The opening-up of Central Asia in progress

Author : Donatien BERTAUD. Translated by : Uriel N’GBATONGO.

At the end of 2017, Shavkat Mirziyoyev, the successor of Karimov at the presidency of Uzbekistan, manifested his will to reconnect with the other states of Central Asia. Nevertheless, the integration of the latter within a union is still a distant objective. Gathering many factors such as the shift of the current state officials, infrastructural projects and the foreign desire of influence over the area, the Central Asia region might make the most of the situation and reconnect itself with the world.

Central Asia, which compound 5 former Soviet states, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan, has recently been the center of attention regarding many events such as the new silk road, the 2017 World exhibition in Astana, or even the peace negotiations Syria organized the latter. However, this region might deserve more attention. Indeed, actually, more than being the intersection between China and Europe, this region is full of natural resources (more particularly uranium and gas in Kazakhstan and natural gas in Turkmenistan for instance). Moreover, Central Asia might certainly be a new outlet for Chinese products even if, given the dimension of the market, it is in fact limited (only the 17 million Kazakhs and 5 million Turkmens have a consequent purchasing power).

The center of the « Great Game ».

Partie 1Beyond being one the world main raw materials supplier, Central Asia is an interesting region as the hub between China and Iran but also China and Europe (it is all the more true with the new chins silk road project). It is also noteworthy that this region is an important power stakes between China and Russia since the American retirement of their last military base in Kyrgyzstan in 2014. From an historical point of view, Russia has been a great influencer over the region. Today, it is still one of the main commercial partners of the area and one of the main donors for the purpose of many projects, in particular the renovation of the local army. However, China slowly managed to interfere in the region through numerous projects carried by the Asian Infrastructure investment Bank or directly financed by Chinese banks. Very often, these projects take part of the new silk road program (China being strongly dependent in terms of raw materials). Thus, many projects such as dry ports or pipelines were to be found.

The question is why two of the biggest countries in the world are longing for such an influence in this area? China is hoping to find new outlets and is willing to build a stable environment which could lead to the development of Xin Jiang. Russia wishes to preserve its influence on its « near abroad » in order to ensure the control over some of these potential competitors on the gas market. Such a statement echoes with the situation described in Rudyard Kipling’s book where two empires fight for the domination of a central region.

Picture of the officials during the 2017 summit of the Shanghai cooperation in Kazakhstan

Central Asia, a region which tries to have it both ways

It seems that the leaders of Central Asia have well perceived both of the Russian and Chinese ambitions. Thus, they are longing for making the most of what these two stakeholders have to offer. Very often it follows this pattern: Russians bring weapons while Chinese bring money. Hence, Central Asia officials are trying to get both a security cooperation with Russia and a business trade with China. However, the reality is not that simple. Indeed, Russia tends to look unfavorably on the emergent competition on the gas market (in particular with the construction of new pipelines between Turkmenistan, Uzbekistan, Kazakhstan and China). For Russia, it represents a competition to its own pipelines which no longer allows Moscow to block off the gas from Turkmenistan as it did in 2009 when the prices were falling (such a leeway allowed them to limit the influx of gas on the market, thus provoking the rise of the gas price and the pressure on the Turkmen government, strongly dependent on these gas export). The governments of Central Asia among which some exists since the collapse of the USSR are willing to enjoy the best of both world with China and Russia as I said before but also with Europe. Certain partnerships are established with the European Union in particular regarding the customs duties so as to show their good will to any foreign investors. To finish, even if the United States are no longer implants militarily speaking in the region, they remain a great commercial partner as big companies are still doing business in the region, such as Chevron still in activity in Kazakhstan.

Partie 3

Central Asia opening up : an opportunity for China

Through institutions such as the Asian Infrastructure Investment Bank, the New Development Bank of the Silk Road Fund, and thanks to many great Chines banks such as EXIM Bank, China invested colossal amounts of money for the development of the region. According to a study led by PWC for the United Nations, China is said to have invested roughly 35,5 billion dollars in Central Asia up until now. However, some people are still questioning the Chinese economic interest. The thing is, for China, lending money to Central Asian countries sounds like giving an impetus to the yuan’s internationalization. Moreover, most of the time, local projects are realized by Chinese companies as local companies do not possess yet the knowledge and the capacities to handle them. The employees on these great construction areas are also mainly Chinese (thus insuring the repatriation of some of the capital invested). To continue, these projects are also allowing China to find outlets for its concrete and steel. On the aftermath of the slowing down of its internal market and the global economic growth, China suffers from an excess capacity concerning its own industrial production.

If the profitability of these project is not assured, China will be paid in nature (that is to say with the resources the country desperately needs). Furthermore, China needs to insure the safety of its own commercial infrastructures (which gives a good reason for widening its military influence in the region)

From left to right: Russia, China, Belarus, Kazakhstan, India, Armenia, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan.

Central Asia, a region at the heart of many alliances

Central Asia is divided between many alliances (from the commercial ones such as the Shanghai Cooperation Organization or the Eurasian economic union, to the military ones such as the Collective Security Treaty Organization). However, without the influence of a foreign major power, this region never achieved to create by itself an international organization which could include only the Central Asian countries. The numerous alliances Central Asian states are involved in allow them to increase trade with their partners (Russia and China being the most important one). Yet, the new silk road project and those carried by Central Asian government aim at increasing the exchanges within Central Asia. Hence, the progressing opening up of the region may be artificial as it lies only on some regions which serve as transit zone to the outside. Concerning national infrastructures, they remain poorly developed and connections between each Central Asian country are still quite weak if they are not part of the one which are focused on China and Russia. Some difficulties are to be observe too concerning boarders given the various litigations between each state (which are authoritarian tendency oriented given the legacy of the Soviet era).

To continue, the jihadist issue as also a relevant problem which has to be taken into account. Indeed, certain areas have become areas of potential illegal trafficking. Thus, creating an instability in a region where extremism is a way to oppose the Russian influence over Central Asia. As a consequence, Central Asian countries remain poorly connected to each other and without a strong and influence free political vision, they might see their economy stagnate or even decline.

As such the opening-up of Central Asia has indeed begun but is far from being sufficient. We still need to consider if those projects will really be beneficial to the development of those countries or will only make a zone of transit out of those states.


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