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Turkmenistan: Business With Iran Runs Counter To U.S. Policy

Boston, 10 March 1998 (RFE/RL) -- Turkmenistan has picked a curious time to announce plans for increasing business with Iran, just weeks before President Saparmurad Niyazov is scheduled to visit the United States.

The strange sense of timing was demonstrated at a Vienna conference last week when a top Turkmen petroleum official disclosed that the government is discussing a surprisingly large oil swap deal with Tehran.

Kurbammaazar Nazarnov, director of the Turkmen Institute of Oil and Gas, said the deal could include deliveries of 14 million tons of crude oil a year to refineries in northern Iran. Turkmenistan would be paid by exporting equal amounts of Iranian oil through the Persian Gulf in the south.

The swap would require construction of a 350-kilometer pipeline from Iran's Caspian port of Neka to Tehran. A much larger project is planned to build a 1,200-kilometer pipeline from Turkmenistan through Iran to the Gulf to export 50 million tons of oil annually.

Turkmenistan's efforts to boost trade with Iran do not stop there. Last week, Niyazov also said the country must triple its gas exports to Iran from 4 billion cubic meters this year to 12 billion in 1999. The figure for 1998 is already double the amount that was originally planned. The increase for next year will likely require a big investment in additional compressors on the 200-kilometer line between Korpedzhe and Kurdkui, which opened last December.

All this business with Iran runs completely counter to U.S. policy. Just the week before, officials from the U.S. Energy and Commerce Departments testified before Congress that the Clinton administration continues to oppose pipelines through Iran.

In light of the U.S. stand, it seems odd that the Niyazov government would announce so many deals with Iran before his first official visit to Washington on April 21.

But the government has also been careful to give the Clinton administration something that it wants by endorsing an oil route from the Caspian through Turkey to the Mediterranean port of Ceyhan. At a meeting of regional foreign ministers in Istanbul last week, Turkmenistan supported the option for Caspian exports which has been urged by Washington.

While Turkmenistan has left open the possibility that it will continue to pursue southern oil and gas pipelines through Iran, it has also agreed to go along with trans-Caspian lines that would link Central Asia and Azerbaijan, forming an extension of the $2.5-billion oil route to Ceyhan.

The Clinton administration now sees the lines across the Caspian as essential to its costly plans for avoiding both Iran and Russia by giving the Ceyhan project the added potential of connecting with Central Asia's petroleum wealth.

In this case, the timing of Turkmenistan's announcements about Iran may seem strange, but it appears to have its policy about right.

There seems little doubt that the republic will have to agree with Washington, at least in part, if it wants to sign deals with American oil companies. But Turkmenistan also needs to put the Clinton administration on notice that it must have exports to Iran.

As a result of its geographic isolation and difficulties with Russia, no other country is so dependent on access to the Islamic republic. Even Azerbaijan, with its large volume of Iranian trade, has been able to use other export routes through Georgia because of its position on the western Caspian shore. Iran's growing energy shortages this winter have also increased Turkmenistan's importance as a strategic source of gas.

Turkmenistan's new pipeline to Iran is currently its only active outlet for gas. Although an agreement on Russian pipeline fees was reported recently, the deal for exports to Ukraine has not been finalized.

It is also becoming clear that U.S. policy toward Iran is increasingly contradictory and potentially changeable. While the Clinton administration continues to resist Iranian pipelines through the country, it has continually postponed a decision to impose sanctions against foreign petroleum projects. Washington has started to welcome Iranian visitors and recently encouraged a U.S. wrestling team to compete in Tehran.

The United States has quarreled with Russia over its project for Iran's Bushehr nuclear power plant and Moscow's alleged transfers of missile technology. But at the same time, the Clinton administration is clearly appreciative of Iran's neutral stance during the conflict over weapons inspections in Iraq.

U.S. policy on Iran may well be at a watershed. In any case, it now seems so full of contradictions that it would be difficult and potentially perilous for any other country to follow the U.S. line too closely. Turkmenistan is right to pursue its own interests with Iran and make its position clear before the Niyazov visit to the United States.

In this respect, Turkmenistan's policy differs little from that of Washington's European allies which maintain close ties to the United States while continuing to trade with Iran.