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