In a world that continues to be shaped by growing global economic integration and fragmentation of political power, states resistant to change are finding the status quo more and more difficult to maintain. While most national leaders acknowledge the realities of economic and political interdependence, some are hesitant to release domestic economic forces due to fears of political change. Of the many countries that fit these parameters, Turkmenistan provides a fascinating case study.
Turkmenistan’s post-Soviet existence has been dominated by the late President Sapamurat Niyazov, who styled himself Turkmenbashi, or Father of the Turkmen. Before his death in 2006, Niyazov consolidated his rule by setting up a one-party state and developed a Stalin-like cult of personality.
Niyazov’s successor, Kurbanguly Berdymuhamedov, has taken steps to dismantle his predecessor’s personality cult and has introduced reforms, including better internet access, improvements to Turkmenistan’s education system, and a stronger social welfare system. However, Turkmenistan’s economy continues to be governed in the Soviet style, with central planning and state control as its primary features. Privatization has been relatively minimal and Transparency International’s Corruption Perceptions Index ranks Turkmenistan as of one of the most corrupt countries in the world, placing it at 168 out 180 in 2009.
Turkmenistan is not your everyday Soviet throwback state, though. In 2008, the U.S. Department of Energy estimated that Turkmenistan has 600 million barrels of proven oil reserves and 100 trillion cubic feet of proven natural gas reserves. After opening a gas pipeline to Iran in 1997, Central Asia’s first pipeline to the outside world beyond Russia, Turkmenistan has been largely unable to diversify its export routes. However, the opening of the first section of the Turkmenistan-China pipeline in early 2010 and continued discussions over delivery of Turkmen gas to Europe via a trans-Caspian pipeline are evidence of Ashgabat’s intention to diversify export channels.
Turkmenistan’s interest in new export destinations has important ramifications. For one, expanded relationships with Western firms could provide Turkmen government officials with greater exposure to Western corporate governance standards. Although Daimler Chrysler has set a poor example after recently being charged with giving large-scale kickbacks and bribes to Turkmen officials, there may yet be opportunities to influence Ashgabat through future business relationships.
If Western firms maintain high standards in business arrangements, Turkmen officials may better see the advantages of transparency, accountability, and free markets. For now, attention is turning to Germany’s RWE, the sole Western company granted offshore gas exploration rights in Turkmenistan, as a significant source of influence. Whether RWE or other Western firms can have an impact on Turkmenistan remains to be seen, but opportunities should not be taken lightly.
Arie Beitman is a CIPE program assistant for Eurasia.
Published Date: May 12, 2010