As Russia's economy stagnates, rising China is challenging its influence over Central Asia.
12 Mar 2014
Baktybek Beshimov is a Visiting Professor, at the College of Professional Studies at Northeastern University and a Visiting Scholar at the MIT Center for International Studies.
Ryskeldi Satke is a freelance contributor with research institutions and news organisations in Central Asia, Caucasus, Turkey and the US.
Pipeline infrastructure has been an important factor in Russia's dealings with Central Asia [Reuters]
It has become increasingly clear in the past few years that Russia has no intention to relax its grip over the former Soviet bloc. Ukraine has recently become a good case in point. Although Moscow is clearly preoccupied with keeping its western borders and geopolitical interests safe, it has not forgotten about the East.
Russian President Vladimir Putin's political project to pull former Soviet republics of Central Asia into the Kremlin's orbit via the Customs Union, is part of a larger plan to bring Russia back to manage one fifth of the world's largest landmass. Since the disintegration of the Soviet Union in 1991, Russia has sought, through various economic treaties, to re-establish its control over the Central Asian republics.
The first one, and most well-known, the Commonwealth of Independent States (CIS) included 12 of the newly independent republics and was formed in late 1991. Russia then proposed the idea of an Economic Union in 1993 and after two years in January 1995, Russia signed a treaty on the formation of the Eurasian Customs Union with Belarus and Kazakhstan, which were later joined by Kyrgyzstan and Tajikistan.
When Putin came to power, he wanted to strengthen reintegration of the former Soviet space and the union was transformed into the Eurasian Economic Community (EEC), with the signing of a treaty by the five countries in October 2000. Eventually the idea of dropping customs barriers emerged and in 2007, Russia, Belarus and Kazakhstan signed a treaty to establish the Customs Union.
Since then the idea of the union has been developed and since 2013 there has been talks of establishing the Eurasian Economic Union, which could open its doors to countries beyond the borders of Central Asia.
The Kremlin's economic offensive is aimed at reining in increasingly independent Central Asian leaders. Russia's influence has been growing in Central Asia's poorest countries, Kyrgyzstan and Tajikistan, while diminishing among its richest (Kazakhstan and Uzbekistan). Its geopolitical project in Central Asia is facing increasing difficulties, as contenders from the East (China) and the South (Turkey) have emerged to challenge its power in the region.
The clash of two titans
Putin's regional integration project will likely not prevent, but rather pave the way for Chinese comprehensive economic expansion. While Russia needs Central Asian states in the Customs Union for the purpose of maintaining its geopolitical presence, China pursues its economic benefits. Russia relies on its military might and traditional soft power in the region, whereas China applies its financial clout.
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So while Beijing refrains from all out confrontation with Russia's interests (as opposed to PRC's hawkish approach to its neighbours in the East and South-East Asia), Chinese policymakers certainly take advantage of the Kremlin's missteps and limited capabilities.
China takes note of the stagnating Russian economy that is gradually losing positions in the region. Russia and Central Asia overall trade turnover reached $27.3bn in 2011, when China's commerce with Central Asia topped $46bn in 2012. Single-handedly, Beijing has become a main trade partner to all former Soviet states of Central Asia, except for Uzbekistan, where it is the second.
Much to Russia's dismay, the Chinese "trade revolution" is still in motion. Beijing has strong interest in President Putin's Eurasian economic integration initiative, since a free trade regime in Central Asia would lay better conditions for the flow of Chinese goods and investments. President Xi Jinping's proposal to create the "Silk Road" economic belt with Eurasia aims to promote investment opportunities. Within the past year, China sealed $30bn investment package with Kazakhstan, $15bn deal with Uzbekistan and $3bn financial aid with Kyrgyzstan in various industries from oil and natural gas extraction to infrastructure projects throughout Central Asia.
As much as Russia is having a tough time to adapt to the fact that China scooped the energy-rich Central Asia, it has already happened. Chinese-built gas pipelines boosted Central Asia's regional integration without downsizing sovereignty of any of the states. China's oil and natural gas pipelines help Kazakhstan and Turkmenistan to reroute their energy resources away from Russia, receding their dependency on Moscow. By 2020, China will be the largest consumer of natural gas and oil from the region of Central Asia. Likewise, a Chinese-funded oil refinery plant in Kyrgyzstan is going to break the Kremlin's fuel supply monopoly.
Dominating the weak, reining in the strong
Sensing the possibility for more independence from Moscow, some Central Asian countries have started increasingly resisting Russia's attempts at integration. Ever anxious over Russian political projects, the Uzbek political elite repudiated Uzbekistan's membership in the Kremlin-led Collective Security Treaty Organisation (CSTO) security bloc in 2012. The Collective Security Treaty Organisation originally formed in 1992 as a regional mutual defence alliance that consists of Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
The purpose of the CSTO is to promote peace, strengthen international and regional security and stability, and ensure collective defence of independence, territorial integrity and sovereignty of the member states. Tashkent undertook its gutsy move against Russia's incessant meddling despite the fact thatremittances from Russia to Uzbekistan make up 16.3 percent of its GDP. What might of encouraged the move is that Uzbekistan now has China as its biggest foreign investor.
However, the Kremlin will not to give up easily. Russia has aggressively re-appeared in Central Asia's weakest countries, Kyrgyzstan and Tajikistan, extending its military presence in these republics and committing close to $1.5bn for rearmament of the armies in both states. So far, the Kremlin's foothold in Kyrgyzstan and Tajikistan has been firm. The Kyrgyz Republic applied for membership in the Customs Union in 2011, hoping for favourable terms for its migrants in Russia. The Kyrgyz minister of labour had indicated that over 500,000 citizens [Ru] of Kyrgyzstan travelled to Russia in 2013.
Reliant on remittances from Russia, cash-strapped Kyrgyzstan and Tajikistan economies reflect on money transfers from migrants working in the Russian cities. The World Bank report indicates that remittances from abroad to Kyrgyzstan accounted for 31 percent of its GDP and 48 percent of Tajikistan's GDP in 2013.
Kyrgyz Republic and Tajikistan are also upstream states in a water-rich region where Russia is investing into hydro-energy projects on Vakhsh section in southern Tajikistan of the Amu Darya river and on Naryn water stream in central Kyrgyzstan, a tributary of the Syr Darya river. Strategic control over water resources gives Russia an opportunity to influence downstream recalcitrant Kazakhstan, Turkmenistan, and apostate Uzbekistan.
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And thirdly, the Kremlin keen to project its ambitions could not pass Kazakhstan's growing impatience. The Kazakh President Nursultan Nazarbayev rejected Russia's approval for Kyrgyzstan's demands for economic concession and special preferences upon entry into the Customs Union. The Kazakh leader has deliberately reminded Customs Union partners, Russia and Belarus, that another Customs Union candidate Armenia, yet, has to resolve its territorial disputes with the former Soviet republic of Azerbaijan.
Consequently, Azerbaijan expressed its concern with Russia's intention to have Armenia in the Customs Union. President Nazarbayev also challenged Moscow's drive to hegemony by proposing Turkey's accession into Customs Union.
The Turkish factor
Obviously, Kazakh leader's opinion could not be a coincidence; it is indeed a manoeuvre to balance the Kremlin's power in the interests of the Turkic states. Needless to say that Pan-Turkic idea of the development of comprehensive relations between Turkic Central Asia and Turkey is a factor that adds onto regional geopolitical grand game.
Today's Turkey, one of the fastest growing economy and the sixteenth largest in the world, and the energy rich Central Asia are more ardently listening to each other. Turkey's trade volume with the region was valued at $6.5bn by 2010, with total foreign direct investment (FDI) from Turkey exceeding $4.7bn. Turkish contractors' projects were valued at $50bn, with nearly 2,000 Turkish companies operating on the ground. Slowly Turkey's soft power changes the cultural life in Central Asia. Through Cooperation Council of Turkic-Speaking States (CCTS) established in 2009 with well developing net of secondary schools, colleges and universities, Ankara has become one of the important players in the region where it previously had only a marginal influence.
Kazakh President Nazarbayev's words on the role of Turkey in Russia's integration scheme are quite clear: "Everywhere in the West I get asked whether we are creating the Soviet Union or something to suit Russia, and I have to explain that we do nothing of the kind. It is possible that if we let Turkey join, that question will stop."
Despite the Kremlin's gains in the last few years, Russia's cultural influence is dramatically shrinking elsewhere in Central Asia. Kazakhstan has now cemented the legislation to replace Cyrillic script with Latin as the country's official alphabet by 2025 just as Uzbekistan did 10 years ago. The sharp decline of the ethnic Russian population in Central Asian republics and influx of graduates from Turkish schools and universities have contributed to Moscow's waning cultural influence over the years.
As its traditional points of influence of Central Asia decline, the Kremlin's ambitions in the region are likely to depend on its economic activity there. At the same time, China will persist with its economic offensive to maximise its relative economic power in the region. The oil-rich Central Asian states are able to increasingly promote their own game plan by exploiting this Chinese-Russian rivalry and even bringing Turkey into the competition.
Baktybek Beshimov is a Visiting Professor, at the College of Professional Studies at Northeastern University and a Visiting Scholar at the MIT Center for International Studies.
Follow him on Twitter: @bakytbeshimov
Ryskeldi Satke is a freelance contributor with research institutions and news organisations in Central Asia, Caucasus, Turkey and the US.
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