LEAVING MISUNDERSTANDINGS IN THE PAST

Neighbouring Turkmenistan marked its Independence Day on 27 October. In congratulating the fraternal people of Turkmenistan, I would like to use this date to review the relations that have been developing between our states throughout the period of independence and to assess their prospects.

Although we are separated by the narrowest part of the Caspian Sea (in order to get to Turkmenistan you need just one night on a ferry or just one hour on a plane), the years of independence have divided our two countries. We know very little about Turkmenistan today, we rarely visit and remember it only in the context of the disputed Kapaz (Serdar) deposit or the trans-Caspian gas pipeline project. This is not the fault of Azerbaijani journalists and analysts. Turkmenistan has strict entry and exit restrictions. As in Soviet times, citizens of Turkmenistan need to apply for exit visas. It is difficult enough to get an entry visa to Turkmenistan, but you also have to get several signatures and go through five document checks when you cross the border. The authorities strictly control all incoming and outgoing flows of information. We can say that Turkmenistan is one of the most secretive states in the world.

After such a pessimistic prelude, I should remind our readers that Turkmenistan is a country covered by desert or semi-desert with an overall area of 488,100 square kilometres and a population of about five million. Turkmens comprise almost 80 per cent of the population. Turkmenistan owns the fifth largest natural gas reserve in the world and considerable oil reserves. It is also the 10th largest cotton producer in the world. However, the country has a very underdeveloped infrastructure and a weak private sector which is limited to trade and services. For this reason and due to the lack of transparency in the economy and decision-making procedures, Turkmenistan has been sidelined by foreign investors.

Officially, the per capita GDP in Turkmenistan is comparable with that of Azerbaijan. But in reality, the situation in the country's economy is quite tense because of Saparmurat Niyazov's (Turkmenbashy) autocratic rule, and most of the population is poor. Extracting more than 70 billion cubic metres of gas and 10 million tons of oil per year, Turkmenistan has a budget that is half that of Azerbaijan. According to international financial institutions, up to 60 per cent of Turkmenistan's population is living below the poverty line. Low salaries are eaten up by constant price hikes, while inflation exceeds 10 per cent. More than 50 per cent of the population have no permanent jobs. 

But at the same time, electricity and heating are free, food products are inexpensive and petrol is heavily subsidized. So even if most people are poor, they are not hungry.

As for its international relations, having proclaimed neutrality, President Saparmurat Nyyazow in fact pursued a policy of isolating his country from the rest of the world. He even quit the CIS, although he continued to send his representatives to summits as observers. President Niyazov was quite suspicious of Azerbaijan. As a consequence, disputes with Baku about the size of the debt for earlier gas supplies and the delineation of the sea shelf caused our countries to freeze relations. The Turkmen embassy in Baku was in fact closed, economic relations were minimized and relations in the spheres of education, science and culture were almost totally severed.

Azerbaijan and right-thinking representatives of the Turkmen intelligentsia and authorities understood that such a situation was not normal, but the irrational style of President Niyazov's government and behaviour did not make it possible to change the situation. Only after the death of Niyazov, who was in total control of the country for 20 years, and the election of the young president, Gurbanguly Berdymuhammedov, did there appear hope that joint efforts would make it possible to restore good neighbourly relations between Turkmenistan and Azerbaijan. None of the problems that spoilt bilateral relations in recent years are insurmountable. If both sides show good will and are ready to make reasonable compromises, it will not be difficult to settle them.

The problem of the gas debt appeared as a result of "closed payment" schemes under which Azerbaijan supplies goods and services in return for Turkmen gas. The two countries had different ways of evaluating mutual supplies. What's more, some goods were "lost" on their way. Such misunderstandings were common between almost all post-Soviet countries in the early 1990s. As a result, Baku was ready to admit a 28 million dollar debt for gas whereas Ashgabat wanted almost 80 million dollars, including interest (which was not actually specified by the agreements).

In the process of delineating the national sectors in the Caspian, the stumbling block is the Kapaz (Serdar) deposit, which is believed to have reserves of between 80 million and 130 million tons. It was discovered by Azerbaijani geologists in Soviet times and was called "Intermediate" because it lies on the median line. For this reason, Baku offers joint exploration and use of the deposit. Turkmenbashy wanted all of this deposit and reluctantly agreed to divide it 75 to 25 per cent in favour of Ashgabat. The negotiations reached deadlock. In response, Turkmenistan sided with Iran and refuses to recognize the method of delineating economic interests in the Caspian on the basis of the internationally-accepted practice of a modified median line. Agreements between Russia, Kazakhstan and Azerbaijan were reached on the basis of this method.

It is illogical for Ashgabat to side with Tehran on the issue of dividing the Caspian. Insisting on an equal 20 per cent share for all Caspian littoral states, Iran claims not just the Caspian sector of Azerbaijan, but also that of Turkmenistan. Disputes with Baku have a negative impact on Ashgabat's efforts to attract major foreign investors to exploit offshore deposits. Common sense should make Ashgabat understand that Azerbaijan is the only alternative for the export of Turkmen oil and gas to Europe; this would make it possible to diversify export routes and reduce dependence on Russian transit, not to mention the fact that the exploration, development and delivery of oil and gas to the world market using our infrastructure would make it possible to reduce expenditure on the development of hydrocarbon reserves in the Turkmen sector of the Caspian.

However, it is clear that the task of normalizing relations with Azerbaijan is not one of the first priorities of the new Turkmen president. Gurbanguly Berdymuhammedov is busy securing his rule and control of the country and tackling Turkmenbashy's legacy in the economic, education and social spheres. His first steps deluded the population and foreign observers into thinking that there would be positive changes. He restored the payment of pensions and mandatory 10-year education which had been repealed by his predecessor, granted citizens easier access to the Internet and amnestied many innocent people held in prison. The government has announced its plans to send young people abroad for education.

President Berdymuhammedov purged the law-enforcement agencies and Nyyazow's appointees and strengthened his personal power. Recently, he replaced the foreign minister and the minister of national security. Earlier, the defence minister and secretary of the Security Council were dismissed, and the influential chief of the presidential guard, Akmurat Rejepov, was dismissed and arrested.

A new economic policy has been announced in the country. On 12 October, President Berdymuhammedov signed a decree "On foreign investments in Turkmenistan". Now foreign investors have the right to set up enterprises there that wholly or partly belong to them, and to buy movable and immovable property, including houses, flats and means of transport. It is planned to revalue the Turkmen manat.  Monetary reform is needed not only to get rid of excess zeros, but also to make a realistic assessment of the country's economy. Although the official rate is one dollar per 5,000 manats, it is 23,500 manats on the black market.

Despite Moscow's expectations, Turkmenistan has no intention of clinging to the idea of transporting its gas only through Russian territory. According to Associated Press, President Berdymuhammedov said, at a recent meeting with British Energy Minister Malcolm Wicks: "We discussed the prospects for opening the southern corridor, which will make it possible to export oil and gas to Europe through the Caspian Sea, Azerbaijan and Turkey."

As we said above, Baku understands that it is necessary to improve relations between Azerbaijan and Turkmenistan. Azerbaijan has been attentive and has sent Prime Minister Artur Rasizada to Ashgabat twice - to Turkmenbashy's funeral and to the new president's inauguration. Ilham Aliyev phoned, congratulated and invited Berdymuhammedov to Baku on an official visit. In August, President Aliyev approved the composition of a representative, intergovernmental commission on cooperation between Azerbaijan and Turkmenistan, under the leadership of First Deputy Prime Minister Yaqub Eyyubov.

It is clear that we will not be able to solve the problems quickly, but it is important to change the dynamics of relations for the better. The return of a Turkmen ambassador to Baku, the resumption of the ferry service and air flights, the simplification or complete elimination of the visa regime and the resumption of cooperation in the spheres of education, science, culture and medicine could be regarded as a sign of this change. For Turkmens who did not study Russian or foreign languages under Turkmenbashy, it will be a lot easier to access higher education in Baku than in the West and even in Russia or Turkey. Manuals and scientific literature in Azerbaijani, especially on the physical sciences, could be easily adapted to the Turkmen language and used in the system of secondary and higher education.

As for the problem of the old debt for gas supplies, taking account of the modern financial potential of the two countries and the benefits we may get from the resumption of economic cooperation, the sum of the debt does not seem to be so great as to prevent compromise. In the same amicable way, we could reach agreement on the division of the disputed Kapaz (Serdar) deposit, for example to a ratio of 55 to 45 per cent in favour of Turkmenistan, provided that the project is operated by SOCAR. Azerbaijani oilmen already have considerable working experience of offshore deposits, and Kapaz's proximity to the Azari-Ciraq deposit, which is already being developed, and the presence of pipelines and a coastal infrastructure, make it possible to develop this deposit with minimum expense and in a short period of time.

The prospect for the swift settlement of disputes and resumption of cooperation between Azerbaijan and Turkmenistan is unlikely to make Moscow and Tehran happy. For Russia, there is a danger that trans-Caspian projects might be put on the front burner again, which might deprive it of considerable transit revenues from gas. As for Iran, it will be isolated in its demands for a 20 per cent share in the Caspian and left to face alone the coordinated position of the post-Soviet states.

In turn, Western powers and energy companies are interested in a swift settlement of relations between Azerbaijan and Turkmenistan in order to eliminate obstacles to the construction of the trans-Caspian pipeline. I believe that Moscow's resistance could be reduced if we concentrate on involving major western energy corporations in the development and extraction of gas from new Turkmen deposits and moving this through the trans-Caspian pipeline and the Nabucco system, rather than continuing the rivalry to deliver gas to European consumers from the Turkmen deposits that are currently being developed. There is no doubt that Turkmenistan has great, unexplored gas reserves. Investors could channel these additional volumes of gas into their own markets using the routes which they think are safer and more beneficial, i.e. through the Caspian, Azerbaijan and Georgia to Europe, bypassing Russia and Iran.

It is difficult to guess how soon a new spring will start in Azerbaijani-Turkmen relations. To this end, diplomats, politicians, businessmen, journalists and others need to work very hard, because partnership between Azerbaijan and Turkmenistan meets the true national interests of both states and peoples. It could connect the two shores of the Caspian, not just by ferries and gas pipelines, but also restore traditional good and fraternal relations.