VZCZCXRO8712
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1049/01 2251404
ZNR UUUUU ZZH
P 121404Z AUG 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1323
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4140
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1952
RUEHKO/AMEMBASSY TOKYO PRIORITY 1817
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2388
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0855
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 2763
RUEAIIA/CIA WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

UNCLAS SECTION 01 OF 04 ASHGABAT 001049 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN; 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EPET ECON KDEM MARR SCUL SOCI SNAR
TX 
SUBJECT: TURKMENISTAN:  SCENESETTER FOR THE SEPTEMBER 6-9 
SPECIAL ENVOY GRAY/AMBASSADOR MANN VISIT 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Embassy Ashgabat warmly welcomes your 
visit to Turkmenistan as an important opportunity to advance 
our bilateral dialogue on energy.  President Bush met briefly 
with President Gurbanguly Berdimuhamedov on April 3 at the 
NATO Summit in Bucharest.  Other high-level U.S. meetings 
with him were Senator Richard Lugar in January, Energy 
Secretary Bodman in November 2007, and Secretary Rice in 
September 2007 during the UNGA in New York.  Coordinator for 
Eurasian Energy Diplomacy Ambassador Steven Mann meets with 
Berdimuhamedov regularly, most recently with you on June 3-6. 
 Into the second year of his presidency, Berdimuhamedov is 
increasingly self-confident and will not hesitate to speak 
his mind.  We believe his instincts are generally right, even 
if his understanding is elementary and his implementation 
timelines unrealistically quick.  Turkmenistan will gradually 
bring its standards -- including educational and human rights 
-- in line with international levels.  But he's starting from 
almost zero with very few on his team who have the experience 
and capacity to implement the reforms he says he wants.  Like 
many ex-Soviet governments, Turkmenistan relies too heavily 
on presidential decrees and the power of law-on-paper.  The 
longer-term monumental task will be to change a century of 
national political psychology, the entrenched bureaucracy, 
and the culture of rent-seeking.  END SUMMARY. 
 
¶3.  (SBU) A year and a half into the new era, it is clear 
Turkmenistan is becoming significantly different from the 
international bad-joke pariah state it was under former 
President-for-Life Niyazov.  But precisely what Turkmenistan 
is becoming is still a work in progress.  Evidence 
increasingly suggests it could well one day become a 
responsible partner for the United States and a normal 
international player.  Berdimuhamedov's fundamental policies 
have been promising.  However, he faces an uphill struggle 
against political traditions that favor autocratic governance 
models and a bureaucratic capacity stunted by 15 years of 
Niyazovian repression and complete egocentrism.  The 
challenge will not be to get new reforms on the books -- 
Berdimuhamedov is already beginning to do this -- but rather, 
to change the attitudes and modi operandi of those officials 
responsible for implementing the new policies. 
 
DEMOCRACY AND HUMAN RIGHTS 
 
¶4.  (SBU) President Berdimuhamedov has made a public 
commitment to bring Turkmenistan's laws and practices -- 
including in areas of human rights -- up to international 
standards.  At his order, the country's legal, human rights 
and legislative bodies are working overtime to rewrite or 
draft more than 30 laws and codes, including on religion and 
civic organizations, family, and criminal and criminal 
procedures codes.  The President on April 16 also ordered 
that the country's constitution -- revised four times since 
1992 -- be redrafted in time for a September meeting of the 
Halk Maslahaty -- the massively large, rubber-stamp People's 
Council, which is responsible for approving constitutional 
changes.  The first draft, made public in mid-July, offers 
some good and some shortcomings.  Most notably, it calls for 
the elimination of the Halk Maslahaty, whose powers will in 
future be split between the president and the Mejlis 
(Parliament). 
 
¶5.  (SBU) In seeking to promote democratic development and 
strengthened respect for human rights, the Embassy is working 
with the newly empowere Institute of Democracy and Human 
Rights, which is one of the government bodies most open to 
and cooperative with foreign donors.  We believe that this 
body, which has a director who clearly enjoys the trust of 
the president, can play a significant role.  In January, the 
Ministry of Foreign Affairs agreed to USAID's proposal for 
 
ASHGABAT 00001049  002 OF 004 
 
 
cooperation with the Institute.  Areas for cooperation 
include information exchange, the provision of legal and 
technical expertise, and support for increased access to 
information.  The Institute has fully embraced USAID as a 
valued partner.  Together with the Institute, USAID's 
partner, the International Center for Not-for-Profit Law, has 
laid out an ambitious plan for cooperation over the next 
year.  Other USAID partners have made or are preparing to 
make other proposals based on feedback from the Institute. 
 
¶6.  (SBU) Although the president is making progress in 
overhauling Turkmenistan's laws, human rights practices 
continue to lag behind the president's intentions.  RFE/RL 
reporters continue to experience considerable harassment from 
security forces, including efforts to disrupt the wedding of 
one reporter's son.  Small evangelical Christian religious 
groups continue to experience problems with registration, and 
some unregistered groups have experienced harassment.  We 
have heard reports that some individuals are continuing to 
experience troubles with traveling abroad, though the 
government has been willing to reverse travel bans in a 
limited number of cases where there is a clear U.S. interest. 
 While Berdimuhamedov last summer released Turkmenistan's 
former Grand Mufti, imprisoned since 2005 under charges of 
complicity in the 2002 attack, only a handful of other 
individuals who were also imprisoned for alleged involvement 
in the attack have been released.  Despite these problems, 
the number of new cases -- and of individuals coming to the 
embassy seeking assistance with perceived human rights 
complaints -- is lower than in previous years. 
 
ENERGY 
 
¶7.  (SBU) Turkmenistan has world-class natural gas reserves, 
but Russia's near monopoly of its energy exports has left 
Turkmenistan receiving much less than the world price and 
overly beholden to Russia, although Gazprom has agreed to pay 
"world price" starting in 2009.  (NOTE:  Despite this 
promise, Gazprom and Turkmenistan have yet to agree on 
precisely what this means and are still negotiating natural 
gas prices for 2009.  END NOTE.)  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-voltage 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 steps needed to increase the volume of gas 
exports to Russia, signing an agreement (with Russia and 
Kazakhstan) in Moscow in December 2007 to enlarge and rebuild 
a non-functioning Soviet-era Caspian littoral pipeline. 
(NOTE:  While little progress has been publicized on this 
project, government officials and some foreign oil company 
officials maintain that plans are on track, with construction 
to begin in 2009.  END NOTE.)  He will require encouragement 
and assistance from the international community if he is to 
maintain a course of diversification in the face of ongoing 
Russian efforts to keep Turkmenistan from weaning itself away 
from Russia. 
 
¶8.  (SBU) Although Turkmenistan and Azerbaijan have made 
excellent progress over the past year in resolving many of 
the issues that had troubled their relationship, officials 
have been broadcasting signals in recent months that -- from 
Turkmenistan's perspective -- the relationship is still not 
trouble-free.  Fundamentally, Turkmen leaders seem to believe 
that they have made most of the efforts at rapprochement over 
the last year, and are looking for signs that the Azeris are 
 
ASHGABAT 00001049  003 OF 004 
 
 
taking them seriously.  It is more important than ever for 
the United States to continue its constructive role, urging 
the two sides to work together. 
 
¶9.  (SBU) One of the biggest challenges that Turkmenistan's 
hydrocarbon sector will have to face, if it is to succeed in 
pipeline diversification, is the need for increased 
natural-gas production.  Turkmenistan produced a reported 
72.3 billion cubic meters (bcm) in 2007, a figure that barely 
meets its existing domestic needs and export commitments. 
The president directed that production should increase to 
81.5 bcm in 2008.  Even larger increases will be needed as/if 
new pipelines come online.  While Turkmenistan has welcomed 
foreign companies to work its offshore (primarily oil) 
Caspian blocks, it has up to now largely rejected allowing 
foreign energy companies to work its onshore gas fields, 
maintaining that it can handle the drilling itself.  But 
onshore natural gas production offers some tough challenges, 
including ultra-deep, high-pressure, high-sulphur, sub-salt 
drilling, which requires special skills and technologies and 
massive investment.  One Western analyst suggested that costs 
could run as high as $100 billion over the next five years. 
No one outside of the Turkmen government believes 
Turkmenistan has either the skills or the financial resources 
needed.  U.S. policy has been to promote onshore production 
by major Western oil companies.  There has been strong debate 
within the government about this, and we have watched views 
evolve to the point that the government has now told a 
limited number of Western firms that it is willing to begin 
negotiations for onshore work. 
 
ECONOMY AND FINANCE 
 
¶10.  (SBU) President Berdimuhamedov has stated repeatedly, in 
many forums, that he wants to develop an 
international-standard market economy and to promote foreign 
investment.  To those ends, he has placed a new priority over 
the past eight months on promoting economic and financial 
reform.  Turkmenistan has announced that it will 
re-denominate its currency in 2009, lopping off three zeros, 
and has already unified the country's dual exchange rates. 
The president has stated that some state enterprises will be 
privatized -- though not in "strategic" sectors like oil and 
gas, electricity, textiles, construction, transportation, and 
communications.  He has signed a new foreign investment law, 
which, among other things, guarantees resident foreign 
businessmen and their families one-year, multi-entry visas, 
and approved changes to the tax code.  The president divided 
the overworked Ministry of Economy and Finance into two 
bodies -- a Ministry of Economy and Development, and a 
Ministry of Finance, and he has created a Supreme Auditing 
Chamber with the goal of providing transparency in the budget 
process.  In a notable development, the president also 
announced that he will abolish the opaque extra-budgetary 
funds that were prone under his predecessor to misuse and 
corruption.  Finally, the state has slowly begun to raise the 
price of electricity and price of vehicle fuel.  These 
measures could be part of an early effort to phase out the 
state's extensive and tremendously expensive subsidies system. 
 
¶11.  (SBU) Even though the president has reshaped his 
bureaucracy, put in place the structures that theoretically 
should help promote a market economy, and opened Turkmenistan 
to cooperation with IFIs, the lack of basic understanding and 
bureaucratic capacity remains an enormous impediment to 
change.  New reforms are being rolled out with inadequate 
preparation, understanding of their consequences and 
explanation -- and are leading to increased public 
dissatisfaction.  USAID is working through its contractor, 
BearingPoint, to implement a new program to increase 
bureaucratic capacity and to support growth of private 
business in Turkmenistan.  Department of Treasury 
 
ASHGABAT 00001049  004 OF 004 
 
 
representatives visited Turkmenistan and met with government 
ministries and financial sector entities in June and July to 
identify areas where Treasury might play a role in promoting 
reform, should funding be available. 
 
FOREIGN POLICY 
 
¶12.  (SBU) Despite his statements that he plans to continue 
the "neutrality" policies of his predecessor, Berdimuhamedov 
has put an unprecedented emphasis on foreign affairs to 
repair Turkmenistan's international and regional relations 
and to become a respected player on the international stage. 
Under the president's leadership, Turkmenistan has reached 
out to participate actively in regional organizations.  He 
has met with all the leaders in the region, as well as with 
those of other countries of importance to Turkmenistan. 
China has a strong and growing commercial presence in 
Turkmenistan, and continues to court the president through a 
series of high-level commercial and political visits, 
including a July 2007 Berdimuhamedov trip to Beijing focused 
on natural gas and pipeline deals.  Presidents Berdimuhamedov 
and Gul (Turkey) have exchanged visits, but bilateral 
relations continue to be colored more by the image of 
Turkey's lucrative trade and construction contracts that are 
eating up large amounts of money from the national budget. 
Berdimuhamedov has held positive meetings with high-level 
leaders of international organizations (including both the UN 
and the Organization for Security and Cooperation in Europe) 
and IFIs that have led to productive, cooperative 
relationships.  The UN High Commissioner on Human Rights, 
Louise Arbour, visited Turkmenistan in May 2007, and the UN 
Special Rapporteur on Religion will visit in September. 
 
¶13.  (SBU) Berdimuhamedov has held positive meetings with 
high-level U.S. officials and is well-disposed toward the 
United States.  He made his first trip to the United States 
as president to participate in the UNGA session in September 
2007, where he also met with Secretary of State Rice.  In 
November 2007, Secretary of Energy Bodman met with 
Berdimuhamedov in Ashgabat, and Berdimuhamedov's meeting with 
President Bush during the April Bucharest NATO summit 
received extensive and very positive media coverage in 
Turkmenistan.  Berdimuhamedov made his first visit to EU and 
NATO headquarters in Brussels in November 2007. 
 
SECURITY 
 
¶14.  (SBU) The U.S. security relationship with Turkmenistan 
continues to unfold, with slow but consistent cooperation. 
Although basing is not an option, Turkmenistan remains an 
important conduit for the U.S. military to Afghanistan. 
Maintaining blanket overflight permission and the military 
refueling operation at Ashgabat Airport remains a key U.S. 
goal.  CENTCOM and Turkmenistan's military maintain an active 
military-to-military cooperation plan, and CENTCOM and the 
Nevada National Guard (operating through the State 
Partnership Program and CENTCOM's military cooperation and 
counternarcotics programs) have a productive 
counter-narcotics program that has funded training and 
completion of two border-crossing stations on the Iranian and 
Afghan borders.  A third border-crossing station is under 
construction at Farap on the Uzbekistan border, with two more 
to follow.  With the assistance of the Embassy's Export 
Control and Border-related Security (EXBS) program, the 
Embassy works to strengthen Turkmenistan's border security 
and to increase its ability to interdict smuggling of weapons 
of mass destruction. 
CURRAN