EEB/CBA SPECIAL REPRESENTIVE MERMOUD DISCUSSES

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000657 SIPDIS SIPDIS DEPT FOR EEB/CBA SPECIAL REPRESENTATIVE J. FRANK MERMOUD E.O. 12958: DECL: 06/01/2017 TAGS: ECON EFIN PREL EAID EAGR AJ SUBJECT: EEB/CBA SPECIAL REPRESENTIVE MERMOUD DISCUSSES NON-ENERGY SECTOR DEVELOPMENT IN AZERBAIJAN REF: BAKU 474 Classified By: POL/ECON COUNSELOR JOAN POLASCHIK PER REASONS 1.4 B, D ¶1. (C) SUMMARY: Prior to co-leading the U.S. agricultural delegation to the U.S.-Azerbaijan Agrobusiness Forum, EEB/CBA Special Representative Mermoud met with local business and government officials to discuss the development of non-energy sectors, including agriculture and high-tech. Mermoud visited local lettuce grower AgroYurd to see how the small non-energy sector company is successfully competing in a difficult market. At the Azerbaijan Investment Company (AIC),the deputy executive director briefed on AIC's investments and future plans. The Minister of Telecommunications and Mermoud discussed the importance of the non-energy sector and connecting the rural areas of Azerbaijan through "satellites of learning." Mermoud met with the CEO of Azerfon, a new wireless services company, and discussed the importance of providing high technology services in a difficult business environment. END SUMMARY. ¶2. C) State Department Special Representative for Busiess and Commercial Affairs Frank Mermoud co-led U.S. agricultural delegation to Azerbaijan May 1-25, seeking to expand commercial contacts and pportunities for U.S. businesses in the agricultral sector. Mermoud visited small lettuce farm AgroYurd, met with the deputy executive chairman of the Azerbaijan Investment Company, the Minister of Telecommunications and Information Technology, and the Chief Executive Officer of Azerfon. Other meetings will be reported septel. NON-ENERGY SUCCESS STORY - AGROYURD -------------- ¶3. (SBU) AgroYurd is a small farm operating outside of Baku that represents a non-energy sector success story. On a two hectare site, AgroYurd grows between 25 and 30 tones of lettuce per year in 15 small greenhouses and sells the lettuce to the local McDonald's chain and the major local hotels, including the Hyatt chain, in Baku. The company employs 16 employees to care and harvest the lettuce and uses its own fleet of trucks to deliver lettuce daily to its customers. AgroYurd uses only small amounts of pesticides, relying upon a biological compost system developed from rabbit and sheep manure. In a telephone conversation with �00A;Mermoud, AgroYurd's director Samad Abasguliyev explained how he developed his company, noting that he currently had no problems with government authorities. AgroYurd exports a small amount of its production to Russia and Belarussia. Abasguliyev is an English speaker, graduated from Baku State University and studied in the U.S. AZERBAIJAN INVESTMENT COMPANY -------------- ¶4. (C) In a meeting at the Azerbaijan Investment Company (AIC),Deputy Executive Director Riad Gasimov briefed Mermoud on AIC's current operations and investment plans (reftel). He told Mermoud that since beginning operations in September 2006, AIC had only invested USD 5.3 million in local dairy company Milk Pro. He added that AIC was exploring other potential investment deals, including an investment in the local Garadagh cement company. Gasimov told Mermoud that the GOAJ is also considering amending AIC's Presidential decree to move its veto power. Mermoud told Gasimov about Bechtel's possible infrastructure plans and thought that AIC could play a role in development of the plans. Other AIC investments planned for 2007-2008 included a salt plant with AzerSun, green house development to export flowers and vegetables and a joint project with a Korean company to build a shipping yard. CONNECTING THE REGIONS -------------- ¶5. (C) At a May 21 meeting, Minister of Telecommunications and Information Technology Abbasov and Mermoud discussed ideas to connect Azerbaijan's rural areas through "satellites of learning" in order to facilitate economic development and interconnectivity. Abbasov told Mermoud that he would coordinate with the Ministers of Education and Agriculture to organize a meeting to develop further the concept. Mermoud told Abbasov about Cisco's "country transformation" initiative and added that a major impediment to the successful development of the agricultural sector in Azerbaijan was due to a lack of information regarding crop BAKU 00000657 002 OF 002 production, sales, and marketing. Facilitating the exchange of information, connected through an infrastructure developed by the GOAJ, could increase agricultural production and efficiency. Mermoud and Abbasov also discussed the Agricultural Academy in the city of Ganja and its importance for training the farmers and agronomists of the future. Both Abbasov and Mermoud stated that U.S. universities, including Indiana University, could assist Azerbaijan with its agricultural training. Abbasov told Mermoud that he would look into working with U.S. universities. NEW TELECOMM COMPANY -- AZERFON -------------- ¶6. (C) Mermoud also met with John Armley, Chief Executive Officer of Azerfon/NAR Mobile. Armley briefed Mermoud on Azerfon's efforts to enter the Azerbaijan mobile phone market. According to Armley, Azerfon had received its license in December 2005 but had only been able to begin operations in early 2007. He said that the company hoped to develop into a full service mobile company, with services in wireless communications and Internet connectivity. He explained that beginning services had been a "hard road" and that the company had made slow progress. With nearly 100,000 subscribers, Armley was confident that Azerfon could compete with local cell phone giant AzerCell. Mermoud and Armley discussed the need for Azerbaijan to develop its human capacity in order to support high-tech services. Armley noted that the GOAJ did not fully comprehend information technology and that direct meddling or corruption by government officials was minimal. ¶7. (U) EEB/CBA Special Representative Frank Mermoud cleared this cable. DERSE