TURKMEN GOVERNMENT VIEWS ON 2009 FIRST QUARTER RESULTS

UNCLAS SECTION 01 OF 05 ASHGABAT 000461 SENSITIVE SIPDIS STATE FOR SCA/CEN E.O. 12958: N/A TAGS: PGOV TX SUBJECT: TURKMEN GOVERNMENT VIEWS ON 2009 FIRST QUARTER RESULTS ¶1. (U) Sensitive but Unclassified. Not for Internet distribution ¶2. (SBU) SUMMARY: President Berdimuhamedov chaired an expanded session of the Cabinet of Ministers on April 6 for the purpose of reviewing social and economic development in the first quarter of the year, as well as a number of priority policy issues. Although the session declared that the first quarter was generally stable, it revealed shortcomings in the field of livestock development for which President Berdimuhamedov severely reprimanded the responsible officials. Summing up the session, Berdimuhamedov identified major successes in early 2009 and outlined goals to be achieved in 2009. As a result of the session, Berdimuhamedov issued decrees authorizing extravagant multimillion dollar construction contracts. END SUMMARY. ECONOMIC PARAMETERS ¶3. (SBU) At the April 6 session of Turkmenistan's Cabinet of Ministers session, Deputy Chairman of Cabinet of Ministers for Economy, Tuwakmammet Japarov reported on economic developments during the first quarter of 2009. During the reporting period, Japarov claimed a stable increase in macroeconomic indices, caused by the steady development of all sectors, in particular, industry, construction and trade. This had led to an increase the welfare of population, he claimed. In February, the average monthly wages in Turkmenistan exceeded last year's analogous index by 12.4%. Finance Minister Gochyev then reported that the budget of Turkmenistan has a large surplus. According to the results of the first quarter of this year, the revenues were 2.8 times more and expenditures were 2.1 times more than the same period of in 2008. More than 80% of the budget funds have been directed towards implementing social policy. ¶4. (SBU) According to the report of the Chairman of the Board of the Central Bank of Turkmenistan Guvanchmyrat Goklenov, the step by step introduction of the redenominated manat continues. He noted that almost 79.8% of available money in circulation is comprised of the newly denominated manats and coins. Minister of Economy and Development Bashimmyrat Hojamukhammedov reported on the progress of implementing President Berdimuhamedov's national program on reforming the social-living conditions of the population of the provinces. He provided information regarding work completed in each province and also the work planned for this year. Noting the need for a constant improvement in the professional and educational level of officials, Berdimuhamedov ordered the Academy of State Service to conduct a certification of mayors and other executives of local administrations. Deputy Chairman of the Cabinet of Ministers for Trade and Textile Hojamuhammet Muhammedov reported on a significant increase in the production of textile products caused by their high demand in domestic and foreign markets. He noted a steady increase in the commodity turnover in the Ministry of Trade and Foreign Economic Relations of Turkmenistan. ENERGY FIELD AND TURKMENISTAN-CHINA GAS PIPELINE ¶5. (SBU) Deputy Chairman of the Cabinet of Ministers, Tachberdi Tagyev reported on the progress of implementation of the oil and gas industry development program of Turkmenistan for the period until ¶2030. In order to strengthen the raw-material base of this sector and increase the volume of production and processing of oil and gas, exploration-geological survey work has increased recently. In addition, industrial development and construction of new promising oil and gas fields are well under way. Work on the modernization of production infrastructure of the fuel-energy complex as well as the creation of a diversified system of transport of Turkmen energy carriers to world markets is also under way. ¶6. (SBU) Commenting on the report, Berdimuhamedov noted that the effective development of hydrocarbons and other natural resources of Turkmenistan is fundamental to the successful development of large-scale social and economic programs achieved in the country. A broad international partnership, built on the principles of equality and mutual advantage, will contribute to achieving the targets that have been set. In this context, drawing the attention of session ASHGABAT 00000461 002 OF 005 participants to the highest priority tasks associated with the export of Turkmen energy resources to world markets, the President ordered that they implement all measures to complete the construction of Turkmenistan-China gas pipeline by the end of 2009. Touching on the prospects for the development of other sectors of the fuel-energy complex, Berdimuhamedov ordered Tagyev to ensure that the domestic fish industry become extremely profitable. In this regard, the President appointed Mr. Tekayev, who earlier worked as a General Director of the "Nebitgazkhyzmat" (Oil and Gas Service) Joint Stock Company of the Ministry of Oil and Gas Industry and Mineral Resources, as a new chairman of the State Fishery Committee. AGRICULTURAL SECTOR RESULTS ¶7. (SBU) Deputy Chairman of the Cabinet of Ministers for Agriculture Myratgeldi Akmammedov reported on increased production of almost all types of agricultural products, which has led to increased earnings across the board in this sector. It was noted that the measures undertaken for the purpose of the practical implementation of the new strategy of the development of the agricultural sector and solutions developed by the President and adopted by the Council of Elders in March in Turkmenabat became a powerful stimulus for villagers. ¶8. (SBU) As far as conducting seasonal agricultural campaigns is concerned, preparations are well under way for harvesting grain crops and sowing cotton seeds. Currently, almost 30% of the farmlands allocated for this valuable industrial crop, has been sown with cotton seeds. Summing up the report, Berdimuhamedov designated the most urgent tasks needed for further progress of agrarian reform and the development of the Turkmen village. In particular, it was noted that it is necessary in the very near future to solve all issues connected with the opening of the specialized stores on the sales of agricultural machinery and spare parts for them to the population. ¶9. (SBU) In their reports, governors of provinces paid special attention to the state of affairs in the agrarian sector, and specifically, seasonal field work. They presented detailed information on the implementation of state social and economic programs, including on the progress of the Avaza National Tourism Zone on the Caspian Sea coast. They also reported on the readiness for commissioning of the first sanatoria and health resorts there as well as on the quick pace of construction of the Ashgabat-Dashoguz highway, which will be opened in the near future. Governors of Mary and Lebap provinces thanked the Turkmen leader for the newly built sports complexes in Mary and Turkmenabat cities. The complexes have stadia for 10,000 viewers each, swimming pools and other sports facilities, which were opened a day before. SHORTCOMINGS REVEALED ¶10. (SBU) Chairman of the Supreme Auditing Chamber (SAC), Gurbannazarov reported on the results of inspection of the condition of storage and refrigerator facilities intended for storing vegetables and fruits in the capital and other cities of the country, undertaken on the instruction of the President of Turkmenistan. Chairman of the Food Industry Association Bayar Abayev also reported on the state of affairs in his sector. Noting that the improvement of the material and technical base of the sector is the key aspect for ensuring the food security program, Berdimuhamedov instructed Deputy Chairman Akmammedov and other relevant officials to adopt the measures necessary for the creation of contemporary storage facilities for agricultural and other food products to provide Turkmenistan with high-quality fresh products at affordable prices year round. Berdimuhamedov ordered the transfer of part of these storage facilities to the private sector. ¶11. (SBU) The President listened to the reports of the chairman of SAC about the audit results of the activity of the Turkmenmallary (Turkmen Livestock) Association, and also the report of the chairman of this association, Bayramgeldi Jumov. Berdimuhamedov emphasized the need to steadily increase the potential for cattle-breeding both ASHGABAT 00000461 003 OF 005 for domestic and consumption and export. The President designated the priorities of this work, the importance of the creation of conditions for the satisfactory wintering of cattle, the expansion of pastures and their economic utilization, creation of specialized cattle-breeding farms and noted the attraction of private entrepreneurs to this work. As Berdimuhamedov noted, "During last winter (2007-2008),we have lost a lot of livestock. According to the report of the Office of the Prosecutor General, this was caused by the careless attitude of former officials of the association to their duties. If the livestock shelters are not in good condition during the harsh winter, if there are not enough feed and if nobody cares about the protection of livestock from cold, then it is obvious that there will be such losses." According to the SAC report, not a single new shelter for wintering of livestock has been built. The President criticized the work of Turkmenmallary Association and severely reprimanded Chairman Jumov and Minister of Agriculture Esenmyrat Orazgeldiyev. Berdimuhamedov instructed them to work out a plan on the elaboration of the program of development of the livestock sector together with the provincial governors' offices within 10 days. The President also instructed them to raise livestock in especially designated farms rather than breeding them in the desert. TRANSPORT AND COMMUNICATION FIELD ¶12. (SBU) Deputy Chairman of the Cabinet of Ministers for Transport and Communication, Shagulyev reported on the significant increase in the volume of cargo and passenger transportation by all forms of transport, including railroad, aviation and automobile transport, in comparison with the same period in 2008. According to him, essential growth was achieved in the sphere of communication, where services are being expanded thanks to the opening of new telephone exchanges, modernization of existing telephone stations, and also expansion of the number of Internet users. Noting the importance of the creation of reliable transportation infrastructure as fundamental for implementing social and economic development programs, Berdimuhamedov accentuated attention on the need of accelerating the construction of the bridge over the Amu Darya river which would play an important role in the successful development of the rich resources and industrial potential of Lebap province. CONSTRUCTION DEVELOPMENT ¶13. (SBU) Deputy Chairman of the Cabinet of Ministers for Construction and Power Energy Deryageldi Orazov reported on the steady tendency of increased production of electric power and construction materials. He also noted that the of city-planning program is going well, especially, residential construction activity. His report was supplemented with the report of the chairman of SAC, who presented the results of the audit on price formation for the construction of social facilities carried out on the order of the President of Turkmenistan. Taking into consideration the report and emphasizing the priority importance of the social component in state urban-planning policy, Berdimuhamedov emphasized the issues connected with implementation of the sequential stage of the housing program both in Ashgabat, and in the country. Declaring that the eleventh stage of this program will start in Ashgabat in the coming months, the President instructed the relevant officials to prepare proposals on conducting the corresponding international tender. He also emphasized the need to involve local construction companies in this work. SESSION RESULTS AND FUTURE GOALS ¶14. (SBU) Summing up the session, Berdimuhamedov emphasized that the beginning of 2009 was marked by a whole series of the events, which have important significance for strengthening the international authority of Turkmenistan and the successful fulfillment of reforms and bring about high living standards for people of Turkmenistan. Among these, he named visits to Uzbekistan, Iran and the Russian Federation, during which a whole series of the new agreements and other documents aimed at activating mutually beneficial intergovernmental collaboration have been signed. According to President Berdimuhamedov, "Despite the ongoing global economic ASHGABAT 00000461 004 OF 005 crisis in the world, the rates of development of our economy remain high. Implementation of large-scale international projects continues, numerous social and economic objects are being built. Among them are the creation of the Avaza National Tourism Zone, construction of the North-South transcontinental railroad, Turkmenistan-China gas pipeline, new settlements - district centres, institutes, schools, apartment buildings, kindergartens, development of the oil and gas deposits and others." He continued that construction of 1,437 buildings at a total cost of 15 billion US dollars is conducted in the country. In January-February 2009, the volume of investments increased by 2.1 times and the growth of foreign trade turnover reached 176%. Exchange rate of the manat remains steady. The level of inflation also does not exceed the assigned parameters. High rates of growth are ensured in the industry, construction and other sectors of economy. Reforms conducted in the agricultural sector also started producing results. Positive results of reforms, aimed at the modernization of industrial and other sectors of the economy are also clearly visible. Stable macroeconomic indices, high degree of financial, social and political stability - all this caused the investment attractiveness of Turkmenistan. In his speech, Berdimuhamedov also emphasized the special importance of the sphere of culture and media in the spiritual, moral and aesthetic training of nation. ¶15. (SBU) Formulating goals for this year, Berdimuhamedov emphasized that the most critical of them are further strengthening of the democratic and legal bases of state, increase the economic power of the country, spiritual improvement of society, development of education, science and culture, enhancing international cooperation, and a steady improvement of the living standards of population by developing entrepreneurship. President Berdimuhamedov outlined that in order to achieve these tasks it is necessary to accelerate the rates of the social and economic development of provinces, the implementation of the national program on reforming social and living conditions of the population of villages, settlements, cities of districts and district centres for the period until 2020. This acceleration will also help ensure further increase of the GDP (Gross Domestic Product) by at least 10.7% in 2009 compared with 2008 and further increase of the wages in all sectors of the economy. Balanced financial-credit and monetary policy will enable the country to preserve the stability of prices, and not to increase inflation. Berdimuhamedov also said that the inflate rate should be maintained not higher than 7-8%. EAST-WEST GAS PIPELINE AND INTERNATIONAL ENERGY CONFERENCE ¶16. (SBU) Noting the importance of the independent international audit of hydrocarbon deposits, which confirmed the presence of the enormous reserves of gas in the depths of the country, Berdimuhamedov emphasized that the results not only make Turkmenistan one of the largest energy powers but also increases the strategic value for expanding the framework of international collaboration in the sphere of ensuring energy security. This fact is clearly confirmed by the Turkmenistan-initiated UN Resolution "Stable and reliable transit of energy resources and its role in ensuring sustainable development and international cooperation," included in the agenda of the UN General Assembly. Part of the practical implementation of this important document became international tender on the construction of the East-West gas pipeline. In this context, Berdimuhamedov instructed the Foreign Ministry and the oil and gas complex of the country to take all measures to conduct the declared tender, and also the international conference dedicated to the issues of ensuring security of pipelines and other energy-transport communications to take place in Ashgabat at the end of April in a well-organized manner. ¶17. (SBU) The Cabinet session concluded with a solemn ceremony where Berdimuhamedov was awarded the Order of Honor of the Olympic Council of Asia. Director of the National Security Agency of Kuwait, the President of Olympic Council of Asia, Sheik Akhmad Al Fakhad al Sabakh, who came to Ashgabat for this occasion, presented the award to the Turkmen leader. CONTRACTS AUTHORIZED BY PRESIDENT ASHGABAT 00000461 005 OF 005 ¶18. (SBU) As a result of the session, President of Turkmenistan issued a decree in line with which, "Turkmennebitgazgurlushyk" (Turkmen Oil and Gas Construction) State Concern has been authorized to conclude a contract with the Turkish firm "Polimeks Insaat ve Taahut ve Sanayi Ticaret A.S." for covering the fountains on Andalyp Street in Ashgabat with granite, setting up electro-mechanical equipment and improvement of adjoining areas for a total amount of EUR 33,442,500 (including VAT) for construction between April 2009 and November 2009. President Berdimuhamedov signed another decree authorizing "Turkmennebitgazgurlushyk" State Concern to conclude a contract with the Turkish firm "Polimeks Insaat ve Taahut ve Sanayi Ticaret A.S." for design and construction of the winter sports complex at the intersection of Ataturk and Oguz Khan streets for 10,000 viewers and also sports school of Olympic Reserve for a total amount of EUR 134.39 million (including VAT) between April 2009 and November 2011. ¶19. (SBU) President Berdimuhamedov also signed a decree authorizing the purchase of 1,040 KAMAZ brand trucks and special machinery for a total amount of 292,666,000 manats (equivalent of USD 102.68 million). The Ministry of Trade and Foreign Relations of Turkmenistan and Ministry of Automobile Transport of Turkmenistan have been instructed to accept the KAMAZ brand trucks from "KAMAZ FTC Corp" Company by distributing them among the provincial governors' offices and the office of the mayor of Ashgabat. ¶20. (SBU) COMMENT: This latest expanded session of the Cabinet of Ministers looked at the results of the country's social and economic development in the first quarter of 2009. Although making efforts for social and economic development of the country to improve the population's living standards is a commendable activity, it is difficult to understand how authorization of 33 million dollars for covering fountains in Ashgabat with granite can contribute to the social and economic development of the country. END COMMENT. MILES