TURKMENISTAN STEPS ON THE GAS.

Turkmenistan’s official economic data leave much to be desired in terms of quality and frequency. Still, there can be little doubt that–like Russia, Kazakhstan and Azerbaijan–Turkmenistan is currently benefiting from high world energy prices. According to data recently released by the National Statistical Institute (NSI), Turkmenistan’s economy is growing rapidly this year. GDP and industrial output were reported up a stunning 14 percent in the first half of 2000 (Sotsial’no-Ekonomicheskoye Polozhenie Turkmenistana, July 2000). The sharp growth in gas exports to Russia which began in December 1999 was the main cause of this growth.

Some US$400 million worth of gas was exported to Russia during January-May, a sum which made up 88 percent of Turkmenistan’s total gas exports. Another 10 percent of Turkmenistan’s gas exports are listed as having gone to Iran. According to the NSI data, this export boom translated into a 37 percent increase in Turkmenistan’s natural gas production. Russia’s share of Turkmenistan’s foreign trade turnover therefore rose to 31 percent, up 9 from percent in the first five months of 1999 (when Turkmenistan benefited from a short-lived revival of gas exports to Ukraine). Thanks to Russia’s willingness to accept Turkmenistan’s gas, CIS countries accounted for 53 percent of Turkmenistan’s exports during January-May, and supplied 29 percent of imports. Natural gas sales represented 49 percent of Turkmenistan’s total exports, with crude and refined oil products accounting for 31 percent, and cotton fibers and textiles another 14 percent.

Thanks to surging gas exports, Turkmenistan’s total exports rose by 53 percent during January-May 2000. Because oil and gas account for 60 percent of industrial output, gas exports caused industrial output to rise by a reported 14 percent during this time. Higher gas exports also financed more imports (which were reported up 34 percent during January-May), further helping to boost production and incomes. And while Turkmenistan’s fiscal accounts are notoriously nontransparent, the export boom apparently helped the government to keep the budget in balance during the first half of 2000 (Russian agencies, July 17).

The NSI figures also illustrate the extent to which Turkmenistan remains one of the CIS’s least reformed economies. The state sector in the first half of 2000 accounted for 67 percent of industrial output–and 65 percent of total investment. But most of all, these figures underscore Turkmenistan’s high reliance on a single export product–gas–the sale of which is critically dependent on Russian largess. When access to Russia’s gas pipeline infrastructure is denied, Turkmenistan’s exports and GDP can tumble sharply. This occurred in 1997, when exports dropped from US$1.1 billion to US$450 million–and GDP crashed 15 percent. The Niazov regime’s continued disinterest in the economic reforms which could broaden and modernize Turkmenistan’s industrial base suggest that Turkmenistan’s economic prospects will continue to depend on Moscow’s good will.

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