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Turkmenistan: Economic Relations Developing With Iran

Turkmenistan is seeking closer economic ties with Iran. It has proposed a 10-year pact with Tehran that would focus on energy, construction and other sectors. RFE/RL special correspondent Michael Lelyveld examines the stakes.

Boston, 15 September 1999 (RFE/RL) -- Turkmenistan has proposed a 10-year economic cooperation pact with Iran, as the Central Asian nation seeks to balance its ties with Washington and Tehran.

The proposal made Sunday in Ashgabat at a meeting of a joint economic commission was received favorably by Iranian officials and is expected to be approved by Iranian President Mohammad Khatami and Turkmenistan's president, Saparmurat Niyazov. Iran's minister of roads and transportation, Mahmood Hojjati, cited growing cooperation with Turkmenistan in construction, energy and other sectors, the Iranian official news agency IRNA said.

The pending agreement appears to demonstrate the dynamic of relations in the region, despite tensions over Turkmenistan's plan to build a trans-Caspian gas pipeline that is designed to bypass Iran. Tehran's official statements have called the project organized by U.S. companies "illegal" and "unacceptable." Officials have also spoken of unspecified consequences, but they have been careful not to spell them out.

In fact, as construction of a trans-Caspian pipeline has drawn closer, Turkmenistan's relations with Iran seem to have grown warmer. Last week, the two countries announced a joint project to build a $168 million irrigation dam on the Tedzhen River between the two countries.

In announcing the proposed economic agreement, Hojjati hailed the success of Iran's railway junction with Turkmenistan at Sarakhs, which is said to handle 1 million tons of freight annually. Such references seem to be a sign that any tensions over the trans-Caspian project have been kept well under control.

Iran may have more reason than ever to resent Turkmenistan's plans for the trans-Caspian pipeline to Turkey. In August, Royal Dutch/Shell strengthened the pipeline's prospects by joining U.S.-based Bechtel and General Electric in the consortium for the project. Shell also announced a strategic partnership with Turkmenistan.

Last year, Shell was working with Iran as the potential developer of a competing gas line to Turkey through northern Iran. Shell officials have said that they dropped the plan for an Iranian gas route after Tehran made clear that it wanted to pursue the project on its own.

Shell has now turned its attention to Turkmenistan. But instead of punishing the company for its new alliance, Iran is reportedly negotiating with Shell for development of at least two oil fields.

The cooperation with both Turkmenistan and Shell may suggest that there is not only a long-standing pragmatism of business interests at work in Iran but also a growing political willingness to compartmentalize disputes.

Iran has deepened its involvement in Turkmenistan with projects such as port construction, gas purification and electricity transmission. These have taken place with apparent disregard for Ashgabat's links both to the United States and Israel. Other initiatives such as Turkmenistan's gas exports and oil swaps with Iran seem to have languished for commercial and technical rather than political reasons.

Over the past two years, U.S. officials have also eased their pressure on Central Asian nations to shun all dealings with Iran, although they continue to insist on pipelines that bypass the country's territory. U.S. and Iranian investments in the region are at odds, but they also co-exist.

Turkmenistan's latest flurry of activity with Iran may serve as a reminder that while Caspian competition has enormous importance, it is also something of a sideshow. Not everything in the relationship between Turkmenistan and Iran depends on who wins the race for pipeline routes. Geography, history, culture and necessity are factors that outsiders may tend to ignore. In fact, the countries may do well to keep their Caspian disagreements from spreading into other areas of possible conflict.

Iran has already engaged in some logical gymnastics by objecting to Caspian exploitation by its neighbors before there is a legal division of the resources by all five littoral states. At the same time, Iran has accepted a 10 percent share of the Shakh-Deniz offshore field, where Azerbaijan has discovered an estimated 700 billion cubic meters of gas.

Turkmenistan has also preferred to limit the scope of its protests. Last year, it joined Iran in condemning Kazakhstan's bilateral agreement with Russia on dividing the northern Caspian shelf. But this year, Turkmenistan has held cooperative talks with Kazakhstan on transporting oil to Iran for mutually beneficial swaps.

The only firm rule in the region seems to be that disputes may be pushed into the background when greater or more pressing interests emerge. That lesson may be temporarily forgotten when the pipeline rhetoric grows too loud, but it is likely to be remembered after the protests die down.