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Turkmenistan’s internal political stasis is strong enough to ensure that natural resource wealth is not used in the interests of society at large, a Russian pundit says. From Chronicles of Turkmenistan.by Chronicles of Turkmenistan 12 January 2011
Azhdar Kurtov, editor-in-chief of the journal Problems of National Strategy of the Russian Institute of Strategic Studies, gave this interview to the independent news site Chronicles of Turkmenistan.
Azhdar Ashirovich, the Nabucco project – the most expensive ($11.4 billion) gas pipeline in history – is reaching its dramatic culmination. In 2011, either work on its implementation will start, or EU money will be re-channeled to other projects. How important for the viability of Nabucco is the agreement of Turkmenistan to take part in the project?
The Nabucco project, without any doubt, was largely initiated by political rather than financial motives. All expert opinions confirm that Europe is not in desperate need of hydrocarbons. On the contrary, being the most attractive market with regard to high fuel prices, Europe has naturally become the object of attention for hydrocarbon producers from the entire world. Currently, thanks to the development of modern civilization, the technical delivery of both oil and gas is possible from different continents. Regarding the latter case, I would like to note that we may say this not only about pipelines but also about liquefied natural gas.
It was in 2010 that the political component in the Nabucco project became particularly vivid. Europe has failed to overcome the economic crisis which started in the fall of 2008. Moreover, despite all measures implemented by the European Commission, the crisis, which hit Greece hard, is spreading further with Iceland, Spain, and Romania currently in possible danger. Attempts of the authorities to replenish the budgets by cutting social benefits provoked waves of protests. In any case, the demand for natural gas in Europe that existed before the 2008 crisis has not recovered. However, European politicians continue to lobby for the Nabucco project. Why?
It is clear, and they make no secret of it, that firstly they are seeking to diversify the sources of energy supplies. This very fact alone does not allow Turkmenistan to cherish too many optimistic hopes. The EU intends to create a system that would allow the future reduction of gas and oil prices by stirring up competition artificially. This is particularly true of gas as in contrast with oil, natural gas cannot be viewed as an exchange commodity, i.e. a commodity the price of which is determined by the stock exchange. Prices for the main volume of gas (excluding spot contracts) are determined in lengthy (in terms of validity) contracts for gas supplies. Therefore, Ashgabat should not have high hopes of receiving high payments if its gas is channeled through the new pipe to Europe. The EU is creating a system that will offer some potential competitors of Turkmenistan advantages on the gas markets in Europe. At least due to the geographical proximity to Europe of gas suppliers such as Algeria or Libya.
It is sufficient to look at the pipeline route to understand that Nabucco itself is not oriented for gas from Turkmenistan. In principle, the Europeans made a tricky step: the project is laid through several states which can fill the pipe with their own gas. For instance, Turkey which is a transit country where most of the pipes would be laid, borders Iraq, Iran, and Azerbaijan. All these countries have their own natural gas and all of them can be viewed as potential suppliers of Nabucco. Certainly, their chances are different. However, objectively speaking, the chances of Iraq and Azerbaijan, or even Egypt, are much higher than those of Turkmenistan.
Speaking objectively, simple facts should be admitted. Earlier, in the early 1990s, Turkmenistan had a large pipeline, Central Asia Center, and was still far from being prosperous. Nowadays, Ashgabat has three export major pipelines – two to Iran and one to China in addition to a pipeline to Russia. In terms of quantity, this is an achievement. Yet, it has not made the country happy. Perhaps, the issue is not simply the amount of pipelines?
In June 2010 Turkmenistan launched the construction of the $2 billion East-West pipeline from its largest gas field, South Yolotan, to the shore of the Caspian Sea. Is this the hand, or a pipe, of help to Nabucco? Or does Turkmenistan have its own far-reaching plans?
In contrast to many others who provide analyses of today’s situation in Turkmenistan, I used to do it in the mid-1990s. The idea to build such a pipeline, which would link the east of Turkmenistan with its Caspian shore, was born already at that time, since the competent experts were aware that the shores of western Turkmenistan have no sufficient onshore deposits to fill a gas pipeline that could possibly go under the Caspian Sea. At that time, nothing came of this idea because of the disagreements [President Saparmurat] Niyazov had had with the president of Azerbaijan, Heidar Aliev. The latter, backed by the U.S., suddenly refused to follow the agreed commitments on the Trans-Caspian gas pipeline. While it was previously agreed that the entire pipeline capacity would be offered for Turkmen gas, Aliev senior started insisting that half of the pumping volume should be offered to Azerbaijan’s gas. This led to a conflict which was further complicated by then and currently existing disagreements with regard to whom the Caspian deposits should belong. The dispute between the two countries has further involved scholars who came to argue as to who – Turkmenistan or Azerbaijan – authored the epic Book of Dede Korkut. Ashgabat commenced suppressing Azerbaijani nationals in Turkmenistan, in fact organizing the forcible deportation of the latter to Baku by ferries. To cut the story short, the conflict was heating up and the pipeline project was buried. I would like to emphasize once again: both Turkey and the U.S. in fact supported Baku in that conflict, so one should not rely on their support today as they may “give a wag of the tail” again.
I can note that the Ashgabat authorities hope that following the completion of the East-West pipeline, theoretically Turkmenistan will be in the position to decide what part of the world and, consequently, what pipeline (in the direction of Russia, Iran, Azerbaijan) it will be able to channel its gas from the west of the country. In this respect, this is not such a silly intention. Above all, the East-West pipeline is not an export but an internal major pipeline. The development of internal infrastructure is an advantage; however, the challenge remains: will the money not be spent in vain? Such sad experience has been already seen in the post-Soviet territory. For instance, in Ukraine, the Odessa-Brody oil pipeline was constructed without thinking twice while there was no oil to fill it for several years. The pipeline had to stay empty, rusting in the earth.
"We will build the gas pipeline with our own resources at our own expense," President Berdymukhammedov said. Why then do the Turkmen authorities spend $2 billion from the budget while there are foreign companies crowding around who are looking forward to investing money in the gas projects?
It is hard to give an unambiguous answer for the reasons for such behavior. The factor of injured pride of the country’s leading person might also play a certain role: Moscow has refused but we will build it out of spite. Authoritarian leaders often act on a whim. [Also,] one can assume that the Ashgabat authorities do not want to put the internal pipeline network in the hands of foreigners.
In October 2009 the British energy consultants Gaffney, Cline & Associates stated that Turkmenistan ranks fourth in the world in natural gas reserves. Does this mean that Turkmenistan will become a prosperous “gas Kuwait,” or could the country instead become an arena of competition among leading world nations for the right to possess Turkmen energy resources?
Regarding the prospects to become a “second Kuwait,” I think this will not be the case of Turkmenistan. The matter is not only the richness of deposits possessed by the state but also in how rationally the benefits received from the export of produced natural resources are spent. Speaking the language of accountants, it is important to consider both revenue and expenditure. For instance, the Soviet Union was not poor in natural resources; however, by the end of the 1980s, the state-controlled economy and the “wise party governance” managed to bring the country to a dead end that the country could not cope with and simply collapsed. Or another example – Nigeria, which is quite a rich African state in terms of oil deposits. And what is this country known for? Reportedly, for its flourishing criminal gangs and drugs.
So not everything depends upon natural resources. One can spend a small amount of money in an intelligent manner while another can waste billions of dollars. Why does Turkmenistan need so many pompous buildings? They are meant only to feed the sense of self-importance of the authorities. It is a mere myth that ordinary people always take pride in them. As the history of many countries shows, in times of coups and revolutions the population more often set these “palaces” on fire because for them they are the symbols of tyranny.
And finally, geography is fate; you cannot ignore it. I mean that the location of Kuwait is more advantageous than that of Turkmenistan. Kuwait is located on the shores of the open sea, i.e. the most inexpensive transport routes – sea transport – are available. The country faces no problems with transit states that have major pipelines. Nobody shuts the valves, nobody drills holes in the pipelines, nobody blows them up, and nobody blackmails the suppliers by the price factor.
OLD AND NEW FRIENDS
What are the positive and negative factors of the ever-growing influence of China on the Turkmen economy?
The positive factors are obvious: China has become the major world “money grabber” – its international reserves are the largest in the world, therefore China’s economy is being “overheated.” This forces Beijing to conduct economic expansion across the world. The Chinese are buying up everything which represents value for them: deposits, companies, stocks of raw materials, luxury goods, etc. Turkmenistan gets money and investments from China. In this respect, today China has very few competitors, including Russia. Therefore, Moscow could not [offer any significant alternative] to the construction of a gas pipeline from Turkmenistan to China. However, neither has Ashgabat benefited much from this pipeline. It should be noted that according to recent data, only 3 billion cubic meters of gas, i.e. 10 percent of its projected capacity, was pumped through this pipeline in 2010. And if only it was known for certain what price the Chinese pay for Turkmen gas! As experts say, they pay 1.5 times less than Gazprom pays for the same gas. In other words, Ashgabat has achieved its dream – it has diversified its pipeline system by selling its resources at little money. This can hardly be viewed as an achievement.
One can also make an assessment of the structure of the mutual trade turnover. While Turkmenistan exports mostly raw materials to China, China supplies Turkmenistan with highly processed goods. This could not be the other way as this is the external policy strategy of Beijing. Local industry is dying everywhere the Chinese go to and being replaced by industrial structures which ensure the operation of the “world factory” as China is called today. In this respect, a rapid escalation of relations with China largely prevents Turkmenistan from being developed not in a resource-based scenario but in supporting the industrial and manufacturing spheres of the economy which would enable it to become a state with a truly developed civilization.
How would you estimate the prospects of cooperation between Turkmenistan and Russia? Which spheres of this cooperation would you mark as priority areas?
Despite all the difficulties and conflicts in 1997, 1998, and 2009, as well as the recent dispute with MTS [mobile phone provider], the relations between the two countries are marked by positive dynamics. Ashgabat has not broken all ties with Russia: trade continues, moreover, the spectrum of goods exported by Russia to Turkmenistan is being extended. This includes vehicles, sea vessels, arms, and many others. Not all is lost in the gas sphere either. This already happened when in 1998 Turkmen gas exports dropped 13 times because of disagreements between Moscow and Ashgabat over the price. However, later it was Moscow that helped Ashgabat both to achieve a price increase for exported gas and receive payments for gas supplies not at barter terms – which was the intention of the Ukrainians for instance – but for hard cash. I would consider promising those spheres of cooperation which, with the help of Russian investors, would allow the creation of Turkmenistan enterprises capable of producing goods with a high degree of surplus value, i.e. enterprises of advanced industries. This certainly depends upon the readiness of the Ashgabat authorities to accept such cooperation. It is easier to drill holes in the earth and pump oil and gas from them than produce TV sets.
With what country of Middle Asia, in your opinion, does Turkmenistan have the warmest economic and political relations?
First of all, let me specify the term “Middle Asia.” Classical geography defines a totally different region under this term: Mongolia, a part of China, Russian Altai, and only a part of Central Asia. However, in the early 1990s the immensely vain leaders of former Middle Asia and Kazakhstan decided to rename the region in order to become the center of the continent at least in name. Today the Kazakhs, puffed with self-conceit, are trying to return to the former term of “Middle Asia and Kazakhstan,” making a difference between their “advanced” and “successful” country from less “civilized,” as they see it, neighbors in the region.
I tend to consider Middle Asia as comprising the former Central Asian Soviet Republics and not Afghanistan (which has been imposed by the Americans as an integral part of the unified region). In this context Ashgabat is closer to Uzbekistan and Kazakhstan. Firstly, they share borders, which always facilitates economic cooperation. Uzbekistan imports agricultural machines and cooperates with Turkmenistan in the gas and oil spheres. There are common transport projects with Kazakhstan – the Uzen-Etrek-Gorgan railway to Iran. One must also note that if it weren’t for the jealousy of Tashkent, Ashgabat might have been able to build more advanced cooperation both with Tajikistan and Kyrgyzstan, for instance by exporting cheaper gas to these countries. However, this is not in the interests of Uzbekistan, thus it does not allow this option.
Yet relations cannot be characterized as particularly warm. The political and economic practices of Turkmenistan differ too much from those of its neighbors. Totalitarian regimes always fear active external contacts in any sphere, even if they are strictly controlled by the authorities. That was the politics of the Soviet Union which fenced itself off from the rest of the world with the Iron Curtain. Turkmenistan follows the same path, to judge by what is happening on the Turkmen-Uzbek border.
During 19 years of independence, in contrast with other post-Soviet states of Central Asia, Turkmenistan has avoided ethnic and national conflicts, as well as fratricidal civil wars. Can this be attributed to the achievement of the country’s political governance, or is this related to the mentality of the Turkmen people?
I think none of these. If to take the position of the Soviet historiography, which connected this with the events in the Far East as a reference point, following the end of the civil war in 1922 the Soviet Union also did not experienced such conflicts in an acute form (except for deportations which is another issue). It took longer to catch [Turkmen tribal leader] Junaid-khan while others like him were “suppressed” even in the 1930s. Why? Because the totalitarian regime cut off all impulses deriving from the society from the very beginning, both positive and negative. Undoubtedly, a repressive apparatus can be efficient. “Might is right,” as the Russian saying goes. Everybody will quail before the lord’s sword. Yet, will this interethnic and domestic peace be preserved in different conditions? As practice in other countries shows, it will not. If the government of Rosa Otunbaeva in Kyrgyzstan had had an “iron fist,” if it had controlled its armed forces, the massacre of Kyrgyz and Uzbeks in the south of the republic would either have not happened or would have been on a smaller scale.
Can we put the question as follows: “Turkmenistan is as rich in natural resources as the United Arab Emirates. The population of both Turkmenistan and the UAE is 5 million. Then why do we live in poverty while the Arabs lead a prosperous life?”
The question can be put this way. However, one should go into details. It is necessary to calculate the reserves of hydrocarbons in tons or billions of cubic meters per capita. Off the top of my head, even looking at these indicators, the UAE has better prospects than Turkmenistan. This is the first factor. Secondly, I have already mentioned geography as a determining factor. Whatever you say, the Arabs of the Persian Gulf are advantaged in this respect. Finally, it should be admitted that the governments of these Arab counties make sure that every national of the emirates has his fair share. This is not a priority for the Turkmen authorities.
Bribes have long been common practice in all spheres of Turkmen society. Is it possible to eliminate corruption in a specific post-Soviet country?
Corruption has little dependency on the sphere of external politics in the respect that this phenomenon does not derive from the system of interstate relations. Therefore, theoretically it is possible to combat corruption and win within one particular country. Another question is whether the authorities have the will and desire to carry out such a fight. In my view, Turkmenistan’s authorities, both under Niyazov and Berdymukhammedov, are comfortable with the situation when bribery, inter alia in the government sphere, is flourishing, while from time to time the president shuffles the set of officials, thus imitating the fight for transparency for the population. Corruption is present everywhere in the world; however, it is not so significant in those countries which have independent judicial systems, control of the parliament elected in free elections, and independent mass media, i.e. subjects of legal relations which are truly capable to counteract corruption. In a system where everything depends upon the will of one individual, corruption flourishes.
Culture and arts in Turkmenistan are fully committed to worship and exaltation of the president and his actions. Scientific works are authored exclusively by the president. He is the one who makes all discoveries. What path will a society with an total lack of freedom of artistic expression and scientific thought follow?
I can’t help saying that you exaggerate. Inter alia, one of my duties is to follow the publications by CIS experts. Scientific works are authored not by the president alone. I regularly read scientific journals published in Turkmenistan. There are few of them and they are far from those that can be called scientific publications in a normal world but they do exist. In this respect, the situation of Turkmenistan is really the worst in Central Asia. Even poverty-stricken Tajikistan publishes quite decent scientific works on economics. However, you are absolutely correct that in Turkmenistan (as well as in all of Central Asia) both artistic and scientific workers are infected with primitive apple-polishing and toad-eating. Partially, this is the heritage of the past. Today’s regimes of the region have much in common with despotisms which existed many centuries ago. With the breakup of the Soviet Union and the wave of nationalism as well as the outflow of Russians from the region, local science and culture have largely returned to the past. Just recall [Leonid] Solovyov’s stories about Hodja Nasreddin. He describes in detail how the emir is surrounded by a crowd of viziers – intellectuals whose exclusive task was to praise the merits of their lord a thousand times per hour.
Currently the situation is the same. The choirs of Turkmen or Kazakh scientists sing hymns to the endless wisdom of Nursultan [Nazarbaev] or Gurbanguly [Berdymukhammedov] at the top of their voices. The “salt of the nation,” which is the intelligentsia in a normal society, in Central Asia have tried so hard to soften the skin of their masters that it is likely that they already have hematomas. Therefore, there are no new Makhtumkuli [18th-century poet] in Turkmenistan and Kazakhstan knows no significant scientific discoveries. Instructing the authors who write for the journal which I edit, I always say that science is driven by doubt. A scientist is the one who puts someone’s opinion in question and looks for the evidence. Science is ruled by reason and not by the authority of the government. Societies that live by the principle “the head of the state is always right” cannot have true science and civilization. Achievements of culture and science are parts of human civilization. The society which is deprived of these is defective, the same way as an individual with one limb is handicapped. Since both science and culture are related to the intellectual process and creativity, which are under the competence of the brain in the human body, I would go further in my comparison to say that Central Asian societies remind one of a headless horseman.
Azhdar Ashirovich, what is your vision of Turkmenistan in 20 years?
Many things have changed during the first 19 years of independent Turkmenistan. There are positive changes in economics but there are also negative, repressive changes in the political and spiritual spheres. I do not think that in the next 20 years to come these trends will change significantly. I do not forecast any revolutions in Turkmenistan. It is clear already now that Berdymukhammedov has chosen again the way of his predecessor in internal politics. Like in the novel [by O. Henry] Cabbages and Kings, in the republic of Anchuria, only the heads on the statues of presidents change while politics stays unaltered.
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