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Reference ID Created Released Classification Origin
07TBILISI379 2007-02-26 07:53 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

DE RUEHSI #0379/01 0570753
R 260753Z FEB 07

C O N F I D E N T I A L SECTION 01 OF 03 TBILISI 000379 
E.O. 12958: DECL: 02/13/2017 
Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d). 
1.  (C) Summary:  In a February 12 meeting with Assistant 
Secretary for Economic, Energy and Business Affairs Daniel 
Sullivan, Georgian President Saakashvili gave the Assistant 
Secretary a tour d'horizon of Caucasus and Caspian region 
politics.  He spoke positively of Karim Masimov, the new 
Prime Minister of Kazakhstan.  Kazakhstan and its President 
Nazarbayev are ready to move closer to the West, he said.  He 
believes Turkmenistan's leaders need to be given more 
exposure to the West, and there is an opportunity to bring 
them along in a moment of Russian confusion about the 
direction that country will take.  In Saakashvili's view, 
Turkey is less resistant to Russian pressure than Georgia, 
Azerbaijan, and Kazakhstan, and he sees a need for intense 
discussion to keep them a team player in the search for 
alternative gas supplies to Europe.  In comparison, 
Azerbaijan's President is a hero for standing up to the 
Russians and refusing to take their gas.  Putin, as the 
autocrat of Russia, in Saakashvili's opinion, was emotional 
and unpredictably dangerous.  Saakashvili spoke with pride 
about Georgia's economic growth, the economic reforms it has 
undertaken, and his intent to tackle reform of health care 
and the judiciary.  He concluded by welcoming the possibility 
of more U.S. investment in Georgia.  End Summary. 
2.  (C) A/S Sullivan described his visit to the Caspian, the 
South Caucasus and Turkey as opening the next phase of 
Caspian energy development, after completion of the 
Baku-Tbilisi-Ceyhan oil pipeline.  He said the USG is looking 
for ways to continue development of a Southern corridor for 
energy.  He told Saakashvili that his meetings with Kazakh 
officials in Astana were positive.  Saakashvili responded 
that in general, the Kazakhs are cautious, and will wait 
until plans for development are sure and real.  They often 
need a push and encouragement.   The new Kazakh Prime 
Minister, Karim Masimov, is a good partner, in his opinion. 
Saakashvili recommended that the USG support Masimov for his 
desired post in the OSCE, which is something he cares about 
and which will encourage him to engage with the United States 
even more. 
3.  (C) Saakashvili believes there are signals that 
Turkmenistan will be more open after the death of President 
Niyazov.  Its new leaders need more information from the 
outside world, to which they have not been exposed.  He said 
that the Russians are not well informed about the situation 
in Turkmenistan, post-Niyazov.  The West, he said, needs to 
send as many missions as possible to the country, to show 
what advantages will derive from closer relations.  He warned 
that the next President of Turkmenistan, Berdymukhamedov, has 
some vague sympathies toward Iran.  He is someone who needs 
"education" and as many visits to the United States as 
possible.  Saakashvili said the need to focus attention on 
Turkmenistan and its large gas reserves is urgent. 
4.  (C) Saakashvili expressed disappointment with the Turks 
and their reneging on Prime Minister Erdogan's promise to 
help Georgia with gas from the Turkish volumes from the Shah 
Deniz pipeline.  One can't believe a Turkish yes or no, he 
said.  He somewhat pityingly mentioned the "open blackmail" 
the Russians are practicing on the Turkish government.  The 
pressure is coming at a sensitive time for Turkey, which he 
said is facing a presidential election soon.  He added that 
Turkey has lots of small companies that do business with 
Russia and can be much more easily manipulated than Georgia 
or Azerbaijan. 
5.  (C) At the same time, strong words with the GOT are 
needed, he said, to make them focus on the Nabucco pipeline. 
The U.S. and EU need to look for ways to make Nabucco make 
sense.  In that regard, Saakashvili said, nothing can be 
taken for granted.  The Hungarian attitude toward Nabucco is 
uncertain, although the opposition there dislikes the 
country's dependence on Russian gas.  The Romanians are also 
very worried, he added.  Europe needs to present a united 
front on Nabucco. 
6.  (C) Moreover, it is time, Saakashvili said, to talk to 
commercial partners about a Black Sea pipeline.  Ukraine is 
interested in such an idea and there is additionally interest 
in Kazakhstan and Turkmenistan.  In fact, he said, the 
Kazakhs are better equipped to cope with Russian pressure 
than the Turks, especially if the benefits in sending energy 
southward are clear to them.  President Nazarbayev is careful 
not to anger the Russians, but he is inclined to bide his 
time and will make a move in favor of the West when the time 
is right.  Saakashvili said that Nazarbayev cares deeply 
TBILISI 00000379  002 OF 003 
about his standing with the West and believes his legacy lies 
in that direction.  Masimov's appointmen
t is a signal to the 
West of Niyazov's inclination.  Masimov was appointed for his 
good relationship with Europe and China, and he has 
Nazarbayev's ear, Saakashvili said. 
7.  (C) When A/S Sullivan remarked that the Kazakh investment 
now pouring into Georgia is a very positive development, 
Saakashvili said that the investment was a political move at 
first, but now Kazakhstan is seeing that it is getting a good 
return.  According to Saakashvili, Nazarbayev's investment in 
Georgia is a way of showing his rapprochement with the United 
States and the West. 
8.  (C) Saakashvili spoke warmly of Azerbaijani President 
Aliyev.  Aliyev's decision to forego Russian gas imports was 
"close to political heroism", he said; neither Ukraine's 
Yushchenko nor the Turkmenbashi ever stood up to Russia as 
Aliyev did.  Aliyev's action was inspired by his meeting at 
the White House, Saakashvili said.  He has seen that a 
Russian embargo "doesn't kill you" and is now inspiring 
Nazarbayev and the Kazakhs. In the Russian view, Azerbaijan 
was not an emotional matter like Georgia, but it is 
strategically significant to them.  The Russians, Saakashvili 
said, thought Georgia would fall and Azerbaijan would 
naturally follow. 
9.  (C) Saakashvili spoke approvingly of Defense Secretary 
Gates' speech in Munich, which struck the right tone, in his 
opinion.  A/S Sullivan noted that Putin's talk about an OPEC 
for gas actually helps the United States position vis-a-vis 
the Europeans.  To Saakashvili, Putin's rhetoric underscores 
the importance of stability in Georgia to the Southern 
Corridor.  Georgia needs some years to get on its feet, but 
the Russians are working against that.  Russia needs to 
understand Georgia is on the U.S. and EU radar and is not 
falling off.  Putin talked tough in Munich because he thinks 
the United States commitment in the Caspian, the Caucasus and 
elsewhere is slackening, he said.  In Russia, Saakashvili 
said, the West is dealing with one person, not a big, 
cautious bureaucracy.  Putin's actions depend on his mood, he 
said.  His mood took a bad swing in the fall, then improved, 
then swung back again in Munich.  Saakashvili ventured that 
if Putin feels humiliation in the way the Kosovo issue is 
handled, he might blow up the Caucasus region without regard 
for the consequences, believing the way to win is to overturn 
the table.  Putin must be told not to do so, but the 
Europeans would be "scared to death" in such a situation and 
are unlikely to say it.  Saakashvili suggested that Russia 
may even stir up trouble in Belarus, if Lukashenko becomes 
too independent.  Russia is willing to use any means to 
manipulate the West and "don't let's be manipulated," said 
Saakashvili.  Although Russia is not as powerful as the 
former USSR, it is more arrogant and more willing to take 
risks, he said.  The West must engage Russia and think about 
10.  (C) Turning from regional politics to speak of Georgia, 
Saakashvili accepted A/S Sullivan's commendation for 
Georgia's economic reforms.  Saakashvili was proud that 
Georgia's GDP has doubled in the past four years.  He noted 
that it is seeing a huge influx of foreign direct investment, 
and investors are coming from Kuwait, the UAE, Turkey, 
Israel, and significantly, from Georgians fleeing Russia. 
Investors are interested in hospitals which the government 
intends to privatize.  Judicial reform is on the way; tax 
administration has been made simple, and will be 
consolidated; and the government is considering establishing 
free economic zones similar to some that exist in the UAE. 
Transportation is being revolutionized with new airports, the 
Kars-Akhalkalakhi railway and new road infrastructure. 
Kuwait is interested in building a major new hydroelectric 
dam, and Czech investors have recently bought other 
hydroelectric and distribution assets.  Georgia's economy is 
moving rapidly forward, he said, and in four to five years 
could be like Latvia's and Lithuania's.  Saakashvili said he 
is more interested in strong growth than the threat of 
inflation, which ticked up in January of this year.  A/S 
Sullivan noted that inflation, if unchecked, can be very 
detrimental to Georgia's economy.  Nevertheless, Saakashvili 
feels he has adequate support from the people, and that 
tighter money and an appreciated currency may make "nicer 
figures," but he wants growth in the double digits in order 
to make up for lost time since independence under the 
previous government.  He noted that even Georgia's tormentor, 
Russia, with all its oil wealth, is not growing as quickly as 
Georgia.  He hears people talk less about impoverished 
Georgia than they used to, and he claims that Georgia's GDP 
TBILISI 00000379  003 OF 003 
per capita is now higher than Romania's, when Romania began 
its EU membership process. With its economic growth, 
macroeconomic stability, tariff reductions and WTO 
membership, Georgia will welcome more United States companies 
to invest here, he said. 
11. (U) Assistant Secretary Sullivan has cleared this message. 


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