Friday, December 22, 2006

Good riddance 

I cannot comment in any great detail on the internal politics of Turkmenistan following the death of Saparmurat Niyazov, or Turkmenbashi, as he preferred to call himself. Captain Ed and the guys at Registan have done a fine job covering much of that. See also TOL: Turkmenistan's speculation of the succession.

Let me make two points, however, that others might be missing. First for the mundane: The reverberations of this in the energy world cannot be overstated. The Russians have done a fairly good job in making any discussions in Europe over energy supplies go through Gazprom, and Gazprom and Russia have placated Kazakstan and Niyazov enough to keep Gazprom's position as market maker secure. Having Turkmenistan now in play will make for a source of intrigue. And it won't be only Russia, as pointed out in this interview with an energy expert: China and Iran will have reasons to make overtures to the new political class that is in Turkmenistan and its leaders-in-exile.

Such discussions are strengthening, in my view, Russia's hands in dealing with its near neighbors as well. Contained in an article discussing a meeting between Vladimir Putin and Ukrainian president Viktor Yushchenko in Kyiv,
The dictator's death may affect energy supplies to Ukraine, which is currently importing a mixture of Russian and cheaper Turkmen natural gas for a price of $95 per 1,000 cubic meters. Russia and Ukraine still have to decide on the gas price for next year, and Turkmenistan said before Niyazov's death it would charge Ukraine $130 in 2007.
There's reason to believe the price might be driven higher with Niyazov's death, a fear felt in Ukraine. Such discussions would also happen in the other countries of the Caucasus and in Moldova, all of whom use Turkmen gas to get cheaper prices than they might pay on the open market. I think this is going to be a bigger deal than most other people are saying so far, and it bears watching in 2007.

Second, a friend who has spent time in Turkmenistan made the comparison between Niyazov and Romania's Nicolae Ceausescu, and he regretted that Turkmenbashi had not met with Ceausescu's fate. He was a pretty brutal guy by all accounts, and the comparisons of a strongman who uses Islam as a tool for personal political gain will look very familiar. Its economic freedom is very poor as well. But for the most part this guy was a two-bit self-aggrandizing dictator (take a look at the photos someone took there and imagine the costs of these monuments to his ego!) We'll have to leave his final judgment for someone else, but we won't miss Niyazov even if it does cause greater instability. That was bound to happen whenever he died.

UPDATE: As if to prove the point, Russia is already angling at nemesis Georgia's gas supplies:

Gazprom, the Russian natural gas monopoly, agreed Friday to continue supplying natural gas to Georgia, but at double the price, the latest increase for a pro-Western nation on Russia's border.

Aleksandr Medvedev, Gazprom's deputy chief executive, said three Georgian importers had agreed to buy gas at the company's asking price of $235 for 1,000 cubic meters, or 35,000 cubic feet, close to the prices paid by industrialized nations in Europe. Gazprom is insisting it will raise prices to European levels throughout the former Soviet Union.

The latest contract is considered short-term on both sides. Gazprom notes that the contract does not cover all of the country's needs and that it could still cut off supplies. And Georgia said that it was close to obtaining an alternative supply from a BP-run natural gas platform off the Caspian Sea coast of Azerbaijan, Georgia's eastern neighbor.

If the Azeri deal comes off, and that's a big if.

UPDATE 2: Poisoned?