China, The United States, and the Future of Central Asia: U.S.-China Relations, Volume I 9781479809448

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China, the United States, and the Future of Central Asia

U.S.-China Relations Series Edited by David B. H. Denoon

China, the United States, and the Future of Central Asia: U.S.-China Relations, Volume 1 Edited by David B. H. Denoon

China, the United States, and the Future of Central Asia U.S.-­China Relations, Volume I Edited by David B. H. Denoon

NEW YORK UNIVERSIT Y PRESS New York and London

NEW YORK UNIVERSITY PRESS New York and London www.nyupress.org © 2015 by New York University All rights reserved References to Internet websites (URLs) were accurate at the time of writing. Neither the author nor New York University Press is responsible for URLs that may have expired or changed since the manuscript was prepared. ISBN: 978-1-4798-4433-3 (hardback) ISBN: 978-1-4798-4122-6 (paperback) For Library of Congress Cataloging- in- Publication data, please contact the Library of Congress. New York University Press books are printed on acid-­free paper, and their binding materials are chosen for strength and durability. We strive to use environmentally responsible suppliers and materials to the greatest extent possible in publishing our books. Manufactured in the United States of America 10 9 8 7 6 5 4 3 2 1 Also available as an ebook

Contents

Preface and Acknowledgments

vii

Introduction 1. Alternative Views of Central Asia’s Future David B. H. Denoon

3

2. Walls and Windmills: Economic Development in Central Asia

20

3. Factoring the Foreign Policy Goals of the Central Asian States

75

Nazgul Jenish

Marlene Laruelle

The Outside Powers 4. Both Epicenter and Periphery: U.S. Interests in Central Asia

101

5. Chinese and Russian Economic Interests in Central Asia: Comparative Analysis

130

6. The Strategic Interests of China and Russia in Central Asia

154

7. Life after Divorce: Russia, Central Asia, and Two Decades of Tumultuous Relations

173

8. Europe in Central Asia: Political Idealism and Economic Pragmatism

209

9. Japan and Korea in Central Asia: Economic Observations

237

Andrew Kuchins and Shalini Sharan

Li Xin and Xin Daleng Xing Guangcheng

Alisher Khamidov

Sebastien Peyrouse Edward J. Lincoln

v

vi | Contents

10. India’s Objectives in Central Asia

262

11. Ambitions of Grandeur: Understanding Turkey’s Foreign Policy in a Changing World

296

Gulshan Sachdeva

Joshua W. Walker

Regional Integration? 12. Alternative Futures for Central Asia: How Far Will Integration and Cooperation Proceed?

325

13. The Development of the Shanghai Cooperation Organization: The Impact on China-­U.S. Relations in Central Asia

347

14. The Quest for Energy Security in the Central Asian “Neighborhood”

366

Richard Pomfret

Pan Guang

Carolyn Kissane

Conclusion 15. Uncertainty Ahead: China Rising, U.S. Fatigued, and Central Asia Waiting on New Alignments David B. H. Denoon

397

About the Contributors

419

Index

425

Preface and Acknowledgments

There is already a vast and growing literature on U.S.-­China relations. Starting with the Qing Dynasty (1644 – ​1912) and continuing through the Chinese civil war (1934 – ​49) and on to the present, there is a voluminous record of the interaction between Americans and Chinese. Not surprisingly, most of the work deals with bilateral ties: economic, cultural, diplomatic, and military. The most significant change in this relationship has occurred in the past three decades as China changed from an isolated, low-­income country to a major military power with the world’s second-­largest economy. Although China and the United States are economically interdependent, their differences in culture, political system, and history continue to make their interaction complex and often problematic. One of the major goals of the New York University Center on U.S.-­ China Relations is to analyze the current interaction between the two states with the intent of identifying likely future trends. The center is sponsoring research on the linkages between Chinese and American capital markets and the differences between Beijing’s and Washington’s diplomatic styles. In our center’s research, we found one topic that has received only limited analytical attention: how do the United States and China interact in “third regions” where neither is dominant? This issue is significant because the United States is currently the world’s sole superpower and the only country that has major interests in every continent on the globe. It is not clear yet whether China will choose to project its military power beyond Asia, but Beijing has already established its economic profile in Africa, the Middle East, Europe, and Latin America. Moreover, in selected areas where China’s leaders see American policy as contrary to their interests, Beijing has been willing to thwart initiatives from Washington. Sudan, Syria, and Libya are examples where vii

viii | Preface and Acknowledgments

China chose to directly constrain U.S. policy, while North Korea poses a complex case where there have been instances of both cooperation and resistance from Beijing. It is reasonable to assume that China’s influence and global presence will grow over time. Thus, the number of areas where the United States and China operate in proximity to each other will also increase. Hence, it would be useful to see whether we can ascertain consistent patterns in the interaction between the United States and China or whether the nature of the interaction varies considerably, depending upon the region involved. If there is a great deal of consistency in Sino-­U.S. relations in third regions, then precedent and predictability in policy formation become very important. If, however, we find considerable variation in the character and intensity of the relations, then policies can be more ad hoc and designed to fit regional circumstances rather than part of a set, global pattern. To explore the actual situation in distinct third regions, the New York University Center on U.S.-­China Relations has decided to concentrate on three cases: Central Asia, Southeast Asia, and Latin America, and to do a separate volume on each. This volume on Central Asia is the first in this series. *** An edited volume requires the effort and cooperation of many individuals. We were fortunate to have a superb group of chapter writers who, first, discussed our topic at the initial conference and, then, revised drafts as comments and suggestions developed. Thanks to all of them for their insight and patience as we proceeded. There were also many others who helped as the volume progressed. Richard Solomon, J. Stapleton Roy, and Jerome Cohen all provided useful guidance as the book was planned. Subsequently, Nicholas Platt, Donald Zagoria, Donald Rice, James Hsiung, and M. I. Nadiri all made important comments. In addition, Winston Lord and Alexander Cooley read selective chapters and made many useful suggestions, as did two anonymous reviewers. Also, New York University was supportive of the project and I got many helpful leads from Deans Thomas Carew and Michael Laver.

Preface and Acknowledgments | ix

Moreover, throughout the process, Ms. Dongbo Wang was gracious and skillful at keeping the assorted aspects of the book on track. Finally, I want to thank Mr. Wenliang Wang for his encouragement and generous support, and NYU Press for its careful editing of the volume.

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Introduction

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1

Alternative Views of Central Asia’s Future David B. H. Denoon

Overview The collapse of the Soviet Union in 1991 led to the creation of five newly independent states in Central Asia: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Each of these states had been conquered by imperial Russia and subsequently was tightly controlled by the Union of Soviet Socialist Republics. The process of establishing themselves as truly autonomous states has been the central enterprise for these five countries in the last twenty-­two years. The demise of the USSR also led to dramatic changes in the global strategic environment: the Warsaw Pact unraveled, the Soviet Union itself splintered into numerous states, and the Cold War ended. Most of the Western commentary on these developments focused on the reduced military threat and the independence of Belarus, Ukraine, and the states in the Caucasus. Few Westerners knew much about Central Asia, and even fewer followed the halting steps of the Central Asian states toward greater economic and political autonomy. Only after September 11, 2001, when the United States began to use Central Asia as a transit route to Afghanistan, did greater numbers of Americans learn about air bases and truck routes in Central Asia. Also, it was only then that Americans became more aware of Islamist networks spreading from the Middle East and Afghanistan into Central Asia. Roughly simultaneously with the rise of Islamist groups came the rise of China. These two seemingly unrelated historical developments combined together and provided a new platform for the interplay of the United States and China in Central Asia. Though the 1990s were relatively tranquil in military terms, the first decade of the twenty-­first century was a veritable cauldron of turmoil, as the world adjusted to surging Islamist and Chinese capabilities. 3

4 | David B. H. Denoon

So why is it useful to have a volume that links the United States and China and Central Asia? First, China is the only state that has the potential to directly challenge American global leadership. Second, militant Islamist movements are the only nonstate groups that are openly confronting American and Western institutions, and they thrive in Central Asia. Finally, Central Asia is important in its own right because it is the vital fulcrum between the dynamism of East Asia and the wealth and technology in Western Europe. What we do below is briefly survey the literature on bilateral relations between the United States and China, and then, by concentrating on Sino-­American relations inside Central Asia, we will show what is distinctive about this volume. The rise of China has led to a massive outpouring of commentary and analysis. In the past three years alone, there have been at least six major studies dealing with bilateral relations between the United States and China.1 There are many useful perspectives in this literature. Some have emphasized the historical interaction between China and the West, noting that the nineteenth and early twentieth centuries were periods when China was on the defensive and under pressure from outsiders.2 Others, like earlier studies, have stressed the cultural aspects of the sparring between China and the West and the difficulties each side faced in coping with the other.3 Also, during the past two decades, as China’s growth stunned outside observers, much of the discussion between Beijing and Washington has been over trading regimes and how to adjust to China becoming the world’s largest manufactured-­goods exporter.4 In addition, of course, the rapid growth of China’s military capability and Beijing’s new assertiveness on territorial and maritime claims issues with its neighbors have led to major debates about China’s intentions.5 Yet what is notable about Central Asia, in the past two decades, is that China and the United States, despite their problems elsewhere, have pursued different objectives in the region and not had any direct clash of interests.

Alternative Views of Central Asia’s Future | 5

Some of the most significant problems in Central Asia have been developmental ones for the five states. Moving away from centrally planned economies has been resisted by the political elites, who were all trained in Soviet-­style management. Private sector business in Central Asia has been mostly small firms or an occasional quasi-­public company where a well-­connected person got control of a former state enterprise. Since the political elite has little incentive to privatize the remaining large companies, there has been an ongoing standoff between outside donors and advisors (who favor privatization) and most of the current elite.6 Also, it is clear that the political leaders can extract resources from these state enterprises on a predictable basis, whereas a truly independent private sector would resist side payments and even be an alternative source of power.7 Creating real autonomy for the five Central Asian states has also faced serious obstacles. Russia has waxed and waned in its interest in Central Asia since 1991. President Yeltsin wanted to concentrate on internal Russian issues, but President Putin has consistently had a strong concern with the “near abroad.” When the Commonwealth of Independent States concept failed to gain support, Putin then suggested a series of organizations to cement political, economic, and security ties with Central Asia. Moscow proposed and successfully persuaded certain Central Asian states to join the Collective Security Treaty Organization (CSTO), the Eurasian Economic Community (EurAsEC), and the Customs Union Commission (CUC).8 Both the United States and China have made major overtures to Central Asia as well. The United States put effort into encouraging economic integration among the Central Asian countries, but when that foundered on friction between Kazakhstan and Uzbekistan, Washington has stressed bilateral efforts at economic assistance and defense cooperation.9 China’s programs in Central Asia have been predominantly economic, though its signature effort, the Shanghai Cooperation Organization (which includes four Central Asian states plus Russia as members) has recently begun to discuss security issues, notably Islamic militancy.10 In addition, each of the Central Asian states has ethnic divisions that make creating a unified state difficult.11 These ethnic differences

6 | David B. H. Denoon

are particularly prominent in Kyrgyzstan and Uzbekistan. These long-­ standing frictions are now exacerbated by the rise of militant Islam and have led to outbreaks of violence and government crackdowns in Kazakhstan, Kyrgyzstan, and Uzbekistan.12

Major Themes of This Volume 1. China and the United States are not currently in conflict or experiencing direct friction in Central Asia because they have different objectives and interests. Washington’s principal concerns are military and relate to supplying U.S. and NATO troops in Afghanistan. The major concerns of the Chinese are economic and relate mostly to ensuring access to oil and gas supplies in Kazakhstan and Turkmenistan. Beijing’s major military worry in Central Asia is Islamic protest and organization directed at Xinjiang. In this latter regard, America and China are aligned in the desire to limit the spread of militant Islam. 2. If there is any power that is competing with the United States for strategic influence in Central Asia, it is Russia. Key members of the Russian leadership want to reassert Moscow’s influence in Central Asia, and they see the post-­2001 role of the United States in Tajikistan and Kyrgyzstan especially as inimical to Russian interests. 3. Since it is unclear whether the United States will try to maintain a presence in Central Asia after the NATO withdrawal from Afghan­ istan in 2014, the less powerful states on the periphery of Central Asia are waiting for an opportunity to increase their influence. India, Pakistan, Iran, and Turkey each have some ambitions in Central Asia and are maneuvering to test out what roles they can play. 4. Thus, we are in a waiting period, during which the Central Asian states themselves are pursuing their respective policies to ensure their autonomy, while the outside powers are calculating how to position themselves for the changing strategic environment in Central Asia. We will return to each of these themes in the balance of this chapter and in the body of this volume as different authors examine Central Asian developments in depth.

Alternative Views of Central Asia’s Future | 7

Why Is Central Asia Significant by Itself? In the nineteenth century, Central Asia was the region of the “Great Game” — ​the ongoing contest between the British, from their base in India, and imperial Russia, from its contiguous territory.13 This British-­ Russian competition was significant then not only because of the resources expended but because leaders in St. Petersburg and London saw this as part of a global balancing effort. Britain’s influence was rising, while Russia’s was gradually declining, and the contest was capped by Russia’s humiliating naval defeat by Japan in 1905. Ironically, after World War I, although imperial Russia had collapsed, the Soviet Union was able to re-­infuse itself into Central Asia and fully incorporate Central Asia as five provinces of the USSR. By the start of World War II, one of Germany’s central goals was to expand southeast into the Caucasus and east into Ukraine and Central Asia to gain control of the farmland and hydrocarbons there. Thus, we see major strategic choices that were made between 1850 and 1945 playing themselves out in Central Asia or its periphery. Britain’s naval power was a key inspiration for A.  T. Mahan’s book The Influence of Sea Power upon History, whereas Harold Mackinder and Nicholas Spykman stressed the importance of controlling land and the Eurasian heartland as a pivot point between Europe and Asia.14 Yet it was the combination of land and naval power in Britain’s favor that explained the shift in global balances of that period. Although the Nazi-­ Soviet Pact of 1939 briefly gave Germany potential access to oil in the Caucasus, once Hitler and Stalin were at war, the Eurasian heartland became a key objective for German attacks. The tenacity of the USSR during World War II meant that Germany never succeeded in controlling the Caucasus and Central Asia, and Moscow was able to preserve its dominance there until 1991. However, as Zbigniew Brzezinski notes, “two aspirants to global power, Adolf Hitler and Joseph Stalin, explicitly agreed that America should be excluded from Eurasia. Each realized that the injection of American power into Eurasia would preclude his ambitions regarding global domination.”15 We see a somewhat analogous situation today, where neither Russia nor China wants the United States to stay in Central Asia after NATO’s departure from Afghanistan.

8 | David B. H. Denoon

Obviously Eurasia is a wider area than Central Asia, and it now includes China and Japan as well as Europe. Nevertheless, Central Asia is the linchpin between Asia and Europe. Thus, keeping Central Asia autonomous is vital to preventing any one power gaining dominance in Eurasia. Thus, Central Asia’s first critical feature is its location. Central Asia’s second vital asset is its hydrocarbon resources. Kazakhstan has 30 billion barrels of oil reserves. Although this is only one-­eighth of the proven reserves in Saudi Arabia, it is worth roughly $2.5 trillion at current world prices, after expenses for extraction. This is, clearly, enough to create a sizable annual annuity for each Kazakh. At a similar level of importance is Turkmenistan’s natural gas, estimated at 265 trillion cubic feet.16 Turkmenistan’s gas reserves put it in the world’s top five potential producers. It is also worth noting that Kazakhstan’s and Turkmenistan’s abundance of resources is in contrast to the relative paucity of hydrocarbons in the other three Central Asian states. Central Asia’s third distinctive feature is not an asset. It is a dilemma: movements that seek to establish Islamist governments.17 These movements grow out of religious fervor and assorted grievances and have led to underground activities and violent protests in Kazakhstan, Kyrgyzstan, and Uzbekistan. In addition, Tajikistan had what amounted to a civil war in the early and mid-­1990s.18 So Central Asia has key advantages in its location and natural resources, but is a tinderbox where political instability could surface at any time. Also, because Central Asia borders on Afghanistan and Pakistan, there is no question that instability could stem from inside Central Asia leading out or the reverse.19 The biggest uncertainty facing Central Asia is what will happen when Western forces leave Afghanistan. The major powers (the United States, China, and Russia) realize that they cannot control Central Asia as do the regional powers on its periphery. At present, the object of all these states is to gain influence and prevent any single other power from gaining a dominant position. Before turning to the roles of the outside powers, we will provide more background on the trends inside the Central Asian states.

Alternative Views of Central Asia’s Future | 9

Inside Central Asia: Four Major Processes Under Way Since 1991, establishing autonomy and new identities separate from Russia has been the key objective of all the Central Asian states. Russian imperial and Soviet domination of Central Asia created a very complex interaction between the capital and its dependencies. Central Asian elites took Russian names, were educated in Moscow, and created a myriad of business and personal relationships.20 Yet a strong desire to be independent and to chart its own course led each Central Asian state to choose a slightly different path. Kazakhstan, with its vast oil reserves, has been the most confident about its bargaining power with Moscow and thus often willing to collaborate closely with its former colonial ruler. At the other extreme is Turkmenistan, which has chosen a starkly isolationist path. Kyrgyzstan, with its small size and concerns about being coerced by its Central Asian neighbors and China, has often openly sided with Moscow.21 Tajikistan has been willing to tolerate Russian troops on its soil, due to its perilous internal security situation, while Uzbekistan has shifted back and forth between support for and vehement opposition to Russian influence.22

Reconfiguring Their Economic Development Strategies When they were part of the Russian Empire or the Soviet Union, the Central Asian states were essentially agricultural and raw material suppliers for their overlords. Kazakhstan was notable for its cotton and oil, while Uzbekistan’s Ferghana Valley was a fertile source of many fruits and grain crops. The situation today is now far more diverse.23 Kazakhstan has leveraged its hydrocarbon resources to launch a range of industries; Turkmenistan is in the process of developing gas-­related projects; Tajikistan is broadening its agricultural base; Kyrgyzstan has become an entrepôt between China and Central Asia; and Uzbekistan is promoting itself as the central state for communications and transportation with the Central Asian region.24 The Central Asian states question whether they can build steadily on their efforts toward greater economic diversity. As mentioned, most of the early leadership in post-­1991 Central Asia had been trained in

10 | David B. H. Denoon

Moscow and favored centrally led economies for a variety of reasons. Direction from the center made political control and patronage easier, facilitated the extraction of resources from enterprises, and kept opponents marginalized. The problem is that it is generally inefficient. Hence, Western economists have usually recommended partial or full privatization and linking states with the world trading system as a means for encouraging efficiency.25 Yet political control and gaining economic advantages for leaders have generally gotten top priority in Central Asia. This means that economic modernization has often been a secondary objective.26

Dealing with Internal Unrest, Separatism, and Islamist Groups As noted above, Islamist and separatist groups have become increasingly able to challenge established governments in Central Asia.27 Except for Kyrgyzstan, which has alternated between riots and voting as a means to change leadership, the Central Asian states have had authoritarian rulers throughout their post-­1991 independence period. Kazakh president Nursultan Nazarbaev and Uzbek president Islam Karimov ascended directly to power from their positions as Soviet party leaders and have brooked no opposition since. President Emomali Rahmon of Tajikistan represents a similar form of secular, authoritarian leader. Ironically, only in Turkmenistan, which is the most isolated of the Central Asian states, has there been a peaceful transition of power since 1991; when President Saparmurat Niyazov died in 2006, Gurbanguly Berdimuhamedov emerged, after private maneuvering, to claim the presidency. Berdimuhamedov has not been openly challenged since. Thus, in four of the five states of Central Asia we have a general pattern: authoritarian, secular leaders run societies that are overwhelmingly Muslim. This creates an inherent tension between the values of the public and those of the leadership. In those cases where there is radical Islamic organizational ability that the governments cannot completely suppress, periodic uprisings occur.28 In the one democratic state, Kyrgyzstan, there is more freedom of expression but a deep ethnic split between the Kyrgyz majority and Uzbek minority.

Alternative Views of Central Asia’s Future | 11

Hence, it is reasonable to surmise that Central Asia has more political instability ahead. Presidents Nazarbaev and Karimov are in their seventies, so future aspirants to power will be positioning themselves; and throughout the region, the rise of militant Islam will challenge secular governments. There have not yet been general uprisings in Central Asia like the “Arab Spring” revolts of 2011 – ​2012, but they cannot be ruled out as a possibility.

Determining How to Deal with Regional Powers on Their Periphery Below we will analyze in greater detail how the Central Asian states deal with the major powers, but it is first worth noting that the “regional powers” on their periphery pose both risks and opportunities. At various times in the past two decades, both Iran and Turkey have made efforts to expand contacts and influence in Central Asia.29 Neither of these has been particularly successful recently, but there are strong cultural and ethnic ties as well. Many of the languages in Central Asia are Turkic in origin, whereas Tajik is based on Persian. This, plus the different models of Islam that Turkey and Iran represent, also provides inspiration for links to the region’s middle powers.30 The regional power with the most intent and capability to affect Central Asia is India.31 Strategists in New Delhi have two major objectives in Central Asia: gaining access to the hydrocarbons and preventing Pakistan from forming a broad Islamic coalition against India. Obtaining Central Asian oil and gas would reduce India’s dependence on Iran and the Middle East; thus the appeal of the proposed Turkmenistan — ​Afghan — ​Pakistan — ​India (TAPI) pipeline. The problem is that no company will build the TAPI line without a secure peace in Afghanistan and improved relations between Pakistan and India. However, even if the TAPI pipeline is not built, India would still like to have good relations with Central Asia so that it is not facing united northern Islamic antagonism.32 India has therefore put substantial resources into aid for Afghanistan, offers various aid programs to Central Asian states, and has achieved observer status in the Shanghai Cooperation Organization. This has not yet yielded close ties in

12 | David B. H. Denoon

Central Asia, but its minimum objective has been achieved as India does not find itself excluded from the region.

The Outside Major Powers: Russia, the United States, and China Russia’s long-­term involvement in Central Asia has created both opportunities and drawbacks for its current policies. As mentioned, the long-­ term involvement means that there are close personal contacts with most of the current leadership in Central Asia, ease of communication in Russian, and, in many cases, common approaches to issues.33 On the other hand, in those situations where the Central Asian decision maker has had negative experiences dealing with Moscow, the historical legacy can be a hindrance to current relations. After the demise of the Soviet Union, President Yeltsin took little interest in Central Asia, and many of the leaders there felt abandoned. President Putin has reversed that stance and placed significant emphasis on “Russia’s near abroad,” which includes Eastern and Southern Europe as well as Central Asia.34 The dilemma for the Central Asian states is that Putin’s embrace often comes with a price: increased dependence on Russia.35 Moscow has tried to prevent the Central Asian governments from signing pipeline deals that moved gas or oil without going through Russia. Moscow has also pressed the Central Asian states to cooperate in national security arrangements or in aligning with Russian positions on controversies that many in Central Asia found unacceptable. This has been particularly true regarding Russia’s stance on Georgia and North Ossetia.36 Putin certainly recognizes that the United States will have trouble maintaining its influence in Central Asia after NATO’s fighting units depart from Afghanistan, so many see his efforts as directed toward picking up the pieces after the thirteen-­year American interregnum ends. The United States faces serious intervention fatigue after its wars in Afghanistan and Iraq. At the start of these wars, few foreign affairs specialists and even fewer of the American public would have anticipated that U.S. troops would spend nine years in Iraq and almost a decade and a half in Afghanistan at a terrible human and financial cost. Thus, the public sentiment in the United States is strongly against further commitments of forces or aid in the Middle East and Central Asia. For example,

Alternative Views of Central Asia’s Future | 13

this experience is surely inhibiting President Obama from making any large-­scale commitments to intervene in Syria. Nevertheless, the question remains: What role will the United States assume in Central Asia “after Afghanistan”?37 First of all, there may be several Central Asian states that want the United States as a balancer against growing Russian and Chinese influence. Uzbekistan and Kyrgyzstan are both states that see their neighbors as problematic and may want an outside friend, if not ally.38 Tajikistan may fit in this category as well if Afghanistan devolves into a decentralized state with the Tajik “northern alliance” seeking protection from the Pushtun majority in the south. Also, there may be purely pragmatic regimes that see financial benefits from allowing American use of their roads, rails, or airports.39 This may have already played a part in the cooperation with the U.S. Northern Distribution Network (NDN), which channels supplies through Central Asia to Afghanistan. Moreover, even though Turkmenistan has been strictly neutral and isolationist, it has chosen to let China be a major developer of its gas reserves. This has been a source of irritation to Russia but an indication that policy makers in Ashgabat see merit in diversifying their potential supporters. The effort to countervail the influence of Russia with China might even motivate Turkmenistan to see the benefit of ties with the United States.40 Nevertheless, the current gridlock in Washington and inability to agree in the Congress on broad goals for foreign policy make it unlikely that there will be American support for an interventionist and broad-­ gauged role in Central Asia. That means that policy makers in Washington may end up focusing on narrower goals, such as countering Islamic militant groups and maintaining sufficiently good relations with some Central Asian states so that U.S. forces can gain access in critical situations. Yet the more ambitious objectives of promoting democracy and transparent government (which characterized American policy in the 1990s) seem unattainable and a relic of the past. Clearly, the most enigmatic outside power today in Central Asia is China. Although official Chinese policy emphasizes the importance of Central Asia, Beijing is actually keeping a very limited profile. China has become the world’s second-­largest oil importer at 5.5 million barrels

14 | David B. H. Denoon

a day in 2011. Only about 5 percent of that oil comes from Central Asia (Kazakhstan), but once the Turkmenistan gas is flowing at full capacity, Central Asia may be supplying a sizable percentage of China’s hydrocarbon imports. This is critical to Beijing’s overall energy security plans because Central Asian imports come directly to China and are not subject to interdiction in the Persian Gulf, in the Indian Ocean, or in Southeast Asia. Thus, it is understandable that Beijing wants to pursue a low-­keyed approach to energy acquisition that keeps China out of the limelight. Yet China’s broader objectives, of shaping developments in neighboring states, limiting the spread of Islamic fundamentalism into Xinjiang Province, and balancing Russia’s influence in Central Asia, cannot be achieved with its current low-­profile stance.41 There are ample indications that China is confident about balancing Russia and working with Moscow to limit the influence of the United States and Europe in Central Asia. The question of how to deal with Islamic fundamentalism poses a more complex challenge. At present, China is content to have the United States take the lead in dealing with Muslim terrorists.42 China has enough problems with its own Uighurs (mostly in Xinjiang) that it does not want to antagonize Muslims in Central Asia who could be a source of training and financial support for dissidents inside China. Also, China has worked diligently to keep good relations with both Sunnis and Shias in the Muslim world. Beijing needs Iranian oil, so has been unwilling to take a stance against the Assad regime in Syria, which is aligned with Tehran. Moreover, ties with Shia states give China acceptable relations with Hezbollah in Lebanon and Gaza as well. Nevertheless, China’s most important relations in the Muslim world are with the Sunni regimes in Saudi Arabia and Pakistan. Saudi Arabia is China’s largest supplier of imported oil, as it provides almost twice the annual amount supplied by Iran. Also, given Saudi Arabia’s role in the Sunni community, China is careful not to antagonize Riyadh’s partners as well. Yet Pakistan is even more critical to China because of Islamabad’s role in balancing India. Pakistan’s presence preoccupies India and keeps New Delhi facing northwest, not northeast toward China.43 Since 1998, when Pakistan successfully tested nuclear weapons, India has been

Alternative Views of Central Asia’s Future | 15

thwarted in its ability to coerce Pakistan, and that frees China to focus on its expanded relations with Bangladesh, Sri Lanka, and Myanmar, all littoral states on the Bay of Bengal. Although Beijing and New Delhi have cordial relations for public consumption, leaders in both states know that each represents the main regional rival to the other. At the broadest strategic level, China’s principal foreign policy concern remains the United States.44 Beijing has not yet revealed to the world how active its long-­term foreign policy will be. At present China is satisfied to play a relatively low-­keyed role in Central Asia, to balance its relations between Sunni and Shia states in the Middle East, and to expand its ties with the states surrounding India. All of these moves will give Beijing options in the future, but China cannot please all of these states indefinitely. If there is greater turmoil in Central and South Asia when U.S. and NATO forces leave Afghanistan, China will need to decide whether it is willing to intervene to play a stabilizing role. Otherwise, China will need to cede the role of aspiring outside powers to Iran, India, Pakistan, and Russia, each of which has shown interest in greater influence in Central Asia. In the subsequent chapters of this volume, each of the authors will examine aspects of Central Asia’s development from their particular perspective. Then, in the concluding chapter, the editor will summarize the basic findings and evaluate the extent to which common themes are found in all the chapters.

Organization of the Volume The “Overview” section of the book provides the basic rationale for the volume and a survey of the principal economic and foreign policy issues facing Central Asia. The chapter by Nazgul Jenish highlights the very significant differences in resource endowment and levels of development within Central Asia. The chapter also demonstrates that Central Asian governments and their state-­owned enterprises frequently mis­allocate funds and divert resources to private uses. This pattern of closely held, self-­aggrandizing actions is evident, as well, in Marlene Laruelle’s analysis of the foreign policies of the Central Asian states. In the section entitled “Outside Powers,” each of the authors comments on the notable success of the Central Asian states in establishing

16 | David B. H. Denoon

their autonomy after independence in 1991. Although Russia is deeply ambivalent about this Central Asian autonomy, China, the United States, and the European Union each have their own reasons to encourage it. In addition, Japan, India, and Turkey would each like more influence in Central Asia, but do not yet have the right circumstances to move from being marginal to major players there. In the “Regional Integration” section, the authors identify the reasons why Central Asian economic ties are more with outside states than within the region. As Richard Pomfret illustrates, all of the Central Asian states are natural resource or agricultural exporters, and manufacturing is still limited within the region. Also, since the major wealth in Central Asia is in oil in Kazakhstan and natural gas in Turkmenistan, there is no simple process to encourage enhanced intra-­regional trade. Finally, as Pan Guang notes, the Shanghai Cooperation Organization (SCO) has the potential to encourage regional integration, but its efforts to date have been more political than economic. The concluding chapter identifies areas of consensus and difference among the volume’s authors. In addition, it comments on the likely impact of the U.S. withdrawal from Afghanistan and growing efforts at cooperation between China and Russia. Notes 1.  S. Lawrence and T. Lum, “U.S.-­China Relations: Policy Issues” (Congressional Research Service, Washington, D.C., 2011); K. Lieberthal and Wang J., Addressing U.S.-­ China Strategic Distrust, Thornton China Center Monograph Series 4 (Washington, D.C.: Brookings Institution, 2012); M. Swaine, America’s Challenge: Engaging China in the Twenty-­First Century (Washington, D.C.: Carnegie Endowment for Inter­national Peace, 2011); A. J. Tellis, T. Tanner, and J. Keough, eds., Strategic Asia 2011 – ​12: Asia Responds to Its Rising Powers — ​China and India (Seattle, WA: National Bureau of Asian Research, 2011); Yuan Peng, “Strategic Thinking on Constructing a New Sino-­ American Relationship,” Contemporary International Relations, no. 5 (2012); Zhu Feng, “Obama Administration’s Strategy of ‘Pivot to Asia’ and Sino-­American Relations,” Contemporary International Relations, no. 4 (2012). 2.  H. Harding, A Fragile Relationship: The United States and China since 1972 (Washington, D.C.: Brookings Institution, 1972). 3.  L. Pye, The Spirit of Chinese Politics (Cambridge: MIT Press, 1968). 4.  For an early discussion of this issue, see Nicholas Lardy, Integrating China into the Global Economy (Washington, D.C.: Brookings Institution, 2002).

Alternative Views of Central Asia’s Future | 17

5.  For an overview of this debate, see chapters 1 – ​3 in A. Friedberg, Contest for Supremacy (New York: Norton, 2011). 6.  For an overview of this debate, see O. Dmitrieva, Regional Development: The U.S.S.R. and After (London: UCL Press, 1996). 7.  K. Darden, “The Integrity of Corrupt States: Graft as an Informal Institution,” Politics and Society 36, no. 1 (March 2005): 35 – ​60. 8.  A. Cooley, Great Games, Local Rules: The New Great Power Contest in Central Asia (Oxford: Oxford University Press, 2012), 55 – ​60. 9.  O. Oliker and D. Schlapak, U.S. Interests in Central Asia: Policy Priorities and Military Roles (Santa Monica, CA: RAND, 2005). 10.  For an overview of China’s program in Central Asia, see the chapters in this volume by Li Xin and Xin Daleng, Xing Guangcheng, and Pan Guang. 11.  P. Jones Luong, ed., Institutional Change and Political Continuity in Central Asia (New York: Cambridge University Press, 2002). 12.  G. Sullivan and B. Hayes, Blacklisted: Targeted Sanctions, Preemptive Security, and Fundamental Rights (Berlin: European Center for Constitutional and Human Rights, 2009). 13.  For a discussion of the lingering effects of the Great Game, see Cooley, Great Games, Local Rules. For a history of the nineteenth-­century actions, see K. Meyer and S. Brysac, Tournament of Shadows: The Great Game and the Race for Central Asia (New York: Basic Books, 2006). 14.  A. T. Mahan, The Influence of Sea Power upon History, 1660 – ​1805 (1890; reprint, Mineola, NY: Dover, 1987); H. Mackinder, “The Geographical Pivot of History,” Geographical Journal 23, no. 4 (1904): 421 – ​37; and N. Spykman, The Geography of the Peace (New York: Harcourt Brace, 1944), 60. 15.  Z. Brzezinski, The Grand Chessboard (New York: Basic Books, 1997), xiv. 16.  See Carolyn Kissane’s chapter in this volume, which covers the hydrocarbon issues in Central Asia in detail. 17.  E. McGlinchey, Chaos, Violence, Dynasty: Politics and Islam in Central Asia (Pittsburgh: University of Pittsburgh Press, 2011). 18.  For a discussion of these movements and the efforts to suppress them, see D. Marty, “Alleged Secret Detentions and Unlawful Inter-­state Transfers of Detainees Involving Council of Europe Member States” (report prepared for the Council of Europe Parliamentary Assembly, June 12, 2006). 19.  R. Weitz, “Averting a New Great Game in Central Asia,” Washington Quarterly 29, no. 3 (Summer 2006): 155 – ​67. 20.  To see the effect of this pattern on current Central Asian foreign policy, see Marlene Laruelle’s chapter in this volume. For the historical period, see P. Golden, Central Asia in World History (New York: Oxford University Press, 2011). 21.  S. Radnitz, Weapons of the Wealthy: Predatory Regimes and Elite-­Led Protests in Central Asia (Ithaca: Cornell University Press, 2010). 22.  A. Rashid, Jihad: The Rise of Militant Islam in Central Asia (New Haven: Yale University Press, 2002).

18 | David B. H. Denoon

23.  R. Pomfret, The Central Asian Economies since Independence (Princeton: Princeton University Press, 2006). 24.  World Bank, “Bazaars and Trade Integration in CAREC Countries” (report by S. Mitra, B. Kaminski, and M. Kholmatov, World Bank, Washington, D.C., 2009). 25.  J. Linn, “Connecting Central Asia with the World,” Journal of Emerging Market Economies 1 (2009): 241 – ​58. 26.  E. Marat, The Military and the State in Central Asia: From Red Army to Independence (New York: Routledge, 2009). 27.  T. Simmons, Eurasia’s Frontiers: Young States, Old Societies, Uncertain Futures (Ithaca: Cornell University Press, 2008). 28.  S. Jones and O. Oliker et al., Securing Tyrants or Fostering Reform? U.S. Security Assistance to Repressive and Transitioning Regimes (Washington, D.C.: RAND, 2006). 29.  See the Joshua W. Walker’s chapter in this volume for a discussion of Turkey’s assorted efforts in Central Asia. 30.  E. Kavalski, The New Central Asia: The Regional Impact of International Actors (Singapore: World Scientific, 2010). 31.  See Gulshan Sachdeva’s chapter in this volume for a detailed review of India’s interests and activities in Central Asia. 32.  S. Moore, “Peril and Promise: A Survey of India’s Strategic Relationship with Central Asia,” Central Asian Survey 26, no. 2 (September 2007): 279 – ​91. 33.  A. Tsygankov, Russia’s Foreign Policy: Change and Continuity in National Identity, 2nd ed. (New York: Rowman and Littlefield, 2010). 34.  J. Mankoff, Russian Foreign Policy: The Return of Great Power Politics (New York: Rowman and Littlefield, 2009). 35.  B. Lo, Vladimir Putin and the Evolution of Russian Foreign Policy (London: Royal Institute for International Affairs and Blackwell, 2003). 36.  L. Mitchell, Uncertain Democracy: U.S. Policy and Georgia’s Revolution (Philadelphia: University of Pennsylvania Press, 2009). 37.  See Andrew Kuchins and Shalini Sharan’s chapter in this volume for a detailed assessment of this question. 38.  S. Akbarzadeh, Uzbekistan and the United States: Authoritarianism, Islamism, and Washington’s Security Agenda (New York: Zed, 2005). 39.  “Strategic Blind Spots in the Department of Defense’s Fuel Contracts in Kyrgyzstan” (Report of the Majority Staff, Subcommittee on National Security and Foreign Affairs, Committee on Oversight and Government Reform, U.S. House of Representatives, December 2010, Washington, D.C.). 40.  C. Fitzpatrick, “Is the U.S. Violating Turkmenistan’s Neutrality with the NDN?,” EurasiaNet, August 1, 2010. 41.  For an overview of China’s expanding international presence, see R. Sutter, “China’s Growing International Role,” in International Politics in Times of Change, ed. N. Tzifakis (New York: Springer, 2012), 117 – ​34. 42.  Wu Xinbo, New Landscape in Sino-­U.S. Relations in the Early 21st Century (Shanghai: Fudan University Press, 2011).

Alternative Views of Central Asia’s Future | 19

43.  F. Frankel and H. Harding, eds., The India-­China Relationship: What the United States Needs to Know (New York: Columbia University Press; Washington, D.C.: Woodrow Wilson Center Press, 2004). 44.  Wang Fan, “Asymmetrical Interdependence and Cooperative Pressing: Adjustment of the U.S.’s Strategy toward China,” World Economy and Politics, no. 12 (2010).

2

Walls and Windmills Economic Development in Central Asia Nazgul Jenish When the wind changes direction, there are those who build walls and those who build windmills. —Old Chinese proverb

Introduction Nestled in the heart of the Eurasian continent, Central Asia1 is a key geographic nexus between the world’s most dynamic economies of China, India, and Russia. Within this nexus lies an intricate knot of geopolitical, economic, and security challenges and opportunities that may shape the future of the entire continent. Since ancient times, Central Asia’s location at the crossroads of Asia and Europe has largely determined its role and interaction with the rest of the world. From early antiquity to the High Middle Ages, Central Asia was a land of nomadic tribes that generated waves of massive human migration sweeping across Asia and Europe: the Scythians and Sarmatians (eighth to third centuries BC), the Huns (third to fourth centuries AD), the Turks (sixth to eleventh centuries AD), and the Mongols (twelfth to thirteenth centuries AD). After its unification under the Mongol Empire, this epicenter of human tsunami turned into a major transit center for the flow of goods between China and Europe. Traversing Central Asia east to west, the Silk Road served as the land bridge connecting China with Europe. The trade on the Silk Road waned with the disintegration of the Mongol Empire in the fourteenth century. The spin-­offs of the Mongol Empire in Central Asia — ​Bukhara, Khiva, and Kokand Khanates — ​became a buffer zone between the Russian and 20

Walls and Windmills | 21

British Empires in the nineteenth century. They were subsequently conquered by the Russian Empire. This period is widely known as the “Great Game” — ​geopolitical rivalry of the Russian and British Empires for supremacy in the region. The collapse of the Soviet Union in 1991 turned a new page in the history of Central Asia, and brought it again to the forefront of international attention. But this time, in addition to its geostrategic salience, Central Asia has assumed considerable economic importance due to its fabulous mineral wealth. The region is endowed with abundant reserves of oil, natural gas, gold, aluminum, uranium, and rare earth metals. Given the rising demand for hydrocarbons and instability in the Middle East, China and Europe are turning more and more to Central Asia to secure and diversify their hydrocarbon supplies. Moreover, Central Asia’s geostrategic and security relevance has become even more pronounced with the establishment of a network of U.S. and NATO bases on its territory as well as the launching of the Northern Distribution Network, a vital supply route supporting the war in Afghanistan. Against this backdrop, sustained socioeconomic development and stability in the region are key to the political and economic security of the Eurasian continent. This chapter examines recent developments in the socioeconomic situation in the five Central Asian states of the former Soviet Union, with a particular focus on the relations of these countries with China. The main issues addressed are (1) whether the hitherto rapid economic growth in the region will persist into the future; (2) the challenges and opportunities for the region’s development, and the role of China in this process; and (3) the potential for the economic integration of Central Asia. Our answer to the first question is largely negative. Structurally, the Central Asian economies have seen a lopsided development of a few commodity-­exporting sectors, and the high growth rates have mainly been driven by surging demand and prices in these sectors. In contrast, the share of higher-­value-­added, capital-­and technology-­intensive industries remains very modest; the hefty natural resource rents have not brought an industrial revival to the region. Furthermore, the region is cursed with one of the most prohibitive transportation costs in the world due to its landlocked location. The cost of exporting for Central Asia is six times that for China and Vietnam, and more than twice

22 | Nazgul Jenish

that for Southeastern European countries.2 Thus, the highly skewed structure of the Central Asian economies and high transportation costs jeopardize their medium-­and long-­run growth prospects. In the short run, the region’s growth is likely to be moderate, reflecting the slackening commodity demand and general economic slowdown in the world. In particular, Kazakhstan’s GDP growth decelerated from 7.5 percent in 2011 to 5.8 percent in 2012, and was expected to remain around 5 percent in 2013 and 2014. Growth in Turkmenistan was forecast to slow after 2012.3 Moreover, poor governance, pervasive corruption, and rising social tensions pose a serious threat to sustained socioeconomic development in the region. In particular, the governance situation is deplorable, and corruption is rampant. The global financial crisis has further intensified social polarization in the region. The public funding of education and health care is low compared to other transition economies, despite the substantial natural resource rents. Some selected socioeconomic indicators for the Central Asian countries are summarized in table 2.4 in the appendix. At the same time, the Central Asian countries have made considerable progress in integrating into the world economy. Both economically and politically, they have pursued a “multi-­vector” strategy of engaging with all significant international players to balance the influence of their big neighbors. Nowhere has the “multi-­vector” strategy of the Central Asian states manifested itself so graphically as in their oil and gas policy, with new pipelines built in all directions. However, the direction of the resultant vector has recently shifted to the east, with China outflanking Russia and Europe as the largest market for Central Asian hydrocarbons. This shift in the regional energy vector may tilt the overall geopolitical center of gravity in the same direction. While the Central Asian countries became more integrated into the global economy, they drifted more and more away from each other. The Central Asian countries seem to have been erecting walls between themselves with the same vigor as they have been building pipelines to harness winds of opportunity blowing from China. While the overall trade of the Central Asian countries has significantly expanded, the share of intra-­regional trade in total trade has been continuously declining due to various protectionist measures, weak infrastructure, and customs and

Walls and Windmills | 23

transit bottlenecks. Regional integration has also been hindered by territorial disputes and tensions over water and energy.

Economic Performance in 2000 – ​2008 None of the five Central Asian countries endeavored independence, and they were very poorly prepared for it when it occurred. The collapse of the Soviet Union brought severe blows to these countries. First, the common ruble zone persisted until the fall of 1993, but without any monetary discipline whatsoever. As a consequence, the whole region was caught in hyperinflation in 1993, ranging from 885 percent in Uzbekistan to 9,750 percent in Turkmenistan.4 Second, substantial Soviet budget subsidies of about one-­tenth of GDP of each country ceased.5 Third, the old Soviet trade system collapsed in the course of 1991 – ​1994, while hardly any new trade could develop, since both the payments and trade systems lay in tatters. Trade and transportation were all the more difficult in this region, since all these countries are profoundly landlocked. As a consequence, all the Central Asian countries faced horrendous declines in output. Kazakhstan, Kyrgyzstan, and Uzbekistan hit their nadirs in 1995, Tajikistan in 1996, and Turkmenistan only in 1997. The cumulative official declines in GDP from 1989 amounted to 19.5 percent in Uzbekistan, 35.8 percent in Turkmenistan, 39.2 percent in Kazakhstan, 46.9 percent in Kyrgyzstan, and 64.2 percent in Tajikistan.6 These declines were exaggerated by poor measurement in the transition, but output declines were great. A precondition for new economic growth everywhere was macro­ economic stabilization. Inflation had to fall to the double digits. Kazakhstan, Kyrgyzstan, and Tajikistan became market economies, while Turkmenistan and Uzbekistan largely restored their centralized state-­run economies. The inconsistencies of economic systems greatly impeded revival of regional trade and economic integration.7 The differences in output decline can, to a considerable extent, be explained by the terms of trade for their major exports. Uzbekistan was saved by high cotton prices in the 1990s, while Turkmenistan and Kazakhstan had plenty of natural gas and oil.8 Kyrgyzstan and Tajikistan had no major exports, and Tajikistan was devastated by civil war in the early 1990s.

24 | Nazgul Jenish

Economic Growth After a decade of severe economic hardship following the collapse of the Soviet Union, the Central Asian states experienced an impressive economic growth in 2000 – ​2008. Although from a low base, the growth averaged 9 percent per year, the highest for any region in the world. Rates of growth varied across the countries. The growth leaders were Turkmenistan and Kazakhstan, with average annual GDP growth rates of 14 percent and 9.5 percent, respectively, while the worst-­performing was Kyrgyzstan, with an average growth of 5 percent (see figure 2.1). The sectorial contributions to growth are depicted in figures 2.13 – ​2.17 in the appendix. This spectacular growth was propelled by a combination of three different factors, including high commodity prices, ample unutilized production capacity and human capital inherited from the Soviet Union, and market reforms and improved macroeconomic management. But this was most of all a commodity boom. The high aggregate growth rates mask important country-­level differences. The main distinction between the region’s countries lies in their energy sectors. Three of the five countries — ​Kazakhstan, Turkmenistan, and Uzbekistan — ​are net exporters of oil and natural gas, while Kyrgyzstan and Tajikistan rely on hydrocarbon imports. This key

Figure 2.1. GDP growth rate (%). Source: International Monetary Fund, World Economic Outlook.

Walls and Windmills | 25

feature explains the differences in the pattern of economic development across the region. High oil and gas prices were the growth drivers in Kazakhstan, Turkmenistan, and, to a lesser extent, Uzbekistan, which began expanding its hydrocarbon exports relatively recently. In addition, Uzbekistan derives a sizeable share of its income from cotton and gold exports. The growth in Kyrgyzstan was led by gold production and the agricultural sector, while the growth in Tajikistan was associated with aluminum and cotton exports. These two countries together with Uzbekistan also benefitted from migrant worker remittances coming from Russia.9 Finally, market reforms and sound macroeconomic policies also contributed to the economic expansion of Kazakhstan, Kyrgyzstan, and Tajikistan. These countries had undertaken substantial market reforms and entered the new millennium with predominantly private ownership and reasonable macroeconomic stability. According to the EBRD (European Bank for Reconstruction and Development), their private sectors generated 65, 75, and 55 percent, respectively, of their GDP in 2010.10 The private sector stagnated in Turkmenistan and Uzbekistan, at 25 and 45 percent of GDP, respectively, and they largely retained a Soviet economic system with a dominant state sector and omnipresent state regulation.

Trade and Industrial Performance Following the sharp decline in the 1990s, trade expanded at a remarkable pace in all Central Asian states in 2000 – ​2008 (see table 2.1). Exports grew on average by 11 percent a year. However, both the composition and geographic distribution of exports remain narrow. Exports were dominated by a few primary commodities (oil, natural gas, gold, aluminum, and cotton) and destined to a handful of countries. In 2008 the region’s Herfindahl-­Hirschman index (a widely used measure of product concentration ranging from 0 to 1, with 1 being the maximum concentration) stood at 0.5, compared to 0.08 for South and East European countries.11 The main export markets for Central Asian commodities are China, Russia, Turkey, Italy, Switzerland, Netherlands, and France. On the other hand, imports were mainly limited to machinery and equipment. The growth in this category was particularly sizeable in the

26 | Nazgul Jenish

table 2.1. Trade and Industrial Performance

Country

Average annual growth rate of exports (%) 2000 – ​2008

Exports + imports as a share of GDP (%) 2008

Manufacturing value added per capita (constant 2000 US $) 2000 2008

Kazakhstan

8.3

94

203

337

Kyrgyzstan

6.9

147

50

52

Tajikistan Turkmenistan Uzbekistan

7.3

89

43

79

27.4a

116

63

n.a.

4.4b

85

46

50

Source: World Bank. a Turkmenistan export growth rate for 2000 – ​2006. b Uzbekistan export growth rate for 2000 – ​2005.

oil-­producing countries, which made substantial capital investments in their mining sectors. Russia, China, Turkey, South Korea, and Germany are the main sources of Central Asian imports. The rapid expansion of trade was mostly due to intensification of interregional trade, especially with China. The intra-­regional trade among the Central Asian countries was much smaller, though it increased in absolute terms relative to the 1990s. The share of intra-­ regional exports in total exports declined from 8.4 percent in 1999 to 4.4 percent in 2010. This can only partially be explained by the low degree of trade complementarity between the Central Asian economies. Various tariff and nontariff barriers, including discriminatory taxes, restrictive sanitary norms, hostile custom and transit procedures, and outright border closures, have been more serious obstacles for intra-­ regional trade. The composition of intra-­regional trade has been limited to energy, agricultural products, and apparel. The hydrocarbon importers are more dependent on intra-­regional trade than their oil-­exporting neighbors. For instance, Kyrgyzstan relies on imports of refined oil products and natural gas from Kazakhstan and Uzbekistan, and in turn sells agricultural products (meat, dairy) and apparel to these countries. Tajikistan imports crude oil and natural gas from Uzbekistan, and wheat from Kazakhstan. Despite geographic proximity, the region did not trade much with South Asia, except Afghanistan. The main export commodities to

Walls and Windmills | 27

Afghanistan are refined oil products, electricity, and wheat. Exports to India have been negligible for all Central Asian countries except Uzbekistan (cotton, zinc) and Kazakhstan (uranium). Given the geographic proximity and complementarity in industrial output, there is a substantial unrealized trade potential between the Central and South Asian regions. The volumes and composition of exports also illuminate the structure of the Central Asian economies, which are characterized by a strong specialization in mining and agriculture. Diversification and sophistication of production are generally recognized as the key drivers of middle-­and low-­income countries’ competitiveness in the world market. The Central Asian countries, however, show little sign of economic diversification and sophistication, perhaps with the exception of Uzbekistan, which has recently expanded its noncommodity exports comprising machinery and chemicals. The industrial structure in all countries but Uzbekistan had become even more lopsided in 2008 compared to 2000. The share of crude oil and oil products in Kazakh exports soared from 53 percent in 2000 to 69 percent in 2008 (see figure 2.2). Metals (iron, steel, and copper) — ​ the second-­largest export grouping after crude oil in Kazakhstan — ​can

Figure 2.2. Kazakhstan’s export structure. Source: UN Comtrade Database.

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Figure 2.3. Turkmenistan’s export structure. Sources: UN Comtrade Database; International Trade Centre.

hardly be regarded as high-­value-­added manufactured products. Despite the Industrial and Innovative Development Program and import substitution measures adopted by the Kazakh government, the shares of more complex skill-­, technology-­, and capital-­intensive sectors — ​machinery, electronics, telecommunication, and transport equipment — ​in total exports (both including and excluding oil) remain modest (see also figure 2.13 in the appendix). The only shift toward value-­added production seems to have occurred in the chemical industry of Kazakhstan, which exploits vertical complementarities in the hydrocarbon value chain. Finally, Kazakhstan has traditionally been a big exporter of wheat to the world markets. Turkmenistan’s hydrocarbon dependency is even more pronounced, and its economy is much less diversified than that of Kazakhstan. Natural gas exports account for about 82 percent of total exports (see figure 2.3). Aside from natural gas, cotton fiber and textiles play a prominent role in Turkmen exports. Textile production increased in 2000 – ​2008 due to large foreign investments from Turkey and Korea. Turkmenistan also produces chemicals, but their relative weight has declined, indicating contraction in one of the few value-­added industries.

Walls and Windmills | 29

Figures 2.4, 2.5, and 2.6 compare the composition of exports between 2000 and 2008 for Kyrgyzstan and Tajikistan. The data suggest that the export structure in these countries too is oriented toward mining, agriculture, and simple labor-­intensive manufacturing, and no major structural changes took place between 2000 and 2008. The main export commodity of Kyrgyzstan is gold. Its share in total exports, however, shrank from 39 percent in 2000 to 30 percent in 2008. Somewhat surprisingly, petroleum oil products (benzene, kerosene) were the third-­largest export category in 2008, though Kyrgyzstan does not produce much crude oil itself. In fact, it re-­exported a big portion of Kazakhstan and Russian petroleum imports. In particular, kerosene was sold to the American air base for refuelling military airplanes. Apparel is the second-­largest category in the Kyrgyz exports. It consists of domestically sewn clothing as well as Chinese garments, which are exported to Russia, Kazakhstan, and Uzbekistan. Yet the official figures significantly underestimate imports and subsequent re-­exports of Chinese textiles and apparel by small shuttle traders through the intra-­ regional bazaars (Dordoi and Kara-­Suu) located on Kyrgyz territory. And this is not only due to smuggling and corruption. Perhaps a more important reason is that the Kyrgyz custom regulations permit small

Figure 2.4. Kyrgyzstan’s export structure. Source: UN Comtrade Database.

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Figure 2.5. Tajikistan’s export structure (2000). Source: UN Comtrade Database.

traders to pay duties based on weight rather than value of garments, which are light. As a result, a lot of trade goes unrecorded. Based on the mirror trade statistics and unexplained entries in the balance of payments, Kaminski (2008) estimates the country’s unregistered re-­exports of Chinese consumer goods at $100 million a year, or about 10 percent of total exports in 2006. By taking advantage of its WTO membership, proximity to China, and more liberal customs regime, Kyrgyzstan emerged as a regional re-­export hub for Chinese consumer goods.12 The Kyrgyz intra-­regional bazaars present an interesting model of building economic niches and exploiting geo-­economic opportunities. A somewhat different economic strategy is being pursued by Tajikistan. Tajik exports have been dominated by unwrought aluminum and cotton fiber (see figures 2.5 – ​2.6). The share of aluminum in total exports shot from 54 percent in 2000 to 72 percent in 2008, reflecting the extreme skewedness of Tajikistan’s economy. Tajikistan has made considerable efforts to diversify its economy and reduce dependence on hydrocarbon imports through development of its hydroelectric sector. Located on the Pamir mountain range, the source of some of the most powerful mountainous rivers, Tajikistan is endowed with a colossal hydropower potential. During Soviet times, a cascade of hydropower

Walls and Windmills | 31

stations was built on the river Vakhsh, a tributary of Amu Darya. The electricity generated by these plants is used for both domestic and industrial purposes, including aluminum production. Tajikistan has recently augmented this Soviet-­era hydroelectric cascade by a few new power stations. In 2008 hydroelectricity exports climbed to 4.2 percent of total exports. Finally, figure 2.7 reveals that Uzbekistan’s industrial output has a relatively more diversified pattern, partly because it has not gone through a market economic transformation.13 In 2008 Uzbek industrial output was dominated by natural gas and oil (20 percent), followed by machinery (16 percent), textiles (13 percent), and nonferrous metals (12.5 percent). As in Kazakhstan and Turkmenistan, Uzbek hydrocarbon production surged from 15 percent in 2000 to 20 percent in 2008. In contrast to its neighbors, Uzbekistan managed to increase production of machinery and equipment, which comprises automobiles made at the joint Uzbek-­Korean plant UzDaewoo, tractors, and other agricultural equipment. Uzbekistan also exports some chemicals and plastics. Concentration of exports in a few primary commodities has adversely affected the manufacturing sectors of the Central Asian economies. For example, the overreliance on hydrocarbon exports coupled

Figure 2.6. Tajikistan’s export structure (2008). Source: UN Comtrade Database.

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Figure 2.7. Uzbekistan’s industrial output. Source: Uzbekistan National Statistics Committee.

with rigid exchange rate policies led Kazakhstan and Turkmenistan to exhibit symptoms of the “Dutch disease,” including real appreciation of their national currencies. This has impaired the competitiveness of their manufacturing sectors and hampered economic diversification. The manufacturing value-­added (MVA) per capita figures for the Central Asian countries are below those for the Baltic states and the Eastern and Southern European transition economies. For instance, Kazakhstan, which has the largest industrial base in the region, trails behind Latvia and Bulgaria — ​laggards in their own regional groupings — ​in terms of MVA per capita and machinery production. To conclude, the Central Asian republics have dramatically expanded their exports over the last decade. However, the highly skewed structure of exports makes the Central Asian states vulnerable to abrupt swings in world commodity prices, as demonstrated by the global financial crisis in 2008 – ​2009, and jeopardizes their future growth prospects. Moreover, the resource rent dependence may conserve the region’s industrial backwardness and hinder economic diversification.

Walls and Windmills | 33

Macroeconomic Policies By and large, the fiscal and monetary policies remained sound until the onset of the financial crisis. The average budget deficit was as little as 1 percent of GDP. The three hydrocarbon-­exporting countries accumulated fiscal surpluses in the range of 3 – ​7 percent of GDP, while Kyrgyzstan and Tajikistan ran deficits within an acceptable range of 3 – ​4 percent of GDP (see figure 2.8). This was achieved through drastic cuts in public expenditure from 45 – ​50 percent of GDP to about 30 percent of GDP. These cuts in public spending, however, did not significantly lower GDP, as exports grew and external loans poured into the region. Furthermore, Kazakhstan and Kyrgyzstan implemented significant tax reforms: the number of taxes was cut, as were their rates, including a flat income tax of 10 percent and favorable tax regimes for small and medium enterprises. On the monetary side, the broad money supply had been growing on average at 36 percent a year. Even so, monetary expansion did not result in rising inflation until 2005, because of the preceding great demonetization in the early 1990s (see figure 2.9). The median inflation remained below 10 percent a year. Inflation, however, began to pick up in 2005,

Figure 2.8. Fiscal balances as percentage of GDP. Source: Asian Development Bank.

34 | Nazgul Jenish

Figure 2.9. Inflation (end-of-year change in consumer prices). Source: International Monetary Fund, World Economic Outlook.

reaching two-­digit levels by 2008. It started as a typical demand-­pull inflation spurred by buoyant receipts from the minerals sector and excessive credit growth in some countries, notably in Kazakhstan. Yet in 2007 – ​2008, additional cost-­push factors set in. Rising global food and fuel prices put a strong upward pressure on consumer prices. As a result, CPI inflation jumped to 20 percent a year in Kyrgyzstan and Tajikistan; while Turkmenistan and Uzbekistan, being net energy exporters, experienced a slightly moderate inflation of 8 – ​14 percent a year, stemming mostly from food price shocks. In Kazakhstan, inflation was exacerbated by the fixed exchange rate regime and excessive foreign borrowing by domestically owned commercial banks. The illusory safety of the stable exchange rate attracted large inflows of short-­term lending from Western banks. Most of this debt was private bank borrowings. The currency flows fueled a speculative construction boom and inflationary consumption. Real estate prices spiraled out of control, and white-­collar salaries spiked to

Walls and Windmills | 35

unprecedented levels. Kazakhstan continued to build up foreign debt until the world financial crisis. By the end of 2007, its total external debt soared to 94 percent of GDP. By contrast, the remaining Central Asian countries substantially reduced their external debt (see figure 2.10). Finally, the external position of the Central Asian states improved in 2000 – ​2008, reflecting increased export volumes and high commodity prices rather than a conscious policy to reduce deficits. Uzbekistan and Turkmenistan recorded significant current account surpluses (see figure 2.11). Despite its trade surplus, Kazakhstan’s current account balance remained in negative territory due to large factor income outflows and debt service payments. The current account deficits in Kyrgyzstan and Tajikistan hovered within a reasonable 3 – ​4 percent of GDP. They were mainly financed by migrant worker remittances from Russia and Kazakhstan. Unregistered re-­exports of Chinese consumer goods were an additional source of funding in Kyrgyzstan. The spillovers from the Russian and Kazakh growth through increased remittance flows thus mitigated the adverse effect of high fuel prices on the current accounts of the hydrocarbon importers.

Figure 2.10. External debt as percentage of GDP. Source: Asian Development Bank.

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Figure 2.11. Current account as percentage of GDP. Source: International Monetary Fund, World Economic Outlook.

Impact of the 2008 – ​2009 Financial Crisis and Recovery The global financial crisis of 2008 – ​2009 had an asymmetric impact on the Central Asian economies. Kazakhstan, Kyrgyzstan, and Tajikistan, which had more open economies and stronger links to international markets, were severely hit by the crisis. At the same time, Turkmenistan and Uzbekistan, the countries with relatively closed economies, were insulated from the crisis. The financial crisis dealt the earliest and hardest blow to the economy of Kazakhstan. As early as August 2007, the country experienced a sudden stop of international finance, which had drastic and immediate repercussions on its economic activity. The largest and fourth-­largest banks (BTA and Alliance Bank) went under and had to be taken over by the state; the second-­and third-­largest banks received capital injections from the government. Furthermore, the construction sector, which was often dependent on foreign credit, stalled. The metallurgy and chemical

Walls and Windmills | 37

industries, which delivered much of their output to the construction sector, suffered from dwindling demand, and their production declined by half. In the second half of 2008, both the demand for and price of crude oil — ​the country’s main export commodity — ​fell sharply, with the crude price taking a nosedive from $150 per barrel to $40 per barrel. Consequently, the GDP growth rate plummeted from 8.9 percent in 2007 to 3.2 percent in 2008 and then to 1.2 percent in 2009. Similarly, growth in Kyrgyzstan and Tajikistan slowed down considerably between 2008 and 2009: from 8.4 percent to 2.3 percent in Kyrgyzstan, and from 7.9 percent to 3.4 percent in Tajikistan. The transmission channels in these countries were somewhat different than in Kazakhstan. Tajikistan and Kyrgyzstan were mainly affected by secondary ripple effects of the crisis involving a sharp reduction in migrant workers’ remittances from Russia and Kazakhstan. Remittances, which accounted for 50 and 28 percent of Tajikistan’s and Kyrgyzstan’s pre-­ crisis GDP, respectively, dropped by about 30 percent from the pre-­crisis levels.14 Low-­income, mostly rural, households took the brunt of this drastic decline in remittance flows. Moreover, the contraction of aluminum and cotton demand was an additional transmission channel for Tajikistan. Fortunately, gold revenues remained steady in Kyrgyzstan. By contrast, Uzbekistan and Turkmenistan enjoyed robust growth despite the weakened commodity demand and dried-­up remittance flows, in the case of Uzbekistan. Growth slowed down by less than 1 percent in Uzbekistan, and about 3 percent in Turkmenistan. With rather small state-­controlled financial sectors and little foreign borrowing, these countries escaped a capital account crisis like the one that occurred in Kazakhstan. Furthermore, Uzbekistan benefitted from increased natural gas sales to Russia under a new favorable pricing formula. In the bid to secure long-­term supplies and development rights, the Russian Gazprom also offered a higher price for Turkmenistan’s natural gas amidst the crisis. However, the sudden explosion in the Turkmen-­ Russian pipeline in April 2009, for which the parties blamed each other, thwarted the agreement and halted the Turkmen gas deliveries to Russia. Nevertheless, Turkmenistan made up for this loss by boosting its supplies to China through the newly constructed pipeline (see below). Unlike crude oil, the price of natural gas is determined through long-­ term contracts, and is less susceptible to market fluctuations. This was

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an additional factor for continued growth of Turkmenistan and Uzbekistan during the world economic crisis. The governments in all five countries responded to the crisis by relaxing fiscal policies. However, the funding sources and extent of the fiscal accommodation varied. The energy exporters (Kazakhstan, Turkmenistan, and Uzbekistan) put together generous fiscal stimulus packages financed from their oil stabilization funds. The stimulus measures generally involved increased social spending, assistance to small and medium enterprises, public investment, and infrastructure maintenance. Kazakhstan spent a huge chunk of the stimulus package on bailing out four of its top banks and completing residential construction projects. According to Kazakhstan’s Central Bank, the anti-­crisis expenditure amounted to a staggering $19 billion, or 14 percent of GDP.15 The fiscal easing in the energy importers, Kyrgyzstan and Tajikistan, was relatively modest and funded mostly by concessional loans from the international financial institutions (IMF, World Bank, and Asian Development Bank). In addition, Russia provided a $150 million grant and a $300 million loan to Kyrgyzstan, which was reportedly conditional on closure of the American air base in Kyrgyzstan. Most of the expenditure in these countries was redirected to protect social spending (pensions, public sector salaries, primary health, and education) and to extend social safety nets. Furthermore, Tajikistan reduced some corporate taxes and cut VAT by two percentage points, and Kyrgyzstan slashed VAT by eight percentage points to stimulate economic activity. These expansionary fiscal policies eroded fiscal balances. Kazakhstan saw its budget surplus of 5 percent of GDP turn into a deficit of 3 percent of GDP. The budget surpluses shrank in Uzbekistan and Turkmenistan, and the deficits widened in Kyrgyzstan and Tajikistan. In contrast to fiscal policies, monetary instruments were used sparingly, except in Kazakhstan, given the rudimentary state of the banking sectors in the region. Kazakhstan lowered the refinancing rate and eased the reserve requirements in addition to direct liquidity injections into insolvent banks. The Kazakh government also took measures to restructure foreign currency – ​denominated loans and mortgages. It forced the creditors of the biggest banks to accept substantial losses on the order of two-­thirds of their claims.

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Finally, all countries but Turkmenistan allowed their currencies to depreciate, but only after Russia gradually devalued its ruble from November 2008 until February 2009. Kazakhstan devalued its currency, the tenge, by about 20 percent against the U.S. dollar, having drained 16 percent of its foreign exchange reserves to defend tenge. Like Russia, Kazakhstan chose to bail out the country’s banks and elite with its international reserves, at the expense of popular welfare. Faced with the devaluation of the Russian ruble, Kyrgyzstan, Tajikistan, and Uzbekistan followed suit to maintain the competitiveness of their exports. As a result of currency devaluations, the external debt-­to-­GDP ratio rose in all countries but Turkmenistan. Kazakhstan had a foreign debt ratio over 100 percent in mid-­2009, while Kyrgyzstan and Tajikistan increased their debt-­to-­GDP ratio by five percentage points. On the upside, the lower energy and food prices helped to bring inflation down from two-­digit numbers to an average of 4 percent in 2009. A striking development during the economic crisis was the dramatic expansion of the Chinese presence in the region. Cleverly, China used the Shanghai Cooperation Organization (SCO), which consists of China, Russia, and the Central Asian republics excluding Turkmenistan, to supplant Russia as the dominant economic power in the region. China became the largest importer of Central Asian hydro­ carbons through the newly commissioned natural gas and oil pipelines, as discussed in the following sections. It invested heavily in the hydrocarbon sectors of Kazakhstan and Turkmenistan, becoming the leading FDI supplier to the region. In addition, it extended a $3.5 billion loan to the nuclear, metallurgical, and agricultural sectors of Kazakhstan, and financed about 30 percent of the public investment program in Tajikistan.

Post-­Crisis Recovery By 2010, the Central Asian countries with the exception of Kyrgyzstan seemed to have turned the corner and returned to the path of economic growth. By and large, the old patterns reemerged: the energy exporters were lifted out of the crisis by the revived demand for and rising prices of mineral fuels, while the labor exporters were aided by the

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renewed remittance flows and the ensuing upturn in the construction and service sectors. Kazakhstan, which had entered its banking crisis early on in 2007, also experienced the earliest recovery, supported by rising oil prices. It reached growth rates of 7 percent and 7.5 percent in 2010 and 2011, respectively.16 Yet growth decelerated to 5.8 percent in 2012 due to the slowdown in Europe and Russia — ​the country’s major trading partners. Growth in Turkmenistan rebounded to the pre-­crisis levels of about 9.2 percent in 2010 and further rose to 14.7 percent in 2011, underpinned by the launching of new gas pipelines to China and Iran, and the resumption of gas supplies to Russia. Growth was expected to decelerate slightly in 2012 as further expansion of gas supplies to China and South Asia were likely to offset a potential decline in commodity prices. In Uzbekistan, largely unscathed by the global crisis, growth remained high at 8.5 percent in 2010, driven by climbing natural gas, cotton, gold, and copper prices. Aside from commodity exports and in contrast to its neighbors, a strong growth in the chemical, machinery, and textile industries also contributed to the economic expansion. In particular, the share of machinery (mainly automobiles) in exports doubled in 2010. Migrant worker remittances from Russia recovered to the pre-­crisis levels of about 3.7 percent of GDP. The current growth rates were expected to continue in 2012 – ​2013 owing to significant ($47.3 billion) state-­led investments in infrastructure and other strategic sectors slated for 2011 – ​2015. Tajikistan recorded a decent growth of 6.5 percent in 2010 and 7.4 percent in 2011, bolstered by rebounded remittances, which account for 40 percent of GDP. Apart from remittances, the growth was spurred by increased hydropower production, which, unlike previous years, ensured uninterrupted electricity supply to domestic industries and households in winter, and allowed electricity exports to neighboring countries. Despite the recovered world demand, aluminum exports expanded only by 2.8 percent in 2011 because of periodic disruptions of rail transit through Uzbekistan. Growth was expected to sag after 2011, due to the slowdown in Russia — ​the largest trading partner and source of remittances. Kyrgyzstan also showed some positive growth dynamics at the end of 2009 and the first quarter of 2010. However, the green shoots of growth

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were wiped out by the political crisis of April – ​June 2010, which involved the deposition of the president and ethnic conflict in the south of the country. In addition to loss of life and property and human displacement, the crisis caused an economic contraction of 1.4 percent in 2010, seriously undermining fiscal balances and overall growth prospects for the country. Most severely hit were the agricultural, construction, and tourism sectors as well as the wholesale markets for Chinese apparel and consumer goods, which suffered from border closures with Kazakhstan and Uzbekistan. Farmers could not sell their products and buy fuel and other inputs for the sowing season; construction came to a standstill; the hitherto burgeoning wholesale markets withered; tourism in the Issyk-­Kul lake region waned. The economic slump would have been even more severe if not for the robust growth of gold production in the Kumtor gold mine, which accounts for 7 percent of GDP. The downturn was also mitigated by remittances, which climbed by 25 percent. Despite widespread speculations on Kyrgyzstan’s possible disintegration and economic collapse, peace and security were quickly restored. And the political situation normalized after the parliamentary elections at the end of 2010, which adequately reflected the regional balance of power and preferences of votes. The political stability was further re­ inforced by the subsequent presidential election and formation of a three-­party government coalition in 2011. Trade with Russia, Kazakhstan, and Uzbekistan resumed. As a result, the growth rate bounced back to 5.7 percent in 2011. However, it was expected to decline after 2011, mirroring the slowdown in Russia and Kazakhstan. With the upturn in fuel and food prices, inflation has risen once again across the region, averaging 9 percent in 2010. It now stays elevated at around 6 percent. Fiscal balances continued to deteriorate in 2010. Nonetheless, budget surpluses persisted in Turkmenistan and Uzbekistan, and the budget deficits remained within reasonable bounds in Kazakhstan and Tajikistan. Only Kyrgyzstan ran a worrisome deficit of 12 percent of GDP to meet conflict-­related expenditures. By contrast, the current account balances largely improved. In 2010 the current account moved back to surplus in Kazakhstan, and the surplus widened in Uzbekistan, reflecting not only increased exports and remittances but also diminished imports from the CIS inflicted by official import restrictions. The current account deficit narrowed

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in Turkmenistan from 16 percent to 4.7 percent of GDP and in Tajikistan from 5 percent to 3.5 percent of GDP. Again, only Kyrgyzstan saw its current account deficit increase to 5.5 percent of GDP, due to rising prices of imported fuel and food. To sum up, the extraordinary growth of the decade ending in 2008 is unlikely to return to the region, because it was part of a global commodity boom, which seems to be fading away. Yet moderate growth was likely to continue in 2013 – ​2014, ensured by the robust economic expansion of China. China will remain the main growth engine for the region, while the role of Europe as the region’s trading partner will gradually diminish, especially in light of the deepening Eurozone sovereign debt crisis. An interesting open question is the role of Russia: will the ongoing Russian efforts to build a common economic zone with Kazakhstan, Kyrgyzstan, and Tajikistan succeed, and will Russia be able to regain its former economic influence in the region? These issues are discussed below, in the section on regional integration. In any event, given the economic slowdown, rising inflation, and mounting social tensions, the governments of Central Asia will need to radically rethink their economic and social policies, and undertake governance reforms.

Oil and Gas Politics The breakup of the Soviet Union opened up the region’s untapped oil and natural gas resources to the rest of the world. Ever since, Central Asian oil and gas politics have been a long-­running saga with unexpected and sometimes dramatic turns. The U.S. Energy Information Administration estimates the proven natural gas reserves of Central Asia at 12 trillion cubic meters (tcm), or 5.8 percent of the total world reserves as of the end of 2010. Turkmenistan accounts for 64 percent of the total regional pool. It is currently placed fourth in the world after Russia, Iran, and Qatar (see table 2.2). The remaining 36 percent are shared between Kazakhstan (20 percent) and Uzbekistan (16 percent). However, these figures may not reflect accurately the full potential of the newly discovered South Yolotan-­Osman gas field in Turkmenistan. In October 2011, the British auditor Gaffney, Cline and Associates raised its earlier estimates of natural gas in this deposit up to 21.2 tcm,

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table 2.2. Proven Reserves and Production of Natural Gas, 2012 Country

Production Proven reserves (billion cubic feet) (trillion cubic feet)

Kazakhstan

307

Kyrgyzstan

0

Tajikistan

1

85

World ranking 16

0.2

91

0.2

89

Turkmenistan

1,600

265

4

Uzbekistan

2,123

65

20

Source: U.S. Energy Information Administration, International Energy Statistics.

far above the BP estimate of 2.9 tcm.17 In addition, the adjacent Yashlar and Minara fields may contain another 5 tcm, according to the British auditor. The latest British Petroleum Statistical Review of World Energy confirmed these estimates.18 The new BP estimate of 24.3 tcm or 11.7 percent of global proven natural gas reserves places Turkmenistan at almost the same level with Qatar, which holds the third-­largest reserves (of 25 tcm) after Russia and Iran. The production of natural gas in the region has also been substantial. In 2010 Turkmenistan’s natural gas exports totaled approximately 25 billion cubic meters (bcm): about 11 bcm to Russia (down from 40 bcm in 2009), 8 bcm to Iran and 6 bcm to China, while Kazakhstan produced about 37.4 bcm, of which about half was consumed domestically and the remaining half was exported to Russia. The region also contains about 31 billion barrels (bbl) of proven oil reserves, which makes 3.2 percent of the total world reserves. The lion’s share of these resources — ​30 billion bbl — ​is located in Kazakhstan, while Turkmenistan and Uzbekistan hold only 0.6 billion bbl each. The other two states — ​Kyrgyzstan and Tajikistan — ​have some oil and natural gas, but their exploration and extraction are hampered by complex geological conditions. The endowments and current production levels of crude oil and natural gas are summarized in tables 2.2 – ​2.3. The country export figures are shown in figures 2.13 – ​2.17 in the appendix. Although Turkmenistan has the fourth-­largest natural gas reserves and Kazakhstan has the eleventh-­largest oil reserves, Central Asia cannot compete with the Gulf region and Russian Siberia in terms of the size of its oil and gas deposits. However, the quest for Central Asian hydrocarbon resources is driven not so much by the size of its reserves as

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table 2.3. Proven Reserves and Production of Oil, 2012 Country Kazakhstan

Production (thousand barrels per day) 1,606

Proven reserves (billion barrels) 30

World ranking 11

Kyrgyzstan

0

0.04

76

Tajikistan

0.2

0.012

85

Turkmenistan

244

0.6

41

Uzbekistan

103

0.6

43

Source: U.S. Energy Information Administration, International Energy Statistics.

by its strategic location between the world’s fastest-­growing economies, and the instability in other oil-­producing regions. Given the volatility of the Gulf supplies and Russian dominance in the European natural gas market, Europe and China have been actively seeking to diversify their oil and gas supplies, and see Central Asia as a leading alternative. Moreover, according to the International Energy Agency, world demands for oil and natural gas in 2035 are expected to rise, respectively, by 14 and 44 percent over 2008.19 More than half of the world oil demand growth and more than one-­fifth of the natural gas demand growth are to come from China alone, which implies that its energy consumption would surge by about 90 percent in the next twenty-­five years. China already surpassed the United States as the world’s largest energy consumer in 2009. India also contributes to the increased hydrocarbon demand. According to the U.S. Energy Information Outlook,20 India is projected to more than double its energy consumption between 2010 and 2035. As for the OECD, most of its energy demand growth will probably be satisfied with natural gas, while the share of oil in its energy basket is expected to gradually diminish. Europe is projected to increase its natural gas consumption by 43 percent by 2030.21 Overall, natural gas, which is environmentally friendly and relatively efficient, is likely to outpace other energy sources in the next two decades. The two Caspian littoral states of Kazakhstan and Turkmenistan together with another Caspian state — ​Azerbaijan — ​are believed to hold sufficient reserves of both oil and natural gas to help meet this incremental demand and diversify global hydrocarbon supplies. Kazakhstan

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is projected to soon become the fourth-­biggest non-­OPEC producer of crude oil, with production of 2 million bbl/day, while Turkmenistan’s production of natural gas is expected to soar to 230 bcm/year by 2030.22 Against this backdrop, the control over extraction, transportation, and distribution of Central Asian energy resources is a key determinant of the Eurasian geopolitical balance of power.

Pipelines Transportation has been the technically most challenging and politically most contentious variable in the Central Asia energy equation. Central Asia is severely landlocked, and until recently it has been completely dependent on Soviet-­era pipelines running through Russian territory (see figure 2.12). Kazakhstan has a long-­standing “multi-­vector” policy, trying to engage energy companies from many countries and to build multiple pipelines in all feasible directions. Until the end of the 1990s, Turkmenistan was completely dependent on Russia, but with its newly found large gas reserves, much of the new action involves Turkmenistan. Uzbekistan remains a much smaller producer. To break the Russian transit monopoly and to tap into the Caspian mineral wealth, consortia of Western companies led by BP built two pipelines bypassing Russia in 2005 – ​2006. The first one, the Baku – ​ Tbilisi – ​Ceyhan (BTC) oil pipeline, with a capacity of one million bbl/ day, delivers oil from Azerbaijan and Kazakhstan to the Turkish port of Ceyhan via Georgia. Kazakhstan also planned to construct a trans-­ Caspian oil pipeline linking up its port Aktau with the BTC. However, it was blocked by Russia and Iran, and instead Kazakhstan has now to ship its oil to the BTC by tankers across the Caspian Sea. The other new pipeline, Baku – ​Tbilisi – ​Erzurum (BTE), carries natural gas from Azerbaijan to Turkey. It can pump up to 20 bcm of natural gas per year. Yet the BTE pipeline is not connected to the rich gas fields of Central Asia, and is currently operating below its capacity. To provide a missing link, the EU has proposed a trans-­Caspian gas pipeline that would go under the Caspian Sea from Turkmenistan to Baku and then join the existing BTE pipeline, which is in turn planned to be extended to Europe. The latter project, known as the Nabucco pipeline, has generated a lot of controversy.

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Figure 2.12. Existing and proposed natural gas pipelines. Existing pipelines: 1. Bukhara – ​Urals, 2. Central Asia – ​Center, 3. Soyuz, 4. Central Asia – ​China, 5. Turkmenistan – ​Iran, 6. Baku – ​Tbilisi – ​Erzurum, 7. Bukhara – ​Bishkek – ​Almaty. Proposed pipelines: 8. Trans-Caspian, 9. Nabucco, 10. Caspian Coastal, 11. TAPI, 12. West – ​East Kazakhstan, 13. East – ​West Turkmenistan.

Some 3,300 kilometers long, Nabucco is expected to transport up to 31 bcm/year of Caspian and Middle Eastern gas from the Turkish port Erzurum to Baumgarten in Austria, bypassing Russia. As part of the U.S.-­backed South Corridor, Nabucco is aimed to reduce Europe’s dependence on Russian natural gas supplies.23 However, the project has been in paralysis since its conception in 2002. The main problem is the viability of its resource base: the 10 bcm/year slated from the Azeri Shah Deniz field are not sufficient to fill the pipeline; supplies from Iraqi gas fields are presently unrealistic due to security concerns and the unresolved Kurdish problem. This leaves Turkmenistan and the trans-­ Caspian gas pipeline as the only feasible option. However, Russia is strongly opposed. Central Asian natural gas has been an essential component of Gazprom’s exports to Europe, and Nabucco would challenge Russia’s monopoly in parts of the European natural gas market. To counter Western overtures, Russia is promoting

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South Stream, a rival to Nabucco, to be laid down under the Black Sea from the Russian to the Bulgarian coast, with a capacity of 63 bcm/year. In January 2012, Gazprom decided to start building this pipeline. Russia has also proposed a competing land route, called the Caspian coastal pipeline, which would curve along the Caspian east coast toward Russia. It would have a capacity of 30 bcm/year, and cluster Central Asian gas for re-­export to Europe. Turkmenistan and Kazakhstan have been vacillating between the two projects, playing Europe and Russia against each other to get a better deal on the existing hydrocarbon contracts. No firm commitments have been secured for either of the projects to date. While the EU and Russia wrangled over possible routes, China quietly secured access to a big chunk of Central Asian oil and natural gas. In July 2009, the first oil pipeline from Central Asia to China was commissioned. It delivers 200,000 bbl/day of crude oil from the Aktobe and Kashagan fields in Kazakhstan to the Chinese Xinjiang-­ Uighur Province. Its capacity will be significantly enhanced by 2014. Later, in December 2009, a more massive natural gas pipeline from Turkmenistan to China was launched. It runs from Turkmenistan to China’s Xinjiang-­Uighur Province across Uzbekistan and Kazakhstan. In Kazakhstan, it will be joined by a branch, now under construction, pumping natural gas from Kazakh fields. In the first ten months of 2011, Turkmen gas exports to China amounted to 12.3 bcm. China and Turkmenistan had originally agreed to increase this volume to 40 bcm/year by 2013, while Kazakhstan committed 10 bcm/year. On November 23, 2011, the Turkmen president signed an accord with the Chinese government to increase the supplies by an additional 25 bcm/year, bringing the total Turkmen gas supplies to 65 billion cubic meters a year.24 Earlier in September, Kazakhstan agreed to upgrade the capacity of the Kazakh branch of the pipeline to 25 bcm/ year.25 The Central Asian pipeline could thus meet more than half of China’s current natural gas consumption. This means that China replaces Russia as Turkmenistan’s largest export market for natural gas. To further complicate the Russian game, this news comes amidst the deadlocked Sino-­Russian negotiations over the price of natural gas deliveries from the Russian Sakhalin Island fields. Russia is insisting on European-­level prices, while China wants much lower prices closer to its domestic prices.

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The substantial boost in the Turkmen gas supplies to China has been made possible by the recently ascertained reserves of the gigantic South Yolotan field from which the Turkmenistan – ​China pipeline draws its supplies. With estimated reserves of 21.2 bcm, the South Yolotan field ranks second in size only to the South Pars field, straddling Iran and Qatar, and can support several projects in parallel. It thus strengthens Turkmenistan’s bid to diversify its natural gas exports and shore up its production to 230 bcm/year by 2030. The staggering reserves of South Yolotan have also revived the melting hopes for Nabucco. In November 2010, the Turkmen vice-­prime minister said that his country could supply up to 40 bcm/year for the Nabucco pipeline.26 However, this statement has not been followed by any formal deals despite the intensified courtship of the European Union. The main stumbling block is the tough Russian stance on the legal status of the Caspian Sea. Russia maintains that any pipeline under the seabed must be authorized by all coastal states including Russia and Iran. But even if Turkmenistan commits to Nabucco, its prospects remain bleak. The construction costs may send the price of Nabucco gas rocketing, and make it uncompetitive relative to the South Stream. Nabucco’s cost estimate has leaped from $8 billion to $12 billion since 2002, and is expected to grow further.27 The continued Azeri-­Turkish dispute over the pricing formula further diminishes the Nabucco chances. Turkey is now holding the trump cards as the principal transit juncture for Russian and Central Asian hydrocarbon exports to Europe. And it is playing them hard and smart. In 2013, the long-­awaited contract to export up to 16 bcm of gas per year from Azerbaijan’s Shah Deniz field to Europe via Turkey was awarded to the trans-­Adriatic pipeline, rival of Nabucco, which offered lower transit tariffs.28 This development effectively means the death of Nabucco, despite assurances of EU energy officials. The prospects seem brighter for another U.S.-­sponsored natural gas pipeline from Turkmenistan, the Turkmenistan – ​Afghanistan – ​Pakistan – ​ India (TAPI)29 pipeline, nicknamed the New Silk Road. It will extend over 1,700 kilometers from Dauletabad, Turkmenistan, to the Indian town of Fazilka, traversing the Afghan provinces of Herat and Kandahar, and Pakistan’s province of Balochistan. Transshipments to China and Japan via the Pakistan port of Gwadar are also possible. The pipeline’s

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projected capacity is 33 bcm/year, with India and Pakistan each receiving 14 billion and the remaining 5 billion reserved for Afghanistan. TAPI is funded by the Asian Development Bank, in which the United States and Japan hold controlling stakes. China has also expressed its interest in participating in the TAPI project, but India has so far opposed any Chinese involvement.30 The TAPI project has been gaining momentum since its official ratification in December 2010. During a 2011 visit to Islamabad,31 the Turkmen president settled on the volume and price of gas supplies with Pakistan. While the financial and technical issues are being resolved at a dazzling pace, safeguarding the pipeline remains a central challenge. It is unclear whether the seven thousand Afghan troops announced by Afghan President Karzai will be able to secure the New Silk Road. The role of the Taliban is another open question. Lastly, aside from Russia and China, Turkmenistan currently exports some 8 bcm of natural gas annually to Iran through the Dauletabad – ​ Sarakhs – ​Khangiran pipeline commissioned in January 2010. The pipeline’s capacity is to be expanded to 20 bcm/year. The natural gas is to be consumed by northern Iran, which, unlike other parts of Iran, does not have its own gas reserves. Nowhere has the “multi-­vector” strategy of the newly independent Central Asian states manifested itself so graphically as in their oil and gas policy. However, the direction of the resultant vector has shifted east, with China outflanking Russia and Europe as the largest market for Central Asian hydrocarbons. This shift in the regional energy vector may tilt the overall geopolitical center of gravity in the same direction.

Prospects and Benefits With all the pipelines in place, two questions arise: what are the future prospects for the Central Asian energy sector, and how will hydro­ carbon rents be used? Given the current trend in global hydrocarbon consumption, the future demand for Central Asian crude oil and natural gas seems assured, especially considering that the rapidly growing Asian giants — ​ China and India — ​are projected to almost double their energy consumption. Moreover, a general shift away from nuclear power after the

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Fukushima accident is also expected to raise the share of fossil fuel in electricity generation. A more serious concern is that high costs of building pipelines may render Central Asian natural gas uncompetitive relative to liquefied natural gas (LNG). However, a recent study by Jensen Associates32 found that LNG storage costs and the costs of building liquefaction and re-­gasification plants rose twice as fast as pipeline construction costs in 2004 – ​2008. Moreover, environmental factors may further tip the balance in favor of pipelines. In spite of the increased popularity of LNG, pipelines are thus likely to remain the prevalent mode of intra-­ continental gas transportation. The answer to the second question about how the energy rents will be used is less obvious. It is unclear whether the oil and natural gas windfall will bring about sustained and equitable growth in oil-­producing countries. As discussed earlier, these countries have not thus far succeeded in economic modernization and diversification.33 Investments of the resource rents into higher-­value-­added, capital-­and technology-­ intensive sectors have been inadequate. Neither has the hydrocarbon windfall trickled down to the majority of people in the oil-­producing countries. Poverty continues to affect a sizeable share of their populations, and income disparities have widened. Spending on health care and education even in the most prosperous Kazakhstan is low in comparison to other transition economies. The social infrastructure is even weaker, and poverty is more widespread in the rest of the Central Asian countries. At the same time, extravagant buildings and monuments, lavish palaces, and towns have mushroomed in the oil-­producing countries. Consequently, social tensions have been mounting in the region. The sharpest public reaction against a corrupt and nepotistic ruler occurred in Kyrgyzstan, where a liberal group overthrew the authoritarian regime in April 2010. Although Kyrgyzstan is one of the region’s poorest countries and does not enjoy oil rents, the uprising in Kyrgyzstan made the heads of the neighboring oil-­rich states nervous. Kazakhstan and Uzbekistan closed their borders with Kyrgyzstan, fearing spillover of the social unrest. Nevertheless, protests broke out in Kazakhstan in May 2011 despite the country’s relative economic prosperity and stability. They started as

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a strike of oil workers of KazMunaiGas, the Kazakh state oil company, in the western Mangistau region. The workers demanded higher pay and better working conditions. The Kazakh authorities ignored their demands, and instead persecuted the workers. More than a thousand workers were fired; activists were jailed and intimidated. The prolonged labor dispute culminated in violent clashes between workers and police in the oil-­mining town Zhanaozen on December 16, 2011. The authorities suppressed the protest; sixteen people died and more than eighty people were wounded, according to official sources. The Kazakh authorities tried, somewhat belatedly, to repair their damaged reputation. President Nazarbaev sacked a number of officials, including the regional governor and the head of the state oil company, who happens to be his son-­in-­law. Furthermore, the government pledged $25 million for Zhanaozen’s rehabilitation, restored some dismissed workers to their jobs, paid compensation to victims, and promised to create more jobs. Yet all these measures seem to be rather palliative; the fundamental social problems, particularly the issue of more equitable distribution of the natural resource rents, still persist. Most of the local mining companies are controlled by a handful of oligarchs loyal to the president. The National Fund of the Republic of Kazakhstan (NFRK), which accumulates the oil and gas proceeds, remains one of the most obscure government institutions; its functioning mechanisms and allocation of its resources are non­ transparent. Worse still, the outcome of the official investigation into the violence, which was accompanied with allegations of police torture and which resulted in conviction and imprisonment of thirty-­four workers, indicates a stubborn neglect and refusal to address the problem at its roots.34 Although the events in Zhanaozen did not have a clear political or religious coloring, public discontent over inequitable distribution of hydrocarbon profits may play into hands of Islamic extremist groups, which have recently stepped up their activities in Central Asia. A disturbing signal of their escalating activity came in November 2011, when a suicide bomber attacked a government building in the oil-­mining city Atyrau in Kazakhstan. The bombing was claimed by the Islamic militant group Jund al-­Khilafah.

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Regional Integration The more integrated into the global economy the Central Asian countries became, the more they drifted away from each other. The Central Asian countries seem to have been erecting walls between themselves with the same vigor as they have been building pipelines to harness winds of opportunity blowing from China. While the overall trade of the Central Asian countries has significantly expanded, the share of intra-­regional trade in total trade has been continuously declining due to various protectionist measures, poor infrastructure, weak institutions, and customs and transit bottlenecks. Regional integration has also been hampered by territorial disputes, tensions over water and energy, and personal rivalries of the leaders.

Regional Trade The share of intra-­regional exports in total exports dropped from 8.4 percent in 2000 to 4.4 percent in 2010. The composition of the Central Asian trade has also shrunk to agricultural products, mineral fuel, and apparel. And this is in spite of a myriad of multilateral and bilateral free trade agreements between the countries. After the disintegration of the Soviet Union, all five Central Asian states joined the Commonwealth of Independent States (CIS), comprising twelve ex-­Soviet republics. In April 1994, all CIS countries except Turkmenistan signed a free trade agreement (FTA). However, the CIS FTA was never ratified by the Russian parliament. Disillusioned with the failure to create a CIS free trade zone, in 1995 Belarus, Kazakhstan, and Russia established a CIS Customs Union. Later in 2005, the CIS Customs Union was expanded to the Eurasian Economic Community (EurAsEC), including Russia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. Yet EurAsEC and its Customs Union were scarcely more effective than the free trade area. Presently, only two Central Asian countries are WTO members: Kyrgyzstan acceded to the WTO in 1998, and Tajikistan in 2013. In the following decade, CIS countries entered into a number of bilateral FTAs with each other, but again these arrangements proved largely ineffective. Bilateral FTAs formally provide for free trade between the

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parties, but contain various exclusion clauses on product exemptions and contingent protection. Exemptions, subject to most-­favored-­nation tariff rates, were left unspecified, allowing a great deal of latitude for protectionism. Contingent protection often took the form of quantitative restrictions on imports, countervailing duties, and anti-­dumping measures. For instance, Kazakhstan levied prohibitive duties on cement, metal pipes, food, and agricultural imports of neighboring countries to protect its own exports in 1999 – ​2000.35 All these protectionist measures have seriously undermined the FTAs. More importantly, FTAs lack effective enforcement and dispute settlement mechanisms; disputes have to be resolved by political means, which particularly hurt small countries. Furthermore, some countries such as Turkmenistan and Uzbekistan have extensive price regulation and strict foreign trade regulation. They have adopted an openly autarkic stance vis-­à-­vis their Central Asian neighbors. Turkmenistan has stayed away from any kind of free trade arrangement with other Central Asian countries, while Uzbekistan has an FTA only with Kyrgyzstan. Uzbekistan has the highest and most complex tariff schedule in the region. Explicit tariffs are augmented by discriminatory taxes levied on imported but not on domestically produced goods; for example, 70 percent on nonfood products, raising the price of an imported good up to 150 percent of its initial value. While traditional tariffs have become less burdensome over time, various nontariff barriers have emerged as more serious impediments for intra-­regional trade. These include, inter alia, import quotas and licensing, price and foreign exchange controls, hostile custom and administrative procedures, draconian sanitary norms, and outright border closures. Most often, nontariff barriers have been applied for protection of agricultural and food sectors. For example, Kazakhstan and Uzbekistan imposed a ban on Kyrgyz meat imports in 2007 because of an outbreak of foot-­and-­mouth disease. Yet the ban was not lifted for three years, even after the epizootic situation normalized. In 2011 the Kazakh veterinary agency resurrected the ban on Kyrgyz meat imports, and also blocked Kyrgyz imports of dairy and other agricultural products despite the absence of any sanitary threat. Uzbekistan adopted licensing procedures for foreign exchange transactions through the banking system to restrict certain imports.

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Customs, cross-­border crossing, and transit practices are other towering nontariff barriers. Customs clearance in Central Asia is time-­consuming and involves an excessive documentation burden. Furthermore, Kyrgyzstan and Tajikistan have to route their road shipments through Kazakhstan and Uzbekistan, respectively. Despite numerous agreements on favorable customs and transit regimes, authorities in the transit countries often constrained their neighbor’s cargo movements and extorted both official and unofficial payments in the form of road taxes, mandatory customs convoying, insurance, and bribes. Kazakhstan restricted Kyrgyz transit to Russia, and Uzbekistan restricted Tajik transit to Kazakhstan. Uzbekistan requires a visa from Tajik drivers. There have also been outright border closures and blockades. For instance, Kazakhstan and Uzbekistan sealed their borders with Kyrgyzstan following the popular uprising in that country in April 2010, thereby inflicting enormous losses upon the Kyrgyz economy. For all these reasons, some countries had to build unjustifiably expensive roads and railways to bypass their neighbors. For example, to connect their territories, Kyrgyzstan and Kazakhstan constructed, respectively, the Jalalabad – ​Osh and Kyzylasker – ​Kirovskii roads bypassing Uzbekistan, and Uzbekistan laid down a railway circumventing Turkmenistan.

Transport Central Asia is cursed with some of the most prohibitive transportation costs in the world because of its landlocked and remote location, complex topography (mountains), and enormous distances. The high transportation costs have hindered trade and overall development in the region. According to the World Bank’s Ease of Doing Business Report, the cost of exporting for Central Asia is six times that for China and Vietnam, and more than twice that for Southeastern European countries. Aside from the landlocked location and remoteness, the high transport costs stem from weak transport infrastructure, institutional hurdles, and restrictive government policies in the area of customs and transit. Because there is no access to the sea, rail and road are the main modes of transport in Central Asia, and pipelines have recently assumed

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a greater role in transportation of the region’s hydrocarbons. Rail accounts for more than 75 percent of all freight in the region, and carries mostly nonperishable bulk cargoes such as metals, coal, oil, cotton, and grain. The railroad network is dense and well-­integrated in Kazakhstan, which inherited a strong industrial base along with railroads from the Soviet Union. By contrast, Tajikistan’s and Kyrgyzstan’s railroad systems are thin and fragmented. The railroads run mainly from south to north, toward Russia, with few links to China, Iran, and India. Presently, there is only one operational railroad connecting Central Asia to China, which passes through the narrow Druzba-­Ala Pass at the Sino-­Kazakh border. Congestion problems at this chokepoint are exacerbated by break-­of-­gauge difficulties stemming from the differences in the Soviet and Chinese gauge standards. To alleviate these problems, China and Kazakhstan agreed on the construction of a railway linking the Chinese town Khorgos in Xinjiang Province to the Kazakh town Zhetygen. More generally, China has advocated a Eurasian railroad network connecting China with Europe through the Middle East. One of the three main envisaged routes — ​the route from Urumqi in the Chinese Xinjiang Province to Germany — ​would pass through Central Asia. In 2010 China signed a $2 billion deal with Iran to lay down a railway connecting Tehran with the town of Khosravi on the Iraqi border, which would then link to Syria and Lebanon. China is planning to extend this railroad to Central Asia, thereby creating a Europe – ​Middle East – ​Central Asia – ​China rail corridor. In 2011 China entered into negotiations with Kyrgyzstan and Uzbekistan on the construction of a railway branch running from Kashgar in China’s Xinjiang Province through the town of Kara-­Suu in Kyrgyzstan, a regional distribution hub for Chinese consumer goods, to Andijan in Uzbekistan. However, the negotiations stumbled over some financial and environmental issues. While Uzbekistan has agreed to finance its segment of the road, Kyrgyzstan has to rely on Chinese funding, estimated at around $2 billion. The Chinese demanded several Kyrgyz aluminum, gold, and iron ore deposits in return for the railroad construction. This raised fear of Chinese expansion as well as environmental concerns among Kyrgyzstan’s public. In particular, the local communities near the mineral deposits are concerned that mining would contaminate

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the fresh water reserves stored in the adjacent areas. Pressured by the negative popular sentiment, the Kyrgyz government had to reject this “resources-­for-­investments” deal in May 2012. The road network is denser and better developed than the railways. However, their condition and capacity are still inadequate for the rapidly growing trade, especially with China. For this reason, much of the effort to expand transportation networks has focused on the Chinese direction. China, Kyrgyzstan, and Uzbekistan agreed to reconstruct the Andijan – ​Osh – ​Kashgar road connecting the three countries. The ADB financed the rehabilitation of a network of roads in Kazakhstan and Kyrgyzstan, which constitutes an important cross-­link between the corridors connecting Europe and China. There have also been a number of regional initiatives to develop transport corridors sponsored by the EU, UN, ADB, IMF, and other multilateral donors. Among them, the Central Asia Regional Economic Cooperation (CAREC) Program has arguably been most successful. CAREC envisages creation of six corridors connecting Central Asia with Europe, Russia, the Middle East, East Asia, and South Asia. A detailed description and analysis of these corridors are given in Pomfret (2009). Just as with the oil and gas pipelines, new rail lines and roads connecting Central Asia with the rest of the world would loosen Russia’s grip on Central Asia and change the geopolitical balance in the region.

Water and Energy Water is another bone of contention between the Central Asian countries. The two biggest rivers of the region, Syr Darya and Amu Darya, are formed high in the mountains of Kyrgyzstan and Tajikistan, and flow down to the Aral Sea crossing Uzbekistan, Turkmenistan, and Kazakhstan. During Soviet times, a complex system of dams and hydropower stations was built upstream in Kyrgyzstan (Toktogul cascade) and Tajikistan (Nurek Dam) to regulate the water flow of these rivers. It was an integrated water-­energy management system, which provided for irrigation water (mainly for cotton fields) in the downstream countries and electricity in the upstream countries. Water from the dams was released mostly in the summer, while the energy needs

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of the upstream countries in winter were met with natural gas from the downstream countries. With the breakup of the Soviet Union, the downstream countries cut their hydrocarbon supplies and began charging market prices. The energy-­poor upstream countries were compelled to build new dams and/or to increase hydropower generation at the existing plants in the winter, thereby reducing the amount of water supplied (for free) to the downstream countries in the summer. Moreover, the downstream countries did not contribute to operation and maintenance of the dams, whose costs were borne solely by the host countries. All these issues have triggered bitter disputes between Kyrgyzstan and Uzbekistan, Tajikistan and Uzbekistan, and Kyrgyzstan and Kazakhstan. In particular, Uzbekistan has repeatedly cut off its supplies of natural gas to retaliate against any effort by the upstream countries to increase electricity production, causing massive blackouts and heating problems in the upstream countries. To resolve disputes, the countries negotiated several bilateral barter deals involving water-­electricity-­gas swaps, but these deals have largely fallen through. Kyrgyzstan’s hydropower potential is estimated at 163 billion kilowatt-­ hours a year, of which only 10 percent is presently used. Since independence, Kyrgyzstan has actively sought to expand its hydroelectric sector by modernizing existing plants and building new stations. Four smaller-­scale hydropower plants were built with World Bank financing, and a few larger stations are now under construction. The biggest among them is the Kambarata Dam on the river Naryn, a tributary of Syr Darya. Russia initially pledged $2 billion for this project, but disavowed the commitment after Kyrgyzstan kept the American air base on its territory. Likewise, Tajikistan is utilizing only 5 percent of its vast hydropower potential, estimated at 300 billion kilowatt-­hours a year. The country was distressed with chronic energy shortages, especially in the winter season. To tackle the problem, Tajikistan has built a handful of new hydropower plants on the river Vakhsh, a tributary of Amu Darya, including the Sangtuda-­1 (with Russian funding) and Sangtuda-­2 (with Iranian funding) stations. These hydropower plants, with a joint annual capacity of over 1 billion kilowatt-­hours, allowed Tajikistan to expand

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its electricity exports. In 2011 it commenced exports to Afghanistan, to the great displeasure of Uzbekistan. Since 2009, Uzbekistan has been the dominant electricity supplier to Afghanistan and charged monopolistically high prices. Given this, increased Tajik electricity production threatens not only to reduce the amount of water available for irrigation of Uzbek cotton fields, but also to undercut Uzbekistan’s own electricity exports. The already strained relations between Uzbekistan and Tajikistan have been further damaged by Tajikistan’s efforts to build the Rogun power plant on the river Vakhsh. If finished, the dam will become the tallest in the world (335 meters), and generate 3,600 megawatts of electricity annually. The project is estimated to cost between $1.3 billion and $6 billion. In 2004 the Russian aluminum giant RusAl promised $2 billion to complete the construction of the dam and to modernize Tajikistan’s major aluminum plant. Yet the global financial crisis as well as the fierce opposition from Uzbekistan prevented Russian investment. There was rapprochement between Uzbekistan and Russia after the suppression of the Andijan uprising and subsequent closure of the American air base in Uzbekistan. Despite Uzbekistan’s protests and lack of financing, Tajikistan proceeded unilaterally using its own funds, which were collected from the population through a voluntary-­compulsory share purchase program. If the Rogun and Kambarata Dams are completed, Tajikistan and Kyrgyzstan will be able to extend their electricity exports to South Asia. The countries agreed to build a high-­voltage electricity transmission line to Pakistan via Afghanistan. In response, Uzbekistan called for an environmental audit of the Rogun Dam, and its construction is now suspended pending the results of the World Bank study. Furthermore, in 2009 Uzbekistan withdrew from the unified Central Asian electricity grid, and Kazakhstan is now considering exiting from this system. Last but not least, bilateral relations between the countries have also been plagued with intermittent territorial and border conflicts. These conflicts are rooted in the Soviet-­era territorial divisions and historical animosities fueled by competition over land and water. The tortuous boundaries drawn in Soviet times did not entirely correspond to the ethnic composition of the population, and created sizeable ethnic minorities and territorial enclaves in Uzbekistan, Kyrgyzstan, and

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Tajikistan. The 1992 – ​1997 civil war in Tajikistan led Uzbekistan to close and mine its border with Tajikistan to prevent incursion of Islamic terrorist groups based in that country.

New Regional Blocs Unfortunately, the multitude of existing regional agreements and organizations has been largely unsuccessful in providing effective regional coordination, especially in the areas of trade, transport, and water and energy management. The lingering tensions between the Central Asian states call for a more effective regional coordination mechanism to fulfill these objectives. Recently, Russia has attempted to breathe new life into the EurAsEC Customs Union, now limited to Russia, Belarus, and Kazakhstan. In 2010 these three countries eliminated most duties on mutual trade and adopted a common external tariff and a common customs code. The ultimate goal is to form a single economic space in 2015 with free movement of goods, labor, and capital. While Kazakhstan stands to benefit from greater access to Russia’s agricultural and commodity markets, its manufacturing sector is likely to face increased competition from Russian companies. Besides, the prices of consumer goods, particularly food, in Kazakhstan have risen markedly since the beginning of 2012 as a result of price arbitrage. Moreover, experts fear trade diversion as Kazakhstan’s import tariffs on goods from outside the union have been raised to the level of the Russian tariffs. Kyrgyzstan and Tajikistan have also expressed interest in joining the Customs Union. However, they need to carefully weigh all its costs and benefits, especially vis-­à-­vis the WTO. In particular, Kyrgyzstan will need to obtain WTO permission to raise its tariffs to the level of the Customs Union’s common external tariff. Also, Kyrgyzstan’s current re-­ exports of Chinese consumer goods, which account for more than 15 percent of total exports, are likely to suffer from Kyrgyzstan’s accession to the Customs Union. More importantly, there are very few manufacturing goods that Kyrgyzstan can export to the EurAsEC. Apparel, one of such goods, is already exported to Russia and Kazakhstan, and accession to the EurAsEC is unlikely to boost its exports. On the contrary, it stands to raise the cost of Chinese textiles and other inputs used by

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the Kyrgyz sewing industry. Despite these risks, Kyrgyzstan has recently signed a number of documents paving the way for its accession to the Customs Union. In general, Russia sees the Customs Union as a stepping stone for deeper integration between the former Soviet republics under its own leadership. In October 2011, following his official announcement to run for the Russian presidency in 2012, Putin unveiled his plan to transform the existing Customs Union into a larger and deeper Eurasian Union, which would bring the former satellites back to the Russian orbit and restore Russian influence in the region. While the EurAsEC Customs Union is currently gaining momentum, the prospects for a deeper integration remain uncertain. None of the former Soviet, now independent, republics is willing to give up its political independence. Nor are they willing to give up their national currencies in exchange for a common EurAsEC currency. This was openly stated by Belarusian president Alexander Lukashenko during his visit to Kazakhstan in October 2013.36 While Russian influence in Central Asia has been declining, China, on the contrary, has increased its presence in the region, achieved to a great extent through the Shanghai Cooperation Organization (SCO). The SCO has emerged as the most important security organization in the region. Founded in 2001, it comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan as full members. India, Iran, Mongolia, and Pakistan have observer status. Mostly driven by Chinese concern over rising separatism and terrorism in its predominantly Muslim Xinjiang Uighur Autonomous Region, the SCO identified cooperation against terrorism and security as its main priorities. The organization has also been active in the areas of energy, trade, transport, and environmental protection. In particular, China has leveraged the SCO to secure access to Central Asian hydrocarbons. Many experts believe that China will increasingly use the SCO to project its power across the Eurasian continent. To counter the expanding Chinese presence and to safeguard its military interests in the region, Russia has recently intensified its economic diplomacy in Central Asia. The 2012 visits of Russian president Putin to Kyrgyzstan and Tajikistan best exemplify this policy change. During his visit to Kyrgyzstan, Putin reinstated the Russian pledge to fund

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the construction of the Kambarata Dam (disavowed during Medvedev’s presidency) and signed an agreement on joint construction and exploitation of the Upper-­Naryn Cascade of hydropower stations. In addition, Russia agreed to write off a $489 million debt of Kyrgyzstan. In return, Kyrgyzstan extended the lease of the Russian military base for another fifteen years. The parties carefully avoided any mention of the American air base in Kyrgyzstan. However, the Kyrgyz president later announced that the U.S. lease of the Manas air base, due to expire in 2014, would not be renewed. The decision was ratified by the Kyrgyz Parliament in 2013.37 Putin’s visit to Tajikistan had similar outcomes: the lease of the Russian 201st military base was extended till 2042 in return for some economic concessions on the part of Russia, including easing visa restrictions for Tajik migrant workers and duty-­free supply of Russian petroleum products to Tajikistan. These initiatives highlight the increasing importance that Russia attaches to Central Asia both as a critical outpost against incursions of Islamic militants and as an extension of its economic zone. Once the bone of contention between Russia and Great Britain, Central Asia is again turning into an arena of geopolitical and economic competition, but this time, between Russia and China. The economic presence of the United States and Europe in the region is, by and large, limited to the hydrocarbon sectors of Turkmenistan and Kazakhstan. Their trade with the other countries — ​Kyrgyzstan, Tajikistan, and Uzbekistan — ​is negligible. The U.S. and EU roles in the region are also weakened by the current sovereign debt crisis in these countries. With the planned withdrawal of U.S. forces from Afghanistan in 2014, the closure of the U.S. air base in Kyrgyzstan, and the general shift of the American geopolitical focus to the Asia-­Pacific region, the U.S. presence in the region is to fade even further. This leaves Russia and China as the only principal players on the Central Asian chessboard. Yet the situation is more reminiscent of the game of Go — ​or wéiqí in Chinese — ​rather than chess. Just as in wéiqí, China has been encroaching on the region slowly but surely, placing carefully its stones — ​plants, pipelines, railways, and roads — ​on the vacant cells of the Central Asian board. The September 2013 tour of Chinese president Xi Jinping to

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four Central Asian states — ​Turkmenistan, Kazakhstan, Kyrgyzstan, and Uzbekistan — ​not only confirmed this trend, but also revealed an accelerated pace and increased assertiveness of the Chinese expansion in the region.38 As an alternative to the U.S. New Silk Road plan and the Russian Eurasian Union, China put forward its own New Silk Road initiative, which envisages economic integration of the five Central Asian states as well as India, Iran, Mongolia, and Pakistan with the rest of Asia under the aegis of China.39 The proposal was announced by President Xi Jinping during his visit to Kazakhstan in September 2013. However, the visit was not limited to declarations. As before, China poured billions of dollars into the region in the form of acquisitions, loans, and investments. China acquired for $5 billion an 8.33 percent stake in the Kashagan project, the largest oil field in Kazakhstan. It signed additional contracts with Kazakhstan totaling $25 billion, including construction of a hydropower station on the river Ili and some other chemical and oil equipment plants. Similarly, a number of deals totaling $15 billion were concluded with Uzbekistan. In Turkmenistan, Xi Jinping inaugurated the first phase of the natural gas production at the Galkynysh (or South Yolotan) field, 80 percent of which was financed from a Chinese loan in the amount of $8 billion. This new pipeline will supply an additional 25 bcm/year of Turkmen gas to China, thus making China the largest market for Turkmen gas. In Kyrgyzstan, Xi Jinping negotiated construction of a new branch of the Turkmenistan – ​China natural gas pipeline through Kyrgyz territory, offering in return investments in the Kyrgyz energy sector of up to $3 billion. The existing three branches go through Kazakhstan and Uzbekistan. China is thus seeking to diversify not only hydrocarbon sources but also their supply routes. Another motivation is to tie the Central Asian countries more closely to the Chinese Xinjiang Province bordering the region. Central Asia is considered a key security arrière-­front and a major market for the goods produced in Xinjiang Province. Moreover, with all hydrocarbon sources and pipelines in place, China will face the challenge of their protection in the case of political and military destabilization in the region. In this light, laying a web of railways and roads across the region takes on additional importance for China. And it is not surprising that China is actively advocating the China – ​Kyrgyzstan – ​ Uzbekistan railroad.

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Last but not least, despite Chinese proclamations that its interests in Central Asia are complementary to those of Russia, potential enlargement of the Russian Customs Union does not seem to be welcome by China.40 In his speech at a conference in Kyrgyzstan in October 2013, the vice president of the Chinese Institute of International Studies, Juan Tszuen, urged Kyrgyzstan not to join the Customs Union and proposed instead that it participate in the Chinese “New Silk Road.” Thus, Chinese and Russian interests in Central Asia stand to eventually clash, and the Central Asian states will eventually have to abandon their “multi-­ vector” strategy and make definite geopolitical choices.

Governance and Social Policies The region is highly corrupt, as evident from the Corruption Perceptions Index assembled by Transparency International, and the situation had become much worse throughout the mid-­2000s in Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan. Shockingly, out of 183 countries, Transparency International (2011) ranked Tajikistan number 152, Kyrgyzstan number 164, and Turkmenistan and Uzbekistan were tied at number 177, while Kazakhstan was number 120. Central Asia is thus one of the most corrupt regions in the world. The World Bank (2011) has compiled an index on the ease of doing business in various countries. According to this index, several countries in the region had improved greatly by 2009. Kyrgyzstan was the leader, followed by Kazakhstan. In Uzbekistan and Tajikistan, by contrast, the business environment is extremely poor. The fundamental problem is that most post-­Soviet countries are ruled by a small, entrenched elite that, having captured control of the state, uses authoritarian means to extract maximum rents. The pivotal economic issue is whether these governments will become serious in combatting corruption. Most of the rulers and their families have grossly enriched themselves and use some repression to maintain the system. This has stark consequences for the provision of social services. The United Nations Development Program (UNDP) Human Development Index (2013) summarizes the relative achievement of the Central Asian countries in terms of welfare. It combines three measures — ​ gross national income per capita in PPP, life expectancy, and years of

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schooling. Its rankings and conclusions are quite revealing. Out of 187 countries, the Central Asian countries are spread out from Kazakhstan at 69, Turkmenistan at 102, Uzbekistan at 114, and Kyrgyzstan and Tajikistan at 125. Furthermore, the global average for countries with “high human development” is 3.4 percent of GDP. Kyrgyzstan has maintained a decent level of public health expenditure of 3.5 percent of GDP, but the rest of Central Asia has devoted a much smaller proportion of their public resources to health care. The shockers are the oil and gas producers, Turkmenistan with 1.4 percent of GDP and Kazakhstan with 2.5 percent of GDP. The poor countries Uzbekistan and Tajikistan have similarly low levels. Education was a real priority of communism. In 1990 – ​1991, the transition countries spent on average 5.9 percent of their GDP on education, even more than the 5.4 percent of GDP in the OECD countries (UNDP 1998, 217). By 2007, this level had fallen substantially except for Kyrgyzstan. Kazakhstan currently spends only 2.8 percent of GDP on education, about as much as truly poor Tajikistan, whereas Turkmenistan’s education spending is probably even less (UNDP 2011). Again, the Central Asian countries underinvest in human capital. In particular, the authoritarian oil states show their disrespect for the needs of their citizens, and their social policies are better characterized as antisocial. The rather clear impression that arises is that all the Central Asian countries are so corrupt that corruption is bound to be a major obstacle to their continued economic growth. Moreover, poor governance has resulted in a severe underinvestment in human capital. This is particularly remarkable in relatively highly developed Kazakhstan, which shows great largess in public spending on the elite and its children.

Conclusions and Recommendations Over the last decade, the Central Asian countries have experienced an impressive growth and made significant strides toward integrating into the world economy. In particular, the countries have seized geo-­ economic opportunities presented by their proximity to China, and

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drastically expanded their trade with China. A dramatic shift occurred in the region’s hydrocarbon sector, with China outflanking Russia as the primary importer of Central Asian oil and natural gas. However, the remarkable growth of the Central Asian economies has largely been driven by the surging global demand and price of commodities. Central Asian exports are dominated by few primary commodities, and their industries show little sign of diversification and sophistication. The highly skewed structure of the Central Asian economies makes them vulnerable to volatility in the commodity markets and may hamper their future economic development. The hefty natural resource rents have not brought an industrial revival to the region — ​ quite the contrary, they seem to have impeded it. Neither has the natural resource windfall trickled down to the majority of people in these countries. Poverty continues to affect a sizeable share of their populations, and income disparities have widened. At the same time, public spending on health care, education, and other social services remains low in comparison to other transition economies. Consequently, social tensions have been escalating throughout the region, notably in Kazakhstan and Kyrgyzstan. In the latter country, they culminated in an uprising that toppled the corrupt regime in April 2010. Unfortunately, the uprising in Kyrgyzstan was followed by ethnic conflict, human displacement, and border closures with the neighboring countries, which dealt a serious blow to the country’s economy. An unresolved labor dispute with oil companies led to violent clashes of workers with police in western Kazakhstan. The rising discontent over distribution of hydrocarbon rents may play into the hands of Islamic extremists, who have stepped up their activities in the region. To tackle these economic and social challenges, the governments of Central Asia need to radically rethink their economic and social policies, and undertake governance reforms. More specifically, they should undertake the following measures: •  Diversify exports and integrate into global production networks by restoring their manufacturing base and shifting from natural resource extraction to more capital-­and technology-­intensive industries. As an entry point, develop domestic processing industries for mineral and

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agricultural commodities by exploiting vertical complementarities in the existing natural resources – ​based production chains. •  Liberalize trade policy (for Turkmenistan and Uzbekistan) and remove barriers to regional trade (for all countries). In particular, eliminate bureaucratic hurdles in customs, border crossing, and transit. •  Step up efforts to join the WTO (Kazakhstan, Uzbekistan) to gain access to new markets, strengthen bargaining power, and take advantage of the WTO’s dispute settlement mechanisms. •  Expand trade with South Asian countries, including India, Pakistan, and Afghanistan, to diversify export markets and exploit untapped trade complementarities, particularly in the energy sector. •  Enhance regional integration and cooperation in the areas of water, energy, and transport. Given increasing freshwater scarcity, efficient and equitable use of Central Asian water resources is becoming an issue of paramount importance, which calls for resolution of the long-­standing regional disputes. •  Implement comprehensive governance reforms and reduce corruption, especially in management of public assets and revenues from the mining and energy sectors. •  Increase investments in human capital by boosting spending and improving the quality of education and health care. •  Promote job creation and market-­driven skill development, especially for the unemployed youth, to alleviate social tensions and achieve a more inclusive development. •  Extend social safety nets and improve targeting of social programs in the face of rising inflation.

Some of these reforms are already under way, while other reforms will require more time, resources, and coordination — ​for example, changes in regional trade and transport policies. For instance, Kazakhstan has recently increased investments in its manufacturing, transport, information, and communication sectors as part of the Accelerated Program of Industrial and Innovative Development. Uzbekistan is also implementing a $47.3 billion Industrial Modernization and Infrastructure Development Program, which envisages substantial investments in the hydrocarbon, chemical, and metallurgical sectors.

Walls and Windmills | 67

Yet there is another set of “soft” reforms, which will require not only material resources but also the political will of the ruling elites. These are governance reforms, anti-­corruption measures, and social changes. Unfortunately, corruption has become a systemic, defining feature of many post-­socialist states, including those of Central Asia. Therefore, it seems unrealistic to expect genuine reforms initiated from the top. Rather, as the Kyrgyz experience shows, such reforms are pushed from the bottom. The question is then at what cost. Our hope is that the Central Asian countries will formulate and implement their own socially inclusive development strategies in a peaceful and democratic way. This will not be easy, but the future of the Central Asian countries depends on it.

Appendix table 2.4. Selected Indicators for Central Asian Republics

Country

2012 GDP per 2012 capita population Area (US$) (million) (sq. km)

Main exports

Poverty 2012 headcount HDIa (% population (rank) below $2/day)

Kazakhstan

11,935

17.736

2,724,900

crude oil, metals, chemicals, grain

69

1.5 (2007)

Kyrgyzstan

1,160

5.548

199,950

gold, agricultural products, apparel

125

29.4 (2007)

872

7.910

142,550

aluminum, cotton, electricity

125

50.9 (2004)

Turkmenistan

6,511

5.113

488,100

natural gas, cotton, textiles

102

49.7 (1998)

Uzbekistan

1,717

28.662

447,400

natural gas, cotton, gold

114

76.7 (2003)

Tajikistan

Sources: CIA World Factbook; World Bank 2010; UNDP 2013. a UNDP Human Development Index, world ranking out of total 187 countries, with lower ranking corresponding to higher human development.

Figure 2.13. Kazakhstan’s non-oil exports. Source: International Trade Centre.

Figure 2.14. Contributions to growth, Kazakhstan. Source: Asian Development Bank. 68

Figure 2.15. Contributions to growth, Kyrgyzstan. Source: Asian Development Bank.

Figure 2.16. Contributions to growth, Uzbekistan. Source: Asian Development Bank.

69

Figure 2.17. GDP growth by sector, Tajikistan. Source: Asian Development Bank.

table 2.5. Natural Gas Pipelines I. Existing Pipelines Pipeline

Route

Capacity (bcm/y)

Length (km)

Bukhara – ​Urals

Turkmenistan – ​Uzbekistan – ​ Kazakhstan – ​Russia

20

1,175

Central Asia – ​Center

Turkmenistan – ​Uzbekistan – ​ Kazakhstan – ​Russia

55 – ​90

2,000

Soyuz

Kazakhstan – ​Russia – ​Ukraine

Central Asia – ​China

Turkmenistan – ​Uzbekistan – ​ Kazakhstan – ​China

40 – ​90

1,833

Iran

Turkmenistan – ​Iran

8 – ​20

182

Baku – ​Tbilisi – ​Erzurum

Azerbaijan – ​Turkey

20

692

70

28.3

424

Walls and Windmills | 71

II. Proposed Pipelines Capacity (bcm/y)

Length (km)

Estimated cost (billion $)

Pipeline

Route

Nabucco

Turkey – ​Bulgaria – ​Romania – ​ Hungary – ​Austria

31

3,300

12.3

Caspian Coastal

Turkmenistan – ​Kazakhstan – ​ Russia

30

1,700

n.a.

Trans-­Caspian

Turkmenistan – ​Azerbaijan

30

210

TAPI

Turkmenistan – ​Afghanistan – ​ Pakistan – ​India

33

1,700

5 7.6

Expansion of Central Asia – ​Center

Turkmenistan – ​Uzbekistan – ​ Kazakhstan – ​Russia

55 – ​90

2,000

n.a.

Sources: “Nabucco Pipeline Is Approved,” BBC News, June 27, 2006, http://news.bbc.co.uk/2/hi/business/​ 5121394.stm (accessed January 18, 2012); Sebastien Peyrouse, Turkmenistan: Strategies of Power, Dilemmas of Development (Armonk, NY: M. E. Sharpe, 2012); “Gas Pipeline Deal for Pakistan, India Imminent,” Reuters, November 5, 2011, http://tribune.com.pk/story/287863/gas-­pipeline-­deal-­for-­pakistan-­india-­imminent/ (accessed January 18, 2012); “Pre-­Caspian Gas Pipeline,” Gazprom, http://www.gazprom.com/production/ projects/pipelines/pg/ (accessed January 18, 2012).

Notes 1.  In this book, Central Asia refers to the five post-­Soviet states of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. 2.  World Bank, 2011. 3.  Asian Development Bank, 2013. 4.  EBRD, 1999, 76. 5.  Orlowski, 1995, 66. 6.  United Nations Economic Commission for Europe, 2000, 225. 7.  Åslund, 2002. 8.  Pomfret, 2006. 9.  The U.S. Department of State estimates the number of Uzbek migrant workers at around 3 – ​5 million people, or 25 percent of its total labor force; http://en.wikipedia. org/wiki/Economy_of_Uzbekistan. According to the Parliament Speaker Keldibe­ kov, the number of Kyrgyz migrant workers reached 548,000, or 10 percent of the population, in 2010; http://centralasiaonline.com/en_GB/articles/caii/features/ main/​2011/03/18/feature-­01. According to the Russian presidential aide Ushakov, the number of Tajik migrant workers in Russia rose to 1.3 million people, or 20 percent of Tajikistan’s population; http://www.naharnet.com/stories/en/​55999-­tajikistan-­extends​ -­presence-­of-­russian-­military-­base-­for-­30-­years. 10.  EBRD, 2010. 11.  World Bank, 2010, 10. 12.  Kyrgyzstan joined the WTO in 1998, and China acceded to the WTO in 2001.

72 | Nazgul Jenish

13.  The COMTRADE database contains no data on the export structure for Uzbekistan. We therefore examine the Uzbekistan National Statistics data on the industrial output. 14.  Mitra, Selowsky, and Zalduendo, 2010. 15.  “14% of GDP Spent for Anti-­crisis Measures,” Kazinform, July 12, 2010, http:// www.inform.kz/eng/article/2285651. 16.  Asian Development Bank, 2012. 17.  Reuters, November 21, 2011, http://blogs.reuters.com/marat-­gurt. 18.  BP Statistical Review of World Energy, report, June 2012. 19.  International Energy Agency, 2010. 20.  U.S. Energy Information Administration, 2011. 21.  Eurogas, http://www.eurogas.org/uploaded/Eurogas%20long%20term%20​ outlook%20to%202030%20-­%20final.pdf. 22.  International Energy Agency, 2008. 23.  Aside from Nabucco, the South Corridor includes the trans-­Adriatic pipeline, the White Stream or Georgia – ​Ukraine – ​EU gas pipeline, and the ITGI pipeline between Turkey, Greece, and Italy. 24.  Bloomberg, November 23, 2011, http://www.bloomberg.com/news/2011-11-23/ china-­signs-­gas-­deal-­with-­turkmenistan-­amid-­russian-­talks-­1-­.html. 25.  Bloomberg, September 8, 2011, http://www.bloomberg.com/news/2011-09-08/ china-­kazakhstan-­sign-­accord-­to-­expand-­gas-­pipeline-­network-­1-­.html. 26.  EurasiaNet, November 19, 2010, http://www.eurasianet.org/taxonomy/term/​ 2789. 27.  “Nabucco Project Cost to Exceed Value of South Stream and Make It World’s Most Expensive Gas Pipeline,” Abc.az, October 24, 2011. 28.  Wall Street Journal, July 5, 2013, http://online.wsj.com/article/BT-­CO-­20130705​ -702794.html. 29.  The agreement on TAPI signifies the end for the Iran – ​Pakistan – ​India (IPI) pipeline project advocated by Unocal. 30.  Hindustan Times, January 17, 2011. 31.  Express Tribune, 15 November 2011, http://tribune.com.pk/story/292147/ turkmenistan-­agrees-­gas-­price-­with-­pakistan/. 32.  “Fostering LNG Trade” (Energy Charter Secretariat, Brussels, 2009), http:// www.jai-­energy.com/pubs/LNG_2009_ENG.pdf. 33.  With an MVA per capita of $337, Kazakhstan is still trailing behind East European transition economies, while Turkmenistan’ s MVA per capita is comparable to that of sub-­Saharan African countries. 34.  BBC News Asia, May 15, 2012, http://www.bbc.co.uk/news/world-­asia-­18055249; and July 12, 2012, http://www.bbc.co.uk/news/world-­asia-­18816018. 35.  Freinkman, Polyakov, and Revenco, 2004. 36.  Belteleradiocompany, October 2, 2013, http://www.tvr.by/eng/news.asp?id​ =11048&cid=20. 37.  RT, June 20, 2013, http://rt.com/news/kyrgyzstan-­manas-­us-­lease-­994/.

Walls and Windmills | 73

38.  Xinhuanet, September 15, 2013, http://www.xinhuanet.com/english/special/ xjp201309/. 39.  People’s Daily in Russian, October 10, 2013, http://russian.people.com.cn/95181/​ 8420655.html. 40.  Novyi Region, October 28, 2013, http://www.nr2.ru/asia/467512.html.

References Asian Development Bank. 2012. Asian Development Outlook 2013. Manila: ADB. Åslund, Anders. 2002. Building Capitalism: The Transformation of the Former Soviet Bloc. New York: Cambridge University Press. European Bank for Reconstruction and Development. 1999. Transition Report 1999. London: EBRD. ———. 2010. Transition Report 2010. London: EBRD. Freinkman L., E. Polyakov, and C. Revenco. 2004. “Trade Performance and Regional Integration of the CIS Countries.” World Bank Working Paper 38, World Bank. International Energy Agency. 2008. “Perspective on Caspian Oil and Gas Development.” IEA Working Paper Series. http://www.iea.org/papers/2008/caspian_​ perspectives.pdf. ———. 2010. World Energy Outlook 2010. http://www.iea.org/Textbase/npsum/weo​ 2010sum.pdf. Accessed December 2011. International Monetary Fund. 2011. Regional Economic Outlook: Middle East and Central Asia 2011. Washington, D.C. Kaminski, Bartłomiej. 2008. “How Kyrgyzstan Seized Opportunities Offered by Central Asia’s Recovery.” Background paper, ECA, World Bank. Mitra, Pradeep, Marcelo Selowsky, and Juan Zalduendo. 2010. Turmoil at Twenty: Recession, Recovery, and Reform in Central and Eastern Europe and the Former Soviet Union. Washington, D.C.: World Bank. Orlowski, Lucjan. 1995. “Direct Transfers between the Former Soviet Union Central Budget and the Republics: Past Evidence and Current Implications.” Economics of Planning 28: 59 – ​73. Pomfret, Richard. 2006. The Central Asian Economies since Independence. Princeton: Princeton University Press. ———. 2009. “Central Asia after Two Decades of Independence.” School of Economics Working Papers 2009 – ​32, School of Economics, University of Adelaide. ———. 2010. “Trade and Transport in Central Asia.” Eurasia Emerging Markets Forum, Thun, Switzerland. Transparency International. 2011. “Corruption Perceptions Index.” http://cpi​ .transparency.org/cpi2011. Accessed December 2011. United Nations Development Program. 1998. Poverty in Transition? New York: United Nations. ———. 2011. “International Human Development Indicators.” http://hdrstats.undp.org/ en/indicators/default.html. Accessed December 2011.

74 | Nazgul Jenish

United Nations Development Program. 2013. Human Development Report 2013. New York: United Nations. United Nations Economic Commission for Europe. 2000. Economic Survey of Europe, no. 1. New York: United Nations. U.S. Energy Information Administration. 2011. International Energy Outlook 2011. DOE/EIA-­0484 (2011). http://www.eia.gov/forecasts/ieo/pdf/0484(2011).pdf. Accessed December 2011. World Bank. 2010. “Central Asia: Expanding Trade by Connecting with Markets.” Report no. 53556-­ECA, World Bank, Washington, D.C. ———. 2011. Doing Business 2012: Doing Business in a More Transparent World. Washington, D.C.: World Bank.

3

Factoring the Foreign Policy Goals of the Central Asian States Marlene Laruelle

Introduction In academic works and the media, Central Asia is almost systematically presented as a region in thrall to the games of the great powers, a passive object of external projections that it cannot influence, and a region incapable of developing its own narrative on international affairs. This distorted image, at once inscribed in the memory of the nineteenth-­ century “Great Game” and an overly Western-­centric view of international relations, does not correspond to reality. The contemporary Central Asian states cannot be reduced to simple objects of rivalry between the great powers. They are not mere passive recipients of external influences — ​colonial domination in the nineteenth century, Soviet control in the twentieth century, and the post – ​Cold War geopolitical contests of the twenty-­first century — ​but instead actors in their own right, with their own identity projections onto the international stage. The five states have all developed their own specific international positioning, formed their own narratives on their place in the world, and implemented short-­term and long-­term strategies. As new states, they have formulated foreign policy goals that are intrinsically linked to their own statehood and leadership legitimacy: the interaction between domestic and foreign policies is therefore intense. They all avail themselves of contradictory tools as a way of maximizing their gains in the international arena, put on multiple faces — ​postcommunist, Muslim, Asian, European — ​and cultivate the historical references and geo­ political myths surrounding the region: a buffer zone, a heartland, a Silk Road. They all share common traits in their foreign policy goals, but also have increasingly diversified objectives and strategies, such that it 75

76 | Marlene Laruelle

is no longer really possible to talk of a Central Asian unity in terms of international affairs: the world is not seen through the same sets of eyes in Ashgabat or in Bishkek, in Astana or in Tashkent. This chapter discusses the Central Asian long-­term positioning on the international scene and the matrixes of foreign policies (symbolic recognition but political autonomy, international integration but an instrumental reading of it); regime security; and diverging strategies of multi-­vectoralism and of regional cooperation, as well as some shared patterns (mimetic strategies of external actors’ narratives, cultural sovereignty as the main foreign policy goal; and the use of international affairs as a domestic tool of political legitimacy).

Understanding Central Asian Long-­Term Positioning on the International Scene In 1992 Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan were obliged to form their foreign policy and diplomatic corps from scratch, since in the Soviet period these were almost entirely reserved for Moscow and not delegated to the federated republics. It took a long time for their diplomatic corps to take shape, and the process is by no means finished: if Kazakhstan is the most advanced in this domain, followed by Uzbekistan (the only state in the region that had international visibility during the Soviet period as a display case for Muslim socialism, which was aimed at brother countries), the other three states are in difficulty in this regard. Given its isolationist position, Turkmenistan has not yet devoted enough energy to the creation of a diplomatic corps, while Kyrgyzstan and Tajikistan do not have the public purses to do so. In addition, competence building on international expertise is still very limited throughout the region, and all the countries lack good experts on the international economy and world affairs to advise decision makers. Despite challenging regional and domestic conditions, they have all developed their own strategies for shaping what they consider to be their best possible foreign policies given the circumstances. The goal of all Central Asian states’ foreign policy could be summed up in a sentence: To be as autonomous as possible from outside pressures while obtaining as much recognition as possible. As young states recently arrived on the international scene after the great waves of

Foreign policy goals of the central asian states | 77

decolonization had come to an end, they search for symbolic recognition. At the same time, the ruling elites are concerned about autonomy in the managing of domestic affairs, and want to avoid having to deal with any new “big brothers” looking to take over the former place of the Russians. Depending on the domain of activity and the geopolitical conjuncture of the moment, this duality creates tensions and contradictions in the strategies adopted. A second sentence that could be used to sum up the foreign policy of the Central Asian states runs as follows: They desire more inter­ national integration, more assurance of their territorial unity, and less regionalism. This strategy implies a clearly instrumental conception of international relations: Central Asian governments sign a good many documents but never consider them binding. All are members of major international organizations such as UN agencies, and are or have been the beneficiaries of loans from the World Bank and the International Monetary Fund, as well as from the European Bank for Reconstruction and Development, the Asian Development Bank, and the Islamic Development Bank. All are also members of the Organization for Security and Cooperation in Europe (OSCE); the Economic Cooperation Organization (ECO), with Turkey, Iran, Pakistan, and Azerbaijan; the Organization of Islamic Cooperation (OIC); the NATO Partnership for Peace (PfP); the Conference on Interaction and Confidence Building Measures in Asia (CICA); and the Central Asian Nuclear-­Weapon-­Free Zone (CANWFZ), the first denuclearized zone in the Northern Hemisphere, bordering atomic powers such as Russia and China, and states on the verge of acquiring nuclear capacity such as Iran. However, many of these regional organizations, such as ECO or CICA, are essentially forums for state-­level discussion and inter­national visibility, with a socializing function, and have no impact on local realities. Some of them have had difficulties in creating the hoped-­for dynamic of regional cooperation, as is the case with the Central Asia Regional Economic Cooperation (CAREC) program in terms of transport and trade, and the EU-­supported and UNDP-­implemented Border Management in Central Asia (BOMCA) border security program. These projects are usually lacking in substance and do not work in favor of deeper regional integration. The only ones that have received some support from some ruling elites — ​not from the Turkmen elites and only

78 | Marlene Laruelle

very fickle support from those in Uzbekistan — ​are the security-­oriented institutions dominated by either Russia or China, that is, the Collective Security Treaty Organization and the Shanghai Cooperation Organization, the functions of which are essentially defensive. Belonging to them enables the elites to forge solidarity in the name of domestic regime security, as well as to brush aside the agendas of good governance or democracy promotion, a move aptly named “protective integration” by Roy Allison.1 The majority of the Central Asian states thus reject supranational organizations that would effectively limit their margin of maneuver. The main multilateral organizations, like the Shanghai Cooperation Organization and the Collective Security Treaty Organization, have no supranational objectives, but instead aim only at consultation, cooperation, and protection from Western pressures. The Common Economic Space (CES) between Russia, Belarus, and Kazakhstan, which came into effect on January 1, 2012, and the formation of a supranational executive body, the Eurasian Economic Commission, is Kazakhstan’s first supranational agreement since the fall of the Soviet Union. Kyrgyzstan and Tajikistan, which have applied for the Russia-­backed Customs Union with reluctance, have shown only moderate interest in it, where Uzbekistan and Turkmenistan have overtly criticized all these projects.2 In parallel with this instrumental use of multilateral organizations, the Central Asian states and their established elites share a pragmatic and sometimes cynical view of international relations: for them, power relations have more pertinence than legal obligations, and they consider that the big players in this world are not subject to binding agreements. This reading justifies their own use of strategies that they manipulate to their own advantage — ​for example, in Kyrgyzstan’s negotiations over the closure of the Manas base, or Uzbekistan’s handling of the Northern Distribution Network. This may also be explained by the fact that Central Asian foreign policies are presidentially driven: decisions are the province of the presidential apparatus, that is, of the president himself and his immediate entourage, while senior officials in the Ministry of Foreign Affairs have no more than symbolic functions of representation and of managing current affairs. The authoritarian nature of the regimes makes the decision-­making process very opaque, but even in the least authoritarian country in the region, Kyrgyzstan, foreign affairs

Foreign policy goals of the central asian states | 79

are the domain of the president’s inner circle, not of diplomats. The lack of interest shown in international issues gets reflected in career strategies: with some rare exceptions, getting a diplomatic post is often considered a punishment, an exclusion from the inner circle.

Openness and Closedness: Multi-­vectoral Foreign Policies From the time of their independence, the states of Central Asia have promoted divergent conceptions of their place on the international stage, and these divergences have widened over time. Twenty years after the collapse of the Soviet Union, the Central Asian foreign policies share similar objectives — ​autonomy but recognition — ​but from these they draw very different strategies and outcomes. Indeed, the diversity of positions is extreme, going from Turkmen isolationism, so complete that it led to the country’s often being placed alongside North Korea and Burma in various global rankings, to the far-­reaching openness of Kyrgyzstan, the first former Soviet state to join the WTO in 1998, even prior to the Baltic countries, and the only country in the world to host a Russian and an American military base on its soil at a distance of only a few kilometers from one another. Schematically, the Central Asian states can be divided into two broad categories: those who want to keep a distance from Russia at all costs — ​ Turkmenistan and Uzbekistan — ​and those who deem Moscow to be an essential actor in Eurasia over the long term. However, this framework is too binary and needs to be nuanced. First, Turkmenistan pursues a policy of isolationism that is not only directed against Moscow and the Eurasian region: with the exception of Turkey, Iran, and China, its three main allies, and to a lesser extent the United Arab Emirates, neither does Ashgabat welcome Westerners. The Turkmen authorities continue to be very cautious concerning the requests for cooperation issuing from Washington and the European countries, in particular in the guise of the European Union. The situation has slightly improved since 2007 with Gurbanguly Berdimuhame­ dov’s coming to power, but the hopes of seeing the country engage in a Khrushchevian thaw have not borne out.3 More than by its anti-­Russian foreign policy, the country is thus above all defined by its closed­ ness. China’s growing hegemony over Turkmen gas (the 2011 contract

80 | Marlene Laruelle

stipulates 65 bcm/year to be sold to China by 2015, so a large part of the Turkmen production, bought for cheap by Beijing) will probably reinforce this isolationist trend, which allows the Turkmen elites a guaranteed rent without having to change policy. *** Uzbekistan, for its part, has opted to remove itself from post-­Soviet integration dynamics ever since independence, due to its desire to take a distance from Russia. However, it has also impeded intra-­regional processes of integration. Building regional unity has only ever been meaningful to Tashkent if it played the lead figure and had its own status reinforced, which has not been the case. Despite being anti-­Russian, Uzbek foreign policy has not thus turned out to be advantageous for its “cultural” neighbors such as Turkey or Iran, with whom relations have always been chaotic, but more recently has turned in a decisive way toward China. Since independence, Uzbek strategy has been unambiguously pro-­ American, not for reasons of political or ideological sympathy (the country has, for example, never seen European actors as allies), but for reasons of strategy: Tashkent sees itself as a major historical regional power and desires symbolic recognition of this status through a privileged partnership with Washington. However, the country has had to switch its position in accordance with the geopolitical interests of the moment. In the 1990s, its foreign policy seemed well established and stable. The pro-­American strategy culminated after 9/11 with the opening of the U.S. base of Karshi-­Khanabad, a symbol of the Uzbek-­American honeymoon, but abruptly drew to a close in 2004 – ​2005.4 After an interlude of a few years (2005 – ​2008) in favor of Russia,5 Tashkent turned once again to the United States, a partnership that has been strengthened thanks to Uzbekistan’s key role in the Northern Distribution Network. Although the country became more clearly isolated from the international community in the early twenty-­first century, its status as a regional power on the demographic and strategic levels, despite growing economic weaknesses, has granted it large international visibility and meant that all external actors have pressed their suits with it despite the difficulties involved in negotiating with Islam Karimov’s regime. ***

Foreign policy goals of the central asian states | 81

The three pro-­Russian countries are not uniform either. Tajikistan is the most critical of Moscow. It regularly reconsiders the status accorded to the Russian language, and is a tough negotiator as regards the Russian military base, now on a lease for thirty years. Moreover, Dushanbe refuses to give authorization for Russian border guards to return to the Tajik-­Afghan border. At the same time, this increasingly anti-­Russian policy should not mislead us; it is a bargaining strategy toward Moscow and a branding by the authorities aimed at domestic public opinion. In fact, the Tajik economy is almost entirely dependent upon Russia, both in terms of the remittances sent by a million Tajik migrants (out of a population of seven million) and in terms of investments.6 Kyrgyzstan is distinctly more pro-­Russian than its Tajik neighbor, and the cultural tensions with Moscow are fewer since the country still has a large Slavic minority, grants Russian language a bilingual status, and points up its Russo-­Soviet heritage. The Kyrgyz economy is just as dependent upon Russia, due to massive investments and remittances, though the latter are less significant than in Tajikistan since Kyrgyz migrants also travel to Kazakhstan. Its massive opening up in the 1990s meant that Kyrgyzstan nonetheless benefitted, more than its Tajik neighbor, from international, particularly Western, attention: the country served as a laboratory of Western aid to “civil society,” and the political system there remains freer. Furthermore, the Kyrgyz economy’s near-­total dependency on the re-­export of Chinese products and the presence of the American military base at Manas (officially a “transit center”) work in favor of promoting greater balance.7 Kazakhstan remains the most pro-­Russian state of the region: Nursultan Nazarbaev has not stopped defending strategies of regional integration between post-­Soviet states; ever since 1994 he has been actively in favor of a Eurasian Union endowed with supranational institutions, well before Vladimir Putin’s revival of the idea in October 2011.8 Kazakhstan ranks Moscow as its foremost ally both on the economic (Eurasian Economic Community, Customs Union) and strategic (Collective Security Treaty Organization) levels. However, this positioning can be explained by Astana’s being able to gain respect from Moscow, and by the fact that its partnership with China, its rapprochement with the European Union, and its strategy of visibility vis-­à-­vis NATO are accepted by the Kremlin. Over the long term, the Kazakh authorities do not project

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themselves as simply a “loyal second in command” to Moscow but as its equal in Eurasian space. All the states of Central Asia claim to be pursuing so-­called multi-­ vectoral policies. While multilateralism presupposes multiple actors working in concert on a given issue, multi-­vectoralism means a multiplicity of bilateral relations that create a balancing effect for the country initiating them. Kazakhstan is the only one to have succeeded in implementing a positive multi-­vectoral policy, that is, in building links in multiple directions, rather than opposing the actors against one another, and in having this strategy recognized by its partners. By openly displaying the hierarchy of its relationships — ​Russia first, China second, followed by the West (more the European Union than the United States)9 — ​Kazakh foreign policy has managed to build stable and consensual logics for presenting its case on the international scene. The multi-­vectoral foreign policy of the other Central Asian states has proven more problematic.10 Turkmenistan’s stance of “permanent neutrality” can be defined as multi-­vectoral only by default, since it is more a testimony to isolationism than international involvement. Uzbekistan has undergone several major strategic reversals, which makes its multi-­vectoralism a sign not of stability, but of geopolitical instability. Kyrgyzstan, for its part, and Tajikistan to a lesser extent are able to play with a fair amount of success on the oppositions between the major powers, but they do not have any established multi-­vectored policy to speak of. They play one power against another, while Kazakhstan plays upon all of the powers at the same time. Only Astana has thus developed a foreign policy whose multi-­vectoral nature is cumulative, whereas those of the others are exclusive. This multi-­vectoral strategy is replicated in matters of regional integration. Kazakhstan has made multilateralism one of the principles of its foreign policy, and the country considers itself one of the heralds of multilateralism not only in the Eurasian or Asian space but also on the global level, with, among others, its initiative for elaborating a universal declaration for a denuclearized world, which it put forward at the nuclear security summit held in Washington in April 2010.11 Kazakhstan is a fervent supporter of numerous regional organizations, especially the Conference on Interaction and Confidence Building Measures in Asia (CICA), initiated by Nazarbaev himself. Kyrgyzstan endorses

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also the international community’s narrative in favor of multilateralism, about which Tajikistan is clearly less enthusiastic, but it plays the game out of a lack of alternatives. The other two states give clear preference to bilateralism. Ashgabat’s and Tashkent’s foreign policies are even constructed on the basis of their refusal to join the various regional bodies. In the 1990s Turkmenistan refused to join the Central Asian Cooperation Organization (CACO) — ​ the only one in which no regional powers were involved; it suspended its participation in the CIS; and in the 2000s it has refused to join any of the Moscow-­led institutions or the China-­led SCO. Uzbekistan became a member of CACO but has refused to apply its rules. It joined the SCO in 2001 after the incursions of the Islamic Movement of Uzbekistan into Tajikistan and Kyrgyzstan in the summer of 1999 and 2000, with the twin aims of building a collective security policy and of hosting the Regional Anti-­Terrorist Structure (RATS).12 Then, under pressure from Moscow, it joined the Eurasian Economic Community in 2005 followed by the CSTO in 2006, at a time when relations with the United States had visibly deteriorated. However, it has never implemented any CSTO mandates and left the organization in 2012, while continuing to participate with reluctance in some of the SCO joint activities. In addition, intra-­regional cooperation between Central Asian states is impeded by multiple tensions between political leaders, unresolved border issues, contradictory geopolitical orientations, and an inability to find a consensual resolution to the regional water/energy nexus.13 Ever since independence, Turkmenistan has indicated its desire to leave the Eurasian and Central Asian space and orient itself around Iran and Turkey. Indeed, the country has effectively stopped its regional cooperation. However, in practice it is still obliged to cooperate with its Uzbek neighbor for the collective management of the border dams; it tries to sell electricity to Tajikistan; and since 2007 it has been cooperating more closely with Kazakhstan. Uzbekistan, for its part, favored intra-­ Central Asia cooperation only when it reckoned it was the undisputed leader, that is, at the beginning of the 1990s. After that it thwarted all attempts to structure regional mechanisms: it closed its border with Tajikistan during the civil war and has never reopened it, since it continues to apply the railway blockade and refuses to demine border zones; it plays hot and cold at the volatile border with Kyrgyzstan in

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the Ferghana Valley, thus contributing to destabilizing that country14; and it has sought to prevent Kazakhstan’s rise to power. The three other states are more favorable to regional cooperation, in both economic and regional terms, and also have cultural policies that are more open to a Central Asian regional identity (for instance, Kyrgyzstan and Tajikistan allowed their respective minorities to be taught with textbooks from the other republic in minority schools). *** Fostered by external actors or international institutions, the overwhelming majority of regional organizations acting in Central Asia have refused to discuss openly the fundamental contradiction involved in encouraging Central Asian states to pursue policies that they do not want to adopt. The Central Asian regimes tend to confound regionalism that is endowed with a supranational driver, on the model of the European Union, with the need for concerted action in numerous domains, economic as well as strategic. In their defense, most of the external actors in the region also tend to advance cards of a national character using regionalist arguments, and to legitimate their bilateralism in the name of multilateralism. This is the case with Russia and China, both of which claim to be promoting multilateralism in the name of the need for a multipolar world. These complexities largely explain the failure of “regionalism”: regional organizations operate first on the basis of the lowest common denominator, and therefore on minimal consensus, which often works to foster the status quo more than it does to build any sort of regional architecture; and second in an essentially declaratory mode, granting little interest to implementation mechanisms, with therefore a limited impact on realities on the ground.

Cultural Sovereignty as a First Foreign Policy Goal All the Central Asian states have made cultural sovereignty a key element of their foreign policy. They are thus extremely sensitive to matters of cultural heritage. Turkmenistan is an extreme case of this, due to the exacerbated nationalism organized by the authorities in order to legitimate the regime of Saparmurat Niyazov and then that of Gurbanguly Berdimuhamedov.15 As for Kyrgyzstan, it was deeply shocked that

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China asked UNESCO to recognize, in the name of its Kyrgyz minority, the Manas epic as being part of mankind’s oral heritage.16 The fact that Beijing is able today to argue that Manas is a Chinese cultural good, at the same time as Bishkek considers that it is its own national epic, has provoked fierce anti-­Chinese polemics within Kyrgyz public opinion and presented a problem for the respective diplomatic corps.17 In a general way, the states of Central Asia have a view of the international scene stamped by the fear of their ethnic/state disappearance: the narrative on the Chinese demographic threat reveals, for example, how much the question of the survival of the nation is a key element of local anxieties, explainable by the feeling of having been unforeseeably “born again” from the fall of the Soviet Union.18 In their foreign policy, the states of Central Asia severely limited Turkish pretensions to play the role of new “big brother” at the beginning of the 1990s and halted all attempts to encompass them within a Turkish identity grouping in which they would only be a piece of the greater whole.19 The same process is visible, to a lesser extent, in the relationship to Iran. Even Tajikistan has sought to impede Tehran’s attempts to include it in Iran-­centered narratives in the name of their linguistic unity. The states of Central Asia also criticize Moscow’s tendencies to incorporate them into post-­Soviet mechanisms and its presumptions that this meets their own objectives. They denounce the disdainful character of Russian foreign policy, which flaunts its lack of respect for the independence of the new states. While such a strategy is obvious in the most anti-­Russian states such as Turkmenistan and Uzbekistan, it is also manifest in the three pro-­Russian countries: Tajikistan has revealed its cultural sensitivities to be great where Russia is concerned;20 Kyrgyzstan considers that some Moscow-­backed institutions such as the Customs Union go against its economic interests; and even Kazakhstan must sometimes reiterate that it is an autonomous actor able to make the decisions it wishes to without having to consult the Kremlin. *** Lastly, like many other emergent or developing countries, the states of Central Asia are very critical of the world order that they regard as dominated by the West and its values. They denounce the interference of Western countries in domestic questions in the name of respect for

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human rights; criticize the international financial institutions like the World Bank or International Monetary Fund for their narrow view of enforceable financial and budgetary norms; and endorse a multipolar world in which the opinion of non-­Western countries would be better taken into account. At the same time, they all lack international recognition and wish to win the attention of the most prestigious countries, mainly the United States and Europe. They share, nevertheless, the feeling of being disappointed by Western involvement in their favor: the dominant narrative they all express is that American and European engagement is temporary and unstable, that the West always promises more than it delivers, and that it might suddenly decide to vacate the scene, leaving local actors all alone to deal with their neighbors.

Mimetic Strategies toward External Actors’ Narratives Similar to many other young states that have only recently appeared on the international stage, those of Central Asia are hesitating between two types of narrative: that of the victim and that of the responsible actor. They often present themselves as still being the victims of Russia or the Soviet Union, denounced as former colonizers, in order to avoid taking on certain responsibilities and to receive specific aids. At the same time, however, they request to be recognized as fully fledged international actors. These ambiguities are visible, for example, in the international handling of environmental questions, particularly during debates on the question of the Aral Sea, in which Uzbekistan and Turkmenistan have tried to lay all the blame on the Soviet regime without changing their contemporary practices of water overconsumption.21 This twofold position of victim/responsible actor is also found in the Central Asian debates on the return of the “Great Game” and the influence of the great powers, particularly the United States, Russia, and China. Central Asian experts, but also the political authorities, tend to present their countries as the victims of great powers’ strategies, considering that they have been torn between contradictory logics — ​this trait is particularly evident in Kyrgyzstan due to the presence of the two military bases, one American, the other Russian.22 At the same time, the Central Asians criticize Western discourse about their status as a buffer zone and lay claim to their autonomy of decision.

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The same paradoxical relation to the outside world appears in the use made by Central Asian political leaders and diplomats of geo-­historical references — ​for example, being at the “crossroads” of the world, at a “meeting point” between the East and West. They often implement mimetic strategies with external actors that enable them to present the face that is expected of them and to create common discursive spaces with their main partners. Some cultural borrowings can be easily written into their own vision; others are more artificial. The five states easily consolidated their own discourses on the Islamic threat by using the Russian narrative on this issue inaugurated at the start of the second war in Chechnya in 1999, and use each new bomb attack in Russia to underscore their own fragility. After 9/11 their discourse has also been strengthened by borrowing the theme of the “war on terror” from the United States, thus enabling the justification of the repressive measures used against all those suspected of threatening the established order. Further, they were quick to adopt the Chinese narrative of the fight against the “three evils” (san gu shili) of separatism, extremism, and fundamentalism, which has become the symbol of the Shanghai Cooperation Organization, and which originally targeted the Uighur dissidents. These three borrowings — ​from Russia on the Islamic threat, from the United States on the war on terror, and from China on the three evils — ​made very clear their desire to repress every approach to Islam that they deem incongruent with their secular identity and potentially challenging the incumbent regimes.23 When dealing with other Muslim states, the states of Central Asia point up their Muslim identities, underscore their belonging to the Organization of the Islamic Conference, and recall that they are in the process of entering the Umma in terms of Islamic education or ritual practices. This face enables them to access financial support from the Islamic Development Bank, as well as from various sovereign funds from the United Arab Emirates, both for infrastructure and Islamic banking projects.24 The four Turkish-­speaking countries also point up their linguistic proximity with the Turkish authorities and the organizations associated with it such as Turksoy, while Tajikistan plays the card of the Persian-­speaking unity with Iran. With the countries of South and East Asia, the Central Asian states underline other elements of identity, ones based on historical references

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to the Silk Roads along which people, products, and ideas travelled from east to west throughout centuries. They tend to minimize their Muslim identity by valorizing the — ​more or less mythologized — ​pre-­Islamic epochs. They also insist on their will to adopt specific contemporary Asian models. In the early years of independence, the Central Asian presidents increased their positive references to an allegedly “Asian model,” insisting on the economic dynamism of Asian countries, but also on their political regimes, and their allegedly non-­Westernized cultural identity. Later, at the turn of the twenty-­first century, the symbolism of the Asian Dragons (Hong Kong, Singapore, South Korea, and Taiwan) and Asian Tigers (Thailand, Malaysia, Indonesia, the Philippines, and Vietnam) was translated by Kazakhstan into its own narrative of becoming a “snow leopard.”25 This valorization of both South and Southeast Asia, very manifest in the first half of the 1990s, gradually dissipated with the return of Russian influence and the rise of China, before reappearing at the end of the 2000s, this time with more tangible economic foundations. This is particularly true in Kazakhstan, where the prospect of a high-­tech sector is most realistic and the geopolitical stakes toward the Asia-­Pacific region stronger. The use of shared historical references is inflected with a specific national flavor depending upon the country being dealt with. With Japan, for example, Central Asia emphasizes the role it played in the spread of Buddhism from India toward East Asia: the Buddhist roots of Japanese culture are allegedly to be found in Central Asia.26 With South Korea, Central Asia valorizes itself as the possible cradle of the ethnic and linguistic origins of Koreans, and promotes its Korean minority, which is particularly well integrated and a symbol of social success.27 With India, the focus is on the Mughal Empire and its brilliant universal culture, which constitute the real jewel in the crown of historical arguments that are advanced to exalt their age-­old bilateral relations.28 With China, the Silk Road narrative is used in its Sino-­centric version, enabling centuries of either mutual ignorance or tensions to be bypassed and the emphasis to be placed on more ancient periods when China was a key actor in the Central Asian region.29 When negotiating with Moscow and Beijing, the Central Asian states do not conceal the authoritarian nature of their decision making. When

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meeting with the Europeans and the Americans, however, they display concern for democratization and good governance, emphasizing their past as a Soviet country in “transition” toward the norms of the Western market economy and democracy, requesting more time to be able to integrate the requested changes, and showing a concern to improve their governance. They also reiterate Western preoccupations when it is in their own interests: they point out, for example, their secular legislation and their refusal to become Islamic states, particularly when dealing with Israel, and play the role of countries menaced by the “Afghan threat” so that they can ingratiate themselves with Europe and the United States and obtain financing from them.30

Foreign Policy as a Domestic Tool for Political Legitimacy Foreign policy is not disconnected from domestic realities: in many cases, the choices made in this domain are closely dependent on internal questions, more so in young states that have to forge a twofold legitimacy, both domestic and international. The most flagrant case of direct connection between building national identity, legitimizing political leadership, and foreign policy strategies is the symbolic competition that pitted Uzbekistan and Kazakhstan against each other in the 1990s, and continues partially to shape interstate relations in the region.31 The Uzbek president, Islam Karimov, referred to the need for regional unity by reviving the historical name of Turkestan — ​used in Western and Russian Orientalist texts in the nineteenth century to define both contemporary post-­Soviet Central Asia and Xinjiang — ​and promoted an identity based on Turkic and Muslim values that he named Turanism.32 The Kazakh president, Nursultan Nazarbaev, by contrast, put forward the concept of Eurasia, which situates Central Asia at the crossroads between Europe and Asia, the regional identity of which would be distinctly less Turkic and Muslim, more open to the Russian heritage, and more settled on Asian modernity — ​a combination that was obviously thought of as embodied by Kazakhstan.33 Both these narratives served as an ideological framework for foreign policy strategies — ​Uzbekistan sought to distance itself to a maximum from Russian influence, whereas Kazakhstan preferred

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to become one of the pillars of the post-­Soviet regional instances — ​but also in the personal competition into which the two presidents launched themselves in regard to public opinion. Another example of this foreign/domestic interaction is Turkmenistan’s geopolitical isolationism, which was legitimized by the country’s international status, validated by the United Nations, of “permanent (or positive) neutrality.” This can no doubt be explained by the complexity of the regional environment, and especially of the Afghan and Iranian neighborhoods; however, this isolationism is also construed as the conclusion of an autarkic narrative about Turkmen nationhood. The doctrine of permanent neutrality constitutes a key element in nation building, based on a megalomaniac narrative about the role of the Turkmen people in all the great achievements of human civilizations since antiquity and, after the Russo-­Soviet “parenthesis,” the need for the country to find the path to an alleged new “golden age.”34 Although less visible in Kyrgyzstan and Tajikistan, their respective foreign policies are also shaped by domestic-­oriented narratives concerning their own state-­building. Bishkek has often presented itself as the state most open to the international community, in line with the alleged openness of the Kyrgyz nomads, and has also cultivated an image as the Switzerland of Central Asia for purposes of domestic legitimacy, in particular under the presidency of Askar Akaev in the 1990s.35 Under Kurmanbek Bakiev, the narrative privileged an image of Kyrgyzstan as the victim of the great powers and as weakened due to the presence of two military bases on its territory: foreign policy and conspiracy theories36 thus served as an excuse to avoid naming the real reasons for the country’s fragility, mostly due to the lack of economic perspectives and the failure of the state to provide social services. Since the second “revolution” of April 2010, Roza Otunbaeva’s presidency, and the establishment of a parliamentary republic, Kyrgyzstan continues to promote itself as the most democratic country of the region, and is indeed valorized as such, for instance by the U.S. State Department. As far as Tajikistan is concerned, it managed both to valorize its Persanophone ethno-­cultural specificity — ​denouncing the all-­conquering pan-­Turkism embodied by Uzbekistan is a common feature of Tajik foreign policy — ​and to rival Iran in laying claim to the historical heart of Persian­ness on its territory.37 However, the region’s two weakest

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countries also take into account, perhaps more so than their neighbors, their contemporary situation as small states without great means: they maintain more realistic discourses on their limited foreign policy autonomy, and are more favorable to the involvement of external actors and international agencies. For regimes that are all extremely presidential and personalized — ​ as even Kyrgyzstan was under Akaev and more so under Bakiev — ​the leader’s legitimacy is in part founded on the instrumentalization of foreign policy. Official visits during which leaders are received by great Western or Asian leaders are thus highly emphasized in the local media: Uzbek and Turkmen propaganda on this subject is the most extensive, a phenomenon amplified by the total absence of press freedom. In Kazakhstan, this mode of legitimacy has been exacerbated by Nazar­ baev’s personal will to be considered an influential actor in the international arena. Very early on Astana had grasped the need to create a nation-­branding for the country and so implemented logics of lobbying in Russia (financing of press articles favorable to the Kazakh president and high media visibility in the Russian capital, in large part thanks to the direct support of the former mayor Yuri Luzhkov38) as well as in Europe (in the framework of Kazakhstan’s campaign to obtain the OSCE chairmanship in 201039) and in the United States (several articles commissioned by lobbying firms paid by Astana have come to light in recent years40).

Conclusions The foreign policy goals of the Central Asian states have common patterns thanks to their shared Soviet legacy, their status as young states, and their proximity to former empires (Russia), to emerging powers (China, India), and to unstable countries (Afghanistan). The personalization of power, the control of the main strategic and economic orientations by a small inner circle, deep-­seated local conflicts that impede intra – ​Central Asia cooperation, the need to be recognized on the international stage, and the confusion of narratives between state-­building, nationhood, and foreign policy are all common elements in large part explainable by the domestic political culture. The challenges needing to be met, however, are very different between the three rich or potentially

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rich countries (Kazakhstan, Turkmenistan, Uzbekistan), and the other two (Kyrgyzstan and Tajikistan), which are among the poorest on the planet. The region’s long-­term prospects are increasingly divergent, on a scale going from the potential failure of the Tajik and Kyrgyz states to Kazakhstan’s aim of catching up to Central European living standards in the coming decades. China’s well-­established power in the region is both a unifying element that pushes the Central Asian states toward their neighbor, and potentially a bone of contention as all of them hope for more investments. Each of these states has thus set its own foreign policy methods in terms of opening to or closing itself off from the international community, especially in relation to the three great powers of Russia, China, and the United States. All of them have successfully exploited inter­ national competition to their own advantage: for twenty years or so they have played one actor against the other and taken advantage of the lack of coordination between the main external actors and institutional organizations in order to give themselves more room to maneuver. Their multi-­vectoral strategies can be interpreted sometimes as a sign of weakness, but also as a sign of success. Although they are “small” players compared to their “large” Russian and Chinese neighbors or to the American “superpower,” they have nevertheless managed to impose their rules and to defeat foreign strategies that did not correspond to their vision of the world: they defeated the West’s will to impose a democratic good governance, the Russian hope for controlling the geopolitical orientations of the local foreign policies, the Chinese trend toward a free trade zone. It can thus be considered that, given the objectives each country has set for itself, their foreign policies have, more so than their domestic policies, been successful: the governments have more or less obtained what they wanted. One might ask, nonetheless, whether Turkmenistan’s extreme isolationism and Uzbekistan’s policy of regional obstruction will not be detrimental to the interests of the Central Asian populations over the long term. One can wonder also about the future of these policies. NATO withdrawal from Afghanistan and the decreasing interest in the region apparent in U.S. foreign policy send a worrying signal to the Central Asian elites. They feel they are being left alone to face either

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a China-­Russia coalition or a Chinese hegemony that, in either case, will reduce their room for maneuver in the global arena and put at risk their multi-­vectoral foreign policy. The Kazakhstan-­Uzbekistan strategic partnership treaty, signed on June 14, 2013, according to which the presidents of both countries have indicated the need for regional cooperation, reveals indirectly their concerns as the U.S. withdraw partly from the local radar (Kourmanova 2013).

Notes 1.  R. Allison, “Virtual Regionalism, Regional Structures and Regime Security in Central Asia,” Central Asian Survey 27, no. 2 (2008): 185 – ​202. 2.  M. Laruelle, “When the ‘Near Abroad’ Looks at Russia: The Eurasian Union Project as Seen from the Southern Republics,” Russian Analytical Digest, no. 112 (April 20, 2012): 8 – ​11. 3.  See the “Turkmenistan” special issue, China and Eurasia Forum Quarterly 8, no. 3 (2010), edited by S. Peyrouse and L. Anceschi, http://www.chinaeurasia.org/images/ stories/isdp-­cefq/CEFQ201009/cefq8.3sp47.pdf (accessed December 5, 2011). 4.  G. Gleason, “The Uzbek Expulsion of U.S. Forces and Realignment in Central Asia,” Problems of Post-­Communism 53, no. 2 (2006): 49 – ​60. 5.  The Uzbek “pro-­Russian” stance was a short-­term axis of convenience that followed the West’s condemnation of the Andijan repression of May 2005. Losing support in the United States and in Europe, Tashkent favorably received Moscow’s support, and tried to take advantage of it in terms of strategic cooperation and modernization of the Uzbek army and security services. 6.  International Labor Organization, Migrant Remittances to Tajikistan: The Potential for Savings, Economic Investment and Existing Financial Products to Attract Remittances (Moscow: ILO Subregional Office for Eastern Europe and Central Asia, 2010). 7.  For a view on the Kyrgyz narrative, see T. Berdikeyeva, ed., Current State and Prospects for the Development of Kyrgyzstan’s Foreign Policy (Bishkek: Institute for Public Policy, 2008). 8.  M. Laruelle, “Putin Uses Symbols of Soviet Power to Announce Idea of Eurasian Union,” Eurasia Daily Monitor 8, no. 195 (October 24, 2011). 9.  B. K. Sultanov and L. M. Muzaparova, eds., Stanovlenie vneshnei politiki Kazakhstana: Istoriia, dostizheniia, vzgliad na budushchee [Establishing Kazakhstan’s foreign policy: History, successes, and a look to the future] (Almaty: IWEP, 2005). 10.  F. Tolipov, “The Foreign Policy Orientations of Central Asian States: Positive and Negative Diversification,” in Eager Eyes Fixed on Eurasia, ed. Iwashita Akihiro (Sapporo: 21st Century COE Program Slavic Eurasian Studies, 2007), 23 – ​40.

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11.  “Nazarbayev Calls on Countries to Adopt Universal Declaration on Nuclear-­ Free World,” Interfax, August 26, 2010, http://www.interfax.com/newsinf.asp?id=​ 185218 (accessed September 15, 2011); “Kazakhstan Calls on OSCE States to Adopt Declaration on Nuclear-­Free World,” RIA Novosti, December 1, 2010, en.rian.ru/world/​ 20101201/161573340.html (accessed December 5, 2011). 12.  S. Aris, Eurasian Regionalism: Shanghai Cooperation Organization (New York: Palgrave Macmillan, 2011). 13.  The water issue is a key element of the Uzbekistan-­Tajikistan and Uzbekistan-­ Kyrgyzstan relationship. Water-­rich Kyrgyzstan and Tajikistan hope to develop hydroelectricity to free themselves from Uzbek domination in supplying them power, and to transform water into a geopolitical weapon. V. A. Dukhovny and J. De Schutter, Water in Central Asia: Past, Present, Future (London: CRC Press, 2011). 14.  N. Megoran, “The Critical Geopolitics of the Uzbekistan – ​Kyrgyzstan Ferghana Valley Boundary Dispute, 1999 – ​2000,” Political Geography 23 (2004): 731 – ​64. 15.  M. Denison, “The Art of the Impossible: Political Symbolism, and the Creation of National Identity and Collective Memory in Post-­Soviet Turkmenistan,” Europe-­Asia Studies 61, no. 7 (2009): 1167 – ​87. 16.  Manas is the main Kyrgyz epic poem, and with more than 210,000 lines, one of the longest in the world. The Kyrgyz authorities have institutionalized Manas as the founding father of the Kyrgyz people, and promote him as a model for independent Kyrgyzstan. The jubilee of Manas’s millennium was organized in 1995. 17.  M. Bekesheva, “Kyrgyzstan Protests UNESCO’s Listing of Epic of Manas as Chinese,” Central Asia Online, February 2, 2010, http://centralasiaonline.com/en_GB/ articles/caii/features/entertainment/2010/02/20/feature-­02 (accessed December 20, 2011). 18.  M. Laruelle and S. Peyrouse, China as a Neighbor: Central Asian Perspectives and Strategies, Silk Road Monograph (Washington, D.C.: Central Asia-­Caucasus Institute, 2009). 19.  Z. Zardykhan, “Turkey and Central Asia: From Fraternity to Partnership,” in Great Powers and Regional Integration in Central Asia: A Local Perspective, ed. M. Esteban and N. de Pedro (Madrid: Fundación Alternativas; Almaty: KIMEP, 2008), 79 – ​94. See also B. Balci, ed., “La Turquie en Asie centrale: La conversion au réalisme (1991 – ​2000),” IFEA Working Papers, no. 5 (2001).  20.  In 2007, for instance, the president de-­Russified his surname (from Rahmonov to Rahmon). Though this practice has not been made into law, gradually more government officials have de-­Russified their family names as well. See R. Muhutdinova, “Tajikistan,” in Nations in Transit, Freedom House, 2008, http://www.unhcr.org/ refworld/pdfid/4865cf5ff.pdf. 21.  V. A. Dukhovny and S. Sokolov, Lessons on Cooperation Building to Manage Water Conflicts in the Aral Sea Basin (Paris: UNESCO; Interstate Commission for Water Coordination in Central Asia, 2003); K. D. W. Nandalal and K. W. Hipel, “Strategic Decision Support for Resolving Conflict over Water Sharing among Countries

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along the Syr Darya River in the Aral Sea Basin,” Journal of Water Resources Planning Management 133, no. 4 (2007): 289 – ​99. 22.  H. Huskey, “Foreign Policy in a Vulnerable State: Kyrgyzstan as Military Entre­ pôt between the Great Powers,” China and Eurasia Forum Quarterly 6, no. 4 (2008): 5 – ​18. 23.  For an example on Tajikistan, see J. Heathershaw and S. Roche, “Conflict in Tajikistan — ​Not Really about Radical Islam,” Open Democracy, October 2010, http:// www.opendemocracy.net/john-­heathershaw-­sophie-­roche/conflict-­in-­tajikistan-­%E2%​ 80%93-­not-­really-­about-­radical-­islam. 24.  M. Laruelle and S. Peyrouse, Central Asia in an Era of Globalization (New York: M. E. Sharpe, 2012). 25.  S. S. Samubaldin, Drakony i tigry Azii: Smozhet li kazakhstanskii bars proiti ikh tropami? [Dragons and tigers of Asia: Can the Kazakh snow leopard follow their path?] (Almaty: International Eurasian Economic Academy, 1998). 26.  C. Len, T. Uyama, and H. Tetsuya, eds., Japan’s Silk Road Diplomacy: Paving the Road Ahead (Washington, D.C.: Central Asia-­Caucasus Institute, 2008). 27.  K. E. Calder and V. Kim, “Korea, the United States, and Central Asia: Far-­Flung Partners in a Globalizing World,” Korea Economic Institute Academic Papers Series 3, no. 9 (2008). 28.  M. Laruelle and S. Peyrouse, eds., Mapping Central Asia: Indian Perceptions and Strategies (Farnham, UK: Ashgate, 2011). 29.  J. A. Millward, “Positioning Xinjiang in Eurasian and Chinese History: Differing Visions of the ‘Silk Road,’ ” in China, Xinjiang and Central Asia, ed. C. Mackerras and M. Clarke (London: Routledge, 2009), 65 – ​66. 30.  M. Laruelle, “Reassessing ‘Security’ in Central Asia: The Weight of Neighboring Afghanistan,” in Contemporary Issues in International Security: U.S-­Russian-­European Views 2011, ed. S. Blank (Carlisle: Strategic Studies Institute, 2012). 31.  M. Brill Olcott, “Rivalry and Competition in Central Asia,” in Central Asia and the Caucasus: At the Crossroads of Eurasia in the 21st Century, ed. W. Hermann and J. F. Linn (Washington, D.C.: Sage; Emerging Market Forum, 2011), 17 – ​42. 32.  I. Karimov, Turkistan, nash obshchii dom [Turkestan, our common home] (Tashkent: Uzbekistan, 1995). 33.  On Kazakh Eurasianism, see M. Laruelle, Russian Eurasianism: An Ideology of Empire (Washington, D.C.: Johns Hopkins University; Woodrow Wilson Press, 2008), 171 – ​88. 34.  L. Anceschi, Turkmenistan’s Foreign Policy: Positive Neutrality and the Consolidation of the Turkmen Regime (London: Routledge, 2008). 35.  E. Marat, “Nation Branding in Central Asia: A New Campaign to Present Ideas about the State and the Nation,” Europe-­Asia Studies 61, no. 7 (2009): 1123 – ​36. 36.  J. Heathershaw, “Of National Fathers and Russian Elder Brothers: Conspiracy Theories and Political Ideas in Post-­Soviet Central Asia,” Russian Review 71, no. 4 (2012): 610 – ​29.

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37.  M. Laruelle, “The Return of the Aryan Myth: Tajikistan in Search for a Secularized National Ideology,” Nationalities Papers 35, no. 1 (2007): 51 – ​70. 38.  Anonymous interviews with Russian experts on Central Asia, Moscow, May 2004 and December 2007. 39.  See “Lobbying for Governments in Brussels,” Corporate Europe Observatory, http://www.corporateeurope.org/publications/lobbying-­governments-­brussels (accessed December 20, 2011). 40.  J. Kucera, “Kazakhstan: Astana Hires DC Lobbyists to Work on Softening Aid Requirements,” EurasiaNet, November 12, 2009, http://www.eurasianet.org/ departments/civilsociety/articles/eav111309a.shtml (accessed December 20, 2011).

References Allison, R. “Virtual Regionalism, Regional Structures and Regime Security in Central Asia.” Central Asian Survey 27, no. 2 (2008): 185 – ​202. Anceschi, L. Turkmenistan’s Foreign Policy: Positive Neutrality and the Consolidation of the Turkmen Regime (London: Routledge, 2008). Aris, S. Eurasian Regionalism: Shanghai Cooperation Organization (New York: Palgrave Macmillan, 2011). Balci, B., ed. “La Turquie en Asie centrale: La conversion au réalisme (1991 – ​2000).” IFEA Working Papers 5, 2001. Bekesheva, M. “Kyrgyzstan Protests UNESCO’s Listing of Epic of Manas as Chinese.” Central Asia Online, February 2, 2010. http://centralasiaonline.com/en_GB/ articles/caii/features/entertainment/2010/02/20/feature-­02. Accessed December 20, 2011. Berdikeyeva, T. Current State and Prospects for the Development of Kyrgyzstan’s Foreign Policy. Bishkek: Institute for Public Policy, 2008. Calder, K. E., and V. Kim. “Korea, the United States, and Central Asia: Far-­Flung Partners in a Globalizing World.” Academic Papers Series 3, no. 9, Korea Economic Institute, 2008. Denison, M. “The Art of the Impossible: Political Symbolism, and the Creation of National Identity and Collective Memory in Post-­Soviet Turkmenistan.” Europe-­ Asia Studies 61, no. 7 (2009): 1167 – ​87. Dukhovny, V. A., and J. De Schutter. Water in Central Asia: Past, Present, Future. London: CRC Press, 2011. Dukhovny, V. A., and S. Sokolov. Lessons on Cooperation Building to Manage Water Conflicts in the Aral Sea Basin. Paris: UNESCO and Interstate Commission for Water Coordination in Central Asia, 2003. Gleason, G. “The Uzbek Expulsion of U.S. Forces and Realignment in Central Asia.” Problems of Post-­Communism 53, no. 2 (2006): 49 – ​60. Heathershaw, J., “Of National Fathers and Russian Elder Brothers: Conspiracy Theories and Political Ideas in Post-­Soviet Central Asia.” Russian Review 71, no. 4 (2012): 610 – ​29.

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Heathershaw, J., and S. Roche. “Conflict in Tajikistan — ​Not Really about Radical Islam.” Open Democracy, October 2010. http://www.opendemocracy.net/john-­heathershaw​ -­sophie-­roche/conflict-­in-­tajikistan-­%E2%80%93-­not-­really-­about-­radical-­islam. Huskey, H. “Foreign Policy in a Vulnerable State: Kyrgyzstan as Military Entrepôt between the Great Powers.” China and Eurasia Forum Quarterly 6, no. 4 (2008): 5 – ​18. International Labor Organization. Migrant Remittances to Tajikistan: The Potential for Savings, Economic Investment and Existing Financial Products to Attract Remittances. Moscow: ILO Subregional Office for Eastern Europe and Central Asia, 2010. Karimov, I. Turkistan, nash obshchii dom [Turkestan, our common home]. Tashkent: Uzbekistan, 1995. “Kazakhstan Calls on OSCE States to Adopt Declaration on Nuclear-­Free World.” RIA Novosti, December 1, 2010. en.rian.ru/world/20101201/161573340.html. Accessed December 5, 2011. Kourmanova, A. “Regional Cooperation in Central Asia: Nurturing from the Ground Up.” Central Asia Fellowship Papers 1, Elliott School of International Affairs, George Washington University, October 2013. Kucera, J. “Kazakhstan: Astana Hires DC Lobbyists to Work on Softening Aid Requirements.” EurasiaNet, November 12, 2009. http://www.eurasianet.org/departments/ civilsociety/articles/eav111309a.shtml. Accessed December 20, 2011. Laruelle, M. “Putin Uses Symbols of Soviet Power to Announce Idea of Eurasian Union.” Eurasia Daily Monitor 8, no. 195 (October 24, 2011). ———. “Reassessing ‘Security’ in Central Asia: The Weight of Neighboring Afghanistan.” In Contemporary Issues in International Security: U.S-­Russian-­European Views 2011, edited by S. Blank. Carlisle: Strategic Studies Institute, 2012. ———. “The Return of the Aryan Myth: Tajikistan in Search for a Secularized National Ideology.” Nationalities Papers 35, no. 1 (2007): 51 – ​70. ———. Russian Eurasianism: An Ideology of Empire. Washington, D.C.: Johns Hopkins University; Woodrow Wilson Press, 2008). ———. “When the ‘Near Abroad’ Looks at Russia: The Eurasian Union Project as Seen from the Southern Republics.” Russian Analytical Digest, no. 112 (April 20, 2012). Laruelle, M., and S. Peyrouse. China as a Neighbor: Central Asian Perspectives and Strategies. Silk Road Monograph. Washington, D.C.: Central Asia-­Caucasus Institute, 2009. ———. Globalizing Central Asia: Geopolitics and the Challenges of Economic Development. New York: M. E. Sharpe, 2012. ———, eds. Mapping Central Asia: Indian Perceptions and Strategies. Farnham, UK: Ashgate, 2011. Len, C., T. Uyama, and H. Tetsuya, eds. Japan’s Silk Road Diplomacy: Paving the Road Ahead. Washington, D.C.: Central Asia-­Caucasus Institute, 2008. “Lobbying for Governments in Brussels.” Corporate Europe Observatory. http:// www.corporateeurope.org/publications/lobbying-­governments-­brussels. Accessed December 20, 2011.

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Marat, E. “Nation Branding in Central Asia: A New Campaign to Present Ideas about the State and the Nation.” Europe-­Asia Studies 61, no. 7 (2009): 1123 – ​36. Megoran, N. “The Critical Geopolitics of the Uzbekistan – ​Kyrgyzstan Ferghana Valley Boundary Dispute, 1999 – ​2000.” Political Geography 23 (2004): 731 – ​64. Millward, J. A. “Positioning Xinjiang in Eurasian and Chinese History: Differing Visions of the ‘Silk Road.’ ” In China, Xinjiang and Central Asia, edited by C. Mackerras, and M. Clarke, 65 – ​66. London: Routledge, 2009. Nandalal, K. D. W., and K. W. Hipel. “Strategic Decision Support for Resolving Conflict over Water Sharing among Countries along the Syr Darya River in the Aral Sea Basin.” Journal of Water Resources Planning Management 133, no. 4 (2007): 289 – ​99. “Nazarbayev Calls on Countries to Adopt Universal Declaration on Nuclear-­Free World.” Interfax, August 26, 2010. http://www.interfax.com/newsinf.asp?id=185218. Accessed September 15, 2011. Olcott, M. B. “Rivalry and Competition in Central Asia.” In Central Asia and the Caucasus: At the Crossroads of Eurasia in the 21st Century, edited by W. Hermann and J. F. Linn, 17 – ​42. Washington, D.C.: Sage; Emerging Market Forum, 2011. Peyrouse, S., and L. Anceschi, eds. “Turkmenistan.” Special issue, China and Eurasia Forum Quarterly 8, no. 3 (2010). http://www.chinaeurasia.org/images/stories/isdp​ -­cefq/CEFQ201009/cefq8.3sp47.pdf. Accessed December 5, 2011. Samubaldin, S. S. Drakony i tigry Azii: Smozhet li kazakhstanskii bars proidti ikh tropami? [Dragons and tigers of Asia: Can the Kazakh snow leopard follow their path?] Almaty: International Eurasian Economic Academy, 1998. Sultanov, B. K., and L. M. Muzaparova, eds. Stanovlenie vneshnei politiki Kazakhstana: Istoriia, dostizheniia, vzgliad na budushchee [Establishing Kazakhstan’s foreign policy: History, successes, and a look to the future]. Almaty: IWEP, 2005. Tolipov, F. “The Foreign Policy Orientations of Central Asian States: Positive and Negative Diversification.” In Eager Eyes Fixed on Eurasia, edited by Iwashita Akihiro, 23 – ​40. Sapporo: 21st Century COE Program Slavic Eurasian Studies, 2007. Zardykhan, Z. “Turkey and Central Asia: From Fraternity to Partnership.” In Great Powers and Regional Integration in Central Asia: A Local Perspective, edited by M. Esteban and N. de Pedro, 79 – ​94. Madrid: Fundación Alternativas; Almaty: KIMEP, 2008.

The Outside Powers

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4

Both Epicenter and Periphery U.S. Interests in Central Asia Andrew Kuchins and Shalini Sharan

Introduction The strategic landscape of Eurasia is rapidly changing, and Central Asia is literally at its geographical epicenter.1 More than twenty years past the collapse of the Soviet Union, one can agree with Vladimir Putin’s recent pronouncement that the “post-­Soviet era is over” in Eurasia. This period was marked by a reluctant Russian strategic retreat, and geo­political competition that was usually framed as Russian interests contesting those of the United States and the West in a modern version of the nineteenth-­century “Great Game.” A new and wider set of emerging powers in Eurasia contends with U.S. and Western interests, and the regional states have matured as independent states themselves. Further, a new generation of elites is coming to the fore in Central Asia whose memory of the Soviet Union grows more distant. How the Central Asian states will manage their domestic transition challenges and which international partners and institutions they will view as most efficacious in promoting their national interests are very uncertain today. What is clear at this point is that all five Central Asian states are pursuing various forms of multi-­vectorism in their foreign relations, and although Kyrgyzstan and Tajikistan are fragile states, all five Central Asian nations after more than twenty years of sovereignty more confidently assert their interests with others. The collapse of the Soviet Union more than twenty years ago also ushered in a new era in Eurasian geopolitics. Covering a vast landmass and rich in resources, the newly independent Central Asian states of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan 101

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have presented successive U.S. administrations a variety of foreign policy challenges. Efforts to promote market democratic reforms have been met with entrenched resistance from authoritarian rulers. Ethnic clashes, endemic corruption, and economic crises have rendered the region fragile and volatile. There is also tremendous diversity economically, politically, socially, and culturally from relatively wealthy Kazakhstan to impoverished Kyrgyzstan and Tajikistan, which makes devising a coherent Central Asian strategy more difficult. While greater regional integration would likely provide economic and security benefits, deep distrust, ethnic conflicts, and a heightened sense of sovereignty in the wake of more than a hundred years of tsarist Russian and Soviet policies of integration present major roadblocks to cooperation. Nevertheless, the region’s strategic location at the crossroads of rapidly growing Eurasian powers including China, India, Russia, Turkey, and Iran, its mineral and energy wealth, and its proximity to Afghanistan have forced U.S. policy makers to spend much time developing strategies to deal with the region. The inflection point in U.S. policy toward Central Asia was 9/11 and America’s war on terror, which embedded it in the region vis-­à-­vis the war in Afghanistan. The Central Asian nations emerged as geostrategic partners in the war by providing military bases and other assistance. Later they provided additional crucial logistical support as key partners in the Northern Distribution Network (NDN) and are now important players in devising a regional long-­term strategy on Afghanistan. Robert Blake, former assistant secretary for South and Central Asian affairs, outlined in January 2011 the Obama administration’s priorities in engaging Central Asian partners as key to the long-­term strategy in Afghanistan: “Cultivating broad and long-­lasting relationships with the Central Asian countries is the only way to ensure a common understanding and gain their long-­term support for our efforts in Afghanistan.”2 Since the announcement in December 2010 of a gradual drawdown of U.S. military forces in Afghanistan by 2014, the Central Asian political elites have been and remain very nervous about the return of the Taliban to Afghanistan and growing terrorist threats and instability crossing their borders, as they experienced in the 1990s. The memory of the Soviet Union’s rapid withdrawal and subsequent regional instability remains fresh. Three countries of the region, Tajikistan, Turkmenistan,

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and Uzbekistan, share a long and porous border with Afghanistan, and broader regional cooperation will be essential to achieve any success in longer-­term stabilization of Afghanistan. Violence in Kyrgyzstan in 2010 demonstrated that regional security organizations, including the Collective Security Treaty Organization (CSTO), the Shanghai Cooperation Organization (SCO), and the Organization for Security and Cooperation in Europe (OSCE), are very limited in their capacity to guarantee regional security. U.S. tensions with Pakistan and Iran are high, placing greater importance on the Central Asian countries in stabilizing Afghanistan, particularly its northern regions. This also gives the Central Asian countries greater leverage in dealing with Washington. India, Turkey, and China are becoming increasingly important players as well. This emerging multipolarity in the region will necessitate a deft and strategic multi-­ vectored U.S. policy approach that emphasizes long-­term support for the region, as a December 2010 Senate Foreign Relations Committee report stated: “The U.S. role in Afghanistan is changing, but Washington should repeatedly stress that its engagement is not ending.”3 Budgetary pressures in Washington as well as the Obama administration’s new defense strategy calling for greater focus on the Asia-­Pacific, however, naturally send regional elites the message of U.S. retreat. To counter this, Washington must effectively engage Central Asian states’ desire for U.S. and Western cooperation to heighten their sovereignty and balance Chinese, Russian, and other interests. The 2014 deadline makes achieving progress on regional security, political cooperation, and economic cooperation an urgent priority; the dismal recent historical record in Central and South Asia on this score fuels the growing chorus of naysayers and skeptics in and outside the United States who doubt that much success can be achieved. In May 2012 the United States, after long negotiations, reached a Strategic Partnership Agreement with Afghanistan, which commits Afghanistan to provide U.S. personnel access to and use of Afghan facilities through 2014 and beyond. The agreement provides for the possibility of U.S. forces in Afghanistan after 2014, for the purposes of training Afghan forces and targeting the remnants of al-­Qaeda, and commits the United States and Afghanistan to initiate negotiations on a Bilateral Security Agreement to supersede our current Status of

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Forces Agreement. The United States will also designate Afghanistan a “major non-­NATO ally” to provide a long-­term framework for security and defense cooperation. This agreement was a step in the right direction, but it also left many points ambiguous, such as the number of U.S. military to remain in Afghanistan after 2014 and the level of future assistance.4 The United States and Afghanistan successfully negotiated a Bilateral Security Agreement in 2013, but despite the landslide approval of the agreement at a December 2013 Loya Jirga, President Karzai refused to sign it, saying that it should be left to his successor (Ashraf Ghani was elected in the spring of 2014). This extended uncertainty has frustrated the Obama administration and further complicates the implementation of the post-­2014 U.S. presence in Afghanistan. But it is impossible to discount the deep fatigue in U.S. policy-­ making circles with Afghanistan. Regardless of rhetorical promises and partnership agreements, even the most optimistic observers — ​and there are few optimists left regarding Afghanistan — ​must realize that Washington’s commitment to Afghanistan could drop off dramatically in the coming years.

Regional Security Architecture: NATO, the SCO, and the CSTO NATO’s emphasis on security in Central Asia since 2001 has provided the opportunity for more cooperation in the region. The Central Asian states’ logistical support through bases and overflight rights beginning in the fall of 2001 have been crucial to NATO’s mission in Afghanistan. However, U.S. needs for basing and logistical support for the Afghan war make these bilateral relationships much more transactional than strategic. More recently, since early 2009, the most significant contribution made by the Central Asian states has been in facilitating the NDN. The value of the NDN was highlighted in November 2011, when Islamabad cut off transit through Pakistan for several months in response to a U.S. drone strike that resulted in twenty-­four deaths.5 The existence of the NDN also made President Obama’s decision to deploy secret forces to take out Osama Bin Laden in May 2011 less risky from the standpoint of continuous supplies for U.S. forces. At its peak in 2011 – ​2012, the NDN transported about 40 percent of all cargo for operations in Afghanistan (more than 50 percent of

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nonlethal supplies), and about 70 percent of the NDN freight enters through Uzbekistan. Uzbekistan has been critical because of its rail network that extends to the Afghan border, infrastructure relied upon in the 1980s by the Soviets to support their troop presence in Afghanistan. This transit corridor has made Uzbekistan a key partner of the U.S. and NATO mission in Afghanistan. Uzbekistan became a U.S. strategic partner in 1995 and has had a tumultuous relationship with the United States since then. The U.S.-­Uzbekistan Strategic Partnership Document was signed in 2002 expanding military, security, economic, and humanitarian cooperation, and U.S. military forces were granted access to the Karshi Khanabad base.6 Later, after the United States harshly condemned the Andijan crisis, the Uzbeks expelled the United States from the Karshi Khanabad military base in 2005.7 After 9/11 the relationship has changed but continues to be shaky, mainly due to human rights concerns in Washington. The Uzbek support for the NDN was announced by Karimov in 2008 and has been the pivot for further cooperation between the two nations based on mutual interests. Despite these concerns, in January 2012 the United States extended the Foreign Military Financing (FMF) waiver for military sales to Uzbekistan. Kyrgyzstan and the history of the Manas air base/transit center epitomize the essential logistical role Central Asia plays in the Afghan war as well as the challenges of working with fragile security partners under considerable domestic and foreign pressures. Kyrgyzstan is also the only Central Asian country to host both a Russian and U.S. base, often using one as leverage against the other. The Manas facility, established in 2001 during Askar Akaev’s tenure, has been central to U.S. operations in Afghanistan. Following the ousting of Akaev, the Bakiev government in 2005 sought to renegotiate the basing agreement. Condemning the leasing agreements as fraught with corruption, Bakiev issued sharp criticism of the way revenues from leasing were surreptitiously divided among the ruling elite. The rhetoric was partly an attempt to garner support for his fragile regime, which was seeking legitimacy among the public.8 This was taking place around the same time that the United States was struggling with policies in Uzbekistan, thus strengthening Bakiev’s leverage with Washington. Bakiev was successful in closing a new deal at more than three times the previous rent, but several years later, in 2009, when the Russians sought to entice him with a $2 billion

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assistance package to deny U.S. access to Manas and failed, he was also overthrown amidst a great deal of controversy over Manas. The U.S. presence in Manas and the many controversies over corrupt contracting procedures over the past decade united diverse political factions in Kyrgyzstan to oppose its continued operation, and finally in 2013 the United States agreed reluctantly to shut down its operation in 2014 as the U.S. troop withdrawal runs its course. Tajikistan, the most vulnerable and fragile of all Central Asian states, allows the use of Dushanbe international airport for refueling needs, provides a transit point for the NDN, and has been partnering with NATO in developing programs to strengthen its counternarcotic and counterterrorism capability. Russia has historically held military privilege in Tajikistan by deploying soldiers along the Tajik-­Afghan border, but has never paid rent for the base they occupy. Now there has been pressure from the Tajiks, perhaps taking a cue from their Kyrgyz counterparts, to extract revenue from Russia for the use of the base. In October 2012 the Russian and Tajik governments agreed to extend the Russian lease for thirty years. However, the ratification process stalled as Tajikistan worked to negotiate better terms.9 The October 2012 agreement allowed Russia to maintain its presence practically rent-­free;10 in return, the Russians would extend their visa policy to the large numbers of Tajik immigrant workers in Russia11 and abolish duties on 1 million tons of imported oil products from Russia per year.12 Tajikistan was largely unsuccessful in negotiating more favorable terms. The final agreement, ratified by the Tajik parliament in October 2013, maintained Moscow’s military presence — ​and low rent figure — ​through 2042 and includes, in addition to the two concessions listed above, support for additional training and assistance for the Tajik military and increased transfers of military equipment.13 Kazakhstan, the most Western-­leaning among the Central Asian states, is a key partner in the NDN, provides overflight rights, and is also instrumental in ensuring the success of long-­term stabilization of Afghanistan. In fact, all of the three main NDN routes — ​the Caspian route beginning in Georgia; the most utilized route, which begins in Latvia and goes through Russia; and the Kazakhstan – ​Kyrgyzstan – ​ Tajikistan (KKT) route, which transits through Kazakhstan — ​are viable. Apart from the crucial transit and transport assistance, Kazakhstan has

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increased economic and humanitarian cooperation with Afghanistan in the last few years. The two nations signed several agreements in late 2011 covering trade, education, mining, transport, and humanitarian aid. Of all the Central Asian states, Kazakhstan has the most robust humanitarian engagement in Afghanistan, providing educational opportunities for young Afghans, training to develop human resources, constructing hospitals and schools, and investing in domestic infrastructure development. Afghanistan’s mineral wealth has tremendous revenue-­generating potential but is in dire need of appropriate development investments. To that end, the involvement of CAREC countries in developing infrastructure swiftly can bring significant economic benefits to the Afghan economy.14 Kazakh expertise in developing mineral resources can help catalyze the process, especially in developing the oil and gas resources. Additionally, the north-­south railway initiative, which involves Central Asian states, could potentially bring benefits to the Afghan economy by means of wider integration. Turkmenistan’s “neutral” foreign policy is reflected in its limited engagement with NATO, the United States, and regional security structures like the CSTO. The Ashgabat airport facility allows tax-­free refuelling of NATO jets as a part of the Partnership for Peace (PfP) program but has not provided land transport facilities into Afghanistan. Turkmenistan has also allowed a quota of overflight rights, and a majority of the fuel for Afghanistan ships through Turkmenistan in a “don’t ask, don’t tell” arrangement.15 Given the extensive border that Turkmenistan shares with Afghanistan, and the strategic proximity to Iran, it provides ideal land routes for NATO and U.S. interests. Although Turkmenistan is not a significant contributor to the NDN, talks have been floating around about U.S. Central Command’s plans to extend the network to use Turkmen routes.16 There has been little communication from the Turkmen side on this matter, but the imminent withdrawal of U.S. troops from Afghanistan might cause a shift in that position. U.S. policy makers have long grappled with the question of how to engage the two other leading multilateral security organizations, the CSTO and the SCO. To date, U.S. policy has been to rely on bilateral agreements. Both organizations have included all the Central Asian countries except defiantly neutral Turkmenistan, but in June 2012 Uzbekistan announced that it was suspending its CSTO membership.

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Since joining the organization in 2006, Uzbekistan had been a rather reluctant member. For example, Tashkent never signed onto the KSOR rapid reaction force that Moscow has been pushing. The basic problem with the CSTO, however, is that the organization is viewed principally as an extension of Russian power, which is often at odds with the interests of other members of the organization, most notably Uzbekistan. The decision taken by the CSTO in 2011 to create a regional forum that necessitates consensus on foreign military presence in the region raised concerns about the future of U.S. military presence.17 However, the CSTO secretary general Nikolay Bordyuzha has frequently voiced willingness to hold talks with NATO but has received no response from that organization.18 CSTO member countries have sought to advance a partnership with NATO, recognizing that a weakened military presence in Afghanistan will sooner or later put the CSTO’s capabilities to the test. All member states unanimously backed the initiative to cooperate with NATO at the April 2012 ministerial meeting and unfolded the plan to create a joint peacekeeping force that would operate “both within and outside the CSTO area,” signaling a shift in the goals and objectives of the organization in becoming both a regional and global actor.19 In addition to the access/logistics agreements noted above, U.S.-­Central Asia military-­to-­military ties continue to evolve, especially on border management, counterterrorism, and training. And while Russia’s desire for a U.S. military presence in the region is mixed at best, China has been more reticent about regional security cooperation with the United States.20 China’s interest and presence in the region are consistent with its policy to avoid political and military intervention on foreign land while it pursues a robust economic agenda in the region. China’s principal concern with Afghanistan and Central Asia stems from potential political instability in its western Xinjiang Province. From the founding of the Shanghai Five in 1996 to its development into the SCO in 2001, the security dimension of the organization has been intrinsically linked to the situation in Afghanistan, although China remains cautious about direct intervention in domestic Afghan politics. The presence of International Security Assistance Force (ISAF) troops has made it easier for China to avoid deeper involvement in Afghanistan by mitigating serious escalation of the Taliban’s powers, which could create a precarious situation for China’s domestic security.

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Now, however, the imminent withdrawal of troops and speculation about the future of Afghanistan’s governance have heightened Chinese concerns to foster dialogue on the security dimension of the SCO. But privately, Chinese analysts express frustration with Russia’s objections to the SCO playing a greater role in regional security cooperation.21 The China-­Afghanistan strategic and cooperative partnership, signed on the sidelines of the June 2012 SCO summit, is an indication of China’s growing interest in the region’s security issues. On the economic side, China has successfully exploited the Central Asian consumer market and has rooted itself in the energy sector by investing in Kazakh oil and Turkmen gas for the energy needs of its burgeoning economy. In its search for additional energy corridors, China has invested in Pakistan’s Gwadar port, and potential investment in the Iran – ​Pakistan pipeline is catalyzing cooperation between the two countries, which signed a free trade agreement in 2006. China remains wary of the growing instability within Pakistani borders, which it perceives as a threat to its economic investments, especially in the insurgency-­ ridden Balochistan, where the port is located. China has also actively developed energy cooperation with the region with two major pipelines: an oil pipeline with Kazakhstan, and a natural gas pipeline bringing Turkmen gas to China through Uzbekistan and Kazakhstan. The evolving relationship between China and Pakistan also stems from speculations about the connection that the East Turkistan Islamic Movement may have with the region of Pakistan-­occupied Kashmir (PoK) in the north and close to China. Although there has been no public announcement of China setting up military bases to monitor the situation,22 the realization of such a project is likely to raise eyebrows in the United States, which has troubled relations with Pakistan, and in India, a neighbor with whom both Pakistan and China have gone to war. From Washington’s standpoint, perhaps the most useful thing China could do is exercise greater vigilance on Islamabad, but Beijing may have just as little leverage over its complicated partner as does the United States. Aside from the question of will, both the CSTO and the SCO have yet to demonstrate significant capacity as regional security providers. Whether either of these organizations will develop into more effective providers and protectors of regional security is highly uncertain. For the

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CSTO to be more effective, Russia will need to counter the dominant impression of its partners that Moscow sees the organization principally as an extension of Russian power and control. The broader membership of the SCO, including those states with observer status and those that aspire for membership (i.e., India, Iran, and Pakistan), suggests tremendous potential if the organization can prove an effective forum for alleviating the intense distrust and competition among its members and potential members. This potential was further enhanced when at the June 2012 SCO meeting Afghanistan received observer status and Turkey that of “dialogue partner.” The imminent drawdown of U.S. forces in Afghanistan presents an excellent test case for either or both of these organizations to demonstrate the will and capacity to add value as a regional security provider. This could present a challenge for U.S. policy makers to accept a greater role of either organization in stabilizing Afghanistan and the region even if goals and means do not fully coincide with those of Washington and its NATO allies. The likelihood, however, is that neither organization will play a significant role in Afghanistan. Russia will continue to strengthen its security ties more on a bilateral basis in Central Asia, with China remaining content with Russia dominating the regional security space while Beijing continues to focus on deepening regional economic ties. As conferences in Istanbul and Bonn demonstrated in late 2011, resolving the challenge of stabilizing Afghanistan and developing a more robust regional security architecture faces many obstacles, but U.S. relations with Central Asia are not the main problem. The breakdown in the U.S. relationship with Pakistan and Chinese opposition to a U.S.-­led security initiative involving long-­term U.S. military presence in the region are the biggest challenges for Washington. Iran, of course, is not enthusiastic about a U.S. military presence on its border, but given the history of successful cooperation in Afghanistan in 2001 – ​2002 and the potential for a landmark agreement on Iran’s nuclear program, there is some reason to believe that a breakthrough in bilateral relations with Tehran could lead to greater flexibility in renewing some cooperation on Afghanistan. Russia’s position displays considerable ambivalence, but in the context of an overall positive bilateral relationship, which is a greater question mark today than one year ago, Moscow too can be more flexible on this question. There is a “catch-­22” nature to the

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problem. Regional great powers like Russia and China may prefer that only those in the region take responsibility for providing security and keep the United States out, but as things stand now, only a security system that includes the United States playing a key role as a “security broker” amongst highly competitive and distrusting regional states who have long and complicated histories fraught with conflicts of many kinds would appear to stand a chance of being successful. The imminent drawdown and withdrawal of most U.S. forces from Afghanistan by the end of 2014 will result in diminished U.S. influence and capacity to provide security. Which institutions and states will be willing to increase their roles as security providers in partnership with whatever is left from NATO’s engagement? Russia should be a prime candidate that Washington works hard to cultivate now together with the Central Asian states either inside or outside the CSTO framework. Russia has worked to increase the operational capacity of rapid reaction forces in Central Asia that comprise primarily Kazakh and Russian personnel. Still, the 2012 withdrawal of Uzbekistan from the CSTO has weakened the institution’s capacity as a multilateral security provider for the region. Granted, Uzbekistan has been a challenging partner for Washington and Moscow, but a Central Asian security organization without Uzbekistan’s inclusion does not seem a viable partner for Washington, which will in turn likely continue to rely on bilateral relationships, including with Russia. While the “reset” in U.S.-­Russia relations has come under fire the past two years with major differences over missile defense, Syria, and other issues, the Russians have displayed considerable pragmatism when it comes to partnering with the United States in Afghanistan, most recently regarding a new NATO transit base in Ulyanovsk in Russia.23 Although Foreign Minister Sergei Lavrov clarified that the transit base was not going to undermine Russia’s national security and was only in Russia’s national interest to stabilize Afghanistan,24 the announcement caused some opposition within the country, as many leveled accusations at the government for “selling out” to the West. Lavrov quickly responded by emphasizing that the Ulyanovsk facility would only be used as a transit hub for NATO personnel and equipment. Putin himself came out in strong support for the plans, dismissing fears about threats to national security even though he continues to view NATO as “a relic

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of the Cold War era.”25 Although Russia has expressed strong disagreement on permanent U.S. bases in the region, it continues to oppose an overly hasty NATO withdrawal from Afghanistan. Indeed, the unexpected turnabout in U.S.-­Russia relations in September 2013, with the Syrian chemical weapons initiative and the subsequent six-­month agreement with Iran in December to restrain aspects of its nuclear program in return for limited sanctions relief, briefly abated the two-­year downward spiral in bilateral relations. However, tensions over Russian actions in Ukraine have brought U.S.-­Russian relations to a new low. In comparison, the SCO, led by China, has aspired to be more involved in economic investment in the region, but has been held back by Moscow’s reluctance. For example, in 2009 the Russians blocked the $10 billion anti-­crisis fund; as such, the Chinese now provide aid bilaterally, but call it SCO aid.26 The organization has expressed interest in security architecture,27 but economic interests are likely to remain the pivot of its engagement in the region. Although the United States does not have a significant trade footprint in Central Asia, the SCO offers an opportunity for private sector involvement through contracting in areas such as infrastructure development. To what extent the member countries will accept this proposal is debatable, especially given the well-­funded and extensive Chinese investment projects in Central Asia. Therefore, we expect that the SCO will offer few opportunities for cooperative engagement with Washington on regional security. The challenge now is for the United States to ask all the stakeholders what they envision for Afghanistan and for the region’s security. There is already an understanding of the fact that there are problems stemming from an unstable Afghanistan that are detrimental to all parties involved. This sentiment has been echoed by most of the countries on multiple occasions. Now there needs to be a serious discussion that takes into account a plausible worst-­case scenario; it is time to accurately assess the threat and explore avenues for deeper cooperation. Any lack of a sense of urgency will prolong the impasse on creating a regional solution, which gets shrouded in competing geopolitical agendas. But we probably also need to ask ourselves the converse question concerning potential dangers from an Afghanistan that is perceived by some of its neighbors as too strong militarily. Over the course of 2013, the Afghan National Army has acquitted itself reasonably well on the

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battlefield, and may prove itself not only quite resistant to international meddling but more assertive in ways it has never been before. President Obama’s announcement in 2011 of a new “Pivot to Asia” strategy focusing on increased military and economic engagement in the Asia-­Pacific reflects the shifting emphasis to adjust to the dynamism in the area and the desire to avoid further long and taxing land wars like Iraq and Afghanistan. Although there are no plans of permanent military bases so far, the deployment of 2,500 rotational troops in Darwin, Australia, is a symbolic gesture of increased American engagement in the region. Not surprisingly, this has raised speculations in China about an American “encirclement” of the growing Chinese presence. Such speculations have been dismissed by the United States, and President Obama has emphasized that American military engagement was not an attempt to isolate China precisely because the United States “welcomes a rising, peaceful China.” The new engagement in Asia-­Pacific is intended to better equip disaster relief mechanisms as well as enhance responsiveness to potential security threats. China’s aggressiveness around the South China Sea will certainly be challenged by an increasing American footprint in the neighborhood, but it is uncertain whether this military competition will be extended to Central Asia. China does not seek to replace U.S. military presence in Central Asia with its own troops, even though it opposes permanent U.S. military bases. Although China and Russia recently carried out joint naval exercises off the Chinese East Coast,28 Moscow will be reluctant to get involved with Beijing’s increasingly tense set of border conflicts over various island groups. However, China has been steadily increasing its engagement in Central Asia. A harbinger of this was an article published in October 2012 by a leading Chinese Americanist and geopolitical thinker, Wang Jisi of Peking University, entitled “Marching Westwards.”29 The crux of the article argued that China was likely to be tightly contained by U.S. military power to its core interests in the East and West China Seas and beyond, but that looking westward from Xinjiang, China has many opportunities to expand its economic and political interests through Central Asia and the Caspian region to the Greater Middle East. This was highlighted by a tour of Central Asia in September 2013 by the new Chinese president Xi Jinping that resulted in a reported $50 billion worth of economic deals and investments in Kazakhstan, Turkmenistan,

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Uzbekistan, and Kyrgyzstan. At Nazarbaev University in Astana, Xi proposed the creation of a “Silk Road Economic Belt” through cooperation between China and the Central Asian republics.30

Counternarcotic Efforts Afghanistan is the world’s largest producer of opium (supplying about 63 percent of the global opium market), and its heroin trade expands outward from the “northern corridors” of Central Asia into Russia and Europe. Due to the lack of a control mechanism for opium production and the rise of “narco-­terrorism” in Afghanistan, the land under opium cultivation has grown by 116 percent from 1996 to 2010.31 The debilitating effect of the drug trade from Afghanistan has been most pervasive in Tajikistan due to its porous borders. The problem of poppy cultivation in Afghanistan is extremely dangerous and increasingly a regional problem as well. Heroin production has escalated in recent years and not only crippled the Afghan economy but also spread its malicious grip on an increasing number of addicts. Additionally, the Central Asian countries are not only transit points but also increasing markets for these products, Kazakhstan being the fastest-­growing market for opium in Central Asia.32 Due to the socioeconomic conditions that make the drug trade lucrative, organized crime and rampant corruption among officials are weakening Central Asian societies.33 Opium trade has been hard to eradicate in Afghanistan and is also an illicit revenue source for the weak Tajik economy. At the same time, merely the eradication of poppy cultivation in Afghanistan is not the solution. Programs designed to cut off flows must also target the development of other revenue sources to fill the void. Given the already established and growing market for heroin, a decline in production might spur prices and provide incentives for the weaker Central Asian economies to develop into “narco-­states.”34 The lack of a fully operational and cohesive counternarcotic initiative is worrisome for the international community. Recognizing that the drug problem is at the heart of economic instability and corruption, and that it provides significant financial support for the insurgents in Afghanistan, the United States has launched the Central Asia Counter­ narcotics Initiative (CACI). With an initial modest investment of

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$4.1 million, the initiative aims to synergize the existing institutions and transfer responsibility to the biggest stakeholders by facilitating institutional and technological advancement in information sharing. To ensure maximum payoff, the CACI should work with the already established drug control commissions in the Central Asian countries to harmonize regional drug control policies to complement domestic regulations. In addition, several other institutions are already established in the region. The most active international organization has been the United Nations Office on Drugs and Crime (UNODC). Most of the U.S. funds are channeled via UNODC, and additional support is being offered by the CACI in the future. At present, the CACI is in its planning stage and waiting for the approval of all five Central Asian countries. William R. Brownfield, the U.S. assistant secretary of state for international narcotics and law enforcement affairs, concluded a trip in June 2011 to Kyrgyzstan, Kazakhstan, Tajikistan, and Russia to further the initiative with individual partners and the regional establishment of the Central Asian Regional Information and Coordination Center (CARICC). The CARICC has actively been engaging the Central Asian countries and Afghanistan through seminars and working groups to facilitate information exchange. The United Nations International Drug Control Program (UNDCP) has long established its program to create a “security belt” around Afghanistan by enhancing the capabilities of the neighboring states in better border controls and information sharing. However, more than a decade later, the program has yet to be successfully implemented despite the reiterations of the idea at SCO and CSTO ministerial meetings. Although the United States is committed to curbing the drug trade, the CACI has drawn some concerns in Russia. Russia is wary of the counternarcotic operation turning into a military presence and has its own plans to re-­send forces to the Tajik-­Afghan border to control the first and most accessible transit point for Afghan drugs. The majority of the opium seized in Central Asia is found traversing through Tajikistan, which delineates the inability of the Tajik government to manage its nearly 1,300-­kilometer border with Afghanistan. There is also evidence that some Tajik government officials are involved in the drug trade. The United States should continue to place an emphasis on securing the Tajik-­Afghan border by providing equipment and training to the

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Tajik border security forces while remaining fully cognizant that many key Tajik political forces benefit from the drug trade and that they constitute the biggest obstacle to progress on this front. The U.S.-­Russia cooperation on anti-­narcotics policy in Afghanistan had been a priority for both governments as a part of the “Reset.” While there has been some useful cooperation, it has been limited by the different models of eradication versus interdiction promoted by Russia and the United States, respectively. Joint operations conducted to destroy opium facilities and raids along the transportation lines have been successfully carried out in the past two years, which demonstrates that the Afghan drug problem can potentially be a converging point for the two nations.35 Yet Russia is disillusioned with the coalition’s dismal control over opium production, which has only escalated in recent years, and does not look favorably upon the CACI, demanding more eradication efforts in Afghanistan and less intervention in the greater region. This sentiment was evident in Vienna in early 2012, where the Paris Pact countries had gathered to discuss the issue. The Russian foreign minister Sergei Lavrov reiterated the Russian proposal to take strict measures to destroy poppy fields, as has been done in Colombia, to effectively fight the problem and remained critical of the CACI.36 The Rainbow-­2 program introduced by Russia proposes the creation of an international body that can coordinate anti-­drug policies in close coordination with the Afghan government, the neighboring countries, and the United Nations. Multilateral institutions like the CSTO and NATO may share similar objectives but are far from achieving those goals if they maintain a zone of mutual exclusivity. Tajik support for greater Russian assistance in combating the drug trade is ambivalent at best, since historically Tajik narco-­traffickers have found themselves competing with Russian military and criminal entities for control of the trade.

Water Scarcity Soviet-­era mismanagement of water resources in the region has left a legacy of water disputes that threaten all of the Central Asian states. Inadequate and inequitable allotment of water during those years created a system that failed to reform after the Central Asian states gained independence, creating a “problem of the commons.” Conflicts between

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upstream countries like Tajikistan and Kyrgyzstan with downstream Uzbekistan have become more contentious as the land under cultivation increases in the fertile lands of Kyrgyzstan and Uzbekistan. Agriculture, especially water-­intensive cotton production, continues to be a significant cash crop for most of the Central Asian countries and especially for Uzbekistan and Kazakhstan. Tajikistan’s hydropower generation is also expected to grow significantly in the coming years, which is likely to add more pressure on the current resources. The Uzbeks strongly oppose the construction of the large Rogun Dam in Tajikistan because they fear they will lose access to water as a downstream country. Each year this dispute seems to escalate. Lack of a cohesive regional policy on water management presents a great challenge for the United States to act as a broker for a peaceful settlement. The United States has devoted significantly more resources in aid toward water issues in Afghanistan and Pakistan, while their immediate Central Asian neighbors have received very little assistance ($46.8 million to Afghanistan and Pakistan, versus $3.7 million for all five Central Asian countries).37 This is particularly problematic because of the increasing water resources needed in Afghanistan from the Amu Darya as agricultural activities increase in the country. Such a scenario will necessitate greater U.S. engagement with the Central and South Asian countries to better manage the existing resources (a World Bank report shows that the water resources are used with an efficiency of only 21 percent38). To counter these problems, a 2011 Senate Foreign Relations staff report recommended that the United States encourage and facilitate technical assessment of the present situation, address the steadily growing demand, foster better groundwater management techniques, and work with local and international bilateral and multilateral institutions that have the capacity and resolve to deliver results.39 The U.S. Agency for International Development (USAID) has already commenced organizing a Regional Energy Security, Efficiency and Trade (RESET) project to address energy issues and trans-­boundary water management techniques.40 The Central Asia Energy-­Water Development Program (CAEWDP)41 launched by the World Bank with assistance from the USAID and others, is also a step forward in creating a mechanism for regional information sharing. Fostering a regional dialogue on the issue can mitigate the threat of water scarcity, although

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regional antipathy to cooperation in this as in other spheres necessitates considerably more engagement by the United States on both bilateral and multilateral tracks.

Regional Economic Cooperation and the New Silk Road Vision U.S. economic engagement with Central Asia was ushered in shortly after the republics gained independence. U.S. policy makers immediately recognized the need to establish market economies that could enable the Central Asian countries, rich in oil and gas reserves, to compete with Russian exports. In addition, market reforms were instrumental in establishing an East-­West axis, providing access to the European markets, and encouraging U.S. companies to participate in developing the resource sector by constructing pipelines and investing in infrastructure. These policies were guided to a considerable degree to erode Russia’s Soviet legacy of resource transit monopoly and thus enhance the Central Asian states’ sovereignty. Conversely, the Central Asian states had vested interests in expanding cooperation with the United States and other advanced industrial European and Asian states to gain access to technology that could not be provided by Russia or China. Yet Russian and Chinese involvement in the Central Asian energy sphere is only growing. Annual Bilateral Consultations (ABCs), established in 2009, have enhanced the diplomatic engagement between the United States and Central Asian states. The ABCs have established country-­specific agendas with Central Asia by bilaterally addressing issues that plague the entire region, such as terrorism, human rights, democratic reforms, and rule of law, while advancing U.S. interests in improving market access and enhancing trade and investment. During the inaugural ABC with Turkmenistan in 2011, Assistant Secretary of State Robert Blake laid down clear priorities and objectives to redefine the relationship between the two nations. He described the ABC as an “ambitious plan of work to advance our relationship on all fronts with clear objectives and specific deadlines.” The ABC also placed emphasis on improving the business climate and encouraging economic openness, especially in the energy sector.42

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The 2004 Trade and Investment Framework Agreement (TIFA) between the United States and the five Central Asian nations established a United States-­Central Asia Council on Trade and Investment that focuses on issues such as intellectual property, labor, private sector investment, environmental issues, and enhancing the role of domestic and foreign partners in trade and investment.43 This is the only multilateral economic forum for the United States to engage Central Asian states, and Afghanistan participates as an observer in the group. While an excellent idea in principle, to date the TIFA forum has underdelivered in improving market access and removing tariff and nontariff barriers as Central Asian states remain reluctant to engage in multilateral cooperation as well as to the kinds of good governance and transparency-­ building reform policies advocated by the United States. Afghanistan currently has an observer status in TIFA, and recent consultations have emphasized the need to increase trade between the Central Asian countries and Afghanistan. Failure to create a regional market has been costly for the Central Asian states as well, especially for the weaker states of Kyrgyzstan and Tajikistan, which are in dire need of market access.44 Despite the well-­meaning goals of the TIFA forum, to date it has brought little in the way of results, to the frustration of the Central Asian states as well as Washington. Essentially the problem is that most Central Asian elites seek economic and commercial benefits for themselves without having to reform their corrupt and nontransparent political-­economic systems. In July 2011, Secretary of State Hilary Clinton introduced the “New Silk Road Vision” to reinvigorate trade across borders in Central and South Asia and engage Afghanistan and the Central Asian states in new transcontinental transport corridors in Eurasia that are linking East Asia, Southeast Asia, and South Asia with Europe and the Greater Middle East. It is important to note that this concept was first developed and initiated by the Afghan government, as Afghanistan’s potential as a trade and transit hub has been a core goal in all of the major Afghan National Development Strategies (ANDS) going back to 2005, and President Hamid Karzai made this vision of Afghanistan’s role as a continental trade and transit hub the core vision of his speech at the Kabul Conference in July 2010.45 New trade, transport, and energy corridors are having the effect of “reconnecting Eurasia,” and their development

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is ongoing now, but the lack of efficient hard and soft infrastructure in Afghanistan and Central Asia constrains the degree to which these countries can participate and benefit.46 Turning this vision into a strategy has already experienced challenging obstacles both in Washington and in the region. In Washington there are questions about commitment, and in the region, indeed, the biggest challenge and payoff in implementing the New Silk Road (NSR) vision lies in removing the bureaucratic, institutional, and political hassles that make borders function more like toll booths.47 The United States can add most value by facilitating transport accords, overhauling structural barriers, and investing in infrastructure. Problems with cross-­border cooperation evidenced by Uzbekistan’s disagreements with other Central Asian countries48 and especially with the frail economy of Tajikistan, which is dependent on the Kyrgyz and Uzbek transport links, present a major challenge. Promoting the NSR as a part of a sustainable stabilization strategy in Afghanistan can help promote more sustainable economic growth in Afghanistan as it transitions from its current dependence on foreign assistance and a war economy. The Central Asian states can also benefit, but this will depend to a great extent on effective measures to reduce cross-­border delays caused by inefficiencies and corruption. This is a very tall order since the first priority for regional political elites is preserving their power, which requires allocation of economic favors to cronies rather than open competition. Strengthening the economic connectivity of Central Asia through Afghanistan to South Asia and the booming Indian economy can take place through free trade agreements such as the long-­awaited Afghanistan Pakistan Free Trade Agreement concluded in 2010. The Indian and Pakistani governments are now negotiating measures to increase their trade ties.49 The CASAREM (Central Asia South Asia Regional Electricity Market) works to bring hydroelectric energy generated in Tajikistan and Kyrgyzstan to Afghanistan and Pakistan. The United States in December 2013 committed $15 million to the showcase CASA 1000 project, but still major funding gaps remain in this approximately $1 billion endeavor. And the $15 million committed looks rather paltry in comparison with the massive Chinese investments coming into the region. In fact, China’s People’s Daily in November 2013 ruefully noted in an article comparing the U.S. New Silk Road policies, the Russian-­led

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Customs Union, and Chinese economic integration plans for the region that “the United States wants to build a New Silk Road but have somebody else pay for it.”50 Unfortunately this comment appears to be pretty much on the mark. A potentially game-­changing project would be the TAPI (Turkmenistan, Afghanistan, Pakistan, India) gas pipeline that would bring Turkmen gas to South Asia — ​a project that dates back to the 1990s but was thwarted by security concerns in Afghanistan. The Asian Development Bank (ADB) has supported this effort, and the four governments are meeting regularly, yet a lot of work remains to be done to make the project commercially feasible and attractive to the private sector. The ADB also supported the building of the first rail line into Afghanistan linking the Uzbek city of Hairaton with Mazar-­e-­Sharif in northern Afghanistan, and is developing feasibility studies for extending the rail lines in Afghanistan so that its vast mineral wealth can be brought to regional and global markets. Just as the post-­9/11 U.S. strategy in Central Asia has received much attention, the post-­2014 strategy will need heavy diplomatic and security engagement with the region that will complement the NSR strategy. A sustained endeavor in that direction will be vital in reassuring investors. At the same time, we need to understand that there is little willingness on the part of the Central Asian countries to cooperate with each other. Although most policies target the five republics as a larger region, their bilateral relations with each other are marked with deep rivalry and antagonism, most evidenced in the water, border, and land disputes. Crafting policies that encompass the entire region has to take into account the intrinsic competition among these states for resources and privileges as well as to engage other great power and institutional efforts in a complementary manner.

Democracy Promotion, Human Rights, and U.S. Assistance During the immediate years after the collapse of the USSR, the U.S. government’s key priorities for Central Asia were promoting democracy, pursuing balanced energy policies, ensuring nonproliferation, and encouraging market economies. These efforts have produced only marginal results in some areas, with most significant successes in the

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nonproliferation field in the 1990s. Despite the attempts made by the United States to engage in diplomatic ways to engender democracy in the region, the Central Asian states have successfully resisted. Save for Kyrgyzstan, which has a notable number of political parties, most of the Central Asian states have limited access to free and fair elections. While a Marshall Plan – ​like intervention was not in the offing to secure democratic and market principles in post-­Soviet Central Asia, the United States spent significant amounts of aid toward these goals. The Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992, or FREEDOM Support Act, set forth U.S. policy with respect to assistance to the independent states of the former Soviet Union. Soon after, the Silk Road Strategy Act of 1999 authorized specified assistance, including humanitarian, economic, migration and refugee, development, border control, and democracy building assistance, to the South Caucasus and Central Asian countries to (1) promote sovereignty, independence with democratic government, and respect for human rights; (2) assist in the resolution of regional conflicts and facilitate the removal of impediments to cross-­border commerce; (3) promote economic cooperation and market-­oriented principles; (4) assist in the development of infrastructure necessary for communications, transportation, education, health, and energy and trade; and (5) support U.S. business interests and investments in the region.51 These interests largely dominated the Washington rhetoric for engagement in Central Asia for the next two decades. Although comprehensive in its scope, the aid assistance has been tied to democratic and human rights reforms that have been woefully neglected by regional governments. Poor adherence to human rights standards has often been a thorny issue in relations with the United States. In recent years, U.S. officials have justified aid to Central Asia by tying it to the security situation in Afghanistan.52 However, aid to Central Asia has been declining in the past few years, owing to domestic budgetary constraints and the repeated violation of mandates established by the Congress. U.S. assistance, both civilian and military, to Central Asia has seen a steep decline in recent years. The aid budget for Central Asia in 2014 was only slightly more than one-­third the size of the aid budget in fiscal year 2012, a massive cut taken as Congress attempts to decrease financial commitments. Between fiscal year 2012 and fiscal year 2013

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alone, the allocated assistance budget was cut by nearly two-­thirds.53 The diversion of resources to Afghanistan significantly reduced the ability of the U.S. government to adequately fund other critical regions. The fiscal year 2014 foreign assistance request for Central Asia (a combined $118.5 million) is merely 5.4 percent of the request for Afghanistan ($2.194 billion), displaying a great disparity in allocation of resources to neighboring states. The same trend is seen in aid from fiscal year 2013 (3.49 percent) and fiscal year 2012 (9.14 percent).54 A recent Senate Foreign Relations report recommends that Afghan assistance be leveraged to support more trans-­border projects with Central Asian neighbors to promote regional economic, political, and security cooperation.55 As financial commitments to previous projects decline in the coming years, the United States will need new initiatives in the Central Asian region to encompass strategies aimed at reducing poverty and investing in human capital, and promoting economic development by encouraging businesses and private investments. Whether these agendas will be a part of Washington’s vision for future engagement once military and security operations gradually decline is yet to be determined. In the past there has been interest in these initiatives, but recently the rhetoric has become more dominated by the war in Afghanistan. The NSR will also need the backdrop of an integrated political framework (which coincidentally is also the goal that the NSR seeks to achieve), and infrastructure funding will be crucial to maintaining the momentum of the NSR. Therefore, engagement with multilateral institutions such as the World Bank, ADB, and others will be instrumental.

Uncertainties on the Horizon The domestic factors that triggered the revolutions across the Arab world, such as limits to civil and media liberty, lack of free and fair elections, autocratic leadership, and pervasive human rights abuses, are indeed to be found in the Central Asian regimes as well. While it is difficult to predict an Arab Spring – ​like scenario in the near future, the use of state power to suppress such a phenomenon in Central Asia has been well displayed in the past. The role that the international community will play in supporting or intervening in such a revolution is also highly doubtful. Previous attempts made by international organizations

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like the OSCE and CSTO have already proven ineffective, and the United States is less than likely to take a leading role if the situation would indeed arise. However, the wave of protests that gripped Russia in the winter of 2011 – ​2012 has served as a warning signal to many of the Central Asian leaders, who may preemptively develop mechanisms to avoid such a scenario, albeit by using force. The December 2011 violence in the Kazakh city of Zhanaozen, the most significant protest in Kazakhstan since Soviet times, was met with brutal police action, demonstrating that indiscriminate use of force is still the preferred means of containing dissent. These developments raise speculations about the question of succession in the Central Asian regimes. The two largest states in the region, Kazakhstan and Uzbekistan, have been ruled by the same Soviet-­era leaders, Nursultan Nazarbaev and Islam Karimov respectively, for more than two decades. Each is now into his seventies, and there is no clear plan for succession and much speculation about the potential for instability that a succession crisis could cause. The Rahmon leadership in fragile Tajikistan similarly could face a crisis. Turkmenistan managed its succession from Niyazov, widely known as Turkmenbashi, to Berdimuhamedov in 2007, and Kyrgyzstan has experienced three leadership changes since the demise of Askar Akaev in 2005. It is not clear how and what the United States can do to prevent instability, but there are both positive and negative lessons to be taken from the experience of managing Kyrgyz unrest in 2009 – ​2010.

Conclusion It seems that according to current conventional wisdom, while Central Asia is at the geographical epicenter of Eurasia, it will only become more peripheral to U.S. interests as our military engagement with Afghanistan winds down. Certainly the necessity for Central Asian logistical support for our military presence in Afghanistan will be dramatically reduced, but the economic and political stabilization of Afghanistan and requirements for regional security cooperation will remain and require engagement with Central Asia. The diminished necessity of logistical support for a major military presence may help Washington shift its policy in Central Asia away from its transactional nature to a more

Both Epicenter and Periphery | 125

strategic and balanced framework. Empowering Central Asian states to play this role is principally dependent on their own reform efforts and willingness to work together rather than at cross-­purpose, but it may well demand actually greater U.S. engagement and assistance than are currently provided. This is certainly an inflection point for reviewing and adjusting our Central Asia policy. For the first decade or so, our policy was driven mainly by our vision for supporting transitions to sovereign, independent market democracies; during this time, Central Asian states made major progress in enhancing their sovereignty and independence, not insignificant strides in market capitalism, and not so much progress on the democracy front. After 9/11, the focus of U.S. policy shifted to what Central Asia could do to help the United States and ISAF in the war in Afghanistan. We believe there remains a strong demand signal for U.S. engagement in the region, but probably with a different balance of priorities, raising economic and commercial cooperation to a first order priority combined with military and security cooperation, but at a lower level during the years of the war in Afghanistan. But as a first step in crafting a new policy, we would be well advised to listen very carefully to what those states would like to see from Washington rather than assuming we know better than they about their needs and interests. The most dramatic strategic change in the region over the past decade has been the increased economic presence and activities of China, which has replaced Russia as the region’s number one trade and investment partner. Obviously the United States will not be able to compete with China economically in Central Asia, nor would we want to. However, an increased U.S. — ​and European, for that matter — ​presence would be welcome as a hedge against becoming overleveraged to Chinese economic and thus political power. It is an old axiom of inter­national relations that smaller countries in the proximity of growing great powers look to diversify their ties. China’s neighbors in Southeast Asia seek this, and even Russia is attempting this with its own “Asia pivot,” especially with Japan, South Korea, and Vietnam. In fact, Washington should more explicitly make Central Asia an integral part of the so far obliquely defined U.S. “Asia pivot.” Since the Asia pivot is principally about managing the rise of Chinese power, Washington needs to conceive of Asia more in the terms in which China sees

126 | Andrew Kuchins and Shalini Sharan

it, which is more akin to the continental view that was prevalent in late nineteenth-­century British policy and literature. The natural U.S. inclination is to view Asia as the Asia-­Pacific where we fought three major wars in the twentieth century. But for Beijing, Asia is not just the Asia-­ Pacific to its West and South, but also the Asian regions of Russia to its north, Central Asia to its west, and South Asia to its southwest. Through this prism Central Asia acquires a greater significance. It is ironic that many Chinese strategic thinkers did not believe our announced rationale for the war in Afghanistan in the context of the so-­called war on terror. They viewed this as a convenient excuse to bring U.S. military presence into the region to establish a longer-­term presence to China’s strategic rear. Maybe it would behoove Washington to adopt some of this perspective and back it up with a long-­term strategy of implementation that deftly combines economic and commercial private sector interests with military/security interests and diplomatic measures. Unfortunately however, long-­term strategic thinking and commitment seem to have gone out of style, and the bureaucratic mishmash of institutions that make up the U.S. government is uniquely poorly structured to advance such a policy, assuming we could find bipartisan and cross-­ institutional consensus, which is a very big assumption indeed. Notes 1.  The authors would like to express their gratitude to Jeffrey Mankoff and Alexander Cooley for their very insightful comments on an earlier draft of this chapter and to Oliver Backes for his exceptional research assistance. 2.  Robert O. Blake, “The Obama Administration’s Priorities in Central Asia” (remarks presented at Houston, Texas, January 19, 2011), http://www.state.gov/p/sca/ rls/rmks/2011/155002.htm. 3.  Senate Committee on Foreign Relations, Central Asia and the Transition in Afghanistan, 112th Cong., 1st sess., p. 1. 4.  For a summary of the agreement and some international press response, see White House Office of the Press Secretary, “Fact Sheet: The U.S.-­Afghanistan Strategic Partnership Agreement,” May 1, 2012, http://www.whitehouse.gov/the-­press-­office/​ 2012/05/01/fact-­sheet-­us-­afghanistan-­strategic-­partnership-­agreement. 5.  “Pakistan Says Blockade on NATO Will Last until ‘Rules of Engagement’ Changed,” Radio Free Europe/Radio Liberty, December 12, 2011, http://www.rferl.org/ content/pakistan_says_nato_blockade_until_rules_of_engagement_changed/24419330​ .html.

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6.  “United States-­Uzbekistan Declaration on the Strategic Partnership and Cooperation Framework,” March 12, 2002, http://uzbekistan.usembassy.gov/pr031203.html. 7.  Uzbek frustration with the Bush administration predated the Andijan events. 8.  Alexander Cooley, “Manas Matters: The Changing Politics of the U.S. Military Base in Kyrgyzstan” (PONARS Policy Conference Memo 423, December 2006). 9.  Konstantin Parshin, “Tajikistan: Is Dushanbe Setting New Conditions for Russia’s Military Presence?” EurasiaNet, April 5, 2013, http://www.eurasianet.org/node/66789. 10.  David Trilling, “Tajikistan: Putin Secures Base Deal during Birthday Visit,” EurasiaNet, October 5, 2013, http://www.eurasianet.org/node/66008. 11.  “Russia Gets 30-­Year Extension for Base in Tajikistan,” BBC, October 5, 2012, http://www.bbc.co.uk/news/world-­asia-­19849247. 12.  Roman Kozhevnikov, “Afghan Neighbor Tajikistan Ratifies Base Deal with Russia,” Reuters, October 1, 2013, http://www.reuters.com/article/2013/10/01/ us-­tajikistan-­russia-­idUSBRE9900CZ20131001. 13.  “Ratification of Russian Military Base Deal Provides Tajikistan with Important Security Guarantees,” IHS Jane’s Intelligence Weekly, October 1, 2013, http://www.janes​ .com/article/27898/ratification-­of-­russian-­military-­base-­deal-­provides-­tajikistan-­with​ -­important-­security-­guarantees. 14.  Participating countries: Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan, Uzbekistan. Multilateral partners: Asian Development Bank, European Bank for Reconstruction and Development, International Monetary Fund, Islamic Development Bank, UN Development Program, World Bank. Budget: 16 Loans TOTAL (all sectors) ADB financing $499.8 million/ cofinancing $134.1 million (as of April 30, 2007), http://forum-­adb.org/docs/CAREC​ -­paper-­iron-­fist.pdf. 15.  Alexander Cooley, Great Game: Local Rules (New York: Oxford University Press, 2012). 16.  Deirdre Tynan, “Central Asia: Turkmenistan Could Become Key Cog in NDN Supply Route for Afghanistan,” EurasiaNet, April 12, 2011, http://www.eurasianet.org/ node/63279. 17.  “CSTO Wants Mutual Consent for Foreign Military Bases,” Radio Free Europe/ Radio Liberty, January, 28, 2012, http://www.rferl.org/content/csto_wants_mutual_ consent_foreign_military_bases/24429242.html. 18.  “CSTO Foreign Ministers Adopt Declaration on Cooperation with NATO,” Trend.az, April 6, 2012, http://en.trend.az/regions/casia/kazakhstan/2011299.html. 19.  Ilya Kharlamov, “CSTO, NATO Should Cooperate against Terrorism, Drugs — ​ Moscow,” Voice of Russia, April 6, 2012, http://english.ruvr.ru/2012_04_06/70895771/. 20.  Zhao Huasheng , Afghanistan: China’s Interests, Stances, and Perspectives (Washington, D.C.: Center for Strategic and International Studies, 2012). 21.  Authors’ discussions with Chinese experts in 2012/2013 in Washington, Beijing, and Shanghai. 22.  “China Has No Plans for Indian Ocean Military Bases,” Hindu, September 4, 2012, http://www.thehindu.com/opinion/interview/article3855313.ece.

128 | Andrew Kuchins and Shalini Sharan

23.  “What’s to Follow the Demise of the US-­Russian ‘Reset’?,” Current History 111, no. 747 (2012): 281, http://www.currenthistory.com/Article.php?ID=1004. 24.  Sergei Lavrov, “Speech and Answers of the Minister of Foreign Affairs of the Russian Federation S. V. Lavrov to the Questions of Mass Media during Press Conference at the End of the Talks with the Minister of Foreign Affairs of the Kyrgyz Republic R. A. Kazakbaev, Bishkek, 5 April 2012,” http://www.mid.ru/bdomp/brp_4.nsf/​e78a480 70f128a7b43256999005bcbb3/1097d6de949d6a5c442579e6004168dd!​OpenDocument. 25.  “Putin Calls NATO ‘Relic of the Cold War,’ but Promises Support on Afghanistan Cooperation,” Washington Post, April 11, 2012, http://www.washingtonpost.com/ world/europe/putin-­calls-­nato-­relic-­of-­the-­cold-­war-­but-­supports-­cooperation/2012/​ 04/11/gIQAXEf79S_story.html. 26.  Alexander Cooley, “Cooperation Gets Shanghaied: China, Russia, and the SCO,” Foreign Affairs, December 14, 2009, http://www.foreignaffairs.com/articles/65724/ alexander-­cooley/cooperation-­gets-­shanghaied. 27.  “China to Host SCO Security Council Secretaries Meeting,” China Daily, April 10, 2012, http://www.chinadaily.com.cn/china/2012 – ​04/10/content_15015341.htm. 28.  “China and Russia Launch Naval Exercises in Yellow Sea,” BBC, April 22, 2012, http://www.bbc.co.uk/news/world-­asia-­17803624. 29.  Wang Jisi, “ ‘Marching Westwards’: The Rebalancing of China’s Geostrategy” (Center for International and Strategic Studies, report no. 73, Peking University, October 7, 2012). 30.  “Xi Suggests China, C. Asia Build Silk Road Economic Belt,” Xinhua, September 7, 2013, http://news.xinhuanet.com/english/china/2013 – ​09/07/c_132700695.htm. 31.  United Nations Office on Drugs and Crime, World Drug Report (2011), 60, http://www.unodc.org/documents/data-­and-­analysis/WDR2011/The_opium-­heroin_ market.pdf. 32.  United Nations Office on Drugs and Crime, “Illicit Drug Trends in Central Asia,” April 2008, http://www.unodc.org/documents/regional/central-­asia/Illicit%20 Drug%20Trends_Central%20Asia-­final.pdf. 33.  Kairat Osmonaliev, “Developing Counter-­Narcotics Policy in Central Asia” (Silk Road Paper, Silk Road Studies Program and Central Asia-­Caucasus Institute, Washington, D.C., 2005), http://www.silkroadstudies.org/Silkroadpapers/Osmonaliev.pdf. 34.  Ibid., 30. 35.  “Russia Joins Drug Raid in Afghanistan, Marking Advance in Relations with U.S.,” New York Times, October 29, 2011, http://www.nytimes.com/2010/10/30/world/ asia/30opium.html. 36.  Sergei Lavrov, statement at the Third Ministerial Conference of the Paris Pact Partners on Combating Illicit Traffic in Opiates Originating in Afghanistan, Vienna, Austria, February 18, 2012, http://www.mid.ru/bdomp/brp_4.nsf/e78a48070f128a7b432 56999005bcbb3/5879f116b18616cb442579a600423cbb!OpenDocument. 37.  Senate Committee on Foreign Relations, Avoiding Water Wars: Water Scarcity and Central Asia’s Growing Importance for Stability, report prepared by Committee Majority Staff, 112th Cong., 1st sess., 2011, S. Prt. 112 – ​10.

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38.  World Bank, “Water Energy Nexus in Central Asia: Improving Regional Cooperation in the Syr Darya Basin,” January 2004, http://siteresources.worldbank.org/ INTUZBEKISTAN/Resources/Water_Energy_Nexus_final.pdf. 39.  Senate Committee on Foreign Relations, Avoiding Water Wars. 40.  U.S. Agency for International Development, “USAID Announces Next Phase of Energy Sector Assistance in Central Asia,” April 7, 2011, http://centralasia.usaid.gov/ press-­release/kyrgyzstan/47. 41.  World Bank, “Central Asia Energy-­Water Development Program,” http://web​ .worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/0,,contentMDK:​ 22743346~pagePK:146736~piPK:146830~theSitePK:258599,00.html. 42.  Robert Blake, remarks at U.S.-­Turkmenistan Business Council, June 16, 2010, http://turkmenistan.usembassy.gov/remarks20100616.html. 43.  United Nations Conference on Trade and Investment, “Investment Guide to the Silk Road,” 2009, 17, http://www.unctad.org/en/docs/diaeia20096_en.pdf. 44.  Martha Brill Olcott, Central Asia’s Second Chance (Washington, D.C.: Carnegie Endowment for International Peace, 2005), 227. 45.  The first public U.S. document to develop this strategy was Andrew C. Kuchins, S. Frederick Starr, et al., “The Key to Success in Afghanistan: A Modern Silk Road Strategy” (Silk Road Paper, Central Asia-­Caucasus Institute and Silk Road Studies Program, Washington, D.C., May 2010), http://www.silkroadstudies.org/new/docs/ silkroadpapers/1005Afghan.pdf. “Uzbekistan: The Little Engine That Couldn’t,” EurasiaNet, January 3, 2011, http://www.eurasianet.org/node/64784. 46.  Andrew C. Kuchins, “A Truly Regional Economic Strategy for Afghanistan,” Washington Quarterly 34, no. 2 (2011). 47.  For more details see, Kuchins, Starr, et al., “The Key to Success in Afghanistan.” 48.  “Uzbekistan: The Little Engine That Couldn’t.” 49.  Andrew C. Kuchins, “Laying the Groundwork for Afghanistan’s New Silk Road,” Foreign Affairs, December 5, 2011, http://www.foreignaffairs.com/articles/136714/ andrew-­c-­kuchins/laying-­the-­groundwork-­for-­afghanistans-­new-­silk-­road. 50.  Cited in Михаил Сергеев, “Пекин дипломатично подвинул путинский проект Евразийского союза,” Независимая Газета, October 14, 2013, http://www.ng​ .ru/economics/2013 – ​10 – ​14/1_pekin.html. 51.  Silk Road Strategy Act of 1999, H.R. 1152, 106th Cong., 1st sess., http://www​ .govtrack.us/congress/bill.xpd?bill=h106 – ​1152&tab=summary. 52.  Joshua Kucera, “U.S. Diplomat: Top Priority in Central Asia What They Do for Afghanistan,” EurasiaNet, March 11, 2011, http://www.eurasianet.org/node/63051. 53.  Calculations based on data from “Foreign Assistance by Recipient Country/ Region,” ForeignAssistance.gov, http://www.foreignassistance.gov/web/RGAIntro.aspx (accessed December 20, 2013). 54.  Ibid. 55.  Senate Report on U.S. Foreign Assistance to Afghanistan, 2011 (Washington, D.C.).

5

Chinese and Russian Economic Interests in Central Asia Comparative Analysis Li Xin and Xin Daleng

Since the twenty-­first century began, with the further development of cooperation between China and Central Asia, we often hear about the “China threat theory” in Russia and Central Asia. It has had largely negative effects on China’s image in this area and on cooperation between China and Central Asia by exaggerating Chinese interests, presence, and expansion in Central Asia. Russian economic interests in Central Asia mainly work under the assumption that by strengthening economic cooperation with Central Asia, it will finally form a Eurasian economic integration or Eurasian alliance with Central Asia, and promote the development of the Russian domestic economy. At the same time, Russia can maintain its influence in Central Asia and enhance its international role in the world by its economic penetration and presence in this area. In contrast, China’s economic interests in Central Asia are aimed at facilitating both sides’ economic development through bilateral trade and investment with Central Asia. Central Asia’s prosperity and stability can not only maintain the safety of Xinjiang Province and even the western region of China, but also provide a secure external barrier for China to resist traditional security threats. Thus, we can say that there are no essential conflicts between Chinese and Russian interests in Central Asia.

Russian Economic Interests and Purposes in Central Asia After the collapse of the Soviet Union in the first half of the 1990s, Russia didn’t realize the geopolitical importance of the Central Asian countries. In order to obtain economic aid from Western countries and carry 130

chinese and russian economic interests | 131

out various domestic political and market economic reforms, Russia pursued a one-­sided, pro-­Western foreign policy. Also, the sharp downturn of the Russian economy made it almost unable to pay for economic aid to the Central Asian countries. In other words, financial incapability and other political factors together led Russia to ignore the importance of Central Asian countries in the 1990s.1 It was only at the beginning of the twenty-­first century that Russia began to take them seriously. From a historical perspective, Russia has always regarded Central Asia as its sphere of influence, which could help it complete its mission of power in the whole of the Eurasian region. The Russian Federation’s foreign policy, which was announced in 2000 and 2008, explicitly stated the priority position of CIS countries, especially the Central Asian countries, in regional development. In February 2010 the Russian Institute of Contemporary Development released a report on Russia’s economic interests and tasks in the CIS. The report stresses that it is necessary to devise a relationship model that could be studied by all the CIS countries and strengthen and increase the attractiveness of multi-­cooperation in the framework of the CIS. Furthermore, this theory would ensure that the integration of the former Soviet Union and all members’ economies has real benefits. The report suggested substantive steps to create broad-­based Eurasian regional cooperation and finally ensure the long-­term interests of Russia in the CIS.2 Besides the development of its own economy, economic cooperation between Russia and Central Asia also aims to maintain Russia’s influence in this area. Also, we believe that if Russia is looking for “friendly powers” in the area, it will not potentially limit China’s ties with the same countries. Russian advantages in this geographic area are seen in the following: the volume of the Russian economy amounts to 72 percent of the CIS and 90 percent of the EurAsEC (Eurasian Economic Community) and the Russian-­Belarusian-­Kazakh Customs Union; and production of oil and gas and exports of goods and services amount to 77 percent and 68 percent of the CIS, respectively. The Russian economy is 160 – ​165 times the size of that of Kyrgyzstan, Tajikistan, and Moldova, and 100 times the size of that of Armenia and Georgia. In 2011 the Russian Gross National Income (GNI) per capita was 3.14 times higher than Ukraine’s, 4.95 times higher than Moldova’s, 11.77 times higher than

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Kyrgyzstan’s, and 14.69 times higher than Tajikistan’s.3 Russia’s basic interests in Central Asia instead include nine key goals: 1. Establishing a common economic space with the CIS countries and widely opening to the Europe Union and Asia-­Pacific region to complete the mission of Eurasian power. 2. Consolidating its resource foundations by opening the mineral raw material base of the CIS countries, especially those in Central Asia. Then Russia could have access to scare mineral resources to enhance its role in the world’s raw material market and in the international energy security field. 3. Expanding an effective commercial presence for Russia in the Eurasian free market. 4. Avoiding competition with the CIS countries in the international market by the implementation of joint projects in the field of resource processing. 5. Considering the high adaptability of immigrant laborers from the CIS to Russian labor conditions, Russia could open its labor markets to the CIS to alleviate acute population problems. 6. Filling the vacancy caused by educated Russians leaving to work in Western countries by recruiting intellectual elites from the CIS in order to promote economic innovation in Russia. 7. Opening some strategic interests’ fields to Russian assets, guaranteeing stability in the CIS region and implementing some foreseeable cooperation between the two in areas such as defense, nuclear energy, aviation, and the rocket and aerospace industry. 8. Promoting positive cross-­border trade between Russia and other countries in the CIS. 9. Making use of the CIS’s geostrategic potential.

Russian Approaches in Realizing Its Economic Goals and Purposes in Central Asia 1. Promoting economic and trade cooperation. Ever since 2000, the trade value among these countries has gone up every year. Specifically, trade value between Russia and Central Asia has increased 4.4 times, and export to Central Asia may increase 5.3 times from

chinese and russian economic interests | 133

2001 to 2011. In 2011 trade value reached a record US$28 billion (table 5.1). At the same time, Russia has increased investment in the Central Asian countries. Russian investment in this area has grown 182 times from 2001 to 2011, and the total amount of investment has amounted to US$6.68 billion. In 2011 Russia invested US$0.83 billion in Central Asia, US$0.61 billon of which went to Kazakhstan (see table 5.2). Since the global financial crisis of 2008, Russia has provided US$7.5 billion to the Eurasian Economic Community to deal with this crisis. 2. Promoting the process of Eurasian economic integration. Russia is propelling the progress of the CIS free trade agreement (FTA) and EurAsEC toward a Eurasian economic alliance, turning the Customs Union of Russia, Belarus, and Kazakhstan into the core of the economic integration. By unifying the economic space and currency and establishing a common energy market, Russia enables the free flow of services, capital, and labor. The basic sequence may be FTA – ​Customs Union4 – ​Single Economic Space – ​Eurasian Economic Alliance – ​EAU.5 In October 2000 the presidents of Russia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan signed the treaty on the establishment of the Eurasian Economic Community.6 According to a proposal by the presidents of Russia and Kazakhstan, they established a Eurasian development bank in January 2006. In order to deal with the global economic crisis, they founded the anti-­crisis fund of EurAsEC in 2009. In October 2007 Russia, Belarus, and Kazakhstan announced the construction of a Customs Union for the further development of EurAsEC. By July 1, 2011, they had formed a common tariff space, which means that the Customs Union has already been established. As the membership application talks of Kyrgyzstan and Tajikistan are under way, the Customs Union could potentially expand to all EurAsEC members. The presidents of the three countries declared that the unified economic space will begin its full operation as the Eurasian Economic Union on January 1, 2015. Then the goal is to realize the free flow of goods, capital, and labor. In addition, they plan to build a supranational coordination organization to coordinate the members’ microeconomic and macroeconomic

table 5.1. Bilateral Trade between Russia and Central Asia (million U.S. dollars) 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Total

6,312.7

5,565.3

7,463.3

10,435.1

12,694.2

16,754.1

22,135.1

26,730.0

18,492.2

21,891.6

28,020.3

Export

3,479.7

3,103.0

4,302.0

6,124.0

8,247.0

11,222.0

15,519.0

18,247.0

13,322.2

15,110.3

18,489.0

Import

2,833.0

2,462.3

3,161.3

4,311.1

4,447.2

5,532.1

6,616.1

8,483.0

5,170.0

6,781.3

9,531.3

Sources: Russian Statistical Yearbook 2012 (Moscow: National Bureau of Statistics, 2012); and authors’ calculations.

table 5.2. Russian Investment in Central Asia (thousand U.S. dollars) 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Total

4,571

4,255

29,200

228,211

213,025

499,814

851,509

1,423,330

794,553

1,804,610

831,500

Kazakhstan

3,637

2,068

27,135

84,104

204,314

189,231

445,068

762,159

388,741

1,205,872

609,000

Kyrgyzstan

11

51

608

628

1,247

112,094

207,718

386,029

200,535

210,237

57,000

496

22,315

105,683

171,962

111,954

182,846

102,000

6,357

6,205

1,616

300

96,823

87,118

204,039

632,000

4

2

18

3,067

Turkmenistan

Tajikistan

318

230

857

1,865

Uzbekistan

601

1,904

582

138,547

Source: “Data on Russia” (National Bureau of Statistics, Moscow, 2012), 664.

—­

—­

6,968

176,174

0.4 93,040

chinese and russian economic interests | 135

policies.7 Also, participating nations plan to construct a unified central bank and currency, as well as a common energy market. In November 2011 the leaders of three countries signed the Declaration of Eurasian Economic Integration and the Eurasian Economic Committee Charter Treaty. Under the umbrella of the Customs Union and a unified economic space, they will have closer coordination of economic and monetary policy. Thus they will create a genuine economic alliance. Putin, the principal motivating force behind the creation of the Eurasian Economic Union,8 was very proud of these efforts at economic integration.9 He expected that they would accomplish the mission of developing a Eurasian power by 2015.10 At the same time, representatives of eight CIS countries have signed the agreement on a CIS free trade zone, offering a valuable concession for the twentieth anniversary of the CIS.11 The free trade zone is the first stage of the CIS economic integration, with the ultimate goal of economic union. Another important sign of the development process of the CIS is the Conception of the Further Development of the CIS, signed in 2007, and the CIS’s strategic plan for economic development through 2020, signed in 2008. The Conception of the Further Development of the CIS acknowledges the process of socioeconomic development and cooperation of the CIS countries and looks to the future of this trend in the CIS. The long-­term objectives of the CIS are to achieve the national integration of economy and politics, and to ensure the efficient development of all members. The 2020 strategy has determined more specific development goals.12 At present, a treaty on a free trade zone in the Commonwealth of Independent States has come into force in Belarus, Russia, and Ukraine. The members plan to ratify this agreement in 2015. Yet Kazakhstan, Kyrgyzstan, Moldova, and Tajikistan have not completed plans for the intrastate procedures. The plans are for the CIS free trade zone to come into force in 2015 or shortly thereafter.

Chinese Economic Interests and Purposes in Central Asia Central Asia’s situation is closely linked to China’s interests. Central Asia is the safe, stable outer area and geopolitical barrier for Xinjiang Province and even western China. Central Asia’s safety could affect the long-­term stability of western China as well as the implementation of

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a large-­scale western development strategy. Thus it could influence China’s political stability and economic development on the whole, and the realization of its next strategic goal, which is to become a moderately developed country by the middle of the twenty-­first century. The stability of Central Asia’s political situation as well as any regional unrest the actions of big powers’ contention may bring about could pose a threat to China’s safety. If Central Asia is in turmoil, China cannot be unaffected. Moreover, the “East Turkestan” forces that threaten China’s safety are colluding with terrorist organizations such as Al-­Qaeda, the Islamic Movement of Uzbekistan, and others. They have made Central Asia their forward position and the springboard of separatist activities, and usually carry on terrorist attacks in China’s Xinjiang Province. Therefore, if China wants to solve the problem of the so-­called three evil forces (terrorism, separatism, and extremism), which include “East Turkestan,” it may encounter some difficulties without the cooperation and assistance of the Central Asian countries. For China, economic development is the ultimate way to protect stability and security. Getting rid of poverty is the fundamental solution to the three evil forces.13 As China is becoming a main importer of energy sources, Central Asia may be one of the most important bases of energy supply for China in the twenty-­first century. Because of the region’s rich oil and gas resources, it is known as one of the major suppliers of nonrenewable oil and gas energy in the future. It is a win-­win situation for energy cooperation between China and Central Asia. For China, it could meet the increasing demand of energy and diversify energy imports by adding an additional source. For Central Asia, they will also add an important energy exports channel, and get great economic benefits by diversifying export channels.14 In the framework of the SCO (Shanghai Cooperation Organization), China has won the trust of Central Asia, and has become even more of a respected friend of Central Asia.15 However, again, we need to emphasize that Chinese cooperation with the Central Asian countries is to protect its own security and development, not to intervene in Central Asia. Whether it is China with its rapid expansion of its national economy or Central Asia with its recently obtained independence, all parties need to carry out economic cooperation on the basis of equality and mutual benefit. In 2012 China’s total import and export volume was

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close to US$3.87 trillion. However, Chinese import and export with the five Central Asian countries was only US$30 billion, which is one ten-­ thousandth of the country’s total. But we could see that Chinese imports from Central Asia are mainly raw materials of which China is experiencing a shortage domestically. In the long run, the import of oil and gas from these countries will increase, which could solve the difficulties of Chinese fuel shortages. Also the Central Asian countries could import a large amount of Chinese consumer goods and other products to satisfy domestic demands. Thus this complementary economic structure has made up for the deficiency in trade between the two regions. The Central Asian countries that are rich in natural resources could be beneficial to the sustainable development of the Chinese economy. In the view of economic and technical cooperation, Chinese investment in the Central Asian countries may have some help for their insufficient funding. Chinese joint enterprises in Central Asia have made great contributions to the development of their economies and societies, and are well received. The Eurasian transport corridor, which passes through Central Asia, is a traffic artery from China to Europe and western Asia. Without the cooperation of Central Asia and China, it is very difficult to make this artery work. Since 2000, the economy of the former Soviet Union has seen a long-­term development, becoming one of the fastest-­growing areas of the world (see figure 5.1). In 2008 the Eurasian Economic Community had grown by 68 percent since 2000. An average rate of annual growth is nearly 7 percent, and investment is increasing by 13.7 percent per year.16 The CIS countries’ trade has also expanded significantly. In 2005 it reached US$500 billion, then US$933.63 billion in 2010. Kazakhstan has already had some success in attracting foreign investment, and the country encourages the development of the foreign exchange market. China needs foreign enterprises to participate in to encourage further growth and development, and the Central Asian countries are well placed to act in this capacity.

Chinese Approaches in Guarding Its Economic Interests and Goals in Central Asia In the framework of the Shanghai Cooperation Organization, economic cooperation has come to be one of two important wheels in

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Figure 5.1. Annual growth rate of CIS (%). Source: Executive Committee, Commonwealth of Independent States, “Основные социально-экономические показатели государств-участников СНГ за 1992 (1994) – 2010 годы,” http://www.cis.minsk.by/ page.php?id=18908.

the relationship between China and Central Asia. The other is security cooperation. Chinese bilateral trade with the other SCO members surged to US$84.7 billion in 2010, slightly lower than US$86.8 billion in 2008. And in 2011, the trade volume between China and other member countries exceeded US$100 billion for the first time. However, in 2001, when the SCO was created, trade was at just US$12.22 billion. The average rate of annual growth has been more than 30 percent, and also achieves China’s goal in advance for bilateral trade between China and other SCO countries to reach $80 billion in 2010, which was proposed by Premier Wen Jiabao in 2008. In 2000 the bilateral trade between China and Central Asia countries was only about US$1 billion. In 2008 it went up to a record US$30.8 billion. As a result of the global economic crisis, there was a slight fall in 2009, but the amount returned to 2008 levels by 2010. In 2011 the trade value between China and the Central Asian countries amounted to US$39.6 billion (see table 5.3). Long after the independence of the five Central Asian countries, most of the time China has had more exports to the Central Asian countries than imports from them, owing largely to the region’s voracious appetite

table 5.3. China’s Trade with Central Asian Countries (Million U.S. Dollars) Total

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

1,578.5

2,388.3

3,103.2

5,933.4

8,726.8

12,057.9

19,662.0

30,822.7

23,546.5

30,112.6

39,605.9

Export

561.3

943.9

1,091.7

3,105.3

5,228.6

7,737.8

12,692.6

22,596.0

16,669.5

16,530.6

18,585.2

Import

1,017.2

1,444.4

2,011.5

2,828.1

3,498.2

4,320.1

6,969.5

8,226.7

6,877.0

13,582.0

21,020.7

Sources: UN Comtrade Database; and authors’ calculations.

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for Chinese goods and the paralyzed industrial system back home in China. But in recent years, the operation of the oil and gas transportation pipelines has greatly promoted the Central Asian countries’ exports to China. According to Chinese customs statistics, compared with 2010, in 2011 Chinese exports to Kazakhstan grew by just 2.64 percent, while imports increased by 38.18 percent. Chinese exports to Kyrgyzstan have increased by 18.19 percent, while imports increased by 36.15 percent. Chinese exports to Turkmenistan have increased by 49.37 percent, while imports greatly increased, by 349.31 percent.17 In sum, the total export value from China to the Central Asian countries has increased by 12.43 percent, while the total value of imports to China from the Central Asian countries increased by 54.77 percent in 2011. China has become the most important export market of the Central Asian countries. This is a powerful response to the argument that Central Asia is becoming the dumping ground of cheap Chinese goods. With the deepening of economic and trade cooperation, the Central Asian countries have positively adjusted their laws and regulations. And now the social environment, the economic environment, and the regulatory environment of investment have significantly changed. Mutual investment has expanded rapidly, while areas of investment have gradually widened. The SCO has become the key area of Chinese foreign direct investment. According to statistics from the ministry of commerce of China, in 2008 China’s direct investment (foreign direct investment) in the members of the SCO reached US$960 million, increasing by 26.3 times over 2003. Against the background of the international financial crisis, in June 2009 Chinese president Hu Jintao promised that China would provide a US$10 billion credit loan to the member states of the Shanghai Cooperation Organization in support of the multilateral and bilateral cooperation projects in the framework of the SCO, which helps member states to counter the financial crisis. Meanwhile, China also sent a huge trade and investment mission to other SCO member states to boost two-­way trade and investment. In June 2009, the joint statement of the Heads of State Council meeting stated that it is necessary to take effective measures to reduce the influence of the international financial crisis and promote trade, economic, and investment cooperation in the framework of the organization.

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table 5.4. China’s Direct Investment in Central Asia (Ten Thousand U.S. Dollars) 2004

2005

2006

Kazakhstan

2003 294

231

9,493

4,600

Kyrgyzstan

244

533

1,374

2,764

1,499

499

77

698

6,793

–­4

126

72

108

9

107

1,315

610

1,371

10,953

8,165

Tajikistan Turkmenistan Uzbekistan Total

2007

2008

2009

2010

49,643

6,681

3,606 58,160

706 13,691

8,427 14,507

2,658

1,667

1,542

2011

2,210

8,671 11,968 45,051 –­38,304 3,937

493

–­463

8,825

37,725 65,615 34,500 58,163 45,398

Source: 2012 Statistical Bulletin of China’s Outward Foreign Direct Investment.

Since the international financial crisis in 2008, China has already agreed on and promised a US$45 billion credit loan to member states of the Shanghai Cooperation Organization in bilateral and multilateral occasions, $25 billion of which would go to Russia and $15 billion to Kazakhstan. In 2009 Chinese direct investment to Turkmenistan and Kyrgyzstan amounted to more than US$100 million, reaching $120 million and $130 million, respectively. In 2011 Chinese direct investment to Central Asia was $0.45 billion, including $145 million to Kyrgyzstan. By the end of 2010, China’s total investment in Kazakhstan had reached $5.03 billion, making China the seventh-­highest investor in the country (up from ninth-­highest in 2009). Direct investment in 2010 was $1.22 billion, up by 72.4 percent and accounting for 7 percent of total investment.18 China is the largest investment partner of Uzbekistan. In 2010 Chinese accumulated direct investment in Uzbekistan on agreements was nearly US$4 billion, and the indirect investment was $710 million, mainly for the Chinese government’s preferential export buyer’s credit. In 2010 Chinese investment in Uzbekistan was $1.65 billion. From 2003 to 2011, China’s accumulative total direct investment in Central Asia reached $2.625 billion (see table 5.4). By the end of May 2011, the loan balance of China’s development bank to the SCO member states was about $38.5 billion, which has supported energy, electric power, and transportation infrastructure. Among them, energy cooperation has become an important field of enhancing mutual trust and benefit among SCO member states.

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There are many areas of investment cooperation for China and Central Asia, including light industrial, food, metallurgy, petroleum, chemical industry, machinery, agricultural, construction, communication, traffic industry, electronics, and so on. However, there are two important issues. One is the network infrastructure construction. It is the countries’ aim to construct a shared infrastructure system with regional interoperability, and energy, power, traffic, and telecommunications networks will be their primary focus. Another is resource exploitation. Exploiting natural resources is not to control the economic fates of these countries, but is the inevitable result of market mechanisms. As Chinese president Xi Jinping has visited Central Asia in 2013, all parties have agreed to cooperate more in the future. And the cooperation will have tremendous positive effects in the long run.

The Lack of Essential Conflicts between Russian and Chinese Economic Interests in Central Asia China and Russia have many common interests in Central Asia. They both need to maintain the stability and development of the Central Asian countries, support the Central Asian countries’ efforts to establish and perfect their markets, improve the environment, and strengthen multilateral cooperation. However, with the further development of economic cooperation, compared to Russian trade with Central Asia, Chinese trade with Central Asia has been close to Russia’s and even more expansive (see figures 5.2 and 5.3). This “avalanche” type of growth, which greatly increases the economic influence of China in Central Asia, has caused Russian concern. Vladimir Paramonov, who is a representative of the Border Cooperation Association in Uzbekistan and director of the Central Eurasia Project,19 has conducted a virtual expert forum by using his own “Central Eurasia” website in conjunction with a Russian online journal, New Oriental Outlook, the Regnum news agency, the Information Analysis Center of Moscow State University, the APRA information analysis portal of Kyrgyz Telecom Networks, and the Region.kg analysis website. Famous experts and scholars of the former Soviet Union are invited to take part in the forum, and have a heated discussion on the theme of

Figure 5.2. Bilateral Trade between China, Russia, and Central Asia. Sources: UN Comtrade Database; Russian Statistical Yearbook 2012 (Moscow: National Bureau of Statistics, 2012); authors’ calculations.

Figure 5.3. Chinese and Russian FDI to Central Asia. Sources: Statistical Bulletin of China’s Outward Foreign Direct Investment (Beijing: Ministry of Commerce, 2010); Russian Statistical Yearbook 2011 (Moscow: National Bureau of Statistics, 2011); authors’ calculations.

143

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Eurasian integration and China.20 This forum has held twelve issues, from November 23 to December 26, 2011.21 All the experts acknowledge that China is the second-­largest economy in the world and is growing rapidly. Any integration process in the current situation must consider China’s growing strength. Chinese presence in Central Asia has rapidly strengthened, especially in the past ten years. Currently, China has become the world’s leading manufactured-­ goods exporter and a far more influential factor overall in the region. Chinese trade with Central Asia has been almost the same as Russian trade with them for many years, and even has surpassed it. Therefore, China is an inevitable factor in the process of Eurasian integration. However, experts have different view on the issue of how to treat the Chinese economic presence in this area. A considerable number of experts who have a negative attitude on the Chinese economic presence in Central Asia argue that China’s economic rise is a threat to the former Soviet Union countries. Konstantin Syroezhkin, chief researcher of the Kazakhstan Institute for Strategic Studies (KAZISS), argues that China cannot and should not become a locomotive of regional integration in the former Soviet Union, and China appears as a competitor rather than a helper. China’s purpose is to establish a free trade area in the SCO space and open Eurasian, European, and Middle Eastern markets for Chinese goods. Neither Russia nor the Central Asian countries have the ability to resist Chinese economic and trade penetration into this area. Azhdar Kurtov, chief editor of the journal International Strategic Studies of the Russian Institute of Strategic Studies, believes that China has already gained access to a very impressive part of the natural resources of this region, and has the ability to change the transport network at will. China has turned into the leading lender and actual financial controller in this region. Central Asia has not only become a raw material appendage to China, but also increasingly relies on Chinese banking and the Chinese financial system. Dependence on the field of information and culture is intensified, too. Konstantin Simonov, chairman of the Russian National Energy Security Foundation, exaggeratedly emphasizes that the only way to effectively resist the permeation of China in this area is to actively promote the process of Eurasian integration. This is an umbrella for protecting Central Asia from Chinese expansion, and its aim is to replace

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the trade advantage of China. He also thinks that China will consider the Customs Union and the Eurasian Union as a challenge to its strategy of getting an excellent and competitive position on the Eurasian continent at the expense of its financial and economic strength. But China will not change this strategy. Paramonov alleges that China plays a leading role in the process of integration, and it is manifested, in particular, in the discussion of the idea of creating the Bank of the Shanghai Cooperation Organization. Therefore, China will occupy a position of absolute advantage in any economic integration of the former Soviet Union with China. It is impossible to absorb China into the economic integration of the former Soviet Union, as no one would like to invite China to participate in the Eurasian Union. However, China has the power to significantly influence the integration processes in Eurasia. Murat Laumulin, chief researcher at the Kazakhstan Institute for Strategic Studies, extremely exaggeratedly says that China has begun to perform as a competitor in Central Asia, which traditionally is a zone of Russian influence — ​not only to the West, but also to Russia. This will be a stern test for Russia. China’s booming interests conflict with the interests of both Central Asia and Russia. Russia’s geopolitical power in Central Asia, even with the comprehensive support of all the Eurasian partners, is unlikely to be comparable with China’s growing power and influence in the region. So proceeding from the fact that China today overplays Russia in the SCO, Russia will need other tools for the realization of its interests in Central Asia. However, most experts believe that Central Asia’s cooperation with China is of great importance in maintaining the economic development of Central Asia. Therefore, it is necessary to learn how to use the Chinese presence in favor of socioeconomic development, and jump on the “Chinese economic express.” Evgeny Vinokurov, director of the Center for Integration Research of the Eurasian Development Bank, stresses that China is a necessary element of the architecture of Eurasian continental integration. Russia and Central Asia could gain more by such a good opportunity. There’s no need to fear China, and the fear of China’s expansion is meaningless. Professor Ksenia Borishpolets of MGIMO (Moscow Institute of International Relations) objectively points out that China’s cooperation with Tajikistan and Kyrgyzstan is not for profit. It is mainly for future investment, reducing political investment risk, and

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preventing social instability.22 Anyway, it is a constructive contribution to the development of this region. We can see that currently it is useful for the integration processes of Eurasia that Central Asia cooperates with China. Paramonov emphasizes that we should have a correct and adequate understanding of China and its policies, and effectively use its economic and other powers. Russia and other former Soviet Union countries must enhance their relationships with China and bring them to a new level — ​the level of a real strategic partnership. And they should build up a relationship of mutual trust, even an alliance, in the future. Many experts emphasize that Russia should participate more actively in the establishment of effective forms of economic interaction with China and Central Asia. Saifullo Safarov, deputy director of the Center for Strategic Studies in the Republic of Tajikistan, believes that policies in Russia and other former Soviet Union countries tend to discourage close economic interdependence that recalls the USSR period, and that this is what makes Russia lose its influence in the former Soviet Union regions, rather than China plundering a Russian “site.” With the disappearance of Soviet power and the appearance of the subsequent weak countries, it is very lucky for China to receive such huge geopolitical dividends. Turkmenistan’s independent expert Murat Jumaev further notes that Russia should reconsider its foreign policy and implement a cooperation strategy with former Soviet Union countries. The Central Asian countries are very cautious about cooperation with Russia. In order to ensure the independence of their energy exports, they will be more likely to make China a trading partner as an alternative. At present, Russia is adjusting its foreign policy, and the first thing to do is to develop a Eurasian integration policy. Russia and the Central Asian countries should not be afraid of China. China is not going to take Russia’s “site,” and it is largely Russia itself that is at fault in Russia’s waning influence in the Central Asian region. On the contrary, China has become an important factor in regional development and prosperity in Central Asia. Russia should enhance cooperation with China in regard to the issue of Central Asia. Both will be satisfied with the Chinese economic presence in Central Asia. Yuri Shevtsov, director of the Institute of Russian Energy Strategy, notes that Eurasian economic integration could dramatically help to

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promote the resolution of the transport issues between China and the European Union, involving the territory of Kazakhstan, Russia, and Belarus. Then they could truly fulfill the large-­scale transcontinental China – ​Europe transport corridor. China is already an important supporter of Eurasian integration, because China needs transit to the EU, and to enter the markets of the EurAsEC region. Moreover, the development of transcontinental transport arteries could allow China to reduce its dependence on maritime transport passing through the potentially vulnerable Strait of Malacca, and promote the development of the inland and western regions of China. As Gennady Chufrina, chief researcher at the Russian Academy of Sciences Institute of World Economy and International Relations, has said, under current conditions, China does not intend to oppose Eurasian integration. As of now, China is interested in maintaining normal economic and political relations with Russia, and Russia wants to do the same. Putin’s past visit to China clearly speaks to this. However, this does not mean that China will reduce its economic presence in the region. China will likely maintain an interest in energy and other natural resources from Central Asia, and will continue to import goods and defend its economic interests there as well. In the view of Russia and its partners in the Customs Union, the Unified Economic Space, and even the Eurasian Union, Russia should find some mutually acceptable ways of economic cooperation with China, including the use of the SCO to avoid strategic competition. As with China, whether the former Soviet Union unifies economically or not is insignificant for Russia. Russia will continue strengthening bilateral relations with each of the countries. Wang Lijiu, researcher at the Institute of Russian Studies at the China Institutes of Contemporary International Relations (CICIR), argues that rather than preventing and protesting China’s involvement with former Soviet Union countries, Russia should view the Eurasian Union as an important diplomatic initiative of Russia, based on Russia’s future development strategy and the rapidly changing nature of international and regional politics. A good relationship between Russia, China, and Central Asia will have a positive impact on peace, security, and development in the CIS area, and even in the whole of Eurasia. Also, China hopes that a Eurasian Union and the Shanghai Cooperation Organization could mutually cooperate and develop, which can make some contributions to the stability and prosperity of

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Central Asia. At present, with the efforts of all members, the SCO has made great achievements, such as an increasing volume of trade and mutual investment among the members. Financial and energy cooperation also have made a lot of progress, as has security cooperation between the Eurasian Union and the SCO. The economic cooperation between China and the Central Asian countries can also be seen as the economic cooperation of the SCO. The SCO plays an important role in the region’s overall security. Without the SCO, it is hard to imagine a stable security situation in the region. The Central Eurasia Project, under Paramonov’s direction, has planned a bright future of cooperation between an economically integrated Eurasia and China. Paramonov believes that this project is the only way of reducing the fragmentation of the unified economic space, brought on by the collapse of the USSR. He also feels that the project will aid in overcoming the economic tendency of most countries toward relying on raw materials by promoting the economic integration of the former Soviet Union. It is obvious that in order to fulfill this strategic task, countries in this region must rely on the EurAsEC, the Customs Union, and finally the EAC. At the same time, the SCO should give political and other support for the integration process of the former Soviet Union by Chinese guarantee. This support will be of great importance for Russia and its allies, especially in terms of countering the likely pressure from the United States and other Western countries, because many Western countries are reluctant to accept the economic reintegration of the former Soviet Union. Hence, after the fulfillment of whole economic integration in the framework of the EAC, it is necessary to further expand the integration in the framework of the SCO. In order to achieve a systematic breakthrough of the whole development of the Eurasian economy, it is necessary to guarantee the consistency and functioning of the EAC and the SCO. China plays a decisive role in fostering innovation and developing multilateral cooperation in the framework of the SCO. The SCO must become an attractive integration project with the participation of Russia, China, the Central Asian states, and possibly other countries. Olga Garanina, head of the Center for Energy Policy Research at Saint Petersburg State University of Finance and Economics, also points out that it is imperative to strengthen the complementarities

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of production and consumption, and change the economic relation of trading finished products for raw materials between China, Russia, and Central Asia. This relationship is not conducive to building a strong foundation for long-­term development and cooperation between China, Russia, and Central Asia. She believes that the promising areas of cooperation may be investment projects and the creation of regional investment funds that are aimed at ensuring the “catch-­up” development of rural regions and overcoming regional inequalities. The main development directions should be financing for infrastructure projects (transport, communications, etc.) and supporting the development of small and medium enterprises. Evgeny Vinokurov, director of the Center for Integration Research of the Eurasian Development Bank,23 also lists areas of possible cooperation: a variety of cross-­border infrastructure projects (oil and gas pipelines, railway and automobile transport corridors, effective border crossings and border trade zones, land fiber-­optical lines, power lines, etc.) and the free movement of capital. Also, cooperation plays an important role in the development of the Eurasian economy by promoting free trade, which will benefit all the partners. Konstantin Syroezhkin, chief researcher of the Kazakhstan Institute for Strategic Studies, recognizes that those projects, which are impossible to implement in the framework of the EurAsEC due to financial, technical, and other difficulties, could be completed by the SCO. China, which has a huge level of investment in the region, could provide substantial help.

Conclusion China would be pleased to see Russia realize the idea of the Eurasian Union and guarantee stability and safety in Central Asia, as it will provide stability and safety to the western region of China. Chinese interests in Central Asia are largely connected with the western region of China. As Professor Gennady Chufrina asserts, China won’t oppose Eurasian economic integration. China is interested in maintaining a practical political and economic relationship with Russia, which may be the Eurasian Union in the future. For China, it makes no difference whether the post-­Soviet territory is unified or not. China will strengthen and develop bilateral ties with each of the countries as usual.

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The Chinese position in this region revolves around the fact that China is not going to occupy the “place” of Russia and instead just wants to be a factor for development and prosperity in the region. The extensive energy reserves of Russia and Central Asia and a huge consumer market in China create favorable conditions for mutually beneficial cooperation. The goal of regional economic integration in the territory of the former Soviet Union is the reconfiguration of the geopolitical and geo-­economic picture of Eurasia. The SCO should play a supporting role in this political and economic integration, at least in the interest of security. The support of Russia and its allies to withstand possible pressure from the United States and the West is very important, because many Western countries are very reluctant to accept the integration process of the former Soviet Union. For this reason, it is necessary to further expand economic integration within the SCO framework after the realization of full economic integration within the framework of the Eurasian Union (Eurasian Economic Union). The SCO should provide strength, coordination, and synchronization for these two forces. Thus, in the framework of the SCO, Russia and Central Asia play a crucial role in training for the development of multilateral cooperation.

Notes 1.  For further reading, please refer to Liu (2007), Zhang (2008), Buszynski (2005), and Allison (2004). 2.  Institute of Contemporary Development (2010). 3.  World Bank database, authors’ calculations. 4.  According to the Customs Union agreements, the three countries will form a unified customs area. And except that the tariffs of automobiles and oil will be levied according to the provisions of every country during the transition period, they will simplify the customs procedures, and the vast majority of commodities will be subject to exemption circulation. Also they will have unified external tariffs. In July 2010 the Customs Union effectively came into force. Although Uzbekistan and Turkmenistan are not in the Customs Union, their absence has had no significant effect on the Customs Union. 5.  The Single Economic Space (sometimes denominated the Common Economic Space) is a project of economic and political integration of three CIS states: Russia, Kazakhstan, and Belarus. On September 19, 2003, in Yalta the heads of Russia, Belarus, and Kazakhstan signed the treaty on the establishment of the CES. The purpose of the CES is to create conditions for stable and effective development of the member states’

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economies and improvement of the quality of life of the population, by eliminating international trade barriers and customs and establishing a central trade commission with supreme trade authority over participating states. The Single Economic Space (SES) became operational on January 1, 2012, so the Customs Union transformed into a higher form of integration ensuring freedom of movement of goods, services, capital, and labor, and equal treatment of economic entities. See the website of the Ministry of Economic Development of the Russian Federation: http://www.economy.gov.ru/wps/ wcm/connect/economylib4/en/home/activity/sections/space/. 6.  The Eurasian Economic Community (EurAsEC) is an international economic organization of the member states aimed to form common external customs borders and develop common external economic policy, tariffs, prices, and other functioning parts of a common market, adapted from the European Community, the WTO, and other international norms. EurAsEC was created in compliance with UN principles and international legal principles, and has observer sætatus in the UN General Assembly. See the website: http://www.eurasian-­ec.com/index.php?option=com_content&​ task=view&id=2&Itemid=7. 7.  There may be some difficulties in implementation by the supranational coordination organization, caused, for instance, by the uneven political and economic development of all the countries and the influence of the global economic slowdown. The formation of policies on tax, money, and finance, and the signing of important economic agreements lay a solid foundation for the work of a supranational coordination organization. See http://www.mofcom.gov.cn/aarticle/i/dxfw/jlyd/201203/​ 20120308040260.html. 8.  News from Russian television: “Путин: Евразийский союз заработает в 2013 году,” http://www.vesti.ru/doc.html?id=506530. 9.  The reasons for Putin’s optimism may be based on the objective requirements of the CIS countries to realize Eurasian integration; the joint initiative of Russia, Belarus, and Kazakhstan; the rapid economic development and the need to respond to the financial crisis in the region; and Russia’s dominant position in the region. See Li (2011b). 10.  See Putin’s speech on the news conference of CIS heads of government committee, the Eurasian economic community multinational committee, and the senior agency meeting of the Customs Union, which were held on October 20, 2011; see Customs Union website at http://www.tsouz.ru/news/Pages/21 – ​10 – ​2011.aspx. 11.  Currently there are eleven members of the CIS, of which eight countries signed free trade agreements in October 2011: Russia, Ukraine, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Armenia, and Moldova. Azerbaijan, Uzbekistan, and Turkmenistan did not sign the free trade agreements. 12.  The CIS FTA is a project the CIS countries hope will facilitate free trade. Nonetheless, the Eurasian Economic Community will go further than the CIS FTA. On the basis of the Customs Union of Russia, Belarus, and Kazakhstan, it will absorb Kyrgyzstan and Tajikistan and extend the Customs Union to the whole EurAsEC. Finally, it will achieve the goals of the free flow of goods, labor, and capital among member states.

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13.  Economic development or growth may not bring social stability, but we cannot simply conclude that instability in some countries is caused by economic development. Wang and Hu (2010) empirically analyze the transnational data of 162 countries in three years, and they conclude that the countries who experience economic growth or have a high level of economic development are more likely to achieve social and political stability. The article also discusses the possible reasons. 14.  The Central Asian states will not see hydrocarbons in Xinjiang as competitive with their interests. Since 1993, China has been a net importer of oil. And since 2006, China has been a net importer of natural gas. Because of the huge domestic consumer market, China uses domestic resources to satisfy its own demand as much as possible. In addition, hydrocarbon development in Xinjiang has so far failed to live up to its promises. The progress has been slow, as potential domestic and foreign investors are not confident that China’s legal system is transparent or effective enough to resolve potential disputes. See Chung (2003). 15.  In the framework of the SCO, by cooperation in the political, economic, military, security, energy, transportation, and arts and humanities fields, both China and the Central Asian states can maintain regional security and stability, and promote the development and prosperity of all the countries. Thus China can win the trust of the Central Asian states. See Liu (2007a). 16.  Евразийское экономическое сообщество, Справочник, 2000 – ​2009, http:// www.evrazes.com/i/data/item7264 – ​2.pdf. 17.  Authors’ calculations according to data from UN Commodity Trade Statistics Database, http://comtrade.un.org/db/. 18.  According to data from the Chinese economic and commercial counselor at the embassy in Kazakhstan, http://kz.mofcom.gov.cn/aarticle/zxhz/zzjg/201105/​ 20110507573947.html?995477944=1848581430. 19.  The Central Eurasia Project, a regional initiative of the Open Society Foundations, aims to promote social progress and human rights in the South Caucasus, Central Asia, and Mongolia by developing programs and international campaigns that use policy research and advocacy to shape debates on significant economic, political, social, and security challenges facing the region; see http://www.ceasia.ru/. 20.  Eurasian integration mainly refers to the former Soviet CIS countries, not China. 21.  See http://www.ceasia.ru/. 22.  Through economic cooperation with the Central Asian countries, especially energy cooperation, China can diversify its energy imports. Also China can promote the safety and stability of Xinjiang and the western region of China by maintaining Central Asia’s prosperity and stability. Thus we can say that cooperation with Central Asia is mainly for the safety and development of China. 23.  The bank’s charter capital exceeds US$1.5 billion, which was formed by contributions of its member states. The bank invests in large, effective mid-­and long-­term projects. The minimum project volume taken into consideration is, as a rule, US$30 million, with a maximum duration of fifteen years. Examples include infrastructure

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development projects (transport, energy, telecommunications, municipal facilities), development of high-­value-­added production, energy efficiency programs, and so on.

References Allison, Roy. 2004. “Strategic Reassertion in Russia’s Central Asia Policy.” International Affairs 80 (2): 277 – ​93. Buszynski, Leszek. 2005. “Russia’s New Role in Central Asia.” Asian Survey 45 (4): 546 – ​65. Chung, Chien-­Peng. 2003. “The Defense of Xinjiang: Politics, Economics, and Security in Central Asia.” Harvard International Review 25 (2): 58 – ​62. Institute of Contemporary Development. 2010. “Russian Economic Interests and Objectives in the CIS.” Report, February. Li Xin. 2011a. “10 Years of SCO: Achievements, Challenges and Prospects.” Contemporary International Relations, no. 9, 9 – ​15. Li Xin. 2011b. “Mr. Putin’s Perspective of Eurasian Alliance: Background, Goal and Its Possibilities.” Contemporary International Relations, no. 11, 4 – ​10. Liu Fenghua. 2007a. “China in Central Asia: The Development of the Policies.” Russian Central Asian and East European Studies 6: 63 – ​72. ———. 2007b. “Russia in Central Asia: The Development of the Policies.” International Politics Quarterly, no. 2, 150 – ​56. Wang Lijiu. 2012. “Russia’s Eurasian Union Strategy and Its Impact on Sino-­Russian Relations and SCO.” Contemporary International Relations, no. 3 (May – ​June). Wang Yong and Hu Angang. 2010. “Empirical Study of the Relationship between Economic and Social Political Instability, Based on the Comparative Analysis of the Transnational Data.” Comparative Economic and Social Systems, no. 1, 83 – ​89. Zhang Xiaohui. 2008. “Russia Reconstructs Its Influence in Central Asia.” Xinjiang Social Science 6: 45 – ​49.

6

The Strategic Interests of China and Russia in Central Asia Xing Guangcheng

The Influences of China and Russia in Central Asia From a geopolitical point of view, every major power is exerting some influence in Central Asia. America has great influence; Europe has some influence; India, Japan, Turkey, and Iran are also exerting influence in Central Asia to a lesser extent. It cannot be denied that Russia still has the greatest influence on Central Asia. Russia’s influence covers almost all fields and areas. Politically, Russia and most Central Asian countries have strategic or even quasi-­alliance relations.1 Economically, most of Central Asia’s energy exports head north to Russia, and Russian energy companies almost completely control the up-­and downstream production lines of the Central Asian energy sector. Except for the recent Chinese pipeline, Central Asia’s transportation systems all lead to Russia. Russia also has a demographic influence in the region, as a considerable number of Russians live in Central Asia. The Russian language is still the most important and widely used language there; Russia’s news media are the primary sources of information; Russian culture and customs are well accepted; Russia is still the most desired destination for laborers from Central Asian countries. We cannot neglect history. Russia and Central Asia used to be within one country in both the Russian Empire period and the Soviet Union period. With the disintegration of the Soviet Union only about twenty years ago, the Central Asian countries got their independence. But the very close political, economic, diplomatic, and cultural relations between Russia and the Central Asian countries naturally and instinctively remained. In sum, the regions share an extraordinarily close relationship. 154

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In the twenty years since the disintegration of the Soviet Union, Russian opinions and judgments on Central Asia experienced extensive changes — ​almost like a U-­turn. The transformation of Russian policies toward Central Asia can be divided into the Yeltsin period and the Putin period (including a Putin-­Medvedev combination period). During the Yeltsin period, Russian policies toward Central Asia were to preserve Russia’s traditional strategic influence. However, the fact is that in this period, Russia withdrew strategically from Central Asia. Russian influence was weakened. This was a peaceful separation between Russia and Central Asia. The leading actor was Russia, as it considered Central Asia a burden. Though some Central Asian leaders did not actually want to become fully independent from Russia, they had no choice. After the inauguration of President Putin, his persistent idea was the “great power” strategy. Putin’s strategic aim was to promote the integration of the Commonwealth of Independent States (CIS). This aim is in accord with Russia’s great power strategy and its efforts during this period to recover its traditional levels of geopolitical influence. We can see that, in the Putin period and Putin-­Medvedev combination period, Russia was recovering its strategic and strong influence in Central Asia. Compared with Russia, China’s influence in Central Asia is limited, partial, and fluctuating, but is strongest in the economic field. China’s economic cooperation with Central Asia focuses on the energy sector. In the security field, China’s influences in Central Asia are not as strong as those of Russia and America. China has no armed forces or military bases stationed in Central Asia. In regard to cultural influences, China’s Confucius institutes are the only primary platforms for introducing Chinese culture in Central Asia; the influences of China’s media and language in Central Asia can be described as insignificant. In terms of diplomatic importance, no Central Asian country lists China as the most important country for its interests. This does not mean that the Central Asian countries do not emphasize their relations with China, but it does reflect the reality of the diplomatic situation. Historically speaking, China’s relations with Central Asia trace back to ancient times. China has maintained strong relations with the present Central Asian countries for over two thousand years. China began to govern this area, the so-­called Western Region, since the Western Han Dynasty. China’s relations with Central Asia suffered a rupture only

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in the modern era, when Central Asia was conquered by Russia. Yet, although China has a long history of good relations with the Central Asian countries, this relationship is nowhere near as close as the relationship between Central Asia and Russia. From a political, economic, military, and cultural perspective, Russian relations with Central Asia are closer than those of China. The abrupt disintegration of the Soviet Union was a very significant event for China. For a period, it was difficult for China to judge what the new geopolitical situation would be. China is trying to strengthen its new, friendly relations with the Central Asian countries, which are of crucial importance for safeguarding the stability and development of northwestern China. China directly borders with three Central Asian countries: Kazakhstan, Kyrgyzstan, and Tajikistan. Geopolitical stability necessitates that countries sharing a border cooperate, and so China pursues a good neighbor and friendly policy toward Central Asia. The Central Asian countries also need China’s help, support, and understanding as they develop themselves as independent states. So, from the very beginning, China and the Central Asian countries have laid a good foundation for amicable neighboring relations. China realizes its strategic interests in Central Asia by two important means: bilaterally and through multilateral regional organizations such as the SCO. The SCO is the most important platform for realizing China’s interests in the Central Asian countries. For twenty years after the independence of the Central Asian countries, the relations between China and all countries in Central Asia have been steadily improving. With the rise of China’s power as a nation, China’s influence on Central Asia is increasing, and “the Chinese factor” has become important. China’s increasing influences show that China’s economic cooperation level is being upgraded and becoming more fruitful. China and all the Central Asian countries find cooperation mutually beneficial. Although Russian influence has declined from its Soviet-­era peak, there is no question that Russia is still the most important power for the Central Asian states. Although China’s influence in the Central Asian countries has been on the rise, China cannot match Russia yet. Some Russians’ opinion is that Russia is facing the challenges of China, the United States, and Islamic forces for influence in Central Asia. This

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viewpoint exaggerates China’s negative role in influencing Russia, and does not reflect reality. If there is a new Great Game between big powers in Central Asia, it mainly involves competition between Russia and the United States. China is not an actor.

Russian Interests in Central Asia Because Russia has a comprehensive influence in Central Asia, Russian strategic interests in Central Asia are wide-­ranging and penetrate into every field. What does Russia care most about? Clearly, Moscow’s strategic interests in the security field take the highest priority. Non­traditional security also concerns many Russians, who think that the rise of Islamic radicalism, drug trafficking, and weapons trafficking pose real threats to the southern border of Russia. It is well known that the northern Caucasus used to be the most turbulent region of Russia. After the disintegration of the Soviet Union, Russia launched two wars there. Although the situation in the northern Caucasus region is now relatively stable, it is still the most fragile area of Russia. International terrorism and radicalism have penetrated seriously into Central Asia, and pose an all-­around threat to Central Asia. For its own strategic interests, Russia hopes that the regimes in Central Asia can cooperate closely with Russia, and contain the threat of international terrorism and radicalism. Central Asia borders the Caucasus region. In these two areas, Islamic radicalism is relatively active. The Islamic radical forces in the two areas are related. If Russia wants to maintain the stability of the northern Caucasus area, it needs to pay close attention to the trend of Islamic radicalism in Central Asia and ensure the general stability of Central Asia. Russia’s security strategy about Central Asia has other features as well. Russia is not willing to see Central Asia controlled by any one big power or a Western bloc. That would be contrary to Russian national interests. So Moscow’s preference is that Central Asia be a Russian strategic rear area and security shelter. Any big power’s excessive involvement in Central Asia will be regarded by Russia as an affront to its national interests, and Russia will surely take necessary countermeasures. Russia does not allow other major powers to use Central Asia to contain Russia or pose a comprehensive strategic threat to Russia. Therefore, Russia is

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taking various measures to prevent other major powers or blocs from controlling this area. To control Central Asia is the only strategic choice for Russia. Russia has two strategic defense goals in Central Asia. The first is to contain Islamic radicalism, which may be gaining strength as Western countries withdraw from Afghanistan. The second is to contain the Western countries’ strategic attempts to exert control over Central Asia. Some people in Russia also worry that China may obtain strategic control over Central Asia. Russia has very important strategic and economic interests in Central Asia. According to the traditional division of labor, the Central Asian countries were the supplier of raw materials and primary products, and the markets for the industrial products of the Soviet Union. After the disintegration of the Soviet Union, this basic economic structure has not changed fundamentally, and Russia still tries to preserve this model of economic cooperation. Although the Central Asian countries have taken a number of measures toward changing this relationship, it is not easy to get rid of this economic model. Unlike in the security field, where Russia stresses the importance of defense, in the economic field, Russia is expanding its economic cooperation in the Central Asian countries. Russia regards Central Asia as an element of its own broader economic sphere. Russia has important human interests in Central Asia as well. Russia protects the rights of Russians in Central Asia, and safeguards the status and influence of the Russian language. The influence of Russian culture in the region was weakened after the disintegration of the Soviet Union, but it still has widespread influence. The influences of Russian science and technology, education, and media in Central Asia are very strong, however. Thus, Russia has put forward a strategic plan for preserving its traditional cultural links.

China’s Basic Strategies and Interests in Central Asia China has important strategic interests in Central Asia. The geopolitical situation in Central Asia has a significant impact on China, directly or indirectly affecting various Chinese interests in the region, including

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energy policy, economic development, East Turkistan forces, and the development of the Shanghai Corporation Organization (SCO). As Zhao Huasheng writes, “From the angle of relations of big powers and geopolitics in Central Asia, China is facing a series of strategic choices which can be categorized as the choice of strategic security positioning, the choice of strategic security pattern, the choice of strategic partners and the choice of structure.”2 China’s most important interests in Central Asia are in the realm of security. China worries that the newly independent countries of Central Asia may be threatened by radical Islamic fundamentalism. Inter­ national terrorism and radicalism threaten not only Central Asia, but also China’s Xinjiang Province. China hopes Central Asia could be the barrier for resisting the spread of Islamic fundamentalism. China is against national separatism of any form, and is cracking down on any organization or forces engaged in separatist activities against other countries within its territory. China hopes all the countries in Central Asia will support China’s propositions mentioned above, and hopes that Central Asia becomes a peaceful, stable, and dependable backyard for the northwest area of China, not a stronghold to incite instability. Thus, as China’s Xinjiang is closely connected with the Central Asian countries, maintaining security and stability in Central Asia is very important for the security and stability of China’s Xinjiang. Another one of China’s top interests in Central Asia is economic cooperation, especially energy cooperation. China and the Central Asian countries have a long history of good experiences in this arena. After the disintegration of the Soviet Union, the Central Asian countries became market partners in China’s plans for opening its market. Central Asia is indispensable for the development of China’s Xinjiang. Recently, the Chinese government put forward a renewed emphasis on the rapid development of Xinjiang, emphasizing that Xinjiang needs to further open to the West. So China’s deep economic cooperation with the Central Asian countries has become very important. China also has important cultural interests in Central Asia. The ancient Silk Road closely connects China and Central Asia. In September 2013, the Chinese president Xi Jinping put forward the strategic conception of building “the economic belt along the Silk Road” in his

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speech at Nazarbaev University of Kazakhstan.3 Later on, Xi explained the idea again in the 2013 summit of the Shanghai Cooperation Organization in Bishkek.4 Starting from China, taking Russia and Central Asia as bridges and links, Europe as a foothold, and northern African areas as an extension line, an “economic belt along the Silk Road” will form a comparatively free transportation network and comparatively convenient trade route. Basically, an economic belt along the Silk Road focuses on the cooperation of the whole of Eurasia, not just cooperation with Central Asia. In the process of building this network, China must pay more attention to strategic cooperation with Russia, because without Russia’s participation and its important role, the construction of an economic belt along the Silk Road is impossible. The economic belt along the Silk Road will not contradict the Shanghai Cooperation Organization or the Eurasian Economic Union. Through mutually beneficial cooperation, the belt will try to link up several international and regional organizations in Eurasia and form a new community. China and the European Union have jointly developed a road map of economic cooperation and plan to promote the bilateral trade volume between the two parties in order to reach an overall trade value of US$1 trillion in 2020. The construction of the economic belt along the Silk Road will reinforce the new trend of economic cooperation between Europe and Asia. In the twenty-­first century, China and the Central Asian countries will likely try to rejuvenate the New Silk Road. China and its Central Asian neighboring countries have close cultural connections. There are many trans-­border nationalities in China and Central Asia, such as Kazakh, Tajik, Uzbek, Kyrgyz, and Russian. Their cultural exchanges are important factors for developing China – ​Central Asia relations. China’s relations with the Central Asian countries have several characteristics: (1) emphasizing friendship; (2) attaching great importance to the development of economic and trade relations; (3) trying to promote China’s own values to the Central Asian countries; (4) not intervening in the Central Asian countries’ internal affairs, and not promoting its own model to the Central Asian countries; (5) and limiting other countries’ intervention in China’s domestic affairs.

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Sino-­Russian Common and Diverging Interests in Central Asia China and Russia have common or similar strategic interests in Central Asia. The two countries are neighbors and therefore must deal with these issues in the region: 1. Border issues. The disintegration of the Soviet Union brought major changes and instabilities to the geopolitics of China. The direct consequence of the disintegration of the Soviet Union was that China had three more neighbors: Kazakhstan, Kyrgyzstan, and Tajikistan. China’s border with the three new neighbors runs over three thousand kilometers. The Sino-­Soviet border talks changed from bilateral to multilateral talks among China, Russia, and the three new independent Central Asian neighbors. In October 1992 Kazakhstan, Kyrgyzstan, Russia, and Tajikistan held border issue negotiations, and agreed to solve the historical border issues between them and China. In September 1994 China and Russia signed an agreement on the western border of China. Then China, Kazakhstan, Kyrgyzstan, and Tajikistan signed agreements on border issues. Up to now, China’s border issue with the above-­ mentioned four countries have been thoroughly solved. China’s borders with these four countries have become transparent and peaceful. This was a successful case of peacefully solving border issues among countries. The development of friendly relations between China and Russia and China and the Central Asian countries is an important achievement. 2. Security cooperation. A related result of the negotiations was progress on security cooperation. Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and China held many consultations and reached consensus on many issues. On April 26, 1996, the “Shanghai Five” signed an agreement on strengthening mutual trust in the military field as well. On April 24, 1997, the leaders of the Shanghai Five signed the border regions’ disarmaments agreement in Moscow. These two agreements provide a new safety model differing from the transitional thinking and promoting mutual cooperation among nations.

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3. International terrorism. Russia and China share a strategic interest in working together to combat international terrorism in the region. International terrorism as a new threatening factor appeared after the independence of the Central Asian countries, and it remains an important unifying issue for China and Russia. After the formation of the Shanghai Five summit, cooperation among China, Russia, and the Central Asian countries entered a new period. Resisting international terrorism became the most important common task for them. The Central Asian countries, the northern Caucasus region of Russia, and Xinjiang Province of China face a real threat from international terrorism. China, Russia, and the Central Asian countries need to unite and jointly cope with the challenges it brings. From over ten years of experience cooperating in fighting against terror, the fight against international terrorism will be a long-­term common strategic aim of China and Russia. Preserving the stability and development of Central Asia is a major common strategic interest for China and Russia. Indeed, with the common efforts of the Central Asian countries, China, and Russia, the Central Asian countries have been able to maintain stability. Ensuring the stability and development of Central Asia has provided China and Russia a good opportunity for cooperation in the region. 4. Regional cooperation. Setting up regional cooperation helps ensure regional peace. The need to solve the border issues catalyzed the Shanghai Five summit. Then, the SCO was founded on the basis of what transpired at the summit. In 2011 the SCO was ten years old. China and the Central Asian countries regard the SCO as an important platform for mutual cooperation. The establishment of the SCO signaled that Russia and China have overlapping strategic interests and requests, common tasks and challenges. 5. Regional stability. Central Asia geographically connects China and Russia. Any major problems in this area will surely affect the strategic interests of China and Russia. Since Central Asia borders with China and Russia, it is crucial to prevent other countries and forces from intervening in this area, and to prevent them from destroying regional stability. Encouraging peace and development in Central Asia is in the common interest of China and

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Russia. There is no military competition in Central Asia between China and Russia. China does not plan to, and does not have any necessity to station troops in Central Asia. In China’s opinion, the stationing of Russian forces in Central Asia has a positive effect in safeguarding peace and stability in Central Asia. Moreover, Russian troops in Central Asia are not against China. In addition, Chinese and Russian leaders think that the so-­called color revolutions may lead to upheavals in Central Asia. Moreover, the populations of not just Central Asia but also China and Russia may suffer from the instability. Both China and Russia support the people of Central Asia in choosing their own development road and model. Other countries should not plan the way of development for them. 6. Withdrawal of U.S. forces. The gradual withdrawal of U.S. forces from Afghanistan will bring a new uncertainty to China and Russia as well as to the Central Asian countries. It is highly likely that inspired Islamic radicals will try to expand their influence in surrounding areas. Weak regimes are their ideal target. Thus, poverty and ethnic conflicts in Tajikistan, Uzbekistan, and Kyrgyzstan are a hotbed for the maturing of radicalism. The most important things that must happen are that China admits that Russia has a traditional and special interest in Central Asia and that China never objects to Russia maintaining its military bases in Kyrgyzstan and Tajikistan. China does not seek any special position or attempt to exert influence in Central Asia. China does not have any strategy to set up an “interest belt” in neighboring countries and regions. Therefore, China is not trying to challenge Russia in Central Asia. In fact, Russia and the countries of Central Asia have been actively cooperating with China and jointly have solved many common problems in the region.

The Divergent Interests of China and Russia in Central Asia Just as there are some common strategic interests between China and Russia, the two countries also have some different interests in Central Asia. Due to these differences, the two countries experience some tension around certain specific cases. As stated in the journal Independence, “Russia tries to consolidate its status by military means, while

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China does this by economic aid and investment. China has built Central Asia – ​China gas pipeline, is planning to take part in the construction of Astana-­Almata express railway. All these reflected the rise of Chinese influence and the decline of Russia in Central Asia.”5 China’s entrance into Central Asia is the result of great changes in geopolitics. Judging from the current situation, China not only has no intention to challenge the strategic interests of Russia in Central Asia, but also is not searching to maximize its interests in this area. This is the difference between China and Russia. For China, stability in Central Asia is the primary goal. In the long run, differences between China and Russia will continue. But the dominant trend is for the commonalities in their interests to prevail. There is little chance of serious contradictions and interest conflicts arising between China and Russia in Central Asia. Thus, from the standpoint of the overall strategy of the two countries, the strategic relationship between the two is reliable and stable. Overall, their shared interests in Central Asia keep Russia and China from entering into conflict over any differing interests in the region; cooperation is more valuable than conflict in their situation. Of course, there are various views in Russia on the problems in Central Asia. Some are even radical. Yet the Russian government’s policy choices are limited and rational. In fact, the Russian government has had its own plans to build a relationship with the Central Asian countries, and they have been closely followed. From China’s perspective, it is doubtless that Russia plays an important role and carries a great deal of influence in Central Asia. China accepts this situation as a matter of fact. China is fully aware of where Russia’s interests are, and also takes Russia’s interests in this area into account. China will do its best to work around what Russia is doing in Central Asia. China does not intend to compete with Russia strategically in Central Asia, and is not trying to replace Russia. Chinese strategists are clear that the overall stability of the China-­Russia strategic relationship will be undermined if conflict breaks out due to a struggle for control of Central Asia. Not only can China not control Central Asia, but the mutually beneficial win-­win principle for which China consistently advocates would be violated by Russian-­Chinese competition. A return

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to Chinese-­Russian competition would risk diminishing the chances for economic reform in China. What should be emphasized is that both China and Russia should consider the interests of the Central Asian countries themselves. This is the most important factor, for the Central Asian countries are protected under international laws, and they have the right to make choices according to their own interests. They are not followers of either China or Russia, but are neighbors of the two countries. Their interests and individuality should be fully respected. After all, it was for these reasons that the Central Asian countries were able to establish the SCO with China and Russia in the first place. The development of friendly relationships between China and the Central Asian countries does not mean that the relations between Russia and those countries are marginalized, harmed, or downgraded. It is not a zero-­sum game between China and Russia in Central Asia. Not only that, the cooperation between China and Russia in Central Asia, if viewed from a multilateral cooperation perspective, is not only beneficial to the two countries but also in accordance with the strategic interests of the Central Asian countries. The rise of China in Central Asia will not damage Russia’s strategic interests; on the contrary, it will balance more perfectly the influences of Western countries and Islamic radicalists. This will be beneficial to the strategic balance and stability of Central Asia, and help Russia to realize its strategic interests. In the future, the two countries should keep on strengthening their common interests, paying attention to differences in interests, and communicating about these differences so as to limit as much as possible the uncertainties and negative consequences of their conflicting strategic plans in the region.

Energy Policy: Cooperation or Competition Now we shall return to analyzing the problem of competition over energy in Central Asia between China and Russia. It is very important to comprehend this problem. First of all, China is a country short on energy, so it is reasonable for China to pursue a certain share in the Russian and Central Asian energy markets. China does not monopolize

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the energy market and transportation channels of Central Asia. The main purpose of Russian energy companies’ reluctance to let Chinese companies enter into the Central Asian energy market is to maintain their monopolistic status. At present the Russian companies get huge economic benefits. It is natural that the energy companies of these two countries will compete with each other. Why do Russian energy companies try to maintain a monopoly of Central Asia energy while Russia itself does not need to consume the energy of this area? From the perspective of energy demands, it is reasonable for Chinese energy companies to get a certain percentage of energy from Central Asia. China does not want to squeeze Russia out and monopolize totally the energy production and transportation channels. We should also see that the competition on energy is essentially commercial competition. Competition at the commercial level is unavoidable, and it is also a natural process, so neither China nor Russia should extrapolate commercial competition as political competition and strategic competition. Just as Prime Minister Putin said that Russia would not make any political deal regarding the energy problem, Russia’s attitude on China’s entrance into the energy field has changed since the gas pipelines connecting China and Turkmenistan were put into use. If Russia can understand China’s demand for energy, it can also understand China’s proportional interest in the energy of Central Asia or even that of Russia. Energy may be the toughest issue between China and Russia to address in Central Asia. The building of oil pipelines by China and Kazakhstan has already touched a sensitive nerve with Russia, nervous about losing potential energy profits. Then the gas pipeline between China and Turkmenistan through Uzbekistan and Kazakhstan also aroused Russian worries about China. While the West lost no chance to hype this problem, China’s imports of oil and gas from Central Asia are only to meet its own demand, not to elude Western embargoes or squeeze Russian interests. What should be pointed out also is that Russia is rich in oil and gas. Russia does not need the oil and gas from Central Asia, but it wants to maintain its traditional monopolistic status on distribution of the energy from Central Asia. With the end of the Cold War, the inter­ national situation has changed greatly. Russia should reappraise how it

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regards the energy share in Central Asia and why it is so involved with the energy market in Central Asia. It is only because of its urgent need for energy that China began economic cooperation with Central Asia. China’s aspiration to seek out energy sources in Central Asia came into being step by step. In the 1980s China was an oil exporter, but it became a net oil-­importing country by 1993. Then, China’s energy reliance on imports became greater. However, China was still accustomed to buying oil on the international market, for at that time the inter­ national oil price was relatively low and the oil supply on the inter­ national market was sufficient. From 1992 to 1997, China was never active or anxious to cooperate on energy matters with Central Asia; it was Kazakhstan that was taking the initiative to work with China to develop oil resources. Kazakhstan began to develop its oil fields and build pipelines toward China. Furthermore, all these cooperation efforts are commercial, not defense-­related. In the long term, China still hopes to cooperate with Russia in the oil and gas industry. The two countries already have been involved in a series of difficult negotiations about gas and oil pipelines for many years. After China constructed the gas pipelines with Turkmenistan and Kazakhstan as well as Uzbekistan, Russia worried about China possibly not needing gas from Russia. At the same time, a delay in China-­ Russia gas negotiations reduces Russia’s leverage in bargaining with European customers. This limited competition between China and Russia in Central Asia in the energy market does not hinder their cooperation in other areas. The oil pipeline cooperation between them was carried out smoothly, natural gas cooperation talks are under negotiation, and their cooperation in the nuclear energy, electric power, and coal industries is developing gradually. Energy is not a source of friction between China and Russia, but rather, mostly an area of cooperation. Judging from the present as well as predicted future trends, Central Asia’s energy diversity will be more and more obvious. For example, energy-­transporting pipelines in Central Asia have already been multi­directional. Besides delivering energy to Russia, there is a westward oil pipeline through the Caucasus to Ceyhan, Turkey, and a gas pipeline also runs from Turkmenistan to Iran. The opening of an oil

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pipeline from Kazakhstan to China and a gas pipeline from Turkmenistan to China marked the eastward flow of energy output pipelines in Central Asia. In fact, Russia has already realized this situation. President Putin, in his second term, established an energy club within the framework of the Shanghai Cooperation Organization. In 2011 Russia renewed this proposal. This showed that Russia slowly was changing its strategic vision on Central Asian energy. In sum, the competition over Central Asian energy between China and Russia is only commercial and furthermore, low-­intensive — ​far from a zero-­sum competition. Of course, there are many important reasons for Russia to pay close attention to the energy of Central Asia, one of which is that Russia, through its control of the region’s energy, often tries to increase its advantages in its energy negotiation with Europe and force Europe to make more concessions.

The “Integration” Model and the “Cooperation” Model Russia’s Model of Integration The way that Russia conceives of its interests in Central Asia is extremely complicated, even for Russian political and diplomatic circles. Russia’s interests in Central Asia should be divided into two factors: cultural and political. The cultural interests include the historical linkage between the two regions, culture, language, and the shared experience of living in the same united country under the USSR. Political interests refer mostly to Russia’s economic, diplomatic, and military efforts in Central Asia. The core of all these problems is ambivalence in both Russia and Central Asia about what their relationship should be. While the Central Asian countries, on the one hand, have very close ties with Russia, on the other hand, they value their national sovereignty. There is another important factor. Other nations, no matter how big or small, all regard the Central Asian countries as sovereign and independent states and wish to develop diplomatic relationships with them at various levels. Those diplomatic relationships indicate that the Central Asian countries certainly will communicate intensely with the outside world; various relationships will surely be established, and trade and technology exchanges will follow as a result.

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After coming to power, Putin chose to handle diplomatic relations between Russia and Central Asia along the lines of the group thinking within the CIS frame. This means that Russia has attempted to join one or several member CIS countries and organize a closer group in order to promote the integration process of the region. The above-­mentioned group process does not exclude the process of CIS integration and exists as an important complement to link Russia closer to the CIS. The CIS Collective Security Treaty Organization, the Eurasian Economic Community, the Eurasian Customs Union, and the Eurasian Alliance are all designed to achieve broader integration for Russia within the CIS region. In fact, this process did not just begin with the Putin period; it had begun as early as in the Yeltsin period. For example, Russia set up the Belarus National Alliance under Yeltsin. But these trends were increasingly put into practice under Putin. Russia is trying hard to restore its advantageous position in Central Asia. Due to the decline of national power after the collapse of the USSR, Russia did not pay as much attention to Central Asia. The Western countries thus have taken the opportunity to strengthen their influence in Central Asia. After Putin came into power at the start of the twenty-­first century, Russia fortified its influence in Central Asia and restored its traditional advantages in the region’s politics, economy, and militaries. Russian implementation of integration with the Central Asian countries, to a larger extent, is due to politics and strategy. It is from this perspective that the Western countries have attempted to control Central Asia. Western efforts have been strongly checked by Russia and therefore have not been realized. Russia and the Central Asian countries have been especially worried that the United States and other Western countries would encourage “color revolutions” in the region. In addition, Russia and the Central Asian states have paid much attention to the “Arab Spring,” and have adopted many measures to seek out and contain any efforts to replicate this political environment. These states think that what “color revolutions” will bring them is not prosperity and democracy, but turbulence and disaster. The CIS Collective Security Treaty Organization (CSTO) and the Eurasian Customs Union are two important international organizations in the former USSR space. The CSTO is a military organization, which Kazakhstan, Kyrgyzstan, and Tajikistan have joined (Uzbekistan has

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temporarily suspended its membership). The CSTO has played a very important role in safeguarding the security and stability of Central Asia. The Eurasian Customs Union is an economic organization and is composed of Russia, Belarus, and Kazakhstan; its influence is smaller than the former, but it has great potential, and the three member states are now engaging in promoting it to become a Eurasian economic alliance. Of course, there are also contradictions between Russia and the Central Asian countries. For example, Russia is not satisfied with the diversified strategy of gas pipelines emanating from Turkmenistan. Also, in 2012 Uzbekistan suspended its membership in the CIS Collective Security Treaty Organization in order to show its dissatisfaction with the integration strategy of CIS security. Since the collapse of the USSR, every state in Central Asia has been engaged in seeking the right balance of cooperation with Russia while at the same time asserting its own autonomy.

China’s Model of Cooperation Overall integration is not the goal China is seeking. China’s goal is a totally different model from Russia’s model of integration. The Eurasia alliance advocated by President Putin is to establish a united space within the CIS and implement integration from within. China does not want to take part in any activities of a Eurasian alliance. The so-­called model of cooperation with the Central Asian countries means that China and the Central Asian countries will not seek to set up a united political, economic, and military space. What China wants is to follow a model of mutual cooperation. Relationships between China and Central Asia rely mainly on bilateral relations. One reason that China engenders trust from Central Asia is that China is developing its relations with the Central Asian countries through cooperation, not through claiming control. No additional conditions, such as human rights and economic privileges, are attached to China developing a relationship with the Central Asian countries. The multilateral relationship between China and the Central Asian countries also encourages cooperation. The Shanghai Cooperation Organization is the most obvious example of an equal cooperation.

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The cooperation principle of the Shanghai Cooperation Organization is embodied in the requirement of all member states’ consensus. The energy cooperation between China and the Central Asian countries also reflects this pattern. The gas cooperation between China and Turkmenistan is an important regional project. If there were no cooperation among China, Uzbekistan, and Kazakhstan, there would be no way to transport the gas from Turkmenistan into China. The cooperation among the four countries on gas pipelines demonstrates that there is a significant amount of regional cooperation. Of course, sometimes China is eager to develop closer integration with Central Asia. For example, China supports the establishment of a free trade zone in the framework of the Shanghai Cooperation Organization, trying to promote the economic integration process, but it seems there has been little progress on that at present. The Central Asian countries do not fully support economic cooperation and Russia is not active on that at all. All these show that China lacks the soft power to pursue integration and is short of the prerequisites for encouraging economic integration. At the end of 2011, the Huoerguosi International Economic Cooperation Center began to operate. This is the best form of cooperation between China and Kazakhstan. Through this type of cooperation, China and Kazakhstan can actively advance their pragmatic shared interest, and probe new forms of cooperation. This is worthy of attention. Integration should not be the model for the process of cooperation between China and the Central Asian countries, for, at present, there is still no real desire for greater integration with China in the Central Asian countries. This is the biggest difference between China and Russia. The Central Asian states will respond actively to the integration policies pursued by Russia if their national sovereignties are not sacrificed. That is why Kazakhstan president Nazarbaev quickly responded to the proposed idea of establishing a Euro-­Asia alliance. In a word, Russia and the Central Asian countries have many common interests in diverse areas. Due to such common aspirations, China, Russia, and the Central Asian countries established the Shanghai Cooperation Organization, which became the strategic platform for regional cooperation. Of course, we also need to see that China and Russia not only strive to fulfill common strategic interests, but also have some

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difference in interests as well. In some areas, they also have a low-­ intensity commercial competition. This phenomenon does not mean that China and Russia are in bitter competition in Central Asia. China and Russia’s common interests are larger than their disputes. This is the basic condition that facilitates strategic cooperation between China and Russia in the region. Although China’s influence in Central Asia is increasing, China’s influence there is not as strong as Russia’s. Russian influence in Central Asia is thorough and comprehensive. Russia also has deep historical ties and realistic expectations in Central Asia. The period of tense relations between Central Asia and Russia has passed. The Central Asian countries have basically acknowledged Russia’s dominant role in Central Asia. China also recognizes and accepts Russia’s dominant role in Central Asia. So China’s choice is to have comprehensive and deep cooperation with Russia in Central Asia. This is helpful to realize and safeguard the interests of Russia, China, and the Central Asian countries. Notes 1.  Kazakhstan is an important strategic partner and ally of Russia in Central Asia. Alliance and strategic partnership should be the best model for our bilateral relations, based on the two sides’ historical, economic, military, political, and cultural interests. Both sides need to cope with the threat and challenge of regional and international securities. The Foreign Policy Outline of Russian Federation, March, 27, 2007. 2.  Zhao Huasheng, China’s Diplomacy in Central Asia (Beijing: Current Affairs Publishing House, 2008), 222. 3.  People’s Daily, September 8, 2013. 4.  People’s Daily, September 14, 2013. 5.  Vladimir Skoselev, “Russia’s Influence in Central Asia Declined, the SCO Participants Said Nothing about Their Consultation,” Independence (Moscow), April 27, 2011.

7

Life after Divorce Russia, Central Asia, and Two Decades of Tumultuous Relations Alisher Khamidov

Introduction It was like déjà vu all over again. In early April 2010, Kyrgyzstan witnessed mass protests that led to the ouster of Kyrgyz president Kurmanbek Bakiev. Five years before, in March 2005, Kyrgyz opposition groups toppled Askar Akaev, Kyrgyzstan’s first president since 1991, in what later became known as the Tulip Revolution. These two revolutions shared some commonalities, but the engines that drove them differed. If the Tulip Revolution was the result of internal struggles between the authoritarian president and disgruntled opposition groups,1 the violent regime change in April 2010, as some commentators claim, was sparked by actions of an external actor — ​Russia.2 Russia’s involvement in the April 2010 Kyrgyz uprising is instructive because it dispels the claims often made by students of Central Asia that Moscow has been losing its influence in its former backyard.3 The events in Kyrgyzstan amply demonstrated that the Kremlin is still a powerful actor capable of impacting the internal politics and foreign partnerships of its neighbors in Central Asia. As the major trade partner for all of the Central Asian republics, Russia possesses enormous economic clout in the region.4 With its dominant role in the regional security alliances such as the Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO), Moscow is also the key security coordinator in Central Asia.5 And with an overwhelming number of Central Asians still speaking Russian, using Russian media outlets, and working in Russia,6 the Kremlin also retains a significant degree of soft power over the region.7 173

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That Russia has tremendous influence in Central Asia is clear. But how has Russia used that influence? And how have Central Asian leaders reacted to Russia’s policies toward them? These are the questions that this chapter seeks to address. The main argument of this chapter is that in the pursuit of its objectives in Central Asia, Russia has often relied on various tools of manipulation. Such an approach has necessarily undermined Russia’s clout in the region. In response, Central Asian governments have also resorted to a variety of methods to counter Moscow’s influence. Notwithstanding this bleak picture, Russia’s relations with Kazakhstan, marked by openness, close collaboration, and a certain amount of confronting and engaging as well as give-­and-­take that are necessary for a robust relationship, offer hope for a more constructive future for Russia’s partnership with Central Asia. Before we proceed, a word on methodology is in order. In preparing this chapter, I have relied extensively on my previous work as a journalist and an academic (my dissertation explored Russia’s relations with Kyrgyzstan and other Central Asian relations). I have interviewed a range of government officials, experts, NGO representatives, and journalists in Central Asia, Russia, and the United States. I have also drawn upon a variety of published materials in Russian, Kyrgyz, and English. The first part of this chapter provides an overview of Russia’s relations with the Central Asian republics over the past two decades. The second part provides a view from Central Asia. More precisely, it examines how Central Asian leaders view the Russian role in Central Asia and how they deal with Moscow. The third part explores how Russian officials perceive Central Asia and how they deal with the Central Asian governments.

Overview of Russia’s Approach to Central Asia: 1991 – ​2011 Russia and Central Asia in the 1990s The collapse of the USSR in 1991 not only catapulted Russia to independence, but also created a set of serious domestic and foreign policy challenges for the new Russian government. In the domestic arena, Russian leaders faced the task of improving the sagging economy and

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introducing political reforms.8 In the foreign policy sphere, they confronted the challenge of dealing with complex historical legacies inherited from seven decades of Soviet rule, defining Russia’s new place in the changed international system, formulating new relations, and constructing new institutions to carry out these tasks.9 Although the Russian authorities recognized the independence of the Central Asian republics in the early 1990s, Russian foreign policy makers continued to view them as not quite foreign, a trend that was reflected in the new term “near abroad.”10 Claiming that “near abroad” republics “would not be able to survive on their own or resist the gravitational pull of Russia’s economic and military influence,” some Russian officials saw little need in courting them.11 In fact, Russia’s reformist government led by Prime Minister Egor Gaidar viewed Central Asia as an economic burden to Russia. Gaidar claimed that reforming the Russian economy and aligning Russia with Western economic and military-­ political structures required Russia “to cut out the backward Soviet periphery.”12 In practical terms, “cutting out the periphery” meant reduction in the Soviet-­era economic subsidies to Central Asia. Eager to address deep economic problems, the Yeltsin administration’s early foreign policy orientation, known as Atlanticism, attached a high priority to building closer ties with wealthy nations in the West. Andrei Kozyrev, the Russian foreign minister and one of the key advocates of Atlanticism, claimed that the development of democracy and implementation of economic reforms in the “near abroad” countries would bring them closer to democratic Russia and promote Russia’s economic interests there.13 Partly as a result of these assumptions, the Russian Ministry of Foreign Affairs took several months in 1992 to create a department to deal with the post-­Soviet republics.14 Russia’s early foreign policy orientation and economic initiatives that ignored its southern neighbors appalled post-­Soviet leaders in Central Asia. In particular, Kazakh president Nursultan Nazarbaev chastised Russia’s December 1991 decision to include Ukraine and Belarus in the newly formed CIS while excluding the other former Soviet republics. He argued that “the CIS should go beyond a Slavic union to include all members of the former Soviet Union which wished to join.”15 Uzbek president Islam Karimov showed his displeasure with the Gaidar

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government’s fiscal policies that eventually forced the Central Asian economies out of the ruble zone.16 In Kyrgyzstan, which was heavily subsidized by the Soviet central economy, President Askar Akaev lamented the sudden disruption in Moscow’s subsidies to Bishkek. In Tajikistan, the post-­Soviet communist elites were disgruntled about Russia’s apparent unwillingness to aid them in the struggle against Tajik opposition forces — ​an amalgamation of democratic and Islamic groups. The Yeltsin government’s Atlanticist orientation also drew criticism from a wide range of influential constituencies within Russia such as the communists, the nationalists, and representatives of the military and industrial sectors.17 Such criticisms centered around four key issues. First, critics claimed that the CIS was more vital than the West to Russia’s interests.18 Second, opponents of the government’s diplomacy argued that the quest for Western economic assistance had produced a servile Russian imitation of U.S. positions on a range of international issues and undermined Russia’s status as a great power.19 Third, critics asserted that the government’s failure to protect Russian minorities had led to gross violations of human rights and the exodus of Russians from the other former Soviet Union republics.20 Finally, critics asserted that the Russian Foreign Ministry failed to formulate a blueprint that clearly defined the country’s foreign policy priorities.21 A confluence of factors — ​growing domestic opposition to the Atlanticist orientation, the plight of ethnic Russians in the “near abroad,”22 the rising influence of Turkey and China, and the growing political instability in Tajikistan and Afghanistan — ​compelled the Kremlin to assume a greater role in Central Asia. Throughout the 1990s, Russia sought to deepen security cooperation with its southern neighbors under the aegis of the Collective Security Treaty, which was signed in 1992.23 The Kremlin also assumed the responsibility to guard the Tajik-­ Afghan border.24 The emphasis on security collaboration overshadowed Russia’s declining role as an economic actor in Central Asia throughout the early and mid-­1990s. This was evident in the precipitous fall in the volume of trade between those countries and Russia.25 In 1991 the annual trade volume between Russia and the five Central Asian republics reached levels close to $60 billion. In 1992 this figure fell to around $6 billion. Between 1992 and 1998, the annual volume of trade remained at a low

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but stable level of about $6 – ​7 billion. In 1998 the volume decreased to $5.4 billion.26 Russian leaders’ aggressive economic policies exacerbated relations with post-­Soviet rulers of Central Asia. Relying on its monopoly of gas and oil export routes, the Kremlin systematically blocked the transit of energy and established quotas for Kazakhstan, Turkmenistan, and Uzbekistan to extract favorable oil and gas concessions from them.27 Faced with such pressure, Kazakhstan, Turkmenistan, and Uzbekistan sought to reduce their reliance on Russia by signing energy deals with various Western consortiums. They also sought to develop alternative energy transportation routes.28

Russian Policy in the 2000s When Vladimir Putin took the reins of power from Boris Yeltsin in late 1999, Russian diplomacy seemed to be experiencing a state of rout in major foreign policy fronts.29 As Lo put it, “an anarchic institutional climate, several very high-­profile setbacks — ​NATO enlargement, Iraq, Kosovo — ​and severe deterioration in relations with the USA and major west European powers in the latter years of the Yeltsin administration had generated an atmosphere marked by acute pessimism and a maximum of resentment toward the West.”30 Putin’s arrival in the Kremlin also coincided with a period when its southern flanks became increasingly dangerous. Although the 1997 peace accords ended the civil war in Tajikistan, terrorism emerged as a pressing security threat. In February 1999 a series of bombings in the Uzbek capital, Tashkent, not only shattered the fragile sense of stability among Uzbek citizens, but also almost claimed the life of president Islam Karimov.31 Four months later, a group of Islamic militants belonging to the Islamic Movement of Uzbekistan (IMU) infiltrated Batken, the southern province of Kyrgyzstan, and seized several villages. Declaring their aim of ousting the Karimov regime, the militants demanded that Kyrgyzstan provide a passage for militants to Uzbekistan.32 The invasion of southern Kyrgyzstan by the IMU in the summer of 1999 and 2000 further aggravated the volatile security situation in the region. Unable to thwart the militants on their own, the Kyrgyz authorities reportedly paid a ransom to release hostages.33 The Uzbek

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government harshly criticized the Kyrgyz government’s handling of the insurgency and sent the Uzbek Air Force to bomb mountainous Kyrgyz villages in which militants were believed to be hiding.34 The bombardment of Kyrgyz villages by Uzbek military planes caused a diplomatic scandal between the two countries.35 The Islamic insurgency provided a platform for Putin to reassert Russia’s role in Central Asia.36 In March 2000 Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan held a joint antiterrorist drill code-­named the “Southern Shield of the CIS.”37 Two months later, they adopted a CIS Anti-­Terrorist Program and agreed to create a CIS Anti-­Terrorist Center.38 In June 2001, the CST members signed an agreement on  a CST rapid deployment force in Central Asia.39 Terrorism and security in Central Asia emerged as a unifying theme in Russian-­Chinese relations as well. In June 2001 Russia and China initiated the transformation of the Shanghai Treaty into the Shanghai Cooperation Organization. Concurrently with the efforts to increase Russia’s security profile, Moscow also took steps to beef up bilateral economic collaboration with the Central Asian capitals. The Kremlin secured a number of energy agreements with Central Asian states allowing Russia to emerge as the major transit point for Central Asian oil and gas exports. Russia also sought to deepen economic collaboration through the Eurasian Economic Community (EurAsEC), a customs union formed in October 2000 by Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Russia.40

Russia and Central Asia after September 11, 2001 The September 11, 2001, terrorist attacks ushered U.S. military forces into Russia’s southern flanks, transforming the regional security alignments. Although Russia initially supported the establishment of the U.S. base in Central Asia in the immediate aftermath of the September 11 terrorist attacks, Russian leaders became wary about their southern neighbors’ continued collaboration with the U.S.-­led alliance. The Kremlin’s negative attitude toward U.S. bases intensified as the Kremlin’s own relations with the U.S. administration soured after a U.S.-­led coalition invaded Iraq in 2003.41

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Russia, despite its demonstrated concern for the protracted U.S. presence in Central Asia, did not openly pressure Central Asian leaders to evict the U.S. base and give up their multi-­vector foreign policy course in the early 2000s.42 Instead, Russian officials sought to deepen security and economic cooperation with them.43 This approach paid off. In a major development, the Kremlin established an air base on Kyrgyz territory in October 2003. A series of events — ​the U.S. invasion of Iraq in 2003, the Western backing of the color revolutions in Georgia, Ukraine, and Kyrgyzstan, and the perceived Western involvement in a popular uprising in Andijan, Uzbekistan44 — ​worsened Russia’s already tense relations with the West in the mid-­2000s, prompting the Kremlin to change its policy approach toward Central Asia.45 In July 2005 Russia and the China-­led SCO adopted a resolution urging the U.S.-­led coalition to establish a deadline for the withdrawal of Western troops from Central Asia.46 In the late 2000s, when security threats emanating from Afghanistan diminished and skyrocketing global prices for oil and gas allowed Russia to improve its finances, economic pragmatism dominated the Kremlin’s approach toward Central Asia. Russian state companies such as Gazprom, RAO UES, and Rosatom sought to expand their presence in all the Central Asian republics. In a landmark achievement in May 2007, Russia achieved an agreement with Kazakhstan and Turkmenistan to build a natural gas pipeline along the Caspian Sea coast, a project that the Kremlin had long cherished.47 The August 2008 military conflict between Russia and Georgia had aggravated the Kremlin’s relations with the Central Asian republics. Russian officials’ hopes that their efforts to repel Georgian troops from disputed territories would receive immediate backing from their allies in the CIS and SCO were disappointed: neither the CIS nor SCO leaders publicly backed Russia’s actions during the conflict.48 Further, the Central Asian potentates were unreceptive to Russia’s subsequent calls to recognize South Ossetia and Abkhazia. A joint declaration of the SCO leaders adopted at the August 2008 summit in Dushanbe49 said that the SCO “expresses grave concern in connection with the recent tensions around the South Ossetia issue and urges the sides to solve existing problems peacefully, through dialogue, and to make efforts facilitating

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reconciliation and talks.”50 The SCO’s Dushanbe meeting exposed a crucial divergence between Russia and China.51 As Stephen Blank, a U.S. scholar, claimed, the SCO’s refusal to support Russia’s war showed that it was not Moscow’s rubber stamp.52 Several factors may explain the reluctance of Russia’s CIS and SCO allies to support Russia’s operations in the Caucasus. First, CIS and SCO leaders were dismayed at Moscow for its failure to consult with them prior to the start of the war.53 Second, the war frightened Russia’s allies. For example, authorities in Tashkent feared that Russia could utilize the same military means in pressuring Uzbekistan.54 Third, Russia’s support for sovereignty of Georgia’s breakaway regions alarmed the CIS and SCO leaders because they themselves were dealing with various separatist claims in their respective countries.55 Finally, some CIS and SCO leaders such as Nazarbaev feared that the war would affect regional energy projects.56 Russia’s military conflict with Georgia and the onslaught of the global financial crisis in 2008 – ​2009 did little to restrain Russia’s ambitions in Central Asia. Although Russia was weakened by both crises, it remained a powerhouse compared to the other Commonwealth republics. Rather than cut back on foreign spending, Russia relied on its Stabilization Fund to bail out foreign governments and purchase their distressed assets. In December 2008 Russia pledged $10 billion to the newly formed EurAsEC bailout fund.57 Moscow also agreed to transfer $3 billion to Kazakhstan’s sovereign wealth fund and considered a $10 billion loan to Kiev.58 Russia, along with Belarus and Kazakhstan, strove to remove trade barriers in efforts that led to the creation of the Customs Union in January 2010.59 Russia’s policy toward the Central Asian republics was not devoid of controversies in the late 2000s. In February 2009 President Bakiev’s administration adopted a decree evicting the U.S. base after Moscow announced that it was providing an economic aid package to Bishkek that amounted to $2 billion — ​a staggering sum for a country whose GDP was estimated at $3.5 billion in 2007.60 Three months later, however, the Kyrgyz government signed a new agreement with the United States that allowed the base to stay, albeit under a changed status. The agreement came after the U.S. administration suddenly increased the rent price for the base from $17.4 million to $60 million annually.61

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Moscow grudgingly accepted Bakiev’s decision to renew the lease agreement. In the ensuing months, Moscow sought to make the best of a bad bargain, compelling Bishkek to agree to base a Russia-­led CSTO military base in southern Kyrgyzstan and transfer the ownership of a Kyrgyz munitions plant to the Russian military. Bishkek, however, dragged its feet on both issues and sought to deepen its security ties with the United States. Russia’s patience with the Bakiev government finally evaporated in early March 2010, when Bishkek and Washington announced that the United States would help Kyrgyzstan build an antiterrorism training center.62 The U.S. embassy in Kyrgyzstan said that the $5.5 million center would be built in Batken in southern Kyrgyzstan, where Russian and Kyrgyz officials had earlier said Moscow may consider building a similar military facility. Maksim Bakiev reportedly played a key role in negotiations with the U.S. officials. The Bakiev government’s brashness infuriated the Kremlin.63 A three-­pronged punishment strategy followed shortly. The first among these strategies was a flurry of attacks on the Bakiev government through the Russian government-­controlled media.64 The Kremlin’s second strategy was to actively engage with Kyrgyz opposition leaders.65 And third, Putin signed a decree on March 29 eliminating subsidies on gasoline exports to Kyrgyzstan and other former Soviet republics that had not joined the newly created Customs Union. In early January 2010, when Belarus, Kazakhstan, and Russia announced the launching of the Customs Union, Moscow did not support Kyrgyzstan’s bid to join the organization. Moscow’s measures led to calamitous consequences for the Bakiev administration. The suspension of Russian fuel shipments to Kyrgyzstan on April 1 caused domestic fuel shortages and a dramatic price hike for basic foodstuffs, thus enraging Kyrgyz residents who were already reeling from sharp increases in utility fees. Emboldened by Russia’s support, the opposition movement leaders organized a series of protests in early April, which subsequently culminated in the Kyrgyz government’s dramatic and violent fall on April 7, 2010. To some observers, the events in Kyrgyzstan marked the beginning of an era when Russia was willing to foster its own “color revolution from outside” in countries led by unfriendly regimes.

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Russia and Central Asia after the April 2010 Revolution in Kyrgyzstan Russian government officials refuted claims made in the international press that Moscow had played a role in masterminding the Bakiev government’s demise. They also said that while Moscow would be willing to aid the efforts to stabilize the country, they would maintain neutrality toward Kyrgyz political factions. Apart from offering contingency aid, Russia also contributed to defusing the constitutional crisis in Kyrgyzstan by helping the Kyrgyz interim leaders negotiate Bakiev’s resignation and departure. Following his dramatic fall, Bakiev fled to southern Kyrgyzstan and refused to resign. However, he changed his mind after the Russian authorities gave their backing to the interim leaders. Bakiev subsequently flew to Minsk at the invitation of Belarus president Aleksandr Lukashenko Despite its stated support for the new authorities in Bishkek, Moscow stood aside in June 2010, when ethnic unrest broke out in southern Kyrgyzstan and the embattled Kyrgyz government urged the Russia-­led CSTO to intervene. The Kremlin said that the unrest was an internal Kyrgyz affair and that the CSTO did not have a mandate to send peacekeeping forces to quell the internal unrest. To the chagrin of Kyrgyz authorities and citizens, no Russian or CSTO troops arrived, and the Kyrgyz government was forced to deal with the instability on its own. Russia’s “hands-­off ” approach to the Kyrgyz unrest signified a broader trend: preoccupied with pressing global issues in the international arena (for example, blocking the United States on Syria and Iran in 2012; playing a lead role in defusing the Iran nuclear crisis in 2013), diplomats in Moscow simply could not devote sufficient time and resources to their southern neighbors. The Central Asian republics supported Russia’s revived international diplomacy on Syria and Iran because Russia’s positions are in line with their own geopolitical interests. Believing that the same can happen to them, Central Asian leaders are loath to having the United States engage in military operations against authoritarian leaders. The Central Asian leaders are also eager to see the easing of sanctions against Iran, because this change would have enormous positive impact on the regional economies by boosting trade ties with Iran.

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Central Asian Leaders’ Views on Russia If one carefully listens to Central Asian leaders’ rhetoric about their relations with Russia, what emerges is a narrative of suffering and blame. The Central Asian presidents often lament that they were not consulted and “left out in the cold by themselves” when Russian, Ukrainian, and Belarusian leaders signed the Belavezha Accords in December 1991, which dissolved the USSR and created the CIS.66 Some Central Asian potentates also do not hide their grudge against Moscow for taking a disproportionately larger share of the USSR’s resources (such as military regimens and facilities, economic enterprises, and even the seat in the UN Security Council) while conveniently forgetting that Russia also assumed much of the USSR’s $100 billion foreign debt and other international obligations.67 If you follow Central Asian leaders’ rhetoric, it also emerges that Moscow can still compensate for all the pain and suffering it inflicted on the Central Asian republics and regain their trust.68 To do so, as the rhetoric goes, the Kremlin must become more responsive to their needs and wishes, which fall under three domains: security, the economy, and foreign policy. In the security domain, Central Asian leaders desire a Moscow that continues to recognize and respect their sovereignty and territorial boundaries; helps them meet internal and external security threats; and avoids meddling in their domestic affairs. In the economic realm, Central Asian bosses want a Russia that agrees to economic deals that are fair and favorable to them; a Russia that allows a greater flow of Central Asian goods and a greater number of labor migrants into its territory; and a Russia that shares its wealth by investing and providing low-­ interest loans and grants to its southern neighbors. In the foreign policy domain, they desire a Russia that avoids hindering the Central Asian states’ multi-­vector diplomacies; a Russia that helps them in pursuit of their foreign policy objectives; a Russia that consults with them on not only matters of common interests, but also on broader global security issues; and a Russia that avoids conspiring with other great powers and regional actors against the Central Asian countries. Has Russia lived up to these expectations? What emerges is a picture of mixed results in all the domains. In the security domain, the Kremlin

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has recognized and respected the sovereignty and physical boundaries of all of the Central Asian republics. In May 2005 Moscow offered unwavering support to Uzbek president Islam Karimov’s regime in the aftermath of the Andijan uprising.69 Moscow, however, failed to support Kyrgyz presidents Askar Akaev and Kurmanbek Bakiev during Kyrgyz opposition protests in March 2005 and April 2010. In fact, the Kremlin became indirectly implicated in the April 2010 ousting of Bakiev, a move that strengthened Central Asian leaders’ suspicions about Russian officials’ motives. And after the 2008 conflict with Georgia, Russia itself emerged as a potential external security threat to most Central Asian leaders.70 In the economic domain, many Central Asian officials believe that the Kremlin used its markets for goods and labor to promote projects that primarily favor Russia and not its southern neighbors. Instead of allowing more labor migrants, Central Asian officials lament, Russia has imposed a variety of migration quotas while failing to respond decisively to increasing attacks on migrants by homegrown racist and nationalistic groups.71 Although the Kremlin did invest in large infrastructural projects such as the Kambarata and Rogun hydropower stations in Kyrgyzstan and Tajikistan respectively, Moscow has sought sizable ownership shares in these enterprises or linked funding to geopolitical deals such as the February 2009 eviction of the U.S. base from Kyrgyzstan. And rather than foster deep trade ties, the Russia-­led Customs Union has created numerous barriers for the Central Asian countries (except Kazakhstan). In the foreign policy realm, Moscow has largely disappointed the Central Asian governments’ expectations. To be sure, Moscow did consult with Central Asian leaders on common threats such as Islamic extremism and the narcotics trade emanating from Afghanistan, but the Kremlin has also acted unilaterally, as exemplified by its decision to attack Georgia and recognize South Ossetia and Abkhazia in 2008. And instead of helping their Central Asian counterparts achieve common foreign policy objectives, officials in Moscow have been wary of their multi-­vector diplomacies and even sought to undermine such policies, as demonstrated by the Russian government’s attitude toward the U.S. air base in Kyrgyzstan.

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Central Asian leaders have ample reasons to distrust and resent Russia. But rather than resolve their problems with Moscow in a constructive way, they have often relied on a variety of manipulation tools. Wary of Moscow’s growing security role in Central Asia, Tashkent has been busy mending relations with the United States and the European Union.72 In August 2009 Tashkent was openly livid when Russia and Kyrgyzstan announced their decision to launch a new Russian military facility in Kyrgyzstan’s Batken province, which borders Uzbekistan.73 Disgruntled over Moscow’s April 2009 turnaround on a lucrative gas deal (offering the Turkmens top dollar price for their gas), Turkmenistan has been actively courting the Chinese to expand Turkmen gas exports to that country.74 These tantrums, accusations, and pleas for help often leave Russian officials and analysts wondering what is wrong with the Central Asian leaders. In the absence of good explanations, Russian officials and observers have tended to attribute such erratic behavior to the mercurial style of leadership in each Central Asian capital.75 While such portrayals are relevant, Kremlin officials, however, seem to seldom question what is wrong with their own approach.

Russian Officials’ Perspectives on Central Asia If leaders in the Central Asian republics have an image of an ideal Russia, decision makers in the Kremlin also appear to have an image of an ideal and loyal Central Asia. In the security domain, ideal Central Asian states would cooperate with all Russia-­led structures in good faith, and ensure order and stability in their territories by controlling drugs and Islamic militants.76 Loyal Central Asian rulers would follow Russia’s lead in allowing citizens limited and controlled opportunity to protest, letting off steam from time to time to avoid popular uprising such as the Andijan uprising in 2005 or the April 2010 events in Kyrgyzstan. In the economic domain, ideal and loyal Central Asian states would be willing to give Moscow preferential treatment when it comes to investment projects in their lucrative economic industries.77 Ideal Central Asian states would not play “eastern tricks” — ​reneging on agreements, as Kyrgyzstan did in late 2009.78 Loyal Central Asian

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counterparts would also abstain from harassing existing Russian businesses, and they would train and discipline their labor migrants before sending them to Russia. In the foreign policy domain, loyal Central Asian republics would unequivocally support Russia’s diplomatic stances on a variety of international and regional matters, and they would not get carried away in their collaboration with the West or the Islamic world.79 In the social and humanitarian domain, they would not hinder Russian language, media, and culture.80 Have the Central Asian capitals met Moscow’s expectations in reality? What emerges here is a mixed picture. In the security domain, not all have been politically loyal. For example, Tashkent had been obstructing Moscow’s efforts to form Collective Security forces under the aegis of the CSTO. And in June 2012 Uzbekistan ended its membership in the CSTO.81 Although Kyrgyzstan has signaled its wish to end collaboration with the U.S. air base on numerous occasions, Kyrgyz officials continue with the practice of extending the base lease and contemplate opening an antiterrorist base with the United States in the south.82 Not all have been stable. Following the violent ouster of Bakiev, Moscow had to bear the burden of restoring political stability in Kyrgyzstan. And the July 2012 clashes between Tajik government troops and rebel forces in a remote province have caused worries in Russia over the fragility of President Emomali Rahmon’s regime.83 Russia’s relations with the Central Asian republics in the economic domain are also characterized by mixed results. Not all Central Asian capitals have been willing to give Moscow preferential treatment when it comes to lucrative investment projects. To be sure, Central Asian officials still rely on Russian oil and gas transportation routes, but they are also increasingly turning to Chinese, Turkish, and Japanese authorities and private companies with investment proposals. For example, in December 2009 Turkmenistan and China signed a landmark agreement on a new gas pipeline to carry natural gas from eastern Turkmenistan through Uzbekistan and Kazakhstan into China’s northwestern Xin­jiang region.84 The harassment of existing Russian businesses continues regularly in all these republics, as evidenced by the ordeal of Russian cell phone companies in Kyrgyzstan, Turkmenistan, and Uzbekistan.85

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In the foreign policy domain, the record has been mixed. While all Central Asian republics offered halfhearted backing to Russia’s actions against Georgia, none has recognized South Ossetia and Abkhazia. And despite Moscow’s admonitions, most of them are actually getting carried away with their multi-­vector diplomacies. All of the Central Asian republics are strengthening economic and security ties with the United States, the European Union, and China. Kremlin leaders’ hopes that their Central Asian counterparts will not hinder the Russian language, media, and culture have been disappointed. To be sure, Central Asian authorities are not blowing up Russian or Soviet monuments, as the Georgian authorities had done in 2009. But they are quietly dismantling Russian/Soviet monuments while changing Russian names of places and blocking Russian-­language broadcasts. With Russian no longer enjoying a status as an official language, the number of Russian-­language schools is dwindling across Central Asia, especially in Tajikistan, Turkmenistan, and Uzbekistan. Against this backdrop, many ethnic Russians and Russian-­speaking people are leaving these countries permanently.86 Given these unfortunate developments, officials in Moscow have all the reasons to seek to engage their Central Asian counterparts in a dialogue. But despite the Kremlin’s occasional claims that it wants to resolve problems in relations in a constructive manner, Moscow too increasingly relied on tools of manipulation. For example, the Kremlin’s backing for controversial hydropower projects promoted by upstream Tajik and Kyrgyz authorities have heightened concerns among officials in downstream capitals Tashkent and Astana.87 Second, Moscow employed tacit arm-­twisting and diplomatic blackmail, as demonstrated by the Kremlin-­orchestrated negative media campaign and links with Kyrgyz opposition, which helped to topple the Bakiev government in April 2010. Third, the Kremlin ostensibly used its own eastern tricks. As Turkmen officials allege, Moscow masterminded the April 2009 explosion on a gas pipeline to renege on a 2006 agreement pledging Russia to pay the Turkmens at the European price rate.88 Russian diplomacy toward Central Asia, as some Central Asian commentators claim, has been inconsistent, ineffective, and reactive.89 Observers provide various answers for why this is the case. Some observers claim that the Kremlin has insufficient knowledge about the

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Central Asian republics; others emphasize flaws in policy coordination within the Russian diplomatic establishment. Nevertheless, a large part of the answer lies in the perennial dilemma between Moscow’s lofty goals in Central Asia and its constrained means. As a major inter­ national actor, Russia has to deal with a myriad of regional and global issues and a variety of actors. The discussion above has painted a controversial portrayal of relations between Russia and the Central Asian republics, but not everything is bleak. Kazakhstan’s relations with Russia epitomize the healthy aspect of Russia-­Central Asia ties. The following discussion examines the prospects for Kazakh-­Russian relations.

Kazakh-­Russian Relations: A Hope for Russia’s Future Partnership with Central Asia Relations between Astana and Moscow are not devoid of thorny issues. With their vast hydrocarbon reserves, Russia and Kazakhstan compete for energy markets in Western Europe and Asia.90 The two countries have had different visions for the division of the Caspian Sea resources and seabed, and they have also been divided over the prospective oil and gas pipelines.91 The Kremlin is wary of Astana’s Kazakh-­language promotion policies, which are said to discriminate against ethnic Russians, who reportedly make up 30 percent of Kazakhstan’s population of 16 million.92 Despite the existence of problems, Kazakh and Russian leaders have consciously avoided the types of manipulation used by other Central Asian leaders. Instead, they have often engaged in frank discussions involving a degree of confronting and engaging as well as give-­and-­take that are necessary for a robust relationship.93 As a result, some serious accomplishments have been achieved. For example, Moscow and Astana have successfully delimited the 7,500-­kilometer border, a remarkable result given that border delimitation has been a major stressor in relations among the other Central Asian republics.94 Astana and Moscow have also resolved the issue of Russia’s rent payments for the Baikonur space center, located in Kazakhstan.95 Unlike other Central Asian leaders, President Nazarbaev enjoys warm personalized relations with the Russian leaders Putin and Medvedev.96

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He seems to recognize the importance of face time at meetings even if they are insignificant occasions. Such personalized ties have translated into strong security commitments. Kazakhstan acts as a faithful Moscow ally in all Russia-­led regional political, economic, and security structures, such as the CIS, CSTO, EurAsEC, and SCO.97 Unlike their other Central Asian counterparts, Kazakh authorities do not deny the existence of a special bond between their country and Russia; instead, they often celebrate the special relationship. With Russian enjoying the status of an official language, as Fatima Kukeeva, a Kazakh scholar, observed, “the influence of the Russian-­speaking population in Kazakhstan fosters bilateral cooperation between Russia and Kazakhstan.”98 According to Kukeeva, “approximately 80 percent of the Kazakhstani information space is covered by Russian media.”99 Nazarbaev has also encouraged Kazakh officials at various levels of government to form relations with their counterparts in Russia. Apart from allowing Astana to have better awareness of how the Kremlin functions, these informal links have translated into lucrative business and commercial contracts between the two countries. By 2012, trade turnover between Russia and Kazakhstan was estimated at $24 billion, or 20 percent of Kazakhstan’s foreign trade.100 Together, Russia and Kazakhstan attempted to introduce healthy elements into relations with the other Central Asian republics. One example was in forming the EurAsEC bailout fund to respond to the onslaught of the financial crisis in Central Asia in 2008 and 2009.101 In another example of collaboration, Russia and Kazakhstan have been making efforts to reform the CSTO to improve the organization’s capacity to deal with internal unrest on the territory of member states.102

Outlook for Russian and Central Asian Relations In the short term, three major issues are likely to preoccupy Russian diplomats as they deal with Central Asia: (1) the withdrawal of U.S./NATO troops from Central Asia and its potential effects on the regional security; (2) the effects of China’s rising economic profile in Central Asia on Russia’s geopolitical standing in the region; and (3) the unpredictable scenarios for the succession of power in Kazakhstan and Uzbekistan. Each of these issues requires separate attention.

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Withdrawal of U.S./NATO Troops from Central Asia in 2014 Russian policy makers will be critical of limited NATO commitments that might create a power vacuum in Central Asia, but they will not be alarmed. Officials in Moscow realize that a power vacuum in Central Asia is an unlikely scenario because of the following conditions. First, militant groups that could pose risks for Central Asian security are either destroyed or their operational capacity is significantly reduced as a result of the U.S. military campaign in Afghanistan. The operational capacity of the Islamic Movement of Uzbekistan, a militant group composed mainly of Central Asian expats who fought alongside the Taliban, was destroyed as part of the U.S.-­led campaign. Remnants of the IMU exist in areas adjacent to Pakistan, and some IMU fighters found refuge in Iran, but it is unlikely that they will manage to unite and generate the capacity to stage attacks on Uzbekistan, Kyrgyzstan, or Tajikistan. The IMU currently lacks not only operational capacity, but also leaders who could revive the group. Tahir Yuldashev and Juma Namangoni, both natives of Uzbekistan’s Namangan oblast, were killed during the Afghan war. Second, thanks to improved economic performance and rising GDPs, the Central Asian authorities (especially in Uzbekistan, Kazakhstan, and Turkmenistan) have beefed up their military capabilities, and they will be able to put a common front to counter external military threats posed by the Taliban (in case the Taliban manages to recapture Kabul after NATO troops leave). Kazakhstan, Kyrgyzstan, and Tajikistan are protected by the Moscow-­led Collective Security Treaty Organization. The Shanghai Cooperation Organization is also another security umbrella that serves as a deterrent for would-­be militants. Third, over the past decade, the Central Asian authorities, in collaboration with Russia and various international agencies, have also beefed up their capacity to interdict drugs coming from Afghanistan. Tajikistan’s economy is improving, which means that officials in Dushanbe are discouraged by Russian officials and their Central Asian counterparts from facilitating drug trafficking (when Tajikistan was poor and was suffering from the consequences of the civil war, Tajik officials were said to benefit from the drug trade to help finance government expenditures).

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Nevertheless, Russian officials recognize that while the impact on regional security will be low, the U.S./NATO drawdown may exacerbate existing rivalries among the Central Asian governments. With the exception of Turkmenistan, all of the Central Asian republics are competing with each other to obtain a larger share of what the United States and NATO want to leave to the Central Asian republics. Uzbekistan and Kazakhstan are in negotiations with NATO now: in return for providing a transportation corridor to returning troops, they want military equipment. If the United States/NATO will not manage this process in a skillful way, the transfer of equipment may end up causing more headaches for NATO.

Russia’s Concerns over the Growing Economic Profile of China China is now playing a significant role in the Central Asian economy and politics. The trade turnover between China and Kazakhstan alone reached $24 billion by the end of 2012. China is not only a major trade partner for the Central Asian republics, but is also a major supplier of cheap government loans. In 2009 China agreed to provide approximately $10 billion in credits and loans in return for Kazakh oil and gas supplies. During Chinese president Xi Jinping’s ten-­day tour through Central Asia in September 2013, Beijing committed itself to provide some $3 billion to Kyrgyzstan in loans for energy and infrastructure projects. In Astana, Chinese and Kazakh leaders publicly pledged to increase the trade turnover between the two countries to over US$40 billion by 2015. And in Tashkent, Chinese and Uzbek leaders signed deals totaling $15 billion. The Chinese and Central Asian governments are spearheading efforts to build the Western Europe – ​Western China highway. Currently slated for launch in 2015, this highway is expected to increase the total volume of transported goods from 12 million tons in 2012 to 33 million tons by 2016. Significant progress has been achieved in rail transportation. The completion of the Altynkol – ​Khorgos rail crossing linking China’s Xinjiang Province to Kazakhstan in 2012 allowed the two countries to significantly increase the volume of goods (in 2012 the rail crossing was used to transport 16 million tons of cargo; by 2015, the cargo shipments are expected to increase substantially).

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China’s recent high-­profile visits and Beijing’s promises of economic investment have been causing mixed reactions in Moscow. Some Russian policy makers, particularly some hawkish members of the Duma (representing such parties as the Liberal Democratic Party of Russia), are alarmed by China’s growing influence, and they are calling for action to balance China in Central Asia. Other policy makers, particularly within the Ministry of Foreign Affairs and various Moscow-­based policy think tanks, are calling for caution. These officials maintain that there might be a silver lining for Russia from China’s increased economic presence in Central Asia. These observers maintain that much of China’s investments are directed to improving the oil and gas infrastructure in Central Asia. They also claim that improved economic opportunities also mean that the Central Asian republics will be less prone to domestic instability. As some Russian observers maintain, economic dynamism in Central Asia fuelled by cheap Chinese loans will also help Russia to solve the unregulated mass labor migration from Central Asia (with more jobs in Central Asia, more and more unskilled Central Asian citizens will stay home). In their official statements, Russian diplomats claim that China’s economic expansion in Central Asia is unlikely to undermine Russia’s relations with the regional governments. Russian diplomats are also cognizant of the fact that the Chinese government appears to be cautious about any potential backlash that China’s expansion may cause for China’s geopolitical and political interests in Central Asia and in relations with Russia. Chinese officials have been making systematic attempts to assure Russian and Central Asian officials that Beijing will remain a reliable partner and that it will not use its rising economic muscle to obtain political concessions from the regional governments. Beijing has also been trying to allay concerns in Russia that its expanding commercial interests in Central Asia are designed to undermine Russia’s historic influence in the region.

Concerns about Regime Change Much of the public debate in Central Asia now focuses on the issue of succession in two countries, Kazakhstan and Uzbekistan. There are several reasons why power succession has become a hotly discussed theme.

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First, the presidents in both republics are aging and nearing their eighties. Although the constitutional arrangements enable them to run for the presidency indefinitely, neither Karimov nor Nazarbaev has signalled a wish to run for another term. Second, state media outlets in both countries have presented upbeat reports about the health of both presidents, but observers in both countries have doubted such reports. In July 2012, when Nazarbaev received treatment in a German clinic, rumors spread that he had been diagnosed with prostate cancer. Nazar­ baev dispelled such rumors upon his return to Kazakhstan. Nevertheless, his early 2013 visit to an Israeli clinic fuelled the rumors about his ill health. Given the importance of the two republics for Moscow, Russian officials exhibit heightened concern about the power succession in both Astana and Tashkent. Drawing lessons from the Kyrgyz 2010 unrest, policy makers in Moscow are aware that the succession issue can fuel inter-­elite rivalries and lead to political unrest. Therefore, Russian officials are eager to see a managed and peaceful transition of power in the two republics akin to the December 2000 devolution of power from Yeltsin to Putin. Policy makers in Moscow are eager to see pro-­Russian leaders take the reins of power, but they recognize that any Russian involvement in power transition in Central Asia may have counter­ productive effects. At the same time, officials in Moscow recognize that although the power succession issue is important, it is not the most important issue in Uzbek and Kazakh politics, at least for now. First, both Karimov and Nazarbaev appear to be in good physical shape for their age, and they maintain very busy schedules. Second, both leaders preside over political systems in which they are the ultimate arbiters and the focal centers of power, and various powerful groups have high stakes to keep them in power.

Conclusion The chief argument of this chapter is that contrary to various claims that Moscow’s influence has been on the decline, Russia remains a major player in Central Asia capable of influencing both the domestic politics and the foreign relations of its Central Asian partners. Russia-­affiliated

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economic and security structures play dominant roles in the region. When economic, political, or social problems emerge in the region, it is Moscow — ​not Washington, Beijing, or Brussels — ​that the Central Asian leaders first turn to. Although Russia has enormous clout in Central Asia, Moscow’s relations with the regional capitals have been marked by distrust and a reliance on tools of manipulation. Russian leaders bear a large share of the blame. Until now, Russia has done a poor job of using its enormous clout to advance its goals in Central Asia through utilization of constructive dialogue, confidence building, and transparent foreign policy. The flaws in Russian policy toward Central Asia can be attributed to a variety of factors: Russia’s failure to view Central Asia as a priority region, internecine clashes between various factions in the Kremlin, Moscow’s inadequate grasp of how Central Asia works, and Russia’s burdensome commitments in other parts of the world. The Central Asian presidents and their foreign policy advisors share the blame for the turbulent relations with Moscow too. Suspecting Russia of imperialistic ambitions, Tashkent has been systematically seeking to undermine Russia’s security initiatives in the region although they promised to provide collective benefits to the citizens of Central Asia. Full of distrust for Russian leaders and eager to break Russia’s stranglehold over the oil and gas routes, Turkmenistan has been actively courting European and Chinese governments to invest in new pipeline projects. Eager to extract favorable loans and energy tariffs, Kyrgyz and Tajik officials have shown outward loyalty to Moscow, but they both have been unwilling to give up their multi-­vector diplomatic orientations. But not everything is bleak. Kazakh-­Russian relations provide hope that relations between the Central Asian capitals and Moscow have the potential to become more robust and devoid of unhealthy manipulation. Despite the existence of a variety of troublesome issues, Astana and Moscow have managed to maintain close ties and resolve problems in a constructive manner. The powerful message from Kazakh-­Russian relations is that the role of leadership matters. Without cordial personal ties between Kazakh and Russian leaders, relations between the two countries would show all the signs of distrust and manipulation that characterize Moscow’s ties with the other Central Asian republics.

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Notes 1.  Scott Radnitz, “What Really Happened in Kyrgyzstan?” Journal of Democracy 17, no. 2 (2006): 132 – ​46. 2.  In February 2009, after Moscow announced that it was providing an economic aid package to Bishkek that amounted to $2 billion, then Kyrgyz president Kurmanbek Bakiev decreed the eviction of the U.S. air base that Kyrgyzstan had been hosting since December 2001. Moscow grudgingly accepted Bakiev’s decision to renew the lease agreement. But in March 2010, when Bishkek signed another agreement with the United States on the establishment of a U.S. antiterrorist center in southern Kyrgyzstan, Moscow lost its patience with Bishkek. Throughout March 2010, Moscow-­controlled mass media outlets provided critical coverage of President Bakiev’s regime. The imposition of punitive energy tariffs on Bishkek sparked the wave of mass protests that led to the Bakiev government’s collapse in April 2010. Philip Pan, “Russia Is Said to Have Fueled Unrest in Kyrgyzstan,” Washington Post, April 12, 2010. 3.  Among most recent publications that claim that Russia is losing its influence in Central Asia is James Nixey, “The Long Goodbye: Waning Russian Influence in the South Caucasus and Central Asia” (Chatham House Briefing Paper, London, March 2012). 4.  Sara Rajabova, “Russia Keen to Boost Its Clout in Central Asia,” Azernews, September 25, 2012; Sergei Blagov, “Russia Moves to Strengthen Ties with Uzbekistan,” Eurasia Daily Monitor, April 28, 2010; Islam Duvanaev, “Trade Turnover between Kyrgyzstan and Russia Is $1.5 B in 2011,” Information Agency 24.kg, September 14, 2012, http://eng.24.kg/cis/2012/09/14/25687.html; “Russia Ranks Third in Turkmenistan’s Total Trade Turnover over Three Months of 2012,” Turkmenistan.ru, May 31, 2012, http://www.turkmenistan.ru/en/articles/16302.html. 5.  Roger McDermott, “Central Asia Commits to Russian Joint Air Defense Plans,” Eurasia Daily Monitor, July 25, 2012, http://www.jamestown.org/programs/edm/single/​ ?tx_ttnews%5Btt_news%5D=39675&cHash=8b6ceea8cfb4b46c7da344f5515536fd. 6.  An estimated 800,000 Kyrgyz, 3 million Uzbek, and 1.5 million Tajik citizens live in Russia as labor migrants. It is estimated that remittances from labor migrants make up 49 percent, 29 percent, and 10 percent of GDPs of Tajikistan, Kyrgyzstan, and Uzbekistan respectively. “Central Asia’s Migrant Headache,” Carnegie Endowment for International Peace, Washington, D.C., June 21, 2012, http://carnegieendowment.org/ ieb/2012/06/21/central-­asia-­s-­migrant-­headache/c418. 7.  Igor Torbakov, “Russia: Can the Kremlin Develop a Warm and Fuzzy Side?,” EurasiaNet, May 3, 2012, http://www.eurasianet.org/node/65355. 8.  Michael McFaul, Russia’s Unfinished Revolution: Political Change from Gorbachev to Putin (Ithaca: Cornell University Press, 2001); Lilia Shevtsova, Russia — ​Lost in Transition: The Yeltsin and Putin Legacies (Elmsford: Carnegie Endowment for International Peace, 2007); Bertil Nygren, The Rebuilding of Greater Russia: Putin’s Foreign Policy towards the CIS Countries (New York: Routledge, 2007).

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9.  Karen Dawisha and Bruce Parrott, Russia and the New States of Eurasia: The Politics of Upheaval (New York: Cambridge University Press, 1994); Nicolai Petro and Alvin Z. Rubinstein, Russian Foreign Policy: From Empire to Nation-­State (New York: Longman, 1997); Milton Kovner, “Russia in Search of a Foreign Policy,” Comparative Strategy 12 (1993): 307 – ​20; James Richter, “Russian Foreign Policy and the Politics of National Identity,” in The Sources of Russian Foreign Policy after the Cold War, ed. Celeste Wallander (Boulder: Westview, 1996), 69 – ​73. 10.  Mark Kramer, “Russian Policy toward the Commonwealth of Independent States: Recent Trends and Future Prospects,” Problems of Post-­Communism 55, no. 6 (November – ​December 2008): 3 – ​19. 11.  Nicole Jackson, Russian Foreign Policy and the CIS (New York: Routledge, 2003), 59. 12.  Ibid. 13.  Ibid. 14.  Ibid., 58. 15.  Stephen Page, “The Creation of a Sphere of Influence: Russia and Central Asia,” International Journal 49, no. 4 (Fall 1994): 788 – ​813. 16.  Leila Kazemi, “Domestic Sources of Uzbekistan’s Foreign Policy, 1991 to the Present,” Journal of International Affairs 56 (2003): 205 – ​16. 17.  Mary Fitzgerald, “Russia’s New Military Doctrine,” Defense and International Security, October 1992, 46. 18.  Kovner, “Russia in Search of a Foreign Policy.” 19.  Bobo Lo, Vladimir Putin and Evolution of Russian Foreign Policy (London: Royal Institute of International Affairs; Oxford, UK: Blackwell, 2003), 14. 20.  Andrei Kortunov, “Russia and Central Asia: Evolution of Mutual Perceptions, Policies, Interdependence” (James A. Baker III Institute for Public Policy, Rice University, Houston, TX, 1998). 21.  Kovner, “Russia in Search of a Foreign Policy.” 22.  Across the former USSR republics, faced with discriminatory policies on language and citizenship adopted by the national authorities in the early 1990s, many ethnic Russians and Russian-­speaking populations chose to emigrate to Russia. Many ethnic Russians were also displaced by a series of ethnic conflicts and interstate confrontations in Central Asia and the Caucasus. 23.  The signing of the CST by Armenia, Kazakhstan, Russia, Tajikistan, and Uzbekistan in May 1992 would have profound consequences in the years to come. Azerbaijan, Georgia, and Belarus joined the treaty in 1996. Participating states had been treaty-­bound to “collectively confront and eliminate a military threat against their sovereignty and territorial integrity.” As Article 4 of the treaty stipulates, “in case of an act of aggression against a Member State, all other Participating States would provide all necessary assistance, including that of military.” In May 2002 member states endorsed the transformation of the Collective Security Treaty into the Collective Security Treaty Organization (CSTO). The CSTO was given a mandate to preserve the territorial integrity of member states, thwart terrorism, and seek closer cooperation

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with other multilateral institutions. In February 2009 member states approved the establishment of the CSTO Rapid Reaction Collective Forces (RRCF) to “conduct special operations against international terrorism and organized crime” and mitigate “the consequences of natural and technological disasters.” Membership in the CSTO evolved over time. Claiming that the treaty had not been effective in thwarting regional security risks, Azerbaijan, Georgia, and Uzbekistan withdrew from the CST in 1999. Following the 2005 upheaval in Andijan, Uzbek authorities rejoined the CSTO in 2006. In June 2012 Tashkent again withdrew from the CSTO without providing any official explanation. Currently, the CSTO comprises Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. The CSTO, whose secretariat is located in Moscow, has sought to present itself as an independent international organization, but it is seen by many observers as a Moscow-­controlled security structure whose main purpose is to promote Russia’s military preeminence in Central Eurasia by providing member states with Russian military equipment at low prices. Vladimir Shishlin, “ODKB obrataet boevuiu mosch’: Na sammite v Mosvke reshili sozdat’ kollektivnye sily operativnogo reagirovaniia” [The CSTO is becoming powerful: They agreed to form collective rapid reaction forces at a Moscow summit], Interfax, February 2, 2009. 24.  The Tajik government, which was locked into a conflict with an alliance of opposition forces, was desperate for Moscow’s military support. Officials in Dushanbe reasoned that the deployment of Russian troops on the Tajik-­Afghan border would not only deter a potential invasion of Tajikistan by the Afghan mujahedeen forces, but would also help the Tajik authorities undermine support for opposition forces. Author’s interviews with Tajik analysts, Dushanbe, Tajikistan, September 1999. 25.  Yeltsin expressed his worries about the decreasing trade with the CIS in his 1995 speech to the Federal Assembly of the Russian parliament. He stated, “At present, the CIS countries account for only 20 percent of Russia’s total foreign trade turnover, as against 56 percent in 1991. The Commonwealth states’ growing insolvency with respect to Russia, especially when it comes to paying for energy deliveries, is cause for concern.” “Poslanie Borisa Yeltsina Federal’nomu Sobraniiu” [Boris Yeltsin’s address to the Federal Assembly], Rossiiskie Vesti, February 17, 1995. 26.  Vladimir Paramonov and Aleksei Strokov, “Economic Involvement of Russia and China in Central Asia” (Conflict Studies Research Center, Defense Academy of United Kingdom, Swindon, UK, May 2007). 27.  Yusin Lee, “Formation of a Coherent Concept of Russia’s National Interest in the Caspian Sea: A Constructivist Explanation” (PhD diss., Johns Hopkins University, 2004), 239 – ​44. 28.  Ibid. 29.  Lo, Vladimir Putin and the Evolution of Russian Foreign Policy, 25 – ​28. 30.  Ibid. 31.  “Death Penalties for Tashkent Bombers,” BBC News Online, June 28, 1999, http:// news2.thls.bbc.co.uk/hi/english/worldlasia-­pacific/newsid_380000/380039.stm. 32.  Among the hostages were four Japanese geologists, a group of American mountain climbers, and a Kyrgyz army general who was captured while visiting the camp of

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the Japanese geologists. Douglas Frantz, “Guerrilla Attacks Raise Worries in Central Asia,” New York Times, September 6, 2000. 33.  The Kyrgyz government reportedly paid close to $1 million that it secured from Japan for the release of the hostages. The Japanese government denied that it provided the Kyrgyz government the funds to rescue the hostages. However, as Tursunbai Baakir Uulu, the chief Kyrgyz negotiator with the IMU in 1999, revealed to the Kyrgyz press shortly after the Akaev regime’s fall in March 2005, the Kyrgyz government did pay the ransom from the Japanese funds. 34.  The Uzbek government opposed the Kyrgyz decision to invoke the CIS Collective Security provision in relation to the IMU insurgency. Wary of the Russian leadership (Uzbekistan abandoned the CIS Collective Security Treaty in February 1999), Uzbekistan appeared to be unwilling to allow Russian troops in Central Asia. Monitoring of Uzbek State TV broadcasts in August 2000 by the author. 35.  The Kyrgyz military reportedly authorized the bombing of the areas where the Islamic militants were believed to be hiding. However, the Uzbek pilots apparently got their maps mixed up and bombed villages inhabited by Kyrgyz civilians. Several Kyrgyz residents were seriously wounded and their cattle were destroyed because of the bombing. 36.  Lena Jonson, Vladimir Putin and Central Asia: The Shaping of Russian Foreign Policy (New York: Tauris, 2004), 64. 37.  “Russia Stages ‘CIS Collective’ Antiterrorism Exercises in Central Asia,” Jamestown Monitor, April 23, 2002. 38.  The Anti-­Terrorist Program provided for legal mechanisms for coordination of antiterrorist measures and the harmonization of national laws dealing with combating terrorism and other forms of extremism. The Anti-­Terrorist Center was instituted to gather data on terrorist groups and facilitate the exchange of information among CIS members. “CIS Summit Decides to Create Anti-­terrorist Center,” People’s Daily, December 2, 2000, http://english.peopledaily.com.cn/english/200012/02/eng20001202​ _56720.html. 39.  The agreement provided for 1,500 troops to be deployed at the request of the CST members. Haroutiun Khachatrian, “Creation of Rapid Deployment Force Marks Potential Watershed in Collective Security Treaty Development,” EurasiaNet, May 5, 2001. 40.  The Eurasian Economic Community (EurAsEC) was founded to form common external customs borders, develop common external economic policy, and allow for a non-­visa regime for citizens. Uzbekistan joined the organization in 2005 and withdrew from it in 2008. Moldova, Ukraine, and Armenia maintain “observer” status within the organization. The EurAsEC’s governing bodies include the Interstate Council, the Integration Committee, the Interparliamentary Assembly, and the Community’s Court of Justice. In 2008 member states signed an agreement on the establishment of the EurAs­EC bailout fund to help member states in coping with the consequences of the global financial crisis. Although decisions on the dispensation of the bailout fund are

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taken jointly by member states, Russia de facto establishes criteria for loans and controls the bailout fund. Roza Zhalimbetova and Gregory Gleason, “Eurasian Economic Community (EEC) Comes into Being,” Central Asia – ​Caucasus Analyst, June 20, 2001. 41.  The U.S. administration’s unilateralism in international affairs, as evidenced by the U.S. invasion of Iraq in 2003, added to the growing animosity between Moscow and Washington. 42.  In October 2003 the Russian defense minister Sergei Ivanov said that the Kremlin supported the Kyrgyz position regarding the status of the U.S. base. Kyrgyz officials viewed the base as a temporary facility that would be terminated after the U.S.-­led coalition completed military operations in Afghanistan. Olga Semenova, “Rossiia soglasilas’ s inostrannymi bazami v SNG tol’ko na period antiterroristicheskoi operatsii” [Russia agreed to the deployment of foreign bases in the CIS only during the duration of the antiterrorist operation], Ferghana.ru, October 10, 2003, http:// www.ferghana.ru/article.php?id=2216. In early 2005 Ivanov said that Russia did not oppose the U.S. air base. “Russian-­U.S. Bases in Kyrgyzstan Don’t Hinder Each Other — ​Ivanov,” Interfax, April 6, 2005. 43.  For example, the Kremlin involved Kyrgyzstan in the Russia-­led economic and military structures, offered preferential treatment of Kyrgyz labor migrants in Russia, and restructured a sizable portion of the Kyrgyz national debt to Russia. Russia also emphasized humanitarian collaboration such as the promotion of Russian culture, language, media, and education in Kyrgyzstan. 44.  During his meeting with Putin in Moscow on June 30, 2005, Uzbek president Karimov “made thinly veiled accusations that the West orchestrated the unrest to strengthen its presence in Central Asia.” Claire Bigg, “Russia Plays Uzbekistan Blame Game,” Asia Times, July 1, 2005, http://www.atimes.com/atimes/Central_Asia/ GG01Ag01.html. Karimov said that “[t]he events in Andijan were planned in advance and were a very serious, thoroughly prepared operation, to put it accurately. It is clear that it was prepared in headquarters and centers where there are people who have carried out operations like this before on the territory of both CIS and other states.” Quoted in Bigg, “Russia Plays Uzbekistan Blame Game.” 45.  Ann Scott Tyson, “Russia and China Bullying Central Asia, U.S. Says,” Washington Post, July 15, 2005. 46.  U.S. troops withdrew from Uzbekistan after receiving an eviction notice from Tashkent in July 2005. The United States continues to maintain a military base in Kyrgyzstan. 47.  As envisioned by the agreement, the Prikaspiisky project, a pipeline that hugs the Caspian shoreline, would expand the Central Asia-­Center pipeline, a spur of networks linking Central Asian gas pipelines to Russia. For Russia, the agreement was a major victory because it would allow Moscow to maintain its stranglehold over Central Asian gas exports and undermine rival gas pipeline projects such as Nabucco. Turkmenistan supported the deal because it would allow Ashgabat to expand the volume of gas exports to Russia. Kazakhstan endorsed the deal because the Prikaspiisky

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spur passed through Kazakh territory. Nevertheless, a combination of several factors in 2009 — ​the downturn in global demand for gas and mutual recriminations between Turkmen and Russian officials over the April 2010 pipeline explosion on the Turkmen stretch of the Central Asia-­Center pipeline — ​affected the Prikaspiisky pipeline project and generally Turkmen-­Russian relations. In October 2010, amidst a slump in the prices for gas in Europe, Russian and Turkmen officials took a decision to freeze the Prikaspiisky project for an indefinite period. Catherine Fitzpatrick, “Russia Talks TAPI with Turkmenistan; Postpones Prikaspiiski,” EurasiaNet, October 25, 2010, http://www​ .eurasianet.org/node/62235. 48.  The Kremlin was dismayed by the failure of its allies to immediately back Moscow’s actions in the Caucasus. Aleksandr Surikov, Russian ambassador in Belarus, criticized Minsk’s response: “We don’t understand why the government of Belarus has been blissfully silent. It’s necessary to express a more distinctive stance towards matters like this, even more so as it concerns the allies.” “Europe Split Up over Georgia,” Kommersant, August 14, 2008, http://www.kommersant.com/p1011125/ International_attitudes_toward_Moscow/. 49.  Despite their unwillingness to recognize Georgia’s breakaway provinces, the SCO leaders endorsed “the active role of Russia in assisting in peace and cooperation in the region.” Sergei Blagov, “Russia Talks Tough, but Is Moscow Swaying Opinion on Georgia?,” EurasiaNet, September 8, 2008. 50.  Medvedev put a positive spin on the outcome of the SCO meeting, saying, “I am sure that the united position of the SCO member states will have international resonance. . . . It is well known who helped Georgian authorities and even encouraged them in pursuit of their own mercenary aims.” Quoted in Blagov, “Russia Talks Tough.” 51.  China’s position was helpful to the Central Asian republics. By rallying around China, they were able to resist Russia’s pressure more effectively. Author’s interviews with Kyrgyz journalists, Bishkek, June – ​August 2009. See also Mark Katz, “Russia and the Shanghai Cooperation Organization: Moscow’s Lonely Road from Bishkek to Dushanbe” (Slavic Research Center Publications, Hokkaido University, Japan, March 9, 2008). 52.  Stephen Blank, “Georgia: The War Russia Lost,” Military Review, November – ​ December 2008. 53.  Alla Iazykova, “O konfliktah: Zamorozhennyh i inyh” [About conflicts: Frozen and other ones], Vestnik Evropy 24 (2008). 54.  Author’s interview with an Uzbek diplomat, Washington, D.C., October 2010. 55.  Ibid. 56.  Svetlana Gamova and Viktoriia Panfilova, “Molchanie soiuznikov” [The silence of allies], Nezavisimaia Gazeta, September 4, 2008. 57.  “Rossiia, Kazahstan, Armeniia, Tadzhikistan i Kyrgyzstan uchredili antikrizisnyi fond v razmere $10 milliardov” [Russia, Kazakhstan, Armenia, Tajikistan and Kyrgyzstan have established an anti-­crisis fund amounting to $10 billion], Interfax, December 23, 2008.

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58.  “Ekonomist: Rossiia sil’no riskuet razdavaia den’gi stranam SNG” [Russia is risking immensely by spreading money among the CIS countries], RosBalt, February 2, 2009. 59.  The Customs Union was presented by Russian, Belarus, and Kazakh officials as the first step toward the creation of the Eurasian Union, a broader economic alliance among former Soviet republics akin to the European Union. In keeping with the founding agreement, the member states removed all customs borders within their territories and introduced the Single Economic Space. In December 2011 the member states created the Eurasian Economic Commission within the Customs Union, a structure that has been tasked with promoting the further economic integration of the member states. A digest of Kyrgyz press reports, January 2010 and December 2011. 60.  Though Russian officials denied the link, observers suggested that Bishkek’s decision to close the U.S. air base was closely tied to the Russian financial aid. Ellen Barry and Michael Schwirtz, “Kyrgyzstan Says It Will Close U.S. Base,” New York Times, February 3, 2009. 61.  The Kyrgyz decision to renew the lease agreement with the United States was seen by some observers as a diplomatic slight for Russia. Michael Schwirtz and Clifford Levy, “In Reversal, Kyrgyzstan Won’t Close a U.S. Base,” New York Times, June 23, 2009. 62.  Olga Dziubenko, “U.S. to Build Kyrgyz Anti-­terrorism Training Center,” Reuters, March 9, 2010. 63.  Ibid. 64.  In mid-­March 2010, “Russian television stations broadcast scathing reports portraying President Kurmanbek Bakiev as a repugnant dictator whose family was stealing billions of dollars from this impoverished nation.” Pan, “Russia Is Said to Have Fueled Unrest.” See “Kyrgyzstan: Russian Press Bashing Bakiev,” EurasiaNet, March 29, 2010. On March 27, 2010, the Russian TV station NTV aired a broadcast accusing the Bakiev family of being involved in corruption and nepotism. In particular, the broadcast alleged that the Bakiev family built criminal ties with some international investment companies that were accused of money laundering. “Rukovodstvo Kirgizii obviniaetsia v koruptsii i semeistvennosti” [Kyrgyz leadership is accused of corruption and nepotism], NTV, March 27, 2010, http://chp.ntv.ru/news/12562/. 65.  Several Kyrgyz opposition leaders such as Roza Otunbaeva, Temir Sariev, Omurbek Babanov, and Almazbek Atambaev visited Moscow in March – ​April 2010. Kyrgyz media reports suggested that Putin met with some of these leaders and encouraged them to overthrow the Bakiev government. Transcripts of broadcasts by Kyrgyz TV stations, April 2010; Pan, “Russia Is Said to Have Fueled Unrest.” 66.  Page, “The Creation of a Sphere of Influence.” 67.  Author’s interview with a senior Uzbek diplomat, October 2010. 68.  Ibid. 69.  A May 14 statement from the Russian Foreign Ministry said that “[w]e are concerned about the events happening in Andijan, Uzbekistan, a country with which we have relations of strategic partnership. We in Russia condemn the attack by extremists in Uzbekistan who in their efforts to achieve their goals are relying on

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violent, unconstitutional means that resulted in the death of people. Russia supports the leadership of friendly Uzbekistan at this difficult moment.” Quoted in “MID RF v konflikte v Andizhane podderzhal Islama Karimova” [MFA of RF supported Islam Karimov in the conflict in Andijan], Newsru.com, May 15, 2005, http://txt.newsru.com/ russia/13may2005/uzbrussia.html. 70.  Author’s interview with a senior Uzbek diplomat, Washington, D.C., October 2010. 71.  Author’s interview with a Kyrgyz government official, Bishkek, August 2010. 72.  “Uzbekistan Sends Up Trial Balloon for Rapprochement with Western Countries,” EurasiaNet, February 25, 2007, http://www.eurasianet.org/departments/insight/ articles/eav022607b.shtml. 73.  “Uzbekistan: Tashkent Throws Temper Tantrum over New Russian Base in Kyrgyzstan,” EurasiaNet, August 3, 2009. 74.  While Turkmenistan has put on hold the plans to build the Prikaspiisky pipeline jointly with Russia and Kazakhstan, Ashgabat has sought to enlist Russia’s cooperation in other pipeline projects. One such project is the Turkmenistan – ​ Afghanistan – Pakistan – ​India oil pipeline. The Russian state company Gazprom has shown interest in the project. Fitzpatrick, “Russia Talks TAPI with Turkmenistan.” 75.  Malika Rahmanova, “Chinopochitanie kak vlastnyi resurs” [“Servility as a Power Resource”]. RFE/RL Russian Service, October 7, 2010, http://www.svobodanews​ .ru/content/article/2183362.html. 76.  I. Vovk and N. Haritonova, “Geopoliticheskie interesy Rossii v Tsentral’noi Azii na rubezhe XX-­XXI vv” [Russia’s geopolitical interests in Central Asia at the turn of the twenty-­first century], Novyi Istoricheskii Vestnik, no. 14 (2006), http://www​ .nivestnik.ru/2006_1/16.shtml. 77.  Ibid. 78.  Stanislav Minin, “Kak poteriat’ 600 millionov?” [How do you lose 600 million?], Nezavisimaia Gazeta, June 24, 2009. 79.  Dmitrii Trenin and Martha Brill Olcott, “Russia’s Policy towards the New States in Eurasia” (presentation at the Carnegie Endowment for Peace, Washington, D.C., February 23, 2005). 80.  Dmitri Trenin, “Southern Watch: Russia’s Policy in Central Asia,” Journal of International Affairs 56, no. 2 (Spring 2003): 119 – ​31. 81.  Vladimir Ivashenko, “Uzbekistan Quits Russia-­Dominated Security Pact,” Guardian, June 28, 2012, http://www.guardian.co.uk/world/feedarticle/10311599. 82.  Lolita Baldor, “SecDef in Kyrgyzstan to Lobby for U.S. Air Base,” Associated Press, March 13, 2012, http://www.airforcetimes.com/news/2012/03/ap-­panetta-­in​ -kyrgyzstan-­to-­lobby-­for-­us-­air-­base-­031312/. 83.  “Tajikistan Clashes: ‘Many Dead’ in Gorno-­Badakhshan,” BBC World News, July 24, 2012, http://www.bbc.co.uk/news/world-­asia-­18965366. 84.  Bruce Pannier, “New Turkmen-­China Pipeline Breaks Russia’s Hold over Central Asian Gas,” RFE/RL, December 12, 2009, http://www.rferl.org/content/​​​ TurkmenistanChina_Gas_Pipeline_To_Open/1903108.html.

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85.  In a recent high-­profile case of legal attack against Russian businesses in Central Asia, the Uzbek government had seized the assets of the MTS, a Russian cellular phone company, after accusing the company’s Uzbek CEOs of financial fraud in June 2012. Peter Leonard, “Uzbekistan Court Seizes MTS Assets,” Associated Press, September 18, 2012, http://www.businessweek.com/ap/2012-09-18/uzbekistan-­court-­seizes​ -­mts-­assets. 86.  In Uzbekistan, for example, the number of ethnic Russians declined from roughly 1.65 million in 1989 to about 620,000 in 2005, or about 2.3 percent of the population at that time. See Marina Kozlova, “Uzbekistan: Do You Speak Russian?,” Transitions Online, May 21, 2008. 87.  Richard Weitz, “Nazarbayev-­Karimov Summit Imparts New Momentum to Kazakhstani-­Uzbekistani Relations,” Eurasia Daily Monitor, September 14, 2012, http:// www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=39847. 88.  “Russia Blamed for Pipeline Blast,” BBC News, April 10, 2009, http://news.bbc​ .co.uk/1/hi/world/asia-­pacific/7993625.stm. 89.  Author’s interviews with Kyrgyz journalists, July – ​August 2010. 90.  Fatima Kukeeva, “Developments and Trends in the Russian-­Kazakh Strategic Partnership,” Russian Analytical Digest, no. 87 (November 2010). 91.  Astana’s strong determination to develop alternative energy export routes — ​as demonstrated by the launching of the Kazakh-­Chinese oil pipeline and Astana’s participation in the Baku – ​Tbilisi – ​Ceyhan (BTC) pipeline, a project that had long been opposed by Moscow — ​has added to sensitivities in relations with Russia. Kukeeva, “Developments and Trends in the Russian-­Kazakh Strategic Partnership.” 92.  Aigerim Shilibekova, “Russian-­Kazakh Security Relations Revisited,” Russian Analytical Digest, no. 87 (November 2010). 93.  Author’s interview with Kazakh and Kyrgyz journalists, August – ​September 2010. 94.  “Border Delimitation between Russia and Kazakhstan Completed,” Kazakhstan Today, January 1, 2005, http://engnews.gazeta.kz/art.asp?aid=302086. 95.  “Kazakhstan Allows Russia to Resume Baikonur Launches — ​PM,” RIA Novosti, June 15, 2012, http://en.rian.ru/russia/20120615/174059494.html. 96.  Author’s interviews with Kazakh and Kyrgyz journalists, August – ​September 2010. 97.  Shilibekova, “Russian-­Kazakh Security Relations Revisited.” 98.  Kukeeva, “Developments and Trends in the Russian-­Kazakh Strategic Partnership.” 99.  Ibid. 100.  “Russia-­Kazakhstan Trade Turnover Reaches USD 24 Billion,” Itar-­Tass, April 18, 2012. 101.  “EurAsEC Bailout Fund to Allot Money to Kyrgyzstan before End 2011,” Information agency 24.kg, August 4, 2011, http://eng.24.kg/business/2011/08/04/19572.html. 102.  The efforts to reform the CSTO have been opposed by such countries as Uzbekistan, which has been wary of Russia’s military role in Central Asia. Roman

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Vorobiev, “Civil Unrest on the Agenda,” Russia: Beyond the Headlines, September 29, 2011, http://rbth.ru/articles/2011/09/29/civil_unrest_on_the_agenda_13504.html.

References Allison, Roy. “Russia Resurgent? Moscow’s Campaign to ‘Coerce Georgia to Peace.’ ” International Affairs 84, no. 6 (2008): 1145 – ​7 1. ———. “Strategic Reassertion in Russia’s Central Asia Policy.” International Affairs 80, no. 2 (March 2004): 277 – ​93. Arbatov, Aleiksei. “Mezhdunarodnaia bezopasnost’ posle Kavkazskogo krizisa” [International security after the Georgian crisis]. Polit.ru, October 15, 2008. Arbenin, Sergei. “Rossiia nachinaet: Kto vyigryvaet?” [Russia begins: Who wins?] Ferghana.ru, September 3, 2008. Baev, Pavel. “Assessing Russia’s Cards: Three Petty Games in Central Asia.” Cambridge Review of International Affairs 17, no. 2 (July 2004): 269 – ​83. Barry, Ellen. “Russia’s Neighbors Resist Wooing and Bullying.” New York Times, July 2, 2009. Bigg, Claire. “Russia Plays Uzbekistan Blame Game.” Asia Times, July 1, 2005. http:// www.atimes.com/atimes/Central_Asia/GG01Ag01.html. Blagov, Sergei. “Rossiia proiavila sebia kak sderzhivaiuschii faktor vo vremia kyrgyz­ skogo konstitutsionnogo krizisa” [Russia proved itself a constraining factor during the Kyrgyz constitutional crisis]. EurasiaNet in Russian, November 13, 2006. Blank, Stephen. “America Strikes Back? Geopolitical Rivalry in Central Asia and Caucasus.” Central Asia – ​Caucasus Analyst, May 17, 2006. Bogaturov, Aleksei. “Krizis strategii ‘naviazannogo konsensusa’ ” [The crisis of an “imposed consensus” strategy]. Svobodnaia Mysl’, no. 11 (2008). Buszynski, Leszek. “Russia’s New Role in Central Asia.” Asian Survey 45, no. 4 (July – ​ August 2005): 546 – ​65. Chan, John. “Russia and China Call for Closure of U.S. Bases in Central Asia.” World Socialist Web Site, July 30, 2005. http://www.wsws.org/articles/2005/jul2005/base​ -­j30.shtml. Charap, Samuel. “The Petersburg Experience: Putin’s Political Career and Russian Foreign Policy.” Problems of Post-­Communism 51, no. 1 (January – ​February 2004): 55 – ​62. Cooley, Alexander. Base Politics: Democratic Change and the U.S. Military Overseas. Ithaca: Cornell University Press, 2008. ———. “Depoliticizing Manas: The Domestic Consequences of the US Military Presence in Kyrgyzstan.” PONARS Policy Memo 362, February 2005. Cornell, Svante, and Niklas Swanström. “Kyrgyzstan’s ‘Revolution’: Poppies or Tulips?” Central Asia – ​Caucasus Analyst, May 18, 2005. Cummings, Sally. “Happier Bedfellows? Russia and Central Asia under Putin.” Asian Affairs 32 (2001): 142 – ​52. Daly, John, Kurt H. Meppen, Vladimir Socor, and S. Frederick Starr. “Anatomy of a Crisis: U.S.-­Uzbekistan Relations, 2001 – ​2005.” Silk Road Paper, Central Asia-­Caucasus

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Institute, Washington, D.C., February 2006. http://www.silkroadstudies​.org/new/ inside/publications/0602Uzbek.pdf. Dawisha, Karen, and Bruce Parrott. Russia and the New States of Eurasia: The Politics of Upheaval. New York: Cambridge University Press, 1994. Donaldson, Robert H., and Joseph L. Nogee. The Foreign Policy of Russia: Changing Systems, Enduring Interests. Armonk, NY: M. E. Sharpe, 2005. Dubnov, Arkadii. “Vsem po Manasu: Na vostoke priniato blagodarit’ druzei za pomosch’ ” [Everyone gets a Manas: In the east they thank friends for help]. Vremiia Novostei, February 10, 2009. Fedorov, Andrei. “Rossiia stoit pered vyborom: Podderzhav antiterroristicheskie mery SShA, Moskva mozhet uskorit’ sblizhenie s ES i NATO” [Russia faces a choice: By supporting the U.S. anti-­terrorist measures, Moscow can speed up rapprochement with the EU and NATO]. Nezavisimaia Gazeta, September 14, 2001. Felgenhauer, Pavel. “Moscow Hopes Crisis Will Drive Bakiev Back into Russian Camp.” Eurasia Daily Monitor 3, no. 207 (November 7, 2006). Frolov, Vladimir. “A New Post-­Soviet Doctrine.” Russia in Global Affairs, May 20, 2005, http://eng.globalaffairs.ru/engsmi/920.html. Gaddy, Clifford, and Barry Ickes. “Russia after the Global Financial Crisis.” Eurasian Geography and Economics 51, no. 3 (2010): 281 – ​311. Gaidar, Yegor. Collapse of an Empire: Lessons for Modern Russia. Washington, D.C.: Brookings Institution Press, 2007. Gorbachev, Igor. “Kyrgyz Foreign Affairs and Inter-­parliamentary Committee Ratify Denunciation of Manas Airbase Agreement,” 24.kg Kyrgyz News Agency, February 17, 2009, http://eng.24.kg/politic/2009/02/17/7100.html. Grozin, Andrei. “Russia-­Kyrgyzstan: Bilateral Relations.” Eurasian Home Analytic Resource, September 9, 2005. http://www.eurasianhome.org/xml/t/expert.xml?​ lang=en&nic=expert&pid=211. Guang, Pan. “The Astana Summit: A New Stage in the Development of the Shanghai Cooperation Organization.” Asia Europe Journal 3, no. 4 (2005): 501 – ​6. http://www​ .springerlink.com/content/y24m0275t5557671/fulltext.pdf. Illarionov, Andrei. “The Siloviki in Charge.” Journal of Democracy 20, no. 2 (April 2009): 69 – ​72. Jonson, Lena. “Russia and Central Asia.” In Central Asian Security Dynamics: The New International Context, edited by Roy Allison and Lena Jonson. Washington, D.C.: Brookings Institution Press; London: Royal Institute of International Affairs, 2001. ———. Russia in Central Asia: A New Web of Relations. Central Asian and Caucasian Prospects Series. London: Royal Institute of International Affairs, 1998. ———. Vladimir Putin and Central Asia: The Shaping of Russian Foreign Policy. Culture and Society in Western and Central Asia Series. New York: Tauris, 2004. Juraev, Shairbek. “The Logic of Kyrgyzstan’s Base Policy.” PONARS Eurasia Policy Memo no. 72, September 2009. Kalishevskii, Mikhail. “Paradoksy kremlevskoi politiki v Tsentral’noi Azii” [The paradoxes of the Kremlin’s policy in Central Asia]. Ferghana.ru, December 13, 2009.

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Karimov, Islam. “Uzbek People Will Never Depend on Anyone.” Speech at press conference with foreign journalists, May 14, 2005. Kempe, Frederick. “Central Asia Emerges as Strategic Battleground.” Wall Street Journal, May 16, 2006. Kortunov, Andrei. “Russia and Central Asia: Evolution of Mutual Perceptions, Policies, Interdependence.” James A. Baker III Institute for Public Policy, Rice University, Houston, TX, 1998. Kortunov, S. “Rossiisko-­amerikanskoe partnerstvo i vyzovy XXI veka: Shans na nachalo novogo dialoga sushestvuiet” [Russian-­American partnership and challenges of the twenty-­first century: A chance for starting a new dialogue exists]. Mezhdunarod­naia Zhizn’ 4 (Spring 2002): 67 – ​86. Kryshtanovskaia, Olga, and Stephen White. “Inside the Putin Court: A Research Note.” Europe-­Asia Studies 57, no. 7 (November 2005): 1065 – ​75. ———. “Putin’s Militocracy.” Post-­Soviet Affairs 19, no. 4 (October – ​December 2003): 289 – ​306. Lee, Yusin. “Formation of a Coherent Concept of Russia’s National Interest in the Caspian Sea: A Constructivist Explanation.” PhD diss., Johns Hopkins University, 2004. Legvold, Robert. “Great Power Stakes in Central Asia.” In Thinking Strategically: The Major Powers, Kazakhstan, and the Central Asian Nexus, edited by Robert Legvold, 1 – ​38. Cambridge, MA: American Academy of Arts and Sciences; MIT Press, 2003. Lo, Bobo. “The Securitization of Russian Foreign Policy under Putin.” In Russia between East and West: Russian Foreign Policy on the Threshold of the Twenty-­First Century, edited by Gabriel Gorodetsky, 12 – ​28. New York: Routledge, 2003. ———. Vladimir Putin and Evolution of Russian Foreign Policy. London: Royal Institute of International Affairs; Oxford, UK: Blackwell, 2003. Lough, John. “Defining Russia’s Relations with Neighboring States.” RFE/RL Research Report, May 14, 1993. ———. “The Place of the ‘Near Abroad’ in Russian Foreign Policy.” RFE/RL Research Report, March 12, 1993. Mankoff, Jeffrey. Russian Foreign Policy: The Return of Great Power Politics. Lexington, MA: Rowman and Littlefield, 2009. Marat, Erica. “Conflict in South Ossetia Confuses Kyrgyz Government ahead of CIS Summit.” Eurasia Daily Monitor, August 14, 2008. Markedonov, Sergei. “Novym regional’nym politseiskim naznachat SShA: Rossiiskoi diplomatii luchshe smirit’sia s amerikanskim prisutstviem v Tsentral’noi Azii” [United States appoints a new regional policeman: Russian diplomacy had better resign itself to the American presence in Central Asia]. Prognosis: Journal of the Institute of Eastern Europe, May 24, 2005, http://www.prognosis.ru/news/secure/​ 2005/5/24/police.html. McFaul, Michael. “U.S.-­Russia Relations in the Aftermath of the Georgia Crisis.” Testimony to the House Committee on Foreign Affairs, September 9, 2008. Menon, Rajan. “The New Great Game in Central Asia.” Survival 45, no. 2 (Summer 2003).

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———. “Structural Constraints on Russian Diplomacy.” Orbis 45, no. 4 (Fall 2001): 579 – ​96. Minin, Stanislav. “Kak poteriat’ 600 millionov?” [How do you lose 600 million?] Nezavisimaia Gazeta, June 24, 2009. Nichol, Jim. “Coup in Kyrgyzstan: Developments and Implications.” U.S. Congressional Report, April 14, 2005, http://fpc.state.gov/documents/organization/45463.pdf. Nikonov, Viacheslav. “Politika Rossii v Tsentral’noi Azii” [Russian policy in Central Asia]. Tsentral’naia Aziia i Kavkaz 8 (1997). Olcott, Martha Brill. Central Asia’s Second Chance. Elmsford: Carnegie Endowment for International Peace, 2005. Omarov, Nur. “Vneshniaia politika sovremennogo Kyrgyzstana: Puti i metody optimizatsii” [Foreign policy of contemporary Kyrgyzstan: Routes and methods for optimization]. APN Kazakhstan, October 17, 2006, http://www.apn.kz/publications/ article6445.htm. Page, Stephen. “The Creation of a Sphere of Influence: Russia and Central Asia.” International Journal 49, no. 4 (Fall 1994): 788 – ​813. Pan, Philip. “Russia Is Said to Have Fueled Unrest in Kyrgyzstan.” Washington Post, April 12, 2010. Paramonov, Vladimir, and Aleksei Strokov. “Economic Involvement of Russia and China in Central Asia.” Conflict Studies Research Center, Defense Academy of United Kingdom, Swindon, UK, May 2007. ———. “The Evolution of Russia’s Central Asia Policy.” Conflict Studies Research Center, Defense Academy of United Kingdom, Swindon, UK, June 2008. Perovic, James. “From Disengagement to Active Economic Competition: Russia’s Return to the South Caucasus and Central Asia.” Demokratizatsiia, no. 1 (2005): 61 – ​85. Radnitz, Scott. “What Really Happened in Kyrgyzstan?” Journal of Democracy 17, no. 2 (2006): 132 – ​46. Rumer, Eugene. “United States and Central Asia.” In Central Asia: Views from Washington, Moscow, and Beijing, edited by Eugene Rumer, Dmitri Trenin, and Huasheng Zhao. Armonk, NY: M. E. Sharpe, 2007. Safranchuk, Ivan. Remarks at CSIS Conference on International Perspectives on Afghanistan and Regional Security to 2014 and Beyond, July 2011. https://csis.org/ files/attachments/110726_afghanistan_perspectives_summary.pdf. Shevtsova, Lilia. Russia — ​Lost in Transition: The Yeltsin and Putin Legacies. Elmsford: Carnegie Endowment for International Peace, 2007. Shlapentokh, Vladimir. Contemporary Russia as a Feudal Society: A New Perspective on the Post-­Soviet Era. New York: Palgrave Macmillan, 2007. Sobianin, Aleksandr. “Krizis — ​piliulia dlia ekonomiki: Rossiia pomozhet samym slabym stranam Tsentral’noi Azii — ​Kirgizii i Tadzhikistanu” [Crisis as a pill for the economy: Russia will help the weakest countries of Central Asia — ​Kyrgyzstan and Tajikistan]. Respublika-­Kz, October 28, 2008. Socor, Vladimir. “SCO Asks Washington to Set Date for Withdrawal of Forces.” Eurasia Daily Monitor 2, no. 130 (July 6, 2005).

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Torbakov, Igor. “Moscow Adapts Policy to Address Rifts within CIS.” EurasiaNet, September 12, 2005. http://dev.eurasianet.org/departments/insight/articles/ eav091205a_pr.shtml. ———. “Policy Makers in Moscow Debate the Limits of Russian Power in the Caucasus, Central Asia.” EurasiaNet, August 30, 2004. ———. “Putin Faces Domestic Criticism over Russia’s Central Asia Policy.” EurasiaNet, February 12, 2002. ———. “Putin Urges Shift in Russia’s CIS Policies.” Eurasia Daily Monitor 1, no. 60 (July 2004). ———. “The West, Russia, and China in Central Asia: What Kind of Game Is Being Played in the Region?” Transition Studies Review 14, no. 1 (2007): 152 – ​62. Trenin, Dmitri. “Southern Watch: Russia’s Policy in Central Asia.” Journal of Inter­ national Affairs 56, no. 2 (Spring 2003): 119 – ​31. Tyson, Ann Scott. “Russia and China Bullying Central Asia, U.S. Says.” Washington Post, July 15, 2005. Weitz, Richard. “Averting a New Great Game in Central Asia.” Washington Quarterly 29, no. 3 (2006): 155 – ​67. Wood, Thomas. “The Formation of Kyrgyzstan’s Foreign Policy: 1991 – ​2004.” PhD diss., Tufts University, 2005.

8

Europe in Central Asia Political Idealism and Economic Pragmatism Sebastien Peyrouse

Despite the absence of shared borders, Europe and Central Asia have many interests in common. Located on the same continent, with only Russia or — ​more complex — ​South Caucasus as an intermediary, both regions could build mutually advantageous strategies in terms of trade and investments (particularly as the Central Asian economies need European technological and industrial know-­how), develop the export of Central Asian hydrocarbons and minerals to Europe, and work together on shared human security issues like migration, refugees, food safety, improvement of environmental security, and so on. Europe is also interested in helping the Central Asian states to develop their autonomy from external influences, mostly Russian and Chinese, and to be reliable partners and stakeholders. However, the lack of contradictory strategies between both regions — ​except in terms of promotion of democratic rule and good governance — ​does not necessarily imply an easy-­to-­build relationship. In 1992 the European states recognized the independence of the five former Soviet republics of Central Asia and began bilateral relations with many of them. The European Union (EU), for its part, remained somewhat present on the Central Asian scene, instead placing more emphasis on a relationship with Moscow. It also had to manage circumstances of far greater priority such as Germany’s reunification, the conflicts in Yugoslavia, and the implementation of the Schengen Area (the twenty-­ six European countries that currently do not require passports to travel among borders). Since 2007, however, the EU has resolved to speak with a more assertive voice in Central Asia, as the deteriorating situation in Afghanistan, tensions over energy matters with Russia, China’s 209

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burgeoning power, and the influence of some regional organizations like the Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO) have encouraged it to intercede in the region.1 The EU’s member states are also becoming increasingly present on the local level and on the military level in the framework of the ISAF operations in Afghanistan (such as the German base in Termez, Uzbekistan, and the French air force in Dushanbe, Tajikistan). In addition, the EU finally became cognizant of its economic weight and is now one of the main trading partners of the five states. In fact, it hopes to transform its member states’ bilateral economic relations into a global community dynamic that has a greater impact on the entirety of the Central Asian societies. In 2007, under the impetus of Germany, the motor of European involvement in Central Asia, the EU adopted a new strategy designed to reinforce its presence in the region. However, despite its more assertive ambitions on the institutional level, Europe remains an actor with limited capabilities on the ground. Its involvement in the region is not comparable to that of the Eastern partnership between Ukraine, Belarus, Moldova, and the three South Caucasus countries, which engages in discussions on a free-­visa regime, free trade and associations agreements, and creating a normative standard within the region. Moreover, several dilemmas have shaped and continue to shape European policy in Central Asia, and the EU must conduct a balancing act to reconcile sometimes contradictory interests: the promotion of European values (human rights, good governance, etc.), economic strategies (mainly diversification of the European energy supply after the Russo-­Ukrainian gas crises), and security objectives linked in large part to the proximity of Afghanistan (supply and reverse effort for transit agreements with Uzbekistan and Kazakhstan). In addition, the recurrent divergence between EU policies and those of its member states fosters an image of Europe as a complex entity without a well-­defined agenda. Europe has had difficulties finding its place among influential actors such as China, Russia, and the United States. Several sociological surveys carried out in Central Asia show that Europe remains scarcely visible in the face of competition from Moscow and Beijing. Many analysts predicted that Russia would gradually lose ground in the region after

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independence, a notion further underscored by the reorientation, carried out under Yeltsin, of Russian foreign policy toward Europe and the West. Moscow has, however, regained a primary role by reaffirming its influence over the southern parts of the region. Russia remains the former “colonizer,” with its cultural values and language spread widely throughout Central Asia. It is also an economic actor of the highest importance, particularly in the energy domain, with the five states constituting a central element of Russian energy policies. In addition, it is a necessary strategic partner that supports the established regimes, which are viewed as guarantors of regional security. For the Kremlin, insecurity and the risks of destabilization constitute the fundamental reason for its presence in the region. As such, Russia is seeking to secure its own territory and to avoid a situation where it would have no choice but to intervene militarily. Russia utilizes this influence, lastly, to promote its image as a great power, which it has strived to recover since independence. From the 2000s on, China has also played an exponentially growing role in the region. As China’s historical implantation in the region is almost nonexistent, unless we hark back to the first millennium of our era, it arrived in Central Asia with far fewer assets than either Russia or the United States. The situation has rapidly improved to China’s advantage, however: the Chinese authorities, aware of their poor image in the region, sought to valorize these states upon independence, receiving Central Asian delegations with full honors, and they proposed neighborly economic measures that the Central Asian heads of state received very enthusiastically. In less than two decades, Beijing has achieved a massive and multilayered entry into Central Asian space. It has taken a role as a loyal partner at the level of bilateral diplomacy, has managed to turn the Shanghai Cooperation Organization (SCO) into a regional body that its members appreciate, and has become a leading economic partner in the commercial sector. For China, Central Asia, with its access to hydrocarbons and proximity to new market opportunities in the Middle East, is an area of essential investment. Faced with the strong presence of Russia and China, the EU, as well as the United States, has largely ceded ground in the region. Cognizant of the imbalance, the EU nonetheless intends to play a more crucial role in the region, not only

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in terms of economic exchange but also in terms of spreading European values, respect for human rights, promotion of democracy, and good governance.

European Involvement in Central Asia and Its Main Drivers Diplomatic Representation and Agreement Frameworks The European states have varying levels of diplomatic representation in Central Asia in accordance with their involvement in the region. Only three countries — ​Germany, France, and Great Britain — ​have an embassy in each of the five republics.2 Many other countries have embassies in Kazakhstan and/or Uzbekistan whose missions include the other republics, while others have only roving ambassadors. For many European countries, their diplomatic presence in the region aims essentially to supervise and protect their national firms conducting business there. Some countries have more historical relations with these countries. Poland, for example, is greatly present in Kazakhstan thanks to the dynamism of the Polish minority there. In contrast, other European states entered the Central Asian diplomatic scene only recently. Finland, which launched its Wider Europe Initiative in 2009, invested 64 million euros in development projects for Eastern Europe and Central Asia.3 Other countries have drastically reduced their presence in the region. Sweden, for example, closed the last office of the Swedish International Development Cooperation Agency (SIDA), and it no longer has any local diplomatic representation.4 Europe’s interests are also transmitted through transatlantic institutions such as NATO or the OSCE, which, although they each have their own agendas, both strengthen and complicate the European presence in the region. One of the EU’s goals is to balance out the influence of other organizations dominated by Russia and China, in particular the Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO), which are seen as essential tools for spreading political principles that are counter to European ideas, such as the maintenance of authoritarian regimes in the region and the repression of political opposition. Last but not least, the European Union is a complex political structure, made up of the Commission

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(which represents unified European institutions), the Council (which represents the member states), and the Parliament (which represents European citizens). Since the adoption of the Lisbon Treaty in 2007, the Commission’s delegations abroad have been converted into the European Union Delegation of the European External Action Service (EEAS), mandated to represent the totality of competences of the European Union.5 They are open in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, whereas in Turkmenistan, a Europa House is awaiting a status upgrade. The nomination in 2005 of a special EU representative for Central Asia, Jan Kubis — ​succeeded the following year by Pierre Morel and in 2012 by Patricia Flor — ​attests to the EU’s growing will to be represented alongside the classical diplomatic representation of its member states. Cooperation between the EU per se and the states of Central Asia is institutionalized in the Partnership and Cooperation Agreements (PCAs), which provide a general framework for political dialogue that translates into regular meetings between high-­level officials.6 The PCAs also aim to accompany these countries that are entering the market economy to stimulate trade and investments, and to make Central Asian regulation compatible with EU standards. In other words, the agreement extends the tariff preferences under the Generalized System of Preferences to each respective country.7 In practice, these objectives have not been reached, and general frameworks of cooperation have progressed with difficulty. In Kazakhstan, Kyrgyzstan, and Uzbekistan, the PCAs with the EU began operating after their ratification in 1999. Uzbekistan’s agreement was suspended in 2005 after the Andijan repression, only to be resumed in 2008.8 Turkmenistan’s agreement, signed in 1999, still has not been fully ratified by the United Kingdom and France.9 Tajikistan’s agreement was signed much later, in 2004, and was ratified five years later, in 2009.

The 1990s: European Transit Strategies for Landlocked Central Asia Following the same pattern as the other external actors and inter­ national financial institutions, European aid for the Central Asian economies in the 1990s concentrated on the region’s transit potential and its natural resources. European priorities at this time included disenclaving

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Central Asia; contributing to the development of international transport routes to facilitate intra-­regional exchanges was considered a European priority. The Transport Corridor Europe – ​Caucasus – ​Asia project (TRACECA) aimed to open up Central Asia and the South Caucasus by creating a vast transport and communication corridor along an east-­ west axis. Endowed with a budget of 110 million euros between 1993 and 2002, it financed the modernization of the ports of Ilyichevsk, Poti, Batumi, Turkmenbashi, Baku, and Aktau, as well as the Kungrad – ​ Beineu – ​Aktau railway, and organized the boat-­railway linkup on the trip from Varna to Batumi and Baku to Aktau.10 The program is now increasingly connected with pan-­European road projects planned according to the EU Neighborhood Policy.11 But twenty years after having been launched, TRACECA has failed to redirect trade flows. The conflicts that rocked the South Caucasus in the 1990s, and the suspicions harbored by Central Asian states against one another, have drastically impeded the integration of national transport networks. Moreover, despite a great deal of interest in these projects, the EU’s budgets were reduced to a limited average of two million euros per project. Last, and above all, the economic profitability of the route is contested: not only does transport through Russia create major transit delays, but the numerous taxes demanded by the excessive number of transit states through which transport has to pass reduce the overall financial margins.12 The EU also financed the Interstate Oil and Gas Transportation to Europe project (INOGATE), which covers the domains of oil and gas, electricity, renewable energy, and energy efficiency. The project evolved into a broader energy partnership between the EU and the countries of the former Soviet Union. It supplies technical studies on feasibility, institutional and legal support, and support for small-­scale investments in interstate infrastructure. Unfortunately, it has also seen few concrete results.13 Lastly, the EU also targets the development of the private sector by working with small and mid-­size companies in the region. To this end, the EU has promoted the Central Asia Invest Regional Program, which aids the development of local Business Intermediary Organizations, namely, chambers of commerce and professional and industrial associations, and supports policies designed to improve the investment climate.14

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The 2000s: Energy Diversification and the Nabucco Project Since the second half of the 2000s, the European Union has sought to diversify its energy imports, which are too dependent upon Russia, and to avoid complicated energy transit routes, since they often work to complicate negotiations, as was shown during the Russo-­Ukrainian “gas wars” of 2006 and 2009.15 However, the importing of Central Asian gas is far from being the EU’s only solution to these problems. Both the North Stream project, inaugurated in November 2011, and the South Stream project already allow EU countries to bypass problematic energy transit countries, and other energy alternatives such as developing liquefied natural gas (LNG) or reducing demand for gas in favor of renewable energies could potentially alleviate dependence on Russian energy imports.16 In regard to European energy diversification initiatives, Central Asia is concerned only with the so-­called Southern Corridor, which comprises two gas pipelines: first and foremost is Nabucco,17 which would link Erzurum in Turkey to Baumgarten an der March in Austria, and the second is the more limited Turkey – ​Greece – ​Italy Interconnector (TGII) pipeline. The Nabucco pipeline will be able to transport 31 billion cubic meters (bcm), or 5 percent of European demand, by 2017 – ​2018, while the transport capacity of the TGII pipeline is set to increase to 8 billion bcm of gas in 2014.18 The Southern Corridor will transport Azeri gas extracted from the BP-­operated offshore site of Shah Deniz, which has fed the Baku – ​Tbilisi – ​Erzurum (BTE) gas pipeline since the end of 2006, to these two pipelines. If Nabucco is to be viable, an additional 8 billion bcm at least must be secured, a condition that Shah Deniz II is supposed to fulfill. However, if production is to reach 31 billion bcm sometime between 2016 and 2020, a sizably larger volume of natural gas must be found, whether from the Middle East (Iraq) or Central Asia. Given that Kazakh and Uzbek gas is out of the question, the shortfall in volume could be made up by supplies from Turkmenistan, whether from the offshore deposit of Serdar/Kyapaz — ​linking it up to the export network of Shah Deniz would cost only a modest amount but would require that the territorial conflicts between Ashgabat and Baku be settled — ​or from the onshore South Yolotan-­Osman deposit, in which case the linking costs would be far greater.19

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In March 2009 the Turkmen government put out a tender for the construction of an internal gas pipeline linking this gas deposit to the Caspian Sea. This could potentially fill two competing objectives: either the Moscow-­led Prikaspiisky gas pipeline, or the EU-­led trans-­Caspian. To see the latter solution realized, the European Union and the Turkmen authorities will first have to come to an understanding on prices, and then withstand Russian and Iranian pressures. Alternatively, the authorities could transform the gas into LNG so that it can be transported by tankers, a solution that is easier geopolitically but is more costly. In late 2012 the Turkmen authorities had still not officially ratified their agreement to supply 10 bcm of gas to Nabucco, even though their leaders seemed to be committed to it.20 Construction of Nabucco-­ West depended on the gas export route decision by the Shah Deniz consortium. However, as the Shah Deniz consortium selected the trans-­ Adriatic pipeline over Nabucco, there are questions regarding the future of these projects. European dialogue on the importance of Central Asia for European energy must nonetheless be questioned. Though Kazakhstan and Turkmenistan have many hydrocarbon riches, the Caspian Basin cannot supplant the world’s main fuel producers, the Gulf countries. Most Kazakh gas will continue to proceed to European markets through Russia, an almost indispensable transit country for Europe. While Turkmen gas can be more easily sent toward the South Caucasus and then Turkey, this remains problematic. Since the EU supports the Extractive Industry Transparency Initiative, which makes provision for more transparency in the management of resources by producer countries, Turkmenistan’s reputation as one of the most opaque countries in the world21 is a major obstacle to its energy trade with EU-­affiliated countries. This ethical problem is only exacerbated by the more technical and logistical challenges that Turkmenistan and the EU would face in setting up this trade route for natural gas. In general, the EU has not managed to redirect trade or hydrocarbon flows. As in the security or political sectors, it faces competition from Russia, which still manages to exert considerable influence over Central Asia, an influence that is itself rivaled by the growing role of Beijing. Through the building of gas and oil pipelines that today connect the region to China, and through the growth of trade flows over recent years, Central Asia has turned far more toward the

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East, at the expense of the EU. U.S. policy, which has worked at redirecting trade flows, particularly hydrocarbons, toward South Asia in order to reduce Moscow’s influence in the region, has also contributed to crippling the EU’s power in certain negotiations, negatively impacting, for example, Turkmenistan’s potential involvement in the Nabucco project.

Scope and Limits of EU Action in Central Asia If the EU intends to play a role in the Central Asian region, it must do so with limited financial means. It will also continue to have difficulties getting involved in concrete initiatives due to existing divisions between European states in terms of foreign policy and involvement in the region. The EU will have to develop a strategic angle when compared with Beijing and Moscow, which are not only closer geographically but also have made considerably greater financial commitments. An overall budget of 675 million euros has been allocated by the EU under the Development Cooperation Instrument (DCI) for cooperation with Central Asia for the period 2007 – ​2013, whereas China has granted the republics of Central Asia loans that have presently amounted to several billion euros.

The 2007 Strategy: Changing the Patterns of Cooperation Since 2007, European strategy has abstained from approaching Central Asia as a unified region and instead has sought to take into account the diversity of each nation by allocating a large part of its aid in accordance with the needs specific to each country. Thus, the EU considers that Kazakhstan, given its resources, no longer requires direct financial support, except in some specific sectors such as higher education and civil society. A joint statement endorsed by the EU-­Kazakhstan Cooperation Council in November 2009 plans to further strengthen EU-­Kazakhstan relations by reaching a new enhanced agreement to replace the Partnership and Cooperation Agreements (PCA), making it possible to encompass all EU competences.22 Commercial negotiations, however, have been hindered by Kazakhstan joining the Customs Union with Russia and Belarus, which excludes the possibility of a free trade agreement with the EU unless all three of the Customs Union’s member states

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ratify it.23 Nonetheless, Kazakhstan continues to be the most involved of Central Asian countries with the EU and has developed a “Path to Europe” program partly inspired, at least on paper, by the model of the Eastern partnership. Relations with Turkmenistan and Uzbekistan are limited due to the political context and the isolationist policies of both regimes. The EU thus focuses its aid policy on the two most fragile states, Kyrgyzstan and Tajikistan, a logic reinforced by the review of European strategy validated in 2012. The 2007 – ​2013 strategy foresees a doubling of EU aid programs for Central Asia, reaching 750 million euros for this seven-­year cycle. Financial assistance in Central Asia is detailed in an overarching regional strategic paper (2007 – ​2013) for assistance to Central Asia and a specific program called the Central Asia Initiative Program (2007 – ​ 2010). The regional strategy is oriented around seven initiatives: human rights, the rule of law, good governance and democratization; youth and education; economic development, trade, and investment; strengthening energy and transport links; environmental sustainability and water; combating common threats and challenges; and intercultural dialogue.24 The sum allocated to the region by the European bodies — ​ which does not include the aid offered by member states — ​remains very modest when compared to the funds dedicated to Eastern and Mediterranean partnerships — ​about 20 million euros per country per year. Of this amount, two-­thirds are reserved for EU bilateral assistance to reduce poverty and improve sustainable development. The last third of the budget is dedicated to transnational issues such as organized crime, drug trafficking, and water management.25 European aid has been profoundly reformed in recent years. Until 2006 the chief EU aid program, the Technical Assistance to the Commonwealth of Independent States (TACIS), had as its general goal to promote market economy and democracy through supporting political and institutional reforms, the development of infrastructure, and the minimization of the social consequences of the transition for formerly socialist states.26 Via TACIS, Central Asia benefitted from more than 1.3 billion euros in aid between 1992 and 2006.27 In 2007 TACIS was dissolved into a joint instrument for all the world’s recipient countries of European aid and became the Development Cooperation Instrument (DCI), directly inspired by the UN Millennium Development Goals.

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DCI operations are distributed according to thematic and regional programs. In Central Asia, this includes programs on food security in Kyrgyzstan and Tajikistan and a program focusing on nonstate, local authorities. The aid given to Kazakhstan by the DCI may be short-­lived, however, as the country is now eligible only for regional types of aid, but Kyrgyzstan and Tajikistan should see an increase in European aid, particularly for programs supporting poverty reduction, sustainability, and stability.

The Main EU Tools for Central Asia The 2007 DCI strategy launched a Human Rights Dialogue process with each of the five republics in Central Asia. This process has involved bilateral meetings at the highest political level as well as seminars bringing together European and Central Asian official representatives and NGO activists. The results of this dialogue have been limited, though there have been some rare advances in prisoner rights, moratoriums on capital punishment, and the liberation of certain journalists.28 The European Initiative for Democracy and Human Rights (EIDHR), which is active in Kazakhstan, Kyrgyzstan, and Tajikistan, allocated 9 million euros in grants to more than fifty projects linked to the development of civil society and to dialogue on human rights.29 Unfortunately, assistance in the sector of human rights and democratization is especially difficult since the Central Asian context is unfavorable to it. Moreover, there are numerous divergences between European actors. For example, EU officials deem that simply holding a dialogue with the local authorities is a positive element, a sign of the socialization of the Central Asian regimes in international mechanisms. In contrast, European and local NGOs criticize these dialogues for not having any impact on everyday realities and point to the degradation of human rights and of democratic principles in all the states of the region.30 The Instrument for Stability is another EU initiative that targets Central Asia; it aims to respond to the needs resulting from localized conflict or civil war, particularly in weak or failing states. However, in this framework, the fight against organized crime and drug trafficking is the only active operation in Central Asia. The EU is also trying to play a mediating role in the more sensitive realms that have elicited regional

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tensions — ​above all, around the issue of water management. The risk of conflicts between the states in the region is growing, particularly between Uzbekistan and Tajikistan, but also to a lesser degree between Uzbekistan and Kyrgyzstan. In response, Europe has since undertaken discussions at the political level but also has distributed technical aid, coordinated by the Water Governance in Central Asia Initiative.31 However, so far the European focus on the water issue has not resulted in any concrete improvement. The EU is also involved in environmental initiatives, as the Central Asian region is threatened by desertification, natural disasters, and climate change. It has launched the Central Asia Environment Program, which focuses on questions of sustainable use and management of natural resources.32

Higher Education: Europe’s Prestige Card The EU wants to invest in Central Asia’s education sector, as European education is perceived as prestigious in many post-­Soviet societies. This involvement is especially necessary as the quality of the overall educational system in Central Asia has largely declined since independence, having been hit by a significant decline in financing, endemic corruption, a decline in the prestige associated with the teaching profession, and a dearth of human capital.33 Some states, such as Kyrgyzstan and Tajikistan, which do not have enough financial capabilities to ensure the survival of their education systems, have proven willing to engage in cooperation and receive international support. Kazakhstan, which is better endowed financially, has engaged in the process of conforming its university curricula to European standards. The two most authoritarian states, Turkmenistan and Uzbekistan, are far more reluctant to receive international aid for education, as they view it as a threat to their national sovereignty. The EU finances several programs targeted to improve primary education in response to the UN’s Millennium Development Goals. However, considering that other international donors are already focused on funding primary and secondary education improvement programs, it has opted to focus on tertiary and vocational education. Its Education Initiative has undertaken two major efforts: a political dialogue called the EU-­C entral Asia Education Platform, and the regional

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Tempus and Erasmus Mundus programs, which standardize curricula and offer exchange student programs. In this framework several other specific programs have been promoted, such as the European training foundations and the Central Asian Research and Education Network (CAREN), which provides high-­speed Internet for universities and research centers and seeks to develop better communication between Central Asian researchers and students and their foreign colleagues.34 Several Central Asian European universities have also been opened, such as the Kazakh-­British and Kazakh-­German Universities in Almaty or the Westminster University in Tashkent, offering a higher level of studies to a number of local university students.

A Growing Focus on Security Issues Although the European Union regards security as one of its main strategic interests, issues of hard security are handled by its member states and transatlantic organizations. NATO is involved in the region through the Partnership for Peace.35 The OSCE, in addition to its own border training programs, has already implemented a police reform program in Kyrgyzstan36 and is trying to engage the Central Asian authorities in a debate on security services reform. Two EU member states, France and Germany, are present in the region due to their intervention in Afghanistan. France’s key military presence in Central Asia is the air force detachment (Detair) that has been stationed at Dushanbe international airport since 2002.37 Germany is heavily involved with the Termez base, where the Bundeswehr has been stationed since 2001, and through this involvement has developed a close partnership with Uzbek authorities. The EU, therefore, has chosen to specialize in border management, as it encompasses both regional and national priorities, and takes into account the security risks associated with the region’s proximity to Afghanistan. The EU finances two programs, Border Management in Central Asia (BOMCA) and the Central Asia Drug Action Program (CADAP), run by the regional offices of the UNDP. Both programs have been progressively unified. CADAP has supplied goods to airports and Central Asian border posts, such as detection equipment and dog brigades, as well as legal assistance and training designed for antidrug agencies. BOMCA’s purpose is to improve the capabilities of border

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service, customs and immigration services, and control centers and mobile units, in order to help fight more effectively against cross-­border criminality and the trafficking of drugs, weapons, and humans. These programs enable the Central Asian states to acquire modern equipment for their border posts, build new infrastructure, and take advantage of training for their specialized officers.38 The EU is aware of the growing security problems of the Central Asian region. The 2007 strategy sets out a standard definition of “common threats and challenges” that focuses on border management, proximity to Afghanistan, and drug trafficking. The June 2010 “Joint EU Council and Commission Implementation Report of the EU Strategy for Central Asia” recognizes the deficiencies of the strategy in terms of security, and calls for reinforced efforts in “security, broadly speaking.”39 The report concludes, It will be necessary to expand the concept of security to include major international and regional challenges such as human security, combating drug trafficking and trafficking in human beings, precursors, nuclear and radioactive materials, uranium tailings, border management, bio-­safety, bio-­security, combating terrorism and preventing radicalization and extremism, including via a continued emphasis on poverty alleviation. Combating corruption is an important element in countering many of these security challenges.40

Meanwhile, the European Parliament is developing its own position on the implementation of the EU strategy. The August 2011 draft report on this matter emphasizes the terminology of human security, and “takes the view that the cornerstones of the EU’s new approach to the region must be human security and genuine regional cooperation.”41 In this way it contributes to defining the EU’s security approach to the region as well as starting a broader debate on the EU’s role in security matters beyond its neighborhood. However, the EU often adopts on its own behalf the Central Asian narratives about the threats coming from the south. As such, by validating a victimization strategy and local views on Muslim extremism, terrorism, and the shadow economy, the EU risks indirectly helping Central Asian regimes legitimize domestic policies of repression

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and rent-­seeking strategies. Even though the EU repeatedly states that the main concern for the region is security and spends considerable amounts on border security projects like BOMCA, it would be naïve to assume that the fight against drug trafficking can be waged successfully with such programs alone. Securing a border with checkpoints, barbed wire, and watchtowers does not suffice to make the frontier impermeable. In Central Asia and Afghanistan, all border points, even those that the international community has created and equipped, remain essentially open due to corruption. The Central Asian countries that border Afghanistan cannot be made secure by physical means alone. It requires the political will to fight against corruption for the long term. To be effective, international efforts to combat drug trafficking in Central Asia must therefore be political in nature. Such an approach is unlikely to obtain the support of Central Asian ruling elites today, however, and the international community cannot force it upon them. Moreover, even though the financial commitments that border security requires to be effective can be debated, the costs remain higher than what most European donors can contribute in these difficult financial times.42 Border security thus will remain the lowest common denominator for international cooperation.

Member States and Private Actors at the Core of European Visibility If the EU as an entity has gained in visibility in Central Asia since 2007, it is due largely to the actions of its individual member states. Historically, the Central Asian societies, influenced by decades of Soviet domination, have seen Europe more through the national cultures of its member states than through the European political construct. Moreover, the Soviet regime always tried to avoid building solid relations with European institutions, instead favoring direct relations with member states.

Europe as a Key Trade Partner Europe’s interests in Central Asia are mostly economic, even if border security is the main priority for EU member state Germany due to its military base in Termez. Taken as an entity, Europe is the second-­largest

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table 8.1. EU Imports, Exports, and Total Trade with Central Asian States in 2012 (Millions of Euros) Imports from EU

Rank

Exports to EU

Rank

Total trade

Kazakhstan

7,072 (20.1%)

1

20,154 (41.2%)

1

27,227 (32.4%)

1

Kyrgyzstan

444 (5.8%)

4

28 (3.3%)

5

473 (5.5%)

4

Tajikistan

Rank

170 (4.9%)

5

66 (8.3%)

3

236 (5.5%)

5

Turkmenistan

1,380 (19.1%)

2

610 (7.1%)

2

1,990 (12.6%)

2

Uzbekistan

1,303 (14.3%)

3

122 (3%)

4

1,425 (10.9%)

3

Source: Data from 2011 European Commission statistics, http://ec.europa.eu/trade/creating-­opportunities/ bilateral-­relations/countries-­and-­regions/ (accessed October 22, 2011). Note: The big European powers are Germany, the Netherlands, Italy, France, and the United Kingdom.

trading partner of the Central Asian region (31.1 billion euros in 2012), after China (34.9 billion euros in 2012) and ahead of Russia (21.5 billion euros in 2012).43 Since the beginning of the 1990s, Kazakhstan emerged as Europe’s principal Central Asian partner, with trade between them rising exponentially from 6.1 billion euros in 2003 to 21 billion in 2010 and 27.2 billion in 2012.44 Turkmenistan follows in second place, far behind its Kazakh competitor, while Uzbekistan is in third place. Trade with Kyrgyzstan and Tajikistan remains minuscule, and the location of European companies in these two countries is still very limited and often linked to EU assistance programs. Economic relations between Europe and Central Asia thus have a radically imbalanced nature. While Europe constitutes one of Central Asia’s premier commercial partners, the reverse is far from true. In 2012 Kazakhstan represented 1.4 percent of total European imports and 0.4 percent of its exports, placing it twenty-­seventh among Europe’s trade partners. As Europe’s premier industrial power, the third-­largest exporter in the world in terms of volume, and the fourth-­largest economic power in the world, Germany remains a key partner driving EU relations with Central Asia, and its direct investment in the region totaled more than 250 million euros in 2010.45 The German-­Kazakh partnership is viewed by both Berlin and Astana as a long-­term one, and is based on old, historical links related to the German diaspora in Kazakhstan — ​close to one million Germans lived in Kazakhstan at the end of the Soviet Union, and today a little more than 200,000 remain. During the 1990s, most of this diaspora returned to settle in Germany and in doing so some of its

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members turned into go-­betweens; today, the diaspora plays an important role in fostering cultural partnerships and economic cooperation such as joint ventures and small or medium businesses between both countries.46 Although Berlin is interested in the energy sector, German firms focus mainly on enterprises of medium infrastructure with high added value such as industrial production, automobile mechanic construction, the electronics industry, agricultural processing industries, and the management and training of qualified specialists. This interest is mutual. Kazakhstan’s strategy for industrial and technological development tries to attract German investors in industrial sectors, such as transformation technologies, and six pilot sectors not related to hydrocarbons: construction, tourism, agriculture, transports infrastructure, agribusiness, and the textile industry.47 The Italian economy has many valuable resources, including the reputation of its savoir faire, or adaptability. Italy is one of Kazakhstan’s principal commercial partners, mostly thanks to the oil and gas company ENI’s leadership in the North Caspian Sea Consortium in Kashagan and growing presence in Turkmenistan. Bilateral exchanges have risen considerably over recent years. Cooperation is developing in very diverse sectors, stretching from agricultural and industrial resources to light industry, foodstuffs, and the construction of agricultural equipment.48 Like France, Italy has seen its exchanges with Uzbekistan decline over recent years because of Tashkent’s policies, but Rome remains interested in Uzbek textiles. French firms have shown some reserve given the difficulties of investing in the region. These firms have reduced their presence in Uzbekistan considerably from 1990s levels; however, France’s trade exchanges with Kazakhstan have increased since 2008. Central Asia imports arms, nuclear energy, electronic and mechanical equipment, basic consumer goods, medications and cosmetics, cars, foodstuffs, and construction materials from France, but big French companies like Total, Areva, Thales, and EADS are also increasingly involved in the Central Asian market.49 In the 1990s the United Kingdom was the largest investor in the Kazakh economy after the United States, and in the 2000s the commercial exchanges between the United Kingdom and Central Asia rose considerably.50 British firms have been looking to diversify their

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investments in sectors other than hydrocarbons, such as new technologies, technology and science facilities, and agricultural production. Britain has also supported Astana’s wishes to become a regional financial center for the whole of Central Asia. These regional exchanges are partly structured by the Scottish town of Aberdeen, which has developed partnerships with Atyrau, Mangistau, and western Kazakhstan.51 The Netherlands is also one of Central Asia’s major investors, especially in Kazakhstan. Dutch companies are particularly interested in foreign investments since their economy is heavily based on foreign trade. The country has been trying out new markets in the post-­Soviet space through its central position in air transport and its status as one of the world’s largest exporters of agricultural and market produce. It has many projects under way linked to solar, wind, and hydroelectric power. Between 1993 and 2008, the Netherlands invested more than $7 billion in foreign direct investment (FDI) in Kazakhstan, which made it the nation’s premier foreign investor. These investments were focused on the energy sector, finance, transport, communications, and transformation industries.52 Other European countries like Spain, Belgium, Luxembourg, Sweden, Finland, Greece, and Austria are also involved in Central Asia, but on a more modest scale. They often occupy specific commercial niches, but do not have the same influence as larger countries. Trade exchanges between Central Asia, on the one hand, and Denmark, Portugal, Ireland, Malta, and Cyprus, on the other, are minimal, or indeed nonexistent.

New Actors from Central Europe Interestingly, Central European countries, former allies of the socialist bloc and now EU member states, offer good opportunities for collaboration with Central Asia. While usually less competitive compared with Western Europe, Central Europe’s chemical industries (such as cleaners, fertilizers, and pharmaceuticals), transport equipment, and agribusiness are of interest to Central Asian markets. In this sector, links between former socialist countries draw out the compatibility between post-­ Soviet industries. Foodstuffs — ​for example, Czech beer, Hungarian cooked meats — ​and the wood and furniture sector coming from Central Europe are also aimed at Central Asian middle-­class consumers,

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as their prices are more suitable for their lower standards of living, and enjoy better reputations than those produced in China.53 Poland is one of Central Asia’s leading economic partners in Central Europe. Warsaw opened a chamber of commerce and industry in Almaty, and the Polish diaspora in Kazakhstan appears active in the development of trade and small joint ventures. Regional cooperation agreements were signed between the region of Akmolinsk and Mazovia, focusing especially on the construction sector, chemical industry, and agriculture.54 The Czech Republic has also increased trade with Kazakhstan sharply, and has a well-­established presence in Uzbekistan, with interests in the gas, chemical, glass, textile, and water industries. The two countries have cooperated in the mechanical engineering sector, as some of the trolley buses and trams in Uzbekistan were manufactured in the Czech Republic.55 Like other countries of the former Eastern bloc, the Czech Republic purchased much of its cotton from Tashkent, and in 2006 cotton fiber accounted for two-­thirds of Czech imports from Uzbekistan.56 However, this figure will likely decline as the Czech textile industry weakens and as Uzbekistan seeks to process its own cotton. Central Europe and the Balkans also see Central Asia as a future source of energy imports that could reduce their often total dependence on Russian supplies. Although small compared to their Western counterparts, Central European national oil companies also seek their respective places in the Kazakh market. At the forefront of Central European energy activism, the Romanian company Petrom hopes to establish a cycle of petroleum exploration, extraction, and processing in Kazakhstan. Petrom also plans to promote Romania’s geographical situation as a crossroads for export routes.57 Finally, since Soviet times, the Baltic states have been some of the principal exporters of Central Asian products to Europe, particularly cotton, but also metals. They also specialized in exporting buses, tramways, and carriages, as well as in producing telephones. With the collapse of the Soviet Union, trade relations disappeared, only to take off again at the start of the 2000s. Kazakh exports to the Baltic region mostly consist of combustible minerals, oil, and heavy metals, whereas Baltic imports comprise automobiles, pharmaceutical products, electric machines, and products for livestock farming. But the chief aspect of relations between the Baltic countries and Central Asia concerns transit.

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Kazakhstan’s “Path to Europe” program outlines its intention to become one of the main communications hubs between Asia and Europe, while Baltic countries, for their part, hope to benefit from being a trade corridor en route to the Persian Gulf.58 In 2003, at the initiative of the Estonian, Latvian, Lithuanian, Russian, and Kazakh railway administrations, a Baltika-­Transit project for cargo trains was launched as part of an attempt to reorganize Central Asian transit around the Baltic ports. Since the three Baltic states entered the EU in 2004, exchanges with Central Asia have intensified, in particular in the ports of Riga, Liepaia, and Ventspils. Astana has proposed to create joint ventures in the free trade zone of Estonian ports Muuga and Tallinn.59 In 2005 Kazakhstan opened a cereals terminal in Ventspils, its first in Europe.60 Klaipeda also hopes to become one of the export ports for Uzbek agricultural products, which are of interest to the Lithuanian textile industry. However, these relations between the Baltic and Central Asian states depend almost entirely on their common Russian neighbor and its goodwill in tariff policy.

Conclusion The diversity of European interests in Central Asia shows through in the many polemics that have shaken European institutions. Germany in particular, but also Italy to a lesser extent, maintains a utilitarian vision of Central Asia, based on energy and security interests, whereas the United Kingdom and the Nordic countries place greater emphasis on the promotion of human rights and good governance. The disagreements between the states have been particularly apparent on several occasions: the vote for sanctions to inflict on the Uzbek regime following the Andijan repression in 2005 and their lifting in 2009;61 Kazakhstan’s candidacy for the presidency of the OSCE, validated in 2010 thanks to German lobbying to free Astana from the obligation to engage in political reform;62 ratification of the PCA with Turkmenistan, and so forth. The 2011 – ​2012 economic and debt crisis may have exacerbated the lack of solidarity between member states and the dissociation from their policies. In the near future, they will probably favor going their own way in Central Asia and be less dependent on EU structures. Germany might, for instance, see its policies in the region diverge from

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those of France, Italy, or Great Britain, as was already the case in discussions concerning whether the EU should adopt a value-­oriented or an energy-­and security-­oriented strategy. So far, however, the energy strategy has not had any concrete results; furthermore, drastic changes on the world gas market could reduce the European interest in Central Asian exports.63 There are also contradictory interests among the varying European actors: the major private companies involved in energy projects, uranium extraction, or high-­tech security do not support the EU value-­ oriented narrative; European civil society has virulently criticized the conciliatory policies of the European Commission and its representatives, and so on. In the nearer future, Kazakhstan will continue to be wooed for its economic dynamism and its regional leadership; Uzbekistan for its status as a key country for transit from Afghanistan; and Turkmenistan for its — ​still potential — ​role in western-­oriented gas imports. European presence in the region is especially difficult to assert as Russia and China, the two main external actors in Central Asia, support the local regimes in their refusal of political reforms and good governance improvements, block Europe from setting itself up in the energy market, and raise concern about the EU’s security designs. Moreover, European policy is minimally coordinated with that of the United States, and only NATO and the OSCE appear to embody unified transatlantic interests. More structurally, European involvement in Central Asia is bound to remain limited, and will find it difficult to compete with the Russian and Chinese influence in the region. In the course of the last ten years, both these states have considerably ramped up their presence in the region in terms not only of security, but also of strategic and economic policy, under the auspices of bilateral agreements as well as through regional organizations (the SCO and the CSTO). The European posture toward both actors is still largely undefined: the room for cooperation with China in Central Asia is very limited, while shared strategies with Russia, especially in the security sector, raise concerns among some European actors.64 In years to come, the EU will have to concentrate on its economic growth issue, its internal tensions, and its political project, and is already having to manage the membership prospects of some Balkan countries and the associative agreements discussed with

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Ukraine and Turkey. Aside from state budget cuts and the lack of short-­ term growth opportunities, European governments today face growing skepticism from their citizens, who are not inclined to commit public funds to countries deemed too far removed from their daily lives. The place of Central Asia in the European worldview will therefore be limited. Moreover, the crisis has contributed to reinforcing the skepticism of Central Asian elites toward the European model, reducing Europe’s legitimacy to promote rule of law and good governance, and impacting negatively on its soft power. However, Europe’s influence in Central Asia is not solely dependent on its financial capacities. Even with limited budgets, it can impose itself as an important external actor on the Central Asian scene. To succeed, the EU will have to give itself the means, including better-­defined goals, improved prioritization (values, development, security, energy?), better-­monitored aid, and increasing cooperation between member states, private actors, other external actors, and international donors. A large share of the Central Asian public still considers Europe to be an aspirational model in terms of culture, the well-­being it offers its citizens, and its socially oriented model of market economy. Nonetheless, Europe will be put to the test of its own legitimacy in coming years, during which time generational change will occur among the Central Asian elites. The new generations trained during the post-­Soviet decades are more polarized in their ideological orientations (with pro-­Western, pro-­Russian, pro-­Chinese, pro-­Turkey, pro-­Islamic stances) and will be more demanding in building partnerships with Europe. Notes 1.  M. Laruelle and S. Peyrouse, The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor (London: Hurst, 2012). 2.  M. Emerson, J. Boonstra (rapporteurs), N. Hasanova, M. Laruelle, and S. Peyrouse, Into Eurasia: Monitoring the EU’s Central Asia Strategy; Report of the EUCAM Monitoring (Brussels: Center for European Policy Studies; Madrid: Fundación para las Relaciones Internacionales y el Diálogo Exterior, 2010). 3.  Ibid., 59. 4.  “Finland and Central Asia,” EUCAM Newsletter, no. 10 (December 2011). 5.  See the official website of the European Union: http://eeas.europa.eu (accessed June 2, 2012). 6.  Emerson et al., Into Eurasia, 58.

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7.  “Partnership and Cooperation Agreements (PCAs): Russia, Eastern Europe, the Southern Caucasus and Central Asia,” http://europa.eu/legislation_summaries/ external_relations/relations_with_third_countries/eastern_europe_and_central_asia/ r17002_en.htm (accessed May 31, 2012). 8.  Emerson et al., Into Eurasia, 58. 9.  Ibid. See also “Turkmenistan: Human Rights Prerequisite for Closer EU Ties,” Eurasia Review, April 20, 2011, http://www.eurasiareview.com/20042011-­turkmenistan​ -­human-­rights-­prerequisite-­for-­closer-­eu-­ties/ (accessed May 20, 2012). 10.  “Progress Report II,” TRACECA Co-­ordination Team, December 1, 2002, annex 3, p. 2. 11.  M. Emerson and E. Vinokurov, “Optimisation of Central Asian and Eurasian Trans-­Continental Land Transport Corridors” (EUCAM Working Papers 7, Center for European Policy Studies, Brussels, December 2009). 12.  E. Vinokurov, M. Jadraliyev, and Y. Shcherbanin, “The EurAsEC Transport Corridors: Sector Report” (Eurasian Development Bank, Astana, March 2009), 23. 13.  Emerson et al., Into Eurasia, 77 – ​78. 14.  See the program website: http://ec.europa.eu/europeaid/where/asia/regional​ -­cooperation-­central-­asia/sme-­development/ca_invest_fr.htm. 15.  S. Pirani, “The Russo-­Ukrainian Gas Dispute, 2009,” Russian Analytical Digest, no. 53 (January 20, 2009); O. Shumylo-­Tapiola, “Ukraine and Russia: Another Gas War?” (Carnegie Endowment for International Peace, Washington, D.C., February 21, 2012), http://carnegieendowment.org/2012/02/21/ukraine-­and-­russia-­another-­gas​ -­war/9roh (accessed May 31, 2012). 16.  P. K. Baev and I. Øverland, “The South Stream versus Nabucco Pipeline Race: Geopolitical and Economic (Ir)rationales and Political Stakes in Mega-­Projects,” International Affairs 86, no. 5 (2010): 1075 – ​90; C. Locatelli, “Russian and Caspian Hydrocarbons: Energy Supply Stakes for the European Union,” Europe-­Asia Studies 62, no. 6 (2010): 959 – ​7 1. 17.  Baev and Øverland, “The South Stream versus Nabucco Pipeline Race.” 18.  M. Giuli, “Nabucco Pipeline and the Turkmenistan Conundrum,” Caucasian Review of International Affairs 2, no. 3 (2008): 124 – ​32. 19.  M. Denison, “The EU and Central Asia: Commercializing the Energy Relationship” (EUCAM Working Papers 2, Center for European Policy Studies, Brussels, 2009), 9. 20.  R. M. Cutler, “Turkmen Boost for Nabucco,” Asia Times, June 9, 2011, http:// www.atimes.com/atimes/Central_Asia/MF09Ag01.html (accessed October 4, 2011). 21.  S. Peyrouse, Turkmenistan: Strategies of Power, Dilemmas of Development (Armonk, NY: M. E. Sharpe, 2011); V. Boas, “Energy and Human Rights: Two Irreconcilable Foreign Policy Goals? The Case of the Trans-­Caspian Pipeline in EU-­Turkmen Relations” (IAI Working Papers 1207, Istituto Affari Internazionali, Rome, March 2012). 22.  See the EU official website: http://eeas.europa.eu/kazakhstan/index_en.htm (accessed May 30, 2012). 23.  Emerson et al., Into Eurasia, 103.

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24.  “European Community Regional Strategic Paper for Assistance to Central Asia (2007 – ​2013),” http://eeas.europa.eu/central_asia/rsp/07_13_en.pdf (accessed May 20, 2012); “Central Asia Indicative Programme (2007 – ​2010),” http://eeas.europa.eu/central​ _asia/rsp/nip_07_10_en.pdf (accessed May 20, 2012). 25.  N. Melvin and J. Boonstra, “The EU Strategy for Central Asia @ Year One” (EUCAM Policy Brief 1, Center for European Policy Studies, Brussels, October 2008). 26.  A. Warkotsch, ed., The European Union and Central Asia (Abingdon: Routledge, 2011). 27.  N. Melvin, ed., Engaging Central Asia: The European Union’s New Strategy in the Heart of Eurasia (Brussels: Centre for European Policy Studies, 2008). 28.  K. Hoffmann, “The EU in Central Asia: Successful Good Governance Promotion?,” Third World Quarterly 31, no. 1 (2010): 87 – ​103. 29.  J. Boonstra and J. Hale, “EU Assistance to Central Asia: Back to the Drawing Board?” (EUCAM Working Papers 8, Center for European Policy Studies, Brussels, January 2010). 30.  V. Axyonova, “EU Human Rights and Democratisation Assistance to Central Asia: In Need of Further Reform” (EUCAM Policy Brief 22, Center for European Policy Studies, Brussels, January 2012); V. Axyonova, “The EU-­Central Asia Human Rights Dialogues: Making a Difference?” (EUCAM Policy Brief 16, Center for European Policy Studies, Brussels, April 2011). 31.  Emerson et al., Into Eurasia, 82. 32.  See http://ec.europa.eu/europeaid/where/asia/regional-­cooperation-­central​ -­asia/environment/ca_environment_en.htm (accessed May 27, 2012). 33.  OECD, “Developing Skills in Central Asia through Better Vocational Education and Training Systems,” June 2013. http://www.oecd.org/investment/psd/Vocational​ Education.pdf. 34.  P. Jones, “The EU-­Central Asia Education Initiatives” (EUCAM Working Papers 9, Center for European Policy Studies, Brussels, February 2010). 35.  J. Boonstra, “The EU Strategy for Central Asia Says ‘Security’: Does This Include Security Sector Reform?” (EUCAM Policy Brief 10, Center for European Policy Studies, Brussels, November 2009). 36.  E. Marat, “Kyrgyzstan’s Fragmented Police and Armed Forces,” Journal of Power Institutions in Post-­Soviet Societies, no. 11 (2010), http://pipss.revues.org/3803?​ lang=fr#quotation (accessed May 28, 2012). 37.  Detair has two C-­160 Transall transport plans and about two hundred men there, and is tasked with providing support for the French military units deployed in Afghanistan (missions involving the transport of personnel and freight). S. Peyrouse, “France and Central Asia” (EUCAM Policy Brief 9, Center for European Policy Studies, Brussels, November 2012). 38.  G. Gavrilis, “Beyond Border Management Programme for Central Asia (BOMCA)” (EUCAM Policy Brief 11, Center for European Policy Studies, Brussels, December 2009); Border Management Program in Central Asia, Integrated Border Management Book for Central Asia, 2010.

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39.  “The Joint EU Council and Commission Implementation Report of the EU Strategy for Central Asia,” June 28, 2010, 6. 40.  Ibid., 26. 41.  N. Kiil-­Nielsen, “Draft Report on the State of Implementation of the EU Strategy for Central Asia,” European Parliament, Committee on Foreign Affairs, August 2011, 10, http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-­//EP//NONSGML​ +COMPARL+PE-­469.951+02+DOC+PDF+V0//EN&language=EN. 42.  S. Peyrouse, “Drug-­Trafficking in Central Asia: A Poorly Considered Fight?” (PONARS Policy Memo 218, September 2012). 43.  2012 European Commission’s statistics, http://ec.europa.eu/trade/creating​ -­opportunities/bilateral-­relations/countries-­and-­regions/ (accessed October 22, 2011). 44.  Ibid. 45.  “Germany and Central Asia,” http://www.auswaertigesamt.de/cae/servlet/ contentblob/382808/publicationFile/4275/ZentralasienstrategieENG.pdf (accessed December 8, 2011). 46.  N. Kadatskaia, “Nemtsy v migratsionnom obmene mezhdu Kazakhstanom i Germaniei: Tendentsii i perspektivy” [Germans in the migration flows between Kazakhstan and Germany: Trends and perspectives] (CAMMIC Working Papers 5, Center for Far Eastern Studies, University of Toyama, 2008); A. Diener, Homeland Conceptions and Ethnic Integration among Kazakhstan’s Germans and Koreans (Lewiston: Edwin Mellen Press, 2004). 47.  See “Germany and Kazakhstan,” German Federal Foreign Service, http://www​ .auswaertiges-­amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-­Nodes/Kasachstan_ node.html (accessed October 22, 2011). 48.  “Sotrudnichestvo Respubliki Kazakhstan s Ital’ianskoi Respublikoi” [Cooperation of the Kazakh Republic with Italy], Kazakhstan Ministry of Foreign Affairs, July 8, 2008, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/cooperation/ europe_america/23 (accessed December 8, 2011). 49.  “Sotrudnichestvo Respubliki Kazakhstan s Frantsuzskoi Respublikoi” [Cooperation of the Kazakh Republic with France], Kazakhstan Ministry of Foreign Affairs, September 7, 2009, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/ cooperation/europe_america/09 (accessed December 15, 2011). 50.  “Cooperation of the Republic of Kazakhstan with the United Kingdom of Great Britain and Northern Ireland,” http://www.kazembassy.org.uk/kazakh_british_​ relations​.html (accessed October 22, 2011). 51.  See Aberdeen city website, http://www.aberdeencity.gov.uk/CouncilNews/ci_ cns/pr_atyrau_101008.asp (accessed December 15, 2011); A. Ferris-­Rotman, “Aberdeen Signs New Agreement with Kazakh Oil City,” Reuters, October 13, 2008, http://www​ .reuters.com/article/2008/10/13/kazakhstan-­scotland-­alliance-­idUSLD22195420081013. 52.  “Sotrudnichestvo Respubliki Kazakhstan s Korolevstvom Niderlandov” [Cooperation of the Kazakh Republic with the Netherlands], Kazakhstan Ministry of Foreign Affairs, May 6, 2010, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/ cooperation/europe_america/15 (accessed December 16, 2011).

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53.  More in S. Peyrouse, “The Growth of Commercial Exchanges between Central Europe and Central Asia,” Central Asia – ​Caucasus Analyst, April 22, 2009. 54.  “Sotrudnichestvo Respubliki Kazakhstan s Respublikoi Pol’sha” [Cooperation of the Kazakh Republic with Poland], Kazakhstan Ministry of Foreign Affairs, May 31, 2010, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/cooperation/ europe_america/10 (accessed December 8, 2011). 55.  “Sotrudnichestvo Respubliki Kazakhstan s Cheshskoi Respublikoi” [Cooperation of the Kazakh Republic with the Czech Republic], Kazakhstan Ministry of Foreign Affairs, October 19, 2009, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/ policy/cooperation/europe_america/15 (accessed December 16, 2011). 56.  “Uzbekistan — ​Chekhiia: Ekonomicheskoe sotrudnichestvo” [Economic cooperation between Uzbekistan and the Czech Republic], Delovoipartner.uz, December 20, 2007, http://www.dp.uz/ru/content.scm?contentId=7623&topicId=6524 (accessed December 16, 2011). 57.  “Sotrudnichestvo Respubliki Kazakhstan s Rumyniei” [Cooperation of the Kazakh Republic with Romania], Kazakhstan Ministry of Foreign Affairs, September 14, 2009, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/cooperation/ europe_america/15 (accessed December 16, 2011); M. Stenesku, “Rumyniia i Kazakhstan: Opyt i perspektivy partnerstva” [Experience and perspectives of cooperation between Romania and Kazakhstan], Investkz.com, n.d., http://www.investkz.com/ journals/26/406.html (accessed December 16, 2011). 58.  More details in A. Dunn, “Building Bridges between Baltic and Central Asia States,” European Dialogue, March 20, 2011, http://eurodialogue.org/Building-­Bridges​ -­Between-­Baltic-­and-­Central-­Asia-­states (accessed December 12, 2011). 59.  “Kazakhstansko-­estonskie otnosheniia” [Kazakh-­Estonian relations], Kazakhstan embassy in Estonia, September 11, 2008, http://kazakhstan.embassy.lt/ Default.asp?Lang=R&EditionID=48&TopicID=3&SubTopicID=18 (accessed November 17, 2011). 60.  “Sotrudnichestvo Respubliki Kazakhstan s Latviiskoi Respublikoi” [Cooperation of the Kazakh Republic with Latvia], Kazakhstan Ministry of Foreign Affairs, September 11, 2008, http://portal.mfa.kz/portal/page/portal/mfa/ru/content/policy/ cooperation/europe_america/15 (accessed December 17, 2008). 61.  International Crisis Group, “Uzbekistan: Europe’s Sanctions Matter,” Asia Briefing, no. 54 (November 6, 2006). 62.  V. Shkolnikov, “The 2010 OSCE Kazakhstan Chairmanship: Carrot Devoured, Results Missing” (EUCAM Policy Brief 15, Center for European Policy Studies, Brussels, April 2011). 63.  M. Denison, “Game Over? Shifting Energy Geopolitics in Central Asia” (Central Asia Policy Papers 5, Central Asia Program, George Washington University, Washington, D.C., October 2012). 64.  S. Peyrouse, J. Boonstra, and M. Laruelle, “Security and Development in Central Asia: The EU Compared to China and Russia” (EUCAM Working Papers 11, Center for European Policy Studies, Brussels, May 2012).

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Bibliography Axyonova, V. “The EU-­Central Asia Human Rights Dialogues: Making a Difference?” EUCAM Policy Brief 16, Center for European Policy Studies, Brussels, April 2011. ———. “EU Human Rights and Democratisation Assistance to Central Asia: In Need of Further Reform.” EUCAM Policy Brief 22, Center for European Policy Studies, Brussels, January 2012. Baev, P. K., and I. Øverland. “The South Stream versus Nabucco Pipeline Race: Geo­ political and Economic (Ir)rationales and Political Stakes in Mega-­Projects.” International Affairs 86, no. 5 (2010): 1075 – ​90. Boas, V. “Energy and Human Rights: Two Irreconcilable Foreign Policy Goals? The Case of the Trans-­Caspian Pipeline in EU-­Turkmen Relations.” IAI Working Papers 1207, Istituto Affari Internazionali, Rome, March 2012. Boonstra, J. “The EU Strategy for Central Asia Says ‘Security’: Does This Include Security Sector Reform?” EUCAM Policy Brief 10, Center for European Policy Studies, Brussels, November 2009. Boonstra, J., and J. Hale. “EU Assistance to Central Asia: Back to the Drawing Board?” EUCAM Working Papers 8, Center for European Policy Studies, Brussels, January 2010. Denison, M. “The EU and Central Asia: Commercializing the Energy Relationship.” EUCAM Working Papers 2, Center for European Policy Studies, Brussels, 2009. Emerson, M., and J. Boonstra (rapporteurs), N. Hasanova, M. Laruelle, and S. Peyrouse. Into Eurasia: Monitoring the EU’s Central Asia Strategy; Report of the EUCAM Project. Brussels: Center for European Policy Studies; Madrid: Fundación para las Relaciones Internacionales y el Diálogo Exterior, 2010. Emerson, M., and E. Vinokurov. “Optimisation of Central Asian and Eurasian Trans-­ Continental Land Transport Corridors.” EUCAM Working Papers 7, Center for European Policy Studies, Brussels, December 2009. Gavrilis, G. “Beyond Border Management Programme for Central Asia (BOMCA).” EUCAM Policy Brief 11, Center for European Policy Studies, Brussels, December 2009. Giuli, M. “Nabucco Pipeline and the Turkmenistan Conundrum.” Caucasian Review of International Affairs 2, no. 3 (2008): 124 – ​32. Hoffmann, K. “The EU in Central Asia: Successful Good Governance Promotion?” Third World Quarterly 31, no. 1 (2010): 87 – ​103. “The Joint EU Council and Commission Implementation Report of the EU Strategy for Central Asia.” June 28, 2010. Jones, P. “The EU-­Central Asia Education Initiatives.” EUCAM Working Papers 9, Center for European Policy Studies, Brussels, February 2010. Laruelle, M., and S. Peyrouse. The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor. London: Hurst, 2012. Locatelli, C. “Russian and Caspian Hydrocarbons: Energy Supply Stakes for the European Union.” Europe-­Asia Studies 62, no. 6 (2010): 959 – ​7 1.

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Marat, E. “Kyrgyzstan’s Fragmented Police and Armed Forces.” Journal of Power Institutions in Post-­Soviet Societies, no. 11 (2010). http://pipss.revues.org/3803?lang=​ fr#quotation. Accessed May 28, 2012. Melvin, N., ed. Engaging Central Asia: The European Union’s New Strategy in the Heart of Eurasia (Brussels: Centre for European Policy Studies, 2008). Peyrouse, S. “Drug-­Trafficking in Central Asia: A Poorly Considered Fight?” PONARS Policy Memo 218, September 2012. ———. “France and Central Asia.” EUCAM Policy Brief 9, Center for European Policy Studies, Brussels, November 2012. ———. Turkmenistan: Strategies of Power, Dilemmas of Development. Armonk, NY: M. E. Sharpe, 2011. Vinokurov, E., M. Jadraliyev, and Y. Shcherbanin. “The EurAsEC Transport Corridors: Sector Report.” Eurasian Development Bank, Astana, March 2009. Warkotsch, A., ed. The European Union and Central Asia. Abingdon: Routledge, 2011.

9

Japan and Korea in Central Asia Economic Observations Edward J. Lincoln

Japan and the Republic of Korea1 are two large, affluent, market-­based economies in Asia, sitting geographically on the eastern edge of the region. An important question is the nature of their relationship with Central Asia. How does their involvement compare to that of the major strategic players such as China, the United States, or Russia? As large, advanced economies, they certainly have the potential to be both a market for Central Asia (at least for raw materials) and a source of imports, inward direct investment, foreign aid, and general foreign policy attention. This chapter will argue that, with several partial exceptions, neither Japan nor Korea maintains a strong involvement in the region. Trade ties are minor, investment ties small, and foreign aid low. As explanations for this situation, this chapter focuses on geography and inter­ national politics. Despite being part of Asia broadly defined, the Central Asian nations are landlocked at considerable distance from either Japan or Korea, raising the cost of trade. Politically, both Japan and Korea face the presence of China and North Korea between themselves and Central Asia, complicating transportation links. Furthermore, neither the Japanese nor Korean government appears to view Central Asia as a part of the world with which they have much commonality or influence. The exceptions to this overall situation are twofold: both countries have had an interest in Kazakh (and to some extent Uzbek) uranium, and Korean involvement in Kazakhstan and Uzbekistan may be motivated by the sizable presence of ethnic Koreans in both countries. The uranium-­driven Japanese interest now appears set to fade over the next decade as the role of nuclear energy has become uncertain in the aftermath of the 2011 Fukushima nuclear disaster. Korea, however, may 237

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become more involved as it remains committed to increasing its reliance on nuclear power. Central Asia consists of the five “stans.” However, for purposes of this chapter, Central Asia is defined to include Mongolia as well, another landlocked country on the periphery of China (with very close past ties to the Soviet Union). Japan and Korea view Mongolia, a potential and actual raw material producer, in much the same way as the proper Central Asian nations, with the marginal advantage of being geographically closer.

The Dimensions of Economic Engagement Countries are connected economically in a variety of ways: merchandise and services trade, direct investments (in which the investor has operational control over a company or similar asset), foreign aid, and even people-­to-­people contact. The starting point for looking at the involvement of Japan and Korea in Central Asia, therefore, is to consider these dimensions of engagement. In general, the connections are quite limited.

Trade Both Japan and Korea are major global trading nations. The share of exports to GDP is high (especially for Korea), and a number of major manufacturing firms in both countries are among the leaders in their global industries, particularly in the fields of automobiles and consumer electronics. Both Japan and Korea lack domestic sufficiency in some key raw materials, oil and coal most conspicuously among them. Nonetheless, trade by each of these two advanced economies with the Central Asian countries is extremely small. Table 9.1 shows Japan’s exports to Central Asia and Mongolia in a global context (see the appendix for all tables). Exports to the full set of these countries is only 0.1 percent of Japan’s global exports. Not a single one of the individual countries takes more than 0.06 percent of Japan’s exports. These percentages are so small that it would be fair to say that Central Asia simply does not figure in the global strategy of Japanese

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firms. But note that exports to the region are dominated by Mongolia (with a small population but closer geographically) and Kazakhstan (with a larger population). Table 9.2 provides the same information on Japan’s imports from the region, which are also very small. With some raw material producers, Japan runs a considerable trade deficit, but in the case of Central Asia, Japan’s imports from the region are almost as small as its exports. To be sure, Japan does have a trade deficit with the region, reflecting the importance of raw materials in bilateral trade. In 2012 Japan exported ¥64 billion ($771 million at 2012 average exchange rates) to the region and imported ¥71 billion ($855 million) from the region, yielding a small trade deficit of ¥7 billion ($84 million). Nonetheless, the import amounts and shares of global imports are so tiny that the region hardly figures as a significant source of Japan’s imports. The story for Korea is much the same as for Japan. Table 9.3 shows Korea’s exports to Central Asia in 2012 (in this case using dollar-­ denominated data from the International Monetary Fund). The region as a whole absorbed only 0.6 percent of Korea’s global exports, with no nation in the region representing more than 0.3 percent. Although these percentages are higher than those for Japan’s exports to the region, they are still very small. The regional pattern is somewhat different from that of Japan, with Uzbekistan absorbing more than half of Korea’s exports to the region. Table 9.4 shows Korean imports from Central Asia for 2012. Unlike Japan, Korea maintains a trade surplus with the region. Exports were $3.3 billion, while imports were only $410 million, so that Korea had a trade surplus with the region of $2.9 billion. But these numbers are insignificant. The big picture is that the region as a whole supplied less than 0.1 percent of Korean imports, and Kazakhstan, the largest single source, represented only 0.06 percent of Korean imports. Both Japan and Korea have the majority of their regional imports coming from Kazakhstan. The overall trade picture for both Japan and Korea is quite similar: Central Asia hardly figures in their trade at all, either for exports or imports. With their solid global reach, these two countries have massive amounts of trade with large countries (China) and affluent countries

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(the United States and the Western European countries). To the extent that there is any discernible tie, Kazakhstan is the main source of imports from the region, while on the export side Kazakhstan, Uzbekistan, and Mongolia receive most of Japanese and Korean exports to the region. The very low level of trade with the Central Asian nations as a share of the total trade of Japan and Korea could be due to the small size of most of these economies. That is, Japan or Korea might loom large for the Central Asian nations even though they play a minor role in the trade of Japan and Korea. Tables 9.5 and 9.6 show the share of Japan and Korea in the trade of these nations, along with a notation on what country is the largest trade partner. As these tables show, in general, Japan and Korea barely register as trade partners. The only major exception is Uzbek imports, with 16.3 percent of imports in 2012 sourced from Korea, only a bit behind the share of Russia (24.1 percent). The only other partial exception is Mongolia, which obtains small but noticeable amounts of imports from both Japan (4.9 percent) and Korea (6.1 percent), though these shares pale in comparison to imports from China (37 percent). These data may seem at odds with the perception of experts on Central Asia that Japan and Korea have a visible presence in the region, at least in Kazakhstan and Uzbekistan. There are three possible explanations why Japan and Korea appear to have a greater involvement than that shown by the trade data. The first is that almost 50 percent of Kazakhstan’s exports are to Europe. Some of those exports may be uranium ore purchased by Japanese trading companies, to be sent to France and the United Kingdom for processing before eventual shipment to Japan in the form of fuel pellets for Japanese nuclear reactors. These exports show up as destined to Europe, not Japan. However, even including estimates of uranium production for Japanese firms, only about 8 percent of Kazakh uranium production in 2010 appears to have been destined ultimately to Japan.2 Second, it is possible that Japanese factories in China produce products that are exported to Central Asia. Since the late 1980s, Japanese manufacturers have relocated some production abroad, including to China (such as final assembly of consumer electronic products). Third, there is a market for Japanese used vehicles in developing Asia. In the case of the Central Asian countries, it is likely that used Japanese vehicles would be purchased from Russian

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or Chinese companies specializing in this business. Auto­mobiles and trucks are the most visible branded products that might give the impression of higher levels of trade, but through this indirect routing these vehicles do not necessarily represent trade with Japan (or even profit for Japanese firms).

Investment The investment picture largely repeats the one for international trade. Japanese firms have been actively investing around the world since the mid-­1980s, relocating some manufacturing output, servicing export sales, and developing raw materials. Korean direct investments are more recent, but are now expanding rapidly as well. Central Asia has been a very minor destination for either Japanese or Korean direct investments. Even though the pace of Japanese investment picked up temporarily a bit in the 2006 – ​2010 period, there is no evidence of any real longer-­term increase in the interest of Japanese firms toward the region since the amounts dropped again in 2011 – ​2012. The method of calculating Japanese foreign direct investment (FDI) statistics changed in 2005 (from notification basis to a balance of payments basis) and data collection authority shifted from the Ministry of Finance to the Bank of Japan. Years in which no numbers are published are presumably ones in which no investment took place, although this is not specified. Furthermore, the statistics on the stock of accumulated investment are published for a more limited number of individual countries, so that there are no data on individual Central Asian countries. With these caveats in mind, we can see that table 9.7 provides data on the flow of FDI from Japan to those Central Asian countries for which the government provides numbers over the period 2000 – ​2012. In no year does the flow to the region reach as high as 0.1 percent of Japanese global FDI flow. Even those countries in which Japanese firms have invested show no consistent annual flow. Even for Mongolia, the sum of the investments from 2000 to 2012 comes to only ¥8.8 billion, or roughly $88 million (or roughly $90 million given the fluctuating yen-­ dollar exchange rate over that time period). Given the fact that Mongolia is the closest geographically to Japan and that it is well endowed with raw materials, the low amount of Japanese investment there is a bit of a

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puzzle. Investment over the same time period in Kazakhstan, the next largest recipient, is somewhat lower at ¥7.6 billion. For Korea, the International Monetary Fund’s (IMF) foreign direct investment database reports a country breakdown of the stock of outward investments denominated in U.S. dollars in 2012. Table 9.8, therefore, shows the amount of the stock (rather than annual flow) of Korean investments in Central Asian countries, and the percentage shares that these represent of global Korean investments. If the IMF data for Korea are reasonably comparable to Japanese data, table 9.8 indicates that the Koreans are more active investors in the region than Japanese firms. Nonetheless, from a Korean perspective, the region is a very minor destination for the rapidly expanding investments abroad by Korean firms, with the partial exception of the $1.8 billion invested in Kazakhstan (80 percent of Korean investments in the region as a whole). In 2012 the stock of investments in all of Central Asia was only 1.6 percent of total Korean investments abroad (implying that investments in Kazakhstan represented 1.3 percent of global Korean investments). As with trade, it is possible that since the Central Asian economies are small, the investment flowing in from Japan and Korea could be relatively important in the context of total inflows. Foreign direct investment data are somewhat spotty. The IMF’s statistics for Tajikistan, Turkmenistan, and Uzbekistan rely on the home country statistics rather than the host country. Note also that there can also be large differences between what the host and home countries report due to differing data collection techniques (so that Korea reports $1.8 billion in investments in Kazakhstan, while Kazakhstan reports only $1.1 billion from Korea). Table 9.9 shows the results from the IMF database. In general, these data indicate that Japanese and Korean investments are smaller than those of China, Russia, the United States, and the EU. In Kazakhstan, for example, Japanese investments total $3.8 billion and Korean investments $1 billion, but these are a very small share of the total $120 billion, with the United States and the EU being the dominant sources. Kazakh data (which differ somewhat from those of the IMF) do not include Japan or Korea among the top ten investors in terms of total stock of investment.3 The very incomplete data for Tajikistan, Turkmenistan, and Uzbekistan indicate that the Korean investments are considerably smaller than those from Russia.

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Expatriates One final way to look at economic engagement is to consider how many Japanese and Koreans are resident in the Central Asian nations. Even international merchandise trade often involves a need to have a local distribution or service operation, including the presence of some expatriates from the exporting country. Trade in services is more closely connected to direct investments (since many services must be consumed at the spot where they are created). And when firms locate factories abroad, these, too, involve the dispatch of some expatriate managers from the home country. Table 9.10 shows the presence of Japanese and Korean nationals in the Central Asian nations, as reported by the foreign ministries of Japan and Korea. For Japan, the numbers are very small, just a few dozen to several hundred residents in each, with the regional total representing only 0.1 percent of the approximately 732,000 Japanese reported to be expatriates (i.e., Japanese residing abroad, but leaving out those who have emigrated abroad permanently). For Japan globally, the numbers include some people who are abroad as students or for other purposes other than business. But these numbers are at least a crude way of re­ inforcing the conclusion of a thin economic relationship; there are just not enough Japanese on the ground in Central Asia to carry out substantial economic transactions. The picture for the Koreans is very different, with large numbers of Koreans listed as living in Uzbekistan (200,000) and Kazakhstan (100,000). Most of these people are not Korean businessmen, aid workers, or students. In 1937 – ​1938, the Soviet leader Joseph Stalin ordered the relocation of ethnic Koreans living in the Soviet Union from regions close to the borders of Korea and Manchuria.4 The forced move to Uzbekistan and Kazakhstan was motivated by concerns over the loyalty of these people as tensions rose between the Soviet Union and Japan (since at that time Korea and Manchuria were part of the Japanese empire). He may have been wrong about the loyalty of the ethnic Koreans (who had no love of the repressive policies of Japan in Korea), but he was right to worry about Japan’s military intentions. In 1939, shortly after the deportations, Japan invaded Mongolia and fought briefly with Soviet troops (followed by a nonaggression treaty that lasted until the

244 | Edward J. Lincoln

Soviet Union attacked Japanese forces in the closing days of World War II). The consequence of the forced move is the continued presence of ethnic Koreans in Kazakhstan and Uzbekistan (and a few in Kyrgyzstan as well), most of whom are now people born in these two countries. Those countries that were not part of the relocation effort have only small numbers of Koreans present — ​although generally higher than the number of Japanese (with, for example, 3,000 Koreans in Mongolia compared to only 344 Japanese).

Foreign Aid The Central Asian nations are all potential recipients of foreign aid. Using the OECD’s annual report on ODA flows, table 9.11 shows Japan and Korea in the context of total ODA flows to the Central Asian nations. Japan, larger and more affluent, is a much bigger provider of ODA in general, and this is true in Central Asia as well. Since Japan’s ODA is mostly in the form of subsidized loans, new flows of aid are smaller than repayment of existing loans for Kazakhstan, Turkmenistan, and Uzbekistan. For the others, Japan is a significant donor (17 to 31 percent of the net flows received in 2011), but the amounts ($30 million to $76 million) are small. Receipts from Korea ($1 million to $30 million) are even smaller.

Motivation for Engagement The preceding discussion indicates that among the Central Asian countries, both Japan and Korea are at least somewhat more engaged with Kazakhstan, Mongolia, and Uzbekistan than with the other three countries in the region. That involvement reflects two factors: resource diplomacy and (for Korea) ethnic nostalgia.

Resource Diplomacy The Japanese government became adept at resource diplomacy in the 1970s at the time of a global spike in other commodity prices. In addition to driving hard bargains to obtain supply contracts or mining rights (or encouraging private sector Japanese firms to do so), this

Japan and Korea in Central Asia | 245

approach involved a broader effort to build friendly relations and provide financial or other benefits that might cause host governments to treat Japanese firms more favorably than those of other countries (giving Japanese buyers either lower prices or greater assurance of stable supply in times of turmoil in raw material markets). The style of resource diplomacy practiced by Japan is quite different from that of the major powers. Japan cannot, for example, provide military equipment or munitions (due to a ban on such exports adopted decades ago by the government — ​in an attempt to be consistent with the constitutional ban on use of military force). Without such exports, Japan is not in a position to meddle in internal or regional power struggles. Instead, the effort is focused on friendly gestures toward whatever government is in power through foreign aid, subsidized trade financing, training programs for bureaucrats, plant construction projects on favorable terms, and inward foreign direct investment. Some of these elements involve choices by private sector Japanese firms, but the government can provide financing or other benefits to encourage them to participate. One of the underlying goals of such efforts is to make Japan appear to be a desirable, humble partner relative to the great powers and their various manipulative strategic games. The origins of this approach came in the wake of the oil crises of the 1970s. The Japanese government quickly agreed to the Arab embargo on trade with Israel in the wake of the 1973 war, in order to be removed from the list of countries on the Arab oil export ban list. The government soon increased foreign aid for Middle East oil-­producing countries to further curry favor. At the height of this effort, in 1977, the Middle East received 24 percent of Japan’s bilateral foreign aid (and although the share fell thereafter, it remained in the 8 – ​10 percent range through the mid-­1980s). Japanese firms were also encouraged (with subsidized loans from Japanese government-­owned financial institutions such as the Japan Export-­Import Bank or the Overseas Economic Cooperation Fund) to put in highly competitive bids on plant construction and other infrastructure design and construction projects.5 Through the 1980s, Japanese engineering/construction firms were very active in designing and building oil storage tanks, oil refineries, petrochemical plants, and other facilities in the Middle East, mostly for the state-­run firms in those countries.

246 | Edward J. Lincoln

A scaled-­down version of that approach appears to characterize Japan’s approach to Central Asia, especially Kazakhstan, based mainly on uranium (as its price rose in the mid-­2000s). This interest was further motivated by a new Japanese government energy plan in 2006 that called for increasing dependence on nuclear energy from the then-­ current 30 percent share of the electric power supply to 40 percent by 2030 (later revised up to 50 percent — ​until the shock of the 2011 Fukushima nuclear disaster in Japan, discussed later in this chapter). Rising raw material interest led to a series of sporadic presidential-­level visits, begun in the summer of 2006 by Junichiro Koizumi, the first Japanese prime minister to ever visit the region.6 Lower-­level visits have occasionally led to private sector contracts for Japanese firms, and the Japanese government has even begun a broader Central Asia plus Japan dialogue, beginning in 2004. All of these comments about Japan apply to Korea, though somewhat more recently and on a smaller scale (since Korea is a smaller economy than Japan). In many aspects of economic policy Korea has followed closely the example of Japan, and resource diplomacy appears to be no exception. Furthermore, as in Japan prior to 2011, in Korea, nuclear energy provides approximately 31 percent of electric power. In late 2011 the government announced a new long-­term energy plan that envisions increasing that share to 59 percent by 2030, involving the construction of fifteen new reactors.7 Note that this decision to increase reliance on nuclear energy came after the nuclear disaster in Japan. As this new plan was being developed, the Korean government and private sector engaged in their own flurry of resource diplomacy in Kazakhstan and Uzbekistan. Korea and the Central Asian countries have periodically exchanged presidential visits and have carried out some government-­to-­government negotiations, leading to some Korean investment in raw material development. Korea has also pursued expanded cultural exchange agreements, part of the effort to build goodwill on the part of potential suppliers of energy and other raw materials. In Uzbekistan, a very visible “sweetener” for raw material deals was a deal turning over operation of Navoi Airport, a major airport serving a provincial capital, to Korean Air Cargo (a subsidiary of Korean Airlines), done with the goal of turning Navoi into a major cargo hub for Korea.8

Japan and Korea in Central Asia | 247

These efforts at resource diplomacy, however, must be kept in perspective. The very small amounts of trade, investment, dispatch of ex­ patriates, and foreign aid all indicate that neither Japan nor Korea has put a high priority on the region. Both countries certainly have an interest in raw materials from the region, but that interest, unlike the frantic effort to secure oil supplies in the 1970s, is very modest.

Ethnic Nostalgia Resource diplomacy may be sufficient to explain the burst of Korean activity in Kazakhstan and Uzbekistan, but the presence of a sizable number of ethnic Koreans mentioned earlier may be a factor as well. This factor may explain why Daewoo Motors chose to form a joint venture with Uzbek state-­owned UzAvtosanoat in 1992.9 Daewoo was not the strongest of the Korean automobile manufacturers (eventually going bankrupt in the wake of the Asian financial crisis of 1997 and subsequently purchased by General Motors in 2002 — ​so that this factory no longer counts as a Korean investment in Uzbekistan). Nor were Korean auto firms particularly competitive in international markets at that time, and they exported relatively little of their output. Of all the countries in the world, why would Daewoo pick Uzbekistan to build a factory? This deal occurred well before the interest of both Korea and Japan in uranium and other raw material development in Central Asia, so it cannot be viewed as a sweetener for raw material development contracts. The presence of a sizable Korean ethnic minority in Uzbekistan is certainly a possibility for this otherwise inexplicable business decision.

Limiting Factors The rationale of resource diplomacy, periodic summit meetings, and government-­led deals on resource development discussed in the previous section give the impression of a burgeoning and strong relationship between Japan and Korea on the one side and the Central Asian countries (plus Mongolia) on the other side. This picture, however, is at considerable odds with the data presented on thin trade and investment ties. Two explanations are possible. First, the trade and investment data may be missing aspects of the relationship. Construction contracts

248 | Edward J. Lincoln

or operating contracts that do not involve ownership, for example, do not appear in foreign direct investment data. The routing of uranium through Europe and the United States for processing means that this trade does not show up as exports to Korea and Japan. Second, despite the number of visits, agreements, and deals signed, the relationships simply remain much smaller in scale than the economic involvement of the big players in the region (mainly Russia and China). One of the basic lessons of economics is that individual anecdotes or examples are often misleading when compared to broader statistical evidence. To the extent that this second explanation is the correct one, there are two principal explanations for the thin economic relations: geography and a variety of political or strategic obstacles.

Geography One of the fundamental features of economic activity for thousands of years has been that transportation by water is much cheaper than by land. One of the major impediments to a stronger economic relationship between Central Asia and either Japan or Korea, therefore, lies in this fact. Central Asia is not close to either Japan or Seoul — ​Ulaanbaatar is almost two thousand miles from Tokyo, and Almaty almost three thousand miles, mostly overland. Japan and Korea have ocean access and excellent harbors, giving them ready, inexpensive access to distant markets in the Americas and Europe. Manufacturing firms are located in easy reach of ocean harbors, location decisions deliberately made to lower access costs to global markets (and easy to do since both countries are geographically small). Central Asia, on the other hand, is landlocked, without even river connections to any ocean. The Caspian Sea provides a water connection, but to the west, not the east, and as a landlocked body of water, the Caspian does not provide water access to the world as a whole. Those countries, therefore, are quite naturally tied economically to their closest geographical neighbors, especially Russia and China. If there were excellent land transportation facilities — ​highways, railroads, or pipelines — ​connecting the coast to the interior of Asia, then the distances might not make such a difference, but this is not the case. Mongolia is a partial exception, connected by rail lines to Beijing and

Japan and Korea in Central Asia | 249

the coast, but the other Central Asian nations are not well connected to the Pacific coast. Indeed, it is likely that Japanese or Korean firms exporting to these countries route their products from the west rather than from the east.

North Korea The location of North Korea mainly affects the relationship of South Korea with Central Asia, blocking any direct land transportation from Korea to the rest of the Asian continent. Given the inability to transit North Korea, the implication is that all trade must move by sea to China. Although sea transportation is inexpensive, this routing adds two cargo handling operations along the way (onto ships in Korea, from ship to rail or truck in China), driving up costs. In addition, the more circuitous and complicated route adds time to shipments. Until such time as the impasse on the Korean peninsula is resolved, this obstacle will continue to limit trade.

China Relations with China represent a less clear-­cut problem, and relate primarily to imports of raw materials from Central Asia through China to Japan or Korea. All shipments from Central Asia to either Japan or Korea must transit China. There is an alternative routing through Russia, but Vladivostok is not a year-­round port. Other than the cost of the long land route through China, there is concern about reliability or vulnerability. Shortly after a Chinese fishing boat rammed a Japanese Coast Guard vessel off the coast of Japan in the fall of 2010, with the captain of the boat detained in Japanese jail for several weeks, the Chinese government announced an embargo on exports of rare earths.10 The excuse was that exports had already reached the annual quota (which had been lowered 40 percent from its 2009 level). However, there was strong suspicion in Japan that the move was direct retaliation for the incarceration of the fishing boat captain. This incident sent shock waves through government and industry, since almost 90 percent of Japan’s rare earth imports are from China.

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In 2011 – ​2013 rising tensions over the Senkaku/Daioyu Islands (occupied by Japan but claimed by China and Taiwan as well) led to riots in China directed against the Japanese, some temporary boycotts of Japanese goods, and a decision by some Japanese firms to shut their factories in China for a period of time. The Chinese government further exacerbated bilateral relations (with both Japan and Korea) by unilaterally declaring a vastly extended Air Defense Identification Zone (ADIZ) in the East China Sea area that extended over the disputed islands. Prime Minister Shinzo Abe, coming into office at the end of 2012, complicated the situation further with a visit to pay homage at the controversial Yasukuni Shrine in Tokyo in December 2013. A well-­known symbol of the political right in Japan, this shrine is dedicated to the spirits of those who died in war, including the eleven Class A war criminals executed by the Allies after World War II. The Korean government has not been provocative toward China. However, Korea is an ally of the United States, and the Korean government is aware that the Chinese are not above threats in an effort to push Korea away from its relationship with the United States. Actions such as the cut in rare earth exports from China affect Korea, as did the uni­ lateral expansion of China’s ADIZ. These kinds of incidents suggest that it is not entirely inconceivable that the Chinese government might threaten to stop transshipments of rare earths or some other critical raw material from Central Asia to Japan and Korea in an effort to pry them away from support of the American position. As unlikely as such a scenario might be, these are the sorts of eventualities that affect the behavior of both the Japanese government and Korean government, as well as the firms of both countries.

Central Asian Instability A third issue that may affect both Japan and Korea is the perception of regional political instability, repression, and corruption. Japanese firms (relative to American or European firms) have shied away from trade and investment with countries they believe to be dangerous or unstable. A crude measure of this risk aversion is evident in the fact that 62 percent of Japan’s stock of direct investments abroad in 2010 was in

Japan and Korea in Central Asia | 251

other OECD-­member countries.11 The kind of Wild West atmosphere in Kazakhstan that American oil firms have become used to in their international operations over the past century, therefore, is a frightening prospect for Japanese firms (helping to explain why Japanese firms are such a low share of total foreign direct investments in that country). Korean firms may be somewhat less risk-­averse. Korean society in general appears to be less risk-­averse than Japanese society. Furthermore, management of Korean firms is more top-­down than the case of Japanese firms. For the Japanese, the need to build consensus among managers can lead to slow and timid decisions. Thus, while foreign direct investment by both Japan and Korea in the region is small, this behavioral difference might explain why Korean firms have somewhat more of their global investments in the region (or at least in Kazakhstan) than do their Japanese counterparts.

Overall View of the Region Finally consider the way both the Japanese and Korean governments conceive of their diplomatic relationship to Central Asia. Since the late 1980s, Asian regionalism has been a popular topic in both countries. Both governments have been active participants in APEC, ASEAN+3, and the East Asian Summit. None of these groups includes any participants from Central Asia. Indeed, the entire conception of regionalism in both governments has been along ASEAN+3 lines. That is, both governments view the concept of “Asia” differently than does either the Chinese government or the Central Asian governments. The lack of focus on Central Asia is startlingly clear to any observer looking at the organization of the foreign ministries in both governments. In both cases, Mongolia is the only country in the region that is included in the Asia bureau of the foreign ministry. The others are relegated to the Europe bureau.12 Japan does the same thing in the regional grouping of statistical data on its trade and direct investment. These organizational issues are a legacy of the Soviet era. Since the Soviet Union was treated as a European entity in the organization of the foreign ministries, the countries emerging from its breakup are also included as part of Europe in the institutional framework of the foreign ministries. The failure to treat the Central Asian nations other

252 | Edward J. Lincoln

than Mongolia organizationally as part of Asia affects real relationships in important ways. Any regional initiatives originating within the Asia bureaus of the foreign ministries of either country, for example, will necessarily leave out these Central Asian nations.

The Future Over the next decade, the engagement of Japan and Korea with the region may diverge, as uranium becomes less important for Japan and more important for Korea. However, that possibility depends on what happens to the role of Central Asia in providing other raw materials that Japanese firms need.

Japan The March 11, 2011, earthquake, tsunami, and nuclear disaster have brought a major reconsideration of nuclear energy in Japan. Over the course of the next year, all fifty-­four nuclear reactors in Japan were shut down as they reached the date of the mandatory annual inspections. As of the end of 2014, all of them remained closed, despite the pro-­nuclear power attitude of the Abe government. Whether Japan will totally abandon nuclear power remains unclear, but regardless of political shifts in the next several years, it is unlikely that any political party will endorse a return to the level of dependence on nuclear energy that characterized Japan prior to the disaster. This will greatly reduce Japan’s annual demand for imports of uranium or nuclear fuel pellets. If Japan’s demand for uranium declines, Japanese corporate and government interest in Kazakhstan and Uzbekistan will decline as well. In the fall of 2013, a Japanese government-­owned firm (Japan Oil, Gas and Metals National Corporation, or JOGMEC) signed a contract to explore for uranium in Uzbekistan, but this was hardly a solid indicator of a strengthening role in the region. What about other raw materials? If Japan shifts from nuclear energy to oil and gas to generate electricity (as it has done since March 2011, bringing online previously idled non-­nuclear generating plants), it is possible that Central Asia will figure in the quest to increase those imports. Newly discovered natural gas fields in Turkmenistan, for

Japan and Korea in Central Asia | 253

example, might supply power plants in Japan, although the Japanese government has not progressed beyond showing “interest” in pursuing natural gas deals. However, in this case geography is likely to matter more than it does for high-­value uranium. Pipelines through Iran might lower the cost to Japanese importers, but the Japanese government and private sector firms will continued to be deterred from any major projects in Iran until there is some resolution of the Iranian nuclear issue. Instability in Afghanistan and Pakistan is also likely to deter Japanese participation in projects to improve pipelines, roads, or rail links through that route that might ease the cost issues for oil, gas, and other raw materials. The one possible offset to uranium that might keep Japan engaged in Central Asia is rare earth metals, following the 2010 cut in China’s rare earth exports. The obvious response was to seek alternative sources of supply, with Mongolia, Kazakhstan, and Uzbekistan as possible sources. The rare earth panic led to new official trips and joint announcements of cooperation on rare earths. In 2010, even prior to the China incident, Japanese firms (both private sector and state-­owned) had signed new deals in Kazakhstan.13 In the fall of 2010, Japan signed an agreement with Mongolia that included language about development of rare earths on the occasion of the visit to Japan by Mongolian president Sukhbaatar Batbold.14 In early 2011 Japan and Uzbekistan signed a similar agreement on the occasion of President Islam Karimov’s visit to Japan.15 But the flurry of visits and agreements slowed down thereafter. Very few meetings, official agreements, or private sector deals occurred in 2012 or 2013. Mongolia and Japan exchanged prime minister – ​president visits, but these were short and produced no concrete outcomes.16 The uncertainty about the impact of this new interest on the part of Japanese firms and the government in developing alternatives to China lies in two factors: the availability of supply from other sources, and the future behavior of China. Central Asia is not the only place where the Japanese are seeking to develop rare earth supplies, so the factor cost and reliability of supply due to political uncertainty come into play as possible limiting factors for Central Asia. Furthermore, although reduced quotas on rare earth exports from China continue, they are not zero, and Japanese firms will continue to obtain at least part of their needs from that source.

254 | Edward J. Lincoln

While rare earth mining and processing could provide a substitute for uranium, therefore, it is not at all certain that this will lead to a stronger relationship between Japan and Central Asia. The most likely outcome is that Japan’s engagement with the region will remain low-­key, and perhaps lower-­key than in the past half decade.

Korea As Japan’s involvement with the region stagnates, it is equally possible that Korea will emerge as a stronger player in the region. If the Korean government sticks with the decision to increase reliance on nuclear power, and with Kazakhstan already the world’s largest supplier of uranium, Korea is likely to continue a policy of resource diplomacy toward Kazakhstan, and secondarily toward Uzbekistan. In addition, consider the earlier point that Korean firms appear to be less risk-­averse than Japanese firms. Add to the mixture what appears to be a continuing sense of connection based on the presence of ethnic Koreans in Kazakhstan and Uzbekistan. Finally, Korean firms may be able to outbid their Japanese competitors in the area of complex engineering/design/construction projects (such as electric power plants or petrochemical plants). Japanese firms were competitive players in this market in the 1980s, but appear to have lost much of their competitive edge due to higher wages and a strong currency. This collection of factors suggests that the Korean government will continue or even increase resource diplomacy efforts and that private sector Korean firms may increase their engagement with at least these two countries. A flurry of investment deals in Kazakhstan and Uzbekistan signed in 2011 – ​2012, for example, ought to bring a substantial increase in the total stock of Korean direct investment in both countries (keeping in mind that other investors are increasing their presence as well, so that Korea’s investments relative to those of European, American, or Russian investors may not rise much). Engagement with Mongolia may also increase, given its closer geographic proximity. However, even for Korea it is important to keep in mind that Central Asia plus Mongolia must compete for Korean attention with the rest of the world. In the area of resource diplomacy, for example, consider the following language in the 2011 diplomatic white paper concerning policy toward countries with energy resources:

Japan and Korea in Central Asia | 255

through summit diplomacy, MOFAT [Ministry of Foreign Affairs and Trade] laid the foundation to deepen friendly cooperative relations with resource-­abundant countries in various regions. These countries include Canada (January), Colombia (June), Mexico (July), Bolivia (August), Ecuador (September), Chile (November), Brazil (November), Peru (November), Jordan (January), Uzbekistan (February), Kazakhstan (April, p.), UAE (May), Russia (October), Australia (October), and Malaysia (December). All the summit-­level talks held in the countries mentioned above prove Korea’s commitment to active energy cooperative diplomacy.17

As this long list makes clear, Korea is pursuing an explicit resource diplomacy at a global level with many governments of countries with energy resources. Exactly where Mongolia, Kazakhstan, or Uzbekistan will fit in the overall approach is unclear, but the geographical and political issues addressed in this chapter are likely to place these countries at some disadvantage relative to many others.

Conclusion Japan remains the third-­largest economy in the world, is one of the most affluent, and has limited domestic mineral and energy resources. Korea has a smaller population and GDP, but has become another major advanced regional economy, with a level of affluence approaching that of Japan. Since they are two of the leading economies in Asia, it might seem logical for them to play a leading role in diplomatic and economic relations with Central Asia. This chapter has argued, however, that this is not the case. Economic ties between Japan or Korea and Central Asia are quite thin, despite the series of high-­level meetings that both governments have had over the past decade with leaders of these countries. Geography has been part of the story, with the long overland distances involved acting as an impediment. Politics also matters, including the inability to transit North Korea, unease over the vulnerability of transportation routes transiting China, and unease about political in­stability within some of the Central Asian nations. None of the limiting factors is likely to change in the near future. Even continental drift is not going to bring Japan and Korea into closer

256 | Edward J. Lincoln

geographical contact with Central Asia. The North Korea problem might be resolved someday, but not in the near future. Unease over China is unlikely to diminish; rapid economic growth and the self-­ perception of being a rising power are likely to yield a continued aggressive Chinese foreign policy that worries its neighbors. And the road to political stability without repression may be a long and uneven one for some of the Central Asian nations. Both Japan and Korea have exhibited interest in uranium, rare earths, and other raw materials. As described in this chapter, a number of deals for uranium, rare earth, and other raw material development are under way. So, too, are other outcomes of resource development, ranging from construction of nuclear power plants to the contract to operate the Navoi Airport. The meetings, deals, and actual resource development do not, however, add up to a significant role for either country. While economic engagement will continue, and while both countries may be regarded favorably in the region as a result of their resource diplomacy, both Japan and Korea will remain relatively minor players in the region relative to the major powers. At the margin, however, the Korean government and Korean firms are likely to be more active and visible in the region than the Japanese over the next decade.

Appendix table 9.1. Japan’s Exports to Central Asia, 2012 Amount (¥ million)

Share of total exports (%)

63,747,572

100.000

Central Asia

94,791

0.149

Kazakhstan

43,422

0.068

World

Kyrgyzstan Mongolia Tajikistan

5,757

0.009

27,525

0.043

596

0.001

Turkmenistan

9,699

0.015

Uzbekistan

7,791

0.012

Source: Ministry of Finance, “Trade Statistics of Japan,” http://www.customs.go.jp/toukei/suii/html/time_e.htm (January 9, 2014).

table 9.2. Japan’s Imports from Central Asia, 2012 World

Amount (¥ million)

Share of total imports (%)

70,688,632

100.000

Central Asia

57,774

0.082

Kazakhstan

46,467

0.066

Kyrgyzstan

83

0.000

Mongolia

2,060

0.003

Tajikistan

596

0.001

1

0.000

8,567

0.012

Turkmenistan Uzbekistan

Source: Ministry of Finance, “Trade Statistics of Japan,” http://www.customs.go.jp/toukei/suii/html/time_e.htm (January 9, 2014).

table 9.3. Korea’s Exports to Central Asia, 2012 Amount (millions of U.S. dollars) Central Asia

Share of global exports (%)

3,317

0.605

Kazakhstan

885

0.162

Mongolia

433

0.079

38

0.007

194

0.035

Tajikistan Turkmenistan Uzbekistan World

1,767

0.322

547,858

100.000

Source: International Monetary Fund, Direction of Trade Statistics, online database (January 9, 2014).

table 9.4. Korea’s Imports from Central Asia, 2012 Amount (millions of U.S. dollars)

Share of global exports (%)

Central Asia

410

0.079

Kazakhstan

308

0.059

Mongolia

54

0.010

Tajikistan

5

0.001

Turkmenistan

1

0.000

Uzbekistan World

42

0.008

519,584

100.000

Source: International Monetary Fund, Direction of Trade Statistics, online database (January 9, 2014).

257

table 9.5. Central Asian Exports to Japan and Korea, 2012 (Percent Share of Total Exports) Japan

Korea

Largest partner

Share

Kazakhstan

1.3

Kyrgyzstan

0.1

0.4

EU

54.4

0.0

Kazakhstan

26.1

Mongolia

0.6

Tajikistan

0.9

1.2

China

89.0

0.4

Turkey

29.8

Turkmenistan

0.0

0.0

China

69.5

Uzbekistan

1.8

0.7

Russia

24.1

Source: International Monetary Fund, Direction of Trade Statistics, online database (January 10, 2014).

table 9.6. Central Asian Imports from Japan and Korea, 2012 (Percent Share of Total Exports) Japan

Korea

Largest partner

Share

Kazakhstan

3.4

3.6

China

28.0

Kyrgyzstan

0.8

1.8

China

54.9

Mongolia

4.9

6.1

China

37.3

Tajikistan

0.2

0.9

China

41.0

Turkmenistan

1.4

2.2

China

19.2

Uzbekistan

0.9

16.3

Russia

21.4

Source: International Monetary Fund, Direction of Trade Statistics, online database (January 10, 2014).

table 9.7. Japan’s Foreign Direct Investment Flow to Central Asia (100 million yen)

Mongolia Kazakhstan Tajikistan Uzbekistan

Central Asia share (%)

Central Asia

World

0

54,193

0

2000

0

0

0

0

2001

0

0

0

0

0

40,413

0

2002

9

0 

0 

2

11

44,930

0.02

2003

0

0

0

0

0

40,795

0

2004

0

0

0

0

0

38,210

0

2005

2

4

0

0

6

50,459

0.01

2006

23

24

0

0

47

58,459

0.08

2007

22

21

0

11

54

86,607

0.06

2008

13

0

0

14

27

132,320

0.02

2009

3

8

0

0

11

69,896

0.02

258

table 9.7 (continued )

Mongolia Kazakhstan Tajikistan Uzbekistan

Central Asia

World

Central Asia share (%)

2010

7

15

1

0

23

49,388

0.05

2011

5

0

0

0

5

91,262

0.01

2012

4

4

0

0

8

97,782

0.01

Sources: Bank of Japan, “Outward/Inward Direct Investment by Region and Industry,” http://www.boj.or.jp/en/ statistics/br/bop/index.htm/; and Ministry of Finance, “Past Statistics: Foreign Direct Investment,” http://www.mof​ .go.jp/english/international_policy/reference/itn_transactions_in_securities/fdi/index.htm (January 10, 2014).

table 9.8. Stock of Korean Foreign Direct Investment in Central Asia, 2012 (Millions of U.S. Dollars, Percent) Amount

Share of total

Central Asia

2,290

1.60

Kazakhstan

1,823

1.27

Kyrgyzstan

30

0.02

Mongolia

190

0.13

Tajikistan

31

0.02

Turkmenistan Uzbekistan World

0

0.00

216

0.15

143,157

100.00

Source: International Monetary Fund, Coordinated Direct Investment Survey, online database (January 9, 2014).

table 9.9. Stock of FDI in Central Asian Countries 2012 (Millions of U.S. Dollars) Mongolia Kazakhstan Kyrgyzstan Tajikistan Japan

115

3,762

Korea

80

1,145

Russia

170

1,701

China

1,201

5,361

259

12,869

U.S. EU Total ($ billion)

1

Turkmenistan Uzbekistan

1

0

0

71

31

0

216

132

679

0

277

335

n.a.

n.a.

n.a.

68

0

0

71

8,854

69,841

394

21

0

1,342

13,458

120,074

2,357

n.a.

n.a.

n.a.

Source: International Monetary Fund, Coordinated Direct Investment Survey, online database (January 11, 2014). Note: Numbers for Tajikistan, Turkmenistan, and Uzbekistan are derived from the reports of the home country, not the host country.

259

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table 9.10. Nationals Reported as Resident in Central Asian Nations Japan (2009)

Korea (2012)a

Central Asia

 774

 323,368

Kazakhstan

118

100,000

Kyrgyzstan

110

20,930

Mongolia

344

3,000

Tajikistan

39

1,708

Turkmenistan

12

1,000

Uzbekistan World

121

200,000

1,131,807

> 4,000,000

Source: Ministry of Foreign Affairs, Japan, “Asia Pacific” and “Europe,” http://www.mofa.go.jp/ ; and Ministry of Foreign Affairs and Trade, Republic of Korea, “Countries and Regions,” http://www.mofat.go.kr/ENG/main/ index.jsp (January 11, 2014). a Korean data include both resident Korean nationals and ethnic Koreans.

table 9.11. Net ODA Flows to Central Asian Nations, 2011

Recipient

Japan Amount (millions of Share dollars) (%)

Korea Amount (millions of Share dollars) (%)

Total ODA Amount (millions of dollars)

Kazakhstan

–­22

–­68.8

2

6.3

32

Kyrgyzstan

30

17.0

1

0.6

176

Mongolia

76

30.8

30

12.1

247

Tajikistan

35

22.9

1

0.7

153

Turkmenistan

–­2

–­16.7

1

8.3

12

Uzbekistan

–­4

–­7.8

21

41.2

51

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients, online database (January 11, 2014).

Notes 1.  Hereafter, the Republic of Korea will be referred to simply as Korea in this chapter. 2.  In 2010 uranium output in Kazakhstan was 17,803 tons. At that time several joint uranium mining/processing projects with Japanese joint venture partners were coming on line. The anticipated output to be supplied to the Japanese partners comes out to roughly 1,500 tons per year (and actual shipments in 2010 were probably less), or 8.4 percent of total Kazakh output that year. See “Uranium and Nuclear Power in Kazakhstan,” World Nuclear Association, http://www.world-­nuclear.org/info/inf89​ .html; and Hisane Masaki, “Japan Joins the Race for Uranium amid Global Expansion

Japan and Korea in Central Asia | 261

of Nuclear Power,” Asia-­Pacific Journal: Japan Focus, April 22, 2006, http://japanfocus​ .org/-­Hisane-­MASAKI/1626 (accessed March 31, 2012). 3.  “Foreign Investments in Kazakhstan,” Invest Kazakhstan, http://www.invest.gov​ .kz/?option=content§ion=4&itemid=75 (accessed January 12, 2014). 4.  German Kim, “Korean Diaspora in Kazakhstan: Question of Topical Problems for Minorities in Post-­Soviet Space,” http://src-­h.slav.hokudai.ac.jp/publictn/89/​ contents-­63.pdf (accessed March 30, 2012). 5.  Robert M. Orr Jr., “Balancing Act: Japanese Foreign Aid Policy in the Middle East,” in Japan and the Middle East, ed. Edward J. Lincoln (Washington, D.C.: Middle East Institute, 1990), 35. 6.  “Koizumi Off to Kazakhstan, Uzbekistan on Energy Quest,” Japan Times, August 29, 2006, http://www.japantimes.co.jp/text/nn20060829a6.html (accessed March 30, 2012). 7.  “Nuclear Power in South Korea,” World Nuclear Association, http://www.world​ -­nuclear.org/info/inf81.html (accessed April 3, 2012). 8.  “Introduction,” Navoi Airport, http://www.navoi-­airport.com/en/content/ corporate/management/#en/content/corporate/introduction_1/ (accessed April 3, 2012). 9.  “About the Company,” Uz-­Daewoo, http://en.uzdaewoo.ru/ (accessed April 3, 2012). 10.  Keith Bradsher, “Amid Tension, China Blocks Crucial Exports to Japan,” New York Times, September 23, 2010, http://www.nytimes.com/2010/09/24/business/ global/24rare.html?pagewanted=all (accessed April 5, 2012). 11.  Bank of Japan, “Direct Investment Position by Region and Industry,” http:// www.boj.or.jp/en/statistics/br/bop/index.htm/ (accessed January 25, 2012). 12.  See the country listings under “Asia Pacific” and “Europe” at the website for Japan’s Ministry of Foreign Affairs, http://www.mofa.go.jp/, and the similar groupings within “Countries and Regions” at the website for Korea’s Ministry of Foreign Affairs and Trade, http://www.mofat.go.kr/ENG/main/index.jsp (accessed January 20, 2012). 13.  “Japan, Kazakhstan Ink Rare Metals Deal,” Yomiuri Shimbun online, July 17, 2010, http://www.yomiuri.co.jp/dy/business/T100716004834.htm (accessed March 31, 2012). 14.  “Mongolia Joins Rare Earth Quest,” Japan Times, October 4, 2010, http://www. japantimes.co.jp/text/nn20101004a3.html (accessed January 25, 2012). 15.  “Japan, Uzbekistan Tie on Resources,” Japan Times, February 8, 2011, http:// www.japantimes.co.jp/text/nb20110208a1.html (accessed January 25, 2012). 16.  “Cooperation with Mongolia,” Japan Times, April 4, 2013, http://www​ .japantimes​.co.jp/opinion/2013/04/04/editorials/cooperation-­with-­mongolia/#.UtA​ Ko7TuWE0 (accessed January 11, 2014); and “Abe Hosts Mongolia’s Chief at Home,” Japan Times, September 30, 2013, http://www.japantimes.co.jp/news/2013/09/30/ national/abe-­hosts-­mongolias-­chief-­at-­home/#.UtALbrTuWE0 Times (accessed January 11, 2014). 17.  Ministry of Foreign Affairs and Trade, 2011 Diplomatic White Paper (Seoul: Ministry of Foreign Affairs and Trade, 2011), 182.

10

India’s Objectives in Central Asia Gulshan Sachdeva

Introduction Indian policy makers and analysts believe that the Central Asian region is important because of old cultural and civilizational linkages; its strategic location;1 energy resources; and trade and economic opportunities. India has a rich tradition of scholarship on Central Asia. Traditionally, most of the academic work on Central Asia in India was concentrated either on historical and cultural linkages between the two regions or part of the broader study of the Soviet Union.2 In the last two decades, new research based on geopolitics and geo-­economics in Central Asia has emerged in India. Although a large part of the discourse is still dominated by historians and former Sovietologists, awareness of the region’s importance is increasing. Because of its location, oil and gas reserves, and competition for pipeline routes, many analysts created theories of a new “Great Game” in Central Asia in the 1990s. Later, the race for military bases and the regime change experiments through color revolutions added a new dimension to competition in the region. Despite the intentions and rhetoric, India was never really part of any competition in Central Asia during this period. With no direct road transportation access plus difficult market conditions, the region was not at that time attractive to Indian private companies. In the post-­socialist period, the economic relationship with the region had also deteriorated considerably. Earlier, analysts felt that the real competition in the region was between Russia and the United States. Indian policy makers were more or less comfortable in dealing with Central Asian authoritarian leaders. They were part of the former Soviet elite, with whom India had been dealing for decades. They had provided stability and were committed to fight 262

India’s Objectives in Central Asia | 263

religious terrorism. Moreover, many in India believed that Russia would continue to have a decisive role in Central Asia because of its advantage of history and geography. Although many in India still believe in the reemergence of a strong Russia, a sober assessment has also been made of a scenario in which over time China would become a dominant player in Central Asia while playing very friendly to Russia. As China increased its engagement in the region and created a high profile for itself through trade, energy deals, military agreements, and the Shanghai Cooperation Organization (SCO), India watched carefully.3 Despite many positive developments and fruitful diplomatic engagements, India is still very cautious in matters relating to China. Both India and China are still very much concerned with the balance of power between the two of them, although officially, both deny this proposition. Moreover, developments in Afghanistan, particularly against the background of difficult India-­ Pakistan relations, have also added new dimensions to India-­Central Asia relations. The failure of the Afghanistan project poses common security challenges, but any positive outcome will open tremendous economic opportunities to both India and Central Asia. So the geo­ political salience of Central Asia for India was never in doubt. Developing political, economic, and energy partnerships has been the focus of India’s “extended neighborhood” policy in the region so far.4 However, the growing importance of China and Afghanistan in Central Asia has increased its strategic significance for India considerably, and therefore Indian policy makers seek to expand and sincerely implement its recently announced “Connect Central Asia” policy.

Emerging Security and Economic Dynamics Most analysts now believe that the Asian continent is going to become the new center of gravity in global politics. In an evolving Asian economic and security architecture network, many Asian countries would be looking toward China or India for future economic and security alignments.5 As an economic and military superpower, the United States would also like to play an important role in this evolving situation. In Central Asia, India will be expected to play its role as a balancer in a situation of increasing Chinese dominance and declining Russian

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presence. As Enders Wimbush in the context of this region has nicely summarized, “India may not be in the same league as China or Russia, nor half so visible, but is potentially a future balancer of either or both.”6 So in this rapidly evolving situation in Central Asia, “India would need to bring to bear its rapidly increasing political, economic and military capabilities to the table as a threshold great power with vital stakes in the region.”7 A simple, straightforward political logic of realism, with its power balances and security dilemmas, would be the emergence of a Washington-­New Delhi-­Jakarta-­Hanoi-­Tokyo axis in the context of a rising China and attempts by the United States to contain it.8 This is a nightmare scenario for Chinese strategists. China would do everything possible to avoid this situation, including accommodating some Indian security and economic concerns. With a rapidly growing trade and economic relationship with India, China may also try to build partnerships in other areas. It is also plausible to argue that an alternative axis running through Tehran-­New Delhi-­Kuala Lumpur-­Beijing could be formed around Asian solidarity.9 India-­Russia-­China cooperation in Central Asia is another pet theme of many anti-­American enthusiasts in both India and Russia. Ever since visiting Russian prime minister Yevgeni Primakov suggested a Russia-­India-­China (RIC) “strategic triangle” in 1998, the idea has been discussed at various official as well as nonofficial forums. Formally, the Russian, Indian, and Chinese foreign ministers have met ten times so far. Overall, the major challenge for Indian and Chinese policy makers in Central Asia would be to manage their relationship in such a way that there is “limited competition and expanding cooperation.”10 On the economic front, the Central Asian economic transformation from a centrally planned economy to a market economy coincided with Indian economic reforms aimed at liberalizing the country’s highly controlled mixed market economy. Compared to Central Asian economic decline, which lasted for many years, the Indian economy slowed only for a year. Since 1992, India has made a successful transition from an excessively inward-­oriented economy to a more globally integrated economy. As a result of new policies, it has become one of the fastest-­ growing economies in the world. Despite some serious challenges, like energy security, poverty, infrastructure, regional disparities, and internal security, there are strong indications that rapid growth in India will

India’s Objectives in Central Asia | 265

continue. Similarly, after a period of slow and negative growth, all Central Asian economies started growing fast since 2000. This growth is the result of high commodity prices and improved infrastructure and human capital. The growth momentum in Central Asia provided confidence to leadership in these countries to push for much-­needed economic reforms. As a result of this combination of factors, growth in the Central Asian region has been among the fastest in the world since the late 1990s. Even Afghanistan has seen economic growth, in spite of security and governance problems. These factors have created excellent opportunities for India and Central Asia to create new economic linkages for mutual benefit. In addition to expanding, the Indian economy also diversified significantly in the last decade. Traditionally, India’s economy was dependent on markets in Europe and the United States. In the last two decades, there has been a rapid integration of the Indian economy within Asia, which has been reinforced by India’s “Look East” policy, initiated in the early 1990s. This is clearly evident from rapidly increasing trade between India and China as well as trade between India and the Association of Southeast Asian Nations (ASEAN). Studies have shown that India’s qualitative and quantitative engagement with the Asian economies is far deeper than commonly perceived.11 India’s economic linkages with West Asian countries have been traditionally quite strong, and more so now due to energy imports, a diaspora of 2.5 million Indian nationals to the region, and good trade relations. In an evolving Asian economic architecture, India will be less effective if its economic relations with the greater Central Asian (GCA)12 region and Pakistan remain marginal. In this case, India needs to work for an economic policy framework in which Pakistan, Afghanistan, and the Central Asian republics view the partnership as benefiting them too. This policy framework will also improve India’s energy security, as it may finally get access to some of the energy resources in the Eurasian region. It can also fundamentally change India’s sea-­based continental trade. Simultaneously, it can generate tremendous opportunities for trade and transit for Pakistan, Afghanistan, and Central Asia. Indians can find tremendous investment opportunities in Central Asia, which in turn can transform their small and medium industries as well as agriculture. The growing realization of these opportunities has influenced

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policy makers not just in India, but also in Pakistan and Afghanistan. Many developments, such as Afghanistan’s joining the South Asian Association for Regional Cooperation (SAARC), signing on to the South Asian Free Trade Area (SAFTA), the Regional Economic Cooperation Conferences (RECC) on Afghanistan, an emerging India-­Kazakhstan partnership,13 and continuous interest in Turkmenistan – ​Afghanistan – ​ Pakistan – ​India (TAPI) as well as in Iran – ​Pakistan – ​India (IPI) gas pipelines, have provided enough inputs to Indian policy makers to shape their newly emerging “Look West” policy. Ever since the United States joined Central and South Asia under one bureau in the State Department, linking these two regions has also been a declared U.S. foreign policy objective. This fits well within emerging India-­U.S. ties and adds new dimension to India-­Central Asia relations.

India Slowly Entering the Central Asian Energy Scene Despite fairly low per capita energy consumption, India is the fifth-­ largest energy consumer in the world and is likely to become the third-­largest by 2030. To catch up with the rest of dynamic Asia and to decrease poverty, India will have to continue growing at a rate of about 8 – ​10 percent or more in the next twenty years. Its energy requirements for a sustained 8 – ​9 percent annual growth pose a major challenge. Since India is relatively poor in oil and gas resources, it has to depend on imports to meet its energy supplies. With already more than 70 percent of its crude oil requirements met by imports, its oil import bill was close to US$90 billion in 2008 – ​2009. Liquefied natural gas (LNG) imports started only in 2004, and in 2005 made up 17 percent of total gas supply. India also imported about 12 percent of its coal supply.14 The Indian economy relies heavily on coal, which accounted for 42 percent of total energy consumption in 2009.15 Coal accounts for about 70 percent of electricity generation. After China and the United States, India is the world’s third-­largest coal user. As a result of government policies to promote the diversification of the mix of energy used in India, the share of natural gas used in the country increased up to 7 percent. Other sources, such as wind, solar, and nuclear power, still account for very small shares. Although coal will still be a very important source of energy, the Indian government’s alternative policy scenario

India’s Objectives in Central Asia | 267

visualizes reduction in its demand by 2030. In the alternative scenario, coal demand will grow more slowly and oil demand will also decrease somewhat due to introduction of compressed natural gas (CNG) and fuel efficiency. Similarly, the role of nuclear power in India is also likely to increase. Even if all these changes are implemented, India’s oil import dependence may go up to 90 percent by 2030. In addition, gas imports will also have to be increased. India has been a net oil importer since the 1970s. LNG imports started only in 2004. In 2010 India imported oil from about twenty-­ five countries; nearly two-­thirds of imports come from the Middle East (Saudi Arabia 18 percent, Iran 11 percent). The rest of the oil came from Africa (22 percent) and the Western Hemisphere (10 percent).16 Due to this dependence, policy makers in India are worried about oil price volatility and its impact on inflation, economic growth, and foreign exchange reserves. It is believed that India’s energy security can be increased by (1) diversifying both the energy mix and sources of energy imports; (2) seriously pursuing overseas acquisitions of energy assets; and (3) initiating policy reforms to attract foreign investment as well as improving domestic production, distribution, and consumption. In the last few years, energy diplomacy has also become one of the main agendas of the country’s foreign and security policy. India is seriously pursuing the option of implementing nuclear energy as well as locating import sources beyond the Middle East. Indo-­U.S. nuclear agreements as well as consistent engagements with the countries of Eurasia, Africa, and Latin America could be seen from this perspective.17 In this scenario, new energy sources in the Eurasian region are going to play an important role in Indian energy strategy in the coming years. In the early 1990s, there was a lot of discussion about the Central Asian region becoming another Middle East. These discussions and projected scenarios have become relatively pessimistic. Still, the Central Asian region definitely has 3 to 4 percent of proven global oil and gas reserves. Further­more, production of oil and gas in the region has increased in the last few years. From the Eurasian region, apart from Russia, Kazakhstan could play an important role in diversifying Indian imports. Indian companies are trying hard to get a strong foothold in the region. Sakhalin 1 investment in Russia and purchase of Imperial energy by the Indian public sector

268 | Gulshan Sachdeva

company the Oil and Natural Gas Corporation (ONGC) are efforts in this direction. Competition in the region is very fierce as China is also pursuing the same strategy. India and China may be cooperating in other areas, but when it comes to Central Asian energy, they are far from partners. This was clearly illustrated in late 2005, when China outbid India to acquire PetroKazakhstan, Kazakhstan’s third-­largest oil producer, with China National Petroleum Corporation (CNPC) raising its bid to $4.18 billion. After trying for many years, though, India may finally be getting into the energy scene in the region. In April 2011, during the Indian prime minister’s visit to Kazakhstan, a final agreement for a 25 percent stake in the Satpayev block of Kazakhstan was signed. This transaction marks the entry of ONGC Videsh Limited (OVL) into Kazakhstan’s hydrocarbon sector. Although OVL has been trying to gain a foothold in Kazakhstan since 1995, the efforts got a boost when OVL entered into a memorandum of understanding with KazMunaiGas (KMG), the national oil company of Kazakhstan, in February 2005 for cooperation in the hydrocarbon sector. During the Kazakh president’s visit to India in January 2009, the heads of agreement (HOA) was signed between OVL and KMG, and the exploration contract was signed between the Ministry of Oil and Gas of Kazakhstan and KMG in 2010. The Satpayev exploration block, located in Kazakhstan’s Caspian Sea region, covers an area of 1,482 square kilometers and is at a water depth of six to eight meters. It has estimated reserves of 1.8 billion barrels of oil. OVL is expected to invest about $400 million in the project and oil is expected to flow from the site by 2020.18 The company has also agreed to buy a 2.7 percent stake in the Azeri, Chirag, and Guneshli fields in Azerbaijan and also a 2.4 percent stake in the associated Baku – ​ Tbilisi – ​Ceyhan (BTC) pipeline for a total of $1 billion. Recently, however, India suffered a setback in its efforts in Kazakhstan. The Indian public sector company ONGC Videsh was very close to finalizing an approximately $5 billion deal for the acquisition of the 8.4 percent participating interest (PI) of ConocoPhillips in the North Caspian Sea Production Sharing Agreement that includes the Kashagan field. While the ONGC got approval from partners for acquisition of ConocoPhillips’s stake, the Kazakh government, using its own legal rights, sold this stake to the Chinese CNPC for a reported sum of $5.2 – ​5.4 billion. According to some estimates, India has lost at least $12.5 billion in deals to China in

India’s Objectives in Central Asia | 269

past years.19 This shows China’s rising clout in the region and how the Indian system is not in a position to challenge China when it comes to major energy deals. As far as gas imports are concerned, both Turkmenistan and Uzbekistan are important. Both have large amounts of proven gas deposits. In the last fifteen years, there has been a lot of discussion on the Turkmenistan – ​Afghanistan – ​Pakistan – ​India (TAPI) gas pipeline. Earlier, analysts highlighted many uncertainties concerning the project. These included gas reserves in Turkmenistan; the security situation in Afghanistan; and strained relations between India and Pakistan. Despite all these challenges, all parties have considered the proposal very seriously. As per latest reports, the proposed 1,700-­kilometer pipeline will run from the South Yolotan Osman fields in Turkmenistan to Afghanistan; from there, it will be constructed alongside the highway running from Herat to Kandahar, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be Fazilka in Indian Punjab. The project can transport up to 30 billion cubic meters of natural gas annually from Turkmenistan to the South Asian countries. The agreement signed by the countries envisions the delivery of 90 million cubic meters per day (mmcmd) of gas from Turkmenistan to participating countries, with 38 mmcmd each going to Pakistan and India and 14 mmcmd for Afghanistan. India was formally invited to join the project in 2006. Earlier, India was participating in the talks as an observer along with the Asian Development Bank (ADB), Turkmenistan, Afghanistan, and Pakistan. The ADB has acted as the TAPI secretariat since 2003. In the last few years, all four countries involved in the project have already signed most agreements required for its commencement. These include an inter-­governmental agreement (IGA), a gas pipeline framework agreement (GPFA), and a gas sales and purchase agreement. A broad agreement on transit fees has also been agreed upon. Early last year, India and Pakistan agreed on the principle of a uniform transit fee, which means basically that Pakistan will accept whatever transit fee India and Afghanistan agree upon. Later, the Indian government approved the payment of fifty cents per million metric British thermal units as the transit fee to Pakistan and Afghanistan. To accelerate the project, parties have formed a ministerial-­level steering committee and technical

270 | Gulshan Sachdeva

working group. At this point in history, all four participating countries in the TAPI project are keen for its implementation. Both Nawaz Sharif in Pakistan and Narendra Modi in India are eager to show some positive movement in bilateral relations. While the ADB has already been appointed as the transaction advisor, the search for a consortium leader is still on.20 It seems that the Indian government is fairly confident about early completion of the project, as India’s energy minister declared recently that gas through TAPI “is expected to reach the border of India by August 2017.”21 India and Kazakhstan have also agreed to cooperate in the field of nuclear energy. As Kazakhstan has large reserves of uranium, India is keen to import it for its growing nuclear industry. Last year, Kazakhstan agreed to supply 2,100 tonnes of uranium to India’s nuclear plants by 2014.22 There are certain possibilities in Uzbekistan as well. The Indian public sector company Gas Authority of India (GAIL) has signed a memorandum of understanding with Uzbekneftegaz (UNG) for oil and gas exploration and production. The GAIL is planned to set up a few liquefied petroleum gas (LPG) facilities in western Uzbekistan, mainly for Uzbek consumption.23 In 2011 ONGC Videsh also signed a memorandum of understanding with UNG for joint cooperation in the upstream exploration and production (E&P) sector of Uzbekistan as well as in other nearby countries.24 India and Uzbekistan are also cooperating in Afghanistan, where Uzbekistan is supplying electricity through a power transmission line built by India. In 2013 the Indian vice president and foreign minister visited Uzbekistan, and now India is also looking for uranium imports from Uzbekistan.

Limited Trade but Huge Possibilities During the Soviet era, Indian economic contacts with the republics of the USSR, including the Central Asian republics, were through Moscow. The Soviet Union used to be India’s major trading partner. The nature and character of the then Indo-­S oviet trade and economic relations largely determined relations with Central Asia. In the post-­ socialist period, as with other Commonwealth of Independent States (CIS) countries, economic relations with the Central Asian region also declined considerably. In the last few years, there have been some

India’s Objectives in Central Asia | 271

upward trends. Currently, the official two-­way annual trade between India and the GCA region is more than US$1 billion (with about US$700 million exports; see table 10.1 in the appendix). Apart from Afghanistan and Kazakhstan, India’s economic relations with other Central Asian countries are minimal. This trade is also restricted mainly to traditional items. The main commodities being exported from India are pharmaceuticals, tea, readymade garments, leather goods, jute manufactures, cosmetics, cotton yarn, machinery, machine tools, rice, plastic products, machinery and instruments, electronic goods, chemicals, and so forth. Imports from the GCA are restricted to fruits and nuts, raw cotton, and iron and steel. Uzbekistan and Kazakhstan also export zinc to India.25 The Export Import Bank of India has already identified many potential export items for this region.26 At present, India’s trade with the GCA region is rather insignificant (just 0.17 percent of total Indian trade). Even if there is a manyfold increase in trade in the coming years, it will still be less than 1 percent of total Indian trade. Although India’s trade with the GCA region looks quite insignificant, its importance should not be seen only within this limited context. With an appropriate framework and foresighted policies, this region has the potential to alter the nature and character of India’s continental trade. So far, the majority of Indian trade is conducted through the sea. Border trade with China was stopped after the India-­China war in 1962. A limited opening has been made with China through Nathula Pass. Looking beyond the GCA region, it is clear that India trades a great deal with other CIS countries, Iran, and of course the European continent. In 2010 – ​2011, India’s total trade with these countries amounted to about US$147 billion (see table 10.2). Just before the global economic crisis of 2008 – ​2009, India’s trade with this region was growing very fast, particularly with Afghanistan, Pakistan, and Iran. Simple calculations on the basis of past trends earlier showed that India’s trade with Europe and the CIS plus Iran, Afghanistan, and Pakistan would be in the range of about US$500 billion in 2014 – ​2015.27 These are quite realistic assessments. Until 2008 – ​2009, actual trade had in fact surpassed many of these earlier predictions (see table 10.3). One reason perhaps was that the Indian economy from 2006 to 2008 grew more than 9 percent per year, one of the highest growths in recent history. Due to a global economic slowdown, there was some decline

272 | Gulshan Sachdeva

in 2009, but the Indian economy is catching up again. Even after taking into consideration all the cyclical factors, the earlier prediction of achieving about $450 – ​500 billion by 2015 is very much within reach. If the political economy in the region improves and even if about 20 percent of this trade is conducted by road, we are talking about US$100 billion of Indian trade passing through this region by 2015.

Investment Potential The countries of this region provide good investment opportunities for Indian business. This is clearly shown by the London-­based Indian steel tycoon Laxmi Mittal. He owns a six-­million-­ton capacity steel plant in Kazakhstan, employing more than forty thousand people, and from there it now mainly supplies the CIS countries and Iran. The company produces up to 6 percent of the country’s GDP, and is one of Kazakhstan’s largest foreign investors. To facilitate trade with and investment in this region, Indian policy makers in the last decade have set up bilateral intergovernmental commissions for trade, economic, scientific, and technical cooperation with all Central Asian countries, which have been meeting on a regular basis. These relationships are further institutionalized through joint working groups in various fields, such as information technology, science and technology, hydrocarbons, military-­technical cooperation, and so forth. The Indian government also extends small lines of credit for countries in the region to enable Indian exporters to export to these markets without repayment risk. In this scheme, importers pay around 15 to 20 percent of the contract value in advance, and the balance contract value is disbursed by the Indian EXIM Bank to the exporters on shipment of goods. The recovery of credit extended to the overseas buyer is taken care of by the EXIM Bank, without recourse to the Indian exporter. To promote and facilitate trade, double taxation avoidance agreements have also been signed. In the banking sector, improvement also has taken place. Punjab National Bank has a full-­fledged branch in Kabul, and many other Indian banks have inter-­banking arrangements with countries in the region. Canara Bank has links with the Commercial Bank for Foreign Economic Affairs of Tajikistan, as does the State Bank of India with Turan-­Alem Bank of Kazakhstan, the Commercial Bank of Kyrgyzstan, the National Bank

India’s Objectives in Central Asia | 273

of Tajikistan, the State Bank for Foreign Economic Affairs of Turkmenistan, and the National Bank for Foreign Economic Activity of the Republic of Uzbekistan. In 2003 the Indian Ministry of Commerce launched a “Focus CIS” program, which aimed to promote business-­to-­ business linkages, support trade fairs, and encourage various promotional meetings and seminars. India has also signed many agreements with these countries for technical economic cooperation under the International Technical and Economic Cooperation (ITEC) program. So far thousands of candidates from Central Asia have come to India under the program to study in various disciplines such as diplomacy, banking, finance, trade, management, small industry promotion, and so on. The highest number of seats allotted from Central Asia is from Uzbekistan, which sends about 120 candidates every year. Thousands of Afghan citizens have been able to participate in various short-­and long-­term study and training programs in the last few years. The Federation of Indian Chambers of Commerce and Industry (FICCI) has set up joint business councils with Kazakhstan, Uzbekistan, and the Kyrgyz Republic. Recently, the governor of the western Kazakhstan region invited Indian industry to invest in areas like extraction of sunflower oil, wheat production, wool, leather, and the construction of elite housing complexes and five-­star hotels.28 Many Indian business organizations and think tanks have identified areas of cooperation, like energy, food processing, textiles, tourism, information technology, education, consultancy services, petrochemicals, and construction.29 Another area of major interest to Indian businesses would be to participate in the continuing privatization process in the region. Under the Uzbek privatization program, the Indian company Spentex Industries acquired the business of Tashkent-­To’yetpa Tekstil, a state-­owned spinning company in Uzbekistan, for $81 million in 2006. In 2007 Uzbekistan also announced many incentives to Indian textile companies. Uzbekistan and Kazakhstan are heavily marketing a bounty of fiscal incentives to Indian textile firms.30 Some other Indian companies like Punj Lloyd have also participated in oil pipeline projects in Kazakhstan.31 If some of the Central Asian countries are able to reform their land policies, there is a tremendous possibility of investment in the agricultural sector.

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India’s Linkage to Central Asia through the SAARC, INSTC, and SCO In the past, India had adopted a cautious approach to regionalism, and was engaged in only a few bilateral/regional initiatives, mainly through preferential trade agreements (PTAs) or through open regionalism. The collapse of the Doha Development Round of WTO negotiations has pushed many countries, including India, to look for alternatives to multilateral negotiations to improve their trade positions. For the last few years, India has put its proposed regional trade agreements on the fast track. In recent years, it has concluded comprehensive economic cooperation agreements (CECAs) with many countries. These CECAs cover free trade areas (FTAs) in goods (zero customs duty regime within a fixed time frame on items covering substantial trade, and a relatively small negative list of sensitive items with no or limited-­duty concessions), services, and investment and identify areas of economic cooperation. Such agreements include the South Asian Free Trade Area (SAFTA), the India – ​Association of Southeast Asian Nations (ASEAN) agreement, the framework agreement for the India-­Bay of Bengal Initiative for Multi-­Sectoral Technical and Economic Cooperation (BIMSTEC) FTA, the India-­Thailand FTA, the India-­Singapore CECA, the India-­Japan CECA, and so forth. India already had FTAs with Sri Lanka and Nepal. An India-­EU agreement is being negotiated. A trade and investment deal is also being negotiated with the Gulf Cooperation Council (GCC), the Southern Common Market (MERCOSUR), South Korea, Chile, and other countries. India-­Israel, India-­Brazil, South Africa (IBSA), and India-­Russia joint study groups have also been set up. Compared to these broader trends, India’s links with the GCA region have been relatively weak despite the fact that most of the Central Asian republics participate in a wide range of regional initiatives. Knowing that it does not have direct access to the GCA region and its difficult relations with Pakistan, India’s major initiative in the 1990s was cooperation in building a new trade corridor. Russia, Iran, and India are founding members of the International North South Transport Corridor (INSTC). Later, many other countries joined the project. It provides a shorter route for trade to Iran, Russia, and the CIS. For India, the

India’s Objectives in Central Asia | 275

corridor facilitates movement of goods via Iran, the Caspian Sea, and Astrakhan to Russia and adjoining countries of the CIS, including Central Asia. It was supposed to reduce travel time and cost significantly. The main transport project being undertaken in this program with Indian involvement in the region is the development of a new port complex at Chabahar on the coast of Iran, from which a road goes north to the border with Afghanistan. It is seventy-­two kilometers from Pakistan’s deep-­sea Gwadar port, which is built with Chinese assistance and closer to India than the existing port at Bandar Abbas. In the last decade it has faced many delays, but now it seems that both the Indian and the Iranian governments have agreed to accelerate the project.32 Now there are reports that India is planning to construct a nine hundred-­kilometer railway line that will connect the Chabahar port with the Hajigak region of Afghanistan, where Indian companies have recently been awarded iron ore projects.33 India has also completed the construction of a 218-­kilometer link from Zaranj on the Iran-­Afghan border to Delaram, from where all major cities in Afghanistan and the Central Asian republics further north are connected. India is also building the Afghan side of the twenty-­two-­kilometer Zaranj – ​Milak road. Another road transport project involves the Chabahar – ​Faraj – ​Bam railway project, which connects the port to Central Asia and Europe by rail.34 The Chabahar port is strategically important for India as its serves as the entry point for India’s outreach into Afghanistan and Central Asia, bypassing Pakistan. The port could also become important to the U.S. logistics supply chain, if in the future some working relationship is developed between Iran and the United States. Despite all the work and ambitions, the north-­south corridor project still has not really taken off. One of the main reasons behind this is the very low volumes of India-­Russia trade, which was supposed to provide major traffic. In the absence of large volumes, shipping companies still prefer their original routes where they have established logistics. However, the Indian government has announced its reactivation of the INSTC in the next few years. Shipping companies confirm that Iranian ports are working fairly efficiently. Still, Indian exporters to Central Asia prefer the Chinese port of Qingdao, which is 35 percent cheaper than the Iranian route, although transit time is longer compared to Bandar Abbas.35

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As discussed earlier, for India, it is the continental trade that is much more important than trade only with the GCA region. For this reason, any plan of linking India with Europe through the GCA region will be much more valuable than just having some regional or subregional initiatives. In this context, the plans for a trans-­Asian highway are very valuable to India. All GCA countries, along with India and Pakistan, are members of the proposed Asian highway. This project, which is being implemented under the auspices of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), is a network of 141,000 kilometers of roads crisscrossing thirty-­two Asian nations, with linkages to Europe. Similarly, countries in the region are involved in one other UNESCAP project, called the Trans-­Asian Railway. Most countries in the region are linked through different corridors of the project. As this network provides connectivity to twenty-­eight nations, a few more have joined later. Transport Corridor Europe-­Caucasus-­Asia (TRACECA) is another program in which all Central Asian countries are involved. The European Commission, along with the governments in the region, formulated this fourteen-­nation program in 1993. The corridor starts in Eastern Europe and crosses Turkey. Through Central Asia, it reaches China and Afghanistan. In the last few years, new roads and railways have been built along the corridor. Air connections between GCA countries and India are prime examples of tremendous business opportunities available when the Indian market is linked to Europe through Central Asia. For greater regional integration, air transportation is going to play an extremely important role in the coming years. Since land and rail corridors are going to take time to build, due to heavy investments and other political/ security problems, air services at reasonable rates with reliable services could work wonders for the GCA region. Since air traffic in and out of the region may not be enough to sustain daily reliable services at economical rates, this traffic has to be linked with the main traffic routes. Already there are about thirty direct weekly flights from India to all the important destinations in greater Central Asia. These flights are operated as low-­cost carriers mostly by Central Asian airlines to and from Delhi and by Amritsar to Europe via Central Asian cities like Tashkent or Ashgabat. Once airlines from Afghanistan are able to establish their European connections, Afghan airlines may be following the same

India’s Objectives in Central Asia | 277

route. In this way, Delhi could become the center of air corridors for the entire region. This is very much a possibility as a major modernization program is already under way for Indian airports. At the moment, India is not really connected with the Central Asian region through any regional organization. In fact, there is no single regional organization where Central and South Asia meet together. In the absence of any other organization emerging, however, the SCO may fill this gap. Since its formation, India was not quite sure what priority this organization deserved. It provided China, Russia, and the Central Asian states a delicate equilibrium in the new geopolitical situation. India was never featured in this equilibrium, though the Central Asian nations perceived India’s potential to be a countervailing factor.36 In the beginning, India showed interest in the SCO, but the impression is that China never really wanted India involved. India was welcomed as an observer to the SCO only when China was also admitted to SAARC as an observer. Furthermore, China instead welcomed Pakistan into the SCO grouping. In later years, the way the SCO conducted itself politically further aggravated India’s dilemma. But now, with the uncertainty about Afghanistan, where the SCO may be playing some important role in the post-­2014 situation, India has finally been compelled to ask for membership in the SCO and has become a member. Apart from the SCO, India will be concentrating more on Afghanistan, Kazakhstan, and Uzbekistan for trade and energy cooperation. From the Indian point of view, the extension of SAFTA to Central Asia could be useful. Afghanistan is already a member, and Iran and China have been given observer status in the organization. Tajikistan, Uzbekistan, and Kazakhstan could be encouraged to be associated in the grouping. But SAARC has to produce some concrete results to become attractive to the Central Asian countries. For India, these are still pieces of a much larger picture, which is basically the development of entirely new India-­ Europe linkages through GCA. In fact, SAARC multi – ​model transport linkages, CAREC action plans, and INSTC are all bits and pieces of the already existing trans-­Asian highway and trans-­Asian railway plans. If India-­Pakistan relations improve, the two regions could be linked through Pakistan and Afghanistan, which will be useful, particularly for north Indian states. Some parts of India will be linked up with the plan through the Mumbai port and INSTC. INTEC may become

278 | Gulshan Sachdeva

an important component of the trans-­Asian railway network. Further synergies through SAARC and CAREC will improve their effectiveness and scope.

Indian Engagement in Afghanistan With a broad understanding that a peaceful and stable Afghanistan is crucial for regional stability, India is also trying to play an active role. With engagement in Afghanistan, policy toward Central Asia has also gotten some boost. So far India has pledged $2 billion in assistance. Indian projects cover areas like road construction (the 218-­kilometer Zaranj – ​Delaram road), power (the transmission line from Pul-­e-­ Khumri to Kabul), the Salma dam project, the construction of the Afghan parliament, and many projects in the areas of agriculture, telecommunications, education, health, and capacity building. More than a thousand young Afghans also come to India every year on short-­and long-­term fellowships.37 To upgrade their relationship with India, Afghanistan signed its first ever “strategic partnership” with India in 2011. The India-­Afghanistan agreement has the potential to provide at least some direction to the uncertain post-­2014 situation in Afghanistan. Apart from increasing capacity building as well as sociocultural and educational linkages, the agreement points toward two major developments. First, India has agreed to assist in training, equipping, and capacity-­building programs for Afghan national security forces. Second, the agreement recognizes that regional economic cooperation is vital for long-­term economic prosperity in Afghanistan and the rest of the region. In addition, the agreement creates institutional mechanisms for bilateral cooperation, consisting of an annual summit meeting, regular political consultations led by foreign ministries of both countries, and the establishment of a strategic dialogue on national security led by national security advisors of both countries.38 A few weeks after the signing of the agreement, a consortium of seven Indian companies led by the state-­owned Steel Authority of India (SAIL) won a $10.3 billion deal to mine three iron ore blocks in central Afghanistan. These blocks, located in the Bamiyan Province about 130 kilometers west of Kabul, have iron ore reserves of

India’s Objectives in Central Asia | 279

around 1.8 billion tons.39 Indian companies are also planning to bid for copper and gold projects in the area. There are also reports that India is also planning to build a nine hundred-­kilometer railway line between Iran’s Chabahar port and Bamiyan Province, where Indian companies are planning large investments. In June 2012 the government of India, in cooperation with the government of Afghanistan and the Confederation of Indian Industry (CII), organized a successful investment summit on Afghanistan in Delhi. The main objective of the summit was to attract foreign investment in Afghanistan, particularly in the context of emerging opportunities in sectors like mining, hydrocarbons, infrastructure, telecommunications, agriculture, education, health services, and so forth.40 This was perhaps the first time that a major summit on Afghanistan was being organized by a neighboring country mainly on its own initiative. In 2013 a similar conference was organized by the Federation of Indian Chambers of Commerce and Industry (FICCI). In the “Heart of Asia” process, India leads the Chamber of Commerce Confidence Building Measures.

Importance of the New Silk Road Strategy for India and Central Asia The strategic location of Afghanistan will always be important for India, particularly in the context of difficult India-­Pakistan relations. However, the importance of Afghanistan for India is much bigger than normally perceived in this narrow context. Once Afghanistan becomes stable, trade through Pakistan and Afghanistan could also alter India’s continental trade. As mentioned earlier, by 2015, India’s trade with Europe and the CIS plus Iran, Afghanistan, and Pakistan would be about US$500 billion annually. Even if only 20 percent of this trade is conducted via roadways, US$100 – ​120 billion of Indian trade would still be passing through Afghanistan and Central Asia. With improvement in India-­ Pakistan relations, an important portion of Indian trade (particularly from the landlocked northern states, including Jammu and Kashmir) will be moving through Pakistan and Afghanistan. With the possibility of this trade passing through Afghanistan and Central Asia, most of the infrastructural projects in the region will become economically viable.

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These linkages will also transform small and medium industries and agriculture in Central Asia and Afghanistan. For this to happen, first of all, a massive effort is needed to rebuild Afghanistan’s transport network and economy. A few recent papers have clearly outlined some concrete immediate and long-­term measures that can soften the economic impact of military drawdown and create conditions for self-­sustained growth.41 However, the existing difficult relationship between India and Pakistan is a major impediment in realizing the potential of this particular trade route. While looking at the regional economic dynamics, it is clear that both India and Pakistan would be paying huge economic costs if they did not cooperate in Afghanistan. If trade stops in Pakistan, many roads and other infrastructural projects will never become viable because of low volumes of traffic. Direct linkages between Central Asia and India will also give a huge boost to the region’s economies, particularly to Afghanistan. Earlier, it was thought that Afghanistan had very limited resources. The Afghanistan government in 2010 claimed, however, that the country has huge untapped mineral resources worth at least $3 trillion.42 For long-­term sustainability, though, Afghanistan ultimately has to play its traditional role of facilitating trade and commerce through its territories. American officials have now repeatedly talked about the New Silk Road strategy. Since 2005, the idea has been discussed at many academic and policy forums. This strategy is a long-­term vision of an international trade, transit, and energy network that links the Central and South Asian economies through Afghanistan.43 This was a good blueprint for Afghanistan, but unfortunately has been mixed with regional geopolitics and exit strategies from Afghanistan. Still, Afghanistan has no other option but to continuously work for this strategy. Many analysts have pointed out difficulties in implementing this strategy, particularly in the context of difficult India-­Pakistan as well as Pakistan-­Afghanistan relations. It is true that it is difficult to imagine implementation of this policy in the current tense political environment. However, some positive developments have taken place. The Afghan-­Pakistan Transit Trade Agreement (APTTA) has been reached after years of negotiations and active U.S. encouragement. Under the agreement, both Afghanistan and Pakistan have agreed to

India’s Objectives in Central Asia | 281

facilitate the movement of goods between and through their respective territories. Pakistan has allowed Afghan exports to India through Wagah and to China through Sost/Tashkurgan. Similarly, Afghanistan has allowed Pakistani trucks to reach Tajikistan, Turkmenistan, Uzbekistan, and Iran through its territories. Afghan trucks can carry Afghan transit export cargo on designated routes up to the Pakistani sea ports of Karachi, Qasim, Gwadar, and the Wagah border. At the moment, this is only a partial agreement, as Afghan cargo is offloaded onto Indian trucks back to back at Wagah and trucks on return are not allowed to carry Indian exports back to Afghanistan. Despite its limited nature and serious initial problems in implementation, the agreement can be seen as a major development in regional economic cooperation.44 It has also generated interest beyond Afghanistan and Pakistan. Recently, both Pakistan and Afghanistan have decided, in principle, to include Tajikistan also into the APTTA. To make this initial small project into a serious regional economic force, the parties must include Turkmenistan and Uzbekistan (and perhaps Iran) in the broader agreement. However, the project will be of very limited interest to Central Asian countries if traffic to India is not allowed in both directions. Once Central Asia and India are included in the expanded APTTA, the region will be ready to take advantage of the emerging Eurasian Customs Union space within a few years. Despite tensions at the political level, there are positive developments between India and Pakistan on trade matters. Recently, both have concluded three agreements regarding the redress of trade grievances, mutual recognition, and custom cooperation. Pakistan will allow trade through Wagah for all goods (presently restricted to 137 items). India has agreed to reduce the number of items under its restricted list by 30 percent. There are indications that Pakistan will provide most-­favored-­ nation (MFN) status to India soon. While India had given Pakistan MFN in 1996, Pakistan has been refusing to reciprocate. Once that happens, India will bring its SAFTA sensitive list to just one hundred. Pakistan will do so in the next five years. By 2020, the peak tariff rate will not be more than 5 percent. Both nations have also agreed to cooperate in investment, banking, electricity and gas trade, railways, and better air connectivity. In addition, they have signed a new liberalized visa regime.

282 | Gulshan Sachdeva

Afghanistan beyond 2014 Uncertainty surrounding Afghanistan could bring India and the Central Asian region even closer together. Because of its ethnic and cultural linkages plus borders shared by three out of five republics, the Central Asian region will play an important role in any post-­2014 scenario. They are also worried about the movement of militants and narcotics traffic. Apart from broad discussions on the 2014 drawdown by international forces, developments in the last two years, including the assassination of Ustad Burhanuddin Rabbani, speculations on negotiations with the Taliban, ongoing regional anxieties, and continuing global economic crisis have pointed toward increasing unpredictability about Afghanistan’s future. Besides, the tensions between the United States and Pakistan and instability within Pakistan have further complicated future scenarios for Afghanistan. One important reason for this uncertainty is that almost everyone involved in the Afghanistan project believes that by 2014 a significant number of coalition forces will have left the country, even if some American forces continue to stay for longer periods, mainly in non­ combat missions. In June 2011 President Obama announced that the United States had already accomplished most of its major policy goals in the region and that a drawdown of 33,000 U.S. troops would take place by September 2012. Despite doubts about the durability, the transition to Afghan leadership began, as planned, in July 2011, and is continuing. The security responsibility for many provinces and cities has already been handed over to Afghan authorities. At the Bonn and Istanbul conferences, both the international community and regional players reaffirmed their long-­term commitment to the future of Afghanistan, which goes much beyond 2014. The Bonn conference of December 2011 was attended by eighty-­five countries and fifteen international organizations. At the conference, all participants dedicated themselves to “deepening and broadening their historic partnership from Transition to the Transformation Decade of 2015 – ​ 2024.”45 The final declaration talked about mutual commitments in the areas of governance, security, the peace process, economic and social development, and regional cooperation. Earlier, in November 2011 at

India’s Objectives in Central Asia | 283

the Istanbul conference, which was attended by the so-­called Heart of Asia countries (consisting of Afghanistan, China, India, Iran, Pakistan, Russia, Saudi Arabia, Turkey, UAE, and all Central Asian republics), participants reaffirmed their strong commitment to a “secure, stable and prosperous Afghanistan in a secure and stable region.” Apart from other things, in the context of Afghanistan, the regional countries also agreed to respect for the territorial integrity of states; nonintervention in the internal affairs of other states; the dismantling of terrorist sanctuaries and safe havens; the disruption of all financial and tactical support for terrorism; and support for stability and peace in Afghanistan, as well as respect for Afghanistan’s sovereignty, unity, and territorial integrity. At the Tokyo conference in July 2012, donors agreed to provide $16 billion over the next four years. Moreover, American officials also talked about working for a New Silk Road Strategy for Afghanistan. These developments, however, have failed to reduce uncertainty about Afghanistan’s future. Although this transition has already begun, it is quite clear to all that due to a weak Afghan government and insurgent safe havens in Pakistan, Afghanistan will still need direct security assistance even after 2014. As a result, the Afghan government has concluded “strategic partnerships” with the United States and other partners. It is hoped that the U.S. troops that will remain in Afghanistan will fall under the Bilateral Security Agreement (BSA) completed between the United States and the new Afghan president, Ashraf Ghani. Overall, post-­2014 Afghanistan is going to face three major challenges — ​security, politics, and development. Although there were some gains following the surge, the security situation in Afghanistan still has deteriorated significantly since 2007 and will remain difficult in the foreseeable future. With the drawdown of foreign forces, the situation will become more challenging for the Afghan administration. In 2011 the Joint Coordination and Monitoring Board (JCMB), which is responsible for overall strategic coordination between the Afghan government and the international community, reached an agreement to increase the Afghan National Police Force from 134,000 to 157,000 and the Afghan National Army from 171,000 to 195,000. Although these numbers have already increased significantly, the security forces will

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need much more mentoring than provided so far. Due to higher rates of desertion, many more also need to be trained on a regular basis. So far, Americans have provided a major share of the resources for training. In fact, about 50 percent of their committed and disbursed resources for reconstruction and development in Afghanistan have gone only to train security forces. Europeans have also contributed for police training. Apart from lack of sociocultural understanding toward new Afghan soldiers, the Western training has also been very expensive. If India is able to share some of their burden, a significant amount of resources can be freed for other development programs. This will also provide a major role for India in any future security scenario. Although details are not known at the moment, it is likely that a major portion of training agreed to in the strategic partnership agreement will be conducted in India itself. In the last ten years, the United States has depended heavily on Pakistan to resolve the Afghan problem. The apparent deterioration in U.S.-­ Pakistan relations, however, may force the United States to look for other allies. To reduce its dependence on Pakistan, the United States since 2009 has increasingly relied on a series of commercial air and ground routes called the Northern Distribution Network (NDN).46 Under this network, nonlethal supplies to coalition troops in Afghanistan are sent through Russia, the Caucasus, and Central Asia. The NDN comprises three principal land routes. The first one is from the Georgian Black Sea port of Poti, through Baku, Azerbaijan, across the Caspian Sea, and into Central Asia. The second route is from the Latvian port of Riga through Russia, Kazakhstan, and Uzbekistan. The third route originates in Latvia and travels through Russia, Kazakhstan, and Kyrgyzstan, and passes into Afghanistan via Tajikistan. Already close to 75 percent of ground sustainment cargo is now shipped via the NDN. According to the U.S. Transportation Command, around 40 percent of all cargo travels via the NDN, 31 percent is shipped by air, and the remaining 29 percent goes through Pakistan.47 The dependence on Pakistan was about 90 percent in 2009. At the moment, the NDN allows only one-­way transit of goods to Afghanistan. It also allows only the transit of nonlethal supplies, such as cement, lumber, blast barriers, septic tanks, and matting. As a result, sensitive and high-­technology equipment is transported by air. It also

India’s Objectives in Central Asia | 285

costs roughly an additional $10,000 per twenty-­foot container to ship via the NDN instead of Pakistan.48 Still, it seems that this option will be increasingly used by the coalition forces in the future. Since the NDN through the Eurasian region is going to play an increasingly important role in supporting coalition operations, the coming years may see a greater role for Central Asian countries in U.S. stabilization efforts in Afghanistan. As a result, the United States may also try to balance its security and political priorities in the region. Another major challenge Afghanistan faces is on the economic front. With declining Western interest, it is likely that significantly fewer resources will be available for development projects in the next decade than were available in the previous ten years. Experience suggests that withdrawals of international troops in other parts of the world have reduced civilian aid, with implications for economic growth and fiscal sustainability. Therefore, potential financing gaps in the budget could threaten security and recent progress made on the developmental front. According to the World Bank, actual aid to Afghanistan in 2010 – ​2011 was about $16 billion, about the size of the nominal GDP.49 According to the Asian Development Outlook 2011, the planned foreign troop pullout by 2014 may lower growth by at least two to three percentage points.50 Any rapid decline in aid will severely affect economic performance and employment in the country. Zalmay Khalilzad, the former U.S. ambassador to Afghanistan and Iraq, outlined in late 2011 that what happens in 2014 and beyond will depend on the success and failure of the U.S. strategy with regard to eliminating terrorist sanctuaries in the region; catalyzing a strategic shift in Pakistan policy from supporting those who are fighting NATO and Afghan forces — ​the Taliban, the Haqqani network, and others — ​to facilitating a political settlement in Afghanistan; persuading the Afghan government to deal with issues concerning governance and corruption; and fostering a positive outlook for the region based on economic integration and establishment of a New Silk Road.51 Whatever the United States does, however, none of its policies is likely to deliver conclusive results by the time of the major troop withdrawals. One other European and U.S. strategy between now and the end of 2015 is likely to be some kind of reconciliation with the Taliban. In the last three years, however, progress in this front has been disappointing for

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the Western countries. Henry Kissinger had already warned earlier, “If you negotiate while your forces are withdrawing, you’re not in a great negotiating position.”52 So the post-­2014 phase in Afghanistan will be a continuation of the same project with significant security and economic challenges. In these circumstances, India will be proactive in defending its own security and economic interests in Afghanistan and the region. Moreover, the U.S. administration has also indicated that it would like to see a larger Indian role in Afghanistan.53 Therefore, in this changed geopolitical environment, India could be in a better position to influence outcomes by building on its “strategic partnership” with Afghanistan and developing economic integration strategies with the Central Asian states.

New “Connect Central Asia” Policy In the rapidly changing geopolitical scenario in the region, the Indian government has announced a new policy for the Central Asian region called “Connect Central Asia.” Building on its past linkages and goodwill, India had already developed strong political and developmental relations, including a “strategic partnership” and an agreement on uranium trade, with Kazakhstan. It regarded the region as a close political partner under the concept of an “extended neighborhood.” The new initiative seeks to strengthen India’s political, securitization, economic, and cultural connections with Central Asia. As outlined by E. Ahamed, the minister of state for external affairs, at the first India-­C entral Asia Dialogue in Bishkek on June 12, 2012, the new policy comprises twelve points:54 •  Further strengthening political relations with the region •  Strengthening strategic and security cooperation (military training, joint research, counterterrorism cooperation, close consultations on Afghanistan) •  Stepping up multilateral engagement (SCO, Eurasian Customs Union) •  Setting up partnerships in energy and natural resources •  Strengthening cooperation in the medical field •  Establishing a new Central Asian University in Bishkek

India’s Objectives in Central Asia | 287

•  Setting up a Central Asian e-­network with its hub in India •  Strengthening private partnerships in sectors like construction and iron and steel •  Reactivating the International North South Trade Corridor •  Strengthening cooperation in the banking sector •  Improving air connectivity •  Encouraging regular academic exchanges and civil society contacts

Immediately after the announcement of this new policy, the Tajik president Emomali Rahmon visited India in September 2012 and signed six agreements concerning cooperation in the textile industry and health and medicine as well as educational and cultural exchanges. The strategic importance of Tajikistan is yet to be seen, however, given the fact that it shares a border with Afghanistan. India also helped build the Ayni air base in the country. Tajik Air has also decided to resume its direct air links between New Delhi and Dushanbe. Both countries have now agreed to deepen counterterrorism cooperation and elevate the relations to a “strategic partnership.”

Conclusion Policy makers and analysts in India have always clearly understood the geopolitical importance of Central Asia. As a result, the region has been considered part of India’s extended strategic neighborhood. After the collapse of the Soviet Union, when the new Great Game for energy resources and pipeline routes began in the region, India was a marginal player. Unlike others, India was more concerned about political stability, as an unstable Central Asia could have created many security and strategic challenges. Since India had limited presence in the region during this period, it was attracted to cooperative strategies with Russia, which it thought would have had sufficient advantage in Central Asia because of historical and geographic connections between the two regions. Building on its past linkages and goodwill, India has developed strong political and developmental relations, including “strategic partnerships” with Kazakhstan, Tajikistan, and Uzbekistan. Although India has been trying to enter the Central Asian energy sector for quite some

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time, concrete results have yet to emerge. Recent developments indicate that India is slowly trying to enter the region’s oil, gas, textiles, and nuclear trades — ​key industries overall for Central Asia. Moreover, if the ArcelorMittal Company is considered “Indian,” then India has been a dominant player in iron and steel for many years. The increasing Chinese profile in the region, as well as uncertainties surrounding post-­2014 Afghanistan, has pushed India to formulate some new strategies in the region, including a new “Connect Central Asia” policy. As a result of increasing U.S.-­Pakistan tensions, the importance of Central Asia would increase with regard to stabilization efforts in Afghanistan. The confusion and uncertainty created by the U.S. administration have also pushed India to seek membership in the SCO. There is a possibility that the SCO might create a role for itself in stabilizing Afghanistan in the near future. In these circumstances, it would be wise for India to be a part of the organization. Regardless, India has always felt positively about the SCO’s economic, energy, and transport projects in the region. India’s current trade with the Central Asian region is very small and likely to remain modest in the coming years. However, the importance of the GCA region for Indian trade should not be seen only in the context of its minimal regional trade. By 2015, India’s trade with Europe and the CIS plus Iran, Afghanistan, and Pakistan would be about US$500 billion annually. Even if 20 percent of this trade were conducted via roadway, US$100 billion of Indian trade would be passing through the GCA region. With the possibility of this trade passing through the GCA region, most of the infrastructural projects in the region will become more economically viable. Creation of this infrastructure will create further incentives for regional and subregional cooperation. High economic growth in both the Central and South Asian regions is pushing policy makers to work for integration strategies. Given its size and its fast-­growing economy, India is an attractive market for both regions. A relative slowdown of the Indian economy in 2012 and 2013 and a change in government in 2014 is not going to change in any way the Indian position on Central Asia and Afghanistan. Regional economic integration is also important for sustainability in Afghanistan, as ultimately it has to play its traditional role of facilitating trade and

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commerce through its territories. So India is very positive about the RECCA (Regional Economic Cooperation in Central Asia) and the Istanbul process as well as the New Silk Road Strategy outlined by the U.S. administration. The U.S. strategic goals of stability in Afghanistan and helping linkages between Central and South Asia have also coincided with India’s major engagement in Afghanistan and its desire to improve its presence in Central Asia. Despite a plethora of regional organizations in Central and South Asia, there is no single organization where both the regions meet together. In the absence of any other organization, the SCO may become that forum, if and when India and Pakistan become members. Another alternative could be the emergence of an entirely new organization from the existing structure of the RECCA with Afghanistan in the focus. At the moment, however, it seems the focus is more on the Istanbul process. In the meantime, the SAARC, the SCO, and CAREC will continue to be important in the coming years. Overall, compared to the modest trade in South and Central Asia, transcontinental trade is going to be much more important for India. As a result, plans for linking India with Europe through Central Asia will be much more valuable than plans that are limited to a regional or subregional context. The EU’s UNESCAP plans for an Asian highway perfectly fit within India’s existing strategy. Different infrastructural plans, like the SAARC multi-­model transport linkages, CAREC action plans, and INSTC are all in a way different pieces of this grand design. Ultimately, Indian trade volumes will be reaching Europe through these different schemes. As Iran is an important part of Indian strategy, there will be further efforts on India’s part to reenergize the North South Corridor. Further synergies through SAARC and CAREC will improve its effectiveness and scope. Despite serious problems in implementation of the regional integration strategies with respect to India-­Pakistan difficulties and the situation in Afghanistan, there are some positive signs. These include APTTA as well as positive developments in TAPI and on India-­Pakistan trade and visa matters.

Appendix Tables follow on the next page.

table 10.1. India – ​Greater Central Asia Trade, 1996 – ​1997 to 2009 – ​2010 (Millions of U.S. Dollars) 1996 – ​ 1997 – ​ 1998 – ​ 1999 – ​ 2000 – ​ 2001 – ​ 2002 – ​ 2003 – ​ 2004 – ​ 2005 – ​ 2006 – ​ 2007 – ​ 2008 – ​ 2009 – ​ 2010 – ​ 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Afghanistan

25.79

31.95

40.93

54.26

52.45

41.89

79.23 185.98 212.44 201.09 216.48 359.18

520.47 588.74 557.81

Kazakhstan

16.96

51.16

50.43

40.65

64.12

53.09

59.61

84.07

96.81 117.16 171.48 188.77

290.70 291.44 306.30

Kyrgyzstan

0.98

10.8

8.81

15.61

22.02

11.52

15.13

38.74

50.19

Tajikistan

1.53

1.12

3.04

4.72

4.10

2.56

8.73

8.42

10.68

12.13

15.42

22.21

34.17

32.57

40.79

Turkmenistan

1.65

1.70

2.03

6.03

3.83

6.30

15.70

28.55

26.12

31.18

45.94

45.65

53.50

46.15

35.87

14.50

22.91

19.98

23.80

25.62

42.84

52.81

50.57

63.60

56.52

116.27

84.00

80.10

Uzbekistan Total GCA Total Indian trade % of total Indian trade

10.74 57.65

20.3

29.57

37.84

32.43

23.95

27.48

23.56

117.03 119.74 144.18 166.50 139.16 204.02 388.60 488.75 441.70 550.76 704.76 1,039.06 1,070.38 1,074.43

72,602 76,490 75,608 86,493 95,096 95,240 114,131 141,992 195,053 252,256 312,149 414,786 488,991 467,124 620,905 0.079

0.153

0.158

0.166

0.175

0.146

0.178

Source: Department of Commerce, Ministry of Commerce and Industry, Government of India.

0.273

0.250

0.175

0.176

0.169

0.212

0.229

0.173

table 10.2. India’s Trade with GCA Countries Plus Pakistan, Iran, CIS, and Europe (Millions of U.S. Dollars) 2007 – ​2008

2008 – ​2009

2009 – ​2010

2010 – ​2011

Exports EU-­27

34,535

39,351

36,028

46,819

2,752

2,724

2,494

3,839

232

258

269

293

1,508

1,666

1,418

2,569

249

395

463

411

Iran

1,943

2,534

1,853

2,742

Pakistan

1,950

1,439

1,573

2,333

43,169

48,366

44,098

59,006

Rest of Europe 5 Central Asian republics Rest of CIS Afghanistan

Total exports

Imports EU-­27

38,450

42,733

38,433

44,539

Rest of Europe

13,127

14,528

17,279

26,640

5 Central Asian republics Rest of CIS Afghanistan Iran Pakistan

112

260

212

193

3,675

6,367

5,891

5,471

109

126

125

146

10,943

12,376

11,540

10,928

287

370

275

332

66,703

76,760

73,755

88,249

EU-­27

73,075

82,084

74,461

91,358

Rest of Europe

15,879

17,252

19,763

30,479

344

518

481

486

5,183

5,183

8,033

8,040

359

520

588

557

12,887

14,910

13,394

13,670

2,238

1,810

1,849

2,666

109,965

125,127

117,845

147,256

Total

Trade

5 Central Asian republics Rest of CIS Afghanistan Iran Pakistan Total trade

Source: Author’s calculations based on data from Department of Commerce, Ministry of Commerce and Industry, Government of India.

291

292 | Gulshan Sachdeva

table 10.3. Comparison of Earlier Projections with Actual Trade (Millions of U.S. Dollars) Earlier projections made in 2005

Actual trade

2005 – ​2006

61,977

65,146

2006 – ​2007

78,091

85,224

2007 – ​2008

98,395

109,965

2008 – ​2009

123,977

125,127

2009 – ​2010

156,212

117,845

2010 – ​2011

196,827

147,256

2011 – ​2012

248,002

2012 – ​2013

312,482

2013 – ​2014

393,728

2014 – ​2015

496,098

Year

Sources: Gulshan Sachdeva, “India,” in The New Silk Roads: Transport and Trade in Greater Central Asia, ed. S. Frederick Starr (Washington, D.C.: Central Asia-­Caucasus Institute and Silk Road Studies Program, 2007), 377; and Department of Commerce, Ministry of Commerce and Industry, Government of India.

Notes 1.  Tajikistan is just about twenty kilometers from Greater Kashmir. 2.  See Marlène Laruelle, “Foreign Policy and Myth-­Making: Great Game, Heartland, and Silk Roads,” in Mapping Central Asia: Indian Perceptions and Strategies, ed. Marlène Laruelle and Sébastien Peyrouse (Farnham, UK: Ashgate, 2011). 3.  Gulshan Sachdeva, “India’s Attitude towards China’s Growing Influence in Central Asia,” China and Eurasia Forum Quarterly 4, no. 3 (2006). 4.  On India’s growing capacity and will to project hard and soft power in subregions beyond South Asia, see David Scott, “India’s ‘Extended Neighborhood’ Concept: Power Projection for Rising Power,” India Review 8, no. 2 (2009). 5.  See Ashley J. Tellis, Travis Tanner, and Jessica Keough, eds., Strategic Asia 2011 – ​ 12: Asia Responds to Its Rising Powers — ​China and India (Washington, D.C.: National Bureau of Asian Research, 2011). 6.  S. Enders Wimbush, “Great Games in Central Asia,” in Tellis et al., Strategic Asia, 261. 7.  Kapil Kak, “India’s Strategic and Security Interests in Central Asia,” in Central Asia: Present Challenges and Future Prospects, ed. V. Nagendra Rao and Mohammad Monir Alam (New Delhi: Knowledge World, 2005), 208. 8.  Varun Sahni, “From Security in Asia to Asian Security,” International Studies 41, no. 3 (2004): 245 – ​62. 9.  Ibid., 257.

India’s Objectives in Central Asia | 293

10.  Ajay Patnaik, “Framing Indo-­Central Asian Relations, 1990s-­2000s,” in Laruelle and Peyrouse, Mapping Central Asia, 109. 11.  See “India’s Economic Integration with Asia” (speech by Jairam Ramesh, Minister of State for Commerce and Power, Government of India, at seminar series on Regional Economic Integration, Asian Development Bank, Manila, November 24, 2008); and Mukul G. Asher, “India’s Rising Role in Asia” (Discussion Paper 121, RIS, New Delhi, 2007). 12.  There are many definitions of Wider or Greater Central Asia. See William Byrd, Martin Raiser, et al., “Economic Cooperation in the Wider Central Asian Region” (World Bank Working Paper 75, World Bank, Washington, D.C., 2006); S. Frederick Starr, “A Greater Central Asia Partnership for Afghanistan and Its Neighbors” (Central Asia-­Caucasus Institute and Silk Road Studies Program, Washington, D.C., 2005). The GCA, in this chapter, includes the five former Soviet Central Asian republics plus Afghanistan. 13.  For increasing India-­Kazakhstan linkages, see P. Stobdan, “India and Kazakhstan Should Share Complementary Objectives,” Strategic Analysis 33, no. 1 (2009). 14.  For details, see Energy Outlook 2007 (Paris: IEA/OECD, 2007). 15.  U.S. Energy Information Administration, information on India, http://www.eia​ .gov/countries/cab.cfm?fips=IN. 16.  Ibid. 17.  For details, see Gulshan Sachdeva, “Geo-­economics and Energy for India,” in Handbook of India’s International Relations, ed. David Scott (London: Routledge, 2011). 18.  For details, see “Bilateral Agreements Concluded during PM’s Visit to Kazakhstan,” Ministry of External Affairs, April 16, 2011, http://www.mea.gov.in/mystart.php?​ id=500417552. 19.  “India Loses $5 Bn Bid for Kashagan Oil Field to China,” Economic Times (New Delhi), July 2, 2013. 20.  For details, see Gulshan Sachdeva, “TAPI: Time for the Big Push,” Central Asia – ​ Caucasus Analyst 15, no. 14 (2013). 21.  “TAPI Project Moving Ahead: India to Get Gas by Aug 2017: Moily,” Hindu Business Line, January 15, 2013. 22.  “Kazakhstan to Supply 2100 Tonnes Uranium by 2014,” DNA, April 16, 2011, http://www.dnaindia.com/india/report_kazakhstan-­to-­supply-­2100-­tonnes-­uranium​ -­by-­2014_1532633. 23.  “GAIL to Set Up LPG Plants in Uzbekistan,” Hindu Business Line, May 2, 2006, http://www.thehindubusinessline.com/2006/05/02/stories/2006050201860300.htm 24.  “ONGC Videsh Inks Pact with Uzbek Firm,” Business Standard, May 18, 2011, http://www.business-­standard.com/india/news/ongc-­videsh-­inks-­pactuzbek-­firm/​ 135637/on. 25.  For details, see Gulshan Sachdeva, “Regional Economic Linkages,” in Reconnecting India and Central Asia: Emerging Security and Economic Dimensions, ed. Nirmala Joshi (Washington, D.C.: Central Asia-­Caucasus Institute and Silk Road Studies Program, 2010), 115 – ​79.

294 | Gulshan Sachdeva

26.  CIS Region: A Study of India’s Trade and Investment Potential, Occasional Paper no. 116 (Mumbai: Export Import Bank of India, 2007); Central Asian Republics, Afghanistan and Pakistan: A Study of India’s Trade and Investment Potential, Working Paper (Mumbai: Export Import Bank of India, 2005). 27.  For details, see Sachdeva, “Regional Economic Linkages.” 28.  See Federation of Indian Chambers of Commerce and Industry, http://www​ .ficci.com/international/countries/Kazakhstan/kazak.pdf. 29.  Ramgopal Agarwala, Towards Comprehensive Economic Co-­operation between India and Central Asian Republics, Discussion Paper 108 (New Delhi: RIS, 2006), http://www.ris.org.in//dp108_pap.pdf; Central Asia and Indian Business: Emerging Trends and Opportunities, Seminar Proceedings (New Delhi: Confederation of Indian Industry, 2003). 30.  “Central Asian Countries Woo Indian Textile Cos,” Business Line, January 22, 2007. 31.  For details, see Punj Lloyd company website, http://www.punjlloyd.com/ subpage​.php?opt=&page_cat=2&id=15. 32.  “Chabahar Port Plan on Fast-­Track,” Hindustan Times, September 13, 2011. 33.  “With Pakistan Watching, India Firming Up Big Plans on Afghanistan,” Times of India, November 1, 2011. 34.  For details, see Report on the Economic Impact of Central-­South Asian Road Corridors (ADB, 2005); “India-­Iran Relations,” Ministry of External Affairs, http://www​ .mea.gov.in/mystart.php?id=50044479. 35.  Jyotsna Dube Choudhri, “An Insight of CIS” (paper presented at the Inter­ national Conference “Silk Road and India: Historical and Contemporary Relevance,” New Delhi, December 27 – ​28, 2011). 36.  P. Stobdan, “Central Asia and China Relations: Implications for India,” in Asian Security and China, 2000 – ​2010, ed. K. Santhanam and Srikanth Kondapalli (New Delhi: Shipra Publications, 2004), 355. 37.  For details of Indian projects in Afghanistan, see Gulshan Sachdeva, “The Reconstruction Issue in Afghanistan: Indian and Chinese Contribution,” in China and India in Central Asia: A New Great Game?, ed. Marlène Laruelle, Jean-­François Huchet, Sébastien Peyrouse, and Bayram Balci (New York: Palgrave Macmillan, 2010). 38.  See text of Agreement on Strategic Partnership between the Republic of India and the Islamic Republic of Afghanistan, October 4, 2011, http://www.mea.gov.in/ mystart.php?id=530518343. 39.  “SAIL-­Led Consortium Wins 3 Afghan Iron Ore Blocks,” Live Mint, November 28, 2011, http://www.livemint.com/2011/11/28235528/SAILled-­consortium-­wins-­3-­Afg​ .html. 40.  See Gulshan Sachdeva, “The Delhi Investment Summit on Afghanistan,” IDSA Comment, June 26, 2012, http://www.idsa.in/idsacomments/TheDelhiInvestment​ SummitonAfghanistan_gsachdeva_260612. 41.  S. Frederick Starr et al., Finish the Job: Jump-­Start Afghanistan’s Economy; A Handbook of Projects (Washington: CACI, 2012).

India’s Objectives in Central Asia | 295

42.  Afghanistan Chamber of Commerce and Industries, “Mining in Afghanistan,” n.d., http://www.acci.org.af/business-­opportunities-­in-­afghanistan/138-­mining-­in​ -­afghanistan.html. 43.  See S. Frederick Starr, Andrew C. Kuchins, et al., “The Key to Success in Afghanistan: A Modern Silk Road Strategy” (Silk Road Paper, Central Asia-­Caucasus Institute and Silk Road Studies Program, Washington, D.C., 2010). 44.  Gulshan Sachdeva, “Afghanistan and Pakistan Sign Trade and Transit Agreement,” Central Asia – ​Caucasus Analyst 12, no. 6 (2010). 45.  See the Bonn Conference Conclusions, “Afghanistan and the International Community: From Transition to the Transformation Decade,” December 5, 2011, http://www.auswaertiges-­amt.de/cae/servlet/contentblob/603686/publicationFile/​ 162662/Konferenzschlussfolgerung_engl.pdf. 46.  For details on the Northern Distribution Network, see Andrew C. Kuchins, Thomas M. Sanderson, and David A. Gordon, The Northern Distribution Network and the Modern Silk Road: Planning for Afghanistan’s Future (Washington, D.C.: Center for Strategic and International Studies, 2009). 47.  U.S. Senate, Committee on Foreign Relations, Central Asia and the Transition in Afghanistan, report, December 19, 2011. 48.  Ibid. 49.  Transition in Afghanistan: Looking beyond 2014 (Washington, D.C.: World Bank, 2011). 50.  Asian Development Bank, Asian Development Outlook (Manila: ADB, 2011), 157. 51.  Zalmay Khalilzad, “2014 and Beyond: U.S. Policy towards Afghanistan and Pakistan,” pt. 1, testimony to House Committee on Foreign Affairs, November 3, 2011. 52.  Mackenzie Weinger, “Henry Kissinger: Talk to Afghan Neighbors,” Politico, November 1, 2011, http://www.politico.com/news/stories/1111/67384.html. 53.  Julian E Barnes, “U.S. Seeks Larger Role for India in Afghanistan,” Wall Street Journal, June 7, 2012, http://online.wsj.com/article/SB10001424052702303830204577447 833940958106.html. 54.  For details, see E. Ahamed, keynote address, First India-­Central Asia Dialogue, June 12, 2012, http://www.mea.gov.in.

11

Ambitions of Grandeur Understanding Turkey’s Foreign Policy in a Changing World Joshua W. Walker

Introduction A key ally of the United States, long-­standing member of the North Atlantic Treaty Organization (NATO), and a candidate for membership in the European Union (EU), Turkey has strong ties to the West in a volatile yet strategic region of the world. Turkey sits geographically at the crossroads of Eurasia, but has only in the last decade of the post – ​ Cold War environment assumed the confidence and trappings of a geo­ politically pivotal player. As a nonpermanent member of the United Nations Security Council from 2008 to 2010, a G-­20 founding member since 2008, and holder of the post of secretary general of the Organization of the Islamic Conference (OIC) since 2005, Turkey has experienced a rise in the regional that has impacted its global ambitions. At the dawn of the new century scholars of Turkish foreign policy declared that Turkey was “changing”1 and entering a “new world”;2 however, in hindsight the most significant changes were yet to come in Ankara. Indeed, one of the more active debates about Turkish foreign policy today is to what extent what is being observed today is “real” change versus a continuation of what was observed in previous times under new rhetorical guises.3 Given the evolving nature of Turkish foreign policy today, this chapter does not seek to follow all aspects of it; it will focus on the underlying causes and logic for the shifts in Turkish foreign policy rather than exclusively relying on models or hypothesized approaches that may be outdated before they can be tested.4 Also given the extremely dynamic nature of Turkish politics, its foreign policy is always only one domestic crisis or flourish away from success or failure. 296

Ambitions of Grandeur | 297

Historically betting against Turkish civil society and its people has never been a smart move, yet its government and institutions have rarely lived up to the promise of Atatürk’s republic born from the ashes of the Ottoman Empire over ninety years ago. Turkey, with its combination of economic pragmatism and soft power appeal as a Muslim-­majority secular democracy with a conservative and pious Muslim leader, has fared much better than almost any other Muslim-­majority nation in global affairs in recent years. Shedding its former policies of disengagement in international politics, Ankara has become an active participant in all of its regions over the last decade and, particularly given its close geographic proximities to the “hot spots” of this decade, has become a central player. As a result, Turkey has been transformed in a way not seen since the days of the Ottoman Empire, as a truly global player whose reach can now extend beyond just its geographic neighborhood. Turkey has emerged in the twenty-­first century stronger than it has ever been in its modern history, going from a peripheral player to Europe’s most dynamic actor and economy. While analysts are still arguing over a common framework for the phenomena sweeping the Mediterranean, commentators across the board have acknowledged that the “Turkish model” has been one winner of the Arab Spring and European Fall. Beyond Turkey’s immediate neighborhood, it has reemerged in a geopolitical space that it unsuccessfully tried to fill two decades ago with the fall of the Soviet Union, namely, Central Asia. Given the cultural, ethnic, and linguistic connections shared with Ankara and the attractive energy-­rich resources of Central Asia, there are many opportunities for a Turkic revival in Turkey’s “brotherly” neighborhood. Yet given the failure of the “Turkish model” of the 1990s in Central Asia and its success today in the Middle East, there remain significant challenges both domestically and regionally to a more proactive Turkish foreign policy in this region of the world. In addition, the emergence of China as a regional competitor has added a new dimension to Turkish foreign policy making. Given that it failed to capitalize on the promises of the 1990s to lead the “Turkic world” from Ankara, Turkey’s caution and hesitance in Central Asia are to be expected. However, based on Turkey’s tremendous international rise and the strategic opportunities presented throughout

298 | Joshua W. Walker

Central Asia, Ankara has become a pivotal player by default as it tries to develop new relations with Eastern powers such as China, India, Iran, and Russia, which all play within this region. Because it is such a critical transatlantic partner, strengthening Turkey’s links to Central Asia serves the interests of the EU and the United States while playing to Ankara’s strength as a natural bridge between East and West. This chapter analyzes Turkey’s potential in Central Asia by first looking at its emergence as a pivotal player with regional ambitions, as exhibited in its foreign policy goals and orientation of the last decade. Turkey’s foreign policy priorities in its neighborhoods and regions are examined before we turn to a geopolitical assessment of Ankara’s future with its traditional Western allies and new partners in Eurasia along with some of the challenges that it faces. Finally, an analysis of the impact of global events and the potential for Turkey as an actor in Central Asia follows as a conclusion.

The Emergence of Turkey as a Pivotal Global Player Balancing Ankara’s historically close relationships with the West both in its “strategic alliance” in Washington and its ongoing process with Brussels amidst the realities of its neighborhood is no simple task. Key to this is managing the interdependency between a democratizing and stable domestic political scene and an ambitious foreign policy vision in Ankara. The changes in Turkish foreign policy cannot be attributed to a single factor; rather, a number of domestic and international considerations have propelled this phenomenon, as this chapter will highlight. Turkey has the economic and political potential to be either a trans-­regional actor that promotes peace, prosperity, and stability or an inward-­focused state whose domestic turbulence inflames problems abroad. Therefore, understanding Turkey on its own terms and assessing its potential impact globally and regionally are of critical importance to practitioners and scholars alike working on international affairs today. Turkey’s new stated foreign policy has coincided with the emergence of the self-­confident prime minister Recep Tayyip Erdoğan and his AKP. Elected in 2002 and reelected in 2007 and 2011, the AKP has become a hegemonic force in Turkish politics that has exclusive control of Turkish foreign policy in a way unprecedented for a civilian party in

Ambitions of Grandeur | 299

modern Turkish history. Championed by Erdoğan’s minister of foreign affairs, Ahmet Davutoğlu, the policy advocates repositioning Turkey through multiple alliances while asserting its regional and global influence and independence.5 Davutoğlu and the AKP’s foreign policy strategists contend that rather than being peripheral, Turkey is a centrally positioned inter­ national player. For them, “Turkey is a country with a close land basin, the epicenter of the Balkans, the Middle East, and the Caucasus, the center of Eurasia in general and is in the middle of the Rimland belt cutting across the Mediterranean to the Pacific.”6 Turkey, Davutoğlu contends, “has no chance to be peripheral, it is not a sideline country of the EU, NATO or Asia.”7 As part of this new strategy, Ankara sought good relations or “zero problems” with its neighbors. By embracing previous enemies such as Armenia, Greece, Iran, Iraq, Russia, and Syria, Turkey replaced the Cold War strategy of regional isolation with an increasingly assertive role of regional leadership. The AKP is highly critical of Turkey’s Cold War strategy, dismissing it as a misguided, myopic reluctance to embrace the country’s obvious advantages — ​namely, its rich history and geographical location.8 The doctrine’s appeal created some unlikely allies for the AKP. The country’s nationalist and secularist factions accepted the concept of leveraging Turkey’s Ottoman past and strategic geopolitical location, despite distaste for the AKP’s conservative religious roots.9 The policy tack gained particular favor with business and industry, which were eager to develop close ties beyond Turkey’s immediate borders.

The Big Picture Despite the rhetoric, Turkey’s recent activism in its neighborhood is nothing new. On at least two occasions in the past, Turkey has undertaken similar initiatives to reach out to its neighbors. After Turkey’s first multiparty elections in 1950, Prime Minister Adnan Menderes brought Turkey into the Baghdad Pact (1955) along with its Middle Eastern neighbors. Similarly, after the presidential elections of 1989, President Turgut Özal reached out to the newly established post-­Soviet republics and made Turkey the first country to formally recognize the Turkic countries of the Caucasus and Central Asia.

300 | Joshua W. Walker

With the end of the Cold War, Turkey played an active role in integrating the ex-­communist world into the global economic system by opening and encouraging trade relations and liberalizing its visa policy. As a result of Turkey’s openness to its eastern neighbors, large numbers of nationals from the former Soviet bloc were able to travel to Turkey relatively freely and engage in what came to be termed “suitcase trade.”10 The initial low-­level commercial contacts between Turkey and the ex-­ Soviet world evolved into significant economic relations. Therefore, in many ways Turkey today is simply extending its earlier policies toward Central Asia and Eastern Europe to the Middle East. This pattern of relations between Turkey and the former Soviet world was in stark contrast to Turkey’s relations with the Middle East at the time. Despite the late President Özal’s intention to develop closer relations with Middle Eastern countries as well, the Arab world remained lukewarm to his ideas. Trade sanctions on Iraq, growing violence in Turkey’s southeast, and souring relations with Egypt, Libya, and Syria all further hampered Özal’s ambitions. Unlike nationals from the ex-­ Soviet republics, the nationals of Arab countries throughout the 1990s were thus required to obtain visas before coming to Turkey. The “paper wall” between Turkey and the Arab Middle East was reinforced when Turkey became a candidate country for EU membership in 1999 and Ankara enthusiastically committed itself to introducing the terms of the Schengen visa regime in 2001 – ​2013.11 Recently this picture has changed rapidly. Turkish trade with the Middle East has expanded and diversified. Egypt, Iraq, Syria, and the Gulf states became equally important economic partners as Israel had been since the mid-­1990s. Following the Turkey-­Syria free trade agreement in 2004, bilateral commerce picked up, having doubled between 1995 and 2007, and is expected to grow manyfold in the coming years. During his visit to Syria in December 2009, Erdoğan highlighted how he expected Turkey to become Syria’s economic gateway to Europe, and Syria to become Turkey’s gateway to Arab markets.12 Until 2011, Turkish-­Syrian trade was indicative of a Turkish-­Arab honeymoon that lasted until the Arab Awakenings began to topple successive regimes. Looking at a broader picture of the Turkish economy as seen through recent trade figures from the UN, we observe some visible trends that further demonstrate the growing significance of new neighborhood

Ambitions of Grandeur | 301

markets for Turkey. Traditionally, the European Union has been and remains the dominant trade partner of Turkey. However, the share of the EU in Turkey’s exports has steadily declined since 2003.13 After a slow decline during 2003 – ​2007, the EU’s share suffered a large drop in 2008 and 2009 as a result of the global financial crisis. Yet at the same time, the share of predominantly Muslim neighbors of Turkey, including the Central Asian republics and the Arab countries, gradually increased. In 2009 the share of this “Muslim Neighborhood” in Turkish exports rose to 26 percent, while for the first time, the share of the European Union fell below 50 percent. Given the relative decline of the West versus the rise of the East in the twenty-­first century, Turkey’s desire for 360 degrees of “strategic depth” reflects its own pragmatic calculations. Tracing developments in Turkey’s international relations, starting with its traditional Western allies in America and Europe and then moving to its neighbors in the post-­ Soviet space and the Middle East, allows us to further appreciate the significance of global changes in geopolitics, the economy, energy, and human mobility that have presented Turkey with complex challenges as well as opportunities. Laying out these changes helps put Ankara’s recent actions and reactions in context along with providing a critical assessment of the net results of these changes for Turkey today and potential for the future.

Turkey’s Place in the West Relations between Turkey and the West have always been dynamic and reflective of the historical circumstances. Turkey for the past seventy years has prioritized its relationship with the West, as manifest in its membership in almost every Western multilateral organization. Casting its lot with the West during the Cold War was made particularly easy given the Soviet Union’s aggressive motives on the Turkish straits and northeastern Anatolia. As a result, Turkey’s Cold War relationship with the United States was indicative of most bilateral alliances during the period and represented a convergence of national interests in containing the influence of the Soviet Union. With the Truman Doctrine, the United States publicly committed itself to protecting Turkey, thereby linking it with the West.14 While the historical roots of Turkish-­Western

302 | Joshua W. Walker

relations can be traced to the gates of Vienna, where the Ottomans laid siege twice, Turkey’s inclusion was not ideational but rather facilitated by the geostrategic realities of the Cold War and America’s leadership of the West.15 The collapse of the Berlin Wall in November 1989 was met with fear in Ankara that it was no longer relevant to the West and to Washington in particular.16 Having been unequivocally part of Europe since joining NATO in 1952 during the Cold War and based on the strategic logic of the time, Turkey expected its Western credentials to hold up. As a part of almost every European organization from its inclusion in the Council of Europe in 1949 to the Ankara agreement of 1963 that created a customs union with Europe, Turkey looked to Europe as its logical home and partner. But Turkey’s successive coup d’états and war in the 1990s against the Kurdistan Worker Party (PKK) led to an inward focus, and European protests about human rights violations further strained relations.17 Turbulence in U.S.-­Turkey relations has always been inevitable given the global, regional, and domestic changes that both countries have experienced over the last decade. Given the strategic foundation of this alliance, the challenges currently faced by Washington from an assertive and independent Ankara are at least equally muted by the benefits that this posture offers declining U.S. leadership in Turkey’s neighborhood. There are causes for concern regarding changes in Turkish domestic politics and foreign policy that could lead to even greater tensions in U.S.-­Turkey relations down the road; but for the time being it is clear that Turkey continues to offer the United States numerous opportunities for strategic cooperation and support.18 Therefore, while U.S.-­ Turkish relations have deteriorated since the Cold War years and the “model partnership” has not been realized, given that Turkey is at the center of one of the most critical regions of the world, recent changes to the country as well as the region have only heightened Turkey’s importance to America.

Europe — ​Turkey’s Western Anchor? Turkey’s historical preoccupation with Europe and its subsequent quest for an acknowledged European identity can be explained on many

Ambitions of Grandeur | 303

levels.19 Historically, Europe has represented “modern civilization,” in the words of Turkey’s founding father, Atatürk. Economically, Europe represents over half of Turkey’s foreign investment, and the bulk of lucrative foreign trade is conducted with EU member states. Geopolitically, Turkey has always insisted on being part of every European organization, based on its 3 percent geographic claim to Europe. However, despite the arguments made by many Atlanticist quarters in Europe and the United States that favor Turkey’s geostrategic value within the framework of the EU, many Europeans remain skeptical about Turkish membership.20 As a result of this sentiment, the EU has kept Turkey waiting at its doorstep for over four decades. Still, for Turkey, the single most important historical external factor in its domestic agenda remains the EU. The prospect of EU accession has traditionally been a major factor in Turkey’s internal reform process. The major impetus for reform came after Turkey became a candidate for membership in December 1999. The reform process initially started in 2001 with a series of critical constitutional amendments. A series of reform packages followed. Inter alia, they brought greater freedom of expression and association, banned capital punishment, reduced the influence of the military over civilian government, and improved the rights of minorities. The EU, through these reforms, also helped to catalyze the growth of civil discourse in Turkey. In this period, many taboo issues, such as the Kurdish question, the Armenian genocide claims, the rights of non-­Muslim minorities, the Cyprus problem, and the limits of secularism, became subjects of debate. The EU’s conditionality clearly contributed to Turkey’s democratic transformation.21 Reform packages adopted in the context of EU accession also steadily reduced the military’s influence, and precipitated a revolutionary change in the military’s mindset.22 EU engagement also helped transform the Islamist movement from strongly opposing EU accession to embracing the idea, as well as the reforms associated with it.23 As Turkey transformed domestically, its allies in the EU grew in strength and number, leading to the opening of negotiations in 2005 on the grounds that Turkey had “sufficiently” fulfilled the Copenhagen political criteria. When the AKP came to power in 2002 as the historical successor of Turkey’s right-­leaning Islamic conservative movement, it had many

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domestic hurdles to overcome. Erdoğan and the AKP began using their foreign policy agenda to placate their domestic opposition and to expand areas of possible cooperation with Turkey’s liberal elites. In particular, the AKP focused on the EU accession process to broaden its domestic support and weaken its opponents between 2002 and 2005. Ironically, the launch of EU accession negotiations in October 2005, after an acrimonious debate in the EU over Turkey’s membership and problematic terms of Turkey’s Accession Negotiations Framework, actually triggered setbacks in the reform process in 2006 and 2007. The decisive victory won by AKP at the July 2007 national elections ushered in short-­lived expectations of a renewed period of reform. However, the government’s enthusiasm for drafting a new constitution was undercut by resistance from the opposition and the judiciary’s case against the AKP in 2008. In part, this resistance was provoked when the government became distracted from its constitutional reform agenda and instead pushed through legislation to lift a ban on the use of headscarves in universities. At the EU, which had spent much of the young twenty-­first century celebrating Europe’s various achievements, the perennial question involving Ankara was whether to deepen or widen the EU’s membership. Yet only seven years after Greece joined the Eurozone in 2001, the global financial crisis erupted in the United States and spread to Europe. Today, previously unthinkable scenarios have become common discussion points. The question now is whether the Eurozone will disintegrate and what the consequences for the European Union will be. There is widespread concern among economists that a Greek exit from the Eurozone will lead to serious, maybe catastrophic, consequences for the rest of Europe and the global economy. While Europe has been able to avoid disaster to date, the crisis has greatly humbled core constituencies while empowering Turkey, which has been on the doorstep of the EU longer than any other nation of Europe. In an ironic twist of fate, at precisely the moment in which the foundations of the European Union are being questioned, Turkey’s newfound swagger and emergence as a global actor have been both decried as arrogant and welcomed as a sign of a more engaged partner that could help to determine the future direction of Europe as a global actor. Yet, in the EU’s darkest moment, Turkey remains eerily silent on the Eurozone crisis as well as its own accession process.

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Newspaper columns and columnists who used to write about every aspect of the accession process and EU decision making with sensationalist headlines about ramifications for Turkey, have turned their attention elsewhere. The most visible sign of the apathy and indifference of the Turkish government and public was the most recent EU Commission progress report on Turkey, released in 2012, that used to be one of the most significant international spotlights for Ankara, but has recently had to compete with other “neighborhood” events such as the “Friends of Syria” or Iran nuclear negotiations. For the first time, the progress report generated almost no headlines other than the Turkish EU minister’s colorful criticisms about Europe being like a camera that was out of focus that could not capture the dynamism of Turkey in a still frame. Unlike events in the Middle East like Syria that continue to make headlines, Turkey’s European dreams seem to be drifting off into oblivion, with little attention being paid on either side of the Mediterranean. Populist rhetoric on the part of Prime Minister Erdoğan against the EU has become a common talking point in Turkish politics, yet it risks further alienating Europe at precisely the wrong moment. Being blinded by hurt pride and a rightful sense of injustice at the hand of certain European politicians, Turkey has begun to look more toward it neighborhood. However, Ankara’s value-­add in its new neighborhoods hinges precisely on the ongoing domestic transformations that are highly dependent on its EU accession process in comparison to other democratic revolutions in the region. Turkey’s continuing accession process is a net positive regardless of its eventual membership outcome and is in fact one of the primary reasons for the country’s enhanced value to its neighbors. This is best captured by a recent survey of Arab public opinion that revealed that 64 percent of those surveyed believed that Turkey’s EU membership prospects made Turkey a more attractive partner for the Arab world.24 The failure to find a common strategic vision to guide broader Turkish-­Western relations is therefore intrinsically linked to its neighborhood.

Turkey Today and the Promise of Looking Eastward Turkey today is at a crossroads. It is more democratic and globally engaged than at any time since the foundation of the Turkish Republic.

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Yet its democracy is far from perfect, and its international relationships are strained in the aftermath of the Arab Spring and its own Gezi Park protests. What began as a reaction to a municipal decision to remove one of Istanbul’s most iconic and green spaces in May 2013 quickly became the primary vehicle for Turks to protest the status quo in Turkey, including the decade-­long rule of Prime Minister Recep Erdoğan’s AKP. Despite being disruptive and transformational for civil society in Turkey, these protests were not the beginning of a so-­called Turkish spring that some Western press unhelpfully linked to regional developments. At the same time, Turkish foreign policy has suffered numerous setbacks, including a nasty falling-­out with Erdoğan’s previous ally, the Syrian president Assad, with whom he once vacationed and held up as the crown jewel of his foreign policy. The ousting of Erdoğan’s understudy, the Egyptian president Morsi, less than a year after he keynoted the AKP’s political convention, along with increasing competition from Russia, Qatar, and Saudi Arabia for regional leadership, has only heightened Ankara’s sense of isolation. Turkey’s predicament in its neighborhood is a largely self-­inflicted wound caused by emotional rhetoric, unrealistic ambitions, and miscalculation of Ankara’s own capabilities. Turkey is not alone, however. Washington also faces myriad challenges in the Middle East. It has been searching for new approaches to Egypt and Syria because previous policies were not working. In Egypt the military unseated a democratically elected Muslim Brotherhood government and continued to abuse Egyptian civilians over U.S. objections. In Syria the United States supported UN efforts to destroy Syria’s chemical weapons while simultaneously training and arming opposition forces in the midst of civil war. Meanwhile in Iran, a series of symbolic U.S. and Iranian gestures at the 2013 UN General Assembly has breathed life into the old debate about the efficacy of sanctions, incentives to cooperate with nuclear inspectors, and promoting change from within. There is no panacea to these foreign policy crises. However, one policy framework offers the possibility of enabling the United States to better understand and address them — ​a deeper Ankara-­Washington partnership. As the Middle East’s largest and Europe’s fastest-­growing economy and population, Turkey is uniquely situated to play a consequential role in a region critical to U.S. national interests.

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Like Washington, Ankara faces a new world in the aftermath of the Arab Spring and challenges in its neighborhood. The choices it took in aggressively backing the Muslim Brotherhood’s Morsi in Egypt and Sunni Syrian rebels, while initially appearing successful, have proven less satisfactory over time. Turkey’s once vaunted foreign policy slogan of “zero problems with neighbors” has proven unrealistic in practice. Having built and reoriented itself into a twenty-­first-­century regional power, Turkey aspires to lead at a moment when massive domestic protests have complicated Washington’s support for Ankara. Meanwhile, the United States is desperately seeking reliable regional leaders with whom to partner. The idea of a new Silk Road that could potentially raise Turkey above its Middle Eastern fray has been championed by the American administration with little buy-­in from Turkey.25 Given Turkey’s own experiences with South Asia, Central Asia, and the Middle East, the idea of a comprehensive framework, while appealing, seems unrealistic. Given that the traditional instruments of Turkish foreign policy tended to overlook the cultural links of a shared common history, the AKP has reemphasized Turkey’s connections to its former Ottoman space in the Balkans and the Middle East. It even includes Central Asia, despite the lack of Ottoman connection, given shared cultural, ethnic, and linguistic affinities. Turkish civil society in turn promoted these “privileged” relationships to the Turkish public as part of Turkey’s historic responsibility, while the AKP has leveraged them to increase the importance of Turkey regionally and globally.26

Eurasia, Russia, and Beyond — ​On the Same Side of Europe In a clear-­cut, bipolar world, Turkey simply followed the lead of its Western allies in isolating and containing Russian interests in its region.27 With the dissolution of the Soviet Union, however, Turkey has begun to transform its relationship with Russia from enemy state to rival regional power. While Turkey and Russia have worked to maintain normal and pragmatic relations, their competing interests in the mutually shared areas of their near abroad have often led to tense relations. The antagonistic tones of historic Turkish-­Russian relations were replaced by pragmatic dealings between the two countries. A personal

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relationship was formed between then prime ministers Erdoğan and Putin, soon to be president in both cases, which has been the source of much public discussion.28 The post-­9/11 environment that Erdoğan and Putin have inherited forces the two leaders to focus on points of common strategic interest, while quietly negotiating their existing points of contention. Both nations have been quick to stress the importance of states’ sovereignty and have committed to cooperating in creating a new multipolar order in Eurasia. Given both Turkey and Russia’s continued fight against internal separatist movements, the emphasis placed on fighting terrorism has allowed a convergence of interests. Despite the difference in scale of the current operations in Chechnya and south­ eastern Anatolia, neither country has criticized the other for its handling of the ongoing military operations despite external European pressures. Russia no longer represents the strategic threat it posed during the Cold War; however, the continued tension between Moscow and its Muslim minorities does not bode well for the stability of the entire region. In the 1990s Turkey responded to instability in the Balkans by participating in a variety of peacekeeping and peacemaking missions under both NATO and EU auspices. At the same time, the opening of the Turkish economy and the collapse of the Soviet Union allowed for the beginning of economic ties with Russia, a country rich in natural resources and previously cut off from Turkey. In the last several years, expanded economic ties with the Balkans, the Caucasus, and the Central Asian post-­Soviet space have continued, while ties with Russia have grown exponentially — ​at least until the economic downturn of 2009 hurt all Turkish trade. Russia is also the source of roughly three million tourists a year to Turkey, and has received more than $17 billion in Turkish investment.29 In 2009 reciprocal visits between the prime ministers led to even greater levels of planned cooperation between Turkey and Russia, on energy, on arrangements for joint cabinet meetings, on beginning the process of providing visa-­free travel, and on agreement to build a Russian nuclear power plant in Turkey.30 Russia’s role in Syria has changed the dynamics of the recent rapprochement, mainly because of the key stake Turkey has in the outcome in its southern neighbor. Having vigorously called for Assad’s removal and criticized Moscow’s support of Damascus, Ankara has been disappointed by the lack of American and Western intervention in Syria.

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Turkey hosts the Syrian National Council and has dedicated massive resources to care for the close to one million refugees that have crossed into its territory. Simultaneously, Ankara has turned a blind eye toward and even tacitly supported the activities of certain extremist Sunni rebel groups to serve as a hedge against future Iranian influence in Syria. Such contradictions are common due to the lack of a comprehensive strategy for the overthrow of Assad or longer-­term solution to Syria’s civil war globally. Yet even more than most governments, Erdoğan’s is losing domestic political support and international credibility because of the disconnect between his hyperbolic rhetoric and limited capabilities. Further, Turkey’s once mutually pragmatic relationship with Israel, which would have helped reinforce its position, was sacrificed due to perceived domestic and regional gains that have not been borne out in the Arab Spring. Lack of U.S. leadership and inconsistent coordination with Turkey on Syria, among many other issues, further muddled already complex regional dynamics. Turkey’s twenty-­first-­century dream of reimagining itself as an “energy hub” is almost completely dependent on stable relations with Eurasian regimes. With few natural resources of its own, the country has taken advantage of its geographic position to host virtually all alternative routes for oil and gas delivery from Central Asia to Europe. The first oil in the Baku – ​Tbilisi – ​Ceyhan pipeline arrived the same year that gas from Baku reached Erzurum, from which it is eventually to be shipped further west in the proposed Nabucco pipeline. But the biggest change in recent years — ​the improvement of Turkish-­Russian relations before Syria — ​is also accompanied by substantial increases in Russian provision of energy to Turkey both for domestic supply and shipment further west. Turkey has been importing Russian gas through the Blue Stream pipeline, running under the Black Sea, since 2003 and has even agreed to let Russia explore building the South Stream pipeline, which could pipe gas to Europe, through its territorial waters. The saga of antagonism between Turks and Russians for the vast majority of both peoples’ history makes the present state of Turkish-­ Russian relations over Syria normal. While they may not be as promising as Turkish-­Turkic relations, they are sometimes more consequential and offer a pragmatic starting point for a potentially transformative axis on which to build a future partnership of regional cooperation

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in opposition to China’s role in Central Asia, which both Ankara and Moscow view with suspicion. Given the deep ambivalence felt by Russia toward Europe and the West more broadly, the recent warm turned cold relations between Ankara and Moscow point toward a pragmatic partnership to ensure a more multipolar and Eurasian world order. By minimizing its rivalry with Russia in the Balkans, Caucasus, and Central Asia, Turkey has neutralized its greatest immediate threat without fully eliminating it in the Middle East, as seen in Syria. Unlike the deep roots of Turkey’s reorientation toward its immediate southeastern neighborhood, Ankara’s future with its northwest remains far from certain. Ethnic ties, frozen conflicts, and secessionist movements all represent flashpoints for domestic politics that will continue to dictate a cautious and pragmatic embrace of Russia, and beyond.

Winds of Change from the Arab Spring In the wake of the so-­called Arab Spring, the Turkish model has been much debated, and its original connotation in which a military-­ bureaucratic elite imposed secularism on a Muslim-­majority society has shifted.31 Under the AKP, the “Turkish model” has come to represent coexistence between conservative Muslims through democratic politics in a secular state with a strong, albeit weakened, military with organic links to the West. This model may resonate in the region, but comparisons to Turkey should also be approached with extreme caution. Despite superficial similarities, the various Arab Islamic movements, including the Muslim Brotherhood, have little in common with Turkey’s AKP. The broader political landscapes from which they emanate are also very different; Turkey, after all, has a parliamentary tradition that, for all the interruptions and reversals, dates back almost 150 years. Thus, any government in Cairo, Damascus, or Tunis may draw inspiration from but will be difficult to “model” on the Turkish example. Dissonance between Turkey’s rhetoric and experience on one hand and Arab realities on the other means that despite the initial successes of Turkish foreign policy in opening new markets and expanding into its neighborhood, Ankara has been forced throughout the Arab Spring to confront the new and complex realities of the Middle East. Having initially inspired admiration in both the Arab world and the West for its

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early embrace of Tunisia and Egypt, Turkey misjudged the situation in Libya by initially rejecting sanctions and even opposing NATO involvement, losing much credibility before changing course. Similarly, having exhausted all options in the face of ongoing protests and brutal repression by the AKP leadership’s “brother” — ​Assad — ​Ankara finally spoke out forcefully against Damascus and offered refuge to Syrian dissidents and opposition. Syria, once the showcase of AKP’s policy of engagement in the Middle East, has now become the centerpiece of a policy of containment with Turkish leadership that has “run out of patience” with Assad. In the current context, managing Syria is critical for Turkey; yet it is almost entirely beyond its own control. Since the beginning of the uprisings against Syrian president Assad, Turkey has been cautiously weighing its options as it decides how to deal with Damascus’s brutal crackdown and the ongoing humanitarian disaster unfolding in its own backyard. Ankara has claimed regional leadership for itself and proclaimed a policy of “zero problems with neighbors,” and this lofty rhetoric has put Turkey in the international spotlight over Syria. Due to Turkey’s own domestic evolution, and the resulting self-­confidence vis-­à-­vis the world that it has developed over the last decade of reform, it was uniquely placed to play a decisive role in Syria. At the same time, the domestic and international dimensions for Turkey of the Syrian situation made it one of the most difficult foreign policy challenges that Ankara ever had to face. A combination of status-­quo policies, inter­ national pressure, and concrete actions against the Assad regime were all attempted, but without strong political will or strategic conviction. As a result, Ankara struggled to balance its strategic interests in Syria with its broader ambitions for the region. The long-­term potential impact on domestic Turkish politics of Syria’s disintegration is only now beginning to be discussed in Ankara. Strong Sunni sympathies are impacting Turkish policy on Syria and beyond following Ankara’s support for victimized Sunni communities around the world, from humanitarian aid in Somalia to the more recent advocacy on behalf of the Rohingya in Myanmar or the Islamic party leader of Bangladesh. Ankara’s efforts are widely popular in the Muslim world, and pictures of the prime minister and foreign minister and their wives providing humanitarian assistance have circulated widely

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as Ankara positions itself as the Ottoman-­style protectors of the Sunni Muslim world. While popular in the short term, in the long term Turkey is performing a precarious balancing act over a cauldron of boiling domestic and sectarian tensions. In this context, other regional actors such as Iran and Israel, who share diametrically opposite worldviews, watch and wait. Shi’a Iran — ​ whose model of anti-­Westernism is no longer the only alterative to pro-­ Western military regimes — ​can only cringe at predominantly Sunni Turkey’s ascendancy with its own model of pluralism, however imperfect, which seeks to rise above the fray.32 Turkish policy makers refuse to describe rising tensions in Sunni/ Shi’a terms and chastise those who do for conflict-­mongering. The picture in the Middle East is further complicated by Turkey’s relations with Shia-­led Iran, Iraq, and Syria and a more conservative Israel, which can be attributed to both geopolitics (prioritizing NATO commitments over regional relationships) and personalities (a clash of type-­A leaders). Overemphasis of its role as Sunni Muslim champion is bound to backfire. The AKP simply will never figure as prominently in the Sunni Islamist imagination as the Arabs’ own Muslim Brotherhood, which is already playing a major role in the transitioning states like Egypt and poised to make a comeback in Syria. Meanwhile, Turkey’s ability to lead through example by consolidating its own version of pluralist democracy — ​an outcome that was well within the AKP’s grasp — ​ appears to have been jettisoned. Erdoğan’s — ​and Turkey’s — ​comparative advantage and ability to play a transformative regional role require projecting an inclusive message toward and platform for those who fear the rise of Sunni Islamism while exerting their own pro-­religious credentials toward moderating the Sunni Islamist bloc. One can only hope that as Syria transitions, Turkey’s prime minister, consummate risk manager but also outspoken firebrand, will choose his words carefully.

Central Asia — ​Turkic Revival? The story of Turkey’s engagement with Central Asia is well known and documented, but the surprising lack of equivalent scholarship on this critical area of Turkish foreign policy demonstrates the fundamental gap between rhetoric and reality. Following the Soviet Union’s collapse,

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the Caucasus and Central Asia became the focal point of Turkey’s diplomatic efforts, peaking in the early 1990s. Ankara tried to capitalize on the strong cultural and linguistic bonds with the new republics, even famously proclaiming a Turkic bloc that would extend from the Adriatic to the Great Wall of China and usher in a Turkish century.33 The Turkish state’s increasing interest in the region was symbolized by the formation of the Turkish Cooperation and Development Agency and the organization of annual summits involving the presidents of Turkey and the Turkic republics (Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan in Central Asia as well as Azerbaijan), the very first of which was held in Ankara in October 1992. The “Turkish model,” based on the country’s reasonably successful experience of mixed economy, parliamentary democracy, and early exposure to market-­oriented reforms, was projected, but with very little resources and tangible diplomacy. Despite the Turkic Central Asian countries enjoying a position of priority among Turkey’s popular conscience as “different states of the same nation,” this has rarely translated from mere rhetoric to concrete policy. Now on the twentieth anniversary of these nations’ independence, Turkey seems poised to review its long-­standing policy toward this increasingly important region for Turkish foreign policy. While the last decade has proved similar to 2011, when Turkey’s moves in Central Asia have been sidelined by the country’s concerns over the Middle East and the more immediate concerns of the Arab Awakenings, it also saw the emergence of the Cooperation Council of Turkic Speaking States (CCTS), a platform joined by all Turkic states except Turkmenistan and Uzbekistan, where in 2011 in Astana, Turkic heads of state and ministers gathered for the first summit to beef up institutionalized networks between the states, specifically economic networks. In spite of the great importance Turkey attaches to its “Turkic brothers,” relations with these countries have not always evolved into solid cooperation; on the contrary, ties have loosened due to Turkey’s naive and mistaken conviction that they could be maintained without much effort because of historic and ethnic ties. A case in point is with the Caucasus and Central Asia’s demographically largest and arguably most strategically important countries, Azerbaijan and Uzbekistan, respectively. Given Turkey’s historic support of Azerbaijan in its conflict with Armenia, the recent rapprochement between Ankara and Yerevan was

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received particularly badly in Baku. When Turkey accepted an invitation for a presidential visit in 2008 to Armenia, and then participated in negotiations to normalize relations between the two countries, signing protocols to that effect in October 2009, it underestimated the Azeri reaction. Supported by domestic nationalist forces, Azerbaijan fiercely criticized the move as being counterproductive to its own interests and “Turkic solidarity,” thereby forcing Ankara to step back. In order to placate the Azeris, Erdoğan linked Turkey’s ratification of the protocols with Armenia to the progress on the Nagorno-­Karabakh peace process. That linkage, in turn, has imperiled reconciliation with Armenia, while greatly disappointing the United States and the EU, both of which stood to gain from the success of this initiative. Acrimony between Ankara and Tashkent has been mostly over Uzbekistan’s suspicions about Turkey’s intentions. This is visible on almost every level, including the level of pan-­Turkic symbolism, which in contrast to other Central Asian leaders, Uzbekistan’s president Islam Karimov has largely dismissed. A fear of Islamic revivalism and Ankara’s potential contribution to it, in supporting dissident movements and Turkish schools accused of teaching Islamist values, color all other parts of the state-­to-­state relationship. Tashkent’s resentment of what many see as Ankara’s support for Islamization in Uzbekistan, particularly the role of Fethullah Gülen schools and the Nurcu movement, is strong. Whether this suspicion is grounded in reality is another question, but the notion is powered by the ruling AKP’s strong sympathies for the Nurcu movement, which is active in over a hundred countries and whose presence is felt across Turkish society, economy, and politics, leading some analysts to claim that AKP and the Nurcu movement are in fact joined at the hip.34 Amid regional complexities such as these, Turkey is trying to position itself as a rising regional power and global aspirant. Ankara’s policy elite sees its ethnic, cultural, and religious ties to the Turkic world as a valuable strategic asset. Even more than its claims to leadership of the Muslim world, Ankara’s role in the Turkic world has strong domestic resonances, and its ability to successfully mediate in the security and political crises that punctuate the region is seen as critical for enhancing Ankara’s international stature.35 Beyond simple rhetorical gains, this

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also comes with a degree of tension with powers such as China that are dealing with restive Turkic Uighur populations in Xinjiang.36 In Central Asia just as in the Middle East, with its intersection of great and middle powers, politics, economics, and energy, Turkey has found that achieving a state of “zero problems” can be problematic. There is a strong convergence of Turkish and Western interests in Central Asia in a future that seems increasingly likely to feature the failure of nuclear states like Pakistan, the agonizingly difficult task of stabilizing Afghanistan, the possibility of new turmoil in Iran, Russia’s unsettled politics and draining stability, and the emergence of new actors like China and India in the region, which might fundamentally change the game’s parameters for all players. Nor are strategic opportunities being realized for building a trade and transport infrastructure across Central Asia that could heighten the economic prospects of the entire region and, indeed, make the prospects of a new Silk Road of Europe-­to-­China-­to-­India trade and economic corridor more than an American pipe dream. Without Ankara’s creative and strong focus on Central Asia, it will be hard to realize the benefits of a strong strategic Turkic partnership for the future despite the potential.37 Turkey seems to be aligning its foreign policy in a way that will close the gap and revive old partnerships, as 2011 was a year when Turkey’s moves in Central Asia, although partially sidelined by the country’s concerns over the Middle East, aimed at mending fences in the region and preparing infrastructure for more cooperation in the years to follow.

Turkey’s New Directions in a Changing World Taken as a whole, Turkey now is applying a more open, pragmatic, and proactive foreign policy to its own diverse and turbulent neighborhood, including Central Asia and the Middle East. It is doing so in a variety of policy areas, ranging from diplomacy to trade, energy, and immigration.38 Turkey’s prioritization of its Eastern neighborhood implies a “reorientation” from its exclusive Western focus. As Ankara’s 2013 decision to select a Chinese defense contractor for its largest missile defense project revealed, its new approach is not always welcomed by Turkey’s Western allies, who are increasingly skeptical of its neighborhood

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policies. While Turkey’s policies have a clear impact on EU and U.S. goals in Turkey’s neighborhood, the United States and the EU also hold important leverage on Turkey. As seen from its own neighborhood, Turkey’s strategy of diplomatic and economic engagement has been a welcome one. With its nonsectarian and pragmatic focus on stability for business, Ankara offers the greatest economic incentives for partnership. The opportunity for Ankara comes in part because of the lack of regional leadership, mistakes made by the West, and suspicions of China’s ultimate intentions. With the fastest-­growing and largest economy in its neighborhood, Turkey is uniquely placed to play a decisive international role, not least because of the institutionalized nature of its relationships. As a G-­20 founding member, rotating member of a European seat on the UN Security Council, EU aspirant, and head of the OIC, Ankara has transformed itself into an international actor, capable of bringing considerable clout and influence to its regions. Turkey did not transform itself from a defeated post-­Ottoman state led by Atatürk’s military to a flourishing market democracy overnight; it has been almost a century in the making. However, the lessons learned and the opportunities offered by Turkey today lend it further credibility that many countries in the West lack in Turkey’s neighborhood. *** Given the dynamic changes happening throughout Turkey’s neighborhood, with the color revolutions that originally swept the post-­Soviet space and most recently in the Arab world, Turkey stands at a historic crossroads. It is positioned between two geopolitical regions: one characterized by democracy to its west and the other by either very weak democracies or authoritarianism to its north, east, and south. As a neighbor of powers such as Iran and Russia that offer alternative paths to development and promote alternative understandings of democracy, Turkey continues to require the support of its EU and U.S. partners if its own democracy is to consolidate and develop in a liberal manner. Central Asian powers have been watching the revolutionary movements sweeping the Middle East with less enthusiasm, fearing spillover and a loss of primacy as the region reshapes itself. These countries’ very weakness in comparison to the economic opportunities and popularity

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of an indigenous democracy led by a freely elected legitimate conservative Muslim party makes the case for Turkey’s regional leadership even stronger. As a longtime ally of the West but also seeking to be a new partner in its region, Turkey has been seeking the role of mediator and model. However, Turkey’s aspiration is dependent on its Western affiliations, not its anti-­Western rhetoric or individual leadership. Turkey’s global role has shifted from a Western geostrategic military deterrent to an exemplary model of a Muslim-­majority, secular, and democratic nation. Turkey has historically prioritized its relationship with the West, and the attractiveness of Turkish membership in the EU is undoubtedly linked to the constructive role it can play in its own near abroad. Therefore, as Erdoğan and the AKP continue to cultivate these relationships and Western policy makers continue to examine Turkey’s actions throughout the geopolitical landscape of Eurasia, Turkey can no longer be seen as a means to an end for these foreign policy initiatives. There is much that the EU and United States can do to take advantage of Turkey’s increasingly prominent regional role without “zero problems” becoming a “zero-­sum” competition between Turkey and the West, since Turkey is still, as of this writing, a part of the West.39 Turkey’s overtures to the neighborhood have been interpreted as symptomatic of the country’s slide to the East. The cause of this slide is viewed as the rise of political Islam in Turkey, embodied in the AKP. The consequence is Turkey’s increasing warmth toward Muslim countries like Iran; its open political channels with Islamist movements such as Hamas and Hezbollah; and its pro-­Islam double standards in denouncing genocide in Xinjiang while denying it in Darfur. The ramification for the United States and Europe is “losing” Turkey and Turkey’s Western orientation.40 This debate took a particularly strident tone in 2009 – ​2010 as the Turkish-­Israeli military alliance faltered, reaching an all-­time low in the aftermath of the June 2010 Gaza flotilla crisis, Turkish-­Iranian relations warmed, and Turkey mediated alongside Brazil a deal on the Iranian nuclear question.41 This has led some to provocatively question Turkey’s NATO membership tout court.42 While worded more softly, some European observers have also raised eyebrows at Turkey’s newly assertive foreign policy, voicing a growing concern that Ankara may be losing its European vocation.43

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While the United States and European Union can no longer count on Turkey to passively support their regional objectives in Central Asia or the Middle East, they will be able to rely on Turkey as a self-­confident and equal regional partner where their interests converge. This partnership must be built on mutual respect and sensitivity to both sides’ national interest. There are many areas where Turkish participation can be very constructive, particularly in Central Asia. Turkey can serve as a valuable partner for regional stability and security of energy-­exporting Arab and Turkic countries, which is crucial for the global economy. Furthermore, in light of the current pro-­democracy uprisings throughout the region, the West and Turkey have a common interest in facilitating these countries’ peaceful transition to democracy even as the Turkic world watches Ankara’s own internal reform process. While the AKP will continually look toward its Muslim and Turkic roots to gain domestic support, Turkey’s future internationally is neither exclusively in Europe nor exclusively in Eurasia. Erdoğan is a pragmatic and clever politician who has exploited the lack of leadership and weakness of the West, but ultimately realizes the importance of the U.S.-­Turkish alliance and EU-­Turkish cooperation for the success of the AKP’s foreign policy objectives. Inherent in the conceptualization of Turkey’s new foreign policy is the need to have good relations not just with its neighbors, but with all the major poles of world and regional power. Ankara’s proactive attempts at policies in regions that it once ignored are following its own private sector and dealing with competition coming increasingly from China and Russia rather than the West. While pursuing similar anti-­Western policies or rhetoric to bolster Ankara’s regional credentials is a short-­term tactic, as a long-­term strategy it is doomed to failure, given Turkey’s own proud tradition of being part of the transatlantic community. Given the preponderance of Western power at both a global and a regional level, Turkey cannot simply pursue its regional policies without working with Brussels and Washington. Especially in places like Syria, Western vacillation is further evidence of Ankara’s critical role as transatlantic bridge between the Middle East and Europe. Western leaders have belatedly recognized the change that has occurred in Turkish foreign policy making and have calibrated their own policy toward Turkey accordingly. Working toward securing Turkey into

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a Western framework, preferably through EU membership, remains a policy priority for some leaders, while being simply a rhetorical trick to gain Turkish appreciation for others. Given the tension in Turkish­EU and transatlantic relations generally, this will require political capital that has rarely been expended on behalf of Turkey; however, it is necessary. A Turkey that is not anchored to the West will increasingly look toward its other options in a way not seen before in its Republic history. As outlined, this would include greater reliance on its Muslim identity in the Middle East, Turkic identity in Central Asia, and peripheral balancing with Russia and even China against the West. Given Turkey’s potential as both an energy corridor and economic hub for these regions, Ankara has many options for seeking new poles of influence. Turkey has now become more interdependent with its neighborhood in both economic and geopolitical domains. This reorientation will likely be sustained and continue to grow precisely because it is supported by a broad base of domestic interest groups, which are growing beyond the AKP that once brought them together. Even if the AKP loses its grip or disintegrates in future elections, the growing domestic economic interests will assure that any other party that takes charge will have to preserve the improved neighborhood relations. Turkey’s rapprochement with its neighborhood suggests a new chapter in its foreign policy that the rest of the world will have to grow accustomed to in the coming decades. Notes 1.  Heinz Kramer, A Changing Turkey: The Challenge to Europe and the United States (Washington, D.C.: Brookings Institution, 2000). 2.  Alan Makovsky and Sabri Sayari, Turkey’s New World (Washington, D.C.: Washington Institute for Near East Policy, 2000). 3.  This was the subject of an active debate at a recent Turkish International Studies Association panel with Meliha Altunisik, Mustafa Aydin, Fuat Keyman, Hasan Kosebalan, Halit Tagma, and Joshua Walker on March 19, 2011, in Montreal, Canada. 4.  Classic works on Turkish foreign policy include William Hale, Turkish Foreign Policy, 1774 – ​2000 (London: Frank Cass, 2002); Andrew Mango, Turkey: The Challenge of a New Role (London: Praeger, 1994); Philip Robins, Suits and Uniforms: Turkish Foreign Policy since the Cold War (Seattle: Washington University Press, 2003); and Reşat Kasaba, The Cambridge History of Turkey, vol. 4, Turkey in the Modern World (Cambridge: Cambridge University Press, 2008).

320 | Joshua W. Walker

5.  As a scholar of international relations, Davutoğlu has published a book that has become the backbone and terminology for the AKP’s foreign policy. See Ahmet Davutoğlu, Stratejik Derinlik: Turkiye’nin Uluslararasi Konumu [Strategic depth: Turkey’s international position] (Istanbul: Kure Yayinlari, 2001). 6.  Joshua Walker, “Architect of Power,” Journal of Security Affairs 18, no. 1 (2010): 67. 7.  Davutoğlu, Stratejik Derinlik. See also his articles “The Clash of Interests: An Explanation of the World (Dis)Order,” Perceptions 2 (December 1997 – ​February 1998): 4; “Türkiye merkez ülke olmalı,” Radikal, February 26, 2004; and “Turkey’s Foreign Policy Vision: An Assessment of 2007,” Insight Turkey 10, no. 1 (2008): 77 – ​96. 8.  Davutoğlu, Stratejik Derinlik. 9.  Davutoğlu denies charges of “Neo-­Ottomanism” by his secular counterparts; however, in his writings there is a continual emphasis on the “natural” historical and cultural links to Turkey’s former Ottoman territories, and his actions reveal a clear focus on these regions for the most intensive Turkish diplomatic activities; see Davutoğlu, Stratejik Derinlik; and Suat Kiniklioglu, “The Return of Ottomanism,” Today’s Zaman, March 27, 2007. 10.  Kemal Kirişci, “The Transformation of Turkish Foreign Policy: The Rise of the Trading State,” New Perspectives on Turkey, no. 40 (2009): 29 – ​57. 11.  Kemal Kirişci, “A Friendlier Schengen Visa System as a Tool of ‘Soft Power’: The Experience of Turkey,” European Journal of Migration and Law 7, no. 4 (2005): 343 – ​67. 12.  Nader Habibi and Joshua Walker, “What Is Driving Turkey’s Re-­engagement with the Arab World?” (Middle East Brief 50, Crown Center for Middle East Studies, Brandeis University, Waltham, MA, April 2011). 13.  Ibid. 14.  Joshua Walker, “The Forming of the U.S.-­Turkish Special Relationship,” in The History of American Turkish Relations: 1833 – ​1989, ed. Bilge Criss, Bruce Kuniholm, and Selcuk Esenbel (Istanbul: Cambridge Scholar Press, 2011). 15.  Stephen Larrabee and Ian Lesser, Turkish Foreign Policy in an Age of Uncertainty (Santa Monica: Rand Corporation, 2003). 16.  See Huseyin Bagci, Zamnin Ruhu: Kuresel Politikalar ve Turkiye (Istanbul: Orion, 2007). 17.  Henri Barkey, “The Endless Pursuit: Improving U.S.-­Turkey Relations,” in The United States and Turkey: Allies in Need, ed. M. Abramowitz (Washington, D.C.: Century Foundation, 2003). 18.  Joshua Walker, “The United States and Turkey: Can They Agree to Disagree?” (Middle East Brief 46, Crown Center for Middle East Studies, Brandeis University, Waltham, MA, November 2010). 19.  This discussion draws extensively from Ahmet Evin et al., “Getting to Zero: Turkey, Its Neighbors and the West” (Transatlantic Academy, Washington, D.C., 2010), http://www.transatlanticacademy.org/sites/default/files/publications/GettingtoZero​ FINAL.pdf; and Kemal Kirişci, Nathalie Tocci, and Joshua Walker, “A Neighborhood Rediscovered: Turkey’s Transatlantic Value in the Middle East” (2010 Brussels Forum Paper Series, German Marshall Fund, Washington, D.C., 2010).

Ambitions of Grandeur | 321

20.  Nathalie Tocci and Ahmet Evin, eds., Towards Accession Negotiations: Turkey’s Domestic and Foreign Policy Challenges Ahead (Florence: European University Institute, 2004). 21.  Senem Aydın and Fuat Keyman, “European Integration and the Transformation of Turkish Democracy” (EU-­Turkey Working Papers 2, Centre for European Studies, Brussels, 2004). 22.  Ersen Aydınlı, Nihat Ali Özcan, and Doğan Akyaz, “The Turkish Military’s March towards Europe,” Foreign Affairs 85, no. 1 (January – ​February 2006): 84. 23.  Hakan Yavuz, “Islam and Europeanization in Turkish-­Muslim Socio-­Political Movements,” in Religion in an Expanding Europe, ed. Timothy Byrnes and Peter J. Katzenstein (Cambridge: Cambridge University Press, 2006). 24.  Mensur Akgün et al., The Perception of Turkey in the Middle East (Istanbul: TESEV Yayınları, 2009), 25. 25.  Robert D. Hormats, “The United States’ New Silk Road Strategy: What Is It? Where Is It Headed?” (remarks to the SAIS Central Asia-­Caucasus Institute and CSIS Forum, Washington, D.C., September 29, 2011), http://www.state.gov/e/rls/rmk/2011/​ 174800.htm. 26.  Bulent Aras, “Turkish Policy towards Central Asia” (SETA Policy Brief 12, Ankara, April 2008). 27.  This section draws extensively from Evin et al., “Getting to Zero.” 28.  For a full discussion of this important relationship, see Joshua Walker, “Turkey and the Post-­Soviet States: A New Way Forward,” Insight Turkey 4 (2005): 13 – ​20. 29.  See Ronald H. Linden et al., Turkey and Its Neighbors (New York: Lynne Reiner, 2011), particularly Linden’s chapter 4, “Battles, Barrels and Belonging: Turkey and Its Black Sea Neighbors.” 30.  Linden, “Battles, Barrels and Belonging.” 31.  For more, see Linden et al., Turkey and Its Neighbors. 32.  In many ways, Prime Minister Erdoğan today represents the culmination and synthesis of Özal’s unfulfilled legacy of opening to the East. Özal was the first Turkish president to attend Friday prayers and perform the hajj pilgrimage to Mecca while simultaneously having a penchant for fine scotch and being a proud secular nationalist — ​much as Erdoğan tries to combine his Muslim piousness with his Turkishness. For more on this comparison, see Malik Mufti, Daring and Caution in Turkish Strategic Culture: Republic at Sea (New York: Palgrave Macmillan, 2009). 33.  This has been attributed to both Turgut Özal and Suleyman Demirel, but Hugh Pope’s book Sons of the Conquerors: The Rise of the Turkic World (New York: Overlook, 2005) is the best resource for further reading on the notion of a Turkic world. 34.  Nadir Devlet, “Turkey and Uzbekistan: A Failing Strategic Partnership” (On Turkey Series, German Marshall Fund of the United States, Washington, D.C., January 5, 2012). 35.  Gokhan Bacik, “Turkey and China” (On Turkey Series, German Marshall Fund of the United States, Washington, D.C., 2011). 36.  For more on China, please see Xing Guangcheng’s chapter in this volume.

322 | Joshua W. Walker

37.  Devlet, “Turkey and Uzbekistan.” 38.  See Linden et al., Turkey and Its Neighbors. 39.  For one of the best articulations of this, see Nathalie Tocci, Turkey’s European Future: Behind the Scenes of America’s Influence on EU-­Turkey Relations (New York: New York University Press, 2011). 40.  For two strong articulations of this view, see Rajan Menon and S. Enders Wimbush, “Is the United States Losing Turkey?” (Working Paper, New America Foundation, March 25, 2007); and Soner Cağaptay, “Turkey at a Crossroads: Preserving Ankara’s Western Orientation” (Policy Focus 48, Washington Institute, Washington, D.C., October 2005). 41.  The agreement between Turkey, Brazil, and Iran was brokered in May 2010 as the United States and the European members of the UN Security Council were attempting to rally support for a resolution on new sanctions on Iran. The agreement stipulated Iran’s depositing of 1,200 kilograms of low enriched uranium in Turkey in one instalment, in exchange for the equivalent amount of fuel by the Vienna group (United States, Russia, France, and the International Atomic Energy Agency) delivered within a year to Iran. 42.  David Schenker, “A NATO without Turkey,” Wall Street Journal, November 5, 2009. 43.  Heinz Kramer, “Turkey’s Accession Process to the EU” (SWP Comments 25, Stiftung Wissenschaft und Politik, Berlin, October 2009).

Regional Integration?

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12

Alternative Futures for Central Asia How Far Will Integration and Cooperation Proceed? Richard Pomfret

Until the five Central Asian countries became independent in December 1991, they were part of the integrated economic space of the Soviet Union without internal borders. In the Soviet system they were open economies, with export/output ratios similar to those of Canadian provinces, but 85 – ​90 percent of their trade was with other Soviet republics. Roads and railways led north or west to the Russian republic, and the eastern and southern borders of the Soviet Union were effectively closed to trade.1 The huge unanticipated shock of the dissolution of the Soviet Union in December 1991 was followed by over a decade of regional disintegration in Central Asia as border crossing posts were erected along frontiers that had been mere lines on a map in the Soviet economy. Transport infrastructure generally deteriorated, with road and railway building focused on nationalizing networks rather than improving the regional network.2 Although trade with Russia declined to below half by the late 1990s, trade among the Central Asian countries has remained small. As Russia’s economic influence declined, no external powers filled the vacuum before the turn of the century. Since then a variety of factors, notably soaring oil prices and U.S. involvement in Afghanistan, have led to increased economic activity by the United States and China. Russia has responded by trying to revive its historically dominant position in Central Asia, especially through the Eurasian Economic Community. The customs union created in 2010 between Russia, Kazakhstan, and Belarus highlights a fault line in Central Asia as the Kyrgyz Republic and Tajikistan are likely to join the customs union, while Uzbekistan and Turkmenistan oppose it. However, many 325

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uncertainties remain — ​especially concerning the viability and widening of the customs union, U.S. interests in the region post-­Afghanistan, and China’s economic future — ​that will determine the future relative influence of external powers.

Regional Integration Faced with three major negative shocks in the early 1990s — ​the end of central planning, the dissolution of the Soviet Union, and hyper­ inflation — ​the newly independent Central Asian countries tried to maintain existing economic ties. They all joined the Commonwealth of Independent States (CIS) and continued to use the ruble. By November 1993, however, the ruble zone had collapsed and the CIS’s weakness was exposed by its inability to resolve any of the conflicts that broke out within and between CIS members. In the mid-­1990s, trade flows began to recover and in the process trade partners became substantially more diversified, with over half of the five Central Asian countries’ inter­ national trade being outside the CIS after 1996. The many proposals for regional trading arrangements, however, were ineffective. After the collapse of the ruble zone, the presidents of Kazakhstan, the Kyrgyz Republic, and Uzbekistan agreed to create the Central Asian Economic Union, which was renamed the Central Asian Economic Community (CAEC) when Tajikistan joined in 1998. At CAEC meetings Central Asian leaders passed over 250 resolutions, but the implementation record fell far behind the statements of intentions, and the CAEC had little in the way of practical achievements. In 2002 the four presidents proclaimed the Central Asian Cooperation Organization (CACO) as the successor to the CAEC, but the CACO also had lofty aspirations with little concern for implementation. In May 2004 Russia became a CACO member, but this was a sign of Uzbekistan-­ Russian rapprochement rather than a strengthening of the CACO. In December 1994 a subset of CIS members (Kazakhstan, Russia, and Belarus) announced the formation of a customs union, to which the Kyrgyz Republic acceded in 1996 and Tajikistan in 1999, making it a Union of Five. Despite the formal agreements, there was little evidence of implementation by the Central Asian countries. In 2000 the Union of Five was renamed the Eurasian Economic Community (EurAsEC),

Alternative Futures for Central Asia | 327

and in 2005 Uzbekistan joined EurAsEC. Since this step, equivalent to a CACO-­EurAsEC merger, there has been no exclusively Central Asian regional organization, and no sign of the situation changing in the near future. In 1992 the newly independent Central Asian countries, along with Azerbaijan and Afghanistan, joined Iran, Pakistan, and Turkey in the Economic Cooperation Organization (ECO), bringing together all non-­ Arab Muslim countries in Asia west of India. Trade between the Central Asian countries and their southern neighbors expanded after 1992, but from a low base and more slowly than many observers expected. As with the CAEC/CACO, the practical impact of the ECO has been limited; in both cases a fundamental obstacle to regional integration is the similarity of the member countries’ economies, which all tend to be specialized on a small group of primary products (oil, gas, minerals, and cotton). In 1996 the Council of Ministers approved the establishment of a permanent ECO Secretariat in Tehran, but this was a high point for the ECO. In 1995 and 1996 Uzbekistan, partly responding to Kazakhstan’s pro-­Russia shift, moved closer to the United States. This undermined relations with Iran, and the 1996 ECO summit ended early amid acrimonious insults between Iran and Uzbekistan. Within the CIS a split deepened between the Union of Five (Russia, Belarus, Kazakhstan, the Kyrgyz Republic, and Tajikistan) and the GUUAM group (Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova), and the fault line ran through Central Asia. Turkmenistan remained ostentatiously neutral. Uzbekistan formally joined the four GUAM countries in 1999, effectively withdrew from the alliance in 2002, and withdrew de jure in May 2005 before joining EurAsEC. However, in 2008 Uzbekistan exited EurAsEC, reestablishing the fault line. The formation of a customs union among the three largest EurAsEC members in 2010 represents the most important move since 1991 by Russia to revive its historically dominant position in Central Asia. Another overlapping configuration, dubbed the Shanghai Five, emerged from a meeting in 1996 of China, Russia, Kazakhstan, the Kyrgyz Republic, and Tajikistan intended to demilitarize borders. At a summit in Dushanbe in July 2000, the Shanghai Five, with Uzbekistan as an observer, took up a number of economic issues, and the group changed

328 | Richard Pomfret

its name to the Shanghai Forum. At the June 2001 summit Uzbekistan became the sixth member and the group was renamed the Shanghai Cooperation Organization (SCO). For the Central Asian countries, the SCO was a way of using China as a counterweight to Russia, rather than an instrument for regional integration. Two institutions promoted by multilateral organizations complete the kaleidoscope of overlapping institutions (table 12.1). The Special Program for the Economies of Central Asia (SPECA) was launched in 1998 by the UN regional commissions for Europe and Asia as a forum for regional cooperation. Although SPECA could have become an institutional framework for trade cooperation, its achievements have been minimal. Another institutional vehicle for regional cooperation is the table 12.1. Membership in Regional Organizations CIS

EurAsEC

ECO

SCO

SPECA

CAREC

Kazakhstan

×

×

×

×

×

×

Kyrgyz Rep.

×

×

×

×

×

×

Tajikistan

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

×

Turkmenistan Uzbekistan

 — ​

×

a

×

 — ​b

Afghanistan Armenia

×

Azerbaijan

×

Belarus

×

×

× ×

China Georgia

 — ​

× × ×

Mongolia

×

Pakistan Russia

×

×

× ×

×

Turkey Ukraine

×

c

Iran Moldova

×

×

Turkmenistan never ratified its CIS membership, and since 2005 unofficially considers itself an associate member. b Uzbekistan joined EurAsEC in 2005, but withdrew in 2008. c Georgia withdrew from the CIS in 2009. a

Alternative Futures for Central Asia | 329

Central Asia Regional Economic Cooperation (CAREC) program, an initiative to encourage economic cooperation in transport, energy, trade policy, and trade facilitation between Azerbaijan, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Uzbekistan, and the Xinjiang autonomous region of China.3 Despite slow progress after its launch in 1997, CAREC has some achievements in coordinating transport and trade facilitation among the member states.4 In sum, the record of regional cooperation in Central Asia between 1991 and 2010 was of many paper proposals and official declarations, but limited real progress (Kulipanova, 2012). Cooperation was inhibited by sensitivity about newly won sovereignty and by personal tensions between the autocratic presidents. Despite the natural ties of a shared culture, history, and economic structure and obvious shared problems such as managing the water resources of the two rivers flowing into the Aral Sea, there is no regional institution based in Central Asia. Four or five of the Central Asian countries belong to three regional institutions that have their secretariats outside Central Asia and tend to be driven by the host country: EurAsEC (secretariat in Moscow), the SCO (secretariat in Beijing), and the ECO (secretariat in Tehran). They also participate in SPECA, run by the UN regional commissions in Bangkok and Geneva, and in CAREC, whose secretariat is at the Asian Development Bank in Manila. Serious interest in improving the regional transport network only dates from the mid-­2000s, stimulated by a series of reports from multilateral organizations that highlighted the economic shortcomings of existing trade, transport, and transit arrangements (World Bank, 2004; UNDP, 2005; ADB, 2006), but implementation has been slow. What is the fascination with regional agreements in Central Asia despite their abject record? Part of the motivation behind announcements of regional initiatives is to signal political alignments, without any intention of constraining economic policy autonomy. Kazakhstan and Uzbekistan have had broader visions of their role on the international stage, and competition for regional leadership has never been far from the surface. After 1994, as Uzbekistan attempted to assert a stronger leadership role in Central Asia, Kazakhstan’s interest in the CAEC waned and interest in a Russian-­centered regional organization (Union of Five/EurAsEC) grew. Uzbekistan’s response was to move closer to

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the anti-­Russian camp (GUAM) and to the United States. Apart from Uzbekistan’s brief reversion to the Russian camp in 2005 – ​2008, this fault line has continued to divide Central Asia.5 Among the smaller countries, Turkmenistan, with abundant rents from natural gas and cotton and with an autocratic leadership, has seen no need to play these games or to impose any limits on its policy independence.6 At the other extreme, Tajikistan went through a bitter civil war for most of the 1990s, and the leadership is well aware of its debt to Russia for military assistance. The Kyrgyz Republic, with limited natural resources and relatively liberal leadership, was most open to the suggestions of international institutions that it integrate rapidly into the global economy, and in 1998 it became the first Soviet successor state to join the WTO, but it was also aware of the importance to its economy of its larger neighbor Kazakhstan. The rapid accession to the ECO in 1992 also sent a signal rather than being a major policy shift. The Central Asian leaders sought to assert their solidarity with Islamic neighbors, even though their regimes remained solidly secular. The southern orientation was reinforced by linguistic and cultural ties between Tajiks and Iran and between the other four countries and Turkey, but the willingness of the three ECO founders to provide practical assistance to the new ECO members fell short of the Central Asian countries’ expectations.

External Players The breakup of the Soviet Union was accompanied by predictions of a new Great Game of foreign power rivalries in Central Asia. Other observers foresaw competition between Turkey and Iran to promote different brands of Islam in the region. In fact, outsiders showed little interest in the region during the 1990s. Russian influence waned, but no other country stepped in to fill the vacuum. The United States as the sole remaining superpower quickly established embassies in the Central Asian capitals, and a handful of individual U.S. companies were active — ​for example, Chevron and Mobil in Kazakhstan. In 1996 – ​1997 the U.S. administration supported Unocal’s plans to construct a gas pipeline from Turkmenistan through Afghanistan to Pakistan, but the project was abandoned in 1998 as U.S. opinion

Alternative Futures for Central Asia | 331

shifted against the Taliban government. At this time Uzbekistan was the strongest Central Asian supporter of the United States; on occasion the only countries voting with the United States in the UN were Israel and Uzbekistan. Despite moral support for the new independent countries, the United States provided only small amounts of aid to any of the Central Asian countries. The role of the United States in the region grew in the early 2000s, as the United States established bases in Uzbekistan and the Kyrgyz Republic for military operations in Afghanistan. This development was viewed with suspicion by other regional powers, but Russia and China at least initially were constrained to pay lip service to a common cause against terrorism. China had been shifting away from support for the United States during the late 1990s.7 This was reflected in China’s participation in the predecessors to the SCO, China’s first real experiment with regional arrangements anywhere. In the 1990s and early 2000s China obtained little response from the Central Asian countries, which harbored lingering suspicions of their large neighbor’s territorial ambitions and fear of Chinese immigration.8 After the 2003 invasion of Iraq, the welcome for U.S. troops in Central Asia began to be reassessed by the region’s autocratic presidents. A greater emphasis on the SCO, especially by Uzbekistan, reflected growing concerns about the reliability of the United States. The political motives for closer ties with China and Russia became stronger as Uzbekistan recognized kindred spirits in the Chinese and Russian leaderships’ attitude toward democracy and civil rights. After the Andijan events of May 2005, U.S. calls for an independent inquiry into the deaths were met by an Uzbek demand that the U.S. base in Uzbekistan be vacated within six months. On July 5, 2005, the SCO requested that the United States set a deadline for the withdrawal of U.S. military personnel from Central Asia, while the Russian and Chinese foreign ministries declared that they did not interfere in the internal affairs of other countries. However, the apparent shift toward China and Russia was incomplete, as the Kyrgyz Republic, despite the SCO policy, renewed the U.S. lease on the Manas air base near Bishkek. When the U.S. secretary of state Condoleezza Rice visited Central Asia in October 2005, she visited Kazakhstan, the Kyrgyz Republic, and

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Tajikistan, while pointedly avoiding the formerly strongest U.S. ally in the region, Uzbekistan. In September 2006 President Bush welcomed Kazakhstan’s president Nazarbaev in Washington. Turkmenistan had begun to deviate from its strict neutrality by seeking Russian economic assistance. Superficially at least, there had been a reversal of alliances as the three countries formerly closest to Russia now tilted toward the United States, and the two most repressive regimes shifted toward Russia. However, the shift in alliances was short-­lived. Uzbekistan became a key piece of the northern supply route to U.S. troops in Afghanistan, whose importance was growing as U.S.-­Pakistan relations deteriorated, and quit EurAsEC in 2008.

Energy and Pipelines The most contentious and highly publicized elements of Central Asian trade and transport have been pipelines. The region is rich in oil and gas, for which pipelines are the lowest-­cost means of transport, but large construction costs mean that only a limited number of pipelines are justified. The inherited pipelines all ran from Central Asia to Russia, but the question of whether new pipelines would run east, south, or west led to pipeline projects becoming the stuff of high politics. At independence, all pipelines were controlled by Transneft. The first oil pipeline from the Caspian not under Transneft control, a privately owned pipeline from Kazakhstan to the Black Sea, opened in 2001; the first to bypass Russia, the Baku – ​Tbilisi – ​Ceyhan pipeline, opened in 2005. A pipeline through Kazakhstan to China, built in three stages during the 2000s, was completed in 2009. These oil pipelines mean that Kazakhstan now benefits from a competitive environment in transporting and selling its oil, so that revenue is equal to the world price minus transit fees that are related to cost rather than monopoly power. The situation with respect to gas pipelines is more complex and controversial. Railways and boat transport across the Caspian Sea are feasible, albeit more expensive, alternatives to oil pipelines, but for exporting natural gas the landlocked Central Asian producers have no feasible alternatives to pipelines. The inherited network, dominated by Russian routes, continued to carry gas exports, apart from a small pipeline opened from Turkmenistan to Iran in 1997.9 Negotiations in 1997 with

Alternative Futures for Central Asia | 333

Unocal of California to construct a pipeline through Afghanistan to the energy markets of South Asia collapsed as the U.S. government drew back from relations with the Taliban government. This route is still on Turkmenistan’s agenda, assuming that Afghanistan’s (and Pakistan’s) government can provide reasonable security guarantees. In 2006 – ​2007 prospects were boosted by improved relations between India and Pakistan plus promised support from the Asian Development Bank, but any trans-­Afghanistan pipeline is still a distant prospect.10 The situation began to change in the mid-­2000s as energy prices increased and Turkmenistan started to renegotiate its long-­term agreement to supply gas via Russia to Ukraine. In 2006 President Niyazov made a rare foreign trip to Beijing, where he negotiated Chinese investment in the Turkmen gas sector, and construction of a gas pipeline from Turkmenistan through Uzbekistan and Kazakhstan to China. In July 2007 China signed a contract to buy 30 billion cubic meters (bcm) per year. At the same time, the China National Petroleum Corporation was granted drilling rights in Turkmenistan. In May 2007 Russia responded by proposing a 10 bcm per year gas pipeline along the Caspian coast from Turkmenistan through Kazakhstan to Russia, the Prikaspiisky route, feeding into the Russian pipeline network.11 This would be in addition to the 50-­plus bcm a year that currently flows to Russia. The agreement was widely seen as a preemptive move to forestall Caspian gas going to China, but it did not stop the July 2007 Turkmenistan-­ China agreement.12 The Chinese moved ahead with their pipeline project, which was completed in 2009. Meanwhile, the Prikaspiisky pipeline remains stalled. A major debate has concerned new pipeline routes from Central Asia and Russia to the EU, with the issue being whether the Nabucco project through Turkey is more desirable than investment in gas pipelines from Russia. In 1999 – ​2000 the U.S. government funded a $750,000 feasibility study by Enron for a pipeline supplying gas from Azerbaijan and Turkmenistan to Turkey, but the project fell afoul of poor relations between Turkmenbashi and president Heydar Aliev of Azerbaijan, and was eventually limited to the Baku – ​Erzurum gas pipeline from Azerbaijan to Turkey that opened in late 2006. A pipeline under the Caspian would link up to the Baku – ​Tbilisi – ​Erzurum pipeline and to the proposed Nabucco pipeline from Turkey to Hungary via Bulgaria and Romania.

334 | Richard Pomfret

After April 2008 meetings in Ashgabat between EU officials and Turkmenistan’s foreign minister, the EU external relations commissioner claimed that Turkmenistan had committed to supply 10 bcm of gas per year directly to the EU, but the pipeline remains unbuilt. The economic attractiveness of Nabucco to Western European buyers depends upon the alternatives, and a trans-­Caspian pipeline will surely be opposed by Russia and Iran on environmental grounds. With construction of the Chinese pipeline and the proposal for a Prikaspiisky pipeline, the question was whether Turkmenistan would have insufficient gas to also fill Nabucco. The basic math was that Turkmenistan had commitments to supply 80 bcm a year through Russia and 30 bcm a year to China as well as up to 14 bcm a year to Iran by the 2020s, and was negotiating exports to the EU and perhaps supplies to South Asia. During the decade 2001 – ​2010, annual gas production fluctuated in a range from 36.4 to 66.1 bcm, with a flat or even downward trend: output in 2010 was 42.4 bcm (BP, 2011). Thus, gas production would have to more than double over the next decade for all these commitments and dreams to be satisfied. Given the official secrecy and unsupported official claims about the country’s reserves, it is not surprising that analysts came up with wildly differing projections of future output. For several years the BP Statistical Review reported a constant estimate of Turkmenistan’s natural gas reserves at 2.75 trillion cubic meters, and International Energy Agency (IEA) reports were skeptical about whether Turkmenistan could increase production at all. President Berdimuhamedov sought to establish credibility by commissioning an independent audit by the respected UK firm Gaffney, Cline and Associates. The audit has confirmed massive reserves, at least ten times the estimate in the BP Statistical Review, which could promote Turkmenistan into a major gas producer. However, Turkmenistan has to turn the reserves into output and deliver the gas to markets. Technological change is reducing the cost of liquefied natural gas (LNG) transportation. Intercontinental trade in LNG has been constrained by the high cost of constructing liquefaction plants at the point of shipment and regasification plants at the point of arrival. Technological change is lowering these costs, and Western European countries

Alternative Futures for Central Asia | 335

such as Spain, Britain, and Italy have been investing in regasification plants; the South Hook plant in South Wales, which opened in 2009, is Europe’s largest, and Italy has recently finished or is constructing three large offshore plants that can process over 20 bcm a year, equal to deliveries through a large pipeline and important because Italy is a major intended market for Nabucco gas. These developments will allow countries with large gas reserves and port access (e.g., Qatar and Australia) to be highly competitive in European markets and, given the low ocean-­shipping costs relative to the high cost of constructing pipelines, will seriously erode the competitive position of landlocked producers such as those of Central Asia.13 The most plausible outcome is that the EU will get most of its future gas as LNG, while Turkmenistan supplies Asian markets, primarily China, northern Iran, and eastern Russia. In sum, by delaying expansion of its gas production and organizing the necessary pipelines, Turkmenistan may have missed the opportunity to diversify into EU markets.

China From the early 1960s until the end of the Soviet era, the long land border between Central Asia and China was essentially closed, and in the mountainous southern section not even delimited. The only significant link was the rail line between Urumqi in western China and the Kazakhstan network, which was completed in September 1990. The first goods train travelled from China to Almaty in July 1991, five months before the dissolution of the Soviet Union.14 Since independence, road links between Central Asia and China have been improved, although the high mountains between China and the Kyrgyz Republic or Tajikistan make for slow journeys. In December 2009 a second rail link from China was built to the Kazakhstan border. Improved rail and road connections have been associated with rapid increase in economic connections between China and Central Asia, although these are often not captured by official data. Since 2000, China has emerged as a major economic partner of Central Asia, trading manufactured goods for primary products, investing in the resource sector, and building infrastructure. The infrastructure investment has mainly

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been to facilitate export of raw material from Central Asia and of manufactured exports from China to Central Asia, but some of the investment (e.g., road building in Tajikistan) is better described as foreign aid. In the 1990s the main bilateral trade involved iron and steel from Kazakhstan to China, but since the turn of the century a wider range of minerals and especially energy products has been exported to China. China has been willing to invest heavily and prioritize construction of the oil pipeline across Kazakhstan and the gas pipeline from Turkmenistan via Uzbekistan and Kazakhstan in order to diversify sources of energy supply, and especially to have an alternative to maritime imports, which pass through several choke points (e.g., the Strait of Hormuz and the Malacca Strait), and to imports from Russia, which are not guaranteed. Chinese exports of manufactures to Central Asia are largely un­ recorded, but we know they are substantial. They primarily enter the region through the Kyrgyz Republic with its liberal import regime, and are sold at two bazaars on the outskirts of Bishkek and Osh, where the majority of shoppers are from other Central Asian countries, especially Uzbekistan, to which there are well-­developed smuggling routes.15 “Bazaar” does not capture these operations; in terms of employment, the Dordoi bazaar in Bishkek may be the biggest shopping “mall” in the world, although the aisles are triple-­decker containers with basic displays.16 Creation of regular rail services between China and Western Europe has been on the agenda since 2008, when China and Germany inaugurated a freight service via Mongolia, Russia, Belarus, and Poland. The first train along the 10,000-­kilometer (6,210-­mile) route took fifteen days, as compared with the thirty days average it would take for the freight to make the same journey by ship, but in April 2009 Deutsche Bahn postponed the service indefinitely because of the economic crisis. In March – ​April 2011 a route from Chongqing to Duisburg via Kazakhstan, Russia, Belarus, and Poland, covering 10,300 kilometers (6,400  miles) in sixteen days, was tested, and regular services were operating by 2013 (Böcking, 2013; Bradsher, 2013). The Eurasian Landbridge rail link highlights the growth of global value chains; regular rail services between Duisburg and Chongqing offer an attractive price/ time option to electronics firms in western China (e.g., HP, Acer, and

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Foxconn) supplying EU markets and to EU firms shipping parts to their operations in China (e.g., Volkswagen, Audi, and BMW). Chinese proposals for a high-­speed rail service that would link Shanghai to Berlin in two days via Astana are not implausible, given the speed with which China constructed its domestic high-­speed rail network. Although the project is dismissed as futuristic fancy by many outside observers, it should be borne in mind that China now has the longest high-­speed network in the world, from zero in 2007, and that the far west is being included as the main line to Urumqi is completed. The Chinese government is jointly sponsoring construction of a high-­speed rail line between Astana and Almaty in Kazakhstan.17 Rather than wondering whether a high-­speed rail will connect China and Europe, the issue in the coming decade may be whether Central Asia will just collect transit fees or whether improved long-­distance transport connections can foster economic diversification. A deeper issue is whether a physical landbridge will reunify the Eurasian landmass.

WTO Accession and the Customs Union Issue: How Far Will Integration and Cooperation Proceed? In 2001 Kazakhstan, Tajikistan, and Uzbekistan confirmed, as part of their commitments to CAREC, their intention of joining the World Trade Organization, but progress was glacially slow. Tajikistan acceded in 2013, joining the Kyrgyz Republic as the only Central Asian countries in the WTO. The reluctance of the other countries appears to have less to do with maintaining protectionist trade policies than unwillingness to have external constraints on policy making and lack of obvious benefits from accession when their main exports (oil and gas, cotton, and minerals) rarely face market access barriers. The most advanced regional trading arrangement in the region is the Eurasian Economic Community. Although there was from the start a commitment by EurAsEC members to form a customs union, implementation seemed unlikely because the common external tariff would be close to that of the economically dominant member, Russia. If Kazakhstan and the Kyrgyz Republic harmonized their tariffs with Russia’s higher tariff rates, they would suffer from trade diversion and trade destruction.18 Using a simple partial equilibrium model of the response

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table 12.2. Estimated Welfare Effects of Implementing the EurAsEC Customs Union in the Mid-­2000s (Millions of U.S. Dollars) Kazakhstan

Kyrgyz Republic

Change in tariff revenue

+223.4

+22.8

Change in consumer surplus

–255.2

–26.3

–­31.8

–­3.5

Net welfare effect Source: Tumbarello 2005, table 4.

of trade flows to changes in tariff rates, Tumbarello (2005) showed that both Kazakhstan and the Kyrgyz Republic would receive more tariff revenue as customs union members, but the welfare effects would be dominated by the loss of consumer surplus (table 12.2). Concrete steps to create a customs union among Belarus, Kazakhstan, and Russia were implemented in 2010 – ​2011. Russia’s WTO accession in 2012, with Russian trade liberalization and hence reduction of the common external tariff, made the customs union less costly to Kazakhstan, and may have paved the way for the Kyrgyz Republic to join in future. Tajikistan is also a potential future member, while Uzbekistan has denounced the trade agreement. In sum, the customs union represents a significant widening of the fault line across Central Asia that emerged in the mid-­1990s, with Kazakhstan, the Kyrgyz Republic, and probably Tajikistan aligning in a Russian-­led organization, while Uzbekistan and Turkmenistan take a more autonomous stance. Important questions in the 2010s will be whether Turkmenistan’s neutrality and Uzbekistan’s alignment with the United States are viable long-­term strategies, and whether China can act as a credible counterweight to EurAsEC. Apart from decisions about trade policy highlighted in choices over customs union and WTO accession, there remains an important role for regional cooperation (UNDP, 2005; ADB, 2006). Many of the obstacles to trade in Central Asia require regional cooperation in order to reduce the costs of trade. Tariffs and traditional nontariff barriers are only part of the story. Trade facilitation, while more mundane, is an area in which progress could be made to reduce forgone opportunities for mutually beneficial trade and also to enable the landlocked Central Asian countries to facilitate transit of goods to the wider international market.

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The need for regional cooperation appears to be recognized by the Central Asian leaders, but they have failed to create suitable institutional mechanisms. This is highlighted by the example of the ECO transit agreements, which on paper could have alleviated many of the region’s transit problems and provided access to ocean ports in Pakistan and Iran. Only eight countries signed the 1995 transit trade agreement, and the two nonsignatories, Afghanistan and Uzbekistan, straddle some of the most important routes in the region. The modified — ​and much watered-­down — ​1998 transit agreement was approved only by Azerbaijan and Tajikistan, whose geographical position makes them marginal countries to an ECO-­wide transit arrangement. Many of the “free trade” agreements among CIS members contained provisions on transit that have likewise not been honored, and negotiations to create a new Silk Road are likewise having little on-­the-­ground impact. The unwillingness of key countries to accept the principle of unhindered passage of goods in transit remains a major obstacle to trade in Central Asia. Apart from trade issues, there is a pressing need for regional cooperation on environmental issues such as the desiccation of the Aral Sea, on water and energy issues where upstream and downstream nations have competing interests, and perhaps on security matters in the face of insurgent threats. At the same time, there are some less powerful pressures working against the assertion of policy autonomy in trade matters.19 Regional cooperation to reduce trade costs is compatible with WTO membership, but there is no preeminent institutional setting for such cooperation in Central Asia; existing organizations have either found it difficult to implement agreements or do not include all relevant countries. In practice, regional cooperation does not require a single institution; bilateral agreements are sometimes appropriate (e.g., for coordination of border crossing arrangements), while for other purposes a plurilateral agreement may be more appropriate (e.g., transit agreements).

Conclusions From a virtually seamless region before 1992, Central Asia has split into five nations with little formal cooperation, despite obvious potential benefits from cooperative approaches to trade and transit, water and

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energy, and security. A fault line now divides the region, with Kazakhstan, the Kyrgyz Republic, and Tajikistan reasserting historic links to Russia, which Uzbekistan and Turkmenistan are resisting. Looking forward, the major uncertainties for the region are domestic political change and world commodity prices. The presidents of the two largest countries are both in their seventies and without an obvious successor; in super-­presidential regimes, the personality of the president matters. The Kyrgyz Republic is the only country in the region experimenting with a parliamentary regime, and the jury is still out on whether that is a step toward democracy or chaos. Tajikistan is a fragile — ​bordering on failed — ​state. Turkmenistan is a bizarre autocracy. None of these situations is immune from major political change. Meanwhile, the countries remain dependent on a handful of primary product exports (oil and gas, cotton, copper, gold, aluminum) whose world prices are subject to large swings that determine the health or sickness of the domestic economies. Which outside powers are the Central Asian countries turning to for trade and other relations? In the decade after the Central Asian countries became independent, despite much talk of a new “Great Game” or of competing models of Islam being pushed by Iran and Turkey, the outside world showed minimal interest in Central Asia. Russia had the incumbent’s advantage, but its credibility as a power was undermined by a passive position in face of intra-­CIS conflicts and by poor military performance in the first Chechen War. This was exacerbated by economic weakness, culminating in the 1998 crisis and default. After 1999 the Russian economy turned around on the back of rising oil prices and as Yeltsin’s reforms began to take effect, and with a booming economy Russia became more assertive in Central Asia. The caesura mattered, however, because the new independent countries had time to establish themselves as autonomous states and their leaders became more self-­confident.20 Although some countries were more inclined to align with Russia and others were not, none of the Central Asian countries was willing to take a subservient role vis-­à-­vis a Russian “elder brother.” The largest Russian-­aligned country, Kazakhstan, has been carefully burnishing its independent international credentials (from chairing the OSCE in 2010 to sponsoring team Astana in the Tour de France).

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Russia’s attempt to reassert hegemony in the 2000s has achieved only limited success. The customs union is small compensation for the lost monopoly over transport routes, and the customs union’s expansion and even its survival are far from certain. Failure to expand the customs union would reinforce the impression (e.g., from the Prikaspiisky pipeline saga) that Russia under Putin talks but does not deliver. Uzbekistan’s long-­standing alignment with the United States has survived despite the antidemocratic and repressive nature of the regime, with only a brief break after the Andijan massacre. Kazakhstan’s president has been welcomed at the White House and he has involved Western firms in developing the country’s hydrocarbon resources — ​for example, Chevron and Mobil at the inherited onshore Tengiz oilfield, Agip as lead operator of the Kashagan offshore megafield, and BG and Agip at the large Karaganchak gasfield.21 Nevertheless, the role of the United States has been muted, and that of the EU and other Western countries even more so.22 The anticipated struggle for influence between Iran and Turkey has been a damp squib, and the South Asian countries have been even less visible. The only significant newcomer likely to assert future influence in the region is China. China’s political interests are complicated by concerns over “splittism” in the far western region, Xinjiang, where the Uighurs have cultural connections to their Kazakh neighbors.23 From an economic perspective, however, China has good reasons to be involved: the Central Asian economies are complementary to China’s, and they offer increased energy security and possibly transit routes to Europe. President Xi Jinping’s September 2013 tour of Central Asia, in which he met all five presidents and announced billions of dollars of project financing, was a high-­profile demonstration of China’s commitment to the region (Boulègue, 2013) at a time when President Obama was mired in domestic political procedure. What is the role for the United States and China? The three-­power influence in Central Asia means that, while China and the United States may at times see themselves as competing, they also have common cause in restricting Russian resurgence in Central Asia and in supporting the five countries’ independence. China will inevitably have greater economic presence in the region due to complementarity and proximity. The United States has little economic interest, other than supporting

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the activities of specific companies in oil, agriculture, the aircraft industry, and so forth. As U.S. involvement in Afghanistan winds down, a crucial question is whether the United States will continue to have interests in the region when it no longer needs logistical support for U.S. troops. While China may be uneasy about a U.S. military presence so close to its border (the Manas air base is 350 miles, less than a seven-­ hour drive, from the border — ​and closer by air), China appears to have no military intentions in Central Asia and may be less unhappy with U.S. and Russian air bases near Bishkek than if there were a Russian military monopoly on its border. Similarly, while U.S. observers may have reservations about China’s economic rise, burgeoning trade that contributes to Central Asian prosperity is preferable to an alternative of a stagnating region of economic interest only to Russia. Notes 1.  The only railway line that did not go to Russia was completed in 1990 between Kazakhstan and China. In 1997 a rail link between Turkmenistan and Iran was opened. Roads between Central Asia and China were closed after the Sino-­Soviet split; they only gradually reopened in the 1980s, and were in poor condition. 2.  The initial problems and longer-­term development of Central Asia are addressed in my books (Pomfret, 1995, 2006). Disintegration is analyzed in Linn (2004). There were many examples of major roads crossing borders for a few kilometers (e.g., the Tashkent – ​Samarkand road went through Kazakhstan, the Almaty – ​Shymkent road through the Kyrgyz Republic, and the Jalalabad – ​Osh road through Uzbekistan); frequent border closures or traffic police behavior toward foreign vehicles encouraged nationalization of networks even though it was wasteful for the region. 3.  Like SPECA, CAREC is supported by an alliance of multilateral institutions. The CAREC Secretariat is in the Asian Development Bank, and CAREC also includes the United Nations Development Program, the European Bank for Reconstruction and Development, the International Monetary Fund, the Islamic Development Bank, and the World Bank. In 2005 Afghanistan became a CAREC member; in 2010 Pakistan and Turkmenistan became members. 4.  CAREC, operating through senior officials’ and ministerial meetings, has more flexibility than SPECA, which was launched by the presidents and has a structure of formal working parties. While their broad aims are similar, CAREC has been able to focus on some elements of trade and trade facilitation (e.g., coordinating hard and soft infrastructure along specified corridors), despite lack of progress in areas such as trade policy (where the stated but unmet goal is WTO accession by all) and energy. 5.  Uzbekistan’s shifting position reflected the dilemma of the U.S.-­Uzbek alliance, which serves both countries’ strategic interests, but sits uneasily with U.S. advocacy

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of democracy and Uzbekistan’s super-­presidential regime. Uzbekistan was happy to see greater U.S. involvement in the region in 2001, when U.S. armed intervention was targeted against Islamic militancy, but Uzbekistan was less pleased in 2003 with U.S. military action to overthrow a secular dictator in Iraq. The United States turned a blind eye to Uzbek domestic policies, until several hundred civilians were killed in Andijan in May 2005. Despite these contretemps, the alliance was patched up fairly quickly, and by 2007 it was back up and running. 6.  The centerpiece of Turkmenistan’s diplomacy was obtaining recognition of its neutrality by the UN General Assembly in 1995. President Niyazov (a.k.a. Turkmenbashi the Great) rarely participated in meetings of regional organizations of which Turkmenistan was a member. After Niyazov’s death in December 2006, President Berdimuhamedov travelled more and established better bilateral relations with China, but the country remains neutral and one of the few to have not applied for WTO membership. 7.  China had been a strong supporter of the U.S.-­led multilateralist response to the 1997 Asian crisis, but by the turn of the century it was cooperating with Japan in building regional monetary institutions such as the Chiang Mai Initiative (Pomfret, 2005). The U.S. bombing of the Chinese embassy in Belgrade in 1999 appears to have been a catalyst. 8.  The xenophobic fears of the 1990s reflected the isolation of Soviet Central Asia and inherited territorial claims by China. By the end of the decade Kazakhstan, the Kyrgyz Republic, and Tajikistan had all reached border delimitation agreements with China, and were ready for normal relations. For Uzbekistan the presence of China as a counterweight to Russia made the SCO acceptable at a time (1999 – ​2002) when Uzbekistan was a member of the anti-­Russian GUUAM group. 9.  An Iranian company built the 200-­kilometer-­long Korpedeke – ​Kurt – ​Kui gas pipeline with an annual capacity of eight billion cubic meters. The pipeline delivers gas to large domestic markets in northern Iran, while freeing up an equivalent quantity of Iran’s own natural gas for export to Turkey and Europe. More substantial projects through Iran have been stymied by nonparticipation of U.S. companies and U.S. threats of sanctions against other countries’ companies that do business with Iran. 10.  India and Pakistan are also in negotiation over an Iran – ​Pakistan – ​India (IPI) gas pipeline; this is opposed by the United States, which threatens sanctions against any participating firms. 11.  As additional incentives for Turkmenistan to sign the pipeline contract, Russia-­ connected companies provided capital for other projects. Itera, for example, was a lead investor in the $4 billion development project to turn the area around the Caspian port of Turkmenbashi into a tourist center. 12.  China’s heightened interest in Caspian energy (Kazakhstan’s oil as well as Turkmenistan’s natural gas) has, in turn, been born out of frustration with Russia’s failure to guarantee supplies of its Far East energy to China (Blank, 2011). Proposals for an energy club within the SCO, aimed at moderating Russia-­China energy conflicts, have made no headway.

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13.  A sign of the speed of change is Russia’s construction of a liquefication plant for its Sakhalin gas reserves and for its Arctic gas fields, in contrast to earlier pipeline plans and despite Arctic navigation being feasible for only part of the year. Technological changes in producing onshore gas, such as fracking and coal seam gas, are also undermining Central Asian export prospects by pushing down world gas prices. 14.  Former Soviet republics use a gauge of 1,520 millimeters (4 feet, 11 ⁵⁄₆ inches), while the international standard rail gauge used in most of Europe and China is 1,435 millimeters (4 feet, 8 ½ inches). Changing the bogies on railcars requires special equipment and can be slow, as is the alternative (typically used for containers) of transshipping freight from one train to another. 15.  The Kyrgyz Republic does not closely monitor imports from China; for example, in 2010 China reported exports of light industry products to the Kyrgyz Republic of $3,130 million, while the Kyrgyz statistics indicated imports of $195 million from China (Mogilevskii, 2012, 40). The smuggled goods across the Kyrgyz-­Uzbek border are not recorded, but the World Bank (2009) concluded from discrepancies in mirror statistics that the Kyrgyz Republic had “excessive” imports and Uzbekistan “under-­imports.” 16.  In 2008 the Dordoi bazaar in Bishkek employed 55,000 people, had 40,300 sales outlets, and had annual sales of $2,842 million, of which $2,131 million are estimated to have been foreign sales (to ultimate customers in Uzbekistan, Kazakhstan, and Russia); facilities included overnight accommodation and well-­organized local and long-­distance transport facilities. The smaller Kara-­Suu bazaar in Osh (annual sales in 2008 of $684 million, of which $400 – ​500 million went to Uzbekistan) involved mainly ethnic Uzbek traders with family connections on both sides of the border; it was more closely integrated into the Uzbekistan economy, but also vulnerable to border crackdowns by the Uzbek authorities, which could lead to short-­term shutdown. For more details, see Kaminski and Raballand (2009), World Bank (2009), and Kaminski and Mitra (2010). 17.  Construction began in the spring of 2013 of a new line cutting four hundred kilometers from the existing route. Travel time will be reduced from the existing twenty hours on a normal train and thirteen hours on the Talgo express to under five hours. 18.  The higher tariffs would deter non-­Russian imports, which might be replaced by Russian goods (trade diversion) or not (trade destruction); both outcomes are inferior to importing from the least cost/best quality supplier in the world market. The Kyrgyz Republic would also have difficulty if any customs union tariff rates were higher than the bound values to which the Kyrgyz Republic had committed in its WTO accession. 19.  Increasing WTO coverage will highlight the distinction of nonmembership. Turkmenistan is the only country in the region not to have applied for WTO membership, and Uzbekistan’s application is proceeding very slowly. As other applicant countries (Kazakhstan and Iran) accede, this would highlight the nonmembers’ unwillingness to accept the norms of international trade law, exposing producers to specific

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risks such as sudden changes in tariffs on imported inputs or in customs practices, excluding use of WTO dispute settlement mechanisms, and deterring potential investors by the general institutional uncertainty. 20.  Survival has been a major achievement of the Central Asian countries. At the end of 1991 few would have bet on the survival of all fifteen Soviet successor states, and Central Asia was a region where boundaries were artificial and national traditions weak. The contrast to the experience of the countries that became independent after the dissolution of the European empires in 1919 is striking; twenty-­one years later they had almost all been occupied or dismembered by foreign powers. 21.  In other countries too, individual foreign firms stand out on their own account rather than as part of national policy toward Central Asia — ​for example, Cameco in developing the Kyrgyz Republic’s principal goldmine or Daewoo (and GM after Daewoo’s bankruptcy) in Uzbekistan’s car industry. Rather than being instruments of home government policy, two big private companies (Bouygues of France and Çalık of Turkey) have tried to influence their home governments’ perceptions of Turkmenistan (Garcia, 2006; Halonen, 2008). 22.  The EU’s flagship project, the Transport Corridor Europe-­Caucasus-­Asia (TRACECA) program, was established in 1993 to develop an efficient and integrated transport and transit system between Europe, the Caucasus, and Central Asia. Despite the EU implementing sixty technical assistance and investment projects in the amount of over 121 million euros and establishing a Permanent Secretariat in Baku in 2001, TRACECA has had little impact. In the 2000s the EU focus shifted to providing assistance for drug control (CADAP) and border management (BOMCA) programs, but the impression that the EU was contributing to increasingly fortified borders was not a good image, especially when their equipment may have been used in Andijan in 2005. A new EU strategy toward Central Asia in 2007 suffered from lack of clear direction and underfunding — ​the implication being that Central Asia really was not all that important to the EU (and certainly less so than Eastern Europe). 23.  China’s concern about splittism was strikingly illustrated after Russia’s 2008 war with Georgia. Russia looked to the SCO for endorsement of its intervention in South Ossetia, but was rebuffed as the other SCO members, led by China, refused to support secession. That episode also highlighted the weakness of the SCO, and the priority placed by China on bilateral relations with Central Asia.

References Asian Development Bank. 2006. Central Asia: Increasing Gains from Trade through Regional Cooperation in Trade Policy, Transport, and Customs Transit. Manila: Asian Development Bank. Blank, Stephen. 2011. “Toward a New Chinese Order in Asia: Russia’s Failure.” Special Report 26, National Bureau of Asian Research, Seattle, March. Böcking, David. 2013. “Deutsch-­chinesische Güterstrecke: Moin, moin, Weltwirtschaftslok.” Der Spiegel, August 2.

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Boulègue, Mathieu. 2013. “Xi Jinping’s Grand Tour of Central Asia: Asserting China’s Growing Economic Clout.” Central Asia Economic Paper 9, Elliott School of International Affairs, George Washington University, Washington, D.C. BP. 2011. BP Statistical Review of World Energy 2011. www.bp.com/statisticalreview. Bradsher, Keith. 2013. “Hauling New Treasures along the Silk Road.” New York Times, July 20. Garcia, David. 2006. Le Pays où Bouygues est Roi. Paris: Éditions Danger Public. Halonen, Arto. 2008. Pyhän Kirjan Varjo [Shadow of the holy book]. Film. Finland. Kaminski, Bartlomiej, and Saumya Mitra. 2010. Skeins of Silk: Borderless Bazaars and Border Trade in Central Asia. Washington, D.C.: World Bank. Kaminski, Bartlomiej, and Gaël Raballand. 2009. “Entrepôt for Chinese Consumer Goods in Central Asia: Re-­exports through Kyrgyzstan — ​A Statistical Puzzle.” Eurasia Geography and Economics 50: 581 – ​90. Kulipanova, Elena. 2012. “International Transport in Central Asia: Understanding the Patterns of (Non-­)Cooperation.” Working Paper 2, Institute of Public Policy and Administration, University of Central Asia, Bishkek. Linn, Johannes. 2004. “Economic (Dis)Integration Matters: The Soviet Collapse Revisited.” Unpublished paper, Brookings Institution, Washington, D.C. ———. 2009. “Connecting Central Asia with the World.” Journal of Emerging Market Economies 1: 241 – ​58. Mogilevskii, Roman. 2012. “Trends and Patterns in Foreign Trade of Central Asian Countries.” Working Paper 1, Institute of Public Policy and Administration, University of Central Asia, Bishkek. Pomfret, Richard. 1995. The Economies of Central Asia. Princeton: Princeton University Press. ———. 2005. “Sequencing Trade and Monetary Integration: Issues and Application to Asia.” Journal of Asian Economics 16 (1): 105 – ​24. ———. 2006. The Central Asian Economies since Independence. Princeton: Princeton University Press. Tumbarello, Patrizia. 2005. “Regional Integration and WTO Accession: Which Is the Right Sequencing? An Application to the CIS.” Working Paper 05/94, International Monetary Fund. United Nations Development Program. 2005. Central Asia Human Development Report: Bringing Down Barriers; Regional Cooperation for Human Development and Human Society. Bratislava: United Nations Development Program. World Bank. 2004. “Trade Performance and Regional Integration of the CIS Countries.” Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region, World Bank, Washington, D.C. ———. 2009. “Bazaars and Trade Integration in CAREC Countries.” Report prepared by Saumya Mitra, Bartlomiej Kaminski, and Matin Kholmatov, World Bank, Washington, D.C. http://www.carecinstitute.org/uploads/events/2009/10th-­TPCC/​ 10thTPCC-­Bazaars-­Trade-­Integration-­Paper.pdf.

13

The Development of the Shanghai Cooperation Organization The Impact on China-­U.S. Relations in Central Asia Pan Guang

China has established a strategic good-­neighborly relationship with the post-­Soviet Russia and Central Asian states. The process of the “Shanghai Five” — ​Shanghai Cooperation Organization (SCO)1 — ​has transformed this new relationship into a stable multilateral mechanism. Despite great achievements, however, the SCO faces serious challenges in its second decade. Alongside these grim challenges, the SCO also faces a number of opportunities. At the same time, the SCO has become a factor of major importance in China — ​U.S. relations in Central Asia.

The Achievements of the “Shanghai Five”: The SCO Process China established close contact with Central Asia through the Silk Road trading route as early as two thousand years ago. However, this direct contact was suspended after the middle of the nineteenth century, due to the fact that most of Central Asia had become a component part of the Russian Empire and later the Soviet Union. The disintegration of the Soviet Union caused Central Asia to open its doors to the outside world again. Since 1992, friendly relations and cooperation between China and the newly independent Central Asian countries have developed rapidly. Shelving their ideological differences, China and Russia have also witnessed an emergence of the best period in their relations in several centuries. China, Russia, and the Central Asian countries in the hinterland of Eurasia have three basic common interests: to solve historical issues, to fight against terrorism and extremism, and to develop resources and the economy. Aside from differences and competitions, 347

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common interests in China-­Russia-­Central Asia relations laid a solid foundation for the formation and development of the “Shanghai Five” — ​ the SCO process. The SCO, for the first time in history, combined China, Russia, and Central Asia together in one interest group, which helped to minimize differences and their negative impact while maximizing the expansion and consolidation of common interests. As an important platform of China-­Russia-­Central Asia cooperation, the SCO has developed steadily and made great achievements that have attracted worldwide attention, including the following: 1. Resolving border issues between China and the former USSR. Following the collapse of the USSR, Sino-­Soviet negotiations on their border issues came to involve “two sides but five countries” — ​that is, China on the one hand and Russia, Kazakhstan, Kyrgyzstan, and Tajikistan on the other. The western section of the formerly Sino-­ Soviet border includes about 1,700 kilometers between China and Kazakhstan, about 1,000 kilometers between China and Kyrgyzstan, more than 500 kilometers between China and Tajikistan, and 54 kilometers between China and Russia. In April 1996 and April 1997, two agreements for security and disarmament along borders, which marked the beginning of the “Shanghai Five”/SCO process, were signed by China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan, establishing stable security cooperation between China and its Central Asian neighbors. In the framework of the “Shanghai Five”/SCO, based on two agreements, all disputes regarding the western section of the formerly Sino-­Soviet border of more than 3,000 kilometers, which had bred instability and conflicts for centuries, were completely solved in several years — ​a rare achievement in the history of international relations. 2. Fighting against transnational terrorism, extremism, and crime. After the breakup of the Soviet Union, especially since 1996, with support from the Taliban and al-­Qaeda, religious extremists and terrorist organizations in Central Asia have built up cross-­border networks, causing serious problems to the countries in this region. The “Shanghai Five” was the earliest international community calling for cooperative actions against terrorism in Central Asia. On

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June 15, 2001, less than three months before the 9/11 terror attack on the United States, leaders of China, Russia, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan signed the Shanghai Convention on Combating Terrorism, Separatism and Extremism when launching the SCO. This convention, as the first international document on antiterrorism in the twenty-­first century, spelled out the legal framework for fighting terrorism and other evil forces for SCO members and their coordination with other countries. The SCO further stepped up its security cooperation following 9/11 and the war in Afghanistan. In 2004 the establishment of the SCO Regional Anti-­Terrorist Structure (RATS) was a strategic step in strengthening the security cooperation. In the framework of the SCO, China, Russia, and the Central Asian countries have worked closely to sign and implement a series of laws and regulations and make a long-­tern comprehensive strategy to eradicate the root causes of terrorism and extremism, while joint military exercises against terrorism were held, all of which have achieved remarkable results in fighting against terrorism and extremism, drug trafficking, arms smuggling, illegal migration, and other transnational criminal activities, and in ensuring the success of the Beijing Olympics, the Shanghai World Expo, the Sochi Winter Olympics in Russia, and other important events. 3. Promoting the development of regional cooperation. At present, trade and economic cooperation, mainly in energy and transportation, among China, Russia, and the Central Asian countries has been gradually promoted and achieved remarkable results. Cooperation has expanded in tourism, environmental protection, agriculture, finance, water resources, health care, social security, and other fields, as well as cultural cooperation with the “Silk Road” as the link. Take the trade between China and the other SCO member states as an example. Compared with US$12.1 billion in 2001, when the SCO was founded, China’s trade with the five other SCO member states reached US$113.42 billion in 2011, growing by more than nine times in ten years.2 At the same time, compared with US$0.46 billion in 1992, China’s trade with the five Central Asian states (including Turkmenistan) reached $46 billion in 2012, growing by a hundred times.3 The SCO has developed a meeting mechanism

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for ministers of culture, education, health, and science and technology, who have signed documents on cooperation in culture, education, and health as well as science and technology, laying a solid legal foundation for multilateral cultural cooperation. The organization has launched the SCO Arts Festival, the SCO Forum, and particularly SCO University, which has become an innovative institution for multilateral cooperation among different education systems of the member states. In addition, the SCO is dedicated to facilitating cooperation in tourism by developing abundant tourism resources along the “Silk Road” and deepening friendship and trust by enhancing mutual understanding of history, cultural heritage, customs, and habits. Central Asia-­China and Russia-­China oil and gas pipelines started services one after another. Russia has begun to transport oil to China through the Kazakhstan – ​China pipeline, which also promoted development of energy cooperation in the SCO framework from bilateral to multilateral. Particularly, since the global financial and economic crisis gradually spread to Central Asia in 2008, SCO member states have reached broad consensus in building aid funds, opening an SCO account, establishing a currency exchange mechanism within the SCO framework, and other measures.4 These emergency programs or measures responding to the financial crisis have progressively turned into normal cooperative projects and mechanisms, which have become a powerful driving force for the sustainable development of regional cooperation in Central Asia.

Challenges to the SCO during Its Second Decade Despite remarkable achievements, the SCO faces serious challenges in its second decade: 1. The riots in some member states like Kyrgyzstan pose serious challenges to the SCO in its role of maintaining stability in Central Asia, particularly the internal stability of its member states. For example, in the case of Kyrgyzstan, an SCO statement was issued at the beginning of the unrest in Kyrgyzstan in April 2010, hoping

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that Kyrgyzstan would “restore law and order, and achieve national reconciliation as soon as possible.”5 One major outcome of the SCO Tashkent summit in June 2010 was reaching a consensus about Kyrgyzstan: “Member states stressed that the stability of Kyrgyzstan has critical importance for the entire region. The SCO can provide necessary support and help to the Kyrgyz Republic when necessary.”6 However, it was clear that the SCO cannot do more than provide humanitarian support and facilitate negotiation, since the SCO is not a military alliance. After the riots, the situation in Kyrgyzstan is still grim. Suvanaliev, the ex-­home secretary of Osh state, pointed out, “The next wave of clashes may come at any time.”7 In such a situation, the United States, the EU, the OSCE, the UN, the CIS, the CSTO, and other parties may get actively involved in Kyrgyzstan, which would definitely challenge the role of the SCO in the maintenance of member states’ internal stability. Meanwhile, Russia, China, Kazakhstan, and other SCO members actively supported Kyrgyzstan in their own ways, which outshone the overall role of the SCO in Kyrgyzstan in comparison. 2. The spillover effects of conflict in Afghanistan and the Middle East bring new challenges for the antiterrorism and security cooperation of the SCO. Conflict in Afghanistan and the Middle East has resulted in a resurgence of extremist forces in Central Asia and poses a direct threat to the SCO primarily in three areas: first, instigating ethnic and religious extremism, launching violent terrorist attacks, and threatening the stability and development of the SCO member states; second, interfering and damaging SCO economic and trade cooperation, especially posing a serious threat to Central Asia-­China’s oil and gas pipelines; third, directly threatening the safety of companies and citizens of the SCO member states in Afghanistan and the Middle East. Evidence shows that al-­Qaeda and other terrorist organizations stirred the unrest in Kyrgyzstan during the spring and summer of 2010.8 The former Kyrgyzstan president Roza Otunbaeva warned that terrorist attacks were being planned in Kyrgyzstan.9 The extremist group Jund al-­Khilafah (JaK) has carried out a string of deadly attacks in Kazakhstan since October 2011. The Afghanistan-­Pakistan border region provides this Salafist group with havens.10 Since 2011,

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Turkestani Islamic Party (TIP) militants trained in Pakistan’s FATA (the Federally Administered Tribal Areas) have launched several “Jihadi” attacks against China in Xinjiang and Beijing. This is “a threat to China’s core interests: national stability and territorial integrity.”11 All of these bring about new challenges to the SCO’s antiterrorism and security cooperation and a series of questions to SCO leaders: In addition to joint exercises and “important events” security cooperation mechanism, is it necessary to establish a joint rapid response force or peacekeeping police? How can the security of energy pipelines be ensured? After the United States and NATO gradually withdraw from Afghanistan, what role should the SCO play in Afghanistan? 3. The global economy has gradually moved out of the financial crisis and entered a new adjustment and recovery period, which brings pressures and challenges to the economic cooperation of the SCO, which still lags behind political and security cooperation. With the world moving out of the global financial crisis, Central Asia has entered a new adjustment and recovery period. Member states of the SCO are trying to heal the aftermath of the crisis, revive their economies, and improve people’s lives. Under such circumstance, the SCO, as a regional cooperation organization, should play an active role in promoting economic recovery. Otherwise it will be marginalized in Central Asia when this region starts a new wave of development. In order to respond to these pressures and challenges, in the near future, the SCO must quickly change the status of economic cooperation that for long has lagged behind the political and security cooperation, enhancing economic cooperation within the framework of the organization to enable it to contribute directly to the economic revival of its member states, especially the Central Asian countries. 4. Islamic extremism presents big challenges to the “Silk Road” spirit and cultural cooperation of the SCO member states. Central Asia is an intersection of four great civilizations: Confucian, Islamic, Slavic, and Indian. There have been ethnic, religious, and sectarian conflicts in this region since ancient times. One would think that after seventy years of education by the Soviet Union, Islamic extremism in Central Asia would not find much of an

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audience. However, religious extremism has started a resurgence in post-­Soviet Central Asia. Behind phenomena like wearing long beards, putting on the veil, and changing names are the agitation and promotion of extremist groups. For example, the IMU (Islamic Movement of Uzbekistan) and Hizb-­ut-­Tahrir (Islamic Party of Liberation)12 have become very influential in Central Asia. Increasing their membership by philanthropic activities and pyramid-­like schemes, the two groups are fast winning support in the poverty-­stricken Ferghana countryside, where the un­ employment rate has reached 80 percent.13 The situation with radical Islam in the Ferghana Valley is likely to worsen when NATO and U.S. forces withdraw from Afghanistan after 2014 because the Central Asian militants who fought in Afghanistan are likely to return home to pursue a new agenda.14 This has had a tremendous impact on the SCO members’ cultural cooperation and the cultural ties among China-­Russia-­Central Asia that take the “Silk Road” as a bridge. 5. Emerging nontraditional security threats, especially contradictions and conflicts around water and border issues, are presenting direct challenges to cohesion and solidarity among the SCO member states. In the past decade, especially after the financial and economic crisis began to spread to Central Asia in the second half of 2008, conflicts rose between the Central Asian countries due to many nontraditional security issues, such as historical grievances, water allocation, border issues, trade disputes, illegal workers, and debt. Particularly due to water allocation and related power supply problems left over from the Soviet era, relationships among some Central Asian countries have been deteriorating. Central Asia is severely short of water resources mainly because of its many deserts; as a result, the water resources such as Amu Darya, Syr Darya, Chu River, Talas River, Ili River, Tarim River, and Irtysh River are extremely precious. In Soviet times, the usual arrangement was for water to be provided by the upstream area in exchange for the power supply from the downstream area. After the independence of the Central Asian countries, however, those rivers have become transnational, which makes the allocation of water resources a challenge. The key point of disputes regarding water resources

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is whether any dam or power station should be built on some of those rivers or their branches. The upstream countries, such as Tajikistan, hope to build dams and power stations for the purpose of irrigating farmland and developing hydropower; whereas the downstream ones, like Uzbekistan, strongly oppose the proposal, claiming that they will stop providing power supply for the upstream area once any dam or power station is established to intercept the water resources necessary to them. Due to the issue of water resource allocation and the related power supply problem, there are increasing tensions among Tajikistan, Uzbekistan, and Kyrgyzstan. In 2010 the conflicts between Uzbekistan and Tajikistan were so intensified that Uzbekistan detained Tajikistan’s materials transiting the former’s territory, putting a severe strain on their relationship. Some member states suggested discussing water disputes in the framework of the SCO, but some members objected. As a result, the SCO cannot take any action. At the same time, relations among the SCO Central Asian member states have also worsened due to border disputes left over from the Soviet era. For example, in January 2013 tensions between Uzbekistan and Kyrgyzstan were heightened in a violent border dispute in the Uzbekistani enclave of Sokh, located inside Kyrgyzstan, that resulted in property damage and hostages being taken.15 Obviously, these malignant events have weakened the cohesion of the SCO and pose challenges to the organization’s unity and cooperation.

Opportunities for Further Development of the SCO Challenges and opportunities always exist together. Alongside these grim challenges, the further development of the SCO also faces a number of opportunities. First, the domestic crisis in some member states, the negative effects of conflict in Afghanistan, and the recent Middle East turmoil have spurred SCO member states to reach consensus and create conditions for further strengthening their security and antiterrorism cooperation. Central Asian leaders have a sense of crisis and have become more aware of the importance of maintaining stability. For now, the SCO is

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the multilateral mechanism that can play a role in maintaining stability in Central Asia, especially in solving border issues, combating extremist forces, and curbing cross-­border crimes. Therefore, the appeal and determinations of the SCO member states to strengthen security and antiterrorism cooperation within the framework of the organization have become even stronger now.16 The following projects could become starting points to deepen security cooperation within the SCO: to further strengthen antiterrorism cooperation, complemented by the comprehensive management of both the root and surface causes; to promote a nuclear-­free zone in Central Asia to prevent the proliferation of weapons of mass destruction in Central Asia; to combat the criminal acts of drug trafficking while eliminating the threat of drug sources from all SCO member states.17 From the perspective of the overall security of Central Asia, if one country’s domestic situation further deteriorates, and its neighboring countries are unwilling to be involved in the chaos, UN involvement may be a possible choice. If this happens, according to the Joint Declaration of the SCO Secretariat and the UN Secretariat, the UN action in Central Asia will be inseparable from the support and help of the SCO.18 Second, the continuous opening of Central Asia-­China and Russia-­ China energy pipelines and the start of a series of China-­C entral Asia-­Russia economic and financial cooperation projects prove that new opportunities have emerged within the framework of the SCO to strengthen economic and financial cooperation, especially in the energy and agricultural sectors. To seize this opportunity for development, the SCO in the near future should focus on the following actions: turn more bilateral energy cooperation programs into multilateral programs, and extend them to include strategic rare mineral development, transportation routes, and other infrastructure programs; try to turn the financial crisis emergency programs into normal development cooperation programs and mechanisms, establish a special account of the SCO, and work on establishing the SCO bank;19 commit to the implementation of livelihood programs, such as poverty alleviation programs, re-­employment training programs, basic schools, and environmental programs, so as to help all the member states’ people get real benefits; promote reform on the trade settlement mechanism within the SCO framework; build a new bilateral currency exchange mechanism; start

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and promote agricultural cooperation on the basis of the agriculture ministers’ consensus; and continue to promote trade and investment facilitation for the eventual establishment of an SCO free trade zone. On September 7, 2013, the Chinese president Xi Jinping proposed that members join in building a “Silk Road Economic Belt,” with innovative cooperation mechanisms, and make it a grand cause benefiting people in the countries along the route. He said, “We should jointly build this belt step by step”: first, to strengthen policy communication; second, to improve road connectivity; third, to promote trade facilitation; fourth, to enhance monetary circulation; fifth, to strengthen people-­to-­ people exchanges.20 This is a strategically important proposal not only for SCO states, but also for all Eurasian countries to strengthen their economic cooperation. Third, the approval of a series of documents on Observers Regulation, Dialogue Partnership Ordinance, and New Members Reception Regulation lays a solid legal and institutional basis for the SCO to further enlarge its organization, expand outreach, and enhance international cooperation. Since the member states hold different views on accepting new members, the SCO still takes a cautious approach when enrolling full membership.21 It focuses more on accepting new observers and dialogue partners to further expand and enhance international cooperation. Facing a complicated international situation, the SCO will continue to strengthen friendly cooperative relations with the UN, ASEAN, the CIS, the CSTO, and other international and regional organizations, and implement specific, effective cooperation programs. Of particular importance is that the SCO should establish a link and dialogue mechanism with the United States, the EU, and Japan, so as to have regular dialogue and consultations to avoid misunderstanding and enhance mutual trust. At the SCO Beijing Summit on June 6 – ​7, 2012, the organization decided to grant Afghanistan observer status.22 The move not only contributes to including Afghanistan in the SCO cooperation framework and facilitating the country’s postwar reconstruction, but also becomes a driving force for strengthening dialogue and mutual trust between the SCO and other international forces. It is expected that the issue of Afghanistan will be a focus for cooperation between the SCO and Western countries. At the Beijing Summit, Turkey was accepted as a dialogue partner, making the country a bridge

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between  NATO and the SCO and thus beneficial for mutual understanding and confidence building between the two organizations.23 Fourth, recent excellent performances in disaster relief, health care, and education highlight the achievements and potential of the SCO in humanitarian cooperation. For example, during the 2008 Sichuan earthquake in China, all the SCO member and observer states strongly supported China’s earthquake relief. Russia sent rescue teams to China, and invited Chinese earthquake orphans to Russia for recuperation. After the unrest in Kyrgyzstan, the SCO member states also actively provided assistance. China quickly transported a total of about 800 million yuan worth of emergency humanitarian materials to the southern Kyrgyzstan city of Osh. These have been important opportunities for the SCO to further strengthen cooperation in disaster relief. Such humanitarian cooperation within the SCO serves to enhance the “Silk Road” spirit and promote dialogue among civilizations, especially enhancing the further development of culture, education, tourism, disaster relief, and youth cooperation.

The SCO Factor in China-­U.S. Relations in Central Asia Both China and the United States are playing an increasingly crucial role in Central Asia, where they have common and divergent interests, cooperation and competition. The common interests of China and the United States in Central Asia can mainly be identified in these areas: fighting terrorism and extremism, especially bringing peace and stability to Afghanistan; containing the proliferation of weapons of mass destruction, including the proliferation of nuclear weapons and nuclear materials; promoting energy exploitation and economic development in Central Asia, while facilitating postwar reconstruction in Afghanistan; and jointly coping with such nonconventional security threats as drug trafficking, weapon smuggling, illegal immigration, cross-­border crimes, environmental degradation, water resource shortage, and emergent public health incidents. Sino-­U.S. antiterror cooperation is a successful case. At the initial stage after 9/11, Sino-­U.S. antiterror cooperation was mainly focused on sharing intelligence and uprooting the financial sources of the terrorist groups. In response to a U.S. request, China closed its border with

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Afghanistan to foreclose the possibility of any forces linked with al-­ Qaeda or the Taliban from crossing over into China. The training bases of the “East Turkestan” terrorist group were destroyed and twenty-­two members were captured by the U.S. army in Afghanistan. Besides, it also became urgent and vital for China and the United States to work together to maintain political and economic stability in Pakistan, to support General Musharraf ’s decision and actions to join the anti­terror coalition, and to prevent any escalation of Indian-­Pakistani conflicts. In late 2001, China-­U.S. joint efforts in this regard were going well and made remarkable achievements. Since 2002, China and the United States have outlined a long-­term strategy for antiterror cooperation, and bilateral cooperation has made in-­depth progress in this direction in the past decade. Sino-­U.S. bilateral antiterror working groups, including a financial antiterror working group, have been established, and experts of the two countries are in regular consultation. China and the United States signed agreements regarding the security of containers and international civil aviation between China and the United States. Joint search-­and-­rescue exercises were held for the first time between China and the United States in 2006.24 In February 2010 Abdul Haq, a leader of the Turkistan Islamic Party (TIP),25 was killed by an American unmanned drone in Pakistan.26 Abdul Haq’s successor, Abdul Shakoor Turkistani, was killed in an air strike on his training camp in the Shawal Valley of Pakistan on August 24, 2012. Furthermore, China and the United States recently carried out joint communication exercises, anti-­ piracy drills, and joint humanitarian rescue and disaster relief drills.27 All these developments have given impetus to Sino-­U.S. cooperation in Central Asia, particularly antiterrorism cooperation. An article in the National Interest recently argued, “So the posture toward China when the subject comes up of Islamic militants crossing borders in Central and South Asia should be, ‘We’re in this together.’ ”28 Meanwhile, there are also differences and competitions in Central Asia between China and the United States. Generally speaking, difference and competition are nothing abnormal or destructive in the international arena. However, it is worth noting that, given certain fundamental differences including those in national interests, benign competition between the two sides could well turn into violent clashes under certain conditions. First, there are obviously different opinions

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regarding political reform and democratization in the region. Indeed, such different opinions resulted in the common opposition on the part of Chinese, Russian, and Central Asian regimes to the “color revolutions” endorsed by the West, including the United States, in 2005. Second, there are different interests regarding the alignment of the Central Asian energy pipelines. The most desired choice for Russia would be having the pipelines go through Russian territory, and the Americans strongly favor the lines leading to the West through the Caucasus and Turkey, while in the eyes of the Chinese, more pipelines from Central Asia leading to China would be an ideal option. These different considerations, looking like mere contention in economic interests, actually reflect more deeply rooted political and strategic calculations. Third, there are different perceptions of the American military presence in Central Asia. The United States maintains that stationing its troops in the region is a must for the war on terrorism, while China and Russia have misgivings about the long-­term intentions of the American military presence. The withdrawal of the American and NATO troops from Afghanistan might arouse further controversy over the goals and roles of the American troops in Central Asia. As mentioned, the SCO, integrating China, Russia, and the Central Asian states into one interest community, can enable them to minimize their differences and maximize their common interests. In contrast, the United States, an outsider to the SCO, does not have the similar connection of interests with China in this regard, thus feeling apprehensions about the multilateral organization. There have been several different opinions on the part of the United States about the SCO since its inception as the Shanghai Five. The first opinion identifies the SCO as a potential threat to the United States, and believes that it should be put under strict restrictions.29 The second opinion ignores the SCO, believing that the SCO, after all, will not operate properly as expected. For example, an American official mentioned that the United States, after the 9/11 attacks, had sought to cooperate with the SCO on antiterrorism, which turned out to be inefficient.30 The third opinion holds that the SCO, as a regional organization of multilateral cooperation, can become a partner of the United States in one way or another.31 The popularity of the second view has been waning as the SCO has been gaining influence over the last decade. Nevertheless, the other two views are

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still often heard and even fervently argued about, significantly affecting U.S. foreign policy not only toward China, Russia, and the Central Asian countries but also Pakistan, India, and such hotspot problems as Afghanistan, the Iranian nuclear issue, and instability in Kyrgyzstan. In 2005 the declaration of the SCO Astana summit and the acceptance of Iran as an observer state have given rise to further negative American views of the SCO. It is claimed that the SCO is being transformed into a new military group under the domination of Russia and China, so as to pose a deterrent against Western military presence in Central Asia.32 Especially conspicuous has been the following phrase in the declaration of the SCO Astana summit: “Considering the completion of the active military stage of antiterrorist operation in Afghanistan, the member states of the SCO consider it necessary, that respective members of the antiterrorist coalition set a final timeline for their temporary use of the above-­mentioned objects of infrastructure and stay of their military contingents on the territories of the SCO member states.”33 Some points should be emphasized here. First, these remarks were not specifically targeted at the United States, but more broadly at “respective members of the antiterrorist coalition,” that is, all those countries and inter­national organizations that use the infrastructure facilities of SCO countries or station their troops in SCO countries. Second, the SCO voiced its views and suggestions, while any final arrangements will have to be worked out through multilateral or bilateral consultations between SCO states and those relevant parties. Third, as the situation in Afghanistan was still severe at that time, it was not the right time to work out a timetable for the withdrawal of all foreign troops from Central Asia. Fourth, issues like the military presence or use of infrastructure facilities by one SCO state in another, for example, the use of the military base in Kyrgyzstan by Russia, may be sorted out through coordination within the framework of the SCO or the CIS either multilaterally or bilaterally. Basically, the Astana declaration was the result of the 2005 “color revolution” or regime change in Central Asia, not a long-­term strategy of the SCO.34 The fact that the 2006 SCO Shanghai summit and all following summits didn’t reiterate the above-­mentioned words quoted from the Astana declaration makes this very clear. However, this subject will certainly come up again, since Osama Bin Laden has been killed and the American and NATO troops have begun pulling out of Afghanistan.

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At the same time, positive opinions about the SCO have increased since 9/11 and the Iraq war, and even more so following the recent unrest in the Middle East. Supporters of the SCO argue that collaboration between China, Russia, and the SCO is necessary to promote global cooperation on antiterrorism and meet nontraditional security challenges, and to solve the Middle East problem and withdraw from Afghanistan. They believe that the United States should work together with more partners apart from NATO and engage the SCO over Afghanistan problems, and that the problem between the United States/ NATO and the SCO lies not in whether or not a partnership should be established so as to ensure stability in Afghanistan, but in how the partnership should be established.35 NATO’s New Strategic Concept, drafted by a committee chaired by the former U.S. secretary of state Madeleine Albright, states that NATO should explore the possibility of establishing new subregional groups with non-­NATO nations, and build more formal ties, on the basis of equality, mutual trust, and mutual benefit, with such regional organizations as the SCO and the Collective Security Treaty Organization.36 Based on this consideration, they further argue that the SCO should be encouraged to play a bigger role in Central Asia, particularly in Afghanistan. It is right in this context that America and the SCO begin to explore the possibility of cooperation. It has been proposed that both sides, as the first step in their common efforts, send each other liaison officers, invite military observers from the other side to inspect their antiterror exercises, and promote joint research and training for antiterrorism purposes.37 Some others have suggested that the SCO start cooperation with American NGOs and firms on certain specific projects regarding environmental protection and poverty reduction in order to facilitate economic development in Central Asia. As a matter of fact, there is already some basis for antiterrorism cooperation between the SCO and America, since all six SCO members have respectively set up some bilateral structure of antiterror cooperation. It can well be expected that the intersecting and overlapping of these pluralistic cooperation arrangements will, through more conscious efforts, grow into a more formal structure of antiterror cooperation between America and the SCO as a whole. What is noteworthy is that since the Obama administration took office, more U.S. government officials have

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supported engagement with the SCO,38 which indicates the growing influence of the third view of the U.S. government. Some U.S. officials have attended conferences hosted by the SCO on such issues as anti­ terrorism and counternarcotics. In return, officials from the SCO have also attended conferences organized by the United States and the West on the Afghanistan issue.39

Conclusion To sum up, despite remarkable achievements, the further development of the SCO faces serious challenges and good opportunities in its second decade. At the same time, the SCO-­U.S. relationship is closely linked with the Sino-­U.S. relationship, and both influence each other, particularly in Central Asia. By reinforcing cooperation in Central Asia, the SCO helps overall ties between China and the United States. This improves relations in Central Asia as well. Conversely, Sino-­U.S. relations in the region would be harmed if there were confrontations between the SCO and the United States in Central Asia. Consequently, it is foreseeable that the developing trend of the SCO will be a factor of major importance in Sino-­U.S. relations in Central Asia for a long time to come. Notes 1.  This process had its origin in the Sino-­Soviet negotiations on their border issues. Following the collapse of the USSR, the negotiations came to involve “two sides but five countries” — ​that is, China on the one hand and Russia, Kazakhstan, Kyrgyzstan, and Tajikistan on the other. The interactions among them finally led to the creation of a stable mechanism called the “Shanghai Five” in Shanghai in April 1996. On June 15, 2001, the mechanism was upgraded to the SCO, which extended its membership to Uzbekistan, and expanded its cooperation beyond border security. 2.  PRC Ministry of Commerce, Retrospect and Prospect: Regional Economic Cooperation of Shanghai Cooperation Organization (Beijing, 2012), 10. 3.  People’s Daily, September 13, 2013. 4.  See Joint Statement of the First Meeting of Finance Ministers and Heads of Central Banks of the SCO Member States, December 9, 2009, Almaty. 5.  The SCO secretary-­general M. Imanaliev issued a statement in connection with the events in the Kyrgyz Republic, April 8, 2010, Beijing. 6.  Declaration of the Tenth Meeting of the Council of the Heads of the Member States of the Shanghai Cooperation Organization, June 11, 2010, Tashkent.

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7.  Vlast’ (Russia), no. 29 (2010). 8.  Daily Telegraph (UK), June 20, 2010. 9.  Nezavisimaia (Russia), February 2, 2011. 10.  Jacob Zenn, “Jund al-­Khilafa Operations Expand in Kazakhstan,” Terrorism Monitor (Jamestown Foundation, Washington, D.C.) 9, no. 46 (December 15, 2011). 11.  Christina Lin, “How Pakistan’s Unstable Tribal Areas Threaten China’s Core Interests,” China Brief (Jamestown Foundation, Washington, D.C.) 12, no. 1 (January 6, 2012). 12.  Hizb-­ut-­Tahrir was founded in Palestine around 1952. 13.  The spread of the global financial crisis has brought many projects in Central Asia to a standstill. With enterprises closing down, large numbers of employees lost their jobs and came back to the Ferghana countryside. 14.  Igor Rotar, “Will the Fergana Valley Become a Hotbed of Destabilization in Central Asia?,” Eurasia Daily Monitor (Jamestown Foundation, Washington, D.C.) 9, no. 180 (October 3, 2012). 15.  Igor Rotar, “Uzbekistan and Kyrgyzstan Heighten Tensions in Violent Local Border Dispute,” Eurasia Daily Monitor (Jamestown Foundation, Washington, D.C.) 10, no. 17 (January 30, 2013). 16.  See Press Communiqué of the Meeting of the Council of the Heads of the Member States of the SCO, September 13, 2013, Bishkek. 17.  On June 15, 2011, the SCO summit in Astana approved “the 2011 – ​2016 drug control strategy of the SCO member states” and its implementation plan, which would be conducive to enhancing the capabilities of member states in jointly dealing with drug threats in the region. 18.  Joint Declaration on SCO/UN Secretariat Cooperation, April 5, 2010, Tashkent. 19.  See the Bishkek Declaration of the Heads of the Member States of the SCO, September 13, 2013, Bishkek. 20.  “President Xi Jinping Delivers Important Speech and Proposes to Build a Silk Road Economic Belt with Central Asian Countries,” Xinhua News Agency (Astana), September 7, 2013. 21.  On June 11, 2010, the SCO summit in Tashkent approved the Statute on the Order of Admission of New Members to the SCO. 22.  Press Communiqué of the Meeting of the Council of the Heads of the Member States of the SCO, June 7, 2012, Beijing. 23.  Ibid. 24.  Xinhua News Agency (Beijing), September 27 and November 19, 2006. 25.  Some “ET” members established this party in 2008. 26.  Guangming Daily (Beijing), March 4, 2010. 27.  Xinhua News Agency (Beijing), July 12, 2011. 28.  Paul Pillar, “China’s Central Asian Problem,” National Interest, August 2, 2011. Also see Jacob Zenn, Testimony before the Subcommittee on Europe, Eurasia and Emerging Threats, House Committee on Foreign Affairs, “Islamist Militant Threats to Eurasia,” Washington, D.C., February 27, 2013.

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29.  See Gene Germanovich, “The Shanghai Cooperation Organization: A Threat to American Interests in Central Asia?,” China and Eurasia Forum Quarterly 6, no. 1 (2008): 21 – ​23; Selbi Hanova, “Perspectives on the SCO: Images and Discourses,” China and Eurasia Forum Quarterly 7, no. 3 (2009): 64 – ​66; Akihiro Iwashita, ed., Toward a New Dialogue on Eurasia: The Shanghai Cooperation Organization and Its Partners (Sapporo, Japan: Hokkaido University Slavic Research Center, 2007), 8. 30.  Xing Guangcheng and Sun Zhuangzhi, eds., The Shanghai Cooperation Organization (Jilin, China: Changchun Press, 2007), 231. 31.  Matthew Oresman, “Reassessing the Fleeting Potential for U.S. – ​China Cooperation in Central Asia,” China and Eurasia Forum Quarterly 6, no. 2 (2008): 12. 32.  Fred Weir, “Russia, China Looking to Form ‘NATO of the East’?,” Christian Science Monitor, October 26, 2005. 33.  Declaration of Heads of Member States of Shanghai Cooperation Organization, Astana, July 6, 2005. 34.  See Pan Guang and Hu Jian, The First New Regional Cooperation Organization of the 21st Century: A Comprehensive Study of the Shanghai Cooperation Organization (Beijing: CCCPC School Publishing House, 2006), 118. Also see Alyson Bailes, Pal Dunay, Pan Guang, and Mikhail Troitskii, “The Shanghai Cooperation Organization” (Policy Paper 17, Stockholm International Peace Research Institute, May 2007). 35.  Alexander Cooley, “The West’s View on SCO” (lecture at Center of SCO Studies, Shanghai Academy of Social Sciences, October 23, 2009); also see Matthew Hall, The Shanghai Cooperation Organization: A Partner for Stabilizing Afghanistan? (Canberra: Australian Defense Force Academy, 2009), 9. 36.  NATO, “NATO 2020: Assured Security, Dynamic Engagement; Analysis and Recommendations of the Group of Experts on a New Strategic Concept for NATO,” May 7, 2010. Also see Alyson J. K. Bailes and Johanna M. Thordisardottir, “The SCO and NATO,” in The Shanghai Cooperation Organization and Eurasian Geopolitics, ed. Michael Fredholm (Copenhagen: NIAS Press, 2013). 37.  Matthew Oresman, “Engaging China in Central Asia,” China and Eurasia Forum Quarterly, April – ​May 2004. 38.  Julie Boland, Ten Years of the Shanghai Cooperation Organization: A Lost Decade? A Partner for the U.S.? (Washington, D.C.: Brookings Institution, 2011). 39.  Alexander Lukin, “SCO and NATO: Is Dialogue Possible?,” RIA Novosti, July 21, 2011.

References Chinese Center of SCO Studies. Compilation of Materials and Documents of SCO. Vols. 1 – ​6. Shanghai: Shanghai Academy of Social Sciences, 2003, 2005, 2007, 2009, 2011, 2013. Li Gang, ed. SCO — ​Rapidly Promoted Regional Economic Cooperation. Beijing: China Customs Publishing House, 2004.

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Li Jinfeng, Wu Hongwei, and Li Wei, eds. Annual Report on the SCO (2013). Beijing: Social Sciences Academic Press, 2013. Pan Guang and Hu Jian. The First New Regional Cooperation Organization of the 21st Century: A Comprehensive Study of the Shanghai Cooperation Organization. Beijing: CCCPC School Publishing House, 2006. Sun Li and Wu Hongwei, eds. Annual Report on Development of Central Asia (2012). Beijing: Social Sciences Academic Press, 2012. ———. Annual Report on Development of Central Asia (2013). Beijing: Social Sciences Academic Press, 2013. Xing Guangcheng and Sun Zhuangzhi, eds. Shanghai Cooperation Organization. Changchun, China: Changchun Publishing House, 2007. Wu Enyuan and Wu Hongwei, eds. Annual Report on the SCO (2011). Beijing: Social Sciences Academic Press, 2011. English Aris, Stephen. Eurasian Regionalism: The Shanghai Cooperation Organization. New York: Palgrave Macmillan, 2011. Bailes, Alyson, Pal Dunay, Pan Guang, and Mikhail Troitskii. “The Shanghai Cooperation Organization.” Policy Paper 17, Stockholm International Peace Research Institute, May 2007. Boland, Julie. Ten Years of the Shanghai Cooperation Organization: A Lost Decade? A Partner for the U.S.? Washington, D.C.: Brookings Institution, 2011. Fredholm, Michael, ed. The Shanghai Cooperation Organization and Eurasian Geo­ politics. Copenhagen: NIAS Press, 2013. Oresman, Matthew. “Engaging China in Central Asia.” China and Eurasia Forum Quarterly, April – ​May 2004. Pan Guang. “China in the Shanghai Cooperation Organisation.” In China and the New International Order, edited by Wang Gungwu and Zheng Yongnian. New York: Routledge, 2008. Pillar, Paul. “China’s Central Asian Problem.” National Interest, August 2, 2011. Zenn, Jacob. Testimony before the Subcommittee on Europe, Eurasia and Emerging Threats, House Committee on Foreign Affairs, “Islamist Militant Threats to Eurasia,” Washington, D.C., February 27, 2013. Russian Андреева, Е. Л., и А. И. Татаркин. Шанхайская организация сотрудничества: экономическая интеграция и национальные интересы. Екатеринбург: УрО РАН, 2010. Серебрякова, Н. В. Шанхайская организация сотрудничества: многосторонний компромисс в Центральной Азии. Москва: ИнфоРос, 2011. Чуфрин, Г. И. Россия в Центральной Азии. Алматы: КИСИ при Президенте РК, 2010.

14

The Quest for Energy Security in the Central Asian “Neighborhood” Carolyn Kissane

Introduction A New Great Game for Central Asia? Arthur Conolly, an intelligence officer with the British East India Company, coined the term “the Great Game” in the nineteenth century to describe the competition for control of territory and resources between the British and Russian Empires. Fierce rivalries lie at the heart of the narrative, with the Central Asian region serving as a battleground for control over strategically valuable terrain. The emergence of new players after the dissolution of the Soviet Union begs the question, Is the region still immersed in the Great Game? If so, then China joins the rivalries between Russia and the United States. Each competes for dominance over both energy resources and regional security — ​particularly in the face of the U.S. withdrawal of troops from an unstable Afghanistan and its inchoate détente with Iran. China, with sustained growth rates above 9 percent since 2002, needs more energy to feed its manufacturing engine and rapidly growing urbanization. Secure and affordable energy is a strategic Chinese national imperative, and there is no better place to acquire resources than from resource-­rich Central Asia. Russia, which still views Central Asia as its sphere of influence, continues to wield substantial power due to its extensive pipeline network — ​infrastructure that Kazakhstan, Turkmenistan, and Uzbekistan still heavily rely upon to get their oil and gas onto the international market. U.S. interests centered in the past on offering alternative energy transit routes to bypass Russia, but over the last decade its preoccupation in the region has been 366

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over Afghanistan and controlling the rise and spread of radical Islam. According to Steve Levine, Washington risks losing its reputation as the protector of political and economic independence due to a diminishing focus on national reforms and its more pliant stance toward Central Asian dictatorial regimes; this differs from the position the United States had in the 1990s and early 2000s after pushing through the Baku – ​ Tbilisi – ​Ceyhan pipeline: The pipeline represented a rare post – ​cold war foreign policy triumph for the United States. . . . It anchored America’s physical presence on the Caspian, already conspicuous in the wake of the September 11, 2001, terrorist attacks on New York and Washington. For a few years after those signal events, Central Asia and the Caucasus became effective U.S. protectorates, with the establishment of military bases and the deployment of military advisors throughout. (Levine 2007, 380 – ​81)

Today, the region and the United States’ status in the region are very different: the United States exerts less influence and impact, while China effectively exerts more political and economic power due to its generous foreign investments in the region and its laissez-­faire approach to the internal politics within Central Asia. This chapter explores the role natural resources play in the region and especially China’s role over the last decade, which offers an opportunity to address questions of impact, influence, and what China’s continued engagement means for Russia, the United States, and the region as a whole. China appears to be forging ahead in its efforts to gain an advantage in the region: through developing energy partnerships and fostering greater regional integration; the construction of pipelines that directly link Central Asia with China; and substantial loans for oil and gas that ensure long-­term Chinese access to energy resources.

Background In the three-­decade history of involvement and competition in the Central Asian hydrocarbon sector, Russia predominated over the region during the Soviet period. After the collapse of the Soviet Union in 1991, however, the United States asserted its presence through investment

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by international oil and gas corporations and the construction of the Baku – ​Tbilisi – ​Ceyhan (BTC) pipeline to bypass Russia. Through pipeline politics, the United States sought to displace Russia’s influence in the region by offering Central Asian states an alternative to their historically dependent relationship. In addition to the sway the BTC pipeline established, the U.S. government, through USAID and other NGO projects, affirmed its authority through electoral reform projects, democracy initiatives in schools and universities, and the establishment of local civil society organizations. These organizations were meant to promote more active citizen involvement within communities and government, but were viewed with suspicion by the already established authoritarian-­leaning regimes in the region. Now it seems to be China’s decade, with billions of dollars invested in pipelines, cross-­border cooperation agreements, and equity oil and gas concessions in Kazakhstan, Turkmenistan, and Uzbekistan. China’s regional involvement is growing: as of 2014, China’s share of equity in Kazakhstan’s oil sector is significantly larger than that of Russia and the United States. China’s rapid expansion into the Central Asian energy market represents a critical international development at the nexus of politics, commerce, and security. However, China’s current ostensible advantage is not absolute: the United States could still flex its geo­ political muscles and potentially outflank both China and Russia by aligning closer to Iran in a pivot toward Central Asian pipeline and petro­dollar politics; and Russia’s geostrategic advantage in the Middle East may yet check attempts at balancing in the Eurasian energy sector. Historically, the international energy sector has been relatively uninterested in Central Asia. During the West’s Cold War engagement with the Soviet Union, it ignored the Soviet periphery because of the United States’ limited ability to wield influence in the region and the opaque power structures that guided the republics’ relationships with the outside world. The Soviet Central Asian republics were considered the least developed states within the Soviet Union. The United States was concerned with events in Afghanistan after the Soviet invasion in 1979, but more direct involvement did not take place until the late 1980s and early 1990s. The landlocked Central Asian region remained dependent on Russia for the export of its oil and gas, even after the fall of the Soviet Union.

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But Russia was so preoccupied with restabilization in the early 1990s that Central Asian issues took a back seat. Russia focused instead on its own domestic oil and gas privatization deals. The underdevelopment of energy production capacity and infrastructure in Central Asia stirred little incentive to invest in the region’s resources until Kazakhstan, with meager technical expertise and financial resources, gained a more international route to privatization. In the late 1980s, the U.S. oil company Chevron negotiated with the Soviet Union to begin exploration in what was then the Soviet Socialist Republic of Kazakhstan. While Chevron became the first Western company to sign an oil concession and secure exploration and production in Kazakhstan and the Caspian region, Turkmenistan and Uzbekistan remained largely closed to international energy investments — ​even up until the last five years (both currently allow limited onshore oil and gas projects). But Turkmenistan is interested in diversifying its relationships beyond Russia and China. It already has relations with Iran and Turkey and has just finished its term chairing the Commonwealth of Independent States (CIS). Turkmenistan offers a pipeline hub for exporting its natural gas. It seeks to export north to Russia, east to China, and south to Pakistan and India via Afghanistan, and it also seeks to export west to Europe via the Caspian Sea (though unlikely due to Russia’s opposition). The north and east pipeline routes are already online and the most viable, while the southern route (TAPI) and trans-­Caspian are less likely to allow Turkmenistan to radically diversify the geopolitics of its gas: At present, Turkmenistan sells its natural gas directly at its borders with China, Russia, and Iran. In 2011, Turkmen gas exports to Russia (10 bcm), to Iran (10 bcm), and to China (14 bcm) were substantial. However, these markets may dry up in coming years. Russia and Iran have some of the world’s largest natural gas reserves and China will likely develop its shale gas potential by the end of the decade. (Hammond 2012).

Chinese companies did not enter the energy game until 1997, when China National Petroleum Corporation (CNPC) acquired the rights to the Aktobe field in Kazakhstan, which includes the Zhanazhol oil and gas condensate field and the Keniyak oil blocks. However, its late entry into the Central Asian energy market game caused China to miss out on

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all the big Caspian plays: Tengiz, ACG, Karachaganak, and Kashagan. Today, China is making up for its delay in competing for Central Asian resources through long-­term regional financial commitments for exploration, production, and pipelines. Its vast currency reserves allow China to secure a foothold in the region through loans for oil and gas. Daniel Yergin defines energy security as “the capability to assure adequate, reliable energy supplies at reasonable prices in ways that do not jeopardize major national values and objectives” (1998, 110 – ​11). This definition integrates economic, security, and ideological elements in addition to the core necessity of ensuring access to adequate supplies. Energy deals often involve state-­to-­state interactions and diplomatic negotiations. This chapter defines energy diplomacy as “foreign activities with explicit involvement of the central government aiming to secure foreign and oil and gas resources or promote interstate oil and gas cooperation” (Chen 2008). China’s energy diplomacy in the region focuses on state visits, formal meetings between heads of states and their delegations in person to negotiate agreements. Russia, on the other hand, has used its historic relationship with the region, its extensive pipeline networks, and sometimes even threats to secure its position in the region. The United States has yet to deploy China’s strategy of granting loans for oil and gas; U.S. diplomatic relations with Central Asian nations ramped up only after the issue of Afghanistan demanded greater attention to regional security.

Central Asia’s Energy Networks Eurasian energy networks are vast and complicated and require analysis on multiple levels to gain a fuller understanding of international involvement in the region. Supply, demand, relational pricing, financing for new projects, and geopolitical factors all come to bear when one attempts to forecast a coherent projection for both the near-­and long-­ term outlook. Key questions for energy and regional analysts include, Which of the proposed pipelines will become operational? Who is looking to finance them and why? And where is the oil and gas going to come from? The answers to these questions shed light on China’s motives and likely actions as it seeks to control an ever-­greater share of the international energy market.

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Not lost on the Chinese is the region’s significant potential as an important energy provider on the global market. For example, in terms of sheer numbers, Azerbaijan has oil reserves of 7 billion barrels and 30 trillion cubic feet (tcf) of natural gas.1 Kazakhstan has 30 billion barrels of oil in reserve,2 along with 85 tcf of associated natural gas.3 Turkmenistan has 71 tcf of gas in reserve, along with 6 billion barrels of oil.4 According to the U.S. Energy Information Administration (EIA), Turkmenistan has proven natural gas reserves of 71 trillion cubic feet (2 trillion cubic meters).5 As of 2009, Turkmenistan’s average natural gas production was about 45 bcm (billion cubic meters) per year (“Turkmenistan’s gas politics” 2009). Further, according to the BP Statistical Review of 2009,6 Turkmenistan has 7.94 tcm of natural gas, which most likely includes the Dauletabad field and certainly includes the South Yolotan-­Osman field. The audit, performed by Gaffney, Cline and Associates, concludes that this field could contain anywhere from 4 to 14 tcm, making it the world’s fourth-­or fifth-­largest field (“Turkmenistan’s gas politics” 2009; Pannier 2008). But spoilers remain. To date, the projected capacity for growth has been substantial: oil production from the Kashagan field in Kazakhstan, the largest new field in the world, was expected to come online in 2013 with forecasts projecting $28 billion in revenue to Kazakhstan from 2014 to 2016.7 But although it delivered its first oil in September 2013, toxic pipeline leaks — ​possibly due to Kashagan’s highly sulfurous and corrosive “sour gas” — ​crippled the output to the point of completely shutting Kashagan production down for repairs until as late as 2015.8 Expectations for Turkmenistan gas extraction and distribution have also been overconfident, with deals to export 80 – ​90 bcm per year to Russia (“Does Turkmenistan’s willingness” 2008), 30 bcm to China (“Does Turkmenistan’s willingness” 2008), 8 bcm to Iran (“Does Turkmenistan’s willingness” 2008; Pannier 2008) and an additional 10 bcm to Europe (Vukotic 2008) through the proposed Nabucco pipeline, requiring Turkmenistan to produce nearly 140 bcm annually, a threefold increase in production. If the reserve numbers are to be believed, then Turkmenistan has enough natural gas to satisfy all (Vukotic 2008; Pannier 2008). However, according to an Economist Intelligence Unit report cited by Roubini Global Economics, “Turkmenistan therefore appears to have the reserves to sustain output at a level that would meet

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domestic demand and existing contracts, and even supply the Nabucco and the Turkmenistan – ​Afghanistan – ​Pakistan – ​India (TAPI) pipelines. Unfortunately, its record on production is not strong, and it has not attracted anywhere near sufficient investment over the past decade” (“Turkmenistan’s gas politics” 2009). Such overconfidence sways international players like China, which invest in Turkmenistan as a means to gain a stake in the country’s significant energy resources. But Turkmen gas export is dependent on the Nabucco and TAPI pipelines being built — ​both of which face serious and possibly insurmountable obstacles to their completion. Furthermore, if China can cost-­effectively domestically extract the shale deposits estimated by the IEA and others, its need for imported natural gas will likely diminish. Still, Turkmenistan’s unique geostrategic position as a neighbor to China makes it a natural gas player in China’s market regardless. It will be at least another five to ten years for China to confirm and begin to tap its own natural gas from shale, so in the meantime, Turkmenistan has a keen buyer in China. In 2006 CNPC acquired an onshore concession in Turkmenistan and proceeded to plan a pipeline through Uzbekistan and Kazakhstan to import gas to China. The planned 40-­bcm twin lines are supported by gas volumes from CNPC’s own production in Turkmenistan and from production by Turkmengaz. By the end of 2009, China secured agreements with neighboring countries to import oil and gas from all directions, cementing its strategy to diversify its energy supplies and become a key player in the region. From the north, oil imports from Russia were set to expand from the relatively small rail shipments via a new pipeline into China’s northeastern Heilongjiang Province, while from the west, an oil pipeline from Kazakhstan and a gas pipeline from Turkmenistan, via Uzbekistan and Kazakhstan, will extend into China’s western autonomous region of Xinjiang (Jiang and Sinton 2011). The infusion of Chinese investment into Turkmenistan’s gas market has weakened Russia’s position. Before China’s development of a west-­ east pipeline allowing for Turkmen gas to reach it, the only other export alternative was through Russia via the Korpedeke – ​Kurt – ​Kui line. All Turkmen and Uzbek natural gas exports were controlled by Russia’s Gazprom entity, and almost all Turkmen gas was exported to Russia via Uzbekistan or to Ukraine via Russia. Such radical changes in the

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table 14.1. Oil and Gas Reserves in the Region Oil (millions of barrels)

Natural gas (billion cubic meters)

Kazakhstan

30,000

1,820

Kyrgyzstan

40

Tajikistan

12

Turkmenistan

600

7,940

Uzbekistan

594

1,580

Sources: U.S. Energy Information Administration, “International Energy Statistics,” http://www.eia.gov/cfapps/ ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid=ww,&syid=1980&eyid=2013&unit=TBPD; U.S. Energy Information Administration, Country analyses for Central Asia, http://www.eia.gov/countries/.

financing landscape within the last few years have made Turkmenistan a much more autonomous player by helping it diversify its export opportunities away from Russia alone.

Major Central Asia Oil and Natural Gas Pipelines Because this landlocked region lacks access to seaports and waterways that benefit other oil and natural gas exporters such as those in the Middle East, development and exportation of Central Asia’s resources require significant capital investments in the form of pipeline construction — ​projects that are costly to initiate and maintain, and that are vulnerable to regional instability and domestic threats. A number of critical pipelines bear mentioning. Azerbaijan is a cornerstone of Central Asian energy exports, as numerous major Caspian pipelines begin there. The Northern Route or Baku – ​Novorossiysk, dating back to 1997, was the earliest post-­Soviet pipeline. It has a maximum capacity of 200,000 b/d (barrels per day) and spans 1,388 kilometers from Baku to the Russian Black Sea port of Novorossiysk. Additionally, Russia has maintained the Chechnya Bypass, a 326-­kilometer line, which can carry 120,000 b/d from Baku through Dagestan to the Russian city of Tikhoretsk and allows Russia a degree of security from trans-­Caucasus tensions. Crucially, however, later post-­S oviet pipelines sought to bypass Russia. The first is the AIOC Western Export Route (1999), also known as “Early Oil” and the Baku – ​Supsa. Originally a rival to the

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Russian-­controlled Baku – ​Novorossiysk pipeline, the Baku – ​Supsa had traditionally been Azerbaijan’s chief export route to the West via tanker ships over the Black Sea and through the Bosporus. The pipeline is 824 kilometers and carries 100,000 b/d between Azerbaijan and Georgia. Later, in 2006, non-­Russian Caspian crude was given a massive lifeline with the construction of the 1,800-­kilometer Baku – ​Tbilisi – ​Ceyhan (BTC) pipeline. The BTC can carry up to 1 million b/d of Azeri and Kazakh crudes via Tbilisi, Georgia, to the Turkish Mediterranean port city of Ceyhan. The Baku – ​Tbilisi – ​Erzurum (BTE) natural gas pipeline, also constructed in 2006, follows a similar path, taking 7 billion cubic meters daily from the Azeri offshore Caspian Shah Deniz gas field to Turkey. Much like its sister line, the BTC, the BTE pipeline provides export diversification for Central Asian gas producers, and ensures European markets secure and stable access to energy supplies. Azerbaijan’s importance as a pipeline export hub parallels Kazakhstan’s importance as Central Asia’s largest producer of crude oil by volume and reserves. With the exception of tanker cargos destined for export along the BTC, nearly all of Kazakhstan’s production is exported through Russia or China. The Soviet-­era Atyra – ​Samara pipeline carries up to 900,000 b/d and connects Kazakh fields with the Transneft “Druzhba” system. The post-­Soviet Caspian Pipeline Consortium (CPC) line, a joint effort between IOCs (international oil companies), Russia, and Kazakhstan, was constructed in 2001. This massive pipeline stretches 1,440 kilometers and carries anywhere from 22 to 67 million tons per year, roughly equivalent to 400,000 to 1.4 million b/d. Alternatively, the Kazakhstan – ​China (2003 – ​2009) pipeline carries 20 mt/y (million tons per year — ​roughly 400,000 b/d) of Kazakh crude eastward to China, stretching a colossal 2,880 kilometers. This pipeline gives Kazakhstan much-­needed export diversification, allowing increasing production to find direct market access. One pipeline yet to be built, but which serves as a lodestone for illustrating the Great Game’s stakes and actors, is the fabled and interminably inchoate Turkmenistan – ​Afghanistan – ​Pakistan – ​India (TAPI) pipeline. The proposed 1,680-­kilometer TAPI pipeline route (see figure 14.1) was conceived in the mid-­1990s as a way of transporting natural gas

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Figure 14.1

from the Turkmen city of Dauletabad through the Afghan cities of Herat and Kandahar to Quetta, Pakistan, and then into the Indian border town of Fazilka. TAPI is slated to carry 33 bcm of natural gas annually, and would bring an estimated 5 bcm to Afghanistan and 14 bcm to both Pakistan and India annually (Foster 2008). Constructing TAPI would cost at a minimum an estimated $7.6 billion, with an initial capacity of 30 – ​33 bcm/year (Hancock 2006, 74). Since pipeline cost projections typically underestimate the real price tag, TAPI could easily surpass $10 – ​12 billion, especially since large segments of its length require presence in the Afghanistan section of the route, where infrastructure costs will become mired in security and labor matters. Layered onto Afghanistan’s perpetual insecurity are Turkmenistan’s unstable supply and Pakistan’s security threats (both internal and external). The fragile relationship between Pakistan’s civilian government, armed forces, intelligence services, and terrorist groups poses a distinct hazard for any transnational infrastructure project such as TAPI.

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Macro-­level security dynamics would be exacerbated by discussions on transit fees, which Pakistan’s India-­phobic security establishment could exploit in ways similar to recent Russian-­Ukrainian gas disputes.9 Indeed, 2012 talks between India and Pakistan on potential TAPI transit fees broke down with Indian refusals to pay the $.50/mm Btu (million British thermal units) fees Pakistan had “suggested” (Mehdudia 2012). Historic animosities aside, both Pakistan and India desperately require a pipeline solution to fulfill their energy needs. Despite the seemingly intractable security risks, both U.S. and Russian policy makers preferred TAPI over an alternative proposal of an Iran – ​Pakistan – ​India pipeline (IPI), a result of the United States’ need to isolate Iran and Russia’s need to prevent Iranian gas development in South Pars (where IPI’s gas would originate) from making its way into Russia’s bread-­and-­butter European markets via potential hook-­ins to southern stream projects like Nabucco that bypass Russian territory. A new wrinkle in TAPI’s fate has now emerged, thanks to the 2013 Geneva accord between Iran and the P5+1: if the détente between the West and Iran holds long-­term, isolating Iran by blocking IPI could run counter to U.S. and European interests in the energy sector. Indeed, supporting IPI could allow the West to balance against Russian energy interests. Immediately after leaving Geneva, Ali Majedi, the Iranian deputy oil minister for international and commercial affairs, flew to India to discuss the IPI proposal, “recommending IPI’s extension to China, providing a marginalized India an opportunity to lock itself into the Eurasian Great Game.”10 While IPI must still overcome both Pakistan’s resistance to pay for its part of the pipeline (a fact that led to suspension of a $500 million Iranian loan to Pakistan for IPI construction in mid-­December 201311) and India’s security concerns that may require rerouting parts of the IPI, the rapid changes in fortune for TAPI and IPI illustrate the complexity of pipeline politics and the constant strategic maneuvering among actors in the Great Game. The distraction of the Afghanistan war has put the United States at a strategic disadvantage in the geopolitical chessboard of Central Asian resource security, allowing Russia and China to dominate. The energy gains made possible by hydrofracturing in North America have concentrated the attention of Western IOCs away from Central Asian

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hydrocarbons, but the rapidly shifting political scene in the Middle East and South Asia has intensified the need for U.S. strategic vision with regard to Central Asia. In this concern, the United States now has a potential and unlikely counterbalancing ally in Iran, which also seeks a measure of control over Central Asia’s export capacity. The historic 2013 Geneva accord between Iran and the Western allies of the P5+1 not only serves to potentially break the impasse on nuclear negotiations, it also provides the United States an opportunity, via the relaxing of economic sanctions, to drive a wedge between Iran and its long-­standing traditional allies (and energy partners) Russia and China. By enticing Iran back into the dollar-­pegged energy market — ​a system that both China and Russia have actively sought to change and that Iran was forced through sanctions to abandon in favor of selling its oil for gold, Chinese yuan, and Indian rupees during the sanctions period — ​ the United States may yet bolster its own economic position in the energy security sector overall. If future negotiations between Iran and the United States and Western allies proceed positively with appropriate carrot-­and-­stick phasing, the United States could still remain in the Great Game by undermining the political influence Russia and China retain over Iran and use this new chapter in U.S.-­Iranian relations to secure greater geopolitical presence via energy deals in Central Asia once it draws down in Afghanistan. The former secretary of state Hillary Clinton summed up America’s post-­Afghanistan strategic approach to hydrocarbon development in Central Asia when speaking in Chennai in 2011: Historically, the nations of South and Central Asia were connected to each other and the rest of the continent by a sprawling trading network called the Silk Road. Indian merchants used to trade spices, gems, and textiles, along with ideas and culture, everywhere from the Great Wall of China to the banks of the Bosphorus. Let’s work together to create a new Silk Road. (Clinton 2011)

This “new Silk Road” is predicated upon infrastructure investment and a more internationally accessible (i.e., less Russia-­centric) trading structure. India serves U.S. aims nicely here, while Clinton’s vision — ​provided

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that India and, to a lesser extent, Pakistan gain footholds in the region — ​ of a new Silk Road mirrors Chinese visions for the region. Indeed, both China and the United States have new Silk Road initiatives, but they differ in significant ways: the U.S. strategy seeks to maintain influence in Eurasia and bolster allies and interests in South Asia, while China plans to develop a Eurasian land bridge connecting China to Europe across the Central Asian region (Lin 2011). Despite differences in approach, each actor’s overarching strategy does not inherently create conflict: U.S. backing for Indian involvement in the Central Asian gas market would bring much-­needed energy supplies to China’s ally and designated counterweight to India, Pakistan. As far back as 1994, then prime minister Li Peng stated that China felt it “important to open up a modern version of the Silk Road” (Pantucci and Petersen 2012), thus underscoring the primacy of hydrocarbons in China’s foreign policy — ​especially since China had become a net importer just a year earlier (Foster 2011; Luft 2004; Vivoda and Manicom 2011). Pantucci and Petersen also note how concerns over security in China’s restive Xinjiang region filtered into Li’s statements, illustrating how China’s intertwining of energy and domestic stability remains its paramount preoccupation, particularly during eras of potential political volatility. In the Eurasian context, China’s notion that energy demand and a peaceful “neighborhood” go hand in hand prompted one senior policy maker in China’s energy ministry to remark that “energy is the basis for a wider relationship with Turkmenistan,” while also revealing that the renewed focus on the Sino-­Turkmenistan relationship was a direct response to recent unrest within Kazakhstan (Petersen 2012). Russia’s “grand strategy” for Central Asia diverges from both American and Chinese visions by seeking to “build upon previous glory” (Pantucci and Petersen 2012). Yet while calling the collapse of the Soviet Union the “greatest geopolitical catastrophe of the 20th century,” President Vladimir Putin predicates the Russian vision for Central Asia on an economically integrated “Eurasian union,” which would not “attempt to restore or copy something from the past,” but would rather be “a stronger integration on a new political and economic basis and a new system of values [which] is an imperative of our era,” as such a union would allow Central Asian states to “integrate into Europe faster and from a

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much stronger position” (Bryanski 2011). Russia’s intentions vis-­à-­vis Central Asian oil and gas are quite clear — ​flow west, with “strength” derived from ties to Russian transport corridors. Russia seeks to also hedge its position in the energy sector game by strengthening its advantage in the Middle East.12 Future opportunities to undermine Russia’s influence on Tehran, now that Iran and Western allies are attempting to break their thirty-­year impasse, are not lost on Russia. Iran, given its geographical position relative to Central Asia and its own considerable oil and gas reserves, has its own interests in exploiting Eurasian pipelines and reserves — ​especially as it may yet emerge from years of debilitating economic sanctions. Russia’s circumspect treatment of Syria during the grim civil war of the last three years has two clear driving strategic advantages: first, it keeps Iran — ​ the principal financier and only regional ally behind Syrian president Bashar al-­Assad — ​on Russia’s side; and second, it preserves Russia’s strategic vantage point of its Mediterranean naval base in Syria’s Tartus port, which could wind up being a critical node if the planned Iran – ​ Iraq – ​Syria (IIS) pipeline, for which an agreement was signed in 2011, moves forward (thus allowing Russia a potential opportunity to connect undersea to its European-­bound Southern Stream pipeline by extending a junction via Greece or Cyprus, which would preserve Russian control over Iranian and Levant gas into Europe).13 This strategy is one facet of Russia’s drive to restore the glory of its Soviet-­era global superpower status, which requires not only pulling in former Eastern European and Central Asian outposts closer to its core, but also encircling new partners. But Russia’s attempts to draw former satellites into a tighter embrace via such vehicles as the Eurasian Union have revealed the cracks in Russia’s façade: the populist uprising in Ukraine in late 2013 over its government caving to Russian coercion rather than clinching a possible deal with the European Union for closer association ties in energy and trade demonstrates a rising level of pushback against Soviet-­style tactics. Moreover, the extreme levels of xenophobia, hostile sentiment, and violence within Russia against migrants from Central Asia set the stage for friction between the once-­imperial overlord and its former southern territories as their now autonomous interests diverge and fewer-­strings-­ attached Chinese money beckons.14

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Defining the Chinese Eurasian Strategy As David Kerr notes, “the Chinese strategy . . . [in Central Asia] is just one vision which must coexist with others, notably those emanating from Moscow, Washington, and, perhaps, Brussels” (2010, 134) and from Bishkek, Dushanbe, Astana, Tashkent, and Ashgabat as well. In trade and soft power, it is a region imbricated by these strategies in the form of rail projects, oil field concessions, pipeline deals, and markets featuring cheap consumer goods made in China. Yet hard-­power considerations have once again been brought to the fore, and may force Beijing to assert its vision more conclusively in the near future. On December 20, 2011, less than a week after riots in Kazakhstan’s oil and gas town of Zhanaozen were violently suppressed by local authorities, China’s Foreign Ministry released a statement that read, “China is highly concerned about the riots in Kazakhstan and supports Kazakhstan’s measures to restore social order, protect people’s lives and property, and ensure the country’s stability” (“China concerned” 2011). The following day, at the conclusion of a Collective Security Treaty Organization (CSTO) summit in Moscow, a Russia-­backed regional organization that does not include China, the group’s members reiterated the requirement for the consent of the organization’s seven member states before any foreign military base can be established on a member’s territory (“CSTO to control” 2011). Indeed, both of these stories highlight the sensitivities and competing regional forces within the current Central Asian security environment, while pointing to the delicate balance of influence that regional powers like Russia and China must work to maintain.15 For China, the region represents alternative non-­sea sources of energy and energy transport routes, and for the Central Asian states, neighboring China embodies an alternative to fickle Russian markets and pipeline routes, as well as a deep and seemingly endless line of credit. By “escaping Russia” (Hancock 2006, 67) and embracing China more deeply over the past decade and a half, oil-­and gas-­rich states like Kazakhstan and Turkmenistan have forged relationships with China that have become a window into the evolution of China’s regional foreign policy objectives and methods.

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In general, China’s foreign policy approach to post-­Soviet Central Asia can be seen through two complementary yet potentially conflicting lenses of energy security and rimland/border security. While the former usually denotes more market-­based and soft-­power connotations within the post-­Soviet/China-­Central Asia dynamic, harder forms of power as conceptualized by the Shanghai Cooperation Organization (SCO) have increasingly defined the latter.16 Still, within the recent history of Chinese investments in Central Asian oil, gas, and related infrastructure, China’s own internal ambiguities and incongruencies have had, and will continue to have, a profound impact on the ways it approaches energy security and general security in the region. The competing needs for resource security and domestic economic growth, coupled with an increasingly distant global energy supply chain and sluggish international trade environment, will force China’s new generation of leadership into more unfamiliar decision-­making dilemmas abroad. But while China’s military has grabbed recent headlines with pictures of increasingly modern ships and stealth fighter jets, the country still lacks the expeditionary and airlift capabilities to sustain power projections too far abroad.17 When analyzed collectively, these individual force compositions make neighboring Central Asian states — ​ in both their rich resource endowments and relative strategic proximities — ​far safer and perhaps more comfortable bets for China’s strategic thinkers, and signify that “the frontiers of China are moving even if its boundaries are not” (Kerr 2010, 127). More specifically, Kerr notes that there are three principal drivers behind China’s current engagement in its immediate Central Asian “neighborhood” (2010, 127 – ​28). They include the “embeddedness” of China’s internal economic development in Central Asia; China’s issues of constitutionality, specifically the absence of “meaningful federalism”; and fear of U.S. hegemony and the potential for U.S. policies to check its ability to manage relationships in these neighborhoods. Kerr goes on to explain these points by highlighting a concept he calls “Great Wall syndrome,” by which “China seeks to secure its periphery by building it into a system of controls and exchanges that extend beyond China’s frontiers; in effect, defending internal unity by externalizing constitutional imperatives” of stability (127 – ​28), or in Hu Jintao’s words, harmony.

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China’s Central Asian oil and gas interests thus serve as a quest to secure proverbial clarity in the chaos of international affairs: China’s domestic policy and the industrial-­energy dynamics upon which its future stability is predicated are tangled within the larger Central Asian region, the energy and resource endowments within its own borders, and the complex sociopolitical systems that compete for Chinese state attention. Indeed, recent events in Tibet and Xinjiang, and the sub­ sequent implementation of martial law in large parts of these regions, not only “indicate Beijing’s anxiety that soft power can flow against it as much as in its favour” (Kerr 2010, 150), but also highlight the possibility that these internal realities will spill over into China’s relations with Central Asia. As Kerr concludes, there is indeed great “difficulty of separating out the hard and soft power effects of China’s emergence; of identifying the extent to which it is using economic or cultural exchange to create a benign environment in its neighborhoods that will produce strategic dividends at a later point” (150).

Chinese Investments in Kazakhstan and Russian Political Influence As Kerr argues, China, unlike the United States and much of Western Europe, never “downgraded the strategic significance” of Russia post-­ 1991, and gives the Russian relationship status second only to that with the United States (Kerr 2010, 131). Kerr solidifies this thesis with an additional observation: both China and Russia share a “hyper-­sovereign” approach to globalization that seems to trump all else. In the case of influence in Central Asia, China recognizes Russia’s history, as well as its non-­Western attempts, however futile, to define the “regionalness” of modern Central Asia. As long as these Russian definitions provide some semblance of protection to China’s western flank against the “three evils” of terrorism, separatism, and religious extremism, then Russia’s political influence in Kazakhstan is probably a welcome burden-­shifting distraction in the eyes of Beijing’s leadership. The similar Russian and Chinese worldviews with regard to security and sanctity of borders may potentially forge a closer bond between the two powers as U.S. ground forces withdraw further from the region, because “within China there is evident concern with social stability, and

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sustainability in crucial areas such as food, water, energy, and climate security,” and “it is at least as likely that China’s regional relations will be shaped by this agenda of vulnerability as by its capacity to wield conventional strategic influence” (Kerr 2010, 150). Consequently, Russian influence in Kazakhstan may replace China’s inability or lack of desire to deploy harder force projection in the region.

Russia’s View of Growing Chinese Influence in Central Asia In 2011 the Collective Security Treaty Organization (CSTO) — ​the Russia-­centric entity that excludes China but includes all Central Asian states minus Turkmenistan — ​required that any new (i.e., Manas air base excluded) “extra-­military structures” within the territory of any CSTO member state acquire the approval of all member states, an indication of current hard-­power and security concerns that characterize the interstices between Russia and China (“CSTO to control” 2011). Russian strategic planners naturally expect China to play an increasingly greater role in the region over the next couple of decades, as long as Russia retains close military linkages with Central Asian states and Russian oil and gas have a market in China via Siberian pipelines. Conversely, President Putin’s Russia will continue to develop its far east through the continued development of its hydrocarbon reserves. Russia’s border integrity has been challenged less by separatist movements in the restive Caucasus and more by demographic decline, particularly in its eastern expanses. So the development of the region’s energy resources thrusts Moscow and Russian power back onto the map from Irkutsk to Vladivostok. As long as China recognizes Russia’s sensitivity here, as well as the abundant hydrocarbon potential that Russia’s east has to offer its energy-­ thirsty northeastern rust belt, China’s influence in Central Asia should be met in Moscow by the watchful — ​if not somewhat paranoid — ​eyes of a contentious history, and nothing more.

Is the Shanghai Cooperation Organization Significant? Designed as a collective security bridge between Moscow and Beijing’s Central Asia interests, the SCO does not have at this time a substantial

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impact on current oil and gas plays in Eurasia.18 However, as an institution that facilitated several new bilateral security relationships among its members, particularly around China’s involvement, the SCO is indeed significant, but this does not necessarily create a strategic disadvantage for Russia. Unlike Russia’s imperial-­based relationships with the Central Asian states, China’s modern (i.e., post-­1949) relationships with the Central Asian states have been defined only recently — ​over the past twenty years or so — ​and expedited during the mid-­1990s, when China’s domestic energy reserves became insufficient to meet demand.19 To be sure, the officer corps of the Central Asian armies are trained by Russia, not China; moreover, local opinions, predicated largely upon a shared history and language with Russia, increasingly view China’s growing influence in the region with apprehension and resentment. This is particularly the case in Kazakhstan and has been underscored by recent protests over Chinese land purchases there. Still, ever the opportunist, Kazakhstan’s president Nursultan Nazarbaev wants wins on all sides. In 2009, when Kazakhstan signed the Customs Union with Russia and Belarus, Kazakhstan also signed loans for oil and gas with China. The financial crisis of 2009 and the subsequent damage to Kazakhstan’s banking and housing sectors drove Kazakhstan into depression, which led to artificial drops in price for hydrocarbons for the sake of the national interest. Nazarbaev’s grand strategy compelled him to eagerly make deals where he could. He signed the Customs Union with Russia and Belarus for strategic reasons; to date, the decision has paid off with a growing increase in trade between the three countries every year. “Kazakhstan’s turnover (export plus import) with Russia and Belarus has grown by almost 80 per cent between 2009 and 2011” (Plekhanov and Isakova 2012). China has attempted to counter this latent local sinophobia through vigorous bilateral relationship building — ​manifested in its unrivaled ability to provide low-­interest development loans and the predictable capacity of Chinese firms to complete infrastructure projects in short time horizons and at cost. No evidence of “collective” behavior exists in China’s intentions, whether in loan or development projects. But as the recent re-­entry of Russia’s MTS telecom into Turkmenistan shows,

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China’s gains in Central Asia do not presage a death knell for Russian businesses.20 Still, balance of power politicking in great power relations will always be present. At the SCO summit in November 2011, the Russian foreign minister Sergei Lavrov renewed Russia’s push for India’s entry into the SCO: “Russia supports the resolution of the issue of India’s transfer from observer status to full membership in the SCO as soon as possible. We have expounded on this position repeatedly and expect to achieve progress on the issue soon” (quoted in Bosco 2011). In general, though — ​despite campaigning by the various members on the admission of new states into the SCO, whether it be the cases of India, Pakistan, Afghanistan, or Iran — ​the inability to reach agreement on any of these examples does in fact “highlight [Russia’s] immaturity and should show outsiders,” including the United States, “the likely limited role that it will be able to play in post-­American Afghanistan” (Pantucci 2011), or the larger Central Asian region. By contrast, China’s foreign policy, military, and energy institutions are thinking beyond the continental power traditions in which they were schooled and which have historically enabled the country to thrive. The future energy security-­related strategic decisions China must make in Central Asia will almost certainly be uncomfortable ones, especially in a region with a less overt American presence. While the aforementioned force composition of the People’s Liberation Army is not yet suited to American-­style expeditionary and long-­range/long-­term action, China’s strategic planners continue to maintain a continental force posture and would not hesitate to protect Central Asian oil and gas pipelines and strategic choke points in the years to come. Chinese military mobilization becomes increasingly more probable in a Central Asian environment ruled by an aging and atrophied collective elite, even in places once believed to be relatively safe bets like Kazakhstan. Events and subsequent government responses in both Tibet and Xinjiang over the past several years demonstrate that China regards its western frontiers, no matter how sparsely populated, as highly valued strategic assets to be defended.21 Any leader in Beijing, military or otherwise, would push back against accepting a long-­term American armed presence in Central Asia; however, a U.S. departure from the region in all probability will create an animosity vacuum, forcing the region’s

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restive populations to direct their frustrations elsewhere — ​perhaps making recent Kazakh popular protests against Chinese land deals in the country small by comparison. The question remains whether webs of oil and gas pipelines, collections of oil and gas field holdings, and portfolios of downstream investments make the Central Asian region a more or less secure investment for China.

China between Interests: Favoring Coal versus Central Asian Oil and Gas? As the geopolitical strategies among actors in the Central Asian region play out, China must still make strategic decisions about the material of its energy investments. China’s continued reliance on coal is germane to the country’s energy security as well as its political economy dynamics in shaping core versus provincial financial prospects. This operational dichotomy of rural and industrial zoning served as the driving force behind Beijing’s attempts to consolidate the coal industry into thirteen regional power bases. In 2008 Zhang Guobao, then director of China’s National Energy Bureau, summed up these dynamics: “large energy enterprise groups are nurtured with the integrative and comprehensive development of coal, power, railways, ports, chemical, and other related industries so as to toughen the government’s influence and control on energy” (Rui, Morse and He 2010, 22). Put simply, China’s relative abundance of coal provides the country with a degree of energy security derived from central government policy control that imported gas simply does not. Yet railway logjams and the regional separation between coal bases and coastal industrial and urban centers mean that a high potential demand for Central Asia’s natural gas remains. The future of natural gas growth in China’s energy mix, particularly in electricity generation, is tied largely to the pace of price and tariff liberalization within the country’s wholesale electricity markets. New gas infrastructure projects can be difficult to finance, due in part to a fixed tariff rate structure similar to that of the coal-­power market, which drives fuel costs higher than the end rates power producers can charge in wholesale and retail markets. Putting this into a market context, China is expected to have and consume a total supply of approximately 220

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bcm/year of gas over the next three years (including domestic supplies, imports of piped international supplies, and imported LNG). Natural gas consumption in China remains a function of supply, not demand (Ling 2012). Low international gas prices ostensibly make the replacement of coal-­fired power plants with natural gas plants a sensible option, but coal’s abundance within China makes this shift along the supply curve challenging. Still, China has crafted a national and inter­national natural gas strategy as part of its recent five-­year plan to increase domestic production and to secure access to gas resources in neighboring countries. Natural gas offers China’s growing economy a cleaner source than burning coal, and new technologies entering the market suggest that natural gas will become more significant as a transportation sector fuel. Coal remains the top of China’s energy supply pyramid, but natural gas’s base is poised to expand over the next decade and beyond.22 The IEA notes that “the key elements of China’s approach to gas security are to further promote domestic production from conventional and unconventional resources, to expand reserves, to construct gas storage facilities, and to accelerate construction of LNG terminals and interregional gas pipelines in order to strengthen supply of gas imports” (2012). In addition to regulatory and pricing reform, natural gas imported from Central Asia via the west-­east pipeline infrastructure is facing some blowback from provincial and larger subprovincial governments. Right now, CNPC controls the west-­east pipeline’s development, and the company, with both upstream and midstream control over this piped gas, could easily push its way into urban natural gas markets as a downstream and retail player. Without further regulatory clarification from the central government, the development of subnational natural gas markets and infrastructure will remain stunted across all consuming sectors as third-­party investment remains crowded out (Wong 2009, 2109).

Concluding Thoughts Where Russia and China are concerned, the Xinhua reporter Yu Lu put it succinctly in May 2012 when he wrote, “China and Russia share the common goal of a multi-­polar world where no single hegemony can dictate the whole international community” (2012). Yet while this is

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perhaps true on a philosophical level, the actual contest is one based on increasing their respective national gravities. This inevitable fringe rivalry has been “fought” over the past decade under some cover, since the American presence in Afghanistan has ensured that Russia, China, and to some extent Central Asia’s despotic strongmen remain on the backburner of Central Asian popular animosities. The post-­2014 picture thus becomes much more perilous for these powers to navigate.23 For the United States, it can draw all the new Silk Roads it wants to across the walls of the State Department, but any semblance of its overt geopolitical prowess in the region — ​Manas air base is a prime example of this presence — ​will almost certainly erode further post-­2014 unless it takes a very active position on how it will leverage its IOC relationships and its burgeoning diplomatic opportunities with countries like Iran. Simply put, unlike Russia, China, Iran, and India, the United States has no first-­country energy security “skin in the game,” so its regional bargaining power will decrease in proportion to its strategic withdrawal from Afghanistan. For the Central Asian states, particularly those like Kazakhstan looking to diversify exports to China via minerals and downstream petroleum products, this economic trend poses serious demand security questions at a time when domestic unrest and challenges to institutional longevity are already spilling over into the streets. Again, this dynamic becomes more precarious for the regional governments as the U.S. presence in Afghanistan draws down and various “homegrown” Central Asian militant groups return home from the battlefield.

Appendix Central Asia Oil Network

Figure 14.2

Figure 14.3 389

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Notes 1.  U.S. Energy Information Administration, Country analysis for Azerbaijan, August 1, 2014, http://www.eia.gov/countries/cab.cfm?fips=AJ. 2.  U.S. Energy Information Administration, Country analysis for Kazakhstan, October 28, 2013, http://www.eia.gov/countries/cab.cfm?fips=KZ. 3.  Ibid. 4.  U.S. Energy Information Administration, Country analyses, http://www.eia.gov/ countries/?fips=rs. 5.  U.S. Energy Information Administration, Country analysis for Turkmenistan, January 25, 2012, http://www.eia.gov/countries/cab.cfm?fips=TX. 6.  BP, “Statistical Review of World Energy Full Report 2009,” http://www.scribd.com/doc/16304689/ BP-­s-­Statistical-­Review-­of-­World-­Energy-­Full-­Report-­2009#scribd. 7.  Stephen Jewkes and Dimitry Solovyov, “The sour gas eating Kashagan oil profits,” Reuters, November 15, 2013, http://uk.reuters.com/article/2013/11/15/kazakhstan​ -kashagan-­insight-­pix-­graphic-­idUKL5N0IZ5FE20131115 (accessed December 28, 2013). 8.  Ibid. 9.  The idea of using Afghanistan as “strategic depth” in case of war with India has long dominated Pakistan’s Afghan policy to the extent that TAPI, and the natural gas it carries, has the very real potential to “commoditize” this strategic insecurity. 10.  Atul Aneja, “Game-­changer at Geneva,” Hindu, December 4, 2013, http://www​ .thehindu.com/opinion/op-­ed/gamechanger-­at-­geneva/article5418669.ece (accessed December 4, 2013). 11.  Yusuf Fernandez, “Pakistan loses ground to India in Iran ties,” Iran Project, December 14, 2013, http://theiranproject.com/blog/2013/12/25/pakistan-­loses-­ground​ -­to-­india-­in-­iran-­ties/ (accessed December 14, 2013). 12.  Keith Johnson, “Putin’s Mediterranean move,” Foreign Policy, December 27, 2013, http://www.foreignpolicy.com/articles/2013/12/27/putin_s_mediterranean_move?utm_ source=Sailthru&utm_medium=email&utm_term=*Morning%20Brief&utm_ campaign=MB%2012.30.13#sthash.IJuuWUWM.hkWVV9jY.dpbs (accessed December 27, 2013). 13.  Aneja, “Game-­changer at Geneva.” 14.  Marlene Laruelle, “Anti-­migrant riots in Russia: The mobilizing potential of xenophobia,” Russian Analytical Digest, no. 141 (December 23, 2013). 15.  China exerts a multi-­pronged strategy in Central Asia. It aims to avoid tension and conflict in the region because China knows it would spill over into its own Xinjiang region, an area fraught with contention. In response, China’s policy has been to quell unrest and bring the Muslim population under the central government’s control. 16.  I argue and other analysts have also noted that the SCO is a way for China to increase and expand its energy security. It is not a security organization as is NATO and has to date not exerted hard power; however, China has carefully used the SCO to improve energy security in the region. John Foster in an article in the Journal of Energy

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Security echoes this view: “The SCO is primarily an organization promoted by China in order to fulfill its energy objectives which illustrate China’s (PRC’s) geo­strategic dilemmas. If Beijing has been the main benefactor of the SCO, its partners have not been marginalized, and have also benefited from the relationships the organization engenders. Further the SCO could develop and expand even further would all its members recognize that energy-­related projects are perhaps the most important raison-­d’être of the organization” (2011). 17.  Department of Defense, Annual Report to the Congress: Military and Security Developments Involving the People’s Republic of China, 2013, esp. pp. 38 – ​39, http://www​ .defense.gov/pubs/2013_China_Report_FINAL.pdf. 18.  The Shanghai Cooperation Organization is not a security organization per se; however, since its establishment a decade ago, member countries are moving closer toward establishing a more cohesive security agenda within the organization. Both China and Russia support greater security cooperation, and this was reiterated at the 2012 SCO summit. 19.  Most of the current literature from Martha Brill Olcott and Sebastien Peyrouse would back up this cursory observation with deeper research methodology and frameworks. 20.  MTS went eighteen months before its operating license was finally renewed by Turkmenistan’s government. Picking up the slack were Chinese telco network providers like Huawei. 21.  It could also be argued that China’s movements into the Aksai Chin region and the ensuing Sino-­Indian war of 1962 are also an adequate demonstration of China’s hypersensitivity to its western frontier. 22.  According to the EIA, China has the most shale gas in the world. The problem with China’s shale gas is producing it. The United States has been successful in shale gas extraction because of a mix of factors: small independents took the lead in developing shale gas extraction techniques and production, and U.S. property rights and ability to lease private land for production also played a significant role. If China really wants to produce its shale gas potential it will, but not as easily as the United States has done. 23.  Petersen notes that both China and Russia share the preference for regional stability through maintaining the current Central Asian regimes. Indeed, U.S. preferences for this same stability may also account for the patterns of Central Asian leadership, especially in lieu of the Tulip Revolution and its subsequent failure.

References Babanov, B. 2012. “Kazakhstan says Kashagan bribe claims ‘internal fight.’ ” RIA Novosti, March 11. http://en.rian.ru/crime/20120511/173391365.html. Accessed May 11, 2012. Bosco, D. 2011. “Russia wants India in its club.” Foreign Policy, November 17. http:// bosco.foreignpolicy.com/posts/2011/11/17/russia_wants_india_in_its_club. Accessed May 8, 2012.

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Bryanski, G. 2011. “Russia’s Putin says wants to build ‘Eurasian Union.’ ” Reuters, October 3. http://www.reuters.com/article/2011/10/03/us-­russia-­putin-­eurasian​ -­idUSTRE7926ZD20111003. Accessed May 9, 2012. Chen, S. 2008. “Motivations behind China’s foreign oil quest: A perspective from the Chinese government and the oil companies.” Journal of Chinese Political Science 13 (1). “China concerned about Kazakhstan’s riots.” 2011. People’s Daily Online/Xinhua, December 20. http://english.people.com.cn/90883/7682883.html. Accessed January 1, 2012. “China, Kazakhstan: Pipelines and the balance of power.” 2007. Stratfor, December 11. http://www.stratfor.com/analysis/china_kazakhstan_pipelines_and_balance_ power?page=5&fn=5910822050. Accessed May 11, 2012. “China’s exclusive: Oil pipeline linking China, Kazakhstan joins together.” 2005. China Daily, November 14. http://www.chinadaily.com.cn/english/doc/2005-11/15/content​ _494654.htm. Accessed December 1, 2012. Chow, E., and H. Leish. 2010. “Central Asia’s pipelines: Field of dreams and reality.” National Bureau of Asian Research. Clinton, H. R. 2011. “Remarks on India and the United States: A vision for the 21st century.” Address, proceedings at the Anna Centenary Library, Chennai, India, July 20. http://www.state.gov/secretary/rm/2011/07/168840.htm. Accessed May 9, 2012. Cohen, A. 2006. “U.S. interests in Central Asia security.” Heritage Foundation, November 15. http://www.heritage.org/research/reports/2006/11/us-­interests-­and-­central​ -­asia-­energy-­security. Accessed January 12, 2012. “CSTO to control new foreign military bases in member states.” 2011. People’s Daily Online/Xinhua, December 21. http://english.people.com.cn/90777/7683387.html. Accessed January 1, 2012. “Does Turkmenistan’s willingness to supply gas to Europe surpass its ability?” 2008. IHS Global Insight, April 14. http://www.ihsglobalinsight.com/SDA/SDADetail​ 12208.htm. Accessed May 8, 2012. Foster, J. 2008. “A pipeline through a troubled land.” Canadian Centre for Policy Alternatives 3, no. 1. ———. 2011. “Shanghai Cooperation Organization: Assessing China.” Journal of Energy Security, December 14. http://www.ensec.org/index.php?option=com_ content&view=article&id=331:the-­shanghai-­cooperation-­organization-­assessing​ -chinas-­energy-­strategy-­in-­central-­asia&catid=​121:contentenergysecurity1111&Item id​=386. Accessed December 20, 2012. Hammond, J. 2012. “Caspian tensions reveal Turkmenistan’s rising confidence.” International Relations and Security Network, December 19. http://www.isn.ethz. ch/isn/Security-­Watch/Articles/Detail/?lng=en&id=156087. Accessed December 21, 2012. Hancock, K. J. 2006. “Escaping Russia, looking to China: Turkmenistan pins hopes on China’s thirst for natural gas.” China Eurasia Forum Quarterly 4 (3): 67 – ​87.

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International Energy Agency. 2012. “Oil and gas emergency policy: China 2012 update.” http://www.iea.org/publications/freepublications/publication/oil-­and-­gas​-e­ mergen cy-­policy---­china-­2012-­update.html. Jiang, J., and J. Sinton. 2011. “Overseas investments of Chinese oil companies: Assessing the drivers and impacts.” International Energy Agency, February. http://www​ .oecd-­ilibrary.org/energy/overseas-­investments-­by-­chinese-­national-­oil-­companies​ _5kgglrwdrvvd-­en. Accessed May 20, 2012. “Kazakh copper mine workers win strike.” 2012. Radio Free Europe/Radio Liberty, May 7. http://www.rferl.org/content/kazakhstan_copper_mine_strike_/24572759.html. Accessed May 9, 2012. Kerr, D. 2010. “Central Asian and Russian perspectives on China’s strategic emergence.” International Affairs 869 (1): 127 – ​52. Lee, C. 2011. “China’s CNPC says Central Asia gas pipeline rate to hit 30 bcm/year June 2012.” Platts, December 16. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/ NaturalGas/7882712 Accessed May 9, 2012. Levine, S. 2007. The oil and the glory: The pursuit of empire and fortune on the Caspian Sea. New York: Random House. Lin, C. 2011. “The new Silk Road: China’s energy strategy in the greater Middle East.” Policy Focus 109, Washington Institute for Near East Policy, Washington, D.C., April 9. http://www.washingtoninstitute.org/uploads/Documents/pubs/PolicyFocus​ 109.pdf. Accessed December 11, 2012. Lin, H-­T. 2008. “From rimland to heartland: Nationalist China’s geopolitics and ethnopolitics in Central Asia, 1937 – ​1952.” International Historical Review 30 (1): 52 – ​75. Ling, S. Y. 2012. “China’s growth depends on power.” Platts International Gas Report 697. Luft, Gal. 2004. “Fueling the dragon: China’s race into the oil market.” Institute for the Analysis of Global Security, Potomac, MD. http://www.iags.org/china.htm. Mehdudia, S. 2012. “TAPI pipeline: Transit fee likely to be finalized by next month.” Hindu, April 26. http://www.thehindu.com/business/article3357325.ece. Accessed May 9, 2012. Nanay, J. 2011a. “Central Asia: China expands gas route again.” Russia and Caspian Service Memo, PFC Energy. ———. 2011b. “Kazakhstan: New deals deepen China ties.” Russian and Caspian Service Memo, PFC Energy. Olcott, M. Brill. 2012. “Kazakhstan’s political (r)evolution.” Carnegie Endowment for International Peace, January 27. http://carnegieendowment.org/2012/01/27/ kazakhstan-­s-­political-­r-­evolution/97d5. Accessed May 11, 2012. Pannier, B. 2008. “Independent audit shows Turkmen gas field ‘world-­class.’ ” RFE/RL, October 14. http://www.rferl.org/content/Independent_Audit_Shows_Turkmen_​ Gas_Field_WorldClass_/1329822.html. Accessed May 11, 2012. ———. 2009. “Turkmenistan grabs energy spotlight as Caspian leaders gather.” RFE/ RL, September 12. http://www.rferl.org/content/Turkmenistan_Grabs_Energy_ Spotlight_As_Caspian_Leaders_Gather/1821220.html. Accessed May 11, 2012.

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Pantucci, R. 2011. “Why the Shanghai Cooperation Organization is resisting pressure to expand outward.” Foreign Policy, November 16. http://afpak.foreignpolicy.com/ posts/2011/11/16/the_limits_of_regional_cooperation_in_south_asia. Accessed May 8, 2012. Pantucci, R., and A. Petersen. 2012. “The new great game: Development, not domination, in Central Asia.” Atlantic, May 1. http://www.theatlantic.com/international/ archive/2012/05/the-­new-­great-­game-­development-­not-­domination-­in-­central​ -­asia/256578/. Accessed May 9, 2012. “People’s Liberation Army versus the U.S. military.” 2012. GlobalSecurity.org, January 1. http://www.globalsecurity.org/military/world/china/pla-­v-­us.htm. Accessed May 8, 2012. Petersen, A. 2012. “How the West is wholly missing China’s geopolitical focus.” Foreign Policy, January 10. http://oilandglory.foreignpolicy.com/posts/2012/01/09/how_the_ west_is_wholly_missing_chinas_geopolitical_focus. Accessed May 9, 2012. Plekhanov, A., and A. Isakova. 2012. “Trade within the Russia-­Kazakhstan-­Belarus customs union: Early evidence.” EBRD Blog, July 10. http://www.ebrdblog.com/ wordpress/2012/07/trade-­within-­the-­russia-­kazakhstan-­belarus-­customs-­union​ -­early-­evidence/. Accessed December 18, 2012. Rui, H., R. K. Morse, and G. He. 2010. “Remaking the world’s largest coal market: The quest to develop large coal-­power bases in China.” Program on Energy and Sustainable Development, Stanford University, December. http://pesd.stanford.edu/​ publications/23050. Accessed May 11, 2012. “Turkmenistan, Iran, Turkey: A new phase in energy competition?” 2006. StratFor, January 6. http://www.stratfor.com/sample/analysis/turkmenistan-­iran-­turkey​ -­new-­phase-­energy-­competition. Accessed May 12, 2012. “Turkmenistan’s gas politics: Ashgabat eyeing Western energy markets?” 2009. Roubini Global Economics, November 18. http://www.roubini.com/critical-­issues/86311.php​ ?parent_briefing=36215. Accessed May 8, 2012. U.S. Department of Defense. 2011. “Annual report to Congress: Military and security developments involving the People’s Republic of China.” DOD Pub. No.: May06 RefID: 1 – ​4AE81FF. http://www.defense.gov/pubs/pdfs/2011_cmpr_final.pdf. Accessed May 11, 2012. Vivoda, V., and J. Manicom. 2011. “Oil import diversification in Northeast Asia: A comparison between China and Japan.” Journal of East Asian Studies 11: 223 – ​54. Vukotic, J. 2008. “Energy power play: Courting Central Asia.” EconoMonitor, April 23. http://www.economonitor.com/analysts/2008/04/23/energy-­power-­play-­courting​ -­central-­asia/. Accessed May 7, 2012. Wong, J. W. K. 2009. “City-­gas development in China — ​An NG perspective.” Energy Policy, no. 38, 2109. Yergin, D. 1998. “Energy security in the 1990s.” Foreign Affairs 67 (1): 110 – ​32. Yu, L. 2012. “A stable, prosperous Russia under Putin is good for China.” People’s Daily Online, May 7. http://english.people.com.cn/90883/7809875.html. Accessed May 8, 2012.

Conclusion

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15

Uncertainty Ahead China Rising, U.S. Fatigued, and Central Asia Waiting on New Alignments David B. H. Denoon

When the five Central Asian states became independent in 1991 there was a surge of optimism in the West. A region of the world that had long been subjected to imperial Russian and Soviet power had a chance of becoming autonomous, and many thought it would be democratic as well. Two decades later, it is clear that those expectations were overly optimistic. The Central Asian states are indeed independent, but they are definitely not autonomous, and only one of the five, Kyrgyzstan, is democratic. Also, there is no question that Russia maintains a subtle but pervasive political and military influence throughout the region. In addition to a close relationship with Kazakhstan, Russia exercises considerable influence in Kyrgyzstan and Tajikistan as well. Also, the Central Asian states are mindful of Russia’s takeover of Crimea and are assessing the implications for their region. The purpose of this volume is to explore how other states will interact with the Central Asian region — ​and to give specific attention to the roles of China and the United States. As has been amply demonstrated in the chapters above, China has been able to use its vast market for energy and its massive foreign exchange reserves to purchase oil and gas from Central Asia and to fund exploration and transport (pipelines, road, and rail) projects. What is less clear is whether China will use its economic stake in Central Asia to develop political and military influence comparable to that of Russia. In the last decade China has become the second-­largest importer of Central Asian hydrocarbons and has been the largest investor in Central 397

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Asian infrastructure. So far, Beijing has kept a strict focus on economic objectives. Will this change as China’s global ambitions grow? We face similar questions for the United States. Although there was considerable enthusiasm in the 1990s for playing a leading role in Central Asia, much of that motivation is gone today. Civil society groups and real democracy have made only modest progress; and authoritarian regimes in Russia, China, and Iran have actively challenged the benefits of Western-­style democracy. Thus, there is no sense of inevitability behind a move to Westernize and democratize Central Asia. In fact, many scholars now see Central Asia as a region that may stay authoritarian for the foreseeable future and where traditional forms of client-­patron relationships will dominate governments. If this pattern proves to be the case, Western taxpayers will lose their appetite for supporting aid programs and democratization efforts in a region where the impact is minimal. Moreover, in terms of economic interests, because hydrocarbons are the main attraction to outsiders, the question becomes whether Central Asia can compete with new sources of shale gas in Europe and the United States. Since the population of Central Asia is small, trade in manufactured goods will be modest until per capita incomes reach much higher levels. Thus many of the commercial forces that could have encouraged cooperation between the Central Asian states will be weak as well. Hence, we see a mixed picture in Central Asia. The five states have succeeded at preserving their independence since 1991, but Russia still maintains a widespread political and military presence, and China is increasingly shaping the economic environment. Because the political leadership in both Beijing and Moscow actively thwarts democracy in Central Asia, there are few outside forces pressing for political change in the region. In addition, as American aid and civil society groups lost confidence in the ability to foment change in Central Asia and the U.S. military needed cooperation to maintain its supply routes into Afghanistan, even American policy began to put less emphasis on good governance and political change. Thus, Central Asia poses a conundrum: if it were to modernize and Westernize, it would provide an antidote to the current political trends

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in China and Russia. However, that does not look likely now, and it seems reasonable to expect that tradition-­bound leadership will dominate in much of the region. This means that both economic and political transformation in Central Asia is likely to be slow. The U.S. government is losing interest in Central Asia while China’s interests there are growing. Therefore, we see a rather traditional region making modest changes as American influence wanes and China’s impact expands. This chapter is meant to summarize the principal findings of the authors in this project and to make generalizations about the future of U.S.-­China relations in Central Asia. The chapter has three main goals: 1. Identify those conclusions where there is a consensus among this volume’s authors; 2. Elaborate and explain those areas where the authors have significantly different views; and 3. Highlight those developments that appear most likely to shape long-­term growth and determine the roles of China and the United States in Central Asia.

Conclusions on Which There Is a Consensus among the Authors 1. Economic and Political Integration in Central Asia Is Only a Distant Goal There is substantial rhetoric among the donors to Central Asian states regarding the hopes for regional integration. Yet, as illustrated in the chapters above, the Central Asian states themselves show limited interest in closer intra-­regional ties. There are a number of reasons why regional integration is resisted. First and foremost, the leaders of the Central Asian governments still have vivid memories of life under Soviet control. Achieving autonomy and promotion of ethnic pride are highly valued (see Marlene Laruelle’s discussion in chapter 3). Hence, even if there may be some economic or even strategic benefit in regional cooperation, it cuts against deeply

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held preferences for autonomy. The extreme case of this pattern is Turkmenistan, which is totally isolationist, refusing to join either regional or extra-­regional groupings, but Tajikistan and Kyrgyzstan both have misgivings as well about their larger neighbors. Kazakhstan has the largest land area and the largest economy in Central Asia, and Kazakhs see themselves as the natural leaders for Central Asia. However, Uzbekistan has the largest population in the region and, periodically, contests Kazakh efforts at taking the lead. In sum, this is not exactly a promising political context for regional cooperation. In addition, as Nazgul Jenish in chapter 2 and Richard Pomfret in chapter 12 illustrate, the economies of the Central Asian states do not naturally complement each other. Kazakhstan generates most of its export proceeds from hydrocarbons and cotton and has a substantial industrial sector, but cannot compete with Western and Chinese products in the markets of its neighbors. Uzbekistan exports some natural gas and a wide variety of agricultural products but few manufactures. Tajikistan and Kyrgyzstan have limited markets, while Turkmenistan is generously endowed with hydrocarbons but few other products to sell in Central Asia. So, to have effective economic integration, the Central Asian states would need to diversify away from primary product exports and agree on some division of labor so their fledgling industries could complement each other. Therefore, both the political and economic bases necessary to sustain regional cooperation are presently missing in Central Asia.

2. The United States and China Are Not Competing Directly in Central Asia Although China did play a role in getting the Shanghai Cooperation Organization to call for withdrawal of U.S. forces from Central Asia, it is striking to see how little direct competition there is between Washington and Beijing in the region. The two countries are simply operating on different tracks. Now that shale gas is widely available in the United States and there is at least some possibility of partial détente with Iran, the United States no longer needs to expend extra effort to get hydrocarbons from distant

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places in Central Asia. Not only is Central Asia a long, costly transit for the U.S. market, but American oil companies can find less prickly governments to deal with in other locations. The principal, current U.S. government concern in Central Asia is to maintain adequate military supply routes into Afghanistan. Also, because President Obama is planning to reduce U.S. troops in Afghanistan, from 90,000 to 10,000 by the end of 2014, even the supply route issue will become less critical over time. Moreover, neither the U.S. president nor any other major interest group is calling for more American involvement in Central Asia. The question for U.S. policy makers thus becomes, Is there a way for the United States to maintain its influence in Central Asia and avoid the region becoming an appendage of Russia or China without a substantial expenditure of resources? For China, Central Asia is critical in two regards: (1) it is a major source of hydrocarbons, which can be supplied without using vulnerable sea routes in the Indian Ocean and South China Sea; and (2) there are strong ethnic, cultural, and religious ties between Uighurs in Central Asia and those in the province of Xinjiang. Thus, China’s goal is to maximize hydrocarbon supplies from Central Asia while limiting links between fundamentalist Islamic groups that seek to strengthen bonds between Central Asia and Xinjiang. Since all of the current regimes in Central Asia are secular and also want to limit Islamic groups, Beijing and the leadership in the Central Asian capitals have a common interest in preserving the political status quo. Though China’s leaders would prefer to see the United States out of Central Asia, they are more worried about an insurgency in Xinjiang. So the Chinese want a low-­profile presence for themselves in Central Asia — ​as long as they can get the gas and oil they want. In sum, each of the principal actors in Central Asia prefers the present situation to one that might be worse. The Central Asian leaders want to balance the outside powers by having good relations with all; the United States is mostly preoccupied elsewhere and is not in a position to make new commitments; China hopes Islamists in Central Asia do not mobilize opposition to its growing economic presence; and Russia still enjoys a privileged position in three of the five Central Asian states (Kazakhstan, Kyrgyzstan, and Tajikistan). This is a delicate balance, but not one

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that any of the major outside powers wants to change now. Turkey, Iran, and India would each like to enhance their position in Central Asia but have not yet found a way to do it at reasonable cost to themselves.

3. China Is Devoting Massive Amounts of Aid and Investment to Central Asia China’s efforts at hydrocarbon extraction in Central Asia are primarily concentrated in two states: Kazakhstan and Turkmenistan. Kazakhstan has the largest new oil find outside the Middle East, while Turkmenistan has the largest new gas find on the globe (see Carolyn Kissane’s discussion in chapter 14). These vast resources and governments willing to sign long-­term deals with China have led to major investments by Beijing’s state-­owned oil companies. The latest large deal in Kazakhstan is for $5 billion, giving China an 8.3 percent stake in the Kashagan oil field.1 In Turkmenistan, China is the largest foreign investor in the two main gas fields, Amu Darya and Galkynysh.2 These natural resource deals have also led to contracts for China in constructing Central Asia’s infrastructure. For example, China’s telecommunications firm, Huawei, has won a contract to supply a nationwide, fourth-­generation telecom network for Kazakhstan. Contracts like these hydrocarbon and infrastructure deals typically lead to close financial and personal links between the parties involved and the strong likelihood of follow-­on arrangements. Hence, China is not only challenging Russia’s long-­standing economic dominance in Central Asia but is laying the basis for political ties that could last decades.

4. The U.S. Has Devoted Over $2 Trillion and Many Casualties to Its Efforts in Iraq and Afghanistan It may be many years before an objective assessment of American involvement in Iraq and Afghanistan can be made. However, that has not stopped the American public from reaching a judgment that is strongly negative about these two enterprises. This negative reaction to these wars over the past thirteen years is having a powerful effect on policy makers in Washington. It has inhibited the Obama administration

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from taking a more assertive role in Egypt and Yemen and caused the president to reverse course entirely on Syria.3 There are many ramifications of this widespread public skepticism about the value of U.S. involvement in Iraq and Afghanistan. For our purposes here, though, the impact on American policy in Central Asia is clear: direct military involvement in a conflict in Central Asia is out of the question, and there will be growing concerns about even aid for Central Asia after the withdrawal of U.S. troops from Afghanistan is complete.

5. The European States Have Their Own Agendas in Central Asia There are three principal concerns of the European countries in Central Asia: (1) access to hydrocarbons, (2) limiting Russia’s reemergence as a power broker, and (3) human rights. Russian manipulation of natural gas supplies into Europe and recent pressure by Moscow on Ukraine to stop plans to enter the European Union are deeply troubling to European governments. Not only do the Europeans resent Russian pressure on them, but they fear loss of supplies at critical times. Thus, many European governments would be willing to pay higher prices to get Central Asian gas and oil if it can be routed around Russia. As noted in chapter 14, however, these circuitous routes require long, expensive underwater passages and also transit unstable regions themselves. So Central Asian hydrocarbons may not become a major part of Europe’s supply. Russian political objectives are also uncertain. Is President Putin’s goal to reestablish Russia as a major power by thwarting NATO and balancing China in Central Asia? Is it to get the Europeans to shift away from ties with the United States to create closer ties to Russia? Or is the intent narrower and economic in orientation, with the objective of keeping Central Asian hydrocarbon supplies from undercutting Russian prices in the European market?4 Thus, on both strategic and economic grounds, European interests in Central Asia are opposed to those of current Russian policy. On values, there are sharp differences as well, as human rights and promoting democracy are stated objectives of European Union foreign policy (see the discussion by Sebastien Peyrouse in chapter 8). The current crisis in Ukraine illustrates the same differences.

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On balance, this means that Russia and China remain the principal outside actors in Central Asia. Europe provides a potentially appealing alternative market for Central Asian hydrocarbons, but its concerns about human rights have no appeal for the Central Asian governments (except for Kyrgyzstan).

6. Japan and South Korea Have Modest Investments in Central Asia As discussed by Edward J. Lincoln in chapter 9, both Japan and South Korea have important technologies and markets of interest to the Central Asian states. Also, due to forced migrations during the Soviet period, there are thousands of Koreans in Central Asia, predominantly in Uzbekistan. Moreover, both South Korea and Japan need energy imports, so there is some hypothetical basis for ties between the two states and Central Asia. The problem is geography: the distance makes transportation costly and there is no north-­south set of pipelines from Central Asia that can deliver gas or oil to the Indian Ocean. In theory, Japan and South Korea could contract with China to expand current pipelines going east from Central Asia, but China wants to use all the hydrocarbons it can get from Central Asia. Moreover, few in Seoul or Tokyo would want to be dependent on passage of vital resources through China. This has not prevented Japan from offering aid, in a multilateral context, to the Central Asian states, but there is not likely to be a surge of Japanese private investment in Central Asia. Hence, Japan and South Korea face a situation in Central Asia somewhat similar to that of Europe. There is a potential basis for closer ties, but a competitor, closer to Central Asia, stands in the way. In Europe’s case, Russia thwarts its ambitions; for Japan and South Korea, China is so vast east to west and so problematic to deal with that ties with Central Asia are likely to remain limited.

7. Some of Central Asia’s Close Neighbors (India, Pakistan, Iran, and Turkey) Have a Desire for Influence in Central Asia As noted by Gulshan Sachdeva in chapter 10 and Joshua W. Walker in chapter 11, the states on the southern and western periphery of Central

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Asia all have an interest in closer economic and cultural ties with Central Asia. Yet none of them has been particularly successful. Iran has close cultural and language ties with the Persian-­speaking groups in Central Asia and has made some preliminary efforts at raising its profile there. However, all the governments in Central Asia are secular and disdain the kind of militant Islam that Iran’s revolutionary government tries to export. This has led to such limited results for Iran that Tehran, presently, has downplayed efforts to increase ties with Central Asia. In addition, since Iran and Central Asia are both hydrocarbon exporters and manufactured goods importers, there is no natural economic division of labor between them. Turkey is a different matter. Turkey imports hydrocarbons, wants pipelines (from many directions) to traverse its territory, and has made major efforts to link itself with the Turkic-­speaking peoples in Central Asia. Nevertheless, Ankara has not gained much traction in Central Asia and was seen as meddling much the same way as the Iranians were. The Cooperation Council of Turkic Speaking States (CCTS) never developed a workable agenda and faded in importance. On the other hand, the Gülen schools and the Nurcu movement were so successful that they were suppressed. In the meantime, prime minister Recep Erdoğan and his AKP have encountered such widespread protests at home that they have had little time for long-­term policy ventures like improving ties with Central Asia. At some future point, for example when a trans-­ Caspian pipeline is built and it runs through Turkey, Ankara may be able to restart its efforts at greater visibility in Central Asia. But for the present, the links between Turkey and Central Asia are linguistic but not strategic or economic. Increasing interaction with either India or Pakistan poses different sorts of issues for Central Asia. India would like greater ties with Central Asia, and made a major effort to get the part of the Kashagan oil field that Kazakhstan ultimately sold to China. Kazakhstan had originally said that India would get the drilling rights, but at the last minute the deal went to China. It is not clear exactly what China offered in addition to the $5 billion price, but there is little doubt that President Nazarbaev is looking for a long-­term relationship with China that will balance out his already close ties with Russia.5

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Presumably India will keep trying to get hydrocarbons from Central Asia. Yet New Delhi faces two key obstacles: (1) resistance by many Muslims in Central Asia to dealing with India, a predominantly Hindu state, and (2) major difficulties in getting the gas or oil across the Himalayan Mountains and through Pakistan to India. Despite the cultural and religious differences, India has been quite successful at developing links with Afghanistan, and some of the secular leaders in Central Asia may see an advantage in an “India connection.” Afghanistan certainly thinks it benefits from ties to India, but that is because of its fraught relationship with Pakistan and the aid that India provides. If India were able to convince leaders in Ashgabat to go ahead with the Turkmenistan – ​Afghan – ​Pakistan – ​India (TAPI) pipeline, then both India and Pakistan might gain influence in Central Asia. At present, however, Pakistan is seen with skepticism in Central Asia because of it ties to the Taliban and Al Qaeda. Moreover, this is distant speculation, given the high cost of the TAPI pipeline and it success being based on close cooperation between India and Pakistan.6 Also, we don’t know what the Chinese reaction would be if Turkmenistan actually planned to become a major energy supplier to India. In sum, though Central Asia’s southern and western neighbors have aspirations for influence, they do not yet have the wherewithal to move forward.

8. The Only True Competitor to China’s Increased Status in Central Asia Is Russia The United States is focused elsewhere; Japan, South Korea, and Europe are too distant; and Central Asia’s peripheral neighbors are not in a position to challenge. This leaves Russia as the only state that has both the ability and the will to compete with China in Central Asia. Moreover, Vladimir Putin is a leader who wants to reestablish Russia as a major power, with heavy influence in nearby states. The links between Russia and Central Asia are manifold. “Russian armed forces, intelligence services, and internal security services all cooperate extensively with their Central Asian counterparts.”7 In addition to these bilateral ties, Russia is sponsoring two multilateral

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organizations: the Collective Security Treaty Organization (CSTO) and EurAsEC/Customs Union to strengthen bonds with Central Asia.8 On May 29, 2014, Russia, Belarus, and Kazakhstan agreed to form the Eurasian Economic Union. The group will have a combined GDP of about $2.2 trillion, roughly equal to the size of the United Kingdom economy. The CSTO is, obviously, modeled on the North Atlantic Treaty Organization (NATO) and the Eurasian Customs Union has some features like the customs union in the European Community. However, the similarities should not be overstated. NATO is a mutual security treaty where all the members are obligated to defend each other if one is attacked. The real focus of the CSTO is among the member states and it is not designed primarily to deal with external aggression. Likewise, the analogies between EurAsEC and the European Union are limited because Russia is mainly a hydrocarbon exporter and it is competitive, not complementary, with most of the Central Asian states. So there are inherent limits to how far multilateral economic cooperation can proceed between Russia and Central Asia. Yet the bilateral security ties between Russia and Central Asia are still stronger than those between Beijing and most of the Central Asian states. As Alisher Khamidov notes in chapter 7, Russia’s ties to Central Asia are somewhat like a turbulent family. Almost three million Central Asians work on a temporary or illegal basis in Russia. Authorities in Russia have reduced the number of visa-­free, legal work permits for Central Asians, and this has meant that many Central Asian citizens stay in Russia on an undocumented basis.9 Nevertheless, these population movements strengthen Russia’s links with Central Asia. The Russian language is the second language for most in Central Asia, Russian universities are still a favored location for Central Asian elites to send their children, and intermarriage strengthens formal, governmental ties. Russian intelligence on developments in Central Asia is superb, and it often gives Moscow a lead over Beijing or Washington on interpreting and intervening in crisis situations. Over time, Beijing may be able to develop a set of comparable human ties to Central Asia, but that will take decades. In the meantime, as U.S. influence in Central Asia declines, Russia and China rise as the principal sources of outside power and funding.

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9. Prospects for the Central Asian States Vary Enormously among the Five Kazakhstan and Turkmenistan both have vast hydrocarbon resources and small populations. Thus, their per capita resources are extraordinary. Kazakhstan is also the most developed of the Central Asian states. Of the five, Kazakhstan has the largest industrial base, the most modern bureaucracy, a functioning university system, a central location that borders the four other Central Asian states, and has proposed various forms of regional cooperation. Turkmenistan, on the other hand, has made a specialty of isolation: refusing to join Central Asian regional organizations, keeping out most aid donors, shunning outside military advisors, and thwarting efforts from Russia and neighbors to include it in various defense agreements. Thus, the two wealthiest states in Central Asia have pursued strikingly different policies. The three other Central Asian countries have much more limited resources. Tajikistan is the poorest and least developed; Kyrgyzstan has a key location, next to Chinese trade routes, and has a functioning democracy; while Uzbekistan has the most population of the five and the very fertile Ferghana valley but a long-­term, serious Muslim insurgency.10 Hence, when we look at the prospects for the Central Asian region as a whole, it is problematic to make generalizations. Kazakhstan and Turkmenistan have the flexibility that great wealth provides them; but with small populations and minimal defense capabilities, either could easily be coerced. The other three Central Asian states have fewer economic options yet seem to have limited interest in cooperation. Overall, regional integration appears unlikely in the near future; and ethnic, linguistic, and religious schisms are deep enough to make even cooperation limited among the five capitals. That makes it relatively easier for Russia and China to form ties with specific states and preserve a pattern of outside influence.

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Topics on Which Authors Have Significantly Different Views 1. Do China’s Economic and Political Ambitions Pose More of an Opportunity or Challenge for Central Asia? The authors are deeply split on this question. Those who see China’s current ambitions in Central Asia as primarily economic (Li Xin, Xin Daleng, Xing Guangcheng, and Pan Guang) are inclined to think that this will also remain Beijing’s focus in the long term. Others who see China’s current policies, especially on territorial issues, as indicative of a state that will take a more assertive role in the future (Andrew Kuchins, Shalini Sharan, Carolyn Kissane, and Gulshan Sachdeva) express caution about an environment where China could dominate Central Asia. At present, all the authors see China focusing on two objectives in Central Asia: hydrocarbon extraction and limiting the spread of Islamic fundamentalism inside China. The question becomes, Will these objectives change over time as China’s capabilities grow?11 There is no definitive way to answer this question because it depends upon a host of uncertainties: What type of government will China have in twenty years? How will the territorial disputes in the East and South China Seas be resolved? Will China’s efforts at shale gas extraction inside its own borders make imported fuels less important? Will the Uighurs in Xinjiang succeed at creating closer ties with Muslims in Central Asia? Will the Chinese government choose to combat Islamic fundamentalism in Central Asia or to focus mostly on internal challenges? In the near term, however, it is reasonably certain that the Chinese leadership wants to concentrate on its economic interests in Central Asia and stay away from entanglements there. The decision of Russia and China in May 2014 to proceed with a massive natural gas deal between them could have major implications for Eurasian strategic and economic relations. The initial $400 billion deal involves Gazprom pipelines supplying 38 billion cubic meters of Russian natural gas annually to China by 2018, with China making an up-­front payment of $22 billion to help finance the pipeline.12 The deal also envisages expanding that annual capacity up to 61 billion cubic meters per year in the future. These plans follow on Chinese plans to help Moscow build a bridge from Russia to Crimea and a $27 billion

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gas deal between China and Novatek, Russia’s second-­biggest natural gas producer. Moreover, China and Russia have emphasized that they see their economic cooperation as part of a broader political strategy to create a grouping separate from Europe and the United States. Not only have China and Russia made major diplomatic efforts in the Shanghai Cooperation Organization (see chapter 13 by Pan Guang), but China is now also promoting the Conference on Interaction and Confidence Building Measures in Asia (CICA). This latter organization, launched by Kazakhstan in the early 1990s, has been dormant until recently but held a major conference in Beijing at the end of May 2014. Both Russia and China used the CICA conference to promote their anti-­Western policies. There have been several earlier periods of close ties between Moscow and Beijing that ended in recriminations, so there is no reason to assume that the current efforts are guaranteed to succeed. Yet with Russia’s bold, recent moves in Eastern Europe and China’s friction with Japan, Vietnam, and the Philippines, there is a strong incentive for Russia and China to cooperate. If Russia and China succeed at developing a working entente, it will pose major problems for the Central Asian states. Do they choose to cooperate in an anti-­Western stance? Can the Central Asian states afford to stress their autonomy if the two major powers on their periphery are both pressing for a new foreign policy direction?

2. What Are Russian Intentions in Central Asia? It is clear that President Putin sees Central Asia as a vital part of Russia’s “near abroad” and is willing to allocate scarce resources to providing enticements for cooperation from Central Asian governments. It is also widely assumed that Russian intelligence operatives play a significant covert role in Central Asia, seeking out leaders and upper-­ level officials who will be sympathetic to Moscow’s interests. In chapter 7, Alisher Khamidov sees the ongoing maneuvering for influence between Moscow and the Central Asian governments as a family feud, where some members want more autonomy and others are satisfied with the arrangements. Given Russia’s recent, high-­profile intervention in Ukraine, it is clear that President Putin sees the “near abroad” as a

Uncertainty Ahead | 411

“sphere of influence,” not just a set of voluntary associations. What is not certain is whether Russia will ultimately use its main force military units to back up its current covert and special forces operations. Yet there is no question that Russia is still the most important outside military power in Central Asia.13 Russia has military bases in Kyrgyzstan and Tajikistan as well as a military treaty with Kazakhstan, Kyrgyzstan, and Tajikistan as part of the Collective Security Treaty Organization (CSTO) signed in 2002.14 Russia’s chief constraint is its small, uncompetitive economy. Yet this has not kept Russia from pressing Kyrgyzstan to evict the U.S. forces from the Manas air base. This indicates that Russia will seek to reduce American influence in Central Asia as the U.S. forces exit from Afghanistan. Thus, Russian and Chinese tactics in Central Asia are almost inverse images of each other: China’s strength is its economy and it is hesitant to deal with its security concerns in a military way, while Russia’s principal method of operation is to stress military and security ties.

3. Will American Influence in Central Asia Remain after the NATO Withdrawal from Afghanistan? For the near-­term future, as a superpower, the United States will continue to have the ability to intervene militarily in conflicts of its choosing. Nevertheless, considerable uncertainty arises about what U.S. capabilities and intentions will be several decades in the future. Some of our authors (Kuchins and Sharan) see the strategic importance of Central Asia as naturally drawing the United States into the region; while others (Pan) see a diminution of U.S. influence as Chinese and regional organizations gain ground. If the United States gains control of its fiscal deficit and reduces its current account deficit, and if its allies share in a broad array of its current international responsibilities, then the United States may continue to provide a panoply of global security guarantees. Otherwise, economic circumstances may force it, or the American public may, on its own terms, press for a reduction in commitments. President Obama’s decision to withdraw from Iraq and the decision to draw down in Afghanistan by 2016 are signs of American fatigue with these obligations.15 Also, with domestic sources of energy increasingly

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prominent, the Middle East becomes less vital to American national interests. Accordingly, the Obama administration’s stated policy is to “pivot” toward East Asia and reduce the American concentration on the Middle East. This means that American commitments to Central Asia are even more tenuous than those to Afghanistan. There are two other factors that are likely to limit American involvement in Central Asia: (1) four of the five governments are authoritarian, so Congress will have qualms about providing enhanced aid, and (2) all five states have serious governance and corruption problems, and that makes it difficult for American businesses to function there. In sum, there is a growing American skepticism about the merits of overseas involvement in general plus a number of specific features about Central Asia that make it an unlikely venue for major U.S. aid, business, or civil society activities. Hence, it seems reasonable to assume that after the United States leaves Afghanistan, there will be fewer American ventures in Central Asia as well.

4. Are the Neighboring Regional Powers Likely to Become Influential in Central Asia? As noted above and in chapters 10 and 11, several neighboring states would like to have greater influence in Central Asia. However, at present, three of the neighbors (Pakistan, Iran, and Turkey) are each pre­ occupied with their own specific problems and have few extra resources that could be devoted to courting the Central Asian states. Pakistan is viewed with wariness by all the Central Asian governments because of its support for Islamic fundamentalists, but it has some bargaining power because north-­south pipelines would need to traverse Pakistani soil. Iran has strong language and cultural ties to Central Asia, but is struggling to get out from under sanctions over its nuclear program and has the added burden of Shia Islam, which is not widely followed in Central Asia. As Walker notes, Turkey also has strong cultural and language ties in Central Asia, but the Erdoğan government is besieged with domestic protests that make a more active foreign policy unfeasible now.

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As noted above, the one neighboring country that may become a player in Central Asia is India. As Sachdeva argues, because of the size of its economy and the sophistication of its technology, India currently has the greatest potential of the neighboring states to be important in Central Asia. India’s military, space, and software expertise all have appeal for the Central Asian states.16 Yet the issues for India are cultural and religious, and we will need to wait to see whether the Central Asian states will be pragmatic enough to work with a secular but predominantly Hindu state.

External Factors That Will Shape Long-­Term Developments in Central Asia There are four additional factors that will be critical in shaping long-­ term developments in Central Asia: Iraq, Iran, global economic trends, and the shale gas market.

The Deteriorating Situation in Iraq Growing friction among the three principal groups in Iraq (Shias, Sunnis, and Kurds) is leading to increased violence and the threat of renewed civil war.17 This has broad implications for the Middle East and Central Asia. First, it demonstrates that the Western occupation of Iraq (2003 – ​2011) was not successful at building a stable, peaceful state. Second, if the intergroup violence spreads throughout Iraq, there is a chance that neighboring states will get involved to protect their own interests. This could lead to Iranians, Saudis, Jordanians, Syrians, and various guerrilla fighters from other states, including some affiliated with Al Qaeda, to become participants in a regional conflict. There is also a deep sense of disappointment among many Americans that the massive loss of life in Iraq has not been followed by a more open, democratic government. Nevertheless, the more positive news is that Iraq’s economy is growing rapidly, and Baghdad has succeeded at signing oil revitalization and development contracts with Western, Chinese, and Russian firms.18 If Iraq’s internal violence can be mitigated, increased flows of Iraqi oil into

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international markets should have a stabilizing effect on oil prices. This may make development and transport projects for Central Asia slightly less attractive as investments, but more stable oil prices make it easier for firms to decide on their future exploration and development plans. Also, if Iraq can avoid being drawn into the Syrian civil war, that should quiet the Kurds and the Turks and reduce the political risk of building pipelines going west/southwest from Central Asia. Since no one can predict whether Iraq will become less violent, many of the major capital projects will be on hold until it is clear whether Southwest Asia and the northern Persian Gulf region are safe enough for long-­term investments.

Whither Iran? Related to the issue of Iraq’s direction, of course, is a similar set of questions about Iran. The most important new development in this regard is the possibility of reduced tension between the United States and Iran. The Obama administration has taken the lead in negotiations between the West and Iran over the current sanctions that are designed to get Iran to ensure that its nuclear program is only for peaceful purposes. Washington’s short-­term strategy is to offer a slight reduction in the severity of sanctions to get a temporary halt in Iran’s nuclear program.19 Presumably, the long-­term objective will be to make the eventual lifting of sanctions sufficiently attractive that Iran will end its nuclear program, in its current form, and agree to comprehensive inspections. If this can be agreed upon, then there is the real possibility of a broader détente between Iran and the major powers.20 At the time of this drafting (December 2014), it is uncertain how successful these negotiations will be, and they have been extended for a second time. Yet if an agreement were reached, it would have a major effect on Central Asia because a host of pipeline and development projects would then be feasible (see chapter 14). Moreover, a broader relaxation of tension between Iran and the West would facilitate a wide-­scale increase in trade and foreign investment.21 Conversely, if the nuclear negotiations fall apart or enforcement of an agreement fails, at a minimum, military tensions would rise and the economic environment would suffer.

Uncertainty Ahead | 415

Global Economic Recovery Variations in Central Asia’s economic performance primarily reflect induced demand from outsiders who purchase its hydrocarbons, metals, and agricultural products. Thus, growth rates in the world’s major economies are critical for determining Central Asia’s economic health. The International Monetary Fund (IMF) estimates that world Gross Domestic Product will grow at about 3.7 percent in 2014 and 3.9 percent in 2015.22 According to IMF projections, the advanced economies will grow in the 2.2 percent range for the next two years, while the emerging markets, as a group, will expand at between 5.1 percent and 5.4 percent, and China is expected to grow at slightly over 7 percent per year. This indicates that the world economic recovery, from the recession of 2008 – ​2009, is almost complete and should provide a promising economic environment for Central Asia. Although the prospect of more Iraqi and Iranian oil coming onto the international market in greater quantities could suppress oil prices somewhat, the bigger issue for Central Asia is whether shale gas, from the United States and Europe, will lower natural gas prices for the foreseeable future. Yet the United States, Europe, and Japan are all still growing at rates below their potential; and if they all return to growth in the 3 percent range, that will stimulate gas demand and absorb some of the new supply coming from shale. Also, if world growth GDP rates in all major regions are at 3 percent or above, that will have a major impact on demand for metals and agricultural goods from Central Asia. Overall, since the world’s economic recovery seems to be proceeding satisfactorily, this is positive news for a region like Central Asia with its current composition of exports.

Shale Gas Shale gas and hydraulic fracturing (“fracking”) are transforming the world energy markets. Not only is shale gas making the United States a low-­cost producer of natural gas, but the “tight oil” near the shale gas has led to a dramatic increase in U.S. oil production. Some analysts think that by 2018, the United States will extract more oil domestically than either Saudi Arabia or Russia, making it the world’s largest oil

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producer.23 Because of the state-­side natural gas production, the United States is no longer importing substantial liquefied natural gas (LNG). The reduction in gas and oil imports is saving the United States about $200 billion per year on energy imports. This has a significant effect on the U.S. balance of payments, plus reduced energy prices will make manufacturing inside the United States much cheaper. The precise effect of new U.S. shale gas and oil supplies on Central Asia is uncertain, but the direction of the impact is clear. Since there is a new source of energy supply, producers outside the United States will need to look for other locations to market their products. This means that Russia and the Persian Gulf producers will be more competitive with Central Asian suppliers. It also means that China will be less concerned about being excluded from Middle Eastern sources, so Beijing may be slightly less willing to pay for future, long pipelines from Central Asia to its East Coast markets.24 The geological formations in north-­central Europe and in central China also look promising for shale gas extraction. When the technology for shale gas development is more widely available, the relative importance of the Middle East in energy supplies will decline. In the meantime, however, the United States is the principal beneficiary of the boom in shale gas and associated oil. Political risks are the primary factors in limiting the pipeline or rail movement of Central Asian hydrocarbons to the west and south. Thus, governments in Central Asia have a strong incentive to keep courting Beijing to provide an eastern route for both transit of and demand for Central Asian hydrocarbons. *** In sum, we have presented a diverse array of opinions about China, the United States, and the future of Central Asia. The overview covers recent economic, political, and foreign policy choices made by the Central Asian states; then we turn to the outside powers; and, finally, we assess the prospects for regional integration in Central Asia. As a region, Central Asia shows mixed prospects for economic and political development. Two of the states, Kazakhstan and Turkmenistan, are exceptionally well endowed with hydrocarbons, but the other three countries are not. Only Kazakhstan has the educational system

Uncertainty Ahead | 417

and infrastructure to move quickly to higher levels of per capita income. Also, since there are major political, ethnic, and language differences among the Central Asian states, the much-­touted prospects for regional cooperation seem limited. Without new western or southern pipelines and a transition to more development-­oriented governments, Central Asia’s prospects are for modest, not dramatic, change. There are several overarching conclusions that stand out: (1) Central Asia is not likely to become a cohesive, integrated grouping of states. (2) The combination of the planned U.S. withdrawal from Afghanistan and the striking increase in shale gas production inside the United States mean that Central Asia will become less important to American policy makers in the future in both economic and strategic terms. (3) China has two major interests in Central Asia: importing hydrocarbons and limiting the spread of Islamic fundamentalism from Central Asia to Muslim areas inside China. (4) Although there is much discussion about a competition between the United States and China in Central Asia, in fact, the two outside powers have notably different objectives there and, at present, have little real competition between them. (5) Thus, it appears that, a decade hence, China will be an even greater economic presence in Central Asia than it is today, but there are few signs that it will play a significant military or security role then. (6) The United States, for its part, is likely to have a smaller relative presence in Central Asia than it does today. (7) Assuming Russia’s leadership continues with policies similar to those advocated by Presidents Medvedev and Putin, the real competition in Central Asia among outside powers will be between Russia and China. Notes 1.  J. Perlez and B. Feng, “China Gains New Friends in Its Quest for Energy,” New York Times, September 24, 2013, A-­4. 2.  China National Petroleum Corporation, January 15, 2014, www.cnpc.com.cn/en/ cnpcworldwide/Turkmenistan. 3.  M. Katz, “The Syria Gambit,” Current History, October 2013, 283 – ​85. 4.  F. Lukyanov, “What Russia Has Learned from the Iraq War,” Al Monitor, March 18, 2013, www.al-­monitor.com/pulse/originals/2013/russia-­iraq. 5.  T. Yakobashvili and C. Lin, “Has China Shanghaied Central Asia?,” Real Clear World, October 7, 2013, www.realclearworld.com/articles/2013/10/07.

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6.  The TAPI pipeline is not out of the question — ​as Pakistan is trying hard now to convince India that it will guarantee security for a proposed gas pipeline from Iran through Pakistan to India. 7.  A. Cooley, Great Games, Local Rules (Oxford: Oxford University Press, 2012), 52. 8.  Turkmenistan has never been willing to join either organization, and Uzbekistan withdrew from the CSTO in 2012. 9.  International Crisis Group, “Central Asian Migrants and the Economic Crisis,” Asia Report, no. 183 (January 5, 2010). 10.  M. Mirovalev and A. Kramer, “In Uzbekistan, the Practice of Labor Lives On during the Cotton Harvest,” New York Times, December 15, 2013, A10. 11.  For an extended discussion of this issue, see chapter 6 of D. Denoon, The Economic and Strategic Rise of China and India (New York: Palgrave Macmillan, 2007). 12.  S. Song, “Forget Sanctions over Ukraine: Russia Scores Massive Gas Pipeline Deal with China,” Business Insider, May 14, 2014. 13.  D. Treisman, “Is Putin Losing His Grip?,” Current History, October 2013, 251 – ​58. 14.  Uzbekistan was initially a member of the CSTO, but suspended its membership in 2012. 15.  The refusal of Afghan president Hamid Karzai to sign an agreement covering the stationing of NATO troops in Afghanistan further complicated American decisions about the merits of commitments in all of South and Central Asia. 16.  H. S. Bal, “Indian Craft Is Lofted toward Mars, Trailed by Pride and Questions,” New York Times, November 6, 2013, A6. 17.  P. Salem, “Iraq’s Tangled Foreign Interests and Relations” (Carnegie Endowment for International Peace, Washington, D.C., December 2013). 18.  T. Grose, “Iraq Poised to Lead World Oil Supply Growth,” National Geographic, October 9, 2012. 19.  D. Sanger and J. Rudoren, “A Gamble in Iran Talks: Easing of the Sanctions,” New York Times, November 22, 2013. 20.  The countries negotiating with Iran are the United States, United Kingdom, France, Germany, China, and Russia. 21.  Neither China nor Russia has any major tension with Iran at the moment, although both states have agreed to join the Western powers in negotiations to limit potential Iranian nuclear capabilities. 22.  International Monetary Fund, World Economic Outlook Update, January 21, 2014, 2. 23.  D. Yergin, “The Global Impact of U.S. Shale,” Project Syndicate, January 8, 2014, www.project-­syndicate.org/commentary/daniel-­yergin. 24.  Part of Beijing’s desire for pipelines from Central Asia is to avoid the “country risk” of turmoil in or being excluded from exports from a particular country in the Middle East. The other principal risk is “transit risk,” where oil being brought from the Middle East might be delayed or blocked in transit by a hostile power.

About the Contributors

David B.  H. Denoon is Professor of Politics and Economics at New York University and Director of the NYU Center on U.S.-­China Relations. He holds a PhD from M.I.T. and has served in the federal government in three positions: Program Economist for USAID in Jakarta, Vice President of the U.S. Export-­Import Bank, and Deputy Assistant Secretary of Defense. Denoon is a member of the Council on Foreign Relations, the National Committee on U.S.-­China Relations, the International Institute for Strategic Studies (London), the Asia Society, and the U.S.-­Indonesia Society, and he is Co-­Chairman of the New York University Asia Policy Seminar. He is also Chairman of the Editorial Advisory Board of Great Decisions. He is the author and editor of seven books, including The Economic and Strategic Rise of China and India (2007) and China: Contemporary Political, Economic, and International Affairs (2007). Nazgul Jenish is Assistant Professor of Economics at New York University. She holds a PhD in Economics from the University of Maryland. Prior to academia, Jenish worked at the United Nations, New York, as a policy specialist. Alisher Khamid ov is Newton Fellow at the Newcastle University in the United Kingdom. Previously he served as a lecturer at the School of Advanced International Studies (SAIS) at Johns Hopkins University. He began his career as director of the Osh Media Resource Center, a nonprofit, independent media association in southern Kyrgyzstan, and has worked for several nongovernmental organizations and think tanks, including the Central Asian Media Support Project, the University of Notre Dame’s Sanctions and Security Project, and the Foreign Policy Studies Program at the Brookings Institution. He earned his doctorate in Russian and Eurasian studies from the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University. 419

420 | About the Contributors

Carolyn Kissane serves as Clinical Associate Professor at the Center for Global Affairs at New York University, where she teaches graduate-­ level courses examining the Central Asian region, transformations in China, the geopolitics of oil, comparative energy politics, resource security, and civil society organizations. She serves as the Coordinator of the Energy and Environment concentration at the center and is faculty advisor to the Energy Policy International Club. In recognition of her commitment to education, Kissane was awarded the esteemed NYU Excellence in Teaching Award in 2007 and nominated for the NYU-­ wide Distinguished Teaching Award in 2008 and 2009. She received the SCPS Award for Teaching Excellence in 2009. Kissane received her PhD from Columbia University. Andrew Kuchins is Senior Fellow and Director of the Russia and Eurasia Program at the Center for Strategic and International Studies. Previously, Kuchins has served as a senior associate at the Carnegie Endowment for International Peace, where he was Director of its Russian and Eurasian Program in Washington, D.C., and Director of the Carnegie Moscow Center in Russia from 2003 to 2005. He currently teaches at Johns Hopkins School of Advanced International Studies (SAIS) and has also taught at Georgetown and Stanford Universities. His recent publications include Russia after the Global Economic Crisis, coedited with Anders Aslund and Sergei Guriev (2010). He holds a PhD from Johns Hopkins SAIS. Marlene Laruelle is Research Professor of International Affairs at the Institute for European, Russian and Eurasian Studies (IERES) in the Elliott School of International Affairs, George Washington University. She has coauthored The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor (2012), and coedited China and India in Central Asia: A New “Great Game”? (2010), and Mapping Central Asia: Indian Perceptions and Strategies (2011). Li Xin is Professor and Director of the Institute for Economic Comparative Studies and the Center for Russia and Central Asia Studies at Shanghai Institutes for International Studies (SIIS). He is a member

About the Contributors | 421

of the Shanghai Committee of People’s Political Consultative Conference, the Standing Director of the National Council of China Society of Russian, East European and Central Asian Studies and Shanghai Cooperation Organization (SCO) Research Centre, Vice President of the Shanghai Association of Russian, East European and Central Asian Studies, and a part-­time Professor and director of doctoral students at Tsinghua University, Fudan University, Shanghai University of Finance and Economics, and East China Normal University. Edward J. Lincoln is Professor at the George Washington University. He is formerly the Director of the Center for Japan-­U.S. Business and Economic Studies and Professor of Economics at New York University Stern School of Business. Before joining NYU, Lincoln was a senior fellow at the Council on Foreign Relations, and earlier a senior fellow at the Brookings Institution. In the mid-­1990s, he served as special economic advisor to Ambassador Walter Mondale at the American Embassy in Tokyo. He has also been a professorial lecturer at the Johns Hopkins University School of Advanced International Studies. He is the author of eight books and monographs, including East Asian Economic Regionalism (2004) and Arthritic Japan: The Slow Pace of Economic Reform (2001). Lincoln received his PhD in economics from Yale University. Pan Guang is Vice Chairman and Professor at the Shanghai Center for International Studies, Director of the SCO Studies Center in Shanghai, Dean of the Center of Jewish Studies Shanghai (CJSS), and Vice President of the Chinese Association of Middle East Studies. He is Senior Advisor to the China-­Eurasia Forum in the United States and Senior Advisor on anti-­terror affairs to the Shanghai Municipality and Ministry of Public Security of the PRC. He obtained the Sankt Peterburg-­300 Medal for Contribution to China-­Russia Relations, awarded by President Putin in 2004, and the Austria Holocaust Memorial Award in 2006. He was appointed by UN secretary-­general Kofi Annan as a member of the High-­Level Group for the UN Alliance of Civilizations in 2005, and appointed as Ambassador of the Alliance of Civilizations in 2008.

422 | About the Contributors

Sebastien Peyrouse is Senior Research Fellow with the Central Asia-­Caucasus Institute and Silk Road Studies Program, a joint center affiliated with Johns Hopkins University’s School of Advanced Inter­ national Studies, Washington, D.C. He was a doctoral and post­doctoral Fellow at the French Institute for Central Asia Studies in Tashkent (1998 – ​2000 and 2002 – ​2005). He is the author of Turkmenistan: Strategies of Power, Dilemmas of Development (2011) and the coauthor of The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor (2012). Richard Pomfret is Professor of Economics at Adelaide University, and Visiting Professor of Economics at the Johns Hopkins University SAIS Bologna Center. He has also worked at universities in Canada, China, Germany, and the United States. In 1993 he was seconded to the United Nations for a year, acting as advisor on macroeconomic policy to the Central Asian republics of the former Soviet Union. He has acted as a consultant on Central Asia to the EU, World Bank, UNDP, OECD, and Asian Development Bank. He has published over a hundred articles and seventeen books, including The Central Asian Economies since Independence (2006). His most recent book is The Age of Equality: The Twentieth Century in Economic Perspective (2011). Gulshan Sachdeva is Associate Professor at the School of Inter­ national Studies, Jawaharlal Nehru University, New Delhi. As a Regional Cooperation Advisor, he also headed the ADB and the Asia Foundation projects at the Afghanistan Ministry of Foreign Affairs in Kabul. He has been Visiting Professor at the University of Antwerp, University of Trento (Italy), and Corvinus University of Budapest. He is the author of Economy of the Northeast (2000), various monographs, project reports, and more than sixty research papers in scholarly journals and edited books. He holds a PhD in economics from the Hungarian Academy of Sciences. Shalini Sharan is currently an MA candidate at the Fletcher School of Law and Diplomacy at Tufts University. Previously she served as a Researcher at the Indian Council of World Affairs and a Research

About the Contributors | 423

Assistant at the Russia and Eurasia Program of the Center for Strategic and International Studies in Washington, D.C. Joshua W. Walker currently serves as Director of Global Programs at APCO Worldwide in the Office of the CEO and Non-­Resident Transatlantic Fellow at the German Marshall Fund of the United States in Washington, D.C. Before joining the private sector, Walker served at the U.S. Department of State in Secretary Kerry’s Office of the Chief Economist in 2013 and in Secretary Clinton’s Global Partnership Initiative as Senior Advisor on the Middle East and North Africa. Walker has been affiliated with and taught at Brandeis University, George Mason University, Harvard Kennedy School, Middle East Technical University, Istanbul Sehir Merkez, Tokyo University, Transatlantic Academy, Princeton University, University of Richmond, and Yale University. Walker earned his PhD in politics and public policy at Princeton University. His recent publications include Understanding Turkey’s Kurdish Problem (2013) and The Shifting Tectonics of Japan after March 11, 2011 (2012). Xin Daleng is a PhD candidate at Shanghai University of Finance and Economics, and currently a visiting graduate student in the Economics Department of Cornell University. He received his BA in economics from Shandong Institute of Light Industry in 2007 and MA in economics from Liaoning University in 2010. Xing Guangcheng is Deputy Director of the Chinese Center for Borderland History and Geography, Chinese Academy of Social Sciences (CASS). From 2003 to 2009, he was Director of the Institute of Russian, Eastern European and Central Asian Studies at CASS. He has also been a Visiting Professor at the Russian Academy of Science and at the Slavic Research Center at Hokkaido University.

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Index

Page numbers in italics refer to figures. ABCs. See Annual Bilateral Consultations Abe, Shinzo, 250, 252 Abkhazia, 179 ADB. See Asian Development Bank ADIZ. See Air Defense Identification Zone Afghanistan, 374 – ​75; border of, 8, 58, 103, 107, 223; China and, 108 – ​9; conflicts and war in, 3, 12 – ​15, 21, 351 – ​52, 376 – ​ 77; economy of, 265; exports and, 58; France and, 221, 232n37; Germany and, 221; India and, 265 – ​66, 269 – ​70, 278 – ​86; Kazakhstan and, 107; mujahedeen forces of, 197n24; NATO and, 6 – ​8, 15, 21, 92, 104, 112, 190 – ​91, 359, 418n15; NSR and, 283; opium and, 114 – ​ 16, 190, 222 – ​23; Pushtun majority of, 13; stabilization of, 110; trade with, 26 – ​ 27, 58; U.S. and, 3, 12 – ​15, 21, 61, 102 – ​4, 111 – ​13, 122 – ​23, 163, 190 – ​91, 199n42, 284 – ​86, 359; water and, 117. See also Tajik-­Afghan border Afghanistan Pakistan Free Trade Agreement, 120 Afghan National Army, 113 – ​14, 283 Afghan National Development Strategies (ANDS), 119 Afghan National Police, 283 Afghan-­Pakistan Transit Trade Agreement (APTTA), 280 – ​81, 289 Agency for International Development, U.S. (USAID), 117 Agriculture: in Kyrgyzstan, 117; in

Tajikistan, 117; in Turkmenistan, 9; in Uzbekistan, 9, 117 Ahamed, E., 286 AIOC Western Export Route, 373 – ​74 Air Defense Identification Zone (ADIZ), 250 Akaev, Askar, 90 – ​91, 105, 124, 173, 184, 198n33 AKP, 298 – ​99, 303 – ​4, 306, 310 – ​12, 317 – ​19, 320n5, 405 Aliev, Heydar, 333 Alliance Bank, 36 Allison, Roy, 78 Altynkol-­Khorgos rail crossing, 191 Aluminum, 58 Amu Darya, 56 – ​57, 117 Andijan-­Osh-­Kashgar road, 56 Andijan uprising, 184, 201n69, 213 ANDS. See Afghan National Development Strategies Annual Bilateral Consultations (ABCs), 118 Anti-­terrorist, 83, 178, 198n38, 349 APTTA. See Afghan-­Pakistan Transit Trade Agreement Arab Awakening, 313 Arab embargo, 245 Arab Spring, 309 – ​12 Armenia, 314 ASEAN. See Association of Southeast Asian Nations Asian Development Bank (ADB), 49, 77, 121, 127n14, 269, 333 425

426 | Index

Asian Development Outlook 2011, 285 Asian Dragons, 88 Asian financial crisis (1997), 247, 343n7 “Asian model,” 88 Asian Tigers, 88 al-­Assad, Bashar, 308, 311 Association of Southeast Asian Nations (ASEAN), 265 Astana-­Almata express railway, 164 Atambayev, Almazbek, 201n65 Atlanticism, 175 – ​76 Azerbaijan: gas and, 44, 45, 48, 268, 373 – ​ 74; Turkey and, 313 – ​14. See also Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova Babanov, Omurbek, 201n65 Baghdad Pact (1955), 299 Bakiev, Kurmanbek, 90 – ​91, 105 – ​6, 173, 180 – ​82, 184, 195n2, 201n64, 201nn60 – ​61 Baku-­Novorossiysk. See Northern Route Baku-­Supsa. See “Early Oil” Baku – ​Tbilisi – ​Ceyhan (BTC), 45, 203n91, 268, 367 – ​68, 374 Baku – ​Tbilisi – ​Erzurum (BTE), 45, 70, 215, 333, 374 Baltic states, 227 – ​28 Bangladesh, 15 Beijing. See China Beijing Summit, 356 Belarus, 60, 175, 200n48, 210. See also Customs Union of Russia, Belarus, and Kazakhstan Belarus National Alliance, 169 Belavezha Accords, 183 Bengal Initiative for Multi-­Sectoral Technical and Economic Cooperation (BIMSTEC), 274 Berdimuhamedov, Gurbanguly, 10, 79, 84, 124, 334, 343n6 Berlin Wall, 302

Bilateral Security Agreement (BSA), 103 – ​4, 283 BIMSTEC. See Bengal Initiative for Multi-­Sectoral Technical and Economic Cooperation Bin Laden, Osama, 104, 360 Blake, Robert, 118 Blank, Stephen, 180 BOMCA. See Border Management in Central Asia Bonn conference (2011), 282 Border: issues, 83 – ​84, 156, 161, 348, 353 – ​ 54; security, 77 – ​78 Border Cooperation Association (Uzbekistan), 142 Border Management in Central Asia (BOMCA), 77, 221 – ​23, 345n22 Bordyuzha, Nikolay, 108 Borishpolets, Ksenia, 145 – ​46, 152n22 BP. See British Petroleum BP Statistical Review, 334 Brazil, 274, 322n41 British Petroleum (BP), 43, 45, 215 Brzezinski, Zbigniew, 7 BSA. See Bilateral Security Agreement BTA, 36 BTC. See Baku – ​Tbilisi – ​Ceyhan BTE. See Baku – ​Tbilisi – ​Erzurum Buddhism, 88 Bukhara-­Urals pipeline, 70 Burma, 79 Bush, George W., 332 Business Intermediary Organizations, 214 CACO. See Central Asian Cooperation Organization CADAP. See Central Asia Drug Action Program CAEC. See Central Asian Economic Community CAEWDP. See Central Asia Energy-­ Water Development Program

Index | 427

Cameco, 345n21 Canara Bank, 272 CANWFZ. See Central Asian Nuclear-­ Weapon-­Free Zone CAREC. See Central Asia Regional Economic Cooperation Program CAREN. See Central Asian Research and Education Network CASAREM. See Central Asia South Asia Regional Electricity Market Caspian Pipeline Consortium (CPC), 374 Caucasus: northern, 157, 162; operations in, 179 – ​80, 200nn48 – ​49; southern, 122, 152n19, 214. See also Transport Corridor Europe-­Caucasus-­Asia project CCTS. See Cooperation Council of Turkic Speaking States CECAs. See Comprehensive economic cooperation agreements Center for Integration Research, 145 Central Asia, 416 – ​17; during 1990s, 174 – ​ 77, 196nn22 – ​23, 197nn24 – ​25; during 2000s, 177 – ​78, 197n32, 198nn33 – ​35, 198nn38 – ​40; after Kyrgyzstan’s revolution, 182; China and, 4 – ​6, 61 – ​65, 91 – ​93, 112 – ​14, 125 – ​26, 158 – ​65, 180, 200n51; “Connect Central Asia” policy and, 286 – ​88; counternarcotic efforts in, 114 – ​16; CSTO and, 107 – ​14; currencies of, 32, 38 – ​39; democracy and, 3 – ​ 6, 9 – ​16, 89, 122; early leadership of, 9 – ​ 10; economic and political integration in, 399 – ​400; economic development of, 9 – ​10, 20 – ​35, 64 – ​67; education in, 220 – ​21; energy, pipelines and, 332 – ​35, 343nn9 – ​12; EU and, 209 – ​10, 217 – ​23, 403 – ​4; Europe in, 209 – ​13, 228 – ​30; exports and, 132 – ​33; external players in, 330 – ​32; FDI and, 259; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 15, 75 – ​93; geostrategic location of, 20 – ​21, 54 – ​55; India and,

274 – ​78, 287 – ​89; inflation in, 33 – ​35; instability of, 250 – ​51; interaction and role of, 20 – ​21; Islamic fundamentalism, separatism, and unrest in, 10 – ​11; languages of, 11; major powers outside of, 12 – ​15; “multi-­vector” strategy of, 21, 49, 92 – ​93, 101; Muslim identities of, 87 – ​88; NATO and, 104 – ​14; NSR and, 118 – ​21, 123, 129n45; outlook for, 189, 193 – ​94; overview of, 3 – ​6, 345n20; post-­crisis recovery of, 39 – ​ 42; processes under way in, 9 – ​15; prospects for, 408; regional integration of, 326 – ​30, 339 – ​42, 342nn3 – ​5, 343n6; SCO and, 107 – ​14, 136, 152n15; security of, 104 – ​14; significance of, 7 – ​8; trade with, 132 – ​33, 134, 138 – ​40; transportation throughout, 325, 342n2; Turkey and, 312 – ​15; uncertainties in, 123 – ​24; U.S. and, 4 – ​6, 101 – ​26, 330 – ​32, 341, 367; views by leaders of, 183 – ​85, 201n69, 202n74. See also Greater Central Asian region; “The Great Game”; Kazakhstan; Kyrgyzstan; Tajikistan; Turkmenistan; Uzbekistan Central Asia-­Center pipeline, 70 Central Asia-­China pipeline, 70 Central Asia Drug Action Program (CADAP), 221 – ​22, 345n22 Central Asia Energy-­Water Development Program (CAEWDP), 117 Central Asia Initiative Program (2007 – ​ 2010), 218 Central Asia Invest Regional Program, 214 Central Asian Cooperation Organization (CACO), 83, 114 – ​16, 326 Central Asian Economic Community (CAEC), 326 Central Asian Nuclear-­Weapon-­Free Zone (CANWFZ), 77 Central Asian Research and Education Network (CAREN), 221

428 | Index

Central Asia Regional Economic Cooperation Program (CAREC): membership and partners of, 107, 127n14, 328; transportation corridors and, 56, 77, 278, 329, 342nn3 – ​4 Central Asia South Asia Regional Electricity Market (CASAREM), 120 Central Command, U.S., 107 Central Eurasia Project, 142, 148, 152n19 Central Europe: actors from, 226 – ​28; EU and, 226 CES. See Common Economic Space Chechen War, 340 Chevron, 330, 369 Chiang Mai Initiative, 343n7 Children, 64 China, 343nn7 – ​8, 397 – ​99, 409 – ​10, 416 – ​17, 418n24; Afghanistan and, 108 – ​9; aid and investments of, 55 – ​56, 164, 402; border issues of, 156, 161; Central Asia and, 4 – ​6, 61 – ​65, 91 – ​93, 112 – ​14, 125 – ​26, 158 – ​65, 180, 200n51; consumer goods from, 30, 59 – ​60, 71n12; economic goals of, 137 – ​42; economic interests of, 4, 130 – ​32, 135 – ​50, 152nn13 – ​15, 152nn19 – ​20, 152nn22 – ​23; economy of, 4, 144, 191 – ​92; energy policy of, 165 – ​68, 171, 343n12, 386 – ​87; EU and, 147, 210 – ​11; Eurasia and, 380 – ​ 82, 390n15; exporting costs of, 21 – ​22; FDI by, 140 – ​42, 143; foreign policy of, 14 – ​15; gas pipelines and, 40, 45 – ​49, 62, 70, 109, 368 – ​70; hydrocarbons and, 13 – ​14, 21 – ​22, 39, 49, 62 – ​63, 136, 152n14; India and, 263 – ​64, 268 – ​69; influence of, 154 – ​57, 170 – ​72, 176; Japan and, 249 – ​50; Kazakhstan and, 62, 166 – ​67, 171; Korea and, 249 – ​50; Kyrgyzstan and, 62, 344n15; model of cooperation of, 170 – ​72; oil and, 13 – ​14, 21 – ​22, 39; as outside major power, 12 – ​15; Pakistan and, 109; policies and profiles of, 13 – ​14, 126; on railways,

55 – ​56, 164, 335 – ​37, 344n14; regional cooperation and stability around, 162 – ​63; rise of, 3; Russia and, 191 – ​92, 383, 387 – ​88, 406 – ​7; SCO and, 357 – ​62; on security, 108 – ​9, 159, 161; shale gas and, 369, 372, 391n22; on splittism, 345n23; strategic interests of, 158 – ​60; trade with, 138 – ​40, 142, 253 – ​54; Turkmenistan and, 166 – ​67, 184, 186; U.S. and, 4 – ​5, 331 – ​32, 343n7, 400 – ​ 402; Uzbekistan and, 62, 167. See also Shanghai Cooperation Organization; “Silk Road”; Xinjiang Province China Institutes of Contemporary International Relations (CICIR), 147 China National Petroleum Corporation (CNPC), 268, 333, 369 – ​70, 372 “China threat theory,” 130 Chinese Institute of International Studies, 62 Chufrina, Gennady, 147, 149 CICA. See Conference on Interaction and Confidence Building Measures in Asia CICIR. See China Institutes of Contemporary International Relations CII. See Confederation of Indian Industry CIS. See Commonwealth of Independent States CIS Anti-­Terrorist Center, 178, 198n38 CIS Anti-­Terrorist Program, 178, 198n38 CIS Customs Union: bilateral FTA of, 52 – ​ 53, 120; membership of, 52, 59 CIS FTA, 133 – ​35, 151n12 Clinton, Hillary, 119, 377 – ​78 CNG. See Compressed natural gas CNPC. See China National Petroleum Corporation Cold War, 3, 368 Collective Security Treaty (CST), 178, 196n23, 198n39 Collective Security Treaty Organization (CSTO), 5, 124, 361, 407, 411, 418n8; Central Asia and, 107 – ​14; limitations

Index | 429

and reforms of, 103, 189, 203n102; as military organization, 169 – ​70, 186; objectives of, 78, 169; regional security and, 108 – ​14; Russia and, 173; Uzbekistan and, 107 – ​8, 111, 170, 186, 196n23 Columbia, 116 Commercial Bank for Foreign Economic Affairs, 272 Commercial Bank of Kyrgyzstan, 272 Commodities, 26 – ​27, 67. See also Consumer goods Common Economic Space (CES), 78. See also Single Economic Space Commonwealth of Independent States (CIS), 52; agreements of, 135; formation of, 175 – ​76, 183, 196n23, 197n25; growth and trade of, 137, 138, 197n25; integration of, 155, 169; membership of, 151n11, 152n20, 196n23, 326, 328; Russia and, 131 – ​32, 175 – ​76, 196n23, 197n25. See also CIS Customs Union; CIS FTA; Collective Security Treaty Organization; Conception of the Further Development of the CIS Comprehensive economic cooperation agreements (CECAs), 274 Compressed natural gas (CNG), 267 COMTRADE database, 72n13 Conception of the Further Development of the CIS, 135 Confederation of Indian Industry (CII), 279 Conference on Interaction and Confidence Building Measures in Asia (CICA), 77, 82 – ​83, 410 “Connect Central Asia” policy, 286 – ​88 ConocoPhillips, 268 Conolly, Arthur, 366 Consumer goods: apparel as, 59; from China, 30, 59 – ​60, 71n12; prices of, 59, 65 Cooperation Council of Turkic Speaking States (CCTS), 313, 405

Corruption, 63, 67 Corruption Perceptions Index, 63 CPC. See Caspian Pipeline Consortium CST. See Collective Security Treaty CSTO. See Collective Security Treaty Organization CUC. See Customs Union Commission Customs: code, 59; trade and, 53 – ​54 Customs Union Commission (CUC), 5 Customs Union of Russia, Belarus, and Kazakhstan: agreements of, 150n4; integration of, 133; membership of, 131, 180 – ​81, 201n59, 217 – ​18 Czech Republic, 227 Daewoo Motors, 247, 345n21 Davutoğlu, Ahmet, 299, 320n5, 320n9 DCI. See Development Cooperation Instrument Debt: external, 35; private-­bank, 34 Declaration of Eurasian Economic Integration, 135 Democracy, 398; Central Asia and, 3 – ​6, 9 – ​16, 89, 122; Kyrgyzstan as, 3 – ​6, 9 – ​ 16, 122; promotion of, 121 – ​23; Turkey as, 303, 306 Department of State, U.S., 71n9 Detair (France’s air force), 221, 232n37 Deutsche Bahn, 336 Development Cooperation Instrument (DCI), 217 – ​19 Doha Development Round, 274 Dordoi bazaar, 344n16 Drugs, 354n22; Central Asia’s counter­ narcotic efforts with, 114 – ​16; programs for, 115, 221 – ​22; Russia’s counter­narcotic efforts with, 115 – ​16, 184; trafficking, 157, 190, 218 – ​19, 221 – ​ 23, 349, 355 – ​57 “Dutch disease,” 32 EAC, 148 “Early Oil” (Baku-­Supsa), 373 – ​74

430 | Index

Ease of Doing Business Report (World Bank), 54 East Asia, 87 EAU. See Eurasian Economic Alliance EBRD. See European Bank for Reconstruction and Development Economic Cooperation Organization (ECO), 77, 327, 328 Economic development: of Central Asia, 9 – ​10, 20 – ​35, 64 – ​67; of Kazakhstan, 9 – ​10, 20 – ​35, 64 – ​67, 67 – ​68; of Kyrgyzstan, 9 – ​10, 20 – ​35, 41, 64 – ​67, 69; of Tajikistan, 9 – ​10, 20 – ​35, 64 – ​ 67; of Turkmenistan, 9 – ​10, 20 – ​35, 64 – ​67; of Uzbekistan, 9 – ​10, 20 – ​35, 64 – ​67, 69 Economist Intelligence Unit, 371 Economy: of Afghanistan, 265; of China, 4, 144, 191 – ​92; of India, 120, 263 – ​66, 288 – ​89; of Russia, 130 – ​32; of Turkey, 300 – ​301 Education, 63, 66; in Central Asia, 220 – ​ 21; EU on higher, 220 – ​21; schools and, 314 EEAS. See European External Action Service Egypt, 306, 403 EIA. See Energy Information Administration, U.S. EIDHR. See European Initiative for Democracy and Human Rights Embassies, 212 Energy: alternatives of, 215; Central Asia and, 332 – ​35, 343nn9 – ​12; coal and, 266 – ​67, 386 – ​87; cooperation and integration of, 66, 159, 171; development of water and, 83, 94n13, 117; Europe’s consumption of, 44, 46; EU’s diversification and partnerships associated with, 214 – ​17; India and, 44, 49, 266 – ​70; loans, 191; networks of, 370 – ​73; nuclear, 246, 252; policies, 211; tariffs, 195n2

Energy consumption: of Europe, 44; of India, 44, 49 “Energy hub,” 309 Energy Information Administration, U.S. (EIA), 42, 371 Energy Information Outlook, U.S., 44 Energy policy: of China, 165 – ​68, 171, 343n12, 386 – ​87; of Russia, 165 – ​68 Energy security, 132, 390n16; of China, 366 – ​70; quest for, 366 – ​67; as term, 370 Enron, 333 E&P. See Exploration and production Erasmus Mundus program, 221 Erdoğan, Recep Tayyip, 298, 300, 304 – ​6, 308, 314, 317, 405 Estonia, 228 EU. See European Union EU-­Central Asia Education Platform, 220 EU-­Kazakhstan Cooperation Council, 217 EurAsEC. See Eurasian Economic Community EurAsEC Customs Union, 148, 169 – ​70, 407; membership of, 52, 59 – ​60, 78, 133; Russia and, 59 – ​62, 85, 133 Eurasia: China and, 380 – ​82, 390n15; free market of, 132; integration of, 144, 152n20; power of, 132; region of, 7 – ​8, 101 – ​4. See also Central Eurasia Project Eurasian Development Bank, 145, 149, 152n23 Eurasian Economic Alliance (EAU), 133, 169 Eurasian Economic Committee Charter Treaty, 135 Eurasian Economic Community (EurAsEC), 5, 169, 325, 328, 337 – ​38, 344n18, 407; bailout fund of, 180; development and establishment of, 78, 133, 151nn6 – ​7, 151nn9 – ​10, 178, 198n40; growth of, 137; investments in, 133,

Index | 431

134; membership of, 52, 83, 151n12, 178, 198n40, 210, 326 – ​27 Eurasian Economic Union, 60, 62, 84, 133 – ​35, 150, 151nn9 – ​10 Eurasian Landbridge, 336 – ​37 Europe, 22; in Central Asia, 209 – ​13, 228 – ​ 30; energy consumption of, 44, 46; gas and, 46; NATO and, 212; OSCE and, 212; trade and, 223 – ​26; transportation strategies of, 213 – ​14; Turkey and, 302 – ​ 5. See also Central Europe European Bank for Reconstruction and Development (EBRD), 25, 77, 127n14 European Commission, 229 European Community, 151n6 European External Action Service (EEAS), 213 European Initiative for Democracy and Human Rights (EIDHR), 219 European Parliament, 222 European Union (EU), 45, 48, 407; Central Asia and, 209 – ​10, 217 – ​23, 403 – ​4; Central Europe and, 226; China and, 147, 210 – ​11; cooperation with, 213; energy diversification and partnerships of, 214 – ​17; foreign aid programs of, 218 – ​19; Germany and, 210; on higher education, 220 – ​21; initiatives of, 219; investments of, 214, 217; Italy and, 225, 229; membership of, 223 – ​30; PCAs with, 213, 217; political structure of, 212 – ​13; role of, 61; Russia and, 210 – ​ 11; on security, 221 – ​23; strategy of, 210, 217 – ​19; tools of, 219 – ​20; Turkey and, 303 – ​5, 319; U.S. and, 211, 217 Eurozone, 304 Exploration and production (E&P), 270 Export Import Bank of India, 271 Exports: Afghanistan and, 58; Central Asia and, 132 – ​33; China’s costs of, 21 – ​22; commodities for, 26 – ​27; composition of, 29 – ​32; costs of, 54 – ​ 55; of hydrocarbons, 31 – ​32, 37 – ​38;

interregional, 26; intra-­regional, 26; of Kazakhstan, 27 – ​32; of Kyrgyzstan, 29 – ​30; markets for, 25; oil, 24 – ​25; of Tajikistan, 29 – ​31; of Turkmenistan, 28 – ​32; Vietnam’s costs of, 21 – ​22 Extractive Industry Transparency Initiative, 216 FDI. See Foreign direct investment The Federally Administered Tribal Areas (FATA), 352 Federation of Indian Chambers of Commerce and Industry (FICCI), 273, 279 Fethullah Gülen schools, 314 FICCI. See Federation of Indian Chambers of Commerce and Industry Financial crisis, 352; of 2008 – ​2009, 36 – ​ 42; Asian, 247, 343n7 Finland, 211 Flor, Patricia, 213 FMF. See Foreign Military Financing Food: security, 219; trade of, 226 – ​27 Foreign aid: EU’s programs for, 218 – ​19; Japan and, 244, 260; Korea and, 244, 260; from SCO, 112; U.S., 117, 121 – ​23 Foreign direct investment (FDI): Central Asia and, 259; China’s, 140 – ​42, 143; Japan and, 241 – ​42, 258 – ​59; in Kazakhstan, 140 – ​41, 226; Korea and, 241 – ​42, 259; in Kyrgyzstan, 140 – ​41; SCO and, 140 – ​41; in Turkmenistan, 140 – ​41; in Uzbekistan, 140 – ​41 Foreign Military Financing (FMF), 105 Foreign policy: bilateralism as, 82 – ​83; of Central Asia, 15, 75 – ​93; of China, 14 – ​15; cultural sovereignty as goal of, 84 – ​86; external actors’ narratives in, 86 – ​91; international integration and, 77; isolationism as, 79, 90; of Kazakhstan, 76 – ​79, 84 – ​86, 89, 92 – ​93; of Kyrgyzstan, 76 – ​79, 84 – ​85, 90 – ​92; multilateralism as, 82 – ​83; regionalism and, 76, 84; of Russia, 131, 146, 193 – ​94;

432 | Index

Foreign policy (continued ) of Tajikistan, 76 – ​79, 85, 90 – ​92; as tool for political legitimacy, 89 – ​92; of Turkey, 296 – ​98, 305 – ​7, 315 – ​19, 319n3, 322n41; of Turkmenistan, 76 – ​79, 84 – ​ 85, 90 – ​92, 107; unity and, 76; of U.S., 80, 92, 102 – ​4; of Uzbekistan, 76 – ​79, 84 – ​86, 89, 92 – ​93. See also “Multi-­ vector” strategy Foster, John, 390n16 “Fracking.” See Hydraulic fracturing France, 229; Afghanistan and, 221, 232n37; agreements of, 213; embassies of, 212; Kazakhstan and, 225 Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992 (FREEDOM Support Act), 122 Free trade agreement (FTA): bilateral, 52 – ​53, 120; dispute settlement and enforcement of, 53. See also CIS FTA; specific trade agreement Free trade areas (FTAs), 274 FTA. See Free trade agreement FTAs. See Free trade areas Fukushima nuclear disaster, 246, 252 Gaffney, Cline and Associates, 42 – ​43, 371 – ​72 Gaidar, Egor, 175 – ​76 GAIL. See Gas Authority of India Game of Go. See Wéiqí Garanina, Olga, 148 – ​49 Gas: Azerbaijan and, 44, 45, 48, 268, 373 – ​ 74; consumption of, 44; Europe and, 46; extraction of, 371 – ​72; Kazakhstan and, 42 – ​51; Kyrgyzstan and, 42 – ​51; price of, 37 – ​38; reserves, 42 – ​43, 373; Sakhalin’s reserves of, 344n13; sales to Russia, 37; Tajikistan and, 42 – ​51; Turkmenistan and, 8, 13 – ​14, 23 – ​25, 37 – ​38, 42 – ​51, 61; Uzbekistan and,

42 – ​51; wars, 215. See also Hydro­ carbons; Shale gas Gas Authority of India (GAIL), 270 Gas pipeline framework agreement (GPFA), 269 Gas pipelines, 70, 171, 350, 355 – ​56; benefits and prospects of, 48 – ​51; China and, 40, 45 – ​49, 62, 70, 109, 166, 368 – ​70; Iran and, 40, 48; Kazakhstan and, 45 – ​49; Kyrgyzstan and, 45 – ​49, 62; Russia and, 45 – ​49, 179, 199n47, 203n91; Tajikistan and, 45 – ​49; transportation through, 54 – ​55; Turkmenistan and, 45 – ​49, 62, 166, 202n74, 216; Uzbekistan and, 45 – ​49. See also specific gas pipelines Gaza, 14 Gazprom, 46 – ​47, 179, 202n74 GCA. See Greater Central Asian region GCC. See Gulf Cooperation Council GDP. See Gross Domestic Product Generalized System of Preferences, 213 General Motors, 247, 345n21 Geneva accord (2013), 377 Georgia, 179 – ​80, 187, 200n49, 345n23 Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova (GUUAM group), 327, 330, 342n5, 343n8 Georgia – ​Ukraine – ​EU gas pipeline, 72n23 Germany: Afghanistan and, 221; embassies of, 212; EU and, 210; Kazakhstan and, 224 – ​25; military bases of, 223; unification of, 209; during World War II, 7 Ghani, Ashraf, 104, 283 GNI. See Russian Gross National Income Gold, 29, 41 GPFA. See Gas pipeline framework agreement Great Britain, 229; embassies of, 212; India and, 7; Russia and, 61. See also United Kingdom

Index | 433

Greater Central Asian region (GCA), 265, 271 – ​72, 276, 291 “The Great Game,” 7, 21, 75, 86, 101, 262, 340, 366, 376 “Great Wall syndrome,” 381 Greece, 304, 379. See also Turkey – ​ Greece – ​Italy Interconnector gas pipeline Gross Domestic Product (GDP), 415; external debt and, 35; fixed balances as percentage of, 33; of Kazakhstan, 23 – ​ 25, 38, 64; of Kyrgyzstan, 23 – ​25, 38, 64; of Tajikistan, 23 – ​25, 70; of Turkmenistan, 23 – ​25, 64; of Uzbekistan, 23 – ​25 Gulf Cooperation Council (GCC), 274 Gulf countries, 216 GUUAM group. See Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova Hamas, 317 Haq, Abdul, 358 “Heart of Asia,” 279, 283 Hezbollah, 14, 317 Hitler, Adolf, 7 Hizb-­ut-­Tahrir. See Islamic Party of Liberation Hu Angang, 152n13 Hu Jintao, 140, 381 Human Development Index, 63 – ​64 Human interests, 158 Human rights: promotion of, 121 – ​23; standards for, 122 Human Rights Dialogue, 219 Human security, 209 Human trafficking, 222 Huoerguosi International Economic Cooperation Center, 171 Hydraulic fracturing (“fracking”), 415 – ​16 Hydrocarbons, 367 – ​70, 397 – ​98, 406; China and, 13 – ​14, 21 – ​22, 39, 49, 62 – ​ 63, 136, 152n14; dependency on, 28; exports of, 31 – ​32, 37 – ​38; Kazakhstan

and, 6, 9, 23, 38, 61; Kyrgyzstan and, 24, 38; Saudi Arabia and, 8; SCO and, 60; Tajikistan and, 24, 38 Hydropower: Kyrgyzstan and, 57 – ​58; plants and projects, 57 – ​58, 62, 184, 187; Tajikistan and, 30 – ​31, 57 – ​58 Hyperinflation, 23 “Hyper-­sovereign” approach, 382 IBSA. See India-­Brazil, South Africa IEA. See International Energy Agency IGA. See Inter-­governmental agreement IIS. See Iran-­Iraq-­Syria Imports, 25 – ​26 IMU. See Islamic Movement of Uzbekistan Independence, 163 – ​64 India, 405 – ​6, 413; Afghanistan and, 265 – ​ 66, 269 – ​70, 278 – ​86; banks of, 272 – ​73; Central Asia and, 274 – ​78, 287 – ​89; China and, 263 – ​64, 268 – ​69; “Connect Central Asia” policy of, 286 – ​88; economy of, 120, 263 – ​66, 288 – ​89; energy and, 44, 49, 266 – ​70; Great Britain and, 7; INSTC and, 274 – ​75, 277 – ​78; investments of, 272 – ​73; Kazakhstan and, 267 – ​68, 273; “Look East” policy of, 265; Mughal Empire and, 88; NSR and, 279 – ​81, 289; objectives of, 11 – ​12; Pakistan and, 263, 265 – ​66, 269 – ​70, 279 – ​81; role of, 6, 14 – ​15, 262 – ​63, 292n1; Russia and, 263 – ​64; SAARC and, 266, 277 – ​78; SCO and, 263, 277, 289; security and, 263 – ​66; trade with, 27, 270 – ​72, 279 – ​81, 288 – ​89, 290, 291, 292; transportation and, 274 – ​77; Uzbekistan and, 270, 273 India-­Afghanistan agreement (2011), 278 India-­Brazil, South Africa (IBSA), 274 India-­Central Asia Dialogue, 286 – ​87 India-­China war (1962), 271 Indian EXIM Bank, 272

434 | Index

Inflation, 66; in Central Asia, 33 – ​35; in Kazakhstan, 23, 34; in Kyrgyzstan, 23, 34; in Tajikistan, 23, 34; in Turkmenistan, 23, 34; in Uzbekistan, 23, 34. See also Hyperinflation The Influence of Sea Power upon History (Mahan), 7 Infrastructure: development of, 66; medium, 225; projects, 57 – ​58, 62, 184 INOGATE. See Interstate Oil and Gas Transportation to Europe project INSTC. See International North South Transport Corridor Institute of Russian Energy Strategy, 146 – ​47 Instrument for Stability, 219 Integration, 77; of CIS, 155, 169; of Customs Union of Russia, Belarus, and Kazakhstan, 133; economic and political, 399 – ​400; energy cooperation and, 66, 159, 171; of Eurasia, 144, 152n20; protective, 78; regional, 23, 52 – ​63, 326 – ​30, 339 – ​42, 342nn3 – ​5, 343n6; Russia’s model of, 168 – ​70; of transportation, 66; water, 66 Inter-­governmental agreement (IGA), 269 International Energy Agency (IEA), 334, 372, 387 International Monetary Fund, 77, 86, 127n14, 242, 415 International North South Transport Corridor (INSTC), 274 – ​75, 277 – ​78 International Security Assistance Force (ISAF), 108, 125, 210 International Strategic Studies, 144 International Technical and Economic Cooperation (ITEC), 273 Interstate Oil and Gas Transportation to Europe project (INOGATE), 214 Investments, 119; of China, 55 – ​56, 164, 402; of EU, 214, 217; in EurAsEC, 133,

134; of India, 272 – ​73; of Korea, 28; of Russia, 133, 134 IPI. See Iran – ​Pakistan – ​India Iran, 43, 322n41, 405, 413 – ​14, 418n20; agreements with, 55; gas pipelines and, 40, 48; nuclear program of, 110; pipeline, 70; role of, 6, 14; Tajikistan and, 87, 90; U.S. and, 103, 182 Iran – ​Iraq – ​Syria (IIS), 379 Iran – ​Pakistan – ​India (IPI), 72n29, 266, 343n10, 376 Iraq: U.S. and, 178 – ​79, 199n41, 402 – ​3; wars of, 12. See also Iran – ​Iraq – ​Syria ISAF. See International Security Assistance Force Islamic Development Bank, 77, 87, 127n14 Islamic fundamentalism: in Central Asia, 10 – ​11; in Kazakhstan, 10 – ​11, 50 – ​51; in Kyrgyzstan, 5 – ​6, 10 – ​11, 50, 65, 173, 195n2, 350 – ​51; militant, 3 – ​6, 8, 51; as nonstate group, 4; political, 317; Russia and, 61; in Tajikistan, 10 – ​11, 197n24; in Turkmenistan, 10 – ​11; in Uzbekistan, 5 – ​6, 10 – ​11, 58 – ​59; in Xinjiang Province, 14, 60, 159, 162. See also Muslim Islamic Movement of Uzbekistan (IMU), 83, 136, 177 – ​78, 190, 197n32, 198nn33 – ​ 35, 198nn38 – ​39, 353 Islamic Party of Liberation (Hizb-­ut-­ Tahrir), 353 Israel, 14, 245 Italy: EU and, 225, 229; Kazakhstan and, 225. See also Turkey – ​Greece – ​Italy Interconnector gas pipeline ITEC. See International Technical and Economic Cooperation ITGI pipeline, 72n23 Ivanov, Sergei, 199n32 JaK. See Jund al-­Khilafah Japan, 8, 197n32, 198n33, 283, 404, 410; China and, 249 – ​50; defeat of, 7; economy of, 237 – ​43, 247 – ​48; FDI of,

Index | 435

241 – ​42, 258 – ​59; foreign aid and, 244, 260; future of, 252 – ​55; geography, transportation and, 248 – ​49; Kazakhstan and, 237; nationals of, 243 – ​44, 260; overview of, 251 – ​52; resource diplomacy of, 244 – ​47; role of, 88; trade and, 238 – ​47, 256, 257, 258 Japan Oil, Gas and Metals National Corporation (JOGMEC), 252 JCMB. See Joint Coordination and Monitoring Board Jensen Associates, 50 JOGMEC. See Japan Oil, Gas and Metals National Corporation Joint Coordination and Monitoring Board (JCMB), 283 Joint Declaration of SCO Secretariat, 355 “Joint EU Council and Commission Implementation Report of the EU Strategy for Central Asia,” 222 Journal of Energy Security, 390n16 Jumaev, Murat, 146 Jund al-­Khilafah (JaK), 51, 351 Kabul Conference (2010), 119, 129n45 Kambarata Dam, 57 – ​58, 184 Kaminski, Bartlomiej, 30 Kara-­Suu bazaar, 344n16 Karimov, Islam, 10 – ​11, 80, 124, 175 – ​76, 184, 193, 199n44, 253, 314 Karshi-­Khanabad base (Uzbekistan), 80, 105 Karzai, Hamid, 49, 104, 119, 418n15 Kashagan project, 62 Kazakh-­British University, 221 Kazakh-­German University, 221 Kazakhstan, 405; Afghanistan and, 107; as autonomous and independent state, 3 – ​6, 9 – ​16; budget of, 41 – ​42; Central Bank of, 38; China and, 62, 166 – ​67, 171; currency of, 38 – ​39; economic development of, 9 – ​10, 20 – ​35, 64 – ​67, 67 – ​68; ethnic divisions within, 5 – ​6,

65; exports of, 27 – ​32; FDI in, 140 – ​41, 226; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 76 – ​79, 84 – ​86, 89, 92 – ​93; France and, 225; gas and, 42 – ​51; gas pipelines and, 45 – ​49; GDP of, 23 – ​25, 38, 64; Germany and, 224 – ​25; governance and social policies of, 63 – ​67; hydrocarbons and, 6, 9, 23, 38, 61; India and, 267 – ​68, 273; Industrial and Innovative Development Program of, 28; industrial performance of, 25 – ​32; inflation in, 23, 34; instability of, 250 – ​51; Islamic fundamentalism, separatism and unrest in, 10 – ​11, 50 – ​51; Italy and, 225; Japan and, 237; Korea and, 237, 243 – ​44, 247, 260; leaders of, 124; macroeconomic policies of, 33 – ​35; migrant workers and, 37; “multi-­vector” strategy of, 45, 81 – ​84, 93n5; MVA per capita of, 72n33; NDN and, 106 – ​7; oil reserves of, 8 – ​9, 23, 43 – ​44, 62, 371 – ​72; opium and, 114; PCAs with, 213; Poland and, 212; post-­crisis recovery of, 39 – ​42; regime change in, 192 – ​93; Russia and, 81 – ​82, 172n1, 174, 188 – ​89, 203n91, 203n102; trade and, 25 – ​32, 52 – ​63, 140, 224 – ​26; transportation in, 54 – ​56; uranium and, 237, 240, 246, 253 – ​54, 260n2; Uzbekistan and, 5; Zhanaozen in, 51, 124, 380. See also Customs Union of Russia, Belarus, and Kazakhstan; EU-­Kazakhstan Cooperation Council; Nazarbaev, Nursultan Kazakhstan Institute for Strategic Studies (KAZISS), 144 – ​45, 149 Kazakhstan – ​Kyrgyzstan – ​Tajikistan (KKT), 106 Kazakhstan-­Uzbekistan strategic partnership treaty (2013), 93 KAZISS. See Kazakhstan Institute for Strategic Studies KazMunaiGas (KMG), 51, 268

436 | Index

Kerr, David, 380 – ​82 “The Key to Success in Afghanistan: A Modern Silk Road Strategy,” 129n5 Khalilzad, Zalmay, 285 Kissinger, Henry, 286 KKT. See Kazakhstan – ​Kyrgyzstan – ​ Tajikistan KMG. See KazMunaiGas Koizumi, Junichiro, 246 Korea, 26, 88, 125, 260n1, 404; China and, 249 – ​50; economy of, 237 – ​43, 247 – ​48; FDI of, 241 – ​42, 259; foreign aid and, 244, 260; future of, 254 – ​55; geography, transportation and, 249; investments of, 28; Kazakhstan and, 237, 243 – ​44, 247, 260; nationals of, 243 – ​44, 260; overview of, 251 – ​52; resource diplomacy of, 246 – ​47; trade and, 238 – ​47, 257, 258; Uzbekistan and, 247. See also North Korea Korean Air Cargo, 246 Korpedeke – ​Kurt – ​Kui gas pipeline, 343n9, 372 Kozyrev, Andrei, 175 KSOR rapid reaction force, 108 Kubis, Jan, 213 Kuchins, Andrew C., 129n5 Kukeeva, Fatima, 189 Kurdistan Worker Party (PKK), 302 Kurtov, Azhdar, 144 Kyrgyzstan: agriculture in, 117; budget of, 41 – ​42; China and, 62, 344n15; currency of, 39; as democratic and independent state, 3 – ​6, 9 – ​16, 122; economic development of, 9 – ​10, 20 – ​35, 41, 64 – ​67, 69; elections in, 41; ethnic divisions within, 58 – ​59; exports of, 29 – ​30; FDI in, 140 – ​41; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 76 – ​79, 84 – ​85, 90 – ​92; gas, oil, and, 42 – ​51; gas pipelines and, 45 – ​49, 62; GDP of, 23 – ​25, 38, 64; governance and social policies of,

63 – ​67; hydrocarbons and, 24, 38; hydropower and, 57 – ​58; industrial performance of, 25 – ​32; inflation in, 23, 34; Islamic fundamentalism, separatism, and unrest in, 5 – ​6, 10 – ​11, 50, 65, 173, 195n2, 350 – ​51; macroeconomic policies of, 33 – ​35; migrant workers and, 25, 37, 71n9, 195n6, 199n43; minorities in, 10; “multi-­ vector” strategy of, 81 – ​84; PCAs with, 213; post-­crisis recovery of, 39 – ​42; “resources-­for-­investments” deal and, 55 – ​56; Russia and, 60 – ​61, 81, 173 – ​74, 177 – ​78, 182, 185, 195n2, 195n6, 197n32, 198nn33 – ​35; second “revolution” of, 90; trade and, 25 – ​32, 52 – ​63, 140, 224; transportation in, 54 – ​56; U.S. and, 6, 179 – ​81, 185 – ​86, 195n2, 199n42, 201nn60 – ​61; water and, 83 – ​84, 94n13, 117. See also Manas Latvia, 228 Laumulin, Murat, 145 Lavrov, Sergei, 111, 116 Lebanon, 14, 55 Li Peng, 378 Liquefied natural gas (LNG), 50, 215 – ​16, 266 – ​67, 334 – ​35, 387 Lisbon Treaty (2007), 213 Lithuania, 228 LNG. See Liquefied natural gas Lo, Bobo, 177 Loans: energy, 191; private-­bank, 34; short-­term, 34 “Look East” policy, 265 Lukashenko, Aleksandr, 60, 182 Mackinder, Harold, 7 Mahan, A. T., 7 Majedi, Ali, 375 Manas: facility in, 78, 105 – ​6, 331; institutionalized, 85, 94n16 Manufacturing value-­added (MVA), 32;

Index | 437

per capita of Kazakhstan, 72n33; per capita of Turkmenistan, 72n33 “Marching Westwards,” 113 Medvedev, Dmitry, 155, 200n50, 417. See also Putin-­Medvedev combination period Menderes, Adnan, 299 MERCOSUR. See Southern Common Market MFN. See Most-­favored-­nation MGIMO. See Moscow Institute of International Relations Middle East, 245, 351 – ​52 Migrant workers: Kazakhstan and, 37; Kyrgyzstan and, 25, 37, 71n9, 195n6, 199n43; Russia and, 25, 40, 71n9, 195n6, 199n43; Tajikistan and, 25, 37, 71n9, 106, 195n6; Uzbekistan and, 25, 71n9, 195n6 Military, 6; aid, 105 – ​6, 122 – ​23, 196n23, 330; balance, 13, 15, 103, 125, 190; capabilities, 4, 190; equipment, 196n23; operations, 182, 199nn41 – ​42; organization, 169 – ​70, 186; of Russia, 196n23, 197n24 Military bases, 86, 102, 109, 163, 181, 185, 360; of Germany, 223; U.S., 61, 79 – ​81, 90, 105, 113, 179, 195n2, 199n42, 199n46, 367, 411 Mobil, 330 Modi, Narendra, 270 Moldova, 131, 135, 210. See also Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova Mongol Empire, 20 Mongolia, 238 – ​41, 243, 251, 253 Morel, Pierre, 213 Morsi, Mohamed, 307 Moscow. See Russia Moscow Institute of International Relations (MGIMO), 145 – ​46 Most-­favored-­nation (MFN), 281 MTS, 203n85, 384, 391n20

“Multi-­vector” strategy: of Central Asia, 22, 49, 92 – ​93, 101; of Kazakhstan, 45, 81 – ​84, 93n5; of Kyrgyzstan, 81 – ​84; of Tajikistan, 82 – ​84; of Turkmenistan, 79 – ​84; of Uzbekistan, 79 – ​84 Muslim, 60; factions within, 14; identities of, 87 – ​88 Muslim Brotherhood, 306 – ​7, 310 – ​12 MVA. See Manufacturing value-­added Myanmar, 15 Nabucco pipeline, 45 – ​48, 72n32, 215 – ​17, 333 – ​34 Nagorno-­Karabakh peace process, 314 Namangoni, Juma, 190 National Bank for Foreign Economic Activity of the Republic of Uzbekistan, 273 National Bank of Tajikistan, 272 – ​73 National Fund of the Republic of Kazakhstan (NFRK), 51 National Interest, 358 NATO. See North Atlantic Treaty Organization NATO’s New Strategic Concept, 361 Navoi Airport, 246 Nazarbaev, Nursultan: personal will of, 91; as president, 10 – ​11, 51, 81 – ​82, 124, 171, 175, 188 – ​89, 193, 332, 405 Nazi-­Soviet Pact of 1939, 7 NDN. See Northern Distribution Network, U.S. “Neo-­Ottomanism,” 320n9 Netherlands, 226 New Oriental Outlook, 142 New Silk Road (NSR), 48, 62, 160, 378; Afghanistan and, 283; Central Asia and, 118 – ​21, 123, 129n45; India and, 279 – ​81, 289 NFRK. See National Fund of the Republic of Kazakhstan Niyazov, Saparmurat, 10, 84, 124, 333, 343n6

438 | Index

North Atlantic Treaty Organization (NATO), 6; Afghanistan and, 6 – ​8, 15, 21, 92, 104, 112, 190 – ​91, 359, 418n15; Central Asia and, 104 – ​14; Europe and, 212; membership and partners of, 106, 191; peacekeeping and peacemaking missions of, 308; Turkey and, 296, 317. See also International Security Assistance Force; Partnership for Peace North Caspian Sea Production Sharing Agreement, 268 Northern Distribution Network, U.S. (NDN), 13, 21; Kazakhstan and, 106 – ​7; partners of, 102, 106 – ​7; Tajikistan and, 106; transportation and, 104 – ​5, 284 – ​85; Turkmenistan and, 106 – ​7; Uzbekistan and, 78, 80, 105; value of, 104 – ​5 Northern Route (Baku-­Novorossiysk), 373 North Korea, 79 NSR. See New Silk Road Nurcu movement, 314, 405 Obama, Barack, 13, 102, 104, 113, 283, 341, 401 – ​3, 411 – ​12 Official development assistance (ODA), 244, 260 OIC. See Organization of Islamic Cooperation Oil, 373; China and, 13 – ​14, 21 – ​22, 39; companies, 227; exporters of, 24 – ​25; Kyrgyzstan and, 42 – ​51; network of, 389; pipelines, 109, 166, 350; products, 27, 29; reserves of Kazakhstan, 8 – ​9, 23, 43 – ​44, 62, 371 – ​72; reserves of Turkmenistan, 13 – ​14, 23 – ​25, 43 – ​45; reserves of Uzbekistan, 24, 43 – ​44; Tajikistan and, 42 – ​51 Oil and Natural Gas Corporation (ONGC), 268 Olcott, Martha Brill, 391n19

ONGC. See Oil and Natural Gas Corporation ONGC Videsh Limited (OVL), 268 Open Society Foundation, 152n19 Opium: Afghanistan and, 114 – ​16, 190, 222 – ​23; Kazakhstan and, 114. See also Drugs Organization for Security and Cooperation in Europe (OSCE), 77, 103, 124, 212, 221 Organization of Islamic Cooperation (OIC), 77, 87 OSCE. See Organization for Security and Cooperation in Europe Otunbaeva, Roza, 90, 201n65, 351 OVL. See ONGC Videsh Limited Özal, Turgut, 299 – ​300, 321nn32 – ​33 Pakistan, 104, 405, 412; border of, 8, 58; China and, 109; India and, 263, 265 – ​ 66, 269 – ​70, 279 – ​81; nuclear weapons of, 14 – ​15; role of, 6, 11, 14 – ​15; U.S. and, 103, 110; water and, 117 Pakistan-­occupied Kashmir (PoK), 109 Paramonov, Vladimir, 142, 146, 148 Partnership and Cooperation Agreements (PCAs), 228; EU and, 213, 217; replacement of, 217 Partnership for Peace (PfP), 77, 107, 221 PCAs. See Partnership and Cooperation Agreements People’s Daily, 120 Petersen, A., 391n23 PetroKazakhstan, 268 Petrom, 227 Peyrouse, Sebastien, 391n19 PfP. See Partnership for Peace Philippines, 410 “Pivot to Asia,” 113, 125 PKK. See Kurdistan Worker Party PoK. See Pakistan-­occupied Kashmir Poland: Kazakhstan and, 212; trade with, 227

Index | 439

Poverty: decrease in, 266; income disparities and, 50, 65; programs, 218 Preferential trade agreements (PTAs), 274 Prikaspiisky natural gas pipeline, 199n47, 202n74, 216, 333 – ​34, 343n11 Primakov, Yevgeni, 264 PTAs. See Preferential trade agreements Public health, 63 Punj Lloyd, 273 Putin, Vladimir, 308, 341, 378, 403, 410, 417; on Eurasian Economic Union, 135, 151nn9 – ​10; “great power” strategy of, 155; policies of, 5, 12, 81, 101, 111 – ​12, 166, 168 – ​69, 178, 199n44; visits of, 60 – ​61, 147 Putin-­Medvedev combination period, 155 al-­Qaeda, 103 – ​4, 136, 348, 358 Qatar, 43 Qingdao, 275 Rahmon, Emomali, 10, 94n20, 124, 186, 287 Railways, 164, 191, 228, 325, 342n1; construction of, 55 – ​56, 164; system of, 55, 336 – ​37, 344n17 Rapid Reaction Collective Forces (RRCF), 196n23 RATS. See Regional Anti-­Terrorist Structure RECC. See Regional Economic Cooperation Conferences RECCA. See Regional Economic Cooperation in Central Asia Regional Anti-­Terrorist Structure (RATS), 83, 349 Regional Economic Cooperation Conferences (RECC), 266 Regional Economic Cooperation in Central Asia (RECCA), 289 Regional Energy Security, Efficiency and Trade (RESET), 117 Republic of Korea. See Korea

RESET. See Regional Energy Security, Efficiency and Trade RIC. See Russia-­India-­China Rice, Condoleezza, 331 – ​32 Rivers: dams and, 57 – ​58, 184; water and, 56 – ​59 Rogun Dam, 58, 184 Romania, 227 Roubini Global Economics, 371 – ​72 RRCF. See Rapid Reaction Collective Forces RusAl, 58 Russia, 410 – ​11, 417; during 1990s, 174 – ​77, 196nn22 – ​23, 197nn24 – ​25; during 2000s, 177 – ​78, 197n32, 198nn33 – ​35, 198nn38 – ​40; after September 11, 2001, 178 – ​81, 199nn41 – ​44, 199nn46 – ​47, 200nn48 – ​51, 201nn59 – ​61, 201nn64 – ​ 65; “Asia pivot” strategy of, 125; border issues of, 161; businesses of, 186, 203n85; Central Asia and economic interests of, 130 – ​32; China and, 191 – ​ 92, 383, 387 – ​88, 406 – ​7; CIS and, 131 – ​ 32, 175 – ​76, 196n23, 197n25; counternarcotic efforts in, 115 – ​16, 184; CSTO and, 173; economic interests and purposes of, 132 – ​35, 142 – ​50; economy of, 130 – ​32; emigration to, 196n22; energy policy of, 165 – ​68; ethnic, 176, 196n22, 203n86; EU and, 210 – ​11; EurAsEC Customs Union and, 59 – ​62, 85, 133; foreign policy of, 131, 146, 193 – ​94; gas pipelines and sales of, 37, 45 – ​49, 199, 203n91; Georgia and, 179 – ​80, 187, 200n49, 345n23; Great Britain and, 61; human interests of, 158; imperial, 7; India and, 263 – ​64; influence of, 6, 12 – ​13, 42, 131 – ​32, 154 – ​57, 172, 172n1, 173 – ​74, 195n2, 195n6; investments of, 133, 134; Islamic fundamentalism and, 61; Kazakhstan and, 81 – ​82, 172n1, 174, 188 – ​89, 203n91, 203n102; Kyrgyzstan and, 60 – ​61, 81, 173 – ​74, 177 – ​78, 182,

440 | Index

Russia (continued ) 185, 195n2, 195n6, 197n32, 198nn33 – ​35; leaders and policymakers of, 185 – ​ 88, 192; media of, 181, 201nn64 – ​65; migrant workers and, 25, 40, 71n9, 195n6, 199n43; on migration, 184; model of integration of, 168 – ​70; outlook for, 189, 193 – ​94; as outside major power, 12 – ​15; provinces of, 7; regional cooperation and stability, 162 – ​63; on security, 110 – ​11, 161, 183 – ​84, 201n69; Stabilization Fund of, 180; strategic interests of, 157 – ​58; Tajikistan and, 61, 81, 106; trade and, 176 – ​77, 191, 197n25; Turkey and, 307 – ​12; Uzbekistan and, 80, 93n5, 198nn34 – ​35, 201n69; victims of, 86 – ​87; views on, 183 – ​85, 201n69, 202n74. See also Caucasus; Customs Union of Russia, Belarus, and Kazakhstan; Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992 Russia-­India-­China (RIC), 264 Russian (language), 158, 187, 189, 211, 407 Russian Academy of Sciences Institute of World Economy and International Relations, 147 Russian Gross National Income (GNI), 131 Russian Institute of Contemporary Development, 131 Russian National Energy Security Foundation, 144 – ​45 Russo-­Ukrainian “gas wars,” 215 SAARC. See South Asian Association for Regional Cooperation Safarov, Saifullo, 146 SAFTA. See South Asian Free Trade Area SAIL. See Steel Authority of India Sakhalin gas reserves, 344n13 San gu shili. See “Three evils” Sariev, Temir, 201n65

Saudi Arabia: hydrocarbons and, 8; regime within, 14 Schengen Area, 209 SCO. See Shanghai Cooperation Organization SCO Astana summit, 360 Security: border, 77 – ​78; of Central Asia, 104 – ​14; China on, 108 – ​9, 159, 161; cooperation regarding, 138; EU on, 221 – ​23; food, 219; human, 209; India and, 263 – ​66; Russia on, 110 – ​11, 161, 183 – ​84, 201n69; SCO and, 107 – ​10, 112, 148; of Xinjiang Province, 130, 152n22, 159. See also Energy security Semenova, Olga, 199n42 Senate Foreign Relations, U.S., 123 Senkaku/Daioyu Islands, 250 September 11, 2001, 3, 80, 102, 357 SES. See Single Economic Space Shah Deniz, 215 – ​16 Shale gas, 400 – ​401, 415 – ​17; China and, 369, 372, 391n22; hydraulic fracturing and, 415 – ​16; market for, 413; U.S. and, 391n22, 398, 400, 409, 415 – ​17 Shanghai Convention on Combating Terrorism, Separatism and Extremism, 349 Shanghai Cooperation Organization (SCO), 5, 145, 156, 190, 381, 390n16; achievements of, 348 – ​50; Central Asia and, 107 – ​14, 136, 152n15; challenges to, 350 – ​54; China and, 357 – ​62; declaration of, 179 – ​80, 200nn49 – ​51; documents of, 356; efforts, framework, and objectives of, 16, 78, 148, 168, 170 – ​7 1, 178; FDI and, 140 – ​41; foreign aid from, 112; further development of, 354 – ​57; hydrocarbons and, 60; India and, 263, 277, 289; limitations of, 103; membership and observer status within, 11, 60, 110, 138, 328, 356; security and, 107 – ​10, 112, 148; significance of, 383 – ​86, 391nn18 – ​21; supporters

Index | 441

of, 361 – ​62; symbol of, 87; U.S. and, 357 – ​62 “Shanghai Five,” 108, 161 – ​62, 327 – ​28; process of, 347, 362n1; terrorism and, 348 – ​49 Shanghai Treaty, 178 Sharif, Nawaz, 270 Shevtsov, Yuri, 146 – ​47 Shias, 14 Shishlin, Vladimir, 196n23 SIDA. See Swedish International Development Cooperation Agency “Silk Road,” 20, 88, 349, 352 “Silk Road Economic Belt,” 114, 159 – ​60, 356 Silk Road Strategy Act (1999), 122 Simonov, Konstantin, 144 – ​45 Single Economic Space (SES), 150n5, 201n59 South Africa, 274 South Asia, 58, 87 – ​88 South Asian Association for Regional Cooperation (SAARC), 266, 277 – ​78, 289 South Asian Free Trade Area (SAFTA), 274 South Corridor, 215 – ​16 Southeast Asia, 88 Southern Common Market (MERCOSUR), 274 “Southern Shield of CIS,” 178 South Korea. See Korea South Ossetia, 179, 184 South Yolotan-­Osman gas field (Turkmenistan), 42 – ​43, 48, 62, 215, 269 Soviet Union (USSR): collapse of, 3, 12, 23, 101, 154 – ​56, 183, 347 – ​48; during World War II, 7. See also Russia Soyuz pipeline, 70 Special Program for the Economies of Central Asia (SPECA), 328 – ​29, 342n4 Spentex Industries, 273 Spykman, Nicholas, 7

Sri Lanka, 15 Stalin, Joseph, 7, 243 Starr, S. Frederick, 129n5 State Bank for Foreign Economic Affairs of Turkmenistan, 273 State Bank of India, 272 Statistical Review of World Energy, 43 Status of Forces Agreement, 103 – ​4 Steel Authority of India (SAIL), 278 Strategic Partnership Agreement (Afghanistan and U.S.), 103 Sukhbaatar Batbold, 253 Sunnis, 14, 312 Surikov, Aleksandr, 200n48 Swedish International Development Cooperation Agency (SIDA), 212 Syr Darya, 56 – ​57 Syria, 13, 55, 182, 306, 308 – ​10, 379, 403 Syrian National Council, 309 Syroezhkin, Konstantin, 144, 149 TACIS. See Technical Assistance to the Commonwealth of Independent States Tajik-­Afghan border, 176 Tajikistan, 292n1; agriculture in, 117; budget of, 41 – ​42; civil war in, 23, 59, 83, 177; currency of, 39; economic development of, 9 – ​10, 20 – ​35, 64 – ​67; ethnic divisions within, 5 – ​6, 8, 58 – ​59; exports of, 29 – ​31; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 76 – ​79, 85, 90 – ​92; gas, oil and, 42 – ​ 51; gas pipelines and, 45 – ​49; GDP of, 23 – ​25, 70; governance and social policies of, 63 – ​67; hydrocarbons and, 24, 38; hydropower and, 30 – ​31, 57 – ​58; as independent state, 3 – ​6, 9 – ​16; industrial performance of, 25 – ​32; inflation in, 23, 34; Iran and, 87, 90; Islamic fundamentalism and separatism in, 10 – ​11, 197n24; macroeconomic policies of, 33 – ​35; migrant workers and, 25, 37, 71n9, 106, 195n6; “multi-­vector”

442 | Index

Tajikistan (continued ) strategy of, 82 – ​84; NDN and, 106; post-­crisis recovery of, 39 – ​42; Russia and, 61, 81, 106; trade and, 25 – ​32, 52 – ​63, 224; transportation in, 54 – ​56; U.S. and, 6; water and, 83, 94n13, 117. See also Rahmon, Emomali Taliban, 348, 358; in Afghanistan, 102, 108 – ​9, 190; powers of, 108 – ​9 TAPI. See Turkmenistan – ​Afghan – ​ Pakistan – ​India pipeline Tariffs, 344n18; energy, 195n2; external, 150n4, 151n6; nontariff barriers, trade and, 53 – ​54; preferences on, 213; WTO and, 59 Technical Assistance to the Commonwealth of Independent States (TACIS), 218 Tehran-­New Delhi-­Kuala Lumpur-­ Beijing axis, 264 Telecom, 28, 142, 278 – ​79, 384, 402 Temir Sariev, Omurbek Babanov, 201n65 Tempus program, 221 Terrorism: emergence of, 177 – ​78, 197n32, 198nn33 – ​35, 198nn38 – ​39; international, 162, 348 – ​49; “Shanghai Five” and, 348 – ​49; war on, 87, 102 TGII. See Turkey-­Greece-­Italy Inter­ connector gas pipeline “Three evils” (san gu shili), 87 Tibet, 382, 385 TIFA. See Trade and Investment Framework Agreement TIP. See Turkestani Islamic Party Tokyo conference (July 2012), 283 Tourism, 41 TRACECA. See Transport Corridor Europe-­Caucasus-­Asia project Trade: with Afghanistan, 26 – ​27, 58; with Central Asia, 132 – ​33, 134, 138 – ​40; with China, 138 – ​40, 142, 253 – ​54; CIS, 137, 138, 197n25; cross-­border, 132; customs and, 53 – ​54; Europe

and, 223 – ​26; expansion of, 66; of food, 226 – ​27; with India, 27, 270 – ​72, 279 – ​81, 288 – ​89, 290, 291, 292; interregional, 26; intra-­regional, 21; Japan and, 238 – ​47, 256, 257, 258; Kazakhstan and, 25 – ​32, 52 – ​63, 140, 224 – ​26; Korea and, 238 – ​47, 257, 258; Kyrgyzstan and, 25 – ​32, 52 – ​63, 140, 224; with Poland, 227; policies, 66; regional, 52 – ​54, 59 – ​63; Russia and, 176 – ​77, 191, 197n25; Tajikistan and, 25 – ​32, 52 – ​63, 224; tariffs and nontariff barriers to, 53 – ​54; transportation and, 23, 54 – ​56; Turkey and, 300 – ​301; Turkmenistan and, 25 – ​32, 52 – ​63, 140, 224; United Kingdom and, 225 – ​26; Uzbekistan and, 25 – ​32, 52 – ​63, 224. See also Free trade agreement; Free trade areas; South Asian Free Trade Area; World Trade Organization Trade and Investment Framework Agreement (TIFA), 119 Trafficking: drugs, 157, 190, 218 – ​19, 221 – ​ 23, 349, 355 – ​57; human, 222; weapons, 222 Trans-­Adriatic pipeline, 72n23, 216 Transparency International, 63 Transportation: CAREC and, 56, 77, 278, 329, 342nn3 – ​4; cooperation and integration of, 66; corridors, 56, 77, 278, 329, 342nn3 – ​4; costs, 21 – ​22; Europe’s strategies for, 213 – ​14; facilities for land, 107; through gas pipelines, 54 – ​55; India and, 274 – ​77; Japan and, 248 – ​49; in Kazakhstan, 54 – ​56; Korea and, 249; in Kyrgyzstan, 54 – ​56; NDN and, 104 – ​5, 284 – ​85; networks for, 214; roads as, 56; in Tajikistan, 54 – ​56; throughout Central Asia, 325, 342n2; trade and, 23, 54 – ​56; transcontinental, 147; through Turkey, 45, 48; in Turkmenistan, 54 – ​56; in Uzbekistan, 54 – ​56. See also Railways

Index | 443

Transport Corridor Europe-­Caucasus-­ Asia project (TRACECA), 214, 276, 345n22 Truman Doctrine, 301 Tszuen, Juan, 62 Tulip Revolution, 173, 195n2, 393n23 Tumbarello, Patrizia, 338 Turan-­Alem Bank of Kazakhstan, 272 Turkestani Islamic Party (TIP), 352, 358 Turkey, 405, 412; activism of, 299 – ​301; Azerbaijan and, 313 – ​14; Central Asia and, 312 – ​15; as democracy, 303, 306; economy of, 300 – ​301; emergence of, 298 – ​99, 320n5, 320n9; as “energy hub,” 309; EU and, 303 – ​5, 319; Europe and, 302 – ​5; foreign policy of, 296 – ​98, 305 – ​7, 315 – ​19, 319n3, 322n41; influence of, 176; NATO and, 296, 317; role of, 6, 28, 85; Russia and, 307 – ​12; trade and, 300 – ​301; transportation through, 45, 48; uranium and, 322n41; U.S. and, 301 – ​2, 318; Uzbekistan and, 313 – ​14; West and, 301 – ​2 Turkey – ​Greece – ​Italy Interconnector gas pipeline (TGII), 215 “Turkic world,” 297 Turkish Cooperation and Development Agency, 313 “Turkish model,” 297 Turkmenistan, 343n6, 343n11; agriculture in, 9; allies of, 79; budget of, 41 – ​42; China and, 166 – ​67, 184, 186; currency of, 39; economic development of, 9 – ​10, 20 – ​35, 64 – ​67; ethnic divisions within, 5 – ​6; exports of, 28 – ​32; FDI in, 140 – ​41; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 76 – ​79, 84 – ​85, 90 – ​92, 107; gas and, 8, 13 – ​14, 23 – ​25, 37 – ​38, 42 – ​51, 61; gas pipelines and, 45 – ​49, 62, 166, 202n74, 216; GDP of, 23 – ​25, 64; governance and social policies of, 63 – ​67; as independent state, 3 – ​6, 9 – ​16; industrial

performance of, 25 – ​32; inflation in, 23, 34; Islamic fundamentalism, separatism and unrest in, 10 – ​11; macroeconomic policies of, 33 – ​35; “multi-­ vector” strategy of, 79 – ​84; MVA per capita of, 72n33; NDN and, 106 – ​7; oil reserves of, 13 – ​14, 23 – ​25, 43 – ​45; post-­ crisis recovery of, 39 – ​42; trade and, 25 – ​32, 52 – ​63, 140, 224; transportation in, 54 – ​56. See also Berdimuhamedov, Gurbanguly; Niyazov, Saparmurat Turkmenistan – ​Afghan – ​Pakistan – ​ India pipeline (TAPI), 11, 48 – ​49, 121, 202n74, 266, 369, 371 – ​72, 374 – ​76, 390n9, 406, 418n6. See also New Silk Road Turkmenistan – ​China natural gas pipeline, 62, 166 Ukraine, 3, 7, 72n23, 112, 131, 135, 175, 179, 210, 215, 230. See also Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova UN. See United Nations UNDCP. See United Nations International Drug Control Program UNDP. See United Nations Development Program UNESCAP. See United Nations Economic and Social Commission for Asia and the Pacific UNG. See Uzbekneftegaz UN General Assembly, 306 343n6 Union of Five, 327 United Arab Emirates, 79 United Kingdom: agreements of, 213; trade and, 225 – ​26 United Nations (UN), 76, 90 United Nations Development Program (UNDP), 63 – ​64, 127n14 United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), 276, 289

444 | Index

United Nations International Drug Control Program (UNDCP), 115 United Nations Office on Drugs and Crime (UNODC), 115 United States (U.S.), 399; Afghanistan and, 3, 12 – ​15, 21, 61, 102 – ​4, 111 – ​13, 122 – ​23, 163, 190 – ​91, 199n42, 284 – ​86, 359; Central Asia and, 4 – ​6, 101 – ​26, 330 – ​32, 341, 367; economic engagement of, 118 – ​21, 129n45; EU and, 211, 217; FMF waiver of, 105; foreign aid of, 117, 121 – ​23; foreign policy of, 80, 92, 102 – ​4; global leadership of, 4 – ​5; influence of, 411 – ​12; Iran and, 103, 182; Iraq and, 178 – ​79, 199n41, 402 – ​3; Kyrgyzstan and, 6, 179 – ​81, 185 – ​86, 195n2, 199n42, 201nn60 – ​61; military bases of, 61, 80, 179, 195n2, 199n42; as outside major power, 12 – ​15; Pakistan and, 103, 110; “Pivot to Asia” strategy of, 113; post-­2014 strategy of, 121; role of, 61; SCO and, 357 – ​62; shale gas and, 391n22, 398, 400, 409, 415 – ​17; Tajikistan and, 6; Turkey and, 301 – ​2, 318; Uzbekistan and, 199n46, 327, 342n5; war on terror declared by, 87, 102. See also Washington UN Millennium Development Goals, 218, 220 Unocal, 330, 333 UNODC. See United Nations Office on Drugs and Crime UN Secretariat, 355 UN Security Council, 322n41 Uranium: Kazakhstan and, 237, 240, 246, 253 – ​54, 260n2; Turkey and, 322n41 U.S. See United States USAID. See Agency for International Development, U.S. Ushakov, 71n9 USSR. See Soviet Union U.S.-­Uzbekistan Strategic Partnership Document, 105

Uulu, Tursunbai Baakir, 198n33 UzAvtosanoat, 247 Uzbekistan, 342n5; agriculture in, 9, 117; budget of, 41 – ​42; China and, 62, 167; CSTO and, 107 – ​8, 111, 170, 186, 196n23; currency of, 39; economic development of, 9 – ​10, 20 – ​35, 64 – ​67, 69; exports of, 31 – ​32, 38; FDI in, 140 – ​41; financial crisis of 2008 – ​2009 and, 36 – ​42; foreign policy of, 76 – ​79, 84 – ​86, 89, 92 – ​93; gas and, 42 – ​51; gas pipelines and, 45 – ​49; GDP of, 23 – ​25; governance and social policies of, 63 – ​ 67; as independent state, 3 – ​6, 9 – ​16; India and, 270, 273; Industrial Modernization and Infrastructure Development Program of, 66; industrial performance of, 25 – ​32; inflation in, 23, 34; Islamic fundamentalism, separatism and ethnic divisions within, 5 – ​6, 10 – ​11, 58 – ​59; Japan and, 240; Kazakhstan and, 5; Korea and, 240, 247; leaders of, 124; macroeconomic policies of, 33 – ​35; migrant workers and, 25, 71n9, 195n6; “multi-­vector” strategy of, 79 – ​84; NDN and, 78, 80, 105; oil reserves of, 24, 43 – ​44; PCAs with, 213; post-­crisis recovery of, 39 – ​42; regime change in, 192 – ​93; Russia and, 80, 93n5, 198nn34 – ​35, 201n69; trade and, 25 – ​32, 52 – ​63, 224; transportation in, 54 – ​56; Turkey and, 313 – ​14; U.S. and, 199n46, 327, 342n5; water and, 83 – ​84, 94n13, 117. See also Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova; Karimov, Islam Uzbekistan National Statistics, 72n13 Uzbekneftegaz (UNG), 270 UzDaewoo, 31 Vienna group, 322n41 Vietnam, 21 – ​22, 54, 125, 410 Vinokurov, Evgeny, 145, 149, 152n23

Index | 445

Wang Jisi, 113 Wang Lijiu, 147 Wang Yong, 152n13 Warsaw Pact, 3 Washington. See United States Washington-­New Delhi-­Jakarta-­Hanoi-­ Tokyo axis, 264 Water: Afghanistan and, 117; cooperation and integration of, 66; development of energy and, 83, 94n13, 117; issues, 220, 353 – ​54; Kyrgyzstan and, 83 – ​84, 94n13, 117; Pakistan and, 117; rivers and, 56 – ​ 59; scarcity of, 116 – ​18; Tajikistan and, 83, 94n13, 117; Uzbekistan and, 83 – ​84, 94n13, 117 Water Governance in Central Asia Initiative, 220 Wéiqí (game of Go), 61 Wen Jiabao, 138 Western Europe-­Western China highway, 191 Westminster University, 221 White Stream. See Georgia – ​Ukraine – ​EU gas pipeline Wider Europe Initiative (2009), 212 Wimbush, Enders, 264

World Bank, 54, 63, 77, 86, 127n14 World Trade Organization (WTO), 151n6; accession of, 337 – ​39, 344n18; membership of, 52, 59, 66, 71n12, 344n19; tariffs and, 59 World War I, 7 World War II, 7, 250 WTO. See World Trade Organization Xi Jinping, 61 – ​62, 113 – ​14, 142, 159 – ​60, 191, 356 Xinjiang Province, 152n14, 191, 372, 401; attacks in, 6, 136, 317; goods production in, 62; Islamic fundamentalism in, 14, 60, 159, 162; railways through, 55; security of, 130, 152n22, 159 Yasukuni Shrine, 250 Yeltsin, Boris, 5, 169, 175 – ​76, 211, 340 Yemen, 403 Yergin, Daniel, 370 Yuldashev, Tahir, 190 Yu Lu, 387 Zhanaozen (Kazakhstan), 51, 124, 380 Zhang Guobao, 386