CABINET OF MINISTERS REPORTS TO PARLIAMENT ON 2005

UNCLAS SECTION 01 OF 02 BAKU 000510

SIPDIS

DEPT FOR EUR/CARC

SENSITIVE

SIPDIS

E.O. 12958:N/A
TAGS: PHUM KDEM PREL PGOV ECON AJ
SUBJECT: CABINET OF MINISTERS REPORTS TO PARLIAMENT ON 2005
RESULTS


SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY


1. (SBU) SUMMARY: On March 14 the Prime Minister presented
the Cabinet of Minister's report on its 2005 activities,
similar to a "State of the Union" address. As expected, the
GOAJ comments and data were very positive: GDP and average
salary increased, government reforms continued, state
credits continued to be successfully channeled to the
development of entrepreneurship, privatization yielded
positive results and more schools were built, thereby
developing the education sector. The report lacked substance
beyond economic data and offered little in the way of new
policy objectives or political analysis. Hinting at a more
activist approach, new Speaker of Parliament Osadov called
upon the GOAJ to change the report's format and be more
responsive to issued raised by MPs. While some opposition
MPs criticized the GOAJ for leaving out key sectors in the
report, the general public seemed to take little notice of
the Cabinet's accounting. END SUMMARY.

2005: ANOTHER SUCCESSFUL YEAR
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2. (U) The Prime Minister reported that GDP increased in
2005 by more than 26 percent (USD 12.6 billion) due to
successes in the oil sector and agricultural production. The
GOAJ also reported that about 169,000 new jobs were created,
out of which almost 80,000 were permanent. Poverty decreased
from 40 percent to 30 percent (NOTE: The decrease in poverty
levels may be tied to recent adjustments in poverty
calculation methodology.) Aggregate currency reserves of the
State Oil Fund and the National Bank increased 30 percent,
equaling USD 2.4 billion. External debt levels fell to 12
percent of GDP, from 22 percent of GDP in 2004. The Prime
Minister said that these figures all indicated the
successful policies of the GOAJ during the year and that the
current path of reform should continue in order to keep
Azerbaijan on its positive trajectory. The majority of the
report focused on rote economic statistics with little new
policy plans or analysis of the political arena. Notably
absent were reports from the security ministries, including
the Ministry of Defense, Ministry of National Security,
Ministry of Justice, and Ministry of Internal Affairs.

LOYAL MPS APPLAUD THE REPORT
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3. (SBU) Ruling Yeni Azerbaijan Party (YAP) and pro-
government independent MPs used their allocated time to
commend GOAJ activities and express their satisfaction with
the report itself. Only a few MPs, including Siyavush
Novruzov (a leading YAP MP),pointed out minor problems such
as a shortage of information other than purely economic
data. Despite the positive comments from pro-governmental
MPs, Speaker of Parliament Ogtay Asadov said he was
disappointed that the report did not include solutions for
the existing problems; he also noted that it is not clear
how effectively the Cabinet addresses issues raised by
Parliament. In a heartening show of independence, Asadov
called for a change in format of the report and asked that a
separate chapter be included devoted to the issues MPs raise
during hearings.

OPPOSITION CONSIDERS REPORT INCOMPLETE
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4. (SBU) The few opposition MPs in Parliament were the only
ones who gave extensive, concrete critiques of the report.
Some complained that problems faced last year with energy
supplies, the agricultural sector, and price increases were
not covered by the report. Others, including Jamil Hasanli
(former PFP member, elected from the Azadliq Bloc) also
criticized the Cabinet of Ministers for not including
reports from law-enforcement ministries, therefore
preventing a public debate of their activities. The Speaker
defended this approach, saying that the country is still in
a state of war, so an open discussion would be
inappropriate. However, the Speaker did offer to entertain
the idea of a closed-door hearing with those ministries.


5. (SBU) Igbal Agazadeh from the opposition Umid (Hope)
Party criticized last year's activities of the Cabinet of
Ministers. He said the GOAJ did nothing to solve problems in
the energy, education, agriculture, or other sectors of the
economy. Agazadeh specifically said that the agricultural
sector has great potential but is still not utilized to its
full extent. Agazadeh was also concerned with the recent
increase in prices and inaction of GOAJ to prevent

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inflation. In general, he called the report a document on
"success stories" that does not address the problems facing
Azerbaijan.


6. (SBU) In an interesting note, Gudrat Hasanguliyev (a pro-
governmental small party MP) expressed concern about the
GOAJ's level of readiness to deal with the potential inflow
of refugees if Iran were attacked by the United States.
Hasanguliyev called on the Foreign Ministry to report on its
activities to address this problem.

REPORT ON ANOTHER "SUCCESSFUL" YEAR
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7. (SBU) The report was approved with only 10 votes against
from opposition MPs. While the report created a day's worth
of debate in Parliament, the general public took little
interest. Some speculate the lack of interest is because
the reports exaggerate facts and offer few solutions to the
problems facing the country. As a result, the GOAJ's annual
report received poor coverage in the media and few were
heard discussing it on the streets of Baku.

HARNISH