Less than a month left for the presidential election in Turkmenistan. Although the election results are predetermined, there are still some interesting moments. Specifically, the rivals of the incumbent president have been provided with certain freedom of actions, while the president has refused from his airtime in favor of them. Besides, Turkmenistan has entered a problematic phase, as it has faced fluctuations of the national currency, deficit of foreign currency and (unthinkable!) essential foodstuffs. What is happening to that Central Asian country, what are its protests? See answers to these and other questions in EADaily’s interview with Andrey Medvedev, the head of PolitContact think-tank.
What do you think of the situation in Turkmenistan ahead of the presidential election to be held on February 12?
Of course, the presidential election in Turkmenistan is ceremonial and the results can be flawlessly forecasted even today. The legitimacy of the authorities inside the country (and, consequently, stability in the country) depends on the social and economic field rather than electoral procedures.
The incumbent authorities have recently faced serious problems: the country had to reduce expenses on social needs and the living standards in the country have decreased dramatically. This is a result of the falling proceeds from export of natural gas. In the mid-term outlook, the social and economic situation in Turkmenistan remains tough.
The authorities in Turkmenistan will have to make hard decisions triggering public discontent soon. Despite the domestic stability, Turkmenistan is not insured against political crises. It is known that elites in the Mary, Balkan and Dashoguz regions are not happy with both human resources policy of President Berdymukhamedov and distribution of financial flows from the state budget to the regions.
Maintaining its political identity, Turkmenistan may fail to cope with potential growth of social discrepancies in heavy economic situation. Possible destabilization in Turkmenistan poses potential threat to Russia’s interests in the region. Unfortunately, Russia has no tools to influence the social and political situation in Turkmenistan. Therefore, Russia needs to respond timely to actions of external actors that, to put it mildly, do not reckon with Russia, and to contribute to social and political stability in Turkmenistan.
What makes the Turkmen regime sustainable?
Turkmenistan has its own internal reserves, including financial ones. They are enough to stabilize the situation for a while, but not enough to correct it and give the right direction to it. Realizing the uncertainly of the situation, President Gurbanguly Berdymukhamedov is trying to enlist support of both Russia and the West. In November, the Turkmen president paid a working visit to Russia. The issue related to resumption of natural gas purchase-and-sale was not settled, but there was a certain breakthrough in the process. On the next day of his arrival in Turkmenistan, the Turkmen national currency sharply appreciated (25%) against US dollar on the black currency market. Besides, for businessmen importing food products from abroad the national currency was converted into hard one. Arears of wages of the state-run enterprises were paid partially. All this speaks of the financial assistance from Russia. The terms and the amount have not been disclosed by tradition. It is evident that one-time assistance cannot have a long-term effect. Turkmenistan will not be able to overcome the potential crisis without foreign economic assistance it may receive not only from Russia, but also from China and the West.
What makes Turkmenistan interesting to the West?
Turkmenistan is one of the most geo-economically important countries in the region, as it has both transit potential and significant hydrocarbon reserves: Therefore, transnational corporations connected with U.S. and EU have been trying to get control over the country’s economic space for years. In the current situation, they may well get such an opportunity. Trying to find money for social expenses Ashgabat announced another stage of large-scale privatization. Besides, the country’s leadership is again trying to attract foreign investor to develop hydrocarbon deposits on the Caspian shelf. The amount involved is $600 million. The official statement says it is anticipated to create a joint venture with a foreign company, with Turkmenneft state concern to carry out the main work and the potential investor – the service. It is a very important issue, as Turkmenistan will not be able to raise the necessary investments on such terms, unfortunately. This is exactly mentioned in the Report “Energy and Security” issued by the U.S. Senate Foreign Relations Committee dating back to December 12, 2012. It clearly demands Turkmenistan to amend the domestic legislation and give transnational corporations direct access to Turkmen deposits. Actually, service contracts are not interesting to transnational companies having sufficient money to invest.
Berdymukhamedov cannot agree on such terms comprehending that his regime will collapse, as soon as transnational corporations get access to Turkmen deposits, since it will become unprofitable to keep his big family clan. It will be much cheaper and favorable for them to put a marionette on the post of the president – neither the incumbent president nor the former one have been marionettes.
The facilities set for privatization can attract Germany’s attention. At the end of 2016, a delegation of about 70 governmental and business representatives of Germany traveled to Turkmenistan. German business is traditionally interested in projects in the fields of trade, transport and communications, industry, construction, science and technology, agricultural and industrial facilities, banking and finance sector, health and pharmaceutics. German companies such as Siemens, Wintershall, Daimler Chrysler AG, Bentec GmbH, Lurgi, Technip, Unionmatex have been operating in Turkmenistan since early 1990s. Germany was one of the leading importers in Turkmenistan by the mid-2000s. However, the scales and nature of the Turkmen import largely determining the level of cooperation with Germany directly depend on Turkmenistan’s solvency. Therefore, after an IMF mission visited Ashgabat and forecasted economic slackening for the short-term and mid-term outlook, German corporations have shown natural caution.
IMF data analysis definitely suggests that Turkmenistan is becoming more and more dependent on China (and partially on Iran). During the last few years, Ashgabat has accumulated debts to Beijing and now sees construction of alternative gas pipelines, including Trans-Afghanistan Pipeline (TAPI), the only way out of the situation. However, it is evident that none of Turkmenistan’s current gas-exporting projects will be implemented within the coming years.
You have mentioned Turkmenistan’s interest in the United States or the vice versa. What is the heart of the matter?
The U.S. interest in Turkmenistan is not focused on the economic field. Washington would like to make Turkmen resources more accessible to American corporations and establish control over the country’s transit potential. However, it does strive to diminish the influence of Russia, Iran and China on the ongoing processes in Central Asia. Therefore, what Washington cares most here is not to let its potential rivals increase their positions in Turkmenistan.
At the end of 2016 – it was quite eventful year for Turkmenistan – a U.S. delegation headed by the U.S.-Turkmenistan Business Council Executive Director Eric Stuart that comprised representatives of the leading American corporations visited Ashgabat. The world’s leading energy companies, such as BP, Chevron, ConocoPhillips, ExxonMobil, Shell, Total, take an interest in Turkmenistan’s energy sector. Yet in 1999, more than 120 foreign companies were engaged in the energy sector in Turkmenistan and every fifth of those companies had U.S. capital. Presence of the U.S. companies in the oil and gas sector of Turkmenistan has increased with the promotion of the gas projects TAPI (Turkmenistan-Afghanistan-Pakistan-India) and Trans-Caspian gas pipeline that have become the axis of the U.S. energy policy in the region.
The Turkmen leadership once pinned great hopes with the implementation of those projects. In the state of euphoria, they even introduced visa regime with neighbors, including Russia. The Turkmen authorities demanded withdrawal of Russian frontier guards from the Turkmen-Afghan border. However, by 2000, both the projects utterly failed. The first president Saparmurat Niyazov (had the title of Turkmenbashi – the leader of all Turkmens) then felt himself “deceived” saying Americans just “threw him under the bus.” Eventually, the number of U.S. companies in Turkmenistan decreased, but the U.S. influence in the country did not diminish, since September 11, 2001 was just around the corner.
Then Turkmenistan let U.S. aircrafts use Ashgabat airport as refueling site…
Sure, in 2002 Ashgabat and Washington made an agreement that enabled the U.S. military-transport aircrafts to use the Turkmen airspace and the international civil airport in Ashgabat for refueling of aircrafts delivering allegedly humanitarian aid to Afghanistan.
Then, U.S. Department requested access to Ak-Depe Airdrome located 18km westward from Ashgabat. They explained the request with the fact that UN had no own transportation means and applied to the U.S. Government for support, and the U.S. had to seek an opportunity to implement the mission it undertook. Then Turkmenbashi rejected the request referring to neutrality of the state. Afterwards, Americans asked a permission to use Mary-2 military airfield and underground depots in Kushka that were built yet when the Soviet military contingent was deployed in Afghanistan.
U.S. diplomats explained their request saying permanent neutrality status does not run contrary to humanitarian aid even if military aircrafts of foreign countries are used to that end. Ashgabat’s stand did not change, but softened certainly – Niyazov was inclined to negotiate. Furthermore, the United States again promised to introduce the Turkmen energy products to solvent markets. However, the promises remained again.
I think President Berdymukhamedov is in a more complicated situation now than his predecessor Saparmurat Niyazov was. On the one hand, the country depends on China financially. On the other hand, it has continuous contradictions with Tehran and Moscow. In addition, there is open pressure by Washington over domestic legislation amendments.
Furthermore, appointment of Rex Tillerson, Exxon/Mobil CEO, as U.S. Secretary of State means trouble for Berdymukhamedov. Exxon/Mobil is one of the key actors that seek to buy ground-based oil and gas fields in Turkmenistan. To achieve its goals, Exxon/Mobil is trying to press the Turkmen leadership through human rights organizations that bracket Turkmenistan with Tunisia, Egypt, and Libya. Evidently, in case of the U.S.-China confrontation spillover into Central Asia, the U.S. oil and gas companies will again intensify their efforts to access Turkmen hydrocarbons, which may affect the country and its incumbent leadership dramatically. Therefore, restoration of a constructive dialogue with Russia can become a way out of the stalemate, though a largely forced one.
