Congress Must Investigate U.S. Loans To Azerbaijan’s Secretive Silk Way Airline
By Harut Sassounian
Last year, I wrote an article reporting that the Silk Way Airlines of Azerbaijan made 350 secret flights to transport hundreds of tons of weapons from Bulgaria to ISIS terrorists in Syria and other Middle Eastern countries between 2014 and 2017. We now have a new surprising revelation that Silk Way received $419.5 million of loans from the U.S. Export-Import Bank (EXIM) to buy three 747-8 cargo planes from Boeing to continue its sinister operations.
The disclosure was made by a reporter for the Organized Crime and Corruption Reporting Project (OCCRP) by filing a Freedom of Information Act (FOIA) request with the U.S. government in 2016. It is noteworthy that Silk Way, “owned by a company with past ties to Azerbaijan’s Aliyev family, won some lucrative contracts from the U.S. military,” according to FOIA documents. In fact, “Silk Way was given contracts worth more than $400 million with the U.S. Defense Department’s Transportation Command for more than decade,” according to Devansh Mehta of OCCRP. Silk Way transported “ammunition and other non-lethal materials” to Afghanistan as of 2005. “In addition to its relationship with the U.S. government, Silk Way Airlines has also worked as a subcontractor for the Canadian Department of National Defense, the German armed forces, and the French army,” Mehta revealed.
In April 2017, Silk Way increased its purchases from Boeing, signing a $1 billion deal for 10 new 737 MAX passenger planes, according to reporter Mehta. However, it is not known how the new acquisition was financed. Last October, Silk Way announced plans to buy two more 747-8 cargo planes.
Mehta disclosed that “the airline is owned by Silk Way Group, which, at least at one point, was closely associated with Azerbaijan’s ruling Aliyev family (which has used its planes for private trips) and has benefited from benevolent state deals. Information obtained through FOIA shows that Silk Way Airlines took steps to conceal its owners’ identity, perhaps to improve its chances of winning the valuable U.S. loan guarantees and military contracts.”
Mehta added that “Azerbaijan ranks 122nd out of 180 countries in Transparency International’s corruption perception index, while President Ilham Aliyev’s family owns luxury properties around the world worth over $140 million. The Panama Papers and other leaks have implicated the country’s first family as being involved in nearly all sectors of the Azerbaijani economy, from luxury hotels to mining to banking.”
According to the terms of the Export-Import Bank’s $419.5 million loan to Silk Way, in case of default the loss would be repaid by the state-owned International Bank of Azerbaijan (IBA). The problem is that IBA has been “implicated in the Azerbaijani Laundromat, a massive scheme that pumped nearly $3 billion out of the country through various shell companies,” Mehta wrote. Furthermore, IBA is not in a position to guarantee the Silk Way loan, as the IBA itself declared bankruptcy in 2015, unable to pay its $3.3 billion debt!
Nate Schenkkan, project director of the Nations in Transit report at Freedom House, a US-based nonprofit that monitors democracy and human rights around the world, questioned the wisdom of EXIM Bank’s loan to Silk Way: “In Azerbaijan, where one family dominates economically and politically, and is then using state institutions to back its economic projects, there’s an obvious conflict of interest.”
Arzu Aliyeva, Pres. Aliyev’s 21-year-old daughter in 2010, was one of the three owners of Silk Way Bank, the financial arm of Silk Way Holding. Since 2017, her name is no longer mentioned as an owner. “Silk Way Holding, also referred to as Silk Way Group (SW Group) on its website, is a conglomerate that has currently listed 11 companies in its portfolio, including the airline,” according to Mehta. Silk Way Holding dominated Azerbaijan’s aviation sector after the state carrier AZAL airlines was privatized in a highly secretive manner without any bids and tenders. Mehta wrote that “a similar privatization of the telecom sector ended up with the [Aliyev] family earning about $1 billion in bribes in cash and share value, according to an earlier OCCRP story. The investigation also found that the money was funneled to the first family through various secret offshore companies. These companies have enabled the Aliyevs to control stakes in gold mines, telecommunications and construction businesses in Azerbaijan.”
According to a filing in 2006, Silk Way Airlines was owned by IHC (International Handling Company), an offshore entity based in the British Virgin Islands. In a 2017 filing, Silk Way Airlines stated that 40% of the company was owned by IHC, while 60% was owned by SW Holding, “effectively controlled” by Zaur Akhundov, an Azerbaijani citizen. Mehta stated that “IHC is linked to the Aliyev family through its director Jaouad Dbila who reportedly served as a proxy for the first family’s business interests in the past.”
In 2011, a Russian-born manager, Grigory Yurkov, was given power of attorney for both Silk Way Holding and IHC, according to Luxembourg’s official gazette. This appointment was used as a means to conceal the true owners of IHC.
Meanwhile, Zaur Akhundov had mysteriously become the 100% owner of the entire Silk Way Group in 2014. By that time, the firm and its many holdings were already worth billions of dollars, Mehta declared, based on the company’s loan guarantee application. Akhundov, 50, had held several official positions in Azerbaijan. “It is unclear how Akhundov became the owner of a billion-dollar conglomerate with more than 10 aircrafts, an insurance company, a construction company and an aircraft maintenance company, to name a few of the enterprises in the Silk Way Group,” Mehta wondered.
According Schenkkan of Freedom House, “Azerbaijan can be described as a centralized, vertical pyramid where the benefits go to one family that collects rents throughout the economy. This includes all sorts of transactions, not only official state transactions that might involve taxes and public funds, but also things that involve what we normally consider the private sector: import-export, consumer goods, transport—any area of the economy, the family has a stake in it and receives a cut on what takes place.”
The U.S. Congress should hold a hearing to investigate the appropriateness of EXIM Bank’s $419.5 million loan guarantee to Silk Way Airlines, its arms shipments to terrorist groups in the Middle East, and its hidden ownership by the ruling Aliyev family. After all, why should Azerbaijan, a country with billions of petrodollars, be given a U.S. loan?
Why Donald Trump Should Recognize the Armenian Genocide
By Areg Galstyan
The American Thinker
Last month, a report on how Donald Trump’s administration should build a political dialogue with Turkey was published at the website of the Washington Institute for Near East Policy. The authors of this work are James F. Jeffrey, the former U.S. ambassador to Turkey during the presidency of George W. Bush (2008-2010), and Soner Cagaptay, the director of the Turkish Research Program at The Washington Institute. Recommendations of the authors cover a wide range of geopolitical issues that the United States and Turkey should solve by joining their efforts.
It is noteworthy that Mr. Jeffrey and Mr. Cagaptay mark the necessity for Trump’s administration to guarantee non-recognition of the Armenian Genocide as an important condition for restoration of trust between the U.S. and Turkey. In particular, the authors write: “Separately, the United States can quietly guarantee Turkey that the Armenian Genocide resolution in Congress will not pass. This has always been critical in the relationship and most Turks care deeply about the issue.” There is no doubt that the authors aim not only to influence on the development of the foreign policy of the new administration for Turkey, but also to remind that the Armenian question can have a negative impact on bilateral relations.
Certainly, the representatives of the pro-Turkish lobby groups can develop their own recommendations for the foreign relations between Washington and Ankara. This is a normal practice of lobbying. However, the authors, speaking about the need to block the recognition of the Armenian Genocide, make a number of serious mistakes. First, this question is an internal affair of the United States. We must not forget that the requirement to recognize the historical events of 1915-1923 in the Ottoman Empire comes from the millions of citizens of America and is purely humanitarian. American Armenians do not require official Washington to take any steps against Turkey.
On the other hand, the representatives of U.S.-Armenian relations have always stressed that the recognition of the Armenian Genocide by the United States and Turkey will be a good signal and will allow the establishment of Armenian-Turkish dialogue in the future. Unfortunately, the Turkish authorities turned the Armenian issue into an instrument of political blackmail and intimidation.
Secondly, it is an incorrect recommendation to the U.S. president to influence Congress to prevent the passage of the resolution on the Genocide. This is not just interference in the internal affairs of a sovereign country, but also a call for the executive power to put pressure on the legislators, which cannot but arouse the indignation of American citizens.
Concerning the Armenian issue, I would like to give an alternative view to the next administration. During the Cold War, Turkey was considered one of the most important strategic allies in the bilateral format and in the framework of NATO. On the basis of pragmatic considerations, the White House and the leaders of both parties in Congress believed that an open discussion of the Armenian issue could cause a negative reaction from Turkey. The situation changed in 1974, when Turkey sent troops to the territory of Cyprus. In response to this act of aggression, Congress declared an arms embargo on Turkey. A series of further events led to a serious cooling of U.S.-Turkish relations. Then Washington did not prevent the adoption of Resolution No. 148 on the “Day of Remembrance of the Victims of Inhuman Crimes.” According to the adopted resolution, the 24th of April was officially proclaimed the day of remembrance of victims of the Armenian Genocide. Thus, the United States at that time became the only country in the world whose president officially addressed to the Armenian people on every 24th of April.
In 1978, the U.S. president, Jimmy Carter, used the term “genocide” for the first time in his statement to describe the events of 1915-1923 in the Ottoman Empire. Carter noted that, while preparing for the meeting with the Armenian community, he spent a lot of time in Roosevelt’s room and carefully studied the documents related to the Armenians’ history. The president said he was impressed by the force of will and talent of Armenian people and that as the U.S. citizens, Armenians made an enormous contribution to the development of the country. Carter said that not many people knew that a few years prior to 1915, a deliberate effort was taken to destroy the Armenian people. At the end of his speech, he stated that the Armenian Genocide was one of the greatest tragedies that ever befell any group of people, and no trial similar to Nuremberg was conducted over the criminals.
In the very first year of his presidency, Ronald Reagan demonstrated support for the Armenian-American community in the international recognition of the Armenian Genocide. In his proclamation No. 4838 on April 22 in 1981, Reagan remarked that the United States was aware of the fact and understood that the criminal government that had committed inhuman acts of genocide had to acknowledge its past and repent for it. Reagan said there was an eternal debt of all mankind toward those who had experienced these horrors. He urged the international community to remember that the lessons of the Holocaust, as well as of the Armenian Genocide, the ensuing genocide of the Cambodians, and numerous persecutions against other nations, could never be forgotten.
On the 11th of April in 1985, the Republican majority leader – Senator Robert Dole – introduced Resolution No. 247 on the “Day of Memory of the Armenian Genocide in the Ottoman Empire” to Congress. The hearing in the Committee on Foreign Affairs of the House of Representatives was successful, and Speaker Tip O’Neill put the resolution on a general vote. Turkey threatened that in case of adoption, it would refuse to buy eleven U.S. Boeing aircraft for the benefit of aircraft of the European consortium Airbus Industries. Moreover, Turkey claimed that it would cease to prolong the Defense and Economic Cooperation Agreement.
President Reagan assured Turkey’s Prime Minister Ozal that the administration was committed to maintaining a high level of appropriations for Turkey. The U.S. president was referring to the majority in Congress held by Democrats, whom he could not influence. Regardless of quite logical explanations given by the White House, the Turkish side did not conceal its irritation. Ankara stated again that it would prepare for the revision of the U.S.-Turkish agreement on military and economic cooperation. America, which at that time was going through a period of difficult relations with Greece, was close to losing access to its military bases in Turkey. It was for that reason that the U.S.’s Secretary of State Schulz arrived to the negotiations on the extension of the agreement in Ankara.
Trying to prevent the recognition of the Armenian Genocide, the pro-Turkish lobbies were interfering in the electoral process. Thus, Ankara and its lobbyists campaigned against Mike Dukakis – an ethnic Greek who was the candidate of the Democratic Party in the presidential elections of 1988. They also opposed George Deukmejian, an ethnic Armenian and the governor of California, who was considered by George Bush, Sr. for the post of the U.S. vice president. During their election campaigns, presidents Bill Clinton, George W. Bush, and Barack Obama talked about the need to tell the truth about the Armenian Genocide at the highest level. However, being in the Oval Office, they broke their promises for fear of spoiling relations with Turkey. These examples from history show that the Turkish authorities and the pro-Turkish lobbyists have always used intimidation tactics when it comes to the Armenian issue. Donald Trump poses himself as a leader who will protect the interests of America and Americans. In this case, the new president and his administration should not allow Turkey to interfere in the internal affairs of the United States.
Moreover, Turkey’s statements that adoption of a resolution recognizing the Armenian Genocide may harm relations with the U.S. are greatly exaggerated. Nowadays, the laws on the Armenian Genocide have been adopted in more than twenty countries around the world, including Russia, France, and Germany. Did Russia’s recognition of the Armenian Genocide have an impact on its bilateral relations with Turkey? No. Official Ankara has traditionally protested and threatened with deterioration in relations. However, in reality, we are witnessing active development of Russian-Turkish ties in the political, economic, trade, tourism, and energy sectors. There was a similar scenario regarding Turkish-French relations after Paris officially recognized the Armenian Genocide. By the way, France and Germany, being Turkey’s NATO allies, take their own domestic political decisions without fear of Ankara’s threats.
In this regard, the new administration should clearly express its position on the Armenian issue and should not be afraid of threats from Turkey and its lobbyists. Anyway, President Trump has two ways to solve this issue. He can continue the policy of denying the Armenian Genocide (as Bush and Obama did), or he can choose a different path and become the president who had enough courage to restore historical justice. I hope Trump will choose the path of Ronald Reagan instead of the one of Barack Obama.
This article originally appeared in The American Thinker.
Areg Galstyan, Ph.D., is a regular contributor to The National Interest, Forbes, and The Hill and the head of the “American Studies” Research Centre. You can follow him on Twitter @Galstran_Areg.