US embassy cable - 05ALMATY1203

C O N F I D E N T I A L  ALMATY 001203 
 
SIPDIS 
 
 
EUR/CACEN FOR MUDGE 
 
E.O. 12958: DECL: 03/31/2015 
TAGS: ENRG, KR, KZ, ECONOMIC, Energy 
SUBJECT: KAZAKHSTANI OIL PATCH: KYRGYZ TULIPS WON'T GROW 
HERE 
 
Classified By: POEC Chief Deborah Mennuti for reasons 1.4 (b) and (d). 
 
1. (C) Summary: The Kazakhstani oil patch, both expats and 
locals, neither foresee nor seek a Kazakhstani repeat of the 
Kyrgyz "Tulip Revolution." They cite the following reasons: 
 
- Kazakhstani economy is dynamic and growing. Despite rural 
poverty, many average citizens have a seat at the table; 
- President Nazarbayev is smarter than his Kyrgyz 
counterpart. He will draw the necessary lessons and may seek 
better ties with the opposition; 
- Overthrow of Akayev was a coup, not a popular revolution. 
Nazarbayev is more adapt at managing elites and largely 
respects their economic interests. 
 
Only one of eight oilies voiced muted support for a Kyrgyz 
scenario in the hope of ending corruption. Another predicted 
a GOK scramble to bolster relations with both Russia and the 
United States, while a third speculated on a Yeltsin-Putin 
style transfer of power. End Summary. 
 
2. (C) Energy officer talked with eight oil-sector 
representatives, three Kazakhstani and five expats. The 
companies included four oil majors (two U.S. and two 
European), a Canadian independent producer, a U.S. service 
company, a small, independent Kazakhstani producer, and, 
finally, a Chinese energy company. 
 
---------------- 
It's the Economy 
---------------- 
 
3. (C) Most interlocutors juxtaposed Kazakhstan's multi-year, 
near ten-percent growth with Kyrgyzstan's humbler economic 
accomplishments. A government relations rep for a U.S. major 
quipped that "Kazakhstan has an economy." An Amcit working 
for small Kazakhstani producer with ten years under his belt 
in-country said that "people are happier, they are doing 
better." He contrasted the current situation with widespread 
grumbling and discontent during the first few years of his 
tenure here. 
 
---------------------------- 
Comparing Apples and Oranges 
---------------------------- 
 
4. (C) A majority cited Nazarbayev's combination of deftness 
and toughness as opposed to Akayev's grinning, "Mr. Nice Guy" 
image. An employee of a European oil major dubbed Nazarbayev 
"the best guy to learn a lesson." He predicted an opening to 
the opposition combined with a tightening of rules for NGOs. 
A Kazakh working for a Chinese producer supported this view. 
She said that Nazarbayev had "learned his lesson" and also 
predicted warmer state-opposition relations. She, however, 
was outraged at the biased - or simply nonexistent - coverage 
of Kyrgyz events on Kazakhstani state-controlled television 
stations. 
 
----------------- 
Bigger Pie to Cut 
----------------- 
 
5 (C) Some pointed to a rising economic boat for Kazakhstani 
elites, versus Kyrgyzstan's family-dominated economy. They, 
the theory goes, can earn without political control. One 
expat noted the existence of competing "financial-industrial 
groups" and Nazarbayev's "tip-toeing" around them. 
 
6. (C) The elite equation, however, cuts both ways. The Amcit 
complained of the elites "endless appetite." He worried that 
elite greed could metastasize into politics if left 
unchecked. An employee of a Canadian oil independent saw no 
"down-side" to regime change in Kazakhstan -- the only person 
polled to express such a view. He was bitterly critical of 
elite corruption such as allegations concerning Timur 
Kulibayev, the vice president of the state oil producer and 
presidential son-in-law. According to him, Kulibayev and his 
ilk prey on foreigners and locals alike. 
 
------------------------------------- 
Closer Relations with U.S. and Russia 
 
------------------------------------- 
 
7. (C) The country representative for U.S. oil major 
predicted that the GOK would quickly seek to bolster ties 
with the U.S. and Russia. He hoped the USG would use this 
opportunity to seek better treatment of U.S. and other 
foreign businesses in Kazakhstan. 
 
----------------------------- 
Nazarbayev December Surprise? 
----------------------------- 
 
8. (C) A Kazakh representative of a European major, a former 
government official and by far the best connected of the 
group, thought a Kyrgyz scenario unlikely, though possible if 
a "perfect storm" of political unrest were to hit. That 
storm, according to him, would combine simultaneous 
industrial strikes, power outages, a ham-handed crackdown 
and/or a scandal. 
 
9. (C) He sensed that Nazarbayev may be planning a 
Yeltsin-like exit in December 2005 through early elections. 
Assured guarantees from prosecution and some retention of the 
trappings of office, Nazarbayev would encourage the victory 
of Zharmakhan Tuyakbay, the former speaker of the Mazhilis 
and Procurator General who is currently the opposition 
presidential candidate. Family power centers -- such as 
Kulibayev's oil fiefdom -- would have to be scaled back, but 
could remain. Only Nazarbayev's fear of post-presidential 
"Kazakhgate"-related U.S. or international prosecution blocks 
this graceful exit. 
 
10. (C) Comment: A call for reform -- including a curb on 
corruption -- lies hidden in the hydrocarbon sector's take on 
the "tulip revolution."  It hopes events in Bishkek will 
serve as a wake-up call for the present government.  As one 
Western oil man lamented: "Kazakhstan would have a real 
future if the people in power would only steal millions, and 
not tens and hundreds of millions." 
 ORDWAY 
 
 
NNNN