ASTANA CALLING: A bi-weekly online publication of the Ministry of Foreign Affairs of the Republic of Kazakhstan

· Kazakhstan, France Announce Strategic Partnership

(US$6 bn-worth of agreements signed, Sarkozy-Nazarbayev Commission Set Up)

· In Bishkek, PM Massimov Resolves Energy Supply Issues

(Agreements Reached on Electricity Exchange during Winter)

· Kazakhstan Joins Countries with High Human Development Index

(Education, Gender Policies Push Ratings Up, Short Life Expectancy Pulls Them Down)

· Astana to Seek WTO Membership as Part of Customs Union

(Two-Pronged Approach to Negotiations Will Be Pursued)

· U.S. Deputy Energy Secretary Visits Kazakhstan, Seeks Stronger Ties

(Visit Gives Boost To Wide-Ranging Energy Partnership)

· Kazakhstan, France Announce Strategic Partnership

President Nicolas Sarkozy of the French Republic paid a state visit to Kazakhstan on October 6, overseeing, together with Kazakhstan's President Nursultan Nazarbayev, the signing of US$ 6 billion-worth of deals in oil, uranium, transportation and communications areas. The two leaders also agreed to further strengthen their political ties, with President Sarkozy supporting Kazakhstan's idea of holding an OSCE summit in Astana during the country's chairmanship in that organization.

In a joint statement after the visit, the two presidents announced their intention to develop bilateral strategic partnership encompassing wide areas of cooperation.

The most important economic deals included a contract between Total and GDF Suez and Kazakh national oil and gas company Kazmunaigaz to develop the Khvalynskoye offshore gas field in the Caspian Sea. For one billion euro ($1.46 billion) Total and GDF Suez acquired a 25 percent stake in the project, with Kazmunaigaz retaining another 25% and Russian oil firm Lukoil holding 50 percent. The field is expected to start operations in 2016 and produce up to 3 trillion cubic feet (9 billion cubic meters) of gas per year.

Construction consortium Spie Capag, a subsidiary company of the public works group Vinci, signed memoranda to build a pipeline which will link the giant Kashagan oil field with the Caspian Sea shore and provide an on onshore outlet from Eskene to the port of Kuryk near Aqtau. From there on, energy supplies through the route will be transported across the inland sea by tanker to Azerbaijan, will then enter the Baku-Tbilisi-Ceyhan pipeline and be transported westward to Europe.

The project is potentially worth between 1.5 and 2.0 billion euros, of which 1.2 billion will go to such companies like Spie, Mannesmann France, Europipe, GTS ArcelorMittal. According to the French President, the future pipeline will create or preserve thousands of jobs in France, particularly in the area around Dunkirk.

"This is an extremely important project, which is the main artery of transportation of Kazakh oil to Europe," President Nazarbayev said.

"They (the French) will organize one hundred percent financing on loan basis. It is obvious that they have their own interests: the main part of the work will be placed in their companies," Kazakhstan's Minister of Energy and Mineral Resources of Sauat Mynbayev explained in an interview. He also said Kazakhstan would own the Eskene-Kuryk pipeline.

Another important commercial accord is an agreement to create a joint venture between the two countries' state-owned nuclear power companies, Kazatomprom and AREVA, to produce and market fuel assemblies for nuclear power plants. Kazakhstan already is turning into the world's largest supplier of uranium, and recently established partnerships with partners in Russia, Japan and China seeking a part in all stages of the nuclear fuel production cycle.

One year after the visit to Astana by French Prime Minister Francois Fillon, President Sarkozy's visit was the occasion to conclude fresh agreements: 230 million euros for two satellites (EADS Astrium), 300 million euros to build a tram system in Astana (Alstom) and 100 million euros for the delivery of military radios to the Kazakh army (Thalès). Another agreement envisages the production of components for Airbus airplanes at Ust-Kamenogorsk titanium and manganese combine.

In addition to commercial deals, an important agreement was signed in the security area, allowing for the transit of French military equipment and personnel through the territory of Kazakhstan to Afghanistan.

At a joint conference following talks in the Akorda presidential residence in Astana, the two presidents reconfirmed their desire to seek closer political ties.

President Sarkozy reaffirmed France's support for Kazakhstan's chairmanship of the Organization for Security and Cooperation in Europe (OSCE) in 2010, and said, "Kazakhstan is a bridge between Europe and Asia. Kazakhstan can play a crucial role in helping find a solution to the crises and conflicts in the region. For this reason, Kazakhstan is, for France, a strategic priority."

The French leader praised Kazakhstan's renunciation of nuclear weapons in the early 1990s, saying he wished other countries would make similar choice. He also spoke of the "peace experienced in this country [Kazakhstan]" and "the respect for ethnic and religious minorities."

The presidents agreed to create a "Sarkozy-Nazarbayev" commission which is set to meet annually to oversee a wide-ranging cooperation.

"France is one of Kazakhstan's leading economic partners. Since 2003, our trade grew 10 times, reaching US$6.5 billion last year... We have discussed all bilateral issues, and regional security problems in Afghanistan and Iran. And we agree with your views on these matters. I support the idea of convening a conference on Afghanistan in Kabul, maybe in Astana. I am grateful for the fact that you supported the convening of the OSCE summit in Astana," President Nazarbayev said.

On a lighter note, President Sarkozy praised the speed of construction of Kazakhstan's new capital of Astana, when he said, "Before coming here, I considered myself an energetic and strong willed person. I now see there are people in Kazakhstan who are more energetic than I am."

In Bishkek, PM Massimov Resolves Energy Supply Issues

Prime Minister Karim Masimov of Kazakhstan visited Bishkek, the capital of Kyrgyzstan, October 7, for talks with his counterpart Igor Chudinov, about ways to ensure uninterrupted power supplies in both countries during upcoming winter.

After the "closed doors" talks, Kazakhstan's Prime Minister said, "The main question great importance for our countries concerns water and energy cooperation and preparation for winter. We have reached agreements in principle on the work of our energy sectors in case of a possible withdrawal of Uzbekistan from the regional electricity grid. The arrangement that we have agreed upon will allow us to safely survive the winter."

The Kyrgyz Prime Minister said an "agreement on the parallel work of power grids of Kyrgyzstan and Kazakhstan is important to us and is a matter of principle". He also noted Kazakhstan had agreed to supply coal to Kyrgyzstan, which would ensure stable operation of Bishkek's heat power station, and enable it to ship electricity northwards to Kazakhstan.

Presidents of Kazakhstan and Kyrgyzstan, Nursultan Nazarbayev and Kurmanbek Bakiyev, paid special attention to this issue during their meeting in Nakhchevan, Azerbaijan, on October 3.

In Bishkek, the two heads of government also discussed legal registration of ownership of Kazakhstan's facilities on the resort lake of Issyk-Kul. In 2008, four recreational sanatoriums were transferred to the property of Kazakhstan, but the lease of land on which they are located has not been solved until now. Now, according to Kyrgyz legislation, Kazakhstan will pay an annual fee of 20 thousand dollars for each facility. The two prime ministers gave instructions to relevant ministries of both countries to prepare necessary documents.

Kazakhstan Joins Countries with High Human Development Index

Kazakhstan has joined the group of countries with High Human Development Index (HDI) in the report published by the United Nations Development Program October 5.

Kazakhstan, with an HDI of 0,804, took the 82nd place out of 182 countries ranked. Kazakhstan's HDI grew steadily during the last 14 years at an average of 0.2%. While this year's report uses data for 2007, the rating did grow again this year, from 0,794 to 0,804.

The biggest factors pushing Kazakhstan's ratings up are high literacy rate of 99.6% (10th place in relevant rating), as well as the promotion of gender equality. Taking into account the gap between the HDI for men and women, the difference between Gender Development Index (GDI) and HDI for the Republic of Kazakhstan is 0.2% (11th place). This is the best result for a Central Asian country. In adult literacy rate (female as % male), women lag behind men in Kazakhstan only by 0.3% (32nd result).

The biggest drawback for Kazakhstan's overall rating remains relatively short life expectancy of 64.9 years. The reason for this low rate is high mortality from heart and coronary diseases, traumas (especially during road accidents) and respiratory diseases. Aggravating the situation are consequences of two environmental catastrophes of the past half a century, those of nuclear testing at the Semipalatinsk test site and the shrinking Aral Sea.

Yet, the situation in this sphere is bound to change in a not too distant future due to concerted actions.

The Kazakh Government adopted a program, "Development of cardiology and cardiac care in the Republic of Kazakhstan," allowing to detect cardiovascular disease at early stages. It involves improving the material base of hospitals throughout the country. The budget for healthcare will also be increased substantially. According to the 2009-2011 national budget, 34 billion tenge (one US dollar equals 150 tenge) will be allocated for provision and expansion of guaranteed free medical care in 2009, 47 billion tenge in 2011, and 54 billion tenge in 2011.

Since last year Kazakhstan also introduced a law requiring drivers and front seat passengers to wear safety belts. This regulation has drastically reduced the number of fatal accidents. The Internal Affairs Ministry says exact figures will be published at the end of the year.

In order to combat respiratory diseases authorities also decided to impose a number of restrictions on the distribution of tobacco products, with the new Code of Public Health Care entering into force October 9. T he Government imposed a total ban on smoking in public places and raised the drinking age from 18 to 21. All prohibitions meet the standards of WHO Framework Convention on Tobacco Control.

In addition to these measures, the rehabilitation of the Aral Sea region in partnership with the World Bank is already allowing Kazakhstan to improve the lives of the people in the area.

In overall HDI ratings, Kazakhstan still slipped nine positions, from 73rd place in 2008, mostly due to the inclusion for the first time of such countries as Liechtenstein, Andorra, Montenegro, Serbia and St. Lucia. In addition, a big jump was made by Venezuela (from 74 to 58), Turkey (from 84 to 79), and Peru (from 87 to 78).

Only two countries from the Commonwealth of Independent States, Belarus (68) and Russia (71) outstripped Kazakhstan in human development index.

Kazakhstan to Seek WTO Membership as Part of Customs Union

Kazakhstan is committed to joining the World Trade Organization as part of a Customs Union with Russia and Belarus, the country's top WTO accession negotiator said.

Zhanar Aitzhanova, Kazakhstan's deputy minister of industry and trade, on a visit to Washington October 9, confirmed this position in an interview with Reuters.

If a joint accession is accepted, this will create a precedent for the entry into the organization of a union, not of a country. Currently there are several economic unions within the WTO itself, but all of their members have joined the organization separately. At the same time, the WTO as an organization has existed since 1995, and not all entry mechanisms are well customized.

All three countries have sought membership in the organization, beginning with the date of its establishment. All of them have reached various stages WTO accession negotiations as separate states.

On June 9, 2009 it was announced that Belarus, Russia and Kazakhstan will seek WTO membership as a free-trade zone that comes into full force in 2011. The three countries will introduce unified customs tariffs on January 1, 2010, from 1 July there will be a single customs code, and by mid-2011 it is planned to complete all necessary procedures to create a single customs territory.

The June decision changed the dynamics of negotiations.

"One thing I have drawn from my experience is never to make prognosis about the date of accession," Zhanar Aitzhanova told Reuters in an interview. "Not everything depends on acceding countries. A lot depends on our counterparts in the WTO accession process, such as the United States and the European Union. I think many things will depend on their political will too," she said.

"There are 12 customs unions operating within the World Trade Organization. They're not contradictory but we have to agree on the terms that will be acceptable to World Trade Organization members," Aitzhanova commented.

Kazakhstan, along with Russia and Belarus will pursue a two-pronged negotiating strategy. The three countries will negotiate as a customs union on issues such as tariffs and import licensing procedures where the new union will have competence.

"But everything outside - services, intellectual rights, sanitary and phyto-sanitary issues and technical regulations - we'll be continuing our country-based negotiations and we'll have country-based commitments," she noted. "We have to narrow the gap and Belarus has to narrow the gap in our accession speeds," Aitzhanova added.

Russia, Belarus and Kazakhstan are members of the Eurasian Economic Community along with Tajikistan and Kyrgyzstan, who have been invited to join the Customs Union.

Forming a Customs Union with Russia and Belarus creates a single market of more than 160 million people and makes Kazakhstan a more attractive investment opportunity for foreign companies, Aitzhanova explained.

U.S. Deputy Energy Secretary Visits Kazakhstan, Seeks Stronger Ties

U.S. Deputy Secretary of Energy Daniel Poneman visited Kazakhstan October 7 and 8 to talks with officials on ways to further deepen the cooperation in the energy sphere.

The visit also took him to energy producing regions of Aktau and Atyrau, and to Almaty, where he spoke at the 17th Kazakhstan International Oil and Gas Exhibition (KIOGE). In Astana, Deputy Secretary Poneman co-chaired, together with Minister of Energy and Mineral Resources Sauat Mynbayev a session of Kazakhstan-U.S. Energy Partnership Commission, set up in 2001. The commission oversees cooperation in oil and gas, uranium and other sources of energy.

In Astana, Poneman also met Secretary of State - Minister of Foreign Affairs of the Republic of Kazakhstan Saudabayev. They reaffirmed the level of strategic partnership between Kazakhstan and the United States, characterized by a wide range and deep level of interaction. They also discussed the preparation of the participation of President Nursultan Nazarbayev in the Global nuclear security summit next spring in Washington, DC, according to the White House invitation. The two officials also noted positive dynamics in bilateral energy cooperation, stressing great potential for expanding it, including through the development of alternative energy sources.

"Our assessment of the investment climate in Kazakhstan is positive," Poneman said in his remarks at KIOGE. "Proof of this is our ongoing investment. It is obvious that the global financial crisis has also affected Kazakhstan's market, but the decline of enthusiasm from American companies is not observed. Moreover, they are very committed to continuing their work in Kazakhstan."

He noted the U.S. is ready to further cooperate with the Kazakh government and oil companies. The U.S. companies already are the largest investors in Kazakhstan's oil and gas sector. "As the development of new oil and gas continues, our task is to bring all the resources to consumers. Existing links in different areas will expand and strengthen our cooperation," Poneman said, noting Kazakhstan's potential to become one of the world's largest non-OPEC oil producers within the next decade.

"We recognize that the resources of Kazakhstan play a significant role in the global energy market. This country stands to become one of as the largest suppliers of oil and gas," he said.

Things to Come:

• Visit to Kazakhstan of Deputy Prime Minister - Minister of Foreign Affairs of Israel Avigdor Lieberman, October 12-13.

• Active phase of military exercises "Interaction-2009" of the Collective Rapid Reaction Forces of the Collective Security Treaty Organization (CSTO), in Almaty region of Kazakhstan, October 15-16. Up to 7 000 soldiers from Kazakhstan, Russia, Armenia, Kyrgyzstan and Tajikistan are taking part in exercises which began October 2.