TURKMENISTAN SEEKS TO EXPLOIT BOTH GAS AND GEOGRAPHY

Turkmenistan seeks to exploit both gas and geography

by David Nissman

After becoming independent in 1991, Turkmenistan quickly soughtto take its place in the world as a country like any other. Morethan any of the other post-Soviet successor states in CentralAsia, Turkmenistan had both the resources (three trillion cubicmeters of natural gas reserves) and the location (next to Iran)to do so. Indeed, geography may be more important than gas, forTurkmenistan sits at the junction of a north-south axis linkingMoscow and the Middle East, and an east-west axis linking Europe,Central Asia and the Far East.

This geographical advantage was long the source of Turkmen power. A thousand years ago, the Seljukate state linked the land ofthe Slavs with Persia, and Europe with Cathay. But there aresome important differences between that time and now. Then, theSeljukate possessed the most powerful army of its time and deployedit to expand against its neighbors. Turkmenistan today is notable to do that: its President Sapurmurad Niyazov has espousedthe doctrine of "positive neutrality," a concept whichproscribes any use of its small forces beyond the border of thestate. That idea lies behind Turkmenistan’s refusal to send itsborder guards to other CIS states, or to allow CIS forces on itsterritory. Russian border troops might seem to be an exceptionto this, but they are there as the result of a bilateral accord,rather than the CIS agreement. In December 1993, Turkmenistansigned that treaty with Russia in order to deal with a problemleft over from Soviet times: it inherited a 2500-kilometer longunprotected border with Iran and Afghanistan. At that time, Turkemnistanhad only 11 border guards and needed help.

The North-South Axis

In December 1994, Niyazov told Moscow’s Delovoy mir businesspaper that "Russia’s interests are included in all our strategicdevelopment projects for the fuel and energy industry, includingthe Turkmenistan-Iran-Turkey-Europe natural gas pipeline, andfor transportation where the priority is on Europe-Asia transportationarteries." But many in both Central Asia and Moscow seethe relationship between Russia and Turkmenistan to be more competitivethan complementary. Turkmenistan’s gas industry is in directcompetition with Russia’s Gazprom: it has been selling its naturalgas to other CIS states at 60% of the world price even thoughmany of the customer countries have not paid for it at all.

As a result of these delinquencies and the implicit competitionwith Gazprom within the CIS, Turkmenistan has sought to buildgas pipelines to accommodate customers on the broader east-westaxis. Turkmenistan made its position on this point clear whenit sided with Azerbaijan, rather than Russia and Iran, on thequestion of the legal status of the Caspian Sea, and argued thatboth Baku and Ashkhabad have the right to develop oil resourcesthere. If Turkmen gas begins to flow through the Turkmenistan-Iran-Turkey-Europepipeline–which is now beyond the planning stage–or through theTurkmenistan-Iran (or Afghanistan)-Pakistan pipeline, Turkmenistanwill certainly become even more independent in its policies.

Turkmenistan is already trying to benefit from its locationas a transport hub for north-south traffic. A railroad connectingTurkmenistan and Iran is almost completed. The Tejen-Saragt linewhich links Turkmenistan with Iran is already finished, and theline connecting Krasnovodsk with Russia should be finished soon. Consequently, whatever Niyazov may say to a Moscow paper aboutthe primacy of Russia in Turkmenistan’s interests, in fact, hiscountry’s economic ties with Iran have taken first place in thethinking of Niyazov’s government.

Turkmenistan is already a member of the Economic CooperationOrganization which joins the most important countries of the MiddleEast–Iran, Turkey, and Pakistan–with the five post-Soviet Muslimstates in Central Asia and the Caucasus. In June, Niyazov metwith Iran’s foreign minister in Ashgabat, and then visited Tehranto sign an accord on pipeline developments. With regard to Iran,Niyazov said openly that his country is "keen and enthusiastic"about expanding economic ties with Iran.

Iran’s business community has been the beneficiary of the goodrelations between Turkmenistan and Iran. One area where theyhave benefited most is telecommunications; another is banking. In April, an Iranian-sponsored telecommunications fair openedin Ashgabat; and immediately after it, Iranian experts announcedthat they were developing a new communications system for thecity of Mary. Moreover, Iranian bankers and others are certainto benefit from the trilateral accords between Iran, Turkmenistanand Armenia. Contrary to expectations, Iran has been a majoreconomic influence in the region but less an ideological one,at least so far.

The East-West Axis

Pipelines figure in Turkmenistan’s plans to exploit its east-westaxis. Recently it has announced plans to build a pipeline throughChina to Japan, and another to Europe. If these pipelines arebuilt–and start-up funding is still lacking–Ashgabat will havesolved its fundamental problem: transforming the billions of cubicmeters of gas in the ground into real wealth for the population.Because Iran is involved in all these projects, Western lendersare leery of participating, especially because of American objections. As a result, Turkmenistan will probably have to shoulder muchof the cost itself. But Western governments may ultimately decidethat it is more important to have a secure and independent Turkmenistanthan to continue to punish Iran for its international behavior.

If the final completion of a pipeline running through Iran andTurkmen remains in doubt, what about a pipeline from Turkmenistanto the Yellow Sea? Were it to be built, such a pipeline wouldbe more than 6,000 kilometers long and cost more than $12 billion. Despite these daunting figures, the Chinese National Oil company,the Mitsubishi Corporation, and Turkmengaz have launched a pilotstudy on its construction. Reportedly, Exxon is also interested. Yet another obstacle to this and other pipeline routes is theproblem of security. That is why a pipeline through Afghanistanis unlikely to be feasible anytime soon.

Can Turkmenistan Become a "Kuwait of Gas"?

Turkmenistan came into existence as a state as the most stableand potentially wealthy of the former Soviet republics. It hasdone much to accommodate Russian interests, including the grantingof dual citizenship to Russians in Turkmenistan, in order to stemthe brain drain of technical experts back to Russia. Moreover,it has not been troubled by the ethnic rivalries that have batteredsome of the other independent states. And, with the exceptionof Iran and Russia, Turkmenistan enjoys the enviable positionof being surrounded by countries which owe it money and want toavoid having to pay world prices. If it can build any of thepipelines mentioned above, it will truly become the Kuwait ofGas; if it cannot, it will not make the transition and will findit increasingly hard to maintain its current level of independence.

David Nissman is an Adjunct Professor at Georgetown University.