Identifier
Created
Classification
Origin
06ALMATY1583
2006-05-02 11:04:00
CONFIDENTIAL
US Office Almaty
Cable title:  

KAZAKHSTAN: PLANS FOR ALMATY BIOKOMBINAT EQUIPMENT

Tags:  KNNP KSCA PARM PREL TBIO TSPL KZ 
pdf how-to read a cable
VZCZCXYZ0000
PP RUEHWEB

DE RUEHTA #1583/01 1221104
ZNY CCCCC ZZH
P 021104Z MAY 06
FM AMEMBASSY ALMATY
TO RUEHC/SECSTATE WASHDC PRIORITY 5157
INFO RUEHMO/AMEMBASSY MOSCOW PRIORITY 1228
RUEKJCS/SECDEF WASHDC PRIORITY
C O N F I D E N T I A L ALMATY 001583 

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (J. MUDGE),ISN/CTR, ISN/NDF (R. SMITH)

E.O. 12958: DECL: 05/02/2016
TAGS: KNNP KSCA PARM PREL TBIO TSPL KZ
SUBJECT: KAZAKHSTAN: PLANS FOR ALMATY BIOKOMBINAT EQUIPMENT
IN STEPNOGORSK

REF: A. STATE 13717

B. 05 ALMATY 3915

C. STATE 67375

D. 2/6/06 PAULSON-CAMERON EMAIL

Classified By: Ambassador John Ordway, reasons 1.4 (e) and (h).

C O N F I D E N T I A L ALMATY 001583

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (J. MUDGE),ISN/CTR, ISN/NDF (R. SMITH)

E.O. 12958: DECL: 05/02/2016
TAGS: KNNP KSCA PARM PREL TBIO TSPL KZ
SUBJECT: KAZAKHSTAN: PLANS FOR ALMATY BIOKOMBINAT EQUIPMENT
IN STEPNOGORSK

REF: A. STATE 13717

B. 05 ALMATY 3915

C. STATE 67375

D. 2/6/06 PAULSON-CAMERON EMAIL

Classified By: Ambassador John Ordway, reasons 1.4 (e) and (h).


1. (C) Summary: The private company that purchased the
Biokombinat veterinary vaccine production facility is moving
forward with construction of a smaller production facility in
Stepnogorsk, in order to observe the terms of its
privatization deal and avert potential threats to its real
estate development project in Almaty. Progress in
Stepnogorsk is slower than expected; the remaining fermenters
are in secure storage in the building where production is
planned, and a handful of employees has been hired. Although
still hoping to sell the facility as soon as possible, the
owners say that they cannot consider any offers before
October 2006. The former director of Biokombinat, now
charged with restarting production in Stepnogorsk, maintains
that no virulent strains of any type will be used in the
production or testing processes. End summary.


2. (SBU) Following the February completion of the destruction
of all remaining fermenters and associated equipment at the
Almaty Biokombinat facility by ISN/NDF, POEC chief met on
April 24 with Betta Star director Gaisha Kashikova and
Oriental Real Estate financial director Eduard Dya to present
the final report and discuss plans for the Stepnogorsk
facility (Ref A). Kashikova expressed appreciation for the
thorough report produced by Controlled Demolition Inc., as it
will permit her to address any future concerns regarding the
fate of the Biokombinat equipment not moved to Stepnogorsk.

--------------
Stepnogorsk Plans Unchanged
--------------


3. (C) Kashikova said that plans to open a new, smaller
veterinary vaccine production facility in Stepnogorsk had not
changed; they were still planning to make the same vaccines

as previously described (Ref B). Work on the new facility
was going more slowly than expected, however; Betta Star was
in the process of contracting for additional renovation work
to begin in May. When asked by POEC chief whether Betta Star
was in danger of violating the terms of its privatization
agreement due to the lengthy pause in vaccine production,
Kashikova explained that her firm had received official
permission to temporarily halt production in connection with
the move to Stepnogorsk. She said they had to show constant
progress toward opening the new facility, however. She
commented that the clause requiring a new owner to maintain
the "profile" of a privatized firm was a standard provision
of almost all privatization deals signed in Kazakhstan in the
1990s. Although she could not be sure, she believed it was
included as a matter of course, rather than due to any GOK
reliance on Biokombinat as a vaccine producer. Kashikova
said that Kazakhstan had imported most of its vaccines from
RosBioMedProm in Russia in recent years rather than
purchasing them from Biokombinat.


4. (C) Kashikova claimed that there had already been
inquiries from firms interested in buying the new Stepnogorsk
facility, including RosBioMedProm. Betta Star could take no
steps to sell the facility until October 2006, however, in
order to respect the terms of the privatization deal.
Kashikova said she was personally eager to sell off the
Stepnogorsk facility so that she could focus solely on real
estate development, but made it clear that Betta Star ran the
risk of having the Biokombinat plot in Almaty seized if it
did not fully meet its obligations to the GOK. "Better to
spend the $2 million we have to invest in Stepnogorsk than
risk losing a $60 million project in Almaty," Kashikova
explained.

--------------
Security of Equipment, Strains
--------------


5. (C) When asked about the security of the equipment
transferred to Stepnogorsk, Kashikova said that the
fermenters were all stored in locked steel containers stacked
several high, and placed door to door to prevent entry (Ref
C). She said that the facility was guarded around the clock,
and the handful of personnel that had already been hired were
present during the day. Strains moved from Almaty as well as
some purchased in anticipation of resuming production were
being stored in a rented, alarmed refrigerated facility in
Stepnogorsk. (Per Ref D, by the time fermenter destruction

began at the Biokombinat facility in Almaty there was no
evidence of pathogens or similar materials in the abandoned
building.)

--------------
Plans for Production and Testing of Vaccines
--------------


6. (C) Kashikova called in the former director of
Biokombinat, Michail Ababkov, now working with Betta Star to
start up the new production facility, to explain plans for
production and testing. When asked about plans for anthrax
vaccine in particular, he explained that the vaccines would
be produced using an attenuated strain purchased from the
Vladimir BioZavod in Russia. Testing would be done on live
animals using "strains so weak, they pose no threat to humans
unless injected intravenously in large quantities." He
mentioned a type of strain developed by Tsenkovskiy that
would be used in testing, and alluded to Pasteur's technique
of subinoculation or subculture ("passazh" in Russian). No
virulent strains would be used for any purpose in the
facility, he emphasized. Underscoring the low risk of the
planned production and testing methods, the former
Biokombinat director said that it had been decided that
employees of the new facility would not be required to have
anthrax vaccinations.


7. (C) Kashikova stated that Betta Star was still open to the
idea of selling the plant to the U.S. government once its
legal obligations had been met. She said that she would be
happy to meet with State Department experts on any future
visit, and could arrange access to the Stepnogorsk facility.

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


8. (C) Comment: Kashikova has been truthful in her dealings
with the State Department to date, and we have seen nothing
so far to cast doubt on the description of how vaccine
production and testing will be carried out at the new
facility in Stepnogorsk. Post would be pleased to consult
further with Kashikova and/or her staff on any detailed
questions regarding planned production and testing methods
that the Department wishes to forward.


9. (C) Comment, continued: It appears unlikely that the USG
could persuade or force Betta Star to abandon its planned
Stepnogorsk veterinary vaccine production facility before
October 2006. Kashikova appears to be under no pressure from
the GOK to restart vaccine production quickly to meet
domestic demand, and therefore has no incentive to spend
additional money to move production elsewhere in Kazakhstan.
Her primary motivation appears to be to observe the terms of
the Biokombinat privatization deal scrupulously to avoid
losing the valuable plot of land in Almaty, and to recoup as
much of the Stepnogorsk investment as possible once Betta
Star can sell the new facility. Anthrax vaccine was
traditionally Biokombinat's highest seller due to frequent
outbreaks in Kazakhstan; dropping plans to produce it would
undoubtedly lower the potential resale value of the plant.
Absent evidence that the production or testing methods will
violate Kazakhstani laws or international agreements, post
does not believe that the USG has sufficient leverage to
persuade Betta Star to voluntarily drop anthrax vaccine
production, or to persuade the GOK to intervene to limit
Betta Star's activities. That said, post stands ready to
work with the Department to clarify the situation further.
End comment.
ORDWAY