Annex C: Assessments Required by the Silk Road Strategy Act of 1999
ASSESSMENTS REQUIRED BY THE SILK ROAD STRATEGY ACT OF 1999
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 made during FY 2004. 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 section 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 aware of one outstanding investment dispute involving U.S. citizens and the Government of Armenia (GOAM). U.S. citizen investors allege that their investment in a photo shop and two parcels of land was expropriated by the GOAM through a denial of justice, as they claim the GOAM has failed to investigate and prosecute the theft of their property by their Armenian joint venture partner. The U.S. Embassy has offered appropriate assistance to the American investors.
Azerbaijan: The U.S.-Azerbaijan Bilateral Investment Treaty entered into force on August 2, 2001. The State Department is aware of one claim against the Government of Azerbaijan (GOAJ). An American-owned airline alleges that the Azerbaijani flag carrier breached a commercial agreement with it setting fares and routes on the Baku-Tbilisi route. Although the airline has ceased operation, the U.S. Embassy continues to provide assistance on the matter as appropriate.
Georgia: The U.S.-Georgia Bilateral Investment Treaty entered into force on August 17, 1997. The State Department is aware of two investment disputes between a U.S. company and the Government of Georgia (GOG), one of which was recently resolved. In the active dispute, a U.S.-owned airline alleges that the failure of the GOG to enforce its rights under its bilateral aviation agreement with Azerbaijan resulted in the airline's demise. This airline has filed suit against the GOG in Georgian court. In the resolved dispute, an American company had alleged that Georgian courts had wrongly terminated the company's rights to a parcel of land in central Tbilisi. The Georgian Supreme Court recently reinstated those rights. In both cases the U.S. Embassy has been active in its support of the American investors.
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 the first 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 done pursuant to the BIT. The GOK has not paid to date but has committed to pay in January 2006 . In the second dispute, the Kazakh state power company fell behind in making contractually required payments to the American operator of a power station. While the parties reached a negotiated settlement to the dispute in 1999, the GOK subsequently breached the terms of the settlement. When the American investor then tried to initiate international arbitration under the terms of the original contract, the GOK refused to abide by the arbitration clause. In January 2004 a Kazakh court declared the arbitration clause invalid. The U.S. Government continues to support, as appropriate, these investors' attempts to resolve the disputes.
Kyrgyzstan: The U.S.-Kyrgyz Republic Bilateral Investment Treaty entered into force on January 12, 1994. The Department is aware of no outstanding investment dispute between a U.S. company and the Kyrgyzstan.
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 one active investment dispute between a U.S. company and the Government of Tajikistan (GOT). An American company is involved in a running dispute with the Tajik state-owned aluminum company over that state entity's alleged failure to deliver aluminum as required in a deed of guaranty. The U.S. Embassy in Dushanbe and the Department have been actively assisting the American company, and will continue to advocate on its behalf as appropriate.
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 ten active trade and/or investment disputes between U.S. companies and the Government of Uzbekistan. In one major dispute a U.S. company has accused the GOU of seizing ethyl alcohol imports pursuant to a law not in effect at the time the goods were imported. Three more disputes center around the GOU's refusal to pay for agricultural chemicals provided by American trading partners. Still another non-payment dispute concerns the alleged failure of the GOU to pay for wheat imported from an American company. Two American companies also allege the GOU has not paid them for various consulting services provided. An American cell phone provider claims that the GOU expropriated its operating equipment in Uzbekistan. The remaining claims involve the uneven application and enforcement of currency restrictions, tax laws, and court rulings. The U.S. Embassy is monitoring these cases and is providing all appropriate assistance.