VZCZCXYZ0011
PP RUEHWEB

DE RUEHKB #0012/01 0041147
ZNR UUUUU ZZH
P 041147Z JAN 08
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 4551
INFO RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

UNCLAS BAKU 000012 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
H PLEASE PASS TO CODEL WEXLER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ENRG EPET MARR MASS PTER KDEM AJ
SUBJECT: SCENESETTER FOR CODEL WEXLER'S VISIT TO AZERBAIJAN 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION. 
 
¶1.  (SBU) Azerbaijan's pro-Western foreign policy 
orientation, geopolitical setting -- sandwiched between Iran 
and Russia -- and ability to provide alternative energy 
supplies to Europe make it an important U.S. partner.  It is 
in our interests to have a reforming, stable, pro-western 
Azerbaijan, which lies in the Eurasian heartland.  Our 
bilateral agenda with Azerbaijan includes three 
interdependent interests:  diversifying European energy 
supplies, promoting political and economic reform, and 
extending our security cooperation.  We hope your visit will 
be an opportunity to reinforce the message of Azerbaijan's 
growing role as a strategic partner for the U.S. and the need 
to continue making mutual progress in our three core 
interests. 
 
Energy Links Azerbaijan to the West 
----------------------------------- 
 
¶2.  (SBU) Azerbaijan is a crucial link in the East-West 
energy corridor that aims to diversify Europe's energy 
supply.  U.S.-Azerbaijan cooperation was critical in 
realizing the Baku-Tbilisi-Ceyhan (BTC) pipeline project, 
which in July 2006 delivered its first oil to Ceyhan, Turkey. 
 Azerbaijan's ability to transit gas to Europe increasingly 
is the focus of our bilateral energy discussions.  With up to 
one trillion cubic meters in new gas reserves and the 
political will to bring them to European markets, 
Azerbaijan's gas could enhance European energy security.  At 
the same time, Azerbaijan faces pressure from Iran and Russia 
not to be too closely linked to the West.  Neither Tehran nor 
Moscow is interested in seeing Azerbaijan play a supplier and 
transit role for sending Caspian oil and gas to Europe.  In 
your meetings with GOAJ officials, conveying the message that 
the U.S. Congress is grateful for Azerbaijan's role in 
diversifying Europe's energy supplies -- despite regional 
pressures -- will reinforce broader U.S. efforts to let the 
government know that Azerbaijan plays an important regional 
role. 
 
Robust Security Cooperation 
--------------------------- 
 
¶3.  (SBU) Azerbaijan is a steadfast partner in U.S. 
counterterrorist efforts.  In Iraq, 151 Azerbaijani (Shiite 
Muslim) infantry troops stand alongside U.S. Marines guarding 
the Haditha Dam.  Azerbaijan is also contributing troops in 
Afghanistan and peacekeepers in Kosovo.  In October, the 
Azerbaijani Parliament voted to double the number of 
Azerbaijani peacekeepers serving in Afghanistan from 22 to 
¶45.  Azerbaijan provides blanket over-flight rights for U.S. 
aircraft, as well as strong information sharing and law 
enforcement cooperation in fighting terror. 
 
¶4. (SBU) Azerbaijan is in the process of drafting a second 
Individual Partnership Action Plan (IPAP) with NATO. 
Azerbaijan's first IPAP began in 2005, promoting defense 
sector reforms and Azerbaijan's interoperability with NATO. 
The IPAP is a good umbrella for Azerbaijan-NATO cooperation, 
although the GOAJ often sends mixed public signals on the 
question of whether it wants to join NATO eventually.  The 
U.S. works extensively with the Azerbaijani Navy and Coast 
Guard to increase Azerbaijan's interdiction capabilities 
against proliferation and terrorist threats on the Caspian 
Sea. 
 
¶5.  (SBU) Security cooperation is one of the strongest 
aspects of our bilateral relationship.  In your meetings with 
Azerbaijani officials, it would be helpful to thank them for 
their consistently strong support, despite Iran and Russia's 
distaste for such cooperation.  Azerbaijani officials may 
tell you that the ongoing Nagorno-Karabakh (NK) conflict and 
Section 907 of the Freedom Support Act restrain our 
cooperation.  The OSCE Minsk Group is tasked with helping 
Azerbaijan and Armenia resolve their conflict; Department of 
State EUR Deputy Assistant Secretary Matt Bryza is one of the 
three OSCE Minsk Group Co-Chairs.  According to Section 907 
of the Freedom Support Act of 1992 (P.L 102-511), the U.S. is 
limited in the types of aid it can provide to Azerbaijan 
because of the ongoing NK conflict. Since 2001, however, the 
U.S. Congress has granted the President the authority to wave 
Section 907 on national security grounds, which President 
Bush has done on an annual basis. 
 
Promoting Reform is Tough Work 
------------------------------ 
 
¶6.  (SBU) Getting the GOAJ to make substantive political and 
economic reform is an ongoing challenge that mirrors 
difficulties in most other post-Soviet states.  The U.S. 
engages with the Azerbaijani Government at all levels, 
arguing that our three core interests are mutually 
reinforcing and interdependent.  Cooperation in the areas of 
security or energy cannot be divorced from Azerbaijan making 
the right steps toward reform.  One of the key challenges is 
that many in the government do not perceive reforms as 
serving their immediate, personal, short-term interests.  We 
seek to convince these officials that taking difficult 
reforms meets Azerbaijan's desired goals of prosperity, 
regional prestige, and long-term stability.  Azerbaijan 
aspires to be a regional leader, but this can only come 
through the path of reform. 
 
¶7.  (SBU) We are concerned by a trend of increased government 
pressure against the media and critics of the government. 
The media environment is heavily restrictive, with 
transparently implausible criminal court cases against 
journalists and violent attacks against journalists that have 
gone unprosecuted and unpunished.  Most Azerbaijanis argue 
that the media's ability to criticize or question government 
policies has significantly deteriorated in the last year. 
One piece of good news is that President Aliyev pardoned 119 
prisoners -- several of whom (including five high-profile 
journalists) appeared to have been jailed because of their 
criticism of the government.  It would be helpful to 
acknowledge the importance of the pardon as a first step 
toward allowing a more robust and critical press. 
 
¶8.  (SBU) In addition to the problem of media freedom, the 
government since the 2005 elections has restricted the 
ability for peaceful groups to assemble, particularly in 
central areas of Baku.  Moreover, it has put pressure on 
opposition political parties by restricting their ability to 
rent office space, hold meetings, raise funds and carry out 
normal political activities.  Civil society representatives 
also complain that they increasingly feel under fire and are 
nervous that a recent Presidential decree for state financial 
support to NGOs is another instrument of government control. 
 
Rapid Economic Growth 
--------------------- 
 
¶9. (SBU) With GDP growth of 36 percent in 2006, Azerbaijan 
has one of the fastest growing economies in the world, driven 
nearly entirely by an unprecedented inflow of energy revenue. 
 The growth rate for 2007 remains and is anticipated to be 
between 20-25 percent.  The government's economic planning, 
and the country's judicial, regulatory and banking sectors 
are weak and ill-prepared to manage this enormous influx of 
revenue.  Corruption is pervasive throughout Azerbaijan. 
Significant institutional reform and capacity-building will 
be required to manage the stable growth of Azerbaijan's 
economy and to prevent Azerbaijan from succumbing to the "oil 
curse" experienced by many other energy producers. 
 
¶10. (SBU) The U.S. is providing technical assistance to help 
Azerbaijan manage this transition, primarily through USAID,s 
Trade and Investment Program, anti-corruption programs, rule 
of law programs and a program to help strengthen the GOAJ's 
consolidated budgeting process.  Moreover, we believe the 
World Trade Organization (WTO) accession process, for which 
we are providing technical assistance, is the key vehicle 
through which we can promote implementation of successful 
economic reform that will keep Azerbaijan's development on a 
stable path.  While the government has submitted important, 
WTO-compliant draft legislation to Geneva, it has not yet 
followed through on the long awaited co-financing for the 
Trade and Investment Program, an important signal of its 
commitment to WTO accession and economic reforms. 
 
Background on Azerbaijan's Jewish Community 
------------------------------------------- 
 
¶11.  (SBU) There are approximately 16,000 Jews living in 
Azerbaijan.  The Mountain Jewish community is the largest and 
oldest Jewish group in Azerbaijan, with approximately 11,000 
members.  Scholars disagree whether they came to modern-day 
Azerbaijan after the destruction of the first Jewish temple 
in 722 BC or whether they migrated from Persia several 
hundred years ago.  The second largest community is the 
Ashkenazi Jews (4,300 members), who came to Baku during the 
19th century in parallel with the Czarist subjugation of the 
South Caucasus.  Finally, there are approximately 700 
Georgian Jews.  There are good working relations between the 
Jewish community and the government, and Israel and 
Azerbaijan have close ties.  We have arranged a meeting for 
you with Semyon Ihilov, the leader of the Mountain Jewish 
(Sephardic) community in Azerbaijan, who can provide you with 
more details on the Jewish community in Azerbaijan. 
 
¶12.  (SBU) In your meetings with officials, we believe it is 
important to highlight the interrelationship of our three 
interests.  Appealing to the government's desire to project 
Azerbaijan as a regional leader, Azerbaijan can accomplish 
this goal in part through opening up the political and 
economic space.  The October 2008 presidential election 
presents a tremendous opportunity for President Aliyev to 
burnish Azerbaijan's democratic credentials by allowing the 
opposition, civil society, and the media more political 
space.  As the Embassy routinely tells the government and the 
general public, the U.S. support the process of a free and 
fair election and our concerns will focus most heavily on the 
process over the result. 
LU