TURKMENISTAN

CAPITAL: Ashkhabad (Ashgabat)

FLAG: Green field with claret stripe of five carpet patterns; white crescent and five white stars symbolizing five major regions of Turkmenistan to the right of the stripe. In 1997, two crossed olive branches were added beneath the carpet patterns.

ANTHEM: Independence Turkmenistan.

MONETARY UNIT: Manat (mn), the unit of currency, was introduced by the government in November 1993. $1 = mn0.00019 (or $1 = mn5,200) as of 2005, but exchange rates fluctuate widely.

WEIGHTS AND MEASURES: The metric system is used.

HOLIDAYS: New Year's Day, 1 January; Flag Day, 19 February; International Women's Day, 8 March; Novruz Bairam (first day of spring), 21 March; Victory Day, 9 May; Revival and Unity Day, 18 May; Independence Day, 27 October; Neutrality Day, 12 December.

TIME: 5 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Turkmenistan is located in central Asia, bordering the Caspian Sea, between Iran and Uzbekistan. Comparatively, Turkmenistan is slightly larger than the state of California, with a total area of 488,100 sq km (188,456 sq mi). Turkmenistan shares boundaries with Kazakhstan and Uzbekistan on the n, Afghanistan on the se, Iran on the sw, and the Caspian Sea on the w. Turkmenistan's boundary length totals 5,504 km (3,420 mi), of which 1,768 km (1,099 mi) is shoreline along the Caspian Sea. Turkmenistan's capital city, Ashkhabad (which means "city of love"), is located in the southwestern part of the country.

TOPOGRAPHY

The topography features flat to rolling sandy desert with dunes to the Caspian Sea, which lies in the west. The Kara Kum desert occupies over 80% of Turkmenistan's total area. The desert is bounded by oases in the north that are watered by the Amu Dar'ya, and by the Murgab, Tejen, and Atrek rivers in the south. Only 4% of Turkmenistan's land is arable with approximately 2.5% under irrigation. The highest point in Turkmenistan is the Gora Ayribaba (3,139 m/10,299 ft), located along the eastern border near Uzbekistan. The lowest point in the country is Vpadina Akchanaya (Akdzhakaya Depression) at 81 m (266 ft) below sea level in the north central region of the country.

The Kopet-Dag Mountains of the southern border are part of a seismically active region that has experienced devastating earthquakes. One of the most destructive earthquakes in history occurred near Ashkabad on 5 October 1948 when a 7.3 magnitude quake resulted in the deaths of 110,000 people.

CLIMATE

The climate is arid continental. In July the mean temperature is 28°c (82°f). The mean temperature in January is -4°c (25°f). It can become very hot in the Kara Kum desert, with daytime temperatures of 50°c (122°f) not unusual. It does not rain much in Turkmenistan. Rainfall averages 25 cm (9.8 in) a year).

FLORA AND FAUNA

The Kara Kum (Black Sea) desert covers most of the country, and there is little plant or animal life. Herders raise goats, camels, and sheep in the desert. Farmers use reservoirs for irrigation to grow crops not indigenous to the area. As of 2002, there were at least 103 species of mammals and 204 species of birds throughout the country.

ENVIRONMENT

The most significant environmental problems in Turkmenistan include salinization of the soil and water pollution. The nation's water supply is threatened by chemical contaminants from farming activity. The problem is complicated by a lack of adequate sewage treatment facilities. A large share of the Amu Darya River's flow is diverted for irrigation, decreasing its contribution to the water supply from the Aral Sea. Water cycles have also affected the Garabogazol Aylagy, a lagoon-like appendage in the northwest that adjoins the Caspian Sea. It became fully enclosed because of a drop in the volume of the Caspian Sea, but is starting to rise again as the sea returns to previous levels.

As of 2003, 4.2% of the country's total land area was protected. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 12 types of mammals, 13 species of birds, 2 types of reptiles, 8 species of fish, and 5 species of invertebrates. Threatened species included the cheetah, tiger, Aral salmon, slender-billed curlew, and white-headed duck. Wild goats and cheetahs are listed as vulnerable animals.

POPULATION

The population of Turkmenistan in 2005 was estimated by the United Nations (UN) at 5,240,000, which placed it at number 111 in population among the 193 nations of the world. In 2005, approximately 4% of the population was over 65 years of age, with another 32% of the population under 15 years of age. There were 97 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 1.6%, a rate the government viewed as satisfactory. Between 1990 and 2005, the fertility rate declined from 4.3 births per woman to 3.4. The projected population for the year 2025 was 6,579,000. The population density was 11 per sq km (28 per sq mi).

The UN estimated that 47% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 2.27%. The capital city, Ashkhabad (Ashgabat), had a population of 574,000 in that year. Other large cities (and their estimated populations) include Chärjew (Chardzhou) (203,000), Dashhowuz (Tashauz) (165,400), Mary (123,000), and Nebitdag (119,000).

MIGRATION

Emigration to other former USSR republics exceeded immigration by 20,600 during 1979–90. More than 40,000 people fled from Tajikistan to Turkmenistan in 1992 to escape civil war. Repatriation of the Tajik refugees started in early 1998. As of 1999, nearly 5,000 Tajik refugees had voluntarily repatriated. There were also some 13,000 Tajik refugees, mostly ethnic Turkmen, who expressed the desire to remain in Turkmenistan. Between 1993 and 1995, 100,000 Russians left Turkmenistan. In 2000 there were a total of 223,000 migrants, including 14,200 refugees, living in Turkmenistan. In 2004, there were 13,253 refugees mainly from Tajikistan and 3 asylum seekers. The net migration rate was estimated as 0.82 migrants per 1,000 population in 2005. The government views the immigration level as satisfactory, but the emigration level as too high.

ETHNIC GROUPS

There are over 100 distinct ethnic groups living in Turkmenistan. According to unofficial estimates in 2003, about 85% of the population consists of ethnic Turkmen, Uzbeks account for 5% of the population, and Russians for about 4%. The Turkmen generally divide themselves into five main tribes: the Teke, Yomut, Ersary, Yasyr, and Goklen. Smaller groups of people include Kazakhs, Ukrainians, Armenians, Azeris, Tatars, and Beluji. Other groups present include Belarussians, Germans, Jews, Georgians, Moldovans, Uighurs, and Koreans. Like the Turkmen, the Uzbeks, Kazakhs, and Azeris are Turkic-speaking peoples.

LANGUAGES

Turkmen, spoken by about 72% of the population, is mandatory in the schools and the primary language of the government, which has campaigned to make it the only language of official business. It is a Turkic language of the Oghuz group, related to Azeri, Turkish, and Uzbek. Prior to the Soviet era, Turkmen wrote their language using the Arabic script. In Turkmenistan, that script was changed to Latin and then Cyrillic before World War II. The government has begun to institute the Latin script again. The Turkmen language has been influenced by Persian and Arabic elements. In recent decades, many borrowed words from Russian also have been adopted. Russian remains in common use in government and business and is spoken by 12% of the population. Uzbek is spoken by 9%; various other languages are spoken by 7%.

RELIGIONS

There is no state religion, but about 89% of the population are Muslim, primarily Sunni, with strong elements of local shamanism and Sufi mysticism included in its practices. About 9% of the population are Eastern Orthodox, including Russian and Armenian churches. There are small groups of Bahai's Baptists, Seventh-Day Adventists, Lutherans, Roman Catholics, Jehovah's Witnesses, Jews, and a few other Protestant denominations.

Although the constitution provides for religious freedom, the government does not protect this right in practice. In 2003, the government implemented a new law on religion that requires all religious organizations to be registered with the government; unregistered organizations face criminal charges if they continue to operate by holding services or other activities. Religious education is restricted. As of 2004, only six religions had been officially registered: Sunni Islam, Russian Orthodox, Seventh-Day Adventists, Bahai's, Baptists, and Hare Krishnas.

TRANSPORTATION

Nebitdag, Ashkhabad, Mary, and Chärjew (Chardzhou) are connected by railroad to the nation's main port of Turkmenbashi on the Caspian Sea. Other lines include a railroad from Mary along the Murgab and Kushka rivers to Afghanistan and a line from Chärjew (Chardzhou) along the Amu Dar'ya which nearly parallels Uzbekistan's border. Smaller rail spurs are located at Dashhowuz (Tashauz) and Kerki. Rail lines were estimated at a total of 2,440 km (1,498 mi) in 2004, all of it broad gauge. Also in 2002, there were an estimated 22,000 km (13,671 mi) of roadways, of which 18,000 km (11,185 mi) were hard-surfaced. In 2003, Turkmenistan had 1,300 km (809 mi) of navigable inland waterways, which includes the Amu Dar'ya River and the Kara Kum canal. As of 2005, the country's merchant marine consisted of seven ships of 1,000 GRT or more, totaling 6,873 GRT. In 2004, Turkmenistan had an estimated 53 airports. As of 2005 a total of 22 had paved runways, and there was also one heliport. In 2003, about 1.412 million passengers were carried on scheduled domestic and international airline flights.

HISTORY

The territory of present-day Turkmenistan has been inhabited since the Stone Age, with evidence of agricultural communities as early as 6000 bc and of planned irrigation works from 3500 bc. The first states were Margiana and Parthia, from about 1000 bc. In 7th–6th centuries bc, Margiana was part of Bactria, while Parthia was part of the Median state. In the 6th–4th centuries bc the region was ruled by the Achaemenids, who were conquered by Alexander the Great at the end of the 4th century. In his wake there emerged a Parthian Empire which lasted until ad 224, when Persians of the Sassanid dynasty seized the territory. In the 5th century much of Turkmenistan was conquered by Ephthalites, who in turn were conquered in the 6th century by the Tiu-chue nomads, of Turkic origin. The Arab caliphate conquered Turkmenistan in 716, and began to introduce Islam. In the 10th century part of Turkmenistan was under Samanid control.

Oghuz Turks began to migrate into Turkmenistan in the 9th century. In 1040 the Seljuk clan took control of the territory, and held sway until the 13th century, when Turkmenistan was part of the Khwarazm-Shah state. The entire region was conquered by Mongols in 1219–21, and Turkmenistan was split between the Golden Horde and the Chagatai Khanate, as well as the Hulaguid Khanate of Persia.

In the 1380s Turkmenistan became part of the empire of Timur (Tamerlane). By the 16th century part of the territory was ruled by the Khiva Khanate, part by Bukhara, and part by Persia. The course of the Amu Dar'ya River changed, and the Kara Kum desert claimed a great deal of once arable land.

Russia began to make commercial contacts with the Turkmens as early as the 16th century; by the 18th century almost all trade between Europe and Central Asia passed through Turkmenistan. Local tribes were used diplomatically by the Persians, Russians, and British as part of the Great Game of the 18th and 19th centuries. Beginning in 1865, Russia undertook direct annexation, which because of heavy resistance by the Turkmen tribesmen was not complete until the 1885, making Turkmenistan the last portion of the Russian Empire to be conquered. The territory then was called the Transcaspian District.

Turkmen joined the uprising of 1916, when the Tsar attempted to draft Central Asians into work battalions, and remained in general rebellion throughout the period of the revolution and civil war. Muslim and nationalist opposition, whom the Russians called basmachi, resisted the Bolsheviks until 1924, when the area was made part of the Trans-Caspian Republic. In 1925, the presentday territory became a Soviet Socialist Republic.

Throughout the Soviet period, Turkmenistan was the poorest and least assimilated of the republics. In 1985, longtime Communist Party boss M. Gapurov was fired by Mikhail Gorbachev, who picked Sapamurat Niyazov as new republic head. Niyazov has remained in power ever since. On October 27, 1990, Niyazov received 98.3% of the popular vote in an uncontested election to the new post of president of Turkmenistan. Turkmenistan declared independence on 27 October 1991. After independence, Niyazov won another uncontested presidential election in June 1992 with 99.95% of the vote. In a referendum in January 1994, he received the support of 99.99% of the vote for extending his term until 2002. An elaborate cult of personality has grown up around Niyazov, who now prefers the title "Turkmenbashi," or "chief of all Turkmen." Niyazov is president, supreme commander of the armed forces, first secretary of the Democratic Party of Turkmenistan, head of the quasi-legislative Khalk Maslakhaty (People's Council), and chairman of the Cabinet of Ministers and the National Security Council. Changes to the constitution were introduced in late December 1999 during a joint meeting of the Mejlis (legislature), the Khalk Maslakhaty, and Niyazov's National Revival Movement, to include naming Niyazov president for life.

Turkmenistan's "neutral" foreign policy is enshrined in its constitution. Niyazov has declared that Turkmenistan's "open door" or "permanent neutrality" policy precludes joining political or military alliances and entails good relations with the East and the West, though priority will be placed on relations with Central Asian and other Islamic states. Turkmenistan joined the Non-Aligned Movement in 1995, and the United Nations General Assembly in 1995 recognized Turkmenistan's status as a neutral state. Turkmenistan has pursued close ties with both Iran and Turkey. In addition to growing trade ties with Iran, Turkmenistan is also interested in cultural ties with the approximately one million Turkmen residing in Iran. Turkey is the largest foreign investor in Turkmenistan and has far surpassed Russia in trade turnover with Turkmenistan. Turkmenistan supports some of Russia's policies in the region while endeavoring, where possible, to resist, contravene, or reduce Russian influence. Russian military and border troops assisted Turkmenistan until it built up its own forces, and Russia's presence has been used to counter Uzbek policies in the region. In 1993, Russia and Turkmenistan agreed that Russian border guards would work with Turkmen border guards under Turkmen command at borders with Iran and Afghanistan. In 1999, Turkmenistan canceled this agreement, and the last of Russia's 1,000 border troops in Turkmenistan left in late 1999.

The new country has abundant resources that could bring in ample export earnings, ranging from oil, gas, electricity, coal, aluminum, and cotton to wool, grapes, and carpets. Although the potential for great quantities of exported materials exist, poor infrastructure and government inefficiency has contributed to a 2005 unemployment rate of 60%. Turkmenistan's main natural gas export pipeline runs through Russia, which has closely controlled the volume, price, and destination. Seeking alternatives, Turkmenistan in December 1997 opened a 125-mile gas pipeline to connect with the Iranian pipeline system. On 18 November 1999, Turkmenistan, Azerbaijan, Georgia, and Turkey signed a declaration on a trans-Caspian and trans-Caucasus gas pipeline territory that would deliver Turkmen gas to Turkey (expected to be completed in 2002 with an eventual capacity of 16 billion meters per year), boosting chances for international financing for the pipeline. In December 2002, Turkmenistan, Afghanistan, and Pakistan signed an agreement to build a 1,500-km pipeline to carry gas from Turkmenistan's Dauletabad-Donmez field through Afghanistan to Pakistan.

In October 2001, Azerbaijan announced the planned trans-Caspian gas pipeline would not be realized. It had discovered its own huge gas reserves in Shahdeniz, and subsequently demanded a share of the exports to the amount of half of the trans-Caspian pipeline's capacity. Turkmenistan regarded such demands as contrary to its interests. In July 2002, an Azerbaijani tanker exploded in the Turkmen port of Turkmenbashi, killing six Azeri sailors. Some blamed the Turkmen government for the incident. Suspicions between the two governments ran deep in 2002, as mutual enmity between Azerbaijan's president Heydar Aliyev and Niyazov has made the gap between the ethnically close nations wide.

Following the 11 September 2001 terrorist attacks on the United States, Turkmenistan offered to aid the US-coalition in its military and humanitarian campaign in Afghanistan. Over one-third of all food aid reaching Afghanistan since 11 September transited Turkmenistan. The United States has stated that Turkmenistan can play a positive role in the rebuilding of Afghanistan. However, Turkmenistan demonstrates strong discrimination against non-Turkmen, and in 2003 the State Service for the Registration of Foreign Citizens was established to monitor foreign visitors, whose activities are strictly regulated.

On 25 November 2002, an assassination attempt was made on Niyazov. Following the attack on his motorcade, the Niyazov government began a wide investigation, and 61 people were arrested in connection with the assassination plot. Turkmenistan's National Assembly granted powers to the Supreme Court to administer "special punishment" to people found guilty of involvement in the plot. The resolution permits the Supreme Court to hand out life sentences to those convicted, with no possibility of amnesty, pardon, early release, or change of prison. Former foreign minister Boris Shikhmuradov was sentenced to life in prison for his involvement. As of January 2003, more than 30 people were given lengthy sentences by Turkmen courts, including at least three life sentences amid reports of torture and coerced confessions. The US State Department expressed concern with Turkmenistan's conduct of the investigations into the assassination plot, stating that while the United States recognized the government's right to apprehend those involved, the US government could not condone actions that violate international practice. The United States claimed the Turkmen government conducted summary trials of alleged suspects without due process of law, and cited credible reports of torture and abuse of suspects.

In January 2003, the Turkmen government announced parliamentary elections would be held on 6 April, nearly two years ahead of schedule (elections had been scheduled for December 2004) for the unicameral People's Council or Halk Maslahaty. There was no election campaign, and the state media did not provide information about the candidates, all of whom were nominated by the presidential administration. The People's Council, which is considered the ultimate representative body, has 65 members. All candidates at the elections of April 2003 belonged to Niyazov's party, or the Democratic Party of Turkmenistan (DPT). The CEC announced voter turnout of 99.8 %. Also in January, Niyazov ordered the forced relocation of ethnic Uzbeks living along the Turkmen border with Uzbekistan. He stated he wanted "unworthy people" to be moved from the border area and replaced with ethnic Turkmen. The 2004 elections for the unicameral Parliament or Mejlis, which consists of 50 seats, were also all won by the DPT. The next parliamentary elections were to be held in December 2008.

GOVERNMENT

In May 1992, Turkmenistan became the first Central Asian republic to enact a postindependence constitution. It sets up a "secular democracy," and formally upholds the balance of powers between executive, legislative, and judicial branches, but in reality the republic is a presidential autocracy, under the control of President Niyazov. The executive branch of government is the responsibility of a prime minister and his cabinet, all of whom are appointed by the president. The republic's economy is centrally planned and controlled, as in Soviet times, giving the government wide powers. Niyazov issues edicts that have the force of law and appoints and removes judges and local officials. The constitution includes an impressive list of individual rights and safeguards (though not freedom of the press), but cautions that the exercise of rights must not violate national morality and public order, or damage national security.

The new constitution created a People's Council (Halk Maslahaty) with mixed executive and legislative powers, consisting of the president, ministers, the 50 legislators of the Supreme Council (Mejlis), 50 "people's representatives," and others. The people's representatives were elected by district in a virtually uncontested vote in December 1992. The Halk Maslahaty serves as a forum and rubber stamp for the president's policy initiatives. Resurrecting pre-Soviet customs, a Council of Elders, hand-picked by Niyazov, was also created to advise the president and choose presidential candidates. Oppositionists complained that both these bodies were designed to stifle dissent. In 2001 Niyazov published Rukhname, a spiritual guide that became an informal legal code for the country. It is a guide to Turkmen national cultural and ethical personal behavior. A new Mejlis of 50 members was elected in December 2004. The candidates were all nominated by Niyazov, ran unopposed, and most were members of his Democratic Party of Turkmenistan (DPT). The Mejlis routinely supports presidential decrees and has little legislative initiative. In the wake of a 25 November 2002 alleged coup attempt, the country's constitution was amended in 2003 to give the Halk Maslahaty dominance over the parliament in the hierarchy of power, and is now Turkmenistan's supreme legislative body.

Elections to the Turkmen 50-seat legislature (Mejlis) were held on 19 December 2004. Niyazov rejected a role for parties and there was no discussion of political issues or problems during the campaign. Niyazov's Party was 'elected' into all 50 seats. The lack of democratization in Turkmenistan was accentuated during the 2003 election of the Halk Maslahaty. Turnout was reported at 99.5%, though some of the candidates ran unchallenged and no real campaigning or political party contestation occurred. All members of parliament are also members of the Halk Maslahaty, a body that has no set number of seats but which is said to have about 3,000 members.

POLITICAL PARTIES

The only legally registered party in the republic is the Democratic Party of Turkmenistan, which is what the Communist Party renamed itself in September 1991. Seeking to bring together most major cultural, religious, and public groups in a wider political bloc, in early 1994, Niyazov created a National Revival Movement, which he heads. Unregistered parties are tiny and have been severely repressed. Many of their leaders have been forced into exile or arrested. Most significant is the "Agzybirlik" (Unity) popular front. Banned in 1990, it mostly consists of Turkmen intellectuals and backs democratization and ties to Turkey. Opposition figure Avdy Kuliyev, former foreign minister, is in exile. Physician Pirkuli Tangrikuliyev announced that he wanted to create an opposition party and would run in the 1999 Mejlis election, but he was arrested and convicted of corruption. In late December 1999, a constitutional change was enacted naming Niyazov president for life.

The assassination attempt on president Niyazov in 2002 created further crackdown on opposition groups within Turkmenistan.

LOCAL GOVERNMENT

There are five large regional subdivisions, called velayets. Beneath these are shekhers, then etraps, then ovs. Velayets, shekhers, and etraps have executives called vekils who are appointed and dismissed by the president. In addition each administrative sub-unit has an elected assembly called a gengeshchi, the chairman of which is an archyn.

The clan system is said still to be very strong in Turkmenistan, and the velayets reflect distribution of the five major clans, whose totems are represented in the state flag.

JUDICIAL SYSTEM

The court system remains substantially similar to that which existed in the Soviet era. There are 61 district and city courts, 6 provincial courts (including one for the capital city of Ashkhabad), and a Supreme Court. A supreme economic court hears cases involving disputes between business enterprises and ministries. Military courts were abolished in 1997 and cases involving the armed forces are now tried in civilian courts. Decisions of lower courts are appealable to higher courts.

The constitution declares the establishment of an independent judiciary. In practice, the president's role in selecting and dismissing judges compromises judicial independence. The president appoints all judges for a term of five years, without legislative review, except for the chairman of the Supreme Court.

Defendants in criminal cases are afforded a number of procedural due process rights, including the right to a public trial and the right to defense counsel. In practice, the government often denies these rights. There are few private lawyers. Defendants may petition the president for clemency. He has traditionally released large numbers of prisoners in periodically declared amnesties, though some political prisoners have appeared exempt from the amnesties. Prisons conditions are unknown as international organizations are not permitted to visit prisons. Although there have been reports of overcrowding and inadequate nutrition and medical care.

Journalists face severe restrictions on what they can report. Even mild criticism of the president is forbidden. Subscription to foreign magazines or other media is also forbidden. Freedom of religion is also severely restricted and there are reports that in 2004 at least 7 mosques were destroyed for unauthorized worship. A 2003 law requires all religious groups to be registered in order to practice. Freedom of assembly is also restricted; there is only one union, the Colleagues Union, which is government-controlled.

Turkmenistan is a member of the United Nations.

ARMED FORCES

In 2005, Turkmenistan's armed forces consisted of 26,000 active personnel. The Army numbered 21,000 with equipment that included 702 main battle tanks, 170 reconnaissance vehicles, 942 armored infantry fighting vehicles, 829 armored personnel carriers and 488 artillery pieces. The country's 4,300-member Air Force had 92 combat capable aircraft that included 22 fighters and 66 fighter ground attack aircraft. In addition, the service also had 10 attack helicopters. Turkmenistan's Navy has an estimated 700 personnel, operating a total of five patrol/coastal boats from a single base at Turkmenbashi. The defense budget for 2005 was $173 million.

INTERNATIONAL COOPERATION

Turkmenistan was admitted to the Untied Nations on 2 March 1992; it participates in several nonregional specialized agencies, such as, the FAO, the World Bank, UNSECO, UNIDO, and the WHO. The nation is a member of the Asian Development Bank, the WTO, the Commonwealth of Independent States, the Euro-Atlantic Partnership Council, the European Bank for Reconstruction and Development, G-77, OSCE, and the Organization of the Islamic Conference (OIC). Turkmenistan is part of the Nonaligned Movement and the NATO Partnership for Peace. In environmental cooperation, Turkmenistan is part of the Basel Convention, the Convention on Biological Diversity, the Kyoto Protocol, the Montréal Protocol, and the UN Conventions on Climate Change and Desertification.

ECONOMY

Turkmenistan, though one of the poorest and least developed of the former members of the Soviet Union, boasts rich deposits of oil, gas, potassium, sulfur, and salts. It is the fourth-largest producer of natural gas in the world with proven reserves of about 2.9 trillion cu m (101 trillion cu ft), ranking it within the top 15 countries in the world in terms of natural gas reserves. Proven oil reserves are 546 million barrels, with possible reserves as high as 1.7 billion. Despite this wealth of industrial raw materials, the labor force remains dominantly in agriculture, which, with forestry, generated an estimated 26.9% of the 2005 GDP. Turkmenistan was formerly the world's tenth-largest cotton producer. Industry contributes about 39.5% of the GDP and occupies 13.9% of the labor force, and services account for 33.6% of GDP and occupy 37% of the labor force.

Turkmenistan's transition from a command economy to a free market economy was initially cushioned by its relatively low level of development, as well as by the central government's plans for a gradual reform over a 10 year period with the state continuing to play strong directive and protective roles in the economy. The slow pace of privatization and reliance on central directives has meant that much of the economy has not been exposed to market disciplines, and remains subject to the inefficiencies and distortions inherent in central controls. Although evidence suggests that living standards remain low and that structural development has been impeded, assessment is difficult because the government continues to treat economic statistics like state secrets.

Turkmenistan became independent in October 1991. The initial decontrol of prices resulted in a 90% increase in retail prices in 1991, followed by a megasurge of 800% in 1992. Contraction in output occurred mainly in industrial output while growth in the agricultural and transportation sectors—the latter particularly due to increased government investment—lessened the rate of decline in the overall economy. Enlarged subsidies, increased wages and family allowances, and the reinstatement of some price controls were used to offset the impact of rising prices and the potential for social unrest, particularly in light of the eruption of violence in Tajikistan and other former Soviet socialist republics (SSRs). In November 1993 Turkmenistan dropped out of the ruble-based monetary union and introduced its own currency, the Turkmeni manat. In the same month, Russia, on whose Gazprom pipelines Turkmenistan relied to take its natural gas to market, cut Turkmenistan's access to the hard currency markets of Western Europe, diverting its competitor's gas instead to the cash-strapped markets of Ukraine and the ex-SSRs of the Transcaucasus. The result was one of the worst bouts of hyperinflation experienced by one of the newly independent states. The manat, introduced at two to a dollar, was at 125 to the dollar before the end of 1994, with unofficial rates often three times as high. In November 1995, with inflation at over 1000% for the year and the Turkmeni government threatening to cut off gas to its late paying customers, an agreement was reached with Russia for the creation of a joint stock company TurkmanRosGaz (TRAO)—51% Turkmen, 44% Gazprom, and 5% Itera International Energy Corp. (US)—whereby Gazprom would purchase and transport all the gas that Turkmenistan could sell to Ukraine and the Transcaucasus countries. This did not solve Turkmenistan's basic problem of getting hard currency export earnings to back its currency. Azerbaijan, Kazakhstan, and Ukraine had all run up substantial gas debts. Aggravating the situation, a below average cotton harvest extended poor economic conditions into 1996, as inflation raged on at about 992% for the year. GDP continued its postindependence slide, registering a decline in GDP of -8.2% in 1995 and -7.7% in 1996. Gross domestic product plunged further (-25.9%) in 1997 when Russia cut off access to its pipelines in a dispute over prices to be paid for Turkmeni gas. External debt, which had already increased 86.5% from $401 million to $750 million 1995 to 1996, jumped 136% to $1.77 billion in 1997 as the government was forced to borrow to cover shortfalls in export payments. More promising were the effects of reforms in monetary and fiscal policy adopted in 1996 and 1997.

Although not officially under an IMF program, the government voluntarily undertook to follow IMF recommendations about controlling credit expansion, reducing budget deficits, and liberalizing foreign exchange. From this point inflation began a steady retreat, falling to 84% in 1997, to about 20% in 1998 and 1999, to 14% in 2000, and to a reported 6% in 2001. However, internal evidence from the government's published figures suggested a resurgence of inflation in double digits in 2002. Another positive development was the completion in 2002 of the $190 million, 24 mile Korpedzhe Kurt-Kui pipeline connecting Turkmenistan to the Iranian gas pipeline system. In 2001 agreement was reached on a route whereby Turkmenistan gas could be delivered to Armenia through a still-to-be-built Iran-Armenian pipeline. A more ambitious project is the Trans-Afghanistan pipeline, called the Central Asia Gas Pipeline (or Centgas) that would run 1440 km (900 mi) from the Daulet Abad gas field in Turkmenistan through Qandahār, Afghanistan and end at Multan in Pakistan. The Centgas consortium was set up by Unocal in October 1997, but suspended 22 August 1998 in the face of a lack of success in obtaining funding, continuing civil war in Afghanistan (and opposition in the United States to Unocal negotiations with the unrecognized Taliban regime), and, finally, US cruise missile attacks against al-Qaeda training camps.

In May 2002, Turkmenistan led the reopening of discussions on the Trans-Afghan pipeline, now generally referred to as the TAP, and in December 2003 the leaders of Turkmenistan, Pakistan and Afghanistan reached an agreement in principle to build the $3.2 billion plus project. The ADB was enlisted to carry out a six-month feasibility study, and a summit is planned for September 2003 to put together the consortium that will build the TAP. In February 2003, the three TAP countries extended an invitation to India to join the project, apparently on the realization that its viability would depend on access to the Indian market. India, not wanting to work with Pakistan, did not accept the offer. In any case, the 1997 opening of the pipeline connection to Iran helped make 1998 the last year of postindependence decline in Turkmenistan's GDP, which reportedly fell only 1% despite the ongoing Russian financial crisis, although earlier reports had put this decline at closer to 11%. Decisive in restoring the economy to growth was the reopening of access to the Russian gas lines in 1998 following the resolution of their price dispute. There followed four years of double digit growth: 16% in both 1999 and 2000, 20.5% in 2001 and an estimated 13% in 2002.

By the agreement reached with Russia in 1998, Turkmenistan was supposed export 20 billion cu m (706 billion cu ft) of natural gas to Russia by 2000 and increase this figure by 10 billion cu m (353 billion cu ft) per year until a level of 50–60 billion cu m (1,765–2,118 billion cu ft) was reached in 2004 or 2005. These levels were not achieved and in 2003 Russia was seeking a new agreement with Turkmenistan. The Turkmeni economy by US government estimates had reached about 70% of its preindependence level by 2001. The country's production of natural gas in 2001 was at about 60% of its preindependence level. Unemployment has apparently declined sharply during the last several years, dropping from 24% in 1998 to 14% in 2001, though this series of data was incomplete. In the meantime, payments problems with gas customers continue.

On 14 May 2001 Turkmenistan and Ukraine reached an agreement for the supply of natural gas between 2002 and 2006 in exchange for 60% payment in cash and the rest in participation in 20 construction and industrial projects in Turkmenistan worth $412 million. In May 2002, with Ukraine still owing $46 million in cash, President Niyazov expressed concern that work on the projects was progressing too slowly. In the meantime, cotton production experienced an unprecedented shortfall in 2002. Government planners had set an ambitious target of 2 million tons of cotton for the 2002 harvest despite the fact that the level had fallen from 1.3 million tons to 1.136 million tons (12.6%) from 2000 to 2001. To achieve the envisioned 80% increase, the government agreed to sign contracts only with farmers achieving a yield of more than 30 centners (about 1.65 tons) per hectare. The government's long-range targets for cotton are for 3 million tons of cotton by 2010 processed into 900,000 tons of cotton fiber. However, poor harvests in the early- and mid-2000s led to an almost 50% reduction in cotton exports.

Turkmenistan has taken a cautious approach to economic reform, relying upon its cotton and gas exports to sustain its inefficient economy, based as it is on an authoritarian, post-Communist political structure and a tribally-based social structure. From 1998–2005, Turkmenistan suffered from a lack of adequate export routes for its natural gas and from its external debt burden. Nevertheless, due to high international oil and natural gas prices over the 2003–05 period, Turkmenistan registered a 20–30% rise in exports per year. In 2005, the IMF estimated Turkmenistan's GDP growth rate at 7%, while the government's statistics, notoriously unreliable as they are, recorded a 21.4% GDP growth rate. The US Central Intelligence Agency (CIA) estimated the unemployment rate in 2004 to be 60%, and the percentage of people living below the poverty line to be 58% in 2003. The inflation rate was estimated by the CIA at 10% for 2005.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Turkmenistan's gross domestic product (GDP) was estimated at $29.4 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $5,900. The annual growth rate of GDP was estimated at 7%. The average inflation rate in 2005 was 10%. It was estimated that agriculture accounted for 26.9% of GDP, industry 39.5%, and services 33.6%.

Foreign aid receipts amounted to $27 million or about $6 per capita and accounted for approximately 0.4% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Turkmenistan totaled $3.34 billion or about $687 per capita based on a GDP of $5.8 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings.

Approximately 32% of household consumption was spent on food, 14% on fuel, 6% on health care, and 18% on education. It was estimated that in 2003 about 58% of the population had incomes below the poverty line.

LABOR

From 1985 to 1991, the size of the labor force in Turkmenistan grew by 2.7% per year. Of an estimated 2.32 million inhabitants of working age in 2003, it was estimated that agriculture engaged 48.2%, with 13.8% in industry and 37% in the services sector. In 2004, unemployment was estimated at 60%.

The right to form or join unions is not provided by law. As of 2002, there were no independent unions. The Federation of Trade Unions, now renamed the Colleagues Union, the government-associated organization of the Soviet era, is still present. In 2002, the union claimed 1.3 million members. Although Turkmen law does not protect the right to bargain collectively, strikes are allowed. State economic control is still prevalent, and little progress toward privatization has occurred.

The standard legal workweek is 40 hours. Many industrial workers often labor in unsafe conditions, and agricultural workers especially are subjected to ecological health hazards. The minimum working age is 16 years except for in a few heavy industries where it is 18. Violations of the minimum working age do occasionally occur in rural areas, especially during the cotton harvesting season. There is no set minimum wage. As of 2002, the average wage for public-sector employees was $77 per month.

AGRICULTURE

About 30–35% of Turkmenistan is considered arable, but only 4.8% was under cultivation in 2003. Almost 80% of the sown agricultural land is under irrigation. Yields are relatively low because of poor water usage, salinization, inefficient irrigation, and over-development of cotton cultivation. In 2003, agriculture engaged 33% of the economically active population. Agriculture accounts for about 25% of GDP.

Cotton is the main crop, grown on some 500,000 hectares (1.24 million acres), with production on the Mary and Tejen oases and along the Amu Dar'ya. Estimated cotton production for 2004/05 was 501,000 tons, up from 137,000 tons in 1996. Lack of machinery had caused significant portions of the cotton crop to go un-harvested. Wheat also is cultivated to avoid dependency on unstable cotton export earnings. In 2004, estimated production was 2,600,000 tons. Citrus fruit, dates, figs, grapes, pomegranates, olives, and sugarcane are grown in irrigated groves and fields in the southwest. Sesame, pistachios, and oilseeds are other important export crops.

ANIMAL HUSBANDRY

The inability to raise sufficient fodder impedes livestock development. The livestock population in 2005 included sheep, 13,000,000; cattle, 2,000,000; goats, 370,000; pigs, 30,000; asses, 25,000; horses, 16,000; and chickens, 7,000,000. Karakul sheep are raised for wool export; in 2005, 20,000 tons of greasy wool and 12,000 tons of sheep skins were produced. A private tannery in Mary processes about 100,000 sheepskins per year, selling its product to the staterun leathery factory.

Akhaltekin horses, raised at the Akhaltekin oasis, are a breed which dates date to the 3rd century. Bucephalus, the favorite horse of Alexander the Great, was Akhaltekin. In 1986, an Akhaltekin horse, Dancing Brave, was sold for $50 million. Akhaltekins have a large share of the racehorse breeding market worldwide, and are depicted on Turkmenistan's national emblem.

FISHING

The Caspian Sea provides fishing resources; fishing is an important export activity. In 2003, the total catch was 14,567 tons, primarily Azov sea sprat.

FORESTRY

About 8% of the land is forested. Arid conditions and the expansive Kara Kum desert inhibit the development of commercial forestry. Forestry imports amounted to $3.9 million in 2004.

MINING

Turkmenistan had the world's third-largest reserves of sulfur, and was a leading producer of natural gas. Its top industries in 2002 were the production of natural gas, oil, and petroleum products. Gas and oil accounted for 33% and 30%, respectively, of its export earnings in 1999, and 90% of foreign direct investment went into the oil and natural gas sectors.

In 2002, estimated outputs included: sulfur (mined at the Gaurdak complex, in the Gora deposit), 9,000 metric tons; gypsum, 100,000 metric tons; sodium sulfate (from an extensive mirabilite site in the Gararbogazköl), 60,000 metric tons; iodine, 200,000 metric tons; and nitrogen (content of ammonia), 75,000 metric tons. Turkmenistan also produced bentonite, bentonite powder, bischofite, cement, all of the FSU's supply of epsomite, ferrous bromide, lime, and salt (north of Nebitdag).

Ozocerite, iodine, and bromine were found on the Cheleken Peninsula and in Vyshka, Stantsiya. The Garabogaz Aylagy lagoon, off the Caspian Sea, was one of the world's largest sources of raw materials for the chemical industry. Commercial interest in the salts of the region began at the end of the 19th century, and it supplied all of the FSU's supply of medicinal Glauber's salt. Other mineral deposits included potassium and polymetallic ores.

ENERGY AND POWER

Turkmenistan has large reserves of oil and natural gas, but exports have been hampered by a reluctance to use Russian-controlled pipelines.

Turkmenistan, according to the Oil and Gas Journal and contained in an Energy Information Administration analysis of September 2005, the country has proven oil reserves of approximately 546 million barrels, and natural gas reserves of around 71 trillion cu ft. In 2004, oil production in Turkmenistan averaged an estimated 260,000 barrels per day, while natural gas output totaled 2,312 billion cu ft in that year. Exports that same year averaged around 170,000 barrels per day. Turkmenistan operates a pair of refineries, the Turkmenbashi and the Chärjew (Chardzhou), which have a combined capacity of 240,000 barrels per day. However, the refineries operate well below capacity and in the period from January through May 2005, an average of only 137,000 barrels per day were processed. Turkmenistan has no oil pipelines, which requires that the oil be shipped by sea via tanker to the Russian Caspian Sea port of Makhachkala.

In 2002, Turkmenistan's total electrical generating capacity was 3.921 million kW, of which 3.920 million kW of capacity was dedicated to conventional thermal fuel plants. Hydropower accounted for the remainder of the country's generating capacity. In that same year, net electricity generation was 10.528 billion kWh, of which more than 99% came from fossil fuels. In the same year, consumption of electricity totaled 8.781 billion kWh.

INDUSTRY

After growing at an average rate of 2.3% during the 1980s, the industrial sector declined after the breakup of the Soviet Union. Industrial output declined by 15% in 1992, and fell 25% in 1994 when it became clear that Turkmenistan's gas exports were going to be diverted from hard currency markets, and therefore from external sources of capital finance. After a further decline of 7% in 1995, gross industrial output reportedly surged ahead 17.9% in 1996, despite a 7.7% decline in the wider economy, as agreements were reached for gas supplies to Ukraine and the Transcaucasus. However, in 1997 deepening financial problems stemming from Russia's cutoff of Turkmenistan's access to its Gazprom lines over a price dispute, arrears in payments from its ex-Soviet customers, and declines in cotton processing helped to produce a fall in industrial production of 29.3%. From this low point, however, industrial output has expanded consistently. In December 1997 the $190 million, 124 mile Korpezhe-Kurt Kui pipeline connecting to Iran's gas pipeline system was completed, and in 1998 access was restored to the Gazprom's pipelines.

Industrial production increased 1% in 1998, damped by the effects of the Russian financial crisis, but then rose 16% in 1999, 29% in 2000, and 8% in 2001. Nevertheless, the Turkmenistan economy remains dominated by primary production—gas, oil and cotton—and there has been little privatization of medium and large enterprises that might promote industrial development. Industry as a percent of the GDP declined over this period from 50% to 45%, and industrial workers as a percent of the labor force declined from 19% to 15%. By 2005, the industrial sector had declined further, to 39.5% of GDP, employing approximately 14% of the labor force. Economic reforms have been held back by the deliberately gradualist approach adopted by the government, which has left over 90% of economic activity in government hands. Industrial development is a secondary goal, subordinated to the primary objectives of gradualism, maintaining state leadership of the economy and maintaining a comprehensive welfare program. As part of the government's economic diversification policies, investment from the public sector and foreign exchange earnings have been used to build textile and garment manufacturing plants, often in joint ventures with Turkish partners. From 1995 to 2000 the share of the textile sector in total industrial production increased from 10.4% to 26%, while the share of cotton processed domestically rose from 3% to 35%. However, the commercial viability of these joint ventures is difficult to assess because of the implicit subsidies provided by the Turkmenistan government, multiple exchange rates, and incomplete data.

Turkmenistan's leading industries are those related to its main raw material exports. Most of country's plants and infrastructure continue to rely on Soviet-style equipment and technology. The textile industry is dominated by large state-owned enterprises (SOEs). As of 1998, only 33 manufacturing enterprises had been privatized, including one knitting factory whose sales price of 43.3 billion manats (about $8.2 million at official exchange rates) constituted over 40% of the value of all privatized assets. Turkmen carpets are known world wide for their quality and are a source of national pride: ornaments of Turkmen carpets are components of the national flag and the national emblem of Turkmenistan. They are sometimes erroneously identified in Western markets by the label "Bukhara," which is actually just the Uzbekistan city where the carpets are sold. Turkmen carpets feature deep red wool, with stylized geometric patterns.

Fuel-related production (mainly gas and oil) is the second-largest component of the industrial sector, accounting for about 22% of total sector output in value terms. Turkmenistan has two oil refineries and plans for building a third. The older one at Turkmenbashi (formerly Krasnovodsk) has a 116,500 bbl/d capacity and was undergoing a $1.46 billion upgrade and modernization with financing from Germany and Japan. Turkmenistan's record, slightly larger, 120,150 bbl/d capacity Chardzou refinery at Seidi was not completed until 1991, but is also slated for modernization and expansion. The Chardzou refinery depends on Russian oil piped in from Western Siberia, and has been operating at about half capacity. In 2002, the president solicited bids for a third 100,000 bbl/d refinery. Food processing (especially meat and dairy processing), construction materials, and electricity generation account for about 20% of total industrial output. Chemicals and machinery are other important manufacturing subsectors.

SCIENCE AND TECHNOLOGY

The Turkmen Academy of Sciences, headquartered in Ashkhabad, has eight attached institutes concerned with natural sciences and technology. In addition, six independent institutes conduct medical research. In 1991, the Academy of Agricultural Sciences was established, and in 1992, the Academy of Medical Sciences was created, both in Ashkhabad. The Turkmen A.M. Gorkii State University, founded in 1950 at Ashkhabad, has faculties of physics, mathematics, and biology. Also in the same city are the Turkmen Agriculture Institute, the Turkmen Polytechnic Institute, and the Turkmen State Medical Institute (founded in 1932). In 2002, high technology exports were valued at $8 million, or 5% of the country's manufactured exports.

DOMESTIC TRADE

Like the rest of the Turkmenistan economy, much of the country's retail and wholesale sector remain under the control of the central government. However, informal markets also operate in the country, at which a wide variety of consumer goods, including food, clothing and household wares, may be purchased. In 1994, the government established the State Commodity and Raw Materials Exchange as a means to regulate all trade and to restrict foreign competitors from controlling the market during the economic transition to a free market economy. Domestic trade involving locally produced goods is free from government regulations. Distribution of these products is generally facilitated through a state wholesale network. Most transactions are conducted only in cash. A value-added tax of 20% applies to most goods and services. Commercial advertising is under government control.

The work week is from 9 am to 6 pm, Monday to Friday, with an hour for lunch. Many government officials and businesses regularly work on Saturday.

FOREIGN TRADE

Like other Central Asian countries, Turkmenistan is highly trade dependent. While natural gas and processed cotton fiber are the country's most important export items, Turkmenistan is heavily dependent on imports for industrial equipment, industrial raw materials, and a number of basic food items such as grain, milk and dairy products, potatoes, and sugar. Agricultural products, of which cotton makes up the vast majority, accounted for about 9% of total exports in 2000, while mineral fuels brought in 81% of export receipts.

Poor harvests in recent years have led to a decline of almost 50% in cotton exports. Continuing difficulties with gas export payments and use of Russian gas pipelines to reach the European market resulted in a decrease in that sector as well.

Turkmenistan's primary export markets in 2004 were: Ukraine (46.6%); Iran (17.3%); Turkey (4.2%) and Italy (4.1%). Primary import partners in 2004 were: the United States (11.8%); Russia (9.7%); UAE (9.2%); Ukraine (9%); Turkey (8.6%); Germany (8%); France (5%); Georgia (4.6%); and Iran (4.5%).

BALANCE OF PAYMENTS

In 2005, the value of Turkmenistan's exports was estimated at $4.7 billion, and imports were estimated at $4.175 billion. The current-account balance was estimated at -$204.3 million.

BANKING AND SECURITIES

The State Central Bank of Turkmenistan (SCBT) is charged with issuing currency and executing a monetary policy, and represents the top tier of a two-tiered banking system. Commercial banks are responsible for collection, settlement, and handling of assets for clients and other banks. The State Bank for Foreign Economic

Activities has been established to provide hard currency credits for foreign economic activities.

The government has not released details of monetary policy since Turkmenistan left the ruble zone in November 1993. The currency reform involved a high degree of confiscation. Since then, the government is thought to have severely contracted the money supply in real terms as part of its bid to tackle inflation.

The banking decree of 20 February 1995 stated that: 75% of 1994 bank revenue was to be used for capital expenditure projects; banks were to lend to state-owned firms at an annual interest rate of 15%; and all excess bank profits were to be transferred to the state. Turkmenistan's banks are shackled with the usual problems of the former communist bloc. The Turkmen banks are poorly capitalized, have large loss-making portfolios to state-owned enterprises, and are burdened by an antiquated payments system which builds up arrears with ease.

Sberbank (the State Savings Bank) ranks second behind the SCBT in significance, holding most household deposits, and is still state-owned. The local branch of Vneshekonombank has been incorporated as an independent foreign trade bank, and is also state-owned. Investbank is the industrial sector bank and Agro-prombank the agricultural sector bank. Both are state-owned via stock distributed to state-owned enterprises. In 1994, there were 10 further banks owned by state enterprises, two cooperative banks and two private banks.

INSURANCE

The joint-stock insurance company "TIS" is operating direct insurance lines for aviation, cargo, fire, accident, and auto in Ashkhabad.

PUBLIC FINANCE

Although still a centrally planned economy, Turkmenistan has slowly begun to decrease the size of the public sector's influence. Among the steps it has taken are a drive toward a unified market-based exchange rate, the allocation of government credits by auction, and stricter limits on budget deficits.

The US Central Intelligence Agency (CIA) estimated that in 2005 Turkmenistan's central government took in revenues of approximately $1.4 billion and had expenditures of $1.5 billion. Revenues minus expenditures totaled approximately -$141 million. Total external debt was $2.4 to $5 billion.

TAXATION

Turkmenistan significantly lowered income tax rates in 2002. The top rat was 11%, down from 25% in 2000, and 40% in the 1990s. The marginal rate for the average taxpayer is also 11%. The top corporate rate is 25%, down from 45%. A 15% rate is charged on income from dividends, copyrights, licenses, leases, royalties and other forms of passive income, although investors holding more than 30% of hard currency shares in an enterprise's capital fund are exempt from the dividend tax. Enterprises are not required to pay the profit tax until investors have fully recovered their original investment. Also, companies that reinvest profits are exempt from tax payments on the reinvested capital. Equipment contributing to the capital of joint ventures is exempt from import duties. Free economic zones have been created to attract foreign capital. There us a value-added tax (VAT) imposed on all goods and services, sold or bartered, of 10% for foodstuffs and 20% for all other items. In March 1994, the president exempted from the VAT registered foreign investors, private enterprises (other than Turkmenpotrelsoyuz enterprises) and businesses importing and selling consumer goods.

CUSTOMS AND DUTIES

Technically, Turkmenistan does not levy tariffs except on imports by individuals. However, in practice, the excise tax system applies higher rates to imported goods than domestic, effectively putting an unspoken tariff in place. Additionally, certain domestic products are exempted from the VAT and, by special presidential decree, government regulatory agencies have the power to go into certain markets and determine the prices of domestically produced goods and the prices for which importers pay for foreign products. Certain imports from countries outside the rural area are prohibited or require a license. Turkmenistan is not a member of any free trade agreements and is not a member of the Commonwealth of Independent States customs union. It has signed trilateral agreements with Iran and Ukraine, Iran and Armenia, Iran and Bangladesh, and Iran and the Philippines and is pursuing more such agreements. Turkmenistan has most-favored nation status with the United States and Austria. Duties run from 10–100%, the average being 30%.

FOREIGN INVESTMENT

A law on foreign investment and other legislation regarding private entrepreneurship passed since 1991 now provides most of the conventional guarantees to foreign investors in Turkmenistan. However, until 1994, the purchase of property by foreign parties remained highly restricted. Reflecting some of this ambiguity, by 1992, only 23 joint ventures had been established, most of a relatively small scale and with negligible impact on foreign trade. Nevertheless, the country's political stability and rich natural resources are likely to make it a favored target for foreign investors in the near future. Significant inflows of foreign assistance have already allowed expansion of the petroleum industry to begin. Negotiations with foreign firms and several countries are underway for establishing a liquefied natural gas plant and the joint construction of a new gas pipeline to Europe that would bypass the need to transverse potentially unstable states of the former USSR.

In 1994, Turkmenistan's laws were modified to offer greater protection for property and rights of foreign investors and exemptions from duties and taxes for specific categories of investment; foreign investors registered in Turkmenistan, and enterprises importing and selling consumer goods there have been exempt from the value-added tax since March 1994. The Commodity and Raw Materials Exchange, created in 1994 to regulate all commercial transactions in Turkmenistan, registers individual trade contracts concluded by foreign companies and joint ventures, and charges a 0.2% commission. The State Agency for Foreign Investment (SAFI), established by presidential decree in 1996, monitors investments, reviews proposals and foreign currency credits, and may award priority status to projects favored by the government. There were no investment statistics available in 2005. However, leading sectors for US investors include: the oil and gas sector, in terms of exploration, development, equipment, and services; electrical energy—development, equipment, and services; the chemical and mining sector—equipment, development, and services; transportation—infrastructure construction, distribution, and services; communications—equipment and services; environmental technology and services; health care and the medical industry; and agriculture.

ECONOMIC DEVELOPMENT

Turkmenistan's president Niyazov, or Turkmenbashi (Father of the Turkmen) as he has increasingly insisted on being called, has spoken of his country becoming the next Kuwait after its independence in 1991, with the state funding a high standard of living, a comprehensive welfare program, and industrial development from the invested proceeds of state-owned natural gas, oil and cotton operations. To date this vision has foundered on Turkmenistan's geographical and political isolation from hard currency markets for its exports, a position that help produce, after an initial soft landing in 1992, a sharp decline in economic activity, hyperinflation, and increasing external debt from 1993 to 1998. Although official statistics show double-digit growth since 1999 and inflation reduced to a single digit by 2001 (6%), the reliability of these statistics that the government treats like state secrets is highly questioned. The country does not submit economic information to the scrutiny of the IMF, which it has avoided by avoiding balance of payments problems (though not without difficulty judging from the harsh measures, including gas cut-offs, it has employed to get delinquent country's to pay their gas debts).

Turkmenistan's relatively well-educated population and natural resources provide a promising foundation for the growth of a diverse set of industries. The government's transition strategy consisted of three overarching principles: a gradualist pace to privatization and liberalization, a leading role for the state in developing the economy, and the maintenance of a full array of welfare supports to minimize the human costs of the economic transition. It is within these constraints that the government has pursued goals of food self-sufficiency and economic diversification.

The guiding principles of this program were detailed in a formal document in early 1991 calling for a series of legislative, fiscal, and monetary measures related to price controls, privatization, and industrial infrastructure development. More specific measures followed, including new laws on privatization and foreign investment adopted in 1992, price decontrol measures taken the same year, adoption of a value-added tax and other tax reform, and measures taken in 1996 and 1997 to control the growth of money supply. Under the liberalized property regime, leasing arrangements have expanded in both the agricultural and industrial sectors. The leasing or purchase of individual enterprises by workers is favored by the current legislation, although land, water, and the oil and gas industries are excluded from the possibility of outright purchase by private individuals or companies. Public money and foreign exchange earnings have been used to establish textile and garment manufacturing plants, often as joint ventures with Turkish partners. The share of the textile sector in total industrial production has increased since independence from about 11% to about 26%, and the percent of Turkmenistan's cotton production processed domestically instead of exported has increased from 3% to 35%. However, it is difficult to judge the competitiveness of these state-supported enterprises. Overall the gradualist pace in privatization has left over 90% of the economy by value under state control employing about 80% of the work force. Most medium and large industrial enterprises continue to run on the basis of centrally planned state orders and resource allocations, although there has been a substantial amount of privatization among small enterprises and in the service sector.

Following the government's expressed commitment to minimizing the negative impact of post-Soviet economic restructuring on the population, the terms for Turkmenistan's social safety net are more generous than many other former Soviet countries: allowances for large families, social security payments, and pensions have all been increased substantially since 1992, and as of 1993 all citizens were to receive free electricity and free water. Potential fiscal imbalances resulting both from these increased expenditures and the end of transfers from the Soviet government have thus far been avoided by increased profit transfers from key enterprises, export duties, and a variety of smaller revenue sources. Twenty-nine percent of the 1992 budget expenditures was allocated to price-differential subsidies paid to retail agencies required to sell food and medicines below wholesale prices. Capital expenditures claimed a further 12% of total expenditures while combined social and cultural expenditures allocated to education, health care, and social security totaled about 30%. In 2002, an estimated 80% of the government's budget was spent reinforcing the social welfare safety net.

Historically, landlocked Turkmenistan has depended on imports for most its food. Although there has been marked improvement in the government's prime target of wheat production since independence—total grain production, including wheat, rye, barley, corn, rice and miscellaneous grains, was 776 metric tons in 1992 whereas wheat alone had attained the government target of 1.2 metric tons by 1998—the goal has not been fully met. In recent barter deals with Ukraine over past gas debts Turkmenistan has contracted for shipments of Ukrainian wheat and sugar.

A five-year production and investment plan set out in 1992 proposed large investments in the development of infrastructure and the energy sector financed by tax receipts and foreign exchange receipts from gas and cotton exports. The budget for 1993 included financing for projects to expand grain production and cotton processing. Under the government's central planning approach to economic development, the ambitious targets set have often not been met. In allotting its reduced cotton production, the needs of the newly expanded domestic industry appear to be given priority over exports, although raw cotton is an important foreign exchange earner.

The key to Turkmenistan's economic success rests on securing development finance through the exploitation of its natural gas resources. The completion of the Korpezhe-Kurt Kui Pipeline to the Iranian gas pipeline system in December 1997 plus restored access to Gazprom's pipelines in 1998 laid the basis for the economy's first return to growth since independence in 1999.

In 1998 the government restructured its oil and gas industries into several state-owned companies to better attract foreign investment. Progress has been made on two other gas pipeline schemes: the Iran-Armenian pipeline that would allow Turkmenistan to deliver its gas to Armenia, and the Trans-Afghanistan Pipeline (TAP), that, as originally envisioned, would pipe Turkmenistan gas across Afghanistan to Pakistan. Neither, however, is free of economic and political problems. Armenia remains a poor and uncertain market, particularly, as a source of hard currency, plus it is not clear if the arrangement would be exempt from US sanctions against countries dealing with Iran. Representatives of the three main participants in the TAP project have attempted to persuade India to agree to be the final terminus for Turkmenistan's gas apparently on the realization that neither Afghanistan nor Pakistan could provide markets large enough to justify the $3.2 billion cost of construction. India initially refused participation because of its conflicts with Pakistan, but in 2005 expressed interest in the idea of participating in the project, despite its geostrategic fears and security issues. For oil, Turkmenistan's third major export earner, the president announced a 10-year program to reach an output of one million barrels per day in 2010. The US Department of Energy forecasts Turkmenistan's oil production level in 2010 at only 200,000 barrels per day.

SOCIAL DEVELOPMENT

Turkmenistan's current social security system provides old age, disability and survivor pensions to employed persons. A social pension is provided to those not eligible for employment-related pensions. Old age benefits are provided at age 62 for men who have 25 years of covered employment and at age 57 to women with 20 years of employment. The social security program is financed by contributions from employers and employees. The government provides subsidies as needed and completely funds social allowances. Unemployment benefits are provided for up to one year. Sickness and maternity benefits and workers' compensation were introduced in 1998, and a child care allowance is also available.

Women are entitled to equal rights as men under the law, however due to societal constraints the woman's role is primarily that of homemaker and mother. Opportunities for education and careers outside the home are limited. Violence against women, including domestic violence, is not discussed and victims keep silent. Women are underrepresented in management positions in most state economic enterprises. Despite constitutional provisions, Muslims often follow religious practices giving men precedence over women in property and inheritance matters.

Turkmenistan's human rights record is extremely poor. Arbitrary arrest, detention, unfair trials, and interference with citizens' privacy and correspondence are reported. Security forces beat and mistreat suspects and prisoners. There are no international or domestic human rights monitoring groups operating in Turkmenistan. The government funds almost all print media and completely controls television and radio. Academic freedom and publishing are restricted. All forms of religious expression are controlled by the government. The government severely restricts freedom of speech and completely controls and censors the media, forbidding the expression of criticism of the government.

HEALTH

As of 2000, systematic health care reforms had been undertaken, including enhancement of primary care, training programs for medical personnel, and infrastructure improvements. Serious inadequacies remained in the condition of medical facilities and equipment. Primary care was provided by two types of rural health units and by urban health centers. The number of hospital beds has been greatly reduced since independence. Total health care expenditure was estimated at 5.2% of GDP. As of 2004, there were an estimated 317 physicians, 619 nurses, 23 dentists, and 25 pharmacists per 100,000 people. Approximately 58% of the population had access to safe drinking water and 100% had adequate sanitation.

Immunization rates for children up to one year old were tuberculosis, 97%; diphtheria, pertussis, and tetanus, 87%; polio, 94%; and measles, 90%. The rates for DPT and measles were, respectively, 98% and 97%. The infant mortality rate in 2005 was 73.08 per 1,000 live births. The maternal mortality rate was 65 per 100,000 live births. Average life expectancy was 61.01 years in 2005.

In this former Soviet republic, mortality rates have increased significantly since the breakup. Leading causes of death were communicable diseases and maternal/perinatal causes, noncommunicable diseases, and injuries. The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 200 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

In 1989, 27.3% of all privately owned urban housing had running water, 7.2% had sewer lines, 16% had central heating, and 1% had hot water. In 1990, Turkmenistan had 11.1 sq ft of housing space per capita and, as of 1 January 1991, 108,000 households (or 30.9%) were on waiting lists for urban housing.

EDUCATION

Before the Soviet Union established control over the region in the 1920s, few schools, mainly Muslim, existed. The government has control over all aspects of education. Education is now state-funded and compulsory from the age of 7 to 16. Basic education is completed in two stages of three and six years. Students may then take a two- to four-year specialized academic program or a one-year vocational program. In most schools, instruction is in the Turkmen language; Uzbek, Russian, Kazakh, and Karakalpak languages are used in others. In the early 1990s, primary school enrollment was estimated at about 77% of all age-eligible students.

In 1990/1991, all higher-level institutions had 76,000 pupils enrolled. There are 14 institutions of higher learning, including one university at Ashkhabad, the Turkmen State University (founded in 1950) with an enrollment of over 11,000 pupils. Turkmenistan also has 90 technical colleges. As of 1995, public expenditure on education was estimated at 4.3% of GDP. The adult literacy rate has been estimated at about 98%.

LIBRARIES AND MUSEUMS

The National Library of Turkmenistan in Ashkhabad holds 5.5 million volumes and is the largest in the country. The Republican Scientific and Technical Library of Turkmenistan holds 900,000 volumes and the Turkmen Academy of Sciences, in the capital, holds 2.1 million volumes. Turkmen University has the nation's largest academic library, holding 542,000 volumes.

In early 2005, President Saparmurat Niyazov called for the closure of nearly all of the nation's public libraries, with the exception of the National Library and some libraries associated with educational institutions. The president called for these closings claiming that most of the citizens don't read books or visit libraries.

There are several fine museums in Ashkhabad, including the National Museum, the State Museum of Fine Arts, and the Carpet Museum, as well as museums devoted to history and literature. There are historical and ethnographical museums in the cities of Mary, Turkmenabat, and Turkmenbashi.

MEDIA

Telephone links to other former Soviet republics and Iran are provided by land link or microwave and to other countries through Moscow. In 2003, there were an estimated 77 mainline telephones for every 1,000 people; about 36,800 people were on a waiting list for telephone service installation. The same year, there were approximately two mobile phones in use for every 1,000 people.

Turkmen Radio in Ashkabad broadcasts transmissions from Moscow, as does Turkmen Television, which also receives Turkish television broadcasts. All broadcasts are controlled by the government. In 2005, there were four television channels and two radio stations, all owned and operated by Turkmen TV and Radio. Many programs can be received from Russia and Turkey. Orbita and INTELSAT are received by satellite earth stations. In 2003, there were an estimated 279 radios and 182 television sets for every 1,000 people. The same year, only two of every 1,000 people had access to the Internet, available only through the government-owned Turkmen Telecom.

In 2004, there were 22 newspapers published in Turkmen and 1 official newspaper in Russian. The two main daily papers are Turkmenistan (circulation 73,170 in 1995) and Turmenskaya Iskra (in Russian, 40,000). There are also a number of periodicals, mostly in Ashkabad.

The constitution provides for free expression, but in practice the government is said to severely limit press rights. The government owns and directly controls all radio, television, and print media, and is said to rarely allow criticism or opposition opinion in even the mildest forms.

ORGANIZATIONS

The economic affairs and other concerns of workers are handled by the Chamber of Commerce and Industry, and the Federation of Trade Unions of Turkmenistan, respectively. The most important mass movement in the country is the Communist Party. It controls all aspects of Turkmenistan's politics, society and culture. Its organizations of control are the Committee on National Security, Ministry of Internal Affairs, and various trade unions. The trade unions, all controlled by the state, serve to promote government production plans and policies. Cultural and educational associations are somewhat restricted by the government. There is a national chapter of the Red Crescent Society.

TOURISM, TRAVEL, AND RECREATION

Tourism has been designated a priority area of economic development with a focus on its infrastructure. Turkmenistan is home to the largest modern airport in Central Asia, and Turkmenistan Airlines flies nonstop to Europe. The hotels do not yet take credit cards but are working to improve their system. Geological and archeological sites and museums are primary tourist spots in this mostly desert state. Casinos and health spas are popular at the five-star hotels. A valid passport as well as a visa is required to enter Turkmenistan. There are no vaccination requirements although precautions against malaria, typhoid, and hepatitis are recommended.

In 2005, the US Department of State estimated the daily expenses of staying in Ashkhabad at $108.

FAMOUS TURKMENISTANIS

Saparmuryat A. Niyazov (b.1940) has been president of Turkmenistan since December 1991. Outstanding representatives of culture and literature of Turkmenistan include Abdulhekin Qulmukam Medoghli, a writer, researcher and political activist who was killed in 1937 during one of Stalin's purges, and the poet and thinker, Maktum Kuli, who first envisioned an independent Turkmenistan. The country has established the Makhtumkuli International Prize in his name and awarded it to President Niyazov.

DEPENDENCIES

Turkmenistan has no territories or colonies.

BIBLIOGRAPHY

Abazov, Rafis. Historical Dictionary of Turkmenistan. Lanham, Md.: Scarecrow, 2005.

Dailey, Erika. Human Rights in Turkmenistan. New York: Helsinki Watch, 1993.

History of United Turkmenistan. Ankara: Turkish Association for Friendship with Turkmenistan, 1995.

Kort, Michael. Central Asian Republics. New York: Facts On File, 2004.

Mandelbaum, Michael (ed.). Central Asia and the World: Kazakhstan, Uzbekistan, Tajikistan, Kyrgystan, and Turkmenistan. New York: Council on Foreign Relations Press, 1994.

Maslow, Jonathan Evan. Sacred Horses: The Memoirs of a Turkmen Cowboy. New York: Random House, 1994.

Seddon, David (ed.). A Political and Economic Dictionary of the Middle East. Philadelphia: Routledge/Taylor and Francis, 2004.