TURKMENISTAN

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Development Challenge Other Donors FY2001 Program / Activity & Budget Information Summary Tables Program Summary Work Force Data Program/Sector Summary USAID Search: Turkmenistan Previous Years' Activities 2000, 1999, 1998, 1997 00     Introduction The United States has a strategic and economic interest in Turkmenistan becoming economically viable, politically independent, and well integrated into international political and economic institutions. It has long borders with Iran and Afghanistan, as well as close proximity to the Caucasus, the Middle East, and South Asia. As an energy-importing nation, the United States is interested in ensuring that Turkmenistan's energy production potential is realized. Turkmenistan possesses the world's fourth largest natural gas resources as well as significant oil reserves. It has the potential to become an important player in world energy markets. The USAID program in Turkmenistan supports national policy reform to create favorable conditions for developing an oil industry sector according to international standards. The Development Challenge At the break-up of the Soviet Union, Turkmenistan was among the countries least prepared for change. When independence came in October 1991, the country had a very small industrial base and highly centralized political and economic systems. The Turkmen government continues to lag behind the other newly independent states in leading the country into the transition to becoming a plurasitic democracy with a market economy. As a result, USAID confronts numerous challenges in addressing the issues of fostering economic growth and promoting democracy. While USAID has achieved some of the results identified in its strategic plan, there is little progress overall. USAID has not had the opportunity to become substantively involved in policy reform in Turkmenistan. There are a number of reasons for the lack of substantial progress toward democracy and a market economy. The Government of Turkmenistan has not yet made a demonstrable commitment to democratic and economic reform. Turkmenistan remains a resolute one-party state with power vested in a communist-turned-nationalist leadership. The current leadership avoids changes that could entail significant loosening of state control over the economy or rapid political liberalization, arguing that such measures will cause instability and the deprivation of livelihoods for the working class. The European Bank for Reconstruction and Development (EBRD) ranks Turkmenistan the lowest of any former Soviet country in economic policy reform. The general economic situation continues to deteriorate, making change more difficult. Export revenues remain depressed following the March 1997 decision to suspend gas exports through the Russian pipeline system. Oil production and exports have increased and the rise in global oil prices has provided some welcome foreign exchange earnings. The prospect of a Trans-Caspian pipeline to export Turkmen gas to Turkey offers promise for the future, but the near-term outlook continues to be bleak. Turkmenistan receives assistance with energy and environmental challenges through USAID's Central Asia Regional program. While there have been modest gains in collecting tax revenues, the overall amount received falls well short of the amount required to balance spending. The budget operates increasingly on a non-cash basis. Expenditures have been reduced, especially in health and education, but the available budget resources are still barely adequate to meet priority-spending categories on a timely basis. Although the official and parallel market foreign exchange rates remained close for much of 1998, the parallel market rose to about three times the official rate and has maintained that ratio throughout much of 1999. Inflation that was held in check throughout much of 1998 rose to an annual rate of 25% by mid-year 1999 and is expected to exceed 30% at year-end. To keep afloat, the Government of Turkmenistan has resorted to international borrowing at commercial rates. Foreign direct investment remains low, although there is considerable interest by foreign investors in the energy sector. There has been very little progress in real structural reform. According to EBRD estimates, the private sector's share of GDP remains a dismal 22%, far lower than the private sector's share of the GDP in all of the neighboring countries. Turkmenistan has made little progress in moving from a Soviet-era authoritarian style of government to a democratic system. The national leadership exercises firm control over a highly centralized government structure with no freedom of the press, no independent trade unions or public associations, and no tolerance for opposition political parties. Parliamentary elections were not held on the "wide democratic basis" which the Government of Turkmenistan promised. Although there were at least two candidates for each of the 50 deputy seats, they were handpicked from the ranks of the Democratic Party (the former Communist Party), and government-controlled professional unions and social organizations. The new Institute for Democracy and Human Rights (IDHR), which has a mandate to foster democratization of the state and protect human rights, is in full operation. USAID has been assisting IDHR to identify institution building needs. While the number of non-governmental organizations has surprisingly increased four-fold in the last year, both U.S. private voluntary organizations and USAID-assisted, grassroots, community-based organizations have great difficulty in getting registered and gaining acceptance by the central government. Eight years after independence, the average Turkmen faces hardships caused by unemployment, inflation, poorly funded government services, and a deteriorating physical environment caused in part by the current set of national policies. Many, particularly outside the capital, suffer from poor nutrition and disease, especially water-borne and infectious diseases. This is especially critical for women and children. Partnerships, training and exchanges remained an important component of U.S. assistance. USAID trained over 330 reform-minded government leaders and professionals in areas directly related to democracy and a free-market economy. Thirty-five percent of the trainees were women. USAID's successful third-country training allows participants to observe positive reform in other Central Asian Republics. Other Donors The World Bank has restarted its lending program with projects aimed at improving rural health and incomes. The World Bank and USAID are collaborating in the agricultural sector to expand integrated pest management. The EBRD makes credit available for projects contributing to economic reform, especially for the modernization of agriculture and oil and gas production. The European Union (EU) supports improved agricultural production and processing, energy, and private sector development. The United Nations Development Program supports economic reform and management, the health and education sectors, and environmental protection. The United Nations Children's Fund assists with maternal and childcare. Other donors include the Turkish International Cooperation Agency, the British Know How Fund, and United Nations High Commission for Refugees. Country Background Information Resources   CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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