(U) REQUEST FOR INFORMATION ON POLITICAL

C O N F I D E N T I A L STATE 041027

NOFORN
SIPDIS

E.O. 12958: DECL: 04/23/2034
TAGS: PINR ECON EFIN EINT AJ AM GG
SUBJECT: (U) REQUEST FOR INFORMATION ON POLITICAL
IMPLICATIONS OF GLOBAL FINANCIAL CRISIS IN CAUCASUS
(C-RE9-00772)

Classified By: SUZANNE MCCORMICK, DIR., INR/OPS. REASON: 1.4(C).


1. (C) WASHINGTON ANALYSTS ARE CLOSELY MONITORING THE
POLITICAL IMPLICATIONS OF THE GLOBAL FINANCIAL CRISIS. TO
THIS END, ANALYSTS ARE INTERESTED IN INFORMATION REGARDING
HOW THE FINANCIAL CRISIS HAS AFFECTED THE SOUTH CAUCASUS--IN
PARTICULAR, THE GOVERNMENTS OF ARMENIA, AZERBAIJAN, AND
GEORGIA. ANALYSTS REQUEST ANY INFORMATION OR INSIGHT INTO
THE IMMEDIATE ECONOMIC AND FINANCIAL PROBLEMS THAT
BUSINESSES, INDIVIDUALS, AND BANKS ARE CURRENTLY FACING IN
THESE COUNTRIES, AND WHAT ECONOMIC AND FINANCIAL ISSUES MOST
CONCERN NATIONAL LEADERS IN THE NEAR-TERM. ANALYSTS REQUEST
THAT POSTS SHARE ANY INSIGHT AVAILABLE INTO THE IMPACT OF THE
ECONOMIC CRISIS IN THESE COUNTRIES, AS WELL AS ANY RELEVANT
DECISIONS BY NATIONAL LEADERS, AS TIME AND RESOURCES PERMIT.


A. (U) THE FOLLOWING QUESTIONS APPLY TO ARMENIA,
AZERBAIJAN, AND GEORGIA:

1) (C) WHICH NATIONAL LEADERS AND/OR CABINET FIGURES ARE
MOST ACTIVELY INVOLVED IN ECONOMIC DECISIONMAKING? ARE THERE
DIFFERING OPINIONS WITHIN THE NATIONAL LEADERSHIP REGARDING
APPROPRIATE ACTIONS IN LIGHT OF THE ECONOMIC CRISIS?

2) (C) WHAT ROLE DO OUTSIDE ADVISORS (FROM THE US TREASURY,
IMF, WORLD BANK, EBRD) HAVE IN SHAPING ECONOMIC POLICY? HOW
DO NATIONAL LEADERS REGARD THEIR VIEWS?

3) (C) HOW DOES THE PUBLIC PERCEIVE THEIR COUNTRY'S
ECONOMIC SITUATION COMPARED TO OTHERS IN REGION (OTHER
CAUCASUS COUNTRIES, RUSSIA, UKRAINE, ETC)?

4) (C) HOW DO LOCAL BANK OFFICIALS VIEW THE PERFORMANCE OF
NATIONAL OFFICIALS IN HANDLING THE CURRENT FINANCIAL
SITUATION? ARE BANK OFFICIALS LOBBYING THE CENTRAL BANKS TO
TAKE CERTAIN ACTIONS--FOR EXAMPLE, RECAPITALIZING BANKS OR
PURSUING FOREIGN EXCHANGE POLICY?

5) (C) WHAT PRECAUTIONS, IF ANY, ARE BANKS TAKING IN LIGHT
OF THE GLOBAL FINANCIAL CRISIS? SPECIFICALLY, ARE LOCAL
BANKS TAKING ANY PRECAUTIONS REGARDING THEIR FOREIGN EXCHANGE
EXPOSURE, OR ARE THEY PURSUING EXTERNAL FUNDING FROM WESTERN
BANKING OR INTERNATIONAL LENDING INSTITUTIONS? FOR
SUBSIDIARIES OF FOREIGN-OWNED BANKS, IS THERE CONCERN THAT
FOREIGN BANKS WILL WITHDRAW SUPPORT FOR THESE SUBSIDIARIES?

6) (C) TO WHAT EXTENT ARE BANKS EXPRESSING CONCERN ABOUT
CURRENCY DEPRECIATION?

7) (C) ARE INDIVIDUALS SWITCHING LOCAL CURRENCY BANK
DEPOSITS INTO DOLLAR OR EURO-DENOMINATED ACCOUNTS?

8) (C) ARE BUSINESS OWNERS CURRENTLY ABLE TO OBTAIN BANK
LOANS? IF SO, AT WHAT TERMS?

9) (C) HAS THERE BEEN ANY RECENT CHANGE IN REMITTANCES FROM
ABROAD? ARE WORKERS RETURNING FROM RUSSIA, EUROPE, AND OTHER
COUNTRIES DUE TO LACK OF WORK?

10) (C) TO WHAT EXTENT ARE CONSTRUCTION PROJECTS BEING
DELAYED AND/OR FROZEN PRIOR TO COMPLETION? WHAT IS CAUSING
PROJECTS TO FALL SHORT OF COMPLETION?


B. (U) THE FOLLOWING QUESTIONS APPLY SPECIFICALLY TO
AZERBAIJAN:

1) (C) HOW MUCH MONEY IS BEING TRANSFERRED FROM THE STATE
OIL FUND BACK INTO THE BUDGET? HOW IS THE GOVERNMENT
ACCOUNTING FOR THESE TRANSFERS IN THE GOVERNMENT BUDGET?

2) (C) WHICH PARTS OF THE GOVERNMENT BUDGET, IF ANY, ARE
OFFICIALS INDICATING WILL BE UNFUNDED IF OIL PRICES REMAIN
BELOW THE $65/BARREL BASELINE USED IN WRITING THE BUDGET?
HOW HAVE OFFICIALS INDICATED DEFENSE SPENDING SPECIFICALLY
WILL SUFFER, IF AT ALL?

3) (C) WHAT PLANS, IF ANY, DOES THE GOVERNMENT HAVE TO BUY
UP UNFINISHED OR UNPROFITABLE REAL ESTATE PROPERTIES IN BAKU?
ARE CONSTRUCTION/REAL ESTATE BUSINESSES LOBBYING FOR SUCH A
MOVE?


C. (U) THE FOLLOWING QUESTION APPLIES SPECIFICALLY TO
ARMENIA:

1) (C) WHAT DO NATIONAL OFFICIALS ASSESS WILL BE THE
IMMEDIATE ECONOMIC IMPACT OF REOPENING THE BORDER WITH
TURKEY? THE LONG-TERM IMPACT? HOW DO LOCAL BUSINESSES
ASSESS AN OPEN BORDER WILL HELP OR HURT ECONOMICALLY IN THE
NEAR-TERM?


2. (U) PLEASE CITE C-RE9-00772 IN THE SUBJECT LINE OF
REPORTING IN RESPONSE TO THE ABOVE QUESTIONS.
CLINTON