AMBASSADOR MEETS WITH US AMBASSADOR TO THE ASIAN

C O N F I D E N T I A L SECTION 01 OF 02 BISHKEK 000931 SIPDIS DEPT FOR SCA/CEN (GORKOWSKI) E.O. 12958: DECL: 08/18/2019 TAGS: ADB AID PGOV PINR PREL ECON EFIN KG SUBJECT: AMBASSADOR MEETS WITH US AMBASSADOR TO THE ASIAN DEVELOPMENT BANK BISHKEK 00000931 001.2 OF 002 Classified By: Amb. Tatiana Gfoeller, Reason 1.4 (b) and (d). ¶1. (C) SUMMARY: The Ambassador received U.S. Ambassador to the Asian Development Bank (ADB),Curtis Chin, on August 18 during his visit to the region. During their meeting Ambassador Chin described the ADB's relatively robust activity in Kyrgyzstan, primarily focused on infrastructure development and especially road improvement. He also discussed the ADB's decision to not participate in financing of the Central Asia South Asia Electricity and Trade project (CASA),and he noted taht the ADB is scheduled to invest in energy efficiency and improving the business environment, two areas where USAID is already working with the Government of Kyrgyzstan (GOKG). END SUMMARY. ¶2. (SBU) Ambassador Chin briefed the Ambassador on the Asian Development Bank's (ADB) proposed $175 million investment program for the 2010-2011 period. He noted that the ADB's past financing in Kyrgyzstan has focused primarily on infrastructure projects, in particular road construction and improvement. Ambassador Chin said that the ADB also has had limited investment in water system improvements in Kyrgyzstan, but has moved cautiously in this area following ADB's negative experience with an earlier water project marred by corruption. ADB is investing USD 30 million in 2009 in the water system in the Issyk-Kul Lake region. This region has the potential for increased tourism and this investment will help improve the sustainability of the area's water system. He said ADB's road investment in Kyrgyzstan has numerous sub-projects, but the main ongoing road investment is in the Bishkek-Torugart corridor connecting Kyrgyzstan and China, in which ADB is projected to invest USD 80 million in 2010-2011. ¶3. (C) In response to a question from the Ambassador regarding the ADB's participation in the Central Asia South Asia Electricity and Trade Project (CASA),Ambassador Chin said that the ADB had decided to pull out of participation in the project after the governments in the region indicated that they would rather use the available financing for what they considered higher priority projects. Ambassador Chin noted that the ADB would be participating in the improvement of the Afghanistan-Uzbekistan transportation corridor (part of the Northern Distribution Network). Ambassador Chin said that given the critical need for this transportation network, the ADB would participate even though the Uzbek government was demanding a single bidder for the project, a Russian company, which the ADB would normally not agree to. ¶4. (SBU) Ambassador Chin also described the ADB's intention to finance a project in Kyrgyzstan that will increase energy monitoring and efficiency, and another project that will improve the business environment. The U.S. is working closely with the GOKG on necessary reforms to the energy sector -- including legal, technical and financial advice on CASA, as well as developing a more strategic approach to address long-standing issues of deteriorating infrastructure, low cash payments, high losses and lack of resource management. Ambassador Chin confirmed that the ADB has included USD 15 million for the energy monitoring and efficiency project in its planned funding for 2010. Ambassador Chin also said that the ADB is slated to provide USD 40 million for investment climate improvement in 2010-2011. ¶5. (SBU) COMMENT: It was useful to hear directly from Ambassador Chin on the ADB's work in Kyrgyzstan and the region. The ADB has provided significant financing for infrastructure projects in Kyrgyzstan and the road projects have improved the country's links to its neighbors. It is good news that ADB will be supporting energy efficiency in Kyrgyzstan, an area of critical need. There are already several international organizations, including USAID, working to improve Kyrgyszstan's business environment and the Embassy BISHKEK 00000931 002.2 OF 002 will work with other donors to avoid overlap. GFOELLER