08TBILISI186, COMMERCE SECRETARY GUTIERREZ’S JANUARY 20 MEETING

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Reference ID Created Released Classification Origin
08TBILISI186 2008-02-05 12:07 2011-08-30 01:44 CONFIDENTIAL Embassy Tbilisi

VZCZCXRO9741
RR RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #0186/01 0361207
ZNY CCCCC ZZH
R 051207Z FEB 08
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 8802
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 TBILISI 000186 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/CARC, NEA/SCA AND EEB/ESC/IEC 
COMMERCE FOR SECRETARY GUTIERREZ 
 
E.O. 12958: DECL: 01/22/2018 
TAGS: PREL ECON ENRG GG KZ
SUBJECT: COMMERCE SECRETARY GUTIERREZ'S JANUARY 20 MEETING 
WITH KAZAKH PRIME MINISTER 
 
 
Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d). 
 
1. (C) Summary: During his January 20 visit to Tbilisi, 
Georgia for the inauguration of President Mikheil 
Saakashvili, Secretary of Commerce Carlos Gutierrez met with 
the Prime Minister of Kazakhstan, Karim Masimov, at Masimov's 
request.  Masimov told the Secretary he is ready to come to 
the United States for a Public-Private Partnership meeting in 
March.  The Secretary agreed to Masimov's proposal and 
indicated that he would await Masimov's suggestions for 
dates.  Masimov said that a "peaceful solution" had been 
reached between the Government of Kazakhstan and U.S. oil 
companies regarding the Kashagan oil project in Kazakhstan. 
He said the Kazakh economy is now linked to world markets and 
has suffered as a result of the subprime mortgage crisis in 
the United States.  The Secretary described the stimulus 
package planned for the U.S. economy, and said he expects a 
slowing of growth but not a recession in 2008.  End Summary. 
 
 
2. (C) Masimov opened the meeting by stressing that 
Kazakhstan's bilateral relationship with the United States is 
an important one for Kazakhstan.  He said that he had wanted 
to come to the United States in 2007 to hold a meeting to 
discuss Public-Private Partnerships, but was unable to do so. 
 He suggested that he would like to come to the United States 
for the meeting in March 2008.  He told the Secretary that 
Kazakhstan has reached a "peaceful solution" with Exxon-Mobil 
and Conoco-Phillips regarding development of the Kashagan 
oilfield.  All problems have been resolved, he said, and the 
project can go forward.  The Secretary welcomed that news. 
 
3. (C) The Secretary said that the United States also values 
its relationship with Kazakhstan and considers it a strategic 
ally.  He said he was pleased about Kazakhstan's recent 
purchase of Boeing aircraft.  He told Masimov that he 
supports the Public-Private Partnership meeting idea, and 
that Commerce will work to put together a list of current and 
potential investors in Kazakhstan who could be invited to 
attend.  He agreed that March is a good time for the meeting. 
 Masimov replied that he will bring with him some Kazakh 
officials and company representatives.  He said discussions 
on the format of the meeting should begin immediately.  While 
in Washington, he would also like to meet with the financial 
community in the United States. 
 
4. (C) Masimov reported that the Kazakh economy is doing 
well, but has been affected by the subprime mortgage crisis 
in the United States.  The Kazakh economy is an open one, he 
said, and its banks are involved with the international 
community.  The banks, as well as the construction industry, 
have been impacted by the subprime problem.  Nevertheless, 
problems that arose in the local economy in September and 
October have been largely resolved, he added.  Higher prices 
for oil and minerals are helping the Kazakh economy.  He 
expects 8.7 percent growth in 2007 and 7 percent in 2008.  He 
said that the Kazakh government has hired James Wolfensohn as 
an economic advisor. 
 
5. (C) The Secretary said that growth in the United States 
has also begun to slow lately.  Nevertheless, the 
unemployment rate is only 5 percent, and third quarter 2007 
growth was 4.9 percent.  Exports were up in the second and 
third quarters of 2007.  However, a slowdown in residential 
construction has cost the U.S. economy 1.5 percentage points 
of growth.  Therefore, the President has announced a fiscal 
stimulus package amounting to 1 percent of U.S. GDP, in order 
to prevent the slowdown from becoming serious.  One measure 
in the program will be accelerated depreciation benefits. 
While growth may be slow, he said, it will still be positive. 
 The U.S. economy is resilient and will adjust as risk is 
being repriced in the financial markets, he said.  Masimov 
said that what happens in the U.S. economy is important to 
the rest of the world, so much so that he reads the U.S. 
financial news in the morning before turning to the Kazakh 
news. 
 
6. (C) The Secretary asked Masimov about Kazakhstan's 
economic relations with China.  Masimov deemed the 
relationship good, and said China is Kazakhstan's fourth 
largest trading partner.  As for Russia, he said that high 
commodity prices had helped Russia in the past few years, but 
that Russia needs more structural reforms and to diversify 
its economy.  Even Russia may face economic problems soon, he 
predicted.  Kazakhstan's economy is experiencing higher food 
prices due to more expensive grain.  The country needs to 
develop more food processing industries, he said, and U.S. 
food processors can help.  The Secretary said that 
 
TBILISI 00000186  002 OF 002 
 
 
agribusiness could be included on the agenda of the Public 
Private Partnership.  Masimov said that 40 percent of
 the 
Kazakh population works in agriculture and 15 percent in 
industry.  However, productivity in agriculture is low, and 
it produces only 10 percent of GDP. 
 
7. (C) Masimov said that the fast growing construction sector 
in Kazakhstan has been attracting labor from the farms to the 
cities, but is slowing down now.  The Secretary noted that 
migration to the cities is a hard demographic problem that 
has affected countries like India.  Masimov said that 
Kazakhstan is smaller, and the problem is easier for it to 
manage.  Many foreigners are coming to work in Kazakhstan as 
well, he said. 
TEFFT

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