THE TURKMEN TRANSIT

Turkmen President Gurbanguly Berdimuhamedow said he intended to transfer his post to “young leaders with good moral qualities and raised in line with high demands of our time”.

At the same time, Turkmenistan announced early presidential elections slated for March 12, 2022, originally planned to be held in 2024.

Meanwhile, Turkmenistan's Central Election Commission has completed registration of nine candidates for the upcoming presidential election. Three of them are nominated by political parties, while six are nominated by civic initiative groups, Trend reported.

Why now?

After the sudden announcement of early presidential elections, many began wondering why President Berdimuhamedow suddenly decided to leave his office and whether he will leave all his posts.

In addition to his main post as a president of the republic for the last 15 years, Mr. Berdimuhamedow also serves as Chairman of the Cabinet of Ministers and Khalk Maslakhaty, head of the State Security Council and Supreme Commander-in-Chief of the Armed Forces.

Some sources claim, albeit without confirmation, that the reason for Berdimuhamedow’s sudden decision to step down may be the state of health of the Turkmen leader. Previously, the media, reporting on the Turkmen president's prolonged public absence, claimed that he was ill. In summer of 2019, Berdimuhamedow did not appear in public for several weeks, leading to the first batch of rumours about his serious illness. Since then, this issue has appeared periodically in the media, including with other topics that could confirm this version.

In particular, the rapid career development of Berdimuhamedow’s only son, Serdar, was explained by the need to prepare a successor. Such a rapid decision-making process shows that everything was prepared in advance for the transit of power in Turkmenistan.

On February 14, at an extraordinary 9th Congress of the Democratic Party of Turkmenistan, Deputy Prime Minister Serdar Berdimuhamedow was nominated as a candidate for the post of the president. Serdar Berdimuhamedow himself said that he intended to implement the initiatives of the incumbent head of state. Thus, he confirmed the continuity of the existing course, which may be a signal to local elites and external interests that they should not expect a dramatic change and shift in priorities in Turkmenistan's foreign and domestic policies.

Favourable candidate

However, President Berdimuhamedow has not said yet that he intended to withdraw from politics and completely remove himself from the governance. There is a strong view that he will retain his positions as a chairman of the upper house of the parliament and possibly as head of the State Security Council.

Serdar Berdimuhamedow is likely to gather his inner circle around him and gradually promote his men to important key posts in the government.

As to foreign policy, it is expected that Serdar Berdimuhamedow can build special relations with Russia, also thanks to his study and work in Moscow. Between 2008 and 2011, he worked at the Embassy of Turkmenistan in Moscow and studied at the Diplomatic Academy of the Ministry of Foreign Affairs of the Russian Federation until 2014. At the same time, no serious changes or adjustments to the traditional course of state neutrality are expected in Turkmenistan’s foreign policy.

Serdar Berdimuhamedow has not been known involved in any public scandals, nor has he compromised himself yet. His public image is far ahead of that of other potential presidential candidates. At the same time, judging by local media reports, most Turkmen voters, and most importantly the country's political elite, are morally prepared for this transit of power, which is expected to be rather a technical issue.

Also, Serdar Berdimuhamedow has been deputy prime minister and head of the Akhal Vilayat. This suggests that he has gone through various stages of career development and has an understanding of how state institutions work.

At the same time, it would be wrong to assume that no changes will take place under Turkmenistan's new president. There will be changes. Even when Berdimuhamedow Sn. came to power, he changed many things that were quite outdated at the time and did not correspond to his personal ideas about the nature of state policy. However, it is difficult to say exactly what changes will follow. The new president is more likely to pursue a more liberal policy; in particular, he is currently responsible for the development of digital communications in the country, which assumes openness per se.

Turkmenistan needs more foreign investment now, but to ensure this the country must meet certain international criteria of transparency. So, the new president, if he wants to attract foreign investment, will have to change a certain order of things in the country.

Favourable economy

Meanwhile, Turkmenistan is one of the few countries, which significantly improved its macroeconomic performance during the pandemic in 2021. This was largely possible thanks to the rapid increase in the price of gas, the country's main export commodity. This more or less affected both social stability and the state of affairs in the social sphere.

Although the general standard of living in Turkmenistan is far from ideal, there are no social upheavals caused by mass unemployment or poverty. On the other hand, food shortages on the domestic market and rising real consumer inflation have a negative impact on the standard of living. Authorities try to index wages and pensions not only to prevent a possible explosion of social discontent, but also to stimulate the domestic consumer market.

For example, since January 2022, the Turkmen government has increased salaries, pensions, state benefits, scholarships for students and trainees by 10%. This is a significant part of the working-age population. Indexation of payments can be an encouraging factor to make voters to vote for the candidacy of Serdar Berdimuhamedow in the upcoming election.

Although data on real inflation is not disclosed, according to various sources, it remains quite high mainly because most food products are imported. Amid rising food prices globally, the increasing cost of basic food products in the country and region may last long, hence fueling consumer inflation.

Authorities try to keep the prices of basic food products fixed, which in some cases leads to shortages. On the other hand, they are encouraging own production in order to cover the growing shortage of domestic sources and promote the development of the business sector.

The Turkmen President has repeatedly instructed the relevant authorities to keep under constant control the efforts to improve the supply of food to the domestic market and avoid the rising of commodity and food prices. This is not easy when domestic production cannot fully cover the country’s own needs while the cost of production in the hot weather conditions and fertiliser prices remain high.

Nevertheless, there is some optimism that global gas prices and increasing revenues from gas sales to the Turkmen treasury will make it possible to buy the missing food products from abroad.

In 2020, Turkmenistan imported 219,000 tonnes of agricultural and industrial products from Russia. The volume of food purchases increased by 2.8 times compared to 2019. Other food importers for Turkmenistan include the CIS states, Iran, and a number of other countries. This would hardly be possible in the absence of a sufficient resource base.

Ashgabat makes accent on gas

The Turkmenistan-China gas pipeline passing through Kazakhstan and Uzbekistan since the end of 2009 opened the way for Ashgabat to have a permanent and stable source of income. At present, the Turkmenistan-China international gas pipeline (IGP) already includes three parallel lines (A, B and C) running along the Turkmenistan-Uzbekistan-Kazakhstan-China route. The main volume of gas supplies to China is 35-40 billion cubic metres (bcm) annually, which is largely supplied by Turkmenistan. In total, more than 320 bcm of Turkmen gas has been exported to China since the operation of the IGP pipeline.

Meanwhile, the consumption of gas in China and the demand for the Turkmen gas are growing every passing day. National company PetroChina predicted that Chinese gas demand will grow to 600 bcm annually by 2030 and to 620 bcm by 2035. The company predicted it could grow to 600 bcm annually by 2030 and 620 billion by 2035. And Turkmenistan is seen as a major source of meeting that demand.

Yet another branch of the IGP pipeline is being constructed in addition to the existing three branches of the pipeline from Turkmenistan to China. According to agreements reached earlier, the fourth line is expected to increase Turkmen natural gas supplies to China to 65bcm annually.

If natural gas prices remain stable and high, then Ashgabat can make more profit. Given the rising trend in gas consumption in Asia and in China, even with the increased supply from other gas producers, the likelihood of high prices remains high.

The price of natural gas supplied by Turkmenistan to China, which was $192 per 1,000 cubic metres in January 2021, rose to $238 in July, according to Wood Mackenzie.

President of Turkmenistan recently supported a dialogue with Beijing to determine a new price for gas. In the coming period, it seems that Serdar Berdimuhamedow will be the main person responsible for supplying Turkmen gas to China, or in any other direction. This will determines the geopolitical and geo-economic significance of changes in Turkmenistan.