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Books on Turkmenistan
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
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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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