08ASTANA2231, KAZAKHSTAN: WHAT THE PRIVATE SECTOR CAN ACCOMPLISH

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Reference ID Created Released Classification Origin
08ASTANA2231 2008-11-10 11:26 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO7433
OO RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHPOD RUEHPW RUEHROV RUEHSR
RUEHVK RUEHYG
DE RUEHTA #2231/01 3151126
ZNR UUUUU ZZH
O 101126Z NOV 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3793
INFO RUCNCIS/CIS COLLECTIVE 0789
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0188
RUEHKO/AMEMBASSY TOKYO 0898
RUEHIT/AMCONSUL ISTANBUL 0100
RUCNDT/USMISSION USUN NEW YORK 2022
RUEHNO/USMISSION USNATO 2356
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0353
RUEKJCS/SECDEF WASHDC 0270
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 0890

UNCLAS SECTION 01 OF 02 ASTANA 002231 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB, ECA 
 
TAGS: PREL ECON EINV KPAO KZ
SUBJECT:  KAZAKHSTAN:  WHAT THE PRIVATE SECTOR CAN ACCOMPLISH 
 
ASTANA 00002231  001.2 OF 002 
 
 
1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
2.  (SBU) SUMMARY:  Kazakhstan's Capital Partners develops luxury 
projects in Almaty, Astana, Moscow, and Istanbul, including for J.W. 
Marriott and its related Ritz-Carlton brand.  In Almaty, Capital 
Partners is developing for Marriott near the new Financial District 
-- a complex of office and residential towers with a mall to be 
anchored by Saks Fifth Avenue.  The chairman of Capital Partners 
said it operates, at least in Kazakhstan, in the gray area between 
the capitalist private sector and the government.  Capital Partners 
is negotiating to establish a Yale University School of Management 
branch in Almaty, as well as a world-class teaching hospital to be 
managed by Johns Hopkins University Medical School -- an example of 
the private sector stepping into the traditional role of public 
diplomacy when U.S. government resources are no longer available. 
END SUMMARY. 
 
3.  (SBU) Ambassador and Foreign Commercial Service Officer met in 
Almaty on November 6 with Founding Partner Burak Oymen and Chairman 
Serzhan Zhumashov of Capital Partners, Kazakhstan's premier property 
development company that operates in Kazakhstan, Moscow, and 
Istanbul.  Capital Partners' General Director Alexandr Gushavin, who 
appears to be ethnic Russian, attended part of the meeting.  The 
meeting took place in Capital Partners' corporate headquarters 
located in the still-under-construction Esentai Park project.  The 
project is being developed in conjunction with J.W. Marriott Hotels 
and Resorts and will include a high-rise with Class A office space 
(already occupied by U.S. legal and accounting firms and investment 
companies) and a 175-room Marriott Hotel on the upper floors with a 
26th-floor "sky lobby," several mid-rise world-class residential 
towers, and a large shopping mall where the anchor store will be 
Saks Fifth Avenue and include other luxury brands like Channel and 
Louis Vuitton, and where there will also be a multiplex cinema and a 
luxury health club.  Marco Fien, J.W. Marriott General Manager in 
Kazakhstan, emphasized that this is the first J.W. Marriott branded 
hotel outside the continental United States (the firm has two 
Marriott Renaissance hotels in Aktau and Atyrau already).  The 
residential apartments, suitable for Manhattan, will sell at New 
York prices. 
 
4.  (U) Capital Partners also developed the new Ritz-Carlton in 
Moscow, and plans Ritz-Carlton hotels and residences in Almaty and 
Astana.  The Astana project, expected to begin construction in 2009 
(if economic conditions permit), will be the tallest building in the 
city at about 50 stories, and will be located in the new government 
core. 
 
5.  (SBU) Oymen said Capital Partners is the largest foreign 
investor in the J.W. Marriott corporation.  Capital Partners relies 
mostly on Skidmore, Owings, and Merrill LLP, New York, for design 
and engineering, employing a group of 80 architects in the New York 
headquarters.  The transparent-glass-sheathed Esentai Park project 
is only one part of a very large multi-block area in north Almaty 
that Capital Partners is developing as Almaty's new Financial 
District.  Zhumashov commented in passing that such a massive 
development is possible only "in the gray area where private 
investment and the government intersect." 
 
6.  (SBU) Capital Partners also developed the all-amenities British 
Haileybury School in Almaty, across the street from Esentai Park, 
which currently has about 300 students in grades 1-6 and expects to 
expand to 600 students through grade 12, providing 
international-class education primarily to the children of 
Kazakhstan's economic elite, as well as to children of foreign 
business people and diplomats.  Oymen and Zhumashov had just come 
from meeting with two professors from the Yale University School of 
Management who are working to build and staff a Yale Business School 
affiliate in Almaty.  Oymen said Capital Partners' future projects 
also include a world-class hospital for Almaty that Johns Hopkins 
Medical School is now considering, with the possibility of 
eventually including a Johns Hopkins Medical School teaching center 
there. 
 
ASTANA 00002231  002.2 OF 002 
 
 
 
7.  (SBU) When he was asked how the current world financial crisis &#
x000A;has impacted Capital Partners, Oymen replied with one word: 
"Dramatically!"  However, he alleged, Capital Partners has the only 
projects in Kazakhstan still going full steam, whereas almost all 
others have come to a halt.  (NOTE:  A glance at the unfinished 
towers in Esentai Park didn't show much evidence of "full-steam" 
construction activity.  END NOTE.)  Oymen said Capital Partners is 
as well protected as possible at this time because of its corporate 
strategy of sectoral (residences, hotels, office buildings, 
factories) and geographic diversification, with an emphasis on 
ultra-high-end projects.  He noted that the liquidity crisis hit 
Kazakhstani banks a year earlier than in the rest of the world.  In 
2007, Capital Partners began selling its assets to AIG and Deutsche 
Bank and by August 2007 had raised $1.1 billion to pay back and 
restructure loans, even though they weren't yet due, at Kazakhstani 
banks to help stabilize the national banking sector.  For that 
reason, among others, the president and government of Kazakhstan are 
said to consider Capital Partners a positive, and favored, corporate 
citizen.  Zhumazhov said Kairat Kelimbetov, former head of the 
presidential administration and new head of the Samruk-Kazyna 
National Welfare Fund, recently met with the Capital Partners' 
leadership to brainstorm about how to invest Samruk-Kazyna's 
financial resources. 
 
8.  (SBU) BIO NOTE:  Oyman, who appears to be in his early 30s, is 
the son of Turkish diplomats.  After spending five years at Temple 
University in the United States, he initially worked for the Turkish 
construction firm, Enca, in Moscow.  He first arrived in Almaty in 
2000 and has built the Capital Partners empire since then. 
 
9.  (SBU) COMMENT:  While it's easy for poor diplomats to be dazzled 
by great wealth, and while we know the appearance of great wealth 
can be a carefully constructed and fragile image, Capital Partners 
and its two leaders seem impressive.  Most impressive to us is their 
connection to major U.S. businesses, as well as their corporate 
citizenship that is drawing Yale and Johns Hopkins Universities to 
Kazakhstan.  This is the kind of public diplomacy the United States 
no longer has the resources to accomplish.  END COMMENT. 
 
HOAGLAND

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