Country Overview

U.S. FOREIGN POLICY AND FOREIGN ASSISTANCE OBJECTIVES & PRIORITIES

Turkmenistan is an important potential partner in promoting a peaceful and prosperous Central and South Asia. The United States (U.S.) is interested in sharing democratic and market economic principles that can help Turkmenistan to prosper. To this end, the U.S. has focused its foreign policy and assistance efforts on five mutually reinforcing areas: democratic and just governance, economic reform and energy, and security and law enforcement.

OPERATING ENVIRONMENT

Turkmenistan's first president, Saparmurat Niyazov, had come close to bankrupting the country by the time he died in December 2006. However, President Berdimuhamedov started reversing many of his predecessor's most destructive policies, especially in the areas of education, health, social welfare, and rural development. Recently, the Government of Turkmenistan (GOTX) has shown considerable willingness to cooperate with the United States, and is already a significant regional security partner. The inauguration of Gurbanguly Berdimuhamedov as Turkmenistan's second president in February 2007 significantly eased constraints on the historically challenging operating environment and opened new possibilities for engagement. During numerous visits by high-ranking U.S. officials, Turkmenistan's new government indicated that the desire to "turn the page" in the bilateral relationship is mutual.

However, perhaps still influenced by the Niyazov-cultivated culture, bureaucrats often impede programs, hampering the efforts of the international community to support the president’s gradual reforms. Even so, the international community and the U.S. Government (USG) made more progress implementing new projects in FY 2007 than in the previous five years. President Berdimuhamedov replaced some of the ministers he inherited with better-qualified individuals, sending the signal that he is serious about reform.

Political development and education remained challenging in FY 2007. Although overall indices of civil society development did not improve and registration of civic groups remained problematic, there were signs by the end of the fiscal year that this could change. Communities were increasingly interested in civil governance programs. USG assistance had some success in increasing access to information, including legal information, and improving access to quality primary and secondary education.

In the financial sector, the lack of reliable data hamstrung meaningful discussion of economic trends. The financial sector remained isolated and backward. The black market exchange rate remained at roughly five times the official rate. However, the new government committed to unifying the exchange rate, which would open up significant opportunities for expanded assistance to help establish a sound, private, and well-functioning financial sector that could fulfill the critical market roles of financial intermediation.

Health and security remained the two areas that benefited the most from increased bilateral engagement. In the health sector, the USG increased prospects for long-term impact by institutionalizing improvements that expand health services and promote health. In March the government agreed to sign a memorandum of understanding for cooperation in fighting the spread of HIV/AIDS and other sexually transmitted diseases.

Security sector cooperation also expanded appreciably. Balancing its relations with competing security partners and ever aware of its policy of "positive neutrality," Turkmenistan's government continued to tightly control its security sector cooperation with the United States. At the same time, it is slowly expanding the breadth and depth of its cooperation with the USG into several new areas, agreeing on a number of new assistance programs with Turkmenistan's military and most of its law enforcement and border control agencies.

FY 2007 Country Program Performance

PEACE AND SECURITY

Corruption, inexperience, and poor training limited the capabilities of Turkmenistan’s security forces. The GOTX engaged in restructuring, but not reform, of its security apparatus, which arguably remained overly focused on maintaining internal control and stability. Key areas for USG assistance included drug trafficking, detection of WMD and component materials at ports of entry and physical border security generally, and the GOTX’s military capabilities.

Counter-Narcotics and Law Enforcement - The USG objective in counter-narcotics and law enforcement was to increase the capacity and professionalism of law enforcement and counter-narcotics agencies in Turkmenistan.

In FY 2007 the GOTX agreed to work with the USG to improve the ability of Turkmenistan’s law enforcement and legislative agencies to conduct successful investigations of narcotics traffickers and other criminal elements, raise awareness of intellectual property rights, and enhance the use of forensic analyses of evidence. Two GOTX forensic laboratory experts attended an international forensic conference in the United States, and 10 GOTX officials from five law enforcement agencies participated in a "Rule of Law" study tour of the United States. Subsequently, the USG and the GOTX co-sponsored a two-day follow-up conference in Ashgabat on rule of law issues. The conference fostered a productive discussion of potential policy reforms and demonstrated the GOTX’s willingness to begin to engage with the international community in this area.

In August 2007 the GOTX opened a border-crossing checkpoint and conducted related training programs with USG assistance. In April 2007 the USG enhanced regional security by organizing multilateral meetings in Afghanistan for officials from Afghanistan, Turkmenistan, and international donor organizations to discuss cross-border cooperation. In October 2007 twenty-five law enforcement officials graduated from a USG-funded English language training program. The USG also provided specialized laboratory equipment and chemical analysis training for drug seizures to the GOTX’s Criminal Research Center.

A Ministry of Justice prosecutor, who had attended a USG-sponsored investigation course in 2005, was pivotal in conducting a fast and thorough investigation of a crime against a U.S. citizen in FY 2007. The investigator’s precise adherence to established and lawful procedures he learned during the training course resulted in the timely apprehension and conviction of the criminal.

Combating Weapons of Mass Destruction and Border Security - The USG’s objective in WMD and border security assistance was to improve the capacity of border enforcement officials to detect and intercept WMD related materiel and other contraband. The GOTX supported regular USG visits to its borders and commercial border-crossing sites. Twenty-six Turkmenistan Border Guards and Customs Officers attended WMD non-proliferation training in the United States, which focused on air cargo interdiction, railway interdiction and border interdiction. Another 45 Turkmenistan officials received proliferation awareness training and dual-use commodity identification training in Ashgabat. The USG provided five fully equipped, mobile maintenance trucks to the GOTX Border Service and installed new radiation detection portal monitors at the border-crossing checkpoint at Imam Nazar. The USG also funded a new radar suite, radios, and repairs to the engines on the former USCG Cutter Point Jackson now operated by the GOTX.

Work also progressed on the border security initiative supported by the Nevada National Guard to build five border-crossing stations. In August the GOTX and USG officially opened the border facility at Imam Nazar on the Afghanistan border.

Security Sector Reform - Security sector programs sought to foster professional relationships between the Turkmen and U.W. military forces and to support defense reform efforts. In FY 2007 one student started the Basic English language Instructor course to increase the English-language capability of Turkmenistan’s armed forces. Two officers began English language training to prepare them for attendance at the U.S. Army and U.S. Air Force Command and General Staff College. These courses provide mid-level officers with first-hand knowledge of how a military functions in a democracy. Two junior officers are in the process of attending Air Force Squadron Officers School and one will attend the Armor Basic Officer course. The U.S. designed these courses to increase exposure to the United States and its military. In FY 2007 seven officers returned to Turkmenistan after successfully completing military education training program courses in the United States. One officer graduated from the U.S. Army Command and General Staff College, three from the Language Instructor course, and three from the U.S. Air Force’s Squadron Officer School. One student continued to study in the United States.

Turkmenistan’s military remained committed to improving its English language training capability. MOD teachers attended English-language instructor courses at the Defense Language Institute in Texas. The MOD also invited a team from the Defense Language Institute to assess its English language training program in early FY 2008.

In FY 2007 the MOD used USG funds to purchase communications equipment to establish a modern, nation-wide rapid response military communication system. In FY 2007 experts completed the installation of the Human Patient Simulator located at Turkmenistan’s main military hospital. This simulator will improve Turkmenistan’s military medical training program.

GOVERNING JUSTLY AND DEMOCRATICALLY

Although Turkmenistan’s overall indices of civil society development remained among the most restrictive in the world, there were signs at the end of the year that this could change. With a combination of local level engagement in more than 50 communities across the country and greater governmental openness to reform, USG programs are well-placed to support increased civil society development in FY 2008.

Civil Society - The objectives of civil society activities included increasing the capacity of civil society organizations, cooperation between local authorities and community organizations, and the capacity of community organizations to advocate for improved government services.

The USG worked with 146 local civic organizations in 50 communities to improve communications and foster partnerships with local authorities. To strengthen the community organizations’ ability to be effective partners, the USG developed training materials, legal resources, and a network of community-level consultants. USG assistance enabled the community organizations and local authorities to jointly identify and prioritize local needs and develop plans to meet them. Although grants for community-level projects were not yet underway by the end of FY 2007, some community groups began using the skills they had acquired to work with local authorities to resolve community issues without grant assistance from the USG.

The USG increased legal awareness and provided access to legal information through a network of eleven lawyers, who offered on-demand advice regarding NGO formation and registration, tax issues, labor law, land use, and water rights. The USG provided information and assistance to more than 1,800 people through telephone hotlines, a referral network, a mobile legal clinic and professional skills development. The USG also supported 33 nongovernmental community initiatives such as establishing community resource centers, holding seminars and workshops on a variety of civic and professional topics, and offering summer camps that teach civic values to children.

Media Freedom and Freedom of Information - While the environment for independent media operation and freedom of information in Turkmenistan remained among the most restrictive in the world, there were signs at the end of FY 2007 that this was starting to change. The GOTX began taking steps to increase access to information, including opening 15 new public Internet access sites, publishing more information on governmental web sites, launching new radio stations, and improving the content and quality of state mass media. However, the GOTX priced its newly launched public Internet sites out of the range of most citizens. The USG supported 11 public access Internet sites, which reached an estimated 9,200 people across the country. The USG also assisted eight community organizations to establish local public Internet access. USG programs providing free Internet access faced fewer operating difficulties than in years past.

In March 2007 the USG established a satellite broadcast feed covering all of Central Asia. This program produced content on an unencrypted feed, and began work with partner stations to increase the public’s access to objective news and information from both the region and other sources. While reliable statistics on satellite dish ownership are not available, more than 750,000 people are believed to own satellite dishes capable of receiving the broadcast.

ECONOMIC GROWTH

Although the current GOTX has acknowledged the need to introduce economic reforms in order to attract foreign investment, U.S. economic assistance programs remained limited in size and scope. Programs focused on increasing governmental transparency, educating students, entrepreneurs and farmers on enterprise development, and engaging the government on economic liberalization and financial sector reform.

Macroeconomic Foundation for Growth - The Central Bank of Turkmenistan has been slow to implement macroeconomic reform, but the USG has expressed its willingness to assist when it is ready to proceed. Meaningful discussion of economic trends in Turkmenistan is hampered by the lack of reliable data, a hallmark and legacy of the Niyazov regime. The broad indicators available through 2006 show strong economic growth, with rates declining but still over 12%, and increasing inflation. Much of this growth is based on rising gas prices, as gas accounts for roughly 80% of Turkmenistan’s exports and half of industrial output. A second powerful force driving growth has been the high level of aggregate investment, averaging more than 30% of GDP per year, primarily in gas and oil infrastructure, electricity, textiles, transportation, and food processing.

Booming government-ordered construction and state-controlled cotton industries dominate Turkmenistan’s economy. The GOTX has not had the political will to foster broad-based development by stimulating an open and vibrant private sector. Although small enterprises generally work with little impediment, they are unable to expand significantly to offer greater employment opportunities.

Financial Sector and Trade Development - The financial sector remains largely untouched by international best practices. The black market exchange rate has stayed at roughly five times the official rate for several years. The new government has given strong indications that things will change, which would open up significant opportunities for assistance to help establish a sound private and well-functioning financial sector that could fulfill the critical market roles of financial intermediation.

The USG continued support to strengthen private sector accounting through the Russian-language Certified Accounting Practitioner (CAP) and Certified International Professional Accountant (CIPA) program. Since the inception of the CAP program, 130 accountants in Turkmenistan have qualified for the internationally recognized certification, including 29 accountants in FY 2007. These accountants can have a significant impact on the financial environment. They typically work in national-level ministries and institutions where reliable accounting practices encourage effective financial management, transparency, accountability, and professional values. The increasing number of Certified Accounting Practitioners demonstrates a growing recognition of the importance of knowledge of international standards among banking sector employees and other government institutions

The accountancy-training program failed in FY 2007 to meet its goal of training 41 accountants. To improve its performance in FY 2008, the USG will conduct training for trainers seminars at the Central Bank and other local training locations in order to increase the pool of available instructors. In addition, the USG will work closely with the government to finish re-registration and advocate for official recognition of the CIPA program and formal adoption of International Financial Reporting Standards.

The USG brought two Turkmen businesspersons to the United States for a four-week intensive program covering fruit and vegetable processing and packaging. Previous business interns improved the legislative environment for business owners by pushing for business-friendly laws.

Agricultural Programs - The difficult operating environment in Turkmenistan has historically limited progress toward major policy reforms in the agriculture sector. However, the new president has moved quickly to pass laws and promulgate decrees promoting economic reforms, and has shown a renewed interest in agricultural reforms and a larger role for the private sector.

U.S. programs increased smallholder farm and greenhouse productivity by introducing efficient technology and improving management to increase rural household income. The USG transfered more efficient technology to participating farmers through regional study tours and by funding showcase farms featuring new farming and greenhous technology. Participating communities learned about better greenhouse heating systems, new soil testing technologies, improved pest control, effective disinfection, proper ventilation, improved product packaging techniques, and drip irrigation. Demonstration greenhouses were completed in a number of sites around Turkmenistan, and farmers showed increased interest in technologies that lengthen growing seasons.

A U.S. expert in agricultural marketing visited Turkmenistan in August and taught local pasta producers the basics of product and brand identification. In addition, small grants allowed local farmers to renovate irrigation structures in Ahal, Dashoguz and Mary Veloyats. These projects improved cotton and other production on a number of farms and opened fields for cultivation that have long been fallow due to poor drainage and irrigation.

In FY 2007 the USG also sponsored travel for 17 Turkmen farmers to the United States to learn about fruit and vegetable processing, irrigation management, and veterinary care.

Banking system withdrawal limitations and persistent visa problems reduced the effectiveness of many agricultural programs. For example, the USG had to cancel a trip on improved tomato seedling production after Turkmenistani authorities refused visas for Uzbek trainers. Program staff replaced the cancelled trip with a study tour of seven greenhouse seedling producers at an agro-exposition in Turkey where participants learned new techniques for open-pollination and hydroponics, improved seed production, and advanced techniques of vegetable grading and packaging. Participants saw new types of tomato packaging and post-harvest improvements and made contacts with Turkish packing companies to import packaging materials in the future.

Workforce Development - U.S. programs in this sector sought to improve the job skills of younger people and to increase the pool of educated workers. USG workforce development programs in Turkmenistan taught market economics to secondary school students and provided recent graduates with additional instruction in business and economics to prepare them for a future career in business. The USG established partnerships with potential private sector employers, and expanded business and economics instruction offered to high school teachers and students. The total number of participants in this program during FY 2007 was 3,214, of which 2,040 were women and 1,174 men. In FY 2007 two-hundred and fifty-seven teachers were trained to deliver business and economics modules, bringing the total number of teachers trained by the program to 417. In addition, the number of schools implementing this program grew from 111 in 2006 to 172 at the end of 2007.

The USG also supported annual national student competitions in management, economics, banking, business ethics, and entrepreneurship. In addition to U.S. support, these competitions received generous contributions from students, parents, teachers, school administrators and local private sector representatives. In FY 2007 twelve private businesses supported USG sponsored activities. In addition, the USG partnered with Turkmenistan's Union of Economists to include economic subjects into new high school curriculum. As a result of U.S. assistance, economics will be taught as part of the compulsory curriculum for secondary school students throughout the country.

INVESTING IN PEOPLE

The overall environment for implementing programs in health and education shifted significantly during FY 2007. The GOTX demonstrated a new openness to international standards of care by approving a national safe motherhood program, which will include USG assistance. However, the general lack of health data continued to pose a major obstacle to strategic programming of scarce health resources, especially on tuberculosis programming and planning. The new government has indicated that it will be more open to data collection and dissemination in the future.

The new government has also displayed interest in improving educational quality. President Berdimuhamedov campaigned on a platform that included the reinstatement of 10th grade and the re-introduction of subjects eliminated by the previous president. The GOTX also emphasized the importance of the role of academic and professional exchanges with other countries, including the United States.

HIV/AIDS - The USG objective in HIV/AIDS was to improve the capacity of Turkmen health professionals to detect and prevent the spread of HIV/AIDS. The USG and the Ministry of Health signed a Memorandum of Understanding in the spring of 2007 which provides for a new high-level collaboration in the fight against HIV/AIDS and other sexually-transmitted diseases.

In FY 2007 the USG funded a Ministry of Health conference marking the global “Day to Fight Against Drug Abuse,” which allowed participants from various agencies and departments to discuss strategies for combatting HIV/AIDS. In addition, USG program staff trained 32 healthcare workers in four health institutions on HIV prevention, which it had integrated into training and mentoring on effective perinatal care. The USG also trained 25 laboratory specialists working in National HIV/AIDS Centers and blood transfusion stations. In cooperation with the World Health Organization (WHO), the USG trained 28 blood transfusion specialists on how to reduce the possibility of HIV transmission by reducing the frequency of unnecessary blood transfusions.

Tuberculosis - The USG objective in TB was to increase the percentage of health care workers able to monitor and treat TB patients in accordance with WHO standards.

Tuberculosis remained a major public health challenge for Turkmenistan, and the USG continued to facilitate TB control activities in FY 2007. The USG supported the full integration of the WHO TB strategy, DOTS (Directly Observed Treatment Short Course), into all levels of the medical education system, and financed the expansion of DOTS coverage. The USG delivered 10 binocular microscopes, reagents, and other laboratory materials to Ministry of Health sites. A USG pilot project in Serdar district equipped a TB laboratory and trained all medical specialists. The USG also provided educational materials and related equipment for a new training center at the Turkmen State Medical Institute’s TB department. In FY 2007 the USG trained 259 staff in DOTS and provided DOTS materials to 2,500 health workers.

The USG helped draft the National Strategy on Health Communication and assisted the government with its successful application for children’s TB medications from the Global Drug Facility. Because of USG assistance, the GOTX expanded DOTS therapy networks to cover 18% of the entire population. In addition, U.S. assistance enabled Turkmenistan to expand modern TB diagnosis techniques to 90% of the country.

Other Public Health Threats - A further objective of the USG was to create sustainable and efficient health financing systems, to improve government capacity to provide accurate national health statistics, and to increase the national capacity to deliver primary health care services at the community level.

In FY 2007 the USG introduced a new hospital database system which automated Turkmenistan’s previous statistical reporting process. The new system electronically tracks disease patterns and other health statistics nationwide. At year’s end, the USG was working with the Ministry of Health to incorporate training on the new system into courses at the Health Management Center under the Medical Institute. The information system upgrade improved the quality of health data, and sets the stage for improvements in information technology and productivity through the entire health sector. The calculations used for this upgrade also created a starting point for future health financing reform.

Maternal and Child Health and Family Planning - USG programs strive to improve the quality of maternal and child health services in Turkmenistan and increase government capacity to provide accurate national health related information. In FY 2007 the USG helped to develop a governmental decree approving a national safe motherhood program in Turkmenistan and trained 134 health workers. In addition, the USG trained staff from primary health care facilities that provide antenatal care. The approval and launch of this initiative demonstrates that the GOTX accepts international standards, and is willing to incorporate practical changes to significantly improve birth outcomes and save the lives of women and children.

The USG expanded the WHO’s “Integrated Management of Childhood Illnesses” (IMCI) module to physicians in two additional districts, and with the GOTX trained 420 nurses on the module. Also in FY 2007 the USG trained medical university and college faculties on the use of WHO methods for registering infant and newborn births and deaths. The addition of new live birth definition criteria to the curriculum will lead to greater use of the WHO live and stillbirth criteria in the future.

The USG also incorporated information on voluntary family planning into training conducted for primary health-care staff on antenatal and perinatal care. Overall, the USG trained 134 health providers on family planning as a component of broader training events in FY 2007.

Basic Education - USG-funded education programs enhanced the quality of basic education by increasing community involvement and improving teacher training curriculum and other professional development systems. Although the Ministry of Education did not grant formal approval for the USG's regional basic education program, the project remained in great demand at the community level. The project trained 672 teachers with learner-centered, interactive teaching methods, exceeding its target by 397 teachers due to requests from district and regional departments of education. An estimated 71,280 primary and secondary students study in schools where teachers have received training under the program. Trained teachers also received program publications such as professional development newsletters, and a book of model lessons developed by fellow teachers. USG teacher and student exchanges enhanced educational methodology and provided exposure to U.S. schools and practices. Alumni follow-on grants support further education and professional development for exchange returnees.

Community mobilization activities focused on improving the effectiveness of Parent Teacher Associations (PTA) by training teachers to lead effective PTA meetings and training parents of children who do not have access to preschool. These activities resulted in the development of standardized training programs and accompanying materials. A USG sponsored conference brought together teachers and parents to exchange experiences gained in preparing their children for school.USG exchange programs operated with much less interference from the government than in past years. During 2007 returnees from these and other exchange programs were often accepted as having had a valuable exchange experience by their employers and the government. Also in FY 2007 the USG funded a number of scholarships for students to attend regional universities such as the American University – Central Asia in Bishkek. In the spring of FY 2007 the Government of Turkmenistan changed its policy and began recognizing the legitimacy of foreign earned degrees, a welcome recognition of the value of international and intra-regional educational exchanges.

FY 2007 Measures of Country Performance

The following data are based on the Monitoring Country Progress in Europe and Eurasia system developed by USAID to measure and track progress in the region. The system uses four different indices to monitor progress, drawing on readily available standardized country-level data on economic reform, economic structure and performance, democratic reform, and human capital. The primary data sources are the European Bank for Reconstruction and Development (EBRD), the World Bank, the United Nations Children’s Fund (UNICEF), and Freedom House. The data for each of the four indices are converted and standardized to a 1-to-5 scale, with a “5” representing the best performance of the Eastern Europe and Eurasia region, and a “1 the least advancement of the region.

Turkmenistan’s Democratic Reform* Scores in 2006 compared to Romania and Bulgaria in 2002

Turkmenistan’s Democratic Reform Scores in 2006 compared to its Reform Scores in 1999

*Democratic reforms include the electoral process (the extent to which elections are free, fair and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform) and the scope of corruption as well as anti-corruption income.

Turkmenistan’s 1^st Stage Economic Reform* 2007 Scores Compared to Bulgaria and Romania in 2002

Turkmenistan’s 1^st Stage Economic Reform 2007 Scores Compared to its Scores in 1999

Turkmenistan’s 2^nd Stage Economic Reform 2007 Scores Compared to Bulgaria & Romania in 2002

Turkmenistan’s 2^nd Stage Economic Reform 2007 Scores Compared to its Scores in 1999

*Economic reforms include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and “second stage” reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

Turkmenistan’s Progress on the USAID Country Progress Indices between 1998 and 2007

(1) Economic reforms index include “first stage” reforms of privatization, stabilization, and liberalization (domestic price liberalization and trade liberalization), and second stage reforms in the financial sector, infrastructure (physical and energy), corporate governance and competition policy.

(2) The economic structure and performance index tracks indicators such as the size of the private sector as % of GDP, export share of GDP, and the size of the small and medium enterprise sector as % of GDP, economic growth, inflation, debt, and foreign direct investment.

(3) The Democratic reforms index include the electoral process (the extent to which elections are free, fair, and competitive), civil society (primarily NGO development), the independence of media, public governance and administration, rule of law (primarily judicial reform), and the scope of corruption as well as anti-corruption efforts.

(4) USAID tracks progress on the Human capital index by analyzing trends in health (life expectancy, under five mortality rates, and public expenditures on health), education (secondary school enrollment rates and public expenditures on education) and per capita income.