The New Great Game – China and Russia’s interests in Turkmen gas7 min read
Turkmenistan – a country largely ignored in International Relations, is actually a central piece of the natural gas geopolitical realm. After its independence, most of the country’s gas export went to Russia, until 2010, when a dramatic shift occurred as Turkmenistan started exporting almost exclusively to China. This shift can appear puzzling at first but is explained by both Turkmenistan’s dependency on gas and the regional context of the New Great Game.
In the 19th century, Russia and the United Kingdom partook in what is known as the Great Game. The two powers sought to determine which one was in a hegemonic position of influence in Central and South Asia. The risks, chances and deceptions that came with this conquest “game” are at the origin of its historical nickname. In 1996, the New York Times published an opinion piece titled “The New Great Game”. It drew a parallel between Russian and British actions in the 19th century and the current actions of Russia, China and, to a lesser extent, the United States in Central Asia.
After the fall of the USSR, post-Soviet countries were left with the challenge of creating functioning and sustainable states for themselves. Due to this precarious position, many were easily influenced by global powers who wanted to make sure that their influence were the dominant ones. The New York Times, with the New Great Game terminology therefore put into words this new interest driven dynamic between Central Asia and the global powers. This interest is ultimately rooted in the natural resource potential that the region unveiled with its freshly gained independence.
Within the New Great Game, the case of Turkmenistan’s gas exports is particularly interesting. Historically, Russia and Turkmenistan have sustained close ties and this was initially reflected in Russia’s quasi-monopoly on exported Turkmen gas. However, in the last decade China has managed to replace Russia as the dominant importer of Turkmen gas.
The importance of gas for Turkmenistan
Turkmen gas has been fancied as part of the New Great Game by actors involved in the natural gas industry ever since Turkmenistan’s official independence in 1991. It is estimated that the country holds approximately 10% of the world’s natural gas reserves. This is just an estimate, as the secretive nature of the regime of both former President Saparmurat Niyazov and current President Gurbanguly Berdimuhamedow implies that precise numbers are hardly reliable. Furthermore, Turkmenistan’s economy is largely dependent on hydrocarbon exports (25% of its GDP). The importance of this industry for the country is hence rather straightforward.
Turkmenistan is also characterized by its lack of involvement in international affairs, institutionalized by the nation’s 1995 UN permanent neutrality resolution. The natural gas industry is one of the only realms of international affairs in which the country is involved. This involvement is crucial for both the country and the regime’s viability.
All former USSR states have faced the same challenge of filling the gap between their inchoate national economies and the well intertwined global economy. Led by Niyazov, a former member of the Communist Party, Turkmenistan had a major advantage in modernizing its economy thanks to its natural resources reserves. Yet, the deep autocratic nature of Niyazov’s regime meant that these resources were primarily used to maintain his grasp on power. This prevented the development of a functioning civil and political society, which could have led to a favorable environment for the development of an unwanted opposition.
The development of Turkmen gas
Therefore, from the 1990s, the state established a quasi-monopoly on natural gas extraction, of which Russia established another quasi-monopoly as a buyer. When the country became independent, the only operational pipeline system was the Central Asia-Center gas pipeline. Niyazov, to get funds, and keep both his country and leadership afloat, had no other choice than to sell to Russia due to Turkmenistan’s secluded position and limited infrastructural alternatives.
Given Russia’s strong bargaining power over Turkmenistan, they were able to strike a very lucrative deal. Russia would buy Turkmen gas and then sell it to Europe for up to five times more than the original price. In terms of the New Great Game, this was a major win for Russia. Turkmenistan was aware that this situation was akin to exploitation and Niyazov was quick to improve the scarcity of the country’s gas-related infrastructures. This contrast between Russia’s great satisfaction and Turkmenistan’s frustration, coupled with the dissatisfaction of the New Great Game actors is at the root of the export shift that would occur a few years later.
Turkmenistan therefore sought alternative partners to break the Russian monopoly on Turkmen gas. In 1995, Turkmenistan took the first tangible actions to achieve this goal. The decision to build the Korpeje–Kordkuy pipeline between Turkmenistan and northern Iran marked a turning point, even if this project was not incredibly lucrative for Turkmenistan.
Furthermore, still in 1995, Turkmenistan started the first discussions around the Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI). Since the development of such a project is a slow process, gas exports were still almost entirely going to Russia, making it look like the country still had its strong monopoly. But the Turkmens’ will to break away from Moscow’s influence was strong and growing more still.
The shift between Russia and China
It was not until the Central Asia-China gas pipeline was established, that the shift became tangible. Discussions around the pipeline started in the early 2000’s and the completed pipeline, stretching from Turkmenistan to China, through Uzbekistan and Kazakhstan was inaugurated on December 14, 2009. This pipeline, more than any other, marked the end of the observable Russian monopoly on Turkmen gas as Russia no longer held the absolute bargaining power they once had.
In reaction, Russia initially agreed to pay Turkmenistan more for its natural gas but soon afterwards Russia initiated renegotiations. These negotiations; however, were difficult and soon interrupted. Furthermore, exports to Russia were fully stopped in 2009 when a Russian portion of the pipeline (conveniently?) exploded. Over the following decade Turkmenistan still continued to export gas to Russia but nothing comparable to the pre-2009 volumes.
Russian frustration combined with infrastructural issues made China’s access to Turkmen gas easier, sparking a major evolution in the New Great Game. Russian’s chance turned into deception, whereas Chinese risks turned into a great satisfaction for China. This uncomplicated access was a blessing for China’s goal to reduce both its dependency on coal and on Middle Eastern energy sources. The new pipeline inherently changed the Turkmen natural gas market, as ten years after its inauguration 90% of Turkmen gas exports are now going to China.
This inherent change was two sided for Turkmenistan; they had indeed managed to slip away from the previous Russian monopoly; yet, the evolution of their relationship with China started to present monopolistic tendencies. As a consequence, Berdimuhamedow was faced with a challenging question: how could he maintain some bargaining power over China without losing the stable funds that the Chinese provided to his costly autocratic regime? It appears that his line of thinking was to actively redevelop alternative trading options. Therefore, in 2019, trade with Russia slowly resumed.
Paradox and future prospects for Turkmenistan
At first glance, Turkmenistan’s gas export strategy seems oddly off. The low prices used with Russia, the country’s radical shift to China, the construction of barely profitable pipelines with Iran and the now return to Russian market – none of it seems coherent. However, as a consequence of Turkmenistan’s autocratic and isolated position, natural gas is not just profitable to the regime, it is necessary to its survival.
Unfortunately for Turkmenistan’s autocratic leader, by letting an exterior power take a monopoly on this vital industry, he is also inherently undermining the regime’s self-sufficiency ability. And for one of the most autocratic and isolated regimes on earth, self-sufficiency is not something that can be lost.
Turkmenistan is therefore in a paradoxical situation as it needs gas for its self-sufficiency, but gas is undermining its ability to sustain self-sufficiency. Furthermore, the country has little room to act freely as the apparent lack of coherence in the Turkmen gas industry is double sided. On one hand, the lack of participation of Turkmenistan in the global economy makes it inherently dependent on gas for its survival. On the other hand, the country’s trading relations are unequal because it is perceived as a mere piece of the New Great Game.
The future prospects for the country are therefore uncertain as well as limited. Turkmenistan, with its current infrastructure capacities, is bound to eastward exports, which inherently limits potential buyers and the possibility to develop a westward market is undermined by deep ideological differences. Hence, it is complicated to imagine a Turkmenistan not trapped between Russia and China yet equally as complicated to see where exactly the country is headed.