Russia Acts Aggressively to Enhance Energy Position in Turkmenistan

Turkmenistan's Saparmurat Niyazov already is notorious for being Central Asia's most repressive ruler. Now he appears intent putting the final touches on his Big Brother image. Despite Niyazov's evident megalomania, Russia is eager to deal with Turkmenistan. Moscow's desire to extend its economic influence in the CIS appears to be overriding concerns about human rights abuses.

Niyazov's personality cult took a quantum leap forward during a cabinet meeting February 23. In comments broadcast on state television, Niyazov announced that "young people should not grow their hair or beards." He went on to instruct his education minister to "look at their dress code and ethics."

At the same meeting, the Turkmen leader announced that government agencies would intensify their video surveillance of Turkmen citizens. Cameras will be installed at key economic facilities, government offices and public buildings, he announced.

"We should know if a fly quietly buzzes past," said Niyazov – the self-declared Turkmenbashi, or father of the Turkmen people. "This is not due to a lack of trust, but to avoid disorder."

Though Niyazov has proven mercurial in his dealings with foreign states, Russian President Vladimir Putin's administration is aggressively courting the Turkmen leader, apparently aiming to secure Moscow's energy interests in the gas-rich Central Asian state. In doing so, Moscow has glossed over Niyazov's glaring human rights abuses, including repressive behavior towards ethnic Russians. [For additional information see the Eurasia Insight archive].

Russia's efforts appear to be paying off. Nevertheless, Russia knows first hand that cooperation with Turkmenistan always involves the possibility of a sudden shift in policy.

The Kremlin dispatched a high-level delegation to attend Turkmenistan's February 19 Flag Day celebrations, which also marked Turkmen President Saparmurat Niyazov's 64th birthday. The governor of St. Petersburg, Valentina Matviyenko, led the delegation, reportedly hailing Turkmenbashi's achievements as "fantastic." She also praised Niyazov's spiritual guide book, the Rukhnama, as a "serious philosophical" work.

The main achievement of the Matviyenko's visit was the signing of a cooperation agreement covering the economic, scientific and cultural spheres. It is designed to encourage joint investment in the fishing industry, mining and gas production, the Itar-Tass news agency reported. It also calls for an exchange of trade missions. The pact, Matviyenko declared, "paves the way for [Russian] businessmen" to enter the Turkmen market.

Russia's goal is clear; to cement its position as Turkmenistan's dominant partner in energy-sector cooperation, and thus retain control over the export of Turkmen gas. Accordingly, Matviyenko's mission included top figures in Russia's energy sector, such as the head of the Itera gas firm, Igor Makarov. At a February 19 meeting, Niyazov and Makarov reportedly agreed that Turkmenistan's would sign a major deal to develop offshore oil fields in Turkmen sector of the Caspian Sea "in the near future." The deal, a production sharing agreement (PSA), would involve the Russian oil consortium ZAO Zarit -- which includes state-owned firms Rosneft and Zarubezhneft, along with the gas trader Itera. The PSA's term would be 25 years and it would cover four oil- and gas-rich blocks in the southern part of the Caspian shelf near the Iranian border. Last December, the Turkmen government put off signing the PSA. No reason for the delay was given at the time.

Zarit was registered in May 2002 in Moscow as a joint venture between Rosneft, Itera's subsidiary Gazkhiminvest (each controls 37 percent of Zarit), and Zarubezhneft, which holds the remaining 26 percent stake. The consortium aims to attract Turkmen state-owned Turkmenneft and Turkmenneftegas, as well as Iranian firms, to take part in the project. Turkmenistan is the largest natural-gas producer in Central Asia, and hopes to attract up to $26 billion worth of foreign investment in its oil and gas sector by 2020.

As far as Moscow is concerned, part of the PSA deal's price apparently involves the Kremlin's silence over Turkmenistan's treatment of ethnic Russians. In April of 2003, Niyazov abruptly decided to eliminate dual citizenship, effectively forcing roughly 95,000 ethnic Russians in Turkmenistan to either renounce their Russian citizenship or leave the country. [For background see the Eurasia Insight archive].

Until late 2003, Russia repeatedly voiced concern over alleged discrimination against ethnic Russians in Turkmenistan. Now, however, the Putin administration is downplaying the ethnic Russian issue. Matviyenko did not raise the issue with Niyazov during the recent Ashgabat visit. Russia's deputy foreign minister, Alexei Fedotov, recently said there was no "migration rush" among Russian citizens in Turkmenistan. Since April, some 1,500 people per month have applied to move to Russia, he said.

Some nationalist politicians in Russia are dissatisfied with Putin's Turkmen policy. Dmitry Rogozin, one of the leaders of "Rodina" political block, is among those trying to keep pressure up on Turkmenistan. Last May, Rogozin claimed that Turkmenistan had covertly cooperated with the radical Islamic Taliban movement – the former rulers of Afghanistan. Rogozin also accused Niyazov of being involved in drug trafficking.

Russia began its push to expand its economic influence last April. Just days before Niyazov announced the elimination of dual citizenship, he signed a framework agreement on gas cooperation with Putin. In addition, the two leaders inked a 25-year contract on gas supplies to Russia, involving the Russian natural gas monopoly Gazprom. [For background see the Eurasia Insight archive]. By clinching the deal, Moscow sought to preempt the possible construction of a trans-Afghan pipeline.

Not all of Russia's efforts to enhance energy-related cooperation with Turkmenistan have met with success. Earlier in February, Niyazov declined an offer from Anatoly Chubais, head of Russia's power monopoly RAO Unified Energy Systems (UES), to join a CIS power network. Last January, Chubais urged Niyazov to link Turkmenistan to the CIS system, helping to reestablish a Soviet-era grid. In an open letter published by Turkmen media, Niyazov said Turkmenistan would refrain from joining due to the "traditional failure" of CIS customers to pay promptly. He also cited an absence of clear rules and obligations covering the exchange of energy and transit.

Instead of relying on Russia as an outlet for electricity exports, Niyazov is exploring stronger ties with his southern and western neighbors, in particular Turkey. Niyazov met Turkish Minister for Energy and Natural Resources Hilmi Guler on February 18, signing a protocol of intent to double Turkmen electricity supplies in 2004 from 300 to 600 megawatts.

Overall, Turkmenistan hopes to generate 12.5 billion kilowatt-hours (kW/h) of energy in 2004. Over the last two months, about 90 million kW/h of electricity has been exported by Turkmenistan via a Turkmen-Iranian-Turkish power transmission line commissioned last December. "Turkmenistan's energy capacity that is growing every year allows to further increase the electricity exports to Iran and Afghanistan," Niyazov said.