VZCZCXRO6817
PP RUEHIK
DE RUEHTA #2006/01 3170556
ZNR UUUUU ZZH
P 130556Z NOV 09
FM AMEMBASSY ASTANA
TO RUCNFB/DIRECTOR FBI PRIORITY
INFO RUEHC/SECSTATE WASHDC 6815
RUCNCIS/CIS COLLECTIVE 2147
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1517
RUEHKO/AMEMBASSY TOKYO 2218
RUEHUL/AMEMBASSY SEOUL 1152
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 1707
RUEKJCS/SECDEF WASHDC 1565
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1998
RUEAWJL/DEPT OF JUSTICE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC 0043

UNCLAS SECTION 01 OF 05 ASTANA 002006 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, INL 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINS SOCI KZ
SUBJECT:  KAZAKHSTAN:  SCENESETTER FOR FBI DIRECTOR ROBERT S. 
MUELLER 
 
ASTANA 00002006  001.3 OF 005 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Embassy Astana warmly welcomes your November 
17-18 visit to Kazakhstan.  Kazakhstan has proven to be an 
increasingly reliable security partner and a steady influence in a 
potentially turbulent region.  Although Kazakhstan is willing to 
work together in criminal investigations, some efforts to increase 
cooperation have stalled, which is causing them to fall behind other 
countries in the region.  During your visit, you can congratulate 
Kazakhstan on its current cooperation in criminal investigations and 
press to enhance future cooperation.  END SUMMARY. 
 
SECURITY COOPERATION 
 
¶3.  (SBU) Kazakhstan, on the crossroads of the ancient Silk Road, 
also finds itself on the crossroads of transnational crime.  The 
United Nations Office of Drugs and Crime estimates that up to 20% of 
Afghan opiates transit through Kazakhstan.  In addition, Kazakhstan 
is both a source and destination country for trafficking in persons. 
 It could have easily become a center for laundering transnational 
criminal profits given that it has the most developed banking system 
and most stable economy in the region.  However, the government's 
strong political will, legislation based on international standards, 
and the creation of a financial intelligence unit is preventing such 
a development. 
 
¶4.  (SBU) Kazakhstan willingly cooperates with the United States to 
fight terrorism, stem the flow of illegal narcotics, and fight 
trafficking in persons.  Law enforcement agencies recognize their 
limitations and continue to seek technical assistance from the 
United States.  The Department of State's Bureau for International 
Narcotics and Law Enforcement (INL) and Office of Antiterrorism 
Assistance (ATA) and the Department of Defense's Office of Military 
Cooperation (OMC) provide equipment and technical assistance to law 
enforcement and security services in Kazakhstan. 
 
¶5.  (SBU) Since 2008, Diplomatic Security's ATA has trained 
Kazakhstani officials in travel documents, airport security, digital 
evidence, and post-blast investigations, as well as conducted an 
anti-terrorism instructor course.  Since 2002, INL has provided 
training courses, equipment, and technical assistance in the areas 
of border security, counter-narcotics, anti-trafficking in persons, 
anti-money laundering and terrorism financing, forensics, and crime 
statistics.  INL has worked closely with the FBI in many of these 
areas and funded the travel of FBI trainers in money laundering and 
forensics and the visit of Kazakhstani law enforcement officers to 
the FBI Academy.  In 2008, near the end of the INL crime statistics 
program, the Department of Justice's Bureau of Justice Statistics 
began to negotiate a direct memorandum of understanding with the 
Prosecutor General's Office (PGO). 
 
¶6.  (SBU) The Office of Military Cooperation is responsible for 
implementation of the U.S. Central Command's (USCENTCOM) Theater 
Security Cooperation Plan (TSCP).  A co-signed Memorandum of 
Understanding between the U.S. DoD and the Kazakhstani Ministry of 
Defense (MoD) -- called the five-Year Plan for Military Cooperation 
-- supports CENTCOM's TSCP.  The five-year plan outlines three main 
objectives:  1) Establish a professional Army with rapid deployment 
capability and NATO compatibility, 2) Establish military 
capabilities in the Caspian Sea Region, and 3) General systemic 
reform objectives in support of the first two goals.  Within these 
objectives, several goals relate to border, internal, and maritime 
security, which the OMC-managed CENTCOM Counter-Narcotics programs 
support.  These goals include programs for regional 
counter-narcotics security, such as equipment support to the Central 
Asian Regional Information Coordination Center (CARICC), border 
security, such as refurbishment and upgrade of three Mi-8 
helicopters and ground surveillance radars for the Border Guards, 
and assistance to Internal Affairs to stem the flow of narcotics 
 
ASTANA 00002006  002.3 OF 005 
 
 
transiting through the country.  OMC works closely with the U.S. 
Export Control and Border Security (EXBS), INL, and Defense Threat 
Reduction Agency (DTRA) to ensure all Embassy border-control 
programs complement one another. 
¶7.  (SBU) The Legal Attache (Legat) cooperates well with law 
enforcement agencies in ongoing investigations.  The Kazakhstani 
government always positively receives and acts upon all 
investigative requests generated from the Legat Office.  Over the 
past year, the Legat Office has trained Kazakhstani officials about 
economic crimes and corruption, weapons of mass destruction (WMD) 
investigative analysis, and WMD cyber crimes.  It also conducted a 
nuclear smuggling workshop and sent a Kazakhstani officer to the 
FBI's National Academy for the first time. 
 
¶8.  (SBU) Despite good cooperation in many areas, Kazakhstan still 
lags behind the region in biometric cooperation.  That said, 
Kazakhstan participated in the first-ever Central Asia Biometrics 
Summit hosted by the FBI in the United States.  The Kazakhstani 
Border Service also has expressed interest in learning more about 
employing biometric controls.  CENTCOM and the U.S. Embassy are 
exploring support options. 
 
¶9.  (SBU) Kazakhstan is deeply interested in being a regional leader 
in law enforcement.  The Central Asian Regional Information and 
Coordination Center (CARICC), of which all countries in Central 
Asia, Russia, and Azerbaijan are members, is based in Almaty. 
Kazakhstan's law enforcement academies are also seeking to be 
regional training hubs.  The Ministry of Interior will open an 
Interagency Counter-Narcotics Training Center in December.  The 
Center, co-funded by the United States, will train Afghan police and 
will be open to all countries in the region. 
 
NON-PROLIFERATION:  A HALLMARK OF BILATERAL COOPERATION 
 
¶10.  (SBU) Non-proliferation cooperation has been a hallmark of our 
bilateral relationship since Kazakhstan quickly agreed to give up 
the nuclear weapons it inherited from the USSR after becoming 
independent.  The Kazakhstanis recently ratified a seven-year 
extension to the umbrella agreement for our bilateral Cooperative 
Threat Reduction (CTR) program, which remains the dominant component 
of our assistance to Kazakhstan.  Key ongoing CTR program activities 
include our efforts to secure the radiological material at the 
Soviet-era Semipalatinsk nuclear test site and to provide long-term 
storage for the spent fuel (sufficient to fabricate 775 nuclear 
weapons) from Kazakhstan's BN-350 plutonium fast breeder reactor. 
 
¶11.  (SBU) The government of Kazakhstan is responsible for funding 
the transport of the BN-350 spent fuel from Aktau to Baikal-1.  On 
September 18, the Prime Minister signed two decrees authorizing 
reserve funding and duty-free equipment transfer that will help 
ensure continuation of spent fuel transport operations.  While these 
decrees are helpful and timely, we continue to urge the government 
to take further steps, such as simplified procedures for customs 
clearances and the adoption of legislation that would exempt 
technical assistance recipients from property taxes. 
 
¶12.  (SBU) The Kazakhstanis are active participants in the Global 
Initiative to Combat Nuclear Terrorism and are seeking additional 
ways to help them burnish their non-proliferation credentials.  We 
have welcomed President Nazarbayev's April 6 announcement that 
Kazakhstan is interested in hosting the Nuclear Threat Initiative's 
IAEA-administered international nuclear fuel bank.  During his 
October 6-8 visit to Kazakhstan, Deputy Secretary of Energy Daniel 
Poneman assured the Kazakhstani government that we will support 
their proposal during the next IAEA Board of Governors meeting, 
although we have been clear that the Kazakhstanis need to work out 
the technical details directly with the IAEA.  President Nazarbayev 
also has called for the United Nations to designate August 29 as 
annual World Non-Nuclear Testing Day, which we support. 
 
ASTANA 00002006  003.3 OF 005 
 
 
 
AFGHANISTAN:  POISED TO DO EVEN MORE 
 
¶13.  (SBU) Kazakhstan has supported our stabilization and 
reconstruction efforts in Afghanistan, and in recent months, has 
expressed a willingness to do even more.  We signed a bilateral 
blanket over-flight agreement with Kazakhstan in 2001 that allows 
U.S. military aircraft supporting Operation Enduring Freedom (OEF) 
to transit Kazakhstani airspace cost-free.  This was followed in 
2002 with a bilateral divert agreement that permits our military 
aircraft to make emergency landings in Kazakhstan when aircraft 
emergencies or weather conditions do not permit landing at 
Kyrgyzstan's Manas Air Base.  There have been over 6500 over-flights 
and over 60 diverts since these agreements went into effect.  In 
January, Kazakhstan agreed to participate in the Northern 
Distribution Network -- which entails commercial shipment through 
Kazakhstani territory of non-lethal supplies for U.S. troops in 
Afghanistan.  Kazakhstan is working on sending several staff 
officers to the International Security Assistance Forces (ISAF) 
headquarters in Kabul and, further down the road, might consider 
providing small-scale non-combat military support, as it did for 
five-plus years in Iraq. 
 
¶14.  (SBU) In 2008, the Kazakhstani government provided 
approximately $3 million in assistance to Afghanistan for food and 
seed aid and to construct a hospital, school, and road.  The 
Kazakhstanis are finalizing a proposal to provide free university 
education in Kazakhstan to Afghan students.  The government has also 
offered to provide training to Afghan law enforcement officers at 
law enforcement training institutes in Kazakhstan, and is working on 
a 2009-2011 assistance program for Afghanistan that might include 
free university education for up to 1,000 Afghan students. 
Kazakhstan's Border Guard Service is ready to allow Afghan cadets to 
attend its full four-year academy as soon as the appropriate 
bilateral agreements are signed.  The Kazakhstanis intend to make 
Afghanistan one of their priority issues during their 2010 OSCE 
chairmanship. 
 
ECONOMY:  AGGRESSIVE STEPS TO TACKLE ECONOMIC CRISIS 
 
¶15.  (SBU) Kazakhstan is Central Asia's economic powerhouse, with a 
GDP larger than that of the region's other four countries combined. 
Economic growth averaged over nine percent per year during 2005-07, 
before dropping to three percent in 2008 with the onset of the 
global financial crisis.  The International Monetary Fund is 
predicting negative two percent growth for Kazakhstan in 2009, with 
a modest economic recovery poised to begin in 2010.  Astute 
macroeconomic policies and extensive economic reforms have played an 
important role in Kazakhstan's post-independence economic success. 
The government has taken significant steps to tackle the domestic 
reverberations of the economic crisis.  It has allocated around $20 
billion to take equity stakes in private banks, propped up the 
construction and real estate sectors, and supported small- and 
medium-sized enterprises and agriculture. 
 
¶16.  (SBU) The banking sector continues to struggle, as Kazakhstan's 
leading commercial banks have been unable to repay creditors and 
seek to restructure their debt.  In July, BTA Bank, the country's 
largest commercial bank, declared a moratorium on interest and 
principal payments.  BTA's external debts are valued at $13 billion, 
of which the bank said it will repay $3 billion this year.  In 2008, 
BTA's net losses were $7.9 billion, and total obligations exceeded 
the value of its assets by $4.9 billion.  Kazakhstani authorities 
continue to investigate former BTA Chairman Mukhtar Ablyazov and 
other former top managers of the bank.  On July 14, the Prosecutor 
General's office charged 12 members of BTA's credit committee with 
embezzlement, and six were found guilty and sentenced to jail. 
 
DEMOCRACY:  SLOW GOING 
 
ASTANA 00002006  004.3 OF 005 
 
 
 
¶17.  (SBU) While the Kazakhstani government articulates a strategic 
vision of democracy, it has lagged on the implementation front. 
President Nazarbayev's Nur Otan party officially received 88% of the 
vote and won all the parliamentary seats in August 2007 elections 
which OSCE observers concluded did not meet OSCE standards.   The 
next parliamentary and presidential elections are scheduled for 2012 
although rumors of early parliamentary elections are intensifying. 
 
¶18.  (SBU) When Kazakhstan was selected to be 2010 OSCE 
chairman-in-office at the November 2007 Madrid OSCE Ministerial 
meeting, Foreign Minister Tazhin promised his government would amend 
Kazakhstan's election, political party, and media laws in accordance 
the recommendations of the OSCE and its Office of Democratic 
Institutions and Human Rights (ODIHR).  (NOTE:  Then Foreign 
Minister Tazhin also promised that as OSCE chairman, Kazakhstan 
would support the OSCE's Human Dimension and preserve ODIHR's 
mandate, including its critical role in election observation.  END 
NOTE.)  President Nazarbayev signed the amendments into law in 
February.  While key civil society leaders were disappointed that 
the new legislation did not go further, we considered it to be a 
step in the right direction and continue to urge the government to 
follow through with additional reforms. 
 
¶19.  (SBU) On September 3, the Balkash district court sentenced 
Kazakhstan's leading human rights activist Yevgeniy Zhovtis to four 
years imprisonment for vehicular manslaughter, and the appeals court 
upheld this decision on October 20.  The charge stemmed from a July 
26 accident in which Zhovtis struck and killed a pedestrian with his 
car.  Local and international civil society representatives and 
opposition activists heavily criticized the trial for numerous 
procedural violations. 
Some observers allege that the harsh sentence imposed on Zhovtis, a 
strong critic of the regime, was politically motivated.  The 
Ambassador has publicly urged the Kazakhstani authorities to provide 
Zhovtis access to fair legal proceedings, the Embassy issued a 
statement on October 22 expressing concern about the process 
following the appeal decision, and we continue to raise the case 
with senior government officials in Astana and in Washington. 
 
¶20.  (SBU) While the Kazakhstanis pride themselves on their 
religious tolerance, religious groups not traditional to Kazakhstan, 
such as Evangelical Protestants, Jehovah's Witnesses, Hare Krishnas, 
and Scientologists, have faced difficulties with the authorities. 
Parliament passed legislation in late 2008 aimed at asserting more 
government control over these "non-traditional" religious groups. 
Following concerns raised by civil society and the international 
community, President Nazarbayev chose not to sign the legislation, 
but instead sent it for review to the Constitutional Council -- 
which ultimately declared it to be unconstitutional. 
 
¶21.  (SBU) Though Kazakhstan's diverse print media include many 
newspapers sharply critical of the government and of President 
Nazarbayev personally, the broadcast media are essentially 
government-controlled.  On July 10, President Nazarbayev signed into 
law Internet legislation which provides a legal basis for the 
government to shut down and block websites whose content allegedly 
violates the country's laws.  On October 22, a Kazakhstani appeals 
court upheld the Editor-in-Chief of "Alma Ata Info" newspaper's 
August 8 sentence to three years in prison for publishing 
confidential internal documents of the Committee for National 
Security (KNB).  In addition, the courts have levied 
disproportionately large fines for libel against two opposition 
newspapers over the past year, forcing one paper to close while 
another is still fighting the case through appeals.  These appear to 
be steps in the wrong direction at a time when Kazakhstan's record 
on democracy and human rights is in the spotlight because of its 
forthcoming OSCE chairmanship.  We have expressed our disappointment 
about the Internet legislation and libel regime, and have urged the 
 
ASTANA 00002006  005.3 OF 005 
 
 
government to implement the Internet law in a manner consistent with 
Kazakhstan's OSCE commitments on freedom of speech and freedom of 
the press. 
 
OIL AND GAS PRODUCTION 
 
¶22.  (SBU) Kazakhstan produced 70.7 million tons of oil in 2008 
(approximately 1.41 million barrels per day (bpd), and is expected 
to become one of the world's top ten crude oil exporters soon after 
¶2015.  From January - August, Kazakhstan increased oil production by 
8.8%, to 41.83 million tons, compared to the same period last year. 
U.S. companies -- ExxonMobil, Chevron, and ConocoPhillips -- have 
significant ownership stakes in each of Kazakhstan's three major 
hydrocarbon projects:  Tengiz, Kashagan, and Karachaganak. 
 
¶23.  (SBU) While Kazakhstan has significant gas reserves (2.0 
trillion cubic meters is a low-end estimate), current gas exports 
are less than 10 billion cubic meters (bcm), in part because gas is 
being reinjected to maximize crude output, and in part because 
Gazprom, which has a monopoly on the gas market in the region, pays 
producers only a fraction of the going European price.  The 
country's 40 bcm gas pipeline to China will help to break that 
monopoly, although the majority of the gas that will be exported via 
this pipeline will come from Turkmenistan and Uzbekistan, not 
Kazakhstan.  The first line of the China gas pipeline was completed 
in July, and the first shipments are planned in November. 
Kazakhstani gas exports to China will be modest, 4-6 bcm annually. 
The government of Kazakhstan has made several public statements 
confirming that it has no objection to the Nabucco gas pipeline 
project, but the government has emphasized that Kazakhstan does not 
and will not produce enough gas to supply the pipeline. 
 
OIL AND GAS TRANSPORTATION 
 
¶24.  (SBU) With significant oil production increases on the horizon, 
Kazakhstan must develop additional transport routes to bring its 
crude to market.  Our policy is to encourage Kazakhstan to seek 
diverse transport routes, which will ensure the country's 
independence from transport monopolists.  Currently, most of 
Kazakhstan's crude is exported via Russia, although some exports 
flow east to China, west across the Caspian through Azerbaijan, and 
south across the Caspian to Iran.  In July, for example, national 
oil company KazMunaiGaz (KMG) announced the completion of the 
Atasu-Alashankou segment, and it recently began pilot crude 
shipments via the Kenkiyak-Kumkol segment of the 3,000 kilometer oil 
pipeline to China, which will initially carry 200,000 bpd, with 
expansion capacity of 400,000 bpd. 
 
¶25.  (SBU) We support the expansion of the Caspian Pipeline 
Consortium (CPC) pipeline, which is the only oil pipeline crossing 
Russian territory that is not entirely owned and controlled by the 
Russian government.  We also support implementation of the 
Kazakhstan Caspian Transport System (KCTS), which envisions a 
"virtual pipeline" of tankers transporting up to one million barrels 
of crude per day from Kazakhstan's Caspian coast to Baku, from where 
it will flow onward to market through Georgia, including through the 
Baku-Tbilisi-Ceyhan (BTC) pipeline.  Negotiations with international 
oil companies to build the onshore pipeline and offshore marine 
infrastructure for this $3 billion project have recently stalled, 
although the government has expressed an interest in resuming 
talks. 
 
HOAGLAND