WHITHER TIFA? RETHINKING OUR DIALOGUE WITH TAJIKISTAN

UNCLAS DUSHANBE 000458

SENSITIVE
SIPDIS

STATE FOR SCA/CEN
STATE PASS TO USTR FOR LILIENFELD
STATE PASS TO OPIC AND EXIM

E.O. 12958: N/A
TAGS: ETRD EINV BEXP PREL ENRG KIPR TI
SUBJECT: WHITHER TIFA? RETHINKING OUR DIALOGUE WITH TAJIKISTAN


1. (SBU) Given the new administration, the broad review of our
engagement in this region, and the upcoming visit of Deputy
Assistant Trade Representative Claudio Lilienfeld, this is a
good opportunity to take a fresh look at the most effective way
to engage in a meaningful trade and investment dialogue with
Tajikistan. As work gets underway to plan this year's Trade and
Investment Framework Agreement (TIFA) meeting, we propose
setting aside the old model and trying a new approach.

Bilateral Engagement


2. (SBU) The Mission recommends moving from the current regional
event involving all five Central Asian republics to a bilateral
discussion that focuses specifically on Tajikistan and its
issues. Though the five former Soviet central Asian states are
neighbors and share history, they have evolved in different
directions economically and can not really be addressed in
unison on most economic issues. Some are WTO members, some are
not; some have relatively open trade regimes, others do not;
they have different levels of wealth, different levels of
government capacity, different levels of trade and investment
with the West. Trying to discuss key issues with them
simultaneously inevitably leaves some of them on the sidelines
of any conversation. Prickly relationships among them also
undermine productive discussion in group settings. We have
noticed, in particular, that representatives from one country
are reluctant to engage in substantive discussions with us under
the gaze of those they see as potential rivals. This is true
even in the areas where countries have substantial interests in
common. Lumping these countries together is an increasingly
artificial construct for many issues. Thus we recommend that we
shift our dialogue on trade and investment issues with
Tajikistan from a regional format to a bilateral format that can
address issues that are directly relevant to Tajikistan.

A Focused Agenda


3. (SBU) The Mission recommends that the agenda for this
discussion be carefully tailored to a limited set of issues
where we judge there are some realistic prospects for making
progress with direct engagement. Even where there is real
political will, the Tajik government has a limited capacity to
implement meaningful reform. Presenting a broad agenda tends to
overwhelm the fairly small cadre with the ability to effect any
change. The end results are polite exchanges, a few
pleasantries, while the long list of actual items discussed is
promptly set aside until next year.


4. (SBU) Direct U.S. business interests in Tajikistan are very
limited. Even when Tajik companies express interest in working
with U.S. companies, the U.S. side often decides the deals are
too small and Tajikistan too remote to make it worth bothering.
The main U.S. economic interest here is improving the overall
business environment to strengthen the Tajik economy and
stability. There are perhaps six to eight areas where there is
some slow progress or potential for progress including tax
reform, budget processes, agriculture reform, the energy sector,
microfinance, and business regulation. We would recommend that
each year we review these areas, and then choose no more than
three, which have the best potential for bilateral engagement
and positive action, to address with the government of
Tajikistan.


5. (SBU) The Mission would then seek the highest level official
we could get from State, Commerce or USTR to lead the dialogue,
in order to engage high-level interlocutors on the Tajik side.
We would propose some specific steps we would like to see
Tajikistan take in these three areas, and match that with offers
of specific support for these steps, mainly through USAID
programs. The Mission judges that this approach would be less
demanding on our resources than the current format and more
likely to achieve real results.


6. (SBU) The Mission recognizes that the TIFA process has a
history behind it, and that for many Washington agencies
addressing the five central Asia states together has advantages.
We believe that, at least for Tajikistan, the current process
has reached a point where it simply does not work, and is in
danger of degenerating into a purely pro forma exercise. To
reinvigorate TIFA with a strong trade and investment dialogue,
we need to look to a new format.

JACOBSON