A terminal crisis in Turkmenistan?

While Turkmens are told they’re living in a “golden age”, food shortages, labour unrest and unemployment are on the rise. Unless president Berdymukhamedov changes things fast, his days could be numbered.

Bruce Pannier Luca Anceschi
20 December 2017

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Keeping the throne warm? President of Turkmenistan Gurbanguly Berdymukhamedov, during Vladimir Putin’s visit to Ashgabat in October 2017. Photo (c): Sergey Guneyev / RIA Novosti. All rights reserved.

Very few images are more powerful than those depicting the overthrow of a dictator. Recent footage from the Zimbabwean capital of Harare, where Robert Mugabe was deposed after 37 years at the helm, immortalised a moment of epochal change. People celebrated the demise of a regime that held on to power through a mix of disastrous economic policies, international isolation, and brutal repression.

Central Asia-watchers would have certainly noted that a strikingly similar combination of power technologies defines the authoritarian politics of the region’s most idiosyncratic regime, namely that which is presiding over Turkmenistan. With very few international supporters, the Turkmen leadership has been enforcing, for almost three decades, an unencumbered and repressive decision-making monopoly, managing the country’s significant resource endowment through an unequivocally kleptocratic outlook. Ignoring this reality, official propaganda continues to present Turkmenistan’s authoritarian desolation as an altyn asyr, a golden age in which the regime’s enlightened leadership is to guide the Turkmen people through an unprecedented period of wealth and peace.

Official propaganda continues to present Turkmenistan’s authoritarian desolation as a “golden age”

While we always highlighted the absurdity of this narrative, we now have enough evidence to question the sustainability of the policies implemented by Gurbanguly Berdymukhamedov, raising at the same time many doubts about the viability of his personal rule. Reading between the lines of official documents and news reports, and liaising on a daily basis with our contacts in Turkmenistan, we have come to believe that the Berdymukhamedov regime has entered a period of terminal crisis, from which there can be no exit without radical change in economic policy-making.

The end of the Turkmen illusion

The definitive failure of the political economy of Turkmen authoritarianism lies at the very heart of this terminal regime crisis. Relying since 1992 on the non-transparent management of revenues arising from natural gas exports, successive Turkmen leaderships had no incentive to reform the national economy, which, in late 2017, continues to be almost exclusively based on the energy sector.

Ensuring a constant stream of revenues represented in this sense the sole preoccupation of Turkmenistan’s economic decision-makers, who commercialised energy relations with Russia, Iran and China to guarantee a steady capital flow into the regime’s coffers. Gazprom’s withdrawal from the Turkmen gas market, the crystallisation of a tumultuous energy relationship with Iran, and the specific terms of the pay-for-purchase agreement finalised with China in the mid-2000s led to a dramatic reduction of revenue in-flows: at the end of 2017, Turkmenistan is reaping very limited financial benefits from the exports of his main resource. Shrinking revenues instigated in turn a wider malaise, which has been affecting Turkmenistan’s real economy since at least 2014.

In the regime’s authoritarian worldview, it is Turkmenistan’s wider population — and not the élites surrounding the president — that has to be hit most severely by this deepening economic crisis. At the start of December 2017, there were reports of shortages of flour across the country, with other basic goods, including cooking oil and sugar, also disappearing quickly. Food shortages — which were also reported in the autumn of 2016 — would have been unheard of just a few years ago.


As Turkmenistan’s economic woes continue, reports have surfaced of difficulty obtaining basic foodstuffs in some regions of the country. Baking bread at the Bai Bazaar in Dashoguz, 2011. Photo CC BY 2.0: David Stanley / Flickr. Some rights reserved.

Throughout the last twelve months, the availability of actual currency decreased dramatically. Turkmen authorities explain this development by pointing at the state’s efforts to demonetise the economy: outside Ashgabat, however, relatively few businesses have the necessary equipment to accept payments by bankcard. There is simply not enough paper money in circulation at the moment: bank machines are regularly out of cash, and some bank branches in the Turkmen regions have now closed. Access to hard currency is therefore extremely difficult and extends even to people trying to wire money orders to relatives abroad. Parents with children studying in universities outside Turkmenistan need to bring a package of documents to prove they are actually sending money to their child who is registered as a student at a foreign university.

At the start of 2017, Turkmen tourists abroad were limited to cash withdrawals equal to $250 per day; by November, this amount had been reduced to $50 per day. The black-market rate for the manat — Turkmenistan’s national currency — climbed from five to six to US dollars at the start of 2017 to more than nine by year’s end; since February 2015, the official rate has remained 3.5 manat to one US dollar.

Bread and martial arts

Wage arrears, once a rare occurrence in Turkmenistan, became a regular feature during the lead-up to the Asian Indoor and Martial Arts Games [AIMAG], which Turkmenistan hosted in late September 2017. The state prioritised the construction of the facilities and infrastructure around the venues: the workers’ remuneration, in this sense, became a regularly overlooked expense. In the months preceding AIMAG, the government took money from state employees by garnishing their wages between 20-30%: the enforcement of this detraction came to be known as money officially “donated” by Turkmen workers towards the cost incurred by the state while preparing for the games.

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Opening night of the Asian Indoor Martial Arts Games festival, at Ashgabat’s newly-renovated Turkmenbashi Olympic Stadium, 17 September 2017. Photo CC BY 4.0: Tasnim News / Wikimedia Commons. Some rights reserved.

In 2017, AIMAG construction sites became Turkmenistan’s key employer: at the onset of the games, the country’s unemployment rate was believed to be about 60%. Since AIMAG ended in late September, most of these workers are now presumably unemployed. In another dramatic development for local workers, Turkmennebit and Turkmengaz, the state’s oil and gas companies, are about to let go up to a third of their workforces: this round of layoffs is to follow prior cuts enforced in early 2016. Estimating a 2018 unemployment rate of 80-85% may not be an unrealistic assessment of Turkmenistan’s crumbling economy.

The country’s unemployment rate is believed to be about 60%, and earlier this year, Turkmen authorities ended free provision of water, gas, and electricity

Earlier in 2017, Turkmen authorities announced that the free provision of water, gas, and electricity was being scrapped, since Turkmenistan had reached an economic level where such “gifts” were no longer needed. Meanwhile, prices for basic foods and goods continue to rise. State stores maintain set prices but are often bare; private stores do sometimes carry basic goods but at a cost often three times higher. The need for money has led the population in rural areas to slaughter some of their herds to sell the meat.

Recently, these bleak circumstances led to two very rare acts of protest. In Dashoguz velayat, a group of parents, mainly women, gathered outside the provincial education department on 10 October to complain about a 1000% overnight increase in kindergarten fees. An official from the education department told the crowd to go to the mayor’s office. The protesters followed his advice, for which the official was sacked and charged with trying to stoke unrest against the government. Faced with the protesters’ demands, the local mayor remarked that the increase was to compensate rising prices of water, gas, and electricity, which the government was no longer providing for free. Some parents took their children out of kindergarten. Eventually, Turkmen authorities announced that state employees would lose their jobs if they did not send their children to kindergarten, and pay the higher cost.

Two days later [12 October], a group of cotton farmers in Lebap province went on strike, demanding unpaid wages from the chairman of the Lebap Farmers’ Association. The situation quickly escalated, as the farmers charged the chairman, after he had threatened serious consequences to those who went on strike. With the help of local elders, the chairman reportedly returned to his office and signed an order that confiscated land from those who refused to go back into the cotton field and re-assigned that specific land to those who did return the fields.

After Arkadag

Diffused economic hardship is eroding regime support amongst the population: a protracted series of failing economic policies is testing the proverbial resilience of ordinary Turkmens, as confirmed by the occasional, yet not insignificant, instances of popular unrest that we listed above.

Recent initiatives to ramp up the cult of the president’s personality represented a makeshift response to Berdymukhamedov’s popularity crisis: a sustained plan of revenue re-distribution may offer instead a more durable solution to enhance regime support across Turkmenistan. We do however have some reservations about the room available to the president to move resources away from his supporting élites: Berdymukhamedov’s grip on power appears to be precarious, as also confirmed by the astonishing regularity through which central and regional cadres are reshuffled and by the increasingly frequent accounts of the president’s paranoia.

Berdymukhamedov’s grip on power appears to be precarious, as confirmed by the regular reshuffling of central and regional cadres

There is therefore no immediate solution to what we regard as a systemic crisis. It is only through the introduction of medium-term (allowing access of foreign investors to on-shore gas fields) or more encompassing (recalibrating the Turkmen economy away from the energy sector) economic reforms that Turkmenistan’s negative economic trend may be reversed. These options, however, respectively erode and obliterate the élites’ control over Turkmenistan’s energy endowment: as the nexus between economic rentierism and Turkmenistan authoritarianism appears to be inextricable, there is no ground to predict their implementation in the short term.

As we query this regime’s capacity to operate in a business-as-usual situation, there is another scenario that ought not to be discarded: leadership change, which offers the increasingly disgruntled population with an[other] illusory promise of liberalisation, while stimulating a wider, and perhaps necessary, process of élite realignment. Unless he gets thrown a lifeline — and the finalisation of an agreement settling the Caspian status may just be that — Berdymukhamedov appears to be very disposable: as political expediency continues to inform the élite’s reticence to decisive tackle the revenues’ crisis, what recently happened in Harare may be one day repeated, in some shape or form, in Ashgabat.

*Arkadag: the honorific used by president Berdymukhamedov, meaning “protector”.

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