Political Developments
Chinese President Xi Jinping held talks with Uzbek President Shavkat Mirziyoyev in Beijing and announced that China and Uzbekistan will develop an all-weather comprehensive strategic partnership for a new era, and promote the building of a China-Uzbekistan community with a shared future from a higher starting point. They asserted that the two sides should begin the construction of the China-Kyrgyzstan-Uzbekistan railway project at an early date, advance physical connectivity and institutional connectivity simultaneously, and build a multidimensional connectivity network to help Uzbekistan transform from a landlocked country into a land-linked country.
President Mirziyoyev said, choosing China as the first country to visit this year is of great symbolic significance. Mirziyoyev attributed China’s achievements to the dynamic leadership of President Xi Jinping. Uzbekistan is ready to learn from China’s successful development experience and become a companion on the path to modernization for the benefit of the two peoples. He announced his readiness to elevate bilateral relations to an all-weather comprehensive strategic partnership for a new era and further consolidate and deepen mutual trust, expand comprehensive cooperation, promote high-quality Belt and Road cooperation, achieve more results in practical cooperation in fields such as trade and economy, agriculture, clean energy, and tourism, and at the sub-national level, and enhance people-to-people and cultural exchanges.
After Beijing, Mirziyoyev visited the southern city of Shenzen to see the headquarters of Chinese automaker BYD, which recently overtook Elon Musk’s Tesla as the world’s largest-seller of electric vehicles (EVs). He also oversaw a remote launch ceremony of an assembly plant of hybrid and electric cars to be built in Uzbekistan. Once completed, the factory will produce 50,000 units per year.
Kyrgyz President SadyrJaparov is set to run for a second term in the next election. In Kyrgyzstan, as per the Constitution adopted in 2021, the president is elected for a five-year term and can be re-elected for a second term. SadyrJaparov won the presidential election on January 10, 2021, and officially assumed office on January 28. Back then, the previous version of the law was still in effect, allowing the head of state to serve for six years. Consequently, Japarov’s term is set to expire in 2027.
Transparency International’s (TI’s) 2023-edition Corruption Perceptions Index (CPI) “paints a troubling picture” of Central Asia, “an area struggling with dysfunctional rule of law, rising authoritarianism and systemic corruption”, regional advisors at the Agency said as the ranking was released on January 30. The average score of 35 out of 100 makes Central Asia the second lowest-scoring region in the world. Kazakhstan with 39 points was up by 3 points as compared to last year and was ranked 93/180 countries. It was described by TI as “making some progress in addressing corruption issues, including through legal reforms and recovering stolen assets. However, these efforts are overshadowed by its autocratic governance alongside lack of transparency and judicial independence. Uzbekistan with 33 points was up by 2 points and ranked 121/180 countries. Kyrgyzstan with 26 points was down 1 point and ranked 141/180 countries. TI observed that in “just four years, Kyrgyzstan… has turned from a bastion of democracy with a vibrant civil society to a consolidated authoritarian regime that uses its justice system to target critics.” Tajikistan with 20 points was down 4 points and ranked 162/180 countries. Turkmenistan with 18 points was down 1 point and ranked 170/180 countries. TI said that the country’s anti-corruption efforts have significantly declined.
A Report from a US Think Tank asserted that the US should work to break China’s near monopoly on the production of rare earth elements needed for many cutting-edge technologies by engaging Central Asia to develop high concentrations of Rare Earth Elements (REEs) found in the region. It warned that a failure to act could leave China with a “decisive advantage” in the sector, which is crucial to green energy, many new weapons systems and other advanced technologies. Central Asia enjoys plentiful reserves of minerals ranging from iron and nonferrous metals to uranium. Kazakhstan holds the world’s largest chromium reserves and the second-largest stocks of uranium, while also possessing other critical elements.
Out of 30 critical elements, identified by the U.S. Geological Survey (USGS), 19 are now being produced in Kazakhstan, including natural graphite, phosphorite, tungsten, potassium salts, boron ores, helium, strontium, lithium, gallium, arsenic, germanium, feldspar, and bauxites. The Report claimed that Central Asia offered an opportunity to challenge China’s monopoly and rebalance international supplies. The region holds 38.6 percent of global manganese ore reserves, 30.07 percent of chromium, 20 percent of lead, 12.6 percent of zinc, 8.7 percent of titanium, as well as significant reserves of other critical materials. Kazakhstan is the world’s largest supplier of uranium, with 43 percent of world supply in 2022. With the U.S. House of Representatives passing a bill that would ban imports of Russian uranium in December 2023, as well as increasing interest around the world in nuclear energy in efforts to decarbonize, Kazakhstan is in the spotlight.
China has a significant head start on the United States. It is the main destination for most of the region’s critical minerals. For example, imports of molybdenum, which is used in the production of wind turbines, from Kazakhstan to China quadrupled between 2017 and 2020. Kazakhstan became the second-largest exporter of chromium to China after South Africa in 2019. Chinese companies own the majority of licenses for the extraction of critical minerals in Tajikistan and Kyrgyzstan. The region’s proximity to China and the lack of other external investors mean that exports to China look set to increase.
Investing in Central Asia’s mining and processing capabilities could significantly de-risk the world’s clean energy supply chain. To be effective, the U.S. needs to move beyond financial investment to include technology transfers and expertise. The U.S. should establish a sustainable partnership that ensures the benefits of mineral wealth translate into broader economic growth and stability for the region. Critical minerals are already starting to compete with hydrocarbons as the region’s most-valuable export, with sales of Kazakh copper bringing in more revenue than natural gas in 2020 for the first time. In Tajikistan, critical minerals accounted for 37 percent of exports in 2019, consisting of aluminum, zinc, and lead. Uzbekistan and Kyrgyzstan have both seen the sector surpass 10 percent of their total exports.
According to the latest findings from the “Listening to Kazakhstan” survey conducted by the World Bank, around 70 percent of Kazakhstan’s citizens express satisfaction with their life – a number that has remained the same since the start of the survey in 2021. The survey, reaching 1,400 households across urban and rural areas in Kazakhstan, revealed that public perceptions of local economic conditions significantly improved in 2023. Around three-quarters of respondents expressed optimism regarding the country’s long-term economic trends, and this share remained largely stable during 2023. The survey showed that support for the government’s reforms increased to 67 percent and was particularly high among young people, the elderly, and rural residents.
Organizations including Human Rights Watch said that the Kyrgyz parliament should reject the ‘’highly repressive’’ “foreign representatives” draft law, which would unduly interfere with the activities of nongovernmental organizations receiving funding from abroad. The draft law would allow local nongovernmental organizations to be labelled “foreign representatives” if they receive foreign funding, categorizing any of their advocacy, monitoring, information provision, and direct-action activities as “political activities” in the interests of their foreign funders.
A well-known Russian TV presenter recently upbraided Kazakhstan for having the temerity to give a number of train stations more Kazakh — and, accordingly, less Russian — names. She argued that this was a certain first step to the exclusion of ethnic Russians from public life in Kazakhstan, citing what she described as a “dangerous” precedent set by the former Soviet Baltic republics. She said that there too everything started small, and then ‘’it really snowballed. Russian schools were shut down, Soviet monuments were removed, the Russian language was banned and, finally, pensioners were kicked out into the cold.” In a follow-up post, she reminded her readers that the Russian-led Collective Security Treaty Organization had helped Kazakhstan restore stability after the violent political unrest of January 2022. She suggested that Kazakhstan to be doing anything to disrespect Russia and its culture and language is ingratitude.
The Kazakh Ministry of Defense announced that it will conduct two military exercises with Azerbaijan this year. The command and staff exercise “Birlestik-2024” will be conducted, featuring units from the armed forces of Azerbaijan, Uzbekistan, Kyrgyzstan, and Tajikistan. Additionally, joint naval exercises will be held with the Caspian states (Azerbaijan, Iran, Kazakhstan, Russia).
Economic Developments
Total Chinese investments in Central Asiain creased from $40 billion 2020, to over $70 billion in 2022, making it the largest economic actor in the region. Russia, which accounted for 80 percent of the region’s trade in the 1990s, now accounts for less than two-thirds of Beijing’s trade. Lurking beneath these big numbers is a growing asymmetry, particularly between China and the countries of the region. In 2020, an estimated 45 percent of Kyrgyzstan’s external debt, and 52 percent of Tajikistan’s was owed to China. Meanwhile, 75 percent of Turkmenistan’s exports depend on Chinese consumers.
During the two-day Investors Forum for EU-Central Asia Transport Connectivity, the European Union, Central Asian countries and other gathered partners from across the world took important steps to start the development of the fast route Trans-Caspian Transport Corridor linking Europe and Central Asia within 15 days. European Commission announced an overall commitment to invest €10 billion in sustainable transport connectivity in Central Asia, as contributions from international partners present at the Investors Forum. A series of Memoranda of Understanding and agreements were signed to kickstart the development of the corridor.
The first SCO Digital Forum, bringing together IT and communication agencies from countries within the Shanghai Cooperation Organization (SCO), was held in Almaty. Kazakhstan’s minister of digital development, innovations and aerospace industry said that “Kazakhstan has achieved significant success in the field of digitalization, GovTech, and IT development, confidently leading among the Central Asian countries.” He highlighted the successful Kazakhstani IT startups at the international techno-park Astana Hub. “The advantage and attractiveness of Astana Hub to international companies lie in visa and tax preferences, extraterritoriality, the possibility of online registration, and the launch of acceleration programs. Participants from the SCO countries exchanged best practices in ICT, ready to give a new impetus to the innovative technological development. The discussions also focused on eliminating the digital divide between the states. With the aim of promoting partnership for sustainable development of the digital economy, the parties agreed to deepen cooperation.
As Russia experiences the impact of sanctions and restrictions in trade and economic relations with a number of countries, Central Asian countries and China are exploring new routes to increase their exports to Europe, bypassing Russia.The Middle Corridor that connects Central Asia to Europe, has emerged as an alternative to the Northern Corridor, where Russia plays a key role as most of it runs through Russian territory, and the conventional sea route through the Indian Ocean. And the route shaves weeks off transit times. If it takes 40 to 60 days to ship cargo from Europe to Asia through the Suez Canal or around Africa, and it takes more than 30 days to deliver cargo from China to Europe using the Northern Corridor, by using the Baku-Tbilisi-Kars railway that is a core part of the Middle Corridor, deliveries from Asia to Turkey via the South Caucasus takes only 15 days. In 2023, Kazakh oil was carried along the Middle Corridor for the first time.
The International Chamber of Commerce’s (ICC) International Court of Arbitrations in Paris, France, have unanimously ruled in favor of the Kyrgyz Republic in a case brought by Kazakhstan’s state natural gas company QazaqGaz. The Kazakh company’s claim was filed in 2020. QazaqGaz had originally sought $35 million during the arbitration proceedings, but later reduced its claims to $15 million by waiving its claim to lost profit.
Kazakhstan has claimed the sixth spot in the foreign direct investment (FDI) Standouts Watchlist 2024.The first half of 2023 saw a $13.3 billion influx of foreign direct investment (FDI) into Kazakhstan. The Netherlands, the US, Switzerland, Russia, China, South Korea, Belgium, France, UAE, and Luxembourg emerged as the top contributors. Astana is keen to receive higher investment from India.The mining sector attracted the largest share of FDI by industry ($5.6 billion), followed by manufacturing ($2.9 billion), wholesale and retail trade ($2.5 billion), financial and insurance activities ($488.2 million), transport and warehousing ($577.8 million), construction ($189.8 million), professional and technical activities ($159.6 million), and real estate operations ($234.3 million).
India-Central Asia Relations
India along with 10 other countries participated in a conclave in Kabul organized by the Taliban, focusing on regional cooperation. The meeting, addressed by the Taliban acting foreign minister Amir Khan Muttaqi, emphasized the importance of regional dialogues to enhance positive interactions with Afghanistan. In his address, Muttaqi urged the participants to capitalize on emerging opportunities in Afghanistan for regional development and coordinate the management of potential threats. He emphasized that regional cooperation should focus on exploring region-centric pathways based on shared benefits. Muttaqi also called for the removal of unilateral sanctions imposed on Afghanistan, asserting that Kabul is prepared to engage and cooperate with regional countries based on mutual interest and respect. In his remarks, Muttaqi also urged the participants to take advantage of emerging opportunities in Afghanistan for the development of the region and “coordinate the management of potential threats”. Afghanistan is a “sovereign, free and safe country” with a government that “stands ready and has the capacity to conduct talks on common and concerning issues” with regional and international players, Muttaqi was quoted as telling the meeting. He added that Afghanistan does not want confrontation with any country but seeks positive engagement. “Therefore, our choices shall be respected. Instead of proposing governance models and pointing fingers at the system, it is better to engage on mutual interests,” Muttaqi said. “Calling the current diplomatic relations of Afghanistan with the countries of the region remarkable, FM Muttaqi stressed that regional countries should hold regional peace talks to increase and continue positive interaction with Afghanistan.
The participating countries included India, Kazakhstan, Turkey, Russia, China, Iran, Pakistan, Uzbekistan, Turkmenistan, Indonesia, and Kyrgyzstan. Russia was represented by its special representative for Afghanistan, ZamirKabulov. No official statement regarding the meeting was issued by India. India’s participation in the meeting occurred shortly after the Indian embassy in the United Arab Emirates (UAE) extended an invitation to the charge d’affaires of the Afghan mission in the country to attend India’s Republic Day celebrations in Abu Dhabi. A government source clarified that the invitation was sent to all accredited missions based in the UAE as part of standard diplomatic protocol. India has not recognized the Taliban setup and has been pitching for the formation of a truly inclusive government in Kabul. Hafiz Zia Ahmad, deputy spokesman of the Taliban foreign ministry, quoted the Indian representative who attended the meeting as saying that New Delhi backs all initiatives focused on the stability of Afghanistan. “India actively takes part in international and regional initiatives regarding Afghanistan, and supports every effort leading to the stability and the development of Afghanistan,” Ahmad quoted the Indian representative as saying.
IT, healthcare, tourism and education have been identified as key fields where India and Kazakhstan can expand partnership. Indian investments have big potential in Kazakhstan. Indian tech companies and startups can partner with Kazakh counterparts in the growing IT and innovation sector.
The honorary consulate of Kazakhstan in Hyderabad celebrated its third anniversary marking three years of strengthened relations between Telangana and Kazakhstan. Among the achievements highlighted were an MoU between Astana and T Hub, Visa-free visits for Indian citizens to Kazakhstan, and plans for a direct flight from Hyderabad to Kazakhstan to further strengthen the bonds between the two countries.
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(The views expressed are personal)
