BRI and Turkmenistan: A Way of Progress and Prosperity | Dr Mehmood Ul Hassan Khan

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The West “New Great Game” syndrome has been purposefully disseminating in the Central Asian Region against China which has become the largest trading partner and the biggest investor in which One Belt One Road Initiative (BRI) has played an important role.

According to the Chinese Ministry of Commerce (April 2017) since 2013, US$304.9 billion in contracts have been signed between China and the economies along the route. A substantial FDI has been poured into Turkmenistan, the 2nd largest country of the region in diverse sectors of economy including energy, oil & gas, infrastructure, transport, ICT, IT and last but not the least, industrialization under the flagship project of the BRI. Now the two countries announced the decision to elevate the China-Turkmenistan relationship to a “Comprehensive Strategic Partnership” in Beijing. Since 2011, China has remained Turkmenistan’s largest trading partner.

According to China Customs statistics (December 2022) from January to August in 2022, bilateral trade between the two sides reached $6.9 billion, an increase of 52.4 percent year on year, of which Chinese imports were $6.36 billion, a year-on-year growth of 50.1 percent, and exports of $540 million, representing an 87.3-percent expansion year on year. It is good omen that gradually Turkmenistan is progressively opening itself to the outer world with the development of large scale infrastructure projects including transnational energy projects and multimodal regional transport corridors.

Interestingly, Turkmenistan is ideally located between Central Asia, Middle East, South Asia and the Caucasus due to which Turkmenistan would become a major “connecting hub”. In June 2016, in Tashkent, former Turkmenistan President Gurbanguly Berdimuhamedov met the Chinese President Xi Jinping and had discussed further cooperation with the Belt and Road Initiative.

Turkmenistan is one of the biggest suppliers of natural gas to China and a key country of the China-Central Asia Gas Pipeline project. Till June 2022, the China-Central Asia Gas Pipeline has delivered more than 400 billion cubic meters of natural gas to China over the last 12-plus years. On the one hand, the pipeline helped replace the use of 532 million tonnes of coal during this period, equivalent to the reduction of 8.8 million tonnes of harmful substances and 568 million tonnes of carbon dioxide emissions. On the other hand, the project’s company has provided more than 22,000 jobs and trained some 110,000 local employees in Turkmenistan.

Moreover, China has become the largest trading partner of Turkmenistan. 70% of Turkmen exports, mostly gas transmitted to China while Turkmenistan has become the third largest trading partner of China in the Commonwealth of Independent States and the two countries have been each other’s largest cooperative partner in natural gas since 2016. In addition, Turkmenistan also acts as a corridor for China to reach important import and export markets in South Asia, the Middle East, Eastern Europe and beyond as well as access to the Caspian Sea which lies on the country’s western border. Turkmenistan’s largest export market is China, which accounted for 76.6 percent of all products in the first quarter of 2022.

China and Turkmenistan established their diplomatic relations in 1992. The early decades of the relationship saw the signing of several bilateral agreements and treaties which included a bilateral investment treaty (BIT) in 1992 and a double taxation agreement (DTA) in 2009. Most recently, the President of Turkmenistan Serdar Berdimuhamedow was on a state visit to China at the invitation of his Chinese counterpart, President Xi Jinping. The visit, scheduled between January 5 and 6, represents Berdimuhamedow’s first official visit to Beijing since taking over the presidency. During the two-day official visit, numerous MOUs were inked which would be a value addition for the further strengthening of bilateral relations and BRI between the two countries in the days to come. MOUs were signed to promote investment cooperation in the digital economy, green development, “Revival of the Great Silk Road” and “One Belt and One Road”; energy, oil, gas exploration between Türkmengaz (Turkmen Gas) State Concern and the China National Petroleum Corporation (CNPC),  health, education, tourism, culture, media and last but not least, sports,

Interestingly, before the launch of China’s BRI, Turkmenistan had already planned several strategic energy infrastructure projects and corridors. However, at the time, these initiatives were limited in their scope, resources and participation. Since their involvement in the BRI scheme, these projects have now been able to advance their goal of becoming intercontinental corridors with access to significant transportation networks and energy security. It includes the Turkmenistan-China Gas Pipeline, the International North-South Transportation Corridor, the Lapis Lazuli International Transit Corridor and the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline.

According to statistics from China’s Ministry of Commerce (MOFCOM), in 2020, China’s direct investment in Turkmenistan reached US$211 million. By the end of 2020, China’s accumulated direct investment in Turkmenistan was US$336 million. In 2020, Chinese enterprises signed 27 new project contracts in Turkmenistan with a total value of US$457 million and a total turnover of US$165 million. Most of the new Chinese projects are contracted and implemented mainly in the fields of natural gas exploration and development and technical services.

To conclude, the two countries’ friendship has deepened mutual understanding and learned from each other in terms of culture, tradition and worldview. The great Silk Road that connects the two countries is a bridge of not only trade but also cultural exchanges.

At present, China’s Belt and Road Initiative (BRI) and Turkmenistan’s development strategy to revive the Silk Road are gaining more and more synergy. The two countries share common interests which make them good partners under such synergy. Both the BRI and Turkmenistan’s development strategy to revive the Silk Road inject strong impetus into the economic development of Eurasia. Both connect the vast region between the Pacific and the Atlantic with interconnected technological chains, industrial chains and industrial belts, which further strengthen greater regional connectivity.

It seems that energy will remain an important direction of Turkmenistan-China future cooperation. Turkmenistan enjoys huge potential in the energy sector. China’s growing demand is spurred by its expanding economy due to which Turkmenistan’s government is planning to increase its supply of natural gas to China. Both Turkmenistan and China attach high importance to transport cooperation. Turkmenistan sees China as its most important cooperation partner in the Asia-Pacific region.

On its part, Turkmenistan is now working with its regional and trans-regional partners to build an infrastructure network of transit shipment and logistics. It seems that it will include transit corridors leading to the Caspian Sea, the Black Sea and the Baltic Sea regions. It is expected to become a perfect channel of transport from Asia Pacific to Europe and the Middle East via Central Asia.

Interestingly, China is also exploring building a spur from Pakistan’s territory once the multi-country TAPI natural gas pipeline project begins operating. Turkmenistan is building the TAPI pipeline to diversify its gas exports which have mostly gone to China. But the project has suffered lengthy delays due to difficulties obtaining financing and the security risks of building a pipeline through war-torn Afghanistan. Pakistan-Turkmenistan and China would be a winning iron triangle for the further development of CPEC and BRI in the days to come. In the past, Turkmenistan showed its keen interest in using Pakistani ports for its greater connectivity and diversification of energy and finished products.