President Gurbanguly Berdymukhamedov is taking arbitrary behavior to new heights in Turkmenistan, according to a report released October 12 by a US-based watchdog organization. The report paints a disturbing picture of Turkmenistan’s energy sector, alleging that Berdymukhamedov, even more so than his predecessor Saparmurat Niyazov, treats the country’s abundant energy reserves as his personal ATM.
The findings contained in the report, titled The Private Pocket of the President (Berdymukhamedov): Oil, Gas and the Law, have alarming implications for the United States and European Union, both of which have courted Berdymukhamedov in the hopes of getting Ashgabat to do more deals with Western energy firms. Ashgabat is also an important cog in the Northern Distribution Network, a major re-supply corridor for US and NATO troops fighting in Afghanistan. Berdymukhamedov’s arbitrary management style heightens the risk of instability in Turkmenistan down the road, according to the report, published by Crude Accountability, an environmental organization that promotes transparency in the global energy sector.
"Sooner or later the Berdymukhamedov’s regime will collide with the problems that brought about the collapse of [Middle Eastern and North African] regimes,” the report’s conclusion states, referring to the revolutionary upheaval that has swept across the Arab world this year.
“Through their actions and inaction, both the Turkmen authorities and their international partners are doing everything that could lead to a revolutionary scenario in Turkmenistan,” the report adds. “The current Turkmen regime is incapable of evolution, and it has proved this. Whether there will be a ‘velvet’ scenario, as in Tunisia, or a civil war like in Libya, only time, and the ability to learn from history, will tell."
Much of the information contained in the report is based on public Turkmen government documents, some of them available in Turkmen and Russian online. Working with activists inside Turkmenistan who must remain anonymous for fear of reprisals, Crude Accountability was able to analyze recent government regulations and document Berdymukhamedov’s systematic efforts to gain control over his country’s gas and oil revenues.
The report traces the history of energy resource mismanagement back to the early years of Turkmenistan’s independence. Niyazov, Turkmenistan’s mercurial dictator from 1990-2006, set a precedent by setting himself up as the Central Asian state’s gatekeeper for energy deals. Under legislation adopted in 1997, for example, all energy tenders and licenses had to be personally confirmed by the president.
At the time, Niyazov justified such steps by claiming that it would reduce rampant corruption in the energy sector. In practice, it just streamlined corrupt practices. Shortly before his sudden death, Niyazov was found to have maintained special foreign bank accounts where he reportedly stashed funds siphoned off from energy exports and related dealings.
Soon after coming to power, Berdymukhamedov pledged to clean up the energy sector. But the Crude Accountability report suggests that he has, if anything, expanded the corrupt machinery put in place by his predecessor.
For example, the report documents how Berdymukhamedov changed legislation to give the State Agency for the Management and Use of Hydrocarbon Resources Under the President (the Agency) exclusive authority to manage all reserves, as well as handle all export-related issues and payments. Previously, the Ministry of Nature Protection and other ministries were responsible for supervising environmental impact, labor, contract and related issues. All these aspects of the energy sector are now handled by the presidential agency.
"During his presidency, through the Agency, President Berdymukhamedov has managed to consolidate all authority, decision-making, management, and, most importantly, oil and gas revenue in the hands of one person—himself,” says the report.
What‘s shocking about the developments under Berdymukhamedov, activists say, is that corrupt practice is embedded in the law, which stipulates that only 20 percent of the revenue from oil and gas sales should go to the state budget -- and leaves the rest unaccounted for. “People doing business in Turkmenistan can and should be reviewing the law,” Kate Watters, executive director of Crude Accountability told EurasiaNet.org. “The law itself basically allows this disparity.”
“Berdymukhamedov is very savvy,” Watters added. “By contrast with a past regulation, he can say that 10 percent more goes to the budget and he has improved things. Yet where’s the other 80 percent going?”
Watters said that even under Niyazov, the Cabinet of Ministers had some review of hydrocarbons sales, but this control is now dismantled. “Berdymukhamedov has been steadily undermining any scrutiny, and now there is not even a pretense of some governmental body’s oversight,” Watters said.
Catherine Fitzpatrick is a New York-based writer on Central Asian affairs. She is the author of EurasiaNet's Choihona and Sifting the Karakum blogs.