VZCZCXYZ0010
RR RUEHWEB

DE RUEHKB #0460/01 1371256
ZNR UUUUU ZZH
R 161256Z MAY 08
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 5311
INFO RUEHIL/AMEMBASSY ISLAMABAD 0076
RUEHBUL/AMEMBASSY KABUL 0081
RUEHYE/AMEMBASSY YEREVAN 1457

UNCLAS BAKU 000460 
 
SENSITIVE 
SIPDIS 
 
H PLEASE PASS TO CODEL SCHIFF 
 
E.O. 12958: N/A 
TAGS: PREL PGOV KDEM PHUM PBTS AM AJ
SUBJECT: SCENESETTER FOR CODEL SCHIFF'S VISIT TO 
AZERBAIJAN, MAY 23-24 
 
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.  Our bilateral agenda with Azerbaijan includes 
three interdependent interests:  diversifying European energy 
supplies, promoting political and economic reform, and 
extending our security cooperation.  Your visit comes in the 
wake of several public bilateral disagreements, including 
Azerbaijani frustration with the OSCE Minsk Group Co-Chairs' 
"no" vote on Azerbaijan's UN General Assembly resolution 
regarding Nagorno-Karabakh.  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. 
 
Nagorno-Karabakh 
---------------- 
 
¶2.  (SBU) The Nagorno-Karabakh (NK) conflict is Azerbaijan's 
top domestic and foreign policy priority, and the sole issue 
that unites Azerbaijani citizens across the political 
spectrum.  Azerbaijanis seek the return of Nagorno-Karabakh 
and the seven surrounding territories; from their 
perspective, 
any solution to the conflict must preserve Azerbaijan's 
territorial integrity.  The GOAJ's position on NK is to offer 
the highest degree of autonomy possible within Azerbaijan's 
territorial integrity.  Since 2004, President Aliyev and 
Foreign Minister Mammadyarov have been involved in intensive 
negotiations under the auspices of the OSCE Minsk Group, 
centered around Basic Principles that continue to be refined 
by both parties.  Presidents Aliyev and Sargsyan are 
scheduled 
to meet next on the margins on a June 6-8 CIS summit. 
Although 
the Azerbaijani Government remains committed to the Minsk 
Group 
peace process, there are signs that the Azerbaijani 
government 
and public are increasingly frustrated by what they perceive 
as a lack of progress in the negotiations.  The Azerbaijani 
Government was extremely disappointed by the Co-Chairs' "no" 
vote on Azerbaijan's UNGA resolution regarding 
Nagorno-Karabakh 
and continues to express its concerns in both public and 
private fora. 
 
Energy Links Azerbaijan to the West 
----------------------------------- 
 
¶3.  (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.  Both Tehran and 
Moscow oppose Azerbaijan playing 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 
--------------------------- 
 
¶4.  (SBU) Azerbaijan is a steadfast partner in U.S. 
counterterrorist efforts.  In Iraq, 150 Azerbaijani (Shiite 
Muslim) infantry troops stand alongside U.S. Marines 
guarding the Haditha Dam.  Azerbaijan recently announced 
plans to increase its military and civilian presence in 
Afghanistan, including 90 troops, PRT contributions, and 
new training programs for Afghan security forces. 
Azerbaijan provides unlimited over-flight and landing rights 
for Coalition aircraft bound for Iraq and Afghanistan, as 
 
well as strong information sharing and law enforcement 
cooperation in fighting terror. 
 
¶5. (SBU) Azerbaijan is an active member of NATO's 
Partnership for Peace and is working to bring its armed 
forces to NATO standards through its second NATO Individual 
Partnership Action Plan (IPAP).  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 with 
a keen eye to its neighbors, the GOAJ often sends nuanced 
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. 
 
¶6.  (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 pressure against 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.  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 
------------------------------ 
 
¶7.  (SBU) Getting the GOAJ to undertake 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 underpin Azerbaijan's long-term prosperity, regional 
influence, and stability. 
 
¶8.  (SBU) Through its membership in the OSCE and Council of 
Europe, its partnership with NATO and its WTO aspirations, 
Azerbaijan has pledged to make the far-reaching, systemic 
political and economic reforms needed to ensure its 
long-term stability and prosperity.  Azerbaijan's democratic 
and economic reform record, however, is poor, hamstrung by an 
entrenched Soviet-era bureaucracy, endemic corruption and 
weak 
democratic institutions.  Azerbaijan's October 2008 
presidential election presents an important opportunity for 
Azerbaijan to demonstrate its commitment to democratic 
reform, 
and the U.S. Government is engaged in an intensive effort - 
including USD 3.2 million in technical assistance - to 
promote 
the conditions necessary for a free and fair election.  The 
Government is considering changes to the electoral code that 
could improve some aspects of the electoral process, but key 
changes must also be made in the pre-election environment. 
 
¶9.  (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.  President Aliyev, however at the end of 2007, 
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; we 
hope 
the government will do more. 
 
¶10.  (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 feel increasingly under fire. 
 
¶11.  (SBU) The Azerbaijani Parliament, or Milli Mejlis 
(National 
Council), presents an interesting opportunity for further 
democratic development.  There are reform-minded Members of 
Parliament who seek to increase Parliament's level of 
activity, 
transparency and responsiveness to constituents.  USAID is 
implementing a multi-year program that seeks to increase 
Parliament's technical capacity to provide oversight and 
establish links between MPs and their constituents.  Reform- 
minded MPs face several challenges, including constitutional 
limits on the powers of Parliament and political resistance 
within the Presidential Apparat to the idea of a more 
empowered 
Parliament.  Some of the key MPs have approached us several 
times, requesting greater interaction with the U.S. Congress; 
your meeting will be an excellent basis for continued 
cooperation with the aim of understanding and strengthening 
the 
function of the Milli Mejlis as a key democratic institution. 
 
Rapid Economic Growth 
--------------------- 
 
¶12. (SBU) With GDP growth of 25 percent in 2007, Azerbaijan 
has one of the fastest growing economies in the world, 
driven nearly entirely by the energy sector.  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 are 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. 
 
¶13. (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.  The government has submitted important, WTO- 
compliant draft legislation to Geneva and is working with us 
on plan to co-finance the Trade and Investment Program, an 
important signal of its commitment to WTO accession and 
economic reforms. 
 
Our Three Interests 
------------------- 
 
¶14.  (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. 
DERSE