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UNCLAS SECTION 01 OF 03 ASHGABAT 000163 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN; EEB 
PLEASE PASS TO USTDA DAN STEIN 
COMMERCE FOR HUEPER 
 
 
E.O. 12958: N/A 
TAGS: PGOV EIND EINV ETRD TX
SUBJECT:  TURKMENISTAN:  PROVINCIAL DEVELOPMENT UNDERWAY--THE GOOD, 
THE BAD AND THE STRANGE 
 
¶1.  (U) Sensitive but unclassified.  Not for public internet. 
 
¶2.  (SBU) SUMMARY:  In 2008, the Turkmenistan government kicked off 
a wide array of development projects, under the auspices of a 2007 
National Development Program, which was designed to refurbish 
crumbling Soviet era infrastructure and modestly expand the 
country's industrial base.  Calendar year 2009 is looking much the 
same.  While much of the construction is sorely needed, some of it 
continues to be expensive projects that will bring neither 
significant employment nor promote economic development in the 
outlying provinces.  President Berdimuhamedov has been pressing 
regional leaders to play a greater role in getting projects in their 
back yards completed, within budget and before deadline, but it 
would appear that provincial officials are ill-prepared to work with 
contractors and adequately oversee these projects.  The continued 
dominance of Turkish firms in winning the contracts, along with the 
prioritization of non-critical infrastructure that will do little 
for local economic conditions suggest that there is still much post 
does not understand regarding the development goals of Turkmen 
leaders.  END SUMMARY. 
 
STRATEGY ON PROVINCE DEVELOPMENT 
 
¶3.  (SBU)   In April 2007, Berdimuhamedov unveiled a new National 
Program that mandated fundamental improvements in the socio-economic 
development and infrastructure of rural settlements, cities and 
district centers be undertaken in a phased program.  The Government 
earmarked 24.8 trillion manats ($1.74bn) for the first phase of 
2008-2010, 30.7 trillion manats ($2.2bn) for the second phase of 
2011-2015, and 17 trillion manats ($1.2bn) for the third phase of 
2016-2020. 
 
PROVINCIAL SCHOOLS, STADIUMS, HOSPITALS-AND RACE TRACKS 
 
¶4.  (SBU)   In 2008, local and Turkish companies commissioned six 
modern schools for 600 pupils, at costs that ranged from $7.2-7.7 
million each.  The schools were established in every province and 
equipped with the most modern multimedia equipment.  Last year, 
German Baugesellschaft GmbH company renovated the Serdar region's 
central hospital and replaced outdated hardware with $800,000 worth 
of state-of-the-art technology from the German company Siemens. 
Russian, Turkish and Lebanese companies are currently building five 
10,000-seat sports stadiums in each of the provinces.  Each stadium 
will cost about $20 million and will comprise a sports complex as 
well as a hotel.  In addition, five horseracing tracks each worth 
$49 million and hosting 3,000 spectators is planned for every 
province, but construction has not yet begun.  (NOTE:  Since 
management and breeding of the Ahal Teke horse is a small-scale 
government enterprise occurring only in the Ashgabat area, it is 
unclear how the provincial hippodromes would see regular use, much 
less who would go to the races.  END NOTE.) 
 
MORE MOSQUES PART OF THE PLAN 
 
¶5.  (SBU)  The Turkish company Kilich Insaat is now building a 
mosque for 1,500 attendees in the center of Mary city.  The Turkish 
company Polimeks has begun construction of a mosque for 1,500 in the 
ancient Silk Road city of Konye Urgench, an official gift from the 
government of Turkey.  The mosque is located in Dashoguz province 
and is a sacred place for Muslims.  Along with the mosque, Polimeks 
is building a museum and conference hall, all to be completed by 
¶2010.  Some local staff view the construction of new, official 
mosques as a waste of money, given that average Turkmen Muslims are 
unlikely to worship in these grandiose facilities.  They privately 
express the opinion that popular concerns about wages and inflation 
should take precedence over construction of less necessary 
buildings. 
 
 
ASHGABAT 00000163  002 OF 003 
 
 
NEW STATE FACTORIES PART OF DEVELOPMENT PROGRAM 
 
¶6.  (SBU)  The Turkish company Cotam Enterprises LTS is now building 
two cotton-spinning factories for the Ministry of Textiles.  The 
first, a factory in Ahal province will cost $70 million and produce 
some 9,450 tons of yarn by 2010.  It will employ nearly 500 people. 
The second is a $76.5 million cotton spinning factory in Dashoguz 
province that will be capable of producing 14,500 tons of cotton 
yarn per year.  Another Turkish company called Engin Grup will also 
be constructing a $79 million textile factory this year in Ahal 
province.  By early next year, the factory will begin producing a 
mixed cotton and polyester yarn, for the first time in Turkmenistan. 
 The factory should have an annual capacity of 13,000 tons of yarn. 
 
 
PLETHORA OF NEW BRIDGES PLANNED ACROSS THE COUNTRY 
 
¶7.  (SBU)  Hundreds of highway and railway bridges are also part of 
the plan, and many are to be built or reconstructed in Turkmenistan 
in the next few years.  The Turkish N?? Yapi company, along with the 
British Garanti Koza LLP company have won contracts to build 120 
roadway bridges for the Turkmen Motor Roads State Concern.  NET Yapi 
is to build 31 bridges along the Ashgabat-Turkmenbashy highway, 30 
bridges along the Ashgabat-Mary highway, 20 bridges on the 
Turkmenabat-Farap highway, and 9 bridges on the 
Ashgabat-Karakum-Dashoguz highway.  The British company will build 
28 bridges on the Mary-Turkmenabat highway by 2010.  The total sum 
of the contracts is $387.5 million.  In the meantime, the Turkmen 
Motor Roads State Concern is re-paving and widening the 
Ashgabat-Turkmenbashy, Ashgabat-Dashoguz and 
Ashgabat-Mary-Turkmenabat-Farap highways. 
 
NEW CEMENT MILL TO FACILITATE BALKAN PROJECTS 
 
¶8.  (SBU)  To help speed up some of the infrastructure development 
in Balkan province, the Turkish company Polimeks will be building a 
cement mill in Jebel, northwest of Balkanabat city.  The company 
signed a 180 million Euro contract with the Turkmen Oil and Gas 
Construction State Concern in late 2008.  The company is tasked with 
completing the new mill, with a production capacity of 1 million 
tons annually, by May 2011.  Turkish companies have dominated 
construction in the last decade in Turkmenistan, and are poised to 
continue to do so.  Post estimates that Turkish contractors won more 
than $8.2bn of construction projects between 2003-2008. 
 
PRESIDENT DEMANDING MORE PROVINCIAL OVERSIGHT 
 
¶9.  (SBU)  In December 2008, Berdimuhamedov severely criticized 
local governors for failing to play a role in monitoring the pace 
and quality of construction projects in their regions.  "Usually, 
unknown firms and companies, without sufficient funds and technical 
capacity, are allowed to apply for construction tenders and once 
they win the tenders, contracts are concluded and funds are arranged 
for them.  In the meantime, local governors completely forget to 
control their compliance with deadlines and quality standards," 
Berdimuhamedov said.  (NOTE:  It is unclear where the responsibility 
for these provincial projects stops for the central government that 
signs the contracts, and where it starts for regional officials, who 
have little or no experience in locally managing these efforts.  END 
NOTE.) 
 
¶10.  (SBU)  During a December 2008 Cabinet of Ministers meeting, the 
president demanded that both governors and contractors should be 
held responsible for monitoring construction work.  In January 2009, 
he severely reprimanded all the provincial governors (except the 
governor of Lebap province Charyyarguly Odeberdiyev, who was fired 
along with a dozen district governors for grave shortcomings).  The 
president stressed in particular that the governors had failed to 
 
ASHGABAT 00000163  003 OF 003 
 
 
commission buildings and facilities by stated deadlines.  Local 
staff opined that Odeberdiyev's dismissal was primarily his failure 
to get the new Ruhyyet (cultural) Palace in Lebap province completed 
on time.  Berdimuhamedov had to postpone the first session of the 
Elders Council that was scheduled to take place in the new Ruhyyet 
Palace in December 2008.  ((NOTE:  The Elders Council session has 
been rescheduled for March 2009, according to a decree published in 
Neytralniy Turkmenistan on February 2.  END NOTE.) 
 
BERDIMUHAMEDOV UNVEILS PLANS FOR 2009 
 
¶11.  (SBU)  During the January 15 "year in review" Cabinet of 
Ministers session, Berdimuhamedov discussed some of the development 
plans that will be initiated in 2009.  In particular, he mentioned 
the following construction projects: a potassium fertilizer plant in 
Lebap province, two new units to produce iodine and bromine at the 
Balkan iodine plant, 1,375 thousand square meters of new residential 
housing, schools for 6,824 pupils, kindergartens for 1,600 children, 
a maternity hospital in Gokdepe district, and new museums in 
Balkanabat, Turkmenabat, and Mary. 
 
¶12.  (SBU) COMMENT:  A great deal of infrastructure development is 
underway, all over the country, much of it sorely needed.  There is 
no doubt that President Berdimuhamedov wants to see the program move 
forward and revive provincial and rural infrastructure that hasn't 
seen an infusion of spending since the Soviet period.  That said, 
the continued dominance of the Turkish firms along with the 
construction of less important infrastructure that will neither 
impact local economic conditions nor provide long-term employment, 
would seem to suggest that there are conflicting priorities for 
decision makers.  END COMMENT. 
 
MILES