TURKMENISTAN'S MINISTRY OF ECONOMY AND FINANCE WELCOMES

UNCLAS SECTION 01 OF 03 ASHGABAT 000756

SIPDIS

SIPDIS

SENSITIVE

STATE FOR SCA/CEN

E.O. 12958: N/A
TAGS: PREL PGOV ECON EINV ETRD EAGR TX
SUBJECT: TURKMENISTAN'S MINISTRY OF ECONOMY AND FINANCE WELCOMES
USAID ASSISTANCE TO IMPROVE INVESTMENT CLIMATE


ASHGABAT 00000756 001.2 OF 003



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

SUMMARY


2. (SBU) In a July 23 meeting at Turkmenistan's Ministry of Economy
and Finance (MOEF),USAID Deputy Assistant Administrator Drew Luten
and his economic growth delegation met with MOEF First Deputy
Minister Tuwakmammet Japarov. While Minister Hojamyrat
Geldimyradov, with whom the delegation was scheduled to meet, failed
to show due to his "heavy workload," the two sides engaged in
substantive conversation on introducing and attracting U.S.
private-sector investment to Turkmenistan. Luten said government
and business would need to understand the other's interests and
requirements to further cooperation on improving international
finance, investment, agriculture, and rural development in
Turkmenistan. To this end, the delegation introduced the idea of an
investors' "roadmap" to help Turkmenistan and foreign businesses
maximize opportunities. Japarov expressed particular interest in
this, and posed several questions about the details of such a
project. He also seemed eager about business training in the United
States for Turkmenistani managers. While the deputy minister
welcomed USAID assistance in rural development, he said help would
only possibly be solicited after his government had approved the
comprehensive development plan. He also requested that
Turkmenistan's various donors, including USAID, better coordinate
their activities, and that all projects still be conveyed through
diplomatic channels to the Ministry of Foreign Affairs. END
SUMMARY.

TRADE AND INVESTMENT: HOW CAN WE COOPERATE?


3. (SBU) In the absence of Minister of Economy and Finance
Hojamyrat Geldimyradov, USAID Deputy Assistant Administrator Drew
Luten asked First Deputy Minister Tuwakmammet Japarov how the United
States and Turkmenistan could further cooperate to improve
Turkmenistan's economy, particularly in areas in which President
Gurbanguly Berdimuhamedov has expressed interest: international
finance, investment, agriculture, and rural development. U.S. and
other international companies would "want to understand what the
opportunities are in a country and what is required to make
investment and do business," Luten said. Likewise, Turkmenistan
would want to understand what international businesses are
interested in.


4. (SBU) Japarov responded that investment and trade were the new
government's two main priorities. He recognized there will be
interest in investing in Turkmenistan. MOEF welcomed USAID's
assistance, but noted that the two countries will first need to
agree on a legal framework for cooperation, particularly on the
issues of investment protection and double taxation. (NOTE: This is
Japarov's second recent request for help on double taxation. END
NOTE.) Additionally, MOEF wants the U.S. assessment of
Turkmenistan's internal regulatory mechanisms and related issues.


BUSINESS TRAINING IN UNITED STATES A "VERY GOOD PROPOSAL"


5. (SBU) Danica Starks of the U.S. Department of Commerce offered
three areas in which the United States and Turkmenistan might work
to improve the economy and the investment climate. First, the
countries could explore opportunities for U.S. companies to sell
equipment or invest in Turkmenistan. Second, they could organize
events for Turkmenistani officials to meet with various U.S.
businesses. Third, the U.S. government could bring Turkmenistani

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managers to the United States for business training programs in
areas such as water systems and energy management, food processing
and packaging, hospital administration, and road construction.
Japarov expressed his gratitude in particular for the offer for
business training, calling it a "very good proposal," and
recommended it be sent through diplomatic channels. Management
training in general and specifically in property is important and
will be useful, Japarov observed, and he offered MOEF's assistance
in recruiting "appropriate candidates."

UNITED STATES: CLEAR PICTURE NEEDED OF WHAT MUST BE DONE


6. (SBU) Michael Boyd, USAID/CAR senior economist with the
delegation, complimented Turkmenistan on recent progress made in
presenting itself to the U.S. business community. But Turkmenistan
still needs a "roadmap" to provide a "clear picture" of what must be
done to improve the investment climate and make strides in relation
to international standards. The roadmap would include information
on issues such as employment procedures, visa requirements, permits,
site development, and environmental regulations. This document
would eventually help businesses but would initially deepen
Government of Turkmenistan understanding "the good things and also
the barriers along the way to realizing investment."
Competitiveness was also raised.

ROADMAP COMPONENTS "TOTALLY" IN MINISTRY'S HANDS


7. (SBU) Japarov liked the idea of a roadmap and asked what actions
MOEF would need to take to create it. Would it be a project, and
what would be its duration, he asked. Japarov saw the roadmap as a
tool to introduce new investment to Turkmenistan and to provide
recommendations for improving investment. MOEF would always be
happy to host U.S. specialists and experts on this. There are no
doubt a number of components to such a task, he observed, and they
"are totally in the hands of my ministry."


8. (SBU) Japarov continued conversation with Luten on the topic
after the meeting, requesting that USAID send further materials or
proposals to MOEF by diplomatic channels via the Ministry of Foreign
Affairs. Although MOEF registered all international projects,
investments, and other grants, MOEF had to work through the Ministry
of Foreign Affairs, which decided how to allocate assistance among
Turkmenistan's various ministries. Luten said he hoped USAID and
MOEF would get to the point where direct communication was possible.


THE WORD IN ENGLISH IS "WOW": TURKMENISTAN'S RURAL DEVELOPMENT PLAN


9. (SBU) Asked to discuss Turkmenistan's rural development plan,
Japarov said education, culture, and tourism are the three main
areas marked for improvement. Other issues included bringing modern
medical services, water, gas, sewage, and irrigation to rural areas.
Japarov stated that Turkmenistan inherited a situation from the
former Soviet Union in which rural and urban areas did not develop
at the same pace. "After 15 years, Turkmenistan has acquired enough
strength to bring up the rural level." Doing so would help avoid a
problem of over-urbanization.


10. (SBU) The deputy minister said the rural development plan was
slated for implementation beginning in January 2008 and running
through 2020. He could not yet say where or if USAID might be able
to assist. MOEF had thought of contacting international
organizations to help develop this comprehensive plan, but decided
to go it alone with other Turkmenistani ministries because of the

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president's short deadline. MOEF will approach the donor community
outside the country's borders only after the government approves the
plan. The government had allocated money for the project in its
budget, but expected some funding ultimately to come from
businesses, grants, and possibly loans.


11. (SBU) "The word in English is 'wow,'" exclaimed Luten, upon
hearing Turkmenistan's plan and its enormity. Rural development is
important work that should be viewed as a process rather than simply
a plan to be implemented. USAID is ready and willing to discuss
possible cooperation as soon as the Government of Turkmenistan is
ready. For instance, USAID has helped Kazakhstan and Azerbaijan
with budget management for public projects and could provide similar
expertise in Turkmenistan.

INTERNATIONAL DONORS GOOD, COORDINATED DONORS EVEN BETTER


12. (SBU) Japarov stated that international donors undoubtedly had
great interest in providing technical assistance to Turkmenistan.
He hoped, however, to see more coordination among the donors, with
one common objective to be reached. Luten said MOEF would need to
further develop its capacity to deal with many groups, but he and
USAID would continue to be sensitive to the fact that various
parties wanted to talk with the Government of Turkmenistan.
Delegation members also said they hoped that recent discussions with
other donors in Washington would improve coordination and promised
to continue seeking better coordination.

COMMENT


13. (SBU) Japarov and his colleagues in attendance were articulate,
highly competent, and willing to explore cooperation on many fronts.
Japarov's openness to USAID's assistance -- specifically in
developing an investors' roadmap and providing business training in
the United States for Turkmenistani managers -- suggests a broader
wish on MOEF's part to move from delegation meetings to concrete
steps. There seems to be a window to move forward on both
proposals. Next step: MOEF agreed USAID should provide information
on the investor road-mapping exercise and suggestions on how to move
forward.


14. (SBU) Despite such openness, MOEF's reluctance to engage
directly with USAID and other international donors demonstrates
post's difficulties in promoting a "direct contact" policy. This
could seriously hinder USAID efforts to cooperate with MOEF,
including in areas MOEF itself expressed sincere interest,
especially in the area of rural development, where Turkmenistan is
thus far taking on an enormous project by itself. We will continue
to press MFA to streamline Turkmenistan's bureaucracy for handling
international cooperation and assistance. END COMMENT.


15. (U) DAA Luten has cleared this cable.

HOAGLAND