FATA-ALIYEV MEETING - APRIL 16, 2008

C O N F I D E N T I A L BAKU 000383

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/21/2018
TAGS: PREL PBTS MARR MASS ENRG AJ
SUBJECT: FATA-ALIYEV MEETING - APRIL 16, 2008

Classified By: Ambassador Anne Derse, Reason 1.4 (b) and (d).


1. (C) SUMMARY: In a cordial one-hour meeting with
visiting Deputy Assistant Secretary of Defense for European
and NATO Policy Daniel Fata on April 16, President Aliyev
delivered a direct plea for greater US support for
Azerbaijan's security in the face of growing regional
pressures, especially those associated with Azerbaijan's
support for USG energy security policies. Aliyev argued that
as a gas producer and a transit country for Central Asian
gas, "only" Azerbaijan prevents Russia from monopolizing gas
supply to Europe, deflects Russian pressure on Georgia by
supplying low-cost gas and provides Central Asia an
alternative to "total" dependence on Russia. Warning that
"the more we work on energy, the more dangerous it becomes,"
Aliyev said "our cooperation is very important...in the
future, regional powers must understand that Azerbaijan is
not alone, Azerbaijan will be supported if they plan
something." Aliyev also underscored Azerbaijan's ongoing
reforms in support of its goal of Euro-Atlantic integration,
saying that if "the EU and NATO consider us as potential
members, we must be ready...if invited today to join NATO, we
are ready to become a member." Aliyev also applauded the
Bucharest Summit Declaration's "support for resolution of
regional conflicts on the basis of territorial integrity,"
said a high-level GOAJ delegation will soon visit Afghanistan
to explore increased military and civilian assistance,
offered support for US missile defense policy and use of
Qabala, sought US support for arms sales to bolster
interoperability, and noted a "strange" incursion of Turkmen
and Russian vessels into the disputed Kapaz field just as
planning is underway for Turkmen President Berdimuhamedov's
vist to Baku. END SUMMARY.


2. (C) Visiting Deputy Assistant Secretary Daniel Fata,
accompanied by Ambassador Derse, Maj. Gen. Harry Wyatt, Brig.
Gen. William Mayville, Colonel Jon Chicky, Office of the
Secretary of Defense Country Director Anne Gebhards, and LTC

SIPDIS
Mike Bruce met on April 16 with President Aliyev for an hour.
Presidential International Relations Advisor Novruz Mammadov
also participated.


3. (C) DAS/D Fata told Aliyev that while in Azerbaijan for
annual DoD-MoD Bilateral Defense Consultations, he wished to
underscore the USG's commitment to Azerbaijan with respect to
both security relations and our broader relations, to explore
how we can introduce a three-to-five year strategic outlook
in the development of our security relations, and to gauge
Azerbaijan's commitment to defense transformation, including
with respect to NATO interoperability.


4. (C) President Aliyev pointed to positive achievements "in
all areas," saying that Azerbaijan is undergoing
transformation and moving closer to NATO standards. Broader
reforms are also underway. Azerbaijan is seeking to become a
"modern" country in all respects and has the programs in
place and the "determination" to achieve this goal. Aliyev
said strong relations with NATO and the US are a key part of
Azerbaijan's foreign policy framework. He noted that he had
reaffirmed Azerbaijan's commitment to Euro-Atlantic
integration and close relations with the US, NATO, EU and
other European structures at Bucharest.

Bucharest -- NK Conflict, Afghanistan
--------------


5. (C) Aliyev emphasized that the Bucharest Summit
Declaration statement that "conflicts should be settled on
the basis of territorial integrity" was an important step
forward, especially after the creation of the &illegal
state8 of Kosovo and the recent vote in the UN on the
Azerbaijan-sponsored resolution on the NK conflict "where we
saw results we did not expect."


6. (C) Aliyev said that he had made several "practical" new
proposals for Azerbaijan's cooperation with NATO in
Afghanistan at Bucharest. There will be more Azerbaijani
soldiers working with NATO now than before the pullout from
Kosovo, increasing Azerbaijan's overall peacekeeping
contribution. Aliyev noted that in addition a large,
high-level Azerbaijani government delegation would soon
travel to Afghanistan to discuss practical contributions with
the Afghan government, including training of officers and
humanitarian assistance, and to determine the best ways for
Azerbaijan to further assist Afghanistan, as Aliyev had
promised at Bucharest. The delegation will include the
Ministries of Economic Development, Social Defense and
Welfare, Defense and Foreign Affairs. Aliyev noted that
Azerbaijan could train both the police and army and could
provide civilian assistance as well, sending deminers,
doctors and engineers. Aliyev noted that he had listened
closely to the speeches by other partners in Bucharest, and
in comparison, Azerbaijan,s proposals were &very
concrete.8 Azerbaijan is following up by sending its team.
Fata agreed that Azerbaijan's forward-leaning proposals had
set a good example and noted USG appreciation.

Military Spending/Weapons Procurement
--------------


7. (C) In regard to the increasing defense budget, Aliyev
said it should be viewed in the general context of
Azerbaijan's rapidly increasing financial capabilities
overall. The economy is developing rapidly, with first
quarter GDP growth of 96 per cent and burgeoning first
quarter revenues. He noted that in 2003, the state budget
was approximately USD 1.2-1.3 billion with the military
budget only USD 150 million of this. The total 2008 budget,
by contrast, was approximately USD 12 billion with the
military budget around 1.2 billion. The 2008 budget &may
increase a couple billion more8. Aliyev said that in every
area there is an increase in spending, not only in the
military sphere. Pointing to Azerbaijan's difficult
neighborhood, Aliyev said Azerbaijan is "building a strong
army, buying weapons and necessary equipment to defend
ourselves," and investing a lot in border security.
Reminding the group that Azerbaijan is in a state of war, he
said a strong military was also an important instrument for
the negotiating process, recalling Ronald Reagan's philosophy
that "a country must be strong to be respected."


8. (C) Expanding on military spending/weapons procurement,
Aliyev told Fata Azerbaijan is acquiring new weapons and
equipment from a broad range of sources, in the region and
elsewhere. He said that Azerbaijan wants this element to be
part of "our cooperation," but the ban on the sale of arms to
Azerbaijan prevents it. He noted that the arms embargo is
not working in practice, as Azerbaijan is able to procure
armaments from a variety of sources. Azerbaijan would prefer
to buy NATO compatible weapons. He asked Fata to &please
pass this message to your bosses.8 Fata encouraged Aliyev
to think strategically about where Azerbaijan wants its
military and defense institutions to be three-to-five years
out, the opportunities that interoperability, modernization
and strategic planning now will provide Azerbaijan when NK is
resolved, and agreed that acquiring NATO interoperable
systems would be a better course of action. Fata stressed
that prioritization of defense resources and missions are
essential, particularly in the area of maritime security
(given Azerbaijan,s economic interests in the Caspian.) Fata
also pledged to work with Azerbaijan on its Strategic Defense
Review. Aliyev replied that Azerbaijan "wants to work with
you on this as we do on economic issues."


9. (C) Aliyev said Azerbaijan also wanted to work with the
U.S. on the resolution of social problems, "because in our
neighborhood, social problems lead to bad results." He noted
that &all the principles of the free market apply here.8
Azerbaijan needs not only a strong economy but also a strong
social policy. 400,000 poor people receive social benefits
of approximately USD 100 from the government each month. He
pointed to rapid development of Azerbaijan's social (schools
and hospitals) and physical infrastructure, with some USD 600
million in state investments alone this year to develop
roads, power and other infrastructure.

Euro-Atlantic Integration -- Azerbaijan "Must Be Ready" for
NATO and EU
-------------- --------------


10. (C) Aliyev said Azerbaijan is inviting &world class8
companies to participate in its rapid development to ensure
world class standards. "If the EU and NATO consider us as
potential members, we must be ready," he said. NATO and the
EU, too, however, must be ready to accept Azerbaijan; a NATO
bid "mustn't create additional tensions for us with European
states...we are waiting our turn." Turkey's EU bid had
raised tensions with Germany and France. Georgia's NATO bid
had raised tensions with Germany. Azerbaijan, by contrast,
is "modernizing, working with partners to be ready,
developing the systems and institutions, the level of living
standards" required.


11. (C) With respect to Azerbaijan's NATO aspirations,
Aliyev said that "if Ukraine and Georgia succeed, the door
will be open. If we were invited today, we are ready to
become a member -- but we are not invited." He pointed out
that "EU membership would not be a gift" to Azerbaijan;
Azerbaijan is self sufficient in energy, economic development
and regional cooperation, and "does not need" EU membership.
Azerbaijan, in fact, "contributes to EU energy security."

Aliyev: Azerbaijan Supports West's Priorities, Needs Support
in Return
-------------- --------------


12. (C) Azerbaijan "is on our own," Aliyev underscored. "We
defend our borders ourselves." He said Azerbaijan's two
neighbors Russia and Iran, former empires, have &become more
ignorant8 about the world situation. They "ignore
international concerns," Russia in the "political sphere8
and Iran with respect to its nuclear programs. Russian and
Iranian behavior today is "more or less within international
norms." But what about tomorrow, he asked? He pointed to
Russia's intention to increase its representation in
Abkhazia. Clearly alluding to how Azerbaijan would respond
to similar pressures, Aliyev said again that "we are not
protected." Armenia is a member of the CSTO, and Georgia has
"a strong US umbrella." But Azerbaijan "is alone and we must
mobilize all our resources to protect ourselves, especially
our huge energy resources and Central Asian gas reserves."


13. (C) Without Azerbaijan, Aliyev warned, Russia will
"seal" its monopoly in the energy sector. Russia is already
using its energy clout to bring "destabilizing" pressure to
bear in the Ukraine and Georgia. In this connection, Aliyev
said he had instructed SOCAR that day to sign "a low price
deal for gas" with Georgia, at a below market price of $200.
Without Azerbaijan the situation in Georgia would be much
worse. All this irritates Russia, Aliyev stressed. Further
highlighting Azerbaijan's role, Aliyev said the &situation
with Central Asia would be totally different without us,
Central Asia would be totally linked to Russia." Azerbaijan
is working with the US and the EU to bring Central Asian gas
to the EU, but Azerbaijan does not need to do this for
economic reasons. Azerbaijan has tremendous financial
resources through its exports of oil, one million barrels per
day. Rather, Azerbaijan's cooperation on gas is "our
contribution to our partnership with our friends in the
West."


14. (C) To summarize, Aliyev said, "to protect our future,
our independence, our security and to modernize our country,
we must do all we can to work with the EU, NATO and other
leading countries as a strong partner." It is "your agenda,"
Aliyev said. "We want lots but it depends on you."


15. (C) Thanking Aliyev for Azerbaijan's cooperation in the
war on terror, including contributions in Iraq and
Afghanistan and protection of the US Embassy during the
October 2007 terrorist threat, Fata asked Aliyev for his
assessment of the terrorist threat to Azerbaijan. Aliyev
first noted approvingly that US-Azerbaijan intelligence,
security and anti-terrorism efforts are "strong and
developing successfully." He pledged continued cooperation.
Aliyev said the episodes of last year were a warning signal
for Azerbaijan. While the plots have generally been against
the U.S. and Israel, Azerbaijan is "under no illusion we are
on the safe side." Azerbaijan has efficient mechanisms to
control threats, and the &situation is under control in
general.8 All who had plotted the attack against the U.S.
Embassy in October 2007 were detained and "every last weapon,
every last grenade8 had been recovered. Azerbaijan had
similarly uncovered the &Mahdi Army Group8 of 12 locals
working with Iran last year as well. The government publicly
accused Iran of working against the state; this &was an
awakening8 for Azerbaijan and relations with Iran have been
rough since. "I do not mind if this continues," he said.


16. (C) Aliyev stressed that "the more we work on energy,
the more dangerous" the regional situation is for Azerbaijan.
There is danger from Russia, because Azerbaijan's role on
energy "damages their monopoly." The Armenians resent
Azerbaijan's progress "because they cannot compete." And the
more successful Azerbaijan is, the harder it is for the
mullahs in Iran to maintain support for their model: "the
more successful we are, the more irritated they are." Aliyev
said scornfully that Iran, a major oil producer, had asked to
buy gas from Azerbaijan this winter, annually buys 500,000
tons of oil products from Azerbaijan and has implemented
gasoline rationing.


17. (C) Aliyev again stressed to Fata, in the context of
regional developments and the pressure he expects Azerbaijan
will come under for its cooperation on energy and economic
success, that "our cooperation is very important...in the
future, regional powers must understand that Azerbaijan is
not alone. That Azerbaijan will be supported if they plan
something." He warned that "if Azerbaijan is out of the
foreign policy agenda, the whole situation in the Caucasus
will be different...the main force in the region for
stability, energy cooperation, support for Euro-Atlantic
priorities is us." Georgia, he acknowledged, is "ahead" but
it has no resources and there are now serious splits in its
society. Fata stressed that given the significance of
Azerbaijan,s energy, it is important for Azerbaijan to
prioritize its defensive capabilities, particularly in the
area of maritime security.

Missile Defense
--------------


18. (C) Fata briefly reviewed recent USG-Russia discussions
on missile defense, noting that they focused largely on
confidence building and transparency measures, and that use
of Azerbaijan's Qabala radar station had not come up in the
past four months of talks. Aliyev repeated his position that
"if you (Russia and the US) agree, we'll support" the
decision. "You can count on us."

Turkmenistan
--------------


19. (C) Aliyev said he wanted to relay, in confidence, that
several Turkmen and one Russian vessel had crossed
Azerbaijan,s maritime border to approach the Kapaz field,
bringing some "constructions" apparently with the intent of
carrying out a &geo-physical8 survey. He noted that the
ships were interdicted by the State Border Service and after
a stand off of a day and negotiations between the Azerbaijani
and Turkmenistani Ministers of Foreign Affairs, the boats
were withdrawn. One boat lingered approximately 1 kilometer
from the maritime border and then it left. Aliyev said
Azerbaijan did not plan to make the incident public, saying
he is confident relations with Turkmenistan are on a good
track. He said the incident was especially strange because
the Turkmen Defense Minister had had a positive visit just
two days before it occurred and planning is underway for the
visit of the Turkmen president to Azerbaijan; at a minimum,
it reflects a "lack of coordination" in the GOTX. He said
SOCAR has not yet received the invitation it had expected
from the Turkmen side, after the visit of the GOTX Foreign
Minster to Baku, to come to Ashgabat to discuss gas.

COMMENT
--------------


20. (C) For almost two years, since the BTC pipeline began
to function and interest turned in earnest to developing the
Southern gas corridor to support European energy security,
President Aliyev has been increasingly direct about the
dangers to Azerbaijan and the urgent need for stronger ties
with the US to fend off growing regional pressures and
bolster Azerbaijan's security and independence -- and
especially, Azerbaijan's independence to continue to support
key shared interests in an increasingly volatile region.
Aliyev's stark message in his meeting with DAS/D Fata,
spelled out further by Foreign Minister Mammadayarov in their
subsequent meeting (septel),is the clearest to date: "The
more we work on energy, the more dangerous it becomes...our
cooperation is very important...in the future, regional
powers must understand that Azerbaijan is not alone. That
Azerbaijan will be supported if they plan something."
Azerbaijan has repeatedly expressed strong interest in
enhanced cooperation with the US for this reason. If we
believe it is important to our interests to maintain
Azerbaijan's continued support on energy and security (we
do),and if we hope to win greater cooperation on the
conflict resolution and political and economic reform needed
for Azerbaijan to use its new economic potential to support
stability and development in the region, we need to respond.
Ideas follow septel. END COMMENT.


21. (U) DAS/D Fata has reviewed and cleared this cable.
DERSE