USAID ECONOMIC GROWTH PROGRAMS WARMLY RECEIVED

UNCLAS SECTION 01 OF 03 ASHGABAT 000533 SIPDIS SIPDIS SENSITIVE STATE FOR SCA/CEN, EUR/ACE, EEB AID/W FOR EE/EA E.O. 12958: N/A TAGS: PGOV PREL EAID ECON ENRG TX SUBJECT: USAID ECONOMIC GROWTH PROGRAMS WARMLY RECEIVED REF: A. ASHGABAT 0469 ¶B. ASHAGBAT 0040 ¶C. ASHAGBAT 0248 ASHGABAT 00000533 001.2 OF 003 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: April 16-22, a delegation led by USAID/CAR Economic Growth Office Director met with major Turkmen counterparts to discuss the status of USAID's Economic Growth programs in Turkmenistan. The Ministry of Energy and Industry indicated that it is ready to expand its participation in the next generation of USAID's Regional Energy Markets Assistance Program. The Deputy Chairwoman of the Supreme Council on Science and Technology (SCST) voiced support for recognizing the USAID-developed Russian language Certified Accounting Practitioner (CAP) and Certified International Professional Accountant (CIPA) curriculums and asked for expanded USAID assistance in training of trainers and curriculum reform in Turkmenistan's universities. During this period, USAID's new Economic Reforms for Enhancing Competitiveness (EREC) organized a seminar on project management methodology and development of performance indicators for the Institute of Strategic Planning and Economic Development (ISPED) and participants from the Supreme Regulatory (Audit) Chamber travelled to Kazakhstan at USAID's invitation to learn about the functions of Kazakhstan's State Accounts Committee. Comments by the Mary provincial governor indicated that ongoing USAID advocacy for long-time partner in the agricultural sector, the Ilkinjiler farmers' association, has had a positive effect on its reputation with local officials. Overall, the discussions demonstrated increased interest in and commitment to joint development priorities from Turkmen counterparts. They also highlight the need for additional resources at this critical juncture in Turkmenistan's development. END SUMMARY. MINISTRY OF ENERGY READY FOR REMAP II ¶3. (U) On April 16, Deputy Minister of Energy and Industry Orazgulyev recognized USAID's assistance in building a national transmission model and thanked the delegation for supporting the Ministry's participation in the April 21 Energy Regulators Regional Association workshop. During working meetings on April 17-18 with USAID, the Ministry strongly requested additional support in the areas of analysis of generation and transmission costs, assessment of regional transmission system tele-metering and control system guidelines, education and training on regional energy market development, and assistance on transmission tariff methodologies. Future USAID assistance in these areas via the follow-on activity to the current Regional Energy Market Assistance Program (REMAP), currently under development, combined with ongoing implementation of the Afghan and Turkmen commitments outlined in the Protocol of the Joint Meeting of Technical Experts of the Ministry of Energy and Water of the Islamic Republic of Afghanistan and the Ministry of Energy and Industry of Turkmenistan on April 9, 2008 (Ref. A),will lay the foundation for sustainable electricity exports to Afghanistan. SUPREME REGULATORY CHAMBER TRAVESL TO KAZAKHSTAN ¶4. (U) From April 21-25, USAID supported a study tour by five representatives of the Supreme Regulatory Chamber of Turkmenistan to the Accounts Committee of the Republic of Kazakhstan. Led by SRC Deputy Chairman Velmurad Dovletov, this delegation's goal during the intensive one week visit was to learn about Kazakhstan's experience -- also supported by USAID -- in building its human and institutional capacity. Specific presentations and discussions covered a range of issues, including: -- General overview of the Organization and Conduct of Audit by the ASHGABAT 00000533 002.2 OF 003 Accounts Committee; -- Standards and Procedures in the Conduct of External Audits; -- Issues in External Audit of Tax and other Revenue Sources to the Budget; -- Experience of the Accounts Committee in Conduct of Financial Audits of Budget Organizations; -- Experience of the Accounts Committee in Conduct of Performance Audits; -- Strategic Planning for Activities of the Accounts Committee; -- Accounts Committee's Experience Organizing International Cooperation; -- Staff Development at the Accounts Committee; -- Organization of the Administrative and Legal Departments of the Accounts Committee. In addition, the delegation met with the Chairman of the Parliamentary Finance and Budget Committee, and observed a regular session of the Accounts Committee to Review Audit Results. Based on the results of this experience, the Supreme Regulatory Chamber will identify key areas for possible technical assistance from USAID to develop its human and institutional capacity for introduction of international best practices as a supreme audit institution. CAPACITY-BUILDING AT ISPED STARTS ¶5. (U) In response to a mid-March request from Institute of Strategic Planning and Economic Development (ISPED) Director Ashirkuli Kurbankuliyev for support in developing the National Development Strategy to 2030, USAID quickly organized a set of three workshops during the second half of April. Specific areas to be covered by USAID's implementing partner on the Economic Reforms for Enhancing Competitiveness (EREC) include: -- Project management methodology and development of robust sector performance indicators to incorporate into the strategy (April 15-17); -- Macroeconomic modeling - Fiscal policy, Macro policy and Monetary policy - for all staff of Institute of Strategic Planning and Economic Development, with participation of staff from the Central Bank of Turkmenistan (April 22 - 29): and -- Private sector development, including the Role of public-private dialogue and partnerships; using the Balanced Scorecard to drive improvement; Global and Business Competitiveness Improvements; Financial Market Development and Privatization; Corporate Governance and Microfinance (April 27 - May 2). These seminars will help strengthen the capacity of a new institution tasked with overall development strategy and longer-term support could integrate Institute of Strategic Planning and Economic Development into the medium-term budget process, further promoting economic reforms to build competitiveness. MARY GOVERNOR WARMLY WELCOMES DELEGATION ¶6. (U) In an April 19 meeting with the delegation, Mary Governor Kakageldi Gurbanov complemented USAID's work in the area of agricultural development. In a change of attitude from USAID Mission Director Bill Frej's visit in December 2007 (Ref. B), Gurbanov stated that USAID's productivity enhancing work with the Zaman Samat community group and the Ilkinjiler farmers' cooperative should be expanded. The Governor emphasized his willingness to cooperate with USAID, echoing sentiments also heard at national-level meetings. While the Governor outlined what the government is doing in support of wheat and cotton, he also highlighted the importance of USAID's work on family greenhouse plots and small dairy operations. SUPREME COUNCIL ASKS USAID'S SUPPORT FOR ACCOUNTING REFORM ASHGABAT 00000533 003.2 OF 003 ¶7. (U) Following a presentation by USAID on April 22, the Deputy Chairwoman of the Supreme Council on Science and Technology (SCST) indicated her support for official approval for the USAID-developed Certified Accounting Practitioner (CAP) and Certified International Professional Accountant (CIPA) accounting training and certification program in Turkmenistan. The Deputy Chairwoman prioritized building the capacity of Turkmen auditors, accountants and students through these internationally recognized standards and clearly recognized capacity-building as a cornerstone for implementation of International Financial Reporting Standards in Turkmenistan. The Chairman asked for expanded USAID assistance in training of trainers and curriculum reform in Turkmenistan's universities and highlighted that the Council would move rapidly to fully approve the curriculum. ¶8. (SBU) COMMENT: The delegation's meetings with government officials were overwhelmingly positive. Government counterparts showed a renewed interest in building international relations, in exploring international standards, and in learning about how Turkmenistan's development priorities can be achieved in the most effective manner. Counterparts engaged in constructive and frank discussions, were appreciative of USAID's past assistance, and appeared interested in ensuring that USAID's programs operate smoothly. This level of dialogue and cooperation would have been unthinkable only a year ago. Even more impressive is the fact that the areas of cooperation -- educational reform, audits of state bodies, and regional energy market development -- have been sensitive to the state and therefore have received sparse USG support. ¶9. (SBU) COMMENT CONTINUED: The increased interest and demonstrated actions from Turkmen counterparts provide numerous opportunities for engagement at this critical juncture. Small amounts of technical assistance and training provided to the Government of Turkmenistan, combined with its substantial resources and broadening political interests, could have a dramatic impact in critical economic development areas. Capacity-building that would support the introduction of International Financial Reporting Standards would have far reaching benefits for the financial system. Assistance to support the government's stated intention to privatize state enterprises would improve transparency and the productivity of these firms. Increased assistance in developing a regional electricity market would diversify sustainable exports of electricity to the region, including Afghanistan. USAID has established relationships to support assistance in all of these areas but is hindered by limited budgets. ¶10. (SBU) COMMENT CONTINUED: USG resources for the Economic Growth objective in Turkmenistan are an insignificant $879,000 in FY08. These are simply insufficient to take advantage of the near-term opportunities and needs outlined in this cable. While FY09 budgets are a more robust $2,925,000, they will not be available for over another year. The USG needs to immediately double the FY08 budget to be able to respond to GOT interests and build a relationship which has far-reaching potential across numerous strategic imperatives. END COMMENT. CURRAN