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Identifier
Created
Classification
Origin
06ALMATY1376
2006-04-14 12:36:00
SECRET
US Office Almaty
Cable title:  

SCENE SETTER FOR THE VISIT OF THE VICE PRESIDENT

Tags:   KZ  OVIP  PGOV  PREL 
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VZCZCXYZ0001
OO RUEHWEB

DE RUEHTA #1376/01 1041236
ZNY SSSSS ZZH
O 141236Z APR 06
FM AMEMBASSY ALMATY
TO SECSTATE WASHDC IMMEDIATE 4937
						S E C R E T ALMATY 001376 

SIPDIS

SIPDIS

DEPT FOR S/ES; SCA/CEN (MUDGE)

E.O. 12958: DECL: 04/14/2016
TAGS: KZ OVIP PGOV PREL
SUBJECT: SCENE SETTER FOR THE VISIT OF THE VICE PRESIDENT
TO ASTANA, MAY 5-6, 2006

Classified By: Ambassador John Ordway, Reason: 1.4 (B) AND (D)



1. (C) Summary: The Vice President's visit comes at a time
of strengthened U.S.-Kazakhstani strategic ties, particularly
noticeable in light of the deterioration in our relationship
with Uzbekistan. President Nursultan Nazarbayev was
reelected in December to what he and the constitution say
will be his final seven-year term in office. Immediately
following his reelection, Nazarbayev focused on burnishing
his legacy as the father of Kazakhstani independence and
ensuring an orderly succession. Riding high on a 91.6%
victory and record-breaking oil prices, Nazarbayev had the
opportunity to move forward boldly with the political reforms
crucial to Kazakhstan,s future development while
safeguarding what he regards as hard-won social and political
stability. The February murder of a prominent opposition
politician, Altynbek Sarsenbaiuly, has changed the political
calculation. It has unleashed an unusually public fight
within the President's inner-circle as powerful figures
sought both to avoid blame and achieve political advantage in
the face of rampant suspicion that someone in the political
elite had ordered the killing that Nazarbayev sees as a
strike against his authority. Pending the outcome of the
investigation, which the FBI is assisting, the murder will
dominate the political landscape and render any engagement
between the authorities and the opposition even more
problematical than usual. The Vice President,s visit
provides an excellent opportunity to focus Nazarbayev on the
big picture of Kazakhstan,s continued development and
potential for regional leadership, and to stiffen his resolve
on the need for continued political reform. End summary.



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


The Geopolitical Context


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





2. (SBU) In geographic area, Kazakhstan is the ninth largest
country in the world, with a population of 15.2 million. It
is located in the heart of Central Asia and bordered by
Russia, China, Uzbekistan, Kyrgyzstan and the Caspian Sea.
Kazakhstan's size and location make it strategically
important not only to regional stability but also to U.S.
strategic interests. Kazakhstan's bold move to eliminate
the nuclear weapons it inherited from the USSR set the stage
for extensive and continuing collaboration with the U.S. in
combating proliferation. In February 2006, Kazakhstan, along
with the other nations of Central Asia, moved from the Bureau
for Europe and Eurasia, to the new Bureau for South and
Central Asia. While we will continue our active engagement
with European economic, political and military organizations
such as the OSCE, EU, and NATO, this move will allow us to

promote stronger commercial and political relations between
Kazakhstan and its South Asian neighbors. The latter
include Afghanistan, with which this country already shares
deep historical and cultural ties and one which could greatly
benefit from Kazakhstani investment. Other areas for
increased regional cooperation include the war on terrorism,
anti drug trafficking, and preventing the transfer of weapons
of mass destruction.



3. (C) During her October 2005 visit, Secretary Rice
announced a new "Central Asia Infrastructure Initiative,"
with the objective of encouraging increased infrastructure
(energy, transportation, and communication) linkages between
Central and South Asian countries. President Nazarbayev, in
turn, has spoken favorably of Kazakhstan assuming a larger
regional role, and during a recent conference on Afghanistan
reconstruction, Foreign Minister Tokayev pledged Kazakhstan's
assistance. In terms of energy initiatives, Kazakhstan is
well-placed to trade electricity with its Central Asian
neighbors.



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


An Ally in the War on Terrorism


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





4. (SBU) In 2002, Kazakhstan provided crucial support to
U.S. coalition efforts in Afghanistan. It pledged no-cost
overflights (some 4500 to date) and emergency landing rights
for U.S. aircraft participating in Operation Enduring
Freedom. The latter support has become increasingly
important following the unilateral closing by Uzbekistan of
the U.S. base in Karsi-Khanabad, and the deterioration in the
bilateral relationship with Tashkent. Since August 2003, the
Kazakhstan has also directly supported the U.S.- led global
anti-terrorist coalition through deployment of a coalition of
military engineers with coalition forces in Iraq. While the
contingent is modest in size (27 troops and two liaison
officers who rotate every six months), it had by April 2006
safely disposed of over 3.5 million pieces of ordnance.



5. (C) In 2004, Kazakhstani authorities realized they had an
indigenous terrorist problem following the July 30 terrorist
bombings in Tashkent, which included an attack on the U.S.
Embassy. Those subsequently arrested and tried here included
ethnic Kazakhstanis who had trained for the operation in the
southern part of this country. This problem was underscored
in late 2005 when Uighur terrorists linked to al-Qa'ida
murdered Kazakhstan's deputy chief of mission in Islamabad.
As a result of these events, cooperation between U.S. and
Kazakhstani intelligence agencies on domestic and regional
terrorist threats improved dramatically.



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



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


Democracy: Whither Kazakhstan in 2006?


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



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





6. (C) Since becoming an independent state in 1991, the
government of Kazakhstan and President Nazarbayev, the
country's first and only president to date, have outlined a
strong vision of democratic development, respect for human
rights, freedom of speech and the press and political
pluralism. However, in significant areas such as media
freedom and the ability of all political forces to play
active and effective roles, governmental actions have often
been in stark contrast with stated aspirations. The 2005
presidential and 2004 parliamentary elections, while in some
significant ways an improvement over those conducted in 1999,
were flawed and fell short of international (OSCE) standards.
The government remains sensitive to challenges to its
authority, even legitimate activity by opposition groups and
parties, most prominently during election periods.



7. (C) Despite skepticism among international observers and
the opposition about the his receiving an official 91.6% of
votes cast, President Nazarbayev clearly scored a landslide
in the December 2005 presidential elections, and was
confidently looking toward having a mandate for future
actions. (A USG-funded exit poll showed Nazarbayev getting
83% of the vote.) Prior to the election, he had made a
commitment that once he was re-elected, he would begin
discussion with the opposition and civil society
organizations representing a broad spectrum of views on
future political reforms. In mid-February, however, a
prominent opposition figure, Altynbek Sarsenbaiuly, was
murdered. The killing, a rarity in Kazakhstani public life,
severely shook up the political environment and has delayed
discussion of political reforms.



8. (S) The investigation into the Sarsenbaiuly murder is
ongoing, with assistance from the FBI. Ten suspects,
including seven members an elite anti-terrorism unit, have
been arrested in the case. Political observers and the
general public are extremely skeptical of the official
version of events, and there is rampant speculation (but no
actual evidence) that a member of President Nazarbayev,s
inner circle actually ordered the murder. Based on the FBI
participation, we can say with confidence that there is
overwhelming evidence of the guilt of those currently
charged. We also have strong reason to believe that
President Nazarbayev was not involved, and saw it as an
attack against his authority and the stability he prizes so
highly. Although FBI-administered polygraph examinations of
the two main culprits suggest someone else may have
instigated the murder, only a more forthcoming attitude by
the main suspects would provide a basis to prove or disprove
additional involvement.



9. (C) There has been some recent forward movement on
democratization. The opposition &True Ak Zhol8 party was
registered in March after months of legal battles. On March
24 Nazarbayev finally convened the long-awaited State
Commission on Democratization, which is intended to bring
together representatives from government, the opposition, and
civil society to outline a plan of wide-ranging political
reforms. Most opposition leaders refused to attend the first
session on the grounds that the government had not shared any
information about the purpose, structure, or procedures of
the Commission. However, the government had met all three of
the opposition's public demands for participation in the
commission (Nazarbayev to serve as chair, release of
imprisoned political leader Zhakiyanov, and registration of
the True Ak Zhol party).



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


Macroeconomic Achievements


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





10. (SBU) Kazakhstan stands out among the post-Soviet Central
Asian states in its record of macroeconomic reform since
independence. The country has enjoyed near double-digit GDP
growth over the last five years, while keeping inflation in

check. In 2000, Kazakhstan repaid its $400 million in IMF
loans ahead of schedule. Financial reform has created a
banking system comparable to those in Central Europe, and
Almaty now aspires to become a regional financial center.
The GOK deserves much credit for its management of oil
revenues, thus far avoiding the typical macroeconomic
distortions of oil-rich countries by placing $7 billion under
offshore management. It has joined the Extractive
Industries Transparency Initiative. Kazakhstan is in the
end-stages of WTO accession, a goal it hopes to reach by


2007.



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


Energy: U.S. Investment


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





11. (SBU) The U.S. has a clear strategic interest in ensuring
the development of Kazakhstan,s significant energy
resources. Kazakhstan will likely become a top-ten world
oil producer by 2015, and is poised to deliver important
quantities of natural gas to European markets within the next
decade. In order to ensure that Kazakhstan,s reserves
contribute to international energy security, we promote a
regional policy of multiple pipelines, in order to minimize
the influence of geographical chokepoints or transportation
monopolies. To this end, we are encouraging completion of
the Kazakhstani-Azerbaijani negotiations to secure access for
Kazakhstani oil to the Baku-Tblisi-Ceyhan (BTC) pipeline, and
finalization of an agreement between the GOK, Russia, and
investors on the expansion of the privately owned CPC
(Caspian Pipeline Consortium) pipeline which runs north
through Russia. We are also exploring the feasibility of
constructing an underwater Trans-Caspian gas pipeline, which
would carry Central Asian gas to European markets via
Azerbaijan.



12. (SBU) American companies are well represented in all of
Kazakhstan's major energy projects. Chevron was an early
post-independent entrant, and now holds 50% of Tengiz,
Kakakhstan's largest current producer. Over the next
decade, the majority of Kazakhstan,s production will move
offshore, beginning with the mammoth Kashagan field (where
ExxonMobil and ConocoPhillips have shares), due to begin
production in 2010. Most recently, the USG has been
advocating on behalf of ConocoPhillips' bid to participate in
development of Kazakhstan's offshore Caspian "N Block" in
partnership with Kazakhstan's state-owned oil-and-gas
company.



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


Economic Diversification


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





13. (S) Efforts to develop non-energy related industries are
hampered by widespread corruption at all levels of society
and government, and oligarchical concentration of ownership.
This is especially true among the President's family,
political allies and the economic elites who dominate his
inner circle The GOK has taken some steps to address the
problem, but has not attacked it at the root, or created the
sort of truly independent judiciary needed to combat economic
crimes. Nevertheless, the solid macroeconomic policies of
the past decade have created many of the prerequisites for a
more diverse economy, such as moderate inflation rates, an
excellent banking and banking regulatory system,
investment-grade ratings of sovereign debt by all agencies,
and the early pay-off of all IMF debt. The GOK is also
taking the necessary steps to integrate itself into the
regional and global economy, most notably application for WTO
membership.



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


Religious Tolerance


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





14. (SBU) Kazakhstan leads the countries of the former
Soviet Union in its encouragement of religious tolerance and
its respect for the rights of religious minorities. The
country is multiethnic, with a long tradition of tolerance
and secularism. The generally amicable relationship among
religions in society contributed to religious freedom. Since
independence the number of mosques and churches has increased
greatly. Religious leaders, including those of minority
faiths, have praised consistently the role the Government of
Kazakhstan has played in ensuring their right to peaceful
practice of their religious beliefs. President Nazarbayev
refers often to Kazakhstan's religious diversity and
tradition of tolerance, taking great pride in his role in
promoting interfaith harmony. Kazakhstan will continue
Nazarbayev's "Peace and Harmony" initiative by hosting the
second Congress of World Religions in Astana in September

2006 and inviting several previously unrepresented groups.
The previous congress was held in September 2003.



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



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


Kazakhstan and the U.S.: The Long Term


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



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



15.(C) Looking outward, Kazakhstan adheres to what it terms
a "multi-vector foreign policy8 -- i.e. a careful balancing
act between its powerful mega-neighbors, Russia and China, as
well as the U.S. Nazarbayev actively seeks high-level U.S.
visits such as that of the Vice President as a useful
counterweight to pressures from Russia and China.
Nazarbayev speaks often of increasing Kazakhstan's stature in
the world community. In concrete terms, Kazakhstan is
bidding for the OSCE Chairmanship in 2009.



16. (C) Nazarbayev, who has not had a White House meeting
since his December 2001 visit to Washington, will be eager to
publicly highlight both Kazakhstan,s strategic relationship
with the U.S. and its leading role in Central Asia. He is
grateful for the enhanced engagement with the U.S. since last
fall, which has included four cabinet-level visits to Astana.
His desire to set a positive tone for his own fall 2006
meeting with President Bush gives us an opportunity to
encourage steady and meaningful movement on the democratic
reform agenda, complementing the strong engagement we have
had across the rest of the relationship.
ORDWAY