AMBASSADOR OPENS AMERICAN CORNER, MEETS WITH KEY

C O N F I D E N T I A L ASTANA 000769

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/18/2018
TAGS: PGOV ECON SOCI KZ
SUBJECT: AMBASSADOR OPENS AMERICAN CORNER, MEETS WITH KEY
LEADERS IN AKTOBE


Classified By: Pol/Econ Chief Steven Fagin, Reasons 1.4 (b) and (d)

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Summary
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1. (C) The Ambassador attended the official opening of the
eighth American Corner in Kazakhstan on April 8 at the Aktobe
branch of the Republican Science Technical Library. While in
Aktobe, he also held meetings with oblast (regional) and city
officials, NGO's representatives, and local businessmen.
Aktobe appears to be pinning its economic development hopes
on natural resources. Business leaders complained about
poorly-trained personnel, low educational standards, and
problems with government regulation. The Aktobe Women's
Support Center, an NGO, is cooperating well with local
authorities on issues of domestic violence, human
trafficking, and protecting children's rights. End Summary.

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Lacking Infrastructure, Aktobe Banks on Natural Resources
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2. (C) Having broken with Soviet-era revenue streams from
agriculture and livestock, Aktobe oblast (i.e., region)
officials now believe that their economic prosperity is
ultimately linked to the efficient exploitation of their
natural resources, which include significant deposits of oil
and gas. According to Oblast Deputy Akim Zhetkergen
Oralmagambekov, wheat is still cultivated on over 6.5 million
acres of land in the oblast's northeast, but most of the
agricultural land surrounding the city of Aktobe has long
been fallow. Although plans have been discussed for the
resuscitation of part of the agricultural sector, more
emphasis is being placed on the extraction of minerals,
including copper, nickel, gold, chromium and silicon. Like
all of Kazakhstan, the rapidly rising cost of living and
commodities and looming threat of increased inflation rates
weigh heavily on Aktobe officials. According to Aktobe City
Akim Serik Nokin, the sub-prime crisis has had an impact on
local economic growth. He noted specifically the relative
unavailability of credit, which has impacted several
unfinished construction sites. Despite these challenges,
Oralmagambekov insisted that in Aktobe oblast "we are
developing quickly."

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Businesses Face Obstacles, Seek Partner in Advocacy
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3. (C) The Ambassador met with a group of Aktobe business
leaders, including a representative of the Aktobe branch of
the Atameken business association. The business leaders
agreed that despite significant resource wealth, the economic
development of Aktobe is hindered by several factors,
including a lack of skilled laborers, irregular governmental
regulation, poorly developed infrastructure (including poor
roads and deficient power generation),and inefficient
customs practices. Acknowledging the need to bring issues to
the attention of the government, the group was divided in
their vision as to how best this could be achieved. They
also were apprehensive about rising inflation rates, which
have for some increased production costs by 20 percent over
the past year. Rising oil prices, proposed export tariffs
and export restrictions, and growing food costs have curbed
their optimism.


4. (C) According to the businessmen, a lack of qualified
specialists and technicians, as well as an ineffective system
of educational accreditation, is impacting economic
development. Absent rigorous accreditation standards like
those maintained during the Soviet period, Kazakhstan has
witnessed an increase in the number of questionable
degree-offering institutions, they maintained. Relaxed
standards and easily purchased degrees have shaken industry
confidence in the ability of the system to prepare qualified
personnel. According to Anatoly Kunevich, President of Caspi
Neft TME, verifying credentials is nearly impossible, making
it easy for many job-seekers to simply lie about their
qualifications from the start. Tleumurat Darkhanuly of
KazTechnoGas said he was reluctant to use local employment
agencies and increasingly turned to the internet to outsource
work such as financial and legal services.


5. (C) Inconsistent government regulations continue to
challenge business development. According to Kunevich, he has
still not recovered his initial investment made nine years
ago, yet his enterprise has been increasingly subjected to
inspections from government agencies who believe it is
profitable. "The government's appetite is growing, and
everyone checks us, especially before January 1" said
Kunevich, indirectly implying official corruption. The

businessmen collectively acknowledged the need for effective
business advocacy, arguing that those who regulate it from
above do not properly understand the market.

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Small But Real Victories For Civil Society
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6. (C) At a press conference hosted by the Aktobe Akimat,
reporters and officials made clear their curiosity about the
opening of the American Corner, the availability of English
language instruction, other possible U.S. regional
priorities, and their general perception of decreased levels
of U.S. funding and interest in Kazakhstan. Several locals
inquired about the fate of relations between the U.S. and
Kazakhstan following 2008 U.S. presidential elections.
(Note: The audience laughed heartily when the Ambassador
assured them that the only certainty was that there would be
a new president. End Note.) Journalist Bayan Sarsembina
from Zhas Alash made an indirect plea for continued support
of independent media, inquiring about future programs that
the U.S. government would provide similar to the previous
independent journalism seminars. Noting "the situation we
are currently in here," Sarsembina criticized the Kazakhstani
political process and one-party parliament asking if in light
of its "murderous" treatment of the opposition Kazakhstan had
the "moral right" to serve as Chair of the OSCE. (Note:
Later that day, Aktobe City Akim Nokin and Deputy Oblast Akim
Oralmagambekov remarked to the Ambassador on Sarsembina's
bravado, saying with a wink that the authorities have
ultimately "found it easier to let journalists talk" rather
than to trying to impede them. End Note.)


7. (U) Participating in a round table discussion with the
Ambassador at the Aktobe Women's Support Center, both local
officials and center staff discussed their work to prevent
domestic violence and human trafficking and protect the
rights of children and migrant laborers. The Center
currently receives funding from the Soros and Counterpart
Foundations, as well the U.S. government. Operating
primarily as a community-based resource and training center,
it has also demonstrated unusual success by initiating an
ongoing partnership and collaboration with regional
authorities, including the Transport Police and the Aktobe
Oblast Department of Internal Affairs. Working closely with
the authorities, the Women's Support Center maintains a
hotline and offers psychological counseling and
rehabilitation services for victims of trafficking and
violence.

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Street-Level Observations Indicate A Society In Transition
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8. (SBU) The ethnically diverse city of Aktobe is home to
Russian, Kazakh, and -- increasingly -- Chinese speakers.
Russian remains omnipresent, but Kazakh is increasingly
spoken on the streets and -- according to Deputy Oblast Akim
Oralmagambekov -- in the halls of government. Religion,
Oralmagambetov assured the Ambassador, does not play a major
role in Aktobe. More specifically, he said that there were
no problems with religious extremism, but the city was
constructing a new mosque in the city center in response to
increased demand for places of worship. According to
Oralmagambetov, a new Orthodox church is also being built
across the street from the mosque, but we did not see signs
of its construction. The bulk of the infrastructure of
Aktobe clearly dated from Soviet times, much of it in
significant disrepair. There were a few new construction
sites, and government facilities visited, including the
Pedagogical Institute and City Administration, were in good
condition.
ORDWAY