Deputy Secretary's Speech

Deputy Secretary of Commerce David A. Sampson
American Chamber of Commerce
Baku, Azerbaijan

I appreciate the invitation to speak to you today. Thank you Ambassador (Anne) Derse for that kind introduction. It’s a pleasure to be here in Baku to address the international business community in Azerbaijan.

For more than a decade you have played a vital role as a bridge between Azerbaijan and the world. You have also promoted the creation of an economic environment that allows businesses to thrive. This is good for the U.S. This is good for business. And most of all, it is good for the people of Azerbaijan.

This generation of Azeris has seen tremendous change and the creation of new opportunities. With a strategic location and large energy reserves, Azerbaijan’s economy grew at an astounding rate of 34 percent in 2006 and is poised to continue unprecedented growth in the future.

The United States has been an early and consistent supporter of Azerbaijan’s growth and independence, and Azerbaijan has become a strong ally and a strategic partner of the United States. As President Bush and President Aliyev said in Washington last year, we are allies in the war on terror, we both seek global energy security, and we desire economic and political reforms that promote freedom and democracy.

We are committed to these goals and to expanding commercial ties between our two countries. Today, this country is at a crossroads. Azerbaijan is grappling with the challenges that face virtually all developing economies and societies in transition, particularly those countries that have recently become independent from Soviet rule. Azerbaijan faces many challenges in confronting new realities.

The country has already achieved tremendous economic growth and seen foreign investment skyrocket. In fact, if you look back to the beginning of the decade, the entire stock of foreign investment in Azerbaijan in 2001 was about as large as the increase alone last year. So in one year foreign companies have invested as much in this country’s future as in the entire first decade after independence. (Source: UN conference on Trade and Development)

Accompanying this domestic economic growth and foreign investment is an expansion in international trade. In 2006 Azerbaijan’s trade with the world topped $17.5 billion, more than doubling the figure for the year before. (Note: 2005 TOTAL TRADE WAS ABOUT $8.5B).

Much of this can be attributed to the tapping of Azerbaijan’s energy reserves. And this is only the beginning of what is projected to be a quarter trillion dollars of energy revenues over the next decade. Oil and gas revenues have the potential to transform the entire country. The question is how Azerbaijan’s leaders will use this historic opportunity to provide a foundation for a diverse, prosperous economy that will fulfill the dreams of the nation. Making the right decisions and going down the right path now will turn the promise of long-term prosperity into a reality that will improve the lives of millions of Azeris for decades to come.

Wisely and effectively managing new energy revenues to develop the non-energy sectors of the economy can create jobs, raise living standards and help ensure the long-term sustainability of the economy. Azerbaijan has the opportunity to follow in the footsteps of other nations, such as Norway and Bahrain, that had the wisdom to see beyond petroleum and put their natural resources to good use.

For example, developing a solid transportation and technology infrastructure is critical to unlocking the region’s long-term economic strengths. A vital step is to create an environment that will attract investment in all areas of the economy.

The American Chamber’s membership is representative of the wide variety of international companies from transportation to information technology leaders that see a future in Azerbaijan.

Sustained growth and prosperity will require reducing corruption. Corruption is a cancer that will infect and destroy even the most promising economy with the most talented and dynamic people. According to the competitiveness report of the World Economic Forum, corruption is the most problematic factor for doing business in Azerbaijan today. Although the government recognizes that corruption is a major challenge, a systematic and sustained program is urgently needed to address it. During my meeting with President Aliyev, I expressed our support for the State Anti-Corruption Program. We would like to see a Phase Two of the program that outlines specific actions for international commitment, time lines and methods to monitor progress.

Azerbaijan must take steps to implement transparent, consistent and efficient administration of customs, licensing and tax functions.

We are pleased to see the new Presidential decree on strengthening customs and the creation of a “one stop shop” for investors.

The Azeri government’s commitment to the transparent management of energy revenues through creation of the State Oil Fund and its efforts in the Extractive Industries Transparency Initiative are also positive steps forward.

An important step in integrating Azerbaijan into the world economy and sending a positive signal to investors is accession to the WTO, a goal strongly supported by the United States. Progress in Azerbaijan’s WTO accession process will signal the country’s desire to meet international standards and create a fair business climate.

The United States stands committed to helping Azerbaijan create a stable, prosperous and market oriented economy, which will raise the standard of living for all citizens. The successful inaugural U.S.-Azerbaijan Economic Partnership Commission meeting in February underlined America’s strong support for the Azeri government’s efforts on vitally important issues including revenue management, the fight against corruption, and WTO accession.

Sustained dialogue, cooperation and progress on economic policy issues are critical to Azerbaijan’s future prosperity and stability and to strengthening our relations. The goal of my trip is to reinforce our strategic partnership at this critical juncture in Azerbaijan’s history.

The Commerce Department sees the AmCham as an indispensable partner in Azerbaijan. The AmCham has valuable practical advice to offer on building a better business environment, while AmCham member companies can contribute to Azerbaijan’s efforts to diversify the economy and create sustainable economic growth. We thank you for helping to strengthen our alliance in this strategically important part of the world and building bridges between our two nations.