 |
 |
Political Transitions in Central Asia CA-PoliticalTransitions.com Jonathan K. Zartman |
 |
 |
|
|
Political Transitions in Central Asia CA-PoliticalTransitions.com Jonathan K. Zartman |
|
|
| Home |
VULNERABILITY |
Research Papers |
| Table of Contents |
CHAPTER III: ECONOMIC VULNERABILITY |
Chapter Four |
The Economic Dimension
|
The definition of vulnerability as border-crossing interactions exploitable by one state to the detriment of another, or the interruption of which can cause harm, includes all interstate economic relations. Since vulnerability characterizes many aspects of economics, the literature of economics has developed specific measures and definitions of vulnerability. Economists discuss vulnerability within three general categories: strategic imports, systemic forces and market structure imperfections. The economic structure of Central Asia and the active political contention for the routing of export pipelines strongly illustrates these categories. This chapter examines variations and limitations in definitions of economic vulnerability and proposes measurements of economic vulnerability within the limits of available data. Turkmenistan serves as the best test case because of its policy reversal regarding cooperation and its late and severe economic collapse. Measurements of the changing scale of Turkmen economic vulnerability support the claim that increasing convergence of vulnerability leads to increased cooperation. Categories of Vulnerability Strategic Imports The literature emphasizes import vulnerabilities, since most states seek access to international sources of supply. (1) However, the definitions employed use a level of precision that requires data which are not available for the Central Asian states and that precision does not help explain policy formation. Vulnerability definitions used by economists have limited usefulness beyond comparisons among advanced industrialized states that collect and publish detailed statistical information. The works of Keohane and Nye and of Steven Plaut illustrate unsuitably precise definitions that, by virtue of their precision, fail to capture how policy makers form decisions. (2) Keohane and Nye claim that the actor with relatively lower dependence will bear lower costs resulting from breaking relations. Lower relative dependence equals more freedom to threaten imposing breakup costs on the other actors. They also explicitly employ the same triad of national interests and vulnerabilities used by this thesis when they write: "Sensitivity interdependence can be social or political as well as economic." (3) Steven Plaut gives one example of a precise definition, concluding that two factors, expenditures on an import divided by total domestic absorption of all commodities, and imports minus exports divided by total supply of a commodity, accounted for between 83 and 89 percent of all vulnerability. (4) The closest easy approximation to such a definition would be imports as a percentage of domestic consumption. Yet neither the Central Asian governments, nor international organizations, collect this type of information for the essential categories of food, energy and capital. Furthermore, such a measure defines the scale of vulnerability, whereas this study investigates the value of the geographical distribution of vulnerability. The measures used here include the four categories of economic information available expressed as a geographical distribution: imports, exports, foreign direct investment, and aid. Systemic Vulnerability Economic vulnerability includes both exploitable relations and also the possibilities that arise from systemic processes without active agents. The sensitivity of states to global conditions rises as a function of their interaction with global markets: disruptions cause pain and national loss. (5) As Crawford explains: "There is little question that, even from a liberal perspective, participation in the market increases the number of economic vulnerabilities a state faces." (6) A systemic view requires defining vulnerability as the lack of buffering mechanisms, strategies or institutions to prevent harm to the home state. (7) The most important and difficult questions concern how to design protections that do not, in turn, prevent the growth benefits of integration with the global economy. (8) State policies must be formed in the context of costly tradeoffs between increased opportunities for efficiency and growth extracted from international economic relations versus the risks of increased vulnerability. This conundrum goes beyond the problems of price levels, unemployment rates or interest rates to the core of physical survival for the population. (9) Vulnerability to systemic shocks requires a level of data gathering beyond the scope of this treatment, but it is partly reflected in the categories of data mentioned above. Market Structure In addition to the importance of imports, export infrastructure access follows in derivative importance: Imports require payment with hard, convertible currencies from the sale of exports. Export success can be jeopardized by blockade, which harms state welfare as seriously as hindered access to imports. The landlocked position of the Central Asian states raises this issue to the highest importance because their chief export products require infrastructure--pipelines, railroads, electric power lines-- that Russia monopolizes and blockades without hesitation. Russia used infrastructure as a tool for political integration; these states must build their infrastructure for political independence. Nijkamp and Vleugel note the importance of infrastructure for economic and political reasons: "Because all economic development in space involves interacting networks, missing networks will sooner or later translate into missing economic development." (10) Market Structure Imperfections Beverly Crawford appraises the security consequences of trade by equating vulnerability with failure of market control because trade create dependency, despite mutual benefits for either importer or exporter, if they lack low cost alternatives. (11) Crawford's summarization of regime requirements can also apply to the prospects for cooperation among the states of Central Asia: " . . . [Regimes] must be grounded in consensual assessments of vulnerability in order for them to be truly effective." (12) In the terms of classical economics, restrictions in the number of buyers or sellers are called market imperfections. A monopoly brings the seller extra profits, because the buyer's choices are restricted. The other end of the scale is called monopsony, when a company or many sellers must sell to a very small number of buyers. The restricted choices represented by both of these conditions prevent the functioning of the competitive market, which neoclassical economics often promotes as an ideal of efficiency. When a country only exports one or two products, this form of captivity to the market can be measured as export concentration. (13) This study uses the same method as used by the World Bank in computing export concentration. Balance of trade statistics for the Central Asian states frequently show a few export products bringing in 20% to 30% of total trade revenue, with a few others at 1% or 2% each. The same trend holds true for the distribution of import sources and export markets. Those in the 1% and 2% range cannot effectively substitute for the losses of the major products or partners, while the importance of those over 20% results in excessive dependence. One hundred equal partners would give the state more autonomy than ten, but most of these states would gain considerably just by raising two or three of their smaller trade partners or products into the 10% range. The figures used for measuring trade relations should not be taken as accurate in any absolute sense for a variety of reasons. (14) The Economic Survey of Europe attributes inconsistencies of data to factors such as "variant methodologies or concealment by practitioners (such as tax avoidance, capital flight, illegal and corrupt practices, trade in narcotics or arms, and so on)." (15)Another source of inaccuracy is the so called "suitcase trade," or shuttle trade. (16) Compared to security and identity vulnerability, most countries interact with a much greater number of partners. The constraints on greater dispersion in the number of trade partners and products reflect the degree to which economics is constrained by geography (as is security) and by past history (as is identity). Historical constraints in this context refer to the heritage of Soviet polices which imposes multiple barriers between the Central Asian economies and their economic self-determination. (17) The collapse of the Soviet Union allowed greater global trade access but this did not reduce vulnerability. Greater trade has the perverse effect of reducing the diversification of the economy as each state concentrates on its comparative advantage. A standard text by Appleyard and Feld notes: ". . . there is no doubt that trade moves production in all countries toward a more specialized production pattern than would be the case in autarky." (18) Therefore, measurement of economic vulnerability requires balancing the increasing number of trade partners against the increasing concentration of production. Market structure, such as measured by the export concentration index, is an important issue because it leads to misallocation of capital investment, may contribute to corruption and hinder the development of democratization. (19) In the following charts the units are Herfindahl-Hirshman (HH) Index of Concentration times 100 numbers (for detail, see n.18 on page 32). All four countries show a healthy increase in the number of other countries buying their exports, which is successful vulnerability management by dispersion. This is shown by the downward trending solid lines that represent the distribution of export markets. The scale of vulnerability, represented by dashed lines shows a great difference in outcomes. They indicate that for Kazakhstan and Kyrgyzstan the scale of their vulnerability continues to decline, as represented by a lowering of their export concentration. The structure of exports for Turkmenistan and Uzbekistan is increasingly concentrated, an increasing vulnerability. FIGURE 8: CONCENTRATION VERSUS MAGNITUDE OF ECONOMIC VULNERABILITY
The tables in Figure 9 and Figure 10 provide the numbers used to generated the graphs above. While the graphs used Herfindahl-Hirshman Index of Concentration as the units, the tables use the reciprocal, which is the effective number of interaction partners or markets. An increase in the number of markets and products is a decrease in vulnerability. FIGURE 9: NUMBER OF TRADE PARTNERS
Units are number of trade partners expressed as "Effective Number of Parties."Source: 1994-1997-Direction of Trade Statistics Yearbook and Quarterly Report, 1992 for Kyrgyzstan and Tajikistan ibid., 1990 from Appleyard and Feld. Shaded cells such as 1991 and 1993 extrapolated from the differences between the first two sources FIGURE 10: EXPORT CONCENTRATION
Units are number of export products expressed as "Effective Number of Parties." Sources: 1989--UNCTAD "Handbook of International Trade and Development Statistics 1994"; 1993: ibid, 1997 edition; 1995 from Economist Intelligence Unit Country Reports; 1996 from Source: 1994-1997-Direction of Trade Statistics Yearbook and Quarterly Report, 1992 for Kyrgyzstan and Tajikistan ibid., 1990 from Appleyard and Feld. Shaded cells such as 1991 and 1993 extrapolated from the differences between the first two sources1996 from International Trade Center [ http://www.intracen.org]. According to the IMF Staff Report, "Kyrgyz Republic: Recent Economic Developments" Kyrgyz export concentration changed from 4.76 in 1992 to 7.32 in 1996. Foreign Direct Investment
Economic Vulnerability Test Case: Turkmenistan Explaining Regional Cooperation Turkmenistan's policy reversal regarding cooperation with other Central Asian states provides the best test case by which to test hypothesis corollary # 2. Corollary #2. - Increased cooperation tends to be associated with convergence of vulnerability. Increasing convergence of vulnerability with other states tends to increasing cooperation. Why Did Turkmenistan Resist Cooperation?
[the] first serious attempt at working out a detailed plan for the economic integration of Central Asia was Economic Collapse Stimulates Cooperation These confrontations build on two other events. First, the opening of the gas export pipeline to Iran at the end of December 1997, just one week before the surprise summit, communicated a strong symbolic message that Turkmenistan was breaking the Russian blockade. Second, in the long run Russia needs the revenue from transit royalties on Turkmen gas and oil as badly as Turkmenistan needs the sale income. (49) Turkmenistan's President Saparmurat Niyazov long has erected barriers to a five-way summit. Confident that his country's wealth in oil and natural gas . . . Niyazov has stood aloof . . . The suddenness of the conference, without an evident urgent need to meet was mysterious. The last time that the leaders of all five countries, and only these five leaders, gathered together was in December 1991. (50)When negotiations among Turkmen President Saparmurat Niyazov, Prime Minister Chernomyrdin and Gazprom board chairman Rem Vyakhirev, who accompanied Chernomyrdin, broke down, January 14, 1998, the Russian side postponed the prospects for compromise for more than a month. (51) Measuring Convergence Summary Convergence in Output: GDP/Capita FIGURE 11: CONVERGENCE IN CURRENT ACCOUNT Changes in Current Account Balance as a % of GDP
Note: Changes are positive, meaning a growing economy, unless noted as negative (-) meaning a shrinking economy. Source: EIU Country Reports. GDP in $ U.S. at official rates of exchange
FIGURE 12: CONVERGENCE IN CHANGES IN GDP/CAPITA Purchasing Power Parity
All Units are Percentages
Mean is calculated using only Kazakhstan, Kyrgyzstan and Uzbekistan
$U. S. of GDP/ Capita in Purchasing Power Parity -- All Units are U. S. $
| Back to Home Page | | Research Papers | | Table of Contents | | Chapter Four | Footnotes: 1. Examples include: High Technology Materials: a Study of Seven Materials on Supply and Demand; A Relative Vulnerability Analysis Included, (Battelle Memorial Institute: Columbus Ohio, 1990); Walter Caltsnaes, Energy Vulnerability and National Security, (New York: Pinter, 1988); David Katz, Oil and Western Europe: A Study of Resource Dependence, Supply Vulnerability, Community and National Responses, (Thesis: Brandeis University, Waltham, Mass. 1985); Dispersed, Decentralized and Renewable Energy Sources: Alternatives to National Vulnerability and War, (California Academy of Sciences: San Francisco, 1980). 2. In Power and Interdependence Robert Keohane and Joseph Nye separate interdependence from interconnectedness by the presence of costly effects. "The vulnerability dimension of interdependence rests on the relative availability and costliness of the alternatives that various actors face." Keohane and Nye, 9. The costs derive from the restriction of alternatives, yet the concept of vulnerability must not be narrowed to the cost factor alone. The strategic dimension implies calculations across intervals of time which also hinders its broad theoretical utility. In other words, their connection between the terms "sensitivity interdependence" and vulnerability introduces the factors of costs and time. For example, "oil imports as a percentage of domestic consumption would impart a sensitivity to their interruption and cause price increases. That country which can mobilize alternative domestic sources of supply at only slightly higher costs, or use other forms of alternatives cannot be regarded as equally vulnerable compared to another less well endowed country. " Robert O. Keohane and Joseph S. Nye, Power and Interdependence, (Little, Brown and Co. Boston, 1977), 13. 4. Steven E. Plaut, Import Dependence and Economic Vulnerability, (Greenwich, Conn. JAI Press, 1983), 2. Plaut attempted to specify the relative weight of factors like "total import volume, the function of imports from any one country, and the specific sources of imports." He takes issue with such simplistic definitions and examines several approaches such as "lack of self-sufficiency," but rejects that as well. He goes on to test the relative importance of "inelasticity of demand, large expenditures, and little domestic production." His study tested welfare loss in three countries for a doubling of prices for eleven categories of imported goods. Plaut, 10. 5. "Since the system is addictive, in the sense that states must restructure themselves extensively in order to participate in it, once such restructuring has occurred states increase their vulnerability to adverse behavior by others, or to breakdowns in the system." Barry Buzan, People States and Fear: The National Security Problem in International Relations, (University of North Carolina: Chapel Hill, 1983), 144. Recent events in Malaysia and Indonesia illustrate the power of this system to force a measure of conformity of practice that states treat as an assault on their sovereignty. 6. Crawford, 9 "Where such complex patterns of interdependence exist, many states will be vulnerable to disruptions in the pattern of trade." 7. As Ricardo Hausmann argues: "To make today's globalized, volatile capitalism sustainable, governments need to develop strategies and institutions that reduce the range of economic swings and better absorb major shocks. Ricardo Hausmann, "Will Volatility Kill Market Democracy?" Foreign Policy, 108 (Fall 1997) p. 54-67. Quotes taken from page 55. Emphasis added. In this regard, vulnerability is a function of the balance between the degree of openness to the international system versus the strength and adroitness of institutions of financial controls. Excessively rigid controls reduce investment trade and growth but can throwback the crashing waves of a regional financial crisis. For example, Rostam Kavoussi has found that growth is a function both of outward orientation and external demand. During cyclical periods of low external demand, external orientation may cost more than it benefits. Rostam M. Kavoussi, "International Trade and Economic Development: The Recent Experience of Developing Countries," The Journal of Developing Areas, 19 (April 1985) 379-392 8. "Policies to reduce vulnerability in trade relations rub against the imperatives of the marketplace. Trade theoretically enhances the capabilities of all trading partners and facilitates a division of labor in which dependencies thrive." Crawford, 5. 9. "The survival of large numbers of people has become increasingly dependent on the maintenance of high levels of social order . . . . This condition reflects the pursuit of efficient economies of specialization, but it produces a society much more vulnerable to serious total disruption. . . . Unless complex distribution and production systems are maintained, people starve, and virtually the entire machinery of society collapses." Buzan, 100. For a greater discussion of the nature of the economic system as a source of vulnerability, especially pp. 141-145. 10. P. Nijkamp and J. Vleugel, "Success Factors for High Speed Rail in Europe,"International Journal of Transport Economics, XX, no. 3 (October, 1993) 267. 11. Crawford compared the effects of trade for the West and the Soviet bloc on their relative levels of economic vulnerability during the Cold War. Crawford, 216, 224. 13. In the World Development Report 1996, pp. 192, 193, Table 3, 2nd column. No figures were given for the five states of Central Asia, but the scale ranged from a high of 0.934 for Nigeria on the high end to 0.076 --China, 0.056 -- Italy and 0.080 for the U. S. as the three lowest. (New York: Oxford University Press, World Bank, 1996). The 1997 edition did not include this category of information. 14. Michael Esses of Britain's Department of Trade and Industry warns that: ". . . present trade flows to the Central Asian countries are probably 'vastly under-recorded.' Because of the problem of access to the landlocked region, much trade goes through third countries, such as Turkey, Russia and the United Arab Emirates. By his estimate, trade flows could be five or ten times higher that estimated." Stuart Parrott, "Central Asia Conference," RFE/RL, January 28, 1998. Reprinted in BUSINESS, 98:003 January 30, 1998.[TURKISTAN-N@VM.EGE.EDU.TR] The data used have potentially large flaws for several reasons. The IMF Directions of Trade Statistics figures used here are better than other sources, but the quality is uneven. Based on this data it is evident that Kyrgyzstan has achieved great success in increasing the number of trade partners from from 1992 to 1996, but to compare this progress with that of other states runs into problems of lack of data. For Turkmenistan the earliest passible data is 1994, and for the others, 1993. 15. "The Central Asian Economies 1991-1996" Economic Survey of Europe, (Geneva: UN Economic Commission for Europe 1997), 8. For instance, "Uzbekistan reported in 1995 as sales to Germany only one eighth of the value Germany recorded as importing from Uzbekistan, and contrariwise it reported selling to the United Kingdom no less that 89 times the value the United Kingdom wrote down as coming from Uzbekistan." Ibid., 28 16. Regarding this behavior, Turkey has tried to document the scale of the flows. "The CB also estimated that 64 percent of CIS tourists -- roughly 1 million people -- came to Turkey last year to participate in the suitcase trade. As a result, it was estimated that suitcase trade amounted to $8.8 billion in 1996." "Turkey: Suitcase Trade Part - Trade is Lucrative, but Numbers are Declining," (Courtesy: US Consulate General--Ankara, Turkey), Business Information Service for the Newly Independent States, U. S. Dept. of Commerce. [http://www.iep.doc.gov/bisnis/country/turkey.htm] 17. As summarized by a report from the Union Bank of Switzerland, after the collapse of the Soviet Union, the Central Asian republics inherited many structural obstacles that make their transition to a market economy a difficult process. These include the existence of Soviet-era enterprises which are adjusting with difficulty to the demands of a market economy; loss of the large Soviet market; loss of subsidies from Moscow; loss of inputs for industrial production, raw materials, and human capital; isolation from world markets; insufficient infrastructure; high prices for imports ( particularly energy); poor economic conditions in Russia which limit export demand; payments difficulties and insolvency in other CIS countries; collapse of the rouble zone, and the lack of forex reserves and income to support the newly introduced currencies; massive inter-enterprise debts, that now extend across international borders (the former Soviet republics), and environmental problems. "Central Asia: A Newly Emerging Region," (Union Bank of Switzerland Regional Report 1997) Janet Matthews Information Services, Quest Economics Database. NEXIS 19. As David Nissman observes: "Concentration of control of a plum asset mainly sold abroad --oil-- invites corruption and discourages the requisite transparency." David Nissman,RFE/RL, April 3,1998. Reprinted in Turkistan Newsletter 98-2:065 [Turkistan-N@VM.EGE.TR], April 9, 1998. A variation of this principle operated in Kyrgyzstan as explained in Chapter IV. The deleterious effects on the potential for the decentralization of political power are also persuasively explained by Ali Abootalebi: " The more resources the state controls and the more independent the state elites are from the other socioeconomic classes, the more likely an authoritarian regime will take hold." Ali R. Abootalebi, "Civil Society, Democracy, and the Middle East" Middle East Review of International Affairs, Volume 2, no. 2, [www.biu.ac.il/SOC/besa/meria.html//],September 24, 1998, referencing the work Capitalist Development and Democracy, by Dietrich Rueschmeyer, Evelyne Huber Stephens and John D. Stephens. 20. Popular awareness and understanding of economic vulnerability rises in the context of conflict where its exploitation increases costs, deteriorates terms of trade and leads to a large welfare loss for the importing country. In the technical terms of economics this equates vulnerability with the concept of an imported strategic good when total domestic demand is price-inelastic, or as other authors define it, low demand elasticity. 21. "The Central Asian Economies, 1991-1996" Economic Survey of Europe, (Geneva: United Nations Economic Commission for Europe, 1998) p. 33 22. "World Bank Study Projects Near-Term Drop in Private Financial Flows to Developing Countries," IMF Survey, 27, no. 3, February 9, 1998, 103 23. "Capital investments by portfolio investors focus on shorter term financial gains and tend to be volatile. In contrast, direct investors are mainly concerned with visible economic transactions, such as the establishment or expansion of plants, the operation of internationally integrated production systems, the international transfer of technology, and the distribution of intermediate and final products in world markets." "Multinationals Remain Confident in Asia As Destination for Investment," IMF Survey, April 6, 1998. p. 112, quoting International Chamber of Commerce Secretary General Maria Livanos Cattaui. 24. Sergei Kolchin, "Foreign Investment in Kazakhstan's Oil and Gas Complex," The Jamestown Foundation Prism, III no. 17, part 3, [http://www.jamestown.org], October 24, 1997, p. 2. Kolchin notes that "Russia, in recent years, has not transported a single cubic meter of Kazakhstan's natural gas for export to Europe." Since Russia is an economic competitor, President Nazerbayev's behavior as a "Eurasianist" and an advocate of integration within the CIS is explained as a tactic to avoid political confrontation with Russia. Kolchin's claim that Kazakhstan, " . . . so far exceeds all of the post-socialist countries in the scale and speed of industrial privatization," obscures the extent to which privatization has been structured to exclude non-Kazakhs from benefiting. He can even say that, "Kazakhstani officials point out that, as regards per capita foreign investment, Kazakhstan outstrips not only its CIS neighbors but many Eastern European countries," but this does not take into account the relative scale of natural endowments that also attract FDI as well as an economically conducive regulatory climate. 25. "For 'Countries in Transition' the flow was negative ($8.8 billion) compared to FDI of $11.3 billion and portfolio investment of $1.6 billion and other net investment of $6.6 billion." Furthermore, ". . .throughout the 1990s, a substantial proportion of the capital inflows into emerging markets has been accumulated as foreign exchange reserves. . . . The buildup of foreign exchange reserves is a direct consequence of central bank intervention to prevent nominal exchange rate appreciation in the face of substantial capital flows." " The accumulation of foreign exchange reserves also reflects a desire to build up a "buffer" against a sudden reversal of capital flows."Developments and Prospects in Emerging Markets, World Bank (1997) 28, 29. 26. Originally, the idea behind the CIS was to exclude the southern republics rather than to integrate them into the new arrangement. . . . At that time, nobody in Moscow cared about the destiny of the 'archaic,' 'underdeveloped,' 'Asiatic' republics of Central Asia and the Caucasus. on the contrary, it seemed almost everybody in the Kremlin was happy to get rid of this 'burden.' " Mehdi Mozaffari, "CIS Southern Belt: Regional Cooperation and World Economy," ibid, 172. His description is the source of the narrative here. 27. Estimated Terms of Trade Impact of Moving from Soviet Prices to World Prices % change from 1990 base:Kazakhstan+19Kyrgyzstan+1Turkmenistan+50Tajikistan-7Uzbekistan-3Source, Richard Pomfret, The Economies of Central Asia, (Princeton, New Jersey: Princeton University Press, 1995) 48. 28. "Commercial Overview of Turkmenistan," [http://www.mac.doc.gov/bisnis/country/turecon.htm]. p. 3 29. "Expected profits, however unrealistic, from gas exports had apparently become a defining factor of both domestic and foreign policy. However, Turkmenistan was forced to accept the bitter truth that even the biggest deposits are of no benefit if the present customers cannot pay and potential future customers are inaccessible." R. Freitag-Wirminghaus, "Turkmenistan's Place in Central Asia and the World," Security Policies in the Commonwealth of Independent States: The Southern Belt," ed. Mehdi Mozzaffari, (New York: St. Martin's, 1997). 71 31. "Turkmenistan is the only financially independent ex-Soviet republic and, consequently, it is able to stand up to Russia's pressure better than others." Mehdi Mozzaffari, "CIS' Southern Belt: Regional Cooperation and Integration," Security Policies in the Commonwealth of Independent States: The Southern Belt," ed. Mehdi Mozzaffari, (New York: St. Martin's, 1997) 175. 32. The dual citizenship treaty is also less 'costly' in that Turkmenistan has the smallest Russian speaking population of the Central Asian states (Except Tajikistan now because of the mass exodus of Russians from Tajikistan in the civil war.) "By interesting contrast, even Tajikistan, which depends totally on Moscow for political, military and economic aid has thus far resisted [granting Russians dual citizenship]." Michael Ochs, "Turkmenistan: Pipeline Dream II," Caspian Crossroads, no. 1, Winter 1995, 2. [http://ourworld.compuserv.com/homepages/usazerb/9.htm]. 33. Merdad Haghayeghi, , (New York: St. Martin's, 1995), 184-185. 34. "In fact, mutual trade fell in value and more in real terms in 1995-1996." "The Central Asian Economies 1991-1996," (Geneva: UN ECE, February 1998), 28. 37. Turkmenistan belongs to CCC, EBRD, ECE, ESCAP, IBRD, ICAO, EDB, IMF, IMO, INTELSAT, IOC, ISO (correspondent), ITU, NACC, OIC, PFP, UN, UNCTAD, UNESCO, UPU, WHO, and WMO. And of course CIS and ECO, not a member of WTO. 38. Turkmenistan ". . . can easily sell its natural gas product within the CIS, but Ashkabad (the capital of Turkmenistan) is helpless when it comes to collecting overdue payments and is unable to take any stronger action than periodically closing the gas valve." "Uzbekistan regards the Turkmen-Iranian rapprochement with open suspicion and (with) fears of a growing Islamist influence." "New Contours for an Old Region." Swiss Review of World Affairs. May 2, 1995. NEXIS. All of the states in this region use transportation and communications infrastructure as political as well as economic tools. Even Russia is itself landlocked to a degree and vulnerable, suffering the same economic blackmail at the hands of Belarus and Bulgaria. 39. "The total extraction [of natural gas] fell from 652.2 billion cubic meters in 1993 to 35.6 billion cubic meters in 1994. Other factors contributing to reduced production were Russia's blockade and Uzbekistan's closing of the pipeline when Turkmenistan refused to pay higher transit fees." R. Freitag-Wirminghaus, "Turkmenistan's Place in Central Asia and the World," Security Policies in the Commonwealth of Independent States: The Southern Belt," ed. Mehdi Mozzaffari, (New York: St. Martin's, 1997). 40. 1993 income for Turkmenistan was 86.2% of 1989 levels, but 1996 income only 54%. This is in spite of the benefits Turkmenistan should have accrued by moving to world market prices as noted in footnote # 31. Numbers are Purchasing Power Parity of GDP/Capita from Economist Intelligence Unit Kazakhstan Country Report, 3rd Quarter 1997, p. 49. 41. Turkmenistan is promoting a 1462 Kilometer pipeline to Pakistan's town of Multan. This is being held up by the war in Afghanistan. The U. S. is actively promoting a set of pipelines (one oil and one for gas) under the water crossing the Caspian Sea bed to allow export access through Azerbaijan, Georgia and Turkey to western markets. 42. This is only part of a broad pattern whereby Russia exploits Central Asian export access vulnerability to extort gains, such as a ten per cent share of Azerbaijan's oil export consortium for Lukoil and a 15 percent share of the Western stake in the development of a huge gas field in Kazakhstan. See also Steve Levine, "Way Sought for Pipeline to Bypass Russia" The New York Times, September 9, 1995, 5. 43. "Turkmen Ukraine Gas Delivery" March 2, 1998 CAP Marat Gurt, Reprinted in BUSINESS vol. 98: 025 [TURKISTAN-N@VM.EGE.EDU.TR], March 12, 1998. 44. Thirty five percent of the four billion cubic meters goes toward payment to Iran for the construction costs, but for the remainder Tehran will pay $40 per 1,000 cubic meters. "Turkmen Iran Gas Increase," March 2, 1998, Interfax. Reprinted in BUSINESS, vol 98: 022,[TURKISTAN-N@VM.EGE.EDU.TR], March 5, 1998. 45. "According to a new International Monetary Fund estimate, the Republic's gross domestic product fell by 20 percent last year. The 1997 drop is even greater than the 19 percent decrease in GDP sustained in 1994. . . .Turkmenistan's gas exports last year were valued at only $294 million, less than one third of the amount for 1996. . . In a more normal year it accounts for 60 percent of total exports and half of Turkmenistan's total GDP. The situation could turn out to be even worse than the IMF estimates." Michael Lelyveld, "Turkmenistan: Economy Suffers Biggest Decline Yet," RFE/RL, [http:// www.rferl.org/nca/features/1998/01/F.RU.980115141438.html.] January 15, 1998. 46. "It is interesting to note that Niyazov is heading a unique republic where the size of the intelligentsia is considerably small, Islam is relatively weak, and the population is largely apolitical. These factors, together with his iron-fist policy, has given him the opportunity to continue with his totalitarian rule in Turkmenistan with no prospects for its dismantling in the foreseeable future." Haghayeghi, 141. 47. Turkmen-Ukrainian Gas Deal Dramatizes Dependence on Russia for Transit," Jamestown Monitor, vol. IV, no 20, [http://www.jamestown.org], January 30, 1998. On March 21, 1998 Reuters reported that: "Russia's price evidently also requires payment in large portion through barter, which was also a factor in the rejection. " 'We don't need Russian goods. We don't need (Russian) weapons, and as for (other) goods, they are still of poor quality,' Niyazov said, adding that his country would rather buy U. S.-made agricultural machinery or Iranian buses and cars." Marat Gurt, "Turkmens Say Gas Talks with Russia Fruitless," Reuters, March 21, 1998. Jamestown Monitor of January 28, 1998 reported that the demand was for 70% barter goods. 48. Incompatible positions could not be overcome in spite of that Turkmen President Niazov "boasts of an old friendship with [Prime Minister] Chernomyrdin," Floriana Fossato, "Russia: Chechnya and Turkmenistan Stake Claim to Transit Gas," RFE/RL, [http://www.rferl.org/nca/features/1998/01/F.RU.980120141658.html] January 20, 1998. 49. Roland Goetz explains that because of a lack of restructuring and foreign investment and the non-competitive nature of Russian industry enforces the tendency of the Russia economy toward an orientation for the production and export of raw material. This is so unfavorable for general economic growth that any resurgence of economic capability requires extracting revenue from Central Asian petroleum resources. Roland Goetz, "Russia's Economic Potential as a Basis for its Foreign Policy," Aussenpolitik, November, 1996, 136-145. 50. Bruce Pannier, "Central Asia: Summit Arouses Quiet Surprise," RFE/RL January 8, 1998. [http://www.rferl.org/nca/features/1998/01/F.RU.980108130736.html.] "A reason for urgency then was clear. The USSR had collapsed and the CIS -- Commonwealth of Independent States -- formed without any of the leaders of Central Asia's republics even being asked for their opinion. By contrast, the parties announced this month's conference only the day before it convened without even an agreed agenda." The Economist Intelligence Unit Country Reports say that the official reason given was to congratulate Niazov upon his recovery from heart surgery. 51. "Russian Premier in Turkmenistan . . ." RFE/RL Newsline - Transcaucasus & Central Asia, [http://www.rferl.org/newsline/2-tca.html]. January 15, 1998. 52. Bruce Pannier, "Central Asia: Summit," 2. 53. Svetlana Kulagina, "Kazakhstan SPECA Program comes True," March 9, 1998 BUSINESS, VOL. 98:027, [TURKISTAN-N@VM.EGE.EDU.TR], March 13, 1998. "Late in February, there was a meeting in Almaty for the delegations of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan to discuss the opportunities of this special program. It also involved the representatives of ECE, ESCAP, the UN Development Program and the executive committee of the Intergovernmental Council of the Central Asian Union (CAU)." 54. The Jamestown Monitor also reported the meeting of all five Presidents in Almaty on February 26 and 27, referencing ITAR-TASS of February 26. According to this report thirty-two projects in four areas were proposed. The Monitor mentioned that Uzbekistan was the country holding back and not being agreeable, and that cooperation must overcome obstacles such as rivalries. "Even if Central Asian populations show a readiness to work together, public opinion surveys indicate that they seem more willing to cooperate, for example, with Western firms. (ASN Newsletter, Vol. 9, No. 12, December, 1997, p. 4). . . First the project is aiming to establish the appropriate regional infrastructure, which will decrease the region's dependence on Russia. Second, interest shown by China, France, Germany, Japan, and the USA suggests that financing may in the future be more forthcoming." "Central Asian Regional Cooperation to Receive External Aid," Jamestown Monitor, IV, no. 42, [http://www.jamestown.org].
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
