Identifier
Created
Classification
Origin
08ASTANA1944
2008-10-01 11:15:00
CONFIDENTIAL
Embassy Astana
Cable title:
KAZAKHSTAN: DECISION NOT TO BUILD POTI GRAIN
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C O N F I D E N T I A L ASTANA 001944
SIPDIS
E.O. 12958: DECL: 10/01/2018
TAGS: PREL EAGR EINV RS GG KZ
SUBJECT: KAZAKHSTAN: DECISION NOT TO BUILD POTI GRAIN
TERMINAL WAS APPARENTLY A COMMERCIAL ONE
Classified By: Ambassador Richard E. Hoagland, Reasons 1.4 (b) and (d)
C O N F I D E N T I A L ASTANA 001944
SIPDIS
E.O. 12958: DECL: 10/01/2018
TAGS: PREL EAGR EINV RS GG KZ
SUBJECT: KAZAKHSTAN: DECISION NOT TO BUILD POTI GRAIN
TERMINAL WAS APPARENTLY A COMMERCIAL ONE
Classified By: Ambassador Richard E. Hoagland, Reasons 1.4 (b) and (d)
1. (U) In contradiction to earlier Kazakhstani government
claims, it now appears that Kazakhstan's decision not to
build a grain terminal at Georgia's Poti port was actually a
commercial one that had no connection to the recent Georgia
conflict, according to several sources.
2. (C) Prime Minister Masimov informed Assistant Secretary
Boucher on September 2 that negotiations with the Georgian
side on building the 24,000-ton terminal had been temporarily
put on hold due to the security situation in Georgia. On
September 22, Agriculture Minister Kurishbayev told
parliamentarians at a Majilis session that the whole project
had, in fact, been cancelled because of the conflict.
3. (U) Express-K newspaper, however, published a detailed
article on October 1 which explained that, in reality, the
the decision not to build the Poti grain terminal was purely
a commercial one. An unnamed source at Kazakhstan's
state-owned Foodstuffs Corporation, which owned the
Kazakhstani share of the Poti project, told Express-K that
the Kazakhstani and Georgian sides were each supposed to
invest $9 million into the terminal, with Georgia's
investment consisting of land and equipment. After an
independent audit determined that the land was worth just $4
million and the equipment offered was outdated and thus
worthless, the Kazakhstanis demanded that the Georgians come
up with $5 million in cash to make up the difference. When
the Georgians could not do so, the Kazakhstanis backed out of
the deal. According to the unnamed source, the Foodstuffs
Corporation is instead considering building a grain terminal
in Batumi on its own, without Georgian co-participation.
(NOTE: Kazakhstan's state oil and gas company, KazMunaiGas,
already owns 100 percent of the Batumi oil terminal. END
NOTE.)
4. (C) In separate October 1 conversations, Georgian Embassy
counselor Zurab Kozmava and Agricultural Ministry chief
phytosanitary expert Kudaberdy Butayev (who is charged with
certifying the safety of Kazakhstan's grain exports)
confirmed for us the accuracy of the Express-K article.
Kozmava maintained that the Kazakhstani government had
publicly ascribed its decision not to build the terminal to
the post-conflict security situation because it wanted to
curry political favor with Russia, while also lowering the
profile of Kazakhstan's extensive investments in Georgia.
Kozmava expected the Kazakhstanis would ultimately move
forward on building a grain terminal in Batumi, a location
which made more commercial sense for them than Poti.
HOAGLAND
SIPDIS
E.O. 12958: DECL: 10/01/2018
TAGS: PREL EAGR EINV RS GG KZ
SUBJECT: KAZAKHSTAN: DECISION NOT TO BUILD POTI GRAIN
TERMINAL WAS APPARENTLY A COMMERCIAL ONE
Classified By: Ambassador Richard E. Hoagland, Reasons 1.4 (b) and (d)
1. (U) In contradiction to earlier Kazakhstani government
claims, it now appears that Kazakhstan's decision not to
build a grain terminal at Georgia's Poti port was actually a
commercial one that had no connection to the recent Georgia
conflict, according to several sources.
2. (C) Prime Minister Masimov informed Assistant Secretary
Boucher on September 2 that negotiations with the Georgian
side on building the 24,000-ton terminal had been temporarily
put on hold due to the security situation in Georgia. On
September 22, Agriculture Minister Kurishbayev told
parliamentarians at a Majilis session that the whole project
had, in fact, been cancelled because of the conflict.
3. (U) Express-K newspaper, however, published a detailed
article on October 1 which explained that, in reality, the
the decision not to build the Poti grain terminal was purely
a commercial one. An unnamed source at Kazakhstan's
state-owned Foodstuffs Corporation, which owned the
Kazakhstani share of the Poti project, told Express-K that
the Kazakhstani and Georgian sides were each supposed to
invest $9 million into the terminal, with Georgia's
investment consisting of land and equipment. After an
independent audit determined that the land was worth just $4
million and the equipment offered was outdated and thus
worthless, the Kazakhstanis demanded that the Georgians come
up with $5 million in cash to make up the difference. When
the Georgians could not do so, the Kazakhstanis backed out of
the deal. According to the unnamed source, the Foodstuffs
Corporation is instead considering building a grain terminal
in Batumi on its own, without Georgian co-participation.
(NOTE: Kazakhstan's state oil and gas company, KazMunaiGas,
already owns 100 percent of the Batumi oil terminal. END
NOTE.)
4. (C) In separate October 1 conversations, Georgian Embassy
counselor Zurab Kozmava and Agricultural Ministry chief
phytosanitary expert Kudaberdy Butayev (who is charged with
certifying the safety of Kazakhstan's grain exports)
confirmed for us the accuracy of the Express-K article.
Kozmava maintained that the Kazakhstani government had
publicly ascribed its decision not to build the terminal to
the post-conflict security situation because it wanted to
curry political favor with Russia, while also lowering the
profile of Kazakhstan's extensive investments in Georgia.
Kozmava expected the Kazakhstanis would ultimately move
forward on building a grain terminal in Batumi, a location
which made more commercial sense for them than Poti.
HOAGLAND