KAZAKHSTANI OIL PATCH: KYRGYZ TULIPS WON'T GROW

C O N F I D E N T I A L ALMATY 001203

SIPDIS


EUR/CACEN FOR MUDGE

E.O. 12958: DECL: 03/31/2015
TAGS: ENRG KR KZ ECONOMIC
SUBJECT: KAZAKHSTANI OIL PATCH: KYRGYZ TULIPS WON'T GROW
HERE

Classified By: POEC Chief Deborah Mennuti for reasons 1.4 (b) and (d).


1. (C) Summary: The Kazakhstani oil patch, both expats and
locals, neither foresee nor seek a Kazakhstani repeat of the
Kyrgyz "Tulip Revolution." They cite the following reasons:

- Kazakhstani economy is dynamic and growing. Despite rural
poverty, many average citizens have a seat at the table;
- President Nazarbayev is smarter than his Kyrgyz
counterpart. He will draw the necessary lessons and may seek
better ties with the opposition;
- Overthrow of Akayev was a coup, not a popular revolution.
Nazarbayev is more adapt at managing elites and largely
respects their economic interests.

Only one of eight oilies voiced muted support for a Kyrgyz
scenario in the hope of ending corruption. Another predicted
a GOK scramble to bolster relations with both Russia and the
United States, while a third speculated on a Yeltsin-Putin
style transfer of power. End Summary.


2. (C) Energy officer talked with eight oil-sector
representatives, three Kazakhstani and five expats. The
companies included four oil majors (two U.S. and two
European),a Canadian independent producer, a U.S. service
company, a small, independent Kazakhstani producer, and,
finally, a Chinese energy company.

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It's the Economy
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3. (C) Most interlocutors juxtaposed Kazakhstan's multi-year,
near ten-percent growth with Kyrgyzstan's humbler economic
accomplishments. A government relations rep for a U.S. major
quipped that "Kazakhstan has an economy." An Amcit working
for small Kazakhstani producer with ten years under his belt
in-country said that "people are happier, they are doing
better." He contrasted the current situation with widespread
grumbling and discontent during the first few years of his
tenure here.

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Comparing Apples and Oranges
--------------


4. (C) A majority cited Nazarbayev's combination of deftness
and toughness as opposed to Akayev's grinning, "Mr. Nice Guy"
image. An employee of a European oil major dubbed Nazarbayev
"the best guy to learn a lesson." He predicted an opening to
the opposition combined with a tightening of rules for NGOs.
A Kazakh working for a Chinese producer supported this view.
She said that Nazarbayev had "learned his lesson" and also
predicted warmer state-opposition relations. She, however,
was outraged at the biased - or simply nonexistent - coverage
of Kyrgyz events on Kazakhstani state-controlled television
stations.

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Bigger Pie to Cut
--------------

5 (C) Some pointed to a rising economic boat for Kazakhstani
elites, versus Kyrgyzstan's family-dominated economy. They,
the theory goes, can earn without political control. One
expat noted the existence of competing "financial-industrial
groups" and Nazarbayev's "tip-toeing" around them.


6. (C) The elite equation, however, cuts both ways. The Amcit
complained of the elites "endless appetite." He worried that
elite greed could metastasize into politics if left
unchecked. An employee of a Canadian oil independent saw no
"down-side" to regime change in Kazakhstan -- the only person
polled to express such a view. He was bitterly critical of
elite corruption such as allegations concerning Timur
Kulibayev, the vice president of the state oil producer and
presidential son-in-law. According to him, Kulibayev and his
ilk prey on foreigners and locals alike.

--------------
Closer Relations with U.S. and Russia

--------------


7. (C) The country representative for U.S. oil major
predicted that the GOK would quickly seek to bolster ties
with the U.S. and Russia. He hoped the USG would use this
opportunity to seek better treatment of U.S. and other
foreign businesses in Kazakhstan.

--------------
Nazarbayev December Surprise?
--------------


8. (C) A Kazakh representative of a European major, a former
government official and by far the best connected of the
group, thought a Kyrgyz scenario unlikely, though possible if
a "perfect storm" of political unrest were to hit. That
storm, according to him, would combine simultaneous
industrial strikes, power outages, a ham-handed crackdown
and/or a scandal.


9. (C) He sensed that Nazarbayev may be planning a
Yeltsin-like exit in December 2005 through early elections.
Assured guarantees from prosecution and some retention of the
trappings of office, Nazarbayev would encourage the victory
of Zharmakhan Tuyakbay, the former speaker of the Mazhilis
and Procurator General who is currently the opposition
presidential candidate. Family power centers -- such as
Kulibayev's oil fiefdom -- would have to be scaled back, but
could remain. Only Nazarbayev's fear of post-presidential
"Kazakhgate"-related U.S. or international prosecution blocks
this graceful exit.


10. (C) Comment: A call for reform -- including a curb on
corruption -- lies hidden in the hydrocarbon sector's take on
the "tulip revolution." It hopes events in Bishkek will
serve as a wake-up call for the present government. As one
Western oil man lamented: "Kazakhstan would have a real
future if the people in power would only steal millions, and
not tens and hundreds of millions."
ORDWAY


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