Identifier
Created
Classification
Origin
06BAKU1684
2006-11-17 14:23:00
CONFIDENTIAL
Embassy Baku
Cable title:  

AMBASSADOR'S INTRODUCTORY MEETING WITH MINISTRY OF

Tags:  PGOV PREL AJ AM RS TU PK UP 
pdf how-to read a cable
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INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 1845
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 0053
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RUEKJCS/SECDEF WASHDC PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 0510
RUEKDIA/DIA WASHDC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001684 

SIPDIS

SIPDIS

DEPT FOR EUR/CARC

E.O. 12958: DECL: 11/13/2016
TAGS: PGOV PREL AJ AM RS TU PK UP
SUBJECT: AMBASSADOR'S INTRODUCTORY MEETING WITH MINISTRY OF
DEFENSE INDUSTRY

Classified By: Ambassador Anne Derse for reasons 1.4 b and d.

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001684

SIPDIS

SIPDIS

DEPT FOR EUR/CARC

E.O. 12958: DECL: 11/13/2016
TAGS: PGOV PREL AJ AM RS TU PK UP
SUBJECT: AMBASSADOR'S INTRODUCTORY MEETING WITH MINISTRY OF
DEFENSE INDUSTRY

Classified By: Ambassador Anne Derse for reasons 1.4 b and d.


1. (U) This is an action request; see para 14.


2. (C) SUMMARY: During a November 14 introductory meeting
with the Ambassador, Minister of Defense Industry Yavar
Jamalov provided an overview of the new ministry, created in
December 2005. Jamalov, who was appointed in March, said the
ministry is tasked with procuring and producing
defense-related equipment, providing the Azerbaijani armed
forces with defense-related equipment, and developing ties
with other governments' defense industry sectors. The
ministry's 2007 budget is 100 million USD, in comparison with
the overall defense sector's (Ministry of Defense and
Ministry of Defense Industry) 2007 budget of one billion USD.
The ministry's priorities for the next year are invigorating
Azerbaijan's defense industrial sector, forming a research
institution that will guide efforts to overhaul the GOAJ's
defense industrial base, and establishing relations with
other country's counterpart agencies. Jamalov, who already
has cultivated ties with Russia, Turkey, Iran, Ukraine, and
Pakistan, said he was open to exploring potential areas of
cooperation with the USG. We believe there is an opportunity
to balance the ministry's contacts with Russia and Iran by
fostering links between the ministry and US defense
firms--see action request. End Summary.

Azerbaijan Growing Stronger, Despite State of War
-------------- --------------


3. (C) The Ambassador--accompanied by the DATT and poloff
(notetaker)--had an introductory meeting on November 14 with
Minister of Defense Industry Yavar Jamalov. Jamalov began
the meeting by stating that Azerbaijan is "in a state of
war," with 20 percent of its territory under occupation. He
said that Armenia has refused to adopt a constructive
position, despite President Aliyev's attempt to find a
negotiated solution.


4. (C) Jamalov commented on Azerbaijan's growing economic
and geopolitical strength. Relative to 2005, Azerbaijan's

economy has grown by 34 percent. Azerbaijan's economic
success has drawn large amounts of foreign investment.
Specifically, Azerbaijan has received 20 billion USD in FDI
during the past 10 years and 5 billion in 2006. Azerbaijan's
participation in regional projects--the BTC oil pipeline, the
South Caucasus gas pipeline, and the
Baku-Tbilisi-Akhalkalai-Kars railroad--will increase the
volume of FDI. Azerbaijan's state budget grew from 130
million in 2001 to 700 million in 2006. In short, Jamalov
observed that Azerbaijan's economic growth is leading to the
country's overall strengthening.

Background on the Ministry
--------------


5. (C) Jamalov said former President Heydar Aliyev had
"created a firm foundation" for Azerbaijan's defense industry
in the late 1970's by overseeing the construction of several
key defense industry complexes. During the Soviet period,
30,000 people were employed in the Azerbaijani defense
complex, although only 4,000 are currently employed in this
sector. While the defense sector languished n the early
post-Soviet years, Heydar Aliyev souht to reestablish the
importance of Azerbajain's defense industries. In 1993, he
established an engineering complex, and then, in 2003, he
signed a state decree that raised the importance of the
defense sector. Following in his father's footsteps,
President Ilham Aliyev created the current Ministry of
Defense Industry in December 2005.


6. (C) Jamalov reviewed the ministry's responsibilities.
The ministry formulates and implements Azerbaijan's defense
industry policy. The ministry has the authority to import and
export defense-related equipment, domestically produce such
equipment, provide the armed forces and "other units" with
defense-related equipment, and develop ties with other
governments' defense industry sectors. The ministry includes
a research institution, three departments, and six units.
(Note: The size and responsibilities of each entity are
unclear.) As the lead GOAJ agency for acquiring

BAKU 00001684 002 OF 003


defense-related equipment, it oversees 19 domestic factories.
The ministry has positions for 126 employees, but currently
only has 41 staff. Jamalov remarked that he is working to
find the relevant specialists.

Ministry Priorities
--------------


7. (C) In response to the Ambassador,s question, Jamalov
reviewed the ministry's major priorities. First, the
ministry seeks to restore and refurbish Azerbaijan's domestic
defense industrial sector. This includes invigorating the 19
defense-related factories. Second, the ministry wants to
establish its research institution as the brain trust to
energize Azerbaijan's domestic defense sector. Jamalov
admitted that the research institution was only approved by
presidential decree on September 27, and much still needs to
be done to get the institution functioning. Third, the
ministry seeks to establish relations with other states and
learn from their experiences. To this end, Jamalov noted
that he has traveled to several countries. He remarked that
he is interested in cooperating with the US in the defense
industry sector.


8. (U) (Note: Press reporting suggests that since his
appointment in March, Jamalov has focused on cultivating ties
with Russia, Turkey, Iran, Ukraine, and Pakistan. He has met
with the Defense Ministers from Turkey (September) and Iran
(April). Jamalov and the powerful Minister of Emergency
Situations Kamaleddin Heydarov co-chair the
Russian-Azerbaijani Committee of Military Technical
Cooperation. This institution potentially is significant
because it may be a key focal point for bilateral military
cooperation. Putin and Aliyev signed a memorandum of
cooperation in the military industries, as part of Putin's
February visit to kick off the "Year of Russia in
Azerbaijan." Local press also indicates that Jamalov was
negotiating with KYIV to develop an unspecified defense
establishment. Local press from July also reported that a
team of Pakistani military experts was going to visit
Azerbaijan to discuss cooperation in the defense industrial
spheres.)


9. (C) Jamalov acknowledged that the ministry may not
accomplish all of these objectives in the next year, but
these goals would remain priorities for the coming years.
Considering future priorities, Jamalov remarked that he would
like the ministry's research institution to spearhead the
research and development of new defense technologies.


10. (C) In response to the Ambassador's question, Jamalov
said that the ministry's 2007 budget is 100 million USD, in
comparison with the overall defense sector's (Ministry of
Defense and Ministry of Defense Industry) 2007 budget of one
billion USD. Jamalov noted that these resources primarily
will be focused on establishing the ministry and refurbishing
domestic defense industry factories.


11. (C) In response to the Ambassador and DATT's question,
Jamalov said that the ministry eventually hopes to develop
relations with the commercial defense sector. He noted that
while this is within the ministry's purview, it is an item
for future development.

Relations with MOD Unclear
--------------


12. (C) The relationship between the Ministry of Defense and
the new Ministry of Defense Industry remains ambiguous. The
only comment Jamalov offered in response to the Ambassador's
question was, we "work together to define priorities."
(Note: We have little insight into the personal relations
between Defense Minister Safar Abiyev and Jamalov. The
Ministry of Defense Industry was created by Presidential
decree in December 2005, and it reportedly includes several
departments that were formerly part of MOD. Post will report
any further details via septel.)

Ambassador Affirms US Security Cooperation with GOAJ
-------------- --------------


BAKU 00001684 003 OF 003



13. (C) The Ambassador thanked Jamalov for providing
information on his ministry and highlighted the strong
relations between the USG and the GOAJ. US-Azerbaijani
relations are based on three areas: energy diversification,
building democracy through political and economic reform, and
strengthening regional and global stability and security. In
the security sphere, the Ambassador thanked Jamalov for
strong suport in the war on terror, including the GOAJ,s
military contributions in Iraq, Afghanistan, and Kosovo. The
US promotes regional stability and bilateral military
cooperation with the GOAJ through a broad range of programs,
including NATO IPAP and Caspian maritime security. The
Ambassador noted the central importance of Azerbaijan,s NATO
IPAP and the USG commitment to assisting the GOAJ make
progress in its IPAP. The Ambassador also remarked that the
embassy would investigate further opportunities for
cooperating with the Ministry of Defense Industry. DATT
provided background on DoD,s presence and programs at Post.

Comment Action Request
--------------


14. (C) Post seeks Washington's guidance on whether and how
to engage with the Ministry of Defense Industry, to include
fostering links between US commercial defense firms and the
ministry. We note that the ministry's 100 million dollar
budget and Jamalov's travel to other countries suggests his
ministry is in the initial stages of determining which
countries will assist the GOAJ rebuild its defense sector.
While the USG has obvious restrictions in providing direct
military assistance to the GOAJ, it is not in the US
interests to have the ministry turn to Russia and Iran as its
major suppliers. There is an opportunity for US commercial
firms to work with the ministry--particularly in providing
non-lethal military equipment. For example, Jamalov said
that he had recently met with representatives from US defense
firm Harris.

DERSE