CODEL RAHALL DISCUSSES ENERGY, SECURITY, DEMOCRACY

S E C R E T ASTANA 001022

SIPDIS

STATE FOR SCA/CEN M. O'MARA, H

E.O. 12958: DECL: 05/29/2018
TAGS: PGOV PREL KZ
SUBJECT: CODEL RAHALL DISCUSSES ENERGY, SECURITY, DEMOCRACY
WITH KAZAKHSTANI LEADERSHIP


Classified By: AMBASSADOR ORDWAY FOR REASONS 1.4 (B) AND (D)


1. (C) Summary: Codel Rahall traveled to Astana on May 28 for
meetings with President Nazarbayev, Prime Minister Masimov,
Foreign Minister Tazhin, State Secretary Saudabayev, and
members of both houses of Parliament. The delegation's
Kazakhstani interlocutors praised U.S. - Kazakhstan
relations. President Nazarbayev and Foreign Minister Tazhin
both said that the U.S. should stay the course in Iraq and
Afghanistan. Tazhin and Saudabayev told the delegation that
Kazakhstan is making progress on democracy but conditions in
the region must be considered when assessing the pace of
development. Codel Rahall consisted of Representatives Nick
Rahall (D-West Virginia); Darrell Issa (R-California); Jack
Kingston (R-Georgia); Ray LaHood (R-Illinois); Charles
Melancon (D-Louisiana); and John Linder (R-Georgia). End
Summary

Nazarbayev Addresses War on Terror, Iran, World View of U.S.
--------------


2. (C) President Nazarbayev begin his meeting with the
delegation by praising U.S. - Kazakhstan relations.
Responding to Representative Rahall's thanks for Kazakhstan's
contributions in Iraq and Afghanistan, Nazarbayev said that
the U.S. is moving in the right direction in both countries
and that each conflict affects Kazakhstan. The U.S. must
finish what it started in Iraq, he said. If there is a
retreat, he added, terrorist attacks will increase.
Nazarbayev said, however, that it is "funny" to hear
President Bush say that democracy is being established in
Afghanistan and Iraq. After the coalition leaves, the
countries will be Islamic countries which are hopefully "at
least as good as Pakistan." He also told the delegation that
Kazakhstan's more religious-minded southern neighbors,
Uzbekistan and Tajikistan, are susceptible to more radical
positions.


3. (C) According to Nazarbayev, if force is used against Iran
it will cause chaos and an increase of terrorism, a view
which he said many leaders of Moslem countries share. He
told President Ahmadinejad last year that Iran should abandon
its nuclear program in exchange for an end to the embargo and
the opportunity to create a peaceful nuclear program.
Ahmadinejad replied that Iran's current program is peaceful,
and that the United States will accuse Iran regardless of its
intentions. Nazarbayev said that he also met at that time
with Ayatollah Khamenei, and believes that Ahmadinejad was
only reflecting the views of the Ayatollah. Nazarbayev opined
that Saddam Hussein, while "not a good guy," at least helped
to achieve balance in the region. Now, the Shias are
increasing their power and Iran is a threat to the other Gulf
states.


4. (C) Nazarbayev told the delegation that western oil
companies are in Kazakhstan and are flourishing. He would now
like to see western companies become more involved in
Kazakhstan's economic diversification and the development of
the services sector. Nazarbayev expressed displeasure with
the pace of progress at Kashagan. He noted problems with oil
transportation and said that Kazakhstan is now developing
options across the Caspian and to China.


5. (C) Nazarbayev informed the delegation that Kazakhstan
does not have any major unsettled issues with the United
States. He did request the delegation's assistance with
Jackson - Vanik, saying that Kazakhstan is the second best
country in the world for Jews to live. He also asked why the
U.S. has not endorsed Kazakhstan's WTO candidacy, instead
grouping it with "bad" countries. Finally, Nazarbayev
reminisced that in Soviet times people believed that the U.S.
was fair and good. Now, he said, the mood has changed. The
U.S. needs to demonstrate its moral potential with "good
acts," and not just military acts.

Codel Rahall Discusses Energy, Security. Democracy with
Kazakhstani Leaders
-------------- --------------


5. (C) In a meeting with Prime Minister Masimov,
Representative Rahall asked for an explanation of the
situation with AES. Masimov promised a just and fair
solution, guaranteeing that the issue will be reviewed in
accordance with the law and with the input of independent
U.S. experts. Masimov predicted that oil prices have not
yet peaked and will continue to rise through the Beijing
Olympics. He believes that prices will rise to $155 a
barrel. The continued rise will create consumption issues in
emerging markets such as India and China, leading to a

reduction of prices next year.


6. (C) Asked by Representative Issa about Kazakhstan's
capital flow, Masimov answered that until last August,
Kazakhstan had good access to global capital. That time, he
said, will not return in the near future. The number one
issue for Kazakhstan currently, according to Masimov, is
risk. Previously, Kazakhstan's banks were viewed as too big
to fail. Now, world banks are closely assessing the risks of
Kazakhstani banks.


7. (C) Masimov said interest in Kazakhstan's hydrocarbons and
agriculture sectors remains strong. Agriculture in
Kazakhstan is very attractive because of rising food prices.
Prices for land are also one-tenth those in Europe, said
Masimov. He added that Kazakhstan has attracted interest
from GMO companies, but has not yet determined its position
on the issue. In other sectors, however, attracting capital
is more complicated, he said.


8. (C) State Secretary Kanat Saudabayev told the delegation
that there are no major problems between the U.S. and
Kazakhstan. The support of the U.S. for Kazakhstan's bid to
chair the OSCE in 2010 is a vote of confidence from the U.S.
and recognition that Kazakhstan is moving towards true
democracy. There may be issues on the pace of democratic
development in Kazakhstan, said Saudabayev, but others must
remember that Kazakhstan has to take into consideration
domestic and regional realities. Saudabayev also questioned
why "hotheads" in the U.S. Congress criticize Kazakhstan
undeservedly. With each criticism, he warned, "some
neighbors" tell President Nazarbayev that Kazakhstan should
not bother with the United States.


9. (S) On the OSCE, Saudabayev called the chairmanship not
only a big honor but also a great responsibility. Kazakhstan
does not want some OSCE members states to feel like
second-class citizens and wants to heighten the
organization's focus on Central Asia, including Afghanistan.
Saudabayev called Kazakhstan's commitment to Iraq and
Afghanistan proof of the strength of U.S. - Kazakhstan
relations. As another example of partnership, Saudabayev
pointed to the "active cooperation" of the secret services of
the two countries.


10. (C) The delegation asked Foreign Minister Tazhin how the
U.S. can help Kazakhstan. Tazhin responded that the U.S.
should lift Jackson - Vanik restrictions. Representative
Lahood asked Tazhin what the U.S. and its allies should do in
Iraq. Tazhin said that "if we begin the process, then we
must be responsible for the results." To leave Iraq, he said,
will create serious and dangerous consequences. Looking at
Central Asia, Tazhin said that change in the region cannot be
"artificially forced." According to Tazhin, the U.S. should
consider this when developing its policy for the region.


11. (C) Nurbakh Rustemov, Chairman of the Mazhilis Committee
for International Affairs, asked the delegation for U.S.
support for Senate Speaker Tokayev's candidacy for Deputy
Chairman of the OSCE Parliamentary Assembly, assistance with
Jackson - Vanik, and help with efforts to integrate Central
Asia and to establish a free trade zone. Asked by
Representative Rahall about the stability of the investment
climate, Rustemov promised that there will not be deviations
from existing agreements.


12. (U) This cable has not been cleared by Codel Rahall
ORDWAY