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Cablegate: New Turkmenistan-Kazakhstan-Iran Rail Line: Sign

VZCZCXRO9972
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1393/01 3610813
ZNR UUUUU ZZH
P 270813Z DEC 07
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9933
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 3148
RUEHBJ/AMEMBASSY BEIJING 0963
RUEHKO/AMEMBASSY TOKYO 0837
RUEHIT/AMCONSUL ISTANBUL 1411
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHVEN/USMISSION USOSCE 2030

UNCLAS SECTION 01 OF 02 ASHGABAT 001393

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: N/A
TAGS: PREL ECON ELTN ETRD IR KZ TX
SUBJECT: NEW TURKMENISTAN-KAZAKHSTAN-IRAN RAIL LINE: SIGN
OF CLOSER REGIONAL RELATIONSHIPS?

1. (U) Sensitive but unclassified. Not for public Internet.

2. (SBU) SUMMARY: President Berdimuhamedov has added yet
one more important construction project to his list: a
railway line connecting Kazakhstan, Turkmenistan, and Iran
into a single north-south railway route. The countries
expect that this line will foster greater trade in the
region, the transit fees from which Turkmenistan stands to
earn substantial profit. The new link offers a route to
transport Russian and European goods that bypasses hot spots
in the Caucasus. However, this does not mean that it is
smooth sailing ahead, with regulations, bureaucracy, and
corruption remaining in place as major trade barriers. Iran
recognizes Turkmenistan as an important trade partner, and,
perhaps aware of greater western interest in Turkmenistan,
has offered technical assistance on the construction of this
line. END SUMMARY.

COOPERATION THROUGHOUT THE REGION

3. (U) Turkmen President Berdimuhamedov attended a ceremony
in the Bereket region of Balkan province on December 1 to
kick off construction of the
Uzen-Gyzylgaya-Bereket-Etrek-Gorgan railway line, connecting
railway networks of Kazakhstan, Turkmenistan, and Iran into a
single north-south railway route. The Iranian Deputy
Minister of Roads and Transportation and Executive Director
of the Organization of Railways Hassan Ziyari and Kazakh
Acting Minister of Transportation and Communications Zhenis
Kasymbekov also attended the ceremony. Turkmen Minister of
Railroad Transportation Deryaguly Muhammetgulyev announced
that the Ministry plans to complete construction by December
2011, but President Berdimuhamedov said that Turkmenistan's
portion might be finished earlier. Each of the participating
countries -- Kazakhstan, Turkmenistan, and Iran -- is
financing the construction of the rail line that is located
on its own territory. About 700 kilometers -- with stops at
17 stations -- of the 900-kilometer railroad will pass
through Turkmenistan. The government of Turkmenistan
reportedly approved the line quickly. Iran made a public
offer of technical assistance to Turkmenistan.

EXPECTED TRADE INCREASE, INCLUDING WITH RUSSIA AND EUROPE,
WITH OTHER BENEFITS FOR THE CASPIAN REGION

4. (U) Turkmenistan, Kazakhstan, and Iran expect an increase
in trade from these rail links. According to Itar-Tass,
three to five million tons of goods will transit this rail
line annually, with a gradual increase up to 12 million tons
of transited goods anticipated. Russian President Vladimir
Putin noted that the line will benefit Russia, since it links
to existing Russian rail systems and fits with Moscow's plans
to promote bilateral trade with Ashgabat.

5. (U) This new route bypasses hot spots in the Caucasus
region when transiting goods from Russia, Belarus, Ukraine,
Moldova and other European countries to the Persian Gulf or
South Asia. Also, this route reduces the travel time for
cargo by two days by reducing the distance by 600 kilometers
from the current corridor of Beynau-Turkmenabat-Kerakhs.
According to a December 24 article in "Neutral Turkmenistan,"
this North-South line "will play a decisive role in the
creation of a new social infrastructure of desert regions"
because it will make it possible to export oil and gas, and
mineral deposits such as coal, manganese, and phosphorus from
the area around the Caspian Sea. In addition, goods needed
for construction in the Caspian region will arrive faster,
thus "deciding many socio-economic problems of development in
the Sea region."

A FOLLOW-ON TO NIYAZOV'S TEJEN-SARAHS-MASHHAD LINE


ASHGABAT 00001393 002 OF 002


6. (U) Former President Niyazov also commissioned a rail
link from Turkmenistan to Iran in 1996, the
Tejen-Sarahs-Mashhad line. In the first ten months of 2007,
Turkmenistan earned $36 million from cargo transit on this
existing route. According to a source at the Turkmenistan
Ministry of Railway Transportation quoted by Gorgan Voice of
the Islamic Republic of Iran, at least 2.5 million tons a
year transits Turkmenistan on this line.

7. (SBU) COMMENT: Even as the Turkmen press is emphasizing
socio-economic benefits to the Caspian Sea region, some
locals see this rail line as another of President
Berdimuhamedov's attempts to make his own mark on the face of
Turkmenistan. Just as former President Niyazov turned
Ashgabat into the "White City" and built a rail link to Iran,
President Berdimuhamedov is now endeavoring to transform
Avaza on the Caspian coast into a world-class tourism center
and build a rail link from Kazakhstan to Iran.
Berdimuhamedov is pushing for an early opening of the rail
line. And, the sooner Turkmenistan finishes the line, the
sooner it will earn transit fees from it. END COMMENT.
HOAGLAND

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