about high figures and content myself with the existence of impressive statistics. I think that nowadays, one of the fundamental tasks is to analyse the possibility of the intensification of bilateral economic collaboration. In order to intensify economic relations it’s first and foremost important to establish the legal basis, predominantly by signing the agreement on the prevention of double-taxation as well as the agreement on mutual investment protection. Furthermore it’s necessary to define the fields of potential economic cooperation. Despite the fact that the level of economic collaboration between our states isn’t very high, there are several positive moments in our economic relations. For instance, Slovak company Doprastav is the primary constructor of the state-of-the-art arterial road connecting the city of Baku and the Heydar Aliyev International Airport. This project is crucial form the Azerbaijani point of view. Nowadays, the realisation of the construction continues. The Slovak company has been actively participating in the project conduction as its primary constructor setting thus the stage for optimism. Generally speaking, we are optimistic about the prospects of our bilateral economic cooperation.

The Azerbaijan Embassy, accredited since September 2006 in the Slovak Republic, acts in the Slovak Republic with the aim of developing the cooperation between our countries in terms of all fields, however, the economic one in particular. It’s not a secret that economy is the driving force of everything. If there are firm economic ties established between the states, it has a positive effect on the collaboration level within the political as well as humanitarian sphere. The Embassy works actively on the definition of the priorities of bilateral cooperation and the intensification of mutual economic relations. In Bratislava in March 2007, we arranged a presentation the organiser of which was the Azerbaijani Export and Investment Promotion Agency. We are hoping that a similar presentation, arranged by Slovak entrepreneurs, will be held this year in Baku.

What is the main commodity of mutual goods exchange between Slovakia and Azerbaijan?

As far as the import from the Slovak Republic is concerned, its basis consists in automotive production and technology. As for the Azerbaijani export, unfortunately, we cannot boast about a wide range of goods meanwhile. At present, the export from Azerbaijan includes mostly textile production. The primary goal of the presentation in Bratislava was to help Slovak entrepreneurs to define the goods they could import from Azerbaijan. We are hoping that the arrangement of the mentioned above return Azerbaijani-Slovak business forum in Baku will contribute to this.

Is there any progress in the establishment of the legislative basis of mutual economic collaboration?

The absence of legislative basis, the agreement on the prevention of double taxation and the agreement on mutual investment protection in particular, is a bit of obstacle to mutual economic cooperation. We have been preparing these agreements along with the relevant Ministries of the Slovak Republic and Azerbaijan. The finishing of the preparation of these agreements in the near future is of great importance.

Azerbaijani macroeconomic indicators really are impressive. Could you elaborate on their structure?

The gross domestic product (GDP) of Azerbaijan is one of the most impressive ones not only in our region but also throughout the world. Last year, its growth reached 25 per cent. Industrial production growth amounted to 24 per cent in 2007. Azerbaijan is the leader according to these indicators. Obviously, this has been achieved to a large extent thank to oil and gas industry production, anyway, this production enabled us to develop other economy areas too. First of all it is the progress in terms of the development of the regions in Azerbaijan.

Last year, the sum of investments accounted for more than 6 billion dollars. One has to point out that domestic investments formed that amount. This indicates that our economy has reached the level sufficient for investments based on own economic potential.

What’s the share of the production of energy bearers in the state’s income? To what degree have been also other economic branches developed?

Azerbaijani economy needn’t be linked exclusively with oil and gas. We perceive them to be the starting point for the development within all economic branches. I’ve already mentioned the regional development. This year, the program of the social-economic development of Azerbaijani regions, which had been conducted since 2004, will be finished. In the course of its realisation, we had even gone beyond the aims set. We have been conducting a whole range of other big projects. One of them pertains to tourism development. Azerbaijan has unique climate since it stretches across nine climatic zones out of eleven. This forms the basis for the development of various types of tourism beginning with sea tourism and ending with mountain and alpine tourism. I also have to mention the agro industry as Azerbaijan is very rich in agro cultures. Transport is important because our country lies on the intersection of arterial roads connecting West and East, North and South. We have been playing a crucial role in goods transport and energy bearers transport. In our region, several huge projects are being implemented in the sphere of energy transport infrastructure at present, namely the oil pipeline Baku – Tbilisi – Ceyhan and the gas pipeline Baku – Tbilisi – Erzerum. The railway project Baku – Tbilisi – Kars is under construction. To put it simply, these projects represent a bridge between Europe and Asia. Azerbaijan lying on the intersection plays a key role in the development of a transport corridor between continents.

Can we expect any state investments in technologically intensive branches?

The area of information technologies is one of the priorities of the Azerbaijani Government. We pay considerable attention to the development of IT. A part of investments flows directly into Azerbaijani IT sector. There are lots of perspective projects like the launch of Azerbaijani telecommunications satellite. This will commence a new era.

When is the launch of the satellite due?

Naturally I’m not allowed to reveal exact dates, nevertheless, I want to assure you that it won’t happen in the distant future but in the foreseeable one.

Could the overly rapid income growth of Azerbaijani population slow down the investment pace?

As I’ve already mentioned, last year domestic investments stood for larger share and nowadays we’re capable of investing in our economy. As far as our collaboration with other states is concerned, we are more interested in modern technologies, the modernisation of enterprises and technical assistance.

In what target branches does Azerbaijan support the investments directly or indirectly?

It is predominantly construction, agro industry, then tourism and the development of social sphere, health and education.

What are the forms of investment support like?

It depends on concrete legislative. For example, the largest oil contracts possess the force of law and are passed in the Azerbaijani Parliament. Generally, the legislative basis is rather positive. High figures concerning investments attest to the fact that we’ve set a very favourable scene for investments which don’t cause troubles to foreign investors. Business climate is very favourable as well. Azerbaijan is a very attractive country from the viewpoint of foreign entrepreneurs. Now, if you visit Baku, you will see a good amount of foreign companies. That’s also the indicator of Azerbaijan’s attractiveness.

There is a continual construction boom in the world. It’s well known that developing has been expanding at fast pace in Baku. What kind of companies carry out constructions and from which sources is this construction realised?

The construction is realised in Baku in the first place. The majority of developing companies are Azerbaijani national companies, however, there are cases when the invested capital belongs also to foreign companies. As for the financing, it’s again the matter of domestic investments. The construction conjuncture is connected with the growing profits of companies as well as the population’s purchasing power not only in Baku but also in other regions. The construction boom pertains also to towns like Ganja, Sumqayit, Ali Bayramli where new modern buildings have been proliferating.

Can you imagine Slovak companies participating in the developing in Azerbaijan?

If an interesting project occurs or if a Slovak company wins a tender, there are no impediments. I’ve mentioned Doprastav which persuaded the committee by means of its arguments highlighting professionalism and project quality. Slovak experience of constructing cutting-edge transport communications were of great moment as well. Generally, if it is a building construction project, why not? On the occasion of the presentation in Bratislava, some questions concerning mutual investments were negotiated with the agency SARIO. Nonetheless, we encounter anew the obstacle in the form of the absence of legislative basis.

It isn’t possible for Azerbaijan to fill up all pipelines which are supposed to lead form the region to Western markets. It’s important to involve Kazakhstan and Turkmenistan in the Trans-Caspian gas and oil pipeline projects. Some time ago, these states signed preliminary export contracts with the Russian Federation. Is Azerbaijan able to exert influence on the states mentioned in order to make them join the projects?

I’ve already mentioned Azerbaijan’s task within huge regional transport projects. Azerbaijan contributes significantly the energy security of Europe. It’s true that Azerbaijani gas itself won’t do for an effective filling up of the Nabucco pipeline. Therefore it’s crucial to integrate Kazakhstan and Turkmenistan into the Nabucco project as well as the Trans-Caspian oil pipeline project. First and foremost the European Union should hold more actively and purposefully negotiations on cooperation with Kazakhstan and Turkmenistan. Our position is clear, we declared many times that we would be ready to become a reliable EU partner and to take part in the realisation of projects including Nabucco. So that this projects turns from fiction to reality, it is necessary that these two Eurasian countries participate and it’s primarily the EU which should persuade them to join the project. From the point of view of energy security, the diversification of energy sources supplies is needed.  Energy security doesn’t mean harmful rivalry and the elimination of anybody from the market as the consequence of hostile relations. Ordinary competition and the diversification of suppliers are in the foreground. This is central for Europe in particular. If Europe is supposed to be in a predictable world without the fear for the future of energy bearers supplies, it will have to deliberate seriously on this question in order not to become the victim of alien pressures or political games. Azerbaijan is willing to join similar projects like Nabucco on the condition that these are advantageous for it.

Apart form Nabucco the White Stream project, upheld predominantly by Ukraine, is in the pipeline too. In the initial stage White Stream counts on the supplies of Azerbaijani gas. Also the Russian Federation is interested in Azerbaijani gas. Which project does Azerbaijan prefer?

There will be enough gas, however, primarily for the meeting of our internal needs. When speaking of gas supplies to Europe, we have to consider first of all the needs of our country and region. In principle we have been doing it already; we have been supplying gas to Georgia which we gave a helping hand repeatedly in situations when it lacked gas. We know of the Russian Federation’s interest as well. Obviously, only our gas will not suffice for the covering of all these projects. As for preferences, our choice will take into account the strategic needs of Azerbaijan in the area of power engineering as well as commercial factors, i.e. economic lucrativeness, profitability and efficiency.

Is there also a political discussion about the geopolitical aspects of energy bearers sale under way in Azerbaijan?

The geopolitical aspect is that Azerbaijan has already started to contribute to the energy security of Europe. Azerbaijan has thus become a regional power. They esteem us and negotiate with us on a partnership level. These are the geopolitical aspects of the project. We have achieved that Azerbaijan is considered as reliable partner of the EU in the energy sphere. As regards the choice of routes and partners for collaboration in the field of power engineering, economic interests are decisive.

It’s important that export yields are rationally invested, that they aren’t gorged, as it were. Is there a strategy for sustainable development in Azerbaijan?

One of the focal tasks is the maintenance of inflation level. We have been perpetually deliberating on the optimal and efficient utilisation of profits from energy bearers sale. We’ve been conducting various social and socio-economic programs which are directly linked with high profits. We’ve been investing these means in the development of other economy sectors. We have in mind that in 25 or 30 years, when the majority of our energy sources are spent, we will have to have other stably and steadily developing branches of economy. We possess advanced mechanisms for this sake, like the oil funds the reserves of whose have already exceeded 2 billion dollars. The State Oil Fund has been established for the accumulation of profits from oil production, which are used solely for the realisation of social projects like refugees and internally displaced persons (IDP) aid. We are building new houses and temporarily settlements for refugees and IDPs, using this money. By the way, the model of the Azerbaijani Sate Oil Fund is based on the Norwegian one.

What is the availability of qualified labour like in Azerbaijan?

We’ve always been know for our qualified labour force. We used to achieve a high level of education. There are many universities in Azerbaijan. The technical potential of our engineers and the labour quality of our qualified workers are high. Everything that the country has achieved, like production development and economic growth, has been achieved particularly thank to our own specialists. Yet in the era of the USSR but also prior to it, Azerbaijan was one of the main oil extraction spots. We’ve always possessed excellent professionals in the field of oil industry. At present, this potential has come out because we have brilliant engineers and specialists.

What is the population’s income growth like? How about the progress in the solution to the issues of poverty and regional disparities?

There’s a massive progress as far as the social programs solution in Azerbaijan is concerned. In the aftermath of Armenian aggression 20 per cent of the territory of Azerbaijan was occupied. There are about one million refugees and internally displaced persons in our country. This factor poses a serious burden for state budget since we have to secure jobs and material aid for these people. At the end of 2007, we demolished the last tent camp. All refugees and IDPs have been living in temporary settlements in comfortable and cosy new houses. These villages are of interim character as the ultimate solution to the problem of refugees and IDPs is in direct connection with the final settlement of the conflict. Another central point is the fight against poverty. We’ve achieved a tremendous progress in this field during last years. Nowadays, the poverty level equals to 16 per cent that is three times less than several years ago. We owe this to domestic income and not to foreign aid.

The population’s incomes grow year after year and the unemployment rate sinks. The last year’s figures manifest clearly that there has been a change in the sphere of social problems in Azerbaijan. The development of the Azerbaijani regions was one of the priorities of the Government of Azerbaijan. The regional development plan, which is being conducted since 2004, has contributed to the fact that not only Baku has been developing but also other Azerbaijani regions. If you visit Azerbaijan today, in many regions you will see that the economy develops and new objects are built; we are in quest for tourism development as well as the utilisation of our natural potential. This enables us financial investments in regional development.

One cannot forget about the fact that Azerbaijan achieved such positive results in pretty hard conditions, i.e. Armenian aggression and the occupation of 20 per cent of our territory, the presence of million refugees and IDPs. In South Caucasus, unsettled conflicts are the burning issue. These are the primary obstacle to the development of our region.

With regard to the last year’s meeting of Azerbaijani and Armenian intelligentsia, in December 2007 the Foreign Affairs Ministry of Azerbaijan made a statement that the continuation of such meetings isn’t ruled out….

We don’t exclude the continuation of such meetings. The first meeting was our initiative. We’ve always declared that Nagorno-Karabakh region is a part of Azerbaijani territory and that the Armenians living in Nagorno-Karabakh are our citizens. That’s why every Azerbaijani citizen has the right to visit this territory. However, Armenian side has always impeded mutual communication. The cause is clear: those affected the most are the inhabitants of Nagorno-Karabakh themselves. Take a look at what’s going on in Armenia and Nagorno-Karabakh. Compare the economic situation in this country and look at Armenian role in our region. Armenia is the only country which doesn’t participate in any regional project. Take a look at the pipe routes. In the 21st century it’s impossible to occupy foreign territories and to pursue the policy of territorial expansion. At present, talking about united Europe and European values, there should not be a place for aggression and ethnic cleansings. Not a single Azerbaijani has remained in the 20 per cent of the territory of the country, which is under occupation, including the Nagorno-Karabakh region. You won’t find a soul in Armenia either, although 250,000 of Azerbaijanis used to live there! That’s the result of the unreasonable and short-sighted policy of Armenian governmental circles.
As for the intelligentsia meeting, we cannot overrate its results. Anyway, by means of it we could notice how people were able to communicate with each other. As far as the future of such visits is concerned, many things depend on how the negotiations themselves will work out. There are yet many questions to answer. We don’t know whether there will be any progress in terms of the OSCE Minsk Group.

Armenia pushes through the respect for three principles of conflict settlementwhich have been known already for a longer period. Are these conditions reconcilable with the position of Azerbaijan?

Today, Nagorno-Karabakh and seven regions in its surrounds are occupied. We affirm that the first step towards the settlement must be the withdrawal of occupation forces from all seven surrounding areas. After their liberation, the internally displaced persons will have to return. Next, the clearance of mines in the territory as well as the restoration of transport communications and rehabilitation of territories must follow. At this point we’re approaching the issue of the linkage of Armenia and Nagorno-Karabakh. Azerbaijani stance is as following: the Lachin district and the road to Armenia passing through it are an integral part of Azerbaijan. The Azerbaijani territorial integrity question isn’t on agenda. This issue is not negotiable. At present, the most urgent issue is the removal of political consequences of the conflict, namely the occupation of the Azerbaijani territory. Only then we can speak of further steps aimed at complete settlement as well as solution to such problems like communication, the connection between Nagorno-Karabakh and Armenia etc. The route connecting Armenia and Nagorno-Karabakh through the Lachin corridor is supposed to be open and shifted under the control of international peacekeeping troops and international observers. It mustn’t remain under the Armenian army’s control at any cost because thus we return to the annexation question. Instead of that, we offered the reparation of the road leading from Azerbaijan through Nagorno-Karabakh and Lachin district to Armenia and then continuing to the Nakhichevan Autonomous Republic of Azerbaijan and the Turkish border. We proposed dubbing this route the Road of Peace. It could be a two-way route.

Also in connection with this route we may conclude that the fulfilment of the given conditions is more advantageous for Azerbaijan. Short time ago, the information about an agreement between the Presidents Kocharian and Aliyev on the withdrawal of troops from seven regions surrounding Nagorno-Karabakh appeared in the media. Why do Azerbaijani politicians react to this news much more harshly than the Armenian ones despite unequivocal benefits for Azerbaijan?

I’ve never heard of an agreement between President Aliyev and Robert Kocharian. I’m not sure whether the media presented it correctly. As for the meeting of intelligentsia, I would like to stress once again this event isn’t to be overestimated. This meeting never had an official character and it’s absolutely inconceivable to say that it led to any conclusions. We manifested through this initiative that we really wish mutual dialogue. As far as the aggression is concerned, it would suffice to listen to questions addressed to our representatives in Baku by the Armenian side. At the meeting in Baku, Armenian intellectuals were clearly told that the sole necessary step towards the normalisation of mutual relations is the recognition of Azerbaijani territorial integrity by Armenia.

We have to look back. In 1978, the 150th anniversary of the Armenians resettlement in the Azerbaijani lands was celebrated. Russian empire resettled the Armenians form Persia, today’s Iran. All the fairy tales and legends about ancient Armenian lands don’t correspond with reality. From the very first day that they appeared, their objective was a territorial expansion. Today, nobody in Armenia remembers that ninety years ago Azerbaijan gave the territory of today’s Armenia including Yerevan – the territory where during the Medieval Ages one of the Azerbaijani khanates, namely Erivan khanate was located – to the Armenians as a gesture of goodwill. Before this, the Armenians even hadn’t had own territory in which they could have declare independence. They have already forgotten it, although it was our generous gesture. Afterwards they wanted more and begun to lay claims to Nagorno-Karabakh and Nakhichevan.  Moreover, they still hanker after it.

Do you know how many inhabitants Nagorno-Karabakh has at present? Not more 50,000. Armenia has around two million and the country is still being abandoned by own inhabitants. Just for the sake of comparison, Azerbaijan has 8.6 million inhabitants. If Armenian politics is orientated towards the claims to the territories of its neighbours, it will be short-sighted. The Armenian politicians should give some thought to their behaviour as soon as possible and pick up on the question of the normalisation of relations with Azerbaijan. In this case, Armenia could derive benefit from Azerbaijan and become the participant of regional cooperation. This, however, necessitates goodwill and constructive approach.

As regards negotiations in terms of the Minsk Group it was written that the progress in negotiations won’t be achieved until presidential elections are held in both countries. Is the progress ruled out completely?

Our stance is that elections in both states mustn’t influence the process of conflict settlement. The negotiations must be continued. One has to resume what was attained within the Prague process in the course of last two or three years. The worst case would be if the Prague process was interrupted. Therefore, we are tensed up when we watch the Armenians speculations over the right to self-determination as well as when such an issue is the subject matter of negotiations. We understand that it’s a part of election campaign. There is still the possibility that they interrupt the Prague process. Nonetheless, our posture is that elections can by no means affect the process of conflict settlement. The least desirable option is that the new Armenian president declares the process results null and void and will demand everything to be done from zero. Such approach would further harm the situation in the whole region since Azerbaijan, Armenia and Georgia are very closely linked. It would harm Europe too as all countries of the region are included in the European Neighbourhood Policy. The situation in the South Caucasus is destined to reflect on the entire Europe.

Kosovo Albanians refer to the right to self-determination as well. What impact can have the Kosovo case on the settlement of the Nagorno-Karabakh conflict?

You cannot compare two conflicts, which have other historical background. There’s a different level of the involvement of the international community. When ethnic cleansings were under way in our homeland, the international community wasn’t involved at all. From this and other points of view we don’t consider the case of Kosovo a precedent. Anyway, another factor is here, namely our stance that all existing conflicts are to be settled on the basis of international norms and principles that don’t encompass the possibility of unilateral territory separation in accordance with the nation’s right to self-determination. International law emerging also form the Final Helsinki Act doesn’t prefer the right to self-determination to the principle of territorial integrity. Thus a precedent may arise which would mean the denial of the fundamental principles of international law. Our attitude is that the Kosovo issue should be settled on the basis of mutual agreement of all parties. We adhere to the norms and principles of international law, namely those pertaining to territorial integrity, sovereignty and inviolability of state borders. We wish Kosovo would not create a precedent for other conflicts, in the post-Soviet area in particular. Separatists and forces behind it, however, pin their hopes on the Kosovo case and intend to use this precedent in order to achieve their goals.

Traditionally, Azerbaijan enjoys good relations with the Russian Federation. What is Azerbaijani stance on Russia’s involvement in the Nagorno-Karabakh settlement like?

Russia is our largest neighbour with whom we used to be bound together during many years of joint existence. A numerous Azerbaijani diaspora has been living in Russia. We feel reverence for Russian culture, Russian language and for everything what’s Russian. Russia is one of our main business partners. We’ve been forging links with the Russian Federation on the basis of mutual respect and friendly neighbourhood. Russia has participated actively in the process of the Nagorno-Karabakh conflict settlement form the very first day. It’s a member and simultaneously the co-chair of the Minsk Group and its influence is very strong here. We wish that Russia would be involved actively in the settlement process through its influence in the region. It has been present in the region for a very long time. Moreover, the Russian Federation has in terms of the Minsk Group enormous potential to contribute to conflict settlement.