Central Asia Digest | October 2020


● Political Developments

● Economic Developments

● India-Central Asia Relations

Political Developments

On September 1, 2020, Kazakh President Kassym-Jomart Tokayev delivered his annual state-of-the-nation address highlighting seven key principles of the new economic course Kazakhstan is set to embark on in the near future. These are: equitable distribution of wealth and responsibilities, leading role of private entrepreneurship through support and development of SMEs, effectiveness through fair competition, versatility of economy, development of human capital through investment into the education of new format, ‘greening’ of economy through protection of environment, and validity of government’s decisions. In large part he sought to inject a note of optimism after a torrid year of economic woe precipitated by the coronavirus pandemic. The plan for pensions evoked considerable excitement. The intention appears to be to allow citizens to withdraw from their pension funds in case they wish to invest in buying a home or pay for the cost of medical treatment. Tokayev said around 700,000 Kazakh citizens will be eligible to take up this pension offer. Tokayev also announced that the nation will cut the civil service by 10% this year and by 15% next year. A brand-new program solely dedicated to development of domestic agro-industrial sector is set to be mapped out. He called on developing the Social Code of the Republic of Kazakhstan and digitalize social payments. He focused on the problems of education in Kazakhstan pointing out the need to introduce the concept of lifelong learning. Given that the people of Kazakhstan live in the epoch of natural and manmade disasters, he announced that Ministry of Emergency Situations will be re-established.

Speaking at a virtual meeting of Foreign Ministers of SCO Member States, Russian President Vladimir Putin stated that terrorism poses a serious threat to global peace and that drug trafficking and organised crime are on the rise. Putin expressed confidence in SCO’s ability to respond promptly to the “new acute challenges.” He added that SCO plays a major role in ensuring peace and security, as well as sustainable development in Eurasia. He said that situation in Afghanistan remains tense and conflicts in the Middle East and North Africa continue unabated. He conceded that much remains to be done to expand interaction between SCO countries in economic cooperation, to build technological partnerships and create a common transport and logistics infrastructure, to convert to national currencies in mutual transactions as previously agreed. He said that SCO has received 16 requests to join as member states, observers or dialogue partners. This illustrates the authority that SCO enjoys internationally. Putin added that due to the epidemiological situation, Russia was unfortunately not able to hold the Summit meeting of SCO that was initially planned for July. He stated that Russia is planning to hold it online in November.

Meeting of Council of Foreign Ministers (CFM) of SCO reviewed the preparations for the forthcoming SCO Summit and also exchanged views on international and regional issues. SCO Secretary General stated that the authority of SCO is increasing with passage of time as more countries are interested in joining it.

After attending the SCO Foreign Ministers’ meeting in Moscow, Chinese foreign minister and State Councillor Wang Yi paid bilateral visits to Kazakhstan, Kyrgyzstan and Mongolia.

During visit of Chinese Foreign Minister to Kazakhstan, both countries agreed to work together to advance the Global Initiative on Data Security launched by China and jointly crack down on false information. China made the proposal to promote the formulation of global data security rules and build an open, cooperative and safe global data space. Wang said China invites countries interested in the proposal, including Kazakhstan, to jointly advance the initiative and is willing to enhance communication with Kazakhstan in this regard. Wang said Kazakhstan's strategic hub role in transit transportation became more prominent amid the pandemic, and expressed support for expanding the China-Kazakhstan highway and railway transportation as well as accelerating research to improve the freight capacity of border ports. The two sides need to build a healthy Silk Road, he stated, adding that China will continue to provide Kazakhstan with anti-epidemic support, share medical treatment experience, and strengthen cooperation in vaccine and drug research and development until Kazakhstan completely overcomes the pandemic. Kazakhstan conveyed its support to Global Initiative on Data Security launched by China and expressed its willingness to make it a priority in bilateral cooperation. Kazakh foreign minister said that the two countries should resume normal exchanges among all levels as soon as possible, resume port customs clearance and cargo transportation, and explore cooperation between the two countries in areas such as infrastructure, investment, trade, transportation and cultural exchanges. Wang also met Kazakh President and said that Chinese President Xi Jinping has proposed a new development pattern that "takes the domestic market as the mainstay while letting internal and external markets boost each other." Kazakhstan expressed willingness to deepen people-to-people exchanges and in setting up more Confucius Institutes in Kazakhstan.

It’s in the realm of security including terrorism and counterterrorism that Beijing has made significant inroads in Central Asia. Tajikistan is prime example. In August 2016, China Afghanistan, Pakistan, and Tajikistan formed a “Quadrilateral Cooperation and Coordination Mechanism in Counter-Terrorism” (QCCM). It was reported in September, 2016 that Tajikistan had signed an agreement with China that would provide for construction of 11 “outposts of different sizes and a training centre for border guards.” The following month China and Tajikistan held their first bilateral military exercises. Since that time, the presence of some Chinese troops in eastern Tajikistan became a routine rumor and military exercises between the two have broadened. In February 2019, the clearest evidence to date of a sustained Chinese military presence in eastern Tajikistan was reported.

Tajikistan's ruling People's Democratic Party officially nominated President Emomali Rahmon, already the longest-serving leader in the former Soviet Union, to run for another term. There has been speculation that Rahmon, who has been president since 1992, would bow out to clear the way for his son, Dushanbe Mayor Rustam Emomali, to run for the presidency.

A parliamentary election campaign officially began in Kyrgyzstan with 15 political parties to contest 120 seats in the Jogorku Kenesh, or the Supreme Council. Elections will take place on October 4. Kyrgyzstan’s Central Election Commission (CEC) said that applications by two parties, Aktiv and Butun Kyrgyzstan, had been rejected as they didn’t meet the requirements.

Kazakh Health Minister revealed that second wave of coronavirus infection is likely to coincide with the period of acute respiratory viral infections and flu nationwide ie between November-December 2020. He admitted it is hard to make any forecast because figures vary from week to week. He said that Kazakhstan sets high hopes on vaccine against COVID-19 being developed by Kazakhstani scientists.

Kazakh Foreign Minister said that the assistance provided by Russia has helped stabilize the coronavirus situation in Kazakhstan. Medicines and a group of Russian doctors who provided consultative assistance were dispatched to Kazakhstan during the pandemic which ‘’made a certain contribution to the stabilization of the coronavirus situation." Kazakhstan FM said that Kazakhstan is preparing to host the next interregional cooperation forum in the city of Kokshetau in October, 2020.

Kazakhstan's Air Astana airline resumed regular flights to Uzbekistan, Egypt and Kyrgyzstan in September, 2020. Flights to Malaysia, Poland, Hungary, Tajikistan, Azerbaijan and the Czech Republic are under consideration. Air Astana has so far restored flights with Turkey, South Korea, the Netherlands, Belarus, Germany, Ukraine and the United Arab Emirates.

Uzbekistan has resumed regular flights to Turkey, the UAE, Belarus, and Kazakhstan from September.

Kyrgyzstan resumed flights with Kuwait starting September. Kyrgyzstan resumed air services with Turkey and the United Arab Emirates on 7th August. It resumed regular flights from Sept. 14 on the Tashkent - Bishkek - Tashkent, and from Sept. 17 on the Almaty - Bishkek – Almaty routes.

Economic Developments

Jizzakh Petroleum announced its investment in a project to build a new state-of-the-art chemical complex in Uzbekistan. The plant will be constructed in Bukhara region where it will use domestic feedstock. This will allow natural gas monetization via the production of export oriented and high value-added products. Successful completion of project will further diversify Uzbekistan's economy, develop its domestic textile, chemical and para-pharmaceutical industries, and reduce imports into Uzbekistan. When completed, a new 500,000 tons olefins plant will process 1.5 bcm of natural gas per annum and manufacture high-quality polymers used in many sectors of worldwide economy.

Crude production from Kazakhstan’s highest-producing oil field, Tengiz, dropped 12% in the second quarter of 2020 to 570,000 b/d reflecting the country’s adherence to OPEC+ production cuts. Tengiz produced almost 100,000 b/d less in Q2 than it did in Q1. Chevron said a coronavirus outbreak among Tengiz workers had no impact on production, but it was adhering to output cut instructions relating to Kazakhstan’s commitments under the OPEC+ agreement. It added it still aimed to meet the timeline for a $45.2 billion expansion project that should lift output to around 850,000 b/d of crude and 1 million barrels of oil equivalent overall, despite the impact of coronavirus and measures implemented to limit the spread of the disease.

Exports of Kazakh crude to China fell to 12,100 tonnes in July, their lowest since March when shipments were hit by organic chloride contamination and down from 98,865 tonnes in June. August shipments stood at 10,000 tonnes. This was due to sharp reduction in its output under the OPEC+ pact and because of their low profitability compared with westward shipments through Russia.

Natural gas exports from the Central Asian republics began to see major drops as a result of the global economic slowdown in the wake of the coronavirus pandemic. China, the main buyer of natural gas from Kazakhstan, Turkmenistan, and Uzbekistan, issued a force majeure note to its suppliers in March this year to halt supplies. In Uzbekistan, there has been talk about leaving commercial natural gas for domestic consumption, which is a positive development for a population that often suffers from a lack of access to the natural resource. The Russian oil and natural gas company, Lukoil, that produces Uzbekistan’s China-bound natural gas recently announced a 14.6 percent drop in natural gas production to 14.8 billion cubic meters (bcm) in the first six months in 2020, down from 17.4 bcm for the same period in 2019. The reported loss from this setback was $476.5 million. Kazakhstan also announced a 20-25 percent reduction. News from Turkmenistan is hard to come by but when China announced the cuts in March, worries from Ashgabat were apparent. Turkmenistan’s GDP share from natural gas exports has historically been the highest, compared to Uzbekistan and Kazakhstan. In the 2000-2010 period, natural gas contribution as a percentage of GDP for Turkmenistan ranged from as high as 67 percent in 2001 to a low of 18.9 percent in 2010. In much of that period, the figure was above 30 percent. The latest measure, for 2018, estimates natural gas share as 17.6 percent of Turkmen GDP. According to the latest estimates for Uzbekistan, in 2018, natural gas share as a percentage of GDP rest at 10.1 percent; meanwhile, Kazakhstan’s figure was 1.7 percent. The numbers for Uzbekistan and Kazakhstan are particularly stark given that the volume of their natural gas exports is almost the same. According to 2019 estimates, China received 7.1 bcm from Kazakhstan and receives around 10 bcm a year from Uzbekistan. Turkmenistan’s share in 2019 was 33.2 bcm.

Kabul, Ashgabat and Islamabad have agreed on a project to transmit power from Turkmenistan to energy-starved Pakistan through Afghanistan. The first of the project – spanning Turkmenistan to Herat and Farah provinces of Afghanistan – will significantly increase Afghanistan's energy reserves. Afghanistan is expected to earn a substantial $50 million in the second phase for hosting Turkmenistan-Pakistan transmission line. Corruption is reckoned as the main hurdle to implementation of such big projects.

Tajikistan is expecting to normalize its energy exports to Afghanistan with a plan to transmit a significant 150 megawatts of electrical power. Tajikistan cut back on its exports to Afghanistan in recent weeks to a low 50MW of electricity because of 'receding of water levels along dams. But as water levels have returned to normal exports will be increased. An Uzbekistan-and Asian Development Bank-funded 500kV power grid worth $100 million will have to be constructed within 3 years to transmit the 150MW electricity from Tajikistan. More than 75% of Afghanistan's electricity comes from Uzbekistan, Tajikistan, Turkmenistan and Iran. Some thermal power plants produce the rest inside Afghanistan.

Pakistan is planning to obtain access to markets of Central Asian States through China as Uzbekistan has agreed to become part of the Quadrilateral Traffic in Transit Agreement (QTTA) already signed among Pakistan, China, Kyrgyzstan and Kazakhstan. Uzbekistan’s Deputy Prime Minister visited Islamabad and met Prime Minister Imran Khan and Adviser to PM on Commerce, Textile and Investment. Uzbek minister said that Afghanistan has been reluctant to provide access to Pakistani products for being transported to Central Asian markets as it linked this initiative with allowing Indian goods to Afghanistan via land route through Pakistan. The QTTA provides an alternative gateway to Central Asia by circumnavigating Afghanistan. Pakistan would use the Karakoram Highway, which connects Gilgit-Baltistan to China’s Xinjiang region which links with Central Asian States. Uzbek Deputy PM is reported to have said that Uzbekistan is keen to invest in Pakistan’s Karachi port as it wants to have access to the market of Middle East countries. Uzbek Deputy PM said that Pakistan can import cotton or cottonseed from Uzbekistan and there is potential for Pakistan’s pharmaceutical industry to export its products to Uzbekistan. Uzbekistan can export oil and gas, minerals and other products to Pakistan. Pakistan is also keen to develop backward and forward linkages in the textile, leather, and agriculture sectors with Uzbekistan.

US Chamber of Commerce announced the launch of the US-Kazakhstan Business Council (USKZBC) to encourage economic and commercial cooperation between the two nations. The newly established council is expected to replace the former US-Kazakhstan Business Association, also known as USKZBA, through an enhanced business and policy platform. The US is now involved in about 20 sectors of Kazakhstan's economy including energy, agriculture, insurance and infrastructure. The accumulated value of US investment in the Kazakh economy reached nearly $36 billion, of which $33.9 billion was invested into the mining industry. Kazakhstan’s financial and insurance spheres ranked second with $974.1 million of US capital invested, while projects related to the professional, scientific and technical activities brought in $509.1 million. The launch of the US-Kazakhstan Business Council comes a few months after the visit of US Secretary of State Mike Pompeo to the Central Asian country. Washington recently designed a new strategy for the Central Asian region, including Kazakhstan. According to the document, which covers the period between 2020-2025, the US plans to reduce terrorist threats in the region, promote connectivity between Central Asia and Afghanistan, as well as promote economic connectivity and improve the region’s connections to the global economy.

India-Central Asia Relations 
Two significant face to face meetings of the Shanghai Cooperation Organisation (SCO) ministers took place in Moscow during September, 2020. The first was the meeting between the Defence ministers of the 8 members of the Organisation on 4-5 September and the second was between Foreign Ministers of the grouping on 9-10 September. Shri Rajnath Singh, Defence Minister and Dr S Jaishankar, EAM represented India in these meetings. Both the Ministers met their counterparts from China to discuss the current stand-off in the Ladakh sector of boundary between India and Tibet.  A 5 point consensus Agreement was reached between the foreign ministers of the two countries in which it was stated that the two sides should take immediate steps to disengage and de-escalate; all efforts be made to ensure that disagreements don’t turn into disputes; Special Representatives and other officials will continue to meet to discuss the boundary issue; and new Confidence Building Measures will be developed to ensure peace and tranquillity on the border.

Addressing the Combined Meeting of Defence Ministers of SCO, Commonwealth of Independent States (CIS) and Collective Security Treaty Organisation, CSTO Member States in Moscow, Rajnath Singh said, peaceful, stable and secure region of SCO member states, which is home to over 40 per cent of global population, demands a climate of trust and cooperation, non-aggression, respect for international rules and norms, sensitivity to each other’s interest and peaceful resolution of differences. He stressed on the need for institutional capacity to deal with both traditional and non-traditional threats above all, terrorism, drug-trafficking and transnational crime. The Defence Minister said, India unequivocally condemns terrorism in all forms and manifestations, and condemns its proponents. He said, India values the works of SCO Regional Anti-Terrorism Structure and its recent work in cyber domain to prevent spread of extremism. Adoption of anti-terror measures by the SCO Council to counter extremist propaganda and de-radicalization is a significant decision. Rajnath Singh said that India was deeply concerned about the situation in Persian Gulf. Noting that India has vital interests and links of civilisation and culture with all states in the Gulf, Singh called upon countries in the region to resolve differences by dialogue based on mutual respect, sovereignty and non-interference in internal affairs of each other. He reaffirmed that India was committed to evolution of a transparent and inclusive global security architecture which was anchored in international laws.

Shri Rajnath Singh met his counterparts from Tajikistan, Uzbekistan and Kazakhstan and discussed ways to expand cooperation with these countries in the defence sector.

EAM Dr S Jaishankar met his counterparts from all the 4 Central Asian countries who are members of SCO viz Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.  Ways to promote bilateral cooperation as well as discussions on regional and global security were held.

EAM thanked the Kyrgyz Foreign Minister for support in facilitating the return of Indian nationals from Kyrgyzstan. Air India operated several flights under Vande Bharat Mission to evacuate its nationals stranded in that country. About 4,500 Indian students study medicine in various medical institutions in Kyrgyzstan. A few businessmen are engaged in trade and services in Kyrgyzstan.

EAM met his Uzbek counterpart and agreed to coordinate actively on issues of regional concern. This formulation assumes significance as both the countries are keen for a stable, peaceful, secure and democratic Afghanistan and also ensure that the gains of the last 19 years of democratic rule in Afghanistan are not lost.

EAM met his Kazakh counterpart and discussed bilateral trade and energy exchanges. Both sides confirmed that they will continue to work closely on peacekeeping and also cooperate on regional peace and security. EAM stressed the need for robust political cooperation and high-level visits between Kazakhstan and India. The two Ministers noted a double-digit growth in bilateral trade (that amounted to $1.57 billion between January and May, 2020) compared to 2019. EAM reiterated the importance of continuation of strengthening of bilateral ties, including in fields of energy, investment, pharmaceuticals and logistics.

Union Minister of State (MOS) (I//C) for Culture and Tourism, Prahlad Singh Patel, participated in the 17th SCO Culture Ministers’ Meeting held on September 10, 2020. Discussion took place on the role and place of culture during the global epidemiological crisis and on the prospects for developing multilateral cultural cooperation within the SCO. MOS presented India’s perspective to strengthen the cultural cooperation within SCO by using digital technology as an effective medium for dissemination and awakening with regard to customs, culture and traditions in the prevailing conditions. The Culture Minister said that one of the important aspects that unites and connects SCO countries to each other is shared heritage of Buddhist philosophy and art. To promote the mutual bonding, the National Museum of India is in process of organizing the first SCO Exhibition on Shared Buddhist Heritage this year. The Exhibition marks India’s Chairpersonship of Council of Heads of Government this year. Patel also informed that Sahitya Akademi is translating ten Indian literary works into the SCO languages Russian and Chinese with the objective of sharing Indian literature with our fellow nations of SCO.

Later this year, India is expected to host the meeting of Council of Heads of Government (CHG) of SCO, which discusses trade and economic matters, on 29th-30th November 2020 in New Delhi. This will be the first Prime Minister level meeting to be hosted by India since it joined as a full-member of SCO in 2017.  India is expected to host two Minister-level meetings of SCO Member States before the Heads of Govt meet viz Justice Ministers and Trade Ministers. Trade Ministers could meet in last week of October where India will launch SCO start-up forum. India wants to utilise its expertise in trade and investment, intellectual property rights, innovation and start-ups and other sectors to enhance cooperation with the member states.

All member states have supported India’s initiatives in run up to Heads of Government meet in New Delhi. This affords India an opportunity to contribute in a substantive way to the trade and economic agenda of the SCO. India attaches great importance to SCO as it provides an excellent platform for it to connect with its extended neighbourhood.

In recent months India participated in many virtual meetings and webinars on India's engagements with SCO including one in the field of India's traditional medicines and amongst economic think tanks.

An important step has been taken to turn the Turkmenistan-Afghanistan-Pakistan-India, or TAPI, gas pipeline from distant fantasy to reality. A memorandum of understanding was signed on August 31 by Turkmen and Afghan officials envisioning the acquisition of necessary land in Afghanistan on which work is expected to start by early 2021.

Second meeting of joint working group of India and Tajikistan on peaceful uses of space technology was held through video conference.

A webinar on the theme ‘The Way Forward for Developing India-Central Asia Air Corridor', was organised by FICCI to promote import and export of agricultural products between India and Uzbekistan. Manish Prabhat, the then joint secretary (ERS), Ministry of External Affairs, said, "The combined annual trade with Central Asia is less than US$2 billion. The level of trade does not reflect the political will that India enjoys with Central Asian countries.” He added that India is at an advanced stage of negotiation with Uzbekistan for export and import of agricultural products. Prabhat Kumar, Indian Ambassador to Kazakhstan, said that Central Asian countries are in a position to support air traffic from India. He laid emphasis on potential of trade between India and Kazakhstan. 

Ambassador Vidhu P. Nair presented his Credentials to President of Turkmenistan on September 10, 2020.

(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.