Central Asia Digest | May 2023

HIGHLIGHTS 

● Political Developments
● Economic Developments
● India-Central Asia Relations

Political Developments

The first in-person China-Central Asia (C+C5) Summit was held in the north-western Chinese city of Xi’an on 18th-19th May. The Summit marked “the first diplomatic event that China will host this year.” China had organized a virtual C+C5 Summit on 25th January, 2022. Presidents of China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan participated in the Meeting.

Chinese President Xi Jinping recalled the millennia-old friendship and hailed the relations as brimming with vigor and vitality in the new era. In expounding on how to build a China-Central Asia community with a shared future, Xi stressed the need for mutual support, common development, and upholding universal security and everlasting friendship. Xi hailed the proposed China–Kyrgyzstan–Uzbekistan railway, the China–Tajikistan expressway, the China–Kazakhstan crude oil pipeline and the China-Central Asia Gas Pipeline as the present-day Silk Road, and the China–Europe freight trains, freight trucks and flights as the present-day camel caravans. He urged that in addition to traditional areas of cooperation, China and Central Asia should also forge new drivers of growth in finance, agriculture, poverty reduction, green and low-carbon development, medical service, health and digital innovation. He added that it is important that ‘’we act on the Global Security Initiative, and stand firm against external attempts to interfere in domestic affairs of regional countries or instigate color revolutions.’’

During their meetings and talks with Xi, the leaders of the 5 Central Asian Republics expressed confidence and determination to boost cooperation with China, voicing their support for the China-proposed initiatives on global development, security and civilization.

The Xi’an Declaration of the China-Central Asia Summit was signed. Another significant step was the adoption of the List of results of the Summit, which outlines the main agreements and cooperation initiatives, mechanisms and platforms for multilateral interaction. The summit resulted in a staggering 54 agreements, 19 new cooperation mechanisms and platforms, and nine multilateral documents, including the Xi’an declaration. Even if several of these were to be discounted as having uncertain prospects of actual implementation, there can be no doubt about China’s growing influence in the region. According to UN statistics the volume of trade in goods between China and the five countries of the region rose from US$460 million three decades ago to more than US$70 billion in 2022 – a 150-fold increase -and its investments there totaled $15 billion. Kazakhstan accounted for $31 billion of the trade, while Kyrgyzstan came next with $15.5 billion, followed by Turkmenistan ($11.2 billion), Uzbekistan ($9.8 billion) and Tajikistan ($2 billion), as China sought deeper links in its quest for greater food and energy security.

Xi told reporters on May 19 that ‘’China and the Central Asian countries will firmly support each other on issues concerning their respective core interests such as sovereignty, independence, security, and territorial integrity.”

The Chinese state-owned media reported plans to open Chinese-funded medical laboratories in Kyrgyzstan and Turkmenistan, as well as implement a “second phase of investment” in a similar project in Uzbekistan. Such laboratories already exist in Tajikistan and Kazakhstan.

Kazakh President Kassym-Jomart Tokayev held pre-summit talks with Xi on May 17. 23 bilateral agreements were signed by officials from the two countries, including a pact enabling visa-free tourism. Tokayev also announced the opening of a Kazakh consulate in Xi’an. In addition, Tokayev participated in a bilateral investment event, resulting in the signing of 47 deals potentially worth about $22 billion.President Tokayev discussed plans to expand the “Kazakhstan-China oil pipeline, increase gas processing capacity, expand the gas transmissionsystem and build a gas processing plant at the Kashagan oilfield”. Xi Jinping stressed that an independent, secure, stable, growing and prosperous Kazakhstan is in the common interests of the people of China and Kazakhstan. The two Presidents signed the Joint Statement between China and Kazakhstan, and witnessed the signing of multiple bilateral documents on cooperation in economy, trade, energy, transportation, agriculture, connectivity, and people-to-people and cultural exchanges, as well as at sub-national levels.

Xi said that China firmly supports Kazakhstan in safeguarding its national independence, sovereignty, and territorial integrity. Xi noted that over the past decade since he put forward the Belt and Road Initiative (BRI), China and Kazakhstan have successfully implemented dozens of important cooperation projects which have delivered benefits to the two peoples and contributed to the common development of the two countries.

Tokayev expressed pleasure at the signing of the bilateral agreement on mutual visa exemption, noting that it will give a strong boost to exchanges between the two countries. He hailed the BRI as a great initiative, saying that Kazakhstan will continue its active participation in the BRI. He added that given the current complex international situation, the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative proposed by Xi Jinping are of great significance. Kazakhstan is ready to work with China to make full use of the China-Central Asia cooperation mechanisms to jointly promote regional security, stability, and development.

Kazakh Agriculture Ministry representatives later sought to dispel rumors circulating on the Chinese-language internet about the sale of Kazakh land. “The provision of [agricultural] plots to foreigners is strictly prohibited,” a Kazakh ministry official said. A memorandum of understanding involving Samruk-Kazyna, Kazakhstan’s Ministry of Energy, the China Energy Investment Corporationand Chinese company SANY Renewable Energy, to manufacture windmills in Kazakhstan was signed. The deal also aims to “increase the total capacity of renewable generation in Kazakhstan by 40 percent.” Meanwhile, Kazakhstan’s Ministry of Agriculture signed protocols that can make it easier for Kazakh farmers to export agricultural products to China.

According to experts, the signing of the mutual visa-free agreement between the two sides was one of the key outcomes of the meeting.

On the eve of the summit, police in Kazakhstan detained several activists who tried to hold rallies against the agreement on visa-free entrance for Chinese citizens traveling to Kazakhstan.

Xi emphasized that China firmly supports Uzbekistan in safeguarding national sovereignty, independence and territorial integrity, and in following a development path suited to its national conditions. The two sides should firmly support each other and be each other’s reliable and trustworthy friends and partner.

Uzbek President Shavkat Mirziyoyev said that Uzbekistan is ready to learn from China’s experience in poverty alleviation, further deepen cooperation with China in various fields and strengthen people-to-people and cultural exchanges, actively implement the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative, and elevate Uzbekistan-China comprehensive strategic partnership to a new level. Uzbekistan is also ready to strengthen coordination with China in multilateral settings including the China-Central Asia cooperation mechanism, to jointly promote regional security and development.

The two leaders signed the Joint Statement between China and Uzbekistan, approved a plan for the development of the comprehensive strategic partnership in the new era between the two countries (2023-2027), and witnessed the signing of multiple bilateral documents on cooperation in priority investment projects, poverty alleviation, trade of agricultural products, and inspection and quarantine, as well as sub-national cooperation.President Mirziyoyev oversaw signing of 41 bilateral deals worth potentially $25 billion covering such areas as energy development, chemistry, metallurgy, geology, automotive production, electrical engineering and construction. During the summit, Mirziyoyev voiced a desire to see a doubling of trade between Central Asian states and China by 2030.

A meeting between Xi and Kyrgyz President Sadyr Japarov resulted in the signing of 25 agreements, including a joint declaration on the establishment of a strategic partnership. Japarov also held talks with other major Chinese figures, including Premier Li Qiang and Chair of the People’s Political Consultative Conference Wang Huning, along with top business executives. Discussions focused on the China-Kyrgyz-Uzbek rail project and the Kambar-Ata hydroelectric power station.

The Presidents of Tajikistan and China signed the Joint Statement between the two countries and witnessed the signing of multiple bilateral cooperation documents in such areas as economy and trade, connectivity, science and technology, and sub-national exchanges. Tajik President Rahmon’s meeting with Xi yielded 25 cooperation agreements covering such areas as anti-terrorism, media, humanitarian assistance and trade. In a separate meeting with Premier Li Qiang, Rahmon reportedly discussed accelerating the construction of Line D of the Turkmenistan-Uzbekistan-Tajikistan-Kyrgyzstan-China gas pipeline. XI lavished praise on Rahmon, calling him “a wise, experienced and far-sighted politician” whose “suggestions and thoughts are very important to China.”

Several bilateral agreements were signed covering such areas as animal quarantine, mass media and customs during Turkmen President Serdar Berdymukhamedov’s meeting with Xi. Berdymukhamedov proposed to expand Turkmen gas exports and transit routes to China. Xi Jinping pointed out that China and Central Asian countries are closely interconnected as lips and teeth, and having stood together through thick and thin, have become a community with a shared future. China looks forward to working with the five countries to make the China-Central Asia Summit a success, promote the steady development of China-Central Asia cooperation, and uphold peace, stability and long-term security in Central Asia.

Among the signed documents were Memoranda of Understanding aimed at building partnerships between the six states in such areas as trade and economic relations, digital trade, infrastructure and engineering construction, agriculture, technical cooperation in the field of veterinary medicine and quarantine when importing and exporting plants, the establishment of a Business Council, as well as Regulations on the work of the mechanism for the meeting of the heads of customs services in the ” China – Central Asia” format.

Xi said that the ‘’summit has added new impetus to the development and revitalization of the six counties, and injected strong positive energy into regional peace and stability. He added that the leaders agreed to promote in-depth cooperation across the board, with priority accorded to transport, economy and trade, investment and industry, agriculture, energy, customs, and people-to-people exchanges.”To stimulate our cooperation and Central Asian development, China will provide Central Asian nations with a total of 26 billion yuan ($3.8 billion) of financing support and grants,” Xi said.

In his keynote speech on May 19 titled “WorkingTogether for a China-Central Asia Community with a Shared Future Featuring Mutual Assistance, Common Development, Universal Security and EverlastingFriendship,” Xi emphasized that the world needs astable Central Asia; thus, the “sovereignty, security, independence andterritorial integrity of Central Asian countries must be safeguarded.’’

Xi tried to persuade the Central Asian countries that, in this polarizing world, they can count on China and are on board with the Chinese notion of “common destiny.” There were inducements to garner the countries’ support. Kazakhstan and China signed a deal for a new industrial transfer program, and Beijing pledged to support Kazakh businesses operating in China and to increase the number of tourists visiting the country. Kyrgyzstan and China announced a new investment fund, extended an invitation for China to open branches of its banks in the country, and added Kyrgyzstan to China’s list of countries Chinese nationals are allowed to visit as tourists. Looking at the bilateral statements coming out of the Xi’an Summit, the China-Uzbekistan statement has twenty-eight items, the China-Kazakhstan statement seven, China-Kyrgyzstan eleven, and China-Tajikistan eighteen. Most importantly, China is planning to open a C+C5 secretariat with nineteen separate channels of direct engagement with the region, moving away from its long preference of working bilaterally to instead attempt to tie the whole of Central Asia’s outlook to China no matter what domestic political changes occur there.

Central Asian countries vary in their receptiveness to China’s overtures. For example, Kazakhstan and Uzbekistan have previously shown greater reluctance to engage with Beijing than some of the others. But there is a region-wide trend of closer alignment with growing China.

While China is ramping up its campaign to engage with Central Asia, the opportunities for Central Asian countries to cooperate with other foreign players are uncertain. Russia is embroiled in its war with Ukraine. The United States’ presence is suffering from its exit from Afghanistan and consequently reduced attention being paid to the region. Moreover, recent programs to increase cooperation with Central Asia by Turkey, India, the European Union, and the United States are yet to take off.

China is also seeking to export its governance style—which easily accommodates authoritarian practices—to Central Asia. By oppressing civil society, detaining or expelling journalists, and arresting leaders of protests ahead of and after demonstrations, Central Asian governments could be attracted towards a governance style which they perceive as having been successful in China.

A mechanism for meetings among the heads of state of China and Central Asian countries was officially established, with the two sides – China and Central Asian countries – taking turns to host the biennial summit. The next Summit will take place in Kazakhstan in 2025.

There is a special significance of the Summit as earlier cooperation was bilateral or multilateral under the auspices of the Shanghai Cooperation Organization (SCO), now it has been brought under a new mini-lateral involving China and the region.

Russian-language media devoted considerable attention to the Chinese announcement of a $3.7 billion aid package designed “to strengthen cooperation and development of Central Asia,” as well as a trilateral memorandum on the construction of a China-Kyrgyzstan-Uzbekistan railway.

Commenting on the C+C5 Summit, Russian Foreign Ministry said in a media briefing on May 17 that Central Asian countries are well aware that “neither the West nor anyone else” will be able or willing to compensate their losses if they choose to break ties with Russia. “We assume that our partners also understand that the potential losses from the curtailment of ties with our country would be immeasurably greater than the effect of the notorious secondary sanctions.” A Chinese expertsaid that the expression “anyone else” mentioned in Russian Foreign Ministry’s speech obviously refers to China. He said that Russia may be worried that C5 is walking away from it but this is totally unnecessary as China only wants to connect with neighbours. He argued that Central Asian countries ‘’will not lean towards the West only if they choose to cooperate with China. China can help Russia safeguard the Central Asia region.”

However a Russian defense journalist published an article titled “China takes over Central Asia,” saying that Xi openly offered to form a military bloc with the post-Soviet states, some of which are members of the Eurasian Economic Union (EAEU) and the Collective Security Treaty Organization (CSTO). He stated that China today has economic power and military strength which may persuade some members to eventually leave the EAEU and the CSTO if a new C5+China military bloc is established. He said that such a trend will not pose any military threat to Russia while the dissolution of the EAEU would not imply that Central Asian countries will abandon Russia.

China has been careful in expanding its footprint in Central Asia so as not to arouse Russian suspicions. It has not challenged the Russia-led Eurasian Economic Union that integrates several of the Central Asian and Caspian republics to Russia in a single market.

Uzbekistan has been undergoing profound political, economic and social reforms for seven years ever since President Shavkat Mirziyoyev came to power. One of the major themes of his second presidential term, which began in 2021, was constitutional reform.Following the referendum of 30 April, 2023 in which most of the amendments to the constitutional text were approved, early presidential elections will be held on 9 July as the culmination of the profound transformation the country is undergoing.This reform cycle is placing the country in a position of international leadership. The Uzbek model of international relations is based on the promotion of peace and respect for international law, which is reflected in Articles 17 and 18 of the Constitution, which recognize the equality of states on the basis of sovereignty and respect for their territorial integrity and condemn the threat and use of force. From this point on, Uzbekistan claims peaceful resolution of disputes and the principle of non-interference in the affairs of other states. Rising geopolitical tensions in both East and West Eurasia make these principles enshrined in the constitution all the more important.

Police in tightly controlled Turkmenistan have launched a nationwide crackdown on men’s facial hair, forcibly shaving young men’s beards and barring bearded men from boarding planes or trains. A 30-year-old bearded man was not allowed to board a flight at the Turkmenbashi International Airport because of his facial hair.Several other residents in western Turkmenistan confirmed that local police in recent days have been targeting young, bearded men on the streets, demanding they shave their beards or be taken to a police station.Authorities are also demanding that men sign a written pledge that they won’t grow a beard in the future. There have been numerous reports that bearded men were rounded up and forcibly shaven by police in Turkmenistan, Tajikistan, and Uzbekistan. Turkmenistan last year launched a string of restrictions against women, banning them from wearing “tight-fitting” clothes, coloring their hair, or having cosmetic surgery, such as breast enhancement. At least 20 female flight attendants and some 50 female employees of the national rail service were fired for allegedly having had their lips or breasts surgically enhanced.

Singapore’s President Halimah Yacob paid a State Visit to Kazakhstan from 21 to 23 May 2023 at the invitation of President Tokayev. She also visited Uzbekistan from 23 to 25 May 2023 at the invitation of President Mirziyoyev. These were the first State Visits by a Singaporean President to Central Asia.In Kazakhstan, President Halimah was accorded a State Welcome and a State Luncheon was hosted in her honor by President Tokayev. A dinner was hosted for her by Kazakh PMAlikhanSmailov. President Halimahmet Singapore and Kazakh business leaders at the Singapore–Kazakhstan Business Forum. She also visited the Astana International Financial Centre and the Nazarbayev University.

Singapore and Kazakhstan inked four agreements including one that will give Singapore companies greater access into Kazakhstan’s services sectors and protect investors’ interests.This agreement offers mutual benefits for businesses from both countries, which in turn will generate opportunities in a range of sectorssuch as specialised medical services, dental, interior design, urban planning and engineering. The agreement will also protect Singapore investors and companies in Kazakhstan from discriminatory treatment and illegal expropriation, among other things.

Singapore will help train officials from five Central Asian countries in areas such as public administration, urban development and trade negotiations, under a memorandum of understanding (MOU) inked by MFA and Kazakhstan’s Agency for International Development.

On the economic front, Enterprise Singapore signed a cooperation agreement with the Astana International Financial Centre to help Singapore companies establish a presence in Kazakhstan, and also identify key private and public projects they can invest in.

EnterpriseSG also signed an MOU with the Joint-Stock Company Center for Trade Policy Development (QazTrade) to provide support for activities such as trade missions and study visits. The aim is to help Singapore companies in the urban solutions, logistics, consumer goods and infrastructure services sectors to explore business opportunities in Kazakhstan. Kazakhstan is Singapore’s largest trading partner in Central Asia. In 2022, bilateral trade in goods totaled S$412.3 million.During the visit, close to 20 MOUs were inked between Singapore companies, such as PSA International, SurbanaJurong and Wilmar International, and their Kazakh partners.

In Uzbekistan, President Halimah was accorded a State Welcome and a State Luncheon by President Mirziyoyev in President Halimah’shonour. President Halimah met Singapore and Uzbek business leaders at the Singapore–Uzbekistan Business Forum and visited the Academy of Public Administration. In addition, President Halimah visited Samarkand. President Halimah was accompanied by several Ministers as well as officials from the President’s Office.

The gathering at Red Square on May 9 to mark the end of World War II in Europe in 1945 was attended by leaders from Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, and Belarus. Despite only the leader of Tajikistan being present in 2021, it is clear that Russia still holds significantinfluence in the Central Asian region as all five former Soviet Union countrieswere represented in 2023. On the sidelines of the Victory Day Parade 2023, Russian President Vladimir Putin held a bilateral meeting with Kyrgyzstan’s President SadyrJaparov and Uzbekistan’s President Shavkat Mirziyoyev on May 8 separately. After themeeting with President Japarov, the two leaders adopted a joint statement on“deepening relations of strategic partnership and alliance.”In a show of loyalty to Russia, President SadyrJaparov signed orders tohelp facilitate the legal stay of citizens of Kyrgyzstan in Russia.

Economic Developments

Speaking at a plenary session of the Eurasian Economic Union (EAEU) in Moscow, Kazakh President Tokayev said that Kazakhstan sees the union as an exclusively economic bloc. He criticized the Russia-led economic bloc EAEU and cautioned against political integration between its members. Kazakhstan, once Moscow’s closest ally in Central Asia, has been shaken by the invasion of Ukraine that sparked fears about Russia’s geopolitical ambitions.“This is precisely what is stipulated in the 2015 treaty,” Tokayev said, addressing his Russian counterpart Vladimir Putin, who appeared alongside him on stage. Any other areas of integration should only be considered “through the prism of the economy,” he said.“We have a Union State in the EAEU,” he said, referring to Russia and Belarus. He added that the other member countries — Kazakhstan, Kyrgyzstan and Armenia — share a different level of integration. He argued that the member states need to discuss and resolve this issue.

The European Union (EU) and the European Bank forReconstruction and Development (EBRD) Study on Sustainable TransportConnections between Europe and Central Asia identified that the CentralTrans-Caspian Network, traversing through southern Kazakhstan, is the mostsustainable option for forging links between Central Asia andEurope, increasing container volume from a European company intends to invest $50 billion in a center for the production and distribution of renewable energy and green hydrogen, possibly in Kazakhstan. A pre-feasibility study has already been completed. The project implementation is slated for the 2026-2032 period. A 40 gigawatt-plant is expected to use up to two million tonnes of green hydrogen for production per annum, with further conversion into 11 million tonnes of pure ammonia.

The 46th annual meeting of the Association of Development FinancingInstitutions in Asia and the Pacific (ADFIAP) took place in Almaty, Kazakhstanon May 15-16. The conference focused on the impact of DevelopmentalFinancial Institutions (DFIs) on sustainable infrastructure in Asia and thePacific region. Nikolai Podguzov, Chairman of the Management Board at theEurasian Development Bank (EDB), highlighted that Central Asian nations areunable to exploit 20% of their development potential due to their lack of accessto the sea. At the conference, Kazakh President Tokayev highlighted theongoing systemic transformations to achieve a more robust and diversifiedeconomy. Furthermore, he expressed the country’s interest in financial andeconomic cooperation with other nations.

On May 18-19, Kazakhstan hosted the second European Union-Central Asia Economic Forum. It discussed the policies, programs, and investmentsneeded to develop a more integrated and interconnected regional marketengagement. This forum will prioritize three key areas: a green and digitaltransition, creating a better business environment, and improving trade andconnectivity. Participants included high-level representatives from EUmember states, partners who are implementing EU-funded projects in theregion, European financial institutions, and private sector representatives fromCentral Asian and European countries.

India-Central Asia Relations

On May 5, the Council of Ministers of Foreign Affairs of the Shanghai Cooperation Organization (SCO) member countries convened in Goa. At the meeting, the foreign ministers delved into regional and global issues, and reviewed preparations for the forthcoming SCO Council of Heads Summit scheduled for July 3-4. Kazakh Deputy Prime Minister and Minister of Foreign Affairs Murat Nurtleu strongly emphasized that “the SCO should find ways to adapt to the rapidly evolving global situation by working together in a coordinated manner”.

In addition, the meeting attendees reached an agreement to enhance the organization’s performance. They reviewed the proposed New Delhi Declaration, which is to be approved by the Heads of State.

Indian IndiGo low-cost air carrier plans to launch flights to Kazakhstan. The airline plans to commence flights to Kazakhstan starting from August 15, 2023. The flights will operate three times a week on the Delhi-Almaty route via A320 and A321 aircraft. IndiGowhich is India’s largest low-cost carrier, will have a positive impact on ticket affordability in Kazakhstan and raise competition in the region.The increased air connectivity between Kazakhstan and India will foster further development in trade, economy, business, investments, tourism, and cultural cooperation between the two nations.

The Government of Kazakhstan has cancelled visa fees for Indian tourists for two weeks.

Low-cost air carrier based in Kazakhstan, FlyArystan has announced new direct flight service from New Delhi to the Southern Kazakh city of Shymkent.The first flight on the Delhi-Shymkent route was carried out on May 22.FlyArystan is a part of the Air Astana Group and the first Kazakh low-cost carrier that started its operations in May 2019. The carrier’s fleet consists of 14 Airbus A320 aircraft.Earlier Kazakhstan had waived visa fees for Indian tourists for a 14-day visit.

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