INTERNATIONAL MISSIONS AGREE ON UNIFIED ROGHUN MESSAGE

C O N F I D E N T I A L SECTION 01 OF 03 DUSHANBE 000103

SIPDIS

E.O. 12958: DECL: 1/21/2020
TAGS: EFIN PHUM ENRG EAID IMF TI
SUBJECT: INTERNATIONAL MISSIONS AGREE ON UNIFIED ROGHUN MESSAGE

REF: A. DUSHANBE 052

B. 09 DUSHANBE 508

C. DUSHANBE 67

CLASSIFIED BY: Kenneth Gross, Ambassador, Exec, DOS.
REASON: 1.4 (b),(d)

1. (C) Summary: Ambassador Gross convened a meeting of heads of
diplomatic missions in Dushanbe to discuss a common approach to
the government of Tajikistan's campaign to force its citizens to
contribute to the construction of the Roghun dam. Attendees
agreed on a two-pronged strategy: They would work to ensure the
International Monetary Fund (IMF) looked carefully at potential
violations of its assistance to Tajikistan posed by the Roghun
campaign. At the same time they would present a broader set of
common concerns to government officials. Attendees agreed on a
set of limited, achievable goals they would seek via both
approaches. Embassy Dushanbe is developing a list of talking
points for meetings with government and IMF representatives.
While the government is unlikely to completely back off its
Roghun campaign, a unified and persistent approach by major
international donors will be difficult to ignore. End summary.



A Unified Approach




2. (C) On January 20, Ambassador Gross convened a meeting of
heads of diplomatic missions in Dushanbe to discuss the
government of Tajikistan's campaign to extort and intimidate its
citizens into buying shares in the Roghun hydroelectric project
(ref A). Representatives attended from the British, French, and
German embassies, as well as the European Commission office.
Embassy Dushanbe Econoff and USAID Deputy Director also were
present. Attendees agreed on the importance of adopting a
unified approach to the issue: The government was more likely
to respond productively to international concerns if they were
raised with one voice. President Rahmon has (probably
deliberately) linked Roghun with the very survival of the Tajik
nation; any mission criticizing the campaign in isolation risks
drawing a very emotional and unproductive reaction from the
government.



Working Through the IMF




3. (C) Representatives agreed on a two-pronged approach. On the
one hand, they would bring up a common set of concerns in
individual meetings with government representatives. On the
other, they would work to make sure multilateral donors,
particularly the IMF, carefully considered potential violations
of their assistance posed by Roghun. Even though the IMF's
concerns are narrower than those of the international community
as a whole -- for instance they are unlikely to consider human
rights questions -- the Fund has a degree of clout and influence
with the government not shared by any other organization.
Furthermore, other international lenders, such as the Asian
Development Bank and the European Commission, require that the
government abide by IMF agreements as a condition for their own
assistance. EC Charge d'affaires ad interim Charlotte Adriaen
stated flatly that if the IMF withdrew its funding she "had no
problem immediately withdrawing EC funds as well." She noted
that this is precisely what had happened in 2008 as a result of
the National Bank misreporting scandal.




4. (C) At the meeting several possible violations of the IMF's
Poverty Reduction and Growth Facility were identified (ref C):
(1) Overall government spending was likely to expand beyond
agreed-upon amounts; (2) spending on Roghun in particular would
exceed the $140 million agreed to; (3) the government is failing
to meet minimal social sector spending requirements because its
expenditures have been offset by forced Roghun contributions
from pensioners, doctors, teachers, and other social sector
employees; (4) Roghun funds are being maintained off-budget; and
(5) no analysis has been conducted about adverse macroeconomic
effects of the Roghun campaign.




5. (C) Attendees agreed to raise these concerns with their
representatives on the IMF Executive Board in Washington and
with a high-level IMF assessment mission coming to Tajikistan
February 1-12. The goal is not only to make sure the IMF
understands how important an issue Roghun is, but to help it
take a firm -- but still productive -- stand in its discussions
with the Tajik government. Since Roghun shares went on sale
January 6, 2010, and many of the IMF's existing benchmarks
(e.g., minimal social spending) apply to 2009, the Fund could

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adopt a very narrow approach and defer judgment on many Roghun
questions. According to IMF Resident Representative, however,
the team visiting in February will have to consider Roghun; a
unified message from international donors will reinforce this
focus. They will also be responsible for drafting 2010
benchmarks, which many donors believe should require government
transparency regarding Roghun.



Approaching the Government Directly




6. (C) All at the meeting agreed it was also necessary to
approach the government directly with concerns about the Roghun
campaign. There was some discussion about whether this should
be done via a joint statement or diplomatic note, perhaps from
the Donor Coordination Council (DCC),or whether missions should
individually voice their concerns. In the end it was agreed
that a series of individual, informal meetings with government
officials, all carefully emphasizing the same key concerns, was
likely to be the most effective means of demonstrating the
seriousness of our concerns without eliciting an unproductive
response. A formal, joint effort could trigger a defiant
"us-against-the world" reaction from the government. Some
believed the DCC could follow up with a more targeted message
focusing on potential violations of international agreements,
but should steer clear of the emotions associated with the
broader Roghun campaign itself.




7. (C) Concerns delivered directly to the government would
expand on those enunciated through the IMF: (1) Numerous and
persistent reports of forced purchases in Roghun raise serious
concerns about human rights; (2) donors are concerned that
Roghun finances lack transparency and may violate provisions of
international assistance; (3) the purchase of Roghun shares
destroyed the savings of many poor Tajiks, leaving them very
vulnerable to future shocks, such as poor weather, falling
remittances, and increasing inflation; (4) International donors
are very sympathetic to the government's desire for energy
security, but they would have to carefully review their future
assistance if they believed the government's policies were
adding to, rather than alleviating, poverty. Embassy Dushanbe
is circulating a set of suggested talking points for both the
IMF and the government.



Goals




8. (C) No one at the meeting expected the government could be
convinced to reverse the Roghun campaign and return the money
spent on shares, but several achievable goals were identified:



(A) The government should act to end forced purchases of Roghun
shares. This includes direct government coercion of its
employees, as well as the indirect coercion at universities,
hospitals, private firms, and other institutions.



(B) The government should transparently account for and spend
the money generated from sales of Roghun shares.



(C) The government should provide more public information about
shareholder rights, including when and how shareholders may
sell, transfer, or redeem their shares; what their voting rights
are for the Roghun board of directors; and other specifics.



(D) Minimum social sector spending must be maintained; Roghun
expenditures from social sector employees and institutions --
doctors, clinics, teachers, schools, pensioners, etc. -- should
be offset by additional investment in this sector.



(E) Individuals who were fired or otherwise penalized for
refusing to buy Roghun shares should be reinstated and/or
entitled to a credible grievance procedure. This includes
individuals who resigned in protest over the government's

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coercive policies.




9. (C) Comment: Achieving these goals, and ending the majority
of human rights violations, will require balance -- donors must
be firm enough to make sure the government understands the
seriousness of our concerns but not so severe that it ends the
discussion. A series of individual approaches all underlining
the same key issues stands the best chance of achieving this.
At the same time, it is important to be clear and consistent
with the IMF about our concerns about financial transparency.
This means approaching key IMF officials both in Dushanbe and in
Washington. Though the IMF's concerns are narrower than those
of the donors at large, its clout and reputation give it the
best chance of ending some of the government's most flagrant
practices.
GROSS