07ASTANA2061, KAZAKHSTANI OFFICIALS LUKEWARM TO DEMARCHE ON WTO ACCESSION

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Reference ID Created Released Classification Origin
07ASTANA2061 2007-07-27 08:39 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO4149
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHPW
DE RUEHTA #2061 2080839
ZNR UUUUU ZZH
R 270839Z JUL 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 0218
INFO RUCNCLS/SCA COLLECTIVE
RUEHMO/AMEMBASSY MOSCOW 1452
RUEHBJ/AMEMBASSY BEIJING 0009

UNCLAS ASTANA 002061 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN - O'MARA; USTR - HAFNER, ERRION 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN WTRO WTO KZ
SUBJECT: KAZAKHSTANI OFFICIALS LUKEWARM TO DEMARCHE ON WTO ACCESSION 
BILATERAL SERVICES NEGOTIATIONS 
 
REF: State 94657 
 
1. Summary:(SBU) Charge delivered reftel demarche to Minister of 
Labor and Social Protection Gulzhana Karagusova, Minister of Energy 
and Mineral Resources Baktykozha Izmukhambetov, and Deputy Chairman 
of the Financial Supervision Agency Gani Uzbekov.  While the 
responses ranged from friendly but technical (Karagusova) to 
respectful but aggressive (Izmukhambetov) to plainly unreceptive 
(Uzbekov), it is difficult to judge reliably the likelihood of these 
officials relaxing their stances as a result of the discussions. 
Uzbekov, perhaps, summed it up best: "in the end, it's a political 
decision, either by the President or the Prime Minister."  End 
Summary. 
 
2. (SBU) In a very diplomatic tone and in highly technical terms, 
Karagusova explained why she was "surprised" by the notion that 
progress has stopped in the bilateral services negotiations. She 
spoke of Kazakhstan's offer on labor being quite fair and, in 
various aspects, being superior to Russia's.  She mentioned her 
Ministry's flexibility on some areas highlighted by the USTR.  But, 
she stated, "we need to foster development of young specialists" in 
Kazakhstan.  "Unfortunately," Karagusova remarked, "our borders are 
not with the U.S.," alluding repeatedly to Russia and China, 
Kazakhstan's two "big neighbors."  Still, she expressed willingness 
to adopt some USTR recommendations and said, somewhat cryptically, 
at the end of the conversation, "This fall, when Ms. Aitzhanova 
[Zhanar Aitzhanova, Deputy Minister of Industry and Trade and WTO 
accession chief negotiator] resumes services negotiations, there 
will be no Mode 4 problems."  (Note: Karagusova recently joined the 
pro-presidential Nur Otan party and now appears on the party's 
roster of candidates for the August 18th parliamentary election. 
This is a strong indication that her days as Labor Minister may be 
numbered.  In response the Charge's question on her future plans, 
Karagusova (with some apparent bitterness in her voice) remarked 
that everything now is up to "God and the President."  End note.) 
 
3. (SBU) Energy Minister Izmukhambetov began his response to 
Charge's points by graciously acknowledging the role the U.S. 
investors have played in the history of independent Kazakhstan. 
"U.S. and Russia," he stated, "are our main partners," adding later 
that "with Russia, as well as China, we are neighbors; thus, our 
interests [with them] do not always coincide."  Izmukhambetov, 
however, appeared to concede nothing when he turned to the terms of 
Kazakhstan's WTO accession.  "As far as services," he said, "we are 
no worse than Russia on any issue."  Turning to energy specifically, 
he added, "Our terms are much more favorable than Russia's, with 
whom you have already signed.  So, what's the problem?"  He went on 
to state that U.S. energy companies have no problems operating in 
Kazakhstan, adding, however, "today we want investors here not just 
to take our oil but to help us: train our staff, develop technology 
in Kazakhstan."  "I have a request," Izmukhambetov continued, "if 
there are specific issues, please provide them in writing.  I will 
talk to Aitzhanova as well...  We would like to accede with Russia. 
If we fall behind, it will cause major problems.  It's in your 
interests, too, since no one is as involved in our economy as you 
are."  Izmukhambetov echoed Karagusova in expressing the 
Kazakhstanis' main concern with the accession: "We know we won't get 
twenty million U.S. workers and become 'dissolved.'  We can't be 
sure of that with some other countries." 
 
4. (SBU) Commenting on financial services, Financial Supervision 
Agency (FSA) Deputy Chairman Uzbekov displayed little willingness to 
compromise.  The FSA, he said, met with Aitzhanova two weeks ago and 
is now discussing what kind of new offer it can come up with.  "In 
our opinion," Uzbekov stated, "the financial sector is already 
liberalized...  You may not feel we are doing enough; in my - and 
our - opinion, we are doing too much."  Remarking on "very tough" 
negotiations with the E.U., Uzbekov bemoaned lack of appreciation 
"by the other side" of Kazakhstan's "significant" concessions. 
"There is talk as to whether we need to join the WTO.  There is no 
real analysis as to what we will gain [from joining]."  He stressed 
that the FSA is presently involved in "very tense discussions" with 
the Kazakhstani private sector, which has grown concerned, having 
realized that the WTO accession is imminent.  Turning to specifics, 
Uzbekov described the U.S. offer of a two-year transition period as 
"unacceptable."  "At the end, of course," he added, "it's a 
political decision." 
 
MILAS

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