Despite its long-avowed status as a neutral nation, Turkmenistan is playing an important supporting role for US and NATO forces fighting in Afghanistan. Washington and Ashgabat are both keen to keep Turkmenistan’s strategic role low-key, especially the financial aspects of cooperation.
What is known is that the US government and its contractors do not pay taxes on fuel intended for military use that is purchased in Turkmenistan, as well as in Azerbaijan. Fuel is exempt from local duties and taxes due to Turkmenistan’s and Azerbaijan’s participation in the NATO Partnership for Peace program, a spokeswoman for the Defense Logistics Agency (DLA), the Pentagon’s main procurement arm, told EurasiaNet.org.
Initial enquiries to the US Embassy in Ashgabat about tax arrangements for US contractors buying fuel in support of Operation Enduring Freedom elicited denials that such tax break were available. However, in late December, Michelle McCaskill, a DLA spokeswoman, confirmed that fuel bought in Turkmenistan and Azerbaijan are “delivered free of all duties and taxes.”
“It is DLA’s understanding that both Turkmenistan and Azerbaijan are partners in the NATO Partnership for Peace. As partners, they agree to abide by the terms of the NATO status of forces agreement, which provides in relevant part that NATO member countries shall make special arrangements for fuel, oil and lubricants for use by another member countries military and civilian personnel to be delivered free of all duties and taxes,” McCaskill explained.
Similar arrangements are in place in Uzbekistan, Kazakhstan and Tajikistan, although DLA does not purchase fuel in these countries she added.
Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan signed Partnership for Peace agreements with NATO in 1994. Tajikistan signed up in 2002.
US military aircraft have been using Turkmen airspace and facilities since at a least 2002, and Ashgabat is a hub for operations involving C-5 and C-17 transport planes. World Fuel Services, a Miami-based entity, currently holds a three-year contract worth $11 million for refueling services carried out at Ashgabat airport.
Both Azerbaijan and Turkmenistan are also major exporters of fuel to US facilities in Afghanistan. In 2008 Red Star Enterprises Ltd was awarded a $720.6 million-contract to supply jet fuel to Bagram Air Base in Afghanistan. According to the US government’s Federal Procurement Data System, the fuel’s country of origin is Turkmenistan.
In 2009, the last year for which complete statistics are available, the US war effort in Afghanistan consumed 1.1 million gallons of fuel daily. Of that amount, “70 percent of all petroleum sustainment” arrived from Central Asia via the Northern Distribution Network, according to an article published in the September/October 2010 issue of Army Sustainment magazine.
Prior to the publication of an investigatory report by a US congressional committee in December, titled Mystery at Manas, it was widely believed that US Central Command’s fuel needs in the region were met chiefly by Azerbaijan and Turkmenistan. The Manas report detailed re-export operations that delivered Russian jet fuel to Afghanistan.
Russia’s introduction of an excise tax on fuel exports to Kyrgyzstan last April cost the US government an additional $15.4 million over just a 16-day span. The additional payments were made to Mina Corp, the aviation fuel contractor at the Manas air base. Just over a month later, Mina Corp refunded the money due to “changes [to] Russian duty compensation procedures.”
Russia has promised to lift the excise tax on fuel exports to Kyrgyzstan, but observers suggest it may be late February before the tariff is actually scrapped.
Deirdre Tynan is a Bishkek-based reporter specializing in central Asian affairs.