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