Courting Turkmenistan

How Central Asia's "hermit kingdom" became the biggest prize in Europe's energy wars.

BY LELAND R. MILLER | AUGUST 28, 2009

Each December, Turkmenistan celebrates "Neutrality Day," an official state holiday commemorating the reclusive country's aspiration to be the Switzerland of Central Asia. But for the first time in nearly a century, Turkmenistan is finally in play. Although the former Soviet republic has languished for decades, EU-Russian energy tensions, the war in Afghanistan, and the power politics of oil and gas have combined to fuel a new "Great Game" in Central Asia. The most coveted prize may be the hermit kingdom of Turkmenistan, which sits atop the world's fourth-largest reserves of natural gas, a huge amount of oil, and a strategic position in the heart of Central Asia. The United States, the European Union, Russia, China, Iran, and Turkey are all vying for influence in Turkmenistan. The only question is, at whose expense will future gains be made?

Turkmenistan puts a fine point on the age-old puzzle of whether bizarre countries seem to have oil and gas, or whether they are bizarre because they have them. The country was brought through the fall of communism under the dictatorial rule of Saparmurat Niyazov, who renamed himself Turkmenbashi ("Leader of the Turkmen"). Niyazov cared less about his country's increasing irrelevance in foreign affairs than his domestic projects, such as banning entertainment (from circuses to the opera), renaming the calendar after his family members, and penning a spiritual guide that Turkmen students and civil servants had to parrot to get ahead. When Niyazov died in December 2006, a then 49-year-old former dentist named Gurbanguly Berdymukhamedov ascended to the leadership. Despite promising greater openness and reform, his record has been mostly spotty: Most of the Turkmen population still lives in poverty, and this year Freedom House granted Turkmenistan the dubious honor of "worst" of the 29 post-communist countries it surveyed.

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And yet, Turkmenistan has quietly emerged over the past two years as a major priority for the great powers with stakes in Central Asia. This has nearly everything to do with energy. Russia has historically maintained some form of control over nearly all of the oil and gas pipelines leading out of Central Asia. Without Turkmen gas, however, Russia would not have the supplies necessary to fulfill its extensive export commitments to Europe. According to the Jamestown Foundation, Russian state-owned gas giant Gazprom typically purchases about 80 percent of Turkmenistan's total annual gas exports at its border, after which Gazprom resells them to, or swaps them for other energy or exports with, Ukraine and Europe. This system worked out well enough for both parties for most of the past two decades: Moscow had a guaranteed source of supply, and Ashgabat had a guaranteed buyer for its exports.

This old arrangement began to break down, however, during the global financial crisis. As factories shuttered their doors and production ground to a halt, European demand for Russian-supplied Turkmen gas plummeted. Amid skyrocketing energy prices during the first half of 2008, Gazprom had conceded to paying higher prices for Turkmen gas (from $100 to $130 per 1,000 cubic meters). But by 2009, that now-inflated rate made the bulk purchase of Turkmen gas economically unviable, and Russia found itself locked into a contract with Turkmenistan for huge quantities of gas it could not sell. It was in this context that the major gas export pipeline from Turkmenistan to Russia, through which almost 50 percent of the Turkmen gross national product flows, suddenly exploded this April. Rather than repair it, Moscow simply announced the cessation of all purchases of Turkmen gas -- an action that continues to cost Turkmenistan approximately $1 billion a month.

Needless to say, Turkmenistan did not view this incident as an "accident," as Russia claimed. Instead, it saw the explosion as Russian retaliation for Ashgabat's flirtations with the West and a power play to force the renegotiation of existing gas contracts. Two weeks after the explosion, Berdymukhamedov laid down a new marker: "Turkmenistan," he said, "needs to create a new system of connections with Europe."

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Leland R. Miller, a New York attorney, is a senior advisor with DC Asia Advisory in Washington and a term member of the Council on Foreign Relations.

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AHALLY

5:57 PM ET

August 28, 2009

Security, energy or human rights?

Here someone might want to ask, does the West try to secure its energy supplies at the expense of human rights values?

The answer will be complicated but clear.

1. Russia and Suudi Arabia are the Europe's largest gas and oil suppliers. None of the countries have proven good human rights records so far.

2. Isolating any country with repressive regime has never helped to achieve even at least certain improvements, but rather worsened the situation.

3. For gas rich countries like Turkmenistan which is geografically located at the center of Big players -- Iran, China, Russia and to some extends Europe -- there is always alternative option to sustain its economy.

3. For Central Asian countries like Turkmenistan, human rights issues are not only the matter of politics but also a matter of social mentality.

Here it is better to add one sentence to the last paragraph, "It is the beginning of the history for Turkmenistan and current president Berdymukhamedov will likely to be the first Turkmen president to rise against the dominance of Russia."

But without strong Western support, the steps may reach a deadlock.