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Russia: Putin To Visit Uzbekistan, Turkmenistan

As Turkmenistan and Uzbekistan prepare for the visit of Russian President Vladimir Putin, both countries may be facing big decisions about their relations with their dominant neighbor. Our correspondent, Michael Lelyveld, reports that for now, Russia may hold the upper hand.

Boston, 17 May 2000 (RFE/RL) -- Russian President Vladimir Putin's visit to Turkmenistan this week could be significant in defining the country's relations with both Moscow and the West.

Putin's working visits on Thursday and Friday to Uzbekistan and Turkmenistan come at sensitive times in both countries.

In Uzbekistan, rising fear of Islamic movements and terrorism have driven the government to take harsh steps in a country that has tried to be a power center in Central Asia that is independent of Moscow. Putin is likely to offer President Islam Karimov uncritical support without the burden of Western concerns about human rights to bring him into the Russian fold.

But Putin's trip may be even more crucial for Turkmenistan, which is facing economic problems on at least two fronts at once.

The Russian news agency Interfax reported last Friday that Putin and President Saparmurat Niyazov will sign an agreement calling for Turkmenistan to more than double its gas exports to Russia for the next 30 years. But a Turkmen official told Interfax that the pact will only be an agreement "in principle" because the two countries have not settled on a price for the gas.

The trouble has been compounded by Turkmenistan's disputes with both Iran and the United States.

Last week, Iran announced that it has cut gas imports from Turkmenistan by half following a disagreement over pricing. Turkmenistan has been using its gas to pay Iran back for a pipeline that has linked the two countries since late 1997. The dispute dimmed Turkmenistan's hopes for negotiating a huge increase in gas sales to Iran, for the time being at least.

Niyazov is also at odds with the United States over its plans for a trans-Caspian pipeline to carry gas to Turkey. Last week, an unnamed Turkmen government official was quoted in critical remarks aimed at John Wolf, the U.S. government's adviser on the Caspian. The tense exchange was one of several that have followed Azerbaijan's demands for a half-share in the pipeline's capacity.

The two disagreements may leave Niyazov dependent on a positive outcome with Russia, but the two sides seem to be far apart on a price for Turkmenistan's gas. Ashgabat is reportedly seeking $40 per thousand cubic meters, although it has asked for as much as $46. Russia is said to be offering between $32 and $33, although it currently pays $36.

An added problem is that Turkmenistan has been collecting very little cash from anyone. All its exports to Iran have gone toward paying its debt for the pipeline. Russia has paid for 60 percent of its gas bills with goods. The trans-Caspian line seems to offer the only all-cash opportunity for exports. But Turkmenistan has been dissatisfied with the terms, and exports to Turkey could face delays.

If the result of this two-sided trouble is greater reliance on Russia, it would be a departure from Niyazov's stated policy of neutrality. Turkmenistan previously depended on Russia as its sole route for gas, until an argument over prices in 1997 halted all exports for over a year.

Since then, the country has tried to widen its options by exporting to Iran and working toward construction of the trans-Caspian line. But both of those alternatives now seem in doubt. The exclusive focus on Russia also comes as that country is dealing with its own debate over gas pricing. This month, Gazprom raised its rates by up to 39.5 percent on domestic customers in an effort to reform utility costs. On Friday, the head of Russia's Federal Energy Commission said he would not support an additional increase of 15 percent, The Moscow Times reported.

But Russian consumers are still paying only about $11 per thousand cubic meters, or one-third the price that Gazprom would pay Turkmenistan. Russia makes up the loss by charging countries like Turkey up to $120 per thousand cubic meters. But the system leads to economic distortion, waste, and shortages of fuel for electricity.

The task of reforming Russia's energy market and eliminating barter will not take place overnight, making it unlikely that Gazprom can agree to pay much more for Turkmen gas, even though it needs the supplies. Gazprom exports only about 37 percent of the gas it produces, The Moscow Times said.

Without competition from other markets, Turkmenistan may also find it hard to command a higher price. The situation could put the country back into the same predicament it faced in 1997, when reliance on Russia led to an export cutoff.

If that is the case, Niyazov's agreement in principle with Putin will be a hollow one, allowing for increased exports in theory but very little in cash.