AZERBAIJAN: PRESIDENT ALIYEV DISCUSSES U.S.-AJ

C O N F I D E N T I A L SECTION 01 OF 05 BAKU 001582

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DEPT FOR EUR A/S FRIED AND EUR DAS BRYZA
DEPT FOR NEA PDAS JEFFREY

E.O. 12958: DECL: 10/30/2016
TAGS: PGOV PREL PBTS ETRD ECON GG RU IR AJ
SUBJECT: AZERBAIJAN: PRESIDENT ALIYEV DISCUSSES U.S.-AJ
RELATIONS, WTO ACCESSION, RUSSIA AND GEORGIA, IRAN, AND
NAGORNO-KARABAGH CONFLICT WITH CONGRESSIONAL STAFF
DELEGATION


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


1. (C) SUMMARY: In an October 27 meeting with a visiting
German Marshall Fund delegation that included six
Congressional staff, President Aliyev applauded
U.S.-Azerbaijani relations as "developing very
successfully" across many areas, and "entering a new
phase." Underscoring that Azerbaijan is a "friend and
ally" of the U.S. that is increasingly capable as a partner
and influential in the region given its strategic location,
energy and financial resources, and transport links, Aliyev
told the GMF delegation that "our goals in the region
coincide, this is one of the best periods of bilateral
ties, it is time to work on possible joint action." In
Aliyev's view, given Azerbaijan's growing regional stature
and the continuing need for strong U.S. support for
regional energy and other projects, the "future direction
of the region will depend to a large extent on
U.S.-Azerbaijan relations." It is in the interest of both
countries and the region for the U.S. and Azerbaijan "to
cooperate on a broader agenda in a broader regional
context, this could be a new element in U.S.-Azerbaijan
relations in the future," Aliyev said.


2. (C) SUMMARY CONTINUED: On other subjects, Aliyev noted
Azerbaijan's concern with Russia-Georgia tensions, "given
Georgia's importance as Azerbaijan's friend, strategic
partner and window to Europe." Russia is pressuring
Georgia as the "weakest link in the BTC and SCP pipelines
and the energy project for Europe," but "cannot overcome
U.S. political support for these projects." Aliyev said a
nuclear-armed Iran is as much a "danger" to Azerbaijan as
it is to the U.S. and the world, but argued that the U.S.
policy of isolation "has not worked." The Iranian
leadership is unified and remains intent on pursuing its
nuclear aims; Iran has relations with its neighbors, the
Islamic world and major Asian and European countries, and
"feels very comfortable." Aliyev outlined key points of
Azerbaijan's recent written proposal to the Minsk Group to
resolve the Nagorno-Karabakh conflict, saying "this is the
most we can give." He thanked the U.S. for its support on
Azerbaijan's WTO accession, stating that Azerbaijan "wants
to join the WTO" and its action plan for WTO membership
"would be 100 percent completed in 2007 and the doors will
open for Azerbaijan to enter." END SUMMARY.


3. (U) In an October 27 meeting with a visiting German
Marshall Fund delegation that included six Congressional
Staffers, accompanied by the Ambassador and poloff
(notetaker),President Aliyev commented on next steps in
U.S.-Azerbaijan relations, Azerbaijan's accession to the
WTO, Russia, Georgia, Iran and the Nagorno-Karabakh
conflict.

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U.S.-Azerbaijan Relations: "Time to Work on Joint Action"
in a Broad Regional Context
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4. (C) Aliyev welcomed the delegation, saying he has valued
dialogue with GMF and GMF's contribution to developing new
approaches to strengthen regional cooperation and
U.S.-Azerbaijan bilateral relations. He told the group
that U.S.-Azerbaijan relations "cover many areas, are
developing very successfully, and we are very satisfied."
He noted that Azerbaijan's regional role is becoming
increasingly important, and that Azerbaijan is playing that
role as a "friend and ally of the U.S." He argued that
"the region's direction will depend to a large extent on
U.S.-Azerbaijan relations," given U.S.-Azerbaijani shared
interests, Azerbaijan's strategic location and Azerbaijan's
growing importance in regional political, economic, energy
and transport developments.

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5. (C) Aliyev underscored the value to U.S. interests of
working closely with Azerbaijan, saying that such an effort
is very important for the development of the region and for
Azerbaijan, and "could be a new element in U.S.-Azerbaijan
relations in the future." Aliyev said there are very
important issues in the region "for our future partnership,
which can enter a new stage." Azerbaijan is becoming "more
and more capable of contributing" by providing
peacekeepers, political support, and contributing to
regional economic development. There is an important
opportunity now to strengthen U.S.-Azerbaijan ties, he
concluded. "Our goals in the region coincide, this is one
of the best periods of bilateral ties, it is time to work
on possible joint action."


6. (C) Illustrating his point about Azerbaijan's growing
influence and the importance of U.S.-Azerbaijan cooperation
for the region's stability and development, Aliyev noted
that Azerbaijan is using its good relations in the Caspian
and Black Sea regions, especially its strong ties with
Romania, Bulgaria, the Ukraine and the countries of the
former Soviet block, to promote "Caspian-Caucusus-Black
Sea" cooperation and development. He underscored the
importance of U.S. support to efforts to diversify gas
supplies by providing Caspian gas to world markets, and the
importance of Azerbaijan to this strategy "given our own
resources and our existing infrastructure." Azerbaijan
also can "work with Kazakhstan and potentially other
Central Asian countries to join our oil and gas projects."
As another example, Aliyev pointed to GUAM, noting that the
U.S. was important to the launch of GUAM and Azerbaijan is
now playing an active role to further develop GUAM as a
regional institution.

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WTO Accession: Action Plan to be Completed "100 Percent"
in 2007
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7. (C) Aliyev noted with appreciation his recent discussion
with visiting U.S. Ambassador to the WTO Peter Allgeier
(septel). "We want to be part of the WTO," he said. He
thanked the U.S. for its support for Azerbaijan's efforts.
Azerbaijan's action plan (to make legislative changes
required for WTO membership) "will be implemented 100
percent next year," Aliyev said. Azerbaijan is also
pursuing bilateral negotiations and must now "negotiate in
a more concrete and specific manner on the issues," he
acknowledged. At the same time, Azerbaijan "must be
protected" from negative economic developments as a result
of accession. He noted that Azerbaijan's export potential
outside of oil and gas "is still modest." Azerbaijan is
"working hard to invest in the non-oil sector, especially
agriculture and services," as half of Azerbaijan's
population lives in rural areas. "As we pursue the
accession process we must address the potential concerns
that may result from the process. But there is nothing that
cannot be resolved. It can be done. It just has to be
done. Next year the whole program will be implemented and
the doors will open for Azerbaijan to enter."

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Russia
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8. (C) Aliyev said that Georgia and Armenia are more
concerned about their relations with Russia than is
Azerbaijan. "The Russian question is not at the top of our
agenda. Azerbaijan is neither a Russian satellite nor a
Russian enemy. We constructively and wisely build our
policy, but without compromises." Aliyev said that an

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analysis of Azerbaijan's relations with Russia over the
past ten years would reveal "normal relations on the basis
of mutual respect, non-interference -- but no
compromises." As a result, whether with respect to
domestic or foreign policy, he repeated, Russia is not at
the top of Azerbaijan's agenda. Aliyev said that
Azerbaijan is one of the most independent countries of the
CIS in general and from Russia in particular.


9. (C) The "crisis" in Georgia, however, is "very tense,"
Aliyev said. Georgia is trying to find a way out of this
situation. The Georgia-Russia issue does concern
Azerbaijan because Georgia is a "friend, strategic partner,
and our pipelines cross their territory." Russia is very
unhappy about this pipeline, but "Russia cannot stop us
from transporting this energy." Georgia, however, is "the
weakest link in BTC and the gas project for Europe" so
Russia focuses on the weakest link. Russian control over
Georgia would be a disaster for U.S. Georgia is our window
to Europe. If it is closed, it's a problem." For this
reason, Aliyev said, Azerbaijan is concerned that Russia
not destabilize Georgia.


10. (C) Armenia is more and more a Russian satellite,
losing its independence of action and now "totally
dependent" on Russia from an economic and energy point of
view, Aliyev said. Armenia is the most dependent on Russia
of all the CIS countries, "even more than Belarus," Aliyev
said. The tension between Georgia and Russia is "a
disaster" for Armenia.

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Iran
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11. (C) Aliyev said it is hard for Azerbaijan to offer
advice on how to handle the Iranian situation "because we
do not know exactly what is happening, their goals, when
they will have a nuclear weapon -- and we know they are
pursuing one." From Azerbaijan's perspective, sharing a
border of over 1,000 kilometers with Iran, "the U.S. policy
of isolation did not work. Iran is not isolated." Iran
has relations with its neighbors, "tense" relations, but
relations nonetheless with the Arab world, and relations
with the "biggest countries in Asia and in Europe."
Isolation "is not a productive policy." Barring Chevron
from engaging in Iran in the mid -1990s only resulted in
Total immediately making the investment, Aliyev noted.


12. The U.S. is in any case negotiating with Iran through
the Europeans, Aliyev commented. It is worth considering
the kinds of contacts that could be pursued with Iran.
However, the time for the U.S. to directly communicate with
Iran has passed. Aliyev said that his discussions with
Iranian President Makhmud Ahmadinejad "have convinced me
that they will not step back from their nuclear program,"
and Aliyev opined that Iran would go until the end. Iran
is hard to influence, Aliyev said. Iran does not depend on
assistance, and it is not politically isolated, with "two
supporters in the UN." Iran is a closed society, its
people are not educated, and there is strong anti-American
propaganda. The Iranian religious leadership, the
President, and the presidential staff are more united than
ever before. There is not the same level of internal
dissent among the leadership as there was under the
previous regime and they feel much more comfortable, Aliyev
said.


13. Iran is a "big danger" for Azerbaijan, Aliyev noted.
There are "30 million Azeris" in Iran, and part of the
Iranian establishment looks at Azerbaijan as Iran's. The
successful development of Azerbaijan "irritates, makes
nervous and anxious," the Iranian leadership, Aliyev said,
because it shows which approach to development is better.

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"A nuclear-armed Iran "is no less a disaster for Azerbaijan
than it is for the US."

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Nagorno-Karabakh
--------------


14. Aliyev said that the Minsk Group had asked both
Armenia and Azerbiajan to provide in writing their
proposals for a solution based on the last three years of
negotiations and international law. Armenia did not
respond to the Minsk Group's request for a written
proposal, Aliyev said, but Azerbaijan did. Our proposal
was "very reasonable," and includes a guarantee of
Karabakh's peace and security through both political and
military guarantees, an interim arrangement for Karabakh
with the "highest degree of autonomy" until "the final
stages are resolved." It was "the best we can give,"
Aliyev maintained.


15. There can be "no independence" for Karabakh, Aliyev
stressed. Neither Georgia nor Moldova will ever give
independence to their separatist territories. There is "no
principle that if you are a minority you can demand
independence." Azerbaijan has minorities - Jewish, Muslim,
Christian -- living cooperatively, without conflict, and not
demanding autonomy in Azerbaijan's "highly tolerant"
society. The territorial integrity of Azerbaijan is
recognized in international law and by the international
community. Azerbaijan wants its seven regions returned
peacefully; this is a "natural," not an "extraordinary"
demand. "We can see in the future, a status for NK like
the status quo: NK as a part of Azerbaijan as a strong
country, protected by an interim arrangement and
international guarantees."


16. (C) Azerbaijan retains the right "at any moment" to
undertake military action "in our own territory - we just
want to restore our lands, like the UK in the Falklands,"
Aliyev asserted. This is "issue number one" for
Azerbaijan; Azerbaijan "is mobilizing its political,
diplomatic, economic, military, all its resources to regain
its occupied lands." The Armenian approach is based
neither on international law nor the normal behavior of
states. In 1918, Yerevan was part of the Azerbaijan
Democratic Republic and 65 percent of the population was
Azeri. Azerbaijan could demand Yerevan back, Aliyev said
rhetorically. Aliyev noted that there were separatist
movements in Italy, Spain, the UK, Romania, Moldova, Russia
and other states. Separating NK from Azerbaijan would set
a dangerous precedent for others, he said.

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COMMENT
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17. (C) Aliyev's comments to the GMF delegation on
Azerbaijan's broad regional vision and growing regional
influence, potential and aspirations, as well as
Azerbaijan's value as an increasingly capable "friend and
ally" for the U.S. and the West, are themes he underscores
with increasing frequency both publicly and privately. We
will seek an opportunity to explore further with Aliyev his
view of next steps in U.S.-Azerbaijan relations, and
especially, what he envisions as "possible joint action" on
a "broader agenda in a broader regional context." His
comments on Russia and Georgia strongly implied that
Azerbaijan will do all it can to help Georgia survive and
resolve the current crisis given Azerbaijan's fundamental
self-interest in ensuring that its "window to Europe"
remains open, without antagonizing Russia. Aliyev seemed
troubled by the current standoff with Iran and the U.S. and
international community's inability to influence Iranian
behavior; he was clear, however, that efforts to isolate

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Iran have already failed and other appraches should be
considered. His comments on Azebaijan's position on
Karabakh remain consistent nd were aimed at underscoring
Azerbaijan's justiication on the basis of international
law and Azerbaijan's "no independence" bottom line. We
willfollow up actively to support fulfillment of Aliye's
pledge that Azerbaijan's WTO membership actio plan will be
completed in 2007, as a key tool to force reform essential
to Azerbaijan's successful management of its oil revenues
and non-oil sector development.

DERSE