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Friday 26 May 2017

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Uzbek President Shavkat Mirziyaev (file photo)

t looks like the new president of Uzbekistan, Shavkat Mirziyaev, is keeping at least one of his promises. Not long after independent Uzbekistan's founding president, Islam Karimov, died in September 2016, his successor said one of his priorities would be better relations with neighboring Central Asian states.

It looks like the new president of Uzbekistan, Shavkat Mirziyaev, is keeping at least one of his promises.

Not long after independent Uzbekistan's founding president, Islam Karimov, died in September 2016, his successor said one of his priorities would be better relations with neighboring Central Asian states.

Mirziyaev met with Turkmen President Gurbanguly Berdymukhammedov at the Turkmen Caspian resort area Awaza on May 19-20, and among the many agreements they reached was one on Turkmen electricity exports to Kazakhstan and to Kyrgyzstan via Uzbekistan's territory.

That doesn't sound like much, but it reverses a nearly 15-year trend of decoupling in Central Asia.

In the Soviet-era, a Central Asian unified grid was established, drawing on power sources such as oil in Kazakhstan and Uzbekistan, gas in Turkmenistan, hydropower from Kyrgyzstan and Tajikistan, and coal from all but Turkmenistan. All five then-Soviet republics were interconnected; so, for example, southern Kazakhstan received gas from Uzbekistan.

Energy Shortages

In 2003, "neutral" Turkmenistan withdrew from the grid. In 2009, Uzbekistan withdrew, causing severe power shortages in Kyrgyzstan and Tajikistan.

Some believe that this was Karimov's intention -- a response to Kyrgyzstan and Tajikistan very publicly forging ahead with massive hydropower plant projects on the upper reaches of rivers that flowed into Uzbekistan.

It was only one aspect of a process that saw the five countries sever many of the road, rail, and air links that had connected them for decades before independence, and devote significant funds to building up infrastructure that avoided neighbors' territories.

For the last several years, Turkmenistan has wanted to sell electricity to Tajikistan, the latter being habitually short of power in the winter due to a reliance on hydropower, and the former having gas-fired electrical power stations that operate throughout the year.

Berdymukhammedov and Tajik President Emomali Rahmon have agreed to such a deal, but that power would be most easily transferred using lines that cross some 200 kilometers of Uzbekistan's territory.

Uzbek President Karimov was reportedly unwilling to agree to that, so the Turkmen-Tajik deal never moved forward.

Tajikistan was not mentioned in reports about Berdymukhammedov and Mirziyaev's meeting in Awaza. But judging by the chummy pictures of Mirziyaev and Rahmon at the Arab Islamic American Summit in Riyadh on May 21, it probably won't be difficult now to reach a deal for the Turkmen-Tajik power transmission lines.

Uzbek President Shavkat Mirziyaev (right) with his Tajik counterpart Emomali Rahmon in Riyadh on May 21.
Uzbek President Shavkat Mirziyaev (right) with his Tajik counterpart Emomali Rahmon in Riyadh on May 21.

For Kyrgyzstan, the agreement in Awaza is a welcome surprise.

Since the early days of independence, most of the stories of Uzbek-Kyrgyz energy ties were those of Uzbekistan shutting off the gas to Kyrgyzstan, sometimes in the heart of winter and usually for political reasons, though it is true that Kyrgyzstan was almost constantly in debt for Uzbek gas supplies.

Gas has not been much of a concern for Kyrgyzstan since 2014, when Russia's Gazprom purchased Kyrgyzgaz for a symbolic $1 and pledged to spend hundreds of millions of dollars upgrading and expanding Kyrgyzstan's internal gas network.

But Kyrgyzstan is still reliant on its hydropower supplies and still short of electricity, so steady supplies from Turkmenistan during winter months would be helpful.

Kazakhstan could also use the extra electricity. It would give the Kazakh authorities extra time to bring domestic sources of power to the southern parts of the country.

Kazakhstan is still experiencing its own economic difficulties, and the government would appreciate this unexpected, if only temporary, relief on state coffers.

Hopeful Sign

The process of building and rerouting energy distribution networks from northern Kazakhstan to the south has been under way for many years and was sparked originally by the Kazakh government's desire to stop having to deal with Uzbekistan for gas supplies.

So Mirziyaev's agreement on Turkmen electricity exports represents progress in regional integration, though admittedly, he might be simply removing obstacles he inherited from the previous administration.

It is not a bold new initiative for regional cooperation. But it is a hopeful sign, especially when Mirziyaev's other moves to improve ties with Central Asian neighbors might seem guided merely by self-interest.

Mirziyaev's trip to Awaza was the second trip to Turkmenistan in less than three months; his first state visit as Uzbekistan's president was to Turkmenistan on March 6-7. Mirziyaev has also visited Kazakhstan twice -- on March 22-23 and again on April 29.

While he was generally trying to improve Uzbekistan's relations with Kazakhstan and Turkmenistan, and hopefully find new markets particularly for Uzbekistan's agricultural products, Mirziyaev was looking for supplies of oil from both countries.

Gasoline shortages have been a huge problem in Uzbekistan for many years. Uzbekistan's domestic oil production has fallen by more than 40 percent in the last 10 years, and its three operating refineries are currently functioning below capacity due to lack of oil.

Long lines at Uzbekistan's filling stations have become common and are a source of social discontent.

Mirziyaev has only been in power since September. Making gasoline consistently available at filling stations is one relatively easy way of gaining some popular support.

In March and April, Mirziyaev secured deals for oil supplies from Turkmenistan, Kazakhstan, and Russia (which he visited on April 4-5). The Russian and Kazakh oil will come to Uzbekistan through Kazakh pipelines and will link up with a new Uzbek pipeline, yet to be built, and be taken to a new, fourth refinery, yet to be built, in Uzbekistan's Jizzakh region. The Turkmen oil goes to the refinery in Bukhara.

Kazakh President Nursultan Nazarbaev (right) and Shavkat Mirziyaev exchange documents during a signing ceremony following their meeting in Astana in March.
Kazakh President Nursultan Nazarbaev (right) and Shavkat Mirziyaev exchange documents during a signing ceremony following their meeting in Astana in March.

So one could say Mirziyaev's trips to Turkmenistan and Kazakhstan were at least partially motivated by the desire to resolve one of Uzbekistan's urgent domestic problems.

Mirziyaev's latest trip to Turkmenistan, however, brought a note of caution, especially for people in southern Kazakhstan and Kyrgyzstan who might already be imagining warm and well-lit apartments throughout winter.

Meaningless Agreements?

The electricity export deal was not the only energy agreement the two countries signed in Awaza.

Uzbekistan agreed to join the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural-gas pipeline project, and state company Uzbekneftegaz signed a deal to help develop one of Turkmenistan's Caspian Sea oil and gas fields.

These seem to be meaningless agreements.

TAPI is unlikely to be built anytime soon because more than 700 kilometers of the planned pipeline runs through areas of Afghanistan that are now scenes of intense fighting.

Consequently, the operating manager of the project, Turkmengaz, has not had much luck finding investors willing to pitch in some of the estimated $10 billion the pipeline will cost to construct.

The biggest obstacle to Uzbekneftegaz and Turkmennebit developing a Caspian Sea field is also financing. Turkmenistan and Uzbekistan do not currently have the large amount of money needed for such projects.

Another problem is that Uzbekneftegaz has no experience in developing an offshore field, so it is unclear what sort of role the Uzbek company could play.

Mirziyaev may well deserve credit for acting on his promise to improve ties with the neighbors. Six months into his tenure, Uzbekistan's relations with its neighboring states are already better than they were during the last 10 or 15 years under Karimov.

Most of the agreements Mirziyaev has reached with his neighbors represent efforts to address short-term political necessities; there is not much so far that suggests long-term policy changes are coming.

The Turkmen electricity exports to Kazakhstan and Kyrgyzstan are therefore something of a litmus test, because Uzbekistan does not receive much (only transit fees) for its part in this arrangement, and it promises to be a long-term deal.

Allowing this electricity agreement to go through and operate unhindered would demonstrate an interest in regional cooperation that Tashkent has not shown in a long time.

Thanks to Dr. Luca Anceschi from Glasgow University for his help in preparing this report.
The views expressed in this blog post do not necessarily reflect those of RFE/RL
Kyrgyz President Almazbek Atambaev (left) meets with Chinese President Xi Jinping in Beijing on May 15.

China hosted an international conference for the ambitious One Belt, One Road (OBOR) trade transportation network on May 14-15. On this week's Majlis podcast, we discuss Central Asia’s role in OBOR.

China hosted an international conference for the ambitious One Belt, One Road (OBOR) trade transportation network on May 14-15.

The conference brought together leaders from 30 different countries, including three presidents from Central Asia -- Kazakhstan’s Nursultan Nazarbaev, Kyrgyzstan’s Almazbek Atambaev, and Uzbekistan’s Shavkat Mirziyaev.

Central Asia borders China, and one could say Chinese projects in Central Asia were a basis for the concept of OBOR.

OBOR’s promise of enhanced trade and greater global connectivity is enticing but there are many aspects of OBOR that remain unclear. For example, who is paying for it.

On this week's Majlis podcast, we discuss Central Asia’s role in OBOR.

Moderating the discussion was RFE/RL Media Relations Manager Muhammad Tahir. From Bishkek, Przemtslow Ozierski, the deputy director of the Central Asia Strategic Center for Analysis, Dialogue and Development took part in the talk. From London, Dr. Raffaello Pantucci (@raffpantucci), director of International Security Studies at the Royal United Services Institute, joined in. From Spain, Nicolas de Pedro (@nicolasdepedro), a research fellow in charge of the post-Soviet space at the Barcelona Centre for International Affairs, contributed his insight to the discussion. And I really enjoy the big picture stuff, so I said something also.

OBOR seeks to link more than 60 countries by road, rail, and sea in a new global trade network. Beijing has estimated some $1 trillion will be invested into developing this network.

Chinese President Xi Jinping first announced plans for OBOR in September 2013, but its origins go back to the 1990s when Beijing decided to develop the oil-rich Tarim Basin in China’s western Xinjiang region.

Pantucci recalled, "There was this huge push to develop the west because the Chinese thought they needed to develop their western regions, so the investment and the attention was really in Xinjiang, but then there’s no kind of logic to developing Xinjiang if the regions around it aren’t [developed]."

China made its first widely publicized entry into Central Asia in 1997, when it signed an agreement with Kazakhstan to construct an oil pipeline from western Kazakhstan to Xinjiang.

Between 2000 and 2010, fueled by Chinese loans and investment, a network of roads, railway lines, and pipelines was built between Central Asia and China.

OBOR already existed in Central Asia before Xi articulated it as a much grander project.

OBOR would enhance this infrastructure and turn Central Asia from an end-of-the-line region for trade with China into a transit region for trade extending from China into the Middle East and Europe.

In one of the promotional videos released ahead of the May OBOR conference, one actor says OBOR is "China’s idea… but it belongs to the world."

De Pedro said, "The Chinese are saying that the project is really neutral from a geopolitical and if you want from an ideological point of view." But he added, "It’s mainly perceived, at least by the Central Asians, Russia, and Western Europeans, as a project which has huge geopolitical and strategic implications.”

Central Asia does not have much choice except to open the region’s doors to OBOR. The discussion noted that since the Central Asian states became independent in late 1991 upon the collapse of the Soviet Union, only China has really stepped in economically.

Speaking about Kyrgyzstan, Ozierski noted, “"t’s very important for Kyrgyzstan to…use the OBOR projects...to escape from its landlocked perspective and open for the world.”

That is true for all the Central Asian states, and new routes to China have already opened up new possibilities for trade.

But it comes at a cost.

Central Asia’s infrastructure has improved and continues to improve with Chinese help. But the Central Asian governments have been taking huge loans from China to implement these projects.

Pantucci said in some cases "these loans are being taken on with a certain level of care and attention and there’s a thought to how are we going pay it back." But he added, "In some Central Asian contexts, you do question how ultimately that money is going to get paid back."

Kyrgyzstan’s Finance Ministry just reported the country’s debt to China’s Exim Bank is some $1.54 billion, some 40 percent of Kyrgyzstan’s foreign debt and an amount Kyrgyzstan will be hard pressed to repay.

Similarly, China is Tajikistan’s biggest creditor, with Dushanbe now owing more than $1 billion, more than 40 percent of that Central Asian country’s external debt, and again a sum that seems beyond Tajikistan’s ability to pay back.

Ozierski said he believed there would come a time when China would have to write off some of this debt. But with China already having extended billions of dollars of loans for projects around the world and preparing to make another $124 billion available to help finance OBOR, writing off debts could spark a financially disastrous domino effect from poor nations involved in OBOR.

And de Pedro referred to an article from Pakistan’s Dawn newspaper last October that looked at Chinese projects and funding in Pakistan, taking the view of "the China-Pakistan corridor as a sort of new East India company, basically meaning that the pattern is a very colonial pattern."

There is another aspect of massive Chinese investment in Central Asia that now seems unavoidable and that is what security role China might play in the region in the interests of protecting its investments.

De Pedro said, "At some point, China will need to take a bigger role" in Central Asian security, despite distrust from not only the Central Asians but Russia as well.

The panel noted that China has been slowly increasing its security cooperation in Central Asia, particularly in Kyrgyzstan and Tajikistan, despite larger regional organizations already involved in the region, such as the Russian-led Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO).

Pantucci pointed out China has some doubts about the ability of the CSTO or the SCO to stem the problems of Islamic extremism in South and Central Asia. So, in August 2016, China created a new group with Afghanistan, Pakistan, and Tajikistan to fight terrorism, an organization Pantucci said that was "very much focused around China’s concerns in those countries."

Pantucci said that despite what many think about China’s intentions with the trade routes or OBOR in general, "I don’t think this has all been very centrally planned out from Beijing."

"What is the consequence of when you, as a country, go into a country like Kyrgyzstan or Tajikistan and become suddenly within the space of a short period of time the biggest sort of economic player in this country?" Pantucci asked.

The Majlis podcast looked at these matters in greater detail and discussed several other important facets of Central Asia’s growing connections to China and OBOR.

Listen to or download the Majlis podcast above or subscribe to the Majlis on iTunes.

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About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change. Content will draw on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad. The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.

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