Turkmenistan: A Desert Kingdom Fueled by Gas

Turkmenistan: A Desert Kingdom Fueled by Gas

25.02.2012

Central Asia’s Crisis of GovernanceAsia Society

Berdymukhammedov’s steps to dismantle his mercurial predecessor’s personality cult made it politically palatable for the West to engage with the new regime. But even as foreign investors, politicians, and financial institutions embraced Turkmenistan, it was becoming clear that his reforms were largely a façade.

Turkmenistan Snapshot

Size: Around 488,000 square kilometers

Population: Nearly 5 million (July 2011)

GDP: Approximately USD 20 billion (2010)

Natural resources: Petroleum, natural gas, sulfur, salt

Main exports: Gas, crude oil, petrochemicals, textiles, cotton fiber

Corruption Perception Index: 172/178 (2010)

Political rights (1 = most free, 7 = least free): 7 (2011)

Civil liberties (1 = most free, 7 = least free): 7 (2011)

Press freedom: 195/196 (2011)

Sources: CIA World Factbook; World Bank (GDP data);

Transparency International; Freedom House.

Few countries in the world can match Turkmenistan in the breathtaking absurdities of the cult of personality constructed by its first president, a career Communist Party functionary named Saparmurat Niyazov . Much like the rest of Central Asia, Turkmenistan was thrown into post-Soviet independence with little preparation. As a Soviet republic, Turkmenistan depended heavily on subsidies from Moscow, in return supplying the Soviet Union with natural gas abundant under its desert surface.There was little by way of a real economy or a local elite that could step in to run the new country.

Into this void stepped Niyazov, who, like his counterpart in Uzbekistan, grew up in an orphanage. Niyazov molded the new nation around his own quirky persona, famously declaring himself Turkmenbashi, or the leader of all Turkmen. His governing style brooked nothing but slavish devotion, constantly whipped up on state television, which carried his visage as a logo in a corner of the screen.Like Mao in China and Qaddafi in Libya, Niyazov distilled his vision of statehood, history, and society into a book called Ruhnama, or “Book of the Soul.” It became required reading in schools. As the years went on, Niyazov’s vision of his own greatness grew ever more sweeping. He renamed the months of the year after matters and people dear to his heart, including himself. A glittering statue of Niyazov decorated the central square of the capital at Ashgabat, where it rotated so that it would always face the sun.

Like all dictators, Niyazov succeeded in eliminating the opposition and instilling fear in his own ministers, gaining a free rein to act on his delusions. In one of his most alarming initiatives, Niyazov ordered rural health clinics closed, insisting that Turkmen travel to Ashgabat to seek medical treatment. In a sprawling country with bad roads, the move was tantamount to denying medical care to a large segment of the Turkmen population. In the meantime, the regime built large hotels in the capital in anticipation of a flood of businessmen and tourists.The visitors never materialized in the projected numbers, leaving the empty towers as monuments to government waste. Niyazov hired a French firm to build a massive mosque with a gilded dome to commemorate his mother, who had died in an earthquake.

Turkmenistan might have lingered in complete obscurity and isolation were it not for its vast reserves of natural gas. Though precise estimates vary, Turkmenistan is among the top gas repositories in the world, a position that makes it a coveted prize for resource-poor Europe and for China, whose galloping industrial growth calls for ever-greater amounts of fuel. Under Niyazov’s erratic rule, Turkmenistan remained a closed economy, and foreign investors were loath to get involved.What is more, most of Turkmenistan’s gas output went straight into the pipeline network of Gazprom, the Russian gas monopoly, which would then pump it onward to European markets. Like much of Niyazov’s Turkmenistan, the gas business was opaque and beholden to the man at the top. Turkmenistan’s annual take from gas exports was estimated at USD 2 billion, but “President Niyazov [kept] most of the gas revenues under his effective control in overseas and off-budget funds.”

Though he projected an aura of immortality— of being the state itself—in the end, Niyazov died. A heart attack killed him in December 2006, plunging Turkmenistan into a crisis of succession. Death is one of the few assured outcomes of life, but in Central Asia, the possibility of a leader’s death is often treated as a taboo subject—tiptoed around and rarely addressed directly. The rulers of Kazakhstan, Tajikistan, and Uzbekistan—all in the same age group as Turkmenbashi and in power for just as long—have no known succession plans, making their regimes beholden to their presumed longevity. Partly as a result, the region watched Turkmenistan’s succession shuffle with trepidation, fearing violence or a long period of uncertainty.

But within months, the Turkmen political system closed ranks behind Gurbanguly Berdymukhammedov, a dentist by training and a former minister of health. The new president took steps to dismantle some of the most egregious manifestations of his predecessor’s personality cult. Turkmenbashi’s sun-facing statue, for instance, was removed from Ashgabat’s central square. In another break with his predecessor’s reclusive policies, Berdymukhammedov signaled that Turkmenistan might be ready to engage with the world and diversify its gas exports beyond the traditional Russian market.

The possibility of bypassing the Russian pipelines and tapping directly into Turkmenistan’s gas reserves came at a critical time for the European Union (EU). With few natural gas resources of its own, Europe counts Russia as one of its main suppliers. To reach Europe, gas from the Russian pipelines must traverse Ukrainian territory. Europe realized the perils of this dependency in 2006, when Russia and Ukraine clashed in a high-profile dispute over gas prices and transit rates. As a result, supplies of gas to Western Europe were disrupted, stoking fears that European citizens may have to shiver in their unheated homes in the middle of winter. The gas dispute spotlighted Europe’s strategic weakness and sharpened its apprehensions about having to rely on Russia at a time when the Kremlin became increasingly assertive in its dealings both with the West and with its former subjects in the Soviet empire.

European leaders decided to solve their gas predicament with a grand initiative named Nabucco, after an opera by Giuseppe Verdi. Under the plan, Europe would build a 3,900 kilometer pipeline running from Turkey to a distribution hub in Austria, bypassing the geopolitical and commercial quicksands of Russia and Ukraine. Nabucco would tap into the gas reserves of Azerbaijan, Iraq, and, crucially, Turkmenistan. Nabucco is expected to launch in 2017, though there are doubts about the project’s future.

In the meantime, Turkmenistan’s export outlook changed significantly in 2009. In the midst of the global economic crisis, demand for natural gas declined across Europe because of a slowdown in industrial activity. The balance of power in the European gas market tilted toward consumers, undermining the traditional leverage of producing nations such as Russia.Faced with flagging demand, Gazprom reduced production and pared back the level of gas imports from Turkmenistan. In April 2009, a mysterious explosion rocked the main pipeline carrying Turkmen gas to Russia.The Turkmens blamed Gazprom for abruptly cutting the amount of gas flowing through the pipeline. That sudden drop, they said, caused the blast.The Russians blamed Turkmenistan’s aging infrastructure for the incident. Whatever the truth, the explosion stopped the flow of Turkmen gas to Russia at a time when Gazprom was chafing at the cost of Turkmen imports, which it no longer could resell profitably to Europe. Gazprom used the opportunity to renegotiate the purchase price that it would pay for Turkmen gas once the flow resumed. Though the pipeline was eventually fixed, the gas flow from Turkmenistan to Russia never reached its pre-explosion levels.

For Berdymukhammedov’s regime, the pipeline explosion underscored the need to diversify Turkmenistan’s gas exports and reduce dependence on Russia. That was good news for the Europeans, whose plans for the Nabucco pipeline were facing frequent delays because of political and commercial complications and logistical hurdles. There were also lingering doubts about the true size of Turkmenistan’s gas reserves. Turkmen estimates of the country’s gas wealth always came with questions about whether the opaque regime was overselling itself. Those doubts were dispelled in the first major independent survey of Turkmenistan’s gas fields.In 2008, Gaffney Cline & Associates, an oil advisory firm, confirmed Turkmenistan’s status as the world’s fifth-largest repository of natural gas. One field alone, the South Yolotan-Osman field, was estimated to be able to produce up to 70 billion cubic meters a year, which would roughly double Turkmenistan’s current annual output.The Gaffney Cline study confirmed that Turkmenistan really does have enough gas to sustain a multidirectional export strategy— selling to Russia, to Europe via Nabucco, and to China.

In fact, China has long had Turkmenistan in its sights.In 2007, China’s national oil company signed landmark deals with the Turkmen government, under which Turkmenistan would export 30 billion cubic meters of natural gas a year to China. That is nearly triple the level of Turkmenistan’s diminished gas exports to Russia, the traditional purchaser of the totality of the Turkmen output. In fact, 2009—the year of the mysterious blast on the Turkmenistan– Russia pipeline—was also the year in which China quietly completed construction of a new pipeline bringing Turkmen gas to China. As in much of the rest of Central Asia, China’s economic juggernaut is swiftly supplanting the historical influence of Russia in the region’s economy.

Inside Turkmenistan, Berdymukhammedov’s steps to dismantle his mercurial predecessor’s personality cult made it politically palatable for the West to engage with the new regime. Unlike China, Western governments are generally constrained, both by public opinion and by law, in their dealings with overtly repressive regimes. Though, over the years, both the United States and Europe have found ways to engage with dictators when it suited their commercial and political interests, such engagement is far easier when an autocratic regime takes steps to craft a softer image.

But even as foreign investors, politicians, and financial institutions embraced Turkmenistan, it was becoming clear that Berdymukhammedov’s reforms were largely a façade, and that little of substance had really changed in Turkmenistan since the passing of Turkmenbashi. More ominously, the repression of civil liberties continued unabated, with journalists and activists routinely harassed and jailed by the omnipresent security forces. Berdymukhammedov’s domestic reforms have been “largely a show—and one for which many Western decision-makers have fallen.” Furthermore, “there’s no doubt that energy is playing an important role in the political relationships between the European Union and Turkmenistan. Talk about human rights, democracy, and political concerns take a back seat to discussions of energy every time.”

Following a series of large explosions at a munitions depot in the town of Abadan in the summer of 2011, reports of civilian casualties started trickling out despite government efforts to suppress the news. The government’s handling of the accident (there is no evidence to suggest foul play) stoked popular anger and seems to have prompted the president to hint at the opening up of the Turkmen political system.Just a day after the blasts, Berdymukhammedov invited the country’s scattered and exiled opposition to take part in the presidential election scheduled for 2012. It is too early to say exactly what that invitation means or whether the Turkmen authorities even intend to honor it.It is extremely unlikely that the opposition candidates—should they overcome legitimate concerns for their safety and run against the incumbent—will be allowed to make any meaningful gains at the polls.But, at a minimum, the invitation suggests that Berdymukhammedov sees the benefits of constructing a simulacrum of political competition, perhaps resembling the Kazakhstan model.

Источник :: Asia Society

 

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