Remarks by the U.S. Ambassador Reno L. Harnish at the Annual Conference - State Program on Poverty Reduction and Economic Development
Baku, Azerbaijan

May 12, 2005

I want to congratulate the Government of Azerbaijan and the Ministry of Economic Development on the progress made in implementing the State Program on Poverty Reduction and Economic Development -- for example, reducing the poverty rate, creating a strong SPPRED Secretariat and launching a Regional Development Program.

When SPPRED was launched more than two years ago, the strategy provided a comprehensive program for reducing poverty and a framework for discussion between the Government and donors. The U.S. Government's assistance goals of improving the investment climate and promoting economic development in the non-oil sector complement the SPPRED strategy. We will help Azerbaijan to build its capacity to use transparently and effectively the large sums of money coming from energy production. Also, we will continue to work with the government and people of Azerbaijan in their transition to a democratic government and a market-oriented economy. We believe this is the critical path to achieving prosperity for all of Azerbaijan's people.

In the past year, we have witnessed real progress in building the East-West Energy Corridor. The United States Government has been firm in its support of the pipelines. The opening of the BTC pipeline this year will allow Azerbaijan fully to develop its energy resources -- for commercial benefit, but also in a way that will help secure the sovereignty and independence of Azerbaijan and the Caspian Region. The opening of the pipelines will also bring an enormous financial windfall to Azerbaijan.

None of what oil money can fund -- new roads, factories, schools or hospitals -- will succeed in reducing poverty and building prosperity they are only objects. Unless there is systemic reform, including a thorough liberalization of the economy, a country cannot achieve sustained growth.

Let me suggest a few examples of reform for the future:

This would mean strengthening the banking system.

This would mean opening up to the global economy through accession to the World Trade Organization.

This would mean strengthening enforcement of law, and creating a legal system that people can trust.

This would mean taking steps to end monopolies.

This would mean taking power from those who use their regulatory authorities to protect vested interests.

Perhaps most importantly, this would mean taking further steps to stop corruption.

The Government has passed a new Anti-Corruption law, adopted a National Action Plan on corruption, and established an anti-Corruption commission. These are good first steps. At the U.S.-Azerbaijan Economic Task Force meeting last week, we talked a lot about additional steps needed to end corruption and improve transparency. The U.S. Government, along with other donors, is ready and willing to provide technical assistance to implement the new anti-corruption law.

As I mentioned earlier, the U.S. Government will continue to support Azerbaijan in achieving its goal of poverty reduction. One concrete measure we have taken is to launch USAID's new Public Investment Policy and Efficiency Project (PIPE). The multi-year PIPE program will work with the Ministry of Economic Development and other ministries to strengthen capacity for long-term sectoral development and for preparation of public investment projects -- the roads, factories, schools, and hospitals. PIPE will help translate the stated goals of SPPRED into budget priorities. We also believe that careful attention to linkage of this project with Ministry of Finance budget process is important.

Again, I want to congratulate the Government on the progress thus far in implementing the SPPRED, and I look forward to working with you over the next year to continue to develop the economy -- and to create prosperity for all citizens of Azerbaijan.