WELCOME TO IWPR'S REPORTING CENTRAL ASIA, No. 529 Part 1, January 31, 2008 COLD SNAP WREAKS HAVOC ON CENTRAL ASIAN POWER Ageing electricity networks have been pushed to the limits by this winters prolonged sub-zero temperatures. By Jyldyz Mamytova in Bishkek and Yaroslav Razumov in Almaty
ASHGABAT PRESSES IRAN FOR HIGHER GAS PRICE While both sides engage in a war of words, Turkmenistan holds most of the aces in this regional energy dispute. By Abdujalil Abdurasulov in Almaty TURKMEN SACRED TEXT HEADS FOR OBLIVION Presidents decision to unveil his own ideology marks another step away from the personality cult fostered by his predecessor. By IWPR staff in Central Asia WEARY KYRGYZ SCEPTICAL OF ECONOMIC MIRACLE Presidents bullish talk of stability and prosperity arouses a good deal of scepticism in a country where poverty remains the norm. By Gulnara Mambetalieva and Tolkunbek Turdubaev in Bishkek **** IWPR RESOURCES ****************************************************************** 2008 KURT SCHORK AWARDS IN INTERNATIONAL JOURNALISM Call for entries now open. For more details visit http://iwpr.net/kurtschork.html NEW PROJECT: IWPR now operates a major new media project in Asia. 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In Kyrgyzstan, a state rich in hydroelectric power, daily consumption is ten per cent higher than it normally would be at this time of year. The jump in use caused water levels in the main reservoir at Toktogul to fall alarmingly as the turbines were kept running in an effort to keep up with demand. In Tajikistan, which suffers from annual winter energy crises despite its substantial hydroelectric generating capacity, savage power cuts have inflicted severe damage on industrial output and raised questions about the competence of the political leadership. Even energy-rich Kazakstan, Uzbekistan and Turkmenistan have experienced power cuts as sharply-rising domestic consumption overwhelms capacity. An observer in the Balkan region of western Turkmenistan described the energy crisis in schools and hospitals as critical. The worst situation is in the schools, said this source. All the local schools have had their boilers cut off, and as a result most teachers hold classes for only 15 minutes and then let the children go. Vadim, a businessman in Kazakstan whose scrap-metal recycling firm relies on electrical power, says the cuts have inflicted major damage on his company. The smelting process uses up a lot of electricity, he explained. Now we are suffering big losses and experiencing technological problems. Energy industry experts say the Kyrgyz electricity grid had failed a crucial test as a result of the abnormal cold. Almaz Abdrahmanov, a resident of the Kyrgyz capital Bishkek, said that despite freezing daily temperatures of around 20 below zero, the new residential district of Archa-Beshik had been without power for three days. The electricity shortages come as consumers across the region faces problems with supply of natural gas, again as a consequence of the harsh winter conditions. Major producer Uzbekistan is struggling to cope with increased demand at home and curtailing exports to its neighbours. (See IWPR reports on this: Uzbekistan Sees Rare Protests Over Gas Shortage and Sparks Fly as Tajiks Endure Power Cuts, RCA No. 528, 25-Jan-08.) In Kazakstan, Petr Svoik, an economist and former minister who once ran a power station, says even this energy-rich country cannot cope with the current high rates of demand. The crisis, he says, has highlighted the failure to carry out long-overdue repair work to cables and power plants. Experts note that the country is capable of producing a maximum of 70 billion kilowatts per hour, not enough to for crisis situations such as the recent hard winter. However, given the continuing lack of investment in the system, an immediate increase in electricity production looks unlikely. A unified energy system for the whole of Kazakstan has not yet been created, Svoik said. In practice, it consists of a number of regional energy enclaves. Svoik said relatively little was being done to modernise the power grid. The authorities have not yet decided which facilities to build first, and when it comes to what to build and who will supply the money, theres been an absolute failure, he said. While Kazakstans electricity industry has received some investment over the last four years, experts say about 70 per cent of the system remains unfit for purpose. If immediate and resolute measures are not taken to renovate energy facilities, the power supply system will inevitably collapse, and this will have many negative social and economic consequences, said Alexander Trofimov, head of Kazselenergoproekt, which works on electricity projects for rural areas of Kazakstan. In Kyrgyzstan, besides fundamental problems with generating capacity, there is the additional and widespread problem of illegal diversion of power supplies, which goes on largely undetected and leads to large revenue losses. Gulya Muratalieva, spokesman for the Severelektro power company in Bishkek, says most of the theft appears to occur in Bishkek, a city that is home to more than a million people. Its difficult to calculate how many customers Severelektro serves in the capital today, since no one knows what the real population of Bishkek is, Muratalieva told IWPR. People connect cables to transmission lines without permission and so use up energy without it being recorded on a meter. The capital is also inefficient in its use of electricity. Most people use homemade heaters in their apartments that consume about five times more power than modern factory-produced heaters. Another problem is that the meters are worn-out and inaccurate. Most of Severelektros customers have old meters that often act up in the extreme cold and fail to record consumption accurately. But as one Bishkek resident told IWPR, few people worry about stealing electricity when their homes are freezing. He and his family were forced to move into a hotel for several days when it became intolerable to remain in their cold home. Our area has no central heating or gas heating, he said. There are no coal-fired stoves in the houses, either the rooms are heated with electricity and we cook on electric stoves, too, he explained. When the power is cut, we practically freeze and go hungry. Jyldyz Mamytova and Yaroslav Razumov are IWPR contributors in Bishkek and Almaty, respectively. ASHGABAT PRESSES IRAN FOR HIGHER GAS PRICE While both sides engage in a war of words, Turkmenistan holds most of the aces in this regional energy dispute. By Abdujalil Abdurasulov in Almaty A worsening energy dispute between Iran and Turkmenistan may have dealt a fatal blow to plans to build a gas pipeline from Turkmenistan to Europe, running through Iran, experts say. The crisis, which erupted in late December when Turkmenistan halted gas exports to northern Iran, has bloomed into a full-scale diplomatic standoff between the neighbours. Officially, Turkmen officials said the gas supply was cut because Tehran had failed to pay its bills, thus obstructing vital maintenance work to the 200-kilometre Korpeje-Kord Koy pipeline to Iran. Irans failure to fulfill its obligations and pay for previous natural gas shipments is holding back completion of the repairs and maintenance work [to the pipeline], said a foreign ministry statement. Irans deputy oil and gas minister, Akbar Torkan, denounced the decision to cut off the gas during the freezing winter as immoral. Tehran said problems over unpaid bills ought to have been discussed bilaterally before Turkmenistan resorted to extreme measures. Iran claimed the real reason Turkmenistan halted exports was to increase the pressure on Tehran to accept a doubling in the gas price from 75 to 140 US dollars per 1,000 cubic metres. In the meantime, the proposed Turkmenistan-Iran-Turkey pipeline seems likely to become a casualty of the quarrel. Since the early Nineties, Iran, Turkey and Turkmenistan have been discussing a 1,400 km-long pipeline with an annual capacity of 28 billion cu m, and last year they signed another memorandum confirming their plans. With little sign of reconciliation in sight between two of them, work on the scheme now looks unlikely. TURKMEN SEEK BETTER DEAL While the two sides trade recriminations over the causes of the dispute, most energy experts agree the pricing issue is central. The original gas agreement between the two countries was signed in 1998, and is intended to cover the period to 2024. This agreement has been periodically updated since then, with new arrangements for pricing and export volumes. In 2006, Iran agreed that its neighbour could raise the gas price from 42 to 65 dollars per 1,000 cu m, while Turkmenistan pledged to increase annual exports from 5.8 to eight billion cu m in 2006 and then to 14 billion in 2007. However, the increase in export volumes did not happen at the anticipated pace, and experts say no more than eight billion cu m went to Iran in 2007. Last year, the Iranians agreed to another price rise, to 75 dollars per 1,000 cu m. One industry source quoted by Iranian media claimed this agreement included a pledge not to increase prices again for three years. Many energy analysts believe the stoppage in December was an attempt to force Tehran to accept Ashgabats terms. Oleg Lukin, an Ashkhabad-based analyst with the Neftegazovaya Vertical magazine, said price disputes were the only possible explanation. If Tehran had agreed to pay a higher price, no repair works would have stopped the gas exports, he said. Jonathan Stern, from the Oxford Institute for Energy Studies, also expressed doubt in the truth of the Turkmen assertion that repairs to the pipeline had become essential. However, Murad Esenov, an expert on Turkmenistan and editor of the Swedish-based Central Asia and the Caucasus Journal, maintained that apart from pricing issues, there were other factors at play, such as the dilapidated state of the Turkmen gas industry and its inability to meet even current demand. Esenov said Turkmenistan had spent too little on developing its gas industry and had not attracted foreign investment. For all these years, they have been using what was left over from the Soviet Union, he said. The gas industry has not been modernised at all. As a result, Esenov believes Turkmenistan has recently been finding it difficult to produce enough gas to meet all its export commitments. In addition, he says exports have recently been curtailed to meet soaring domestic demand over the unusually cold weather. They simply reduced their exports in order to meet domestic needs, he said. Exports to Iran stopped completely and shipments to Russia and Ukraine were also significantly reduced. Turkmenistan has denied reducing gas supplies to Russia. In a press statement, the foreign ministry said the industry was fulfilling its obligations and carrying out deliveries of Turkmen natural gas to Russia in strict compliance with contractual terms. TURKMEN HAVE THE UPPER HAND The text of the 1998 agreement governing gas exports to Iran was never made public, so it is hard to judge who has the upper hand when disputes occur. In the current case, though, most experts believe Turkmenistan is in a better position to dictate terms. Stern says there can be only two possible outcomes to the current row - either Iran agrees to the Turkmen conditions, or it does not get any more gas from this source. Lukin agrees that Tehran is more likely to blink first. It is not beneficial for Iran to lose the gas supplier for its northern provinces, he said, explaining that while the Iranians are themselves rich in gas, it would cost them a good deal of money to build a new pipeline connecting their gas fields in the south to their northeaster provinces. The current Korpeje-Kord Koy pipeline meets this demand at a reasonable cost. Tehran is now suggesting that it has the right to seek international arbitration on the dispute. Foreign ministry spokesman Mohammad Ali Hosseini said last week that the terms of the original contract give Iran the right to appeal to international legal authorities in the eventuality of a breach of the gas agreement. But Stern doubts the original contract made provision for such arbitration, and if it did, he says, the legal case would turn on the detail of the price clause(s) in the contract. According to Jonathan Hines, a lawyer from Dewey & LeBoeuf, a firm specialising in energy matters, contracts normally set out a fixed or escalating price table with reference to standard market indicators. The contract cannot simply have nothing to say about prices, he says. Hines believes a mutually agreed solution to the dispute is more likely than an Iranian surrender. They are neighbouring countries, not a private company, he says. They cannot go away from each other; they have to deal with one another on a daily basis. MORE COMPETITION TO BUY TURKMEN GAS Turkmenistan has shown before that it can play hardball over energy. In 1997, it cut off gas supplies to Russia for two years after the two countries failed to agree on new prices. Because Russia was the only major purchaser of Turkmen gas, Turkmenistan was eventually forced to make concessions. But the situation is now changing. While Moscow remains the dominant player, there are more potential buyers lining up in anticipation of future opportunities, not least China, which is planning to lay a pipeline to bring Turkmen gas to its energy-hungry economy. Tehran will also have to face the fact that Russia has already agreed to pay more for Turkmen gas than the 100 dollars per 1,000 cu m it was charged last year. In November, the giant gas company Gazprom agreed to pay 130 dollars per 1,000 cu m for the first half of 2008, and then 150 dollars for the rest of the year. The price could well rise even further in 2009. China, too, seems prepared to accommodate higher tariffs. Citing China Securities Journal, Reuters recently reported that Beijing had agreed to a price of 195 dollars per 1,000 cu m from 2009. In other words, if Tehran does not agree to pay more, Turkmenistan may sell its gas to others at the most advantageous price. DISPUTE AFFECTS WIDER REGION While the crisis may have torpedoed any remaining hopes of constructing a pipeline to transport Central Asian gas to Europe via Iran and Turkey, analysts note that other practical difficulties had already rendered the project highly unlikely. For one thing, the United States is bitterly opposed to any pipeline project that involves its arch-enemy Iran. Meanwhile, what may look like a localised dispute has had a kind of domino effect on other states in the region. After Turkmenistan suspended the supply of gas to Iran, Tehran stopped exporting to Turkey, which in turn halted sales of the fuel to Greece. Experts say that given the unstable relations between states in this region, chain reactions of this kind will always be a risk. According to Stern, one lesson is clear in order for pipeline projects to succeed, it is important that they involve as few transit countries as possible. Abdujalil Abdurasulov is an IWPR contributor in Almaty. TURKMEN SACRED TEXT HEADS FOR OBLIVION Presidents decision to unveil his own ideology marks another step away from the personality cult fostered by his predecessor. By IWPR staff in Central Asia Turkmenistans president ruler has set out a new ideological framework for his isolated country, leading observers to conclude that his predecessors book, the Ruhnama, which was accorded near-sacred status, is about to be displaced. President Gurbanguly Berdymuhammedov formally unveiled the new national ideology, entitled A State for People, on January 19. The main goal of the ideology, he said, was a spiritual reawakening for society, a new sense of awareness based on a national creative revival and the education of a new generation of young people. He said it would contribute to the development of a secular society underpinned by the rule of law and market economic principles. I believe my main task is to protect human rights and freedoms, to ensure equality and the observance of laws by all citizens of the country, and to build a highly developed society, said Berdymuhammedov. The announcement of the new ideology has been seen as a sign that the regime is distancing itself from the eccentric policies and personality cult propagated by Berdymuhammedovs predecessor, Saparmurat Niazov, who died in December 2006. Under Niazov, the former Soviet republic became an increasingly closed society where people were force-fed a diet of propaganda in praise of Niazovs alleged genius. Resources were diverted towards lavish prestige projects glorifying the regime and its leader, including gold-plated statues of the man who styled himself Turkmenbashi or Leader of the Turkmen. While foreign cultural influences brought in by the Soviets, including Russian literature, the opera and the ballet, were downgraded or closed down entirely, Niazovs philosophical ruminations, the Ruhnama or Book of the Spirit became the obligatory text. Extolled as the fount of wisdom on morality and ethics, the Ruhnama gathers together Niazovs thoughts on Turkmen folklore, history and mythology in a compendium designed as a handbook to life. Under his rule, it became a mandatory subject in primary and secondary schools and in universities, and civil servants and others were tested on their knowledge of it. The work was cited everywhere. Each day, before the main TV news programme, announcers would read out 20 pages from the sacred book. Officials fired for poor performance and pardoned criminals showed their repentance by placing their hands on copies of the Ruhnama. The quasi-religious significance attached to the book jarred with the beliefs of a predominantly Muslim population, and the chief Islamic cleric was sacked after raising his voice against an order to place copies of the Ruhnama in the mosques, thus equating it with the Koran. Berdymuhammedov has already signalled his distaste for some of the cultural excesses of the former regime, such as the disbandment of the national opera and ballet companies. In his January 19 speech, the president said his new ideology envisaged the revival of opera, ballet and circuses forms of entertainment that Niazov regarded as alien elements. Less obviously, Berdymuhammedov has also started dismantling the cult of the Ruhnama, observers say. Since his legitimacy stems from being the successor to Niazov, it will be difficult from him to perform a complete about-face on the regimes symbolic centerpiece. The role of the sacred book is decreasing substantially, one observer from Ashgabat told IWPR. People are now getting jobs in ideological [educational] institutes without having to pass exams on the Ruhnama. The book is mentioned far less often on radio and television, and the hours-long readings have become a thing of the past. Other observers report an atmosphere of abandonment at the numerous Ruhnama propaganda centres set up in towns and villages across Turkmenistan. The staff at the Ruhnama centres are in a state of uneasy expectation, said one staff member. Now that the authorities no longer hold any ceremonial events here, were afraid we will be closed down. He added somewhat forlornly, We truly hope the Ruhnama will be replaced by another work written by the current president or by his scribes. A media analyst from the Dashoguz region in the north of the country said it was just a matter of time before the Ruhnama was consigned to oblivion. There is no point in Berdymuhammedov leaning on somebody elses book and ideas as he tries to form his own ideology and personality cult, he said. However, some people complain that the new ideological direction outlined by Berdymuhammedov so far is lacking in substance. The president wants culture to become the instrument of a new ideology that does not yet exist in reality, said one employee of an environmental organisation in Ashgabat. A radio journalist also voiced strong doubts about the value and sincerity of the presidents change of course. Big deal! he said. They are restoring the opera, the circus and the Academy of Sciences, but are there any real changes? he asked. We dont have any more freedom as a result. Despite the fact that Berdymuhammedov has lifted restrictions on peoples freedom of movement at home and subscription to some foreign publications is now allowed, the jails still host a good many political prisoners and the media remains strictly censored. The government has shown it is determined to retain control over access to information, and has recently been clamping down on satellite television. Turkmenistan counts as one the least free countries in the world in most international rankings. Rights activists say the presidents call for ideological renewal will be taken more seriously when he makes real moves to allow democratic freedoms. The new ideology ought to be based on the creation of democratic institutions, if the president really yearns for societal renewal according to his declared principle of a state for people, said a civil activist in the western Balkan region. The media analyst from Dashoguz agreed, adding, The government needs to move away from total control over society, to give people real freedom, permit an independent media and allow them to criticise the government, permit non-governmental organisations and in general allow everything that Turkmenbashi prohibited. A school head said he feared the new ideology would be much like the old cult, as it was being built on praise for Berdymuhammedovs so-called era of a great renaissance. History is repeating itself, the teacher claimed, and the fact that one of the additional hours allotted for studying the Ruhnama has been removed from the school timetable does not fill me with optimism. Its early to rejoice - the Ruhnama may simply be replaced by something else. But other observers in Turkmenistan are more optimistic, noting the broad support that the plan for cultural revival has won. One singer said the president recently received a standing ovation at a gathering of the countrys intelligentsia when he outlined his vision of the future. When the president announced the new ideology at this meeting, the famous musician Solmaz Muhammedova thanked Berdymuhammedov for rescuing some of the peoples favourites from oblivion and we all stood up and applauded him, he recalled. An employee of the newspaper Nesil was similarly upbeat, saying, Now everything will be different. The president has waited for the anniversary of Niazovs death to pass, and a real transformation is about to start. (The names of interviewees have been withheld out of concern for their security.) WEARY KYRGYZ SCEPTICAL OF ECONOMIC MIRACLE Presidents bullish talk of stability and prosperity arouses a good deal of scepticism in a country where poverty remains the norm. By Gulnara Mambetalieva and Tolkunbek Turdubaev in Bishkek Declarations by the leader of Kyrgyzstan, one of the poorest states in the former Soviet Union, that an economic breakthrough is just around the corner have been met with incredulity in many quarters. President Kurmanbek Bakiev has said that the eight per cent economic growth rates and the massive rise in the government budget seen in the last two years show the economy is on the right track. Bakiev, who came to power after street protests toppled his predecessor Askar Akaev in March 2005, also holds Kyrgyzstan up as a model of political stability since the December 2007 election awarded the pro-presidential party Ak Jol most seats in parliament. The recent parliamentary election has turned a new page in our countrys political development, Bakiev boasted in a national address in late December. We were able to resolve a number of important social and economic issues... and Im convinced the successes we achieved will form the basis for strengthening the foundations we have already laid. Few would question the fact that Kyrgyzstan now appears fairly calm following three years of political turmoil. After the street riots of 2005 that brought Bakiev to power, the new president himself came under pressure from recurrent demonstrations in 2006 and early 2007. However, he has regained momentum, getting a new constitution passed by a national referendum last autumn and then calling the election which left his supporters in Ak Jol in control of the legislature. Murat Shaimkulov, who works in the presidential administrations department for economic and social policy, says the new balance of power between parliament and executive will pave the way to economic progress. Now that we have achieved political stability in society, a new era of coordinated work between all branches of government the legislature, executive and judiciary - has begun, he said. The foundations for an economic breakthrough have been laid, and the eight per cent real growth of gross domestic product points precisely to this. Economy Minister Akylbek Japarov cites gold mining as another likely source of prosperity, given the marked rise in world gold prices. He predicts that hydroelectric power will become an additional money-spinner for Kyrgyzstan, saying that only a tenth of the countrys potential to generate power had been exploited so far. Outside the world of government officials, however, economic predictions are far less rosy. Analysts point out that Kyrgyzstans growth rates will depend not only on political stability but on the success of privatisation policies, especially in the energy sector. The Kyrgyz government is currently launching the last phase of privatizing several major energy companies including Kyrgyzgaz, Severelektro and carbon fuel-fired power plants in the Bishkek, Osh and Jalalabad. Experience has also made ordinary people far less optimistic about the future than government officials. Anara Abisheva, a teacher from Bishkek, said that even if economic growth rates proved healthy, she doubted it would make any difference to her family as rising inflation was devouring their savings and more than canceling out salary increases. Even the official figures concede that inflation hit the 20 per cent level in 2007, making basic foodstuffs much more expensive for shoppers and hitting the poor hard. I havent noticed any economic growth, said Abisheva, 55. My salary is only enough to buy food, and sometimes I cant afford so much as a sausage. All I see is that some people are getting richer and that there are many expensive cars in Bishkek, whereas honest folk like us can hardly make ends meet. Most economic indices paint a fairly dismal portrait of endemic poverty, inefficiency and corruption. Kyrgyzstan has one of the highest levels of labour out-migration of any of the Central Asian states, and remains unable to attract significant foreign investment because of perceptions that its business climate is unwelcoming, its tax legislation opaque and its legal system far fromtransparent. A recent World Bank study placed Kyrgyzstan near the bottom of a ranking of countries by tax regime and ease of starting a business, while the watchdog Transparency International rated Kyrgyzstan 145th out of 163 countries in terms of corruption, for the year 2006. Former finance minister Taalaibek Koichumanov says it is absurd to make optimistic predictions on the economy given the unfavourable investment conditions in the country. As for the investment climate, the situation here is still quite wretched, Koichumanov told IWPR. This is connected to the poor potential of most state institutions, the lack of transparency in decision-making, and corruption. Ishenbay Abdrazakov, who heads Project for the Future, a political think tank, says that if Kyrgyzstan is to escape the economic doldrums, it needs to do more than achieve a minimum level of political stability. He identifies the key challenges as introducing modern technology into industry, recruiting people with higher skills across the economy, and establishing cast-iron legal safeguards for business. We just dont have any of those things here, he said. And without them, I can scarcely believe we are on the verge of an economic breakthrough. Encouraging qualified graduates to remain in Kyrgyzstan will remain difficult as long as the brain drain continues to suck the most enterprising people out of the country to Russia, Kazakstan and beyond. About a million Kyrgyzstan nationals a fifth of the population - now live abroad as labour migrants. Opposition politician Ravshan Jeenbekov says a country that cannot keep talented young people at home is doomed to stagnation. The whole point is that our system has not created any competition of ideas, people and business, he said. Sapar Orozbakov, director of the Bishkek Centre of Economic Analysis, offers an equally bleak view of Kyrgyzstans prospects. My forecast for the near future is quite grim, he said. Our economic growth last year was achieved mainly as a result of unusually high economic growth in neighbouring states, Kazakstan in particular. Because Kyrgyzstans prospects were dependent on the knock-on effects of prosperity in other economies, Orozbakov said it was unwise to take its current growth levels for granted. Gulnara Mambetalieva and Tolkunbek Turdubaev are IWPR contributors in Kyrgyzstan. **** www.iwpr.net ******************************************************************** REPORTING CENTRAL ASIA provides the international community with a unique insiders' perspective on the region. Using our network of local journalists, the service publishes news and analysis from across Central Asia on a weekly basis. The service forms part of IWPR's Central Asia Project based in Almaty, Bishkek, Tashkent and London, which supports media development and encourages better local and international understanding of the region. IWPR's Reporting Central Asia is supported by the Global Conflict Prevention Pool of UK government and Norwegian Ministry of Foreign Affairs. The opinions expressed in Reporting Central Asia are those of the authors and do not necessarily represent those of the publication or of IWPR. REPORTING CENTRAL ASIA: Editor-in-Chief: Anthony Borden; Managing Editor: Yigal Chazan; Senior Editor: John MacLeod; Central Asia Editor: Saule Mukhametrakhimova; Programme Director: Kumar Bekbolotov. 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