INAUGURAL U.S.-KYRGYZ COMPREHENSIVE POLICY

C O N F I D E N T I A L SECTION 01 OF 04 STATE 147334

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/22/2017
TAGS: PREL PGOV KG
SUBJECT: INAUGURAL U.S.-KYRGYZ COMPREHENSIVE POLICY
DIALOGUE

REF: BISHKEK 490

Classified By: Deputy Assistant Secretary Evan A. Feigenbaum
for reasons 1.4 (b & d).


1. (C) Summary. On September 27, the United States and
Kyrgyzstan inaugurated an interagency "Comprehensive Policy
Dialogue." In over three hours of discussion with U.S.
officials responsible for Central Asia representing seven
agencies, Kyrgyz Foreign Minister Ednan Karabayev reviewed
security cooperation, economic development, political and
democratic reform, and the role of U.S. assistance in these
areas. Karabayev termed the relationship a "strategic
partnership." Both sides agreed on the need to continue
successful operation of Manas Air Base while further
developing a broad relationship that transcends the Base.
Karabayev expressed confidence that the October 21
constitutional referendum would reflect the consolidation of
democracy in Kyrgyzstan; the U.S. side cautioned that the
referendum be conducted transparently. The two sides agreed
on some specific steps to move the relationship forward (see
paragraph 12). End Summary.


2. (C) Karabayev and SCA Deputy Assistant Secretary Evan
Feigenbaum agreed to establish the Comprehensive Policy
Dialogue in Bishkek in April 2007 (see reftel). Feigenbaum
noted that the Dialogue could help to restore greater
consistency and predictability to U.S.-Kyrgyz relations.
Karabayev criticized observers, especially in the press, for
focusing disproportionately on Manas Air Base as the basis of
the relationship, adding that the Base had become
"politicized." This overemphasis on the Base was
unfortunate, in his view, because it hindered Kyrgyzstan's
primary goal of promoting Western values in Central Asia. He
proposed developing a program for deepening relations,
culminating in a possible visit to the United States by
President Bakiyev.

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Assistance
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3. (C) Coordinator Thomas Adams noted that U.S. government
assistance for Central Asia had kept fairly steady, despite
declining budgets overall. He asked the Minister to revive
the previous Kyrgyz practice of designating a single point of
contact within the Ministry of Foreign Affairs for assistance
issues. Karabayev agreed. Karabayev outlined his priorities
for assistance: reduction of Kyrgyzstan's debt in order to
promote stable development; educational programs, in
particular in vocational fields, and independent evaluation
programs at all levels; social development; reform of the
health program; and programs to combat child labor and human
trafficking. Karabayev noted the importance of Kyrgyzstan's
selection as a Millennium Challenge Threshold country; he
said the proposed constitutional changes would not affect
those steps taken in the run-up to the Threshold Program. He
also expressed interest in eventually qualifying for a
Millennium Challenge Compact. Adams noted the ongoing U.S.
program to promote educational reform at the primary level;
the university entrance exam program; and the successful
efforts to reform primary health care payments.

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Security Cooperation
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4. (C) Karabayev said the reason Manas is widely perceived as
the main issue in the bilateral relationship is the strong
influence of civil society on public discourse in Kyrgyzstan.
Just as the United States insists on transparency in such
areas as the conduct of referenda or elections, the people of
Kyrgyzstan sought transparency in the U.S. government's
operation of the Base. Although it receives many queries
regarding the base, the Ministry of Foreign Affairs stays
mum, leaving it to the United States to explain its actions.
He even suggested that these demands of public opinion were
what compelled President Bakiyev to speak somewhat harshly
("zhestko") to Secretary of Defense Gates. Karabayev
proposed trying to decrease the Base's impact on the overall
relationship, but stressed that the United States needs to
bring closure to Base issues that have become long-term

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irritants in the bilateral relationship. Any response to
Kyrgyz questions and requests about the Base, he underscored,
was better than no response.


5. (C) Deputy Assistant Secretary of Defense Mitchell Shivers
assured Karabayev the Department of Defense was working to
address systematically Kyrgyz concerns. Although he
understood that the Kyrgyz side was anxious for answers, the
United States had to operate in accordance with established
laws and procedures, including those protecting individual
rights. Shivers indicated Defense would seek to be more
"agile and responsive." Feigenbaum noted some ways in which
the United States had, in fact, been quite responsive to
Kyrgyz concerns, including holding a seminar about business
opportunities at the Base and in Afghanistan, as specifically
requested by President Bakiyev. The United States had also
taken Kyrgyz parliamentarians and others to the Base and
Kabul. Karabayev expressed appreciation for these steps,
noting as well a recent trip by a Defense team to Bishkek to
discuss ecological issues.


6. (C) Karabayev raised the issue of a radar system for
Manas. Although he noted that equipment for Manas was not a
key element in the relationship, he suggested the radar was
important for both the United States and Kyrgyzstan. Shivers
replied that Defense was currently trying to identify
resources to pay for a radar. Karabayev complained that
Kyrgyzstan, and the Ministry of Foreign Affairs in
particular, lack a system for providing information about the
Base to the public, such as a broadcast studio. The Ministry
does not have the tools to affect public opinion, he said.
Turning to other security issues, Karabayev noted that
resolution of border disputes with Tajikistan and Uzbekistan
remain complicated, and the flow of narcotics will not come
under control until living standards are raised. Relations
with Tajikistan and Uzbekistan are relatively good; border
issues are discussed rationally, but regional integration
will only be possible when the borders are well-defined and
secure.

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Economic Development
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7. (C) Karabayev listed a number of steps Kyrgyzstan had
taken to improve the economic environment: adoption of 55
laws to improve the investment climate; establishment of an
investment council; introduction of electronic visas;
continuing privatization, with 70% of the economy now in
private hands; establishment of four free economic zones; and
reduction of taxation of legal entities from 30% to 20%. As
a result, Kyrgyzstan has improved 14 places (to 90) in the
World Bank's "Doing Business" report, and of 21 banks, only
three are state-owned, and 11 have foreign ownership.
Karabayev explained that Kyrgyzstan is focused on creating
joint production ventures, finding export markets, and making
the transition from exporting raw materials to exporting
manufactured goods.


8. (C) Deputy Assistant Secretary of Commerce Paul Dyck
expressed the U.S. government's interest in increasing the
level of commercial engagement with Kyrgyzstan, enumerating
prior steps and existing programs: the "Doing Business with
the U.S.A." seminar; two regional transportation events; the
ongoing Special American Business Internship Training (SABIT)
program; and a visit by Secretary Gutierrez in 2005. He
encouraged Kyrgyzstan to work closely with the American
Chamber of Commerce in Bishkek. Karabayev noted that
privatization of the hydroelectric sector had begun. U.S.
Trade and Development Agency (TDA) Country Manager Scott
Greenip listed specific projects TDA has funded in support of
the Central Asia-South Asia power corridor, including a power
transmission project just signed in Kyrgyzstan. A number of
TDA grants had faced extended ratification delays in
parliament; he therefore requested that Karabayev work to
simplify the process, for instance through a threshold
exemption for grants below a certain amount of money.


9. (C) Treasury Deputy Director Jeff Baker noted that the
United States is pushing certain international financial
institutions, such as the European Bank for Reconstruction
and Development and the International Finance Corporation, to
do more to promote private investment in Kyrgyzstan. He
emphasized the importance of establishing a very sound
investment climate, adding that the recent period of abundant
liquidity in global financial markets may be coming to a
close. If so, investment will be harder to come by going

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forward. Baker agreed with the minister that Kyrgyzstan's
debt burden represented a major impediment to the country's
development goals, but the Government of Kyrgyzstan decided
not to pursue relief under the only available means -- the
Highly Indebted Poor Countries (HIPC) Initiative. At this
point, Kyrgyzstan's only option to lessen the debt burden was
to grow its economy, as was the case in Georgia and Armenia.
Karabayev agreed the only sustainable solution was to
increase growth and pledged to repay Kyrgyz debts in full.
Baker noted that Treasury was examining the possibility of a
new advisor, depending on the government's interest.
Karabayev responded that it would be best to follow up
directly with Finance Minister Japarov, while noting that an
advisor to the Prime Minister could become too personalized
and arbitrary.

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Political and Democratic Reform
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10. (C) Karabayev suggested that the draft constitution to be
considered in an October 21 referendum represented an
improvement in Kyrgyzstan's political system, noting for
example that its party-list system would create stronger
parties. He said it offered Kyrgyzstan a chance to move
beyond recent constitutional squabbles. The Kyrgyz people
are "tired" of all the debates about constitutions, which
have divided more than integrated society, and are ready to
choose one and move on. He compared the extended public
discussion of the constitution to the public consideration of
the HIPC debt relief program, suggesting that reserving more
time for debate would not lead to a good end.


11. (C) Feigenbaum expressed the U.S. hope that the
referendum be conducted transparently and in a fashion that
gave voters time to digest the constitution. International
perceptions would be affected not just by the substance of
the constitution, but by the nature of the process. DRL DAS
Erica Barks-Ruggles characterized the establishment of a
democratic society as neither easy nor linear, but said the
United States tried to evaluate the overall trajectory of
development. She offered U.S. assistance and added that many
other civil organizations had expertise and could make useful
contributions. Karabayev insisted Kyrgyzstan was already
following a democratic model of development, calling his
country a "Western country in Central Asia." While saying he
did not want to be too critical, he suggested Kyrgyzstan's
neighbors were not following such a model, and that
Kyrgyzstan was working hard to maintain its orientation
despite pressure from the outside. He said Kyrgyzstan would
announce in Madrid its intention to seek the chairmanship of
the Organization for Security and Cooperation in Europe in
2013 or 2014, because such a role would help strengthen
western values in Kyrgyzstan. Kyrgyzstan's task now is to
maintain those values while strengthening the government, and
it needs support in that effort, given today's unfortunate
tendency toward the strong hand.

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Next Steps
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12. (SBU) Kyrgyzstan agreed to undertake the following next
steps:

-- Develop a joint work program to enhance bilateral
relations;

-- Appoint a single contact point on assistance at the
Ministry of Foreign Affairs;

-- Discuss enhanced Treasury-Ministry of Finance coordination
during the next visit of Finance Minister Japarov.


The United States agreed to:

-- Provide background information on U.S. assistance
priorities/programs to the Ministry of Foreign Affairs;

-- Respond to the Kyrgyz request for a radar an Manas Airport.


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Participants
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13. (U) Participants included:

-- Kyrgyzstan:

Ednan Karabayev, Minister of Foreign Affairs;
Zamira Sydykova, Ambassador to the United States;
Daniyar Mukashev, Deputy Director of the Western Countries,
MFA;
Marina Grechannaya, Adviser to the Minister, MFA;
Kainarbek Toktomushev, Deputy Chief of Mission, Kyrgyz
Embassy;
Ulan Djusupov, Minister Counselor, Kyrgyz Embassy;
Arslan Anarbayev, Minister Counselor, Kyrgyz Embassy;


-- United States:

State:

Evan Feigenbaum, Deputy Assistant Secretary, SCA;
Erica Barks-Ruggles, Deputy Assistant Secretary, DRL;
Thomas Adams, Coordinator of U.S. Assistance for Europe and
Eurasia;
Pamela Spratlen, Director, SCA/CEN;

NSC:

Elisabeth Millard, Special Assistant to the President and
Senior Director, South and Central Asia;
Jorgan Andrews, Director for South and Central Asia;

USAID:

Douglas Menarchik, Assistant Administrator for Europe and
Eurasia;

OSD:

Mitchell Shivers, Deputy Assistant Secretary, Central Asia;

Commerce:

Paul Dyck, Deputy Assistant Secretary, Europe and Eurasia;

USTDA:

Scott Greenip, Country Manager, Europe and Eurasia;

Treasury:

Jeff Baker, Deputy Director, Europe and Eurasia.
RICE