Wednesday, 28 December 2011

The Caspian in 2012 - Turkmenistan

From now until the end of the year, I will be running a series of posts offering some (guarded) predictions for 2012.

The biggest news in Turkmenistan is February’s presidential election – if you can call an entirely rigged and stage-managed vote ‘news’ at all. President Gurbanguly Berdimuhammedov faces fourteen opponents at the time of writing (summarised by Catherine Fitzpatrick), all of them state officials or managers from state-controlled industries. They include such political luminaries as Myrat Charykulyev, MD of the Mary-Ozot chemical company, and Rejep Bazarov, deputy mayor of Dashoguz region.

So, needless to say,  Berdimuhammedov will win another resounding mandate. None of the other candidates will probably break the 5% mark, although the sheer number of them which have been nominated suggests that the government is keen to give the president a lower and more ‘realistic’ share of the vote - last time, in 2007, he won 89.2% against five opponents, each of which got an average of 2.2%.

The government’s emphasis on democracy and pluralism in this poll may just be a bit of window-dressing for the OSCE and the UN, but it may also be intended to head off even the slightest chance of a ‘Turkmen Spring’. This is not to say one is likely to happen – given the extent of repression and censorship, the hydrocarbon-lubricated standard of living, and the scattered population, it is not.

But the Turkmen leadership is undoubtedly looking at the outside world with some concern, particularly given recent unrest in Kazakhstan. Steps to mitigate even a flicker of political discontent will be taken.

In foreign policy, Turkmenistan will continue to develop its recent strategy of energy-led multipolarity, using its gas riches to balance between China, the West, and Russia, which is fast becoming just one of a number of poles. The war of words between Moscow and Ashgabat which marked the second half of this year may continue if Turkmenistan maintains its vocal and determined support for a Trans-Caspian Pipeline (TCP) to take Central Asian gas west to Azerbaijan and on to Europe.

Questions have been raised about whether Moscow would go to war to block a TCP being built. This seems unlikely: the threats seem more intended to spook potential investors and dissuade Turkmenistan and Azerbaijan. Expect more punitive measures by Russia if planning for construction goes ahead – blacklisting participating companies from working on projects in Russia, cutting commercial ties with Baku and Ashgabat, or clamping down on migrant labourers from both countries working in Russia.

In any case a TCP may not go ahead, if – as predicted – a low-capacity export route is chosen for Azerbaijan’s Shah Deniz gas. Although expansion would provide room for Turkmen exports too, the rationale and the urgency would be reduced, putting the benefits of building a TCP well beneath the risks (for the EU as well as Azerbaijan and Turkmenistan).

With the western route becoming less viable, expect ties with China and Iran to deepen further. China in particular is fast becoming one of Turkmenistan’s key energy partners, with extensive investment both upstream and downstream. The recent agreement to increase Chinese purchases of Turkmen gas from 40 billion cubic metres to 65bcm seems almost unnecessary when 2010’s exports were estimated at about 3bcm.

But it represents a conscious and aggressive strategy by China to capture Turkmenistan’s energy market, including as much gas as possible from the enormous Galkynysh structure (the gasfield formerly known as South Yolotan-Osman),which will take several years to come onstream.

With this new deal in place, the substance of cooperation between Ashgabat and Beijing may not change too much in 2012, but the year will see gradual deepening of cooperation as CNPC intensifies operations in Turkmenistan’s gas sector and exports to China rise.

So, another year of gradual change for Ashgabat abroad: Russia becoming less important (but slowly), China becoming more important (gradually), and the door to Europe – which will have a subsequent impact on relations with both Moscow and Beijing – perhaps starting to close. Domestically, expect things to stay as flat and unchanging as the Karakum Desert.

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