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Analysis: Turkmenistan looks to U.S.

By JOHN C.K. DALY, UPI International Correspondent   |   Sept. 28, 2007 at 2:19 PM   |   Comments

WASHINGTON, Sept. 28 (UPI) -- What a difference nine months makes. Turkmen President Gurbanguly Berdymukhammedov, nine months ago a relatively unknown Turkmen apparatchik, made his first official visit to the United States, attending the opening of the United Nations' 62nd General Assembly and dazzling the Bush administration with promises of Western access to Turkmen energy resources. Given longstanding Turkmen grievances against Russia underpaying for its most valuable export, against all odds Washington might have staked a tentative claim to the Caspian basin’s last underdeveloped hydrocarbon assets, which Moscow formerly saw as its own. If the negotiations come to fruition, they represent an astonishing turnaround in U.S. fortunes in Ashgabat, which up to now have been marked by a mixture of indifference and ineptitude.

Turkmen President Saparmurat Niyazov died last December, sparking intense speculation among Western analysts about the future of the most isolated of the former Soviet republics, as Niyazov did not designate a clear successor. Coincidental to the analysis was the fact Turkmenistan contains the world’s fifth-largest natural gas reserves, which had effectively been unavailable to Western energy company freebooters roaming the Soviet Union after the 1991 collapse of communism.

Berdymukhammedov in 2001 became deputy prime minister; for the previous four years he was Turkmen health minister. Upon Niyazov’s death, the State Security Council of Turkmenistan immediately appointed Berdymukhammedov both acting president and head of the Niyazov funereal commission.

Niyazov’s funeral was a posh affair; among those attending the last rites were Libya’s Moammar Gadhafi, Afghan President Hamid Karzai, Kazakh President Nursultan Nazarbayev and Tajik President Emomali Rakhmonov. Iran’s First Vice President Parviz Davoudi and Foreign Minister Manouchehr Mottaki also attended, but Washington saw fit to send only Assistant Secretary of State Richard Boucher, one of 24 assistant secretaries of state; there was no ambassador posted to Turkmenistan at the time.

In contrast, the Russian delegation in attendance was by far the most impressive, including Prime Minister Mikhail Fradkov, accompanied by former Prime Minister Viktor Chernomyrdin, now Russian ambassador to Ukraine, along with Gazprom head Alexei Miller, who led a delegation of high-ranking officials from the gas giant. The reason was simple -- a new day might result in new contracts, with Moscow losing its lucrative monopoly over Turkmen gas exports. Nine months later Berdymukhammedov's triumphal lap around Washington and New York seems to confirm the Kremlin’s worst fears.

Three days after Niyazov’s demise, Parliament’s People’s Council voted to amend Article 60 of the Turkmen Constitution, which said an acting president "may not stand for election to the presidency," allowing Berdymukhammedov to participate in the February 2007 presidential elections. On Feb. 11, against five other candidates from the Democratic Party of Turkmenistan, Berdymukhammedov won 89 percent of the vote.

While Berdymukhammedov inherited Niyazov’s apparatus largely intact, he did not apparently inherit his megalomaniacal ego, and the Turkmen and Western media slowly filtered articles about cautious reforms in fields such as education.

One legacy that Berdymukhammedov apparently took note of, however, was Niyazov’s simmering resentment over 15 years of Russian exploitation of Turkmen natural gas exports, as the Kremlin obeyed the capitalist precept of “buy cheap, sell dear.”

Since 1991, Niyazov grew increasingly irate about Gazprom’s penurious rates for Turkmen gas, but was stymied by the fact his sole export route was Russia’s Transneft pipeline monopoly. Niyazov in response occasionally unilaterally halted supplies, sometimes for years, to Armenia, Azerbaijan, Georgia, Russia, Tajikistan and Ukraine to force new price discussions. As late as January 1998, Niyazov rejected a Russian offer to purchase Turkmen natural gas for $32 per 1,000 cubic meters. The high point in Niyazov's brinkmanship came in June 2006, when he forced Gazprom to agree to a 54 percent gas price increase in a 25-year bilateral accord under which Turkmenistan would supply Russia with 162 billion cu m of gas annually at $100 per 1,000 cu m. Another Niyazov pressure tactic was to explore other options for gas exports; in April 2006 he signed a deal with China for natural gas exports and the commissioning of a Turkmenistan-China pipeline by 2009.

Berdymukhammedov’s victory lap around the United States has dramatically upped the pressure on Gazprom, as Turkmen’s Deputy Prime Minister and Oil and Gas Minister Tachberdy Tagiev has indicated Turkmenistan intends to raise the price of gas sold to Gazprom from $100 to $150 per 1,000 cu m beginning Jan. 1. Washington adroitly recovered from its faux pas over Niyazov’s funeral, and since then has sent 16 high-level executive-branch delegations to Ashgabat, whose efforts are evidently beginning to bear fruit. During his U.S. visit, Berdymukhammedov held meetings with U.S. Secretary of State Condoleezza Rice and informed the U.N. General Assembly:

“Turkmenistan defines its international energy strategy aimed at developing a multiple pipelines system to bring Turkmen energy resources to the international markets on a stable and long-term basis. This strategy is not dependent on either political circumstances or any kind of ideological biases.” Further pitching his country’s potential to a group of U.S. businessmen in New York, Berdymukhammedov said, "As the president of Turkmenistan, I am the supreme guarantor of safety of your future investment," an eerie echo of Niyazov’s “l’etat, c’est moi” mentality, which was lost on most Western journalists.

Despite the air kisses in Manhattan and Washington, many issues remain to be resolved before Washington can begin enriching Ashgabat with a more equitable price for its natural gas.

The first and most important issue is that of a final delineation of Caspian offshore waters and seabed. While Russia and Iran maintain diametrically opposed positions on the topic --Russia wants a division based on Caspian shoreline while Iran supports an equitable 20 percent division between the five Caspian riparian states -- both share a common interest in blocking further U.S. expansion into the region. As the favored option for Western exports of Turkmen gas is a pipeline laid on the Caspian seabed linking Turkmenistan’s Turkmenbashi port to Azerbaijan’s Baku port, a definitive resolution of the issue must be achieved before nervous Western investors pour the billions of dollars necessary into the project to make it a reality.

A second, equally significant issue is that of Turkmenistan’s current export contracts. Despite the euphoria in Washington, the reality for both Gazprom and Turkmenistan is that they still need each other, as Europe now represents nearly 70 percent of Gazprom's total revenue and Gazprom also sells about two-thirds of its indigenous annual gas production of about 550 billion cu m in the Russian domestic market, using Turkmen production to make up the shortfall and meet its European commitment, not to mention Niyazov’s commitments to China.

Which brings up the question -- is Berdymukhammedov genuinely committed to opening up his country’s energy reserves to Western businesses, or is he merely using the threat of alternative markets after 16 years of exploitation to secure a more equitable price from its neighbor?

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(e-mail: energy@upi.com)

© 2007 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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