#10 - JRL 7170
May 7, 2003
Swapping Turkmen Gas for Citizens
By Yulia Latynina
In mid-April, Gazprom signed a 25-year contract to buy natural gas from Turkmenistan. In exchange, President Vladimir Putin acquiesced to Turkmen President Saparmurat Niyazov's demand to end the 10-year-old dual citizenship agreement between the two countries.
Niyazov interpreted this concession as giving him carte blanche to pursue his own agenda. On April 22, he signed a decree ordering the roughly 150,000 residents of Turkmenistan who hold dual Turkmen-Russian citizenship to choose within two months which passport they want to keep.
On April 23, police began removing Russian citizens with dual citizenship lacking a valid Turkmen visa from airplanes in Turkmenistan. And on April 25, a crowd in the capital Ashgabat burned a portrait of Putin and trampled a Russian flag.
Niyazov is in absolute control of Turkmenistan, including its state-owned gas and cotton industries. Khudaiberdi Orazov, currently a leader of the Turkmen opposition, used to head the country's Central Bank. When $3 billion in revenue from cotton sales went missing at one point, Orazov asked the Turkmen leadership what had happened. By his own account, he was presented with documents showing that the cotton had been given to middlemen who had promised to build something with the money. Needless to say, nothing was ever built.
To get a sense of Turkmenistan today, imagine Stalinist Russia. But where Stalin robbed the people blind to fund his dreams of massive industrialization, the Turkmen leadership moves its ill-gotten gains abroad. Under Turkmenbashi, hundreds of local schools and hospitals have been closed. At the same time, Islamist schools have opened; after all, the Taliban were one of the few regimes in the world that Turkmenistan had a good working relationship with. No sooner had the Americans taken Kabul, however, than Niyazov ordered the arrest of National Security Committee Chairman Muhammed Nazarov. He was accused of trading in narcotics on a scale comparable to the country's annual budget. The trial completely cleared Niyazov of suspicions that he was personally involved in the drug trade, although it remained unclear what the the cash-poor Taliban were using to pay Turkmenistan for goods and fuel.
The same thing has happened in Turkmenistan that happened earlier in the Congo and Nigeria. When the colonial regime departed, local rulers proved incapable of anything but arrests, theft, personality cults and denouncing their former colonial rulers. But there is an important difference between Turkmenistan and the Congo: Turkmenistan depends on Russia to this day. Its main source of revenue, natural gas, flows through Russian pipes. You'd think this would give Russia the right to dictate its terms to Turkmenbashi. But you get the impression that Niyazov is calling the shots.
Why? Probably because of the special nature of the companies that sell Turkmen gas. Under the new contract signed in Moscow last month, large-scale deliveries of Turkmen gas to Gazprom will not begin for several years.
Until 2006, the bulk of Turkmen gas sold to Ukraine will be delivered by an obscure shell company called Eural Transgas. The company was registered on Dec. 5, 2002, in the Hungarian village of Csabdi, with just $12,000 in charter capital. Eural TG was founded by Israeli citizen Gordon Zeev and three Romanians. Some press reports have linked suspected Russian organized crime boss Semyon Mogilyevich to the company as well. According to analysts at Hermitage Capital Management, Eural TG stands to rake in anywhere from $320 million to $946 million per year for its services.
The creation of Eural TG was probably an economic necessity. It's no secret that the Kremlin views Gazprom as an illicit cash cow for the party of power. But the Eural TG deal destroys Russia's pretensions to leadership in the region. A country willing to swap 150,000 of its citizens for natural gas is unworthy of a leadership role. A country that abandons 150,000 of its citizens so that a company registered in the village of Csabdi can make a couple of hundred million dollars is beneath contempt.
Yulia Latynina is host of "Yest Mneniye" on TVS.