As Russian President Vladimir Putin revealed this week during a visit from Uzbekistan’s President Islam Karimov to Moscow, Russia has lost its top trading partner status with the Central Asian nation for the first time since the fall of the Soviet Union.
Unsurprisingly, it was China that took that title in 2015 after it did $3 billion worth of trade with Uzbekistan. And that was even lower than in 2014, when the figure stood at $4.7 billion.
As Putin noted ruefully, the fall was down to the currency devaluation brought on by the slump in global prices for oil.
“Russia occupies the second place among external trade partners for Uzbekistan. Our share in Uzbekistan’s external trade is 17 percent,” Putin said on April 26, according to a Kremlin transcript.
It’s not all bad news for Moscow though. The volume of bilateral goods trade has actually increased in the first quarter of this year, by 7.9 percent.
According to Russia’s Federal Customs Service, Russia’s trade with Uzbekistan in 2015 hit $2.8 billion. Uzbekistan has a substantial trade deficit with Russia, importing $2.2 billion worth of goods, while exporting $602 million in 2015.
Uzbek political analyst Kamoliddin Rabimov said that although the nominal drop in trade was indeed down to the collapse of the ruble, the overall trend was unmistakeable.
“The scale of the trade turnover between China and Uzbekistan has become so big that we will see it, mostly likely, only continue to increase. Russia is gradually losing its economic presence in Central Asia to Russia, and that is notwithstanding the fact that countries in Central Asia have not entirely opened their doors to China,” Rabimov said.
The shift inevitably bears geopolitical significance as well.
Months after breaking off a long-standing deal with Russian companies to build two major hydropower projects, Kyrgyzstan has found a potential white knight in the form of a major Chinese investor.
Kyrgyzstan deputy Prime Minister Oleg Pankratov met with representatives of China’s State Power Investment Corporation on April 6 to discuss plan to build a cascade of four hydropower stations on the Naryn River. Collectively, the cascade is expected to generate around 4.6 billion kilowatt hours annually — more than either of the now-scotched Russian projects.
“We are carrying out work on a few projects to develop new generating capacities that will allow us, in the near future, to considerably increase the amount of power produced. This is of special importance, because energy consumption is growing every year that passes”, Pankratov was quoted as saying by KyrTag news agency.
An official for the state-owned electricity provider State Power Investment Corporation told Kyrgyz media that they have assessed the potential of the Central Asian nation’s hydropower potential and feel ready to begin work on building the 1,150 megawatt Kazarman hydropower cascade.
The terms of the deal are not yet known, however.
According to the company website, Beijing-based State Power Investment Corporation holds assets in hydropower, thermal and nuclear power and has registered capital of $7 billion and total assets worth $120 billion.
In January, Kyrgyzstan’s parliament voted overwhelmingly to cancel earlier hydropower construction deals with the Russian companies leading the projects, citing lack of progress in work.
In an apparent attempt to assuage Russian concerns, Chinese defense officials have clarified their intentions to create a military bloc along with Afghanistan, Pakistan, and Tajikistan. They emphasize that it is not to be a "Central Asian NATO" and would "complement" the efforts of the Shanghai Cooperation Organization, of which Russia is a member, rather than exclude Moscow.
The initiative in question was announced during a visit by General Fang Fenghui, the chief of general staff of the People's Liberation Army, during a visit to Kabul last month. Details have been scant, but the initiative was a surprising one given China's traditional deference to Russia in Central Asia security affairs. And Russian media have accused their Western counterparts of deliberately misconstruing the initiative in an effort to sow discord between the two giant neighbors.
"Western media outlets branded the suggestion as a 'Central Asian NATO' claiming to threaten Russia’s influence in the region," wrote the Russian state news agency Sputnik wrote.
Screenshot of Turkmenistan state television showing what appears to be a Chinese HQ-9 air defense system during military exercises.
Turkmenistan showed off its newly acquired Chinese air defense systems during military exercises, confirming for the first time that the country has gotten some significant weaponry from Beijing.
Last year, sketchy media reports suggested that Turkmenistan (and Uzbekistan) had acquired Chinese HQ-9 air defense systems, potentially marking the entrance of China into the Central Asia military market hitherto dominated by Russia.
Now Turkmnenistan has aired footage of what appears to be an HQ-9 in action during its large-scale, ongoing military exercises. The HQ-9 was spotted by the Russian military blog BPMD amid the state TV coverage, visible at about 4:10 in the video below (which is also worth watching for its footage of President Gurbanguly Berdymukhammedov at the controls of a number of military vehicles, including a helicopter).
"The Russian government may not be entirely happy, but probably cannot do anything about it," Russian military expert Vasiliy Kashin told The Bug Pit after last year's reports of China's HQ-9 exports to Central Asia. "Central Asian countries started to diversify their military-technical cooperation long ago, and China is one of natural choices."
Tajikistan President Emomali Rahmon meets General Fang Fenghui, chief of general staff of the People's Liberation Army, in Dushanbe in February. (photo: president.tj)
China's plans to create a new Central Asian security bloc have raised concerns in Moscow that Russia is declining geopolitically in Central Asia and may now be competing with China.
General Fang Fenghui, the chief of general staff of the People's Liberation Army, said on a visit to Kabul this month that China was proposing an anti-terror regional alliance consisting of Afghanistan, China, Pakistan, and Tajikistan. Almost no details about the grouping have been announced, but a spokesman for Afghanistan President Ashraf Ghani "said the Chinese military chief asked for Afghanistan's participation in the Chinese-proposed anti-terrorism mechanism with Pakistan and Tajikistan," VOA reported. "President Ghani has endorsed the proposal," the spokesman said.
China has been exploring a greater role in Afghan security; during Fang's visit he also promised $70 million in military aid to Afghanistan. But the fact that this proposed alliance would include Tajikistan, and exclude Russia, has raised alarm bells in Moscow. Russia has, until now, seen itself either as the primary security provider in Central Asia or, at times, a partner with China. But that may be changing.
A cargo train carrying a test shipment along the recently completed China-Kazakhstan-Turkmenistan-Iran railway is bearing in on its final destination in a landmark event for Eurasian trade.
State media in Turkmenistan reported that the train, which departed from the Chinese city of Yiwu, just south of Shanghai, at the end of January covered 7,908 kilometers over nine days, and crossed the border into Iran on February 10.
The entire railroad extends around 10,000 kilometers and requires two weeks to cover, which is estimated to be around twice as fast as the sea route.
“The cargo, loaded with all kinds of consumer goods, traversed the Turkmen section in 28 hours, instead of two days, as had been expected. This significant reduction in travel time translates into substantial savings on transportation costs and makes the route more cost-effective,” state news agency TDH reported.
The overall route could, as its proponents argue, radically increase the efficiency in the transportation of goods from China’s eastern seaboard to markets in the Persian Gulf.
A final link in the mammoth railroad was put into place in December 2014 when the presidents of Kazakhstan, Turkmenistan and Iran officially inaugurated a 930-kilometer line running from Ozen in western Kazakhstan through Turkmenistan to Gorgan in northwestern Iran. That sped up cargo transit between the countries by cutting 600 kilometers off the journey on the previously existing route from Beyneu in western Kazakhstan to Mashhad in northern Iran.
With international sanctions lifted, Iran is ready to become a full member of the Shanghai Cooperation Organization, senior Iranian officials said Monday.
Iran applied for full membership in the SCO in 2008, but has been blocked by rules in the organization's charter that forbid membership for any country under United Nations sanctions. Those sanctions were lifted on Saturday as a result of Tehran's compliance with its nuclear deal with world powers including the United States, China, and Russia.
The organization has been eager to get Iran on board. "The organization wishes success to Iran in the finalization of efforts related to the nuclear program so that the essential legal procedures leading up to the lifting of sanctions were implemented as soon as possible," said SCO Secretary General Dmitry Mezentsev last month. "I'd like to believe the SCO will take up Iran's request for the status of a full member immediately after that."
And with the sanctions lifted, Iranian officials said that among their priorities would be gaining full SCO membership.
"The lifting of sanctions opens for Iran the opportunity to become a member of the Shanghai Cooperation Organisation and eliminates other limitations, which the Islamic Republic has been facing in the regional foreign policy," Iranian Foreign Ministry spokesman Hossein Jaber Ansari told a press conference on Monday.
"For several years Iran has been an observer state in the SCO and is interested in strengthening that organization. The removal of sanctions creates new possibilities for acquiring full membership for Iran in the SCO," wrote Iran's ambassador to Moscow, Mehdi Sanai, on his blog.
Chinese soldiers at the opening ceremony of the SCO Peace Mission 2012 military exercises in Tajikistan. (photo: MoD, Russia)
China places a priority on Central Asia as a site for training its military to operate abroad, with nearly half of its military exercises abroad involving Central Asian and Russian militaries, a new U.S. government report has argued.
The analysis of China-Central Asia relations in the report, by the U.S.-China Economic and Security Review Commission, won't surprise too many close watchers of the region. It argues that Chinese activity in Central Asia is largely economic, that Chinese military activity there is relatively limited but growing, and that China's economic and security policy is oriented towards maintaining stability in the ethnically Uyghur and frequently restive province of Xinjiang, which borders Central Asia.
But there are a number of interesting observations in the report, which was based on interviews with experts and government officials from the U.S., China, Central Asian countries, and elsewhere.
For example, the priority that the Chinese military apparently places on Central Asia as a training ground. It notes that most of Beijing's security cooperation with Central Asia is conducted under the auspices of the Shaghai Cooperation Organization, which is dominated by China but also includes Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.
While the SCO military exercises had over the years seemed to be declining in importance, as the organization took on more of an economic role, the last major exercise, in 2014, was the organization's biggest in ten years. And SCO exercises play an outsized role in preparing the Chinese military to operate outside its borders, the report argues:
The long-running drama over Turkey's controversial decision to buy a Chinese missile system appears to have ended with a move to scrap the purchase altogether.
An unnamed Turkish official told Reuters on Sunday that the $3.4 billion program has been canceled. Daily Sabah, a pro-government newspaper, cited its own sources saying that Turkey would now pursue building the system by itself.
The program had been a geopolitical touchstone, with the original competition pitting four competitors from the U.S., Russia, China, and a European consortium. The announcement, in 2013, that Ankara was choosing the Chinese HQ-9 air defense system, set off a massive, twisting controversy. Ankara's original justification for choosing the Chinese system was that it was the cheapest, and also included the most generous offers of technology transfer, which would allow Turkey to acquire the blueprints for the system so that it could eventually build its own system.
But that decision angered Turkey's NATO partners, which objected that they couldn't integrate the Chinese system into NATO's larger air defense umbrella because it could compromise the security of NATO data. Many in China and Turkey complained that this was merely a pretext, and that Western governments were trying to bully Ankara into choosing a European system for commercial reasons.
Kazakhstan President Nursultan Nazarbayev meets with Chinese defense minister Chang Wanquan in Astana. (photo: akorda.kz)
China is giving new military aid to Kazakhstan and the two countries are planning joint special forces training, as Beijing slowly but steadily increases its military presence in Central Asia.
Chinese Defense Minister Chang Wanquan visited Astana on Monday and met with Kazakhstan President Nursultan Nazarbayev and Kazakhstani defense officials. There, Chang announced that China was donating some military trucks to Kazakhstan, according to Kazakhstan's Ministry of Defense.
Especially intriguing was the discussion of special forces training: "Training and exchange of experience in the sphere of combating asymmetric threats (training special forces units) is an important aspect of cooperation," the MoD announced. ("Asymmetric threats" is a military euphemism for unconventional warfare like terrorism and guerrillas.) "Kazakhstan is interested in organizing joint events on mountain training, training of military swimmers, actions in urban environments for special forces. In the near future joint tactical antiterror exercises are planned on the territory of China and Kazakhstan."
Kazakhstan has carried out these kinds of training exercises before with China, but it's almost always been within the framework of the Shanghai Cooperation Organization. These exercises appear to be purely bilateral.
The press release from Nazarbayev's office announced that ties with China are "at a new level of cooperation," and Chang laid on the praise for the president: "We consider you to be a great politician and strategist. You have made a great contribution to the formation and development of Kazakhstan, enjoying enormous authority among the population."