VZCZCXRO1355
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0617/01 0811217
ZNR UUUUU ZZH
R 211217Z MAR 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2118
INFO RUCNCIS/CIS COLLECTIVE 0454

UNCLAS SECTION 01 OF 03 ASTANA 000617 
 
SIPDIS 
 
DEPARTMENT FOR OES/STC, SCA/RA, AND SCA/CEN 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: TSPL KSCA PREL PGOV KZ
SUBJECT:  KAZAKHSTAN - SCIENCE AND TECHNOLOGY - ADDITIONAL AREAS FOR 
COOPERATION 
 
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Summary 
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¶1.  EST officer's January 20 - February 19 TDY visit to Kazakhstan 
provided a timely opportunity to discuss the Kazakhstani 
government's Science and Technology (S&T) infrastructure, 
particularly in light of continued negotiations on a bilateral 
Science and Technology Agreement.  This is one of a series of four 
cables summarizing EST officer's meetings in Kazakhstan, and focuses 
on additional areas, ministries, and organizations with potential 
for S&T cooperation.  End Summary. 
 
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Ministry of Education 
--------------------- 
 
¶2.  EST officer met with Mr. Bakhyt Kutubayev, head of the Division 
of Science and Technology Administration, Ministry of Education and 
Science.  Kutubayev explained that the Ministry of Education 
coordinates the arrangement of science and technology activities. 
According to Kutubayev, the ministry already coordinates 36 
international bilateral science and technology focused agreements 
aimed at grants management, joint research, and lab construction. 
Kutubayev described the ministry's coordination with an 
international expert council comprising 19 members (including five 
from the United States).  The ministry uses the advice from the 
council to formulate future strategy, policy, and focus areas. 
Kutubayev stated he would greatly support expanded S&T cooperation 
with the United States.  The Ministry of Education has allotted 
funding for 92 joint research projects during 2007-2009.  Kutubayev 
explained that Kazakhstan is in the process of constructing five 
national labs, two of which will be international labs. Foreign 
experts will be invited to work in the labs and to conduct research 
with the best equipment available.  Kazakhstan also has plans to 
expand and improve laboratories at 10 universities so that they meet 
international standards.  Kutubayev stated he hoped that a bilateral 
S&T agreement would have provisions under which joint research and 
exchanges could be arranged. 
 
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Ministry of Industry and Trade 
------------------------------ 
 
¶3.  EST officer met with Kanysh Tuleushin, head of the Division of 
Innovation Policy in the Ministry of Industry and Trade.  Tuleushin 
stated the Ministry of Industry and Trade is a line ministry which 
conducts its own research programs that focus on innovation and 
industrial policy.  (Note: Line ministries identify priority 
investments in their annual infrastructure strategies and asset 
management plans.  End Note.)  Currently, no defined border exists 
between the research areas covered by the Ministry of Education and 
his ministry.  This has caused a problem of competing structures and 
competition for funding between the ministries.  Both ministries are 
tasked with supervising innovation policy.  The Ministry of Industry 
provides grants for research which they have determined have a 
likely success rate at commercialization.  The ministry focuses on 
such areas as metallurgy, machinery, and chemistry, and provides 
grants to university labs, private labs, and labs at other 
ministries. 
 
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Samgau: Government Holding Company 
---------------------------------- 
 
¶4.  On January 25, EST officer met with Marat Nurguzhin, 
vice-chairman of Samgau.  Nurguzhin explained that Samghau was 
created in part to support R&D.  Samgau also focuses on ITC, media, 
and postal services.  Nurguzhin stated Samgau has a budget 
allocation for R&D totaling KZT 20 billion ($166 million) in 
addition to KZT 2 billion ($15 million) set aside for 
commercialization of newly developed products.  He added that Samgau 
is currently cooperating with the Civilian Research Development Fund 
(CRDF) as well as American companies including Microsoft, Sysco, 
Motorola, and Hughes. Much of this ITC cooperation is done through 
Samgau's subsidiary, Kazakhsatnet. For more information on 
Kazakhsatnet, EST officer met with its president, Assan Dossayev. 
Dossayev explained Kazakhsatnet's mission to expand internet access 
and e-government across Kazakhstan and his desire to include 
international private companies in the process. Kazakhsatnet is 
currently doing research in the area of cryptography. 
 
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Kazakhstan Science Fund 
----------------------- 
 
¶5.  EST officer also met with Assel Nussupova, chief executive 
officer of the Kazakhstan Science Fund (KSF).  KSF is a branch under 
Samgau and is headquartered in Astana.  The stated purpose of KSF is 
to fund higher risk research through loans.  KSF has a budget of KZT 
 
ASTANA 00000617  002 OF 003 
 
 
20 billion ($165 million).  Nussupova explained that KSF provides 
zero interest loans to researchers to conduct research that has a 
commercial focus.  Under the current system, researchers applying to 
KSF must rely on collateral to receive loans. Nussupova stated this 
has been problematic because many of the researchers work in 
government-owned labs and thus have no collateral for loans. 
Nussupova stated that the KSF is attempting to move towards a grants 
system.  She also mentioned that if joint funding were an option for 
a particular project, it would be possible to waive the collateral 
requirement. 
 
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Lessons from CRDF in Kazakhstan 
------------------------------- 
 
¶6.  EST officer met with Kanat Shakenov, director of CRDF's branch 
office in Astana.  Shakenov stated that the CRDF office was recently 
opened in 2007 and plans to have three employees in Astana and two 
in Almaty.  Shakenov said that CRDF has had tax problems, despite 
having taxation waiver status.  According to Shakenov, the 
government still tries to tax equipment originating from CRDF if 
transferred to a Kazakhstani entity through a third party.  He said 
that on a number of occasions the government has tried to tax the 
shipping company when equipment was being transferred.  In every 
case, CRDF was able to maintain its tax free status, but has had 
numerous battles with the Kazakhstani taxation bureaucracy. 
Shakenov believes that international cooperation is not a priority 
for the short-staffed and underpaid bureaucrats in ministries.  He 
did not have a very high opinion of the KSF because of its 
collateral requirement. 
 
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International Science and Technology Center 
----------------------- ------------------- 
 
¶7.  EST officer met with Natalia Tomarovskaya, head of the 
Kazakhstan branch office of the International Science and Technology 
Center (ISTC), which is located in Almaty. Tomarovskaya stated ISTC 
has a budget of around $65 million and has partnered in the past 
with USDA and DOE.  Although the organization has a tax waiver in 
place, ISTC continues to have tax issues with the Kazakhstani Tax 
Committee. Occasionally ISTC runs into problems when using third 
parties, but has been able to get the fees refunded. Tomarovskaya 
noted that initially the United States contributed to the funding of 
ISTC and she inquired as to why the USG has terminated its funding. 
Tomarovskaya was hopeful a bilateral S&T agreement would increase 
American involvement in the region and offered to help by including 
American agencies in some of the proposals. 
 
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National Center for Scientific and Technical Information 
----------------------------- -------------------------- 
 
¶8.  EST officer met with Yerbol Suleymenov, director-general of the 
National Center for Scientific and Technical Information, 
headquartered in Almaty.  Suleymenov described the center as an 
analytical agency which develops S&T recommendations for the 
government.  Another task of the center is to review projects which 
are submitted to the government for funding.  Suleymenov stated that 
the center coordinated the international team of experts currently 
reviewing the status of S&T in Kazakhstan.  He added that his center 
currently has a cooperation agreement with the American Association 
for the Advancement of Sciences (AAAS), and is hoping to sign an 
agreement with the National Science Foundation (NSF) to understand 
how NSF conducts its quantitative reports on the status of science 
and technology.  Suleymenov stated that although his center does not 
supervise research, he can see where a bilateral S&T agreement would 
be highly beneficial to Kazakhstan and hopes it will strengthen ties 
with the American scientific community. 
 
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National Innovation Fund 
------------------------ 
 
¶9.  EST officer met with Nurbek Rayev, chairman of the National 
Innovation Fund (NIF), which is headquartered in Almaty.  Rayev 
described the NIF as a state-owned, venture capital institution 
interested in investing in high-tech companies in Kazakhstan.  The 
NIF is currently working on a project with the National Technical 
University to establish a techno park to conduct innovative research 
in ITC that will eventually be able to commercialize.  Although the 
NIF may be a partner in future cooperation with the U.S., it would 
be partnered through another Kazakh organization. 
 
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KazEngElectronics 
----------------- 
 
¶10.  On February 12, EST officer met with Viktor Adamov, 
director-general of KazEngElectronics (KEE), in Almaty.  Adamov 
 
ASTANA 00000617  003 OF 003 
 
 
stated that the main activities of KEE are not scientific, though 
research is conducted on radio-electronics and industrial projects. 
KEE is more focused on commercialization of radio-electronic 
products than R&D. Adamov stated that in the past, KEE received 
funding for R&D but has not had such funding for two years. 
 
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Academy of Sciences 
------------------- 
 
¶11.  EST officer met with Dr. Murat Zhurinov, president of the 
Academy of Sciences, located in Almaty.  Currently, Zhurinov is on 
the Science Council which advises the President and Prime Minister 
on science issues.  Zhurinov stated that the members of the academy 
include all directors of research institutions and universities in 
Kazakhstan. He said that once a bilateral S&T agreement is 
finalized, he would be interested in concluding MOU's with AAAS, 
NSF, and the National Academy of Sciences (NAS) as a means to 
increase communication and possible cooperation.  Zhurinov also 
lobbied for the establishment of a Kazakh-American University in 
Kazakhstan similar to American universities in Europe, though this 
would not be covered under the S&T Agreement. 
 
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Comment 
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¶12.  An interesting aspect to the Kazakhstani S&T scene is existence 
of government-owned joint stock companies which play a vital role in 
R&D.  These JSC's are assigned to work on specific areas of R&D and 
could be valuable partners for future R&D collaboration.  End 
Comment. 
 
ORDWAY