Identifier
Created
Classification
Origin
07ASHGABAT1129
2007-10-19 05:59:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:  

LONGTIME TURKMENISTAN EXPERT REPORTS POSITIVE

Tags:  PGOV PREL ECON EFIN TX 
pdf how-to read a cable
VZCZCXRO3747
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RUEHLZ RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1129/01 2920559
ZNR UUUUU ZZH
P 190559Z OCT 07
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9568
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2894
RUEHBJ/AMEMBASSY BEIJING 0715
RUEHKO/AMEMBASSY TOKYO 0591
RUEHIT/AMCONSUL ISTANBUL 1167
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
UNCLAS SECTION 01 OF 02 ASHGABAT 001129 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EUR/ACE, EEB
PLEASE PASS TO USTDA DAN STEIN

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN TX
SUBJECT: LONGTIME TURKMENISTAN EXPERT REPORTS POSITIVE
STEPS TOWARDS ECONOMIC REFORM

REF: A. ASHGABAT 1106


B. ASHGABAT 1124

C. ASHGABAT 1056

D. ASHGABAT 1127

UNCLAS SECTION 01 OF 02 ASHGABAT 001129

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EUR/ACE, EEB
PLEASE PASS TO USTDA DAN STEIN

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN TX
SUBJECT: LONGTIME TURKMENISTAN EXPERT REPORTS POSITIVE
STEPS TOWARDS ECONOMIC REFORM

REF: A. ASHGABAT 1106


B. ASHGABAT 1124

C. ASHGABAT 1056

D. ASHGABAT 1127


1. (U) Sensitive but unclassified. Not for public Internet.


2. (SBU) SUMMARY: EU-Tacis Turkmenistan Advisor Michael
Wilson told econoff October 17 the Central Bank is cautiously
considering a unified exchange rate, but the government fears
the effect of shock therapy on the population. Wilson
expects Turkmenistan to finalize an international arbitration
law by the end of 2007, and ratify the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (also
known as the New York Convention) by March 2008. As the
foundation document for international arbitration, this would
be a serious step towards creating a stable,
international-standard investment climate that potential
foreign direct investors are looking for. END SUMMARY.

TURKMENISTAN: AVOIDING SHOCK THERAPY AT ALL COSTS


3. (SBU) On October 17, EU-Tacis Advisor Michael Wilson told
econoff the Central Bank is considering doing away with the
dual exchange rate, but the government wants to approach the
whole issue very cautiously. He said Central Bank officials
repeatedly have said they would look at the dual exchange
rate issue, and European Union High Representative for Common
Foreign and Security Policy Javier Solana asked about the
exchange rate mechanism during his October 9 visit in
Ashgabat (Ref. A). However, the government is proud that
Turkmenistan did not go through the economic shocks that
other former Soviet republics did and is afraid of putting
the population through that (Ref. B).


4. (SBU) Referring to current economic conditions, Wilson
said "pricing is out of control" and that "currently, there
is no mechanism for controlling the whole thing." In
September, the government of Turkmenistan announced wage
increases of 10-15% for government workers. The retail
sector immediately increased prices (Ref. C),although, to
date, the raises have not materialized. In Wilson's view,
"the retail sector is making its own decisions."

POSITIVE STEPS TOWARDS REFORM PREDICTED


5. (SBU) Wilson mentioned projects and made predictions on
steps that will be positive for the business climate.
Currently, EU-Tacis is working on terms of reference with the
Ministry of Justice and the State University Law Faculty for
a legal reform project that will focus on trade and transit
issues. In addition, he expects Turkmenistan will finalize
an international arbitration law by the end of 2007, and will
ratify the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (also known as the New York
Convention) by March 2008. As the foundation document for
international arbitration, this would be a serious step
towards creating a stable, international-standard investment
climate that potential foreign direct investors are looking
for.


6. (SBU) The government of Turkmenistan asked EU-Tacis to
work with all of the donors, including USAID, on a five-year
sustainable agriculture development program. A key element
of this project will be subsidies, which the Ministry of
Economy and Finance still strongly supports.

WHERE IS ALL THE MONEY GOING?


7. (SBU) Pointing to the creation of the Supreme Auditing
Chamber, Wilson stated the Turkmenistan government wants to

ASHGABAT 00001129 002 OF 002


gain an "understanding of where money is going" and fight
corruption. This echoes comments made on October 17 by the
local Amcit Boeing representative (Ref. D).


8. (SBU) COMMENT: If Wilson's prediction about ratification
of the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards by March 2008 turns out to be true,
this would be a strong signal that Turkmenistan welcomes
foreign direct investment. Understanding Turkmenistan's
concerns about reform, such as fears about shock therapy and
concerns over allocating financial resources properly, will
enable those who want to move the country in the right
economic direction to target the message. END COMMENT.
HOAGLAND