By Simon Pirani
Hopes for meaningful change run high after the passing of Turkmenistan’s eccentric former leader Saparmurat Niyazov last December. But a shift from Russia-centred policies is unlikely
Turkmenistan’s new president, Gurbanguly Berdymukhammedov, is likely to introduce some domestic economic reforms – but changes in foreign policy, and specifically in gas export strategy, will be far slower.
Energy company executives and diplomats are watching closely for signs that the resource-rich central Asian republic, a key exporter of gas to Russia and Ukraine, may try harder to diversify exports.
Specifically, the US and EU hope Turkmenistan will support a trans-Caspian pipeline to carry Turkmen gas westwards via Azerbaijan and Georgia to Europe, avoiding Russia. China, too, keeps a watching brief, although the cost of an export pipeline might be prohibitive, even if it sources Kazakh, as well as Turkmen, gas.
Berdymukhammedov’s most significant move so far has been to telephone president Ilham Aliyev of Azerbaijan in mid March, ending an eight-year breach of diplomatic relations that has not only put all trans-Caspian pipeline plans in deep freeze, but even prevented the Caspian littoral states (those two plus Russia, Kazakhstan and Iran) agreeing on territorial rights to the seabed.
Typical
The stand-off with Azerbaijan was typical of Berdymukhammedov’s predecessor Saparmurat Niyazov, the eccentric dictator who ruled Turkmenistan from its 1991 declaration of independence until his death in December last year.
Having been shunned by international institutions for his suppression of free speech and meaningful elections, Niyazov further isolated himself by rows with Azerbaijan and Uzbekistan, another key neighbour. In his last years Niyazov imposed inconsistent and destructive economic policies, and became politically paranoid, regularly ordering the arrest of anyone, up to ministerial level, whom he thought disagreed with him.
There is a consensus among Ashgabat-watchers that Berdymukhammedov is more rational, and more reliant on others – such as Akmurad Redzhepov, head of the presidential guard, and Agageldy Mamedgeldiev, defence minister – than Niyazov was. They also agree that Niyazov’s more absurd excesses will be reversed. But they are divided about how rapid a shift from a Russia-centred foreign policy might be expected, or whether it will happen at all.
Martha Olcott, senior associate at the Carnegie Endowment in Washington, tells Emerging Markets: “The US government is overly optimistic. It assumes that relations will improve, and that Turkmenistan is bound to support the trans-Caspian pipeline.
“That’s just wrong. There’s no flexibility in the Turkmen economy, and Turkmenistan relies on the money they are paid for gas exports to Russia. By supporting the pipeline, Ashgabat risks estranging Russia, and has nothing to gain.”
Olcott believes that Turkmenistan “can never be more independent from Russia than Kazakhstan is”.
But other observers are more hopeful. One oil industry analyst sees in the Turkmen-Azeri thaw opportunities for resolution of the Caspian delimitation issue, for verifiable reserves audits to international standards and “an improvement in the investment climate” in the upstream oil and gas sector. A “significant increase in Turkmenistan’s international engagement” could be expected over time.
Linchpin
If such hopes are to be realized, Azerbaijan will be the linchpin. After Berdymukhammedov’s telephone chat with Aliyev, Azeri deputy foreign minister Araz Azimov called on the EU to buy gas directly from Turkmenistan as a means of diversifying from Russian supply. And British and Greek consultants working for the EU’s Inogate energy supply security project travelled from Baku to Ashgabat to talk about Trans-Caspian pipeline possibilities.
Time will tell whether Berdymukhammedov needs European custom as much as the EU needs his non-Russian gas. What is already clear is that he will reverse some of Niyazov’s most damaging policies in the economic and social sphere, aiming to revive industry and improve living standards.
In March, Berdymukhammedov reopened the Turkmen Academy of Sciences, which Niyazov had junked; reversed a one-year reduction in compulsory schooling and brought 23,000 sacked teachers back to work; and announced that subsidies taken away from pensioners and war veterans in 2006 would be restored.
Vyacheslav Mamadov, exiled president of the Democratic Civil Union, tells Emerging Markets: “We do not expect the restoration of free speech or other democratic rights. But Berdymukhammedov has already started taking welcome steps towards reviving the [non-gas] economy.”
Mamadov expects a government-backed revival of domestic construction companies and of the fish and wool processing industries. “I hope we will see some progress on financial and monetary reform, too, to encourage trade.”
An official of an international institution who follows events in Turkmenistan tells Emerging Markets that financiers in Ashgabat are also optimistic: “People expect liberalization in the economy, along with recent improvements in the school curriculum and health care.”
Earlier this year, a delegation of Turkmen bankers – representatives of three state banks and of the only privately-owned lender, Senegat Bank – visited Kyrgyzstan to see how microfinancing schemes work. It is understood that the IFC is considering initiating a Turkmen microfinance scheme, with loans of $50-$15,000, which would complement the EBRD’s work among small businesses, for which the loans are larger.
Things are happening on the ground, softly softly. That’s probably how they will happen in Turkmenistan’s relations with the outside world too.