Four months after announcing it would slash the amount of gas it buys from Turkmenistan and Uzbekistan, Russian energy behemoth Gazprom has revealed the extent which its imports from Central Asia will fall this year.
On February 3, Vice Chairman Alexander Medvedev told an investment summit in Hong Kong that this year Gazprom will import two-fifths of the 10 billion cubic meters (bcm) it imported from Turkmenistan in 2014; it will buy less than a quarter of the roughly 4.5 bcm it bought from Uzbekistan last year.
Medvedev said the decisions had the blessings of both Central Asian states, while boasting that his company came to the agreements from a position of strength.
“For Gazprom, thanks to investment in extraction and transport infrastructure, there is no technological necessity for the purchase of foreign gas,” Medvedev said in comments picked up by state-run RIA Novosti. “Gazprom is in the situation to guarantee both the domestic demand in any region of the Russian Federation, and the delivery of gas to our customers in Europe, and in the future, Asia, with our own resources.”
The announcement came just hours before Moscow said Foreign Minister Sergei Lavrov would make a rare stopover in Ashgabat.
Getting reliable economic information out of Turkmenistan is difficult at the best of times, so if the gas-rich country is on the verge of a crisis, the secretive leadership is unlikely to drop any hints.
But a number of recent reports suggest that the effect of falling energy prices is being magnified by limited official information.
Opposition-minded news websites Alternative News Turkmenistan and Chronicles of Turkmenistan have reported long queues stretching out of currency exchange bureaus in recent days. The panic, note both outlets, is based on a rumor that the manat is about to be significantly devalued again.
The manat already fell 19 percent on New Year’s Day, falling from 2.85 to 3.5 manats against the greenback. The rumors point to an alarming 4.5 to the dollar. According to the Chronicles of Turkmenistan:
In recent days queues have been forming at various banks from early in the morning. In the regions, only 40-45 people are able to obtain the dollars at each bank, even though the queues extend to 200 or more people. Then the [people in the queue] are informed that there are no more dollars for the rest of the day.
Passports are required at the point of exchange. Each person can obtain no more than $1,000 in a single day.
A private militia to combat ISIS and the Taliban has been formed in northern Afghanistan, as Afghan and Central Asian officials continue to debate to what extent there is an ISIS presence in the region.
It's not clear how serious the new anti-ISIS militia is: "several dozen" members announced its presence at the provincial council office in Mazar-e-Sharif this week, according to a report by Khaama Press. But they claim to have 5,000 people ready to fight ISIS and the Taliban, and if nothing else they have a keen instinct for PR: their uniforms are the tricolor of Afghanistan's flag -- red, green, and black -- and their name is "Marg," or "Death."
Also this week, a senior Russian defense ministry official visited Tajikistan where he invoked the growing terror threat. The official, Deputy Defense Minister Anatoliy Antonov, called Tajikistan "our outpost in the fight against terror." The officials discussed Russian aid to Tajikistan but no details were announced; Central Asia expert Arkady Dubnov told Nezavisimaya Gazeta (in a piece headlined "ISIS Tests Strength of Central Asia's Borders") that the purpose of the visit was to assuage concerns in Dushanbe about slow deliveries of the military aid Russia has promised Tajikistan.
The International Monetary Fund has revised downward its forecast for growth in Central Asia and the former Soviet Union to account for dramatically lower oil prices and the shriveling Russian economy. The region’s poorest countries can expect sharply higher inflation.
The assessments are part of an economic update released January 21 in Washington.
For energy importers like Kyrgyzstan and Tajikistan, the IMF says, any gains from lower oil prices are overshadowed by weakness in Russia, Central Asia’s largest trade partner and the destination for millions of Central Asian labor migrants. The IMF projects Russia’s economy to shrink 3 percent this year due to “geopolitical tensions” (the Kremlin’s adventure in Ukraine) and sharply lower prices for its chief export, oil.
Already the Central Asian countries are reeling from the 45 percent drop in the value of the ruble against the dollar last year. Kyrgyzstan’s currency, the som, lost 17 percent against the dollar, even as the National Bank spent hundreds of millions of dollars defending it. Oil-exporter Kazakhstan devalued the tenge by 19 percent last February and another downward adjustment appears imminent. Turkmenistan’s manat dropped 19 percent on January 1.
Tajikistan spent over half its hard-currency reserves in 2014 defending the somoni, the Central Bank said this week. Yet the rumpled somoni still fell 11 percent and is bound to plunge further as remittances – which make up the equivalent of half of Tajikistan’s GDP – shrink.
Four of the five Central Asian states have failed to meet basic fiscal transparency standards, according to the U.S. State Department’s latest Annual Fiscal Transparency report. The study does not appear to affect whether a country receives U.S. government funding, however.
In addition to ascertaining whether countries meet State’s minimum standards (such as publishing receipts and expenditures in publicly available national budget documentation and bidding and contract information for natural resource extraction), the study assesses progress—or lack thereof.
Published by the Office of Monetary Affairs since 2008, the report only includes “those governments it anticipated would receive bilateral allocations of assistance” in fiscal year 2014. The latest version of the report was released January 14.
This year, Kazakhstan, Tajikistan, Turkmenistan and Uzbekistan were all judged to have made “no significant progress” toward meeting minimum fiscal transparency standards, joining 35 other countries in that category. Overall, 50 fell below the minimum-standards threshold.
Kyrgyzstan, which has harnessed international assistance from USAID and other donors to improve public access to state budgets was judged to have met minimum transparency standards for the second year running.
In 2012, Tajikistan made significant progress toward the benchmark. It has slipped over the last two years, however.
Turkmenistan and Uzbekistan, which routinely rank at the bottom of Transparency International’s Corruption Perception Index, have never glittered in this report.
For a landlocked country, Turkmenistan is getting into the seafaring spirit: Ashgabat’s new showpiece ferry Berkarar has been shuttling its way around the Caspian Sea – defined by geographers as an inland lake – making trips to both Azerbaijan and Russia so far this year.
The ferry was built in the Uljanik Shipyard in Pula, Croatia – which has produced ferries for the Caspian littoral states since communist times – and delivered to the reclusive Central Asian country in December. Ashgabat has also commissioned a second, smaller ship, Bagtiyar, which is scheduled to arrive this summer. They carry both freight and passengers.
Azerbaijani newswire Trend.az gushed about Berkarar’s latest voyage, from Turkmenbashi to the Azerbaijani capital: “The ferry impresses with its dimensions; it has a length of 155.8 meters, width of 17.5 meters, and height of 12.2 meters,” Trend reported on January 14.
Berkarar can carry “56 trucks loaded with 40-foot containers,” according to News Central Asia’s detailed report on the vessel.
So, provided there are enough goods to fill them, the ferries could help expand regional trade across the contested waters of the Caspian.
A Turkish company is currently modernizing Turkmenistan’s Turkmenbashi port, a commission that is expected to finish in 2017.
Tajikistan's armed forces are setting up a new base near the Afghanistan border in response to the apparent massing of fighters on the Afghan side of the border.
The base, to be called "Khomiyon," will be in the Kulyab region. "Tanks, armored vehicles and other weaponry" will be deployed to the base, which "units of all security structures of the country will be able to use for conducting maneuvers," reported RFE/RL, citing a source in Tajikistan's Ministry of Defense. While there is no "immediate threat" from the Taliban fighters apparently massing near the Tajikistan border, Dushanbe still chose to take "preventative measures," the official said.
(Technically, the facility is not a "base" but a "polygon," a Russian word suggesting something smaller than a base, though the report also noted that the polygon would operate "under the regime of a military base.")
An unnamed source in Tajikistan's State Committee on National Security (GKNB) told the Russian news agency TASS that "groups not controlled by Kabul" have massed on the Afghanistan side of the border.
"We are closely tracking the situation close to the border of Afghanistan, especially in the Badakhshan and Pyanj areas, where intelligence has noted a gathering of armed individuals, coming from various extremist and terrorist communities like the Taliban and the Islamic Movement of Uzbekistan," the source said.
A major Pakistani newspaper has argued that the long-stalled Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI) is unlikely to be built anytime soon. The link is increasingly vital to Turkmenistan’s ambitions of being an independent force in the regional gas market, and reducing its dependence on its main buyer, China.
But while all four countries have signed off on the project, there are a number of reasons it may not come to fruition, according to Dawn, one of Pakistan’s largest English dailies.
There had been excitement in recent months that after years of talk, TAPI was entering the business stage. On the back of a four-country steering committee assisted by the Asian Development Bank in November, Turkmen President Gurbanguly Berdymukhamedov noted in December that “there is now no doubt that [TAPI] will be realized, moreover in the very foreseeable future.” European major Total and Malaysia’s Petronas are rumored to be interested in building the pipeline.
But referring to the same steering committee meeting held in Ashgabat, Dawn notes the very earliest gas could be expected to flow is 2019, three years later than anticipated, and potentially too late for India.
Given this delay, India has indicated revisiting its plan to be a part of the project; whether it would really need the gas from Turkmenistan after 2018 is questionable because it is already a major player in the Singapore LNG futures trading.
A senior Kremlin official has warned that the Islamist group ISIS is gathering its forces in northern Afghanistan in preparation for an attack against Central Asia and Russia, and that a wide array of military measures are required to prevent that. But in spite of the alarmist rhetoric, he suggested that the Russian military would not be heavily involved in Central Asia's fight against ISIS.
The official, Zamir Kabulov, is Russian President Vladimir Putin's special representative for Afghanistan, and he gave a long interview to Interfax on the occasion of the end of the Western combat mission in Afghanistan. The ginning up of the ISIS threat isn't new for Russian officials, but Kabulov's interview is noteworthy for its unusual amount of detail. (Whether or not that detail corresponds to reality is another matter.)
According to Russia's information, Kabulov said, a "small group -- maybe a bit more than a hundred fighters" -- was redeployed from ISIS's main base in Iraq and Syria to Afghanistan. But they supplement local fighters loyal to ISIS, he says:
A "spillover" into Central Asia is inevitable, especially considering that all the foundations are there. They have created two beachheads in Afghanistan: one on the border of Tajikistan, and the other of Turkmenistan. There they have concentrated fairly large forces. Let's say on the Tajikistan beachhead there are 4-5,000 fighters concentrated. And on the beachhead opposite Turkmenistan, 2,500 fighters. They have deployed camps for two-month preparation courses for fighters. We know of three such camps, and there may be more. They are training 50 fighters in every course, so if you take at least three camps that we know about, that's 150 fighters every two months. What's interesting is that they are mostly natives of Central Asia.
Turkmenistan rang in the New Year by dramatically devaluing its national currency, the manat, and introducing a steep levy on the price of petrol.
The scale of the devaluation – comparable to the 19 percent devaluation of the tenge in Kazakhstan earlier in the year – comes as all Central Asian economies are feeling the downturn in Russia, where the ruble lost 45% of its value against the dollar in 2014. But it is still somewhat surprising because Turkmenistan’s is the region’s economy least dependent on exports to its former colonial master.
AFP reported January 1 that the Turkmen central bank had published a rate of 3.50 manats to the dollar, down from the 2.85 that had held since 2009—a devaluation of 18.6 percent. The government has not commented.
Noting that a liter of popular 95-octane petrol had also jumped overnight – from 0.62 manats to 1 – The Chronicles of Turkmenistan, a news blog run by Turkmen exiles, feared significant inflation would follow.