In another sign that Russian-Turkmen relations may be gradually getting back to normal, Russian cellphone company MTS is set to return to Turkmenistan after an enforced absence of eighteen months.

The company was unceremoniously kicked out at the end of 2010 after the Turkmen authorities refused to renew its licence, which began in 2005. No reason was given for the cancellation, which cut off around half the population (MTS had around 85% market share) and forced them to switch to the state-owned provider Altyn Asyr instead. For ordinary Turkmen citizens, the cutoff had a serious effect on business and social life as the state provider was unable to provide the same coverage.

MTS slammed the move as thinly-disguised expropriation, and filed several lawsuits with international arbitration bodies. Nothing appeared to come of them, and the Russian government chose not to intervene in the dispute. The Turkmen government refused to pay any compensation for the sudden shutdown, saying it had followed legal procedures.

Ashgabat's decision to resume the company's licence is equally mysterious. It seems that the government has realised the inability of Altyn Asyr to cope with the influx of customers. Service is expected to be resumed within three to six months.

The story is in some ways a good encapsulation of the government's approach to handling business. Nominal commitment to foreign investment followed by a sudden and unexplained volte-face, based on a serious miscalculation of domestic capabilities. The one bright spot is the government's willingness to walk back on its bad decision.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2012 Menas Associates