FIRST MEETING WITH NEW ECONOMIC DEVELOPMENT

C O N F I D E N T I A L BAKU 001108 SIPDIS E.O. 12958: DECL: 11/20/2018 TAGS: ECON ETRD EINV EFIN EAGR ECIN AJ SUBJECT: FIRST MEETING WITH NEW ECONOMIC DEVELOPMENT MINISTER SUGGESTS A CONSISTENT MESSAGE ON ECONOMIC ISSUES Classified By: DCM Donald Lu for Reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: During his November 11-12 visit to Baku Senator Corker met with the newly appointed Minister of Economic Development Shahin Mustafayev. In his first meeting with USG officials, the new minister stuck closely to his prepared talking points, emphasizing GOAJ plans to improve the business environment and diversify the economy. He also reiterated GOAJ concerns regarding Jackson-Vanik, Section 907, and GSP status. End Summary. ¶2. (C) Senator Corker met with newly appointed Minister of Economic Development (MoED) Shahin Mustafayev on November 12. (Biographical Note: Mustafayev is the former First Deputy Minister of the Ministry of Taxation. End Note.) The meeting garnered few insights, as Mustafayev, having been appointed to his current position on October 31, 2008, stuck very close to his talking points. He echoed the same sentiments expressed by other GOAJ officials in recent meetings: concern for the effect of decreasing oil prices on the state budget, and the growing need to diversify Azerbaijan's economy and decrease dependence on oil and gas revenues. He briefly mentioned the GOAJ policy of using State Oil Fund (SOFAZ) monies "in case of emergency," along with planned decreases in expenditures, to help maintain balance in the budget. ¶3. (C) Mustafayev spoke generally of President Aliyev's policies of increasing support to the non-oil sector, encouraging business investment, and developing industry in the regions. He mentioned that President Aliyev had "many" projects planned to imrove the business environment and diversify the conomy. Mustafayev noted that his Ministry had just the day before signed an agreement with the Taxation Ministry to cooperate in creating a one-stop shop for the issuing of tax control logs to new businesses. (Note: This is likely in response to the much-touted World Bank "Doing Business 2009" Report in which implementing a one-stop shop for starting a business significantly improved Azerbaijan's ranks. End Note.) Previously, the MoED had issued these tax control books, with the Taxation Ministry controlling and regulating them, adding an unnecessary layer of bureaucracy. He noted that now, businesses can get their tax control books within three days of registering. ¶4. (C) The Minister also mentioned some challenges, and corresponding instruments the GOAJ was using to help improve the business environment. Mustafayev highlighted GOAJ plans to develop regional infrastructure, including support for the tourism and agricultural sectors, and he put in a plug for the Azerbaijan Investment Company, established in 2006 as a good vehicle for investment in Azerbaijan. (Note: The Minister of Economic Development is also the Chairman of the Supervisory Board of this state-owned joint-stock company. End note.) He emphasized that Parliament is currently analyzing competing legislation regarding competition among business. ¶5. (C) Echoing other GOAJ officials in recent meetings with USG officials, Mustafayev also expressed concern that the Jackson-Vanik Amendment, Section 907 of the Freedom Support Act, and lack of GSP status were impeding trade between the U.S. and Azerbaijan. He stressed that WTO accession was an important goal for the GOAJ, adding that as a small country, Azerbaijan needed to be able to export goods to the world market. Senator Corker reassured the Minister that the U.S. is committed to the principles of free-trade and supportive of measures which facilitate open competition, noting the importance to both sides of a strong, financially stable Azerbaijan. ¶6. (C) COMMENT: This was the first meeting of a senior USG interlocutor with this new minister. It is significant that he is at least rhetorically continuing his predecessor's focus on economic reform issues, including WTO accession. Moreover, given the positive press about Azerbaijan's recent "Doing Business" assessment, Mustafayev will be under considerable pressure not to let Azerbaijan fall in this ranking. DERSE