BOUCHER AND BAKIYEV: BOTH PLEDGING TO MOVE FORWARD

S E C R E T SECTION 01 OF 05 BISHKEK 001196

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DEPT FOR SCA/FO, SCA/CEN

E.O. 12958: DECL: 08/16/2016
TAGS: PGOV PREL ENRG EINV MARR KG
SUBJECT: BOUCHER AND BAKIYEV: BOTH PLEDGING TO MOVE FORWARD

REF: BISHKEK 1195

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Classified By: Amb. Marie L. Yovanovitch, Reason 1.4 (b) and (d).


1. (C) SUMMARY. In an August 11 meeting with Assistant
Secretary for South and Central Affairs Richard Boucher,

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President Bakiyev turned straight to investment issues,
urging U.S. involvement in major hydro-electric projects.
Surprising everyone with an about-face, Bakiyev said that the
Kyrgyz Government would not exercise its right to supply 50%
of the fuel to the Manas Air Base. The President also
expressed concern about rising extremism in southern
Kyrgyzstan. A/S Boucher responded that after years of good
bilateral cooperation, the recent strains in the relationship
had come as a surprise to the U.S. He urged the President
not to let false information come between the two countries
again. Boucher also urged Bakiyev to make a public display
of support for Manas Airbase by attending an event there on
September 11 (which Bakiyev agreed to) and to increase Kyrgyz
attention to regional integration. Bakiyev downplayed the
recent strains and pledged that would be a "stable, reliable
partner." Throughout the meeting, Bakiyev said many of the
right things about cooperation and moving forward, but his
words also demonstrated that his decisions are subject to
change and review, resulting in confusion and uncertainty.
END SUMMARY.


2. (C) On August 11, Assistant Secretary of State for South
and Central Asia Richard Boucher met with President Bakiyev.
Ambassador Yovanovitch and Senior Advisor Hayden accompanied
Boucher. Foreign Minister Jekshenkulov and Foreign Policy
Advisor Ibragimov accompanied Bakiyev. The Assistant
Secretary's other meetings in Bishkek were reported reftel.

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IN SEARCH OF U.S. INVESTORS FOR KAMBARATA 1 and 2
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3. (C) The President welcomed A/S Boucher and noted that the
bilateral relationship had been a good one for the past 15
years and that Kyrgyzstan appreciates the assistance the U.S.
provides. He turned straight to business issues, noting that
a number of large business projects are on the horizon, such
as Kambarata 1 and 2, that might be of interest to U.S.
investors. He said that when there are close economic ties,
all other questions in the bilateral relationship are more
easily resolved. He noted the Kazakhs and the Russians are
interested in Kambarata 1 and 2, but they are dragging out
the talks. Moreover, they should be working together, as the
project may prove too big for a single investor; it would be
good if the U.S. were involved too. The President noted that
since Kambarata 1 and 2 are not part of the Cascade, it would
be easier to finalize the legal aspects with parliament,
which he expects to do in the fall. On economic issues, the
President said that economic growth is good, tax and customs
revenues are flowing to the budget, and the fight against
corruption has been successful. Morale in Kyrgyzstan is
high, according to the President, but he concluded that the
American presence in this area should be stronger.

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KYRGYZSTAN NOT TO PARTICIPATE IN FUEL CONTRACT
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4. (C) Bakiyev noted that the bilateral relationship is
strong in other areas as well and said the recently concluded
base agreement had provided a good result. "I understand the
threats we face. From the beginning, I knew we could do it,"
he said. He added that "some politicians" had given the
impression that Kyrgyzstan did not want the Base, but he, the
President, had always been committed to the Base, as no
country can fight terrorism alone. Later in the meeting,
Bakiyev said that the July agreement that Kyrgyzstan would be
granted the right to provide 50% of the fuel could become a
problem, because he cannot guarantee Kyrgyz performance. The

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President said that no Kyrgyz company has the capacity, and
since fuel supply is a military issue, not a political issue,
it should be treated as such. Certain bureaucrats had made
the fuel part of the July agreement, perhaps because "they
wanted to make business" on the side, commented the
President. He concluded that people had criticized former
President Akayev for profiting from past fuel contracts, and
he did not want the same criticism leveled against himself.
In sum, the President said he was ready for the Americans to
supply 100% of the fuel.


5. (C) Boucher responded that a reliable fuel supply is most
important, and the U.S. Government appreciates the Kyrgyz
flexibility on this issue. Boucher added that the U.S. would
appreciate a public demonstration of support for the Base and
suggested visiting on September 11, the fifth anniversary of
the attacks on the U.S. President Bakiyev agreed.


6. (C) On internal affairs, the President said that
constitutional reform was moving forward and would be
finished in the fall. He did not think it was necessary for
the Constitutional Assembly to decide on every article; they
should merely make their views known regarding which form of
government they prefer. Then there would be further
consultations with the Parliament. He said he is ready to
proceed with reform of the judicial system and law
enforcement agencies, although it is not a simple matter:
"We are on the threshold of reform," he claimed.

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BOUCHER: WHERE IS KYRGYZSTAN GOING?
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7. (C) Boucher responded that his purpose in coming to
Kyrgyzstan was to find out what was happening in the country
and where it was headed. He said that the last time he had
spoken to the President, the President had requested a speedy
conclusion to the base negotiations. This had happened, and
the U.S. was fulfilling its obligations as agreed in July.
For his part, Boucher had asked that the President decrease
the level of conflict with the opposition and involve civil
society in the constitutional reform process, and Bakiyev had
done this successfully.


8. (C) Boucher reviewed the good cooperation that the U.S.
and Kyrgyzstan have enjoyed over the years, but noted that
the U.S. had been stymied by the two PNGs and the SNB
operations against the Surveillance Detection Team. Boucher
stated that the Kyrgyz had acted on false information and
incorrect interpretation. He said we have taken reciprocal
measures by PNGing two Kyrgyz diplomats and do not plan on
taking further steps. Boucher said that we are working with
Kyrgyz Ministries to re-establish the Surveillance Detection
Team in an atmosphere of complete transparency. Boucher
concluded that the U.S. and Kyrgyzstan will overcome this
difficult period in bilateral relations, but Kyrgyzstan
should take the lesson that false information, including from
third parties, should not come between our two countries.
The PNGing of two U.S. diplomats was a serious, even an
unfriendly, action, and we don't want this to continue,
Boucher said.

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NORTH-SOUTH INTEGRATION
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9. (C) On other issues, Boucher responded that the U.S. is
actively promoting regional integration. On north-south
energy integration, Boucher noted that Kyrgyz representatives
attended the U.S. Trade and Development Agency-sponsored
conference on hydro-electricity in Istanbul in June, which
had been useful, and the next step is a follow-on conference
in Dushanbe in October. He raised AES' interest in working
in Kyrgyzstan, the work AES is doing in Tajikistan, some of
which the U.S. is financing, and suggested that the Kyrgyz

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work with AES, as well, to "create a whole" -- to which the
President nodded. Boucher said he had appointed a senior
officer to his staff to convert the idea of integration into
the reality of roads and electrical lines. On trade, Boucher
noted the big markets in Pakistan, and especially India, and
said that Kazakhstan would be holding a conference on trade
integration shortly. In the end, he said, integrating the
region makes economic sense.

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BAKIYEV: EXTREMISM IN THE SOUTH
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10. (C) On the situation in southern Kyrgyzstan, the
President said that religious extremism has been building for
the last ten to fifteen years. He cited recent incidents in
Batken, Jalalabad, and Osh, including the killing of Mufti
Mohammadrafiq Kamalov earlier in the week and said that the
Government of Kyrgyzstan had information that not only
Kamalov, but his brother, Sadykjan Kamalov, head of the
International Center for Islamic Cooperation (Note: and
former International Visitor Program participant. End Note.)
were extremists, had direct contact with terrorists, and
should be behind bars. He said that the religious extremists
were now no longer limiting themselves to disseminating
literature, but were preaching an untrue version of Islam and
how to overthrow the government. The Kyrgyz government is
working with "real" Islamic clerics to provide support in the
South, Bakiyev said. He added that the Kyrgyz government
would "deal harshly" with terrorists in the South. He noted
that the capacity of the law enforcement agencies needed to
be increased. The Kyrgyz Government had requested assistance
from the Russians and wanted the U.S.-donated helicopters to
go to the SNB, as the SNB has no helicopters.

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SECURITY COOPERATION NEEDED
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11. (S) Boucher responded that the U.S. wants to continue
security cooperation with the Kyrgyz and has generally
experienced good cooperation. The U.S. wants good relations
with the SNB, but believes the SNB has spread false
information about the U.S. and U.S. activities in Kyrgyzstan,
and our bilateral cooperation program with the SNB has
expired. We would like to reactivate our cooperation, as
both countries would benefit. Boucher added that the U.S. is
not trying to push any country, i.e. Russia, out of
Kyrgyzstan; our goal is to support Kyrgyz goals and Kyrgyz
sovereignty. When Kyrgyzstan cooperates with many countries,
it provides competition, which in turn provides more choices.


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AGREEMENT ON UZBEKISTAN
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12. (C) Boucher continued that he had just been in
Uzbekistan, where he tried to re-establish a decent
relationship, but it would be a hard-nosed relationship based
on areas of specific interest. He noted it cannot be as
broad a relationship as with Kyrgyzstan, but that President
Karimov had expressed interest in cooperating in the areas of
security, and political and economic development, but that
there could still be a positive relationship with the U.S. if
Uzbekistan works at it. Boucher noted that when Bakiyev
meets with Karimov, he hopes that Bakiyev influences Karimov
rather than the other way around. With a grin, Bakiyev said
that Karimov is "very hard," that he had just had a difficult
conversation with him in Minsk, so he is not sure how
constructive their meeting will be. Boucher responded that
this would be a shame for Uzbekistan, which is closing itself
off. As Bakiyev nodded, Boucher concluded that by leaving
only one door open, Uzbekistan is losing opportunities.


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REQUEST FOR HIPC ASSISTANCE
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13. (C) Bakiyev said he hoped that the U.S. would provide
assistance in getting Kyrgyzstan into the Highly Indebted
Poor Countries program (HIPC). Kyrgyzstan was debating the
issue, but the two billion dollars of debt weighed heavily on
Kyrgyzstan and the President would appreciate if the U.S.
could help in restructuring the debt burden. The Ambassador
responded that it had always been U.S. policy to support
Kyrgyzstan's entry into the program.

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REQUEST FOR THRESHOLD STATUS
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14. (C) Bakiyev said that he had one final wish, that
Assistant Secretary Boucher support Millennium Challenge
Account Threshold Status for Kyrgyzstan. Boucher responded
that the U.S. is interested in going forward with judicial
reform and will address this quickly when he returns. He
stated that given the events of the past month and a half,
questions had been raised about the direction of the country
and the direction of the relationship, but he hoped that the
Kyrgyz would see the benefits of cooperation and reform.


15. (C) Bakiyev replied that he had no doubts that the
relationship would develop further. "Kyrgyzstan," he said,
"is a country that does not waver. We will be a stable,
reliable partner. We won't switch priorities and we don,t
switch partners." Turning to the PNG issue for the first
time in the conversation, Bakiyev said that the issue of the
two PNGs was not his idea. "Let's forget that. Intelligence
is intelligence. I didn't decide this issue, and the Foreign
Minister didn't approve this action." Boucher thanked the
President and concluded that the President should not let
this happen again.

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COMMENT
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16. (C) Bakiyev came very well prepared to the meeting with
Assistant Secretary Boucher. The Kyrgyz goal was to put the
tensions of July behind us, and Bakiyev succeeded, although
he has been put on notice that the relationship cannot afford
another PNG situation. He is clearly most interested in the
economic relationship, although he also said what we wanted
to hear on constitutional reform and on the Base.


17. (C) Bakiyev succeeded in surprising everyone -- including
his own advisors -- when he announced that the Kyrgyz would
not follow up on the July agreement to provide 50% of the
fuel to Manas Air Base. He clearly reveled in catching even
his own staff off guard, and three days later they are still
trying to figure out what this means: does it mean that
Kyrgyzstan will not participate at all or does it mean they
will participate in the open tender for 100% of the fuel
deliveries, or does it mean, as Security Council Secretary
believes, that the Kyrgyz Government will start taxing fuel.
Security Council Secretary Niyazov told us that he would
clarify this with the President when the latter returns from
Sochi on August 17. He advised us to postpone for now the
Defense Energy Support Center fuel team scheduled to arrive
on August 15. We reminded Niyazov that if taxation was the
goal, the overall cost to the U.S. could not increase, and
Niyazov agreed.


18. (C) On the Highly Indebted Poor Countries program, the
President apparently saw no irony in requesting assistance
from the United States on this issue, although in April the
Foreign Ministry had issued a public reprimand to the
Ambassador for "interfering in internal issues" when she
commented on it. During this part of the conversation, the

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Foreign Minister was determinedly studying the ceiling and
would not meet the Ambassador's eye.


19. (C) We also found it interesting that the President made
a point of telling us that it was not the Foreign Minister,
nor the President himself, who decided the PNG issue, it was
the SNB. First, this contradicts what he told us on July 12
-- and what virtually everyone else in Bishkek is telling us.
Second, it begs the question of who is in charge of foreign
policy if neither the President nor the Foreign Minister
decide a question of such import.


20. (C) The President's comments were constructive and
forward-looking. Nevertheless, many of his remarks,
including the news regarding the fuel deal, where he was
essentially using U.S. talking points, once again
demonstrated that decisions are subject to repeated review.
No decision is final, which leaves both Bakiyev's staff and,
to a certain extent, the U.S. scrambling. END COMMENT.


21. (U) A/S Boucher has cleared this message.
YOVANOVITCH