As an air of economic despondency descends over Central Asia, Turkmenistan and Uzbekistan have decided to eat their way out crisis.
A government meeting in Turkmenistan on August 28 examined areas in which the country might be able to pursue an import substitution policy, which would mean banning imported goods in favor of locally produced equivalents.
Deputy prime minister Palvan Taganov said the bulk of imported goods was accounted for by technical industrial goods, but the state news agency report on the Cabinet discussion gave no details about what those mostly comprise.
Instead, more talk was seemingly devoted to the purportedly more promising area of food imports.
Import substitution was initially touted as Turkmenistan’s ticket out of economic doldrums in a government meeting in April, when President Gurbanguly Berdymukhamedov instructed officials to develop a program on the policy. He also used that meeting to complain of excess spending and the bloated state of the government.
But figures produced by Taganov indicate that if the import substitution agenda is to be applied mainly to food, its benefit will be virtually negligible, if not detrimental in the long term. The policy favors local producers in the immediate term, but typically ends up yielding poor returns to the consumer.
As Taganov explained in his presentation, food accounts for 6.1 percent of imports. The state news agency cited state on four goods and the proportion that the consumption of locally produced goods takes up in the domestic market: fruit juices - 96.9 percent; non-alcoholic drinks - 91.8 percent; tinned foods goods - 87.2 percent; and sausage goods - 61.8 percent.
Kazakhstan is poised to become part of the World Trade Organization (WTO) nearly two decades after it first applied to join. The Central Asian nation has completed entry talks that have been among the most “challenging” the global body has faced with any country.
Kazakhstan “finalized the negotiations of its WTO membership terms with WTO members at the Working Party meeting on Kazakhstan’s accession on 10 June,” the international trade body said in a statement issued the same day.
Farida Batyrbayeva, spokeswoman for Minister of Economic Integration Zhanar Aytzhanova, confirmed to EurasiaNet.org the completion of talks that started back in 1996.
Astana will not release details of the accession package until after a meeting in Geneva on June 22 at which the WTO’s 161 member states will consider formal approval of the draft accession package, Batyrbayeva added.
The WTO announcement came on the same day that the Agriculture Ministry had declined to put a date on Kazakhstan’s long-delayed accession, hinting at behind-the-scenes disagreements over agricultural subsidies.
The size of subsidies Kazakhstan would be permitted to retain for the agricultural sector – which contributes some 5 percent of GDP and employs around a quarter of the workforce – remained “unresolved,” as Kazakhstani negotiators tried to secure “the maximum possible domestic support,” the ministry told Tengri News on June 10, shortly before the WTO issued its statement on the completion of the accession talks.
Evidently, negotiators overcame the stumbling block to conclude the deal, which WTO Director-General Roberto Azevedo hailed as a “historic step.”
The accession talks with Kazakhstan were among “the most challenging negotiations” in the WTO’s 20-year history, the statement said.
For a landlocked country, Turkmenistan is getting into the seafaring spirit: Ashgabat’s new showpiece ferry Berkarar has been shuttling its way around the Caspian Sea – defined by geographers as an inland lake – making trips to both Azerbaijan and Russia so far this year.
The ferry was built in the Uljanik Shipyard in Pula, Croatia – which has produced ferries for the Caspian littoral states since communist times – and delivered to the reclusive Central Asian country in December. Ashgabat has also commissioned a second, smaller ship, Bagtiyar, which is scheduled to arrive this summer. They carry both freight and passengers.
Azerbaijani newswire Trend.az gushed about Berkarar’s latest voyage, from Turkmenbashi to the Azerbaijani capital: “The ferry impresses with its dimensions; it has a length of 155.8 meters, width of 17.5 meters, and height of 12.2 meters,” Trend reported on January 14.
Berkarar can carry “56 trucks loaded with 40-foot containers,” according to News Central Asia’s detailed report on the vessel.
So, provided there are enough goods to fill them, the ferries could help expand regional trade across the contested waters of the Caspian.
A Turkish company is currently modernizing Turkmenistan’s Turkmenbashi port, a commission that is expected to finish in 2017.
The presidents of Kazakhstan, Turkmenistan, and Iran have opened a long-anticipated railroad link connecting landlocked Central Asia to the Persian Gulf.
On the Turkmen-Iranian border, Gurbanguly Berdymukhamedov of Turkmenistan, Hassan Rouhani of Iran, and Nursultan Nazarbayev of Kazakhstan donned white gloves to bolt together a final section of track that was symbolically colored gold, the Associated Press reported, inaugurating the last stage of the freight link that they hope will herald a boom in trade between the three Caspian littoral states.
Highlighting those expectations, the first cargo to cross the border between Turkmenistan and Iran on December 3 was a wagonload of wheat from Kazakhstan.
The line – which carries only freight but may carry passengers later – has an initial capacity of 5 million tons per year, projected to rise to 12 million tons. Forecasts suggest the new line could triple trilateral trade in the short term from 3 million to 10 million tons, and double it again by 2020 to 20 million.
President Nursultan Nazarbayev is in Brussels putting the finishing touches to a landmark agreement with the European Union, cementing ties with Europe even as Astana pushes ahead to join the Russian-led Eurasian Economic Union.
Nazarbayev met Jose Manuel Barroso, president of the European Commission, on October 9, to “confirm the conclusion of negotiations” on the Enhanced Partnership and Cooperation Agreement, the EU said.
The agreement – three years in the making – aims to boost cooperation in around 30 policy areas including trade and foreign and security policy, it said, and will “significantly deepen political and economic ties” between Kazakhstan and the EU (Astana’s largest trade partner and a major consumer of its energy exports).
The agreement is a far weaker deal than the Association Agreement signed by Ukraine this year, but is still the most ambitious deal to be concluded between the EU and any Central Asian state.
It “puts a strong emphasis on democracy and the rule of law, human rights and fundamental freedoms,” the EU stated, although it failed to specify how.
The visit was marred by news that France is investigating possible kickbacks involving a helicopter deal with Kazakhstan, and probing allegations that Nazarbayev put indirect pressure on Brussels to close a bribery case against Kazakhstani oligarchs.
There was also controversy over Kazakhstan’s human rights record.
The idea of linking Turkmenistan, Afghanistan and Tajikistan by rail appears to have wheels once more, following reports earlier this year that the project was running short of steam.
Back in January, Turkmenistan went cold on the estimated $2 billion link, slated to be part financed by the Asian Development Bank. Ashgabat faulted Afghanistan and Tajikistan for not keeping the Turkmen leadership in the loop with regard to the route the railroad would follow. As EurasiaNet.org reported:
On January 29, the head of state-owned Tajik Railways, Amonullo Khukumatullo, announced that Dushanbe and Kabul had themselves decided on the route for the Afghan section of the rail. The announcement apparently caught Ashgabat by surprise because on January 31, the Turkmen Foreign Ministry protested that Khukumatullo’s declaration was "tendentious and absolutely unacceptable" and "counterproductive."
Two panels this month, one in Washington and the other in Istanbul, illustrate the broad gap in thinking on Central Asia between foreign policy leaders in Washington and mid-level practitioners more closely linked to the region.
"The US must take initiative to create a long-term strategy for the region. It should bring the New Silk Road to the region, because if we do not, others [Russia, China] will fill the void," Adib Farhadi, a visiting Afghan scholar at the Central Asia and Caucasus Institute (CACI) at Johns Hopkins University, said, summarizing the sentiments of his fellow panelists in Washington.
Just a few days earlier in Istanbul, however, one panelist derided Washington's New Silk Road concept – unveiled by then Secretary of State Hillary Clinton in mid-2011 – to widespread agreement: "The New Silk Road was a strategy, then an initiative, now I guess it is a vision. It should be called an illusion and ignored. It was created by outsiders without reference to what is going on in the region."
The Atlantic Council and CACI jointly hosted the Washington panel, entitled "The New Silk Road Project: A New Strategy for Afghanistan and Central-South Asia," on October 9. The previous week, the US Congress-chartered Hollings Center for International Dialogue gathered 30 policy experts and development practitioners from Central Asia, Afghanistan, Turkey and the West for a dialogue on "Central Asia's Regional Challenges." The Hollings Center event on October 3-5 was held under the Chatham House Rule, thus participants’ names have been withheld.
Uzbekistan is planning a rail link over a mountain pass that would link Tashkent directly to its territories in the Fergana Valley, bypassing the current line through Tajikistan, according to media reports.
Uzbekistan controls all of Tajikistan’s railway border crossings and often uses them as leverage over its poorer southeastern neighbor. It’s not unusual for Uzbekistan, trying to stymie Tajikistan’s plans to build a massive hydropower plant upstream, to cite “technical problems”, “terrorist sabotage”, or “weather delays” as reasons for extended closures at the border crossings.
Tajikistan maintains some leverage in these disputes thanks to the 70-mile stretch of the Fergana main line that crosses its territory. Uzbekistan’s Fergana Valley population of some 10 million relies on this line for its fuel supplies. Tajikistan also needs the line because factories and farms in Sughd Province and Khujand produce much of the country’s modest exportable goods base, including consumer items, processed foods, and clothing.
Thus, rail access for both countries is predicated on cooperation to keep the line open. An official from the Sughd Free Economic Zone once insisted to me that complications were overblown, and that Uzbekistan and Tajikistan “need each other.”
After 11 years of negotiations, Tajikistan is set to join the World Trade Organization (WTO) within the next few months.
President Emomali Rakhmon was in Geneva on Monday to sign a package of membership agreements that commit Dushanbe to opening its markets and standardizing import tariffs. Tajikistan’s rubberstamp parliament must ratify membership by June 7, 2013. The country will become a WTO member 30 days after ratification, making it the trade body’s 159th member.
“Today constitutes a landmark in Tajikistan's history and lays solid foundations for further promotion of sustainable social and economic growth,” Rakhmon said at the signing ceremony. “Tajikistan will use its WTO membership as a means of fostering future economic growth and prosperity.”
According to the WTO, Tajikistan ranks 143 globally in exports of goods (approximately $2 billion in 2010) and 140 ($2.7 billion) in imports, and trades primarily with China, the EU, Russia, other Central Asian countries, and Turkey.
In Dushanbe, one analyst affiliated with the president’s office hailed accession. By forcing Tajikistan to modernize its legislation, membership will help attract international investors, Saifullo Safarov, deputy director of the Center for Strategic Studies under the President, told Russia’s Nezavisimaya Gazeta.
But a Russian analyst said Dushanbe has sought membership out of its desire for prestige, rather than economic interests.
By shutting its border with Kyrgyzstan, Uzbekistan has imposed a “catastrophic” de facto embargo, stimulating a shadow economy in the beleaguered Central Asian state, say researchers at a Bishkek-based think tank.
The Central Asian Free Market Institute (CAFMI) found a 75 percent drop in trade at southern Kyrgyzstan’s largest market since Tashkent unilaterally closed the border following the upheaval that unseated the Kyrgyz president last April.
The closure has also pushed up food prices -- which have risen more in Kyrgyzstan this year than anywhere else according to the World Bank -- since Uzbekistan traditionally was a major supplier of fruits and vegetables to Kyrgyzstan.
But the 1100-kilometer border is open for smuggling, entrenching corruption as the arbiter of economic activity. In interviews with 109 illegal smugglers, the researchers found that many of them ferry cheap Chinese consumer goods to Uzbekistan and fruits and vegetables back to Kyrgyzstan, paying border officials bribes along the way. (At the prices they found, it’s not a stretch to imagine drugs, weapons and even militants are also getting across.)
Along the entire […] border there are illegal paths by which goods transit from Kyrgyzstan into Uzbekistan and vice versa. At the moment, traders are forced to pay bribes to border guards along paths that bypass the border. Payment to the border guards is 200 som [$4] for every person crossing and 300 som [$6] for goods weighing up to 80 kg. […]