Institute for War and Peace Reporting | Giving Voice, Driving Change

Turkmenbashi Linked to Building Racket

President Niazov’s alleged preference for Turkish companies is harming local businesses.
By IWPR staff

Turkmen businesses are being squeezed out of the construction sector by a cartel of overseas firms close to President Saparmurat Niazov, it has been claimed.


Lucrative contracts are being awarded to a small number of Turkish companies – even though local firms are bidding to do the work to the same standard for a fraction of the cost.


Turkmenistan’s former ambassador to Turkey, Nurmuhammed Hanamov, told IWPR that the current business environment in the former Soviet republic was encouraging a climate of corruption and kickbacks at the highest level.


And many Turkish companies encouraged by Niazov’s friendly overtures to Ankara have found themselves frozen out by Ashgabat, which instead chooses to award contracts to a select few favoured firms.


“I can confirm that of several dozen Turkish businesses who wanted to invest in Turkmenistan, only a handful are left at the moment,” said the former ambassador. “A lot of respectable companies had to leave because they found it impossible to operate in such a lawless environment.”


Hanamov, who left his post in early 2002 and now lives at an undisclosed location in Western Europe, claims that the market has now been cornered by a select few Turkish firms who have the ear – and the trust – of Niazov.


The former diplomat told IWPR that much of the money made from such contracts goes straight to the president and his inner circle.


The Turkmen economy has been facing a number of difficulties since the republic gained its independence in 1991. This means that money has to be found from somewhere if the president wishes to reinforce his already authoritarian regime, analysts say.


The president’s increasing belief that his position is under threat has led to him strengthening his law enforcement agencies, including the secret service, and further resources will be required to maintain these forces at the current level.


Turkmenbashi, or leader of all Turkmen, as Niazov likes to be called, has also cultivated a cult of personality through the use of expensive statues, monuments and palaces – putting a further drain on the state’s dwindling resources.


Murad Esenov, editor of the Swedish-based analytical magazine Central Asia and the Caucasus, echoed Hanamov’s concerns about the current business environment in Turkmenistan.


He told IWPR that Turkmenbashi is referred to as “Mr 33” within the republic’s Turkish business community. He claims that favoured companies are encouraged to submit grossly inflated estimates for state projects and that 33 per cent of this figure is shared out between Turkmenbashi, his inner circle and the bidding firm.


This practice has led to extreme concern among local and overseas firms who are struggling to make a living in Turkmenistan’s stagnant economy.


Such anxieties were raised by the Union of Turkmen Businessmen at their annual conference earlier this year. A number of speakers expressed their bewilderment as to why domestic companies – who offered realistic tenders for quality work – were being continually overlooked in favour of substantially higher bids from foreign bidders.


One speaker cited the example of a Turkmen company that had bid 1,300,000 US dollars for a construction project, only to lose the job to a Turkish company whose estimate was three times more expensive.


When questioned by IWPR, the Turkish diplomatic office in Ashgabat denied all knowledge of alleged corrupt business practices within Turkmenistan.


Pressured further about the authorities’ alleged practice of awarding lucrative contracts to select Turkish businesses, the spokesman refused to comment.


IWPR also approached the Turkmen foreign ministry in Ashgabat and the Turkmen diplomatic mission in London, but they both refused to comment.


Turkish construction companies have been contracted to work on various construction projects in Turkmenistan - including a monument and park in honour of the Turkish hero Ataturk in the centre of Ashgabat, parks, elite housing complexes, hotels, factories and business centres.


Jobs on these projects attract high salaries – but it’s usually Turkish workers who benefit.


Murad, a Turkmen engineer working for a major Turkish construction company, told IWPR, “A third of the workers at the site are locals and the rest are Turks, who receive a lot more money than we do. For example, I make around 150 dollars, while a Turkish engineer who does the same job makes ten times that amount.


“It’s like that on all levels, from ordinary builder to architect. Why do we make so much less when we have the same experience and qualifications?”


Turkmenistan and Turkey have been building something of a “special relationship” in recent years, to their mutual economic benefit.


Analyst Arkady Dubnov, who covers Central Asia for a Moscow-based newspaper, told IWPR, “One thing you notice in Turkmenistan is the complete absence of any western companies – as it would be impossible for them to operate here.


“The arbitrary nature of Turkmen decision-making and its unstable legal environment make it a tough place to do business – but certain Turkish firms feel right at home here.”


Dubnov added that Turkmenbashi has come to rely on a number of Turkish businessmen, consulting them and asking them to lobby for him with western, South-east Asian and Arab companies.


But if you are not a favourite Turkish company problems often arise. Ashgabat has apparently refused to fulfil its side of various agreements with Ankara-based companies more than once.


“I know of two cases where Turkmen aeroplanes have been impounded on Turkish soil, and used as a bargaining chip in an attempt to pressure Ashgabat into paying debts owed to Ankara companies,” said Hanamov.


In spite of the occasional difficulty, trade between the two countries is growing. Turkmenistan, for its part, seems keen that this continues, especially since Ashgabat’s relations with Ankara are free of the sort of frontier, water and energy disputes that afflict ties with some of its other neighbours in Central Asia and the Caucasus.


Turkmen journalist Murad Novruzov contributed to this report.


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