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