TURKMENISTAN: WHY ASHGABAT SHOULD HOST THE 2008

UNCLAS SECTION 01 OF 02 ASHGABAT 000228 SIPDIS SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB 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 ASHGABAT 00000228 002 OF 002 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