Turkmen Report: April 8, 2001

6 April 2001

Turkmenistan's authoritarian President Saparmurat Niyazov has closed down the main opera and ballet theater in his Central Asian nation to make way for arts more in line with Turkmen culture.

It will be replaced by a new, government-sponsored National Music and Drama Theater, which will also assume responsibility for the philharmonic and the circus in Turkmenistan's capital Ashgabat, Niyazov said at a meeting with cultural leaders on 3 March 2001.

The opera and ballet theater "has depleted its potential and has not created anything significant for a long time," Niyazov told the meeting in remarks shown on state television on 4 April. "Moreover, far from everything in its repertoire corresponds with the national mentality."

"How can one instill love for ballet in the Turkmens if they have no ballet in their blood," President Saparmurat Niyazov told Turkmen television.

"One cannot implant a form of art that arose in another place, one should develop one's own national art. I don't understand ballet, what use is it to me?" The opera and ballet theater has been replaced by the Makhtumkuli National Music and Drama Theater.

The Mylly Tachmuradov State Philharmonic Society, the National Folk Dance Company, and the National Variety and Circus Center have also been closed down. "The culture and art of the Turkmens" will be studied at the National Cultural Center set up on their basis, the president said.

"Our spectators remain indifferent at times to the 'sufferings' of the characters, who express their artificial feelings in trills and not always modest dances," he said. "Special stress should be placed on musical dramas by modern Turkmen playwrights."

The move was part of a broad campaign by Niyazov -- who has dubbed himself Turkmenbashi, or father of Turkmens -- to introduce a code of moral conduct for his impoverished, desert nation. He is planning to release a "spiritual constitution" later this year.

Niyazov has led Turkmenistan since 1985, when the Central Asian nation of 5 million people was still part of the Soviet Union. He has resisted moves toward democracy and economic reforms, and his nation's economy remains quite weak despite vast oil and gas reserves.

He has created a cult of personality, naming a city, oil refinery, and meteorite after himself. His face decorates all the currency, while towns and villages are abundant with his portraits and statues. (AP/Interfax)



6 April 2001

According to Ashgabat correspondent of Turkmenistan.ru, the Ministry of Communications of Turkmenistan is planning on signing new contracts with German company Siemens and the multinational corporation Alcatel for a total sum of 3.3 million euro soon. These two corporations, cooperating with the republic, will deliver electronic telephone exchanges for 12,000 numbers, which will be installed in Ashgabat, Bizmeyin, and Kumdag.

According to the Ministry of Communication, the current capacity of digital automatic telephone exchanges in the country, installed by Alcatel since 1993, is more than 60 thousand numbers, and the total sum of its investments in development of the communication services of Turkmenistan is 45 million German marks. Alcatel has also upgraded some operational stations.

Siemens has installed in Turkmenistan digital automatic telephone exchanges with a capacity of more than 40 thousand numbers. The sum of its investments in the development of communications in the country is more than 12 million German marks.

Turkmenistan's Ministry of Communication has stated that by 2010 there should be digital telephone exchanges of a total capacity of 325 thousand numbers in operation. (Turkmenistan.ru)



3 April 2001

Turkmen President Saparmurat Niyazov has issued a decree on the TMT [Turkmen National Television] -- Broadcasting Production Association of the [former] Turkmen National Television and Radio Company, in order to improve the structure of state management, and to implement his decree No 5173 of 3 April 2001 on the reorganization of the Turkmen National Television and Radio Company, as follows:

1.The TMT-Broadcasting Production Association of the [former] Turkmen National Television and Radio Company is to be put under the jurisdiction of the Turkmen Communications Ministry and its main assets and property are to be transferred to the ministry in accordance with the set procedure.

2.The Turkmen Ministry of Economics and Finance must not change the existing structure of financing of TMT-Broadcasting, which has been placed under the jurisdiction of the Communications Ministry.

3.Three extra posts are to be added to the staff of the central department of the Ministry of Communications. (Turkmen Radio)



3 April 2001

By decree of the Turkmen president, Turkmen Minister for Health Care and Pharmaceutical Industry Gurbanguly Berdimuhammedov was appointed to the position of the deputy chairman of the Cabinet of Ministers. (Turkmen radio)



3 April 2001

According to a Turkmen presidential decree, Gulmurat Muradov is to be appointed to the post of deputy minister of the Ministry of Culture, for a six-month probation period.

In case of his failure to carry out his official duties, he is to be relieved of the post without the offer of another position. (Turkmen Radio)



3 April 2001

On 3 April Turkmen President Niyazov received the special envoy of the Islamic Republic of Iran for Caspian Sea issues, Deputy Foreign Minister Ali Ahani.

Niyazov and Ali Ahani reaffirmed the readiness of Turkmenistan and Iran to participate in a meeting of the leaders of the Caspian Sea littoral states for adopting a document on the legal status of the sea. At the forthcoming meeting of the five Caspian Sea littoral states' leaders, an agreement to that effect should be reached, the Turkmen president said. He was the initiator of holding such a high-level meeting.

The results of the meeting will also depend on the readiness of the participants to have open discussion, Niyazov said.

Turkmenistan's position regarding the legal status of the Caspian Sea is known already, the Turkmen president said during the meeting.( Turkmen TV)



3 April 2001

President Saparmurat Niyazov has outlined his plan to revitalize the country's cultural life, media, and education. In his address to the State Council he said that three new independent television and radio channels would be set up, where programs of "national flavor" would have to dominate. He said that the heritage of Soviet communism in the arts and theatre, such as ballet, would have to be done away with and people had to be familiarized with their own history and tradition. The following is an excerpt from President Niyazov's address to the National Council on 3 April, broadcast by Turkmen television the same day:

Niyazov said that "during the 70 years of the Soviet Union we have learnt a lot about cultures, we know great Western classics, we are familiar also with Shakespeare, French writers, many composers, but we do not know the origin of Turkmens, we do not know our writers. We should know them [the foreign writers], I do not prefer any sort of order of precedence, but without learning about our origin it is difficult to assess the origin of others. That is why, we have forgotten somewhere our national and Turkmen flavor.

"We should evoke love in people towards the neighboring states. We should arrange musical shows, games, different programs on TV and radio in order to influence the mind of a person who has just come home from a job and having a pleasant rest. We cannot evoke the spirit of people with unpleasant songs of any singers.

"The minister of culture who is also the head of cultural issues in the Cabinet of Ministers, Aydogdyyev Oraz, I have known him for a long time. He works, but recently he has not criticized or punished anybody, but you cannot work in a such way as a leader.

"Creative workers, artists, think that someone will bring them spectators. No, spectators are attracted by scrupulous and honest creative work. Spectators cannot be bought, cannot be forced, we saw it during the former Soviet period.

"There are 388 people working in the Magtymguly Turkmen State Opera and Ballet Theatre, not one of you ever go. Then how will the farmers or workers go to theatre? We pay salary to 388 people; they must perform shows, not one of you sitting here goes. Leaders, go to the theatre this year!

"What kind of theatre is this? Theatres must attract spectators for themselves by producing masterpieces. But they are sitting and waiting for somebody else to bring spectators. We pay them salary, but they do not worry. I always say in my speeches that we need the theatre, but if there is no ballet in the blood of the Turkmens, why do you want to give it to them? No one will go to the ballet, not even a child. You should explain. If it is not in the blood of the people it cannot be forced upon them. For example, in India, a country with a population of 1 billion, there is no ballet, but there are national theatres there. There are national theatres in China, too. A nation cannot present itself as cultured people with introducing another art. We must study our national culture; we must create our national theatre.

We shall close the whole television, and create three independent channels of television.

Every morning at 8 o'clock I look through the crime reports given by the Ministry of Internal Affairs. Thank god, some days, there are no deaths and robbery. Sometimes the number of crimes is no more than 15 cases, seven of them are crimes and seven are accidents: car crashes, or accidents due to inattention. I have said recently that policemen should be put on every street of Ashgabat to monitor the breach of public order. Cases of tearing off girls' and women's jewelry are observed; this is a very grave crime. Policemen did not have to fight such crime in the past, but now this kind of work will have to be stepped up and such events will be reduced. We will bring them to trial, but you need not show them to the people on TV and distress them." (Turkmen TV)



3 April 2001

By decree of the Turkmen president, Orazgeldi Aydogdyyev was relieved of the post of deputy chairman of the Turkmen Cabinet of Ministers for shortcomings.

According to another decree by the Turkmen president, Minister of Culture Orazgeldi Aydogdyyev is to be appointed to the post of director of the Alp Arslan Young Spectators' Theatre for a six-month probation period.

In the event of his failure to carry out his official duties, he is to be relieved of the post without being offered another. (Turkmen TV)



3 April 2001

Turkmen President Saparmurat Niyazov issued a decree on the reorganization of Turkmen National Television and Radio Company. In order to improve the activities of the National Television and Radio Company of the independent and neutral Turkmenistan, he ordered:

1. The creation of independent and self-organized TV channels under the names of Altyn asr [Golden age], Turkmenistan, Yashlyk [Youth], Miras [Heritage], and radio channels under the names of Watan [Country], Char tarapdan [From all sides], and Miras Radio, to be carried out on the existing basis of the Turkmen National Television and Radio Company

2. The Coordination Council for Television and Radio under the authority of the Cabinet of Ministers will coordinate the activities of Altyn asr, Turkmenistan, Yashlyk, Miras TV channels and Watan, Char tarapdan, and Miras radio channels. (Turkmen Radio)



3 April 2001

By decree of the Turkmen president, Dovletmurat Annamuradov is to be appointed to the post of the head of the Turkmen Altyn asr [Golden age] and Turkmenistan TV channels.

Also by decree of the Turkmen president, Bayramgylych Yazgylyjov is to be appointed to the post of the head of the Turkmen Miras [Heritage] TV channel. (Turkmen Radio)



3 April 2001

In line with a decree by the Turkmen president, Bayramdurdy Khudaynazarov was relieved of the post of first deputy minister of culture for serious shortcomings in his work. (Turkmen Radio)



2 April 2001

Turkmenistan is preparing to sign contracts worth $10 billion with companies from Europe and the United States to develop oil and gas fields in the Caspian Sea, Deputy Prime Minister Yelly Gurbanmuradov said Friday (30 March).

The Caspian has immense hydrocarbon reserves, but so far other littoral states, especially Kazakhstan and Azerbaijan, have been more successful than Turkmenistan in attracting the huge sums of foreign capital needed to produce oil there.

"At this moment a number of contracts with European and U.S. companies have been prepared for signature on the development and commercial exploitation of the Serdar field and other offshore blocks in the Turkmen sector of the Caspian Sea," Gurbanmuradov said in an interview.

He gave no details of which companies were involved.

Azerbaijan also claims Serdar, which it calls Kiapaz, and the two countries have disputed its ownership since 1997.

Russian companies Lukoil and Rosneft and the Azeri state oil company SOCAR had signed a broad agreement on working on the field, but cancelled the agreement following Turkmen protests.

In September 1997 Turkmenistan included Serdar in a list of fields to be offered for tender, leading to Azeri protests. The ownership has not been raised at subsequent talks between the two governments.

But Gurbanmuradov was adamant Friday. "There is not the slightest doubt � this is a Turkmen field," he said.

He added that the overall value of the contracts he said were ready to be signed was $10 billion, and would lead to the production of over 80 million tons (nearly 600 million barrels) of crude.

Turkmenistan and Azerbaijan are also in dispute over the Azeri and Chirag fields. An international consortium headed by BP Amoco is already developing the two fields with SOCAR, but Turkmenistan says it owns the whole of Azeri and part of Chirag.

Turkmen President Saparmurat Niyazov was due to host a summit in the Caspian port of Turkmenbashi earlier this month with all the Caspian littoral states to resolve the complex issue of how to divide the sea among the surrounding states.

But the meeting was postponed at the request of Iran. Niyazov said at the time he hoped the meeting would be held in April, but no date has emerged. ("Moscow Times")



2 April 2001

The European Parliament, having regard to Turkmenistan's membership of the OSCE, pointing out the principles set out by the OSCE in the 1990 Copenhagen Document, specifically with respect to the establishment of a free, independent and effective judicial system and the conditions of detainees,

whereas Turkmenistan is virtually still based on a one-party system and lacks any effective instrument to guarantee freedom of expression, independent media, fair judicial procedure or respect for other basic human rights,

stressing that Turkmenistan's human rights record is extremely poor with serious government abuses and severely restricted political and civil liberties,

pointing out that the country's population, in spite of the existence of huge energy reserves, lives in grinding poverty,

whereas only Islam and the Russian Orthodox church are accepted by the State, and other religious communities face discrimination and often persecution,

whereas Shageldi Atakov, a Baptist minister, was arrested for his religious beliefs, sentenced to four years in prison, and fined $12 000; drawing attention to the cases of Jevgeni Potolov, Alexander Frolov and Mukhamad Aimuradov, who all were arrested for their religious beliefs,

whereas the government of Turkmenistan acknowledges that Shageldi Atakov could be released if he were willing to participate in a public ritual of repentance,

whereas the European Union and its member states signed a Partnership and Cooperation Agreement with Turkmenistan in 1998 and this agreement has not yet been ratified because of the situation in Turkmenistan,

whereas the European Union signed an Interim Agreement with Turkmenistan in 1999 and it has not yet entered into force,

1. Expresses its deep concern at the continued human rights violations committed in Turkmenistan;

2. Urges the Turkmen authorities to review their judicial system and to comply fully with the OSCE's Copenhagen Document;

3. Calls on the Turkmen authorities to respect the principle of freedom of religion;

4. Welcomes the Turkmen government's decision to release Primukuli Tanrykuliev and Nurberdy Nurmamedov from prison, as part of a larger amnesty of 12 000 prisoners;

5. Regrets deeply that no similar amnesty decisions have been taken with regard to Mukhamad Aimuradov and Shageldy Atakov, who have been in prison for several years;

6. Condemns the unjust treatment of Shageldi Atakov and calls on the Turkmen authorities to release him immediately;

7. Calls on the Turkmen government to allow the participation of international observers in this process;

8. Calls on the Commission to monitor the human rights situation in the country closely and not to allow the Interim Agreement with Turkmenistan to enter into force as long as the human rights situation in this country does not improve;

9. Urges the Commission to strengthen the TACIS democracy program for Turkmenistan with a view to developing civil society, a real multi-party system and free and independent media;

10. Asks its committee responsible to follow developments in Turkmenistan closely with a view to deciding on an appropriate time to report to Parliament on the conclusion of the EU-Turkmenistan Interim Agreement;

11. Instructs its President to forward this resolution to the Council, the Commission, the governments of the Member States of the European Union, the governments of the OSCE and the government of Turkmenistan. (Human Rights Without Frontiers)



2 April 2001

Turkmen President Saparmurat Niyazov underwent a scheduled medical examination at Ashgabat's international clinic on Monday.

German heart surgeon Hans Meisner, who traveled to Ashgabat specially for the check-up, tested Niyazov's cardiovascular system.

Sources with the Turkmen Ministry of Health and Medical Industry have told Interfax that "the president's condition is stable, his heart is working normally," and his overall condition, according to Meisner, is satisfactory.

The ministry said the surgeon attributed that to "the Turkmen head of state's rejection of risk factors, especially smoking."

Meisner has been testing Niyazov several times a year since September 1997, when he operated on the president's heart at the Munich Cardiology Center. (Interfax)



31 March 2001

Service on a contractual basis will be abolished in Turkmenistan's armed forces, Interior Ministry forces and border guard, the president said on 31 March. Cost cutting was one reason for the decision, he told Turkmen television.

Another reason were regular offenses by servicemen in charge of food supplies, finance, and property, he said.

The duties of soldiers serving on a contractual basis would be handed over to officers and conscript soldiers. (Interfax/RFE/RL)



31 March 2001

President Niyazov has appointed Guvanchmyrat Goklenov to be chairman of the board of governors of the State Foreign Economic Relations Bank of Turkmenistan and to be relieved of his post of deputy chairman of the board of governors of the same bank. (Turkmen TV)



30 Mar 2001

Turkmen President Saparmurat Niyazov has issued instructions for wire fences to be erected along the entire length of the country's borders with Uzbekistan and Kazakhstan before the end of this year. Speaking at a government sitting on 30 March, Niyazov said the fences were needed to keep out "dishonest people" and prevent Turkmen goods from being smuggled out.

Niyazov also said that the country's chemicals sector was lagging behind modern requirements, describing it as "backward". He dismissed the chief of the Turkmen state chemicals and fertilizer concern, Ishanguly Gulmuradov, for poor performance and said the state chemicals and fertilizer concern was to be moved from the jurisdiction of the Agriculture Ministry to the Ministry of Oil and Gas and Mineral Resources, since the oil and gas sector has more resources to develop the chemicals sector. (Turkmen TV)



31 March 2001

President Saparmurat Niyazov said on 31 March he had ordered a newly appointed first deputy energy and industry minister to spend his first three months of office as "an ordinary electrician" and "foreman" as a "probation period."

This would help Annaguly Dzhumagylydzhov, who on 30 March became first deputy energy and industry minister and head of the Kuvvat (Energy) corporation, improve his knowledge of how Turkmenistan's energy industry runs and of strong and weak technological points, Niyazov told Turkmen television.

Only after this period would Dhumagylydzhov be allowed to take his ministry and corporate positions, the president said.

"Only one who knows thoroughly, down to the smallest detail, the operation of all the links of the production chain, can become a good administrator," Niyazov said. (Interfax)



30 March 2001

Turkmen bread producers will soon receive four new elevators, constructed in different regions of the country by experts of the Iranian firm Jahat. Two more granaries will enter operation this summer, and altogether six elevators will accept 180 thousand tons of wheat from the next harvest.

Construction of grain elevators is one field of Turkmen-Iranian economic cooperation. To date, Iranian experts have built granaries practically in all areas of the republic. All of them are constructed on as part of a long-term credit, secured to the Turkmen party by the Iranian government, and are equipped with machinery of leading European firms, placed close to railway stations, and allow the local farmers, who have sufficiently increased grain production in the last few years, to reliably save their harvested crop. (Turkmenistan.ru)



6 April 2001

By Giles Whittel

The dry heart of Central Asia is about to become a cultural desert as well. President Niyazov of Turkmenistan, arguably the world�s most deluded autocrat, has abolished classical ballet as part of a grand attempt to nationalize the spiritual life of his desert fiefdom.

Not only ballet but also Western opera and literature are now endangered art forms after a rambling speech in which the president shut down the country�s only opera and ballet theatre and announced the formation of a new national theatre and six radio and television channels to propagate culture with a "national flavor."

Mr. Niyazov's new crusade is not religious -- he has outlawed Islamic fundamentalism and rails against it -- but a delayed reaction to 70 years of stultifying Soviet high culture imposed by Moscow.

Addressing the Turkmen state council, through which he rules in the manner of the 19th-century khans, Mr. Niyazov asked rhetorically: "If there is no ballet in the blood of the Turkmens, why give it to them? Our viewers find it strange to see the suffering of heroes who express their highly artificial feelings in dances that are not always very modest," he continued, before dismissing the artistic director of the Magtymguly Turkmen State Opera and Ballet Theatre and stripping Orazgeldy Aidogdiyev, his culture minister, of his additional title of deputy prime minister.

This parched land of five million souls that borders the Caspian, Iran, and Afghanistan is not known for its contribution to ballet. Like every Soviet republic, it received its own classical theatre as a gift from Stalin. Hand-chosen children were dispatched to Leningrad to study ballet and bring back Tchaikovsky. By the 1980s the national ballet company of the Turkmen SSR had mastered nearly the entire classical repertoire.

Then Mr. Niyazov made his entrance. Appointed head of the Turkmen Communist Party in 1985, he stayed on as leader after the Soviet collapse and two years ago had himself appointed president for life. In the meantime, he squandered the chance to turn one of the world�s largest natural gas reserves into broad-based prosperity and poured millions of dollars into his own burgeoning personality cult.

His face graces every Turkmen banknote and public building as well as millions of yogurt pots and his own brand of aftershave. The country's biggest port and roads, and mosques in every town, are named after him.

That Mr. Niyazov -- or Turkmenbashi (Father of all the Turkmens), as he prefers to be known -- should have dismissed most of Western culture as "not in conformity with the mentality of the Turkmens" is hardly surprising. He has toiled for several years over a national code of spiritual conduct, the "Rukhname," designed as an alternative to centuries of Western philosophy.

Ordinary Turkmens are unlikely to take much notice. Ten years of unfulfilled promises of export-led wealth have left them among the poorest of former Soviet citizens. ("Times")



5 April 2001

By Tamara Makarenko

Gas and oil deposits in the Caspian Sea have attracted the interests of foreign investors and raised the possibility of rapid economic growth. Believed to contain the largest energy deposits discovered in the past 20 years, the Caspian Sea has attracted increasing international attention.

In fact, the past year has witnessed a sense of unprecedented urgency in resolving what governments and the international business community perceive as the two greatest obstacles to maximizing future oil and gas development: the legal status of the Caspian, and pipeline routes.

Unfortunately, while attention is concentrated on these two issues, the expansion of criminal organizations in the Caspian region is being overlooked. Significantly affecting the development of industrial sectors in many areas of the world, the emergence of organized crime in this "newly discovered" oil-producing region represents a growing threat to the future of Caspian development.

In addition to lucrative natural resources, the Caspian has become an attractive criminal target for a variety of reasons, most of which emerged as a result of the break-up of the Soviet Union. First, the opening of borders has allowed criminal groups to move relatively freely throughout the region. Second, the destruction of the Soviet empire resulted in deteriorating socio-economic conditions in former republics, and produced an environment in which all levels of officials are prone to corruption. Third, relative economic inadequacy has ensured most Caspian littoral states cannot afford to build effective security bodies required to discourage the rise of illicit activity. Finally, the experiment of building effective and efficient state institutions to guide political and economic reform has, for the most part, only succeeded in producing a bureaucracy interested in maximizing personal gain while maintaining its hold on power.

Pinpointing the origin of organized crime around the Caspian is not a straightforward task. A single "Caspian Mafia" does not exist; rather there are several different criminal groups, with alternative goals, seeking to expand their presence and operations. The most immediate threat emerges from Eurasian crime groups, originating from Azerbaijan, the Central Asian republics, and Russia, which have been expanding their operations in most of the littoral states over much of the past decade. However, the potential for criminal groups from the Caucasus, Turkey, and China to branch out to the Caspian also exists. The latter, however, are largely dependent on the path of pipelines.

The Immediate Threat

As it currently stands, the most immediate threat posed by organized crime to international business interests around the Caspian emerges from ties that have been established between state officials, domestic business, and criminal elites. These "conglomerate" groups, as they have been commonly referred to in the Russian context, are primarily interested in maintaining the status quo to the detriment of any significant national reform program. The main reason for this being that current conditions in the littoral states, especially Azerbaijan, Kazakhstan, and Turkmenistan, ensure that these groups maximize their own profits from lawful economic activities.

As with the Russian situation, ties between the bureaucracy and organized crime emerged during the Soviet era. Evidence documented in the 1970s reveals that organized crime, and subsequently corruption, was an integral part of these societies. The difference with the organized crime experience in much of the West, however, was that in many of the Soviet republics it emerged from within the government as opposed to being an external phenomenon. An anticorruption drive initiated in the 1980s throughout the Central Asian region revealed the extent to which these criminal-government networks existed, partially explaining why the efforts to impose the rule of law were largely ineffective.

After independence, however, the distinction between organized crime and bureaucracy has blurred even more. In many respects the ruling regimes of the Caspian region remain in office as a result of a tacit agreement, which calls for the support of criminal elites in exchange for a vested interest in the national economy. The post-independence struggle for power in Azerbaijan, Kazakhstan, and Turkmenistan can thus be explained, in part, as a result of these different "clan" loyalties vying for wealth and influence by gaining control over government institutions and business interests. International companies operating around the Caspian since 1991 have been forced to deal in this environment.

Taking Azerbaijan as an example, it may be concluded that President Heidar Aliyev consolidated his position with the support of his "clan" from Nakhichevan. Commonly referred to as the "Nakhichevan Mafia," Aliyev immediately rewarded them for their support by handing out government appointments. As a result, the Nakhichevan Mafia has used its official position to establish control over a large segment of the economy. Despite a large number of oil deals signed over the last decade, the state economy has not improved as much as it should have -- suggesting that large amounts of capital have been diverted to personal accounts. It is also believed that the Nakhichevan Mafia has established control over customs rackets and a number of trafficking activities, including narcotics.

A similar scenario surrounds President Nursultan Nazarbayev's government in Kazakhstan. Most criminal activity in this country has been concentrated in major industrial sectors, including arms, grain, non-ferrous metals, and petroleum -- sectors that require a high degree of collusion with state officials. The 1999 MIG scandal during which 40 fighter aircraft were "unofficially" sold to North Korea is illustrative of this.

However, the clearest evidence of criminal activity dominating state interests has emerged in the oil sector where several scandals have been revealed. The most newsworthy was the Giffen scandal, uncovered in 2000. James Giffen, an American investment banker, was placed on a retainer by Nazarbayev to promote the Kazakh energy sector. While fulfilling this role, Giffen allegedly oversaw the transfer of some $60 million from the accounts of U.S.-based oil companies to the accounts of leading Kazakh officials as a precursor to winning contracts. Although controversy surrounds the question of whether or not Giffen should be charged in violation of the U.S. Foreign Corrupt Practices Act, the most important point of this revelation is the extent to which corruption is a systemic part of the oil and gas industry in Kazakhstan.

Finally, the government's blatant attempt to cover up the involvement of state officials in criminal activity further highlights the criminal-state nexus in Kazakhstan. Despite a number of government officials directly implicated in the Giffen affair, only former Prime Minister Akezhan Kazhegeldin was targeted by the Kazakh government. As a result, his arrest (and subsequent release) by Interpol in 2000 was regarded as a politically motivated action. Kazhegeldin, increasingly asserting himself against Nazarbayev, was considered a threat because he was willing to collude with a U.S. investigation into financial irregularities by senior Kazakh officials. Regardless of the political dimensions surrounding this case, the fact that Kazhegeldin had money transferred to his personal account is not disputed. Furthermore, allegations that he accepted $100 million from a Russian businessman, Grigory Luchansky, with ties to Russian organized crime groups, suggests that Kazhegeldin, like many other Kazakh officials, abused his position. His only mistake was turning against his peers.

The most recent evidence revealing a Kazakh government-criminal nexus emerged after the publication of the book, "Shymkentskaiia Mafiia," by Temirtas Tleulesov. Tleulesov detailed corruption among the municipal authorities in Shymkent, including revelations about illegal oil transactions. The fact that Tleulesov was sentenced in absentia by the Shymkent city court to two years imprisonment for hooliganism suggests that his book may contain elements of truth.

Turkmenistan presents a somewhat different example with respect to criminal-government collusion. Considering the high degree of control President Saparmurat Niyazov and his Ahal-Tekke clan exert, it is widely accepted that this control also extends to criminal activities. Niyazov appears to allow criminal groups to operate relatively freely in the country, so long as they do not try and expand their operations and obstruct the state's monopoly in the most lucrative legal and illegal economic sectors.

Emerging Trends

In addition to criminal organizations penetrating the depths of government, organized crime in the Caspian also exists in the more traditional sense. Not interested in directly infiltrating the government and legitimate business sectors, several criminal groups have emerged in the Caspian region in order to take advantage of opportunities associated with increased economic development. Although these groups are less powerful, their economically motivated crimes do pose a threat to legitimate business operations. Thus as development in the Caspian expands, current trends indicate that extortion and kidnapping, protection rackets, and theft of oil and gas flowing through pipelines will also increase.

Kazakhstan provides the most illustrative example of traditional organized crime operating in the region. A geographically large country, it has been more difficult for Kazakh officials to assert an equal degree of control over illicit sectors. As a result, both domestic and non-domestic criminal groups (for example, the Russian "Mafiya" and Chinese Triads) have been able to establish operations without having to establish a relationship with government officials. Many of these groups already control criminal activities around the Caspian (such as the illegal fishing of sturgeon), and therefore are perfectly placed to expand their operations. Two trends appearing as a result of organized crime's involvement in Kazakhstan are kidnapping/hostage-taking and extortion. Data from the Interior Ministry suggests that kidnapping for ransom is significantly rising -- for example, in 1997 there were only six reported cases, versus 65 cases reported between 1998 and the end of 1999.

Extortion and protection rackets, on the other hand, do not appear to pose a significant problem in Kazakhstan -- mostly because it is not widely reported. However, these activities are likely to become increasingly problematic in the future, especially for the small and medium-sized businesses that operate around the Caspian and provide services and goods to the growing oil and gas industry. The capability of criminal groups in Kazakhstan to carry out advanced extortion schemes has already been proven with the uncovering of the Bloomberg affair, when two Kazakh nationals hacked into the U.S. company's computer system and demanded $200,000. Access to highly qualified and unemployed personnel grants criminal organizations the ability to engage in similar extortion schemes at home. Furthermore, given understaffed and underpaid law enforcement agencies, Kazakhstan cannot provide security guarantees for all companies operating on their territory. The same can be said for Azerbaijan and Turkmenistan.

Apart from these obviously disruptive activities, organized crime in the region appears to also be involved in the practice of "tapping in." This refers to the process in which oil or gas is stolen from pipelines and pumped to nearby depots, and subsequently transported to refineries under the control of organized crime groups and eventually sold on the black market. Kyrgyzstan's Interior Ministry recently reported that an estimated 155 tons of oil products were smuggled into the country between 1997 and 1998 - most of which probably originated in Kazakhstan. In fact, oil smuggling rings have become commonplace throughout Central Asia, where hundreds of illegal petrol stalls are operated along the main highways. Depending on the evolution of the socio-economic and political environment, the most extreme future for Kazakhstan is comparable to that of Chechnya, where approximately half of Chechen oil is stolen.

Organized Crime And Instability

The greatest threat to stability and economic development may come from criminal organizations not directly involved in oil development. As development expands, it is believed that access to the Caspian will become increasingly difficult as physical protection is tightened by government agencies and the private security teams of international corporations. Furthermore, development also has the potential to bring greater political stability, should the native populations begin to feel the associated benefits of foreign investment - such as employment opportunities.

For criminal groups involved in the trafficking of illicit narcotics, arms, and people, the above scenario directly threatens access to a number of routes leading to the West. Over the past decade routes used by drug cartels have included several that began in Afghanistan, ran through Turkmenistan to the port of Turkmenbashi, and across the Caspian into Azerbaijan or Russia. Alternative routes start in Afghanistan and pass through the western oil-producing region of Kazakhstan via Tajikistan/Uzbekistan. Furthermore, should security around the Caspian substantially increase with development, there is an associated fear that the $3-4 billion annual operations of the Caviar Mafia will also be disrupted. Generally interested in operating in environments marked by instability, the potential disruption of access to the Caspian may lead to a situation that is comparable to Colombia and, to a certain degree, Chechnya.

Considering current regional conditions, the most effective way for criminal groups to create instability is to support the activities of insurgent or terrorist movements. In light of the existence of religious-extremist and ethnic-separatist movements in Central Asia, it would take little convincing for them to target foreign business operations, personnel, and infrastructure. As the history of terrorism repeatedly reveals, foreign targets promise to bring international media attention to the causes that regional terrorist groups are fighting for. As a result, a future danger that the oil industry must consider is the extent to which oil wells and pipelines are vulnerable to rebel sabotage. Attacks against the oil and gas industry, therefore, would be an obvious way for criminal groups to create conditions favorable to the continuation of undetected criminal operations.

Impact Assessment

In an area where three-quarters of foreign investment is directly connected to the development of oil and gas resources, the importance of monitoring the operations and growth of organized crime in the Caspian is of paramount importance for commercial risk analysis. As many of the above examples reveal, trends suggest that an increased presence of foreign business will be met with an increase in organized crime -- a scenario that exemplifies the belief that oil development is a double-edged sword, one that simultaneously brings prosperity and feeds criminal activity. There is, therefore, little doubt that the region will continue to experience a growth in economic crimes, kidnapping for ransom, and violence perpetrated to create instability.

The most worrying trend, however, is one that has commonly been associated with the growth of organized crime in the Russian Federation that is the criminal-political nexus. As Professor Phil Williams, an international security specialist, writes: "There is no better front for organized crime than a state." Considering the extent to which the governments of the Caspian littoral states are directly involved in criminal activity, this quotation provides a telling summary of the situation. Despite the extent to which these states may be considered criminal, it is worth noting that this does not necessarily pose a significant problem for foreign business so long as a degree of relative political stability is maintained by the current ruling clans.

However, a number of immediate difficulties for foreign businesses operating in the Caspian still exist. For example, as development in the oil and gas industry expands, businesses seeking to operate in the region must be aware of cooperating with domestic companies that may act as fronts for criminal organizations simultaneously engaged in illegal activities. Furthermore, given the position of officials in these countries, foreign companies are forced to remain in good standing with the government. Without the explicit support of domestic governments, foreign operations are directly placed at risk as they will become targets of arbitrary rises in taxes and demands for cash settlements -- situations that cannot be alleviated by any foreign institution.

As the Giffen scandal reveals, there are inherent dangers should bribery be uncovered as the primary tool used by companies to remain in the region. In fact a significant percentage of foreign firms admit that corruption does represent the most discouraging factor for business, revealing why the Central Asian littoral states only attracted $5 billion of $150 billion invested in developing regions in 1999. Although corruption emerged from the Soviet system, the extent to which it has grown over the past decade highlights the role of organized crime in the region. ("Jane's Intelligence Review" -- Jane's Information Group)



3 April 2001

By Michael Lelyveld

As it struggles to recover from an economic crisis, Turkey may be on the verge of a feud over gas imports from neighboring Iran.

Late last week, Turkey's Anatolia news agency reported that Iranian gas deliveries may be delayed from July until early 2002 because Tehran has failed to build a metering station between the two countries as required under a 1996 contract.

Platt's Oilgram, an industry news service, said 30 March that it confirmed Turkey's version of the story with an unnamed energy official, who blamed Iran for the setback despite a long series of problems on the Turkish side.

Iran has been slow in responding to the story, perhaps due to its national holidays for the New Year. But earlier delays have led to frosty relations and threats of big fines.

Last week's warning is the latest hurdle for Iran's huge 22-year deal to supply Turkey with gas. The contract has been controversial from the start.

The United States opposed the $23,000 billion gas pact when it was signed by the Islamicist government of Turkey's former prime minister, Necmettin Erbakan. But after Erbakan was ousted, Ankara vowed to honor the contract, saying the country's growing economy needed the fuel.

Both sides were supposed to build pipelines to join at the border, but Turkey's part of the project was repeatedly stalled. In December 1999, Iran raced to finish its line from Tabriz, lighting a flare on the frontier as a sign that it had fulfilled its part of the bargain.

Turkey was forced to admit that it was not ready to take delivery of the gas. Iran responded by demanding $200 million in fines to cover its costs under the terms of a take-or-pay contract. Turkey said it had been unable to secure financing due the worldwide crisis in emerging markets in 1998. It also cited trouble in buying a compressor because of U.S. export controls.

Eventually, the two sides compromised by agreeing to start deliveries on 31 July and to extend the terms of the contract. Turkey also took the opportunity to note that Iran was responsible for building the metering station, so that the amounts of gas could be properly billed.

In the latest episode of the dispute, Ankara has tried to put the burden back on Iran. As Platt's reported last week, "Energy officials now accuse Iran of having misled Turkey when it said it was ready to begin deliveries in January 2000." The news service quoted a Turkish official as saying, "If the metering station wasn't ready, how could they have pumped any gas?"

Turkey has refused to accept a temporary metering station on the border. At the same time, officials concede that Turkey's own pipeline work is not finished, although they promise that it will be complete in July.

But officials have made no mention of Turkey's current economic difficulties, which have raised doubts about its ability to pay for or use large additional volumes of gas.

The value of the Turkey's currency has fallen by one-third since February, when a political row erupted between the country's president and its prime minister. A Turkish delegation returned from Washington last week without a commitment for additional loans.

In meetings with experts in Washington, Turkish Energy Undersecretary Yurdakul Yigitguden stuck to the official line that the country's electricity demand would grow 8 percent annually, even though the government has forecast an economic decline of 2 percent this year. Yigitguden made no mention of any delays in Turkey's gas import plans.

But the country is also due to accept large increases in gas imports from Russia, which also holds take-or-pay contracts. Moscow is expanding deliveries through Bulgaria and is adding its new Blue Stream gas pipeline under the Black Sea.

A delay in supplies from Iran could give Turkey more time to recover from its economic slump so that it can use all the gas that it is obligated to buy. While Turkey's economy may be the real reason for slowing the gas import schedule, Iran's ability to deliver may also be questioned. Until the country's giant South Pars gas field in the Persian Gulf starts to produce, it is unclear how much excess fuel Iran really has.

But Tehran is unlikely to accept the blame for Turkey's predicament or the explanation that the minor matter of the metering station is at fault. Trouble has been brewing for years over Turkey's rosy forecasts of demand for foreign gas, and the July deadline for the Iran deal may only be the first that Ankara will miss. (RFE/RL)



3 April 2001

The Turkmen government has prepared a $10 billion investment project and submitted it to U.S. and European oil companies with the aim of striking a deal. The project envisages production of 80 million tons of oil and it includes the Serdar (Kiapaz) field as well, Media Press reports.

In line with negotiations between Azerbaijan and Turkmenistan, the sides will not sign any agreement on the development of this field until the issue of the Caspian status has been fully resolved. However, the Turkmen government has broken the agreement and included the disputed field into the development project.

Commenting on the issue, SOCAR [State Oil Company of the Azerbaijani Republic] said that some time ago Azerbaijan had a contract on the development of the field; however, taking neighborly relations into account, Azerbaijan shelved the contract. It was exactly at that time when the sides agreed not to carry out any work on the field until the problem was resolved.

We should note that this is not the first time that Turkmenistan has broken the agreement. On many occasion Turkmenistan submitted the development project for Kiapaz (Serdar) field to [foreign companies] based in Ashgabat, Houston, and London, and even succeeded in signing a contract with Mobil. But so far it has failed to get any oil company involved in the development of the field. Companies realize how complicated the situation is and are refusing to invest in the disputed field. At the same time, all companies showing interest in the Caspian Sea, in one way or another, are operating in the Azerbaijani sector and are not interested in damaging relations with it.

The interesting point is that why has Turkmenistan raised this issue now? What would the Turkmen president gain by exacerbating the situation in the run-up to the forthcoming meeting of the heads of Caspian states? What would he gain by disrupting the summit and raising an old problem?

The reason behind this could be that the Caspian states might reach common ground about the status issue and this will not suit Turkmenistan. Even Turkmenistan's recent statement backing Iran's 20 percent condominium position, which goes against its principles, looked like a country losing its allies (later President [Saparmurat] Niyazov rejected this statement).

A few days ago, Niyazov received Russia's Caspian envoy Viktor Kalyuzhny and reminded him that Turkmenistan was not going to sign any document during the summit and did not deem it important to sign a joint agreement. The Turkmen leader seems to be preparing an argument to hinder the negotiations in case the discussions do not develop in his country's favor. It is not known yet whether this is a hasty action or a well-thought-out one, but no doubt, it will ruin another initiative in the Caspian region. ("Azadliq" -- Baku)