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TURKMENISTAN


 

 

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)

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


Update No: 310 - (30/10/06)

Ingratiating a despot
Turkmen government coffers are awash with cash. The regime is benefiting from a massive inflow of energy revenues. This makes it a tempting prospect for 'movers and shakers' from the West.
Businessmen have to be practical. They cannot always like the people they do business with. They can console themselves with the thought that in the long run the more contacts that a dictatorial regime has with the outer world the better for its people (if they gave a damn, that is).
But a price has to be paid - the need to turn a resolute blind eye to abuses of human rights and the corresponding need to ingratiate the dictator with flattery. In the case of Turkmen President Saparmurat Niyazov this is easily done. One just needs to praise his profound tome, the Rukhmana, which he places on the same spiritual plane as the Bible and the Koran. Actually, if one is going to go in for flattery it is as well to heed the advice of Benjamin Disraeli, the Jewish-born UK Prime Minister, a master of the art, who remarked on the success of his relationship with Queen Victoria: "when it comes to royalty, lay it on with a trowel." He did, praising a slim dairy of hers to the skies, saying that it placed her "at the very head of the literary profession."
Niyazov is royalty in all but name. A very different figure than Disraeli, Herbert J. Markley, head of the John Deere tractor firm's agricultural division, promised Niyazov in late September that a copy of the Rukhnama would occupy a prominent place at the John Deere company museum. As the government newspaper, Neutralnii Turkmenistan, reported, John Deere has once again become the beneficiary of a multi-million dollar deal for the supply of agricultural machinery. 
At the meeting between Niyazov and Markley, a contract was signed extending a long-established business partnership between the parties and completing a deal to supply Turkmenistan with 150 wheat combine harvesters, worth US$23 million, and spare parts to the value of US$4 million. During their encounter, Niyazov also took the opportunity to thank John Deere for its operations on the Turkmen market, which have been carrying on since 1993, while they both expressed mutual confidence that the collaboration would stand to continue for the foreseeable future.
In September 2003, President of John Deere Worldwide Agriculture, David Everett, visited Turkmenistan, at which time his company sealed a deal to supply 100 wheat combine harvesters and 50 cotton-combines, to the cost of US$27 million. As NewsCentralAsia reported at the time: "The John Deere-Turkmen partnership dates back to 1993 when Turkmenistan purchased harvester combines from John Deere. After extensive testing in local conditions, John Deere machinery was found to be suitable for Turkmenistan and on 24 April 1998, during the visit of President Niyazov to the United States, the government of Turkmenistan signed an agreement with John Deere for the supply, repair, maintenance and user/maintainer training of agricultural machinery. Over 10 years of cooperation, Turkmenistan has purchased 694 tractors to a total value of US$77.5 million, 258 wheat-combines worth US$41.3 million, and 148 cotton-combines for a total sum of US$27.7 million. In addition, John Deere has supplied thousands of smaller machines and equipment. In all, John Deere has supplied more than 3,500 machinery units to Turkmenistan. The total value of these items exceeds US$170 million. John Deere maintains permanent repair and maintenance facilities in Turkmenistan."
During the meeting, Markley also stated that he was ready to organise training sessions for Turkmen agricultural workers at John Deere's own factories, but not before noting that they were already highly skilled. Before concluding their encounter, Markley thanked Niyazov and congratulated him on the 15th anniversary of his country's independence. He continued by remarking how impressed he was by Ashgabat and its architecture, noting that it clearly demonstrated the achievements of the era of independence. Finally, Markley impressed on Niyazov how he had heard wonderful things about the Rukhnama and wished to read it, and he also expressed a desire to visit the mosque in Kipchak and visit the graves of Niyazov's parents.
This kind of scene is familiar for anyone who has observed the ritual flattery that large-scale foreign investors must indulge in when meeting Niyazov; but the degree of unctuousness achieved here by Markley is remarkable. For all the relative merits of opening up western trade to Turkmenistan, it is hard to imagine how many foreign companies would be prepared to gratify Niyazov's ego and his dubious apparatus of power while risking their reputations for the sake of a lucrative contract. 

The state of the gas world
Market forces always prevail in the end. World-wide energy shortages and the emergence of China and India as economic giants has tilted things the way of the Central Asian energy producers, notably Turkmenistan. 
Even as perverse a figure as Saparmurat Niyazov, the dismal dictator of the country, could hardly fail to benefit, sitting on the world's fifth largest gas reserves. He has been able to do a good deal with the Russians at last.
But they have not necessarily been the long-term losers.

Gazprom concedes in Asia; and wins in Europe?
Under its August 5th agreement with the Turkmen government, the Russian gas monopoly, Gazprom, decided to buy Turkmen gas at a price of US$100 per a thousand cubic meters in 2007-2009, up 50% on current prices for its purchases of Turkmen gas. It will purchase 12 billion cubic metres in 2006 and 50 billion cubic metres every year in 2007-2009. In other words, it will pay US$6 billion more than it was going to, but will control all Central Asian gas exports to Europe as a result. 
The media and industry press have not failed to notice the new price, or its implications. Only in July Gazprom flatly refused to pay it, and even walked out of the talks, but now has changed its tune. Apparently, a serious change in the world gas market compelled the Russian monopolist to give in. 

China counts 
There are several factors influencing the major players in the world market today, not least the Chinese option.
China has become much more active in the Caspian region. The efforts of the Chinese companies to gain a foothold in the energy industries of Turkmenistan, Kazakstan and Uzbekistan are starting to threaten Gazprom's domination in Central Asia, which rests on its monopoly ownership of the Europe-bound gas pipelines. 
The Chinese have crucially offered Ashgabat to build an eastward-bound export pipeline with a capacity of 30 billion cubic metres of gas per year. They are going to sign a production-sharing agreement for the right bank of the Amu Darya River, which is going to become a new gas province. They have also stepped up their involvement in developing gas resources in Uzbekistan and Kazakstan with a view to transporting gas to China's western provinces. 
These steps have given Central Asian countries more room for manoeuvre. Turkmen President Saparmurat Niyazov has spoken more than once about the strategic importance of the Russian direction of the Turkmen gas exports. He has made the point that the construction of new pipelines, including the one going to China, which he promised to commission by 2009, will not prejudice cooperation with Moscow. Nevertheless, Ashgabat has definitely gained more bargaining chips in talking with Gazprom. 

Europe beckons too
Apart from eastern-bound exports, the discussion of a pipeline under the Caspian Sea to supply Europe with gas bypassing Russian routes has become markedly more active. The Kommersant newspaper reported on September 6th that Polish Prime Minister Jaroslaw Kaczynski is going to visit Washington with the proposal on a joint construction of a trans-Caspian pipeline to supply Europe with gas bypassing Russia. The Polish newspaper Rzeczpospolita wrote that in order to receive US$5 billion for this project, the Polish authorities are ready to sign with the U.S. a lease for the construction of a missile base to become part of the US ABM system. 
Although in Kazakstan the subject is avidly discussed at government level, only Turkmenistan currently has the resources for this gas project. Apparently, Gazprom will now pay to freeze it as well. Niyazov emphasized: "We'll primarily supply gas to Russia. Don't worry that Turkmenistan will walk away with its gas. We are not ready to discuss the trans-Caspian pipeline," (which is not to say that it won't actively be discussed. One version was agreed and signed up in 1999 but failed to materialise). 
Higher Turkmen gas prices will not be a big problem for Russia. Europe pays US$230-US$250 for a thousand cubic metres of gas, and Gazprom will have its share of the profit anyway. Moreover, having contracted almost all of Turkmenistan's export resources until 2009, it has actually protected itself against competition in Central Asian gas supplies. A panic demand for gas in Europe, generated by the recent apprehensions about its near shortage, is bound to send gas prices even higher. Today, Europe's major energy concerns are lining up to extend long-term contracts with Gazprom, but it is not likely to meet this demand without Central Asian gas. In the last few years, Gazprom has launched its own gas industry and blocked a speedy growth of its independent production in Russia. It is now compelled to negotiate with Ashgabat for this reason. 

Gazprom in charge; but problems ahead
New prices in Turkmen-Russian gas cooperation are the first sign of change on the post-Soviet gas market. For the time being, Gazprom has been quite prompt and flexible. 
The market situation has helped as well. But the competition for resources keeps growing, and control costs more and more. 
Moreover, stepping up its efforts in the foreign market, Gazprom is neglecting its own production. In January-July 2006 gas production went up by 2.5% over the relevant period in 2005, whereas gas exports went up by 24.9%. 

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AGRICULTURE

John Deere combine harvesters bought for 3.843m Euro 

Turkmenistan is buying 150 John Deere-9560 combine harvesters for 18 million Euro and spare parts costing 3.843 million Euro, a spokesman for Turkmenistan's president said, Interfax News Agency reported.
The deal was signed during a meeting between Turkmen President, Saparmurad Niyazov, and John Deere representatives in Ashgabat. The combine harvesters must be delivered by April 30th 2007.

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CONSTRUCTION

Turkish company wins 42m Turkmen contract 

A Turkish company, ABKA Construction and Foreign Trade Co. Ltd, won an international tender in Turkmenistan to construct a fishery complex worth 42 million Euro in the country, reported Turkmenistan.ru. 
The winner of the tender was announced by the State Committee for Fisheries on October 2nd. Turkmen President, Saparmurat Niyazov, also approved the decision of the tender commission and the conclusion of the expert commission. The Istanbul-based company is to design and construct a complex for breeding sturgeons and producing fishery at Kiyanly port, in the Balkan province on the basis of "turn-key" principle. The construction is to be launched in October, and the complex is to be completed in May 2008. 

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EDUCATION

US$11m provided for 2 educational institutions in Turkmenistan 

Turkmenistan has announced two contracts for construction of education institutions worth US$11.319 million, website Turkmenistan.ru reported on October 6th. 
TurkmenNeft would sign a contract with Turkish firm Atayurt for the construction of a school in Balkanabat city of Balkan province, which would be able to accommodate 600 students. Total cost of the project is US$7.362 million. Work should start in November 2006 and the project should be ready by February 2008.TurkmenNeft would sign another contract with the Turkish company Shap Turkmen for the construction of a kindergarten for 160 kids in Balkanabat city. The total cost of this project is US$3.957 million. Construction work should start in November 2006 and the project should be ready by October 2007.

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ENERGY

Central Asia declares itself a nuclear weapons free zone 

The five countries of Central Asia, Kazakstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan have signed a treaty creating a nuclear weapons free zone in their lands. Semipalatinsk, the former Soviet nuclear test site in eastern Kazakstan, was the scene for the treaty's historic signing on September 8th, New Europe reported.
Under the treaty, the five countries have committed themselves to ban the production, acquisition and deployment of nuclear weapons and their components. The treaty does not prohibit the use of nuclear energy for peaceful purposes. "This is our contribution to global security," Kazakstan' Foreign Minister, Kasymzhomart Tokayev, said. "It will become an impetus for the coordinated efforts of the world community in non-proliferation and prevention of the acquisition of weapons of mass destruction by terrorists. It will undoubtedly become an important step in the development of peaceful nuclear energy."

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FOREIGN TRADE

Putin, Niyazov discuss trade contacts, Caspian region 

Russian President, Vladimir Putin, and his Turkmen counterpart, Saparmurat Niyazov, discussed key issues on the two countries' agenda over the phone on September 24th, Interfax News Agency reported. 
"The heads of state addressed crucial issues of bilateral cooperation in the trade and business sphere. At the same time, both sides expressed satisfaction with the level of cooperation in the gas and energy sector and the pace at which these contacts have been developing," the Kremlin press service reported. When discussing the situation in the Caspian region, Putin and Niyazov "noted the need for constructive joint work by the littoral Caspian states to successfully continue searching for solutions to key issues related to the legal status of the Caspian Sea," the press service said.

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ENERGY

Ukrainian energy minister hopes to restore ties

Ukrainian-Turkmen gas relations have taken a turn for the worse, largely due to mistakes on the Ukrainian side, Ukrainian Fuel and Energy Minister, Yury Boyko said.
The new heads of the fuel and energy ministry will do all they can to restore the partnership to its former state, Boyko added. "We will be forced to take effective measures to restore trust between the partners and re-establish direct contracts, which are beneficial for both sides," Boyko said at a press conference in Kiev on August 14th, Interfax News Agency reported.
Top Ukrainian government officials will soon begin preparing for a visit to Turkmenistan, Boyko said.
Previous visits by Ukrainian officials were not properly prepared, and the delegations did not take Turkmenistan's position into account, Boyko said. Among the mistakes Ukraine has made in its relations with Turkmenistan, Boyko named the loss of warranted contracts to sell Ukrainianj goods and the end to gas trade under direct contracts. Boyko said, however, that Ukraine is not willing to buy Turkmen gas at a considerably higher price than before.

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FOREIGN ECONOMIC COOPERATION

Niyazov hails economic ties with China

Turkmenistan President, Saparmurat Niyazov, welcomed the Chinese delegation headed by Yu Guang Zhou, deputy trade minister of the China People's Republic, in the Turkmen capital, Ashgabat. During the talks at the presidential palace, both sides signed a comprehensive economic cooperation agreement including oil fields, natural gas and textiles. Delegates from both countries signed the bilateral agreements during the meeting. The agreements are expected to boost economic ties between the two countries. Speaking at the meeting, Niyazov expressed satisfaction with his country's developing economic relations with China. He went on to say that the two counties had common views on issues such as international politics, humanitarian aid and UN reforms. "We attach great importance to the realisation of the natural gas pipeline construction project," he added. Niyazov invited the visiting Chinese delegation to join together with Turkmenistan in the production of hydrocarbon, polyproplene and liquefier gas on the Caspian coast. The Chinese will consider the proposals in detail. With the introduction of the pipeline project, Turkmenistan will sell 30bn cubic metres of natural gas to China annually, Interfax News Agency reported.
Meanwhile, China's CITIC Group will build new facilities and reconstruct the Maryazot mineral fertiliser plant in Turkmenistan. Recently, Niyazov allowed Turkmendokun, of which Maryazot is a part, to sign the deal that costs 265.95 million Euro, a source at the presidential press service said.
He also allowed the Construction Ministry to sign a contract with the Chinese consortium Capital Longji Sci-Tech Co. Ltd on building a glass plant in Ashgabat. The contract costs 67.38m Euro. The presidential ordinance was issued "for fully meeting the national economy's demand for mineral fertilisers and glass," the source said. Both projects will be partially financed with a 300 million Euro loan from the Export-Import Bank of China. Also Niyazov permitted the State Foreign Economic Bank to sign a general credit agreement with the Export-Import Bank of China and receive a 20-year 300 million Euro loan at three per cent annual interest.

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TOURISM

Govt approves Caspian tourism development plan

Turkmenistan has embarked on an ambitious plan to turn its Caspian coast into a world class tourist attraction. Initially the plan was approved by Turkmen President, Saparmurat Niyazov. This project is first of the series of tourist attractions planned for the Caspian coast of Turkmenistan, reported Turkmenistan.ru.
Total cost of the project is US$26.97m and it should be ready by February 2008. The ministry of railways would sign a contract with the Turkish company, Delta, for construction of a 12-storey health resort and tourist complex at the Avaza settlement at Turkmenbashy, the Caspian city of Turkmenistan. The tourist complex would be able to accommodate 200 guests simultaneously. There would be single accommodation as well as family units for two, three and four persons. The services would include bars, stores, fitness clubs, open and covered swimming pools, tennis courts and basketball area. Physical therapy and medical treatment facilities would also be included in the tourist complex.

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