TURKMENISTAN RECEPTIVE TO CHINESE CALL FOR

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001210 SIPDIS SIPDIS STATE FOR SCA/CEN, EEB ENERGY FOR EKIMOVV/THOMPSON PLEASE PASS TO USTDA DAN STEIN E.O. 12958: DECL: 11/07/2017 TAGS: PREL PGOV PINR EPET SCUL CH TX SUBJECT: TURKMENISTAN RECEPTIVE TO CHINESE CALL FOR EXPANDED RELATIONSHIP, BUT ENERGY DRIVES IT REF: ASHGABAT 1104 Classified By: Charge Richard E. Hoagland for reasons 1.4(B) and (D). ¶1. (SBU) SUMMARY: Chinese Premier Wen Jiabao's November 4 official visit to Turkmenistan, which focused on implementing the agreements that Berdimuhamedov signed during his July visit to Beijing, appears to have gone well, and the Turkmenistan-PRC bilateral relationship seems to be on the upswing. The two leaders signed agreements on expanding cooperation in a variety of areas, including the political sphere, security, and energy, but it is still uncertain whether China can -- or even wants to -- expand its relationship with Turkmenistan beyond the energy and commercial spheres. END SUMMARY. ¶2. (SBU) Post met with Chinese DCM Li Hua on November 7 to discuss the visit of Premier Wen Jiabao to Turkmenistan on November 4. Li indicated that, although this was Wen's first visit to Ashgabat as Premier, he had visited Turkmenistan 20 years ago, when he was a working-level government functionary. Wen was impressed by the remarkable change in the country since then. ¶3. (SBU) According to Li, Wen's visit focused primarily on facilitating the implementation of agreements that Berdimuhamedov had signed during his official visit to China in July. However, the two countries also wanted to improve and expand the bilateral political relationship. Wen and Berdimuhamedov signed an agreement designed to increase bilateral cooperation on a broad range of issues, including improving transportation infrastructure, telecommunications and military contacts (which he described as focusing primarily on expanding military exchanges). They also signed an agreement on granting soft purchasing loans for the reconstruction of the Maryazot nitrogen fertilizer complex in Mary and the construction of a glass-production plant. INTELLIGENCE SHARING ¶4. (C) During the visit, Wen and Berdimuhamedov signed a 10-year intelligence-sharing agreement related to the East Turkestan terrorist group. Li stated that, although the Government of Turkmenistan agreed some time ago to assist the Government of China to combat this group's activities, it had never followed through. Although Li maintained there is no evidence that this group is active or even maintains a presence in Turkmenistan, China believes that Turkmenistan's proximity to Afghanistan and Pakistan -- as well as the presence of a good-sized Turkmen minority in Afghanistan, with which Ashgabat maintains close ties -- offers government officials a good opportunity to pick up useful information. (NOTE: The East Turkestan group has allegedly been active in other parts of Central Asia. The Chinese government blamed the group for the murder of a chinese diplomat in Kyrgyzstan in 2002. END NOTE.) This agreement was an effort to push Turkmenistani officials to begin following through on their commitments. EDUCATION ¶5. (SBU) Li described China's cooperation with Turkmenistan on education, which is a key issue, given the poor state of higher education here. This year, China is funding 30 Turkmen students who are studying -- among other issues -- Chinese, journalism, Chinese culture and history, and agricultural studies at Chinese universities. ENERGY ¶6. (SBU) The discussion turned briefly to bilateral energy ASHGABAT 00001210 002 OF 002 issues. Li said the preliminary signs are good regarding future potential production at the Bagtyyarlyk gas field on the right bank of the Amu Darya, where the China National Petroleum Company has a production sharing agreement (PSA), but he refused to speculate on expected production. He did note that according to the PSA the company signed with Turkmen authorities, CNPC is required to have seven Turkmen employees on the books for every three Chinese workers brought in to work at the site. (NOTE: The Turkmen government increasingly is including such mandates in its agreements with foreign firms in order to facilitate the development of a cadre of trained and experienced Turkmen workers, as well as to employ Turkmen officials' relatives and friends. END NOTE.) ¶7. (C) When asked about the progress of the Turkmenistan-China pipeline, which local press played up as a significant part of the bilateral discussions, Li had little to add beyond official press statements that pipeline construction is on schedule and that Turkmenistan had completed its feasibility studies for the arrangement. Li would not discuss the pricing structure for Turkmenistan's gas, stating that it was complicated and the information classified. (NOTE: Reftel reported that the agreement signed in July stated the pricie per thousand cubic meters (tcm) is $150, with the price to be renegotiated annually after the first year. END NOTE.) ATMOSPHERICS ¶8. (SBU) Although the visit was brief -- less than 24 hours -- the official schedule had fewer "cultural activities" than the Turkmen like to provide for top-level officials: primarily wreath-layings at former President Niyazov's masoleum and at Independence Monument. We Jiabao and his fairly large delegation stayed at the President Hotel, rather than the Serdar State Guest Complex where top-level officials are usually lodged. At the official luncheon, Wen Jiabao and President Berdimuhamedov chatted politely from time to time but did not appear to engage in any serious conversation. There were no official toasts. Twentry minutes before the time indicated for the event to end, and with fewer than half the 18 courses served, Wen Jiabao stood up, congratulated the orchestra, and it was over -- leaving mountains of food for the staff and their families. ¶9. (SBU) COMMENT: The Chinese government appears to be motivated to increase its engagement with Turkmen authorities on a variety of fronts, given the broad array of political, security and economic issues raised during this visit. The Turkmen government, likewise, is showing every sign that it is willing to expand the bilateral relationship, at least moderately. Energy, however, will be the primary bilateral issue driving the relationship, and the two countries' success in forging a symbiotic business relationship on this front will be a measure for how much China will be able to expand its influence in Turkmenistan. END COMMENT. HOAGLAND