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Energy and the Turkmen Executive

Gurbanguly Berdimukhamedov has his work cut out for him.

12:00 AM, Mar 21, 2007 • By GERALD ROBBINS
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JUST TWO MONTHS ago, the name Gurbanguly Berdimukhamedov would have seemed a desperate attempt to win a Scrabble contest. He is now the president of Turkmenistan, a Central Asian republic renowned for it's largely untapped energy resources and human rights repression. The California-sized nation of five million people has Iran and Afghanistan for southern neighbors, while nearby Russia dominates its economic prospects. How a largely unknown former health minister (a dentist by profession) maneuvers this environment will require true gamesmanship.

At stake is developing what's considered to be one of the world's largest reserves of natural gas. Estimates range from a conservative 2.9 trillion cubic meters lying underneath Turkmenistan's terrain to a whopping 20 trillion cubic meters, which would make it a worthy alternative to Russia's reserves. Not only would another energy option help European consumers who are overly dependent on Russian supply and pricing jolts, but it could be critical to meeting a growing Asian demand as well.

Much work needs to be done. Mr. Berdimukhamedov inherits a nation with a 60 percent unemployment rate and Stalinist-era legacy. His predecessor, Saparmarat Niyazov, defined idiosyncratic leadership. Among the list of unusual occurrences during Niyazov's reign was renaming two months of the year after himself and his mother. Taking a chapter from Bolshevik lore, Niyazov changed his last name to Turkmenbashi, or "father of the Turkmen." In a nod to Maoism, he wrote the Ruhnama, a philosophical guide that the nation was required to read. Any signs of dissent or political opposition were brutally suppressed. The combination of personality cult and authoritarianism was only outdone by North Korea, but with economic instead of nuclear potential.

Mr. Niyazov suddenly died in late 2006 without naming a successor. A behind the scene power struggle ensued, resulting in Mr. Berdimukhamedov's accession. (Rumors that Berdimukhamedov is supposedly the late president's son helped his bid.) An election was held last month to symbolize a new beginning, but old habits die hard--Berdimukhamedov won nearly 90 percent of the popular vote against a handpicked opposition with no foreign observers or basic electoral oversight.

If Berdimukhamedov envisions Turkmenistan becoming an important player in the energy market, he will need to explore new methods of delivery. Practically all of Turkmenistan's gas flows north through Russian controlled pipelines. An export agreement was signed in 2003, giving Russia the right to market the bulk of Turkmenistan's production for a twenty five year period. It's a bad arrangement for Turkmenistan, since its own yield is sold at below market rates to Russian consumers, enabling Russia to readily export its own gas at higher prices for Western Europe or Ukraine.

Niyazov attempted to remedy Turkmenistan's export dependency shortly before his death. He signed an agreement to supply China with thirty million cubic meters of gas for the next thirty years beginning in 2009. However, industry analysts viewed this as a highly speculative contract, since a pipeline still needs to be built between the two nations.

Linking Turkmenistan with China would be a massive undertaking, spanning thousands of miles at an estimated cost of $10 billion. Berdimukhamedov has reassured the Chinese that he is still committed to honoring the agreement, but it is most likely a bargaining ploy to obtain more money from the Russians. Another plan involving Asia would have a pipeline going to the Indian subcontinent via Afghanistan, but seems unlikely given the political instability in that area.

Transiting across the Caspian Sea would be the best way for Turkmenistan to circumvent Russian control. Oil-rich Kazakhstan is increasingly shipping its crude across the Caspian to European markets via the Baku-Tbilisi-Ceyhan (BTC) pipeline. Traversing the Caucasus region and Turkey, the BTC represents freedom from Russia's transport stranglehold for Central Asian products. Turkmenistan would greatly benefit from another project that would bypass Russia, the gas-oriented Trans Caspian Pipeline (TCP). The challenge isn't solely financial, however. The Caspian's five littoral states--Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan--have yet to approve a treaty delineating respective borders for offshore prospecting and drilling. Turkmenistan and Iran have been particularly wary about signing an agreement, periodically firing at research vessels presumed to have violated their territorial waters without permission.

A Caspian Sea accord would increase the chances that the TCP will be constructed. (Sending Turkmen gas to Iran is another option, but the growing sanctions against Teheran's nuclear program dissuade any possible investment.) One indicator as to whether Berdimukhamedov will change Turkmenistan's outlook is his relationship with Azerbaijan. Relations between both nations have been tense throughout the post-Soviet era. Territorial differences over the Caspian have nullified projects and even caused diplomatic rows. With the BTC pipeline operable and the TCP under serious consideration, Azerbaijan wants to project itself as the energy hub between Europe and Central Asia. Convincing Berdimukhamedov to send Turkmenistan's gas towards Azerbaijani facilities would reflect a changed atmosphere within the Caspian Basin. Furthermore, it would bolster the Caspian's reputation as a substantive alternative to Russian and Persian Gulf markets for fuel production and delivery.

It's hard to predict what lies ahead for Turkmenistan. One regional analyst aptly said that assessing Mr. Berdimukhamedov's intentions is "like fortune telling with coffee grinds." Whatever the outcome, it is sure to reverberate throughout Central Asia and beyond.

Gerald Robbins is an associate scholar specializing in Turkish and Caspian affairs at the Foreign Policy Research Institute.