Monthly Archives: January 2007

07ASTANA277, SCENESETTER FOR ASSISTANT SECRETARY SULLIVAN’S VISIT TO

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Reference ID Created Released Classification Origin
07ASTANA277 2007-01-30 12:00 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO2417
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0277/01 0301200
ZNR UUUUU ZZH
R 301200Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8338
INFO RUCNCIS/CIS COLLECTIVE 0021
RUEHAST/USOFFICE ALMATY
RUEHBJ/AMEMBASSY BEIJING 1295

UNCLAS SECTION 01 OF 04 ASTANA 000277 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FROM CHARGE D'AFFAIRES TO EB ASSISTANT SECRETARY SULLIVAN 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON ETRD KZ
SUBJECT: SCENESETTER FOR ASSISTANT SECRETARY SULLIVAN'S VISIT TO 
KAZAKHSTAN 
 
Ref: Astana 125 
 
ASTANA 00000277  001.2 OF 004 
 
 
1. (SBU) Summary: While recent Kazakhstani headlines have been 
dominated by discussion of the country's new government, its bid to 
assume the OSCE chairmanship, and a democratization initiative 
presumed to be in the works, the real, abiding story here is 
Kazakhstan's economy.  The country's natural resource wealth is 
well-known and, by and large, well-managed; much of the USG's 
attention in this arena is focused on the development of pipeline 
routes to carry oil and gas out of landlocked Kazakhstan.  While far 
from being Kazakhstan's top trading partner, the U.S. is the largest 
foreign investor.  The company executives you meet here will tell 
you about an investment climate that is, at times, challenging, 
while simultaneously discussing expansion plans - or, in private, 
bids for new oil blocks. 
 
2. (SBU) Summary, cont.: Kazakhstan has, to date, done an admirable 
job of managing its oil wealth.  President Nazarbayev seems 
determined to take the next, rational step of lessening the 
country's dependence on extractive industries; the ambitions of 
diversifying the economy and enhancing Kazakhstan's competitiveness 
rank high on the Kazakhstani government's agenda.  It is clearly in 
the USG's political and commercial interests to help Kazakhstan 
achieve those goals - through expanded U.S. trade, investment, and 
economic cooperation - while reinforcing market mechanisms. 
Finally, your visit here comes as the GOK grapples with a new sense 
of the country's regional role and responsibilities, earned by its 
relative prosperity and stability, and forced upon it by challenges 
and opportunities to the South.  Here, too, the U.S. can assist, by 
helping Kazakhstan find the opportunities and means to increase 
trade and infrastructure ties with its Southern neighbors, including 
Afghanistan.  End summary. 
 
The Political Context 
--------------------- 
 
3. (SBU) Your visit comes at a time of significant personnel changes 
in the government, but relative stability as regards economic 
policy.  President Nazarbayev appointed Karim Masimov as Prime 
Minister on January 10 (reftel).  Masimov, who had been Deputy Prime 
Minister since January 2006 and concurrently Minister of Economy and 
Budget Planning since April 2006, was already the most prominent 
economic policymaker in the cabinet.  In his first weeks on the job 
he has emphasized the need to diversify the Kazakhstani economy, 
including by attracting foreign investment, and to respect contract 
stability.  Masimov has also highlighted the need for streamlined 
GOK decision-making and improved organization.  Other new appointees 
include Foreign Minister Marat Tazhin (formerly head of the Security 
Council), Deputy Prime Minister Aslan Musin (who also retains his 
job as Minister of Economy and Budget Planning), Defense Minister 
Daniyal Akhmetov (former Prime Minister and Kazakhstan's first 
civilian defense minister), and Minister of Industry and Trade Galym 
Orazbakov (who as Deputy Minister from 2001-2003 used to head 
Kazakhstan's WTO negotiating team). 
 
4. (SBU) While Masimov is charting a relatively familiar economic 
policy course, significant changes are expected on the domestic 
political front.  (Note:  In the Kazakhstani system, the Prime 
Minister coordinates economic policy.  Foreign policy and domestic 
political issues are handled by the Presidential Administration. 
End note.)  President Nazarbayev has been consolidating the 
pro-presidential political parties into one grouping, Nur-Otan, 
which controls over 90% of parliamentary seats.  He is widely 
expected to give a public address in February or March outlining his 
vision of political reform, based on the recommendations of the 
Democratization Commission which met throughout 2006.  While no 
details are publicly known, participants in the Commission predict 
that while the rhetoric may be sweeping, the actual reform proposals 
will be fairly modest.  One frequently-heard measure is an increase 
in the number of seats in the Mazhilis (lower house of parliament), 
which would theoretically make room for more diverse party 
representation. 
 
 
The Macroeconomic Situation 
--------------------------- 
 
5. (SBU) Kazakhstan's economy (2006 GDP: $68 billion) is larger than 
those of all the other Central Asian states combined, largely due to 
the country's vast natural resources and a recent history - rare in 
the region - of political stability.  Kazakhstan also stands out 
among the post-Soviet Central Asian states in its record of 
macroeconomic reform. Financial reform has created a banking system 
comparable to those in Central Europe, for example, and Kazakhstan 
now aspires to be a regional financial center. Kazakhstan has the 
economic performance to match its policies, having enjoyed near 
double-digit growth (estimated at 10.6% in 2006) over the last six 
 
ASTANA 00000277  002.2
OF 004 
 
 
years, while keeping inflation in check and avoiding, to date, the 
"Dutch Disease" which has plagued many other extractive economies. 
 
6. (SBU) If there a reason for macroeconomic worry, it is tied to 
the fact that inflation rose a full point in 2006, to 8.5%.  This, 
combined with other signs of a potentially overheating economy - 
including skyrocketing rates of commercial lending; the emergence of 
a housing "bubble" in Almaty and Astana; and a rise in government 
spending, especially on salaries - has led many observers to preach 
fiscal restraint.  Any inflation-driven appreciation of the Tenge 
would, of course, hurt the competitiveness of Kazakhstan's 
non-extractive exports, thus blunting the GOK's drive to diversify 
the economy.  The GOK has defused these pressures to date by 
steering the vast majority of its oil revenues to the offshore 
"National Fund," which now holds over $14 billion in assets and an 
improved, rule-based link to the national budget. 
 
Energy: The Economic Engine 
--------------------------- 
 
7. (SBU) Kazakhstan's economy is dominated by the energy sector, 
with oil exports alone accounting for roughly a third of GDP. 
Kazakhstan produced 1.3 million barrels of oil per day (bpd) in 2006 
-- all from onshore projects - roughly the production volume as 
2005.  Overall production will be boosted near year-end 2007, as 
Tengiz (U.S. partners: Chevron, ExxonMobil) production doubles. 
Kazakhstan is likely to become a top-ten oil producer soon after 
2015, as offshore supergiant Kashagan (ExxonMobil, ConocoPhillips) 
reaches peak production and other offshore projects come on line. 
 
8. (SBU) The GOK actually closed 2006 by revising its 2015 
production estimates from 3 to 2.6 million bpd, due to delays in 
Kashagan field development.  Your GOK interlocutors may criticize 
the Kashagan consortium for delays and cost overruns at that 
project. They may also reference an October riot at the Tengiz 
field, pitting Kazakhstani against Turkish workers, which delayed 
Tengiz production increases by several months and triggered a broad, 
ongoing GOK investigation of wage discrimination against Kazakhstani 
employees.  GOK concerns over "local content" and equity issues in 
the oil and gas sector have never been higher. 
 
9. (SBU) While Kazakhstan possesses substantial proven gas reserves 
(3 billion cubic meters), it currently exports very little gas, 
serving principally as a transit country for Turkmen and Uzbek gas. 
The GOK has set ambitious targets for domestic gas production, 
forecasting 63 bcms by 2015.  Much of this gas will be reinjected in 
order to maintain oil field pressure, and the GOK would like to see 
some gas used to create a domestic petrochemical industry (most oil 
majors are  skeptical of the economics); remaining volumes will be 
available, later if not sooner, for export. 
 
10. (SBU) Kazakhstan has recently begun to pursue the possibility of 
building one or more nuclear power plants over the next decade, 
capitalizing on its enormous uranium reserves (Kazakhstan is 
currently the world's third leader producer of uranium), an 
experienced corps of industry professionals, and well-developed 
control systems left over from its Soviet-era nuclear industry. 
Kazakhstan and Russia have recently signed several joint nuclear 
agreements - most notably to establish an international center for 
uranium enrichment in Russia - but there appears to be ample room 
for further U.S.-Kazakhstani cooperation in this field, as well as 
potential commercial opportunities for U.S. firms. 
 
Gas and Oil Infrastructure Projects 
----------------------------------- 
 
11. (SBU) All of Kazakhstan's gas exports currently flow through 
Russia, leaving the country hostage to GazProm politics and prices. 
Two projects under GOK consideration - a Trans-Caspian gas pipeline, 
and a gas pipeline to China - would reduce this dependence.  The 
Kazakhstanis are currently undertaking a feasibility study of the 
China route, including a variation which would add Kazakhstani 
volumes to a pipeline originating in Turkmenistan.  While the GOK 
seems cognizant of the risks inherent in building a pipeline which 
would serve a single buyer, these concerns are partially offset by 
Chinese avidity and the GOK's desire to gasify Southern Kazakhstan 
along the pipeline's projected route.  If USTDA's feasibility study 
proves the viability of a Trans-Caspian pipeline, on the other hand, 
the GOK will have to confront Russian (and Iranian) opposition to 
the project.  Your GOK interlocutors are likely to be cautious in 
their support of the Trans-Caspian pipeline project, reflecting 
their (wise) reluctance to pick a fight with Russia before the 
feasibility of the project is proven. 
 
12. (SBU) Currently the bulk of Kazakhstani crude is exported via 
Russia, both through the Transneft system and the independent 
Caspian Pipeline Consortium (CPC) pipeline.  (Small, but growing, 
 
ASTANA 00000277  003.2 OF 004 
 
 
volumes are shipped East to China, while negligible quantities are 
"swapped" South to Iran.)  The majority of Kazakhstan's near-term 
oil production increases are projected to flow to market either 
through the Baku-Tblisi-Ceyhan pipeline or an expanded CPC.  Long 
delays in the CPC negotiations have left Tengiz producers scrambling 
for alternative export options.  (Don't be surprised if your GOK 
interlocutors blame one American company for the current impasse.) 
As a consequence, they have joined Kashagan producers in seeking the 
development of the Kazakhstan Caspian Transportation System (KCTS), 
which will join the Kazakhstani fields, by means of a new pipeline, 
terminals, and ships, to the BTC.  The oil producers signed an 
initial MOU with KazMunaiGaz (Kazakhstan's national oil-and-gas 
company, and a partner in both the Kashagan and Tengiz projects) 
last week; this document defines the technical work needed to launch 
the project, as well as defines how the investors will create a 
negotiating team which will conduct eventual Host Government 
Agreement (HGA) negotiations with the Kazakhstani and Azeri 
governments. 
 
On the GOK's Mind: Competitiveness and Diversification 
--------------------------------------------- --------- 
 
13. (SBU) Diversifying the economy away from its dependence on 
hydrocarbons is one of Kazakhstan's main challenges. At present, 
wheat is Kazakhstan's only significant non-mineral export.  GOK 
officials address this need, along with the more-amorphous goal of 
achieving the status of "one of the world's 50 most competitive 
countries," with regularity.  To date, the GOK has focused its 
diversification efforts on Harvard professor Michael Porter's 
"cluster" concept, identifying seven sectors of presumed natural 
advantage for priority development: tourism, construction materials, 
textiles, metallurgy, food processing, oil-and-gas machinery 
building, and transport and
 logistical services.  Prime Minister 
Masimov would be an excellent interlocutor with which to share our 
own vision of market-based diversification, enabled by improvements 
in Kazakhstan's investment climate and an expanded U.S. - Kazakhstan 
partnership. 
 
WTO Accession 
------------- 
 
14. (SBU) Kazakhstan has targeted 2007 as the year of its WTO 
accession.  WTO membership is important to Kazakhstan not only for 
the economic benefits it will bring, but also as a symbol of 
Kazakhstan's presence on the world stage. (Note:  Much like two 
other public GOK pursuits: the OSCE chairmanship and the Winter 
Olympic Games.)  To date, Kazakhstan has signed bilateral protocols 
with 16 out of the 39 members of its Working Group.  In the past, 
Kazakhstan's WTO experts have occasionally used high-level USG 
visits to lobby for relaxed "WTO Plus" provisions and explain the 
burdens of reducing Kazakhstan's agricultural subsidies.  Your 
conversation with the new Minister of Industry and Trade, Galym 
Orazbakov, will be the USG's first, and an important opportunity to 
understand his vision for Kazakhstani accession. 
 
Regional Integration 
-------------------- 
 
15. (SBU) Kazakhstan initially greeted Secretary Rice's October 2005 
call for increased regional integration in Central and South Asia 
with a certain degree of skepticism.  As we have clarified our 
goals, and reassured the Kazakhstanis that we are not proposing a 
political "Greater Central Asia," the Kazakhstani government has 
shown increased enthusiasm.  The reference to regional integration 
in the September 29 joint statement was an important milestone in 
this regard.  The GOK has long sought to remove trade barriers with 
its Central Asian neighbors and to help them improve their own 
investment climates.  Sustained USG engagement will be needed, 
however, to encourage a lasting GOK focus on the broader region -- 
not just Kazakhstan's immediate neighbors -- and to encourage the 
GOK to look at tougher issues such as electricity networks. (The 
American firm AES, Kazakhstan's leading electricity generator, is 
actively engaged in our efforts to increase regional electricity 
trades from surplus to deficit countries; to date, GOK interest has 
lagged.)  Your interlocutors may ask what became of the USG's summer 
2006 proposal to launch a Central Asia Regional Economic Integration 
Dialogue (CAREID). 
 
The Investment Climate 
---------------------- 
 
16. (SBU) U.S. companies doing business in Kazakhstan face an 
investment climate that is, at times, challenging.  Among their 
concerns are occasional GOK infringements upon contract sanctity; a 
growing tendency to "criminalize" civil disputes; what they view as 
overzealousness on the part of federal and local tax authorities, 
especially in the framework of ill-defined tax law; and difficulties 
 
ASTANA 00000277  004.2 OF 004 
 
 
in obtaining work permits for expatriate workers.  Particularly 
since the October "Tengiz brawl" (par. 8), the GOK has intensified 
its scrutiny of the hiring practices of foreign businesses. These 
concerns, while significant and worthy of our attention, should not 
overshadow the fact that foreign investment in Kazakhstan is growing 
at a healthy rate, and that the larger, multi-national corporations, 
at least, tend to find strategies for managing their legal and 
contractual risks. 
 
MILAS

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07ASTANA232, KAZAKHSTAN: NO RESPITE IN CAMPAIGN AGAINST HARE KRISHNA

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Reference ID Created Released Classification Origin
07ASTANA232 2007-01-27 05:52 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO0419
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0232/01 0270552
ZNR UUUUU ZZH
R 270552Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8291
INFO RUEHAST/USOFFICE ALMATY
RUCNCIS/CIS COLLECTIVE 0016
RUEHNE/AMEMBASSY NEW DELHI 0420
RUEHLO/AMEMBASSY LONDON 0448

UNCLAS SECTION 01 OF 03 ASTANA 000232 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN (M. O'MARA) 
 
E.O. 12958: N/A 
TAGS: PHUM PGOV PREL KDEM KZ
SUBJECT: KAZAKHSTAN: NO RESPITE IN CAMPAIGN AGAINST HARE KRISHNA 
PROPERTY 
 
REF: A. 06 ASTANA 651, B. 06 ASTANA 668, C. 06 ASTANA 903 
 
ASTANA 00000232  001.2 OF 003 
 
 
1. (SBU) Summary:  Despite the negative publicity and diplomatic 
pressure Kazakhstan received after authorities executed a surprise 
demolition of Hare Krishna homes in November 2006, local government 
officials have not relented in their campaign to confiscate the Hare 
Krishna properties.  In addition, officials in Astana have mounted a 
late diplomatic and public relations effort to mitigate the damage 
to Kazakhstan's reputation.  All told, the Hare Krishnas' political 
and legal fight to keep their property does not appear to have 
changed any minds in the government.  End summary. 
 
--------------------------------------------- 
SPECIAL COMMISSION ISSUES ITS RECOMMENDATIONS 
--------------------------------------------- 
 
2. (U) On December 22, 2006, the special Ministry of Justice 
commission charged with resolving the long-running property dispute 
(Refs B, C) held a meeting in Astana in order to issue its final 
decision. The Hare Krishnas, the Almaty Helsinki Committee, and the 
Kazakhstani International Bureau for Human Rights again questioned 
the integrity of the commission process, given that the apparent 
final decision of the commission had already been provided to the 
U.S. Embassy and was drafted without the input of all commission 
members (Ref C). 
 
3. (U) At the meeting, the commission issued a decision nearly 
identical to the one provided to post by the MFA on December 14. 
The document contained a series of recommendations to the Hare 
Krishnas and the other parties involved, and essentially told the 
Hare Krishnas to use their land and resolve their disputes in 
accordance with the law.  The decision also recommended that the 
Hare Krishnas be "objective" in their appeals to international 
organizations and the mass media.  In addition, the decision vaguely 
encouraged Karasai district officials to process the Hare Krishnas' 
land privatization (legalization) requests. (Note: The Krishnas' 
subsequent attempts to privatize the cottages at issue thus far have 
not been accepted by the local land privatization committee.  End 
note.)  The commission's decision contained no practical steps 
toward resolving the dispute. 
 
--------------------------------------------- --------- 
GOVERNMENT INITIATES PUBLIC RELATIONS COUNTEROFFENSIVE 
--------------------------------------------- --------- 
 
4. (U) On January 5, Amanbek Mukhashov, chairman of the special 
commission and deputy chairman of the Religious Issues Committee in 
the Ministry of Justice, held a press conference in Astana to 
discuss the commission's decision.  He was joined by representatives 
from the Procurator General's office and the Ministry of Foreign 
Affairs.  Pol FSN attended the event.  Mukhashov stressed that there 
was no religious motivation behind the Hare Krishnas legal troubles. 
 Rather, he said that the Hare Krishnas have been breaking various 
laws since they first purchased their land, including using the land 
for religious worship when it was not properly designated for such 
use.  Despite his contention that religion is not the issue, he 
noted that the Hare Krishnas' neighbors complained about loud and 
disruptive religious ceremonies on the property, and that the Hare 
Krishnas allow their cows to walk in the lake, which was insensitive 
to nearby neighbors. 
 
5. (U) The representative of the MFA said that there are no 
restrictions on religious practice in Kazakhstan, and criticized the 
Hare Krishnas for not applying to use the land as a religious 
organization.  (Note: The Hare Krishnas' use of the land for 
religious purposes was not the basis of the main lawsuit, and has 
never been cited as the reason that the local government has not 
accepted privatization applications for the cottages.  End note.) 
She noted that would the International Society for Krishna 
Consciousness has similar property problems in India itself, and 
that the Supreme Court of India is reviewing a number of cases 
concerning illegal acquisition and use of land by Krishnas.  The MFA 
official also criticized what she called the massive informational 
campaign waged by the Hare Krishnas against Kazakhstan, citing 
purported inaccuracies in their public relations efforts.  Finally, 
the MFA representative announced that the MFA had presented a 
diplomatic note to the U.S. Embassy protesting our November 30, 2006 
statement to the press regarding the demolitions. 
 
6. (U) The representative of the Procurator General's office said 
that prior legal decisions in the case were sound, and presented a 
list of laws allegedly being violated by the Hare Krishnas, 
including use of the land for religious purposes when it was 
designated for agricultural purposes.  He stressed that the Hare 
Krishnas' legal troubles were not the result of religious 
discrimination, as Hare Krishna c
ommunities are registered 
 
ASTANA 00000232  002.2 OF 003 
 
 
throughout Kazakhstan and functioning without problems. (Note:  The 
Hare Krishnas are registered in 10 oblasts [regions] throughout the 
country, and Krishna representatives confirm that they generally 
operate without government interference, aside from the long-running 
dispute over the commune outside of Almaty.  The commune is the only 
Hare Krishna property holding in the country. End note.) 
 
7. (U) The procuracy representative also announced that the Karasai 
procurator has initiated criminal forgery charges against three 
Krishna members for allegedly altering land title documents to say 
that the main plot of land was to be used for "part-time farming" 
instead of "peasant farming." (Note: The alleged forgery has long 
been a part of the government's legal case against the Hare 
Krishnas's largest parcel.  The new criminal charge is a response to 
the Krishnas' recent argument that the alleged forgery cannot serve 
as the basis for the government's civil case because the allegation 
has never been proven in a court of law.  The government is 
essentially closing a loophole in their legal argument. End note.) 
 
 
8. (U) A few news outlets, including Kazakhstan Today, 
Interfax-Kazakhstan, and the Associated Press wire services provided 
brief coverage of the press conference. 
 
------------------------------------ 
HARE KRISHNAS FACE MOUNTING PRESSURE 
------------------------------------ 
 
9. (U) In addition to the criminal forgery charges announced by the 
Procurator General's office, on January 16 Karasai district 
authorities filed a new lawsuit in the Karasai district court 
against the main parcel of Hare Krishna property.  The lawsuit again 
seeks to nullify ownership of the parcel by the Hare Krishnas, this 
time based on different alleged irregularities in the Hare Krishnas' 
acquisition of the land. 
 
10. (SBU) Hare Krishna representative Maksim Varfolomeyev reported 
to Poloff on January 22 that the Hare Krishnas were detecting 
increased signals of extra-legal harassment.  On January 19, local 
tax police began a tax inspection of the Hare Krishnas' 
organization.  According to Varfolomeyev, the tax inspections occur 
annually, but this year the tax inspector was for the first time 
accompanied by a representative of the financial police.  Moreover, 
migration police informed the Hare Krishnas that they will soon be 
investigating the legal status of Hare Krishna followers living in 
the community.  Varfolomeyev also said that maintenance and utility 
workers who regularly maintain homes in and around the commune 
informed several Krishna members that they have been instructed by 
the local akim to monitor activities in the commune. 
 
---------------------------------- 
WHAT'S NEXT FOR THE HARE KRISHNAS? 
---------------------------------- 
 
11. (SBU) In Poloff's recent conversations with Varfolomeyev and 
Govinda Swami, the Hare Krishna leaders indicated that they are at a 
loss for what to do next.  They plan to present their case in an 
open letter to President Nazarbayev, and continue to pursue 
legalization of their disputed properties and defend themselves in 
court hearings. However, Karasai district authorities continue to 
reject their applications to legalize the remaining properties, and 
the Hare Krishnas are not optimistic that the ongoing legal turmoil 
will result in a fair resolution of the issue.  Govinda Swami 
intimated that the Hare Krishnas are at a point where they might be 
willing to accept compensation for the land, and said that the group 
is searching for a mediator of sufficient stature who could 
negotiate on their behalf with the government. 
 
12. (SBU) On January 25, Poloff met with Mukhashov, who reviewed the 
government's case against the Hare Krishnas in great detail and 
raised a number of issues that were not part of the government's 
lawsuits.  The thrust of his argument was that the Hare Krishnas are 
using their main piece of property, the farmland, for religious 
purposes, which is not permissible under the law.  As for the 
private cottages, he said that many of them were never properly 
acquired by the Hare Krishnas, and several had been illegally joined 
together in violation of building codes, etc.  As in the January 5 
press conference, he claimed that the Hare Krishnas have not been 
considerate to their neighbors, and have held large religious 
gatherings without proper permission. 
 
13. (SBU) Mukhashov acknowledged that some local officials made 
negative comments about the Hare Krishnas based on their 
nontraditional religion, but he disavowed the statements and said 
they do not represent the overall opinion of the government. 
Instead, he argued that the government was motivated purely by the 
 
ASTANA 00000232  003.2 OF 003 
 
 
Hare Krishnas' multiple violations of Kazakhstani law.  He said that 
it was not too late for the Hare Krishnas to save their properties 
by remedying violations and making the appropriate applications. He 
also advised that the Hare Krishnas could file libel lawsuits 
against the local government officials who criticized their 
religion, and could file claims for compensation for their 
property. 
 
------- 
COMMENT 
------- 
 
13. (SBU) Comment: Kazakhstani authorities clearly remain committed 
to pressing the legal case against the Hare Krishnas, despite the 
diplomatic and international pressure Kazakhstan has received over 
the issue.  The lack of any effort by the government to resolve the 
situation quietly has reinforced the public impression that someone 
powerful wants the land.  Mukhashov's statement that the Hare 
Krishnas could still save their land by filing the correct paperwork 
is questionable, given that the government's argument seems to 
change and expand as time moves on.  The Hare Krishnas are rapidly 
running out of options, and may soon shift their focus to achieving 
compensation for the threatened property.  End comment. 
 
MILAS

Wikileaks

07ASTANA229, KAZAKHSTAN: INFLUENTIAL WOMEN

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If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07ASTANA229.
Reference ID Created Released Classification Origin
07ASTANA229 2007-01-27 05:52 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO0415
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0229 0270552
ZNR UUUUU ZZH
R 270552Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8288
INFO RUEHAST/USOFFICE ALMATY
RUCNCIS/CIS COLLECTIVE 0015

UNCLAS ASTANA 000229 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR SCA/CEN (M. O'MARA), S/WE (S. MEHRA AND G. LANE) 
 
E.O. 12958: N/A 
TAGS: PHUM KWMN PREL KZ
SUBJECT: KAZAKHSTAN: INFLUENTIAL WOMEN 
 
REF: 06 STATE 202341 
 
1. (SBU) In response to reftel request, post submits the following 
names of the five most influential women in Kazakhstan: 
 
NAME:  Dariga Nazarbayeva 
TITLE:  Member of the Mazhilis; Deputy Chairperson of the Otan 
Party; Leader of the Congress of Journalists. 
ORGANIZATION:  Mazhilis (lower house of parliament); Nur-Otan Party; 
Congress of Journalists. 
CONTACT INFORMATION: Left Bank, Mazhilis, Parliament, Astana, 
Kazakhstan. 
Tel: 7-3172-74-60-51, fax 7-3172-24-12-83 
 
 
NAME:  Natalya Korzhova 
TITLE:  Minister of Finance 
ORGANIZATION: Ministry of Finance 
CONTACT INFORMATION:  33 Pobedy Ave., Astana, Kazakhstan.  Tel: 
7-3172-71-72-99, fax: 7-3172-71-77-85 
 
 
NAME:  Gulzhana Karagusova 
TITLE:  Minister of Labor and Social Protection 
ORGANIZATION:  Ministry of Labor and Social Protection 
CONTACT INFORMATION: 2 Manas str., Astana, Kazakhstan 
Tel: 7-3172-75-36-02, fax 7-3172-75-36-54. 
 
 
NAME:  Zauresh Battalova 
TITLE: Director 
ORGANIZATION: "Polyton" Discussion Club, Astana 
CONTACT INFORMATION: 20 Bogenbay Batyr, Office 1, Astana, Kazakhstan 
010000.  Tel/fax: 7-3172-316-044. 
 
 
NAME:  Irina Savostina 
TITLE:  President 
ORGANIZATION:  "Pokoleniye" Pensioners' Movement 
CONTACT INFORMATION: 85 Karasai Batyr, office 208, Almaty, 
Kazakhstan 
Tel/fax: 7-3272-72-82-02 
 
 
2. (U) Post POC on women's issues is human rights officer Richard 
Damstra, DamstraRD@state.gov, tel: 7-3172-70-2397, fax: 
7-3172-70-2277. 
 
 
MILAS

Wikileaks

07ASTANA223, JURY TRIAL SYSTEM DEBUTS IN KAZAKHSTAN

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Reference ID Created Released Classification Origin
07ASTANA223 2007-01-26 01:30 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO8973
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0223/01 0260130
ZNR UUUUU ZZH
R 260130Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8279
INFO RUCNCIS/CIS COLLECTIVE 0009
RUEHVEN/USMISSION USOSCE 1675
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 03 ASTANA 000223 
 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (M. O'MARA, T. PERRY), DRL/PHD (C. 
KUCHTA-HELBLING) 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KZ
SUBJECT: JURY TRIAL SYSTEM DEBUTS IN KAZAKHSTAN 
 
 
ASTANA 00000223  001.2 OF 003 
 
 
1. (SBU) Summary: As of January 1, criminal defendants in Kazakhstan 
charged with aggravated murder have the right to request a jury 
trial.  Under the system developed by Kazakhstani authorities, two 
judges, including the judge presiding at trial, participate on the 
jury along with nine lay jurors.  The long awaited implementation of 
jury trials represents an important step toward promoting judicial 
transparency in Kazakhstan.  However, the untested system faces 
several challenges, including lack of training for judges, lack of 
public awareness, and the potential for judges to dominate and 
control the deliberations. End summary. 
 
--------------------------------- 
WHO HAS A RIGHT TO TRIAL BY JURY? 
--------------------------------- 
 
2. (U) As of January 1, criminal defendants charged with aggravated 
murder have the right to request a trial by jury.  The jury trial 
right applies only to those defendants charged under Article 291.2 
of the Criminal Code, which defines aggravated murder and carries a 
possible death penalty.  (Note: Kazakhstan imposed a moratorium on 
the death penalty in 2003.  Defendants sentenced to death are in 
effect sentenced to life in prison, though they could be executed if 
the moratorium is lifted.  End note.)  Aggravated murder includes 
especially brutal murders, multiple murders, murders of persons 
carrying out official duties, murders connected with a sexual crime, 
hostage murders, etc. 
 
3.  (U) In order to obtain a trial by jury, the defendant in such a 
case must file a request when the termination of the preliminary 
investigation has been announced and all case files have been 
submitted for inspection.  The motion for a jury trial will be 
considered during a closed, preliminary hearing, and the procurator, 
defendant, and defense counsel are required to be present.  The law 
appears to create a presumption that the request for a jury trial 
will be granted if the defendant affirms the request during the 
hearing.  The defendant may also choose not to request a jury trial. 
 However, once the defendant's decision is affirmed by the judge 
during the preliminary hearing, the decision is final. 
 
---------------------------- 
HOW ARE THE JURORS SELECTED? 
---------------------------- 
 
4. (U) Juries will consist of nine lay jurors plus the two judges 
(presiding and second) hearing the case.  There will also be two 
reserve jurors who will be dismissed at the close of proceedings if 
not needed.  The court will create the preliminary pool of jury 
candidates for each case by randomly selecting persons from jury 
lists composed within each oblast (region) by oblast officials.  The 
secretary of the court notifies the candidate of their selection at 
 
SIPDIS 
least seven days prior to the trial.  A person may serve on a jury 
only once per year. 
 
5. (U) The preliminary pool of jury candidates will then undergo a 
screening process somewhat similar to the voir dire process used in 
United States.  First, the judge will address all of the candidates 
and introduce them to the court, the parties, and the case, and 
outline the tasks of the jury.  Candidates who are suspected or 
charged with a crime, unable to understand the language of the court 
in the absence of simultaneous translation, or who are otherwise 
physically unable to fully participate in the proceedings will be 
dismissed from service automatically.  In addition, candidates may 
request relief from jury service if they have a "reasonable excuse," 
including that they are over 65 years old, have religious beliefs 
that prohibit them from participating in the administration of 
justice, are women with children under three years of age, or are 
professionals whose diversion will damage state or public interests. 
 
 
6. (U) Next, the judge will question the remaining candidates about 
their knowledge of the case and their ability to serve as impartial 
jurors.  The presiding judge asks the questions, but the procurator, 
victim, defendant, and defense counsel may submit written questions 
to the judge.  The law requires the judge to dismiss biased 
candidates or candidates who have outside knowledge of the facts of 
the case.  The parties may challenge for cause any juror candidate 
who is a victim, civil plaintiff or defendant, or potential witness 
in the case; any candidate serving as an expert, interpreter, or in 
another role in connection with the case; any candidate related to 
the parties, victim, lawyers, or investigator; or any candidate with 
a personal, direct or indirect interest in the case. 
 
7. (U) If over 16 candidates remain at the conclusion of this stage, 
the judge will reduce the pool to 16 by randomly removing juror 
candidates through a blind draw.  The procurator may then eliminate 
two candidates without cause, and the defendant three.  Finally, the 
 
ASTANA 00000223  002.2 OF 003 
 
 
judge calls the remaining 11
 candidates to the jury box in random 
order.  The last two jurors called constitute the reserve jurors. 
The judge administers an oath to the jurors and explains their 
rights and duties. 
 
--------------------------------------------- - 
WHAT IS THE ROLE OF THE JURY DURING THE TRIAL? 
--------------------------------------------- - 
 
8. (U) During the evidentiary stage of the trial, the jury listens 
to the parties examine witnesses.  Once the parties have concluded 
their examination of a particular witness, the jurors, via the 
presiding judge, may ask questions of the witness, the defendant, 
and/or the victim.  The jurors may also review the physical evidence 
and documents submitted in the case.  Following the evidentiary 
stage of the trial, the jury listens to the arguments of the 
parties.  If parties refer to excluded or previously unexamined 
evidence, the judge will interrupt the party and instruct the jury 
not to consider that evidence. 
 
9. (U) Following the arguments and rebuttal, the judge will explain 
the allegations and the appropriate law, summarize the evidence and 
positions of the parties, explain that a defendant's failure to 
testify shall not be considered a sign of guilt, and explain the 
method of deliberation and voting.  The parties may object to the 
judge's instructions, and such objections may be grounds for an 
appeal. 
 
-------------------------------------- 
HOW DOES THE JURY DETERMINE A VERDICT? 
-------------------------------------- 
 
10. (U) After the presiding judge instructs the jury, the jury 
withdraws from the courtroom and the two judges formulate specific 
questions to the jury concerning the criminal charges.  The parties 
have the right to offer input to the formulation of the questions, 
but the presiding judge completes the final formulation of the 
questions in the secrecy of the deliberation room.  Each criminal 
count will have the following three questions: 1) is it proven that 
the act took place; 2) is it proven that the act was committed by 
defendant; and 3) is defendant guilty of a crime. These questions 
may be followed by additional questions that may diminish or 
aggravate guilt, or call for the discharge of the defendant. 
 
11. (U) The judges and jury then meet in the deliberation room, and 
the presiding judge chairs the meeting and serves as the foreperson 
of the jury.  The deliberations are secret.  The jurors may request 
explanations from the presiding judge on unclear issues, and such 
requests are not shared with the parties.  After deliberating, the 
judges and jurors vote on the questions by secret paper ballot; the 
votes of the judges and jurors have equal weight.  The presiding 
judge must count the votes in the presence of the jurors. 
 
12. (U) The defendant is found guilty of a particular charge if 
there are a majority of affirmative votes for each of the first 
three questions.  The defendant is found not guilty if there are a 
majority of negative votes (six or more) for any one of these three 
questions.  If the defendant is found guilty, the jury also decides 
the sentence by open vote.  Eight votes are required to impose a 
sentence of greater than 15 years, and a unanimous vote is required 
for the death penalty. 
 
--------------------------------------------- ---- 
WHAT ARE THE POTENTIAL PROBLEMS WITH THIS SYSTEM? 
--------------------------------------------- ---- 
 
13. (SBU) Although no jury trials have been conducted to date, there 
are a number of potential problems with this new system.  Because 
the judges participate in the deliberations and vote along with the 
jurors, they are likely to dominate the deliberations.  In addition, 
judges have received very little training concerning the new system, 
and there is virtually no awareness among the general public (the 
potential jury pool) of their rights and responsibilities as jurors. 
 
 
14. (SBU) The American Bar Association/Central European and Eurasian 
Law Initiative (ABA/CEELI), in the interest of promoting effective 
implementation of the new law, conducted three mock jury trials in 
October of 2006. After analyzing the mock trials, ABA/CEELI issued 
several recommendations to improve the system.  The recommendations 
centered on clarifying a number of procedural issues, as well as 
enhancing the impartiality of the jurors.  Among other things, 
ABA/CEELI recommended that jurors be allowed to remain in the 
courtroom for all portions of the arguments by the parties, so their 
knowledge of the case is equal to that of the judge, and that any 
explanations of unclear issues given by the judge to the jurors be 
 
ASTANA 00000223  003.2 OF 003 
 
 
shared in advance with the procurator and defense counsel to prevent 
unfair prejudice to their cases.  To date, Kazakhstan has not 
revised its jury trial legislation to address these concerns. 
 
15. (SBU) USAID, at the request of the Supreme Court of Kazakhstan, 
has been working closely with the judiciary to prepare it for the 
implementation of jury trials.  USAID has several concerns about the 
judiciary's lack of preparation, but is optimistic that the system 
will eventually improve through experience and the development of 
new procedures. (Details to be reported septel.) 
 
------- 
COMMENT 
------- 
 
16. (SBU) Comment:  The initiation of jury trials in Kazakhstan is a 
welcome step toward transforming a frequently corrupt and easily 
influenced judicial system.  However, the system is untested, and 
this fledgling effort toward greater independence and integrity 
could easily be overcome by lack of training and a structure that 
allows the judges to play a significant role in decision-making. 
Post and its partners at USAID will continue to monitor 
implementation of the jury trial system and to advocate for 
additional practices and procedures to ensure the integrity of the 
system.  End comment. 
 
MILAS

Wikileaks

07ASTANA219, BN-350 PERMANENT DISPOSITION TALKS BEGIN

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Reference ID Created Released Classification Origin
07ASTANA219 2007-01-25 09:48 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXYZ0006
PP RUEHWEB

DE RUEHTA #0219 0250948
ZNR UUUUU ZZH
P 250948Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8274
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS ASTANA 000219 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (O'MARA) 
DOE/NNSA FOR C. KENNEDY 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PARM MNUC KNNP KZ
SUBJECT: BN-350 PERMANENT DISPOSITION TALKS BEGIN 
SUCCESSFULLY 
 
REF: A. ASTANA 190 B. STATE 4791 C. ASTANA 93 
 
1. (U) On January 24-25, a U.S. delegation led by NNSA Deputy 
Administrator William Tobey met with Kazakhstani officials 
for initial BN-350 spent fuel program Senior Policy Group 
(SPG) discussions.  During the talks, the two sides agreed 
upon language for a draft joint communique establishing the 
framework for SPG objectives.   Under the communique, the SPG 
will establish a Technical Working Group tasked with 
exploring the technical feasibility, costs and schedule 
associated with permanent disposition options. The SPG will 
then recommend one or more permanent disposition options to 
the U.S. and Kazakhstani governments. 
 
2. (U) The communique must still clear the Kazakhstani 
interagency approval process before signature.  The 
communique states that the TWG inaugural meeting shall occur 
no later than two months from the signing of the communique. 
 
3. (SBU) Comment: The initial Senior Policy Group discussions 
on BN-350 spent fuel permanent disposition mark the beginning 
of a long and complicated process.  Merely defining the term 
"permanent disposition" in Russian occupied a healthy portion 
of the first day's discussions.  Nevertheless, the 
Kazakhstanis' willingness to hold the talks on relatively 
short notice, their establishment of a well-represented, 
multi-agency Senior Policy Group, and their cooperative 
attitude during the discussions are all positive indications 
that momentum remains from the President Nazarbayev - 
Secretary Bodman talks on permanent disposition.  End Comment 
 
SIPDIS 
MILAS

Wikileaks

07ASTANA204, KAZAKHSTAN: ALMATY NOTES, JANUARY 2007

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Reference ID Created Released Classification Origin
07ASTANA204 2007-01-24 04:40 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO6389
RR RUEHAST RUEHDBU
DE RUEHTA #0204/01 0240440
ZNR UUUUU ZZH
R 240440Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8267
INFO RUEHVEN/USMISSION USOSCE 1673
RUEHEK/AMEMBASSY BISHKEK 7839
RUEHNT/AMEMBASSY TASHKENT 7786
RUEHAH/AMEMBASSY ASHGABAT 7101
RUEHDBU/AMEMBASSY DUSHANBE 1992
RUEHMO/AMEMBASSY MOSCOW 1369
RUEHAST/USOFFICE ALMATY
RUEHNO/USMISSION USNATO 2174

UNCLAS SECTION 01 OF 02 ASTANA 000204 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KZ
SUBJECT: KAZAKHSTAN: ALMATY NOTES, JANUARY 2007 
 
REF: 06 ASTANA 919 
 
1. The "Almaty Notes" series is intended to maintain focus on 
developments in civil society, the media, and the opposition in 
Kazakhstan's "southern capital" following the move of the Embassy to 
Astana. 
 
Young Opposition Activists Jailed for Embezzlement 
--------------------------------------------- ----- 
 
2. On December 11, the Saryarka district court in Astana sentenced 
young opposition activist Makhambet Abzhan to three years in prison 
for misappropriation of 1,337,000 tenge ($10,445) allocated for 
election campaigning.  According to press reports Abzhan, the leader 
of the youth wing of the Communist Party of Kazakhstan, confessed to 
the crime.  Abzhan received the money from the state budget in 2005 
in order to campaign for a position in the Astana City Maslikhat. 
He instead used the money to publish the "Young Patriot" newspaper. 
After Abzhan was arrested in December 2005 in Kyrgyzstan and 
extradited to Kazakhstan, he repaid the money to the state election 
fund. 
 
3. Abzhan was charged with misappropriating a large sum of money. 
The procurator asked the court to jail Abzhan for seven years.  The 
court instead sentenced Abzhan to three years in prison, with an 
additional two year ban on involvement in public activities 
following his release. 
 
4. Abzhan's friend Azamat Zhetpisbayev told the press that while 
they were in Kyrgyzstan, they set up a revolutionary committee. 
They called on youth organizations of Kazakhstan to unite their 
forces and to set up a single association.  Had the presidential 
election in 2005 been rigged, they would have organized mass 
uprising.  In addition, Abzhan made a number of public statements 
asserting that Nazarbayev had no right to run for the presidency. 
 
5. Zhetpisbayev himself was arrested in Almaty on December 15.  On 
December 22, Respublika newspaper published an appeal from Rozlana 
Taukina, president (and sole member) of the "Zhurnalisty v Bede" 
(Journalists in Distress) fund, to Minister of Internal Affairs 
Baurzhan Mukhamedzhanov asking the minister to intervene.  Taukina 
claimed that the arrest of Zhetpisbayev, a correspondent of "Radio 
Azzatyk" (the Kyrgyzstan branch of RFE/RL), was politically 
motivated.  She stated that he was arrested only because he is a 
friend and associate of Abzhan. 
 
6. Since his arrest, Zhetpisbayev has been held in the Almaty 
pre-trial detention center; no charges have been filed.  In her 
appeal, Taukina asked for assistance in facilitating his release and 
for permission for a representative of her organization to study the 
documents on the case as a public defender.  In a December 28 
telephone conversation with Pol FSN, Taukina complained that the 
requests to see the journalist in the detention center had been 
denied. 
 
7. On December 26, Astana TV reported that Zhetpisbayev's arrest was 
linked to the trial of Makhambet Abzhan.  According to the report, 
Abzhan testified during his trial that Zhetpisbayev had seized part 
of the election fund (about 900,000 tenge, or $7,000) 
misappropriated during the 2005 maslikhat election campaign. 
 
Conflict between Uighurs and Kazakhs 
------------------------------------ 
 
8. On November 18, 2006, in the village of Shelek in the Almaty 
Oblast, there was a fight between a group of young Kazakhs and a 
group of young Uighurs.  The fight reportedly erupted after a young 
Uighur said: "It is your state, but it is our land."  The following 
day, there was a larger fight involving more than 300 people.  The 
local police broke up the fight with the help of village elders. 
 
9. On December 7, the opposition "Svoboda Slova" newspaper published 
an article titled "Uighurs of Shelek: It is Your State, but it is 
Our Land" by journalist Yerganat Uralbayev.   The article, in which 
Uralbayev referred to inter-ethnic conflict, caused a very heated 
reaction.  Journalist Bakhtiyar Gayanov, writing on the 
www.fergana.ru site on December 20, criticized Uralbayev for blaming 
young Uighurs for the conflict.  Gayanov claimed that the article 
would lead to the emigration of non-Kazakhs, especially ethnic 
Russians. 
 
10. "Svoboda Slova" published three pages of responses to the 
article on the Shelek incident on December 28.  A group of Uighur 
sportsmen published an article calling on the newspaper's editorial 
staff not to incite inter-ethnic discord with biased coverage of a 
 
ASTANA 00000204  002 OF 002 
 
 
small incident.  The newspaper published its interviews on the case 
with the local akim, some residents of the village and even local 
high school students.  Only the school students confirmed that there 
had been numerous scuffles between local young Kazakhs and the young 
Uighurs who emigrated from China.  Mazhilis member Serik 
Abdrakhmanov gave his comments on the incident, warning the pub
lic 
against stirring up discord.  Finally, Uralbayev and "Svoboda Slova" 
editor-in-chief Yergaliyeva published their justification of why the 
article had been written and published. 
 
11. Deputy Procurator General Bakhtybayev stated during a December 
26 press conference in Astana that the incident in Shelek had been 
discussed by the collegium of the Procurator General's office.  It 
found that the incident was exaggerated by biased coverage in the 
mass media.  The Procurator General instructed the oblast procurator 
to give his opinion about the causes and how the incident was 
exaggerated in mass media, stressing that there would be follow-up. 
 
Public Organization in Defense of Opposition Parties 
--------------------------------------------- ------- 
 
12. A group of public organizations (Human Rights Bureau, AdilSoz, 
Union of Journalists, Almaty Helsinki Committee and Charter for 
Human Rights) monitoring the registration of political parties sent 
an inquiry to the Ministry of Justice Registration Committee asking 
why it has not registered the Alga and Social-Democratic parties. 
On December 8, 2006, Alga's application for registration was 
suspended again after it applied for registration for the third time 
on November 10.  On November 22, 2006, the MOJ suspended review of 
the registration application of the Social-Democratic Party.  The 
MOJ referred to legal provisions which allow the ministry to suspend 
a registration application to verify the list of the party members. 
 
 
Afghan Veterans Oppose Sending Forces to Afghanistan 
--------------------------------------------- ------- 
 
13. The Combat Brotherhood Union of Afghan War Veterans objects to 
the idea of sending a Kazakhstani military contingent to 
Afghanistan, the leader of the union, Sergey Pashevich, stated at a 
press conference in Almaty on December 20.  Pashevich cited a visit 
of an officer of the Ministry of Defense to Afghanistan as a sign of 
that the GOK is considering the deployment of Kazakhstani troops. 
The Union sent an open letter to parliament warning deputies against 
sending Kazakhstani military servicemen to Afghanistan. 
 
Bulat Abilov's Trial Continues 
------------------------------ 
 
14. On January 10, the Bostandyk district court in Almaty continued 
hearings in the trial of Bulat Abilov and his business partners 
(reftel).  Pol-Econ Chief and Pol FSN observed the proceedings.  The 
court considered several motions filed by the defense, including a 
request to adjourn the hearing until January 30 to allow the defense 
adequate time to scrutinize the 125 volumes of evidence, a request 
to replace the three Kazakh-Russian interpreters with qualified 
ones, a request to exclude one of the three procurators as he 
allegedly drove a defendant in a previous case to commit suicide, 
and a request to exclude the judge in the case for bias toward the 
prosecution.  All the motions were rejected.  The judge then 
adjourned the hearing until January 29. 
 
Journalist Toguzbayev's Trial 
----------------------------- 
 
15. On January 12, the Bostandyk district court in Almaty held 
another hearing in the trial of journalist Kazis Toguzbayev 
(reftel).  Pol FSN observed the proceedings.  The court heard the 
testimony of three state experts who analyzed the language of the 
articles and concluded that they insulted the president's dignity 
and honor.  It turned out that there were two examinations because 
the first one was poor.  The defense insisted that the Criminal 
Procedure Code had been violated, because Toguzbayev had not been 
notified about the examinations and their findings. 
 
16. Toguzbayev announced that he had sent a letter to President 
Nazarbayev asking whether his articles insulted Nazarbayev's dignity 
and honor.  In this connection, Toguzbayev's lawyer asked the court 
to adjourn the hearing until Nazarbayev responds to Toguzbayev's 
letter.  The judge rejected the request as well as the majority of 
other motions by the defense.  The judge announced the next hearing 
for January 16 and asked the parties to be ready for concluding 
arguments. 
 
MILAS

Wikileaks

07ASTANA203, KAZAKHSTAN: JOINING FORCES WITH THE U.S. TO COMBAT ILLEGAL

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Reference ID Created Released Classification Origin
07ASTANA203 2007-01-24 01:53 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO6290
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0203/01 0240153
ZNR UUUUU ZZH
R 240153Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8264
INFO RUCNCIS/CIS COLLECTIVE 0004
RHMFISS/HQ USEUCOM VAIHINGEN GE//ECJ5//
RUEKDIA/DIA WASHINGTON DC//DHO-2//
RHMFISS/HQ USCENTCOM MACDILL AFB FL//CCJ5//
RUEKJCS/SECDEF WASHINGTON DC//USDP EURASIA//
RUEKJCS/SECDEF WASHINGTON DC//USDP-SOLIC-CN//
RUEAWJA/DEPT OF JUSTICE WASHDC
RHEHAAA/WHITE HOUSE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHDC
RUEAUSA/DEPT OF HHS WASHDC
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 03 ASTANA 000203 
 
SIPDIS 
 
STATE FOR INL, SCA/CEN , OSD FOR PIRRATANO, CENTCOM FOR MALCOM AND 
ROESNER, JUSTICE FOR FBI, DHS FOR CBP DENNIS ULRICH, ROLAND 
SULIVERAS, AND MARK ADAMS, HHS FOR MITCHELL-FRABLE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SNAR KCRM PREL KZ
SUBJECT: KAZAKHSTAN: JOINING FORCES WITH THE U.S. TO COMBAT ILLEGAL 
NARCOTICS SUPPLY, DEMAND, AND ADDICTION 
 
Ref: ASTANA 128 
 
ASTANA 00000203  001.2 OF 003 
 
 
1.  Summary: A senior-level Kazakhstani interagency delegation 
visited Washington December 4-8 to meet with State, DHS, FBI, DOD, 
DEA, HHS, DOJ, and others to discuss bilateral collaboration to 
combat illegal narcotics supply, reduce societal drug demand 
especially among young people, combat addiction, and improve 
rehabilitation.  The delegation, traveling at the invitation of INL 
Assistant Secretary Anne Patterson, included representatives from 
the Ministries of Internal Affairs, Defense, Education, and Health; 
the Border Guard Service; the Committee for National Security; 
Procurator General's Office; and a national center to combat drug 
addiction.  The visit resulted in concrete steps to expand 
cooperation to reduce drug supply, demand, and addiction.  End 
summary. 
 
2.  Background:  During discussions with Ambassador Ordway early in 
2006, Minister of Internal Affairs Baurzhan Mukhamedzhanov expressed 
interest in improving Kazakhstan's counter-narcotics strategy by 
engaging in bilateral discussions with U.S. experts in order to 
learn from best practices.  During her May visit to Kazakhstan, INL 
Assistant Secretary Anne Patterson invited an interagency team to 
visit Washington to meet U.S. experts in supply reduction, demand 
reduction, and addiction/rehabilitation. 
 
 
---------------- 
DEMAND REDUCTION 
---------------- 
 
3.  A December 4 roundtable discussion at State lead by Dr. Bertha 
Madras, ONDCP Deputy Director for Demand Reduction, focused on the 
need to attack the demand for drugs, especially by young people, on 
multiple fronts using media platforms such as radio, TV, internet, 
newspaper and magazines, and even text messaging on cell phones. 
Madras encouraged outreach efforts targeting the anti-drug message 
to schools, universities, and other hangouts.  She pointed out that 
in the U.S., television anti-drug spots are aimed not only at young 
people but their parents.  She elaborated that sports events, 
musical performances, artistic exhibitions, and other cultural 
events are excellent venues to broadcast the anti-drug message. 
 
4.  DEA presented its Street Smart drug use prevention program which 
reaches out to state governments, local communities, and schools. 
The program was a successful model of a law enforcement agency, 
normally associated in the public mind with interdiction, 
effectively attacking the scourge of drug use from both the demand 
and the supply ends. 
 
 
----------------------------------- 
ADDICT TREATMENT AND REHABILITATION 
----------------------------------- 
 
5.  Changing topics to addiction, Dr. Madras outlined the U.S. 
approach to drug treatment.  She pointed out that in the experience 
of the U.S., medicine will not help drug addicts recover without 
simultaneous support from social services.  She argued for the 
important role of social support, saying that drug addicts should 
not feel that they are social outcasts but rather that they need 
treatment. 
 
6.  Dr. Katkov, Head of Faculty of Psychotherapy and Narcology of 
the National Center for Applied Research on Drug Addiction in 
Pavlodar, actively questioned Dr. Madras regarding U.S. use of 
methadone and buprenorphine for the treatment of addiction.  Dr. 
Madras reported that in 44 U.S. states doctors use methadone as a 
substitute therapy and it is successful when combined with a social 
support service. 
 
7.  Dr. Katkov and the Ministry of Education representative Uteshev 
visited the office of Substance Abuse and Mental Health Services 
(SAMHSA) at the Department of Health and Human Services to discuss 
the issues of narcotics addiction and psychiatry.  After returning 
to Kazakhstan, Katkov and Uteshev expressed interest in continuing 
the dialogue with the U.S. experts on demand reduction (Reftel) and 
addiction prevention and rehabilitation programs with HHS and ONDCP 
 
ASTANA 00000203  002.2 OF 003 
 
 
In addition, Katkov specifically mentioned his interest in 
establishing links with the U.S. National Institute for Drug 
Addiction.  The goal of the dialogue is the development of 
professional relations and joint action which will lead to increased 
professional knowledge and improved effectiveness in these areas. 
 
8.  Based on the meeting with the Kazakhstani delegation at SAMHSA, 
HHS representatives identified the following points which could form &#x000
A;the basis for further dialogue. 
 
A) Develop an age-specific prevention education program ("drug 
demand reduction") within schools in Kazakhstan. 
 
B) Create programs to educate the general public that drug treatment 
is a medical treatment that works (including methadone therapy). 
 
C) Continue work to co-locate HIV treatment centers with drug 
treatment centers. 
 
D) Train primary care providers in substance abuse screening. 
 
E) Facilitate a dialogue between the police and the community of 
medical and governmental bodies that treat addiction to enhance free 
and open communication.  This could include mayors, school 
administrators, and the medical community at large. 
 
 
---------------- 
SUPPLY REDUCTION 
---------------- 
 
9.  Michael Braun, DEA Chief of Operations, and James Soiles, Chief 
of Enforcement Operations for Europe, Asia, Africa, Middle East and 
Canada, briefed the delegation concerning the U.S. approach to 
attacking drug trafficking on a global scale.  Delegation members 
engaged in supply reduction expressed strong interest in working 
with DEA to improve interdiction in Kazakhstan. 
 
10.  During briefings at DEA headquarters, Chairman of the Ministry 
of Internal Affairs Committee on Combating Narcotics Anatoliy 
Vyborov put three offers on the table to develop a closer working 
relationship with DEA.  He offered to support broader U.S. 
involvement in the Central Asia Regional Information Coordination 
Center (CARICC) which is under development in Almaty.  He offered to 
open his Committee to any type of training that DEA could provide to 
improve interdiction capacity and capability of his counter-drug 
effort.  He also offered to conduct joint operations in Kazakhstan 
with DEA agents in order to detect, interdict, and prosecute 
narcotics traffickers. 
 
11.  James Rose, DEA Chief of the Office of International Program 
for countries in Central Asia expressed agreement in principle to 
closer cooperation between the two services and promised to 
establish coordination through the DEA office in Tashkent. 
 
12.  At the DEA meeting and other briefings in Washington Vyborov 
expressed his opinion  that the most significant problems that 
counter-narcotics forces in Afghanistan should be addressing were 
locating and destroying mobile drug producing laboratories and the 
interdicting the supply of precursors such as anhydride and 
hydrochloric and acetic acid.  He stated that attacking these two 
problems would significantly contribute to lower drug production in 
Afghanistan and would thereby reduce the quantity of illegal 
narcotics transiting Kazakhstan. 
 
13.  Representatives of the Office of the Secretary of Defense met 
with the delegation to express their appreciation for overall GOK 
cooperation on counternarcotics issues.  General Abdulmanov of the 
Ministry of Defense presented OSD representatives with an overview 
of the delegation's purpose and expressed his pleasure with the 
content of the December 4 strategy meeting and related briefings. 
The OSD representatives thanked General Abdulmanov and the GOK's 
continued commitment to fighting narcotics smuggling. 
 
14.  CENTCOM briefed the delegation on the role, and limitations, of 
the military in the U.S. fight against the supply of drugs, 
primarily from Central and South America.  CENTCOM highlighted its 
 
ASTANA 00000203  003.2 OF 003 
 
 
interest in working with Kazakhstan's law enforcement community to 
create a narcotics interdiction force on the Caspian. 
 
 
---------------------------------- 
BORDER SECURITY AND CRIME FIGHTING 
---------------------------------- 
 
15.  FBI and the Customs and Border Protection Bureau of the 
Department of Homeland Security (DHS/CBP) provided two examples of 
U.S. best practices in combating narcotics and attendant crimes. 
Both programs were viewed favorably by the delegation; post expects 
future collaboration in these areas. 
 
16.  Customs and Border Protection representatives presented a 
freight targeting program which uses available manufacturer, 
shipper, forwarder, consignee, and multimodal transportation route 
information to identify suspect containers, trucks, ships, etc. and 
prepare to search them before the shipment arrives at the border 
checkpoint.  The system requires extensive data collection and 
analysis capability, which the GOK could build over time using U.S. 
experience as a basis. 
 
17.  General Utyapov of the Border Guard and Lt. Col. Didenko of the 
Committee for National Security both immediately saw the utility of 
the effort and praised its technological development.  In 
conversations on the margins, they pointed out that such a program 
was not feasible for Kazakhstan in the immediate future because of 
the extensive computer system necessary to establish and sustain it. 
 (Note: To show just how fast Kazakhstan is developing its 
capabilities, on December 27 Kazakhstan announced the first 
pre-cleared customs effort aimed at easing the border crossing of 
inbound freight yet not sacrificing customs duty collection 
efficiency.  End note.) 
 
18.  During the delegation's visit to Quantico, the FBI provided a 
briefing on the Global Initiatives Unit, where Kazakhstan could 
multiply law enforcement effectiveness by extending data sharing of 
fingerprints with the FBI.  Vyborov expressed interest in 
collaborating with the U.S. in this effort.  The LEGATT in Embassy 
Astana will follow up. 
 
 
---------------------- 
GOK Delegation Members 
---------------------- 
 
19.  The delegation was headed by Major General Anatoliy Vyborov, 
Chairman of the Committee on Combating Drug Trafficking and 
Controlling Circulation of Narcotics of the Ministry of Internal 
Affairs, and included Major General Shintas Utyapov, Deputy Director 
of the Border Guard Service of the Committee for National Security; 
Major General Almaz Abdulmanov of the Ministry of Defense; 
Lieutenant Colonel German Didenko, Director of the Office of 
Economic Crimes of the Committee for National Security; Shirmirbai 
Agabekov, Deputy Head of the Department on Supervision of Lawfulness 
of Investigation of the Procurator General's Office; Nurlan Uteshev, 
Director of Department for Youth Policy of the Ministry of Education 
and Science, and Doctor Professor Alexander Katkov, Acting Director 
of the Kazakhstan Center of Applied Research on Drug Addiction, 
Ministry of Health. 
 
MILAS

Wikileaks

07ASTANA193, KAZAKHSTAN PREPARING FOR BN-350 TALKS

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Reference ID Created Released Classification Origin
07ASTANA193 2007-01-22 11:48 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0013
PP RUEHWEB

DE RUEHTA #0193 0221148
ZNR UUUUU ZZH
P 221148Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8254
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS ASTANA 000193 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (O'MARA) 
DOE/NNSA FOR C. KENNEDY 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PARM MNUC KNNP KZ
SUBJECT: KAZAKHSTAN PREPARING FOR BN-350 TALKS 
 
REF: A. ASTANA 93 B. STATE 4791 
 
1. Poloff passed the draft agenda for January 24-25 BN-350 
spent fuel program senior policy group discussions to Timur 
Zhantikin, Kazakhstan Atomic Energy Committee Chairman, and 
to the Ministry of Energy and Natural Resources on January 
19.  Zhantikin promised to provide his comments on the agenda 
by January 22.  He also told Poloff that the relevant 
Kazakhstani authorities continue to review the Terms of 
Reference. 
 
2. On January 12, Almaz Tulebayev, Ministry of Energy and 
Natural Resources, passed to Poloff a list of the Kazakhstani 
officials who will participate in the BN-350 talks.  The 
following officials will participate: 
 
- Timur Zhantikin, Kazakhstan Atomic Energy Committee Chairman 
- Sergey Savelyev, Ministry of Foreign Affairs, Department of 
International Organizations, Deputy Director 
- Talgat Nurpeisov, Ministry of Internal Affairs, 
Administrative Police Committee, Deputy Chairman 
- Amangeldy Syzdykov, Ministry of Environmental Protection, 
Environmental Control Committee, Deputy Chairman 
- Almaz Tulebayev, Ministry of Energy and Natural Resources, 
Department of Nuclear Energy, Director 
- Yevgeniy Ryaskov, Department of Technological Development 
and Public Assets Management, Deputy Director 
- Bakhyt Shaykhislamova, Ministry of Energy and Natural 
Resources, Head of External Relations Office of Nuclear 
Energy Department 
- Kuanysh Isayev, Deputy Head of Office of Committee of 
National Security 
- Anuar Zhumagaliyev, Ministry of Energy and Natural 
Resources, Head of Nuclear Energy Section of Department of 
Nuclear Energy and External Relations 
- Boris Redkin, Head of Section of Committee of State Control 
over Emergency Situations and Industrial Security 
- Sergey Yashin, Vice-President of NAK Kazatomprom JV 
- Kairat Kadyrzhanov, General Director of National Nuclear 
Center 
 
3. Tulebayev also told Poloff that the Kazakhstanis are 
prepared to host the talks at the Ministry of Energy and 
Natural Resources. 
MILAS

Wikileaks

07ASTANA191, KAZAKHSTAN PREPARING FOR BN-350 TALKS

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Reference ID Created Released Classification Origin
07ASTANA191 2007-01-22 11:48 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0004
PP RUEHWEB

DE RUEHTA #0191 0221148
ZNR UUUUU ZZH
P 221148Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8251
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS ASTANA 000191 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (O'MARA) 
DOE/NNSA FOR C. KENNEDY 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PARM MNUC KNNP KZ
SUBJECT: KAZAKHSTAN PREPARING FOR BN-350 TALKS 
 
REF: A. ASTANA 93 B. STATE 4791 
 
1. Poloff passed the draft agenda for January 24-25 BN-350 
spent fuel program senior policy group discussions to Timur 
Zhantikin, Kazakhstan Atomic Energy Committee Chairman, and 
to the Ministry of Energy and Natural Resources on January 
19.  Zhantikin promised to provide his comments on the agenda 
by January 22.  He also told Poloff that the relevant 
Kazakhstani authorities continue to review the Terms of 
Reference. 
 
2. On January 12, Almaz Tulebayev, Ministry of Energy and 
Natural Resources, passed to Poloff a list of the Kazakhstani 
officials who will participate in the BN-350 talks.  The 
following officials will participate: 
 
- Timur Zhantikin, Kazakhstan Atomic Energy Committee Chairman 
- Sergey Savelyev, Ministry of Foreign Affairs, Department of 
International Organizations, Deputy Director 
- Talgat Nurpeisov, Ministry of Internal Affairs, 
Administrative Police Committee, Deputy Chairman 
- Amangeldy Syzdykov, Ministry of Environmental Protection, 
Environmental Control Committee, Deputy Chairman 
- Almaz Tulebayev, Ministry of Energy and Natural Resources, 
Department of Nuclear Energy, Director 
- Yevgeniy Ryaskov, Department of Technological Development 
and Public Assets Management, Deputy Director 
- Bakhyt Shaykhislamova, Ministry of Energy and Natural 
Resources, Head of External Relations Office of Nuclear 
Energy Department 
- Kuanysh Isayev, Deputy Head of Office of Committee of 
National Security 
- Anuar Zhumagaliyev, Ministry of Energy and Natural 
Resources, Head of Nuclear Energy Section of Department of 
Nuclear Energy and External Relations 
- Boris Redkin, Head of Section of Committee of State Control 
over Emergency Situations and Industrial Security 
- Sergey Yashin, Vice-President of NAK Kazatomprom JV 
- Kairat Kadyrzhanov, General Director of National Nuclear 
Center 
 
3. Tulebayev also told Poloff that the Kazakhstanis are 
prepared to host the talks at the Ministry of Energy and 
Natural Resources. 
MILAS

Wikileaks

07ASTANA190, KAZAKHSTAN PREPARING FOR BN-350 TALKS

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Reference ID Created Released Classification Origin
07ASTANA190 2007-01-22 11:48 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0001
PP RUEHWEB

DE RUEHTA #0190 0221148
ZNR UUUUU ZZH
P 221148Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8250
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS ASTANA 000190 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (O'MARA) 
DOE/NNSA FOR C. KENNEDY 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PARM MNUC KNNP KZ
SUBJECT: KAZAKHSTAN PREPARING FOR BN-350 TALKS 
 
REF: A. ASTANA 93 B. STATE 4791 
 
1. Poloff passed the draft agenda for January 24-25 BN-350 
spent fuel program senior policy group discussions to Timur 
Zhantikin, Kazakhstan Atomic Energy Committee Chairman, and 
to the Ministry of Energy and Natural Resources on January 
19.  Zhantikin promised to provide his comments on the agenda 
by January 22.  He also told Poloff that the relevant 
Kazakhstani authorities continue to review the Terms of 
Reference. 
 
2. On January 12, Almaz Tulebayev, Ministry of Energy and 
Natural Resources, passed to Poloff a list of the Kazakhstani 
officials who will participate in the BN-350 talks.  The 
following officials will participate: 
 
- Timur Zhantikin, Kazakhstan Atomic Energy Committee Chairman 
- Sergey Savelyev, Ministry of Foreign Affairs, Department of 
International Organizations, Deputy Director 
- Talgat Nurpeisov, Ministry of Internal Affairs, 
Administrative Police Committee, Deputy Chairman 
- Amangeldy Syzdykov, Ministry of Environmental Protection, 
Environmental Control Committee, Deputy Chairman 
- Almaz Tulebayev, Ministry of Energy and Natural Resources, 
Department of Nuclear Energy, Director 
- Yevgeniy Ryaskov, Department of Technological Development 
and Public Assets Management, Deputy Director 
- Bakhyt Shaykhislamova, Ministry of Energy and Natural 
Resources, Head of External Relations Office of Nuclear 
Energy Department 
- Kuanysh Isayev, Deputy Head of Office of Committee of 
National Security 
- Anuar Zhumagaliyev, Ministry of Energy and Natural 
Resources, Head of Nuclear Energy Section of Department of 
Nuclear Energy and External Relations 
- Boris Redkin, Head of Section of Committee of State Control 
over Emergency Situations and Industrial Security 
- Sergey Yashin, Vice-President of NAK Kazatomprom JV 
- Kairat Kadyrzhanov, General Director of National Nuclear 
Center 
 
3. Tulebayev also told Poloff that the Kazakhstanis are 
prepared to host the talks at the Ministry of Energy and 
Natural Resources. 
MILAS

Wikileaks

07ASTANA173, KAZAKHSTAN: 2007 INVESTMENT CLIMATE STATEMENT

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Reference ID Created Released Classification Origin
07ASTANA173 2007-01-19 13:50 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0000
RR RUEHWEB

DE RUEHTA #0173/01 0191350
ZNR UUUUU ZZH
R 191350Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8225
INFO RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS ASTANA 000173 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EB/IFD/OIA 
STATE PLEASE PASS USTR 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV OPIC USTR KZ
SUBJECT: KAZAKHSTAN: 2007 INVESTMENT CLIMATE STATEMENT 
 
REF: 06 STATE 178303 
 
1. The following information is provided in response to 
reftel request. 
 
Openness to Foreign Investment 
------------------------------ 
 
Kazakhstan has made significant progress toward creating 
a market economy since its independence in 1991.  The 
European Union in 2000 and the U.S. Department of 
Commerce in March 2002 recognized the success of 
Kazakhstan's reforms by granting it market economy 
status.  Kazakhstan also has attracted significant 
foreign investment since independence.  By July 2006, 
foreign investors had invested a total of about $46.2 
billion in Kazakhstan, primarily in the oil and gas 
sector, during the country's fifteen years of 
independence.  Following independence, the government 
created a favorable regime for oil and gas investments at 
the same time that it undertook other liberalizing 
economic measures and began an ambitious privatization 
program. 
 
Despite continuously increasing investment into 
Kazakhstan?s energy sector, concerns remain about a 
tendency on the part of the government to challenge 
contractual rights, to legislate preferences for domestic 
companies, and to create mechanisms for government 
intervention in foreign companies' operations, 
particularly procurement decisions.  Together with vague 
and contradictory legal provisions that are often 
arbitrarily and inconsistently enforced, these negative 
tendencies feed an enduring perception that Kazakhstan is 
becoming less open to investment. 
 
Four major pieces of existing legislation affect foreign 
investment.  These are: 1) the 2003 law "On Investment?; 
2) the 1997 law ?On Government Procurement;? 3) the 2001 
Tax Code; and 4) the 2003 Customs Code.  These four laws 
provide for non-expropriation; currency convertibility; 
guarantees of stability in the legal regime; transparent 
government procurement; and incentives in certain 
priority sectors, including electrical infrastructure, 
telecommunications, light manufacturing, health and 
tourism.  However, inconsistent implementation of these 
laws and reforms at all levels of government remains the 
key obstacle to business in Kazakhstan. 
 
Since 1997, there has been a growing trend to favor 
domestic investors over foreigners in most state 
contracts.  Furthermore, amendments passed in 1999 to the 
Oil and Gas Law require mining and oil companies to use 
local goods and services.  According to these ?local 
content? regulations, subsurface users in Kazakhstan are 
obligated to purchase goods and services from Kazakhstan 
entities -- provided that the local goods meet minimum 
project standards -- and to give preference to the 
employment of local personnel.  Prospective subsurface 
users are required to specify in their tenders the 
anticipated local content of their work, goods, and 
services.  Since 2002, a designated government body must 
approve all tender documents, participate in tender 
committees, and approve all tender committee decisions, 
in order to ensure compliance.  The 2005 ?Production 
Sharing Agreements (PSA)? law, which applies primarily to 
Kazakhstan?s offshore oil development projects, binds 
companies to similar local context provisions. 
Amendments to the Subsurface Law adopted in December 2006 
further tighten the government?s application of local 
content requirements, requiring companies to meet local 
content benchmarks annually, rather than on average over 
the lifetime of a project. 
 
These requirements are being challenged in connection 
with Kazakhstan's forthcoming WTO accession negotiations, 
as they appear to breach GATT and GATS rules and the 
Agreement on Trade Related Investment Measures.  They 
also appear to contradict the 1994 U.S.-Kazakhstan 
Bilateral Investment Treaty, which states in Article II, 
paragraph 5, that "neither party shall impose performance 
requirements...which specify that goods be purchased 
locally..." 
 
In January 2003 President Nazarbayev signed a new law "On 
Investments" that superseded and consolidated past 
legislation governing foreign investment.  The law 
establishes a single investment regime for domestic and 
foreign investors, and provides, inter alia, guarantees 
of national treatment and non-discrimination for foreign 
investors.  It guarantees the stability of existing 
contracts, with the qualification that new ones will be 
subject to amendments in domestic legislation, certain 
provisions of international treaties, and domestic laws 
dealing with "national and ecological security, health 
and ethics." 
 
The 2003 law provides for dispute settlement through 
negotiation, Kazakhstan's judicial process, and 
international arbitration.  However, the law narrows the 
definition of investment disputes and lacks clear 
mechanisms for access to international arbitration.  U.S. 
investors should note that the U.S.-Kazakhstan Bilateral 
Investment T
reaty, as well as the New York Convention, 
protect U.S. investor access to international 
arbitration.  Additionally, the RK Constitution, as well 
as the 2003 law "On Investments," specifies that ratified 
international agreements have precedence over domestic 
law.  The May 2005 Law on International Agreements 
appears to contradict this legal hierarchy, setting 
precedence of domestic law of the RK over its 
international agreements.  For the purpose of eliminating 
this contradiction from the law, the Parliament has 
recently passed amendments to the Law on International 
Agreements that re-state the precedence set by the 
Constitution of ratified international agreements over 
domestic law.  The amendments will become effective once 
they are signed by President Nazarbayev.  Finally, in 
December 2004 Kazakhstan adopted a law ?On International 
Commercial Arbitration? (see ?Dispute Settlement? for 
full discussion). 
 
The 2003 law contains investment incentives and 
preferences based on government-determined sectoral 
priorities, and provides for investment tax preferences, 
customs duties exemption

Wikileaks

07ASTANA168, KAZAKHSTAN GETS NEW ELECTION BOSS

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Reference ID Created Released Classification Origin
07ASTANA168 2007-01-19 10:04 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO5347
RR RUEHAST
DE RUEHTA #0168 0191004
ZNR UUUUU ZZH
R 191004Z JAN 07 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8214
RUEHAST/USOFFICE ALMATY

UNCLAS ASTANA 000168 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR KZ
SUBJECT: KAZAKHSTAN GETS NEW ELECTION BOSS 
 
 
1. Summary: On January 17, the Mazhilis (lower house of parliament) 
selected Kuandyk Turgankulov as the new chairman of the Central 
Electoral Commission (CEC), Vladimir Foos as the new deputy 
chairman, and Bakhyt Meldeshov as the new secretary.  All of the 
appointees currently serve on the CEC, and their promotions do not 
appear to carry any significant political implications.  The 
outgoing chairman of the CEC, Onalsyn Zhumabekov, was appointed 
deputy head of the presidential administration by President 
Nazarbayev, also on January 17. End summary. 
 
2. In response to a proposal by President Nazarbayev, the Mazhilis 
on January 17 selected Kuandyk Turgankulov as the new chairman of 
the CEC, Vladimir Foos as the new deputy chairman, and Bakhyt 
Meldeshov as the new secretary.  Pursuant to the Kazakhstani 
Constitution, the Mazhilis dismisses and selects the chairman and 
other members of the CEC based on the president's recommendation. 
 
3. Turgankulov was promoted from his post as deputy chairman, Foos 
from his post as secretary, and Meldeshov from his post as a member 
of the CEC.  All three appointees have served on the CEC for several 
years.  The reshuffling was made possible by President Nazarbayev's 
January 17 decision to appoint chairman Onalsyn Zhumabekov as deputy 
head of the Presidential Administration.  Zhumabekov, an attorney 
and the former Minister of Justice, will be responsible for law 
enforcement and legal reform issues in the presidential 
administration. 
 
 
------- 
COMMENT 
------- 
 
4. Comment: The new appointments are not likely to result in any 
significant changes in the direction of the CEC, as all of the new 
appointees are long-standing and experienced members of the CEC. 
End comment. 
 
MILAS

Wikileaks

07ASTANA161, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, January 1 – 14,

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Reference ID Created Released Classification Origin
07ASTANA161 2007-01-19 10:02 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO5349
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0161/01 0191002
ZNR UUUUU ZZH
R 191002Z JAN 07 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8206
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0002
RUEHAK/AMEMBASSY ANKARA 2008
RUEHBUL/AMEMBASSY KABUL 0289
RUEHNE/AMEMBASSY NEW DELHI 0418
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 000161 
 
SIPDIS 
 
DEPT FOR SCA/CEN (O'MARA) 
DEPT PASS TO OPIC - BALLINGER 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
DEPT PASS TO AID - EE-PHILLIPS/RUSHING 
TREASURY FOR OASIA/VELTRI 
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS 
USDOC FOR 6110/ITA/TD/BI/RHALPERN 
ANKARA FOR CFC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, January 1 - 14, 
2007 
 
 
ASTANA 00000161  001.2 OF 002 
 
 
1.  Summary: This information is drawn primarily from the 
Kazakhstani local press, and has not been checked for accuracy.  The 
opinions and policies expressed in this report are those of the 
authors, not the U.S. Government. 
 
-- Finance Minister Nominates Deputies 
-- National Holding Company "KazAgro" Created 
-- Kazakhstan Passes Amendments to the Law on Subsoil Use 
-- CITIC Buys Nations Energy's Kazakhstani Assets 
-- 2006 Oil & Gas Production 
 
 
 
Finance Minister Nominates Deputies 
----------------------------------- 
 
2.  On January 15, Kazakhstani Minister of Finance Nataliya Korzhova 
announced names of her new deputies: Bakhyt Sultanov and Daulet 
Yergozhin.  Mr. Sultanov, age 35, worked previously as Chairman of 
National Statistics Agency; Mr. Yergozhin, aged 27, was Head of the 
Special Tax Department, Ministry of Finance.  (Interfax - 
Kazakhstan, January 15) 
 
National Holding Company, KazAgro, Created 
------------------------------------------ 
 
3.  In December 2006 Kazakhstani President Nursultan Nazarbayev 
signed a decree establishing the KazAgro national holding company to 
facilitate the development of the country's agro-industrial sector 
and make it more competitive in domestic and foreign markets.  On 
January 15, Alikhan Smailov, a former Deputy Finance Minister, was 
named as Chairman of the KazAgro's Management Board. 
 
4.  On January 17, Smailov announced that the GOK would contribute 
its shares of seven state companies to build up  KazAgro's 
authorized capital: "Food Contract Corporation," "Agrarian Credit 
Corporation," "Kazagrofinance," "Agriculture Support Fund," "Mal 
Onimderi Korporatsiyasy," "Grain Receipt Guarantee Fund" and 
"Kazagromarketing."  According to Smailov, "The Ministry of 
Agriculture will be fully responsible for 100% of KazAgro stock. 
KazAgro's initial authorized capital consists of KZT 300 million 
[about $2.4 million.4 million] funded by the 2007 budget, but will reach KZT 
80 billion [about $640 million] after the contribution of the 
above-mentioned equity shares."  (Interfax - Kazakhstan, January 
17) 
 
Kazakhstan Passes Amendments to the Law on Subsoil Use 
--------------------------------------------- --------- 
 
5.  On January 15, President Nazarbayev signed into law amendments 
to the Kazakhstani "Law on Oil" and the "Law on Subsoil and Subsoil 
Use." The amendments introduce new standards aimed at ensuring 
transparency in the purchase of goods, work and services associated 
with subsoil use activities, as well as new norms which regulate the 
process of granting subsoil use rights and the awarding of 
contracts.  The law defines the State's right to disallow a company 
from participating in a tender competition on the basis of "national 
security" interests.  New norms will obligate contractors to provide 
non-discriminatory work conditions and provide equal pay to local 
and foreign personnel.  These amendments further tighten the GOK's 
application of local content requirements, requiring companies to 
meet local content benchmarks annually, rather than on average over 
the lifetime of a project.  (Interfax - Kazakhstan, January 15) 
 
CITIC Buys Nations Energy's Kazakhstani Assets 
--------------------------------------------- - 
 
6.  On October 25, Canadian-registered Nations Energy officially 
announced its intention to sell the company's Kazakhstani oil assets 
(Karazhanbasmunay) to the China International Trust and Investment 
Corp (CITIC) for $1.91 billion.  CITIC Group successfully closed the 
deal on December 30 after it signed an agreement granting the 
national oil and gas company KazMunayGaz (KMG) the option, valid for 
a year, to purchase 50% of Nations Energy's shares for $955 million. 
 (According to Kazakhstani legislation, the GOK has a priority right 
 
ASTANA 00000161  002.2 OF 002 
 
 
to purchase the assets of extractive industries in the Republic 
should such assets be offered for sale.)  Nations Energy operates 
the "Karazhanbas" field in Kazakhstan.  The company produces 50,000 
barrels of oil per day and holds reserves of 340 million barrels. 
(Oil Review - Kazakhstan, January 9) 
 
Oil & Gas Production in 2006 
---------------------------- 
 
7.  According to the Kazakhstani Ministry of Energy and Natural 
Resources, Kazakhstan produced 64.9 million tons of oil and gas 
condensate in 2006, 5.5% hi
gher than in 2005, including 59.2 million 
tons of oil (up 7.1%) and 5.7 million tons of gas condensate (down 
8%).  TengizChevrOil produced the largest share, 13.3 million tons 
of oil (down 1.8%).  Other notable production figures include: 
Karachaganak Petroleum Operating - 10.5 million tons (up 1%), 
KazMunayGaz - 9.6 million tons (up 2%), PetroKazakhstan - 3.7 
million tons (up 20.6%).  In 2006 overall gas production reached 
27.2 billion cubic meters, or 2.6% higher than in 2005.  (Interfax - 
Kazakhstan, January 12) 
 
MILAS

Wikileaks

07ASTANA157, KAZAKHSTAN READY TO COOPERATE ON INSPECTION OF

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Reference ID Created Released Classification Origin
07ASTANA157 2007-01-19 07:42 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO5342
PP RUEHDBU
DE RUEHTA #0157 0190742
ZNY CCCCC ZZH
P 190742Z JAN 07 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8202
INFO RUEHAH/AMEMBASSY ASHGABAT PRIORITY 7093
RUEHEK/AMEMBASSY BISHKEK PRIORITY 7834
RUEHDBU/AMEMBASSY DUSHANBE PRIORITY 1990
RUEHBUL/AMEMBASSY KABUL PRIORITY 0288
RUEHNT/AMEMBASSY TASHKENT PRIORITY 7784

C O N F I D E N T I A L ASTANA 000157 
 
SIPDIS 
 
SIPDIS 
 
SCA/CEN FOR M. OMARA, ISN/CPI (M. FELIPE), AND EAP 
 
E.O. 12958: DECL: 01/19/2017 
TAGS: MNUC PARM KNNP KZ
SUBJECT: KAZAKHSTAN READY TO COOPERATE ON INSPECTION OF 
SUSPECT FLIGHTS 
 
REF: A. STATE 3730 
 
     B. 05 ALMATY 3731 
     C. 05 ALMATY 3729 
     D. 06 ALMATY 406 
 
Classified By: Pol-Econ Chief Deborah Mennuti, 
reasons 1.4 (B) and (D). 
 
1. (SBU) Pol-Econ Chief delivered Ref A demarche and 
non-paper on January 19 to Murat Tashibayev, Director of the 
MFA's Department of International Organizations and 
Multilateral Cooperation, emphasizing that the demarche was a 
continuation of previous discussions with the GOK regarding 
the Proliferation Security Initiative. 
 
2. (C) Tashibayev said that Kazakhstan had taken the 
"political decision" to cooperate with the U.S. on the 
interdiction of suspect flights within the framework of the 
Proliferation Security Initiative as a result of Under 
Secretary Joseph's October 2005 meetings with President 
 
SIPDIS 
Nazarbayev and others in the government (Refs B and C).  The 
current U.S. request therefore came as no surprise, 
Tashibayev said.  He noted that UNSCRs 1718 and 1737 had 
strengthened the legal basis for such cooperation.  He 
promised to forward the U.S. nonpaper within the GOK and to 
advise of any questions, concerns, or requests for technical 
assistance that might arise. 
MILAS

Wikileaks

07ASTANA128, KAZAKHSTAN: REACHING OUT TO THE U.S. ON REDUCING ILLEGAL

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Reference ID Created Released Classification Origin
07ASTANA128 2007-01-17 08:16 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO9726
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0128 0170816
ZNR UUUUU ZZH
R 170816Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8184
INFO RHEHAAA/WHITE HOUSE WASHDC
RUCNCIS/CIS COLLECTIVE 0001

UNCLAS ASTANA 000128 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR INL (ALTON AND DISSELKOEN), SCA/CEN (OMARA), SCA/RA (LEE), 
WHITE HOUSE FOR ONDCP 
 
E.O. 12958: N/A 
TAGS: SNAR PGOV KCRM KZ
SUBJECT: KAZAKHSTAN: REACHING OUT TO THE U.S. ON REDUCING ILLEGAL 
DRUG DEMAND 
 
REF: A) 06 STATE 167469 B) 06 USOffice Astana 0131 C) 06 AmEmbassy 
Astana 188 
 
1. (SBU) Summary: While discussing our non-paper on U.S. policy on 
testing secondary school students for drugs, the Head of Youth 
Policy at the Ministry of Education said that not only law 
enforcement agencies but MinEd too was now providing grants to NGOs 
to create anti-drug programs and implementing programs "in house." 
He asked for U.S. assistance to implement some of the interesting 
anti-drug program ideas he learned from ONDCP during a recent visit 
to Washington to discuss counter-narcotics strategy.  He promised to 
provide a written proposal shortly.  End summary. 
 
2. (SBU) On January 9, Emboffs delivered Ref A points regarding U.S. 
policy on testing secondary school students for drugs to Nurlan 
Suleimenovich Uteshev, Head of the Youth Policy Department of the 
Ministry of Education and Science.  A copy of the information was 
left as a non-paper.  Uteshev thanked us for the information and 
promised to distribute the paper to appropriate offices and agencies 
promptly. 
 
2. (SBU) Responding to questions about the MinEd approach to demand 
reduction, Uteshev said that his ministry was actively involved in 
creating programs to publicize the anti-drug message (Ref B). 
Previously, anti-drug programs were under the purview of law 
enforcement agencies but Uteshev said the approach had shifted and 
the role of other ministries was being enhanced. 
 
3. (SBU) Uteshev elaborated, saying that previously the MinEd 
distributed a portion of its demand reduction budget to NGOs and 
used the remainder to implement its own demand reduction program. 
This year MinEd changed its approach and granted almost all the 
funding to local organizations to conduct anti-drug campaigns.  He 
said that MinEd retained only a small portion of the funds in order 
to oversee the implementation of the grants. 
 
4. (SBU) Noting the interesting possibilities he learned from the 
Office of National Drug Control Policy briefings during his recent 
trip to the United States, Uteshev advocated cooperation between INL 
and his ministry to create a partnership to improve demand reduction 
efforts in Kazakhstan.  (Note: Uteshev was a member of a December 
2006 INL-sponsored counter-narcotics delegation to Washington. End 
note.)  He suggested expanding the outreach program to include radio 
and television spots, internet ads, cultural and sports 
competitions, involvement of student associations, youth wings of 
political parties, and other local organizations.  He emphasized 
cooperation, saying that the ministry had money to contribute to the 
proposed venture and did not expect the U.S. to fund everything.  To 
begin the cooperative venture, Uteshev suggested focusing the 
project on Astana within the framework of the government's program 
"Astana - drug free city" (Ref C) and not try to launch a program 
encompassing the entire country. 
 
5. (U) Uteshev said he will provide a written proposal for the 
proposed venture shortly. 
 
MILAS

Wikileaks

07ASTANA125, KAZAKHSTAN: NEW CABINET TO MAINTAIN POLICY COURSE

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Reference ID Created Released Classification Origin
07ASTANA125 2007-01-16 11:52 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO8618
PP RUEHDBU
DE RUEHTA #0125/01 0161152
ZNY CCCCC ZZH
P 161152Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8179
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 2097
RUEHBUL/AMEMBASSY KABUL PRIORITY 0283
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0413
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEHNO/USMISSION USNATO PRIORITY 2169
RUEHVEN/USMISSION USOSCE PRIORITY 1668

C O N F I D E N T I A L SECTION 01 OF 05 ASTANA 000125 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR SCA/CEN (M. O'MARA) 
 
E.O. 12958: DECL: 01/16/2017 
TAGS: PGOV PREL KDEM KZ
SUBJECT: KAZAKHSTAN:  NEW CABINET TO MAINTAIN POLICY COURSE 
 
REF: A. ASTANA 87 
 
     B. ASTANA 96 
     C. ASTANA 48 
 
Classified By: CDA Kevin Milas, reasons 1.4 (B) and (D). 
 
1. (C) Summary:  President Nazarbayev's early January cabinet 
reshuffle will not have a major impact on Kazakhstani 
government policy, but may offer insight into the struggle 
for influence between power groups and would-be successors. 
New Prime Minister Karim Masimov is expected to maintain the 
economic policy course that President Nazarbayev has long 
charted, focusing on economic diversification and 
competitiveness.  Familiar figures named to other key 
positions, including Marat Tazhin as the new Foreign Minister 
and Daniyal Akhmetov as Kazakhstan's first civilian defense 
minister, are also expected to continue Kazakhstan's 
multi-vector foreign policy and defense reform efforts.  The 
government shake-up is more significant for the insight it 
provides into competition between elite power groups based on 
Nazarbayev sons-in-law Timur Kulibayev and Rakhat Aliyev, and 
metals magnate Aleksandr Mashkevich.  With his allies 
installed as Prime Minister, Minister of Energy and Mineral 
Resources, and at KazMunaiGaz, Kulibayev appears to be the 
clear winner of the reshuffle.  End summary. 
 
---------------- 
What Has Changed 
---------------- 
 
2. (C) As reported in Refs A and B, President Nazarbayev 
appointed Karim Masimov as Prime Minister on January 10 and 
named his new cabinet on January 11.  Twelve ministers 
retained their positions, including Bakhtykozha Izmukhambetov 
in the key post of Minister of Energy and Mineral Resources. 
Nazarbayev made seven new cabinet appointments: 
 
-- Marat Tazhin, most recently secretary of the Security 
Council, was named Foreign Minister, replacing Kasymzhomart 
Tokayev.  On January 11 Nazarbayev introduced Tazhin to 
Foreign Ministry staff as his "main advisor on international 
issues" who would continue Kazakhstan's multi-vector foreign 
policy.  Known as a master of Kazakhstan's political system, 
Tazhin has until now held posts out of the public eye, 
including a brief stint as chairman of the Committee for 
National Security (KNB), where current Deputy Foreign 
Minister Rakhat Aliyev was his very troublesome deputy, and a 
long tenure as Deputy Head of the Presidential Administration 
(2002-2006).  Tazhin, a fluent English speaker, has never 
held a diplomatic post.  Tazhin's protege Nurlan Yermekbayev, 
head of the Foreign Policy Center of the Presidential 
Administration, was named Deputy Foreign Minister.  There has 
been no announcement of whom Yermekbayev is to replace, 
although it is rumored that Deputy Foreign Minister Aliyev 
may depart. 
 
--  Aslan Musin was appointed Deputy Prime Minister, while 
retaining the position of Minister of Economy and Budget 
Planning that he has held since last October.  Musin, who 
served as Akim of both the Aktobe and Atyrau oblasts, 
possesses extensive regional economic experience that is 
expected to complement Masimov's expertise in finance.  In 
his January 11 speech to Parliament, Nazarbayev challenged 
the cabinet to increase budget planning efficiency and to 
create a new system of center-regional budget relations -- 
areas in which Musin may be able to make a significant 
contribution.  Some post contacts maintain that Musin, whose 
limited experience in Astana makes him a somewhat surprising 
choice for the Deputy Prime Minister position, was chosen in 
order to maintain balance among the three main Kazakh clans 
("zhuz") at the top level of government.  (Note:  Musin is an 
influential representative of the "Younger" clan, dominant in 
western Kazakhstan, as is Tazhin. Nazarbayev and Tokayev are 
both from the "Elder" clan, from southeastern Kazakhstan. 
Mazhilis speaker Mukhamedzhanov represents the "Middle" clan, 
from the northeastern part of the country.  As an ethnic 
Uighur, Prime Minister Masimov is outside the clan system. 
End note.)  Other observers point to Musin's reported ties to 
Rakhat Aliyev and Dariga Nazarbayeva and see him as a 
counterweight to Masimov, known to be close to Timur 
Kulibayev. 
 
-- Daniyal Akhmetov, the former Prime Minister, was appointed 
 
ASTANA 00000125  002 OF 005 
 
 
as Kazakhstan's first civilian Defense Minister.  In 
announcing the appointment, Nazarbayev said that his decision 
conformed to the international practice of having civilians 
handle policy and management.  The former Defense Minister, 
Mukhtar Altynbayev, remains the senior uniformed member of 
the Armed Services while becoming First Deputy Defense 
Minister -- an appointment that many observers do not expect 
to last given the almost inevitable tension between the men 
and the fact that Altynbayev is nearing retirement age.  The 
press has suggested that Akhmetov, who has never been 
involved in any public corruption scandals, may
 undertake an 
anti-corruption crusade within the military.  Before serving 
as Prime Minister from 2003-2007, Akhmetov served as Akim of 
the Pavlodar (1993-1997 and 2001-2003) and North Kazakhstan 
(1997-1999) oblasts, as well as Deputy Prime Minister 
(1999-2000).  He was the highest-ranking representative of 
the "Middle" clan in the previous government, and is closely 
linked to metals magnate Aleksandr Mashkevich.  Post sees the 
appointment of a civilian as Defense Minister as an important 
milestone in Kazakhstan's defense reform efforts. 
 
-- Galym Orazbakov replaces Vladimir Shkolnik as Minister of 
Industry and Trade.  Orazbakov, only 42 years old, previously 
served as Deputy Minister of Economy and Trade (2001-2002) 
and of Industry and Trade (2002-2003), where he was head of 
Kazakhstan's WTO negotiation team.  Since 2003, he has worked 
as President of the private "Kazakhstan Engineering" firm. 
Orazbakov, a member of the "Elder" clan, is believed to be 
related to Abykayev.  It is not yet known whether Orazbakov 
will retain Deputy Minister Zhanar Aitzhanova, the lead 
negotiator on WTO accession.  (Shkolnik, a longtime 
Nazarbayev confidante, was appointed a deputy head of the 
Presidential Administration on January 12; his portfolio has 
not been announced.) 
 
-- Zhanseit Tuymebayev, formerly ambassador to Russia, 
replaces Berganym Aitimova as Minister of Education and 
Science.  Tuymebayev is a career diplomat, who served as 
Chief of Presidential Protocol prior to his February 2006 
appointment to Moscow.  A PhD in philology, Tuymebayev has 
conducted extensive research on the Kazakh language.  Media 
analysts have suggested that Aitimova may have lost her job 
due to her failure to effectively fight corruption in the 
universities.  Given the lack of significant criticism of 
Aitimova, it is more likely that Nazarbayev simply needed to 
free up a ministerial post for Tuymebayev in order to send 
former Senate speaker Nurtay Abykayev to Russia. 
 
-- Viktor Khrapunov replaces Shalbay Kulmakhanov as Minister 
of Emergency Situations.  Khrapunov, a member of the "Middle" 
clan, previously served as Akim of the East Kazakhstan Oblast 
(2004-2007), Akim of Almaty City (1997-2004), and Minister of 
Energy and Coal (1995-1997).  Nazarbayev's decision to 
"demote" Khrapunov from Almaty to East Kazakhstan in 2004 was 
widely seen as a sign that Khrapunov had not yet mastered the 
political game; he came in for particular criticism for crude 
violations during the 2004 parliamentary elections.  Given 
that the Ministry of Emergency Situations is seen as a 
political backwater, Khrapunov's latest appointment is likely 
a sign that his performance has not improved.  Many observers 
are puzzled as to how Khrapunov, who is known to be quite 
corrupt (industry sources tell post that as akim he directly 
solicited a bribe from a distributor in Ust-Kamenogorsk), has 
managed to stay in government.  His wife's reported close 
friendship with Dariga Nazarbayeva may be one explanation. 
 
 -- Yerbol Orynbayev was named Chief of the Prime Minister's 
chancery, the only non-ministerial cabinet position. 
Orynbayev replaces Altay Tleuberdin in the relatively 
low-profile job.  Orynbayev, born in 1971 in Shymkent and 
thus a representative of the "Elder" clan, holds a law degree 
from Moscow State University (1993) and a Master's in 
international development from Duke (2002).  He previously 
served as Deputy Minister of Economy and Budget Planning 
(2002-2003), chairman of the board of directors of the Center 
of Marketing and Analytical Studies (2003-2004), and in 
positions of increasing responsibility in the Presidential 
Administration, most recently as Deputy Head with 
responsibility for economic policy (2006-2007).  Orynbayev 
worked closely with Masimov on the international board of 
advisors for the Almaty Financial Center and on the 
government working group on administrative reform, and is 
thus expected to focus on economic and administrative reform 
 
ASTANA 00000125  003 OF 005 
 
 
issues. 
 
3. (C) In perhaps the most surprising move, Nazarbayev 
appointed former Minister of Foreign Affairs Kasymzhomart 
Tokayev to replace Nurtay Abykayev as Speaker of the Senate. 
(Under the Constitution, Nazarbayev can appoint up to seven 
senators.  The Speaker is first in line of presidential 
succession.)  Some media analysts have claimed that Tokayev 
is an ally of Rakhat Aliyev and thus intended as a 
counterweight to the Masimov-Kulibayev camp.  Given the 
obvious tensions between Tokayev and Aliyev during their 
coexistence at the MFA, however, that theory holds no water. 
Tokayev is known as a smart, honest, and relatively 
politically unambitious figure whom Nazarbayev can therefore 
trust to be a heartbeat away from the presidency.  Abykayev's 
transfer to Moscow is widely seen as punishment for his 
failure to prevent his staffer Yerzhan Utembayev from 
ordering the February 2006 murder of opposition leader 
Altynbek Sarsenbaiuly and bringing international criticism on 
the Kazakhstani government. 
 
4. (C) Confusion and controversy surrounded Nazarbayev's 
appointment of Berik Imashev, formerly the deputy head of the 
Presidential Administration for legal affairs, to replace 
Tazhin as chairman of the Security Council.  On January 11, a 
decree was posted on the Presidential Administration website 
naming current Ambassador to the U.S. Kanat Saudabayev to 
that position, and numerous news outlets reported the story 
as fact.  On January 12, with no explanation, the original 
decree was replaced with one naming Imashev to the post. 
Imashev, 46, holds a law degree from Moscow State University 
(1982).  He worked his way up through the procuracy and later 
the Financial Police before working in the private sector 
during the mid-1990s.  Imashev served as deputy secretary of 
the Security Council (2003-2005) before moving to his most 
recent job at the Presidential Administration. Imashev is a 
stern individual whose department is thought to have drafted 
much of the legislation considered damaging to human rights 
in the past two years.  His daughter Aida (born 1984) is 
married to Rakhat Aliyev and Dariga Nazarbayev's son Nuraly 
(born 1985), making Imashev the grandfather of President 
Nazarbayev's great-grandson Alan (born 2005). 
 
-------------------- 
What Has Not Changed 
-------------------- 
 
5. (U) Twelve ministers retained their positions: 
Bakhtykozha Izmukhambetov, Energy and Mineral Resources; 
Baurzhan Mukhamedzhanov, Internal Affairs; Yermukhamet 
Yertysbayev, Culture and Information; Natalya Korzhova, 
Finance; Zagipa Baliyeva, Justice; Anatoliy Dernovoy, Health; 
Akhmetzhan Yesimov, Agriculture; Gulzhana Karagusova, Labor 
and Social Protection; Serik Akhmetov, Transportation and 
Communications; Nurlan Iskakov, Environment and Natural 
Resources; Temirkhan Dosmukhanbetov, Tourism and Sports; and 
Musin at Economy and Budget Planning. 
 
6. (U) There were no changes at the top of the key agencies 
and committees.  Head of the Pres
idential Administration 
Adylbek Dzhaksybekov, KNB Chairman Amangeldy Shabdarbayev, 
Financial Police head Sarybay Kalmurzayev, Chairman of the 
Financial Supervision Agency Arman Dunayev, and Civil Service 
Agency head Zautbek Turisbekov all retained their positions. 
Procurator General Rashid Tusupbekov and Supreme Court Chief 
Justice Kairat Mamy are appointed by Parliament and thus were 
not affected by the cabinet reshuffle. 
 
------------------------ 
What It Means for Policy 
------------------------ 
 
7. (C) In Kazakhstan, the Prime Minister is primarily 
responsible for coordinating economic policy.  On paper, all 
ministers report to him.  In reality, however, ministers 
dealing with foreign policy and security issues work directly 
with the Presidential Administration.  Even in the economic 
realm the Prime Minister, because he is appointed by the 
president and has no electoral legitimacy of his own, has no 
authority to chart his own policy course.  Masimov, an ethnic 
Uighur, underscored his loyalty to Nazarbayev and his 
policies during the January 10 joint session of parliament 
when he placed his hand over his heart and stated "You showed 
 
ASTANA 00000125  004 OF 005 
 
 
great trust in me when you named me your aide.  I want to say 
that I was, am, and will remain your loyal assistant."  In a 
conversation with Pol-Econ Chief, True Ak Zhol co-chairman 
Tulegen Zhukeyev, himself a former chairman of the Security 
Council, described the gesture with disgust as that of a 
"slave," something that "a Kazakh would never do." 
 
8. (SBU) Masimov's authority will thus be limited to the 
economic realm, within the policy limits set by Nazarbayev 
and the Presidential Administration.  Although Masimov is 
well known to post as a liberal, reform-oriented individual 
with a positive attitude toward the West, it is not realistic 
to expect his influence to extend to the political realm or 
questions of democratic reform.  Other cabinet-level changes 
are not likely to have either a positive or negative impact 
on the reform process, as it is being orchestrated by the 
Presidential Administration  (Ref C).  Likewise, most 
observers do not expect significant changes in the country's 
economic policy as a result of the switch, as Nazarbayev's 
decision to replace former Prime Minister Akhmetov is seen as 
a routine change after 3.5 years rather than a condemnation 
of his performance.   During the January 11 parliamentary 
session, Nazarbayev set out a familiar list of priorities for 
the new government, including pursuing Kazakhstan's objective 
to be among the 50 most competitive countries in the world, 
the need to improve state planning and development programs, 
support for regional development based on "centers of 
economic growth," economic diversification, affordable 
housing, fair rules for land sales, creation of a pilot 
program of civic-oriented entrepreneurial corporations, 
increased efficacy in budget planning, improving education 
and health care, strengthening the pension system, and job 
creation. 
 
-------------------------- 
What It Means for Politics 
-------------------------- 
 
9. (C) The cabinet changes have touched off a great deal of 
debate about the battle for succession.  While Nazarbayev's 
decision to appoint Karim Masimov as Prime Minister is a 
clear vote of confidence in his political and managerial 
skills, it does not necessarily augur a bright political 
future for Masimov beyond his current posting.  It is highly 
unlikely that anyone other than an ethnic Kazakh could be 
chosen as Nazarbayev's successor.  (There has already been 
criticism in the parliament of the fact that Masimov does not 
speak fluent Kazakh.)  Masimov's appointment thus says more 
about the ascendant position of his main backer, first 
son-in-law Timur Kulibayev, than it does about his own 
prospects.  Kulibayev himself controls the giant Samruk 
holding company -- which includes KazMunaiGaz -- and his 
allies now hold the key revenue-controlling positions of 
Prime Minister and Minister of Energy and Mineral Resources. 
 
10. (C) Kulibayev's primary rival, Dariga Nazarbayeva's 
husband Rakhat Aliyev, appears to have come out on the losing 
end of the reshuffle.  While he has some allies in key 
positions, namely Deputy Prime Minister Musin and Security 
Council chairman Imashev, he has also seen rivals such as 
Tazhin and Tokayev retain positions of great influence. 
Aliyev, who has been First Deputy Foreign Minister since 
2005, is rumored to be on his way back to "honorable exile" 
in Vienna where Nazarbayev sent him in 2002 following 
accusations that Aliyev was plotting to seize power.  Some 
believe he is being punished for mismanaging Kazakhstan's bid 
to chair the OSCE; others see the changes as delayed 
retribution for his rumored involvement in the Sarsenbaiuly 
murder. 
 
------- 
Comment 
------- 
 
11. (C) Comment:  Kazakhstani politics are particularly 
opaque due to the closed nature of the clan system, the tight 
family relationships among the elite, and the shortage of 
political analysts and investigative journalists with any 
first-hand knowledge of events.  The maneuverings that are 
visible to outsiders are merely the surface ripples of an 
enormous struggle that takes place far beyond the public eye. 
 Nevertheless, a few things are clear:  the Kazakhstani elite 
are beginning to maneuver into position to succeed 
 
ASTANA 00000125  005 OF 005 
 
 
Nazarbayev, and -- for now -- the Kulibayev camp appears to 
be playing the game most successfully. 
MILAS

Wikileaks

07ASTANA120, KAZAKHSTAN: NO IMMEDIATE RESPONSE ON PRESIDENT’S

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Reference ID Created Released Classification Origin
07ASTANA120 2007-01-15 04:53 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0010
PP RUEHWEB

DE RUEHTA #0120 0150453
ZNR UUUUU ZZH
P 150453Z JAN 07
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC PRIORITY 8175

UNCLAS ASTANA 000120 
 
SIPDIS 
 
SIPDIS 
 
SCA/CEN FOR PERRY 
 
E.O. 12958: N/A 
TAGS: MARR IZ MARR MOPS PGOV PREL
SUBJECT: KAZAKHSTAN: NO IMMEDIATE RESPONSE ON PRESIDENT'S 
ADDRESS ON IRAQ 
 
REF: STATE 3592 
 
On January 11 Charge delivered reftel demarche to Serzhan 
Abdykarimov, the head of the America's Desk at the Ministry 
of Foreign Affairs.  Charge thanked Kazakhstan for its 
participation and asked for any reaction. Mr. Abdykarimov 
stated that they will study the demarche and get back to us 
with comments. 
MILAS

Wikileaks

07ASTANA116, KAZAKHSTAN’S PETROCHEMICAL AMBITIONS:

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Reference ID Created Released Classification Origin
07ASTANA116 2007-01-12 12:04 2011-08-30 01:44 CONFIDENTIAL//NOFORN Embassy Astana

VZCZCXRO6773
PP RUEHDBU
DE RUEHTA #0116/01 0121204
ZNY CCCCC ZZH
P 121204Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8166
INFO RUCNCIS/CIS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEBAAA/DEPT OF ENERGY WASHDC

C O N F I D E N T I A L SECTION 01 OF 04 ASTANA 000116 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPT FOR EB/ESC; SCA/CEN (O'MARA) 
 
E.O. 12958: DECL: 01/11/2016 
TAGS: ENRG EPET KZ PGOV PREL
SUBJECT: KAZAKHSTAN'S PETROCHEMICAL AMBITIONS: 
FORWARD-THINKING OR FOLLY? 
 
REF: A. 06 ASTANA 737 
 
     B. 06 ASTANA 738 
 
Classified By: Charge d'Affaires Kevin Milas; reasons 1.4 (b) and (d). 
 
1. (C) Summary:  The Government of Kazakhstan (GOK) is 
aggressively encouraging foreign investment in a domestic 
petrochemical industry as part of its strategy to diversify 
the economy and to "climb the value chain" of hydrocarbon 
production.  The GOK has authorized a predictable set of tax 
benefits for petrochemical investors, but the largest 
incentive to invest may be the 2005 law governing offshore 
oil contracts, which makes explicit the GOK's intent to favor 
exploration and production bids from companies which commit 
to investing in the petrochemical industry.  Western oil 
company executives are uniformly skeptical of the economics 
of petrochemicals in Kazakhstan, pointing out that the 
country is disadvantaged, especially in comparison with the 
Middle East, in terms of feedstock availability, distance to 
market, and supporting infrastructure.  Numerous potential 
petrochemical projects have been discussed in the media over 
the last year, but the one which appears to be furthest along 
-- a plan to build a $4 billion complex in Atyrau using 
ethane from the Tengiz field -- does, indeed, appear to be 
"uneconomic" and dependent on high-level political will to 
remain on-track.  The 2005 law, along with the growing 
perception that building a petrochemical plant would "please 
the President," creates an interesting dilemma for Western 
oil companies which would prefer to focus on producing and 
transporting crude oil.  End summary. 
 
Outlining the GOK's Vision 
-------------------------- 
 
2. (C) The development of a petrochemistry industry is, upon 
first analysis, a logical extension of Kazakhstan's oil 
extraction-based economy, and evidence suggests that the GOK 
has entertained the thought for years.  ConocoPhillips (CP) 
Vice President Bill Berry recently told the Ambassador that 
the GOK had pressured CP to invest in a petrochemical 
facility in 1997, during discussions surrounding CP's entry 
into the super-giant Kashagan project.  The petrochemical 
initiative appears to have first gained official status in 
2003, with the publication of the Republic's "Industrial and 
Innovation Development Strategy for 2003-2015." This document 
singles out petrochemicals as a sector in which Kazakhstan 
has a likely competitive advantage.  (Note: This document, 
which focuses on the development of competitive, 
export-oriented non-raw materials production, is often seen 
as the starting point for Kazakhstan's subsequent "cluster 
theory" approach to economic diversification.  End note.) 
The initiative gained further footing with the 2004 
publication of a six-year plan for developing a Kazakhstani 
petrochemical sector.  The clearest sign that this has become 
a GOK priority, however, are 2005 revisions to the offshore 
oil production law (see para. 7) which made explicit the 
GOK's intent to favor companies in the bidding process which 
pledged to invest in petrochemicals.  President Nazarbayev 
touted the petrochemical industry in his 2004 and 2006 annual 
addresses, but has been relatively low-key in his public 
approach to the issue.  This contrasts, we are told, to his 
private approach in talking to international oil companies -- 
on November 19 CP Country Manager Nick Olds told the 
Ambassador that Nazarbayev had talked to "all the oil 
companies" about investing in petrochemicals. 
 
3. (C) While Nazarbayev has not made the connection explicit, 
many observers believe the petrochemical initiative has also 
gained momentum from the President's drive to make Kazakhstan 
one of the fifty "most competitive" nations, and the 
concurrent emphasis on diversifying the economy.  (Comment: 
While petrochemical production would clearly add value to 
Kazakhstan's gas resources, it would, as a 
technology-intensive industry, add relatively few jobs.  End 
comment.)  Shell's Country Chairman, Martin Ferstl (whose 
company advised the GOK on a petrochemical strategy in 2005) 
told Energy Officer recently that he believed Nazarbayev's 
motivations for promoting the industry were driven in part by 
fears that, once Kazakhstan joined the WTO, the country would 
be flooded with Chinese products.  Kazakhstan hoped to export 
petrochemicals to China, Ferstl concluded, in order to help 
balance trade flows. 
 
4. (C) In 2005 the state-owned Center for Marketing and 
Analytical Research (CMAR) undertook a feasibility study of 
the industry, contracting with Nexant to produce a detailed 
 
ASTANA 00000116  002 OF 004 
 
 
"Petrochemical Masterplan," the fundamental conclusions of 
which -- that an ethane-based petrochemical complex based in 
Atyrau would have an expected internal rate of return (IRR) 
of 13-16% -- were presented during a November 2005 
petrochemical conference in Astana.  (Note: There was 
widespread skepticism of th
is IRR figure. Two oil company 
executives whispered to Energy Officer on the margins of the 
conference that Nexant had originally returned a much lower 
IRR -- in the single digits -- only to be told to go back and 
change the study's assumptions.  End note.) 
 
Existing Facilities / Planned Future Facilities 
--------------------------------------------- -- 
 
5. (U) In the Soviet era, Kazakhstan's petrochemical 
industries (a polyethylene plant in Aktau, a polypropylene 
plant in Atyrau, a tire-manufacturing plant in Shymkent, and 
a complex of rubber plants in Karaganda) functioned as part 
of a larger Soviet production chain, importing raw materials 
from Russia and distributing the resulting value-added 
products throughout the USSR.  While several of the rubber 
plants have survived since independence by exploiting the 
same interconnections with the Russian market, the Aktau and 
Atyrau plants have struggled.  Both had shut down prior to 
being purchased, in 2004, by "Atoll" -- a Kazakhstani 
joint-venture which, in 2006, joined with Dutch-based Basell 
to become "Kazakhstan Petrochemical Industries" (KPI).  Atoll 
re-tooled the Aktau plant to begin polystyrene production in 
September 2005, using feedstock from Russia and selling the 
resulting plastics inside Kazakhstan (12%), to Russia and the 
CIS (30-40%), and to China (48-58%). 
 
6. (C) KPI has not restored polypropylene production at the 
Atyrau facility; this site is now one of several being 
considered as the location for KPI's planned ethane complex 
in Atyrau (par. 10).  The KPI project is merely one of 
numerous new potential projects which have been discussed 
publicly in the past year.  At the November 2005 
petrochemical conference, then-Energy minister Vladimir 
Shkolnik singled out a $3.6 billion KMG / Lukoil gas chemical 
complex planned in Kazakhstan, near the North Caspian border 
with Russia. (Note: This project now seems less likely, with 
Russia reportedly favoring a Russian landing for the offshore 
gas.  End note.)  KMG and Marubeni, a Japanese company, are 
reportedly developing a feasibility study to explore the 
possibility of producing benzene at the Atyrau refinery, for 
use as a feedstock for polystyrene production at the Aktau 
plant. "GS Caltex," a South Korean company, has reportedly 
launched a feasibility study (with KMG) for construction of a 
$1.5 - $3 billion plastics plant.  On December 15, Iranian 
Foreign Minister Mottaki was quoted in the press as 
indicating Iran's interest in building a petrochemical 
complex in Atyrau.  These announced deals and discussions may 
only scratch the surface of active interest: Michael 
Sturdivant, an Almaty-based Deloitte tax advisor, told Energy 
Officer on November 28 that "four or five" companies had 
recently sought Deloitte's advice on possible petrochemical 
investments in Kazakhstan. 
 
Legal and Financial Promotions 
------------------------------ 
 
7. (C) Kazakhstan's 2005 law governing offshore oil 
operations (informally, the "Production Sharing Agreement" 
law) formalized the GOK's intent to favor international oil 
companies which invest in petrochemical facilities in 
Kazakhstan.  The law states that, in assigning offshore 
production and exploration rights, the State will favor 
proposals which further the development of "high technology" 
-- of which "petrochemistry" is listed as the highest 
priority.  Prime Minister Akhmetov articulated this 
connection clearly in his keynote speech at the 2005 
petrochemical conference, stating "we will prioritize 
companies who invest in petrochemicals when signing 
exploration and production contracts." 
 
8. (C)  ConocoPhillips' (CP) bid to secure Kazakhstan's 
offshore "N" block (Ref A) provides one example of how the 
GOK is implementing this law.  CP related to Post that, 
during CP CEO Jim Mulva's meetings in Astana in May 2006, 
Prime Minister Akhmetov and other officials told Mulva that 
the surest way to win a share of the "N" block was to commit 
to partner with KMG in building a petrochemical facility 
which would utilize "N" block gas.  Akhmetov answered Mulva's 
skepticism about the commercial feasibility of such a project 
by referring to Nexant's finding that an ethane cracker 
 
ASTANA 00000116  003 OF 004 
 
 
complex had an expected IRR of 13-16%. 
 
9. (SBU) The GOK has also created tax and other financial 
incentives for petrochemical investment. The 2006 Tax Code 
(Article 119-1) provides a five-year exemption on corporate 
income tax for petrochemical projects established from 
2004-2007 and meeting minimal investment thresholds. (Note: A 
local accountant -- and skeptic of the petrochemical sector 
initiative -- minimized the significance of this article as 
an incentive to investment, pointing out that an exemption on 
corporate income tax has value only if the company has 
taxable profits in the first place.  End note.) 
 
10. (SBU) Finally, the GOK has launched a feasibility study 
for the creation of a "National Industrial Petrochemical 
Technopark" in Atyrau, where investors will enjoy the 
benefits of operating in a "special economic zone," including 
exemptions from land and property tax, VAT exemptions on 
service turnover, and exemptions from customs duties on 
imported goods.  (Note: The "technopark" is a key element in 
Kazakhstan's "industrial innovation" strategy -- the 2003 
initiative at diversifying the economy which gave rise to 
Kazakhstan's "cluster" approach to diversification.)  While 
the technopark plans feature prominently in the Atyrau 
oblast's short-term economic development vision, no 
institutions have yet been built. 
 
Atyrau Petrochemical Facility 
----------------------------- 
 
11. (C)  The petrochemical project which has received the 
most press, and appears to be furthest along in development, 
is KPI's planned $4 billion ethane-based cracker, an 
associated LPG-based Propane Dehydrogenation Plant, and 
downstream polyethylene and polypropylene facilities, based 
in Atyrau. The project's first stage envisions building a 
cracker utilizing 3 billion cubic meters (bcm) of gas 
annually from the nearby Tengiz oil field, and a second 
complex, further in the future (2013-18), based on gas 
volumes from the Kashagan field. 
 
12. (C) The project still appears to face considerable 
hurdles despite much forward-leaning press and clear 
government support. The First Deputy Akim of Atyrau told the 
DCM on November 28 that the oblast based "many hopes on 
petrochemicals," and listed development of a petrochemical 
industry as the oblast's second economic priority, trailing 
only further development of oil and gas production. 
Nevertheless, TengizChevrOil (TCO) General Manager Todd Levy 
recently told DCM (Ref B) that negotiations between KPI and 
TCO for Tengiz gas supplies were proceeding only because 
Nazarbayev had asked Chevron Chairman David O'Reilly to 
support th
e project.  TCO had agreed to supply KPI with 
below-market gas, Levy said, but even so the project appeared 
to be "uneconomic," and the deal would likely fail without 
additional political intervention. Access Industries (parent 
company of KPI participant Basell) Vice President Paul 
Rodzianko seemed to have reached the same conclusion when, on 
December 7, he asked Energy Officer how the Embassy might 
react to a request from Access to "put some pressure" on TCO 
to conclude a gas deal.  "The project has to happen," 
Rodzianko explained, "because it's important to Nazarbayev." 
 
13. (C) Although KPI recently announced signature of an MOU 
concerning "mutual intent to proceed with negotiations over 
gas supplies," with Kashagan operator AGIP KCO, the 
consortium is not factoring gas supplies for a petrochemical 
plant into their project development plans.  Ferstl told 
Energy Officer on December 8 that the GOK had recently 
"seemed to drop" the idea that AGIP KCO should allocate gas 
for a petrochemical plant; for this and other reasons the 
consortium had recently adopted a "full re-injection plan" 
for Kashagan gas.  AGIP KCO's Astana Office Manager, Luka 
Rogoz, confirmed this on December 6, telling Energy Officer 
that "all" of Kashagan's gas would be re-injected, beginning 
six months after first commercial oil production.  As a 
consequence, he continued, Kashagan engineering and 
construction was proceeding on the basis of 100% 
re-injection.  If the GOK came back to the consortium with a 
request to support the petrochemical industry, he concluded, 
"I don't have the faintest idea how we would accommodate the 
request." 
 
Private Sector Skepticism 
------------------------- 
 
 
ASTANA 00000116  004 OF 004 
 
 
14. (C) Among local oil company executives, skepticism of the 
GOK's petrochemical ambitions run high. The skeptics 
articulate three primary disadvantages faced by Kazakhstan: 
lack of available feedstock, distance from market, and 
inadequate supporting infrastructure.  To outline the 
argument concerning feedstock: seventy percent of 
Kazakhstan's known gas resides in three fields: Karachaganak, 
Kashagan, and Tengiz.  Karachaganak is reportedly near to 
signing a long-term deal to supply gas to the Orenburg gas 
refinery in Russia which would commit the field's gas 
supplies well into the next decade.  Kashagan partners are 
pursuing full re-injection.  While TCO has lower re-injection 
goals for Tengiz, and the field's high ethane content makes 
it attractive for use in petrochemical production, two 
independent industry studies (by Shell and ExxonMobil) have 
concluded that Tengiz does not have sufficient gas to drive a 
cost-competitive cracker.  Intertwined with the idea of gas 
"availability," of course, is the issue of gas economics: how 
can Kazakhstan's gas -- often highly-sulfurous, and thus 
expensive to process; and associated with oil, and thus 
valuable for raising reservoir pressure for high-value oil -- 
compete with gas from the Middle East which (a) is often 
found separate from oil; (b) is often "stranded" (or isolated 
from market), and thus cannot be monetized on its own; and 
(c) often receives governmental support which lowers the 
price below export parity? 
 
15. (C) In terms of infrastructure, the ExxonMobil study 
suggests that the "green field" costs for petrochemical 
development in Kazakhstan are approximately twice that of 
"brown field" costs on the U.S. Gulf Coast -- a difference 
which reflects both significantly higher constructions costs 
in cold and isolated Kazakhstan, and the relative lack of 
surrounding road, port, rail, and electrical infrastructure. 
This lack of infrastructure exacerbates Kazakhstan's third 
major disadvantage, that of geography: thousands of miles 
from either the European or Chinese markets, the country 
suffers a logistical disadvantage in relation to existing or 
potential competitors, especially in the Middle East.  These 
disadvantages add up, in ExxonMobil's detailed study, at 
least, to single-digit returns on investment in 
petrochemical facilities in Kazakhstan.  While the study 
suggests that the GOK can do much to reduce Kazakhstan's 
disadvantages -- primarily by investing in infrastructure -- 
the necessary changes are years, if not decades, away. 
 
16. (C) Comment:  There is a clear contradiction between the 
oil companies' calculations that a petrochemical plant in 
Kazakhstan is not economic, and the GOK's evident will that 
one (or more) be built.  The GOK can, to some extent, improve 
project economics even further with tax cuts and, in the long 
term, infrastructure improvements. The 2005 PSA law, of 
course, broadens the relevant economic calculation, 
essentially inviting companies to "write off" a low- (or no-) 
profit petrochemical plant in return for access to a 
potentially lucrative offshore oil field.  And finally, 
pleasing President Nazarbayev carries benefits that cannot be 
captured by purely economic models.  These reasons appear to 
explain the private sector interest expressed so far, and 
will likely, sooner or later, lead to a company taking the 
petrochemical plunge, if adequate supplies of gas can be 
secured.  These investments will likely occur in partnership 
with KMG -- which, as a state-owned company, may have the 
mandate and leeway to undertake "strategic" projects with low 
expected rates of return. End comment. 
MILAS

Wikileaks

07ASTANA94, EXBS: KAZAKHSTAN ADVISOR’S MONTHLY REPORTING CABLE

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Reference ID Created Released Classification Origin
07ASTANA94 2007-01-11 08:34 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO5273
RR RUEHAST RUEHDBU
DE RUEHTA #0094/01 0110834
ZNR UUUUU ZZH
R 110834Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8155
RUEAORC/US CUSTOMS SERVICE WASHINGTON DC
RUEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSJGA/COMDT COGARD WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUETIAA/NSA WASHDC
RUEKJCS/JCS WASHDC
RUCQAAA/USCINCCENT MACDILL AFB FL
RUEHRL/AMEMBASSY BERLIN 0397
RUEHEK/AMEMBASSY BISHKEK 7828
RUEHNT/AMEMBASSY TASHKENT 7777
RUEHKB/AMEMBASSY BAKU 0737
RUEHDBU/AMEMBASSY DUSHANBE 1983
RUEHAH/AMEMBASSY ASHGABAT 7085
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 05 ASTANA 000094 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR ISN/ECC PVANSON, ACHURCH, JHARTSHORN 
DEPT FOR ISN/ECC-AMT LSPRINGER 
DEPT FOR EUR/ACE RBUCK 
DEPT FOR SCA/RA JSCHLOSSER 
DEPT FOR SCA/CEN MO'MARA 
CBP/INA FOR CDONOFRIO AND RWATT 
USDOE/NNSA CWALKER, TPERRY AND EDESCHLER 
DOC FOR DCREED AND GPETERSEN-BEARD 
USCG FOR BGOLDEN 
AMEMBASSY BERLIN FOR CUSTOMS ATTACHE 
AMEMBASSY TASHKENT, BISHKEK, BAKU, DUSHANBE AND ASHGABAT FOR EXBS 
ADVISORS 
 
E.O. 12958: N/A 
TAGS: ETTC MNUC PARM PREL KSTC KNNP KZ
SUBJECT:  EXBS: KAZAKHSTAN ADVISOR'S MONTHLY REPORTING CABLE 
(DECEMBER 2006) 
 
 
I. BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS: 
 
      1. Kazakhstan's Customs Control Committee Chairman Askar 
Shakirov's proposed visit and draft itinerary to the United States 
under the Volunteer Visitor Program (VVP) has been approved in 
concept by DOS Public Affairs.  Jeff Hartshorn suggested exploring 
the possibility of changing the visit from the VVP to the 
International Visitor Program (IVP).  The IVP covers the entire cost 
of a U.S. visit whereas the VVP only covers expenses after the 
visitors have reached the U.S.  After conferring with Public Affairs 
and other Embassy officers, it is understood that the funding for 
the IVP is programmed annually and not available for this visit. 
Additionally, it is understood from Public Affairs that the IVP is 
designed for mid-level officials rather than high-ranking officials 
such as Chairman Shakirov.  Nonetheless, the EXBS Advisor will 
attempt to validate that the IVP alternative is truly not an option 
before dismissing the idea.  This is a unique opportunity for the 
EXBS Advisor to spend an entire week one-on-one with the senior 
Kazakhstani Customs leadership and should not be missed.  The next 
step is to meet with the Chairman in January, dates TBD, to discuss 
and lock in final itinerary details. 
 
 2.  As the Kazakhstan bureaucracy has matured, the Ministry of 
Foreign Affairs (MFA) has become increasingly insistent on being the 
conduit for all international engagement activities.  The MFA would 
like to formally be involved in the decision making process of all 
U.S. Government program activities.  This includes approval of 
participants in various workshops, training events, conferences as 
well as requests for meetings, visits and exchanges.  The MFA 
recently expressed dissatisfaction when coordination for engagement 
activities was completed without input from the MFA.  The EXBS 
Advisor asks the supporting USG agencies take note of this and 
transmit requests through the MFA.  Post of course encourages 
agencies to continue to communicate informally with their contacts. 
 
 
 3.  Blue Lantern program, DOD, requested EXBS assistance in 
validating the location and serial numbers of all Night Vision 
Goggles (NVG) donated under the EXBS Program.  100% of all NVGs have 
been accounted for by serial number and location.  All NVGs are 
operational except for one broken unit.  This effort is closed.  How 
to address the disposition of the damaged NVG is TBD. 
 
 4.  Other administrative activities accomplished:  Country 
clearance for Douglas Evans (DOC/CTP) Internal Control Program / 
Administrative Enforcement Instructor Training to be held in 
Pavlodar and Astana in January. Diplomatic Note requesting 18 names 
of Border Security officers for International Seaport Interdiction 
Training (ISIT) to be held in Charleston S.C. February 12-16, 2007. 
Diplomatic Note requesting participation of Ms. Gulnara Elegabayeva 
of the Kazakhstan Atomic Energy Committee (KAEC) for DOE/NNSA 
meeting on nuclear export control to be help in Washington D.C. 
during the week of January 22, 2007. 
 
 5. Draft FY07 EXBS Budget plan was completed and presented to the 
Department in December.  A thorough and comprehensive analysis of 
Kazakhstan's needs and USG goals was considered and incorporated 
into the draft.  As the plan is a draft, there is still work to be 
done and decisions to be made on what D.C. is willing to support. 
All proposed initiatives have been prioritized and the EXBS Advisor 
and staff are prepared to discuss specifics upon request. 
 
 6. Tracker Program status.  After lengthy dialog with Ms. Dina 
 
ASTANA 00000094  002 OF 005 
 
 
Akpanbaieve, head of export / import licensing department, Ministry 
of Industry and Trade, further effort on the U.S. Tracker Program is 
no longer desired.  Kazakhstan has developed its own licensing 
system which has already been fielded.  No further action on the 
U.S. Tracker Program is anticipated.  Unless the Department requires 
formal closure to the Tracker Program initiative, this message will 
mark
the close of this program. 
 
 7. Second Line of Defense (SLD).  Erik Deschler (DOE), SLD Portal 
Monitor Program Manager, requested permission in December to conduct 
late stage site assessments at projected installation sites.  This 
program has been underway for several years and is nearing fruition; 
however, the Kazakhstani Customs Control Committee insists that a 
contract between AHTNA, DOE's program implementation contractor, and 
the Kazakhstani implementing contractor be signed before any further 
site assessments take place.  Until then, permission to conduct 
further surveys will be postponed.  It should be noted that the 
Kazakhstani government appreciates this program.  However the 
Customs implementing contractor, with whom AHTNA will contract, has 
already incurred significant expense without a signed contract. 
Unless there is other information the EXBS Advisor is not privy to, 
the Customs Committee's request for a contract appears reasonable. 
The situation has been communicated to Erik Deschler and the status 
on the contract and appropriate way-forward will be established in 
early January. 
 
 8. Two donated X-Ray vans.  Kazakhstani Customs has requested that 
the two X-Ray vans receive maintenance.  The estimated cost for this 
is undetermined.  The problem is the units will not turn "on." 
Without an experienced technician's evaluation it is not known 
whether the problem is a major or minor problem.  The EXBS Advisor 
has recommended to DOE/NNSA (Laural Cotton) that if old funding 
monies are available perhaps a periodic maintenance analysis can be 
planned. 
 
 9. Fiberscope Repair.  Kazakhstani Customs awaits a decision from 
EXBS on plans to repair 7 broken fiberscopes.  Carla D'Onofrio, 
HLS/CBP, is the point of contact on this to determine whether there 
is old money budgeted for these repairs or the cost must be factored 
into the FY07 plan.  EXBS Advisor will make contact with Carla on 
the best way-forward. 
 
II. COMPLETED ACTIONS FOR THE REPORTING PERIOD 
 
A. SITE ASSESSMENTS AND MEETINGS CONDUCTED 
 
 1. No site assessments were conducted during December due to the 
holiday season and a multitude of other engagement activities 
previously scheduled.  Beginning in January 2007, EXBS has set aside 
one week each month for the entire year to conduct border site 
assessments on all Kazakhstani borders (Annual EXBS calendar 
forwarded to Jeff Hartshorn and updated weekly). 
 
 2. As of the end of December, Baku-based EXBS Regional Maritime 
Advisor Mike Taffe continues to report that planned hull 
anti-fouling paint and winterization for the three donated SAFE 
boats in Aktau, Kazakhstan did not occur - specifics for the delay 
are still not known.  A new date for the painting and winterization 
is yet to be determined. EXBS advisor Mike Seguin will make contact 
with Mike Taffe to better understand the state of the SAFE Boat 
program.  A tentatively planned joint Office of Military Cooperation 
/ EXBS meeting with MoD and Border Guard officials may take place 
week of January 8 in Aktau to address specific areas of concern 
 
ASTANA 00000094  003 OF 005 
 
 
regarding the SAFE boat project, noted in the October report. 
However, unless a clear way forward is planned to address the Safe 
Boat maintenance issues, EXBS will not participate in this event. 
 
 3.  At USAID's invitation, EXBS staff attended and presented the 
EXBS program to a USAID Conference held in Almaty December 6-8 on 
Central Asian Customs and Border Control issues entitled Trade 
Facilitation and Investment Project.  EXBS Advisor Mike Seguin 
briefed the international Central Asian Customs community on EXBS 
Program initiatives and participated in anti-corruption breakout 
sessions.  The conference was of value in that it brought together 
all Customs entities (mid- and senior- level managers) from 
throughout Central Asia to discuss and brainstorm methods of 
enhancing, among other things, control of customs procedures to 
prevent the proliferation of WMDs. 
 
 4.  Also during the week of December 4, the EXBS office met with 
the International Organization of Migration (IOM) in Almaty.  IOM 
has supported INL with procurement services and equipment 
distribution much like LATA is presently doing with EXBS's purchase 
and delivery of portable shelters and Ural trucks.  The meeting was 
of value in that IOM could be a potential resource for similar 
future EXBS initiatives.  IOM also has indicated a desire to 
participate in the EXBS site assessment and training schedule in an 
attempt to lessen the burden on Kazakhstani Customs and Border Guard 
activities by packaging visits together.  IOM also focuses on 
training the Customs and Border Guard on effective passport control 
methods - a program geared, among other things, to detect potential 
signs of illegal trafficking (including WMDs). 
 
 5.  December 15 EXBS team met with the Military Institute.  This is 
the academy where the National Security Services are trained (KNB - 
former KGB).  This is also where the Border Guard security services 
train their junior leadership.  This was a unique opportunity to 
introduce the EXBS program to the people who have the responsibility 
for institutionalizing training across Kazakhstan.  It would be in 
the EXBS program's best interest to cultivate a relationship with 
this organization to standardize both border security doctrine and 
perhaps more important to help develop an Inspector General (IG) 
inspection program that ensures standards are known and maintained 
uniformly throughout the country.  The commanding general was out of 
the office during the visit, but his deputy and staff thought it 
worthwhile to explore further the idea of engagement with the EXBS 
Program.  The EXBS Advisor offered to come back and present to the 
General the EXBS Program and discuss areas of previous engagement 
and potential areas for future engagement.  The value of this 
meeting cannot be overstated as it is very difficult to establish 
comprehensive dialogue with this organization. It is noteworthy that 
INL has already taken the first steps in establishing an exchange 
program with the Military Institute; EXBS should consider following 
suit.  Also while there, EXBS proposed that representatives from the 
Military Institute's Border Guard section be included in the planned 
February ISIT training to be held in Charleston, South Carolina. 
 
 
B.  TRAINING DURING THE REPORTING PERIOD 
 
 1.  December 4-8 EXBS office attended DOE WMD Commodity 
Identification Workshop in Almaty conducted by a team of 4 and led 
by Chris Walker.  In attendance were representatives from Customs, 
Border Guard, Nuclear Safety Center, and Ministry of Industry and 
Trade, among others.  The workshop focused primarily on Nuclear 
Commodity Identification, but also touched on Biological and 
 
ASTANA 00000094  004 OF 005 

 
 
Chemical materials.  This event focused on all aspects of WMDs and 
was well conducted and received.  The participants recommended 
continuing with this format.  One comment the workshop attendees 
particularly focused on was the need for support of a Technical 
Information Center.  This initiative should be explored in the 
future and has been proposed in the FY07 EXBS Program Budget. 
 
 2. December 14-15 - The Department of Commerce/Commonwealth Trading 
Partners (CTP) conducted an extremely well done Internal Control 
Program (ITP) workshop along with the Kazakhstani non-governmental 
organization Business Info.  This workshop was a follow-on to 
November's training in Astana geared toward orienting various 
Kazakhstani agencies - most notably the Ministry of Industry and 
Trade (MoI&T) - with customized Kazakhstani software for use in 
commodity identification.  This software will be used to support 
Kazakhstan's industry outreach efforts and standardize the method 
used for Nuclear Commodity Identification.  Ms. Dina Akpanbayeva 
again indicated a need for other related support in both hardware / 
software including focus on Biological and Chemical commodities in 
the future.  Also discussed was the desire for a web-based solution 
to facilitate industry outreach.  The EXBS budget subsequently 
proposed a portion of the FY07 funding be allocated to this end - 
pending assessment and approval by D.C. 
 
C. EQUIPMENT DELIVERED DURING THE REPORTING PERIOD 
 
      1. No equipment delivered during this reporting period. 
 
D. IMMINENT TRAINING OR EQUIPMENT STATUS UPDATE 
 
 1. Dip note sent to the MFA in November for dates for DOE to 
conduct installation and necessary software upgrades to 3-each 
portable X-ray Florescence (XRF) Metal Analyzers used at various 
border locations.  Customs responded in December with a request for 
names and dates of those proposing to conduct the upgrades. DOE was 
contacted, and the requested information will be provided by 
mid-January. 
 
 2. EXBS office continues with the preliminary planning stages for 
USCBP sponsored 5-day ISIT training event to be held February 12-16 
in Charleston, S.C. for 18 mid-level and senior Border Guard 
officers.  Purpose is to conduct training (Train-the-Trainer) in 
"Hands-On" Interdiction techniques and practices.  Also invited was 
representation of the Kazakhstani Military Institute.  Presently the 
EXBS staff is coordinating all logistics and administrative issues 
(i.e. visas, tickets, lodging). 
 
 3. EXBS Advisor invited to attend World Customs Organization 
sponsored anti-corruption conference in Almaty January 17-19. 
 
 4. January 16-25 Douglas Evans (DOC/CTP) with Business Info will 
conduct Internal Control Program / Administrative Enforcement 
Instructor Training to be held in Pavlodar and Astana in January. 
 
 5. Site assessment week planned for January 20-25 on south 
Kazakhstan region (Kazakhstan/Uzbekistan Border). 
 
 6. Annual Export Control System Questionnaire scheduled for 
submission to the MFA second week of January.  First, must validate 
the currency of the existing questionnaire with EXBS D.C. 
 
 7. EXBS staff planned introductory meetings in January with 
leadership of Border Guard, Customs, Ministry of Industry and Trade 
 
ASTANA 00000094  005 OF 005 
 
 
and Ministry of Foreign Affairs after approval of the FY07 budget is 
received from D.C. 
 
 8.  Portable Shelters and Ural Trucks (LATA T.O. 79).  EXBS 
provided LATA with points of contact and names of Border Guard 
officials to facilitate the shipment of T.O. 79 donations.  There 
are still a number of minor issues to resolve in the logistics of 
this rather complicated and significant transfer, which is projected 
to happen in late February or early March.  The EXBS office will 
continue to closely monitor the details of this project throughout 
the month of January and update D.C. as required. 
 
E. SIGNIFICANT DEVELOPMENTS IN EXPORT CONTROLS, NONPROLIFERATION, OR 
RELATED BORDER SECURITY 
 
      1. Nothing other than relayed above. 
 
F. CASPIAN SECURITY INFORMATION 
 
      1. Nothing other than relayed above. 
 
III. RED FLAG ISSUES. 
 
      1. None. 
 
MILAS

Wikileaks

07ASTANA93, KAZAKHSTAN ACCEPTS DATES FOR BN-350 TALKS

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Reference ID Created Released Classification Origin
07ASTANA93 2007-01-11 07:12 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXYZ0001
PP RUEHWEB

DE RUEHTA #0093 0110712
ZNR UUUUU ZZH
P 110712Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8154
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS ASTANA 000093 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/CEN (PERRY) 
DOE/NNSA FOR C. KENNEDY 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PARM MNUC KNNP KZ
SUBJECT: KAZAKHSTAN ACCEPTS DATES FOR BN-350 TALKS 
 
REF: A. STATE 185480 B. STATE 185757 C. ASTANA 966 D. 
     STATE 1609 
 
1. (SBU) Almaz Tulebayev, Director of the Ministry of Energy 
and Mineral Resources (MEMR) Department of Nuclear Energy and 
International Affairs, told Pol-Econ Officer on January 10 
that Kazakhstan agrees to the dates of January 24-25 for 
senior level policy discussions on the final disposition of 
BN-350 spent fuel.  Tulebayev said that Timur Zhantikin (who 
also attended the meeting), Chairman of the Atomic Energy 
Committee, will lead the Kazakhstani delegation.  The 
Kazakhstanis should be able to pass on a full list of their 
participants and a draft agenda within one to two days, 
Tulebayev added. 
 
2. (SBU) Tulebayev stressed Kazakhstan's need to receive the 
draft Terms of Reference and a list of U.S. participants as 
soon as possible.  He asked whether two days would be 
sufficient for discussions on the complicated topic of final 
disposition and if, after the discussions, the Kazakhstani 
delegation would have a deliverable document for its 
government.  Pol-Econ officer said that the aim of the 
January discussions is to initiate discussion of permanent 
disposition options and to finalize the Terms of Reference. 
Finally, Tulebayev asked about the level of classification of 
the discussions.  Pol-Econ Officer promised to consult with 
the Department. 
MILAS

Wikileaks

07ASTANA87, KAZAKHSTAN: KARIM MASIMOV NAMED NEXT PRIME MINISTER

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Reference ID Created Released Classification Origin
07ASTANA87 2007-01-10 11:45 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO4179
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0087/01 0101145
ZNR UUUUU ZZH
R 101145Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8148
INFO RUCNCIS/CIS COLLECTIVE
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 000087 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN (T. PERRY) 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL PINR KZ
SUBJECT: KAZAKHSTAN: KARIM MASIMOV NAMED NEXT PRIME MINISTER 
 
 
ASTANA 00000087  001.2 OF 002 
 
 
1. (SBU) Summary:  President Nazarbayev named Karim Masimov 
Kazakhstan's new Prime Minister on January 10, replacing Daniyal 
Akhmetov.  Masimov's nomination was approved by a joint session of 
Parliament the same day. 
Once Masimov is officially appointed to the position, he  will have 
10 days to recommend new Cabinet members for appointment by the 
President.  Masimov, an economist, worked as an assistant to 
Nazarbayev for three years before being appointed Deputy Prime 
Minister in January 2006.  Public reaction to the change has been 
modest, reflecting the widespread view that the Prime Minister 
enjoys relatively little power in Kazakhstan, and because a change 
in government has long been rumored.  Although we expect that 
Masimov will continue to be a valuable USG interlocutor, post does 
not expect that his appointment will dramatically affect either our 
bilateral relationship or the government's near-term course.  End 
summary. 
 
Nazarbayev Names Masimov Next PM 
-------------------------------- 
 
2. (SBU) On January 10, President Nazarbayev named Karim Masimov as 
Kazakhstan's new Prime Minister, replacing Daniyal Akhmetov, who 
submitted his resignation on January 8.  Masimov's nomination was 
approved by a joint session of Parliament the same day.  According 
to press reports, the vote was unanimous in favor of Masimov. 
Eleven members of the Mazhilis did not take part in the session. 
 
3. (SBU) Once Nazarbayev formally appoints Masimov - which may occur 
later today - Masimov will have 10 days in which to recommend new 
Cabinet members for appointment by the president.  Prior to this 
appointment, Masimov served as Deputy Prime Minister (and 
simultaneously for several months as Minister of Economy and Budget 
Planning), where he handled economic issues and provided overall 
strategic direction for the government.  Masimov, who worked as an 
assistant to Nazarbayev for three years prior to becoming Deputy 
Prime Minister, appears to have excellent access to Nazarbayev, as 
well as rumored close relations with influential presidential 
son-in-law Timur Kulibayev. 
 
Other Cabinet Changes 
--------------------- 
 
4. (SBU) Kazakhstan Today reported that President Nazarbayev told 
the joint session of parliament that Daniyal Akhmetov had accepted 
his offer to become the first civilian Minister of Defense. 
Nazarbayev also said that he would nominate Minister of Economy and 
Budget Planning Aslan Musin to replace Masimov as Deputy Prime 
Minister.  Musin, until recently akim of Atyrau Oblast, has little 
Astana experience but is known as an energetic and loyal supporter 
of the president.  These appointments will not take effect until the 
presidential decree appointing all of the new cabinet members is 
issued. 
 
President Consults with Ruling Party 
------------------------------------ 
 
5. (SBU) On January 8, just hours after Akhmetov's resignation, 
President Nazarbayev consulted with leaders of the ruling Nur Otan 
party on the nomination of a new Prime Minister and Cabinet. (Note: 
Nur Otan holds approximately 90% of parliamentary seats. End note.) 
Although there was no official announcement, Nur Otan party Chief of 
Staff Yermek Kusherbayev confirmed to visiting desk officer and 
Pol-Econ chief that Masimov's candidacy had been proposed during the 
meeting.   The next day, Nur Otan's parliamentary members met to 
discuss Masimov's candidacy, as well as the composition of a new 
Cabinet.  Both meetings were widely publicized in the media as the 
first occasion in Kazakhstan's history in which the President 
consulted with a political party on the appointment of a new 
Cabinet. 
 
Speculating on Reasons for Change 
--------------------------------- 
 
6. (SBU) Local media has downplayed the importance of the change, 
pointing out that the Prime Minister's powers are eclipsed by those 
of President Nazarbayev.  Numerous analysts suggest that Akhmetov's 
resignation was driven by his Cabinet's failure to address key 
macro-economic issues, including inflation (the National Bank has 
issued a preliminary 2006 inflationary estimate of 8.5%) and 
anti-monopoly regulation.  Last January's cabinet change - in which 
Masimov was brought on as Deputy Prime Minister, among other moves - 
is now widely seen, in retrospect, as having stripped Akhmetov of 
key portions of the economic portfolio, perhaps foretelling his 
eventual resignation.  Other analysts see Masimov's appointment as a 
sign that the future government will concentrate on economic reform, 
leaving the issue of political reform to the Democratization 
Commission. 
 
Biographical Data 
 
ASTANA 00000087  002.2 OF 002 
 
 
----------------- 
 
7. (SBU) Masimov (an ethnic Uighur, born 6/15/65), studied at Moscow 
University of People's Friendship, the Beijing Language Institute, 
and the Kazakhstan State Economics Univers
ity, from which he 
received a doctorate in economics in 1995. In 1991 he worked as 
Legal Advisor to the Soviet Trade Representative in China; from 
1991-92 as an Economist and Department Head at the Ministry of 
Labor; and from 1992-93 as a Senior Specialist in the Ministry of 
External Economic Relations' Representative Office in Urumchi, 
China.  After working in private business from 1993-94 and as the 
Executive Director of the Kazakhstani Trading House in Hong Kong, 
Masimov worked in the banking sector from 1995-2000, finishing as 
Head of the Board of Halyk Savings Bank.  In August 2000 he was 
appointed Minister of Transport and Communications; and in November 
2001, as Deputy Prime Minister.  In June 2003 Masimov was appointed 
Assistant to President Nazarbayev, a position he held until January 
2006, when he was appointed Deputy Prime Minister.  In April 2006 he 
was given the additional responsibility of Minister of Economy and 
Budget Planning, which he held until October 2006.  Masimov is 
married, with two daughters and a son, and speaks Russian, Chinese, 
English, and Arabic. 
 
MILAS

Wikileaks

07ASTANA86, KAZAKHSTAN: KARIM MASIMOV NAMED NEXT PRIME MINISTER

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Reference ID Created Released Classification Origin
07ASTANA86 2007-01-10 11:45 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO4176
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0086/01 0101145
ZNR UUUUU ZZH
R 101145Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8146
INFO RUCNCIS/CIS COLLECTIVE
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 000086 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN (T. PERRY) 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL PINR KZ
SUBJECT: KAZAKHSTAN: KARIM MASIMOV NAMED NEXT PRIME MINISTER 
 
 
ASTANA 00000086  001.2 OF 002 
 
 
1. (SBU) Summary:  President Nazarbayev named Karim Masimov 
Kazakhstan's new Prime Minister on January 10, replacing Daniyal 
Akhmetov.  Masimov's nomination was approved by a joint session of 
Parliament the same day. 
Once Masimov is officially appointed to the position, he  will have 
10 days to recommend new Cabinet members for appointment by the 
President.  Masimov, an economist, worked as an assistant to 
Nazarbayev for three years before being appointed Deputy Prime 
Minister in January 2006.  Public reaction to the change has been 
modest, reflecting the widespread view that the Prime Minister 
enjoys relatively little power in Kazakhstan, and because a change 
in government has long been rumored.  Although we expect that 
Masimov will continue to be a valuable USG interlocutor, post does 
not expect that his appointment will dramatically affect either our 
bilateral relationship or the government's near-term course.  End 
summary. 
 
Nazarbayev Names Masimov Next PM 
-------------------------------- 
 
2. (SBU) On January 10, President Nazarbayev named Karim Masimov as 
Kazakhstan's new Prime Minister, replacing Daniyal Akhmetov, who 
submitted his resignation on January 8.  Masimov's nomination was 
approved by a joint session of Parliament the same day.  According 
to press reports, the vote was unanimous in favor of Masimov. 
Eleven members of the Mazhilis did not take part in the session. 
 
3. (SBU) Once Nazarbayev formally appoints Masimov - which may occur 
later today - Masimov will have 10 days in which to recommend new 
Cabinet members for appointment by the president.  Prior to this 
appointment, Masimov served as Deputy Prime Minister (and 
simultaneously for several months as Minister of Economy and Budget 
Planning), where he handled economic issues and provided overall 
strategic direction for the government.  Masimov, who worked as an 
assistant to Nazarbayev for three years prior to becoming Deputy 
Prime Minister, appears to have excellent access to Nazarbayev, as 
well as rumored close relations with influential presidential 
son-in-law Timur Kulibayev. 
 
Other Cabinet Changes 
--------------------- 
 
4. (SBU) Kazakhstan Today reported that President Nazarbayev told 
the joint session of parliament that Daniyal Akhmetov had accepted 
his offer to become the first civilian Minister of Defense. 
Nazarbayev also said that he would nominate Minister of Economy and 
Budget Planning Aslan Musin to replace Masimov as Deputy Prime 
Minister.  Musin, until recently akim of Atyrau Oblast, has little 
Astana experience but is known as an energetic and loyal supporter 
of the president.  These appointments will not take effect until the 
presidential decree appointing all of the new cabinet members is 
issued. 
 
President Consults with Ruling Party 
------------------------------------ 
 
5. (SBU) On January 8, just hours after Akhmetov's resignation, 
President Nazarbayev consulted with leaders of the ruling Nur Otan 
party on the nomination of a new Prime Minister and Cabinet. (Note: 
Nur Otan holds approximately 90% of parliamentary seats. End note.) 
Although there was no official announcement, Nur Otan party Chief of 
Staff Yermek Kusherbayev confirmed to visiting desk officer and 
Pol-Econ chief that Masimov's candidacy had been proposed during the 
meeting.   The next day, Nur Otan's parliamentary members met to 
discuss Masimov's candidacy, as well as the composition of a new 
Cabinet.  Both meetings were widely publicized in the media as the 
first occasion in Kazakhstan's history in which the President 
consulted with a political party on the appointment of a new 
Cabinet. 
 
Speculating on Reasons for Change 
--------------------------------- 
 
6. (SBU) Local media has downplayed the importance of the change, 
pointing out that the Prime Minister's powers are eclipsed by those 
of President Nazarbayev.  Numerous analysts suggest that Akhmetov's 
resignation was driven by his Cabinet's failure to address key 
macro-economic issues, including inflation (the National Bank has 
issued a preliminary 2006 inflationary estimate of 8.5%) and 
anti-monopoly regulation.  Last January's cabinet change - in which 
Masimov was brought on as Deputy Prime Minister, among other moves - 
is now widely seen, in retrospect, as having stripped Akhmetov of 
key portions of the economic portfolio, perhaps foretelling his 
eventual resignation.  Other analysts see Masimov's appointment as a 
sign that the future government will concentrate on economic reform, 
leaving the issue of political reform to the Democratization 
Commission. 
 
Biographical Data 
 
ASTANA 00000086  002.2 OF 002 
 
 
----------------- 
 
7. (SBU) Masimov (an ethnic Uighur, born 6/15/65), studied at Moscow 
University of People's Friendship, the Beijing Language Institute, 
and the Kazakhstan State Economics Univers
ity, from which he 
received a doctorate in economics in 1995. In 1991 he worked as 
Legal Advisor to the Soviet Trade Representative in China; from 
1991-92 as an Economist and Department Head at the Ministry of 
Labor; and from 1992-93 as a Senior Specialist in the Ministry of 
External Economic Relations' Representative Office in Urumchi, 
China.  After working in private business from 1993-94 and as the 
Executive Director of the Kazakhstani Trading House in Hong Kong, 
Masimov worked in the banking sector from 1995-2000, finishing as 
Head of the Board of Halyk Savings Bank.  In August 2000 he was 
appointed Minister of Transport and Communications; and in November 
2001, as Deputy Prime Minister.  In June 2003 Masimov was appointed 
Assistant to President Nazarbayev, a position he held until January 
2006, when he was appointed Deputy Prime Minister.  In April 2006 he 
was given the additional responsibility of Minister of Economy and 
Budget Planning, which he held until October 2006.  Masimov is 
married, with two daughters and a son, and speaks Russian, Chinese, 
English, and Arabic. 
 
MILAS

Wikileaks

07ASTANA48, KAZAKHSTAN CONTEMPLATES DEMOCRATIC REFORM

WikiLeaks Link

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If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07ASTANA48.
Reference ID Created Released Classification Origin
07ASTANA48 2007-01-08 12:31 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0002
PP RUEHWEB

DE RUEHTA #0048/01 0081231
ZNY CCCCC ZZH (CCY TEXT - MSI4839 - AD676F05 - 555)
P 081231Z JAN 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 8110
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 2094
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0410
RUEHNO/USMISSION USNATO PRIORITY 2166
RUEHVEN/USMISSION USOSCE PRIORITY 1665

C O N F I D E N T I A L ASTANA 000048 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR SCA/CEN (M. O'MARA, T. PERRY) 
 
C O R R E C T E D  C O P Y - TEXT 
 
E.O. 12958: DECL: 01/08/2017 
TAGS: PGOV PHUM PREL KZ
SUBJECT: KAZAKHSTAN CONTEMPLATES DEMOCRATIC REFORM 
 
REF: A. 06 ASTANA 573 
 
     B. 06 ASTANA 585 
     C. 06 ASTANA 712 
     D. 06 ASTANA 22 
     E. 06 ASTANA 27 
 
Classified By: CDA Kevin Milas; reasons 1.4 (B) and (D). 
 
1. (C) Summary:  There is widespread expectation in 
Kazakhstan that President Nazarbayev will announce a package 
of democratic reform proposals early in the new year.  The 
timing and content of the initiative is not yet known, and 
some are skeptical that the proposals will represent 
fundamental changes.  Nevertheless, the work of the 
Democratization Commission has set the stage for wider public 
debate of the need for reform, and has heightened 
expectations that the government will move forward with 
democratization.  The next step forward could come as early 
as mid-January, when Nazarbayev may share his thoughts 
directly with the Democratization Commission.  End summary. 
 
--------------------- 
"Reform" is Coming... 
--------------------- 
 
2. (C) In November, with no prompting, President Nazarbayev 
volunteered to us that Kazakhstan would implement large-scale 
political reforms in 2007.  Speaking at a lunch following the 
November 14 dedication of the new embassy building, 
Nazarbayev explained that he had felt the need to complete 
the tasks of building the state structure and creating a 
strong economy before changing the political system.  Now 
that those two tasks have been completed, he said, it was 
time to move forward with reform of the political system (Ref 
A). 
 
3. (C) Observers of the political situation, regardless of 
party affiliation, appear to believe that a major 
announcement is coming early in 2007.  Opposition leader 
Bulat Abilov, co-chairman of the True Ak Zhol party, is 
factoring the expected announcements into his strategy as he 
fights criminal charges for his business dealings in the 
1990s (Ref B).   He told us that the government is less 
likely to pursue him aggressively if the trial coincides with 
an effort to trumpet political reform.  Likewise, failed 
opposition presidential candidate Zharmakhan Tuyakbay 
believes that a reform effort will begin in 2007, although he 
expects the results to be "minimal" (Ref C). 
 
4. (C) Numerous contacts in the Kazakhstani government have 
told us to expect movement on the democratic reform front in 
2007.  Perhaps most intriguingly, Deputy Prime Minister Karim 
Masimov told the Ambassador on November 17 that he know 
exactly what President Nazarbayev had in mind but could not 
discuss the specifics as he had been sworn to secrecy.  In a 
similar vein, Presidential Administration head Adylbek 
Dzhaksybekov told the Ambassador on December 1 that a 
constitutional convention would be held in the new year to 
examine proposed changes to the political system, but did not 
provide specifics. 
 
-------------------- 
...But When and How? 
-------------------- 
 
5. (SBU) President Nazarbayev is widely expected to use the 
next meeting of the State Commission on Democratization to 
outline his thinking on democratic reform.  The deputy 
director of the OSCE Centre told us that a highly-placed 
individual in the Presidential Administration had said that 
the session would take place the week of January 15.  There 
has been no official announcement, however. 
 
6. (SBU) Participants in the Democratization Commission 
provide significantly different descriptions of the work of 
the organization and its likely impact on the reform process. 
 In a December 5 meeting with the Ambassador, State Secretary 
Oralbay Abdykarimov said that the Commission is considering 
two stages of proposals:  reforms not involving changes to 
the constitution in 2007-2008, and reforms requiring 
constitutional changes from 2009-2011.  Abdykarimov, who runs 
the Democratization Commission on a day-to-day basis, said 
that President Nazarbayev would share his vision of reform at 
the next meeting of the Commission (likely in January).  The 
Commission would then move forward with specific reform 
proposals based on the recommendations of its various working 
groups.  (See Refs D and E for details on structure and goals 
of the Commission.) 
 
7. (SBU) Although Abdykarimov did not describe the expected 
proposals in detail, he noted that changes will be made to 
parliamentary powers and the electoral process.  The most 
contentious issue facing the Commission is in his view the 
question of transferring additional authority to the 
parliament and increasing its power relative to the 
presidency.  Abdykarimov commented that any effort to change 
the existing presidential form of government would likely &#
x000A;provoke dispute.  He added that the Commission is also 
considering increasing the number of deputies elected from 
party lists as opposed to single mandate districts; 
decreasing the number of signatures needed to register a 
party from 50,000 to 25,000; and modifying the roles of 
maslikhats (local legislatures).  Abdykarimov also singled 
out the need to strengthen the independence of the judiciary 
and to enhance the separation of powers between courts and 
procurators.  He predicted that the Commission would 
"resolve" the issue of procurators having the power to 
sanction arrests during the 2007-2008 phase of reforms. 
 
8. (C) In a November 21 conversation with the Ambassador, Ak 
Zhol leader Alikhan Baymenov, who heads the working group on 
constitutional reform, painted a much less rosy view of the 
workings of the Democratization Commission.  Baymenov 
complained that the proposals of the working groups were 
being forwarded to the Presidential Administration, likely to 
deputy head Maulen Ashimbayev, for review before being 
accepted.  Only the "mildest" suggestions were being included 
in the document that would be forwarded to President 
Nazarbayev for consideration.  Baymenov said that he had made 
a strong pitch to Abdykarimov that all the proposals, even 
those requiring constitutional amendments, should be 
presented to Nazarbayev at the same time. 
 
9. (C) Abdykarimov was holding the line against presenting to 
Nazarbayev any proposals that required changes to the 
constitution, however.  Baymenov predicted that Presidential 
Administration head Adylbek Dzhaksybekov and Security Council 
chair Murat Tazhin would have a large say in the final 
product that would be presented to Nazarbayev.  Foreign 
Minister Tokayev might also have some input, given his 
understanding of Western views, but would be unlikely to push 
for any bold changes.  Baymenov told the Ambassador that the 
reform process might become an area of competition for the 
business groups behind each of the most influential people in 
government, many of them flush with cash from recent London 
IPOs and preparing for the "next stage of battle" for assets 
and influence. 
 
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Comment 
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10. (C) Comment:  Kazakhstani authorities seem eager to give 
the impression that an organic, inclusive dialogue with civil 
society is underway in the Democratization Commission, which 
will lead to a package of reform proposals for President 
Nazarbayev's consideration.  The truth is somewhat less 
heartening; most international observers and even many 
Democratization Commission participants view the process as 
window dressing designed to convey the impression of 
dialogue.  Nonetheless, the Commission has heightened public 
awareness of the need for further political reform, and has 
placed fundamental questions like the balance of power 
between the executive and legislative branches on the table 
for public discussion for the first time.  While the 
Commission's proposals may not form the core of President 
Nazarbayev's widely expected reform initiative in 2007, the 
process has heightened expectations and the onus on the 
government to put forward a substantive reform package.  Post 
does not expect the government reshuffle announced on January 
8 to derail the process, as the dialogue is being managed by 
the Presidential Administration.  End comment. 
MILAS

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