Turkmenistan Economics and Business

The Turkmen’s traditional way of life was nomadic animal husbandry. During the latter part of the 19th century and the first part of the 20th century this was radically changed. Intensive cultivation of cotton and petroleum extraction took over as dominant industries. Despite the fact that about 90% of the country’s total area is filled with desert, agriculture employs almost 50% of the working population (2010).

Turkmenistan GDP (Nominal, $USD) 2003-2017

According to COUNTRYAAH, Turkmenistan was also among the world’s ten largest cotton producers for a long time, but production declined in the 1990s. Cultivation takes place with high consumption of artificial irrigation and fertilizers. The ecological consequences are great. A drastic expansion of the artificial irrigation system has caused the water level in the Aral Sea to drop significantly and that salt deserts are spreading. Health injuries are registered in the population. In the far east, along Amu-Darja, silkworms and cotton are bred. Fruits and vegetables are also grown. Animal husbandry is also important. breeding of karakulsau, camels and horses.

Abbreviated as TKM by abbreviationfinder.org, Turkmenistan has large natural resources, especially of oil and gas. Major discoveries have recently been discovered in the Caspian Sea.

In counterbalance to the dependence of former Soviet republics, a gas pipeline was built for Iran. Another gas pipeline, opened in 2005, runs via Azerbaijan, Georgia and Turkey to the Turkish port city of Ceyhan. This opened up opportunities for extensive exports to the West. A project that has long been considered is a gas pipeline via Afghanistan to Pakistan, but this has been put on hold due to the security situation.

The industry includes petroleum refining, and petrochemical factories, manufacture of cotton, silk and wool products, cement etc. Turkmenistan is also well known for its production of beautiful rugs.

Berdymukhamedov wants to intensify industrialization with a focus on chemicals and gas. A key element of his strategy is to create greater variation in Turkmenistan’s energy markets.

Foreign Trade

The main export goods are gas, petroleum, cotton and electrical power. The main import goods are food and consumables, machinery and metal products.

Key trading partners are Ukraine, Iran, Russia, Turkey, China, USA and Germany.

The Turkmen authorities want to attract more foreign companies to the Caspian Sea’s extraction, mainly because of. the area’s high development costs and risk. Foreign investors, however, often face problems as countries around the Caspian Sea have not agreed on the division of the area. In addition, the investment climate is characterized by a complicated currency exchange system, heavy bureaucracy and strong government control.

Transport and Communications

The road and rail networks largely follow rivers and canals, that is along the Amu-Darja, the Karakum Canal and Murgab, and have a main direction from the southeast to the northeast. The main connection across the desert is over the city of Mery. Moreover, large parts of the country are inaccessible. There are approx. 23 500 km of road, most of which was paved. The Transcaspic Railway passes through the land from Turkmen Bashi (formerly Krasnovodsk) on the Caspian Sea, along the Karakum Canal, past Mary to Tsardshou at Amu-Darja, and on into Uzbekistan. From Mary, a sideline leads to Kushika at the Afghan border. A new railroad to Mashad in Iran was ready in 1996. Amu-Darja is the most important inland waterway. Turkmenbasi (formerly Krasnovodsk) is the most important port city. International Airport at Ashkhabad. The tourism industry is little developed.

Note: the capital city of Turkmenistan is Ashgabat with a population of 828,000 (UN estimate 2019). Other major cities include Turkmenabat, Tasjaouz, Mary.

Turkmenistan Economics and Business

Economy, energy and environment

The main economic resource of Turkmenistan is constituted by the vast reserves of hydrocarbons. The country has, in particular, proven gas reserves, second only to those of Russia, Iran and Qatar (24.3 trillion cubic meters, equal to 11.7% of the world’s proven reserves), which have allowed high growth rates., not even interrupted by the international economic crisis, thanks above all to Turkmenistan’s low exposure to international markets and prudent macroeconomic policies.

In the first fifteen years following independence, Niyazov’s isolationism and the lack of reliability shown towards foreign interlocutors have substantially cut the country out of the fierce international competition for access to Caspian and Central Asian energy resources, better known with the label of ‘New big game’.

However, Berdimuhammedov’s accession to the presidency coincided with an attempt to undo the two knots that hindered the full development of the national energy potential: lack of transport infrastructure for hydrocarbons and lack of foreign investments, blocked by an absolutely unfavorable climate. Against the backdrop of the growing attention paid to Central Asian producers from the main Euro-Asian energy markets – Euand China in the lead – the Turkmen president has signed contracts for the exploration and exploitation of the largest oil fields in the country with Western, Middle Eastern, Korean and Chinese companies. At the same time, it has intensified negotiations for the construction of pipelines that will break the substantial Russian monopoly on the purchase of Turkmen gas. Until 2009, almost all of the gas was exported to Russia, with a more limited quantity directed to Iran. This allowed Gazprom, Russia’s largest energy company, to pay a far lower price than that imposed on European customers for Turkmen supplies. The risks associated with the dependence on the sale of gas to Russia emerged clearly during 2009, when the suspension for nine months of exports to the north, output on an annual basis by 45%.

The most important interlocutor in the strategy of diversifying buyers and export routes was China. The inauguration, in December 2009, of the Central Asia-China Gas Pipeline (with a capacity of 40 billion cubic meters of gas per year, of which an expansion of up to 60 billion cubic meters is expected) between Turkmenistan and Xinjiang, through Uzbekistan and Kazakhstan, was the main achievement of Ashgabat’s energy strategy. The possibility of building a new section of the pipeline is also being studied, which would reach China via Uzbekistan, Tajikistan and Kyrgyzstan. Increasing Chinese investments – which could ensure GDP growth rates for the countryover 8% per year over the next two years – have ensured that China has become, starting from 2010, the main Turkmen economic partner in terms of trade and in line with a dynamic shared by several Central Asian republics.

In addition to strengthening the energy partnership with Iran, the Turkmen government is also engaged in two further infrastructure projects. The first consists in the construction of a trans-Caspian infrastructure (Trans-Caspian Gas Pipeline, Tcgp) capable of connecting Turkmenistan with the Azerbaijani coasts and, from there, with European markets. The Tcgp, the result of a US proposal dating back to the second half of the nineties, represents one of the priority objectives of the strategy of diversifying the energy supply channels of the EU.It is no coincidence that the European Union has recently intensified its dialogue with Ashgabat in view of the possible involvement of Turkmenistan in the gas supply of the Southern Corridor of the Union, which should run along a route between the western shore of the Caspian and Italy. The unresolved question of the legal status of the Caspian Sea and the traditional Russian opposition, however, constitute the greatest obstacles to the construction of the TCGP. Another objective of the Turkmen strategy of diversification of gas buyers is the construction of a gas pipeline to India, through Afghanistan and Pakistan (Turkmenistan-Afghanistan-Pakistan India pipeline, T api). A project frozen for over a decade due to the difficulties of transit in Afghan territory and the Indo-Pakistani tensions, Tapi returns to catalyze the attention of the countries involved, thanks to the support guaranteed by the United States and the Asian Development Bank (A db) with a view to stabilizing the Afghan theater.

About the author