Central Asia Digest | February 2019

Political Developments

Two anti-Chinese protests took place in Kyrgyzstan in January, 2019. These were directed against Beijing’s current crackdown on Muslims in western Xinjiang Uyghur Autonomous Region in which 1 million people — ethnic Uyghurs, Kazakhs, and Kyrgyz, have been sent to political re-education camps. Rally organizers, who had anticipated a larger turnout, laid out three demands: inspection of companies employing Chinese workers, a halt to Kyrgyz citizenship being granted to anybody but ethnic Kyrgyz people, and a government audit on how Chinese loans were secured and how the funds are being spent. Disregarding public sentiment about mounting Chinese hegemony in the local economy may portray the government as being indifferent to problem of joblessness. Addressing the complaints of small players meanwhile endows marginal elements with more credibility than perhaps they deserve. President Jeenbekov has taken a combative position and expressed disdain for "trouble-makers trying to foment negative sentiments against Beijing." He and other top officials insist China is a "wholly benevolent partner" and that any attempt to sour the relationship will be dealt with sternly.

Responding to charges of alleged house arrest of its citizens by Chinese authorities, Kazakhstan urged Beijing to act in accordance with law and be fair in its treatment. Kazakhstan issued a statement urging Chinese authorities to only carry out lawful practices in East Turkestan. The statement comes as a response to the reported activities of Kazakh people being detained alongside Uyghurs and placed under house arrest. The Kazakh Foreign Ministry also noted that there are over 1.5 million Kazakh people in China.

According to 2018 World Press Freedom Index published by Reporters Without Borders, Turkmenistan had the third worst press freedom conditions in the world (178th place out of 180 countries), just ahead of Eritrea and North Korea. On The Corruption Perception index 2017 of Transparency International, Turkmenistan scored at 167 out of 180 countries. According to these organisations, Turkmenistan imposes human rights restrictions as an intentional, systemic policy to control every aspect of society.

Economic Developments

According to World Bank, growth of Kazakhstan’s economy will decrease to 3.5% this year as oil production growth levels off and further fiscal consolidation efforts continue. Global growth slowdown could decrease remittances from Russia and Kazakhstan to Uzbekistan, Tajikistan and Kyrgyzstan. Kyrgyzstan and Tajikistan lead the region in share of remittances to GDP at 35% and 32% respectively.

China and Central Asia have been witnessing a boom in trade volume, especially in energy sector. In 2018, Central Asian countries exported 50 billion cubic meters of natural gas to China, a 30% increase from 2017.

Largest solar power station, not only in Kazakhstan, but also throughout Central Asia, with a capacity of 100 megawatts, was launched in Karaganda region near Astana in January, 2019. An international team of investors and specialists from Germany, Czech Republic and Slovakia executed the project. The plant uses 307,000 PV panels which cost $137 million.

Kazakhstan and Uzbekistan are planning to introduce a new common "Silk Visa" which will enable foreigners with a valid visa from either country to travel in both countries.  This "Asian Schengen" visa would increase trust between Kazakhstan and Uzbekistan and boost tourism of both countries. Tajikistan and Kyrgyzstan have also expressed interest in joining this project.

Turkmenistan has started building a $2.3 billion highway connecting its capital to the Uzbek border as part of a plan to diversify the economy by developing the logistics and transportation sectors. Turkmenistan wants to offer Uzbekistan, a major exporter of metals and agricultural commodities, access to Caspian Sea from where cargo can be shipped to Russia, Iran and Azerbaijan. 

Kazakhstan has attracted more than $300 billion in FDI since independence, making the country the leading investment destination in Central Asia. Over the past two years alone, foreign investors have brought over $20 billion to Kazakhstan’s economy.

EU Special Representative for Central Asia Peter Burian stated that Uzbekistan could become an economic leader of Central Asia and that EU is ready to support the country’s initiatives with grants as well.

India-Central Asia Relations

President Shavkat Mirziyoyev of Uzbekistan was a key guest at the Vibrant Gujarat investment summit. This was his second visit to India in four months. The first was the state visit in September/October, 2018 and the second to Gandhinagar, Gujarat in January, 2019. This was clear indication of growing ties between India and Uzbekistan. Uzbekistan can help India in protecting its interests in Afghanistan. Participation of Uzbekistan in Vibrant Gujarat summit included government and business level meetings, trade show exhibition, country seminar and first meeting of Uzbekistan-India Business Council. As Uzbekistan is opening up as an investment destination, Indian businessmen are looking at the country as a hub for further expansion within the resource rich region. Economic liberalization, rapid political reforms and encouragement of FDI make Uzbekistan an inviting destination for business and investment. Indian companies are exploring investment opportunities in the pharmaceutical, textile, education, IT, tourism and other sectors in Uzbekistan. To attract investments in the pharmaceutical sector, an Uzbek-Indian Free Pharmaceutical Zone is being developed in the Andijan region. This project was among 17 agreements that were signed during the Uzbek president’s State visit to India. A direct flight between Tashkent and Mumbai, launched last year, also facilitates business travel between western India and Central Asia. Tourists flow from India to Uzbekistan increased 30% last year. High level delegation of Uzbekistan at Gujarat summit included heads of Investment Committee, Trade Committee, Chamber of Commerce, Ministry of Foreign Affairs as well as more than 60 business owners, CEOs of biggest national and private companies of Uzbekistan. Country pavilion of Uzbekistan at Gujarat Trade Show displayed a large spectrum of industries including automobile, metallurgy, pharmaceutical, construction, IT, banking, textile and leather, machinery, food processing, tourism, education and others.

A long-term deal for supply of uranium ore concentrate from Uzbekistan to India was signed in the presence of Indian PM and Uzbek President on sidelines of the "Vibrant Gujarat Global Summit." After Kazakhstan, Uzbekistan will become the second Central Asian country to supply uranium to India. India needs nuclear fuel as part of a plan to create a strategic uranium reserve that will sustain the country’s reactors for next several years.  Targeting bilateral trade of $1 billion within two years, Mirziyoyev led a high-level delegation to the Vibrant Gujarat Summit. A technopark of advanced information technologies in Tashkent and a pharmaceutical zone in Uzbekistan’s Andijan region are being established jointly with Indian partners. An agreement was reached with Export-Import Bank of India to grant a preferential credit line for $200 million for financing housing and socially significant projects in Uzbekistan. Branches of leading higher education institutions of India — Amity and Sharda universities — will start functioning in Uzbekistan from the new academic year. Mirziyoyev said Uzbekistan was keen on attracting Indian capital in areas like IT, education, pharma, healthcare, agribusiness and tourism. As part of an MOU on agro processing business signed between Gujarat Agro Industries Corporation (GAIC) and Uzbekistan, Uzbek government offered around 20,000 ha of land for farming, as well as for agro industries in its country. MoU calls for training for capacity building and for facilitating technology transfer between the two countries. 

At the first meeting of India Central Asia Dialogue held in Samarkand, Uzbekistan with participation of Foreign Ministers of India, all Central Asian countries and Afghanistan, India’s External Affairs Minister (EAM) offered development partnership to bring the countries closer by taking up concrete projects, inter alia, under India’s Lines of Credit and Buyers’ Credit, and by sharing India’s expertise. A key area of discussion was to expand connectivity between India and central Asia and use transit potential of Afghanistan. Discussions on strengthening peace, sustainable development and prosperity in Afghanistan as also promoting mutually beneficial cooperation in trade-economic, cultural-humanitarian and other important spheres were held.  India expressed readiness to provide technical and financial support to participating countries in technology, science, medicine and education. EAM said that development of regional economies, transit, transport and communication potential of Afghanistan and Central Asian states, increasing tourism, and implementing specific joint projects will create a stronger region. India and Central Asia backed an inclusive peace process in Afghanistan that is Afghan-owned and Afghan-led. India proposed to set up an ‘India-Central Asia Development Group’ which will enable it to expand its horizons in the region and fight terror effectively, including in Afghanistan. EAM promised to invest another $3 billion to stabilize situation in Afghanistan. She proposed a dialogue on air corridors with Central Asian countries to boost connectivity. She mentioned that India has been using Chabahar Port to send "very substantial quantities of wheat to Afghanistan", and that an Indian company has opened a local office at Shaheed Behesti Port in Chabahar.

At India-Central Asia Dialogue in Uzbekistan, Kazakh Foreign Minister stressed need to establish a closer relationship between India and Central Asia and urged implementation of joint projects with India in medicine, pharmaceuticals, new technologies and finance through the International Technopark of IT startups Astana Hub and the Astana International Financial Centre (AIFC).

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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.