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


Memorandum submitted by British Aerospace

  Since the collapse of the Soviet Union, British Aerospace has taken a keen interest in the territories of the Transcaucasus and, more particularly, Central Asia. Government Department restrictions have limited the company's activities in this region, however we have concluded some airport development business in Uzbekistan and Kyrgyzstan and a small, but politically significant, number of small arms are now being used in the presidential protection unit in Kazakstan. In addition Uzbekistan purchased three Regional Jets and negotiations are continuing for a further tranche. We are also pursuing an opportunity to sell a small number of Regional Jets (RJs) to Kazakstan.

  British Aerospace is currently concentrating on Kazakstan as a regional priority, with proposals that would provide the country with integrated civil aviation transport infrastructure. This is a particularly exciting project as Kazakstan presents an almost unique opportunity to start such an enterprise from scratch. The project would start with the redevelopment and regeneration of airports and regional airlines, through to airspace management and international route planning. It is hoped that this will lead to the company being selected as the preferred supplier in the civil aviation and, in the longer term, military and defence sectors.

  Many western countries are developing relations and business in the region. Most notable amongst these is the USA, which is very forward in creating a presence. The First Lady, for example, has paid an official visit and Kazak politicians and businessmen are proud to relate the fact. The USA proclaims a geo-political view of the region in which Kazakstan is the priority. Recent military exchanges and manoevres, largely paid for by the US, is testimony to this. Not only is the maintenance of a strategic balance an imperative, but the huge potential of the regions mineral resources is also a powerful magnet.

  Turkey is also a significant operator in Central Asia mainly in the construction sector, but they are also evident in the military field. Hotels, airports and other major projects have received financial backing with the EXIMBANK taking a leading role. The Japanese have also offered favourable terms for funding, particularly in Kazakstan, eg $80 million for the redevelopment of Almaty airport.

  The United Kingdom has, generally speaking, not been as evident in the area as these more forward countries. Interlocutors comment that the British have not demonstrated similar willingness to invest time, trouble and effort. They are keen to have British policy towards them explained and have questioned BAe staff to that end.

  The nature of business in Central Asia demands that consistent effort needs to be invested in relationships. For such relationships to achieve success, they need to be supported at the highest levels. Accordingly, it is vital if Great Britain is to play a role in the region and take advantage of the long-term business opportunities, that not only company senior executives invest their time, but also senior members of the government make official visits to develop friendly relations with the various nations. A coherent plan of visits and activities would facilitate an environment within which business can be created thereby aiding the development of these fledgling democracies.

March 1999

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