WikiLeaks (40 page)

WORKING TOGETHER IN THE FUTURE

9. (C/NF) When he was elected in 2007, Sarkozy was among the first French leaders to openly embrace the United States, despite a U.S. administration very unpopular in Europe at the time. This was due to Sarkozy’s conviction that France can accomplish more in cooperation with, rather than opposition to, the United States. When then-Senator and presidential candidate Obama came to France in July 2008, Sarkozy cleared his schedule to meet with him and further broke his own protocol rules and held a joint press conference (a privilege normally reserved exclusively for visiting heads of state). Sarkozy is prepared to be the U.S.’s key partner in Europe and is hoping for intense regular contact with President Obama (which enhances Sarkozy’s domestic stature and therefore directly increases his ability to make hard decisions). French journalists are pointing out with increasing frequency that Sarkozy has not paid a White House call on President Obama, and French officials are beginning to express concern over this
perceived lack of high-level visits and other regular consultations. Journalists and officials alike are expressing the concern that France, and Europe as a whole, may be of less strategic importance to the United States today (a view that, all things being equal, does not enhance their incentives to work closely with us).

10. (C/NF) On strategic questions, Paris is frequently willing to back U.S. positions, even in the face of general European reluctance. Paris has welcomed U.S. efforts to “re-set” relations with Russia and has consistently emphasized developing a common approach with Washington toward Moscow. On Iran, President Sarkozy remains personally engaged and is willing to work intensely within Europe (both institutionally in the EU and through efforts to persuade individual countries to adopt national measures). On non-proliferation and disarmament issues, the GOF has urged regular consultations in the run up to the 2010 NPT Review Conference and launch of discussions on a FMCT treaty. The most important thing for French officials and Sarkozy himself is to feel like they are part of the decision-making process and not simply called in to ratify decisions after they have been made in Washington.

AFGHANISTAN: AN ILLUSTRATIVE CASE

PARIS 00001638 004 OF 004

11. (C/NF) Our effort to secure increased French contributions to Afghanistan underlines how much decision-making power is vested in the French president and how best we can work with him to achieve desired results. Last year, on our request, President Sarkozy went against all of his political and military advisors to deploy a French OMLT to assist the Dutch forces in Uruzgan, a critical reinforcement of a key ally. It was also Sarkozy alone who made the decision to deploy an additional 700 troops at last year’s Bucharest summit – at the time of the announcement, even key
staff were still unsure what the final decision would be. This year, in intense exchanges with all the major French players including FM Kouchner, NSA-equivalent Levitte and French CHOD Georgelin, each one expressed support for U.S. policy but were doubtful about additional French financial or military resources, frequently citing Sarkozy’s earlier statement of “no additional troops.”

12. (C/NF) However, following a direct conversation with President Obama, President Sarkozy dropped the formerly firm “no” position and moved forward more quickly and proactively than we envisioned, opening the door to military reinforcements “in time” and promising increased financial and training assistance. Although the specifics are not yet provided, the personal outreach to President Sarkozy made the difference between getting a cautious bureaucratic response and a genuine commitment from a key ally when we needed it. The French press led their reports noting Sarkozy was the first foreign leader on Obama’s call sheet, thereby increasing the pressure on Sarkozy to respond favorably.

COMMENT

13. (C/NF) Comment: As one of Europe’s most politically secure leaders at the head of a country with significant ability to contribute more to global problem-solving across a broad front, from Afghanistan to climate change, economic stabilization, Iran, and the Middle East Peace Process, Sarkozy represents a key actor in the fulfillment of our shared policy goals. We will not always see eye-to-eye, and differences on key issues (such as non-proliferation and disarmament, which are seen as critical to French national interests) are looming. However, through enhanced consultation (including, and perhaps especially, at the highest levels), I believe we can address these differences, minimize unhelpful proposals and foster increased collaboration to better leverage French interests to fulfill ours. France is a like-minded country with a
major economy and the second-largest deployed military and diplomatic forces in the world. By striking the right note in our bilateral relationship, we can leverage Sarkozy’s strengths, including his willingness to take a stand on unpopular issues, to be a major contributor to U.S. goals. We must also recognize that Sarkozy has an extraordinary degree of decision-making power which is vested in him alone as the French president. In my opinion it will necessitate periodic Presidential intervention to reassure Sarkozy of our commitment as an ally and partner and, in many cases, to close the deal. Sarkozy will remain a power to be reckoned with in France and a significant driver of Europe for the foreseeable future. It is clearly in our interest to work hard to channel his energy and initiatives into a constructive form of cooperation that enhances our ability to solve global issues together. End comment. RIVKIN

‘BP IS STEALING OUR OIL’,
AZERBAIJAN PRESIDENT TELLS US

Tuesday, 09 October 2007, 14:14

CONFIDENTIAL SECTION 01 OF 03 BAKU 001227

SIPDIS

SIPDIS

VILNIUS PLEASE PASS TO MATT BRYZA

EO 12958 DECL: 10/09/2017

TAGS ENRG, PREL, PGOV, RS”>RS, TU, UP, KZ, PL, GG, LH, TX, AJ

SUBJECT: PRESIDENT ALIYEV ON ENERGY ISSUES IN ADVANCE OF THE VILNIUS ENERGY SUMMIT

REF: A. (A) BAKU 1224 B. (B) TBILISI 2498

Classified By: Ambassador Anne E. Derse. Reason: 1.4 (B)(D)

1. (C) SUMMARY: In a one-hour one-on-one meeting with the Ambassador on October 8, President Aliyev outlined with frustration current problems on energy in advance of the Vilnius Summit. British Petroleum (BP) is “stealing our oil,” he asserted sharply, seeking to put pressure on Azerbaijan to delay to 2010 the advent of an 80/20 profit split due next year under the Azeri Chirag Guneshli (ACG) Production Sharing Agreement (PSA) by threatening to cut back on gas it provides to the GOAJ from the ACG field from 3 bcm to 1.4 bcm. “Only Georgia will suffer” if BP continues down this path, he warned, noting Azerbaijan’s commitment, otherwise, to help Georgia on gas this winter. He said the Georgian PM had promised him to enlist Washington’s help with BP. He said BP had asked for time, until October 19, to resume talks.
If a good response is not found, Azerbaijan “will make public that BP is stealing our oil,” Aliyev stated.
Similarly, he said, Turkey’s 15 percent netback pricing scheme for gas transit is “unacceptable” as it would require Azerbaijan to disclose to Turkey sales agreements with customers in Europe and allow Turkey to sell 15 percent of Azerbaijan’s gas to European markets. A transit agreement is “not so urgent for us that we will accept unjustified conditions from Turkey.”

2. (C) Summary Continued: Azerbaijan has an MOU with Greece, will soon launch talks with Italy, and will not allow Turkey to “block the Azerbaijan-Europe partnership.” He said Turkmenistan seems to want the trans-Caspian option to be implemented but “to hide it from Russia.” Azerbaijan has shown “maximum constructiveness” – offering its infrastructure to Turkmenistan and pledging to serve as purely a transit country – but Azerbaijan will not initiate next steps with Turkmenistan – “We cannot want it more than they do.” Azerbaijan does support the Odessa-Brody- Plotsk oil pipeline for political reasons (“Ukraine, Poland, Georgia are friends to us.”) and will present a concrete plan on next steps at a meeting in Vilnius with Ukraine, Poland, Lithuania, and Georgia with the aim of making the project commercially feasible. Aliyev asked that the U.S. try to deliver the message on the unacceptability of the 15 percent netback pricing proposal to Turkey. He continues to support Nazarbayev’s idea of a 3-way summit between Kazakhstan, Azerbaijan and Turkmenistan as a good signal and a way to strengthen 3-way relations, but will not initiate the meeting. End Summary.

Georgian Winter Gas

3. (C) President Aliyev opened the discussion on energy by saying that Azerbaijan will help Georgia this winter as it has in the past. He said he confirmed this to the visiting Georgian PM during his September 27 visit to Baku.
The GOAJ, however, is having some difficulties with BP, he said. Because the GOAJ halted negotiations on PSA extension and Shah Deniz development, BP is now “trying to put political pressure on us by cutting back on gas it is giving to Azerbaijan, from 3 bcm to 1.4 bcm.”
But “only Georgia will suffer” from this step because the Shah Deniz gas they will receive from Azerbaijan will not be enough. “If BP reduces the gas it is giving Azerbaijan, Georgia will get less.” The Georgian PM, Aliyev said, had told him he is aware of this danger, and had said he would talk
to Washington to “get them to help us.” (See Ref. A for background on Azerbaijan-BP negotiations.)

4. (C) Aliyev continued that “these things are inter-connected. If BP is supportive and helpful, there will be no problem supplying Georgia.” But the situation with BP is “unpleasant – they are cheating us on the PSA profit split according to our calculations.” The GOAJ believes that the profit split should have changed in the second quarter of this year. “They are stealing our oil – they are unilaterally changing the formula on the ROR (rate of return) so the profit split will take place in 2010. SOCAR spoke to (BP Azerbaijan head) Bill Schrader. BP asked for time, until October 19, to come back to discussions.”

BAKU 00001227 002 OF 003

(Comment: BP Azerbaijan on October 9 had no news of an impending visit by BP CEO, per Ref. B. End comment.) If there is not a good response, “we’ll make public that BP is stealing our oil … oil that belongs to Azerbaijan, because BP wants the 80/20 profit split that should occur next year to be pushed to 2010.” The Georgian situation, Aliyev repeated, “is connected to that.”

Turkey Transit Agreement

5. (C) Aliyev said that Azerbaijan rejects the Turks’ 15 percent netback proposal. The Turkish formula would require Azerbaijan to disclose to the GOT its commercial agreements with Greece, Italy, and other European countries – “anywhere our gas goes.” The netback pricing proposal is “not acceptable – it does not exist in any other transit agreement. We would lose money and Turkey could sell 15 percent of our oil to our markets. This is not fair. We’ll pay an agreed transit tariff. We want to do it on the basis of best international practice. Our position with Turkey is pretty strong. If they block an agreement, they are responsible. The Minister
always says Turkey will do the necessary, but then does nothing. We will not accept pressure.”

6. (C) Aliyev noted that it is Turkey and European consumers who need the transit agreement. “It is not so urgent for us that we will agree to unjustified conditions with Turkey.” Azerbaijan has existing and adequate markets for its gas in Georgia and Turkey, he noted. Aliyev asked that the U.S. “deliver (to Turkey) if it can, this message. Turkey wants to get everything.” Turkey does not understand that Azerbaijan has signed an MOU with Greece and will soon start negotiations with Italy. “Turkey cannot block the Azerbaijan-Europe partnership.” Aliyev said Finance Minister Samir Sharifov’s proposal for USTDA technical assistance to review best international practice in transit agreements was a good one. Azerbaijan wants the transit agreement with Turkey to be based on best international practice, not to “invent something new.” He encouraged the U.S. to consider the technical assistance.

Turkmenistan and Trans-Caspian Gas

7. (C) Aliyev pointed to Turkmen President Berdimuhamedov’s statement that he would “sell gas to Europe at Turkmenistan’s border,” adding, however, that he had failed to specify which border he was referring to – that with Russia, Iran, or the Caspian Sea? Aliyev said it was his sense that Turkmenistan wants the trans-Caspian option to be implemented but “wants to hide it from Russia.” Azerbaijan, he said, has shown “maximum constructiveness – we offered all our infrastructure; we said we’d be a purely transit country, not do like Turkey is trying to do. But we will not be more interested than they. I will not initiate a meeting with Berdimuhamedov – it is not right to do.” Azerbaijan, he repeated, “will not initiate discussions with Turkmenistan because we do not need its gas – we cannot be seen to want it (the trans-Caspian option) more than they do.”

Odessa-Brody-Plotsk

8. (C) Azerbaijan has finalized its energy plan, Aliyev said. Azerbaijan supported the Krakow Summit and the proposed Odessa- Brody-Plotsk oil pipeline “even though the project is seen as anti-Russian” because Ukraine, Poland and Georgia are friendly to Azerbaijan. Aliyev said that the key is for Odessa-Brody-Plotsk to be “commercially feasible.” For this reason, he had asked Energy Minister Natiq Aliyev to prepare a concrete proposal for discussion in Vilnius. This will include Azerbaijan’s joining as a shareholder in the Sarmitia pipeline, and the launch of a feasibility study. In addition, a joint trading company for Black Sea oil will be created. With Supsa and Novorossisk, there is a great deal of Black Sea oil available, Aliyev said. The key, he repeated, is to make the Odessa- Brody-Plotsk project commercially feasible. Azerbaijan supports it “more to show political support than any urgent need” economically.