TURKMENISTAN: ADDITIONAL GOVERNMENT RESTRICTION ON

UNCLAS SECTION 01 OF 02 ASHGABAT 001673

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB
COMMERCE FOR EHOUSE/DSTARKS

E.O. 12958: N/A
TAGS: ETRD ELTN PGOV SOCI TX
SUBJECT: TURKMENISTAN: ADDITIONAL GOVERNMENT RESTRICTION ON
USED CARS

REF: ASHGABAT 1601

ASHGABAT 00001673 001.2 OF 002



1. (U) Sensitive but unclassified. Not for public Internet.


2. (SBU) Traffic police posted in Ashgabat's southern
outskirts reportedly have instructions to prohibit cars from
entering the city if the drivers cannot produce a title for
the car with their name on it. Many drivers do not have legal
title to their vehicles, particularly older models, because of
an informal mechanism for financing auto purchases. According
to this mechanism, the buyer receives a power of attorney from
the car owner/seller, while simultaneously making installment
payments. Once the car is paid in full, title is officially
transferred. Police have been reportedly ordered to stop
older cars entering Ashgabat and ask drivers for license and
proof of ownership. If drivers produce a power of attorney
document instead of an actual title with their name on it, the
drivers are reportedly turned back. This new measure is
apparently aimed at reducing the number of cars in the
capital.


3. (SBU) Allowing a car buyer to use a car based on a power of
attorney from the owner/seller, while the buyer makes agreed
installment payments, is an informal mechanism for financing
used car sales. Neighbors, friends, and family members first
reportedly used this system to sell cars to each other.
Subsequently, used car traders noticed a potential market and
also started granting powers of attorney in order to sell cars
on an installment plan. The sellers often bought the vehicle
on the cheap, thus turning a nice profit on the car over time.
Since the agreements were verbal, individual Turkmen car
owners generally granted power of attorney to people they
either knew well or to those who were recommended to them by
family or close friends. Under the installment arrangement,
once a would-be buyer, who was granted power of attorney to
drive the car, fulfills his or her agreed upon payment
requirements, the owner cancels the power of attorney and
transfers the title to the purchaser.


4. (SBU) This auto finance system allows many Turkmen to buy
vehicles that they otherwise could not afford. At the same
time, tis system usually involved the sale of older cars, and
now many of those cars can be found in Ashgabat. Overall
traffic in Ashgabat has been steadily increasing and locals
complain about the number of cars on Ashgabat roads. (COMMENT:
Actually a bigger problem adding to the congestion is the number
of road closures due to road construction. END COMMENT.)
Recently, Turkmen press reported that the Russian company
Vozrozhdeniye was contracted by the GOTX to construct eight
new bridges to improve traffic movement in the capital.
President Berdimuhamedov has also ordered an import ban on
cars produced before 2000, effective January 1, 2010, in a
reported effort to maintain the city's beauty and prestige by
reducing the number of older cars in the city (reftel).


5. (SBU) The decision to crack down on the informal auto
finance system will affect used car traders in Mary province.
This area is known throughout the country for its large used
car markets. Some Ashgabat residents originally from Mary
suspect this latest crackdown on cars was also intended to
disrupt the used car market in Mary, which the Turkmen
President reportedly dislikes.


6. (SBU) COMMENT: It appears that the government is
determined to reduce the number of older used cars in Ashgabat
by various means. Although the new orders might reduce the
number of cars in the city and reduce traffic, these
initiatives will make it more difficult for the average
Turkmen to afford a car of their own. END COMMENT.

ASHGABAT 00001673 002.2 OF 002



CURRAN