Economic Developments - April 2018

Tajikistan has started supplying electricity to Uzbekistan after a nine-year interruption. This is result of more than a year of concerted diplomacy by Uzbek President Mirziyoyev. Mirziyoyev’s visit to Dushanbe in March, 2018 to meet President Rahmon was the first state visit by an Uzbek president since 2000. They agreed to put past disagreements behind them. Mirziyoyev dropped Uzbekistan’s longstanding opposition to Tajikistan’s Rogun dam project. Following the Summit, it was announced that Tajikistan and Uzbekistan would have more border crossings and less visa restrictions. Bilateral agreements covering trade, investment, agriculture, and security were signed.

Uzbekistan has resumed delivering natural gas to Tajikistan, ending a six-year hiatus precipitated by diplomatic differences. Uzbekistan pledged to deliver 126 million cubic meters of gas for US$15.1 million this year. At US$120 per 1,000 cubic meters, this translates into a substantially favourable rate. Uzbek gas supplies were suspended in 2012 on account of Uzbekistan’s objection to Tajik plans to build the giant Roghun hydropower dam. Since President Shavkat Mirziyoyev came to power in Uzbekistan, in 2016, relations have improved dramatically and resumption of trade and energy ties has emerged as a priority.

Kazakhstan plays a special role in China’s trade and economic relations with Eurasian countries. Two-third of railroad traffic from China to Europe goes through Kazakhstan. In addition to transport, China and Central Asian countries have joint projects in energy, logistics, light industry and agriculture. In 2017, trade turnover between Kazakhstan and China was US$18 billion US dollars, an increase of 40% compared to 2016.

Both Kazakhstan-China oil pipeline, the first section of which opened in 2003, and Central Asia-China natural gas pipeline, which began operating in 2009 have expanded significantly over the years. In 2017, Kazakhstan-China oil pipeline transported 12.3 million tons of oil and 44 billion cubic meters (bcm) of natural gas, while the Central Asia-China natural gas pipeline transported 34 bcm of natural gas in 2016. As China increased its energy imports from Central Asia, Russia has decreased its own. Russia, a major oil and natural gas producer, doesn’t need Central Asian energy to fuel its economy. 

Similar trends are reflected in trade exchanges of Russia and China with Central Asia. In 1990s, total trade between China and Central Asia was less than US$1 billion annually. By 2017, it had reached US$30 billion, compared with US$18.6 billion in total trade between Russia and Central Asia. China outpaces Russia in total trade with all Central Asian countries individually, except for Kazakhstan. In case of Turkmenistan, China accounts for 44% of country's total trade while Russia makes up only 7%. Remittances however are still the mainstay of Russian economic influence in Central Asia. Russia is primary destination for Central Asian migrants working abroad, and remittances from more than 3 million Central Asians who currently live and work in Russia make up a substantial part of the region's economies. In countries such as Kyrgyzstan and Tajikistan that don't export energy, this source of revenue is especially important.

Kazakhstan is working actively to establish a national official development assistance agency, provisionally called KazAID. It is the first ODA programme among Central Asian states. It will have a neighbourhood focus. KazAID is not meant to be a charitable organization but, rather, will provide carefully-planned, targeted support to projects which are able to contribute effectively to development of regional economies, safety and people’s well-being.

Stretched government finances have prompted Turkmen public sector organisations to cut their workforce and send remaining employees on unpaid leave. Turkmen government has adopted multiple desperate measures to balance the country’s budget including completely suspending Visa cards; ending the era of discounted gas, water and electricity prices for citizens; making it mandatory for businesses to contribute to Turkmenistan’s Pension Fund; and even imposing more fines on car owners and Turkmen fortune tellers, whose occult services are popular in the country.

Russian authorities stopped 11 flights by Tajik airlines Somon Air and Tajik Air to Russian cities. Tajikistan responded by withdrawing permissions for 11 flights by five Russian carriers. Sudden drying-up of available flights could have major implications. 

Russian Foreign Minister Lavrov stated that Russia’s investment in Central Asia amounts to about US$20 bln. More than 7,500 Russian and joint companies are operating in the region. Russia’s aid to these countries, including participation in multilateral projects exceeds US$6 bln.


 April 30, 2018

E-mail me when people leave their comments –

You need to be a member of Ananta Centre to add comments!

Join Ananta Centre

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.