On May 2, during an international trade fair held in Ashgabat, President Gurbanguly Berdimuhamedov stood up and declared that expanding the private sector was a major priority for his government. It’s an understandable aim, given that Turkmenistan’s economy has been badly affected by the global slump in natural gas prices.
But we shouldn’t be taken in. This act from Berdimuhamedov is nothing new – giving the impression that serious reform is forthcoming, failing to deliver it, and then once again stressing how vital it is. The economy remains restricted and state-dominant; a hermit in terms of world trade, despite Berdimuhamedov offering the occasional hint of liberalization. A Soviet legacy of control-freakery ensures that, regardless of any professed appetite for reform, there is a reluctance on the part of the government to step back just a little and allow some extra room for the small private sector to grow.
That this latest suggestion of imminent reform occurred at a trade fair does not bode well. The current regime is an old hand when it comes to hosting them. For a few days in February there was the “International Export Product Fair,” purportedly arranged to show off household goods and appliances. In July, we can expect “Turkmen Health,” an international health industry exhibition, and in the following month a trade fair and conference for construction firms. By now they’ve almost become an annual tradition – or, more cynically, an annual waste of time. A few deals might be made here and there, but that won’t be enough to jumpstart generally sluggish growth. Endemic corruption will still exist, business visas will remain tough to acquire, and incentives for foreign firms to invest in the country will go unimplemented. Recent years, in fact, have witnessed the withdrawal of outside investors – most notably the German energy firm Deutsche Erdoel AG – which pulled out in frustration over Turkmenistan’s complex and unpredictable bureaucracy.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
What these fairs do provide is an insight into the psychology of dictatorship. A side benefit, perhaps the main benefit, is the propaganda value. They allow Berdimuhamedov or one of his acolytes to make a stirring speech in front of an already tamed media, and create the impression he is doing something genuinely useful. That’s the idea anyhow — the extent to which citizens believe the message is debatable. What we can be sure of is that these “successful” conferences deliver good news stories that are dubious at best.
Take the 6th edition of the International Cotton Trade Fair held in December last year, organized to help facilitate the sale of Turkmen cotton to foreign markets. Per an account published on the presidential website, it was a roaring success. Contracts worth $30 million were signed. And in contrast to Turkmenistan’s typical trade fairs, the list of attendees apparently went beyond Turkey and Iran. More than 70 companies from over 30 countries participated — or so we’re told.
It all sounds very impressive, until you remember that cotton is a commodity product. Its price is subject to fluctuation just like natural gas, and has been declining. Global output is expected to improve this year, though the downward pressure on prices will continue for the time being. Essentially, the drop in earnings that Turkmenistan has experienced in gas, its major export, will hardly be offset by the cotton industry, especially when $30 million in contracts could have been worth substantially more a few years back. That the government highlighted this event is a worrying sign, as it suggests a lack of enthusiasm when it comes to steering the economy away from its current commodity-trap status.
Those problems aside, trade fairs in Turkmenistan are not pointless. They symbolize a dull, business as usual approach, but present fleeting chances for an otherwise waning economy to connect with potential investors — even if, like Deutsche Erdoel AG, some of those investors may eventually regret it. Still, this tragic lack of ambition will keep dragging the country down; though the geopolitical space that Turkmenistan occupies means it isn’t altogether surprising. It’s a situation explained by going further than the traditional Central Asian scourges of patronage networks and rent-seeking. Berdimuhamedov’s grip on the economy echoes Turkmenistan’s foreign policy of guarded neutrality; with a fear of neocolonial domination by regional neighbors, particularly Russia, incentivizing a closed market that the state clutches to anxiously. A genuine transition to a freer system would make him nervous. Openness might promise greater wealth, but also greater vulnerability.
Fairs and conferences, meant to express a certain energy and dynamism, instead show an isolation unlikely to be resolved any time soon, with brief glimpses of opportunity for overseas business in tightly controlled conditions. In other words, the type of environment where the regime feels most at ease.
Henry James is a Risk Graduate of Durham University.