Central Asia Digest | March 2019

Political Developments

Kazakh President Nursultan Nazarbayev dropped a geo-political bombshell on 19th March when he announced his resignation from position of President of country after having led it for about 30 years. In his televised Address he said that "concerns of the country and the people will remain my concerns" and that as founder of an independent Kazakhstan, his future task would be to ensure "the coming to power of a new generation of leaders who will continue the transformation" of Kazakhstan. Demonstrating Kazakhstan’s close ties with Russia, Nazarbayev delivered his address both in Kazakh and in Russian.

Nazarbayev will continue to hold three important posts including Chairman of Security Council; Head of Assembly of People of Kazakhstan; Member of Constitutional Council. He has constitutionally been conferred the title of ‘Leader of the Nation’ and will also remain Chairman of ruling “Nur Otan (Light of the Motherland)” party. He will remain the most powerful person in Kazakhstan even after stepping down.

Nazarbayev appears to have decided to oversee the political transition and establish his legacy during his lifetime. Analysts are impressed at Nazarbayev’s decision to step aside voluntarily, unlike some other Central Asian counterparts who left office feet first.

A possible reason for Nazarbayev’s resignation could be that notwithstanding the considerable oil wealth that Kazakhstan possesses, the economy has stagnated in recent years with widespread public discontent about low living standards and poor social services. Nazarbayev did not wish to become a punching bag for rising dissatisfaction with the government. Kazakhstan’s commodity-dependent economy has struggled to recover from a 2014 plunge in oil prices and Western sanctions against Russia, a key trading partner.

Nazarbayev, a steel-worker, came to power in 1989 as first secretary of Kazakh Communist Party, when the country was still part of the Soviet Union.

During his presidency, Nazarbayev sought to balance Russia’s long-time dominance by drawing in Chinese investment and building ties with the West. China has been expanding its political and economic influence across Central Asia, seeing Kazakhstan as pivotal to its One Belt, One Road global infrastructure program. 

Nazarbayev’s domestic leadership has however been decidedly authoritarian, with political dissent and media freedoms severely limited. In 2017, Nazarbayev ordered the official script of Kazakh language to be switched from Cyrillic to Latin, an expensive undertaking that infuriated some Russian officials. Nazarbayev justifiably prides himself for building "a successful Kazakh state with a modern market economy", and creating "peace and stability inside a multi-ethnic and multireligious Kazakhstan."

Over years of Nazarbayev’s presidency, Kazakh economy grew by 15 times, and household incomes by nine times, which made it possible to reduce poverty level by almost 10 times. Kazakhstan is among 50 top developed countries in the world and aims to become one of 30 most developed countries by 2050. Nazarbayev said that that since "it was impossible to build democratic institutions with a weak economy and poor citizens, we put economic development and the growth of citizens’ welfare at the forefront."

Nazarbayev’s move has been compared to be in line with the strong and influential roles Deng Xiao Ping and Lee Kuan Yew continued to play even after relinquishing their formal official positions. 

In accordance with the constitution, Kassym-Jomart Tokayev, speaker of upper house of parliament, and Nazarbayev’s close confidante took over as Kazakhstan’s acting president on 20th April for remainder of Nazarbayev’s term.Underscoring his geopolitical balancing act and multi-vector policy he has pursued, Nazarbayev noted that Tokayev had studied in Moscow and spoke good English and Chinese.  

Kazakhstan is expected to hold both presidential and parliamentary elections next year. In his inaugural speech, Tokayev stated that he planned to direct his knowledge and experience to ensuring the continuity of strategic course of Nazarbayev. According to present constitution Tokaev will not be able to contest the Presidential election as he has not lived in the country consecutively for the past 15 years. 

Nazarbayev’s daughter Dariga Nazarbayeva replaced Tokaev as speaker of the senate and could be positioning herself to contest and win the Presidential election in 2020.

Nazarbayev’s resignation comes at a time of flux in Central Asia, adding more political uncertainty to demographic and geopolitical change sweeping the region’s former Soviet republics.

The first decision Tokayev took on assuming charge was to change the name of capital "Astana" to "Nursultan." He decreed that in capital and regional cities, main streets should be named after Nazarbayev. 

First official visit of President Tokayev was to Russia on 3rd April sending out a clear message that Russia continues to be the most significant strategic partner and there will be no foreign policy sway either westward or eastward towards China.

Tokayev’s first challenge includes reviving Kazakhstan’s economy after Nazarbayev replaced the government in February and demanded trillions of tenge in extra spending to boost living standards. Nazarbayev complained in February that living costs for Kazakh families were rising while earnings were stagnating. Kazakhstan has spent at least US$18 billion on bailouts since 2009 to keep its banking system afloat, though the money did little to boost lending to the real sector. 

Crown Prince of Abu Dhabi received the-then Kazakh President Nazarbayev and discussed promising, mutually beneficial prospects for developing bilateral relations in investment, economic and cultural areas. They also discussed latest regional and international developments of mutual interest. An MOU to promote cooperation in investment in energy and industries related to underground resources in Kazakhstan was signed.

Uzbek Foreign Minister recently met with Taliban leadership in Doha. Taliban endorsed Uzbek President Shavkat Mirziyoyev’s political and economic initiatives in Afghanistan. Upon return to Tashkent Uzbek FM met an Afghan delegation led by national security advisor to President Ashraf Ghani. It is likely he briefed Afghan delegation on his trip to Doha.

Serikzhan Bilash, a prominent human rights activist and China-critic based in Kazakhstan was arrested by Kazakh police and charged with inciting ethnic strife. He is co-founder of Atajurt, an Almaty-based organization that focusses attention on crackdown on Muslims in China's western region of Xinjiang. If convicted, he could face up to 10 years in prison. Astana police confirmed the detention and said that he was suspected of inciting "national discord or hatred.” Bilash's lawyer said that his arrest is connected with his actions against Chinese camps, and his support for Kazakh people and other Muslims in the camps. She charged that Bilash has been arrested because Kazakhstan doesn't want to spoil relations with China. Suspicions abound that raid on Atajurt and Bilash’s arrest were carried out because of Chinese pressure. The raid seemingly reflects an increasingly aggressive Chinese effort to impose its will on others and ensure that they accord the respect and deference that China believes it deserves. There is mounting anti-Chinese sentiment among Kazakhs and public demands that Kazakhstan be more forceful in standing up to China for rights of Kazakh nationals and Chinese citizens of Kazakh descent. Kazakhs constitute the second largest minority in Xinjiang after Uyghurs.

European lawmakers adopted a resolution urging Kazakhstan to "respect human rights and fundamental freedoms." They called on Kazakh authorities to "put an end to human rights abuses and all forms of political repression," noting that the number of political prisoners in the country had increased and right to freedom of association remained largely restricted.

A Swedish court convicted a man from Uzbekistan to seven years in prison on terrorism charges. The accused was found guilty of acquiring chemicals, reading a bomb manual on a messaging platform and “planning a bomb attack in the name of Islamic State.’’

Anti-terrorism officers raided two Baptist churches in Taraz, Kazakhstan, on two occasions recently and fined worshippers for conducting prayers without government permission. Three people were fined between one and two months' worth of average wages. Two others were fined different amounts.


Economic Developments

Turkmen President in a meeting with King of Bahrain invited Bahraini companies to participate in implementation of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI). It was noted that construction of TAPI gas pipeline is proceeding at a brisk pace. 

Turkmen foreign minister during his visit to Pakistan to conclude the Host Government Agreement (HGA) on Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline with Pakistan declared that Turkmenistan plans to build transport and energy corridor between Pakistan and Turkmenistan and wants to lay an optic-fibre network parallel to TAPI pipeline and then to China. ADB is facilitator and coordinator for the project. It is proposed to lay a 56-inch diameter 1,680 KM pipeline with design capacity of 3.2 billion cubic feet of natural gas per annum (Bcfd) from Turkmenistan through Afghanistan and Pakistan up to Pak-India border. Civil works of project have already commenced in Afghanistan after the project’s ground breaking (Afghan section) was held last year.

Foreign trade turnover of Uzbekistan in January-February 2019 was US$6.39 billion which was higher by 25.4% on an annualized basis. Exports reached US$3.03 billion (growth of 20.4%), and imports reached US$3.35 billion (growth of 30.3%). Foreign trade surplus totalled US$319.2 million. During this period, exports of goods and services were US$513.7 million more while imports increased by US$779.6 million than in corresponding period of previous year.

International Monetary Fund (IMF) has forecast GDP growth of 5.5% in Uzbekistan in 2019 due to investment boom in the country. Exports are however likely to weaken. Growth in 2020 will be 6%, which is also associated with investment demand. Imports of investment goods rose from US$4.5 billion in 2017 to US$7.5 billion by end of 2018. Inflationary pressure on Uzbek economy in 2019 could increase, the consumer price index could increase 17-18% due to rising energy prices, wages in social sector and taxes.

International rating agency S&P Global Ratings has confirmed long-term and short-term sovereign credit ratings in foreign and national currency of Kazakhstan at level of BBB-/A-3. The agency expects the country’s sovereign and external balance to remain viable.

First Central Asian Economic Forum was held in Uzbekistan with participation of region’s Government representatives. The forum’s theme was “Central Asian Cooperation: Prospects for Mutually Beneficial Development”. 

Boston Consulting Group has outlined a US$170 billion foreign direct investment potential for Central Asia over next ten years, with up to $70 billion in non-extractive industries.

Oil production in Kazakhstan was 1.88 million barrels per day (bpd) on average in January-February, 2019. This slightly missed the target under a global deal with OPEC whereby Kazakhstan was required to produce only 1.86 million bpd.

The Fergana region of Uzbekistan is slowly growing into a global tourist attraction owing to its historical monuments, places of worship, modern buildings, and nature. This year it plans to increase the number of tourists visiting the region to 1 million people. It is planned to implement 58 projects with private investments, bank loans and foreign investments in order to further develop tourism potential and infrastructure.

Asian Development Bank (ADB) has signed a US$11.5 million loan agreement with Baikonur Solar LLP for expansion of solar power in Kazakhstan. Scope of work includes design, construction, commissioning, operation, and maintenance of a 50 MW solar power project with grid integration. The solar project is expected to generate 73 GWh hours of electricity per year.


India-Central Asia Relations

First shipment under United Nations ‘Transports Internationaux Routiers’ (TIR) convention recently arrived at port of Nhava Sheva, Mumbai and Mundra in India from Afghanistan through Iran’s Chabahar Port. TIR convention will help in fast and easy movement of goods across multiple countries under a common customs document and guarantee. TIR will play a pivotal role in improving ease of doing business and pave the way for smoother and safer transport of goods across international borders and will help boost trade between India, Central Asia, Europe and Russia. India joined the TIR Convention (UN Customs Convention on International Transport of Goods under cover of TIR Carnets) in June, 2017.

It was decided at Council of Regional Anti-Terrorist Structure (RATS) in Tashkent, Uzbekistan that Shanghai Cooperation Organization's (SCO) member states will hold a joint anti-terrorism exercise "Sary-Arka-Antiterror 2019." India and Pakistan are expected to participate. No dates were announced.  Meeting also declared plans to hold the first stage of joint border operation "Solidarity 2019-2021," the 7th meeting of heads of border services, and training workshops on identifying and preventing use of Internet for terrorist, separatist and extremist purposes. 

Fashion designer Ritu Beri has been appointed as Cultural and Tourism Ambassador for Uzbekistan in India. She has been working towards bringing the two countries closer by using cultures from both nations in her clothing collections. She is the first Indian to be appointed to this position.

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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.