Accessibility links

Breaking News

Turkmenistan: Ashgabat Fails To Collect Debts From Ukraine And Azerbaijan

Turkmenistan is again seeking payment of old debts from Ukraine and Azerbaijan, but so far, both countries have resisted Ashgabat's terms. President Saparmurat Niyazov has pursued policies that give him little power to pursue his claims for over $1 billion in arrears. RFE/RL's correspondent Michael Lelyveld reports:

Boston, 15 August 2001 (RFE/RL) -- Turkmenistan appears to be having little success in collecting on debts for its past natural gas supplies.

In recent days, both Azerbaijan and Ukraine have resisted Turkmenistan's claims for gas that it delivered over seven years ago. Relations with Kyiv are friendly, while those with Baku have been frosty. Yet, the debt talks with both countries have led to a similar lack of results.

On 14 August, Ukrainian Prime Minister Anatoliy Kinakh said his country would keep negotiating and would offer better terms for settling its $281 million bill for Turkmen gas it used in the winter of 1993-94. Kinakh cited the "close relationship" between the two nations, but he did not disclose what Ukraine's next offer would be. On 13 August, Ashgabat rejected an attempt to reschedule the arrears over the next 12 years, demanding payment in 3 1/2 years instead.

The accounting seems to exclude an additional $82 million in penalties, which Turkmenistan says Ukraine owes. The dispute also appears to ignore a barter agreement for services and joint projects, which was supposed to have cleared up the matter last March.

Ukraine is Turkmenistan's biggest gas customer. The two countries signed a five-year supply deal in May. But they failed to clear up their old accounts. For new supplies, Turkmenistan has been keeping Ukraine on a tight tether, demanding regular payments in advance, although only half have been in cash.

Even those arrangements have been less than foolproof. Kazakhstan recently cut the flow of Turkmen gas to Ukraine after the Russian gas trader Itera stopped paying for transit through Kazakh pipelines. That move was revenge for Kyiv's refusal to pay Itera for gas debts run up by Ukrainian power generators last winter.

The tactic proved partially successful last month, when Ukrainian President Leonid Kuchma agreed to settle $20 million of the $56 million debt of the power companies. Kazakhstan then restored the flow of Turkmen gas.

With Azerbaijan, the talks have been more contentious but just as inconclusive. Last week, Azerbaijani Deputy Prime Minister Abbas Abbasov said Turkmenistan could not "frighten" his country with "threats" to take Baku to an international court of arbitration, Azerbaijan's ANS television reported. Abbasov said Turkmenistan lacked documentation for its claim that Azerbaijan owes $59 million for gas supplied in the same winter of 1993-94.

Baku says that the government's debt is about $18 million, while Abbasov argues that an additional $8 million "is debt owed by companies," Interfax reported. Kuchma has used much the same argument in avoiding debts owed to Itera and Russia's Gazprom.

The situation with Azerbaijan is complicated by Turkmenistan's competing claims to several Caspian oil fields. Baku sees Ashgabat's debt collection efforts as another form of pressure over Caspian border issues.

In the most recent round of disputes, Turkmenistan has said nothing about debts owed by Kazakhstan, which broke off talks in February after failing to agree on terms for paying $52 million for Turkmen gas and electricity. Kazakhstan is in much better shape to settle its debts than either Azerbaijan or Ukraine. The country had $3.4 billion in hard currency and gold reserves in its national bank and national fund at the start of this month, according to Interfax. But it apparently sees no pressing reason to pay.

All told, Turkmenistan claims it is owed over $1 billion, a figure that compares with the country's $1.6 billion in foreign debt, according to an accounting by President Saparmurat Niyazov in May.

But Niyazov seems powerless to compel his customers to pay up. His only export routes are through Russia, giving him little leverage. Although exports to Iran reportedly doubled in the first half of this year, they remain behind schedule to reach the 6 billion cubic meters that were promised for 2001 and only a fraction of the 1.3 billion cubic meters that Iran discussed in February.

Turkmenistan's major option of a trans-Caspian pipeline to Turkey was also blocked by wrangling with Azerbaijan over shares in the transit. As a result, the arrears issue has simply been added to the list of hopeless disputes instead of becoming an element in a possible trade-off.

As long as Ashgabat pursues policies that seem to assure isolation, it may have no choice but to keep pumping gas to customers that see debt payment as voluntary.