Chart 2-10: Kazakhstan’s GDP Growth Rate
2.2.2 The Development Strategy of Turkmenistan
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From these events one can see that Kazakhstan has gradually realized that its policy regarding encouragement of foreign investment in the Kazakh oil industry in the early years of independence was too loose, and by enforcement of more stringent environmental laws and regulations and policies that will limit foreign energy companies it has reduced those
investment losses, while making them into bargaining chips, allowing the Kazakh government lucrative ownership of some of the shares in foreign energy companies via its oil field
development joint ventures.
2.2.2 The Development Strategy of Turkmenistan
Turkmenistan takes restrictive measures on the import trade, as imports of goods face high tariffs. Under the strict control of Turkmenistan’s government, the country's national development can be said to have maintained economic stagnation. Turkmenistan’s
“President-for-Life,” Saparmurat Niyazov, died on the 21th of December 2006. By February 2007 he was replaced by Gurbanguly Berdimuhamedow. Berdimuhamedow instituted a new financial policy in macroeconomic terms to attract foreign investments in the country's
industrial activities through a series of measures, while the banking sector was also improved.
From 2007 onward, Turkmenistan began a re-adjustment of its foreign investment regulations and renewal of its diplomatic relations with several countries including Russia, China, the U.S.
and other nations of potential investors. 89
2.2.2.1 Turkmenistan’s Original Isolation Policy 90
Turkmenistan is located in Central Asia between Uzbekistan, Russia and Iran, a strategic geographic location, making it a suitable transit country for export of resources. However, because of (the tendencies of) its government’s policies, the country's regional economy is
89 Pomfret, Richard. “Turkmenistan’s Foreign Policy,” The China and Eurasia Forum Quarterly, 2008, available at: http://www.chinaeurasia.org/current-issue/47-2008/81-volume-6-no-4-2008.html, (accessed: 20140516).
90 Peyrouse, Sébastien. Turkmenistan: Strategies of Power, Dilemmas of Development (New York: M.E.Sharpe,
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greatly restricted. Turkmenistan takes restrictive measures on import trade, as imports of goods face high tariffs, and must be state registered. Such policies have led to rampant smuggling. Moreover, due to a lack of daily necessities (i.e., a lack of domestic supply) and the severe restrictions on imports, its demand is far greater than its supply. Therefore, food and commodity prices have skyrocketed, which further promotes the black market. This country rarely adopted policies of economic liberalization during its early post-independence governments. The former president of Turkmenistan, Saparmurat Niyazov, criticized this by saying that Turkmenistan should be quickly converted into a market economy (his idea emphasizing a need to move from central planning to a market economy).
As a matter of fact, under the strict control of Turkmenistan’s government, the country's national development can be said to have maintained economic stagnation. Furthermore, due to the country’s isolation from international institutions, it is difficult to observe the real state of Turkmenistan’s economy. Basically, Turkmenistan’s post-independence economic system is still using Soviet-era models, which means focusing on the development of heavy industry, while ignoring other aspects such as services and consumer goods.
2.2.2.2 Turkmenistan’s Later Development Strategy
In December of 1995 Turkmenistan’s government proposed the 'Presidential Program for the Social and Economic Development of Turkmenistan,’ that outlines future restructuring of the economy through privatization, and attracting foreign investment. This proposal was divided into two phases: Phase 1 covered a period up to 1996, mainly aimed at small businesses, allowed for small shops, cafe, restaurant, etc. to be opened. Phase 2 included medium-size enterprises, but the government still holds control of a large proportion of this level of participation in Turkmenistan’s economy. 91
In late 1999 Turkmenistan proposed ‘The National Strategy of Socio-Economic Transformations of Turkmenistan for the Period until 2010’ which outlines four priority
2012), p. 155-157.
91 Peyrouse, Sébastien. Turkmenistan: Strategies of Power, Dilemmas of Development (New York: M.E.Sharpe,
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development areas that include economic independence, food security, social protection and ecological safety. 92
Turkmenistan’s “President-for-Life,” Saparmurat Niyazov, died on the 21st of December, 2006. By February 2007 he was replaced by Gurbanguly Berdimuhamedow.
Berdimuhamedow instituted a new financial policy in macroeconomic terms to attract foreign investments in the country's industrial activities through a series of measures, while the banking sector was also improved. But that sector is still heavily dependent on the state, allowing small businesses to have little chance of making a real profit. In addition, small businesses must also face bureaucratic interference, a system of patronage and official corruption in the necessity of paying bribes to officials. However, bribes are cheaper than the fines. 93
2.2.2.3 Turkmenistan’s Energy Strategy
After Turkmenistan’s independence in 1991, oil and gas exploration wasn’t initiated until 1997 due to the isolationist policies of Saparmurat Niyazov and the continual political purges and some level of animosity towards certain neighboring nations, while foreign companies encountered investment difficulties prior to his death in 2006. The National Assembly of Turkmenistan passed the Hydrocarbon Resources Law in 1996. Turkmenistan’s deceased former President Niyazov approved further amendments of that law on August 22nd, 2005, fortifying the president's and the nation’s absolute control over resource development. The dominant role of the Ministry of Oil and Gas Industry and Mineral Resources in external economic cooperation was also enhanced. In addition to formulating policies, the Ministry is also in charge of attracting foreign capital and signing agreements concerning the
development of oil and gas fields. 94
2012), p. 157-158.
92 “Country Development Strategy: Turkmenistan,” Regional Resource Centre for Asia and the Pacific, available at: http://www.rrcap.ait.asia/nsds/brief/Turkmenistan%20brief.pdf, (accessed: 20121201).
93 Peyrouse, Sébastien. Turkmenistan: Strategies of Power, Dilemmas of Development (New York: M.E.Sharpe, 2012), p. 158.
94 大學碩士論文清雲科技，「俄中在中亞的能源競逐」，孫丕澄 (桃園：2010 年 6 月) ，頁 82。[Sun, Picheng. E Zhong Zai Zhongya De Nengyuan Jingzhu (Russia and China in Central Asia's energy to compete),
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Under Turkmenistan's new leader, Gurbanguly Berdimuhamedow, from 2007 onward, Turkmenistan began a re-adjustment of its foreign investment regulations and renewal of its diplomatic relations with several countries including Russia, China, the U.S. and other nations of potential investors. Owing to its relatively conservative economic policies among Central Asian countries, Turkmenistan was not affected greatly by the 2008 international financial crisis. As the China-Central Asia natural gas pipeline opened up in December 2009, Turkmenistan began to provide China with 40 billion cubic meters of natural gas within a span of thirty years, which is to benefit its economy directly and diversify its energy exports.
95
unpublished thesis, Ching Yun University, (Taoyuan: June 2010), pp. 82.]
95新大賽局」，蔡振雄-大學碩士論文清雲科技，「印三國在中亞地區的競逐、中、俄 (桃園：2010 年 7
月) ，頁 27。[Tsai, Chenshiung. Xin Dasaiju -E、Zhong、Yin Sanguo Zai Zhongyadiqu De Jingzhu (The New Great Game-The Rivalry between Sino-Russia and India in Central Asia), unpublished thesis, Ching Yun University, (Taoyuan: July 2010), pp. 27.]
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Table 2-9: Turkmenistan's GDP Growth Rate
Year GDP Growth Rate
1999 9 2000 16 2001 10 2002 6 2003 23.1 2004 7.5 2005 6 2006 6 2007 6 2008 10.5 2009 6.1 2010 9.2 2011 14.7
Source: “Turkmenistan GDP-real growth rate,” Historical Data Graphs per Year, Index Mundi http://www.indexmundi.com/g/g.aspx?c=tx&v=66
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