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Central Asia

Natural Gas and the ‘Lesser’ Caspians: How New Players Might be Good for Everyone

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Energy: what was once a largely single-resource/two-state controlled industry has given way to other resources of significance. In turn, this has also given rise to other states as major players in the arena. Given the increased need for energy among states, there has been greater collaboration and cooperation among states with regards to energy resources.

This is well exemplified by the US’ early and continued energy relationship with Saudi Arabia following World War II. Saudi Arabia may have drastically different security and human rights priorities than the US, and yet they both have been longtime energy partners that rely on one another heavily. Relationships of this nature have grown in frequency since then and as a result the Caspian region has emerged as a major player in energy security geopolitics.

By and large oil has been, and for the most part still is, associated with energy security. So long as a nation has access to an amount of oil commensurate with its needs, it is energy secure. However, a new player in the energy resource arena has begun to emerge: natural gas. Though natural gas has been around forever, it has taken on a position of importance in the struggle for energy security only recently. Natural gas can be used for everything from heating, cooking, and electricity generation. In fact it has many of the same applications as oil. The Caspian region is starting to exploit this resource. The region is one of the oldest oil-producing areas in the world and, though it continues to play a significant role in oil production, the control of energy in the region has begun to shift largely as a result of natural gas. Oil production and export from the region has primarily gone through Russia (or the USSR) throughout history. Caspian states, however, have discovered that they are home to some of the largest natural gas reserves in the world and now are looking to bypass Russia entirely to export it to the European Union (EU). This is significant for two reasons: first, it would shrink Russia’s impact as a controller of energy resources worldwide, especially in the EU. Second, it would drastically raise Kazakhstan, Azerbaijan and Turkmenistan’s profiles over energy resources and security.

Russia’s historical dominance over the Caspian region gave it significant control over the global energy market. It is estimated that 17 percent of the world’s oil comes from the Caspian (primarily Iran and Russia) and it is largely responsible for providing the EU with energy security. The shift away from Russia by other Caspian states, however, erodes Russia’s stranglehold on energy resources in the region and gives way to exciting new players and geopolitics. Caspian states have already begun to break away from Russia in their bid to export natural gas to the EU. The process has been underway since the dissolution of the USSR, with concrete realization in the late 1990’s. But ultimately it was always hindered due to strong opposition, largely from Russia and Iran, which vehemently opposed the any independent Caspian projects from the other littorals. In the mid-2000s, once the Russia-Ukraine gas dispute began in earnest, the project began to gain more traction. There was a shift in allegiance between the littoral nations and renewed interest in the project sprang back to life. Since then, massive headway has continued to be made, largely to the dismay of Russia and Iran.

The Russia-Ukraine dispute can truly be seen as the point when the lesser Caspian littorals decided to separate themselves from Russia as far as energy resource export is concerned. This is not to say they have separated themselves completely, as there is still collaboration on energy resources in the area. However, the dispute has led to Russia and Iran being excluded from the southern gas corridor project, which is expected to become fully operational by 2020 and supply much of the EU with natural gas. This is a boon financially for the nations involved, but perhaps more importantly, it creates a major geopolitical shift for those lesser littorals in the Caspian. States such as Turkmenistan, Azerbaijan and Kazakhstan, who have historically had decidedly smaller stakes in the energy sector, stand to gain significant traction by building and remaining in control of this corridor without major Iranian or Russian influence/interference. This can only serve to strengthen their diplomatic ties with the EU while simultaneously weakening Russia’s and elevating their status as legitimate players in energy geopolitics. Russia and Iran have opposed the pipeline repeatedly, with Russia playing a far more active and vocal role in the opposition than Iran. Throughout the last decade and a half, Russia has thrown virtually every piece of oppositional ammunition at the construction of the pipeline. Its two primary tactics have been to oppose it environmentally and by way of old treaties.

The treaty option has been the strongest oppositional tool used. Specifically, Russia has been using the treaties signed by Iran and the Soviet Union in 1921 and 1940 to threaten the other Caspian states. They have pointed out that the treaties are still in effect and that without support for the pipeline from all littoral states, any construction in the Caspian Sea would be illegal. There is some disagreement over whether these treaties still hold any legal bearing today. Next, Russia leveraged the environment in an attempt to oppose the project. According to Russia’s Natural Resources Ministry, pipelines along the Caspian Sea floor would be environmentally unacceptable. Aside from the fact that anytime a pipeline is placed in a body of water it has some environmental risk, this was clearly an attempt by Russia to try and generate international opposition to the pipeline. This is of course somewhat ironic given Russia uses similar environmentally-concerning pipeline routes. Evidently none of these attempts have had much of an impact on the project overall as it is still well underway. There is no doubt that Russia and Iran spent such a considerable amount of time opposing the pipeline due to the fact they knew its construction set a bad precedent for their continued dominance in the local energy sector. If former Soviet states can break away from Russia economically, then perhaps they can break away in yet other ways in the future. The more these lesser littoral Caspian states strengthen diplomatic bonds with Western-leaning nations, the less reliant they are on Russia. The further Russia is from controlling larger amounts of energy, the weaker its position in terms of geopolitics, something it considers anathema to its international security profile and agenda.

Moving forward, the lesser Caspians will gain significant respect and authority in their development and control over future energy. This alters the geopolitical arena enough that other states around the globe need to take notice, though this awareness so far has been slow. It allows the Caspian, minus Russia and Iran, to be yet another option when it comes to building diplomatic ties and securing access to energy now and in the future. Despite the fact that the amount of natural gas they plan on moving may not radically alter the geopolitical arena overnight, there is opportunity to move enough in the future that could make a major impact. More importantly, this gives the EU a second option for energy procurement, which increases its energy security and also gives it the option to slowly cut ties with other ‘problematic’ providers like Russia. Perhaps the most interesting point of this entire development is Russia’s complete lack of desire to do anything but threaten verbally and act diplomatically. To date the nation has not taken any physical action to impede the pipeline and it has also continued to maintain trade and economic ties with the lesser Caspian nations it is protesting against. Despite having divergent views on the pipeline and actively attempting to impede it diplomatically, Russia seems unwilling to militarize the situation, something that deserves at least begrudging respect and acknowledgement. Perhaps this is a potential sign of building diplomacy over military solutions, which would be a global plus for the entire international community. If Iran and Russia realize they must recognize challenges to their energy dominance with only a need to work with other Caspian nations, even though they do not completely agree with them, then a critical future region of the globe has a chance to remain stable and at peace. In this case, maybe the entrance of new players into the arena doesn’t have to signal the start of a new bloodbath or new geopolitical tension.

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Central Asia

China’s policies spur Central Asians to cautiously chart independent course

Dr. James M. Dorsey

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China’s brutal crackdown in its north-western province of Xinjiang and growing questions about the dark side of some of its Belt and Road investments is fuelling anti-Chinese sentiment, prompting some countries to explore ways to chart an independent course, and feeding into the narratives of rising populist leaders.

The incarceration of up to 2,5000 Kazakhs in re-education camps in Xinjiang designed to install Chinese values and loyalty to President Xi Jinping, erase nationalist and militant sentiment, and introduce ‘Chinese characteristics’ into perceptions of Islam among the region’s Uyghur population, a Muslim Turkic ethnic group, has spurred a Kazakh search to cautiously chart an independent course.

An estimated 1.5 million ethnic Kazakhs live in Xinjiang, 200,000 of which obtained Kazakh citizenship after the demise of the Soviet Union in 1991. In contrast to Uyghurs, they were able to move freely across the Kazakh-Chinese border until 2016 when China stepped up its crackdown in Xinjiang.

Chinese policy also figures in crucial Pakistani elections with populist contender and former international cricket player Imran Khan demanding greater transparency in China’s US$ 50 billion plus investment in the China Pakistan Economic Corridor (CPEC), a Belt and Road crown jewel and the initiative’s single largest investment. Mr. Khan is also demanding a more equitable distribution of Chinese investment among Pakistan’s provinces.

Irrespective of whether Mr. Khan emerges victorious from the Pakistani polling, he is likely to be a major voice. His call for greater transparency resonates with significant segments of the business community represented by the Federation of Pakistan Chambers of Commerce and Industry who have been critical of commercial terms that advantage Chinese companies with reduced benefit to their Pakistani counterparts.

Mr. Khan’s call for greater transparency is likely to get a significant boost if Pakistan is forced to turn to the International Monetary Fund to bail out its troubled economy.

Major political parties and business organizations in the Pakistani province of Gilgit-Baltistan have meanwhile threatened to shut down the Pakistan-China border if Beijing does not release some 50 Uighur women married to Pakistani men from the region, who have been detained in Xinjiang.

The province’s legislative assembly unanimously called on the government in Islamabad to take up the issue. The women, many of whom are practicing Muslims and don religious attire, are believed to have been detained in re-education camps.

Concern in Tajikistan is mounting that the country may not be able to service its increasing Belt and Road-related debt. With the World Bank and the IMF warning that Tajikistan runs a high risk of debt distress, Tajikistan has seen its debt-to-GDP ratio balloon from  33.4% of GDP in 2015 to an estimated 56.8% in 2018.

The emerging stories of Kazakhs released from re-education camps in Xinjiang and a court case a Chinese national of Kazakh descent accused of entering Kazakhstan illegally after working in one of the detention centres holding hundreds of thousands of mostly Turkic Muslims is forcing the Kazakh government to stand up more forcefully for the rights of its nationals and reinforcing its desire to steer a middle course between Chinese and Russian ambitions in Central Asia.

41-year-old Sayragul Sauytbay is on trial for allegedly illegally crossing the Chinese-Kazakh border border to join her husband and two children in Kazakhstan. Ms. Sauytbay told the court she had escaped to Kazakhstan after being told by Chinese authorities that she would never be allowed to join her family because of her knowledge of the camps.

Chinese authorities have denied the existence of the camps despite mounting evidence from both official documents and witness accounts. China’s foreign ministry said it “had not heard” of the camps.

Ms. Sauytbay’s defense is attracting attention and spurring anti-Chinese sentiment not only because of her first-hand account of the detention camps but also because of her assertion that she had access to classified Chinese documents that shed light on the sprawling network of re-education centres.

Ms. Sauytbay’s trial puts the Kazakh government, an important Belt and Road partner, in a bind. She has admitted having illegally entered the country but said she would disappear in one of Xinjiang’s detention camps if she were returned to China. Ms. Sauytbay has requested political asylum in Kazakhstan.

Kazakhstan has until now to sought to raise the issue of the fate of ethnic Kazakhs in Xinjiang quietly and cautiously with China. Returning Ms. Sauytbay would open the government to accusations that it is kowtowing to Beijing and failing to protect its people. Allowing her to stay, would give further credibility to reports on the extent and nature of the crackdown in Xinjiang.

The trial also boosts Kazakh efforts to steer a middle course between Chinese and Russian influence in Central Asia by forging closer ties to European nations and the United States as well as the Muslim world.

Kazakh President Nursultan Nazarbayev discussed with President Donald J. Trump, on a visit to Washington in January, an “enhanced strategic partnership” that would strengthen cooperation “on political and security issues, trade and investment, and people-to-people relationships.”

Uzbek president Shavkat Mirziyoyev travelled to Washington on a similar mission, seeking US support for his liberalizing economic and political reforms.

Central Asian leaders suggested to European Union High Representative for Security and Foreign Affairs Federica Mogherini that they were looking to Europe rather than China and Russia for assistance in building sustainable economies that can create jobs for the region’s mushrooming youth population.

That is not to say that Central Asian nations, most of which are members of the Shanghai Cooperation Organization, do not welcome massive Chinese and Russian investment. They do, but also realize that the investment may improve their infrastructure and enhance security but does not necessarily ensure their ability to sustainably create jobs.

In a sign of the times, Russian commentator Yaroslav Razumov noted that Kazakh youth recently thwarted the marriage of a Kazakh national to a Chinese woman by denouncing it on social media as unpatriotic.

Quoting Kazakh commentators as blaming Russia for stirring anti-Chinese sentiment in their country, Mr. Razumov, in an article entitled ‘Ally, but not a friend,’ warned that Russia, and by extension China, “must learn to live with this.”

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Central Asia

Astana: City of new opportunities

Asset Issekeshev

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Relocating a capital, and creating from scratch not only an administrative and diplomatic centre, but also a new continental and global hub, is a huge task. The few countries that have attempted this can confirm the complexity of this challenge. Yet despite the challenges, no-one can doubt that the goal of the President of Kazakhstan, Nursultan Nazarbayev, to move our capital from Almaty in the South to the heart of our large country has been achieved.

It was a bold decision, which some at that time were worried was simply too ambitious. Kazakhstan had only just gained independence following the collapse of the Soviet Union. The country was transitioning, with great difficulties, from a planned to a market economy. And despite being the 9th largest country in the world, the global community knew very little about us.

That is no longer the case. Today, Kazakhstan’s capital has become a modern city that is playing an ever-growing political and cultural role in the world community. The choice of President Nazarbayev, who believed the new capital would accelerate, not hold back our country’s progress, has been proved right.

Astana is a symbol of Kazakhstan’s ambition for its citizens and its global partners. It is a source of pride and a capital accessible to all and has become a driver of national prosperity. Internationally, it has helped put Kazakhstan firmly on the map as it plays its part in tackling some of the world’s toughest challenges.

In twenty years, our population has tripled to more than one million people. Providing the housing, roads and the many other socially important services a 21st century city needs has been a major feat of planning and construction. Today’s economic indicators prove that the city is now self-sufficient and profitable. And not only in financial terms.

Astana has been chosen by major international firms to establish their headquarters and production centres for Kazakhstan and Central Asia. They see our capital and our country as a reliable bridge between east and west and as a continental centre with further high development potential.

Kazakhstan, with Astana at its heart, has created a very favourable business climate. Over the past few years, the nation has attracted ever-increasing investor attention as one of the fastest-growing economies. Continuously increasing foreign investment in Kazakhstan is testament to our stability and ongoing reforms. I am confident that the launch of the Astana International Financial Centre, which operates on the basis of the English law, will create further incentives to conduct business in this city.

In addition, thanks to the country’s investment policy, last year Astana was recognised as having the most favourable conditions in the country for doing business.

It is not just as a successful and reliable economic partner that Astana is making its international mark. The city has become a centre for diplomacy where regional and global initiatives are launched to promote peace and cooperation, expand trade, and encourage sustainable development. Astana is now established as a place which brings people together and helps find solutions to the challenges of our time.

It is where, for example, the Eurasian Economic Union and Silk Road Economic Belt Initiative – both important for regional prosperity – were proposed to the world. Expo 2017, in which over 100 countries took part, provided the opportunity for advances in future energy to be shared.

Astana also hosts the annual Congress of Leaders of World and Traditional Religions, recognised as a major platform for inter-faith dialogue. The Astana Declaration, which came out of the Organisation for Security and Co-operation in Europe summit here in 2010, set out a bold vision for the future of Eurasia.

Astana is seen by the international community as a neutral and welcoming location where progress can be made on major conflicts and disputes. In this regard, it is difficult to overestimate the significance of the Astana Process, which remains the only forum that brings together all the main parties in the Syrian crisis. Kazakhstan will continue to be committed to peace and dialogue and I have no doubt that Astana will play a key role in helping to achieve these goals.

Twenty years, of course, is a very short time in the life of a city, especially a capital. But in just two decades, Astana has come a long way and made a big impact. Thanks to our leadership and the enormous effort of the people of Kazakhstan, Astana today is a successfully developing young capital with a bright future.

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Central Asia

Kyrgyzstan: Looking for digital solutions to combat child labour

MD Staff

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A group of young digital specialists – supported by the ILO in Kyrgyzstan – was among the prize winners in a ‘Hackathon’ aimed at promoting children’s rights.

Following a marathon 48-hour event involving 18 teams of information technology experts and their mentors, they designed an innovative application that has the potential to monitor the incidence of child labour in communities.

The ILO Child Labour Project in Kyrgyzstan provided general guidance and mentoring to the team to ensure the conformity of the software to the operational mechanisms of the national child protection system in Kyrgyzstan.

Their design came second in the competition, “Central Asian Hackathon, Generation Z: Wellbeing of Children”, which was organized by the Central Asian Coalition on Promotion of the Rights of Women and Children and the “League on protection of Children Rights” Public Fund, in partnership with the ILO, UNICEF, UNODC, the Embassy of Netherlands, and public and business companies.

‘The application helps to conduct interviews with children, formulate recommendations and determine their status,’ said Victoria Petrova, business processes analyst of the ILO-supported IT team. ‘It will help officials to assess the situation of the child, determine whether the child is being exploited and what needs to be done to resolve the situation.’

“We are on constant search of new solutions and new partnerships,” explained Amina Kurbanova, ILO National Project Coordinator in Kyrgyzstan. “The Hackathon gave us a unique opportunity to establish partnership with a new group – young highly qualified IT professionals, and to develop an application that may greatly facilitate child labour monitoring process.”

The IT team, “Testovoe nazvanie”, collected USD 1,500 in prize money.  The ILO now plans to support pilot testing of the new software by the line ministries.

“We are grateful to the ILO for this support. It is obvious that the proposed technologies could be applied in the daily work of social workers, police inspectors, labour inspectors and social pedagogues. The Ministry will carefully study the results of the pilot testing and will closely work with the IT Team specialists during fine-tuning of the application,” says Jyldyz Polotova, Deputy Minister of Labour and Social Development of the Kyrgyz Republic.

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