fbpx

Turkmenistan and the Natural Gas Domino Effect

We’ve recently blogged about the boost given to the Nabucco pipeline project from the enlistment of RWE, as well as the potential concerns over Turkmenistan’s reliability as a supplier (the recent cut-off of supply to Iran caused a domino effect which reached all the way to Greece and the EU). These concerns have not diminished over recent weeks, and it now appears that Europe has to seriously reckon with how to deal with an increasingly assertive government in Turkmenistan that is eager to play hardball in energy politics. However, this supply cut-off should not be compared with the Gazprom-Ukraine example for several reasons.

Since coming into power to replace the deceased Turkmenbashi, Saparmurat Niyazov, President Gurbanguli Berdymukhamedov has proven himself to be quite a slick negotiator, who made it clear early on that the old rules no longer apply. One day he looks like he is in the Kremlin’s pocket, the next day he holds discussions and extends promises to the eager Europeans and the Americans, then squares up to the desperate Chinese, and then back to its romance with Russia.But there is more to Turkmenistan’s negotiating games than just a change of leadership. The key instrument boosting their bargaining leverage is a new pipeline project to China, freeing the government from absolute reliance on Russia for pipeline exports – and most likely the reason they were able to get Gazprom to agree to a 30% price increase (which I have previously argued shows a desperation on behalf of Gazprom to secure supplies that it cannot produce itself).Emboldened by multiple export options coming in the future, Turkmenistan moved aggressively on Iran to double the price of gas. When they refused to pay, they cut the taps right during the middle of a cold spell, which Iran says was “immoral” and resulted in several deaths.However seeing the Turkmen president play hardball in energy is not the same as the Gazprom-Ukraine fiasco. The problem with that comparison is that in one case, the Kremlin sought to destabilize a pro-Western government and put an end to the frightening “color revolution” trend that briefly caught on in the former Soviet space. In Turkmenistan’s case, everyone in the region is adjusting to a new set of rules and engagement with a major gas exporter – and although the difficulties in the relationship with Iran can have consequences for Europe, there is a greater level of predictability when we are dealing with commercial and market motivations over political agenda.That certainly doesn’t make it OK for anybody to cut supplies without warning, and not attempt to resolve the differences in a fair, rule-based forum where consumer safety is made a priority.Secondly, the concerns and fears over reability seem to place very little emphasis on Turkmenistan’s natural strategic interests. True, Russia was able to come away as the winner from the dispute with Iran, and China will likely be willing to pay what is being asked. But that doesn’t necessarily mean that Turkmenistan wouldn’t have an enormous interest in participating in Nabucco under the right terms, in that a diversification in the export routes will provide them with greater security of demand and further freedom from Russia (a bullying neighbor of historic distrust). Berdymukhamedov’s predecessor knew all too well the limited appeal of only doing business under the guardianship of Gazprom’s oversight, and it is reasonable that Ashgabat may want to seek greater independence from Russia.So while many analysts panic over Russia’s success in sewing up Central Asian energy supply, others suggest that Turkmenistan just needs to be given what it wants, and assured that nobody will play with their interior affairs.One of my favorite bloggers and Caspian region experts, Steve LeVine, has argued that quiet diplomacy is needed from the United States: “The U.S. is right to give the benefit of the doubt, for instance, to Turkmen President Gurbanguly Berdymukhamedov as long as he continues to methodically dismantle the legacy of his predecessor, Saparmurat Niyazov.“Steve is right in some senses – Berdymukhamedov did just recently legalize opera, the circus, and some movies, but I wouldn’t characterize it as a free country.But this point raises the most troubling aspect of the Europe vs. Gazprom (and vs. China, to an extent) competition for Turkmen supply. The West is at a distinct disadvantage, in that we are more likely to eventually start criticizing human rights abuses under the dictatorship and start asking for democratic reforms. In theory, the Russians and the Chinese will never ask for such compromises, so Ashgabat might find them to be more convenient and quiet energy partners.So while a deal with the Europeans may give Turkmenistan a more powerful role in the region and deepen their security, the ethical cost may indeed prove to be too high.