Photo: iStock
Szabolcs Veres
14/07/2024 06:00
Central Asia, including Turkmenistan, is a completely unknown place for most people. Despite its mountains and deserts, the average European thinks of Turkmenistan only in terms of its dictatorial regime. However, the country plays a much more important role on the world's geopolitical stage.
Turkmenistan's geopolitical importance stems from its strategic location in Central Asia, which places the region, including Turkmenistan, at the crossroads of major powers and important trade routes. After the dissolution of the Soviet Union in 1991, Turkmenistan became an independent state, reclaiming its historical legacy while trying to navigate the complexities of modern geopolitics.
One of the country's most important geopolitical advantages is its extensive natural gas reserves. Turkmenistan is currently the country with the fourth largest natural gas reserves in the world. The country's wealth of resources makes it a major player in the global energy market, while also providing it with strategic partnerships, investment and influence from neighboring countries that play an important role in the global economy, such as China.
Most of Turkmenistan's territory is covered by desert. Agriculture and the export of energy sources (natural gas and oil) form the basis of the Central Asian country's economy. The most important sectors of Turkmenistan's agriculture include cotton cultivation, which is largely produced for the foreign market, and wheat cultivation, which is used to meet domestic demand. Although agriculture accounts for around 8-9% of Turkmenistan's GDP, industry employs almost half of the Central Asian country's workforce (around 1 million people).
Turkmenistan's GDP, one of the most landlocked countries in the world, has almost doubled in the last five years, from USD 46.7 billion to USD 81.8 billion. Exports of hydrocarbons account for almost 25% of the country's GDP, most of which is natural gas supplied to China. Asgabat is also supporting two other initiatives to bring the country's energy resources to foreign markets. One of these is the Trans-Caspian pipeline, which will transport natural gas to Europe, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. However, the latter project is currently facing serious financing and security obstacles.
In addition, the country's observer status at the World Trade Organization (WTO) strengthens its international position and offers the possibility of some trade liberalization and diversification of its country's economy.
The foundations of the Turkmen economy
Most of the territory of Turkmenistan is covered by desert. The basis of the economy of the Central Asian country is agriculture and export of energy resources (natural gas and oil). The main sectors of Turkmenistan's agriculture include cotton cultivation, most of which is produced for foreign markets, and wheat cultivation, which is used to meet domestic needs. Although agriculture accounts for nearly 8-9% GDP of Turkmenistan's, industry employs nearly half of the Central Asian country's labour force (about 1 million people).[i]
Exports of hydrocarbons account for nearly 25% of the country's GDP, most of which is natural gas shipped to China. Asgabat also supports two other initiatives to bring the country's energy resources to foreign markets. One is the Trans-Caspian pipeline, which will transport natural gas to Europe,[ii] and the other is the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. However, the latter project faces serious financing and security obstacles.
Turkmen-Chinese economic relations
In September 2013, relations between Turkmenistan and China were recognized by both countries as a strategic partnership. As a result, the Treaty of Friendship and Strategic Cooperation between China and Turkmenistan was signed in May 2014. Ashgabat thus became the latest country to join the other four Central Asian countries with which China has already entered into a strategic partnership.
For the Turkmen economy, natural gas exports to China are an important element of economic relations between the two countries. As China is one of the world's largest energy consumers[iii], ensuring a continuous supply of natural gas to the Asian country is also an important part of China's economic strategy. Since Ashgabat supplies a significant portion of Beijing's natural gas needs (30-40%) and China has invested significant sums in the natural gas pipeline system from Turkmenistan to China and in the development of related infrastructure, China also has some interest in ensuring the stability of Turkmenistan's economy.
The main commodities that China imports from Turkmenistan include natural gas, petroleum, polyethylene, sulfur, licorice products, cotton, and iodine.
The Beginnings of Turkmenistan's Foreign Policy: Neutral Turkmenistan
The concept of Turkmenistan's foreign policy as a neutral state is based on the fundamental provisions of the Constitution of Turkmenistan. The concept of "neutral Turkmenistan" determines the direction of the foreign policy strategy of the Central Asian country and its relations with other states and international organizations. The foreign policy of the Central Asian country is also a direct continuation of Ashgabat's domestic policy, which is determined by the legal status of permanent "positive neutrality" This "position", which Turkmenistan adopted voluntarily adopted, has been followed by the Central Asian country with minor and major changes since the presidency of Saparmurat Niyazov (1990-2006) with minor and major changes.
Foreign Policy under Gurbanguly Berdimuhamedov
After the death of President Niyazov, Gurbanguly Berdimuhamedov became president of Turkmenistan. He continued Niyazov’s domestic policy begun by his predecessor, but made intensive efforts to improve relations with neighboring countries. In 2008, Turkmenistan made a constitutional amendment stating that the basis of the country's foreign policy is "permanent neutrality," in addition to the concept of "Neutral Turkmenistan". Berdimuhamedov and the Turkmen leadership set the new foreign policy direction at that time, primarily to improve relations with neighbors with common historical and cultural roots, including Iran, Uzbekistan, Kazakhstan, Azerbaijan, Afghanistan, and India (this concept of Turkmenistan's foreign policy neutrality remained in effect until 2013).
For the Central Asian country's neighbors, this type of Turkmenistan's foreign policy thinking is evidence that, unlike in the past, Ashgabat intends to become a major player in the region's commercial, diplomatic, and economic initiatives in the future.
However, Turkmenistan's regional ambitions soon led to a conflict of interests in the diversified energy policy that is the driving force of the Turkmen economy. In 2016, Gazprom stopped importing Turkmen gas to Russia. Following Russia's withdrawal from the Turkmen gas market, economic relations between Ashgabat and Moscow deteriorated and the country's economic dependence on China increased even more as China gradually began to take the place of the retreating Russian gas giant in natural gas supplies.
in 2017, President Berdimuhamedov decided to take another step toward "neutrality" The Turkmen president declared that Turkmenistan's foreign policy for the next seven years would be based on multilateral cooperation with international organizations and other regional countries. In the wake of this (and probably also due to the revision of Moscow's earlier decision, which can be described as wrong, according to which Gazprom withdrew from Turkmenistan), relations between Ashgabat and Moscow took a positive turn again in 2019. Gazprom started buying Turkmen natural gas again, which became an important counterweight in Turkmenistan's foreign policy to reduce its unilateral dependence on China.
Foreign policy under Serdar Berdimuhamedov
After Gurbanguly Berdimuhamedov unexpectedly resigned from the Turkmen presidency on March 12, 2022, his son Szerdar Berdimuhamedov became the new president of Turkmenistan, having previously held the post of deputy foreign minister for a long time under his father's leadership.
In his first months in office, Serdar Berdimuhamedov continued the policy of "permanent neutrality" begun by Ashgabat and strengthened it until 2028.
One of the special elements of Turkmen-Chinese relations is that Turkmenistan is a kind of transport and trade corridor for China. In parallel, Turkmen foreign policy - taking advantage of Turkmen-Chinese relations - is trying to gain access for itself and Turkmen companies in the shadow of Beijing.
Another specific element of Turkmen-Chinese relations (especially under the presidency of Serdar Berdimuhamedov) is the strong military rapprochement between the two countries, which adds a military and security element to Turkmen-Chinese cooperation that goes beyond economic relations. However, since Russia has traditionally been a major military player in the region, Turkmen-Chinese military cooperation could become a serious source of tension between Ashgabat, Beijing, and Moscow.
The author is a researcher at the Eurasia Center
[i] In 2021, less than 2 million people were officially registered in Turkmenistan's labor market. In Turkmenistan, the labor market and employment includes people over the age of 15 who provide their labor for the production of goods and services at a given time or during a given period. This includes both the unemployed and people looking for their first job. However, not everyone who works is included in the Turkmen labor market. Unpaid workers, family members and students are often left out, and special rules apply to members of the armed forces. The size of the Turkmen labor market typically fluctuates throughout the year, depending on the need for seasonal workers. Turkmen nationals working abroad are also not included in the statistics.
[ii] Currently, there is a great opportunity for the realization of this project, as the energy shortage in Europe - the Russian-Ukrainian war and the Western sanctions against Russia, which also affect the market for energy sources - has clearly awakened European interest in the project.
[iii] At this point, it should be noted that China is aiming to phase out coal and natural gas and switch to renewable energy sources as part of its plan to become carbon neutral by 2060.
