KAZAKHSTAN SECURES LUCRATIVE DEALS WITH INDIA, BUT

C O N F I D E N T I A L SECTION 01 OF 02 ASTANA 000281

SIPDIS

STATE FOR SCA/CEN

E.O. 12958: DECL: 02/17/2019
TAGS: PGOV PREL ECON EINV EPET ETRD MARR IN KZ
SUBJECT: KAZAKHSTAN SECURES LUCRATIVE DEALS WITH INDIA, BUT
OBSTACLES TO "STRATEGIC PARTNERSHIP" REMAIN

REF: ASTANA 00200

Classified By: AMBASSADOR RICHARD E. HOAGLAND, 1.4(B/D)


1. (C) SUMMARY: President Nursultan Nazarbayev's January
23-26 trip to New Delhi as the guest of honor at India's 2009
National Day celebration underscored the close political
relations between Kazakhstan and India which have existed
since Kazakhstan's independence. However, despite
professions of interest from both sides in strengthening
economic ties, India and Kazakhstan are not yet key trading
partners, in part because of geographical barriers. An
Indian Embassy official in Astana also cautioned against
overly high expectations from the uranium and oil deals
signed in New Delhi. India's Defense Attache reported
difficulties in developing Kazakhstan-India mil-mil ties.
END SUMMARY.

INDIA SEEKS MORE TRADE, AS WELL AS EXCHANGES AND VISITS


2. (SBU) In several meetings with PolOff from October 2008
to January 2009, Indian Embassy Second Secretary D.C.
Manjunath said that his Mission's three priority goals were
to increase Kazakhstan-India trade, promote people-to-people
exchanges, and encourage more frequent meetings between
senior officials. Manjunath noted that Kazakhstan's main
exports to India are mineral products and raw materials,
while India's main exports to Kazakhstan include tea,
pharmaceuticals, chemicals, plastics and machinery. He said
the Indian Tea Agency and India's pharmaceutical industry
expect their exports to Kazakhstan to increase, in part due
to lack of alternative suppliers. Overall Kazakhstan-India
bilateral trade turnover grew significantly in 2008, reaching
$367 million, in comparison to $195 million in 2007.
However, to put this figure into context, $367 million
represented just 0.3 percent of Kazakhstan's total trade
turnover for the year. Manjunath explained to PolOff that
the biggest barrier to bilateral trade is the lack of a
viable land-transit route, resulting in very high costs for
goods transport.

CAUTIOUS ASSESSMENT OF ENERGY DEALS


3. (SBU) Manjunath offered a more cautious assessment of the
oil and uranium agreements signed during the Nazarbayev visit
than the Kazakhstani press reports. He explained that the
Memorandum of Understanding and Cooperation signed by
Kazatomprom (KAP) and the Nuclear Power Corporation of India
Limited (NPCIL) was only "a company to company agreement,"
not a comprehensive 123 agreement such as India has with
France, Russia and the United States. While Kazakhstan is
looking for technology transfers, Manjunath told PolOff that
"frankly speaking," India's primary interests are procuring a
long-term contract for uranium supplies and conducting joint
mining activities (see ref A). According to Manjunath, as
soon as the U.S. government signed the U.S.-India Civilian
Nuclear Agreement, India began negotiating to buy uranium
products from Kazakhstan and Canada. Manjunath told PolOff
the amounts of uranium India agreed to purchase from
Kazakhstan that were discussed in the press after
Nazarbayev's visit were only "floating figures," with the
actual amounts to depend on price and demand.


4. (SBU) Although Manjunath said the deal on the Satpayev
oil field was the crowning achievement of Nazarbayev's visit
to India, he cautioned that whether it was to be exploratory
only or would also encompass production remained to be
finalized. Manjunath told PolOff that even if India's Oil
and Natural Gas Corporation produces oil from Satpayev, the
output would not likely be delivered to India, given the lack

ASTANA 00000281 002 OF 002


of a viable transport option. He noted that despite the fact
that a significant number of Indians are working for oil
service and engineering companies in Kazakhstan, Indian oil
companies are not running any major operations in Kazakhstan.

KAZATOMPROM OPTIMISTIC ABOUT DEALING WITH INDIA


5. (SBU) Although Manjunath highlighted the differences in
Kazakhstani and Indian interests in the uranium sector,
Ministry of Energy and Mineral Resources (MEMR) and
Kazatomprom officials told PolOff they were optimistic about
business with India. Yevgeniy Ryaskov, Acting Director of
MEMR's Department of Nuclear Energy, told PolOff that, "India
had approached Kazakhstan about selling India uranium long
before the NSG granted India a waiver, therefore Kazakhstan
refused. Now that the NSG had agreed, Kazakhstan is
definitely interested." Sergey Poltoratskiy, Kazatomprom's
Director of the Corporate Management Department, and Alexandr
Trigubov, Director of Production, told PolOff that
Kazatomprom sees major growth opportunities in supplying
nuclear fuel pellets to markets where nuclear power plants
are being built, expanded, or planned, including India,
China, Vietnam, Indonesia, and Europe.

MUTUAL INTEREST IN HIGH TECHNOLOGY


6. (SBU) On January 10, Kazakhstan's Vice Minister of
Industry and Trade (and chief negotiator for WTO accession),
Zhanar Aitzhanova, told the press that Kazakhstan is
interested in cooperating with India in such commercial
spheres as textiles, high-technology, and financial services.
Manjunath told PolOff he also considers technology-related
fields, particularly pharmaceuticals, metallurgy, and
production of light machinery, as promising areas for
cooperation. Manjunath admitted, however, that Indian
businesses are not very well organized in Kazakhstan, and
have no organization that mirrors the American Chamber of
Commerce, which hinders close cooperation.

MILITARY COOPERATION LIMITED


7. (C) The Indian Embassy's Defense Attache, Colonel Raja
N.S. Subramani, reported to us difficulties in developing
mil-mil relations between Kazakhstan and India. India is
very interested in enhancing cooperation with its mountain
regiment, but has been unable to secure interest from the
Kazakhstani side. The British Defense Attache in Astana, Lt.
Col. Simon Fitzgibbon, reported that the British Embassy
strongly supported an Indian offer to provide military
training to Kazakhstani forces through a regional training
center, and felt the Indian forces had valuable expertise to
offer, but Kazakhstani military officials expressed low
opinions of Indian capabilities.
HOAGLAND