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Cablegate: Btc Pre-Inauguration Meetings in Istanbul

VZCZCXRO1811
PP RUEHAST
DE RUEHIT #1341/01 2071304
ZNR UUUUU ZZH
P 261304Z JUL 06
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 5537
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 ISTANBUL 001341

SIPDIS

C O R R E C T E D C O P Y - REMOVED TEXT AFTER "JONES"
SENSITIVE
SIPDIS

E.O. 12958: N/AT
TAGS: EPET ENRG PREL AJ GG KZ RU TU
SUBJECT: BTC PRE-INAUGURATION MEETINGS IN ISTANBUL

ISTANBUL 00001341 001.6 OF 002

REF: (A) ISTANBUL 1296 (B) ANKARA 4241

1. (SBU) Summary: Energy Deputy Secretary Sell and senior U.S. officials met with high-level delegations from Azerbaijan, Georgia,
Turkey and Kazakhstan in Istanbul on July 12 to discuss issues related to the Baku-Tiblisi-Ceyhan (BTC) pipeline on the eve of its inauguration. Deputy Secretary Sell and the U.S. delegation held bilateral talks with Azerbaijan President Ilham Aliyev, Georgia President Mikheil Saakashvili, Turkish Energy Minister Hilmi Guler and Kazakhstan Energy Minister Baktykozha Izmukhambetov. The meetings highlighted the BTC pipeline's importance to regional energy and political cooperation. End summary.
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Presidents at the Palace
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2. (SBU) The U.S. Presidential delegation was led by Deputy Energy
Secretary Clay Sell and included EB Assistant Secretary Daniel

SIPDIS
Sullivan and SCA Principal Deputy Assistant Secretary Steven Mann.
Ambassadors Ross Wilson (Ankara) and Anne Derse (Baku), EUR Deputy
Assistant Secretary Matthew Bryza, and DOE officials also
participated. The meetings were held at Istanbul's Cirgan Palace
Hotel, which was awash with delegation staffers, media, and assorted
hangers-on attending to three presidents (Aliyev, Saakashvili, and
Turkish President Ahmet Necdet Sezer, who played host to the senior
guests at a dinner at the conclusion of the day's meetings).
Details of the U.S. delegation's meetings with Azerbaijan President
Aliyev and Turkish Energy Minister Guler were reported refs (A) and
(B).

------------------------------------------
Meeting with Georgia President Saakashvili
------------------------------------------

3. (SBU) In his brief meeting with the U.S. delegation, President
Saakashvili said although he regards the BTC project as an immensely
positive development, he remains convinced that Russian President
Vladimir Putin is intent on "regime change" in Georgia. He
described a scheme in which the Russians would cut off gas supplies.
This would force the Azeris to use more domestic gas and reduce gas
exports including to Georgia, which would lead to crisis there.
Saakishvili claimed that without an alternative source of supply,
such as Azerbaijan, the Russians could significantly increase the
price of gas, and Georgia would be forced to pay artificially high
prices. The President said he agrees with those who say Georgia and
Azerbaijan must stand together in the face of Russian pressure, but
wondered how this would be successful.

4. (SBU) Deputy Secretary Sell said the United States is prepared to
help Georgia to stand fast with the Azeris. DAS Bryza noted that
Russian shenanigans, while perhaps profitable in the short-term,
would further undermine Moscow's credibility as a reliable energy
supplier. In response to Saakashvili's concern about how to manage
a short-term crisis produced by Russian supply manipulation, the
U.S, delegation assured the President that Washington would not
allow Putin to get away with such a scheme.

---------------------------------------
Meeting with Kazakhstan Energy Minister
---------------------------------------

5. (SBU) Deputy Secretary Sell told Kazakh Energy Minister
Izmukhambetov that the United States viewed the BTC pipeline as an
exciting opportunity for Kazakhstan to diversify transit routes and
markets for its petroleum. He said the United States is committed
to assisting in this regard and to exploring avenues for the export
of Kazakh natural gas. The Deputy Secretary said that he had met
with the Minister's predecessor, Vladimir Shkolnik, about a year
ago, and at that time noted Washington's interest in cooperation on
nuclear non-proliferation. Deputy Secretary Sell said Minister
Shkolnik had been interested in results, not just talk, and
expressed hope the same action-oriented spirit would characterize
the relationship with Minister Izmukhambetov. He also highlighted
the importance of collaboration on legal and economic reforms needed
to attract increased U.S. and European corporate participation in
development of Kazakhstan's wealth of energy resources.

6. (SBU) Minister Izmukhambetov said he viewed the BTC as a catalyst
for the region. Kazakhstan soon will sign an agreement enabling it
to connect to the BTC. Commenting on Kazakhstan's energy-related
prospects, the Minister reviewed his country's considerable oil and
gas reserves as well his 35-year career in the energy sector.
Izmukhambetov spoke of the key role energy plays in shaping his
country's political development and noted his interest in a

ISTANBUL 00001341 002.6 OF 002


trans-Caspian pipeline, a subject he said he had raised previously
with Energy Secretary Bodman. In the course of enumerating
Kazakhstan's energy agreements with Russia, China, and the BTC
states, the Minister commented on Iran's truculence and his
country's desire to refine its oil in Europe. Izmukhambetov
reviewed plans to expand domestic uranium and coal mining and said
his government is eager for U.S. and European corporate
participation in further developing Kazakhstan's energy resources.
He concluded by expressing confidence that the upcoming visit to
Washington of President Nazarbayev would help sustain forward
momentum on bilateral energy cooperation.

7. (U) DOE cleared this message.
JONES

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