Investment flows to Karabakh: how to direct it?

We must build the liberated territories just as a car is rebuilt. The engine, tires, and other parts of the car were completely out of order after the accident. They just put a car with an iron shell in front of our eyes. This "car" of the economy also needs outside support. We must convince investors to do business in this region. We must use a variety of incentive tools to motivate them. At this time, we must mobilize the potential of investments in three directions:

(i) We should increase capital investment expenditures from the state budget;

(ii) We should open the door to domestic investment in the region;

(iii) We should bring the interests of foreign investors to the region;

The most generous expenditure item in Azerbaijan in recent years is considered the construction, repair, and infrastructure expenditures. Every year, we spend an average of 35-39 manats for every 100 manats of budget expenditures on the construction or renovation of infrastructure. In the next state budget, we will have to increase our expenditures in two directions: our capital investment expenditures and defense expenditures. So, public funds (the state budget belongs to this category) can be considered a source of investment that we can direct to Karabakh.

We need to offer a variety of incentives for domestic investors to invest in the liberated territories, from institutional concessions to tax breaks. This would also prevent the flow of migrant capital to various countries.

Investment infrastructure created at the expense of public funds should play a pivotal role in attracting foreign investment. That is, it should condition the inflow of foreign investment into the country due to the attractiveness of the infrastructure. When foreign investment comes, it creates value in the economy. Therefore, the value-added opportunities of the infrastructure must be used. Infrastructure creates costs when it does not create value. Because the established infrastructure itself requires additional maintenance and depreciation costs from year to year. Therefore, an infrastructure system must be created so that it can attract foreign investment.

We must build our relations with foreign investors in a completely different format. We must put aside simple formats such as "Let's invest in Karabakh". We must have a separate investment strategy for Karabakh. We must accept that when it comes to foreign investment, we must not end our work by allowing money to cross the border into one country only.

We need to build an investment strategy so that investments will bring new technologies, modern management, knowledge, skills, etc. along with or behind them. These effective investments can revive our Karabakh, which we consider a dead zone.

Criteria for attracting investment

First of all, we must form a favorable economic regime in our liberated regions. An investment climate must be created for the establishment and development of business. We need to normalize the factors that determine the investment climate in four directions (political, economic, legal, and social). Priorities for foreign investment must be clearly defined. We must pay more attention to the companies, which represent the states that have a clear position in the political and legal promotion of Nagorno-Karabakh, to be business entities in this region. While we set unambiguous and superior criteria for specific Turkish investors, for example, we can apply restrictive conditions for other countries. The French state can be included in this list. We can also set prohibitive norms for French companies. We can also pass a law banning companies from several countries, especially French companies, from investing in Karabakh. If the senate of this state does not consider Karabakh as our territory, our parliament can pass a statement of protest for that state and similar laws for the companies existing in that state. This type of legislative requirements for investment activities, as an economic principle, is very fully expressed in our proverb: “He who has no trace in the field should not have the face on the table!”

"No" to French investment, "Yes" to Turkish investment

At the beginning of the 21^st century (2001), during Jacques Chirac's presidency, France was the first European country to recognize the so-called "Armenian genocide", 18 years later, in February 2019, the current French President Emmanuel Macron signed a decision to mark April 24 as the "national day of commemoration of the Armenian genocide". In November 2020, the French Senate passed a resolution declaring Nagorno-Karabakh the territory of Armenia. After these relations, the participation of French companies as investors is impossible.

It is important to increase the volume of Turkish-Azerbaijani investment many times. Over the years, Turkey has invested $ 11 billion in Azerbaijan and Azerbaijan $ 20 billion in Turkey. Azerbaijan is the largest investor in the energy sector in the brotherly Turkish economy. In addition, our investments in the construction and food sectors are expanding. If we take into account that the GDP of Turkey is $ 813 billion, and the GDP of Azerbaijan is $ 45 billion, both countries must accept that we need more Turkish investors to invest in the Azerbaijani economy.

We must build an investment strategy so that investments are directed not by episodic situations and emotions but by our rational goals and minds!

Mohammed Talibli