VZCZCXYZ0988
PP RUEHWEB

DE RUEHAH #0300/01 0641138
ZNR UUUUU ZZH
P 041138Z MAR 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0375
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 3460
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1278
RUEHKO/AMEMBASSY TOKYO PRIORITY 1145
RUEHIT/AMCONSUL ISTANBUL PRIORITY 1714
RUEHVEN/USMISSION USOSCE PRIORITY 2282
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

UNCLAS ASHGABAT 000300 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EUR/EMB 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EINV UP TX
SUBJECT:  TURKMENISTAN:  UKRAINIAN INDUSTRIALIST MENDS 
FENCES, RESTARTS THE BILATERAL RELATIONSHIP 
 
REF: A. ASHGABAT 0295 
 
     ¶B. 07 ASHGABAT 1186 
 
¶1.  (U)  Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU)  SUMMARY:  With a series of diplomatic and 
commercial forays in January and February, the Ukrainian 
government appeared to be aggressively working to resolve 
contractual issues that have stalled its relations with 
Turkmenistan for several years.  After President 
Berdimuhamedov publicly made clear that the entire bilateral 
relationship would remain stagnant until these serious 
construction contract issues were resolved, the Ukrainian 
government sent a wealthy industrialist to placate 
Turkmenistan's president and try to find a solution.  In 
February, Serhiy Taruta of the Donbass Industrial Union 
agreed to oversee two troubled construction projects to 
ensure their timely completion.   Turkmenistan's government 
appears to be pleased with this turn of events and has begun 
to respond to other Ukrainian diplomatic initiatives, such as 
restarting air service between Ashgabat and Kyiv.  Ukrainian 
efforts to cut a separate deal on natural gas will take more 
time, but at least the two parties are talking civilly again. 
 END SUMMARY. 
 
¶3.  (SBU)  President Berdimuhamedov recently told a U.S. 
official that he had warned Ukrainian President Yuschenko 
earlier this year that if the work did not start back up 
soon, he would re-open two construction projects to 
international bidding (Ref A).  The warning must have been 
taken seriously, because on February 4, Serhiy Taruta, a 
wealthy industrialist and Chairman of the Board of Directors 
of the Donbass Industrial Union Corporation, arrived in 
Ashgabat to meet with President Berdimuhamedov.  The media 
reported that after he met again with the president on 
February 18, Taruta promised to oversee almost $300 million 
worth of construction work in Turkmenistan.  Media reports 
indicated that Taruta will be taking responsibility for 
assuring the completion of two particularly troubled 
Ukrainian construction projects in Turkmenistan. 
 
¶4.  (U)  Taruta reportedly talked with the president about 
the troubled railway and automobile bridge over the Amu Darya 
that the Ukrainian construction firm UkrTransBud started 
several years ago and also appears to be taking 
responsibility for assuring that InterBudMontazh's doomed 
Ashgabat underground project (Ref B) is completed.  According 
to Turkmenistan's press, he will coordinate the work of 
Ukrainian companies and will also bring in Russian partners 
to get both projects done, but no timeline was reported. 
(COMMENT:  It is unclear whether UkrTransBud will play a 
continued role in construction of the bridge.  Ukrainian 
television reported in January 2008 that the head of 
UkrTransBud and another company head were to appear in court 
to address tax evasion charges.  The company has likely 
burned its bridge here in any case, given reports of its role 
in an embezzlement scandal when the project began.  END 
COMMENT.) 
 
¶5.  (SBU)  Taruta also talked with President Berdimuhamedov 
about how Ukrainian companies will move forward on the 
underground communications infrastructure project in Ashgabat 
that InterBudMontazh began several years ago.  Igor Roman, a 
political officer at the Ukrainian embassy, said in November 
2007 that the project had been fraught with engineering and 
other technical challenges, including flooding problems due 
to Ashgabat's shallow and unpredictable water table.  He 
noted that Turkmenistan's government had been impatient and 
inflexible with Ukrainian company representatives when they 
tried to explain the problems and find a workable solution. 
This and other -- possibly financial -- issues had caused the 
company to stop work on the project. 
 
¶6.  (U)  Turkmenistan government officials seemed pleased 
 
that the Ukrainians had come up with a workable solution, and 
responded by resuming weekly commercial air service between 
Ashgabat and Kyiv on February 28.  This new air service will 
likely be filled with Turkmen students attending universities 
and institutes in Ukraine and with Ukrainian employees 
working in Turkmenistan.  Between November 2005 and June 
2006, both Turkmen and Ukrainian airlines had suspended 
flights when disagreements over Ukrainian natural gas debts 
and other issues peaked. 
 
¶7.  (SBU)  COMMENT:  Taruta's stated commitment to ensure the 
timely completion of the construction projects appears to 
have been well-received in Ashgabat.  Turkmenistan government 
officials would no doubt love to have these two complicated 
and unfortunate projects out of their hair once and for all, 
and Taruta's role as overseer means he alone will take the 
heat if the projects do not show progress.  Additionally, now 
that the two projects will no longer be a burr under the 
Turkmenistan government's saddle, it is possible that more 
constructive dialogue could take place between the Turkmen 
and Ukrainians on the key issue of natural gas imports, as 
well as on more mundane issues, such as construction of a new 
Ukrainian embassy or expansion of Ukraine's educational 
exchange program.  END COMMENT. 
HOAGLAND