ISRAEL'S PERES MAKES AN IMPRESSION IN BAKU

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000527 SIPDIS DEPT FOR EUR/CARC, INR (PSTRONSKI),NEA/IR, NEA/IPA E.O. 12958: DECL: 06/30/2019 TAGS: PGOV PREL AJ IR IS SUBJECT: ISRAEL'S PERES MAKES AN IMPRESSION IN BAKU REF: A. A: BAKU 0020 ¶B. B: BAKU 0439 BAKU 00000527 001.2 OF 002 Classified By: Pol/Econ Counselor J. Robert Garverick, Reasons 1.4 (b) and (d) ¶1. (C) The "iceberg" (as President Aliyev calls its because "nine tenths of it is below the surface") (Reftel A) that is the Azerbaijan-Israel relationship just got a higher profile as Israeli President Shimon Peres made a two-day official visit to Baku June 29-30. By hosting this visit, President Aliyev got to tweak the noses of both Turkey and Iran and received an unequivocal vote in favor of Azerbaijan's territorial integrity. Israel also had the opportunity to showcase its ability to engage in productive relations with a Muslim-majority country and cemented profitable business relations including arms sales as well. ¶2. (U) Israeli President Shimon Peres arrived June 29 in Baku under exceptionally heavy security for a two-day working visit, the first for an Israeli President to Azerbaijan, although current Prime Minister Netanyahu visited during his previous term in office in 1998. Accompanying Peres were Minister of Industry and Trade Benjamin Ben-Eliezer, Minister of Infrastructure Uzi Landau, Minister of Science, Culture and Sport Daniel Gershkovits, a senior Ministry of Defense official, and a 50-person business delegation. ¶3. (U) Although the visit's primary effect was symbolic, there were meaningful, concrete results, according to reports. Azerbaijan and Israel have a flourishing economic relationship. Israel is Azerbaijan's third-largest trading partner, with turnover between the two countries reaching 3.5 billion USD in 2008 (6.4 percent of Azerbaijan's GDP.) The preponderance of this trade was in oil sales, as Azerbaijan provides 20 percent of Israel's imports. During this visit Israeli firms joined a USD 350 million project for road construction in the Baku region, and also secured an agreement for the Israeli company Aeronautics, Ltd to build production facilities for defense technology in Azerbaijan. ¶4. (C) Peres also provided a clear political deliverable to Aliyev by unequivocally declaring support for Azerbaijan's position on Nagorno-Karabakh (NK) and its territorial integrity, even referencing a figure of over 1 million internally displaced persons (IDPs),which the GOAJ touts as its figure whereas many non-Azerbaijani observers acknowledge about 650,000. Peres' position was applauded by Azerbaijani political observers, who contrasted this favorably with Iran's allegedly "pro-Armenian" policies. ¶5. (C) The political effects of this visit are not negligible. This visit raised the ire of the Iranian government, which had publicly and privately warned the GOAJ not to go ahead with the visit, or face "very, very grave consequences (Reftel B). Perhaps in a demonstration of the paralysis that has beset the Iranian regime amid the post-election violence, Iran's Baku embassy's reaction was sputtering and indecisive. According to press reports, the Ambassador, Muhammad Bagir Bahrami, was recalled to Tehran in protest, although the embassy would not confirm or deny a report by the Iranian Sahar television network that these reports were true. The Azerbaijani MFA spokesman sardonically noted that "((i)f that's the reason he left Baku, he is the only one who knows that(" observing that no formal notification of a protest had been made to the MFA. ¶6. (C) Taking place as it did against the backdrop of Turkish-Armenian normalization talks, the visit served as a demonstration that Azerbaijan is capable of devising policies independently of or even contrary to Turkish preferences. Foreign Minister Mammadyarov told Ambassador and visiting EUR DAS Bryza in late April that one of the reasons Azerbaijan went ahead with the visit was to send a message of disapproval to Ankara. (Note: Mammadyarov,s statement at the time closely followed the public disclosure in Azerbaijan that Turkey and Armenia were close to an agreement to open their border, which Turkey closed in 1993 in solidarity with Azerbaijan on Nagorno-Karabakh. End Note.) ¶7. (C) Asked by Ambassador on June 30 if Azerbaijan was apprehensive about Iran's eventual response, Foreign Minister Mammadyarov was dismissive. If the Iranians were so irked by the presence of the Israeli President in Baku, they should have thought about that before inviting Armenian President Sargsian to visit Tehran, he said. BAKU 00000527 002.2 OF 002 ¶8. (C) Comment. Israel and Azerbaijan have long kept their productive relationship very discreet, but apparently both sides have concluded that there is profit in exposing their ties to public attention. From Azerbaijan's standpoint, the visit was an important declaration of its capacity for independent policymaking - especially as it marks the first time that Baku has openly bucked the consensus of the Organization of the Islamic Conference (OIC). The Foreign Ministry is acutely aware of this, and concerned that the OIC's support on Nagorno-Karabakh issues could be at risk. Foreign Minister Mammadyarov, meeting with the Ambassador, noted that prior to the visit he had "talked this over" with OIC members. Meanwhile, President Aliyev has a return invitation to Tel Aviv, which he can now deploy in future, should he see the need to make a statement in the direction of Ankara or Tehran. It should be understood, however, that the visit of Peres does include a certain risk and while Iran outwardly seems disorganized in its response it may be only a matter of time before the Islamic Republic attempts to extract a price from the GOAJ for its "impertinence," though long-term implications remain unclear. End comment. DERSE