TURKMENISTAN: WHY ASHGABAT SHOULD HOST THE 2008

UNCLAS SECTION 01 OF 02 ASHGABAT 000228

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PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: PGOV PREL ECON ETRD TX
SUBJECT: TURKMENISTAN: WHY ASHGABAT SHOULD HOST THE 2008
CENTRAL ASIAN TIFA MEETING

REF: A. STATE 1132

B. ASHGABAT 0125

C. DUSHANBE 0185

D. ASHGABAT 0219


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


2. (SBU) In response to Ref A. request asking embassies in
Central Asia to poll host governments about where to hold the
2008 Trade and Investment Framework Agreement (TIFA) Council
meeting, Turkmenistan and Tajikistan both expressed an
interest in serving as hosts (Refs B and C). While the
United States would like for Central Asian TIFA partners to
work out the hosting issue among themselves, Post has seen
little effort to date by authorities from either Turkmenistan
or Tajikistan to translate their "firm offers" to host into a
campaign for support from other partner governments. In
fact, governments in the region are still very unused to abnd
uncomfortable with this kind of collective bargaining. And
so we present the following case for holding the 2008 Central
Asian TIFA meeting in Ashgabat.


3. (SBU) As an emerging regional player, Turkmenistan is
already providing natural gas-generated electricity to
Afghanistan, Tajikistan and Uzbekistan. It is upgrading the
road running from Uzbekistan to Afghanistan and its main
east-west highway, and will have two U.S.-built
state-of-the-art border crossing checkpoints to facilitate
cross-border trade in the region. It is in the process of
upgrading its airports in Ashgabat and the Caspian port city
of Turkmenbashy, and has concrete plans to upgrade its harbor
facilities -- all in the expectation of improving its status
as a trading partner and transit state in the region. What
it lacks, however, is a larger understanding of how to
translate its interest in promoting trade and investment into
concrete steps to spur foreign investment, to open market
access, and to increase private-sector economic activity --
all hallmarks of a genuine market economy.

THE GOALS: SPURRING INTERNAL REFORM


4. (SBU) President Berdimuhamedov has clearly stated both
publicly and privately, to U.S. and other western officials,
that he intends to lead his country on a path of reform that
will allow it gradually to meet international standards and
become a more attractive target for foreign investment. To
that end, Berdimuhamedov has introduced a broad-based program
of reforms (Ref D),but he has a long way to go to reach his
goal. He has not found it easy to motivate Turkmenistan's
officials, many of whom fear initiative and lack the
expertise needed to do their jobs. He has faced particular
problems in getting top officials in the financial and
economic sectors to act.

PROMOTING OUTREACH


5. (SBU) For years, Turkmenistan was inward-looking as a
result of former President Niyazov's neutrality (read
isolation) policy and his poor relationships with most of his
regional counterparts. However, Berdimuhamedov has
kick-started Turkmenistan's regional recondiliation and
international reintegration. He has established joint trade
and economic investment commissions with all of his neighbors
and is using those commissions to resolve the issues that
contributed to Turkmenistan's political and commercial
isolation under Niyazov and promote new bilateral trade
relations.

INCREASING PARTICIPATION IN REGIONAL PROGRAMS


6. (SBU) Turkmenistan has begun to join or has increased its
participation in a number of regional cooperative
organizations. Although the Central Asian TIFA was one of
the handful of regional mechanisms in which Turkmenistan did
participate under President Niyazov, that participation was

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largely passive. Turkmenistan's expression of interest in
holding the next TIFA meeting in Ashgabat is a significant
commitment to greater activism as a regional trade and
development partner.


7. (SBU) Turkmenistan wants to increase its participation in
TIFA because it is precisely the sort of organization with
which Berdimuhamedov feels most comfortable: a politically
"neutral" organization whose multilateral focus on promoting
regional trade and investment is unthreatening and very much
in Turkmenistan's interest. From Berdimuhamedov's
perspective, hosting the TIFA would:

-- Bulwark his internal reform efforts to date, while
highlighting for still-skeptical financial and economic
officials how far Turkmenistan is from achieving
international standards.

-- Offer Berdimuhamedov a high-profile opportunity to
highlight to his neighbors his commitment to improved
relations.

-- Give Turkmenistan's economic and financial officials a
chance to network with their counterparts in neighboring
countries and greater exposure to international trade regimes
and practices.

-- Serve as a tangible sign of the international community's
support for what the president is trying to accomplish.


8. (SBU) The United States has always viewed TIFA as an
engine for promoting exactly the sorts of change that
Berdimuhamedov says he wants. We believe Berdimuhamedov is
sincerely interested in transforming Turkmenistan, but he is
hitting serious obstacles. He has yet to get total buy-in
from his trade, financial, and economic officials that change
is needed and positive. For these reasons, we believe that
Turkmenistan as host of the next Central Asia TIFA, which
focuses on a collective approach to promoting trade while
addressing issues that have become trade barriers, offers a
soft-sell approach that could help accomplish both
Berdimuhamedov's goals and, most importantly, our own.
HOAGLAND