Oil Should Cease to Be Priority

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- Togrul Bey, do you think the trend was set correctly to the economy of Azerbaijan?

- Honestly, it's difficult for me to answer this question, because it is almost impossible to know in advance, but it can only be determined later. Therefore, we must proceed from the results. And today the results are causing us to recognize that our economy was built incorrectly. It would be more correct to use the entire industrial potential of the country, which was quite large.

- For 27 years now, Azerbaijan has been independent. By the way, Azerbaijan restored independence, being one of the most promising of the Soviet republics from the economic point of view, although it was at war. How do you think, where were the mistakes made? In what direction did the economy need to be developed?

- Indeed, in the 90s of the last century we were the most promising country in the USSR, because, as I have already mentioned, we had very high industrial potential. So, we were one of the two countries of the Union, who provided themselves with industrial products. True, since we were part of the USSR, all the resources that came to us were inexpensive. But if we had managed to maintain these relations and ties, now everything would have been different for us. In 1993-1996, approximately from the mid-90's we took a completely different course: we began to sell oil and earn income. But it was not so much mistaken as the fact that the proceeds from the sale of oil were not invested in the development of other spheres of industry. But it was necessary to develop the real sector of the economy, because only oil never provides a sufficiently high level of development.

- Azerbaijan is recognized as an oil country worldwide. Experts also note that its economy is built on oil. The budget is also based on oil revenues. At the same time, there are other oil countries in the world, in which the economic spheres are considerably developed. And why have other branches of our economy not progressed?

- Speaking of other oil countries, you probably mean Norway. But it is hard to understand that the economy of this country was fully formed before the oil boom, and the development of the oil industry then became an additional impetus for further improvement of its economy. That is, in such countries, the basis of the economy is not oil. At us the oil economy was generated in the middle of the XIX century. During the Soviet era, it was slightly changed. According to some sources, in the early 1990s oil was only 15-20% of GDP, since even during the Soviet period it was well understood that it is difficult to build a stable economy on oil. Therefore, saying that some oil countries are more developed, one must understand that in their economy even before the oil boom there were other sufficiently developed spheres. And after the beginning of oil exports, these industries not only continued to function, but also improved.

- And what about the National Fund for Entrepreneurship Support (NFES), or subsidies for the development of agriculture? Is this insufficient to give an impulse to the development of other spheres?

- Actually, if NFES that you"ve mentioned and the system of subsidies allocated to the development of agriculture functioned as it should, everything would be normal. However, not only these, but also the credit and other systems do not work for us as they should. These and other supporting funds will never be able to occupy an important place in the economy. Because there are many tens of thousands of farmers engaged in agriculture and hundreds of thousands of entrepreneurs. And they cannot be provided with financial support from the Support Fund. For this, the credit system must function properly, so that people, having taken a normal loan, could develop their own area of ​​activity and establish their own business. An enterprise development assistance fund, in fact, is a form of additional assistance provided by the state. And this never takes and should not occupy an important place in the system of ensuring the activities of an economic entity. But our credit system is very poorly developed and has a number of problems - high interest rates, inaccessibility of loans for farmers, etc. The thing is that in many cases, farmers are not given loans, because they do not have real estate in Baku to mortgage to the bank and the like. And all this is due to the fact that the credit system is in a deplorable state. That's why business and agriculture do not develop. Only subsidies and funds supporting business cannot let the business succeed.

- In recent years, the development of agriculture in general, and cotton growing in particular, is given great attention and a lot of money is invested there. Will this investment be fruitful?

- There will be no effect from all this. Because, as I said, it is meaningless to hope that only through subsidies can the development of agriculture be ensured. First of all, there must be a goal. For example, the development of cotton growing must be subordinated to a specific goal. Cotton production assumes the existence of a textile industry. The need for cotton growing is not so high that we should develop it. Trying to enter the world market is somewhat pointless, since it is already occupied. We can supply only very small shipments there, and this will be of little use for the country's economy. At the same time, in connection with the development of cotton growing, the state should support, first of all, the development of the textile industry and a number of other industries. They must progress so that the result is a need for the development of cotton growing. But where there is no demand for cotton, there is no point in developing cotton growing, and it will not have any effect. The same is true in other areas, because we still do not know why a number of technical areas of industry have been created. In the absence of a goal, everything becomes ineffective. The only successful area is the cultivation of tomatoes and the production of tomato paste, and this has become possible due to some specific features of this industry. But, in fact, in other technical areas, say, in the production of tea and cotton, there is no goal, and when there is no goal, there will be no effect.

- Suppose the oil era is over. What will happen then? What steps should be taken after that to provide the adequate economic development of Azerbaijan? Which areas need to be given more attention? Are there chances for the current economy to become normal? Is there a way out?

- When the oil era is over, another era will begin. However, in fact, this is impossible. The oil era will end and the gas era will begin, etc. This is not a problem. For adequate development of the national economy, first of all, it is necessary to move to a normal market economy. If we want to develop the state, it must leave the market. It must perform only supervisory and supporting functions, and in no case it should be a participant in the market. And we can say that all economic transactions, mostly in one way or another, are carried out with the participation of the state. Agriculture, that is, millions of people, and other spheres, such as the entire industry, applications, etc., in fact everything, is connected with the state. The state must move aside. It should only control and occasionally support. This is the only way for its participation. To build a normal economy there is always a chance, and there is always a way out. It may be that this way out is unprofitable to someone. In many areas, the way out of the situation is to restore competition. And this, in any case, is unprofitable and is not a positive outcome for large holdings and for the bureaucratic-oligarchic system. However, in reality, in fact, the solution is to restore normal competition. For the development of other spheres there must be only one principle. The oil and gas related areas should cease to be a priority. Attention, support, incentive measures should be directed to all other spheres. This should become the main principle of the state.