KYRGYZ GOVERNMENT SEEKS TO CHANGE BASE FINANCE

C O N F I D E N T I A L SECTION 01 OF 04 BISHKEK 000816

SIPDIS

SIPDIS

DEPT FOR SCA/CEN

E.O. 12958: DECL: 06/25/2017
TAGS: PGOV PREL MARR KG
SUBJECT: KYRGYZ GOVERNMENT SEEKS TO CHANGE BASE FINANCE
AGREEMENT

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


1. (C) Summary and Comment: On June 22, the Kyrgyz
government delivered a draft protocol on changes and
additions to the July 2006 Protocol of Intentions covering
U.S. payment to the Kyrgyz government for access to and use
of Manas Airbase. The Kyrgyz proposal includes additional
payments and assistance from the U.S., specified payments for
fuel dumping, and a change to the provisions for annual
renewal of the Protocol of Intentions. Under the July 2006
Protocol of Intentions, the U.S. could renew the Protocol on
the same terms and payment amount each year for a period of
five years. The Kyrgyz proposal did not/not include a
request to change the legal status of, or jurisdiction over,
base personnel. Embassy's unofficial translation of the
Kyrgyz draft protocol is below at paragraph 8.


2. (C) The Kyrgyz proposal itself does not come as a
surprise. Kyrgyz officials, including President Bakiyev,
have said that they wanted to review the base protocol in
order to get more money for ecological or facilities damage.
However, the scope of the demands is wide, and we do not
think that the Kyrgyz expect to get all of what they
proposed. From our conversations with Kyrgyz officials, we
believe the serious issues are the request for the air
navigation radar, some compensation for ecological damage,
and a system for reimbursement for future damages. These and
other issues were discussed last year in negotiations
parallel to the compensation negotiations, but no final
conclusions were reached. At the time, we were prepared to
be flexible on some issues (e.g., air navigation fees,
contractor taxes).


3. (C) While we should not re-open negotiations over
compensation for access to the base, some of the issues
raised by the Kyrgyz government could be addressed in the
context of the proposed joint commission on base issues. We
think it is important to respond quickly to the Kyrgyz
government -- not to agree on the substance of the proposal,
but to indicate a willingness to address issues in the
context of implementation of the current agreement. We
believe this is important for management of the bilateral
relationship and base issues. Embassy's proposed response to
the Kyrgyz government is below at paragraph 9. End Summary
and Comment.

Proposal to Change Base Financing Agreement
--------------


4. (C) On June 22, Deputy Foreign Minister Kydyrov delivered
to the Ambassador a Diplomatic Note with a draft protocol on
changes and additions to the July 14, 2006 Protocol of
Intentions covering U.S. payments for access to and use of
Manas Airbase. The Kyrgyz proposal makes reference to both
the July 2006 Protocol and to the Joint Statement issued at
the signing of the July 2006 Protocol. The July 2006
Protocol provided for annual payments of $17.4 million for
access to and use of the "facilities and real estate" of the
Manas airbase, and it was renewable by the U.S. on the same
terms and payment amounts for a period of five years. The
Joint Statement noted that the decision on continued use of
the Manas Airbase should be viewed in the context of the
"larger, robust bilateral relationship," and that the U.S.
"expects to provide $150 million in total assistance and
compensation over the next year."


5. (SBU) The Kyrgyz draft protocol proposes changes to
specific language in the July 2006 Protocol of Intentions, as
well as additional language covering damages, determining the
amount of damages, and a list of base contractors and
subcontractors. The draft protocol proposes the following
changes:


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--adding "air navigation equipment" to the definition of
"facilities/real estate";

--payment of $18 million in installments during 2007 for
renovation of air navigation equipment;

--payment of $98.6 million in compensation and assistance
through the end of 2007 (making reference to the figure of
"$150 million" used in the Joint Statement, the draft
protocol states that the U.S. has already provided $51.4
million in total assistance and compensation, including
payments for access to the base facilities/real estate, in
2007);

--a statement that the U.S. intends to provide more than $150
million in total assistance and compensation each year;


6. (SBU) The draft protocol proposes the following additions:

--one-time payments of 60,000 soms (approx. $1500) per ton of
aviation fuel dumped;

--monetary reimbursement for ecological damage;

--monetary reimbursement for damage to legal entities and
individuals, or to their heirs;

--the amount of such damages to be determined by a joint
commission;

--the U.S. will provide a list of contractors and
sub-contractors working with the base, as well as information
about the cost of goods, works, and services.


7. (SBU) In addition, the draft protocol proposes to change
the language regarding renewal of the July 2006 Protocol of
Intentions. The July 2006 Protocol provided that "The Kyrgyz
Republic intends that the United States may renew this
Protocol annually without reconsideration of the terms or
payment amount, for a total period of five (5) years . . . ."
The Kyrgyz propose to change this provision to read, "The
United States of America, with the consent of the Kyrgyz
Republic, may renew this Protocol . . . ."

Text of Draft Protocol
--------------


8. (SBU) The Kyrgyz draft protocol delivered on June 22
refers directly to the July 14, 2006 Protocol of Intentions
between the U.S. and Kyrgyz Governments covering payment for
access to the facilities/real estate of the Manas Airbase.
The draft protocol also refers to the Joint Statement issued
on July 14, 2006 to mark the signing of the Protocol of
Intentions. Following is the Embassy's unofficial
translation of the draft protocol.

Begin Text:

Draft
Protocol on Changes and Additions to the Protocol of
Intentions between the Government of the Kyrgyz Republic and
the Government of the United States of America of July 14,

2006.

The Government of the Kyrgyz Republic and the Government of
the United States, hereinafter "the Parties",

Confirming the commitment to develop and strengthen mutually
beneficial cooperation and partnership relations between the
two countries based on universally recognized principles and
norms of the international law, specifically, with respect to
and compliance with the laws of the receiving country,


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Reaffirming the decision of the Parties that the continued
use of the airbase at Manas airport should be viewed in the
context of the broader, robust bilateral relations and
considering the Joint Statement of the Kyrgyz Republic and
the United States of America of July 14, 2006 regarding
providing USD 150 million in total assistance and the
compensation by the United States of America to the Kyrgyz
side during the year 2007,

Noting that within the framework of the aforementioned
Statement of July 14, 2006, during the first and the second
quarters of 2007, the United States has already provided USD
51.4 million in total assistance and compensation, including
for the continued access and use of facilities/real property
on the territory of the Kyrgyz Republic by the United States
Department of Defense,

Being guided by efforts to ensure safety of flights of civil
aviation, the USAF, and of other member countries of the
Anti-terror Coalition and to prevent emergency situations,

Considering the unsatisfactory condition of the air
navigation equipment used for the air navigation services to
the USAF and other Coalition members, which is breaking down
due to its more intensive use,

Taking into account the need of preventing cases of causing
environmental damage,

In order to settle issues related to resolving the incidents
involving the personnel of the U.S. Department of Defense and
to protecting rights and interests of the Kyrgyz Republic,

1) Introduce the following changes and additions to the
Protocol of Intentions between the Government of the Kyrgyz
Republic and the Government of the United States of America
signed on July 14, 2006 (hereinafter "the Protocol of
Intentions"):

A) In point 2, after the word utilities, to add the words
"air navigation equipment", without changing the rest of the
language;

B) In point 3, to add the following: "The U.S. Government
intends to pay to the Kyrgyz Republic USD 18 million
($18,000,000) in installments during 2007 for renovation of
the air navigation equipment of the Manas airport, which is
used to servicing military and humanitarian operations of the
International Antiterror Coalition within the framework of
Operation Enduring Freedom and, pursuant to the Join
Statement of the Kyrgyz Republic and the United States of
America of June 14 2006, also intends to provide total
assistance and compensation in the amount of the remaining
USD 98.6 mln by the end of 2007. The United States of
America intends to continue providing more than USD 150 mln
annually in total assistance and compensation to the
Government of the Kyrgyz Republic;"

C) To supplement the Protocol of Intentions with points 4, 5,
6 and 7 in the following language and to change the numbering
of points:

"4. The U.S. Government intends to make one-time payments
for jettison of harmful substances (aviation fuel) in the
airspace of the Kyrgyz Republic in the amount of 60,000 soms
per ton in accordance with the law of the Kyrgyz Republic.

In case of causing ecologic damage to the Kyrgyz Republic as
a result of actions of personnel of the U.S. Department of
Defense, the U.S. Government intends to provide monetary
reimbursement for the damage.


5. Reimbursement for the damage to legal entities and

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individuals of the Kyrgyz Republic or to their heirs and
payment of compensation if such damage was done as a result
of actions of the personnel of the U.S. Department of Defense
shall be paid by the United States Government.


6. The amount of damage incurred in cases described in
points 4 and 5 of this Protocol shall be determined by an ad
hoc commission consisting of representatives of the Parties;


7. The U.S. Department of Defense intends to furnish the
Government of the Kyrgyz Republic with the list of legal
entities and individuals and the information about the cost
of goods, works, and services provided to the Ganci airbase
by contractors and subcontractors, both residents of the
Kyrgyz Republic and non-residents of the Kyrgyz Republic;"

D) In point 5 of the Protocol of Intentions the words "the
Kyrgyz Republic shall bear in mind that the United States of
America" shall be replaced with words "the United States of
America, with consent of the Kyrgyz Republic", without
changing the rest of the language.

2) This Protocol shall come into force on the day it is
signed and remain in effect during the timeframe of the
Protocol of Intentions.

Signed 2007 in the Russian and English languages.
For the Government of the Kyrgyz Republic
For the Government of the United States of America

End Text.

Proposed Response
--------------


9. (C) Post proposes an official interim response to the
Kyrgyz government along the following lines:

Complimentary opening.

The United States Government notes the commitment of the
Government of the Kyrgyz Republic to the fight against
terrorism and appreciates the significant contribution of the
Kyrgyz Republic to that fight by providing continued access
to, and use of, Manas Airbase.

The United States Government acknowledges receipt of Note No.
011-11/1268, dated June 22, 2007, and the draft Protocol on
Changes and Additions to the July 14, 2006 Protocol of
Intentions. The United States Government notes the request
of the Kyrgyz Government to reconsider compensation for
access to and use of the Manas Airbase. We note that
following extensive negotiations between the two sides in
2006, the Unites States and Kyrgyz Republic signed the
Protocol of Intentions on July 14, 2006. Under the terms of
the Protocol, the United States may renew the Protocol each
year, for a period of five years, without reconsideration of
terms or payment amounts.

However, in light of the strong, robust bilateral
relationship and the importance of cooperation, we are
prepared to review issues raised in the Note and draft
protocol, and we are prepared to review any evidence of
adverse impacts to the Kyrgyz Republic from the operation of
Manas Airbase.

Complimentary Closing.
YOVANOVITCH