GOAJ PREPARING FOR SUCCESSFUL INAUGURAL

UNCLAS BAKU 001799 SIPDIS SIPDIS SENSITIVE DEPT PLEASE PASS TO EB ASSISTANT SECRETARY DANIEL SULLIVAN DEPT PLEASE PASS TO USTR SHAUN DONNELLY, PAUL BURKHEAD AND BETSY HAFNER TREASURY FOR ASSISTANT SECRETARY CLAY LOWERY, DAS NANCY LEE, AND JEFF BAKER USAID FOR DREW LUTEN E.O. 12958: N/A TAGS: ECON EFIN PREL EAID EAGR ETRD EINV AJ SUBJECT: GOAJ PREPARING FOR SUCCESSFUL INAUGURAL U.S.-AZERBAIJAN ECONOMIC PARTNERSHIP COMMISSION REF: (A) BAKU 1721 (B) BAKU 1403 (C) BAKU 1176 SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION - PLEASE HANDLE ACCORDINGLY ¶1. (SBU) Following up on her November 30 meeting with President Aliyev (REF A),Ambassador Derse met separately with Minister of Finance Samir Sharifov and Minister of Economic Development Heydar Babayev to discuss the February 2007 inaugural U.S.-Azerbaijan Economic Partnership Commission and to provide a draft agenda for discussion. Both ministers strongly welcomed the EPC and committed to organize a meeting of relevant government ministries and agencies to review the agenda and coordinate practical goals and objectives for the EPC. ¶2. (SBU) Both Minister Sharifov and Minister Babayev agreed that raising the U.S.-Azerbaijan economic dialogue to a senior policy level discussion would facilitate real results and engagement. During the meeting with Minister Sharifov, the Ambassador reviewed possible deliverables, including the announcement of the U.S.-financed Treasury Information Management System roll-out and follow-on at the Ministry of Finance. Minister Sharifov took close note of the possible deliverables, writing down several possibilities. Sharifov also told the Ambassador that he would change his vacation planned for February in order to lead the GOAJ's delegation. Minister Babayev, who met with the Ambassador in between meetings with President Aliyev, also reviewed the objectives of the EPC and indicated that he would meet with his team to coordinate policy goals and objectives. ¶3. (SBU) The GOAJ is interested in having the EPC help Azerbaijan address its serious macroeconomic policy challenges and develop a longer term development strategy for the country. According to both ministers, the GOAJ recognizes that it is facing huge energy revenue inflows, but lacks the experience and technical know-how to manage this challenging environment. Azerbaijan needs advice and regular consultations on this challenge and needs advice to craft a sensible long-term development strategy. To its credit, Azerbaijan has committed to use its new wealth to rapidly improve standards of living for the Azerbaijani people by accelerating Azerbaijan,s economic diversification, development and integration into the international economic system. ¶4. (SBU) As soon as the GOAJ provides substantive comments to the agenda and possible deliverables, we will forward them to the Department. HYLAND