Turkmenistan

Politics:

• Analysis

  Turkmenistan politics: Quick View - Media law will not improve access to in

  Event

  Turkmenistan's president, Gurbanguly Berdymukhamedov, announced on January 7th that a new law on mass media had come into effect.

  Analysis

  Mr Berdymukhamedov approved the legislation on January 3rd. The law is designed to guarantee the freedom of the media. It clarifies who may set up a mass media organisation, which, aside from state bodies, includes political parties, public associations and any citizen of Turkmenistan who is 18 years of age or older. In addition, the legislation states that: "No one can prohibit or prevent the media from disseminating information of public interest".

  Despite such lofty pronouncements, the law will not make any difference to media and social freedoms in Turkmenistan. The authorities have made a number of similar promises in the past, which have not led to any improvements in local access to information. Over the forecast period, the state will continue to restrict severely access to both print and Internet media sources. Foreign governments and non-governmental organisations (NGOs) have long been critical of the heavy media censorship in Turkmenistan. In an annual survey by Reporters Without Borders, an NGO that supports freedom of the press and information, Turkmenistan ranks 177th out of 179 countries surveyed, above only North Korea and Eritrea, making its stance on the media one of the most restrictive in the world. In addition to its pervasive control over the media, the authorities also ban citizens' access to a number of Internet sites, including social networking sites such as Facebook and Twitter. Previously, email accounts have been shut down ahead of important national events, such as the celebrations for the Turkmen Flag Day (February 19th).

  January 08, 2013

• Background

  Turkmenistan: Key figures

  Gurbanguly Berdymukhamedov

  Mr Berdymukhamedov was one of the longest-serving ministers in Saparmurad Niyazov's cabinet, but his accession to the presidency in late 2006 was nevertheless unexpected, given the absence of an obvious successor to Mr Niyazov. A dentist by training, and health minister until his appointment as acting president, the 50-year-old Mr Berdymukhamedov survived the frequent ministerial reshuffles that characterised Mr Niyazov's presidency. Whether this was because he was not considered a threat to Mr Niyazov is unclear, but his ascent to power in December 2006 was so smoothly co-ordinated that he must have won broad support among the political and security elite. His appointment as head of the commission overseeing Mr Niyazov's funeral appeared to secure Mr Berdymukhamedov's status as president-in-waiting, as did his public endorsement by the head of the Central Election Commission. Mr Berdymukhamedov went on to win a presidential election in February 2007, easily beating the other five candidates. His election campaign promised policy continuity with the Niyazov era while nevertheless pledging certain shifts in policy in sectors such as education and social security. Although he has started to fulfil these commitments and has demonstrated a greater willingness to engage with foreign partners, particularly in the hydrocarbons sector, Mr Berdymukhamedov has retained several features of the Niyazov presidency, including the frequent reshuffling of senior officials in order to reinforce presidential control over the political scene.

  Boris Shikhmuradov

  Mr Shikhmuradov, once a prominent opposition figure, is currently serving a life sentence in prison. For much of the 1990s he was one of the most high-profile figures in Turkmenistan. Mr Shikhmuradov served as foreign minister and then as Mr Niyazov's special envoy on Caspian affairs. He is said to have strong connections to the Russian energy sector and intelligence services, dating back to his time as a journalist in Moscow in the Soviet era. Until his demotion to the position of ambassador to China in 2000, he was regarded by many observers as a possible successor to Mr Niyazov. Mr Shikhmuradov joined the Moscow-based opposition in exile in November 2001, where he sought to gain international support for the removal of Mr Niyazov by democratic means. Mr Shikhmuradov returned secretly to Turkmenistan in late 2002, but turned himself in to the authorities after an alleged attempt on Mr Niyazov's life. Subjected to a summary show trial, he acknowledged his role in the incident, in what appears to have been a forced confession. Mr Shikhmuradov received a 25-year prison sentence, which was subsequently extended to life imprisonment. Since then there has been little word of his wellbeing.

  August 08, 2008

• Structure

  Turkmenistan: Political structure

  Official name

  Turkmenistan

  Legal system

  Turkmenistan became a constituent republic of the Soviet Union in 1924, and became independent in December 1991; a new constitution came into effect in May 1992

  National legislature

  Under constitutional amendments in September 2008, the Khalk Maslakhaty (People's Council) was dissolved and its powers transferred to the unicameral Mejles (parliament). After a parliamentary election in December 2008 the number of deputies in the Mejles, who are elected in single-mandate constituencies, rose from 65 to 125

  Electoral system

  Universal suffrage over the age of 18

  National elections

  February 12th 2012 (presidential); December 14th 2008 (parliamentary). Next elections: February 2017 (presidential); December 2013 (parliamentary)

  Head of state

  The president, Gurbanguly Berdymukhamedov

  National government

  Cabinet of ministers, appointed and headed by the president; the current government was formed in February-March 2012, but has had many small reshuffles since then

  Main political parties

  In December 1991 the Turkmen Communist Party changed its name to the Democratic Party of Turkmenistan, which has become the party of power. A new political party, the Union of Industrialists and Entrepreneurs, was formed in August 2012 and will represent the interests of business owners. Undoubtedly, the creation of the party was sanctioned by Mr Berdymukhamedov. The presidential administration has also indicated that the establishment of an agrarian party is desirable. All genuine opposition parties are banned

  Cabinet of Ministers

  Chair: Gurbanguly Berdymukhamedov

  Deputy prime ministers:

  Rashid Meredov (also foreign minister)

  Annageldy Yazmuradov

  Sapardurdy Toyliyev

  Rozmurad Seyihuliyev

  Byagul Nurmyradova

  Nazarguly Sagarliyev

  Baimyrat Khojamuhammedov

  Akmyrat Yegeleyev

  Hojamuhammet Muhammedov

  Key ministers

  Agriculture: Rejep Bazarov

  Construction: Jumageldi Bayramov

  Defence: Begenc Gundogdiyev

  Economy & development: Bashimmyrat Khojamammedov

  Education: Gulsat Mammedova

  Energy: Myrat Artykov

  Finance: Dovletgeldi Sadikov

  Internal affairs: Isgender Mulikov

  Justice: Begenc Caryyev

  National security: Yaylim Berdiyev

  Oil & gas industry & mineral resources: Kakageldi Abdyllayev

  Textile industry: Saparmyrat Batyrov

  Water economy: Seyitmurad Taganov

  Central Bank governor

  Tuvakmammet Japarov

  January 18, 2013

Economy:

• Background

  Turkmenistan: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	21.0	19.9	16.9	16.6	11.5
  Industry	44.6	40.8	40.6	39.3	40.8
  Services	34.4	39.3	42.5	44.1	47.7
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  We estimate that exports of goods and services account for more than 90% of GDP by expenditure, a share that has risen sharply since the later years of the 1990s, following the resumption of gas exports to Russia and Ukraine. Imports are also estimated to have risen, to around 90% of GDP, owing partly to growth in capital-intensive sectors such as construction. However, gross fixed investment has fallen as a share of GDP in recent years, partly reflecting the lack of investment in pipeline infrastructure. Private consumption is believed to have stagnated, as incomes have failed to keep pace with rising prices, and difficulties in the public finances have resulted in government consumption falling slightly as a share of GDP.

  August 08, 2008

• Structure

  Turkmenistan: Economic structure

  Economic structure: Annual indicators

  	2007a	2008a	2009a	2010a	2011a
  GDP at market prices (Manat bn)	27.0	43.7	41.8	48.7	60.0
  GDP (US$ bn)	12.7	17.0	14.7	17.1	21.1
  Real GDP growth (%)	11.6	9.8	-8.0	6.0	10.0
  Consumer price inflation (av; %)	6.3	14.5	4.0	10.0	12.0
  Population (m)	5.0b	5.0b	4.9b	4.9	5.0
  Exports of goods fob (US$ m)	9,114b	11,786b	8,946b	10,551b	14,776
  Imports of goods fob (US$ m)	-3,780b	-5,363b	-8,071b	-8,326b	-9,604
  Current-account balance (US$ m)	3,564b	2,689b	-2,838b	-1,376	1,005
  Foreign-exchange reserves excl gold (US$ m)	13,461	14,837	16,873	17,568	19,401
  Exchange rate (av; estimated market) Manat:US$	2.1	2.6	2.9	2.9	2.9
  Exchange rate (av; official) Manat:US$	1.0c	2.3c	2.9c	2.9c	2.9c
  a Economist Intelligence Unit estimates. b Actual. c In January 2009 the manat was redenominated by 5000.

  Download the numbers in Excel

  Origins of gross domestic product 2008	% of total	Components of gross domestic product 2008	% of total
  Industry	53.7	Private consumption	55.5
  Agriculture & forestry	12.3	Public consumption	8.3
  Services	34	Gross fixed investment	6.5
  		Net exports	29.7
  Principal exports 2001	% of total	Principal imports 1999	% of total
  Gas	57	Machinery & equipment	60
  Crude & refined oil	26	Food products	15
  Cotton fibre	3
  Textiles	2
  Main destinations of exports 2010	% of total	Main origins of imports 2010	% of total
  China	9.0	Turkey	15.1
  Turkey	3.3	Russia	9.5
  UAE	2.3	China	6.9
  Afghanistan	2.0	UAE	5.8

  Download the numbers in Excel

  Download text file (csv format)

  October 01, 2012

• Outlook

  Turkmenistan: Country outlook

  Turkmenistan: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Turkmenistan's president, Gurbanguly Berdymukhamedov, was elected for a second term in February 2012. The Economist Intelligence Unit expects him to remain in power throughout the 2013-14 forecast period. Only limited progress towards democratisation is expected in this period. The entrance of new parties into the political arena will not change the status quo, and will add only a veneer of democracy. Foreign policy will continue to move gradually away from its focus on Russia as stronger ties with countries such as China and Iran are pursued. Chinese investment will focus particularly on the energy sector. Any move away from statist economic policies in 2013-14 will be gradual and limited to the non-hydrocarbons economy. The business environment will remain extremely difficult for foreign investors. We estimate real GDP growth at around 7% in 2012. We forecast an acceleration in 2013-14 to above 8%, supported by rising gas exports to China, robust private consumption and expanding public investment. The surplus on the current account is likely to have grown in 2012. High gas prices and rising exports will keep the surplus rising over the forecast period, to an annual average of around 6% of GDP.

  DOMESTIC POLITICS: In February 2012 Mr Berdymukhamedov was re-elected president, in a process that was criticised by the international community for being neither free nor fair. His presidency has not brought about any meaningful improvements in political, social or media freedom, and the economy remains dominated by state-owned monopolies. His sponsoring of a new law promising greater media freedom, which was passed in early January 2013, is unlikely to reduce state interference in the press or improve public access to information. The incumbent's survival in office will depend on rewarding officials and balancing competing interests. Since 2010 Mr Berdymukhamedov has shown an increasing interest in developing the party system, and in January 2012 parliament approved legislation that enabled the establishment of political parties and fleshed out the role they would play in the political system. In August 2012 a new party, the Union of Industrialists and Entrepreneurs, entered the political scene to compete against the Democratic Party of Turkmenistan (previously the only registered party since independence). With this step, it is possible that the president wants to allow some members of the elite to have a greater voice in the political system, albeit within a constrained framework, perhaps as a way of widening the political base of the regime, and in this way helping to stabilise it. Nonetheless, given the tight control that the Berdymukhamedov administration exerts over all aspects of the political, social and economic spheres, the founding of the new political party is unlikely to allow any substantive progress on democratisation in Turkmenistan. Turkmenistan looks well insulated from the wave of political democratisation that swept the Middle East and North Africa (MENA) in 2011. The maintenance of an extensive subsidy system for the population reduces social discontent, and there seems little prospect of radical Islam gaining a foothold. The authorities' control over political, media and religious freedoms is much tighter than in MENA, which curbs the potential for upheaval. International groups frequently highlight the lack of media freedoms and the limitations on freedom of expression. The government reacts harshly to any criticism and strongly denounces any negative publicity. Crucial to maintaining domestic stability will be ensuring the continued flow of gas exports, and hence foreign-exchange inflows, which underpin patronage and subsidies. According to the Central Commission for Elections and Referendums, in 2012 Mr Berdymukhamedov won 97% of the vote on a turnout of 96%. The remaining 3% of the vote was divided between seven "virtual" opposition candidates, most of whom were closely linked to the state apparatus. Restrictions on independent foreign observers prevented them from taking part in the electoral process. The next parliamentary election is due in December 2013, but the new business party is likely to obtain only token representation in parliament, and will not attempt to hold the government to account.

  INTERNATIONAL RELATIONS: Foreign policy will continue to shift away from an overwhelming focus on Russia as more diversified hydrocarbon export routes raise the importance of ties with China and Iran, eventually Europe, and perhaps also Pakistan and India. Nonetheless, ahead of a meeting of the Commonwealth of Independent States (CIS; of which Turkmenistan is only an associate rather than a full member) in Ashgabat, the Turkmen capital, in December 2012, Mr Berdymukhamedov said that developing co-operation with the CIS members was his country's priority. This could mark a departure for the isolationist state, but so far no concrete progress has been made. Mr Berdymukhamedov has maintained that Turkmenistan is open to foreign investors. This is mainly because the country lacks technical expertise in important areas. China started importing Turkmen gas through the Central Asia-China pipeline in late 2009, with a new agreement in November 2011 raising planned supply levels further, to 65bn cu metres. China is also providing substantial loans for the development of gas production. The opening of a second pipeline to Iran in 2010 creates the potential for Iranian gas purchases to increase, although they could be impaired by the intensification of economic sanctions on Iran from the West. In the second half of 2012 reports emerged of a disruption of gas flows to Iran, supposedly because of a price disagreement. This would have had to last some time to have an impact on economic activity overall, but may be one factor behind the modest economic slowdown in 2012. The EU is interested in securing a share of Turkmen gas through transit across the Caspian Sea to Europe as part of its Southern Gas Corridor project. Mr Berdymukhamedov has expressed interest in supplying gas to Europe. Although negotiations remain under way, concrete progress remains slow, with greater enthusiasm on the European than on the Turkmen side. The signing of a Turkish-Azerbaijani agreement in June 2012 over the construction of the Trans-Anatolian pipeline, which will transit gas from the Caspian Sea through Turkey to Europe, renewed speculation concerning Turkmen support for a Trans-Caspian pipeline. However, an increase in Turkmen-Azerbaijani tensions over the disputed Serdar oilfield (also known as Kapaz) will result in any plans for the Trans-Caspian pipeline being put aside for the time being. In addition, construction of the pipeline will be complicated by the long-running issue of the delimitation of the Caspian Sea, which has yet to be resolved. Turkmenistan will continue to promote plans for the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Although the four countries signed an agreement on gas supplies through the pipeline in May 2012, funding issues and the unstable situation in Afghanistan pose sizeable risks, making the plan to build the pipeline by 2018 appear unrealistic.

  POLICY TRENDS: Turkmenistan is to a large extent isolated from the direct effects of turbulence on global financial markets and the euro zone crisis. However, it is affected by price movements in international commodity markets. The state retains a dominant role in all sectors, and continues to rely on subsidies, price controls and the free provision of utilities. In early 2013 the government began a limited privatisation of state assets, excluding the hydrocarbons sector. Monetary policy remains rudimentary and the public finances are opaque. Following his re-election, Mr Berdymukhamedov reiterated his goal of pushing ahead with industrialisation, focusing on chemicals, energy and higher value-added operations. Diversification of energy markets will be a central element of this strategy. The authorities are also taking small steps to increase the attractiveness of Turkmenistan to investors, and to provide more scope for small- and medium-sized enterprises. Nonetheless, we expect that the business environment, particularly outside of the natural resources sector, will remain very difficult for foreign investors to penetrate. Over the forecast period investment in the oil and gas sector will continue to rise. China in particular will remain keen to increase its access to Turkmenistan's energy reserves. Field service contracts have also been concluded with South Korea and the United Arab Emirates for the development of onshore gas reserves. In addition, the authorities are beginning to conclude production-sharing agreements (PSAs) to develop offshore gasfields in the Caspian Sea. However, the authorities' unwillingness to conclude PSAs for onshore fields presents an impediment to investment. Official statistics show state budget revenue as 39.5 percentage points above target and expenditure as 4.6 percentage points below target in January-September 2012. They show revenue rising by almost 41.5% and spending rising by 29.7% compared with the first nine months of 2011. It remains difficult to take at face value the government's exemplary budgetary story, but fast growth in gas sales will have seen public income expand quickly. Following a modest deficit in 2010, we estimate the return to a small state budget surplus in 2011, and a further increase in 2012. The budget plan for 2012 envisaged a small deficit, but was based on conservative revenue assumptions. Despite good prospects for revenue growth from increased gas sales and high gas prices, growth in the official public finances surplus could be kept subdued by ongoing commitment to public investment and improving the living standards of the population, in part to maintain a level of political support for the regime. We therefore forecast that the surplus will rise only modestly over the forecast period, averaging just above 2% of GDP in 2013-14. Regulatory improvements to assist financial sector development continue. According to the IMF, the money supply grew rapidly in 2011, which ties in with the view that inflationary pressures are likely to have been much stronger than officially indicated.

  ECONOMIC GROWTH: Real GDP grew by 14.7% in 2011, according to the State Statistics Committee, up from a reported 9.2% in 2010. At end-2012 the president claimed that economic growth had slowed modestly in January-November, to 11.1% year on year. However, the reliability of official data is questionable, and official economic data appear to exaggerate growth. We estimate real GDP growth for 2012 at around 7%. The robust rise in economic activity in 2012 was driven by similar factors as that in 2011: high international gas prices, as well as fast expanding gas production and gas sales to China. By boosting government revenue, this has allowed for the continued growth of state spending on investment and wages, as well as on subsidies to households and firms. In turn, this has supported the development of domestic demand, along with construction, retail trade and transport. The rapid build-up of hydrocarbons capacity and infrastructure that this strategy allows will support growth in the forecast period, as will strong Chinese growth. Although the global price of natural gas is expected to fall in comparison with 2012, it is set to remain high in 2013-14 by the standards of the recent past. At the same time, the government will continue to spread some of the gas wealth to the population in order to sustain a degree of political support. Although prospects for further growth in gas exports to China remain solid, Iran has implied that it does not wish to raise import levels soon. In the second half of 2012 reports suggested that Turkmenistan's gas supplies to Iran had been reduced owing to a dispute over price. In 2013 we expect another shallow economic contraction in the euro zone, of 0.2%. This could affect economic growth in Turkmenistan through its impact on markets such as Turkey, an important trading partner. Nonetheless, 2012 saw the confirmation of a significant increase in Turkmenistan's natural gas reserves, to 24.4bn cu metres, according to BP (UK), almost double the previous estimate. This and the coming on stream of the giant Galkynysh gasfield in late 2013 or 2014 should allow the realisation of the government's ambitious gas production and export goals, boosting economic growth in 2014. We, therefore, forecast an acceleration in GDP growth to an average of just above 8% in 2013-14.

  EXTERNAL ACCOUNT: The rapid rise in gas earnings in 2011 is estimated to have raised the current account back into a modest surplus, and it lifted further in 2012. A continuation of this broad pattern will see the surplus rise in subsequent years, with perhaps a more rapid increase in 2014 once the Galkynysh field comes on stream. We forecast that the current-account surplus will average around 6% of GDP in 2013-14. Gas exports will remain the main driver of exports. Transit trade will provide only limited services credits, and Turkmenistan will continue to rely on imported services in sectors such as construction and hydrocarbons. An expected increase in investment will result in significant growth in imported services, and the sizeable services deficit will therefore expand.

  January 21, 2013

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Country Briefing

Total area

488,100 sq km

Population

5m (2010; World Bank)

Main towns

Population in '000, beginning of 2004:

Ashgabat (capital): 828

Turkmenabat: 256

Dashoguz: 210

Climate

Continental desert; summer temperatures regularly reach 45-50°C

Languages

Turkmen is the state language; Russian is widely spoken in the towns and Uzbek is spoken by the ethnic Uzbek minority, mainly in northern Turkmenistan

Weights and measures

Metric system

Currency

Manat; redenominated in January 2009, at a rate of 5,000 old manat = 1 new manat

Time

Five hours ahead of GMT

Public holidays

January 1st (New Year's Day); January 12th (Memorial Day); February 19th (Turkmen Flag Day); March 8th (International Women's Day); March 21st-22nd (Spring holiday); May 9th (Victory Day); May 18th (Revival and Unity Day); August 19th (end of Ramadan); October 6th (Remembrance Day for the victims of the 1948 earthquake); October 26th-28th (Independence Day and Feast of Sacrifice); November 17th-19th (Kurban Bairam); December 12th (Day of Neutrality of Turkmenistan)

January 18, 2013