a free service
Annexed by Russia between 1865 and 1885, Turkmenistan became a Soviet republic in 1925. It achieved its independence upon the dissolution of the USSR in 1991. President NIYAZOV retains absolute control over the country and opposition is not tolerated. Extensive hydrocarbon/natural gas reserves could prove a boon to this underdeveloped country if extraction and delivery projects can be worked out.
Update No: 262 - (22/10/02)
The Turkmen republic has the dubious privilege of being largely alone in Central Asia, as its dictatorial president remains aloof from regional groupings and initiatives, as in the anti-terrorism campaign. Turkmenistan is not a member of the Eurasian Economic Community, comprising Kazakstan, Kyrgyzstan and Tajikistan, as well as Russia and Belarus. Nor is it a member of the Shanghai Five, recently upgraded to Six. Nor is it a member of the Central Asian Cooperation group, that met in Dushanbe recently.
Maybe President Saparmurat Niyazov is frightened of leaving his country on foreign trips, aware of the growing disaffection with his regime at home, which is increasingly manifest at the highest levels.
Defections from the ruling elite have included an ambassador to Turkey and other diplomats. In fact many at the top seem to want to leave, in some cases after sending funds ahead of them.
The biggest fish to act in this fashion has been a central bank employee, Arlan Kakayev, the representative of the central bank's foreign payments department and staff member of the SWIFT interbank system. He allegedly stole US$41m from the Turkmen reserve funds in a foreign bank. Having transferred the funds to banks in Russia and the Baltic states and then in offshore banks, he left the country.
The incident has led to the sacking of the chairman of the central bank, Ymamdurdy Gandymov, in his post for less than six months, for negligence. The police authorities are investigating how such a large sum could have gone missing and whether the top central bank staff should be held accountable.
Behaviour of this sort is not at all surprising in a regime that is corrupt through and through, especially at the top. Mr Niyazov treats the public budget as his private purse, having palaces built for him, while ordering the construction of large hotels for largely non-existent foreign visitors.
Niyazov justifies the extraordinary cult of his own personality which accompanies the construction efforts (every building being adorned with his portraits) by reason of the multi-tribal character of the population. Tribal nomads, owing allegiance to their chieftains, were the norm before communism. The adulation of Soviet leaders, whether Stalin or Brezhnev, held the fissiparous tendencies in check.
The cult of Turkmenbashi the Great 'the father of all Turkmen,' is a simple device to do the same today, Niyazov claims. But it is alienating many Turkmen who want their country to enter the modern world, especially better-educated people high up in the administration.
Dissidents assembled recently in Vienna, where they denounced the "grotesque proportions" of the cult. It is particularly offensive to the Turks among foreigners, affronting their conception of Ataturk as "the Father of the Turks," while jeopardising oil and gas pipelines, whose natural route would be via Turkey. Deals with Western firms to construct them have fallen through.
Afghan pipeline or pipedream?
One bright idea that is exercising Niyazov these days is to build a gas pipeline, to be followed by an oil one, across Afghanistan. This would give the remote land-locked republic an alternative export route for its gas than via Russia.
At first Niyazov planned to do a deal to this effect with the Taleban, whose soldiers were allowed to recuperate and train on Turkmen territory. Now he is courting the Northern Alliance and Afghan Premier Hamid Karzai. He signed an accord in July with Karzai and Pakistan President Pervez Musharraf to construct a pipeline to carry an annual 15bn cubic metres of gas from Turkmenistan's Dauletabad field to Kandahar in Afghanistan and thence to the Pakistan port of Gvadar on the southern shore of the Arabian Sea. The world's oceans and markets would beckon beyond.
The Asian Development Bank, which Niyazov has been assiduously courting, has indicated a willingness to finance a feasibility study. But of investors to finance the US$2-3bn project there is no sign. A scheme for the 1,500 km development was first mooted in 1994 when first the Argentinean firm, Bridas and the US firm, Unocal, from Texas showed interest. Both pulled out, citing the security risks.
Turkmen sources now say investment is to come from companies from the US, China and Japan. Officials in the US, however, say that American firms are unlikely to be involved. "There are certainly no new interesting projects in the region," says Leonard Cobern, an official at the US energy department. "ExxonMobil is leaving Turkmenistan. They did not find anything, and have realised that they cannot work in this country. Chevron Texaco is not involved in Turkmenistan, as it has begun serious projects in Pakistan and Azerbaijan."
Turkmenistan is likely to be left out in the cold, especially as the new regime in Afghanistan cannot guarantee stability and safety yet. Niyazov's idea is looking like a pipedream after all.
The Germans maintain interest
One of the countries which could eventually buy energy products, notably gas, from Turkmenistan is Germany, which is interested in Central Asia anyway as a venue for investment. Siemens, Bentek, Daimler-Chrysler, Mannesmann and Technip are already operating in the region and are viewing Turkmenistan as a potential site for capital projects.
Smaller firms from Germany are also getting interested. The general disinterest of US firms in Turkmenistan is no deterrent. The Germans can see the potential in the land-locked but resource-rich republic. Turkmenistan is on the Caspian Sea, but the sea is really the world's largest inland lake. The German ambassador to Turkmenistan, Hans Guenther Mattern, is a staunch advocate of German/Turkmen accord.
Gazprom to rebuild pipeline in western Turkmenistan
Russian gas monopoly Gazprom plans to reconstruct the Central Asia-Centre III gas pipeline in western Turkmenistan. The present-day capacity of the pipeline is about 10m cubic metres of gas a day. "Turkmenistan and Russia intend to legalise their long-term gas partnership," Gazprom Deputy CEO, Yuri Komarov, said after a meeting between a Russian governmental delegation and Turkmen president, Saparmurad Niyazov. "This is a matter of rather large supplies of Turkmen gas before 2020. The projects will require sizeable investments and an upgraded inter-state gas pipeline system," he said. "A potent and widespread network will make it possible to transport Turkmen gas from the Caspian fields, as well," he added.
Russia to increase purchases of Turkmen gas
Russia intends to increase purchases of gas from Turkmenistan, Russian Energy Minister Igor Yusufov said following a meeting with Turkmen President Saparmyrat Nyyazow in Asgabat on 19th September. The meeting was held as part of the first session of the Russian-Turkmen intergovernmental commission on economic cooperation, Interfax News Agency has reported .
"In 2005, Russia intends to buy 10bn cubic metres of gas from Turkmenistan, while, by 2008, imports will increase to 20bn cubic metres," Yusufov noted.
The Turkmengaz company told Interfax that the last contract involving the purchase of 10bn cubic metres of gas was concluded between the international energy corporation Itera and Turkmenistan in January 2002. Itera has so far bought only 4bn cubic metres of gas.
"The Turkmen leader supported our proposals on gas purchases worked out in line with Russia's energy strategy for the period up to 2020, which is being drawn up now. Until 2005, Russia will be proceeding from Turkmenistan's residual potential and the capacity of the Central Asia-Centre gas pipeline, which Russia has agreed to restore and maintain in the Uzbek and Kazakh territories," Yusufov said.
At the moment, the principal importer of Turkmen gas is Ukraine, which buys 34bn cubic metres a year, Yusufov said. Along with this, there are contracts with Itera, "so the existing capacities are engaged in these supplies. However, if opportunity knocks, we will be buying as much Turkmen gas as possible," the Russian minister said.
FOREIGN ECONOMIC RELATIONS
Germany maintains business interest in Turkmenistan
Germany remains one of the closest trade allies of Turkmen republic and Germany. German Ambassador to Turkmenistan, Hans Guenther Mattern, made a statement recently to reiterate the aforementioned. Replying to question forwarded by the Turkmen state news service reporters, the German diplomat stressed his confidence "that Germany and Turkmenistan have the desire and possibility for further stepping up their mutually beneficial and fruitful partnership."
Mattern said that small German businesses had been currently familiarising themselves with the Turkmen market, whilst large companies had been already working successfully in the area. He ambassador named a series of German companies operating in the region amongst which, Siemens, Bentek, DaimlerChrysler, Mannesmann and Technip. The German official representative to the Turkmen state, acknowledged that the pace of business activity was relatively slow.
INVESTMENT BACKGROUND REPORTS
Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of clients or by access to one of our existing specialised reports.
For further information email:
Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly newnation reports and the complete worldaudit democracy check for the low price of
US$12. The print-out would be a good companion to take with you. Having read it, you might even decide not to go!
To order please click here: