KAZAKHSTAN: DEPUTY PM MASIMOV ON VIP VISIT

UNCLAS ALMATY 001402

SIPDIS

SENSITIVE

SIPDIS

DEPARTMENT FOR SCA/CEN (J. MUDGE)
DOE FOR NNSA (DESCHLER),PI-21 (THOMPSON)

E.O. 12958: N/A
TAGS: ECON EPET PARM PREL KZ
SUBJECT: KAZAKHSTAN: DEPUTY PM MASIMOV ON VIP VISIT

REF: ALMATY 1401


1. (SBU) Summary: In a meeting to discuss issues related to
the upcoming VIP visit to Kazakhstan, Deputy PM Masimov
expressed confidence that agreement would be reached on both
the AIG settlement and the Second Line of Defense program
before the visit. He gave a favorable assessment of the
majority of the proposed energy-related activities that A/S
Boucher had shared with FM Tokayev the previous week.
Masimov was particularly supportive of the trans-Caspian gas
pipeline feasibility study. End summary.


2. (SBU) In an April 17 meeting with the Ambassador, Deputy
PM Karim Masimov stated that the Kazakhstani government
would sign the AIG settlement agreement before the May 3
deadline. He indicated that he was also working to
facilitate completion of the Second Line of Defense
implementing arrangement.


3. (SBU) The Ambassador informed Masimov that the Department
was actively examining the question of establishing a
bilateral commission with Kazakhstan, including the issue of
who from the U.S. side could chair such an organization.


4. (SBU) In response to the Ambassador's request for
feedback on the list of activities related to the upcoming
VIP visit provided by A/S Boucher (septel),Masimov
expressed support for the vast majority of economic items
with a few caveats. He noted that the Kazakhstani
government's relations with AES were not entirely positive,
and for that reason the feasibility of regional power
transmission was uncertain. Masimov said that the idea of
adding an Almaty-Kabul air link, while "possible in
principle," depended on the commercial viability of such a
route. He expressed strong personal support for the idea of
a feasibility study for a trans-Caspian gas pipeline, noting
that there were certain "political risks" involved. (Note:
As reported reftel, Energy Minister Izmukhambetov later said
that such a study would address the key political question
of whether Iranian and/or Russian agreement would be
necessary. End note.)


5. (SBU) On the BTC IGA, Masimov stated that there were "no
problems" from the Kazakhstani side. Kazakhstan and Russia
have almost agreed on CPC expansion, following Kazakhstan's
recent ultimatum that it would build "BTC 2" in the absence
of Russian agreement to expansion of CPC. Masimov stated
that the decision of whether to buy Boeings or Airbus was
Air Astana's to make, but perhaps the GOK could exercise a
certain amount of influence. The Deputy PM was unfamiliar
with the issue related to the bilateral assistance agreement
and thus unable to offer an opinion. He was in favor of all
the other items related to regional integration, energy, and
economic progress.


6. (SBU) Masimov emphasized that the Kazakhstani government
was intent on ensuring a "worthy" visit for the VIP. He
expressed the hope that it would be possible to include
participation in a May 5 conference on economic development
organized by the Ministry of Economy and the World Bank on
the agenda.


7. (SBU) Masimov told the Ambassador that Kazakhstan was
considering hiring new international consultants on a range
of issues, including Giuliani & Bracewell on Caspian
security and Kissinger and Associates on regional issues.
He said they were considering Booz Allen to be the on-site
consultants to work within the proposed tax unit for larger
taxpayers.

ORDWAY