The following piece reflects the opinions of Gulnara Karimova, director of the Center for Political Studies (Tashkent).
The development of geopolitical processes over the past decade demonstrates that Central Asia has become one of the key Eurasian regions, with major impact on the overall climate of the continental and global security.
Central Asia’s influence is felt on several fronts, primarily those of combating international terrorism and supplying oil and natural gas.
At the same time, the region’s growing importance carries certain risks. As the region becomes an integral part of the global system of security and the economy, it also becomes sensitive to the effects of the multiple factors and processes that traditionally determine the course of global political, economic, cultural, and ideological development.
This creates some difficulties for Central Asian countries in formation and for the realization of their long-term national strategies. The difficulty lies in the fact that as the region’s geopolitical role grows, its states are increasingly involved in complex political, diplomatic, financial, and economic processes, which, in turn, require a constant evolution of quality and flexibility of strategies to protect national interests.
In fact, taking into consideration the full range of existing threats and challenges, Central Asia at this stage is constantly forced to decide between, on the one hand, continuing to strengthen its position as an outpost of international stability and an integral part of the world economy and, on the other hand, minimizing the impact of negative factors that could decrease the level of security in Central Asia.
Undoubtedly, each country in Central Asia seeks, in its own way, to solve the challenges it faces, based on its national interest priorities, the specific geopolitical situation, and the availability of various resources. However, in general, the problem for the region is how to strengthen Central Asia’s role in maintaining global political and economic security while at the same time minimizing the impact of factors that can bring instability to the region.
Today we can distinguish at least three areas that are located at the junction of these two tensions: the problem of Afghanistan; the issue of increasing supplies of oil and gas, taking into account the diversification of routes; and the transformation of Central Asia as the continental transportation hub. All three of these areas carry a powerful geopolitical component, characterized by the involvement of a large number of regional and global players.
The Afghan Factor in the Security of Central Asia
It is Afghanistan that brought Central Asia in early 2000 to the forefront of the processes of maintaining global stability and security. The September 11, 2001, terrorist attacks on the United States and the subsequent decision by an international coalition to declare war on the take on the Taliban regime and al-Qaeda elevated the Afghan problem from the regional level to the global level.
In fact, Afghanistan and its emanating threat of terrorism had already been a problem at the international level. The president of Uzbekistan, Islam Karimov, had repeatedly warned of invasions by Afghan Islamists in 1999–2000. However, full awareness of the severity and global nature of the Afghan problem was not realized by most of the international community until the tragic events at the World Trade Center and the Pentagon.
International pressure on the Taliban led to a marked reduction in the threat of instability spreading from Afghanistan to Central Asia. It also made it possible to deal more successfully with various jihadist groups in the region whose safe haven in Afghanistan had been lost. Meanwhile, the investment attractiveness of the Central Asian market was raised, owing to a slight reduction of risks to foreign investment and transit-transport capacity of the region.
As a result, the status of Central Asia greatly changed, from a region where safety and stability were highly risky because of the direct threat posed by Afghanistan to a region with a high level of stability, which in turn became a significant factor in restoring the Afghan economy.
However, as leading Western countries—the main stabilizing force in Afghanistan—dramatically shifted the focus of their foreign policy from Afghanistan to Iraq, it gave impetus to the revival of sources of destabilization of Afghanistan. The Taliban, who were on the verge of extinction as an organized political and military force, received an unexpected respite and have exploited it to gradually rebuild their military and technical capacity and manpower, in order to prepare new tactics of sabotage and subversive war.
Along with the shift to Iraq, it seems, the international community took comfort in some positive developments in Afghanistan. First and foremost, of course, was the quite successful process of establishing a formal government. Other positive developments include holding presidential and parliamentary elections; starting the recovery of the economy; improving the education, health, and judiciary systems; and retraining the army and police.
Against this background, however, increasing negative tendencies were occurring. Among them: the emergence and deepening of corruption; expansion of drug production; and increased agitation and subversion by the Taliban in some border regions with Pakistan. Regrettably, those tendencies, being regarded as peripheral, did not receive adequate attention on the part of the international community.
The result was that the instability gradually spread to other regions of Afghanistan, triggering a growing toll among the contingents of the international coalition, the Afghan army, and the civil population.
In this regard—and because there had been some progress toward stabilization in Iraq—it seems logical that U.S. President Barack Obama again declared Afghanistan a priority of American foreign policy.
That decision was very important from the standpoint of regional security in Central Asia. Therefore, it seems coincidental that the Central Asian states have positively responded to a request of NATO to help with the opening of the northern corridor of Afghanistan for non-military cargo supplies in addition to the Pakistan corridor, which is frequently being attacked by the Taliban.
At the same time, the start date announced by Obama for withdrawing U.S. troops from Afghanistan—June 2011—creates uncertainty for all forces involved in the Afghan settlement and, above all, the Central Asian states. Moreover, it remains unclear what will happen in Afghanistan, how effective the new U.S. strategy to combat the Taliban will be, and what further action Washington and NATO will take to support Kabul.
According to Henry Kissinger, “the United States may have no choice but to reconsider its options and to gear its role in Afghanistan to goals directly relevant to threats to American security. In that eventuality, it will do so not as an abdication but as a strategic judgment. But it is premature to reach such a conclusion on present evidence.”
Kissinger believes that a possible strategy would be reassessed only if there is no success in establishing broad international cooperation with regional and neighboring states to turn Afghanistan into “a terrorists-free zone” and if “the problem of short-sighted temptation to take advantage of failures of an opponent” is not withdrawn.
This point of view is in unison with the position of Uzbekistan, which advocates resolution of the Afghan crisis through broader cooperation among the six countries bordering Afghanistan and the world’s leading powers.
Uzbekistan’s viewpoint was formulated in the concept of establishing a contact group on Afghanistan, called 6+3, and presented by President Karimov at the NATO summit in Bucharest in 2008. The idea is to create a platform where the issues of the Afghan settlement could be discussed on a multilateral basis involving the six neighbors—China, Iran, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan—along with NATO, Russia, and the United States.
For Central Asia, such a multilateral format could not start soon enough. With the uncertainty posed by the planned beginning of the withdrawal of U.S. troops from Afghanistan, it is important to create a mechanism today to ensure that security and stability be maintained in Central Asia and other regions contiguous to Afghanistan.
Meanwhile, Uzbekistan’s efforts to strengthen regional security are not limited by its desire to foster a multilateral dialogue. It puts special emphasis on measures to assist Afghanistan’s economic development—the direction in which Uzbekistan sees the possible union of the interests of key countries that have influence in the region. Uzbekistan itself, for instance, delivers electricity to Afghanistan, conveys cargo through its transport communications to the northern Afghan provinces, and hopes to expand bilateral trade. Among recent major projects is the tender won by Uzbekistan, worth $170 million, for construction of the railway linking Khairaton with Mazari-Sharif, which should be put into operation in 2011. This is a breakthrough project for Afghanistan, one that significantly increases the supply of goods from almost all the adjoining countries. It also creates a large number of jobs that, in turn, contribute to the economic development of the northern provinces and their integration into the Central Asian market.
Support of such projects is entirely in line with the strategic position of Uzbekistan, which had long believed that the Afghan problem cannot have only a military solution. Uzbekistan maintains that the economic revival of Afghanistan must form the fundamental basis for the country’s stability and security.
Energy Aspect of Regional Security
Since the early 1990s, when the Central Asian countries got their independence, the energy sector has become one of the key factors in ensuring the security and stable development of the region. This is primarily because of the ever-growing estimates of proven and prospective reserves of oil and natural gas.
Currently, the proven reserves of oil and gas in Kazakhstan amount to 5 billion tons and 3 trillion cubic meters, respectively; in Uzbekistan, it totals 0.53 billion tons and 3.4 trillion сubic meters (geological reserves of 5 trillion); and in Turkmenistan, it is 0.95 billion tons and 3 trillion cubic meters (and that does not even include recently discovered reserves on open fields in South Yoloten and Serdar).
The availability of such reserves, which put Central Asia among the top energy regions of the world, had an immediate effect on the economic and geopolitical aspects of regional security.
From the economic point of view, the significant hydrocarbon reserves provided an opportunity to obtain a long-term and quite stable source of foreign resources, which were necessary to start the process of industrial and economic modernization. After the collapse of the Soviet Union, most economic ties were broken. But the foreign resources from the export of oil and gas, along with other sources of income, not only stabilized the economic situation but also helped to initiate programs to create a new industrial infrastructure.
As a result, for instance, Uzbekistan established new industry sectors such as the automobile industry and rebalanced the industrial structure of its GDP. In 2008, services contributed 46.5 percent of the GDP’s production structure; production of goods was 43.4 percent; and net taxes and export-import transactions accounted for 10.1 percent.
Of the exports, energy and petroleum products are by far the largest share, at 25.2 percent. Services account for 10.7 percent; machinery and equipment, 10.4 percent; cotton fiber, 9.2 percent; ferrous and nonferrous metals, 7.0 percent; chemical products and wood products, 5.6 percent; food products, 4.4 percent.
However, despite an overall decrease in the share of primary industries in Uzbekistan’s GDP, the physical volume of production and export of natural gas will likely increase, taking into account that the oil and gas sector has been an attractive object for foreign investment in recent years. This issue affects Kazakhstan and Turkmenistan as well, and both countries called a further increase in the amount of oil and natural gas as a condition for development of their national economies.
With the growth in the export of hydrocarbons, along with a stabilizing role in domestic economic development, another aspect of the link between energy and security of Central Asia became relevant: the growing integration of regional energy and overall economy in the world market.
The correlation of markets has been clearly seen since the beginning of the Iraq war in 2003. That is when global demand for oil and natural gas took off, boosting the price from $30 per barrel mark WTI to a peak of $147 per barrel by mid-2008. All of this led to increased exports of oil and natural gas from Central Asia; an active investment in the hydrocarbon sector; and, as a consequence of increased foreign exchange earnings, a speeding up in the modernization and reforms of the economy. Combined with the favorable development of the situation in Afghanistan, that period can be considered extremely auspicious for the overall stability and security of Central Asia.
Since then, however, the deepening link between energy and Central Asian security and the world market and its energy segment has shown its dark side. Prices of many commodities and industrial products have fallen rapidly during the global financial crisis, and oil has been no exception. For a short time, prices tumbled below $40 per barrel, causing a domino-like impact on all exporters of energy raw materials.
The declining prices of oil and gas have become a test of stability and security for states and regions, including Central Asia. Exporters of energy and raw materials in Central Asia have managed, with varying levels of effectiveness, to avoid an excessive negative influence of the global financial crisis on their economies; in general, stability has been maintained.
Even before the crisis, Uzbekistan had started reducing dependence on commodity exports in favor of developing its industrial and manufacturing sector, and that policy paid off. Although industrial production has also experienced some decline in demand and the world market prices, Uzbekistan was able to use available mechanisms to offset the negative influences and maintain high GDP growth by adopting an emergency anti-crisis program and stimulating measures for domestic demand and consumption of products.
According to official figures, GDP grew by 8.2 percent in the first half of 2009. It was achieved by increasing the scope of industrial production by 9.1 percent; production of consumer goods by 13.1 percent; agriculture, 4.6 percent; services, 18.5 percent; and construction, 32.5 percent.
It is worth noting that measures were taken to speed up the growth of exports during the crisis. Exports grew by 6.1 percent in the first quarter of 2009 and by 13.4 percent in the first half of the year, compared with the same period in 2008. Moreover, trade surpluses increased almost eightfold, from $207 million in the first quarter of 2009 to $1.6 billion in the first half of 2009.
According to Uzbek experts, the total amount of fiscal incentives was approximately $1.35 billion, or nearly 4 percent of GDP. Measures on stimulating domestic demand helped, for instance, to increase sales of cars in the domestic market.
Energy remains a key area for the leading producers of hydrocarbons in Central Asia. But the experience gained by Uzbekistan as a result of the crisis showed that priority for national and regional security will be given to limiting excessive economic dependence on oil and gas exports by diversifying sources of foreign currency earnings.
Central Asia’s admission to the group of leading manufacturers and suppliers of oil and gas generated the other part of regional security issue, the geopolitical. It would be wrong to deny the close connection between the oil and gas industry and geopolitics; look no farther than the Middle East for an illustration of their intertwined relationship.
In this regard, it seems no coincidence that as the world’s leading energy companies discovered Central Asia’s oil and gas potential, international analytical and information circles have actively been discussing the “Great Game” theory on control of Central Asian hydrocarbons. In other words, the issue of oil and gas exports and routes of its supplies has been gradually moved by the media from the sphere of the economy to the sphere of political rivalry.
Certainly, continued attempts to politicize oil and gas exports do not satisfy the exporters of Central Asia, and Uzbekistan in particular. For the security of Central Asia, it is extremely important that hydrocarbon resources have remained largely in the economic sphere. Politicization of the resources, coupled with the continuing instability in Afghanistan, could significantly raise the level of political risk, which could discourage foreign investors from involvement in the Central Asian markets.
As an analysis of national energy strategies shows, Central Asia gives priority to consideration of energy in the context of economic feasibility. Take, for instance, the issue of export route diversification.
After the Central Asian countries gained independence, some exporters declared a policy of creating new oil and natural gas supply routes. As the extraction of raw materials grew, the issue became more urgent for all, for obvious reasons.
First, the capacity built during the Soviet period, and the pipeline system, were clearly insufficient. Moreover, some of the pipelines, such as Central Asia–Center, were forced to reduce their capacity because of deterioration.
Second, the focus on traditional northern markets (Europe and the CIS countries) created an excessive dependence on consumption by them, to the exclusion of other potential markets. An example of this occurred during the global financial crisis of 2008–2009, when natural gas consumption in the European market decreased, creating significant hardship for exporters.
Third, a very high level of competition exists in the European market among suppliers from Russia, Africa, the Persian Gulf, and the Middle East. That factor exacerbates Central Asia’s excessive dependence on such a market, because it increases the geopolitical component in the relationship between the exporter and importer.
Fourth, in recent decades, consumption of oil and gas in South and Southeast Asia and the Far East has grown exponentially, caused by rapid economic progress, especially by China. In the first decade of the twenty-first century, this region formed the lion’s share of global consumption growth of hydrocarbons. Considering that Central Asia shares a border with China, it would be unwise not to try to gain access to this fastest-growing energy market in the world.
Thus, several economic-based factors are pushing Central Asian countries to diversify their export routes to serve a larger geographical spread of buyers for their hydrocarbon resources. There have been notable successes, among them the Caspian Pipeline Consortium and the Atasu–Alashankou pipeline; tanker deliveries of oil in Azerbaijan and Iran (under the “oil exchange” scheme); two gas pipelines from Turkmenistan to Iran; and the Turkmenistan–China gas pipeline, launched with the participation of Uzbekistan and Kazakhstan. These pipelines supplemented traditional oil and gas pipelines targeted to the northern markets.
Obviously, geopolitical factors sometimes seriously affect the conditions and terms of realization for export projects in some areas. But the strategic goal of Central Asia is to minimize any geopolitical competition in the energy market of the region that can negatively affect regional security.
To reduce the geopolitical risks, Central Asian countries also aspire, each in its own way, to establish energy market conditions that would enable the leading oil and gas companies in many countries to participate in tenders on an equal footing for the development of hydrocarbon fields and construction of enterprises for their processing. A good example is the energy market of Uzbekistan, where companies from Russia, China, Malaysia, South Korea, and South Africa have been engaged for many years.
For the security of Central Asia, the question of development and crisis-free operation of regional transport communications is of great significance. Given its location in the depths of the Eurasian continent, with no direct access to international shores, countries in the region have given priority for almost two decades to diversification of transport routes to extend access to global markets.
Looking at the structure of the modern world economy from the standpoint of geography, several regions on the Eurasian continent have determined the course of global economic development. These are the European and Asian industrial, economic, and financial conglomerates. From the transport point of view, their distinguishing feature is that they have a close relationship with maritime communications, which certainly entails them to pay much attention to the development of port infrastructure. Here, especially, the efforts of Asian countries are worth noting.
In 2008, all five of the world’s busiest container shipping ports were based in Asia. Singapore became the leader, exceeding 29.92 million TEU (twenty-foot equivalent units); Shanghai ranked second with 28.01 million TEU; Hong Kong was third with 24.3 million TEU; Shenzhen was fourth with 21.42 million TEU; and South Korean Busan, with 13.42 million TEU, came in fifth. Meanwhile, some major European ports are rapidly expanding, including Rotterdam, Antwerp, and London; together, these ports serve as the foundation for the recent increase in trade between Europe and Asia.
Central Asia’s lack of direct access to the sea-lanes that carry most of today’s continental and world trade does not rule out its potential as a major transport hub. In fact, its chances are not bad; it is, after all, centrally located between Asia and Europe.
Looking at the issue through the prism of security, it is important that the countries of Central Asia further transform into the continental transportation hub, as this guarantees an increase in the number of actors who have economic interests in the region, and hence, in strengthening regional stability.
Achievement of these strategic goals will be possible if two major tasks are resolved. The first is the need to develop efficient diversification of transport corridors. Priority should be given to economic expediency, rather than individual narrow objectives of a political nature. Creating a diversified transport system, combined with competitive rates, will enhance the attractiveness of Central Asia for international shippers and will help build transit flows.
The second task is the creation of an organic mutual development system of transport communications and regional economy. This task is more complex and expensive than the first one. It assumes the transformation of Central Asia into a major center of industrial, economic, and financial activities, which serves as a bridge between European and Asian economies.
The more Central Asia states approach this goal, the more they will be able to build permanent trade in both directions—Central Asia–Europe and Central Asia–Asia—which, in turn, will allow for regional transport communications to increase the volumes of cargo. Chinese ports did not become the world’s leader in cargo transportation in a vacuum; it happened because of the explosive growth of the Chinese economy and increasing volumes of international trade in China.
Uzbekistan has long been making significant efforts to combine its industrial and economic, and transport development components. The Navoi Free Industrial and Economic Zone project is a good example of that. Its winning attribute is an advantageous location and transport infrastructure, situated as it is in close proximity to the international airport, highway E-40, and rail routes of international importance. The result is that it has created favorable conditions for foreign investors and manufacturers.
Road and rail communications allow the shortest access to the ports of Iran and Turkey, as well as to the ports of the Black and Baltic seas. Through use of the airport, Navoi achieves considerable savings in time and shipping costs. Thus, the distance between Southeast Asia and Europe via Navoi is 1,000 miles shorter than via Dubai. Time saved in the implementation of flight is 1.5 hours, and fuel savings amount to 15 tons for every airliner.
Given its location, Central Asia cannot ignore geopolitical processes that could adversely affect its transport plans, and hence its security and safety. They include the continuing violence in Afghanistan, which is preventing full development of the Afghan–Pakistan southern corridor that could provide the shortest access to the ports of Karachi and Gwadar.
Moreover, uncertainty surrounding Iran’s nuclear program could limit Central Asian companies’ access to the Iranian ports of Bandar-Abbas and Chabahar, which are pivotal in opening the sea gates that can connect Central Asia to the Middle East, South Asia, and Southeast Asia.
All three factors that determine the current state of security in Central Asia will remain highly relevant in the near future. Of course, for the present the most urgent is complete resolution of the Afghan crisis, which has tied up many of the issues surrounding regional security. Solution of the Afghan problem could immediately reflect on the general climate of political, ideological, economic, energy, and transport security.
For example, stabilization of Afghanistan would deprive the ideologues of various radical pseudo-religious movements of use of the country as a base of terrorism as well as any illusions about the spread of instability in regions neighboring Afghanistan. In addition, it would pave the way to more actively combating drug production and smuggling, which would deal a major blow to the sources of both terrorist financing and corruption. These factors would allow the Afghan economy could enter the international integration, because it represents a potentially promising market and because the discovery of large deposits of iron ore at Hajigak and copper at Aynak demonstrates Afghanistan’s significant natural resources.
The relationship between Central Asia’s energy policies and its stability will also remain relevant, as will the two conflicting strategic visions: one that considers the energy sector mainly through the prism of the economy, and the other, by geopolitical radicals, who think of the energy sector in terms of the “great energy game.” The main reason for this will be the gradual building of oil and gas supplies from the region to world markets.
With regard to transport security, in some areas (Afghanistan, Iran, and South Caucasus in particular), it will depend on the development of various geopolitical processes in neighboring regions. In general, transport communications in Central Asia and the saturation of cargo traffic will directly depend on the economic development of the region and the intensity of the growth of continental trade, which will undoubtedly grow as the global economic crisis eases.
Professor Gulnara Islamovna Karimova is the Ambassador Extraordinary and Plenipotentiary of Uzbekistan to Spain, Permanent Representative of Uzbekistan to the United Nations Office and other International Organizations in Geneva. She is also the Director of the Center for Political Studies (Tashkent).