THE CREATOR

The beginning… It was the very start of Azerbaijan's big and thorny progress towards complete economic independence, stability and regional leadership, which was not an easy one. A new country and a new economy had to be built practically from scratch. It had to be raised from the ruins that remained after the collapse of the old system, each sector of the economy had to be regenerated. This, moreover, had to be tackled alongside the number one task of halting the war that had been unleashed on the country, preventing the further occupation of the country's territory and ensuring internal political stability and simply that of providing people with sufficient food. 

Today when Azerbaijan is a recognised regional leader, the leading state in the South Caucasus, which accounts for two-thirds of the gross national product of the countries in the region, it is hard to imagine that 20 years ago, all this appeared to be a very  distant dream.  Had it not been for the emergence of a leader whose name is linked to Azerbaijan's prosperity.

On 10 May 2013 it will be the 90th anniversary of the birth of (Azerbaijan's former president) Heydar Aliyev (1923-2003), the initiator of the most important political and socio-economic reforms, the chief ideologist of major projects promoting the republic's long-term development, the author of extremely important decisions, the fruits of which will benefit many generations to come in Azerbaijan.

The oil strategy 

Once he had taken the helm in 1993, Heydar Aliyev was faced with a huge number of problems. Azerbaijan, which had been an advanced republic in the Soviet Union during his first term in office and had occupied a leading position in oil and cotton production, was now being engulfed by war, an abyss of political and economic crises and social unrest.

Therefore Heydar Aliyev's priority, once a truce had been declared on the Armenian-Azerbaijan front,  was to set about reforms to boost the gross national product, based on a market economy, as well as promoting the rapid development of the oil industry and non-oil-based sectors.

In this connection, the leaders most outstanding merit was the elaboration of a new oil strategy, which today forms the basis of the national economy's development. The completion of that strategy was the signing of the "Contract of the Century" on 20 September 1994. Thanks to this rational policy, the income from oil was channelled into various spheres of society's vital activity. Heydar Aliyev's oil strategy was not only aimed at realising Azerbaijan's economic potential, but at creating a reliable and sound political course aimed at protecting national security. As time shows, this strategy has helped Azerbaijan to fortify its geopolitics and strategics in the international arena.

Twelve agreements were concluded with well-known foreign oil companies within the framework of the "Contract of the Century". The agreements were to span a period of 30 years and determined the joint exploitation of the "Azeri" and "Chirag" deposits and the deep-water part of the "Guneshli" deposit in Azerbaijan's sector of the Caspian Sea and allowed for the shared distribution of the oil extracted. The first oil contracts were followed by others: by November 1997 contracts had been concluded on the joint production at another eight oil and gas deposits, including development of the structures at the "Karabakh", "Shahdeniz", "Ashrafi", "Dan Ulduzu", Lyankyaran-deniz" and "Talysh-deniz" deposits. All in all 21 agreements with 41 oil companies from 19 countries were signed in that period. Prominent among them was the "Shahdeniz" project, thanks to which Azerbaijan was able to become a potential gas exporter.

The construction of the main Baku-Tbilisi-Dzheykhan export pipeline, the foundation for which was laid in Baku on 18 September 2002, is also linked to Heydar Aliyev, who spent eight years battling to get this project implemented. The construction of the South Caucasus gas pipeline (Baku-Tbilisi-Erzurum) was also started on his initiative.The Baku-Novorossiysk export pipeline was restored for the transit of Azerbaijan's oil and began operating in 1997. The construction of the Baku-Supsa pipeline also played an important part in developing the new oil strategy and providing an East-West energy corridor.

The basis of the reform

In spite of the shortage of financial resources to fund his plans in those years, in reviving one sector after another Heydar Aliyev prudently ordered the State Oil Fund of Azerbaijan (ARDNF) to be set up. This fund made it possible to distribute the income in a fair way, as well to increase it by keeping back part of it for future generations.

Back in those years a policy of developing strategically important spheres of the non-oil-based sector was pursued, based on market economy principles. In 1993-2003 more than 3,000 new enterprises were opened, many of which took advantage of the preferential terms offered to them by the state via the national business aid fund. An extensive programme of privatisation of state property was launched, foreign investors were attracted into the non-oil-based spheres, a securities market was set up and so forth. Azerbaijan became the initiator of major transport infrastructure projects in the region.

Particular attention was paid to the development of the agro-industrial sector. Heydar Aliyev himself believed that the future of an independent Azerbaijan really depended on the effective use of its possibilities. It is no accident that the revival of many spheres of agriculture in the republic in the 1970s was linked to Aliyev's name. The necessary legislative base was created during his second term in office. It was the first time that a law "On land reform" had been passed in the Commonwealth of Independent States [CIS]. This law envisaged the transfer of land to private ownership and the right to buy and sell land.

It is noteworthy that even now land reform has not been instituted in several of the states of the former Soviet Union, while that process was completed in an extremely short time in Azerbaijan. The land was given out gratuitously to the owners, which laid the foundation for the development of the agricultural and business sectors in the countryside.  Consequently, rapid rates of growth can be observed in the non-oil-based sector. Azerbaijan is consolidating its status as a country self-sufficient in produce.

In short, it was precisely in those years that the foundation was laid for important changes like radical institutional transformations. These were aimed at replacing the administrative and command structure of government left over from the Soviet times with a new approach. The latter involved free competition, purpose-orientated political measures to stimulate a market economy system, the privatisation of state property, the establishment of new property relations and the implementation of land reforms.

Social solutions

Of course, all the above-mentioned moves helped in resolving the majority of the population's social problems. Suffice it to note that, owing to the overall development of the economy and the measures to improve people's well being, from 1996 to 2003 wages and pensions rose more than sixfold and the population's real incomes increased 2.3 times.

Effective measures were also taken to provide a macro-economic balance and to curb the hyperinflation that existed at that time. Serious social issues started to be tackled in a very determined manner.

The important issues troubling Heydar Aliyev were the problems of unemployment and the high level of poverty. According to a World Bank survey carried out in 1996, the poverty level in Azerbaijan was 61%. In 2001, 49% of the population were living below the poverty line, but, according to 2012 data, this number had dropped to 6%. President Ilham Aliyev has repeatedly stated that the poverty problem may be completely eradicated in Azerbaijan in the next few years.

According to the World Bank classification, in its overall national per capita income Azerbaijan has joined the category of countries with "high average incomes" earlier than any other country in the CIS. Alongside this, according to the 2010 UN Human Development Index, Azerbaijan has left the group of countries with medium human development and joined the group of countries with high human development.

All these achievements, both in the economic and social spheres, can be linked to our national leader. Thanks to him, Azerbaijan has been able to announce the setting up of its own model for running the economy, to occupy a leading position in prestigious classification ratings, to successfully integrate into the world economy, at times dictating is own conditions to international organisations, to bring about liberalisation of the economy within the country, to achieve a high level of competitiveness within the economy and to sustain annual growth rates in the budget and currency reserves.

It is precisely adherence to the reforms instituted by Heydar Aliyev that has help Azerbaijan to reach higher levels of growth. So, today the country's gold and currency reserves total $46bn. This means that, if production at home were be at a standstill, even for as long as three years, the republic could provide for its requirements from its own reserves throughout that period. This figure is tenfold higher than the average requirement world wide and eight times the sum of the country's foreign debt..

Today, on the orders of President Ilham Aliyev, Azerbaijan's companies are increasingly investing in projects and enterprises abroad, which is further strengthening the image of the country's economic stability. These successes are recognised by practically all the leading ratings agencies and organisations. Every year a tendency for the country to improve its ratings can be seen in the reports on various segments of the economic reforms.s

There can be no doubt that Heydar Aliyev's economic policy is one of the state's successful models. It is important that the reforms initiated by him have laid the foundation for Azerbaijan's development for many years to come. Today they are being implemented just as the leader intended. This means they will go on being implemented…