Invest1 publisher2 min readPublished
Korea and Turkmenistan sign 13 documents covering oil, plants, rail and the Karakum Canal
Lee Jae-myung and Serdar Berdimuhamedow signed the package at the Blue House on the 15th, with an investment promotion and protection accord among the 13. Turkmenistan also endorsed Seoul's END Initiative.
The Investor · Invest desk
What happened
- Lee Jae-myung and Serdar Berdimuhamedow met at the Blue House on the 15th and agreed to expand cooperation in energy, plants, transportation and logistics, signing 13 agreements and memorandums.
- The two governments plan to widen Korean corporate participation in oil, gas and chemicals, construction, transportation and logistics, and to work together on modernizing the Karakum Canal.
- About 30 Koreans left Iran overland into Turkmenistan in March, after the Turkmen government designated an immigration checkpoint exclusively for them.
- Berdimuhamedow reaffirmed Turkmen support for the END Initiative, Lee's North Korea framework, and for settling Korean Peninsula issues through peaceful dialogue.
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Why it matters
- capability The 2008 partnership was a declaration. A Korean contractor bidding Turkmen state work can now price political risk against a signed protection accord.
- decision Korean plant, rail and water contractors have to decide whether to staff Ashgabat coverage now, ahead of any tender with a public value on it.
- cost The summit spent presidential time and treaty capacity, and no budget figure leaves either side.
- precedent Ashgabat's endorsement of the END Initiative shows the going rate at these summits: Korean industrial capability against diplomatic backing on North Korea.
The investment promotion and protection accord is the one document among the 13 that a bidder can put into a model [2]. It costs the two treasuries nothing on the day it is signed, and it changes the premium a Korean contractor has to add to a Turkmen tender price. Sedaily's account of the summit puts no value on any project and names no financing commitment [14].
Spread the 13 documents across the five subject areas Seoul listed, which are investment promotion and protection, infrastructure, the chemical industry and plants, rail transport and water resource management, and the package averages 2.6 documents per area [3][1]. One project is named. It is the modernization of the Karakum Canal [4].
Lee dated the relationship himself. "Since establishing a mutually beneficial partnership in 2008, our two countries have built a foundation of substantive cooperation over a long period," Lee said, and added: "I hope we can now use that as a springboard to create results that our people can feel in their daily lives" [7][8]. Eighteen years separate that partnership from the accord signed on the 15th [2].
The economic ask rests on something much more recent. "The warm hand you extended in a difficult moment properly showed the deep trust and friendship between our two countries," Lee said of the Turkmen help getting Koreans out of Iran [6].
Ashgabat's side of the exchange was diplomatic. Berdimuhamedow said of the END Initiative, "I reaffirm our support for it here," and told the summit, "We will continue to consistently maintain the position that all issues on the Korean Peninsula should be resolved through peaceful dialogue and diplomatic means" [10][12].
From here the accord converts, and inside a year a Korean contractor holds a Turkmen award with a contract value attached to it. Or the money lands in transit, since rail transport is one of the five headings and Lee said Korea would work so that "the land connecting the Caspian Sea and Central Asia becomes a new gateway for logistics and trade" [3][9]. Or the 13 sit where the 2008 partnership sat, and the next summit produces a fourteenth [7].
In my view the conversion shows up in water and plant work before oil and gas, because the canal is the only project named in the account of the summit [4]. The test is a priced award. Memorandums again, with no values on them, would settle it the other way [14].
What to watch
- A Karakum Canal modernization tender with a Korean bidder and a published contract value.
- Publication of the investment promotion and protection accord's text, including its dispute settlement terms.
- Another bilateral round that produces unpriced memorandums.