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Analysis: Was Berdymukhammedov Seeking Treasure In Berlin?

  • Bruce Pannier

So why did Turkmen President Gurbanguly Berdymukhammedov suddenly show up in Berlin on August 29?

So why did Turkmen President Gurbanguly Berdymukhammedov suddenly show up in Berlin on August 29?

Was the Turkmen president checking on his predecessor's rumored lost treasure during a recent trip to Germany? (The views expressed in this commentary do not necessarily reflect the views of RFE/RL.)

From independence in late 1991 until December 2006, Turkmenistan was ruled by Saparmurat Niyazov. He preferred to be called "Turkmenbashi," literally the "head of the Turkmen."

Turkmenistan possesses the fourth-largest reserves of natural gas in the world. The country has made a great amount of money from that. The population is some 5 million people. Most of that money never benefitted them.

Instead, Turkmenbashi spent lavishly on new marble buildings in the capital, at Awaza on the Caspian Sea coast, and on monuments to himself, including the infamous 75-meter-high tripod with a gold statute of himself mounted on top that rotated so Niyazov's face was always turned in the direction of the sun.

According to a 2006 report from the London-based corruption watchdog Global Witness, Niyazov also had more than $3 billion in foreign bank accounts, "some $2 billion of which appears to reside in the Foreign Exchange Reserve Fund (FERF) at Deutsche Bank in Germany." The report also said that "Global Witness has discovered that, according to a 2001 contract, gas revenues from 2002 to 2006 were intended to be paid into Central Bank of Turkmenistan account No. 949924500 at Deutsche Bank, Frankfurt."

Niyazov died in late December 2006 and Gurbanguly Berdymukhammedov took over as president.

On August 29, Berdymukhammedov visited Berlin. It was a curious visit, lasting one day. A Turkmen-German business forum was planned and President Berdymukhammedov, apparently somewhat belatedly, chose to lead that delegation.

RFE/RL's Turkmen Service, known locally as Azatlyk, learned there was some debate in the German government as to whether Chancellor Angela Merkel should meet with Berdymukhammedov while he was in Berlin.

Turkmenistan's human rights record has been abysmal for 25 years and despite the country's gas riches, Western leaders are not anxious to host Turkmen leaders.

Berdymukhammedov appeared at a press conference with Merkel, one in which his bodyguard brought in water to replace that offered by the German hosts.

The Turkmen president was asked about the rights situation, a question he was clearly expecting, and he deflected the issue by saying that Turkmenistan's people were supplied with free gas, electricity, and water, so how could the government be repressing them?

He omitted mentioning that he had earlier this year proposed canceling state subsidies for all those things, saying Turkmenistan had advanced so much over the last 25 years that those subsidies were no longer needed.

He did repeat that Turkmenistan was prepared to supply Europe with gas, something he has said dozens of times over the last few years, usually from inside Turkmenistan where no one asks about human rights.

It is doubtful Berdymukhammedov essentially invited himself to Germany so he could answer uncomfortable questions about the respect for rights in Turkmenistan. So what was the great need to make a quick trip to Germany?

Let's open up the lid of Turkmenbashi's treasure chest again.

Tom Mayne, who worked on the 2006 Global Witness report, says that after Niyazov's death, the European Bank for Reconstruction and Development pressed Turkmen authorities to close some of the off-budget funds and accounts highlighted in the 2006 report, and they did. However, according to the source, Berdymukhammedov opened a new "Stabilization Fund," though it is unclear if it was with Deutsche Bank.

In 2008, Turkmenistan also passed a law on hydrocarbons. According to the Natural Resource Governance Institute website, the law "is publicly available but states only general principles and does not include fiscal terms." Furthermore, "rather than promoting transparency, the law prohibits government agencies from disclosing information about the hydrocarbons sector."

According to RFE/RL's source, the law allocates 20 percent of revenues from gas sales to the state budget, while the other 80 percent goes to the State Agency on Management and Use of Hydrocarbon Resources under the President of Turkmenistan.

On March 21, 2014, Global Witness released more information. Referring back to the 2006 report, the corruption watchdog said Turkmenistan's "foreign exchange reserves have grown substantially, with international financial institutions estimating that the country held as much as $20 billion around 2009." The 2014 release continued, "Global Witness believes that as much as 75 percent of this could still be held in the off-budget 'FERF.'"

While in Berlin, Berdymukhammedov met with top officials from several businesses, including Siemens, Airbus, and Cargolux. Turkmen state media reported that Berdymukhammedov was discussing partnerships.

It's doubtful many German companies would be anxious to rush into Turkmenistan's business world, considering the experience of German oil and gas company DEA (formerly RWE Dea AG).

DEA signed a production-sharing agreement in 2009 for a block in Turkmenistan's Caspian Sea sector. In late 2015 DEA announced it was withdrawing from Turkmenistan. The opposition website Alternative News of Turkmenistan reported that "the Germans were simply tired of the bureaucratic entanglements."

If he didn't come home with new business partners it wouldn't necessarily mean the trip was a failure, however. Most telling about his visit were the meetings Berdymukhammedov reportedly had with people he already knew.

The pro-government website Turkmenistan.ru reported the Turkmen president met that day with "Deutsche Bank AG Executive Director for Central and Eastern Europe Peter Tilles and the bank's Senior Adviser Jurgen Fitchen."

Mayne notes that, in September 2014, Tilles and Fitchen were in Turkmenistan to meet with Berdymukhammedov.

So there is good reason to believe that banking was definitely part of Berdymukhammedov's reason for being in Berlin. The question is why now?

Turkmenistan could surely use some extra money.

The country currently has only one customer that pays cash for natural-gas supplies -- China -- and China has loaned Turkmenistan billions of dollars, which Turkmenistan is repaying with gas. It's unclear how much actual money Turkmenistan receives from gas shipments to China. And even then, the price of gas is less than half of what it was just two years ago.

The national currency depreciated in value by 23 percent last year but has held steady at $1 to 3.5 manats, though the black market rate has jumped, touching seven manats to $1 at times recently.

On September 6, the Turkmen opposition website Chrono-tm.org reported that police, teachers, and medical workers in two of Turkmenistan's five provinces -- Lebap and Mary -- had not been paid for the last three months.

Azatlyk has been reporting for months about layoffs in various sectors of Turkmenistan, including the gas and oil sector, the backbone of the country's economy. There are no official unemployment figures for Turkmenistan but some opposition websites claim the figure to be more than half the eligible workforce.

Berdymukhammedov likes to be called "Arkadag," the Protector. But there was no word from Berdymukhammedov, or any other official, indicating that the Protector might be bringing any of the money from this "Stabilization Fund" or "FERF" back home to help create jobs, pay wages on time, or prolong state subsidies.

There was a report, however, that Berdymukhammedov attended the opening of a new $100 million, five-star hotel at the Awaza resort area on September 9.

The "Gami" (Boat) Hotel joins several other multimillion-dollar hotels along the Awaza strip. Reports indicate occupancy at any of them is rarely even 30 percent. A fence keeps locals from coming onto the grounds of the resort area.

Turkmenistan is also hosting the fifth Asian Indoor and Martial Arts Games next year and is in the process of spending billions of dollars on facilities for the event.

In its 2006 report, Global Witness said, "It is clear that the money is not being spent on them [the people]: standards of health, education, and living quality have plummeted since independence in 1991."

That is all still true. And it appears that whatever business Berdymukhammedov had with one of the German banks that was last known to be holding billions of dollars from his country, it had nothing to do with helping out Turkmenistan's people.

Thanks to Azatlyk, and to the many people outside RFE/RL who helped prepare this report

About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change. Content will draw on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad. The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.

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