VZCZCXRO8034
RR RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1253/01 2660829
ZNR UUUUU ZZH
R 220829Z SEP 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 1594
INFO RUCNCIS/CIS COLLECTIVE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHVEN/USMISSION USOSCE 2915
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUETIAA/NSA FORT MEADE MD
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 001253 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR SCA/CEN, EUR/ACE, EEB 
AID/W FOR EE/EA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID TX
SUBJECT: TURKMENISTAN: ECONOMIC POLICY PROJECT MOVES FORWARD ON 
PRIVATE SECTOR DEVELOPMENT STRATEGY 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. (SBU) SUMMARY:  On August 27-28, the Chief of Party for USAID's 
Economic Reforms to Enhance Competitiveness (EREC) program met with 
the director of the Institute for Strategic Planning and Economic 
Development (ISPED) and the Chairman of Supreme Regulatory Chamber 
(SRC) to discuss plans for cooperation and to identify specific 
tasks for joint implementation. The ISPED agreed to cooperate with 
USAID in developing a strategy for state support of private sector 
growth. The SRC, which serves as the chief audit body in 
Turkmenistan, asked for assistance in capacity building of staff as 
well as developing legislation for the government procurement. 
Collectively, these plans for concrete cooperation represent a 
breakthrough in USAID's relationship with two newly created and 
seemingly progressive institutions.  END SUMMARY. 
 
TANGIBLE COOPERATION WITH ISPED BEGINS 
 
¶3. (U) In an August 27 meeting, ISPED director Mr. Ashirkuli 
Kurbankuliev thanked USAID/BearingPoint's Chief of Party (COP) for 
its support for English-language courses for ISPED staff by EREC 
that have recently started.  BearingPoint asked whether the Concept 
for Private Sector Development (PSD) which ISPED recently shared 
with EREC has been reviewed by Deputy Chairman responsible for 
economic development.  The ISPED Director said that the Deputy 
Chairman has already reviewed the initial version, as have the 
Ministry of Finance and the Association of Industrialists and 
Entrepreneurs, and ISPED has been cleared to proceed with developing 
a PSD program.  According to the director, the PSD program has 
higher importance and demands more effort than the concept paper's 
development, because it covers the government's specific activities 
in support of PSD. 
 
¶4. (U) At the meeting's conclusion, the sides agreed to work 
together to develop a state program for Private Sector Development, 
including: 
--Methods of privatization of state-owned property; 
--Forms of entities into which state property can be privatized; 
and 
-- Attraction of foreign investors in privatization. 
Also, EREC will assist ISPED to develop a website, in accordance 
with a recent government decree, and train employees in maintaining 
it.  Two USAID/EREC technical advisors will travel to Turkmenistan 
to work with ISPED on methodology for developing the program in 
September.  During this time, the advisors will help to develop a 
joint workplan for capacity-building for ISPED staff, and offered to 
provide a draft in 2-3 weeks for the Institute's review. 
 
CONTROL CHAMBER TO HOST AUDIT EXPERT 
 
¶5. (U) On August 28, 2008, BearingPoint Chief and USAID Program 
Management Specialist met with Supreme Regulatory Chamber Chairman 
Tuvakmamed Japarov, Deputy Chairman Gadyr Mushikov, and 3 department 
heads.  The Supreme Regulatory Chamber Chairman thanked USAID for 
arranging the study tour to Kazakhstan in April 2008 for six Supreme 
Regulatory Chamber staff, which was the "first opportunity for 
Supreme Regulatory Chamber specialists to share experiences with 
foreign counterparts" and yielded "undeniable" results.  Supreme 
Regulatory Chamber representatives also shared their impressions of 
the study tour.  Their exposure to methodology, financial audit 
mechanisms, control measures, and regulatory documents was useful, 
but they found it difficult to grasp all of it during a single, 
short visit.  One participant noted that  performance audits are 
conducted in Kazakhstan at the end of program implementation, which 
doesn't allow mistakes identified during the implementation stage to 
be fixed. 
 
¶6. (U) The Supreme Regulatory Chamber Chairman said he would like 
Supreme Regulatory Chamber staff to continue to take part in 
capacity-building seminars and workshops on financial audit and 
performance audit methodology.  He said that updated legislation on 
government procurement is needed since the previous law was drafted 
several years ago.  Developing auditing standards in line with 
international standards was also important. International donors in 
Turkmenistan should effectively coordinate their activity while 
developing accounting standards, including for banking sector. The 
 
ASHGABAT 00001253  002 OF 002 
 
 
Supreme Regulatory Chamber designated a specialist to represent the 
Chamber in an interagency working group that is expected to be 
created in order to coordinate the development of accounting and 
auditing standards in Turkmenistan. 
 
¶7. (U) EREC's COP informed Japarov that the project could provide an 
international advisor to assist the Supreme Regulatory Chamber in 
the areas highlighted by Chairman, (i.e. financial audit, 
performance audit and auditing standards).  The Supreme Regulatory 
Chamber Chairman said the expert would be "well received."  The EREC 
COP also offered to identify a specialist in government procurement 
to assist with drafting a law. 
 
¶8. (SBU) COMMENT:   Technical assistance opportunities in 
Turkmenistan have been very limited in recent years, a situation 
which appears to be slowly changing thanks to the emergence of 
several new institutions with progressive directors.  The capacity 
level of these institutions' staff varies, so it is not surprising 
that they would seek assistance in developing new skills based on 
international practices.  The discussions during this visit clearly 
revealed a desire for cooperation among these two counterparts.  As 
a next step with Supreme Regulatory Chamber, USAID/BearingPoint 
expects the technical advisor to arrive in October 2008 for three 
months.  The technical advisors to ISPED will begin their work 
supporting the private sector development strategy in September 
¶2008.  END COMMENT. 
 
CURRAN