Opportunities and risks in Turkmenistan’s quest for diversification of its gas export routes

Highlights

• This paper examines Turkmenistan’s policies of diversifying its gas export routes.

• Turkmenistan’s diversification policies carry both opportunities and risks.

• Turkmenistan has the opportunity to enhance its bargaining power.

• Turkmenistan faces the risk of replacing an old master, Russia, with a new one, China.

• This opportunity and risk have varying implications for Turkmenistan’s security of demand.

Abstract

This paper applies two hypotheses regarding weak state foreign policy to analyze the opportunities and risks in Turkmenistan’s quest to diversify its gas export routes, especially since 2006. The first hypothesis, related to opportunities, is that competition among major powers over the allegiance of weak states strengthens their bargaining power. The second hypothesis, related to risks, is that the diversification policies of weak states in times of decreasing competition among great powers incur the danger of simply replacing an old master with a new one. I argue that while the first hypothesis is useful in explaining the opportunities of Turkmenistan’s diversification policies, especially before early 2009, the second hypothesis is helpful in accounting for the risks of these policies after early 2009. In other words, competition among four major powers, Russia, China, the EU, and India, over Turkmenistan’s gas pipeline system before early 2009 strengthened the country’s bargaining power. In contrast, Turkmenistan’s diversification policies in times of fading competition after early 2009 have left it increasingly exposed to the potential risk of replacing its old master, Russia, with a new one, China.

Introduction

Turkmenistan is undoubtedly a weak state. Indeed, the country exhibits the following features of weak states, as described in the literature on weak state foreign policy: small population, small GDP, and weak military (see for instance Rothstein, 1977, Papadakis and Starr, 1987, Handel, 1990, Elman, 1995, Knudsen, 1996).¹ Moreover, commenting on the characteristics of economically weak states, prominent weak state foreign policy theorist Handel (1990) notes that these states tend to produce a narrow range of products and export these products to quite a few states. Accordingly, weak states “often become dependent on the good-will of one great power, and thus a single state can have an extraordinary impact on their economic well-being” (p. 224). This description excellently captures Turkmenistan’s situation. The country’s economy has relied too heavily on gas exports, which have historically accounted for up to two thirds of its total export revenues and have gone to only a few states such as Russia, Iran, and China (Pirani, 2012, pp. 6–8). The description also perfectly explains the relationship between Turkmenistan and “one great power,” namely, Russia, for most of the period after the collapse of the Soviet Union in that the economic well-being of the former was dependent on the latter (Vasanczki, 2011, pp. 6–14).

Naturally, Turkmenistan has consistently sought to diversify its gas export routes since 1991. These diversification efforts are closely related to enhancing the country’s energy security. This concept of energy security has often been associated with the security of supply. However, from the perspective of producers, this concept implies security of demand (Umbach, 2011, p. 25; Boussena and Locatelli, 2013, p. 183). As a producing country, Turkmenistan can enhance this security by having diverse sources of demand, which allows the country to achieve several goals including reducing its vulnerability to economic pressures, decreasing the impact of any particular disruption, and providing an opportunity for compensating demands. Through achievement of these goals, Turkmenistan can ensure the stability of its national income from gas exports.

This paper examines Turkmenistan’s diversification policies, especially since 2006. In particular, it analyzes the opportunities and risks involved in these diversification policies, relying on two hypotheses regarding weak state foreign policy. The remainder of this paper is divided into four sections. The second section provides a theoretical framework and discusses the data sources. The third section presents the results. The fourth section offers a detailed discussion of the opportunities and risks in Turkmenistan’s diversification policies and explores the implications of these opportunities and risks for the country’s security of demand. The final section concludes the study.