TAJIKISTAN: RUSSIA AND CHINA INTERESTED IN RESULTS OF

C O N F I D E N T I A L SECTION 01 OF 02 DUSHANBE 001176 SIPDIS SIPDIS EMBASSY MANILA: PLEASE PASS TO ADB AMBASSADOR SPELTZ TDA FOR SCOTT GREENIP AND DAN STEIN STATE FOR SCA/CEN, EUR/SE, EB E.O. 12958: DECL: 6/26/2016 TAGS: PGOV PREL ECON ENRG EINV EAID RS CH TI SUBJECT: TAJIKISTAN: RUSSIA AND CHINA INTERESTED IN RESULTS OF ISTANBUL CONFERENCE REF: DUSHANBE 0978 CLASSIFIED BY: Thomas H. Armbruster, Charge d'Affairs, US Embassy Dushanbe, State. REASON: 1.4 (b),(d) ¶1. (C) SUMMARY: "So the United States plans to invest a billion dollars in Tajik hydropower this year?" asked Zheng Wei, political officer at the Chinese Embassy in Dushanbe. As a result of local press coverage of the U.S.-sponsored energy conference in Istanbul, Chinese and Russian diplomats sought out detailed information about U.S. intentions in the region, as well as specific investment plans. Vasiliy Beldugin, the Russian Economic Counselor, called on PolOff June 22, and Wei met PolOff June 20. Their questions indicated great interest in U.S. activity in the region and highlighted how a little American investment gets a lot of attention in Central Asia, particularly from countries that consider Tajikistan their turf. END SUMMARY. ¶2. (SBU) Prior to and during the June 12-14 Trade and Development Agency meeting "Energy Without Borders," post sent out detailed press releases, including an announcement of an $800,000 grant agreement to the Tajik government for a feasibility study of transmission lines to Afghanistan. The conference came on the heels of a well-publicized joint venture between the Tajik government and U.S. energy company AES to build those lines (reftel). ¶3. (C) With U.S. investment in energy and hydropower frequently in the news, the Istanbul conference generated much speculation and some confusing misinformation. AES's plans to invest up to a billion dollars over ten years in three projects were garbled into the rumor of one time billion dollar U.S. investment now. Beldugin thought the $8 billion in projects presented by Kyrgyzstan, Tajikistan and Afghanistan were signed deals, when actually they were pitches made to potential investors. PolOff spent some time explaining to both diplomats that the U.S. government only funded feasibility studies, not infrastructure projects. (NOTE: The U.S.-funded bridge and Nizhniy Pyanzh linking Tajikistan and Afghanistan is a rare exception, and has raised some expectations for more U.S. government direct investment in the energy sector. END NOTE.) ¶4. (C) Wei and Beldugin both seemed surprised that the Istanbul conference was more a relationship building and networking opportunity than a chance to sign on the dotted line. They agreed the idea of an integrated energy network from Kazakhstan to Karachi made economic sense and could help stabilize Central Asia and Afghanistan. Both observed that China and Russia could eventually hook into the network and agreed with PolOff that Tajikistan has more than enough room and need for investment from multiple countries. PolOff stressed that the Istanbul meeting was not an attempt to compete with the Shanghai Cooperation Organization, but a forum for the region to think and work strategically on energy issues. ¶5. (C) COMMENT: Until recently, the Russians have not taken U.S. interest in the Tajikistan's energy sector as real competition, even as they aggressively sought projects and signed agreements with the Tajik government. When RAO UES successfully muscled out AES from participating in Sangtuda-I hydropower station, it appeared as if Russia - through RAO UES and RusAl - would dominate Tajik hydropower. However, the AES deal and a June 15 Chinese agreement to build high voltage transmission lines north from Dushanbe to the Uzbek border are signs that President Rahmonov's "open door" foreign policy is sincere -- and successful. DUSHANBE 00001176 002 OF 002 ¶6. (C) COMMENT CONTINUED: Wei and Beldugin's active interest suggests that U.S. initiatives in the region will be carefully watched by Central Asia's neighbors, but could also be the starting point for real dialogue on regional integration and security. We will continue to engage the Russians and the Chinese on energy as well as other economic issues, stressing that it is in Tajikistan's best interests, as well as those of the United States, Russia and China, that the big powers work together for economic growth. END COMMENT. ARMBRUSTER