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DE RUEHAH #0295/01 0630631
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O 030631Z MAR 08
FM AMEMBASSY ASHGABAT
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S E C R E T ASHGABAT 000295 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR E, SCA/CEN, EUR, EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: DECL: 03/03/2028 
TAGS: PGOV PREL ECON EPET UP TU RS AJ TX
SUBJECT: TURKMENISTAN'S BERDIMUHAMEDOV LAYS DOWN MARKERS TO 
AMBASSADOR MANN ON AZERBAIJAN 
 
REF: ASHGABAT 0254 
 
Classified By: CDA Richard E. Hoagland:  1.4 (B), (D) 
 
¶1.  (S) SUMMARY:  During a February 28 meeting in Ashgabat, 
President Gurbanguly Berdimuhamedov told Coordinator for 
Eurasian Energy Diplomacy Ambassador Steven Mann: 
 
-- He rejects the concept of Gazprom as monopolist; it's 
Turkmenistan's key economic partner; 
 
-- He is strongly irked at Azerbaijan's President Ilham 
Aliyev for not responding to his diplomatic advances; 
 
-- Caspian delimitation talks with Azerbaijan continue, but 
Turkmenistan must have all of the disputed mid-Caspian 
Serdar/Kyapaz; 
 
-- He approves in principle a production pipeline between 
Turkmenistan and Azerbaijan as a prelude to a Trans-Caspian 
Pipeline, and will respond formally later; 
 
-- He would approve a confidentiality agreement with Marathon 
as a necessary step toward a gas-to-fuels project; and 
 
-- He welcomes the concept of establishing a 
U.S.-Turkmenistan Business Council and would like to receive 
a concrete proposal on the initiative.  END SUMMARY. 
 
¶2.  (SBU) Coordinator for Eurasian Energy Diplomacy 
Ambassador Steven Mann met with President Gurbanguly 
Berdimuhamedov for nearly two hours on February 28.  First 
Deputy Prime Minister/Foreign Minister Rashid Meredov 
participated with the president.  Charge d'affaires was 
note-taker. 
 
GAZPROM OUR ECONOMIC PARTNER 
 
¶3.  (C) After brief pleasantries, the president turned 
serious and said, "Let's start with Gazprom.  During the USSR 
when there was no United States for us, that's all we had. 
We had no choice.  We had to do as we were told.  But today 
is different.  Gazprom is an economic partner -- not a 
"friend," but an economic partner -- because it pays us 
money.  We negotiate, and they listen.  We've incrementally 
raised the price of our gas.  In the latter half of this 
year, we'll publicize that we will move in 2009 to the 
international-standard gas sales and purchase formula." 
Berdimuhamedov repeated, "Everyone says Gazprom is a 
monopolist, but it's not.  It's our key economic partner.  I 
have to think of national income so the country can develop." 
 He added, "You seem to think we're like the USSR, but we are 
following our own model.  We want to be on the path of 
diversification (of export routes), but we will follow our 
own path."  Mann welcomed the switch to formula pricing but 
cautioned that if, contract or no contract, Russia decides in 
the future to change the pricing terms, Turkmenistan has no 
recourse, thus the need for diversification. 
 
DISPUTES, DISPUTES, DISPUTES 
 
¶4.  (S) Berdimuhamedov said, "Do we want a Trans-Caspian 
Pipeline?  Of course!  Many steps have already been taken." 
He then complained that at the February 22 CIS Informal 
Summit in Moscow he had had "good chats" with other leaders, 
but "didn't get much out of" Azerbaijan's President Ilham 
Aliyev.  Berdimuhamedov justified the recently announced 
contract for Buried Hill to exploit the disputed Serdar field 
in the Caspian (reftel) by exclaiming, "Azerbaijan already 
has British Petroleum working in areas we dispute!  Look at 
 
the problems between Ukraine and Russia.  It's not that 
Ukraine didn't pay for its gas.  The problem is more 
fundamental.  It's a question of who controls transit and who 
profits.  It's a question of Ukraine using the gas that 
transits and how much they use and then how much they pay and 
to whom."  After picking at several other scabs, 
Berdimuhamedov returned to Ukraine.  "You know, they're 
building a communications tunnel here, but they screwed it 
up.  I told Yushchenko if his guys can't do it right, I'll 
put it out to international tender.  So he sent one of their 
rich guys here, and we solved it."  At another point in the 
conversation, Berdimuhamedov commented, "(Former Ukrainian 
President Leonid) Kuchma may have been a drunk, but he was a 
good guy.  At least he ran that country!"  (COMMENT:  In a 
roundabout way, Berdimuhamedov seemed to be indicating if 
tough guys at the top talk, they can solve problems.  He 
doesn't like process.  The top-down model works for him 
because that's what he knows.  END COMMENT.) 
 
THERE'S ANOTHER MODEL 
 
¶5.  (C) Picking up Berdimuhamedov's thread, Mann said, "When 
you talk with Putin, Russia can make fast decisions because 
all power is at the top.  Gazprom can sign declarations that 
seem to seal deals, then they work for several years to see 
if they can line up the details.  For us, it's the opposite. 
We get all the details in place, from the bottom up, and then 
ask the top for a decision.  For example, Chevron will soon 
submit to you a proposal, and this is important because it's 
already very detailed and serious.  For us, the central 
question is this:  is Turkmenistan ready to work with a major 
Western energy company?" 
 
WE'VE BEEN DISSED! 
 
¶6.  (S) Ambassador Mann then briefed the president on his 
just completed stop in Baku, and especially on his meeting 
with President Aliyev.  Mann told Berdimuhamedov Aliyev said: 
 
-- I need to hear concrete plans from Ashgabat.  Now is the 
time for clarification.  Good intentions are fine, but it's 
now time to act. 
 
-- He had appreciated his February 22 conversation in Moscow 
with Berdimuhamedov, and that it had made a favorable 
impression on him. 
 
-- The Trans-Caspian Pipeline can start with Azerbaijan and 
Turkmenistan linking their Caspian infrastructures.  If we 
have a serious commitment of Turkmenistan gas, a production 
pipeline can become a reality. 
 
-- On delimitation, ACG is considered Azerbaijan's. 
Serdar/Kyapaz especially can be discussed, and Azerbaijan 
would accept a minority share of it.  The delimitation 
conflict is really a (former Turkmen President) Niyazov 
conflict. 
 
¶7.  (S) Berdimuhamedov listened in stone-faced silence, then 
said, "Our conversation in Moscow wasn't very nice.  Aliyev 
doesn't want to come here (to Ashgabat) first.  And besides 
that, old-man Aliyev stole Osman (part of ACG) from us!" 
Mann countered, "Aliyev really wants to meet with you." 
Berdimuhamedov snapped, "Let him come here!"  Mann persisted 
and told Berdimuhamedov, "Ilham told me he could go to 
Ashgabat, and he would like you to visit Baku.  But (Azeri 
Foreign Minister Mammadyarov) said it's a protocol question: 
the newer president should visit first the existing 
presidents."  Berdimuhamedov retorted sharply, "That doesn't 
hold water.  Putin and Karimov came to see me here before I 
 
visited them."  He then added archly, "Old Man Aliyev was a 
member of the Central Committee of the Communist Party.  We 
have all the 'kompromat' on him!"  Calming down and turning 
over his briefing paper and gesturing to its blank back, 
Berdimuhamedov said, "But now we've got a clear page.  As 
neighbors and brothers, there shouldn't be a problem.  I've 
done everything right.  I don't want a Russia-Ukraine 
relationship with Azerbaijan." 
 
¶8.  (S) Ambassador Mann said, "The most important thing is 
that you have an alternative to sell your gas to the West, 
and how can you do that if not through Azerbaijan?" 
Berdimuhamedov said, "I know you're intelligent and 
experienced."  (NOTE: By this locution, he usually means 
"listen up and get with the program."  END NOTE.)  "It's not 
a question of protocol.  It's a question of good manners.  I 
can go to Baku, but I've invited him twice, and he's never 
even answered, never even once said thank you." 
 
¶9.  (S) Still irked, Berdimuhamedov said, "Delimitation is a 
policy of Niyazov?  Certainly not!  It's a policy of the 
Turkmen nation.  Aliyev acted unilaterally.  Why did he do 
that?  We were ready to negotiate on Osman and Omar but he 
acted unilaterally"  But then he said dismissively, probably 
still thinking of the visit question, "Let the protocol types 
work it out."  Meredov interjected, "We've taken good steps 
so far, but they didn't lift a finger!"  Having been egged 
on, Berdimuhamedov added, "We're not cattle!"  Ambassador 
Mann persisted, "I think this can be resolved."  Continuing 
to chew the bone, Berdimuhamedov said, "Look, Iran is our 
brother and neighbor, but we turned off the gas tap. 
Politics is politics, but business is business.  (COMMENT: 
Here Berdimuhamedov strongly implies the dispute with 
Azerbaijan is to a fair degree financial.  We recall Meredov 
said in October 2007 in the context of delimitation, and 
specifically about Omar and Osman/ACG, "They've been stealing 
our wealth for years and will have to compensate us."  END 
COMMENT.)  Berdimuhamedov added, "We don't have to sell our 
gas to Azerbaijan.  We can refine it here and sell our 
products to the world."  Meredov seconded him, "Any country 
in the world will come here to buy our products!" 
 
¶10.  (S) Ambassador Mann explained what is fundamental is for 
Turkmenistan to develop alternate routes for hydrocarbon 
export, and for that Turkmenistan needs a major Western 
company.  Ultimately, bankers who provide financing must be 
convinced.  Continuing his separate track, Berdimuhamedov 
said, "Osman and Omar (ACG) we can think about, but Serdar is 
totally ours!"  Mann continued that he had been told 
officiallyin Baku that Azerbaijan had approved three 
companies (British Petroleum, Wintershall, and Chevron) as 
potential partners joint development with Turkmenistan, and 
of those Baku would prefer Chevron.  Berdimuhamedov did not 
reply but indicated he noted the information.  (COMMENT: 
This may have poured fuel on Berdimuhamedov's slow burn, 
because he had just reaffirmed the contract for the minor 
Canadian firm Buried Hill to develop Serdar (reftel).  After 
Charge had sought clarification on the deal from the 
Hydrocarbon State Agency, Foreign Minister Meredov warned him 
not to meddle because the decision had been made at the top. 
END COMMENT.) 
 
¶11.  (C) Ambassador Mann passed to Berdimuhamedov and Meredov 
the U.S. government-prepared studies Berdimuhamedov had 
requested in their previous meeting:  "Legal Basis for 
Bi-National Development of Offshore Resources," "Cross-Border 
Gas Trade Examples," and "Steps to Make Early Gas Concrete." 
They both skimmed the papers closely, and Berdimuhamedov 
commented, "This is not far from what we've discussed.  We 
need to go step by step"  Mann said, "We think it's truly 
 
important for Turkmenistan to decide to join in the current 
feasibility study, which could be done without any publicity. 
 That would be a powerful signal to major energy companies 
that you are serious about alternate routes for 
Turkmenistan's gas.  Let's work on early gas through 
production pipelines now and put to the side the issue of a 
major trans-Caspian route."  The "Early Gas" paper contained 
a description of the feasibility study and the President 
indicated he would later give a formal answer on joining the 
study. 
 
IT ALL DEPENDS ON SERDAR 
 
¶12.  (S) Berdimuhamedov and Meredov had a long sotto voce 
conversation in Turkmen, and then Berdimuhamedov responded, 
"We could discuss the possibility if we had all of Serdar." 
Then he repeated, "That Serdar is ours is not a 'Niyazov 
policy'!  It's the policy of the Turkmen nation!  If we were 
starting negotiations with Azerbaijan from a blank page, it 
would be one thing, but the page isn't blank.  They've long 
been stealing our resources with the help of foreign 
companies.  The Turkmen people have already suffered because 
of this.  We make reasonable proposals to the other side, but 
all we get is silence.  In fact, we'd accept a 'production 
pipeline.'"   Meredov agreed.  But then the president banged 
the table and said, "But it's our gas!"  He added, "I know 
there were mistakes between Niyazov and the elder Aliyev, and 
I truly want to start on a clean page.  I've suggested two or 
three times we exchange visits, but all I get in return is 
silence.  I want to work with (Ilham Aliyev), but if he 
doesn't want to, it's his problem."  At another point, when 
Ambassador Mann discussed the value of western business 
transparency versus the Soviet model of secretive 
game-playing state companies, and cited the BTC Pipeline as a 
positive model, Berdimuhamedov riposted, "But if we sell our 
gas to Azerbaijan and Georgia, they'll probably steal it!" 
Mann described in detail the way the Western private sector 
bars product theft, for business reasons, compared with the 
looser practices of state-to-state deals. 
 
OTHER BUSINESS 
 
¶13.  (C) Mann also asked the President to approve a 
confidentiality agreement with Marathon as a necessary step 
 
SIPDIS 
toward a gas-to-fuels project, and the President said it 
should be "no problem."  Mann advised that Chevron would 
present a detailed development proposal on or about March 10 
and urged Turkmenistan's careful and favorable evaluation of 
the proposal.  Mann also briefed the president on the 
possibility of establishing a U.S.-Turkmenistan Business 
Council.  The president said he would welcome a concrete 
proposal for such an initiative. 
 
AND JUST WHO DO THE TURKS THINK THEY ARE? 
 
¶14.  (C) To close, the president joked dryly, "And by the 
way, where do the Turks get off thinking they can invite 
Azerbaijan and Turkmenistan to a summit?  What business is it 
of the Turks?  It would be nice if Baku and Ashgabat had 
bilateral relations, but we don't.  We have unilateral 
relations!"  Ambassador Mann replied that the important thing 
is to find a solution."  Berdimuhamedov quipped, "Agreed. 
But I don't want it to take as long as a solution to 
Nagorno-Karabagh!"  Meredov piped up, "Don't forget, we have 
an oriental mindset." 
 
HAMMERING HOME THEIR POINTS 
 
¶15.  (S) Ambassador Mann was to have a follow-on meeting with 
Foreign Minister Meredov, and there was a strong possibility 
 
of an informal working dinner with Berdimuhamedov the next 
day that had been carefully negotiated.  But the Foreign 
Ministry went "radio silent" and did not respond to multiple 
queries.  They apparently decided to use the "silent 
treatment" to reinforce their points:  Serdar is ours; we've 
been dissed by Azerbaijan; we'll follow our own path. 
 
¶16.  (S) COMMENT:  This was a different Berdimuhamedov than 
we have seen before.  Rather than genial and focused, he was 
stern from the beginning.  No matter what the topic, he 
brought it back to his two points about Serdar and Aliyev. 
It's perhaps pertinent to recall that in the earliest decades 
of the 20th century, first the Russian Empire and then the 
Soviets imported the more Europeanized Azeris to Turkmenistan 
to help teach the Turkmen nomads "civilization," and the 
Turkmen have always resented that.  Their fear of being 
"country cousins" makes them brittle and rigidly demanding. 
 
¶17.  (S) COMMENT CONTINUED:  We were taken aback by the 
silent-treatment refusal for the follow-on meeting with the 
foreign minister and the informal working dinner with the 
president.  Only two days earlier, Charge had confirmed with 
Foreign Minister Meredov all was on track and had worked out 
details for the second presidential meeting.  Unless someone, 
like Russia, got to them with a negative analysis of our 
intentions (not impossible), we can only speculate they for 
some reason felt they had to lay down their markers -- and 
did so in a traditional, tough-guy, top-down way.  From these 
and other exchanges, it seems clear Berdimuhamedov is most 
comfortable with, and truly only understands (because it's 
his only experience and point of reference), the 
Soviet/Gazprom business -- and governance -- model:  power at 
the top makes demands and cuts (often shady) deals, whether 
based on objective reality or not -- and carefully detailed, 
profit-oriented Western business models be damned.  He is 
comfortable with Gazprom because he believes "tough guys" can 
slug it out, and everything else will fall into place because 
the tsar-khan-authoritarian leader has so pronounced. 
 
¶18.  (S) COMMENT CONTINUED:  We have a long way to go with 
Turkmenistan, but we should not easily give up because the 
stakes are so high for regional strategic reasons (Iran, 
Afghanistan, terrorism, narcotics), for energy security, and 
for our own best democratic and human rights ideals.  We can 
deploy standard talking points until we are blue in the face, 
but Berdimuhamedov's -- and Turkmenistan's -- psychological 
and ideological realities will pertain for a rather long 
time.  If we can accept that the brittle Berdimuhamedov 
responds best to "respect," we can incrementally meet our 
long-term goals.  END COMMENT. 
 
¶19.  (U) Ambassador Mann cleared this cable. 
HOAGLAND