Central Asia | Raffaello Pantucci

Posts Tagged ‘Central Asia’

China’s Leadership Opportunity in Afghanistan

Posted: April 7, 2013 in Carnegie Endowment for International Peace
Tags: Afghanistan, Central Asia, China, China and the world, China-Afghanistan, China-Central Asia, Chinese foreign policy, xinjiang

A new article for the Carnegie Endowment for International Peace, a think tank with offices around the globe. It focuses on China in Afghanistan and is part of a series being directed out of their Beijing office looking at giving China advice for the coming year in foreign policy. The piece has already been re-printed in the Diplomat and I believe may be being re-published on East Asia Forum. I also want to use this opportunity to highlight this piece in the Russian Penza news which I did an interview for, here it is in English and Russian. For more of my work on this part of the world, check out China in Central Asia that I co-edit with Alex.

China’s Leadership Opportunity in Afghanistan

The 2014 deadline for the withdrawal of troops from Afghanistan is fast approaching. China has just over a year before Afghanistan fades from the West’s radar and Western attention toward the country shrinks substantially. However, it is not clear that Beijing has properly considered what it is going to do once NATO forces leave and pass the responsibility for Afghan stability and security to local forces.

And more crucially, it is not clear that China has thought about what it can do with the significant economic leverage it wields in the region. Afghanistan offers China the opportunity to show the world it is a responsible global leader that is not wholly reliant on others to assure its regional interests.

Traditionally, Chinese thinkers have considered Afghanistan the “graveyard of empires.” They chuckle at the ill-advised American-led NATO effort and point to British and Soviet experiences fighting wars in Afghanistan.

But in reality, the presence of NATO forces provided China with a sense of stability. Beijing correctly assumed that NATO’s presence in Afghanistan would mean regional terrorist networks would remain focused on attacking Alliance forces rather than stirring up trouble in neighboring countries like China. NATO’s targeting of Islamist groups also had the effect of striking anti-Chinese Uighur groups that had sought refuge in Afghanistan under the protection of the Taliban or al-Qaeda. These Uighur groups would otherwise have focused their attention on targeting China.

Yet as the date of American withdrawal from Afghanistan approaches, this security dynamic is changing. While China does worry about the threat of Islamist Uighur groups striking from their Afghan bases, this concern is relatively marginal. The bigger problem is the potentially negative repercussions for the rising number of investments from China’s private sector in Afghanistan and its surrounding region. These investments are part of a broader push into Central Asia that flows from an effort to develop China’s historically underdeveloped province of Xinjiang, which borders Afghanistan.

The prospect of an Afghanistan returning to chaos is, therefore, not appealing to policymakers and businesspeople in Beijing. This scenario would bring instability directly to China’s doorstep, and this instability could potentially expand northward into Central Asia or southward into Pakistan. China would suffer from further chaos in either direction.

The solution to this problem is complex. China is not necessarily expected to invest heavily in security efforts and rebuilding Afghanistan’s security apparatus, though some more substantial contribution in this direction than the offer to train a nominal 300 policemen that China made last year in Kabul would be helpful. Rather, China could focus on what it is able to do best: invest in Afghanistan and develop its abundant natural resources.

Chinese state-owned firms have already invested in oil fields in Amu Darya in northern Afghanistan and a copper mine in Mes Aynak, southeast of Kabul. These investments have had mixed success.

Amu Darya has produced for the China National Petroleum Company (CNPC), though its current status is unknown. Problems and uncertainty with China’s investments in Central Asia are reflected in the difficulties of two other Chinese companies—the Metallurgical Corporation of China (MCC) and Jiangxi Copper—in the south.

In part this is because companies operating in the south face understandable security concerns that range from locals angry because they feel they were not justly compensated for their land that was affected by the mine to Taliban-affiliated groups eager to punish the central government by undermining efforts to develop the country.

But these companies also often find they lack a full understanding of the environment in which they are trying to invest. Orchestrators of projects that begin with the best of intentions and large investments, like the Mes Aynak mine, find themselves burdened with a local government response that is confused. Confusion turns to anger when these projects fail to deliver elements that were supposedly included in the original contract. For example, the local Afghan government initially believed that MCC and Jiangxi Copper would build a train line in the south. But the companies claim the contract only stipulated it would conduct a feasibility study. They also claim that the security situation has driven Chinese workers to refuse to work on the site, though reports about whether these stoppages are actually occurring are unclear.

The difficulty of this deal contrasts with the rapidity with which Chinese energy giant CNPC was able to bring online the oil field in Amu Darya. Political complications with the local Afghan strongman Rashid Dostum have held up work, and it is not clear that they have been completely resolved. The field has produced some oil that was transported across the border by truck into Turkmenistan, where it is refined at a separate CNPC site. The company has also said that it is going to develop a refinery in Afghanistan to help facilitate Afghan energy independence.

These two projects show the potential benefits and downsides to investing in Afghanistan. Large mining projects like these have the potential to be help rebuild parts of Afghanistan and transform the economy from one that is reliant on the drug trade and foreign aid to self-reliance.

Even if they were all successful, Chinese investments alone would not transform Afghanistan into a stable and prosperous state. China also needs to leverage its power within the region and persuade other countries to engage in Afghanistan in order to complete this transformation. The Shanghai Cooperation Organization (SCO), a regional entity led by China, has done very little in Afghanistan due to a lack of agreement among members about what exactly actions to take. China believes the SCO should do more, but other member countries believe a bilateral approach is better that a multilateral one and that focusing on building individual relationships in Afghanistan will help strengthen their particular interests. This is unfortunate as the SCO could be a useful vehicle through which China and other regional actors could undertake efforts to counter the narcotics trade in the region and strengthen border controls.

China has growing influence in the Asian Development Bank, which has already invested heavily in Afghanistan. China could continue its support for these projects to help connect Afghanistan to the broader region and reintegrate the nation into the global community, thus fostering stability. This approach complements China’s broader regional strategy to develop Xinjiang into the “gateway for Eurasia” as Premier Wen Jiabao put it during the China-Eurasia Expo in September last year.

And at the social level, China needs to foster person-to-person contact with Afghanistan. Last year during a visit to Kabul, the most striking characteristic of Kabul University’s Confucius Institute—one of the Beijing-backed centers that promote Chinese language and culture across the world—was the absence of Chinese teachers and Afghan students. This stood in contrast to other Confucius Institutes in Central Asia with dozens of students crowding around excited teachers. The security situation undoubtedly complicates things in Kabul, but there are safer parts of the country in which to operate. To further encourage societal ties, Beijing could try to entice more Afghans to study and work in China through scholarships and study grants.

China has an opportunity in the next year to assert some leadership in helping steer Afghanistan in a more positive direction. A stable Afghanistan is in China’s national interest, and taking the lead on this regional issue of international importance could help bolster Beijing’s global position. The West may have made mistakes in Afghanistan’s past, and making up for them will undoubtedly take time. But the Afghanistan problem is one that remains on China’s borders and has the potential to result in even more regional instability. Investing in Afghanistan now will save years of trouble later.

Raffaello Pantucci is a senior research fellow at the Royal United Services Institute and the co-editor of http://www.chinaincentralasia.com.

Horse To Water

Posted: March 17, 2013 in Caravan
Tags: Central Asia, China, China and the world, China-Central Asia, China-Uzbekistan, Chinese foreign policy, Uzbekistan, xinjiang

A new piece for the latest issue of Caravan magazine, an excellent Indian publication that I would highly recommend. The piece is an evolution of a blogpost that we did for the China in Central Asia site a while ago, and of course part of the bigger project on the subject that Alex and myself are working on with Sue Anne helping us document it visually.

Horse to Water

China’s first faltering steps towards building trade links with Uzbekistan

By RAFFAELLO PANTUCCI | 1 March 2013

SUE ANNE TAY

At the 2012 Uzbekistan Tashkent China Xinjiang Business and Trade Fair, an Uzbek visitor photographs a scale model of a Chinese cotton-picking machine.

On a flight from Beijing to Tashkent, the capital of Uzbekistan, Sue Anne Tay, the photographer with whom I visited Tashkent in May last year, ran into a group of businessmen from China’s Xinjiang region. They were on a government-sponsored trip to the “Uzbekistan Tashkent China Xinjiang Business and Trade Fair” in Tashkent, to help build relations between Xinjiang and the neighbouring countries as part of an economic strategy laid out by Chinese Premier Wen Jiabao. As he put it, China wants to “make Xinjiang a gateway for mutually beneficial cooperation between China and other Eurasian countries”.

Unfortunately for this group of businessmen, they had to take a circuitous route to get through this gate. Because of a lack of direct flights from Urumqi to Tashkent at the time, they had been forced to re-route rather inconveniently through Beijing—a five-hour flight south-east followed by a six-hour flight west. In retrospect, the businessmen’s long trip was emblematic of difficulties they later faced in Tashkent.

We ran into them the next evening at a market in a small park behind a statue of Amir Timur, the 14th-century Asian emperor, in the centre of Tashkent. In the cool evening, traders, painters and other craftsmen had gathered to ply their wares to tourists. Some of the Chinese businessmen were getting their portraits drawn, frustrating the Soviet-trained draftsmen by constantly shifting to smoke cigarettes.

One businessman was intrigued by stalls set up near the artists. A forthright man with a flattop haircut typical of many middle-aged Chinese traders who have little time for the niceties of fashion, he had come to Tashkent to sell his food products to local traders. He was a natural leader, with the robust confidence of someone from a tough frontier province, which made his fascination at the outdoor market with faux vintage Soviet cameras all the more odd. Turning them over in his hands, he remarked on how authentic they were; I couldn’t help but think they had been made, like so many things in this world, in China. Using broken English, gestures, and my assistance as a Chinese–English translator, he proudly bargained down the cost of two cameras to $15.

Two days later, at the expo, this gentleman and the other Chinese businessmen were the sellers, trying to win over Uzbek customers for their products. Sponsored by the Xinjiang government, the expo was part of the Chinese autonomous region’s strategy to develop its economic ties with Central Asia. The companies represented all had operations in Xinjiang, though quite a few were from other provinces in China, such as Guangdong. This was also part of the central government’s strategy: richer eastern provinces were to give financial and other aid to their poorer counterparts and participate in the strategy of turning Xinjiang into a Eurasian gateway.

The expo, held in an exhibition hall in the northwestern corner of Tashkent, was underwhelming—a smattering of stalls were arranged in the centre of a much larger, imposing space, giving visitors the impression of being in a hangar. Sellers displayed everything from high-end power generation machinery and cotton-picking machines to uniforms (with a focus on the oil industry and military outfits), Uighur clothing, spices, sauces, car engine parts and electronics. Some exhibitors had carefully considered where they were travelling to—at one of the clothing stalls a sign proudly boasted that they sold ‘Turky Style clothing’, the unfortunate typo belying an attempt to tap into the Turkish-Uzbek ethnic connection. Another stall had a Chinese woman dressed up in what was supposed to be traditional ethnic Uighur attire, wearing a hat with what looked like a feather duster attached to it, as she tried to sell pillows, rugs, slippers and other homemade wool products. Compounding the hall’s feeling of emptiness was the thin crowd.

At one of the few stalls that were attracting a crowd, a Guangdong merchant selling electronics told me that his company “had been asked to invest in Xinjiang by the Guangdong government”. Having attended the expo before, he had an obvious edge over others and had had the foresight to bring along a Uighur salesman from his Urumqi office. Given Uighur and Uzbek are mutually intelligible languages, both spoken by Turkic peoples, the Uighur salesman was able to talk to curious locals and pitch them products. He proudly announced that the products on offer were all made in Xinjiang by Uighur workers, and told visitors to disregard the Guangdong branding. As proof, he pointed to the picture on a computer tablet box: a Google Android figure donning a hat of a style common to both Uighurs and Uzbeks.

Most others vendors had failed to bring someone who could communicate with locals; instead, the men sat around waiting for proceedings to end. At a stand trying to woo Uzbek companies to buy plots inside a new mall outside Xinjiang’s Kashgar city, one of the men who had had his picture drawn the night before was sitting with two of his colleagues. Bored and with no business prospects, they fiddled with mobile phones and remarked on how they, too, had been encouraged to come to Tashkent by the Guangdong government. (Although the trip had government sponsorship, they resentfully noted, they had to pay a fee to join.) It was only upon arrival that they realised Uzbekistan was an underdeveloped and poor market that was unlikely to have many companies eager to set up operations in China. “The Uzbek market is too small and low-income compared to the vast opportunities we have in Xinjiang,” said Tan Chao, a manufacturer of uniforms.

Dealing in goods of a vastly different scale, those manning the machinery companies’ stalls were less surprised by the slow foot traffic. At one stand, Liu Zhao, a cheery representative from a Siemens subsidiary that builds power stations, showed off a large model of a power substation. It had cost them somewhere in the region of 10,000 RMB (Rs 84,000) to ship the ping-pong table-sized model to Tashkent, a fraction of the money the company would make if it sold one, but he did not seem very optimistic about securing a sale. While my Chinese failed me as he went through the technical specifics of the project, he smiled pleasantly as he told me that people in Uzbekistan didn’t need products like the ones his company was offering, because “these people are at a very different stage of development”.

Soon after lunch, a local school was dismissed and there was a sudden influx of Uzbek children into the hall. The stall that particularly appealed to them was the one run by a company that made cotton-picking machines, a subsidiary of Chinese state-owned military aviation firm AVIC, which was hoping to tap the Uzbek cotton market, one of the top five in the world. But even the recent news that Xinjiang had set a cotton producing record was not helping their sales with locals, who apparently preferred American equipment. This left the Chinese businessmen to fight off eager children drawn not out of some financial stake in cotton, but rather by a large toy automobile that the company had sent along. The harassed vendors shooed away the children as they eagerly tried to play with the car, which was roughly the size of a microwave oven. Neither vendor spoke any Russian or Uzbek, but they had learned enough to say something approximating “no sale” to the young and old Uzbeks who pestered them to buy the model.

In the mid-afternoon, Duan Weiming, one of the clothiers, made a modest sale of some Western suits and received a down payment of a few hundred thousand in Uzbek som. Striding around gleefully with huge bundles of cash, he proclaimed that, given its lack of value, he would have no choice but to blow it all while he was in Uzbekistan—the Uzbek som is officially worth 1,800 per US dollar, but unofficially trades at around 2,800. When asked what he planned to spend it on, he responded, “Dinner, drinks and karaoke.” By 4 pm that day, the group at the expo concluded that the day was basically a write-off and that it was time to go home. Rounding everyone up, they hopped on a tour bus and went back to their hotel, enervated by the prospect of sitting through another day in the empty auditorium.

A few days later, over lunch with an Uzbek businessman whose company had helped sponsor the expo, we got a sense of how successful the whole enterprise had been. “Not very, to be honest, but better than last time,” he said. “More Chinese are coming.” A former government employee, he had seen the economic possibilities of China’s booming, dynamic manufacturing capabilities and had chosen to end a flourishing civil service career at a young age to go into business, with a focus on China. Though at the forefront of Sino-Uzbek relations, he was not optimistic about Xinjiang as the gateway for Central Asia. The province made low quality products and traders were, in fact, simply agents from elsewhere in China, he told us. But he admitted that the greater problem was the difficult business environment in Uzbekistan in general. Awkward red tape, worthless currency conversions and a political environment that took very careful manoeuvering meant that it did not matter how many trade fairs were held. “You can take a horse to water,” he told us, “but you cannot make it drink.” And with that his phone rang, dragging him off to do more business with China.

Russia and China May Compete Economically in Central Asia, But Not Militarily

Posted: February 1, 2013 in Bug Pit
Tags: Afghanistan, Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, CSTO, Russia-China, SCO

A slightly odd post in that it is not an article, but rather an interview I did with the author of the Bug Pit blog on Eurasianet that focuses on all things ‘military and security in Eurasia’. In any case, it was inspired as a result of the piece I recently did with Lifan for Open Democracy Russia, a piece that has been translated in Russian already and is apparently going to go up in Chinese as well. As ever, more on this topic more broadly to come.

Russia and China May Compete Economically in Central Asia, But Not Militarily

February 1, 2013 – 1:32pm, by Joshua Kucera

Last week, Open Democracy Russia ran a very good series of articles on relations between Russia and China. One was especially interesting for EurasiaNet readers, about choices that the Central Asian states are having to make between integration with Russia or China. The piece concentrates on the economic sphere, in which, as the authors convincingly argue, integration with the two big superpowers is becoming mutually exclusive.

Of course, Russia and China also have their respective Central Asia integration schemes in the security sphere: China has the Shanghai Cooperation Organization, and Russia the Collective Security Treaty Organization. So I asked one of the piece’s authors, Raffaello Pantucci, an expert on Chinese-Central Asian relations, about whether there was going to be a similar reckoning in that sphere. Short answer: no. His more detailed thoughts:

The Bug Pit: Is there a similar looming choice to make for the Central Asian states, whether they prioritize ties with the SCO (dominated by China) or CSTO (dominated by Russia)?

Raffaello Pantucci: There is little similar looming choice with regards the SCO and the CSTO. In part this is since the SCO remains a relatively infant security entity, while the CSTO has the advantage of having lots of interoperable forces and equipment. Also, China has no interest in stirring up a security competition having a foreign and security policy that does its utmost to not seem threatening. Having said all of this, it is interesting to see how the SCO has developed as a security actor – it is maybe not as active as some initially thought it would be, but the Chinese are certainly taking advantage of the opportunities it offers to test out equipment and strategy. The ‘Peace Mission’ exercises they regularly undertake are ones that the Chinese are increasingly playing an active role in directing.

TBP: Why has the SCO not turned out to be as active a military organization as China seems to have originally expected?

RP: I’m not entirely sure that was always the focus from a Chinese perspective. The SCO was born out of the ‘Shanghai Five’ – a grouping that was established in the wake of the collapse of the Soviet Union to help delineate and demilitarize China’s borders with the newly former Soviet states Kazakhstan, Kyrgyzstan, Tajikistan and Russia. This grouping proved successful and it evolved into the SCO in 2001 with Uzbekistan’s accession. In its founding declaration, the members emphasize their ‘non-alignment, not targeting to the third country or region, and opening to the outside world.’ Instead, they focus on countering the domestic threat of three evils ‘terrorism, separatism and religious extremism’ – a very Chinese phrasing. Terrorism is quite a useful unifying rallying subject that all of these nations agree on, all of whom had (and for the most part have) active networks of some sort operating in their territory.

In fact, the Chinese have always seemed more interested in the economic aspects of the SCO, and analysts will say as much in conversation. Their emphasis has repeatedly been on developing the SCO as an economic actor, something they hope will help them strengthen their economic hand and links in the region. Looking at many of the recent economic moves and discussions within the organization – talk of an SCO FTA, an SCO Development Bank, the large loan vehicles through the organization – the impetus is all coming from Beijing.

TBP: Do you think that Central Asian governments would like the SCO to be more active? Is there any desire for China to balance Russia in the security sphere?

RP: When Alex and me were travelling in Kyrgyzstan, one of the more amusing stories we heard was that the roads the Chinese were building were being designed to carry the weight of a Chinese tank. This apocryphal story may be founded on little more than speculation, but it captures quite effectively a concern that bubbles barely beneath the surface in Central Asia. People in the small and under-populated Central Asian states are worried about being neighbours to the Chinese behemoth. Tracked out, it translates into little desire for China to step in as the main security guarantor. And in practice, the Chinese have not done much in direct security terms. Look back to the troubles in Kyrgyzstan in 2010 and there was no evidence of China stepping in – it was rather Russia that ended up standing up as the regional supporter.

A final point to make is that China has little desire to become the main security guarantor in the region. It cuts right against the national ethos of non-interference. Elsewhere around the world it has slowly found itself being dragged into such nettlesome security problems and it is still working out how to address them. Where possible, they would like to avoid this in Central Asia too.

TBP: What do Central Asian leaders expect from China and the SCO long-term? Will they eventually take a larger role in security?

RP: I don’t think the Central Asian leaders see the SCO as being on a trajectory towards a greater security role. The impression is that they see it as a useful way to engage more generally with China and manage Chinese regional goals. The fact that the other main regional security player Uzbekistan has been so hesitant to engage with the SCO as a security actor highlights the distance the Chinese still have to go to turn it into a regional security player that everyone will buy into.

The interesting long-term question is what exactly will the Chinese do if their economic interests are directly threatened by security problems. Will they simply write them off? Or rely on local actors to protect them? Or send their own forces in, either under a Chinese flag or the SCO? The answer at this point is unclear, and this is a question that Chinese policymakers are still struggling with.

Decision time for Central Asia: Russia or China?

Posted: January 28, 2013 in Open Democracy
Tags: Central Asia, China, China and the world, China-Central Asia, China-Kyrgyzstan, China-Russia, kyrgyzstan, Tajikistan

Slightly delayed posting of my latest piece, this time with my sometime co-author and friend Li Lifan looking again at China-Russia and Central Asia. This was part of a series that Ben edited at Open Democracy Russia which seems to have attracted some attention. As usual, a lot more on this topic coming soon as part of mine and Alex’s project on China in Central Asia.

Decision time for Central Asia: Russia or China?

LI LIFAN and RAFFAELLO PANTUCCI 24 January 2013

Vladimir Putin’s attempts to draw the countries of central Asia into his fledgling Eurasian Union creates a dilemma for some of them: if they take up his offer, they might lose their valuable trading links with China. Li Lifan and Raffaello Pantucci discuss their options.

If one turns enough of a blind eye, it is easy to be optimistic about Central Asia. Wily diplomats from Kyrgyzstan and Tajikistan are masterfully playing off the great powers. Kazakhstan and Turkmenistan are turning into hubs in their own right – and nobody can tell plucky Uzbekistan what to do. This is nobody’s backyard, and attempts by neo-imperialists in Moscow, Washington and Beijing to play games in the region are only strengthening the hands of the Central Asian states themselves. This is a comforting picture – which is why Western policymakers love it – but it looks increasingly false as President Putin tightens the screws.

Why a Eurasian Union matters

Russia’s desire to strengthen its sphere of influence in Central Asia seems to be intensifying. The first sign came in October 2011 when Russia’s ‘national leader’ published his vision for a Eurasian Union in the Gazprom-Media owned daily Izvestia. Here Putin stated that the Customs Union with Belarus and Kazakhstan that would come into force on 1st January 2012 was just the beginning – and that it would expand ‘by involving Kyrgyzstan and Tajikistan. Then, we plan to go beyond that, and set ourselves the ambitious goal of a higher level of integration – a Eurasian Union.’

The Russian president is said to dream of his third term being his ‘geopolitical presidency,’ where he will make up for the lost ground and lack of achievement in foreign affairs that he views as his main failing. The transformation of the fledgling Customs Union into the Eurasian Union of his dreams is the centrepiece of this strategy. Whilst Kazakhstan seems to have already decided that it wants to be a part of the Union (and its president, Nursultan Nazarbayev is credited for first raising the idea of a Customs Union back in 1995), for the Central Asian states of Kyrgyzstan and Tajikistan this is a potential turning point, forcing a decision on which partner they want to prioritize: China or Russia?

The way Central Asian states will turn — to Russia’s Eurasian Union or to China — is the test for influence in the region. Photo: (cc) Wikimedia/IvaNdimitry

Deciding whether to follow Putin into the Eurasian Union will be a decisive choice for both states in the year ahead, as it will force them to choose which they want to risk: the GDP they get from trade with China or the GDP generated from remittances from their nationals working in Russia. Putin has thrown down the gauntlet – they will now have to make up their minds whether their economic future is going to be closer to Moscow or Beijing. Their dichotomy is not quite as black and white as this, but this is nevertheless a power test. The choices they make will decide whether Russia or China has a stronger say in Central Asia.

Kyrgyzstan’s dilemma

There is a simple reason why Putin’s union matters so much to Kyrgyzstan and Tajikistan: trade with China. Unlike energy rich Kazakhstan, already in the Customs Union, Bishkek and Dushanbe’s economies are dependent on business with Beijing. Kyrgyzstan’s ‘shuttle trade’ business with China, where small traders cross borders as ‘tourists’ with their goods in suitcases in order to avoid Customs duties, accounts for roughly a third of its GDP.

On the other hand there is fear in Bishkek that if they do not deepen integration with Moscow then the millions of migrant workers it exports to Russia – whose remittances are also equivalent to a third of GDP – will be forced to carry international passports, or suffer far reduced quotas. The nightmare is that they will eventually end up barred from Moscow’s labour market by a full visa regime – something nationalist elements in Russia, including charismatic opposition leader Alexey Navalny, have been calling for.

These fears are well grounded: in December 2012 Putin warned that within three years he wanted to end the post-Soviet practice of migrants from the CIS being able to come to Russia on their internal passports, effectively ID cards – but Customs Union members will be exempted from the new requirement for international passports. Polls conducted by the independent Levada Centre show over 60% of Russians supporting tighter immigration controls.

Visa-free admission to Russia and access to the Russian labour market may be soon be a thing of the past for Kyrgyz migrants. Photo: (cc) Shutterstock/FotograFFF

That free access to Russia can no longer be taken for granted is not lost on Kyrgyzstan. But at the same time the Kyrgyz elite fears that joining a Eurasian Union would mean effectively losing control over its border tariffs and regulations, and would destroy the rich network of new trade routes that are tying them into China, bringing them cheap goods and enabling a substantial re-export economy. These trade routes are economic lifelines for this fragile state – and for this network the Customs Union has all the potential to be a total disaster. As a former Kyrgyz cabinet minister put it to one of us in Bishkek last year, it would ‘decimate’ the country’s key markets in the south at Kara Suu and Osh. In his words, ‘almost every’ small business in Kyrgyzstan is reliant on trade with China and any new tariffs or rules would entirely change the local economy.

China: vulnerability and official indifference

Chinese officials insist that the expansion of the Customs Union matters little to them. Ambassador to Bishkek Wang Kaiwen put it succinctly to reporters in late November when he said: ‘Kyrgyzstan’s entry into this Customs Union will not affect trade relations with China.’ Kyrgyz-Chinese trade, he pointed out, oscillated somewhere between $5-$10 billion per annum, a figure that was ‘a small problem’ dwarfed by China’s overall foreign trade of $3 trillion. The question of whether ‘to join or not…should be your decision.’

This blunt response hides a complex reality. It is true that in the grand scheme of things, China’s trade with Kyrgyzstan is a drop in the ocean. The problem for China is that it is a drop that comes from one of the most troubled parts of one of its most restive provinces. China is not investing massively in its trade infrastructure with Central Asian countries for reasons of charity – but to stabilize its own restive Xinjiang Uygur province by turning it into a trade hub for this region.

The Eurasian Union would have a potentially damaging effect on the substantial investment China has made on both sides of its border. The erection of a Russia controlled tariff barrier between China and Kyrgyzstan is likely to have a chilling effect on trade coming out of Kashgar, at a time when the Chinese government has invested a great deal into trying to develop the southern city. Capital of a part of Xinjiang that has faced heightened ethnic tensions for decades, the government has spent a lot of money re-developing the old city and establishing a Special Economic Zone with the aim of turning it into a hub for Central Asian trade.

According to recent figures China invested some $91.91 billion into infrastructure in its ‘western provinces’ – an area that covers Tibet, Guizhou and Xinjiang. This is a focused strategy and Xinjiang sits in the middle of it. All of this will be threatened if suddenly traders no longer find it profitable to send their goods along the roads winding into the CIS from Kashgar. At the same time these traders’ choice of markets is surprisingly limited: without a route through Kyrgyzstan or Tajikistan they would have to travel through the Khunjerab Pass to Pakistan. The problem there is the roads on the Pakistani side remain woefully under-built. Their only other possible border crossing would be with Afghanistan, which remains firmly closed at time of writing.

Seen from China, these are unanswered questions. When one of us asked a group of academics in Urumqi, the capital of Xinjiang, what they thought of the Customs Union’s impact to China, they shrugged and in vague terms said they were ‘waiting to see’ if the Customs Union would actually come to pass across the whole region. In Shanghai and Beijing, everyone has stories of friends who have conducted surveys in the region that highlight its unpopularity. But this is largely behind closed doors. The official line is that espoused by Ambassador Wang, that ‘Kyrgyzstan’s entry into Customs Union will not affect trade relations with China.’ Nothing to see here, keep moving on…

A losing game for small states?

This used to be the sort of situation where Central Asians were in their element, masters of the game of playing one partner off against another. Kyrgyzstan in particular has cannily used access to its Manas airbase to extract large chunks of money from both America and Russia. This time it seems as though Moscow is playing a much harder game, forcing Bishkek into a decision that could ruin one aspect of its economy or another. How this plays out may end up determining the shape of the Kyrgyz economy. For all the talk about China in Central Asia, Putin is still able to compete with Beijing – and the choices made in Bishkek and Dushanbe will make it clearer whether Moscow is still the world power it dreams of being.

China and Central Asia in 2013

Posted: January 20, 2013 in China Brief
Tags: Afghanistan, Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, Kazakhstan, kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan

A kick-off to the new year with Alex on China-Central Asia with an overview for Jamestown Foundations’ China Brief. This is part of our ongoing project looking at China in Central Asia about which we have a number of large publications coming this year.

China and Central Asia in 2013

Publication: China Brief Volume: 13 Issue: 2

January 18, 2013 05:10 PM Age: 1 days

By: Raffaello Pantucci, Alexandros Petersen

China’s Gateway to Central Asia, Khorgos, picture from here

In the last two years, China has emerged as the most consequential outside actor in Central Asia. As we have described in other writings, China’s ascension to this role has been largely inadvertent [1]. It has more to do with the region’s contemporary circumstances and China’s overall economic momentum than a concerted effort emanating from the Zhongnanhai. The implications for United States and NATO policy are nevertheless profound. Not only have the geopolitics of Eurasia shifted in ways little understood in Washington and Brussels, but the socio-political and physical undergirding of the post-Soviet space from Aktobe to Kandahar is being transformed.

Official Chinese policy in Central Asia is quiet and cautious, focused on developing the region as an economic partner with its western province Xinjiang whilst also looking beyond at what China characterizes as the “Eurasian Land Bridge…connecting east Asia and west Europe” (Xinhua, September 4, 2012). Chinese state-owned enterprises (SOEs) are active throughout the region on major infrastructure projects, but it is not clear how much they are being directed as part of some grand strategy as opposed to focusing on obvious profitable opportunities. The Shanghai Cooperation Organization (SCO), the main multilateral vehicle for Chinese regional efforts and reassuring engagement is a powerfully symbolic, but institutionally empty actor. Many smaller Chinese actors—ranging from shuttle traders to small-time entrepreneurs to schoolteachers and students posted to Confucius Institutes throughout the region—are the gradual vanguard of possible long-term Chinese investment and influence.

China’s engagement in Afghanistan is growing as U.S. and Western involvement wanes. Whether Chinese companies and diplomats remain in the event of a surge in violence and country-wide destabilization is a question that will be answered post-2014. For the moment, however, Chinese SOEs Metallurgic Corporation of China (MCC) and Jiangxi Copper are invested heavily in one of the world’s biggest copper mines at Mes Aynak (just southeast of Kabul) while China’s energy giant China National Petroleum Corporation (CNPC) is pumping oil in Afghanistan’s northern Amu Darya Basin. Currently, the firm is trucking the oil across the border to refineries in Turkmenistan, although plans are in place to develop a refinery on the Afghan side of the border. Plans also are moving forward for the construction of another string of the Central Asia-China pipeline from Turkmenistan to Xinjiang to pass through northern Afghanistan (Xinhua, June 6, 2012). CNPC and its subsidiaries already have cut deals with local authorities to ensure security in their operating areas. Should Afghanistan once again be split between a Pashtun south and a Tajik and Uzbek north, Chinese companies may have the relationships to continue operations under the protection of a new Northern Alliance. It seems that plans for the natural gas pipeline include distribution to local communities in northern Afghanistan [2].

Next door, at the source of the gas in Turkmenistan, CNPC and the Chinese government have carved out for themselves an envious position as one of the most influential outside players in Ashgabat, at least when talking in energy terms. The Central Asia-China pipeline, one of the most impressive feats in energy infrastructure construction, was completed in 18 months and now is slated to bring 60 billion cubic meters (bcm) of natural gas per year to China in the coming decades (Platts, August 31, 2011). These immense volumes—four times that planned for the Trans-Anatolian pipeline from the Caspian to Southeastern Europe—may require up to three different routes for the project’s separate strings. This route planned to traverse northern Afghanistan will offer an alternative to the more costly route through Uzbekistan and Kazakhstan [3].

Turkmenistan’s main energy and foreign policy priority at the moment is the realization of the Turkmenistan–Afghanistan–Pakistan–India (TAPI) pipeline southeast across Afghanistan to markets in Pakistan and India. During the project’s recent international road show, CNPC and Sinopec reportedly expressed interest in the project, even if it was unclear in what capacity [4]. For the sake of diversity, Turkmenistan’s leadership would almost certainly prefer non-Chinese companies investing in TAPI. During the Petrotech conference in New Delhi in October 2012, the acting Minister of Oil and Gas Industry and Mineral Resources Kakageldy Abdullaev made overtures to Indian firms to come and invest in Turkmenistan (Business Standard, November 27, 2012).

Further downstream in Uzbekistan, the government started to pump its own gas down the pipeline traversing its territory in September. The move was part of a 2010 agreement signed between the two countries for Uzbekneftegas to send some 10 bcm per year to China (Platts, September 24, 2012). In historically energy-poor Tajikistan, CNPC partnered with Total to purchase a share each of Tethys find in Bokhtar, at the eastern end of the Amu Darya Basin (Bloomberg, December 21, 2012). In Kyrgyzstan, a Chinese firm also has agreed to build a refinery in the Chui Oblast whilst acting Kyrgyz Economy Minister Temir Sariyev reported “China is interested in the construction of Kazakhstan-Kyrgyzstan-China oil pipeline and a gas pipeline from Turkmenistan via the south of Kyrgyzstan” (Azer News, December 4, 2012; Central Asia Online, April 27, 2012).

Beijing and Chinese companies have long cultivated a close partnership with Kazakhstan as a regional power and source of valuable resources (“Sino-Kazakh Ties on a Roll,” China Brief, January 18). While Western companies suffer in their attempts to bring offshore projects online in Kazakhstan’s Caspian waters, China steadily has become the largest outside energy investor onshore. China’s sovereign wealth fund China Investment Corporation (CIC) is set to buy into Kazakhoil Aktobe, Kazakhturkmunai and Mangistau Investments—a deal which according to some estimates will give Chinese companies control over 40 percent of Kazakhstan’s oil production (TengriNews, January 8). The Kazakhstan-China oil pipeline—completed in a number of stages throughout the last decade—is slated to operate at its full capacity of 20 million tons per year (tpy) by 2014 (EnergyGlobal, November 9, 2012).

Nevertheless, this rosy picture has another side. According to analysts spoken to in Astana, the fields to which China has access are older ones that have been exploited for years. Furthermore, local Kazakhs with whom the authors spoke do not have particularly positive perspectives on their Chinese employers. At a grander scale, the slow progress with the Kazakh side of the free trade zone at Khorgos on the border between the two countries just northeast of Almaty is further evidence of these tensions. Analysts and officials asked either side of the border have vague responses about delays with the site. Currently, the Chinese side teams with new markets, corporate offices, hotels and customs buildings, but the Kazakhstani side still has some way to go in bringing its infrastructure on par with its neighbor [5]. Khorgos is the crossing point from China into Central Asia for three developments: a Central Asia-China pipeline from Turkmenistan; a new highway that is under construction linking Almaty, Astana, the Caspian shore and Russia; and a second train connection between China and Kazakhstan that opened last month (Xinhua, December 22, 2012). A key component of China’s so-called “New Eurasian Land Bridge,” the Khorgos passage is one of the main arteries in the chain connecting China’s eastern coast with Western Europe through Russia and the Black Sea-Caspian region.

These difficulties are even more evident in Kyrgyzstan where there have been a spate of clashes between locals and Chinese workers. In October, reports emerged from a gold mine managed by the Zijin Mining group in Taldy-Bulak that locals had threatened to burn down a company office after the company allegedly was killed a local horse (RIA Novosti, October 22, 2012). Then, in January, a fracas broke out between Chinese and local workers after Chinese workers allegedly caught a local stealing. In the ensuing clash some 100 people were involved and 18 Chinese workers were injured, two seriously (Xinhua, January 11). Whilst Kyrgyzstan is a notoriously difficult environment for foreign investors with many other nation’s countries also experiencing problems, China seemed to respond with particular attention this time around. In response to the first incident, the head of the Chinese Chamber of Commerce in Kyrgzystan, Li Deming, wrote an op-ed stating “Kyrgyzstan still a mine field for investors” (Global Times, October 28, 2012). In December, during an SCO Prime Ministers’ Meeting in Bishkek, Premier Wen Jiabao met with his counterpart and reinforced this message encouraging “Chinese enterprises to expand investment in Kyrgyzstan” (Xinhua, December 4, 2012).

A much larger, potentially strategic, threat to Chinese investments in Central Asia, however, lies in Russian President Vladimir Putin’s proposed Eurasian Union. Most recently announced in October 2011, when President Putin laid out his plan in an article in the Izvestia newspaper, the notion has its roots in the Customs Union that was first proposed in the 1990s by President Nazarbayev of Kazakhstan. While slow to accept the idea, President Putin now has embraced the idea wholeheartedly to create a regional organization that would coordinate “economic and currency policy” between the countries of the former Soviet Union (Reuters, October 3, 2011). Currently, the Union is made up of Kazakhstan, Belarus and Russia, but, in Central Asia, both Tajikistan and Kyrgyzstan have expressed an interest in joining. What is not entirely clear is whether this is something that is taking place as a result of Russian pressure or whether this is a choice. In his annual statement to the Duma in December 2012, President Putin spoke of tightening requirements for the citizens of the Commonwealth of Independent States (CIS) to enter Russia with passports rather than simply ID cards as is the case at the moment. He left open the caveat, however, that free access would continue to be allowed for citizens of countries members of the Union (RIA Novosti, December 12, 2012). The potential implication to remittance-reliant Kyrgyzstan or Tajikistan is clear, creating an instant obstacle for the masses of young men from those countries who work in Moscow to send money back home to their families.

The issue for China is what impact this will have on China’s trade relationship with these countries. In particular, Kyrgyzstan is one of the key routes for Chinese goods into the region and for onward re-export—Ambassador Wang Kaiwen, China’s man in Bishkek, places the figure at $5 billion per annum. In commenting, Ambassador Wang also placed Kyrgyzstan’s trade with China in a broader context. As he put it, “trade between China and Kyrgyzstan is $5 billion, and China’s foreign trade is $3 trillion…so this [joining the union] is not a big problem” (Knews.kg, November 30, 2012). The point is that this is a relatively limited problem for China, but the repercussions in Bishkek are uncertain and potentially more substantial.

In many ways, this uncertainty places China’s 2013 in Central Asia in its appropriate context. It is increasingly clear that China is the most consequential regional actor that is making all the right moves to consolidate its interests. The regional impact and the reactions of both the Central Asian states and Russia to this growing preponderance remain to be seen. For Beijing, the relationship is an important one if they are to effectively develop Xinjiang, but their growing perceived dominance is something that is met with ambivalence regionally where nations like China’s money, but worry about its dominance. The dragon has clearly risen in Central Asia, but how the region will decide to respond still remains unclear.

Notes:

Raffaello Pantucci and Alexandros Petersen, “China’s Inadvertent Empire”, The National Interest, October 24, 2012,chinaincentralasia.com/2012/10/24/chinas-inadvertent-empire/
Author interviews, November 2012
Author interviews, October 2012
Author interviews in Ashgabat, September 2012
Author observations at Khorgos, April 2012; and interview January 2013

Local needs matter more than imaginary struggles in Central Asia

Posted: December 18, 2012 in Global Times
Tags: Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, Russia, SCO, xinjiang

Another op-ed on Central Asia for the Global Times, one of China’s English dailies. This time focused on looking beyond Great Games in Central Asia.

Local needs matter more than imaginary struggles in Central Asia

Global Times | 2012-12-17 19:25:05

By Raffaello Pantucci

Last month, Russia was reportedly ready to provide weapons worth $1.1 billion to Kyrgyzstan and $200 million to Tajikistan along with a further $200 million in petroleum products. In early June, China offered $10 billion through the Shanghai Cooperation Organization (SCO) to Central Asia. India has been focusing on developing a strategic partnership with Tajikistan since September, while the US always develops a stronger relationship with Uzbekistan.

There is a sense that we are returning to the “Great Game” in Central Asia. But this focus on abstract theories misses hard realities on the ground. Outside powers invest in Central Asia to advance their individual national interests, not out of a strategy directed against other powers.

Russia has long been a primary supplier of military equipment to Kyrgyzstan and Tajikistan: The money that Russia is providing will buy Russian arms and will help bolster an industry at home. And Kyrgyzstan and Tajikistan have long been the weak regional security links, providing a path into the Commonwealth of Independent States directly from Afghanistan. Drugs from Afghanistan can flow along the porous Tajik-Afghan border and from there into Kyrgyzstan, Central Asia and ultimately Russia.

Similarly, were the security situation in neighboring Afghanistan to deteriorate, then other threats could use this path. This is why Russia is willing to spend money to help strengthen the Kyrgyz and Tajik militaries. Certainly, a desire to keep American bases out of its backyard plays into the decision, but direct security considerations are the priority.

China has taken a different approach to Central Asia, one that is focused on economic and trade relations. For China, the main focus is to develop the region’s links with the Xinjiang Uyghur Autonomous Region to help the underdeveloped Chinese region grow and become a hub for Eurasian trade. The result is a strategy focused on building roads and rail links, infrastructure to support local development, as well as investing in exploiting the region’s rich natural resources.

While China has expressed concern in security threats emanating from the region, it remains a timid security power in Central Asia with some participation at SCO exercises, bilateral interaction about specific security concerns and training missions in Afghanistan.

For the US, the major interest at the moment is developing a stronger relationship with Uzbekistan, something that is largely built around the 2014 exit strategy from Afghanistan. The US and Europe have little direct interest in Central Asia beyond a useful route in and out of Afghanistan.

India, Iran, Japan, South Korea, Pakistan and Turkey all express an interest in the region, but have less to work with. Each one sees Central Asia through a slightly different lens, but all are ultimately interested in trying to strengthen their economic relations with the region.

And all of this discussion of outside powers forgets that Central Asians too have a seat at this table. As relatively poor countries that are still in a development phase, they frankly welcome the outside attention bringing them investment that they desperately need.

This is particularly true of Kyrgyzstan and Tajikistan, which unlike their other Central Asian partners lack abundant natural resources.

So when Russia comes and offers them substantial assistance, they are going to take it, in much the same way that regional leaders signaled their support for China’s policy toward the region when they attended September’s China-Eurasia Expo in Urumqi. Their hope was to be seen supporting China’s push to develop Xinjiang into the gateway for Eurasia and to see how they could also do well out of this approach.

Focusing single mindedly on the struggle between great powers in Central Asia often misses important details. Doubtless, regional geostrategy plays to some degree into Moscow’s considerations when providing weapons to Kyrgyzstan and Tajikistan, but there are equally immediate security concerns at play.

China’s rising profile in the region may make it look like the increasingly dominant power, but this is something that is taking place as a result of an intensive focus from China on the “develop the west” strategy.

The “Great Game” in Central Asia should be left in the past as we focus on the very real problems that exist in the region.

The author is a visiting scholar at the Shanghai Academy of Social Sciences. opinion@globaltimes.com.cn

China rapidly becoming primary player in post-war Central Asia

Posted: December 5, 2012 in Global Times
Tags: Afghanistan, Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, SCO

An op-ed for China’s Global Times today, this one with Alex as part of our bigger project looking at China in Central Asia. The article was actually a response to Pan Zhiping’s piece in the newspaper which took cause with some of our conclusions in our longer National Interest piece.

China rapidly becoming primary player in post-war Central Asia

Global Times | December 04, 2012 20:10

Illustration: Liu Rui

Illustration: Liu Rui from here

By Raffaello Pantucci and Alexandros Petersen

China is on its way to becoming the most consequential actor in Central Asia. This isn’t a critical or a negative statement, but rather a reflection of a reality on the ground.

The heavy investments in Central Asian infrastructure and natural resources, the push to develop the Xinjiang Uyghur Autonomous Region, and China’s focus on developing the Shanghai Cooperation Organization into an economic player are slowly reorienting Central Asia toward China. None of this means that China is aiming to become a regional hegemon, but unless it is willing to write off considerable regional investment, it is going to find itself needing to engage in regional affairs in a more focused manner.

And these actions are likely to be interpreted regionally as hegemonic. A potentially very prosperous corner of the world, Central Asia, is in an early stage of development that could easily be pushed by instability in a wrong direction. China needs to prepare herself to step in and help resolve matters.

First among the potential storm clouds on the horizon is 2014 and the Western withdrawal from Afghanistan. The forces left behind will have a very limited and focused mandate. Their duty will be to protect diplomatic and aid communities and to focus on ensuring that groups like Al Qaeda cannot reform in Afghanistan and pose a threat to US or European interests. Their focus will not be on what the Taliban are doing in general or the instability that they might foster regionally. After over a decade of war, the Western public is tired of Afghanistan and has little appetite for war.

This casts a question over what is going to happen in Afghanistan post-2014, right on China’s border. China played a limited role in Afghanistan in the early years after the US invasion, but it has now invested considerable resources into the country that it will have to protect. It is also likely that instability in Afghanistan will have a knock-on effect into Central Asia, where China has even more investments. And all of this will end up having some sort of impact directly on Xinjiang, China’s long underdeveloped border region.

The US is in a very different position. It has security concerns from Central Asia and Afghanistan, but these will be addressed by the forces left behind. Some US companies have investments in Central Asia, but these are nowhere near as crucial as those made by Chinese firms.

As former national security adviser Zbigniew Brzezinski put it, the US is “too distant to be dominant in this part of Eurasia.” The reality is that the Pamir mountains are too high and the steppe too far away for the US to focus on the region.

China’s ascendant investments in Central Asia are something that also stands in contrast to Russia’s declining ones. This is a more complex picture, as Russia, for many of the same reasons as China, has a clear strategic interest in Central Asia. But it is no longer the regional hegemon that it once was.

Russia’s power has been diluted by growing Chinese interest and Western attention paid to the region as a strategic launching pad into Afghanistan.

On the one hand, Russia realizes that it has to do something about security post-2014 and so is investing military loans to Kyrgyzstan and Tajikistan. But at the same time, its regional security organization, the Collective Security Treaty Organization, has lost one of its most important members, Uzbekistan.

Even more significant in some ways is the recent statement by Russian energy giant Gazprom that it needed to evaluate its position in Central Asia as it had noticed that the region’s producers were “reorienting themselves toward China.”

And while it is clear that Russia still has influence regionally, it is not Russian firms that are putting up buildings, laying down roads and rail or investing in rebuilding the underdeveloped region.

Russia may still exert considerable diplomatic influence and soft power in the region, but it is clearly not investing a huge amount in the region.

Instead, seen from the ground, the scope and range of Chinese investments is clear, and China is increasingly shaping itself to be the most consequential power in the region.

This reality may be unpalatable to China, but it is something that it cannot avoid.

China is increasingly reshaping Central Asia to becoming its backyard rather than Russia’s and this will bring with it some regional responsibilities that China has not yet figured out how to address. China needs to formulate a proper strategy for Central Asia.

Raffaello Pantucci is a visiting scholar at the Shanghai Academy of Social Sciences and Alexandros Petersen is the author of The World Island: Eurasian Geopolitics and the Fate of the West (Praeger, 2011).opinion@globaltimes.com.cn

Central Asia: Europe’s Asia Pivot?

Posted: November 30, 2012 in EU Observer
Tags: Central Asia, China, China-Central Asia, EU foreign policy, EU-China, Europe, Europe-Central Asia

An op-ed for an online outlet I used to contribute more to, the EU Observer. This looks at Central Asia in the wake of Catherine Ashton’s visit there. The idea of China and Europe doing more together in Central Asia is the focus of a longer piece that should be landing soon. UPDATE (2/12/12): Off the back of this article, I was interviewed for this long Los Angeles Times times piece about Ms Ashton’s visit to Central Asia.

Soldiers on guard in Turkmenistan (Photo: d_proffer)

OPINION
Central Asia: Europe’s Asia Pivot?
28.11.12 @ 09:58

BY RAFFAELLO PANTUCCI

BRUSSELS - World media has been abuzz with America’s “Asia Pivot” and President Barack Obama’s groundbreaking trip to Rangoon.

But while the visit signals the importance of Asia as a strategic focus for Obama’s second administration, the same cannot be said of Europe.

This week’s visit by Catherine Ashton to Central Asia offers a possible key that could both refocus Europe on an area it has long ignored, as well as helping shift its relationship with China onto a more practical basis.

European leaders talk of paying attention to Asia and have long cultivated a “strategic partnership” with China, but there is little evidence of much of this having any relation to what is happening on the ground.

Instead, Europe remains on the sidelines as a whole new region emerges on the global stage.

It does not need to be this way. Europe has as much of a claim to be involved in Asian affairs as the United States – it just needs to find the right key.

While the regular Asian-European meeting (Asem) offers a forum in which Europe can talk with East Asian powers, it has yet to really live up to its full potential.

The EU-Central Asia ministerial this week offers an underexplored avenue that Europe could use to re-engage with a region that is crying out for outside assistance, as well as engaging with China on its neglected flank.

Central Asia is one of the ignored regions of the world.

Stuck between China and Russia and adjacent to Afghanistan, it has been relegated in global attention. Insomuch as it does figure in current strategic thinking, it tends to be as an extension of Afghanistan, with the current focus largely being on which nation to use as a staging point for leaving in 2014.

If thinking goes much beyond this, then there is some awareness that the region is rich in energy resources and is primarily Russian speaking.

But a new narrative is emerging regionally, with an old Russian-centric order increasingly being nudged aside through gradual Chinese investment.

Focused on developing its westernmost province, Xinjiang, into a gateway for Eurasia, China has built roads, rail and other infrastructure to help develop the region and connect it better to China.

The idea is not just to connect Central Asia to China, but rather to connect China through the region to Russian and European markets.

China and Europe’s visions and interests in Central Asia broadly align.

Both are eager for the region to develop and become prosperous, to see the natural wealth in the region as something to their benefit.

There are slightly different priorities underlying these decisions: for China it is key in developing its west, while for Europe more abstract regional “security, governance and energy” are the issues laid out in strategy papers.

But both recognise the potential danger of Afghan instability spilling across borders, with European member states engaged militarily in Afghanistan and both the EU and China implementing or announcing police training missions in Afghanistan.

As 2014 approaches and the need for greater focus on Central Asia is going to grow, a breach opens into which Europe has an opportunity to have its own “Asia Pivot” focused instead on China’s western flank.

This would be welcomed by Beijing, which would be eager to see Europe connecting across their common landmass, and would be welcomed by the regional powers that are eager to have as many international partners as possible.

Europe’s aim should be not just to continue to do the development work and infrastructure projects that it has long done, but rather to focus on developing its economic and trade links to the region.

Beyond this, it should develop its regional security programs aimed at helping improve border security and supporting counter-narcotics efforts.

Clearly there is a delicate balance that needs to be struck here with regards to human rights – but simply lecturing is not going to get the answers or responses that we want.

Engagement may help reduce security concerns and will enable better practices to be instilled regionally. All of which would ultimately also align with Beijing’s regional interests, offering a window for a new and productive discussion between Brussels and Beijing.

It could finally provide some meat on the bones of its “strategic partnership” with China, offering a practical outcome beyond the regular summit meetings.

Over a century has passed since Halford Mackinder presented his idea of Eurasia as the “geographical pivot of history” to the Royal Geographical Society in London.

The idea at its core remains sound and is the key through which Europe should orient its own “Asia Pivot” today.

Focusing on Central Asia as a region in which it can try to engage with China offers a new avenue to develop its key relationship in Asia and to focus on an area that is going to be increasingly important to Europe.

Europe needs a way to stay relevant in Asia – focusing on its connective tissue across the Eurasian landmass offers a currently underexplored vehicle.

Raffaello Pantucci is a visiting scholar at the Shanghai Academy of Social Sciences (SASS). His research can be found at chinaincentralasia.com

Corporate China’s Challenges and Opportunities in Central Asia

Posted: November 16, 2012 in Oriental Morning Post
Tags: Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, kyrgyzstan, SCO, Uzbekistan

A new piece for 东方早报 (Oriental Morning Post) the Chinese paper I occasionally write for, this time focused on difficulties that corporate China has encountered recently in Central Asia. As usual, the Chinese is on top, with what I submitted in English below.

中企在中亚的机会与挑战

潘睿凡发表于2012-11-14 05:13

上月，吉尔吉斯斯坦传来新闻说，由中国人投资的金矿因与当地民众发生纠纷，不得不撤走工作人员，施工被中止。

　　上月，吉尔吉斯斯坦传来新闻说，由中国人投资的金矿因与当地民众发生纠纷，不得不撤走工作人员，施工被中止。这不是中国公司第一次在吉尔吉斯斯坦遇到类似麻烦，也不是中国公司第一次在中亚遇到类似事件。

今年9月在乌鲁木齐召开的第二届中国-亚欧博览会上，温家宝总理强调了新疆作为中国与亚欧之间桥梁作用的重要性。博览会上，面对来自阿富汗、哈萨克斯坦、吉尔吉斯斯坦、塔吉克斯坦等国的高层领导，他特别指出：“新疆的改革开放和发展振兴，不仅惠及新疆各族人民，也将给亚欧国家带来更多的发展机遇。”发展新疆与这些国家都有着重要关系。

新疆并不是主要的海上通道或者现代贸易路线，显而易见，发展该地区的重要性在于发展与其接壤国家的通道。打开这些通道能进一步帮助增强中国与欧洲的联系，新开通的道路能直接将中国货品运入欧洲市场。

政府对此持非常积极的鼓励态度。利用进出口银行的贷款和国有企业部署，政府在新疆和中亚已经建造了公路，铁路也在建设中。中国政府还进一步鼓励国有企业在这些区域利用其丰富的天然资源进行投资。这些由国有企业打下的基础已经促使了新疆公司的发展，贸易商也在那里积极寻找向他们开放的新市场。我在去中亚地区旅游的时候发现了中国的贸易商、货物和工人，他们都为新疆的经济扩展起到了重要作用。

但是如今，这种增长正在日益遇到挑战。最近在吉尔吉斯斯坦的这类问题并不是首次发生，中国公司在这一区域也碰到过其他麻烦。这部分是因为中亚本身是比较困难的工作环境，也部分是因为当地的观念。在同哈萨克斯坦、吉尔吉斯斯坦和塔吉克斯坦人聊天的时候，我总是会被一些当地人对个别中国公司持有的负面影响和看法震惊。他们会告诉我各种所谓中国工人抢走工作和吃光附近所有动物的传闻。更严重的是，他们还告诉我，“个别中国企业不按劳或是按时付酬，为当地居民提供很差的工作，对工作人员也非常糟糕。”不管真实与否，他们所持有的印象是：“在中亚的中国公司只是把那里的原材料和商品带回中国，带进当地市场的则是质量有问题的产品。”

这种负面印象导致的正是吉尔吉斯斯坦目前所发生的事。必须承认，当地居民告诉我绝大多数外国公司在那里都有相近的问题。但差别在于，这些国家的公司并不直接帮助本国某一区域的发展。在中亚的中国公司与欧洲公司的本质差别是：对于欧洲公司来说，这仅仅是另一个遥远的市场所在；但对于中国公司来说，却是如果要发展新疆就必须得发展的家门隔壁的市场。

这也是为什么中国的决策者应该看重这个故事的理由。应该开始着手改变中国在中亚的形象，否则开发新疆和其接壤地带的战略都会受到影响。

如今所需要的是更为清晰的中国与中亚接触战略方式。除了依靠上海合作组织峰会和从新疆扩散的缓慢的经济政策，中国不妨做出更多努力来促使这些国家的经济发展。

这并不是一条简单的道路，但是，除非对于中亚采取某些实质性的政策，否则新疆区域发展战略就可能受到影响，这也会成为将来对发展整个国家大战略以及帮助中国走出经济滞胀产生负面影响的因素。

　　潘睿凡英国伦敦国际激进主义研究中心副研究员（李鸣燕译）

Corporate China’s Challenges and Opportunities in Central Asia

Last month news came out of Kyrgyzstan that a local dispute at a Chinese owned gold mine had escalated to the point that staff had to be evacuated and operations shut down. This is not the first time that Chinese companies have had trouble in Kyrgyzstan. It is not in fact the first time that Chinese companies have had trouble in Central Asia more generally. Doubtless this is a problem that is considered far down the list of priorities for the new leadership in Zhongnanhai, but it has the potential to have a direct impact on China domestically. Unless Chinese companies get Central Asia right, it is going to be very difficult for the May 2010 work plan to develop Xinjiang to be effectively implemented.

In September this year at the second international China Eurasian Expo in Urumqi, Premier Wen Jiabao highlighted the important link that Xinjiang is between China and Eurasia. In particular he highlighted how ‘Xinjiang’s reform, opening-up and development will not only benefit people of all ethnic groups in Xinjiang, but also bring more development opportunities to Eurasian countries.’ Saying this at the Expo before senior leaders from Afghanistan, Kazakhstan, Kyrgyzstan and Tajikistan highlighted the importance of these relationships in developing Xinjiang.

Far from major sealanes and modern trading routes, it has always been obvious that the solution to developing Xinjiang lies in developing its links with the countries it borders. Opening up these links is something that will further help strengthen China’s connections with Europe, opening up roadways to directly link Chinese producers with European markets.

And the government has actively encouraged this. Using money from Export-Import Bank loans and deploying state owned firms it has built roads and is building rail infrastructure both in Xinjiang and Central Asia. It has further encouraged state owned companies to invest in the area, taking advantage of the rich natural resources that can be found. And the groundwork laid by state owned firms has been built on by Xinjiang companies and traders seeking new markets that have now been opened up to them. In my travels across the region, I found Chinese traders, goods and workers – many of them with strong connections back to Xinjiang, highlighting how they were helping expand Xinjiang’s economy.

But now this growth is increasingly encountering difficulties. The recent trouble in Kyrgyzstan is not the first of its kind, and in the past Chinese companies have had other problems regionally. Partially this is because Central Asia is a difficult environment to work in, but there is also a problem of local perceptions. In talking to locals in Kazakhstan, Kyrgyzstan and Tajikistan I was endlessly surprised by the negative reactions and beliefs they would have towards Chinese companies. People would tell me stories about how Chinese workers were stealing jobs, women and eating all the animals in sight. More seriously, they would tell me how Chinese firms underpay or pay late, offer bad jobs to locals and treat staff badly. Whether true or not, the general perception is that Chinese firms are in Central Asia to simply take raw materials and commodities back to China, while they flood the markets with low quality products.

The picture that results is a negative one that leads to difficulties like those currently being experienced in Kyrgyzstan. Admittedly, I was told by locals that most foreign firms encounter similar issues in Kyrgyzstan, but the difference is that these other companies are not playing a role in directly helping a part of their home nations develop. This is the key difference for Chinese firms in Central Asia versus European ones: for the European ones it is merely another distant market, for Chinese ones, it is a market next door that is important to develop if the policy to develop Xinjiang is to be achieved.

This is also why this story is something that is important for policymakers in Beijing. Unless something is done to improve China’s image in Central Asia, then the overall strategy of developing Xinjiang’s links with its border regions will be undermined.

What is needed is a clearer strategic approach to China’s engagement with Central Asia. China cannot solely rely on Shanghai Cooperation Organization (SCO) Summits and a slow economic policy that spreads out from Xinjiang. This approach is already causing some friction on the ground and this will only get worse. If China wants to establish a cooperative economic relationship with its Central Asian neighbours, then some efforts need to be made into establishing how to help these economies develop and not simply focus on extracting national benefit from them.

This is not an easy path to take, and Beijing’s new policymakers have an already crowded plate. But unless some effort is taken to forge an actual policy towards Central Asia, China will find its regional development strategy with Xinjiang falling down too. And this would be something that would have a hugely negative effect on any grander strategy to develop the country and help it move beyond the growing economic stagnation.

Shifts in Beijing’s Afghan Policy: A View From the Ground

Posted: November 7, 2012 in China Brief
Tags: Afghanistan, Central Asia, China, China and the world, China-Central Asia, Chinese foreign policy, Pakistan

Latest piece for Jamestown Foundation’s China Brief on mine and Alex’s China in Central Asia research. We have now done pieces on China’s relations with Kyrgyzstan, Tajikistan, and Uzbekistan for China Brief, and are hoping to get a complete set by the time our research is done! A few longer papers in the pipeline on all of this at the moment.

Shifts in Beijing’s Afghan Policy: A View From the Ground

Publication: China Brief Volume: 12 Issue: 21

November 5, 2012 03:22 PM Age: 1 days

By: Raffaello Pantucci, Alexandros Petersen

Zhou Yongkang with Afghan President Karzai in September

In a clear but still gradual shift over the past year, Chinese policymakers have changed their stance on Afghanistan from cultivated disinterest to growing engagement. As the potential security vacuum left by Western withdrawal in 2014 comes into sharper relief, Beijing has come to realize that it will have to play a role in encouraging a more stable and developed future for Afghanistan. As with China’s engagement in Central Asia as a whole, Chinese activity in Afghanistan is less a part of a grand strategy for the region and more the sum of number of disparate parts. Nevertheless, the sum of these parts could have major consequences for Afghanistan and the region’s trajectory as it signals a growing realization by Beijing of the role it will find itself playing in the future.

The most visible and significant element of China’s renewed focus on Afghanistan was marked by the visit in late September of Politburo member and security supremo Zhou Yongkang to Kabul (Xinhua, September 24; China Daily, September 24). This was the first visit by a Politburo-level Chinese official to the country since 1966 when President Liu Shaoqi visited the country just prior to being purged during the Cultural Revolution. It marked, however, the latest in a growing series of high-level visits and meetings marking China’s more focused attention on Afghanistan. This attention dates back to February 28, 2012, when Beijing hosted the first Afghanistan-China-Pakistan trilateral dialogue. Held at the level of foreign ministry director-general positions (or rough equivalents), the meeting was given a senior stamp of approval when the group was met by Chinese Foreign Minister Yang Jiechi a day after the discussions (Afghan Ministry of Foreign Affairs, February 28). Then in June, as China was hosting the Shanghai Cooperation Organization (SCO) Summit in Beijing, President Hu Jintao signed a bilateral “strategic and cooperative partnership” agreement with President Karzai as well as welcoming the country to becoming an official SCO observer (Xinhua, June 8). President Karzai thanked President Hu for helping facilitate the SCO upgrading, saying “without your support, we cannot do this” (Xinhua, June 8). Just over a month later on July 27, this was followed by a further high level meeting between China’s Central Military Commission Vice Chairman General Guo Boxiong and Afghan Defense Minister Abdul Rahim Wardak. The focus of the meetings was to “enhance strategic communication and strengthen pragmatic cooperation in order to contribute to bilateral strategic cooperation” (Xinhua, July 27). The full impact of relationships established during this visit, however, may have been undermined by Wardak’s resignation after a no confidence vote in Kabul just over a week later (Reuters, August 7). Whatever the case, the growing importance China accords to the bilateral relationship would have been emphasized again in late September by Zhou Yongkang’s visit.

The importance of Zhou’s visit was not only the symbolism of a senior Chinese visitor to Kabul, but also the emphasis that his presence casts on China’s interests in Afghanistan. Within the (now outgoing) Politburo, Zhou is responsible for security matters, primarily domestic, something that highlighted China’s interest in Afghanistan’s potential as a safe haven for militants. With an eye toward the withdrawal of U.S. and NATO combat forces in 2014, China increasingly has expressed concern about the possible spillover of militancy from Afghanistan into China’s western Xinjiang province. Notwithstanding its proximity to Kashgar—a city China is trying to develop into a regional trade hub—China keeps its border with Afghanistan tightly closed, with locals in Xinjiang reporting that authorities encouraged them to help monitor any movements across the border [1]. Afghanistan has asked repeatedly for China to open the Wakhan Corridor that links the two countries, but been rebuffed by Chinese security concerns (China Daily, October 16, 2010). When the authors visited earlier this year, there was little evidence the border was about to be opened.

Chinese security concerns are further visible in announcements made during Zhou’s visit about China agreeing to train some 300 Afghan police officers over the next four years (“Zhou Yongkang’s Trip Highlights Security Diplomacy,” China Brief, October 5). Previously, China has provided training for various Afghan technical personnel and officials with Foreign Minister Yang declaring in July 2010 they had trained some 781 Afghans so far with a further 200 trained that year. In May, China and the United States jointly hosted a two-week training session for a group of some 15 young Afghan diplomats (Chinese Ministry of Foreign Affairs, May 17; July 21, 2010). China’s current willingness to explore training security personnel also highlights the growing importance of this aspect of their relationship.

Judging from the June SCO Summit in Beijing, China clearly is aware of the potential implications of deterioration in Afghan security and the implications for the broader region and within this context. During the summit, Beijing focused heavily on persuading Russia and Central Asian member states to coordinate commitments (at least those within the SCO) toward Afghanistan to some degree, and provide aid to contribute to Afghanistan reconstruction and stabilization. As is usual with SCO endeavors, this looked more like a multilateral vehicle for Chinese bilateral activities. The “strategic partnership” signed was between Beijing and Kabul and the 150 million yuan ($23 million) in aid promised to Afghanistan came from China, not the SCO as an organization (Xinhua, June 8). Nevertheless, Afghanistan will benefit from an increased profile and upgraded role to observer within the SCO. It may be asked to contribute information on militants to the SCO’s Regional Antiterrorism Structure (RATS) in Tashkent and presumably also will be able to benefit from others’ contributions. Overall, the summit was symbolically important for both China and Afghanistan. Beijing announced it will be engaged in Afghanistan’s future and Kabul gained commitments from a regional power to bolster its post-2014 prospects.

To examine Afghanistan from a broader perspective, China’s main concern with Central Asia is the importance of the region in helping Xinjiang develop by providing trading partners as well as routes to Russian, European and Middle Eastern markets. Security concerns emanating from Afghanistan are clearly a major potential obstacle to this. Thus, Zhou’s visit and China’s attention more generally can be said to have both a security and economic dimension that links Xinjiang and the broader region. This economic dimension for Afghanistan in particular was emphasized by the fact that pictures of Zhou’s visit showed him being met at his plane by Afghan Commerce and Industry Minister Anwar ul-Haq Ahady (Xinhua, September 22). Furthermore, Zhou is a graduate of the Beijing Petroleum Institute and spent most of the 1960s and 1970s working in the oil sector, including a period as General Manager of China National Petroleum Corporation (CNPC)—a company that has made a number of investments in Afghanistan and that has encountered problems in the country as well. It seems probable that these topics would have been on Zhou’s agenda in Kabul.

In mid-October, CNPC started extracting oil from its field in Afghanistan’s northern Amu Darya basin. At 1,950 barrels per day, the project is a relatively small one, but is being promoted by the Afghan government as a model for how Kabul can raise revenues and wean itself off of foreign aid (Reuters, October 21). Completed at CNPC’s signature blistering speed, plans call for the Amu Darya project’s oil to be refined across the border in Turkmenistan until the Chinese state-owned enterprise (SOE) builds a refinery close to the site in two to three years. CNPC won the tender for the project partly due to its very generous terms: 50–70 percent of profits will go to the Afghan government together with a 15 percent royalty on top of a 20 percent corporate tax (Reuters, October 21). While Chinese aid to Afghanistan is relatively low—partly due to domestic intolerance of sending funds abroad—projects such as the oil extraction in the Amu Darya basin appear to be an indirect form of “corporate aid.”

The relatively small oil project, however, may well be a foot in the door for access to major natural gas deposits in northern and northwestern Afghanistan. It was CNPC geologists from Turkmenistan with the world’s fourth largest natural gas reserves that scouted out the Amu Darya oil project and they have their eye on gas formations that straddle the border [2]. With possible recent major gas finds close by in Tajikistan, CNPC is positioning itself to reap the natural resource benefits of a long-neglected area. In June, it announced plans to run a fourth string of the Central Asia-China pipeline from Turkmenistan to Xinjiang through northern Afghanistan (Eurasia Daily Monitor, June 19). CNPC also reportedly expressed interest in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline at the project’s Singapore roadshow event in September [3].

Whether or not CNPC moves forward with these projects, the prominent Chinese SOE is signaling that they see northern Afghanistan as a stable area going forward (Cnpc.com.cn, June 7). Until a few months ago, militias loyal to Afghan Army Chief of Staff and local warlord Abdul Rashid Dostum harassed Chinese workers in the area, but a deal seems to have been struck where these incidents have ceased (Reuters, June 11). Should CNPC move forward with its announced plans for a natural gas pipeline, it will likely find itself working closely with Dostum and other warlords.

In contrast to the opportunities blossoming in northern Afghanistan, just southeast of Kabul in Logar province the once highly touted Aynak Copper mine project is languishing. Described by President Karzai as “one of the most important economic projects in Afghan history,” the project led by Chinese SOEs Metallurgical Corporation of China (MCC) and Jiangxi Copper was valued at around $4 billion and was the largest investment project in Afghanistan (Xinhua, May 22, 2011). It, however, has been beset by problems, including an archeological dig atop the site, security concerns and now financial troubles at the parent company MCC. One report from late September stated Chinese workers had been spooked by security concerns and had left the country with only a skeleton crew left to watch over equipment (Reuters, September 27). This state of affairs seems to have reinforced skepticism of Beijing’s commitment to the project—and possibly even to Afghanistan itself—among Kabul-based officials and experts [4].

A final element that has not been sufficiently analyzed are the implications of China’s growing relationship with Kabul and its interactions with historical ally Islamabad. Whilst it is clear that China sees the importance of Pakistan in any long-term solution in Afghanistan, it is also increasingly clear that Beijing is concerned about how security in Pakistan continues to deteriorate. It thus seems likely that China’s growing focus on Afghanistan is at least in part out of recognition that it can no longer simply abrogate its strategy toward Kabul to Islamabad—a default setting Beijing previously employed. As the security situation in Afghanistan (and Pakistan) continues to muddle along in a negative direction, Beijing now has realized that it must do more to stabilize its restive neighbor. Zhou Yongkang’s visit is merely the culmination of this new focus on Afghanistan that is going to continue to develop as the 2014 deadline approaches. Whether this new attention translates into new policy resources, however, remains to be seen and probably will have to wait until after next March’s National People’s Congress, when China’s leadership transition will be completed.

Notes:

The authors visited Tashkurgan, Xinjiang (near the Sino-Afghan border) in May 2012.
Authors’ Interviews in Kabul, May 2012.
Authors’ Interviews in Ashgabat, Turkmenistan, September 2012.
This is a key topic of conversation with interviewees with whom the authors spoke, including local analysts, foreign diplomats, international donors and journalists who all reached similar conclusions. Author Interviews in Kabul, May 2012.

Raffaello Pantucci

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