World » Former USSR
Author`s name Ольга Савка

USA to crush Turkmenistan's economy with a billion-dollar lawsuit

USA's largest enterprises still work in the impoverished post-Soviet state

An American court is currently pending a billion-dollar lawsuit against the government of the former Soviet republic of Turkmenistan. The sum of the lawsuit is equal to one-third of the annual export of Turkmenistan.

Turkmenistan is already used to legal disputes with Western companies. The sum of the current lawsuit, however, makes the latest occurrence an outstanding event in the practice. The US company Lybra International Holding Group Corp. is suing the Agricultural Ministry of Turkmenistan in the Columbia DC federal court. According to the claimant, the problem occurred over the ministry's debt on 1992 contracts to deliver equipment and technologies for two sugar-making plants. Turkmenistan was supposed to pay a certain part of the services with cotton, although there were no deliveries made. Lybra addressed to the Liverpool Cotton Association - the major international center for cotton traders. It is noteworthy that over 60 percent of all cotton-related purchase and sale deals are based on LCA's commercial rules. The association, however, did not look into the matter, because Turkmenistan had been expelled from the LCA because of its unwillingness to execute one of the previous decisions of the association.

In addition to the above-mentioned litigation, Lybra initiated a complaint from the US Department of State in Turkmenistan's governmental structures. The lawsuit is evaluated at 1 153 196 280 000 US dollars, including one billion dollars of punitive damages.

The Turkish firm Tar-tek-san won its trial in 2003 and made the Turkmen government pay $14.5 million. The trial was about the breach of contract to build a cotton-cleaning factory. Accounts of the Turkmen embassy in Ankara and the Consulate Office in Istanbul were arrested as a result of the infringement, and Turkmenistan was forced to clear the debt. 

In the event the above-mentioned US company wins the trial, the government of Turkmenistan will find itself in a much more scandalous situation. The sum of the case pending is a hundred times larger. Spokespeople for the Foreign Affairs Ministry of Turkmenistan and the Turkmen embassy in Moscow declined any comments.

USA's largest companies, such as American Airlines, Bell Hellicopter – Textron, Boeing, Caterpillar, General Electric, Halliburton, ITT, Mobil Oil, Motorola, Sikorski Aircraft, Ford Motors Corporation, conduct their activities in Turkmenistan. It is an open secret that huge corporations have a rich experience of working in authoritarian countries, in the Middle East, first and foremost. Powerful corporations can easily reach out for high-ranking officials, with whom they settle all disputes and sign business contracts. Advisors of such enterprises may often represent the local elite, experts say.

The US small and medium-sized business left Turkmenistan in the middle of the 1990s. Washington has repeatedly criticized Turkmenistan for unbearable conditions for business in the country. A spokesman for the US Department of State has recently stated that the actions of the Turkmen government to improve the investment climate in the country do not comply with official statements and laws.

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