Country Risk Profile – Turkmenistan
Overview
Turkmenistan is a landlocked country in Central Asia bordered by Kazakhstan, Uzbekistan, Afghanistan, Iran, and the Caspian Sea. Ashgabat is the country’s capital and largest city. The population is over 6 million, making it the smallest in Central Asia. Turkmenistan is one of the most sparsely populated nations in Asia. Most of the country is covered by the Karakum Desert.
Since declaring independence from the Soviet Union in 1991, Turkmenistan has been governed by repressive totalitarian regimes. The country is widely criticised for its poor human rights, its treatment of minorities, and its lack of press and religious freedom. Elections are tightly controlled, guaranteeing an almost unanimous victory for the president and his supporters. Turkmenistan is categorised as a consolidated authoritarian regime by Freedom House, with a score of 0/100.
Freedom of movement is restricted, with certain regions of the country (border areas and the Caspian coast) designated as restricted zones and requiring special authorisation to enter. Travel outside Ashgabat generally requires a separate visa with special dispensation. Turkmen border crossings may be subject to occasional and unannounced closures.
Turkmenistan is home to the world’s fourth largest natural gas reserves.
Political Risk
Domestic politics
Following political turmoil in neighbouring Kazakhstan in early January 2022, President Gurbanguly Berdimuhamedov, who had ruled Turkmenistan for the past 15 years, instituted the transfer of power to his son, Serdar Berdimuhamedov. On 12 March 2022, the country held an early presidential election, entirely under the executive’s control, which Serdar won with 72.97% of the vote. On 19 March 2022, he was officially inaugurated as Turkmenistan’s third president since the country’s independence.
Former president Gurbanguly Berdimuhamedov continues to play a key role in Turkmenistan’s politics, behind the curtain and as chairperson of the Halk Maslahaty (People’s Council, or Senate). As second in the political hierarchy, he has significant control over the country’s major decision-making processes and the power to assume presidential responsibilities if the current president is unable to carry out his duties.
Corruption
Corruption is deeply rooted in the Turkmen state apparatus, with the country ranking 167th in the 2022 Corruption Perceptions Index. State-embedded actors are known to either facilitate or directly conduct a variety of criminal activities in the country. Patronage networks underpin power, which has given rise to a culture of corruption, nepotism, and embezzlement, where accepting bribes is the norm. This is particularly prevalent among customs, licensing, and social-service agencies, as well as in the education and healthcare sectors.
Right to Internet access
The regime maintains strict control over the information space in Turkmenistan, intensifying its stranglehold on the Internet, the only remaining source of propaganda-free information. Authorities have carried out total or partial disruptions and shutdowns of the Internet, throttling bandwidth, and blocking VPNs and entire sub-networks. In December 2022, the government proceeded to establish an autonomous national digital network, raising concerns about its desire to disconnect the country from the global internet.
Media freedom
All television and radio stations, newspapers, news agencies, and websites located on Turkmen soil are under strict state control. The law allows for the creation of privately-owned TV stations, but only if they promote a positive image of Turkmenistan. The authorities regularly repress and retaliate against independent media.
Freedom of speech and civil society
The regime relies on a variety of tactics to pressure and intimidate activists and critical voices. Those outside Turkmenistan, particularly Turkey-based activists, are threatened with detention and forcible extradition, physical assaults, and surveillance, while their relatives are subjected to intimidation and harassment at home. Many civic and political activists continue to serve politically motivated prison sentences. Human rights groups such as the Committee to Protect Journalists and the international “Prove They Are Alive!” campaign, as well as foreign decision-makers used the momentum created by the official change in leadership to issue open letters and joint statements urging Serdar Berdimuhamedov to release imprisoned activists, end the practice of enforced disappearances, and take meaningful steps to improve the country’s dismal human rights record.
Freedom of movement
Certain regions of the country, particularly border areas and the Caspian coast, are designated as restricted zones and require special authorisation to enter. Travel outside Ashgabat generally requires a separate visa with special dispensation. Turkmen border crossings may be subject to occasional and unannounced closures.
NGOs operations
Cumbersome registration and regulatory requirements prevent most independent NGOs from operating legally or from receiving foreign funding, and activities of unregistered groups can be punished by fines, detention, and other penalties.
Economic Risk
While Turkmenistan is still in an economic recession, the economy began to recover in 2022. Larger volumes of hydrocarbons, the country’s primary commodity, were exported at higher prices. The gradual reopening of borders, greater domestic mobility, increased trade, and the revitalisation of services also strengthened the country’s fiscal position and contributed significantly to economic growth compared to previous years.
As reported by the Asian Development Bank (ADB), supply-side growth came from all sectors, with the hydrocarbon economy expanding mainly due to increased natural gas production and exports, and the non-hydrocarbon economy benefiting from partial easing of restrictions on foreign trade and travel. Growth in industry reflected increased production of electricity, chemicals, textiles, food processing, and other agro-industrial products, as well as intensified construction. Private companies involved in import substitution programmes received substantial government support.
On the demand side, the government reported an increase in net exports and rise in public investment in industrial and social infrastructure in 2022. However, as noted by the ADB, inflation continued to limit real household incomes, as did constraints on employment due to structural problems, which dampened private consumption. Prices for food and other imported products, medicines and goods produced locally with imported components continued to rise. Monetary policy remains focused on controlling inflation by keeping the official exchange rate unchanged, complemented by price controls and the distribution of certain foodstuffs at subsidised prices. Access to foreign currency remains limited, fuelling a parallel currency market with a substantial difference between official and parallel market exchange rates.
Business climate
Strict administrative controls and the dominant role of the public sector in economic activity have hampered the development of the private sector. Despite the increase in the private sector’s share of certain segments of the economy, the public sector and state monopolies continue to govern the economy and the formal labour market. Outside the hydrocarbon network, foreign direct investment remains limited.
Furthermore, as the UK government notes, Turkmen law does not adequately protect contracts and can be changed by decree or ignored with impunity by vested interests. Both domestic and foreign businesses can be forced out of the market for specious or undisclosed reasons. Similarly, the International Trade Administration considers that the government often fails to implement or enforce investment-related legislation consistently, that there are no meaningful legal protections against government expropriation of assets, and that foreign companies generally pay significantly higher prices for services.
Overall, the current business climate presents a very high risk to investors.
Security Risk
Turkmenistan’s security profile is characterised by a high level of state control, which limits the prevalence of risks associated with crime, unrest, and internal conflict. With the political elite exercising monopolistic control over the entire economy, both legal and illegal, interaction between foreign and local criminal actors is minimal to moderate. The involvement of private sector actors in criminal markets is also limited.
Organised crime
There is evidence of the growing activity of informal criminal networks in Turkmenistan, accelerated by the ongoing economic crisis following the COVID-19 pandemic. These networks are mainly involved in drug trafficking, human trafficking, and goods smuggling, and cooperate with transnational organised crime groups.
Inter-state conflict
Turkmenistan faces only a limited risk of inter-state conflict.
Border security
The border with Afghanistan is particularly sensitive. It has seen fatal clashes between militants/criminal groups and security forces. Measures to reinforce security along the Turkmen-Afghan border have been adopted, with the concentration of heavy weaponry, helicopters and other aircraft, as well as the dispatch of additional troops to Serhetabad, a major border crossing point with Afghanistan, to support the border guard units.
Geopolitical Risk
Since gaining independence, Turkmenistan had attracted little attention due to its extreme isolation from the outside world. Ashgabat also adheres to a foreign policy of strict neutrality, a principle enshrined in its constitution. However, since the election of Serdar Berdimuhamedov as President in 2022, Turkmenistan has begun to alter its isolationist policy.
China
Cooperation on natural gas cooperation is the cornerstone of China-Turkmenistan relations. In 2006, former President Niyazov’s visit to China led to the construction of the Central Asia-China natural gas pipelines (lines A, B, and C), which now account for the bulk of Turkmenistan's foreign exchange earnings. China hopes to further exploit Turkmenistan’s natural gas reserves to sustain its economic growth and replace coal by adding a fourth line, Line D, to the existing pipelines, which would increase deliveries by 30 billion cubic metres per year.
In January 2023, China and Turkmenistan upgraded their bilateral relationship to a “comprehensive strategic partnership”, citing “similar visions and objectives as well as intertwined interests.” The partnership envisages deeper “cooperation on law enforcement, security and bio-security”, a joint crackdown on terrorism, separatism, and extremism, and the expansion of “energy on a priority basis.”
Russia
Bilateral relations have resumed following almost a decade-long period of crisis between the two states. Faced with Western sanctions and blocked access to Western markets, Russia needs new strategic partners and alternative trade and energy export routes. Hence Moscow’s recent overtures to Turkmenistan and efforts to deepen its strategic partnership with Ashgabat. In particular, Moscow wants to boost the capacity of the International North–South Transport Corridor and include Turkmenistan as a transit country and a hub for Russian goods exported to South Asian markets. Nevertheless, Russia is currently caught up in its war in Ukraine and its influence in the South Caucasus and Central Asia is weakening, giving other regional powers the opportunity to fill the void left by Moscow.
Türkiye
For several years, Türkiye has been encouraging greater integration between the Turkic states of the South Caucasus and Central Asia. Ankara intends to attract Turkmenistan to join the Organisation of Turkic States (OTS), using cultural and ethnic ties as a vehicle for closer energy cooperation. Cooperation with Turkmenistan could indeed help Türkiye achieve its long-standing goal of becoming a natural gas hub for Europe. Although Turkmenistan already has observer status within OTS, it is unlikely that it will soon become a full member, as long as Ashgabat holds on to its neutral status and prefers to maintain positive relations with the other major regional powers, China and Russia.
Conclusion and forecast
Political change in Turkmenistan is highly unlikely in the coming months due to the totalitarian nature of the regime and the harsh repression of the opposition, which makes it virtually non-existent. Human rights abuses will remain pervasive and could escalate if the government does disconnect the country from the global internet after having established an autonomous national digital network. Corruption will remain endemic as state-embedded actors themselves facilitate or directly conduct a variety of criminal activities in the country.
The limited availability of official statistics and the lack of data make it difficult to assess how Turkmenistan’s economy will evolve in the coming months. Inflation will continue to limit real household incomes while a substantial difference between official and parallel market exchange rates will persist. Turkmenistan will remain highly reliant on hydrocarbon exports and China’s demand for gas.
The high level of state control limits the prevalence of risks associated with crime, unrest, and internal conflict. With the political elite exercising monopolistic control over the entire economy, both legal and illegal, interaction between foreign and local criminal actors will remain minimal to moderate.
Turkmenistan’s neutral foreign policy will remain as such and will prevent the government from joining regional organisations or taking a stance on international issues. The relations with China are likely to deepen in the coming months after they have upgraded their bilateral relations to “comprehensive strategic partnership” but will remain tied to energy. If the relations with Russia have warmed up after years of tensions, Moscow’s attention and resources focused on Ukraine makes it a less influential actor. Türkiye could be tempted to fill the vacuum left by Russia as it has been encouraging greater integration between the Turkic states of the South Caucasus and Central Asia and that cooperation with Turkmenistan could help Ankara achieve its long-standing goal of becoming a natural gas hub for Europe.