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A Russian Cell Phone Company Lands A Punch On The Government In Ashgabat

MTS says it is recalling 1,000 employees from the country
MTS says it is recalling 1,000 employees from the country
A Russian mobile-phone provider has decided to declare war on Turkmenistan.

In a letter sent to the participants of an exhibition held in Singapore to showcase Turkmenistan's potentials for investment last week, Moscow-based MTS warned business leaders of the risks of investing in this energy-rich Central Asian country.

"We believe it's our duty to inform the investing public and other multinational enterprises of the perils of Turkmenistan," MTS said in a letter sent to exhibition participants on March 3.

"There is a lack of transparency, running contrary to international business practices, and good corporate citizenry are rewarded with an ongoing risk in Turkmenistan."

MTS, which until December provided service to more than 85 percent of all cell-phone users in the country of 5.4 million people, says that it invested over $188 million in the country since entering Turkmenistan in 2005. The Turkmen authorities suspended the company's license in December.

In its letter, MTS complains that "Turkmenistan's sudden suspension of its license of operations was never justified and is causing MTS a loss of a total of $600 million and forcing it to recall its 1,000 employees from the country."

It's not yet clear how the letter will influence investment decisions by other multinational corporations that are considering whether to invest in Turkmenistan. The anticorruption body Transparency International rates Turkmenistan as one of the most closed countries in the world when it comes to financial dealings.

The Russian company's letter led the Turkmen Foreign Ministry to take the unusual step of defending itself. Within a day the ministry issued a press release in which it presented the country as "a credible partner."

"Today, there are 1,677 foreign companies operating with foreign capital in Turkmenistan and 2,362 investment projects worth a total of $45.7 billion are currently registered," the statement read.

The statement further argues that "Turkmenistan has not received its fair share of the "enormous business" generated by MTS in the country, and it was entitled not to renew a business agreement that lapsed at the end of 2010."

The response is unusual because the Turkmen government habitually ignores criticisms of its business practices by companies, international organizations, and foreign leaders.

Such criticism is perhaps to be expected, given that Turkmenistan is a country under one-man-rule. The state severely restricts freedom of the press, speech and movement, keeps the media under tight control, and usually denies visas to foreign journalists.

Year after year, organizations such as Human Rights Watch, Amnesty International, Freedom House and Reporters Without Borders rank Turkmenistan at the bottom of their ratings of civil and political liberties -- right next to North Korea and Eritrea.

A 2009 report by the Paris-based organization Reporters Without Borders even listed Turkmenistan among the 10 countries it declared to be "enemies of the Internet."

Yet the Turkmen government almost never responds. So why did Ashgabat feel compelled to do so in the case of MTS? After all, the Russian company is only one of 1,677 foreign firms the Turkmen Foreign Ministry says are operating in the country.

As always, the motives of the government remain obscure. But the case does suggest that the powers-that-be are beginning to realize that they have a serious problem when it comes to Turkmenistan's image in the outside world.

-- Muhammad Tahir