US embassy cable - 05ALMATY956

UNCLAS  ALMATY 000956 
 
SIPDIS 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, PGOV, PHUM, KZ, ECONOMIC 
SUBJECT: AMBASSADOR'S MEETING WITH PRESIDENTIAL 
ADMINISTRATION DEPUTY MASIMOV 
 
1. (U) Summary. On March 3, Ambassador met with 
Presidential Administration (PA) Deputy Karim Masimov. 
Deputy Minister of Industry and Trade Zhanar Aitzhanova, PA 
Chief of the Center for Foreign Policy Nurlan Yermekbayev, 
Astana PO and Astana USAID officer were also present. 
Issues discussed included Kazakhstan's emphasis on economic 
reform, President Nazarbayev's proposal for a Central Asian 
Union, USAID's Program for Economic Development, building a 
civil society, the extremism law, reducing corruption, and 
foreign policy priorities.  Masimov and Aitzhanova's 
comments on WTO accession and intellectual property rights 
discussion reported septel.  End Summary. 
 
Economic Reform First 
--------------------- 
 
2. (SBU) Masimov pointed to President Nazarbayev's February 
18 state of the nation speech and highlighted economic and 
political themes from the address.  Economic reform, 
Masimov declared, is Astana's first priority as a market 
economy.  Nazarbayev's proposal for a Central Asian Union 
drew upon the EU as a model, Masimov said.  Kazakhstan 
already has a "good basis" with Uzbekistan and Kyrgyzstan 
for developing this concept further, including a common 
history and customs.  Free trade would be the initial 
focus, but a regional union could also take up issues such 
as a single currency, a central bank, counter-terrorism, 
transnational crime, and a unified defense.  Nazarbayev was 
interested in the opinion of others on this question. 
 
3. (SBU) Ambassador endorsed focusing first on trade 
issues.  The United States welcomed Kazakhstan leveraging 
its economic and political leadership to strengthen the 
region.  He noted that most of the work to harmonize 
regional trade would center on relations with Uzbekistan. 
Ambassador offered to consult with Washington further for 
opinions on the proposed union.  As a market economy, 
Ambassador also urged that Kazakhstan allow market forces 
to determine the question of airline routes into the 
country rather than artificially restricting airlines to 
the Astana hub. 
 
4. (SBU) Ambassador assured Masimov that the United States 
remains committed to the Houston Initiative (HI).  He 
noted, however, that taxation of assistance had created 
some difficulties for the program.  USAID's new Program for 
Economic Development (PED) will encompass most of HI's 
activities but with the added element of cost-sharing by 
the government of Kazakhstan.  Moving ahead with PED, he 
emphasized, will require Parliament's ratification of the 
1992 Bilateral Assistance Agreement and implementation 
memo. 
 
5. (SBU) Kazakhstan, Masimov responded, wants to become an 
attractive investment option beyond the energy sphere. 
Astana sees HI as a vehicle to bring in U.S. investors to 
small and medium enterprises (SME).  USAID Astana officer 
explained that the goal of the SME development plan is to 
raise local standards to make these enterprises more 
attractive to American investors.  Ambassador suggested tax 
holidays and a separate agency that could market Kazakhstan 
to potential SME investors as possible steps. 
 
Democracy with a Kazakhstani Flavor 
----------------------------------- 
 
6. (SBU) Elaborating on political themes from Nazarbayev's 
address, Masimov said that Kazakhstan was building civil 
society on a western model but was also drawing on the 
experiences of South Korea, Malaysia, and its own 
traditions of a multi-ethnic/religious society.  The 
National Democracy Commission is a platform for a 
discussion of Kazakhstan's development. 
 
7. (SBU) Masimov commented that he "agreed and disagreed" 
with portions of State's recently released Human Rights 
Report on freedom of speech in Kazakhstan.  Human rights 
are taken seriously, he continued, but people must be held 
accountable for their words.  With the threat of terrorism 
edging closer to Kazakhstan, Nazarbayev felt compelled to 
sign the law on extremism.  Masimov asked for FBI and 
Interpol assistance to combat terrorism. 
 
8. (SBU) Ambassador cautioned that it would be important to 
see the extremism law in practice and advised tailoring 
implementation on a narrow basis.  The United States, he 
continued, was ready to help Kazakhstan in the fight 
against terrorism. 
 
9. (SBU) Masimov acknowledged that Kazakhstan must reduce 
corruption.  He described his support for e-government 
measures as a means of reducing opportunities for public 
 
 
officials to solicit bribes.  He is also advocating "one- 
stop shopping" in Astana and Almaty (to start) for drivers' 
licenses, pensions, and other services.  Increasing 
government salaries and standardizing government services 
are also on the table.  Ambassador recommended drawing on 
the experiences of neighbors.  Masimov said that Kazakhstan 
is looking at Estonia, Singapore, and Colorado for models. 
 
10. (SBU) Electoral and judicial reform, Masimov observed, 
are two other areas on Astana's agenda.  The government is 
considering expanding electoral commissions and is 
interested in improving electoral administration. 
Strategies for improving the "social status" of judges are 
under review.  Ambassador emphasized the importance of 
transparency in future elections.  He cited a website 
associated with Kyrgyzstan's recent elections that allowed 
public access within three days to the protocols as a 
critical tool for building public confidence.  Responding 
to Masimov's expression of interest, the Ambassador 
provided the website address. 
 
The Foreign Policy Front 
------------------------ 
 
11. (SBU) Turning to foreign policy priorities, Masimov 
described Russia, China, the United States, and the EU as 
the "strategic relationships."  Kazakhstan, he added, had 
$7 billion in trade with the EU last year.  Ambassador 
noted that Kazakhstan's trade volume with Ukraine 
outweighed trade with the rest of Central Asia combined. 
Masimov interjected that President Yushchenko's new 
government has pledged support for the stability of 
Kazakhstan.  (Note:  President Yuschenko and President 
Saakashvili are expected later this month.  End note.) 
 
12. (SBU) Delimitation of the border with Russia, Masimov 
continued, and President Putin's acknowledgement of 
Kazakhstan's existence based on that border was an 
important milestone.  Astana is now looking ahead to the 
Shanghai Cooperation Organization summit scheduled for July 
5, 2005.  Masimov commented that the SCO hopes that 
President Karzai will attend. 
 
13. (SBU) U.S. support of Kazakhstan's bid for the OSCE 
chairmanship is extremely important, Masimov observed.  The 
United States would be very pleased to see Kazakhstan as 
the first former Soviet state to lead the OSCE, the 
Ambassador responded, but the path ahead is complicated and 
will require full commitment to all OSCE principles. 
 
Ordway 
 
 
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