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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)

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Update No: 326 - (28/02/08)

The legacy of Niyazov
Turkmenistan has become a new country since the death of its dotty dictator, Saparmurat Niyazov, in December 2006. The new man at least has his marbles. A dentist by training, indeed at one time Niyazov's dentist, Gurbanguly Berdymukhammedov makes no claim to be a spiritual force on the level of the Buddha, Jesus or Mohammed, as the former president did. 

Niyazov distinguished himself by establishing a cult of personality resembling the one created by late North Korean leader Kim Il-Sung, says Alexei Malashenko, a Central Asia analyst at the Carnegie Moscow Center, a public policy research organization established by the Washington-based Carnegie Endowment for International Peace. ``They both had totalitarian regimes that included persecution of the political opposition,'' Malashenko says.

Niyazov carried the self-awarded title of "Turkmenbashi,'' or leader of the Turkmens, and ruled by fiat. He erected gold statues of himself around Ashgabat and propagated his teachings to the largely Sunni Muslim nation in a spiritual guide called "Ruhnama.'' Niyazov also trimmed a year off public schooling, making the educational system incompatible with any other.

Under Niyazov, Paris-based Bouygues SA, the world's second-largest construction company behind France's Vinci SA, won contracts for the most-prestigious government buildings; Turkish builders got projects to replace the aging Soviet housing stock. Ashgabat, about 30 kilometers (19 miles) north of the border with Iran, shed its image as a dusty Russian colonial backwater and emerged as a metropolis of white, marble-clad towers and oversize monuments (adorned with golden statues of the dictator). 

But the dictator's fickleness and general dottiness put Western multinationals off in the end. His word it can be said, was not his bond! U.S. energy companies largely abandoned Turkmenistan by 2000. Unocal Corp., now part of San Ramon, California-based Chevron, withdrew from plans to build a gas pipeline to southern Asia across Afghanistan in 1998 to the markets of Pakistan and India, (a project which is revived by others from time to time, but has not happened). A project led by Royal Dutch Shell Plc, Europe's largest oil company, to build a link under the Caspian Sea with Fairfield, Connecticut-based General Electric Co. and San Francisco-based Bechtel Group Inc. was put on hold in 2000 after talks with Niyazov reached a dead end. 

In the absence of Western multinationals, lesser-known producers such as Burren, which is London-based, and Dragon Oil Plc, majority-owned by the government of Dubai and registered in Ireland, have been developing fields under production-sharing agreements. Malaysia's Petroliam Nasional Bhd., also known as Petronas, won Turkmenistan's first such agreement in 1996 and has since been drilling offshore for oil and gas. 

The new man wields a new broom
The new president is breaking the isolationism of his predecessor, who restricted travel, blocked the Internet and scared off investment. 

Berdymukhammedov, aged 50, who became president in February 2007 elections that the U.S. State Department called a modest step toward democracy, has taken a dozen foreign trips, including one to New York, and received more than 300 foreign delegations, according to the U.S. Embassy in Ashgabat. 

"The old regime was singularly unsuccessful in developing the country,'' says Steven Mann, a State Department official who served as U.S. ambassador to Turkmenistan from 1998 to 2001. "We're hopeful the new team will take advantage of the opportunities that exist in the global economy.'' 

Niyazov's death has definitely sparked new interest in the country, with executives from BP, Chevron and France's Total SA visiting Ashgabat to drop in on Berdymukhammedov. In August, Berdymukhammedov personally presented China National Petroleum Corp., the largest Chinese oil producer, with a license to produce gas for a planned pipeline to China, who have already developed a new field, a prize from his predecessor which will enormously enhance his nations earnings. 

Turkmenistan, the largest producer of natural gas in the former Soviet Union after Russia, is certainly beginning to open up its economy. Since Niyazov's death, energy companies, including London-based BP Plc, Europe's second-largest oil company, and Chevron Corp., the second-biggest U.S. producer, have been jostling to get in the door. What is not certain is just how much gas reserve does this nation have, as contracts already signed appear to have accounted for the known gas fields output. 

Investment Conference 
About 500 foreign business and government officials, including U.S. Energy Secretary Samuel Bodman and European Union Energy Commissioner Andris Piebalgs, packed the country's biggest investment conference in a decade in November. 

"This is a critical time in the history of the country,'' Bodman told the gathering at the gleaming new convention center in Ashgabat, the country's largest city. "Opportunities are opening up that could not have been imagined even a year ago.''

Volatile neighbourhood
Turkmenistan, a mostly desert country of 5.1 million people that occupies an area larger than California, sits in a volatile neighbourhood. Its 488,100 square kilometres (188,500 square miles) stretch from the Caspian Sea on the west to Afghanistan on the southeast, with Kazakhstan and Uzbekistan to the north and Iran on the south. None of them are exactly tranquil neighbours, with the partial exception of Kazakhstan.

Given Turkmenistan's location between the energy markets of Europe and Asia, China, Iran, Russia, India and the U.S. are vying to build pipelines out of the country. 

As Turkmenistan opens up, it is attracting entrepreneurs who aren't intimidated by tales of hardship, failure or risk. 


The Maltese falconer
Among those eager to get in is Frank Camilleri, a Maltese middleman with interests from agricultural commodities and construction equipment to chemicals and scrap metal who attended November's investment conference. "Turkmenistan gives me very good vibrations,'' he says.

Camilleri, who is 62, says he has been bringing investors to Libya since the mid-1970s. In Turkmenistan, he wants to arrange financing for the $1 billion tourist centre the government plans to build on the Caspian Sea. He figures he has what it will take. "I've got a tough skin, I never cry, I never complain about the food,'' he says. 

"You can't approach markets like Turkmenistan or Libya with your own business culture; you have to adapt to the local customs.'' In Libya, Camilleri says he helped German, Italian and Swiss companies invest in the local power industry and civil aviation. His Msida-based trading and consulting company, Intertecnica (Malta) Ltd., is now raising funds for a $130 million beetroot sugar plant south of Moscow, opening a showroom for Chinese sport utility vehicles in Tambov, central Russia, and finding international partners for a Bosnian banking and insurance magnate, he says. 

"Turkmenistan's new president is forward looking,'' Camilleri says. "It's a stable market as long as he's there.'' The main problem may be an excess of ambition: The government's Caspian resort plan, inspired by the success of Dubai in becoming an international tourist centre, calls for the construction of 60 hotels in five years. 
"The strategic idea isn't only the goal of developing tourism and attracting foreign investors but giving visible, practical contours to our declarations of the country's greater openness,'' 

Berdymukhammedov said in a speech to investors at the Eurasia Group consulting firm in New York in September, that proving to investors that things really are changing may take some doing. 

During his visit to Ashgabat in November, Camilleri found that the only Internet access at the Grand Turkmen Hotel was via a lone computer with a dial-up connection. At a hotel where he stayed on the Caspian, he was appalled to find a "one-inch by one-inch'' bar of soap in his luxury suite. 

"They just don't appreciate that behind such a project is much more than just building hotels,'' Camilleri says of the officials promoting the tourism project. 

Receptiveness to new proposals
"The government is very open and receptive to concrete proposals,'' says Ian MacDonald, the head of Chevron's Russian operations. OAO Lukoil, Russia's largest independent oil company, in which Houston-based ConocoPhillips has a 20 percent stake, is seeking to complete a deal for offshore fields in the Caspian. Rome-based Eni SpA, Italy's largest oil company, bought 25 percent of Burren in December and made an offer to acquire the rest of the company. 

Security for Investors 
Sealing new international partnerships will require overhauling the country's laws to provide security for investors, Berdymukhammedov told the Eurasia Group during his New York visit. Bayrammurad Muradov, the president's point man on the oil and gas industry, reinforced that commitment at the November investor conference. ``The main task before the government is to complete this legislation,'' Muradov, 45, said. 

The entrepreneurs with visions of riches in Turkmenistan are willing to give the government the benefit of the doubt, at least for now. ``It's going to take this government some time,'' says Neel Duncan, an American oilman who met Muradov during a visit by an official Turkmen delegation to Houston in September. ``In the first half of '08, we'll start to see some movement.''
 

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