TURKMENISTAN: WESTERN BUSINESSMAN DISCUSSES

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001411 SIPDIS STATE FOR SCA/CEN, EEB E.O. 12958: DECL: 10/24/2018 TAGS: PGOV PINR ECON EIND EPET ETRD EWWT TX RS KS SUBJECT: TURKMENISTAN: WESTERN BUSINESSMAN DISCUSSES POLITICAL AND BUSINESS CLIMATE Classified By: Charge d'Affaires a.i. Sylvia Reed Curran for reasons 1. 4 (B) and (D). ¶1. (C) SUMMARY: A western businessman resident in Turkmenistan recently shared news and views of Turkmenistan's political and economic worlds, related to presidential ceremonies, airport Customs operations, government policy on advertisements, Turkmenbashy port refurbishment, and the business climate. According to this source, the head of the Turkmenbashy International Seaport acknowledged that Turkmenistan suffers from an image problem and that it is difficult to get companies to come here. To help address this problem, the Turkmen government has brought in Hyundai Heavy Industries to build and operate a ship repair and fabrication yard. Our source's observations explain and/or confirm many of post's impressions about doing business in Turkmenistan. END SUMMARY. FINALLY, AN EXPLANATION OF PRESIDENTIAL CEREMONIES ¶2. (C) During an October 23 meeting, General Manager of Swedish-owned GAC Marine Greg Flint (please protect throughout) said that, following a presidential visit to one of Dragon Oil's sites, Flint asked Dragon's General Manager in Turkmenistan Vlad Pashkin (please protect also) where Dragon found the village elders and girls bearing flowers -- which the president's handlers inevitably grab before he has a chance to accept them -- who reliably appear at every event that the president attends throughout the country. According to Pashkin, months in advance of a presidential visit, the president's office sends a book to the host that explains in detail how to put on an official welcoming ceremony. Pashkin told Flint that they selected several older Dragon employees to grow beards -- in effect, to play the part of village elders at the ceremony. As Flint said, the existence of such a book is not surprising, because these welcoming ceremonies are always identical. ALL AIRPORT SIGNS MUST SOMEHOW LINK TO TURKMENISTAN ¶3. (C) Flint also reported that, according to a presidential order, airport staff removed all signs that did not at least mention Turkmenistan. Because GAC wants to post a new sign in the airport, Flint knows firsthand that the Cabinet of Ministers must approve all new advertisements. HYUNDAI TO BUILD NEW SHIP REPAIR AND FABRICATION YARD ¶4. (C) Flint said that South Korean firm Hyundai Heavy Industries Co., Ltd. (HHI) is building the ship repair and fabrication yard at Turkmenbashy International Seaport. The head of the Seaport, Meylis Mutdikov, has been to South Korea several times regarding this project. According to Flint, Mutdikov said HHI is working on this project because "Turkmenistan has a branding issue" and no large international firms are willing to come to Turkmenistan. Mutdikov said that bringing Hyundai to Turkmenistan gives Turkmenistan "instant respectability." Hyundai will run the shipyard for five years, and then will turn it over to the government. ¶5. (C) Flint also said that Mutdikov has shown him the Turkmenbashy harbor development plans, adding that while some companies have visited Turkmenistan and claimed that they will be involved in refurbishment -- they are not included in the plan. "LEASES ARE WORTHLESS, UNLESS THE PRESIDENT SIGNS" ¶6. (C) Flint observed that GAC is on a list to receive the right to lease a new wharf and other facilities, but said that because the government interminably stalls these agreements, "prices will rise by the time we get it." He also said that "leases are worthless unless signed by the ASHGABAT 00001411 002 OF 002 president" because landlords don't respect leases and continually hike rents, making leases worthless. (NOTE: Post has observed that agreements are rarely viewed as iron clad commitments. When circumstances change, Turkmen want to renegotiate. END NOTE.) TRAFFIC POLICE CONTINUE HARASSMENT OF FOREIGN BUSINESSMEN ¶7. (C) Ashgabat's traffic police routinely harass drivers of vehicles with yellow license plates, which mark them as foreigner businessmen. Flint said that previously, he could pay the traffic policeman USD five or ten for the fabricated traffic violations, invented for the purpose of supplementing the policeman's meager official income. The procedure has changed: polices have begun seizing drivers licenses. The driver must retrieve the license at the police station. The usual fine is three million manat (USD 211). If the driver argues, the fine is hiked to eight million manat (USD 561). The policeman will write the driver a receipt which the driver can show subsequently to other policemen if they try to fine him again, before the driver is able to pick up his license. Flint understands that under this new system, the "fine" goes into a general pot at the police station and more levels of law enforcement now take their share of the spoils than previously. ¶8. (C) COMMENT: Flint's observations either explain or confirm many of post's impressions about business in Turkmenistan. Indeed, the majority of, if not all, advertisements in the city of Ashgabat do have a Turkmen theme, but according to Flint, this is due to official policy, not marketing strategy. Flint is part of the small and tight network of western businessmen that marvel at the vagaries of life in Turkmenistan. END COMMENT. CURRAN