TURKMENISTAN: PRESIDENT TRIES TO KICK-START

UNCLAS SECTION 01 OF 04 ASHGABAT 000474 SIPDIS C O R R E C T E D C O P Y (PARA MARKING - PARA 1) SENSITIVE SIPDIS STATE FOR SCA/CEN, E, EEB E FOR UNDER SECRETARY JEFFERY PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER TREASURY FOR BAKER/LANIER USAID/W FOR EE/AA E.O. 12958: N/A TAGS: PGOV PREL EAID ECON EFIN SCUL TX SUBJECT: TURKMENISTAN: PRESIDENT TRIES TO KICK-START ECON/FINANCIAL, MEDIA, OTHER REFORMS REF: 07 ASHGABAT 1246 ASHGABAT 00000474 001.2 OF 004 ¶1. (SBU) SUMMARY: President Gurbanguly Berdimuhamedov on April 14 held a marathon cabinet meeting at which he announced a number of new initiatives in the economic/financial, media, and construction sectors directed toward accelerating reform. Most significantly, he ordered a one-year process for redenomination of Turkmenistan's currency, introduction of a new management department in the State Institute for National Economy, fired Central Bank Chairman Abilov and promoted Minister of Finance Hojamyrat Geldimyradov to Deputy Prime Minister. He directed that media should begin covering foreign news, and instructed that Turkmenistan should begin establishing overseas news bureaus -- and should begin allowing foreign journalists in to cover the country. All of this is quite remarkable and, if fully implemented, would hasten significant reform. END SUMMARY. ¶2. (SBU) The business-like April 14 cabinet meeting, whose purpose was to review results from the first quarter of 2008 and long-range strategies for economic/social development, was one of the longest and most extensively reported that President Berdimuhamedov has ever held. The president focused primarily on three sets of issues: economy/finance, media/Internet, and construction. Demonstrating that this was meant to be an unusually important meeting, Turkmenistan's newspapers on April 15 focused solely on reporting the cabinet meeting and the related presidential decrees, contrary to usual practice. ECONOMIC/FINANCE: KEY PERSONNEL CHANGES OFFER HOPE OF MORE COOPERATION ¶3. (SBU) Noting the importance of the changes that Turkmenistan is making in the financial sphere, including the unification of the dual exchange rate, Berdimuhamedov said he was making some additional changes, including: -- A decree on currency redenomination orders banks to begin January 1, 2009, introducing new national currency which would make one new manat equal to 1000 old manats, and requires redomination to be completed by December 31 2009 (more septel). -- Turkmenistan's State Institute of National Economy will be renamed the State Institute of Economy and Management to develop a cadre of highly qualified experts in market development and management. The Institute and the Ministry of Education have been tasked to establish a new charter and a plan for restructuring the Institute within a month. -- To help promote a new concept for economic and social development, the president designated Balkan Province as the pilot province for implementing a stage-by-stage transition to a market economy by 2012 with the guidance of UN specialists. Other provinces will be expected to follow suit, learning from Balkan's experiences. -- Central Bank Chairman Geldimurat Abilov was fired "for serious shortcomings" and for not following through on tasks related to unification of the exchange rate. Berdimuhamedov appointed Vneshekonombank Chairman Guvanch Goklenov in Abilov's place (more septel). (NOTE: Goklenov's wife and Berdimuhamedov's wife are sisters, and Goklenov is also the ASHGABAT 00000474 002.2 OF 004 nephew of Minister of Textiles Jemal Goklenova. END NOTE.) -- Berdimuhamedov promoted Minister of Finance Hojamyrat Geldimuradov to the position of Deputy Prime Minister, giving him responsibility for the entire "economic block," including the Ministries of Finance, Economy and Development, Social Welfare, the State Tax Service, the Central Bank, and all of Turkmenistan's banks. -- Deputy Prime Minister for Transportation and Communications Gurbannazar Ashyrov was removed "for grave shortcomings and inability to fulfill his duties." Berdimuhamedov temporarily handed over responsibility for overseeing these sectors to Deputy Prime Minister for Energy, Industry, Construction and Motor Transportation Nazarguly Shaguliyev. -- Chairman of the State Oil and Gas Construction Concern Jumageldi Babashev was replaced by Atamurat Durdiyev, previously a deputy chairman of the State Concern. -- Bayar Abayev was appointed Chairman of the Food Industry Association. -- Bayramgeldi Jumayev was appointed Chairman of the "TurkmenMallary" Livestock Association. MEDIA/INTERNET: FOCUS ON INTERNATIONAL COVERAGE AND BROADENING INTERNET ACCESS ¶4. (SBU) Making Deputy Chairman for Culture and Media Maysa Yazmuhammedova and all state reporters attending the meeting stand up, Berdimuhamedov delivered a pointed, but still gently worded rebuke of their work, stating that they needed to increase their professionalism. Specifically, he: -- Stated that Turkmenistan's mass media should cover international news, ordered that the Watan channel should establish a department to cover international news, and said there should be a cadre of journalists who specialize in analysis of domestic and overseas political events. -- Instructed that Turkmenistan should establish overseas bureaus staffed by Turkmen journalists and said -- without elaboration -- that foreign media should be allowed to cover events in Turkmenistan. ¶5. (SBU) The president gave all mass media organizations two months to address their shortcomings, or face a major reshuffling. After Supreme Audit Chamber Director Japarov criticized the Ministry of Communications for not making Internet widely available and for excessive prices at public Internet cafes, Berdimuhamedov delivered a sharp rebuke to the Minister of Communications for the lack of affordable public access to the Internet and gave the minister two months to show improvement (septel). CONSTRUCTION: BEGINNING OF A QUALITY-BASED CONTRACT SYSTEM? ¶6. (SBU) Noting the importance of construction to Turkmenistan's economic development, the president addressed representatives of Turkish and France's Bouyges construction firms, calling on them to complete their construction contracts on time and warning them that their contracts would ASHGABAT 00000474 003.2 OF 004 be taken from them if they do not complete their projects in a timely manner. Listing the best and worst construction firms by name, he also warned them that Turkmenistan will begin checking the quality of their work, and instructed his cabinet not to register or license any construction firms with insufficient capital and equipment to do their contracted work (more on this septel). The president split the Ministry of Construction and Construction Materials Industry into two, and put the minister of the former super ministry, Shamuhammet Durdyliyev, in charge of the new Ministry of Construction. OTHER ISSUES: PREPARING FOR A CENSUS AND CRACKING DOWN ON SCHOOLS ¶7. (SBU) During the meeting, the president also signed a large number of other decrees. Two of the most significant included an order to begin overhauling registry procedures to carry out a national census in 2012, and an order to ensure that all schools are equipped with multi-media centers. The president instructed that any schools that do not obtain this new equipment will not be allowed to function. ¶8. (SBU) COMMENT: Taken as a whole, the president's changes focus on accelerating deeper, more significant reforms in Turkmenistan. We note, however, a trend of appointing people the president trusts -- relatives and individuals from his home region -- to replace non-performing hangers-on from former President Niyazov's regime. With implementation the key to determining these measures' success, getting Abilov out of the Central Bank and promoting Geldimuradov (who genuinely seems to understand the need for change) to a more responsible position seem to be good moves. It is unclear, however, whether Goklenov, whose primary qualification for his new position seems to be his relationship to the president, will be an improvement on Abilov. END COMMENT. BIO: HOJAMURAT GELDIMURADOV ¶9. (U) Geldimuradov was born in 1965 in Borme Village of Baharly District in Ahal Province. He entered the Department of Economy and Organization Construction of the Turkmen Polytechnic Institute. From 1983-1985, he served in the military in Leningrad (presently Saint Petersburg, Russia). He graduated from the Turkmen Polytechnic Institute in 1989, and from the Law Academy of Ukraine named after Yaroslav Mudryi in 2004. From 1990 to 1997, he served as the Head of the Accounting Department of the State Tax Service of Baharly District, then, from 1997-2004, he worked in Ahal Province's State Tax Service. After graduating from the Law Academy in 2004, he worked for a year as the head of the department on overseeing the work of tax services at the Main State Tax Service. From 2005 to 2007, he served as Deputy Minister of Economy and Finance, followed by a one-year stint (until February 8, 2008) as Minister of Economy and Finance. In this capacity, Geldimuradov represented Turkmenistan at the 2007 Central Asia TIFA meeting in Washington, DC. When the president divided the ministry into two entities, Geldimuradov became Minister of Finance. BIO: SHAMUHAMMET DURDYLiYEV ¶10. (U) Durdyliyev was born in 1963 in Baharly township, Ahal Province. He graduated from the Industrial and ASHGABAT 00000474 004.2 OF 004 Residential Department of the Turkmen Polytechnic Institute, where he majored in civil engineering, in 1986. From 1986-1990, he served as an engineer for occupational safety and construction at Baharden Mobile Mechanical Division #3. In 1990, he became an engineer at the production and technical department of a self-financed construction field. From 1992-1993, he served as Head of the Baharden self-financed construction field of the "AshgabatRemBytStroi" -- Ashgabat's renovation of public amenities centers. In 1993, he served briefly as Head of the Construction and Assembling Management #3 of the "Ahal Province Gas" Production Association, before becoming construction manager at the Baharden District Specialized Mobile Mechanical Division #17. In 1994 he served for a year as deputy head of Baharly township, followed by seven years (until 2002) as an engineer, senior engineer, then head of the "Baharden water management production administration. From 2002-2007, he worked as a deputy head and head of the Ahal village construction production administration. He became Deputy Minister of Construction and Construction Materials Industry on August 21, 2007, and then, on July 9, 2007, Minister. BIO: GUVANCH GOKLENOV ¶11. (U) From 1997-1999, Goklenov served as Deputy Chairman of the Board of Directors of the State Bank for Foreign Economic Activities (Vneshekonombank). From 2000-2001, he served as Deputy Chairman of the Board of Directors of Vneshekonombank, while also serving as Governor of the Islamic Bank of Development for Turkmenistan and Governor of the European Bank of Reconstruction and Development for Turkmenistan. On March 31, 2001, he was named Chairman of the Board of Directors of Vneshekonombank. HOAGLAND