PROVING WHY SABIT IS "SPECIAL" IN TAJIKISTAN

UNCLAS SECTION 01 OF 03 DUSHANBE 000690

SIPDIS

SIPDIS

COMMERCE/ITA FOR RISD
COMMERCE/ITA FOR DYCK
COMMERCE/ITA FOR SABIT
STATE FOR SCA/CEN
STATE FOR EB
ASTANA PLEASE PASS TO SCO STU SCHAAG
ALMATY PASS TO SABIT/ASHKENOVA

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN TI AF KG UZ KZ
SUBJECT: PROVING WHY SABIT IS "SPECIAL" IN TAJIKISTAN

REF: NONE

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1. (U) Summary: We may be neighbors, but we aren't well
connected. This theme underscored a Central Asian
Transportation Infrastructure Conference May 7, sponsored by the
U.S. Department of Commerce along with Embassy Dushanbe, to
highlight the Special American Business Internship Training
program (SABIT) contribution to the transportation sector. The
conference provided an opportunity for Central Asian transport
representatives to discuss their accomplishments and challenges
within their respective transport sectors, along with the
potential for future cooperation and growth. Over 15 conference
participants had previously received training through the SABIT
program, demonstrating the results of this high-impact exchange
program. Representatives from Tajikistan, Afghanistan,
Kyrgyzstan and Kazakhstan focused on improving aviation and road
construction efforts to integrate Central and South Asia. The
high level of participation -- more than 80 attendees --
demonstrated the desire for economic integration in the region
and building/renovating roads between Kazakhstan and Karachi.
Participants displayed some unwillingness to answer hard
questions in the large-group forum. However, the conference met
its goals in side conversations as private companies talked
contracts, airport managers traded experiences, and weary
travelers swapped stories. End Summary.


2. (U) Department of Commerce Deputy Assistant Secretary for
Europe Paul Dyck opened the conference by explaining the U.S.
government desire to expand U.S. trade links with Central Asia,
while reducing trade and investment barriers through initiatives
such as the Central Asia Trade and Investment Framework
Agreement (TIFA). He also highlighted our mutual goal to create
a regional electricity market, improve customs regimes and
border security, and integrate telecom systems. Tajik Deputy
Minister of Transportation Djumahon Zuhurov thanked the U.S.
government for these initiatives, which he agreed would cut
poverty and raise the standard of living for all Central Asians.


3. (U) The problems incoming visitors faced trying to get to
the conference displayed perfectly the infrastructure challenges
the region faces. Two Department of Commerce representatives
missed their connecting flight from Frankfurt to Istanbul, and
had to take the next flight - three days later - to Dushanbe.
Visa problems prevented an Afghan participant and a Uzbek
citizen representative from U.S. Embassy Tashkent from coming at
all. U.S. representatives emphasized that these difficulties
prevent businesspeople from coming here and stifle foreign
investment.

Constructing New Roads in Central Asia

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4. (U) Kubanychbek Mamaev from the Kyrgyz Ministry of
Transportation and Communication noted that companies face
severe weather in renovating roads in Central Asia; many roads
go though mountainous terrain whose high altitudes are more
susceptible to storms and avalanches. However, others described
the large amounts of foreign investment in road projects here.
Erkinbek Zhumaliyev from the Bishkek-Osh road project stated
that the Islamic Development Bank, Asian Development Bank,
Japanese Investment Agency and a private Iranian company had
invested money to build new roads in Kyrgyzstan, which would
integrate different agrarian areas and increase their access to
other regional markets.


5. (U) Galina Tarakanova from the Kazakh company
"Kazdorproyekt" explained that the Saudi Development Fund, Asian
Development Bank, and Louis Berger were funding ongoing road
construction projects in Kazakhstan, which would link and

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increase trade between Kazakhstan, Kyrgyzstan, Tajikistan and
Pakistan. One problem that these companies faced was Soviet-era
standards and infrastructure, which these companies had started
to replace and upgrade.

Developing Air Travel and Renovating Airports

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6. (U) Mirzomuddin Anvarov, Director of the Dushanbe Airport,
described ongoing French-funded efforts to renovate Dushanbe
airport. He stated that the airport's current capacity of 200
passengers per hour was not sufficient, which they wished to
increase to 300 or 350 passengers per hour. He also described
(with help from the French Ambassador) French plans to build a
new terminal at Dushanbe's airport, to construct a second
runway, and to increase the airport's ability to transport cargo
equipment. The director recognized the high price of Tajik Air
tickets for many Tajik citizens, but argued that they could not
lower prices without losing money, due to the high prices of
fuel and spare parts.


7. (U) Uzifulla Azhmoldaev, the vice president of Astana
International Airport, described the recent Japanese-funded
renovations in Astana which drastically increased its number of
international flight destinations. Talaibek Okenov, from the
Kyrgyzstan-based "Central Asian Aviation Associates," described
the need for most Central Asian nations to upgrade their fleet
by purchasing new aircraft. He specifically named Turkmenistan
and Uzbekistan as having strong aviation sectors, since they had
acquired newer Boeing aircraft. One of the challenges after
acquiring these newer aircraft, however, was the need to train
pilots to operate their advanced technologies. He described a
recent near-fatal accident at Manas International Airport which
he blamed on old and outdated equipment. The Director of the
Kabul International Airport, Najeeb Maqsoodi, and his U.S.
Federal Aviation Authority's Chuck Freisenhahn described a $6
million World Bank project, and an additional $35 million from
the Japanese government, to invest to further upgrade Kabul's
airport. In the ensuing discussion, participants expressed
great interest in increased air links with Kabul.

The Road to Investment

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8. (U) Embassy Dushanbe's Business Information Service for the
Newly Independent States (BISNIS) representative discussed the
positives and negatives of the Tajik investment climate. He
cited fiscal, labor and monetary freedom as investment
advantages in Tajikistan, while naming trade and business
freedoms, lack of property rights, corruption and lengthy
registration processes as existing impediments to more effective
trade. He explained the main role of his office is to
facilitate the process for U.S. companies who wish to invest in
Russia and the countries of the former Soviet Union, which has
resulted in more than $4 billion of U.S. exports and overseas
investments to date.


9. (U) Neeraj Jain, Tajik Country Director for the Asian
Development Bank (ADB),highlighted ADB's role in the
development of the Central Asian transport sector. Over the
past ten years, ADB has provided $1.5 billion of assistance,
which has been used to build roads, railways and airports. ADB
has also improved 3,250 kilometers of roads, or ten percent of
the Central Asian transport corridor, through the Central Asian
Regional Economic Cooperation Program, to better connect

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Tajikistan and Kyrgyzstan with China, Uzbekistan and
Afghanistan. He admitted that some impediments to progress were
weak road and border infrastructures, and a lack of modern
technical equipment.


10. (U) Assiya Alzhanova from the Almaty-based Small
Enterprise Assistance Fund discussed her company's role in
promoting entrepreneurship and innovation to small and
medium-sized enterprises in growing economies, to help them
maximize profitability. Her company's main investors were the
International Finance Corporation, USAID, and the Kazakh
National Innovation Fund, which allowed her office to invest
between $200,000 and $1.5 million per company. Elena Anfimova
of the International Road Transport Union highlighted the
administrative barriers that faced anyone trying to move goods
through the region. EconOff gave the final presentation of the
day, describing an upcoming regional USAID initiative to
facilitate trade and ease customs procedures in Central Asia,
which would raise the level of competitiveness for international
trade in the region.


11. (U) South and Central Asia Bureau's Director for Central
Asia Pamela Spratlen in her closing remarks emphasized the U.S.
commitment in regional transportation infrastructure --
stretching from the Nizhniy Pyanj bridge opening this summer, to
various U.S.-funded conferences, to USAID development programs.


12. (U) Comment: A visiting Department of Commerce
representative asked participants to describe some of their
existing problems, or whether the current level of cooperation
between the Central Asian countries was sufficient to accomplish
the common goal of integrating the region. An awkward minute of
silence passed after he asked this question, which displayed
participants' reticence or unwillingness to discuss the tough
questions publicly. An exception occurred in an exchange when a
representative from Khujand's Airport in northern Tajikistan
asked an official from the Kyrgyz Ministry of Transportation
what the two countries could do to lower trade barriers and to
better facilitate the movement of goods between their borders.
The Kyrgyz official recognized that these problems existed, but
suggested that these would be problems "for the future."


13. (U) Continued U.S. support for development and reform in
the Central Asian transportation sector remains necessary to
keep the dialogue going. The SABIT Program and other exchange
and training programs are invaluable in creating a cadre of
leaders open to new ideas and willing to work together to
realize them. This conference demonstrated that these leaders
share the goals of regional integration, and are actively
working towards them. End Comment.
JACOBSON