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 001068 
 
SIPDIS 
 
E.O. 12958: DECL: 03/20/2016 
TAGS: PGOV ECON PREL KZ POLITICAL
SUBJECT: SECRETARY BODMAN MEETING WITH PRESIDENT NAZARBAYEV 
 
Classified By: AMBASSADOR JOHN ORDWAY.  REASONS: 1.4 (B, D) 
 
 ¶1. (C)  SUMMARY:  Secretary Bodman met President Nazarbayev 
for nearly an hour on March 14.  Bodman conveyed President 
Bush's desire to send VP Cheney to Kazakhstan in May, and 
invite Nazarbayev to the White House in the early fall. 
Nazarbayev accepted both parts of the proposal, but said that 
his visit to Washington required substance, noting as 
examples broader U.S. investment, education, and establishing 
a bilateral working group.  Nazarbayev said that Kazakhstan 
aspires to be a reliable energy supplier to Europe and the 
world, and that the presence of U.S. companies in this sector 
is "priority number 1."  He said Kazakhstan is ready to sign 
the BTC IGA, and that the ball is in Azerbaijan's court.  He 
noted difficulties in achieving Russian agreement to expand 
CPC, and to agree to the transit of Kazakhstani oil to 
Lithuania to facilitate purchase of the Mazeiku refinery. 
Discussing Iran, he said the country had the wrong President, 
which was leading to an unacceptable effort to obtain nuclear 
weapons, as well as creating conditions which made transit of 
Kazakhstani oil problematical.  He strongly urged that the 
U.S. not use military options against Iran.  On Central Asia, 
he said he would be visiting Uzbekistan shortly to encourage 
Karimov to open the economy, admitting that this was still 
unlikely.   He was pessimistic on Uzbekistan's stability, 
bemoaned Kyrgyzstan's weakness, offered little optimism on 
Tajikisistan, and had only caustic comments about 
Turkmenistan.  He spoke at length, and with emotion, about 
Russia and its role, saying bluntly that Kazakhstan is not 
happy with many developments there as Putin tries to build a 
stronger state.  Noting the imperialistic, colonial attitude 
of Russians during the Soviet era, he said that the current 
middle generation has been unable to overcome this heritage. 
Kazakhstan, despite being a good neighbor, suffers from 
Russian discrimination and intolerance.  Nonetheless, he said 
that isolation and confrontation would be counterproductive, 
and urged continued U.S. engagement with Russia, including in 
the G-8 context.   END SUMMARY 
 
Invitation 
---------- 
 
¶2.  (C)  Bodman began the meeting by extending 
congratulations on behalf of President Bush on Nazarbayev's 
impressive election victory.  He said that the President has 
asked Vice President Cheney to call on President Nazarbayev 
in early May, and was asking Nazarbayev to visit him in the 
White House in the early fall.  The President, Bodman said, 
looks forward to seeing Nazarbayev personally.  (NOTE:  After 
Nazarbayev entered, TV and still cameras were brought into 
the meeting room and began shooting from a position outside 
Secretary Bodman's line of sight.  This invitation was seen 
 
SIPDIS 
and heard by a large number of cameramen.  To date, only one 
TV channel has carried a report about the Vice President's 
visit, and it has not received any further play.  END NOTE) 
 
¶3.  (C)  President Nazarbayev noted that he had met President 
Bush in Moscow in May 2005, and the President had promised to 
send the Vice President to Kazakhstan.  Now, a year later, he 
was hearing the confirmation that the President was a man of 
his word.   He said that he welcomed the Vice President's 
visit in early May, noting only that the exact dates would 
have to be agreed.  He said that he in turn would be happy to 
visit the White House, but added that he wanted that visit to 
have substance.  Bodman also expressed gratitude for 
Kazakhstan's contribution to the war on terrorism, and in 
particular its military contingent in Iraq. 
 
¶4.  (C) Nazarbayev then immediately launched into an 
extensive monologue that included a number of diverse points 
of existing and possible future bilateral cooperation: 
 
--  Kazakhstan and the U.S. had accomplished much in many 
areas over the past 14 years.  Now, he was trying to 
industrialize the economy. 
 
--  Kazakhstan was pursuing mining, developing machine 
building for the oil and gas sector, establishing technoparks 
for biotech, IT and medical technology, as well as science 
centers. 
 
-- Nazarbayev wanted American partners to help build a 
world-class educational center, including a high-class 
university to train managers and engineers. 
 
-- Developing value-added agriculture processing was 
important, Nazarbayev said, noting that 60 percent of the 
population lived in rural areas but only produced 20 percent 
of the GDP.  The country's large wheat harvests, along with 
cotton, meat and wool, all could be processed. 
 
--  He also said Kazakhstan wants to attract more small and 
medium-sized businesses. 
 
-- Energy cooperation remains important. 
 
--  Kazakhstan, he said, was "switching" to Boeings and 
wanted to establish a regional maintenance center with 
Boeing.  (Note:  There's a factual disconnect here.  The 
major domestic carrier has had an all-Boeing leased fleet 
that it is now beginning to enlarge with wet-leased Airbuses, 
and one additional wet-leased Boeing.  On the positive side, 
this remark by the President is further, and authoritative, 
confirmation that Boeing is leading in the about-to-be 
released RFP for the purchase of aircraft.  On the other 
hand, we are unaware of any Boeing plans for a maintenance 
center in Kazakhstan, especially given the existing Boeing 
center in Uzbekistan.  END NOTE) 
 
-- Economic partnership will bring the two countries closer, 
and build the basis for political and other cooperation. 
 
--  We should establish two working groups, and reach 
agreements.  (At another point in the conversation, he 
elaborated on this idea.  He noted the Clinton-era 
Gore-Nazarbayev Commission as a model, and proposed that this 
new group be headed on the Kazakhstan side by the Prime 
Minister or Deputy Prime Minister, and perhaps at the 
ministerial level on the U.S. side.) 
 
--  He said he would be pleased to visit the U.S., perhaps 
around the time of the UNGA, and asked Bodman to convey his 
thanks to President Bush for this proposal. 
 
Energy:  Supplier to the world, but pipeline woes 
--------------------------------------------- ---- 
 
 ¶5.  (C)  Nazarbayev outlined a strong vision of Kazakhstan 
as a major and reliable supplier of energy to Europe and the 
world community, striving to be a good partner in supplying 
oil and gas.  In this connection, he said that "the presence 
of U.S. companies is priority number one in our partnership." 
 He noted that U.S. firms had invested $10 billion, a figure 
that should double within five years.  Kazakhstan aspired to 
be one of the top 10 oil producers by 2015.  He said that as 
a land-locked country, the biggest challenge was delivering 
to markets.  Kazakhstan wanted diversity of export routes. 
Lots of effort had gone into CPC, and he was working on its 
expansion.  The pipeline to China had been completed, and a 
700 km extension to the Caspian would be completed in two 
years.  Kazakhstan supported the BTC pipeline, and was 
optimistic about signing the IGA soon:  the ball, though, is 
in Azerbaijan's court.  Three tankers have been ordered to 
transport the oil to Baku, and Azerbaijan would supply 
additional tankers.  The first stage envisioned shipping 10 
million tons a year, but that would be expanded. 
 
¶6.  (C)  Nazarbayev said that the country's "big neighbors" 
were not happy with these developments.  He said that what 
made Russia happy made China unhappy, and vice versa. 
Kazakhstan regarded the two countries as good friends and 
neighbors, but it needed to carry out its own policies -- 
which in fact were not damaging the interests of either China 
or Russia.  Nazarbayev said that Kazakhstan wants to purchase 
the Mazeikiu Nafta refinery in Lithuania, and has made the 
highest offer.  A Russian company, Rosneft, and a Polish 
company, were also still bidding.  The winner would have to 
provide crude to the refinery, which eliminated the Polish 
concern.  Kazakhstan needed Russia's cooperation to transport 
its crude to the refinery.  The Russian side had seemed to be 
cooperative, but now this was uncertain. 
 
¶7.  (C)  Bodman said he would be meeting with Central 
European energy ministers in Budapest, who are worried about 
energy security and supplies in light of the recent 
experience of Ukraine and Georgia.  They are interested in 
LNG from Algeria, and possibly nuclear energy.  What advice 
would Nazarbayev have? 
 
¶8.  (C)  Nazarbayev said that if Russia were not between 
them, there would be a beautiful solution.  A great idea for 
the future is a trans-Caspian gas pipeline that would allow 
gas supplies via a much shorter route than from Siberia.  BTC 
was another important route for energy that could benefit 
Central Europe.  Kazakhstan was trying to convince the 
concerned parties to reverse Odessa-Brody pipeline northward 
as an outlet for Caspian oil from Novorissysk to reach 
Central Europe.  However, for Europe there was no complete 
alternative to Russian natural gas. 
 
¶9.  (C)  Nazarbayev complained that Russia had blocked 
Kazakhstani attempts to sell gas to Georgia at any price 
cheaper than what Russia was charging.  He added that 
Kazakhstan is becoming a major investor in Georgia, and said 
that he liked Saakashvili more than Yushchenko.  He said that 
Ukraine was a completely different situation, and predicted 
that they would have a very tough parliamentary election in 
which no one would get a majority.  He also predicted that 
the new parliament might also attempt to unseat Yushchenko by 
arguing that the third round that elected him was 
unconstitutional. 
Iran 
---- 
¶10.  (C)  Nazarbayev said that the most feasible and 
profitable route for Kazakhstani crude was through Iran. 
However, all the American oil companies objected.  Nazarbayev 
said that any change in this situation would require a new 
President in Iran, and said that he hoped a new one would be 
better than the current one.  He acknowledged that Iran was 
seeking nuclear weapons, and said he was trying to persuade 
the Iranians to give this up.  Kazakhstan had done so, and 
found that its security had not gotten worse, but had 
improved.  Asked by Bodman for advice on how to deal with 
Iran, Nazarbayev said above all "don't repeat Iraq in Iran." 
He said that Kazakhstan "is totally on your side" in saying 
no to nuclear weapons, and continuing to put pressure on the 
Iranians.  He said that Russia now seemed to recognize the 
danger in this, especially for itself.  The worst scenario 
would be to bomb Iran, which would create an outburst of rage 
unlike Afghanistan or Iraq, and which could cause global 
destabilization. 
 
Future of Energy 
---------------- 
 
¶11.  (C)  Nazarbayev asked about President Bush's State of 
the Union remarks about reducing dependence on imported 
energy.  Bodman said that DOE was researching possible 
partial alternatives, including ethanol fuels from cellulose 
for automobiles.  However, this depended on the results of 
research that was not yet completed.  Bodman suggested that 
local Kazakhstani grasses might be used to produce ethanol. 
Nazarbayev noted jocularly that Kazakhstan did not have an 
oil deficit, but added that Kazakhstan was indeed interested 
in alternative energy sources, including solar, wind and 
nuclear.  He said that he would like to cooperate with the 
U.S. in these areas, especially on nuclear. 
 
Central Asia:  Problems everywhere 
---------------------------------- 
 
¶12.  (C)  Bodman noted American interest in Kazakhstan 
playing a leadership role in Central Asia.  Nazarbayev said, 
laughing, that he would be happy to do so, but that the U.S. 
should not mention this idea to the others -- all of whom 
thought they should be the leader.  Nazarbayev said that he 
would shortly be visiting Uzbekistan and would attempt to 
persuade President Karimov to open up his economy, although 
he doubted this would be successful.  Nazarbayev said he had 
proposed a Central Asian economic union to allow the five 
countries to help develop the region -- and Karimov proceeded 
to invite in the Russians.  He criticized Karimov's character 
as damaging the country's development, and noted that wages 
one-tenth the level of Kazakhstan's resulted in nearly a 
million Uzbek "guest workers."  The threat of domestic 
destabilization in Uzbekistan, he said, was very high. 
 
¶13.  (C)  Turning to the other countries in the region, he 
said that Kyrgyzstan is very weak, poor, and burdened by 
excessively high external debt.  Tajikistan was still 
emerging from its civil war and has not decided which way to 
go.  Turkmenistan, he said, was the "worst example of a 
planned economy," whose President's actions had ranged from 
shutting down the opera to abolishing pensions, and whose 
cult of personality knew almost no bounds. 
 
¶14.   (C)  Nonetheless, important processes were going on in 
the region, including in Afghanistan.  The region was on the 
threshold of a major transformation. 
 
Russia:  Coping with post-empire stress syndrome 
--------------------------------------------- --- 
 
¶15.  (C)  Nazarbayev began an extended soliloquy on Russia by 
saying that Putin was trying to get the country under control 
by strengthening state structures.  Kazakhstan was not happy 
with all that was going on in Russia.  Moreover, rapid 
liberalization in Kazakhstan was seen by its neighbors as a 
bad example.  Russians, Nazarbayev explained, by nature need 
a gun in their hands.  All state officials in czarist Russia 
wore uniforms.  All Russians continued to live on the memory 
of World War II. 
 
¶16.  (C)  In the Soviet period, Russians were the main 
nationality everywhere.  All others were second-class 
citizens, even in their own homelands.  The most important 
posts belonged to Russians.  Then the USSR collapsed, and 
Russians lost their privileged position.   In Kazakhstan, for 
example, at independence 90 percent of the army officers were 
ethnic Russians; now the percentages were exactly reversed. 
Post-Soviet Russia is no longer a superpower.  Their 
self-esteem is low, and they are boiling with pain.  This 
especially affects the middle-aged generation.  Russians need 
time to become normal people. 
 
¶17.  (C)  Nazarbayev said that Kazakhstan feels the impact of 
Russia every day.  One example:  rail tariffs are two times 
higher for Kazakhstan than for domestic freight.  This is 
despite the fact that Kazakhstan is a good neighbor.  Russia 
simply wants to show that it is strong.  Nazarbayev said that 
when he goes to Moscow, he tells the Russians that they have 
the largest territory in the world, that they are extremely 
rich in natural resources -- what else could they want?  This 
is enough to bring richness to their people.  Nazarbayev said 
that he argues that Kazakhstan and Russia are neighbors, and 
should meet as equals.  However, Russia does not want to do 
so, they won't treat Kazakhstan as they treat even Poland or 
Finland. 
 
¶18.  (C)  Nazarbayev said that there were parts of Russian 
policy that neither the U.S. nor Kazakhstan liked, but that 
this cannot be avoided.  The worst way of dealing with this 
would be to push them away and isolate them.  This would not 
hurt the Russians, but "would hurt the situation here."  The 
U.S. needed to employ a very "delicate" policy toward Russia, 
inviting Russia to participate in international 
organizations, increasing relations, and trying to influence 
the leadership as was done with Yeltsin.  Nazarbayev said 
that he meets often with Putin.  Putin understands that he 
needs to work closely with the U.S., and understands that 
confrontation is useless.  With the help of American 
influence and the injection of American capital, gradually we 
can all influence Russian policies. 
 
¶19.  (C)  Nazarbayev concluded that the current Russian elite 
will retain power for a long time.  It is very good that 
Russia is in the G-8 and other international organizations. 
It is necessary for them to upgrade their relations with the 
U.S.  "Let them think they are players." 
 
COMMENT 
--------------- 
¶20.  (C)  Nazarbayev is clearly inclined to develop his 
country's energy resources, and energy policies, along 
market-oriented geostrategic lines that largely coincide with 
our own thinking.  His emphasis on CPC expansion and joining 
BTC is an old theme.  What was new was the vision of being a 
stable and strategic energy supplier to eastern Europe 
(including Georgia), tempered by hard-headed realism 
regarding the challenges of overcoming short-sighted Russian 
policies and obstructionism.  The accumulated problems of 
Russian blockage of CPC expansion, Russian-established prices 
for Kazakhstani gas, crippling rail tariffs, and potential 
Russian double-dealing on the Lithuanian refinery deal may 
have combined to produce an unusually candid, and 
devastatingly accurate, picture of post-Soviet Russia's 
aggressive inferiority complex and its impact on Kazakhstan. 
Unlike other residents of what Russia calls its "near 
abroad," Nazarbayev and Kazakhstan have cards and the skill 
to play them.  However, not all of their hands are winners -- 
and this remains galling to Nazarbayev. 
 
¶21. (U)  This cable has been cleared by Secretary Bodman's 
party. 
ORDWAY