NEW ECONOMIC ADVISER INTENDS TO ACCELERATE REFORM

C O N F I D E N T I A L SECTION 01 OF 02 DUSHANBE 000321

SIPDIS

SIPDIS

STATE FOR SA/CEN, EUR (DAS BRYZA),E
NSC FOR MERKEL, MILLARD

E.O. 12958: DECL: 2/21/2016
TAGS: PREL PGOV ECON EAID TI
SUBJECT: NEW ECONOMIC ADVISER INTENDS TO ACCELERATE REFORM

REF: DUSHANBE 0199

CLASSIFIED BY: Richard E. Hoagland, Ambassador, EXEC, Embassy
Dushanbe.
REASON: 1.4 (b),(d)




1. (C) Newly appointed Presidential Adviser on Economic Affairs
Matlubhon Davlatov characterized his appointment not as a change
in President Rahmonov's economic reform agenda but as a means to
accelerate it. "I'm not new to this team," he told the
Ambassador during a February 17 initial meeting, explaining that
he has been part of the presidential economic team nearly from
the beginning, first as head of privatization (reftel),then
more recently as head of the Office of Financial Control
(somewhat like the U.S. OMB) in the Presidential Apparat. He
agreed with the Ambassador's suggestion that his goal in his new
job is to accelerate economic reform. He laughed at recent
media reports claiming he is widely disliked for his
knock-their-heads-together reputation as a get-it-done
bureaucrat.


2. (C) COMMENT: Davlatov's predecessor, Faizullo Khoboboyev,
was increasingly seen by the international community as a
charming but increasing roadblock, rather than facilitator, for
economic reform, and was generally accused of single-handedly
stalemating resolution of the critical farm-debt problem. In
fact, he himself did not have that kind of power, but was likely
simply representing special interests. The Presidential Apparat
is currently well aware that the World Bank is about to come
down hard on Tajikistan for the farm-debt problem. END COMMENT.


3. (C) Davlatov praised U.S.-Tajik relations, and noted the
profound economic impact that would come from completing the
U.S.-funded bridge at Nizhniy Pyanzh. The "Road of Life," as he
called it, will greatly increase trade opportunities for both
Tajikistan and Afghanistan, and play an important role in
building prosperity in the region, he said. Hearing of the
recent cement supply problems for the construction site, he made
a note and said firmly, "That will be resolved." (COMMENT: It
won't be that easy, but his backing will help. END COMMENT.)


4. (C) Davlatov made a brief pitch for bilateral debt
forgiveness, which would provide Tajikistan more room to
implement economic reform. He hoped "other countries" (i.e.,
the United States) would follow the IMF's recent decision to
forgive $99 million. Davlatov highlighted developments in
hydropower as another important prospect for Tajikistan, and
welcomed U.S. involvement in this sector.


5. (C) Davlatov hewed to current government talking points -
"Thanks for the humanitarian aid, but we are ready for economic
assistance," meaning direct foreign investment. He noted
information on USAID assistance in a comprehensive Tajik
government publication was out of date, and asked for more
current and detailed data about U.S. support. (COMMENT: USAID
has regularly provided the Tajik government broad-brush
information on its sectoral involvement, but is reluctant to
provide detailed statistical information because the government
wants to use it to crosscheck the bottom-line assistance U.S.
NGOs report. Our State Department position is that it is better
to be transparent, especially because we advocate transparency
for Tajikistan. END COMMENT.)


6. (C) Davlatov noted that the coming months would be extremely
busy for the Tajik government, including the ceremonial opening

DUSHANBE 00000321 002 OF 002


of the Anzob Tunnel and concurrent visit by Iran's President
Ahmedinejad. Especially important, President Rahmonov's annual
April speech to Parliament will announce a recommitment to
economic reform and growth, and it is already being drafted
under Davlatov's supervision.


7. (C) Davlatov confirmed he will travel to Washington in April
for the annual World Bank/IMF meetings, and welcomed the
Ambassador's offer to set up political side meetings for him
(septel).


8. (C) COMMENT AND BIO DATA: Davlatov made a positive first
impression. Probably in his early 50s, he is polite, slim,
well-tailored, and precisely well-spoken, although he is clearly
a no-nonsense kind of guy that you probably would not want to
cross. He has a Russian PhD in economics, was of course a
"Komsomol boy," and has been involved in economic affairs his
entire career. We know he is a close relative of President
Rahmonov, but whether uncle or cousin we have not yet been able
to pin down. The closest we have gotten is that growing up the
two "shared a garden wall" in Dangara. It is broadly assumed
Davlatov is extremely wealthy, having made his first fortune
when he oversaw the first phases of Tajikistan's post-Soviet
privatization. After a few too many vodka toasts at a
government banquet last year, he reportedly threw his arm around
then-Aga Khan Director Hakim Feerasta's shoulder and slurred
magnanimously, "Why haven't you built your Serena Hotel yet? If
you need money, I'll give it to you personally."


9. (C) COMMENT AND BIO DATA CONTINUED: Davlatov told us with a
fair amount of pride he has been to the United States six times,
the first in the 1980s when he was part of a Soviet economic
delegation. In 1995, he spent two weeks in Kansas City at an
economic reform seminar. Davlatov clearly understands English
fairly well, but is reluctant to use it, except for a few polite
phrases. During the meeting, a telephone rang, and Davlatov
abruptly jumped up to answer it. His notetaker, a young woman
from the banking sector, mouthed to us, "the President." When
Davlatov returned to the table, he explained that he is obliged
to answer when the "special direct line" rings. END COMMENT.
HOAGLAND