VZCZCXRO6815
PP RUEHDBU
DE RUEHDBU #0055/01 0131306
ZNY CCCCC ZZH
P 131306Z JAN 10
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC PRIORITY 1135
INFO RUCNCIS/CIS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBUL/AMEMBASSY KABUL PRIORITY 0385
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0139
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEHDBU/AMEMBASSY DUSHANBE 2469

C O N F I D E N T I A L SECTION 01 OF 02 DUSHANBE 000055 
 
SIPDIS 
 
TREASURY PLEASE PASS LAWRENCE NORTON 
 
E.O. 12958: DECL:  1/13/2020 
TAGS: EFIN PHUM ENRG EAID IMF TI
SUBJECT: TAKING A STAND AGAINST THE ROGHUN EXTORTION 
 
REF: DUSHANBE 052 
 
CLASSIFIED BY: Kenneth Gross, Ambassador, Exec, DOS. 
REASON: 1.4 (b), (d) 
CONFIDENTIAL 
 
PROG 01/13/2010 
 
AMB: KGROSS 
 
POLECON: DKRONENFELD 
 
POLECON: MPURL DCM: NQUAST, USAID: JLEHRER 
 
POLECON 
 
 
 
AMEMBASSY DUSHANBE 
 
SECSTATE WASHDC 
 
INFO CIS COLLECTIVE 
 
AMEMBASSY KABUL 
 
AMEMBASSY BEIJING 
 
CIA 
 
DIA 
 
 
 
 
 
 
 
E.O. 12958: DECLASSIFY ON 01/14/2020 
 
Classified by Ambassador Ken Gross, reasons 1.4 (b) and (d) 
 
 
 
¶1. (C) SUMMARY:  International Monetary Fund (IMF) Resident 
Representative Luc Moers (protect) said the government's 
campaign to extort money from the population for the 
construction of the Roghun hydroelectric dam appeared to violate 
the terms of the IMF's current assistance to Tajikistan.  He 
said, however, that his view may be at odds with that of IMF 
headquarters in Washington, who appear to be adopting a more 
conciliatory tone with the government.  A high-level IMF team 
will be here in early February to assess the government's 
progress.  This represents an important opportunity for the 
United States and other IMF board members to express their 
serious concerns about the government's behavior and to urge the 
IMF to hold the government accountable to its agreements.  Post 
will work carefully with our diplomatic colleagues to present a 
forceful and unitary message to the IMF and to the government of 
Tajikistan.  END SUMMARY 
 
 
 
IMF RESREP SAYS ROGHUN CAMPAIGN MAY VIOLATE LOAN AGREEMENT 
 
 
 
¶2. (C) Econoff met with IMF Resident Representative Luc Moers on 
January 13 to discuss the government's recent campaign to extort 
and intimidate the Tajik population into buying shares in the 
Roghun hydropower project (reftel).  Emphasizing that he was 
speaking personally and not in his capacity as Resident 
Representative, Moers said the "fundraising" campaign was not 
only morally reprehensible but appeared to violate the 
government's agreement with the IMF under the Poverty Reduction 
and Growth Facility (PRGF) signed last year.  Under the PRGF, 
the IMF has agreed to provide the government of Tajikistan $116 
million in preferential loans over three years.  The first 
tranche of $40 million was disbursed last year; another tranche 
of $30 million will be considered in the coming months. 
 
 
 
¶3. (C) Moers said the Roghun drive, in which Tajik citizens from 
all walks of life are being forced to buy shares in Roghun, 
appeared to break several provisions of the PRGF.  First, the 
IMF and other donors have required the government to maintain 
minimum social sector funding levels -- including education, 
health, and pensions -- as a condition of assistance.  Since the 
 
DUSHANBE 00000055  002 OF 002 
 
 
government is forcing teachers, doctors, and pensioners to buy 
shares in Roghun, often well in excess of their monthly 
salaries, actual social sector spending is certainly well below 
agreed targets. 
 
 
 
¶4. (C) Second, the government of Tajikistan committed to 
limiting Roghun funding to $140 million in 2010.  (Moers said 
the IMF only reluctantly agreed to this level, which it believed 
was too high given Tajikistan's pressing needs in other 
sectors.)  The Roghun funding drive has reportedly raised well 
over $100 million in its first few days alone.  If this amount 
is added to the budget, it far exceeds the agreed amount. 
Third, additional expenditures on Roghun would violate the 
government's overall commitment to maintaining a particular 
budget spending envelope.  Fourth, the government has agreed to 
try to maintain certain macroeconomic conditions.  The forcible 
extraction of massive amounts of cash from the already 
impoverished population might have severe consequences on this 
condition, including on inflation, exchange rates, and balance 
of payments. 
 
 
 
IMF HEADQUARTERS HAS SOFTER VIEW 
 
 
 
¶5. (C) Moers said he had carefully briefed his superiors at IMF 
headquarters in Washington about the severity of the Roghun 
issue, but they appear have a relatively conciliatory attitude 
toward the government's actions.  For one thing, IMF 
headquarters is not questioning the morality of the Roghun 
campaign, even though Moers said it clearly constitutes a 
regressive, ad hoc tax falling disproportionately on the poor. 
IMF Washington is focusing on a few narrow macroeconomic 
concerns.  Even on these issues, Moers said, they are showing an 
early inclination to work with the government.  In particular, 
they say if the government could demonstrate the money it is 
collecting for Roghun would be kept in savings until next year, 
they would not have violated their spending envelope 
restrictions.  Provided they have met other macroeconomic 
benchmarks for 2009, the PRGF funding could continue. 
 
 
 
¶6. (C) COMMENT:  The upcoming visit of the IMF team represents 
an important opportunity to pressure the government to alter its 
destructive Roghun strategy.  In addition to the socio-economic 
and macro-economic issues raised by the Roghun campaign, it is 
also a step backwards in budget transparency.  The government is 
collecting non-tax revenue in a separate off-budget account with 
virtually no accountability.  The government cares about the 
PRGF, and even little hiccups -- such the U.S. "no" vote on the 
package last year -- get its attention.  To stiffen the IMF's 
spine, however, the international community, and particularly 
IMF board members, will have to be vocal, insistent, and unified 
in voicing their concerns here, in their capitals, and in 
Washington.  We believe we are pushing on an open door:  in 
informal discussions our European counterparts have been as 
aghast as we are at the Roghun campaign.  The question is 
whether their capitals will pay heed.  END COMMENT 
GROSS