TURKMENISTAN

COUNTRY OVERVIEW

LOCATION AND SIZE.

Turkmenistan is located in central Asia, bordered by Iran (992 kilometers/616 miles) to the south, Uzbekistan (1,621 kilometers/1,007 miles) to the northeast, Kazakhstan (379 kilometers/235 miles) to the north, Afghanistan (744 kilometers/462 miles) to the southeast, and the Caspian Sea (1,786 kilometers/1,110 miles) to the west. Turkmenistan has an area of 488,100 square kilometers (188,455 square miles), slightly larger than the state of California. The capital, Ashgabat, is located in the south-central part of the country, near the border with Iran.

POPULATION.

The Turkmenistan population is smaller than in other central Asian states. According to the last Soviet census in 1989, 2.54 million Turkmens lived in the republic. In 1989 Turkmens comprised 68.4 percent of the population, Russians 9.5 percent, Uzbeks 9 percent, and Kazakhs 2 percent. Due to the emigration of Russians, in 1998 Turkmens made up 77 percent of the population, and Russians only 6.7 percent. Of all the former Soviet Republics, Turkmenistan had the highest infant mortality rate—73.25 per 1,000 in 1997—and the shortest life expectancy, 61 years in 2001 (both figures estimated). During the next decade, population growth is expected to slow considerably as infant mortality rates increase and health care deteriorates.

Only 3 percent of Turkmenistan's land is arable. The Kara Kum, or Black Sand Desert, occupies almost 75 percent of Turkmenistan's territory. The 16 urban areas along its borders and coastline account for 45 percent of the population. Almost 50 percent of the population lives around the capital, Ashgabat, and only 2 other cities have populations with more than 100,000 inhabitants.

OVERVIEW OF ECONOMY

Turkmenistan is one of the most politically conservative and impoverished of the former Soviet republics. It has made little progress toward restructuring its economic foundation. Between 1991 and 1998, Turkmenistan's economic activity plummeted 45 percent. Its economy is agricultural, accounting for almost half of the gross domestic product (GDP), primarily marked by livestock raising and cotton production. Prior to independence in 1991, Turkmenistan was the second-largest cotton producer in the Soviet Union (behind Uzbekistan) and tenth largest in the world. It produces more cotton per capita than any other country in the world. Turkmenistan has the world's fifth largest reserves of natural gas and considerable oil resources. Turkmenistan is also known for subtropical fruits, melons, and nuts, especially pomegranates, figs, olives, and almonds.

Since gaining independence in 1991, Turkmenistan's government has emphasized grain production to increase its self-sufficiency and to limit Russian influence. The government has taken a cautious approach to economic reform, though. In 1992 the government of President Saparmurat Niyazov introduced his Ten Years of Prosperity program, which provided for Soviet-style subsidies for natural gas, electricity, and drinking water to all households in the republic. The program was afterwards modified to Ten Years of Stability, yet continues to subsidize for social needs, accounting for almost 60 percent of the state budgetary expenditures.

In the 1970s the Soviets made major investments in oil and gas production in Turkmenistan. By 1992 gas production accounted for almost 60 percent of GDP. Combined with the failure of trading partners to make payments, Russia's refusal to allow Turkmenistan gas transportation through its territory resulted in reduced output by more than 40 percent, mounting debts, and a sharp decline in overall industrial production. Turkmenistan continues to rely upon its abundant natural resources and cotton production to sustain its inefficient and declining economy.

Sources differ greatly on Turkmenistan's macroeconomic indicators since 1991. Government figures are often inflated to provide a more positive picture. Unemployment statistics for Turkmenistan are unreliable, but according to government sources in 1997 it was 5 percent. Real wages have declined by 25 percent since 1997 and inflation , which peaked in 1993 at more than 3,000 percent, dropped to 30 percent in 1999. The chief reason for the economic collapse was the failure of Russia, Ukraine, and other central Asian republics to pay for goods. In addition, the decline in energy prices hurt the economy.

POLITICS, GOVERNMENT, AND TAXATION

Turkmenistan was the first central Asian republic to create a new constitution, which proclaimed the country a presidential republic. It is dominated by Saparmurat Niyazov, who won election in June 1992. In January 1994 a referendum extended his rule from a 5-year term to a ten-year term; in December 1999 he was made president for life. He is the leader of the state and supreme commander of the armed forces. In accordance with the Turkmenistan constitution, he also appoints all cabinet ministers. Presidential powers extend to all facets of the country's economic and political life, even including the right to issue edicts that have the force of law.

The 1992 Turkmenistan constitution established a national assembly with 50 members elected to 5-year terms. Its primary duties are to enact and approve criminal legislation and ratify presidential decrees. In practice, however, international observers have criticized this body for its failure to limit the expansion of presidential powers over domestic and foreign affairs. In addition, there are the national council and a council of elders, both of which wield little power or influence in political affairs.

In December 1991 the Communist Party of Turkmenistan was renamed the Democratic Party of Turkmenistan (DPT). It controls all political activity in Turkmenistan, though ostensibly allowing political opposition. In 1992, under an initiative proposed by Niyazov, a party called the Peasant Justice Party was formed, consisting of regional secretaries of the DPT. A small opposition party, independent of government sanction, was formed in 1989 but was banned in 1990. The Agzybirlik (Unity) Party operates mostly in exile from Moscow.

Since 1991 Turkmenistan has attempted to establish relations with neighboring countries and potential trading partners in order to exploit its natural resources. Internal reform, however, has hampered economic development. In 1992 and 1993 the government passed laws on foreign investment, banking, property ownership, and intellectual property rights designed to attract foreign investment. The laws allow 100 percent ownership by foreign investors, but in practice the government restricts this right and prefers joint ventures rather than the full purchase of plants, factories, and other facilities by foreigners.

In 1993 the government began an ambitious 10-year plan that was designed to double per capita income, which was less than US$3,000 per year in purchasing power parity terms. The government freed the population from certain fees, such as for heating and electricity, and initiated in December 1992 the Ten Years of Prosperity program, which envisioned a transition to a free market economy, the dismantling of Soviet-style planned management, and extensive social welfare services. Soon thereafter, however, the government changed the slogan to Ten Years of Stability when anticipated investments and profits failed to materialize. Nevertheless, the government took great strides to attract investment for the plan, as Turkmenistan struggled to upgrade its basic infrastructure . The government started a national airline and built a new airport, along with new roads, buildings, and hotels in Ashgabat. Emphasis later shifted to constructing new pipelines, or expanding capacity in old ones, to diversify its markets and avoid further dependency upon Russia to export its natural gas.

In 1994 Turkmenistan was in the midst of a severe economic crisis. The government was forced to ration food, GDP fell more than 20 percent, and inflation was growing at 1,100 percent. In 1995, the government fixed the minimum wage at TMM1,000, which, according to some sources, corresponded to roughly 4 kilograms (8.8 pounds) of meat or potatoes.

Roughly two-thirds of Turkmenistan's revenues come directly from gas exports. The decline in international energy prices forced the government to broaden the tax base to lessen the impact of revenue shortfalls. No information is available on tax compliance, but it has been estimated that it is quite limited. Corporate and income tax rates range from 25 percent to 35 percent, although collection procedures, liability, and individual rates are often complicated, contradictory, subject to abuse, and arbitrarily applied.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Turkmenistan inherited an aging infrastructure from the Soviet Union, with 13,000 seriously depreciated railway cars, insufficient signaling and communication equipment, and inadequate staffing. The Turkmenistan government has ambitious plans for a highly extended transport infrastructure, with priorities devoted to railroad and pipelines development. Turkmenistan's transport system carries freight chiefly via rail, roads, internal waterways, and pipelines. Air transport accounted for less than 1 percent of transportation in the early 1990s. Turkmenistan still uses the Turkmenbashi-Ashgabat-Chardzhou Line as its primary railroad, which links Turkmenistan with Russia and Europe through Uzbekistan. Construction of this

railroad began in the 1880s to connect Turkestan with the Russian Empire. In recent years, construction has begun on a line expected to link Turkmenistan with Iran, although most observers do not expect it to develop as a primary trade route. Plans are being made to build 1,000 kilometers (621 miles) of new railroads, but this requires substantial foreign investment which is lacking. Another plan has called for a railroad that would connect Istanbul with Beijing, running through Turkmenistan, but this too has failed to materialize.

Turkmenistan has focused considerable attention on expanding its present pipeline capacity and building new pipelines. In April 1993, Niyazov announced that an agreement had been reached with Iran to construct a new pipeline to transport natural gas from Turkmenistan through Iran to the Persian Gulf. These plans were met with serious international opposition, particularly from the United States and Russia. The Russians profit from the Turkmenistan dependence upon old Soviet transport routes; however, aging pipelines and insufficient capacity subject Turkmenistan to the whims of Moscow and the inability of former Soviet consumers to make payment. The United States encouraged Ashgabat to construct a line under the Caspian Sea to Turkey, or increase merchant fleet trade, in order to export its most valuable commodity.

Roads in Turkmenistan vary considerably in quality, with 2 major highways that crisscross the country. In 1990, there were nearly 23,000 kilometers (14,292 miles) of roads, of which a little more than 15,000 kilometers (9,321 miles) were paved. Poor maintenance and increased freight and passenger traffic have severely strained the system.

Turkmenistan has 64 airports of varying sizes and capacities, with only 22 having permanently surfaced runways. The main airport, in Ashgabat, includes a new international complex connecting the country to China, Russia, Iran, Pakistan, Turkey, and European locations. There are plans to upgrade Turkmenistan Airlines with Boeing airplanes, replacing some of the aging Aeroflot aircraft.

Telecommunications is provided exclusively by the Turkmenistan Ministry of Communications, which also manages the country's postal services. There are 2 state-controlled broadcasting centers, the Orbita station in the capital and another in Nebitdag. The telephone network is inadequately maintained and insufficiently developed. Less than 30 percent of households have a telephone, and those are principally in the capital. The government has been upgrading the system, including signing agreements with Turkey to install electronic exchanges and international circuit capacity designed to improve local, long distance, and international communications.

Electrical power is one resource that Turkmenistan exports. Approximately 99.94 percent is supplied by fossil fuel, particularly natural gas, and 0.06 percent is hydraulically produced. In 1998, 8.745 billion kilowatt-hours (kwh) of electricity was produced, of which 2.7 billion kwh were exported. In May 1998, a new line was developed to export electricity to Iran. Plans to export electricity to Afghanistan and Turkey are also being negotiated.

ECONOMIC SECTORS

Turkmenistan's economy is dominated by state control of agriculture and industry, legacies of Soviet economic developments and regional links. The CIA World Factbook indicated that agriculture accounted for 25 percent of GDP and industry for 43 percent in 1999. Given that about 44 percent of the population is involved in agriculture, Turkmenistan has attempted privatization schemes, but with little success. Moreover, Turkmenistan, which has never opted for a market economy, continues Soviet-like systems with multiple exchange rates , state orders, and regulated prices, making expanded trade with neighboring states extremely difficult.

The best option for Turkmenistan to restructure its economy, and to develop some sort of sustainable growth, appears to be its ability to market and sell its natural resources, in particular natural gas. The absence of infrastructure, however, raises doubts about Turkmenistan's ability to do so at the pace necessary for economic expansion. Since transportation and export problems have caused problems throughout Turkmenistan's entire economy, especially for the international trade of its energy resources, establishing new markets and routes for trade is of crucial importance. Foreign investment in Turkmenistan has been substantial, although due to the political environment it has decreased almost 70 percent since 1995. In 1992 investment was US$11 million, peaking in 1995 at US$233 million, but falling to only US$62 million in 1998.

AGRICULTURE

Since 1991, Turkmenistan has attempted to restructure the agricultural sector to reduce its dependency upon other former Soviet republics. Agricultural policy has focused upon grain production, which has resulted in significant increases in non-cotton production, but the new crops are unlikely to thrive unless changes are also made to the procurement and transportation sectors. Due to the distance between farms and processing plants, less than 10 percent of fruits, vegetables, and cereals are processed in the country. Livestock raising remains an important part of Turkmenistan's agricultural sector, primarily in meat products such as beef, mutton, and chicken. In 1997 agricultural exports, chiefly cotton, amounted to US$364.5 million, whereas the value of agricultural imports was US$271.7 million.

To understand Turkmenistan's agriculture, it is necessary to understand Soviet practices and collectivization schemes. Roughly 50 percent of arable land is planted in cotton. Due to Soviet planning and economic specialization, Turkmenistan has few textile factories and manufactures less than 1 percent of the cotton grown. It must continue to import cotton fabrics and clothing from Russia and other states in the region. Turkmenistan has made little progress in restructuring the agricultural economy, with only limited privatization and expanded diversification of crop production. Moreover, Turkmenistan is heavily dependent upon irrigation for agriculture. Dilapidated canals and inefficient water management, however, result in only half of the water being delivered to the fields.

The Soviets practiced surface level irrigation, in which water is provided along furrows rather than direct application. Consequently, watering sometimes took days instead of hours, even with around-the-clock irrigation. In addition, the Soviets abandoned nighttime irrigation in favor of daytime irrigation, increasing water usage substantially. Almost no mechanism was in place to determine optimal application, or if there was adequate monitoring equipment, it was in disrepair. The result was endemic over-watering and a casual disregard for resource management.

Management and maintenance of the country's irrigation network is expensive. The budget allocated for maintaining the existing irrigation canals has fallen from US$3.2 million to only US$20,000. In addition, the government has failed to reduce sediment in the canal, due to failing equipment and insufficient financial resources, cutting annual clearance requirements by more than 50 percent. Staffing for the irrigation network has also become a critical problem for Turkmenistan, falling from 1,700 personnel in 1987 to only 640 in 1999. Relatively few young people are employed in irrigation and water management, so Turkmenistan could be facing a severe crisis unless newly-skilled replacement personnel are found.

INDUSTRY

Soviet industrialization left a legacy of ecological devastation, uneven development, and an obsolete, rapidly deteriorating infrastructure. Furthermore, Soviet industrialization often ignored local conditions, conflicting with a traditional society hesitant to embrace new technology. Thus, the Soviets proceeded to emphasize heavy industry that was more and more based upon imported labor from the European regions of the Soviet Union. Local labor has not materialized to replace this technically skilled workforce. Turkmenistan has a strong resource base but inadequate training and financial resources to expand its domestic industry in the near future. Nevertheless, the government is taking steps to lessen its dependency upon industrial trade.

Turkmenistan has a critical shortage of industrial capacity to process its agricultural products and natural resources, a situation that has deteriorated considerably since 1991. Most industrial development in Turkmenistan under Soviet rule was oriented toward heavy industry, especially in chemicals and petrochemicals such as sulfuric acid, ammonia, detergents, and fertilizers. Small-scale steel production was used to manufacture water pumps and construction. Since independence, Turkmenistan has invested in the development of cement production and farm machinery; however, these form a very limited part of Turkmenistan industry. Turkmenistan has also begun to develop local leather works and foodstuffs industries, which remain underdeveloped due to low mechanization and an insufficiently trained workforce. Turkmenistan has no textile factories, only spinning and clothing; however, the Turkmenistan carpet industry remains vibrant and has an international reputation for excellent quality. The Turkmenistan Carpet Production Association manages 10 factories, although household production accounts for a considerable share of overall production.

Turkmenistan has developed numerous joint ventures with international companies in order to update its industrial capacities, increase productivity, and lower pollution levels, which remain high. In addition, it has increased investment in light industry, particularly in consumer and durable goods, but Turkmenistan relies on trade for most products.

SERVICES

The service sector in Turkmenistan accounted for roughly 32 percent of GDP in 1999 and employed an estimated 37 percent of the workforce in 1996. Transportation, energy, and health care are particularly important. Tourism is relatively small, although in 1997 more than 250,000 tourists traveled to Turkmenistan, an increase of more than 400 percent from 1993.

Financial services are strictly controlled by the government, particularly currency exchanges and lending. Loans are provided to finance projects in the republic, with particular emphasize given to agriculture. The retail sector is rather primitive, with few major retail centers, as most citizens buy products at local bazaars and through state-run stores.

Health care in Turkmenistan continues to be free to all citizens, although the system lacks modern technology. Basic medicines are in critically short supply and treatment is crude at best. Medical training has also deteriorated since 1991. According to one study, in Dash-howez Province half of the patients treated died because physicians lacked proper training and surgical supplies. Moreover, most facilities do not have running water and central heating. In addition, pharmaceuticals must be purchased with hard currency , which is scarce and costly. In rural areas, many Turkmens must rely solely upon traditional healers, who use prayer and herbs.

INTERNATIONAL TRADE

Since independence, Turkmenistan has sought to advance its sovereignty by entering only bilateral trade agreements. The country's potential prosperity is dependent upon its ability to maintain peace and stability in a possibly volatile region. Thus, its international relations and trade are focused within former Soviet territories of central Asia, Russia, and the Caucasus, while seeking to cultivate new relations with Asia, Europe, and America. Since transportation and export problems have caused problems for Turkmenistan's economy, especially for the international trade of its energy resources, establishing new markets and routes is of crucial importance. Foreign investors are, however, hesitant to work in Turkmenistan, usually because the socioeconomic infrastructure has deteriorated or laws necessary to protect their investments can be violated by presidential decree.

Russia continues to be the most important partner for Turkmenistan's international trade. Russia dominates 50 percent of all trade within the Commonwealth of Independent States (CIS), particularly among natural resources, and appears unlikely to relinquish control in the near future because it commands the transportation grid built during the Soviet era. Thus, for example, with oil and gas, the pipelines run through Russia, which has often punitively regulated the amount of central Asian goods allowed to traverse its territory.

Russia was the only CIS country to export natural gas to the outside world until Turkmenistan signed an agreement with Iran in 1997. A pricing feud over supplies to Ukraine with Russia's state-run petroleum and natural gas company Gazprom severely disrupted Turkmenistan's ability to export any gas. Shipments were halted with the concomitant effect of handicapping all Turkmenistan trade, causing its exports to fall 61 percent in 1997 and GDP tumble 26 percent. Opening an export route through Iran eased some of Turkmenistan's economic woes. A resolution with Gazprom was reached, but the prices were so high that Turkmenistan will realize minimal profits.

Turkmenistan's trade with CIS states hovered around 50 percent in 1997. This was a slight decrease from previous years and represented Turkmenistan's somewhat successful efforts to reduce its dependency on Russia. Nevertheless, its export-import income has fallen significantly since independence. Export trade in 1992 was roughly US$1.5 billion and US$751 million in 1997. Exports have increased slightly since then, but the low volume reflects the country's continuing struggle to sell its natural gas. Imports, however, rose dramatically from the 1992 figure of US$446 million, jumping the next year to US$2.1 billion, but decreasing to US$1.2 billion by 1997. Because trade with the CIS consists mostly of energy resources, rather than manufactured goods, Turkmenistan has generally maintained a positive trade balance, but it has fluctuated widely since 1992. It is the only former Soviet republic to have a consistently positive trade balance since the collapse of the Soviet Union.

Efforts have been made by central Asian leaders to increase trade, but these have generally been rebuffed by Turkmenistan, which prefers bilateral trade agreements. Turkmenistan rejected Kazakhstan's attempt to create a Euroasiatic Union, but Niyazov agreed to join the Economic Cooperation Organization (ECO), which was founded by Turkey, Iran, and Pakistan in 1960. The ECO was designed to coordinate economic policies between these states and was given new life by the inclusion of the 5 central Asian republics. The move strengthened relations between Turkmenistan and Iran, a feature that disturbed Russia. Russia's demand that they choose between membership in the CIS or the ECO was hardly acknowledged.

Outside of the CIS, Turkey is Turkmenistan's most important trading partner and continues to be Turkmenistan's most vital supplier of technical and financial support. In 1993, for example, it provided the Turkmenistan government with credits worth US$92 million. Turkey further regards Turkmenistan as a country of transit to central Asian markets. Moreover, Turkmenistan is valued by Turkey essentially as a seller of natural gas. In a basic accord signed in October 1994, Turkey agreed to purchase natural gas from Turkmenistan for the next 30 years.

Turkmenistan has signed natural gas export agreements with Iran, believing its southern neighbor to be the most logical conveyor of Turkmenistan resources, even though the United States opposes the arrangement and central Asian leaders have strongly criticized Niyazov's attempts to enhance this relationship. In 1993 Turkmenistan and Iran signed a 25-year accord with the objective of delivering 28 billion cubic meters of natural gas. Delivery will be through a pipeline, jointly built but principally financed by Iran. In order to accelerate the process, in 1995 the countries agreed to transfer 8 billion cubic meters of natural gas annually.

MONEY

Turkmenistan maintains an official exchange rate (US$1=TMM5,200), but currency exchanges on the

black market are often 3 times the official rate. The government has not significantly intervened to artificially support the national currency, although in January and again in April 1995 the Central Bank attempted unsuccessfully to unify the 2 exchange rates. Subsequently, the government decided to limit foreign exchange sites, which resulted in greater disparities between the official and black-market rates. Most banks in Turkmenistan are government owned and the principle lending task is to channel foreign loans into designated state-run enterprises. In 1998, prudent steps taken by the government required businesses to have minimum capital equal to US$1 million; however, audits to determine solvency and adherence to banking laws have been sporadic. In December 1998, the government suspended free convertibility of hard currency to limit capital flight .

Turkmenistan has a single stock market, with 300 joint-stock companies. In 1993, the Law on Securities and Stock exchanges was adopted, although companies have not been allowed to issue stock freely. The success of Turkmenistan's stock market will depend upon further privatization projects and a more transparent legal and accounting system, which remain the same from Soviet times and are not likely to be changed in the near future.

POVERTY AND WEALTH

By most accounts, living standards in Turkmenistan have not dropped as dramatically since 1991 as they have in other former Soviet republics, although conditions are worsening. During the Soviet era, Turkmenistan was considered one of the poorest republics, with roughly 45 percent of the population living below the official poverty line in 1989. The CIA World Factbook reported that, by 1999, 58 percent of the population lived below the poverty line. Since the collapse of the Soviet Union, uneven economic developments have served to create a tiny stratum of the population in Turkmenistan that holds most of the wealth. For the average Turkmenistan citizen, the availability of food and consumer goods has declined while prices have risen. Most people continue to receive their income from state employment. Wages are based upon the old Soviet method, with people working in industry,

transportation, and science faring better than individuals employed in health, education, and services. By 1995, real wages had dropped nearly 48 percent since independence. Conditions in rural areas are often much worse than in urban, where unemployment is as high as 60 percent, although this is difficult to determine with any precision. It was estimated in 1997 that households in Turkmenistan spent 63 percent of income on food, which will likely increase as prices continue to rise and real wages decline.

Since independence, Turkmenistan has experienced significant increases in the rural population. This growth is expected to aggravate economic conditions in rural areas. Worsening economic conditions might force many to leave the rural areas to find work in the country's urban centers. Turkmenistan's cities are not able to accommodate rural migrants seeking employment in urban industries, however, thereby keeping wages below subsistence levels.

WORKING CONDITIONS

Working conditions in Turkmenistan have declined since independence, chiefly because the government has made almost no progress toward economic reform. Most Turkmens are employed in state enterprises and guaranteed a minimum wage. The CIA World Factbook reported that the labor force consisted of 2.34 million people (roughly 50 percent of the population) in 1996. Some sources indicate that the labor force is declining due to emigration and relative population stagnation. The majority of the population works in agriculture and decreased productivity and failing infrastructure means growing impoverishment for most Turkmens. Extremely limited privatization in rural areas also will lead to distressing economic and social conditions in the near future.

A Soviet-style trade union, the Federation of Trade Unions, is the only labor union in Turkmenistan. The government does not permit collective bargaining. The political environment acts as a sufficient obstacle to independent union formation and activity, however. Child labor laws are comprehensive, although children in rural areas often must work. Moreover, high school students are often deployed in the fields during intensive harvest periods, particularly in cotton fields. Women make up a significant percentage of the workforce, although they face discrimination. Labor disputes often go unresolved because the judiciary serves at the pleasure of the president, who appoints and can dismiss them at will.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1881. Russians defeat Turkmenistan tribes and annex Turkmenistan into the Governorship of Turkestan.

1888. Russians start construction of railway from Krasnovodsk (now Turkmenbashi) to Ashgabat.

1916. Widespread revolt in central Asia against the tsarist government's use of local troops during World War I.

1917. Russian Revolution and Civil War begin.

1920. Soviet General Frunze captures Ashgabat, ending the anti-Soviet government in Turkmenistan.

1921. New Economic Policy begins in Soviet Union.

1924. The Turkmenistan Soviet Socialist Republic is established.

1929. Collectivization begins in central Asia, widespread famine as Turkmens resist.

1930s. Pastoral nomadism ends in Turkmenistan; cotton production increases.

1959. Construction begins on the Karakum Main Canal.

1990. Turkmenistan declares its autonomy from the Soviet Union in August.

1990. Saparmurat Niyazov is elected president in October.

1991. Turkmenistan declares its independence from the Soviet Union.

1991. The Communist Party is renamed the Democratic Party of Turkmenistan in December.

1992. Niyazov introduces the Ten Years of Prosperity economic reforms.

1992. Turkmenistan joins the Economic Cooperation Organization (ECO), designed to coordinate economic policies among Iran, Turkey, and Pakistan and given new life by the inclusion of the 5 Central Asian Soviet republics.

1993. New Turkmenistan currency, the manat, is introduced.

1998. The financial collapse in Russia affects Turkmenistan's energy trade.

1999. Niyazov is named president for life.

FUTURE TRENDS

Turkmenistan is regarded by most observers as the most restrictive state in the region. Human rights organizations have consistently criticized the political and economic environment in Turkmenistan. President Niyazov has promoted a political system that rigorously opposes any liberalization or reform programs. Many specialists believe that Turkmenistan has the natural resources necessary to make an effective economic recovery; however, the political environment is considered by most to be a major impediment to future prosperity. For instance, the investments made by major transnational petroleum companies have thus far ended up in the bank accounts of political elite.

The best option for Turkmenistan to restructure its economy and develop some sort of sustainable growth appears to be its ability to market and sell its natural resources, in particular its natural gas. The absence of infrastructural preconditions, economic reforms, and political liberalization raises doubts about Turkmenistan's ability to do so quickly enough for expansion. The most serious non-political obstacle to Turkmenistan's economic future is its lack of access to markets with clients capable of paying for Turkmenistan's trade resources.

DEPENDENCIES

Turkmenistan has no territories or colonies.

BIBLIOGRAPHY

Capisani, Giampaolo. The Handbook of Central Asia: A Comprehensive Survey of the New Republics. New York and London: I. B. Tauris, 2000.

Country Watch. Turkmenistan 1999/2000. <http://countrywatch.com/files/175/cw_country.asp?vCOUNTRY=175>. Accessed March 2001.

Curtis, Glenn, editor. Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan: Country Studies. Washington, DC: Library of Congress, 1996.

Freedom House. "Turkmenistan." <http://freedomhouse.org/nit98/turkmen.html>. Accessed February 2001.

Freitag-Wirminghaus, Rainer. "Turkmenistan's Place in CentralAsia and the World." In Post-Soviet Central Asia, edited by Touraj Atabaki and John O'Kane. London and New York: Tauris Academic Studies, 1998.

Gurgen, Emine, and others. Economic Reforms in Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Washington DC: International Monetary Fund, 1999.

O'Hara, Sarah, and Tim Hannan. "Irrigation and Water Management in Turkmenistan: Past Systems, Present Problems and Future Scenarios." Europe-Asia Studies. Vol. 51, 1999.

—Steven Sabol

CAPITAL:

Ashgabat.

MONETARY UNIT:

Turkmen manat (TMM). One manat equals 100 tenge. There are notes of TMM1, 5, 10, 50, 100, 500, and 1,000. Coins come in denominations of 1, 5, 10, 20, and 50 tenge.

CHIEF EXPORTS:

Natural gas, petroleum, cotton, chemicals, processed food, minerals.

CHIEF IMPORTS:

Machinery and transportation equipment, chemicals, fuel, food and dairy products, sugar, textiles.

GROSS DOMESTIC PRODUCT:

US$19.6 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$2.4 billion (f.o.b., 2000 est.). Imports: US$1.65 billion (c.i.f., 2000 est.).