Central Asia's North Korea Hits the Gas to Find New Friends - OZY | A Modern Media Company

Central Asia's North Korea Hits the Gas to Find New Friends

Central Asia's North Korea Hits the Gas to Find New Friends

By Sophia Akram

Chinese President Xi Jinping (L) and his Turkmenian counterpart Gurbanguly Berdymukhamedov attend the ceremony of inaugurating the No. 2 and No. 3 processing plants of the Fuxing Gas Field in Mary, Turkmenistan, Sept. 4, 2013.
SourceJu Peng/Redux


Autocratic and isolated Turkmenistan is seeking new friends for its gas economy. But will it also improve transparency, reduce poverty and allow foreigners access?

By Sophia Akram

The chill of winter is traditionally when Turkmenistan’s ties with China turn warmest. That’s when Beijing’s dependence on the Central Asian nation, its biggest supplier of natural gas, is at its peak. But when Turkmenistan’s struggling economy failed to supply the amount of gas China needed last winter, Beijing — after an initial struggle — quickly found alternatives, shipping in extra gas from Qatar and the U.S. instead. China’s quick turn is now forcing one of the world’s most reclusive regimes to do the same: look for other friends.

The most closed off of Central Asia’s nations, Turkmenistan is the region’s North Korea: autocratic, isolated and with no time for dissenters or journalists. The country sits on the world’s sixth-largest gas reserves and hydrocarbon exports contribute 30 percent of the country’s GDP, but President Gurbanguly Berdymukhamedov’s government is yet to explain the gas production decline last winter. And like North Korea, the country has long counted China as its biggest economic partner — 93 percent of its gas exports went to China in 2016, according to the World Bank. Now, stung by the realization of vulnerability in its gas relationship with China, Turkmenistan is trying to mend broken ties with other partners, push projects with new friends and explore fresh markets thousands of miles away.

A landmark agreement in August between the five littoral states of the Caspian Sea — Russia, Azerbaijan, Iran and Kazakhstan are the others — has helped Turkmenistan revive long-dormant plans to build an undersea gas pipeline to Azerbaijan, from where it can export the fuel further to Turkey and even Europe. In February, Turkmenistan hosted leaders of Afghanistan, Pakistan and India to launch work on the Afghan stretch of the TAPI pipeline that, if successful, will connect the four nations it is named after and could double Turkmenistan’s gas exports.

[Turkmenistan is] a little bit more economically liberalized [than before].

Anna Chernova, Foreign Policy Center

At the start of the year, Turkmenistan was locked in tensions with Russia and Iran. Russia had last year stopped importing Turkmen gas after a price dispute. Turkmenistan had last year stopped exporting gas to Iran, claiming Tehran owed $1.5 billion in past payments — a charge Iran rejected. But in March this year Berdymukhamedov hosted Iranian President Hassan Rouhani, and in August visited Moscow to meet Russian President Vladimir Putin, to reset these ties.

“[Turkmenistan is] a little bit more economically liberalized [than before] because of increased economic links with Europe and others,” says Anna Chernova, a research fellow at the London-based Foreign Policy Center.


These projects beyond China that Turkmenistan is exploring won’t be easy to pull off. The 1,125 mile-long TAPI pipeline, starting from Turkmenistan’s Galkynysh Gas Field, for instance, traverses over a hotbed of tension. Afghan-Pakistan relations are flailing. Pakistan-India relations are volatile, and the two states have a history of not cooperating on multilateral projects.

Then there’s security. Alex Melikishvili, an analyst at research organization IHS Markit, says the Taliban, which retains control over large swaths of Afghanistan, remains a stumbling block. While construction of the pipeline through Afghanistan started in February 2018 with Taliban approval, they have since started attacking workers building it.

“While the Taliban is fractured, there is broad consensus among them that they want foreign troops out of the country,” says Melikishvili. “That’s a stumbling block for TAPI — as in foreign investors in this project.”

Nafeez Ahmed, an energy security specialist, says that in addition to the Taliban, Afghanistan’s “weak, inept and corrupt” government represents a problem too. All four countries in the project would gain from its success — including through transit fees. But the government of Afghanistan President Ashraf Ghani is seen by many Afghans as “the West’s client regime,” and Ahmed worries that “any financial dividends [for Afghanistan] from TAPI are likely to accrue to centralized unaccountable networks of authority, rather than the Afghan people.”

That’s true for Turkmenistan too. Melikishvili notes the inequality in the country, where you have the leader spending billions of dollars on pet projects — capital Ashgabat has the world’s highest density of white marble monuments — while there are reports of food shortages and layoffs in the public sector. Data from the IMF suggests some economic growth, but the data is limited and big infrastructure projects are mostly delivered by foreign firms.

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Chinese President Xi Jinping (left) and his Turkmenian counterpart, Gurbanguly Berdymukhamedov, attend the ceremony of inaugurating the No. 1 processing plant of the Fuxing Gas Field in Mary, Turkmenistan, Sept. 4, 2013.

Source Ju Peng/Redux

All of which explains why Turkmenistan, while seeking to diversify gas exports beyond China, can’t afford to downgrade relations with Beijing. The uncertainty surrounding other projects means China will likely remain its biggest buyer of gas for several years to come. In August, China began developing a new gas field in Turkmenistan, and the two countries are hoping to extend an existing pipeline. Unlike the West, China doesn’t ask questions on democracy and human rights of its economic partners. Turkmenistan is also heavily in debt — it took loans worth $8 billion from China in 2011 and an undisclosed amount in 2013, and is still repaying them.

Still, the country’s efforts at building new gas relationships represent an opportunity for it to expand its economy — which has registered slowing growth since 2011 — and for the international community to seek reforms there, suggests Chernova. The Asian Development Bank, for instance, is fronting the bulk of the $10 billion needed to finance the TAPI pipeline. Whether it has insisted on mechanisms by which Turkmenistan can improve transparency in governance or reduce poverty is not clear yet.

Slowly the country is changing from within too, adds Chernova. Berdymukhamedov’s predecessor, Saparmurat Niyazov, was even more authoritarian and had given himself the title of Turkmenbashi, Head of the Turkmen. When Chernova first traveled to Turkmenistan in 2007, “internet was extremely hard to come by for the public,” she recalls. The country depended on satellites and Russian telecom providers for connectivity. “It was very closed, and things have been slowly changing.”

They need to change a lot more though, says Chernova, and if Turkmenistan’s expanding gas relations lead to an opening up, that could prove the real game changer for the nation.

Connectivity is good,” says Chernova. “More trade, less borders — these are all good.” But ultimately, she adds, it’s also about “making sure that there is a governance structure for whatever it is that’s generating wealth, so it reaches the people in an inclusive way.”

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