18 november 2019

Central Asia news

Image for Nazarbayev, investments for Rakhmon

17.09.2007 10:01 msk

Feruza Jani

Analytics Tajikistan

President of Tajikistan Emomali Rakhmon seconded the idea of a Central Asian Union at the talks in Dushanbe with the visiting President of Kazakhstan Nursultan Nazarbayev on September 13. Ferghana.Ru approached Ajdar Kurtov, an expert with the Russian Institute of Strategic Studies, for comments.

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Ajdar Kurtov: It is not the first striking foreign political initiative Nursultan Abishevich Nazarbayev suggests. Not all of his initiatives, however, are put into practice either in Central Asia or on a broader scale. I remember how Nazarbayev suggested establishment of Eurasian Alliance in 1994. This idea was met with lukewarm support at best. The way I see it, Nazarbayev came up with this initiative that year because he himself was in trouble. Indeed, 1994 was one of the worst years for Kazakh national economy. Neither was political situation much better. Parliamentary election in March 1994 was accompanied by numerous violations. Moreover, non-titular nations (particularly the so called Russian-speakers) were fleeing Kazakhstan en masse that year. If I'm not mistaken, immigration from the country exceeded 300,000 people. Aware of what it all was doing to his own image, Nazarbayev suggested these striking foreign political initiatives.

There were other ideas and initiatives as well. Nazarbayev suggested the "Ten Simple Steps To People" program several years later, an idea that was never put into practice just like the Central Asian Union project wouldn't be put into practice years later. This union was established in theory, owing its nominal existence to the friendship and cooperation treaty between Kazakhstan and Uzbekistan signed in 1994. Kyrgyzstan and Tajikistan subscribed to it later on. Initially proclaimed as the Central Asian Union, this organization changed its name on four occasions. Patently unable to demonstrate any successes or accomplishments, Central Asian bureaucracy changed names as though to enable the structure to begin from scratch.

If you ask me, this alliance could not succeed for economic reasons - not even political - then. It was a period of complicated economic reforms, a period of transition from planned economy to free enterprise. It follows that Central Asian countries were rivals vying for foreign investments and markets for their export. As it happens, all Central Asian countries export more or less similar goods. Raw materials are essentially all they have to offer to the world market. Uzbekistan, Kazakhstan, and Turkmenistan export gas and oil. Tajikistan, Kazakhstan, and Kyrgyzstan export some metals. Kyrgyzstan and Tajikistan export electric power as well. Needless to say, this similarity made them rivals rather than partners, and rivalry was vicious indeed. Countries of the region never signed any accords that would have settled the rivalry and establish a basis for evolution of the economic union. (What I mean is that the European Union, for instance, began with coal and steel export accords.)

Seeing all flaws and shortcomings of the union, its founding fathers did their honest best to drag Russia into it. As an observer or, even better, a full member. Numerous attempts to accomplish it were made. Moscow, however, took one look at the structure and suggested its disbandment and merger with the European economic community. This advice was finally taken.

Of course, there were some political aspects to the matter as well. First and foremost, the matter concerns rivalry between Uzbekistan and Kazakhstan over regional leadership. No wonder Nazarbayev decided to reanimate the idea again. The way I see it, Kazakhstan is out to become the economic leader in the region. Astana hopes to make use of the oil export dividends that grew along with the oil prices in the world markets. The question is what other Central Asian countries stand to gain in this whole undertaking, and the question is quite serious. After all, only two countries of the region (Tajikistan and Kyrgyzstan) have more or less backed the idea. The poorest countries in Central Asia, Tajikistan and Kyrgyzstan need all foreign investments they can lay their hands on. Kazakhstan offers these investments, and state officials in Dushanbe and Bishkek reason it out in the following manner, "Well, why not? Kazakh investments are as good as those from Russia, China, European Union, Islamic world, United States, and other countries."

Efficiency of Kazakh investments in another question. An emphasis is made on the banking sector in this country. Kazakh sources arrogantly maintain that Kazakhstan is the CIS leader in the matter of the banking reforms and by other economic parameters. It is not of course, and has not been for some time already. The Azerbaijani GDP growth is above that of Kazakhstan, average wage in Kazakhstan is not the highest throughout the Commonwealth, and so on. Well, Kazakh banks do invest in foreign countries, that much is true. The finances already accumulated strain the domestic market and the general situation resembles the so called Dutch malady. Besides, the state of affairs with mortgage makes it plain that Kazakhstan itself cannot absorb surplus finances anymore.

Investing in foreign countries, Kazakh banks in the meantime are after banal profits. The political objective of helping with nearby countries' development is not what they hope to accomplish. Buying interest in many enterprises abroad only in order to sell it at a profit afterwards is their standard operational procedure.

That the future Central Asian Union will benefit all countries of the region is not an established fact at all. Tajikistan is the only country at this point that stands to gain. Poor countries are like a beggar who cannot be chooser by default. They are compelled to knock at every potential investor's door. On the other hand, I wouldn't say that 100 million are that much for Tajikistan, that this is a sum that will make any considerable difference. Relations between this country and Russia soured this year over completion of construction of the Rogun Hydroelectric Power Plant. Tajikistan unilaterally voided the agreement between its government and Russian Aluminium. The latest reports indicate that services of the RAO Unified Energy Systems will be enlisted now. Well, the matter concerns the dam worth several billion dollars. Shortly speaking, Tajikistan has failed despite all its bold reassurances to find investors in the World Bank or United States even though the project will benefit them (meaning that Tajik electric power export would have been rerouted from Russia and Kazakhstan to Afghanistan in the south). Well, compare several billion and one hundred million. The difference shows that Kazakhstan has not been as successful as it claims it has by a long shot.