TURKMEN PRESIDENT IS MIGHTILY ANNOYED WITH

C O N F I D E N T I A L ASHGABAT 000495 SIPDIS DEPARTMENT FOR SCA/CEN E.O. 12958: DECL: 04/20/2019 TAGS: PREL PGOV EPET ENRG ECON MARR OVIP RS TX SUBJECT: TURKMEN PRESIDENT IS MIGHTILY ANNOYED WITH GAZPROM; DOES NOT AGREE TO INCREASED OVER FLIGHTS BUT LEAVES AN OPENING FOR FURTHER DISCUSSION REF: A. ASHGABAT 469 (NOTAL) ¶B. MOSCOW 971 (NOTAL) Classified By: Charge Richard Miles, reasons 1.4(b) and (d). ¶1. (C) SUMMARY. In a wide-ranging and lengthy meeting with Assistant Secretary Boucher on April 15, Turkmen President Berdimuhamedov expressed his appreciation for U.S. efforts in Afghanistan as well as his satisfaction with the Administration's Policy Review on Afghanistan and Pakistan. Berdimuhamedov was accompanied by Foreign Minister Meredov. Boucher was accompanied by Charge Miles. Berdimuhamedov twice mentioned "evil forces" gathering together in Pakistan. Boucher informed President Berdimuhamedov on a confidential basis that an agreement has been reached with the Kyrgyz Government to continue operations at Manas. Berdimuhamedov reiterated his government's willingness to help with the Coalition effort in Afghanistan but balked at Boucher's repeated request to lift the cap on U.S. over flights to and from that country. He cited "technical issues" as the reason for his refusal rather than the usual, rationale of harm to Turkmenistan's policy of "positive neutrality" thus leaving a window open for further bilateral talks on these "technical issues." ¶2. (C) Berdimuhamedov was indignant over the recent gas pipeline explosion, an attitude he later expanded to raise a more general criticism of Russia and Gazprom's previous tactics with regard to energy cooperation with Turkmenistan. Russians were &monopolists8 he said indignantly. Perhaps not coincidentally, Berdimuhamedov said that he favored increased cooperation with American companies, mentioning his willingness to meet with Chevron. Note: This meeting and requests for similar meetings with executives of other American energy companies have been on the agenda for a very long time. ¶3. (C) Berdimuhamedov described the improvement in the energy-related relationship with Azerbaijan and he expressed his gratitude to the U.S. for encouraging this progress. END SUMMARY. ¶4. (C) Boucher began with a general description of the new approaches of President Obama's Administration, emphasizing the importance of the Afghanistan-Pakistan Policy Review but also mentioning the Administration's desire to develop a ;dialogue with Iran. Berdimuhamedov praised President Obama's initiative saying that absent the Administration's approach to the problem of Afghanistan and Pakistan, it would be impossible to change things in those countries. Turkmen policy toward Afghanistan and Pakistan would not change, Berdimuhamedov said, "Whether Karzai or a different person comes to power." OVER FLIGHT ISSUES. MANAS. ¶5. (C) Boucher raised the issue of the Turkmen annual cap of 1,600 over flights for U.S. aircraft en route to and from Afghanistan. At this time, Boucher told Berdimuhamedov ) on a confidential basis ) that we had successfully worked out arrangements with the Kyrgyz Government which would allow continued use of the Manas facilities. Boucher mentioned the resumption of the "Gas and Go" operation at Ashgabat airport noting that these stops bring substantial revenue to the airport and the Turkmen civil aviation authority. While we could pay landing fees at the airport plus, of course, the cost of the fuel itself, we could not pay the USD 30,000 presently demanded by the Turkmen aviation authorities for a few over flights not covered by the terms of the agreement on "humanitarian" over flights. We could also discuss the possible provision of necessary technical equipment or training. Boucher then raised the larger issue of the annual over flight cap. Sixteen hundred planes are not enough, he said. We are ramping up our operations in Afghanistan. We have already virtually reached the 1,600 limit and we still have over six months to go before we renew the annual agreement. We need, Boucher emphasized, no limits or a greatly increased number of flights to support our efforts to bring stability to Afghanistan. Berdimuhamedov said that this had been discussed with General Petraeus, you know our policy, he said, "under the aegis of humanitarian aid" we have never refused your requests ) but on technical issues such as the annual limit on flights, I have to ask my experts. We want to be supportive, Berdimuhamedov said; we are never against emergency landing or refueling. We will continue our policy confidentially, Berdimuhamedov concluded. AFGHANISTAN-PAKISTAN ¶6. (C) Boucher summarized the Administration's approach to Afghanistan and Pakistan. We have an integrated military and civilian approach, he said, and we want to work together with the countries in the region. We will put in the necessary support elements ) troops, civilian assistance and infrastructure ) and we will come up with the financial resources to do what needs to be done. We connected the power lines with Uzbekistan this spring, Boucher went on; we would like to move the Turkmen-Afghanistan power project forward, maybe by bringing it to the Regional Economic Conference in Islamabad in May. ¶7. (C) Berdimuhamedov said, "in all honesty," we want to help but we're not getting any benefit out of this proposed project. Right now, he said, we provide electricity at a "humanitarian rate" of two cents per kilowatt hour. But our commercial cost is seven cents a kilowatt hour. The Economic Cooperation Organization (ECO) ¶8. (C) Berdimuhamedov then changed the subject, complaining that the Economic Cooperation Organization was being transformed from an economic organization to a political one. At the end of the last session, said Berdimuhamedov, we said we were getting out of the group. We will remain only as an observer. Pakistan ¶9. (C) Berdimuhamedov returned to the subject of Pakistan. "Many evil forces are collecting in Pakistan," he said. They are against U.S. policy. The "evil powers" of the extremists are growing. There is a question about the reliability and the stability of the Pakistan authorities. At any rate, Berdimuhamedov said, we will stay firm on our policy of support of the U.S. Iran ¶10. (C) The conversation turned briefly to Iran and Russia. Boucher described President Obama's desire to try to work with Iran. We understand, he said, that there are a lot of problems with Iranian behavior but the President wants to deal with Iran directly. We want to work with the Russians on a variety of issues such as non-proliferation and new arms control arrangements. Problems remain, Boucher said, such as Georgia; but we are working together on Afghanistan. Supplies are coming in through Russian territory. We want to work with all the countries of the region based on their independence, sovereignty and state of their development. Russian and Gazprom Policies on Energy Matters ¶11. (C) Berdimuhamedov had actually begun his meeting with Boucher by waxing indignant on the recent gas explosion on the pipeline to Russia. At 1800 on April 7, said the President, Gazprom informed us of the impending reduction of pressure on the line. At 1100 on April 8, they did reduce the pressure sharply and the result was an explosion on the line. If the explosion had occurred at a compression station, said the President, there would have been considerable loss of life. Berdimuhamedov said we want to confirm with international experts ) including representatives of American companies ) what actually happened and who is guilty here. "Whoever is guilty, is guilty," he emphasized. In response to Boucher's statement that this incident demonstrated the need for diversification, Berdimuhamedov said that Turkmenistan was for diversification. "We have an open door policy," he said. (Comment: This is far from true, but still an interesting comment from Berdimuhamedov. End comment.) "This is just a diversion," said the President, "part of the gas war." ¶12. (C) Berdimuhamedov said that his recent visit to Moscow was successful in general but unsuccessful on one important issue. Originally, he said the Russians had proposed constructing and financing the proposed East-West pipeline (from eastern Turkmen fields to the Caspian) with a no-interest loan. In Moscow, however, the offer of a no-interest loan was withdrawn plus the Russians insisted that the western end of the pipeline connect only to the proposed Caspian Littoral Pipeline to Russia. "So we returned to Ashgabat," said the President, "and announced an international tender for the East-West Pipeline." Doing Business with American Companies ¶13. (C) Berdimuhamedov enthusiastically said that Turkmenistan was always open to American companies. He described his meeting with Honeywell Chairman and CEO, Cote, in positive terms. Berdimuhamedov said that Cote had responded favorably to his suggestion for a project to process methane. In a reversal of his previous position, Berdimuhamedov agreed to meet two senior executives of the Chevron Corporation (Vice Chairman Watson and VP of Business Development, Pryor) who will be in Ashgabat next week for a conference. We will work more with American and western companies, he concluded. Asked about a meeting with Conoco-Phillips CEO Mulva, Berdimuhamedov responded uncharacteristically harshly, "I was very cautious," he said, because of their partnership with Lukoil. Why were they working with the Russians, he asked. The Charge explained that they thought a partnership with Lukoil would enhance their ability to do business in Turkmenistan. Berdimuhamedov shrugged, as though to dismiss this idea out of hand. Let the American companies start to work on our terms, he said ) meaning only service contracts on shore - then we can expand their activities. Azerbaijan ¶14. (C) Berdimuhamedov noted that a good deal of progress had been achieved with Azerbaijan. We have solved ninety percent of our problems he said. He expressed warm gratitude for American support for this. Noting that Azeri President Aliev was in a different situation than he was, Berdimuhamedov said that, nonetheless, "we understand each other." But, he went on, if Aliev allows internal discussion of the Caspian demarcation issue, we will never solve it. U.S. policy should continue to support close ties between Azerbaijan and Turkmenistan. It would be good, he said, if Aliev could support Turkmenistan,s portion on cross-Caspian cooperation or have the Azeri representative to next week's Pipeline Security Conference do so. In that context, Berdimuhamedov specifically asked whether Deputy Assistant Secretary Krol, who will lead the U.S. Delegation to the Conference, could favorably refer to Azeri-Turkmen progress in resolving outstanding issues. Russia Again ¶15. (C) Boucher asked whether Russia was playing a bigger game. Turkmenistan has pushed up the price which Russia pays it for gas; was this pipeline explosion part of an effort to push the price back down? This provoked a real outburst from Berdimuhamedov. "They have robbed us for many years!" he said with considerable vigor. They were buying our gas for forty dollars and selling it for three hundred. Berdimuhamedov said he had worked out what then President Putin had described as a "good, objective" position ) not on price, but on the formula of the price. We have a contract; they must keep it, he said. But, he went on, they ) the Russians ) have continued their pressure on us -- including "kompromat ) derogatory material." "We are not afraid of this!" he declaimed. "Our gas fields are adequate, we don't need the Russians." Anyhow, he concluded, "We have had our difficulties but we always surmounted them." ¶16. (C) Boucher said he would recommend that DAS Krol make the statement Berdimuhamedov desired and that, meanwhile, the U.S. would continue to develop its cooperative projects with Turkmenistan in such diverse fields as education, agriculture and the development of an open society. Berdimuhamedov said he wants to develop the relationship, including through high-level visits such as one by himself. ¶17. (C) In parting, Berdimuhamedov spoke highly of recently retired Ambassador Mann and asked that his personal greetings be extended to him. He welcomed Boucher's announcement of Ambassador Morningstar's appointment and said he looked forward to an early visit by him to Turkmenistan. ¶18. (C) Comment: This was certainly the most free wheeling of the three substantive meetings which the Charge has participated in with Berdimuhamedov and also the one most free of cant. Whether this was brought about temporarily because of Berdimuhamedov's very obvious annoyance with the Russians and with Gazprom or whether it was a result of his continued travels and meeting with other foreign leaders and ranking business executives, is impossible to say. Still, it was refreshing and allowed a more frank exchange of views than usual. On the important issue of the over flight cap, a subsequent meeting (septel) with Foreign Minister Meredov indicated that the window for discussion was somewhat more narrow than had been implied by Berdimuhamedov. DAS Krol's timely visit to Ashgabat next week may shed more light on a possible resolution of this issue. End comment. ¶19. (U) Assistant Secretary Boucher has cleared this message. MILES