NAZERBAYEV'S VISIT TO LATVIA

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000577 SIPDIS SIPDIS E.O. 12958: DECL: 07/21/2016 TAGS: PREL ENRG ECON OSCE RU KZ LG SUBJECT: NAZERBAYEV'S VISIT TO LATVIA Classified By: Ambassador Catherine Todd Bailey. Reason: 1.4(D) ¶1. (C) Summary: The visit to Latvia by Kazakh President Nazerbayev was mainly focused on building economic ties between the two countries. The Kazakhs already have a heavy investment in a grain port in Latvia and would like to use the oil terminal at Ventspils to ship their oil. The two countries would also like to work with China to create a land line to move Chinese goods to market. Both of these ideas, though, require transit through Russia, which is far from assured. Latvia committed to support Kazakhstan's bid to be OSCE CIO in 2009, but tied it to fulfillment of OSCE standards, potentially allowing them a way out. The Latvians were very pleased that Nazerbayev visited the occupation museum as well. End summary. ¶2. (U) President of Kazakhstan, Nursultan Nazerbayev, visited Latvia July 17 ) 18. The joint declaration signed with Latvian president Vaira Vike-Freiberga, can be found in English at www.president.lv/pk/content?cat id=603&art id=9806&lng=en. Pol/econ chief met with MFA A/S level official for Russia and the former Soviet States Vilmers Henins and the President's foreign policy advisor Janis Mazeiks on July 19 for a readout on the visit. ¶3. (C) Economic ties were at the top of the agenda. Nazerbayev brought his ministers for transport, energy and economics along on the trip. The post-visit press headlines focused on Kazakhstan's desire to buy the Latvian government's shares of Ventspils Nafta, the company that controls the oil terminal at the port of Ventspils, when it is privatized. Kazakhstan would like to use the pipelines that end in Venstpils to move its oil to market and Latvia would welcome the return of this business lost when the Russians stopped oil shipments to Ventspils several years ago. Unfortunately, Nazerbayev stated publicly that he expected Kazakh bidders would receive preferential treatment in the bidding, leaving Latvian economic minister Stokenbergs to quickly clarify that the government's shares would be sold to the highest bidder. The two leaders also discussed a project to build rail links from China, through Kazakhstan, to Latvia to provide a route for Chinese goods to European and North American markets. Both these proposed transit routes go through Russia, and it is not at all clear Moscow will approve these projects. Mazeiks said that the Latvians will let Nazerbayev take the lead in talking to the Russians, given the much better state of his relations with Moscow. ¶4. (U) The original plan for the state visit had included a visit to Ventspils, not only to see the oil terminal, but also to look at a joint Latvian-Kazakh enterprise grain terminal for shipping central and eastern European grain to market. However, disputes over port fees and supply chain problems have kept the terminal from operating anywhere near its capacity, so the trip was scrubbed from the schedule. Instead, Nazerbayev attended the laying of a cornerstone for a Kazakh-owned hotel to be built in Riga. ¶5. (C) The main political development from the visit was agreement in principle by Latvia to support Kazakhstan for OSCE Chairman in Office in 2009. The statement language on this is very carefully crafted, with Latvia agreeing to a Kazakh invitation to support the bid, but noting the CIO's "special responsibility for implementation of OSCE standards and principles." Mazeiks termed it a "qualified yes" while Henins said that Vike-Freiberga was clear in a tete-a-tete with Nazerbayev that he needed to implement further reforms at home. Both suggested that Latvia would be willing to drop their support if the human rights and democracy situation in Kazakhstan deteriorated. ¶6. (U) The leaders also discussed educational exchanges. Nazerbayev was especially interested in getting Kazakh students to the Riga Business School, which was originally a USAID-funded project and operates in affiliation with SUNY-Buffalo. ¶7. (C) The Latvians were especially pleased that Nazerbayev agreed to visit the Occupation Museum, which chronicles Latvia's struggles under Nazi and Soviet rule. According to another source on President Vike-Freiberga's staff, Nazerbayev overruled his staff, who cautioned against upsetting Moscow, to visit the museum. ¶8. (C) Comment: The Latvians are genuinely pleased with the visit, which they feel really cemented economic ties between the two countries. While a bit uncomfortable with his political record, they are swallowing that in hopes of getting the economic deals. The key, though, will be the Russian reaction. The Latvians hope Nazerbayev can carry the RIGA 00000577 002 OF 002 water in Moscow to get the necessary transit rights. Bailey