Boston, 2 June 1998 (RFE/RL) -- The South Asian nuclear crisis seems certain to increase Turkmenistan's reliance on the decisions of the United States and Russia while limiting the republic's options in dealing with Iran.
In its isolation, Turkmenistan will now have to face the
fact that Pakistan no longer represents an attractive market
for Turkmen gas. The republic has been hoping for years that
a pipeline across Afghanistan would allow it to sell gas from
its huge Dauletabad field to Pakistan.
Until now, the biggest problem with the plan has been
Afghanistan's long civil war. But now regardless of whether
peace comes to Afghanistan, the project looks unlikely to go
ahead. As a result of its nuclear testing, Pakistan will be
unable to find financing for its portion of the pipeline.
Under U.S. sanctions law, the United States is required to
oppose lending by the World Bank, which was looked to as the
source of funds. Loan guarantees by the U.S. Export-Import
Bank are also barred by law.
India's earlier nuclear testing had already ended the
opportunity for cooperation on extending the line to New
Delhi, eliminating some major benefits of the plan. After the
response from Pakistan, that country's heavily indebted
economy will now come under further pressure from sanctions,
making it doubtful that it will be able to pay for imported
Turkmenistan is not the only country that will suffer the
loss of an important energy market. Iran has also been
counting on selling gas to Pakistan from its giant South Pars
offshore field in the Persian Gulf. But it is hard to see how
Iran's pipeline project can be undertaken on Pakistan's
territory now, unless Iran can finance the entire
development. Payment for the gas will also be problematic.
Although Pakistan needs increasing volumes of gas for
electricity, its rising military expenditures will take
precedence over all other demands until peace with India is
assured. Even if pipelines were built, neither Iran nor
Turkmenistan could afford to accept Pakistani goods in barter
The closing of the Pakistani gas market to both
Turkmenistan and Iran is likely to dictate a radical shift in
regional energy needs and trade. Within the past year, Iran
has become increasingly dependent on Turkmen supplies of gas.
Despite its large untapped reserves, Iran has had little
gas available to pressurize its older oilfields, generate
electricity and substitute for the large volume of oil that
is used domestically.
That will all change when the South Pars project starts
producing. One phase of the project got the green light last
month when the United States decided to waive sanctions
against the $2-billion contract for development by Total of
France, Russia's Gazprom and Malaysia's Petronas. While some
of the South Pars gas might have gone to Pakistan in future
years, it now seems more likely that all of it will have to
be used domestically in Iran. The alternative is to route it
to Turkey, where it would compete with Russian gas. Plentiful
Iranian gas may also interfere with Turkmenistan's plans to
supply the Turkish market.
Either way, Turkmenistan's relationship with Iran as its
gas supplier is likely to change as a result of the loss of
the Pakistani market. Ashgabat can still look to Iran as an
outlet for some Central Asian and Caspian oil, but Iranian
demand for Turkmen gas seems sure to wane quickly as the
South Pars field comes on line.
That trend will leave Turkmenistan as dependent as ever on
access to Russia's gas pipelines. The republic has exported
no gas through the lines for fourteen months because of
disagreements with Moscow over transport charges and rates.
So far, Russia has shown no interest in compromising, despite
Turkmenistan's increasing gas sales to Iran over the past six
months. It will not take long for Moscow to figure out that
its position has been strengthened further by Turkmenistan's
loss of the Pakistan option and Iran's prospect of new gas
The role of the United States as a counterbalance to
Russia may now become even more critical to Turkmenistan.
Washington continues to insist that pipelines across the
Caspian to Azerbaijan and then on to Turkey are the solution
to the region's access problems. But so far, none of the oil
companies are willing to invest the billions of dollars that
the plan would require.
Despite its waiver for the South Pars project, Washington
is continuing to oppose any pipelines across Iran and has
threatened sanctions against companies that offer to build
them. The United States has also shown no signs of approving
the request of Mobil Corp. to conduct oil swaps with Iran
from its new development in Turkmenistan with Britain's
Monument Oil and Gas.
Although Turkmenistan's problems are great, the United
States appears to view them as minor when measured against
the political goal of outmaneuvering Iran. Washington has
also used none of its influence with Russia to restore its
pipeline access for Turkmen gas. The aim may be to compel
Turkmenistan's compliance with the U.S. pipeline strategy,
even if it takes years to realize.
Turkmenistan does not have years to wait. But the
narrowing of Turkmenistan's options in the region since the
nuclear tests means that the republic will be caught between
the interests of the United States and Russia for an
indefinite time with little chance of relief from Iran.