KAZAKHSTAN: CZECH PRIME MINISTER PROMOTES SOUTHERN

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TAGS: PGOV PHUM PINR ECON EPET EINV KDEM KZ
SUBJECT: KAZAKHSTAN: CZECH PRIME MINISTER PROMOTES SOUTHERN
CORRIDOR TO ENHANCE EUROPEAN ENERGY SECURITY

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


2. (U) SUMMARY: Representing the rotating presidency of the
European Union (EU),Czech Prime Minister Mirek Topolanek visited
Astana on February 12 to discuss European energy security, bilateral
trade and investment, and other issues with senior government
officials. Energy Officer spoke with a Czech embassy officer to
discuss Topolanek's visit, the May 7 Eastern Partnership/Southern
Corridor summit in Prague, and the investment and political climate
in Kazakhstan. END SUMMARY.

EUROPE EAGER TO REDUCE DEPENDENCY ON RUSSIAN GAS IMPORTS


3. (U) After meeting with Kazakhstan's Prime Minister Karim Masimov
in Astana on February 12, Topolanek told the media, "In light of the
recent gas conflict between Russia and Ukraine, it has become
obvious that the EU is very vulnerable and dependent on gas
shipments from Russia. We need to look for other solutions."
According to Topolanek, "the EU is interested in the diversification
of transport routes and gas supply sources and thus, will be
encouraging the development of gas transportation projects from
Norway, Iraq, Central Asia, and certainly Russia." He stressed that
the gas transportation projects being considered by the EU are not
in conflict with each other. "They are complimentary, rather than
competitive. One does not have to choose either Nord Stream or
Nabucco," he said.

KAZAKHSTAN PRAISED AS A REGIONAL POWER


4. (U) During his visit, the Czech prime minister emphasized
Kazakhstan's special role in the Central Asian region. "We see
Kazakhstan as a regional power," he told the press, "with immense
influence on the surrounding countries and the entire region."
Topolanek also observed that, "the EU is very positive about
Kazakhstan's upcoming presidency of the OSCE in 2010 and supports
Kazakhstan's ambitions to join the WTO. We also very much welcome
the role Kazakhstan is playing within the framework of the mission
in Afghanistan and in the area of regional security."

NAZARBAYEV DECLINES SUMMIT INVITATION


5. (SBU) On February 17, Energy Officer met with Michal Chabros, a
Polish diplomat temporarily assigned to the Czech Embassy in Astana
to assist with issues related to the EU presidency. Chabros
attended Topolanek's meetings with Prime Minister Masimov and
Foreign Minister Marat Tazhin, and was briefed on Topolanek's
meeting with President Nazarbayev. He said Topolanek invited
Nazarbayev to attend the launch of the Eastern Partnership in Prague
on May 7, but Nazarbayev politely declined the invitation and
instead suggested Energy Minister Sauat Mynbayev. Chabros said the
Czechs will push to have Prime Minister Masimov attend instead.
(NOTE: The Eastern Partnership is designed to increase financial
and diplomatic support to Armenia, Azerbaijan, Belarus, Georgia,
Moldova, and Ukraine. Chabros said the Czechs will host another
summit the following day with countries involved in the southern
corridor natural gas transportation route from the Caspian region,
through Turkey, and into Europe. Georgia, Kazakhstan, Turkmenistan,
and Turkey have been invited to attend the southern corridor summit.
END NOTE).

KAZAKHSTAN SUPPORTS EUROPEAN ENERGY SECURITY...


6. (U) After his meeting with Topolanek, Masimov told the press
that Kazakhstan is prepared to help Europe meets its energy security
needs. "The supply of energy resources from Kazakhstan to Europe
has always been the fundamental basis for our bilateral
relationship," he said. In a deft display of Kazakhstan's vaunted

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multi-vector foreign policy, Masimov quickly added, "The EU and
Kazakhstan have built strong relations through constructive
dialogue, including with the Russian Federation as well."

BUT IS UNLIKELY TO SUPPLY NABUCCO IN THE NEAR-TERM


7. (SBU) According to Chabros, Masimov said that Kazakhstan is an
"interested observer" in the Nabucco gas pipeline project, but has
no plans to become a significant gas exporter in the near future.
(NOTE: On February 18, Giorgio Battistini, deputy country manager
for BG Group, the largest producer of natural gas in Kazakhstan,
told Energy Officer that Kazakhstan exports approximately ten
billion cubic meters of gas to Russia annually and "will not be a
big gas player in the short term." Battistini noted, however, that
reinjected natural gas and gas condensate will remain in the ground
after the main prize -- crude oil -- is extracted, and he said
Kazakhstan could produce significant quantities of natural gas at
some point in the next 15-20 years. "It will still be sitting there
in the reservoir, like a big gas tank," he said. END NOTE).

KAZAKHSTAN WILL NOT PULL OUT OF GEORGIA


8. (SBU) Chabros said he was surprised that one issue was mentioned
repeatedly, without prompting, during each of Topolanek's three
meetings in Astana: Kazakhstan's investments in Georgia. According
to Chabros, Nazarbayev, Masimov, and Tazhin all emphasized
Kazakhstan's intention to remain in Georgia. Masimov reportedly
said, "We are strategic investors in Georgia and we plan to stay
there for a long time. We are not pulling out."

MILD CRITICISM OF INVESTMENT CLIMATE, POLITICAL REFORMS


9. (SBU) Over lunch in a Czech-owned restaurant in downtown Astana,
Chabros was asked for his opinion of the investment climate in
Kazakhstan. He said that large, wealthy multinational companies in
the oil and gas sector had the patience and the capital to pay
environmental fines and higher taxes, but small-scale foreign
investors and entrepreneurs faced a tougher time due to petty
corruption, onerous bureaucracy, and uneven enforcement of laws and
regulations. Chabros also criticized the recent amendments to
Kazakhstan's election law, calling the changes "superficial" ones
that will not affect the exercise of political power in Kazakhstan.
He said that although the amended law ensures that there will be
more than one party in future parliaments, the ruling party can
simply pick a "pocket party" that would offer only symbolic
opposition.

HOAGLAND