Turkmen Report: July 22, 2000

July 21, 2000

Turkmen President Saparmurat Niyazov has suggested that the curricula at the country's higher educational establishments should be cleared of subjects unrelated to a given student's chosen profession.

Addressing leaders of the republic's education system, college and university rectors at a conference, Niyazov said any instructor should have a group of no more than five undergraduates in order to have more control over the quality and quantity of their subject mastery.

The conference also amended rules for admission to higher educational establishments. Ministries will now be able to recommend some applicants to a given college or university.

"It is often seen better on the job who is more worthy to be a student and who will work with greater dedication in the national economy," Niyazov said.

"The criteria in competition for the title of a student should include such key factors as patriotism, general educational, cultural level, and psychological compatibility with the highest requirements of a chosen profession," the president said.

Niyazov added that a check of applicants' family background three generations back is important for revealing the worthiest, and that the priority should go to Turkmen-speaking applicants.

Turkmen president also said that there is no need for public schools to teach the English language. Students who want to study English should find private teachers, Niyazov said.

Two years ago Niyazov issued a decree forbidding study of foreign languages in public schools.

RFE/RL Turkmen service also learned this week from Western sources that 38 Turkmen students, selected through the USAID program to attend American universities, have not been allowed by the Turkmen authorities to leave the country. (Interfax, RFE/RL)

July 21, 2000

More than 200 Turkmens living in Ankara laid black wreaths at the gates of British and U.S embassies and the U.N. building yesterday in memory of two Turkmens killed in a July 12 clash with the Iraqi Kurdistan Democratic Party (IKDP) in the northern Iraqi city of Arbil.

Speaking in front of the British Embassy, chairman of the Iraqi Turkmens' Association Sabah Ketene accused the IKDP, of not respecting Turkmens' basic cultural and political rights.

Turkish Foreign Ministry has asked the IKDP representative in Turkey Safeen Dizayee to be cautious in relations with the Turkmens and punish people responsible for the deaths of two Turkmens.

Turkish State Minister M. Haluk Cay, responsible for Turkic-speaking countries and Turkish groups abroad, also met with Ketene. During the meeting, Cay said that Turkey would not permit a Kurdish state to be founded in northern Iraq.

Referring to the deaths of the two Turkmens, Cay said that such events should have been prevented.

"Turkey attaches great importance to the life and property rights of Turkmens. It is struggling to prevent the negative effects of a lack of authority and to protect the Turkmens' security in northern Iraq," Cay concluded. (Turkistan Newsletter)

July 16, 2000

Muzaffer Arslan, Chairman of the Iraqi National Turkmen Party, visited the Turkish community in Berlin on 12 July, according to an "Anatolia" report.

Arslan told the group that no foreign government apart from Turkey could defend the rights of the Turkmens living in Iraq. Arslan also discussed Baghdad's efforts to change ethnic identity of Iraqi Turkmens, a campaign which he said reflects Iraqi concern that "the Turkmen people would wish to be included in Turkey." (RFE/RL, Turkistan Newsletter)

July 18, 2000

Toyli Kurbanov, Turkmenistan's ambassador in Yerevan, has rejected as "absolutely untrue" a Keston News Service report detailing restrictions on the Armenian Church in Turkmenistan.

The Turkmen government and the Moscow Patriarchate both oppose either the reopening of Armenian churches in Turkmenistan or the restoration of a 19th-century church in the town of Turkmenbashi, Keston News Service reported yesterday.

There are an estimated 40,000 Armenians in Turkmenistan. (RFE/RL, Keston News Service)

July 16, 2000

RFE/RL Turkmen service correspondent in Afghanistan reports that Turkmens living in Northern Afghanistan joined anti-Taliban movement and formed a political and social organization, Islamic Turkmen Consultation Front. The organization will seek to protect the rights of the Turkmens in Afghanistan. (RFE/RL)

July 21, 2000

Iran's Pars Energy has won an international tender for the design, construction and operation of liquefied gas storage facilities at the Caspian seaport of Turkmenbashi (formerly Krasnovodsk) and at the railroad stations of Serakhs and Serkhetabat (formerly Kushka).

Under the agreement signed yesterday by Turkmen President Saparmurat Niyazov, the state-run trading corporation Turkmenneftegaz will sign a $34.87 million contract with Pars Energy. The Turkmenbashi facility will have the capacity to store 6,000 tons of liquefied gas, the Serakhs facility will store 1,000 tons, and the Serkhetabat facility will hold 500 tons.

Foreign investments brought by Pars Energy will finance design and construction of the storage facilities. Turkmenneftegaz will provide 150,000 tons of liquefied gas to Pars Energy with a maximum of 30% of the amount used to pay back the investments, duties, and other costs incurred by the Iranian company.

The two companies, as well as foreign subcontractors in the project, will be exempted from all taxes, excises, and trading and customs fees throughout the construction period. (Interfax)

July 21, 2000

A 127-kilometer highway will be built between Ashgabat and Kaakhba in Turkmenistan.

President Saparmurat Niyazov signed an agreement yesterday under which the state-run concern Turkmenavtollary (Turkmen Roads) will sign a $87 million contract with A-M-L joint venture for construction of a highway with a median strip.

Turkmenistan's State Fund for Development of Transport and Communication will give A-M-L an advance payment of $2.61 million and then make payments as construction progresses. (Interfax)

July 20, 2000

Turkmenistan will buy three Boeing 717 from the U.S. Boeing Company, a representative of the Turkmen government staff has told Interfax.

Turkmen President Saparmurat Niyazov and Boeing International Sales Director Aldo Basile signed the $78 million contract today in Ashgabat.

Boeing will supply airplanes to Turkmenistan by the end of this year, provide for their technical maintenance, deliver spare parts, and train crews and technicians.

Turkmenistan will use the Boeing 717 only for domestic routes.

Turkmenistan already has three Boeing 757 and three Boeing 737. A Boeing 757 will be supplied to Turkmenistan in early August.

The country is planning to use only Boeing Company airplanes. (Interfax)

July 19, 2000

Negotiations on the Caspian Sea status with Turkmen President Saparmurat Niyazov in Ashgabat have been constructive, but "much more difficult" than with the Azerbaijani and Kazakh presidents, Russian presidential envoy and Deputy Foreign Minister Viktor Kalyuzhny said yesterday after the talks.

Kalyuzhny told Turkmen television in an interview late yesterday that Russia and Turkmenistan share the view that it is necessary to sign an international convention on the status of the Caspian. At the same time, Russia believes that agreement on ecological and other issues related to protection and the use of biological resources of the Caspian cannot be deferred much longer.

"One should do everything simultaneously, because the sea can be divided up eternally, but its protection should have started yesterday," Kalyuzhny said.

According to Russia's view, the Caspian Sea should be developed in phases. Kalyuzhny said the first step in resolving the issue could be signing an agreement on ecology and biological resources.

After meeting with Niyazov, Kalyuzhny said delays in determining the Caspian's legal status could lead to conflict.

Kalyuzhny is next scheduled to discuss the status of the Caspian sea with Iran, and the further south the Russian delegation moves, the more difficult the conversation becomes, he said.

The five countries with Caspian coastlines - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - have disagreed about how the Caspian should be divided between them, putting offshore production and exploration at risk.

Representatives from the five countries are due to meet next month in the Russian city of Astrakhan, but the Russian envoy said yesterday it is premature to convene because the sides "are not yet ready to move forward." (RFE/RL, Interfax)

For further analyses, see articles of RFE/RL's Bruce Pannier and Michael Lelyveld at the end of this report.

July 19, 2000

The Kazakh government plans to introduce quotas on the amount of electricity that can be imported from its Central Asian neighbors.

Deputy Prime Minister Daniyal Akhmetov said the measure was aimed at protecting the domestic market.

Akhmetov said that given current rates for transporting electricity on KEGOC, the national electricity network, and on regional networks, domestic electricity producers were able to compete with imports from Tajikistan and Turkmenistan.

Kazakhstan should not be importing electricity from Turkmenistan when it can buy electricity from the Ekibastuz regional electricity station in Pavlodar at the same price, Akhmetov said. Similarly, it should not be importing from Tajikistan when electricity at the same price is available in southern Kazakhstan.

Akhmetov added that the measures are aimed at getting Kazakh suppliers to set competitive rates. (Interfax)

July 17, 2000

Grain holiday was celebrated yesterday in Turkmenistan.

Introduced by a special presidential decree a few years ago, the holiday has been celebrated every year on the third Sunday of July.

This year's grain harvest of 1.7 million tons was the republic's biggest since 1991 and was 200,000 tons more than planned.

"The problem of the country's bread sufficiency has been solved and full food sufficiency will be guaranteed in the next two years," President Saparmurat Niyazov said at an official ceremony in honor of wheat growers. The president said he expects 1.8-2 million tons of grain to be harvested in 2001, 3 million tons by 2005 and 5 million in another five years. Niyazov said he believes that by 2010 Turkmenistan will export up to 2.5 million tons of grain.

Niyazov presented 43 farmers with awards for achieving "high results in harvesting."

Professional and amateur musical ensembles performed at the national park on Ashgabat's outskirts during the festival. (Interfax)

July 16, 2000

Talks with potential sponsors for the construction of the Main Export Pipeline (MEP) Baku-Ceyhan will be completed by the beginning of August, State Oil Company of Azerbaijan (SOCAR) president Natik Aliyev have said.

He said the list of companies financing preparation of a feasibility study will be completed at that time.

SOCAR foreign investment chief Valekh Aleskerov said any countries or companies able to provide oil for the future pipeline or financing for the project may join the MEP project.

Aleskerov said that a month ago 27 companies signed a confidentiality agreement with SOCAR and received electronic copies of documentation on the project agreement, including maps and preliminary data on the route. Now, legal, commercial, tax, and other aspects of the project have to be addressed, he said. (Interfax Central Asia and Caucasus Business Report)

For further analysis on the Baku-Ceyhan pipeline, see article of RFE/RL's Michael Lelyveld at the end of this report.

July 16, 2000

Turkmenistan posted a budget surplus of 28 billion manat in the first half of 2000, or 0.26% of GDP, which is estimated at 10.7 trillion manat - up 14% compared to figures published at the same time last year, the national state statistics institute has reported.

Revenue totaled 2.65 trillion manat, or 100% of the target for the January-June 2000 period, said the Economics and Finance Ministry.

Goods production accounted for 56% of GDP, industry continued to make up a high share at 37%, agriculture accounted for 18%, and construction stood at 11%.

Added value grew 14% in industry, 21% in agriculture, and 14% in services.

GDP calculations took into account unofficial, hidden and illegal economic activity. Added cost at the unofficial sector, which covers household-producing goods and offering services for sale and private consumption, totaled 16% of GDP.

Hidden production, especially in small businesses, calculated on VAT results, totaled 2% of GDP.

Industrial output during the first six months of 2000 came to 7.1 trillion manat, an increase of 14% over last year in fixed prices and 34% in current prices.

Output in basic industries (power, fuel, chemicals, heavy, food, construction materials, light and food industries) came to 5.1 trillion manat (up 18% in fixed prices).

The Textiles Ministry (38%) and Turkmengaz (37%) beat the average growth pattern.

The state sector accounted for 67% of industrial output, or 4.7 trillion manat.

The biggest share in output in basic industries was for fuel and power (64%, including 45% for gas), and light industry (19%). Extraction of gas and oil accounted for 57%, refining was at 43%.

Pre-tax profits of all of Turkmenistan's companies and organizations came to 1.1 trillion manat, an increase of 70% over the same period last year. 86% of profit was in the industrial sector, particularly fuel and power, which accounted for 85% of industrial profits.

Pre-tax losses for businesses and organizations came to 139 billion manat. Among the loss makers were 188 businesses (14% of reporting companies).

Spending amounted to 2.63 trillion manat, or 86% of the target for the period. Most spending (2.51 trillion manat, or 78.1%) went on financing the social sector (wages, pensions, benefits and grants), including 41.6% on education and 18.5% on healthcare.

Other spending items were general state services (15.5%) and financing the economy (6.4%). (Interfax Central Asia and Caucasus Business Report)

July 16, 2000

Year to May 2000, Turkmenistan traded with 72 countries. Russia's share increased from 8.6% in May 1999 to 31.4% in May 2000. Trade between the two countries came to $484 million.

According to the national statistics and information institute, Turkmen exports to Russia came to $413.8 million (a 26-fold increase compared to January-May figures last year), imports from Russia amounted to $70.2 million (down 7.8%).

The sharp increase in trade between the two countries is due to larger gas exports to Russia: $396 million worth of gas was exported to Russia in January-May 2000, 88% of all gas exported by Turkmenistan.

Turkmenistan's foreign trade year to May 2000 increased to $1.540 billion, which is a 45% increase over the same period last year. Export amounted to $919 million (up 53%), while import stood at $621 million (up 34%). The trade surplus increased 120% to $298 million. The CIS share in trade was 43%, including 53% of exports and 29% of imports.

Natural gas accounted for 49% of exports, petroleum products for 22%, cotton fiber for 10%, crude - 9%, cotton textiles - 4%. 90% of gas went to the CIS, including 88% to Russia. Iran accounted for 10% of gas exports.

Most petroleum products were exported to Italy (58%), the CIS (12%), Turkey (11%), and Afghanistan (7%). Crude was exported to Italy (45%), the CIS (23%), Iran (13%), and Great Britain (11%).

68% of Turkmenistan's imports was industrial equipment. Consumer goods accounted for 32% of imports, including foods - 11%.

Goods were imported from Turkey (19%), United Arab Emirates (11%), France (10%), Japan (9%), and Iran (6%). (Interfax Central Asia and Caucasus Business Report)

July 16, 2000

The total money supply rose 23.5% year to May from 1.795 trillion manat to 2.216 trillion manat. According to Turkmenistan's Central Bank, the money supply rose 54.8% compared to June 1, 1999. According to experts, the rapid expansion of the money supply is evidence of potential for inflation.

The money supply to GDP ratio as of the beginning of June was 26.6%.

The amount of cash in circulation increased 36.4% this year, from 1.009 trillion manat to 1.376 trillion manat. Compared to June 1, 1999, the increase was 43.9% and is due to the fact that salaries for public-sector workers, pensions and stipends were doubled beginning on December 1, 1999. At the same time, the share of cash in the overall money supply fell from 66.8% (June 1, 1999) to 62.1% (June 1, 2000). Inflation fell from 15.1% year to May 1999 to 0.6% year to May 2000.

Non-cash money (account balances and deposits) rose 6.9%, from 786 billion manat to 840 billion manat, or 76.8% over figures posted on June 1, 1999. (Interfax Central Asia and Caucasus Business Report)

July 21, 2000

Kazakh President Nursultan Nazarbayev has signed a controversial law granting himself extensive special powers, including immunity from prosecution for life and the right to remain the head of Kazakhstan's parliament after he leaves office. Opposition parties have criticized the law and said that Nazarbayev is trying to make himself president for life. (RFE/RL)

July 21, 2000

A leading human rights groups says an Uzbek Muslim is missing after being detained and possibly tortured by Uzbek state authorities.

Human Rights Watch says in a statement that Bahodir Hasanov, who is 38, was taken into custody on July 18 for the fourth time this year, and that the authorities have refused to give any information on his whereabouts.

The group says Hasanov's entire family is being persecuted for its religious practices. His 27-year-old brother and 70-year-old father are both religious prisoners. Human Rights Watch says all three have been treated brutally by police during previous detentions, and it says it fears Hasanov is now in danger of further torture and other mistreatment. (RFE/RL)

July 20, 2000

Police in Kyrgyzstan's capital Bishkek today sealed off access to the offices of the Kyrgyz Committee for Human Rights and detained the son of the organization's director.

Committee worker Gulhan Borubaeva, speaking by telephone from Bishkek, said about 20 police came to the KCHR office today and demanded entrance.

Borubaeva said that Almaz Dyryldaev, son of KCHR chairman Ramazan Dyryldaev, refused and was taken in for interrogation and police then closed the office and stationed a guard outside.

Ramazan Dyryldaev has been in hiding since July 17, following police coming to his home and office with an arrest warrant.

Police and legal harassment of human rights activists in Kyrgyzstan has been consistent since parliamentary elections in February. (RFE/RL)

July 20, 2000

A report from Kazakhstan says that 44 jail inmates have apparently attempted mass suicide in a prison there.

Interfax quotes a Kazakh Interior Ministry official (unnamed) as saying that the prisoners used razors to slash their necks, stomachs and wrists, and were now receiving medical care.

The official gave few details of the incident, at the Arkalyk prison in the northern Kostanai region, saying it occurred during a routine check on the prisoners for forbidden items.

AFP reports a spokeswoman for the Kazakh International Human Rights Bureau confirmed that 44 prisoners had mutilated themselves and said an investigation was being carried out, the results of which would be clear tomorrow.

A similar apparent mass suicide in another Kazakh prison was reported last year. Conditions in the country's jails are generally poor. (RFE/RL)

July 19, 2000

UN humanitarian agencies today warned that a severe drought is affecting as many as 60 million people in Central and South Asia.

The head of the World Food Program, Catherine Bertini, said that UN agencies believe the worst-hit areas are Afghanistan, Tajikistan, Pakistan, India and Iran.

She said the situation is particularly bad in Afghanistan, where the combined impact of civil wars and the drought will have a severe impact on up to four million people. Bertini also expressed concern about a recent order from the Taliban forbidding women from working for international humanitarian agencies. She said these agencies rely on women to help provide food aid.

Bertini said Tajikistan is the second-most affected country in the region, with more than two million people facing food and water shortages. She said 18 of 28 provinces in Iran have been affected and drought conditions have been recorded in Syria and Jordan as well. (RFE/RL)

July 19, 2000

Meeting of the heads of special services of Central Asian countries took place today in Almaty.

The meeting was held behind closed doors, sources at the Kazakh National Security Committee have told Interfax. Official KGB structures have so far refrained from giving any information or making any comments on the matter.

Representatives of the Azerbaijani and Turkish special services also took part in the meeting, according to some information. (Interfax)

by Robert McMahon, RFE/RL correspondent at the United Nations

July 20, 2000

Qazi Hussain Ahmed, leader of Pakistan's Jamaat-e-Islam party, says his trip to North America during the past several weeks has been focused on correcting misconceptions about Islam.

But his meetings in Washington last week with some senior State Department officials have raised questions about whether he will return to Pakistan with a mission to broker a peace between Afghanistan's warring factions.

Ahmed has long ties with Afghanistan and leads a fundamentalist Muslim party in one of the few countries that recognizes the Taliban as legitimate rulers of Afghanistan.

Ahmed would not give details of his meetings with U.S. officials in Washington, which included Assistant Secretaries of State Karl Inderfurth and Harold Koh. But he said the talks were fruitful. And he told reporters at a news conference at the United Nations yesterday that he is prepared to play a role as a peace broker in Afghanistan.

"I am ready to communicate with the Taliban although I have no special relationship with the Taliban, but for the objective of peace I'm ready to communicate with them," Ahmed said.

Ahmed stressed that the most important players in an overall settlement are the neighboring countries of Iran and Pakistan, Muslim nations which also host large numbers of Afghan refugees.

"Iran and Pakistan should be encouraged by the world community to try to resolve the problem of Afghanistan by the formation of a wide-based government which includes all the people who have worked for the independence and for the sovereignty and for the evacuation of the Russian forces from Afghanistan," Ahmed told reporters.

But a representative of Afghanistan's UN mission was doubtful about the role Pakistan, or the Jamaat-e-Islam leader, could play. Afghanistan is represented at the United Nations by the United Front, the opposition group that controls about 10 percent of the country.

The mission's press attach�, Haron Amin, told our correspondent in a telephone interview that the United Front welcomes any attempt to mediate a solution to the Afghan conflict. But he was skeptical of Ahmed's chances:

"If he can play a role, if he has any indirect connections or direct connections to the Taliban, and if he's able to bring the Taliban to the negotiating table - something they haven't been very adamant about doing - then we would welcome that. But as far as we're concerned, we do not believe that Mr. Qazi Hussein Ahmed is in a position to really influence the leadership of the Taliban."

Ahmed was questioned repeatedly yesterday about the nature of his talks with U.S. State Department officials but he would only say they involved an exchange of information on issues such as Kashmir and Afghanistan. Inderfurth, who is the Assistant Secretary of State for South Asia, is due to testify today before the U.S. Congress on relations with the Taliban regime.

Meanwhile, the UN humanitarian coordinator in Afghanistan, Eric de Mul, is completing talks with Taliban leaders in Kabul on the status of Afghan women employees of international aid agencies. UN officials say he is due to provide details on these talks today in Islamabad.

The prospect of a ban on Afghan women working for these agencies has worried humanitarian officials. The combination of years of civil war and a severe drought have created a heavy dependence in Afghanistan on donated food. Organizations like the World Food Program (WFP) rely on women to help distribute food. WFP director Catherine Bertini told reporters yesterday about her organization's concern.

"That would certainly make our delivery of assistance extremely difficult as well as the targeting of that assistance because the assistance that we provide in Afghanistan, we're very careful to be sure that we provide women with a more than half share of what is distributed there."

Bertini said Afghanistan appears to be the most severely affected among several Central Asian countries facing a drought emergency. WFP and other humanitarian agencies issued an appeal on Wednesday for donations to help an area in which 60 million people are threatened by drought.

by Bruce Pannier, RFE/RL

July 18, 2000

U.S. envoy Stephen Sestanovich visited Central Asia last week to follow up on work done by his boss, Secretary of State Madeleine Albright, in April. Sestanovich traveled to Turkmenistan, Kazakhstan, Kyrgyzstan, and Uzbekistan.

Although his agenda varied from country to country, his general message boiled down to this:

"We aim to deepen our cooperation in a whole series of areas, whether it's by finding ways to increase educational exchanges, or to prepare for joint military exercises, or to share perspectives on multilateral diplomacy."

That was Sestanovich in Kazakhstan last Tuesday (July 11).

He has reason to seek deeper cooperation. CIS Central Asian governments have adopted a somewhat chillier attitude toward the U.S. recently. Since Albright's visit in April, Russian President Vladimir Putin has been in the region twice, and Chinese President Jiang Zemin was there at the start of this month. In a region where leaders once eagerly courted ties with the U.S., Washington may now be third, or farther down, on the list of Central Asia's friends.

Sestanovich's first stop was Turkmenistan, a country where U.S. influence has particularly suffered.

Two U.S. companies, Bechtel and General Electric, last month pulled out of an international consortium that was to build a pipeline to carry Turkmen natural gas across the Caspian Sea. Sestanovich attempted to convince Turkmen officials that the departure of the two companies did not mean the project was dead. But Turkmen President Saparmurat Niyazov told Sestanovich the deal as it stands now is not in the interests of Turkmenistan.

While the trans-Caspian pipeline deal was starting to unravel, Putin visited Turkmenistan in May. And as of this month, exports of Turkmen gas to Russia, via a Russian pipeline, were reportedly reaching 100 million cubic meters daily.

Meanwhile, Jiang Zemin came to Turkmenistan with officials from the China National Petroleum Corporation. They signed deals to help Turkmenistan develop oil and gas fields and construct a 5,000-kilometer oil pipeline from eastern Turkmenistan to China.

The U.S. secretary of state, however, did not visit Turkmenistan during her trip to Central Asia in April. But Albright did travel to the next three countries on Sestanovich's schedule - Kazakhstan, Kyrgyzstan, and Uzbekistan.

Putin also visited Uzbekistan, in May. And he met with the Uzbek, Kazakh, and Kyrgyz presidents at the CIS summit in Moscow in late June. Then Putin met them all again in Tajikistan at the start of this month, when the Shanghai Forum met. Jiang was also at that summit and met with the four Central Asian presidents before traveling further to meet the Turkmen president.

The CIS summit and Shanghai Forum summit focused Central Asian attention on the region's security problem. An assassination attempt on the Uzbek president's life last year and an invasion of southern Kyrgyzstan by Islamic militants later that summer has made that amply evident.

The U.S. has provided money and advice on security. But, not least because of geography, the U.S. cannot compete with Russia and China in helping Central Asia combat its immediate security threats.

The Central Asian leaders received promises of military assistance from the presidents of China and Russia. What they received from Albright in April was vocal support in their fight against terrorism and the small sum of 3 million dollars each for Kazakhstan, Kyrgyzstan, and Uzbekistan to bolster their border defenses.

The U.S. emphasis on democracy building might further encourage the Central Asians to turn to their less exacting neighbors. Both Albright and now Sestanovich told Central Asian countries they need to improve in that area. And the U.S. agreed with international bodies that criticized the most recent elections in the region. Russia and China, in contrast, maintain that the internal affairs of Central Asian countries are their own business.

Putin and Jiang have also aimed some criticism at the U.S. by raising the issue of U.S. plans to build and deploy a national missile defense system. Both Russia and China said deployment would violate the 1972 Anti-Ballistic Missile Treaty. Now, the Central Asian leaders are echoing that line.

Sestanovich did not appear to have accomplished much last week. No deals were signed, and no joint statements came out of any of the meetings he had with regional leaders.

Still, as the Asian Wall Street Journal (July 7) points out, while Russian and Chinese efforts to boost their influence may be working for now, "these authoritarian governments [in Central Asia] have failed to acknowledge that the best defense against extremism is democracy and economic opportunity."

The U.S. policy toward Central Asia is based on this idea.

by Michael Lelyveld, RFE/RL

July 18, 2000

Russia has been using a series of mixed signals and tough tactics to lure Azerbaijani oil away from the planned pipeline from Baku to the Turkish port of Ceyhan.

Last week in London, the Russian pipeline company Transneft held a meeting with major oil companies involved in Azerbaijan's biggest Caspian project to offer them a deal for reduced transit fees on the Russian route to the port of Novorossiysk. The Russian line competes with the Baku-Ceyhan project, which is backed by the United States.

The pipeline to Novorossiysk is also the same one that ran through Chechnya before fighting erupted last year. In March, Transneft completed a 300-kilometer bypass around the territory at a cost of some 140 million dollars. Transneft has been trying to find ways to pay for the budgeted cost of construction ever since.

The problem has been compounded by the fact that there has been only a limited demand for the line. The Western oil companies built their own pipeline through Georgia several years ago, allowing them to export oil for about one-fifth of the Russian tariff to Novorossiysk.

Transneft has insisted on charging the Azerbaijani state oil company SOCAR the higher rate under a 1996 contract. But SOCAR recently stopped all shipments because the country needs to build up reserves of winter fuel. Transneft responded by threatening to impose fines of 29 million dollars on Azerbaijan. Earlier this month, Azerbaijan Prime Minister Artur Rasizade firmly rejected the demand.

It is unclear whether the Russian government will try to collect or not, although Transneft sent a formal notice of the penalty to Azerbaijan last week. When asked about the fines in Baku last week, Russian Deputy Foreign Minister Viktor Kalyuzhny called them "wrong" and "not worth discussing," according to Azerbaijan's ANS News. There was no explanation of the contradictory signals from the Russian government.

The conflict stems from the political nature of the Chechnya bypass project and the entire pipeline issue. The fees and the fines are just two ways of fighting the U.S.-backed plan for Baku-Ceyhan. That project depends on finding enough Caspian oil to fill the new pipeline. Moscow's attempts to persuade, cajole or coerce SOCAR into sending oil over the Russian route will reduce the amount available for the line to Turkey.

The Baku Sun, an English-language newspaper, called the Russian effort a "clumsy campaign to draw Azeri oil exports through its territory."

Transneft has now made an offer to the Western oil companies to cut its transit tariff from 15 dollars 67 cents per ton to as little as eight or ten dollars, which is still two or three times the rate for shipping through Georgia. But if the oil companies accept, Transneft has suggested that it will file a proposal with the Russian government to reconsider the 1996 contract with SOCAR, according Azerbaijan's MPA news agency. SOCAR would then presumably be offered the same lower rate and relief from the threatened fines.

The tactic appears to be aimed at pressuring Azerbaijan to seek help from its partners among the Western oil companies, so that SOCAR can escape its costly contract and avoid the penalties. The advantage for Transneft is that it can fill its pipeline with Caspian oil and keep those volumes from eventually flowing to Ceyhan.

Even before Baku-Ceyhan can be built, there is likely to be competition. Russia has announced that it would like to enlarge its Novorossiysk route to carry more oil, while the partners in Azerbaijan's "contract of the century" are reportedly considering an expansion of their route through Georgia to the port of Supsa.

Transneft is said to have offered even lower transit rates to Kazakhstan and Turkmenistan for using the Novorossiysk line. The United States has been trying to persuade Kazakhstan in particular to make a formal commitment of oil to Baku-Ceyhan.

The normal course of competition may be complicated by questions about who speaks for the Russian government. Is it Transneft or Kalyuzhny? Only the pipeline company seems to favor the fines on Azerbaijan, but it is unclear whether Kalyuzhny has influence over Russian policy.

Then-Prime Minister Vladimir Putin ordered construction of the Chechnya bypass during the war last year. Several schemes for funding the project fell through, including one false report by Transneft that the pipeline would be financed by the European Bank for Reconstruction and Development.

Although the pipeline is now in operation, the payment for it is still a problem. It may be some time before Putin's strategy and all of his reasons for building the bypass become clear.

by Michael Lelyveld, RFE/RL

July 17, 2000

Russia's top official on Caspian Sea issues has urged Azerbaijan to end its border feud with Turkmenistan by allowing joint development of a disputed oilfield.

Speaking on July 14 in Baku, Russian Deputy Foreign Minister Viktor Kalyuzhny proposed a settlement of the long standoff over the Kyapaz oilfield based on a principle that resources which straddle a Caspian border should be shared.

Kalyuzhny aired the proposal after meeting with Natig Aliyev, the president of Azerbaijan's state oil company SOCAR. He plans to pursue it with Azerbaijan President Heidar Aliyev and will also advance it in meetings with Turkmenistan officials in Ashgabat in the coming week, ANS News said.

Russia is taking the same position on sharing several border oilfields with Kazakhstan in the northern Caspian, according to Kalyuzhny. The responses from Kazakhstan to the proposed settlement have reportedly been positive.

If Kalyuzhny succeeds in establishing the principle for bilateral borders, it could help to solve the long-standing problem over a legal division of the Caspian Sea. The issue has clouded development since 1994, when Russia first raised objections to Azerbaijan's "deal of the century" offshore project, arguing that no pact existed among the Caspian's five littoral states.

Since then, Russia has largely ignored its own objections by negotiating bilateral oil agreements with Kazakhstan. Many other offshore contracts have also gone forward, despite the legal argument over division. But the dispute over the Kyapaz field, which Turkmenistan calls Serdar, has had more immediate and damaging effects.

The competing claims have largely ruined relations between Turkmenistan and Azerbaijan, making cooperation on any issue difficult.

The row erupted in 1997 after the Russian oil company Rosneft signed a 1,000 million dollar deal with Azerbaijan to develop the field in the center of the Caspian. Turkmenistan President Saparmurat Niyazov objected to Russian President Boris Yeltsin, laying claim to the deposit's estimated 50 million tons of oil reserves. The Russian Foreign Ministry quickly apologized and cancelled the agreement with Azerbaijan.

For good measure, Turkmenistan also claimed the oil fields that were being developed as part of the "deal of the century," although they were closer to Azerbaijan's shore. At first, Baku tried to settle the matter by offering Ashgabat a share of its big 8,000 million dollar venture. But Niyazov refused, and relations have been sour ever since.

Brief improvements have followed agreements to cooperate on a trans-Caspian gas pipeline. Both sides have stated publicly that the border dispute would not keep the pipeline from going ahead. But the agreements have had little lasting effect.

Last January, Azerbaijan claimed half the capacity of the trans-Caspian line to export its own gas to Turkey. The demand made the economics of the line less attractive to Turkmenistan. Some analysts saw the move as retaliation for claims to Kyapaz-Serdar.

Kalyuzhny's solution offers promise, but there are at least three reasons to question whether it will succeed. Niyazov has previously rejected joint development, which was offered by Azerbaijan two years ago. Russia's interest in proposing the principle of sharing is also curious in this case, unless it is also seeking a share in the oilfield or reinstatement of contracts with Russian companies.

In the case of sharing fields in the northern Caspian, Kazakhstan may have no choice but to accede to Russian demands. Nearly all of Kazakhstan's oil is transported through Russia. It must also defend against further claims to its rich Caspian offshore shelf. Any agreement with Kazakhstan may have far less to do with the sharing principle than with Russia's power.

Lastly, it is unclear whether Kalyuzhny speaks for the Russian government at the highest level. Kalyuzhny, who failed to win reappointment as Russia's energy minister, has been given a new but less powerful post in Caspian affairs. So far, there seems to be no assurance that the sharing principle represents a policy that would be applied to an overall settlement of the Caspian division issue. It is also unknown whether the idea has been raised with Iran, which has sought an equal share in Caspian oil.

Kalyuzhny's proposal may be the start of a serious effort to solve the Caspian legal problems that Russia has helped to create, or it may simply be a ploy. In coming weeks, it may become easier to tell.