While the Army of Azerbaijan, led by Supreme Commander-in-Chief Ilham Aliyev, liberates the occupied territories, the post-conflict period and especially economic development are coming into the focus. The Center for Analysis of Economic Reforms and Communication of the Republic of Azerbaijan (CAERC) conducts serious research in this area and regularly publishes the results of these studies in local and world media in Russian, English, Turkish, Spanish, Urdu, Armenian, Romanian and other languages. Executive Director of CAERC, Doctor of Economics Vusal Gasimli gave an interview regarding the prospects of the development of Azerbaijan's economy in the post-conflict period.
- Mr. Gasimli, CAERC spread a statement about the damage caused to the Armenian economy as a result of the conflict. How will Azerbaijan's economy benefit from victory?
First of all, the victory will raise the spirit of the people, which is very important in the Azerbaijani society for self-confidence. For example, in 1982, during the reign of Thatcher, after the victory over Argentina and establishment of British control over the Falkland Islands in 74 days, Britain took its wings: the economic model of Thatcherism became successful, Britain was again called "Great", and Thatcher increased her status as "Iron Lady".
Secondly, if until now the economy of Azerbaijan has supported the army, now the army is making its contribution to the economy. Azerbaijan is waging a 5G - fifth generation war, and liberates its legal territories. Lands freed from occupation, as well as minerals water and forest resources located there will increase the economic power of Azerbaijan. In particular, the solidarity of the Azerbaijani people with President Ilham Aliyev strengthens the basis for further deepening of reforms.
Three-fold economic growth over the past 17 years and implementation of regional oil-gas and transport-logistic projects under the leadership of President Ilham Aliyev confirmed the leadership of Azerbaijan in the region. Following the quote of Kissinger, which says “Control oil and you control nations; control food and you control the people”, Azerbaijan needed the final touch in the formation of the geopolitics and geoeconomics of the region. According to the US News report, Azerbaijan, which ranks 90th in the world in terms of territory and 114th in terms of population, has become the 45th most powerful country in the world. The economic and political superiority of Azerbaijan as a regional player had to be reinforced by the confirmation of its military potential. Over the past 10 years, the military budget of Azerbaijan was 4 percent of GDP and 11 percent of the state budget. The counter-offensive operation of the Azerbaijani army, which began on September 27, 2020, in response to the Armenian provocation, collapsed the protective barrier created by the enemy for 30 years. Now, Azerbaijan is liberating lands occupied in the period from 1988 to 1993 in weeks. Thus, Azerbaijan was able to turn its economic advantage into economic power and superiority over the enemy. The fact that Azerbaijan is ahead in terms of all parameters of strength - economic, political and military, reshapes the geopolitics and geoeconomics of the region. Armenia, which, according to forecasts, will not be able to withstand the resource war, in the first 20 days of the last war with Azerbaijan, has already faced losses of 3.5 billion US dollars and 30 percent of GDP. Without any assistance, Armenia will need 10 years to recover from the damage.
The occupation of 20 percent of the Azerbaijan’s territories for about 30 years by Armenia with the support of international forces could be perceived for Azerbaijan as a "geopolitical elevator", since during those years Azerbaijan has mobilized all its resources to eliminate the Armenian occupation. These "geopolitical elevators" – oil-gas and transport-logistics projects let Azerbaijan to go to upper floors in the North-South and East-West corridors in the center of Eurasia. While in the 19th century Napoleon's attempt of "continental blockade" of Great Britain (Blocus continental) failed, Azerbaijan, by keeping the aggressor country Armenia away from regional projects to force the aggressor country to peace, could achieve its results. Restrictions on independence, a chronic deficit in the balance of payments and a consolidated state budget, the loss of basic economic levers, and ¼ of the population staying below the poverty line do not allow Armenia to continue its occupation of Karabakh. The military success of Azerbaijan in September-October 2020 revealed one truthful fact for Armenia: the 30 years lost... In order not to miss another historical chance, Armenia must refuse its policy of occupation.
- How will be the economy in liberated lands recovered?
Azerbaijan has sufficient experience in restoring territories liberated from occupation. Our country has created the Agency for the Restoration and Reconstruction of Territories with the mission to coordinate restoration work and create conditions for the return of internally displaced persons to their native lands. Starting from 2020, the territories liberated by the Azerbaijani army from the enemy will be restored accordingly. Following the successful Horadiz operation in 1994, 42 residential settlements in the Fuzuli region were returned to life. After the military victory in April 2016, the Jojug Marjanli village in the Jabrayil region became the starting point of the "Great Return". Due to the attention and care of the government, the Jojug Marjanli village has turned into a modern and well-equipped settlement. For this purpose, the President of the Republic of Azerbaijan has signed several Orders. Currently, Jojug Marjanli is more improved than any other Armenian settlement that is currently under occupation, and the village has higher level of provision with jobs and social services. It demonstrates the difference in the attitude of Azerbaijan and Armenia to development. In the recently liberated villages of Sugovushan and Talysh of Terter region, the restoration of 29-kilometers highways has already begun. In short, as Azerbaijan returns to its lands, the life here is also reiviving. In this regard, the first step to be taken in liberated territories is the deactivation of mines and conduction of other neutralization activities. Next step is installation of communication, and final one is provision of inhabitation and production. The "Great Return" continues upon the liberation of territories.
- As the territories are liberated from occupation, we see how Armenians plundered and devastated of our lands. What is the damage caused to Azerbaijan?
As a result of the policy of ethnic cleansing carried out by the Armenian aggressors in the occupied territories during 1988-1993, a total of 900 settlements, 150 thousand houses and apartments, about 6 thousand industrial, agricultural and other enterprises were completely destroyed and disabled. In addition, 7,000 public buildings, 693 schools, 855 kindergartens, 798 medical institutions, 927 libraries, 44 churches, 9 mosques, 473 historical monuments, palaces and a museums, 40,000 museum exhibits, 160 bridges and other infrastructural structures were demolished and looted. In addition, 280 thousand hectares of forests, about 1 million hectares of fertile land, including 127,700 hectares of irrigated land, 34,600 hectares of vineyards and orchards, and 1200 km of the irrigation system were occupied by the invaders. Besides, 120 thousand hectares of land suitable for cultivation located in 5 districts outside the occupied territories remained non-irrigated and were practically withdrawn from economic turnover. The invaders also took away 220 thousand heads of cattle. Azerbaijan government created a Working Group to assess the losses and damage inflicted on the territories of the Republic of Azerbaijan as a result of their occupation by the armed forces of Armenia, as well as to calculate the cost, and assess all types of property, including ground and underground resources that were subject to the aggression of the armed forces of Armenia in 1988-1994. At the same time, the electronic database has been created in this regard. As of information for 2017, due to the military attacks, the total cost of all losses and damage caused is estimated at 820 billion US dollars. Upon the liberation of territories from occupation, Azerbaijan is bringing life back to these territories. It is also possible to put forward a compensation claim against Armenia to recover the damage caused.
- Which spheres in the liberated land have the potential for development?
Armenia did not gain any sufficient economic benefits from the occupation of the territories. Although these territories have underground and land-based natural resources, are rich in such minerals as non-ferrous metal ores, gold, mercury, chromite, perlite, lime, marble, agate, mineral waters and others, and also have a wide resort and recreational areas, Armenia has never been able to fully use this potential. It is fact that in Kelbajar and other areas, our minerals were plundered by applying artisanal mining practices that caused environmental damage. For this, the perpetrators will be held accountable.
Azergold CJSC and Azerbaijan Industrial Corporation have experience, specialized personnel, as well as export and investment opportunities for the extraction and processing of these reserves. Thus, by attracting new natural resources into circulation, Azerbaijan has the potential to ensure the development of the western region, the growth of the mining industry, as well as the metallurgical complex. The development of metallurgy will accelerate the development of the military industry in Azerbaijan along with other sectors. Our military industry must demonstrate its capacity in supplying the Army of Azerbaijan with 5G technologies. Forest, water and land resources located in the territories liberated by Azerbaijan provide great opportunities for the development of agriculture, processing industry and tourism. Most importantly, the economy of the liberated territories will be restored, and new technologies will be introduced, which will affect the increase in the economic productivity. Germany and Japan - two countries that suffered the most damage after the Second World War, developed faster due to application of new technologies and ensuring the growth of economic productivity. For example, most of the building materials needed for the reconstruction of the liberated Jabrayil can be taken from the same region. Thus, these territories are rich in tuff suitable for the production of sawn stone, construction sand, clay in Garajalli suitable for the production of bricks, volcanic ash suitable for the production of cement, clay gypsum, limestone, gravel, jasper, chalcedony and forest resources.
The “construction boom” is expected in the lands liberated from occupation.
After the liberation of our territories, we will have to update our forecasts regarding the development of the non-oil sector, since this victory of our army will give an impetus to the rapid growth of this sphere. The complete liberation of territories from occupation will have a great impact on our economic development. Our initial calculations show that in the coming years, the total output at the main areas in the Upper Karabakh and Kelbajar-Lachin economic regions may increase by more than 2 billion manats.
- What are the prospects for agriculture in the liberated territories?
Before the occupation, these territories provided about 35-40 percent of the agricultural goods produced in Azerbaijan. Despite that Karabakh has 250 thousand hectares of fertile soil, only 7 percent of it is used. In these territories, the rivers pass in the northern part, the cultivated areas are in the southern part, and underground waters are too deep, and therefore due to the destruction of the irrigation system, these areas remained unused. The productivity in the sown area was low and only 10-12 centners of grain were harvested from each hectare. However, before the occupation, this figure was 21-25 centners. Azerbaijan has great potential for the development of viticulture, tobacco, cotton, silkworm, fruit, vegetable and melon growing, as well as cattle breeding. At the same time, there is potential for the development of the processing and food industries.
The liberation of Azerbaijani territories from occupation will also make a significant contribution to ensuring food security in our country. In particular, self-sufficiency in livestock products will improve. At present, the level of self-sufficiency of our country in meat and meat products is 82.5 percent, and in milk and dairy products - 86.2 percent. According to our forecast, after the resumption of economic activity in the liberated territories, we will be able to provide ourselves with these products. Also, the level of self-sufficiency in cereals (excluding brown rice) in Azerbaijan reaches 70 percent. The liberation of our lands from occupation will allow us to improve the situation in this area as well.
- Our lands, liberated from occupation, are also rich in water resources.
72.7 percent of our water resources are formed outside the country, so Azerbaijan's access to water resources is very important. These reserves will be used as drinking water, as well as for land reclamation and electricity generation. By effectively managing its water resources, Azerbaijan will end the hydro war that is being waged against it, as well as gain control over Armenia. In particular, the Kelbajar and Lachin regions are rich in drinking water supplies, and even Lake Goycha, used as the source of drinking water in Armenia, is fed by the Arpa and Bargyushad rivers the headwaters of which are located in these regions.
In addition, the Sarsang reservoir, the highest one in Azerbaijan (125 m) with a total capacity of 560 million cubic meters, is also under occupation. In the past, the Sarsang reservoir provided irrigation water to Terter, Agdara, Barda, Goranboy, Yevlakh and Agjabadi regions. By creating artificial floods, the Armenian side discharged water in the spring and autumn months to damage the lands of Azerbaijan. In the hands of Armenia, the Sarsang reservoir has become a threat to the environment of the region and national security. Up to 40 percent of Azerbaijan's mineral water reserves are located in the occupied territories. Water in these reserves can be sold as bottled. At the same time, resort and recreational facilities can be created around them. 2 nature reserves, 4 wildlife preserves and historical monuments located in the occupied territories have great potential in terms of tourism development. The Azikh cave, which is one of the oldest human settlements in the world, can also be a popular tourist attraction.
Although by 2020 Armenia planned to build 30 small hydroelectric power plants in the occupied territories, only 16 of them were put into operation. The total capacity of these HPPs of 50 MW is equal to the capacity of the Sarsang HPP, which was commissioned in 1976. Considering that the Azerbaijani army liberated Sugovushan from occupation, the Matagis 1 and 2 hydroelectric power plants in this area were decommissioned. As a result, the power supply was reduced. In general, after the occupation, the energy system of Karabakh depends on Armenia, and the produced energy can provide 30-40 percent of the total demand.
President Ilham Aliyev's far-sighted agreement with Iran on the construction and operation of the Khudaferin and Maiden Tower dams, as well as power plants on the Araz River, speaks for itself today. The Khudaferin hydroelectric complex will allow Azerbaijan to generate 368 million kilowatt-hours of electricity per year. The facilities also have irrigation opportunities.
- What is the importance for the weak economy of Armenia to finance the “structure” in the mountanious part of Karabakh?
Armenia is not ready to wage a resource war and arms competition with Azerbaijan. Armenia becomes exhausted and drained. If we look at the state budget of Armenia, we will see that in 1995-2020, its military expenditures amounted to only 7.9 billion US dollars. At the same time, at that period, Armenia transferred sources from its budget to the budget of the fictitious regime. In general, over the past period, expenditures in the budget of Armenia in connection with the occupation amounted to about 8.6 billion dollars, which is a huge burden for the country. As a comparison, the volume of direct investments in the Armenian economy during that period was about 8 billion US dollars. At the same time, taking into account the level of 2020, we can see that mentioned costs are equal to the budgetary expenses of Armenia for 2.5 years. The predominance of military spending in the country's budget has created a serious problem for financing other areas, especially science, education, healthcare, technology, and the social sector. As a result, Armenia, where one in four people suffers from poverty, ranks among the countries with the most militaristic economy in the world. We can see that occupied Karabakh has no economic potential for Armenia, and all "long-term plans" have faced failure. In other words, for Armenia, Karabakh is an economic burden, and for Azerbaijan, Karabakh is an economic potential.
- What can you say about Armenia’s policy of settlement in the occupied territories?
Armenia pursued an illegal settlement policy in the occupied territories. So, the government of Armenia, encouraging the resettlement of Armenians from Armenia and other countries, especially Syria, Lebanon and Iraq, in the occupied territories of Azerbaijan, promised to provide them with financial, logistical and other assistance. However, the resettlement policy has completely failed. According to the statistics of Armenia, about 150 thousand people live in these regions. In the Armenian media this number was 40-45 thousand, while according to the report of the fact-finding mission in the occupied territories it was 25 thousan. It is important to remember that before the occupation, about 1 million Azerbaijanis lived in those territories. Apparently, this area has never been attractive to the Armenian people. At the same time, the existing economic potential of Armenia does not allow it to fulfill its promises. Armenia is the country suffering from the problem of depopulation, a low birth rate and an aging, and its policy of settlement in Karabakh failed. As one of the countries with the fastest population growth in Europe, Azerbaijan with its demographic foundation will make it possible to quickly populate the liberated territories and return our people to the ancestral lands of their fathers and grandfathers.
The liberation of Karabakh will contribute to the expansion and diversification of Azerbaijan’s economy. As Mr.President says “Karabakh is Azerbaijan!”
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