07ASTANA943, ROBERT DEUTSCH DISCUSSES AFGHANISTAN, REGIONAL

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Reference ID Created Released Classification Origin
07ASTANA943 2007-04-13 01:20 2011-08-30 01:44 CONFIDENTIAL//NOFORN Embassy Astana

VZCZCXRO3490
PP RUEHDBU
DE RUEHTA #0943/01 1030120
ZNY CCCCC ZZH
P 130120Z APR 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 9068
INFO RUCNCIS/CIS COLLECTIVE 0122
RUEHIL/AMEMBASSY ISLAMABAD 2112
RUEHBUL/AMEMBASSY KABUL 0312
RUEHNE/AMEMBASSY NEW DELHI 0442
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 03 ASTANA 000943 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPT FOR EB/ESC; SCA/CEN (O'MARA) 
COMMERCE FOR ADVOCACY CENTER: BLOPP 
DEPT PASS USTR 
 
E.O. 12958: DECL: 04/12/2017 
TAGS: ECON ENRG ETRD KZ
SUBJECT: ROBERT DEUTSCH DISCUSSES AFGHANISTAN, REGIONAL 
INTEGRATION  WITH KAZAKHSTANI OFFICIALS 
 
REF: A. ASTANA 753 
 
     B. ASTANA 908 
 
Classified By: Ambassador John Ordway; reasons 1.5(b) and (d). 
 
1. (C) Summary: SCA Senior Advisor Robert Deutsch briefed 
Deputy Foreign Minister Nurlan Yermekbayev on U.S. 
reconstruction efforts in Afghanistan on April 6 in Astana, 
receiving in turn a brief of Yermekbayev's recent trip to 
Kabul as head of a public-private Kazakhstani delegation. 
Yermekbayev urged the USG to raise the issue of Kazakhstan's 
assistance to Afghanistan at the ministerial level whenever 
possible, in order to help overcome skepticism within the GOK 
over Kazakhkstan's role.  Deputy Minister of Trade and 
Industry Aitzhanova asked Deutsch to communicate a different 
message in Washington: the need for the USG to be more 
aggressive in urging Kazakhstan's Central Asian neighbors to 
play a more constructive role in the next round of TIFA 
negotiations.  Deutsch discussed a recent World Bank study on 
regional transportation facilitation with World Bank and 
private sector representatives, exploring ways in which the 
inefficiencies in regional transport trade could be addressed 
by means of a "public-private partnership."  Kazakhstani 
electricity experts briefed Deutsch on GOK plans to expand 
generation capacity to meet anticipated electricity deficits 
in the South.  End summary. 
 
Afghanistan 
----------- 
 
2. (C) In Kazakhstan to attend the USTDA-sponsored Regional 
Telecommunications Conference, SCA Senior Advisor Robert 
Deutsch conducted meetings on broader regional issues in 
Astana on April 7.  Deutsch began by providing Deputy Foreign 
Minister Yermekbayev with an overview of the USG Afghanistan 
reconstruction efforts, responding to Yermekbayev's earlier 
expression of interest to the DCM.  Yermekbayev commented on 
the utility of the spending and budget figures, telling 
Deutsch that "we can use this to benchmark our goals with 
other ministries."  In general, he said, "we have a will to 
participate more actively" in Afghanistan, but "it is not so 
easy to convince GOK officials" that it should be a priority. 
Perhaps the USG could help, he suggested, by "reminding other 
ministers" of the importance of Afghanistan reconstruction. 
 
3. (C) Yermekbayev described his recent two-day trip to Kabul 
as Head of a delegation composed of government and private 
sector representatives.  He had left with the impression that 
"there will not be peace in Afghanistan until the foreign 
military leaves, especially the Americans and British. 
Still, withdrawal now would lead to further ethnic clashes." 
Commenting on the mixed government/business delegation, 
Yermekbayev explained that the GOK approach was to allow the 
"big companies" to pursue investments ("or not"), based on 
their business interests, while the GOK focused on long-term 
"social assistance programs" -- including, potentially, 
"building hospitals, schools, roads, grain elevators." 
 
4. (C) Later in the day, Vice Minister of Industry and Trade 
Kuandyk Bishimbayev told Deutsch that he, too, had 
participated in the recent GOK delegation to Afghanistan, and 
in fact was the head of an "inter-governmental commission" 
charged with exploring possible "areas of interest." 
(Bishimbayev said that he hoped to sponsor the first 
commission meeting in August or September.) The Ministry of 
Foreign Affairs had the lead in creating an "assistance 
program," he explained, while his efforts were focused on 
helping Kazakhstani businesses identify investment 
opportunities. 
 
TIFA 
---- 
 
5. (C) Zhanar Aitzhanova, Vice Minister of Industry and Trade 
(and Kazakhstan's Special Representative at WTO Accession 
Negotiations), used the occasion of her meeting with Deutsch 
to deliver a message about TIFA. The process was 
"slow-going," she said, due to its regional nature and a 
"lack of enthusiasm" from all parties except Kazakhstan and 
the U.S.  "The USG needs to work more with other governments 
 
ASTANA 00000943  002 OF 003 
 
 
in the region" to advance the project, she urged. 
Kazakhstan, she added, was poorly placed to do so:  "we don't 
want to offend Uzbekistan by looking like a regional leader." 
 Aitzhanova indicated that the GOK intended to use the TIFA 
process to advance its WTO agenda because, unlike the WTO 
discussions, TIFA allowed the Kazakhstanis "an opportunity to 
talk on a more equal basis with the USTR."  Aitzhanova noted 
that she would be in Washington on April 17 for bilateral WTO 
negotiations. 
 
Transportation 
-------------- 
 
6. (SBU) In Almaty, Deutsch discussed cross-border trade 
facilitation with Munavara Patasheva of the Forum of 
Entrepreneurs of Kazakhstan, and World Bank official Aslan
 
Sarinzhipov.  The meeting focused on the findings of a recent 
World Bank-funded study of time and cost issues (including 
"unofficial" payments") affecting seven regional transport 
corridors.   The results of the study have been shared with 
government officials in Kazakhstan, Kyrgyzstan, and 
Tajikistan, and appear to provide a basis for expanded 
public-private dialogue on this key issue.  (The Forum of 
Entrepreneurs, along with other regional business 
associations, gathered data and observations for the study, 
and is thus well-positioned to advocate their interests based 
on the results obtained.) 
 
7. (C) Yerlan Sagadiyev, Advisor to the Prime Minister, 
outlined a different transportation vision over lunch in 
Astana on April 7.  Sagadiyev described growing interest in a 
"multi-modal" transportation corridor across Kazakhstan 
linking China to Western markets.  According to Sagadiyev's 
vision, a single right-of-way for a raildroad, road, and 
telecommunications fiber, linked to port and trans-Caspian 
shipping facilities, could potentially cut 11 days off the 
transit time of Chinese goods to Europe.  Given projected 
volumes of Chinese trade, particularly in perishable goods, 
Kazakhstan was well-positioned to enhance its role as a 
transit country. 
 
Electricity 
----------- 
 
8. (C) Deutsch discussed electricity issues in a series of 
meetings with Samruk (national holding company) and Energy 
Ministry Officials.  Referencing the GOK's recent evaluation 
of electricity balances through 2105 (Ref A), the Head of the 
Energy Ministry's Office of Electrical Energy Reform, Kanysh 
Moldabayev, told Deutsch that, in order to meet projected 
electricity deficits in the South, both new generation plants 
and renovations of existing plants would be required.  The 
GOK study calculated that a wholesale tariff of 3.5 cents / 
kWh would be needed to attract sufficient private investment 
in generation capacity, he said.  If the rate was not 
sufficient, the GOK would consider financing construction 
from the Republican budget, or through private / public 
partnerships.  (Note: Prime Minister Masimov told Ambassador 
Ordway on April 9 that his goal was to achieve entirely free, 
market-determined tariffs "next year." Ref B. End note.) 
Samruk CFO Ulf Wokurka lamented the fact that, to date, only 
8-10% of wholesale electricity trades were conducted on the 
"spot" market, short of the 25% goal set for the 
Samruk-managed wholesale market operator, KOREM.  While 
having 90% of wholesale trades governed by bilateral 
agreements between generator and customer might not seem like 
a bad thing, he explained, each agreement represented a 
potential "sweetheart" deal, or an opportunity for the abuse 
of political power, and thus was best avoided. 
 
9. (C) On the subject of regional electricity integration, 
Samruk's Head of the Electricity (KEGOC) Group, Esbergen 
Abitayev, took pains to underscore that it was only 
"recently," with the construction of a 500 kV North-South 
transmission line, that Kazakhstan's own electricity market 
became "integrated."  Significant electricity trade took 
place in the North, across the Russian border; fewer, mostly 
seasonal volumes, occurred in the South.  Speaking of 
investments in generation capacity, Abitayev told Deutsch 
that the Kyrgyz government had invited Samruk to participate 
 
ASTANA 00000943  003 OF 003 
 
 
in a "joint pre-feasibility" study (along with RAO UES) of 
the Kambarata hydro project.  The study, he said, "will 
include a chapter on markets in South Asia and Afghanistan." 
Turning to Tajikistan, Abitayev noted that Rogun was a 
relatively attractive project, with much cheaper costs per 
kilowatt than in Kyrgystan.  "We are studying the Tajik 
market closely," he concluded. 
 
10. (U) Robert Deutsch has cleared this cable. 
ORDWAY

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