TURKMENISTAN: PRESIDENT CREATES TWO NEW

C O N F I D E N T I A L ASHGABAT 000181

SIPDIS

SIPDIS

STATE FOR SCA/CEN, EEB
TREASURY FOR BAKER/LANIER
USAID/W FOR EE/AA

E.O. 12958: DECL: 02/05/2018
TAGS: PGOV ECON EFIN TX
SUBJECT: TURKMENISTAN: PRESIDENT CREATES TWO NEW
MINISTRIES FROM OLD MINISTRY OF ECONOMY AND FINANCE

Classified By: Charge Richard E. Hoagland for reasons 1.4 (B) and (D).


1. (SBU) SUMMARY: During a February 2 Cabinet of Ministers
meeting on provincial development, President Berdimuhamedov
announced that he was splitting the Ministry of Economy and
Finance (MOEF) into two entities: a Ministry of Finance, and
a Ministry of Economy and Development. Berdimuhamedov gave
the new ministries a month to clarify roles and
responsibilities. Many within Ashgabat's diplomatic
community view this reorganization as a positive move: the
MOEF has been stretched in recent months to keep up with the
president's demands for reform in the economic and financial
sectors, and the president may simply have decided that MOEF
restructuring is necessary to speed up reform. However, this
seems to suggest that February may not be the best month for
a Department of Treasury visit, and post would like to
suggest that the proposed delegation postpone its trip here
for a month. END SUMMARY.


2. (U) During an extended Cabinet of Ministers meeting on
provincial development, President Berdimuhamedov signed
decrees that split the MOEF into two entities: a Ministry of
Finance, and a Ministry of Economy and Development. He gave
the two new ministries a month to work out the details of
their restructuring. The president indicated in his speech
that the Ministry of Economy and Development will coordinate
short- and long-term social and economic development plans
for the country. It will also regulate the activities of a
number of new bilateral economic partnership commissions to
facilitate mutual trade and investment that have been
established since the beginning of 2007. The Ministry of
Finance will take the lead role to manage Turkmenistan's
public revenue and funding -- including the budget -- and
public finance management.


3. (C) EU-TACIS Turkmenistan Advisor Michael Wilson (please
protect throughout) noted to EconOff that Berdimuhamedov has
created departments focused on development within a number of
ministries in recent months to address inadequacies and
better manage the president's development priorities.
Comparing Turkmenistan's course to a similar pattern forged
by Russia 15 years ago of creating auditing structures to
evaluate ministry efficiency, Wilson suggested that
Berdimuhamedov wants to understand why the pace of reform is,
in the president's view, lagging. Wilson views this
reorganization as proof that Berdimuhamedov is aware that
intellectual and technical capacity at the highest levels is
low. Wilson hopes that the restructuring will allow
ministries to initiate a capacity-building strategy for
staff, which would also create opportunities for all donors
to contribute through new training programs.


4. (SBU) COMMENT: The MOEF has been stretched in recent
months to keep up with the president,s demands for reform in
the economic and financial sectors, and the president may
have decided that MOEF restructuring is the most efficient
way of addressing the slow pace of reform. Creating a new
Ministry of Finance will also create a new counterweight to a
Central Bank that has been lukewarm at best in implementing
Berdimuhamedov's proposals. However, it will take some time
to bring order to these two new ministries -- the president
has not yet even named the new ministers. In light of these
developments, Post recommends that the visit of the
assessment team from the Department of the Treasury, proposed
for February, be postponed for a month so the dust can settle
and new people be put in place. END COMMENT.
HOAGLAND