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Qishloq Ovozi

Uzbek President Shavkat Mirziyaev (right) talks with Kyrgyz President Almazbek Atambaev in Samarkand in December.

New Uzbek President Shavkat Mirziyaev made his first official foreign visit as Uzbekistan's leader on March 6-7. Mirziyaev said Central Asian regional relations would be one his priorities and he followed through, visiting Turkmenistan with plans to travel to Kazakhstan later in March.

Qishloq Ovozi recently looked at Mirziyaev's first six months in office, not excluding foreign policy but focusing more on the domestic policy changes, or lack thereof.

Our regular Majlis, or panel discussion, decided to flip that and concentrate on Mirziyaev's regional foreign policy during his first months as president. There was mention of domestic policies as well.

Moderating the discussion was RFE/RL Media Relations Manager Muhammad Tahir.From Washington, Alex Melikishvili, senior Central Asia analyst at IHS Markit Country Risk, joined the talk. From Prague, Alisher Sidikov, director of RFE/RL's Uzbek Service, known locally as Ozodlik, took part. And since I just wrote a paper on this and gave a presentation on the topic (Thank you George Washington University!), I sat in on the discussion.

'Less Baggage' Than Karimov

Mirziyaev was Uzbekistan's prime minister from 2003 to 2016 so he is more familiar with domestic politics than he is with foreign policy.

In terms of his regional policy, Sidikov said Mirziyaev "doesn't have this baggage of President Karimov, being [the] oldest in the region, or thinking he is [the] smartest in the region, or having some personal rows… so for him it's much easier to start everything from the clean page."

That is certain. It was not only that Karimov did not like many of the other Central Asian leaders, he also occasionally mocked them in public comments. When the leaders of neighboring countries implemented decisions that displeased Karimov, he closed his border to them [and Uzbekistan borders every other Central Asian state], suspended railway transit through Uzbekistan to these countries, or turned off gas supplies.

Mirziyaev's choice of Turkmenistan for his first visit was interesting. Karimov did not get along with Turkmenistan's first president, Saparmurat Niyazov, but Uzbek-Turkmen ties improved greatly after Gurbanguly Berdymukhammedov came to power after Niyazov's death at the end of 2006. Uzbekistan's ties with Turkmenistan were probably better than with any other Central Asian country over the last decade.

'Safe Choice'

Melikishvili pointed out that it was "a safe choice because Turkmenistan is officially a neutral country."

There were also practical reasons for going to Turkmenistan. Melikishvili explained that "joint transportation projects and regional transportation projects" are necessary for Uzbekistan, which like all the other Central Asian countries is in the midst of a deep economic crisis at the moment.

It was mentioned that Uzbekistan is also one of the world's only double landlocked countries, meaning there are at least two countries between Uzbekistan and any access to the world's oceans.

Melikishvili noted, "Berdymukhammedov promised Uzbek companies unfettered access to the port infrastructure that is being built as we speak, on the Caspian shore."

Access to the landlocked Caspian Sea would help a bit in connecting Uzbekistan to the Caucasus countries and possibly farther westward and could boost trade modestly.

Trade Interests

Sidikov said Berdymukhammedov's is at least partially driven by trade interests, including something Uzbekistan desperately requires at the moment. "They need cheap gas and oil, which they can use in the neighboring Bukhara refinery, one of the biggest in Central Asia," Sidikov said.

Uzbekistan does have oil and natural gas, but in recent years there have been shortages of both, something noticed by segments of the population living in cold flats during the winter and observed by motorists who face regular shortages of petroleum at filling stations.

Turkmenistan has an abundance of both commodities and a severe lack of customers at the moment.

Melikishvili added that maybe the most important reason Mirziyaev needed to go to Turkmenistan was to "explain why Uzbekistan and China decided to postpone the construction of Line D of [the] Central Asia-China gas pipeline network."

That decision has huge repercussions for Turkmenistan and was examined in a recent Qishloq Ovozi.

'Kazakh Investments'

Sidikov commented on Mirziyaev's upcoming trip to Kazakhstan, saying some of the talks with President Nursultan Nazarbaev would undoubtedly involve "Kazakh investments" particularly "into property in the [Uzbek] capital Tashkent."

And Melikishvili recalled that an auto plant to assemble Uzbek cars was due to open in the northern Kazakh city of Kustanay about the time Mirziyaev comes to Kazakhstan.

Sidikov mentioned progress made in Uzbekistan's ties with Kyrgyzstan to the east. Uzbek-Kyrgyz relations have been, to put it very mildly, bad for many years.

Sidikov said part of the reason ties are suddenly improving is a renewed desire from Mirziyaev's government to "connect the Osh [Kyrgyzstan]-Andijon [Uzbekistan] region… and China, and from China to South Korean ports."

There is a railway planned from Uzbekistan through Kyrgyzstan to China but Sidikov suggested the Uzbek government would like to see a road route opened as soon as possible.

'Lucrative Opportunity' For Russia

Mirziyaev is scheduled to make his first visit as Uzbekistan's president to Russia in April.

"It will be interesting to see how far Russian-Uzbek cooperation in the military and security area advances," Melikishvili said. "In particular, I'm referring to the fact Uzbekistan needs to overhaul its military and Russia will see a very lucrative opportunity in this in terms of selling weapons and equipment, military equipment to Uzbekistan."

As for Uzbekistan's relations with the West, Sidikov explained, "The things that he [Mirziyaev] doesn't understand he tries not [to] touch at this point, so that's why issues like talking to the West [are] primarily under [the chairman of the Senate Committee for Foreign Affairs, also twice Foreign Minister Sadyk] Safayev and [current Foreign Minister Abdulaziz] Kamilov."

One of the big topics of the Majlis was some debate about how much control Mirziyaev really has over decision-making.

Convertible Currency?

Mirziyaev has made some promises, such as easing the visa regime for come countries, only to later postpone the implementation of these plans.

The announcement just before Uzbekistan's December 4 presidential election that the country would start moving in 2017 to make the national currency (the som) convertible was the last thing heard about that issue.

Melikishvili said another promise from Mirziyaev, this one to cancel requirements for an exit visa, was coming up later this year and would provide the outside world with another opportunity to see if the new Uzbek president can do the things he says he will.

The Majlis looked at all these topics in greater detail, talked about Uzbek-Tajik relations, and delved into some other matters concerning Mirziyaev's time as Uzbekistan's leader.

An audio recording of the discussion can be heard here:

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Line "D" of the Turkmenistan-China gas pipeline network was meant to have been the largest single gas conduit connecting Turkmenistan to any consumer state. (file photo)

Turkmen President Gurbanguly Berdymukhammedov and his government just cannot seem to get a break lately.

Not that they necessarily deserve it. But all the same, Turkmenistan's last realistic hope to export a significant amount of additional natural gas to a customer has just evaporated.

Line "D" of the Turkmenistan-China gas pipeline network was to be more than just the largest of four pipelines connecting western China to gas fields in Turkmenistan -- it also would have been the largest single gas pipeline connecting Turkmenistan to any consumer state.

Line D was supposed to carry some 30 billion cubic meters (bcm) of gas annually to China. The line took a different route. Lines A, B, and C all went from Turkmenistan through Uzbekistan and Kazakhstan before reaching China. To include all the Central Asian states, Beijing decided to route Line D through Uzbekistan, Tajikistan, and Kyrgyzstan, and then into China.

Already at the end of 2014, it was clear that there were problems in Kyrgyzstan and Tajikistan with forming joint ventures with Chinese companies to construct and later operate the pipeline, and some disagreements over the route.

Neither of those Central Asian countries was going to receive any gas from the line, but they would have taken in millions of dollars in transit fees.

At the end of 2016, RFE/RL's Kyrgyz Service, known locally as Azattyk, contacted an official in Kyrgyzstan involved with the project who said there had not been any meetings with Chinese officials about Line D since December 2015.

But it was Uzbekistan and China that appear to have officially put a halt to Line D; RIA Novosti reported on March 2 that China National Petroleum Corporation and Uzbekneftegaz had indefinitely postponed construction of the pipeline on Uzbekistan's territory.

Economic Crisis

This is a real blow to Turkmenistan. The country is experiencing the worst economic crisis in its 25-year history, in large part due to Turkmenistan's dependency on revenues from gas sales.

This is partly due to the drastic fall in gas prices in the last three years, but also due to Russia canceling its contract for Turkmen gas imports at the start of 2016 and the suspension of Turkmen gas supplies to Iran at the start of 2017 over a contract dispute.

That leaves Turkmenistan with only China as a customer. There are already three operating gas pipelines from Turkmenistan to China. Lines A and B can each carry 15 bcm and Line C can carry 25 bcm, for a combined 55 bcm of gas annually to China, though all the lines have not yet reached full capacity.

Since the three lines pass through Uzbekistan and Kazakhstan, also gas-producing countries, both of which have contracts to supply 10 bcm to the pipelines, though Kazakhstan has already signaled it wants to export more gas to China.

That leaves 35 bcm of space in the three lines for Turkmenistan.

President Gurbanguly Berdymukhammedov had initially hoped to have increased Turkmen gas exports severalfold by 2030.
President Gurbanguly Berdymukhammedov had initially hoped to have increased Turkmen gas exports severalfold by 2030.

It is always difficult to find reliable figures on Turkmenistan's gas industry, Turkmenistan is thought to have exported some 30 bcm of gas to China in 2016. If true, that means there is little extra room in the pipelines. With the postponement of Line D, Turkmenistan can expect to increase its gas exports no more than 5 bcm in the coming years.

The price China pays Turkmenistan for gas is said to around $185 per 1,000 cubic meters of gas, meaning if Turkmenistan does pump the extra 5 bcm of gas into the pipeline it would receive less than $1 billion annually for that. That would help, but it won't prop up Turkmenistan's sagging economy.

Price War?

It gets worse. China loaned Turkmenistan billions of dollars to develop Turkmen gas fields and build the pipelines to China, so some of the gas Turkmenistan ships to China goes toward paying off Ashgabat's debt.

Worse still, after Russia canceled its contract for Turkmen gas, Russian gas giant Gazprom renegotiated deals with Kazakhstan and Uzbekistan. According to a recent article in Russia's Life News, Gazprom reached a deal to pay Kazakhstan and Uzbekistan some $140 per 1,000 cubic meters. The article said Gazprom annulled the contract with Turkmenistan because Ashgabat was demanding $240 per 1,000 cubic meters.

So Turkmenistan faces the possibility of a price war with its Central Asian neighbors to supply gas to China.

Berdymukhammedov talks often about projects that will enrich Turkmenistan even further, such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. That pipeline would carry 33 bcm of Turkmen gas. Turkmenistan says it has started construction of its segment of TAPI, though there has been no proof of this so far, and Pakistan claimed to have started its section in early March.

That leaves some 700 kilometers of Afghan territory between them, and the proposed route would run through areas where there is frequent and fierce fighting.

Berdymukhammedov has boldly predicted construction of TAPI would be completed in 2019, but Pakistan said at the end of January that it would be delayed by at least one year -- and even that estimate is likely very optimistic.

No one even talks about the Trans-Caspian Pipeline anymore. That was supposed to carry some 30 bcm of Turkmen gas west toward Europe.

Iran Reroutes Supplies

Turkmenistan probably just lost Iran as a customer. Winter is coming to an end, and Iranian officials have spent the weeks since the suspension of Turkmen gas supplies rerouting domestic electricity supplies. Construction of internal gas pipelines from southern Iran to areas in the north that were supplied by Turkmen gas has speeded up. Iran probably won't need Turkmen gas next winter.

So that leaves Turkmenistan with 35 bcm of space in the pipelines going to China, part of it going toward debt repayment.

There is no other gas-export project likely to be built within the next decade.

Quite a disappointment for Berdymukhammedov, who was boasting just a few years ago about exporting 180 bcm by 2030.

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About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change.

Bruce Pannier
Bruce Pannier

Content draws on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad.

The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.



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