Cablegate: Oecd/Osce Conference On Investment and Development In

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Dianne Wampler 08/08/2006 05:19:14 PM From DB/Inbox: Dianne Wampler

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UNCLAS ISTANBUL 01387

SIPDIS
CX:
ACTION: ECON
INFO: CONS PA RAO FAS MGT PMA FCS POL DCM AMB

DISSEMINATION: ECON /1
CHARGE: PROG

VZCZCAYO673
PP RUEHAK
DE RUEHIT #1387/01 2201310
ZNR UUUUU ZZH
P 081310Z AUG 06
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 5577
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0007
RUEHFR/AMEMBASSY PARIS PRIORITY 0160
RUEHBUL/AMEMBASSY KABUL PRIORITY 0224

UNCLAS SECTION 01 OF 03 ISTANBUL 001387

SIPDIS

PARIS FOR USMISSION OECD
VIENNA FOR USMISSION OSCE

E.O. 12958: N/A

TAGS: ECON EINV EFIN TU
SUBJECT: OECD/OSCE CONFERENCE ON INVESTMENT AND DEVELOPMENT IN
CENTRAL ASIA AND THE CAUCASUS

1. Summary: OECD and OSCE jointly sponsored, and the Government of
Turkey hosted, a meeting July 11-12 to assess interest of the
countries in Central Asia and the Caucasus in an investment and
development initiative similar to regional initiatives that OECD has
undertaken with USG support in South East Europe and the Middle East
and North Africa. Most countries from the region were represented at
deputy minister/director general or head of investment agency level
and expressed strong interest in support from OECD and other
institutions in efforts to improve their investment climate and
support economic development and integration within the region.
Other international and regional development institutions were
represented, including the World Bank (IFC and FIAS). They
generally supported the initiative and expressed interest in
coordination of their and OECD/OSCE efforts in the region.
Afghanistan was also represented by the head of their Investment
Support Agency. They expressed strong interest in participation and
highlighting their potential role as a link to other markets in
South Asia. A chairman's summary approved by participants endorsed
the OECD/OSCE proposal (including participation by Afghanistan).
Participants agreed to organize a meeting for September or October
at which a work program for the initiative could be discussed and to
seek the support of donor countries and institutions. Turkey agreed
to host again in Istanbul. OECD secretariat intends additional
activities in Paris in July and September to secure further support
from its member countries for the program. End Summary.

------------------------
Countries Attended
------------------------

2. Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhastan, Kyrgyz
Republic, Ukraine, Uzbekistan, and Tajikistan participated. OECD
members Belgium, Greece, Switzerland and the United States attended.
Romania and Russia also participated. Wes Scholz, Director of
State Department's Office of Investment Affairs represented the
United States. In addition to OECD, OSCE, IFC and FIAS, other
organizations represented included; UNDP, UNIDO, UN Economic
Commission for Europe, and the Organization of Black Sea Economic
Cooperation. The Wolfensohn Center of the Brookings Institution was
also represented by former World Bank VP for Central Asia Johannes
Linn.

--------------------------------
Regional Countries Participated
--------------------------------

3. Regional countries participated actively in the discussions,
welcomed the initiative of OECD and OSCE and asked many questions of
OECD about its similar programs in Southeast Europe and the Middle
East and North Africa. The other organizations present endorsed the
need for greater efforts to support the region's integration and
development and endorsed the call by the United States and Brookings
representatives for OECD and OSCE to coordinate closely with efforts
already underway in the region in an effort to complement those
activities and minimize confusion or conflicting signals for the
countries in the region. Representatives from these organizations
also expressed their interest in coordinating with OECD and OSCE.

4. Both elements of the OECD/OSCE proposal received support from
most participants (i.e., the proposal for assistance in policy
reform to improve the investment climate and the proposal for the
OECD Development Center in Istanbul for a regional economic outlook
providing analysis of macroeconomic and structural policies and
performance.) The elements are described in more detail in the
Chairman's Summary below. In sidebars with the United States some
delegations acknowledged that the policy reform element was more
important than the outlook element. However, both proposals were
endorsed in the summary with no participants objecting. Turkey,
Romania and Greece were particularly insistent on the value of the
economic outlook element in side bars with the U.S. rep.

5. The OECD secretariat told the U.S. rep that the proposal will be
discussed at the OECD Development Center Board Meeting in Paris on
July 18, and although the United States was not a member it would be
welcome to participate. Turkey and Romania stressed that any
financial support for the outlook element would be ODA eligible. The
proposal will also be discussed in a July 20 meeting of the OECD
external relations committee on July 20 and at the Investment
Committee meeting in September. In conversations with the U.S. rep
Turkey expressed their intention to contact key OECD member missions
in Paris to brief them on the meeting results, to pledge their
intent to support the initiative financially and solicit political
and financial support from them as well. They believe support by
the United States will be of particular importance in terms of
securing support from other OECD member governments. They believe
from their preliminary contacts that Japan, UK, Switzerland, Italy
and the UK are good possibilities as well.

----------------------------------
Side Meetings With OCED AND FIAS
----------------------------------

6. In a side meeting with OECD and FIAS, the U.S. rep proposed that
OECD consider inviting the other key institutions active in the
region to a meeting to discuss their respective programs in the
region and how they can complement one another. Both agreed that
this would be desirable and OECD intends to follow-up. Also in side
discussions with OECD, OSCE and Turkey, the U.S. rep stressed the
importance of including Afghanistan for the reasons outlined by the
Afghan rep. They agreed and, other than reported questions raised
by the Russian rep with OSCE, no objections or questions were raised
by others and Afghanistan is included in the proposal.

7. The participants list will be faxed to posts from Washington and
the Chairman's Summary follows:

Begin text
CHAIRS' SUMMARY

On 11-12 July OECD and OSCE in cooperation with the Turkish
government organized a conference at the Istanbul Center for Private
Sector Development.

The conference brought together governmental officials of
Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz
Republic, Tajikistan, Ukraine and Uzbekistan. Other countries
represented included Turkey as the host country, Belgium in its
capacity of the OSCE Chairmanship, Greece, Romania, the Russian
Federation, Switzerland and the United States. In addition to the
co-organizers, the following international organizations were
represented: UNIDO, the UNECE, the UNDP, the World Bank Group (FIAS
and IFC), the BSEC and the International Centre for Black Sea
Studies (ICBSS). There were also a few representatives of the
private sector, academia and NGOs.

The purpose of the meeting was to explore the possibilities for
developing an initiative on investment and development in the
Central Asia and Black Sea regions, with the support of donor
countries and international organizations.

In the conference a number of conclusions emerged:

- The countries of the Black Sea and Central Asia regions face new
challenges as well as opportunities in today's globalized economy;
they have strong potential, but not enough investment.
- Many international investment initiatives have been undertaken in
those regions, but rather in bilateral formats, without sufficient
coherence between the various actors and actions.
- There is a need for a regional approach in improving the
investment climate and promoting investment, achieving a better
co-ordination and more efficiency.
- This approach is also justified by the regional, rather than
national, dimension of transport and infrastructure networks and
potential investors' interest in larger size markets.
- Investment efforts should be combined with achieving development
goals; together they would bring more stability and security.
Sustainability of investment would contribute to sustainability of
economic development itself.
- A new approach to support investment and development could be
realized in the form of the Central Asia and the Black Sea regions'
Investment and Development Initiative (CABS IDI). It could be
further elaborated to include geographical and/or thematic
sub-programmes. The initiative would include countries of Central
Asia (with adjacent Afghanistan as well as Mongolia), and the Black
Sea region (except those already participating in the Investment
Compact for South East Europe - for investment policy reforms).

Participants expressed support for the development of a new regional
initiative. To enhance effectiveness and coherence, the initiative
should be coordinated and integrated with existing efforts of
bilateral, regional and international organisations.

This initiative would be guided by the following orientations:
- It would be demand driven, i.e. tailored to reflect the needs and
priorities of the participating countries, based on active ownership
of the participating countries;
- It would be based on commitments of the participating countries to
economic and institutional reforms and reflect national ownership of
the reform process;
- It would aim at concrete results, policy impacts and project
generation based on sound economic analysis;
- It would build in periodical reviews of the results achieved;
- It would promote private-public dialogue and partnerships among
the participating countries, OECD countries and international
organisations.

The initiative discussed by the participants would have the
following key components:

I. Investment Reform Process (IRP): A structured regional approach
to improve investment environment in the regions.

- This would include an evaluation of policy reforms at national
levels, the formulation of the priorities for future actions as well
as capacity building support. Each country would be invited to
formulate its priorities and time bound targets for investment
reforms and achievements would be evaluated periodically benefiting
from peer review procedures.
- In addition, working groups would be constituted to allow
countries to benefit from each other's experiences. The working
groups will address on a regional base key issues and gaps in the
investment process including infrastructure, trade facilitation, and
financial sector reform and enterprise development. OECD would
provide support to this programme drawing on the policy framework on
investment and its methodologies to assess progress on investment
reforms. Other international and regional organisations will be
invited to contribute to this programme.

II. Black Sea and Central Asia Economic Outlook (BSECAO)

(BSECAO would incorporate the BSEC countries, Central Asia and
Afghanistan.) BSECAO would be modelled on the established OECD
Development Centre regional outlooks and directed at fostering
policy dialogue in the regions. It would:
- Provide economic analysts and decision makers with reliable data
and authoritative analysis of macroeconomic and structural policies
and performance.
- Include thematic cross-cutting issues in order to identify major
hindrance to and highlight successful cases of policy reforms.

These programmes would be guided by a steering group composed of the
participating countries, donor countries and contributing
international organisations and private sector representatives.

Participants will meet again before the end of 2006 in Istanbul to
consider the programme of work and the financial structure of the
initiative. They called on donor countries and international
organisations to provide support. The programme could start
operations at the beginning of 2007 and would be designed for an
initial period of three years.

The OSCE, also through its field presence in the participating
countries would provide support to the national teams and the
working groups.

Meetings would be held at the Istanbul Centre for the Private Sector
Development and in the regions as appropriate.

Participants expressed the gratitude to the organisers, the Turkish
government and TIKA for the organisation of the conference.
End Text.
OUDKIRK

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