Select Committee on Foreign Affairs Appendices to the Minutes of Evidence - Sixth Report


Memorandum submitted by Mr Donald Maclauchlan, Export Director, General Electric Company plc

  I have been instructed by Lord Simpson, my Managing Director, to respond to your letter FAC/98-99/099 dated 20 January 1999.

  This company currently has interests in three of the above mentioned countries, viz Azerbaijan, Uzbekistan and Turkmenistan. However a certain amount of reconnaissance has been carried out into some of the others, notably Kazakhstan.

  Where we do have business, the small Embassies in place have been extremely helpful and supportive. It goes without saying that, from the point of view of the businessman, there are no good Embassies or bad Embassies, there are only good Ambassadors (who are interested in commerce) and bad Ambassadors (who are not). In a small organisation such as an Embassy, the personal interest of the Ambassador is fundamental; Commercial staff (and on occasion Attaches) may labour hard and long, but without the Ambassadors' backing they will achieve little.

  Our companies have commented particularly favourably on two specific aspects of Embassy support. They have found the locally employed Commercial staff to be, in general, highly enthusiastic and extremely knowledgeable. Also, they have found solicited Market Reports to be well researched and very good value for money. The £70 fee when set against the £3000 a visit may cost is a significant saving particularly when the report indicates that, for whatever reason, there is unlikely to be any business.

  In these small countries Britain's main interests must be commerce of one sort or another. The political impact of most of them is small; their trading potential enormous. However that potential has not yet developed. In most cases their most obvious assets are oil and gas which are hugely expensive to develop and scarcely attractive to cash strapped majors at this time of overproduction and rock-bottom prices.

  At root these countries all remain tribal, and their Governments work under tribal pressures no longer common in the West. This can lead to puzzling anomalies which the businessman finds hard to understand and the diplomat hard to talk about (or indeed find out about).

  Marconi Communications' two ventures, in Azerbaijan and Uzbekistan, have both in their own ways fallen foul of such pressures. It is very hard to obtain adequate hard currency exchange authority in Uzbekistan, yet it is fairly common knowledge that the privileged in the country have little problem in so doing. Furthermore, in Azerbaijan, the delay in issuing the licence that would allow the operation of MarconiCommunications' latest contract for telephone switching equipment is almost certainly caused by political tensions at the highest (around the President) level.

  In both cases the Ambassadors have done their best to further our interests but their leverage is limited, reflecting the perceived status of our country.

  Where, however the Foreign Affairs Committee could help us in commerce is by understanding that our main European competitors work under a very different set of financial ground rules to ourselves as regards taking business. The business they take may very well not be profitable but they do get market-share in a way which we envy.

  But to give a direct response to the matter the committee is looking into: we do find the FCO in general, and the Ambassadors in particular, helpful and supportive, at times vital, in that part of the world. We would much prefer to see the large staffs at certain other Posts curtailed than lose people, or, worse, lose an Embassy from any of the far flung outposts.

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