EurasiaNet Business & Economics - Turkmenistan's Rights Record Doesn't Outweigh International Investment Interest

BUSINESS & ECONOMICS

TURKMENISTAN’S RIGHTS RECORD DOESN’T OUTWEIGH INTERNATIONAL INVESTMENT INTEREST
Mark Berniker 5/30/03

Turkmenistan’s reputation for having one of the world’s most repressive governments is not deterring foreign interest in energy development projects. Representatives of international political and financial institutions appear reluctant to condition economic assistance to Ashgabat on human rights improvements by President Saparmurat Niyazov’s regime.

Since an assassination attempt last November, Niyazov has tightened what could already be described as a totalitarian cult-of-personality. [For background see the Eurasia Insight archives]. Among the more notorious measures undertaken over the past six months have been the re-introduction in March of an exit-visa requirement for citizens desiring to leave the country, and the abolition of dual-citizenship recognition. [For additional information see the Eurasia Insight archive] Such changes are consistent with a broader trend, in which government policies have effectively increased Turkmenistan’s isolation from outside cultural, social and political influences.

Niyazov’s government has long been a target of human rights advocacy organizations. Amnesty International, said in its annual report released May 28, said Turkmenistan was experiencing "a new wave of repression," adding that the credible reports of torture are continuing. Likewise, Human Rights Watch in its April monthly update expressed "grave concern" about abuses in Turkmenistan.

Multilateral groups, in particular the Organization for Security and Cooperation in Europe (OSCE), also have voiced worries about Niyazov’s closed political system. Following talks with Turkmen officials, Martti Ahtisaari, personal envoy of the OSCE chairman-in-office, urged Ashgabat to more actively cooperate with global organizations, including the International Red Cross, the Interfax news agency reported May 29. In Ashgabat, Ahtisaari also expressed concern about the exit-visa rule.

Despite OSCE’s displeasure with Turkmen political developments, Ahtisaari indicated that economic assistance should not be used as a lever to compel better behavior by Ashgabat. "There are no quick decisions," Ahtisaari said in a May 13 report posted by Gundogar web site, which cited the Russian daily Izvestiya.

"People must have the right to freedom of expression, free media, justice on the part of the police and a fair legal system," Ahtisaari said. "But, at the same time, social and economic development is extremely important too. It is hard to discuss human rights when living standards are low."

Turkmenistan’s energy abundance at present appears to outweigh corporate concerns about Niyazov’s practices. International interest remains high in possible investment opportunities in Turkmenistan, which reportedly possesses the world’s fifth largest reserves of natural gas. Meanwhile, the country’s foreign investment needs appear to override Niyazov’s evident suspicion of potential external threats to his authority.

The Asian Development Bank (ADB) may begin accepting bids by November for development of the planned $2.5 billion-$3.5 billion Trans-Afghan-Pipeline (TAP). The pipeline is expected to attract bids from at least 40 potential contractors, and would assist in the delivery of Turkmen gas to Pakistan via Afghanistan. Efforts are being made to include India in the project, which has massive energy import needs. Ministers from Pakistan, Afghanistan and Turkmenistan will meet in Ashgabat in June, when the ADB is expected to disclose more details and possible members of the consortium associated with the TAP project. India is also talking with Iran about a possible alternative to TAP, which would deliver Iranian gas across Pakistani territory.

While few major multinational energy companies have yet to expose themselves to the risks and opportunities in the Turkmen market, that could change as the TAP project progresses, or with the development of Turkmenistan’s many onshore or offshore energy plans.

Dragon Oil, a United Arab Emirates-United Kingdom consortium is already actively involved with development of the Turkmen natural gas. On May 12, Interfax reported that Niyazov discussed the Cheleken offshore project with Hussein Sultan, head of UAE-based Dragon Oil. The report went onto say that Dragon Oil boosted oil production in 2002, drilling four new wells in the Jeytun and Jygalybeg reservoirs, increasing production from 6,000 to 15,000 barrels a day. Dragon Oil will build a "new self-propelled floating oil rig" for offshore oil and gas development in and around Cheleken, which estimated to contain 600 million barrels of oil and more than 65 billion cubic meters of gas. Interfax said Turkmenistan could earn $4.7 billion from the Caspian Sea project.

While the European Bank for Reconstruction and Development has suspended indefinitely public-sector lending to Turkmenistan, the bank’s web site says it has "extended a US$ 75 million loan to Dragon Oil, to support the commercial development of hydrocarbon reserves in the Turkmen Caspian Sea sector. The main reserves that are covered under the investment lie in two fields: Jeytun and Jygalybeg." The Dragon Oil project is the EBRD’s first investment in the Turkmen energy industry.

In April, the ADB projected that the Turkmen economy was "forecast to grow 7.5 percent in both 2003 and 2004 on the back of external demand for hydrocarbons, cotton, and textiles, as well as stronger domestic demand stemming from improved agricultural performance. The outlook is positive for the years beyond 2004 as new plans for the export of natural gas to Russia, and possibly to markets in South Asia via the trans-Afghan pipeline are making progress."

A Turkmen-Russian deal signed in April has the potential to secure a lucrative and long-term market for Ashgabat’s natural gas. [For background see the Eurasia Insight archive].

Turkmenistan has also recently been in talks with both Iran and Turkey about significantly expanding economic ties over the next few years. On April 24, IRNA, the Iranian News Agency reported that Niyazov said his country plans a significant increase in Caspian offshore oil exploration over the next three years. The five Caspian littoral states have yet to agree on a comprehensive territorial treaty covering the Caspian, complicating legal rights regarding energy exploration. [For background see the Eurasia Insight archive].

Editor�s Note: Mark Berniker is a freelance journalist specializing in Eurasian political and economic affairs. This is part seven of an eight part series on political risk in Central Asia and the Caucasus.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

The views expressed in this publication do not necessarily represent the position of the Open Society Institute and are the sole responsibility of the author or authors.