Identifier
Created
Classification
Origin
07TBILISI379
2007-02-26 07:53:00
CONFIDENTIAL
Embassy Tbilisi
Cable title:  

PRESIDENT SAAKASHVILI SHARES HIS VIEWS ON CASPIAN

Tags:  PREL ENRG ECON GG 
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C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 000379 

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SIPDIS

STATE FOR EUR/CARC AND EB/ESC/IEC

E.O. 12958: DECL: 02/13/2017
TAGS: PREL ENRG ECON GG
SUBJECT: PRESIDENT SAAKASHVILI SHARES HIS VIEWS ON CASPIAN
REGIONAL POLITICS WITH ASSISTANT SECRETARY SULLIVAN

Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d).

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 000379

SIPDIS

SIPDIS

STATE FOR EUR/CARC AND EB/ESC/IEC

E.O. 12958: DECL: 02/13/2017
TAGS: PREL ENRG ECON GG
SUBJECT: PRESIDENT SAAKASHVILI SHARES HIS VIEWS ON CASPIAN
REGIONAL POLITICS WITH ASSISTANT SECRETARY SULLIVAN

Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d).


1. (C) Summary: In a February 12 meeting with Assistant
Secretary for Economic, Energy and Business Affairs Daniel

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Sullivan, Georgian President Saakashvili gave the Assistant
Secretary a tour d'horizon of Caucasus and Caspian region

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politics. He spoke positively of Karim Masimov, the new
Prime Minister of Kazakhstan. Kazakhstan and its President
Nazarbayev are ready to move closer to the West, he said. He
believes Turkmenistan's leaders need to be given more
exposure to the West, and there is an opportunity to bring
them along in a moment of Russian confusion about the
direction that country will take. In Saakashvili's view,
Turkey is less resistant to Russian pressure than Georgia,
Azerbaijan, and Kazakhstan, and he sees a need for intense
discussion to keep them a team player in the search for
alternative gas supplies to Europe. In comparison,
Azerbaijan's President is a hero for standing up to the
Russians and refusing to take their gas. Putin, as the
autocrat of Russia, in Saakashvili's opinion, was emotional
and unpredictably dangerous. Saakashvili spoke with pride
about Georgia's economic growth, the economic reforms it has
undertaken, and his intent to tackle reform of health care
and the judiciary. He concluded by welcoming the possibility
of more U.S. investment in Georgia. End Summary.


2. (C) A/S Sullivan described his visit to the Caspian, the
South Caucasus and Turkey as opening the next phase of
Caspian energy development, after completion of the
Baku-Tbilisi-Ceyhan oil pipeline. He said the USG is looking
for ways to continue development of a Southern corridor for
energy. He told Saakashvili that his meetings with Kazakh
officials in Astana were positive. Saakashvili responded
that in general, the Kazakhs are cautious, and will wait
until plans for development are sure and real. They often
need a push and encouragement. The new Kazakh Prime
Minister, Karim Masimov, is a good partner, in his opinion.

Saakashvili recommended that the USG support Masimov for his
desired post in the OSCE, which is something he cares about
and which will encourage him to engage with the United States
even more.


3. (C) Saakashvili believes there are signals that
Turkmenistan will be more open after the death of President
Niyazov. Its new leaders need more information from the
outside world, to which they have not been exposed. He said
that the Russians are not well informed about the situation
in Turkmenistan, post-Niyazov. The West, he said, needs to
send as many missions as possible to the country, to show
what advantages will derive from closer relations. He warned
that the next President of Turkmenistan, Berdymukhamedov, has
some vague sympathies toward Iran. He is someone who needs
"education" and as many visits to the United States as
possible. Saakashvili said the need to focus attention on
Turkmenistan and its large gas reserves is urgent.


4. (C) Saakashvili expressed disappointment with the Turks
and their reneging on Prime Minister Erdogan's promise to
help Georgia with gas from the Turkish volumes from the Shah
Deniz pipeline. One can't believe a Turkish yes or no, he
said. He somewhat pityingly mentioned the "open blackmail"
the Russians are practicing on the Turkish government. The
pressure is coming at a sensitive time for Turkey, which he
said is facing a presidential election soon. He added that
Turkey has lots of small companies that do business with
Russia and can be much more easily manipulated than Georgia
or Azerbaijan.


5. (C) At the same time, strong words with the GOT are
needed, he said, to make them focus on the Nabucco pipeline.
The U.S. and EU need to look for ways to make Nabucco make
sense. In that regard, Saakashvili said, nothing can be
taken for granted. The Hungarian attitude toward Nabucco is
uncertain, although the opposition there dislikes the
country's dependence on Russian gas. The Romanians are also
very worried, he added. Europe needs to present a united
front on Nabucco.


6. (C) Moreover, it is time, Saakashvili said, to talk to
commercial partners about a Black Sea pipeline. Ukraine is
interested in such an idea and there is additionally interest
in Kazakhstan and Turkmenistan. In fact, he said, the
Kazakhs are better equipped to cope with Russian pressure
than the Turks, especially if the benefits in sending energy
southward are clear to them. President Nazarbayev is careful
not to anger the Russians, but he is inclined to bide his
time and will make a move in favor of the West when the time
is right. Saakashvili said that Nazarbayev cares deeply

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about his standing with the West and believes his legacy lies
in that direction. Masimov's appointment is a signal to the
West of Niyazov's inclination. Masimov was appointed for his
good relationship with Europe and China, and he has
Nazarbayev's ear, Saakashvili said.


7. (C) When A/S Sullivan remarked that the Kazakh investment
now pouring into Georgia is a very positive development,
Saakashvili said that the investment was a political move at
first, but now Kazakhstan is seeing that it is getting a good
return. According to Saakashvili, Nazarbayev's investment in
Georgia is a way of showing his rapprochement with the United
States and the West.


8. (C) Saakashvili spoke warmly of Azerbaijani President
Aliyev. Aliyev's decision to forego Russian gas imports was
"close to political heroism", he said; neither Ukraine's
Yushchenko nor the Turkmenbashi ever stood up to Russia as
Aliyev did. Aliyev's action was inspired by his meeting at
the White House, Saakashvili said. He has seen that a
Russian embargo "doesn't kill you" and is now inspiring
Nazarbayev and the Kazakhs. In the Russian view, Azerbaijan
was not an emotional matter like Georgia, but it is
strategically significant to them. The Russians, Saakashvili
said, thought Georgia would fall and Azerbaijan would
naturally follow.


9. (C) Saakashvili spoke approvingly of Defense Secretary
Gates' speech in Munich, which struck the right tone, in his
opinion. A/S Sullivan noted that Putin's talk about an OPEC
for gas actually helps the United States position vis-a-vis
the Europeans. To Saakashvili, Putin's rhetoric underscores
the importance of stability in Georgia to the Southern
Corridor. Georgia needs some years to get on its feet, but
the Russians are working against that. Russia needs to
understand Georgia is on the U.S. and EU radar and is not
falling off. Putin talked tough in Munich because he thinks
the United States commitment in the Caspian, the Caucasus and
elsewhere is slackening, he said. In Russia, Saakashvili
said, the West is dealing with one person, not a big,
cautious bureaucracy. Putin's actions depend on his mood, he
said. His mood took a bad swing in the fall, then improved,
then swung back again in Munich. Saakashvili ventured that
if Putin feels humiliation in the way the Kosovo issue is
handled, he might blow up the Caucasus region without regard
for the consequences, believing the way to win is to overturn
the table. Putin must be told not to do so, but the
Europeans would be "scared to death" in such a situation and
are unlikely to say it. Saakashvili suggested that Russia
may even stir up trouble in Belarus, if Lukashenko becomes
too independent. Russia is willing to use any means to
manipulate the West and "don't let's be manipulated," said
Saakashvili. Although Russia is not as powerful as the
former USSR, it is more arrogant and more willing to take
risks, he said. The West must engage Russia and think about
containment.


10. (C) Turning from regional politics to speak of Georgia,
Saakashvili accepted A/S Sullivan's commendation for
Georgia's economic reforms. Saakashvili was proud that
Georgia's GDP has doubled in the past four years. He noted
that it is seeing a huge influx of foreign direct investment,
and investors are coming from Kuwait, the UAE, Turkey,
Israel, and significantly, from Georgians fleeing Russia.
Investors are interested in hospitals which the government
intends to privatize. Judicial reform is on the way; tax
administration has been made simple, and will be
consolidated; and the government is considering establishing
free economic zones similar to some that exist in the UAE.
Transportation is being revolutionized with new airports, the
Kars-Akhalkalakhi railway and new road infrastructure.
Kuwait is interested in building a major new hydroelectric
dam, and Czech investors have recently bought other
hydroelectric and distribution assets. Georgia's economy is
moving rapidly forward, he said, and in four to five years
could be like Latvia's and Lithuania's. Saakashvili said he
is more interested in strong growth than the threat of
inflation, which ticked up in January of this year. A/S
Sullivan noted that inflation, if unchecked, can be very
detrimental to Georgia's economy. Nevertheless, Saakashvili
feels he has adequate support from the people, and that
tighter money and an appreciated currency may make "nicer
figures," but he wants growth in the double digits in order
to make up for lost time since independence under the
previous government. He noted that even Georgia's tormentor,
Russia, with all its oil wealth, is not growing as quickly as
Georgia. He hears people talk less about impoverished
Georgia than they used to, and he claims that Georgia's GDP

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per capita is now higher than Romania's, when Romania began
its EU membership process. With its economic growth,
macroeconomic stability, tariff reductions and WTO
membership, Georgia will welcome more United States companies
to invest here, he said.


11. (U) Assistant Secretary Sullivan has cleared this message.
TEFFT