Columns, Opinion

Worldview: The political effects of Turkmenistan’s economic crisis

Turkmenistan is globally renowned as one of the world’s most repressive and totalitarian states. The country’s political life revolves around the cult of personality surrounding President Gurbanguly Berdymukhammedov, who has been in office since 2007.

Jakub Jakóbowski and Mariusz Marszewski argued in a commentary for the Centre for Eastern Studies that a social contract has existed between the regime in Ashgabat and the Turkmen people, in which the people accept “the most extreme variant of Central Asian authoritarianism” in exchange for basic monetary benefits.

Such benefits include water, food and energy, in addition to societal relief from the state.

This model has worked for the three decades in which Turkmenistan has been independent. Yet recent economic crises have tarnished this informal contract which, in turn, presents a threat to Berdymukhammedov’s legitimacy.

Turkmenistan’s economy is based primarily on natural gas — it controls the fourth-largest reserves in the world. Understandably, this overreliance on natural gas renders the Turkmen economy highly vulnerable to fluctuations in global gas prices.

Trouble began in 2014 when global oil prices, which serve as the benchmark for global gas prices, began to tumble. Ashgabat proceeded to shoot itself in the foot when it antagonized two of its most important customers, Russia and Iran, losing them as clients in 2016 and 2017, respectively.

Consequently, China effectively became Turkmenistan’s sole purchaser of natural gas. In 2017, China received around 94 percent of the country’s total gas exports, representing around 90 percent of the total value of Turkmen exports.

This extreme dependence on the Chinese market has harmed Turkmenistan’s negotiating power, and this, coupled with the decline in gas prices, caused the average price of Turkmen gas exports to China to drop from $160 per thousand cubic meters to $100 in 2016.

Not only has this development harmed government revenue, 80 percent of which is generated from energy exports, but it has also decreased the value of Turkmenistan’s currency, the manat. As of 2018, foreign economists estimated the value of inflation in Turkmenistan was about 294 percent, a significantly higher figure than the official estimate of 8 percent in 2017.

Ashgabat has evidently recognized its vulnerability and has taken steps to reduce its reliance on the Chinese markets by diversifying its export portfolio. The Turkmenistan–Afghanistan–Pakistan–India pipeline is one example of this effort.

Moreover, Russia’s state-owned gas company Gazprom resumed imports of Turkmen gas this January. Combining these developments with the gradual recovery of global gas prices, one would assume Berdymukhammedov has been fortunate enough to avoid backlash.

Turkmenistan’s economy, however, is still in shambles despite encouraging external developments. According to Radio Free Europe’s Turkmen branch “Azatlyk,” unemployment is estimated to be at 60 percent.

Disconcerted by an exodus of people from the countryside to the capital either searching for work or to buy basic necessities, the government has banned non-locals from entering the city.

Berdymukhammedov evidently is gravely concerned about losing power. He has made a concerted effort to limit travel due to fear of a coup and has started sending his son and designated heir to represent him abroad.

Jakóbowski and Marszewski argue Berdymukhammedov’s regime has forfeited responsibility and shifted the burden of the crisis onto the general public, effectively violating the social contract that grants the regime its legitimacy. If Jakóbowski and Marszewski’s assessment is correct, Berdymukhammedov is not incorrect to fear a coup.

In many senses Berdymukhammedov’s situation parallels that of Maduro’s in Venezuela: both are incompetent autocrats responsible for devastating the economies of energy-rich nations.

The key differentiating factor, however, is that there is no external pressure against Berdymukhammedov’s regime. The two great powers pivotal in Turkmen foreign policy, China and Russia, certainly harbor no qualms about supporting a repressive regime. Moreover, neither China nor Russia has any incentive to support dissent against the incumbent regime.

Consequently, while it is undeniable that Berdymukhammedov faces a challenging political predicament at home, it is unlikely that his blunders will lead to genuine opposition to his rule.

One Comment

  1. Very nice piece on Turkmenistan! I cover the country’s economic developments and It is usually very difficult to find data on it. I would really appreciate any advice you could give me. Cheers!