FEATURE-Turkmen autocracy lives on as market reforms bite

By Olzhas Auyezov

ASHGABAT, Nov 3 (Reuters) - Almost three years after the death of the 'Leader of all Turkmens', Turkmenistan's people find their new leader comes with a similarly autocratic cult of personality, but a new readiness to carry out painful reforms.

President Kurbanguly Berdymukhamedov has not taken down the golden statues of the horse-loving Saparmurat Niyazov from the streets. But his own portraits, some of which show him riding a horse, feature prominently on the white marble buildings of the capital Ashgabat.

Gas, electricity and water are still free in Turkmenistan, which sits on the world's fourth largest gas reserves, but gasoline has gone up eight-fold and a decision to use market exchange rates is causing pain.

Ordinary people frequently complain about rising prices and low pay, and a hotel guard says his family of four can barely get by on a salary of $200 a month. But mutterings of discontent are muted at best, since Berdymukhamedov has shown himself no more tolerant of political dissent than his predecessor.

Turkmenistan remains closed and reclusive, and citizens are reluctant or afraid to speak to journalists.

But Western human rights groups say opposition politicians are either persecuted, imprisoned or forced into exile, and no independent political parties can operate openly.

'(The government's position is:) You have food, you have free utilities, what more do you want?' said a foreign executive doing business in Turkmenistan who asked not to be named.

It was a formula that worked for Saparmurat Niyazov, who proclaimed himself Turkmenbashi or Leader of all Turkmens while running the country with an iron fist for 21 years until his sudden death in 2006.



WELFARE SYSTEM

While ruthlessly crushing political opposition and restricting basic freedoms such as foreign travel, Niyazov created a social welfare system that allowed most of the population to meet basic needs for free or at subsidised prices.

Foreign guests are now asked to lunches in Berdymukhamedov's honour in the same way they were once asked to toast Niyazov.

Some saw a whiff of freedom when Berdymukhamedov made good on a promise to allow Internet cafes. But websites critical of the authorities are blocked, and staff at the cafes register visitors' passports.

Berdymukhamedov's term expires in 2012, and few doubt that his grip on power will ensure he is swiftly re-elected.

'A new personality cult is being built around Berdymukhamedov,' said Farid Tukhbatulin, a Turkmen human rights activist who lives in exile in Austria.

But while Niyazov presided as a kind of benign despot over a 'Golden Age' paid for by gas revenues, Berdymukhamedov has chosen to uses his near-absolute power to try to reform the ex-Soviet state's communist-style command economy.

Official propaganda proclaims Berdymukhamedov's rule an 'Era of Great Revival' and touts the new leader as the single architect of 'all the great reforms of a new historical era'.

Pledging to open up the ex-Soviet nation -- and aware that Turkmenistan needs to attract foreign investment to modernise its gas infrastructure -- he has undertaken some economic reforms praised by foreign businesses.

These include a law to combat money laundering, and putting pressure on banks to lend more.

However, corruption remains a way of life, and some of the reforms have hit ordinary Turkmens in their wallets, causing anger, and nostalgia for Niyazov's rule.

'Berdymukhamedov has broken Niyazov's promise to freeze prices until 2010,' says Dovlet, a male fashion model aged 18.

The government increased the heavily subsidised gasoline price eightfold in 2008, although Turkmens still get 120 litres a month for free. And at about 20 U.S. cents a litre (80 cents a gallon) it is still cheap enough for many to leave their engines running while they go shopping.



CURRENCY REFORM

Another unpopular reform was the alignment of the official exchange rate of the local currency, the manat, with the market rate. The effect was to strengthen the manat, and so reduce the remittances of thousands of Turkmen migrant workers.

Turkmens, unfamiliar with the market economy, perceive all those measures as attempts by a corrupt elite to increase its wealth at their expense.

'We are a rich country but the government gets all the money,' says Dovlet.

There are no official figures on unemployment in Turkmenistan but Ashgabat residents say young men are flocking to the capital in search of jobs.

'Many of them fail (to find work) and turn into tramps and beggars,' sighed hotel guard Yunus.

Turkhbatulin's Turkmen Initiative for Human Rights has reported protests over wage arrears. Sources in Turkmenistan say Turkmens building a gas pipeline to China have clashed with Chinese fellow workers who were being paid more.

Foreign businessmen say some construction projects in Ashgabat have been frozen as government finances took a hit from the disruption of gas sales to Russia over a pricing dispute.

Berdymukhamedov is, however, pressing ahead with several gigantic schemes initiated by Niyazov, such as the construction of an artificial lake in the Karakum desert.

Two other such projects are the Caspian Sea resort Avaza and a railway connecting Kazakhstan and Iran. Some observers have doubted the feasibility of the lake and Avaza projects but one of the ideas behind them may be to create jobs.

'Around 2 million new jobs have to be created here in the next 10 years so that a high employment rate can be achieved,' Hans Prodoehl, a managing director at Goetzpartners Management Consultants, told an investment forum in Ashgabat last month.

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(Editing by Kevin Liffey) Keywords: TURKMENISTAN REFORMS/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.