Identifier
Created
Classification
Origin
06BAKU1692
2006-11-20 15:14:00
CONFIDENTIAL
Embassy Baku
Cable title:  

BAKU HOSTS ISLAMIC DEVELOPMENT BANK INVESTMENT

Tags:  PGOV PREL ECON ETRD KISL AJ 
pdf how-to read a cable
VZCZCXRO4037
PP RUEHBC RUEHDBU RUEHDE RUEHKUK RUEHLH RUEHPW RUEHROV
DE RUEHKB #1692/01 3241514
ZNY CCCCC ZZH
P 201514Z NOV 06
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 1750
INFO RUCNISL/ISLAMIC COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 1849
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEHGV/USMISSION GENEVA SZ PRIORITY 0235
RUEHVEN/USMISSION USOSCE PRIORITY 0513
C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001692 

SIPDIS

SIPDIS

DEPT FOR EB; ALSO FOR EUR/CARC

E.O. 12958: DECL: 11/20/2016
TAGS: PGOV PREL ECON ETRD KISL AJ
SUBJECT: BAKU HOSTS ISLAMIC DEVELOPMENT BANK INVESTMENT
CONFERENCE

REF: BAKU 01595

Classified By: DCM Jason P. Hyland for reasons 1.4 b and d.

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001692

SIPDIS

SIPDIS

DEPT FOR EB; ALSO FOR EUR/CARC

E.O. 12958: DECL: 11/20/2016
TAGS: PGOV PREL ECON ETRD KISL AJ
SUBJECT: BAKU HOSTS ISLAMIC DEVELOPMENT BANK INVESTMENT
CONFERENCE

REF: BAKU 01595

Classified By: DCM Jason P. Hyland for reasons 1.4 b and d.


1. (C) SUMMARY: The Azerbaijani Ministry of Economic
Development hosted an investment conference for Islamic
Development Bank members November 8-9 in Baku. The event
included a trade exhibition, large-group presentations on
potential investment projects, and sector-specific break-out
sessions for interested investors. After a series of opening
remarks highlighting the positive Azerbaijani investment
climate, Azerbaijani businesspeople presented investment
proposals in the fields of agriculture, livestock, IT,
industry, tourism, and construction. The conference reflects
three trends: the GOAJ's rising desire to attract foreign
investment in non-energy sectors; Baku's desire to showcase
its image as a wealthy, modernizing Muslim state; and the
"multivector" nature of GOAJ foreign policy. END SUMMARY.

Background
--------------


2. (U) Azerbaijan's Ministry of Economic Development--in
concert with the Islamic Development Bank (IDB)--hosted an
investment conference in Baku November 8-9. Several hundred
local entrepreneurs and representatives from at least
thirteen IDB member countries gathered to discuss potential
investment projects in Azerbaijan. The conference included a
trade exhibition of local Azerbaijani businesses, large-group
presentations on potential investment projects, and
sector-specific break-out sessions for interested investors
to consult with local business representatives. It was the
second IDB conference in Azerbaijan; the first conference was
held in October 1996.

Opening Remarks Highlight Opportunities
--------------


3. (U) After a Koranic recitation, Minister of Economic
Development Heydar Babayev welcomed conference participants,
reading a message from President Aliyev (who was on an
official visit to Brussels that day). Aliyev's statement
emphasized Azerbaijan's positive investment environment,

noting that the country enjoys one of the world's highest
economic growth rates. Aliyev's statement also said
Azerbaijan was implementing economic and democratic reforms
that would enable it to integrate into the world economy and
become a regional economic center. Aliyev expressed his hope
that the conference "would open new economic horizons" for
Azerbaijan.


4. (U) IDB President Dr. Ahmad Mohammad Ali's opening
remarks reminded participants that the conference aimed to
bring new investments to Azerbaijan. Ali noted Azerbaijan's
impressive economic growth, stating that the country's GDP
has risen at an average rate of 13 percent per year over the
past five years. Ali stated that the IDB aims to bring
member countries' banking practices into closer conformity
with Shariah principles. Accordingly, an IDB mission will be
coming to Azerbaijan in the near future to provide assistance
in this area.


5. (SBU) Ruslan Seyidov--the Azerbaijani spokesperson for
local businesses represented at the conference--provided
several opening comments. He emphasized that there were
tremendous investment opportunities, while noting that the
GOAJ had helped "create the conditions and policies" for
economic success. He cited the fields of information
technology, transportation, agriculture, and tourism as
particularly promising investment fields. Seyidov closed by
stating that the GOAJ's goal for the conference is to
"integrate into the world system on a peer or equal basis"
with potential investors. (Comment: Seyidov's point on
Azerbaijan being accepted "on a peer or equal basis" is
reflective of Baku's foreign policy orientation--see para 8.)


6. (U) Deputy Minister of Economic Development Mikayil
Jabbarov wrapped up the concluding remarks by noting that the
tourism, IT, pharmaceutical, and textile sectors present key
investment opportunities. He briefly noted that the GOAJ
seeks to create an institution based on Shariah principles
that would further help to attract IDB investment. (Comment:
It is doubtful that the adoption of any form of Sharia law,

BAKU 00001692 002 OF 003


including in the banking sector, is really part of the GOAJ's
vision.)

Down to Business
--------------


7. (U) Approximately one-quarter of the conference was
devoted to large-group sessions for local businesses to brief
attendees on their investment proposals. The quality of the
presentations varied considerably. Most of the proposals
focused on the agricultural, livestock, IT, industrial,
tourism, or construction sectors. The following summary
represents a sampling of the better projects:


A. Azersun Holding provided the most impressive proposal.
The company proposed creating a factory in the Imishli region
that would use byproducts (sugar beet pulp and molasses) from
its Imishli sugar factory to produce animal feed and oil
extracts. (Note: Per Ref A, the Imishli sugar factory is one
of the few non-oil sector success stories in Azerbaijan. The
factory has worked closely with the U.S. company Valmont
Industries, Inc. and also supplies all of Coca-Cola and
Pepsi-Cola's sugar needs in Azerbaijan.) The company
representative said the factory would create 100 new jobs and
would cost approximately 6 million USD.


B. The Ramil 88 company proposed creating a large farm
outside of Baku as a premier slaughterhouse and research
facility for raising the quantity and quality of beef through
artificial insemination.


C. Ata Holding presented a 36 million USD dollar project to
construct an adjoining convention and business center in
downtown Baku. The company's vision is to create a central
location for hosting trade delegations, conferences, and
fairs. The Ata Holding representative briefed that the
project would create 300-500 new jobs, while boosting the
business and tourism climate in Baku.


D. A representative from 2M Engineering proposed creating an
"Intellectual and Business Hub" in the heart of Baku. This
would be a 12-story building with high-tech office space,
conference space, and an exhibition area.


E. Billur Electronics, which owns Azerbaijan's only
electronics factory, briefed on its 10 million USD proposal
to restructure the company and purchase new equipment. The
factory seeks to produce high quality TV's, computers,
calculators, and LCD screens.


F. The Aliksoft company's proposal focused on creating a
cable television network covering all of Azerbaijan. The
network would be delivered through fiber optic cables.


G. Ultra Computers' 5 million USD project seeks to create a
laptop and computer monitor manufacturing plant. The
company, which works in several CIS states, has been a
leading technology company in bringing wireless internet
access to Western energy firms and Baku-based universities,
according to Ultra Computer's President Tahir Mirkishili.


H. Caspian Service made a 4.2 million USD proposal to invest
in the construction of the Gasr (castle) resort and spa
complex located near Ganja. The proposed facility represents
the GOAJ's interest in advancing its tourism sector.


I. The Caspian Tour company proposed a 9.7 million USD resort
and spa complex on the shore of the Caspian Sea, just 30 km
south of Baku. The facility would include 400 rooms.

What's behind the Conference?
--------------


8. (C) The IDB conference is significant at three levels.
First, the conference highlights the GOAJ's interest in
drawing foreign investment in a range of bilateral and
multilateral forums. As Azerbaijan seeks to develop its
non-energy sectors, it likely will look to similar fora to
attract outside investment. Secondly, the event is part of
the GOAJ's broader outreach to Muslim states. Baku seeks to
cultivate an image of a wealthy, modernizing Muslim state.
The policy aims to increase Azerbaijan's value to the West as
"bridge" to other Muslim states, while also developing

BAKU 00001692 003 OF 003


beneficial relations with other Muslim states, a policy the
GOAJ is advancing through its year-long Chairmanship of the
OIC Foreign Ministers Conference. Finally, the conference
reflects the GOAJ's broader objective of developing a
"multivector" foreign policy orientation that raises
Azerbaijan's prestige as a geostrategically important
Eurasian country. This orientation is accompanied by Baku's
growing confidence in foreign policy matters and a desire to
be treated as an "equal" or "peer" by all other states.


9. (U) The conference presented several interesting
opportunities for investment in the non-energy sectors of its
economy. We continue to engage with the GOAJ to explore
opportunities for strengthening these non-energy sectors to
stave off the effects of "Dutch disease." While the overall
business climate reamins difficult, several of these projects
could provide valuable opportunities for U.S. investors.
DERSE