- Mr Ali, as you know, the Central Bank’s Board of Directors yesterday made the decision to switch to the freely floating rate of manat throughout the country. This news has caused varying opinions analyses to emerge in society. What reason do you think this decision stands to? And how it is going to affect future processes in the country?
- As you know, the Azerbaijani government had done all it could to maintain the stability of our currency until yesterday although most of the oil producing countries including Azerbaijan’s close trade and economic partners, CIS countries had made changes to their monetary policies much earlier. Experts do know that maintenance of currency through intervention causes huge losses for the government. However, we also know that shifting to the “floating rate” cannot take place without public losses and this process brings about a number of socio-economic problems, affecting domestic life and public opinion. Most people in Azerbaijan knew that the shifting to “floating rate” had become virtually unavoidable and the Central Bank had to go through this. As you know, the whole world is undergoing a crisis nowadays; national production and income are decreasing in many countries, their currencies are losing value. National currencies are losing value at a rapid pace in many countries – regardless of their power and potential – from a major world power like China to small countries. The national currencies of our closest trade partners – Russia, Turkey, Iran, Kazakhstan, Georgia, etc – had been left free long ago and that was causing difficulty in our trade and economic relations with them. Azerbaijan’s domestic production was decreasing because of the stable and high rate of manat. In this case, the introduction of freely floating rate of manat was inevitable The Azerbaijani government was only trying to ease and delay processes likely to affect social life in the country. But our country is part of the globe, so we had to abide by and adapt to ongoing global economic processes. The other thing is, Azerbaijan is an oil country and countries like Azerbaijan cannot discount the factor of drop in the price of oil – the main source of their budget. The prices of oil and oil products have gone down thrice since the beginning of this year in world markets. This means triple decrease in Azerbaijan’s oil revenues. While other states that form much of their budget on the basis of oil revenues, including our closest neighbors, have been forced to release the rate of national currencies since the beginning of this year, the National Bank of Azerbaijan tried to pay off the deficit at the expense of its own resources for a long time. However, constantly regulating this process at the expense of foreign exchange reserves could cause bigger blows to the economic situation in the country in future. Everyone knows that oil prices in world markets won’t rise in the near future. Of course, the process isn’t only related with objective market laws, but also with subjective reasons, mostly with the US-Russian relations. It is clear to anyone that at a time of growing geopolitical rivalry with Russia, the US has opted for a policy of affecting oil prices by artificial means in order to economically weaken its rival. Washington firstly took control of OPEC and limited its ability to make a decision on prices in different ways. Then the United States lifted the 40-year-old ban on oil exports. The House of Representatives supported the bill on the abolition of the ban in the light of rapid decline of oil prices in the world market. This decision can’t be explained with economic laws, either. The fact that the U.S. began oil sales when the price was only $37 proved that they had intended to “regulate the prices this way, rather than achieving economic growth and increase in production”. The US Federal Reserve System’s increasing the discount rate along with the abolition of the ban on oil exports strengthened the position of US dollar and weakened other countries' currencies. This devalued the oil slightly, resulting in a further decrease in revenue of countries selling oil. Considering Azerbaijan’s neighbor Iran will begin to export oil to the world market next year, it seems very complicated that the process can be regulated in the near future.
In short, the global economic crisis, release of the national currencies of Azerbaijan’s closest trading partners, as well as international conjuncture, sharp fall in oil prices and etc. made the National Bank’s latest decision inevitable. However, it doesn’t mean that the government will use no regulatory mechanism in this regard. First of all, our government will try to make this process less burdensome for citizens in need of social protection. All steps will be taken to eliminate the stimulation of domestic production, the remaining parts of shadow economy, such as monopolies, corruption, artificial barriers to entrepreneurial activity. At the current stage, the main goal is to compensate the inevitable negative consequences of devaluation with new market mechanisms. Let our citizens be confident that the Azerbaijani government will take all necessary measures.
- How do you assess the bill recently submitted to Congress by Chris Smith, chairman of the US Helsinki Commission?
- As is known, Azerbaijan in such matters builds its policy based on the official position of its partners rather than individual pro-Armenian politicians. Such a biased step by Congressman Chris Smith is not an official position of the White House and US officials. This congressman is well known in Azerbaijan. We know that since 2000, he has been making pro-Armenian statements and initiatives, trying to cast a shadow upon relations between Azerbaijan and the US as if he acts as a representative of Armenia’s Abovyan province rather than as a representative of New Jersey. Chris Smith is one of the numerous congressmen making doing his utmost to achieve the recognition of the so-called Armenian genocide in the US. During this year, he made several statements on the need for recognition of the so-called genocide even sent an appeal to the US president in this regard, begging. In short, I have a similar attitude both towards this person’s reputation and his bill. What’s important is that Washington has never taken seriously Smith’s initiatives on the recognition of the Armenian genocide or his anti-Azerbaijani proposals. This issue should not be taken seriously. We hope this initiative of Smith will be rejected by the US officials and this project will become another failed dreams for pro-Armenian forces. In fact, in every country there are politicians like Smith. In Azerbaijan there are also people who think that the US takes a pro-Armenian position on the Nagorno-Karabakh conflict, demonstrating a biased attitude toward the country and acting under the influence of the Armenian lobby. They demand the Azerbaijani government puts an end to strategic partnership with the US and gives an adequate response to biased attitudes toward the country. But as I noted, we are interested to develop relations with the US and we are going to allow different challenges to undermine bilateral ties.
Of course, if the US expresses official support to this biased bill, playing into the hands of pro-Armenian forces, then the Azerbaijani government will give a deserved response to this – let there be no doubt about that.
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