REPUBLIC DAY GUEST OF HONOR: KAZAKHSTAN PRESIDENT

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000190 SENSITIVE SIPDIS DEPT FOR SCA/INS, DRL, STATE FOR EEB AMBASSADOR STEVE MANN STATE FOR EEB/ESC SGALLOGLY, MMCMANUS, PSECOR, DHENRY DEPT OF ENERGY FOR TOM CUTLER, RBOUDREAU, MGILLESPIE E.O. 12958: DECL: 03/30/2018 TAGS: PREL EPET ENRG TRGY PHUM PINR KDEM KZ IN SUBJECT: REPUBLIC DAY GUEST OF HONOR: KAZAKHSTAN PRESIDENT NAZARBAYEV REF: NEW DELHI 00173 Classified By: PolCouns Ted Osius for reasons 1.4 (B,D) ¶1. (C) SUMMARY: Kazakhstan President Nursultan Nazarbayev's visit to India as chief guest at the 2009 Republic Day celebration resulted in the signature of five substantive agreements, including an MoU on civilian nuclear cooperation. Nazarbayev did not create the media splash other Republic Day guests have in the past,such as Presidents Sarkozy and Putin,but he left with an impressive list of deliverables. Interlocutors predict that the uranium deal will be fruitful and that this visit may mark a broadening of the India-Kazakhstan relationship, especially in economic terms. END SUMMARY. -------------- The Visit - Details -------------- ¶2. (C) President Nursultan Nazarbayev visited India Jan 23 - 26, 2009 as the chief guest for India's 62nd Republic Day celebrations. He was accompanied by a large business delegation, which Kazakh Political Counselor Kairat Akhmetalim says came away with 13 investment agreements, including proposals for the Indian manufacture of pipeline components for use in the Kazakhstani petrochemical industry. Media coverage of Nazarbayev's visit was not as effusive as it has been for prior chief guests -- French President Sarkozy in 2008 and Russian President Putin in 2007. Newspaper photos of Nazarbayev were less prominent than those of family members of police killed in Mumbai, who were also honored at the ceremony. However, in addition to a Joint Declaration on Strategic Partnership Between India and Kazakhstan, five significant, bilateral documents were signed during the visit: an extradition treaty, a protocol on the accession of Kazakhstan to the WTO, an MoU on cooperation in the field of space activities, an energy agreement, and an MoU between the Nuclear Power Corporation of India and Kazakhstan's National Company KazAtomProm (go to http://meaindia.nic.in for the full text of the declaration and agreements). -------------- Natural Partners? -------------- ¶3. (C) According to Dr. Nirmala Joshi, Director of the India - Central Asia Foundation of New Delhi, Nazarbayev's invitation to visit India as chief guest at the Republic Day festivities was "a long overdue political gesture." India did not send a high-level representative to Nazarbayev's 2005 inauguration, nor to the 2006 Conference on Interaction and Confidence Building Measures in Asia (CICA) that Kazakhstan hosted. In both cases, said Joshi, scheduling conflicts were a main factor for India's absence. By inviting Nazarbayev as the National Day chief guest, India made up for its long absence and gave the Kazakhstan president wide, positive publicity, bolstering his international credibility. The visit is also an indication to the world that Kazakhstan acknowledges India's evolving global importance, especially now that the civil nuclear agreement is completed, and wants to strengthen bilateral ties. Political Counselor Akhmetalim told Poloff that the commitments made during this visit, including creating a strategic partnership, mark a major expansion in relations. "It's not about whether we want partnership with India," he said, "Kazakhstan and India are natural partners." -------------- Energy Highlights Deliverables -------------- ¶4. (C) The most anticipated and publicized agreement was the MoU between Nuclear Power Corporation of India Ltd (NPCIL) NEW DELHI 00000190 002 OF 003 and Kazakhstan's National Company KasAtomProm on civilian-nuclear cooperation (REFTEL). Dr. Sanjay Kumar Pandey of the Jawaharlal Nehru University Centre for Russian and Central Asian Studies told Poloff that there "were no surprises" on the Uranium MoU. "Uranium doesn't have security implications, but it does have strategic ones," he said. According to Dr. Pandey, there is every reason to believe that the uranium deal with Kazakhstan will produce concrete results "quickly, within two to three years." Counselor Akhmetalim stated that Kazakhstan is ready to start exporting uranium to India as soon as IAEA safeguards are finalized. He also mentioned that the transportion route for uranium from Kazakhstan into India was not discussed during President Nazarbayev's meetings in New Delhi. Though India's bilateral trade with Kazakhstan remains quite small, Kazakhstan is its top trade partner in Central Asia, and Dr. Pandey believes this mutually important agreement on uranium could represent "a quantum leap" in relations. Dr. Joshi emphasized that the uranium deal is very important to India because Kazakhstan is one of the only countries willing to sell uranium to India without India signing the Nuclear Non Proliferation Treaty (NPT). As Akhmetalim put it, "we are not a superpower. We are economically motivated and don't need to worry about political risks. Kazakhstan is not like Australia." ¶5. (C) According to Dr. Pandey, India has proposed oil investment in Kazakhstan but not much has ever come of those proposals. Dr. Joshi told Poloff the global financial crisis and the reduction in oil prices had hit Kazakhstan hard, making it more amenable to implementing an energy deal with India. Akhmetalim told Poloff that the energy agreement involves an Indian - Kazakh joint venture for petroleum and natural gas exploration on the Caspian Sea in which the Indian side will have a 25% stake. -------------- Extradition, WTO Accession and Space Cooperation Agreements -------------- ¶6. (C) Akhmetalim characterized the extradition treaty agreement as "a standard deliverable." He told Poloff that it is a simple agreement between the internal affairs ministries of the two countries and focused on criminals. It does not have to do with counterterrorism efforts, he clarified. ¶7. (C) Regarding the protocol on accession of Kazakhstan to WTO, Akhmetalim pointed out that opinions differ within Kazakhstan about WTO membership. Because Kazakhstan's major export is energy, said Akhmetalim, Kazakhstan does not really need the WTO very badly. Someone will always want to buy Kazakhstan's energy resources. But for other export products, such as wheat, Kazakhstan might find that WTO membership proves beneficial. The Counselor pointed out that Kazakhstan produces much more wheat than it needs for its own population, which is another reason why India as a country concerned about food security is drawing closer to Kazakhstan. ¶8. (C) Kazakhstan is interested in space cooperation, according to Dr. Joshi, but from the Indian perspective "they aren't ready." In her opinion, the most effective cooperation and technology sharing between India and Kazakhstan would involve small to medium scale industry and relevant technology and expertise sharing. Counsellor Akhmetalim pointed out that Kazakhstan is home to the former USSR's largest space facility, which it has previously rented to Russia and now operates jointly. From the Kazakhstani perspective, since India has also cooperated with Russia on space exploration in the past, it seems like a natural area for collaboration. -------------- NEW DELHI 00000190 003 OF 003 Economic Relations Stunted, but Overall Ties Growing -------------- ¶9. (C) According to Dr. Pandey, despite the relatively limited economic relationship, India has a great deal of soft power in Central Asia, where it is considered a non-threatening, emerging great power. The downside of not sharing physical borders, he pointed out, is that economic relations remain stunted due to difficulty in moving goods between India and Central Asia. For this reason, and because Kazakhstan has "better options in Southeast and East Asia," Pandey does not believe that greater economic interaction can be the primary basis of increased relations between Kazakhstan and India. ¶10. (C) The India-Kazakhstan relationship must also be security based, according to Dr. Pandey, and the two countries can help each other in international fora. As examples of areas for cooperation, Pandey cited shared apprehensions about China, where India is seen as a possible counterweight by Kazakhstan, and Kazakhstan's support of India's UNSC seat aspirations. Dr. Joshi told Poloff that security cooperation between the two countries "would be a good development," but as far as she knows no substantial cooperation exists so far. She pointed out that there is an India-Kazakhstan working group on military technology cooperation, and that India is largely dependent on Kazakhstan for Soviet-era military gear and parts. ¶11. (C) Dr. Joshi added that while Kazakhstan has far stronger economic ties with Russia than with India, Russia will not put money into modernization nor will they completely share technology with Kazakhstan. Kazakhstan "will not go to China," she said. Kazakhstan is "comfortable" with democracies like the United States, India and the EU, but according to Joshi, it sees India as the best partner in terms of the scale of technology it needs right now. Dr. Pandey pointed out that so far, cooperative projects such as an Indian IT training center in Kazakhstan are not functioning very well. Pandey told Poloff that the training "has not caught on" and that language barriers remain a hurdle for cooperation between India and Kazakhstan. Akhmetalim echoed Dr. Joshi, emphasizing the robust ties between Kazakhstan and Russia, and the large bilateral trade with China that dwarfs India-Kazakhstan trade, but concluding that Kazakhstan can benefit not only by selling energy to India, but also from sharing technology with India and trading for textiles, affordable tools and equipment (tractors, etc) for small and medium scale industry, and benefiting from Indian expertise in certain fields such as construction of thermal power plants. ¶12. (C) Comment. India-Central Asia relations have been more about potential benefits than political achievements in recent years, but Nazarbayev's trip delivered real, substantive results. Particularly in the oil and uranium deals, India-Kazakh relations took a leap forward in economic terms, and from the Indian perspective addressed the important goal of diversifying energy sources. While Nazarbayev's appearance as chief guest may not have been as flashy as Sarkozy's or Putin's, his visit was at least as substantial and marks a new phase in bilateral ties. MULFORD