Mr Twesten, could you please give me some information about the German Technical Cooperation (GTZ) and the priority of its activities.

Die Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ, in English: German Corporation for Technical Cooperation), does not exist any more. As of January 1, 2011 the GTZ merged with two other German organizations, the German Development Service (DED) and Capacity Building International (Inwent). Now we are  GIZ (the German Corporation for International Cooperation). So, as we are actually a new organisation which of course combines the expertise and experience of its predecessors. In Azerbaijan the difference to the former GTZ may be considered to be only marginal by outsiders. In line with the creation of the GIZ we have however also broadened our scope of possible fields of activities and therefore also the options for cooperation with our current and potential Azerbaijani partners in the public and private sectors.

The GIZ is an enterprise that is 100% owned by the Federal Republic of Germany. Its main objective is to support the German Government, notably the Federal Ministry for Economic Cooperation and Development, in achieving its objectives in the field of international cooperation for sustainable development and in its international education work. Therefore you may also consider us as an in-house consultancy of the German Government that implements development programmes and projects on its behalf. The main donor is the German Government. In addition we can also work for other clients such as the EU or World Bank or other countries like the Netherlands or even at some time for Azerbaijan. The main focus of the GIZ is to assist developing countries, countries in transition, emerging economies and since January 2011 also industrial countries. For example, I was working in Bulgaria, i.e. an EU member, before I came to Azerbaijan in January this year.

GIZ is a large entity. We are currently engaged in more than 130 countries. We have an annual turnover of currently 1.85 billion EUR and roughly about 17,000 staff members worldwide. Azerbaijan is one of our partners. The fact that we even have our own office in Azerbaijan shows that this country belongs to a group of partner countries we consider as important in terms of both the current and the potential future cooperation. Azerbaijan is developing rapidly and visibly. We are pleased to contribute to that development as well.

As regards our priority directions of activities, GIZ is working worldwide in the fields related to sustainable development and international education such as agricultural development, economic development and employment, good governance, environment, health, education, or peace and conflict prevention. In Azerbaijan we work in three focal areas with our partners, each of which contains one or more individual projects and programmes. The focal areas are (a) Good Governance, (b) Environment, and (c) Sustainable Economic Development.

In the field of Good Governance, we are working in two larger programmes, namely the Judicial Reform Programme with the Ministry of Justice and the Local Governance Programme with central and local authorities as partners. In addition, we also support the Civil Service Commission under the President in the reform of the civil service and the Ministry of Foreign Affairs in establishing management structures for development and disaster relief assistance granted by the Azerbaijan Republic to other countries.

In the second focal area, i.e. Environment, we focus on a large programme on the Sustainable Management of Biodiversity covering areas like forest and pasture management as well as natural park management. Here, our main partner is the Ministry of Environment. However, we also cooperate with regional and local authorities, and when it comes to the use of natural resources also with small and medium-sized companies and cooperatives.

The third focal area of Sustainable Economic Development is one with a long tradition of cooperation with Azerbaijan and in the region. Together with activities in agricultural development the measures in economic development were actually the starting point of our engagement in Azerbaijan in the first half of the 1990s, at that time with a focus on the assistance of internally displaced persons. Today, we are cooperating with our Azerbaijani partners in a comprehensive programme on Private Sector Development, that covers financial and economic policies, investment promotion, trade and - starting in 2012 – qualification and employment promotion. The overall guiding element is to support the strategy of Azerbaijan to promote its non-oil sectors and thus to diversify the economic structure and base of national income and welfare.

So, this is basically the overall set-up of our engagement worldwide and in particular in the cooperation with our Azerbaijani partners.

• How do you evaluate 15 years of activity of GTZ in Azerbaijan and which projects have been carried out during this time? Which benefits does the Azerbaijani side get from it?

The - at that time - GTZ was officially registered with its new office structures in 1997. However and as I have already indicated previously, we started our work in Azerbaijan in 1993 in assisting internally displaced persons (IDPs) in housing and food security, and have since then worked in numerous projects and programmes, the existing one of which I have already mentioned previously. To cover all former projects would simply exceed the limits of this interview. So, let me refer to the overall developments and successes in sectors with a long tradition in cooperation with Azerbaijan, i.e. sustainable economic development and judicial reform.

Today, economic development assistance is still a core element of our engagement. However, the focus has broadened and in some areas also shifted in line with the rapid development successes Azerbaijan could achieve in the last two decades. So, starting with addressing the core needs of IDPs at that time we more and more included other more general issues in our portfolio. In economic development for example we started working on sectoral development and technology transfer in key non-oil sector areas such as tea production in Zaqatala or later in Lenkoran. As a next step - and to cover the missing link between the sectoral assistance on the producers' level and the development of the overall economic environment - we also started to address the macroeconomic environment of private sector development, notably the spheres of trade and investment policy formulation and implementation. As of today we are cooperating with our partners such as the Ministry of Economic Development in the area of investment policy formulation, or assisting the Government of Azerbaijan in developing national think-tanks in economic analysis and planning. We are now also cooperating with the Azerbaijan Export and Investment Promotion Foundation (AZPROMO) in promoting the country as an investment destination and in establishing business links between Azerbaijani producers and exporters with partners in foreign markets. Today, the technological issues, i.e. the question on how to produce, are not a key element in our cooperation anymore. Nowadays, questions on how and where to sell the product and how to get in contact with business partners in current and future markets play a more dominant role in our engagement. We have been successful in bringing Azerbaijani products to international markets through, for example, support of their presentation on fairs and exhibitions in the EU. In addition, we still have very concrete plans to deepen our cooperation with our Azerbaijani partners. For example we want to strengthen the personnel and organisational capacities of Azerbaijan in economic analysis and planning. We have also agreed with our partners to put more emphasis on vocational training as a key element, if not prerequisite, for the improvement of labour productivity and thus also the attractiveness for foreign and domestic investors. For example in the tourism sector, it is often the lack of skilled and service-oriented labour force in hotels or restaurants rather than the lack of infrastructure that limits the development of the sector.

In the Judicial Reform Programme, which is one of our key programmes in the area of Good Governance, our partners have achieved a very significant success when the new administrative law, which was drafted with assistance of GIZ on behalf of the Federal Ministry for Economic Cooperation and Development, was adopted by Parliament. Now ordinary citizens have the right to take legal proceedings against administrative decisions. Such a law improves the rights of ordinary citizens vis-a-vis the public administration and is therefore also a clear indication of the positive development in the judicial sector and also the society as a whole. To be honest, I am proud that we could contribute to that success by bringing in German expertise and our experience in drafting and executing such law. Of course, the cooperation in this area does not end at this stage. There is still a lot to achieve in the implementation of that law. At the moment my colleagues and our Azerbaijani partners in the programme are focusing on training judges in the application of the new law.

-All right, that is quite impressive and pretty exciting. If we would classify institutions which you cooperate with in Azerbaijan by percentage, which picture could you draw?

This is difficult for me to answer given the broad range of our portfolio in Azerbaijan and the sheer number of public and private partner organisations in the programmes and projects we are working in. So, I will not be able to provide you with percentages, but I can give you an overview of the principal partner organisations.
When it comes to the overall coordination of our activities in programmes and projects our major partners and contacts are the Cabinet of Ministers and the Ministry of Economic Development. The latter - as well as its subordinate agencies and institutes - is also our key cooperation partner on the technical level in the focal area of sustainable economic development. In the focal area of Good Governance our core partners in the programmes and projects are the Ministry of Justice and the Supreme Court for the Judicial Reform Programme, central and local institutions such as the governor's office and the municipality of Sumgayit for the Local Governance Programme, the Civil Service Commission under the President for the Civil Service Reform Project, and the Ministry of Foreign Affairs for the new Project on Azerbaijan's Development Assistance. In the area of environment our main partner is the Ministry of Environment. Let me stress that these are only our principal partners we are coordinating our activities with. In the implementation of the programmes and projects we are also working with a wide range of partners from academic institutions, the private sector and the civil society.

• What will be the basics of technical cooperation in the second decade of the 21st century and will there be any changes given the increase of Azerbaijan's oil revenues?

This is a very relevant question and the answer to that is also crucial for the engagement of the GIZ in Azerbaijan. However I am afraid I am not in the position to answer it. Currently, the GIZ is working in Azerbaijan on behalf of the Government of Germany, notably the Federal Ministry for Economic Cooperation and Development, only. The decision on the scope and the priorities of the Germany's future development assistance will be taken by the German government only. The GIZ as its implementing agency may be consulted; it however will not be in the position to decide on the matter.
On the other hand, GIZ can also work for other donors such as the EU or even the Government of Azerbaijan. I assume that the engagement of the EU will continue in the course of the negotiations on the association agreement. In addition, Azerbaijan as a -rich country will take over more responsibilities in the area of humanitarian aid and development assistance in other countries. Moreover, Germany will remain a key partner for Azerbaijan in the EU. I hope that the GIZ with its worldwide contacts and network as well as its expertise and experience in the areas of economic cooperation and development will remain an attractive partner for other donors in Azerbaijan or even the Government of Azerbaijan.

- Azerbaijani officials have recently declared that Azerbaijan is not going to need any foreign investment. Since we have great oil income we are not going to need any foreign investment, we are going to be able to settle all of our business on our own. What do you think about that? Doesn't this mean that we are going to have a closed economy?

Well, we are living in a globalised world. That is in particular true for the capital market. So in a globalised world an investor, whether he is from Azerbaijan or elsewhere in the world, can choose where he wants to invest his capital. He would go where he is receiving the highest return of his investment. Why should you prohibit that? Why should you not allow an investor to come to Azerbaijan because he thinks that he will achieve the highest return in Azerbaijan? Why on the other hand should you not allow an Azerbaijani investor to invest abroad, if it is more profitable for him?
Foreign investments are not a bad thing, on the contrary. With foreign investment you can accumulate capital, while allowing the Azerbaijani investor to gain higher returns elsewhere – which is of course beneficial for Azerbaijan as a country as well. Moreover, foreign direct investment is often combined with innovation and therefore a motor for technological progress. For example look at the Chinese car industry. It could only grow in such a short time because the Chinese government allowed foreign investors in that already possessed the technology. I strongly believe that foreign direct investors could be particularly supportive when it comes to the promotion of the non-oil sector. When you look at the agriculture and food sector for example, there are some structural issues that impede growth, but also the lack of technology or even the lack of a sales network are significant. A foreign investor can bring in both, the technology as well as the business contacts and future buyers.

Why do you think Azerbaijan is in no hurry to get into the WTO?

Azerbaijan whose exports are largely dominated by oil and gas may not have an incentive to become a member of WTO because there are hardly any restrictions on these products imposed by the importing countries. So, the thinking may be that, on the one hand, there is no need to become a member because the trade in those goods is already free while, on the other hand, the membership would certainly also mean that Azerbaijan has to open up its own domestic markets that are currently vulnerable or not yet ready for competition from outside. This could be the case for agriculture for example.

This however is only one side of the coin, and it is also very much related to the current situation. With Russia's accession to the WTO that may change completely. I have no detailed information about the current pattern of trade with Russia. I however assume that Russia is a key market for Azerbaijan's current and future exports of the non-oil sector, notably agriculture and food. With accession to WTO Russia will not be allowed to grant Azerbaijan any privileges or favourable conditions in market access anymore that it will not also give to the WTO members. It may even discriminate such imports from Azerbaijan by providing more favourable market access conditions to its partners in the WTO – and Azerbaijan, unlike the WTO members, has no means at hand to take proceedings against that. All this may not be considered relevant at the moment; it however will become so, if Azerbaijan increases its efforts to promote the non-oil sector. In Azerbaijan with a relatively small domestic market the anticipated growth of the non-oil sector can only be achieved if it is export-led. Therefore, access to the Russian market as well as to that of other WTO members such as the EU, Georgia or Turkey becomes crucial.

-My last question: Elmar Mammadyarov, the Minister of Foreign Affairs, in an upcoming interview to a German publication, states that Azerbaijan is ready to cooperate with and integrate into Europe. But, it does not hurry to join the EU in the near future. What would be your comment on this, to what this could be related?

At the end of 2010 Azerbaijan signed a memorandum of understanding to an  association agreement under the Eastern Partnership. So, Azerbaijan is now getting into formal negotiations with the European Union on deepening the bilateral relations in all kinds of fields. I assume Mr Mammadyarov is referring to these negotiations.
I am not in the position to comment on the path and the comprehensiveness of cooperation or even integration with the EU. I am however convinced that both Azerbaijan and the EU would very much benefit from a closer cooperation whether it is political, economic or cultural.
There are many forms of closer cooperation possible. I think a very important one would be the Deep and Comprehensive Free Trade Agreement with the EU that would provide Azerbaijani products in addition to oil and gas with better access to the EU market and would therefore also contribute significantly to the growth of the non-oil sector.
However, a free trade agreement or other formal arrangements of cooperation that are fruitful and beneficial for both sides also need to be prepared properly on both sides. This also refers to necessary structural adjustments that are to be made prior to such a deepened cooperation. The EU with its Comprehensive Institution Building programme for example is actively supporting Azerbaijan in this area. The same holds for programmes and projects the GIZ is implementing on behalf of the Government of Germany with its Azerbaijani partners in the fields of economic development, governance and environment.