EUR/ACE VISIT WITH MINISTRY OF ECONOMY AND FINANCE

UNCLAS SECTION 01 OF 02 ASHGABAT 000171

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/CEN (PERRY),SCA/PPD, EUR/ACE

E.O. 12958: N/A
TAGS: EAID EFIN PGOV EAGR ECON ETRD PINR TX US
SUBJECT: EUR/ACE VISIT WITH MINISTRY OF ECONOMY AND FINANCE

Summary
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1. (SBU) EUR/ACE Director of FSA Programs Deborah Klepp discussed
potential areas for U.S. technical assistance with Deputy Minister
of Economy and Finance (MOEF) Tuvakmammed Japarov and Chief
International Specialist Galina Romanova on January 31 as part of
EUR/ACE Coordinator Adams's Turkmenistan visit. Japarov's manner
throughout the meeting was courteous and communicative, but
completely cautious. He rebuffed, at least for the time being, all
specific overtures for expanded cooperation with the USG, even on a
proposal that the MOEF itself requested in 2006. END SUMMARY.

Benign Commonplaces
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2. (U) Director of FSA Programs Klepp offered conventional
condolences on the death of President Niyazov and explained the
goals of the EUR/ACE delegation's mission to Turkmenistan.
Foreshadowing his generally conservative approach to the meeting,
the Deputy Minister refused to accept an invitation and
informational flyer on an upcoming U.S. Trade Development Agency
Conference in Almaty, instead insisting that it be delivered through
the Ministry of Foreign Affairs per usual protocol.


3. (U) Japarov responded by outlining the Ministry's priorities,
i.e., the promotion of economic development according to the
Socioeconomic Plan for Development through 2020. He went on to note
that the presidential candidates had all with one voice stated the
need for reforms, and that the ministry would work in this process
together with other state agencies involved in economic issues like
the Central Bank of Turkmenistan and the State Statistics Institute.
MOEF's mandate was to raise incomes and generate jobs for the
population, while ensuring that the current low prices for communal
services, transport and communications were continued, Japarov
stated. (Comment: Sun rises in east. End Comment.)


4. (U) Highlighting existing "cooperation" with the U.S., Japarov
noted that between 2003 and 2005, Turkmenistan firms bought $330
million worth of equipment from U.S. firms such as Boeing and
Sikorsky. Other U.S. firms, like John Deere, Case, and Caterpillar,
also had a strong presence in Turkmenistan.

But Stubborn Refusal to Accept A/CIPA Assistance
-------------- ---


5. (U) Following up on a November 2006 exchange between USAID
Country Rep Moretz and Deputy Minister Japarov, Klepp inquired about
MOEF's interest in USAID's Accounting/Certified International
Professional Accountant program (A/CIPA),which supported testing
and professional certification according to International Financial
Reporting Standards (IFRS). Japarov responded that the MOEF did not
want to waste donors' funds like "money in the air," and that it was
not ready for this program, since national accounting standards
(NAS) that conform to IFRS did not yet exist. Romanova added that
the ministry had recently signed a long-discussed program of
technical assistance with the European Union's (EU) TACIS program,
which was expected to begin in the last half of 2007 and would
support development of NAS and other items.


6. (SBU) NOTE: Ironically, Foreign Minister Meredov told
Coordinator Adams and Charge in a separate meeting the same morning
that the Turkmenistan government would welcome cooperation in the
area of international standards. END NOTE.


7. (SBU) Stating that implementing IFRS required good
legislation and guidance for implementation by enterprises, Klepp
gently suggested the government could demonstrate leadership via
legislation in order to establish a basis for IFRS. One means to
this end would be through supporting a pending request by the School
of Entrepreneurs (a private local training provider) to the Ministry
of Education to approve the USAID-supported curriculum. Displaying
a hint of frustration at Klepp's persistence, Japarov circled back
to his original position that such approval would simply be
premature absent NAS that conform to IFRS.


ASHGABAT 00000171 002 OF 002


Likewise on Budget-Reform Assistance
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8. (SBU) Klepp then inquired about a proposal submitted in October
2006 by USAID in response to a May 2006 MOEF request for technical
assistance on budget reforms. (NOTE: It took four months from
USAID's receipt of the request to gain approval to meet with the
MOEF to discuss their interests. END NOTE.) Romanova replied that
the Ministry was also working with EU-TACIS on this issue, and that
she expected EU-TACIS to play a coordinating role in assistance to
the MOEF. As a result, no work under this or other areas should
begin until TACIS' contractor began its work. (NOTE: The short-term
USAID technical assistance requested by the MOEF was originally
designed to be a bridging assignment until the new EU program's
activities were launched. It was fully coordinated with the EU's
representative in Ashgabat during its development. END NOTE.)

COMMENT
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9. (SBU) The two MOEF representatives were palpably unwilling to
move beyond pleasantries to substantial discussion of expanded
assistance. Their attitude may partially stem from the fact that
there is no current Minister of Economy and Finance; that position
has been vacant since June, 2005. Privately, Ms. Romanova has
repeatedly assured USAID staff of her interest in its proposals and
programs. Indeed, later that night, at a reception for the
delegation hosted by Charge Brush, Romanova shared with USAID FSN
her opinion that the School of Entrepreneurs' request for approval
of the training curriculum deserved support. As long as the
Minister's chair remains unfilled, however, it appears no one will
accept responsibility for supporting this or other projects linked
to the USG. In a subsequent February 7 meeting with the Charge,
Foreign Minister Meredov said the new president would appoint a new
cabinet, making it likely there could be a new Minister of Economy
and Finance soon. END COMMENT.

BRUSH