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Annex C: Assessments Required by the Silk Road Strategy Act of 1999


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2004
Report
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The Silk Road Strategy Act of 1999, which amends the Foreign Assistance Act of 1960 and was enacted as part of the FY 2000 Foreign Operations, Export Financing, and Related Programs Appropriations Act, requires that this annual report:

  • identify the progress made in fulfilling the policy objectives laid out in the Silk Road Strategy Act;
  • evaluate the degree to which U.S. Government-funded assistance to Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan has helped accomplish the objectives laid out in the Silk Road Strategy Act;
  • provide a "description of the progress being made by the United States to resolve trade disputes registered with and raised by the United States embassies in each country, and to negotiate a bilateral agreement relating to the protection of United States direct investment in, and other business interests with, each country" and
  • recommend any additional initiatives that should be undertaken by the United States to implement the policy and purposes contained in the Silk Road Strategy Act.

This report addresses all of the above items, reporting on progress subsequent to the enactment of the Silk Road Strategy Act in late November 1999.

For an evaluation of the degree to which U.S. Government-funded assistance programs in the Silk Road countries have helped accomplish the objectives laid out in the Silk Road Strategy Act, please see the country assessments in Part II of this report.

This report provides information about active trade and investment disputes in the Silk Road countries, as well as a description of progress in negotiating bilateral investment treaties with those countries. Additional information can be found in the Section 498A(a)(2) assessments in Part IV of this report.

The U.S. Government is funding robust, ongoing assistance programs in each of the areas addressed in the Silk Road Strategy Act, and does not recommend the implementation of any new initiatives to implement the policy and purposes contained in the Act.

Armenia: The U.S.-Armenia Bilateral Investment Treaty entered into force on March 29, 1996. The Department is unaware of any outstanding investment disputes involving U.S. citizens and the Government of Armenia.

Azerbaijan: The U.S.-Azerbaijan Bilateral Investment Treaty entered into force on August 2, 2001. The State Department is aware of one pending claim against the Government of Azerbaijan (GOAJ), which is dormant. Another long running dispute, in which a U.S. company claimed that the GOAJ improperly prevented it from becoming the majority shareholder in a joint venture with the Ministry of Communications, was resolved on December 29, 2003 with the GOAJ selling its entire share in the joint venture to the U.S. company. The U.S. Embassy has offered appropriate assistance to the U.S. companies.

Georgia: The U.S.-Georgia Bilateral Investment Treaty entered into force on August 17, 1997. The State Department is aware of one active investment dispute between a U.S. company and the Government of Georgia (GOG). In that dispute the U.S. company alleges that the GOG has participated in looting the assets of a bank the company owns in Georgia. The claim is currently being processed by OPIC. The US Embassy has offered appropriate assistance to the company when requested.

Kazakhstan: The U.S.-Kazakhstan Bilateral Investment Treaty entered into force on January 12, 1994. The Department is aware of two active investment disputes between U.S. companies and the Government of Kazakhstan (GOK). In one dispute, involving the GOK's refusal to issue a license to a U.S. company for the export of uranium, a U.S. Court of Appeals affirmed the dismissal of the company's suit against the GOK. The claimant is considering options for further action but has made no further contact with the Embassy. In the other dispute, a U.S. firm claims that the GOK expropriated a real estate development without offering appropriate compensation. The U.S. company was victorious in arbitration and is awaiting payment of its award. The U.S. Government has supported, as appropriate, these investors' attempts to resolve the disputes.

Kyrgyz Republic: The U.S.-Kyrgyz Republic Bilateral Investment Treaty entered into force on January 12, 1994. The Department was aware of an outstanding investment dispute between a U.S. company and the Government of the Kyrgyz Republic involving an alleged breach of the terms of its telecommunications joint venture agreement, which has been resolved. The U.S. Embassy and other U.S. Government officials played an active role in the case, encouraging the parties to reach a mutually beneficial resolution of the dispute.

Tajikistan: Negotiations on a Bilateral Investment Treaty between the U.S. Government and the Government of Tajikistan have been inactive since April 1993. The Department is aware of no active investment dispute between a U.S. company and the Government of Tajikistan.

Turkmenistan: Negotiations on a Bilateral Investment Treaty between the U.S. Government and the Government of Turkmenistan have been inactive since March 1998, pending action by the Government of Turkmenistan. The Department is aware of no active investment disputes involving U.S. firms and the Government of Turkmenistan.

Uzbekistan: The U.S. Government and the Government of Uzbekistan signed a Bilateral Investment Treaty on December 16, 1994. The U.S. Senate gave its advice and consent to ratification on October 18, 2000, after the executive branch gave its commitment not to bring the treaty into force until Uzbekistan undertakes economic reforms so that its policies are not in violation of the treaty's terms. Uzbekistan has completed its domestic ratification process. Entry into force is pending exchange of instruments of ratification, following satisfactory economic reforms by the Government of Uzbekistan. The Department is aware of thirteen active trade and/or investment disputes between U.S. companies and the Government of Uzbekistan. In two major disputes U.S. companies have accused the GOU of seizing ethyl alcohol imports pursuant to a law not in effect at the time the goods were imported. In a third large dispute a U.S. company alleges the GOU has seized its assets and reduced its share in a joint venture with another U.S. company due to a personal dispute between the company's owner and the daughter of a GOU official. In two other claims U.S. companies state they have not been paid for agricultural chemicals sold to the GOU in 2001. The remaining claims involve uneven application of currency restrictions, tax laws, and visa policies. The U.S. Embassy is monitoring these cases and is providing all appropriate assistance.



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