Accessibility links

Turkmenistan: Pipeline Plans Turn To Pipe Dreams

Washington, 4 November 1997 (RFE/RL) -- What began as a green light from Washington is quickly turning red on a project that could prove crucial to the economy of Turkmenistan.

Despite encouraging signals over the summer, U.S. policy appears to be changing toward Turkmenistan's plan to export gas to Turkey using a pipeline through Iran. Turkmenistan has high hopes for the project, which could help to ease a virtual stoppage in its gas exports. Russia halted Turkmenistan's access to northern pipeline outlets in March, causing the republic's economy to plunge.

But hopes for a pipeline across Iran are also starting to fade, as Washington turns increasingly hostile toward any plan involving Tehran.

In July, U.S. officials argued that the pipeline deal was nothing more than an arrangement between two friendly nations, Turkey and Turkmenistan. Although the pipeline would go through Iran, Washington would not oppose it, officials said. But that was before Iran announced the signing of a $2 billion contract to develop its own South Pars gas field in the Persian Gulf with companies from France, Russia and Malaysia. U.S. Senator Alfonse D'Amato has condemned that deal as a clear violation of the sanctions law that he sponsored last year to block investments in Iranian petroleum projects. The U.S. is concerned at what it sees as Iran's links to terrorism.

The controversy has put the Clinton administration on the defensive about its earlier decision not to oppose the Iranian pipeline from Turkmenistan. Although the two projects are entirely different, U.S. anger has spilled over from one to the other, endangering the pipeline plan.

After the South Pars deal was announced, U.S. attitudes soon turned negative toward the pipeline. On October 15, State Department spokesman James Rubin denied a statement by Turkmen Foreign Minister Boris Shikhmuradov that Washington had given a "greenish light" to the pipeline through Iran. The light immediately changed from greenish to yellow, and now appears to be reddish, if not completely red.

The growing opposition in Congress has helped sanctions supporters within the administration to argue against any moderation toward Iran. An internal debate has been continuing for months within the administration over how to react to the election of Iranian President Mohammed Khatami in May.

The moderates in the Clinton administration are now having a hard time defending their ground. In addition to the South Pars deal, reports of Iranian missile development have stirred familiar U.S. fears.

All that is bad news for Turkmenistan's hopes to sell gas to Turkey. International oil companies which might have taken part in the project are also having second thoughts. Last month, Royal Dutch/Shell denied reports that it has any pipeline plans regarding Iran. The company said it is still interested in pipelines to Turkey, but it would not specify an alternate route.

The outlook for Turkmenistan's exports now looks decidedly mixed. The republic will open a pipeline to Iran next month, allowing some gas deliveries for local Iranian use. But the big projects may be stalled.

Last month's announcement of a consortium with US-based Unocal Corp. to build a gas pipeline to Pakistan still depends on peace in Afghanistan, which seems a long way off.

As so often happens in cases involving Turkmenistan and gas exports, questions are being raised about Russia's role. Last week, Senator D'Amato held hearings in Congress about the South Pars gas deal and threatened sanctions against Russia's Gazprom for investing in the project. The sanctions could cost Gazprom over $1 billion in U.S. financing. But the company could gain much more through the U.S. opposition to Iran and any projects there, including the pipeline from Turkmenistan to Turkey.

That's because if the pipeline is canceled, Gazprom would then be able to keep Turkmenistan from competing for the Turkish market, allowing Russia to maintain its monopoly over gas sales there. Russia has promised to increase gas exports to Turkey at least fivefold in the next 12 years. Moscow's profits will be worth far more than the cost of US sanctions, particularly if the sanctions also keep competitive supplies from Turkmenistan out.

It is not yet clear whether the Clinton administration will consider the consequences for Turkmenistan or give them sufficient weight to let the pipeline proceed. U.S. officials have already found it hard not to injure Central Asian interests when it takes aim at Iran. Gazprom has now made it even tougher, and for Russia, it may be a profitable strategy.