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DE RUEHTA #0361/01 0580929
ZNR UUUUU ZZH
O 270929Z FEB 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4752
INFO RUCNCIS/CIS COLLECTIVE 1263
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1257

UNCLAS SECTION 01 OF 02 ASTANA 000361 
 
SIPDIS 
 
STATE FOR SCA/CEN 
STATE FOR OES, PHUDAK, NFITE 
 
E.O. 12958: N/A 
TAGS: PGOV SENV TSPL KZ
SUBJECT:  KAZAKHSTAN:  SCIENCE FUND STRUGGLING, BUT CONTINUING TO 
FUND SCIENCE PROJECTS 
 
ASTANA 00000361  001.2 OF 002 
 
 
¶1.  SUMMARY:  Created by Presidential decree in March 2006, 
Kazakhstan's Science Fund provides loans and grants to worthy 
applied-science projects in the areas of nanotechnology, new 
materials, biotechnology, mining technology, nuclear research, and 
alternative energy.  Since April 2008, the Fund's government 
financing has been significantly reduced, although it still supports 
key projects.  The Fund's Director says Kazakhstani scientists must 
reach out and find Western partners and integrate themselves into 
the international scientific community.  The Science Fund has worked 
with the U.S. Civilian Research and Development Foundation (CRDF), 
but in general, cooperation with the United States has been minimal. 
 Ideally, the Director said she would like the Science Fund to 
operate like a venture fund.  END SUMMARY. 
 
SUPPORT FOR APPLIED SCIENTIFIC RESEARCH 
 
¶2.  Regional Environmental Officer (REO) and Environmental 
Specialist met on February 26 with Science Fund Director Ardak 
Kusainova, who said the Science Fund was created by Presidential 
decree in March 2006 to provide funding (loans and grants) to 
applied-projects for the advancement of science in Kazakhstan.   She 
explained that the Science Fund is a government entity that receives 
all of its funding from the government.  The government has 
determined that all supported projects must fall within the 
following broad areas of research:  nanotechnology, new materials, 
biotechnology, mining technology, nuclear research, and alternative 
energy.   According to Kusainova, the Science Fund generally does 
not provide small loans of the $5,000-$10,000 range, and only 
supports applied-science research and projects.  (NOTE:  The Science 
Committee in the Ministry of Education supports pure science 
projects.  END NOTE.)  She said that after the Science Fund selects 
a project it deems worthy of financing, it then submits that project 
to the Fund's Investment Committee for final approval.  This 
Committee consists of scientists, government representatives, 
lawyers, and financial experts. 
 
SCIENTIFIC RESEARCH HAS FALLEN ON HARD TIMES 
 
¶3.  Kusainova said the Fund worked well for its first two years of 
its operation, but since April 2008, the financial picture has 
changed drastically.  Whereas initially the Fund had several million 
dollars available to support scientific research projects, now this 
amount has been reduced considerably.  She said the Fund can still 
support projects, but it is now much more difficult to do so. 
Kusainova said the Science Fund is currently supporting just two 
projects:  a microbiology project to develop a new strain of 
potatoes, and a ferrous alloy project to help an investor research, 
develop, and produce a ferrous alloy material that can be used in 
metallurgical industrial production. 
 
¶4.  Because of the financial crisis, the Science Fund's approach has 
also changed.  The organization's structure is the same, but the 
Fund is now able to provide interest-free and, tax-free loans in 
cases where recipients lack the resources and/or credit worthiness 
to obtain commercial loans, pay them back with interest, and pay 
taxes on them.  Also, the loan period is much longer than before, 
with some terms as long as 15 years. 
 
SCIENCE FUND MONITORS PROJECTS 
 
¶5.  Kusainova said the Science Fund also monitors the progress of 
projects to see if there are any financial problems or 
misallocations, and to determine if a project is staying on track 
toward its goals.  Each project lead must prepare a complete 
financial disclosure statement and information on the structure of 
its internal organization.  This can help the Science Fund better 
determine whether or not an organization is able to repay its 
loans. 
 
NEED FOR WESTERN SCIENTIFIC CONTACTS 
 
¶6.  Kusainova admitted that present scientific level and quality of 
science in Kazakhstan is not equal to that of Europe.  She said this 
 
ASTANA 00000361  002.2 OF 002 
 
 
is largely due to the effects of the aftermath of the collapse of 
the Soviet Union, which led to a loss of funding for scientific 
infrastructure, research, training, and jobs.  In addition, she said 
there was a resultant brain drain that took most of the good 
scientists away from Kazakhstan. 
 
¶7.  Kusainova argued that Kazakhstani scientists should invest 
greater time and effort to find partners overseas and in Europe. 
"Our scientists need to know what is happening in the world," she 
said, "and they need to integrate themselves into the international 
scientific community because now they are too isolated, with very 
few contacts outside Kazakhstan."  She did not regard contact with 
Russian scientists as very productive, because "they are all 
products of the Soviet system," and she insisted that the real need 
is for scientific contacts with the Western scientific community. 
 
WILLING TO WORK WITH WESTERN PARTNERS 
 
¶8.  Kusainova said the Science Fund is anxious to work with 
international organizations like the World Bank, the United Nations 
Development Program, and others, as well as with private 
organizations and funds.  She said the Science Fund has cooperated 
with INTAS, and is looking for similar partners in Europe.  (NOTE: 
INTAS is an international association for the promotion of 
co-operation with scientists from the former Soviet Union.  It was 
established in 1993 by the European Community and like-minded 
countries.  INTAS began to wind down its activities in 2007.  END 
NOTE.) 
 
¶9.  Kusainova said the Science Fund has also worked with the U.S. 
Civilian Research and Development Foundation (CRDF) on projects), 
which is involved in cooperative threat reduction activities and 
provides assistance to unemployed scientists.  (NOTE: CDRF promotes 
scientific and technical collaboration between the United States and 
the countries of the former Soviet Union.  END NOTE.)  In general, 
she said, the Science Fund's cooperation with the United States has 
been minimal and generally based on grants given out by U.S. 
partners. 
 
VENTURE FUND MODEL 
 
¶10.  Kusainova said that, even though the Science Fund is a state 
entity, ideally, she would like it to operate more like a venture 
capital fund and cooperate with private sector partners, but she was 
also keenly aware of the Fund's limitations and the country's 
current financial constraints.   She quoted a Russian proverb to 
express her goals for the Fund:  "May our hopes and our 
possibilities come together." 
 
HOAGLAND