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Turkmenistan at the crossroads: either development, or "Venezuelanization"


The socio-political and socio-economic situation in Turkmenistan continues to deteriorate against the backdrop of latent growth of protest sentiment among the population of the country..

Under conditions of austerity regime for the majority of Turkmen population, President Gurbanguly Berdymukhammedov's decision to hold international sports competitions in the country provokes irritation. The abolition of quotas for free electricity, gas, water, tariff increases for communal and other services also negatively affects the image of the president of Turkmenistan. At the same time, this protest does not pour into mass anti-government actions.

The fact is that the state media, despite the absence of other media resources in Turkmenistan, convinces the country's population that the republic is developing and is one of the most developed in the Central Asian region (Central Asia). Though, Turkmenistan has a deficit of foreign trade equal to 10 billion US dollars (about 30% of GDP). In addition, in the republic there is a deficit of foreign currency. Moreover, Turkmenistan came second after Venezuela in terms of inflation - 294% per year.

In other words, Ashgabat experiences insurmountable difficulties with the implementation of large energy projects. Improvement of the socio-economic situation in Turkmenistan should not be expected. According to experts, the real unemployment rate in Turkmenistan is equal to 60%. In general, Turkmen gastarbeiters are sent to the Russian Federation, the Turkish Republic (TP) and Cyprus.

"Venezuelanization" of Turkmenistan

In order to prevent the implementation of a negative scenario in Turkmenistan for the development of the situation, Mr.Berdymukhammedov declares the implementation of reforms that should improve the lives of the population. However, instead of the systemic reforms that provide for the liquidation of G. Berdymukhamedov's personality cult and the planned economy (including the abandonment of wasteful "image" projects), the president of Turkmenistan takes ineffective decisions that have already led to a collapse of the economy. For example, a ban was introduced on the exchange of private individuals, the visa-free regime with the neighboring Kazakhstan was canceled, and the struggle against labor migration was tightened.

It can be stated that the socio-economic crisis in Turkmenistan is aggravated. For example, the government of Turkmenistan sends every fall for the cleaning of cotton under the threat of layoffs and the payment of thousands of employees of state agencies, military, students and schoolchildren. After all, cotton and textiles are the second after the natural gas export article of Turkmenistan. However, the campaign of international human rights defenders against slavery inflicted irreparable blow on this branch of Turkmenistan. Imports of cotton from Turkmenistan have banned the United States, many brands have been rejected by Turkmen textile and raw materials.

There are no funds in the Turkmen treasury. Therefore, a number of foreign companies can not get their money. The official Ashgabat owed only KZT1,000 million to the Turkish companies. Therefore, official Ankara refused official Ashgabat financial assistance.

Obviously, an improvement in the financial situation in Turkmenistan can only come about in the event of an increase in foreign exchange reserves in the country. The official Ashgabat should allow free conversion of the Turkmen manat. The financial crisis and the gap between the courses of the manat - official and real, have struck the whole Turkmen society.

Official Ashgabat loses its reserves due to the presence of two exchange rates. Two courses are beneficial to those who have the ability to convert manat to US dollars in an unlimited amount, i.e. it is a question of the clan of G. Berdymukhammedov, security officials and businessmen close to power.

Against this backdrop, Mr. Berdymukhammedov is trying to solve the problem of lack of financial resources due to a sharp reduction of budget expenditures. He decided to privatize the state-owned enterprises. Thus, the government of Turkmenistan tries to save on salaries, shifting responsibility for non-payment to private entrepreneurs. In the same way G. Berdymukhammedov decided to transfer responsibility for all his unpopular decisions to the highest representative body of people's power, Hulk Maslakhaty (People's Council).

In other words, the government of Turkmenistan has no opportunity to increase its income, since the volume of collected taxes is minimal. However, the negative scenario of developments in Turkmenistan in the short and medium term is unlikely. The fact is that In Turkmenistan, any dissent is severely suppressed. Turkmenistan is actually managed entirely in the "manual mode". Therefore, the threat of regional security with a center in Turkmenistan exists, but this danger comes not from Islamist radicals and extremists, but from the ineffective presidency of G. Berdymukhammedov.

Caspian interest of Turkmenistan

Officially, Ashgabat has signed only one agreement with the Republic of Kazakhstan (RK) on the delimitation of territorial waters and sea borders from the five Caspian states. Against this backdrop, the official Ashgabat has a territorial dispute with Azerbaijan regarding the Serdar-Kiapians deposit, a kind of continuation of the main Azeri-Chirag-Guneshli Azeri oil field (ACG). Turkmenistan's oil industry's biggest impetus will be given when official Baku and the official Ashgabat will agree on a joint development of the Serdar-Kiapians field (oil reserves of the order of 50 million tons).

Obviously, without the settlement of territorial disputes between Azerbaijan and Iran, Azerbaijan and Turkmenistan, Iran and Turkmenistan (there are no demarcation agreements between the three Caspian countries), the EU and Turkey, which also state their interest in laying the Trans-Caspian gas pipeline, are unlikely to be able to count on deliveries of Turkmen natural gas to Europe. Moreover, the official Ashgabat seeks to implement the project of construction of the Trans-Caspian gas pipeline in the direction of Europe. So, since December 2017 the official Ashgabat is discussing with Azerbaijan, Turkey, Georgia and the European Commission opportunities for deliveries from 10 to 30 billion cubic meters. m of natural gas per year to the EU countries. At the same time, the official Ashgabat declares that it is very counting on the system of main gas pipelines of the route "Southern Gas Corridor" (YGK) in Azerbaijan. The fact is that Turkmengaz has completed the construction of the East-West gas pipeline with an extension of 733 km, which unites the eastern natural gas fields along the Caspian coast of Turkmenistan. Throughput capacity of the gas pipeline "East-West" - 30 billion cubic meters. m per year. It should be borne in mind that the official authorities of the IRI and the Russian Federation will continue the policy of neutralizing the efforts of the official authorities of Turkmenistan and the EU, as well as Azerbaijan and Turkey to lay a gas pipeline along the bottom of the Caspian Sea.

Official Tehran considers transformation of Iran into a transit state for deliveries of Turkmen natural gas an important promising task, the solution of which is real in the current geopolitical conditions.

An increase in the volume of natural gas imports from Turkmenistan is considered an important factor in transforming Iran into a major gas hub in the region.

Firstly, the EU wants to receive not only Turkmen but also Iranian natural gas.

Secondly, the Iran-Turkmen gas pipeline can pass through the Turkish territory against the background of a relatively equal interstate relationship between Tehran and Ankara. Indeed, the export of natural gas is an expensive procedure requiring large pipelines to send natural gas to the PRC, Europe, Pakistan and India, while in Iran Turkmen natural gas is exported at the lowest cost since countries are neighbors. Therefore, Turkmenistan, as one of the largest holders of natural gas reserves in the world, needs Iran as an export transit.

But The Iranian proposal for the transit of Turkmen natural gas through the territory of Iran is still technically not realizable.

Firstly, the gas pipeline system in the north of Iran is underdeveloped, which is the reason for Iranian side purchases of Turkmen natural gas for the northern regions of the country. Therefore, the Iranian side should develop pipelines in the northern regions for the transit of Turkmen natural gas. Secondly, Iran is also developing Turkmen natural gas exports - Europe and India.

Probably, official Tehran has offered the official Ashgabat joint export of natural gas in order to be able to fully utilize the potential capacities of both projects. Iran's President Hassan Rookhani said after the visit to Ashgabat that the sides agreed to continue discussing opportunities for the development of a swap of natural gas operations and wider use of available pipelines for the supply of Turkmen natural gas to third countries. Moreover, in this case, Turkmenistan will depend on Iran, which, as it develops its oil and gas fields, can squeeze Turkmen natural gas.

The economic expediency of the South Caucus

First, the resource base. For the stable functioning of the South Caucus of the European Union, Iran needs natural gas from Iran, and through Turkmenistan or the bottom of the Caspian Sea, Turkmen natural gas. If there is no Iran, then only the Azerbaijani natural gas will remain in the South Krai.

The main source of natural gas supplies to the South Caucus is the system of deposits Southern Eloten-Osman and Galkynysh with the maximum estimated volumes of natural in 26,2 trillion. cube. m

However, if the Galkynysh field is put into commercial operation, the official Beijing, with which the official Ashgabat is bound by a rigid gas contract that is not tied to any Turkmen field, will be interested in obtaining its natural gas, but with the obligation to supply 30 billion cubic m per year for 30 years.

Secondly, the formula for the price of natural gas. In the future, certain problems may arise with the achievement of a mutually acceptable price formula for natural gas - in the case of different technical parameters of raw materials from Azerbaijan and Turkmenistan, which will be mixed in one pipe on the western coast of the Caspian Sea. It should also be taken into account that now the natural gas on European hubs is cheaper and stands at around 185-190 dollars per 1 thousand cube. m

Thirdly, financial security. The official Ashgabat adheres to the principle of energy resources at its border, i.e. the problems of finding financing for the project are transferred to its partners.

Trans-Caspian project will help Turkmenistan?

The United States and the EU are seeking a consensus between Azerbaijan and Turkmenistan on the construction of the Trans-Caspian gas pipeline. However, Baku officially believes that the republic is acting only as a transit country in the project. Baku believes that the transport side - the official Ashgabat or a consortium - should be engaged in the implementation of the project on the construction of the Trans-Caspian gas pipeline. The Azerbaijani side already independently implements projects such as TANAP and TAP - the most important elements of the South Caucasus. In May 2017 official Baku invited Iran to join the TANAP project.

The EU is ready to contribute to attracting investment in the construction of the Trans-Caspian gas pipeline. But the capacity of the South Caucus is 16 billion cubic meters. m of natural gas per year, of which 6 billion cubic meters. m will be delivered to Turkey, by 1 billion cubic meters. - to Greece and Bulgaria, and another 8 billion cubic meters. to Italy Consequently, Azerbaijan will supply Europe with 10 billion cubic meters. m of natural gas.

In other words, the gas pipeline will have to be built not only along the bottom of the Caspian Sea (300 km), but also a land plot from Baku to Europe (about 3500 km). After all, the South Caucus provides for the supply of Turkmen natural gas to Europe in the amount of 30 billion cubic meters. m annually for at least 30 years.

Another problem when implementing the Trans-Caspian gas pipeline from Turkmenistan to Azerbaijan is the lack of free volumes of Turkmen natural gas and as a result its price. No European company has entered into an agreement with Ashgabat to purchase a certain amount of Turkmen natural gas. The fact is that Ashgabat is bound by credit obligations and supplies of natural gas to the PRC at relatively low tariffs. The dependence of the official Ashgabat on the export of Turkmen natural gas to China will not allow the Turkmen government to export raw materials to Europe. In 2018, Beijing bought about 39 billion cubic meters. m of Turkmen natural gas. After the introduction of the fourth and last line of the gas pipeline with a total capacity of 85 billion cubic meters. m., the official Ashgabat will be forced to transport all Turkmen natural gas to the PRC. Moreover, the official Ashgabat seeks to implement the project of the TAPI gas pipeline with a volume of 33 billion cubic meters. m

Most likely, official Ashgabat will be able to export Turkmen natural gas to Europe not earlier than 2030 year, since The goal of the Turkmen side towards 2030 is to increase natural gas production to 250 billion cubic meters. m. Exports of Turkmen natural gas are planned to increase to 180 billion cubic meters. m per year.

It should also be taken into account that Turkmen natural gas supplied to Europe will be less competitive than Russian pipeline natural gas and even US LNG. Turkmen natural gas needs to be cleaned, and this procedure makes it more expensive. The cost of Turkmen natural gas with the delivery of the Trans-Caspian gas pipeline and the South Caucus to Italy will be at least 330 US dollars per 1 per thousand cubic meters. m

Moreover, the price of Russian natural gas delivered from Yamal today is estimated at 230 USD, while LNG-LNG from Yamal LNG project is 177-248 USD. By the way, the US LNG is approximately in the Europe of 248 dollars, and if necessary, the US can lower the price and up to 213 dollars.

It should also be taken into account that Gazprom has more pipeline capacity in Europe than the equivalent of the possibility of selling Russian natural gas. Moreover, the decline in demand for natural gas in Europe, the construction of new interconnectors in the Balkans and the increase in LNG supplies led to lower prices and increased competition.

In Europe, many LNG terminals have been built, capable of receiving 200 billion cubic meters. m of liquefied natural gas, but in reality they are used only for a quarter.

True, the Convention on the Legal Status of the Caspian Sea provides for the laying of trunk pipelines along the bottom of the Caspian Sea. However, the Protocol on Environmental Impact Assessment in a Transboundary Context specifies that any project that threatens the ecology of the Caspian Sea requires approval by all the Caspian littoral states. Obviously, the Russian Federation and Iran are unlikely to give their consent in the face of confrontation with the West. Tehran and Moscow are likely to raise the issue of conducting an independent environmental review of the construction of the Trans-Caspian pipeline.

On this background, official Moscow is considering the export of Turkmen natural gas to Ukraine's GTS. At present, an intergovernmental agreement between the Russian Federation and Turkmenistan on cooperation in the gas sector up to 2028 of the year and a signed contract with the same term is in force. According to European norms, in the EU there should be three sources - the supplier of natural gas. At present, it is the Russian Federation, Norway and the Netherlands. But, the Netherlands is already transforming into an importer of natural gas. The Netherlands will fulfill its export contracts, which will require large volumes of imports. Therefore, the third source - the supplier of natural gas should become LNG from the US or other countries.

Thus, official Moscow will fulfill the condition of the Federal Republic of Germany, France and the EU to keep transit of natural gas through Ukraine. This possible step by Moscow (based on the logic of the Kremlin) will allow the Nord Stream-2 project to be realized, as well as not increase the share of Russian natural gas in Europe - 34% according to the Energy Charter.

Convention on the Legal Status of the Caspian Sea

It can be stated that the official Moscow, with the signing of the Convention on the legal status of the Caspian Sea, received the necessary military-political and economic preferences. In particular, the Convention guarantees freedom of development of the Russian Navy, the conduct and actions of Russian warships in the common water area. In addition, rules of safe conduct of warships in the coastal zone and areas of intensive economic activity are established. Moreover, in the Dushanbe Caspian Sea, by the end of 2025, the construction of a new deep-water port for heavy-duty vessels will be completed; The main base of the Caspian Military Flotilla of the Russian Federation is transferred to Kaspiisk from Astrakhan.

In other words, official Moscow is interested in strengthening the strategic position of the Russian Federation in the Caspian Sea, as well as in preventing the entry of the United States, the EU, NATO and the PRC into the Caspian region. The 1 clause of article 8 of the Convention states that "The delineation of the bottom and bottom of the Caspian Sea to sectors is carried out by agreement of neighboring and opposing states, taking into account generally accepted principles and norms of international law", which de facto means - countries with common maritime boundaries resolve the issue Bilateral bilateral delimitation. Consequently, this provision does not exclude potential conflicts between the Caspian countries in the future.


First, the The imposition of US sanctions against Ashgabat due to cooperation with PJSC Gazprom is unlikely.

Second, the in the current geopolitical realities, Turkmen natural gas in Europe is unlikely to emerge due to the evolution of export pricing and politics. The geopolitics is that physically Turkmen natural gas can enter the European market through Iran, the Caspian Sea and the Russian Federation. Against Iran, the United States is against the Caspian, Iran and the Russian Federation.

Third, PJSC "Gazprom", using the difficult financial situation in Turkmenistan, intends to charter the volume of natural gas that the Chinese side has not yet taken.

In turn, the project of construction of the Trans-Caspian gas pipeline will give the USA more opportunities to influence the geopolitical situation in the Caspian region. After all, the protection of the Trans-Caspian gas pipeline is a more ambitious task than the current issues of the protection of platforms and internal pipelines. This project does not mean an American military presence in the Caspian Sea, but it will be more difficult for official Moscow to compete with NATO's security programs, already actively offered by the Washington-Caspian countries.

Rauf Radjabov Orientalist, Head of the Analytical Center 3RD VIEW, Baku, Azerbaijan