BACKGROUND: Presidents Niyazov of Turkmenistan and Aliyev of Azerbaijan paid separate visits to Moscow in the last week of January. High on their respective agendas were designs to develop the Caspian region’s energy sector and to unblock the impasse over who owns what part of the Caspian Sea itself. After a meeting with Niyazov, President Putin called for the establishment of a “Eurasian Gas Alliance” to co-ordinate more effectively the volume, transport and consumption of the region’s natural gas output.  Central Asia’s gas pipeline network has hardly developed since the Soviet era and virtually all of the export product from the region must travel through Russia to reach its market. The only exception is a line from Kopezhe in Turkmenistan to Kurt-Kui in Iran that currently takes around 7 billion cubic metres (bcm) per year, around 15% of Turkmenistan’s yearly output. Uzbekistan is currently the largest Central Asian gas producer but consumes nearly all of its gas domestically. By contrast, Turkmenistan’s huge reserves (up to 4350 bcm) and small population constitute an ideal profile for expansion of its export markets. Nevertheless, Asghabat has barely begun to capitalize, and its market position may be in danger of further deterioration for several interlocking reasons. Firstly, Gazprom’s stranglehold over Turkmenistan’s pipeline outlets has restricted its market to virtually insolvent ex-Soviet states such as Georgia, Armenia and Ukraine whose combined debts to Turkmenistan for gas supplies now run to over $1 billion. Meanwhile, Gazprom retains for itself the lucrative Western European market where Siberian gas extracted for $3-$4 per 1000 cm is eventually sold for $125-$130. Secondly, Turkmenistan’s output record is poor. Production targets have been missed for a decade and although 2001 saw an increase of 9.15% on the previous year to 51.3 bcm, this still compares badly with 1991 production levels of nearly 90 bcm. Fraud, theft and a crumbling infrastructure that reduces pipeline capacity appear to be the major culprits. Thirdly, potential investors have been deterred by Ashghabat’s increasingly pro-Iranian stance of opposing median-line division of the Caspian seabed, a position now accepted and settled between Russia, Azerbaijan and Kazakhstan and seen as a precondition for full-scale exploitation of offshore hydrocarbons. The Turkmen position stems from a dispute with Azerbaijan over ownership of the disputed Kyapaz/Serdar fields in the mid-Caspian. Fourthly, Niyazov has manifestly failed to diversify Turkmenistan’s pipeline routes. Export volumes to Iran have stuttered and remain meagre. The Trans-Caspian project to supply the rapidly expanding Turkish market foundered on Asghabat’s demands for large collateral payments upfront and squabbles with Azerbaijan over the ratio of pipeline capacity to be shared. Ankara eventually turned to Russia’s ‘Blue Stream’ line running under the Black Sea. Projected lines to Pakistan and China have also come to naught. The context for Niyazov’s trip was thus one of Turkmen vulnerability and a desire on Putin’s part to secure important economic and geopolitical objectives within Central Asia’s newly fluid security complex.

IMPLICATIONS: Although no definitive agreement was reached in Moscow, the implications of Putin’s proposal stretch beyond harmonisation of gas output strategies. Putin may have realised that the only feasible way of resolving the dispute over the division of the Caspian was by bundling the issue into a sufficiently attractive package for Niyazov to take. Part of the integration strategy may be a long-term contract for Turkmenistan to supply Russia with anything up to 50 bcm per year, the sort of deal Asghabat was looking for two years ago. Moscow would also be in at ground level on any financing plans to revive the potentially lucrative pipeline through Afghanistan (if and when the security environment settles) to Quetta in Pakistan and possibly on to New Delhi, thereby also ensuring a Russian strategic presence in America’s newly acquired Central Asian ‘backyard’. The quid pro quo would be a softening of Asghabat’s stance on Caspian Sea demarcation in time for the proposed summit of littoral states in the spring. Aliyev may also have to fashion some concession on Kyapaz/Serdar to lock Niyazov in. This would leave Iran’s position of opposing median-line division increasingly untenable and could pave the way for an eventual deal. Interestingly, Putin holds another, subtler, trump card.  Nurmuhammed Hanamov, Turkmen ambassador to Turkey and Israel, resigned suddenly last week and announced that he was joining the principal political opposition movement to Niyazov, which happens to be based in Moscow. He is the third recent high-profile defector from the regime, following on from ex-foreign ministers Avdy Kuliev and Boris Shikhmuradov. Asghabat announced an immediate indictment of Hanamov on grounds of corruption, which most observers believe have been fabricated for political purposes. Niyazov has tried and failed to extradite Shikhmuradov from Russia on similar charges and it appears conceivable that Moscow may be contemplating transition to a more compliant and predictable Turkmen regime. Washington, with Niyazov’s neutrality in the U.S. operation to depose the Taliban fresh in mind, would not be averse to a fresh face in Ashghabat. Consequently, the stakes for Niyazov himself may be higher than he realises.

CONCLUSIONS: Although it is too early to trace definitively the contours of the new geopolitical landscape emerging in Central Asia following the abrupt insertion of the US military presence late last year, it has long been clear that control of hydrocarbon exploration, production and evacuation are central strands of regional strategic thinking. By setting out detailed proposals for integration of the gas sector under Gazprom’s de facto control, President Putin is seeking to cement Russia as the dominant player in the theatre and lever an early resolution to the legal status of the Caspian Sea. Whether President Niyazov will fall in with Moscow’s plans remains unclear. Indeed, Niyazov’s political survival is even open to question. One thing that students of regime theory can tell us, though, is that when sultanistic leaders like Niyazov eventually go, as they all do, they rarely go quietly.

Copyright 2001 The Analyst. All rights reserved