Identifier
Created
Classification
Origin
06BAKU1719
2006-11-28 06:16:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Baku
Cable title:  

POLITICAL AND ECONOMIC DEVELOPMENT IN AZERBAIJAN'S

Tags:  PGOV KDEM PHUM PREL KPAO ECON ETRD AJ 
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DE RUEHKB #1719/01 3320616
ZNR UUUUU ZZH
P 280616Z NOV 06
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 1798
INFO RUCNOSC/ORGANIZATION FOR SECURITY COOPERATION IN EUROPE
RUEKJCS/SECDEF WASHDC PRIORITY
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUCNCIS/CIS COLLECTIVE
UNCLAS SECTION 01 OF 03 BAKU 001719 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KDEM PHUM PREL KPAO ECON ETRD AJ
SUBJECT: POLITICAL AND ECONOMIC DEVELOPMENT IN AZERBAIJAN'S
SOUTHERN REGIONS


SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.

UNCLAS SECTION 01 OF 03 BAKU 001719

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KDEM PHUM PREL KPAO ECON ETRD AJ
SUBJECT: POLITICAL AND ECONOMIC DEVELOPMENT IN AZERBAIJAN'S
SOUTHERN REGIONS


SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: During an October 30 - November 1 trip to
Azerbaijan's southern regions, the Ambassador met with a
broad range of contacts, including representatives from local
government, civil society, and a variety of businesses. The
southern regions are experiencing some growth and investment,
including construction of a new international airport, but
business representatives complained that inefficiencies in
the agriculture and other non-oil sectors hampered further
growth. One local government representative and Lankaran's
Member of Parliament (MP) also expressed concern about the
possible negative effects of WTO accession. Although civil
society is quite active in Lankaran, many members of
different NGOs shared their frustration with being unable to
register with the Ministry of Justice. The Head of Lankaran's
local government and Lankaran's MP told the Ambassador that
the Nagorno-Karabakh conflict remains the country's greatest
concern, and said that the U.S. is the only Minsk Group
Co-Chair country with which Azerbaijan can have serious
discussions. The three-day trip garnered much positive press
coverage, conveying the message that the U.S. is actively
engaged in building democracy in Azerbaijan through political
and economic reform. END SUMMARY


2. (SBU) In an October 30 - November 1 trip, the Ambassador
visited the city of Lankaran, and stopped in villages in the
regions of Salyan, Masalli and Jalilabad. She met with
leaders from local government, a wide range of businesses,
and civil society; the representative of the Caucasus Muslim
Board in the Southern Region; the MP representing Lankaran;
students from Lankaran State University; and Peace Corps
volunteers. The Ambassador also visited a madrasa, two
mosques, and a USG-funded anti-corruption project, and
participated in the openings of several USG-funded projects
including a library information center, an ODC humanitarian
project, and USAID community development and agriculture

projects.

THE VIEW FROM LOCAL GOVERNMENT
--------------


3. (SBU) On October 30, the Head of the Salyan local
government, the Executive Commission (ExComm),Rasim
Bashirov, briefed the Ambassador on Salyan's economic
development. According to Bashirov, in the past two years GDP
has increased by 37 percent, while wages have doubled, and
the construction of a cotton refinery, a textiles plant, a
cannery, and a wheat mill have brought thousands of jobs to
the region. However, Bashirov said that many of these jobs
remain vacant, because a large portion of the work force
travels to Baku to find employment. The USD one million that
President Aliyev allocated to develop Salyan's local economy,
according to Bashirov, has supported the construction of an
Olympic sports complex, the renovation of several schools,
the construction of a reservoir, and much-needed repairs to
the sewage system. Bashirov told the Ambassador that the
ExComm was developing proposals for businessmen, particularly
for the development of the non-oil sector, and said that
Chinese investors had recently visited and were interested in
private development. He said that the region's greatest need
was for equipment and technology, which the Ambassador said
she would mention to U.S. companies.


4. (SBU) In an October 31 meeting with Suleyman Mikayilov,
the Head of the Lankaran ExComm, the Ambassador highlighted
the intertwined priorities in the bilateral relationship:
security, energy, and democracy. She emphasized the benefits
that WTO membership could bring to Azerbaijan, and said that
membership would be a good signal for U.S. companies to
invest in Azerbaijan. Mikayilov briefed the Ambassador on
Lankaran's economic situation. He said that an international
airport is currently under construction, which should be open
in 2007, will increase Azerbaijan's export capabilities and
also boost regional tourism. Mikayilov said that Lankaran's
biggest export partner is Russia, and that China is building
a bottling plant in the region. Although 300,000 new jobs
have been created in the past year, Mikayilov said that
Lankaran's biggest problem remained that of unemployment,
currently between 15 and 20 percent. In addition, Mikayilov
said that the region still faces problems with electricity
supply, which currently works an average of 18 to 20 hours
per day. Mikayilov told the Ambassador that Azerbaijan's
heavy refugee burden is holding back development, and said
that out of the three Minsk Group Co-Chair countries, the
U.S. is closest to Azerbaijan. The Ambassador assured
Mikayilov that the U.S. is fully engaged in the Minsk group

BAKU 00001719 002 OF 003


peace process.

BUSINESS AND ECONOMIC DEVELOPMENT
--------------


5. (SBU) In a roundtable discussion with business
representatives from industries including food processing,
furniture manufacture, leasing and bank services, the
Ambassador spoke of the importance of developing Azerbaijan's
non-oil sector. She highlighted the benefits of WTO
accession, and assured the group that WTO rules do not
prohibit agriculture support. Several representatives from
the food processing industry told the Ambassador that the
lack of produce storage and processing facilities is the
biggest problem facing regional agricultural development.
They also said that the lack of technology and expertise
keeps farmers from reaching their maximum level of
efficiency. One representative from a furniture manufacturing
firm complained that the international community is too
focused on agriculture, and ignores the potential in other
segments of the non-oil sector. He said that Lankaran has the
natural resources to support a strong furniture industry, but
that the resources are not being used productively. One
representative from the banking sector said that the region
could benefit from a greater availability of micro-financing,
and that the majority of Lankaran's foreign financing is from
Germany.

POLITICAL DEVELOPMENT
--------------


6. (SBU) In a dinner with the Head of the Lankaran ExComm
Suleyman Mikayilov, independent MP Rufat Guliyev, and a group
of Guliyev's constituents, the Ambassador highlighted the
potential benefits of WTO accession, such as attracting more
foreign investors. Mikayilov told the Ambassador that
Lankaran's residents want WTO membership, but that because of
the lack of technology, the country is not yet ready.
According to Mikayilov, there is no need to rush to
membership because Azerbaijan already has unlimited access to
the European market. He said that during a three-day
conference held in August to examine potential WTO
membership, participants agreed that for Azerbaijan, the
prospect for WTO membership is realistically two to three
years away. Guliyev brought up the Minsk Group negotiations,
saying that the Nagorno-Karabakh conflict remains the biggest
problem in Azerbaijan. Referring to the French National
Assembly's recent decision to criminalize denial of the
"Armenian genocide," Guliyev said that of the three Co-Chair
countries, the U.S. is the only country with which Azerbaijan
can have sincere discussions. One of Guliyev's constituents
told the Ambassador that if the occupied territories were
returned, Azerbaijan would prove to be the "most democratic,
most civil" country. The Ambassador emphasized that the U.S.
is committed to finding a solution to the conflict.


7. (SBU) In a roundtable discussion with members of civil
society, the Ambassador highlighted civil society's important
role in democratic reform. Representatives of NGOs spanning a
wide range of work - from human rights protection to legal
assistance - discussed the challenges of creating an engaged
citizenry in Lankaran. The representatives agreed that the
biggest problem in the region is the population's apathy
toward civic engagement, resulting in a small volunteer pool
for local NGOs. According to several of the participants,
although Lankaran has more than 50 functioning NGOs, only a
handful of them have been successful in registering their
organizations with the Ministry of Justice. In addition, many
of the representatives said that their NGOs lack the
resources necessary to function, such as office space and
equipment.


8. (SBU) The Ambassador met with Imam Haji Saadi, the
Representative of the Caucasus Muslim Board in the Southern
Region, with whom she visited the local madrasa and two of
the city's mosques. (NOTE: The madrasa which the Ambassador
visited will soon participate in an Embassy-funded public
diplomacy micro-scholarship program focused on teaching
English to high-school age students from poor, religious, and
conservative backgrounds.) The Ambassador praised
Azerbaijan's religious tolerance, saying that it sets an
example for both the region and the world. Imam Haji Saadi
told the Ambassador that there are about 80 mosques in
Lankaran, each with its own Imam. He said that the main
principles of Islam are tolerance and morality, and that
Azerbaijan's religious community values inter-religious
dialogue. According to the Imam, the best solution to

BAKU 00001719 003 OF 003


conflicts between religions is a proper education on
religious issues. He also said that although all religions
are beautiful, Wahabbism is an "enemy to humanity," contrary
to the Islamic tradition of peace.

THE U.S MESSAGE AND MEDIA REACTION
--------------


9. (SBU) The Ambassador's participation in the openings of
several USG-funded projects, including a library information
center, an Office of Defense Cooperation humanitarian
project, USAID community development and agriculture
projects, and her visit to a USG-funded anti-corruption
project received wide, positive media coverage. Reflecting
current concerns about a deterioration in media freedom in
Azerbaijan, most widely covered was the Ambassador's
statement that the U.S. strongly supports a free,
independent, objective and responsible media. The main themes
that emerged from the media coverage were that the U.S. is
concerned about prospects for people in Azerbaijan's regions
and is working to promote regional development; that the U.S.
respects Islam; and that the U.S. attaches great importance
to media freedom. Throughout her meetings, the Ambassador
promoted democratic values, praised Azerbaijan's success as a
religiously tolerant state, and conveyed the need for
political and economic reform.

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


10. (SBU) Lankaran - just dozens of miles from the Iranian
border - is a relatively dynamic region from both a political
and economic perspective. Much of its investment has been
spurred by foreign investment in the region's on-shore oil
reserves, and the planned international airport is sure to
draw still more investment. Politically, the GOAJ is keeping
a wary eye on influence from neighboring Iran, which could
explain - although not excuse - some of the difficulties NGOs
working in the area have experienced. We will continue to
urge the GOAJ to allow NGOs to register within the parameters
of the law, and will continue to explore new ways of reaching
out to Lankaran,s religious community, such as the PD
micro-scholarship program.
DERSE