PRESIDENT ALIYEV "VERY SATISFIED" WITH VISIT TO

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000685

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/05/2016
TAGS: PREL PGOV ENRG EPET ETRD KDEM PINR AJ
SUBJECT: PRESIDENT ALIYEV "VERY SATISFIED" WITH VISIT TO
WASHINGTON, LOOKS TO EXPAND RELATIONSHIP


Classified By: Charge d'Affaires Jason P. Hyland per 1.4 (b,d).


1. (C) Summary: In a May 4 meeting, President Aliyev said
he was "very satisfied" with his U.S. visit, especially his
meeting with President Bush. The comprehensive agenda
reflected the "real partnership" between the U.S and
Azerbaijan, and laid the groundwork for an expanded
relationship. He stressed that Azerbaijan needs to proceed
down the three roads of democratic reform, energy and
security in parallel and that all three roads are
interconnected. Aliyev's positive comments reflect what
we've heard from a range of Azerbaijanis: the visit
confirmed the solid bilateral relationship at a very critical
moment. Aliyev also affirmed Azerbaijan's interest in
further development of the East-West energy corridor, noting
that he had just learned Kazakhstan plans to sign in June an
agreement to bring Kazakh crude into the Baku-Tbilisi-Ceyhan
pipeline. Aliyev said that his new Ministers are charged
with improving Azerbaijan's investment climate; to that end,
he has instructed them to review recommendations made by the
American Chamber of Commerce. Aliyev hopes to develop
Azerbaijan's agriculture sector and said U.S. companies could
play a key role in improving Azerbaijan's facilities and
infrastructure. End summary.


2. (C) In a May 4 meeting with visiting State Department
Special Representative for Commercial and Business Affairs
Frank Mermoud and Charge, President Aliyev said that he was
"very satisfied" with his April 25-28 visit to Washington.
He thanked Mermoud for organizing a lunch with senior
American business leaders during the visit. The
comprehensive agenda reflected the "real partnership" between
the U.S. and Azerbaijan, Aliyev said, and laid the groundwork
for further development of the bilateral relationship.
Aliyev said that the visit touched on all three key areas in
our relationship -- energy, security, and democratic and
economic reform. He said that he believes we should develop
all three areas equally and in parallel, and that all the
roads were at the same time interconnected. Following his
visit, Aliyev said he would like to see more high-level
visits between the two countries. In his view, this is a
time for "active steps" in the relationship. Azerbaijan, he
said, is at a unique moment in its history. With oil wealth
and tremendous economic potential, Azerbaijan can now move
forward on political issues. He added that good relations
with the U.S. and Azerbaijan's neighbors in the region
provide the basis to build a strong society.


3. (C) Noting that he would meet with the Prime Ministers of
Kazakhstan and Turkey in coming days (during the May 5
Economic Cooperation Organization summit),Aliyev said that
Azerbaijan was interested in exploring further development of
the East-West energy corridor. Just today, Aliyev said, he
learned that Kazakhstan plans to sign in June the
Inter-Governmental Agreement (IGA) to bring Kazakh crude into
the Baku-Tbilisi-Ceyhan pipeline. While the two sides need
to adjust several items in the agreement to make it more
balanced, Aliyev said he is confident the issues can be
addressed in the next month.


4. (C) Mermoud urged Aliyev to continue his work on
political reform. Judicial reform and anticorruption
measures are central to Azerbaijan's development and, as
outlined in the American Chamber of Commerce White Paper, are
essential to attracting foreign investment. Aliyev agreed,
and said that he had instructed his Ministers to review the
White Paper. Aliyev said that there already had been some
changes in the way Azerbaijan does business.


5. (C) Noting that he had brought into his Cabinet young,
English-speaking leaders with real knowledge of their fields
and previous business experience (including himself, Aliyev
commented),Aliyev said he encouraged his Ministers to look
at Azerbaijan with a broader view. He has asked his
Ministers to work toward making Azerbaijan a country in which
they personally would be interested in investing. In his
view, they should "put themselves in the shoes of the
business community" and think about whether they would be
comfortable investing in Azerbaijan in the current climate.
The only way that Azerbaijan was able to develop successfully
its energy industry, he said, is because everyone in
government knew they would be punished if they interfered in
the process. Aliyev said he now seeks to extend that
approach to the non-energy sectors.


BAKU 00000685 002 OF 002



6. (C) Aliyev welcomed Mermoud's suggestion that Azerbaijan
could benefit from a council of foreign economic and business
advisors, perhaps an informal "wisemen's group," from which
Aliyev could informally seek advice on tough problems.
Noting that Azerbaijan's greatest challenge was to properly
manage and spend its energy revenue, Aliyev said that
Azerbaijan needs the advice of experts with a "broader
experience." The International Financial Institutions
provide advice that is focused only strict economics; if
Azerbaijan followed this advice, it would face "serious
social problems." Aliyev said that Azerbaijan needs advice
that reflects Azerbaijan's social and political realities.
Azerbaijan will experience a lot of economic activity in
coming years -- billions of dollars, Aliyev said; Azerbaijan
needs the assistance and advice of good companies from
friendly countries, to help manage this activity. (Aliyev
seemed genuinely receptive to the idea of having such an
informal group of senior statesmen/business leaders to whom
he could talk off-line.)


7. (C) Aliyev said he would welcome a Cabinet-level U.S.
trade delegation focused on agriculture, responding to
Mermoud's suggestion. After energy, agriculture is
Azerbaijan's most important sector, and Aliyev hopes to
attract more investment. Azerbaijan has a good climate and
good soil, and has easy access to the vast Russian market.
Aliyev also hopes to end Azerbaijan's dependency on food
imports. However, Azerbaijan lacks the facilities and strong
agricultural industry to make that happen. U.S. investment
-- as in the successful Valmont pilot irrigation project --
could be key.


8. (C) COMMENT: Aliyev's very positive comments on his
visit to Washington reflect what we've heard from Ministers,
pundits and even Azerbaijan's ever-downbeat opposition.
Musavat Leader Isa Gambar told Charge, for example, that
while he wants to know more of the details of what was
discussed in Washington, as an Azerbaijani citizen he was
pleased that the visit showed the world a strong
U.S.-Azerbaijani relationship. The strong impression we get
is that Azerbaijanis were also pleased to see their president
speaking confidently in English at the White House and
throughout his visit, conveying a very professional image of
their country. Azerbaijanis -- and Aliyev himself -- viewed
the visit as recognition of the solid partnership between the
United States and Azerbaijan. Even the print media, which
are prone to spin out the most involved conspiracy tales,
have been quite low-key in their coverage of the visit.


9. (C) COMMENT CONTINUED: In our view, the visit also cured
one of Aliyev's demons; no longer fearful of being snubbed by
the U.S, Aliyev confidently talked about previous and future
travel plans, laughing and telling anecdotes -- including one
about his "Honorary Texan" certificate, received from
then-Governor Bush -- that we previously had not heard.
Aliyev said he was so proud of the congratulations offered by
President Bush about his daughter's wedding, that he played a
tape of it for all the guests at the wedding reception.
Aliyev received Mermoud on the eve of the high-profile ECO
summit, when he had six other bilateral meetings arranged; it
was a clear sign of appreciation for his reception in
Washington (and probably a sign of his desire to balance the
same day photo-op with Iranian President Ahmadinejad).


10. (U) Special Representative Mermoud has cleared this
message.
HYLAND