U.S.-EU CONSULTATIONS ON CAUCASUS, CENTRAL ASIA

C O N F I D E N T I A L SECTION 01 OF 04 BRUSSELS 003782

SIPDIS

DEPT FOR EUR DAS LAURA KENNEDY, EUR/CACEN, EUR/ERA TOM
LERSTEN

E.O. 12958: DECL: 09/08/2014
TAGS: PREL PHUM PGOV EAID GG AM AJ KZ KG TI TX UZ EUN USEU BRUSSELS
SUBJECT: U.S.-EU CONSULTATIONS ON CAUCASUS, CENTRAL ASIA
(COEST)

REF: USEU TODAY 09/02/04

Classified By: USEU POLOFF TODD HUIZINGA, FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY: On September 1 EUR DAS Laura Kennedy held
semi-annual consultations with the EU on Caucasus and Central
Asia (COEST). Caucasus discussions concentrated on
establishing a political process to resolve the South Ossetia
conflict (Kennedy met separately on South Ossetia with Heikki
Talvitie, EU Special Representative for the South Caucasus,
who had just returned from the region -- see ref),and on
reviewing the issues in play in Nagorno-Karabakh with an eye
toward developing a comprehensive plan to move forward.
Regarding both conflicts, interlocutors focused on getting
the Russians to play a positive role and work with, rather
than seek to exclude, the OSCE. COEST participants
consistently emphasized the need for promoting regional
cooperation in both the Caucasus and Central Asia. On
Central Asia, both sides agreed on the importance of building
civil society and coordinating U.S. and EU promotion of
democratic reform and development assistance. Noting this
summer's terrorist attacks in Uzbekistan, the EU said the
Uzbeks had asked them to designate Hizb-ut Tahrir as a
terrorist group (the U.S. has not designated Hizb-ut Tahrir).
END SUMMARY.

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SOUTH OSSETIA: STARTING A POLITICAL PROCESS
--------------


2. (C) Jan Lucas Van Hoorn, Director of the Southeast and
Eastern Europe Department in the Dutch MFA (the Netherlands
is the current EU president),said the key in South Ossetia
was to keep hostilities from flaring up and introduce
confidence-building measures. He supported Tbilisi OSCE HOM
Roy Reeve's idea of setting up confidence-building working
groups focused on key issues. After those groups had made
progress, added van Hoorn, then a higher-level process could
begin, either via the Joint Control Commission (JCC) or by
reviving the Baden process, as proposed by the U.S. Van
Hoorn noted that the EU would have its Cooperation Council
meetings with all three Caucasus countries on September 14.
On September 13, Dutch FM Bot and EU HighRep Solana would
have dinner with the three FM's from Georgia, Armenia and
Azerbaijan. Van Hoorn implied that the EU intended to raise
and endorse Reeve's CBM proposal at these meetings.

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MEANING OF SOUTH OSSETIAN "AUTONOMY?"
--------------


3. (C) Van Hoorn lamented the lack of clarity on how the
Georgians planned to flesh out the concept of autonomy for
South Ossetia. He said Georgia should be encouraged to make
progress on defining the autonomy for Ajara; that would send
an important, positive signal to the South Ossetians and the
Russians. Kennedy noted the difference between the
situations but agreed that the definition of autonomy was a
crucial element for the future of South Ossetia. She
underlined the role of positive public signals; she said, for
example, that supportive statements such as Georgia had made
to the Russians regarding the recent hostage-taking in North
Ossetia could go a long way toward defusing the tensions with
Russia that were complicating the search for a solution in
South Ossetia. We had consistently urged Saakashvili to
cease inflammatory rhetoric. Now that he had disengaged
militarily, we need to push the Russians to engage
politically.

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ABKHAZIA: PROGRESS AFTER ELECTIONS?
--------------


4. (C) On Abkhazia, Kennedy suggested that the U.S. and the
EU explore the possibilities for new movement after the
October Abkhaz elections, perhaps by revitalizing the
"Friends of Georgia" process. Van Hoorn agreed, but said the
Dutch experience as 2003 OSCE Chairman-in-Office (CiO) had
been that Abkhazia is "the hardest nut to crack" of all of
the conflicts in the region. He suggested that Georgian
public acceptance of the concept of dual Georgian/Russian
nationality for South Ossetians and Abkhazians could lead to
progress in both Abkhazia and South Ossetia. Kennedy
cautioned that such a move would reward the Russian policy of
liberally granting Russian citizenship in those regions, and
could be unacceptable to the Georgians.

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IMPORTANCE OF ECONOMIC REFORM
--------------

5. (C) Both sides agreed that continued pursuit of economic
reform was a key factor in increasing political stability in
Georgia and the Caucasus in general. Aid channelled through
the Millenium Challenge Corporation -- with its emphasis on
reform -- was key in Georgia. Also, the Baku-Tbilisi-Ceyhan
(BTC) oil pipeline would be vital to the future of Georgia
not only as an energy corridor, but also as an example to
other investors of the attractiveness of doing business
there. Kurt Juul, Head of Unit for South Caucasus and
Central Asia in the External Affairs Directorate of the
European Commission, said Commission President Romano Prodi
planned to underscore the importance of economic reform when
he visits the region on September 16. Both sides agreed on
the importance of sending a clear message to Georgian
President Saakashvili that he must not divert his focus from
the need to follow through on his economic reform
initiatives.

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NAGORNO-KARABAKH: STATE OF PLAY AND RUSSIA
--------------


6. (C) Van Hoorn noted that the September 14 EU Cooperation
Council meeting with the three Caucasus countries would take
place just before the CIS Summit in Astana. Now that
Azerbaijan's President Aliyev has been in office for a year,
the EU hopes to see a clear indication that he will make
progress, van Hoorn asserted. He added that Armenia was
concerned, with good reason, about being excluded from the
development of infrastructure in the region.


7. (C) Kennedy noted that the Azeri and Armenian foreign
ministers had met in Prague earlier in the week. U.S. Minsk
Group Co-Chair Steve Mann had reported on a positive meeting;
its focus on technical matters -- access issues, for example
-- was useful. Perhaps after another similar session, the
parties could consider an overall plan. The Azeri foreign
minister seemed to be growing into his role. Kennedy agreed
that the Astana meeting between the leaders was the next key
step.


8. (C) COEST participants discussed the need to watch
carefully Russian President Putin's upcoming meeting with his
Armenian and Azeri counterparts in Astana. Putin had
essentially invited himself, possibly intending to cut the
OSCE and the Minsk Group out of future negotiations. Michael
Swann, South Caucasus and Central Asia Desk Officer in the EU
Council Secretariat, remarked that some -- especially in
Azerbaijan -- had "had it" with the Minsk Group, and might
thus be receptive to Putin's efforts to sideline it. Van
Hoorn underscored that the EU would have to provide
Azerbaijan and Armenia with a clear message in support of the
Minsk Group at the upcoming Cooperation Council. Kennedy
added that we also needed to urge the Russians at all levels
to endorse the OSCE and the Minsk Group -- of which Russia is
one of the co-chairs. Van Hoorn said he expected the EU
would take this up at the November 11 EU-Russia Summit in The
Hague.

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CAUCASUS: A REGIONAL APPROACH
--------------


9. (C) COEST participants consistently emphasized the need
for a regional -- vice country-by-country -- approach to both
the Caucasus and Central Asia. As Juul portrayed the
Commission point of view, the U.S. and the EU have regional
assistance programs, but interactions with the recipients
tend to focus on individual countries -- this provided each
with the opportunity to blame its problems and failings on
its neighbors. Taking a collective approach and working with
recipient countries as a unit could help break this pattern,
he suggested. On the Caucasus specifically, he commented
that Commission President Prodi's September 16 meetings with
all three leaders (Azerbaijan, Armenia, Georgia) would
provide the best near-term opportunity to reinforce messages.
He pointed to the European Neighborhood Policy (ENP) as an
example of the EU -- or at least Commission -- interest in
addressing the region more broadly. Energy would be a
particularly important agenda item in EU discussions with
these three countries, he said. Armenia's nuclear power
plant -- now run by Russians -- was unsafe; the EU had been
trying for years to get it closed. According to Juul, the
Commission was prepared to convene a donors' conference to
raise funds for alternate energy sources; he had hoped the
Millennium Challenge Account (MCA) would be a source of
contributions, but it appeared that the MCA was focused on
poverty reduction instead.
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CENTRAL ASIA: BUILDING CIVIL SOCIETY
--------------


10. (C) On Central Asia, both sides agreed on the difficulty
and importance of helping to build civil society. Swann
commented that the EU had to deal with "substandard
governments and substandard civil society" -- the governments
were suspicious of efforts to reach out to NGOs and other
groups, while NGOs and the press tended to take irresponsible
actions that aroused further government suspicion. The U.S.
and EU, suggested van Hoorn, needed to call all parties on
their behavior -- and to encourage further contact between
government and civil society representatives.

-------------- --------------
CENTRAL ASIA: PROMOTING DEMOCRACY, COORDINATING AID
-------------- --------------


11. (C) Kennedy solicited EU support for several assistance
projects in Central Asia. Money was still needed to complete
the bridge from Tajikistan into Afghanistan and the road
leading up to the bridge, she said, and an EU contribution
would be appreciated. The EU declined to respond directly,
but noted that the EU would sign its Partnership and
Cooperation Agreement with Tajikistan in October. Juul
pointed out that again, the key was a regional approach; and
Afghanistan is also a part of the region. He said the
Commission was trying to get the Central Asian countries to
work together wherever possible on poverty reduction,
fighting drugs and crime, and governance.


12. (C) Key to the regional approach, Kennedy pointed out,
was the OSCE. Kazakhstan's desire for 2009 OSCE Chairmanship
offered the U.S. and EU the opportunity to press for
political reform and better respect for human rights. An
important near-term indicator would be how Kazakhstan
conducted its September elections. Van Hoorn agreed, saying
Kazakhstan today was a poor candidate, but the decision
doesn't need to be made until 2008. In the meantime, the EU
has not reached a "common position" on Kazakhstan's bid but
will wait and see how it evolves. Given Russia's concerns
with the OSCE, he said, it would be "interesting" to have a
CIS country as chairman. However, he noted that Kazakhstan
had signed the CIS statement critical of the OSCE; he added
that the EU had pointed out to the Kazakhs that this was
inconsistent with seeking the OSCE chairmanship. Van Hoorn
said Commissioner Patten had leaned heavily on Kazakhstan
during his March visit on issues such as the proposed media
law and elections. The media law has since been withdrawn,
and Van Hoorn concluded that U.S. and EU efforts can lead to
changes in Kazakhstan.


13. (C) It was also important that Turkmenistan, despite its
autocratic dictatorship, not be isolated. A central factor
in keeping engaged with Turkmenistan would be to find a
successor for the OSCE HOM in Ashgabat, Paraschiva Badescu,
who could be equally effective in pressing for human rights
and civil society. Kennedy urged U.S.-EU cooperation in the
search for the right successor; the worst signal that could
be sent to Ashgabat would be if no qualified candidate could
be found.


14. (C) Returning to the topic of civil society and
coordinating assistance, Kennedy urged the EU to support
independent media in Kyrgyzstan by funding the Freedom House
printing press there. Juul noted that the Commission's TACIS
program was not structured for this type of assistance, but
Van Hoorn and the Council Secretariat were receptive to using
the EU's COEST Working Group to identify possible EU member
states who could provide bilateral assistance. (USEU
subsequently provided the EU Council with a non-paper
outlining the need for donors to support independent media in
Kyrgyzstan and Tajikistan, and with details on the road spur
between the Afghan border and the Tajik town of Dusti.)

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UZBEKISTAN AND TERRORISM
--------------


15. (C) EU representatives were very interested in how
Tashkent had reacted to the U.S. decision earlier this year
not to certify Uzbekistan, and sought U.S. views on the
likelihood of instability in a post-Karimov era. Kennedy
noted our hopes to continue to engage Uzbekistan on the
reform front; we hoped to send a senior official to discuss
economic reform. Noting this summer's terrorist attacks on
US and Israeli embassies, Van Hoorn asked whether we had
added a group called Hizb-ut Tahrir to our list of terrorist
groups; he said that the EU would consider this soon but he
was not himself convinced that the group should be so
designated. Van der Togt opined that there are no legal
grounds for banning them in most other EU countries,
especially given the group's vague message -- it is hard, he
said, to determine exactly what the organization stands for
or intends to do. Van der Togt added that the Uzbeks raise
this group with the Dutch "all the time" in meetings. (NOTE:
Uzbekistan has also approached the U.S. repeatedly with the
same request, but the USG has not designated the group as a
terrorist organization. END NOTE.)


16. (C) COMMENT: In the course of discussions, Kennedy
suggested that the agenda for the next COEST meeting include
a more detailed discussion of coordination of development
assistance and offered to include a representative from
EUR/ACE on the U.S. delegation for that purpose. The EU
welcomed the proposal. END COMMENT.


17. (U) This message has been cleared by EUR DAS Laura
Kennedy.

SCHNABEL