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Dianne Wampler  09/08/2006 10:52:22 AM  From  DB/Inbox:  Dianne Wampler

Cable 
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UNCLAS        ISTANBUL 01618

SIPDIS
CX:
    ACTION: ECON
    INFO:   CONS PA RAO FAS MGT PMA FCS POL DCM AMB

DISSEMINATION: ECON /1
CHARGE: PROG

VZCZCAYO738
PP RUEHAK
DE RUEHIT #1618/01 2510813
ZNR UUUUU ZZH
P 080813Z SEP 06
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 5828
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 0007
RUEHBUL/AMEMBASSY KABUL PRIORITY 0233

UNCLAS SECTION 01 OF 03 ISTANBUL 001618 
 
SIPDIS 
 
PARIS FOR OECD 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN TU
SUBJECT: OECD/OSCE CONFERENCE ON INVESTMENT AND DEVELOPMENT IN 
CENTRAL ASIA AND THE CAUCASUS 
 
 
¶1. Summary: OECD and OSCE jointly sponsored, and the Government of 
Turkey hosted, a meeting July 11-12 to assess interest of the 
countries in Central Asia and the Caucasus in an investment and 
development initiative similar to regional initiatives that OECD has 
undertaken with USG support in South East Europe and the Middle East 
and North Africa. Most countries from the region were represented at 
deputy minister/director general or head of investment agency level 
and expressed strong interest in support from OECD and other 
institutions in efforts to improve their investment climate and 
support economic development and integration within the region. 
Other international and regional development institutions were 
represented, including the World Bank (IFC and FIAS).  They 
generally supported the initiative and expressed interest in 
coordination of their and OECD/OSCE efforts in the region. 
Afghanistan was also represented by the head of their Investment 
Support Agency.  They expressed strong interest in participation and 
highlighting their potential role as a link to other markets in 
South Asia. A chairman's summary approved by participants endorsed 
the OECD/OSCE proposal (including participation by Afghanistan). 
Participants agreed to organize a meeting for September or October 
at which a work program for the initiative could be discussed and to 
seek the support of donor countries and institutions. Turkey agreed 
to host again in Istanbul.  OECD secretariat intends additional 
activities in Paris in July and September to secure further support 
from its member countries for the program. End Summary. 
 
------------------------ 
Countries Attended 
------------------------ 
 
¶2. Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhastan, Kyrgyz 
Republic, Ukraine, Uzbekistan, and Tajikistan participated.  OECD 
members Belgium, Greece, Switzerland and the United States attended. 
 Romania and Russia also participated.  Wes Scholz, Director of 
State Department's Office of Investment Affairs represented the 
United States.  In addition to OECD, OSCE, IFC and FIAS, other 
organizations represented included; UNDP, UNIDO, UN Economic 
Commission for Europe, and the Organization of Black Sea Economic 
Cooperation.  The Wolfensohn Center of the Brookings Institution was 
also represented by former World Bank VP for Central Asia Johannes 
Linn. 
 
-------------------------------- 
Regional Countries Participated 
-------------------------------- 
 
¶3. Regional countries participated actively in the discussions, 
welcomed the initiative of OECD and OSCE and asked many questions of 
OECD about its similar programs in Southeast Europe and the Middle 
East and North Africa.  The other organizations present endorsed the 
need for greater efforts to support the region's integration and 
development and endorsed the call by the United States and Brookings 
representatives for OECD and OSCE to coordinate closely with efforts 
already underway in the region in an effort to complement those 
activities and minimize confusion or conflicting signals for the 
countries in the region.  Representatives from these organizations 
also expressed their interest in coordinating with OECD and OSCE. 
 
¶4. Both elements of the OECD/OSCE proposal received support from 
most participants (i.e., the proposal for assistance in policy 
reform to improve the investment climate and the proposal for the 
OECD Development Center in Istanbul for a regional economic outlook 
providing analysis of macroeconomic and structural policies and 
performance.)  The elements are described in more detail in the 
Chairman's Summary below.  In sidebars with the United States some 
delegations acknowledged that the policy reform element was more 
important than the outlook element.  However, both proposals were 
endorsed in the summary with no participants objecting.  Turkey, 
Romania and Greece were particularly insistent on the value of the 
economic outlook element in side bars with the U.S. rep. 
 
¶5. The OECD secretariat told the U.S. rep that the proposal will be 
discussed at the OECD Development Center Board Meeting in Paris on 
July 18, and although the United States was not a member it would be 
welcome to participate.  Turkey and Romania stressed that any 
financial support for the outlook element would be ODA eligible. The 
proposal will also be discussed in a July 20 meeting of the OECD 
external relations committee on July 20 and at the Investment 
Committee meeting in September.  In conversations with the U.S. rep 
Turkey expressed their intention to contact key OECD member missions 
in Paris to brief them on the meeting results, to pledge their 
intent to support the initiative financially and solicit political 
and financial support from them as well.  They believe support by 
the United States will be of particular importance in terms of 
securing support from other OECD member governments.  They believe 
from their preliminary contacts that Japan, UK, Switzerland, Italy 
and the UK are good possibilities as well. 
 
---------------------------------- 
Side Meetings With OCED AND FIAS 
---------------------------------- 
 
¶6. In a side meeting with OECD and FIAS, the U.S. rep proposed that 
OECD consider inviting the other key institutions active in the 
region to a meeting to discuss their respective programs in the 
region and how they can complement one another. Both agreed that 
this would be desirable and OECD intends to follow-up.  Also in side 
discussions with OECD, OSCE and Turkey, the U.S. rep stressed the 
importance of including Afghanistan for the reasons outlined by the 
Afghan rep.  They agreed and, other than reported questions raised 
by the Russian rep with OSCE, no objections or questions were raised 
by others and Afghanistan is included in the proposal. 
 
¶7. The participants list will be faxed to posts from Washington and 
the Chairman's Summary follows: 
 
Begin text 
CHAIRS' SUMMARY 
 
On 11-12 July OECD and OSCE in cooperation with the Turkish 
government organized a conference at the Istanbul Center for Private 
Sector Development. 
 
The conference brought together governmental officials of 
Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz 
Republic, Tajikistan, Ukraine and Uzbekistan. Other countries 
represented included Turkey as the host country, Belgium in its 
capacity of the OSCE Chairmanship, Greece, Romania, the Russian 
Federation, Switzerland and the United States. In addition to the 
co-organizers, the following international organizations were 
represented: UNIDO, the UNECE, the UNDP, the World Bank Group (FIAS 
and IFC), the BSEC and the International Centre for Black Sea 
Studies (ICBSS). There were also a few representatives of the 
private sector, academia and NGOs. 
 
The purpose of the meeting was to explore the possibilities for 
developing an initiative on investment and development in the 
Central Asia and Black Sea regions, with the support of donor 
countries and international organizations. 
 
In the conference a number of conclusions emerged: 
 
- The countries of the Black Sea and Central Asia regions face new 
challenges as well as opportunities in today's globalized economy; 
they have strong potential, but not enough investment. 
- Many international investment initiatives have been undertaken in 
those regions, but rather in bilateral formats, without sufficient 
coherence between the various actors and actions. 
- There is a need for a regional approach in improving the 
investment climate and promoting investment, achieving a better 
co-ordination and more efficiency. 
- This approach is also justified by the regional, rather than 
national, dimension of transport and infrastructure networks and 
potential investors' interest in larger size markets. 
- Investment efforts should be combined with achieving development 
goals; together they would bring more stability and security. 
Sustainability of investment would contribute to sustainability of 
economic development itself. 
- A new approach to support investment and development could be 
realized in the form of the Central Asia and the Black Sea regions' 
Investment and Development Initiative (CABS IDI). It could be 
further elaborated to include geographical and/or thematic 
sub-programmes. The initiative would include countries of Central 
Asia (with adjacent Afghanistan as well as Mongolia), and the Black 
Sea region (except those already participating in the Investment 
Compact for South East Europe - for investment policy reforms). 
 
Participants expressed support for the development of a new regional 
initiative. To enhance effectiveness and coherence, the initiative 
should be coordinated and integrated with existing efforts of 
bilateral, regional and international organisations. 
 
This initiative would be guided by the following orientations: 
- It would be demand driven, i.e. tailored to reflect the needs and 
priorities of the participating countries, based on active ownership 
of the participating countries; 
- It would be based on commitments of the participating countries to 
economic and institutional reforms and reflect national ownership of 
the reform process; 
- It would aim at concrete results, policy impacts and project 
generation based on sound economic analysis; 
- It would build in periodical reviews of the results achieved; 
- It would promote private-public dialogue and partnerships among 
the participating countries, OECD countries and international 
organisations. 
 
The initiative discussed by the participants would have the 
following key components: 
 
¶I.  Investment Reform Process (IRP): A structured regional approach 
to improve investment environment in the regions. 
 
- This would include an evaluation of policy reforms at national 
levels, the formulation of the priorities for future actions as well 
as capacity building support.  Each country would be invited to 
formulate its priorities and time bound targets for investment 
reforms and achievements would be evaluated periodically benefiting 
from peer review procedures. 
- In addition, working groups would be constituted to allow 
countries to benefit from each other's experiences. The working 
groups will address on a regional base key issues and gaps in the 
investment process including infrastructure, trade facilitation, and 
financial sector reform and enterprise development. OECD would 
provide support to this programme drawing on the policy framework on 
investment and its methodologies to assess progress on investment 
reforms. Other international and regional organisations will be 
invited to contribute to this programme. 
 
II.  Black Sea and Central Asia Economic Outlook (BSECAO) 
 
(BSECAO would incorporate the BSEC countries, Central Asia and 
Afghanistan.)  BSECAO would be modelled on the established OECD 
Development Centre regional outlooks and directed at fostering 
policy dialogue in the regions. It would: 
- Provide economic analysts and decision makers with reliable data 
and authoritative analysis of macroeconomic and structural policies 
and performance. 
- Include thematic cross-cutting issues in order to identify major 
hindrance to and highlight successful cases of policy reforms. 
 
These programmes would be guided by a steering group composed of the 
participating countries, donor countries and contributing 
international organisations and private sector representatives. 
 
Participants will meet again before the end of 2006 in Istanbul to 
consider the programme of work and the financial structure of the 
initiative. They called on donor countries and international 
organisations to provide support. The programme could start 
operations at the beginning of 2007 and would be designed for an 
initial period of three years. 
 
The OSCE, also through its field presence in the participating 
countries would provide support to the national teams and the 
working groups. 
 
Meetings would be held at the Istanbul Centre for the Private Sector 
Development and in the regions as appropriate. 
 
Participants expressed the gratitude to the organisers, the Turkish 
government and TIKA for the organisation of the conference. 
End Text. 
OUDKIRK