KAZAKHSTAN: AMBASSADOR RAISES BN-350 PROGRAM, WTO

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SUBJECT: KAZAKHSTAN: AMBASSADOR RAISES BN-350 PROGRAM, WTO
ACCESSION WITH PM MASIMOV


1. (U) Sensitive but unclassified. Not for public Internet.


2. (SBU) SUMMARY: The Ambassador asked Prime Minister Karim Masimov
on July 22 to ensure Kazakhstan meets its funding commitment for the
BN-350 spent fuel program and to sign a decree facilitating transfer
of the program's fuel transport casks and railcars to Kazakhstani
entities. Masimov promised to take action and issue instructions to
the appropriate ministries. He told the Ambassador that Kazakhstan
is proceeding with the Russia-Belarus-Kazakhstan Customs Union in
accordance with the June 9 Moscow announcement, though a final
decision will be made on how to reconcile the customs union with the
countries' WTO aspirations at a November heads-of-state summit in
Minsk. Masimov said that Under Secretary Burns's July 10 meeting
with President Nazarbayev was very important for Kazakhstan, and
reported that he had invited Special Representative Holbrooke to
visit Astana in August. He stressed the importance of continuing to
move forward on the Public-Private Economic Partnership Initiative
(PPEPI, see septel). END SUMMARY.

BN-350 PROGRAM


3. (SBU) During a July 22 meeting, the Ambassador asked Prime
Minister Karim Masimov to take action to ensure that Kazakhstan meets
its commitment to provide $5 million in 2009 for our bilateral
program to transport and store the spent fuel from Kazakhstan's
decommissioned BN-350 plutonium breeder reactor. He also asked
Masimov to sign a decree, already prepared by the Ministry of Energy
and Mineral Resources, which will permit Kazakhstani entities to take
ownership of program's fuel transport casks and railcars without
incurring negative financial and tax consequences. The Ambassador
further suggested that the Kazakhstani government consider issuing a
general decree that would resolve this problem for all future
property transfer cases under our assistance programs.


4. (SBU) Masimov responded that he was already aware of these issues
to an extent. He promised to take action to resolve them, including
giving the necessary instructions to the Ministry of Economy and
Budget Planning and Ministry of Energy and Mineral Resources.

WTO ACCESSION AND THE CUSTOMS UNION


5. (SBU) The Ambassador noted that at the G-8 summit in L'Aquila,
Italy, Russian President Medvedev appeared to have partially walked
back the June 9 announcement in Moscow that Russia, Belarus, and
Kazakhstan, would suspend their individual efforts to join the WTO in
favor of acceding together as a customs union. He asked Masimov
about the impact of Medvedev's statement. Masimov responded that
Kazakhstan is still operating in accordance with the June 9
announcement, since it had not received any official notification
from the Russians that they have adopted a new approach. Regular
consultations with Moscow are ongoing, and a final decision on how to
proceed will be taken by heads of state at a November summit in
Minsk, he explained.


6. (SBU) Masimov said that in any event, Kazakhstan remains intent on
acceding to the WTO. He explained, "I feel that we can find a
mutually acceptable solution that will also be good for the WTO and
the United States." He stressed that Kazakhstan nevertheless needs
open access to the Russian market, and argued that the customs union
will help attract significant investment to Kazakhstan, because it
has a better investment climate and more liberal tax regime than both
Russia and Belarus. Perhaps also admitting there are other factors
motivating the customs union, Masimov quoted an excerpt from a book
by former Indian Prime Minister Vajpayee that he had recently read:
"We can change history, but we can not change geography; we can
change our friends, but we can not change our neighbors."

BURNS VISIT, PPEPI


7. (SBU) Masimov then turned to the bilateral relationship, noting

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that Under Secretary Bill Burns's July 10 meeting in Astana with
President Nazarbayev was Kazakhstan's first high-level meeting with
the Obama Administration. "This was very important, and we valued it
very highly," he explained. Masimov said it is essential that we
continue moving forward on the Public-Private Economic Partnership
Initiative (PPEPI). "At some point, the global economic crisis will
be over, and there will be new investment opportunities in
Kazakhstan," he added.

INVITATION TO SPECIAL REPRESENTATIVE HOLBROOKE


8. (SBU) Masimov said he had recently spoken by telephone with
Special Representative Richard Holbrooke, and had invited him to
visit Kazakhstan in August to discuss bilateral cooperation on
Afghanistan.


9. (SBU) Masimov informed the Ambassador that former EUR DAS David
Merkel had accepted an invitation to join the international advisory
board of Astana's new showcase university, and would occasionally be
visiting Kazakhstan in this capacity. He added that he had received
word that former Secretary of State Rice might be interested in
making a private trip to Kazakhstan at some point in the future.

HOAGLAND