Trials and tribulations of Central Asia integration

Trials and tribulations of Central Asia integration

A man leads a horse on the Suu-Samyr plateau along the ancient Great Silk Road from Bishkek to Osh, some 200 km from Bishkek. Photo: Vyacheslav Oseledko / AFP

The pros and cons of being the Heartland in the 21st century

By PEPE ESCOBAR, NUR-SULTAN, KAZAKHSTAN

Trials and tribulations of Central Asia integration

Crossing Tajikistan from west to northeast – Dushanbe to the Tajik-Kyrgyz border – and then Kyrgyzstan from south to north all the way to Bishkek via Osh, is one of the most extraordinary road trips on earth. Not only this is prime Ancient Silk Road territory but now is being propelled as a significant stretch of the 21st century New Silk Roads.

In addition to its cultural, historical and anthropological pull, this road trip also lays bare some of the key issues related to the development of Central Asia. It was particularly enlightening to hit the road as previously, at the 5th Astana Club meeting in Nur-Sultan, Kazakhstan, I had had the pleasure of moderating a panel titled Central Asia at the Intersection of Global Interests: pros and cons of being Heartland.

The Heartland in the 21st century could not but be a major draw. Any serious analyst knows that Central Asia is the privileged corridor for both Europe and Asia at the heart of the New Silk Roads, as the Chinese-led BRI converges with the Russia-led Eurasian Economic Union (EAEU).

Banking experts such as Jacob Frenkel, chairman of JP Morgan Chase International, insist that the path towards inclusive growth in Central Asia entails access for financial services and financial tech; Nur-Sultan, incidentally, happens to be the only financial center within a 3,000-mile radius. Only a few years ago it was basically a potato field.

So it will be up to Kazakhs to capitalize on the financial ramifications of their independent, multi-vector foreign policy. After all, aware that his young nation was a “child of complicated history,” First President Nursultan Nazabayev from the beginning, in the early 1990s, wanted to prevent a Balkans scenario in Central Asia – as proposed as a sort of self-fulfilling prophecy by Zbigniew Brzezinski in The Grand Chessboard. Recently Kazakhstan mediated quite successfully between Turkey and Russia. And then there’s the Kazakh hosting of the Astana process, which quickly evolved as the privileged road map for the pacification of Syria.

A link or a bridge?

Frederick Starr, chairman of the Central Asia-Caucasus Institute in Washington, made a crucial point in the sidelines of our debate: the UN recently passed a unanimous resolution recognizing Central Asia as a world region. And yet, there is no structure for cooperation inside Central Asia. Tricky national border issues between the Amu Darya and the Syr Darya rivers may have been solved. There are very few pending questions between, for instance, the Uzbeks and the Kyrgyz. Most “Stans” are SCO members, some are EAEU members and all want to profit from BRI.

But as I later saw for myself on the road as I crossed Tajikistan and then Kyrgyzstan, tariff barriers still apply. Industrial cooperation is developing very slowly. Corruption is rife. Distrust against “foreigners” is inbred. And on top of it, the fallout of the US-China trade war affects mostly developing nations – such as the Central Asians. A solution, Starr argues, would be to boost the work of an established commission, and aim towards setting up a single market by 2025.

At the Nur-Sultan debate, my friend Bruno Macaes, former Minister for Europe in Portugal and author of the excellent The Dawn of Eurasia, argued that the thrust for the New Silk Roads remains sea transportation, and investment in ports. As Central Asia is landlocked, the emphasis should be on soft infrastructure. Kazakhstan is uniquely positioned to understand differences between trading bocks. Macaes argues that Nur-Sultan should aim to replicate the role of Singapore as a bridge.

Peter Burian, the EU Special Representative for Central Asia, chose to stress the positives: how Central Asia has managed to survive its new Heartland incarnation without conflict, and how it’s engaged in institutional building from scratch. The Baltics should be taken as an example. Burian insists the EU does not want to impose ready-made concepts, and would rather work as a link, not as a bridge. More EU economic presence in Central Asia means, in practice, an investment commitment of $1.2 billion in seven years, which may not amount to much but targets very specific, practical-minded projects.

Evgeny Vinokurov, chief economist of the Eurasian Fund for Stabilization and Development, touched on a real success story: the 15 day-only transportation/connectivity rail between China’s central provinces, Central Asia and the EU – now running at 400,000 cargo containers a year, and rising, and used by anyone from BMW to all manner of Chinese manufacturers. Over 10 million tons of merchandise a year is already moving West while six million tons are moving East. Vinokurov is adamant that the next step for Central Asia is to build industrial parks.

Svante Cornell, from the Institute for Security and Development Policy, emphasized a voluntary process, possibly with six nations (Afghanistan also included), and well-coordinated in practice (way beyond mere political integration). Models should be result-oriented ASEAN and Mercosur (presumably before Bolsonaro’s disruptive practices). Key issues involve facilitating smoother border crossings and for Central Asia to position itself as not just a corridor.

Essentially, Central Asia should think eastwards – in an SCO/ASEAN symbiosis, keeping in mind the role Singapore developed for itself as a global hub.

What about tech transfer?

As I saw for myself days later, when for instance, visiting the University of Central Asia in Khorog, in the Pamir Highway in Tajikistan, set up by the Aga Khan foundation, there is a serious drive across Central Asia to invest in universities and techno centers. In terms of Chinese investment, for instance, the Asia Infrastructure Investment Bank (AIIB) is financing hydropower in Kyrgyzstan. The EU is engaged in what it defines as a “trilateral project” – supporting education for Afghan women and universities in both Kazakhstan and Uzbekistan.

This may all be discussed and deepened in an upcoming, first-time-ever summit of Central Asian presidents. Not bad as a first step.

Arguably the most intriguing intervention in the debate in Nur-Sultan was by former Kyrgyz Prime Minister Djoomart Otorbaev. He remarked that the GDP of four “Stans,” excluding Kazakhstan, is still smaller than Singapore’s. He insisted the road map ahead is to unite – mostly geoeconomically. He emphasized that both Russia and China “are officially complementary” and that’s “great for us.” Now it’s time to invest in human capital and thus generate more demand.

But once again, the inescapable factor is always China. Otorbaev, referring to BRI, insisted, “you must offer to us the highest technological solutions.” I asked him point-blank whether he could name a project with inbuilt, top technological transfer to Kyrgyzstan. He answered, “I didn’t see any added value so far.” Beijing better go back to the drawing board – seriously.

The RCEP train left the station, and India, behind

The RCEP train left the station, and India, behind

Prime Minister of India Narendra Modi during the 16th ASEAN-India Summit in Nonthaburi, Thailand, on November 3, 2019. Photo: AFP / Anton Raharjo / Anadolu Agency

Biggest story at ASEAN was convergence of moves toward Asia integration, leaving Delhi out for now

ByPEPE ESCOBAR

A pan-Asia high-speed train has left the station – and India – behind. The Regional Comprehensive Economic Partnership (RCEP), which would have been the largest free trade deal in the world, was not signed in Bangkok. It will probably be signed next year in Vietnam, assuming New Delhi goes beyond what ASEAN, with diplomatic finesse barely concealing frustration, described as “outstanding issues, which remain unresolved.”

The partnership uniting 16 nations – the ASEAN 10 plus China, Japan, South Korea, Australia, New Zealand and, in theory, India – would have congregated 3.56 billion people and 29% of world trade.

Predictably, it was billed as the big story among the slew of high-profile meetings linked to the 35th ASEAN summit in Thailand, as RCEP de facto further integrates Asian economies with China just as the Trump administration is engaged in a full spectrum battle against everything from the Belt and Road Initiative to Made in China 2025.

It’s not hard to figure out where the “problem” lies.

Mahathir ‘disappointed’

Diplomats confirmed that New Delhi came up with a string of last-minute demands in Thailand, forcing many to work deep into the night with no success. Thailand’s Commerce Minister, Jurin Laksanawisit, tried to put on a brave face: “The negotiation last night was conclusive.”

It was not. Malaysian Prime Minister Mahathir Mohammad – whose facial expression in the family photo was priceless, as he shook hands with Aung San Suu Kyi on his left and nobody on his right – had already given away the game. “We’re very disappointed,” he said, adding: “One country is making demands we cannot accept.”

ASEAN, that elaborate monument to punctilious protocol and face-saving, insists the few outstanding issues “will be resolved by February 2020,” with the text of all 20 RCEP chapters complete “pending the resolution of one” member.

RCEP dwells across a large territory, covering trade in goods and services, investment, intellectual property and dispute resolution. The Indian “problem” is extremely complex. India in fact already has a free trade agreement with ASEAN.

New Delhi insists it is defending farmers, dairy owners, the services industry, sectors of the automobile industry – especially hybrid and electric cars, and very popular three-wheelers – and mostly small businesses all across the nation, which would be devastated by an augmented tsunami of Chinese merchandise.

Agriculture, textile, steel and mining interests in India are totally against RCEP.

Yet New Delhi never mentions quality Japanese or South Korean products. It’s all about China. New Delhi argues that signing what is widely interpreted as a free trade agreement with China would explode its already significant US$57 billion a year trade deficit.

The barely disguised secret is that India’s economy, as the historical record shows, is inherently protectionist. There’s no way a possible removal of agricultural tariffs protecting farmers would not provoke a social cataclysm.

Modi, who is not exactly a bold statesman with a global vision, is between a heavy rock and a very hard place. President Xi Jinping offered him a “100-year plan” for China-India partnership at their last informal, bilateral summit.

India is a fellow BRICS member, it’s part of the Russia-India-China troika that is actually at the center of BRICS and is also a member of the Shanghai Cooperation Organization.

Questions remain whether both players would be able to work that out before the Vietnam summit in 2020.

Putting it all together

India was only part of the story of the summit fest in Thailand. At the important East Asia Summit, everyone was actively discussing multiple paths towards multilateralism.

The Trump administration is touting what it calls the Free and Open Indo-Pacific Strategy – which is yet another de facto China containment strategy, congregating the US, India, Japan and Australia. Indo-Pacific is very much on Modi’s mind. The problem is “Indo-Pacific,” as the US conceives of it, and RCEP are incompatible.

ASEAN, instead, came up with its own strategy: ASEAN Outlook on the Indo-Pacific (AOIP) – which incorporates all the usual transparency, good governance, sustainable development and rules-based tenets plus details on connectivity and maritime disputes.

All the ASEAN 10 are behind AOIP, which is, in fact, an original Indonesian idea. It’s fascinating to know that Bangkok and Jakarta worked together behind closed doors for no fewer than 18 months to reach a full consensus among the ASEAN 10.

South Korea’s Moon Jae-in jumped in extolling the merits of his Southern Policy, which is essentially northeast-southeast Asia integration. And don’t forget Russia.

At the ASEAN business and investment summit, Russian Prime Minister Dmitry Medvedev put it all together; the blossoming of the Greater Eurasian Partnership, uniting the Eurasia Economic Union, ASEAN and Shanghai Cooperation Organization, not to mention, in his words, “other possible structures,” which is code for Belt and Road.

Belt and Road is powerfully advancing its links to RCEP, Eurasia Economic Union and even South America’s Mercosur – when Brazil finally kicks Jair Bolsonaro out of power.

Medvedev noted that this merging of interests was unanimously supported at the Russia-ASEAN summit in Sochi in 2016. Vietnam and Singapore have already clinched free trade deals with Eurasia Economic Union, and Cambodia, Thailand, Indonesia are on their way.

Medvedev also noted that a trade and economic cooperation deal between China and Eurasia Economic Union was signed in late October. Next is India, and a preferential trade agreement between the union and Iran has also been signed.

In Thailand, the Chinese delegation did not directly address the United States’ Free and Open Indo-Pacific strategy. But Medvedev did, forcefully: “We are in favor of maintaining the effective system of state-to-state relations which was formed on the basis of ASEAN and has shown a good track record over the years.

“In this regard, we believe the US initiative is a serious challenge for ASEAN countries, since it can weaken the association’s position and strip it of its status as a key player in addressing regional security problems.”

Summits come and go. But what just happened in Thailand will remain as another graphic illustration of myriad, concerted moves leading towards progressive, irreversible Asia – and Eurasia – integration. It’s up to Modi to decide when and if to hop on the train.

Pepe Escobar on Al-Mayadeen

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