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Reference ID Created Released Classification Origin
08ASTANA769 2008-04-18 12:35 2011-08-30 01:44 CONFIDENTIAL Embassy Astana


DE RUEHTA #0769/01 1091235
R 181235Z APR 08

C O N F I D E N T I A L ASTANA 000769 
E.O. 12958: DECL: 04/18/2018 
Classified By: Pol/Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
1. (C) The Ambassador attended the official opening of the 
eighth American Corner in Kazakhstan on April 8 at the Aktobe 
branch of the Republican Science Technical Library.  While in 
Aktobe, he also held meetings with oblast (regional) and city 
officials, NGO's representatives, and local businessmen. 
Aktobe appears to be pinning its economic development hopes 
on natural resources.  Business leaders complained about 
poorly-trained personnel, low educational standards, and 
problems with government regulation.  The Aktobe Women's 
Support Center, an NGO, is cooperating well with local 
authorities on issues of domestic violence, human 
trafficking, and protecting children's rights.  End Summary. 
--------------------------------------------- ------------ 
Lacking Infrastructure, Aktobe Banks on Natural Resources 
--------------------------------------------- ------------ 
2. (C) Having broken with Soviet-era revenue streams from 
agriculture and livestock, Aktobe oblast (i.e., region) 
officials now believe that their economic prosperity is 
ultimately linked to the efficient exploitation of their 
natural resources, which include significant deposits of oil 
and gas.  According to Oblast Deputy Akim Zhetkergen 
Oralmagambekov, wheat is still cultivated on over 6.5 million 
acres of land in the oblast's northeast, but most of the 
agricultural land surrounding the city of Aktobe has long 
been fallow.  Although plans have been discussed for the 
resuscitation of part of the agricultural sector, more 
emphasis is being placed on the extraction of minerals, 
including copper, nickel, gold, chromium and silicon.  Like 
all of Kazakhstan, the rapidly rising cost of living and 
commodities and looming threat of increased inflation rates 
weigh heavily on Aktobe officials.  According to Aktobe City 
Akim Serik Nokin, the sub-prime crisis has had an impact on 
local economic growth.  He noted specifically the relative 
unavailability of credit, which has impacted several 
unfinished construction sites.  Despite these challenges, 
Oralmagambekov insisted that in Aktobe oblast "we are 
developing quickly." 
--------------------------------------------- ------ 
Businesses Face Obstacles, Seek Partner in Advocacy 
--------------------------------------------- ------ 
3. (C) The Ambassador met with a group of Aktobe business 
leaders, including a representative of the Aktobe branch of 
the Atameken business association.  The business leaders 
agreed that despite significant resource wealth, the economic 
development of Aktobe is hindered by several factors, 
including a lack of skilled laborers, irregular governmental 
regulation, poorly developed infrastructure (including poor 
roads and deficient power generation), and inefficient 
customs practices.  Acknowledging the need to bring issues to 
the attention of the government, the group was divided in 
their vision as to how best this could be achieved.  They 
also were apprehensive about rising inflation rates, which 
have for some increased production costs by 20 percent over 
the past year.  Rising oil prices, proposed export tariffs 
and export restrictions, and growing food costs have curbed 
their optimism. 
4. (C) According to the businessmen, a lack of qualified 
specialists and technicians, as well as an ineffective system 
of educational accreditation, is impacting economic 
development.  Absent rigorous accreditation standards like 
those maintained during the Soviet period, Kazakhstan has 
witnessed an increase in the number of questionable 
degree-offering institutions, they maintained.  Relaxed 
standards and easily purchased degrees have shaken industry 
confidence in the ability of the system to prepare qualified 
personnel.  According to Anatoly Kunevich, President of Caspi 
Neft TME, verifying credentials is nearly impossible, making 
it easy for many job-seekers to simply lie about their 
qualifications from the start.  Tleumurat Darkhanuly of 
KazTechnoGas said he was reluctant to use local employment 
agencies and increasingly turned to the internet to outsource 
work such as financial and legal services. 
5. (C) Inconsistent government regulations continue to 
challenge business development. According to Kunevich, he has 
still not recovered his initial investment made nine years 
ago, yet his enterprise has been increasingly subjected to 
inspections from government agencies who believe it is 
profitable.  "The government's appetite is growing, and 
everyone checks us, especially before January 1" said 
Kunevich, indirectly implying official corruption.  The 
businessmen collectively acknowledged the need for effective 
business advocacy, arguing that those who regulate it from 
above do not properly understand the market. 
Small But Real Victories For Civil Society 
6. (C) At a press conference hosted by the Aktobe Akimat, 
and officials made clear their curiosity about the 
opening of the American Corner, the availability of English 
language instruction, other possible U.S. regional 
priorities, and their general perception of decreased levels 
of U.S. funding and interest in Kazakhstan.  Several locals 
inquired about the fate of relations between the U.S. and 
Kazakhstan following 2008 U.S. presidential elections. 
(Note: The audience laughed heartily when the Ambassador 
assured them that the only certainty was that there would be 
a new president.  End Note.)  Journalist Bayan Sarsembina 
from Zhas Alash made an indirect plea for continued support 
of independent media, inquiring about future programs that 
the U.S. government would provide similar to the previous 
independent journalism seminars.  Noting "the situation we 
are currently in here," Sarsembina criticized the Kazakhstani 
political process and one-party parliament asking if in light 
of its "murderous" treatment of the opposition Kazakhstan had 
the "moral right" to serve as Chair of the OSCE.  (Note: 
Later that day, Aktobe City Akim Nokin and Deputy Oblast Akim 
Oralmagambekov remarked to the Ambassador on Sarsembina's 
bravado, saying with a wink that the authorities have 
ultimately "found it easier to let journalists talk" rather 
than to trying to impede them.  End Note.) 
7. (U) Participating in a round table discussion with the 
Ambassador at the Aktobe Women's Support Center, both local 
officials and center staff discussed their work to prevent 
domestic violence and human trafficking and protect the 
rights of children and migrant laborers.  The Center 
currently receives funding from the Soros and Counterpart 
Foundations, as well the U.S. government.  Operating 
primarily as a community-based resource and training center, 
it has also demonstrated unusual success by initiating an 
ongoing partnership and collaboration with regional 
authorities, including the Transport Police and the Aktobe 
Oblast Department of Internal Affairs.  Working closely with 
the authorities, the Women's Support Center maintains a 
hotline and offers psychological counseling and 
rehabilitation services for victims of trafficking and 
--------------------------------------------- ------------- 
Street-Level Observations Indicate A Society In Transition 
--------------------------------------------- ------------- 
8. (SBU) The ethnically diverse city of Aktobe is home to 
Russian, Kazakh, and -- increasingly -- Chinese speakers. 
Russian remains omnipresent, but Kazakh is increasingly 
spoken on the streets and -- according to  Deputy Oblast Akim 
Oralmagambekov -- in the halls of government.  Religion, 
Oralmagambetov assured the Ambassador, does not play a major 
role in Aktobe.  More specifically, he said that there were 
no problems with religious extremism, but the city was 
constructing a new mosque in the city center in response to 
increased demand for places of worship.  According to 
Oralmagambetov, a new Orthodox church is also being built 
across the street from the mosque, but we did not see signs 
of its construction.  The bulk of the infrastructure of 
Aktobe clearly dated from Soviet times, much of it in 
significant disrepair.  There were a few new construction 
sites, and government facilities visited, including the 
Pedagogical Institute and City Administration, were in good 


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