SENATOR LUGAR MEETS WITH GOVERNMENT LEADERS IN

C O N F I D E N T I A L ASTANA 000066

SIPDIS

SIPDIS

STATE FOR SCA/CEN M. O'MARA

E.O. 12958: DECL: 01/14/2018
TAGS: PGOV PREL EPET ENRG KZ
SUBJECT: SENATOR LUGAR MEETS WITH GOVERNMENT LEADERS IN
ASTANA

REF: ASTANA 56

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


1. (C) Summary: During his January 9-11 visit to Astana
Senator Richard Lugar discussed energy, non-proliferation,
regional security, and economic cooperation issues in a
series of meetings with high-ranking officials. Kazakhstani
officials praised Senator Lugar for his long support of
Kazakhstan, particularly through the Nunn-Lugar act, and
described U.S.- Kazakhstan relations as healthy. Several
interlocutors assured Senator Lugar that the recently signed
amendment extending and broadening the Cooperative Threat
Reduction (CTR) agreement will be quickly ratified. Prime
Minister Masimov expressed interest in participating in an
event with Senator Lugar in Washington this year to
commemorate cooperation under the Nunn-Lugar Act. End
Summary.

Non-Proliferation
--------------


2. (C) Senator Richard Lugar met with Prime Minister Karim
Masimov, Foreign Minister Marat Tazhin, State Secretary
Kanat Saudabayev, Minister of Energy and Natural Resources
Kauat Mynbayev, Minister of Health Anatoliy Dernovoy and
KazMunayGaz First Vice President Maksat Idenov during his
January 9-11 visit to Astana. Senator Lugar thanked his
interlocutors for their efforts to extend and broaden the
Cooperative Threat Reduction Agreement and asked for their
assistance to ensure that the amendment is quickly
ratified. Energy Minister Mynbayev told the Senator that
Kazakhstan will accelerate the ratification process and
that he does not foresee any problems. Senator Lugar
emphasized to Mynbayev and others that time is of the essence
because of political pressures within the U.S. to
demonstrate that the program is on track. He also reminded
the Kazakhstanis that the U.S. has an additional $64
million it is prepared to spend in Kazakhstan on CTR
programs.


3. (C) Senator Lugar made a strong push for a decision from
Kazakhstan on the location of a national human-veterinary
central reference laboratory, funded by the United States.
Foreign Minister Tazhin and Health Minister Dernovoy both
replied that the construction of the U.S.-proposed joint
human-
veterinary lab may not be possible for Kazakhstan. Senator
Lugar's delegation noted that a separate plan forwarded by
the
Ministry of Health would add two years to completion of the
project. Tazhin said that Kazakhstan is still looking to
find
a compromise solution with the Department of Defense.

Energy
--------------

4. (C) Senator Lugar also focused on Kazakhstan's energy
strategy in his discussions. Prime Minister Masimov told
Senator Lugar on January 11 that he was having talks on the
same day with Chevron about the construction of a joint
Chevron-Kazakhstan pipeline that would send Kazakhstani oil
westward to the BTC pipeline (see septel). He added that
Kazakhstan had considered building the pipeline with the
Kashagan consortium, but that it would mean too many
partners in the project. Masimov also admitted that CPC
(Caspian Pipeline Consortium) expansion still remains a
problem, despite the latest agreement in principle between
President Nazarbayev and President Putin to proceed with
expansion. Energy Minister Mynbayev presented a detailed
account of the status of Kashagan negotiations (reftel),
reserving heavy criticism for ExxonMobil. Aside from
Kashagan, said Mynbayev, Kazakhstan's major oil and gas
projects are proceeding smoothly and Kazakhstan is satified
with its U.S. partners. In contrast to Masimov, Mynbayev
stated that CPC expansion "looks settled." The extra oil
from expansion would likely be sent to the
Bourgas-Alexandropolis pipeline.


5. (C) In several meetings, Senator Lugar emphasized the
importance of Kazakhstan's links to the Baku-Tbilisi-Ceyhan
pipeline. State Secretary Saudabayev claimed that support
for the BTC is a political decision, because it is not
economically justified. (Comment: This is simply not true.
There is no other route for the additional Kashagan oil
volumes to get to market. End comment.) Energy Minister
Mynbayev said that Kazakhstan is very interested in
diversified transportation routes. He noted that President
Aliyev came to Kazakhstan in August to sign an MOU on
transportation and that Azerbaijan and Kazakhstan will

examine infrastructure on both sides of the Caspian. The two
countries are developing a government to government
agreement. When the big oil comes, said Mynbayev, we believe
we will have something ready. He added, however, that a trans-
Caspian pipeline remains a legal problem because of the
undefined status of Caspian Sea delineation. Foreign
Minister
Tazhin reported that a meeting on regulation of the Caspian
will be held in October in Baku, with Kazakhstan hopeful for
a
positive outcome. Some progress was made during talks in
Iran, and the Russian position is pragmatic, according to
Tazhin.

Regional Security and Cooperation
--------------


6. (C) Senator Lugar thanked his interlocutors for
Kazakhstan's efforts in Iraq and as a regional leader.
State Secretary Saudabayev told Senator Lugar that the
United States is a critical element of Kazakhstan's foreign
policy. He characterized Kazakhstan as America's most
reliable
and loyal partner of the U.S. in the region despite pressure
from China and Russia. Kazakhstan, said Saudabayev, will
stay
in Iraq until the end and maintains a similar approach to
Afghanistan. Kazakhstan wants regional integration and is
preparing a serious program for Afghanistan. Kazakhstan
also wants to expand its participation in peacekeeping
operations, added Saudabayev.


7. (C) Tazhin also spoke to Senator Lugar at length about
Afghanistan. He affirmed that Kazakhstan is trying to be
more active in Afghanistan, but complained about the
country's unsuccessful commercial efforts to bid on the
Aynak copper mine tender. According to Tazhin, Kazakhstan
made a favorable offer, but the mine was instead give to
China. President Karzai's "excuse" when President Nazarbayev
raised the issue with him at the SCO summit in Bishkek was
that Afghanistan was "inexperienced" in such transactions.
Kazakhstan will stay involved in Afghanistan. The 2008
budget
has funds for an assistance program that includes a hospital,
schools, and road construction., Kazakhstan also has
offered to train Afghan police in Kazakhstan. After the
copper mine, however, Kazakhstan is unsure about economic
investment, said Tazhin. Tazhin concluded that he is not
optimistic about Afghanistan; he sees the situation getting
worse.


8. (C) Tazhin expressed trepidation about Iran. He said
that despite the absence of visible evidence of an Iranian
nuclear program, including the recent U.S. NIE, Kazakhstan is
still concerned. Kazakhstan has told Iran of its misgivings.
Regionally, Tazhin said that Kazakhstan is stressing
"partnership and friendship," not "leadership," which its
Central Asian neighbors resent. He described President
Berdimuhamedov as more open and receptive. Nevertheless,
Tazhin called Turkmenistan and Uzbekistan big questions.
Kazakhstan is looking to invest in Kyrgyzstan and Tajikistan.

Finally, Tazhin thanked the Senator for U.S. support on WTO
membership and OSCE chairmanship and said that Kazakhstan
views the OSCE as a serious responsibility, not a public
relations opportunity.

Prime Minister to the U.S.
--------------


9. (SBU) Prime Minister Masimov and Senator Lugar
discussed the Prime Minister's possible trip to Washington
in 2008 for the launch of the Public-Private Partnership
Initiative (PPPI). Prime Minister Masimov said besides
PPPI he would like the trip to focus on three issues -
energy, Nunn-Lugar activities and food processing. The two
agreed that if Masimov does come to the U.S. they would
participate in an event highlighting U.S. - Kazakhstan
cooperation under the Nunn - Lugar act.


10. (U) Senator Lugar has not cleared this cable.
ORDWAY