CORRECTED COPY: KAZAKHSTAN: BOUCHER PRESSES

C O N F I D E N T I A L SECTION 01 OF 04 ASTANA 001668

SIPDIS

NOFORN
SIPDIS

DEPT FOR EB/ESC; SCA/CEN (O'MARA)
DEPT PLEASE PASS USTR.

E.O. 12958: DECL: 06/17/2017
TAGS: PGOV PREL KZ ECON ENRG
SUBJECT: CORRECTED COPY: KAZAKHSTAN: BOUCHER PRESSES
POLITICAL REFORM WITH GOVERNMENT, OPPOSITION

REF: A. ASTANA 1357

B. ASTANA 1033

C. ASTANA 1243

D. ASTANA 1454

E. ASTANA 986

F. ASTANA 1110

G. ASTANA 1415

Classified By: DCM Kevin Milas; reasons 1.4 (b) and (d).


1. (C) Summary: In June 5-6 meetings with Assistant
Secretary Boucher, Kazakhstani government officials defended

SIPDIS
recent constitutional amendments as far-reaching, while
acknowledging the need for further reform. Opposition
leaders, by contrast, called the reform package a "step
backward," arguing that even if the changes would have little
immediate effect, on balance they strengthened presidential
power. Both the government and opposition are anticipating
that parliamentary elections will be held in the near-term,
and agreed with Boucher's assessment that the quality of the
elections would be a good indicator of the government's will
to undertake real reform. The opposition identified the
formation of representative electoral commissions as a key to
assuring fair elections, and warned that the ongoing process
of choosing commission members was heavily biased in favor of
the ruling "Nur Otan" party.


2. (C) Summary (continued). On the economic front, Prime
Minister Masimov highlighted the "thirty corporate leaders"
program as the centerpiece of the government's
diversification program. Masimov indicated a desire to
finalize bilateral World Trade Organization accession
negotiations during his planned visit to the U.S. in
September; lead negotiator Aitzhanova asked that the U.S.
defer the "state trading enterprises" issue for multilateral
negotiations. While Foreign Minister Tazhin reiterated that
Kazakhstan's only role in the gas pipeline projects announced
last month in Turkmenistan was as a "transit country,"
neither he nor Masimov signaled strong support for a
Trans-Caspian gas pipeline; both men indicated a preference
for compressed natural gas shipments across the Caspian.
Government officials downplayed any disruption caused by the
Rakhat Aliyev case, while casting it as an exercise in the
"rule of law"; opposition and civil society leaders suggested
that Aliyev's abuses had alienated important factions of
Kazakhstan's economic / political elite, forcing Nazarbayev's
hand. End summary.


3. (SBU) During a June 5-6 visit to Kazakhstan, Assistant
Secretary of State for Central and South Asian Affairs

SIPDIS
Richard Boucher, accompanied by Senior Advisor Caitlin Hayden
and Charge d'Affaires a.i., met with the following government
officials: Prime Minister Karim Masimov, Foreign Minister
Marat Tazhin, State Secretary Kanat Saudabayev, Presidential
Administration Head Adilbek Dzhaksybekov, Senate Speaker
Kasymzhomart Tokayev, and Security Council Secretary Berik
Imashev. Boucher also met with opposition politicians Bulat
Abilov, Tulegen Zhukeyev, Oraz Zhandosov, Galymzham
Zhakiyanov, and Zharmakhan Tuyakbay; as well as
representatives of U.S. businesses; editors and political
scientists associated with "Mysl," a prominent political
science journal; and a group of U.S. exchange program alumni.
Assistant Secretary Boucher also toured the future site of
the Central Asian Regional Information and Coordination
Center.

Government Defends Amendments; Acknowledges Need for More
Reform
-------------- --------------


4. (C) Dzhaksybekov mounted the most vigorous defense of the
constitutional reforms, describing them as far reaching.
Dzhaksybekov highlighted in particular the new role of
maslikhats (regional and local legislatures) to approve akims
(executive branch leaders); the transfer of sanction of
arrest from the procuracy to the judiciary; state financing
for political parties and non-governmental organizations; and
Mazhilis approval of the Prime Minister and cabinet.
Kazakhstan is establishing a system of political checks and
balances that maintains strong vertical controls to ensure
stability, he said. While "we don't think there will be much
change," Dzhaksybekov acknowledged, "we have laid the
foundation for the opposition to expand in the future."


5. (C) Dzhaksybekov explained that four pieces of legislation

ASTANA 00001668 002 OF 004


must be passed immediately in order to implement
constitutional changes: amendments to the laws on
parliament, the government, the president, and elections.
Dzhaksybekov indicated that, while a new media law was not
required to implement the changes, one proposed by the
Congress of Journalists was pending and would eventually be
approved.


6. (C) Dzhaksybekov bridled at Boucher's observation that, in
the West, the decision to lift term limits on President
Nazarbayev had overshadowed the rest of the reform package in
the public eye. Dzhaksybekov termed the focus on the term
limits "offensive," while Tazhin pointed out that the term
limit amendment represented "a legal framework, not a
political decision," adding that Nazarbayev's decision
whether to run again would depend both on the political
situation and on Nazarbayev's health. The fundamental reason
for the term limit change, Tazhin said, was to dampen
political competition among aspirants to the presidency.
Tazhin also spoke frankly about the origins of the amendments
during a one-on-one meeting: "It was proposed in parliament,"
he told Boucher privately, "but we all know where it came
from."


7. (C) Both Dzhaksybekov and Tazhin reiterated the
government's unwavering commitment to its bid to chair the
Organization for Security and Cooperation, reviewing familiar
arguments for Kazakhstan's candidacy, including the
importance of setting an example for others in the region.
"It is our decision and we won't give up," Dzhaksybekov
declared, adding that Kazakhstan would do anything the U.S.
wanted on reform "as long as it does not interfere with out
strategic interests." Tokayev also assured Boucher that the
reform package was just the beginning: "the process will go
on," he said. "The window has been opened by the amendments."


8. (C) Dzhaksybekov and Saudabayev sounded Boucher out on the
idea of holding parliamentary elections in the short-term,
suggesting that elections would be a logical follow-on to the
reforms, while being clear that no decision had yet been
taken. Dzhaksybekov indicated that the decision would depend
"on the law and on the President's negotiations with the
Mazhilis and the Senate," as Nazarbayev would have to
dissolve the parliament for there to be elections. Over
dinner, Saudabayev told Boucher that President Nazarbayev
will make sure that expectations for early parliamentary
elections, resulting from the constitutional reforms, will be
met, and commented later that elections held before the
Madrid ministerial of the Organization for Security and
Cooperation in Europe would "give Kazakhstan's candidacy a
boost." In reply, Boucher indicated that good elections
would have a major impact on U.S. thinking; at the same time,
both sides had agreed that more reform was also needed.

Opposition: Changes a "Clear Step Backward"
--------------


9. (C) While the consensus among the assembled political
scientists seemed to be that, on the whole, the reform
package was a positive development, the opposition leaders
told Boucher that they viewed the reform package as a "clear
step backwards," and voiced disappointment in the U.S.
government's public assessment of the changes. "I'm not sure
how you managed to find one grain of democratic change in
that huge pile of sand," Tuyakbay said. Zhandosov claimed
that, of 19 changes envisioned by the reform package, 16
increased presidential authority. The changes which appeared
to rankle the opposition the most were the elimination of
term limits for Nazarbayev (Abilov: "Kazakhstan cannot be
considered democratic with an eternal president.") and the
expansion of presidential authority to dissolve the
parliament. Abilov warned that an additional amendment
currently before parliament would prohibit the formation of
electoral blocs, such as the one which Ak Zhol and the Social
Democratic Party had just announced in anticipation of
elections.


10. (C) Their criticisms registered, Zhukeyev and Zhandosov
then conceded that, in the near-term, the practical effect of
the (negative) changes would be minimal. However, Zhukeyev
said, the danger lay in the fact that the changes created a
legislative framework for a future "tightening" -- one which
might come, for example, on the heels of a failed bid to
chair the Organization for Security and Cooperation in
Europe.

ASTANA 00001668 003 OF 004




11. (C) The opposition readily agreed with Boucher's
assessment that the key next step was to ensure that the
coming elections would be fair. The politicians told Boucher
that they were gearing up for a campaign: "everything speaks
to simultaneous local and parliamentary elections," Tuyakbay
said, "and local elections must be held this year." In this
light, both the opposition and the political scientists
identified the formation of representative electoral
commissions as a key to the conduct of fair elections -- and
as something that was already going wrong (Ref B). Tuyakbay
explained that the composition of Kazakhstan's 10,000
electoral commissions would be determined by the end of July,
and already opposition nominees were being rejected in favor
of Nur Otan representatives. (Tuyakbay indicated that, of
6,000 nominees from his party, only 400 had been accepted.
Abilov complained that only two Ak Zhol representatives had
been accepted on to the estimated 500 electoral commissions
in Almaty.) What ultimately needed to happen, Tuyakbay
suggested, was to change the way the commissions were formed:
currently they were elected by the Nur Otan-dominated
maslikhats, but better that they be appointed by the
independent Central Election Committee.

Economic Priorities: Diversification, Infrastructure, WTO
-------------- --------------


12. (C) Prime Minister Masimov briefed Boucher on government
efforts to attract investment into the non-extractive
sectors, and thus further diversification, by means of a
public/private "corporate champions" program (Ref C). The
idea, Masimov explained, was to prepare the environment so
that companies could compete in the export market. Toward
that end, the government was planning to raise electricity
tariffs and gas prices to encourage needed investment in
generation capacity (Ref D),as well as encouraging investors
to enter into road and railway projects. Masimov explained
that he had recently agreed with the Prime Ministers of
Azerbaijan and Georgia to cooperate in building a continuous
railroad line (including a Caspian shipping link) which would
eventually run "from Hong Kong to Hamburg" (Ref E).


13. (C) Masimov asked Boucher if it would be possible to
target the second-half of September, when he would be in the
U.S. for World Bank meetings, for finalizing U.S.- Kazakhstan
bilateral World Trade Organization accession negotiations.
Lead negotiator Zhanar Aitzhanova then lobbied for the U.S.
to defer the issue of "state trading enterprises" to
multilateral negotiations, "as you did for Russia." Boucher
agreed to pass both ideas to the U.S. Trade Representative.


14. (C) Asked about Kazakhstan's plans for transporting gas,
Masimov began by commenting that "we don't have much (gas)
yet." Masimov noted that Kazakhstan was encouraging the
Turkmenistan-China gas pipeline project as a way to supply
gas to Southern Kazakhstan. Characterizing the Trans-Caspian
gas pipeline as "something that's been talked about for a
long time," Masimov told Boucher that he personally preferred
the idea of shipping compressed natural gas across the
Caspian, telling Boucher that it was "simpler than a
pipeline." (Tazhin indicated the same preference in an
earlier meeting.) Masimov informed Boucher that the deal to
ship increased volumes of Karachaganak gas to the Orenburg
refinery in Russia (Ref F) was "more or less finalized." The
government was interested in increasing the overall volume of
salable gas, Masimov said, and to that end was opening
negotiations with oil producing companies to encourage them
to re-inject less, and sell more, associated gas.

Afghanistan and Kyrgyzstan
--------------


15. (C) Tazhin told Boucher that he had recommended that the
government take a closer look at what it could do in
Afghanistan beyond investment or humanitarian aid; to that
end, he had asked for a study on a project, costing around
$50 million, to build roads connecting Afghanistan and
Tajikistan. Masimov later confirmed that the government was
"ready to invest" and was "very close" to a decision on road
and infrastructure opportunities. Imashev indicated that the
Afghanistan "economic program" would also include training
for Afghan army and security forces in Kazakhstani defense
institutes.


16. (C) Tokayev informed Boucher that Kazakhstan had agreed

ASTANA 00001668 004 OF 004


to provide $100 million in loans to Kyrgyzstan during
President Nazarbayev's recent visit there; humanitarian
assistance had also been disbursed. Masimov indicated that
Kazakhstan was still interested in pursuing energy projects
in Kyrgyzstan but to date "we haven't been able to find
anyone in Kyrgyzstan who can make deals stick." Masimov
added that he would lead a delegation of investors to
Kyrgyzstan during the second half of June. Imashev told
Boucher that the Kyrgyz government's "weak control" was of
increasing concern, as it had led to a "concentration" of
Hizbut Tahrir in the country. Imashev then claimed to have
"records" from criminal cases which confirmed that Hizbut
Tahrir members in Kyrgyzstan had been "trained in terrorism."


17. (C) Boucher raised the topic of the upcoming Shanghai
Cooperation Organization summit with several of his
government interlocutors, telling them that the U.S. strongly
preferred that the issue of the Manas airbase not be
discussed officially during the meeting. Saudabayev promised
to talk with Nazarbayev about the issue and try to keep it
off the agenda.

Assessing Rakhat Aliyev's Arrest
--------------


18. (C) Interpretations of the Rakhat Aliyev case (Ref G) by
Boucher's interlocutors fell into two camps: government
officials, when asked, tended to minimize the importance of
the case, and explain it as an example of the "rule of law"
which would play out in the court system. The opposition
representatives and political scientists, by contrast,
largely spurned the "rule of law" argument in favor of the
view that Nazarbayev's hand had been forced by Aliyev's
abuses and a resulting groundswell of complaint by important
elements of Kazakhstan's business / political elite, many of
whom were familiar with Aliyev's "predatory" seizure of
business interests, and were keen to eliminate any
possibility of Aliyev succeeding Nazarbayev.


19. (U) Assistant Secretary Boucher has cleared this cable.
ORDWAY