- Upcoming elections in Turkmenistan are all but guaranteed to give President Gurbanguly Berdymukhamedov a third term in office.
- The country will struggle to open up new markets for its natural gas exports, a critical source of revenue, depriving it of leverage with its current buyers.
- Social discontent with the economy could magnify the challenge posed by security threats spilling over from Turkmenistan's less stable neighbors.
On the surface, there's not much room for intrigue in Turkmenistan's politics. Elections have never been particularly competitive in the Central Asian country, and President Gurbanguly Berdymukhamedov is all but guaranteed to win the presidential race on Feb. 12. After all, he took home 89 percent of the vote in 2007 (officially, at least) and 97 percent in 2012. Before that, the country was ruled by Saparmurat Niyazov, the infamous "president for life" who held power from post-Soviet independence until his death in 2006. Clearly, Turkmenistan is accustomed to political continuity, and there is no reason to think the upcoming polls will change that.
This sort of political stability is fairly unique among Central Asian states. Turkmenistan has not experienced a revolution or civil war in its modern history, as Kyrgyzstan and Tajikistan have. Nor has instability bred vulnerability to militant attacks, as it has in Kazakhstan and Uzbekistan. With a small population of roughly 5.2 million people and a geography defined mostly by desert, Turkmenistan has remained internally cohesive and for the most part spared of the disruptive internal divides of its Central Asian counterparts. Very few opposition groups exist within the country, and those that do provide de facto support for the government.
But these factors do not ensure stability for Turkmenistan indefinitely. Though the government is unlikely to face significant political competition anytime soon, it is nonetheless beginning to grapple with growing security and economic challenges that will pose a stronger test to its dominance down the line.
It Starts With Gas
Historically, the Turkmen economy has been fueled primarily by natural gas. Turkmenistan sits on some 32 trillion cubic meters of natural gas, the world's sixth-largest reserves. With a small domestic market, Turkmenistan has been able to export the majority of what it produces. In 2014, for example, the country sold around 41.6 billion cubic meters (bcm) of its total 69.3 bcm of output abroad, providing ample revenues for the government's coffers.
In 2015, however, this advantage began to fade. Natural gas exports dropped to 38.1 bcm, even though production actually rose to 72.4 bcm, reflecting problematic changes in the country's export markets. Until 2010, Russia was Turkmenistan's largest market for natural gas, importing around 90 percent of the country's exports before reselling them to Europe. (Iran was the main importer of the remaining 10 percent.) But a pipeline explosion in 2009 — pressure in the pipeline built up after Russia, likely motivated by politics, neglected to notify Turkmenistan that it had lowered its import level — caused Turkmen exports to Russia to decline precipitously, from more than 40 bcm in 2008 to less than 3 bcm in 2015.
Turkmenistan has shifted much of its natural gas exports to a new customer: China. The Central Asia-China pipeline began operations in 2009 and was expanded in 2010 and 2012 to help offset Turkmenistan's gradual loss of the Russian market. Turkmenistan began exporting below 4 bcm per year to China in 2010, but by 2015 that figure had grown to nearly 30 bcm. Chinese demand has helped Turkmen exports return to nearly pre-2010 levels.
Still, complications with Turkmenistan's historical export markets have persisted. In November, for example, Russia's Gazprom Export informed Turkmenistan that it would cease all imports of Turkmen natural gas. Last month, Turkmenistan followed through with a threat to halt natural gas exports to Iran over a dispute related to unpaid debts totaling around $1.8 billion. Tehran has threatened legal action against Ashgabat, and though Turkmenistan's Foreign Ministry on Jan. 26 expressed a willingness to settle the matter through talks, the cutoff has yet to be resolved.
The opening of the Chinese market softens the blow of losing Iran and Russia, but the lack of alternative buyers has hurt Turkmenistan's negotiating position with Beijing on pricing. Over the first 10 months of 2016, the average price of Turkmen exports to China dropped from $160 to $100 per thousand cubic meters. Though the volume of Turkmen exports to China saw a slight bump from the previous year, the revenues they yielded fell by 30 percent to $4.7 billion.
This is a troubling development for Turkmenistan, since energy exports account for 80 percent of the government's revenues and 35 percent of its gross domestic product. The country's economy has already come under pressure from the drop in global energy prices, which forced Ashgabat to devalue its currency, the manat, by nearly 20 percent at the beginning of 2015. And though the government claims that the economy grew by 6.2 percent in 2016, its official statistics are highly questionable. Meanwhile, anecdotal evidence of rising unemployment and shortages of basic goods and medicine has increased.
Can Pipelines Relieve the Pressure?
Looking ahead, the energy sector will continue to be the biggest driver of Turkmenistan's economic prospects. Accordingly, the government has prioritized projects intended to help diversify the country's energy export markets as a means to lessen its reliance on often-problematic traditional buyers.
One of these projects is the Turkmenistan-Afghanistan-Pakistan-India pipeline, which is designed to transport natural gas from the Caspian Sea across the eponymous countries. But the project — which has been in discussion since the 1990s — has had a tough time getting off the ground. A groundbreaking ceremony was held for the pipeline at the end of 2015, but progress has been hampered by security concerns in Afghanistan and problems in getting the $10 billion needed for construction. In fact, a Pakistani energy official revealed on Jan. 30 that financing expected to have been cleared by December has been delayed until June, pushing back the commissioning of the project from 2019 to 2020. As of now, work on the pipeline has been done only within Turkmenistan, highlighting concerns about the project's viability.
Another potential energy diversification project is the Trans-Caspian pipeline, which would ferry Turkmen natural gas to Azerbaijan across the Caspian Sea and perhaps connect with lines allowing onward export to Europe. This project, however, is subject to a pending maritime delimitation agreement among the Caspian Sea's littoral states that Russia and Iran both have an interest in blocking. The prospects of the Trans-Caspian pipeline, therefore, are similarly uncertain. So for a while, Turkmenistan's ability to maintain — and expand — its natural gas exports and accompanying revenue will be significantly constrained.
Hints of Discontent
The growing economic pressures in Turkmenistan come amid heightened security threats. Protests in the country are typically quite rare, given the lack of a coherent opposition and the highly centralized government backed by a pervasive security apparatus. But worsening socio-economic conditions have made the government more vulnerable to dissent. On Dec. 19, Radio Azatlyk reported that a shortage of cigarettes in the Dasoguz region had sparked small protests, resulting in a brawl between residents and local police. The reports suggested that similar incidents had been taking place in other parts of the country, though the state-run Turkmen media usually obscure visibility into these matters.
Turkmenistan is also vulnerable to threats from without, particularly along the country's vast border with Afghanistan. There have been signs of a growing presence of militants affiliated with the Islamic State and other groups in northern Afghanistan, and some Central Asian officials say as many as 10,000 fighters are operating in the region. Though these officials have an interest in exaggerating the militant threat as justification for crackdowns on their political rivals, attacks against border guards have occurred, including in provinces bordering Turkmenistan.
Coupled with the country's tenuous economic situation, these threats have compelled Berdymukhamedov to tighten his grip on power. Last year, changes to Turkmenistan's Constitution expanded presidential terms from five to seven years and removed the age limit of 70 years for a sitting president, essentially paving the way for Berdimukhammedov to "rule for life" as his predecessor did. But although the Turkmen leader appears unlikely to face much in the way of an open political challenge in the years to come, the consequences of recent tests to Turkmenistan's strategic outlook are much less certain.
Editor's note: The information on natural gas exports has been updated for clarity and the data on currency devaluation has been corrected.