Click here to download a PDF of this report Turkmenistan is facing a confluence of potentially crippling crises. Each one would be enough to worry Ashgabat, but collectively they are forcing the government to lock the country down internally and shut out foreign influence.

Grain Crisis

The grain crisis that has swept through the former Soviet Union has not spared Turkmenistan. According to the Turkmen government, the country is completely self-sufficient in grain production, with domestic consumption just under the 2010 production estimates of 1.6 million tons. However, the Turkmen government has been noted for manipulating population, energy and food statistics in the past. STRATFOR sources in the region have said Russian estimates of Turkmen grain production are at 800,000 tons — half the Turkmen claim — while U.S. Agency for International Development estimates put Turkmen grain consumption at more than 2 million tons. This disparity could create a massive grain crisis for the country. According to those same regional sources, Turkmenistan has longstanding problems with grain production and has heavily imported black-market grain and processed grain supplies from Russia and Kazakhstan — perhaps equal to half of Turkmenistan's needed supplies. But Russia is facing its own grain crisis and has ceased exporting grain altogether. Turkmenistan is still receiving black-market supplies from Kazakhstan, but the shortage from a Russian grain supply freeze could contribute to Turkmenistan's grain crisis. Sources in the region report that only the Turkmen capital, Ashgabat, is receiving full grain and processed grain supplies, since it is the only area where foreigners are prevalent and could witness a crisis. In the rest of the country, shortages have reportedly caused lines for grain to form hours before the markets open. Thefts from silos are being reported.

Energy Export Crisis

The grain crisis comes alongside a massive energy export crisis that has lasted for more than a year. Turkmenistan possesses some of the world's largest natural gas reserves, which, up to 2009, produced around 75 billion cubic meters (bcm) annually. However, in 2009, the pipeline system that transports the majority of Turkmenistan’s natural gas production to Russia ruptured. Even after the pipeline was repaired, Russia refused to resume importing Turkmen natural gas due to a glut of Russia’s own natural gas supplies. Russia’s logic was to curtail natural gas imports to keep from shutting down any Russian supplies going to Europe, which generate more money for Moscow than transiting Central Asian natural gas does. Currently, Turkmenistan sends 10 bcm of natural gas to Russia per year instead of the 50 bcm it sent prior to the pipeline rupture. Turkmenistan has diversified its exports and transit routes and is sending 5 bcm to China and 12 bcm to Iran in 2010. However, this still means Turkmenistan's natural gas exports have been cut by more than 50 percent. Turkmenistan will have an opportunity to increase its natural gas exports to China starting in 2011, but the contracts for increasing supplies to as much as 30 bcm rely on two things. First, Beijing has to contract supplies from the two other countries — Kazakhstan and Uzbekistan — that contribute to the pipeline system and are closer to China. Second, Beijing and Ashgabat must negotiate and agree to a suitable price for the latter's natural gas exports. Currently, Ashgabat is displeased with the price Beijing has proposed for the supplies. Turkmenistan has watched Russia sell its natural gas supplies to Europe for $350-550 per thousand cubic meters (tcm), while Russia used to purchase Turkmen gas for approximately $250 per tcm. According to STRATFOR sources in Ashgabat, Beijing has taken advantage of Turkmenistan’s lack of options for natural gas markets and has offered to pay only $100 per tcm. As the energy export crisis continues, Ashgabat may agree to such a low price, but doing so will not fix its other problem: its financial crisis.

Financial Crisis

Energy exports make up 50 percent of Turkmenistan's gross domestic product (GDP), while approximately 35-40 percent comes from cotton and the rest comes from "other sources" — allegedly including drug trade revenues, since the country is a transit state for drugs from Afghanistan. When Russia stopped importing natural gas from Turkmenistan in 2009, it cut the country's GDP in half. Since small amounts of natural gas exports have resumed, the country is currently without 25 percent of its budget for 2010. Turkmenistan has been looking for cash from other sources to make up for the shortfall. In 2009, China offered Turkmenistan a $4 billion loan, but STRATFOR sources say that the loan came with strings attached. Ashgabat was only allowed to use $1 billion of the loan to help stabilize the country during the crisis, while the other $3 billion was only to be used for Turkmenistan to purchase Chinese goods and services in the energy sector — which offered little relief during the crisis. China is offering to lend Turkmenistan another $5 billion, but it is unclear if that loan will have similar stipulations. Turkmenistan is also looking at Western energy companies to come into the country for large energy deals. Previously, Ashgabat was wary of any Western company coming into Turkmenistan. In the Turkmen government’s view, allowing foreign companies in begets foreign influence — something Ashgabat is firmly against. But as the financial crisis continues, Turkmenistan is trying to persuade Western firms, including Italy’s Eni and the United States' Chevron, TxOil and ConocoPhillips, to invest in the country. Ashgabat wants foreign investment to bring cash to the country soon, rather than over an extended period of time. However, Western firms are hesitant to conduct business in Turkmenistan since the government has constantly canceled contracts and nationalized projects over the years.

Government Response

With few options to alleviate any of these crises, Ashgabat has turned to its old method of handling problems in the country: clamping down on the population while inhibiting any foreign influence. According to source reports and leaks to Amnesty International, the government has not only restricted movement into and out of the country, but it has also restricted any movement between regions inside the country. The prohibitions on cross-regional transit are motivated by Turkmenistan's tenuous social structure composed of five distinct clans, each of which has, for the most part, control of its own region. The ruling clan in the government is the Teke clan from Ahal, which is the third largest in the country. The other two larger clans in the country — the Balkan clan and the Mary clan — have been kept out of the government because they are allowed to operate the country's financial centers. The Balkan clan runs energy revenues from its region, while the Mary clan supposedly controls the drug and cotton markets in its region. These clans will refrain from challenging the government in Ashgabat as long as this arrangement continues. (click here to enlarge image) However, with so many crises under way, the question is whether Ashgabat can continue to prevent social unrest — especially since the larger clans are being hit financially and are facing difficulties in feeding the populations of their regions. Turkmen President Gurbanguly Berdimukhammedov reportedly has ordered an increase of personnel in migration, border security, interior forces and local police in order to prevent potential cross-border movement and regional unrest. Berdimukhammedov also recently clamped down both on media inside the country and any media reporting to outlets outside the country. The Turkmen customs service is inspecting all imported and exported media and has eliminated much of the country's digital media. In addition, there have been recent personnel purges in television stations and in the Ministry of Culture. The Turkmen government is trying to prevent any word of the crises from leaving the country so as to prevent outside forces from using the crises to influence the country internally.

A Greater Concern

One country that would want to use the crises in Turkmenistan to gain greater influence in the country is Russia. Moscow has for years tussled with Ashgabat over the latter’s loyalty to the former in the post-Soviet era. Though Ashgabat has flirted with the West and Beijing, it has not committed to a relationship beyond small energy deals thus far. The break in energy exports to Russia would seem like an opportunity for Turkmenistan to solidify its relationship with the other two players; however, Ashgabat has yet to see any real help — either in energy or finance — from the East or the West. Russia could remedy these crises by resuming natural gas imports, though it would first have to cozy up to Turkmenistan. With the confluence of crises able to socially disrupt Turkmenistan, Russia could either help incite such disruption or clamp down on it. Russia has helped Ashgabat clamp down on security situations in the past by sending military equipment and soldiers when Turkmenistan’s borders were threatened. However, Moscow has a close relationship with the Mary and Balkan clans, so it could provoke the two groups into rising up against the government in Ashgabat or it could order them to stand down. Russia has already proven this year in Kyrgyzstan that it is willing to use social unrest to alter a country's political environment. Ashgabat is concerned that it could be next on Russia’s list, especially with so many crises — all of which could be worsened or relieved by Russia — affecting the country all at once.