KAZAKHSTAN: DEPUTY PRIME MINISTER EVALUATES PPEPI

UNCLAS SECTION 01 OF 02 ASTANA 001983

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EEB/ESC
STATE PLEASE PASS TO USTDA, USAID

E.O. 12958: N/A
TAGS: PGOV PREL EAID ECON EINV KZ
SUBJECT: KAZAKHSTAN: DEPUTY PRIME MINISTER EVALUATES PPEPI

REF: ASTANA 1949

ASTANA 00001983 001.3 OF 002



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


2. (SBU) SUMMARY: On November 6, the Ambassador, USAID's Mission
Director for Central Asia, and the American Chamber of Commerce in
Kazakhstan's Executive Director discussed the U.S.-Kazakhstan Public
Private Economic Partnership Initiative (PPEPI) with Deputy Prime
Minister Yerbol Orynbayev. Orynbayev shared his concerns about the
first draft of white papers, private-sector involvement, and
communication from the PPEPI Secretariat. For the next phase of the
project, they agreed to establish goals and priorities, focusing
less on reports and more on implementation. END SUMMARY.

GOALS AND PRIORITIES


3. (SBU) Arriving at the November 6 meeting with Deputy Prime
Minister Yerbol Orynbayev, the Ambassador, USAID's Mission Director
for Central Asia Andrew Sisson, and the American Chamber of Commerce
in Kazakhstan's (AmCham) Executive Director Doris Bradbury greeted
the Kazakhstani government's unusually large delegation, which
numbered 11 and included the Deputy Foreign Minister Kairat Umarov.
The Ambassador thanked Orynbayev for his serious involvement in the
U.S.-Kazakhstan Public Private Economic Partnership Initiative
(PPEPI). This policy reform project is unique, he asserted, because
it marries government and private-sector expertise in an effort to
build Kazakhstan's economy. The Ambassador also highlighted the
four other projects in the U.S.-Kazakhstani co-funded Program for
Economic Development (PED),emphasizing the importance of
coordinated efforts.


4. (SBU) The Ambassador responded to the government's October 20
PPEPI Action Plan, which relies heavily on exchanges, by noting
existing U.S. exchange programs. He recalled Orynbayev's October 30
meeting with Deputy Assistant Secretary of State for South and
Central Asian Affairs George Krol at which the Deputy Prime Minister
had emphasized the need to "turn recommendations into results by
setting annual priorities" (reftel). The Ambassador suggested that
PPEPI focus on recommendations to better implement Kazakhstan's
current laws and regulations, many of which answer private-sector
concerns, as well as identify and propose further legislation
needed. The Ambassador summarized the discussion with two words,
"goals and priorities. We need to know where we are going, and how
we are going to get there."

PPEPI -- MORE THAN JUST REPORTS


5. (SBU) Orynbayev responded by underscoring the existence of
numerous international and local studies and proposals on economic
development. "We do not want PPEPI to become only a research
project, which turns into another paper. We have enough of those,"
he said. Regarding PPEPI's white papers, Orynbayev stated, "Some
were good, some were very good, but some were not so deep." He also
mentioned his dissatisfaction with the involvement of the private
sector and asked to expand the pool of participants beyond the two
business associations named in the project proposal. He
specifically recommended other business associations in Karaganda
and Almaty, which have good reputations and energetic leadership.
Finally, Orynbayev relayed complaints about the communication of the
PPEPI Secretariat (i.e., AmCham),especially its reliance on
relatively short-notice email rather than hard-copy correspondence.
He said, "I know this works for you, but it's not yet part of our
culture."


6. (SBU) Orynbayev concurred with the Ambassador's "focus on
legislation, regulations -- more specifically on results" and annual
discussion of priorities. He illustrated his point by highlighting
the Ministry of Finance's Action Plan priority to improve government
procurement practices, which is also tied to the anti-corruption
campaign. Next year, he said, PPEPI could develop a practical
recommendation, and the private sector could help monitor its
implementation.

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7. (SBU) Expressing his appreciation for Orynbayev's pragmatism and
directness, the Ambassador recalled previous conversations on these
points. He acknowledged his awareness that Kazakhstani
private-sector involvement has lagged. He highlighted the addition
of new businesses to the working groups, which remain under
development. The Ambassador pledged to consider seriously
Orynbayev's recommendations on business associations, especially
"because the name and definition of the program is public-private."
He thanked Orynbayev for his ideas to improve the Secretariat and
his focus on priorities and goals. Noting the Ministry of Finance
recommendation, the Ambassador agreed that "government tenders
throughout the world, including in the United States, are one of the
most open doors to corruption." He termed the idea of using the
private sector to help monitor the new process excellent, especially
since all reform depends on implementation.

PPEPI IMPROVEMENTS


8. (SBU) Amcham's Executive Director Bradbury highlighted her
efforts to expand working group participation beyond the two
original business associations, which has led to at least two
private sector representatives per group. She noted her concern
about government representatives' inconsistent working-group
attendance. On the issue of communication, she asserted that AmCham
emails and calls, but designated officials often fail to personally
attend, sending representatives instead. Bradbury asserted that
their continued involvement would improve future white papers. She
explained her view of the current white papers as a "modest first
effort to start a dialogue with the government, which was achieved
even if the papers were not perfect," and noted that revised final
versions are nearly completed.


9. (SBU) Orynbayev conveyed his appreciation for Amcham's input,
asserting that his critique aimed only to improve the project. He
promised to convey his assignment of government officials to the
working groups. He welcomed the expanded list of private-sector
participants, including a number of well-known, active businessmen,
but again encouraged consideration of regional business
associations. According to Orynbayev, many such groups exist in
Kazakhstan. Because they do not hesitate to raise issues, they will
enliven the project, he asserted.


10. (SBU) Orynbayev concluded by thanking the Ambassador for his
active involvement in the project and quick response to the
government's Action Plan. He recommended that Amcham and the
National Analytical Center work together on a specific proposal for
PPEPI's next phase, an "Action Plan for 2010." The Ambassador
concurred with this proposal, thanked Orynbayev for his personal
involvement, and pledged continued engagement on the project.


11. (SBU) COMMENT: The Deputy Prime Minister's personal
involvement in PPEPI continues to bode well for the future of the
project, and we want to build on his personal commitment to achieve
success. AmCham has accomplished a good deal of work in a
relatively short period, despite differing cultures and
personalities. As we move toward the end of the first year of
PPEPI, we will evaluate closely the best way forward to continue to
implement this important project. END COMMENT.

HOAGLAND