DEVELOPMENT OF ECONOMY AND NON-OIL SECTOR - MAJOR SUBJECT OF CIBC MEETINGS

USA, ISRAEL AND GERMANY ECONOMIC INTEREST TO AZERBAIJAN GROWS

Three meetings of Azerbaijan and foreign businessmen with high-rank representatives of USA, Israel and Germany administration took place in April within framework of the Caspian Integration Business (Petroleum and Service) Club (CIBC).

Azerbaijan and USA interests coincide

Speaking about CIBC formation during the meeting (April 22, Azerbaijan Business Center) of the deputy assistant secretary for Europe of International Trade Administration, US Department of Commerce Mr. Erick Stuart with businessmen working in the Caspian region, chief executive director of CIBC Telman Aliyev noted that the Club was created in June 2002 and developed due to support of Azerbaijan president Ilham Aliyev. A favorable investment environment promoting development of non-oil sector, in particular, small and medium enterpreneurship is created in Azerbaijan. Head of the Club thanked also American companies, particularly ExxonMobil company for support in edition of the Caspian Energy magazine since its first days.

E. Stuart spoke about the meetings conducted at different ministries and departments of Azerbaijan and said that interests of Azerbaijan and USA coincide in many fields.

The American expert noted that the meetings have particularly discussed economic transformations in Azerbaijan. He said, currently there are questions still being worked out. Despite of it, he expressed confidence in that Azerbaijan will achieve success in business development.

E. Stuart stressed that purpose of his visit to Azerbaijan was to search for ways of USA administration assistance in settlement of these questions. It concerns ways of continuing the privatization process in telecommunications, cargo delivery and bank activity spheres. Issues on the struggle against corruption in Azerbaijan were also discussed.

During the meeting general director of the Cintech company Rashad Aliyev interested in the process of elimination of problems on Azerbaijan's way to become a full member of the World Trade Organization.

According to E. Stuart, for achievement of this purpose USA has already provided $1 mln to Azerbaijan as a technical aid. He expressed confidence in that close cooperation with Azerbaijan ministries and departments will promote to settlement of these issues, which in turn will be fruitfully reflected in the welfare of Azerbaijan and American business circles. In the meantime, he noted, acceleration of the process of full WTO membership for Azerbaijan first of all depends on the country's government. USA Department of Commerce and TDA are also interested in acceleration of this process, E. Stuart stressed.

Further the meeting discussed prospects of CIBC cooperation with American public organizations, state structures and companies.

An extemporaneous press conference took place at the meeting, during which E. Stuart expressed his attitude to issues of economy monopolization, avoidance of the Dutch syndrome etc. According to E. Stuart, Azerbaijan government is aware of the consequences of the Dutch syndrome, and takes necessary steps to prevent it. E. Stuart stressed that geographical position and natural resources of the country will not give a chance to occurrence of such a syndrome here.

One more important resource of Azerbaijan is its people with innovative ideas. Currently the country's government pays a great attention to non-oil sector development. In this respect USA administration will render direct assistance to Azerbaijan. Had the negotiations of the high-rank American visitor with Azerbaijan leadership discussed the problem of monopolies, will an opportunity of a bigger competition freedom be created in the country, and how do the government of the two countries regard these questions? With these questions general manager of Middle East Petrol Farm FZE company John Hodge turned to E. Stuart.

E. Stuart said that Azerbaijan government is working in this direction. So, the meeting with Azerbaijan minister of economic development Farhad Aliyev marked that strengthening of the competition in various fields is very important for the country's development. "He had noted it before I raised the question", - E. Stuart stressed. The guest turned to businessmen with a request that the businessmen frequently raise this question at meetings at the country's ministries and departments. "If we see that the process has slowed down, we will help to speed it up", - E. Stuart continued.

Negotiations in Azerbaijan mentioned the process of cargo deliveries. This sector has a big privatization potential. It is one more step to development of the country's industrial sector. Unfortunately, E. Stuart says, there are barriers in this process. But in this regard US administration is ready to render technical and investment assistance to Azerbaijan. At the end of the meeting T. Aliyev noted that early this year the president of Azerbaijan Ilham Aliyev signed new development programs for non-oil sector and the country's regions. In this respect, the Club wishes to expand its activity - new divisions (Clubs) within CIBC frameworks are planned to establish.

Caspian Petroleum and Gas Service Club, Caspian IT and Communications Club, Caspian Transport and Logistics Club, Caspian Auto Club, Caspian Banking and Insurance Club, Caspian Tourism Club, Caspian Agriculture Club, Caspian Construction Club, Caspian Metallurgy and Machine-Building Club will be created.

In conclusion E. Stuart thanked the country's leadership and Azerbaijan people for the support rendered in the struggle against terrorism and the war in Iraq.

At the meeting Erick Stuart was awarded with the certificate of the honorable membership of the Club.

The grandiose agreement of XXI century

At the CIBC meeting taken place in April 28 at the International press center, the ambassador of Germany to Azerbaijan Klaus Grevlich informed the businessmen about the work carried out for expansion of Azerbaijan-German relations, spoke about importance of mutual cooperation between our countries, that German companies prefer to participate in economic life of Azerbaijan.

The diplomatist stated with confidence that the coming years non-oil sector of Azerbaijan economy will develop in due order and by higher rates. Klaus Grevlich substantiated his ideas by the presidential decrees issued recently on the country's economic development and successful realization of the tasks following the given documents.

The ambassador stressed that cooperation in the field of industry has a special place in Azerbaijan-Germany bilateral relations. Such German companies as Siemens, Baerische Landesbank etc. having certain interests in Azerbaijan are successfully working in Azerbaijan. In opinion of the ambassador, interstate level frameworks must be created to expand bilateral relations.

"I always note that Azerbaijan is a harmoniously developing country, but this country has problems contradicting one another", - K.Grevlich stated. Speaking about the harmonicity, the ambassador particularly noted the good relations built in Azerbaijan among various religious trends. It is very important during the period, when religious contradictions in Near East cause a bloodshed, the ambassador stressed.

Thus it is necessary to note that despite of the favorable business atmosphere created in Azerbaijan, low living standard of the country's population draws the primary sight of an investor arriving in Azerbaijan. Investors are interested in local market opportunities. Thus the opportunity of stable demand maintenance in the market, i.e. consumer ability of the population deserves a special attention.

"I often explain to investors that Azerbaijan GDP level rises annually by 10%, inflation keeps at the level of 2%, export and import are balanced. The major reason is the dynamically developing oil sector", - K.Grevlich stated, - "but in non-oil sector of Azerbaijan there are big problems". Seeing all this, a German exporter becomes surer, but thus his uncertainty grows even more. One company can say that here there is no market, as the population is very poor, but another company can declare that there is a market for production manufactured exactly by this company.

The ambassador expressed confidence in future development of non-oil sector: "We see changes in this respect". So, "if the ex-president of Azerbaijan Heydar Aliyev may be characterized as the father of the "Contract of the Century", his son, the present head of the state prepares another grandiose agreement of the XXI century on development of non-oil sector of Azerbaijan", - K.Grevlich noted.

The ambassador called important the two Decrees determining socioeconomic policy and the regions' development policy signed by the Azerbaijan president Ilham Aliyev. The work of these laws in Azerbaijan is important, as it will also cause development of the country's economy.

Let's say, the ambassador stressed, before starting activity in Azerbaijan, a company must clearly understand what problems it can confront with in this country. First of all, a company needs a special sanction (license), and in two years, the license must be prolonged. A business-plan is required to get the license, a premise must be obtained for the company's development. The investor must be sure that if somebody wants to take hold of this premise, the investor can back his interests at the court. But currently the legal basis of settlement of this question in Azerbaijan is not so clear. It is linked first of all with emptiness in the country's legislation. Or, for example, due to the customs impediments, it happens that a company wastes much time on receiving goods or raw material from suppliers. It negatively affects fulfillment of the business-plan. Another problem of work in Azerbaijan is the check of accounts by officials, let's say Tax Ministry or Finance Ministry. The ambassador assured that work with them does not bring satisfaction to any of the investors. However the work begun by Heydar Aliyev on elimination of obstacles in the way of transparent business in the country is currently keeping on under the leadership of Ilham Aliyev, the ambassador noted. German investments

Germans not only discuss the business, but also work on its realization. For development of bilateral relations, the ambassador believes, it is necessary to develop two directions: first - to expand knowledge of the businessmen, secondly - to assist in economic development.

Speaking about development of economic relations, the ambassador noted that so far Germany has allocated financial aid to Azerbaijan at the sum of 300 mln Euro, which will certainly promote to development of bilateral relations. 150 mln Euro of this is allocated by Germany, 150 mln Euro - within EU budget. The means were provided under the infrastructure development projects (drinking water supply project, Ganja and Sheki - $54 mln to be realized), for development of financial sector, small and medium enterpreneurship (KFW), improvement of technical relations (recommendation, service), fast completion of the transitive period. The size of allocated means will fall, as in 2005-06 only within BTC Azerbaijan budget will receive annually $2 bn income. This in turn determines the necessity of creating internal plan of the country's development. SOFAR means control is important for Azeri population. "It is necessary to determine position in this question and make a decision - which part will be left for future generations, and which will be spent for improvement of infrastructure, progress of the national economy". The ambassador believes that Azerbaijan government will need technical support in this question, and if it turns to Germany, the answer will be positive.

Germany is ready to cooperate with Azerbaijan in petrochemical, energy, agricultural, telecommunication, medical etc. fields.

$150 mln goods turnover - not a limit

At the CIBC meeting, director of the economic division 3, Ministry of Foreign Affairs of Israel Shmuel Ravel noted that if Azerbaijan is the country of fires, Israel is the motherland of milk and honey, and added that "if to unit efforts, we will achieve integration of Azerbaijan energy sector and Israel high technologies and agriculture". "Israel is interested in development of non-oil sector of Azerbaijan economy, and the goods turnover at $150 mln formed basically at the expense of Israel oil import is not the limit for development of mutually advantageous bilateral relations", - Sh. Ravel stated. "Analyzing the 56-year experience of Israel, we would like Azerbaijan also to turn into a state with economy based on advanced industry, and I am sure that the coming years Azerbaijan will experience a rapid economic growth", - he stressed. According to the Israeli diplomat, Azerbaijan has a huge economic potential, and though the share of non-oil sector in the republic's development is still great, the coming years other economic spheres, first of all, industry and agriculture must be developed. The meaning of world economy development, Sh. Ravel noted, has changed recently and now it is of a global character. In his opinion, today development of other countries affects development of one country. Today economy means development of interstate relations. In order to achieve it, the knowledge about other countries must be expanded, - the guest stressed. In this regard Sh. Ravel spoke about Israel economy. Currently economy of this country is firmly developing, which was possible due to the development of high technologies sector. Presently Israel takes the 19th place among 80 world countries for the index of competitiveness (estimated for the level of conditions created for business and technology development, participation of human resources).

The level of technological innovations is under consideration, Israel takes the 7th place in the world. In export of Israel industrial goods the sector of high technologies has been leading for recent ten years - it has increased 4 folds promoting general rise of the country's export.

The changes in national economy for the considered period point to that Israel - exporting basically textile and agricultural production has turned into a country exporting high technologies. When speaking about high technologies, control and measuring, electronic, telecommunication and medical equipment are meant. All these may be achieved by attracting foreign investments, Sh. Ravel thinks. Software programs, electronic and communications equipment take a special place in the field of high technologies in Israel. The factor of human resources plays a special role in the country's economic growth. Here Sh. Ravel noted that not having natural resources Israel possesses rich human resources. In this respect Israel invests huge means in research projects. He stressed that now all the big world countries invest means for development of this sector.

For informational-communications sector employment Israel takes a leading place in world economy, Sh. Ravel went on. Besides, the sector of biotechnologies is developing in Israel, recently sales in this sector exceed $1 bn.

For development of economy, Sh. Ravel believes, it is necessary to adjust healthy relations with international organizations as the WTO, Organization for Economic Cooperation and Development, with international financial institutions as WB and EBRD, and also with UN economic divisions.

Shmuel Ravel is elected the honorable member of the Caspian Integration Business (Petroleum and Service) Club by the decision of CIBC executive committee.