Turkmenistan’s Potemkin economy on the brink of collapse. Experts assess Turimenistan’s investment potential

An expert of the London analytical centre The Foreign Policy Center Adam Hug has published a report devoted to the economic and social crisis in Turkmenistan.

The author of the research notes that Turkmenistan is a country often overlooked on the world stage. When attention is paid the focus tends to be either on the size of its bountiful gas reserves or on the eccentricities of its leadership.

Meanwhile, Turkmenistan is in the middle of a sustained economic crisis that has seen hyperinflation in the lives of ordinary people and widespread food shortages. This economic crisis has in turn led to the regime’s repression becoming ever tighter and its personality cult becoming ever more grandiose.

While investors may be initially attracted to Turkmenistan due to its enormous gas reserved the author warns that it is a Potemkin economy’, with marble facades, which mask a chaotic black economy.

Potential investor risks include: the whims of the President, leading to arbitrary behaviour by a sclerotic bureaucracy; a high risk of non-payment for goods or services; endemic corruption; insecurity of legal title or contracts; the lack of rule of law and independent judiciary; and reputational risks from being associated with severe human rights abuses.

This research documents the vast range of Turkmenistan’s human rights abuses but draws particular focus to the issues of forced labour, disappeared’ activists in the prison system and restrictions on independent journalists and human rights activists.

Despite the fact that exerting international pressure on the regime is hard, the publication argues that the current economic turmoil creates new opportunities to leverage engagement and investment for vital reform.

Adam Hug calls on the European Union to adopt the European Parliament’s proposed human rights benchmarks for Turkmenistan and that these principles should be applied by all international institutions working with Turkmenistan.

Key recommendations to the Government of Turkmenistan:

Notify all families about the condition of their imprisoned loved ones and allow visitor access;

Free political prisoners and jailed journalists;

Improve prison conditions and end the use of torture in the detention system;

End forced labour in the cotton harvest;

Allow access by UN Special Rapporteurs and other UN mandate holders, as well as visas for representatives of international non-governmental organisations (NGOs);

Enhance judicial independence in the criminal and commercial sector, while honouring its international treaty obligations.

Recommendations to the international community:

Ensure the EU adopts and applies the European Parliament human rights benchmarks;

Require the EBRD’s lending to Turkmenistan to reflect the need to improve human rights and avoids expansion to the public sector in the absence of genuine reforms;

Push for the presence of the International Labour Organization with a strong mandate to tackle forced labour;

Reconsider international trade promotion efforts to Turkmenistan.

The full text of a 42 page report in English is available here.

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