VZCZCXRO8726
RR RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHDBU #1059/01 2471040
ZNR UUUUU ZZH
R 041040Z SEP 09
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 0721
INFO RUCNCIS/CIS COLLECTIVE
RUEHBUL/AMEMBASSY KABUL 0229
RUEHDO/AMEMBASSY DOHA 0001
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 1543

UNCLAS SECTION 01 OF 03 DUSHANBE 001059 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN 
 
E.O. 12958: N/A 
TAGS: ECON EINV PREL EAID TI QA
SUBJECT: QATAR TO BUILD FIRST-CLASS RETAIL & RESIDENTIAL COMPLEX IN 
DUSHANBE.  REALLY? 
 
DUSHANBE 00001059  001.2 OF 003 
 
 
¶1. (SBU) Summary: Qatari Diar Real Estate Investment Company in 
Tajikistan recently announced plans to build a large office, 
retail and residential development in central Dushanbe.  Office 
Manager Manuchehr Kurbonali said the project is the result of 
direct talks between President Rahmon and the Emir of Qatar in 
¶2007.  Kurbonali said corruption in Tajikistan was endemic at 
all levels, not only among government officials but 
international financial institutions and international 
organizations as well.  Bidding on projects was rigged to 
extract bribes from bidders.  Rahmon's deep personal interest in 
the Qatari project would make it the "cleanest development in 
Tajikistan," Kurbonali said.  End summary. 
 
 
 
¶2. (U) On August 27 the Qatari Diar Real Estate Investment 
Company held a joint presentation with the Tajik government, led 
by President Rahmon, to announce the construction of a large 
office, retail, and residential development in central Dushanbe. 
 The "Diar Dushanbe" project first emerged in 2007, after 
President Rahmon met for the first time with Qatari leader Hamad 
bin Khalifa al-Thani.  Qatari Diar, whose General Director is 
Ghanim bin Saad al-Saad, is wholly owned by the Qatari 
government.  The $180 million Dushanbe development will include 
five residential apartment buildings ranging from 10 to 16 
stories, one 127-room hotel (some twenty rooms will be reserved 
for hotel staff), three office buildings, and 7,110 square 
meters of retail space.  Construction will proceed in three 
phases.  In Phase One, to begin in the first quarter of 2010 and 
last four or five months, the hotel and one of the residential 
towers will be built.  In Phase Two additional residential 
towers and retail space will be added.  The rest of the 
development will be completed in Phase Three.  Timelines for the 
final two phases have not been set.  There are informal plans to 
build a Qatari embassy and open a Qatari bank branch on the 
site.  Plans to build a large mosque are more vague and separate 
from the Diar project. 
 
 
 
¶3. (SBU) According to Manuchehr Kurbonali, the Tajik citizen who 
heads Qatari Diar's office in Dushanbe, while the Qatari 
government certainly intends to make a profit from the 
residential and commercial space it sells in Diar Dushanbe, 
there are less economic motivations at work as well.  Kurbonali 
said first and foremost these involve personal ties between the 
Qatari leader and President Rahmon.  "When the Emir gives his 
word to fund a project, he will do it no matter the economic 
consequences," Kurbonali said.  "He is wealthy enough not to 
worry about the economics."  He speculated to Embassy staff in a 
September 2 meeting that the Qatari government might also be 
interested in gaining a foothold in Central Asia. 
 
 
 
A Foothold on a Sinking Ship? 
 
 
 
¶4. (SBU) Given that Dushanbe is a relatively small, poor city 
with almost no tourism industry or foreign business travelers, 
the rationale behind constructing a new top-end hotel here is 
questionable -- all the more so since there are three existing 
five-star projects: the recently-completed Hyatt, owned by 
Russian aluminum giant Rusal; the soon-to-open Serena, being 
built by the Aga Khan; and the Ismoili Somoni, with financing 
from President Rahmon's brother-in-law, Hasan Asadullozoda. 
Even now, as the sole operating five star hotel, the Hyatt is 
very underbooked.  Kurbonali said that the Diar Dushanbe hotel, 
which would be managed by a reputable international chain that 
has not yet been determined, had a competitive advantage over 
the other properties, since it would be part of a larger retail 
complex that would be more appealing to travelers.  He also said 
that the other hotels were being built for questionable reasons. 
 The Hyatt, for example, was built simply to launder money. 
"That hotel could have been built for $30 million.  The fact 
that it cost $150 million indicates to me that its purpose was 
to launder money." 
 
 
 
Rahmon Chomping at Bit 
 
 
 
¶5. (SBU) Kurbonali said President Rahmon had taken an active 
 
DUSHANBE 00001059  002.2 OF 003 
 
 
personal interest in the project.  Rahmon would be able to see 
the development from his desk in the newly-built Presidential 
Palace, and he intended to monitor its progress daily. 
(Kurbonali added that the height of the residential towers was 
established so they would be lower than the Presidential 
Palace.)  Rahmon may have unrealistic expectations for Diar 
Dushanbe's completion.  At the August 27 press conference, it 
was reported that the whole development would be completed 
within one and a half years.  According to Kurbonali, however, 
the President made this figure up out of thin air, announcing it 
in front of the microphones without consulting anyone first. 
Before Qatari Diar could set the record straight, the discussion 
had moved on to other topics, and media reported the uncorrected 
figure.  Kurbonali said that, apart from Phase One, no deadlines 
had yet been set for the development, although it would 
certainly take longer than 18 months to complete. 
 
 
 
An Inside View of Corruption in Tajikistan 
 
 
 
¶6. (SBU) The Diar Dushanbe project was likely to be the "least 
corrupt in Tajikistan," because of the President's personal 
interest and involvement in it, according to Kurbonali.  "No one 
will play any games" with this development, he said.  He 
acknowledged, however, that corruption was a serious problem in 
Tajikistan, and he shared some examples of how payoffs and 
kickbacks worked for large projects.  Kurbonali worked last year 
in the project implementation unit for the Ministry of Health, 
which was putting out bids for a new hospital in Dangara, the 
President's hometown in the south of Tajikistan.  He saw 
firsthand how the project manager in the Ministry informed 
bidders how much to inflate their tenders in order to make 
kickbacks to her.  Since the project was receiving international 
financing, all involved viewed it as a win-win scenario. 
 
 
 
¶7. (SBU) After seven years working with the Belgium-based 
medical supply company MedConcept, Kurbonali recently set off on 
his own in the same field, founding Avrocom, LLC.  He said a 
recent contract was put out for bid in Tajikistan's northern 
Sughd region to outfit a diagnostic center.  The project 
required about $3.5 million worth of work, yet he heard from 
contacts in the Ministry of Health that Siemens was likely to 
win the contract with an $8 million bid.  Kurbonali believed the 
remaining $4.5 million was being siphoned off as kickbacks. 
Although Avrocom was not in a position to bid on the project, 
Kurbonali asked a reputable Danish firm with whom he had a 
connection to consider putting in a bid, just so that Siemens 
was not uncontested.  He had no doubt that Siemens would get the 
award based on disqualification of the Danish firm on a 
technicality.  Kurbonali noted that Siemens had recently been 
banned from bidding on World Bank projects because of corrupt 
practices.  (Note: While Kurbonali implied that the ban 
originated in Russia, the World Bank in fact placed a two-year 
moratorium on contracting with the German company on projects in 
Bangladesh.  End note.) 
 
 
 
¶8. (SBU) When asked what could realistically be done to curb 
corruption in Tajikistan, Kurbonali said he had had the idea to 
set up a website that documented corrupt practices, naming names 
and providing information to businesspeople.  The website, if it 
had enough visibility, could not only make it more difficult for 
corrupt officials to operate by "naming and shaming" them, but 
it would also provide a service to businesses interested in 
navigating through the bureaucracy.  Kurbonali said such a 
website would have to be operated offshore, and several shields 
would have to be used to hide the identity of its operators.  He 
said this would not be difficult, however.  The company could be 
set up in Panama, for instance, and registered to Panamanian 
citizens.  These citizens could give power of attorney to the de 
facto operators.  On the technical side, the website would 
operate through multiple mirror sites, so that the government 
could not shut it down in Tajikistan.  Kurbonali said such a 
site would be popular enough that it would generate respectable 
advertising revenue. 
 
 
 
¶9. (SBU) Comment: Despite the government's and Qatari Diar's 
enthusiasm, there are a number of aspects about the Diar 
 
DUSHANBE 00001059  003.2 OF 003 
 
 
Dushanbe project that do not make sense.  The city doesn't need 
another five-star hotel, nor is it clear that it has enough 
wealthy inhabitants to buy residential units, or that 
contractors can be found to complete the project to 
specifications.  Dushanbe has a history of big plans that never 
happen, including a Turkish water park, state-of-the art cotton 
processing centers, and fancy malls.  Perhaps even more 
questionable is Kurbonali's claim that, as a result of the 
President's personal involvement, Diar Dushanbe will be the 
cleanest project in Tajikistan.  The President has also been 
personally involved in the Hyatt, Serena, and Somoni hotels, as 
well as the massive Palace of the Nation project -- yet by 
Kurbonali's own admission at least one of those projects was 
mired in corruption.  Expatriates overseeing these developments 
have also complained to us on numerous occasions of endemic 
corruption which delays their completion.  End comment. 
QUAST