U.S. Department of State

II. Country Assessments - Turkmenistan

Political and Economic Overview

Despite heightened international attention to Central Asia occasioned by the Global War on Terrorism, the effect of post-September 11 events on Turkmenistan has been muted. President Niyazov maintains a monopoly on political power, although more visible signs of internal opposition in addition to the activity of opposition elements based abroad emerged in the latter half of 2002. A series of unpopular policy initiatives by President Niyazov included expanding the draft, re-conscripting some men who had already performed compulsory military service, increasing the focus on the President's spiritual-social tome Rukhnama in school curricula and national life, cutting cable television, terminating imports of foreign-language publications and persecuting former government officials who had fallen from favor, as well as their families. Dissatisfaction with Niyazov's policies became more widespread but remained largely whispered inside the country; public criticism by the opposition on Internet websites and in press interviews grew considerably. Declining educational and employment activities are increasingly critical concerns.

Events climaxed with an armed attack against President Niyazov's motorcade November 25, which the Government characterized as an attempt to assassinate the president and effect regime change. The Government moved quickly against perceived sources of opposition at home and abroad, requesting that several foreign governments extradite alleged conspirators in the plot to topple the regime. There were widespread reports of human rights abuses committed by Government officials in the course of investigating the attack, including torture and repression of families of those accused. The Government denied the charges, but has refused to allow diplomats to observe the trials of those accused and has not provided regular access to foreign citizens accused of participating in the plot, including an American citizen.

Neither the Mejlis (the Turkmen Parliament) nor the judicial branch exercise any independent authority. They serve only to rubber-stamp President Niyazov's policies. Much of the country's legal framework is a holdover from Soviet times and offers Turkmen citizens little relief from arbitrary government action, such as the eviction from their homes of families of those accused of having ties to the opposition. Turkmenistan officially pursues a policy of "permanent neutrality," precluding its participation in security organizations, and has shied away from regional cooperation. Turkmenistan is a member of NATO's Partnership for Peace, the United Nations, and the Organization for Security and Cooperation in Europe (OSCE).

The vast majority of Turkmenistan's economy is controlled by the state; there was little progress on economic reform. The Government claimed that GDP grew by more than 20 percent in 2002, however; such statistics are not credible and are believed to be highly inflated. The Government refuses to share basic data, making a determination of Turkmenistan's macroeconomic position difficult. Import substitution, lack of convertible currency, and excessive public spending on projects that do not improve the country's economic infrastructure contribute to Turkmenistan's economic stagnation. Poor wheat and cotton harvests reflected persistent failure to affect agricultural reform and could presage a difficult winter, particularly for citizens in rural areas. Command style economic policies as well as scarce water resources and inefficient irrigation are principal agricultural constraints. Turkmenistan continues to rely on natural gas and oil sales to support its budget. Reliance on Russian pipelines and poor oil and gas infrastructure constrain increased hydrocarbon exports.

Turkmenistan's debt situation remains murky but worrisome. The U.S. Embassy estimates the total debt at more than $3 billion; the Central Bank has virtually no official reserves. International financial institutions estimate that approximately $2 billion is held in foreign accounts as a Foreign Export Reserve Fund; however, the funds appear to be completely controlled by President Niyazov and thus are not necessarily available to meet external debt obligations. The size of the Government's fiscal deficit is unclear. Many public sector transactions are conducted off budget. Many ministries are required to cover a significant portion of their operating expenses.

With the exception of the oil and gas sector, foreign investment remained small and probably declined. Lack of a convertible currency remains the principal obstacle to greater investment. The official exchange rate is approximately 25 percent of the unofficial rate. Most foreign firms are unable to convert Turkmenistan's national currency, the manat, into hard currency without substantial losses. The prevalence of a dual exchange rate also fuels corruption by officials with access to foreign currency at the official rate of exchange. The Government has shown few signs that it is serious about engaging in the kind of macroeconomic reform that could help foster investment and long-term economic growth. Turkmenistan enjoys a heretofore well-educated population and significant hydrocarbon reserves. With reform, the country could begin to realize its potential fairly quickly; however, under its current leadership the Government has taken steps to further isolate - politically and economically - the country from its neighbors and the global economy. The damage caused by the erosion of the educational system will be progressively more difficult to reverse.

Turkmenistan lies along centuries old trade and smuggling routes, however, between the North Caucasus and Southwest Asia and is a front-line state in the Global War on Terrorism. With a long border with Afghanistan, Turkmenistan has been the second largest conduit for aid into Afghanistan with more than 30 percent of the United Nations and World Food Program food aid to Afghanistan since October 2001 transiting its borders. The continuing conflict in the region puts trade routes at risk of exploitation by terrorists and smugglers of narcotics and weapons.

Overview of U.S. Government Assistance

In FY 2002, the U.S. Government provided an estimated $21.03 million in assistance to Turkmenistan:

• $11.50 million in FREEDOM Support Act (FSA) assistance (including $4.00 million in Emergency Supplemental funds);

• $5.00 million in Export Control and Related Border Security (EXBS) assistance funded through the Emergency Response Fund supplemental appropriation;

• $2.36 million in other U.S. Government assistance; and

• U.S. Defense Department (DoD) excess and privately donated humanitarian commodities valued at $2.17 million.

In FY 2002, as in previous years, the modest results of U.S. Government-funded assistance programs in Turkmenistan once again reflected President Niyazov's refusal to permit broad-based economic or political reform. To adapt to this challenging environment, U.S. Government-funded assistance to Turkmenistan focuses on human capital development. Programs such as training and exchanges target the next generation of Turkmen leaders. While Turkmenistan has been slow to take advantage of offers of U.S. security-related assistance, the Turkmen Government is increasingly demonstrating a commitment to address nonproliferation and other security concerns. The U.S. increased border security assistance in the aftermath of the September 11 terrorist attacks to target the porous border with Afghanistan, but program implementation has been slow with little progress to date. The Mission's activities with the next generation of Turkmen leaders have been successful, much more so than activities with the Government of Turkmenistan. While the Post-September 11th geopolitical environment amplified the importance of regional stability and economic security in Central Asia, the face of U.S. assistance in Turkmenistan changed little over the course of FY 2002. Turkmenistan is a front-line state with a long border with Afghanistan and has been the second largest conduit for aid into Afghanistan.

The main foci of assistance continued to be exchange programs, NGO development, the English-teaching programs of Peace Corps Volunteers, and USAID programs such as rule of law, business training, and infectious disease programs. As in other Central Asian countries, growth of small and medium-sized enterprises (SMEs) is critical to Turkmenistan's overall development. A strong SME sector would fuel economic growth and job creation, thus helping ensure that the benefits of growth are widely shared. Yet, meaningful economic reform is not expected in Turkmenistan anytime soon, leaving few prospects for economic growth. As the Turkmen Government continued to refuse the U.S. Government's economic recommendations, USAID focused its attention on training and education to target future generations and to build a sound base of knowledge and skills for students, entrepreneurs and commercial lawyers. Results from a business environment survey indicated that respondents believe the business environment in Turkmenistan did not improve during FY 2002.

In FY 2002, USAID sought to expand Turkmenistan's private sector and strengthen the entrepreneurial skills of Turkmen citizens. USAID's private-sector development programs, which provide technical expertise and training, continued to target small and medium-sized enterprises. The objectives of USAID's modest-sized democracy programs in Turkmenistan were to encourage citizen participation, foster democratic concepts, and facilitate access to information. USAID pursued these objectives by supporting the efforts of non-governmental organizations (NGOs) in the areas of civic and legal education, as well as community development and self-help activities encouraging social partnerships and advocacy among citizens. U.S. Government-funded humanitarian assistance was targeted at vulnerable groups such as the elderly, the disabled, and disaster victims.

State Department- funded Public Diplomacy exchanges continued to play a vital role in reaching the next generation of Turkmen leaders. Such programs not only expose a receptive audience to the values and ideas we seek to forward, but have also created a strong network of alumni in Turkmenistan. The 1,000-plus alumni of U.S. Government-funded exchange programs successfully organized several community action programs during FY 2002. These exchange programs and alumni activities strengthen democracy, tolerance, and the development of civil society, one of the goals of the Silk Road Strategy Act. During FY 2002, alumni developed programs to clean up their towns, organized a charity auction for a local orphanage, and volunteered to teach English and Internet skills.

The U.S. Embassy's Democracy Commission grants were valuable in terms of providing much-needed NGO support during FY 2002. The grants were given in support of such activities as civic education, the free flow of information, and democratic institution building. As with USAID, NGO development remains a critical theme for Public Diplomacy activities.

Training, Exchange, and Educational Reform Programs

Since 1993, U.S. Government-funded exchange programs have brought over 1,260 citizens of Turkmenistan to the United States for short-term professional or long-term academic training, including over 150 in FY 2002. These programs give participants an opportunity to develop their skills and establish valuable contacts with U.S. counterparts.

U.S. Department of State - Public Diplomacy Exchanges: In FY 2002, approximately 140 Turkmen citizens participated in academic and professional exchange programs administered by the U.S. Embassy's Public Affairs Section in collaboration with the Bureau of Educational and Cultural Affairs (ECA), including 50 Future Leaders Exchange (FLEX) Program high-school students, seven FSA Undergraduate students, and seven Muskie/FSA graduate students. The FLEX program continues to be an extremely popular program in Turkmenistan, with over 1387 applicants for the 50 available slots. Five Turkmen teachers and two American teachers participated in the Teaching Excellence Awards Program (TEA). Under the TEA Program, 25 Turkmen schools received much-needed computer equipment and materials. As a follow up to the TEA program, 22 students and teachers from Turkmenistan traveled to partner U.S. schools on the Secondary School Exchange Program (SSEP), which provides a direct linkage between schools with recognized TEA teachers and U.S. counterparts. Through the Junior Faculty Development Program, three young faculty members from Turkmen State University received training at U.S. universities. There were three Fulbright visiting scholars and one Hubert Humphrey Fellow. The Mission's most important professional exchange program, International Visitors, sponsored30 participants on such critical issues as Internet policy, water resources management, NGO management, private property, and drug education. These exchange programs support the next generation of Turkmenistan's leaders and will be of tremendous value in accomplishing U.S. Government goals. The alumni of U.S. Government exchange programs in Turkmenistan remain active after their U.S. experiences. The Dashoguz Alumni Resource Center opened in January 2002 and is well run by FLEX alumni. Among numerous alumni activities conducted by the Dashoguz Alumni Resource Center were "Actions on the Rights of Children" training for high school teachers and seminars for students; "Necessary Life Skills" workshop for high school students; "Nature In Danger" poster contest for high school students dedicated to the celebration of Earth Day; "The Declaration on Human Rights and The Right to Live" seminar by the Law Students Club "Adalat"; "Say NO to Drugs" workshops, and other activities dedicated to volunteerism such as visits to TB-infected children, Association of Deaf People; debates for high school students; free English language and TOEFL preparation courses; and "Resume-writing and Interview Skills" workshop.

USAID Training Programs: Through the Global Training for Development (GTD) and Strategic Technical Assistance for Results with Training (START) projects, USAID trained nearly 1,090 citizens of Turkmenistan, approximately 32% of whom were women, through 34 U.S.-based, in-country, and third-country training programs in FY 2002. Training focused on NGO development, health care reform, water resources, and agriculture, and participants represented a broad cross section of society from government ministers, to heads of businesses and NGO leaders, to individual citizens committed to reform in their area of expertise. As a result of training on the environment and public relations, one participant established an ecological center for children in Turkmenbashy and initiated three public relations campaigns on the environment, which prompted the city educational administration to include materials on the environment in school examination papers. As a result of a training program in Egypt, the Ministry of Water Management initiated a pilot program using drip irrigation methods, which have never been used before in Turkmenistan, in the Firuza Valley. A conference to launch the WHO Integrated Management of Childhood Illnesses program resulted in the adoption national strategy, which began in two pilot regions. As part of this project, 98% of the family doctors in Farab and Serdar have been trained to use WHO-recommended protocols during their examination, diagnosis, and treatment of patients. In addition, nearly all mothers interviewed after bringing in sick children for treatment were able to name all three rules for care for sick children and at least two signs indicating the need to seek medical care.

Despite the repeal of the exit visa requirement in Turkmenistan, the government is reluctant to expose Turkmen government workers to other countries' approaches to resolving issues, and continued to impede participation in third-country and U.S.-based training. In FY 2002, the Turkmen government canceled ten programs, mainly those in the health sector. The government reports to USAID that Turkmen specialists should learn from Europeans and Americans but not from other Central Asians. In spite of these claims, however, the government canceled two programs to the United States and Hungary. The regional training program helped with the planning and organization of a conference to launch the WHO Integrated Management of Childhood Illnesses (IMCI) program, which resulted in a national IMCI strategy that included rollout into two pilot regions of Turkmenistan. Since then, 98 percent of the family doctors and feldshers (medical practitioners) in Farab and Serdar have been trained. According to follow-up assessments, the health providers used the recommended protocol during their examination, diagnosis, and treatment of patients. In addition, nearly all mothers interviewed after bringing in sick children for treatment were able to name all three rules for care for sick children and at least two signs indicating the need to seek medical care. USAID made special efforts to ensure that Turkmenistan was well presented at international conferences such as the Global Summit of Women in Barcelona and the Society of Petroleum Engineers (SPE) 2001 Annual Technical Conference and Exhibition in the United States.

USAID Resource Network for Economics and Business Education (EdNet): Nine Turkmen universities participated in the Resource Network for Economics and Business Education (EdNet) program. The number of professors who received training in modern economics and business applications rose from 24 professors last year to 136 during FY 2002. As a result of EdNet activities, over 4,000 students in Turkmenistan were exposed to free market principles. Additionally, seven Turkmen scholarship recipients attended the Kazakhstan Institute of Management and Economic Research (KIMEP). Each is expected to play an important role in developing an informed group of graduates who are in a better position to advocate for more liberal economic policies in Turkmenistan. Until the government shows some interest in liberalizing its economic policies, USAID will continue to make training and education the keystone of its reform strategy in Turkmenistan. USAID is confident that students' continued exposure to market economics and modern business practices will eventually help bring change to Turkmenistan's way of doing business.

U.S. Department of Agriculture (USDA) - Cochran Fellowship Program: In FY 2002, the Cochran Program provided training for five participants in fruit and vegetable processing, cooperative development, and dairy herd management. The training assisted participants in assessing current agricultural laws and decrees that regulate production of livestock and land tenure and helped to identify available U.S. agricultural inputs appropriate to Turkmenistan. The participants visited agricultural facilities and processing plants that served as a baseline to provide data for development of trade and marketing opportunities between the two countries.

U.S. Department of Commerce - Special American Business Internship Training (SABIT) Program: In FY 2002, SABIT provided training for two Turkmen specialists. A TurkmenGas mid-level official took part in an energy and gas pipeline program. A specialist from a private car dealer in Ashgabat (IPC Motors) participated in a SABIT internship with SAITCO Inc., an American vehicle distributor based in Virginia.

Democracy Programs

USAID NGO Development Programs: In FY 2002, the Turkmen Government continued to be extremely suspicious of NGOs in general, and this attitude extended to USAID-supported civil society support programs implemented by the Counterpart Consortium and the International Center for Not-For-Profit Law (ICNL). The Counterpart Consortium's assistance strategy for Turkmenistan takes into account the country's poor enabling environment for NGO development by encouraging NGO partners to seek areas of common agreement and interest with the Turkmen Government. Counterpart's programs focus on the following areas: (1) regional outreach, including a program that is building the institutional capacity of a local water users' association to manage the delivery system of clean water to rural communities served by a USAID-built reverse osmosis water plant in Turkmenbashi Etrap in Dashoguz Province; (2) educating the public and government about the role of NGOs in conjunction with ICNL; (3) promoting social partnership through activities designed to establish dialogue between local governments and NGOs; (4) hosting an NGO donor subgroup to encourage partnerships and channel international donor resources to deserving NGOs; and (5) assuming a lower profile in NGO development, thus encouraging Turkmen NGOs to take the lead in this process. In FY 2002, there were almost 1,500 participants in 93 training workshops organized by Counterpart. Counterpart's community-based activities promoted citizen participation in local decision-making - an infrequent occurrence in highly centralized Turkmenistan. In order to encourage citizen involvement, community participation and social partnerships, Counterpart distributed over $60,000 in grant funds to indigenous NGOs in FY 2002 in support of 38 community-level projects.

U.S. Department of State - Internet Access and Training Program (IATP): IATP, which is implemented by the International Research and Exchanges Board (IREX) and administered by the Bureau of Educational and Cultural Affairs (ECA), continues to advance the free flow of information in Turkmenistan by providing access to and training in the use of the Internet. During FY 2002 IATP opened two new public Internet facilities in Turkmenistan. There are currently four IATP facilities open in Turkmenistan. During FY 2002, the Government of Turkmenistan severely limited the circulation of foreign periodicals and newspapers, thereby cutting off citizens of Turkmenistan from substantially more complete and more accurate news media. The growing use of the Internet in Turkmenistan has become all the more important in the face of the Government of Turkmenistan's attempts to curb access to information.

U.S. Department of State - American Corners: FY 2002 funding will allow the U.S. Embassy in Turkmenistan to open two American Corners in Turkmenistan. American Corners will reach out to the U.S. Government exchange program alumni and the public in Turkmenistan to provide information about the United States. American Corners are typically a partnership between the U.S. Government and a local public library. The U.S. Government provides host institutions with books and CD-ROMs about America, Internet access, and hands-on training.

U.S. Department of State - Democracy Funds Small Grants Programs: During FY 2002, the Embassy's Democracy Commission awarded 16 small grants totaling approximately $100,000 in support of NGO projects in areas such as civic education, the free flow of information, women's issues, community self-help, democratic institution-building, and education in free-market concepts. Examples of projects supported by Democracy Commission grants include: civic education workshops for high school students, support to establish a number of informational resource centers, development of NGO networks around the country, support to develop professional education and strengthen community self-help, youth-at-risk activities and a model drug rehabilitation project, disabled rights workshops, and Internet centers. Regardless of the type of project undertaken by a Democracy Commission grantee, the real value of the program is the development of civil society skills that each grantee learns. These skills include citizens identifying problems and finding solutions without waiting for government involvement, and the responsible use of and accounting for funds.

USAID Rule-of-Law Programs: In FY 2002, USAID, through the American Bar Association's Central European and Eurasian Law Initiative (ABA/CEELI), provided support and assistance to law students. ABA/CEELI's primary activities included: (1) conducting substantive legal training on international topics; (2) improving students' oral and written advocacy skills through moot court competitions and mock trials; (3) exposing students to new teaching methodologies through the street law program; and (4) working with the Student Bar Association to address student issues. Additionally, ABA/CEELI helped to create a legal information center at Turkmen State University.  The center officially opened last year and provides the Turkmen legal community with high-quality legal materials.  ABA/CEELI trained Turkmen lawyers on commercial law topics such as international business law and tax law.

USAID Commercial Law Programs: USAID conducted 12 commercial law seminars for second and third year law students at Turkmen State University (TSU), covering legal disciplines not included in TSU's curriculum, such as international business transactions, judicial practice of commercial law in the European Union, and contract law. Law students participated in a commercial law moot court where they were able to apply and refine the knowledge and skills gained from the seminars. During the moot court competition students demonstrated their understanding of new areas of law, and honed their legal reasoning and oral advocacy skills.

USAID's implementing partner also conducted seven seminars and roundtables for the local legal community, including legal counsel of various government ministries, private lawyers, law firms, law professors, NGOs, and small and medium-sized businesses. The seminars and roundtables covered various areas of commercial law, including those areas of a particular concern in Turkmenistan: protection of private property, SME taxation, registration of commercial entities, and contract law. The seminars and roundtables developed and matured from purely educational events to more discussion-oriented gatherings with active participation from all sectors of the legal community. This resulted in more open and free discussions among participants and permitted a professional exchange of information, experience, and opinions, including active debates.

U.S. Department of State - American University of Central Asia (AUCA) Scholarship Program: Funding allocated to the U.S. Embassy in Turkmenistan in FY 2002 will allow 21 students from Turkmenistan to attend the American University of Central Asia (AUCA) in the Kyrgyz Republic during the first year of this new scholarship program. Attending AUCA will provide students from Turkmenistan with an opportunity to study fields that support democratic reform and economic development - opportunities that are currently not available in Turkmenistan.

U.S. Department of State - Support for the National Endowment for Democracy (NED): In FY 2002, the Department provided $150,000 in FSA funding to NED to supplement its grant-making activities in Turkmenistan. NED used this funding to support programs that promote civic activity, provide pro-bono legal advice, and provide access to the Internet. Other NED supported programs in Turkmenistan focus on civic education in high schools and NGO development. Funds are also used to increase the access of people in Turkmenistan to sources of independent information. Turkmenistan also benefits from NED regional and cross-border programs that support important journals of discussion such as Tsentralnaya Aziya i Kavkaz, as well as programs conducted by Central Europeans to spread experience and training in democratic development.

Economic Development Programs

USAID Business Training: USAID trained over 200 Turkmen citizens in accounting courses that conform to International Accounting Standards (IAS). This opportunity, through the regional Certified International Professional Accountant (CIPA) program, is absent in any other venue in the country. Thanks to its growing success in the region, the USAID CIPA program in Turkmenistan has even sparked a surprising level of interest from the Ministry of Economy and Finance, where officials have recognized the need to train Government accountants in IAS. The Ministry has approached USAID to provide CIPA training to Government accountants in coordination with technical assistance funded by the World Bank to convert national standards to IAS. In addition, USAID has increased Turkmenistan's training capacity by establishing a network of local consultants who provide business courses to entrepreneurs in all five regions of the country. As a result, 1,558 people (60% women) received training in basic business methods and strategies. To leverage participant knowledge gained through our training program, USAID business advisors worked to establish more links among prospective buyers and sellers. Since its launch in April 2002, our Regional Trade Promotion program in Turkmenistan has attracted 25 companies to list their products and services on our internet-based regional trade network, while using USAID business advisors to identify potential cross-border trade partners. Despite strong interest, the service has been hampered by a lack of Internet access. However, steadily increasing numbers are coming to the public terminal offered to Turkmen SMEs in the USAID-sponsored Ashgabat Enterprise Development Center.

USAID Association Development Programs: USAID achieved some positive results in association development, such as the establishment of a new agribusiness center that offers nation-wide legal and business consulting services. While still in its infancy, the association has already drafted a number of the procedural regulations for on-lending unions. In FY 2002, USAID also supported the Entrepreneurs Development Fund's efforts to hold regular workshops and roundtables for both entrepreneurs and government officials. The gatherings provided a venue for entrepreneurs to openly discuss sensitive problems related to government-imposed administrative barriers. USAID's Gender Issues Team selected the head of the Fund to attend the Global Women's Forum in Barcelona, Spain. Upon return, she established the Women Entrepreneurs Support Program, which provides training in different regions of Turkmenistan. In September, the Association of the Entrepreneurs received an invitation to participate in the State Coordinating Committee for Entrepreneurship to work on issues such as the establishment of leasing companies, long-term and short-term credit management, and the reduction of administrative barriers to business registration.

USAID Micro-Credit Program: Under a cooperative agreement with the Central Asian - American Enterprise Fund (CAAEF), Mercy Corps International (MCI) previously implemented a micro-credit program that targeted small businesses with a high growth potential and had approved $290,000 in loans of up to $25,000. However, because of high average loan rates and excessive repayment delays, the program was discontinued in August 2000. In August 2001, MCI was granted a one-year, no-cost extension to collect as much as possible on its outstanding loans.

USAID Farmer-to-Farmer (FTF) Program: In FY 2002, FTF's implementing partner Winrock International fielded 20 U.S. volunteers and six Land O'Lakes volunteers in Turkmenistan. Sector emphasis focuses assignments in horticulture, irrigation management, and value-added agricultural products. Associations and businesses that provide key services to agriculture through teaching business planning tools and possibly through the use of micro-credit mechanisms are given high priority. Work continues on linking poultry enterprises with soybean producers through a local financial institution that has been extending cash and production credit to both types of enterprises. Winrock assisted in establishing water user associations and farmer-producer associations. Agribusiness and farmer training activities are increasing, particularly in the Lebap Region. A local Future Farmers of Turkmenistan chapter has been established to develop leadership skills at the secondary school level. Local partner organizations include the Turkmen Union of Entrepreneurs, water user associations and honey production and marketing associations. The FTF satellite office operating in Dashoguz is completely staffed by local host nationals with oversight from the Ashgabat FTF office.

USAID Budget Reform Programs: The Turkmen Government demonstrated some commitment to budget reform in FY 2000, but in FY 2001, reorganization in the Ministry of Economy and Finance (MOEF) and dissipating commitment to budget reform led USAID not to replace its resident budget advisor. Consequently, USAID did not provide any technical assistance to the Government of Turkmenistan in this area in FY 2002, although the World Bank and United Nations Development Program (UNDP) are supporting programs that complemented the U.S. Government's previous efforts in this area. USAID is currently considering partnering with UNDP to deliver assistance to the MOEF and student interns in the area of economic forecasting.

Trade and Investment

U.S. Department of Commerce - Business Information Service for the NIS (BISNIS): Although BISNIS had no representative in Turkmenistan in FY 2002, BISNIS met with representatives from the Turkmenistan Department of Communications, the country's Parliament, and the state telecommunications company to discuss Turkmenistan's telecom/internet industry, how to establish an Internet infrastructure, and the potential benefits of the Internet for Turkmenistan's economy.

U.S. Export-Import (Ex-Im) Bank: Ex-Im Bank is currently off-cover for all trade financing programs in Turkmenistan.

Energy and Environmental Programs

USAID Energy-Sector Programs: In FY 2001, USAID-financed energy-sector activities were significantly cut back and switched their focus to training rather than technical assistance. A resource center with Internet access and a student chapter of the Society of Petroleum Engineers (SPE) were established at the Turkmen Polytechnic Institute. A USAID-developed videotape promoting a package of demonstration models for oil and gas field clean up was previewed at the Turkmenistan International Oil and Gas Exhibition in Ashgabat.

USAID Regional Water Management Programs: USAID assistance helped establish policy and technical working groups including participants from Turkmenistan and other Central Asian countries on improving the collection, analysis and exchange of hydrological data. Progress has been made towards establishing a communication system that would collect and distribute hydrological data throughout the region. USAID has worked with a World Bank-financed project to provide training related to the installation and operation of stream-monitoring stations in Turkmenistan. Officials from Turkmenistan's hydro-meteorological agency have participated in a number of regional training courses promoting a cooperative approach to data management within Central Asia.

Security, Regional Stability, and Law Enforcement Programs

U.S. Department of Defense -Military to Military Contacts: The goal of U.S. Central Command's (CENTCOM) Security Cooperation Program is to strengthen alliances and partnerships for the future, and to focus CENTCOM resources on activities that offer the greatest mutual benefit to cooperative nations and the United States. In FY 2002, CENTCOM sponsored 22 military to military exchanges in the U.S. and Turkmenistan, ranging from senior-level visits to information exchanges at a more junior level. These exchanges contributed to reform of the Turkmen military. Relationships built through previous exchanges laid a foundation for the Turkmen Government's favorable response to U.S. requests for support during Operation Enduring Freedom and the Global War on Terrorism. As one of the most consistent and productive areas of the relationship between the U.S. and Turkmen Governments, FY 2002 military-to-military exchanges continued to build on the trust and confidence between our armed forces contributed greatly to our understanding of the capabilities and conditions in the Turkmen military, and strengthened a relationship that will benefit U.S. security objectives in the future.

U.S. Department of Defense - Warsaw Initiative/Partnership for Peace (PfP): The PfP Information Management System (PIMS) is a bilateral U.S.-Turkmen Government program in the spirit of Partnership for Peace. Under this program, the U.S. Government has provided computer and satellite communication equipment to allow the Ministry of Defense and Ministry of Foreign Affairs to maintain contact with appropriate PfP offices and Partner nations as well as provide them access to various PfP databases and sources of information via the internet. This system was used extensively by the Ministry of Defense to help coordinate its recent Civil Emergency Planning and Civil-Military Cooperation seminar hosted in Turkmenistan during September. Besides being a great asset for participation in PfP, the PIMS system also assists the U.S.-Turkmen military-to-military relationship by allowing the use of e-mail for routine communication and coordination. The program has been a great tool for assisting in modernization, automation and reform within the Ministry of Defense by providing first hand knowledge and experience, and by demonstrating the power and capabilities of modern information management tools.

U.S. Department of Defense - Marshall Center For Security Studies: Increased mission requirements and an insufficient number of qualified officers and soldiers in the armed forces have severely limited Turkmen participation in Marshall Center programs. However, the Marshall Center remains a valuable tool in strengthening the USG-GOTX relationship. The Center promotes reform, regional stability, and peaceful resolution to conflicts by serving as an international forum for advancing democratic defense institutions and relationships and promoting cooperation, trust and understanding among neighbors. This year the Turkmen sent two parliamentarians to a senior level resident course and three other senior government officials to a regional development conference

U.S. Department of State - Export Control and Related Border Security (EXBS) Program: In FY 2002, no new funds were budgeted for Turkmenistan as prior-year funds continued to be implemented. After September 11 attacks, however, as one of the front line Central Asian states, $5 million was allocated from the Emergency Response Fund supplemental for EXBS assistance for Turkmenistan to strengthen border security, particularly along the long porous border with Afghanistan. EXBS assistance is being used to help Turkmenistan develop its export control and border security capabilities, to prevent the transit of weapons of mass destruction, weapons technology and other illicit weapons trafficking across its borders. With the addition of the ERF Supplemental funding, FY 2002 EXBS equipment and training included maritime assistance, surveillance and detection equipment and border control training. Turkmenistan has, however, been slow in approving proposed EXBS activities for implementation. Efforts to bring Turkmenistan officials to the U.S. for training and orientation and efforts and to include them in regional programs in the area were largely unsuccessful. An initial assessment of Turkmenistan's equipment and infrastructure needs was performed in June 2002 and a more comprehensive Customs assessment was planned for December 2002. A U.S. Government-proposed Central Asian Regional Communications Link (CACL), which would strengthen intra-governmental coordination on border security and assist the Turkmen and their neighbors in tightening control over illegal narcotics trafficking and the movement of international terrorists has not been accepted to date. In April 2002, a full time EXBS Program Advisor was placed in Ashgabat. Visits of border posts were conducted to determine the physical quality of the infrastructure and operational techniques of personnel and develop program plans. Turkmenistan's Border Guards as well as Customs officials also have requested specific training and equipment, such as radiation detection pagers and infrastructure upgrades including an advanced training center and communications, and recently committed to attend border interdiction training scheduled in January 2003. In FY 2002, coordination with other international organizations in Turkmenistan was initiated resulting in agreement with the British Embassy for the U.S. to provide EXBS assistance to equip an inspection building that the British were anticipating constructing on the Turkmenistan-Afghanistan border in early 2003. For FY 2003, EXBS assistance will continue with a focus on encouraging greater Turkmenistan cooperation in EXBS regional efforts.

U.S. Department of State - Support for the Civilian Research and Development Foundation (CRDF): The CRDF has committed $65,600 to a collaborative research project on imperiled sturgeon with Turkmenistan under its Cooperative Grants Program. The Government of Turkmenistan has agreed to cost-share on the project at $16,400. Project work has not yet begun.

U.S. Department of State - International Military Education and Training (IMET): The goal of the IMET program in Turkmenistan is to promote reform in the Turkmen Armed Forces. The program exposes the Turkmen Armed Forces to the role of the military under a democratic government, concepts of the rule of law, human rights, and free markets. IMET resources are focused on junior to mid-level officers. In FY 2002, the first Turkmen officer graduated from the Command and General Staff College (CGSC) and the Joint Forces Staff College (JFSC). Additionally this year, a second student began study at the CGSC, and a third student began English language training to enter the CGSC in FY 03. Due to increased mission requirements and an insufficient number of qualified officers and soldiers in the armed forces, Turkmenistan has decreased the number of personnel sent overseas for long-term training. This has had a significant impact on Turkmen participation in the U.S. IMET program. This year, out of seven programmed student allocations, Turkmenistan Ministry of Defense sent only two officers to the U.S. for education and training. Two of the unused student allocations were offered to the State Border Service, with report dates pushed to the "fifth quarter," December 2002. Though relatively small, the IMET program has been successful. All previous Turkmen IMET students as well as senior leadership in the Ministry of Defense and State Border Service highly praise training received in the U.S. and were anxious to return for future training.

U.S. Department of State - Foreign Military Financing (FMF): Despite starting the year with a $2.2 million five-year backlog of unused FMF allocations and losing their FY 2002 allocation due to account inactivity, this was a breakthrough year for the FMF program in Turkmenistan. The Turkmen Ministry of Defense has started to actively use available FMF funds. In FY 2002, the Turkmen obligated over $1.6 million of the previous FMF backlog. The Ministry of Defense has ordered items such as uniforms and tents and a computer instruction lab for their military institute, as well as modern tactical radios. The success of the program not only contributes greatly to improving the bilateral U.S.-Turkmen relationship, but has also helped in broadening U.S. understanding of the condition of the Turkmen military and its capabilities. The program has provided significant first steps in helping the Turkmen military to reform from the old Soviet military model to a more advanced Western style military organization.

U.S. Department of State - Anti-Crime Training and Technical Assistance (ACTTA) Program: The State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) has continued to provide modest amounts of assistance to Turkmenistan. In July 2002, the U.S. Drug Enforcement Administration (DEA) conducted a one-week forensic chemist seminar on narcotics with Turkmen Government law enforcement officials in Ashgabat. This successful seminar marked a significant step towards expanding cooperation between the Government of Turkmenistan and the U.S. Government in the area of law enforcement liaison and training. Attending the seminar were a total of nineteen participants representing the Ministry of Justice, the Prosecutor General's office, and the Ministry for National Security of Turkmenistan. In August 2002, five Turkmen law enforcement officers from the State Customs and the Border Guards service attended a one-week Regional Airport Operations Seminar conducted by the DEA in Tashkent, Uzbekistan. INL FY 2002 funding also will provide support to complete a previously planned forensic laboratory project and for the salary costs for a locally hired program coordinator. Further program development has been complicated by difficulties arising from the highly centralized nature of the host government, its sluggish decision-making process and on-going political transitions. Nevertheless, the INL Bureau and other providers plan to expand cooperation in the future, as Turkmenistan continues to be increasingly used by drug traffickers as a conduit for smuggling illicit drugs from Afghanistan. For FY 2003, the INL Bureau plans to use FY 2002 supplemental funding to develop programs for drug control and judicial systems development. INL and ICITAP will also undertake an overall assessment of Turkmenistan's law enforcement capabilities.

U.S. Department of State - Anti-Terrorism Assistance (ATA): Turkmenistan has not undergone an effective ATA needs assessment due to a lack of response by the Turkmen Government. While there was no program participation by Turkmenistan in FY 2002, the ATA Program hopes to schedule an assessment of capabilities and needs in the latter half of FY 2003.

Social-Sector and Humanitarian Programs

USAID Primary Health Care Programs: USAID has expanded its work in primary health care to three new sites in Turkmenistan where we collaborate with World Health Organization (WHO) and UNICEF to introduce the WHO's Integrated Management of Childhood Illness Program (IMCI). IMCI is a comprehensive approach to screening children for the key illnesses that are a threat to child survival. Such interventions are essential because Turkmenistan has the second highest mortality rate in Central Asia for children under five years of age. The Stop Diarrhea campaign in two districts resulted in a 40% increase in families' knowledge of the hydration and dietary requirements for children suffering from diarrhea.

The new Family Medicine Training Center opened in Ashgabat as a result of an American International Health Alliance partnership between North Dakota medical institutions and the House of Health No 1 in Ashgabat. To date, the Center has retrained about 200 family doctors and nurses in Ashgabat city.

USAID Infectious Disease Programs: USAID is providing technical assistance to Turkmenistan's Ministry of Health and Medical Industry in implementing the WHO-recommended Directly Observed Treatment, Short-Course (DOTS) strategy for tuberculosis control in Ashgabat city and Turkmenbashy. The activity focuses on conducting clinical and laboratory DOTS training in the Central Tuberculosis Hospital and "houses of health," with follow-up monitoring and evaluation. In addition, USAID has provided laboratory equipment and tuberculosis drugs. USAID-funded assistance provided by the Centers for Disease Control and Prevention (CDC) led the Turkmen Government to issue a comprehensive decree on viral hepatitis, the implementation of which abolished mandatory hospitalization for this disease. CDC also provided technical assistance to the Ministry of Health and other donors to successfully develop Turkmenistan's application for funding from the Global Alliance for Vaccines and Immunization (GAVI). Since October 2001 and for the following five years, all newborns are being provided with hepatitis B vaccine.

In 2002 USAID launched a new HIV/AIDS prevention project in Turkmenistan through a grant to UNAIDS. The project started with distribution of small grants to five health NGOs working with vulnerable groups of women and drug users in prisons.

Through a Maternal and Child Health grant to Counterpart Consortium (2001-2002) USAID supported the organizational development of eight health NGOs located in three districts of Turkmenistan. Those NGOs have involved over 5000 individuals as well as service providers in disseminating health information to the rural population of Turkmenistan.

U.S. Department of State - Coordinator's Office Humanitarian Assistance: In FY 2002, the Humanitarian Programs Division of the Office of the Coordinator of U.S. Assistance to Europe and Eurasia delivered $2.17 million in U.S. Defense Department excess and privately donated humanitarian commodities to Turkmenistan at a cost of $450,000 to the U.S. Government. This assistance consisted primarily of U.S. Defense Department excess property distributed by Counterpart International.

Partnership Programs

USAID Health Partnership Program: Under a USAID-funded partnership program administered by the American International Health Alliance (AIHA), the University of North Dakota and Turkmenistan's Ministry of Health and Medical Industry are working together on strengthening Turkmenistan's primary health care system by developing skills-based primary care retraining programs for physicians, nurses and feldshers (medical practitioners). The U.S. and Turkmen partners have identified training needs and developed a training curriculum to meet those needs. The Ashgabat Emergency Services Training Center continued to upgrade the skills of the country's emergency service staff and to serve as a model for similar health partnerships elsewhere in Central Asia. The AIHA Program has been extended through September 30, 2003.

Cross-Sectoral Programs

Eurasia Foundation: In FY 2002, the Eurasia Foundation awarded 10 grants totaling approximately $189,000 to NGOs in Turkmenistan, with an average grant size of nearly $17,000. The majority of these grant funds supported the development of private enterprise, with the remainder targeting civil society development and improvements in public policy and administration.

Peace Corps: The Peace Corps program in Turkmenistan was re-opened in April 2002 with seven Volunteers. These Volunteers worked in three programs in the areas of education, business and community health, in three of the five regions of Turkmenistan. In the area of education, Peace Corps Volunteers (PCVs) taught English as a Foreign Language (TEFL) to more than 500 students. In addition, they worked with 110 teachers in 14 schools to introduce new teaching methodologies and improve language skills in the classroom. PCVs also helped strengthen English language curricula, working with English Education Resource centers and local education departments. PCVs established English clubs to promote language skills among participants, conducted English courses for Afghan Refugees, and assisted the local community in finding sources of funding to support the refugees. In the business program, which was suspended due to the difficult business environment, Volunteers assisted local businesses and a farmers' co-operative with business planning, computer systems and business management. Community Health Volunteers worked with local health professionals in clinics and "houses of health," in numerous community health education outreach and professional development activities. In FY 2002, they taught healthy living practices, including good nutrition, reproductive and maternal health, and prevention of diarrhea and HIV/AIDS to more than 140 adults, mostly women, and 500 children. In September 2002, 49 Peace Corps trainees arrived in country, signaling resumption of a full Peace Corps program in Turkmenistan.

Programs Promoting the Objectives of the Silk Road Strategy Act (SRSA) of 1999

In FY 2002, a number of U.S. Government-funded assistance programs contributed to the objectives laid out in the SRSA-promoting reconciliation and recovery from regional conflicts; fostering economic growth and development; promoting infrastructure development; increasing border control capabilities; and promoting democracy, tolerance, and the development of civil society. Please see the above sections for numerous examples of programs that contributed to one or more of these objectives.

Preview of FY 2003 Programs

In light of the war on terrorism and the instability south of Turkmenistan's border, USAID expects to implement a regional program that is intended to prevent sources of conflict by strengthening democratic processes at the community level, improving community services, and creating sustainable short-term jobs. As the Turkmen Government is not embracing reform, the U.S. Government will place an even greater emphasis on assistance programs targeting Turkmenistan's next generation of leaders. To this end, the U.S. Government intends to expand its exchange programs and training activities, on the premise that these programs offer the greatest return on the U.S. Government's investment in terms of promoting prospects for long-term development. USAID-funded assistance will continue to support the improved delivery of health care services, the development of civil society and the rule of law, and private-sector growth. At the request of the Government of Turkmenistan, USAID will seek to expand its tuberculosis prevention and control program to a new pilot site in Mary. Similarly, USAID will expand its child health activities by training professionals and conducting a study on infant mortality. The USAID-supported Family Medicine Training Center will begin to operate a model in-patient facility.

U.S. Government-funded assistance in the area of democracy building will focus on illustrating that civic organizations can work in partnership with government services for the benefit of the communities they serve. USAID and the Public Assistance Section of the Embassy will significantly expand community-level projects with NGOs and local communities, including the participation of local governments in regions outside of Ashgabat. Proposed rule-of-law activities will include assistance in strengthening the professionalism and ethical practices of lawyers and providing increased access for citizens and officials to Turkmen and international legislation.

Looking ahead, Turkmenistan's near-term outlook does not offer any prospects for building the necessary foundations for long-term economic growth. The dwindling number of foreign investors faced increasing difficulties in most of their business operations. While there appears to be some recognition by the national leadership that the country's budget and debt management needs to be improved, there appears to be little political will among Turkmen leaders to make needed reforms. During FY 2003, USAID may use existing funds to establish a fiscal training center to train government officials in budget development, including revenue and expenditure forecasting and macroeconomic projections. If funds permit, and based on further assessment, USAID may also look to expand access to credit through a micro-lending program. In addition, USAID, in coordination with the U.S. Embassy's Public Affairs Section, the Peace Corps and international donors, will continue with its limited focus on economics and business education and training initiatives.

In addition, the Bureau of Diplomatic Security of the U.S. Department of State is looking into the possibility of Turkmen Government interest in participating in the Anti-Terrorism Assistance (ATA) Program, and the U.S. Embassy is looking into the possibility of providing Turkmenistan's Ministry of Defense and State Border Guard Service with modern communications, emergency disaster response, and border control equipment.

In order to ensure better use of allocated IMET funding in the future, we have begun to offer student allocations to both the Ministry of Defense and the State Border Service. This will allow the Turkmen government to select candidates from a larger pool of personnel and spread the burden of losing highly qualified personnel for long periods of time over two Ministry level organizations. Additionally, we have begun to program Mobile Training Teams to visit Turkmenistan to conduct more specialized short-term training. We will use available resources to help improve Turkmenistan's domestic English language instruction capabilities, which will reduce the time Turkmen students must spend out of country. Currently all Turkmen students must spend a full year learning English prior to beginning any military training or education courses.

The Ministry of Defense of Turkmenistan has developed a long-range plan to establish a countrywide communications system that would greatly increase the capability to respond rapidly to any security threat or natural disaster. They plan to implement the first phase of this project once FY 2003 allocations are approved. At currently projected FMF/FMS funding levels this project would span five years, but the Ministry of Defense has asked about possible supplemental funding to help expedite the project.

The Marshall Center is making efforts to increase Turkmen participation by widening the field of potential participants and stressing to the government that Marshall Center programs are available to civilian government officials as well as military officers.

In 2003, Embassy Ashgabat will continue to work with INL towards implementation of the INL Letter of Agreement (LOA) for the provision of law enforcement training and forensic laboratory equipment to Turkmenistan, which is expected to increase Turkmenistan's counter-narcotics capabilities through improving criminal investigations by means of scientific and forensic analysis of evidence.

To further enhance the use of forensic analysis of evidence gathered by Turkmen law enforcement agencies during the conduct of criminal investigations, the USG has scheduled a Forensic Development Program administered by the U.S. Department of Justice's International Criminal Investigative Training Assistance Program for late 2003.