Central Asia faces a gloomy economic outlook for the rest of this year and into next, battered by the tanking Russian economy and low commodity prices, according to a regional outlook released by the International Monetary Fund (IMF) on May 19. Several countries face double-digit inflation.
“The region has been hit by two major external shocks: the oil price and the slowdown in the Russian economy,” Juha Kahkonen, deputy director of the IMF’s Middle East and Central Asia department, told a briefing in Almaty as the forecast was released.
Growth slowed last year and is set to decrease “much more significantly” this year, he said, before recovering “only slightly” next year.
All the Central Asian states are feeling the pinch of the slump in Russia, “which has close linkages with the region through remittances, trade, and foreign direct investment,” the IMF pointed out.
Energy exporters (Kazakhstan, Turkmenistan, and Uzbekistan) and importers (Kyrgyzstan and Tajikistan) alike are suffering: exporters are battling falling revenues from the drop in global oil and gas prices, while importers are feeling what Kahkonen described as “only a very small beneficial impact” from lower prices because of the long-term nature of their energy import contracts in which prices are set.
Falls in prices for other commodities (gold in the case of Kyrgyzstan and aluminum for Tajikistan, for example) are also biting.
Kyrgyzstan, Tajikistan and Uzbekistan are also suffering from a drop in labor remittances from Russia, as migrants lose their jobs and the dollar value of remittances falls because of the depreciation of the ruble. This is causing weaker domestic demand in remittance-dependent economies.
With the world’s fourth largest gas reserves, Turkmenistan has enough to keep everybody happy. But for the remote Central Asia country and its suitors, taking the potential and turning it into a prize has proven persistently difficult.
Last week, the European Union’s energy boss, Maros Sefcovic, was in Ashgabat speaking positively – some might even say delusionally – about a $5-billion-plus trans-Caspian pipeline that would pump up to 30 billion cubic meters of Turkmen gas underneath the world’s largest inland sea and onto markets in Europe. The link, Sefcovic said, in comments reported by AFP and Reuters, could be ready to pump by 2019.
But it was another proposal he made – about a pipeline across Iran – that has intrigued analysts.
Other than China, which imports upwards of 35 billion cubic meters (bcm) of Turkmen gas per year, Turkmenistan sells to Russia (4 bcm) and Iran (around 10 bcm). Both are net exporters and perennially threaten to cut their imports. Russia made good on its threat earlier this year by reducing imports from around 10 bcm.
While Sefcovic was talking up the Trans-Caspian Pipeline, Afghan President Ashraf Ghani was playing down another connection viewed as vital to Turkmenistan’s ambitions: The Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) which has been on drawing boards since the 1990s and could cost as much as $10 billion.
The United States and the European Union have taken renewed interest in constructing a pipeline to take natural gas from Turkmenistan across the Caspian Sea to Azerbaijan and westward to Europe. The move is motivated by a desire to further decrease Europe's dependence on Russian gas in the wake of Moscow's newly assertive foreign policy posture, but regional analysts say the pipeline could also increase tensions around the Caspian.
European Commission Vice President Maros Sefcovic visited Ashgabat this week for talks with energy ministers of Azerbaijan, Turkey, and Turkmenistan. He told Reuters that the EU expects to start receiving gas from Turkmenistan by 2019.
"[W]e discussed all aspects referring to the trans-Caspian pipeline," Sefcovic said. "We made a big step in the strategic direction... Now there is a political decision that Turkmenistan will become part of this project and will feed the European direction."
The possibility of a trans-Caspian pipeline has been long discussed but has been hindered by a number of obstacles, not least of which is the opposition of Russia, which stands to lose market share in Europe were the pipeline to be built. Russia is the single-largest supplier of gas to Europe, holding about 30 percent of the market share (and far more in some Eastern European countries). And the volatility in Moscow has renewed efforts in Brussels and Washington to reduce that dependency.
Before the horse races, there was the horse beauty contest, and the show was stolen by a stallion named Neutrality. The horse’s lucky owner netted a Toyota Land Cruiser on behalf of his prized steed.
Turkmenistan’s Day of the Horse has been an important fixture in the Turkmenistan-watchers’ calendar ever since equestrian-in-chief Gurbanguly Berdymukhamedov flew over the reins face first immediately after winning a fixed race during the celebration in 2013.
This year festivities were less notable, although the president did manage to net himself another title, and shine a spotlight on an up-and-coming political jockey.
Berdymukhamedov was named the “People’s Horse Breeder” on April 26 to an outpouring of adulation from his cowed public.
“Glory to the protector!” the crowd at Ashgabat’s International Equestrian Sport Complex reportedly chanted, according to AFP.
Unlike “Arkadag” – the “Protector,” which Berdymukhamedov adopted as his official epithet in 2011 – this title is probably one he deserves. Berdymukhamedov has done more than anyone to elevate the cult of the horse in his hermit kingdom. In addition to building an impressive complex outside the capital to house the revered Akhal-Teke breed, he supposedly penned a book on the creatures.
But apart from Berdymukhamedov’s headline-grabbing new title, the standout take away from 2015's Day of the Horse was another racing victory for his teenage grandson, Kerimguly Berdymukhamedov. The younger Berdymukhamedov was also first past the post in a dash to mark the beginning of the autumn horse-riding season last year.
Satellite dishes are ubiquitous in Ashgabat. The government wants them gone.
According to rights watchdogs and the crumbs of independent reporting coming out of Turkmenistan, the authoritarian government is busy stripping homes of their satellite receivers, plunging the insulated country further into isolation.
At the end of March, 2015, local housing authorities in the capital, Ashgabat, and its suburbs started ordering residents of multi-story apartment buildings to take down their satellite dishes, citing simply an “order from above” that allegedly stated the dishes ruined the view of the city. Authorities told residents they could instead get cable television packages through the government or state satellite antennae.
Girls just want to have fun, Cyndi Lauper once sang. But in totalitarian Turkmenistan, having fun can spell trouble, especially if evidence lands on the Internet.
In the days since a video clip featuring a posse of schoolgirls in national dress rocking out to California-based Far East Movement’s party song “Turn Up the Love” turned up on YouTube, authorities have launched a nationwide crackdown on mobile phones in schools, a dissident-run website claims. The video currently has over 38,000 views.
Western music is officially frowned upon in Turkmenistan, where cultural protectionism – at the cost of near total isolation from the world – is a trademark of the repressive regime.
Perhaps to challenge Turkmen society’s deeply ingrained perceptions of gender roles – or perhaps because there were no better props at hand – the sextet swung about with items associated with domestic chores. The lead singer appeared to be yelling into a mop. Two faux guitarists jammed on brooms while, provocatively, another used a mini Turkmen flag to bow a newspaper as if it were a violin.
According to the Chronicles of Turkmenistan – a news outlet run by exiles that is generally hard to fact-check – the government response has been swift:
Prosecutors in Lebap province (formerly Chardzhou region) have been touring schools in the region for the last week, checking cell phones for students that contain photos and videos.
Turkmenistan has approached the United States asking for military aid to help the country address instability on its border with Afghanistan, and Washington is trying to support the requests, a senior American military official has said.
The head of U.S. Central Command, General Lloyd Austin, testified before Congress this week and gave CENTCOM's annual "posture statement," which includes rare public pronouncements of the U.S.'s official military policy toward Central Asia. This year probably the most newsworthy statement was about Turkmenistan.
While noting that "Turkmenistan’s declared policy of positive neutrality limits our opportunities for substantive military-to-military collaboration," Austin also reported that "[t]he Turkmens recently expressed a desire to acquire U.S. military equipment and technology to address threats to their security along their southern border with Afghanistan. We will do what we can to support those requests." Austin did not provide details about what sort of equipment was being considered. There have been several recent reports of increased Islamist militant activity in the northern regions of Afghanistan bordering Turkmenistan, and Russia has been pressing Turkmenistan to allow it to provide military assistance.
Austin also pointed to the growing military relationship with Uzbekistan, highlighted by the decision to give more than 300 armored vehicles to the country's armed forces. "The U.S. military relationship with Uzbekistan has strengthened considerably over the past year," Austin testified. "And, expanded U.S. Special Forces training will further improve the Uzbek military’s capacity to meet security challenges."
Troops from Russia and Uzbekistan are helping Turkmenistan guard its border against militant incursions from Afghanistan, a Turkmenistani exile website reports, citing residents of border areas.
According to the report on Chronicles of Turkmenistan, "residents of Afghan border villages have recently noticed the presence on Turkmen territory border units from Uzbekistan." And it added: "About a month ago military instructors from Russia also appeared on the border. Obviously, the Turkmen authorities appealed to the Russian leadership for help guarding the border with Afghanistan, a situation where, with the arrival of warm weather, has begun to heat up."
Turkmenistan has been taking various aggressive steps to address the rise of Taliban and (some claim) ISIS units in the northern provinces of Afghanistan bordering Turkmenistan. Those steps reportedly include mobilizing reserve troops and carrying out incursions into Afghan territory. However, they have seemed to be trying to prosecute the fight on their own, without any other country's help.
The report of Uzbekistani and Russian troops is obviously sketchy information, and there's nothing to corroborate it. But the news comes as Turkmenistan has begun to come under some public (and undoubtedly private) Russian cajoling to let Moscow help. Just last week, a top Russian security official complained about Ashgabat's refusal to cooperate with Moscow on Afghanistan security issues.
Kazakhstan President Nursultan Nazarbayev meets with CSTO Secretary General Nikolay Bordyuzha in 2014. (photo: akorda.kz)
Russia is disappointed in the unwillingness of Uzbekistan and Turkmenistan to cooperate with its collective security bloc, and considers Iran to be a model those countries could follow, a senior Russian security official has said.
Uzbekistan quit the bloc, the Collective Security Treaty Organization, three years ago. Turkmenistan, avowedly neutral, has never been a member. (The other three ex-Soviet Central Asian states – Kazakhstan, Kyrgyzstan, and Tajikistan – all are, as are Armenia and Belarus.) But Russia continues to make overtures, said CSTO Secretary General Nikolay Bordyuzha.
“To my great disappointment, today we have practically no working relationship with either Uzbekistan or Turkmenistan, although from our side there have been repeated proposals to cooperate,” Bordyuzha said in an interview with Kazakhstani journalists. “We're not talking about the need to join the CSTO, about giving up their sovereignty. We're only talking about one thing: let's unite the efforts of the special services to jointly fight against common threats, which we're confronting today, let's talk about the possibility of offering aid from the CSTO collective forces in case it's needed. But there has been no response from either Uzbekistan or Turkmenistan.”
“Why not cooperate with an organization that contains respected governments: the Russian Federation, with its military potential and military-industrial complex, Kazakhstan, Tajikistan, Kyrgyzstan -- all countries which are always ready to provide help?” Bordyuzha continued. "To me, we simply have to cooperate, especially considering the processes going on in the world.”
Iranian President Hassan Rouhani tried to end uncertainty about Iran’s desire for Turkmenistan's gas during his first official visit to the gas-rich Central Asian country on March 11, promising an unspecified increase in imports.
Over the last few years, at least in terms of gas, Turkmenistan’s relationship with Iran has been second only to its relationship with Russia in volatility. Tehran makes occasional noises about boosting domestic production and doing away with a tiresome trade pickled with disputes.
But during his visit Rouhani confirmed that the Islamic Republic would up imports from Turkmenistan.
That must be music to Turkmen President Gurbanguly Berdymukhamedov’s ears. The Turkmen economy has been struggling on the back of the sharp downturn in Russia and the slumping ruble; moreover, Moscow suddenly slashed imports of Turkmen gas last month.
Referring to increased transport links with Turkmenistan, such as the new Kazakhstan-Turkmenistan-Iran railway, Rouhani set an ambitious target for bilateral trade to grow by more than 15 times from its current $3.7 billion to $60 billion by 2020, his official president.ir website cited him as saying.
For his part, Berdymukhamedov was also effusive: “In recent years, given the growing cooperation in different fields, bilateral ties between Tehran and Ashgabat have taken on a new meaning,” said the Turkmen president, who also called Rouhani a “brother” in comments picked up by AFP.