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P 041144Z SEP 09
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 1692
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UNCLAS SECTION 01 OF 02 BAKU 000708 
 
SENSITIVE 
SIPDIS 
 
COMMERCE FOR D.STARKS 
EEB/CBA FOR T.GILMAN 
DEPT PLEASE PASS TO USTR FOR C. MORROW AND P. BURKHEAD 
 
E.O. 12958: N/A 
TAGS: ECON EINV EIND AJ
SUBJECT: AZERBAIJAN: ECONOMIC/ COMMERCIAL ROUNDUP 
 
REF: A) BAKU 696 B) BAKU 186 C) BAKU 400 
 
¶1.  SUMMARY: This cable is the first in a regular series that 
will summarize economic and commercial issues in Azerbaijan. 
In this issue: President Aliyev refuses to sign Parliament's 
"mole" law that would have put a GOAJ-chosen deputy into 
every foreign company; Azerbaijan Airlines (Azal) works with 
Boeing to improve its in-house maintenance capabilities; the 
Wicks Group reports that Azal is moving on schedule towards 
FAA certification that would open its New York route; 
Lufthansa's 700,000 Euros are unfrozen while the court case 
against it for a six-hour delay in December 2008 continues; 
Azerbaijan's ruling class constructs a luxury gated community 
featuring the country's first golf course; the President's 
ego project to construct the World's Tallest Flagpole, to top 
the current record holder North Korea, nears completion; and 
the Heydar Aliyev foundation helps poor France restore 
Versailles.  End Summary. 
 
¶2.  Parliament's "mole" law is dead (for now?): Presidential 
Economic Adviser Vahid Akhundov informed the Charge 
d'Affaires on September 1 that President Aliyev did not sign 
the proposed amendment to the Law on Entrepreneurship 
Activity that passed Parliament on June 22 and instead 
returned the law to Parliament.  The Amendment, had it been 
signed by President Aliyev, would have required that 
"deputies," or Vice Presidents, of all foreign companies and 
companies with majority foreign investment in Azerbaijan be 
citizens of Azerbaijan chosen jointly by the foreign company 
and the GOAJ (Ref A).  Akhundov said that the President and 
the Presidential Administration had not been consulted by 
parliament during the drafting of the amendment, and had not 
reviewed the proposed text ahead of the June vote.  It is 
unclear what revisions may be included, and it is possible 
that Parliament will decide not to make any revisions but 
rather let the legislation quietly disappear.  Embassy Baku 
will continue to work in partnership with AmCham to monitor 
developments. 
 
¶3.  Boeing,s man in Baku: Econoff met with Rifat Kocal, a 
Turkish-American Boeing employee recently assigned to Baku. 
He will provide technical assistance to Azerbaijan Airlines 
(Azal), which wishes to increase its maintenance capabilities 
and outsource less work to maintenance centers in Turkey and 
Israel.  Rifat says Boeing and Azal are in talks to convert 
Azal,s order for four 737s into a possible 767 order 
(quantity TBD), but nothing is finalized.  This upgrade to 
larger aircraft is curious, given that Azal claimed it had to 
cancel the 737 order because "market conditions" and economic 
problems meant it could no longer afford to purchase the jets 
(Ref B). 
 
¶4.  Azal on Schedule for New York: Former Acting FAA 
Adminstrator Barry Valentine visited Baku with the Wicks 
Group, a consulting group working on a USTDA-funded grant to 
help Azerbaijan Airlines (Azal) achieve the Category I FAA 
rating necessary to begin flights to the United States. 
Katya Grimes and Glenn Wicks traveled with Valentine, and the 
group reported that they have "never had any problems" with 
Azerbaijan Airlines. COMMENT: This is a marked contrast to 
Boeing's experiences.  We suspect Azerbaijan Airlines has a 
very strong interest in beginning its New York flights, which 
it sees as a prestige route.  This may be why they have 
worked hard with the Wicks Group to achieve the necessary 
Category I rating, and why they have never threatened to 
cancel their order for Boeing's long-haul 767 and 787 
aircraft, but rather only their order for short-haul 737 
aircraft.  End Comment. 
 
¶5.  "Gluckwunsche zu Lufthansa": This means "Congratulations 
to Lufthansa," who on Thursday won a court ruling to unfreeze 
700,000 Euros that had been held while the case  brought by 
seven passengers as compensation for a six-hour delay was 
being decided (Ref C).  Once the judge issues a written 
ruling (expected within the next couple of days) Lufthansa 
can show that ruling to the International Bank of Azerbaijan 
and have their accounts unfrozen.  The core issue (whether or 
not the passengers should be compensated for their delay) has 
been postponed to a hearing on September 18.  Background: a 
warning light on the nose gear forced a Baku-bound Lufthansa 
jet to divert to Ashgabat, where weather conditions were 
better.  The passengers were taken off and put on a Turkmen 
jet to Baku while a technician was flown in from Frankfurt to 
fix the nose gear. 
 
 
BAKU 00000708  002 OF 002 
 
 
¶6.  Dream Island to be a reality?  Zarifa Mirzoyeva outlined 
the plans of the Park Bulvar development company to Econoff 
on September 2.  A joint venture between Azersun and South 
Korean conglomerate Kolon, the development features luxury 
"villas, ranch houses, and mansions" clustered around 
Azerbaijan's first golf course.  Mirzoyeva said there would 
also be a "protocol building" for the President of Azerbaijan 
to hold functions, and that the group hoped to attract an 
international school and an international hospital.  In 
related news, Azersun also plans to open the "Park Bulvar" 
mall in February 2010, also in partnership with Kolon.  This 
waterfront shopping mall will feature a planetarium, movie 
theatres, and a "screen golf" game.  The mall will be 
anchored by a 1,200 square meter (13,000 square foot) branch 
of UK retailer Debenham's. 
 
¶7.  Step aside Turkmenistan and North Korea, there's a new 
number one: Plans for Azerbaijan's "National Flag Square" are 
underway and a very tall flagpole can now be seen from miles 
away.  Reports say that President Aliyev asked for the height 
to be increased so that it would be not just the world's 
tallest "free-standing" flagpole (beating out Turkmenistan's 
436-foot Ashgabat flagpole) but the world's tallest flagpole, 
bar none.  At 531 feet, Azerbaijan's flagpole will be 6 feet 
taller than the one at North Korea's "propaganda village" of 
Panmunjeon (which is not free-standing, but rather built atop 
a tower.)  Azerbaijan's flagpole does not yet have a flag, 
and it's not clear when the project will be finished. 
 
¶8.  Azerbaijan wants to help poor France restore Versailles: 
Eurasianet.org and APA report that the Heydar Aliyev 
foundation has made a 40,000 Euro donation for the 
restoration of two fourteenth-century stained-glass windows 
at Cathedrale de Notre Dame in Strasbourg, France.  According 
to the reports, Heydar Aliyev foundation spokesperson (and 
Member of Parliament) Ganira Pashayeva confirmed they would 
also fund the restoration of two "monuments" at Versailles 
(the reports did not specify which monuments or the cost.) 
Eurasia.net quotes Strasbourg mayor Roland Ries as saying 
"The Heydar Aliyev Foundation's support for the Cathedral is 
Azerbaijan's endowment to the European cultural heritage... 
It is a generous gesture." 
LU