Elshad Mammadov: "Liberation of the occupied territories is a serious stimulus for economic growth of Azerbaijan"

Last week, President of Azerbaijan Ilham Aliyev signed a decree on the organization of a temporary special administration in the territories liberated from the occupation. Under the commandant's offices, operational headquarters are created, which include representatives not only of the security forces, but also of the economic bloc - the ministries of economy, agriculture, ecology and natural resources, transport, communications and high technologies. They will identify lands suitable for agriculture, assess natural resources with a view to their effective use ... In an interview with Vestnik Kavkaza, economist, professor of the Azerbaijan State Economic University UNEC Elshad Mammadov commented on the prospects for integrating the liberated territories into the Azerbaijani economy.

- In your opinion, what will the liberation of the occupied territories give to the economy of Azerbaijan in the coming years?

- I believe that the liberation of the occupied territories can provide a serious stimulus for economic growth in Azerbaijan. The economy of our country, both in terms of resource potential and in terms of opportunities for increasing investment flows, is quite impressive in comparison with the territories. In this regard, the liberated territories, which will serve as the basis for an increase in investment, for the regional development of the Azerbaijani economy, can give the impetus needed in the post-crisis economy. The world economy is sinking into a deep hole, and the exit from it will be more effective if there is a potential for increasing the money supply to increase investment.

By the way, our post-Soviet space has significant opportunities for growth, since there is a lack of monetary resources here, and there is a chronic lack of investment. I think that the increase in investment should become a driver of economic development throughout the post-Soviet space.

In this aspect, Azerbaijan receives an additional stimulus for growth, because the infrastructure in those regions that have been occupied for almost 30 years has been destroyed. Investments are needed to restore the infrastructure, the construction sector, and the overall economic dynamics in this region. This will serve as a major stimulus for economic growth. In the first years, this will put a heavy burden on the country's economy, because quarantine is pressing, and oil prices are quite unfavorable, and the world economy as a whole is in crisis.

If it is possible to implement an adequate policy of macroeconomic management, increase the volume of investments in the country's economy, then in five to seven years Azerbaijan will be able to enter a rather impressive growth trajectory. Regional economic integration and the integration of these regions into the unified economic system of Azerbaijan are areas that should give an impetus for its economic development.

- In your opinion, what areas could be revived in these regions in the first place?

- At first glance, this is agriculture, because traditionally these regions were agricultural. But we must understand that the economy is changing a lot. When we talk about the development of agriculture, we have to bear in mind that we are not talking about planting orchards, setting up vegetable gardens, then picking fruits and vegetables and reselling them raw to Russia. Now high technologies to a large extent determine the general vector of development of economic sectors. The processing sector of agriculture with the active introduction of biotechnology, genetic engineering, high technologies - these are areas that can provide a significant increase.

Do not forget that the region has a significant amount of natural resources: it is the mining industry, and reserves of gold and other precious metals. The development of non-ferrous metallurgy is a very promising direction. But here we should talk about the manufacturing industry. It is counterproductive to simply extract and sell raw materials in export markets. This approach will not enhance the competitiveness of the economy. Continuing to export raw materials to falling Western markets is not the path that Azerbaijan needs today. You need to invest in the depth of processing, in processing. It will be important to approach economic policy on a completely new basis.

- Is the Karabakh land rich in water resources - Sarsang reservoir, Sugovushan reservoir? What incentive will they give to the development of Azerbaijan's economy?

- The water potential of our country will be substantially supplemented. For regional development in Azerbaijan, the main problem in recent years has been the lack of water. If we draw up the real intersectoral balance of the Azerbaijani economy, then we can easily see that the lack of water resources often neutralized the effects of capital investments that were sufficiently large for the Azerbaijani economy. We saw that whole programs related to regional development, including agriculture, were stalled. This is due to the fact that often the return on these projects was very low, the profitability was low. In fact, the cost of water resources led to a state of low economic efficiency in projects large for the Azerbaijani economy.

The water resources of Karabakh are a serious help for the development of the agricultural sector of our country. Replenishment of water potential should contribute to economic growth in the regions of the country. But an important point will be related to the effectiveness of macroeconomic management. Unfortunately, failures have been made in many areas of regional development. This is also due to those government agencies that were supposed to draw up the water balance. It is no coincidence that the head of state made a very harsh remark on this matter to the relevant government structures. Despite the fact that for almost 30 years the country has been living in conditions of independence, in my opinion, the effective water balance of the country has not been compiled. I think that the will of the head of state should influence the decisions of the economic bloc of the government, and the use of water potential will serve the interests of sustainable and advanced development of the Azerbaijani economy.

- The Karabakh land is famous for its natural landscape. In this regard, what are your expectations from the development of the tourism sector?

- Here I disagree with the experts who predict in a year or two a flurry of foreign tourists to Karabakh and Azerbaijan in general. Tourism is one of the areas that will be hardest hit by the current global economic crisis. Over the past decades, after the introduction of the policy of stimulating the notorious Reaganomics in the United States, tourism has developed due to a sharp increase in lending to the economy and the formation of a corresponding middle class. The current global economic crisis will hit the middle class the hardest. Therefore, in general, the tourism industry in the coming years around the world will be going through hard times.

As for domestic tourism, there are prerequisites for growth. International tourism will be in crisis in the coming years, which will provide an opportunity for the development of domestic tourism. People still need to rest. If the relevant government structures are able to build a tourism industry that is accessible to the general population in Azerbaijan, then the Karabakh region can become an attractive place for domestic tourism in terms of investing in this area. Here it is important to correctly place the accents and from the very beginning in the implementation of investment policy in the field of tourism to focus on the development of domestic tourism.

- The border with Iran has already been liberated from occupation. To what extent is there potential in this regard for the further development of the energy sector of the region, given that the Khudaferin hydroelectric power station is located there?

- In recent months, it has been said quite often about the possibilities of integrating the energy systems of Russia, Iran and Azerbaijan. I think that this is a fairly promising area, because all three countries in the region are significant centers in the energy segment and, in fact, donors of regional development in terms of the energy component. I hope we will witness a deepening of integration in the region from the point of view of energy policy, possibly establishing a unified energy system. This will increase energy efficiency and resource conservation, possibly optimize market supplies, because there are regions of Iran where it can be much more profitable from an economic point of view to supply energy from the territories liberated from the occupation than to send energy flows there from the territory of Iran itself.

It is important to calculate and analyze all these points. I think that all countries can benefit from deepening economic integration in the region. Energy cooperation between the countries of the region is highly advisable. Of course, external actors may appear who will try to put a spoke in the wheels of regional economic integration, but, in my opinion, the rather pragmatic nature and experience of the political leadership of our countries can make it possible to achieve the adoption of those decisions that would really serve the interests of our states.

- In Soviet times, both a railway and a road led from Baku to Khankendi. By rail, the distance was about 400 km. How will the restoration of the roads affect the development of the communication potential of the region?

- It is difficult to talk about full-scale cooperation in the region when the fighting is still going on. We need to approach these issues on a larger scale. But it is necessary to understand that any wars end in peace. Cooperation in the region from the point of view of long-term development has no alternative.

If we turn to the same Soviet experience that you mentioned, it should be borne in mind that virtually all of the now independent countries were part of a single, fairly effective national economic complex of a great power. In this regard, in different regions of the former Soviet Union, these separatist sentiments, which, in my opinion, were provoked far beyond the borders of our then immense country, these political provocations pursued the goal of achieving economic disintegration and degradation in the region. But sooner or later, history puts everything in its place. I think that disintegration processes should be completed in the coming years.

It should be understood that the collapse of the Soviet Union began precisely with Nagorno-Karabakh, when circles fueled by overseas and Western European politicians who were closely associated with the Armenian diaspora actually started this bloody conflict. With this, they drove the Armenian people into a trap. After the problem is solved, all the countries of the region, the peoples inhabiting these countries will come to the conclusion that through the deepening of economic integration, through the establishment of a humanitarian dialogue, the path lies for the long-term development of this region. I hope that the political will of the leaders of our countries, first of all, we are talking about the Russian Federation, about Azerbaijan, about those countries where the leadership is aware of the need and no alternative to sustainable economic integration, will serve to ensure that the coming years become a time of development.

I am sure that those political forces that advocated disintegration, which were generously financed by all sorts of Soros and other funds, will go to the dustbin of history. As a result, all peoples inhabiting the region will receive those governments that will lead our countries to development and prosperity. I am confident that both infrastructure projects and transport projects in the region will be completed. And we will witness that Baku and Khankendi will be connected by both road and rail communications, air transportation will be resumed. I really hope that our region will become a region of well-being and prosperity.