IN SEARCH OF A NEW MODEL

On 25-29 January, the Swiss ski resort of Davos hosted a meeting of representatives of the world political and business elite - the 42nd World Economic Forum (WEF). This time, the theme of the forum was "The Great Transformation: Shaping New Models". It was more than relevant against the backdrop of the burgeoning economic crisis in Europe, continuing debates about the "way out of the current situation", "prevention of shocks", etc. It is obvious that the world is tired of many economic, financial and political upheavals. It's time to think about a new model of economic and, if you will, political development.

From West to East

In this context, it is necessary to highlight the words of the founder and chairman of the WEF, the Swiss professor Klaus Schwab, who, presenting the theme of the "global meeting of minds" in 2012, said: "Over the past three years, the world has had to deal with crisis management in the fields of politics, economics and finance, but we lost sight of the fundamental transformation that the world is actually undergoing, against the background of which the usual methods of decision-making are rapidly becoming obsolete."

Schwab outlined a "new model of global governance" which "should take into account geopolitical tectonic shifts, the gradual shifting of the centre of power from West to East, and the emergence of new, non-state agents of influence".

In addition, the head of the WEF invited the participants in the meeting to think about a new model of the multicultural and multiethnic world, a model that takes into account the social effects of globalization and technological innovation and a new model of sustained growth in employment in the world.

In other words, the forum in Davos discussed the future of capitalism. According to Schwab, "capitalism in its current form no longer meets the needs of the world".

German Chancellor Angela Merkel made an interesting speech. Opening the forum, she said that "... over the past decades, the Europeans' superiority over other regions has decreased".

Indeed, in recent years, experts are increasingly inclined to believe that it is the developing countries that are able to ensure global economic growth, even despite the growing negative impact of problems in the eurozone on them.

According to the World Bank (WB) report "Global Economic Prospects 2012", this year's economic growth forecast for developing countries is 5.4 per cent, and for countries with high income - 1.4 per cent (-0.3 per cent for the euro area). Despite the fact that in the June forecast, these figures were 6.2 and 2.7 per cent (1.8 per cent for the euro area), economic growth in developing countries is many times faster than that in developed countries.

What is the reason? And why is the interest in emerging economies growing day by day?

Example to follow

Take, for example, Azerbaijan. It's no secret that the country's economy is one of the fastest growing in the world. Refuting the views of some experts about negative dependence on the oil factor, let us note that in 2011, the country's non-oil GDP grew by 9.4 per cent.

How significant these factors are for the global economic elite is proved at least by the fact that a separate interactive session devoted to Azerbaijan, or specifically, to the diversification of Azerbaijan's economy, was held in Davos on 27 January. It is noteworthy that the event was presented by the managing director of the forum, B?rge Brende, who stressed in his opening remarks the importance of the fact that during the financial crisis in the world, the country's non-oil sector attained a 9-per-cent economic growth, i.e. along with the oil sector, the non-oil sector is also growing rapidly.

Speaking at the session, President Ilham Aliyev said that since 2004, the country has achieved more than a triple growth in the economy, and the revenues from the oil sector create major opportunities for the diversification of the economy, and this is one of the main priorities of state policy.

"Every country, especially one that is in transition, should use all natural resources to create a strong economy. Investments worth billions of dollars in the oil and gas sector helped us to diversify the economy. Now we have a new goal: to double the amount of GDP, but with the help of the non-oil sector," President Ilham Aliyev said.

At the same time, he added, of course, the dominance of the energy sector in the economy will continue as the country's produces about 50 million tons of oil and 30 billion cubic metres of gas, and after the commissioning of new projects, it will reach 50 billion cubic metres. "In other words, no matter how hard we try to achieve a growth in the non-oil economy, the energy factor will continue to dominate GDP. But this is natural and opens new horizons for the country. Because today's economic and energy policy of Azerbaijan turns into a political clout for the country," the head of state said.

Ilham Aliyev also shared his thoughts on the economic development of Azerbaijan in his speech at the Davos session entitled "The Future of Eurasia".

We must say that this year's programme of meetings held by President Ilham Aliyev in Davos was quite eventful. The Azerbaijani delegation was represented at the forum in a more expanded format. The need for the broad representation of the country in the main economic event of the year was, apparently, dictated by the great interest shown in Azerbaijan.

During a meeting with President Ilham Aliyev, this idea was confirmed by the founder and executive director of the WEF, Klaus Schwab. He noted that Azerbaijan's economy is developing, and "this development further enhances the interest of a number of prestigious and large companies in the country".

The Davos forum also showed what high stakes the government of Azerbaijan makes on the development of the non-oil sector. Take, in particular, the sector of information and communication technologies (ICT) which has been declared a priority for development in Azerbaijan. At a meeting with the Azerbaijani head of state in Davos, the president of Microsoft International and vice-president of Microsoft, Jean-Philippe Courtois, stressed that Azerbaijan is an example in the region in terms of preventing the proliferation of illegal software and in the fight against piracy. He noted that Microsoft is willing to cooperate with Azerbaijan in the field of information security.

The sides discussed the establishment in Azerbaijan of a major Regional Information and Computing Centre (RICC) of Microsoft and decided to speed up the related work.

So, the world's largest IT company is betting on Azerbaijan - a country that aims to create regional innovation zones (RIZ) intended for the production of high-tech exports. In this regard, the opening of the Microsoft RICC is a good tool for implementing the most ambitious plans to build a "new" economy based on human resources in the country, which will help attract investment in Azerbaijan and be a stimulus to improve the education of young generation.

Azerbaijan will further strengthen its position as a country, which is the economic hub of the region, and become the core of innovation and information. In terms of the best international practices, the opening of the Microsoft RICC in the country cannot be overstated.

Speaking about the development of the non-oil sector in Azerbaijan, it is also necessary to note the financial and banking sector of the country, which demonstrated enviable resilience during the global economic crisis. During his visit to Switzerland, the Azerbaijani president met in Davos with the chairman of the Board of UBS Global, Kaspar Villiger, to discuss the establishment and development of cooperation between one of Switzerland's largest banks UBS and Azerbaijan. In addition, views were exchanged about financial cooperation between UBS and the State Oil Company (SOCAR) and the State Oil Fund of Azerbaijan (SOFAR).

The president also met with the executive director of Deutsche Bank for Central and Eastern Europe, Peter Tils, and a member of its board, Juergen Fitschen. The meeting emphasized the importance of the ongoing processes of dynamic development in Azerbaijan, the establishment of cooperation between our country and Deutsche Bank and exchanged views about the prospects of this cooperation.

But at the same time, the oil and gas sector continues its further development. Azerbaijan has turned into a country that exports oil and gas, and today Europe lives in anticipation of Azerbaijani gas.

Stake on Azerbaijani gas

The Davos talks also clearly demonstrated interest in Azerbaijan as a country that exports hydrocarbons of world importance. For example, the president of Azerbaijan met in Switzerland with the executive director of the German company RWE Juergen Grossmann, the heads of Austria's OMV and Italy's Edison, Gerhard Roiss and Bruno Lescoeur. Both meetings addressed the question of the second stage of the development of the gas condensate field Sah Daniz in which Azerbaijani gas will be supplied to the European market, including its southern part. At the same time, prospects for the gas pipeline project Nabucco, as well as future cooperation with SOCAR were discussed with the head of OMV.

It is also worth noting the meeting in Davos between European Commissioner for Energy G?nther Oettinger and Georgian Prime Minister Nika Gilauri, which had a direct relation to Azerbaijan. It was stated that "the EU is interested in cooperation with Tbilisi in the creation of a unified power grid between Georgia, Turkey and Bulgaria", which "will be very beneficial to all countries".

The meeting with Oettinger also discussed the Azerbaijan-Georgia-Romania Interconnector (AGRI) project, which provides for the transportation of Azerbaijani liquefied gas through Georgia to Romania.

According to the Georgian prime minister, the importance of this project, both for project participants (Azerbaijan, Georgia and Romania) and European states, was noted.

Gilauri said that in the coming months, Georgia will host another conference on AGRI, which will be attended by Georgia, Azerbaijan, Romania, Hungary and EU representatives. The participation of Ukraine and some Central Asian countries is also possible.

What does this mean? This means that Europe is the most interested in the diversification of gas supplies, and the role of the Caspian region, including Azerbaijan, in terms of the export of hydrocarbon resources to world markets, is growing.

Ukraine is also interested in our gas. The meeting between the presidents of Azerbaijan and Ukraine, Ilham Aliyev and Viktor Yanukovych, also discussed issues related to the prospects of cooperation in the energy sector.

Incidentally, 1,000 SOCAR fuel stations will be operating in Ukraine in 2025, and in this country, it is planned to build a terminal for liquefaction of natural gas. According to the Azerbaijani Ministry of Industry and Energy, Ukraine is seriously considering supplies of Azerbaijani liquefied gas from the Georgian coast.

At the same time, Ukraine proposes to examine the supply of 2 billion cubic metres of Azerbaijani gas from 2012, 5 billion cubic metres from 2014, etc. Azerbaijan is still considering the proposal.

In Davos, the president also met with Pakistani Prime Minister Syed Yousaf Raza Gillani, President of the Swiss Confederation Eveline Widmer-Schlumpf and Polish President Bronislaw Komorowski. The theme was enhancing cooperation between the countries, including in the energy sector.

The reforms carried out in Azerbaijan are also appreciated in the United States. It can be concluded following talks between the Azerbaijani president and US Deputy Secretary of State for Economic Growth, Energy and the Environment Robert Hormats.

Conveying greetings from the US secretary of state to President Ilham Aliyev, Hormats said: "The White House highly values the process of development going on in Azerbaijan, in particular successful reforms in the economic and industrial spheres."

They expressed confidence that measures to combat corruption taken in Azerbaijan, as well as investments in the oil sector, will yield positive results.

From East to West

We must say that the WEF 2012 in snowy Davos brought together about 40 heads of state and government. The forum brought together a record number of participants - more than 2,600, of whom 1,600 represented business circles.

What does participation in the WEF mean to Azerbaijan? First of all, it is another chance to express ourselves and show the progress we have made. It is an opportunity to closely follow the latest trends, the development of the global economy and to plan the future based on what we see.

During the WEF 2012, Azerbaijan did not sign any agreements. But this forum made it possible to hold a series of important meetings with heads of state, which in itself is a significant indicator.

In addition, the Davos forum demonstrated the great interest in Azerbaijan as a country with tremendous prospects for human capital development and as a state that plays an important role in future energy supplies to Europe, and, hence, wins more room on the geopolitical map of the world.

Opening the WEF 2012, German Chancellor Angela Merkel said: "Germany must not promise problem countries more than it can give. Discussions about increasing the fund of financial stability need to stop, and it is necessary to focus on reducing budget deficits and on economic growth."

In other words, Germany is not going to continue to address the problems of other countries, which should independently think about the future. And Davos showed that the crisis in the eurozone is getting worse. Developed countries should look for new recipes from the all-consuming disease that is called "crisis", and for the time being, there are, alas, no "new models of great transformation".

Certainly, in these discussions, Azerbaijan played more the role of an observer than a participant. After all, the country has its own recipes for political and economic development. But against the background of the European crisis, the role of our country may increase. For example, Azerbaijan has a chance to increase its presence on the European market, and not just in energy. A country with surplus funds can act as an investor, and not just in energy projects that are initiated by SOCAR. And it is just a matter of time...