09ASTANA211, KAZAKHSTAN: “MONEY THROWN TO THE WIND”

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Reference ID Created Released Classification Origin
09ASTANA211 2009-02-05 03:12 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO3355
OO RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW RUEHROV
RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTA #0211/01 0360312
ZNR UUUUU ZZH
O 050312Z FEB 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4521
INFO RUCNCIS/CIS COLLECTIVE 1137
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0534
RUEHKO/AMEMBASSY TOKYO 1240
RUEHUL/AMEMBASSY SEOUL 0260
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0711
RUEKJCS/SECDEF WASHDC 0627
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1169

UNCLAS SECTION 01 OF 03 ASTANA 000211 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, DRL 
STATE PLEASE PASS TO USTDA FOR DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM ECON EPET SOCI KDEM KZ
SUBJECT:  KAZAKHSTAN:  "MONEY THROWN TO THE WIND" 
 
REF: 08 ASTANA 2252 
 
ASTANA 00000211  001.2 OF 003 
 
 
1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
2.  (SBU) SUMMARY:  On January 28, the Soros Foundation of 
Kazakhstan hosted a roundtable on the effectiveness of social 
projects funded by oil companies operating in the country.  The 
roundtable featured the premier of a 30-minute documentary film 
called "Money Thrown to the Wind," produced under the auspices of 
the Soros Foundation's Kazakhstan Revenue Watch program.  The film, 
which accuses oil companies and local governments of wasting money 
on unsuccessful, unnecessary projects, offended some and inspired 
others in the audience, which included parliamentary deputies, 
oblast officials, non-governmental organizations, and domestic and 
international oil company representatives.  With the exception of 
Energy Officer, all other participants in the roundtable were 
Kazakhstani, which perhaps explains why the ensuing discussion was 
so candid.  Indeed, the spirited discussion following the film 
provided a striking look at the role civil society plays in 
Kazakhstan to promote greater transparency and accountability in the 
use of the country's oil revenue.  It also offered a rare public 
display of the underlying (yet necessary) tension between NGOs and 
the government, and between the executive and legislative branches 
of the government.  END SUMMARY. 
 
ASSESSING SOCIAL PROJECTS FUNDED BY OIL COMPANIES 
 
3.  (SBU) In 2008, the Soros Foundation of Kazakhstan started a 
project called Revenue Watch to assess the efficiency and 
effectiveness of social projects funded by oil companies operating 
in Kazakhstan.  According to Anton Artemiyev, Director of Kazakhstan 
Revenue Watch, the project and the film it produced were designed to 
hold all parties -- domestic and international oil companies, as 
well as local and central government authorities -- more accountable 
for investing Kazakhstan's oil revenue wisely, for the benefit of 
the Kazakhstani people.  He said the purpose of funding a 
documentary film was to raise public awareness of existing and 
planned social projects funded by oil companies and to launch a 
dialogue among regional governments, oil companies, and NGOs to 
increase the efficiency and transparency of these projects. 
 
4.  (SBU) Aitolkyn Kurmanova, author of the film's screenplay and 
Executive Director of the Central Asian League of Strategic 
Management, summarized a 2008 survey conducted in Kazakhstan's five 
major oil producing regions (Atyrau, Mangistau, West Kazakhstan, 
Aktubinsk, and Kyzylorda).  According to Kuramnova, the survey 
showed that local communities are not involved in deciding which 
social projects should be funded; the selection and payment of 
contractors by local governments are not transparent; and the social 
projects managed or funded by oil companies are costly, inefficient, 
and based on incorrect assumptions about the local community's needs 
and priorities. 
 
ONE-SIDED DOCUMENTARY 
 
5.  (SBU) "Money Thrown to the Wind" is billed as a documentary, but 
the title belies the label.  With slow, sweeping shots of the open, 
unsettled steppe and iconic images of barefoot children staring out 
from under ragged clothes, the director leaves the impression that 
Kazakhstan is an impoverished country unable to provide basic care 
to its people.  At one point, the camera cuts away to focus on a 
sparkling, $14 million sports center in Zhanaozen, a city outside 
Aktau which we are told lacks a sufficient supply of potable water. 
Several members of the audience later said the images of abject 
poverty made them think of sub-Saharan Africa. 
 
6.  (SBU) On one of the rare occasions when the film cites 
statistics, the narrator says that during the past ten years, oil 
companies in Atyrau, Mangistau, and West Kazakhstan have spent more 
than $500 million on social projects, or $35,000 per capita. 
According to the film, in 2008, Agip KCO (Kashagan) spent $12 
million, Tengizchevroil (TCO) $10 million, Karachaganak Petroleum 
 
ASTANA 00000211  002.2 OF 003 
 
 
Operating B.V. (KPO) $10 million, and KazMunaiGas (KMG) $9 million 
on social projects.  Yet local residents were apparently not 
impressed.  People interviewed -- apparently at random
-- wonder why 
their regional governors would spend millions of dollars on 
unnecessary infrastructure like sports stadiums and swimming pools 
when the basic health, safety, and education of their children are 
at risk.  One woman accused oil companies of not spending enough 
money on essential projects, particularly given the "record profits" 
they have earned in Kazakhstan.  Although screenplay author 
Kurmanova claims she did not attempt to single out any company or 
country, only one oil company executive was shown on camera:  Todd 
Levy, General Director of TCO, said simply that he was proud of the 
social programs carried out by TCO in partnership with the Atyrau 
oblast government. 
 
7.  (SBU) COMMENT:  The film jumps without warning from one region 
to another, and from one project to another, without identifying the 
time, place, or company under review, making it extremely difficult 
to form an objective opinion about the claims of the authors.  The 
movie is unabashedly one-sided and cites few facts or figures to 
support its argument.  In November 2008, the Ambassador visited a 
vocational school that receives financial assistance from TCO and 
the school director was effusive in her praise for TCO (reftel). 
There are undoubtedly other successful social projects supported by 
oil companies in Kazakhstan, yet the filmmakers chose not to present 
or profile a single success story.  END COMMENT. 
 
SPIRITED DISCUSSION 
 
8.  (SBU) Once the movie ended, the fireworks began.  Rauan 
Kenzhekhanov, a young, articulate advisor to the Governor (Akim) of 
Mangistau Oblast and himself a former employee of the Soros 
Foundation, walked purposefully to the podium and began to read in a 
monotonous voice a long list of social projects funded by the 
Mangistau Oblast in the past one year, three years, etc. 
Fortunately, he was interrupted by Aigul Soloviyeva, a member of the 
Committee for Economic Reform and Regional Development in the lower 
house of parliament (Mazhilis).  Soloviyeva scolded Kenzhekhanov, 
saying the purpose of the roundtable was not to listen to boring 
public relations reports from government officials, "which everyone 
reads all the time," but to assess the efficiency of 
critically-important social projects.  Kenzhekhanov appeared 
offended by the interruption and attempted to dismiss Soloviyeva and 
return to his prepared remarks, but she pressed on:  "There's no 
need to get defensive and build barricades," she said.  "We are all 
here to participate in an open and honest discussion."  Ultimately, 
Soloviyeva said she had to return to the Mazhilis to attend to 
important matters and Kenzhekhanov was left in peace to conclude his 
remarks. 
 
9.  (SBU) Kenzhekhanov said that he was very upset by the movie, 
particularly since he and his colleagues from the Mangistau Oblast 
government met with the filmmakers in good faith and provided them 
with data and statistics they requested, none of which, he said, was 
included in the film.  Kenzhekhanov asked the filmmakers not to show 
the movie to the public, for it would surely embarrass the Akim and 
increase social tensions in the oblast.  "If you decide to release 
the film," he warned, "it would damage our relationship and affect 
our ability to work together in the future." 
 
10.  (SBU) An NGO representative from West Kazakhstan, Svetlana 
Anosova, director of "Zhasyl Dala" (Green Steps), spoke out in 
support of the film, saying she witnessed a failed social project in 
the village of Beryozovka near Karachaganak.  She said KPO spent 
tens of millions of dollars on a water supply project which never 
delivered potable water because the equipment was installed at a dry 
well, over the objections of the local community. 
 
11.  (SBU) Murat Abenov, also a member of the Mazhilis Committee for 
Economic Reform and Regional Development, was surprisingly blunt in 
his criticism of decisions made by regional governments.  He called 
for greater accountability and insisted on a larger oversight role 
 
ASTANA 00000211  003.2 OF 003 
 
 
for the local Maslikhats, or regional parliamentary representatives. 
 Ever the politician, he boldly proclaimed, "If we do not change, 
then we ourselves will be changed." 
 
TCO REPRESENATIVE CRITICIZES FILM 
 
12.  (SBU) Although in one sense the stars of the show, no Western 
oil company heads attended the roundtable, although TCO's Director 
for Government Affairs and Public Relations, Rzabek Artygaliyev, 
participated, as did Oral Idyrysov, Director of the Social Policy 
Department at KMG.  When granted an opportunity to speak, TCO's 
Artygaliyev took immediate exception to the film's premise, 
criticized its lack of supporting evidence, and said, rather 
defensively, that the social projects funded by TCO do in fact meet 
the needs of local communities.  He argued that regional oblast 
governors, not the oil companies, make the final decisions about 
investments in social infrastructure.  "We are also citizens of this 
country," he said passionately, noting that he himself is a former 
mayor from Atyrau oblast.  "We are just as interested in 
transparency, accountability, and the social development of our 
nation as you are. But this film, which is filled with inaccuracies 
and unsubstantiated accusations, is not the way to go about it." 
 
13.  (SBU) COMMENT:  The roundtable was particularly notable for the 
diversity of its audience and for the candid discussion it inspired. 
 The event suggested that members of Kazakhstan's civil society do 
have an opportunity to confront local government officials and 
members of parliament directly on matters of social importance. 
Furthermore, the fact that such a diverse group could agree quickly 
on the importance of working with local populations to improve the 
effectiveness, transparency, and accountability of social investment 
decisions bodes well for greater openness in monitoring and 
reporting on the use of Kazakhstan's oil revenue.  END COMMENT. 
 
HOAGLAND

Wikileaks

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