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LMC 2021

Central Asia in the Middle of Russian and Chinese Tensions

Due to its economic, geopolitical and security position, Central Asia is of great interest to Russia and China. As the Russian and Chinese relationship is likely to take a turn for the worse in the future, Central Asia will be caught in the middle of tensions. The EU can provide a much-needed partnership for the region in testing times.

Katja_Gershak
Katja Geršak

Executive Director, Centre for European Perspective (CEP) and Co-Founder, Regional Dialogue in Uzbekistan

Unemployed men gather on the side of a road with the hope of landing odd jobs in Dushanbe, Tajikistan in April 2020. If Tajikistan’s key economic partner, Russia, had not sealed its border in March to slow the spread of the coronavirus, many of the men would have been seeking work there. Photo: AFP/Scanpix

Historically, as part of USSR, the region was much more closely bound to Russia than China. This was reflected in economic ties which persisted after the republics’ independence, with Russia remaining one of the major trading partners of the region. Many citizens from the republics continue to seek better work opportunities in Russia and remittances are a remarkably stable source of income for Central Asian countries. Russia maintains significant military capabilities through bases in Tajikistan and Kyrgyzstan and has joint security and economic initiatives in the region such as the Eurasian Economic Union and the Collective Security Treaty Organization. Russian also remains the lingua franca in the republics.

Furthermore, Chinese foreign direct investment in the region remains low and lags behind Russian and European investments. While the Chinese have pledged numerous new projects and areas of cooperation this has not yet translated into concrete investments on the ground. The transport infrastructure – particularly railways, which are key for a region that is landlocked – is still primarily gravitating towards Europe and Russia.

China’s Foray into the Russian ‘Backyard

However, in the past decades, the Chinese have made big strides into the region and are gradually becoming one of the key partners and players in Central Asia. While the region’s ties to Europe and Russia remain significant, the trend is going to continue in the direction of rising Chinese influence in the region.

China’s penetration in the region is reflected in its share of trade. In 1998 the region’s biggest trading partners were Europe and Russia with 29% and 28% respectively. By 2018 China has become the region’s biggest trading partner (29%), while trade with Russia declined to 18%.

In 1998 the region’s biggest trading partners were Europe and Russia with 29% and 28% respectively. By 2018 China has become the region’s biggest trading partner (29%), while trade with Russia declined to 18%.

The region is very attractive to China because of its rich natural resources in oil, gas, uranium and other minerals. Chinese engagement in the energy sector includes the construction of the Kazakhstan-China Oil Pipeline and the Central Asia-China Gas Pipeline, which significantly altered the energy landscape of the region. Due to robust Chinese economic growth, China’s thirst for energy is going to continue growing steeply. Its consumption of natural gas is projected to grow by almost 190% between 2020 and 2050. With natural gas reserves, the Central Asian Republics will play a key role in helping China diversify its energy supply and reduce its dependence on energy coming from west Asia.

Furthermore, the region’s stability, or lack thereof, has security implications for China. China is concerned about the impact of the potential resurgence of terrorism in Afghanistan on the Central Asian region and spill over effects in Xinjiang. Instability also does not bode well for furthering other commercial energy and transport projects in the region. China has, therefore, in the past years also upped its military footprint in the region by conducting military exercises with Tajikistan, Kyrgyzstan, and Uzbekistan.

Economy First

In the Central Asian republics, there is a sense of apprehension related to the growing Chinese presence. Neither the people nor governments have fully embraced a Chinese presence, however, it is difficult to forego the economic allure and potential that China represents.

For the governments of the Central Asian republics, the economic perspective is increasingly important. Central Asian countries have young populations (half of the region’s population is under the age of 30), and the governments of the republics are acutely aware that economic growth and job provision are a necessity to maintain societal coherence and stability of their region. The economic incentives are therefore very important to these countries. Between 1998 and 2008 Central Asia’s GDP increased by 356%, with trade growing by 698%. In the decade afterward (2008 – 2018), GDP growth amounted to only 31% while trade growth slowed to 1%.

The economic growth across the region is still significant, however; the region has faced a cyclical slow-down in growth rates in periods when oil and natural gas prices have declined when there was a decrease in remittances and during the crisis caused by the COVID-19 pandemic. Therefore, the region needs to develop new economic drives, diversify away from commodity revenue rents and remittances, and promote private sector-led economic growth. From this perspective, a foreign policy based on strong economic incentives for the Central Asian states is successful. China, with a primary focus on enhancing economic ties and an approach of offering funding that carries no conditions of reforms, is likely to further expand its influence in the region.

The Russia – China Equation

These developments, of course, have a significant impact on Russia, which traditionally has close ties and real security and economic interests in the region. Russia, the largest power on the continent defines its security in terms of territorial might. Russia’s security posture requires a buffer around Russia and implicit recognition of “spheres of influence.” Russia still views the Central Asian states as “its backyard.”

The interests of Russia and China in Central Asia already diverge and the gap will only grow bigger. Russian-Chinese relations have had their fair share of ups and downs. In the past decade, they have strengthened a partnership that was further solidified in 2014 after the Russian invasion of Crimea. But, given China’s increasing foray into regions that Russia perceives as key to its security, including eastern Europe and Central Asia, the partnership may not be long-lasting.

Furthermore, Russia is increasingly becoming the “junior partner” in the relationship. The Russian economy remains dependent on revenues from natural resources (natural gas, coal, oil hydropower) which its leadership has used to quadruple its military budget. President Vladimir Putin has not implemented reforms that would make Russia more attractive not only for investment but also as a role model for the former Soviet Union countries of Central Asia. Russia is also facing a population decline; current trends indicate that the population will shrink from 141 million to 111 million in 2050.

Given Russia’s acrimonious relations with the West, it is becoming more and more dependent on the Chinese market. Russia is increasingly diverting oil to China, purchasing advanced weapons systems from China, and increasing the share of yuan in its foreign currency reserves (in an effort to avoid the dollar). In addition, Russia has signed a deal with Huawei to develop its 5G equipment. President Putin once said that the country with the most developed AI will rule the world. In a Machiavellian twist of faith, the Russian President will now be getting AI (at least the hardware) from China.

A worker checks a cast gold bar at the processing plant of the Jerooy mine in the Tien Shan Mountains in Kyrgyzstan. The mine is being developed to explore gold deposits by a company connected to the Russian Platina group. AFP/Scanpix

Prospects for the Region

China will continue to expand its influence in the region. We are likely to see a growth of much-needed economic incentives and probably a growth of foreign direct investments in infrastructure and transport projects, which will further link the region with China. Governments in the region will welcome the investments as the pressures for economic growth and job creation become more acute.

At the same time, Russia is going to work towards maintaining influence and presence in the region, and the interests of China and Russia there are likely to diverge in the future. Despite Russia’s challenges and weaknesses, it will remain a key regional player.

Furthermore, the Chinese are also viewed with a sense of apprehension by the Central Asian citizens. Particularly, the Chinese government’s poor treatment of Uighurs and other Muslims does not go well with the people of Central Asia. In Central Asia, where outward demonstrations are a rare phenomenon, there have been some overt protests aimed against the rise of Chinese influence in these countries. This will impact China’s ability to project influence and play into the hands of Russia.

In Central Asia, where outward demonstrations are a rare phenomenon, there have been some overt protests aimed against the rise of Chinese influence in these countries.

The Russian and Chinese relationship is likely to take a turn for the worse in the future and the Central Asian region will be caught in the middle. The EU and US should continue to harness relations with the region and strive towards increasing economic exchanges. Particularly Europe, which is a significant trading partner, should continue economic, social, and cultural engagement. The EU’s aid for Central Asia has increased over the past decade and its direct investment in the region is worth 62 billion euros. The EU should expand programmes focused on education, exchanges, and support for capacity building in the area of good governance and rule of law. The EU can serve as a model in this regard, despite the fact that it is perceived as rather remote and unknown to the population of Central Asia.

The EU has not projected power in the region and its influence is likely to remain limited, however; the security of the region is of importance to Europe. Particularly with US withdrawal from Afghanistan, there is a higher risk of terrorism spilling across borders. Youngsters can be particularly vulnerable to radicalisation and drug abuse (as drug routes from Afghanistan traverse Central Asian countries as well).

Intensifying diplomatic relations and ramping up developmental aid is therefore in the EU’s interest. The EU also has valuable experience in developing the internal market and can help the Central Asian economies become more integrated regionally.

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Linking Asia and Europe

Central Asia, encompassing Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Tajikistan, lies at a strategic point on the Silk Road linking Asia and Europe. It is at the heart of the Eurasian continent, a continent, which has been the greatest source of big empires. The region is rich with natural resources ranging from oil and natural gas to uranium and rare metals and has historically experienced an extensive flow of goods and people. It also plays a critical role in broader regional affairs contributing to stability, which is of key importance given the unfolding situation in Afghanistan.

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