OCT. 27 2016 (The Conway Bulletin) — Turkmen president Kurbanguly Berdymukhamedov agreed to pardon 1,523 jail inmates to celebrate the 25th anniversary of independence from the Soviet Union. Mass amnesties for major events are fairly commonplace in Central Asia. Amnesties are also used as a way of relieving overcrowding.
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(News report from Issue No. 302, published on Oct. 28 2016)
OCT. 28 2016 (The Conway Bulletin) — Hiding behind timid smiles, officials from Central Asia and the South Caucasus oil and gas producing countries continue to say that the worst may be over for the region’s economic slump.
In the medium term, Kazakhstan will constantly boast about the restart of the giant Kashagan offshore project and Azerbaijan will try everything it can to attract investments for the Southern Gas Corridor, the pipeline network that will pump gas from the Caspian Sea to Europe.
Production, however, will continue to disappoint. Output will be flat in Kazakhstan, given a lift by Kashagan finally coming back on-stream after a three year delay, and decline in Azerbaijan.
Both countries have, on different occasions, praised the decision by OPEC, the oil producers’ lobby group, to freeze production to help push prices up again.
But behind the propaganda, lies a problem, which the IMF highlighted in its latest report: these countries will face higher fiscal breakeven oil prices in the next few years, piling pressure on their economies.
In April, the IMF said that the breakeven prices that Azerbaijan, Kazakhstan and Turkmenistan would need to balance their government budgets in 2016 were $47, $88 and $42.7/barrel respectively.
In a report this week, the IMF said breakeven prices for Azerbaijan and Turkmenistan had grown to $71 and $50.4/barrel respectively.
For 2016, oil prices are unlikely to average above $50/barrel, which means that the three major energy exporters in the region will have to use their reserves to prop up their economies. Officials may be happier now than in January budget issues are far from sorted.
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(News report from Issue No. 302, published on Oct. 28 2016)
OCT. 25 2016 (The Conway Bulletin) — Looking to reassure nervous savers that the Turkmen banking sector was safe, Turkmenistan has introduced a new law which forces banks to guarantee saving deposits. Poor regional economic conditions have hit Turkmenistan hard with reports leaking out of the country of shortages and of the government running out of cash to pay its thousands of workers.
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(News report from Issue No. 302, published on Oct. 28 2016)
OCT. 21 2016 (The Conway Bulletin) — Turkmenistan’s GDP annualised growth slowed to 6.2% in the first nine months of the year, down from 7.5% during the same period in 2015, the Turkmen state news agency said. Turkmen official statistics are considered unreliable and the information leaking out of the country points to severe economic hardship. The data is valuable in highlighting the economic slow- down that Turkmenistan and its neighbours are dealing with.
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(News report from Issue No. 302, published on Oct. 28 2016)
OCT. 14 2016 (The Conway Bulletin) – Turkmenistan and the Islamic Development Bank (IDB) signed a $700m loan deal for the construction of the so-called TAPI gas pipeline that will pump Turkmen gas to India via Afghanistan and Pakistan.
This is an important deal, not just because of its size, but also because it brings a second major international institution into the project. Turkmenistan has been powering the project, kicking off construction in December, but, up until now, Western companies and financial institutions, other than the Manila- based Asian Development Bank, have steered away from joining it.
Now, though, after months of negotiations, the normally publicity shy Turkmen Bank for Foreign Economic Activities met up with the IDB in Washington DC to agree the loan.
Through its official news website, Turkmenistan lauded the deal.
“The construction of the transnational gas pipeline will ensure the long-term supply of energy in the countries of Southeast Asia and will ensure further economic development in the region,” it said.
For months, Turkmenistan has negotiated with IDB and other international financial institutions for loans and grants. The Asian Development Bank, adviser to the project, agreed a $200m loan in April, when it also said the project was ‘doable’.
Others have been less impressed, calling the project, literally, a pipe- dream that couldn’t be done.
And it is certainly a challenge. The plan is to build a 1,800km pipeline from Turkmenistan across Afghanistan to Pakistan and India. The cost of the pipeline is estimated at $10b.
The IDB, which is headquartered in Jeddah, has not commented on the $700m loan for TAPI.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 17 2016 (The Conway Bulletin) – Georgia and Turkmenistan will launch new direct flights in November, linking Tbilisi and Ashgabat. The flights will run twice weekly and will be operated by Turkmenistan Airlines. Since Georgian President Giorgi Margvelashvili’s visit to Turkmenistan in 2014, relations between the two countries have improved. Now, the governments want to boost trade beyond oil products which dominate.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 17 2016 (The Conway Bulletin) – >> So, an election in Turkmenistan then. Will it be close?
>> No, not at all. The incumbent president, Kurbanguly Berdymukhamedov, will clean up and win probably with more than 95% of the vote. He won 97% of the vote at the last presidential election in 2012.
>> Right. He must be a popular chap, then.
>> Again, unlikely, but it is very hard to tell. Since he was officially elected president in January 2007, Berdymukhamedov has carefully built up a personality cult to rival any other around the world. Last year he unveiled a statue of himself sitting on a horse with a flowing cloak. It was all very Roman. Berdymukhamedov pretty much makes all the key decisions in Turkmenistan. He runs the the economic, foreign and domestic policies. He’s not a big delegator. The problem is that it is very difficult to know how genuinely popular, or unpopular, he is at the moment as free media doesn’t exist in Turkmenistan. What we do know is that although Berdymukhamedov can take credit for opening up the economy and for developing its gas export routes, Turkmenistan is suffering, just like its neighbours, from a sharp regional economic downturn linked a drop in energy prices and a recession in Russia.
>> What do you mean?
>> Again, information that is 100% reliable is hard to come by but we do know that government salaries have been paid late and that people are blocked from transferring cash into foreign currencies. There have also been a handful of small protests in the past couple of years in Ashgabat which are vitally important in judging the mood. These have focused on domestic issues, such as satellite dishes on buildings and the destruction of suburban housing to clear ground for a new Olympic village. They are not directly political but they are good indicators that not all is as steady as the Turkmen government, and Berdymukhamedov in particular, would like. Protests are extremely rare in Turkmenistan so any indicator that people are prepared to stand up to the authorities must be taken seriously.
>> Does this make the election is risky for Berdymukhamedov?
>> Turkmenistan is a tightly controlled police state so this is unlikely. He also had to hold a presidential election next year. Until he changed the constitution last month, presidential terms in Turkmenistan were set at five years. The previous election was in 2012. He’s now changed the length of a presidential term to seven years so once next February’s election is out of the way, he won’t have to deal with another until 2024. This election will be something for the Turkmen authorities to carefully manage but beyond that it shouldn’t trigger any major problems.
>> Got it. And how will the international community deal with it?
>> This is a tricky one. The Russians and the Chinese mainly want a reliable partner and stability. They have this in Berdymukhmaedov and won’t want the the boat to be rocked, so to speak. The West, and Europe in particular, have a different agenda. They want Turkmenistan’s gas but are also interested in human rights. It’s unlikely that they will send vote monitors and they will complain about the lack of free speech but, by and large, there is very little that they can really do.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 20 2016 (The Conway Bulletin) — The Eurasianet website reported that prices of basic foodstuffs are spiraling in Turkmenistan as the economy buckles under inflationary pressure linked to a sharp economic downturn. It also said that the government has had to cancel a series of construction projects to save money. It didn’t give any details of the particular contracts which had been cancelled. The Turkmen government has not commented.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 18 2016 (The Conway Bulletin) — Iran and Turkmenistan signed a swap deal to, essentially, send 1b cubic metres of Turkmen gas to Azerbaijan every year.
The deal means that Iran will become a land bridge between Turkmenistan and Azerbaijan, potentially giving gas supplies to Europe a boost.
Under the deal, Turkmenistan will send 1b cubic metres of gas to Iran’s northern border and Iran will then deliver the equivalent to its border with Azerbaijan.
The swap deal is both an improvement for regional gas transport and an advantageous arrangement for Iran. Iran suffers from gas shortages in its north-east and supplies from Turkmenistan, besides generating transit revenues, will also help reduce this deficit.
For Turkmenistan the deal is an essential part of its diversification strategy. Turkmenistan and Azerbaijan have long touted a pipeline running across the Caspian Sea that could pump Turkmen gas westwards to Europe, as part of the wider Southern Gas Corridor network. This would secure valuable supplies from the region to Europe by giving Azerbaijan’s gas sector, which needs extra gas to fill the prospective TAN- AP-TAP pipeline network, a boost and also allow Turkmenistan to reduce its dependence on China.
The sticking point for a Caspian Sea pipeline has been Russia, though.
Russia has repeatedly said that a trans-Caspian pipeline would have to be approved by all littoral states and has, at times, threatened the use of force against unilateral decisions.
This swap deal, potentially, creates a way to send oil shipments from Turkmenistan to Azerbaijan, and then on to Europe, using Iran as a land bridge.
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(News report from Issue No. 301, published on Oct. 21 2016)
OCT. 16 2016 (The Conway Bulletin) — Turkmenistan’s President Kurbanguly Berdymukhamedov called an election for Feb. 12, barely a month after he tweaked the country’s constitution to allow him to rule for life.
Mr Berdymukhamedov, who won a presidential election in 2012 with 97% of the vote, is expected to easily win next year’s vote, his third election since winning power in 2007.
But like the rest of the region, Turkmenistan’s economy has been creaking under a slump in global energy prices. This could make the election more complicated than previous votes.
Last month the 59-year-old Mr Berdymukhamedov removed an age cap of 70-years from the Turkmen constitution and also extended presidential terms to seven from five years, inline with many of his Central Asian peers.
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(News report from Issue No. 301, published on Oct. 21 2016)