VZCZCXRO2404
PP RUEHAG RUEHBI RUEHCI RUEHLH RUEHPW RUEHROV
DE RUEHAH #1399/01 2971328
ZNY CCCCC ZZH
P 231328Z OCT 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1758
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 4434
RUEHBJ/AMEMBASSY BEIJING 2246
RUEHKO/AMEMBASSY TOKYO 2111
RUEHIT/AMCONSUL ISTANBUL 2682
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHVEN/USMISSION USOSCE 3003

C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 001399 

SIPDIS 

STATE FOR SCA/CEN, EEB 

EO 12958 DECL: 10/22/2018 
TAGS PREL, PINR, EPET, EINV, ETRD, EWWT, SCUL, RS, TX 
SUBJECT: EXPAT SOURCES SAY THAT ITERA GAVE TURKMENISTAN A 
YACHT WORTH 60 MILLION EURO
REF: 07 ASHGABAT 968

Classified By: Charge d’Affaires a.i. Sylvia Reed Curran for reasons 1. 4 (B) and (D).

¶1. (C) SUMMARY: According to expatriate sources in Ashgabat, a yacht that recently set sail on the Caspian Sea -- reportedly worth 60 million euros -- is actually a gift from Russian company Itera. Itera is working on signing a deal jointly with Russian state-owned companies Rosneft and Zarubezhneft and Turkmenistan’s Turkmenneft to develop blocks 29, 30, and 31 in the offshore Caspian area at some point in 2008. According to news reports, Itera is also an enthusiastic partner in the development of the Avaza free tourist zone located on the Caspian Sea, is funding the Ashgabat branch of the Gubkin Oil and Gas University, and is involved in importing farm equipment from Tatarstan, in competition with John Deere and Case New Holland equipment. In addition, the government forced a Swedish-owned shipping company to give up seven of its most valuable employees to become permanent crew on the yacht. Itera’s business activities are wide-ranging and difficult to isolate, and the reported gift of the yacht serves as a sign that the company’s willingness to go to great lengths to win business should not be underestimated. END SUMMARY.

AT FACE VALUE, TURKMENISTAN HAS A NEW YACHT

¶2. (U) The top story in the October 1 edition of official Russian-language newspaper “Neytralniy Turkmenistan” announced the acquisition of an Italian-built yacht called “Galkynysh” (“Revival”) that will sail on the Caspian Sea. President Berdimuhamedov held a meeting of the Cabinet of Ministers on September 30 on board the ship. The article implied that the ship would be the first in a fleet of boats to float in the Caspian in support of the Avaza Free Tourism Zone (reftel). President Berdimuhamedov appeared in one photograph sporting a navy blue sailing cap, a French-style white and blue striped shirt, and binoculars hanging around his neck.

HOWEVER, ONE EXPAT LOST EMPLOYEES TO THIS YACHT...

¶3. (C) According to XXXXXXXXXXXX, Turkmenistan permanently took several of his employees to serve as crew on the presidential yacht. XXXXXXXXXXXX said in a meeting on October 23 that while he was out of the country on holiday, his staff contacted him with the news that the government wanted to borrow or take three important GAC employees: a master, a chief mate, and a chief engineer. The men, however, did not want to go. Less than three days later, his office called him again with the news that security officials were boarding boats as they came into the harbor and taking boat documents, essentially immobilizing them. XXXXXXXXXXXX flew back from Thailand and tried calling Turkmenbashy International Seaport Head Meylis Mutdikov, whose father is a “shadow figure” behind a minister or chairman in the Cabinet of Ministers. Mutdikov wouldn’t take XXXXXXXXXXXX’s phone calls for several days, but XXXXXXXXXXXX finally made an appointment to meet with Mutdikov in Turkmenbashy. In the middle of the meeting, Mutdikov acted oddly: quite abruptly, he stopped talking and swung his chair around away fromXXXXXXXXXXXX to face the wall. After several moments of awkwardness, XXXXXXXXXXXX asked the interpreter what was the matter, and the interpreter told XXXXXXXXXXXX that Mutdikov was upset that XXXXXXXXXXXX had failed to react quickly to the directive to give up the GAC employees, so now Mutdikov was ignoring XXXXXXXXXXXX. XXXXXXXXXXXX practically had to prostrate himself to get the conversation back on track, repeating that the relationship with the harbor authorities is very important, GAC respects Mutdikov, Mutdikov should have called XXXXXXXXXXXX directly, etc. XXXXXXXXXXXX then had to tell Mutdikov that GAC fired the chief engineer because he refused to take the job on the yacht,
ASHGABAT 00001399 002 OF 003
which Mutdikov accepted. After XXXXXXXXXXXX successfully made amends with Mutdikov, the government flew the three former GAC employees to either Mariopol or Rostov to bring the yacht through the canals to the Caspian Sea, at which time the government told GAC to supply four more crew to serve on the yacht. Mutdikov at first said that GAC would only have to loan the personnel temporarily, but a few days later informed XXXXXXXXXXXX that they would not return to GAC. Mutdikov also told XXXXXXXXXXXX that the government is matching the captain’s GAC salary of about $2,000 per month in salary.

¶4. (C) XXXXXXXXXXXX said that personnel on board the presidential yacht must be ethnic Turkmen, and the professionals must have internationally recognized certificates. XXXXXXXXXXXX added that there are few such professional sailors in Turkmenistan, and there were only four or five in GAC, all of whom were either trained by GAC or whose certificates were financially sponsored by GAC.

¶5. (C) XXXXXXXXXXXX said the Turkish company TACO built the ship bay for the presidential yacht, located by the presidential palace in Turkmenbashy. Security forces closed off the entire port for two days for the construction of this ship bay complex, which includes two helipads.

...AND, ACCORDING TO ANOTHER: YACHT WAS A GIFT FROM THE COMPANY ITERA

¶6. (C) XXXXXXXXXXXX said in a meeting XXXXXXXXXXXX that this yacht worth 60 million euros was a gift of Russian firm Itera. He added that the president had originally wanted a larger yacht similar to one owned by Russian oligarch Roman Abramovich, but that yacht would not fit through the canals leading to the Caspian Sea and thus Berdimuhamedov had to settle for this one. XXXXXXXXXXXX added that Berdimuhamedov’s pool of automobiles consists of a Bentley, a Mercedes Maybach (gift of a German company), a Range Rover, and a Cadillac Escalade. According to this source, Itera will build a urea/ammonia plant in Belek, Bekdash, or Turkmenbashy.

ITERA’S ACTIVITIES IN TURKMENISTAN IN 2008

¶7. (U) According to various open source reports, Itera officials have frequently met with President Berdimuhamedov since the end of 2007:
-- On December 27, Itera Holdings Chairman of the Board Igor Makarov and Berdimuhamedov discussed projects such as development of oil and gas fields on the Caspian shelf and in the Karakum, construction of facilities for gas transportation, a carbamide plant, and creation of iodine-bromine production. The same report also said that Itera would fund the Ashgabat branch of the Russian Gubkin State Oil and Gas University in Ashgabat, implement projects in Avaza, construct an office building in Ashgabat, and participate in construction of highways and rail lines.
-- At a meeting on February 18, the president said that Itera has proven itself as one of Turkmenistan’s “old and reliable partners.” Makarov submitted a project for a five-star, 110-room hotel in Avaza. (NOTE: Turkmenistan celebrated “Flag Day” on the February 19 and held meetings with various companies the preceding day. END NOTE.)
-- A delegation of Itera’s top management held talks with Turkmen officials on March 9 to discuss a production sharing agreement for three blocks of the Caspian Sea shelf and to receive a license to survey and develop a new block. The article added, “If Itera gets the license, it is likely to engage Zarubezhneft and Rosneft as partners.”
ASHGABAT 00001399 003 OF 003
-- In April, Itera CEO Vladimir Makeyev announced that the company, within the framework of the Zarit joint venture, expected to sign a production sharing agreement to develop blocks 29, 30, and 31 in the offshore Caspian area at some point in 2008. Zarit was set up in 2002 and is comprised of Itera, the Russian state-owned companies Rosneft and Zarubezhneft, and Turkmenistan’s Turkmenneft. Makeyev acknowledged in the April report that issues with Iran -- one of the blocks is located in a disputed area of the Caspian Sea -- remain unresolved. Makeyev said that Itera was discussing working on gas extraction in inland areas as well.
-- On June 11 in Ashgabat, Makarov gave the president a report on construction of a hotel in Avaza, a stadium in Turkmenabat, and progress on the carbamide plant construction project. In addition, Makarov updated Berdimuhamedov on preparation for joint activities in the Karakum Desert including development of deposits and construction of relevant infrastructure, in particular laying gas pipelines.
-- The official Turkmen television news program Watan showed Makarov visiting President Berdimuhamedov at the guesthouse in Kazan where Berdimuhamedov stayed during his official visit to Tatarstan on June 28, 2008.
-- On August 16, MRK Energy DMSS, an Emirati-based subsidiary of Itera, announced the sale of 400 Russian-made UAZ39629-016 ambulances worth $8 million to Turkmenistan.
-- On the day of the ship’s introduction -- September 29 --Berdimuhamedov discussed the construction of a carbamide plant and a spa, as well as opportunities for Itera’s participation in exploration in offshore deposits with Makarov at the Serdar Hotel in Turkmenbashy.
“NOTHING IS FREE IN THIS COUNTRY”

¶8. (C) COMMENT: Itera has a deal to build a urea/ammonia plant, and also an $8 million deal for ambulances, but there are most likely other deals of which post is not aware. The company undoubtedly really wants a gas exploration contract, especially onshore, and the gift of the yacht is a nice enticement to move the process along. As local businessman XXXXXXXXXXXX said, “The gift of a yacht might be for an onshore gas deal, a chicken farm, or works already in progress. Nothing is free in this country.” IPC Group, official distributors of John Deere and Case New Holland equipment in Turkmenistan, have had concerns about Itera and the company’s ability to take over the farm equipment market in Turkmenistan at least since Berdimuhamedov’s visit to Tatarstan. Itera’s business activities are wide-ranging and difficult to isolate, and the reported gift of the yacht serves as a sign that the company’s willingness to go to great lengths to win business should not be underestimated. END COMMENT. CURRAN