KAZAKHSTAN: TROUBLE LOOMING FOR PRIME MINISTER AKHMETOV?

C O N F I D E N T I A L ALMATY 002380

SIPDIS


DEPARTMENT FOR EUR/CACEN JMUDGE, MRUBIN, DRL/PHD (P. DAVIS, C.
KUCHTA-HELBLING)
TREASURY FOR CENTRAL ASIA DESK OFFICER MGAERTNER
COMMERCE FOR CENTRAL ASIA DESK OFFICER DSTARKS


E.O. 12958: DECL 06/24/2015
TAGS: PGOV KZ POLITICAL
SUBJECT: KAZAKHSTAN: TROUBLE LOOMING FOR PRIME MINISTER AKHMETOV?


CLASSIFIED BY MARK ASQUINO, DCM REASON 1.5 (D)


1. (SBU) Summary/Background. Prime-Minister Daniyal Akhmetov's
government may face a motion for its dismissal at a special joint
session of Parliament June 27. The special session was proposed after
contentious June 13 session during which the Senate received a bleak
report from the Finance Ministry on the inadequate execution of the 200
republican budget.


2. (SBU) Rumors of Akhmetov's imminent dismissal have been a staple of
Astana political discussion since his June 2003 appointment. However,
the current contretemps bears close watching for several reasons: it
originated in the Parliament; it coincides with recent exposures of
high-level misdeeds, and because it has potential for changing the
political landscape ahead of presidential elections scheduled for
December 2006 but widely rumored as likely at the end of 2005. End
Summary/Background.

Government on the Ropes
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3. (SBU) At the June 13 Senate session, Senators learned that the
government had failed to spend nearly 49 billion tenge ($365.7 million)
of 2004 appropriated funds. Senator Sagyndyk Yesimkhanov, speaking to
Channel 31, charged that this type of mismanagement is chronic and that
the national government's incompetence deprives local governments of
needed resources. He called for a special session of Parliament at
which he would attempt a motion to dismiss the Government. While media
reports only attribute the call for dismissal to Yesimkhanov, a non-
aligned senator from Pavlodar oblast, Otan party Senators Kuanysh
Sultanov and Orynbai Rakhmanberdiyev also criticized the government
harshly in the press. Yesimkhanov's request for the special meeting ha
been granted for June 27, only three days from the scheduled end of the
current parliamentary session on June 30. The Mazhilis (lower house of
Parliament) will consider the report of the Finance Ministry June 22.


4. (SBU) Yesimkhanov's call for the Government's dismissal is the
latest in a string of recent embarrassments to Akhmetov's ministries.
Currently, Minister of Healthcare Yerbolat Dosayev is under
investigation for allegedly embezzling up to $12 million in state funds
allotted under a government contract to a company he co-owned. A deput
minister and a committee chairman in the Ministry of Transport and
Communications were recently dismissed for corruption. Public
presidential reprimands have also been issued to the First Deputy
Minister and to the Chairman of the Geology and Subsurface Use Committe
in the Ministry of Energy and Mineral Resources.

What Can Happen
--------------


5. (SBU) The Kazakhstani Constitution specifies that a vote of no
confidence can be taken on the initiative of one-fifth of the deputies
of both Chambers of Parliament and requires a two-thirds majority of th
Chambers to pass. If the President concurs (he has ten days to consider
the vote),or upon the Prime Minister's resignation, the entire
Government must resign. Since the Prime Minister's nomination needs
parliamentary approval, a special session would have to be called in th
event that a new Prime Minister was appointed after June 30, the last
day of the Parliament's session. A second session would have to be
called a month after this appointment so the new Prime Minister could
present the Government's program to the Parliament in accordance with
the Constitution.

Comment
--------------


6. (C) While Akhmetov has been a perennial favorite target of
government critics, this latest round of Akhmetov-bashing bears close
watching in the context of wide speculation that presidential elections
may be called later this year. Replacement of Akhmetov would afford the
President the opportunity to assign blame for rising inflation and slow
implementation of programs on the Prime Minister and the departing
government. Akhmetov's removal would also weaken some of the
opposition's most persuasive political points, and would
likely be met with favor by pro-presidential, technocratic elites.
Likewise, clearing the slate of ministers would give the President an
opportunity to correct any imbalances of elite interests he perceives o
to co-opt selected political opponents with appointments (Astana source
suggest that True Ak Zhol's Alikhan Baimenov is a likely candidate.

Baimenov told the Ambassador on June 23rd that President Nazarbayev has
asked to meet with him and that this will likely take place within the
next ten days.We think it highly unlikely that Baimenov would accept an
offer to enter the government). Such a move would echo Nazarbayev's
July 2004 appointment of Altynbek Sarsenbaiuly as Information
Minister at the height of the Mazhilis election campaign.


7. (C) Despite Akhmetov's long list of political and personal enemies,
he has managed to cling to his position. However, the totality of
current circumstances, including the President's reprimands of official
and lack of public support for the premier of late, indicates that this
resignation rumor may have more substance than the others. Asia Society
Chairman Richard Holbrooke, for instance, was told privately by senior
GOK officials that Kerim Masimov is a leading candidate to replace
Akhmetov. Masimov is currently the president's economic adviser. While
Government shake up would not necessarily bring about changes in
Kazakhstani policy in any core areas of U.S. interest, a new Prime
Minister or shuffling of ministers would likely slow ongoing
areas of engagement or establishing any new initiatives during the
transition period.


8. (U) Minimize for Dushanbe considered.

Ordway


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