VZCZCXRO2301
OO RUEHIK
DE RUEHTA #2168/01 3560102
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O 220102Z DEC 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7018
INFO RUCNCIS/CIS COLLECTIVE 2266
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
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UNCLAS SECTION 01 OF 03 ASTANA 002168 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EAP/CM, EEB 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EPET SOCI CH RS TX KZ
SUBJECT:  KAZAKHSTAN:  HU JINTAO'S PIPELINE DIPLOMACY SUCCESS 
 
REF:      A.  BEIJING 3326 
      ¶B.  ASTANA 2095 
  ¶C.  ASTANA 1775 
  ¶D.  ASTANA 1035 
 
ASTANA 00002168  001.2 OF 003 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Prior to Chinese President Hu Jintao's December 
12 visit to Kazakhstan, the media touted Kazakhstani and Chinese 
positive expectations for the visit, as well as reports of a 
demonstration in protest of a Chinese initiative to lease 
Kazakhstani farmland.  As expected, both leaders praised bilateral 
relations and advocated expanded cooperation during the visit.  On 
December 12, Presidents Nazarbayev and Hu formally opened the 
Kazakhstan-China pipeline, and then Hu and the presidents of 
Kazakhstan, Uzbekistan, and Turkmenistan inaugurated the entire 
Turkmenistan-China gas pipeline -- the first in the region to 
completely bypass Russia -- on December 14 in Turkmenistan (ref A). 
Chinese news media reported that Nazarbayev praised China's policies 
in Xinjiang in the wake of July events, which, if accurately 
reported, could be a subtle shift towards an official policy more 
openly supportive of China's central government on Uighur issues 
(ref B).  Hu's highly celebrated visit indisputably underscored the 
importance of Kazakhstani-Chinese relations, and the concerns many 
Kazakhstanis feel about increasing Chinese activity in Kazakhstan's 
economy.  END SUMMARY. 
 
GREAT EXPECTATIONS -- FOR HU'S VISIT... 
 
¶3.  (SBU) On December 10, on the eve of Chinese President Hu 
Jintao's visit to Kazakhstan, Chinese Ambassador to Kazakhstan Cheng 
Guoping told the press the visit would emphasize rapidly advancing 
cooperation in the non-resource sector.  He cited 10 ongoing 
projects and 40 under development, specifically highlighting the 
intensive implementation of an aluminum smelter in Pavlodar oblast. 
Cheng Guoping also said China and Kazakhstan planned to sign 
cooperation agreements on finance, wind power, the pharmaceutical 
industry, agriculture, and cement production, and announced Hu's 
plan to attend the commissioning ceremony for the first branch of 
the Kazakhstan-China gas pipeline.  (NOTE:  Just before Hu's visit, 
Kazakhstan's President Nazarbayev ratified an August 2007 bilateral 
agreement on construction and operation of the Kazakhstan-China Gas 
Pipeline.  END NOTE.) 
 
...BUT DEMONSTRATORS PROTEST AGAINST CHINESE LAND DEAL 
 
¶4.  (SBU) Despite the generally positive expectations for the visit, 
a group of Kazakhstani intellectuals organized a December 11 protest 
in front of the Chinese Consulate General in Almaty against the 
allocation of one million hectares of land allegedly requested by 
China for agricultural needs.  The influence of China in Kazakhstan 
arouses strong emotions, primarily of wariness and concern, among 
Kazakhstani interlocutors (reftels).    Because no officials from 
the Consulate talked to the protesters or accepted their petition, 
the group announced their plan to mail the original to the Chinese 
Consulate, with a copy to the Kazakhstani Presidential 
Administration.  During the visit, Kazakhstan's Minister of 
Agriculture Akylbek Kurishbayev said bilateral talks did not address 
the question of China's leasing of land. 
 
NAZARBAYEV AND HU PRAISE NEW STAGE OF RELATIONS 
 
¶5.  (SBU) During Hu's December 12 visit, as expected, both leaders 
praised bilateral relations and advocated expanded cooperation. 
President Nazarbayev extolled the role of China in strengthening 
security and maintaining stability in the region and world. 
Nazarbayev also thanked China for its loan to develop the 
Kazakhstani economy during the crisis period.  He praised the 
"good-neighborly" and "trust-based" nature of bilateral relations, 
noting the visit was Hu's fifth to Kazakhstan and the 18th meeting 
between Hu and Nazarbayev in seven years.  Finally, Nazarbayev said 
the countries are "witnessing a new stage of implementing 
strategically important joint economic projects."  (NOTE:  China's 
economic clout in Kazakhstan is undeniably increasing rapidly.  In 
2008, bilateral trade turnover exceeded $17.5 billion, and China 
 
ASTANA 00002168  002.2 OF 003 
 
 
became the leading destination for Kazakhstani exports, absorbing 
13.5% of Kazakhstan's total exports.  China also became Kazakhstan's 
second largest source of imports behind Russia, accounting for 24.3% 
of Kazakhstan's total imports.  END NOTE.) 
 
¶6.  (SBU) Chinese President Hu Jintao advanced five proposals to 
further develop bilateral relations, including maintaining close 
high-level contacts, expanding cooperation in the energy sector 
through joint pilot projects an in non-raw materials sectors, and 
stepping up implementation of projects using China's $10 billion 
loan.  Hu also urged strengthening cooperation in the financial 
sector, as well as in the fields of humanities and culture. 
Nazarbayev thanked China for providing an additional $3.5 billion to 
Kazakhstan to create non-resource sector joint ventures.  During 
Hu's visit to Astana, Kazakhstan and China signed documents on 
cooperation in the fuel and energy sector, including a loan 
agreement on upgrading an Atyrau oil refinery, an agreement between 
the Samruk-Kazyna national welfare fund and China Guangdong Nuclear 
Power on the joint development of renewable energy resources, and a 
memorandum of understanding on financing the second section of the 
Kazakhstan-China gas pipeline. 
 
NAZARBAYEV TO LEARN CHINESE? 
 
¶7.  (SBU) During the visit, Nazarbayev and Hu watched a cultural 
performance of music and dances by students from Kazakhstan's 
Eurasia University Confucius Institute.   According to press 
reports, Hu asked about the origins of the students and the 
institute's activities, while Nazarbayev showed great interest in 
learning the Chinese language, and even asked whether he could 
become a student at Astana's Confucius Institute.  Hu declared 
China's willingness to expand cooperation with Kazakhstan in 
science, technology, education, culture, sports and tourism, and 
announced a decision to double the number of Kazakhstani students on 
Chinese government scholarships to 200 per year. 
 
PRESIDENTS TURN ON THE KAZAKHSTANI-CHINA GAS PIPELINE 
 
¶8.  (SBU) In the visit's main event, Presidents Nazarbayev and Hu 
initiated the pumping of gas in the Kazakhstan-China pipeline, by 
pushing a button in the KazMunaiGas (KMG) headquarters in Astana 
(ref A).  (NOTE:  The Kazakhstan-China Gas Pipeline (KCGP) is part 
of the $20 billion Central Asia Gas Pipeline (CAGP) project, which 
will transport natural gas from Turkmenistan to China through 
Uzbekistan and Kazakhstan.  END NOTE.)  The first section includes 
two parallel pipelines totaling 1300 kilometers in length. 
Kazakhstan plans to complete its part of the pipeline by June 2010. 
The main contractors of the project are Kazakhstan's KazStroyService 
and CPPE (China Petroleum Pipeline Engineering).  KazMunaiGas 
subsidiary, KazTransGas, and the Trans-Asia Gas Pipeline Company 
Limited, with shareholders CNODC and PetroChina, established the 
50-50 owned Asian Gas Pipeline Company in 2008 to implement and 
oversee the project.  The pipeline's initial capacity will be 4.5 
billion cubic meters of gas per year, but total capacity is expected 
to eventually reach 30 billion cubic meters.  Experts predict gas 
supplies to China will begin at 13 billion cubic meters and increase 
to 30 billion cubic meters by the end of 2013.  The pipeline will 
reportedly satisfy a significant portion, perhaps up to a third, of 
China's increasing demand for natural gas.  The pipeline will extend 
from China's western Xinjiang province to its large eastern cities, 
including Shanghai. 
 
FOUR PRESIDENTS INAUGURATE FIRST PIPELINE TO BYPASS RUSSIA 
 
¶9.  (SBU) On December 14, Kazakhstan's President Nazarbayev, along 
with Chinese President Hu, President Islam Karimov of Uzbekistan, 
and Turkmenistan's Gurbanguly Berdimuhamedov, attended an 
inauguration ceremony and formally commenced gas shipments from 
Turkmenistan to China via the 1,833-km pipeline (ref A).  (NOTE: 
The pipeline is the first major Central Asian gas route to 
completely bypass Russia, breaking a stranglehold maintained since 
the 19th century.  END NOTE.) 
 
NAZARBAYEV PRAISES CHINA'S HANDLING OF EVENTS IN XINJIANG? 
 
 
ASTANA 00002168  003.2 OF 003 
 
 
¶10.  (SBU) Kazakhstani Uighurs did not protest Hu's visit. 
According to China's official news outlet, Xinhua, Nazarbayev 
declared that China and Kazakhstan have made concerted efforts in 
the fight against the "three evil forces of terrorism, separatism, 
and extremism," cracking down on drug trafficking and other 
cross-border crimes.  Xinhua also reported that Nazarbayev agreed 
with China's handling of the July 5 incident in Urumuqi in northwest 
China's Xinjiang Uyghur Autonomous Region, and said "China's efforts 
were necessary to maintain stability in Xinjiang, and were good for 
stability in Kazakhstan."  Kazakhstani official sources and media, 
significantly, did not report these alleged quotes from Nazarbayev. 
Bolat Dzhaksygaliyev, a specialist in the Ministry of Foreign 
Affairs' Asia and Africa Department, told PolOff that he personally 
prepared Nazarbayev's talking points for Hu's visit, and denied that 
such remarks were expected. 
 
¶11.  (SBU) COMMENT:  If accurately reported, these statements would 
have been the most explicit comments of support for China's handling 
of the July and August events in the Xinjiang Uighur Autonomous 
Region (XUAR), which had previously stirred up significant concern 
in Kazakhstan's Uighur community.  Kazakhstani political scientists 
had previously told Emboffs that the central government has been 
cooperating with the Chinese government, and certainly sympathizes 
with the Chinese government's concern about Uighur aspirations for 
more autonomy.  However, the government has been careful to make 
very vague statements in support of stability and maintaining 
inter-ethnic harmony, without clearly praising or criticizing the 
government's actions (ref B). 
 
¶12.  (SBU) COMMENT CONTINUED:  The prominent media attention and 
wide scope of the visit underscore the importance of 
Kazakhstani-Chinese relations.  Senior Kazakhstani officials, 
businessmen, and politicians have expressed concern over China's 
growing influence in the economy -- particularly Kazakhstan's 
natural resources -- and have discussed potentially limiting Chinese 
investments (refs C-D).  Nonetheless, cash and political support 
from China, without bothersome political conditionalities, continue 
to flow, making this ambivalent relationship worthy of continued 
close attention.  END COMMENT. 
 
HOAGLAND