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Cablegate: Kazakhstan: Transport and Communications Minister

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DE RUEHTA #2277/01 3241042
ZNR UUUUU ZZH
O 191042Z NOV 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3870
INFO RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0223
RUEHKO/AMEMBASSY TOKYO 0933
RUCNDT/USMISSION USUN NEW YORK 2058
RUEHNO/USMISSION USNATO 2391
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAIIA/CIA WASHDC
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RHEHNSC/NSC WASHDC 0388
RUEKJCS/SECDEF WASHDC 0305
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 0928

UNCLAS SECTION 01 OF 02 ASTANA 002277

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN

E.O. 12958: N/A
TAGS: PGOV PREL EAIR ELTN EINV MARR AF KZ
SUBJECT: KAZAKHSTAN: TRANSPORT AND COMMUNICATIONS MINISTER
DISCUSSES TRANSPORT INFRASTRUCTURE PLANS

ASTANA 00002277 001.2 OF 002


1. (U) Sensitive but unclassified. Not for public Internet.

2. (SBU) SUMMARY: Minister of Transport and Communications Serik
Akhmetov told the Ambassador on November 19 that Kazakhstan aims to
improve its transport infrastructure and develop itself as a transit
corridor. The capacity of the port of Aktau will be doubled by
2012. Modernization of the railway system is ongoing, and General
Electric's locomotive factory in Astana will commence production in
2009. The Ambassador noted that the U.S. government is preparing
Open Skies proposals for discussion with Kazakhstan, and suggested
resuming negotiations on a bilateral agreement on state aircraft
fees. Akhmetov said Kazakhstan welcomes public-private partnerships
in highway construction and is preparing to announce several highway
tenders in December. The Ambassador stressed the importance of
finalizing a Kazakhstan-NATO agreement for a northern GLOC for
Afghanistan. Akhmetov responded that Kazakhstan supports the idea
in principle. END SUMMARY.

AMBITIONS TO DEVELOP TRANSIT CORRIDORS

3. (SBU) During a November 19 meeting with the Ambassador, Minister
of Transport and Communications Serik Akhmetov detailed Kazakhstan's
efforts to improve its transport infrastructure and develop itself
as a transit corridor for international trade. Kazakhstan's
geographic location in the center of Eurasia and long borders with
China (4,000 km) and Russia (7,000 km) provide the country with
great transit potential, he maintained. China-Europe transit is
particularly important and is growing rapidly. Akhmetov said that
Kazakhstan has established several international transit routes --
both road and rail -- which it intends to bring up to international
standards. He added that the TRACECA (Transport Corridor - Europe -
Caucasus - Central Asia) initiative is also very important for
Kazakhstan, and noted that there will be a TRACECA anniversary event
in Baku on December 2.

SEAPORTS: AKTAU'S CAPACITY TO DOUBLE

4. (SBU) Akhmetov also stressed the importance of transit across the
Caspian -- which is the shortest route from Kazakhstan to Europe.
He noted that the port of Aktau, which is the country's largest on
the Caspian, currently handles the transit of approximately 10
million tons of crude and 1.5 million tons of dry goods annually.
Work is ongoing to double Aktau's capacity by 2012 -- in time for it
to handle crude from Kashagan, which is expected to begin production
in 2013.

RAILWAYS: MODERNIZATION UNDERWAY

5. (SBU) Kazakhstan is also modernizing its railroad system,
Akhmetov explained, extending electrification and bringing it up to
European standards. He told the Ambassador that General Electric's
locomotive factory in Astana is expected to commence production in
2009 and will have a capacity of 100 locomotives per year.
According to Akhmetov, Kazakhstan is also interested in the
production of passenger wagons.

AIR TRANSPORT: NAVIGATION SYSTEM REACHING WORLD STANDARDS

6. (SBU) Akhmetov explained that because of Kazakhstan's geographic
location, it has many important air corridors. The government is
very open to air transport and transit. FedEx, he noted, flies
daily into Kazakhstan. The country began modernizing its air
navigation system six years ago and has almost completely brought it
up to world standards. Lockheed-Martin has been a key supplier in
the modernization effort, Akhmetov said.

7. (SBU) The Ambassador thanked Akhmetov for permitting senior
Kazakhstani civil aviation officials to attend the 14th annual
American Association of Airline Executives Conference held in Athens
in October. (NOTE: Their attendance was funded by USTDA, which

ASTANA 00002277 002.2 OF 002


used the event to bring together South and Central Asian civil
aviation officials and airline representatives in order to promote
liberalization and regional integration of the aviation sector. END
NOTE.) The Ambassador noted that in Athens, the Kazakhstanis had
discussed with their U.S. counterparts the possibility of an Open
Skies Agreement. He promised Akhmetov that the U.S. side is
currently preparing specific Open Skies proposals for discussion
with Kazakhstan.

8. (SBU) The Ambassador also said that the United States would like
to resume negotiations on a bilateral agreement on state aircraft
fees. The two countries have differences on definitions of state
aircraft, but we hope that they can be bridged. Akhmetov noted that
negotiations had been initiated in 2001 and ascribed the difficulty
in finalizing an agreement to differences in U.S. and Kazakhstani
legislation. (NOTE: Kazakhstani legislation defines a state
aircraft very narrowly, as one carrying a head of state or head of
government. END NOTE.) He said the two sides need to find a
compromise, and explained that the latest text proposed by the
United States remains under review by the Ministry of Foreign
Affairs.

ROADWAYS: PRIVATE SECTOR INVESTMENT WELCOMED

9. (SBU) The Ambassador asked Akhmetov about Kazakhstan's plans for
the development of highway infrastructure and what role
public-private partnerships (i.e., concessions) might play.
Akhmetov explained that Kazakhstan has a network of 100,000 km of
roadways, including 22,000 km of roads of national importance. The
country's highway budget, however, is only $1 billion per year. The
government's aim is to develop two modern road transit corridors
that meet European standards. Next year, work will be completed on
the Astana-Shchuchinsk autobahn -- a 224 km-long, six-lane highway,
with construction costs of $4.5 million per kilometer. The transit
corridors will require construction of a length of roadway five
times as long. According to Akhmetov, since the highway budget can
not cover those costs, the government is actively seeking
public-private partnerships. A recent legislative change that
permits toll roads should facilitate private-sector investment in
roads. The government is willing to provide co-financing, as well
as share the risks by promising to compensate investors if road
usage does not meet expectations.

10. (SBU) Akhmetov said that the government will announce four
tenders in December for reconstruction of the Astana-Karaganda,
Almaty-Kapchagai, Almaty-Khargoz, Almaty ring roads. These four
roads, he maintained, have excellent potential. Akhmetov admitted
that since the onset of the global financial crisis, the interest of
major lenders in such projects in Kazakhstan appears to have waned
to an extent. He claimed, however, that the EBRD remains interested
in the Almaty-Khargoz road. (NOTE: Khargoz is on Kazakhstan's
border with China. END NOTE.) The Ambassador asked about the
prospects for financing from the Asian Development Bank (ADB), which
has an interest in transit corridors. Akhmetov said that the ADB is
waiting to see what the World Bank does.

NORTHERN GLOC: SUPPORTED IN PRINCIPAL

11. (SBU) The Ambassador stressed the importance to Afghan
stabilization efforts of finalizing a Kazakhstan-NATO agreement for
a northern GLOC. He added that TRANSCOM Commander General Duncan
McNabb would be visiting Astana on November 21 to discuss transit of
Afghanistan-bound supplies and hoped to meet with Akhmetov.
Akhmetov responded that Kazakhstan supports the concept of ground
transit of NATO supplies. He said he might be on a business trip on
November 21, but would meet with General McNabb if he is in Astana.
He appeared willing to have one of his deputies meet with McNabb if
he could not do so himself.

HOAGLAND

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