TURKMENISTAN: WORLD BANK OUTLINES RE-ENGAGMENT

UNCLAS SECTION 01 OF 02 ASHGABAT 000179

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, SCA/PPD, EUR/ACE, EEB
USAID/W FOR EE/EA

E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN EAID TX
SUBJECT: TURKMENISTAN: WORLD BANK OUTLINES RE-ENGAGMENT



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

2. (SBU) SUMMARY: During the last week in January, a World
Bank visiting delegation met with government officials and
resident donor nation representatives to discuss
re-engagement with Turkmenistan. The Government of
Turkmenistan's priorities for assistance from the World Bank
are exchange-rate unification and rural-development strategy.
Other possible areas for cooperation include as market
forecasting, improving public-sector use of government
assets, removing regulatory and administrative barriers to
public-sector development, and reforming the agricultural
subsidies policy. According to one World Bank official, the
bank plans to engage slowly, through one or two investment
projects in rural infrastructure and social services.
Because the World Bank has not spent much time here for
years, these officials also have a lot to learn about
engaging with the Government of Turkmenistan before they can
be effective. Close coordination with other donors and
consistent, on-the-ground engagement are essential to achieve
results. Further, it is essnetial to listen carefully to the
Turkmen and then help them prioritize how to reach their
ambitious goals. END SUMMARY.

3. (SBU) On January 31, the World Bank visiting delegation
met with various donors to discuss their experience and ask
for suggestions for working in Turkmenistan. Annette Dixon,
the World Bank's Country Director for Central Asia, said that
Government of Turkmenistan officials have some idea of what
they want. However, due to the fact that Turkmenistan had
not engaged with the World Bank for some time, government
officials' expectations were unrealistic. For example,
Turkmen officials had no idea what loan terms to expect.
Officials also expressed surprise at the difficulty of
engaging Government of Turkmenistan officials in dialogue, on
which the World Bank places a priority because of its belief
in serious consultations with a government before initiating
assistance projects.
NEED FOR CAPACITY BUILDING

4. (SBU) The World Bank officials noted the huge demand and
potential for capacity building and technical assistance.
They mentioned that the government had requested assistance
setting up a graduate-level economics program. The donors
agreed with the need for capacity building, but emphasized
that this must occur at a very fundamental level, because
Turkmenistan must rebuild after many years with an extremely
weak education system.
PLANNED PROGRAM OF ASSISTANCE

5. (SBU) Mehrnaz Teymourian, World Bank Country Program
Coordinator for Central Asia, hosted a roundtable discussion
on the World Bank Group's Program of Assistance to
Turkmenistan on February 1. She said the Government of
Turkmenistan's priorities for assistance from the World Bank
were exchange-rate unification and rural-development
strategy. She said the World Bank will engage slowly,
through one or two investment projects in rural
infrastructure and social services such as health, rural
water, or rural roads. The World Bank also foresees working
with the economic ministries and entities on economic
training such as market forecasting, improving public-sector
use of government assets, removing regulatory and
administrative barriers to public-sector development, and
reforming the agricultural subsidies policy. Teymourian said
the World Bank also plans to pursue co-financing arrangements
to ensure ownership on both sides of the relationship.
However, the parties must resolve many issues before lending
can commence, such as data sharing and the need for
Government of Turkmenistan officials to participate actively
in the consultative process of assessing areas of need.

6. (SBU) According to Teymourian, so far, Turkmenistan has
requested programs in banking supervision and regulation,
modernization of the payments system, introduction of the
Pension Reform Options Software Toolkit (PROST) and pension

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reform, improvement of national account statistics,
measurement of living standards, a survey of small and medium
enterprises, and an introductory seminar on the World Bank.
In addition, Turkmenistan requested assistance in assessment
of the informal economy, development of leasing transactions,
development of a competitive insurance market, development of
a securities market, introduction of non-cash payment
systems, strategizing a rural-development program, anti-money
laundering and cardholder funds transfer workshops,
establishing a financial-intelligence unit, and development
of sector strategies for the Ministry of Motor
Transportation. The World Bank will work on the Interim
Strategy Proposal (ISP) from February through April and
present the ISP to the World Bank Board of Directors in May.
(NOTE: An ISP is usually the Bank's first stage of
re-engagement and typically last 18 months. END NOTE.)

7. (SBU) On a slide on the "New Government's Priorities," the
World Bank listed the Avaza tourist zone as part of
Turkemnistan's ambitious agenda. On the same slide, they
quoted from President Berdimuhamedov's New Revival ideology:
"...and ultimately make Turkmen people's life happier."
Teymourian expressed surprise that Central Bank Chairman
Geldimurat Abilov could not assist the World Bank delegation
in meeting with President Berdimuhamedov. (NOTE: Currently,
the Foriegn Ministry, with the advice and consent of the
Ministry of National Security, controls nearly all access to
the president by foreigners. END NOTE.)

8. (SBU) COMMENT: World Bank officials showed foresight by
asking to meet with donors many times throughout their
week-long visit to Ashgabat. To their credit, they
proactively asked many questions to better understand the
unique state of affairs in Turkmenistan, issues which
differentiate Turkmenistan from other CIS countries. Because
the World Bank has not spent much time here for years, these
officials also have a lot to learn about engaging with the
Government of Turkmenistan before the Bank can be effective.
Close coordination with other donors and consistent,
on-the-ground engagement are essential to achieve results.

9. (SBU) COMMENT CONTINUED: There is another message
embedded here. The Turkmen are amazingly fast learners. In
meetings six months ago, we never would have heard such a
detailed to-do list as they present the World Bank (see para
six above). More sobering, their need dwarfs the
international community's ability to respond. It is
essential to listen carefully to the Turkmen and then help
them prioritize how to reach their ambitious goals. END
COMMENT.
HOAGLAND