TURKMENISTAN: HOW MUCH OF CHINA IS TOO MUCH?

UNCLAS ASHGABAT 001249 SENSITIVE SIPDIS STATE FOR SCA/CEN; EEB; NEA/IR ENERGY FOR EKIMOFF/BURPOE/COHEN COMMERCE FOR EHOUSE E.O. 12958: N/A TAGS: EPET PGOV EINV TX SUBJECT: TURKMENISTAN: HOW MUCH OF CHINA IS TOO MUCH? REF: ASHGABAT 0815 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: The Chinese presence and the number of Chinese citizens living and working in Turkmenistan have traditionally been related to business activities conducted here by the Chinese National Petroleum Corporation (CNPC). As CNPC and its subsidiaries have expanded their business in Turkmenistan, the number of Chinese residents has increased. Currently, the Chinese represent one of the largest expatriate groups in Turkmenistan, residing at the company's field bases as well as in Turkmenistan's cities, including Ashgabat. There are indications that the Turkmen government is getting concerned about the large number of Chinese in the country, and there is a growing discontent about CNPC among its local employees. END SUMMARY. ¶3. (SBU) CNPC first appeared in Turkmenistan in 2002, when the company won contracts to provide well repair and gas production stimulation services in Turkmenistan's western region. In 2007, CNPC signed a production sharing agreement with the Turkmen government (reftel) to explore and develop gas fields on the right bank of the Amu Darya River, which caused sharp growth in the number of Chinese in the country. Reportedly, about 3,500 Chinese workers are involved in the Amu Darya Project (Lebap Province) alone. A significant number of Chinese citizens are involved in drilling services conducted by CNPC for Turkmengaz at the South Yoloten gas field located in Mary Province. CNPC has a field base in Balkan Province, where the company still carries out well repair and drilling services, and the company's head office is located in Ashgabat. ¶4. (SBU) The Chinese do not usually interact with locals because of the language barrier and are generally considered to behave more quietly than other expatriates. As a result, there have not been any conflicts between the Chinese and locals in everyday life. The situation in work-related relations between the Chinese and locals has been quite different. Many of CNPC's local employees complain about poor working conditions, low salaries, and unjust treatment by the Chinese. These factors caused a clash between Chinese and Turkmen workers that reportedly happened in South Yoloten on September 12. The clash resulted in 15 injured Chinese workers who were hospitalized, and the police detained about 200 locals. A few days after the clash, the local police raided discos and night clubs in Ashgabat, detaining the Chinese and reportedly instructing them not to attend entertainment places for a while. ¶5. (SBU) There seems to be a growing concern among Turkmen government officials over the increasing Chinese presence in the country. Reportedly, the government is not happy about Turkmenistan's growing dependence on Chinese equipment, especially in the energy sector, and is going to limit the procurement of Chinese machinery, which has flooded Turkmenistan since 2007. Moreover, there are rumors that Turkmen officials have been unofficially instructed to limit new deals with Chinese companies to the extent possible. ¶6. (SBU) COMMENT: Although Turkmenistan will remain strongly connected to China for a long time due to the soon-to-open Central Asia-China gas pipeline and a four billion dollar loan recently provided by the Chinese government to Turkmenistan (reftel),there are grounds to suppose that the Turkmen government's honeymoon with China is coming to an end. While there will most likely not be a sharp change in the Turkmenistan-China relations, the Turkmen government will probably try to gradually curb Chinese business activity in the country. END COMMENT. CURRAN