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It is midday in the desert capital city of Ashgabat and out on the street the temperature is 40C. The marble-covered apartment blocks and golden-domed palaces shimmer like a mirage in the heat. It is too hot to venture outside for long and so the city is eerily silent, save for the rustling desert wind and the faint sound of clunking hammers at work on yet more new buildings.

Ashgabat, which nestles on one side of the Kopet Dag mountains – Iran is on the other side – has been a city in flux for more than a decade. Each year more of its old Soviet-era neighbourhoods are torn down and rebuilt to look much like a lower-rise version of Dubai. But over the past year there have been other changes. The old portraits of President Saparmurat Niyazov (aka Turkmenbashi the Great, Leader of all the Turkmens, President for Life, and Architect of the Golden Age of Turkmenistan) have been replaced by a new face.

In December 2006, Niyazov died suddenly, after 21 years in power, bringing to an abrupt end one of the most peculiar personality cults of modern times. He had not nominated a successor but out of the void stepped Gurbanguly Berdymukhamedov, the former health minister and deputy prime minister, who won a hastily organised election in which the five other candidates – all of them members of the ruling party – did not bother to campaign.

Despite concerns over the legitimacy of his election, the appointment caused excitement in Washington, Moscow and Brussels. Here is a country estimated to have the fourth largest natural gas reserves on the planet but which was virtually closed to the outside world. When Berdymukhamedov made speeches about a new era of openness and reform, investors around the world began to dream of billion-dollar opportunities.

Today, the country remains closed to ­foreign journalists, so it is hard to know what, if anything, has really changed. Monocle slipped in unofficially, and travelled from the dusty outpost of Mary on the Murgab River near Afghanistan to the Caspian city of Turkmenbashi (it was formerly called Krasnovodsk, but, like theatres, palaces, villages and even the month of January, was renamed after the long-serving leader).

At first sight, you might be forgiven for not realising Niyazov has gone from power. In many town squares there are glistening gold statues of the man. But almost all of the sombre portraits on government and school walls seem to have been replaced by portraits of Berdymukhamedov. And some of the more ostentatious Turkmenbashi statues have been removed from the centre of Ashgabat and positioned in the suburbs.

Watching the news in our hotel each night, the lead item is usually a report on how Berdymukhamedov has spent his day – and wherever he goes he seems, like Ronald McDonald, to be constantly surrounded by a crowd of cheering children waving balloons.

Most of the five-million strong population do not seem to be dying of poverty or hunger. On the orderly streets people busily shop and go to work, and even make modest attempts at having fun. Monocle watched women ice-­skating and young people riding on dodgems at the “World of Turkmen Fairy Tales”, a gloomy fairground known by the locals as “Disneyland”. But political discussions in public are not an option.

“Over a year has gone by and not much has changed, except the face on the pictures,” says one Turkmen businessman with a sigh, while sipping shots of vodka shared in the privacy of his neat two-bedroom apartment in Ashgabat. Outside, shops are open until late at night, and long queues of colourfully dressed Turkmen women wait at bus stops. “All my friends are hoping that we are going to open up more,” he says.

Berdymukhamedov has overseen some basic reforms in state education and health service. And he has even talked about the need for privatisation of some areas of the almost entirely state-controlled economy. In June this year, the state telecoms service said it would start connecting households in Ashgabat to the internet. Previously the web has only been available to those working for international companies.

But there is still a suspicion among the public that Big Brother is watching. In the first internet cafés that opened in Ashgabat last year – there are still only four – there are just a handful of computers and a giant portrait of Berdymukhamedov overlooking the whole proceedings. Turkmens must give their passport details to be allowed online, and access is still barred to many sites.

“It’s difficult to tell if this is real reform or if he is in the first stages of becoming another Niyazov,” explains Tom Mayne, a campaigner with Global Witness. Authoritarianism is inherent in the system (of which Berdymukhamedov and all Turkmen politicians are a product), according to John MacLeod, a ­regional expert at the Institute for War and Peace Reporting. “If there’s any sign of weakness in the elite, the whole system becomes vulnerable,” says MacLeod.

Despite the vast gas reserves in the country, and the billions of dollars paid to Turkish construction companies to build Ashgabat, two specialists who work for a state oil company, with higher education and over a decade’s experience each, tell us their salaries are just €80 a month.

But their daily outgoings are also minimal. Gas, electricity, heating and water are all provided free by the state. At the beginning of 2008, 1 litre of petrol cost €0.01. Under reforms aimed at slowly easing Turkmenistan towards a market economy, the price rose in April to around €0.12 a litre. Still, a flight across the country on a new-ish Boeing 717 costs less than €10 – and that’s the inflated “foreigner’s price”.

International companies have raced to get involved in the Turkmen gas sector. “Large numbers of oil and gas executives have made the trip to Ashgabat,” says Julian Lee, senior analyst at the Centre for Global Energy Studies in London. “But so far, there has been little in the way of contracts signed, except for with the Chinese, who have signed a PSA [Production Sharing Agreement] linked to building a pipeline to China.”

Currently, the majority of Turkmen gas goes through Russia, but on a visit to the US last September, erdymukhamedov insisted a trans-Caspian pipeline, which would bring gas to Europe, bypassing Russia, was “still on the agenda”.

Western companies are also in negotiations to help the Turkmens exploit their gas and oil fields. “Within two years or so, PSAs will probably be signed with western majors on Caspian blocks,” says Global Witness’s Tom Mayne. He warns that the profits of such deals are unlikely to reach ordinary people, though. “Previously, Niyazov was keeping the money in ­foreign accounts, which he ­controlled and used to fund the ­personality cult. There is no sign that this has changed.”

Investors in other less lucrative ­sectors are holding back for the moment, aware of the crippling bureaucracy and almost total absence of a secure legal framework. It is widely understood that unless you are the size of Siemens (which sent a ­representative to meet Berdymukhamedov in June) and can get an audience with the president, it is probably not worth ­attempting to do business in ­Turkmenistan just yet.

Those who do must explain how they are able to do business with a country that Reporters Without Borders places 164th out of 167 in media freedom (satellite TV is available but few people speak English and most end up watching Russian gameshows). Human Rights Watch says there are “hundreds, possibly thousands” of people in prison after unfair and closed trials. Although, with the demand for energy at an all time high, it will be tempting for both oil and gas giants and their governments to try to ignore these issues.

A more decisive step towards ­normality and integration with the rest of the world will be some time coming. There are “many strong indicators” that the president and other top government officials are serious about carrying out political and economic reforms, says one western diplomat in Ashgabat. “However, it’s another matter whether they ­actually know what that entails or have the capacity to do so,” he adds.

The names of the writer and photographer have not been used in this article to protect the anonymity of the people interviewed

It’s no holiday

The ramshackle bungalows that used to dot the shoreline have been flattened and already the concrete shells of multi-storey buildings have been erected. The first stage in the €600m, 10-year project to turn the village of Avaza on the Caspian coast into a tourist paradise with ­60 high-rise hotels and a myriad of leisure facilities is underway.

But quite how successful the project will be remains to be seen. The Turkmens want to attract foreign investment to the resort, but sources in Ashgabat say that so far construction is being done by Turkish companies on government contracts. “Most diplomats here see this as a vanity project that’s unlikely to succeed,” says one foreign diplomat in Ashgabat.

Currently the only tourists are those that have been granted a visa if they travel as part of a guided tour. “There are supposed to be plans to liberalise the visa system, but nothing concrete has been announced yet,” says the diplomat.

Russia vs the West

Where will the Turkmen turn?

Under President Niyazov, Turkmenistan was so isolated that Russia had little interest in the country, but now it could be one of the major beneficiaries from Berdymukhamedov’s drive to open the country up.

The Russian influence is often put down to the Kremlin’s willingness to turn a blind eye to human rights abuses. But more importantly, both countries have a common Soviet past and the Turkmen elite are fluent in Russian.

Even if President Dmitry Medvedev’s visit to Ashgabat in July saw no firm deals being struck on energy, Russian businesses are sniffing around for opportunities. For example, in late 2005, telecoms giant MTS was allowed to set up its network in the country to rival the state-run network, and now reaches as many as 600,000 subscribers.

As for western companies, those best placed to succeed are the Americans, backed up by their sizeable embassy in Ashgabat, and the intrepid Germans, who developed the European Union’s Central Asia strategy.

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