Central Asia Digest | April 2022

HIGHLIGHTS

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

Political Developments

Kazakh President Tokayev in an Article wrote: ‘’As states that share the longest border in the world, Kazakhstan and Russia enjoy special relations of mutual cooperation. Meanwhile we also have deep traditions of friendly relations with Ukraine. We respect its territorial integrity—as the overwhelming majority of the world does. We hope for a swift and just resolution of the conflict in accordance with UN Charter. I have been in direct communications with Presidents Vladimir Putin and Volodymyr Zelensky urging for dialogue and peaceful settlement of hostilities. Kazakhstan is both willing and able to continue its role as international mediator.’’

Delivering his Address to the Kazakh Parliament on 16th March, Kazakh President Tokyaev said that Kazakhstan is embarking on an unprecedented decentralization of state power, enhancing checks and balances. He added: ’’Corruption and nepotism will not be tolerated. Concentration of political power and accumulation of wealth in the hands of a few must be reversed if this country is to prosper. Indeed, political powers will be rebalanced shifting this country from a “super-presidential” to a “normative presidential” model of government. Through new constitutional amendments, Parliament’s authorities will be strengthened…and barriers to the formation of new political parties will be eased, providing for political diversity. Our government has listened carefully to civil society and public opinion in the design of these reforms. Economically, our system must work for all people, not just for the very few, as has often been the case in the past. Growth that is not inclusive is not sustainable. Furthermore, the tremendous wealth accumulated by the oligarchs and their monopolies will be redirected towards the working and middle classes of this country. I have mandated a 40% increase in the minimum wage, as well as wage increases for public sector workers. Small businesses will see their tax burdens shrink while Kazakhstan’s extractive companies will shoulder a larger and more just share of the economic burden. Both domestically or internationally, partnership is still the only way to build a better common future of peace and prosperity. We want to strengthen our three-decade strong friendship and cooperation with Europe and the United States.’’ These reforms were in response to the public protests, demonstrations and violence that witnessed the killing of about 250 people in Kazakhstan at the beginning of January this year after the price of LPG was doubled on 1st January. In this speech, President Tokayev explained that the country was entering a new chapter of its history, a “new Kazakhstan.”

Plans for this “new” country occur at a time of geopolitical turmoil due to the Russian invasion of Ukraine; key concerns for the Central Asian state are the geopolitical consequences of the Ukraine war and the resulting sanctions against Russia, particularly regarding food and energy security. Geopolitical uncertainty is putting serious pressure on the Kazakh and other Central Asian economies.

In light of developments in January, domestic audiences had hoped President Tokayev’s State of the Nation address would chart a path to comprehensive political and economic change. Yet, despite some promising proposals on court processes and local governance, these reforms risk becoming little more than window dressing if the underlying structural barriers to democratization, transparency, and executive accountability remain unaddressed.

In March, Kazakhstan denied a request from Moscow to provide troops for the offensive in Ukraine and also stated that it did not recognize the Kremlin-backed separatist "republics" in Ukraine.

Kazakh Foreign Minister Mukhtar Tileuberdi said Kazakhstan does not recognize districts in Ukraine's eastern regions of Luhansk and Donetsk controlled by Russia-backed separatists as independent. “It is important for us to prevent negative effects of the sanctions [imposed on Russia] on the development of our economy, and it is important that our territory is not used to evade those sanctions," Tileuberdi said.

While describing the goals of their visit to Brussels on March 28-29, Timur Suleimenov, the first deputy chief of staff to the president, said he and Erzhan Kazykhan, deputy chief of staff to the president and his special envoy for international cooperation, sought to show the European partners that Kazakhstan is keen to expand cooperation with the EU and the West despite the Western sanctions on Russia. Suleimenov said that Kazakhstan will continue to invest in Russia and attract investment from Russia, because “there is no way for our economy to do it differently. (The purpose of the visit to Brussels) is to demonstrate to our European partners that Kazakhstan will not be a tool for circumventing US and EU sanctions against Russia. We will comply with the sanctions. Although we are part of the Economic Union with Russia, Belarus and other countries, we are also part of the international community. Therefore, the last thing we want is for Kazakhstan to be subject to secondary sanctions by the US and the EU”, Suleimanov said. "Russia introduced a law prohibiting the word “war”. They call it a special military operation. But in Kazakhstan, we call it what it is, unfortunately,” he said. “Kazakhstan respects the territorial integrity of Ukraine. We have not recognized and do not recognize either the situation with Crimea or the situation with Donbass, because the UN does not recognize them. We will only respect decisions made at the level of the United Nations,” he added.

Kazakhstan’s Deputy Minister of Foreign Affairs Roman Vassilenko took part in the 19th Meeting of the Republic of Kazakhstan - European Union Cooperation Committee. The agenda of the committee included cooperation in political, trade, and economic area, the rule of law and human rights, as well as cooperation in the field of transport, energy, education, science, environmental protection, and combatting climate change. EU, which is Kazakhstan’s main trade and investment partner, accounts for about 40% of the country’s trade and accumulated foreign investments. Vassilenko emphasized the importance of minimizing or preventing the negative effects of EU’s sanctions regime against Russia on trade and economic relations between Kazakhstan and EU. He added that “European companies are leaving Russia either due to sanctions or due to pressure from the public, from shareholders and ethical reasons. They want to be somewhere in the neighbourhood, and we would like to be that neighbour.’’ Vassilenko said that Kazakhstan did not want to become a collateral victim of politically motivated economic warfare. "If there is a new iron curtain, we do not want to be behind it," he said in an interview published on March 28.

In addition to performing a diplomatic tightrope walk, Kazakh authorities are also keen to balance opposing local passions surrounding the war. The exchanges on social media have been vicious. An anti-war gathering in Almaty on March 6 was attended by around 3,000 people who sang Ukrainian songs and hurled invective at Putin. These are big numbers by Kazakh standards, where permission for rallies is granted on an arbitrary basis, despite official claims to the contrary. When organizers tried to mount a follow-up event two weeks later, though, the authorities demurred.

According to a readout by Kazakhstan on the phone conversation between the Kazakh and Russian President on 2nd April, the two men expressed “a common understanding on the exceptional importance of reaching agreements on a neutral, non-bloc, non-nuclear status of Ukraine.” These are among the demands made by Moscow in the ongoing talks to bring a close to the war in Ukraine.

Uzbek foreign minister Abdulaziz Kamilov told parliament in mid-March that while Tashkent wanted to maintain good relations with both Moscow and Kyiv, it opposed the war. Kamilov said that Uzbekistan does not recognize the pro-Russian separatist-controlled districts in Ukraine's Donbas, known as the Donetsk and Luhansk "people's republics." He called for a "peaceful solution" to resolve the conflict "by diplomatic means" and that violence must be stopped right away. He said that Uzbekistan recognized Ukraine's independence, sovereignty, and territorial integrity.

Uzbekistan, Kazakhstan and Kyrgyzsatn are providing humanitarian aid to Ukraine.

Kazakhstan's security services said they had arrested a foreign spy allegedly plotting an attack against the president and other high-level officials. The suspect "was planning an attack against the president of Kazakhstan and a number of high-level officials," as well as against members of the special services and security forces, the statement said.

A 2020 poll of 4,500 people in Kazakhstan, Kyrgyzstan and Uzbekistan found that the longer Central Asians host Chinese investors, the keener they are on seeing them leave: In Kazakhstan and Kyrgyzstan, more than 70 percent of respondents were “very concerned” by Chinese people purchasing land in their countries.

Economic Developments

Russia's invasion of Ukraine is driving an exodus of IT specialists to former parts of the Soviet Union. Uzbekistan is hoping to speed up plans to modernise its economy best known for its vast production of cotton. It took only one day after Russia's February 24 invasion of Ukraine for Uzbekistan to launch a one-stop government relocation programme for IT specialists and companies. Offering visas, housing and child care support to individuals, and registration assistance and tax exemptions to companies, the programme has already attracted some 2,000 foreign IT specialists. The Russian Association of Electronic Communications, a lobby group, said on March 22 that 50,000 to 70,000 specialists had left Russia and up to 100,000 more may follow.

As the U.S. sanctions on Russia over its invasion of Ukraine tighten, more than 300 U.S. companies pulling out of Russia are in search of alternatives to set up their regional headquarters. Kazakhstan could prove to be the best bet, both from the economic and geostrategic perspective. It is second only to Russia when it comes to natural resources — from oil to titanium, an essential component for both the medical and airplane industries, especially after Boeing recently suspended titanium purchases from Russia. Kazakhstan is also the largest uranium producer in the world.

Kazakhstan has decided to abandon a controversial agreement that would have given the Russian government direct access to the personal records of all Kazakh citizens. When it was announced last September, the US$500 million plan to adopt an e-government platform developed by Russia's state-owned Sberbank fueled resentment and fear in the country. Many criticised the idea of handing such sensitive information to Russia; IT workers were also furious that domestic talent was not assigned the task. This appears to be indicative of tensions that have surfaced between Kazakhstan and Russia since Russia’s invasion of Ukraine began.

During visit of Turkish President Recep Tayyip Erdoğan to Uzbekistan, both countries signed a preferential trade agreement and agreed to increase their bilateral trade to US$5 billion within a year. In an article published in the New Uzbekistan newspaper, Erdogan said that the two sides will discuss political, economic, military and social aspects of our bilateral cooperation in many areas, from energy to agriculture, from industry to culture, from youth issues to environmental issues.

Kyrgyzstan acquired full ownership of the Kumtor gold mine, one of the largest gold mines in Central Asia, after it reached an agreement with the Canadian mining company Centerra.  Centerra has been involved in Kyrgyzstan’s most lucrative gold mine, Kumtor, since 2004, though the first agreements regarding the mine were reached in 1992. The mine was both a critical asset and also a controversial issue in domestic politics on account of frequent calls for its nationalization. Kumtor accounted for nearly 10% of Kyrgyzstan’s GDP in 2019, demonstrating how important its operation has been to the Kyrgyz economy. With the rise to power of President Sadyr Japarov in 2021, Kumtor once again became a target. Japarov infamously served a few months in prison for attempting to take over the Kyrgyz White House during a 2012 pro-nationalization protest. He was later acquitted and released, but ran into further trouble during a protest against Kumtor the following year. Japarov fled the country but was arrested upon return in 2017 and jailed on an 11.5-year sentence that ended early in dramatic fashion when protestors in October 2020 set him free. He quickly rose to power and became President in January 2021.

Kazakh oil production excluding condensate fell to 1.55 million barrels per day (bpd) in March, down 3% from February, amid export problems from the Black Sea Caspian Pipeline Consortium (CPC) terminal. The fall in Kazakh oil output was because of lower intake in the CPC system in the second half of March owing to storm damage to loading facilities at its Black Sea terminal situated in the south of Russia. More than 80% of Kazakhstan's crude is exported via the CPC pipeline to the port of Novorossiisk. CPC terminal damage affected operations of Kazakhstan's giant Tengiz and Kashagan oilfields led by Western oil majors including Chevron, Exxon Mobil, Total, Eni and Shell. Chevron-led Tengizchevroil, operator of the giant Tengiz oilfield, decreased its March oil output the most among other Kazakh producers.

Kazakhstan reduced its oil output forecast for 2022 and radically trimmed its projection for economic growth in fresh evidence of the damage being wrought by the impact of Russia’s war on Ukraine. National Economy Minister said that the country expected to pump 85.7 million tons of crude in 2022, which is 1.8 million tons less than had been projected earlier. He said that this small decline would be offset by higher prices. The Minister however admitted at the same briefing that the government was downgrading its economic growth forecast for this year from 3.9% to 2.1%. Kazakhstan plans to dip into its National Fund for a further 1.63 trillion tenge (US$3.5 billion) this year to finance additional spending. A year of relatively sluggish growth will come as a deep disappointment to the Kazakh government, which was looking forward to a sustained period of buoyancy following the 2.6% contraction in the GDP experienced in 2020 amid the global slowdown brought on by the COVID-19 pandemic. Economic growth bounced back to 4% in 2021 – a rate the authorities had hoped to maintain for some years to come.

On March 29, Foreign Minister Rashid Meredov traveled to China to take part in a gathering of regional diplomats to discuss a coordinated approach on Afghanistan. The meeting brought together representatives of Afghanistan, China, Russia, Pakistan, Iran, Tajikistan, Turkmenistan, and Uzbekistan. Meredov met his Chinese counterpart, Foreign Minister Wang Yi, to talk about the future of gas supplies to China. Wang said that China will always be Turkmenistan's most reliable partner and stable export market. These niceties veil an uncomfortable fact that China has turned Turkmenistan into an economic vassal. Turkmenistan is in no position to take advantage of sky-high global prices for natural gas since it has so few export routes at its disposal. Ashgabat is keen that Beijing pay more for its purchases.

Uzbekistan ceased export of Chevrolet vehicles to Russia since 9 March 2022. It makes vehicles under GM’s Chevrolet brand. These cars contain semiconductors and microchips manufactured in South Korea, which has joined Western sanctions to punish Russia for Vladimir Putin’s invasion of Ukraine.

The Asian Infrastructure Investment Bank (AIIB) has lent US$108m to electrify the 465km Bukhara-Miskin-Urgench-Khiva railway line. The electrification is expected to cut travel time between Bukhara and Khiva by up to three hours and allow for passengers to move between the capital Tashkent to Khiva in seven hours, with trains travelling at a top speed of 250km/h. Uzbekistan wants to boost tourism by linking the western Khorezm region to the central and eastern regions. The electrification will have the potential to cut 81,000 tons of greenhouse gas emissions per year.

According to the National Bank of Kazakhstan, foreign direct investment flows into the Kazakh economy rebounded to pre-pandemic levels reaching US$23.7 billion and growing 37.7% compared to 2020. In 2020, FDI amounted to $17.2 billion. The top foreign investors are the Netherlands, the United States, Switzerland, Russia, and China. Together, they account for 68.3% of the total volume of investments.

Kazakhstan jumped up five positions since 2021 and now ranks 40th out of 146 countries in the tenth World Happiness Report 2022 published on March 18. The report is based on the Average Life Evaluation which relies on such factors as perceptions of corruption, generosity, freedom to make life choices, healthy life expectancy, social support, GDP per capita, among others. In this regard, Kazakh people are mostly satisfied with GDP per capita but they are concerned about the problem of corruption. Among the CIS (Commonwealth of Independent States) countries, Uzbekistan is placed 53rd, Kyrgyzstan ranks 64th, Belarus is 65th and Russia is 80th.

India-Central Asia Relations

During his visit to Turkmenistan from April 1-4 at the invitation of his Turkmen counterpart, President Ram Nath Kovind said that India is ready to invest and build connectivity in central Asia. President Kovind is the first foreign head of state to visit Turkmenistan since Serdar Berdymukhamedov took office from his father on 12th March. This is the first-ever visit of the President of India to independent Turkmenistan.

During his visit, President Kovind held a detailed discussion on the state and prospects of bilateral relations and also exchanged views on various regional and international issues of importance. The two sides agreed to intensify efforts to further strengthen their multifaceted partnership and to expand bilateral trade which has remained modest. The president said that the business communities of the two countries must deepen their engagement, understand each other's regulations and identify new areas of trade and investment.

Cooperation in energy was one of the key areas of discussions. On the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, President Kovind suggested that issues related to the security of the pipeline and key business principles may be addressed in Technical and Expert level meetings. India shared its concerns about some commercial and business aspects of the TAPI pipeline apart from the logistical challenges which are very apparent.

President Kovind stated that as developing countries, India and Central Asian countries share common perspectives and similar approaches. We face common challenges such as terrorism, extremism, radicalization, drug trafficking etc. India has also strategic relations with most of the Central Asian countries. On the ongoing conflict in Ukraine, the President said that India's position on this issue has been steadfast and consistent.

During the talks, the two countries also identified new areas of cooperation such as disaster management. President Kovind expressed India's readiness to partner with Turkmenistan in its drive towards digitalisation and noted that Space can be another area of mutually beneficial cooperation. Our countries share centuries-old civilisational and cultural linkages, he said. During the talks, President Kovind underlined the importance of holding regular cultural events in each other's territory. Both leaders emphasised the need for the two countries to cooperate closely on the effective management of the COVID-19 pandemic that has affected their populations.

Addressing young diplomats of Turkmenistan at the Institute of International Relations in Ashgabat, the President noted that India is a member of both the International North-South Transport Corridor, and the Ashgabat Agreement. He added that while expanding connectivity, it is important to ensure that connectivity initiatives are consultative, transparent and participatory, with respect for the sovereignty and territorial integrity of all countries. "India stands ready to cooperate, invest and build connectivity in the region, " he said. "We have taken steps to operationalise the Chabahar port in Iran which can provide a secure, viable and unhindered access to the sea for the central Asian countries. India’s emergence as one of the major economies of the world and the relevance of India’s technological capabilities has shaped key global negotiations. India’s partnerships with countries of the Global South have grown substantially while its relations with major powers have deepened further. The overarching philosophy of India’s engagement with its neighbours is to ensure that they also benefit from our economic development and growth. Thus, the focus of our Neighbourhood First policy is to enhance connectivity, augment trade and investment, and build a secure and stable neighbourhood,’’ he said. He added that while ‘Indo-Pacific’ is a recent addition to the geopolitical lexicon, India’s engagement with the Indo-Pacific region goes back several centuries. India stands for an open, balanced, rules-based and stable international trade regime in the Indo-Pacific. The President said that one of the focus areas of Indian foreign policy in the last few years has been the revitalization of our historical ties with the Central Asian countries, which are a part of our ‘extended neighbourhood’. Connectivity with the Central Asian countries remains a priority for India.

Four MOUs were signed between the two countries.

The first was between the Financial Monitoring Service at the Ministry of Finance and Economy of Turkmenistan and the Financial Intelligence Unit of India. The second was on Cooperation in the field of Disaster Management; the third in the area of Culture and Arts for the period 2022-2025. The last was on Cooperation in Youth Matters.

The 3rd edition of Indo-Uzbekistan Joint Field Training Exercise “EX DUSTLIK” was held in Uzbekistan. This provided an opportunity for both contingents to train in Counter Terrorism operations in a semi-urban environment. The last two days were dedicated to a validation exercise where both contingents jointly conducted simulated operations over extremist groups under a United Nations Mandate. The conduct of this exercise, which covered a vast spectrum from cross training & combat conditioning in field conditions, to sports and cultural exchanges was a grand success. “Exercise DUSTLIK” will enhance the level of defence cooperation between both the Armies and will act as a catalyst for many such joint programs in future to further consolidate the traditional bond of friendship between India and Uzbekistan.

India imported just over 7600 tonnes of uranium over the past three years, mostly from Kazakhstan and Canada,

The 37th session of the Shanghai Cooperation Organization Regional Anti-Terrorist Structure (SCO RATS) Council, held in Tashkent under chairmanship of India was attended by all member countries. Discussions on regional security, countering terrorism, separatism and extremism in the member countries took place. The SCO member countries approved India’s proposal to hold this year a joint anti-terror drill of the competent authorities of the SCO member states. Next meeting of the SCO RATS Council will be held on October 14 in New Delhi.

India will host the Asian Archery Para Championships from May 31 to June 6 after Kazakhstan expressed its inability to stage the event citing organisational issues because of the Russian invasion of Ukraine

 

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

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(The views expressed are personal)
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About the Author

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.