CHEVRON READY TO INVEST IN SOCIAL PROJECTS (INCLUDING AT

UNCLAS SECTION 01 OF 02 ASHGABAT 000590 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 EPET TX SUBJECT: CHEVRON READY TO INVEST IN SOCIAL PROJECTS (INCLUDING AT AVAZA) WITHOUT A DEAL REF: A. ASHGABAT 0453 ¶B. ASHGABAT 0415 ¶C. ASHGABAT 0365 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (U) SUMMARY: On May 1, Chevron Nebitgaz (Turkmenistan) President told USAID Representative that Chevron is willing to invest in social development projects prior to signing a contract in Turkmenistan in order to demonstrate its long-term commitment to the country. When identifying potential projects, Chevron seeks partnership with organizations like USAID, as it has successfully done in many other countries. With regard to specific projects, Chevron looks for scale, impact and corporate image enhancement. To this end, it is interested in supporting President Berdimuhamedov's vision for the Avaza tourism zone on the Caspian coast through a small business development program that demonstrates real impact for local residents. Chevron also agreed to consider partnering with USAID on a variety of ongoing economic development and health-oriented projects. As a next step, USAID agreed to provide more detailed information on selected USAID projects. A proposed June visit to Turkmenistan by a US-based Chevron assessment team will help identify specific potential opportunities for partnership. END SUMMARY CONTRACT NOT A PREREQUISITE TO SOCIAL INVESTMENT ¶3. (U) USAID Representative met with Chevron Nebitgaz B.V. President Doug Uchikura on May 1 to discuss Chevron's interest in partnering with USAID on devlopment projects in Turkmenistan. Uchikura was very receptive to the concept, based on Chevron's corporate philosophy of making long-term investments in the countries in which it operates. Chevron's operation in Turkmenistan is currently very small, only three staff, but Chevron is ready to expand quickly if its efforts to sign a contract with the government are successful. (NOTE: The first - and only, to date -- Turkmen national hired by Chevron, Uchikura's Executive Assistant, is the daughter of Ministry of Foreign Affairs Americas' Desk Chief, Serdar Bashimov. END NOTE) ¶4. (U) Since Chevron takes a long-term approach to investing in countries, it is willing to move forward with limited investments in social projects as a demonstration of its commitment to Turkmenistan prior to signing a contract. Chevron seeks to partner with organizations like USAID, as it has successfully done in many other countries. For example, Chevron contributed $20 million to establish the Angola Partnership Initiative with USAID, considered a model for public-private partnership that has expanded to include other donors. When reviewing specific projects, Chevron looks at their scale, the potential positive impact on the population, and the ability to enhance its corporate image. Emphasizing the importance of its perception among the population, Chevron wants to support projects that deliver tangible benefits to the people. ECONOMIC GROWTH AND HEALTH KEY PRIORITIES -- NOT DEMOCRACY ¶5. (U) USAID Representative provided an overview of ongoing programs in Turkmenistan, and highlighted perceived opportunities for partnership in areas that build capacity for sustained economic and social development. The Junior Achievement program, which provides market-based economics education for secondary youth across Turkmenistan, would use additional funds to expand course offerings to lower grades. In response to the government's interest in introducing International Financial Reporting Standards (IFRS), Chevron could partner with USAID to support training of university professors and other trainers in IFRS. These trainers would prepare a new generation of accounting specialists needed to support increased foreign investment. USAID's AgLinks program, which supports private farmers involved in greenhouse production and dairy processing, presented another opportunity to cooperate. ¶6. (U) Chevron has a long-standing interest in the health of the local population of countries in which it operates. To this end, Chevron made a 3-year $30 million commitment to the Global Fund to Fight AIDS, Tuberculosis and Malaria in January 2008. Turkmenistan ASHGABAT 00000590 002 OF 002 has committed to submitting an application to the Global Fund's Round 8 by June 30, 2008, which includes support from USAID in developing the proposal. Uchikura was interested in learning more about the status of Turkmenistan's application, and indicated that he would urge support for the application through internal channels if submitted. (NOTE: On May 6, USAID submitted a detailed update on the application process and Turkmenistan's status. END NOTE.). ¶7. (SBU) In contrast to economic and health programs, Uchikura said Chevron would not get involved in democracy programs in Turkmenistan. While he supports peaceful democratic development in general, Chevron had no interest in partnering in programs that promote democracy in Turkmenistan, due to their negative perceptions by the host government and the potential to disrupt business interests. MAKING TOURISM DEVELOPMENT WORK FOR THE PEOPLE ¶8. (U) Referring to President's Berdimuhamedov's repeated calls for investment in the Avaza tourism development project on the Caspian coast, Uchikura highlighted the disconnect between the high-profile construction projects and the lack of focus on developing a sustainable service sector necessary to attract tourists. The government and investors could build many fancy hotels, but visitors would not come - or come back -- if there was not a vibrant service sector to support their needs. This would lead to considerable waste of public resources and would provide no benefit to the local economy. As a result, he was interested in a small and medium-enterprise development project that would support human capacity and tourism development and offer the potential to help the Avaza project to succeed. If Chevron were to support such a project, it should demonstrate clear positive impact on the local population. ¶9. (U) Uchikura said Chevron intends to invite a US-based team to look at programs in the field as part of a Participatory Needs Assessment in June 2008. He asked for more detailed background information on USAID's existing programs in Turkmenistan, including project websites, so that the team could familiarize themselves in advance. During the assessment, the team would visit USAID's partners in the field to learn more about their impact. Following that, additional discussions on potential partnerships would be possible. ¶10. (SBU) COMMENT: Chevron appears to be taking a long-term view to entering Turkmenistan's market. It has made considerable investments in social projects in other countries, and is prepared to do the same here. It views investing in Turkmenistan's people ahead of a signed contract as both a signal to the government of its commitment and an opportunity to generate positive public perceptions. The hiring of the Americas' Desk Chief's daughter is another shrewd political move. Doing something Avaza-connected will also help them politically. ¶11. (U) COMMENT CONTINUED: Seeking public-private partnerships is part of USAID's commitment to change the way it implements its assistance programs. These partnerships, or Global Development Alliances (GDA),allow USAID to catalyze the ideas, efforts and resources of public and private sectors and civil society to stimulate economic growth, address pressing health issues, and expand access to education and technology to develop human capacities. USAID is interested in developing such partnerships with Chevron in Turkmenistan, and will continue to pursue opportunities to leverage our limited assistance funding for greater impact. END COMMENT. CURRAN