VZCZCXRO3177
PP RUEHIK
DE RUEHKB #0015/01 0080820
ZNR UUUUU ZZH
P 080820Z JAN 10
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 2233
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES  PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 3757
RUEHSI/AMEMBASSY TBILISI PRIORITY 1917
RUEHIT/AMCONSUL ISTANBUL PRIORITY 0191
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BAKU 000015 
 
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: EINV ETRD BTIO EFIN KCOR KIPR AJ TU GG
SUBJECT: AZERBAIJAN: MOED READY TO RE-ENGAGE ON NEXT ROUND 
OF ECONOMIC PARTNERSHIP COMMISSION 
 
BAKU 00000015  001.2 OF 002 
 
 
¶1. (U) SUMMARY: The U.S. - Azerbaijan Economic Partnership 
Commission last met in November 2008; prior to that, meetings 
took place roughly annually, alternating between Baku and 
Washington.  These meetings were successful in sending a 
message about U.S. commitment to a more transparent business 
climate, development of a free market, and the importance of 
fighting corruption and money laundering.  We believe a 
meeting under the new administration would be equally 
successful.  GOAJ officials are willing to discuss these 
topics, but the absence of a U.S. Ambassador to Azerbaijan 
has made it difficult for the Embassy to deliver this message 
to high-level officials.  A meeting of the EPC would give us 
a renewed opportunity to send this key message.  End Summary. 
 
¶2. (U) The Charge d'Affaires met with Deputy Minister of 
Economic Development Sevinj Hasanova on January 5, 2010. 
Hasanova expressed satisfaction with USAID assistance 
programs in the economic sphere and said that she would like 
to expand her Ministry's engagement with the USG and is 
looking for ways to do that.  She expressed an interest in 
doing what she can to re-energize Azerbaijan's WTO accession 
effort, in conjunction with the Ministry of Foreign Affairs, 
and pledged to re-start her Ministry's participation in the 
Economic Partnership Commission (EPC).  Hasanova, besides 
highlighting WTO, noted that President Aliyev has designated 
2010 as the "Year of Ecology" in Azerbaijan, and asked for 
USG assistance in environmental initiatives and sustainable 
development.  Embassy agreed that such an initiative would be 
constructive, and noted that another round of the EPC this 
winter or spring could be the single best way for President 
Obama's new international economic team to reach out to 
high-level actors in the GOAJ. 
 
¶3. (U) Embassy Baku has had few high-level economic contacts 
with the GOAJ in recent months, with the exception of 
Treasury A/S Cohen's visit last fall.  Moreover, the absence 
of a U.S. Ambassador to Azerbaijan since July has left 
policymakers here wondering about the commitment of the USG 
to Azerbaijan and its economic development.  Embassy believes 
that a renewed EPC, hosted by the Minister of Finance in 
Baku, would give us an important opportunity to revive those 
contacts and to stress our commitment to encouraging 
Azerbaijan's free-market development, improving its business 
climate, strengthening its fight against money laundering and 
corruption, and re-energizing its WTO accession efforts. 
These meetings, which have previously taken place in Baku and 
Washington, were successful in sending that message during 
the previous administration; we believe they can be equally 
successful under the current administration. 
 
¶4. (U) Azerbaijan's economy continues to be dominated by the 
energy sector, with one million barrels of oil per day 
exported through the Baku-Tbilisi-Ceyhan pipeline and natural 
gas production set to surge.  Currency reserves here have 
reached about USD 20 billion, with the State Oil Fund (SOFAZ) 
holding around USD 13 billion, essentially in a sovereign 
wealth fund.  2009 economic growth, despite a worldwide 
financial crisis, held at 9 per cent, with inflation reduced 
to 2 per cent.  Real incomes in Azerbaijan last year expanded 
by 7 per cent, according to President Aliyev.  U.S companies 
are active in Azerbaijan's energy sector, with the oil majors 
invested in offshore activity and services companies adding 
support.  Additionally, U.S. companies have signed agreements 
to construct Azerbaijan's first telecommunications satellite 
and to build segments of the East-West Highway to Georgia. 
Azerbaijan also purchases construction services and 
agricultural equipment from U.S. firms. 
 
¶5. (U) GOAJ participation in the EPC would include the 
Ministry of Finance, Ministry of Economic Development and the 
State Oil Fund, and would likely also be attended by the 
Central Bank, Ministry of Energy, Ministry of Agriculture and 
Ministry of Communications.  We expect the GOAJ would also 
use the meeting as an opportunity to share the President's 
regional development plan and non-energy sectors 
diversification strategy, as well as to raise Jackson-Vanik, 
FSA Section 907, MCC, and as always, all things 
Nagorno-Karabakh. 
 
¶6. (U) Our goals for the EPC would include further developing 
and targeting our economic assistance programs; addressing 
corruption and the non-transparent nature of the business 
 
BAKU 00000015  002.2 OF 002 
 
 
climate; advancing our work with the Central Bank and 
Financial Monitoring Unit on anti-money laundering and 
compliance with the Financial Action Task Force; promoting 
U.S. trade and development, with an emphasis on explaining 
Export-Import Bank and Overseas Private Investment 
Corporation financing schemes; discussing regional oil and 
gas developments; and advocating renewable/alternative energy 
programs, including recycling. 
GARVERICK