2019: New Dynamics of Central Asian Countries Cooperation

2019: New Dynamics of Central Asian Countries Cooperation

 

In 2019, the leaders of the Central Asian countries will hold a second consultative meeting in Tashkent. The agenda includes a set of topical issues of interstate cooperation. One might recall that at the first meeting, on March 15, 2018, in Astana, the First President of Kazakhstan, N.A. Nazarbayev, emphasized that the main goal of the high-level meetings is “to solve our problems, create conditions for our peoples, relations. These are economics, trade, infrastructure, logistics and other issues”.

Indeed, Astana aimed to maximize the use of negotiation mechanisms based on dialogue. Kazakhstan proposes to intensify regional multilateral cooperation to address water and energy and many other economic issues in Central Asia. A package of Astana proposals includes creating sectoral consortia: water and energy, transport and food; special border areas; joint-investment structures and some others. These initiatives are certainly open for discussion and new proposals from the Central Asian neighbors. 

Earlier, Kazakhstan announced a desire for closer cooperation and intends to consolidate positive trends both politically (bilateral and multilateral dialogue) and economically (investments in energy, transport, etc.). These efforts are based on the state of bilateral and multilateral relations of the countries of the region; the need to ensure stability and security in the region; and to create a favorable external economic and foreign policy environment.

Thus, Astana offers its Central Asian partners the opportunity to consistently move towards close regional cooperation on a pragmatic basis, taking into account the characteristics of each country.

Effective inter-country cooperation in Central Asia can be carried out within the framework of solving topical issues related to the energy complex, with the issue of water distribution and border delimitation. The vital problems include transport transit, border issues and labor migration. Having achieved effective solutions to key problems in these areas, creating a stable mechanism for solving them, it will be possible to consistently develop mutually beneficial regional cooperation.

Further development and expansion of mutually beneficial trade and economic relations between the Central Asian states should be considered primarily through the willingness to create a real free-trade zone; development of entrepreneurship and investment cooperation; the implementation of coordinated customs, tax and tariff policies by the Central Asian states and their harmonization of monetary and currency relations; and the adoption of active measures to unify national legislations to implement a free-trade regime.

In addition, no less important factors in the development of mutual trade between the Central Asian states are the harmonization of the macroeconomic policies of these countries and the synchronization of economic reforms, which will facilitate creating the conditions for the formation of a transparent common goods and services market.

Towards the common transport space 

The Central Asia region, due to its geopolitical position, has historically been a transit link in the system of various interconnections of the Eurasian countries. Partially, this situation remained in the initial period of independence, but due to a number of international economic, internal and foreign policy reasons, the pace of entry of Central Asian countries into the global economic and political space slowed down. It is common knowledge that the underdevelopment of the transport and communication infrastructure, both at the national and regional levels is a major deterrent here. As is commonly known, transport costs seriously affect the competitiveness of products and our economies in general.

It is logical that the development of transport infrastructure is a priority for cooperation among the Central Asian countries.

The Central Asian region demonstrates significant transport and transit potential, which is confirmed both by the scale of modernization and construction, and by the interest of foreign investors in cooperation with the countries of the region. Moreover, the transport infrastructure in the form of transport and economic corridors is the core of the further implementation of the PRC Belt and Road Initiative. The development of transport corridors is expected to have a positive impact on the solution of common regional issues and national objectives.

However, the countries of the region will have to focus on the fundamental problems of the quality of railways and motorways to unlock the potential of transport systems. At the same time, in Kazakhstan, for instance, the railway is the most preferred method of goods transportation. The various railway standards of countries along the Belt and Road Initiative, as well as the heterogeneous landscape and climatic conditions, are considered by many researchers to be the obstacles to the further integration of transport hubs and the transportation of over-sized and heavy goods.

It should be recalled that in at the end of 2015, Kazakhstan and China signed an agreement on the conjunction of the Silk Road Economic Belt and the New Economic Policy “Nurly Zhol” program adopted by the Government of Kazakhstan in 2014. The program is aimed at a comprehensive continuation of the course of reforms in the country's economy. To this end, Kazakhstan has a large-scale transport assets modernization program, which covers all types of transport, one of the tasks of which is to connect the capital city of Astana by the “ray principle” with the main large regions. Up to 2020, it is planned to implement projects with a total investment of about 40 billion dollars.

In the summer of 2016, the parties signed a detailed cooperation plan, highlighting three priorities: transport infrastructure, trade, and industry.

The plan provides for the construction of several transport corridors (China-Kazakhstan-Western Asia, China-Kazakhstan-Russia-Western Europe and China-Kazakhstan-South Caucasus-Turkey-Europe) and logistics terminals in Kazakhstan, China and third countries.

Thus, the government of Kazakhstan, supporting the Chinese initiative, intends to make maximum use of it to protect and promote national economic interests. In 2017, Astana adopted an investment strategy that is designed to increase the effectiveness of cooperation between Kazakhstan and China within the framework of the EEU, the SCO and the Industrial Production Index and contribute to the development of the city of Astana as a regional financial center as part of the project to create the International Financial Center (AIFC), which was launched on July 5, 2018.

A significant platform for cooperation among Central Asian countries in the modernization of transport infrastructure is promoting interests in the CAREC program[1]. This program is also considered by the eastern neighbor of the Central Asian countries as a mechanism for cooperation in the joint implementation of the Belt and Road Initiative. These efforts are aimed at modernizing transport infrastructure, including transport and transit corridors in the countries of the region [2].

The countries of the region, implementing their own state programs for the modernization of transport infrastructure, generally have similar interests in reducing transport costs and attracting transit flows through their territories. Thus, the launch of the new railway route “China - Kazakhstan - Turkmenistan - Iran” allowed to halve travel time compared with maritime transport.

It should be noted that the Central Asian states are seeking to diversify transport routes, mainly from China. So, for instance, the “China-Europe” route (“New Eurasian Continental Bridge”) launched by Kazakhstan and China in 2017 made it possible to reduce the travel time of trains from 20 days to 14 days.

The measures taken to find and develop alternative transport corridors are an indicator of the desire for lower transport costs. However, in case of Central Asian countries, it is important to maintain a balance between the existing structural opportunities for regional cooperation. For instance, the creation of new routes in Turkmenistan, Turkmenbashi through Garabogaz to the border of Kazakhstan, Turkmenabat - Gazachak - Dashoguz, Mary - Serkhetabat will allow diversifying the automobile network .

In addition, in Turkmenistan, work is underway to modernize the Ashgabat-Turkmenbashi and Ashgabat-Mary highways, as well as to reconstruct the Turkmenbashi-Bekdash-Kazakhstan border [4]. Other countries in Central Asia are also working on upgrading existing automotive networks.

Uzbekistan reconstructed many transport arteries, for instance, “Tashkent-Osh”, “Tashkent-Termez”, “Samarkand-Bukhara-Alat”, “Guzar-Bukhara-Nukus-Beyneu”. The following ways are also being reconstructed and modernized: “Beineu-Kungrad-Bukhara-Samarkand-Tashkent-Andijan” and “Bukhara-Alat”.

Tajikistan: reconstruction of the “Kulob-Kalai-Khumb-Kulma, Shkev-Kalai-Khumb”, “Dushanbe-Kurgan-Tube” and Kulob-Darvaz roads.

The Kyrgyz Republic is reconstructing the roads “Bishkek-Osh”, “Kazarman-Jalalabad”.

The modernized transport system will allow the countries of Central Asia to have their competitive advantages, for instance, in comparison with the sea routes of the Belt and Road Initiative and, accordingly, to increase the trade turnover between countries and international trade indicators .

Towards deepening regional trade

In this regard, the countries of Central Asia must proceed looking for points of mutual cooperation. The Central Asian countries have significant potential for increasing trade and economic cooperation both based on bilateral relations with major partners, and within as part of participation in international organizations - CIS, EEU and SCO. In this respect, the harmonization and conjugation of projects of the EEU, SCO and Silk Road Economic Belt will create a more significant synergistic effect for the economic development of the entire region.

States understand the benefits of cooperation in the field of transport infrastructure, due to the increase in transit freight traffic and intraregional and international trade.[3] As is well known, based on the results of the CAREC ministerial meeting in Dushanbe in October 2017, the CAREC strategy until 2030 on further sustainable development in the region was signed. The strategy provides for a “cluster” development approach and is designed to create an “open and inclusive regional cooperation platform”. At the same time, the creation of a “unified railway operator of CAREC” and an “open sky” was discussed .

According to the CAREC 2020 strategy, coupled with national development plans, until 2020, the total investment in the promotion of transport and trade will amount to 39 billion US dollars[4]. This will significantly strengthen the base of the regional transport infrastructure network to reveal the economic potential and improve the overall condition of transport routes .

To our opinion, effective cooperation requires developing a strategy to respond to the volatility of trade indicators, as well as taking measures to prevent conflicts arising from international trade relations.

Different customs duties and tariffs can become a cornerstone in the development of regional cooperation. Kyrgyzstan and Kazakhstan being bound by WTO obligations will have to keep their export rates at a low level due to their parallel participation in the EEU, which may cause concern to neighboring states. National economic priorities will be determined by different views and approaches; there may be some questions about different commodity groups, in particular, on food products.

According to the President of Uzbekistan Mirziyoyev at the opening of the international conference on the development of transport communications in the region in September 2018 in Tashkent, “transit costs of Central Asian countries that do not have direct access to the sea reach 70-80% of the value of exports of products, and carriers lose 40% of the time due to the lack of unified customs procedures”. Indeed, Kazakhstan understands such costs. As mentioned before, the share of Kazakhstan in the railways of the entire region is 2/3, or about 66%.

In our view, the President of Uzbekistan had a very relevant address about “the expediency of creating a regional transport communications council of the Central Asian countries, which will become the coordinating structure in solving problems in the transport and logistics sphere”.[5]

In the context of strengthening this idea, it is obvious that it is also time to discuss the possibility of creating a permanent working structure or platform for the effective implementation of subsequent decisions of the heads of state and proposals of our governments. Such an informal institution may be created at the intergovernmental level (authorized or special representatives). The main goal is not to create any interstate structures, but an effective and mutually beneficial solution of topical regional issues.

From external region-building to the internal one 

Central Asia does not have a simple surrounding environment. Against the background of its neighbors - Russia, China, Iran and several other countries of the Islamic world - the position of each country individually and even of the region does not look comparable. Individual countries are more exposed to external impacts. That entails the economic and political potential, cultural and civilizational vector. Strengthening the regional subjectivity of the community of countries where their potential is commensurate, and there is a cultural, historical and geographical contiguity, is in fact a way to strengthen the subjectivity of each country individually.

The regional cooperation paradigm is way way to solve common issues based on consensus and dialogue, such as managing transboundary rivers, common borders, development of transport transit, trade, energy and agriculture, jointly solving security issues and some others.  Thus, the country benefits from the strengthening of the region.

The regional relations of the Central Asian countries, i.e. what can be called domestic region-building, were specifically perceived by global and regional powers. The external views/strategies, which construct the region, are based not only on its geographical perception, but on the plans and interests of external powers on the geopolitical reformation of these territories. In turn, the principles of external or internal design of Central Asia influence the formation of regional development models.

As is clear, the leading world and regional powers began to officially proclaim and implement their so-called Central Asian strategies. These documents demonstrate the concentrated attention of these powers to Central Asia caused by their special interests in the region and put forward the grounds for a more active and long-term policy in this part of the world. Such strategies were put forward by the United States, the European Union, Russia, China, Turkey, Japan, India, and South Korea .

The ways of implementing the strategies of external forces in Central Asia often turned out to be contradictory. This intensified the rivalry between them for the region. It is notable that the conceptual ideas about Central Asia as a special geographical space and its prospects vary in the approaches of external powers. This prompted the Central Asian states to look for a more adequate response to the growing and diverse types of external exposures.

Analyzing the strategies and concepts of non-regional powers in Central Asia, it is equally important to understand how they perceive and evaluate the interests of each other in the region. These evaluations often contain not only elements of cooperation, but also rivalry [9].

It is remarkable that geographically distant countries, support politically, diplomatically, and in other ways the regional “5+” format. This is evident in relations with the EU, the United States, India, Japan and South Korea. We believe that experience of the EU is in demand for all countries seeking to create effective regional cooperation platforms. In Central Asia, the basic principles of the European experience are fully applicable, if not now, then in perspective. The well-known postulate of th EU “unity in diversity” does not lose its relevance and fully corresponds to the conditions of our region.

All the mechanisms of dialogue and diplomacy developed in the EU in the areas of trade and the economy, politics and the law, as well as other areas, are the subject of study by experts and politicians. We suppose that the adaptation and development of many elements of this huge background (such as the Visegrad Group, the Nordic Council, and others) will play a potentially positive role in Central Asia. The new EU Strategy, announced in 2019, reflects many of these approaches.   

The format of cooperation of the countries of Central Asia with the USA C5+1 is of significant political importance.  The United States needs this format to have a formal and institutional opportunity to influence the regional situation in the future. The United States is aware that it does not have geographical advantages, such as those of China and Russia. Washington cannot be at the forefront of security and the economy. But at the same time, the United States considers it extremely important to maintain its active political presence in the region, which is important for Russia and China.

Given the remoteness of Central Asia and the limited resources of the United States, Washington is transforming its strategy and, along with bilateral ties, is also willing to use a multilateral format in the region, which could influence the formation of a regional agenda. American politicians believe that Russia has several instruments - the EEU, the Collective Security Treaty Organization; China has the SCO and the Belt and Road Initiative.

At the same time, Washington is interested in the stability of regimes in Central Asia in the context of the situation in Afghanistan. It means that the United States does not intend to strictly connect the question of domestic political reforms and cooperation with the states of the region.

The allies of the United States - Japan and South Korea also have their platforms, in particular, “Japan + Central Asia” and “South Korea + Central Asia”. Another advantage of these formats for Central Asian countries is that these countries do not interfere in internal affairs. The United States may have considered the experience of Japan and South Korea. At least, externally, the C5+1 format resembles the Japanese approach. But at the same time, the United States seeks to retain the role of one of the three leading external partners (along with China and Russia) for the Central Asian states.

The essence of the American C5+1 approach is the “strategy of balancing from a distance”. The United States believes that their global economic and political-diplomatic influence and security opportunities balance the geopolitical weight of their neighbors in Central Asia - China and Russia. This strategy does not require major financial expenditures or security obligations. The United States can selectively act as a partner in Central Asia using diplomatic tools. While responsibility for security, stability and economic development can be delegated to neighboring powers. 

The C5+1 platform is implemented as part of three working groups: “Economy and regional relations” (under the leadership of Kyrgyzstan, Turkmenistan and the United States), “Environment and Climate Change” (under the leadership of Kazakhstan and the United States) and “Security” (under the leadership of Tajikistan, Uzbekistan and the United States), which includes representatives of foreign ministries, specialized state bodies and analytical structures of the participating states .

Although the formal results of the C5+1 platform are not major, it is significant in terms of supporting regional subjectivity. It indicates the projects on economic cooperation, in particular, the expansion of export potential, as well as the creation of conditions for freer trade.
For the time being, the environmental, clean energy and trade projects are still background for a dialog of the US with the countries of Central Asia .

***

In this context, the Central Asian countries must be interested in greater cohesion and thereby in minimizing the costs of rivalry and competition of their external partners. It should be noted that regional cooperation in Central Asia cannot and must not be directed against someone, or against someone’s interests. First, this is a process of promoting and protecting one’s interests and it is possible only with the mutual respect of sovereignty and should be based on the principle of equality, voluntary participation, consensus and dialog, diplomatic resolution of issues. This process can cause opposition only to those participants who have sovereign ambitions, who seek unilateral advantages and/or zones of privileged geopolitical interests and, accordingly, who see risks for their geopolitical goals in regional cooperation in Central Asia.

At this stage, it is important for the states of the region to move from meetings at the political level, concluding large-scale agreements to the practical implementation of the reached agreements.

         In this regard, it will be efficient to create a platform that effectively addresses issues of cooperation among the Central Asian countries, which will allow for establishing a productive mechanism for multilateral dialog and serve to consolidate the efforts of states at the regional level.

It is necessary to focus on resolving non-contradictory trade and economic issues of cooperation, maximize the potential of our economies, and finalize the solution of border, water and energy issues.

At the same time, the settlement of a set of regional problems in the fields of energy, transport, environment, water scarcity and visa regime issues require a coordinated pragmatic approach and closer cooperation of the Central Asian countries at the multilateral level. In turn, the joint measures taken in this direction by the Central 

Kisi.kz

12.08.2019

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