Was Turkmenistan’s Transition to a Market Economy Successful? – Diplomat

Turkmenistan was part of the Soviet Union from 1925 to 1991 and existed under a system of government control and planning in all respects to the economy. Government bureaucracy determined what, how and for whom it was produced. The state also set the prices of goods and services, as well as the salaries of employees. In the aftermath of the collapse of the Soviet Union in 1991, many post-Soviet republics shifted their economies from Soviet-style planned economies to market economies by giving the private sector more authority and responsibility in determining production-related activities. hastily moved to

Has Turkmenistan started the transition to a market economy?

Turkmenistan last and slowest The transition to a market economy is underway in post-Soviet republics. The country’s first president, Saparmirat Niyazov, did not want to rush such a transition and did not see a need for it, given the country’s large natural gas reserves, which brought a steady income to the budget.he repeated “We don’t need revolution. We want evolution,” suggesting slow and modest reform. Independence allowed private businesses to operate, and large bazaars run by small businesses began to emerge. Retail, restaurants, bakeries, beauty salons, and other service-related private enterprises have emerged. However, when it came to large factories and industries, most of them were still dominated by state-owned enterprises in the first decades after independence.

As for the agricultural sector, the Turkmen government still owns and controls all land in the country. The government leases land to private farmers and intervenes in what crops they can produce. The state also has monopolies in wheat and cotton production. The state hires private farmers to grow wheat and cotton and buys the crops produced at prices set by the government. Private farmers must sell all their wheat and cotton harvests to the government. They cannot bring their crops to the open market on their own. Ultimately, the system reduces the incentives for farmers to grow more wheat and cotton, given their lack of freedom to sell their harvested crops at market prices. The past few years have been particularly difficult for the country, as low agricultural production and high black market exchange rates have pushed food prices up significantly. External factors such as drought can certainly affect agricultural production, but government interventions in the food sector play a bigger role in disappointing production volumes.

Turkmenistan’s judicial system fails to protect the rights of private companies in the country. For example, Impash, a privately owned Turkish shopping mall in Turkmenistan, close It was abolished by the government in 2016, despite a long-term agreement between the Ashgabat city government and the owners of Impash that was supposed to last until 2030. Go to the newly opened Berkarar Mall, which used to be owned by a “nephew”. Among Turkmen, the euphemism for “nephews” generally refers to two people, Shamirat Rezhepov and Hadzimirat Rezhepov, the most influential nephews of former President Gurbangur Berdimuhamedov and the current Turkmen. Cousin of President Serdar Berdimuhamedov. Russian mobile operator MTS suffered a similar fate. kicked out Such actions scare foreign investors and reduce development opportunities associated with FDI inflows.

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monopoly remains

The government has a complete monopoly on the following sectors: telecommunications, agriculture (land, wheat, cotton), textile factories, alcohol factories, hotels, airlines, airports, railways, chemical raw materials (polypropylene, carbamide, fertilizers, etc.), Natural resources (natural gas and oil), petrol stations and other industries. A state monopoly means that governments do not allow private entrepreneurs to become involved in these industries, resulting in lost opportunities and growth. Some of these listed industries are privately owned (such as pharmaceuticals), but are largely controlled by relatives and close friends of the president, blurring the line between state and private. Raw materials produced by state-owned enterprises (fertilizer, carbamide, polypropylene, etc.) are difficult for private enterprises to purchase.Those who knew his nephews and other presidential relatives and bribed them de facto owner of many state-owned enterprises that produce industrial chemicals.

The telecommunications sector is now completely controlled by state-owned enterprises. Russian mobile operator MTS was the largest provider of mobile services until the Turkmen government suspended his license in 2010. The Russian operator returned to the Turkmen market in 2012, but was expelled again in 2017. lawsuit Opposition to the Turkmenistan government. Currently, domestic and foreign private companies are not allowed to enter the market providing telecommunications services.national burden astronomical price Internet connection as a percentage of national average salary. In the country fourth slowest Global fixed broadband internet surpasses only Yemen, Cuba and Afghanistan. This telecommunications monopoly also allows the government to easily censor and restrict thousands of his websites and social media apps such as Instagram, Twitter and Facebook. Local mobile network operator Altyn Asyr has a monopoly on his mobile network and is reportedly owned by another presidential owner. relativesShikhmurat Shakharuliev.

Monetary policy by exchange rate

Free exchange rates are another indicator that the market economy is working. Turkmenistan’s exchange rate has been pegged against the US dollar at a fixed rate since 1991. However, the government, first under Niyazov from 1998 until he was in 2006, and then Gurbangur under Berdimuhamedov, from 2006 until his son, strictly prohibited the free exchange of foreign currency. I am restricting. Serdar took over the presidency earlier this year. Exchange rates are still restricted. Such restrictions have paved the way for the creation of black market exchanges to buy and sell foreign currencies at higher rates.The official US dollar exchange rate is still set at he 3.5 manat at the time of writing. The black market rate is 19.5 manat for him.

The Heritage Foundation’s Economic Freedom Index measures the impact of freedom and free markets around the world.Turkmenistan ranked 165th place Included in the index among a total of 177 countries. In an economically free society, individuals are free to work, produce, consume and invest as they please, and governments allow labor, capital and goods to move freely. Corruption is a major obstacle to competitive market economies, and government bureaucrats license certain people to operate large-scale manufacturing industries, undermining competition. Some companies also have the privilege of purchasing foreign currency through the official exchange rate, which is about six times cheaper than the black market exchange rate. According to Transparency International’s Corruption Perceptions Index, Turkmenistan ranks as follows: 169th place Out of 180 countries.

Ultimately, Turkmenistan has yet to fully transition from a Soviet-style planned economy to a modern competitive market economy. Modern Turkmenistan lacks the basic features of a market economy. The largest industries are still controlled either by state-owned enterprises or by people connected to the president and his relatives, with the result that monopolies charge high prices for low-quality products and compete to provide alternatives. There is little or no private sector. These companies sometimes suffer from government intervention, as was the case with the aforementioned mall in Turkey. Turkmenistan’s exchange rate is severely restricted, which has a negative impact on industry. The country still has a long way to go to achieve a functioning and competitive market economy.

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