NATIONAL INTEREST

The economic crisis that is continuing in the euro area has forced most of the European countries to abandon their principles of economic management based on market relations and resort to new, hitherto rejected rules of the game. Thus, one of the important nuances in the new economic policy is virtually open and widespread state support for business structures in solving their financial problems, although until recently, international financial institutions considered such assistance a violation of the fundamental conditions of capitalist relations.

In Azerbaijan, state support for the development of businesses has already been practised for over a decade - the Azerbaijani economic development model developed during the 20 years of independence has proved the correctness of this policy and that in making crucial decisions, it is necessary to be guided by national interests rather than exhortations and recommendations from the outside.

Benefits and finances

The state's role in the development of entrepreneurship in Azerbaijan is almost defining: In addition to political support, it has provided, and continues to provide, businessmen with economic assistance as well. For years, the country has used tax and customs benefits meant to help new companies and businesses to get off the ground, strengthen and stimulate the creation and development of new areas of production, imports and exports. When the target was achieved, the preferences ceased to exist, and single actions are now preferred, for example, to encourage the import of grain into the country when the harvest is poor, to support an industry that is on the brink of crisis, etc.

In parallel, most of the benefits are still in place in agriculture - this area is strategic for the national economy and plays a decisive role in the issue of food security and in the overall development of regions. But due to the crisis situations that developed in many sectors of agriculture after the collapse of the USSR, achieving sustainable growth here is still problematic. Therefore, the decision taken in 1990 to exempt farmers from all taxes except for the land tax is still in force. In addition, they are provided with fertilizers, fuel and equipment on concessional terms, there are agrarian services, and cattle is delivered and handed over to farmers. In order to provide rural entrepreneurs with fertilizers on more favourable terms, a plant for the production of nitrogen fertilizers is being built. The acceptability of prices for the products of this company will be ensured through the concessional supply of gas to the plant. Thanks to these measures, the level of support for many types of products has increased owing to local production in recent years, and grounds have been prepared to achieve higher results in the field of agriculture in the next 2-3 years.

By the way, benefits for businesses, including in agriculture, are one of the major stumbling blocks in the negotiations on Azerbaijan's accession to the World Trade Organization (WTO). It is the WTO's tough conditions on this issue that make our government not hurry to become its member. In other words, Azerbaijan does not deviate from the principle of the dominance of national interests over recommendations and views from the outside.

However, the correctness of this principle, as has been said, is obvious. President Ilham Aliyev noted in one of his speeches recently that today one can observe the state in many European countries take greater commitments and invest in order to save banks and large enterprises from bankruptcy. "We embarked on this policy in 2004. I remember that in some cases, we were more dependent on loans from international financial institutions. They advised and recommended that the state should not intervene in these situations, the private sector should develop itself, and the state should stand aside. How can this be? This is our country. Whether it is public or private, it is an Azerbaijani company. How can we not help it?! Our support is important," the head of state said.

Financial support, credits and business planning, particularly for small businesses, have long become the job of the state. A special role in financial support for businesses, of course, belongs to the National Fund to Support Entrepreneurship (NFSE). So far, the fund alone has granted loans amounting to 900 million manats on favourable terms, including in 2012. Their vast majority is directed to the regions, and we can even say, all to the real sector of the economy. Thanks to these loans, 23 poultry plants, five livestock farms, 14 refrigerators and grain warehouses, 13 greenhouse complexes, 5 dairy plants, 3 meat processing plants, 4 canneries, 8 bread factories and other enterprises are now being constructed. In a word, by 2012, we will achieve a record figure for NFSE loans: entrepreneurs will be provided with concessional loans of 200 million manats. At the same time, 110 million manats of these funds will be provided through the repayment of loans, which is sufficient proof of the effectiveness of the established system of business lending.

It is exactly public support that increases the share of the private sector in the gross domestic product to 83 per cent. That is, in fact, Azerbaijan was able to complete the transition to a market economy and become a country undergoing rapid development in quite a short period of time.

The stage of foreign support

With the expansion of domestic production and strengthening of business structures, entrepreneurs in Azerbaijan are gradually entering a new phase of development - entry into foreign markets and establishment of stable export. Of course, for the time being, large companies are major players on the country's export market.

Today, the State Oil Company has achieved the biggest success on the foreign market. However, AZAL has quite a good chance to repeat this practice. "They should see if they can buy any other airline and organize its work in some other countries. This will also be possible thanks to state support," Ilham Aliyev said. JSC Azerenergy can do the same thing after some time.

At the same time, the state is ready to undertake to help private companies to realize their export potential. Fortunately, there are already well-established systems of cooperation for this, for example, in the form of intergovernmental commissions or bilateral business forums. But, unfortunately, there are few tangible results in the sphere of strengthening Azerbaijani companies on the markets of other countries.

Meanwhile, in 4 or 5 years, Azerbaijan will need additional external markets apart from the traditional already "approved" ones in order to fully realize the export potential of the country. So, today it is necessary to draw up a specific programme aimed at supporting companies whose products may be in demand abroad. Moreover, the Ministry of Foreign Affairs and the Ministry of Economic Development should work together to study the matter and make new proposals for the establishment of certain favourable conditions for export-oriented companies in their activity abroad. In foreign policy, this topic should always be present in the negotiations with partners. They can be requested to create special preferential conditions for Azerbaijani companies.

"We believe that this will be fair. Our banks enter, and should enter, external markets more quickly. Why shouldn't five or ten of our banks, rather than one or two, work in other countries? Why shouldn't they seek leading positions there? If need be, the state will give political and other support," the head of state promised in one of his speeches.

In general, it is expected that in 2013-2023, the joint activities of public and private entities will enter a new phase, and therefore, a relevant plan indicating specific objectives will be developed. And continuing to assist the development of business, the state, in fact, will be able to implement its major economic goal - to double the gross domestic product in the next 10 years.