Cotton interests

On October 7, at a governmental meeting, the President Ilham Aliyev called one of the priorities of the agricultural sector the revival of cotton production, which declined, reaching the bottom. In 2015, according to official data, was collected 35.000 tons of raw cotton, which means 10.000 tons of final products - cotton fiber.

It is not known whether this amount  is suffice for the  operation of the industrial enterprises Park "Gilan" Tekstil in Sumgait  opened in 2013; but it is a fact that the factory products in the form of quality branded lingerie and hosiery does not appear in the markets.

The reason for the crisis of the cotton sector, as well as other industries,  is that the  interests of officials, oligarchs in Azerbaijan were placed above the interests of the state, and  though it sounds loud  - are  above the interests of the people. They created a monopoly in the economy and the destruction of the competitive environment became the main factors of deterring economic development.

Specifically, with regard to the cotton industry, the interests of cotton producers have never been taken into account. After the privatization of land and the collapse of the kolkhoz system, free Azeri farmer did not want to serve for miserable payment the interests of senior officials who have turned the cotton industry of Azerbaijan in the sphere of personal enrichment. Cotton producers are buying up just 10 cents per kilogram, or $100 per ton. Of the three tons of raw cotton was produced one ton of cotton fiber, which cost in the foreign market $1400. With this approach, farmers have to turn to more revenue crops - vegetables, fruits, food. As a result, cotton production has declined over the past 20 years by nine times.

It should also be noted that since the beginning of the 90s cotton began to be exported in the form of raw materials, while in the Soviet period it was processed, and sent abroad in the form of yarns and fabrics, which are produced at the plant named after Tagiyev, as well as in the in the form of textile products. That is, the difference between raw materials and finished products is huge and incommensurable. That such an approach was not enough to those who stood at the head of the current political and economic system.

In this case, I would like to give a couple of examples of strategic mistakes that led to the bad state not only of cotton, but also the economy as a whole. The spring of 1993 I was asked to establishing contact between the foreign investor and President Elchibey on the creation in Azerbaijan large cotton and textile design, which included all cycles - cotton production, processing, and production of yarn, fabrics, and textile products of leading brands. The investor was a Belgian bank Crédit Lyonnais (CLB). In Baku arrived responsible representative of the bank Abdeen Sadr's brother of then late first Iranian president  Bani Sadr. Badin Sadr represented  the interests  of the sister of the Shah of Iran, which was one of the major bank depositors. They stated that they are willing to invest in the industry $1.2 billion.

The sum for those times is fabulous. The place for construction enterprises was selected area on the Mardakan-Buzovna road. The choice of location was determined by three important transport factors: the proximity of the sea pier in Dubendi, railway, airport. The project also included the construction of houses for the personnel of the enterprise, consumer infrastructure, and even clinic for animals. When asked why such a clinic. But  we were told: "The Bank cooperates  with Animal Protection Foundation, which is headed by Brigitte Bardot, and participation of the Fund  in all projects is required."

Later  a meeting was organized with Elchibey, who promptly gave the go-ahead for the project, not making any personal terms  on his part. After the change of regime in Azerbaijan, negotiations continued with  Heydar Aliyev, and then completely stopped, due to the fact that the Azerbaijani side has not shown interest in it. While cotton was bought at a very cheap price by "Goods for the people" Concern, and then  through  channels  of private  firms under the new elite of the English flag went abroad.  Deplorable result was predetermined by the  dropping interest of farmers due to the low purchase prices and falling interest of  elite which by that time was interested  in the flow of petrodollars.

The second example concerns the same petrodollars. The fact that foreign companies that participated in the "Contract of the Century" first were ready to re-invest their profits in the non-oil economy of Azerbaijan. But they were willing to do so under the condition that such investments will be subject to the same rules as oil contracts. The fact that the "Contract of the Century" was approved by Parliament in the form of a single legislative act, and was put beyond abnormal tax customs, judicial system of Azerbaijan. One of the mechanisms of this idea was the company Ramco. Its CEO Steve Ramp noted that under the current system of the three components it makes no sense to invest in the development.

In February 1999 Ramp even organized the conference and announced reinvestment. However, these initiatives were not supported. As a result, petrodollars began to go abroad, when under the scandalous and incompetent privatization the current industry instead of modernization and reformatting to new international standards with the participation of foreign investors was destroyed, stolen. And in every case it was the result of the prevalence of individual interests over the interests of the state and nation.

It is not known whether Ilham Aliyev will continue transparent and free policy of "open door" for foreign investors; yet such promises are not visible except declarative appeals and assurances. It is unlikely that this will occur in the future, because the whole strategy of building industrial parks, and on and agro-parks, is built on the principles of monopoly, absence of competence, the narrow interests of a narrow circle of people. In case of continuation of this policy, economic development will be extensive and limited with alternating permanent crises and stagnation.