Publication: Eurasia Daily Monitor Volume: 5 Issue: 195

Since the death of “Turkmenbashi” President for life Saparmurat Niyazov on December 21, 2006, Western governments and energy companies have been falling over themselves to be in on the development of Turkmenistan’s vast natural gas reserves, estimated to be the fourth or fifth largest in the world.

Nearly two years later, despite the blandishments of Westerners, Russia remains Turkmenistan’s closest trading partner, a fact that no amount of wishful thinking can diminish. In the current atmosphere of rising confrontation between Washington and Moscow, the Kremlin seems even less inclined to see its influence decline. Russia dominates all currently existing Turkmen export pipelines, with the exception of the $190 million, 125-mile-long Korpezhe-Kurt Kui pipeline to Iran built in 1997; and this seems to give Moscow an inside edge that will not diminish anytime soon.

Russia already accounts for nearly 50 percent of Turkmenistan’s foreign trade. The Central Intelligence Agency estimates that last year Turkmen exports were worth $7.6 billion, while the World Bank estimated Turkmenistan’s nominal GDP at $12.9 billion. Russian President Dmitry Medvedev’s chief of staff, Sergei Naryshkin, after meeting with Turkmen President Gurbanguly Berdimukhamedov, told journalists that Russian-Turkmen bilateral trade from January 2007 through June 2008 was worth about $4 billion, and the volume of Russian-Turkmen trade for the first half of 2008 was equivalent to that for all of 2007 (Itar-Tass, October 8). Naryshkin added, “Of course, the fuel and energy complex is the key sphere of our cooperation, but Russia increasingly supplies Turkmenistan with equipment, construction machinery, and motor vehicles.” Berdimukhamedov noted simply, “At this stage, Turkmen-Russian relations are gaining momentum and developing in all spheres” (Internet-gazeta, www.turkmenistan.ru, October 8).

Not that Russia has everything going completely its way, however. In contrast to Niyazov’s mercurial governing style, Berdimukhamedov has cautiously pursued a much more nuanced style in opening up Turkmenistan to the outside world, even if it means perturbing the Kremlin bosses. The two most notable examples are Ashgabat honoring Niyazov’s commitment to construct a natural gas pipeline to China and Berdimukhamedov’s hardball negotiations with Gazprom, which in July resulted in Gazprom CEO Alexei Miller agreeing to pay “market rates” for future long-term deliveries of Turkmen gas. Nine months ago Gazprom was paying Turkmenistan $130 per 1,000 cubic meters (tcm), but Miller promised a potential price equivalent to deliveries to Eastern and Central Europe, which could rise as high as $400-500 tcm by the end of the year (UPI, July 31).

Equally irritating to the Kremlin are Turkmenistan’s deepening relations with former Soviet republic and NATO member Latvia. On October 8 Latvian President Valdis Zatlers, in the first visit of a Latvian chief executive to Turkmenistan, met with Berdimukhamedov. Things went so well that Zatlers invited him to visit Latvia.

While in Ashgabat Zatlers attended the Turkmen-Latvian business forum in the President Hotel, along with an extensive entourage of 90 banking representatives and businessmen, including Latvian ministry and departmental officials (Internet-gazeta, www.turkmenistan.ru, October 9).

Zatlers and Berdimukhamedov subsequently signed four documents for expanding mutual cooperation. Topics covered included an agreement for cooperation between their chambers of commerce; an intergovernmental agreement on air services, economic, industrial, scientific, and technical cooperation; and a protocol for increased cooperation between foreign ministries (CA-news, October 9). Not surprisingly, energy issues were also discussed.

The two presidents had cause for celebration, as the recent growth rate of Turkmen-Latvian trade has exceeded that of Ashgabat’s with Russia. In 2007 bilateral Turkmen-Latvian trade was worth a paltry $1.7 million, but it has already exceeded $58 million during the first six months of this year.

It is self-evident that the budding Turkmen-Latvian relationship must take account of their massive mutual neighbor, Russia. Far from being a threat to the Kremlin, the Baltic-Caspian nexus could in fact prove useful to Russia. Latvian investment in Turkmenistan does not carry the implicit threat that U.S. financing does, and Russia would be a major beneficiary of any transit of Turkmen energy to Latvia.

On a different level, Russia tacitly allowing Latvia increased access to Central Asian Caspian energy resources could strengthen Russia’s arguments about the relative security of pipelines transiting Russian territory for East European markets, as opposed to those crossing the Caucasus. Furthermore, Russia playing “honest broker” to help assuage Latvia’s energy concerns could in turn pay off in terms of political influence within NATO, if Latvia in turn decides, at the very least, to express Russian concerns about the alliance’s expansion into former Soviet republics. In advancing such concerns, Riga need not necessarily betray its own visceral distaste for its dolorous experience as part of the USSR. Working with Turkmenistan with its avowed post-Soviet policy of neutrality could provide a relatively dispassionate forum for the Kremlin to air its concerns. Such a policy would stand in stark contrast to the damage inflicted on Georgia by its pro-NATO membership stance and the political turmoil currently engulfing Ukraine over the same issue.

The only certainty in this equation is that Turkmen natural gas production over the next decade will turn the country into a major supplier of the fuel. The reality is that geography dictates that Turkmen exports east, west, or north will involve negotiations with former Soviet republics. As distasteful as the U.S. administration finds current Kremlin policies, a decision by Ashgabat to pump exports southward would profit the charter member of the “axis of evil” Iran. At a time of a slumping global economy, having discreet “back channels” to the Kremlin via former Soviet republics, one now a NATO member, is not an opportunity to be ignored.