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UNCLAS SECTION 01 OF 04 ASHGABAT 001230 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON EFIN EAGR ETRD SCUL TX
SUBJECT: TURKMENISTAN: PRESIDENT SHAKES UP HIS ECONOMIC 
MANAGERS; UNOFFICIAL EXCHANGE RATE PLUNGES 
 
REF: ASHGABAT 1124 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. (SBU)  SUMMARY:  During a November 12 session of the 
Cabinet of Ministers held less than a week after his return 
from Brussels, President Berdimuhamedov renamed the Ministry 
of Trade and Consumer Cooperation the Ministry of Trade and 
Foreign Economic Relations, and cleared out a number of 
economic and some educational non-performers in his 
administration in a lengthy cabinet meeting on November 12. 
He also removed two provincial governors, allowed a third to 
resign for health reasons, and put the remaining two on 
notice that their performance had also been below par. He 
also called on Turkmenistan's financial bodies to pull 
together a plan within ten days to unify the currency rate by 
¶2009.  On November 14, the unofficial exchange rate began to 
collapse (see para 15 below).  Berdimuhamedov seems to be 
acting in parallel, by his own lights, to what he has 
recently heard in New York and Brussels, and seems to be 
attempting to put some substance behind assurances that the 
foreign investment climate will improve.  END SUMMARY. 
 
¶3.  (SBU) During an expanded Cabinet of Ministers meeting on 
November 12, President Berdimuhamedov announced a multitude 
of firings on the local, provincial, and national level for 
shortcomings on the job.  In addition, the Ministry of Trade 
and Consumer Cooperation was renamed the Ministry of Trade 
and Foreign Economic Activity.  Deputy Minister of Economy 
and Finance Tuvakmament Japarov, a frequent Embassy 
interlocutor, was appointed Chairman of the Supreme Auditing 
Chamber.  Berdimuhamedov announced that the dual exchange 
rate must be unified by 2009 and declared there would soon be 
a ten percent salary increase for all state employees. 
 
ANNOUNCMENTS RELATED TO ECONOMIC SECTOR 
 
¶4.  (SBU) Berdimuhamedov named Nokerguly Atagulyev, head of 
the Food Industry Association, the new Minister of the 
Ministry of Trade and Foreign Economic Activity.  Previously 
known as the Ministry of Trade and Consumer Cooperation, this 
ministry's new name reflects a greater emphasis on 
coordinating all foreign economic transactions, including 
investment activities.  Berdimuhamedov gave former minister 
Gurban Melekeev a gracious exit by thanking him for his hard 
work and awarding him with the "For Love to His Motherland" 
order.  His dismissal is seen not as a firing, but as a way 
to make room for a younger and more capable performer who 
will be able to make the changes that need to be made. 
 
¶5.  (SBU) Berdimuhamedov also announced the appointment of 
Hojamuhammet Muhammedov, former Director of the Supreme 
Control Chamber, to the post of Deputy Chairman of the 
Cabinet of Ministers for trade and commerce issues.  This 
extensive portfolio also includes economy, finance, textiles, 
and agriculture.  Deputy Minister of Economy and Finance 
Tuvakmamemt Japarov was appointed Chairman of the Supreme 
Auditing Chamber.  (NOTE:  Embassy officers have often met 
with Japarov at MOEF meetings and found him engaged and 
open-minded.  END NOTE.) 
 
DUAL EXCHANGE RATE:  IT'S TIME TO GO AWAY 
 
¶6.  (SBU) Berdimuhamedov stated that Turkmenistan is losing 
too much money as a result of its dual currency exchange 
rate.  He tasked Central Bank (CBT) Chairman Geldimyrat 
Abylov and Minister of Economy and Finance Hojamyrat 
Geldimyradov to prepare a plan within ten days for fully 
implementing a unified exchange rate by the time 
Turkmenistan's new currency is circulated in 2009 (reftel). 
 
ASHGABAT 00001230  002 OF 004 
 
 
He also announced a ten percent salary increase for all state 
employees, effective January 1, 2008, although teachers are 
exempt from this raise since they just received raises in 
September. 
 
SHUFFLES LINKED TO SHORTCOMINGS IN AGRICULTURE SECTOR 
 
¶7.  (SBU) Berdimuhamedov announced several demotions and 
appointments primarily on the provincial and local level. 
While he did not directly link these dismissals to 
shortcomings in the agricultural sector, they seem to reflect 
a dissatisfaction with this year's cotton harvest. 
 
-- Governor of Ahal province Gurbanberdi Orazmyradov was 
demoted.  In announcing his decision, Berdimuhamedov said 
that Orazmyradov had not made any improvements in Ahal during 
his tenure.  Mayor of Dashoguz City Mammetniyaz Nurmammedov 
was named the new governor.  Berdimuhamedov acknowledged 
inflated statistics, and announced that the General 
Procurator's Office is investigating an unspecified situation 
in Ahal province.  Berdimuhamedov also referred to a 
videotape that proves that the farmers did not receive 
necessary support. 
 
-- Governor of Mary province Muhammet Gurbannazarov was 
demoted.  Mary City Mayor Kakageldi Gurbanov was named new 
governor. 
 
-- The governor of Lebap province, Tagaymyrat Mammedov, was 
allowed to resign for health reasons.  Charyyar Odeberdiyev 
was appointed governor of Lebap province. 
 
-- Chairman of Dayhanbank Tumar Mammedov was fired. 
Berdimuhamedov criticized him and Central Bank Chairman 
Abylov for not paying farmers on a timely basis.  Rejepgeldi 
Sopyev was appointed the new chairman. 
 
-- Livestock Association Chairman Atanazar Bayramlyev was 
fired.  Berdimuhamedov mentioned his connection to 
construction of an apartment building that lacked an elevator 
and heating, from which he financially benefited. 
 
CHANGES TO PAYMENT STRUCTURE FOR AND MARKETING OF COTTON 
 
¶8.  (SBU) Berdimuhamedov stated that entities should properly 
compensate farmers, since the farmers are doing the hard 
work.  The Stock Exchange sells cotton for hard currency, and 
therefore, half of all payments to cotton farmers should be 
made in foreign currency.  Dayhanbank will extend credit to a 
new sales organization that will pay farmers immediately for 
crops. 
 
CHANGES IN LEADERSHIP OF EDUCATION INSTITUTIONS 
 
¶9.  (SBU) Noting the need for rapid reforms in education, 
Berdimuhamedov also announced dismissals and appointments in 
higher education: 
 
-- The Rector of the Turkmen Polytechnical Institute, 
Gurbanberdi Garyagdyev, was dismissed due to poor health, and 
is replaced by Yaza Mowlamov. 
 
-- The Rector of the Turkmen Agricultural University, 
Annaberdi Mammedov, was dismissed due to poor health, and is 
replaced by Gurbandurdy Mammetgulyev. 
 
-- The Rector of Turkmen State University, Ashyrgeldi 
Gulgarayev, was dismissed for poor management of the 
institution.  Berdimuhamedov noted his youth and lack of 
experience.  Rector of the Asadi Institute of World Languages 
 
ASHGABAT 00001230  003 OF 004 
 
 
Charyyar Tugyev was appointed the new rector.  Until February 
2007, Gulgarayev was also Minister of Justice. 
 
CABINET OF MINISTERS TO REVIEW ELEVEN MONTHS OF 
BERDIMUHAMEDOV; MORE SHUFFLES PROBABLE 
 
¶10.  (SBU) In ten days, the Cabinet of Ministers will review 
the first 11 months of Berdimuhamedov's administration.  The 
Cabinet will also review the performance of the Deputy 
Chairman for Industry and Communications Gurbannazar Ashyrov 
and the Deputy Chairman for Education Hydyr Saparlyev, who 
Berdimuhamedov criticized specifically for the slow pace of 
reforms.  Berdimuhamedov did not give the floor to Ashyrov at 
this meeting. 
 
BIOGRAPHIES 
 
¶11.  (SBU)  Minister of Trade and Foreign Economic Relations 
Nokerguly Atagulyev was born in 1964 in Gokdepe, Ahal 
province.  He graduated in 1995 from Turkmen Agricultural 
University with a degree in economics.  He was chairman of 
the Food Industry of Turkmenistan from October 2006 to 
November 2007.  From 1998, he held various positions 
including Acting General Director and Deputy General Director 
of the Mary Sugar Joint-Stock Company, and Senior Accountant 
at the Serdar Joint-Stock Company. 
 
¶12.  (SBU)  Chairman of the Supreme Auditing Chamber 
Tuwakmammed Japarov was born in 1966 in Bereket, Balkan 
province.  He graduated from Turkmen Polytechnic Institute in 
1993 with a degree in mechanical engineering.  From February 
to November 2007, he held the position of Deputy Minister of 
Economy and Finance.  From 1999 to 2005 he was a Chief 
Specialist at the Cabinet of Ministers, working with the 
Ministry of Economy and Finance and the State Tax Service on 
Income and expenditure issues of the state budget. 
 
¶13.  (SBU)  Deputy Chairman of the Cabinet of Ministers for 
Economy, Finance, Textiles, and Agriculture Hojamuhammet 
Muhammedov was born in 1966 in Ashgabat.  He graduated from 
the Turkmen Institute of National Economy in 1993 with a 
degree in economics.  From July to November 2007, he was 
Chairman of the Supreme Auditing Chamber.  From January to 
July 2007, he was Chairman of the State Commodity and Raw 
Materials Exchange.  From September 2005 to January 2006, he 
was Deputy Chairman of the State Commodity and Raw Materials 
Exchange.  From 1998-2005, Muhammedov was Director of the 
Gulistan trade center, otherwise known as Russian Bazaar in 
Ashgabat. 
 
¶14.  (SBU) COMMENT:  By declaring how officials violated the 
public trust at their firing, Berdimuhamedov is continuing 
his fight against corruption.  While the stated intentions to 
compensate farmers more fairly, to improve education, and to 
implement currency reform are good news, we await further 
developments -- and results -- in these areas.  But the very 
fact that Berdimuhamedov is making these changes indicates a 
wish on his part to follow through on promises that 
Turkmenistan's foreign investment climate will improve.  Hias 
moves required a degree of political bravery, since currency 
reform, in particular, will break some iron rice bowls and 
cause some social disruption (reftel). 
 
¶15.  (SBU) COMMENT CONTINUED:  The few who are paid in hard 
currency -- employees of foreign missions, international 
organizations, and foreign companies -- will be hurt in the 
short term as the value of their paychecks is virtually cut 
in half, if as projected the united exchange rate meets in 
the middle of 5,000 and 23,600.  (NOTE:  On November 14, the 
unofficial exchange rate began collapsing precipitously.  At 
 
ASHGABAT 00001230  004 OF 004 
 
 
noon, it was 21,000 to the dollar.  By 1400 hours, it had 
plunged to 19,000.  According to street rumor, the rate was 
expected to hover at 15,000 by the end of the business day. 
It is too early to speculate why this is happening, although 
some observers have long suspected the Central Bank actually 
controls the unofficial rate.  END NOTE.)  Those who have not 
yet realized the potential effects of exchange rate 
unification almost certainly will do so when food prices -- 
many of which already are higher than a year ago -- rise even 
more steeply.  Right now, those who understand the inevitable 
economic changes are buying goods such as automobiles, real 
estate, and gold.  END COMMENT. 
HOAGLAND