1. (U) Summary. On March 3, Ambassador met with Presidential Administration (PA) Deputy Karim Masimov. Deputy Minister of Industry and Trade Zhanar Aitzhanova, PA Chief of the Center for Foreign Policy Nurlan Yermekbayev, Astana PO and Astana USAID officer were also present. Issues discussed included Kazakhstan's emphasis on economic reform, President Nazarbayev's proposal for a Central Asian Union, USAID's Program for Economic Development, building a civil society, the extremism law, reducing corruption, and foreign policy priorities. Masimov and Aitzhanova's comments on WTO accession and intellectual property rights discussion reported septel. End Summary.
Economic Reform First
2. (SBU) Masimov pointed to President Nazarbayev's February 18 state of the nation speech and highlighted economic and political themes from the address. Economic reform, Masimov declared, is Astana's first priority as a market economy. Nazarbayev's proposal for a Central Asian Union drew upon the EU as a model, Masimov said. Kazakhstan already has a "good basis" with Uzbekistan and Kyrgyzstan for developing this concept further, including a common history and customs. Free trade would be the initial focus, but a regional union could also take up issues such as a single currency, a central bank, counter-terrorism, transnational crime, and a unified defense. Nazarbayev was interested in the opinion of others on this question.
3. (SBU) Ambassador endorsed focusing first on trade issues. The United States welcomed Kazakhstan leveraging its economic and political leadership to strengthen the region. He noted that most of the work to harmonize regional trade would center on relations with Uzbekistan. Ambassador offered to consult with Washington further for opinions on the proposed union. As a market economy, Ambassador also urged that Kazakhstan allow market forces to determine the question of airline routes into the country rather than artificially restricting airlines to the Astana hub.
4. (SBU) Ambassador assured Masimov that the United States remains committed to the Houston Initiative (HI). He noted, however, that taxation of assistance had created some difficulties for the program. USAID's new Program for Economic Development (PED) will encompass most of HI's activities but with the added element of cost-sharing by the government of Kazakhstan. Moving ahead with PED, he emphasized, will require Parliament's ratification of the 1992 Bilateral Assistance Agreement and implementation memo.
5. (SBU) Kazakhstan, Masimov responded, wants to become an attractive investment option beyond the energy sphere. Astana sees HI as a vehicle to bring in U.S. investors to small and medium enterprises (SME). USAID Astana officer explained that the goal of the SME development plan is to raise local standards to make these enterprises more attractive to American investors. Ambassador suggested tax holidays and a separate agency that could market Kazakhstan to potential SME investors as possible steps.
Democracy with a Kazakhstani Flavor
6. (SBU) Elaborating on political themes from Nazarbayev's address, Masimov said that Kazakhstan was building civil society on a western model but was also drawing on the experiences of South Korea, Malaysia, and its own traditions of a multi-ethnic/religious society. The National Democracy Commission is a platform for a discussion of Kazakhstan's development.
7. (SBU) Masimov commented that he "agreed and disagreed" with portions of State's recently released Human Rights Report on freedom of speech in Kazakhstan. Human rights are taken seriously, he continued, but people must be held accountable for their words. With the threat of terrorism edging closer to Kazakhstan, Nazarbayev felt compelled to sign the law on extremism. Masimov asked for FBI and Interpol assistance to combat terrorism.
8. (SBU) Ambassador cautioned that it would be important to see the extremism law in practice and advised tailoring implementation on a narrow basis. The United States, he continued, was ready to help Kazakhstan in the fight against terrorism.
9. (SBU) Masimov acknowledged that Kazakhstan must reduce corruption. He described his support for e-government measures as a means of reducing opportunities for public
officials to solicit bribes. He is also advocating "one- stop shopping" in Astana and Almaty (to start) for drivers' licenses, pensions, and other services. Increasing government salaries and standardizing government services are also on the table. Ambassador recommended drawing on the experiences of neighbors. Masimov said that Kazakhstan is looking at Estonia, Singapore, and Colorado for models.
10. (SBU) Electoral and judicial reform, Masimov observed, are two other areas on Astana's agenda. The government is considering expanding electoral commissions and is interested in improving electoral administration. Strategies for improving the "social status" of judges are under review. Ambassador emphasized the importance of transparency in future elections. He cited a website associated with Kyrgyzstan's recent elections that allowed public access within three days to the protocols as a critical tool for building public confidence. Responding to Masimov's expression of interest, the Ambassador provided the website address.
The Foreign Policy Front
11. (SBU) Turning to foreign policy priorities, Masimov described Russia, China, the United States, and the EU as the "strategic relationships." Kazakhstan, he added, had $7 billion in trade with the EU last year. Ambassador noted that Kazakhstan's trade volume with Ukraine outweighed trade with the rest of Central Asia combined. Masimov interjected that President Yushchenko's new government has pledged support for the stability of Kazakhstan. (Note: President Yuschenko and President Saakashvili are expected later this month. End note.)
12. (SBU) Delimitation of the border with Russia, Masimov continued, and President Putin's acknowledgement of Kazakhstan's existence based on that border was an important milestone. Astana is now looking ahead to the Shanghai Cooperation Organization summit scheduled for July 5, 2005. Masimov commented that the SCO hopes that President Karzai will attend.
13. (SBU) U.S. support of Kazakhstan's bid for the OSCE chairmanship is extremely important, Masimov observed. The United States would be very pleased to see Kazakhstan as the first former Soviet state to lead the OSCE, the Ambassador responded, but the path ahead is complicated and will require full commitment to all OSCE principles.