MORE CHANGES TO THE FACE OF ASHGABAT, AND TURKMENISTAN

UNCLAS SECTION 01 OF 02 ASHGABAT 001147

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: N/A
TAGS: PGOV ECON EINV SOCI TU TX
SUBJECT: MORE CHANGES TO THE FACE OF ASHGABAT, AND TURKMENISTAN

REF: A) Ashgabat 843
B) ASHGABAT 1126
C) Ashgabat 1064
D Ashgabat 968
E) Ashgabat 970


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


2. (SBU) SUMMARY: President Berdimuhamedov has approved $1.8
billion in construction projects since he became president in
February. As additional projects are constructed outside of
Ashgabat, provincial residents say that infrastructure projects
should be prioritized over building projects. Fewer people purchase
elite apartments due to corruption, even as the number of completed
apartments increases. The profile of Turkish company Polimeks, the
government's new favorite, is rising in the void left by Gap
Inshaat. END SUMMARY.

MORE CONSTRUCTION TAKING PLACE


3. (SBU) Immediately before departing for New York on September 23,
President Berdimuhamedov approved 17 construction projects worth
$216 million that should be completed by the end of 2009. All
together, the president has approved nearly $1.8 billion in
contracts since taking office in February 2007. Most of the newly
approved projects, such as four 10,000-person stadiums, four 50-room
hotels, four 600-person schools, and four 160-person kindergartens,
are to be built in the provinces. These projects, in addition to
previously announced provincial construction projects (Ref A),
reflect the promises Berdimuhamedov made during his election
campaign. However, according to a farmer from Dashoguz province,
these multi-million dollar projects are built in main towns and are
not accessible to villagers. Instead, "building roads and supplying
families with water would be the best help the government could
provide us," he said.

TEMPTATION IS TOO HARD TO RESIST


4. (SBU) Construction continues booming in Ashgabat. More than ten
projects have been completed in honor of the 16th anniversary of
Turkmenistan's independence. On October 17, the president
officially opened the Ministry of Culture and Broadcasting's new
building. Although Berdimuhamedov requested a decrease in the level
of exuberant festivities for these types of events in the first
months of his presidency, he seems to enjoy them now. This
particular opening was an over-the-top extravagance that included
thousands of students in their best clothes lining the street
outside the ministry and an exceptional laser light show and
fireworks display.

POLIMEKS IS A RISING STAR


5. (SBU) The Turkish company Polimeks built both the new
Presidential Apparat building (scheduled to open soon) and the
Ministry of Culture and Broadcasting. The construction company for
numerous buildings in Turkmenistan, Polimeks has the reputation of
being a steady and reliable partner. Polimeks seems to have become
the government's favorite just as another Turkish company, Gap
Inshaat, no longer holds a key role in the construction industry
(Ref B). As a result of a strengthened relationship with the
president the company's business has expanded: since February 2007,
Polimeks has received contracts for nearly $260 million in projects
in Ashgabat, including a drinking water factory, a high-rise
oncology medical center (next to the U.S. Embassy housing compound),
apartment buildings, and another fountain complex (Ref C). Most
recently, the company secured a contract for a $68 million
oil-expeller plant in the model village of Turkmenistan, Ruhabat.
(NOTE: Ruhabat is also the home village of the late president,
Niyazov. END NOTE.)


6. (U) In addition, Polimeks won on October 20 the first three
projects of the "Avaza" national tourist zone (Refs D and E) in

ASHGABAT 00001147 002 OF 002


Turkmenbashy city, totaling over $510 million. These projects are a
$67 million water desalination plant, a $189 million water supply
and sewage system for the entire city, and a $254 million
7-kilometer recreational canal winding through the tourist complex.
Polimeks and Ickale, another Turkish company, will work on the
latter project jointly.


"ELITE APARTMENTS:" NOT FOR EVERYBODY


7. (SBU) Various ministries and agencies are to take delivery of
eight "elite" apartment buildings this month. On October 19,
PolEcon assistant attended the opening of an elite apartment
building for the Ministry of Energy and Industry. In contrast to
the high-quality, Western-standard apartments built in recent years,
the ceilings were lower, the wooden doors were artificial, and room
layout was awkward. The building that PolEcon assistant toured
contained 60 apartments. If all eight buildings have on average 60
apartments, this would mean housing for 480 families. In reality,
the number of people who can afford these apartments is limited.


8. (SBU) One can purchase an elite apartment if he/she has been an
employee of a particular ministry for five years or longer.
Ministry employment also entitles a person to a 50-70 percent
discount and a 15-year 3 percent interest mortgage to cover the
remaining cost. Those not employed by a ministry can purchase elite
building housing by paying the full price, plus so-called
"overhead." An Embassy employee's relative, who gave up after three
years of trying to buy an elite apartment, said: "not only can an
average family not buy, but it cannot even approach them [elite
apartments], since they are way too expensive." Regardless of
employer, the middle man and bribes are de facto prerequisites for
anyone wishing to experience life in an elite apartment. We have
heard that the well-heeled and well-connected are buying large
blocks of apartments for investment and speculation.



9. (SBU) COMMENT: The nearly $1.8 billion in construction projects
signed during the nine-month period Berdimuhamedov has been in
office only evidences that more marble is expected to be laid and
cities in Turkmenistan will become whiter. Although the
desalination plant, water supply, and sewage system are
fundamentally necessary for Turkmenbashy city, the $254 million
artificial canal is too high of a price to beautify what may be one
of the white-elephant projects of the century. Turkish companies
continue driving the construction industry in Turkmenistan at the
expense of the development of local construction companies. Elite
apartments are unapproachable, unless you have money and good
connections or lots and lots of money. END COMMENT.

HOAGLAND