US embassy cable - 05ALMATY2283

C O N F I D E N T I A L  ALMATY 002283 
 
SIPDIS 
 
 
E.O. 12958: DECL: 06/15/2015 
TAGS: ECON, PGOV, PREL, ECONOMIC 
SUBJECT: ASIA SOCIETY KAZAKHSTAN CONFERENCE 
 
 
Classified By: Ambassador John Ordway. Reasons:  1.5 (B, D) 
 
 1.  (SBU) Summary:  The Asia Society's Kazakhstan Business 
Conference in Almaty was a smashing success.  Highlights 
included a strong exchange of views between George Soros and 
FM Tokayev; multiple appearances by opposition politicians 
including on panel presentations; a major restatement of 
Kazkhstan's foreign policy and reform orientation by 
President Nazarbayev; private one-on-one meetings between 
Nazarbayev and conference participants Richard Holbrooke, 
George Soros and Zeyno Baran; and frank, open discussion of 
the economic and security challenges Kazakhstan faces in 
diversifying their oil-based economy. 
 
A Highly Successful Conference 
------------------------------ 
 
2.  (SBU)  The June 14-16 Asia Society business conference 
grew out of a meeting between the Society's chairman, Richard 
Holbrooke, and President Nazarbayev in April 2004.  The 
Society's organizers began to organize the conference in the 
fall of 2004 with very low expectations.  By the end of the 
conference, however, they were ecstatic about the outcome -- 
and virtually every participant we talked to was saying that 
it was one of the best such conferences they had ever seen. 
There were several factors that contributed to that success. 
 
--  High level commitment:  The conference had President 
Nazarbayev's full backing, which was implemented principally 
through his Economic and Foreign Policy Assistant, Kerim 
Masimov.  The conference got extremely strong representation 
from the GOK, including an opening night speech by 
Nazarbayev, opening remarks by FM Tokayev, and a series of 
ministers and presidential staffers participating in panels. 
 
--  Strong organization:  Asia Society, which has a depth of 
experience in similar conferences, teamed up with Dariga 
Nazarbayeva's Eurasia Media Forum, which brought strong local 
organizational skills and the contacts needed to secure an 
excellent slate of Kazakhstani speakers and panelists. 
 
--  Opposition participation.  The presence of the opposition 
at the conference, including questions from the floor and 
participation in panel participations, provided a real spark 
to the proceedings.  When the opposition first approached 
Asia Society about participation, the Kazakhstani reaction 
was immediately negative.  At Asia Society's request, the 
charge discussed the matter with FM Tokayev, who immediately 
gave his support for the concept.  Holbrooke then called 
Masimov, who quickly agreed to the opposition's participation 
(except at the opening dinner, which was the only event in 
which Nazarbayev participated.) 
 
--  Well-designed program.  The conference format was very 
conducive to informal exchange of views, and allowed for 
questions from the audience.  The topics also covered all 
major issues of concern. 
 
The Bottom Line 
--------------- 
 
3.  (U) The following is synthesized from Asia Society 
Chairman Richard Holbrooke's closing remarks summing up the 
results of the conference. 
 
--    Kazakhstan matters because of its energy resources, its 
role in ensuring stability in Central Asia, and its economic 
potential. 
 
--    Kazakhstan lives in a dangerous neighborhood with 
uncertainties and instability in all the other Central Asian 
states. 
 
--  Development of the non-energy sector will be critical for 
Kazakhstan's future. 
 
--  Russia still matters in Kazakhstan, but within ten years 
China will have closed the gap.  The U.S. will remain a vital 
player. 
 
--  The U.S. cares about Kazakhstan. 
 
--  Economic liberalization and economic reform, already far 
advanced, need to proceed at even faster tempos.  There is a 
dichotomy between plans and reality.  Expensive and 
unreliable telecoms monopolies, and capacity restraints and 
lack of competition in air transport, are just two examples 
of practices that will stifle economic diversification. 
 
--  Political development is critical.  Political 
institutions that will survive regardless of who is leader 
are essential for stability and economic development. 
 
--  Corruption is a cancer that will destroy everything else 
that Kazakhstan is seeking to accomplish. 
 
Meetings with Nazarbayev 
------------------------ 
 
4.   (C) Holbrooke had a lengthy private meeting with 
Nazarbayev on June 14, just before the conference opening. 
Holbrooke told the Ambassador it was the most relaxed and 
sincere of the meetings that he has had.  Nazarbayev 
responded positively to Holbrooke's outline of the need for a 
clean presidential election -- which Nazarbayev strongly 
hinted would be in December 2005.  He committed to working 
further with Asia Society, including an appearance at an 
event in the U.S. if he attended the UNGA in September. 
(Note:  Holbrooke believes, and we agree, that Nazarbayev 
would go to New York only if he can be assured of a meeting, 
even a brief one, with President Bush.  He would be 
politically vulnerable to opposition criticism, especially at 
the beginning of his election campaign, if he did not get 
such a meeting.)  Nazarbayev evinced considerable concern 
about the USG's goals and intentions with regard to 
democratization -- with particular emphasis on what he saw as 
the potentially negative role of U.S. NGOs. 
 
5.  (C) George Soros also had a very lengthy, one-on-one 
meeting with Nazarbayev on June 15.  (Note:  Soros provided 
the Ambassador with a brief characterization of the meeting 
by telephone before he left Almaty.  Soros' visit was the 
result of an invitation by Nazarbayev to visit Kazakhstan, 
and the complete dropping of all criminal charges against 
Soros's local organization, OSI Kazakhstan.)  Soros said that 
it had been a "very good, really frank" meeting.  He said 
that Nazarbayev wanted to establish a friendly relationship. 
Soros said he had asked about how Nazarbayev viewed the 
Giffen case.  Nazarbayev said that he was "not really 
bothered" about it because the money that had been received 
from Giffen had become part of the oil fund in accordance 
with the law.  Soros also brought up corruption and the role 
of the President's family, saying that Nazarbayev had to do 
something about them.  Nazarbayev responded, "I don't know 
what they do."  Judicial reform also came up, and Nazarbayev 
asked Soros to provide advice.  Soros said he would send a 
team to see what kind of help they could provide.  Responding 
to a question by the Ambassador, Soros said that Nazarbayev 
was quite critical of President Bush's message on 
democratization, saying "the process has to be slower."  On 
the whole, Soros said, Nazarbayev had made a good impression. 
 OSI Associate Director Anthony Richter told the ambassador 
that the GOK was looking to OSI as its "consultant on 
democracy." 
 
6.  (C) Zeyno Baran, Director of International Security and 
Energy programs at the Nixon Center, had a 30-minute 
one-on-one meeting with Nazarbayev on June 15 that focused on 
Islam and extremism.  Baran told the ambassador that 
Nazarbayev has a "good vision" for the development of 
moderate, traditional Islam in the country and that he 
recognizes the need to find effective, non-repressive methods 
of combating more radical visions of Islam from other regions 
of the world.  He had a concept of joining with the leaders 
of countries that share this vision to establish a visible 
alternative to politicized and radicalized Islam. 
 
7.  (C) Comment:  Kazakhstan abounds in contradictions, and 
President Nazarbayev and his policies are no exception. 
Strong macro-economic reform and encouragement of major 
foreign direct investment contrasts with rapacious 
robber-baron behavior toward foreign and domestic investors 
-- exacerbated by insider dealing and corruption.  Kazakhstan 
has the most open society in Central Asia (admittedly not a 
very high standard), and a strong ideological commitment to 
further democratization, but also engages in strong-arm 
tactics against the opposition and is setting the stage for a 
crackdown on NGO's and civil society.  The Asia Society 
Conference, working with the more liberal and open elements 
of Nazarbayev's inner circle, succeeded in highlighting these 
and other contradictions and has strengthened the case for 
moving in the right direction.  It enhanced the visibility 
and role of the U.S. in Kazakhstan and its future.  And, it 
established a firmer basis for the engagement of the Asia 
Society, as well as the Open Society Institute and the Nixon 
Center, in furthering our agenda or democratic development, 
combating terrorism and extremism, and building free and open 
markets.  In these areas, we need all the help we can get. 
End comment. 
ORDWAY 
 
 
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