Turkmen Report: September 30, 2002

28 September 2002

Turkmen President Saparmurat Niyazov has taken an investigation into misappropriation of $41.5 million at the country's Central Bank under his personal control, ITAR-TASS reported on 28 September.

The day before, Turkmen law enforcers submitted their first report on the crime committed by bank employees earlier in September. The law enforcement chiefs told Niyazov that some of the accused -- all of them affluent and prosperous people -- have been arrested. Nine apartments and mansions, which they owned in Ashgabat and Dashoguz, as well as valuable objects, have been confiscated. Niyazov ordered the mayors of Ashgabat and Dashoguz to distribute the confiscated dwellings among needy families with many children.

President Niyazov demanded that a Turkmen-Russian commission step up investigation into the circumstances of transferring $20 million from Turkmen Central Bank accounts to Russian banks. "The stolen funds should be returned to the state treasury and the criminals should be punished," Niyazov said. (ITAR-TASS)



27 September 2002

President Niyazov has proposed to U.S. Caterpillar to participate in the implementation of the Trans-Afghanistan pipeline project and in the construction of related infrastructure, Interfax reported on 27 September, citing a source in the president's office. During a meeting with Caterpillar chief Glen Barton in Ashgabat, Niyazov said: "This project is finding a lot of support in the region and in the world, among international financial structures. Your participation and participation of other large U.S. companies in this project will be an additional guarantee of its success."

He also stressed that the Trans-Afghanistan project in no way signifies a change in the orientation of Turkmenistan's gas-export policy. "We have agreements with Ukraine, Iran, and Russia on gas supplies and we will strictly keep to them," Niyazov said.

In response to Niyazov's proposal, Barton announced that "in the U.S. there is understanding and support for the project and a firm conviction that it is timely and justified." (Interfax)



26 September 2002

The fourth Central Asia media conference, sponsored by the Organization for Security and Cooperation in Europe (OSCE) took place in Tashkent on 26-27 September, AP and AFP reported. The two-day conference, attended by participants from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan discussed the freedom of the media in investigating corruption.

Journalists and editors at a Central Asian media conference said there are still restrictions on freedom of speech in Central Asia. Freimut Duve, the OSCE representative on media freedom issues, said corruption had been having "a crippling effect" on the region's transitional economy and democratic development and that it could be fought only through independent media and judges.

Duve singled out Turkmenistan, where he said President Niyazov has established a personality cult around himself and isolated his people from independent information. (RFE/RL, AP, AFP)



26 September 2002

A working group on the Caspian Sea's status will hold a meeting in Azerbaijan's capital Baku in November, ITAR-TASS reported on 26 September, citing the Russian president's Caspian envoy, Deputy Foreign Minister Viktor Kalyuzhnyi.

The group consists of representatives of the five littoral states: Russia, Azerbaijan, Kazakhstan, Turkmenistan, and Iran. "The agenda of the forthcoming meeting is preparation of a convention on the legal status of the sea that should make a basis for the second Caspian summit," Kalyuzhnyi said.

An accord to meet once a year was reached at the previous summit in Ashgabat, Turkmenistan, last year, Kalyuzhnyi added. (ITAR-TASS)



25 September 2002

Saparmurat Niyazov made a business trip to the country's leading cotton-producing area, Dashoguz Velayat, on 24 September and criticized the regional leadership for having delayed this year's cotton planting, turkmenistan.ru reported the next day.

Niyazov warned local leaders they will be held responsible if the upcoming harvest fails to meet the planned target of 560,000 tons. (Turkmenistan.ru)



24 September 2002

During a telephone conversation on 23 September, Turkmen President Niyazov and his Uzbek counterpart Islam Karimov agreed to establish border markets at customs posts between the Dashoguz and Khorezm districts in order to promote cross-border trade, turkmenistan.ru and Interfax reported the next day.

The list of goods sold will meet the needs of each country. Turkmenistan will sell oil products, while Uzbekistan will supply textiles, shoes, rice, fruit, and vegetables. Niyazov and Karimov said they would assume personal control over fulfillment of the understanding.

Turkmenistan's Dashoguz Velayat has a sizeable Uzbek population. (Turkmenistan.ru, Interfax)



23 September 2002 Saparmurat Niyazov and his Russian counterpart Vladimir Putin held a telephone conversation on 23 September to discuss the results of the 19 September meeting of the bilateral commission for economic cooperation, ITAR-TASS reported the same day, citing the Russian presidential press service. The two presidents spoke highly of the commission's meeting as a landmark event in bilateral relations.

Niyazov and Putin discussed specific projects in Russian-Turkmen cooperation, primarily in the fuel and energy sphere. (ITAR-TASS)

24 September 2002

By Michael Lelyveld

Turkmenistan may be taking a step toward Russia with the outlines of a long-term gas deal, but it remains unclear how far the agreement will go.

Previous attempts to craft contracts have repeatedly failed since Russian President Vladimir Putin visited Ashgabat in May 2000 and declared Russia's plans to buy huge volumes of Turkmen gas for the next 30 years.

Last week, after meeting with Turkmen President Saparmurat Niyazov in Ashgabat, Energy Minister Igor Yusufov said Russia would buy 10 billion cubic meters (bcm) of Turkmen gas annually starting in 2005 and more than 20 bcm beginning in 2008, Interfax reported. The figures fell far short of the 50 bcm that Putin and Niyazov discussed two years ago.

It was also less than the 30 bcm that Turkmen officials announced last October after talks on a gas-partnership agreement with Russia. In December, the two countries reached a 10-year pact calling for deliveries of 10 bcm in 2006 and up to 80 bcm in 2011, Platts news service reported. But so far, no contracts have been signed.

The offers have often seemed more plentiful than the gas. As recently as June, Niyazov again told Putin he could sell Russia up to 50 bcm, according to Interfax. In July, the official newspaper "Neitralnyi Turkmenistan" reported that Russia's Gazprom wanted to buy 30 bcm, "and in the future, up to 60 billion cubic meters."

But in the near term, the numbers have had to conform to reality. The capacity of the decaying former Soviet pipelines between the two countries is crimped and largely taken up with Turkmen supplies to Ukraine, which Moscow sanctioned to limit its exposure to Kyiv's energy appetite and debt.

Yusufov said last week that Russia would buy Turkmen gas "on the residual principle" during the next two years, the official Russian news agency RIA-Novosti reported. In other words, Russia's gas monopoly Gazprom will buy leftover gas from the pipeline after the needs of Ukraine and the independent gas trader Itera are met. Those amounts are likely to be small. Instead of the 10 bcm that Turkmenistan planned to export to Russia last year, the country supplied only 2 bcm, according to Platts.

Gazprom plans to rebuild one of the lines in the transit system from Turkmenistan, the company's deputy chief executive, Yurii Komarov, told Interfax last week.

But a major missing factor in the latest announcements continues to be the price. The two countries have argued for years over gas tariffs, and there have been some signs that they could be getting even further apart. In August, Interfax reported that Turkmenistan insisted on selling gas to Russia for "not less than $44-$45 per 1,000 cubic meters," while Russia planned to buy it for $32 to $33. In the past, Russia has paid as much as $42, but only half in cash.

Niyazov has often spoken about prices in terms that make clear how much he resents how much more Moscow charges for the gas it sells in Europe and how much less it paid Turkmenistan in Soviet times.

But two new factors may now be coming into play in the negotiations. The first is a possible transit agreement that could allow Turkmen gas to reach Europe through Ukraine.

Early this month, the head of the Ukrainian oil-and-gas company, Yuriy Boyko, announced that the country would start re-exporting its surplus of Turkmen gas to Europe next year. Gazprom has previously raised loud protests over the idea because Naftohaz Ukrayiny's sales have undercut Russia's prices in Europe. But this time, the sides are still talking about re-exports.

Last week, spokesman Kostiantyn Borodin said Naftohaz Ukrayiny will form a venture with Gazprom to sell Turkmen gas to Hungary's MOL oil company, Bloomberg News and the "Budapest Business Journal" reported. It is unclear how much Turkmenistan will share in the profits, but the arrangement could be part of a compromise on Russia's cost for Turkmen gas.

A second factor may be Russia's campaign for an agreement on dividing the Caspian Sea. As a last holdout along with Iran, Turkmenistan may hold the key.

Russia has been trying to sell its formula on splitting the seabed as a way to end a decade-old standoff on the post-Soviet boundaries of the five shoreline states. Iran has resisted, in part because the median-line plan would leave it with 13 percent instead of the equal 20 percent that it claims. So far, Russia has signed two border pacts: one with Kazakhstan in May and another with Azerbaijan yesterday during President Heidar Aliev's visit to Moscow.

If Russia can reach a similar border accord with Niyazov, Iran could effectively be left with the remaining share. The alternative would be to negotiate the issue separately on its northern borders with Azerbaijan and Turkmenistan, rather than continuing to argue that a five-way agreement is the only way to legitimize any bilateral deals.

In recent days, Iran has sent mixed signals on its flexibility. Last week, Iran's Caspian envoy Mehdi Safari tried to counter speculation that recent talks are leading to a compromise, telling IRNA that the country's position remains "unchanged." Safari said Iran "intends to defend its right to 20 percent of the surface and the seabed," IRNA reported.

But in a commentary, the official English-language "Iran Daily" said on 22 September that Tehran's claims may not be recognized by its neighbors and that the country lacks "sufficient technological means" for Caspian development. The argument suggests that a joint venture could provide a basis for compromise, after all.

Russia may now see a chance to advance its energy agenda on more than one front by coming to terms with Turkmenistan. If that is its plan, then it may also prove more flexible in meeting Niyazov's price for Turkmen gas supplies. (RFE/RL)