Turkmenistan leader's death starts power struggle

By bne IntelliNews January 11, 2007

Ben Aris in Berlin -

The death of the president of Turkmenistan, Saparmurat Niyazov, just before Christmas has started a power struggle for control of this gas-rich Central Asian republic, which so far hasn't disrupted important gas supplies to Russia and Ukraine.

Better known as Turkmenbashi, or Father of the Turkmens, Niyazov was elected president for life and ruled the thinly populated republic with an iron fist. He long ago crushed what little opposition there was in Turkmenistan, making the chance of a "coloured revolution" in the arid republic that borders the Aral Sea highly unlikely.

Parliamentary speaker Ovezgeldy Ataev should have stepped into Turkmenbashi's shoes as acting president, according to the constitution, but was quickly sidelined by the country's political elite.

Ignoring the constitution, the Security Council appointed the deputy prime minister and health minister, Gurbanguly Berdymuhammedov, as acting president. Berdymuhammedov is one of the few ministers in the upper echelons of Turkmen government who has survived repeated purges and is also believed to be Niyazov's illegitimate son. Berdymuhammedov was given the honour of organizing Niyazov's funeral.

Ataev was arrested two hours after the announcement of Berdymuhammedov's appointment and is accused of corruption, despite him being entitled to parliamentary immunity from prosecution. The majority of Turkmenistan's senior government officials were informed of the events only later that morning at a hastily convened session of the federal Security Council.

The state-controlled Turkmen media immediately rolled into action to proclaim Berdymuhammedov acting president, suggesting the controlling group is on top of the situation for the moment. The speed of both the appointment and arrest of Ataev hints at foul play in Niyazov's death, say opposition leaders.

Opposition leader Bayram Shikhmuradov from the Republican Party of Turkmenistan, who is son of ousted former Turkmenistan Foreign Affairs Minister Boris Shikhmuradov, told the Russian daily Kommersant: "The speed with which the Turkmen authorities found a way out of a difficult situation, with the lightning arrest of the speaker of parliament and the naming of the deputy prime minister as the president's temporary successor, is worrying.

However, Shikhmuradov says that even with the change in regime, none of Turkmenistan's exiled opposition leaders will be able to return to the country any time soon.

"All of that will depend on the actions of the current government. The majority of the opposition leaders do not have Turkmen passports, meaning that they will need visas, which they are not likely to receive," says Shikhmuradov.

Burren Energy facilities in Turkmen desert

Berdymuhammedov may have been installed as acting president, but he still needs to be confirmed in the post by popular elections. The date has been set for February 11.

Some analysts believe that ultimately Berdymuhammedov could turn out to be just a transitory figure of an interim administration while the security services strike deals among the various regional elites.

Economic consequences

Given that Turkmenistan is an economic basket case, the actually successor is immaterial as he is unlikely to do much to loosen the grip of the political elite on power or address the endemic corruption. The first casualty from Turkmenbashi's death may turn out to be Deutsche Bank and the prize for the winning presidential candidate runs into the billions of dollars.

Anti-corruption campaigners Global Witness reported at the end of December that about $2bn-3bn of Turkmenistan's public funds are deposited in the Turkmen Central Bank account of the German bank's Frankfurt offices.

Global Witness said in a press release: "Further billion-dollar foreign reserve funds of oil, gas and cotton revenues, which were under the sole control of Niyazov, are also believed to be held at Deutsche Bank. Evidence suggests that many of Niyazov's bizarre prestige projects, including golden statues and palaces, were paid for out of these funds."

What really has everyone concerned is what will happen to Turkmenistan's gas exports, which are a vital source of supply for both Russia and Ukraine, and are effectively the only source of income for the country. The government has tried to quieten fears by immediately promising that the existing deals will remain in place regardless of who takes over.

Opposition leaders were in Kyiv this week to try and drum up support for their power bid and promised cheap gas in return. But without access to the physical assets, nor much prospect of taking control of them, their pleas fell on deaf ears.

The Kremlin is taking the change-of-guard serious too and immediately flew a team to Ashgabat to protect Russia's interests. Russia's support could swing the process for the winning camp.

A messy transition of power will directly affect Gazprom, which is the largest buyer of Turkmen gas; Gazprom signed a three-year contract to buy 50bn cubic meters (cm) of Turkmen gas in 2007- 2009 at $100 per 1, 000 cm in September last year, a bit less than a tenth of what the gas giant produces itself and frees more of its own product for the lucrative Western export market.

Investors are also watching closely as two listed companies, Dragon Oil and Burren Energy, both have gas assets in the country and could get caught up in the fighting if the change over doesn't go smoothly.

Some observers have speculated that a successor may try to renegotiate the Gazprom contract or find alternative partners. However, changes in the gas relations with Russia and Ukraine are unlikely in the short to medium term, as there is still no alternative to the Gazprom-owned gas export pipelines that all run through Russia.

Before his death Turkmenbashi was trying to persuade neighbours Azerbaijan and Kazakhstan to build an underwater pipeline under the Caspian Sea – a project that also won US backing – to break Moscow's stranglehold over Turkmenistan, but the talks came to nothing; Western companies involved in the talks said they couldn't agree terms with the erratic Niyazov.

Send comments to Ben Aris

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.