Central Asia Digest | December 2023

Political Developments

 

The global significance of Central Asia has been steadily growing. The past year, marked by the tumultuous war in Ukraine and the ensuing confrontation between Russia and the West, has not only reshaped Eurasia’s political landscape but has also highlighted the increasingly critical role of Central Asia in the intricate balance of power between East and West.

 

Among the Central Asian states, Kazakhstan and Uzbekistan stand out as the key players. This heightened importance of Central Asia has not gone unnoticed by Western countries, as evidenced by several high-profile visits to the region. The presidents of France and Germany, as well as the foreign ministers of the United States and United Kingdom, have made trips to the region over the past year, signifying a growing recognition of its strategic value and potential as a partner in various domains, from security to economic collaboration. Central Asia is also poised to become a key supplier of vital metals and rare earth minerals, increasingly coveted by Western industries. Kazakh companies are already producing 18 out of the 30 rare earth materials crucial for the EU economy, including titanium, beryllium, tantalum, and niobium. This role was recently highlighted by French President Emmanuel Macron’s visit to Kazakhstan in November, which culminated in significant deals for France to purchase these essential minerals and metals. In the present era, where technological advancement is of paramount importance, securing access to these resources transcends mere economic interest and becomes a strategic imperative.

 

The Qosh Tepa canal, currently being built in Afghanistan, is raising concerns in Central Asia since water from the canal will come from a river that Central Asians have had almost exclusive use of until now. Concern has also been expressed about the quality of the canal’s construction as the Taliban, having failed to find a foreign partner for the project, are building it on their own. The American-Canadian environmental organization Rivers Without Borders, dedicated to protecting transboundary watersheds, reported on December 12 that a section of the canal was leaking.

 

Estimates vary as to how much water the Qosh Tepa canal will take from the Amu-Darya, the river that marks Afghanistan’s border with Uzbekistan and part of Turkmenistan. It appears that the amount of water flowing into downstream communities in those two Central Asian countries will fall by at least 15-20 percent once the canal opens.

 

On December 1, Kazakhstan’s former president Nursultan Nazarbayev’s new memoir “Menin omirim. Bodandyktan – bostandykka” (My Life: From Dependency to Freedom) hit the shelves of bookstores in Kazakhstan. In contrast to dozens of his previous works, his latest book has been a major hit. The memoir is almost 700 pages long and covers Nazarbayev’s personal life and political career, and Kazakhstan’s modern history from the early 1990s to the current day. Nazarbayev’s rule started in 1989, when the country was still part of the Soviet Union, and extended for 29 years after it gained independence in 1991. In 2019, he stepped down from the presidency, handing the reigns to his handpicked successor and the current president Kassym-Jomat Tokayev.

 

Besides the detailed description of how Nazarbayev rose from an ordinary factory worker to a president and led the country through its nascent period, the book contains stories of his encounters with world leaders such as Mikhail Gorbachev, Angela Merkel, Recep Tayip Erdogan, and Vladimir Putin. However, these details are not what created unprecedented buzz, controversy, and demand for Nazarbayev’s memoir. What has caught the attention of the public are the candid details of his personal life unveiled in the book. Nazarbayev confirmed long-standing rumors and admitted having an extramarital affair with Asel Isabayeva. He shared details about marrying her “in accordance with Muslim traditions.” Polygamy is illegal in Kazakhstan, and Nazarbayev has never officially divorced his wife Sara Nazarbayeva. The couple seem to have de-facto separated though, with Sara reinstating her maiden name Konakai. There are many such details in the book.

 

Another controversial event addressed in the book is Qandy Qantar (Bloody January), the largest and deadliest protests in the country’s history that took place in January 2022 and resulted in the death of at least 238 people. A commonly agreed explanation for the protests is the power struggle between Nazarbayev and Tokayev, which the former lost. Nazarbayev has kept a low profile since then and has not provided any commentary on the protests, which Tokayev blamed on bandits and foreign terrorists. According to Nazarbayev, a radical opposition was behind the violent protests, with former Kazakh businessman and political activist in exile Mukhtar Ablyazov allegedly setting up a camp in Kyiv to coordinate them.

 

Since losing in the power struggle in January 2022, Nazarbayev has watched his legacy take several hits. The capital was renamed Astana again, after briefly carrying the name Nur-Sultan. The constitutional law that gave Nazarbayev the title of “Elbasy” (Leader of the Nation) was annulled. The Day of the First President, celebrated on December 1, was canceled.

 

The memoir is Nazarbayev’s attempt to salvage his image and legacy by controlling the leakage of compromising details of his personal life and sharing his own version of Kazakhstan’s milestones.

 

Uzbekistan’s foreign ministry summoned the Russian ambassador over a call by a Russian politician to annex the former Soviet republic. Russian nationalist writer Zakhar Prilepin, who is co-chair of the “A Just Russia – For Truth” party, said he believed Russia should annex Uzbekistan and other countries whose citizens travel en masse to Russia for work. The Uzbek foreign ministry told Russian Ambassador that Tashkent was “deeply concerned” about these “provocative” comments. Russian Ambassador, in turn, said Prilepin’s comments had nothing to do with the official Kremlin position. Russia’s annexation of Crimea and later other areas of Ukraine has caused unease among other ex-Soviet republics.

 

This year, Kazakh President Kassym-Jomart Tokayev has met frequently with Russian President Vladimir Putin to discuss mutual co-operation, despite growing Russian isolation on the international arena. Tokayev’s diplomacy has paid off. In November, during his visit to Astana, Putin started a meeting with the Kazakh President by acknowledging the countries are “closest allies”. Tokayev has praised trade relations between the two countries and with Russia’s corporations, that have got stronger this year. Putin is predicting a 7% annual growth in mutual trade in 2023 from an estimated $28 billion in 2022. Tokayev welcomed hundreds of Russian companies that moved their business to Kazakhstan to reduce the burden of international restrictions imposed since February last year, and said more Russian firms have agreed to relocate soon.

 

Energy deals have remained at the top of Kazakhstan’s co-operation agenda this year, with Russia agreeing to build new gas-fired power plants in Kazakhstan which has been repeatedly suffering energy blackouts, affecting its oil and gas production. During this year, Kazakhstan has also grown its role as a transit country for Russian natural gas flows to Central Asia and China, with gas giant Gazprom contracted to invest into the reversal of a legacy pipeline network. Known as Central Asia-Centre, the network will enable Russia to deliver its gas across Kazakhstan to Uzbekistan, Turkmenistan and other former Soviet states in Central Asia.

 

It is reported that the Russian Federation’s command continues to deploy military personnel from Tajikistan to the war in Ukraine. Analysts claim that units of the Russian 204th Akhmat Spetsnaz detachment and the 201st Military Base are operating in the Kreminna Forest, allegedly capturing “unspecified positions in the area.”

 

Kazakhstan is at the verge of constructing its first-ever nuclear power plant, an initiative estimated to cost between $10-15 billion. The project, currently in the financing stage, is looking to secure funding primarily from international financial institutions. The project will be a commercial enterprise, devoid of direct government funding. In an unprecedented move, President Tokayev urged for a national referendum to decide on the nuclear power plant’s future. The Ministry of Energy, after comprehensive research, has identified Ulken, a village located in the Jambil district of the Alma-Ata region, as the intended site for the plant. Kazakhstan is currently reviewing several proposals from international nuclear technology providers including Russia’s Rosatom, China’s CNNC, South Korea’s KHNP, and France’s EDF. Russia has shown particular interest in the project, with President Vladimir Putin expressing Rosatom’s readiness to collaborate with Kazakhstan. Putin has promised that Rosatom will bring advanced technology to the table, adhering strictly to environmental and safety standards. It is reported that Kazakhstan is not favorably disposed towards the Chinese proposal to build its first nuclear power plant.

 

Kazakhstan will extradite Russian cybersecurity expert Nikita Kislitsin to face hacking and extortion charges in his home country, Russia. Kislitsin was detained in Kazakhstan in June following an extradition request from the United States, which accused him of buying personal data obtained through the 2012 hack of the now-defunct social media website Formspring.

 

Kazakhstan refused the U.S. extradition request, a Russian diplomat said at the time. Kislitsin is a senior executive at FACCT, a Russian-based spinoff company of Group-IB, one of Russia’s top cybersecurity firms, which left Russia in April following Moscow’s invasion of Ukraine and sold its assets to FACCT.

 

Water levels in Caspian Sea near Khazar, Turkmenistan are falling. It is not entirely clear why that is happening, but scientists say it is because of naturally occurring processes exacerbated by climate change. A 2021 study projected that by 2100, water levels in the Caspian Sea could drop by 8 to 30 metres (26 to 98 feet).

 

Authorities in Turkmen provinces have removed decorated New Year’s trees from the streets and state-appointed imams have told their congregations that ringing in the New Year is incompatible with Islam. The moves sharply contrast with practices in recent years in Turkmenistan of holding rather lavish celebrations for the new year. Initially dozens of large New Year’s trees were installed in front of government buildings, hotels, hospitals, the train station, and in the city park in the first week of December. Simultaneously, state workers were forced to contribute equivalent of about $14 for purchasing the ornaments and renting the cranes to erect the trees and other decorations. But just days later officials removed most of the decorated fir trees, leaving only about six in the most prominent spots. Authorities did not, however, return the money they collected from employees. No explanation was offered by the regional government for the removal of the New Year’s trees. Meanwhile state-backed imams have been telling mosque-goers that decorating trees, throwing “wasteful” parties, and shooting fireworks to celebrate New Year are incompatible with Islam.

 

Kyrgyzstan and Tajikistan agreed on an additional 11.88 km of state border demarcation between the two countries. The countries will continue work on delineating the remaining areas at the next meeting in Kyrgyz Republic. Tajikistan and Kyrgyzstan have a common border of 970 km, but some areas still require identification and marking. Meetings between delegations are held alternately on the territory of each country.

 

More than 500 oil workers in Kazakhstan’s western region of Manghystau went on strike demanding the integration of their salary payment system into that of the national KazMunaiGas energy corporation, which would ensure a pay rise, as well as the renewal of their technical equipment.

 

Kazakhstan’s Education Ministry has announced the opening of a Chinese-funded vocational school, known as a Luban workshop, located on the campus of Serikbayev East Kazakhstan Technical University in Oskamen. The facility enables “students to study advanced automotive technologies using modern Chinese equipment,” according to a ministry statement. China opened its first Central Asian Luban workshop in Tajikistan in 2022. Plans have been announced to also launch Luban workshops in Uzbekistan, Turkmenistan and Kyrgyzstan. Globally, China has launched over two dozen Luban workshops, which Chinese state-run media has described as Beijing’s “calling card for professional education.”

 

Economic Developments

 

Afghan acting Foreign Minister said that work on the implementation of the TAPI gas pipeline project will begin soon. In a meeting between FMs of Turkmenistan and Afghanistan, the two sides discussed the Torghondi-Herat railway, the export of energy resources to the Afghan province of Herat and the expansion of trade between the two countries. Turkmenistan is making significant efforts in development of TAPI gas pipeline, seeking to strengthen its role as a leading supplier of natural gas in the region.

 

Pakistan has decided to extend the Foreign Investment Promotion and Protection Act (FIPPA) to provide legal protection to Turkmenistan’s investment in the ambitious $10 billion TAPI gas pipeline project. The move aims to enhance the project’s bankability for international lenders. Turkmenistan will hold an 85 percent stake in the project, with Afghanistan, Pakistan, and India each having a 5 percent share.

 

Pakistan Chief of Army Staff General Asim Munir said during his visit to USA that Pakistan wishes to develop itself as a hub of connectivity and a gateway to Central Asia and beyond.

 

Uzbekistan was recognized as the best country in Central Asia in tourist safety. Kazakhstan was the best in the region in providing medical services to tourists. Uzbekistan is reported to have a low level of violence, riots and terrorist attacks, effective security and emergency services, and good infrastructure. Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan are included in the group of medium risk countries.

 

China is actively pursuing solar energy development in Uzbekistan. Uzbekistan held talks with Laplace Energy Solutions to develop a training program for Uzbek workers.

 

A recent report by Eurasian Development Bank (EDB) projected a potentially chronic shortage of water resources by 2028, estimating a deficit of 5-12 cubic kilometers, exacerbated by climate change and reduced flow from the Amu Darya River in Afghanistan. According to EDB experts, the region faces a critical challenge threatening its socio-economic development. Central Asia, highly vulnerable to climate change, is experiencing faster temperature increases than the global average, leading to a rise in droughts, reduced water levels, and a significant decline in glacier size. Agriculture, the primary water consumer, is particularly affected The region uses 80% of the region’s water for irrigation.

 

Overall Russian LPG shipments to Central Asia doubled in the first 11 months of 2023 compared to the same period in 2022, reaching 390,100 tons. Half of LPG cargos were delivered from the gas processing plant in the southwestern city of Orenburg, near the border with Kazakhstan.

 

ArcelorMittal recently completed the sale of its steel making and mining operations in Kazakhstan. This move came after Kazakhstan demanded its renationalization due to an October blast at a coking coal mine which claimed 46 lives and prompted Kazakh President Tokayev to call for the group’s departure from the country. On December 8, it reported that the state-controlled direct investment fund Qazaqstan Investment Corporation (QIC) acquired ArcelorMittal Temirtau. ArcelorMittal received $286 million from QIC plus an additional $250 million as repayment of outstanding intra-group dues. The sale decision is influenced by geopolitical factors, including sanctions on Russia and Iran, affecting the market for ArcelorMittal’s products from Kazakhstan.

 

ArcelorMittal’s sale included ArcelorMittal Tubular Products Aktau. Much of Aktau’s production is shipped to Iran. Sanctions against Iran over that country’s nuclear and ballistics programs make it difficult to send tubular products from Aktau. On top of that, Iran has sharply increased its crude steel capacity in the past 15 years. In addition, Chinese steelmakers now supply much of Central Asia’s needs. At least part of Temirtau’s production was going to Russia, which invaded Ukraine in February, 2022. However, ArcelorMittal has listings on exchanges in New York and Europe. For that reason, sending material to Russia could put the group afoul of sanctions imposed by the U.S., UK, and European authorities.

 

Kazakhstan has advanced rapidly in securing its oil shipments across Russia to international customers and reaped additional benefits of closer ties with Moscow despite the threat of secondary sanctions from the West. Last year, Kazakh oil transits hung in the balance as the West imposed extensive sanctions against Russia and its corporations, prompting Moscow to seek revenge. The Kremlin retaliated by cutting capacity at Caspian Pipeline Consortium, which operates a key pipeline transporting about 80% of Kazakh oil exports — mainly from the Western-led developments of Tengiz, Kashagan and Karachaganak — to a floating terminal near the Russian Black Sea port of Novorossiysk. Russia repeatedly threatened to interrupt operations as Caspian Pipeline Consortium had to battle with sudden court rulings and technical compliance warnings last year. However, the pipeline has been working without a snag this year, completing a major capacity upgrade in anticipation of higher production at the Tengiz field — operated by an international consortium headed by US major Chevron. Moreover, despite last year’s call for the diversification of oil export routes, Kazakhstan sent more oil via a legacy pipeline connection with Russia, known as Atyrau-Samara, for the delivery to Germany, and the Russian ports of Ust-Luga and Novorossiysk.

 

Astana has been also looking at Russian producer Lukoil to partner oil and gas holding KazMunayGaz in exploring and developing offshore blocks in the Caspian Sea. KazMunayGaz has also teamed with Russian regional producer Tatneft to tap into deep layers at onshore Karaton field. Kazakhstan turned to Russia and to China — which has not condemned the war in Ukraine — after Astana faced unwillingness from Western oil majors to invest in long-term oil and gas exploration and developments in Kazakhstan due to their focus on renewable-energy projects elsewhere.

 

Kazakhstan’s economy showed sustainable growth of 4.9% in January-November from 2.7% in 2022. Overall, GDP per capita increased from $11,500 to $13,300. Measures envisaging 90 operational and medium-term steps made it possible to lower inflation from 20.3% in December 2022 to 10.3% in November. Fixed asset investments grew 14.6% to over 15 trillion tenge ($32.7 billion).

 

Kazakhstan’s foreign trade turnover in January-October reached $114.1 billion, 2.6% up compared to last year. Export volumes reached $64.6 billion, with the largest share occupied by fuel and energy products (54.1%) and metals and products made from them (14.7%). Main export destinations were Italy (18.7%), China (18.1%), Russia (12.6%), Netherlands (5.7%), South Korea (5.3%) and Türkiye (5%). 68.8% of Kazakhstan’s exports come from selling raw materials without complex processing. Imports in the reporting period totaled $49.5 billion. Passenger cars account for 5.2%, telephones – 3%, bodies and cabins – 2.7%, medicines – 2.2%, parts and accessories for motor vehicles – 2%, and other aircraft account for 1.7%. Kazakhstan imported products mainly from Russia (26.7%), China (25.5%), Germany (5.2%), the United States (4.4%), South Korea (3.9%) and Türkiye (3.4%).

 

Kazakh Prime Minister said investing in non-resource sectors is the key to economic success. He highlighted manufacturing, agriculture, transport, logistics, IT, and tourism as focal points for investment projects. He underscored the government’s commitment to improving the quality of both foreign and domestic investments and enhancing infrastructure through the domestic stock market.

 

AD Ports Group of Abu Dhabi has signed an agreement with Kazakhstan’s Temir Zholy JSC, the Kazkah national railway company to form a joint venture to enhance rail connectivity, maritime shipping services, development of operations in Kazakhstan’s ports, accelerate digital transformation and connectivity in Central Asia. Under the terms of the agreement, the JV, owned 51% by AD Ports Group and 49% by KTZ, will aim to establish a dynamic regional logistics hub, leveraging AD Ports Group’s expertise in management, operations, and development of logistics operations and digital transformation, in addition to leveraging Kazakhstan Railways’ regional knowledge and practices for advanced vessel operations, logistics enhancement, including hopper wagons, port developments, and railway infrastructure expansion.

 

In just two years, from 2021 to 2023, Germany’s exports of cars to Kyrgyzstan surged a staggering 31,000 percent. The export of German cars to Kazakhstan saw a relatively slower, but still eye-wateringly high growth of 1,300 percent over this period. The Russia-Ukraine war, and the resultant Western trade sanctions on Russia is the cause for this gigantic increase. It’s not just cars, and it’s not just Germany. Several European nations have seen their exports to the five Central Asian nations surge by between 1,000 and 2,000 percent for merchandise as varied as ships, toys, industrial steel, and books.

 

This sudden huge spurt in exports from EU nations to the ‘-stans’ has given rise to speculation that Russia — facing tough Western sanctions since it began its offensive on Ukraine in February 2022 — may have found a way to beat some of these restrictions. The allegation is that some of these countries — or entities based there — may be rerouting the sanctioned goods to Russia, although there is no way to prove this yet.

 

India-Central Asia Relations

 

The National Security Council Secretariat (NSCS) of India organized a Practical Seminar on “Countering the misuse of Internet and new information technologies for Terrorists, Separatist and Extremist purposes” for delegates from Shanghai Cooperation Organization (SCO) Member States and representatives of Regional Anti-Terrorists Structure (RATS) SCO on 12 December 2023 at New Delhi. This Practical Seminar was one of India’s initiatives started in 2019 under the framework of the SCO’s RATS. The Practical Seminar was designed with a special focus on examining and deliberating on issues related to Misuse of Internet by Terrorists, Separatists and Extremists (TS&E).  The SCO RATS Member States showed keen interest in deepening cooperation amongst each other for countering the Misuse of the Internet by Terrorists, Separatists, and Extremists and issues related to Cyber Security.

 

Uzbekistan organized its first ever India road show in Mumbai. The event was attended by leading travel agency representatives at Sofitel BKC, and was aimed at showcasing Uzbekistan’s diverse tourism offerings to the Indian travel trade. The roadshow elevated the tour operators’ destination awareness and stimulated their interest in promoting the country as an exciting tourism destination in the Indian travel market. Before the pandemic, Uzbekistan recorded around 29,000 visitors in 2019. It is now witnessing steady growth and wants that number to quadruple in the next three-four years. Despite being very distinct in landscape, culture, attractions and experiences, Uzbekistan is a short-haul destination with just over two hours’ flight time that connects the capitals of the two countries.

 

The previous issues of Central Asia Digest are available here: LINK

 

Ambassador Ashok Sajjanhar

Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of Global Studies and Distinguished Fellow, Ananta Centre Ambassador Ashok Sajjanhar belongs to the Indian Foreign Service and has acquitted his responsibilities in the diplomatic service for 34 years. He was Ambassador of India to Kazakhstan, Sweden and Latvia and has worked in senior diplomatic positions in Indian Embassies/Missions in Washington DC, Brussels, Moscow, Geneva, Tehran, Dhaka and Bangkok and also at Headquarters in India. He negotiated for India in the Uruguay Round of Multilateral Trade Negotiations and in negotiations for India-EU, India-ASEAN and India-Thailand Free Trade Agreements. He contributed significantly to strengthening strategic ties and promoting cultural cooperation between India and USA, EU, Russia and other countries.Ambassador Sajjanhar worked as head of National Foundation for Communal Harmony to promote amity and understanding between different religions, faiths and beliefs. Ambassador Sajjanhar has been decorated by Governments of Kazakhstan and Latvia with their National Awards and by Universal Peace Federation with Title of ''Ambassador of Peace.'' Currently Ambassador Sajjanhar is President of Institute of Global Studies, New Delhi. He writes, travels and speaks extensively on issues relating to international relations, foreign policy and themes of contemporary relevance and significance. He appears widely on TV panel discussions. Ambassador Sajjanhar is interested in reading, music and travelling. His wife Madhu is an economist and an educationist. They have a son and a daughter both of who are accomplished singers. Their son passed out of Yale University and their daughter is pursuing her PhD at University of Minnesota.

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