Identifier
Created
Classification
Origin
08TASHKENT803
2008-07-10 13:24:00
CONFIDENTIAL
Embassy Tashkent
Cable title:
UZBEKISTAN: WHAT'S GOOD FOR GENERAL MOTORS IS GOOD
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C O N F I D E N T I A L TASHKENT 000803
SIPDIS
DEPT FOR SCA/CEN
USDOC FOR DANICA STARKS
E.O. 12958: DECL: 07/19/2018
TAGS: ECON ETRD PGOV PREL UZ
SUBJECT: UZBEKISTAN: WHAT'S GOOD FOR GENERAL MOTORS IS GOOD
FOR UZBEKISTAN
REF: TASHKENT 493
Classified By: Pol/Econoff Robert McCutcheon for reasons 1.4 (b, d).
C O N F I D E N T I A L TASHKENT 000803
SIPDIS
DEPT FOR SCA/CEN
USDOC FOR DANICA STARKS
E.O. 12958: DECL: 07/19/2018
TAGS: ECON ETRD PGOV PREL UZ
SUBJECT: UZBEKISTAN: WHAT'S GOOD FOR GENERAL MOTORS IS GOOD
FOR UZBEKISTAN
REF: TASHKENT 493
Classified By: Pol/Econoff Robert McCutcheon for reasons 1.4 (b, d).
1. (C) SUMMARY. General Motors (GM) is poised for a dramatic
expansion of its operations in Uzbekistan with the building
of casting and engine plants. Negotiations with the GOU are
proceeding well, and there is hope that final agreement will
be reached before the end of the summer. END SUMMARY
2. (C) On June 25-26 Michael Arcamone, Vice President of
General Motors (GM) Powertrain Europe, led a delegation to
negotiate an agreement to build casting and engine plants in
Uzbekistan. Prior to beginning negotiations with First
Deputy PM Azimov, Arcamone met with the Ambassador to explain
GM's intentions and to obtain the Ambassador's insights on
the business climate in Uzbekistan.
3. (C) According to Arcamone, the GM casting and engine
plants will dwarf GM's assembly operations in Asaka that
began earlier this year. (COMMENT: The assembly plant in
Asaka was built in the mid-1990s by the Korean Daewoo
Corporation. Daewoo was acquired by GM in 2005. END
COMMENT) "This is big," Arcamone said. The engine plant
will supply both the Asaka facility and other GM plants
outside Uzbekistan, primarily Russia, and will produce
150,000 engines per year. The plants will employ 600 workers
directly in manufacturing and another 300-400 in support
jobs. Arcamone continued that he expects there will be an
employment multiplier effect as GM suppliers set up
operations in Uzbekistan. Arcamone said Uzbekistan is
serious about wanting to develop its automotive industry and
is offering to invest 300 million USD of its own money as
well as offer GM interest-free financing.
3. (C) Arcamone said GM hopes to negotiate 75% ownership of
the new plants. In contrast, GM currently owns only 25% of
the stock in its Asaka assembly plant joint venture with
Uzavtosanoat. Arcamone said the engine plant would allow it
to double the capacity of the Asaka facility, which would no
longer have to import engines from GM plants outside
Uzbekistan.
4. (C) Arcamone was clearly concerned when the Ambassador
told him about recent presidential decrees that have the
potential to eviscerate Uzbekistan's anti-money laundering
legislation and have left Uzbekistan open to possible action
by the Financial Action Task Force (FATF) and under provision
311 of the U.S. Patriot Act (reftel). Arcamone said he would
raise this with Azimov. He continued that he would stress
that GM wants to be a good corporate citizen and would demand
that no one be relocated from the proposed plant sites
without full compensation.
5. (C) Jean Wibaut, Manager for EU Affairs in GM Europe,
reported to us on July 7 that after two days of lengthy
discussions, Arcamone and his team had reached a non-binding
agreement in principle with First Deputy PM Azimov and
representatives from Uzavtosanoat. Based on this preliminary
agreement, GM corporate headquarters has given the go ahead
to continue negotiations through the summer. Wibaut said he
the next round could take place before the end of July. This
positive assessment was echoed by Azimov, who told the
Ambassador at EMBASSY Tashkent's Fourth of July reception
that he expected the negotiations to produce positive results
by October.
NORLAND
SIPDIS
DEPT FOR SCA/CEN
USDOC FOR DANICA STARKS
E.O. 12958: DECL: 07/19/2018
TAGS: ECON ETRD PGOV PREL UZ
SUBJECT: UZBEKISTAN: WHAT'S GOOD FOR GENERAL MOTORS IS GOOD
FOR UZBEKISTAN
REF: TASHKENT 493
Classified By: Pol/Econoff Robert McCutcheon for reasons 1.4 (b, d).
1. (C) SUMMARY. General Motors (GM) is poised for a dramatic
expansion of its operations in Uzbekistan with the building
of casting and engine plants. Negotiations with the GOU are
proceeding well, and there is hope that final agreement will
be reached before the end of the summer. END SUMMARY
2. (C) On June 25-26 Michael Arcamone, Vice President of
General Motors (GM) Powertrain Europe, led a delegation to
negotiate an agreement to build casting and engine plants in
Uzbekistan. Prior to beginning negotiations with First
Deputy PM Azimov, Arcamone met with the Ambassador to explain
GM's intentions and to obtain the Ambassador's insights on
the business climate in Uzbekistan.
3. (C) According to Arcamone, the GM casting and engine
plants will dwarf GM's assembly operations in Asaka that
began earlier this year. (COMMENT: The assembly plant in
Asaka was built in the mid-1990s by the Korean Daewoo
Corporation. Daewoo was acquired by GM in 2005. END
COMMENT) "This is big," Arcamone said. The engine plant
will supply both the Asaka facility and other GM plants
outside Uzbekistan, primarily Russia, and will produce
150,000 engines per year. The plants will employ 600 workers
directly in manufacturing and another 300-400 in support
jobs. Arcamone continued that he expects there will be an
employment multiplier effect as GM suppliers set up
operations in Uzbekistan. Arcamone said Uzbekistan is
serious about wanting to develop its automotive industry and
is offering to invest 300 million USD of its own money as
well as offer GM interest-free financing.
3. (C) Arcamone said GM hopes to negotiate 75% ownership of
the new plants. In contrast, GM currently owns only 25% of
the stock in its Asaka assembly plant joint venture with
Uzavtosanoat. Arcamone said the engine plant would allow it
to double the capacity of the Asaka facility, which would no
longer have to import engines from GM plants outside
Uzbekistan.
4. (C) Arcamone was clearly concerned when the Ambassador
told him about recent presidential decrees that have the
potential to eviscerate Uzbekistan's anti-money laundering
legislation and have left Uzbekistan open to possible action
by the Financial Action Task Force (FATF) and under provision
311 of the U.S. Patriot Act (reftel). Arcamone said he would
raise this with Azimov. He continued that he would stress
that GM wants to be a good corporate citizen and would demand
that no one be relocated from the proposed plant sites
without full compensation.
5. (C) Jean Wibaut, Manager for EU Affairs in GM Europe,
reported to us on July 7 that after two days of lengthy
discussions, Arcamone and his team had reached a non-binding
agreement in principle with First Deputy PM Azimov and
representatives from Uzavtosanoat. Based on this preliminary
agreement, GM corporate headquarters has given the go ahead
to continue negotiations through the summer. Wibaut said he
the next round could take place before the end of July. This
positive assessment was echoed by Azimov, who told the
Ambassador at EMBASSY Tashkent's Fourth of July reception
that he expected the negotiations to produce positive results
by October.
NORLAND