From the conversation of the Azerbaijan President Heydar Aliyev at the meeting with Judi O`Connor, the representative of the World Bank - January 18, 2001

Heydar Aliyev: Welcome to Azerbaijan again. We have had the meeting with you and I remember all of them. I know that you held very detailed exchange of opinions with the prime minister and our other organizations. The prime minister reported me about it. I consider the relations between the World Bank and Azerbaijan to be normal and should be even better henceforth. I think that your present visit must also promote it. Please, I am listening to you.

Judi O`Connor: Thank You very much, mister president. During our present visit to your country, alongside with the discussion of questions on support by the World Bank to the program of economic reforms carried out in Azerbaijan and continuation of this aid as well as in the future, I would like also to touch upon two issues which are important for Azerbaijan.

First of all, I want to note two important events in the life of Azerbaijan. The first one is Azerbaijan`s acceptance into the Council of Europe yesterday. I think it is a new opportunity for wider propagation of Azerbaijan`s culture, development of a social life and also opening Azerbaijan`s doors for the entire world.

Heydar Aliyev: Thank you. You are absolutely right. We share your opinion as we are a part of Europe. Therefore, we should be a member of the Council of Europe. However, acceptance into the Council of Europe is more difficult than passing an examination in university for a young man. We have passed these examinations. We have simultaneously got tasks - homework. Therefore we will study well.


Judi O`Connor: I am sure that membership of Azerbaijan in the Council of Europe will be useful and beneficial no less than other European states.

Heydar Aliyev: That`s right.

Judi O`Connor: Mister President, the second issue, which I wish to note especially, is connected with the economic results reached in Azerbaijan in 2000. I want to emphasize that these results are rather heartwarming and the government of Azerbaijan under Your leadership has carried out stable and steady reforms, a policy for achievement of economic progress. We supported these reforms, this economic progress, and economic results of 2000 proved it once again.

Heydar Aliyev: Thank you very much. We know our results. We know well how much work it is still necessary to carry out to achieve it in this condition existing in Azerbaijan. Because you know that 20 percent of our lands has been occupied by Armenian armed forces. Our one million citizens have been expelled from their native lands, and the majority of them lives in tents.

Naturally, you know that there are a lot of problems in the countries which experience a transition period. These problems exist as well as in our country. And in such condition, we have promoted the economic development and achieved good results. I know, figures are known to you and the prime minister spoke much about it with you. But we are not content with these achievements. We consider that in 2001, it should get a more increase and we should develop. Probably you have also the same opinion that if we did not carry out economic reforms, structural changes and go on market economy resolutely, we could not have achieved all these. We know that we have to do still so much work in the future, including the World Bank. Some agreements, which we have reached, were not executed yet. I am telling it in advance, because I know that you will tell me about it. However all these will also be carried out.

But I have a favor to ask of you. Hold a press conference tomorrow and invite all oppositional press of Azerbaijan or representatives of parties to it. Inform them about your ideas, otherwise they deny everything. They say that there is nothing, Azerbaijan has done nothing for 7 years. Naturally, their empty talks don`t worry us. We prove to our country, people and our citizens with our activities what we have done and what we will do.

I do not wish to trouble you with my offer. But there are representatives of a press here, including representatives of the oppositional private television companies. Let they hear and even speak about it a little in their programs. Please, I am listening to you.

Judi O`Connor: Mister President, thank You for the offer that you gave to express our opinion in our conversations, and for holding press conference tomorrow. I will try to speak so precisely and exactly to minimize the mistakes when someone cites from my speech.

Heydar Aliyev: Thank you very much.


Judi O`Connor: Thank you. You acknowledged at the beginning of conversation that some reforms have not been carried out till now and there is a certain lingering in it. I would like to tell you that after the negotiations held here, I have come to such a conclusion. If I made my visit to Azerbaijan after two-three weeks later, now our conversation could have been absolutely on another theme. As far as I know, in the nearest future You are resolved to make the decision on the realization of serious changes in executive structure.

Heydar Aliyev: Yes, I think the prime minister has told you about it. We have been working on it for some months and we will make very radical decisions. We will carry out all these after my visit to Paris.

Judi O`Connor: Mister President, let me share my opinion with you about how these problems influence Azerbaijan`s image, that is, the existing problems connected with reforms when we look at Azerbaijan from our countries.

Mister President, if the reforms, which were carried out during the last years in Azerbaijan under Your leadership, first of all, in oil and gas sector, in macroeconomic sphere and in the field of management, would be applied in other areas, in particular, in realization of changes in the state structures, providing a transparency in the use of the state expenditure and collecting of incomes, including, as we spoke with you last time, providing a transparency in customs bodies, we consider that Azerbaijan`s image in the world would be so different. The investments, involved by Azerbaijan in oil and gas sectors, would be accompanied by big investments directed on the development of non-oil sector too.

Heydar Aliyev: All this will be carried out. If we have carried out those reforms, we will certainly carry out these reforms too. But I wish to inform you that from the investment, flown into Azerbaijan for the last year, a share of the capital, invested in non-oil sector, is more than investment put in oil sector. 60 percent of investment has been put in non-oil sector, and 40 percent - in oil. We are capable to eliminate the lacks which you mentioned.

Judi O`Connor: Mister President, I consider that there are also good examples you could show in this field. For instance, the incomes, got by Azerbaijan from oil, are not used directly, and are collected in the Oil Fund, and increasing of means of the fund due to new incomes as additional percent, will help to direct them on a lot of industrial branches in the future. It is one of the good examples mentioned by me.

Heydar Aliyev: Yes. There were much talks over the Oil Fund. There were different anxieties in the World Bank, International Monetary Fund and in other organizations concerning it. To tell the truth, when I heard about this anxiety, I was nervous. I am speaking with you frankly. Because if we work and receive income of oil during 7 years and we do not supervise its use, then how is that injustice? The Oil Fund was established. I approved its regulations. It was published in a press. All incomes, which have been received till now, are known and periodically it will be informed. I have also written down in the decree that it would be checked by the international auditors.

I think now it is necessary to keep the profit coming from the oil in the Oil Fund and to make use of it for the future business. Now in Azerbaijan there are many people who have eye on the Oil Fund. If somebody wants to set up a business, demands 10 million, 15 million dollars from the Oil Fund. And I am saying that it will not happen, forget about it. I do it for the sake of Azerbaijan`s future. Probably, such person like me will not participate in use of all profits of the Oil Fund in the future. Because, you know, the life is not eternal for a man. But I think only of the future and keeping now the profit getting from oil, I am trying to increase profit on other fields. Now there are approximately 300 million dollars in our Oil fund. And the head of the Oil Fund is subordinated directly to me. Today he informed me that they receive 44 thousand dollars per day. Now look, how much it makes in a year. This is our work, everything is open and transparent.

Judi O`Connor: Mister President, it is true. Today we held negotiations with the management of the Oil Fund, got acquainted with their work and gave a number of proposals. I completely agree with You that from the viewpoint of its structure, the Oil Fund should be brought to a condition that if for example, its head is replaced or the government changes a policy on using of its means in the future, general use of means, as they say, would not change its channel.

Heydar Aliyev: It is a true idea. Or there may appear another person in Azerbaijan and will squander everything for five days. However it will not happen in the near future. Only after I bring the Oil Fund to several billion dollars naturally, another person can come.

Judi O`Connor: A lot of time is required to collect some billions of dollars, if you earn 44 thousand dollars per day. Anyway, there is still a lot of time ahead.

Heydar Aliyev: No, you are a financier, banker. Today it is 44 thousand dollars. But in fact the profit of Oil Fund increases, we get the profit on the sale of oil. It means their percent also increases. Last year, we received approximately 150 million dollars from the sale of oil for the Oil fund. But after 2-3 years, we will receive 500 million dollars. At that time we will meet and I will tell you about it.

Judi O`Connor: Right, but as the means of the Oil Fund increase, interest, desire also grows to use them immediately both by members of the government and friends of the government.

Heydar Aliyev: I have no such interest. Without me nobody can do anything. May be, I make a mistake by telling you these words. Then you will tell the World Bank not to help to Azerbaijan.

Judi O`Connor: You know, even if, thorough on the one hand, we welcome the government that it does not make use of the means of Oil Fund at once, on the other hand, certainly, there is still a need for the short-term aid of the World Bank to Azerbaijan. Because, despite such increase of money in the Oil Fund, there are still the poor, some of them have no even some drinking water and have no education. Therefore now, in present heavy condition, there is a necessity for the aid of the World Bank to Azerbaijan.

Heydar Aliyev: I just wanted to hear this from you.

Judi O`Connor: Mister President, Azerbaijan is one of 180 owners of the World Bank. Therefore you are worthy to get financial aid from the World Bank , to give it advice and to render the help to the World Bank in the future.

Heydar Aliyev: God willing!

Judi O`Connor: There is also one other feature of the member-states of the World Bank to benefit by bank. Notwithstanding some countries do not consider it as an advantage. But anyway, we prepare the annual report on the estimation of economic and social policy carried out by the governments of the states, which get means and credits from the World Bank.

For example, according to the report of the last year, Azerbaijan has got, it is possible to say, good parameters in all spheres, except one. This sphere, as I have already mentioned, is connected with an issue on management of the received incomes, management of the structures receiving means from the state. The report, we are going to publish this year, can be named management in public sector or results of reforms in public sector. We hope that in our assessment of this year, we will be able to note the existing positive factors. Therefore, we persistently encourage Your government to make serious steps in this area, that is, in realization of structural changes soon so that we could get an opportunity to state the positive opinion in this sphere.

Heydar Aliyev: You write, but we will do everything. Do not worry.

Judi O`Connor: Mister President, today we agreed with the prime minister to present the report of the World Bank in the form of the preliminary project connected with an estimation of a condition of reforms in your country to the government of Azerbaijan in the end of January, and we will inform that if this estimation is prepared not in April-May, but now, in January, what may be our estimation concerning Azerbaijan. We will put forward our proposals in it on what steps the government should take for providing certain progress from January till April.

Heydar Aliyev: January comes to the end. But it will be in February.

Judi O`Connor: In that case, in the end of February we will write one more report. Undoubtedly, as developing such reports, on the one hand we come to conclusion about how much we can allocate financial assets for the projects which are carried out by us in such countries as Azerbaijan, on the other hand, we consider that the reports, which we develop yearly, are a signal for Azerbaijan`s image. We hope that this report will be positive as far as possible, so that on its basis Azerbaijan could receive additional credits in the international financial markets on more favorable conditions to finance the project of Baku-Ceyhan, and the reconstruction of an aluminum plant.

Heydar Aliyev: Perfect. I am very glad.

Judi O`Connor: Mister President, I wish to inform you on another issue which we discussed with your prime minister in detail. It is connected with the program of the economic strategy prepared by the government of Azerbaijan, that is, the concept of the economic strategy prepared jointly by the ministries of economy and labor and social protection of the population for poverty reduction in Azerbaijan.

Developing such programs, concepts, different member-countries of the World Bank give them various names. For example, some countries name it the economic development program, other countries call it project or concept of economic and social development. We consider that it was correctly named as well as in Azerbaijan. This strategy in Azerbaijan was named the concept, the program of strategy of poverty liquidation and reduction.

We hope that the economic development, which is observed as a result of implementation of such program, as a result of Azerbaijan`s oil strategy and the reforms, carried out in oil sector, will be applied in other, wider spheres. Owing to it, there will be opportunities for liquidation of unemployment in rural areas, opening new workplaces, improvement of provision of the needy families in the field of public health services, education, achievement of promotions in the field of water supply and as a whole, in sufficiently provided and poorly-paid part of the population will profit from it.

Therefore, it would be desirable to assign responsibility for realization of this program to a special committee by Your decree or by the instruction of the prime minister. That is, to establish the special commission or committee at a high level which would be responsible directly for its realization. In this case, not only the ministries of economy and labor and social protection of the population would assume the responsibility for implementation of this project. It would surround more circles and promote involvement of the state structures in this work. Simultaneously, opposition, mass media, non-governmental organizations and other levels of the people would have information about this program. Probably, someone will disagree with it. However, anyway, they would be informed on realization of such project and concept.

Heydar Aliyev: Your recommendation is absolutely right, we also think so. You see, our opinions coincide. We will do it.

Judi O`Connor: God willing. Mister President, I have nothing to say. I just want once again to express my desire that there will be deeper cooperation between Azerbaijan and the World Bank in forthcoming years. Once again I express You my gratitude for receiving us.

Heydar Aliyev: I also express my gratitude to you. We have had so interesting conversation. Your recommendations are very important. I was delighted that you objectively estimated our works. I am very satisfied of today`s talk with you. If we take into account that the beautiful woman is sitting in front of me, it gives a special effect to our negotiations. Tell the World Bank to engage people like you. Then their business will go better.

Judi O`Connor: Mister President, it would be better, if you tell them about it.

Heydar Aliyev: I will tell mister Wolfensohn. Convey my regards to him.

Judi O`Connor: I will certainly do it.

General historical background

Azerbaijanand International Monetary Fund