Identifier
Created
Classification
Origin
06BAKU1475
2006-10-11 05:19:00
CONFIDENTIAL
Embassy Baku
Cable title:  

AZERBAIJAN: AMBASSADOR'S INTRODUCTORY CALL ON

Tags:  ETRD ETTC ECON PGOV PREL PINR AJ 
pdf how-to read a cable
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RR RUEHDBU
DE RUEHKB #1475/01 2840519
ZNY CCCCC ZZH
R 110519Z OCT 06
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 1437
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 1770
RUEHFT/AMCONSUL FRANKFURT 1308
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAHLC/DEPT OF HOMELAND SECURITY CENTER
RUEATRS/DEPT OF TREASURY WASHDC
RUEAORD/BICE SAC WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001475 

SIPDIS

SIPDIS

DEPT FOR NP/ECC - PVANSON, ACHURCH AND JGABRYSZEWSKI

E.O. 12958: DECL: 10/02/2016
TAGS: ETRD ETTC ECON PGOV PREL PINR AJ
SUBJECT: AZERBAIJAN: AMBASSADOR'S INTRODUCTORY CALL ON
CUSTOMS COMMITTEE CHAIRMAN

REF: (A) BAKU 848 (B) BAKU 620 (C) BAKU 267 (D)

EMBASSY-CBP EMAILS 10/06

Classified By: AMBASSADOR ANNE E. DERSE, PER REASONS 1.4 (B,D)

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001475

SIPDIS

SIPDIS

DEPT FOR NP/ECC - PVANSON, ACHURCH AND JGABRYSZEWSKI

E.O. 12958: DECL: 10/02/2016
TAGS: ETRD ETTC ECON PGOV PREL PINR AJ
SUBJECT: AZERBAIJAN: AMBASSADOR'S INTRODUCTORY CALL ON
CUSTOMS COMMITTEE CHAIRMAN

REF: (A) BAKU 848 (B) BAKU 620 (C) BAKU 267 (D)

EMBASSY-CBP EMAILS 10/06

Classified By: AMBASSADOR ANNE E. DERSE, PER REASONS 1.4 (B,D)


1. (C) Summary: During her September 28 introductory call on
Customs Committee Chairman Aydin Aliyev, the Ambassador
reviewed Customs' critical role in Azerbaijan's economic
development and its important role in WTO, emphasizing that
WTO membership sends a strong positive signal to U.S.
businesses looking to invest in Azerbaijan. The Ambassador
underscored that Azerbaijani Customs played an important role
in defending Azerbaijan against the unimpeded flow of
contraband, in facilitating the flow of legitimate trade in
and out of the country (a critical activity for the future
economic development of the country),and in providing fiscal
and revenue collection to support the government. Aliyev
briefed on the Customs Committee's operations, including on
the country's harmonized tariff system. Aliyev requested the
Ambassador's assistance in facilitating training in the U.S.
at the Federal Law Enforcement Training Center and with
concluding the Customs Mutual Assistance Agreement with the
U.S. The Customs Committee has always been associated with
rampant corruption; Aliyev complained that the Ministry of
Finance has requested additional revenues from Customs for
the 2007 State Budget, straining Customs' capacity. Aliyev's
complaints about Minister Sharifov's efforts to squeeze more
money for the budget from Customs could point to a growing
rivalry between the President's new economic team and
Minister Heydarov and his associates (to include Aydin Aliyev
END SUMMARY

STRONG U.S.-AZERBAIJAN CUSTOMS SERVICE COOPERATION
-------------- --------------


2. (C) The Ambassador paid an introductory call on Customs
Committee Chairman Aydin Aliyev on September 28. Chairman

Aliyev praised the positive cooperation between the
Azerbaijani and U.S. Customs services, noting especially the
hard work of the Embassy's Export Control and Border Services
(EXBS) office. Aliyev provided the Ambassador with a broad
overview of the Customs Committee and its development over
the past 15 years. He told the Ambassador that the Customs
Committee has both law enforcement authority and fiscal
authority.


3. (C) The Ambassador praised the Customs Committee
cooperation and relationship with the U.S. Embassy. She
underscored that Azerbaijani Customs played an important role
in defending Azerbaijan against the unimpeded flow of
contraband, in facilitating the flow of legitimate trade in
and out of the country (a critical activity for the future
economic development of the country),and in providing fiscal
and revenue collection to support the government. Aliyev
told the Ambassador that the Customs Committee had purchased
two pieces of monitoring equipment from a U.S. firm SAIC to
scan cargo equipment at Azerbaijan's ports and added that
Customs would purchase an additional two in 2007.

HARMONIZED TARIFF SYSTEM
--------------


4. (C) Aliyev told the Ambassador that Azerbaijan implemented
a harmonized tariff system in 2000 that is WTO compatible and
has been a signatory to all the major World Customs
Organization conventions, including the Nairobi and Kyoto
conventions. He explained that Customs' initial efforts to
harmonize tariffs and "convert goods" in the system were
difficult. In addition, Aliyev stated that Azerbaijan was
drafting a new Customs Code with assistance from the European
Union. The new code should be finalized by November or
December. The Ambassador told Aliyev that U.S. Ambassador to
the WTO, Peter Allgeier, would be visiting Baku in October
and would discuss with the Customs Committee techniques and
strategies that country's use to manage WTO accession tariff
issues.

REQUESTS FOR ADDITIONAL ASSISTANCE
--------------


5. (C) Aliyev requested the Ambassador's assistance in
coordinating Azerbaijani customs officer training at the
Federal Law Enforcement Training Center (FLETC) in the U.S.

BAKU 00001475 002 OF 003


Aliyev told the Ambassador that he had visited FLETC during a
trip to the U.S. and thought training there could be
beneficial for the Customs Committee, specifically to improve
its ability to identify high risk cargo for inspection. He
added that the Customs Committee would be willing to
co-finance with the USG the cost of the training or, if
necessary, it would pay for the training itself.


6. (C) Aliyev also requested assistance in concluding the
long pending Customs Mutual Assistance Agreement (reftels A
and B). Finalizing the CMAA has been a goal that the Customs
Committee has pushed for since early 2006. The Ambassador
said that the CMAA was an important building block for
advancing customs services cooperation between the U.S. and
Azerbaijan and could be signed during the upcoming Economic
Partnership Commission meeting. Chairman Aliyev readily
agreed.

ANTI-COUNTERFEIT PHARMACEUTICAL CONFERENCE
--------------


7. (C) Chairman Aliyev told the Ambassador that the Customs
Committee and GOAJ would host an international conference in
February 2007, in coordination with the World Customs
Organization (WCO),on the interdiction of counterfeit
pharmaceuticals. Aliyev stated that Customs had invited
international law enforcement agencies, health organizations
and pharmaceutical companies to participate. In addition to
the groups that Customs has already invited, the Embassy,
through the EXBS office, provided the contact information for
PhRMA in the U.S.


8. (C) Aliyev said that the Customs Committee had a negative
reputation with the general public due to articles in
opposition newspapers. (NOTE: The blaming of opposition
newspapers for negative public image is a common argument
used by GOAJ officials. The Customs Committee is notorious
for its corruption, which has contributed greatly to its
negative popular image.) Aliyev continued that Customs' area
of responsibility is difficult, citing the long open borders
with Iran and Russia. Aliyev said that customs operations
are complex and additional training would assist the Customs
Committee in its efforts.

FINANCE WANTS MORE MONEY FROM CUSTOMS
--------------


9. (C) Aliyev complained to the Ambassador that the Finance
Ministry had increased the amount of revenue the Customs
Committee had to provide to the budget in 2007. Aliyev said
that in 2006 the Customs Committee provided USD 500 million
to the State Budget and that in 2007 this amount had
increased USD 150 million to USD 650 million, an increase of
30 percent. In a separate conversation, the local IMF
resident representative relayed that the Finance Ministry had
requested additional funds from the Customs Committee and
Ministry of Taxation, adding that the Finance Ministry did
not believe that Customs and Taxation had not been declaring
all their revenues in previous years. The IMF rep opined
that this increase was a direct threat to the economic
interests of both Customs and Ministry of Taxation.


10. (C) Surprisingly, Aliyev admitted to the Ambassador that
Customs maintains an "off budget" account for Customs'
operations and that the Ministry of Finance is also
interested in taking some of the funds in this account.
Aliyev said that since Customs was unable to increase tariffs
due to "concerns from the IMF," the Ministry of Finance's
requests for additional funds was a "problem for Customs" and
was "cutting into Customs' budget and resources."

IRAN AND NARCOTICS
--------------


11. (C) Turning to customs activities on its borders, Aliyev
recounted to the Ambassador several narcotic interdiction
successes, including a recent seizure on the Iranian border
of 52 kilograms of opium. Aliyev stated that there were
approximately 170,000 drug addicts in Azerbaijan who consumed
nearly 50 tons of drugs per year - this figure does not
include drugs in transit through Azerbaijan to other
countries. He explained that Customs works well with the
Ministry of National Security to interdict transiting drugs

BAKU 00001475 003 OF 003


and that the Customs Chairman is an "enemy of the Iranian
Customs services." Aliyev commended past U.S. Embassy
assistance in Customs' efforts to interdict narcotics
transiting Azerbaijan. The Ambassador told him that she
looks to revive the good cooperation to prevent drug
trafficking.

COMMENT
--------------


12. (C) Customs Committee Chairman Aliyev is prepared for and
interested in additional engagement and cooperation with the
U.S. Unsurprisingly in a post-Soviet state and developing
economy, the Customs Committee is associated with
inefficiency and rampant corruption. Intensified engagement
may provide the U.S. with a prime opportunity to advance our
reform efforts at Customs and improve and modernize its
operations. After Aliyev assumed responsibilities at Customs
in early 2006, small and medium importers complained that
Customs agents were extorting larger bribes than before,
stopping trade at many of Azerbaijan's borders and ports. An
effective customs service is a critical element in improved
border protection in Azerbaijan, important to U.S. interests
in blocking the illegal flow of drugs, people and WMD from
and through Iran and Russia. We are delighted that U.S. CBP
is prepared to follow-up on Aliyev's interest in cooperation
(REF D) and look forward to receiving CBP's proposal on next
steps.
DERSE