Posts Tagged ‘Central Asia’

Catching up on a lot of old posting, here is a report for my home institute RUSI that has been the culmination of a lot of work with Chinese and Indian researchers and RUSI colleagues (Emily and Edward) looking at the potential for Chinese and Indian cooperation in Afghanistan.

Communication, Co-operation and Challenges: A Roadmap for Sino-Indian Engagement in Afghanistan

by Shisheng Hu, Raffaello Pantucci, Ravi Sawhney and Emily Winterbotham

The politics of Afghanistan remain precarious. But if undertaken correctly, regional engagement by China and India can play a positive role in consolidating security and the economy

afghanistan-india-pakistan-map

Communication, Co-operation and Challenges: A Roadmap for Sino–Indian Engagement in Afghanistan  concludes a research project which brought together influential thinkers and experts from China, India, Pakistan, the UK and Afghanistan in a number of workshops in London, Beijing, New Delhi and Qatar, and outlines areas of common interest between China and India in Afghanistan. The project spanned several years, starting in 2012. While participants’ opinions and responses were therefore likely influenced by developments in Afghanistan at the time the workshops were held it is, however, still possible to draw out the key commonalities and divergences between each country’s participants to map out policy ideas for co-operation and ‘burden-sharing’ between India and China in Afghanistan.

Both China and India have unique and strong relationships with Afghanistan and, in addition to co-operative efforts, both countries can play a number of bilateral roles. This paper presents some ideas for thinkers and strategists in Kabul, Beijing and New Delhi on how to help Afghanistan move forward and achieve stability.

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Catching up on some old posting again now that we are closing in on Christmas, and first up is a short report with Sarah from a workshop we did in Almaty looking at the Silk Road Economic Belt’s economic dimension. Part of a bigger project we are working on at RUSI which is going to be a major priority in the coming year.

The Economics of the Silk Road Economic Belt

On 20 October 2015, RUSI held a day-long workshop in Almaty, Kazakhstan, in collaboration with KIMEP University and the Friedrich Ebert Stiftung (FES). The focus of the workshop was the economics behind the Chinese Silk Road Economic Belt (SREB) and its impact in Central Asia. The key areas of discussion examined the potential benefits that the SREB could bring to participating countries, the integration of the SREB with other economic projects and the various funding mechanisms through which the SREB will be financed. The workshop brought together participants from Almaty, Astana, London, Beijing, Shanghai, New Delhi and Russia, including representatives from academia, the private sector and think tanks.

The first session discussed the real benefits of the SREB to both China and participating countries along the road. There is a risk that the SREB will simply turn Eurasia into a set of transport routes emanating from China, aimed at increasing the volume of Chinese goods going to Europe. Other than transit fees, China has not made it explicitly clear as to what other value participating in the SREB can add to economic development. Special economic and free-trade zones are one opportunity, such as that of Khorgos on the border of Kazakhstan and China, or those planned for Pakistan. However, the extent to which these are benefitting Central Asia is still unclear, and those for Pakistan are still under discussion. Kazakhstan’s side of this free-trade zone is noticeably less developed than that of China’s, highlighting that not all of these projects are implemented to meet maximum potential.

Furthermore, China’s emphasis on connectivity as a key goal of the SREB runs the risk of over-emphasising railway development as an end goal, since not all goods are cost-effective to transport by rail. High-value goods are the ideal product: one participant from Kazakhstan noted that Kazakhstan Temir Zholy, the national railway operator, had begun transporting Apple products from China, cutting down delivery time from sixty days (by sea) to eighteen days (by rail). For the SREB project to be successful, therefore, both Xinjiang, the northwestern Chinese province, and the countries along the Silk Road route need to increase their high-tech manufacturing capacity to produce these high-value goods for transport, neither of which are currently visible.

Understanding  of  the  project  has  been  limited  by  Beijing’s  vagueness  on  practical implementation. The Chinese government’s ‘Visions and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road’ strategy paper, published by the National Development and Reform Commission (NDRC), emphasises the objectives of the SREB, such as connectivity and greater financial integration. However, it does not give practical detail on how this will be achieved. This approach of laying out a grand vision without detail is typical of the Chinese government. So far there is not even a formally government-endorsed map of the exact routes of the SREB.

The workshop discussion highlighted a potential explanation for this. China’s goal may not be to unpack the details itself but instead to seek ideas and engagement from SREB countries to determine where participation can provide most benefit to them. China does not want to limit its options or jeopardise the project’s ‘inclusivity’ by over-defining its approach. There is an opportunity, therefore, for countries along the SREB to provide proposals back to China. However, there are some practical questions that China will need to address. Although its open-
ended encouragement of connectivity is central to the SREB, certain political and geographical difficulties in implementing this are so far unresolved. Anyone who has travelled within Central Asia knows the difficulty of flying direct between most regional capitals, while land travel between the countries in the region is hindered by longstanding border disputes.

Although the SREB has broadly been received with enthusiasm by Central and South Asia, the lack of clarity around its planned implementation has led to some suspicion. India stands out as  the country in the region most apprehensive of China’s plans. As one workshop participant said, ‘there is no Indian perspective at the moment’, in part due to a perceived lack of information from Beijing. The suspicions relate to whether there is a broader Chinese geopolitical strategy behind the SREB and whether political strings will become attached to China’s infrastructure investment.

India’s concerns over a geopolitical strategy are mainly due to the maritime element of the ‘21st Century Maritime Silk Road’, which runs through the Indian Ocean. It covers ports in countries located around India, such as Sri Lanka, Maldives and Pakistan, but not India itself. This has raised alarm bells in New Delhi, who perceive China as encroaching on India’s waterways. China’s investment into the China–Pakistan Economic Corridor (CPEC), which cuts through the disputed areas of Kashmir as well as highlighting China’s strong connection with Pakistan, is also a challenge for India. There are areas where India and China can co-operate on this SREB project, such as the Bangladesh–China–India–Burma corridor or areas where both have interests, like Iran. However, India requires more detail and reassurances regarding China’s intentions.

A large part of the day’s discussion focused on the issue of integrating the SREB with other economic projects. Russia has recently voiced its desire to integrate the SREB with the Eurasian Economic Union (EEU) and Kazakhstan has proposed something similar with its ‘Bright Road’ (Nurly Zhol) policy. Although the Bright Road policy, which focuses on infrastructure development, is consistent with the aims of the Chinese project, SREB integration with the EEU is somewhat more complex. As one workshop participant pointed out, the EEU is an organisation with an institutional and regulatory framework, whereas the SREB is more of a ‘vision’ covering a variety of concrete projects. ‘Integrating’ these in practice may be difficult. A special economic zone may once again be an answer to this, and the EEU and China are currently exploring this idea. The EEU’s external tariffs may present an immediate barrier to increased trade with China, although one benefit is that once this barrier is overcome countries gain access to a significant economic space consisting of five countries. However, to facilitate trade, China and Russia will need to address a number of bilateral trade issues. For example, the Russian–Chinese border currently suffers from excessive bureaucracy that, in particular, prevents cross-border travel and trade.

The third key aspect of the discussions examined the means by which the SREB will be funded. A major tool will be multilateral and national institutions driven by Beijing. China has allocated $29.8 billion to the Asian Infrastructure Investment Bank’s (AIIB) overall $100 billion capitalisation and $40 billion to the national Silk Road Fund. Furthermore, the China Development Bank (CDB) is the lead financial body for the SREB, investing $890 billion into over 900 projects. There are also bilateral funding relations between SREB countries and Chinese provinces. For example, the recent Tbilisi Silk Road Forum held in Georgia was the first event on the SREB co-sponsored by the Chinese state held outside of China. The principals on the Chinese side were the provincial governments of Xinjiang and Shaanxi. On top of this, China is seeking to stimulate public–private partnerships to help progress the project finance, as well as exploring opportunities of collaboration with other international financial institutions like the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).

Most participants agreed, however, that the predominant mechanism for SREB co-operation will continue to be bilateral agreements. As one workshop participant mentioned, China recently pledged $46 billion for the China–Pakistan Economic Corridor alone, a number that puts China’s commitment into context when it is compared to the total $100 billion capitalisation of the AIIB. This highlights the degree to which China is likely to continue to prioritise bilateral agreements over its multilateral financial vehicles. A note of caution was made regarding the enormity of some of the SREB deals announced. As one participant pointed out, it seems in reality that the CPEC deal included a repackaging – or at least a reinvigoration – of some historical agreements between China and Pakistan, such as the development of Gwadar port and the Karakorum Highway, projects that have been underway for years. This demonstrates a lack of clarity in the detail behind some of these enormous declarations of financial support.

A repeated theme that came up during this discussion related to the broader transparency and governance of the SREB, particularly in participating countries outside of China. One workshop participant highlighted the need for SREB countries to ensure necessary reforms are conducted in the domestic markets to provide a degree of security and flexibility and to avoid an over-reliance on Chinese investment. The slow-down in the Chinese economy may produce constraints on China’s ability to meet its ambitious investment programme. A lack of transparency as regards the relevant information has led to questions over China’s asset quality. One workshop participant stated that a ‘sudden large injection of external cash could exacerbate existing problems [in the domestic economy] rather than help’. Thus, SREB participants should ensure they protect and reform their own markets in preparation for any large investments from China to maximise returns and protect against a lack of transparency in the deals.

Another question mark surrounding China’s funding of the SREB projects is the value this produces for China itself. The divestment opportunities or returns China makes on its infrastructure development projects in, for example, Central Asia, remain unclear. Much of the historical bilateral projects have been funded through linked loans, where China provides the funding through loans that have stipulations attached to them, such as the requirement that Chinese companies implement the projects on the ground. In other cases where China’s Eximbank or CDB has provided loans to fund projects, it is unclear whether there are any short- or medium-term returns or even security on the investment. One workshop participant pointed out that given the dominance of the state in China’s economic policy and the government’s long-term vision of investments, China can afford more time to sit on these investments without requiring immediate returns. Moreover, another participant noted that some projects, such as when Eximbank loaned the money for the high-voltage power line recently unveiled in Kyrgyzstan, provide the Chinese government with foreign investment legitimacy and thus material return is not necessarily the priority.

It is clear that no one wants to be left out of China’s SREB initiative. However, questions remain over the implementation plan of the project. For some SREB countries, there are significant concerns over the project’s ultimate geostrategic goal as well as the detail of the various routes, both of which need more clarification from Beijing. However, it is clear that while China has ideas for how the SREB should develop, it is also seeking proposals from other countries about its development. This presents an opportunity for SREB countries to take ownership over the direction of their participation and to determine how best to maximise the benefits nationally.

Sarah Lain is a Research Fellow at RUSI. Sarah Lain’s research looks at Russia and the former Soviet states. In particular, she focuses on China and Russia’s relations with the five Central Asian states.

Raffaello Pantucci is a Senior Research Fellow and Director of International Security Studies at RUSI. His research focuses on counter-terrorism as well as China’s relations with its western neighbours.

Things are slowing down a bit now in the wake of the Paris atrocity, though unfortunately am sad to say the story is likely to not go away. Still some interest around the topic though, and spoke to the Sunday Times about the noisy Sally Jones, to the Huffington Post about how ISIS compares to historical threats, as well as the South China Morning Post about China’s view on the downing of the Russian plane and the Straits Times about what China might do to contribute to the anti-ISIS coalition. More on all of this am sure as ever. In the meantime, a new piece which was acually published prior to the Paris atrocity about China-Russia relations globally for the China Economic Quarterly. Huge thanks to the editors for their patience and invitation to do this. Greatly appreciated and definitely a subject that will be returned to.

China And Russia: Locked In Reluctant Embrace

china russia image

The dynamic of the Sino-Russian relationship is one that has long perplexed Western decision makers and thinkers. At a geopolitical level they appear in lockstep in an anti-western front, but below the surface they seem willing to engage with the west against each other’s interests while also sharing some fundamental disagreements. The reality is that Moscow and Beijing have a sophisticated modus vivendi that both allows for a clear disparity in the relationship in Beijing’s favor, while at the same time retaining an equal sense of importance of the broader strategic relationship. The overriding priority for both remains to ensure that they have an ally against the West and as long as this need remains the axis of authoritarianism will persist.

The archetypal space to explore this complex divergence is Central Asia. On the one hand it is a region where China has gradually increased its footprint to become the most consequential actor on the ground, while on the other it remains linked inextricably to Russia through multilateral vehicles and long-standing ties. And while in other parts of Eastern Europe or the Caucasus Russia has reacted negatively to encroaching external influences with armed conflict (like Georgia or Ukraine), in Central Asia the slow creep of Beijing’s influence has happened largely with Moscow’s acquiescence, though not without some counter-reaction.

China’s interest in Central Asia stems from a desire to improve the economic situation in Xinjiang. Seeing economic development as the answer to ethnic tensions between Han and Uighur in the region, Beijing has embarked on numerous large-scale economic projects to develop the western region of Xinjiang. However, for effective economic development to take place in Xinjiang there is a need for the region to have greater connectivity outwards. A fivehour flight from Beijing, Urumqi is as landlocked as the Central Asian countries it is near, and for it to prosper adequately, it needs to develop routes and roads into the region and ultimately to European markets. Consequently, as Beijing has poured money into the region, there has been an ancillary push into Central Asia with policy banks, state owned enterprises and private citizens all seeing the opportunity and need that lies in developing routes and markets into the Russian space.

Chinese cash displaces Russia in Central Asia…

The consequence of this has been a steady growth of economic influence across the region as Chinese capital and companies move into the region to repave, rebuild and open up Central Asian markets while also taking advantage of the region’s natural wealth to feed the Chinese economic machine. Previously a region largely the domain of Russian extractives firms, and, in the post-Cold War period, large Western players, Central Asia has seen CNPC and other Chinese energy firms moved in to stake claims. But significantly, Chinese firms have not stopped at only extracting energy, with firms showing up re-metering national gas infrastructure, re-developing solar furnaces, and building new power plants, refineries, and transmission lines across the region. The most rapid global pipeline growth of the past decade can be seen in the region, as Chinese firms plan, fund and built in quick succession a series of pipelines bringing hydrocarbons back to China from Turkmenistan, Kazakhstan and Uzbekistan.

All of this has largely been done to the detriment of Russian firms, who retain key stakes in most regional energy efforts but find themselves unable to compete with China’s easy funding and rapid construction. The American evacuation of the Manas airbase is a case in point. Initially awarded to a Russian firm linked to Rosneft, the company had to withdraw due to lack of funding, leaving a Chinese firm to step in and take over the contract. In Turkmenistan, a longstanding animosity between Moscow and Ashgabat culminated with the main pipeline to Russia blowing up and not being rebuilt. Instead, Chinese pipelines appeared and China is now the nation’s key partner—so much so that Turkmenistan might question the wisdom of its almost complete dependence on China.

…but Russian weapons are still welcome

Despite China’s economic incursions, Russia remains the most credible security provider. Untested by conflict outside its borders, China’s military is still a relatively timid force that is wary of launching direct confrontations or placing themselves in situations that would lead to such conflict. Whenever there is security trouble in the region, the powers look more to Russia to provide them with support – in particular in the more unstable nations of Kyrgyzstan and Tajikistan, both of whom have looked to Russia to help provide some stability in the wake of interethnic violence (Kyrgyzstan) and to strengthen their border with Afghanistan (Tajikistan).

Moscow has also made better use of regional organizations than has Beijing. The Shanghai Cooperation Organization (SCO), sponsored jointly by China and Russia, is in the most externally observed, but least effective regional multilateral vehicle. The Moscow-driven Common Security Treaty Organization (CSTO), Commonwealth of Independent States (CIS) and Eurasian Economic Union (EEU) are all more active in changing the context on the ground. The EEU in particular is seen as an attempt to recreate the Soviet space and is driven by Moscow as a specific attempt to reclaim the economic dominance and influence it used to hold. Encompassing Russia, Kazakhstan and Belarus, with Armenia and Kyrgyzstan the latest joiners, the EEU gives Moscow the power to dictate border tariffs and standards across the entire region.

In Central Asia the EEU is seen as direct push-back to Beijing’s growing influence. Yet the reality is that the EEU can do little to stem the rising influence of Chinese cash. And for Beijing’s traders keen to take advantage of Xi Jinping’s vision to create a New Silk Road Economic Belt through the region to European markets, the existence of a single tariff zone from Kazakhstan to Belarus will save them money and time in getting goods from China to Europe. Direct trade with Central Asia may be down, but, as traders in Kyrgyz markets at Kara Suu and outside Bishkek pointed out during a visit in early 2015, these markets had been shrinking for years due to closed local borders and weakening local economies. The addition of a failing Russian economy only further softened local currencies and further reduced remittances from Central Asian laborers in Russia, which in the case of Tajikistan or Kyrgyzstan account for almost a third of GDP.

On the whole, Beijing policymakers seem to view the EEU as complementary to their Belt-and-Road strategy; and even if they did not, they have reason to be skeptical of the EEU’s longevity. Belarus and Kazakhstan have already blocked some trade across their borders, and it remains unclear how Kyrgyzstan is going to be able to effectively integrate and thrive in an economic union where it has few advantages.

China has the upper hand in bilateral affairs

All of this takes place against a backdrop of a failing Russian economy that is increasingly looking to Beijing for growth. Whilst previously resistant to letting Chinese firms invest in upstream energy assets, Moscow allowed the Chinese Silk Road Fund to invest in the Yamal gas field. In a sharp turnaround from previous paranoia of Chinese expansion into Russia’s east, Moscow has actively encouraged cross-border trade between Heilongjiang and the Amur region, with the governor of the region going so far as to say that he would welcome Chinese workers coming into the region to help repopulate it. The Russian press is increasingly full of stories of actively encouraging trade across the border, something that stands in stark contrast to speeches by President Putin in 2000 about losing Russia’s East to Asia.

In all this investment, China clearly retains the upper hand. The Power of Siberia pipeline remains a project largely on paper as CNPC lobbies aggressively to get the deal finalized on its terms. And although the large gas deal signed between Russia and China was supposedly resolved earlier in the year after almost 15 years of haggling, the reality is that the agreement was largely cosmetic. It came at a moment when President Putin wanted to be able to show the world that he had strong allies in the face of a growing animosity between Moscow and the west over Ukraine. Within hours of the deal being signed, stories surfaced of re-negotiations taking place and a continuing lack of agreement over the pricing structure of the deal.

At a geostrategic level there are further tensions between the two great powers. Vietnam is a long-time client state to Russia that depends on Moscow for military equipment, including naval assets that Vietnam feels it needs to bolster its claims to islands in the South China sea that it disputes with China. India is another long-term Russian ally that has border disputes with China and a long-standing inferiority complex to its neighboring Asian giant.

It is also clear—despite its lack of public criticism—that China is displeased by Russia’s adventures in Ukraine and Georgia, as it worried about the precedent of annexing parts of neighboring countries and recognizing break-away provinces. Nor is it enthusiastic about Russian intervention in Syria where it seems unlikely that more combatants on the field will resolve the situation. As a status quo power that sees the future as firmly within its grasp under the current world order, Beijing disapproves of Russia’s efforts to undermine current structures.

The SCO was supposed to be a vehicle for joint maneuver in Central Asia, but has bogged down in disagreements. Beijing’s interest in having it focus more on economic issues has been blocked by Moscow. And in turn Moscow has promoted a rapid expansion of the group, against China’s wishes. Unwilling to directly confront and exclude others, China has found itself forced to bow to external pressure in letting the organization expand against its better judgment.

Authoritarian birds flock together

Notwithstanding these tensions, the two powers retain a tactical geopolitical alignment. Partially this is for the purpose of mutual support in the UN Security Council. As two of the permanent five members, knowing that they will consistently support each other (by either veto or abstention), means that they need never feel isolated in the body.

Shared political insecurity also draws them together. Both governments are equally paranoid about the overthrow of authoritarian regimes. Both speak equally acerbically about the negative influence of democracy and the wave of color revolutions that swept through the former Soviet space in the mid-2000s and the subsequent ‘Arab Spring.’ Watching as chaos came in the wake of the civilian overthrow of regimes from Georgia, Ukraine, Kyrgyzstan and then later Tunisia, Egypt, Libya and Syria, both ascribe these incidents to a missionary foreign policy advocated by western capitals. Fearing that ultimately this wave of civilian insurrection ends up with regime overthrow in Beijing and Moscow, both see each other as fundamental allies in a world divided between western democratic zealots riven with uncertainty and stable one-party states ruled by strongmen and parties.

These underlying geopolitical realities outline why this axis of authoritarianism continues to function as a genuine alliance of sorts despite fundamental differences and an ever-growing imbalance in power between the two. Russia may increasingly be selling itself to China in a manner that will become irreversible, but it is doing this to a power that it fundamentally sees itself locked in step with. It was President Putin who first enunciated in 2000 the fear that Russia would lose its east to Asian influences, but it is also President Putin under whose reign China has become the Russia’s biggest geopolitical friend.

More catch-up, this time a longer magazine sized piece for the excellent current affairs journal Current History. This explores the China-Russia relationship with a particular focus on Central Asia sitting in between them. Clearly more on this topic to come – including a piece soon focused a bit more on the econ and geopolitical equation more broadly. I have pasted the first paragraph below to give you a flavour, but the whole thing is available as PDF below as well.

China and Russia’s Soft Competition in Central Asia

China and Russia have a long history of conflict and competition in Central Asia. Sitting between the two great superpowers, the landlocked Central Asian nations appear to have little choice or control over their destiny, and are often considered to be pawns in a perpetual great game. Yet this narrow view misses the broader picture of the Sino-Russian relationship. It is undeniable that the region has been slipping out of Russia’s immediate economic sphere of influence for some time, but China has been making inroads with Russia’s full acquiescence. For Moscow and Beijing, Central Asia is increasingly a region of soft competition where they are very aware of and attentive to each other’s interests, rather than a source of conflict and tension.

Overriding any differences concerning the steppe are the larger realities of the Sino-Russian strategic relationship on the international stage, where the two permanent members of the United Nations Security Council continue to support each other’s refusal to bow to a Western-dominated global order. Russia may appear to be the loser in Central Asia, but the two powers have established a modus vivendi that suits the interests of both. The real geopolitical losers are likely to be the Central Asians, slowly slipping from Russia’s orbit into China’s.

Please follow for entire article

 

And more catch up posting, this time in Italian for the excellent think tank Twai’s publication Orizzonte Cina. This one was actually initially written a bit in English and a bit in Italian (thanks to Giovanni for commissioning and Simone for editing and translating!), so am not going to re-print here completely in English, but am sure people can figure this out or it gives you an opportunity to learn a beautiful language.

“Una cintura e una via”: il modello dell’Asia centrale

OC Oct 2015

Annunciata in due fasi dal presidente Xi Jinping e dal premier Li Keqiang, la strategia “Una cintura e una via” è il nuovo orientamento della politica estera di Pechino su cui oggi sembrano concentrarsi quasi tutte le discussioni tra esperti d’Asia. Presentata al mondo prima nel settembre del 2013 ad Astana come “Cintura economica della via della seta”, e poi mesi dopo in Indonesia come “Via della seta marittima del XXI secolo”, le finalità di questa nuova strategia non sono sempre ben definite. Per capire meglio l’indirizzo che la Cina sta prendendo bisogna guardare a ciò che Pechino sta facendo in Asia centrale: è l’Asia centrale, infatti, la pista di lancio di questa nuova iniziativa.

Xinjiang: l’Asia centrale cinese

Descritta dal geografo inglese Halford Mackinder come “il fulcro dell’Eurasia”, l’Asia centrale è al centro del pensiero strategico da secoli. Per la Cina essa ha un’importanza anche maggiore per via della sua vicinanza allo Xinjiang – a tutti gli effetti una parte di Asia centrale dentro ai confini della Cina. È una regione ricca di risorse naturali ma popolata da una minoranza uigura profondamente scontenta del governo di Pechino. Una rabbia che si è intensificata fino al punto di scatenare ripetuti episodi di violenza, con apice nel luglio del 2009, quando gruppi di uiguri ad Urumqi (la capitale regionale) aggredirono cinesi han. In seguito alle violenze, che sono durate un paio di giorni, il governo di Pechino ha dato attuazione a una strategia volta a migliorare la situazione regionale con un enorme investimento economico. Pechino scommette sul fatto che la promozione del benessere economico sia sufficiente a mitigare il malcontento sociale e a soddisfare le rivendicazioni della popolazione.

Il risultato è una corsa allo Xinjiang: altre province si sono date l’obiettivo di investire in aree dello Xinjiang, inviando funzionari del Partito a lavorare a fianco delle autorità locali per trasmettere le ricette applicate con successo nel resto del paese. Una percentuale del Pil di ogni provincia cinese viene dirottata verso lo Xinjiang e le grandi imprese statali che investono nella regione sono tenute a lasciarvi una quota dei loro profitti maggiore della norma. Questo sul fronte interno; le imprese straniere, a loro volta, sono incentivate ad aprire stabilimenti nella regione attraverso sostanziosi benefici e agevolazioni.

Il problema, però, è che – come il resto dell’Asia centrale – lo Xinjiang è lontano dalle rotte oceaniche e dalle vie commerciali tradizionali. Per rendere profittevoli gli investimenti nella regione la Cina deve perciò puntare sull’apertura dei mercati limitrofi tra I paesi dell’Asia centrale e costruire una nuova rete infrastrutturale che li colleghi tra loro. Il risultato è un’enorme spinta allo sviluppo regionale con le grandi banche statli cinesi (come la Exim Bank o la China Development Bank) pronte ad offrire ai governi dell’Asia centrale prestiti a tasso agevolato, a condizione che i progetti su cui vengono investiti vengano realizzati da aziende cinesi – generalmente con manodopera cinese e utilizzando prodotti cinesi.

Per i paesi dell’Asia centrale si tratta di proposte attraenti: la Cina rappresenta una fonte d’investimento più solida della Russia, più generosa di altri paesi asiatici come il Giappone e la Corea del Sud, e più affidabile dei paesi europei e degli Stati Uniti. È una dinamica in atto da più di un decennio: la Cina sta diventando la potenza che persegue con più efficacia i propri obiettivi in Asia centrale, mentre – poco per volta – le strade e le infrastrutture della regione si riorientano da Mosca verso Pechino, via Urumqi.

Il sogno cinese di Xi Jinping

È questa la situazione che la nuova amministrazione di Xi Jinping ha ereditato quando è andata al potere nel novembre del 2012: una relazione con l’Asia centrale costruita su finanziamenti e imprese cinesi, di cui entrambe le parti sono soddisfatte. I paesi della regione sono infatti favorevoli a questa nuova fonte di investimenti, con disponibilità economiche apparentemente illimitate e scevra dalle aspettative di dominazione politica che accompagnano invece gli investimenti russi, nonché dalle condizioni politiche poste da Europa e Stati Uniti. L’esperienza centrasiatica ha insegnato a Pechino quali siano le leve più efficaci per affermare gli interessi nazionali cinesi sulla scena internazionale. A Pechino prevale ancora un approccio incentrato sul principio di non interferenza negli affari altrui, che consente di operare all’estero senza crearsi nemici.

Vi è anche una spinta a riprodurre globalmente il modello sperimentato in Asia centrale: dalla “Cintura economica della via della seta” annunciata ad Astana alla “Via della seta marittima del XXI secolo”, al “Corridoio Bangladesh-Cina-India-Myanmar”, al “Corridoio economico Cina-Pakistan” e a una serie di proposte per altre vie che si sviluppano a partire dalla Cina. Nel loro insieme, questi progetti costituiscono l’iniziative ‘Una cintura e una via’, che mira a ridare alla Cina centralita nella rete internazionale di vie commerciali, aprendo nuovi mercati e riorientando le vie commerciali della regione per rafforzare il ruolo di pivot del paese.

Sin dall’inizio del suo mandato, Xi Jinping ha sottolineato l’importanza della diplomazia economica. Nel gennaio del 2013, in un discorso all’Ufficio politico del Comitato centrale, Xi ha sostenuto che la Cina non avrebbe “mai perseguito l’obiettivo del proprio sviluppo al costo di sacrificare gli interessi di altri paesi”. Questa dichiarazione evidenziava l’importanza degli interessi reciproci come nucleo centrale della strategia cinese verso l’esterno. Lo stesso aspetto veniva evidenziato in settembre ad Astana all’interno del famoso discorso sulla ‘Cintura economica della via della seta’ pronunciato da Xi all’Universita Nazarbayev, nel quale il presidente cinese auspicava che “la Cina e l’Asia centrale [unissero] i propri sforzi per costruire una cintura economica della via della seta che [rafforzasse] la cooperazione”. Lo stesso punto veniva nuovamente ribadito nell’ottobre di quello stesso anno, durante la Conferenza sul lavoro diplomatico nella regione, laddove Xi delineava una lista di priorità in politica estera verso l’“obiettivo di realizzare la grande rinascita della nazione cinese; sviluppare complessivamente le relazioni con i paesi della regione; consolidare l’amicizia con i vicini; approfondire forme di cooperazione reciprocamente vantaggiosa; preservare e impiegare al meglio l’importante periodo di opportunità strategica per lo sviluppo della Cina; preservare la sovranità nazionale, la sicurezza e gli interessi dello sviluppo; impegnarsi per migliorare la relazione politica della Cina con I paesi della regione; consolidare i legami economici, approfondire la cooperazione di sicurezza e intensificare gli scambi culturali tra la Cina e i paesi della regione”.

Le leve economiche del progetto

L’attrattiva di un simile modello è facile da comprendere, da un punto di vista cinese. La combinazione di vie commerciali, investimenti nelle infrastrutture, prestiti agevolati e mercati aperti fa leva su una serie di strumenti che I policy-maker cinesi conoscono bene. Si tratta di strumenti che corrispondono alla nozione cinese di benefici armoniosi e di vantaggi condivisi, e che mirano a ricollocare la Cina al centro della struttura economica globale. Sono strumenti che I policy-maker cinesi sanno come utilizzare: prestiti agevolati e finanziamenti vengono forniti attraverso banche quali la China Development Bank o la ExIm Bank, mentre l’attuazione dei progetti è affidata a imprese di Stato cinesi che hanno esperienza nella realizzazione di grandi progetti infrastrutturali in contesti difficili.

Nel quadro dell’iniziativa “Una cintura e una via”, ciò si è concretizzato in una forte proiezione finanziaria cinese. Sia la China Development Bank che la ExIm Bank hanno articolato una propria strategia per “Una cintura e una via”, ma – accanto a questi veicoli tradizionali – la Cina ha iniziato a promuovere la creazione di nuove partnership bilaterali. Non solo: oltre all’approccio bilaterale Pechino ha promosso un’intera rete di nuove istituzioni internazionali, costitute appositamente per finanziare la nuova iniziativa. Queste istituzioni assumono tre diverse forme. Alcune sono create su proposta e sotto la guida cinese; la più significativa è la Banca asiatica d’investimento per le infrastrutture (Aiib), con un capitale di 100 miliardi di dollari. Altre sono create con il sostegno di Pechino, come la Banca di sviluppo dei Brics (pure dotata di un capitale di 100 miliardi di dollari) e la Banca di sviluppo dell’Organizzazione per la cooperazione di Shanghai, ancora in attesa del varo; infine, crescono a ritmo sostenuto gli accordi bilaterali in materia commerciale e di investimento che la Cina sta concludendo con i suoi vicini – ad esempio l’accordo per l’investimento di 46 miliardi di dollari per il Corridoio economico Cina-Pakistan, annunciato da Xi Jinping durante la sua visita di quest’anno a Islamabad. In aggiunta, la Cina ha annunciato la creazione di un Fondo per la via della seta del valore di 40 miliardi di dollari con un board of advisors che include esperti della Urumqi Central Bank.

È attraverso questa rete di istituzioni finanziarie che viene fornita la liquidità necessaria a finanziare l’iniziativa “Una cintura e una via”. Destinatari dei finanziamenti sono i paesi vicini: per esempio, il progetto di Corridoio economico Cina-Pakistan, in particolare alcuni progetti “early harvest” nel settore dell’energia in Pakistan, saranno i primi beneficiari di finanziamenti dal Fondo della via della seta. Ma i finanziamenti finiscono per la maggior parte a imprese di Stato cinesi impegnate a dar sostanza alla retorica dei leader. Per avere un’idea di quali imprese il governo cinese intenda sostenere con l’iniziativa “Una cintura e una via” basta del resto guardare al progetto di China securities index e Shanghai stock exchange per la creazione di un “indice congiunto che rilevi le performance delle azioni che ricadono entro l’iniziativa ‘Una cintura e una via’”. Composta da 52 imprese attive nei settori di “costruzione di infrastrutture, trasporti, produzione di energia e comunicazioni”, la lista offre una chiara indicazione di quali siano – nelle aspettative di Pechino – i beneficiari dell’iniziativa.

La strategia potrà avere successo?

Ma quante concrete possibilità di successo ha questa ambiziosa strategia? Secondo il Ministero del commercio della Repubblica popolare cinese, nella prima metà del 2015 le imprese cinesi hanno investito circa 7,05 miliardi di dollari in 48 paesi collocate entro il perimetro dell’iniziativa. Ma ciò non elimina del tutto i dubbi sulla concreta realizzabilità della strategia. In Asia centrale, in particolare, ha colto alcuni successi, ma ha anche incontrato ostacoli destinati a manifestarsi altrove.

La logica sottesa alla strategia può apparire benevola. L’apertura di corridoi commerciali, con grandi investimenti e con il coinvolgimento di imprese in grado di realizzare i progetti, garantirà vantaggi in termini di nuove reti infrastrutturali ad alcuni dei paesi più poveri della regione. Ma vi sono dubbi sui vantaggi che questi paesi potranno trarre al di là del mero investimento in infrastrutture. Per i paesi dell’Asia centrale, per esempio, non è chiaro quanto la visione di nuovi corridoi commerciali che li attraversano possa realmente aiutarli nello sviluppo delle proprie economie nazionali. Questi paesi puntano a sviluppare industrie nazionali – ma se si parla con uomini d’affari e commercianti della regione, tutti esprimono la preoccupazione di essere espulsi dal mercato dall’arrivo delle più competitive imprese cinesi.

Un ulteriore dubbio è se i paesi della regione siano nelle condizioni di beneficiare realmente dell’iniziativa. L’apertura di corridoi commerciali è finalizzata a creare nuove vie di trasporto per i prodotti, ma nulla garantisce che ne derivino automaticamente vantaggi anche per i cittadini dei paesi di transito. In Pakistan si è cercato di ovviare a questo rischio attraverso l’istituzione di zone economiche lungo il Corridoio economico Cina-Pakistan, ma sarà necessario del tempo prima che queste decollino.

Infine, tutto ciò non risolve i problemi di sicurezza che avranno con ogni probabilità un impatto su molte delle vie di comunicazione create sotto l’egida di “Una cintura e una via”. In aggiunta alle tensioni nelle relazioni tra la Cina e buona parte dei suoi vicini marittimi (che in teoria dovrebbero cooperare nel progetto della Via marittima della seta), vi sono i problemi di sicurezza di Asia centrale e meridionale: instabilità in Belucistan e in Myanmar, gruppi terroristici attivi in Afghanistan e capaci di espandersi in altri paesi dell’Asia centrale. Alcuni di essi hanno contatti con gruppi dissidenti uiguri, il che rinvia a quelle stesse minacce che la Cina cerca di attenuare attraverso la propria strategia di investimenti in Asia centrale. Queste sono parti del mondo in cui è difficile per chiunque investire, non solo a causa della mancanza di infrastrutture ma anche per i diffusi problem di corruzione e per i gravi deficit di governance.

Nonostante ciò, la visione di “Una cintura e una via” è destinata a diventare la fondamentale direttrice della politica estera di Xi Jinping. Delineata in termini sempre più chiari, e sostenuta dai necessari finanziamenti, essa sta ora muovendo dall’elaborazione retorica all’azione. È presto per dire se sarà coronata da successo, ma la rotta è tracciata ed è già stata sperimentata in Asia centrale. Xi Jinping e la sua cerchia hanno certo letto Mackinder: l’Occidente farebbe bene a concentrarsi su come rispondere al meglio all’agenda di politica estera che la Cina sta articolando.

Finally posting my second piece from last week around the SCO Summit, this time for the South China Morning Post. Focuses more on the China-Russia side of things. Beyond this, spoke to the Independent about the elusive Abdel-Majed Abdel Bary, the Daily Mail about ISIS and women, and Reuters about Chinese intelligence dealing with the counter-terrorism questions outside the country.

Russia holds the door to Central Asia open for China

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Raffaello Pantucci says to a region in need, the Chinese offer of funds and expertise is too attractive to resist, as agreements at the Moscow-hosted BRICS and SCO meetings show

PUBLISHED : Wednesday, 15 July, 2015, 12:05pm

Late last week, the leaders of almost half the world’s population gathered in Ufa, Russia. The collision of the BRICS and Shanghai Cooperation Organisation (SCO) summits was orchestrated by Russia to guarantee exposure and attention, and highlight to the world how many friends Russia has. Dig below the shallow surface, however, and the links between the countries of the two international organisations are barely skin deep, with everyone attending for their own reasons.

For China, the two summits provide another opportunity for global engagement, as well as helping Beijing advance two international financial institutions. A timid player in many ways on the international stage, Beijing has found that its capital is one lever that it can use without raising too many hackles, and the meetings in Ufa gave it another opportunity to flex these financial muscles.

Fixating on the slow path to SCO membership for India and Pakistan, the world largely missed the key takeaway from the summits: China’s growing financial domination of Russia and its immediate backyard.

In the wake of the first Ufa summit, greater clarity was cast around the BRICS development bank, a new financial entity to emerge from the grouping of Brazil, Russia, India, China and South Africa, with an initial market capitalisation of US$50 billion. The leaders also created a US$100 billion currency exchange reserve, of which US$41 billion was offered by China, while Russia, Brazil and India each gave US$18 billion, and South Africa contributed US$5 billion.

A day or so later, the SCO members agreed once again to try to advance the concept of an SCO development bank or at least a joint fund.

China has been pushing the idea of an SCO financial institution for some time.

Seeing economic engagement as its major advantage in Central Asia, many years passed before Chinese interlocutors first presented the idea of an SCO development bank.

However, the idea has never quite taken off, with Russia in particular concerned that the vehicle would simply leave the door to Central Asia wide open for Beijing.

We live now, however, in different times, and, rather than be concerned, Russia has opened the door to Beijing. Indeed, Moscow appears to be helping to hold the doors open as China uses its lever in Russia’s backyard. Already endowed with the Silk Road Fund (focused on China’s western partners in Central and South Asia) and the Asian Infrastructure Investment Bank, China’s external constellation of economic firepower has been further enhanced by Ufa.

Russia itself has further opened up its own economy to Chinese investment, offering Chinese state-owned firms majority stakes in its oil and gas fields.

Eager for foreign investment and unable to look west anymore, Moscow is reaching east and apparently willing to throw open not only its backyard, but also Central Asia’s.

The result is a further strengthening of China’s hand in Central Asia, as the country pours finance and infrastructure into a part of the world that is crying out for it.

While in the short term there is little to worry about this investment (these are infrastructure-poor countries that will benefit from China’s appealing combination of low-cost construction firms and cheap loans), over the longer term, Chinese leverage will certainly offer Beijing a grip over the region. The lesson from Ufa is that the region’s one great resistor, Russia, has largely lifted its objections and is now welcoming all the Chinese investment it can attract.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute

This article appeared in the South China Morning Post print edition as Russia holding the door to Central Asia open for China

Still catching up on old posting, new writing has sadly slowed of late. Busy with various projects, including promoting the UK Jihad book. Hopefully usual service will resume soon. In the meantime, the new Brill journal Central Asian Affairs published my contribution to a series of essays commissioned by the excellent Erica Marat about The Chinese Question in Central Asia:

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Sinophobia: A Potential Knot in the Silk Road

Sitting in a café in Bishkek recently, a foreign diplomat explained the Chinese problem in Central Asia with a rather simple characterization. The issue, he said, is a “genetic one,” whereby Kyrgyz have an in-built antipathy toward Chinese. While such a simplistic explanation is one that most international relations experts would shy away from, it is one of the clearest issues to leap off the page of Marlene Laruelle and Sébastien Peyrouse’s excellent : , , . The biggest factor in favor of the Chinese often seems to be their very overwhelming presence and the potential that their existence just across the Tian Shan mountains poses to the Central Asian states.

On the ground in the markets at Kara Suu, Dordoi, or Barekholka, the Chinese are largely seen in a fairly passive light. Bored and griping as one would expect from workers who are earning a living grafting and selling products to poor populations, the Chinese salesmen and workers largely operate on the fringe of local societies, aware that attracting too much attention can lead to trouble. Chinese energy giants operating in the region tell of training their workers deployed in country to avoid drinking in public and to always have their documents on them, as well as a phone number, in case they get into trouble with local authorities.

And of course, there is trouble. Early 2014 in Bishkek, 16 Chinese workers beat up a policeman after he came across one of them intoxicated at their construction site. This particular attack on a policeman was novel, but clashes between Chinese workers and locals is a fairly regular occurrence in Kyrgyzstan. But what is fascinating, and in many ways a demonstration of issues China faces going out more broadly, sometimes these clashes involve Chinese workers rioting because they have not been paid by their Chinese employer. Either way they look dangerous to locals. For local Kyrgyz who see their markets full of Chinese goods and a growing presence of Chinese workers on building sites or doing jobs that they feel they could easily do, there is a certain amount of anger and bitterness. This spills fairly easily into resentment that taps into the age-old Sinophobia that Laruelle and Peyrouse attribute to a dearth of Chinese studies in the Soviet era. Where people did study China in Central Asia, it tended to be through the lens of minority populations like the Uyghurs or Dungans—the archetypal Chinese Central Asians.

Into this void fill rumor and conspiracy—concepts endemic to the Russian mindset and consequently ever present in the still predominantly Russian Central Asian region. Stories of a sweeping “yellow peril” fill conversations and discussions. As Laruelle and Peyrouse point out, “Each year the Chinese population increases by more than 15 million people, a number almost equivalent to the total population of Kazakhstan” (p. 183). Or to look at it another way, China will grow by about two Kyrgyzstans plus one Turkmenistan or by two Tajikistans every year.

Of course, these figures and comparisons are completely artificial—a relatively limited amount of this population growth actually takes place in Xinjiang, China’s domestic piece of Central Asia sitting across the border from Kazakhstan, Kyrgyzstan, and Tajikistan. In fact, Xinjiang’s population is proximate to a large Central Asian nation’s: just under 25 million, spread over a geography that accounts for one-sixth of China’s landmass. But bordering the world’s largest manufacturer with a small population that is increasingly becoming dependent on China is a worrying prospect, especially when, as Laruelle and Peyrouse point out, China’s regional efforts have “profoundly changed the economic status quo in the region” (p. 45). All roads in Central Asia no longer lead to Moscow; the newly paved ones go to Urumqi or Kashgar, with new spurs and projects constantly being announced. Be they in infrastructure, like the rail tunnel in Uzbekistan, a new thermal power plant in Dushanbe, or more pipelines to get Turkmen gas back to China, Chinese firms stepping in to fill the void as Rosneft backs out of taking over Bishkek’s Manas airbase, or receiving a piece of the Kazakh supergiant field Kashagan over an Indian state-owned firm.

But while these are all signs of China’s growth in the region, the reality is that there are a number of games at play here. Since Laruelle and Peyrouse’s book was published, the parameters of a possible strategic outline for China’s push into the region have begun to emerge. Back in September 2013, in the middle of a tour of Central Asia in which he signed almost $56 billion in contracts, President Xi Jinping gave a speech at Nazarbaev University in which he referred to China seeking to create a “Silk Road Economic Belt” that would connect China to Europe through Central Asia.

To take this speech as a full-on strategy, however, is apparently premature. In discussions in Beijing, Shanghai, and Urumqi (as well as across Central Asia), officials, experts, and others all continue to express a lack of certainty about what exactly this Silk Road Economic Belt means. As one prominent expert recently put it in Shanghai, “Our leadership likes to lay out visions and then leaves it to others to work out the details.” Specifically, Beijing appears to be waiting for the National Development and Reform Commission () to outline the practicalities of the vision, and then all the responsible ministries will be able to implement it. This is meant to happen later this year, and after that—by all accounts—we should start to have a clearer sense of what China’s vision for Central Asia looks like.

But as with all geopolitical puzzles, this is a fluid one, and while China seems to be clarifying its intent regarding Central Asia, Russia has upended the chessboard with its action in Ukraine, causing concern across Central Asia. The push toward a Customs Union and Eurasian Economic Union stretching across Kazakhstan, Kyrgyzstan, and eventually Tajikistan, as well as the Western sanctions are all having a knock-on effect in Central Asia. In Kazakhstan they are causing concern at an official level as they worry about the impact on their own relations with the West and the fact that through the Customs Union they are tied more closely to Russia’s economy. Talk to traders in Kyrgyzstan’s Dordoi or Kara Suu and they have been feeling this impact for some time; since the Customs Union came into play between Kazakhstan and Russia, re-exporting their goods across Kazakh borders is more challenging. They worry that once their country joins, the cheap Chinese products will have little reason to be re-exported through Kyrgyzstan and it will make more sense to simply go in through Kazakhstan.

And yet, in the face of this, Russia remains the clear primary partner of choice for Kyrgyzstan. Customs Union membership is on track for 2015, and the Kyrgyz still see Russia as an important partner, their primary security guarantor, and employer to the thousands of Kyrgyz who work in Moscow and elsewhere send precious remittances to support family members who stay behind. The first port of call for Kyrgyz politicians remains Moscow, rather than Beijing. Out of choice or fear, they look to Russia as a geopolitical parent even though their long-term economic future lies to the south with China, India, and the other rising powers.

Kazakhstan faces a different issue. Already caught in Russia’s embrace, they are more desperate to make their much-vaunted multivector strategy a reality. China is but one partner in this picture, and Kazakh officials and businessmen will highlight their nation’s growing links to Iran, pending membership, and the fact that they are renewing their partnership agreement with the European Union as evidence that it is alive and well. Russia is an important partner for them, but not the only one.

The key question here is what this means for the logic of China being the increasingly consequential partner for Central Asia. Is it possible that China’s influence in the region is one that is more fragile than it seems and that the underlying Sinophobia is a problem that can be stoked at will to blunt China’s push? The raw economic force behind Chinese investment would seem to belie this, especially as Russia has little chance to properly counter this strength, given a faltering economy that is already facing new burdens in Crimea and over Ukraine.

But it does raise questions about China in Central Asia. And it does cast an ever-larger light on what the meat of China’s proposed Silk Road Economic Belt will be and how they will try to counter these regional forces and the Sinophobia under it.

For the time being, three aspects would benefit from getting greater coverage:

First, what are Chinese views regarding the long-term goal? Both Laruelle and Peyrouse have long experience in China, but the text does not always address the fundamental question of what the long-term Chinese goal is. On the one hand, this is partially because a clear enunciation of it is something that we are only now starting to see with Xi Jinping’s announcement of the Silk Road Economic Belt, but it is something that Chinese strategists have been edging toward for some time.

Second is the reality of the much-vaunted “multivector” foreign policy that Central Asians so often talk about as their strategy. Talk to officials in any country and they will deny Chinese (or any other) dominance, declaring that it is something that they are ably playing one power off the other. The reality of this is often questionable, especially when one considers the irresistible economic force of China compared to all others, making one wonder to what degree the Central Asians actually are able to manipulate and control their destiny.

And finally, there is the dilemma of absorption. How much does China want responsibility or can the Central Asians avoid finding themselves increasingly looking to China to help resolve issues? Is China becoming the regional hegemon by default, with no-one having really thought through the consequences or what it means for regional stability (or who the principal provider of regional security is) in a situation where Beijing is increasingly the most consequential player on the ground that assiduously avoids conflict or becoming embroiled in resolving it? Central Asian tensions and problems will not fade as China rises, and what this means for China is an as-of-yet unanswered question.