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DE RUEHAH #0230/01 0440940
ZNR UUUUU ZZH
P 130940Z FEB 08
FM AMEMBASSY ASHGABAT
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UNCLAS SECTION 01 OF 03 ASHGABAT 000230 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
TREASURY FOR BAKER/LANIER 
USAID/W FOR EE/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON EFIN TX
SUBJECT:  TURKMENISTAN:  ECONOMIC REFORM TAKES CENTER STAGE 
AT LATEST CABINET OF MINISTERS MEETING 
 
REF: A. ASHGABAT 0077 
     ¶B. ASHGABAT 0213 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  In an extended Cabinet of Ministers 
meeting on February 8, President Berdimuhamedov said 
Turkmenistan's industrial sector should operate according to 
the principles of transparency, privatization, market 
diversity, and profit.  He split the Ministry of Economy and 
Finance into two entities, the Ministry of Finance and the 
Ministry of Economy and Development, hoping better to achieve 
the ambitious goals he has set.  In a notable development, 
the president announced that he was abolishing the opaque 
extra-budgetary funds that have been an annual target for 
misuse and corruption.  Also notable, Berdimuhamedov said 
that Turkmenistan should aim for a yearly 8-10% growth in 
Gross Domestic Product, as opposed to the unrealistic figure 
of 10-20% that had been stated in the past.  While all of 
this is encouraging, citizens will continue to receive free 
products such as automobile gas until 2030, and many key 
sectors will remain state-owned.  This is a key time for 
advisors from the U.S. Department of Treasury to continue 
engaging Turkmenistan on these issues.  END SUMMARY. 
 
¶3.  (U) The agenda for an extended Cabinet of Ministers 
meeting held on February 8 focused on introducing market 
principles to Turkmenistan's economy.  Without mentioning 
specifics, the president announced that some state 
enterprises would be privatized.  However, companies in 
"strategic" sectors like oil and gas, electricity, chemicals, 
petrochemicals, textiles, construction, transportation, and 
communications will remain state-owned.  In addition, because 
non-tax state revenues from leases of state enterprises and 
payments for the use of state property are not used 
effectively, Berdimuhamedov said that Turkmenistan will enter 
into joint ventures with foreign companies to make better use 
of these profits. 
 
LEADERSHIP AND ROLE OF MINISTRY OF FINANCE 
 
¶4.  (U) President Berdimuhamedov appointed former Minister of 
Economy and Finance Hojamyrat Geldimyradov as the new 
Minister of Finance.  Geldimyradov was born in Ahal province 
in 1965.  He graduated from the Polytechnical Institute 
Turkmenistan in 1989 and from the Mudryi Law Academy in 
Ukraine in 2004.  Since 2007, Geldimyradov has served as 
Turkmenistan's National Coordinator for International 
Technical Assistance from the European Union, while also 
Minister of Economy and Finance since February 2007.  He was 
Deputy Minister of Economy and Finance June 2005-February 
¶2007.  During 1997-2005, Geldimyradov worked in local, 
provincial, and national-level positions of the State Tax 
Service, culminating in his role as Head of the National Tax 
Service Department 1990-2005.  The Ministry of Finance will 
have responsibilities somewhat akin to those of the Federal 
Reserve Bank, such as controlling inflation and strengthening 
national currency, as well as taking the lead on 
exchange-rate unification. 
 
LEADERSHIP AND ROLE OF MINISTRY OF ECONOMY AND DEVELOPMENT 
 
¶5.  (U) Former Deputy Minister of Economy and Finance 
Gurbanmyrat Gurbanmyradov was appointed Minister of Economy 
and Development.  Gurbanmyradov was born in 1978 in Ahal 
province.  He graduated in 1999 from Turkmen State University 
with a major in International Economic Law.  Gurbanmyradov 
began working at the Ministry of Economy and Finance in 2004, 
serving as Deputy Head of the Agricultural Industry 
Department, Head of the Methodology and Formulation of 
 
ASHGABAT 00000230  002 OF 003 
 
 
Normative Documents Department, and Head of the Agricultural 
Industry Department.  He has been Deputy Minister of Economy 
and Finance since February 2007.  The Ministry of Economy and 
Development will coordinate with the Institute of Strategic 
Planning and Economic Development on promoting job growth in 
the private sector, especially in rural Turkmenistan. 
 
ECONOMIC AND FINANCE OBJECTIVES 
 
¶6.  (U) Berdimuhamedov ordered the closing of Turkmenistan's 
state funds.  He is making yearly Gross Domestic Product 
(GDP) growth goals more realistic.  (NOTE:  Traditionally, 
Turkmenistan has aimed for an unrealistic GDP growth of 
10-20%.  END NOTE.)  Berdimuhamedov directed the Parliament 
to draft legislation that will encourage private-sector 
growth.  He said the State Statistics Committee should start 
using globally-used economic indicators as soon as possible. 
He also said Turkmenistan should have a "highly liquid stock 
market regulated by the state and integrated into the global 
securities markets." 
 
¶7.  (U) Berdimuhamedov said, without details, more tax 
benefits should be granted to certain types of 
entrepreneurial activities and new compensation for use of 
patents. 
 
AREAS OF STRENGTH AND GROWTH 
 
¶8.  (U) Emphasizing Turkmenistan's strategic geographic 
location, the president said the creation of transnational 
transportation links -- i.e., the North-South Railway Line 
(Ref. A) -- and free economic zones, international tourist 
zones, and economic and political institutions would 
strengthen the country's geopolitical position. 
 
TRANSPARENCY AND DIVERSITY IN THE HYDROCARBONS SECTOR 
 
¶8.  (U) Berdimuhamedov reiterated a major international audit 
of all hydrocarbon deposits in Turkmenistan will take place 
in 2008.  He added that Turkmenistan's oil and gas sector 
should operate under the principles of transparency.  He 
added Turkmenistan should export fuel via a diversified 
network of export routes, through large-scale international 
gas pipeline projects.  The president announced that citizens 
would receive only limited quantities of free vehicle fuel 
beginning February 11 (Ref. B). 
 
OTHER SECTORS 
 
¶9.  (U) In other sectors, Berdimuhamedov made the following 
noteworthy comments: 
 
-- Citizens are encouraged to purchase voluntarily medical 
insurance, and Turkmenistan will continue to build high-tech 
medical centers. 
 
-- Turkmenistan should attract foreign specialists to work in 
its higher education institutions, and send hundreds of 
students abroad to study. 
 
-- The Ministry of Agriculture should identify profitable 
crops to grow in Turkmenistan, including ones that can be 
exported to earn hard currency revenues. 
 
-- The textile industry should also export more products and 
develop more private textile companies. 
 
OTHER FIRINGS AND HIRINGS 
 
¶10.  (U) Berdimuhamedov also fired several heads of 
 
ASHGABAT 00000230  003 OF 003 
 
 
organizations, agencies, and educational institutions, and 
announced their replacements. 
 
-- Head of the Main State Tax Service Dovlet Hojayev was 
fired and replaced by Deputy Head of the Main State Tax 
Service Nurmuhammet Ashirov. 
 
-- Chairman of Turkmenistan Standards Bairam Hasanov was 
fired and replaced by Deputy Chairman of Turkmen Standards 
Ovezmuhammet Atayev. 
 
-- Aina Gurbanniyazova was appointed Rector of the Azadi 
National Institute of World Languages. 
 
¶11. (SBU) COMMENT:  Curiously, Central Bank Chairman 
Geldimyrat Abilov did not speak at this meeting, but it 
appears that the Central Bank will be in charge of banking 
supervision and monetary policy.  Despite the high bar set by 
Berdimuhamedov to operate under market principles, he also 
said that Turkmenistan will continue to give its citizens 
free natural gas, electricity, water, and salt until 2030. 
It seems that Berdimuhamedov is hearing the need to 
privatize, open up markets, and make profits, but there is 
some distance to go until this will be fully realizable. 
This is a key time for U.S. advisors from the Department of 
the Treasury to continue engaging Turkmenistan on these 
issues.  END COMMENT. 
HOAGLAND