08ASTANA768, KAZAKHSTAN AND INDIA SEEK TO REVIVE BILATERAL TIES

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Reference ID Created Released Classification Origin
08ASTANA768 2008-04-18 12:11 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO1779
PP RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHTA #0768/01 1091211
ZNY CCCCC ZZH
P 181211Z APR 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 2260
INFO RUCNCIS/CIS COLLECTIVE 0485
RUCNCLS/SCA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0042

C O N F I D E N T I A L SECTION 01 OF 03 ASTANA 000768 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 04/18/2018 
TAGS: PREL ECON ETRD KZ IN
SUBJECT: KAZAKHSTAN AND INDIA SEEK TO REVIVE BILATERAL TIES 
 
Classified By: Pol/Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
 
------- 
Summary 
------- 
 
1. (C) Bilateral relations between Kazakhstan and India 
started off strongly following Kazakhstani independence, but 
the momentum has slowed since then.   Both sides appear to be 
interested in reviving ties, and President Nazarbayev is 
expected to visit to India in November -- his first trip 
there in six years.   During the April 7-10 visit to 
Kazakhstan of Indian Vice President Ansari, the two sides had 
cordial discussions, but no agreements were signed. 
Kazakhstan-India trade has increased significantly in recent 
years, but from a very low level.   Trade barriers include 
the high cost of goods transportation due to a lack of viable 
overland trade routes.  Thus far, Kazakhstan and India have 
not made headway in developing bilateral mil-mil cooperation. 
 On a more positive note, cultural and people-to-people 
contacts are increasing.  We believe that, especially in 
comparison with Russia, the U.S., China, and the European 
Union, India will remain of only limited importance in 
Kazakhstan's strategic vision.  End Summary. 
 
--------------------------------------------- --------- 
Kazakhstan-India Relations: Quick Start, Lost Momentum 
--------------------------------------------- --------- 
 
2. (C) Kazakhstan-India bilateral relations got off to a 
quick start following Kazakhstan's December 1991 declaration 
of independence, but the momentum appears to have slowed 
since then -- with Kazakhstan emphasizing ties to the North 
(Russia), West (Europe and the U.S.), and East (China), over 
those to the South.  India was, in fact, among the first 
nations to recognize Kazakhstani independence, and President 
Nazarbayev made a state visit to New Delhi in February 1992 
to formally establish bilateral diplomatic relations. 
Nazarbayev made two subsequent state visits to India, first 
in December 1996 and again in February 2002, when he endorsed 
India's bid to become a permanent member of the UN Security 
Council.  However, Nazarbayev has not been back to Delhi in 
over six years. 
 
3. (C) During a February 11 meeting in Astana, Foreign 
Minister Tazhin told visiting Assistant Secretary Boucher 
that India, with its vast population and burgeoning economic 
growth, held real potential for Kazakhstan.  The Kazakhstani 
government, he explained, hoped to revitalize ties with New 
Delhi in the coming year, including through a "state visit." 
It was subsequently announced in April that Nazarbayev will 
visit India in November. 
 
4. (C) As a prelude, Indian Vice President Mohammad Ansari -- 
who also serves as Chairman of the upper house of India's 
parliament -- visited Kazakhstan during April 7-10 together 
with an Indian parliamentary delegation, at the invitation of 
Kazakhstani Senate Chairman Tokayev.  Ansari met with 
President Nazarbayev, Prime Minister Masimov, and Foreign 
Minister Tazhin, and addressed the Kazakhstani parliament. 
According to the presidential press service, Nazarbayev and 
Ansari discussed expanding cooperation in economics, trade, 
and information technology, and strengthening 
inter-parliamentary ties.  They also touched on oil and gas 
cooperation, including regarding the Satpayev oil block on 
the Caspian shelf.  Ansari thanked Nazarbayev for 
Kazakhstan's role in assisting India in getting observer 
status in the Shanghai Cooperation Organization (SCO).   In 
addition to his government meetings in Astana, Ansari also 
visited Almaty, where he was awarded an honorary doctorate by 
Al-Farabi University.  In a speech at Al-Farabi, Ansari 
stressed the inter-connections between Central and South 
Asia.  Indian Embassy diplomat George Raju told us that while 
Ansari was received warmly by the Kazakhstani government, 
there were no agreements signed, and no major projects were 
discussed in any detail. 
 
--------------------------------------------- -- 
Commercial Ties Growing -- But From A Low Level 
--------------------------------------------- -- 
 
5. (SBU) During the Ansari visit, the sides agreed to set up 
an experts working group to explore ways to increase trade 
and commerce.   Indian Embassy officials told us they see the 
potential for significant trade expansion.  In fact, 
Kazakhstan-India trade turnover increased by 76 percent from 
2005 to 2006, from $120 million to $210 million.  However, to 
put this into context, the $210 million figure represented 
just 0.3 percent of Kazakhstan's overall 2006 trade turnover 
of $62 billion.  (Note: Looking at this from the Indian 
perspective, Kazakhstan was not even among India's top 50 
 
ASTANA 00000768  002 OF 003 
 
 
trade partners.  End Note.)  By contrast, Russia, China, and 
the EU accounted for approximately 80 percent of Kazakhstan's 
trade.  In addition, in 2006, Indian investment in Kazakhstan 
was a miniscule $16 million. 
 
6.  (C) The Indian Embassy admitted to us that there are a 
n
umber of barriers to increased bilateral trade, including 
insufficient information about each country's markets, 
language barriers, and the high cost of goods transportation 
due to a lack of viable overland trade routes. Commercial 
relations are also hampered by lack of an Indian chamber of 
commerce or similar organization in Kazakhstan that could 
relay information about Indian companies and lobby for Indian 
business interests.  Indian companies, not surprisingly, 
complain about unpredictable and "arbitrary" treatment by 
Kazakhstani tax and customs authorities.  For instance, in 
2006, Larsen and Toubro, India's largest engineering and 
construction conglomerate, ended their operations in 
Kazakhstan, allegedly because of persistent problems 
encountered with red tape and corruption. 
 
7. (SBU) India is not a meaningful player in Kazakhstan's oil 
and gas sector, though India's ONGC Videsh Ltd. has attempted 
to secure investment deals on Caspian offshore blocks and has 
held talks with KazMunayGaz (KMG) and Kazakhstani officials 
on oil transportation issues.  Indian Oil Corp., Turkey's 
Calik Energy, and KMG are also negotiating to jointly build 
an oil refinery in Ceyhan, Turkey.   The Indian Ambassador to 
Kazakhstan has repeatedly stated that India is interested in 
expanding its ties with Kazakhstan in the civilian nuclear 
power sector.  Kazakhstan holds the world's second largest 
reserves of uranium -- a resource of great interest to India. 
 
--------------------------------- 
Mil-Mil Ties:  Lost Opportunities 
--------------------------------- 
 
8. (C) Though Nazarbayev and Ansari reportedly also discussed 
"military-technical cooperation," Kazakhstan and India have 
not managed to succeed in establishing meaningful mil-mil 
ties.  The Indian Embassy told us that Kazakhstani Defense 
Minister Akhmetov, Defense Chief General Altynbayev, and Navy 
Chief Rear Admiral Komratov had been invited to visit India 
from February 15-18.  (Note:  This information has been 
reported separately via DOD channels.  End Note.)   The visit 
was to take place during a military equipment exposition, 
which was attended by more than 50 national delegations.  The 
Indian Defense Ministry had made a special effort to get a 
meeting between Akhmetov and Indian Defense Minister Antony. 
However, two days before the scheduled visit, Kazakhstani 
Defense Ministry officials informed the Indian side that 
Akhmetov had decided to travel to Russia instead. 
Altynbayev's staff separately informed the Indians that he 
could also not attend.  (Note:  Once Akhmetov declined, 
Altynbayev may have had to back out as well for Kazakhstani 
protocol reasons.  End Note.) 
 
9. (C) The Indians feel snubbed since this is the second time 
that a senior Kazakhstani defense delegation has cancelled a 
visit recently.  In August 2007, Deputy Defense Minister 
Sembinov cancelled his trip to India with no explanation.  At 
this time, we believe there is little enthusiasm on either 
side for pushing forward with a Kazakhstan-India bilateral 
security program. 
 
--------------------------------------------- --- 
Cultural, Educational, and People-to-People Ties 
--------------------------------------------- --- 
 
10. (SBU) There is brighter news on other fronts.  Cultural, 
educational, and people-to-people ties between Kazakhstan and 
India are modest, but appear to be increasing.  Indian 
Embassy officials estimate that there are currently 2500 
Indian nationals in Almaty (including up to 1000 Indian 
medical students), about 100 in Astana, and about 40-50 in 
the Temirtau-Karaganda region working for the steel producer 
ArcelorMittal.  Astana's Eurasian National University and 
Almaty's Al-Farabi University have started offering Hindi 
classes in their oriental languages departments and have 
established exchange programs with India.  In March, the 
first center for Kazakh language and studies opened at 
Delhi's Jamia Milia Islamia University. 
 
11. (SBU) In Kazakhstan's larger cities, we have noticed a 
growing interest in Indian traditions, including vegetarian 
cuisine, yoga, and dance. The Indian government established 
an Indian Cultural Center (ICC) in 1992, which was moved from 
Almaty to Astana in January 2008.  The ICC offers regular 
yoga classes, cooking demonstrations, Indian cinema, and 
Hindi language classes. 
 
 
ASTANA 00000768  003 OF 003 
 
 
12. (SBU) Kazakhstan's principal airline, Air Astana, offers 
twice a week service between Almaty to Delhi, though at 
inconvenient hours.  Talks are underway to increase service 
to three times per week.  We have observed that passengers on 
this route are mainly Kazakhstani tourists, including 
religious pilgrims (Hare Krishna and Sai Baba followers), and 
yoga enthusiasts.  There are also Kazakhstani vendors who buy 
Indian goods to sell in Kazakhstan.  Indians coming to 
Kazakhstan on the flight appear to be either business people 
or students. 
 
------- 
Comment 
------- 
 
13. (C) While there appears to be interest on both sides in 
expanding bilateral relations across a number of fronts, 
India will likely continue to play a limited role in 
Kazakhstan's strategic vision.   Lack of overland trade 
routes puts India at a huge commercial disadvantage, 
especially relatively to China.  Geographic realties also 
make it unlikely that meaningful quantities of Kazakhstani 
oil and gas can be moved to the Indian market.  The simple 
fact of the matter is that geo-politics, history, mutual 
commercial benefit, and the aspirations of the Kazakhstani 
leadership portend a continued focus on Kazakhstani ties to 
the North, West, and East, rather than South.  End Comment. 
ORDWAY

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