US embassy cable - 05ALMATY4105

C O N F I D E N T I A L ALMATY 004105 
 
SIPDIS 
 
 
DEPT FOR EB/ESC; EUR/SNEC (MANN); EUR/CACEN (MUDGE) 
 
E.O. 12958: DECL: 11/16/2015 
TAGS: ENRG, EPET, KZ, Energy 
SUBJECT: KAZAKHSTAN KCTS IGA UPDATE: ONE MORE NEGOTIATING 
ROUND? 
 
REF: ALMATY 3449 
 
Classified By: POEC CHIEF DEBORAH MENNUTI, REASONS 1.4(B) and (D) 
 
1. (C) Summary:  A GOK participant in the ongoing 
Azeri-Kazakhstani KCTS IGA negotiations told Econoff on 
November 15 that sufficient "edits" had accumulated during 
the GOK's ministerial review of the initialled IGA draft 
(reftel) to necessitate a "final" round of negotiations.  The 
GOK and GOA have already begun discussions on the timing of 
such negotiations, the GOK source indicated, and will likely 
settle on Baku in December.  While signature of the IGA in 
2005 is still a theoretical possibility, the GOK's tardy 
review process, along with impending presidential elections, 
make 2006 more likely.  End Summary. 
 
2. (C) Arman Darbayev, assistant to lead Kazakhstani KCTS 
(Kazakhstan Caspian Transportation System) IGA negotiator 
Kairgeldy Kabyldin, told Econoff on November 15 that, by 
"urgent" instruction of Prime Minister Akhmetov, GOK 
ministries would conclude their review of the draft IGA by 
the end of the week.  Akhmetov, in turn, would consolidate 
and finalize the GOK response during the week of November 
20-27.  However, Darbayev noted, the ministerial review had 
already produced sufficient editorial comments to necessitate 
another, "final" Kazakhstani-Azeri negotiating round.  The 
GOA, he said, had already proposed a meeting in Baku in late 
November; however, since the GOK was not yet ready, a meeting 
"in December" was more likely. 
 
3. (C) Darbayev attempted to minimize the significance of the 
GOK edits, predicting that the December round would be 
"short." Asked to describe GOK objections to the initialled 
IGA, Darbayev mentioned that "several" ministries had 
objections.  He then singled out the GOK Tax Committee, in 
particular, as "being difficult" in its review of IGA Article 
5 (on taxation).  Darbayev observed that the Tax Committee's 
objections were "ironic," given that the Kazakhstanis had 
"won" the September negotiations on Article 5. The tax 
authorities' objections, he said, were focused on the one 
sentence that the investors had succeeded in adding to the 
GOK's version of the text. 
 
4. (C) Regarding rectification of the GOK's flawed Law on 
International Treaties, Darbayev told Econoff that a formal 
letter from the Ministry of Foreign Affairs to the Azeris 
"had been drafted," but was still being cleared within the 
GOK. 
 
5. (C) Darbayev also noted that it was not yet clear who on 
the GOK side would sign the agreement, but that it "would not 
be President Nazarbayev."  Rather, the GOK would identify the 
appropriate minister after the presidential elections -- and 
an anticipated cabinet change -- had occurred. 
 
6. (C) Comment.  Without seeing the GOK's proposed edits to 
the IGA, it is impossible to judge whether the next round of 
negotiations will be as "short" as Darbayev predicts. 
However, the fact that the GOK apparently wants to re-open 
the only Article 5 point it conceded during the September 
negotiations does not suggest that the GOK is governed by a 
spirit of compromise. End Comment. 
ORDWAY 
 
 
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