VZCZCXRO6245
RR RUEHAST
DE RUEHTA #0584/01 0650120
ZNR UUUUU ZZH
R 060120Z MAR 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8663
INFO RUEHAST/USOFFICE ALMATY
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHCR/DEPT OF AGRICULTURE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ASTANA 000584 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN (O'MARA); EB/TPP/ABT/ATP; OES/IHA 
DEPARTMENT PASS TO USTR/ENV, COMMERCE, AGRICULTURE, AND TREASURY 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON KZ
SUBJECT: KAZAKHSTAN: GUIDANCE SOUGHT ON ASSISTANCE TO U.S. TOBACCO 
FIRM 
 
REF: STATE 6604 
 
¶1. (SBU) Summary:  Post seeks Department's guidance on a request 
from Phillip Morris's Kazakhstan office for the Ambassador to sign a 
letter of support for Phillip Morris's application to join 
Kazakhstan's "Foreign Investors' Council" (FIC).  The FIC, chaired 
by President Nazarbayev, promotes dialogue between the Government of 
Kazakhstan (GOK) and foreign investors, with the goal of improving 
the investment climate. Representatives from current FIC member 
companies have told Post that one of the key, if informal, benefits 
of FIC membership is direct access of company CEOs to President 
Nazarbayev during FIC plenary sessions held each year.  As Phillip 
Morris might logically use its FIC membership, and resulting access 
to key GOK decision-makers, to lobby business interests that the USG 
cannot legally support, Post would appreciate Department's guidance 
on the advisability of writing a letter of support for membership. 
End summary. 
 
Formal Role of FIC 
------------------ 
 
¶2. (SBU) Ali Takesh, Managing Director, Phillip Morris Kazakhstan 
and Central Asia South, recently asked the Embassy for a letter in 
support of his company's application for membership in the FIC.  The 
FIC is an advisory body, established in 1998 to promote dialogue 
between the GOK and private investors "in order to efficiently 
address key issues related to their investment activities in the 
country, to improve the investment climate of Kazakhstan for the 
benefit of foreign investors..."  Members are formally charged with 
developing recommendations for President Nazarbayev and the GOK on 
"key investment and economic development issues," as well as 
"analyzing and discussing other core investment policy issues upon 
instruction of the President."  The FIC's fundamental work is 
undertaken by five working groups, which address areas of interest 
(oil and gas, legal, taxation, investment image enhancement, and 
operations).  The FIC also holds twice-yearly "interim sessions" 
chaired by the Deputy Prime Minister or Minister of Industry and 
Trade, and one or two annual "plenary sessions," chaired by 
President Nazarbayev and customarily attended by company CEOs. 
Twenty-one companies currently belong to the FIC.  (For more 
information of the FIC, see www.fic.kz.) 
 
Informal Role of FIC 
-------------------- 
 
¶3. (SBU) A few FIC member company representatives have told Post 
that one of the key benefits of FIC membership is the opportunity it 
confers on company CEOs to meet directly with President Nazarbayev 
on the margins of the plenary sessions. These meetings naturally 
offer an opportunity for CEOs to address issues affecting existing 
operations in Kazakhstan, as well as to advocate for new business 
opportunities.  Thus, it is conceivable that Phillip Morris would 
use its FIC membership to lobby, at the highest levels, for business 
opportunities which the USG cannot legally support under reftel 
guidance. 
 
Phillip Morris's Application 
---------------------------- 
 
¶4. (SBU) Phillip Morris appears to meet the formal requirements for 
FIC membership, which include a minimum of $25 million of direct 
investment for non-oil/gas companies, and several qualitative 
criteria addressing issues of corporate responsibility, significance 
for the Kazakhstani economy, and prospects for future growth. 
 
¶5. (SBU) Furthermore, the company appears well-placed to contribute 
to the FIC's high-level discussion of Kazakhstan's investment 
climate.  Phillip Morris was the first foreign investor recognized 
by newly-independent Kazakhstan, and went on to be a founding member 
of the American Chamber of Commerce. With over $330 million invested 
in a manufacturing facility near Almaty, the company is both one of 
the largest employers in the country and one of the biggest foreign 
investors outside of the energy sector.  These factors suggest that 
the company would make a constructive contribution to the FIC's 
work. 
 
¶6. (SBU) The FIC considers seven criteria for admission, including 
the "recommendations of industrial and business associations, and 
foreign embassies" accredited in Kazakhstan.  Thus, the absence of a 
letter from the Embassy is likely to be noted, and have a 
detrimental effect (however small) on Phillip Morris's candidacy. 
 
¶7. (SBU) Post appreciates Department's guidance as soon as possible. 
 
 
 
ASTANA 00000584  002 OF 002 
 
 
ORDWAY