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 BISHKEK 00000816 001.2 OF 004 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: BISHKEK 00000816 002.2 OF 004 --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, BISHKEK 00000816 003.2 OF 004 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 BISHKEK 00000816 004.2 OF 004 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