Monthly Archives: August 2008

08ASTANA1617, GOVERNMENT OF KAZAKHSTAN EXPLORES OPTIONS FOR EXPANDING

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Reference ID Created Released Classification Origin
08ASTANA1617 2008-08-29 02:33 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO1319
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1617/01 2420233
ZNR UUUUU ZZH
R 290233Z AUG 08 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3135
INFO RUCNCIS/CIS COLLECTIVE 0615
RUEHAST/USOFFICE ALMATY 0689

UNCLAS SECTION 01 OF 03 ASTANA 001617 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EAID EINV PGOV KZ
SUBJECT:  GOVERNMENT OF KAZAKHSTAN EXPLORES OPTIONS FOR EXPANDING 
ELECTRICITY GENERATION 
 
ASTANA 00001617  001.6 OF 003 
 
 
SUMMARY 
------- 
 
1. In response to a request from Kazakhstan's Ministry of Energy and 
Mineral Resources, on August 21, USAID completed and presented a 
study on options for stimulating investment in new electricity 
generation capacity through the use of capacity markets.  The study 
will be presented to stakeholders in a workshop as one of the 
culminating activities of the first phase of the Regional Energy 
Market Assistance Program (REMAP).  REMAP has established a strong 
rapport with Kazakhstani counterparts critical to the establishment 
of a regional market capable of increasing market-based trading 
within Central Asia, Afghanistan and Pakistan.   End Summary. 
 
BACKGROUND 
---------- 
 
2.  Kazakhstan has enviable economic growth and vast energy 
resources and yet many parts of the country face frequent blackouts. 
 Even some urban areas in Kazakhstan are facing power shortages and 
possible brown outs.  Current electricity generation and 
distribution assets need to be managed more effectively and 
incentives need to be provided for adding generation and 
distribution assets.  In both areas, there is a potentially large 
role for private sector investment and asset management techniques. 
 
3.  Private sector investment in new generation capacity has not 
taken place or has been stymied due to restrictive government 
policies to limit exports to meet domestic demand at a highly 
unattractive domestic pricing cap.  The pricing cap does not take 
into account the cost of constructing new generation facilities. 
Unless market mechanisms to address pricing issues are implemented 
and transparent regulation to access the grid for unlimited export 
of electricity to neighboring countries in Central Asia and 
Afghanistan is allowed, it will be difficult to access 
private-sector investment. 
 
4.  The Kazakhstani electricity market is evolving, but it is far 
from complete.  For example there are no market-based arrangements 
to deal with transmission congestion, and various instruments to 
allow market participants to manage risks, such as "contracts for 
differences," and other options and futures contracts, are not 
available yet.  More importantly, due to price caps, the majority of 
distribution companies in Kazakhstan cannot make the investments in 
metering and communications needed for improving electricity 
distribution.  Companies continue to face high technical losses and 
theft.  There is a need to separate market operation from 
transmission, and make both subject to economic regulation. 
 
5.  Despite weaknesses, the Kazakhstani government is showing some 
leadership in electricity sector restructuring, promotes the idea of 
creating a regional power exchange, and supports the operation of 
the regional Coordination Dispatch Center in Tashkent. 
 
REMAP: A CATALYST FOR REGIONAL COOPERATION 
------------------------------------------ 
 
6.  The USAID REMAP activity, financed jointly by the Kazakhstani 
government and the USG under the umbrella of USAID's Program for 
Economic Development, focuses on fostering: a) increased electricity 
exchange and trade; b) a transparent, competitive electricity 
market; and c) a market-based regulatory framework for regional 
cooperation.  As REMAP winds down over the next few months, it will 
focus on completing activities in the below areas. 
 
TRANSMISSION 
------------ 
 
7. Kazakhstan has a limited high voltage transmission network and 
capacity within the country.  This limitation impacts cross border 
electricity trade. The Kazakhstan Grid Operating Company (KEGOC) has 
a program to rehabilitate existing transmission lines and build 
several new transmission lines to remove these constraints.  There 
are several high voltage lines under construction and there are 
plans to construct additional lines in the near future. 
 
8.  In order to enhance operation of the regional transmission grid, 
REMAP has established a regional Power System Planning Model based 
on the country models of transmission companies in Kazakhstan, 
Kyrgyzstan, Tajikistan, Uzbekistan and the Coordination Dispatch 
Center in Tashkent.  The model was established through the formation 
of the CARTRANS Working Group (comprising transmission system 
operators from the region with participation from Afghanistan), 
which held a series of policy discussions.  All five Central Asian 
countries have installed USAID funded improved software. 
 
9. The final meeting of the CARTRANS Steering Committee is scheduled 
to be conducted on September 26 in Astana.  During this meeting, the 
CARTRANS Working Group will present to the Steering Committee for 
its approval the final 2007 and 2012 national and regional models 
and the analysis and findings of the CARTRANS final report. 
 
ASTANA 00001617  002.2 OF 003 
 
 
 
GENERATION
 
---------- 
 
10.  Despite Kazakhstan's program of industry restructuring, the 
introduction of competitive power markets, and establishment of 
regulatory institutions, Kazakhstan has not attracted investment in 
new generation facilities and remains a net importer of electricity 
from Central Asian electricity suppliers.  Old generation plants 
with low operating costs supply most electricity at prices that are 
far below the price needed to attract investors to build new plants. 
 Aware of this problem and the resulting shortages of electricity, 
representatives of the Ministry of Energy, the Agency for Regulation 
of Natural Monopolies, and the Agency for Competition Protection 
have all stated that a high priority for Kazakhstan is the need to 
provide incentives for investment in the generation sector. 
 
11. In response to a request from the Ministry of Energy and Mineral 
Resources, REMAP prepared a white paper on approaches to ensuring 
resource adequacy and the international experience in stimulating 
investment in new generation capacity through the use of capacity 
markets.  The paper reviewed various administrative and market based 
approaches to resource adequacy, with a particular emphasis on the 
structure, operations and results to date of capacity markets.  In 
so doing, the paper reviews the interplay between energy and 
capacity markets and highlights the institutional roles of 
regulators and market participants in the operation of such 
markets. 
 
12. The overall conclusion that can be drawn from the report is that 
due to specifics of electricity markets, "one for all products" 
pricing in many competitive power markets does not provide adequate 
price incentives for investment in new generation, therefore 
additional payment mechanisms need to be developed.  The report 
describes a variety of options employed in power markets around the 
world and analyzes advantages and shortcomings of each of these 
options. Since one of the most prevalent options is an installed 
capacity market, the report also contains an overview of the 
operations of the installed capacity market in the U.S. (PJM, New 
York ISO, ISO-New England) and in the Russian Federation (which was 
launched in early July). 
 
13. Once counterparts have had a chance to comment on the paper, the 
findings will be presented to stakeholders in a workshop scheduled 
for September and entitled "Power Sector Resource Adequacy Plans 
within a Market Environment and the use of Capacity Markets to 
Stimulate Investment." 
 
PRIVATE MARKETS 
--------------- 
 
14. REMAP support to on-going national market development and sector 
reform processes will go a long way to help develop market-based 
trading arrangements between all Central Asian countries and 
increase exports available to Afghanistan and Pakistan.  One of the 
first activities that REMAP completed was a study tour for 
Kazakhstani government specialists Ministry of Energy and Mineral 
Resources (MEMR), the Competition Protection Committee (CPC), the 
Kazakhstan Grid Operating Company(KEGOC), and Kazakhstan Market 
Operator of Electricity and Capacity(KOREM) to the most progressive 
electric power market in the United States, PJM. 
 
15.  The annual policy speech President Nazarbayev gave in February 
2007 included support for regional energy cooperation and called for 
the creation of a regional power exchange.  In a related issue, 
REMAP worked with KOREM to streamline its operations and strengthen 
its capabilities to make it more accessible to cross-border trading. 
 Electricity trading on the KOREM market has steadily increased 
since inception and now stands at 15 percent of the total energy 
generated in Kazakhstan. 
 
16.  As a final activity in this area, on May 21-22, REMAP concluded 
an analysis and organized a regional workshop on specific market 
barriers in the area of the legal and customs frameworks in Central 
Asia to see how these regimes can more effectively support 
cross-border power trading. 
 
REGIONAL COOPERATION HAS SIGNIFICANT BARRIERS 
--------------------------------------------- 
 
17. Development of the electricity sector in Central Asia is closely 
related to water/energy sharing issues and the irrigation regime. 
As Kyrgyzstan and Tajikistan are planning to increase the 
utilization of water resources for the production of electricity to 
meet market demands, 
the economic valuation of water as a commodity and the more 
effective use of water for both electricity and agriculture are of 
great importance.  These issues have become even more critical due 
to the current low water year. 
 
18. Ancillary services, such as reserve capacity and regulation 
 
ASTANA 00001617  003.2 OF 003 
 
 
energy, are not procured using market-based mechanisms and 
arrangements for market monitoring by a qualified regulatory agency 
are weak.  This results in distorted market pricing of electricity 
which does not reflect true market costs of ancillary services. 
 
19. The countries of Central Asia have to work together to develop 
common policies and must be provided with the technical resources to 
implement shared decisions. Consistent with best practices used in 
other countries, there is an immediate need to harmonize legal and 
regulatory issues facing the market and to support trade between 
within and between Central Asia and Afghanistan and Pakistan. 
 
USAID REMAP II 
-------------- 
 
20. USAID has designed and is in the process of procuring a 
three-year $16 million follow-on to the REMAP activity.  The bulk of 
the funding for the activity in Kazakhstan will be financed under 
the Program for Economic Development. 
 
21.  The following is an illustrative list of activities for 
Kazakhstan that may be implemented by REMAP II: 
 
- Advice/implementation of incentives for the development of new 
generation capacity. 
 
- Policy facilitation/training on market development/ modification; 
legal and regulatory issues, market design, energy economics, and 
economic regulation. 
 
- Support for on-going national market development and sector reform 
processes in ways that help to develop market-based electricity 
trading arrangements between all Central Asian countries and 
increase exports available to Afghanistan and Pakistan. 
 
-Implementation of a regional transmission planning model for 
transmission system analysis and planning work. 
 
- Technical support for harmonization of national legislation and 
regulations related to electricity trade. 
 
- Development of a new regional methodology for pricing of ancillary 
services. 
 
- Development of a regional grid code and transmission pricing 
arrangements. 
 
- Development f ways for managing transmission conge
stion in the 500 
kV regional grid to provide the necessary pricing signals for 
additional transmission and generation. 
 
22.  While Kazakhstan's contribution to an efficient regional energy 
market will not be achieved without continued reforms, it does have 
the potential to play a significant leadership role. Kazakhstan has 
undergone a first round of energy sector reforms and is potentially 
a model for the development of the other Central Asian countries. 
It is also a likely investor in generation and transmission in the 
region. Over the long term, Kazakhstan could be a potential exporter 
of energy to the region and further south.  It is in the U.S. 
interest to advance international energy security by ensuring 
reliable access to global markets including regional energy 
integration and the Central Asia South Asia Regional Energy Market 
(CASAREM).  Kazakhstan's active involvement in developing the 
regional energy market is essential. 
 
ORDWAY

Wikileaks

08ASTANA1609, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, AUGUST 3 – AUGUST

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Reference ID Created Released Classification Origin
08ASTANA1609 2008-08-28 02:07 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO0200
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1609/01 2410207
ZNR UUUUU ZZH
R 280207Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3127
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0613
RUEHAK/AMEMBASSY ANKARA 2178
RUEHBUL/AMEMBASSY KABUL 0414
RUEHNE/AMEMBASSY NEW DELHI 0514
RUEHAST/USOFFICE ALMATY 0684

UNCLAS SECTION 01 OF 02 ASTANA 001609 
 
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 KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, AUGUST 3 - AUGUST 
16, 2008 
 
ASTANA 00001609  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Banking Sector Updates 
-- New Player in Local Capital Market 
-- Competition Agency Announces Inspection Results 
--   Ministry Presents Draft of New Subsoil Use Legislation 
-- Arcelor Mittal Reduces Its 2008 Output 
-- Petrocapital Resources To Buy Almas International 
-- Rusal Plans To Build Aluminum Plant 
-- Gasprom Neft Seeks To Buy Gas Stations in Kazakhstan 
 
Banking Sector Updates 
---------------------- 
 
2.  According to the Financial Supervision Agency, Kazakhstan's 
commercial banks earned a net profit of 67.9 billion tenge 
(approximately $565 million) during January-June 2008, which is down 
41.4% in comparison with the same period in 2007.  Commercial bank 
revenues totaled 1.297 trillion tenge (approximately $10.8 billion), 
a 68.7% increase over January-June 2007.  However, expenses totaled 
1.229 trillion tenge (approximately $10.2 billion), a 95.1% increase 
over the same period in 2007. 
 
3.  Alnair Capital Holding has increased its stake in 
KazKommertsBank (KKB) to 25.15%, officially making it a "bank 
holding company," according to the definition used by the Financial 
Supervision Agency.  Alnair Capital Holding is controlled by Sheikh 
Tahnoon Bin Zayed Al Nahyan of Abu Dhabi.  Kazakhstani newspaper 
Respublika speculates that the new shareholders are anxious for 
radical changes in KKB's top management. 
 
4.  Kazakhstan's Alliance Bank has secured a $95 million loan from 
Merrill Lynch International.  According to an Alliance press 
release, the 9.67% loan will mature on January 20, 2010.  Alliance 
Bank will in turn use the borrowed funds to provide credit to their 
clients. 
 
5.  According to the Kazakhstan Stock Exchange (KASE), ABN AMRO 
Kazakhstan was recently renamed RBS Kazakhstan.  The change comes 
following the purchase of Netherlands-based ABN AMRO by a consortium 
of the Royal Bank of Scotland, Fortis, and Santander back in October 
2007. 
 
New Player in Local Capital Market 
---------------------------------- 
 
6.  The Eastland Capital Group Ltd has announced plans to invest 
between $10-15 billion in Kazakhstan, directed at projects in the 
oil and gas, mining, metallurgy, transport-logistics, agro-industry, 
and financial sectors.  Eastland Capital manages large sovereign and 
private funds from the Middle East, South-East Asia and Europe. 
 
Competition Agency Announces Inspection Results 
--------------------------------------------- -- 
 
7.  Competition Agency Chairman Mazhit Yesenbayev accused the 
national oil and gas company KazMunayGas (KMG), PetroKazakhstan (a 
subsidiary of China National Petroleum Corporation), and Helios (a 
MangistauMunayGas subsidiary) of monopolizing 70% of the wholesale 
market for oil products.  The Competition Agency brought charges to 
the financial police against a total of 64 companies suspected of 
price collusion in the oil products market. 
 
Ministry Presents Draft of New Subsoil Use Legislation 
--------------------------------------------- --------- 
 
8.  Energy Minister Sauat Mynbayev presented to the government a 
draft for new legislation on subsoil use, which would mandate 
separate contracts for exploration and production, favor bidders 
that offer socio-economic assistance to local communities, and give 
the government a first right of refusal over subsoil assets.  From 
January to June 2008, 20 subsoil use contracts were annulled, 
compared to 84 during November-December 2007.  According to 
Mynbayev, 90 percent of companies are meeting their contractual 
 
ASTANA 00001609  002.2 OF 002 
 
 
obligations per their subsoil use contracts. 
 
Arcelor Mittal Reduces Its 2008 Output 
-------------------------------------- 
 
9.  Arcelor Mittal Temirtau (AMT) plans to produce 3.8 million tons 
of steel in 2008, down from 4.2 million in 2007.  In 2008, AMT 
intends to invest approximately $500 million to upgrade its 
production facilities. 
 
Petrocapital Resources To Buy Almas International 
--------------------------------------------- ---- 
 
10.  Petrocapital Resources Company, a U.S.-fi
rm, reached an 
agreement with Jurby Corporation to acquire a 50 percent stake in 
Kazakhstan's Almas International Trading Company for $54 million by 
2010.  Almas exports crude and oil products to Poland, Ukraine, the 
Netherlands, the UK, Estonia, Latvia, Mongolia, Afghanistan, 
Kyrgyzstan, and Tajikistan.  Almas's revenues exceed $1 billion a 
year. 
 
Rusal Plans To Build Aluminum Plant 
----------------------------------- 
 
11.  The Rusal ("Russian Aluminum") company managing the Bogatyr 
open coal mine in Ekibastuz announced plans to build an aluminum 
plant in Ekibastuz with a designed capacity of 500,000 tons of 
aluminum a year and a 2.5-year construction period. 
 
Gasprom Neft Seeks To Buy Gas Stations in Kazakhstan 
--------------------------------------------- ------- 
 
12.  Russia's Gasprom Neft plans to purchase gas stations in 
Kazakhstan to supply its fuel products, including from the Omsk 
refinery, which is close to the Kazakhstan border. 
 
ORDWAY 
1 
 
 
4

Wikileaks

08ASTANA1608, KAZAKHSTAN – DEMARCHE DELIVERED ON RUSSIAN

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Reference ID Created Released Classification Origin
08ASTANA1608 2008-08-27 07:39 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0000
OO RUEHWEB

DE RUEHTA #1608 2400739
ZNY CCCCC ZZH
O 270739Z AUG 08 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3126
INFO RUCNCIS/CIS COLLECTIVE 0612
RUEHBJ/AMEMBASSY BEIJING 0053
RUEHBUL/AMEMBASSY KABUL 0413

C O N F I D E N T I A L ASTANA 001608 
 
SIPDIS 
 
E.O. 12958: DECL: 08/27/2018 
TAGS: PREL PGOV RS GG KZ
SUBJECT: KAZAKHSTAN - DEMARCHE DELIVERED ON RUSSIAN 
RECOGNITION OF SOUTH OSSETIA AND ABKHAZIA 
 
REF: (A) STATE 91894 (B) STATE 91366 
 
Classified By: Pol-Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
 
1. (C) The Deputy Chief of Mission delivered ref A demarche 
on Russia's recognition of South Ossetia and Abkhazia to DFM 
Kairat Sarybay on August 27.  The DCM also raised the 
Kazakhstan-specific points from ref B, and noted that 
Kazakhstan was in a unique position of influence because of 
its good relations with both Russia and Georgia.  In 
response, Sarybay expressed Kazakhstan's concerns about the 
latest developments and promised to expeditiously pass the 
USG position to his superiors.  He told the DCM that "you 
know well our position on Northern Cyprus, in spite of our 
good relations with Turkey, and our position on Kosovo, in 
spite of our good relations with the U.S. and the EU." 
(Comment:  Sarybay was alluding to Kazakhstan's support for 
territorial integrity and opposition to separatism as a 
matter of principle.  The DCM deployed the Kosovo points from 
ref B to explain why Kosovo is a unique case and not a 
precedent for other conflicts.  End Comment.)   Sarybay noted 
that President Nazarbayev would be meeting with Russian 
President Medvedev in Dushanbe on the margins of the SCO 
summit, perhaps as early as this evening (i.e., the evening 
of August 27).  Kazakhstan's official position on Russia's 
recognition of South Ossetia and Abkhazia should become 
clearer after that meeting.  In the interim, the government 
is under orders to stay silent and make no public statements, 
Sarybay explained. 
ORDWAY

Wikileaks

08ASTANA1574, KAZAKHSTAN – DEPUTY DEFENSE MINISTER SEMBINOV

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Reference ID Created Released Classification Origin
08ASTANA1574 2008-08-27 02:08 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0001
PP RUEHWEB

DE RUEHTA #1574 2400208
ZNY CCCCC ZZH
P 270208Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 3093
INFO RUCNCIS/CIS COLLECTIVE 0611
RUEHGB/AMEMBASSY BAGHDAD 0036
RUEHBUL/AMEMBASSY KABUL 0412
RUEHNO/USMISSION USNATO 2234

C O N F I D E N T I A L ASTANA 001574 
 
SIPDIS 
 
E.O. 12958: DECL: 08/26/2018 
TAGS: PREL NATO MOPS KZ
SUBJECT: KAZAKHSTAN - DEPUTY DEFENSE MINISTER SEMBINOV 
INDICATES GOK CONSIDERING SENDING OFFICERS TO ISAF 
 
Classified By: Deputy Chief of Mission Kevin Milas, Reasons 1.4 (b) and 
 (d) 
 
1. (C) In an August 22 meeting with the Deputy Chief of 
Mission and visiting Marshall Center Director Dr. John Rose, 
Deputy Defense Minister Lt Gen Bulat Sembinov expressed an 
interest in discussing further mil-mil cooperation with the 
U.S. and NATO.  He explained that while there were elements 
in the Kazakhstani government which opposed cooperation with 
the West, support for such cooperation comes from the very 
top.  Sembinov quoted President Nazarbayev's own remarks 
about enhanced Kazakhstan-NATO cooperation.  He pointed out 
that the Ministry of Defense (MOD) had established a 
peacekeeping department based on U.S. advice and had 
dispatched U.S.-trained officers to Nepal as UN observers. 
 
2. (C) Sembinov said he considered NATO operations to be 
critical to security and stability in Afghanistan, contending 
that in 2001, there were 80,000 Taliban ready to pour into 
Central Asia.  The Afghanistan PRTs, he stressed, not only 
help enhance security, but also win over hearts and minds. 
In addition to Kazakhstan's $2.88 million assistance program 
for Afghanistan for 2008, the MOD is also providing training 
and logistical assistance.  Sembinov said that the 
Kazakhstani government is currently considering the 
possibility of sending several officers to serve at ISAF 
headquarters.  (Comment:  This is the first time a 
Kazakhstani government official has indicated to us that 
sending officers to ISAF is under consideration, though we 
previously heard about the possibility from Tugay Tuncer, 
NATO Liaison in Astana.   End Comment.) 
 
3. (C) Sembinov noted positive movement in Iraq, arguing that 
many European countries have changed their attitudes and now 
understand the importance of Iraqi security and stability. 
Kazakhstan, he explained, wants to work with NATO trainers in 
Iraq. 
ORDWAY

Wikileaks

08ASTANA1567, KAZAKHSTAN AGREES TO JOINT DEMARCHE ON

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Reference ID Created Released Classification Origin
08ASTANA1567 2008-08-25 10:47 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXYZ0000
OO RUEHWEB

DE RUEHTA #1567 2381047
ZNR UUUUU ZZH
O 251047Z AUG 08 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3086
INFO RUEHMO/AMEMBASSY MOSCOW PRIORITY 1546

UNCLAS ASTANA 001567 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PTER KGIT KGIC KZ
SUBJECT: KAZAKHSTAN AGREES TO JOINT DEMARCHE ON 
UST-KAMENOGORSK GI EXERCISE 
 
REF: STATE 89185 
 
1. (U)  This is an action request, please see paragraph 3. 
 
2. (SBU)  We delivered reftel points to Fairzarkhman Kasenov, 
Advisor at the MFA's International Cooperation Department. 
Kasenov gladly welcomed the USG proposal to pass the 
invitation for the upcoming GI exercise via a joint demarche 
and promised to get us Kazakhstan's proposed draft shortly. 
He noted, however, that Kazakhstan is not represented in 
twenty-three GI member-states, namely Bosnia, Cabo Verde, 
Cambodia, Cote d' Ivore, Cyprus, Ireland, Iceland, 
Madagascar, Macedonia, Malta, Morocco, Montenegro, Nepal, the 
Netherlands, Norway, Palau, Panama, Portugal, Serbia, 
Slovenia, the Seychelles Islands, Sweden, and Zambia.  After 
discussing several options, we agreed that the best way to 
jointly reach these governments would be either through their 
Washington embassies or via posts where Kazakhstan has 
embassies accredited to several countries, such as London. 
Kasenov also floated the idea of USG forwarding the 
invitation via dipnote, but we stressed the need for 
Kazakhstan to maintain the lead in encouraging attendance. 
Kasenov said that while the MFA hopes for global attendance, 
its priority is securing the participation of other Central 
Asian states.  (Note: To date, only the USG, Canada, and 
South Korea have confirmed attendance. End note.) 
 
3.  (SBU)  Post requests further guidance on coordinating the 
joint demarches, especially in GI countries where there is no 
Kazakhstani embassy. 
ORDWAY

Wikileaks

08ASTANA1562, KAZAKHSTAN’S GERMAN MINORITY IS MORE THAN JUST A SHOWPIECE

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Reference ID Created Released Classification Origin
08ASTANA1562 2008-08-21 11:10 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO5608
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHLN RUEHPW RUEHVK RUEHYG
DE RUEHTA #1562/01 2341110
ZNR UUUUU ZZH
R 211110Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3080
INFO RUCNCIS/CIS COLLECTIVE 0608
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHRL/AMEMBASSY BERLIN 0484
RUEHVEN/USMISSION USOSCE 1938
RUEHAST/USOFFICE ALMATY 0680

UNCLAS SECTION 01 OF 03 ASTANA 001562 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PHUM SOCI PGOV PREL ECON KZ
SUBJECT: KAZAKHSTAN'S GERMAN MINORITY IS MORE THAN JUST A SHOWPIECE 
 
ASTANA 00001562  001.2 OF 003 
 
 
------- 
Summary 
------- 
 
1. (SBU) Although their community shrank dramatically in the 1990s, 
ethnic Germans remain one of the largest and best organized minority 
groups in Kazakhstan.  The German government provides the German 
minority significant resources to strengthen its minority 
Association, improve its economic prospects, and solidify its place 
in Kazakhstani society.  Aleksandr Dederer, the long-time president 
of the German minority Association, is a source of strong leadership 
in both the Association, which has 23 chapters throughout the 
country, and its chamber of commerce, which has scored recent 
victories in promoting its members' commercial interests.  The 
German minority newspaper is currently beholden to tight Ministry of 
Information requirements, but its editor envisions a more 
independent paper with expanded minority-community readership. 
Finally, ethnic German scholars and scientists, supported by the 
German government, are a well-connected part of the Kazakhstani 
intellectual elite.  End Summary. 
 
--------------------------------------------- 
Germans in Kazakhstan: Ich bin kein Berliner! 
--------------------------------------------- 
 
2. (SBU) Kazakhstan's Germans are descendants of Volga Germans 
exiled to present-day Kazakhstan during World War II.   Almost one 
million ethnic Germans resided in Kazakhstan when the USSR 
collapsed.  But thanks to an open visa and naturalization regime and 
generous welfare provisions in Germany, Germans left Kazakhstan in 
droves after the country became independent.  However, in Germany 
many of the new arrivals struggled to integrate as they were labeled 
troublesome "Russians".  Minority representatives here now claim 
about 1000 German families per year are returning to Kazakhstan, 
where prior out-migration has created economic opportunities in 
traditionally German sectors.  Today the German minority numbers 
about 226,000 and lives predominantly in northern Kazakhstan, around 
Karaganda, Kostanay, Petropavlovsk, and Pavlodar. 
 
3. (SBU) Despite the fact that many Germans have intermarried and 
only a small percentage speak German, their identity remains strong 
and emotional, not least due to a history of persecution and 
hardship.  Cultural traditions, especially surrounding Protestant 
holidays, are actively maintained and provide a key mark of 
distinction.  The community also maintains a reputation for being 
hard working, non-corrupt, and highly talented in agriculture, 
craftsmanship, and science. 
 
--------------------------- 
German Tax Revenues at Work 
--------------------------- 
 
4. (SBU) The Kazakhstani German community is heavily funded by the 
German government.  German Technical Cooperation (GTZ), Germany's 
international development agency, channels millions of euros every 
year from Germany's Federal Ministry of the Interior to help 
Kazakhstani Germans organize and prosper.  GTZ Kazakhstan Director 
Rainer Goertz told us that his government sees a responsibility to 
support Germans, give them greater economic opportunities, and in 
turn stem the flow of immigration to Germany.  Annegret Westphal, 
GTZ Central Asia minority program director, said funding aims to 
anchor German minority interests so they make a recognizable 
contribution Kazakhstani society. 
 
5. (SBU) If anything, GTZ's German minority program in Kazakhstan is 
expanding.  Berlin is cutting social welfare spending for minority 
returnees in favor of aid programs in countries of origin.  GTZ has 
restructured its strategy to emphasize organization, language 
training, and youth and academic honors programs.  One GTZ flagship 
program in Kazakhstan is the German Social Fund, a 350,000-euro 
investment that finances health programs for the German minority 
through accrued interest. 
 
6. (SBU) Goertz said Germany's engagement on behalf of the minority 
is a sign that it will have to be taken seriously in Kazakhstan. 
The Kazakhstani government, however, is watching GTZ activities with 
a certain "curiosity".  Westphal reported instances when aid to 
ethnic Germans has created tensions within their communities.  One 
example was a winter relief program for rural Germans.  The sight of 
German families in remote villages receiving much-needed supplies 
during a harsh winter embittered their non-German neighbors, and 
Westphal said GTZ will not renew the program due to Kazakhstani 
government unwillingness to co-finance it. 
 
--------------------------------------------- ---------- 
Organization: German Efficiency with a Soviet Mentality 
--------------------------------------------- ---------- 
 
 
ASTANA 00001562  002.2 OF 003 
 
 
7. (SBU) Overall, the GTZ has been successful, as is evident in the 
str
ength of the completely Berlin-funded Association of the Civil 
Society Organizations of the Germans of Kazakhstan.  The Association 
is an umbrella organization that unites 23 German community centers, 
called "Rebirths", which use earmarked GTZ funds to run language, 
youth, social, and humanitarian programs.  Kazakhstan is the only 
country in the CIS where a single German umbrella organization 
operates nationally. Kazakhstan's Assembly of Peoples consistently 
recognizes the Germans as among the country's best organized 
minority communities. 
 
8. (SBU) The Astana Rebirth has all the expected trimmings of an 
active community center: national crafts and excursion photos 
covering the walls, a German-language library, a dining room, a 
computer lab.  Its most important activities are a German Sunday 
school, in which around 35 children participate each week, and free 
bi-weekly German language lessons.  The Rebirth works closely with 
the Astana German School, one of six public schools in Kazakhstan 
which have mandatory German language instruction within a 
Russian-language curriculum.  The school's deputy director told us 
that about 25 percent of the students are ethnic Germans. 
 
9. (SBU) Aleksandr Dederer, founding president of the national 
Association, is the most important figure in the German community. 
He was the impetus for initiating a national German minority 
movement in the early 1990s and deserves credit for the 
Association's superb organization.  Interlocutors stressed Dederer's 
influence and personal relationship with President Nazarbayev. 
(Comment: Dederer's office is adorned with photographs of himself 
with the Kazakhstani leader.  End Comment.) Despite his successes, 
some voices in the German minority community criticized Dederer for 
his authoritarian style.  Westphal reported that since founding the 
Association in 1992, Dederer has developed a reputation for being an 
inflexible leader with a preference for a rigid top-down structure. 
Much to the dismay of German government sponsors, three Rebirths 
have even withdrawn from the Association due to disagreements with 
Dederer. 
 
--------------------------------------- 
Chamber of Commerce: Delivering Results 
--------------------------------------- 
 
10. (SBU) The German-Kazakhstani Association of Entrepreneurs 
(DKAU), also chaired by Aleksandr Dederer, is the chamber of 
commerce of the German minority.  Its 54 member-companies encompass 
almost 13,000 employees and are most active in international trade, 
foodstuffs and agriculture, construction, and machine tools.  The 
DKAU's largest member enterprises are Ivolga-Holding, which 
purportedly controls 10-percent of Kazakhstan's agricultural 
production, Gold Product, with 21 percent of Kazakhstan's wine 
production, and Rakhat, one of the country's largest confection 
producers.  One of the DKAU's most important goals is to expand 
investment relationships and knowledge transfer between Germany and 
Kazakhstan.  The DKAU claims this exchange strengthens the economic 
potential of the German minority and contributes to its continued 
stability and organization. 
 
11. (SBU) Another chief DKAU goal is to represent member interests 
before state bodies.  Dederer's DKAU Deputy, Nadezhda Burluzkaya, 
related events surrounding the company Gold Product and its ethnic 
German owner Yury Vegelin.  She claimed that Vegelin turned 
thousands of hectares of failing vineyards into a successful and 
environmentally-friendly enterprise that filled 150,000 bottles of 
wine per day and produced a range of fruit and vegetable juices. 
His success attracted the attention of the financial police, who, 
accusing him of tax crimes, placed him under house arrest and 
threatened to seize his assets. 
According to Burluzkaya, DKAU, with the personal high-level 
involvement of Dederer, fought a meticulous, bribe-free legal battle 
to protect its member company.  Vegelin was eventually cleared of 
the charges and remains president of Gold Product.  Burluzkaya said 
the success of Dederer and DKAU attracted several companies, 
including the non-German Rakhat confection company, to DKAU for the 
protection it offered against state harassment. 
 
----------------------------------- 
Media: Wedded to the State, For Now 
----------------------------------- 
 
12. (SBU) The official newspaper of Kazakhstan's Germans is the 
Deutsche Allgemeine Zeitung (DAZ).  This German-Russian publication, 
available in print and on the internet, is owned by Dederer's 
Association but gets 90 percent of its funding from the Kazakhstani 
Ministry of Information.  The money comes with the requirement that 
98 pages per year be dedicated to "intercultural understanding". 
Ulf Seegers, DAZ German edition editor, said the requirement 
resulted in excessive reporting on cultural festivals and he 
lamented the toll it took on the newspaper's quality.  DAZ is also 
 
ASTANA 00001562  003.2 OF 003 
 
 
required to regularly send to the Ministry of Information lists of 
headlines, authors, and word counts for all articles published.  The 
paper practices self-censorship and avoids sensitive political 
topics like President Nazarbayev and his family, Seegers reported. 
 
 
13. (SBU) Seegers, who wrote his graduate thesis on transforming the 
DAZ, envisions a newspaper less reliant on Ministry funds and more 
directly targeted at the German minority.  He alleged the DAZ is 
routinely asked for bribes from Ministry of Information officials, 
which it always declines to pay, resulting in delays in disbursement 
of its financial support from the Ministry.  He said the paper could 
better be financed through advertisements.  A prerequisite for this 
would be that the paper circulate more widely among the broad German 
minority community itself -- rather than among German expatriates 
and internet readers as it currently does -- which is a key 
long-term goal of the DAZ. 
 
-------------------------------- 
Science: Einsteins of the Steppe 
-------------------------------- 
 
14. (SBU) Some of Kazakhstan's most accomplished scientists are 
ethnic Germans.  Ernst Boos, an astrophysicist who chairs the German 
Scientific Society in Kazakhstan, claimed the Kazakhstani government 
spends an average of just three dollars per citizen for scientific 
research annually.  German government aid to the German Scientific 
Society promotes scholarship in Kazakhstan by giving under-funded 
scientists the opportunity to publish articles for free, present 
findings at academic conferences, and deepen scholarly ties with 
German-speaking countries.  Boos stated that being an ethnic German 
has boosted his reputation as a scientist, but familiar obstacles 
remain.  He claimed that one project he headed, an "Information Silk 
Road" to create satellite links from Ukraine across Kazakhstan to 
China, was "hijacked" by a government official in its concluding 
phases, depriving him of credit for years of work. 
 
------- 
Comment 
-
------ 
 
15. (SBU) Despite its rapid contraction, the German minority in 
Kazakhstan remains strong.  Heavy German government sponsorship, 
established leadership, and an efficient organization mean the 
minority is likely to strengthen its place in Kazakhstan's national 
pastiche.  Resistance to state encroachment, particularly in the 
business and media arms of Dederer's organization, as well as the 
prominence of German scholars, demonstrate that the German minority 
is more than a showpiece in President Nazarbayev's campaign to 
advertise cultural harmony in Kazakhstan. End Comment. 
 
ORDWAY

Wikileaks

08ASTANA1558, TFGG01: KAZAKHSTAN CAUTIOUS ON GEORGIA-RUSSIA

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Reference ID Created Released Classification Origin
08ASTANA1558 2008-08-21 07:11 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO5386
OO RUEHBI RUEHCI RUEHFL RUEHLA RUEHLH RUEHMRE RUEHPW RUEHROV RUEHSR
DE RUEHTA #1558/01 2340711
ZNY CCCCC ZZH
O 210711Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3073
INFO RUCNOSC/OSCE POST COLLECTIVE
RUCNCLS/SCA COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 ASTANA 001558 
 
SIPDIS 
 
E.O. 12958: DECL: 08/21/2018 
TAGS: PREL PGOV EAID KZ GG RS
SUBJECT: TFGG01: KAZAKHSTAN CAUTIOUS ON GEORGIA-RUSSIA 
CONFLICT, BUT MAKING HELPFUL REMARKS 
 
Classified By: Pol-Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
 
------- 
SUMMARY 
------- 
 
1. (C) Kazakhstan will likely continue its cautious approach 
toward the Georgian-Russian conflict to preserve its equities 
with both countries.  Nevertheless, the Kazakhstanis appear 
genuinely concerned about the long-term implications of 
Russia's actions for other CIS states.  While Kazakhstan is 
walking a fine line in its public message, in President 
Nazarbayev's most recent remarks, he stressed the importance 
of the principle of territorial integrity, and an MFA 
statement called for full implementation of the agreements 
brokered by Sarkozy and for more OSCE observers in the 
conflict zone.  Kazakhstani media commentary was very limited 
during the first days of the conflict, but has increased in 
recent days.  The Kazakhstanis delivered initial aid for 
conflict victims through Vladikavkaz, but have reassured us 
that they will ultimately use multiple routes to assist both 
sides.  End Summary. 
 
-------------------- 
CAUTIOUS APPROACH... 
-------------------- 
 
2. (C) Kazakhstan will likely continue to maintain a cautious 
approach toward the Georgia-Russia conflict.  On the one 
hand, the Kazakhstanis will not jeopardize their strategic 
relationship with Russia by directly lining up against the 
Russians on this issue.  On the other hand, the Kazakhstanis 
have important equities in Georgia too.  Kazakhstan is 
reportedly the largest foreign investor in Georgia, owning 
100 percent of the Batumi oil terminal and holding major 
stakes in Georgia's hotel and resort sector as well as in 
Tbilisi's gas distribution company.  Georgia is also expected 
to become an increasingly important transit country for 
Kazakhstani crude; it is, in fact, a lynchpin in Kazakhstan's 
efforts to diversity crude transport routes.  (Note: One key 
theme in the Kazakhstani media coverage of the conflict has 
been concern about these investments and about crude transit. 
 The Kazakhstani MFA has sounded reassuring notes on the 
investments, contending that their safety is guaranteed by 
bilateral Kazakhstan-Georgia agreements.  The government has 
also explained that crude that would have transited Georgia 
is for now being redirected for domestic use.  End Note.) 
Of additional importance, President Nazarbayev holds 
Saakashvili in high personal regard, seeing himself as a 
mentor to the Georgian leader who is his junior by 28 years. 
 
-------------------------------------------- 
...BUT CONCERNS ABOUT LONG-TERM IMPLICATIONS 
-------------------------------------------- 
 
3. (C) MFA Americas Department Director Talgat Kaliyev called 
us in on August 15 for a lengthy discussion of the conflict. 
He was very concerned about the consequences of Russia's 
actions for other CIS states, stressing that this is "the 
first time Russia has directly intervened militarily in 
another CIS state since the fall of the USSR."  He noted that 
the other CIS countries are not standing openly with Russia, 
and that even Belarusian President Lukashenko has been 
silent, much to Russia's consternation.  The long-run 
implications of the conflict for Kazakhstan, with its large 
ethnic Russian population concentrated in the country's 
north, are worrisome, Kaliyev explained.  He discounted the 
relevance of a purported pro-Russian statement made by the 
council of the CSTO parliamentary assembly, doubting that any 
Kazakhstani parliamentarians had a role in putting it 
together.  (Comment: Kaliyev also maintained that the 
Kazakhstani public is quite sympathetic to the Georgian 
position.  However, we have some doubts about this.  With 
quite limited coverage of the conflict on Kazakhstani 
television stations, most Kazakhstanis are getting their news 
about events in Georgia from Russian TV networks, a fact 
which presumably has a strong influence on their views.  End 
Comment.) 
 
4. (C) In an August 19 meeting with the Deputy Chief of 
Mission and visiting ARCENT commander Lieutenant General 
Loveland, Deputy Foreign Minister Sarybay emphasized 
Kazakhstan's "historical relations" with both the Russians 
and the Georgians.  He stressed Kazakhstan's support for the 
ceasefire agreement and for the withdrawal of "both military 
forces," adding further than "no one should provoke any 
escalation." 
 
------------------------- 
PUBLIC STATEMENTS HELPFUL 
------------------------- 
 
ASTANA 00001558  002 OF 002 
 
 
 
5. (C) While the Kazakhstanis have been walking a fine line 
with their public message, what they have said thus far 
includes several helpful elements.  Nazarbayev initially 
raised eyebrows on August 8, when during a meeting with Putin 
on the margins of the Beijing Olympics, he appeared to take 
Russia's side and was quoted as saying, among other things, 
that "the Georgian leadership was wrong when it failed to 
make public the heightened tensi
ons (in South Ossetia)." This 
statement, however, was made early on, before events were 
clear -- and before the Russians moved deep into Georgian 
territory.  Nazarbayev's second statement, made while meeting 
with President Bakiyev in Kyrgyzstan on August 14, was much 
better.  He stressed that the "the principle of territorial 
integrity is recognized by the entire world community," 
noting further that "we all have come out against separatism 
in documents accepted within the framework of the CIS." 
 
6. (U) The MFA did not release an official statement on the 
conflict until August 19.  On the one hand, the statement 
criticized "the attempt at forcefully resolving a complex 
ethno-territorial issue," arguing that it "brought about 
serious consequences" and significantly worsened the 
conditions for a "peaceful and legal resolution."  On the 
other hand, it called on all parties to "strictly fulfill" 
the agreements brokered by French President Sarkozy and 
stressed that Kazakhstan supports increasing the number of 
OSCE observers in the conflict zone and "activating their 
role." 
 
-------------------------- 
PRESS WAITS FOR NAZARBAYEV 
-------------------------- 
 
7. (SBU) Kazakhstan's state-controlled broadcast media and 
newspapers, and even most of its privately-owned print 
outlets, had very limited coverage of and commentary on the 
conflict in its early days, apparently waiting for Nazarbayev 
to first set the general line -- which he did in his August 
14 remarks.  Commentary has accordingly increased in recent 
days.  An August 18 piece in privately-owned, but largely 
pro-government daily newspaper Litr argued that it would be 
risky for Kazakhstan to criticize Georgia's actions in South 
Ossetia given Kazakhstan's substantial investments in Georgia 
(which it estimated to be worth $700 million).  An August 19 
editorial in independent business weekly Delovaya Nedelya 
accused Russia of double standards on separatism, pointing to 
the Chechnya conflict, but nevertheless maintained that 
Kazakhstan should hold to a neutral position so that it is 
not dragged into "military adventures" serving someone else's 
interests.  An August 20 Litr article quoted a Kazakhstani 
think tanker explaining that Russia won in South Ossetia 
tactically, but lost strategically in raising the concerns of 
both NATO members and other CIS countries. 
 
------------------ 
AID FOR BOTH SIDES 
------------------ 
 
8. (C) In his August 14 remarks in Kyrgyzstan, Nazarbayev 
promised Kazakhstani assistance for victims of the conflict. 
Georgian Ambassador to Kazakhstan Zurab Shurgaia told the 
Deputy Chief of Mission on August 15 that the assistance 
would be welcome, and that the Kazakhstanis could even send 
some directly through Russia, so long as it was delivered 
south by a neutral party like the Red Cross, and not by the 
Russian government.  The first planeload of Kazakhstani aid 
actually arrived in Vladikavkaz on August 16 -- where, to 
Georgian consternation, it was apparently handed over to the 
Russian authorities.  Deputy Foreign Minister Sarybay 
explained to the Deputy Chief of Mission on August 19 that 
Kazakhstan's initial shipments were being sent exclusively 
through Vladikavkaz for purely logistical reasons.  He 
promised that Kazakhstan would ultimately use multiple routes 
in aiding both sides. 
ORDWAY

Wikileaks

08ASTANA1531, KAZAKHSTAN TO LIFT WHEAT EXPORT BAN

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Reference ID Created Released Classification Origin
08ASTANA1531 2008-08-19 11:24 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO3841
PP RUEHLN RUEHVK RUEHYG
DE RUEHTA #1531 2321124
ZNR UUUUU ZZH
P 191124Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 3042
INFO RUCNCIS/CIS COLLECTIVE 0607
RUEHAK/AMEMBASSY ANKARA 2177
RUEHBUL/AMEMBASSY KABUL 0411
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS ASTANA 001531 
 
SENSITIVE 
SIPDIS 
 
ANKARA FOR FAS 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD PGOV PREL EAID KZ
SUBJECT: KAZAKHSTAN TO LIFT WHEAT EXPORT BAN 
 
1. (SBU) Prime Minister Masimov announced at an August 16 
meeting at the Ministry of Agriculture that Kazakhstan would 
lift its ban on wheat exports, effective September 1.  This 
move was long anticipated.  Our government interlocutors had 
previously emphasized to us on several occasions that the 
export ban would be removed once the government determined 
that there would be a successful 2008 wheat harvest. 
 
2. (U) Masimov explained at the meeting that the government 
will take specific measures to ensure adequate domestic 
supplies of wheat and stable domestic prices on bread.  This 
includes ordering the state-owned Foodstuffs Corporation to 
spend 18 billion tenge (approximately $150 million) buying up 
grain for a "stabilization" reserve -- an additional 
stockpile on top of the regular state grain reserve.  Masimov 
said that in the event adequate domestic wheat supplies and 
stable domestic bread prices are not maintained, the 
government will consider re-imposing the export ban. 
(Comment:  As Kazakhstan annually produces far more wheat 
than it can consume, a renewed export ban would once again 
only be a temporary measure.  End Comment.) 
 
3. (U) The government estimates that the 2008 harvest will 
bring in 17 million tons of wheat -- which is being described 
as an "average" yield for recent years.  (Note:  The bumper 
2007 harvest brought in a reported 21 million tons.  End 
Note.)   Agriculture Minister Kurishbayev said at the August 
16 meeting that he expected a significant increase in wheat 
production in Russia and Ukraine for 2008.  He explained that 
as a result, ports on the Black and Azov seas may be 
overloaded with Russian and Ukrainian wheat, making it 
difficult to get Kazakhstani wheat to market through those 
ports.  Masimov responded that with the lifting of the export 
ban for September 1, Kazakhstani exporters will hopefully be 
able to utilize the Black and Azov sea ports before the 
intensive export of Russian and Ukrainian grain commences. 
ORDWAY

Wikileaks

08ASTANA1527, KAZAKHSTAN: ALMATY NOTES, AUGUST 4 – AUGUST 15, 2008

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Reference ID Created Released Classification Origin
08ASTANA1527 2008-08-19 06:01 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO3630
RR RUEHAST
DE RUEHTA #1527/01 2320601
ZNR UUUUU ZZH
R 190601Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3036
INFO RUEHVEN/USMISSION USOSCE 1936
RUEHEK/AMEMBASSY BISHKEK 8322
RUEHNT/AMEMBASSY TASHKENT 8186
RUEHAH/AMEMBASSY ASHGABAT 7345
RUEHDBU/AMEMBASSY DUSHANBE 2386
RUEHMO/AMEMBASSY MOSCOW 1544
RUEHAST/USOFFICE ALMATY 0673

UNCLAS SECTION 01 OF 02 ASTANA 001527 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KZ
SUBJECT: KAZAKHSTAN: ALMATY NOTES, AUGUST 4 - AUGUST 15, 2008 
 
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. 
 
Protest at Nur Otan Office 
-------------------------- 
 
2. On August 1, approximately 100 Almaty residents picketed the 
Almaty office of the ruling Nur Otan party. Participants in the 
demonstration included "dolshiki" (i.e., individuals who lost money 
they gave to construction companies to build homes for them) and 
those whose residences have been demolished to make way for new 
construction projects.  The rationale behind the protest were the 
broken promises made by the Nur Otan leadership a year ago, said 
Aynur Kurmanov, head of a new public organization called Taymas 
(Tireless).  (Note: Activist Kurmanov is also head of the Socialist 
Resistance Movement.  End Note.)   According to Kurmanov, during the 
2007 parliamentary elections, Nur Otan promised to help Almaty 
residents, particularly those from the outskirts of the city, 
resolve property-related problems.  "Today we want to know what the 
party has done and what it plans to do to resolve social conflicts," 
Kurmanov said. 
 
3. The head of Nur Otan's Almaty branch, Tokmukhamed Sadykov, 
invited the participants into his office, but was not able to answer 
their questions to their satisfaction.  Sadykov referred the 
protestors to a new public council set up to review property and 
other disputes.  The council includes representatives from the 
government, Nur Otan, opposition parties, and NGOs. 
 
Masimov Meets With Dolshiki 
--------------------------- 
 
4.  On August 2, Prime Minister Masimov met in Almaty with 
representatives of construction companies as well as with "dolshiki" 
-- including some of the participants in the August 1 demonstration 
at Nur Otan's office (see paras 2-3 above).  Masimov said he would 
issue an order for $10 billion tenge (approximately $83 million) to 
be transferred from the state budget directly to construction 
companies, rather than through the Kazyna Sustainable Development 
Fund as intermediary, in order to assist the companies in completing 
unfinished projects.  Masimov said that these funds would resolve 
the housing problems of 2500 dolshiki.  He also promised that the 
government would help dolshiki who were defrauded by construction 
companies, adding that criminal cases would be opened and that 
guilty parties would go to prison. Masimov explained that the 
government had introduced into parliament new legislation on 
"shared-based" construction, which would stiffen conditions so that 
in the future, construction companies would not find themselves in 
the same situation they are in today. 
 
Nazarbayev Visits Wholesale Market 
---------------------------------- 
 
5. President Nazarbayev visited Almaty on August 11, following his 
trip to Beijing for the Olympics.  Among other things, Nazarbayev 
walked through the Arzan wholesale market, which reportedly has 
lower prices on food and other goods than other Almaty markets. 
Nazarbayev gave an order to Almaty mayor Akhmetzhan Yesimov to 
assist the owners of Arzan in opening up similar stores in other 
parts of the city.  "It would be great if such wholesale markets 
appeared in all Kazakhstani cities," Nazarbayev remarked. 
 
Kazakh-Uighur Friction in Village 
--------------------------------- 
 
6. Opposition newspaper Svoboda Slova reported that on August 3, 
activists from Kazakh nationalist organizations traveled to the 
village of Malybay in Almaty oblast to participate in a memorial 
ceremony for a village resident, Aydyn Khalykov, who had been killed 
in an alleged interethnic incident on June 27.  Police cordoned off 
the village while the ceremony was going on.  Two suspects have been 
detained in conjunction with Khalykov's murder, but his relatives 
maintain that at least five people were involved.  Approximately 10 
per cent of the residents of Malybay are ethnic Kazakhs and the rest 
are Uighurs.  Khalykov had spoken out on more than one occasion 
against public signage in the Uighur language -- and reportedly once 
pulled down a Uighur-language sign.  His relatives believe that this 
may have been the trigger for his murder. 
 
7. Following the memorial ceremony, Kazazh nationalist activists 
demanded that national-level law enforcement authorities launch an 
investigation into the murder.  They also demanded that the 
village's Uighur-language signage be replaced.  Dos Kushim, leader 
of the Ult Tagdyry (Nation's Destiny) Kazakh nationalist 
 
ASTANA 00001527  002 OF 002 
 
 
organization suggested that oralman (i.e., ethnic Kazakh immigrants 
from other countries) be resettled to the village to counter-balance 
the Uighur population. 
 
ORDWAY

Wikileaks

08ASTANA1525, KAZAKHSTAN – DEMARCHE DELIVERED REGARDING SUICIDE

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Reference ID Created Released Classification Origin
08ASTANA1525 2008-08-18 08:57 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0001
OO RUEHWEB

DE RUEHTA #1525 2310857
ZNY CCCCC ZZH
O 180857Z AUG 08
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC IMMEDIATE 3034

C O N F I D E N T I A L ASTANA 001525 
 
SIPDIS 
 
DEPARTMENT FOR S/WCI 
 
E.O. 12958: DECL: 08/18/2018 
TAGS: PTER KAWC PHUM PINR KDRG PREL KZ
SUBJECT: KAZAKHSTAN - DEMARCHE DELIVERED REGARDING SUICIDE 
ATTACK BY FORMER GUANTANAMO DETAINEE 
 
REF: (A) STATE 83943 (B) 07 ASTANA 3308 (C) 07 ASTANA 
     1644 
 
Classified By: Pol-Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
 
(C)  On August 15, we delivered reftel demarche points 
regarding a suicide attack by a former Guantanamo detainee 
from Kuwait to Serik Baigazin, Acting Director for 
International Affairs in the MFA's Consular Department. 
Baigazin said that he could not immediately tell us the 
status of the Guantanamo detainees previously transferred to 
Kazakhstan, but reassured us that they were under close 
supervision by "the relevant agencies."  He promised to 
research their status and get back to us as soon as possible. 
 (Note:  Media accounts from April-May 2007 indicated that 
all three returned detainees were living and working freely 
in Kazakhstan.  End Note.)   We will follow up with the MFA 
expeditiously to obtain a more detailed response to the 
demarche. 
 
ORDWAY

Wikileaks

08ASTANA1519, KAZAKHSTAN SEES SEVERAL ISSUES WITH NUCLEAR

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Reference ID Created Released Classification Origin
08ASTANA1519 2008-08-15 11:39 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0000
OO RUEHWEB

DE RUEHTA #1519 2281139
ZNY CCCCC ZZH
O 151139Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3025
INFO RUCNNSG/NUCLEAR SUPPLIERS GROUP COLLECTIVE PRIORITY
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0060

C O N F I D E N T I A L ASTANA 001519 
 
SIPDIS 
 
E.O. 12958: DECL: 08/18/2018 
TAGS: PARM PREL AORC IN KZ
SUBJECT: KAZAKHSTAN SEES SEVERAL ISSUES WITH NUCLEAR 
SUPPLIERS GROUP EXCEPTION FOR INDIA 
 
REF: STATE 85498 
 
Classified By: Political Economic Section Chief Steve Fagin, 
for reasons 1.4 (b) and (d) 
 
1.  (C)  We delivered reftel points on the latest 
developments regarding the U.S.-India civil nuclear 
initiative to Sergei Saveliyev, the MFA's Director of 
International Organizations and International Security, on 
August 15.  Saveliyev told us that as far as he knew, the 
GOK's Vienna mission had not previously received the proposed 
NSG exception text for India, so he was unfamiliar with the 
details of the proposal.  He underlined that the MFA will 
need some time to analyze the text and coordinate a formal 
GOK position, but went on to lay out several points of 
concern.  The most immediate issue, he said, is lack of 
clarity on how the exceptions will be implemented and how 
India's compliance will be monitored.  Glancing through the 
text, he  maintained that there is no provision for a review 
mechanism that would allow the Nuclear Suppliers Group to 
monitor India's adherence to the nonproliferation commitments 
outlined in paragraphs 2(c), 2(d), 2(e), and 2(f).  Saveliyev 
believes that without a solid review mechanism, the exception 
to IAEA full-scope safeguards for India could do serious 
damage to the NPT.  Secondly, he was doubtful that NSG 
consensus could be reached in the tight timeframe before the 
Plenary.  Several NSG member states, he claimed, will likely 
remain opposed to granting the exception.  He underlined, 
however, that Kazakhstan's established position is to follow 
consensus within the NSG. 
 
2.  (SBU)  Embassy Astana POCs are Pol-Econ Chief Steve Fagin 
at faginsh2@state.gov and Information Officer Tom Tanner at 
tannert@state.gov. 
ORDWAY

Wikileaks

08ASTANA1512, KAZAKHSTAN — CODEL REID MEETS WITH PM MASIMOV,

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Reference ID Created Released Classification Origin
08ASTANA1512 2008-08-14 08:58 2011-08-30 01:44 SECRET Embassy Astana

VZCZCXYZ0000
RR RUEHWEB

DE RUEHTA #1512 2270858
ZNY SSSSS ZZH
R 140858Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3018
INFO RUCNCIS/CIS COLLECTIVE 0606
RUEHVEN/USMISSION USOSCE 1935

S E C R E T ASTANA 001512 
 
SIPDIS 
 
E.O. 12958: DECL: 08/14/2018 
TAGS: PREL OVIP PARM PHUM ETRD OREP KZ
SUBJECT: KAZAKHSTAN -- CODEL REID MEETS WITH PM MASIMOV, 
OPPOSITION AND CIVIL SOCIETY 
 
Classified By: Ambassador J. Ordway, for reasons 1.4 (b) and (d) 
 
1. (C) CODEL Reid met with Kazakhstan's Prime Minister 
Masimov on August 7 to discuss several aspects of the U.S. - 
Kazakhstan relationship. Masimov opened the meeting by 
highlighting Kazakhstan's progress on democratic and economic 
liberalization since independence.  He thanked U.S. companies 
for their investments and contributions to Kazakhstan's rapid 
economic growth.  Noting the dampening effect of the global 
financial crisis, Masimov said that proposed changes to the 
tax code (which would lower corporate taxes and taxes on 
extractive industries) should help reinvigorate the economy. 
On food security in the region, Masimov stressed that 
Kazakhstan is ready to help its neighbors in the event last 
winter's shortages repeat themselves.  Turning to democratic 
reform, Masimov said that President Nazarbayev's policy has 
always been "economics first, politics second," and 
Kazakhstan has finally reached the level of economic 
development where democratic reform was not only possible, 
but necessary. 
 
2.  (S)  Sen. Reid commended Kazakhstan's progress and 
expressed hope of continuing close cooperation on such issues 
as the Nunn-Lugar Cooperative Threat Reduction (CTR) Program. 
 Sen. Bingaman said that Kazakhstan could play an important 
role in encouraging Iran to disarm.  Masimov agreed by saying 
that as a mostly-Muslim state with a strong non-proliferation 
record, Kazakhstan could serve as an example to Iran and 
added that the GOK stands ready to work closely with the 
international community on Iran's disarmament.  Sen. Nelson 
encouraged the GOK to continue close cooperation on 
intelligence matters. Turning the conversation to 
Afghanistan, Sen. Isakson expressed hope that Kazakhstan will 
join the U.S. and Afghanistan and support OSCE involvement in 
securing Afghanistan's northern border.  Masimov said the GOK 
was not opposed to the initiative, adding that he will visit 
Afghanistan in September and would welcome consultations with 
the Embassy before the trip.  In closing, Sen. Menendez said 
he hoped Kazakhstan's rapid economic liberalization will be 
closely followed by political reform, to which Masimov 
jokingly replied that NDI and IRI will not rest until it 
does. 
 
3.  (C)  Separately, the Senators met with the leaders of 
opposition parties and civil society, who told the delegation 
that democratic reform was severely lagging in the country. 
Not surprisingly, the opposition party leaders derided 
President Nazarbayev and his ruling Nur Otan party for 
effectively blocking all competition on the political scene. 
NGO representatives shared the view that progress on 
political liberalization and human rights was not only 
stalled but in some instances was moving backwards, like with 
the pending religion legislation.  Sen. Reid thanked the 
participants for their honest views and underlined that 
Kazakhstan's democratic reform remained a top priority for 
the United States. 
 
4.  (U)  CODEL Reid did not clear this cable. 
ORDWAY

Wikileaks

08ASTANA1510, KAZAKHSTAN – DEMARCHE DELIVERED ON AUGUST SCO

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Reference ID Created Released Classification Origin
08ASTANA1510 2008-08-13 11:33 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO9483
OO RUEHDE
DE RUEHTA #1510 2261133
ZNY CCCCC ZZH
O 131133Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3016
INFO RUEHZG/NATO EU COLLECTIVE
RUEHAH/AMEMBASSY ASHGABAT 7344
RUEHBJ/AMEMBASSY BEIJING 0051
RUEHEK/AMEMBASSY BISHKEK 8321
RUEHDBU/AMEMBASSY DUSHANBE 2385
RUEHIL/AMEMBASSY ISLAMABAD 2143
RUEHBUL/AMEMBASSY KABUL 0410
RUEHMO/AMEMBASSY MOSCOW 1543
RUEHNE/AMEMBASSY NEW DELHI 0513
RUEHNT/AMEMBASSY TASHKENT 8185
RUEHDE/AMCONSUL DUBAI 0133

C O N F I D E N T I A L ASTANA 001510 
 
SIPDIS 
 
E.O. 12958: DECL: 08/13/2018 
TAGS: MARR MOPS PGOV PREL AFIN KZ
SUBJECT: KAZAKHSTAN - DEMARCHE DELIVERED ON AUGUST SCO 
SUMMIT 
 
REF: STATE 82513 
 
Classified By: Pol-Econ Chief Steven H. Fagin, Reasons 1.4 (b) and (d) 
 
1. (C) The Ambassador raised reftel demarche points on the 
August SCO Summit with Foreign Minister Tazhin on August 5, 
stressing that the U.S. hoped that the SCO would not admit 
Iran to SCO membership or adopt any statement critical of the 
U.S. presence at Manas air base.  While not responding 
directly, Tazhin's body language and dismissive tone 
indicated that he did not think either of these outcomes was 
very likely. 
 
2. (C) Pol-Econ Chief followed up on August 12 with Nadezhda 
Kim, MFA Counselor for SCO issues.  Kim said that the 
stabilization and reconstruction of Afghanistan is a priority 
for all SCO member states.  Kazakhstan, she explained, 
recognizes the importance of Manas air base to Coalition 
efforts in Afghanistan.  Manas is thus not an issue for 
Kazakhstan, though she could not be certain that another 
country would not raise it at the SCO summit.  Regarding 
Iran, Kim maintained that there is effectively a moratorium 
on expanding the SCO's membership given that consensus is 
required to admit new member states. 
ORDWAY

Wikileaks

08ASTANA1501, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 – AUGUST 2,

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Reference ID Created Released Classification Origin
08ASTANA1501 2008-08-12 11:01 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO8562
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1501/01 2251101
ZNR UUUUU ZZH
R 121101Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3007
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0604
RUEHAK/AMEMBASSY ANKARA 2175
RUEHBUL/AMEMBASSY KABUL 0408
RUEHNE/AMEMBASSY NEW DELHI 0511
RUEHAST/USOFFICE ALMATY 0659

UNCLAS SECTION 01 OF 02 ASTANA 001501 
 
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 KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JULY 20 - AUGUST 2, 
2008 
 
ASTANA 00001501  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani press, and has not been verified for accuracy. 
 
-- New Minimum Reserve Requirements for Banks 
-- Kazakhstan's Foreign Reserves 
-- HSBC Expands in Kazakhstan 
-- Cooperation with Brazil 
-- No Increase in Kazakhstani Wheat Prices 
-- Labor Ministry on Foreign Labor and Illegal Migration 
 
New Minimum Reserve Requirements for Banks 
------------------------------------------ 
 
2.  Interfax reported on July 29 that the National Bank of 
Kazakhstan (NBK) has lowered its minimum reserve requirements to 
support the short-term liquidity of commercial banks.  Reserve 
requirements on domestic liabilities were reduced from 6% to 5%, and 
on other liabilities from 8% to 7%.  According to the NBK, this cut 
will enable banks to release around 90 billion tenge (approximately 
$745 million) that can be used to maintain bank lending activity. 
 
Kazakhstan's Foreign Reserves 
----------------------------- 
 
3.  The gold and currency reserves of the National Bank increased by 
$3.8 billion during the first six months of 2008, totaling $21.23 
billion as of July 1, 2008.  This amount is still slightly lower 
than the gold and currency reserves of the National Bank as of July 
1, 2007 ($22.23 billion).  In addition, as of July 1, 2008, the 
assets of the National (Oil) Fund were approximately $25.6 billion. 
 
HSBC Expands in Kazakhstan 
-------------------------- 
 
4.  Aspiring to increase its presence in Central Asia with a network 
of branches in major cities across Kazakhstan, HSBC has opened its 
first branch office in Astana.  According to HSBC, the new branch 
offers a range of retail and commercial banking products and 
services as well as foreign exchange and capital markets expertise. 
This is the first of three branches scheduled to be opened in 
Kazakhstan in 2008, with plans for a second branch in Atyrau already 
underway. 
 
Cooperation with Brazil 
----------------------- 
 
5.  KAZNEX, Kazakhstan's corporation for the development and 
promotion of exports, which is a subsidiary of the Kazyna 
Sustainable Development Fund, has signed a memorandum of cooperation 
with Brazil's agency for exports and investments promotion, 
Apex-Brazil.  According to a KAZNEX press release, the memorandum 
will improve the bilateral business environment for Brazilian and 
Kazakhstani companies as well as facilitate trade and exchange of 
business experience. 
 
No Increase in Kazakhstani Wheat Prices 
--------------------------------------- 
 
6.  According to the July 18 edition of the Times of Central Asia, 
Minister of Agriculture Kurishbayev believes that there will be no 
panic buying of Kazakhstani wheat during the Fall of 2008, and that 
wheat prices will not be higher than the level of last year.  He 
contended that both Russia and Ukraine will have good wheat harvests 
and thus high export potential this year, which will decrease the 
immediate demand for Kazakhstani wheat on the global market. 
 
Labor Ministry on Foreign Labor and Illegal Migration 
--------------------------------------------- -------- 
 
7.  The Ministry of Labor and Social Protection is dissatisfied with 
foreign employers with respect to the hiring of local labor and has 
announced its intention to better protect the rights of Kazakhstani 
citizens regarding this issue.  Of the estimated 41,000 foreign 
specialists legally working in Kazakhstan, only 1,176 (3.9%) were 
replaced by Kazakhstani nationals during the first half of 2008. 
 
ASTANA 00001501  002.2 OF 002 
 
 
 
8.  On a separate issue, Labor Minister Saparbayev said that 
Kazakhstan needs to establish new mechanisms to encourage migrant 
laborers to work legally.  According to Saparbayev, between 200,000 
and 300,000 people, mainly from other CIS countries, are working 
illegally in Kazakhstan at present.  To better address this problem, 
Kazakhstan and Kyrgyzstan are looking to establish conditions 
favorable for free labor movement between the two countries. 
Saparbayev also expressed his belief that labor migration within in 
the CIS should be regulated via an inter-country database that 
tracks the regional demand and supply of labor. 
 
ORDWAY

Wikileaks

08ASTANA1500, KAZAKHSTAN ASKS FOR GREATER USG ASSISTANCE ON GI

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Reference ID Created Released Classification Origin
08ASTANA1500 2008-08-12 10:52 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXYZ0000
RR RUEHWEB

DE RUEHTA #1500 2251052
ZNR UUUUU ZZH
R 121052Z AUG 08
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC 3006

UNCLAS ASTANA 001500 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR ISN/WDMT, EUR/SCA, AND T: TIM KATSAPIS 
 
E.O. 12958: N/A 
TAGS: PARM PREL PTER KGIC KNNP KZ
SUBJECT: KAZAKHSTAN ASKS FOR GREATER USG ASSISTANCE ON GI 
EXERCISE 
 
1.  (U)  This is an action request.  Please see para. 3. 
 
2.  (SBU) On August 12, we met with Sergey Saveliyev, MFA's 
Deputy Director of International Security Department, to 
discuss the upcoming seminar on battling nuclear terrorism 
organized under the auspices of Global Initiative.  The 
seminar will take place September 10-13 in Ust-Kamenogorsk at 
the Ulba Metallurgical Plant.  Saveliyev thanked us for 
publicizing the event on the  GI portal, but asked if the USG 
could formally pass the invitation to Global Initiative 
members via our Embassies.  He said several states already 
expressed interest in sending representatives, and support 
from the USG, the co-founder of the Initiative, should 
greatly increase awareness of the event.  The MFA would like 
to finalize the list of attendees by August 25. 
 
3.  (SBU)  Saveliyev also told us that the GOK wants to 
include one day of seminar activities aimed specifically at 
Central Asian states.  This idea came out of the recent GI 
meeting in Madrid, he said, where the question of increasing 
regional cooperation received special attention.  He 
expressed hope that the USG would support this initiative and 
actively encourage other Central Asian states to attend. 
 
3.  (U)  We would appreciate Department guidance on the 
proper response to Kazakhstan's requests. 
ORDWAY

Wikileaks

08ASTANA1499, KAZAKHSTAN – DAS KROL DISCUSSES IAEA BOG, MADRID

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Reference ID Created Released Classification Origin
08ASTANA1499 2008-08-12 06:47 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXYZ0009
RR RUEHWEB

DE RUEHTA #1499 2250647
ZNY CCCCC ZZH
R 120647Z AUG 08 ZDK
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3005
INFO RUCNCIS/CIS COLLECTIVE 0603
RUEHUNV/USMISSION UNVIE VIENNA 0059

C O N F I D E N T I A L ASTANA 001499 
 
SIPDIS 
 
E.O. 12958: DECL: 08/12/2018 
TAGS: PREL IAEA EAID PGOV KDEM KZ
SUBJECT: KAZAKHSTAN - DAS KROL DISCUSSES IAEA BOG, MADRID 
COMMITMENTS, REGIONAL ISSUES WITH SENIOR MFA OFFICIALS 
 
Classified By: Pol-Econ Chief Steven H. Fagin, Reasons 1.4 (b) and (d) 
 
1. (C) In a July 22 meeting in Astana, SCA DAS George Krol 
stressed to DFM Kairat Sarybai the urgency of Kazakhstan's 
moving forward on its candidacy for the MESA seat on the IAEA 
Board of Governors (BOG).  Sarybai said he has heard from 
Vienna that most of the Arab members of the MESA group have 
reached a consensus on supporting Syria.  Krol responded that 
this was not the case; there is no consensus on Syria's 
candidacy.  Sarybai responded that the Kazakhstani government 
is still weighing the pros and cons and a final decision on 
Kazakhstan's candidacy could not be taken until FM Tazhin 
returns from leave at the beginning of August.  He explained 
that Kazakhstan is hesitant to run for the BOG because this 
may compromise its relations with Arab countries. 
 
2. (C) Krol informed Sarybai that SCA Assistant Secretary 
Boucher would be appearing in front of the Helsinki 
Commission of Congress on July 22 to discuss Kazakhstan's 
progress toward meeting its Madrid commitments on democratic 
reform and the recent OSCE Parliamentary Assembly session in 
Astana.  Sarybai said that he understands the importance of 
fulfilling the commitments that FM Tazhin made in Madrid; 
however, the initiative for reforms is driven by Kazakhstan's 
own interests and will proceed at a pace determined by 
domestic factors.  Sarybai did note, however, that 
Kazakhstan's 2010 OSCE chairmanship provides further impetus 
for Kazakhstan to move forward on democratic reforms. 
 
3. (C) Krol and Sarybai also discussed stability in Central 
Asia.  Sarybai said that the Kazakhstani government is 
preparing for all possible situations that may arise this 
winter in Tajikistan, Kyrgyzstan, and Uzbekistan.  He 
explained that the government is implementing a "secret" food 
fund that could be used to aid its Central Asian neighbors if 
a food crisis arises later this year.  Sarybai also noted 
that a new center for preventative diplomacy established in 
Ashgabat with UN participation could be a useful tool for 
promoting regional cooperation and dealing with regional 
problems such as food, water, and electricity. 
 
4. (C) DAS Krol met separately DFM Nurlan Yermekbayev on July 
24 in Almaty.  Yermekbayev reiterated to Krol that FM Tazhin 
wants to hold off on finalizing a decision on Kazakhstan's 
IAEA BOG candidacy until he returns from leave.  Krol 
informed Yermekbayev that this issue has reached the highest 
levels of the USG and that Under Secretary Burns plans to 
raise it directly with the Russians.  Yermekbayev said that 
the Kazakhstani government would take this under 
consideration when making its final decision.  Krol and 
Yermekbayev also discussed the potential food and water 
crises in Tajikistan and Kyrgyzstan, as Yermekbayev was en 
route to Tajikistan when he met with DAS Krol.  Yermekbayev 
agreed that the U.S. and Kazakhstan should work together in 
promoting stability in these two countries, and further 
pushed the idea of raising water security at the Ashgabat 
preventative diplomacy center. 
ORDWAY

Wikileaks

08ASTANA1456, KAZAKHSTAN – PUBLIC SECTOR STRIVES TO CATCH UP WITH

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Reference ID Created Released Classification Origin
08ASTANA1456 2008-08-11 10:04 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO7708
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1456/01 2241004
ZNR UUUUU ZZH
R 111004Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2961
INFO RUCNCIS/CIS COLLECTIVE 0601
RUEHAST/USOFFICE ALMATY 0657

UNCLAS SECTION 01 OF 02 ASTANA 001456 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EAID EINV PGOV KZ
SUBJECT:  KAZAKHSTAN - PUBLIC SECTOR STRIVES TO CATCH UP WITH 
PRIVATE SECTOR ON INTERNATIONAL FINANCIAL REPORTING STANDARDS 
 
ASTANA 00001456  001.2 OF 002 
 
 
------- 
Summary 
------- 
 
1. During June 16-26, 2008, the USAID Accounting Reform Project 
provided a Training of Trainers (TOT) in the application of 
International Financial Reporting Standards (IFRS) to the lecturers 
of a newly established Ministry of Finance (MOF) training centre. 
The TOT capped a series of MOF-requested and USAID-financed seminars 
on the transition to IFRS and its application to the public sector 
which were held in 17 cities and delivered to 1,105 participants. 
On the private sector side, the USAID-supported Certified 
International Professional Accountants Examination Network (CIPAEN) 
completed its tri-annual examinations during June 27-30, 2008.  The 
private sector response to the Certified Accounting Practitioner 
(CAP) and Certified International Professional Accountants (CIPA) 
programs is booming with exponential growth and increases in 
examination fees which have made the network fully sustainable.  In 
Kazakhstan alone there are 4,532 CAP-qualified professional 
accountants.  End Summary. 
 
---------- 
Background 
---------- 
 
2. The United States has consistently stressed the importance of 
accounting reform as a fundamental step to creating a market economy 
capable of attracting investment and countering a wide range of 
economic ills, such as corruption, tax fraud, and money laundering. 
USAID support for accounting reform in Kazakhstan is comprised of 
several critical components: 1) a legal/regulatory enabling 
environment for adoption and implementation of IFRS and 
International Standards of Audit (ISA); 2) training, testing, and 
certification of professional accountants (the CAP/CIPA program) 
and; 3) development of the institutions to support accountancy for a 
market economy. 
 
-------------------------------- 
Legal and Regulatory Environment 
-------------------------------- 
 
3. The accounting and financial reporting system in Kazakhstan first 
received attention with the President's 1995 decree on the Law on 
Accounting of the Republic of Kazakhstan, but little happened until 
the Kazakhstani government mandated the following dates for 
transition to IFRS:  January 1, 2003 for financial institutions; 
January 1, 2005 for joint-stock companies; and January 1, 2006 for 
other entities.  January 1, 2008 was targeted for SMEs to choose 
between National Accounting Standards and IFRS, based on the 
International Accounting Standards Board's 2007 exposure draft. 
From January 1, 2008, following a failure of compliance with earlier 
decrees, all companies, irrespective of size, were required to 
report under IFRS full or IFRS modified (in accordance with the IASB 
exposure draft), if applicable.  State enterprises and budget 
ministries will report under IPSAS (International Public Sector 
Accounting Standards) at a time stipulated by the government at some 
point in the future. 
 
---------------- ----------------------------- 
Kazakhstani Government Efforts to Promote IFRS 
------------------------ --------------------- 
 
4. In 2005, the MOF initiated seminars and conferences on 
preparation of financial statements in compliance with IFRS in order 
to assist and facilitate the transition to IFRS in the real sector 
of the economy.  This was followed by a period of inactivity and 
uncertainty until USAID, at the request of the MOF, conducted a 
series of seminars during January-April 2008 on issues pertaining to 
the preparation of financial reporting in compliance with IFRS -- 
"Transition to IFRS and Application to the Public Sector" -- which 
was attended by leading specialists from auditing firms.  These 
seminars were delivered in 17 cities to 1,105 participants. 
Following this successful program, the MOF requested a TOT program 
for the lecturers of a government training center which the MOF is 
opening to train its own staff in the use and application of IFRS. 
In response to this request, during June 16-26, 2008, the USAID 
Accounting Reform project conducted a TOT and trained 15 potential 
lecturers for the MOF training center.  The lecturers received 
training in the area of IFRS and teaching methodology. 
 
----------------------- ------------------------------------ 
Training, Testing, Certification of Professional Accountants 
------------------------------ ----------------------------- 
 
5. The key to private sector adoption of IFRS is the establishment 
of an independent Russian-language testing and certification 
program.  In 2001, USAID began establishing such a program (CIPA) in 
nine countries of the former Soviet Union, including Kazakhstan, 
Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan, Ukraine, Russia, 
Belarus, and Moldova. The CIPA Program comprises a set of seven core 
accounting exams plus a take-home course/exam on Management 
 
ASTANA 00001456  002.2 OF 002 
 
 
Information Systems (MIS). In addition to IFAC's International 
Education Standards, the CIPA Program is based on the model global 
accounting curriculum develo
ped by the United Nations Council on 
Trade and Development/Intergovernmental Expert Working Group on 
International Standards of Accounting and Reporting (UNCTAD/ISAR). 
 
 
6. While training providers for the CIPA training courses originally 
received USAID support, since 2006 the training has been fully 
implemented by the private sector.  Today there are over 60 training 
providers in Kazakhstan.  Likewise, examination fees originally set 
at zero have been raised in Kazakhstan to $120 and now generate 
significant income that is used to expand markets and strengthen 
associations.  Due to its international origins and focus on the 
highest world standards, the CIPA program has gained substantial 
recognition region-wide.  To date, more than 7,200 individuals in 
Central Asia have earned the entry level CAP designation, and 119 
are qualified for CIPA. Kazakhstan leads the region with 4,532 
CAP-qualified professional accountants. 
 
---------------- ------------------------------------- 
Institutions to Support Accountancy in a Market Economy 
-------------------------- ---------------------------- 
 
7. Since December 2001, USAID has supported the establishment and 
operations of the Eurasian Council of Certified Accountants and 
Auditors (ECCAA).  During this period, ECCAA has become a regional 
grouping of the International Federation of Accountants (Kazakhstan 
was named to the Developing Nations Committee) and has grown to 
comprise 32 accounting and auditing associations from 11 member 
countries across the CIS, with its headquarters in Almaty.  USAID 
has fostered a relationship between ECCAA and the Institute of 
Chartered Accountants of Scotland (ICAS), the oldest professional 
institute of accountancy in the world, which has sound governance 
and necessary technical skills and experience to provide support to 
ECCAA. 
 
8. On December 21, 2007, USAID signed a Memorandum of Understanding 
in which USAID acknowledged the effective control by ECCAA of the 
CIPA Educational Network.  The last stage of USAID's support for 
accounting reform will be to facilitate an alliance among ECCAA, 
recognized accounting bodies, and international accounting firms to 
ensure the institutional sustainability of ECCAA. 
 
ORDWAY

Wikileaks

08ASTANA1440, EXBS KAZAKHSTAN ADVISOR’S MONTHLY REPORTING CABLE (JULY

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Reference ID Created Released Classification Origin
08ASTANA1440 2008-08-08 11:39 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO6530
RR RUEHAST
DE RUEHTA #1440/01 2211139
ZNR UUUUU ZZH
R 081139Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2950
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSJGA/COMDT COGARD WASHINGTON DC
RUEKJCS/SECDEF WASHDC 0115
RUEKJCS/JCS WASHDC 0053
RUCQAAA/USCINCCENT MACDILL AFB FL
RUEHRL/AMEMBASSY BERLIN 0479
RUEHEK/AMEMBASSY BISHKEK 8314
RUEHNT/AMEMBASSY TASHKENT 8181
RUEHKB/AMEMBASSY BAKU 0052
RUEHDBU/AMEMBASSY DUSHANBE 2378
RUEHAH/AMEMBASSY ASHGABAT 7341
RUEHAST/USOFFICE ALMATY 0645

UNCLAS SECTION 01 OF 03 ASTANA 001440 
 
SIPDIS 
 
DEPT FOR ISN/ECC YWONG, ACHURCH, JHARTSHORN, SROBINSON 
DEPT FOR ISN/ECC-AMT LSPRINGER 
DEPT FOR EUR/ACE DFISCHER 
DEPT FOR SCA/RA JSPILSBURY 
DEPT FOR SCA/CEN MO'MARA 
CBP/INA FOR SBAKER AND BPICKETT 
USDOE/NNSA CWALKER, TPERRY AND EDESCHLER 
DOC FOR DCREED 
USCG FOR SHABETIMICHAEL 
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 (JULY 
2008) 
 
I. BROAD ITEMS OF INTEREST TO ADVISORS AND AGENCY MANAGERS: 
 
1. On July 28, 2008, Kazakhstani Minister of Emergency Situations 
Vladimir Bozhko participated in a six day working visit to the 
United States at the invitation of the Arizona National Guard. He is 
studying the U.S. system of emergency response measures and risk 
management techniques. On July 31, 2008, Minister Bozhko held 
meetings with U.S. Deputy Assistant Secretary for South and Central 
Asian Affairs George A. Krol and the U.S. Ambassador-Designate to 
Kazakhstan, Richard E. Hoagland. 
 
2. In July 2008, the Chairman of the Customs Control Committee of 
the Ministry of Finance of the Republic of Kazakhstan Kozy-Korpesh 
Karbuzov stated that there have been 50 criminal cases for 
corruption filed against Kazakhstani customs officers in the first 
six months of 2008.  Chairman Karbuzov also stated that 27 customs 
officers had been dismissed and 67 customs officers were disciplined 
for corruption offences. A 2006 Kazakhstani government-funded study 
found that Customs was the most corrupt government agency in the 
Republic of Kazakhstan, with the total value of customs-related 
corruption valued at approximately $141 million U.S. dollars. In an 
effort to fight corruption, Chairman Karbuzov also stated that chief 
executives of the customs offices will be rotated to other posts. 
The Kazakhstan Customs Control Committee has also made a request, 
through a diplomatic note to the U.S. Embassy in Astana, that a 
round table discussion on customs related issues including 
management integrity be held in Astana within the next 2 months 
between members of the Customs Control Committee and experienced 
U.S. Customs and Border Protection Officers. 
 
3. An agreement between Kazakhstan and Kyrgyzstan, which is a legal 
basis for the demarcation of the Kazakh-Kyrgyz state border, was 
ratified by both governments and took effect on August 5, 2008.  The 
presidents of Kazakhstan and Kyrgyzstan signed the border treaty on 
December 15, 2001.  Border issues between the two countries have 
long been a major concern.  At a recent Kazakhstani Customs Control 
Committee meeting the head of the Customs Control Department in the 
Zhambyl oblast, Mr. Vladimir Nakisbayev, stated that the "Kordai" 
customs post and the "green border" areas around it are a high risk 
for exploitation by organized smuggling groups.  This revelation 
prompted the Prime Minister of the Republic of Kazakhstan, Karim 
Massimov, to declare that the Ministry of Economy and Budget 
Planning should satisfy the Border Guards' three year budget request 
for equipment. 
 
4.  During July 2008, the Kazakhstani Border Guard detachment in 
Zharkent took part in a joint international operation with units 
from the People's Liberation Army of China to tighten border 
controls in the Dzhungarian Alatau mountain range region. 
 
5.  On July 18, 2008, the Kazakhstani Vice Minister of Industry and 
Trade Zhanar Aitzhanova stated that Kazakhstan is planning on 
bringing its legislation into compliance with the regulations of the 
World Trade Organization in 2008.  Kazakhstan filed a request for 
entry into the World trade Organization in 1996 but to date has 
failed to meet the harmonization requirements that are prerequisite 
for membership.  The USAID Regional Trade Liberalization and 
Investment Project and the EXBS programs support Kazakhstan's 
accession to the WTO by working on reducing trade barriers relating 
to the transport and transit of goods, enhancing enforcement at 
border crossings, and related customs clearances issues. 
 
6. From June 26 to July 3, 2008, Congressman Alcee L. Hastings 
(D-FL) and Senator Benjamin L. Cardin (D-MD), Co-Chairmen of the 
Commission on Security and Cooperation in Europe (U.S. Helsinki 
Commission) lead a bipartisan Congressional delegation to 
 
ASTANA 00001440  002 OF 003 
 
 
Kazakhstan. The other members of the delegation were U.S. Helsinki 
Commissioners Representatives Christopher H. Smith (R-NJ), Mike 
McIntyre (D-NC), Robert B. Aderholt(R-AL), Hilda Solis (D-CA) and 
G.K. Butterfield (D-CA)as well as Representatives Zach Wamp(R-TN), 
Loretta Sanchez (D-C
A), Diane Watson (D-CA), 
Madeleine Bordallo (D-GU), Gwen Moore (D-WI).  The delegation 
attended the 17th Annual Session of the Parliamentary Assembly of 
the Organization for Security and Cooperation in Europe (OSCE).  The 
delegation also held meetings with Kazakhstan President Nursultan 
Nazarbayev, Prime Minister Karim Masimov, Foreign Minister Marat 
Tazhin, and Secretary of State Kanat Saudabayev.  Kazakhstan is 
scheduled to be the Chairman-in-Office of the OSCE in 2010. 
 
7.  The UN Commission on International Trade Law announced that 
Kazakhstan will become the 34th country to accede to the United 
Nations Convention on the Carriage of Goods by Sea, also known as 
the "Hamburg Rules" on July 1, 2009.  The pact, adopted in 1978 at 
the request of developing countries, sets up a uniform legal regime 
governing the rights and obligations of shippers, carriers and 
consignees under a contract of carriage of goods by sea. 
 
II. COMPLETED ACTIONS FOR THE REPORTING PERIOD 
 
A. SITE ASSESSMENTS AND MEETINGS CONDUCTED 
 
1. On July 22, 2008, the EXBS team attended the Donor Coordination 
Meeting on Border Security Issues at the UNDP conference room in 
Astana, Kazakhstan.  Participants in this meeting included 
representatives from the Border Management and Drug Action Programs 
in Central Asia (BOMCA/CADAP), the International Organization for 
Migration, the Organization for Security and Cooperation in Europe 
(OSCE), the UN High Commissioner of Refugees (UNHCR), the UN Office 
on Drugs and Crime (UNODC), the Border Guard Service, the Customs 
Control Committee, and the British, French and U.S. embassies.  The 
EXBS advisor gave a presentation on EXBS activities during the last 
quarter and on planned activities in Kazakhstan. 
 
2. On July 23, 2008, the EXBS staff participated in a town hall 
meeting conducted by the Deputy Assistant Secretary for South and 
Central Asian Affairs George A. Krol at the U.S. Embassy in Astana, 
Kazakhstan. 
3.  On July 29, 2008, the EXBS advisor attended a meeting with the 
Deputy Chief of Mission, Kevin Milas, and Lieutenant Colonel Michael 
Chandler, U.S. Army Chief, Office of Military Cooperation, regarding 
the future of the U.S. Government's relationship with the Maritime 
Border Guards.  During this meeting the DCM stated that, because of 
overarching security concerns, it was vital that all interactions 
with the Maritime Border Guard be fully coordinated within the U.S. 
Embassy in Astana. 
B. TRAINING DURING THE REPORTING PERIOD 
 
1. From July 8-25, 2008, a United States Coast Guard Mobile Training 
Team conducted a SAFE Boat Operations and Maintenance Course for the 
Maritime Border Guards in Bautino, Kazakhstan.  The course was 
designed to develop and provide logistical support to the Kazakhstan 
Maritime Border Guards as well as examine, in-depth, operational 
knowledge regarding the three 42 ft SAFE boats donated by EXBS in 
2006. The Deputy Chief of Mission in Kazakhstan, Kevin Milas, 
attended the graduation ceremony on July 25, 2008. 
C. EQUIPMENT DELIVERED DURING THE REPORTING PERIOD 
 
1.  EXBS delivered approximately $6,000 in spare parts, and $5,000 
worth of fuel to the Maritime Border Guards in Bautino, Kazakhstan 
for the SAFE Boat Operations Course which was conducted in Bautino, 
Kazakhstan, from July 8 to July 25, 2008. 
 
 
ASTANA 00001440  003 OF 003 
 
 
D. IMMINENT TRAINING OR EQUIPMENT STATUS UPDATE 
 
1.  Two Department of State contractors will be in Shymkent, 
Kazakhstan, from August 15-18, 2008, to attempt repairs on two x-ray 
vans donated by EXBS.  The EXBS program assistant from Astana will 
accompany the contractors. 
 
E. SIGNIFICANT DEVELOPMENTS IN EXPORT CONTROLS, NONPROLIFERATION, OR 
RELATED BORDER SECURITY 
 
1.  None 
 
F. CASPIAN SECURITY INFORMATION 
 
1. None 
 
III. RED FLAG ISSUES. 
 
1. None 
 
ORDWAY

Wikileaks

08ASTANA1411, KAZAKHSTAN: HIGH-LEVEL ATTENDANCE TO 63RD UNGA

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Reference ID Created Released Classification Origin
08ASTANA1411 2008-08-06 10:16 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXYZ0001
RR RUEHWEB

DE RUEHTA #1411 2191016
ZNR UUUUU ZZH
R 061016Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2921
INFO RUCNDT/USMISSION USUN NEW YORK 1895

UNCLAS ASTANA 001411 
 
SIPDIS 
 
DEPARTMENT FOR IO/UNP (SUN), USUN, NSC (MCDONALD), P 
(REINEMEYER), SCA/RA (MAZZONE) 
 
E.O. 12958: N/A 
TAGS: PREL OTRA OVIP KSEP UNGA KZ
SUBJECT: KAZAKHSTAN: HIGH-LEVEL ATTENDANCE TO 63RD UNGA 
 
REF: STATE 72078 
 
This is an interim report on Kazakhstan's high-level 
attendance to the 63rd UN General Assembly: 
 
A. Head of State -- no plans to attend 
 
B. Head of Government -- no plans to attend 
 
C. Attendance of the Foreign Minister -- will attend 
 
-- Marat Tazhin, Foreign Minister 
-- Arrival and departure dates to be confirmed 
-- Spouse travel to be determined 
-- Interpretation not required 
 
D.  Attendance of other VIPs -- to be confirmed 
C.  Attendance of MFA official responsible for IO affairs -- 
to be confirmed 
ORDWAY

Wikileaks

08ASTANA1382, KAZAKHSTAN – SPECIAL ENVOY GRAY DISCUSSES ENERGY

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Reference ID Created Released Classification Origin
08ASTANA1382 2008-08-04 02:11 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO2234
RR RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHTA #1382/01 2170211
ZNY CCCCC ZZH
R 040211Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2892
INFO RUCNCIS/CIS COLLECTIVE 0597
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 04 ASTANA 001382 
 
SIPDIS 
 
E.O. 12958: DECL: 08/04/2018 
TAGS: EPET EINV PGOV PREL KZ
SUBJECT: KAZAKHSTAN - SPECIAL ENVOY GRAY DISCUSSES ENERGY 
ISSUES WITH GOVERNMENT AND MAJOR COMPANIES 
 
Classified By: Amb. Ordway for reasons 1.4 (b) and (d) 
 
------- 
SUMMARY 
------- 
 
1. (C) During July 22 meetings, Kazakhstani government 
officials expressed optimism to visiting Special Envoy Boyden 
Gray regarding the restructuring of Kashagan.  They explained 
that Kazakhstan was moving forward with Azerbaijan and the 
companies on the Kazakhstan-Caspian Transportation System 
(KCTS).  They indicated that there had been forward movement 
on expansion of the Caspian Pipeline Consortium (CPC) 
pipeline.  The officials reminded Gray that Kazakhstan has 
only limited quantities of gas available. Western oil and gas 
companies stressed the high costs of energy exploration and 
development in Kazakhstan.  End Summary. 
 
-------------------- 
OPTIMISM ON KASHAGAN 
-------------------- 
 
2. (C) Special Envoy for Eurasian Energy Issues Boyden Gray 
met in Astana on July 22 with Prime Minister Karimov Masimov, 
Deputy Energy Minister Lyazzat Kiinov, KazEnergy Chairman 
Timur Kulibayev, Samruk Deputy Chairman Kairgeldy Kabyldin, 
KazMunaiGaz (KMG) First Vice President Maksat Idenov, KMG 
Vice President Daniyar Berlibayev, and representatives of 
U.S. and other western oil and gas companies.  Gray was 
accompanied by Eurasian Energy Diplomacy Coordinator 
Ambassador Steve Mann, SCA Deputy Assistant Secretary George 
Krol, and Ambassador Ordway.  Gray explained to his 
interlocutors that he was particularly interested in 
discussing the latest developments in Kazakhstan,s oil and 
gas sector, including the status of Kashagan, relations 
between the Kazakhstani government and the international 
energy companies, and energy transport issues. 
 
3. (C) Gray,s Kazakhstani government interlocutors stressed 
that Kazakhstan by and large enjoys good relations with the 
international oil and gas companies.  The officials expressed 
optimism regarding Kashagan.  Prime Minister Masimov 
explained that he had several days previously spoken by 
conference call to all the Kashagan partners.  The key issues 
have been resolved, with the project ready to move forward. 
He noted that under the latest terms, the companies will bear 
all the costs for any additional delays of first oil beyond 
2013.  Providing additional details, KMG Executive Vice 
President Idenov said that Eni, which last year had fought 
furiously to remain sole Kashagan operator, would lose that 
status within a matter of weeks.  Idenov,s vision is for 
ExxonMobil to operate onshore activities and Shell offshore, 
with Total managing the Kashagan joint operating company and 
ConocoPhillips taking the lead on budget issues.  Inpex, he 
noted, does not want to play a lead role.  Idenov explained 
he had recently raised the needed $3 billion for KMG to meet 
upcoming Kashagan cash calls, claiming that investors had 
actually oversubscribed, offering $6.4 billion in total. 
Deputy Energy Minister Kiinov complained that Kashagan,s 
delays had forced Kazakhstan to make significant revisions to 
its development plans.  The country had expected to be 
producing 130 million tons of crude by 2015.  With the latest 
delay in Kashagan,s first oil, that figure has been lowered 
to 100 million tons )- a big difference for Kazakhstan, he 
stressed. 
 
---------------------------------------- 
KAZAKHSTAN-CASPIAN TRANSPORTATION SYSTEM 
---------------------------------------- 
 
4. (C) KazEnergy Chairman Timur Kulibayev (who is also 
President Nazarbayev,s son-in-law) reminded Gray that 
Kazakhstan and Azerbaijan had signed an Inter-Governmental 
Agreement (IGA) on the Kazakhstan-Caspian Transportation 
System (KCTS) in 2007.  KCTS, he maintained, enjoys the 
support of Azerbaijan,s President Aliyev, and KazMunaiGaz 
and Azerbaijan,s SOCAR have agreed to exchange &task 
forces8 to hash out further details, which will also require 
close consultations with the international companies. 
 
5. (C) Kulibayev said the Kazakhstanis have been in 
discussions with Chevron on the pipeline portion of KCTS )- 
i.e., the pipeline to bring crude from the oil fields to 
Kazakhstan,s Caspian coast.  Chevron is prepared to move 
forward now, finance half of the pipeline's construction, and 
take an initial share of 50 percent while also agreeing to 
reduce that later to 10 or 15 percent to allow other 
companies to gain ownership shares.  ExxonMobil, with its 
stakes in both Tengiz and Kashagan, is also positive on the 
pipeline, Kulibayev maintained, but not all the other 
companies in the Tengiz and Kashagan consortiums are on board 
 
ASTANA 00001382  002 OF 004 
 
 
yet.  (Note:  Idenov claimed that Total was a particular 
problem, as it would not be able to export to Iran if U.S. 
companies had equity stakes in KCTS oil terminals.  End 
Note.)  Kulibayev recognized that this is an issue for the 
companies to resolve, but said Kazakhstan would welcome USG 
assistance in getting them to resolve their differences. 
With a lack of agreement among the c
ompanies, Kazakhstan is 
constrained in negotiating with the Azeris on the 
trans-Caspian portion of KCTS and with the Azeris and 
Georgians on transport from Baku onward.   In the meanwhile, 
TengizChevrOil is losing money by having to ship large 
volumes by rail, Kulibayev argued. 
 
-------------------------- 
TRANSPORT FROM BAKU ONWARD 
-------------------------- 
 
6. (C) Gray,s interlocutors touched only briefly on the 
issue of moving crude from Baku onward.  Masimov noted that 
Kazakhstan had committed to use the Baku-Tbilisi-Ceyhan (BTC) 
pipeline in 2006.  Kazakhstan is pleased with how things have 
been developing.  Masimov said the Kazakhstanis were 
discussing with the companies the possibility of building an 
additional pipeline from Baku, and did not think this would 
be a problem for the Azeris or Georgians.  Kulibayev said the 
Georgians were vocally supportive of Kazakhstan moving its 
crude through Georgia )- and also welcomed KMG,s 
acquisition of the Batumi oil terminal.  The Georgians, he 
explained, were willing to give Kazakhstan all opportunities 
to use existing pipelines and build new ones. 
 
----------------------------- 
CPC EXPANSION MOVING FORWARD? 
----------------------------- 
 
7. (C) Masimov told Gray that Kazakhstan,s success in moving 
forward on KCTS is leading to progress on expansion of the 
Caspian Pipeline Consortium (CPC) pipeline.  KMG Vice 
President Berlibayev said that Russia's approach had changed 
on CPC and was now closer to that of the companies.  The 
Kazakhstanis and Transneft had reached agreement.  What is 
needed now is a political decision from the Russian 
government, Kulibayev explained, adding that Kazakhstan hoped 
to get it soon.  Kiinov argued that CPC expansion is 
particularly important in handling future Kashagan volumes, 
as Kazakhstan considers a trans-Caspian pipeline to be a 
no-go for now for political reasons, as well as because of 
the topography of the sea-bed.  He also suggested expanding 
CPC to Odessa, to make the Odessa-Brody pipeline more 
commercially viable.  This would require giving Russia a 
small share in CPC, perhaps 5 or 10 percent )- but that 
should not cause any problems, Kiinov argued. 
 
------------------- 
LIMITED NATURAL GAS 
------------------- 
 
8. (C) The Kazakhstani government interlocutors explained to 
Gray that Kazakhstan produces only limited quantities of gas, 
most of which is used for domestic consumption.  Prime 
Minister Masimov argued that Kazakhstan had made a mistake in 
not focusing more on gas when it signed contracts for Tengiz 
and Kashagan that allowed the companies to reinject most gas. 
 He said Kazakhstan would respect the sanctity of those 
contracts, but would separate oil and gas components in 
future contracts.  Masimov noted that Kazakhstan actually has 
a shortage of gas in the south, because its gas is mostly 
found in the west, as a result of which it imports gas from 
Uzbekistan and is building a pipeline to bring gas from the 
west to the south.  Masimov noted that Kazakhstan had started 
negotiations with ConocoPhillips and the UAE regarding &N 
Block,8 which may be a promising area for gas.  Kulibayev 
noted the importance of a Kazakhstani gas pipeline to China, 
explaining that it will give Kazakhstan two gas customers. 
That said, gas is a very sensitive issue for the Russians, in 
a way that crude is not, he stressed.  Kazakhstan has good 
relations with Gazprom, and both the Russian and Kazakhstani 
governments support Gazprom-KMG cooperation.  Every year, 
Kazakhstan is getting a better price for the gas it sends to 
Russia, Kulibayev argued. 
 
----------------- 
KMG RESTRUCTURING 
----------------- 
 
9. (C) Idenov provided Gray with details on his efforts to 
restructure KMG.  The company, he explained, owns many fields 
that are depleted, at the tail end of the production lives. 
KMG needs to focus more on mega projects that will provide 
large, long-term cash flows.  KMG received $1.4 billion in 
profit from Tengiz in 2007 (which yielded a total of $7.2 
 
ASTANA 00001382  003 OF 004 
 
 
billion in profit for the whole consortium).  Idenov alleged 
that former KMG President Uzakbai Karabalin had made a 
fortune through contracts KMG had with a company he owned. 
Karabalin had, in fact, tried to oust Idenov from the 
company, but in the end, President Nazarbayev supported 
Idenov, and Karabalin wound up losing his job. 
 
------------ 
TURKMENISTAN 
------------ 
 
10. (C) Mann requested to Masimov that the Kazakhstanis 
explain to Turkmen President Berdymukhamedov the importance 
of developing partnerships with the international energy 
companies, as Kazakhstan had done. Masimov promised to pass 
this request to President Nazarbayev.  Kulibayev said there 
had been positive changes in Turkmenistan, and good relations 
between Berdymukhamdov and Nazarbayev, with the former 
willing to learn from the latter.  He expressed doubts about 
Turkmenistan,s capacity to meet all the commitments it had 
made on gas. 
 
------------------------------ 
VIEWS OF THE WESTERN COMPANIES 
------------------------------ 
 
11. (C) Kazakhstan-based representatives of international oil 
and gas companies told Gray that there is a very challenging 
backdrop to the exciting opportunities in Kazakhstan,s 
energy sector.  Campbell Keir, General Manager of Shell 
Kazakhstan Development, argued that the complexity of 
Kazakhstan,s oil and gas projects, together with the fact 
that the country is essentially landlocked, results in very 
high operating costs, such that many projects are only 
worthwhile pursuing if crude is priced above $85 per barrel. 
Project development is also hindered by a lack of 
infrastructure and of domestic human capital, he argued. 
Keir said that companies and governments should encourage the 
Kazakhstanis to package their energy development projects, as 
offering each project separately makes them too expensive. 
Keir pointed out the difficulties of offshore operations in 
the Caspian, where depths range from very shallow (1.5 
meters) to very deep, with work particularly complicated 
below the salt layer.  Steve Rose, General Manager of 
ExxonMobil Kazakhstan, said that there is still &lots of oil 
and gas8 likely to be discovered in Kazakhstan; the question 
is the timeframe for mobilizing the resources to develop new 
fields, as well as whether it will be profitable to do so. 
Oil and gas transport is complicated too, with export routes 
largely having to cross multiple countries, Rose explained. 
 
12. (C) Rose maintained that the Kazakhstani government was 
sending &mixed signals8 on KMG.  On the one hand, it wants 
the company to be an international leader.  On the other 
hand, the crude export duty it recently introduced hits KMG 
very hard.  The government is taking away KMG,s cash flow at 
the same time KMG just increased its stake in
Kashagan, which 
will not yield positive cash flows for many years. 
Responding to a question from Mann, Keir maintained that the 
Samruk state holding company, which is KMG,s sole 
shareholder, plays an influential role in KMG when it wants 
to, noting it had reversed some of the personnel changes new 
KMG President Burkitbayev wanted to make. 
 
13. (C) Mann asked the group how Turkey is regarded in 
Kazakhstan.  Zamira Kanapyanova, Chevron Kazakhstan Country 
Manager, said that in general, relations with Turkey are 
good.  There is appreciation for Turkey,s early recognition 
of and support for Kazakhstan.  That said, sometimes Turkey 
wants to play big brother, which does not go over well, 
Kanapyanova contended. 
 
14. (C) Gray asked the company representatives on what issues 
the USG could be of assistance to them.  Steve Rose responded 
that it is important that the companies be able to engage 
with the Kazakhstan government on its plans to introduce a 
new tax code.  He also contended that the companies are being 
&eaten alive8 by changing regulations, as a result of which 
Todd Levy, General Manager of TengizChevrOil spends 75 
percent of his time dealing with such issues, rather than 
with oil and gas.  The central government, Rose argued, needs 
to find a way to better fund regional governments, so the 
regional governments do not have to raise revenues by finding 
ways to fine the companies for alleged regulatory violations. 
 Rose also expressed the concern that with their growing 
income flows from increased production and higher prices, 
Kazakhstan and Azerbaijan would become complacent, satisfied 
with what they have, and not move forward expeditiously in 
resolving issues like transport. 
 
15.  (U) Ambassadors Gray and Mann have cleared this cable. 
 
ASTANA 00001382  004 OF 004 
 
 
ORDWAY

Wikileaks

08ASTANA1381, KAZAKHSTAN – SPECIAL ENVOY GRAY DISCUSSES ENERGY

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Reference ID Created Released Classification Origin
08ASTANA1381 2008-08-01 14:48 2011-08-30 01:44 CONFIDENTIAL Embassy Astana

VZCZCXRO1767
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHTA #1381/01 2141448
ZNY CCCCC ZZH
P 011448Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 2888
INFO RUCNCIS/CIS COLLECTIVE 0593
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 04 ASTANA 001381 
 
SIPDIS 
 
E.O. 12958: DECL: 08/01/2018 
TAGS: EPET EINV PGOV PREL KZ
SUBJECT: KAZAKHSTAN - SPECIAL ENVOY GRAY DISCUSSES ENERGY 
ISSUES WITH GOVERNMENT AND MAJOR COMPANIES 
 
Classified By: Pol-Econ Chief Steven Fagin, Reasons 1.4 (b) and (d) 
 
------- 
SUMMARY 
------- 
 
1. (C) During July 22 meetings, Kazakhstani government 
officials expressed optimism to visiting Special Envoy Boyden 
Gray regarding the restructuring of Kashagan.  They explained 
that Kazakhstan was moving forward with Azerbaijan and the 
companies on the Kazakhstan-Caspian Transportation System 
(KCTS).  They indicated that there had been forward movement 
on expansion of the Caspian Pipeline Consortium (CPC) 
pipeline.  The officials reminded Gray that Kazakhstan has 
only limited quantities of gas available. Western oil and gas 
companies stressed the high costs of energy exploration and 
development in Kazakhstan.  End Summary. 
 
-------------------- 
OPTIMISM ON KASHAGAN 
-------------------- 
 
2. (C) Special Envoy for Eurasian Energy Issues Boyden Gray 
met in Astana on July 22 with Prime Minister Karimov Masimov, 
Deputy Energy Minister Lyazzat Kiinov, KazEnergy Chairman 
Timur Kulibayev, Samruk Deputy Chairman Kairgeldy Kabyldin, 
KazMunaiGaz (KMG) First Vice President Maksat Idenov, KMG 
Vice President Daniyar Berlibayev, and representatives of 
U.S. and other western oil and gas companies.  Gray was 
accompanied by Eurasian Energy Diplomacy Coordinator 
Ambassador Steve Mann, SCA Deputy Assistant Secretary George 
Krol, and Ambassador Ordway.  Gray explained to his 
interlocutors that he was particularly interested in 
discussing the latest developments in Kazakhstan's oil and 
gas sector, including the status of Kashagan, relations 
between the Kazakhstani government and the international 
energy companies, and energy transport issues. 
 
3. (C) Gray's Kazakhstani government interlocutors stressed 
that Kazakhstan by and large enjoys good relations with the 
international oil and gas companies.  The officials expressed 
optimism regarding Kashagan.  Prime Minister Masimov 
explained that he had several days previously spoken by 
conference call to all the Kashagan partners.  The key issues 
have been resolved, with the project ready to move forward. 
He noted that under the latest terms, the companies will bear 
all the costs for any additional delays of first oil beyond 
2013.  Providing additional details, KMG Executive Vice 
President Idenov said that Eni, which last year had fought 
furiously to remain sole Kashagan operator, would lose that 
status within a matter of weeks.  Idenov's vision is for 
ExxonMobil to operate onshore activities and Shell offshore, 
with Total managing the Kashagan joint operating company and 
ConocoPhillips taking the lead on budget issues.  Inpex, he 
noted, does not want to play a lead role.  Idenov explained 
he had recently raised the needed $3 billion for KMG to meet 
upcoming Kashagan cash calls, claiming that investors had 
actually oversubscribed, offering $6.4 billion in total. 
Deputy Energy Minister Kiinov complained that Kashagan's 
delays had forced Kazakhstan to make significant revisions to 
its development plans.  The country had expected to be 
producing 130 million tons of crude by 2015.  With the latest 
delay in Kashagan's first oil, that figure has been lowered 
to 100 million tons -- a big difference for Kazakhstan, he 
stressed. 
 
---------------------------------------- 
KAZAKHSTAN-CASPIAN TRANSPORTATION SYSTEM 
---------------------------------------- 
 
4. (C) KazEnergy Chairman Timur Kulibayev (who is also 
President Nazarbayev's son-in-law) reminded Gray that 
Kazakhstan and Azerbaijan had signed an Inter-Governmental 
Agreement (IGA) on the Kazakhstan-Caspian Transportation 
System (KCTS) in 2007.  KCTS, he maintained, enjoys the 
support of Azerbaijan's President Aliyev, and KazMunaiGaz and 
Azerbaijan's SOCAR have agreed to exchange "task forces" to 
hash out further details, which will also require close 
consultations with the international companies. 
 
5. (C) Kulibayev said the Kazakhstanis have been in 
discussions with Chevron on the pipeline portion of KCTS -- 
i.e., the pipeline to bring crude from the oil fields to 
Kazakhstan's Caspian coast.  Chevron is prepared to move 
forward now, finance half of the pipeline's construction, and 
take an initial share of 50 percent while also agreeing to 
reduce that later to 10 or 15 percent to allow other 
companies to gain ownership shares.  ExxonMobil, with its 
stakes in both Tengiz and Kashagan, is also positive on the 
pipeline, Kulibayev maintained, but not all the other 
companies in the Tengiz and Kashagan consortiums are on board 
 
ASTANA 00001381  002 OF 004 
 
 
yet.  (Note:  Idenov claimed that Total was a particular 
problem, as it would not be able to export to Iran if U.S. 
companies had equity stakes in KCTS oil terminals.  End 
Note.)  Kulibayev recognized that this is an issue for the 
companies to resolve, but said Kazakhstan would welcome USG 
assistance in getting them to resolve their differences. 
With a lack of
 agreement among the companies, Kazakhstan is 
constrained in negotiating with the Azeris on the 
trans-Caspian portion of KCTS and with the Azeris and 
Georgians on transport from Baku onward. In the meanwhile, 
TengizChevrOil is losing money by having to ship large 
volumes by rail, Kulibayev argued. 
 
-------------------------- 
TRANSPORT FROM BAKU ONWARD 
-------------------------- 
 
6. (C) Gray's interlocutors touched only briefly on the issue 
of moving crude from Baku onward.  Masimov noted that 
Kazakhstan had committed to use the Baku-Tbilisi-Ceyhan (BTC) 
pipeline in 2006.  Kazakhstan is pleased with how things have 
been developing.  Masimov said the Kazakhstanis were 
discussing with the companies the possibility of building an 
additional pipeline from Baku, and did not think this would 
be a problem for the Azeris or Georgians.  Kulibayev said the 
Georgians were vocally supportive of Kazakhstan moving its 
crude through Georgia -- and also welcomed KMG's acquisition 
of the Batumi oil terminal.  The Georgians, he explained, 
were willing to give Kazakhstan all opportunities to use 
existing pipelines and build new ones. 
 
----------------------------- 
CPC EXPANSION MOVING FORWARD? 
----------------------------- 
 
7. (C) Masimov told Gray that Kazakhstan's success in moving 
forward on KCTS is leading to progress on expansion of the 
Caspian Pipeline Consortium (CPC) pipeline.  KMG Vice 
President Berlibayev said that Russia's approach had changed 
on CPC and was now closer to that of the companies.  The 
Kazakhstanis and Transneft had reached agreement.  What is 
needed now is a political decision from the Russian 
government, Kulibayev explained, adding that Kazakhstan hoped 
to get it soon.  Kiinov argued that CPC expansion is 
particularly important in handling future Kashagan volumes, 
as Kazakhstan considers a trans-Caspian pipeline to be a 
no-go for now for political reasons, as well as because of 
the topography of the sea-bed.  He also suggested expanding 
CPC to Odessa, to make the Odessa-Brody pipeline more 
commercially viable.  This would require giving Russia a 
small share in CPC, perhaps 5 or 10 percent -- but that 
should not cause any problems, Kiinov argued. 
 
------------------- 
LIMITED NATURAL GAS 
------------------- 
 
8. (C) The Kazakhstani government interlocutors explained to 
Gray that Kazakhstan produces only limited quantities of gas, 
most of which is used for domestic consumption.  Prime 
Minister Masimov argued that Kazakhstan had made a mistake in 
not focusing more on gas when it signed contracts for Tengiz 
and Kashagan that allowed the companies to reinject most gas. 
 He said Kazakhstan would respect the sanctity of those 
contracts, but would separate oil and gas components in 
future contracts.  Masimov noted that Kazakhstan actually has 
a shortage of gas in the south, because its gas is mostly 
found in the west, as a result of which it imports gas from 
Uzbekistan and is building a pipeline to bring gas from the 
west to the south.  Masimov noted that Kazakhstan had started 
negotiations with ConocoPhillips and the UAE regarding "N 
Block," which may be a promising area for gas.  Kulibayev 
noted the importance of a Kazakhstani gas pipeline to China, 
explaining that it will give Kazakhstan two gas customers. 
That said, gas is a very sensitive issue for the Russians, in 
a way that crude is not, he stressed.  Kazakhstan has good 
relations with Gazprom, and both the Russian and Kazakhstani 
governments support Gazprom-KMG cooperation.  Every year, 
Kazakhstan is getting a better price for the gas it sends to 
Russia, Kulibayev argued. 
 
----------------- 
KMG RESTRUCTURING 
----------------- 
 
9. (C) Idenov provided Gray with details on his efforts to 
restructure KMG.  The company, he explained, owns many fields 
that are depleted, at the tail end of their production lives. 
 KMG needs to focus more on mega projects that will provide 
large, long-term cash flows.  KMG received $1.4 billion in 
profit from Tengiz in 2007 (which yielded a total of $7.2 
 
ASTANA 00001381  003 OF 004 
 
 
billion in profit for the whole consortium).  Idenov alleged 
that former KMG President Uzakbai Karabalin had made a 
fortune through contracts KMG had with a company he owned. 
Karabalin had, in fact, tried to oust Idenov from the 
company, but in the end, President Nazarbayev supported 
Idenov, and Karabalin wound up losing his job. 
 
------------ 
TURKMENISTAN 
------------ 
 
10. (C) Mann requested to Masimov that the Kazakhstanis 
explain to Turkmen President Berdymukhamedov the importance 
of developing partnerships with the international energy 
companies, as Kazakhstan had done. Masimov promised to pass 
this request to President Nazarbayev.  Kulibayev said there 
had been positive changes in Turkmenistan, and good relations 
between Berdymukhamdov and Nazarbayev, with the former 
willing to learn from the latter.  He expressed doubts about 
Turkmenistan's capacity to meet all the commitments it had 
made on gas. 
 
------------------------------ 
VIEWS OF THE WESTERN COMPANIES 
------------------------------ 
 
11. (C) Kazakhstan-based representatives of international oil 
and gas companies told Gray that there is a very challenging 
backdrop to the exciting opportunities in Kazakhstan's energy 
sector.  Campbell Keir, General Manager of Shell Kazakhstan 
Development, argued that the complexity of Kazakhstan's oil 
and gas projects, together with the fact that the country is 
essentially landlocked, results in very high operating costs, 
such that many projects are only worthwhile pursuing if crude 
is priced above $85 per barrel.  Project development is also 
hindered by a lack of infrastructure and of domestic human 
capital, he argued.  Keir said that companies and governments 
should encourage the Kazakhstanis to package their energy 
development projects, as offering each project separately 
makes them too expensive.  Keir pointed out the difficulties 
of offshore operations in the Caspian, where depths range 
from very shallow (1.5 meters) to very deep, with work 
particularly complicated below the salt layer.  Steve Rose, 
General Manager of ExxonMobil Kazakhstan, said that there is 
still "lots of oil and gas" likely to be discovered in 
Kazakhstan; the question is the timeframe for mobilizing the 
resources to develop new fields, as well as whether it will 
be profitable to do so.  Oil and gas transport is complicated 
too, with export routes largely having to cross multiple 
countries, Rose explained. 
 
12. (C) Rose maintained that the Kazakhstani government was 
sending "mixed signals" on KMG.  On the one hand, it wants 
the company to be an international leader.  On the other 
hand, the crude export duty it recently introduced hits KMG 
very hard.  The government is taking away KMG's cash flow at 
the same time KMG j
ust increased its stake in Kashagan, which 
will not yield positive cash flows for many years. 
Responding to a question from Mann, Keir maintained that the 
Samruk state holding company, which is KMG's sole 
shareholder, plays an influential role in KMG when it wants 
to, noting it had reversed some of the personnel changes new 
KMG President Burkitbayev wanted to make. 
 
13. (C) Mann asked the group how Turkey is regarded in 
Kazakhstan.  Zamira Kanapyanova, Chevron Kazakhstan Country 
Manager, said that in general, relations with Turkey are 
good.  There is appreciation for Turkey's early recognition 
of and support for Kazakhstan.  That said, sometimes Turkey 
wants to play big brother, which does not go over well, 
Kanapyanova contended. 
 
14. (C) Gray asked the company representatives on what issues 
the USG could be of assistance to them.  Steve Rose responded 
that it is important that the companies be able to engage 
with the Kazakhstani government on its plans to introduce a 
new tax code.  He also contended that the companies are being 
"eaten alive" by changing regulations, as a result of which 
Todd Levy, General Manager of TengizChevrOil, spends 75 
percent of his time dealing with such issues, rather than 
with oil and gas.  The central government, Rose argued, needs 
to find a way to better fund regional governments, so the 
regional governments do not have to raise revenues by finding 
ways to fine the companies for alleged regulatory violations. 
 Rose also expressed the concern that with their growing 
income flows from increased production and higher prices, 
Kazakhstan and Azerbaijan would become complacent, satisfied 
with what they have, and not move forward expeditiously in 
resolving issues like transport. 
 
15.  (U) Ambassadors Gray and Mann have cleared this cable. 
 
ASTANA 00001381  004 OF 004 
 
 
 
ORDWAY

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08ASTANA1380, KAZAKHSTAN: ALMATY NOTES, JULY 21 – AUGUST 1, 2008

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Reference ID Created Released Classification Origin
08ASTANA1380 2008-08-01 14:22 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO1427
RR RUEHAST
DE RUEHTA #1380 2141422
ZNR UUUUU ZZH
R 011422Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2887
INFO RUEHVEN/USMISSION USOSCE 1934
RUEHEK/AMEMBASSY BISHKEK 8313
RUEHNT/AMEMBASSY TASHKENT 8180
RUEHAH/AMEMBASSY ASHGABAT 7340
RUEHDBU/AMEMBASSY DUSHANBE 2377
RUEHMO/AMEMBASSY MOSCOW 1542
RUEHAST/USOFFICE ALMATY 0634

UNCLAS ASTANA 001380 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KZ
SUBJECT: KAZAKHSTAN: ALMATY NOTES, JULY 21 - AUGUST 1, 2008 
 
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. 
 
Oppositionists Join With Nur Otan in Public Council 
--------------------- ----------------------------- 
 
2. A public council has been set up in Almaty to discuss and propose 
solutions to social problems, Vremya reported on July 23.  Council 
members include the deputy head of the Almaty branch of the Nur Otan 
Party, Tokmukhamed Sadykov, and Almaty's deputy mayor, as well as 
opposition activists Asylbek Kozhakhmetov of the Shanyrak movement, 
Petr Svoik of the Azat Party, Amantay Akhetov of the Communist Party 
and Amirbek Togusov of the National Social Democratic Party. 
Kozhakhmetov told Vremya that political differences between the 
opposition and Nur Otan should not prevent the opposition from 
working to resolve the problems of ordinary people.  According to 
Kozhakhmetov, the council will focus, inter alia, on land and 
housing conflicts.  The council's recommendations will be addressed 
to the parties directly involved in a given dispute as well as to 
the mayor's office. 
 
Nazarbayev Recommends Limits on Almaty Construction 
------------------------- ------------------------- 
 
3. During a July 24 visit to Almaty, President Nazarbayev instructed 
Almaty mayor Akhmetzhan Yesimov to review construction in Almaty and 
to take measures to limit it in the central part of the city.  The 
President recommended that new construction be concentrated on the 
city's outskirts, in districts where many migrants have settled in 
recent years.  "Let construction companies demolish old housing -- 
legal and illegal -- there and provide the current residents with 
new places to live," Nazarbayev argued. 
 
Women Invalids Appeal to Timur Kulibayev 
-------- ------------------------------- 
 
4. The Society of Women Invalids, Bibi-Ana, has addressed an appeal 
to Timur Kulibayev, President Nazarbayev's son-in-law, asking him to 
not seize their office space.  Bibi-Ana's lawyer purportedly learned 
that Kulibayev was the ultimate owner of the company which bought 
the building in which Bibi-Ana's office is located.  This company 
won a lawsuit against Bibi-Ana, resulting in a court ruling to evict 
the organization from the building.  Bibi-Ana's leader, Bibigul 
Imangazina, said that the association unites 217,000 women invalids 
and will not give up its fight to keep the office space. 
 
Suicide Threat 
-------------- 
 
5. On July 21, Murat Telibekov and other activists from the Union of 
Muslims held a press conference in Almaty to express their support 
for Takhirzhan Akhmetov, who cut off his finger in public, 
protesting the failure of court bailiffs to implement a court ruling 
Akhmetov won against a business partner.  At the press conference, 
the Union of Muslims appealed to President Nazarbayev and Prime 
Minister Masimov asking them to fire the Chairman of the Supreme 
Court, the Minister of Justice, and the Prosecutor General.  For his 
part, Akhmetov threatened to send his amputated finger to Nazarbayev 
or to commit suicide by self-immolation if Nazarbayev does not take 
action to resolve his problem. 
 
ORDWAY

Wikileaks

08ASTANA1377, KAZAKHSTAN ESTH UPDATE, JULY 2008

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Reference ID Created Released Classification Origin
08ASTANA1377 2008-08-01 06:16 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO0924
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1377/01 2140616
ZNR UUUUU ZZH
R 010616Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2879
INFO RUCNCIS/CIS COLLECTIVE 0591
RUEHAST/USOFFICE ALMATY 0626

UNCLAS SECTION 01 OF 02 ASTANA 001377 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV TBIO TSPA PGOV KZ
SUBJECT: KAZAKHSTAN ESTH UPDATE, JULY 2008 
 
ASTANA 00001377  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani press and has not been verified.  The opinions expressed 
in this report, therefore, should not be interpreted as official 
positions and/or policy of the U.S. Government. 
 
-- Falsified Maternal and Infant Mortality Rates 
-- Population of Caspian Seals Falling 
-- Three Cases of Anthrax Registered 
-- No Financial Losses From KazSat-1 Failure 
-- Nature Reserves Added to UNESCO World Heritage List 
-- Fire in Yertis Ormany Nature Reserve 
 
Falsified Maternal and Infant Mortality Rates 
--------------------------------------------- 
 
2. Express K newspaper reported on July 16 that the Prosecutor 
General's Office had carried out inspections of maternity hospitals 
throughout Kazakhstan that revealed numerous violations, such as 
concealing maternal and infant deaths, inappropriate distribution 
and spending of government money, charging pregnant women for 
medical check ups that were supposed to be free, absence of 
sufficient equipment and qualified doctors, and low quality of 
medical services that frequently led to patient deaths.  It was 
reported that the secrecy of maternity medical establishments 
prevented demographic specialists from getting an accurate picture 
of the demographic situation in the country.  The Prosecutor 
General's Office filed one criminal case and 511 administrative 
cases as a result of the inspections. 
 
Population of Caspian Seals Falling 
----------------------------------- 
 
3. Kazakhstan Today reported on July 16 that the Caspian 
International Seal Survey (CISS) for the Caspian Environmental 
Program, which is funded by the UK's Darwin Initiative, presented a 
report on its recent survey of the Caspian seal population. 
According to the report, there was a significant reduction in the 
population of seals during 2005-2007.  The seal birth rate in 2007 
was 3.5 times below the level of 2005, purportedly due to pollution. 
 Caspian Environmental Program researchers suggested that the status 
of Caspian seals be changed from a "vulnerable" species to a 
"threatened" one in the Red List of the International Union for the 
Conservation of Nature and Natural Resources (IUCN). 
 
Three Cases of Anthrax Registered 
--------------------------------- 
 
4. On July 24, Kazakhstan Today published a statement by the 
Ministry of Health about three cases of anthrax registered this July 
in East Kazakhstan and Kzylorda oblasts (regions).  In all the 
cases, the source of infection was infected meat.  One of the 
victims died. Over the past 10 years, 176 cases of anthrax have been 
registered in Kazakhstan. 
 
No Financial Losses From KazSat-1 Failure 
----------------------------------------- 
 
5. Interfax reported on July 24 that according to the Kazakhstani 
National Space Agency, Kazakhstan will not incur any financial 
losses as a result of the failure of the first Kazakhstani 
satellite, KazSat-1. The government will receive $60 million in 
compensation and insurance payments if the Russian contractor fails 
to put the satellite back into operation.  However, taking into 
account lessons learned from KazSat-1, the government intends to 
purchase more reliable equipment from European manufacturers for 
KazSat-2, which is being built by Russia's Khrunichev Space Research 
and Production Centre, just as KazSat-1 was.  The launch of KazSat-2 
might also be delayed until early 2010.  Interfax also reported that 
Kazakhstan will spend no less than $6 billion on its space program 
during 2009-2020. 
 
Nature Reserves Added to UNESCO World Heritage List 
--------------------------------------------- ------ 
 
6. Interfax reported on July 10 that the Naurzum Nature Reserve and 
the Korgalzhyn Nature Reserve had been added to the UNESCO World 
Heritage List.  These wetlands are key stopover points for millions 
of birds migrating from Africa, India, and Southern Europe to 
Western and Eastern Siberia. They also host a large number of 
endangered species. 
 
Fire in Yertis Ormany Nature Reserve 
------------------------------------ 
 
7. A large fire occurred in the Yertis Ormany Nature Reserve in 
Pavlodar oblast (region) during July 14-16.  The area affected 
totaled to 1080 hectares, with damages estimated at over $200,000. 
A special commission confirmed the fire as a case of arson, and is 
investigating possible links to assaults on local pilots patrolling 
the reserve and on representatives of the reserve's management which 
took place several days before the fire.  Authorities suspect that 
the victims had been attacked because they had significantly reduced 
 
ASTANA 00001377  002.2 OF 002 
 
 
illegal timber cutting in the reserve. 
 
ORDWAY

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