Posted on 11/18/2004 8:26:21 PM PST by Destro
Nov 19, 2004
Russia comes on strong in Central Asia
By Bruce Pannier
PRAGUE - Visiting the Tajik capital Dushanbe last month, Russian President Vladimir Putin surprised his audience by pledging substantial financial investment in the Central Asian republic. "The Russian side - both its state structures and private companies - intends to invest some [US]$2 billion in the Tajik economy within the next five years. I do not think any other country has, in the past 12 or 13 years, ever invested such an amount of money, or even announced plans to invest such an amount of money in Tajikistan," Putin said.
He was correct. No single country or organization has ever promised that sort of investment in Tajikistan, a country still shattered from a 1992-97 civil war and regarded as the poorest of the Commonwealth of Independent States (CIS) countries. Another deal also appeared to clear most of Tajikistan's $300 million debt to Russia.
Tajikistan was not the only Central Asian country to receive promises from Moscow in October. Uzbekistan and, to a lesser extent, Kyrgyzstan, also have been promised investment by Russia.
Russia has yet to back up its promises with cash, which leads some to ask - where is this largesse coming from? Even before the 1997-98 financial crisis, Russia was poorly positioned to pursue ambitious investment projects.
Alex Vatanka, a senior editor at the London-based publication Russia-CIS Security Assessment Binder, explains the driving force behind what he called Russia's October "shopping spree" in Central Asia: "It probably has to do with the fact that Russia is now receiving more money from the sale of oil. Suddenly you've seen the oil price going from $20 a barrel, which is what the fiscal stance of Russia in based on - they're going with a $15-20 a barrel price - and they're [now] getting twice that," Vatanka said.
Oil and natural gas sales now are helping fill Russia's state coffers and presenting the government with new possibilities that could not have been anticipated even a year ago.
Many might not consider Central Asia the best place to invest part of this newfound wealth. But John Schoeberlein, the director of Harvard University's program on the Caucasus and Central Asia, said for Russian investors and the Russian government, the region is actually well-positioned for investment. "Where Russia might try to expand its economic relations overseas, there aren't that many markets, for example, where really Russia can be competitive. It happens that in Central Asia there is something of a natural market, a natural basis for economic relations between these countries," Schoeberlein said.
Central Asia, like other areas of the former Soviet Union, is still bound to Russia in many ways. Schoeberlein pointed out that spare parts for a number of machines being used across the territory still come from Russia. Other connections remain as well.
These past connections, Vatanka said, do not mean investing in Central Asia is a safe venture, though it's one for which Russia is perhaps better suited than others, he added. "When you look at places like Tajikistan and Kyrgyzstan, it's important to bear in mind that - if you're willing to risk it - it's relatively cheap to buy up assets in a place like Tajikistan or Kyrgyzstan. If you are Russian, you know the region and you speak the language of the people you're dealing with. You're taking a risk, but it's cheap and the returns can be very high. That's the big distinction between Russian and Western companies operating in the region - the Russians are willing to take that risk," Vatanka said.
Oil and gas revenues may be fueling Russia's new economic interest in Central Asia, but just a few years ago Central Asia had largely fallen off Moscow's field of interest. "There was a period under [Boris] Yeltsin when it seemed Russia had sort of forgotten its interests in Central Asia. It was pursuing a much less apparent policy in relations to the Central Asian countries and seemed to be allowing them to go their own way to a large extent," Schoeberlein noted.
Lena Jonson, a senior research fellow specializing in Russian foreign and security policy at the Swedish Institute of International Affairs and author of the recently released book Vladimir Putin and Central Asia, said Russian policy toward Central Asia started to change when Putin became president. "Since Putin came to power, it's meant a more active policy with regard to Central Asia. Then you can see that there is a focus on the energy resources of these countries and also that the Central Asian countries are part of the former Soviet Union infrastructure, which makes them important in general," Jonson said.
Shopping spree
According to Jonson, Russia made several gains in the region last month. "It got the rights to continue using the space-monitoring station, Okno [in Tajikistan]. [Then] they have this military base, which gives it a status for the future, and also you have agreements with the hydroenergy sector and also the aluminum sector," she said.
In addition to Putin's own investment promises, Russia's Unified Energy Systems promised to invest $200 million in Tajikistan's Sangtuda hydropower station. The Rusel aluminum company, meanwhile, pledged to invest $560 million into a dam at the Rogun hydropower plant along with further investments in Tajikistan's current aluminum plant, one of the country's major export producers, and said it would build a new one as well.
Just a few days after these deals were announced, Yuri Lebedev, the economic adviser at the Russian Embassy in Uzbekistan made another announcement. He said the Russian company Gazprom plans to invest $1 billion to develop gas condensate fields in the Ustyurt region in western Uzbekistan and $15 million to extend the life of the country's Shakhpakhty field. Lukoil plans to invest more than $995 million for natural gas extraction in the Bukhara-Khiva region.
Russia's seeming economic success in Central Asia in October also was accompanied by political successes. During Putin's visit to Dushanbe, he and the presidents of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan signed documents admitting Russia to the Central Asian Cooperation Organization (CACO).
Tajik President Imomali Rakhmonov greeted the organization's new member. "Everyone [attending the meeting] has agreed that Russia's full participation in the Central Asian Cooperation Organization will increase the potential and the dynamics of our organization," Rakhmonov said.
CACO, through its various stages of evolution since its 1994 founding, has not proven a very effective organization, but Jonson of the Swedish Institute of International Affairs said Russia's entry was still significant. "It reflects this interest of Russia in Central Asia and it gives [Russia] a better possibility to act within the region and to become part of agreements in the region," she said.
Russia's military also got a firmer foothold in the region. Following the events of September 11, 2001, the United States was given permission by the governments of Kyrgyzstan, Tajikistan and Uzbekistan to station US-led coalition troops on their soil for the campaign in Afghanistan. Many in Russia, particularly in the military, have been upset by this new foreign presence in what many regard as Russia's backyard.
Russia already had troops stationed in Tajikistan, the 201st Motorized Rifle Division. The Tajik government has always been glad to have the unit stationed there, but until Putin's mid-October visit, the unit and its bases had no legal status in the country. That problem was quickly resolved. As part of Russia's debt forgiveness to Tajikistan, Russian assumed control of the Okno space observatory high in the Tajik mountains, a facility that has both civilian and military uses.
Besides the unit in Tajikistan, Russia also commands the Kant air base in Kyrgyzstan, located some 40 kilometers from a US-led coalition base used for support operations in Afghanistan. At the start of October, the commander of the Fifth Corps of the Russia Air Force, Yevgeny Yurev, said more warplanes and helicopters will be coming to Kant base, and that the number of Russian troops will be increased by as much as four times, to about 1,000 personnel.
While in Tajikistan, Putin noted that the now legally stationed Russian unit in Tajikistan would be part of a security network for the region that included the Kant base. "This base, along with the air base at Kant, Kyrgyzstan, will be an important part of the united system of collective security for the region," the president said.
Kant provides an excellent example of an improvement in Russian-Tajik ties. Last year, when the Kant base opened and Putin was in Kyrgyzstan, Tajikistan refused to give permission for Russian warplanes of the 201st division to fly the short trip to Kyrgyzstan for the opening ceremony. Planes had to fly in from Russia instead.
Investing in energy
The high revenues from Russian oil and gas exports may not last, but for now Russia appears determined to maintain its investments in Central Asia's energy projects for years to come. Harvard program director Schoeberlein said it is still too early to tell how much Russia's move into Central Asia will affect the region. But despite the fact that Russia has yet to fully deliver on its pledges, he believes Moscow's vow is genuine.
"I think it's clear that Russia is seeking a stronger position. How much actual meaning these steps will have remains to be seen, but there's a clear commitment on the part of the Putin government to strengthen its strategic ties with Central Asian countries and to impose a greater presence even. So they're working hard on various fronts to assert a new role for Russia and to make sure that Russia stays there and that that Russian presence is felt," Schoeberlein said.
Vatanka, the senior editor, also said Russia's commitments in Central Asia are real. "This is not just going to be about rhetoric and CIS-related treaties being signed when everybody knows it's going to be words on paper and no more," Vatanka said. "[Russia is saying:] 'We're going to make it a bit more concrete, we're actually going to show people that Russian involvement can result in economic generation.'"
No one doubted Russia would remain a player in Central Asia, but the Kremlin is now taking full advantage of unexpected revenues to replant its influence firmly on familiar territory.
Bruce Pannier is a correspondent in Prague specializing in Central Asia. He studied under the doyen of Central Asian studies in the US, Edward Allworth, and at Tashkent State University in 1990. He led a research project in rural areas of Central Asia for the University of Manchester in 1992-93. A frequent visitor to the region, he has a number of chapters on Central Asia in books and magazines.
Copyright (c) 2004, RFE/RL Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Washington, DC 20036
Is central to the War on Terror!!!
Russia's back because of Putin.
Ping
See the original post and then posts 9, 10 and 17 at the followng link re: "Russia Comes on Strong in Central Asia" (Russian and Red Chinese designs laid bare):
http://www.freerepublic.com/focus/f-news/1281826/posts
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