Identifier
Created
Classification
Origin
08BAKU1158
2008-12-05 09:25:00
UNCLASSIFIED
Embassy Baku
Cable title:  

USAID ADMINISTRATOR AND DIRECTOR OF

Tags:  ECON EFIN ETRD ENRG EPET ADPM AJ 
pdf how-to read a cable
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PP RUEHLN RUEHSK RUEHVK RUEHYG
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ZNR UUUUU ZZH
P 050925Z DEC 08
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 0485
INFO RUEHAK/AMEMBASSY ANKARA 3170
RUCNCIS/CIS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAUSA/DEPT OF EDUCATION WASHDC
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHDC
UNCLAS SECTION 01 OF 07 BAKU 001158 

SIPDIS

DEPT FOR EUR/CARC

E.O. 12958: N/A
TAGS: ECON EFIN ETRD ENRG EPET ADPM AJ
SUBJECT: USAID ADMINISTRATOR AND DIRECTOR OF
FOREIGN ASSISTANCE HENRIETTA H. FORE VISIT TO
AZERBAIJAN

REF: BAKU 01147

UNCLAS SECTION 01 OF 07 BAKU 001158

SIPDIS

DEPT FOR EUR/CARC

E.O. 12958: N/A
TAGS: ECON EFIN ETRD ENRG EPET ADPM AJ
SUBJECT: USAID ADMINISTRATOR AND DIRECTOR OF
FOREIGN ASSISTANCE HENRIETTA H. FORE VISIT TO
AZERBAIJAN

REF: BAKU 01147


1. SUMMARY: The visit of USAID Administrator and
Director of Foreign Assistance Henrietta H. Fore to
Azerbaijan capitalized on the existing USG strong
host-country counterpart relationships. During her
three-day visit, Administrator Fore held meetings
with AzerbaijanQs President (see reftel),key
ministers, and the Speaker of Parliament.
Administrator Fore championed public-private
partnership opportunities to both government and
key business leaders within Azerbaijan. In each of
her meetings she also leveraged President AliyevQs
message to do more in the areas of water and
sanitation, anti-corruption, IT, the ecology and
environment, and agriculture. In the course of
discussions, Administrator Fore indicated a
willingness to authorize a significant expansion of
USAID staff and programming to expand large-scale
developmental efforts. End Summary.

AMBITIOUS NEXT STEPS ON ECONOMIC REFORM ENVISIONED
-------------- --------------


2. On November 25, USAID Administrator Fore met
with Shahin Mustafayev, Minister of Economic
Development. Administrator Fore mentioned USAID
was very pleased with the leadership that MOED had
shown in accelerating progress on economic reform
in general and the WTO accession process in
particular, and that USAID looked forward to
continuing its close collaborative working
relationship with the MOED. The Administrator
mentioned USAIDQs interest in forging
public/private partnerships in agriculture and
other critical sectors key to the development of
AzerbaijanQs non-oil sector. The Administrator
noted the importance of moving forward to support
the adoption of draft regulatory reform, which
would introduce greater transparency and efficiency
into the public investment planning and selection
process.


3. Minister Mustafarov emphasized the fact that
USAID has been a very strong collaborator with MOED
on major reforms, especially in WTO accession and
QDoing BusinessQ. The Minister emphasized the
governmentQs intent to continue to promote progress

in key structural and fiscal reform areas,
referencing an array of ministry support programs
for local and non-oil sector economic development.
The Minister asked for intensified support in this
area and Administrator Fore agreed that USAID would
examine modalities for improving the effectiveness
of MOED-led private sector support strategies and
programs. USAID Mission Economist Paul Davis
mentioned the importance of further draft
legislation refinement in the competition law and
investment law. Ambassador Derse noted the MOEDQs
leadership in promoting path-breaking economic
policy and institutional reforms in Azerbaijan. In
closing, Administrator Fore emphasized USAIDQs
strong commitment to continued collaboration in
support of vital economic growth and reform
prograAdministator

DEVELOPING AN EQUITABLE ENDOWMENT STRATEGY
--------------


4. On November 25, USAID Administrator Fore met
with State Oil Fund of Azerbaijan (SOFAZ) Executive
Director, Shahmar Movsumov. Movsumov gave the
Administrator a detailed summary of SOFAZ
directives. He highlighted several ongoing and
future projects that the fund directly finances and
supports, including the Baku-Tbilisi-Ceyhan (BTC)
pipeline, the Baku-Tbilisi-Kars railroad, and the
temporary settlements for internally displaced
persons (IDPs) rendered homeless by the Nagorno-
Karabagh (NK) conflict. (NOTE: Movsumov noted
that all IDPQs had been resettled, that the last

BAKU 00001158 002 OF 007


tent camp was demolished in 2008, and emphasized
that the GOAJ considers the new settlements to be
strictly temporary as the issues of NK are expected
to be resolved. End Note.)


5. The Administrator expressed gratitude for the
willingness of Movsumov to establish and maintain
an effective partnership with USAID on development
priorities. She requested that he consider
deepening and broadening the current level and
areas of cooperation to include public-private
partnerships for education programs. She also
asked for MovsumovQs suggestions on areas in which
the USG could help advance President AliyevQs goals
in support of the areas of agriculture, water and
sanitation, information technology, ecology and
environment, and anti-corruption.


6. Administrator Fore mentioned that it could
prove extremely beneficial to link the GOAJQs
scholarship fund to an internship program with
American businesses. This could also help
scholarship program beneficiaries receive hands-on
training that could be effectively applied when
they return to Azerbaijan. The Administrator also
offered USAID support to implement the concept.
Administrator Fore mentioned USAIDQs public
investment planning site visit to Chile and the
Financing for Development meeting in Doha as events
that could benefit Azerbaijan. Movsumov expressed
interest in participating in both and mentioned his
own plans to host a high-level conference in 2009
to celebrate the 10th anniversary of SOFAZ. He
also expressed interest in the internship concept
referenced by Administrator Fore.

GLOBAL DEVELOPMENT ALLIANCE
--------------


7. Administrator Fore spoke at a luncheon
sponsored by AmCham and the Eurasia Partnership
Foundation (EPF). In attendance were AmCham
members (American, foreign, and local) representing
accounting and audit, banking, communications,
energy, financial services, food, and insurance
businesses operating in Azerbaijan. After
recognizing the various public-private partnership
(PPP) efforts in Azerbaijan, Administator Fore
overviewed the U.S. Foreign Assistance portfolio
and the dramatic evolution of assistance support
(today 80 percent private; 20 percent public).
Administrator Fore provided large-scale PPP
examples, including the Unilever/Colgate hand
washing, Cisco/Intel IT infrastructure, and Coca
Cola sanitation and water initiatives.
Administrator Fore noted that as assistance
recipient countries mature, the USG looks for them
to evolve into Qequal [assistance] partners.Q She
concluded her formal remarks with an invitation to
kick off several multi-million dollar partnerships
in Azerbaijan.


8. Eurasia Partnership Foundation (EPF) Associate
Director Michael Haines highlighted various
corporate social responsibilities initiatives that
EPF promotes. He reaffirmed that Azerbaijan is
ripe for Global Development Alliances (GDA).
Administrator Fore noted that PPP moves beyond
corporate social responsibility to a recognition
that Qit is in the interest of business to do
PPPs. Various AmCham staff and members reaffirmed
the support the U.S. Embassy and USAID has provided
them and the GOAJ in numerous areas of strategic
importance to the private and public sector. They
also noted some of the challenges, including slow
democratic progress, corruption, resistance to
change, and the need for further legislative
development and reform. There was a general
consensus that regardless of the challenge, each
requires behavior changes within the government,
businesses community, and the individual that is

BAKU 00001158 003 OF 007


best accomplished by targeting AzerbaijanQs youth.
USAID Country Coordinator Scott Taylor reinforced
the opportunity for all attendees to substantially
raise the bar in PPP, in line with Azerbaijan
President AliyevQs priorities to improve water and
sanitation, anti-corruption, agriculture, IT, and
ecology and the environment.

STATE OIL COMPANY OF AZERBAIJAN PARTNERSHIP
--------------


9. On November 25, USAID Administrator Fore met
with State Oil Company of Azerbaijan Republic
(SOCAR) President Rovnag Abdullayev. Abdullayev
said he had just returned from Ashgabat, where he
participated in the annual Turkmenistan
International Oil and Gas Exhibition (TIOGE) and
had announced AzerbaijanQs willingness to help
Europe achieve its energy security goals and
to serve as a transit country for eastern Caspian
hydrocarbons. Abdullayev said to the extent
that countries such as Kazakhstan and Turkmenistan
decided to export their hydrocarbons west,
Azerbaijan stood ready to provide its
infrastructure for transit.


10. Administrator Fore complimented SOCAR
President Abdullayev on the progress SOCAR and the
GOAJ continues to make in the energy sector. After
soliciting an energy tour dQhorizon from
Abdullayev, Administator Fore said that USAID stood
ready to work with SOCAR in its initiatives to help
clean up the environment.

ECOLOGY AND NATURAL RESOURCES
--------------


11. Administrator Fore met with Minister of
Ecology and Natural Resources Huseyngulu Bagirov on
November 25. Minister Bagirov described some of
the environmental challenges Azerbaijan is facing,
including oil contamination, urban migration, water
pollution, and solid waste management. Minister
Bagirov stated that 1.5 billion tons of oil had
been taken out of Azerbaijan during Soviet times,
generally through Qthe most primitive
technologies,Q and as a result, 30,000 hectares of
land were now heavily contaminated. He said that
there were plans to build an incinerator near Baku
that would not only reduce the amount of solid
waste in the country, but would also generate
electricity for Azerbaijan. He lamented that
Azerbaijan was unable to do much about water
pollution because, he said, QSeventy-five percent
of contaminated water comes from Georgia and
Armenia.Q The Minister indicated that the waters
coming from Georgia are heavily contaminated with
municipal waste, and the waters from Armenia
contain heavy metals.


12. When asked to identify one area in which the
GOAJ most needed USG assistance, Minister Bagirov
pointed to staff. He said that the QMinistry is
not a resource of skill for anyone,Q and that Qthe
building of the Ministry is more impressive than
the Ministry itself.Q Mr. Bagirov explained the
need for Ministry staff who are Qimpassioned,
understand these [environmental] problems, and have
[the appropriate] skills.Q In response, USAID
Mission Economist Paul Davis offered to launch
technical support efforts to improve cost/benefit
analysis capacity with regard to environment
mitigation projects and to examine the potential
application of economic instruments to promote
cost-effective and comprehensive compliance with
critical pollution abatement policies/goals.

CO-FINANCING MOU TO ADVANCE FINANCIAL SECTOR
REFORMS
--------------


BAKU 00001158 004 OF 007



13. On November 25, USAID Administrator Fore met
National Bank of Azerbaijan (NBA) Chairman Elman
Rustamov. The NBA Chairman welcomed Administrator
Fore and stressed the importance of USAIDQs
financial sector stability program for achieving
financial sustainability and banking sector growth
in Azerbaijan. The Administrator inquired about
the most pressing challenges of the Azerbaijan
banking sector in the light of the current economic
growth situation in the country and the
international financial crisis. The Chairman noted
that the Azerbaijan banking sector is still in a
nascent period of development and is still
rebuilding public confidence following the collapse
of the financial system that accompanied the
breakup of the USSR. He mentioned that the NBA is
taking all necessary steps to mitigate the negative
consequences of the recent international financial
crisis. The Chairman appreciated the fact the
USAIDQs Technical Assistance Support program helped
the NBA forecast the crisis a year ago and prepare
an anti-crisis plan. The Chairman noted how
critical USAIDQs work had been to Azerbaijan under
its two-year program on anti-money laundering,
risk-based banking supervision, HR, and IT
management, as well as the recent NBA cash
management work.


14. Administrator Fore reiterated USAIDQs
commitment to continue the work in these areas.
The Chairman requested support for the
establishment of Caucuses leadership programs in
Azerbaijan under a world leading international
accreditation program. He noted the Central BankQs
interest in attracting a leading US business school
to establish a presence in Azerbaijan which could
send students from the region. Ambassador Derse
supported the idea and promised to follow up.

CHARTING A COURSE FOR INFORMATION HIGHWAY
INNOVATIONS
--------------


15. Administrator Fore met with Minister of
Communications and Information Technologies Ali
Abbasov on November 25. Administrator Fore noted
USAIDQs strong interest in working with the
Ministry on key sectoral policy and regulatory
reform issues; and in public/private partnerships
that would expand sustainable access to information
technology services, building upon USAIDQs strong
experience and track record in this area. Minister
Abbasov noted that while Azerbaijan has
impressively expanded telecommunication service
availability, particularly in cell phone coverage,
internet service coverage remains low and related
access to computer services remains limited. He
noted the Ministry has great interest in
implementing a comprehensive innovation promotion
strategy in the IT sphere and in galvanizing a
regional strategy and program to expand east-west
telecommunications infrastructure capacity through
fiber optic network expansion.


16. The Minister referenced plans to facilitate
expanded availability of satellite-based telecom
services, privatize the countryQs landline
services, and establish an independent
telecommunications sector regulator. The Minister
would welcome USAID technical support to promote
policy and regulatory reforms to cost effectively
expand access to telecom services and facilitate
the establishment of a WTO-consistent sectoral
regulatory regime. The Minister expressed his
interest in technical support to promote IT
diffusion and expansion of its regional
telecom network capacity.


17. Administrator Fore responded that USAID stands
ready to work together in each of these areas.
USAID Mission Economist Paul Davis noted that this

BAKU 00001158 005 OF 007


work could build upon a recently developed
strategic requirements analysis to establish a WTO-
consistent regulatory system. Davis indicated that
USAID was prepared to have a discussion on how to
move forward on key policy, regulatory reform and
infrastructure capacity expansion strategy issues.
Minister Abbasov and Administrator Fore agreed to
hold a follow-up discussion the week of December 1,
to formulate concrete technical support activities
in these areas.

LEGISLATIVE BRANCH EAGER TO EXPAND ITS AUTHORITY
-------------- ---


18. The Chief of Staff of the Parliamentary
Speaker provided the Administrator with a quick
tour of the main meeting hall and a demonstration
of ParliamentQs interactive website. Speaker Ogtay
Asadov thanked USAID for the American peopleQs
support. He stated that he valued USAIDQs
Parliamentary Project efforts, specifically
referencing two areas he found important and well
received: 1) training and support for newly hired
Members of Parliament Assistants (MPAs),and 2)
roundtable discussions with external experts,
Members of Parliament (MPs),and parliamentary
staff. The Speaker expressed hope that USAID would
continue with a planned second phase of the project
and was confident that Parliament would complete
all the tasks established under the Memorandum of
Understanding (MOU) with USAID at the projectQs
start. He requested the second phase be launched
with USAID working with the Parliament and the EU
to find ways to link required under a new EU-
planned twinning project.


19. Administrator Fore thanked the Speaker and
noted how impressed she was at how the Parliament
website provides for greater transparency in
posting the legislative calendar, agenda and draft
legislation under consideration. The Administrator
noted the USG's intent to continue with a second
phase, based upon the results and progress achieved
under the first phase. The Administrator noted
some of the points discussed in her meeting with
President Aliyev, including the desire of both
governments to increase cooperation in economic
reform and political and social development.


20. Ambassador Derse noted how impressed she was
with the SpeakerQs outreach to other parliamentary
assemblies and hoped she could work with him to
develop outreach to the U.S. Congress, share ideas
and best practices, and strengthen U.S.-Azerbaijan
relations. Ambassador Derse expressed pleasure
with how the partnership has grown and looked
forward to follow up on the SpeakerQs ideas for
further cooperation and outreach to the U.S.
Congress. The meeting concluded with both sides
expressing their desire to continue the open
dialogue and support for continuing assistance to
the parliament.

THE TRUE MEASURE OF DEVELOPMENT SUCCESS
--------------


21. Administrator Fore met with USAIDQs Baku staff
on November 26. She complimented the staff for the
Qextraordinary jobQ done, particularly in light of
the small staff. She indicated she had sent on
November 25 her written support to have USAID/Baku
recognized as a full, stand-alone mission. She
hoped final approval would be reached before the
end of the calendar year. Administrator Fore also
commented on future FSN pay adjustments and the
need for USAID/Baku to participate in the wage
survey.


22. Administator Fore explained the intended
progression of assistance development countries
from one of QdependenceQ to one of Qfull partner.

BAKU 00001158 006 OF 007


Together with the GOAJ and the private sector,
USAID/Baku has the ability to leverage its
expertise and funding with that of already
established and new public and private sector
partners to expand the reach and impact of
development assistance efforts throughout
Azerbaijan, she said. She noted a bright future
for the USAID/Baku staff.


23. Administrator Fore commented on the financial
crisis and its impact on assistance development.
She stated she would announce the United StateQs
intent to hold fast to its assistance commitments
at the Finance for Development meeting in Doha.
Administrator Fore opened the floor to questions.
Following her thanks and appreciation to the staff,
the meeting concluded with a group photo.

FINANCE MINISTRY SEEKS USG CONTINUITY
--------------


24. Administrator Fore met with Minister of
Finance Samir Sharifov on November 26. Minister
Sharifov noted that the number and frequency of
high-level USG visitors to Azerbaijan showed the
closeness of the relationship. He noted that he
had found the prior weekQs Economic Partnership
Commission meeting in Washington to have been
extremely productive. He added that he wished he
could sign the co-financing Memorandum of
Understanding (MOU) that USAID prepared, because he
wanted the visit Qto result in something very
tangible,Q but that for Qa few purely technical
reasons" he could not do so. He added, however,
that USAID and the Ministry had "agreed to almost
everything,Q and was optimistic the MOU would be
signed soon. Administrator Fore signed the MOU and
the Minister and the Ambassador agreed they would
do a formal signing as soon as the Minister had the
final approval to sign. He said the GOAJ has
included the $21 million it pledged in the
agreement in the just approved budget, and it will
be paid.


25. Administrator Fore said that AzerbaijanQs
support had been Qextraordinarily important.Q In
order to keep the relationship strong in the midst
of a transitioning Presidential administration in
the United States, the Administrator proposed that
Minister Sharifov and other high-level GOAJ
officials visit Washington in January to meet with
her, Deputy Secretary of State Negroponte, and
Deputy Secretary of Defense England, as well as
various members of Congress. The Administrator
suggested that the visit could focus on economic,
security, diplomacy, and civil society issues.
Sharifov emphasized that Section 907 of the Freedom
Support Act is of great concern to Azerbaijan, and
that the GOAJ wants to ensure that the next U.S.
administration continues to waive 907 each year,
just as the Bush administration did, and moves
quickly to repeal it. He emphasized the security
cooperation between the U.S. and Azerbaijan, saying
that Azerbaijan was Qthe last country to depart
Iraq, and increased its presence in Afghanistan,
but warned that Q907 does not correspond to the
level of [bilateral] relations.Q He said that the
GOAJ has to convince Congress, and said in this
regard: QWe will try mount a lobbying effort in the
U.S.Q He also noted that the Ministry would
support necessary reforms designed to improve the
transparency and cost-effectiveness of public
investment planning procedures, and looked forward
to working together on guiding these reforms
towards approval in the near-term.


26. COMMENT: The Embassy greatly appreciated this
first-ever visit by a USAID Administrator to
Azerbaijan, which comes on the heels of numerous
high-level Washington visits aimed at reaffirming
our support for Azerbaijan in the wake of the

BAKU 00001158 007 OF 007


Russia-Georgia conflict. Citing the strategic
importance of development assistance to our
diplomatic and defense efforts, the Administrator
emphasized the need to adopt a long-term
perspective in order to sustainably advance
economic and democratic reform in Azerbaijan. This
will also raise the level of our developmet
engagement to parallel intensive USG engagemen on
national security and energy. In recognition of
AzerbaijanQs vast energy wealth, Administrator Fore
also stressed the importance of partnering with the
business community whose financial contributions,
together with the substantial assistance co-
financing expected from the Government of
Azerbaijan. These partnerships will permit more
robust public-private partnerships to meet the
significant development challenges facing the
country, and offered an enhanced USAID Mission
presence to meet those challenges.


27. Cleared by USAID AdministratorQs Office.

DERSE