The region’s five countries are split over unresolved issues rooted in the Soviet period as well as lingering border disputes. Russia and China exert economic and political influence. New initiatives, including from the EU and the US, can provide an opportunity for regional, even global prominence if they cooperate.
Bishkek (AsiaNews) – Central Asia can play an important regional and global role, but only if its various states work together to solve security, environmental, social, and economic problems, this according to the Center for Silk Road Studies (CSRS), based in Kyrgyzstan.
This is not an easy challenge to face, given lingering tensions left from Soviet times and religious extremism, as evinced by last Monday’s St Petersburg metro attack. However, the lack of trust among Central Asian leaders is the greatest obstacle, not surprising considering that only Kazakhstan and Turkmenistan have resolved all border disputes.
What these countries share are a Soviet past and the Russian language, which is less and less relevant because younger generations speak more English and Chinese than Russian.
The future of the countries of Central Asia could take divergent directions. AsiaNews has analysed the political and economic situation of the five Central Asian nations ranked as investment destinations (See The Diplomat, April 4, 2017)
General framework
None of these countries can hope for a qualitative development and an improved social and economic situation without foreign investments and help.
Regional trade is limited. The region’s main partners are Russia and China, the main destination for local exports. Moscow and Beijing have set up separate groupings, the Eurasian Economic Union (EEU) and the Silk Road Economic Belt (SREB) respectively. Observers are still trying to figure out whether they complement or compete with each other.
So far only Kazakhstan and Kyrgyzstan have joined the EEU. Contrary to those who thought that China might replace Russia, the two countries have seemingly opted for an "unspoken" division of labour between political and security issues (Russia) and economics (China).
Kazakhstan
Kazakhstan is the main destination of foreign investment thanks to its legal framework, population (17 million, plus access to the markets of other EEU members), and economic potential. However, the country’s political future remains in limbo because of the upcoming transition.
Its current president, Nursultan Narzabayev, is in fact 76 years old, the oldest leader in the region, and has been in power since independence. His party, Nur Otan, won the last parliamentary elections on 20 March 2016, a foregone outcome according to analysts.
Uzbekistan
Ranked second, Uzbekistan has a domestic market of 30 million people, a diversified economy and political stability following its recent transaction. The current president, Shakvat Mirziyaev, was elected last December, following the death of dictator Islam Karimov, who had been in power since 1991.
Mirziyoyev has pursued a more “tolerant” policy with the release of journalists and activists, and has implemented economic reforms to encourage investment. However, government interference in the economy has resulted in a non-liberalised currency market, frequent violations of investors’ and entrepreneurs’ rights, corruption, and an ossified bureaucracy.
Relations with Russia, Uzbekistan’s biggest trade partner, have become closer, as Russian President Vladimir Putin noted during a recent meeting with Mirziyoyev. During the latter’s visit, Uzbekistan and Russia inked deals worth more than US$ 15 billion.
Kyrgyzstan
An EEC member, Kyrgyzstan is ranked third with a liberalised legal framework, cheap labour, and favourable conditions for agriculture, light industry and tourism. Recently, the European Union granted the country GSP+ status, which removes tariffs from Kyrgyz products entering the EU.
However, foreign investors have faced obstacles in a number of projects setting a precedent. The lack of political continuity and the spread of Islamist ideologies are further cause of concern, especially as the country prepares for upcoming elections. Political tensions have emerged recently after the arrest of several activists who had been protesting peacefully.
After China and Russia, Kazakhstan is Kyrgyzstan’s major economic partner. China is also deeply involved in the country. In early 2016, China invested heavily in local oil, coal, natural gas and precious metals.
Tajikistan
Ranked fourth as an investment destination, Tajikistan offers cheap labour, mineral wealth and a climate favorable to agriculture. Still, its underdeveloped infrastructure, limited internal market and political instability are obstacles. In addition, entrepreneurs lack real tools to protect themselves. At present, Tajikistan and the EEC are negotiating its membership. The country remains heavily dependent economically on Russia.
Turkmenistan
Turkmenistan comes last because of government interference in economic activities and widespread corruption, inadequately protected property rights, and high dependency on hydrocarbons. In the middle of the country’s worst economic downturn inn 25 years, construction on the country’s biggest oil pipeline, Line D, was suspended.
Overall, as indicated by the Center for Silk Road Studies, economic initiatives by various players can offer Central Asia an opportunity to find regional, even global prominence.
The EEU represents a common market of almost 200 million people. The SREB can turn the region into a bridge between East and West. US President Barack Obama’s 2011 New Silk Road strategy designed to help Afghanistan through infrastructure and trade could link Central Asia to South Asia. The EU’s GSP+ status gives the region access to a market of more than 500 million people. Any of this could happen if the region’s countries come up with a shared language and understanding to profit from such possibilities.