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TURKMENISTAN


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 6,010 7,672 4,000 110
         
GNI per capita
 US $ 1,120 1,200 950 131
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
488,100 

Population 
4,863,169 

Principal 
ethnic groups 
Turkmens 77%
Uzbeks 9.2%
Russians 6.7%

Capital 
Ashkhabad 

Currency 
Turkman Manat

President 
Saparmurat Niyazov


Update No: 294 - (28/06/05)

The buffoon of the beyond
The rational course for remote former Soviet Turkmenistan is to diversify its gas export route away from Russia. Moscow ruthlessly exploits its monopoly position here, with truly colonial pipelines in place. The Turkmens receive barely one quarter of world prices for their gas.
But President Saparmurat Niyazov, the self-proclaimed Turkmenbashi, or father of all Turkmen, who has built a far-reaching personality cult during his nearly 15 years in power of independent Turkmenistan, is not a rational man. He bungled a deal with Western majors several years ago for a new route across the Caspian to Western Europe that could have transformed his country's economic prospects. The Westerners were simply disgusted by his manner and distrusted his reliability for a multi-billion dollar project.
The greying president is, indeed, a clown, who recently declared on TV: "It is important for Turkmenistan to have a handsome president. From now on I will dye my hair black." 

Ukraine to squeeze Russia as major partner?
Still, he may be learning for fear of being left out on a loop as world energy shortages become a critical issue. Energy issues were the forefront of discussion during late March talks between Ukrainian President Viktor Yushchenko and his Turkmen counterpart in Ashgabat, otherwise two rather unlikely bedfellows. The visit, indeed, ended without an agreement on a gas deal. At the same time, both leaders sent signals that they would like to escape from under Russia's energy dominance. 
Yushchenko pressed for a 15-year deal under which resource-rich Turkmenistan would supply Ukraine with nearly all of its gas needs. The Western-oriented Yushchenko administration is keen to achieve energy-import diversification so as to decrease its economic dependence on Russia, overwhelmingly its main supplier hitherto. Doing so would weaken Moscow's political leverage over Kiev. 
The mercurial Niyazov rejected Yushchenko's proposal. At the same time held out the possibility that a deal could be struck down the road. Niyazov's interest in continuing negotiations with Kiev seems driven by a desire to open energy export routes that bypass Russia. 
Despite the lack of agreement, Yushchenko sounded upbeat at the joint news conference that concluded his Ashgabat visit. "Our countries and our people have good traditions and we maintain unique political and economic relations, which we will raise to a higher level," Yushchenko said during a news conference broadcast by Turkmen state television. "We will act in the most rational way and with success." 
Ukrainian political analysts noted that Yushchenko, the leader of Ukraine's Orange Revolution, and Niyazov, one of Central Asia's foremost tyrants, are political opposites and, thus, would seem to make awkward negotiating partners. Energy, however, is responsible for making these political opposites attract. 
Though having divergent political systems, Ukraine and Turkmenistan are generally regarded as sceptics within the Commonwealth of Independent States grouping of post-Soviet nations. Accordingly, both have expressed an increasing preference in recent years to pursue their strategic interests through bilateral, rather than multilateral initiatives. 
Ukrainian-Turkmen cooperation in the energy sphere is a central element to both nations' economic policies. Turkmenistan is the second largest exporter of natural gas in the CIS after Russia, and Niyazov is extremely interested in expanding his country's export possibilities. In its turn, Ukraine, under the terms of gas delivery agreement covering 2002-2006, buys annually 36 billion cubic meters of Turkmen gas. This makes Turkmenistan the largest gas supplier to Ukraine. The rest of the country's demand is met by Russia's state-controlled gas giant Gazprom and other Russian suppliers, as well as by limited domestic gas extraction. The trade volume between Ukraine and Turkmenistan is second only to Kiev's trade relations with Moscow. 
Beginning in January 2007, however, most Turkmen gas will go to Russia's Gazprom. In April 2003, Russian President Vladimir Putin and Niyazov signed a 25-year energy agreement, under which Russia gained the right to purchase the majority of Turkmenistan's gas production. The deal has the ability to make Ukraine more dependent than ever on Russia for energy supplies. As one commentary published in the Vremya Novostei daily suggested, the long-term Russian-Turkmen contract means that "very soon" Gazprom could become Ukraine's major supplier of gas - a situation that would carry with it unpleasant geopolitical implications for Kiev. 
Ukraine has developed a three-pronged strategy to prevent this scenario from happening. First, Kiev seeks to secure the steady supplies of non-Russian gas, namely from Turkmenistan. An indicator of Kiev's eagerness to cut a deal with Ashgabat was evident in January, when Niyazov hiked the price of gas deliveries to Ukraine by 32 percent and Ukrainian officials immediately agreed to pay. Gazprom, meanwhile, declined to pay the higher price. 
During the Ashgabat talks, Niyazov reportedly assured Yushchenko that "in principle" Turkmenistan could meet its supply obligations to Gazprom -- roughly 60-70 billion cubic meters of gas annually -- and deliver approximately the same amount of energy to Ukraine. To make it happen, Niyazov suggested, a Caspian littoral pipeline needed to be built. 
Yushchenko quickly endorsed the concept. But a number of Russian and Ukrainian experts are wary about whether such a plan is feasible. Many believe that Turkmenistan is incapable of making such a dramatic increase in production, noting Turkmenistan's current extracts amount to around 55 billion cubic meters of gas annually. Given the doubts about Turkmenistan's future production capacity, Oleksiy Volovych, director of the Odessa branch of Ukraine's National Institute of Strategic Studies, warned in an interview with the Novye Izvestiya newspaper that "today Ukraine runs the risk of finding itself on the periphery of global struggle between the world giants over the diminishing supply of energy resources."
In general, Ukrainian analysts are cautious on whether a Ukrainian-Turkmen gas deal will ever be reached, and then adhered to. Niyazov, they note, has a history of not honouring contracts. Turkmenistan's January gas price hike from $44 to $58 per 1,000 cubic meters is but one example of Ashgabat's capricious behaviour. Turkmenistan also has proven a difficult negotiating partner in the five-nation Caspian Sea talks. 
Niyazov's mercurial manner was on display during the joint press conference. International human rights organizations, along with the US government, maintain that Turkmenistan is among the most despotic nations on earth. When asked by a Ukrainian journalist about human rights conditions in Turkmenistan, Niyazov insisted that "there is not a single person held in Turkmen prisons for political motives or ideas." 
"Semi-criminals are telling you stories and you start talking about human rights violations," Niyazov told the questioner. 
Yushchenko came under some criticism at home for his willingness to engage Niyazov. Political analyst Vitaly Portnikov said Niyazov used Yushchenko as a prop to enhance the Turkmen leader's personality cult, when the two presidents had a stroll - hand in hand -- amid the posh Ashgabat palaces in front of the TV cameras. "Such a Yushchenko his voters haven't seen yet," Portnikov wrote in a commentary posted on the Politcom.ru website. 
Some Ukrainian analysts believe Niyazov may be trying to use Ukraine in order to get Russia to pay a higher price for Ashgabat's gas. But even if his desire to work out a deal with Kiev is genuine, many Ukrainian analysts believe that Russia will work hard to scuttle any possibility of a bargain. Andriy Yermolayev, director of the Kiev-based Centre of Social Research "Sophia," said Russia isn't interested in Ukraine's "independent game" in Turkmenistan. That's why Yushchenko's attempts at "establishing direct ties with alternative energy sources and bypassing Russia are unlikely to succeed," Yermolayev was quoted as saying by the Novosti-Ukrayina news agency.

Germans take a closer look at Turkmen market
Meanwhile, new commercial contacts are under way in several directions, notably with Germany and Turkey. A German delegation headed by Peter Lorens, the director general of the Commonwealth of Independent States department in the German Federal Ministry of Economy and Employment, participated in a two-day Turkmen-German economic forum in Ashgabat on May 23rd-24th, Turkmenistan.ru reported. The German delegation representing 25 large companies and a number of state structures participated in the forum to boost bilateral partnership.
According to the government, a brief review of the trade-economic relations between Turkmenistan and Germany and presentation of a number of German companies, both old and potential partners of Turkmenistan were held. Both sides discussed a draft agreement "On the further development of economic cooperation between the ministry of economy and employment of the Federal Republic of German and the Ministry of Economy and Finances of Turkmenistan" designed to strengthen the legal basis of the Turkmen-German cooperation. The German delegation also negotiated with the leading ministries and establishments of the country during their three-day stay in Turkmenistan. Both sides also held bilateral talks with the leadership of the processing and textile industries, trade, transportation and servicing sectors. Other issues discussed at the meeting were related to further development of partnership in the oil and gas, energy and chemical sectors which are of particular interest to the German business circles. Cooperation in the finance and banking spheres were also discussed.

Turkish companies clinch key deals in Turkmenistan
Turkey is of course a key player throughout Central Asia and is eying Turkmen markets and resources. Turkish companies have decided to build two social-cultural facilities in Ashgabat, it was reported recently. Niyazov signed relevant decrees to this effect on May 21st. 
The first document authorises the Turkmen Ministry of Trade and Consumer Cooperation and the State Commodity and Raw Materials Exchange to sign a contract with Turkish company Belda Inshaat Taahut Tijaret Ltd Shirketi for the turnkey construction of a cultural-entertainment centre with a restaurant and improvement of a cultural-entertainment centre with a restaurant and improvement of an adjacent territory with small architectural compositions, Turkmenistan.ru reported.
The project's cost is US$6.98m. Under the second document, the Turkmen Ministry of Trade and Consumer Cooperation is to sign a contract with Turkish company Polimeks Inshaat Taahut & Sanayy Tijaret AS for the construction of a trade centre and improvement of an adjacent territory with small architectural compositions at a total cost of US$9.75m in Ashgabat. 
Both facilities should be commissioned by the 15th anniversary of Turkmenistan's independence on October 27th, 2006. According to another decree signed by Niyazov, the Turkmenmachinegurlushyk concern, the ministry of power engineering and industry of Turkmenistan are to sign a contract with a consortium of Turkish companies ERDEMIR Muhendislik Yonetim ve Danismanlik Hizmetleri AS and SEHIL Insaat Endustri ve Ticaret Limited Sirketi for the construction of the republic's first metallurgy plant with a projected capacity of 160,000 tonnes of metalware a year. The project is worth US$64.5m and will be commissioned in two years.

Ashgabat hosts regional meeting on Caspian ecology protection
Niyazov is taking a less adversarial approach to Caspian Sea issues than hitherto. The second regional meeting of experts to prepare an important ecological document, the protocol on pollution from ground sources under the framework convention for protection of marine environment of the Caspian Sea, kicked off in Ashgabat on May 20th. The ministry of nature protection of Turkmenistan and the UN bodies, UNEP and UNDP organised the forum. The participants comprised of representatives of state nature protection organisations from all the five Caspian states and international experts, Turkmenistan.ru reported.
The meeting discusses articles of the draft protocol related to the ground sources of pollution. The protocol was prepared within the framework of Caspian Ecological Programme (CEP) that was launched in 1998. It constitutes a single regional structure to coordinate efforts aimed at resolving important ecological problems, including development of a strategic action plan and a framework convention for protection of marine environment of the Caspian Sea signed by five Caspian state in Tehran in 2003.

Gurbanmuradov accused of misuse of funds
At home the economy is in the doldrums, despite extravagant claims of double-digit growth in GDP. Even Niyazov is aware that a campaign against corruption is a good idea. He wants to be the only Godfather in town.
The biggest economic bosses are being targeted. Turkmenistan's general prosecutor's office announced the outcome of its investigation of the work of certain sectors of the economy and their leaders at an expanded cabinet meeting on May 20th, Turkmenistan.ru has reported. Niyazov earlier noted that the meeting should address the issues that may affect the pace of economic reforms and the country's welfare and prosperity as a whole, according to the state news agency (TDH). 
Niyazov said that a serious evaluation of the successes and failures at this stage of development is required. He underlined that there is no place for any compromises on the whole number of misdeeds by top state officials that was revealed during the general prosecutor's investigation. Niyazov added that there is need for open discussion about the blatant violations of office by the top officials who abused state and moral laws and 'violated precepts of our ancestors'.
He cited the example of Elly Gurbanmuradov who has overseen the oil and gas complex, Turkmenistan's strategic sector of the economy, in the capacity of the deputy prime minister of Turkmenistan over the recent years. He was the head of the foreign economic relations bank for a few years, turning it into his own patrimony for profiting and enrichment. The general prosecutor of Turkmenistan, Gurbanbibi Atajanova, alleged that Gurbanmuradov misappropriated state funds for a number of years and misused the amounts of money through a network of hidden business structures.

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ENERGY

Wintershall to develop Turkmen Caspian sector

Germany's Wintershall company intends to participate in developing gas fields in the northern part of the Turkmen section of the Caspian Sea on a production-sharing basis soon, Bernhard Schmidt, one of the directors of the Wintershall, said during a meeting with Turkmen President Saparmurat Niyazov on May 23rd. The Ambassador of Germany Hans Mondorf also participated in the meeting.
After the meeting, Niyazov welcomed the wish of Wintershall, which ranks among the largest European oil and gas firms, to establish full-fledged and mutually profitable cooperation with Turkmenistan, Interfax News Agency reported the presidential press service as saying.
Hailing the intention of the German company to establish full-scale mutually advantageous cooperation with Turkmenistan, Niyazov stressed that the extraction of marine hydrocarbon resources is a priority direction in developing the national oil and gas sector, because this is where colossal oil and gas deposits are concentrated which was confirmed by the surveys of independent international experts, Niyazov said.
Wintershall intends to drill test holes in the coming months, Schmidt said. He also told Niyazov about Wintershall's intention to take part in a programme to develop hydrocarbon resources on the right bank of the Amu Darya River.
The state news agency (TDH) reported that Wintershall has once again confirmed its readiness to participate in the realisation of Turkmenistan's vast energy potential, specifically, in projects on the development of hydrocarbon deposits in the Turkmen sector of the Caspian Sea in line with the terms set out in the production-sharing agreement.
In this connection, Schmidt presented Niyazov with initial plans that were favourably met by the head of state. Niyazov is confident that the partnership with Wintershall in this sector would be as successful as cooperation with tens of other European companies including German companies that have been successfully operating in the various sectors of Turkmenistan's economy for quite a time now.
During the meeting, Schmidt briefed Niyazov on the work the company had accomplished to examine the six promising oil and gas deposits in the northern part of Turkmenistan's Caspian sector. Based on these results, the company is intending to drill exploratory wells in the coming months, added Schmidt.

Turkmenistan produces 23.8 bcm of gas

Turkmenistan's natural gas output stood at 23.84bn cubic metres and its exports at 16.84bn cubic metres in January-April 2005, down 1% and 4% on an annual basis, according to the Ministry of oil and gas industry and mineral resources, Turkmenistan.ru reported. 
The decrease in these indexes was due to the delay in gas exports to Russia and cut in physical volumes of gas exports to Ukraine, the ministry said. Gas exports to Ukraine resumed in the middle of this January owing to the protracted negotiations over the gas price. Gas exports to Russia resumed on May 1st.

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FOREIGN DEBT

Georgia will pay Turkmen debt soon

Georgia has significantly reduced its debt to Ashgabat for Turkmen gas deliveries in 1993-1994,New Europe reported recently.
Currrently the debt stands at US$152m, Georgian Ambassador in Turkmenistan, Alexei Petriashvili, said. The Georgian government takes this issue as seriously as it holds the dynamics of economic cooperation between the two countries, according to Petriashvili. On behalf of the leadership and people of Georgia, Petriashvili took the opportunity to express sincere gratitude to the president of Turkmenistan Sapamurat Niyazov for "extending the helping hand to Georgia and making it possible for Georgia to pay the debt in goods and services, considering the economic and financial problems experienced by our country, starting from the most difficult period of restoration of our statehood."

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FOREIGN RELATIONS

Turkmen leader to visit China in 2006

Turkmen President, Saparmurat Niyazov, recently announced at a government sitting that he will pay a visit to China in the first half of 2006. While mentioning his visit to Moscow and the meetings he held there, Niyazov said that his talks with Chinese President Hu Jintao were highly fruitful, Turkmenistan.ru reported, citing the press service of the president. 
Niyazov said that this meeting has improved the Turkmen-Chinese relations with new specific content in the context of mutual aspiration for deepening and expanding the equal and mutually advantageous cooperation.

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FOREIGN TRADE

Turkmenistan foreign trade turnover reaches US$20.2bn

Foreign trade turnover of Turkmenistan exceeded US$20.225bn in the first quarter of this year, up 18.2% on the same period of 2004, according to the national institute of state statistics and information, Turkmenmillihasabat. Turkmenistan's trade turnover with Commonwealth of Independent States (CIS) countries increased 28.6% in January-March of the current year on an annual basis. Exports grew 30.5% and imports 24.8%, leaving a surplus of US$340m. Turkmenistan's trade with the rest of the world rose by 10.4%. Surplus in trade with these countries was US$15.59m despite higher growth rates of imports (25.5%) than those of exports (1.3%), Turkmenistan.ru reported. 
Turkmenistan reports a steady trend in growth of the foreign trade surplus both with CIS countries and other trade partners since the beginning of the year, making a surplus of US$49.59m in 3 months. Turkmenistan's exports in the first quarter of this year increased 14.3% to US$12.592bn on the last year. At the same time, exports of oil products grew from 19-21%; oil from 7-9% and natural gas from 54-55%. Some 80% of Turkmen gas was exported to Ukraine and 13% to Iran in the reported period.

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