Wednesday, 15 June 2016

Why is Central Asia forgoing Russia for China

Central Asia has long been stuck between a rock and hard place in terms of its geopolitical environment. Landlocked, with China to the east and Russia to the north and west, Central Asian leaders have had to balance their alliances with the powers that surrounded them.

In pre-soviet times Kazakh, Kyrgyz and Uzbek leaders would utilise these relationships to gain wealth for their country. After the dissolution of the Soviet Union it became more about security, making sure the newly formed states were not overrun by the bigger boys. To this end the Central Asian states entered into regional cooperative organisations with China and Russia like the Shanghai Cooperation Organisation (SCO) in the hopes of controlling the influence each power exerted in the five nation-states.

Twenty-five years on, this struggle to balance relations has failed and China is now poised to make a spectacular economic conquest of the Central Asian markets. In 2015 China was reported to have become Uzbekistan’s largest trading partner with 3 billion dollars’ worth of trade and Kazakhstan’s largest investor with 33 deals delivering 23.6 billion dollars to the nation. China has also focused heavily on Turkmenistan’s energy sector where it has been purchasing some 30 billion cubic meters of gas a year since 2009 while providing substantial military aid. China also took over in Kyrgyzstan last month as the builder and partner in 2 hydro-power projects.

Russia out and China In

The reversal in Russia’s dominant role in Central Asia is hardly surprising. Russia’s recent economic woes are well documented. Quite simply, they no longer have money to support the region. As a result many countries have been left hanging, as is the case of Kyrgyzstan which recently had to cancel a Russian partnership for a hydropower project that suffered serious setbacks due to the Russian government’s inability to fulfil their commitments.

Additionally Russian ties may be becoming compromised due to Russia’s domineering behaviour. The Economist suggests that Russia has been treating the region like its exclusive hoard. Buying oil and gas at below market rates only to re-export it to elsewhere at a mark-up, pushed countries like Kazakhstan and Turkmenistan into the arms of China who has better terms of trade. In this environment it is easy to see why China came to be viewed as an economic stabiliser and a necessity by Central Asian governments in the past few years.

The Eurasian Bear turning into a Dragon

This is not to say that China has not worked hard to cultivate its current position in Central Asia. Starting with a one billion dollar investment in the region in 2000, it has spent up to 50 billion dollars in trade and investments in the region according to the IMF. From developing its western border region’s to ensure its capabilities for trade to building infrastructure like highways, pipelines and railways throughout the region via the 2013 Silk Road Economic Belt (SREB) initiative, China is determined to secure the region as its own zone of economic interest and appears to be achieving this goal.

The risk in sidelining Russia for both Central Asia and China is Russia. Russia likes to view Central Asia as it personal Achilles Heel and prefers to keep close ties to the region economically, politically and militarily. Understandably, China’s SREB project and their new round of investment in Russia’s backyard has set off alarm bells in Moscow.

According to Alexander Gabuyev of the Carnegie Moscow Centre , "When China announced its Silk Road plan in Kazakhstan, it was met with a lot of scepticism and even fear by the Russian leadership…..The feeling was, 'It's a project to steal Central Asia from us, they want to exploit our economic difficulties to be really present in the region'."

Countering this push, Russian President Vladimir Putin announced the development of a Eurasian Economic Union (EEU) as a way to tie Russia and the Central Asian region together more securely. However, the Union floundered when the financial crisis hit Russia and it has since merged with China’s SREB Initiative.

Bears are tenacious creatures and, like them, Russia has not stopped trying to maintain its status. In the past months it has completed large scale military exercises with Central Asian partners like Tajikistan. Clearly sending a message to both China and Central Asia that they are still in the picture. Vladimir Putin has also made an attempt to slow down China’s entry into these markets by imposing new import restrictions through the EEU.

Central Asians Anti-Sino Relations

There is some risk to China large investments in Central Asia with there being much public distrust and opposition to the Central Asian leaders love affair with China. Anti-Sino sentiment is quite high in many Central Asian states. In Kazakhstan last month there was a series of large protests over a proposal to privatise unused arable land, which Kazakhs feared would be sold off to China. The government has since backed down from the planned privatisation due to the public outcry.

These protests are not isolated to just Kazakhstan. In Kyrgyzstan last year the Prime Minister resigned due to a scandal over the awarding of a contract to a Chinese company, and in 2012, 200 protestors blocked access to a Chinese operated gold mine.

Economic Pragmatism

However Central Asian leaders are pragmatists and many were left scrambling to fix their economies after the Russian collapse. The long term economic surety and prosperity that China is offering is not just an attractive offer it will be a boon to their economies. They will have roads, railways and other infrastructure built or updated without heavy costs to themselves. Through engagement with China, Central Asia will have new goods being imported and new industries and markets for each of the five states. As Kazakh Foreign Minister Erlan Idrissov stated,

"Our philosophy is simple: We should get on board that train…We want to benefit from the growth of China and we don't see any risks to us in that growth."

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