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Cablegate: Turkmenistan's Most Active Black Markets

VZCZCXRO4029
PP RUEHIK
DE RUEHAH #0249/01 0570948
ZNR UUUUU ZZH
P 260948Z FEB 10
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 4299
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 6295
RUEHBJ/AMEMBASSY BEIJING 3965
RUEHKO/AMEMBASSY TOKYO 3824
RUEHIT/AMCONSUL ISTANBUL 4539
RUCNDT/USMISSION USUN NEW YORK 1505
RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEHVEN/USMISSION USOSCE 4434
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 000249

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: N/A
TAGS: AMED EFIN ECON PGOV SOCI SNAR TX
SUBJECT: TURKMENISTAN'S MOST ACTIVE BLACK MARKETS

REF: A) 08 ASHGABAT 17; B) 08 ASHGABAT 1528

ASHGABAT 00000249 001.2 OF 002


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

2. (SBU) Foreign currency, imported alcohol and tobacco, and
pharmaceuticals are the three most prominent items sold on the
black markets in Turkmenistan. Until the Turkmen Government
unified the exchange rates in 2008 (Ref A), currency exchange
was one of the most common and profitable areas for black market
activity. Retailers who purchased products overseas would go
to black market currency traders to exchange their local manat
for dollars. They could get a rate that was five times better
than the official one. Since the unification of the exchange
rate in 2008, black market currency traders are less common,
but often deal in larger amounts of money. Under the
country's anti-money laundering regime, anyone exchanging more
than $5,000 needs a certificate to prove where the money
originated, and the bank will register the transaction. One
black market currency trader told Embassy economic assistant
that the anti-money laundering law saved his business. He
provides his clients anonymity for their large transactions.
In particular, alcohol and tobacco retailers frequently use
black market currency traders' services to turn their manat to
dollars.

3. (SBU) Another common underground market deals in the
importation of alcohol and tobacco products to Turkmenistan.
Turkmenistan's high excise taxes make it profitable for
individuals to smuggle cigarettes and alcohol into the
country. Often the people doing this are airline crews, who
buy expensive hard liquor and cigarettes in duty free shops in
Dubai, London, Ankara, and Istanbul, according to an Embassy
contact who is a stewardess on Turkmenistan Airlines. This
contact said that the market for high-end foreign alcohol is
small in Turkmenistan because most Turkmen prefer the cheaper
local alcohol. Therefore, tax inspectors and customs police
often overlook the illegal activity in exchange for a share of
the profits, usually in the form of a bottle of alcohol. This
acquiescence may be changing, because in January customs and
tax officials reportedly raided several liquor stores in
Ashgabat and fined shopkeepers who were selling Duty Free-
stamped tobacco and alcohol products.

4. (SBU) The pharmaceuticals black market is one of
Turkmenistan's largest. It developed in response to the
Ministry of Health's restrictive licensing procedures for
imported medicine (Ref B). Many companies either cannot
afford or do not want to pay the high licensing fees to
legally import medications. In addition, people smuggle
banned medication into Turkmenistan, including products
containing morphine or codeine. Smuggled medicines can be
bought at bazaars from private vendors. They can also be
found at pharmacies in cases where the medicine is legal to
possess in Turkmenistan, but the importer did not pay a
license fee to the government. An Embassy contact said that
she bought expensive, good-quality Austrian medication at a
pharmacy, knowing the drug was unlicensed. The medications
sold illegally are generally cheaper than licensed ones. This
particular black market raises public health concerns due to
the large number of counterfeit products imported from
Uzbekistan, India and Pakistan. The Customs Service and State
Counternarcotics Service closely inspect the pharmaceuticals
industry because of the potential for abuse by drug addicts.

5. (SBU) COMMENT: All three of these items sold on the black
market have organized distribution networks, which include a
division of labor between importer, distributor, and retailer.
While seemingly successful in their illegal activities, black
marketeers in Turkmenistan are not armed, and so pose little
threat to the country's overall stability or security. END

ASHGABAT 00000249 002.2 OF 002


COMMENT.

CURRAN

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