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Turkmen-Iran Free Trade Zone Withers

This article has been submitted for publication on the BAFS website by Muhammad Tahir based in Aq Qala, northern Iran. He is a Prague-based journalist specializing in Afghan, Iranian and Central Asian affairs and is author of "Illegal Dating-a journey into the private life of Iran".

Amangeldi sits cross-legged in his shop, surrounded by heavy silver jewelry and handmade carpets, sipping green tea pondering the future of his failing business.

He was one of the first merchants to set up shop when Iran launched a special economic zone here in Inche Borun, a town in northeast Iran right on the border with Turkmenistan. He was drawn by the prospect of easy access to traditional handicrafts from Turkmenistan, and thought he would find a ready market in what was promised as a flourishing duty-free zone visited by people on both sides of the border.

It should have worked. The people in this part of Iran are mostly ethnic Turkmen, who would welcome contact with their kin across the border, which was hermetically sealed until the Soviet Union collapsed in 1991. Inche Borun lies on the main route into Turkmenistan from Gunbad-e-Kavus, the major town in this part of Iran.

"We had very good contacts with our Turkmen brothers over the border. They used to come to this bazaar to sell their handicrafts and buy staple goods," said Amangeldi, 32. "It was beneficial to both communities - on one side [Iran] it helped reduce unemployment, while for the people on the other side, it was the nearest place to come and get basic goods, as the major towns in Turkmenistan are a long way away."

The idea was driven by Iranian officials in a bid to boost border trade and create employment. Initial success after the special zone was launched in 1997 led them to expand the number of shops to around 250, although local Iranian officials say Turkmenistan never delivered on its promises to invest in the project.

Nearly ten years on, the plan has failed due to lack of support from both governments, neither of which has proved keen on freedom of movement in a sensitive border area. Turkmenistan has enforced strict border controls, most directed at its own citizens, which have effectively strangled trade.

Iranian statistics show that fewer than 1,800 people crossed the border at Inche Borun in the first eight months of 2006.

Seven out of ten businesses in the Inche Borun's duty-free market have closed, so that just 40 of the 137 original shops in the bazaar are still functioning. The market opens only on Fridays instead of daily, and the only customers are Iranian nationals, plus the occasional long-distance truck driver heading north into Turkmenistan.

Amangeldi thinks he will be joining the exodus of traders soon.

"I don't know what went wrong on the Turkmen side - they started implementing such strict policies on crossing the border," he said.

Oraz Muhammad, who has just closed the shop he had in the bazaar, explained that ethnic Turkmen from Iran are allowed to travel into Turkmenistan within a 45-kilometre radius of the Inche Borun crossing point. But he said this was not enough, since they would need to travel further to be able to visit major commercial centres. Nor do Turkmenistan's border officials allow the traders to bring bulk consignments of goods out of the country.

Other merchants complained that their own government had failed to sustain the duty-free zone, and water and electricity supplies remained erratic.

A more serious gripe voiced by many was that the Iranian government had failed to pressure Turkmenistan to ease the border controls.

Many see political factors behind the failure of Tehran and Ashgabat to support the scheme over the longer term.

Politically, Iran and Turkmenistan are a world apart - one a Shia theocracy, the other a secular post-Soviet state dominated by the personality cult surrounding idiosynchratic president Saparmurat Niazov. But both governments have made great efforts to get on since Turkmenistan emerged as an independent country.

Their cooperation is pragmatic and focuses on economic links across their long border. In addition, both countries have cool relationships with other neighbours and the wider international community, so they have an interest in remaining on good terms. Because of this, the election of hardliner Mahmoud Ahmedinejad as Iran's president in place of the reformer Mohammad Khatami has not substantially affected the relationship with Turkmenistan.

One local analyst in Gunbad-e-Kavus, who did not want to be named, attributed the decline in official support for the Inche Borun market to a change in personalities at the top in Iran the year the project was launched.

"This was an entirely political project rather than a social or economic one, because the Iranian president at that time [Ayatollah Akbar] Hashemi Rafsanjani was a close friend of President Niazov," he said. "So after Rafsanjani lost the presidential election [to Khatami] in August 1997, the Iranian-Turkmenistan relationship never regained its former warmth."

Other analysts, such as Aziz Ismailzade, an Iranian Turkmen who now lives abroad, say both governments are paranoid about letting any of their citizens travel freely.

"Their reluctance stems from the same reason - the fear factor. Neither [government] wishes to allow its people unfiltered access to outsiders," he said,

Thus, restricting border traffic may have less to do with bilateral relations than with the external pressures both governments are facing over human rights and other concerns.

"Just as pressure on Niazov's regime has increased in recent years, international pressure on Iran is also at a high level because of its nuclear ambitions," said Ismailzade. "This has led both countries to impose unprecedented restrictions on population movement."

Tehran keeps a close eye on its own ethnic Turkmen community, as it does with other minorities on its periphery such as the Azeris and Kurds, for any sign of separatist ambitions. Niazov's nation-building exercise is all about Turkmen identity - but he has taken care not to irritate Tehran by stirring up nationalist sentiment among the Iranian Turkmen.

Burhan Karadaghi, an Iranian historian based in Germany, believes both governments may have concluded that keeping these border communities at a distance from each other may be best for everyone.

"Neither Niazov nor Ahmedinejad is in favour of letting these [Turkmen] people stay in touch. Niazov would feel insecure if the border was wide open, while the Iranian regime would be unhappy if its own own ethnic minority was in contact with kinsmen outside the country," he said.