This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 ALMATY 000756 
 
SIPDIS 
 
FOR SCA A/S BOUCHER FROM THE AMBASSADOR 
INFO: SCA (DCAMP/JGASTRIGHT); SCA/CEN (JFOX/JMUDGE) 
 
E.O. 12958: DECL: 02/24/2016 
TAGS: PREL PGOV EINV KDEM PHUM PARM KPAO KZ POLITICAL
SUBJECT: KAZAKHSTAN:  WHITHER IN 2006 
 
Classified By: Ambassador John M. Ordway for reasons 1.4 (b) (d) 
 
¶1.  (C)  Summary:  The U.S.-Kazakhstan relationship is broad 
and deep, built on a number of significant points of 
congruence.  The GOK is a potential ally and partner on a 
whole range of issues that are critically important to the 
U.S., including diversifying Eurasian gas supplies and routes 
to world markets; creating a prosperous and increasingly 
integrated region that includes Afghanistan; and countering 
religious extremism and terrorism both regionally and beyond. 
 President Nazarbayev dominates Kazakhstan's decision-making 
process, and our sustained high-level engagement with him 
over the past four months has dramatically improved a 
relationship that was already quite good.  Nazarbayev's 
governing style, however, is based on careful balancing and 
compromises with powerful, entrenched interests -- political 
as well as economic and personal.  An extensive list of 
issues that needs our attention and engagement comprises the 
bulk of this message.  How we manage those issues, and how we 
can simultaneously pursue them effectively, will be 
absolutely key to our success (or lack thereof.) 
 
¶2. (C) Summary Cot'd:  The Kazakhstani bureaucracy is 
fragmented, non-communicative (both internally and 
externally,) powerful, and responds with alacrity only to a 
direct command from the President.  The 15-year history of 
U.S.-Kazakhstani relations is littered with plans and 
projects that were the product of shared strategies, and then 
died as they failed to secure support and engagement at lower 
levels.  One possible way to build bureaucratic discipline 
and responsiveness on the Kazakhstani side would be to form 
some sort of joint body that would be responsible for 
monitoring progress across the board in the bilateral 
relationship -- and whose annual or semi-annual sessions 
would be an unavoidable galvanizing agent to the bureaucracy 
to produce progress, or face the President's wrath.  The 
appointment of reform-minded, pro-American Karim Masimov as 
deputy Prime Minister puts him in an excellent position to 
co-chair such a group on the Kazakhstani side.  End Summary. 
 
¶3.  (C)  We are the demandeur for most of the bilateral 
agenda.  Even on items that are in our mutual interest, the 
Kazakhstanis perceive us as the driving force.  Two items, 
however, are ones that they are strongly pushing for, and we 
have yet to tip our hand completely.  The first is an Oval 
Office visit for Nazarbayev, an item that comes up in every 
discussion the Ambassador has with senior officials.  The GOK 
and Nazarbayev may see this primarily as recognition of their 
importance, and gratification of the President's considerable 
ego.  However, it also will provide Kazakhstan with a strong 
geo-strategic counterweight as it  continues to balance 
relationships with its two mega-neighbors: Russia and China. 
From our point of view, such a visit offers an opportunity to 
lock in Kazakhstani positions through public and private 
understandings and statements.  It also refreshes, through 
personal contact, a presidential relationship that is an 
essential nutrient of  our longer-term relationship. 
Additionally, it creates the most favorable possible 
circumstances for us to get Nazarbayev's support for our 
strategy of opening a new corridor of opportunity to 
Afghanistan and beyond in South Asia.  Finally, it could 
provide essential cover against Russian opposition to 
orienting Kazakhstani and Central Asian gas to world markets 
through new transportation links. 
 
¶4. (C)  The other major item on the Kazakhstani side of the 
agenda is its campaign to become chairman-in-office of the 
OSCE in 2009 -- a project that Nazarbayev has increasingly 
staked his own personal prestige on.  Our current approach is 
to encourage the Kazakhstanis quietly and informally to 
re-focus their aspirations on 2011, giving them more time to 
develop the democratic reform credentials we want to see in 
any OSCE CIO.   If Nazarbayev visits Washington in the next 
few months, we will have to either validate or revise this 
approach to ensure that it does not derail our other 
priorities. 
 
========== 
The Agenda 
========== 
 
¶5. (C) SECURITY CLUSTER 
       ---------------- 
 
--Counter-terrorism cooperation. 
 
Status:  Excellent operational cooperation that is producing 
results. 
 
Next steps:  Continued engagement at the operational level; 
occasional high-level mention of this as a success item. 
 
--PSI 
 
Status:  The GOK has proposed operationalizing the agreement 
in principle that Under Secretary Joseph secured from 
President Nazarbayev. 
 
Next steps:  Respond to the GOK request for further 
discussions on implementing the agreement.  Develop an 
effective modus operandi to exchange intelligence information 
and develop real-time communication and coordination. 
 
--Caspian Security 
 
Status:  Nazarbayev has raised repeatedly the need for 
training, equipment and other assistance (short of a U.S. 
military base) to protect Kazakhstan's sector of the Caspian, 
including possible arrangements for mutual military 
assistance. 
 
Next steps:  The USG should provide a carefully considered 
policy response that includes all aspects of our interest 
(counter-proliferation, counter-terrorism, counter-narcotics, 
security of hydrocarbon resources and transportation links,) 
and then coordinate a comprehensive U.S. assistance proposal 
and engagement that includes existing programs and 
authorities as well as possible new elements. 
 
--Iraq 
 
Status:  Kazakhstan provides a 27-member EOD unit that is 
operating very effectively in Iraq.  Nazarbayev has committed 
to keeping the unit there; the MOD wants to gradually 
transition from operations to training Iraqi units. 
 
Next steps:  Continue the excellent support from DOD and 
CENTCOM. 
 
--Military reform 
 
Status:  The MOD is transforming the military into a more 
mobile and agile force that can be used either against 
terrorism/extremism threats in the south, or to respond to 
threats to the oil and gas patch in the Caspian.  Key 
elements include a professional NCO corps, better 
transportation assets, and increased cooperation and 
integration with NATO and the U.S. 
 
Next steps:  Continue, and if possible enhance our FMF and 
IMET programs.  Continue the very effective DOD, JCS, 
CENTCOM, and EUCOM high-level visits and contacts. 
 
--Non-proliferation 
 
Status:  Kazakhstan has been a star in denuclearization and 
reducing the proliferation threat.  Our biggest problems have 
been entrenched and non-cooperative bureaucracies, low-level 
resistance to new programs, and numerous operational 
problems.  These include obtaining full exemptions for 
Value-Added Tax and customs duties for assistance provided. 
There is also one unresolved CWC compliance issue. 
 
Next steps:  Continued engagement, and possible formation of 
a high-level bilateral implementation review group at the 
ministerial level or higher. 
 
¶6. (C) ECONOMIC CLUSTER 
       ----------------- 
 
--U.S. investment 
 
Status:  The U.S. is Kazakhstan's single largest foreign 
investor.  American private-sector  investments are 
concentrated largely in the oil and gas sector.  Corruption, 
non-transparent regulation, discriminatory practices, weak or 
non-existent judicial protection, and insider dealings all 
mar the investment climate.  Nazarbayev seeks more U.S. 
involvement in the SME sector, and encouraged Secretary 
Johanns, during the latter's recent visit here, to send U.S. 
agri-business to Kazakhstan. 
Next steps:  Continue high-level commercial advocacy where 
warranted (including current efforts for Boeing and 
Conoco-Philips.)  Provide advice and support for specific 
problems and issues.  Move to implement our USAID-GOK 
jointly-funded SME support program.  Consider a USDA-led 
agricultural trade mission. 
 
--WTO accession 
 
Status:  Kazakhstan is vigorously negotiating bilaterally and 
multilaterally.  There is strong, visible political support 
from Nazarbayev.  Nevertheless, in a number of significant 
areas, we still have a lot of work to do on a bilateral 
basis.  Kazakhstan cannot get PNTR as long as it remains 
subject to Jackson-Vanik. 
 
Next steps:  USTR to continue its intense bilateral 
engagement with the GOK's negotiator.  State and USAID to 
consider how to utilize visitor programs and technical 
assistance to complement the negotiating process and identify 
any post-accession assistance requirements.  Consider a joint 
statement on WTO accession if and when Nazarbayev visits 
Washington.  Work to graduate Kazakhstan from Jackson-Vanik. 
 
--Gas 
 
Status:  Due to its Soviet-era transportation infrastructure, 
Kazakhstan both imports and exports gas.  All exports 
currently go to or through Russia with netbacks dramatically 
lower than world market prices.  Kazakhstan has sought to 
export gas to Georgia and Ukraine, but has to deal through 
Gazprom.  Kazakhstan probably has significant gas resources 
that could be exploited in the future.  Kazakhstan and China 
are in the pre-feasibility stage of a gas pipeline to China, 
which might only add a second monipsony rather than market 
diversity. 
 
Next steps:  Agree on a U.S. TDA feasibility study of the 
trans-Caspian gas pipeline from Kazakhstan to Azerbaijan that 
would provide a non-Russian export route to Europe for both 
Kazakhstani and potentially Turkmen gas, either replacing or 
complementing any pipeline to China. 
 
--Bilateral Assistance Agreement 
 
Status:  Our original bilateral agreement that provides inter 
alia for tax exemption for U.S. assistance projects was never 
ratified.  Unratified agreements no longer supercede local 
law, including tax and customs laws.  We face increasing 
problems in securing tax exemptions. 
 
Next steps:  Complete negotiations for a new bilateral 
agreement that can be ratified, along with our agreement to 
co-finance certain USAID economic development projects, as 
that part of our assistance winds down. 
 
--TIFA 
 
Status:  The Central Asian TIFA includes all five Central 
Asian states.  An initial ministerial meeting was held, along 
with a follow-up meeting. 
 
Next steps:  Move quickly to identify issues that will engage 
the regional states.  Work bilaterally with Kazakhstan to 
develop its capacity to provide leadership to the process. 
Look for ways to expand activities and possibly membership to 
Afghanistan. 
 
¶7. (C) POLITICAL/DEMOCRATIZATION CLUSTER 
       --------------------------------- 
 
--OSCE Chairman-in-Office 
 
Status:  Kazakhstan is a declared candidate for 2009.  Two 
countries (Greece and Lithuania) are competing for 2010. 
Kazakhstan falls short of the standard that we and 
like-minded countries want to see in a CIO.  Kazakhstan may 
also have problems leading the organization due to a shortage 
of trained and capable diplomats.  Our current approach is to 
encourage the Kazakhstanis to postpone their candidacy until 
2011, allowing them more time to implement democratic 
reforms.  In that context, we would offer to support them 
UNLESS they fail to implement their reform package, and would 
also develop an international consortium to provide education 
and training to their diplomats. 
 
Next steps:  Validate or change the current approach, and 
then seek consensus on it with like-minded OSCE countries, 
especially the EU. 
 
--Democratic reforms 
 
Status:  The last two Kazakhstani elections have shown 
improvements, but were flawed and did not meet international 
standards.  Legal requirements and harassment limit the 
opportunities for organized political expression.  Nazarbayev 
has outlined a positive vision for political and democratic 
reform, but there has been very little implementation.  A new 
commission chaired by the President offers new opportunities 
to move the agenda forward.  Among the areas Nazarbayev has 
outlined are (a) increasing the size of parliament and 
electing more members by party list; (b) expanding the powers 
of the parliament; and (c) reforming local government 
structures to make them more responsive to local communities. 
 Kazakhstan has a serious corruption problem. 
 
Next steps:  Continue to use high-level dialogue to stress 
the importance of democratic reforms to the overall 
relationship.  Encourage development of a Kazakhstani reform 
agenda that we can support.  Reverse the decline in U.S. 
exchange programs.  Encourage the GOK to send as many of its 
government-financed overseas students as possible to the U.S. 
 Support any serious anti-corruption efforts that develop. 
Support judicial reform if and when it develops. 
 
--Media 
 
Current status:  While there is scope for debate and 
criticism in the press, clearly oppositionist newspapers have 
difficulties operating and have on occasion been shut down 
permanently.  The Kazakhstani broadcast media are not 
objective, and provide no coverage of dissenting or 
alternative political views.  Russian television and radio 
dominate the airwaves, coloring local attitudes toward the 
U.S.   Professionalism and the skill-level of local 
journalists are very low. 
 
Next steps:  Consider establishing a journalism school based 
on Western standards to train responsible, professional 
journalists.  Look for ways to break through Russia's 
near-monopoly on electronic information, particularly 
television news and public affairs programming.  A 
competitive broadcast media environment  would offer greater 
access to diverse views in Kazakhstan, and perhaps all of 
Russian-speaking Eurasia. 
 
--Religious tolerance and extremism 
 
Current status:  Kazakhstan is a very tolerant society, and 
the GOK has encouraged inter-ethnic and inter-confessional 
harmony.  The growing regional terrorist threat, an 
increasingly active Hizb-ut-Tahrir, and a small up-tick in 
radical imams and mosques, have greatly troubled the 
government.  Regressive legislation in 2005 has not been 
implemented against legitimate groups.  However, there are 
strong indications that the GOK will seek authority to crack 
down on non-conforming Islamic communities, with "balancing" 
moves against other, "outside" religions as well.  Nazarbayev 
is looking for ways to demonstrate that countries with Muslim 
populations can be prosperous and secular, avoiding 
radicalism and fundamentalism. 
 
Next steps:  Continue to urge respect for all legitimate 
religious groups, whether registered or not.  Consider joint 
seminars or other ways to examine how the GOK can prevent the 
development of radical religious groups that foster 
terrorism, without violating basic principles of religious 
freedom.  Explore ways that we can, behind the scenes, 
encourage Kazakhstan to work with other moderate, secular 
states to develop an alternative model of development for 
Muslim countries. 
ASQUINO