Political Developments
British Foreign Secretary David Cameron paid a five-day visit to all five Central Asian states (and Mongolia). This was the first time a British foreign secretary ever visited Kyrgyzstan, Tajikistan, and Turkmenistan, and the first to visit Uzbekistan since 1997. Prior to Cameron’s tour, the government said the foreign secretary would use the visit to promote opportunities for British businesses and announce £50m of new funding to support the sovereignty and independence of states across the region. His visit was designed to drum up support for the West along Russia’s southern border. “We’re here because we believe you should be able to make a choice, to partner with us in a way that is good for both our security and our prosperity,” he told Kazakh reporters after meeting the president of Kazakhstan, in Astana. Cameron had last visited Kazakhstan as PM in 2013.
During his visit to Kazakhstan, Cameron and his Kazakh counterpart inked a historic Strategic Partnership and Cooperation Agreement designed to strengthen bilateral relations in key sectors, ranging from foreign policy and security, trade and investment, to banking and financial services, employment and social policy, science and education. Besides the milestone agreement, Cameron also announced £50 million (US$62.6 million) of new funding aimed at promoting regional growth and economic resilience and fostering trade and cooperation between the U.K. and Central Asia. A parliamentary report in the UK had last year criticised the government for a lack of interest in central Asia despite its strategic importance. The Report had called for high-level ministerial engagement, including visits from the Prime Minister and the Foreign Secretary. The report found that the “deepening of UK engagement in Central Asia not only has the potential to be mutually beneficial but also should be seen as a geopolitical imperative”.
In addition to general discussions on improving relations, Cameron also discussed strengthening labour routes to Britain. Over the past couple of years, the UK has encouraged migrant workers from Tajikistan and Kyrgyzstan to Britain to plug workforce gaps created by Brexit. Cameron’s visit to Central Asia and Mongolia demonstrated the importance that UK attaches to the region. During his visit, Cameron announced the doubling of funding for Chevening scholarships to enable more to study at British universities. During his visit, Cameron acknowledged that Russian elites have been using Central Asian states to circumvent sanctions on account of the Russia Ukraine conflict.
Since its invasion of Ukraine two years ago, Moscow has looked to central Asia to help it dodge sanctions and has expanded military and security ties. It has also used central Asia’s railway network to send fuel to Iran as payment for drones and missiles. Central Asia’s leaders were initially reluctant and hesitant about Putin’s invasion of Ukraine but have since given the Kremlin more support.
Tajikistan has advised its citizens to refrain from traveling to Russia amid increased pressures faced by Central Asians there following the deadly Crocus City Hall attack near Moscow in March, 2024. Human rights organizations and Tajik officials have reported rising levels of xenophobia against Central Asians in Russia following the terrorist attack on the Crocus City Hall. Russian investigators say the assault was carried out by four men, all Tajik nationals. Russian authorities have arrested 11 Tajik citizens and a Kyrgyzstan-born Russian citizen in connection with the attack. Tajik Foreign Minister said that “an ill-conceived information campaign” in Russia was creating “a negative perception” of Tajiks. He also condemned the treatment of the Tajik suspects held in connection with the attack amid allegations that the detainees were tortured in custody. Russia is a popular destination for Tajik migrant laborers, who are often engaged in construction and agricultural work. More than 652,000 Tajiks traveled to Russia for work in 2023. Tajikistan is heavily dependent on remittances from Tajik migrant laborers, with about a third of its GDP coming from money sent home from abroad, mostly Russia.
At the Shanghai Cooperation Organization’s (SCO) defense ministers’ meeting in Kazakhstan, Russian Defense Minister Sergei Shoigu claimed that the main threat to Central Asia originates from terrorists based in Afghanistan. He also spoke at the meeting about America’s efforts to regain influence in the region following its withdrawal from Afghanistan. The Taliban has repeatedly stated that Afghan soil will not be used against any country. He called for the expansion of joint military exercises among Russia and its Asian allies in response to what he perceived as a direct threat from the United States’ efforts to broaden its security influence in the region. Shoigu expressed concern over the deployment of US military infrastructure in the region and labeled it as unacceptable, posing a direct risk to stability in the SCO space. He emphasized the need for SCO member states to enhance both the scale and geographic reach of their military drills. Shoigu criticized the US-led QUAD and AUKUS alliances for seeking to reconfigure the security landscape in the Pacific to their advantage, while also noting increased pressure on China regarding Taiwan.
During the meeting, a protocol was signed by the Defence Ministers of all SCO Member States underscoring the collective commitment of all SCO members towards fostering peace and cooperation in the region. A Joint Communique was issued after the meeting, in which the SCO Defence Ministers agreed, amongst other initiatives, to developing the idea of ‘One Earth, One Family, One Future’, which is rooted in the ancient Indian philosophy of ‘Vasudhaiva Kutumbakam’.
On the sidelines of the SCO Defence Ministers’ Meeting, Chinese Defence Minister Dong Jun pledged to deepen military cooperation with Kazakhstan while also highlighting regional extremist threats. Speaking to Kazakh President in Astana, Dong said the region was facing a “complex” security situation as the “three forces” – Beijing’s term for terrorism, separatism and extremism – were “becoming more active”. Since 2021, when the Taliban returned to power in Kabul, Beijing has repeatedly warned against a revival of terrorist forces in the region. In a 2023 position paper on the Afghanistan situation, China warned that the “three forces” still posed a “major security threat to the region and the world”. During their meeting, Dong and Tokayev agreed to strengthen “strategic coordination.”
Kazakhstan’s Ministry of Defense revealed that Russia is currently leasing three test sites in Kazakhstan. This disclosure comes after a complaint was lodged by residents of the West Kazakhstan region (WKO), who notified local authorities that a Russian landfill named Kapustin Yar, containing unprocessed waste, is operating in the region and making people ill. The three Russian military test sites in Kazakhstan include: the 929 State Flight Test Center is located in the West Kazakhstan and Atyrau regions, and the Sary-Shagan test site occupies parts of the Karaganda, Ulytau, Zhambyl, Kyzylorda and Aktobe regions.
The nephew of Kazakhstan’s former president, Samat Abish, a former deputy head of the security services, has received an eight-year suspended sentence for his role in instigating bloody unrest in January 2022 that left hundreds dead. The lightness of the punishment has caused anger and bewilderment. Little is known about how the trial was conducted, or even what specifically Abish was accused of doing, since it was held behind closed doors.
In the recently published UN and Gallup World Happiness Report 2024, Kazakhstan was ranked among the top 50 happiest countries in the world, ahead of Russia, Armenia and Georgia. However, the Baltic States and Uzbekistan returned higher happiness scores on the index. This rating was developed on the basis of a three-year study conducted by UN experts, Gallup and other scientists. Citizens of different countries assessed their quality of life by taking into account a variety of factors, including economic status, GDP, life expectancy, major life challenges, sense of freedom, public responsiveness, and the level of corruption.
More than 30 civil society organisations (CSOs) from different countries have written an open letter to Kyrgyzstan’s President Sadyr Japarov regarding the amendments to the Law on Non-commercial Organisations, known as the law on ‘’foreign representatives’’, which parliament adopted recently. The signatories express support for Kyrgyzstan’s civil society, which would be severely affected by the law if it enters into force, and urge the president to veto it for the benefit of the country and its people. The signatories to the joint letter stress that the proposed amendments fall seriously short of Kyrgyzstan’s international human rights obligations and risk delivering a devastating blow to the country’s vibrant civil society. The amendments will impair civil society’s ability to carry out its important and legitimate work to the benefit of the people of Kyrgyzstan, and to promote public participation, transparency, accountability and good governance, thereby eroding democratic and human rights progress made by Kyrgyzstan with negative implications for its international reputation.
Turkmenistan and European Union signed a Protocol to the Partnership and Cooperation Agreement during the visit of a Turkmen delegation led by Foreign Minister Rashid Meredov to Brussels. He reviewed the current state and prospects for interaction between Turkmenistan and the EU in political, diplomatic, trade, economic and humanitarian spheres. The EU is counting on Turkmen gas supplies via the Caspian Sea, Azerbaijan and Turkey to provide energy security to Europe which has been dependent on Russia. EU understands that Kazakhstan has a long, shared history with Russia including strong cultural and economic ties. Kazakhstan’s geopolitical and geographical situation requires that it not alienate either Russia or China. It is clear to the West that Kazakhstan is looking for closer relations with western countries, including the EU and US who would like to support Kazakhstan toward greater western orientation and integration. Kazakhstan’s energy and natural resource commodities are of tremendous value to the EU. Russia’s full-scale invasion of Ukraine and the global energy crisis it created in preparation for that invasion taught Europe that it is dangerously energy insecure and vulnerable. The EU is therefore looking to diversify its energy sources away from Russia as much as possible.
The United States is tightening exports of firearms and ammunition to «high-risk» countries, including Kyrgyzstan, Kazakhstan and Tajikistan. The government issued a regulation that amended the department’s measures for export of firearms, ammunition and related components. The decision concerns export to non-governmental entities.
There was a big uptick in the number of migrants from Central Asian countries last year, with more than 50,000 people from the region illegally entering the United States. Among them were some 17,000 from Uzbekistan, 7,000 from Kyrgyzstan, 3,000 from Tajikistan, 2,700 from Kazakhstan, and some 2,000 from Turkmenistan. And the massive inflow of illegal migrants — including Central Asian nationals — has showed no signs of abating so far this year, U.S. statistics show. Through one U.S. border sector alone — San Diego, California — 140,000 illegal migrants, including some 2,500 Uzbek citizens, 500 Tajiks, and about 400 Kyrgyz nationals have entered the United States since the beginning of 2024.
International interest in the Turkic republics and Central Asia is progressively growing. One of the main reasons for this interest is undoubtedly the weakening of Russia’s influence in the region due to the war in Ukraine. Since the beginning of 2023, China, India, the European Union, Qatar, Saudi Arabia, Germany, the United States, and the United Kingdom have held important summits and bilateral meetings with the aim of developing solid cooperation with the Central Asian states.
In December 2023 Kazakhstan removed Taliban from its list of banned organizations. According to the Kazakh Ministry of Foreign Affairs, the Taliban was no longer classed as a banned organization “in accordance with the practice of the UN [United Nations].”
Economic Developments
In a meeting with the Emir of Qatar, the Prime Minister of Kazakhstan, emphasized the importance of the two countries’ economic partnership in the Arab world and reported on the imminent implementation of large-scale and strategically significant investment projects worth an unprecedented amount of $17.6 billion. The governments of Kazakhstan and Qatar subsequently signed an agreement on establishing a long-term strategic partnership for the development of projects in priority sectors. Projects include the construction of gas processing plants in Kazakhstan at a cost of around $5.7 billion. The additional construction of a Aktobe-Kostanay gas pipeline and the second section of the Beineu-Bozoy-Shymkent gas pipeline for a total cost of around $7.7 billion, will develop gas supplies to Kazakhstan’s northern regions. A further investment of around $2.7 billion will fund the construction of a combined cycle gas power plant with a capacity of 1,100 MW, and a hydroelectric power plant with a capacity of 350 MW, to ensure long-term energy security of Kazakhstan.
Kazakhstan is keen to partner with Qatar to build pipelines to deliver gas from the western part of the country to the southern and northern regions. Qatar has considerable experience with the gas industry. Kazakhstan is considering building a 600km gas pipeline linking western producing regions to the north of the country. Kazakh government set a target of doubling the GDP by 2029 at the same time as planning to phase out coal-fired generation. Both factors would increase domestic demand for gas.
Kazakhstan is making significant efforts to develop tourism, and “the presence of Chinese tourists is of utmost importance to ‘’ it. This year was designated as the Year of Kazakhstan Tourism in China by the two countries in May 2023. Within that framework, about 40 events have been planned in major Chinese cities such as Beijing, Xi’an, Shanghai, Urumqi, Hangzhou and Chengdu, aiming to promote and showcase the tourism resources of Kazakhstan. Tourist flows between China and Kazakhstan are gradually returning to pre-pandemic levels. The number of tourists from China rose from 18,000 in 2022 to 217,000 in 2023, an increase of 11 times. Since November 10, 2023, Chinese and Kazakh citizens have been allowed to stay in each other’s country for no more than 30 days for a single crossing and for 90 days as part of a 180-day visa-free period, under a visa-free agreement.
China-Kazakhstan cooperation under BRI has been fruitful in areas such as connectivity, production capacity, the economy and trade, and people-to-people and cultural exchanges. China and Kazakhstan have actively enhanced production capacity and investment cooperation, having drawn up a list of 52 projects with a total value of more than $21.2 billion. Such cooperation is also expanding to the green, digital, scientific and technological fields. In 2022, total merchandise trade was $31.17 billion, a year-on-year increase of 23.6 percent. China has been Kazakhstan’s second-largest trading partner, largest export destination and second-largest source of imports for years. By the end of last year, trade volume between Kazakhstan and China had increased by 30 percent. Kazakhstan sends oil, gas and metals to China, while importing clothing, machinery and cars. In 2023 Kazakhstan imported $16.8 billion and exported $14.7 billion to China. China accounts for 22.5% of Kazakhstan’s total external trade: 27.4% of imports and 18.7% of exports. Popular export categories include refined copper and unprocessed copper alloys, natural gas, precious and rare earth metals, as well as radioactive elements and ferroalloys.
Increasing non-raw material exports such as engineering, chemicals, agriculture and tourism has been a priority for Kazakhstan. In 2023, non-raw material exports reached $35.1 billion out of $78.7 billion in total exports. This demonstrates an increase from $26.5 billion in non-raw exports in 2022. The strategic goal for Kazakhstan is to bring the figure to $41 billion by 2025. Over the past decade, Kazakhstan has become an increasingly important land-bridge between East and West, both in terms of trade and diplomacy. A vast nation the size of Western Europe with powerful neighbors in the form of China and Russia, yet on the doorstep of Europe with access to the Caspian Sea, Kazakhstan’s location has elevated it to the cusp of becoming a significant player. Due to projects such as the Belt and Road Initiative and the Middle Corridor, Kazakhstan’s location has made it an indispensable ally to China. Chinese investment in Kazakhstan over the past eighteen years has grown significantly, estimates varying from $23.2 to over $36 billion. Even these huge sums dwarf in comparison to the Netherlands, which, in the last five years invested $33.8 billion in Kazakhstan. Meanwhile, Italy was Kazakhstan’s largest exporter in 2022, accounting for 16.4% of exports worth $13.9 billion. As a block, the EU is Kazakhstan’s biggest overall trading partner, the destination for 39% of total exports and accounting for 29.4% of its total trade in 2021.
Through initiatives such as C5+1 and the B5+1, the United States has increasingly sought to engage with Central Asia, and with Kazakhstan in particular. With investment totaling $19.4 billion, the U.S. ranks second in terms of foreign investment over the past five years. A driving force behind this engagement has been the huge untapped reserves of Rare Earth Elements (REEs) located in Kazakhstan. Whilst China is the dominant player in REEs, producing approximately 60% and processing 85% of the global output, Kazakhstan is the world’s largest producer of uranium – responsible for 33% of global output as of 2021 – a large amount of which is found in rare earth deposits.
The B5+1 plan, the US Business Initiative with the 5 Central Asian countries, aims to create a single market in Central Asia with reduced trade barriers and improved regulations. The initiative emphasizes public-private partnerships and private sector leadership. The US hopes to promote a positive-sum economic model in contrast to the approaches of Russia and China. It is reported that key Central Asian governments have reacted favorably to the plan. A primary aim of the B5+1 process was to institutionalize an annual gathering bringing together private and public sector leaders from all five Central Asian states for discussions aimed at breaking down trade barriers that hinder outside investment and promoting a regional market. In remarks at the initial B5+1 forum, Kazakhstan expressed its readiness to explore ways with the private sector to improve trade prospects in such sectors as agribusiness and e-commerce, as well as work toward developing a unified regional market. At the Almaty forum, private sector participants issued a communique expressing an intent to coordinate work that “improves trade, transit, and investment facilitation,” while also striving to “harmonize regulations in key industries” beyond the energy and extractive sectors, which have received the overwhelming majority of all Western investment coming into the region to date.
China tops the list of the ten largest trading partners of Uzbekistan with a foreign trade turnover of $2.1bn. Following China is Russia as the second-largest partner, with a foreign trade turnover of $1.7bn, trailed by Kazakhstan with $581.8mn. The significant trade volumes with these neighboring countries underscore the regional economic integration and cooperation initiatives. The top 10 list encompasses a diverse array of countries, showcasing Uzbekistan’s multifaceted trade relationships. Partners such as Turkey, Korea, France, Turkmenistan, Germany, India, and Afghanistan each contribute substantial trade volumes, reflecting the breadth and depth of Uzbekistan’s international trade engagements.
In 2022, Kazakhstan attracted the most foreign direct investment in Central Asia with $6.1 billion. Uzbekistan followed Kazakhstan with $2.53 billion, Turkmenistan attracted almost $1 billion, Kyrgyzstan almost $300 million, and Tajikistan around $170 million. The actual figures are expected to be much higher. In Uzbekistan, after the reforms that began in 2017, foreign investment in the country increased tenfold in the last six years. In January 2024, during his visit to China, the president of Tajikistan signed a $400 million investment agreement with the country. In addition, the volume of e-commerce in Central Asia, which is developing rapidly, is expected to exceed $66 billion by 2028.
In 2022, Turkey’s exports to Central Asian countries grew by around 30%, reaching approximately $12 billion. Turkey’s trade volume with Turkmenistan is increasing every year, with $4.7 billion exported to Kazakhstan, $3.3 billion to Uzbekistan, and $1.9 billion to Turkmenistan. In a few years, Turkey’s trade volume with Turkmenistan, which has reached $2.5 billion in 2023, is expected to exceed $5 billion, while in 2023, Turkey’s share of the construction sector in Turkmenistan will be $3.2 billion.
Kazakhstan is expected to remain on a stable growth trajectory for the next two years, driven by continued carbon use and increased consumer spending, according to World Bank projections. At the same time, the bank suggests a new reform approach is needed to improve prosperity. The bank outlined Kazakhstan’s prospects in a recently published report, titled Preparing for Tomorrow: Reform for Long-Term Prosperity. As Kazakhstan continues to adapt to the shock created by Russia’s unprovoked invasion of Ukraine, growth is expected to moderate to 3.4 percent in 2024, due to lower-than-expected oil production/revenue. Real GDP is projected to pick up in 2025, reaching 4.5-5 percent. An elevated inflation rate is expected to moderate yet remain above the central bank’s target this year and into next, the report states. Inflation pressures began to decline in late 2023 following monetary policy tightening, registering a 9.8 percent rate in December. WB analysts believe the National Bank of Kazakhstan’s (NBK) inflation-rate target of 5 percent is achievable in 2025 if there is no premature easing of monetary policy, and if fiscal consolidation plans are fully implemented. Increased demand for imports and lower export earnings due to falling oil prices led to a current account deficit of about 3.3 percent of GDP in 2023.
Uzbekistan announced a plan to establish a new multi-modal transportation corridor via Afghanistan to connect Belarus, Russia, Kazakhstan, and Pakistan to bolster trade in Central Asia. This initiative includes plans to enhance transportation, as well as the analysis of transit shipments, digitising documents, and simplifying transit processes between countries.
Members of Kazakhstan’s government and representatives of the Taliban have discussed expanding transportation links between Astana and Kabul. Kazakhstan said it’s ready to participate in projects to develop the Trans-Afghan corridor: the construction of the railroad routes Termez – Mazar-e-Sharif – Kabul – Peshawar and Herat – Kandahar – Spin – Buldak. The projects will make it possible to reduce the cargo-transit time between the countries of the region almost 90%, as well as reducing the costs. Kazakhstan is ready to participate in the construction of a Trans-Afghan highway by supplying sleepers and fasteners to Afghanistan. Over the past three years the volume of exports from Kazakhstan to Afghanistan has been steadily growing. In 2023, the volume of transportation by rail amounted to 2.7 million tons, of which 1.5 million tons was flour and grain.
Turkish Alarko Holding is set to invest $650 million in Kazakhstan’s agro-industrial complex over the next five years. Kazkahstan organized a conference in Istanbul with more than 50 major Turkish business groups, presenting measures to improve Kazakhstan’s investment climate. Joint projects in the agricultural sector and other industries were also discussed.
India-Central Asia Relations
Indian Defence Secretary Giridhar Aramane led the Indian delegation to the SCO Defence Ministers Meeting in Astana, Kazakhstan. He stressed on propagating peace, harmony and tranquility in Central Asia and emphasized the need to adopt a zero-tolerance approach towards terrorism in all its forms for prosperity and development of the SCO member states. He spoke about India’s long-standing proposal of Comprehensive Convention on International Terrorism at the United Nations. He also highlighted the concept of Security and Growth for All in the Region’ (SAGAR), proposed by India for the Indo-Pacific.
The fourth edition SCO Startup Forum aimed at promoting innovation, creating job opportunities, and inspiring young talent was organized in New Delhi. It brought together over 15 SCO startups showcasing their products and services to build partnerships among SCO Member States to further strengthen the startup ecosystem in the region. The forum witnessed the participation of high-level officials from government, industry, and academia. The forum also provided an opportunity for the participants to attend a workshop on ‘Establishing a Seed Fund: A Strategic Approach to Fostering Innovation and Entrepreneurship’. The workshop, led by Startup India, provided an interactive session on various models of setting up seed funds to support early-stage startups.
India will host the fifth meeting of the SCO Startup Forum in January 2025. This initiative, spearheaded by the commerce and industry ministry, underscores a collective effort to foster collaboration and innovation within the SCO community. The SCO has recognised the pivotal role startups play in driving economic growth and development. As part of this endeavour, the Special Working Group (SWG) for Startups and Innovation was established in 2022 to facilitate cooperation among member states. After a series of deliberations chaired by the Department for Promotion of Industry and Internal Trade (DPIIT) in 2023, the regulations of the SWG were approved and adopted, designating India as its permanent chair within the SCO framework. The upcoming SCO Startup Forum 5.0 aims to build upon the momentum generated by previous editions, providing a platform for startups to showcase their innovations, exchange ideas, and explore opportunities for collaboration. By offering mentoring, access to investors, and corporate engagement activities, India seeks to add tangible value to startups across the SCO member states.
Joint India-Uzbekistan Military Exercise ‘DUSTLIK’ was conducted at Termez Combined Arms Training Ranges concluded today from 15th to 28th April, 2024. The objective of the Exercise is to stand together for peace and fight terrorism. This was the fifth edition of bilateral exercises between India and Uzbekistan. The joint exercise focused on Counter Terrorism operations. It was a Platoon level exercise and aimed at achieving maximum cohesion and inter-operability between the two armies with focus on exchange of ideas, concepts and best practices between both the armies. The exercise culminated with a 48 hour long tactical exercise on Small Team Insertion, Extraction and Cordon and Search Operation wherein troops from both the contingents were mixed into buddy pairs, comprising of one Indian and one Uzbek soldier, thereby achieving maximum cohesion and interoperability between the two armies.
The previous issues of Central Asia Digest are available here: LINK
