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FM AMEMBASSY ASHGABAT
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RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
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RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 06 ASHGABAT 001211 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
ENERGY FOR EKIMOFF/THOMPSON 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EPET ECON TX
SUBJECT: SCENESETTER FOR THE VISIT OF SECRETARY OF ENERGY 
SAMUEL BODMAN TO TURKMENISTAN, NOVEMBER 15-16, 2007 
 
¶1.  Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Your visit to Turkmenistan, the first by 
a cabinet-level official since 2002, will add value to the 
newly reinvigorated Turkmenistan International Oil and Gas 
Exhibition (TIOGE).  This visit will advance our bilateral 
dialogue on energy issues, while reinforce the progress made 
by the United States since December 2006 in "turning a new 
page" in its overall relationship with Turkmenistan. 
Although the new president, Gurbanguly Berdimuhamedov, is 
making significant changes in some sectors, it is important 
to realize the country is at the very beginning of a new era. 
 The wreck of a country left behind by the now-deceased 
President-for-Life Niyazov, combined with 70 years of 
colonial Soviet rule, compounded by nomadic/tribal customs 
that lacked a modern nation-state concept, create the need 
for a new model.  Turkmenistan was never North Korea, but it 
is not yet Denmark.  Rather, the current state offers a rare 
opportunity to develop a new model; a model molded by, and 
representative of, the proud people of Turkmenistan, with 
patient but consistent nudges by the international community 
toward international standards and practices. 
 
¶3.  (SBU) SUMMARY CONTINUED:  Turkmenistan has world-class 
natural gas reserves, but Russia's near monopoly of its 
energy exports has left Turkmenistan receiving less than the 
world price and overly beholden to Russia.  Berdimuhamedov 
seems to support the U.S. position that pipeline 
diversification strengthens Turkmenistan's sovereignty and 
states publically he has not closed the door to a 
Trans-Caspian pipeline.  However, he continues to maintain 
that such a pipeline -- or even a less politically sensitive 
connector pipeline between already-existing oil platforms in 
Turkmenistan's Caspian basin and pipelines in Azerbaijan's 
Shah-Deniz or ACG oilfields -- is impossible without 
delimitation of Turkmenistan's and Azerbaijan's common border 
in the Caspian Sea.  While Baku and Ashgabat's return to the 
negotiating table is promising, ongoing niggling not only 
over boundary lines in the disputed territory but also over 
possible compensation leaves the situation vulnerable to 
heavy pressure by Russian and Iranian governments eager to 
play a spoiler role.  END SUMMARY. 
 
ENERGY RESOURCES 
 
¶4.  (SBU) Turkmenistan has world-class natural gas reservesQ 
but Russia's near monopoly of its energy exports has left 
Turkmenistan receiving much less than the world price and 
overly beholden to Russia.  Pipeline diversification, 
including both a pipeline to China proposed for 2009 and the 
possibility of resurrecting plans for Trans-Caspian and 
Trans-Afghanistan pipelines that would avoid the Russian 
routes, and construction of high-power electricity lines to 
transport excess energy to Turkmenistan's neighbors, 
including Afghanistan, would not only enhance Turkmenistan's 
economic and political sovereignty, but also help fuel new 
levels of prosperity throughout the region.  Berdimuhamedov 
has told U.S. interlocutors he recognizes the need for more 
options and has taken the first steps to this end, but he 
also took the first steps needed to increase the volume of 
gas exports to Russia -- agreeing in principle to refurbish 
and enlarge a Soviet-era Caspian littoral pipeline -- during 
the May tripartite summit in Turkmenbashy.  He will require 
encouragement and assistance from the international community 
if he is to maintain a course of diversification in the face 
of almost certain Russian efforts to keep Turkmenistan from 
weaning itself away from Russia. 
 
¶5.  (SBU) In promoting a pipeline that would allow westward 
gas exports to Azerbaijan, the United States and other 
interested countries face a number of obstacles: 
 
ASHGABAT 00001211  002 OF 006 
 
 
 
-- A quirky export policy focused on gas sales at the border 
and a national bias against allowing foreign -- particularly 
western -- companies a foothold in Turkmenistan's on-shore 
gas fields. 
 
-- Limited human capacity and understanding of world energy 
practices among officials, including the president.  In the 
president, this lack of understanding has been manifested in 
his seemingly naive and unrealistic expectations of what is 
required to build new pipelines, while the limited knowledge 
of lower-level officials has led to a lack of confidence and 
decisiveness in dealing with new players and unwillingness to 
consider new policy approaches. 
 
-- An aging and inefficient production infrastructure that 
draws into question Turkmenistan's ability to meet delivery 
commitments without a massive infusion of new investment, 
technology and expertise. 
 
-- Russia's opposition to what it perceives as growing U.S. 
influence in an area that it continues to consider its own 
special sphere of influence, as well as Iranian concern that 
a Trans-Caspian pipeline would strengthen U.S. influence to 
its north while undermining Iran's efforts to work out its 
own lucrative gas deal with Turkey. 
 
-- Turkmenistan's insistence that it cannot even consider a 
westward-flowing pipeline until it has successfully delimited 
its common border with Azerbaijan. 
 
¶6.  (SBU) Recognizing the limited window of opportunity for a 
pipeline, the U.S. government has been encouraging 
Turkmenistan's hydrocarbons officials to reexamine their 
thinking, including through a very successful U.S.-funded 
visit by five upper-level hydrocarbon officials to Washington 
and Houston September 22-29.  Through the U.S. Trade and 
Development Agency, the United States is working to provide 
officials with the knowledge and information they need to 
make informed decisions, and the U.S. government is 
encouraging the Azeri and Turkmen governments to engage in 
delimitation negotiations.  These efforts are bearing fruit: 
there have been indications that hydrocarbon officials for 
the first time are looking more realistically at their 
options, reconsidering some key policies, and even engaging 
seriously in delimitation talks.  But recent indications that 
Turkmenistan wants to extend the scope of the delimitation 
talks to include compensation it claims it is owed from 
Azerbaijan's and BP's ongoing extraction of hydrocarbons in 
the disputed territory offers a new wrinkle that could draw 
out the talks even longer and leave the talks vulnerable to 
Russian and Iranian manipulation. 
 
TURKMENISTAN POST-NIYAZOV 
 
¶7.  (SBU) A hydrocarbon-rich state that shares borders with 
Afghanistan and Iran, Turkmenistan is in the midst of an 
historic political transition.  The unexpected death of 
President Niyazov on December 21, 2006, ended the 
authoritarian, one-man dictatorship that by the end of his 
life had made Turkmenistan's government among the most 
repressive in the world.  The peaceful transfer of power 
following Niyazov's death confounded many who had predicted 
instability because the former president had no succession 
plan.  President Berdimuhamedov quickly assumed power 
following Niyazov's death with the assistance of the "power 
ministries" -- including the Ministries of National Security 
and Defense, and the Presidential Guard.  His position was 
subsequently confirmed through a public election in which the 
population eagerly participated, even though it did not meet 
international standards. 
 
ASHGABAT 00001211  003 OF 006 
 
 
 
NIYAZOV'S LEGACY 
 
¶8.  (SBU) Berdimuhamedov inherited a country that former 
President Niyazov had come close to running into the ground. 
Niyazov siphoned off much of Turkmenistan's hydrocarbon 
proceeds into non-transparent slush funds used, in part, to 
finance his massive construction program in Ashgabat at the 
expense of the country's education and health-care systems. 
Politically, his increasing paranoia -- particularly after 
the 2002 armed attack on his motorcade -- led to high-speed 
revolving-door personnel changes at the provincial and 
national level, and an obsessive inclination to micro-manage 
the details of government.  Criticizing or questioning 
Niyazov's decisions was treated as disloyalty, and could be 
grounds for removal from jobs, if not worse.  Niyazov's 
"neutral" foreign policy led to Turkmenistan's political and 
economic isolation from the rest of the world.  His policies 
calling for mandatory increases in cotton and wheat 
production led to destructive agricultural and water-use 
policies that left some of Turkmenistan's arable land salty 
and played-out. 
 
EDUCATION -- "DIMMER PEOPLE EASIER TO RULE" 
 
¶9.  (SBU) Niyazov's attacks on the educational system grew 
increasingly destructive in his later years.  The Soviet-era 
educational system was broadly turned into a system designed 
to isolate students from the outside world and to mold them 
into loyal Turkmen-speaking presidential thralls.  President 
Niyazov famously defended this policy when, in 2004, he told 
a fellow Central Asian president, "Dimmer people are easier 
to rule."  Niyazov's destruction of his country's education 
system included cutting the Soviet standard of ten years of 
compulsory education to nine, firing large numbers of 
teachers, and introducing his own works as core curriculum at 
the expense of the traditional building blocks of a basic 
education.  He slashed higher education to two years of study 
and discouraged foreign study by refusing to recognize 
foreign academic degrees.  Taken together, these steps 
created a "lost generation" of under-educated youth 
ill-equipped to help Turkmenistan take its place on the world 
stage. 
 
RULE OF LAW -- A LOW BAR 
 
¶10.  (SBU) Niyazov seriously harmed Turkmenistan's political 
system.  His capricious authoritarianism left a legacy of 
corrupt officials lacking initiative, accountability, and -- 
in many cases -- the expertise needed to do their jobs. 
Young officials who came of age after Niyazov's destructive 
changes to the education system are particularly deficient in 
skills and broader world vision needed to facilitate 
Turkmenistan's entry into the international community.  Many 
laws lack transparency and provision for oversight and 
recourse.  The population's lack of understanding of the 
meaning of rule of law has left the bar low in terms of 
citizens' expectations of their government. 
 
BERDIMUHAMEDOV BEGINS TO REBUILD THE SYSTEM 
 
¶11.  (SBU) Berdimuhamedov still pays nominal lip service to 
maintaining his predecessor's policies, but he has started 
reversing many of the most destructive, especially in the 
areas of education, health, and social welfare.  He has 
restored -- and in many cases -- increased old-age pensions 
that Niyazov had largely eliminated.  The president is 
embarking on a course of hospital-building, with the main 
focus on improving medical facilities in Turkmenistan's five 
provinces.  To this end, he has already authorized 
construction of five provincial mother-and-children 
 
ASHGABAT 00001211  004 OF 006 
 
 
(maternity) hospitals.  He has also publicly committed to 
improve rural infrastructure and to ensure that every village 
has communications, electricity and running water. 
 
¶12.  (SBU) In education, Berdimuhamedov is reversing many of 
the policies Niyazov ordered him to implement while he served 
as Deputy Chairman of the Cabinet of Ministers for Education 
and Health.  Since his inauguration, Berdimuhamedov has 
ordered a return to the compulsory standard of ten years' 
education, a return of universities to five years of 
classroom study, and a new emphasis on exchange programs and 
the hard sciences.  On July 13, he called for recognition of 
foreign academic degrees, a major step which would allow 
exchange students to receive credit for their overseas study. 
 The goal is to repair Turkmenistan's broken education system 
as quickly as possible and to give the country the educated 
workforce that it needs to compete commercially.  These 
efforts, however, are hampered by old-thinking bureaucrats, 
especially in the Ministry of Education and Ministry of 
National security, who sometimes block or otherwise impede 
foreign assistance programs.  This may perhaps be a legacy of 
the culture of xenophobia Niyazov had encouraged. 
 
ELIMINATING THE CULT OF PERSONALITY 
 
¶13.  (SBU) Berdimuhamedov has incrementally started 
dismantling Niyazov's cult of personality.  Huge posters of 
the deceased president are beginning to be removed from 
public buildings.  References to Niyazov's "literary" works, 
especially the Ruhnama, are less frequent and probably will 
fade away over time.  The new president has banned the huge 
stadium gatherings in his honor and requirement for students 
and government workers to line the streets, often for hours, 
along presidential motorcade routes.  That said, in some 
places, Niyazov's picture has been replaced by 
Berdimuhamedov's, and the new president's quotations have 
replaced Ruhnama quotations on newspaper mastheads.  However, 
these are practices common in Central Asia.  One hopeful 
trend is that Berdimuhamedov appears to be signaling that the 
country should draw its inspiration from its history rather 
from the cult of the leader.  Posters of Turkmen historical 
figures have started to appear.  In addition, all but one of 
the new currency banknotes scheduled to introduced in 2009 
will carry pictures of historical and cultural figures (the 
largest bill has Niyazov on it). 
 
FIRST STAGES OF POLITICAL REFORM 
 
¶14.  (SBU) Berdimuhamedov has replaced some of the ministers 
he inherited from Niyazov.  His focus seems to be on finding 
better-qualified individuals.  On August 24, he established a 
"Human Rights Commission" to help bring the practices and 
policies of Turkmenistan's government agencies into line with 
international standards and human rights conventions. He has 
established a state commission to review complaints of 
citizens against law enforcement agencies, which has become a 
vehicle for pardoning at least some of those imprisoned ) 
including for complicity in the 2002 attack on the 
presidential motorcade ) under Niyazov.  Berdimuhamedov 
pardoned 11 prisoners, including the former Grand Mufti of 
Turkmenistan, Nasrullah ibn Ibadullah, in early August, and 
promised he would pardon more in the future.  Several other 
prisoners of concern were freed in the October amnesty. 
Berdimuhamedov has also agreed to allow UNDP to provide human 
rights training to police. 
 
¶15. (SBU) In addition, he has slowly begun to walk back some 
of the most restrictive controls on movement within the 
country, first removing police checkpoints on the roads 
between cities, then -- on July 13 -- eliminating the 
requirement for Turkmenistan's citizens to obtain permits to 
 
ASHGABAT 00001211  005 OF 006 
 
 
travel to border zones (however, the permit system remains in 
force for foreigners).  Although the president has been 
slower to strengthen the rule of law, correct Turkmenistan's 
previous human rights and religious freedom record, and 
promote economic reform, he has told U.S. officials he wants 
to "turn the page" on the bilateral relationship and is 
willing to work on areas that hindered improved relations 
under Niyazov.  He has approved an unprecedented number of 
visits by U.S. delegations since he took office, including 
those directed toward promoting change. 
 
ECONOMY AND FINANCE 
 
¶16.  (SBU) Turkmenistan's economy is closely controlled by 
the state and is heavily dependent on hydrocarbon revenue. 
Although the government for many years regularly proclaimed 
its wish to attract foreign investment, it made little effort 
up to now to change the state-control mechanisms, restrictive 
currency-exchange system and dual currency exchange rates 
that created a difficult foreign investment climate. 
However, in recent months, we have seen greater willingness 
among upper-level personnel at Turkmenistan's main economic 
and financial institutions -- including both the Ministry of 
Economy and Finance and the Central Bank -- to acknowledge 
that reforms are necessary.  Part of this new attitude is 
linked to the president's growing frustration, expressed 
publicly during several cabinet-level meetings in August, 
with Turkmenistan's complex, opaque web of on- and off-budget 
funds, which have made a thorough accounting of state income 
and disbursements/expenses virtually impossible.  And, in 
fact, President Berdimuhamedov's frustration with the lack of 
accountability in the budget was one of the key factors that 
led, in late July, to the creation of a Supreme Auditing 
Chamber.  That said, growing interest in investing in 
investing in Turkmenistan among western businessmen in hopes 
that the new government eventually will make the changes 
necessary to improve the investment climate is also providing 
an incentive for change. 
 
FOREIGN POLICY:  A NEW FOCUS ON ENGAGEMENT 
 
¶17.  (SBU) Notwithstanding his statements that he plans to 
continue the "neutrality" policies of his predecessor, 
Berdimuhamedov -- probably on the advice of Deputy Chairman 
of the Cabinet of Ministers and Foreign Minister Rashit 
Meredov -- has put a virtually unprecedented emphasis on 
foreign affairs.  Indeed, Berdimuhamedov has met or spoken by 
telephone with all the leaders in the region -- including 
with President Aliyev of Azerbaijan, with whom Niyazov 
hadmaintained a running feud.  He has exchanged visits with 
Russia's President Putin, and held a high-profile gas summit 
with Putin and Kazakhstan's President Nazarbayev in 
Turkmenistan's Caspian seaside city of Turkmenbashy 
(Krasnovodsk).  China has a strong and growing commercial 
presence in Turkmenistan, and continues to court 
Berdimuhamedov through a series of high-level commercial and 
political visits.  In mid-July, Berdimuhamedov made a state 
visit to China, focused mainly on natural gas and pipeline 
deals.  While Turkey has given Berdimuhamedov top-level 
treatment, including an invitation to Ankara, its 
relationship with Turkmenistan continues to be colored more 
by the image of its lucrative trade and construction 
contracts that are siphoning hundreds of millions of dollars 
away from state budgets here than by generous development 
assistance or fraternal support.  He has also held positive 
meetings with high-level U.S. State Department officials and 
leaders of the Organization for Security and Cooperation in 
Europe (OSCE) and United Nations to discuss areas of 
potential assistance.  He met with UN High Commissioner on 
Human Rights Louise Arbour in May, the Head of the OSCE's 
Office for Democratic Institutions and Human Rights (ODIHR), 
 
ASHGABAT 00001211  006 OF 006 
 
 
Christian Strohal, and agreed to a visit by the UN's Special 
Rapporteur on Religious Freedom at an as-yet undetermined 
date.  He most recently made his first trip to the United 
States as president to participate in the UNGA session in 
September.  November 5-7 was his first visit to EU and NATO 
headquarters in Brussels. 
 
U.S. POLICY 
 
¶18.  (SBU) U.S. policy in Turkmenistan is three-fold: 
 
-- Encourage democratic reform and increased respect for 
human rights and fundamental freedoms, including support for 
improvements in the education and health systems; 
 
-- Encourage economic reform and growth of a market economy 
and private-sector agriculture, as well as diversification of 
Turkmenistan's energy export options; and 
 
-- Promote security cooperation. 
 
¶19.  (SBU) In raising human rights concerns, the United 
States: 
 
-- Encourages further relaxation of Niyazov-era abuses and 
restrictions on freedom of movement; 
 
-- Promotes greater religious freedom, including registration 
of unrecognized groups like the Roman Catholic Church, and 
making legal provision for conscientious objectors; and 
 
-- Advocates the growth of civil society by urging the 
government to register non-governmental organizations. 
HOAGLAND