Reports that Russia is uncomfortable with the Shanghai Cooperation Organization (SCO) stepping into banking are nothing new. In particular, Moscow’s quiet efforts to block the creation of an SCO development bank that would funnel largely Chinese credit into Russia’s backyard have featured at the organization’s meetings in recent years.
But a thought-provoking analysis by Alexander Gabuev of the Carnegie Moscow Center, published last week by Russia in Global Affairs, suggests the Kremlin is mistaken, placing fears about appearing to be a junior partner over a sound geopolitical strategy that could give it a measure of control over China’s Central Asia policy.
The SCO – which groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan – has tried hard to convince the world it is more than just a club for dictators. China’s push to include economic initiatives on the SCO agenda was a part of this process, Gabuev notes, and a development bank has been on the table at SCO powwows since 2009.
Just days after Turkey's defense minister said that its new, controversial air defense system would not be integrated with NATO's, the president's spokesman openly contradicted him.
"As one of the most important countries in NATO's security line, we will definitely ensure this integration and harmony," said Ibrahim Kalin, spokesman for President Recep Tayyip Erdogan.
Kalin did not address the other recent plot twist in this long-running saga -- that Ankara's decision on whether to continue as planned with a Chinese system, or instead switch to a Western one, would be based on how the bidding countries mark the upcoming 100th anniversary of the Armenian genocide.
But his statement does -- again -- make it appear likely that Ankara will eventually reverse course and decide to go with a Western, NATO-compatible system. NATO officials have repeatedly argued that they could not integrate a Chinese system into their own for security purposes, and failing to integrate NATO's system would be a big handicap for Turkey. By not integrating with NATO "Turkey will lose half of its radar capabilities,” one unnamed defense analyst told Hurriyet Daily News.
Turkey analyst Aaron Stein notes that Defense Minister Ismet Yilmaz, whose remarks initially set all this off, may not know what he's talking about, and in any case the decision is not going to be made in the defense industry but in the presidential palace.
Turkey is reportedly linking its purchase a multi billion-dollar air-defense system to whether the bidder countries recognize the Armenian genocide.
That news, reported by a number of Turkish media, is the latest unexpected turn in the multi-year saga over the arms deal. The original bidders for the deal were companies representing the United States, Europe, China, and Russia, giving the program the air of a geopolitical litmus test. When Turkey announced that it planned to give the Chinese company the contract, it faced a barrage of pressure from its NATO allies who were concerned that linking that system with NATO air defense equipment already in Turkey could expose NATO secrets to China.
All along, Turkey has denied that there was any political subtext to its decision, saying that its choice of China was related solely to questions of price and the fact that China would hand over more of the technology to Turkey. Now, though, that appears to have changed. With the 100th anniversary of the Armenian genocide approaching in April, Ankara is reportedly waiting to see how the various bidders mark that event.
"Rumors in political circles in Ankara said that no decision will be made over the missile defense system winner before [April 24] since Turkey wants to first see France and the U.S.'s position on the 1915 incidents," reported the pro-government Daily Sabah. "An agreement may be made with China if the U.S. and French administrations take a 'pro-Armenian' stance."
A few weeks ago, Russia’s state-run Gazprom announced it would sharply and immediately cut the amount of gas it purchases from Turkmenistan. Now Turkmenistan’s authoritarian government has responded with a rare outburst. Unfortunately for Ashgabat, these days there’s not much it can do but screech.
Russia is an “unreliable partner,” a think-tank inside Turkmenistan’s own state energy company, Turkmengaz, said in a February 16 rant published on its website.
The article – “Will Gas Exports of Turkmen Gas to Russia Recover?” – criticizes Russia and Gazprom for all of the unhappiest moments in an up-and-down relationship that has seen deliveries of Turkmen gas to Russia drop from a peak of around 45 billion cubic meters per year (bcm) in 2008 to the 4 bcm the Russian giant says it will now import in 2015.
The piece expressed outrage at Gazprom’s failure to fulfill a 2008 agreement to build a Trans-Caspian pipeline and fingered Gazprom for an unexplained pipeline explosion in April 2009 that marked the beginning of the decline in its purchases.
Gazprom and its affiliates “periodically violate agreements at interstate, intergovernmental and interdepartmental levels,” the article notes.
HQ-9 air defense systems on parade in Beijing. (photo: Wikimedia Commons)
China has reportedly provided both Turkmenistan and Uzbekistan with sophisticated air defense systems, which would represent the largest Chinese military equipment deal thus far in Central Asia.
Reportedly, China has provided one battalion each to Turkmenistan and Uzbekistan of the HQ-9 air defense system, as partial payment for natural gas that it imports from Central Asia. (Each battalion consists of eight launchers.)
The information on the deal is spotty: it comes from Chinese-language Canadian defense journal Kanwa Defense Review, and cites an anonymous Chinese defense industry source. "It is possible, even likely, but it is still unclear at which stage the deals are," Vasily Kashin, a Russian military expert at the Center for Analysis of Strategies and Technologies told The Bug Pit. "Both countries need long range [surface-to-air missile] systems to replace their S-200s which are becoming physically old and unsustainable. Both countries are well known for their careful balancing between Russia, China and the West, they are both fiercely independent from Russia. Besides, Chinese currently can provide very good financial terms for such a deal."
Four months after announcing it would slash the amount of gas it buys from Turkmenistan and Uzbekistan, Russian energy behemoth Gazprom has revealed the extent which its imports from Central Asia will fall this year.
On February 3, Vice Chairman Alexander Medvedev told an investment summit in Hong Kong that this year Gazprom will import two-fifths of the 10 billion cubic meters (bcm) it imported from Turkmenistan in 2014; it will buy less than a quarter of the roughly 4.5 bcm it bought from Uzbekistan last year.
Medvedev said the decisions had the blessings of both Central Asian states, while boasting that his company came to the agreements from a position of strength.
“For Gazprom, thanks to investment in extraction and transport infrastructure, there is no technological necessity for the purchase of foreign gas,” Medvedev said in comments picked up by state-run RIA Novosti. “Gazprom is in the situation to guarantee both the domestic demand in any region of the Russian Federation, and the delivery of gas to our customers in Europe, and in the future, Asia, with our own resources.”
The announcement came just hours before Moscow said Foreign Minister Sergei Lavrov would make a rare stopover in Ashgabat.
A Chinese company that has had a string of bad luck in Kyrgyzstan is not getting much support from the country's investment-hungry government—or from Russia.
China’s state-controlled Junda China Petrol Company runs a troubled but potentially strategic oil refinery in northern Kyrgyzstan. The problem now is that Junda doesn’t have enough crude to fuel its $430 million plant. And the regional oil producers, Kazakhstan and Russia, are unwilling to help.
Last week Kyrgyzstan’s Vice Prime Minister Valery Dil called Junda's decision to build a refinery without planning for crude supplies “ridiculous,” in quotes picked up by 24.kg.
"To build a huge refinery and not know where to get the oil, that’s ridiculous,” Dil said.
Those are not exactly welcoming words for a large foreign benefactor already struggling to find reasons to keep investing in perennially troubled Kyrgyzstan. In its short history, Junda itself has faced environmental protests and labor disputes, which one lawmaker claims are backed by opposition politicians bent on using the facility as a weapon in a political confrontation with the government.
Dil also confirmed that Russia and Kazakhstan have refused to supply crude tax-free, though his colleague, Economy Minister Temir Sariev, recently had been hopeful that Kyrgyzstan’s membership in the Russia-led Eurasian Economic Union would help solve this problem.
Kazakhstani soldiers take part in exercises against "extremist, terrorist and separatist organizations." (photo: MoD Kazakhstan)
Kazakhstan's armed forces are carrying out exercises against "separatists," citing "geopolitical shifts" as the justification. But while the reference to separatists may make the Kremlin a bit uneasy, the scenario seems to be oriented toward Chinese separatists, rather than Ukrainian.
The exercise is being conducted from January 15-17 by land forces command staff. "According to the scenario of the joint staff training, groups from extremist, terrorist and separatist organizations, disguised as refugees, infiltrate the territory of a hypothetical government," according to a release from the Ministry of Defense. "During the course of the training the soldiers blocked and destroyed illegal armed formations and repelled the invasion."
The "relevance of the training" was the result of "contemporary geopolitical shifts," the MoD added. So what geopolitical shifts is Astana worried about?
The last line seems to point to a Ukraine scenario; as Ukrainian website depo.ua suggests, "ethnic Russians in Kazakhstan complain about 'oppression' and eagerly await the arrival of 'little green men' from Russia." While Kazakhstan has clearly been rattled by the events in Ukraine, and has undertaken serious efforts to shore up its statehood as a result, ethnic Russians are hardly begging for Moscow's intervention.
Iran, it seems, was calling Turkmenistan’s bluff earlier this summer when Tehran said it no longer needs gas from its northern neighbor. Now a top official says Tehran will keep buying.
That is good news for Turkmenistan, which is so dependent on its main gas customer, China, that it is starting to look like a client state.
Iran is committed to increasing its own domestic gas production to up to a billion cubic meters per day by 2017, a target one industry analyst thinks is possible but unlikely within such a tight timeframe. But supplying Iran’s northern regions with domestic gas is complicated by its lack of infrastructure. So, since 1997, Iran has bought gas from Turkmenistan to service its north, and sold its own gas abroad.
Deputy Oil Minister Hamid Reza Araqi said this week that his boss and Turkmen President Gurbanguly Berdymukhamedov had met in Ashgabat this month to hammer out a new purchase agreement. According to regional news agency AKIpress, the meeting happened November 7.
“The deal makes it possible to raise the amount imported from Turkmenistan in cold months of the winter; starting in the beginning of the current year, Turkmenistan has exported 24-25 million cubic meters of natural gas to Iran [daily],” said Araqi, in comments carried in English by Iran’s Mehr news agency on November 19.
The agreement contains a provision to increase this to 30 million cubic meters daily, he added.
Turkmenistan has the world’s fourth-largest natural gas reserves and exports billions of dollars worth of gas every year. But its copious reserves are apparently not enough to ensure a stable supply for residents of this isolated, totalitarian country.
Shortages in northern villages prompted a rare protest on October 28, reports the Chronicles of Turkmenistan, a news website run by exiles. Several dozen women blocked a highway to draw officials’ attention to the shortages, which come with the onset of autumn and are affecting residents’ ability to heat their homes and cook. The shortages, says Chronicles, have even hit Dashoguz, a town of about 200,000 people:
Residents have repeatedly called on gas providers [for help], but the latter complain that very little gas is being delivered; moreover, the pipes and equipment are very run-down, while specialists capable of maintaining all this in working order are simply nowhere to be found. The authorities are not providing either the funds or the pipes to repair gas mains.