VZCZCXRO8970
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK
RUEHKW RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW
RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK RUEHYG
DE RUEHTA #1145/01 1901056
ZNR UUUUU ZZH
P 091056Z JUL 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 5752
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY 1716
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEFAAA/DIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY 1267
RUEKJCS/SECDEF WASHDC PRIORITY 1184
RUEHGV/USMISSION GENEVA PRIORITY 0989
RUEHNO/USMISSION USNATO PRIORITY 2679
RUEHVEN/USMISSION USOSCE PRIORITY 2052
RUCNDT/USMISSION USUN NEW YORK PRIORITY 2361

UNCLAS SECTION 01 OF 02 ASTANA 001145 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON ETRD WTRO RS BO KZ
SUBJECT:  KAZAKHSTAN:  RBK CUSTOMS UNION, WTO, AND THE WAY 
FORWARD 
 
REF: A. ASTANA 1018 
     ¶B. ASTANA 1005 
     ¶C. ASTANA 0830 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  On July 9, Kazakhstan's WTO negotiator 
 
-- reiterated that Russia, Belarus, and Kazakhstan have 
suspended, not abandoned their individual WTO accession 
negotiations; 
 
-- revealed Russia will hire, probably before August 12, an 
independent international law firm to mark out a way forward 
with WTO; 
 
-- emphasized that President Nazarbayev sees the 
Russia-Belarus-Kazakhstan Customs Union as consistent with 
his long-standing commitment to Eurasian economic integration; 
 
-- said she hopes that Belarus will have "the political will" 
to work smoothly with Russia in the customs union; 
 
-- expressed both appreciation for and skepticism about TIFA. 
 END SUMMARY. 
 
¶3.  (SBU) During the Ambassador's one-on-one lunch with 
Kazakhstan's WTO negotiator and Vice Minister for Industry 
and Trade Zhanar Aitzhanova on July 9, she said that the June 
9 announcement in Moscow that Russia, Kazakhstan, and Belarus 
are suspending their individual WTO negotiations and would 
seek to enter WTO as the Russia-Belarus-Kazakhstan (RBK) 
Customs Union was caused fundamentally, at least on the 
Kazakhstani side, by their increasing frustration that the 
United States and European Union were making 
"disproportionate demands" that required more concessions 
from Kazakhstan than they were willing to give Kazakhstan in 
return.  "It was increasingly clear that we were being asked 
to pay a higher price because we were late-comers to the 
game."  Then the global financial crisis was the coup de 
grace that led to the final decision, she added. 
 
A DESIRE FOR REGIONAL INTEGRATION AND GLOBALIZATION 
 
¶4.  (SBU) Aitzhanova explained that while the final decision 
was made by the Russian and Kazakhstani Prime Ministers, PM 
Masimov obviously was speaking for President Nazarbayev. 
When the Ambassador suggested that some analysts in the West 
might see this as a win for Putin and his desire for Russia 
to gain greater influence in its former territories, 
Aitzhanova replied:  "As a Harvard graduate, I'd say such 
analysts understand Moscow but they don't understand 
Kazakhstan.  They don't seem to comprehend we can use the 
so-called Putinism and not just be its supposed victim.  They 
don't understand Nazarbayev's intense commitment to Eurasian 
economic integration and to globalization.  Nazarbayev's 
decision demonstrates his economic pragmatism, not his 
political ambition -- nor his political naivete."  She added 
that Nazarbayev is intent on using the infrustructure of 
Russia while rejecting the ideology of the former Soviet 
Union.  Aitzhanova made the argument that the RBK Customs 
Union will open the door for more direct foreign investment 
in Kazakhstan because potential investors will have a much 
larger market.  After deploying this official talking point, 
she conceded that foreign investors might, on the other hand, 
choose Russia over Kazakhstan where they can take advantage 
of the larger labor pool and be closer to ports and other 
international lines of communication.  "But at least Russia 
 
ASTANA 00001145  002 OF 002 
 
 
will now open its doors wider for our agricultural products," 
she added. 
 
NEXT STEPS 
 
¶5.  (SBU) Aitzhanova conceded that Kazakhstan and Russia had 
not focused on WTO's distinction between a customs union and 
a customs territory when announcing their intention to enter 
WTO as a customs union.  She emphasized that the individual 
countries' accession processes were simply suspended, not 
abandoned, and revealed that the customs union negotiators 
have agreed that Russia will hire an independent 
international law firm to determine the correct way forward 
with WTO for both the customs union and its individual 
members.  She said Russia expects to choose the law firm 
before the next customs union commission meeting on August 12 
in Moscow. 
 
¶6.  (SBU) In the meantime, Aitzhnova bemoaned that her 
work-load has tripled because of the breakneck speed at which 
Russia, Kazakhstan, and Belarus must review and harmonize 
their legislation.  The customs union becomes official on 
January 1, 2010, and the borders actually open on July 1, 
¶2011.  Aitzhanova emphasized that where one country's 
legislation is more liberal, the negotiators have committed 
to accepting the more liberal version in order to benefit 
businesses.  At the same time, the negotiators are analyzing 
their individual WTO commitments to try to factor in that 
variable.  When asked if that might not require reopening 
already completed chapters with WTO, Aitzhanova sighed and 
said, "It's possible, but we'll wait for advice from the 
independent international law firm."  Aitzhanova said she was 
aware that the June 9 announcment will create technical 
barriers for individual accession to WTO, but, she 
emphasized, "We never want to have political barriers with 
our partners because of the RBK Customs Union." 
 
THE BELARUS FACTOR 
 
¶7.  (SBU) The Ambassador noted that if the customs union 
members will want enter the WTO, even if individually, at 
about the same time, Belarus is years behind both Russia and 
Kazakhstan in its WTO accession negotiations.  Aitzhanova 
sighed again and said, "We hope there will be political will 
to move forward quickly together."  In reply to a comment 
that while the Russia-Kazakhstan relationship is noted for 
its calm stability, the Russia-Belarus relationship tends to 
be tempetuous from time to time, she repeated, "We hope for 
political will." 
 
THE CENTRAL ASIAN TIFA 
 
¶8.  (SBU) Commenting on the U.S.-initiated Central Asian 
Trade and Investment Framework Agreement (TIFA), Aitzhanova 
repeated what she had told Deputy Assistant U.S. Trade 
Representative for South and Central Asia Claudio Lilienfeld 
on April 27 (ref C).  Kazakhstan appreciates participating in 
annual TIFA meetings, but after many years has seen no 
concrete results.  She pointed out the political and economic 
disparaties of the five Central Asian states, their 
resistance to any significant regional cooperation, and the 
fact that Kazakhstan's economic progress and success 
intimidates the other four, which makes honest collaboration 
nearly impossible.  She suggested that holding Kazakhstan up 
as a model during TIFA meetings only increases resentment 
among the other four. 
HOAGLAND