China’s Periphery Part II – Inner Asia

Tony Kellett Defence Scientist Emeritus

The reported results, their interpretation, and any opinions expressed herein, remain those of the author and do not represent, or otherwise reflect, any official position of DND or the Government of Canada.

DRDC CORA TM 2012-009 January 2012

Defence R&D Canada Centre for Operational Research and Analysis

China Team Sponsor: Strategic Joint Staff

National Défense Defence nationale

China's Periphery Part II - Inner Asia

Tony Kellett Defence Scientist Emeritus

The reported results, their interpretation, and any opinions expressed herein, remain those of the author and do not represent, or otherwise reflect, any official position of DND or the Government of Canada.

Defence R&D Canada – CORA Technical Memorandum DRDC CORA TM 2012-009 January 2012

Principal Author

Original signed by Tony Kellett Tony Kellett Defence Scientist Emeritus

Approved by

Original signed by Gregory Smolynec, Ph.D. Gregory Smolynec, Ph.D. Section Head Strategic Analysis

Approved for release by

Original signed by Paul Comeau Paul Comeau Chief Scientist

This paper has been produced under Thrust 10a as part of the China/Asia ARP. It does not contain controlled goods.

Defence R&D Canada – Centre for Operational Research and Analysis (CORA)

© Her Majesty the Queen in Right of Canada, as represented by the Minister of National Defence, 2012 © Sa Majesté la Reine (en droit du Canada), telle que représentée par le ministre de la Défense nationale, 2012

Abstract ……..

This study forms part of the broader investigation of China’s re-emergence as a key great power and its impact on regional and global security, with a view to exploring the potential implications of developments around China’s periphery for Canada and its key alliance relationships. This report examines all the states that constitute Inner Asia (the five Central Asia countries, Russia – particularly its eastern part bordering China – and Mongolia) in the context of their relations with China. Particular emphasis is placed on issues relating to energy and security and to the potential geopolitical competition between Russia and China.

Résumé ….....

Le présent rapport s’inscrit dans le cadre d’une vaste étude sur la réémergence de la Chine en tant que grande puissance et sur les répercussions de cet essor sur la sécurité régionale et mondiale. L’étude a notamment pour visée d’explorer les effets potentiels de l’évolution des pays voisins de la Chine sur le Canada et ses principales alliances. Dans le présent document, nous examinons les États qui forment l’Asie intérieure (les cinq pays de l’Asie centrale, la Russie – en particulier la partie est du pays qui borde la Chine – et la Mongolie) dans le contexte de leurs relations avec la Chine. Nous accordons une attention particulière aux questions d’énergie et de sécurité et à la concurrence géopolitique qui pourrait s’installer entre la Russie et la Chine.

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Executive summary

China's Periphery: Part II - Inner Asia Tony Kellett; DRDC CORA TM 2012-009; Defence R&D Canada – CORA; January 2012.

Background:

This study forms part of the broader investigation of China’s re-emergence as a key great power and its impact on regional and global security, with a view to exploring the potential implications of developments around China’s periphery for Canada and its key alliance relationships. The present report examines all the states that constitute Inner Asia (the five Central Asia countries, Russia – particularly its eastern part bordering China – and Mongolia) in the context of their relations with China. Particular emphasis is placed on issues relating to energy and security and to the potential geopolitical competition between Russia and China.

In August 2010, China’s economy overtook that of Japan to become the second largest in the world, and the IMF now forecasts that in terms of purchasing power parity it could overtake the US perhaps as soon as 2016. As China acquires the economic, military and political sinews of a Great Power, so it is developing the ambition for global stature. There have been signs of a growing assertiveness in China’s foreign policy. Recent actions suggest that Beijing may have departed from the policy of reassurance it adopted in the 1990s, and have revised its grand strategy to reflect its own rise and the decline of the US. However, confidence and assertion abroad seems to be mixed with insecurity at home, with the Chinese authorities appearing to be more nervous now about maintaining social stability and long-term regime legitimacy than at any time since 1989.

A number of factors influence China’s relations with Inner Asia. China has historically pursued a policy of “engaging the periphery,” focusing on its borders and its immediate neighbours as a way of protecting the heartland. Beijing very much associates its core domestic security concerns – the “three evils” (terrorism, separatism and religious extremism) – with what goes on around its periphery. In particular, Beijing sees Xinjiang as a key forward defence and equally a gateway into Central Asia. Eight of China’s international borders lie in Xinjiang, giving it immense strategic importance to China, and the region epitomizes some of Beijing’s security concerns, having been rocked by Islamist uprisings, violent disturbances and bombings over the past two decades. China also worries, to a lesser degree, about Inner Mongolia, a resource-rich region whose restive minority Beijing fears could find support over the border in independent Mongolia. In these circumstances, Beijing is pursuing a vigorous policy to develop its border regions, along with an effort to deepen its relations with neighbours in Central Asia and Mongolia. Thus, the Inner Asian neighbours assume considerable significance for China’s domestic security.

Their importance to China’s security is reinforced by the role that Beijing increasingly sees them playing in the Chinese economy. Historically, the Chinese state did not rely on external sources of raw materials, commodities or know-how to survive and prosper. China’s rapid economic

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development has ensured that this relative independence no longer pertains, and this is particularly the case where it comes to energy, without which China’s modernization and geopolitical rise would be severely undermined, along with the survival of the Communist Party. It is expected that by 2035 China will be importing about 72 percent of the crude oil it consumes, and the government anticipates greatly boosting the share of natural gas in total energy consumption. Inner Asia is in a strong position to satisfy this energy appetite.

Results:

Russia. Russia is by far the most powerful of the Inner Asian countries, and the degree to which it cooperates or competes with Beijing has a great bearing on China’s rise. The two countries have reversed their national power standings over the past two decades, but even a weakened Russia remains in many ways a formidable power. Russia’s leaders have realized that their country’s energy riches give it considerable leverage in world politics. Russia has a strong sense of strategic entitlement which grates on the Chinese, and Moscow insists on its status as a Great Power.

Russia has always relied on military capability to assert that claim. However, Russia’s conventional strength is greatly reduced, forcing it to rely more for its military clout on its formidable nuclear arsenal, but it does have the capacity for effective power projection in Central Asia, unlike China. Senior Russian officers are ambivalent about China, which has been viewed as both a future military threat and a market for Russian weapons, the proceeds from which have enabled a modest re-equipment of the Russian armed forces. Twenty years ago China lagged Russia in military capability by a wide margin, but has now virtually caught up with its neighbour.

Formally and informally the two countries have been neighbours for many centuries, but at no stage of their common history has there been a period of unalloyed good relations. They now share the fifth-longest border in the world, but it has been shaped geographically and psychologically by a series of “unequal treaties” in the 19th century that deprived China of some 1.5 million km2 of territory. For China, the Russian Far East and Taiwan represent the last “unreturned territory” taken from China. Not surprisingly, Russian leaders have expressed real worry about China’s future plans and ability to dominate the Russian Far East, a major part of the “unreturned territory” and an important factor in Sino-Russian relations. Russian residents of the region fret that they will be swamped demographically and economically by China, and the issue of “illegal migration” roils nationalist opinion there.

Only forty years ago Russia and China were implacable enemies, but now relations may well be better than at any other time in their mutual history, although neither country constitutes the other’s most important bilateral relationship. Moscow’s approach to the relationship has emphasized security concerns, whereas Beijing has focused more on the economic aspects of the association. In 2010 Russia ranked only eighth among China’s trade partners. As a result of Beijing’s conflation of economic growth and domestic stability, energy has become a major dimension of the Sino-Russian relationship. However, the extent of the energy partnership falls well short of its potential, largely because the necessary infrastructure has been slow to develop, with Russia more focused on its European markets. In addition, Beijing wants to avoid over- dependence on Russia as an energy supplier.

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Russia and China share similar perceptions of a substantial non-state security challenge, concerns that intersect in Central Asia. Of the eleven “main external military dangers” identified in Russia’s latest military doctrine, seven relate to neighbouring states, and almost all of those have non-state components. With a population of over 20 million Muslims, Russia is alert to the jihadist threat, a vigilance that was greatly heightened by the war in Chechnya and the conflict in the North Caucasus. This concern parallels Beijing’s worry over the restive Uighur population of Xinjiang. In both cases, the Islamist threat seems less immediate that it did a decade ago, but periodic incidents keep the “three evils” high on the agenda of both countries.

Central Asia. The collapse of the Soviet Union threw Central Asia into a period of transition, and in the two decades since, Central Asia has re-emerged as the centre of geopolitical tension that it was in the 19th century. Contemporary Central Asia is characterized by high levels of instability, at the root of which is poor governance, dismal economic performance and corruption. All the regional states, with the possible exception of Kazakhstan, have serious political, social and economic problems, and a recent assessment of the region concluded that the downward spiral evident in all but Kazakhstan is unlikely to stop. Political integration and cooperation among the five states are conspicuously absent. The ruling regimes have relied on repression to mask public discontent, but twice failed to hold the lid down in Kyrgyzstan, in 2005 and 2010.

There is a perception that Central Asia is an energy El Dorado that can significantly contribute to meeting China’s voracious appetite for energy. However, the energy reserves of Central Asia and the Caspian, while not negligible, are modest compared to estimates that were made in the early to mid-1990s. Combined, in 2010 the three leading Central Asian oil producers (Kazakhstan, Turkmenistan and Uzbekistan) produced 2.5 percent of global output, about half of China’s production and one-fifth of Russia’s. With regard to natural gas, in 2010 the three countries produced 4.2 percent of total global output. China produced 3.0 percent and Russia 18.4 percent.

Russia may be highly dependent on natural gas from Central Asia to meet its commitments to its European customers, but Moscow’s domination of the energy infrastructure in the post-Soviet space has had the effect of significantly constraining the Central Asian states’ foreign policy autonomy. The construction of oil and gas pipelines to China, along with rising global energy prices, have played a key role in ending Moscow’s energy stranglehold and at the same time enhanced the economic and political independence of the Central Asian producers.

Attempts at creating a unified economic space in Central Asia have sputtered. The reality is that the great majority of commodities traded by Central Asian countries are directed at external markets beyond Central Asia, and intra-regional trade is very slight. The lofty goals of the various economic groupings set up in the region are further hampered by inadequate infrastructure and institutions within most of the member states. China has tried, without success, to establish a free trade zone in the area covered by the Shanghai Cooperation Organization (SCO) – all of Central Asia except Turkmenistan, Russia and China. Russia and the Central Asian members are unenthusiastic about removing trade barriers, fearing that the regional economies would become “China-dependent” to an uncomfortable degree.

The religious tradition in Central Asia is generally a moderate one, and the level of support for radical religious philosophies in Central Asia has been described as “abysmally low.” Nonetheless, regional governments use the spectre of Islamist groups to bolster their own internal legitimacy, as well as to strengthen security relations with Russia, China, the EU and the US.

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Nevertheless, there have been manifestations of Islamic extremism in the region since independence. The Fergana Valley, which straddles Kyrgyzstan, Tajikistan and Uzbekistan has historically been a centre of unrest and of religious extremism, and was the birthplace of the al- Qaida linked Islamic Movement of Uzbekistan (IMU). When the Uzbek government violently crushed a protest in the valley city of Andijan in May 2005, it gave a great boost to IMU recruiting. The IMU is said to be active along the Afghan-Tajik border, and there have been reports from both Afghanistan and Tajikistan that a small but steady flow of fighters have been crossing their joint border and heading north. Observers worry that the disappearance of basic services in most Central Asian countries will provide Islamic radicals with further ammunition against regional leaders. From the perspective of extra-regional states, particularly Russia and China, the fact that Uzbekistan is the only Central Asian country to border all the others, and has a history of religious extremist activity, is worrisome, since militancy and instability there could quickly spread.

Water scarcity is a problem that has the potential to undermine regional peace and security, and has already led to confrontations between water-rich countries (Kyrgyzstan and Tajikistan) and the other, water-starved, Central Asian states, notably Uzbekistan.

Ten years ago the idea that Central Asia would become a major focus for the interaction of Russian and Chinese interests would have seemed unlikely. The rise of non-state threats, increasing awareness of Central Asia’s natural resources, and the potential for regime change in the region all combined to confer a new strategic focus on Central Asia. As the region attracts increased outside attention, the questions arise as to how far the interests of the two giants on the edge of the region will converge or diverge.

The security establishment in both China and Russia share similar perceptions of a substantial non-state threat in Central Asia, and as a result, Beijing has been quite comfortable with a Russian military presence there. The 9/11 events had important repercussions for security in Central Asia, by bringing NATO forces into the region for the first time and by reviving the sense of threat among regional states regarding Islamic extremism. Initially, Russia was supportive of the Coalition effort and of Central Asia’s logistical support to it. Beijing was unhappy with this stance, regarding the US presence in the region as part of a strategy to “contain” China. However, after a couple of years Russia began to fear an open-ended American presence in Central Asia, and started to work towards its reduction, thus converging with China’s position.

As both China and Russia increase their geopolitical and economic presence in Central Asia, their interests become more vulnerable to possible “people power” outbreaks on the Kyrgyz model. After Andijan in 2005, China and Russia were quick to support the Uzbek regime against Western criticism, and to exploit the situation to secure the expulsion of US personnel from their base in Uzbekistan. However, some regional states welcome an American footprint in the region, to provide some balance, however small, against Russia and China. Thus, Moscow and Beijing have to accept the presence of US forces, at least as long as the US remains in Afghanistan.

Some of the developments of recent years may corrode Russian ascendancy in Central Asia. The energy export routes are no longer exclusively in Russia’s hands, and China’s share of Central Asian trade has probably overtaken Russia’s. As Central Asian suppliers start to move energy east in greater quantities, the producers will be able to pit the consumers against each other, generating higher returns and reinforcing Sino-Russian competition. Beijing’s energetic promotion of cross- vi DRDC CORA TM 2012-009

border infrastructure means that markets in Central Asia that used to be inaccessible to China are now directly connected to its rapidly growing economy.

The inherent tension in Sino-Russian relations with regard to energy is less evident where geopolitics and security are concerned. In the circumstances of a region rich in energy, weak in security, with ever-deteriorating governance, and surrounded for most of its land borders by two strong powers, it has been perhaps surprising that the record of the past two decades has been one more of cooperation than competition between those two powers. However, both Russia and China have strategic compulsions in common in Central Asia – notably maintaining political stability, countering militancy in whatever form it takes, and extruding the American presence as early as can safely be achieved.

Mongolia. Mongolia is unique in Inner Asia in having only two neighbours – Russia and China – and being politically free. Mongolia suddenly finds itself awash in mineral wealth, but its economy is heavily influenced by its neighbours. It purchases nearly all of its petroleum products from Russia, while it acquires machinery, consumer goods, food products, and so on from China. Nevertheless, the Mongolian government is clearly willing to pay a very hefty price for economic independence, selecting an export route by rail to Russia for coal from its largest mine when international financial institutions advised it that the better route, economically, was south to China.

Mongolia’s successful adaptation to democracy, and the country’s tradition of non-violence, suggests that it is less likely than most countries in Inner Asia to be afflicted with political instability and disorder.

For 70 years before 1991, Mongolia was a client state of the Soviet Union, but Russia’s position in the country is now markedly weaker than that of China. Russian investment in Mongolia has basically stopped, and its share of Mongolia’s trade is relatively small. In contrast, China has been Mongolia’s top trade partner since 1998, as well as its largest source of foreign investment. China is developing infrastructure on its side of the border that will inexorably draw the southern region of Mongolia into China’s orbit, enabling Beijing to tap the country’s vast natural resources. These developments have provoked a backlash against China among a nationalist minority. Mongolia has tried to balance against the overwhelming presence of its immediate neighbours by reaching out to the West, and especially to the US. And just as it did in Central Asia, Beijing has reacted to these feelers with the suspicion that they are all part of an American effort to contain China.

Significance:

The Canadian Forces became deeply involved in Afghanistan in large measure to protect Canadians from terrorist attack. The base that al-Qaida exploited to mount 9/11 has now transferred to Pakistan’s tribal areas, and after the end of the ISAF mission it could be resurrected in Afghanistan and initiated in Central Asia. However, the Turkic ethnicity of most of the militants who might base themselves in Central Asia suggests that any Western target they select is more likely to be in Europe than in Canada.

Militant attacks on NATO supply routes across Pakistan have led NATO gradually to abandon those and increasingly to send supplies via the Northern Distribution Network (NDN), via Russia

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and Central Asia. As militant groups, such as the IMU, grow in strength along the border between Afghanistan and Central Asia, they might be tempted to copy the strategy that worked in Pakistan, and attack ISAF’s lines of communication in Central Asia (and especially Uzbekistan). Attacks on NATO’s logistics chain in Central Asia are relevant to Canada mainly insofar as they affect our allies, since Canada has arranged with Kuwait to provide logistical support to the new training mission in Afghanistan.

As a trading nation, Canada has a strong commercial interest in China but a considerably lesser one in Inner Asia. Canada’s total trade with the seven countries of Inner Asia combined was $5.4 billion in 2010, or just 0.06 percent of Canada’s global trade. Canada does have some important investment interests in the region, notably in the Russian Far East, Kazakhstan and Mongolia, but they are in the more stable parts of Inner Asia. Thus, they should not be greatly at risk from turmoil, although they may be affected by geopolitical manœuvring, both internally (Mongolia) and regionally (Russia-China).

Canada’s large immigrant population ensures that turmoil anywhere in the world will have personal and economic repercussions for residents of the country. However, the numbers from Inner Asia are quite small, which suggests that instability in the region will have limited impact here. One group of Canadian residents that will unquestionably be affected by events in China and Inner Asia will be the Uighurs living in this country. But they are thought to number only about 1,000, which will limit the impression left on Canada by events in Inner Asia.

On the whole, developments in Inner Asia, and their interplay with the rise of China, seem likely to have a relatively limited impact on Canada. Perhaps the more significant implications for Canada would include the potential threat to ISAF’s strategic rear in Central Asia and for Canadian investment in Inner Asia as a whole, but neither of these concerns seems likely to eventuate for a quite considerable period. The potential impact on Canadian commerce and on groups within Canada from developments in the region seems likely to be quite low. So too, probably, would be the terrorist threat emanating from Inner Asia.

Conclusions:

By virtue of its energy wealth and instability, Central Asia has re-emerged as a centre of geopolitical tension. Beijing needs its oil and gas to sustain China’s economic growth and the Communist Party’s hold on power, and it seeks to avoid importing the region’s potential for subversion. It competes with its main regional rival, Russia, for the former, but generally cooperates with it on the latter. However, Beijing’s rapidly increasing profile in Inner Asia – which has so far been almost entirely economic in form – may ultimately provoke resentment in the largely Muslim region.

It is noteworthy that the two most independent states in the region – Turkmenistan and Uzbekistan – border neither Russia nor China, which does suggest that geography imposes some limits on the ability of the two major powers to influence events in the region.

For the medium-term developments in Inner Asia, and their interplay with the rise of China, seem likely to have relatively limited implications for Canada.

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Sommaire .....

China's Periphery: Part II - Inner Asia Tony Kellett; DRDC CORA TM 2012-009; R & D pour la défense Canada – CORA; Janvier 2012.

Contexte

Le présent rapport s’inscrit dans le cadre d’une vaste étude sur la réémergence de la Chine en tant que grande puissance et sur les répercussions de cet essor sur la sécurité régionale et mondiale. L’étude a notamment pour visée d’explorer les effets potentiels de l’évolution des pays voisins de la Chine sur le Canada et ses principales alliances. Dans le présent document, nous examinons les États qui forment l’Asie intérieure (les cinq pays de l’Asie centrale, la Russie – en particulier la partie est du pays qui borde la Chine – et la Mongolie) dans le contexte de leurs relations avec la Chine. Nous accordons une attention particulière aux questions d’énergie et de sécurité et à la concurrence géopolitique qui pourrait s’installer entre la Russie et la Chine.

En août 2010, l’économie de la Chine a pris le pas sur celle du Japon et est ainsi devenue la deuxième économie mondiale. Le FMI prévoit maintenant qu’en parité des pouvoirs d’achat, la Chine pourrait dépasser les États-Unis dès 2016. La Chine acquiert peu à peu l’influence économique, militaire et politique d’une grande puissance, nourrissant ainsi son ambition de devenir un acteur clé sur la scène mondiale. Certains signes révèlent une volonté d’affirmation toujours plus grande dans la politique étrangère de la Chine. Les récentes actions des autorités chinoises portent à croire qu’elles ont délaissé la politique rassurante adoptée dans les années 1990 et qu’elles ont revu leur stratégie totale pour tenir compte de l’essor de leur propre pays et du déclin des États-Unis. Toutefois, cette confiance et cette volonté d’affirmation par rapport au reste du monde semblent s’accompagner d’un sentiment d’insécurité sur le territoire intérieur. En effet, les autorités chinoises paraissent plus inquiètes qu’elles ne l’ont jamais été depuis 1989 à l’égard du maintien de la stabilité sociale et de la légitimité du régime à long terme.

Un certain nombre de facteurs influent sur les relations que la Chine entretient avec l’Asie intérieure. La Chine a toujours eu pour politique de tendre la main à ses voisins, voyant dans ses frontières et ses voisins immédiats un moyen de protéger le centre du pays. Beijing fait une association très étroite entre ses principales préoccupations en matière de sécurité nationale – les « trois forces du mal » : le terrorisme, le séparatisme et l’extrémisme religieux – et ce qui se passe en périphérie du pays. En particulier, Beijing considère que le Xinjiang est à la fois un lieu clé de défense avancée et une porte d’entrée en Asie centrale. Parmi les frontières de la Chine, huit touchent le Xinjiang, ce qui confère à cette région une importance stratégique immense. La situation du Xinjiang est représentative de certaines des inquiétudes en matière de sécurité qui rongent Beijing : au cours des deux dernières décennies, la région a été secouée par des soulèvements islamistes, de violentes perturbations et des bombardements. La Chine est également préoccupée, dans une moindre mesure toutefois, par la Mongolie intérieure. Le gouvernement de la Chine craint que la minorité rebelle de cette région riche en ressources puisse trouver un appui à la frontière avec la Mongolie indépendante. Compte tenu de cette situation, Beijing poursuit une politique énergique visant à développer les régions situées à la frontière et à

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approfondir ses relations avec ses voisins de l’Asie centrale et la Mongolie. Ainsi, du point de vue de la sécurité nationale, l’importance des États voisins de la Chine en Asie intérieure est considérable.

L’importance de ces pays pour la sécurité de la Chine est accentuée par le rôle de plus en plus grand qu’ils jouent au sein de l’économie chinoise selon la perception de Beijing. Dans le passé, la Chine n’a jamais compté sur des sources extérieures de matières premières, de marchandises ou de savoir-faire pour assurer sa survie et sa prospérité. En raison de l’expansion économique rapide de la Chine, cette relative indépendance ne tient plus aujourd’hui, en particulier pour ce qui est de l’énergie, sans laquelle la modernisation et l’essor géopolitique de la Chine seraient sérieusement menacés, tout comme la survie du Parti communiste. Selon les prévisions, la Chine importera en 2035 environ 72 p. 100 du pétrole brut qu’elle consomme, et le gouvernement entend accroître considérablement la part du gaz naturel dans la consommation totale d’énergie. L’Asie intérieure est en très bonne position pour combler ces besoins énergétiques.

Résultats

Russie. La Russie est de loin la plus puissante nation de l’Asie intérieure, et l’intensité avec laquelle elle coopère avec la Chine ou lui livre concurrence a une grande incidence sur l’essor de l’économie chinoise. Au cours des deux dernières décennies, la Chine et la Russie ont permuté leurs rangs au classement des puissances nationales, mais même si la Russie s’est affaiblie, elle demeure une grande puissance à de nombreux égards. Les autorités russes ont pris conscience du pouvoir considérable qu’elles ont sur la scène politique mondiale grâce aux richesses énergétiques de leur pays. La Russie croit fermement que tout lui est dû – une attitude stratégique qui irrite les Chinois – et elle tient à son statut de grande puissance.

La Russie a toujours revendiqué ce statut en faisant valoir sa capacité militaire. Toutefois, la Russie est beaucoup moins puissante qu’elle ne l’était autrefois, et le pays doit désormais miser sur son imposant arsenal nucléaire pour asseoir son influence militaire. Néanmoins, contrairement à la Chine, la Russie a la capacité de réaliser des missions de projection de puissance efficaces en Asie centrale. Les hauts fonctionnaires russes sont ambivalents à l’égard de la Chine : ils voient ce pays à la fois comme une menace future sur le plan militaire et comme un marché pour les armes russes, les profits tirés de la vente d’armes ayant permis aux forces armées de la Russie de se rééquiper modestement. Il y a vingt ans, la Chine accusait un important retard par rapport à la Russie sur le plan de la capacité militaire, mais elle a maintenant pratiquement rattrapé sa voisine.

De manière formelle et informelle, les deux pays sont voisins depuis des siècles, mais leur relation n’a jamais été en tous points harmonieuse. La frontière sino-russe est aujourd’hui la cinquième du monde de par sa longueur, mais elle a été façonnée géographiquement et psychologiquement par une série de « traités inéquitables » qui ont privé la Chine de quelque 1,5 million de km2 de territoire au 19e siècle. L’Extrême-Orient russe et Taïwan constituent les deux derniers territoires que la Chine n’est pas parvenue à se réapproprier. Évidemment, les autorités russes ont exprimé de réelles inquiétudes à l’égard des projets futurs de la Chine et de sa capacité à dominer l’Extrême-Orient russe, une portion importante du territoire perdu et un déterminant important des relations sino-russes. Les Russes qui habitent la région craignent d’être assimilés démographiquement et économiquement par la Chine, et la question de la « migration clandestine » inquiète les nationalistes.

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Il y a à peine quarante ans, la Russie et la Chine étaient des ennemies implacables, mais aujourd’hui, leurs relations sont probablement meilleures que jamais, quoiqu’il ne s’agisse ni pour la Russie ni pour la Chine de la plus importante de leurs relations bilatérales. L’approche de Moscou à l’égard de cette collaboration est plus axée sur des questions de sécurité, tandis que Beijing s’intéresse plutôt aux aspects économiques. En 2010, la Russie se classait au huitième rang seulement des partenaires commerciaux de la Chine. Fruit de la bonne croissance économique de la Chine et de la stabilité qui y règne, la question de l’énergie est maintenant un volet clé de la relation sino-russe. Toutefois, ce partenariat en matière d’énergie n’est pas exploité à son plein potentiel, essentiellement parce que la Russie, plus concentrée sur les marchés européens, a mis du temps à développer l’infrastructure commandée par ce partenariat. Par ailleurs, la Chine veut éviter d’être à la merci de la Russie pour son approvisionnement en énergie.

La Russie et la Chine sont toutes deux d’avis que les acteurs non étatiques laissent planer une menace considérable pour la sécurité, et leurs préoccupations se rejoignent en Asie centrale. Parmi les onze « grandes menaces militaires extérieures » énoncées dans la plus récente doctrine militaire russe, sept se rapportent aux États voisins, et presque la totalité de ces sept menaces concernent des acteurs non étatiques. Comme la Russie compte plus de 20 millions de musulmans, elle demeure à l’affût de la menace du Jihad islamique, surtout depuis la guerre en Tchétchénie et le conflit dans le Caucase du Nord. De son côté, Beijing éprouve des craintes par rapport aux Ouïgours rebelles du Xinjiang. Dans les deux cas, la menace islamiste semble moins imminente qu’elle ne l’était il y a dix ans, mais compte tenu des incidents qui surviennent périodiquement, les « trois forces du mal » demeurent une priorité pour les deux pays.

Asie centrale. L’effondrement de l’Union soviétique a plongé l’Asie centrale dans une période de transition et, dans les deux décennies qui se sont écoulées depuis, l’Asie centrale est redevenue le centre des tensions géopolitiques qu’elle était au 19e siècle. L’Asie centrale contemporaine est caractérisée par une forte instabilité, alimentée par une structure de gouvernance déficiente, de piètres résultats économiques et la corruption. Tous les États de l’Asie centrale, sauf peut-être le Kazakhstan, sont aux prises avec de sérieuses difficultés politiques, sociales et économiques, et une récente évaluation de la région a révélé que cette spirale vicieuse, flagrante dans tous les États sauf au Kazakhstan, n’est pas sur le point de s’estomper. L’intégration politique des cinq États et la coopération entre ces pays sont manifestement inexistantes. Les autorités au pouvoir ont utilisé des moyens de répression pour étouffer le mécontentement de la population, mais à deux reprises, soit en 2005 et en 2010, ces mesures n’ont pas suffi à contenir les manifestations au Kirghizistan.

L’Asie centrale est souvent perçue comme un paradis énergétique qui pourrait grandement aider la Chine à assouvir son vorace appétit en la matière. Toutefois, si les réserves d’énergie en Asie centrale et dans la région de la mer Caspienne ne sont pas négligeables, elles demeurent modestes comparativement aux estimations faites entre 1990 et 1995. Ensemble, en 2010, les trois principaux producteurs de pétrole de l’Asie centrale (le Kazakhstan, le Turkménistan et l’Ouzbékistan) sont à l’origine de 2,5 p. 100 de la production mondiale, et leur production équivaut à la moitié environ de celle de la Chine et au cinquième de celle de la Russie. En ce qui concerne le gaz naturel, 4,2 p. 100 de la production mondiale était attribuable à ces trois pays en 2010. À titre de comparaison, la Chine et la Russie étaient respectivement à l’origine de 3,0 p. 100 et de 18,4 p. 100 de la production mondiale.

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La Russie dépend peut-être beaucoup des réserves de gaz naturel de l’Asie centrale pour respecter les engagements qu’elle a pris envers ses clients européens, mais la domination exercée par Moscou sur l’infrastructure énergétique de l’espace post-soviétique a eu pour effet de limiter l’autonomie des politiques étrangères des États de l’Asie centrale. La construction d’oléoducs et de gazoducs reliant ces États à la Chine, conjuguée à la flambée des prix mondiaux de l’énergie, a fortement contribué à mettre fin à la domination totale de Moscou dans le domaine de l’énergie tout en favorisant une plus grande indépendance économique et politique des producteurs de l’Asie centrale.

Les efforts visant à créer un espace économique unifié en Asie centrale s’enlisent. La réalité est que la grande majorité des marchandises dont les pays de l’Asie centrale font le commerce sont destinées à des marchés à l’extérieur de la région; les échanges commerciaux entre les États de l’Asie centrale sont très peu volumineux. De plus, les divers groupes économiques de la région ont de la difficulté à poursuivre leurs nobles objectifs en raison de l’infrastructure et des institutions inadéquates dans la plupart des pays. La Chine a tenté, en vain, d’établir une zone franche dans la région couverte par l’Organisation de coopération de Shanghaï (Shanghai Cooperation Organization – SCO), qui comprend toute l’Asie centrale sauf le Turkménistan, la Russie et la Chine. La Russie et les pays de l’Asie centrale ne sont pas très enthousiastes à l’idée d’éliminer les obstacles au commerce, craignant que les économies de la région ne tombent à la merci de la Chine.

La tradition religieuse en Asie centrale est généralement modérée, l’appui aux philosophies religieuses radicales étant considéré comme extrêmement faible. Néanmoins, les gouvernements de la région utilisent le spectre des groupes islamistes pour faire valoir la légitimité de leur régime et pour cimenter les relations avec la Russie, la Chine, l’Union européenne et les États-Unis dans le domaine de la sécurité.

La région a tout de même été le théâtre de manifestations extrémistes islamiques depuis qu’elle a acquis l’indépendance. La vallée du Ferhana, qui chevauche le Kirghizistan, le Tadjikistan et l’Ouzbékistan, a toujours été un foyer d’agitation et d’extrémisme religieux. Il s’agit également du berceau du Mouvement islamique de l’Ouzbékistan (MIO), une organisation rattachée à al-Qaida. Les violentes mesures prises par le gouvernement de l’Ouzbékistan pour réprimer une vague de protestation dans la ville d’Andijan en mai 2005 ont grandement favorisé l’expansion du MIO. Cette organisation serait active le long de la frontière entre l’Afghanistan et le Tadjikistan. Les autorités des deux pays ont d’ailleurs signalé qu’un petit nombre de combattants franchissaient régulièrement leur frontière commune pour se diriger vers le Nord. Les observateurs craignent que la disparition des services de base dans la plupart des pays de l’Asie centrale n’offre aux radicaux islamiques des munitions supplémentaires pour s’attaquer aux autorités de la région. Pour les pays qui ne font pas partie de l’Asie centrale, en particulier la Russie et la Chine, le fait que l’Ouzbékistan soit le seul pays de l’Asie centrale à avoir une frontière commune avec tous les autres et qu’on y ait observé des manifestations d’extrémisme religieux est source de préoccupation, car ce militantisme et cette instabilité pourraient rapidement gagner d’autres pays.

La rareté de l’eau est un problème qui pourrait troubler la paix et la sécurité de la région et qui a déjà provoqué des confrontations entre les pays où cette ressource abonde (le Kirghizistan et le Tadjikistan) et les autres pays de l’Asie centrale où il y a pénurie, notamment l’Ouzbékistan.

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Il y a dix ans, il semblait bien improbable que l’Asie centrale devienne un enjeu majeur des intérêts russes et des intérêts chinois. La montée des menaces non étatiques, la meilleure connaissance des ressources naturelles de l’Asie centrale et la possibilité d’un changement de régime dans la région confèrent une nouvelle importance stratégique à l’Asie centrale. Comme la région attire de plus en plus l’attention du reste du monde, on se demande dans quelle mesure les intérêts des deux géants qui bordent la région convergeront ou divergeront.

Les autorités chinoises et russes en matière de sécurité sont d’avis que la menace non étatique émanant de l’Asie centrale est considérable. Par conséquent, Beijing tolère assez bien la présence militaire russe dans la région. Les attentats du 11 septembre 2001 ont eu d’importantes répercussions du point de vue de la sécurité en Asie centrale : les forces de l’OTAN se sont rendues dans la région pour la première fois, et la population de l’Asie centrale s’est de nouveau sentie menacée par le courant islamique extrémiste. Initialement, la Russie donnait son appui aux efforts de la coalition et aux mesures de soutien logistique connexes déployées par l’Asie centrale. Les autorités chinoises, quant à elles, déploraient cette stratégie, considérant la présence américaine dans la région comme un moyen de « contenir » la Chine. Toutefois, après environ deux ans, la Russie s’est mise à craindre que les Américains ne s’installent en Asie centrale pour une période indéterminée. Elle a alors commencé à chercher des moyens de diminuer la présence américaine, se ralliant ainsi au point de vue de la Chine.

Comme la présence géopolitique et économique de la Chine et de la Russie en Asie centrale s’accentue, les intérêts de ces deux pays deviennent de plus en plus vulnérables aux possibles soulèvements populaires à l’image de ceux qui se sont produits au Kirghizistan. Après les bouleversements survenus à Andijan en 2005, la Chine et la Russie ont rapidement donné leur appui au gouvernement de l’Ouzbékistan devant les critiques du monde occidental, et elles ont profité de la situation pour veiller à l’expulsion des forces américaines basées en Ouzbékistan. Toutefois, certains États de la région accueillent favorablement cette présence américaine, qui vient faire contrepoids, bien modestement toutefois, à la présence des Russes et des Chinois. Par conséquent, Moscou et Beijing doivent accepter la présence des forces américaines, du moins pour autant qu’elles demeurent en Afghanistan.

Certains des événements survenus dans les dernières années pourraient miner l’ascension de la Russie en Asie centrale. Les exportateurs n’utilisent plus exclusivement les corridors de transport de la Russie pour acheminer l’énergie, et la part de la Chine dans les échanges commerciaux de l’Asie centrale a probablement dépassé celle de la Russie. Puisque les fournisseurs de l’Asie centrale exporteront désormais de plus grandes quantités d’énergie vers l’Est, les producteurs seront en mesure de provoquer des confrontations entre les clients, ce qui tirera les profits vers le haut et accentuera la concurrence entre la Chine et la Russie. La promotion active que fait Beijing de l’infrastructure transfrontalière vient confirmer que les marchés de l’Asie centrale, autrefois inaccessibles à la Chine, sont maintenant directement liés à la croissance rapide de cette économie.

Les tensions inhérentes dans les relations entre la Chine et la Russie au regard de l’énergie sont moins flagrantes quand il est question de géopolitique et de sécurité. Comme l’Asie centrale est riche en énergie, que les mesures de sécurité y sont insuffisantes, que les mécanismes de gouvernance ne cessent de se détériorer et que la plus grande partie de la frontière terrestre est partagée avec deux grandes puissances, il peut être surprenant de constater que ces deux géants ont misé sur la coopération plutôt que sur la concurrence ces deux dernières décennies. Toutefois,

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la Russie et la Chine ont des objectifs stratégiques communs par rapport à l’Asie centrale, notamment maintenir la stabilité politique, faire échec au militantisme sous toutes ses formes et expulser les Américains dès qu’il sera possible de le faire en toute sécurité.

Mongolie. La Mongolie se distingue des autres pays de l’Asie intérieure du fait qu’elle n’a que deux voisins, la Russie et la Chine, et qu’elle jouit d’une liberté sur le plan politique. La Mongolie regorge de ressources minérales, mais son économie est fortement tributaire des États voisins. La Mongolie achète presque tous les produits pétroliers qu’elle consomme auprès de la Russie, mais elle s’approvisionne en machines, en produits de consommation, en produits alimentaires – pour ne nommer que ceux-là – auprès de la Chine. Néanmoins, le gouvernement de la Mongolie est manifestement prêt à débourser de très grosses sommes pour conserver son indépendance économique : pour exporter le charbon extrait de la plus importante mine du pays, il a décidé d’emprunter une voie ferroviaire passant par la Russie, et ce, même si les institutions financières internationales lui conseillaient de passer par la Chine au Sud, une solution plus économique.

Le passage réussi de la Mongolie à la démocratie et la tradition de non-violence qui y règne donnent à penser que l’instabilité et les troubles politiques risquent moins de frapper ce pays que les autres États de l’Asie intérieure.

Pendant les 70 années qui ont précédé 1991, la Mongolie était un client de l’Union soviétique, mais la position de la Russie en Mongolie est désormais beaucoup plus faible que la position de la Chine. La Russie n’investit pratiquement plus sur le territoire mongolien, et sa part dans les échanges commerciaux de la Mongolie est relativement faible. En revanche, la Chine est le plus important partenaire commercial de la Mongolie depuis 1998 de même que sa plus grande source d’investissements étrangers. De son côté de la frontière, la Chine met en place une infrastructure qui attirera inexorablement le Sud de la Mongolie dans l’univers chinois, ce qui permettra à la Chine d’exploiter les vastes ressources naturelles du territoire mongolien. Cette situation a suscité un tollé de protestations contre la Chine de la part de la minorité nationaliste. La Mongolie a tenté de contrebalancer la présence envahissante de ses voisins immédiats en se tournant vers l’Ouest, en particulier vers les États-Unis. Le gouvernement de la Chine a réagi à la situation en soupçonnant la Mongolie, tout comme il soupçonnait les États de l’Asie centrale, de faire partie d’une stratégie américaine visant à contenir l’essor de la Chine.

Importance

Les Forces canadiennes ont établi une forte présence en Afghanistan essentiellement pour protéger les Canadiens des attaques terroristes. Le groupe al-Qaida a transféré dans les zones tribales du Pakistan la base qu’il avait établie en Afghanistan pour organiser les attentats du 11 septembre 2001. Au terme de la mission de la Force internationale d’assistance à la sécurité (FIAS), l’organisation terroriste pourrait renaître en Afghanistan et établir une cellule en Asie centrale. Toutefois, comme la plupart des militants qui pourraient s’établir en Asie centrale sont d’origine turque, si leurs attaques devaient être dirigées vers l’Occident, leur cible serait probablement située en Europe plutôt qu’au Canada.

Les attaques des militants visant les axes de ravitaillement de l’OTAN au Pakistan ont poussé l’organisation à délaisser graduellement ces axes et à acheminer plutôt les fournitures par le truchement du Northern Distribution Network (réseau de distribution du Nord – NDN), via la xiv DRDC CORA TM 2012-009

Russie et l’Asie centrale. Comme les groupes de militants, le MIO par exemple, se font de plus en plus imposants le long de la frontière entre l’Afghanistan et l’Asie centrale, ils pourraient être tentés de reproduire la stratégie qui a porté ses fruits au Pakistan et d’attaquer les lignes de communication de la FIAS en Asie centrale (particulièrement en Ouzbékistan). Les attaques ciblant les chaînes logistiques des forces de l’OTAN en Asie centrale concernent le Canada principalement dans la mesure où elles touchent ses alliés, le Koweït ayant accepté de fournir un soutien logistique dans le cadre de la nouvelle mission canadienne d’entraînement en Afghanistan.

En tant que nation commerçante, le Canada a de vastes intérêts commerciaux en Chine, mais ses intérêts à cet égard sont beaucoup moins importants en Asie intérieure. En 2010, les échanges commerciaux du Canada avec les sept pays qui forment l’Asie intérieure ont totalisé 5,4 milliards de dollars, soit à peine 0,06 p. 100 de l’ensemble des échanges commerciaux du Canada. Le Canada a réalisé des investissements importants dans la région, notamment en Extrême-Orient russe, au Kazakhstan et en Mongolie. Ces investissements ne devraient pas être trop touchés par l’agitation, car ils sont concentrés dans les régions plus stables de l’Asie intérieure. Par contre, les investissements pourraient subir les répercussions des manœuvres géopolitiques internes (Mongolie) ou régionales (Russie-Chine).

Les immigrants sont très nombreux au Canada, de sorte que les perturbations, peu importe la région du monde où elles se produisent, ont inévitablement des répercussions personnelles et économiques sur les résidents du Canada. Toutefois, les immigrants provenant de l’Asie intérieure sont assez peu nombreux, ce qui donne à penser que l’instabilité dans cette région n’aura qu’une incidence limitée au Canada. Les Ouïgours établis au Canada seront sans contredit touchés par les événements en Chine et en Asie intérieure, mais puisqu’ils sont à peine un millier, les troubles en Asie intérieure auront des effets peu importants sur le Canada.

Globalement, les bouleversements en Asie intérieure, combinés à la montée de la Chine, auront vraisemblablement un effet relativement modeste sur le Canada. Les répercussions les plus importantes sur le Canada pourraient être liées aux menaces potentielles qui planent au-dessus de la mission stratégique de la FIAS en Asie centrale et des investissements canadiens en Asie intérieure, mais il est peu probable que ces menaces se matérialisent à court terme ni même à moyen terme. Les bouleversements qui pourraient se produire dans la région auraient probablement des effets assez minimes sur les échanges commerciaux du Canada et sur les groupes établis au Canada. La menace terroriste en provenance de l’Asie intérieure est également assez faible.

Conclusion

En raison de ses ressources énergétiques abondantes et de son climat instable, l’Asie centrale est redevenue un foyer de tensions géopolitiques. Les autorités ont besoin des ressources pétrolières et gazières de la région pour soutenir la croissance économique de la Chine et assurer le maintien du Parti communiste au pouvoir, et Beijing cherche à éviter d’attirer en son sein le potentiel de subversion qui pèse sur l’Asie centrale. Pour ce qui est du premier objectif, la Chine est en concurrence avec sa principale rivale de la région, la Russie, mais les deux nations coopèrent généralement par rapport au deuxième objectif. Toutefois, la présence chinoise – essentiellement économique jusqu'à maintenant – croît rapidement en Asie intérieure et pourrait en définitive soulever une vague de ressentiment dans la grande région musulmane.

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Fait digne de mention, les deux États les plus indépendants de la région – le Turkménistan et l’Ouzbékistan – n’ont pas de frontière commune avec la Russie et la Chine, ce qui porte à croire que la géographie limite à certains égards la capacité des deux grandes puissances d’avoir une influence sur ce qui se passe dans la région. À moyen terme, les bouleversements en Asie intérieure, combinés à la montée de la Chine, n’auront probablement que des répercussions relativement modestes sur le Canada.

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Table of contents

Abstract ……...... i Résumé …...... i Executive summary ...... iii Sommaire ...... ix Table of contents ...... xviii 1 Introduction...... 1 2 A Rising China ...... 4 2.1 China’s Foreign Policy...... 6 2.2 China’s Ability to Project Military Power...... 8 3 Factors Shaping China’s Relations with Inner Asia ...... 12 3.1 China’s Security Concerns ...... 12 3.2 China’s Energy Requirements and Production...... 21 4 Russia...... 26 4.1 A Great Power? ...... 26 4.2 Military Capability ...... 28 4.3 Foreign Policy ...... 35 4.4 Relationship with China ...... 38 4.5 Relationship with Central Asia...... 57 5 Central Asia ...... 70 5.1 Historical Background...... 70 5.2 Contemporary Situation...... 71 5.3 Relationship with China ...... 85 5.4 China and Russia in Central Asia: Cooperation and Competition ...... 105 5.5 China and Central Asia: An Entering Wedge?...... 111 6 Kazakhstan...... 116 6.1 Political Stability ...... 116 6.2 Economic and Social Situation...... 117 6.3 International Relations...... 118 6.4 Energy ...... 120 6.5 Economy...... 121 6.6 Security...... 122 7 Kyrgyzstan...... 125 7.1 Political Stability ...... 125 7.2 Economic and Social Situation...... 126 7.3 Internal Security Environment ...... 128

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7.4 External Involvement in Kyrgyzstan...... 129 8 Tajikistan ...... 133 8.1 Political Stability ...... 133 8.2 Internal Security Environment ...... 134 8.3 Economic and Social Situation...... 136 8.4 External Involvement in Tajikistan ...... 137 9 Turkmenistan ...... 141 9.1 Political Stability ...... 141 9.2 Internal Security Environment ...... 142 9.3 Economic and Social Situation...... 142 9.4 Energy ...... 144 9.5 External Involvement in Turkmenistan ...... 145 10 Uzbekistan ...... 149 10.1 Political Stability ...... 149 10.2 Internal Security Environment ...... 150 10.3 Economic and Social Situation...... 151 10.4 Energy ...... 152 10.5 External Involvement in Uzbekistan ...... 153 11 Mongolia...... 157 11.1 Political Stability ...... 157 11.2 Economic and Social Situation...... 158 11.3 Energy ...... 159 11.4 Internal security...... 159 11.5 External Involvement in Mongolia...... 159 12 Implications for Canada...... 168 12.1 Canadian Domestic Security ...... 168 12.2 Drug Trafficking...... 170 12.3 Bilateral Military Relationships ...... 171 12.4 Security Implications for Canada’s Allies...... 172 12.5 Canadian Commercial Interests...... 173 12.6 Impact on Canadians ...... 176 12.7 Summary ...... 177 13 Conclusions...... 178 List of acronyms...... 180

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1 Introduction

This study forms part of the broader investigation of China’s re-emergence as a key great power under the aegis of the Applied Research Project (ARP) 10aa16, established in April 2010, entitled The Rise of China: Strategic Assessment and Implications for Canadian Security. This project seeks to answer three basic questions: (1) Is the current trajectory of China’s rise likely to continue? (2) What are the implications for the international order? (3) What are the implications for Canadian security? The first phase of the overall project sets out to examine the key issues and factors that have affected, and may in the future have an impact on, China’s progression to global power. In particular, this phase will assess China’s regional dynamics, which are a key element in the development of China’s geopolitical standing, given that there are a number of areas on its periphery where Great Power strategic interests intersect.

1 An earlier reportF F assessed the relationship between the countries in South Asia and China, with particular emphasis on potential flashpoints between China and South Asian states, especially on the Himalayan border and in the Indian Ocean.

This present report will make an assessment of the countries of Inner Asia, to ascertain:

• how each of the regional countries contributes to, or inhibits, China’s geopolitical ascent (its “peaceful rise”); • how China’s growing global reach impacts each of those countries; and • the implications, if any, for Canada of the interactions between China and the countries of Inner Asia.

The Research Institute for Inner Asian Studies (RIFIAS) at Indiana University, Bloomington, defines Inner Asia as follows:

Inner Asia, or the interior of the Eurasian landmass, comprises in historical terms the civilizations of Central Asia, Mongolia, and Tibet, together with neighbouring areas and peoples that in certain periods formed cultural, political, or ethnolinguistic unities with these regions. In the past the Inner Asian world was dominated by pastoral nomadic communities of the great Eurasian steppe, and its history was shaped by the interaction of these societies with neighbouring sedentary civilizations. In the 20th century, the Inner Asian peoples were located within the borders or sphere of influence of either the Soviet Union or the People’s Republic of China. The breakup of the USSR brought statehood and social transformation to much of the region. Today Inner Asia comprises the five independent Central Asian republics of Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, and Kazakhstan; the republic of Mongolia; the Xinjiang Uygur, Inner Mongolia, and Tibet Autonomous Regions of the People’s Republic of China; and adjacent parts of Afghanistan, Pakistan, Iran, China, and Siberia in the Russian Federation. Areas pertinent to the study of Inner Asia for

1 Anthony Kellett, China’s Periphery. Part 1: South Asia, DRDC CORA TM2010-179, Ottawa: Defence R&D Canada Centre for Operational Research and Analysis, August 2010.

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ethnolinguistic and historical reasons include the Tatar, Bashkir, and Kalmyk 2 Republics in Russia and the Manchu homeland in northeast China.F F

For the purposes of this study, whose focus is strategic rather than cultural and ethnolinguistic, the core of the above definition will be used, with important additions and deletions. In light of RIFIAS’s assertion that during the 20th century the Inner Asian peoples were located within the borders or sphere of influence of either the Soviet Union or the People’s Republic of China, obviously the poles of the present study need to be China and Russia. In addition, since the overarching study is about the geopolitical rise of China, that country needs to be considered in its entirety rather than in the disaggregated form outlined by RIFIAS, although in practice a major focus, vis-à-vis the People’s Republic of China, will be on one of the areas identified in the RIFIAS definition, namely Xinjiang. Equally, Siberia and the Tatar, Bashkir and Kalmyk Republics are too limited a focus for the Russian Federation, which is the most powerful of China’s neighbours to its north and west and needs to be incorporated in any assessment of countries that impact on China. On the other hand, while RIFIAS includes Tibet and adjacent parts of Afghanistan, along with Pakistan, in its definition of Inner Asia, those regions have effectively been covered – in terms of their impact on China’s rise – in the earlier report on South Asia. Thus, they will not be reexamined here.

Therefore, this report will deal with Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Mongolia in the context of their relations with a rising China. Russia and China both border Mongolia. Of the five Central Asian countries, China borders three – Kazakhstan, Kyrgyzstan and Tajikistan – while Russia borders only one – Kazakhstan. On the other hand, Russia’s Inner Asian borders total 13,932-km, compared with 11,127-km for China. Thus, to the extent that contiguousness is a factor in influence, geography appears to place China and Russia on a relatively similar footing in the region. Turkmenistan and Uzbekistan border neither Russia nor China.

Because each country’s relationship to China is different, no single model of bilateral relations will be used here. However, particular emphasis will be placed on security, energy and the potential for Sino-Russian rivalry in the region.

While the primary purpose of this report is to assess the interactions between Inner Asian states and China, a secondary goal of it is to provide a database of bilateral relations between regional countries and China in order to provide inputs to broader objectives of the overall project. With this in mind, some emphasis is placed on longer-term aspects of bilateral relations, in order to provide a context for current strategic developments in Inner Asia and Northeast Asia.

At the outset, there will be a brief discussion of China’s growing economic might, its foreign policy in its broader international framework, its energy requirements and its ability to project military power, in order to provide the context for assessing China’s relationships with the countries of Inner Asia.

Russia will be discussed at a length disproportionate to the other regional states. Of the seven countries identified here as belonging to Inner Asia, it is by far the largest and strongest, and thus

2

Research Institute for Inner Asian Studies, RIFIAS and Inner Asian Studies, (http://www.indiana.edu/H

~rifias/RIFIAS_and_Inner_Asian_Studies.htm),H accessed 31 May 2011.

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is the one that is best placed to contribute to or inhibit China’s rise. In fact, of the seven countries examined in this report, Russia has 68 percent of their combined population and 86 percent of 3 their combined GDP.F F It also is the only one with nuclear weapons and a permanent seat on the UN Security Council, and far outstrips the other regional countries in the other measures of national power.

Central Asia will then be examined as a region, with specific reference to its political situation, internal security concerns, and economic and energy issues. This section will assess the activity, influence and interests of Russia and China in the region as a whole, exploring the issue of how far their interests and behaviour in Central Asia converge or diverge and to what degree there is strategic competition between them.

After the assessment of Central Asia as a whole, on broadly thematic lines (energy, security, geopolitics and so on), the report will then focus on the five Central Asian countries and Mongolia individually. The goal is both to amplify the analysis of the region as a whole and to provide a reasonably detailed account of each country as a tool for other analysts in the broader project. The emphasis will again be on the same cross-cutting issues: energy, security and geopolitics. Each country will be examined on these dimensions. For instance, each national section will include a sub-section on China’s involvement in a particular country and another on Russia’s.

Such an approach risks duplication. There are ten different sections relating to energy issues, and twelve to security ones. With regard to energy, for example, there are sections and sub-sections on: China’s energy requirements and production; Russian energy; Russia’s energy relationship with Central Asia; Central Asian energy; China’s energy relationship with Central Asia; Sino- Russian competition for Central Asian energy; Kazakh energy; Turkmen energy; Uzbek energy; and Mongolian energy. The sections on security issues follow essentially the same pattern, with the addition of Kyrgyzstan and Tajikistan (which are not energy producers but have significant security concerns).

This approach allows an analyst whose interest is, say, Sino-Russian energy rivalry in Central Asia, or the security situation in Kyrgyzstan, to go directly to the appropriate section. Every effort has been made to avoid excessive duplication and rather to examine each major theme in quite specific regional or national contexts. The narrower focus of each individual section or sub- section also permits a greater degree of specificity and detail.

3 Central Intelligence Agency (CIA), The World Factbook, population and GDP estimates for 2010 for Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Mongolia (https://www.cia. gov/library/publications/the-world-factbook), accessed 26 July 2011.

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2 A Rising China

This section will explore what China’s “rise” entails, but will principally concentrate on those aspects of its global ascent that impact its relations with its neighbourhood and, in particular in the context of this report, with the countries of Inner Asia. Thus, it will be a relatively brief examination of China’s global standing.

In a famous 2001 report, Goldman Sachs analysts popularized the term BRIC – Brazil, Russia, India, China – and forecast that by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world. More recent forecasts, by Goldman Sachs and others, have greatly reduced the wait time before the BRICs catch up with the West, and the economic woes of the United States (US) and Europe will further accelerate the process. In a December 2009 update of the 2001 report, Goldman Sachs reported that it was possible that the BRICs could become as big as the G-7 by 2032 (about seven years earlier than had originally been believed possible), that China could become as big as the US by 2027, and 4 that the BRICs could account for almost 50 percent of global equity markets by 2050.F F

However, the BRICs themselves are facing headwinds. In late-July 2011, Goldman Sachs warned that the BRICs would have to increase the speed of their infrastructure projects in order to realize the growth projections the bank had set them. The latest note said infrastructure was a key determinant of economic growth potential, and thus played a critical role in its longer-term projections for the BRICs. Goldman Sachs analysts said that China and India had made the most 5 effort to improve their internal infrastructure, albeit from a very low base.F

In April 2011, the BRIC grouping held only its third annual summit, hosted by China and joined by South Africa. With the inclusion of South Africa, the grouping now accounts for 40 percent of 6 the world’s population, 18 percent of world trade and about 45 percent of current growth.F F The four original BRIC members have acquired seats on the governing board of the International Monetary Fund (IMF), with China obtaining the third-largest say in decision-making, after the US and Japan.

With this demographic and economic weight, the BRIC countries are looking for a bigger role in global financial institutions. Although the managing director of the IMF has always been a European since the organization’s inception in 1946, it is noteworthy that, in promoting her candidacy for the position, French Finance Minister Christine Lagarde included visits to Brazil, India and China in her itinerary immediately prior to the end of the nomination period on 10 June 2011.

But one of the BRICs is primus inter pares. A report by Deutsche Bank Research in mid-2009 asserted that economically, financially and politically, China overshadowed the other BRICs and would continue to do so. Indeed, it noted that China had been outperforming the other BRICs by a

4 Jim O’Neill and Anna Stupnytska, The Long-Term Outlook for the BRICs and N-11 Post Crisis, Global Economics Paper No. 192, London: Goldman Sachs International, 4 December 2009. 5 Elizebeth Pfeuti, “Goldman Sachs to Brics: ‘Don't fall behind!’,” Financial News, 25 July 2011. 6 Christopher Bodeen, “BRICs seek larger role in global finance,” Associated Press, 13 April 2011.

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wide margin over the previous thirty years and that its economy was larger than that of the three 7 other BRIC economies combined.F

In August 2010, China’s economy overtook that of Japan to become the second largest in the 8 world, behind the US.F F In terms of purchasing power parity, it now looks set to overtake the US economy in the relatively near term, perhaps as soon as 2016, in the view of the International 9 Monetary Fund.F F China’s reserves of foreign exchange and gold were estimated to be US$2.4 10 trillion at the end of 2009, nearly twenty times the size of the US’s.F F China has a great deal of scope for further expansion. Private consumption accounts for only about 37 percent of China’s GDP, the smallest share of any major economy, and services account for just 43 percent of Chinese GDP, again well below global norms. Furthermore, the country is well on its way to 11 becoming a knowledge-based economy.F

While expectations that the economy of China could catch up that of the US would have seemed fantastic until very recently, the US dollar is beginning to lose its grip on world markets and the yuan (renminbi, “people’s currency”) to be playing a growing role. The central banks of China, Russia and a number of other countries have been buying gold as a means of reducing their holdings of American dollars. In addition, China has been orchestrating currency swaps with its fellow BRIC members and some other countries (including Uzbekistan) to allow trade to be conducted without the dollar. In the first quarter of 2011, about seven percent of China’s trade 12 was settled in its own currency, a great increase over one percent only a year ago.F F Of course, the economic woes faced by China’s main trade partners and investment markets will have negative repercussions for China. Bank stocks in China are trading at lower valuations than global emerging-market indexes for the first time since 2006. The country faces a financial crisis with bad debt that may jump to 30 percent of total loans, Fitch Ratings has said. China may have massive excess capacity, with no one to sell that capacity to, and China’s local governments are 13 heavily debt-burdened.F

Nevertheless, given the overall economic trends of recent years, Chinese President Hu Jintao would seem to have been justified when he predicted (in or before 2005) that his country would 14 become a “world power second to none.”F F In February 2010, a book by Senior Colonel Liu Mingfu, a professor at the National Defense University, urged China to challenge the United 15 States and become “the top power.”F F In a report to Congress published in February 2010, the Pentagon said that it was concerned by China’s missile build-up and increasingly advanced 16 capabilities in the Pacific region.F F China’s rapid accretion of geopolitical weight – political, economic and military – at the outset of the twenty-first century ensures that other Great Powers, as well as the countries in its vicinity, will be increasingly wary in their dealings with it.

7 “BRIC economies poised for growth; China to outperform peers,” The Hindu. 8 June 2009. 8 David Barboza, “China Passes Japan as Second-Largest Economy,” New York Times, 15 August 2010. 9 Brett Arends, “IMF bombshell: Age of America nears end,” MarketWatch, 25 April 2011. 10 CIA, World Factbook, entries for China and the US, accessed 7 June 2011. 11 Steven S. Roach, “Ten reasons why China is different,” Al Jazeera, 31 May 2011. 12 Iain Dey, “The slow death of the U.S. dollar,” The Ottawa Citizen, 31 May 2011, p.D5. 13 Michael Patterson, “Banks in BRICs Signaling Credit Crisis With Loans Showing Increasing Risks,” Bloomberg, 1 August 2011. 14 Anand Giridharadas, “India welcomed as new sort of superpower,” The New York Times, 21 July 2005. 15 Michael Lelyveld, “Military Budget Cuts Raise Questions,” Radio Free Asia, 15 March 2010. 16 Ben Blanchard, “China’s military bluster camouflages toothless bite,” Reuters, March 2010.

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2.1 China’s Foreign Policy

Wang Jisi, the Dean of the School of International Studies at Peking University in Beijing, recently wrote that over the past three decades or so China’s foreign and defence policies have been remarkably consistent and reasonably well coordinated with the country’s domestic priorities. From ancient times, ruling regimes in China have often been brought down by a combination of internal uprising and external invasion. For instance, the government blamed riots in Tibet in March 2008 and in Xinjiang in July 2009 on “foreign hostile forces.” As a result, China’s leadership is extremely sensitive to signs of internal turbulence.

In consequence, Beijing’s foreign and security policy aims at securing a peaceful international environment, an enhanced position for China in the global arena, and China’s steady integration into the existing economic order, all of which would help consolidate the Chinese Communist 17 Party’s power at home.F F In July 2009, President Hu Jintao stated that Chinese diplomacy must 18 “safeguard the interests of sovereignty, security, and development.”F F The policy of “peaceful 19 rise” (now officially termed “China’s peaceful development”F F) has been the key to securing this trilogy of national goals. In turn, “peaceful rise” required China to establish good relations with its neighbours, which would help to balance against the perceived threat of US predominance. An over-arching theme of China’s post-1991 foreign policy has been that of “engaging the periphery,” a policy that entailed the establishment of conducive relations with China’s 20 immediate neighbours on the basis of shared economic and security concerns.F F

As will be seen, Inner Asia occupies a growing place in Chinese geopolitics, but China’s leadership remains more focused on engagement with the US, the members of the Association of Southeast Asian Nations (ASEAN), Japan, the European Union (EU) and Africa. In contrast with Russia, which frequently exploits opportunities to test Washington’s global leadership, China has tended to take a more restrained approach towards the US, perhaps largely influenced by the 21 interdependence of their economies.F F When problems have occurred in Beijing’s interaction with the West they have concerned China’s core interests (the Taiwan Strait, theatre missile defence in Asia, the US bombing of the Chinese embassy in Belgrade in 1999, and so on), but for the most part China has kept a low profile on major international issues such as the Middle East peace process, the Balkans, Iraq, Iran and Georgia. In comparison with Russia, China has far more friends and greater strategic choice. The world is beating a path to China’s door – nearly all the

17 Wang Jisi, “China’s Search for a Grand Strategy. A Rising Great Power Finds Its Way,” Foreign Affairs, vol.90, no.2, March/April 2011, p.70. 18 Ibid, p.71. 19 See, State Council of the People’s Republic of China, China’s Peaceful Development, Beijing: State Council, September 2011 (http:www.gov.cn/english/official/2011-09/06/content_1941354.htm), accessed 6 September 2011. 20 Michael Clarke, “China and the Shanghai Cooperation Organization: The Dynamics of ‘New Regionalism’, ‘Vassalization’, and Geopolitics in Central Asia,” in Emilian Kovalski, ed., The New Central Asia. The Regional Impact of International Actors, Singapore: World Scientific Publishing Co. Pte. Ltd, 2010, pp.120-21. 21 Bobo Lo, Axis of Convenience. Moscow, Beijing, and the New Geopolitics, London: Royal Institute of International Affairs (Chatham House), 2008, p.5, 15.

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Fortune 500 companies now have a permanent presence in the country – and Beijing has shown 22 itself anxious not to prejudice this favourable situation.F F

Several observers have recently commented on a growing assertiveness in China’s foreign policy. For example, Wang Jisi wrote that, based on China’s enhanced position, its “international 23 behaviour had become increasingly assertive.”F F Thomas J. Christensen, a former US Deputy Assistant Secretary of State with responsibility for policy toward China, Taiwan and Mongolia, observed that China had departed from the policy of reassurance it adopted in the 1990s – a “peaceful rise” – and had revised its grand strategy to reflect its own rise and the decline of the US. In the process, Christensen argues that it has managed to damage relations with most of its neighbours and with the US: “Mistrust of Beijing throughout the region and in Washington is 24 palpable.”F F Christensen cited a number of examples of this new abrasiveness, including:

• an episode in 2009 where Chinese ships harassed an unarmed American naval vessel, USNS Impeccable, in international waters off the coast of China; • warnings in July 2010 by Foreign Minister Yang Jiechi to Southeast Asian states not to coordinate with outside powers with regard to their territorial disputes with China; • China’s strident reaction to the arrest by a Japanese coast guard vessel of a Chinese captain whose fishing boat had hit the Japanese ship in September 2010 off islands controlled by Japan but contested by China; outside observers were alarmed that a minor dispute had blown up into a major showdown, and surprised at the unusually shrill rhetoric and harsh, unilateral sanctions from China’s side; and • China’s support for North Korea during several crises provoked by the Kim regime in 25 2010.F

As noted earlier, recent incidents near the Spratly Islands have strained China’s relations with Vietnam and the Philippines.

Christensen argues that “the acerbic turn” in Beijing’s foreign policy “seems rooted in a strange 26 mix of confidence on the international stage and insecurity at home.”F F In his view, the government seems currently more nervous about maintaining long-term regime legitimacy and social stability than at any time since the period just after the 1989 Tiananmen crackdown. Christensen also thought that Chinese foreign policy has been complicated by the involvement in it of an increasing number of bureaucracies, including the military, energy companies, major exporters of manufactured goods, and regional party elites.

Minxin Pei, a professor of government at Claremont McKenna College and an adjunct senior associate at the Carnegie Endowment for International Peace, echoes much of what Christensen argues. He, too, notes that public resentment is rising in China over rising prices, corruption and

22 Ibid, p.45. 23 Wang Jisi, “China’s Search for a Grand Strategy,” p.68. 24 Thomas J. Christensen, “The Advantages of an Assertive China. Responding to Beijing’s Abrasive Diplomacy,” Foreign Affairs, vol.90, no.2, March/April 2011, p.54. 25 Ibid, p.57. Also Jonathan Adams, “China-Japan Spat Rattles Nerves in Asia, US,” Aol News, 28 September 2010. 26 Christensen, “The Advantages of an Assertive China, p.59.

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unaffordable housing, while at the same time he notes that “many veteran observers are saying that its [China’s] relations with major powers and its neighbours are the worst they’ve been since 27 the dark days” of Tiananmen.F F He described China’s international behaviour in 2010 as not simply “a single catastrophic blunder, but a series of assertive and arrogant acts that have totally 28 discredited China’s declared policy of ‘peaceful development’.”F F Pei’s belief that the Chinese leadership had started a process of damage repair is challenged by China’s behaviour in the South China Sea in May-June 2011.

2.2 China’s Ability to Project Military Power

Military might is a key requirement for Great Power status. This section will confine itself to those aspects of military strength that would influence China’s relations with Inner Asia, and is thus not a depiction of overall Chinese capability.

It has been suggested that China’s humiliation and subjugation by foreign states in the 19th and early-20th centuries engendered a deep-seated “victim mentality” among both the elite and the populace, which has intensified the long-standing Chinese sensitivity to foreign threats and territorial incursions. This in turn has encouraged a strong commitment to the creation of a powerful state able to redress past wrongs (for instance, the seizure of Chinese territories such as 29 Taiwan).F F

The creation of powerful armed forces is a natural corollary to this mind-set. The urge to build military strength is fortified by China’s location. It is surrounded by highly-armed countries. Four of its neighbours possess nuclear weapons. Of the dozen countries (excluding China) with the world’s largest armed forces, six border China (India, North Korea, Russia, Pakistan, Vietnam and Burma), and China has had serious military confrontations with three of them during the past half-century. Two more (the US and South Korea) are strategically or geographically close; Japan also has a significant military capability and in addition hosts a strong US military presence. In the period 2006-10, the top four arms importers were India, followed by China, South Korea and Pakistan, according to data collected by the Stockholm International Peace Research Institute (SIPRI). SIPRI found that the Asia-Pacific region accounted for 43 percent of arms imports 30 during the period.F F

During the 1980s, China’s official defence budget remained relatively stagnant, even as the economy began to grow rapidly. China’s attempts to modernize its armed forces suffered a blow when the US and the European Union imposed arms embargoes after the Tiananmen crackdown in 1989. Two years later, China’s military leaders were stunned by the display of Western military firepower during the first Gulf War. In this situation, Beijing turned to Russia, its erstwhile adversary that had not provided it with major arms since the late-1950s. In 1992, China became the first country outside the former Soviet Union to buy Su-27 fighter jets. For the next 15 years, Russia was China’s biggest arms supplier, providing $20-30 billion in fighters,

27 Minxin Pei, “China’s Bumpy Ride Ahead,” The Diplomat, 16 February 2011 (http://the- diplomat.com/whats-next-china/chinas-bumpy-ride-ahead), aAccessed 9 June 2011. 28 Ibid 29 Michael D. Swaine and Ashley J. Tellis, Interpreting China’s Grand Strategy. Past, Present, and Future, Santa Monica: RAND, 2000, p.73. 30 Daniel Ten Kate, “India Passes China as World’s Top Arms Importer,” Bloomberg, 14 March 2011.

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destroyers, submarines, tanks and missiles. It even sold Beijing a license to make the Su-27. China has mastered Russian military technology to such a degree that in 2007 it unveiled an aircraft – the J-11B – that the Russians claim is a copy of the Su-27 and, worse, has begun exporting it, undercutting Russian arms sales in much of the developing world. In the past two 31 years China has not placed a major arms order with Moscow.F F

No Asian country has sought to project military power since the defeat of Japan in 1945, but given that all Great Powers have some offensive capability, and that the Chinese leadership want their country to become a “world power second to none,” it might be expected that Beijing would want to develop a capacity for power projection at some distance from China’s territory. Any such desire would be reinforced by being located in such a heavily-armed neighbourhood.

The official budget of the PLA more than doubled from 2000 to 2008 (in 2008 dollars), although much of the increase has involved pay raises and improvements in living conditions. The official defence budget for 2011 represents a 12.7 percent increase over 2010, yet it still seems to be matched to the growth in the economy, with a view not to disrupt it. This philosophy was epitomized in the 2008 White Paper, which stated that defence development had to be 32 subordinated to and in the service of the country’s overall economic development.F F An analysis of these spending patterns concluded that:

The process of training personnel and building a smaller, more technically competent force is the long-term goal of PLA modernization. Even with a resumption of defense budget increases over 10 percent, the PLA leadership has not changed the mid-century timeframe of achieving that goal. As such, the PLA sees itself as halfway down the path of its multi-decade, multi-faceted military 33 modernization program.F

China has invested heavily in a military modernization programme. The 2010 Quadrennial Defense Review Report (February 2010) noted that “China is developing and fielding large numbers of advanced medium-range ballistic and cruise missiles, new attack submarines equipped with advanced weapons, increasingly capable long-range air defense systems, electronic warfare and computer network attack capabilities, advanced fighter aircraft, and counter-space 34 systems.”F F As an example of the growing technological sophistication of China’s armed forces, a recent article in the Journal of Strategic Studies concluded that China has made massive advances in the field of satellites over the past decade, moving from almost zero real-time surveillance 35 capability to virtual parity with the US.F F InH January 2007 China shocked the US by shooting down one of its own weather satelliteHs, 537 miles above the Earth’s surface, with a ballistic missile, raising fears that the Chinese had the power to cause chaos by destroying US military and civilian satellites. The PLA is investing in electronic countermeasures, defences against electronic attack, and computer network operations, including computer network attack, computer network

31 Jeremy Page, “China Clones, Sells Russian Fighter Jets,” The Wall Street Journal, 4 December 2010. 32 Dennis J. Blasko, “An Analysis of China’s 2011 Defense Budget and Total Military Spending – The Great Unknown,” China Brief (Jamestown Foundation), vol.11, no.4, 10 March 2011. 33 Ibid. 34 Office of the Secretary of Defense (OSD), Military and Security Developments Involving the People’s Republic of China 2010. Annual Report to Congress, Washington, DC: Department of Defense, 16 August 2010, p.I. 35 Peter Foster, “China increasing military use of space with new satellites,” Daily Telegraph, 13 July 2011.

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36 exploitation, and computer network defence.F F The modernization drive also includes organizational initiatives. The PLA intends to cut manpower by 22 percent, from 2.3 million to 1.8 million. In addition, it is upgrading the educational qualifications of its personnel – 80 percent 37 of new officers are now university graduates.F

However, the modernization drive also camouflages what the International Institute for Strategic Studies (IISS) has identified as a key source of weakness that “could frustrate the goal of closing the technological gap with the West,” namely the “widespread duplication and balkanization of industrial and research facilities.”

Intense rivalry, local protectionism and huge geographical distances mean that there is little cooperation or coordination among these facilities, preventing 38 economies of scale and hampering consolidation.F F

One of the biggest problem areas is the aero-engine sector, which has had to rely on Russian engines for some of its latest aircraft, including the J-10 and J-11 fighters.

In terms of concept of employment, the Department of Defense’s annual report on Chinese military power for 2009 noted that the PLA was pursuing a transformation from “a mass army designed for protracted wars of attrition on its territory to one capable of fighting and winning short-duration, high-intensity conflicts along its periphery against high-tech adversaries – an 39 approach that China refers to as preparing for ‘local wars under conditions of informatization’.”F F The report stated that the PLA was developing longer-range capabilities to enable China to ensure access to resources or to enforce claims to disputed territories.

Nevertheless, the Pentagon report concluded that China would not be able to project and sustain small military units far beyond China before 2015, or to project and sustain large military forces 40 in combat operations far from China until well into the following decade.F F It argued that the only aspects of China’s armed forces that had the potential to be “truly global” were offensive nuclear, 41 space and cyber warfare capabilities.F F The report detailed a number of limitations to PLA force projection, including weaknesses in joint integration and air and amphibious lift capacity, limited in-flight refuelling capacity, and a lack of experience of modern combat. If all the large transport available in the PLA Air Force were operational and rigged for parachute drop, China could deliver about 5,000 parachutists in a single lift – or fewer if equipment was carried at the same time. In short, “The PLA’s force projection capabilities will remain limited over the next 42 decade...”F

The Pentagon’s 2010 report to Congress on Chinese military and security developments asserted that the PLA’s ground forces were transitioning from a static defensive force to a more offensive

36 Office of the Secretary of Defense, Military and Security Developments, p.37. 37 Michael Moore, “China’s military modernisation in numbers,” Daily Telegraph, 13 July 2011. 38 IISS, The Military Balance 2011, London: International Institute for Strategic Studies, March 2011, p.204. 39 OSD, “Military Power of the People’s Republic of China,” in Samuel E. Fleischer, ed., Measuring China’s Military Might, New York: Nova Science Publishing, Inc., 2010, p.39. 40 Ibid, p.73. 41 Ibid, p.77. 42 Ibid, p.96.

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and manœuvre-oriented force organized and equipped for operations along China’s periphery. It quoted China’s 2008 Defence White Paper as describing the ground forces as moving from 43 “regional defense to trans-regional mobility.” F F

It might be supposed, given China’s concern for the security of its maritime access to African and 44 Middle Eastern oil – outlined in the report on South AsiaF F – and the recent news of China’s 45 construction of an aircraft carrier,F F that any efforts by Beijing to increase the country’s ability to project military power would have a strong naval dimension. Beijing’s ability to project maritime power would be of very little concern to most of China’s Inner Asian neighbours, the majority of whom are landlocked and do not have navies (leaving aside the small coastal forces deployed in the Caspian Sea by Kazakhstan and Turkmenistan). Chinese naval development would probably not even be particularly troubling to Russia, whose Far East coastline abuts China, given the strength of Russia’s Pacific fleet (which includes five SSBNs – one of which is in reserve – compared with the three in the People’s Liberation Army Navy (PLAN)) and the near presence of other maritime forces (notably the US and Japanese navies). The army’s resource demands and the vulnerability of China’s land borders are additional factors that crimp the ability of the PLAN 46 to engage in a protracted and large-scale ship construction programme.F F

43 OSD, Military and Security Developments, p.24. 44 Kellett, China’s Periphery. Part 1: South Asia, pp.26-33. 45 “China aircraft carrier confirmed by general,” BBC News, 8 June 2011. 46 Robert S. Ross, “China’s Naval Nationalism,” International Security vol.34, no.2, Fall 2009, pp.58-60.

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3 Factors Shaping China’s Relations with Inner Asia

Since this report focuses on China’s neighbours in Inner Asia, this section will deal with those aspects of China’s national power, perceptions, motivations and policy that are relevant to the relationship with its neighbours in Inner Asia. Thus, it will generally not discuss issues of a broader global nature.

3.1 China’s Security Concerns

3.1.1 General

A country that has the largest population in the world, the fourth largest surface area, land boundaries of 22,117-km (the longest in the world), and a history of massive revolt and often fragile unity is bound to have a preoccupation with internal security.

Rollie Lal, of the Asia Pacific Center for Security Studies, interviewed senior policy-makers in China and India between 2001 and 2005. She observed that democratic India has had far more success than has had authoritarian China in providing a political definition of national identity acceptable to the majority of citizens. As a result, the perception of sovereignty among her Indian respondents tended to be a political and economic one, whereas among Chinese interviewees it was generally a territorial and legitimizing one. For Lal’s Chinese respondents, economic growth and military modernization were ultimately intended to maintain national unity and the political 47 stability of the Communist Party.F

It is estimated that China’s economy needs to grow at a rate of at least eight percent per year in order to ensure stability and continued rule by the Communist Party. Any sustained decline in growth could provoke public disaffection. Already, there are estimates of as many as 100,000 demonstrations and strikes each year, many of them in protest at land takeovers, bad working 48 conditions and low wages, and environmental degradation.F F For example, on 12 June 2011 migrant workers clashed with police for a third consecutive night outside the southern city of Guangzhou. About 1,000 protesters set fire to cars and damaged government buildings, and police reportedly fired tear gas and deployed armoured vehicles. The protests began over the alleged mistreatment of a pregnant migrant worker by security guards. When news of the incident 49 spread, other migrant workers – most from far-off Sichuan province – went on the rampage.F F In mid-August 2011, Chinese authorities ordered a petrochemical factory in Dalian to close after more than 12,000 demonstrators confronted riot police, demanding the plant’s relocation over health fears. Public anger erupted after the Fujia Chemical Plant, which produces the toxic chemical paraxylene, came close to being inundated with sea water during a tropical storm in the previous week. The mass action was one of the largest urban protests of recent years and the

47 Rollie Lal, Understanding China and India. Security Implications for the United States and the World (Westport and London: Praeger Security International, 2006), pp.4-9. 48 Bill McKibben, Can China go green?, National Geographic, vol.219, no.6, June 2011, pp.120, 127. 49 China migrant workers clash with police for third night, BBC News, 13 June 2011.

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latest in a growing number of demonstrations against environmental disasters and degradation 50 caused by China’s rapid industrialization and economic development.F

Periodic disasters resulting from ineptitude and corruption roil public opinion and provoke government nervousness. In recent years these calamities have included the deaths of children from the collapse of poorly built schools and the tainted milk scandal. On 23 July 2011, one of China’s new high speed trains crashed, killing at least 40 people and injuring many more. An outpouring of public anger at the incompetence and corruption revealed by the disaster demonstrated a profound cynicism about how China is governed. Users of WeiboH ,H a Twitter-like site that boasts 140 million users, have produced an outpouring of contemptuous comment about government performance. A middle-class revolt would repudiate the “Beijing consensus,” which holds that economic success dampens the desire for democracy and freedom of expression, and 51 place higher demands for accountability on the government.F F

That these signs of public dissatisfaction unsettle the Chinese leaders is suggested by their tussle with Google over allegations of censorship and attempts to collect user passwords, and by a number of hacking incidents that appear to have originated in Jinan, home to one of six technical reconnaissance bureaus belonging to the PLA and a technical college US investigators in 2010 linked to a previous attack on Google. A former US official who served in China said that these actions are a sign that China’s leaders fear a contagion effect from the “Arab Spring” (the “Jasmine Revolution”): “There’s all kinds of Internet issues going on now in China, and I think 52 it’s largely driven by the Jasmine movement. China’s very afraid of that.”F F

As early as mid-February – not long after the overthrow of Hosni Mubarak in Egypt – an anonymous protest appeal on a dissident website urged people in 13 cities across the country to take to the streets. Relatively small numbers of protestors showed up in Beijing and Shanghai, but the police responded very firmly. Soon after, the state began cracking down on human rights activists, artists and writers, including the artist Ai Weiwei, who was arrested in early April. These actions were accompanied with strict controls over the Internet and social media 53 networks.F

Economic and environmental discontent and disaster-induced public anger are far from the only sources of concern for China’s security. The Chinese authorities routinely denounce the “three evils” of religious extremism, “splittism” (separatism), and terrorism. Indeed, so concerned is the Chinese government at the threat allegedly posed to national security by these trends that it has managed to get its concern over the “three evils” incorporated into the objectives of the Shanghai Cooperation Organization (SCO).

50 Jamil Anderlini, “Protests force Chinese factory to close,” Financial Times, 14 August 2011. 51 David Pilling, “China crashes into a middle class revolt,” Financial Times, 3 August 2011. 52 Sui-Lee Wee and Alexei Oreskovic, “Google disrupts cyberattack,” The Ottawa Citizen, 3 June 2011, p.F2. 53 Manoj Kewalramani, China and the Arab Spring, article no.1851, New Delhi: Centre for Land Warfare Studies, 24 May 2011 (http://www.claws.in/index.php?action=master&task=852&u_id=156), accessed 10 June 2011.

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3.1.2 Engaging the Periphery

China has more land neighbours – fourteen – than any other country. To these can be added maritime neighbours, such as Japan and the Philippines (not to mention Taiwan). Not surprisingly, these geographical realities have conduced to conflict.

Since 1998, China has peacefully settled eleven land territorial disputes with six of its 54 neighbours.F F It accomplished this largely through offering substantial compromises to its neighbours in return for their cooperation in helping it to strengthen its control over its frontier 55 areas.F F Its record of boundary demarcation has been more successful with regard to Inner Asia 56 than to South AsiaF F or its maritime neighbours.

However, in some territorial disputes China has had recourse to force. It fought a short but violent war with India in 1962, and another fairly sanguinary battle with Soviet forces on the Ussuri River in 1969 (there were also clashes a few months later on the border in Xinjiang). The Indians and Bhutanese regularly charge that Chinese troops enter the territory they control, and China disputes, but it is a fact that there has not been a single fatality in skirmishing along the Himalayan border since 1967.

China has backed its territorial claims in the South China Sea with force, notably in a battle with South Vietnam over the Paracel Islands in 1974 and more recently in confrontations with Vietnam and the Philippines over the Spratly Islands and in the East China Sea with Japan over the Senkaku Islands (known to the Chinese as the Diaoyu Islands). For instance, in May-June 2011 Vietnamese and Philippine authorities asserted that Chinese military vessels had fired on fishing boats belonging to their nationals in separate incidents near the islands.

It is tempting to see China’s extensive land borders as sources of domestic instability and as potential entry points for “foreign hostile forces.” As was noted earlier, a policy of “engaging the periphery” has been a centrepiece of Chinese foreign policy. This policy is not a recent development. A study of China’s security behaviour noted that since the emergence and maturation of the unified Chinese state well over 1,000 years ago its strategy has contained five core features:

• efforts to protect the Chinese heartland through border defence and control over a large and long-standing periphery; • periodic expansion and contraction of periphery control and regime boundaries; • the frequent yet limited use of force against external entities, primarily for heartland defence and periphery control; • a heavy reliance on non-coercive security strategies to control or pacify the periphery when the state is comparatively weak, unable to dominate the periphery through military means, or regards the use of force as unnecessary or excessively costly; and

54 OSD, “Military Power of the People’s Republic of China,” p.52. 55 Robert J. Art, “The United States and the Rise of China,” in Robert S. Ross and Zhu Feng, eds., China’s Ascent. Power, Security, and the Future of International Politics, Ithaca and London: Cornell University Press, 2008, pp. 279-80. 56 Kellett, China’s Periphery. Part 1: South Asia, pp.20-24, 74-76.

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57 • a strong, albeit sporadic, susceptibility to the influence of domestic leadership politics.F F

As will be seen, these remain relevant to China’s relations with Inner Asia. Some of the other findings of this study are also instructive. For instance, it found that both imperial and modern regimes typically used violent methods against periphery peoples or along the periphery during the first one-third of a regime’s existence. In this light, it is noteworthy that the use of force by the Chinese Communist regime occurred more often during its early years (the 1950s and 1960s), and 58 was primarily directed at the resolution of territorial issues along the periphery.F F The actions of the PLA in the 1950s and 1960s consolidated the formal incorporation into the Chinese state of its periphery regions: Tibet, Xinjiang, Manchuria and Inner Mongolia. In fact, the degree of control 59 over these regions that the PLA’s military actions gave Beijing was unprecedented.F

Interestingly, China’s military forays were mostly directed at its northern and northwestern periphery, with relatively few actions being taken against neighbours on China’s eastern, southern 60 or southwestern borders.F

The linkage made by the Chinese between internal security and their country’s frontier areas was epitomized in an article published in the official China Daily in May 2010 and written by Chen Xiangyang of the China Institute of Contemporary International Relations. In it he advocated a “Large Periphery” strategy to guard against developments in neighbouring areas which could impact China’s development and foreign interests. Chen was particularly exercised by the revolution in Kyrgyzstan, which culminated in the overthrow of President Kurmanbek Bakiyev just three weeks before the publication of the article. During the disturbances there were some anti-China incidents including the burning down of a Chinese commercial building, a concern for Beijing, which regards overseas Chinese as a strategic interest to be protected. In addition, the Chinese leadership worries that the Uighur population in Central Asia might make common cause with their ethnic fellows in restive Xinjiang. The Chinese enjoyed a good relationship with Bakiyev, who ensured that the Uighurs in Kyrgyzstan were kept on a tight leash. In the wake of the Kyrgyz uprising senior Chinese officials rushed to Xinjiang’s capital Urumqi, to assess their 61 response to the event.F F

In Beijing’s eyes, the “three evils” are particularly associated with Taiwan and three of the autonomous republics along China’s periphery. The great majority of China’s land border length comprises “autonomous regions,” entities which have a higher population of a particular minority ethnic group: Tibet, Xinjiang, Inner Mongolia and Guangxi (the remaining autonomous region – Ningxia – is in the centre of the country). The three largest of the autonomous regions – Tibet, Xinjiang and Inner Mongolia – pose significant security concerns for Beijing. The earlier report 62 on South Asia examined the role played in Sino-Indian relations by fears of rebellion in Tibet.F F Similar fears, with regard to Xinjiang and Inner Mongolia, play a key role in China’s relations with the independent countries that also border those two autonomous regions of China. In the case of Xinjiang, those bordering countries are India, Pakistan, Afghanistan, Tajikistan,

57 Swaine and Tellis, Interpreting China’s Grand Strategy, p.21. 58 Ibid, pp.46-47. 59 Ibid, pp.63-64. 60 Ibid, p.51. 61 Bhaskar Roy, Is China Preparing for Strategic Intervention, Paper No.3807, Noida, New Delhi: South Asia Analysis Group, 12 May 2010. 62 Kellett, China’s Periphery. Part 1: South Asia, pp.21-23.

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Kyrgyzstan, Kazakhstan, Mongolia and Russia. In the case of Inner Mongolia, the neighbours are Mongolia and Russia.

3.1.3 Xinjiang

It has been argued that China’s preeminent interest in Central Asia since the collapse of the 63 Soviet Union has been to ensure the security of Xinjiang.F F From the perspective of Beijing, a peaceful and secure Xinjiang, fully integrated within China, is a key element in opening up not only to Central Asia but also to South Asia.

Xinjiang comprises one-sixth of China’s territory, and nowhere on the planet is further from the sea. Eight of China’s 14 international borders lie in Xinjiang, giving it immense strategic significance. The region shares a 2,805-km border with Central Asia and a 40-km one with Russia. There are three major geographical regions in Xinjiang. The Zhungarian grasslands in the north blend into the Kazkah steppes. The Tarim Basin in the centre and west covers about one- fifth of Xinjiang, with much of it comprising the Taklamakan Desert. The Tian Shan and Pamir ranges separate Zungharia and the Tarim. The Tarim Basin is sparsely populated, but contains the Lop Nur nuclear test site and is thought to contain large potential reserves of petroleum and natural gas. It is crossed at its northern and southern edges by two branches of the historic Silk Road, and the Chinese government recently constructed a cross-desert highway that links Luntai on the northern edge to Hotan on the southern (this road is about 500-km east of the Central Asian borders and more or less parallel to them).

In 2003, Uighurs comprised 43.35 percent of Xinjiang’s population, and Han Chinese 43.02 percent, Kazakhs 6.47 percent, Hui (Han Muslims) 4.3 percent and Kyrgyz 0.8 percent; there are 64 also small numbers of Tajiks, Uzbeks, Russians and Tatars.F F Uighurs, Kazakhs and Uzbeks are Turkic and speak different, but mutually comprehensible, dialects of the Turkic language.

In terms of per capita GDP by purchasing power parity, Xinjiang ranks nineteenth among China’s 65 31 administrative divisions, with the equivalent of $6,295.F F This relatively lowly status belies the autonomous region’s economic potential.

From the 8th to the 18th centuries no China-based power controlled the region, yet the official line from Beijing is that China has enjoyed uninterrupted control over the Xinjiang area since 60 BC (although the name, which means “New Territory” was conferred during the Qing Dynasty 66 [1644-1911]).F F Historically, Xinjiang was the crossroads of Eurasia, a corridor along which important things, like Buddhism and silk, came and went. As a result, Beijing has resorted to “Silk road boosterism,” intended to link Xinjiang to China, rather than to Central Asia, by emphasizing silk, Buddhism and the high imperial periods of the Han and Tang Dynasties (206

63 Clarke, “China and the Shanghai Cooperation Organization,” p.123. 64 Hasan H. Karrar, The New Silk Road. China’s Central Asian Foreign Policy since the Cold War, Vancouver: UBC Press, 2009, p.20. 65 List of Chinese administrative divisions by GDP per capita, Wikipedia (http://en.wikipedia.org/ wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita), accessed 6 June 2011. 66 James A. Millward, “Positioning Xinjiang in Eurasian and Chinese History. Differing Visions of the ‘Silk Road’,” in Colin Mackerras and Michael Clarke, eds, China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.57.

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BC – 220 AD; 618-907 AD) – the last time before the 18th century that China had a presence in 67 Xinjiang – and by downplaying and denigrating the more recent Muslim past.F

In the mid-18th century China effectively established control of Xinjiang, and immediately began a process of colonization by Han Chinese. This process accelerated in the 19th century, and doubtless contributed to a series of Turkic-Muslim revolts that wracked Qing Central Asia, and especially Xinjiang, in the period from the 1820s to the 1870s. By the early-1870s, the Qing government had lost control of much of Xinjiang, but began to recover it in the years after 1875. It was also transformed into a province, becoming incorporated into China’s political system.

After the overthrow of the Qing in 1911, the Han elite in Xinjiang managed to retain power through warlord administrations that maintained control by exploiting divisions within the Turkic-Muslim population. But that population erupted in major revolts during the 1930s, forcing the Han elite to turn to the Soviet Union for help. The Soviets crushed the rebellions, but turned Xinjiang into a virtual satellite of the USSR. During the war, the Soviets and Chinese were equally distracted by external invasion, and the appeals for help by the region’s warlord regime went unanswered, allowing a Turkic-Muslim revolt, which erupted in late-1944, to gain considerable traction. In early-1945 the East Turkestan Republic (ETR) was proclaimed in north- western Xinjiang. Thus, Xinjiang was divided into ETR- and Chinese-controlled spheres.

After the Communist victory in China in 1949, Beijing made it a priority to integrate Xinjiang into China, and to isolate it from Soviet influence. The ETR had Soviet backing, but its leadership was killed in a plane crash in 1949. The movement withered, leaving the Chinese in full control 68 of Xinjiang by 1950.F F The Xinjiang-Soviet border became increasingly militarized during the 1960s, and there were repeated skirmishes along it.

Internally, the establishment of military-agricultural colonies, the encouragement of Han colonization, the cooptation of ethnic minority elites and the control and management of religion have been key instruments of integration. The land and local economy of Xinjiang came to be administered by the predominantly Han “Production and Construction Corps” (PCC), which was formed in 1954 and had 2.54 million members in 2001, or 13 percent of Xinjiang’s total population and one-third of all Han there. The military farms established by the PCC played a central role in altering the demography of Xinjiang. In 1953, Hans comprised just 6.1 percent of 69 Xinjiang’s population, a proportion that had risen to 43.02 percent in 2003.F

As might be expected, this changing ethnic balance has had repercussions for public security in Xinjiang. Islamist uprisings, violent disturbances, bombings and other forms of turmoil have rocked the autonomous region during the past two decades. Periods of relative calm have encouraged the view that the unrest in Xinjiang is abating, only for trouble to flare anew. During the 1990s the Chinese tended to attribute unrest in Xinjiang to radicalizing influences in Central Asia. At a later date Chinese officials and scholars began to correlate separatist activity in Xinjiang with the rise of the Taliban in Afghanistan. This topic will be discussed in greater detail in the section on China’s security concerns vis-à-vis Central Asia.

67 Ibid, pp.64-66. 68 Karrar, The New Silk Road, pp.34-35. 69 Ibid, p.37.

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There are both internal and external dimensions to Beijing’s approach to ensuring security in Xinjiang. Internally the Chinese government is pursuing a dual strategy which entails:

• a policy of rapid economic reform to entice locals; and • the encouragement of Han migration and an increased police and military presence in the 70 region.F F

Externally, Beijing seeks to ensure that there are no sanctuaries for Uighur militants in Central Asia or, for that matter, South Asia. In this regard, there are important and revealing differences between Central and South Asia. China’s goals and activities in Central Asia will be covered extensively later in this report, and this section deals only with Beijing’s aspirations and activities in South Asia, with particular reference to Xinjiang and with a view to placing that region’s bridging role – between the Chinese heartland and the outside world – in a broader context.

Pakistan’s location allows for commercial and energy access to cities in western China. In 1966 construction started on the Karakoram (“Friendship”) Highway, a 1,300-km paved road linking Kashgar in Xinjiang with Abbottabad in Pakistan’s North-West Frontier Province (now Khyber- Pakhtunkhwa). The highway took twenty years to build and while its explicit purpose was to foster trade and people-to-people contact, implicitly it was designed to enhance both countries’ political and logistical control over their frontier and their capability to deal with external and 71 internal security threats.F F In June 2006, the two countries signed a memorandum of understanding to rebuild and upgrade the Karakoram Highway, which had fallen into disrepair in places. The improved road was intended to accommodate heavily-laden vehicles and extreme weather conditions. At the same time there were also plans to link the Chinese railway system 72 with that of Pakistan, by building a track from Kashgar to AbbottabadF F, but these do not yet appear to have been implemented. China and Pakistan are also planning to link the Karakoram Highway to the Pakistani port of Gwadar – strategically located close to the entrance to the Persian Gulf – through a railway, to be financed by China, between Gwadar and Dalbandin (in 73 Balochistan), which would then extend up to RawalpindiF F, again, this scheme still seems to exist largely on paper. The Pakistani government plans on building a $1.67 billion road network that 74 would make Gwadar the hub of regional trade with China.F F It is reported that a fibre-optic line and a petroleum pipeline will run from Gwadar to the Karakoram Highway that connects to 75 76 China.F F China also envisages Gwadar as a base for pumping gas via a long pipeline to China.F F Xinjiang is obviously central to these ambitious projects.

70 Donald H. McMillen, “China, Xinjiang and Central Asia. ‘Glocality’ in the year 2008,” in Colin Mackerras and Michael Clarke, eds, China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.9. 71 Ziad Haider, “Sino-Pakistan Relations and Xinjiang’s Uighurs. Politics, Trade, and Islam along the Karakoram Highway,” Asian Survey, vol.LXV, no.4, July/August 2005, p.522. 72 Dr Maqbool Ahmad Bhatty, China’s Peaceful Rise and South Asia, IPRI Paper 13, Islamabad: Islamabad Policy Research Institute, August 2008, p.34. 73 Syed Fazl-e-Haider, “China pact a mixed blessing for Pakistan,” Asia Times Online, 3 July 2007. 74 International Crisis Group (ICG) , Pakistan: The Worsening Conflict in Balochistan, Asia Report No. 119, Islamabad/Brussels: ICG, 14 September 2006, pp.14-16. 75 Tariq Mahmud Ashraf, “Sino-Pakistani Defense Relations and the War on Terrorism,” Terrorism Monitor vol.6, no.8, 17 April 2008. 76 Pepe Escobar, “Balochistan is the ultimate prize,” Asia Times Online, 9 May 2009).

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Islamabad is hugely dependent upon China’s goodwill, and thus is very sensitive to Beijing’s concerns about militancy on its territory. One analyst of the bilateral relationship has described the Pakistan-Xinjiang highway link as “possibly the most sensitive component of the otherwise 77 stalwart Sino-Pakistan friendship.”F F Beijing has shut down the Karakoram Highway periodically, owing to concerns that the road has contributed to “the spread of Islamic ideology into Xinjiang 78 and the movement of radical Uighur militants.”F F The Chinese authorities are also concerned that the road is a major conduit for the entry of drugs into Xinjiang and China (in addition, they believe that the East Turkestan Islamic Movement (ETIM) has derived immense profits from drug 79 trafficking).F F Furthermore, militants of various stripes, based in Pakistan’s tribal areas, have from time to time disrupted the road.

As noted above, the Chinese authorities believe that some 600 Uighur activists escaped to northern Pakistan in the wake of the US-led “Operation Enduring Freedom” in Afghanistan. In two separate meetings in the early months of 2009, senior Chinese officials warned Pakistani 80 President Asif Ali Zardari that ETIM,F F a militant Muslim separatist group based in Xinjiang, had 81 established its “military headquarters” in Pakistani territory.F

For its part – and despite its problems in securing the tribal areas on the Afghan border – the Pakistani government has been unusually attentive (in comparison to other militant ethnicities) to attacking the Uighur militants on its soil. Ismail Kadir, reported to be the third highest leader of ETIM, was returned to China in March 2002 following his capture by Pakistani authorities. Ismail Semed, allegedly another founder of ETIM, was executed in Urumqi after being deported from 82 Pakistan.F F In October 2004, Pakistani troops killed Hasan Mahsum, the ETIM leader, who had taken refuge in South Waziristan, and in early 2007 Islamabad ordered a deadly military attack on 83 Uighur and Uzbek militants based in that tribal agency; only a handful survived.F F Islamabad has agreed to send to China any Uighurs captured in Pakistan, and was reported to have extradited as 84 many as nine Uighurs in April 2009 after accusing them of terrorist activities.F F After the rioting in Urumqi in July 2009, Pakistan’s leaders were quick to assure Beijing that any support for Uighur opposition emerging from the tribal areas would be immediately halted.

The foregoing demonstrates that Xinjiang plays a key role in the strategic and commercial relations between China and its western neighbours. It also shows how sensitive those neighbours are with regard to Beijing’s security concerns in Xinjiang, and Pakistan’s treatment of the Uighurs will provide context to the later discussion of the responses of Central Asian governments to their Uighur populations.

77 Haider, “Sino-Pakistan Relations,” p.524. 78 Ibid, p.523. 79Ibid, pp.533-34. 80 Since 2008, ETIM has been known as the Turkestan Islamic Party. 81 Omar Waraich, “China Leans on Pakistan to Deal With Militants,” Time, 10 April 2009. 82 Elizabeth Van Wie Davis, Uyghur Muslim Ethnic Separatism in Xinjiang, China, Honolulu HI: Asia- Pacific Center for Security Studies, January 2008, p. 8. 83 Tarique Niazi, “China, Pakistan, and Terrorism,” Foreign Policy in Focus, 16 July 2007. 84 Lisa Curtis, China’s Military and Security Relationship with Pakistan, testimony before the U.S.-China Economic and Security Review Commission, 20 May 2009,Washington, D.C.: The Heritage Foundation, 26 May 2009, p. 4.

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Xinjiang’s important role in China’s domestic energy production will be discussed below in the section on China’s energy supply.

3.1.4 Inner Mongolia

Inner Mongolia was the first national minority autonomous region of China and is the third largest of them, with a total area representing 12.3 percent of the whole country (Mongolia itself is about 30 percent larger). The joint border between Inner Mongolia and Mongolia is 3,193-km. This represents two-thirds of the total length of China’s border with Mongolia, and makes the autonomous region a kind of bridge between the two states. Inner Mongolia’s population is just under 25 million, of whom Han Chinese represented 79 percent and Mongols 17 percent in 85 2000.F F Although Mongols comprise 95 percent of the population of Mongolia, they are outnumbered by the Mongol minority in the Chinese autonomous region (around 3 million to 4.2 million).

Inner Mongolia’s border with Russia is about one-quarter that of its border with Mongolia. The border town of Manzhouli is by far China’s largest inland port of entry (it was designated as such in 1992), and is the gateway through which 60 percent of all of China’s trade to and from Russia and the rest of Eastern Europe pass. The city borders the Russian city of Zabaykalsk with a free 86 trade zone that allows residents from both sides to cross visa free.F F The cross-border infrastructure further north is fairly limited, and the spur pipeline of the Eastern Siberia-Pacific Ocean (ESPO) crude pipeline, from Skovorodino to Daqing (in neighbouring Heilongjiang), appears to bypass Inner Mongolia.

Inner Mongolia has a considerable natural resource base. A study by the Asian Development Bank stated that the region has deposits of 134 types of mineral resources, including rare earth, and is rich in coal, oil and natural gas. These natural endowments have been reinforced by a vigorous programme by Beijing to develop border regions. As a result, Inner Mongolia’s world trade grew from $1 billion in 1997 to $7.7 billion a decade later. Interestingly, Mongolia’s share 87 of Inner Mongolia’s total international trade was only 7.1 percent in 2005.F F Inner Mongolia ranks sixth among China’s 31 administrative divisions in terms of per capita GDP by purchasing 88 power parity, with the equivalent of $11,655.F

Just as Xinjiang is a primary security concern for Beijing as well as being a gateway to Central Asia, so Inner Mongolia plays a similar security and bridging role vis-à-vis Mongolia, although on a considerably smaller scale. “Pan-Mongolism” is a bone of contention between China and Mongolia. Beijing is wary of the Mongolian Democratic Party’s stance on a “Great Mongolia” agenda of “Uniting the Three Mongolias” (joining Mongols in Mongolia, Inner Mongolia and

85 Sharad K. Soni, Bridging the Gap in Sino-Mongolian Ties: Role of Inner Mongolia, in K. Warikoo and Sharad K. Soni, eds., Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, p.277. These proportions are from the 2000 census, and the gap has probably widened in the decade since. 86

ChrisH Devonshire-Ellis,H “Manzhouli, China’s Gateway to Eastern Europe,” China Briefing, 26 MayH 2010.H 87 Soni, Bridging the Gap, p.280. 88 List of Chinese administrative divisions by GDP per capita, Wikipedia (http://en.wikipedia.org/ wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita), accessed 6 June 2011.

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89 Buryatskaya in Russia).F F The Democratic Party is quite influential in Mongolia: it won 28 out of 76 seats in the 2008 legislative elections, is part of the governing coalition in the country, and its candidate was elected president in 2009.

As in Xinjiang, Han colonization is a bone of contention among many Mongols in Inner Mongolia. Qing encouragement of Han colonization of Inner Mongolia resulted in the more remote and more “Mongol” outer region following a path to independence at the outset of the 20th century after two centuries of Qing rule, and – as noted – its population is almost entirely homogenous.

In 1997, Mongolians from China as well as Mongolia and other countries held a meeting to focus on organizing an Inner Mongolian nationalist movement. The outcome with the establishment of an “Inner Mongolian People’s Party” with the goal of ending “Chinese occupation” of Inner Mongolia and stopping Chinese immigration and population assimilation policies toward Mongols. According to one source, 17 percent of Inner Mongolia’s Mongolian population 90 adhered to the party in 2005.F

In late-May 2011, there was considerable unrest after two ethnic Mongolians were killed in separate incidents. One was apparently killed by a Han Chinese driver while trying to protect his land, the other during a protest at a mine. The incidents come at a time of increasing concern among ethnic Mongolians that their traditional nomadic way of life is being eroded by mining projects. The ensuing demonstrations are thought to have been the region’s largest in twenty 91 years, with hundreds of riot police being deployed in the regional capital.F

An Indian authority on Central Asia argues that Inner Mongolia has perhaps “played the most 92 significant role” in ever-growing Sino-Mongolian ties.F

3.2 China’s Energy Requirements and Production

The study of China’s security behaviour cited earlier found that the relatively fixed extent of the Chinese heartland and periphery during the imperial period resulted from a number of factors, among them the general economic and political self-sufficiency of the Chinese state. It did not 93 rely on external sources of raw materials, commodities or know-how to prosper or survive. F

China’s rapid economic development has ensured that this relative independence no longer pertains, and this is particularly the case where it comes to energy. Dr Bobo Lo, of the Centre for European Reform in London, contends that without energy, China’s modernization and geopolitical rise would be severely undermined, along with the survival of the Communist Party.

89 Srikanth Kondapalli, “Stabilising Borders: Sino-Mongolian Relations,” in K. Warikoo and Sharad K. Soni, eds, Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, p.210. 90 Carla Freeman and Drew Thompson, China on the Edge. China’s Border Provinces and Chinese Security Policy, Washington, DC: The Center for the National Interest and Johns Hopkins School of Advanced International Studies, April 2011, pp.50-51. 91 “China’s Inner Mongolia ‘under heavy security’,” BBC News, 30 May 2011. 92 Soni, Bridging the Gap, p.256. 93 Swaine and Tellis, Interpreting China’s Grand Strategy, p.30.

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This makes the world-wide search for energy the number one foreign policy priority of the 94 Chinese leadership.F F

Initially, China relied for its energy needs almost entirely on coal, which accounted for over 80 percent of the country’s energy output prior to 1987, and the country only became a net importer 95 of oil in 1993.F F By 2009, China had replaced Japan as the second largest net oil importer in the 96 world (after the US).F

97 In 2010, China accounted for 20.3 percent of global primary energy consumption.F F Oil currently accounts for less than one-fifth of China’s energy consumption, but the country has become the largest automobile market in the world, and it is expected that oil consumption will rapidly 98 increase.F F As of January 2011, China had 20.4 billion barrels of proven oil reserves. It produced an estimated 4.3 million barrels a day (bbl/d) of oil liquids in 2010, of which 96 percent was crude oil. However, China’s main oil fields (notably Daqing and the Shengli oil field in Bohai Bay) are aging and have been heavily tapped since the 1960s, and output is expected to decline significantly in the coming years. China consumed an estimated 9.2 million bbl/d of oil in 2010. 99 Its net oil imports in 2010 were about 4.8 bbl/d.F F In its World Energy Outlook 2009, the International Energy Agency (IEA) predicted that China’s oil demand would increase from 358 100 million tons of oil equivalent (Mtoe) in 2007 to 557 Mtoe in 2020 and 758 Mtoe in 2030.F

The IEA expects that by 2035 China will be importing about 72 percent of the crude oil it 101 consumes, a significant rise from the current 50 percent.F F The Middle East remains the largest source of China’s crude oil imports (over 2.2 million bbl/d in 2010, 47 percent of total imports), and African countries contribute a significant amount (1.5 million bbl/d in 2010, or 30 percent). Set against the 893,000 bbl/d imported from Saudi Arabia, and 788,000 bbl/d from Angola, the 284,000 bbl/d contributed by Russia, and 184,000 bbl/d by Kazakhstan, were relatively small inputs to China’s oil imports (5.9 percent and 3.8 percent respectively). However, in light of Beijing’s concerns for the security of China’s oil imports (the “Malacca dilemma”) identified in 102 the earlier study of South AsiaF F, the present report will examine the potential to increase this relatively small proportion coming from Inner Asia.

China’s primary source of energy remains coal, which represented 70 percent of consumption in 2010, far ahead of oil (17.6 percent), hydroelectricity (6.7 percent) and natural gas (four percent).

94 Lo, Axis of Convenience, p.133. 95 Karrar, The New Silk Road, p.175. 96 Energy Information Administration (EIA), China. Country Analysis Brief, Washington, DC: US Department of Energy/EIA, May 2011 (http://www.eia.gov/countries/cab.cfm?fips=CH), accessed 30 June 2011. 97 BP Statistical Review of World Energy June 2011, London: BP, June 2011, p.41. 98 Hao Li, “China-Russia currency agreement further threatens U.S. dollar,” International Business Times, 24 November 2010. 99 China. Country Analysis Brief (EIA). 100 Shoichi Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” in Edward C. Chow, Leigh Hendrix, Mikkal E. Herberg, Shoichi Itoh, Bo Kong, Marie Lall and Paul Stevens, Pipeline Politics in Asia: The Intersection of Demand, Energy Markets, and Supply Routes, NBR Special Report No.23, Seattle: The National Bureau of Asian Research, September 2010, p.20. 101 EIA, China. Country Analysis Brief. 102 Kellett, China’s Periphery. Part 1: South Asia, p.26.

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China’s proved coal reserves stood at 114,500 million tons in 2010, 13.3 percent of the world total (and less than half of the US total). Its production of coal in 2010 was 1,800.4 million tons, and its consumption was 1,713.5 million, but the gap between production and consumption is narrowing and China’s imports of coal – from Indonesia, Australia, Vietnam and Russia, began to grow after 2002.

Slightly more than half of China’s coal is used for power generation, and the government has recently been grappling with a large power shortage occasioned by a substantial increase in the demand for electricity. This has been paralleled by a slowdown in electricity production at China’s coal-operated power plants, which in turn results from a major spike in coal prices. In response, the government has raised electricity prices for industrial, agricultural and commercial users in half the provinces of China, a move which some analysts speculate could lead China to 103 increase its imports of coal.F F

For the first time in almost two decades, China became a net importer of natural gas in 2007. The government anticipates boosting the share of natural gas as part of total energy consumption to 10 104 percent by 2020 (as noted, it is now four percent).F F At the end of 2009, China’s proved gas 105 reserves ranked fifteenth in the world, with 2.46 trillion cubic metres.F F The IEA predicted that China’s natural gas production would increase from 73 billion cubic metres (bcm) in 2007 to 176 bcm in 2020 and 242 bcm in 2030; domestic production is forecast to grow from 69 bcm to 127 106 bcm and 125 bcm respectively.F F Beijing expects to meet this growing shortfall by importing gas via Liquefied Natural Gas (LNG) and by a number of pipelines from neighbouring countries, an appetite that Inner Asia is in a strong position to satisfy.

In addition, China is now believed to have by far the largest reserves of shale gas in the world. In December 2010, energy firm Sinopec Corp struck shale gas flows in two exploration wells in central and south-western China. In March 2011, the US Energy Information Administration (EIA) released a report that showed that estimated China’s reserves of technically recoverable shale gas at 36.1 trillion cubic metres. At the end of June 2011, China issued its first shale gas exploration tender, and plans to hold a similar auction in the second half of the year. The blocks in the tender are mostly in the Chongqing municipality and Guizhou province. One official stated 107 that “in eight years shale gas should take a significant position in China’s energy mix.”F F

However, China would need to spend billions of dollars to build the necessary infrastructure to pump the gas to market. In addition, the process for recovering the oil – hydraulic fracturing – requires the injection into the gas wells of very large amounts of water, a commodity in short supply in many parts of China. With just under 20 percent of the world’s population, China has six percent of the globe’s fresh water resources and its water sources are unevenly spread across the country. In the first half of 2011, central China experienced a severe drought lasting months, reportedly the worst episode of its kind in fifty years. In mid-2011 China’s official Xinhua news

103 “China raises power prices for non-residential users,” BBC News, 31 May 2011. 104 EIA, China. Country Analysis Brief. 105 Aizhu Chen, “China set to unearth shale power,” Reuters, April 2011, p.5. 106 Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” p.21. 107 Chen, “China set to unearth shale power,” p.2.

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agency reported that about 1,000 of China’s 3,000 natural lakes had disappeared over the past 50 108 years.F F

China is promoting renewable energy, with consumption in 2010 nearly doubling over the 2009 total. Although China is the world’s top investor in renewable energy projects, they still remain a 109 minor factor in Chinese energy use, representing 0.5 percent of the total in that year.F

3.2.1 Xinjiang’s Role in China’s Energy Supply

Xinjiang plays an important role in China’s energy supply. It is the country’s largest gas- producing region, with major fields in the Tarim Basin. Although only 12 percent of the basin has thus far been explored for gas, its complex geological features and the distance from China’s main consumption centres make development costs relatively high. The Junggar Basin in 110 Xinjiang also has a high potential for gas supply.F F

The Tarim Basin is thought to be one of the areas of China that potentially might hold shale gas reserves. It is also one of the driest places on earth. Its only water source is the melting glaciers of Tian Shan (“Celestial Mountains”). In the short term, Xinjiang’s melting glaciers will increase water flow, but it is thought that this increase will last only about forty years, after which there will be little water left to sustain the region’s water-intensive industries, agriculture or growing 111 urban centres.F F This may, of course, encourage a short-term rush to develop any shale gas deposits in Xinjiang, but with potentially very adverse long-term consequences.

Xinjiang became China’s second largest oil production base in 2008 with an output of 27.4 million tonnes (it is catching up Daqing, whose output in 2008 was 40.2 million tonnes). Oil reserves in the region are estimated at 20.9 billion tonnes of oil and proven oil reserves of oil reached 3.9 billion tonnes at that time. In 1990, Xinjiang produced only seven million tonnes of oil but recorded annual growth of more than one million tonnes thereafter, offsetting decreased 112 production from the eastern oilfields.F

In addition, China is developing uranium production in Xinjiang (as also Inner Mongolia). China Guangdong Nuclear Power Group (CGNPG) said it is developing two large mines in Guangdong and Xinjiang. According to the chairman of CGNPG, the two mines are expected to start operations in 2013 and each to have an annual production capacity of no more than 500 tons. China imported 17,136 tons of uranium in 2010 and the World Nuclear Association said that the country’s annual consumption could reach 20,000 tons by 2020. China’s uranium production 113 capacity is 850 tons annually and will reach 2,500 tons in the future.F

108 Chris Buckley, “Drought exposes water, power woes threatening China ascent,” Reuters, 3 June 2011. 109 BP Statistical Review, pp.32-33, p.38, p.41. 110 EIA, China. Country Analysis Brief. 111 Erika Skull, Environmental Health Challenges in Xinjiang, Washington, DC: Woodrow Wilson International Center for Scholars, December 2008 (http://www.wilsoncentre.org/topics/docs/ xinjiang_dec08.pdf). 112 “Xinjiang becomes China's second largest crude oil producer,” Xinhua, 2 January 2009. 113 CGNPG developing uranium mines in Guangdong and Xinjiang, website of the Flanders-China Chamber of Commerce, 9 June 2011, (http://news.flanders-china.be/cgnpg-developing-uranium-mines-in- guangdong-and-xinjiang), accessed 3 July 2011.

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In general, China’s growing energy dependence encourages a more global orientation in a country that has traditionally maintained a low international profile in the interest of concentrating on internal development.

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4 Russia

Quite obviously, Russia is by far the most powerful of the Inner Asian countries studied here, and the degree to which it cooperates or competes with China has a great bearing on the rise of the latter country.

4.1 A Great Power?

The Soviet Union was an unquestioned superpower, but since 1991 Russia has struggled to assert a claim to Great Power status. Such claims recur frequently in Russian foreign policy rhetoric. For example, shortly after his ascent to office in June 2000, President Vladimir Putin declared 114 that Russia did not aspire to the status of a global power, it already was one.F F In 2009, Gleb Ivashentsov, Russia’s ambassador to South Korea, asserted that “Russia has come back to the world stage as a strong state respected by other countries. No important international issue can be 115 solved without Russia’s participation and against Russia’s veto.”F F

Russia does indeed have some of the attributes of Great Power standing. As a recent study of Russian foreign policy described the country, it is “...a weakened but still formidable power 116 confronting a world of emerging and uncertain threats.”F F It is one of the five veto-wielding permanent members of the United Nations Security Council. It has one of two largest nuclear 117 arsenals in the world (far ahead of China),F F and the fifth largest conventional forces. In geographical terms, Russia is the largest country in the world (and nearly 80 percent larger than China). Its population, while less than half that in July 1990, is still the ninth largest in the world. Its economy – measured by GDP at purchasing power parity – ranks seventh (although less than 118 one-quarter the size of that of second-ranked China).F F It has a vast resource base, and is self- sufficient in energy and minerals.

In a number of respects, Russia has reason to display increased confidence in its power these days. With the US bogged down in Iraq and Afghanistan and mired in economic difficulty, there has been a great deal of evidence that the global balance of power is shifting, and Russians feel themselves to be one of the emerging powers. To be included in the BRIC formulation by Western analysts seems to confirm this perception. Nominal GDP grew by a factor of eight between 1999 and 2009 (from $200 billion to $1.6 trillion), foreign exchange reserves increased thirtyfold in the same period (from $20 billion to $600 billion), average wages rose fourfold and

114 Margarete Klein, Russia’s Military Capabilities. “Great Power” Ambitions and Reality, Research Paper 12, Berlin: Stiftung Wissenschaft und Politik (German Institute for International and Security Affairs), October 2009, p.7. 115 Stephen Blank, Toward a New Chinese Order in Asia: Russia’s Failure, Seattle and Washington, DC: The National Bureau of Asian Research, NBR Special Report No.26, March 2011, p.6. 116 Jeffrey Mankoff, Russian Foreign Policy. The Return of Great Power Politics, Lanham: Rowman & Littlefield Publishers, Inc., 2009, p.11. 117 “US, Russia nuclear arsenal data released,” Agence France-Presse, 1 June 2011; Klein, Russia’s Military Capabilities, p.22. 118 CIA, World Factbook, entries for Russia and China, accessed 12 July 2011.

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119 the Russian stock exchange was one of the fastest-growing in the world.F F The state’s external 120 debt – 17 percent of GDP at the start of the yearF F – is extremely low by the standards of most developed economies.

Russia’s leaders have discovered that energy resources give their country considerable leverage in world politics. Oil prices surged from $12 a barrel in 1998 to over $140 a barrel ten years later. Russia has demonstrated its awareness of the geopolitical potency of its energy. Although Dmitri Trenin (of the Carnegie Moscow Center) conceded that Russia’s refusal to pump oil to Latvia and Lithuania (in 2003 and 2006 respectively) “does indeed constitute a case of using energy as a weapon,” he argued that because the two small Baltic countries were not in the same league as Russia’s established large customers in Europe, Moscow’s action did not really constitute an example of Russia using energy as a geopolitical weapon. Instead, he regarded Russia’s energy 121 policy as being much more about seeking profits than about establishing political domination.F F However, Putin himself seems to disagree with Trenin’s assessment, stating that Gazprom is “a 122 powerful political and economic lever of influence over the rest of the world.”F F

Indeed, a month after Trenin’s article was published, Russia was squaring off with a much larger former Soviet republic. Russia has cut off or reduced gas supplies passing through Ukrainian territory to the EU on several occasions (including January 2006 and March 2008). During the last months of 2008, relations between Moscow and Kiev once again became tense when Ukraine and Russia could not agree on the debts owed by Ukraine. At the height of this crisis, in December 2008, German Chancellor Angela Merkel went to St Petersburg for meetings with Russian President Dmitri Medvedev. The central issue of their discussion was Germany’s position on NATO expansion, particularly with regard to Ukraine and Georgia. Merkel made it clear at a joint press conference that Germany would oppose NATO membership for both of these countries, and that it would even oppose placing the countries on the path to membership. Since NATO operates on the basis of consensus, any member nation can effectively block any candidate from NATO membership. Given Washington’s support for NATO membership for the two former Soviet republics, Germany’s stance was of great significance. Germany is heavily dependent on Russian natural gas – at the time it received 36 percent of its gas came from that source – and risking that supply for Ukrainian or Georgian membership in NATO was not something Merkel was prepared to do. Of course, the German position was not motivated solely by concern for its natural gas supply. Berlin also felt that NATO expansion was not in Germany’s interests, since NATO did not have the military means to protect Ukraine or Georgia, and their incorporation into the alliance would not increase European security but might both irritate Russia 123 and impose increased defence spending on existing alliance members.F F In January 2009, this disagreement between Moscow and Kiev resulted in the cut-off of gas supplies to Ukraine and

119 Andrew Kuchins, “Russian Perspectives on China. Strategic Ambivalence,” in Bellacqua, ed., The Future of China-Russia Relations, pp.37-38. 120 Ben Aris, “Investors back in for Russian equity,” Russia Now, 25 February 2011. 121 Dmitri Trenin, “Energy geopolitics in Russia-EU relations,” in Katinka Barysch, ed., Pipelines, Politics and Power. The future if EU-Russia energy relations, London: Centre for European Reform, October 2008, p.15, p.23. 122 Mankoff, Russian Foreign Policy, p.35. 123 George Friedman, “Germany Opposes NATO Membership for Ukraine and Georgia,” Energy Tribune, 19 December 2008 (http://www.energytribune.com/articles.cfm/1094/Germany-Opposes-NATO- Membership-for-Ukraine-and-Georgia), accessed 12 July 2011.

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Europe, with eighteen European countries reporting major drops in or complete cut-offs of their gas supplies; Germany experienced only a 10 percent drop in supply.

Although the Putin years have seen Russia elevate economic factors as a component of national power, the country’s economy is not as robust as it would appear. Of the ten largest economies, Russia stands out as the only one that relies primarily on the export of raw materials (especially 124 energy products) for its growth and government revenue.F F More than 80 percent of its total exports, and 32 percent of its government revenues, are accounted for by energy exports, making Russia’s economic stability very vulnerable to declines in commodity prices. As President Medvedev has acknowledged, Russia has not succeeded in diversifying its economic activities since 1991. If natural resources are left out, Russia has only maintained its arms and space industry, although neither has produced a new product for world markets in the last ten years. Russia is still not a member of the World Trade Organization (WTO)– in fact it has the biggest economy outside that body. The Berlin-based anti-corruption organization Transparency International has persistently rated Russia as one of the most corrupt nations in the world. In the 2010 Corruption Perceptions Index, Russia was ranked 154th out of 178 countries – a significant decline over the previous year, when it was 146th out of 180 – with a ranking below countries like 125 Pakistan and Zimbabwe.F

According to the World Bank, while the Russian and Chinese economies were roughly the same size in 1993, China’s was over 3.5 times larger in 2008 (the disparity has grown further since then). From 1993 to 2005, 1,200 foreign corporations were located in Russia, whereas there were 281,000 in China. According to the OECD, in 2008 China invested $90 billion in research and 126 development, compared to the $20 billion invested by Russia.F F Of the BRIC countries, in 2008 Russia ranked last in the production of scientific papers (twenty years earlier the Soviet Union 127). carried out more research than China, Brazil and India combinedF F

4.2 Military Capability

Russia has always relied on military capability to assert its claim to Great Power status. Before the First World War, its European rivals were threatened with the “Russian steamroller.” During the Cold War, the world kept a wary eye on the “Soviet nuclear superpower.” These days Moscow still asserts a hard power claim to greatness.

The Russian claim for persisting military might rests largely on the country’s nuclear forces, on renewed military showmanship and on the threatened and actual use of force to advance Moscow’s foreign policy objectives. However, in a recent assessment of Russia’s armed forces, Dr Margarete Klein of the Stiftung Wissenschaft und Politik in Berlin, argued that the country’s Great Power ambitions and its actual military capabilities “continue to diverge, in some areas 128 dramatically...”F F

124 Yu-Shan Wu, “Russia and the CIS in 2009,” Asian Survey, vol.50, no.1, January/February 2010, p.76. 125 Transparency International, Corruption Perceptions Index 2010, Berlin: Transparency International, 26 October 2010 (http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results), accessed 12 July 2011. 126 Blank, Toward a New Chinese Order, p.12. 127 Clive Cookson, “China set for global lead in scientific research,” Financial Times, 26 January 2010. 128 Klein, Russia’s Military Capabilities, p.32.

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It quickly became clear after the collapse of the Soviet Union in 1991 that the Soviet military was becoming a hollowed out force. In the dozen or more years after that date, a series of events portrayed serious military decline, among them the failure of a series of military reforms in the early-1990s, the Chechen wars (Russian analysts described the military’s performance as grossly deficient at all levels), the sinking of the Kursk (August 2000), and so on. Even success in a war with Georgia in August 2008 demonstrated that the Russian armed forces have failed to make a successful transition from an industrial age military to one suited to the information age.

Klein believed that Moscow’s nuclear arsenal “constitutes Russia’s last remaining military Great 129 Power attribute,”F F and that the country lacks the capabilities for global power projection. In Klein’s view, Russia is essentially a regional power, whose military reform efforts are obviously designed to strengthen Russia’s primacy in the Commonwealth of Independent States (CIS) area. Klein’s conclusion is shared by other observers. In his study of Sino-Russian relations, Bobo Lo contended that Russia’s armed forces “remain incapable of meeting many of the demands of a modern military let alone more ambitious goals, such as the projection of power beyond the 130 country’s borders.”F

Citing John Mearsheimer, Klein asserted that there are three criteria, in the military realm, for the 131 achievement of Great Power status.F F The first is the possession of a nuclear weapons arsenal with the assured capability for a nuclear second strike. Russia clearly meets this criterion. The second yardstick is possession of conventional armed forces powerful enough to have an even chance to emerge victorious in a military conflict with the strongest existing power. At the height of the Cold War it was widely believed that the Soviet Union met that standard, but it has clearly not done so since the 1980s. The conventional military capabilities of Russia will be briefly discussed here, both in general and subsequently in the context of the military balance with China. The third military benchmark of Great Power status is the ability for global power projection, which requires long-range weapons and delivery systems, logistical capabilities and military bases abroad.

Defence spending collapsed in the wake of the disintegration of the Soviet Union, but the military’s budgetary allocation, expressed in roubles, increased fivefold from 2000 to 2008. However, the real increase has been much more modest, when account is taken of high inflation rates in the defence sector and widespread corruption.

In 2003, Putin stated that Russia’s nuclear forces “form the most important basis for national security,” a belief reflected in the lowering of the country’s nuclear threshold from that pertaining 132 in the Cold War, when Russia’s conventional strength was so much greater.F F To the degree possible, Russia’s strategic forces have been protected against the steepest budget cuts, although its nuclear arsenal is aging. The major portion of its delivery vehicles was built during the Soviet era and has already exceeded its service life. A modernization programme has proceeded slowly, but is now speeding up. However, little more than half of the tests of the new Bulava submarine-

129 Ibid, p.33. 130 Lo, Axis of Convenience, p.75. 131 Klein, Russia’s Military Capabilities, p.8. 132 Klein, Russia’s Military Capabilities, p.8.

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133 launched ballistic missile have officially been pronounced successful.F F Russia’s nuclear capability will be further discussed below, in the context of China’s nuclear arsenal

In quantitative terms, Russia’s conventional arsenal is impressive, but in reality the major part of the weaponry is obsolete and badly serviced. In March 2009, Defence Minister Anatoly Serdyukov estimated that only about 10 percent of Russia’s weapons were modern, and high- 134 technology equipment was hardly used in the war against Georgia.F F Likewise, the operation in Georgia revealed a failure to form joint task forces; doubtless in response, four new joint strategic commands were announced in July 2010, one of which covers eastern Siberia and the Russian Far East. The Russian armed forces are deficient in air-based radar systems and in unmanned aerial vehicles, shortcomings that have been blamed for Russian aircraft losses in Georgia, where the defenders’ air defences were detected too late. Equally, communications are a source of 135 weakness.F

There has been an effort to increase the number and scale of exercises, but the attempt to raise the number of contract personnel has been hindered by recruitment and re-engagement problems, and 136 readiness remains limited.F F The Russian military is heavily over-officered, with one officer for every 2.5 soldiers (more than any other armed force in the world), and it lacks a professional 137 corps of non-commissioned officers.F F In addition, there are significant disciplinary issues, with high rates of bullying, suicide and absenteeism.

138 Russia has traditionally based its claim to global influence on its ability to project hard power.F F Moscow has recently begun to display the trappings of power projection once again. In December 2007, a naval task force began conducting manœuvres near the Iberian Peninsula. This was the navy’s first large-scale exercise in the Atlantic in 15 years, and it also involved air power: long- range bombers tested nuclear-capable missiles in the Bay of Biscay. However, while the task force included the navy’s only aircraft carrier, the ship carried only a very limited number of jets and no attack aircraft. The Soviets were masters of using military parades to demonstrate military strength, but the last Soviet military parade on Red Square was held in November 1990. VE-Day 139 parades resumed in 1995, but did not include military equipment.F F The public display of military might only resumed in May 2008, with the participation of 6,000 troops, Topol-M mobile inter-continental ballistic missiles, tanks, aircraft, and so on. However, behind the panoply of fleet exercises and Red Square parades, Russia’s ability to project power on a global basis is quite limited: as one military analyst put it, “For all this posturing and projection of force, Russia still 140 packs a relatively small military punch.”F

Russia has lost most of the foreign bases once available to the Soviet Union in Asia, Latin America, the Caribbean and Africa. It does retain a number of bases in the countries of the former Soviet Union, including three in Central Asia (Kazakhstan, Kyrgyzstan and Tajikistan). It has a

133 “Russia test fires troubled Bulava missile after 8-month break,” RIA Novosti, 28 June 2011. 134 Klein, Russia’s Military Capabilities, p.9, p.14. 135 Ibid, p.13. 136 Ibid, p.16. 137 Ibid, p.17. 138 Mankoff, Russian Foreign Policy, p.2. 139 LtCol Carol Northrup, Russian Armed Forces: Power Projection, Boston: Institute for the Study of Conflict, Ideology, and Policy, 31 January 2008. 140 Ibid.

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considerable number of transport aircraft, but the fleet is aging and plagued by operational problems. Thus, Klein concluded that Moscow lacks the logistical capabilities needed for protracted operations far from the former Soviet space. However, it does have capabilities for 141 effective power projection in the CIS.F

The Russian army is trying to restructure itself away from the mass-mobilization model beloved by the Soviets, which is exemplified by a large number of “cadre” or paper units. At the end of 2008, General N.Y. Makarov, the Chief of the General Staff, stated that during the Georgian war 142 only 17 percent of units were “capable of fulfilling their tasks.”F F The switch to a brigade-based structure was officially completed by December 2009, and although the new structure appears to 143 remain rather experimental, the reform process “is developing with impressive speed.”F F Nevertheless, unofficial assessments by the Defence Ministry indicate that up to 60 percent of the 144 new brigades are not combat-ready.F F

The Russian ground forces still possess a huge inventory, but it is very dated. For example, they 145 have about 23,600 main battle tanks, 18,000 of them in storage.F F However, about 80 percent were built in the 1960s and 1970s, and the ground forces only own about 300 of the most modern tanks, the T-90/90A. The ground forces do have some highly capable missiles in their inventory, including the Iskander (which Klein describes as “the world’s most effective short-range 146 147 missile”F F) and the long-range S-400 Triumf (“clearly superior” to the US PatriotF F).

The Russian navy has hardly at all been employed in the conflicts in the other countries of the CIS since 1991, and thus has had less call on scarce financial resources than its sister services. As the Chinese are demonstrating, rising military powers regard navies as a central element of their geopolitical status. Similarly, Russia sees its navy as perhaps the most effective instrument to restore its corroded international standing, and as a result over the past decade Moscow has tried to reverse the decline, a process made harder by the country’s dilatory ship-building industry.

Dr Dmitry Gorenburg, a senior analyst at CNA, a non-profit think-tank in Alexandria, Virginia, recently conducted an assessment of Russian naval planning over the next decade. In his view, in ten years Russia is likely to have a navy that is focused primarily on coastal missions, though with some out-of-area capability and maintaining the submarine component of its strategic deterrent. The core of the surface fleet will consist of frigates and corvettes, and Gorenburg contends that plans to build a new aircraft carrier are unlikely to be anywhere near completion by 2020. Russia’s existing carrier, the Admiral Kuznetsov, will still be in the fleet by then, but is likely to be spending more time getting repaired than actually sailing. Some of the ships that currently are able to conduct more distant deployments – such as the aging Udaloy-class destroyers and a few modernized Kirov and Slava- class cruisers – will be reaching the end of their service lives by 2010. Nevertheless, overall Gorenburg believes that the Russian navy will be in somewhat better shape in 2020 than it is now. In Gorenburg’s view, any potential return of a powerful blue water capability will take an additional 10-20 years to achieve.

141 Klein, Russia’s Military Capabilities, p.19. 142 Ibid, p.15. 143 IISS, The Military Balance 2011, p.173. 144 Ibid, p.176. 145 Ibid, p.184. 146 Klein, Russia’s Military Capabilities, p.13. 147 Ibid, p.10.

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In an article written two years ago, Milan Vego, a professor of operations at the Joint Military Operations Department at the US Naval War College, stated that Russian ships are estimated to be some 20 to 30 years behind comparable foreign ships technologically. However, the emphasis on the modernization of Russia’s ballistic-missile submarines precludes large-scale modernization of surface forces. Nonetheless, Vego believes that the Russian navy’s decline has been reversed, and that its strength is bound to increase in the years ahead. Moscow is determined to increase its prestige and influence not only in its immediate neighbourhood but worldwide. While the Russian navy’s power projection capabilities are modest compared with the US Navy, they should not be 148 underestimated.F F

As in the other services, the air force’s inventory is largely outdated or badly serviced. After two MiG-29s crashed in late-2008, all of the MiG-29s were checked for airworthiness, and 70 percent of the fleet were found not to be operational. At the beginning of 2009, only about six percent of the 1,743 combat aircraft in the air force were new or had been substantially re-equipped. The forces possess only very few of the new Su-34 fighter aircraft, and the armaments programme for 2007-15 only provided for 116 new combat aircraft.

4.2.1 Russia-China Military Balance

Senior Russian officers typically view NATO and the US as the main threats to their country, but they also discern dangers emerging from “developing countries that possess well-equipped, 149 combat-ready and well-trained armed forces.”F F This clearly refers to China. In light of history (and especially Russian possession of territory that once belonged to China) and of the rapid technical and organizational modernization of the PLA described earlier, Russia would seem to have reason to be wary of Chinese military might.

Russia and China have a history of military conflict. In the past century-and-a-half they have fought each other in the Russo-Chinese War in Manchuria (1900), the Boxer Rebellion (1900), and on the Ussuri River and along the Xinjiang border (1969). Between these conflicts and the threat of military force (for example, in 1858), the Russians were able to impose a series of “unequal treaties” that acquired a large amount of territory for Russia, most of which, especially in the Russian Far East, it still holds (this will be discussed further below). In these circumstances, it would not be surprising if Moscow sought to maintain some degree of military parity with China.

Yet the Russian military hierarchy has shown itself ambivalent towards China. On the one hand, Russia’s national security strategy to 2020, released in May 2009, virtually omits mention of China and the Asia-Pacific region. It identifies possible military threats along all Russia’s borders 150 except in the Far East.F F Indeed, Russia has eagerly supplied modern arms to its giant neighbour – as noted, $20-30 billion worth in the 15 years after 1992, representing 89 percent of China’s 151 total arms imports over the periodF F – in order to fund the pallid rearmament of its own armed forces.

148 Milan Vego, “The Russian Navy revitalized,” Armed Forces Journal, May 2009. 149 Klein, Russia’s Military Capabilities, p.30. 150 Blank, Toward a New Chinese Order in Asia, p.6. 151 Jing-dong Yuan, “Sino-Russian Defence Ties. The View from Beijing,” in Bellacqua, ed., The Future of China-Russia Relations, p.208.

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On the other hand, it has been claimed that senior officers have been uneasy over the arming of a potential military opponent, and it has been suggested that a rapid decline in Russian arms sales to China during Putin’s second term (they were close to nil by 2006) reflected the armed forces’ 152 increasing fear of China.F F Until now, the Russian government has refused to sell its most sophisticated weapons systems – such as long-range ballistic missiles, strategic bombers, or air and missile defence systems – to China for fear that such weapons could disrupt the balance of power in East Asia. The Russian government has also declined to sell China weapons – such as advanced land warfare weapons or tactical air support aircraft – that could assist the PLA in a ground war with Russia. Instead, Russia has transferred advanced weapons mostly for naval 153 warfare and air defence.F F It is noteworthy that Russia has been more willing to sell its most advanced military hardware and technology to India, with which of course it does not share a border and of which it has long been an ally. This issue will be discussed further below.

As a result of the serious weaknesses that have been detected in the Russian armed forces, and of the rapid modernization of the PLA, some commentators have concluded in recent years that 154 China has virtually caught up with Russia.F F For example, after the Chinese tested a stealth fighter, the Chengdu J-20, in January 2011 there was speculation that Beijing had rejected Russian proposals for joint production of a stealth aircraft in the belief that their plane was superior to the Russian version, the Sukhoi PAK FA/T-50 (which first flew in June 2010), and 155 that Russia stood to gain more from joint production than would China.F F However, other observers believe that some of the claimed advances in China’s military technology have been exaggerated. Pointing to the claims of Chinese aircraft designers that they are capable of producing a platform as technologically sophisticated as US fifth-generation F-22 and F-35 fighters, the IISS suggests that the Chinese fighter would be closer to a 4.5 generation aircraft, such as the Eurofighter Typhoon: “Without extensive foreign assistance, the track record of the Chinese defence industry indicates that it has little chance of making the necessary technological 156 breakthroughs to produce a fifth-generation fighter within the next decade.”F F

The Chinese do not seem to feel particularly threatened by Russia’s military posture. After the collapse of the Soviet Union, Beijing shifted its strategic orientation to the south and east – notably opposite Taiwan – although it does retain significant force structure in the Lanzhou, 157 Beijing and Shenyang military regions.F F

However, Russia continues to enjoy several important military advantages vis-à-vis China. The sheer size of the Russian armed forces, along with the PLA deficiencies discussed earlier, 158 constitute a major deterrent to Chinese attack.F F For all the deficiencies displayed by the operations in Chechnya and Georgia, Russia at least has more experience of modern combat operations than has China. Russia’s huge nuclear arsenal is a further disincentive to Chinese military provocation. As of 5 February 2011, Russia had 521 deployed intercontinental ballistic

152 Mankoff, Russian Foreign Policy, p.215. 153 Richard Weitz, “China-Russia relations and the United States: At a turning point?” RIA Novosti, 14 April 2011. 154 Lo, Axis of Convenience, p.75. 155 “Chinese Stealth Fighter J-X/J-XX/XXJ (Jianjiji – Fighter Aircraft),” GlobalSecurity.org, 14 January 2011 (http://www.globalsecurity.org/military/world/china/j-xx.htm), accessed 16 July 2011. 156 IISS, The Military Balance 2011, p.204. 157 OSD, Military and Security Developments, p.38. 158 Lo, Axis of Convenience, p.76.

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missiles, submarine-launched ballistic missiles, and heavy bombers, according to the State Department, on the basis of figures supplied under the new Strategic Arms Reduction Treaty adopted on that date. Russia also had 1,537 deployed warheads and 865 launchers and heavy 159 bombers.F F In contrast, Western analysts recently put China’s stockpile at 240 warheads, with 175 in active mode and 65 in reserve or waiting to be dismantled because they are considered too 160 old for use.F F However, in June 2009, senior Japanese Defence Ministry officials told US representatives that Tokyo’s assessment was that “China is rapidly upgrading its nuclear capability beyond its relatively insignificant levels from the 1980s and the 1990s, and is trying to 161 reach parity with Russia and the US.”F F In addition, China is not fettered by major nuclear limitation treaties.

The Russian Pacific Fleet clearly plays a key role in the military balance between Russia and China. As was noted earlier, Russia’s Pacific Fleet includes five SSBNs (one of which is in reserve), compared with the three in the Chinese navy. However, while strategic deterrence has the highest priority for the Russian navy (as it was for the Soviet one), Russia cannot maintain 162 more than 20 percent its dozen active SSBNs on patrol because of a funding shortage.F F By 2020 the Pacific Fleet is expected to receive new-generation Borei class nuclear-powered ballistic missile submarines (the first unit will be transferred in 2012).

163 Russia’s sole aircraft carrier in service, the Admiral Kuznetsov,F F is deployed with the Northern Fleet, but there are plans to build at least three carriers each for the Northern and the Pacific Fleets, starting in 2012-2013 with entry into service anticipated for 2017. Moscow recently ordered two French Mistral-class helicopter carriers from France, and plans to deploy them with the Pacific Fleet, probably in late-2013. The Mistral is the most modern French warship class, having entered service in 2006. This acquisition, even without the most sophisticated technology, provides Russia with a modern naval and amphibious warfare capability that it currently lacks. The highly modulable Mistral ships, equipped with Russia’s own helicopters and tanks, will 164 endow Russia with a modern, fast and powerful platform for landing operations.F F It is also intended to add corvettes and frigates, followed by new-generation destroyers and aircraft carriers, to the fleet. If these ambitions are realized, by 2030 Russia will once again manifest its 165 status as a significant Pacific player with the muscle to foster its regional and global interests.F F

Vladimir Petrovsky, a member of the Russian Academy of Military Sciences, recently asserted that, although there is no direct threat to Russia’s strategic interests in the Pacific, in the face of Chinese and Japanese naval developments its position as a Pacific naval power now looks less

159

“US,H Russia nuclear arsenal data released,”H Agence France-Presse, 2 June 2011. 160 Michael Richardson, “Why worry about China's nuclear warheads?”, The Japan Times Online, 4 March 2011. 161 Philip Dorling, “No nuclear limit: China,” The Age (Melbourne), 28 February 2011. 162 In contrast, the US Navy maintains about 50 percent of its SSBN force on patrol at any one time. 163 Ironically, the PLAN’s first aircraft carrier – reportedly named the Shi Lang – is a former sister ship of the Kuznetsov, the Varyag, procured at auction from Ukraine. 164

VladimirH Socor,H “France Offers Russia a Naval Power Projection Capability,” Eurasia Daily Monitor (Jamestown Foundation), vol.6, no.221, 2 December 2009. 165 Alexey Muraviev, “Russia's power ambitions in the Pacific,” The Interpreter, Sydney: Lowy Institute for International Policy, 3 March 2011.

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robust than used to be the case. Petrovsky cites Russian naval experts who say that the Pacific 166 Fleet, in its current condition, is not able to perform full-fledged blue water combat missions.F

Klein includes a comparative table of selected weapons, based on the International Institute for Strategic Studies annual Military Balance 2009, that shows Russia to have a huge numerical advantage over China in main battle tanks (23,860 to 7,660). In other weapons systems there is near parity: Russia has marginally more combat aircraft (1,988 to 1,943) and fewer major surface 167 ships (61 to 78) and tactical submarines (52 to 62).F F However, it was noted earlier that most of Russia’s tanks are very outdated, and it has only about 300 of the most modern types. In contrast, China already has some 450 Type-98 and Type-99 vehicles, which were introduced during the past dozen years (more recently than Russia’s T-90 and T-90A).

4.3 Foreign Policy

Some of the elements of Russia’s foreign policy have been alluded to above: its adherence to the UN and its status as a permanent member of the Security Council; the use of energy for geopolitical leverage; the increased attention to economic factors as a component of national power; the drumbeat of Great Power assertion; and the threatened and actual use of force.

The chaotic conditions of the early-1990s ensured that the making of foreign policy in Russia was hydra-headed. In more recent years, the president and his staff have appeared to dominate foreign policy decision-making, but there has been a continuing struggle for influence among other actors, including the security services, the military-industrial complex, large state-owned 168 companies, and now the prime minister.F F The updated Foreign Policy Concept, which was issued shortly after Medvedev became president and Putin prime minister in 2008, specified that the cabinet, headed by the prime minister, carries responsibility for implementing Russia’s foreign policy. This was a departure from earlier practice which denied prime minsters this role. In addition, public opinion has become a factor in politics, and foreign policy needs to take into account the growth of nationalist sentiment in Russia.

Post-Soviet foreign policy has been shaped by five broad underlying factors:

• a change in the structure of the international system away from bipolarity; • a decline in Russian military capability; • Russia’s transformation from a command to a market economy; • Russia’s integration into, and increasing reliance on, the global economy; and • 169 Russia’s political leadership and domestic politics.F

Russia holds to a geopolitical understanding of world politics in which the focus is on states and power. In the early-1990s Russia briefly espoused a Western-centric, liberal and cooperative foreign policy. In this period, Russia joined the G-8 and signed the Founding Act with NATO.

166 Vladimir Petrovsky, “Russia’s Pacific Fleet Anniversary: Time for some answers?,” RIA Novosti, 13 May 2011. 167 Klein, Russia’s Military Capabilities, p.10. 168 Mankoff, Russian Foreign Policy, p.4. 169 Robert H. Donaldson and Joseph L. Nogee, The Foreign Policy of Russia. Changing Systems, Enduring Interests, Armonk and London: M.E. Sharpe, 2009, p.6.

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However, poverty and instability soured the Russian population on the Western democracies and Russian foreign policy acquired a more competitive spirit during Yevgeny Primakov’s tenure as foreign minister in the late-1990s.

Contemporary Russia has been described as having a “sense of strategic entitlement” that encourages it to adopt vocal positions from “force of habit...even where its interests and influence 170 were peripheral.”F F As a result, its international image continues to be that of a “hard power” that 171 prefers pressure to persuasion, and consequently has few friends.F F Putin epitomized this approach to international affairs in a comment he made in 2006 in which he described the “leading world powers” as those that possess “nuclear weapons [and] powerful levers of military- 172 political influence.”F F This attitude is typified by Russia’s opposition to suggestions that the G-8 be transformed into a G-14 by the inclusion of such non-Western powers as China, India and Brazil.

Given Russia’s craving to be treated as a Great Power, a cardinal plank of Moscow’s foreign policy has been the promotion of a system of international relations in which large states are the primary guardians of global order and in which there is a general balance of power. As a general rule of statecraft, Russia has long pursued balance of power policies, a tradition reflected in its membership of the Triple Entente before the First World War and the Warsaw Pact.

However, the advent of Medvedev has somewhat softened the Russian approach to foreign policy. His emphasis on competitiveness and soft power are at odds with the attitudes of the members of the security and intelligence services who were influential under Putin. This is not to say that Putin has lost his influence on foreign policy. As noted, the 2008 Foreign Policy Concept vested authority for the implementation of foreign policy in the prime minister and cabinet. However, the updated concept differed from its predecessor document of 2000 in avoiding the 173 term “Great Power.”F

Like Beijing, Moscow believes that state sovereignty is absolute. With its own domestic insurgencies (notably in Chechnya and the North Caucasus) and its fear of NATO involvement in the affairs of Central Asia, Russia has been a staunch opponent of Western military action that Moscow regards as interference in the domestic affairs of such countries as Iraq and Libya. Thus, a key element of Russian foreign policy has been support for the UN, which also reinforces its image of itself as a Great Power. Yet Russia has used its UN veto relatively sparingly, especially in comparison with the Soviet Union. From 1992 to 2009 Russia cast a veto six times. During the 174 same period the US used its veto 13 times, China four and the UK and France not at all.F F However, the threat of a Russian veto has also on occasion been effective in restraining Western action. For example, in early-June 2011 Russia said that it would veto intervention against Syria in the Security Council, citing NATO’s inconclusive bombing of the Libyan capital, Tripoli. Five weeks later, Western P-5 members had still not succeeded in obtaining a resolution against Syria, a situation described as “unbearable” by France. China joined Russia in its temporizing tactics,

170 Lo, Axis of Convenience, p.34. 171 Ibid, p.152. 172 Mankoff, Russian Foreign Policy, p.16. 173 Mankoff, Russian Foreign Policy, c.p.13. 174

“Subjects of UN Security Council Vetoes,” Global Policy Forum (http://www.globalpolicy.org/security-H council/tables-and-charts-on-the-security-council-0-82/subjects-of-un-security-council-vetoes.html),H accessed 12 July 2011.

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but both voted for a resolution that deplored an attack by pro-regime demonstrators on the US and French embassies in Damascus on 11 July 2011.

Given its concern with regard to its own internal situation (and thinking particularly of Tibet, Xinjiang and Taiwan), China has shared Russian opposition to Western involvement in the domestic affairs of countries undergoing severe unrest. In the first use of multiple vetoes at the Council since 1989, in January 2007 China and Russia together vetoed a draft resolution in the Security Council that called on Burma to release all political prisoners, begin widespread dialogue and end its military attacks and human rights abuses against ethnic minorities. They said that Burma was not a serious threat to international peace and security and that therefore the issue should not be dealt with by the Security Council. Eighteen months later, in July 2008, the two countries again united to veto a resolution seeking to impose sanctions on Zimbabwe, and for the same reasons. The Chinese ambassador argued that the situation in Zimbabwe “until now has not 175 exceeded the context of domestic affairs.”F F On the other hand, concern about external intervention in countries’ domestic affairs, and in particular with regard to Tibet and Taiwan, led Beijing to oppose Russian actions in Georgia and Moscow’s recognition of South Ossetia and Abkhazia.

Although Russia’s world-view remains overwhelmingly Western-centric – a legacy of the 176 bipolarity of the Cold WarF F – Putin has presided over a marked “Asianization” of Russian foreign policy, pursuing closer relations not only with China, but also with Japan, the two Koreas, and the member states of ASEAN. Russia has pursued membership in, and increased interaction with, such multilateral organizations as Asia-Pacific Economic Cooperation, ASEAN, ASEAN Regional Forum, the East Asia Summit, and the Organization of Islamic Cooperation. Policy initiatives shaped by this approach are pursued not only for the sake of bilateral relations but also as part of a larger challenge to US “unipolarity.”

However, with so many major powers in the Asia-Pacific region, it is difficult for Russia to play a meaningful role there. As a result, Moscow has followed a policy of strategic diversity, by trying to avoid too great reliance on a single partner (such as China). For example, ideally for Russia, Japan and China would neutralize each other strategically, increase competition for Russian resources, and allow Russia to act as a “swing” power in the region. Thus, there has been a huge 177 increase in Russia-Japan trade, from $4 billion in 2003 to $24 billion in 2010.F F Yet Moscow has been unable to avoid spats with Tokyo, notably over the disputed Kuril Islands but also over oil pipeline routes, fishing rights, US missile defence plans, and so on. In reality, Moscow’s policy towards Asia has become more Sino-centric than ever, and Russia’s stature in the Asia-Pacific 178 region “remains very modest.”F

175 Daniel Nasaw, “China and Russia veto Zimbabwe sanctions,” The Guardian, 11 July 2008. 176 Mankoff, Russian Foreign Policy, p.16. 177 Lo, Axis of Convenience, p.122; “Russia, Japan double volume of trade,” The Voice of Russia, 2 February 2011. 178 Lo, Axis of Convenience, p.122, p.126.

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4.4 Relationship with China

4.4.1 General

A recent study of Sino-Russian relations contended that the two countries share many psychological traits: a strong if not always well-articulated national consciousness; a sense of destiny; a painstaking and painful remembrance of the past; a culture of grievance and “national humiliation;” and quasi-permanent feelings of strategic vulnerability. Yet at no stage of the two 179 countries’ common history has there been a period of unalloyed good relations.F F

Another thing the two countries share, and that strongly shapes their bilateral relations, is a border that at 3,605-km – including the 40-km stretch west of Mongolia and bordering Xinjiang – that is the fifth longest in the world.

4.4.1.1 History of Sino-Russian Relations

Three centuries of the “Mongol yoke,” beginning with the invasion of Russia in the 13th century, created in the Russian mind a view of the east as an abiding source of threat. Between the 15th and the 19th centuries Russia’s gaze was directed towards the West, and the period was one of isolation and indifference in Sino-Russian relations.

However, in the mid-19th century an expanding Russia lapped up to a Manchu dynasty in terminal decline in China. As a result, St Petersburg was able to impose three “unequal treaties” – Aigun (1858), Peking (1860) and Tarbagatai (1864) – on a China it viewed with contempt. Under these treaties, the Qing emperor surrendered some 1.5 million square kilometres of territory, and China suffered a further loss of territory in the west during the 1880s (Treaty of St Petersburg, 1881). The Chinese termed these territorial cessions “looting a burning house.”

These treaties fostered a sense of superiority in Russians. For the Chinese they became a potent 180 symbol of their country’s “century of humiliation” (1842-1949).F F Importantly, they also established a territorial question which, for many people in both China and Russia, remains unfinished business. For China, the Russian Far East and Taiwan represent the last “unreturned territory” taken from China in the 19th century.

Despite the commonality of Communism, in the decades after 1921 China and the Soviet Union enjoyed an ambiguous relationship. During the 1920s and 1930s, the Soviets supplied their Chinese confrères with money, arms and technical advice. But they also supported Chiang Kai- shek and refused to return the territory wrested from China by tsarist Russia. In 1949, the USSR was China’s only partner, a situation reinforced by the Korean War, which led to a flood of Soviet technical assistance, including the transfer of atomic weapons technology. Yet bilateral relations went into a serious downward spiral in the 1960s. In June 1960 all of the 1,390 Soviet advisers in China were withdrawn. This action reflected not only a personal antipathy between Nikita

179 Ibid, pp.17-18, p.3. 180 In 1842 the first of China’s “unequal treaties,” the Treaty of Nanjing, ended the First Opium War with Britain.

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Khrushchev and Mao Zedong, but also a struggle for the leadership of the socialist camp and 181 Chinese complaints of Soviet “revisionism.”F F

4.4.1.2 Sino-Russian Border Disputes

In an analysis of Beijing’s approach to territorial issues, published in 2008, M. Taylor Fravel (an associate professor of political science at the Massachusetts Institute of Technology) noted that China’s Communist government inherited territorial disputes with all of China’s 14 land neighbours and six sea neighbours. It has also had to manage what Fravel calls three “homeland disputes,” involving Hong Kong, Macao, and Taiwan. He showed that, while six of these disputes remain unresolved, Beijing has offered concessions in 17 of these 23 conflicts, abandoning claims to very large tracts of land. In the other six disputes, Beijing has used force. Fravel argued that both types of behaviour could be explained by security concerns. Provided the land at stake was not essential for defensive purposes, China offered concessions at times when it needed to break out of diplomatic isolation or gain recognition of its control over domestic ethnic minorities (such as the Tibetans and Uighurs). But if the disputed land was valuable, Beijing was liable to use 182 force (as it did against India in 1962 and the Soviet Union in the late-1960s).F

China’s instability during the Cultural Revolution and the persistence of the territorial dispute bred by the “unequal treaties” led to huge troop deployments along the Sino-Soviet border in the late-1960s, especially along the Ussuri River. Because of Chinese weakness, the river was not demarcated in accordance with international rules, using shipping lanes, with the result that the demarcation line was on the Chinese side of the river, leaving almost all of the islands in Russian possession. This dispute was on the way to some resolution in 1964, but Mao and Khrushchev fell out on the issue, negating the border agreements that had already been reached. The situation vis- à-vis the islands deteriorated, leading to bloody border clashes over the space of seven months in 1969. There were some 1,000 fatalities and Moscow actually probed the US reaction to a possible Soviet preventative strike against Chinese nuclear weapons facilities.

Border talks began in the wake of the 1969 clashes and lasted inconclusively for a decade. Serious negotiations resumed shortly before the collapse of the Soviet Union, and in recent years they have in part been motivated by the need to emplace a border control infrastructure to facilitate cross-border economic activity. In October 1995 an agreement over the last stretch of the border was reached, but the question of control over three islands in the Amur and Argun rivers was not until October 2004, with most of the disputed islands being assigned to China; the deal was ratified in 2005.

Of course, these cessions were only the tiniest fraction of the land in the Far East seized by Russia through the “unequal treaties.” Mao Zedong once told Japanese socialists that China would eventually present claims to the “Soviet revisionists” for huge territories in Siberia and the Far 183 East.F F Whether, despite the demarcation agreements of recent years, China still harbours hopes of recovering more of the lost territory remains to be seen. In his study of Russian foreign policy, Mankoff argues that Russian leaders have expressed real worry about China’s future plans and

181 The historical information here largely comes from Lo, Axis of Convenience, p.17ff. 182 M. Taylor Fravel, Strong Borders, Secure Nation: Cooperation and Conflict in China's Territorial Disputes, review by Andrew J. Nathan, Foreign Affairs, vol.88, no.2, March/April 2009. 183 Dmitry Kosyrev, “Gorbachev and Deng changed the world 20 years ago,” RIA Novosti, 15 May 2009.

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184 ability to dominate the Russian Far East.F F In July 2011, Sergei Karaganov, a leading academic and a former advisor to Presidents Yeltsin and Putin, wrote that “if current trends persist, Russia east of the Urals, and later the entire country, will become an appendage of China – a warehouse of resources, and then an economic and political vassal. No ‘aggressive’ or unfriendly effort by 185 China will be needed; Russia will be subdued by default.”F

China also lost territory along its western border to the “unequal treaties.” This topic will be discussed in the section on Central Asia.

4.4.1.3 Contemporary Sino-Russian Relations

The history of the century-and-a-half prior to the collapse of the Soviet Union inculcated in Russians a sense of superiority vis-à-vis China, and it is difficult for a diminished power to reconcile itself to the rise of another. Lo contends that Sinophobia continues to exert a significant 186 pull in Russia.F F On the other hand, an estimated two million Russians visited China in 2006 187 (and some 600,000 Chinese visited Russia).F

In the early post-Soviet years, Russia benefited from having in Beijing a generation of leaders that were familiar with it. On 15 May 1989, Soviet President Mikhail Gorbachev and Deng Xiaoping, paramount leader of China from 1978 to 1992, met in Beijing. In a recent book, a former Foreign Minister of China wrote that it took ten years to prepare that meeting, given that bilateral relations had been on ice since the confrontation between the Soviet Union and China in 1969-1979. Soviet-Chinese confrontation was finally put to rest at the 1989 meeting. When the West ostracized China after the Tiananmen crackdown, the Soviet Union seized the opportunity 188 to strengthen relations with China.F F It is of note that Deng studied at Moscow’s Sun Yat-sen University in 1926-27.

Several key members of the third generation of China’s Communist leadership also spent time in Russia. Jiang Zemin, General Secretary of the Communist Party from 1989 to 2002 – a key period in modern Sino-Russian relations – received engineering training at the Stalin Automobile Works in Moscow in the 1950s and speaks passable Russian. Li Peng, who was prime minister (acting and actual) from 1987 to 1998, studied in a Moscow engineering institute in 1948, and speaks Russian fluently. Jiang Zemin played a key role in upgrading China’s ties with Moscow. However, his successor, Hu Jintao, effectively downgraded relations with Putin’s Russia, which repeatedly disappointed Beijing in terms of arms sales and energy deals. Unlike Jiang Zemin and 189 Li Peng, Hu did not receive training in Russia.F

None of the fourth generation leaders (Hu and his fellows), or the fifth generation (scheduled to take the helm in late-2012, when the current leaders retire) have had an experience of Russia

184 Mankoff, Russian Foreign Policy, p.27. 185 Sergei Karaganov, “Look East, Russia,” Project Syndicate, 22 July 2011 (http://www.project- syndicate.org/ commentary/karaganov16/English), accessed 22 July 2011. 186 Lo, Axis of Convenience, p.3. 187 Ibid, p.39. 188 Dmitry Kosyrev, “Gorbachev and Deng changed the world 20 years ago,” RIA Novosti, 15 May 2009. 189 Minxin Pei, “Chinese Foreign Policy After Hu,” The Diplomat, 21 July 2011.

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similar to that of the second and third generation leaderships. Indeed, some of the potential fifth generation (such as Wang Qishan, a possible prime minister) have been educated in the West.

Obviously, training in Russia is only one factor shaping the policy of Chinese leaders towards that country. Nevertheless, the loss of interlocutors versed in Russian language and methods has occurred at a time of growing inequality between China and Russia in terms of many of the measures of national power. The second and third generation leaderships knew Russia when the Soviet Union was a superpower and their own country was at best a regional power. Now that the roles are increasingly being reversed it is likely that this turnabout will influence the imminent fifth generation leadership in their attitudes towards Russia. China’s economy is estimated to be 190 4.5 times larger than that of Russia, and its population 15 times larger than that of Russia.F F Yet the Russian and Chinese economies were roughly the same size in 1993, and in 1990 China’s population was less than four times the size of the Soviet Union’s.

Developments such as these undoubtedly fuel growing confidence among Chinese vis-à-vis Russia. Lo contends that although Russophobia does exist in China, it is less of an issue than 191 indifference.F F He describes Moscow’s Great Power pretensions as being a source of considerable irritation to the Chinese, who have nonetheless “massaged” Russian sensibilities, 192 thus preventing the growing inequality between them becoming a major source of tension.F F However, he argues that that inequality will inhibit the development of a genuinely close 193 194 partnership.F F In sum, “Russia needs China more than China needs Russia.”F F

A thaw in Sino-Russian relations was ushered in by Mikhail Gorbachev in a speech he gave in Vladivostok in July 1986, in which he offered territorial concessions, the first by a Russian or Soviet leader since the “unequal treaties.” However, tangible progress in bilateral relations was slow. After the collapse of the Soviet Union, Russian President Boris Yeltsin pursued a pro- Western course that raised fears of strategic encirclement among Chinese leaders. Yet at the same time the delimitation of the Sino-Russian border was occurring, and in April 1996 a confidence- building measure was put in place along the whole length of the frontier whereby troops and heavy weapons were moved from a 100-km zone. After a brief flirtation with Taiwan, Moscow stated its commitment to the “one China” policy, and in return Beijing backed Russia in the first Chechen war (1994-96). In 1996 the two countries established a strategic partnership, which was reinforced by a treaty on friendship and cooperation, signed in 2001. The latter was the first comprehensive agreement between Russia and China since before the Korean War. Among other provisions, it called for the two parties to stop aiming nuclear weapons at each other and to commit to a “no first strike” principle.

Forty years ago Russia and China were implacable enemies yet today, in Lo’s view, relations are better than at any time in their mutual history, and there has been an unparalleled convergence 195 across multiple policy areas.F F In August 2007 Sergei Karaganov (at that time the head of the

190 CIA, World Factbook, entries for China and Russia, accessed 22 July 2011. 191 Lo, Axis of Convenience, p.3. 192 Ibid, p.89. 193 Ibid, p.7. 194 Ibid, p.88. 195 Ibid, p.1.

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Council on Foreign and Defence Policy) gushed that “China’s attitude toward Russia is loyal and 196 positive. No other state in Asia is more friendly to us – apart from Kazakhstan.”F F

Nevertheless, the gist of Lo’s analysis of the relationship is that it is one of strategic convenience rather than one of strategic cooperation, governed more by expediency and opportunism than by like-mindedness. They do share certain priorities: stability and confidence-building along their common border; resisting the influence of “alien” Western values; rejecting Western “interference” in their domestic affairs; countering Western action regarding Iran’s nuclear programme; opposing US theatre missile defence plans in the Asia-Pacific region; and resisting Western efforts to establish a presence in Central Asia.

Yet even where they pursue a common objective, their motivations do not always coincide. For instance, Russian opposition to US missile defence plans is driven quite largely by status concerns, whereas China was concerned that it would reassert the US strategic presence in the Asia-Pacific region, strengthen Japan’s military position and bring Taiwan closer under the American military umbrella. Moscow’s approach to the bilateral relationship has emphasized security concerns, whereas Beijing has focused more on the economic aspects of the 197 association.F F

Neither country constitutes the other’s most important bilateral relationship. Moscow assigns greater resources to the countries of the CIS and to key states of the EU than to China. Today, as historically, Russia finds its external reference points – both positive and negative – in Europe (Europe currently accounts for more than half Russia’s trade turnover). The Chinese leadership is more focused on engagement with the US, the ASEAN countries, Japan, the EU and Africa than on Russia. According to data in the CIA World Factbook, in 2009 the US accounted for nearly 14 198 percent of China’s total trade, and Japan 10 percent;F F Russia’s share of China’s trade in that 199 year seems to have been about 1.8 percent.F F The economy is the central concern of the Chinese leadership, and in these circumstances, it is hardly surprising that they recognize the US, and not Russia, as being their indispensable partner. Indeed, South Korea is also far more important 200 economically and socially to China than is Russia.F F In neither Russia nor China is study of the other’s language and culture rising sufficiently rapidly to suggest that these orientations towards 201 the West will change.F

As noted, Russia has traditionally pursued balance of power policies. The overtures made by President Nixon, first to Beijing and then to Moscow, established strategic triangularism as an

196 Blank, Toward a New Chinese Order in Asia, p.6. As has been seen, four years later Karaganov worries that China will gain political and economic control of Russia east of the Urals (and later the “entire country”), but he seems to attribute this potential threat more to sins of omission by Russia than to hostile intent by China. 197 Mankoff, Russian Foreign Policy, p.197. 198 CIA, World Factbook, entry for China, accessed 19 July 2011. 199 Sergei Blagov, “Russia moves into trade surplus with China,” Asia Times Online, 18 February 2010. Obviously these are different data sources, but they do give a general picture of relative standing among China’s trade partners. 200 Wang Jisi, “China’s Search for a Grand Strategy,” p.74. 201 Gilbert Rozman, “The Sino-Russian Strategic Partnership: How Close? Where To?” in Bellacqua, ed., The Future of China-Russia Relations, p.18.

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202 integral element of Sino-Soviet relations.F F With its diminished geopolitical weight since 1991, Russia needs a partnership with another major power to exert serious influence in international affairs. Russian statesmen have often seen China as a kind of alternative to the West, whether as a model for economic development without political liberalization or as a geopolitical pole toward 203 which Russia can align in opposition to the West.F F In 2000, Putin asserted that “Asia is very important for Russia...Russia is both a European and an Asiatic state. It is like a bird and can only 204 fly well if it uses both wings.”F

But Moscow’s attempts during the 1990s to exploit a putative Russia-China-US triangle were utter failures, as foreign policy failures on such issues as NATO enlargement, Kosovo, missile defence and air strikes on Saddam Hussein’s forces attested. Primakov’s semi-confrontational approach contrasted with Beijing’s more accommodating attitude under the policy of “peaceful rise.” Primakov’s effort (notably during a visit to New Delhi in December 1998) to promote an axis between Russia, China and India to constrain US power demonstrated an ignorance of the foreign policy motivations and interests of China and India. By the end of the 1990s, China had 205 no wish to tie itself to an enfeebled Russia in opposition to a seemingly invincible US.F F

After 9/11, Moscow seized the opportunity to re-engage with Washington, underlining Russia’s Westward orientation. China was shocked by Putin’s initial acceptance of a US presence in Central Asia, especially given the lack of prior consultation with Beijing. Similarly, Beijing felt betrayed in December 2001 when Putin underplayed the significance of Washington’s announcement of its withdrawal from the Anti-Ballistic Missile Treaty, thereby contradicting a 2001 Sino-Russian summit pledge strongly to oppose any unilateral US withdrawal of the treaty.

Although China’s position in Central Asia benefited from the deterioration in Russian-US relations from late-2002, Beijing had learned from these episodes that Russia was unpredictable and weak. The Iraq War and the “Orange Revolution” in Ukraine swung the pendulum of Russian engagement back towards China. In addition, a good relationship with China gives Russia the confidence to pursue a more assertive foreign policy, and to challenge the US. In this sense China is less a strategic partner to Russia than it is a strategic counterweight to the US. However, Russia’s exploitation of its relationship with China to assert itself vis-à-vis the US does not preclude it springing surprises on Beijing. As was noted earlier, China has far more friends and greater strategic choice than Russia, and is anxious not to prejudice this favourable situation, and thus damage an environment conducive to its continued modernization, by allying itself with Moscow’s more obdurate actions, especially vis-à-vis the US. Chinese analysts state that the Sino-Russian partnership is based on a “three nos policy”: no alliance, no confrontation, and no 206 targeting of third countries.F F By the same token, Moscow has no interest in getting embroiled in the Taiwan issue – beyond affirming its support for the “one China” policy.

202 Lo, Axis of Convenience, p.26. 203 Mankoff, Russian Foreign Policy, p.27. 204 Kuchins, “Russian Perspectives on China’s Strategic Ambivalence,” p.35. 205 Lo, Axis of Convenience, p.162. 206 David Kerr, “Central Asian and Russian perspectives on China’s strategic emergence,” International Affairs, vol.86, no.1, January 2010, p.135.

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Thus, Lo has summed up the interaction between Russia and China as a “great-power relationship of a traditional type, defined as much by its flaws and limitations as by its strengths and 207 possibilities.”F F

The total value of trade between Russia and China has increased from $5.5 billion in 1999 to 208 about $59.3 billion in 2010.F F This is a huge increase, especially given the geographic constraints faced by both countries. Up to 2006 Russia consistently ran a trade surplus with China, unlike most industrialized economies, but in 2007 it shifted into deficit. Russia had a small trade deficit 209 with China in 2010.F F

The two countries may share one of the longest borders in the world, and much of China’s trade with Russia and Eastern Europe crosses it (notably at Manzhouli), but the reality is that there is a long distance between China and the main economic and population centres in western Russia. The Trans-Siberian Railway is the only significant transportation link between the Russian Far East and the Chinese administrative divisions on the other side of the border (Inner Mongolia and Heilongjiang). As a result, the trade between the dominant economic areas of Russia and China 210 occur as much through maritime transport as across their contiguous border.F F Once the energy infrastructure between the two countries is fully in place, these geographic constraints will have less impact on the overall size of bilateral trade, but until quite recently the export of oil and natural gas from Russia to China was restricted by the expense of delivery by train from eastern Siberia and maritime routes originating in western Russia. The energy trade between Russia and China will be discussed more fully in a separate section, below.

Apparently using data from 2007, Lo stated that China accounted for only about six percent of Russia’s trade volume, but Russia accounted for a meagre two percent of China’s. The bulk of Russia’s trade is with the EU (52 percent, according to Lo, again probably citing 2007 statistics), 211 compared with the six percent with China.F F In 2010 China was Russia’s top trade partner, but 212 Russia ranked only eighth among China’s trade partners.F F The roughly $60 billion in Sino- Russian trade in 2010 is on a par with China’s other giant neighbour, India, but pales in comparison with the $200 billion trade relationship between China and South Korea (with which 213 China does not share a border).F

Energy has become a key dimension of the bilateral relationship, to the degree that Moscow worries that Russia is becoming a raw materials appendage of China, exporting primary commodities (energy, minerals, and timber) and importing finished goods. It is dissatisfied with China’s reluctance to buy Russian industrial goods. For its part, China is concerned that market forces are not playing as strong a role as they could in Russia. Nevertheless, Beijing has

207 Lo, Axis of Convenience, p.195. 208

1999U :U Mankoff, Russian Foreign Policy, p.209; 2010U :U Sergei Blagov, “Russia Prioritizes Increased Energy Supplies to China,” Eurasia Daily Monitor (Jamestown Foundation), vol.8, no.82, 27 April 2011. 209 “China’s trade surplus fell sharply,” China Ever, 15 January 2011 (http://www.chinaever.com/ 2011/01/15/chinas-trade-surplus-fell-sharply/), accessed 23 July 2011. 210 Richard Lotspeich, “Economic Integration of China and Russia in the Post-Soviet Era,” in Bellacqua, ed., The Future of China-Russia Relations, p.86. 211 Lo, Axis of Convenience, p.49, p.84. 212 Frank Ching, “Russia, China look to own interests despite better ties,” The China Post, 8 June 2011. 213 “India and China set $100bn trade target by 2015,” BBC News, 16 December 2010; Ben Blanchard and Ray Colitt, “Emerging bloc urges dialogue instead of force,” The Ottawa Citizen, 14 April 2011, p.D3.

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supported Russian membership in the WTO, in part motivated by the belief that accession would force Russia to bring its tariff regime in line with WTO standards and to crack down on corruption in its customs service.

The issue of “illegal migration” into the Russian Far East by Chinese is one that vexes many Russians, and has been exploited by nationalist politicians. Lo claimed that there is an anti- Chinese sentiment among large sections of the Russian elite and population, and referred to a 214 comment by Defence Minister Igor Rodionov in 1996 in which he talked of the “China threat.”F F During the 1990s Yevgeny Nazdratenko (the governor of Primorsky Krai) and Viktor Ishaev (his counterpart in Khabarovsk) played up the fear of a mass invasion of “illegals” into their jurisdictions, diverting blame for plummeting living standards onto Chinese traders. These officials managed to slow the work of the joint boundary commission and even in regaining part 215 of the Tumen River basin for Russia.F F

The inhabitants of the Russian Far East are predominantly migrants from European Russia who moved to the region during the Soviet era to work in the military-industrial complex or on large- scale infrastructure projects. After the collapse of the Soviet Union, whole towns in the region died, and large numbers of people left. The population of the region fell from eight million in 216 1990 to 6.5 million at the start of 2010, and was still falling.F F This last figure contrasts markedly with the population of around 109 million (and rising) in the three north-eastern Chinese 217 provinces.F F Those who remained became more than usually wary of Chinese, with the result that there were exaggerated stories of Chinese “illegal migration” in the Russian Far East.

An analysis conducted in 2004 showed that the number of “settled” migrants in Primorsky Krai (in terms of population, far the largest of the “federal subjects” in the Far Eastern federal district) was “statistically insignificant.” Most “migrants” were short-term stayers: tourists, “shuttle” 218 traders,F F students, smugglers, and so on. China has also been renting land in Siberia and the Far East, to be worked by Chinese farmers, for some time. The vast majority of Chinese who travel to or work in the Russian Far East have not been interested in staying there. Indeed, there was 219 evidence of a decline in the number of Chinese in the district.F F A more recent assessment, by the Russian Academy of Sciences in 2009, estimated that, at the high end, there were as many as 500,000 Chinese migrants in Siberia and the Russian Far East. It noted that Chinese had become the dominant migrant worker group in the Russian Far East, as well as in the Siberian districts of 220 Chita, Irkutsk, Novosibirsk and Omsk.F

In June 2010 a Chinese paper reported that Beijing had rented 426,600 hectares of Russian territory in the Jewish Autonomous Oblast and Khabarovsk Krai for agricultural use by Chinese farmers. A Russian journalist stated that China had, in fact, been renting land in Siberia and the Far East for some time. He interviewed a senior official of the Jewish Autonomous Oblast, who

214 Lo, Axis of Convenience, p.32. 215 Ibid, p.31. 216 “Medvedev concerned by falling population in Russia’s Far East,” RIA Novosti, 3 July 2010. 217 Ibid, p.58. 218 The OECD defines shuttle trading as an activity in which individual entrepreneurs buy goods abroad and import them for resale in street markets or small shops. Often the goods are imported without full declaration in order to avoid import duties. 219 Lo, Axis of Convenience, pp.60-61. 220 Gabe Collins, “China Looms Over Russian Far East,” The Diplomat, 22 June 2011.

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said that Chinese farmers had been working in his oblast for almost two decades and that they currently rented out about nine percent of its arable land. He pointed out that the Chinese – who he said numbered around 2,500 – worked on the basis of three to ten year contracts, an arrangement which ensured that they were committed to developing the land and not just 221 exploiting it.F F

There has been considerable resentment at China’s impact on the local economy. The Chinese enclaves in the Far East (as also in the rest of Russia) have been viewed as being reluctant to assimilate and – in the context of Russia’s demographic decline – as a potential fifth column. A poll in 2007 found that 52 percent of Russians believed that Russia and China would be partners and allies in the 21st century (only four percent thought that they would be enemies). However, 62 percent felt that the presence of Chinese firms and workers in the Russian Far East would be 222 dangerous for Russia.F F The response to this alleged threat has been rising nationalism and a 223 renewed emphasis on “Russian values.”F F

A recent article in Der Spiegel remarked that many Russians in Blagoveshchensk are irked that a Chinese entrepreneur has built five shopping centres in their city, runs the most expensive hotel and drives the first Bentley ever seen there, or that a Chinese businesswoman has bought the 224 city’s traditional brewery, while another Chinese woman is now producing Kvass.F F The Khabarovsk edition of Komsomolskaya Pravda described a situation in one residential building in the city where an employer bought several three-room apartments and distributed them among a few hundred Chinese workers, prompting their Russian neighbours to petition the authorities for 225 help.F F A Russian who sells fur hats in the Khabarovsk market complained that it was extremely difficult for Russian merchants to compete with the low prices of Chinese goods: “They’re pushing you out,” he said. “In general, people here don’t like them. They make fun of them. But the big problem is, they can no longer exist without the Chinese … They’re spreading like a 226 forest fire.”F

There is a huge amount of arable land in the Russian Far East, much of it uncultivated and sparsely populated, yet even well-informed Russians are fearful of a “Chinese conquest.” Aleksandr Aladin, a Moscow specialist on China, extrapolated from the population imbalance between the Russian and Chinese sides of the border and from Chinese military doctrine to present the arrival of Chinese farmers as the first step toward the Chinese conquest of the Russian 227 Far East.F F However alarmist such views may be, exaggerated stories of Chinese “illegal migration” in the Russian Far East do represent a current of opinion in Russia, and one that Moscow cannot ignore.

Moscow bears a large measure of responsibility for this situation. In 2000, Putin warned audiences in the Far East that unless Russia invigorated regional development, they would end up

221 Mankoff, Russian Foreign Policy, p.222. 222 Ibid, p.222. 223 Lo, Axis of Convenience, p.63. 224 Matthias Schepp, “China's Growing Interests in Siberia,” Der Spiegel Online, 6 May 2011. 225 “Chinese Influence in Russia’s Far East Is Growing, but the Dangers Are Overplayed…”, Asian Friends and Friendship, n.d. (http://www.friendsfromasia.com/node/1467), accessed 17 August 2011. 226 David Holley, “Chinese Business Acumen Resented in the Far East,” The St. Petersburg Times, 28 June 2005. 227 Paul Goble, “Beijing ‘renting’ Russian border area for Chinese farmers,” Kyiv Post, 2 June 2010.

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speaking Korean, Japanese or Chinese. Moscow has initiated a series of strategies to rejuvenate the Russian Far East, but all have failed. As a result, the district remains one of the most backward in Russia. One in five people have incomes below Russia’s poverty line, the gross regional product is the lowest in the country and its growth tempo is lower than the Russian 228 average.F F The southern part of the Far East is already more economically integrated with China than with the rest of Russia. Moscow’s response has been less to develop the region than to try to limit Chinese development of it. This it has done by raising tariffs and blocking several Chinese proposals for infrastructure – such as railways and cross-border economic zones – linking the two countries. Yet over the past year, Chinese investors have invested $3 billion in the region, about 229 three times as much as the Russian federal government spent.F F

Moscow’s failure to develop the Far East is the more surprising given that senior officials profess to regard the region, with its energy assets, as a key element in Russia’s power position in Asia. As Foreign Minister Sergei Lavrov expressed it in 2006, “Russia can join the integration processes in the vast Asia-Pacific region only through the economic growth of Siberia and the 230 Russian Far East...”F

As for China, there are fewer restrictions on people’s movement than used to be the case under Mao. In addition, Beijing has tried to alleviate employment pressures by encouraging workers to 231 migrate to other countries (the “Go Outward” programme),F F and has not been too fastidious about the manner in which essential raw materials are obtained. Nevertheless, Beijing has tried to respond to Russian concerns, and reacted with restraint to Sinophobe accusations. For its part, Moscow has silenced the most vociferous critics of Chinese activities with regard to the Far East (for instance, in February 2001 Putin fired Nazdratenko). Cross-border political contacts have improved and the border has been demarcated.

4.4.2 Energy

Energy plays a crucial role in the policies of both Russia and China, as the next section will show with regard to Russia’s economic and security planning. Earlier in this report, Putin was quoted as saying that, for Russia, energy (he used the corporate name of Gazprom as a proxy) is a powerful political and economic lever over the rest of the world. However, the motivations behind Russia’s energy policy are not solely geopolitical, and profit is an important driver of Russian policy 232 towards China.F F

Indeed, geopolitical games would risk imputations of commercial unreliability. China has been irritated by what Beijing regards as Russia’s occasional bad faith in its energy policy. A notable example of this was Moscow’s use of tax assessments to bankrupt the Yukos oil company in 2003, thus enabling state-owned Rosneft to snap it up at a very low price. Similarly, China has been directly affected by Moscow’s arbitrary approach to external partners, such as BP. As will be seen below, Gazprom used its political muscle to undermine TNK-BP’s plans to export natural

228 Blank, Toward a New Chinese Order in Asia, p.10. 229 Collins, “China Looms Over Russian Far East.” 230 Blank, Toward a New Chinese Order in Asia, p.5. 231 According to Mankoff, Chinese migrants into the Russian Far East often come from the primarily Muslim, Turkic-speaking population of Xinjiang, which might further the pacification of the region. 232 Lo, Axis of Convenience, p.135.

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gas from the Kovykta gas condensate field in Eastern Siberia to China by pipeline. China was also directly impacted by Moscow’s attempt from 2003 to 2009 to play China off against Japan by creating a competition between the trunk and spur pipelines of the ESPO project (this will be discussed below).

Energy has an equally central place in Chinese foreign and domestic policy. In an earlier section it was noted that without energy, China’s modernization and geopolitical rise would be severely undermined, with potentially negative consequences for the Communist Party. As an article in Foreign Affairs put it six years ago, “An unprecedented need for resources is now driving China’s 233 foreign policy.”F F The global hunt for energy is transforming China’s relations not only with the Middle East and Africa, but also Latin America, Southeast Asia and, as this and a subsequent section will show, with Russia and Central Asia.

In the section on China’s energy requirements it was noted that by 2035 China is expected to be importing about 72 percent of the crude oil it consumes. Security concerns (the “Malacca dilemma”), along with commercial and strategic considerations, are encouraging China to look beyond its traditional sources of energy in the Middle East and Africa. Russia (and Central Asia) is well-placed to respond to China’s energy needs. However, Beijing wants to avoid over- dependence on Russia as an energy supplier, and thus has tried to ensure pipeline deliveries from Central Asia, as well as building new LNG plants on the southern and eastern coasts of the 234 country.F F

In terms of an energy partnership, Russia and China would seem to be perfectly suited. Russia is the world’s second largest oil producer and exporter and the world’s top producer and exporter of natural gas. China is the world’s second largest oil consumer and the third largest oil importer. China wants to diversify from the Persian Gulf, Russia from Europe (which accounts for 80 235 percent of Russian oil exports, compared with the 12 percent that go to AsiaF F). The geographical proximity of Russia and China has the great strategic advantage of no third-country transit.

In an assessment of the bilateral energy relationship, Erica Downs argued that “the enormous 236 potential for bilateral energy cooperation remains largely unfulfilled.”F F The author added that 237 “Energy has not been a major force of convergence in China-Russia relations to date.”F F She claimed that the political and military dimensions of the relationship were much more important than the economic ones. Indeed, she asserted that Moscow both fears that increased dependence on China as an energy client will eventually constitute a threat to national security and worries that Russian energy would fuel the rise of a rival power. Shoichi Itoh similarly contended that Russia’s traditional concern about China has become more serious, and that this “geopolitical mindset” has braked rather than sped up the process of developing untapped hydrocarbon resources in the eastern region, and that as a result plans for the construction of gas pipelines for

233 David Zweig and Bi Jianhai, “China’s Global Hunt for Energy,” Foreign Affairs, vol.84, no.5, September/October 2005, p.25. 234 Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” p.26. 235 EIA, Russia. Country Analysis Brief, Washington, DC: U.S. Department of Energy/EIA, November 2010 (http://www.eia.gov/countries/cab.cfm?fips=RS), accessed 24 July 2011. 236 Erica S. Downs, “Sino-Russian Energy Relations. An Uncertain Courtship,” in Bellacqua, ed., The Future of China-Russia Relations, p.146. 237 Ibid, p.164.

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238 export “remain more rhetorical than substantive.”F F With this mindset, prior to the Yukos debacle Russia was more welcoming to Western investment (from BP, Exxon-Mobil and Shell) while freezing out the China National Petroleum Corporation (CNPC).

4.4.2.1 Oil

At present, oil is the primary form of energy supplied by Russia to China. However, although Russian oil sales to China have grown hugely in the past 15 years – they totalled 12.8 million 239 tonnes (308,000 bpd) in the first 10 months of 2010F F – in comparative terms the amounts are fairly small. In 2009 the bulk (just over 80 percent) of Russian oil production was in the Western Siberian and Urals-Volga regions and the two oil-producing areas in the Far East – Sakhalin and 240 Yakutiya – supplied less than four percent.F F This geographical reality explains why 80 percent of Russian oil is sent westwards.

However, the Russian oil strategy envisages eastern Russia’s share in the country’s total oil output increasing to 10-12 percent by 2015, to 12-14 percent by 2022, and to 18-19 percent by 241 2030.F F The Sakhalin group of fields is expected to contribute most of Russia’s oil production in the near-term and to play a larger role in the longer-term, which will make Russian oil more accessible to China (as will be seen, the bulk of Russian oil intended for China has hitherto been transported – expensively – by rail).

The volatility of oil prices has meant that the two countries have alternated in terms of bargaining power. In the 1990s, when prices were low, Beijing was able to extract the maximum in price concessions. But when prices rose at the turn of the century, and China became concerned that its economic growth might be constrained by energy shortages, Russia became hesitant. The global financial crisis in 2008, and the drop in world oil prices, facilitated a breakthrough in bilateral 242 energy relations.F

4.4.2.2 Natural Gas

For the first time in almost two decades, China became a net importer of natural gas in 2007, and thus until recently had little need to import Russian gas. However, with its environmental benefits vis-à-vis oil, it is likely that gas’s share in China’s energy mix will increase substantially.

Currently, Russia exports 0.51 billion cubic metres of natural gas to China, in the form of 243 LNG.F F This is a small proportion, compared with Turkmenistan, which ships 3.55 billion cubic metres (m3) to China via pipeline. Sino-Russian negotiations over the export of Russian national gas to China have collapsed repeatedly over China’s refusal to pay internationally competitive prices for natural gas. Historically, the CNPC has insisted that Gazprom sell it natural gas at a price competitive with China’s low domestic coal prices, while Gazprom wants CNPC to pay gas

238 Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” pp.27-28. 239 Jim Bai and Tom Miles, “Russia to lose rail oil sales to China as ESPO starts,” Reuters, 9 December 2010. 240 EIA, Russia. Country Analysis Brief. 241 Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” p.20. 242 Downs, “Sino-Russian Energy Relations,” p.147. 243 BP Statistical Review of World Energy June 2011, p.28.

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prices that are tied to oil prices, as its European customers do. Beijing no longer insists on using domestic coal prices as the basis for the natural gas pricing formula, but its access to other routes (notably from Central Asia) gives it leverage in negotiations with Moscow.

For its part, Moscow anticipates increasing global demand for hydrocarbons, and hence higher prices. Talks between Gazprom and CNPC have been underway for five years, without resolution, despite intense political pressure from Presidents Medvedev and Hu. Sticking points include a price differential that has been whittled down but in mid-2011 still stood at $65 per 1,000 m3, and Gazprom’s demand for the kind of advance payment successfully negotiated by Rosneft and Transneft before the construction of the ESPO pipeline to China. Gazprom is reportedly seeking $25-40 billion in advance payment, even before construction of the gas 244 pipeline begins.F F

However, Russia’s bargaining position may be weakened by the huge global potential for shale gas. A recent study by the European Centre for Energy and Resource Security (EUCERS) argued that unconventional gas could become “a major challenge for traditional exporters like Russia in 245 the period between 2015 and 2030.”F F Poland, for example, is thought to have very large reserves of shale gas, and the government is eager to exploit them. Currently, about 40 percent of Polish gas consumption is accounted for by imports from Russia, and this reliance is likely to continue for some time, since it would take a very considerable period fully to develop the Polish fields. In addition, LNG supplies from Qatar and elsewhere have started to flood the market. The planned exploitation of Russia’s huge conventional gas reserves in Yamal and Shtokman is extremely expensive, and could be endangered if shale gas production were to take off in Europe.

As a result of these developments, the Russians have become “very nervous” in the opinion of Frank Umbach, Associate Director of EUCERS. They are trying to put pressure on their traditional customers in Europe, notably Germany and France, where “There is a strong feeling 246 not to upset Russia in any way.”F F As noted earlier, China also has its own huge reserves of shale gas, although it might have difficulty exploiting them. If Russia starts to lose some of its European market to unconventional gas, Umbach argues that it will have to consider changing its 247 “existing market model and pricing system.”F F This, in turn, might strengthen China’s bargaining position on price.

Russia’s interruption of natural gas exports to Ukraine have also raised doubts in the minds of 248 Chinese officials as to how far their country should rely on Russian energy supplies.F

4.4.2.3 Other Forms of Energy

Oil and gas are not Russia’s only energy exports to China. On 26 September 2010, Rosatom – Russia’s state-owned nuclear group – announced a deal to supply two nuclear reactors to China, 249 in addition to two it has already built.F

244 Howard Amos, “Gazprom Asks China to Prepay,” The Moscow Times, 11 July 2011. 245 Sylvia Pfeifer, “Europe Told Of Potential Shale Gas Bonanza,” Financial Times, 6 May 2011. 246 Karel Beckman, “European Companies Risk Missing Out On Golden Opportunity,” European Energy Review, 27 May 2011. 247 Ibid. 248 Downs, “Sino-Russian Energy Relations,” p.161.

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Although China has the third largest coal reserves in the world (after the US and Russia), its heavy consumption of the fuel make it a major importer. In September 2010, China agreed to loan Russia $6 billion to help develop coal resources and transportation infrastructure in Eastern Siberia and the Russian Far East. As part of the agreement, China pledged to import at least 15 million tonnes per year for the first five years of the deal, and at least 20 million tonnes annually 250 for the following 20 years.F

China also buys electricity from the Russian Far East. In February 2007, China halted imports of Russian electricity, citing disagreements on pricing. The two sides resolved their differences, and Russia re-started electricity exports to China in March 2009. In 2010, Russian suppliers exported about one billion kilowatt hours to China. This is a small amount both absolutely and relatively. Russia only ranks about eighth world-wide for electricity exports, most of which go westward. As with other forms of energy, the export of electricity to China is hindered by a lack of infrastructure.

However, price continues to be a concern. Chinese officials have said that Russian suppliers have increased the cost from $0.2 per kWh to $0.42 per kWh, and have warned that China will not 251 accept any further price increases.F F However, China’s hand may be forced by the fact that, as noted earlier, the government has recently been grappling with a large power shortage occasioned by a substantial increase in the demand for electricity.

4.4.2.4 Energy Infrastructure

Currently the majority of Russian oil destined for China is transported by rail and gas is shipped in the form of LNG, and the infrastructure for cost-effective delivery of large volumes of energy between the two countries was very slow to materialize. One reason is that Russia’s pipeline policy is more focused on controlling direct exports routes to Europe than to Central Asia, per se, 252 where its efforts “remain somewhat clumsy.”F F Another reason for the lag in developing the infrastructure to deliver Russian oil to China is the latter’s bargaining for price concessions, which lends itself to stalling tactics. Equally, infrastructure, in the form of pipelines and power grids, has the tendency of locking parties into long-term bilateral dependence, and this probably invokes caution, given the geopolitical environment between Russia and China.

Yet another cause for delay in the construction of pipelines has been Russian mistakes. China’s attempts to acquire energy from the western reaches of Central Asia confront marginal economics, due to great distance and low volumes of oil and gas. These conditions confer a considerable commercial advantage on Russia, whose Siberian and Far Eastern oil and gas fields are located much closer to China. Despite these geographical and economic advantages, at least

249 Carol Matlack and Yuriy Humber, “Russia Sells Nuclear Reactors Decades After Chernobyl Accident,” Bloomberg, 30 September 2010. 250 Collins, “China Looms Over Russian Far East.” 251 Sergei Blagov, “Russia Prioritizes Increased Energy Supplies to China,” Eurasia Daily Monitor (Jamestown Foundation), vol.8, no.82, 27 April 2011. 252 Edward C. Chow and Leigh E. Hendrix, “Central Asia’s Pipelines: Field of Dreams and Reality,” in Chow et al (NBR), Pipeline Politics in Asia., p.35.

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until early-2010 West Siberian crude was actually being shipped to China by heading south and 253 linking up with the Kazakhstan oil pipeline.F

In addition, Russian energy policy-making is opaque – Chow and Hendrix refer to Russia’s 254 “sometimes peculiar” business methodsF F – and Chinese officials have had difficulty locating the 255 appropriate decision-makers.F F Corporate infighting is a further contributor to Russia’s inability effectively to corner the Chinese energy market. Downs suggests that Vladimir Yakunin, the president of Russian Railways and a close associate of Putin, may have stalled the ESPO to defer losing the oil freight business to Transneft. In a similar vein, Gazprom “actively undermined” TNK-BP’s plans to export natural gas from the Kovykta gas condensate field in Eastern Siberia to 256 China by pipeline,F F as part of a strategy (ultimately successful) to force TNK-BP to sell the license to the field at a huge discount. An Irkutsk-to-China gas pipeline was proposed as far back as Soviet times, but “Russian mishandling” of the Kovykta gas field play resulted in China 257 looking elsewhere for pipeline gas.F

Hitherto, Russia has exported oil to China by rail. Not only are pipeline deliveries more cost 258 effective – shipments by rail are about 2½-3 times as expensive as by pipelineF F - but they also imply a larger, more stable, and longer-term supply of oil. In February 2009, Russia and China signed a deal to build a spur line from the East Siberia-Pacific Ocean (ESPO) oil pipeline to Daqing, whereby Russia would supply China with 15 million tonnes of oil (300,000 barrels per day) each year for 20 years in exchange for a loan worth $25 billion to Russian companies Transneft and Rosneft for pipeline and oil fields development. Construction of the spur to China started in April 2008 and was completed in September 2010. In January 2011 Russia said that it had begun scheduled oil shipments to China. It has been reported that in the first six months of 259 2011, Transneft moved an average of 300,000 bpd to China via this pipeline.F

With the opening of the Chinese branch of ESPO, China’s imports of Russian crude oil by railway are likely to fall sharply. The railway carries about 200,000 bpd. The pipeline was originally intended to carry twice as much oil to China, but a Russian trade official said any 260 increase would depend on Russia’s capacity to produce more from its East Siberian oilfields.F F Many oil market participants expected it would effectively double Russian sales to China, but losing the rail route at the same time means China’s oil imports from Russia, which also include some shipments via Kazakhstan and by ship, may rise by only 100,000 bpd next year.

Currently there are no Russian natural gas pipelines that serve the Chinese market. As noted, Russian gas is exported to China in the form of LNG. The earliest date that the proposed 2,800- km Altai pipeline from Western Siberia to Urumqi in Xinjiang (entering via the 40-km Sino- Russian border between Kazakhstan and Mongolia) can begin operating is about 2016. However, the protracted negotiations, the high cost of building it ($10-14 billion), environmental concerns

253 Chow and Hendrix, “Central Asia’s Pipelines: Field of Dreams and Reality,” p.37. 254 Ibid, p.35. 255 Downs, “Sino-Russian Energy Relations. An Uncertain Courtship,” p.163. 256 Ibid, p.162. 257 Chow and Hendrix, “Central Asia’s Pipelines: Field of Dreams and Reality,” p.37. 258 Downs, “Sino-Russian Energy Relations,” p.152. 259 Gabe Collins, “China Looms Over Russian Far East,” The Diplomat, 22 June 2011. 260 Jim Bai and Tom Miles, “Russia to lose rail oil sales to China as ESPO starts,” Reuters, 9 December 2010.

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261 and competition from cheaper Central Asian gas, put that timetable in doubt.F F The two countries have been discussing the export of gas from the Kovykta field since 1996, and with the forced sale of the field from TNK-BP to Gazprom in March 2011, the way would seem clear to build a pipeline from the field to China. The current planning assumption is that the pipeline would become operational by the end of 2015. However, Gazprom is likely to defer full development of 262 the Kovykta field until CNPC is ready to pay European-level gas prices.F F

Russian state oil firm Rosneft has been sending oil to China by rail ever since it bought the biggest unit of defunct oil giant Yukos in 2004. The purchase was facilitated by a $6 billion loan from China, which effectively prepaid $17 per barrel for 48.4 million tonnes of oil. That contract ran out this year, and Rosneft decided not to extend it, citing the low selling price. But a new deal was struck during the depths of the financial crisis in February 2009, when Rosneft and pipeline monopoly Transneft borrowed $25 billion from the China Development Bank in return for 15 million tonnes a year for 20 years. Quite apart from the concessionary rate extracted by China, shipment by rail was not economic for the railway.

4.4.2.5 Energy Investment

China’s financial muscle plays a key role in its energy relations with Russia. This has not always been the case. In a sign of Moscow’s fear of China gaining too strong a foothold over a strategic resource like energy, for years Russia turned away Chinese attempts to invest in Russian resources. At the same time that Western companies, like Conoco-Philips (which owns 20 percent of Lukoil) and BP, were permitted to acquire major equity positions in upstream Russian oil 263 resources,F F China was frozen out. A notable example occurred in December 2002, when CNPC tried to bid for Slavneft and was essentially told just a few days before the sale that it was not 264 welcome, despite being willing to pay a much higher price than its chief competitor.F F

However, Russian companies realized they needed Chinese financial backing. In December 2004, CNPC loaned Rosneft $6 billion as an advance payment for oil supplies through 2010 (Rosneft was unable to borrow from Western companies at the time). In 2006 Sinopec acquired a 49 percent position in the relatively small Udmurtneftgaz.

Sino-Japanese competition for access to Russian energy demonstrates the potency of China’s financial resources. In 1999 Russia and China agreed to proceed with an oil pipeline from Angarsk to Daqing, and in 2003 Yukos and CNPC agreed to proceed with construction. The Yukos affair was one reason for the agreement’s subsequent collapse. A second was competition from Japan. Two months before the Yukos-CNPC deal, Japan made a lucrative offer to Russia that, in return for a $5 billion investment in pipeline construction, and another $7.5 billion to explore potential reserves in Eastern Siberia, the pipeline would bypass China altogether and follow a much longer route to Nakhodka Bay, on the coast opposite Japan. In December 2004, Russia opted for the Japanese-backed route. The Japanese later watered down their financial

261

Sergei Supinsky, “RussiaH may build Chinese pipeline before South Stream – paper,”H Agence France- Presse, 24 August 2010. 262 Downs, “Sino-Russian Energy Relations,” p.167. 263 In other words, the exploration of potential oil and gas fields. 264 Catherine Belton, “Result of Slavneft’s ‘one-horse’ auction faces criticism,” The St. Petersburg Times, Issue #829, 20 December 2002.

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commitment, China sweetened its own, and commercial considerations came into play (the Japanese route was much more expensive to build), with the result that Moscow wavered between the deals, confident that rising oil prices put it in the driver’s seat. However, the global financial crisis that erupted in fall 2008 created serious cash-flow problems for Rosneft and Transneft. Japan was unwilling to make a major investment and in February 2009, Moscow agreed to start constructing a spur from the ESPO, from Skovorodino to Daqing. In return China would provide a $15 billion loan to Rosneft and a $10 billion loan to Transneft. These deals were finalized in April 2009.

Much of China’s investment in Russian energy goes, of course, to the Russian Far East. By 2006, the China Development Bank was financing Chinese-owned companies in Sakhalin and had loaned money to Rosneft to complete its takeover of Yukos. As was noted earlier, in September 2010, China agreed to loan Russia $6 billion to help develop coal resources and infrastructure in Eastern Siberia and the Russian Far East.

4.4.3 Security

The purely military aspects of Sino-Russian relations have been discussed already, in terms both of the military balance between the two countries and also of Russia’s history as China’s biggest arms supplier in the fifteen years after 1992 (indeed, it has been suggested that the early military relationship between them was driven as much by “the private interests of Russian arms 265 dealers...as by any reasoned calculation of Russian strategic or national interests”F F).

This section will discuss those threats to national security that encompass non-state actors such as terrorists, separatists, religious extremists, narcotic cartels, transnational criminal organizations, and so on. As events in Chechnya, the North Caucasus, Xinjiang, Tibet and elsewhere demonstrate, the security forces in both Russia and China share similar perceptions of a substantial non-state challenge. Some other elements that are often incorporated in modern definitions of national security – such as energy security – have been examined earlier, and thus will not be discussed here. Nevertheless, it may be useful briefly to examine here the full range of Russian security thinking, as exemplified in official doctrine, before moving to the more non- traditional security threats that exercise Moscow (and, as has been seen, Beijing).

In May 2009, President Medvedev approved a National Security Strategy to 2020, drafted by the Security Council, a consultative body chaired by the president. The document replaces a National Security Concept drawn up in 1997 and modified in 2000. Although the document attaches great importance to such traditional issues as ensuring national territorial integrity and military security, the concept of security has been broadened to give greater prominence to economic growth, technological progress, education, environmental issues and living standards. Thus, a large portion of the text is devoted to economic issues, highlighting the importance of energy security (which the National Security Strategy anticipated would be achieved by 2015).

The section on threat perceptions occupies a significant part of the National Security Strategy. The dependence of the Russian economy on the export of raw materials and the involvement of foreign actors are recognized as threats to Russian national interests, and the document devoted

265 Kevin Ryan, “Russo-Chinese Defense Relations. The View from Moscow,” in Bellacqua, ed., The Future of China-Russia Relations, p.184.

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considerable attention to the potential risk of future energy wars in regions adjacent to Russia, including the Caspian Sea and the Arctic. Control over natural resources has long been a vital issue for the Kremlin; therefore, any kind of threat to the status quo in strategic regions is considered as being one that could, in certain circumstances, lead to military action.

As far as more specifically military threats are concerned, the National Security Strategy states that the unilateral use of military force is a destabilizing factor for the international community. The document reflects the dissatisfaction of the Russian leadership with the existing security architecture in Eurasia, and rejects any NATO military presence close to Russia’s borders. However, unlike the earlier National Security Concept, the National Security Strategy names neither NATO nor the US as security threats. Another challenge is the protection of the country’s borders, since Russia has the world’s longest land borders. The National Security Strategy places emphasis on the improvement of Russia’s border facilities, naming the Arctic region, the Russian Far East and the Caspian shores as particularly important areas. The inclusion of the expression “Far East region” indicated the possibility of stricter controls being enforced along Russia’s borders with China.

As the National Security Strategy sees it, the demographic problem in Russia is becoming increasingly acute, raising fears for the country’s future.http://www.cria-online.org/10_4.htmlH - sdfootnote35sym H Depopulation is linked to security issues and reflects the weakness of the Russian state in exploiting strategic regions such as Siberia. A strong Russian presence in Siberia would allow Moscow to utilize its natural resources and counterbalance China’s increasing economic influence. The National Security Strategy does not grant terrorism the attention that it had in 2000 when the National Security Concept was drafted and the Chechen war was at its 266 height.F F The strategy document virtually omits mention of China and the Asia-Pacific region, 267 and identifies possible military threats along all Russia’s borders except in the Far East.F F

The break-up of the Soviet Union, and the establishment of independent states in Central Asia, not only reduced the Soviet/Russian border with China by over 40 percent, it also provided a buffer between the two major powers. Furthermore, according to Lo, Beijing has for the most part 268 been “highly sensitive” to the security anxieties of its neighbours.F F For its part, Moscow has shown understanding of China’s internal security concerns. For example, after the Urumqi protests in July 2009, Russian Foreign Minister Sergei Lavrov condemned the rioters for “Using 269 separatist slogans and provoking ethnic intolerance...”F F As will be seen, Moscow has accepted the incorporation into SCO counter-terrorism practice of the uniquely Chinese doctrine of “the three evils” (referring to terrorism, separatism and religious extremism).

Despite this convergence in practice, the Russian-Chinese Treaty of Good-Neighbourliness and Friendly Cooperation, signed in July 2001, contained no security guarantees, unlike the Stalin- Mao friendship treaty of 1950 (which were, of course, comprehensively breached only a few years later).

266 Sophia Dimitrakopoulou and Andrew Liaropoulos, “Russia’s National Security Strategy to 2020: A Great Power in the Making?” Caucasian Review of International Affairs, vol.4, no.1, Winter 2010; Roger McDermott, “Russia’s National Security Strategy,” Eurasia Daily Monitor (Jamestown Foundation) vol.6, no.96, 19 May 19 2009. 267 Blank, Toward a New Chinese Order in Asia, p.6. 268 Lo, Axis of Convenience, p.77. 269 “Russia says China Xinjiang riots internal affair,” Reuters, 8 July 2009.

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In February 2010, President Medvedev approved a new Military Doctrine. Although NATO activities were listed first among “external military dangers,” individual countries – whether the US or China or any other – were not mentioned in the document. The Military Doctrine averred that there was a declining likelihood of conventional or nuclear attack on Russia, but contended that military dangers to Russia were intensifying in a number of areas. These included: the deployment of foreign forces on the territories of states contiguous to Russia and its allies, as also in adjacent waters; territorial claims against Russia and its allies and interference in their internal 270 affairs; and the spread of international terrorism.F F

4.4.3.1 Non-State Threats

Observers had expected that Sino-Russian military cooperation would develop most strongly along their mutual borders in Siberia/Inner Mongolia and the Far East/Heilongjiang, but in fact Central Asia quickly proved the more important stage for partnership, reflecting the role of non- state actors in their security thinking. Of the eleven “main external military dangers” identified in the latest military doctrine, seven relate to neighbouring states, and almost all of those have non- state components. Some of these threats spill over into Russia and China. For instance, nationalist and religious militants in Kyrgyzstan, Uzbekistan and Tajikistan have fed terrorist activities in 271 both Russia and China.F F Some of these non-state challenges will be assessed here, and will be examined further in the context of the other Inner Asian states and of the SCO.

Moscow got pulled into Central Asia in the early-1990s to protect the secular autocrats who ran the region and to avert the creation of Islamist governments on Russia’s southern fringe. The most obvious example of this policy was the active support by Russian army troops of the regime of President Emomalii Rahmon in Tajikistan.

Russia has over 20 million Muslims among its population, and abuts or is relatively close to 272 several Muslim-majority states,F F some of them very unstable. It has experienced years of war in Chechnya – initially mostly nationalist, but increasingly jihadist – that has seeped into other regions of the North Caucasus. Islamist rebels have been implicated in a number of significant hostage and bombing incidents in Russia, including the Moscow theatre hostage event in 2002 (at least 129 hostages killed); the Beslan school hostage crisis in 2004 (over 300 civilians killed); a number of bomb attacks in the Moscow metro: February 2004 (41 killed), August 2004 (at least 10 killed), and March 2010 (at least 40 killed).

A comment by a Kremlin advisor in October 2001 is illustrative of the security concerns that Moscow has had along its southern periphery. He made it in the context of 9/11 and American preparations to send troops to Afghanistan, using Uzbekistan as a springboard; both countries have, of course, long been regarded by Russia as part of its sphere of influence. Nevertheless, the

270 The Military Doctrine of the Russian Federation (approved by Russian Federation presidential edict on 5 February 2010), Russian presidential website, 5 February 2010, reproduced by the Carnegie Endowment for International Peace (http://www.carnegieendowment.org/files/2010russia_military_doctrine.pdf), accessed 26 July 2011. 271 Kevin Ryan, “Russo-Chinese Defense Relations. The View from Moscow,” in Bellacqua, ed., The Future of China-Russia Relations, pp.188-89. 272 Muslims make up 72 percent of Kazakhstan’s population. The Muslim element in the other four Central Asia states ranges from 75 percent to 90 percent.

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Kremlin official thought that it was “better to have Americans in Uzbekistan than to have the 273 Taliban in Tatarstan.”F F

The defeat of the Taliban, the decimation – by US forces in Afghanistan – of the Islamic Movement of Uzbekistan (IMU), the persistence of a peace treaty between Rahmon’s government and rebels signed in 1997, and the relative success of efforts to restore order in Chechnya have all made the Islamist threat to Russia less immediate. Indeed, there has been little evidence of systematic coordination between Islamic extremists in Central Asia and radical groups in Russia’s Islamic regions, although there was some contact in the late-1990s between Chechen rebels and 274 groups in Central Asia.F F The etiolation of the anticipated spill-over of Islamic extremism has allowed Moscow to pursue a broader strategic agenda vis-à-vis Russia’s neighbours in Central Asia, as the section (below) on the Collective Security Treaty Organization will indicate. However, periodic incidents ensure that the “three evils” remain part of Russia’s, as of China’s, agenda.

4.5 Relationship with Central Asia

4.5.1 General

For a number of centuries Russians and Central Asian peoples had traded with each other, and at the same time Russia was pushing eastward and southward. Kalmyk invasions forced some Kazakhs to seek Russian protection, giving Russia the opportunity to secure control of the steppe east of the Caspian Sea. Under Catherine the Great, Russia pushed south, absorbing the traditional grazing lands of the Kazakhs. This process continued during the 19th century and, by means of bribes and the promise of protection, by 1865 the majority of the Kazakh tribes acknowledged allegiance to the tsar. Periodic uprisings were quelled, and Slavic settlers moved onto “vacant” grasslands used by Kazakh herders for centuries. Russia then turned its attention to the three city- states of Khiva, Kokand and Bukhara, partly to deter raids on Russian commercial caravans, partly to counter British activities in Central Asia, and partly to acquire resources and markets. By 1881 the Russian conquest of Central Asia was complete.

The continued migration of Russians into the northern steppe provoked occasional uprisings, as did the introduction of conscription into the imperial Russian army in 1916. After the revolution, the rise of Bolshevik power was not widely welcomed by the local population (because of the Bolsheviks’ atheism and because the Russian settlers supported the new dispensation), as a result of which there was yet another serious uprising, the Basmachi revolt. The Basmachi resistance was most active in the Fergana Valley, which has proved a source of unrest in modern Central Asia, straddling three countries as it does (Uzbekistan, Kyrgyzstan and Tajikistan). Indeed, it is claimed that the population of the valley is more religious than the population of any other region 275 in Central Asia.F F

273 Mankoff, Russian Foreign Policy, p.267. 274 Reuel R. Hanks, Global Security Watch. Central Asia, Santa Barbara: ABC-CLIO, LLC, 2010, p.119. 275

IgorH Rotar,H “Resurgence of Islamic Radicalism in Tajikistan's Fergana Valley,” Terrorism Focus (Jamestown Foundation), vol.3, no.15, 20 April 2006.

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Many Central Asians did not regard themselves as Uzbeks, Kazakhs, Tajiks and so on, but the Soviet nationalities policy succeeded in organizing Central Asia on ethnolinguistic lines. As a result, the titular nationality now comprises between 63 percent and 85 percent of the population of each of the Central Asian states. In contrast, the Soviets severely repressed Islam and 276 discouraged the use of indigenous languages.F F

Central Asia’s independence from the Soviet Union in 1991 has been described as an “unsolicited 277 gift.”F F In Gorbachev’s 1991 referendum on the future of the Union, the strongest support for preserving the USSR came from voters in the five Central Asian republics. In part, this reflected a comfort with Russian leadership felt by the Soviet-trained Central Asian elites. It also revealed the high degree of economic dependence on Moscow. In addition, it has been suggested that a century-and-a-half of cohabitation between Russians and Central Asian peoples gave rise to a common feeling of belonging to the same “civilization,” at the same time that there was 278 resentment at a colonial relationship.F

Unprepared for independence as the five new states were, they welcomed admission to the CIS as founding members. Nursultan Nazarbayev, the president of Kazakhstan on the eve of independence, was an outspoken advocate of keeping the union together. This support for the union was doubtless largely motivated by the republic’s demographic makeup: according to the 1989 census, 37.8 percent of the population was ethnic Russians, who were almost equal in number to the ethnic Kazakhs.

After independence, the Central Asian republics stayed under Moscow’s tutelage for a while. Their industrial and transportation infrastructure was tied to Russia, and ethnic Russians constituted the bulk of their skilled labour. The Russian military continued to guard the non-CIS borders of Kazakhstan, Kyrgyzstan and Turkmenistan in the wake of independence, and Russian army and border guard forces played a role in defending the regime in Tajikistan. For a short time after independence an attempt was made to keep the Central Asian states in a “ruble zone” so as to maintain a measure of fiscal control over them. However, a deadlock in negotiations on the issue in 1993 forced the regional states to rely on their own currencies.

In the early-1990s the Russian leadership briefly espoused an Atlanticist world-view and did not regard Central Asia as an important area in Russia’s foreign relations. There were several factors contributing to Moscow’s relatively unenthusiastic attitude towards the Central Asian states. An important one was cost. In 1992 direct and indirect subsidies from Moscow to the region 279 amounted to about $9 billion, or five percent of Russia’s GDP.F F Between 1990 and 1999 Russian exports to Central Asia registered a 2.5-fold decrease, and the picture for imports was not

276 The historical background mostly comes from Hanks, Global Security Watch. Central Asia. 277 Donaldson and Nogee, The Foreign Policy of Russia, p.4. 278 Marlène Laruelle, “Russia and Central Asia,” in Emilian Kovalski, ed., The New Central Asia. The Regional Impact of International Actors, Singapore: World Scientific Publishing, 2010, p.150. 279 Kirill Nourzhanov, “Central Asia’s domestic stability in official Russian security thinking under Yeltsin and Putin. From hegemony to multilateral pragmatism,” in Colin Mackerras and Michael Clarke, eds, China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.152.

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much better. Less than 10 percent of foreign direct investment in the region between 1996 and 280 2000 was Russian, and there was an all-out trade war between Russia and Kazakhstan in 1999.F F

Another concern for Moscow was the potential influx of large numbers of the roughly 9.5 million Russians living in Central Asia at the time. On average, only three percent of Russians knew the titular language of their countries of residence, indicating less-than-complete assimilation and a 281 potential for migration to Russia.F F In fact, there has been a substantial migration of Russians from Central Asia, even though none of the regional states denied them the rights of citizenship (all but Tajikistan and Turkmenistan rejected a Russian demand that Russian-speaking people be allowed to maintain dual citizenship, and Turkmenistan changed its stance on the issue in 2003). Extrapolating from the CIA World Factbook’s estimates of ethnic populations in the five Central Asian states in July 2011, the total number of Russians now appears to be about 6.2 million, a decline in absolute terms of one-third since independence (the relative decrease may be higher – the Russian population of Kazakhstan is now 23.7 percent of the total). That is about 10 percent of the total population of Central Asia.

Many of the migrants into Russia from Central Asia have been non-Russians. The World Bank estimated in 2005 that Russia had the second largest immigrant population in the world, standing at slightly more than 12 million. The bank estimated in 2008 that remittances from migrant workers accounted for roughly 50 percent of the Tajik GDP and 30 percent of Kyrgyzstan’s, effectively propping up the economies of those two countries (and to a considerable degree that of Uzbekistan as well). The total amount of officially registered money sent from Russia to Central Asia in 2008 (during a severe economic downturn) was nearly $13 billion, and the total amount 282 (including unofficial transfers) may be twice that much.F

Within two weeks of the founding of the CIS in December 1991, all Central Asian states had joined the organization. By the mid-1990s, Moscow was promoting the reintegration of the Central Asian states with Russia under the aegis of the CIS, in part prompted by concern that insecurity in the region could creep north. In return for Russia providing security and economic benefits, the regional states were expected to cede part of their sovereignty. Moscow ignored the “carefully worded objections” of the Central Asian states, as also alternative integration projects 283 proposed by them (such as Nazarbayev’s 1994 proposal for a Eurasian Union).F

However, the CIS was short of practical achievement – as of mid-1999, 90 percent of the more 284 than 2,000 documents signed within the CIS framework remained scraps of paper.F F During the decade following the founding of the CIS a number of sub-groups were formed in the area of the former Soviet Union completely independently of Moscow. Among these were the GUUAM (an association between Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) and the Central Asian Cooperation Organization. These initiatives pointed to a decline in the efficacy of the CIS, particularly in Central Asia, where there was a growing disregard of Russian policy preferences (shown, for example, in the rejection of Russia’s promotion of dual citizenship). Tajikistan was the only regional state whose president attended the CIS summit in Kiev in January 2003. As the ties of the Soviet Union have receded in time, so the populations of the new states have grown in

280 Nourzhanov, “Central Asia’s domestic stability,” pp.154-55. 281 Donaldson and Nogee, The Foreign Policy of Russia, p.193. 282 Hanks, Global Security Watch. Central Asia, p.107. 283 Nourzhanov, “Central Asia’s domestic stability,” p.154. 284 Ibid, p.154.

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the habits of independence, and most of the regional countries have learned the advantages of manœuvring between competing suitors.

Under Putin there has been greater convergence between Russia and the Central Asian states. His accession came shortly before 9/11, an attack which reinforced the desire of his government to increase Russian involvement with Central Asia. In this, Russia has two main goals: to control energy resources and to maintain regional stability. It has also been suggested that the emergence of China has been one of the principal forces driving Russia’s adoption of a more Eurasian 285 identity.F

In addition, Moscow is anxious to reinforce Russia’s claims of Great Power status in the eyes of the West. The expansion of Europe to the east, along with the deployment of US troops to Central Asia and the growing competition for that region’s energy resources, have combined to enhance the strategic significance of the former Soviet Union for all major powers, and not only Russia. The attack on Georgia in 2008 was largely designed to assert Russia’s interests in the CIS and to 286 check the spread of Western influence.F F

Putin treated Central Asian leaders more like his equal than Yeltsin had, and Russia’s gradual abandonment of its stance as a custodian of liberal values in favour of support to the political status quo in the region played well with the authoritarian regimes in Central Asia. Given the role played by charges of election-rigging in the “colour revolutions” in the post-Soviet space – notably in the “Tulip Revolution” in Kyrgyzstan in 2005 – the CIS and the SCO have set up a plethora of international election observer missions to try to neutralize elections as a catalyst of regime change. These monitoring teams have endorsed every election held in a member state since 2005, providing a veneer of international legitimation. The “colour revolutions” have encouraged Central Asian leaders to toe Putin’s line, reiterating his accusations of unacceptable Western interference, and relations even with those states most resistant to Russian influence 287 (Turkmenistan and Uzbekistan) have slowly improved.F

Since Putin’s accession, Moscow has been more energetic in deploying Russian soft power in Central Asia. Russia has sponsored Slavic universities in Bishkek (Kyrgyzstan) and Dushanbe (Tajikistan) – even though the Russian population of Tajikistan is only 1.1 percent of the total. A well-funded Institute of Eurasian Studies was registered in Moscow in 2005, and branches of it have been established in Central Asian capitals and provincial towns, sponsoring cultural events 288 and scholarships and building up libraries.F F

Economic ties have grown. Although attempts to harmonize trade tariffs have moved slowly, Russian investment – corporate rather than government – has been a more efficient tool of Russian-Central Asian convergence. Some one million guest workers from Central Asia stay in Russia at any given time, and their remittances are extremely important to the economies of their homelands (this is especially true of Tajikistan).

Marlène Laruelle, a senior research fellow with the Central Asia-Caucasus Institute at Johns Hopkins University, states that Russia has many factors in its favour in the competition for

285 Mankoff, Russian Foreign Policy, p.230. 286 Ibid, p.243. 287 Laruelle, “Russia and Central Asia,” pp.159-60. 288 Nourzhanov, “Central Asia’s domestic stability,” p.165.

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influence in Central Asia. The regional leaders and their personal networks generally received their education in Russia and have a great deal of experience working with Russian colleagues. Senior military and secret service personnel all belonged to the same administrative entity prior to 1991; Russian is the most spoken language in the region (it has official status in the three Central Asian states bordering China, Kazakhstan, Kyrgyzstan and Tajikistan); and Russian culture is very present, with television and cable channels broadcast from Moscow accessible in the region. She concludes that “As a whole, the Central Asian populations continue to look at the world 289 through the Russian prism,”F F something that Putin has tried to encourage in his soft power initiatives discussed earlier.

Nevertheless, while Moscow might try to influence opinion about Russia in Central Asia, it may be having less success in influencing opinion about Central Asia in Russia. Laruelle also believes that the decline of the population in the eastern part of Russia, and the demographic shift to European Russia, along with a rise of xenophobia and of Islamophobia, might produce negative consequences for Russia’s relationship to the region. Russian public opinion tends to associate Central Asia with Islamic fundamentalism, terrorism and criminality: “positive references [to 290 Central Asia] are extremely rare.”F F In addition, she asserts that Moscow no longer produces any real expert knowledge about this region.

The two Central Asian states that have been most consistently loyal to Russia have been Kazakhstan and Tajikistan. Kazakhstan still has a large Russian-speaking population in the regions bordering Russia, and Russia rents and administers a major missile testing and space launch site at Baikonur which is an important economic asset for Kazakhstan. Tajikistan is weak 291 and highly dependent on Russia for its security.F F

Laruelle claims that Russia follows a differentiated approach to the five Central Asian states. Kazakhstan is regarded as an essential economic and political partner in the region, and as a result Moscow has no other choice than to accept Astana’s decision-making autonomy. Kyrgyzstan and Tajikistan are seen as being burdens to be carried and as destabilizing factors to be controlled. Uzbekistan and Turkmenistan are viewed as being difficult to control, and any positive trend in 292 relations as quite reversible.F

4.5.2 Security

In the wake of the collapse of the Soviet Union, Moscow wanted to retain a degree of hegemony in Central Asia, quite largely for security reasons. It wished to maintain an air defence system that would cover not just Russia but also the outer borders of the former Soviet Union, and also to deploy its troops in the “near abroad” for the same purpose. All the Central Asian states, with the exception of Turkmenistan, were persuaded to join the CIS Collective Security Treaty, although Turkmenistan did conclude a separate agreement with Moscow that sanctioned the deployment of Russian border guards on its soil. From the fall of the Soviet Union until the mid-1990s, Moscow maintained troops in Kyrgyzstan, Tajikistan and Turkmenistan, along the borders with China, Afghanistan and Iran. Only Kazakhstan and Uzbekistan refused Russian aid in defending their

289 Laruelle, “Russia and Central Asia,” p.150. 290 Ibid, p.173. 291 Donaldson and Nogee, The Foreign Policy of Russia, p.198. 292 Laruelle, “Russia and Central Asia,” p.170.

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293 southern borders after independence.F F In Kyrgyzstan, for example, Moscow took over responsibility for the Sino-Kyrgyz border. The Russian border guards were officially in Kyrgyz service, but in reality were subordinate to Russia’s border guard agency and Russia paid 80 294 percent of their five-year contracts.F

Despite concerns about the threat posed to the stability of Central Asia by drug trafficking, the Taliban and the IMU, Russian troops were withdrawn from the borders of Kyrgyzstan and Turkmenistan in 1999. In the Kyrgyz case this action followed a border delimitation agreement between Kyrgyzstan and China, in the Turkmen case it was the result of deteriorating relations with Russia. However, when IMU fighters raided the Fergana Valley from their base in Afghanistan in 1999, Russian officials turned down Kyrgyz requests for military assistance.

Russia started to hand over guard duties on Tajikistan’s borders with China and Afghanistan in 2004, and the process was completed in the fall of 2005 when Russia left the Tajik border guards 295 with material worth $10 million.F F Given the porousness of the Tajik-Afghan border and its key role in the drug trade afflicting Russia, the growing strength and northward movement of the Taliban in Afghanistan, and the fragile condition of Tajikistan, the willingness to hand over responsibility for this difficult 1,206-km border to the Tajik army and border guard seems surprising. Thus, Russian troops no longer guard the borders of Central Asia. Yet even when they had been stationed there, they were not particularly effective in combating organized crime, especially drug trafficking. Indeed, 80 percent of the heroin consumed in Russia enters the 296 country through Central Asia.F F

However, Russia still has a considerable military presence in Tajikistan and other regional countries. At the time that the Central Asian states became independent, the Soviet/Russian 201st Motorized Rifle Division was based in Tajikistan, alongside the Soviet/Russian border guards. These troops played a key role in the survival of Rahmon’s regime during the civil war. The division has remained in Tajikistan, and in June 2005 the Tajik and Russian governments signed an agreement whereby the division would be transformed into a permanent Russian base (which it effectively already had in the form of the 201st Division’s garrisons). This is now Russia’s largest military base outside its own borders. The IISS Military Balance puts the 201st Division’s 297 strength at 5,000.F F The Tajik government would like Russia to pay rent for the base, but the most Moscow will concede is to provide weapons to the Tajik army at the prices paid by the Russian army, and to offer training of Tajik personnel. The Russians have been negotiating the use of Ayni air base near Dushanbe for some of its helicopters, but the talks appear to be at an 298 impasse.F F Moscow maintains a spatial surveillance centre, staffed by Russian civilians, at Okno

293 Sébastien Peyrouse, “Russia-Central Asia: Advances and Shortcomings of the Military Partnership,” in Stephen J. Blank, Central Asian Security Trends: Views from Europe and Russia, Carlisle: U.S. army War College, Strategic Studies Institute, April 2011, p.3. 294 Ibid, pp.5-6. 295 Ibid, pp.5-7. 296 Nourzhanov, “Central Asia’s domestic stability,” p.158. 297 IISS, The Military Balance 2011, p.275. 298 Alexander Sodiqov, “Dushanbe and Moscow Disagree over Russia’s Use of Ayni Airbase,” Eurasia Daily Monitor (Jamestown Foundation), vol.8, no.28, 9 February 2011.

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near the Chinese border, and also operates a missile early warning system that is able to monitor 299 nearly all of the Eurasian airspace in Tajikistan.F F

Russia has a radar station – part of its air defence perimeter – in Balkash in Kazakhstan, and since the 1990s the Kazakh government has allowed Moscow the use of several firing ranges in exchange for military material, specialized maintenance, and officer training. For example, Russia rents the famous Baikonur Cosmodrome from Astana. A new agreement signed in 2004 extends the hiring of the site until 2050. Russia has used Baikonur for missile testing. For instance, Russia test-launched an SS-18 Satan intercontinental ballistic missile from Baikonur in June 2004, and in October 2005 launched an SS-19 Stiletto ICBM from Baikonur. As of 2008, responsibility for the cosmodrome was transferred from the Russian defence ministry to the Russian space agency, a civilian institution, and it appears that Baikonur is no longer used to test military missiles. However, Russia also rents weapons and missile launch centres in the regions of Atyrau and western Kazakhstan, as well as ballistic missile test and training ranges in the Karaganda, Zhambul, Aktobe and Kzyl-Orda areas, and monitors ballistic missiles from the Gulchad site, 300 close to Priozersk.F F In December 2010, Russia and Kazakhstan announced that they would create a single air defence system, with Russia supplying Kazakhstan with 10 S-300 anti-aircraft 301 missile systems.F F

In Kyrgyzstan, Russia was given access to the air base at Kant in September 2003, and probably 302 has around 500 personnel currently stationed there.F F This was the first new air base to be opened by Russia outside its own boundaries after 1991. The Kant base also holds part of the Collective Rapid Reaction Force of the CSTO and additionally supports the Russian presence in Tajikistan. Beginning in 2005, Moscow began applying pressure to obtain a new base in southern Kyrgyzstan, near Osh, but this proposal annoyed Uzbekistan, which claimed that it would be directly targeted by such a move. Russia controls several other Kyrgyz sites, including the seismic control station of the Russian defence ministry, which monitors nuclear weapons trials in 303 China and South Asia, and a base at Koi-Sary.F

304 Russia does not have any military facilities in Turkmenistan or Uzbekistan.F

4.5.2.1 US Military Presence in Central Asia

The 9/11 events had important repercussions for security in Central Asia, by bringing NATO forces into the region for the first time and by reviving the sense of threat among regional states regarding Islamic extremism.

Three weeks after 9/11, Defense Secretary Donald Rumsfeld visited Tashkent to secure the cooperation in “Operation Enduring Freedom” of the Uzbek government. Tashkent immediately agreed to lease a former Soviet air facility at Karshi-Khanabad, about 300-km from the Afghan

299 Peyrouse, “Russia-Central Asia,” p.23. 300 Ibid, p.21. 301 E. Ostapenko, “Russia-Kazakhstan joint air defense system not stunt Afghan operations,” TREND News Agency, 10 December 2010. 302 IISS, The Military Balance 2011, p.255. 303 Peyrouse, “Russia-Central Asia,” p.22. 304 Ibid, p.23.

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border. Many of the earliest US air raids against Taliban positions were mounted from this base. At the same time, Kyrgyzstan leased the air base at Manas to US forces, and the other three Central Asian states granted them transit and overflight privileges.

Tashkent was particularly receptive to the US request because NATO action in Taliban decimated the IMU and other extremist groups, and the Karimov regime believed that partnership in the US- led global war on terror would provide cover for its own domestic crackdown. A second factor facilitating NATO entry into Central Asia after 9/11 was relative familiarity. In March 1992, Russia and all the Central Asian states joined the NATO-founded North Atlantic Cooperation Council (later the Euro-Atlantic Partnership Council), and in 1994 Kazakhstan, Uzbekistan, Kyrgyzstan and Turkmenistan joined NATO’s Partnership for Peace (Tajikistan followed suit in 2002). Thus, between late-2001 and March 2003 (the US-led invasion of Iraq) Russia, the Central Asian states and the US were in agreement about the necessity to work together to destroy Islamic radicals and to normalize the situation in Afghanistan.

By 2003 the Central Asian states were becoming disenchanted with Washington’s performance as a guarantor of stability and were concerned that the American involvement in Iraq would undermine the anti-Taliban campaign (only Uzbekistan supported the Iraq operation). The autocratic regimes of the region also became increasingly unsettled by the people-power uprisings in the former Soviet Union (Georgia, November 2003; Ukraine, November 2004 to January 2005; Kyrgyzstan, March-April 2005). Central Asian regimes have been concerned by the role played by foundations and non-governmental organizations in the West, quite likely in some cases with funding from Western governments, in laying the groundwork for these popular uprisings, one of which occurred in Central Asia. Thus, Washington’s image in the region switched from that of a source of stability to being a fount of instability.

After Uzbek security forces fired on protesters in Andijan in May 2005, killing large numbers, criticism from the US and EU enraged the regime of Uzbek President Islam Karimov. The Uzbek government immediately imposed restrictions on American use of the air base at Karshi- Khanabad, and in July 2005 told the US Air Force to vacate it within six months. The US complied, and within a few months of the cancellation of the lease Uzbekistan signed a mutual defence agreement with Russia, withdrew from the GUUAM grouping, and joined the CSTO. However, the Germans continued to maintain a refuelling station at Termez (on the Afghan border).

Tashkent soon returned to its strategy of balancing, with a gradual thaw in relations with Washington. In March 2008 a US official said that Uzbekistan had agreed to allow limited numbers of US personnel to use the German air-bridge at Termez, but only as part of wider NATO operations in Afghanistan, and on a case-by-case basis. In early-2009, the Uzbek government agreed to allow NATO aircraft transporting non-lethal supplies to Afghanistan to use the facilities at a cargo airport in the city of Navoi (Russia had been given permission in late-2006 to use the same facilities in emergencies).

As NATO reduces its reliance on supply routes across Pakistan and increases its use of the Northern Distribution Network (NDN), via Russia and Central Asia, the advantages of balancing will grow. Those benefits are both strategic and commercial. In a speech given in Samarkand in December 2010, Uzbek President Karimov expressed serious concern about the prospect of US

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305 troops withdrawing from Afghanistan.F F At the same time, the current situation enables Uzbekistan to position itself as an important strategic actor, and to pressure Washington to temper its criticisms of Tashkent’s human rights record.

In June 2011 it was announced that the US would transfer its food imports source for its Afghan military bases from the United Arab Emirates to Uzbekistan, taking advantage of an easier transport route from Uzbekistan than from the UAE. Given that as the US military was buying more than 40 tons of fruits and vegetables daily in Dubai for its troops in Afghanistan, this decision would obviously be a major boost for Uzbek farmers, processors and distributors. Currently, almost 40 percent of surface cargo arrives in Afghanistan along the NDN, and the goal is to increase that proportion to as much as 75 percent by the end of 2011; more than 80 percent 306 of supplies shipped along the NDN pass through Uzbekistan.F

Having itself withdrawn from guarding Central Asia’s borders, Moscow apparently recognized that the deployment of US troops in Central Asia would constitute a barrier to extremist encroachments in Russia itself (the Taliban in Tatarstan warning). In addition, Putin saw US involvement in the region as an opportunity to promote Russia’s Great Power status by advertising itself as an indispensable ally in the war on terror. Yet Putin’s support of the US 307 deployment evidently faced serious opposition from Russian generals.F F However, the leaders of Uzbekistan, Tajikistan and Kyrgyzstan made it clear that they wanted American forces in the region, and for Moscow to have opposed them would have undermined Russia’s influence in 308 Central Asia.F F In the upshot, Putin accepted the deployment of NATO forces in Kyrgyzstan, Tajikistan and Uzbekistan, even though it brought Western forces into what had hitherto been a Soviet/Russian sphere of influence.

However, Russia feared an open-ended American presence in Central Asia, an attitude shared by China (as will be seen below). Thus, at the same time that Moscow was reinforcing its own military presence in Central Asia, Putin was repeatedly pressing Washington to provide a concrete date for the withdrawal of American troops from the region (as well as from 309 Afghanistan).F F

In February 2009, Kyrgyz President Kurmanbek Bakiyev announced that the US Air Force’s transit facility at Manas would shortly be closed, and an official eviction notice was delivered to the US embassy in Bishkek. The news of the base’s closure followed the announcement of an agreement whereby Russia would provide Kyrgyzstan with $2 billion in loans and $150 million in financial aid, substantially more than the assistance provided by Washington. It was widely thought that a condition of the assistance was the expulsion of the US forces from Manas (which is near Kant). However, the US increased the amount it paid for the use of the facilities, and the Kyrgyz government reversed the closure decision.

305 Farkhod Tolipov, “Strategic Uncertainty in Uzbekistan’s Afghanistan Policy,” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 22 June 2011. 306 Craig Whitlock, “U.S. turns to other routes to supply Afghan was as relations with Pakistan fray,” Washington Post, 3 July 2011. 307 Mankoff, Russian Foreign Policy, p.266. 308 Ibid, p.267. 309 Hanks, Global Security Watch. Central Asia, p.130.

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4.5.2.2 The Collective Security Treaty Organization

The Shanghai Cooperation Organization (SCO) will be discussed in a later section relating to Central Asia. Suffice it to say here that, while Russia is a leading member of the SCO, its emphasis is on a rival regional organization, the Collective Security Treaty Organization (CSTO). China is not a member of the CSTO, which makes that organization a useful instrument to foster Russia’s return as the leading power in Central Asia.

The current members of the CSTO are Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Belarus and Armenia (Turkmenistan – whose official foreign policy is one of “positive neutrality” – is the only Central Asian state that is not a member). The CSTO’s headquarters are in Moscow, and although the presidency rotates between members, the organization’s Secretary General, Nikolai Bordyuzha, is a Russian. The CSTO depends on Russia for its military hardware, for which it pays the same price as the Russian armed forces.

The CSTO arose from the Collective Security Treaty of the CIS, which was signed in 1992 and comprised the current members of the CSTO, with the exception of Belarus. Belarus joined the following year, along with Azerbaijan and Georgia, which both withdrew in 1999. The charter of 310 the CSTO was signed in 2002. As the memberships of the two organizations suggestF F the CSTO covers much the same ground as the SCO, combating new security threats and challenges, such as terrorism, Islamic extremism, drug trafficking and transnational crime. It has even branched out 311 into economic cooperation, “if just for show.”F

The CSTO is a typical CIS-type organization: a creature of Moscow, anti-Western and given to rhetoric that far exceeds performance. While the SCO has some important achievements to its credit, Lo argues that in contrast the purpose of the CSTO is almost nakedly geopolitical: to 312 package Russia’s return as the leading power in Central Asia.F F Just as the SCO is China’s multilateral instrument of influence in the region, so the CSTO is Russia’s, and they are effectively competing organizations that cover much the same ground.

However, in contrast with the SCO, the CSTO does have a military force of its own, the Collective Rapid Reaction Force (CRRF), that was set up in 2009 with the goal of countering limited military aggression against CSTO member states and of fighting against terrorism and drug trafficking. By April 2011 the CRRF numbered around 17,000 troops. In addition, the CSTO boasted a Collective Peacekeeping Forces, which numbered around 4,200 men, to which each 313 member state contributed a contingent.F F The CRRF held its first joint exercises at a military facility in Kazakhstan, near the Chinese border, in October 2009, and has since held exercises in Tajikistan, Russia and Kyrgyzstan.

On August 29, 2008, Russia announced it would seek CSTO recognition of the independence of Abkhazia and South Ossetia. Tellingly, it was completely unable to do so. Even Belarus refused to back Russia on the issue. Although the CSTO did blame Georgia for instigating the conflict, and provided a tepid endorsement of the “active role of Russia in contributing to peace and

310 The six full members of the SCO are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Five of the six are also in the CSTO. The notable exception is China. 311 Lo, Axis of Convenience, p.112. 312 Ibid, p.112. 313 Pavel Tarasenko, “CSTO lacks clear ideology,” Russia Beyond the Headlines, 29 April 2011.

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cooperation in the Caucasus,” its call for the security of South Ossetia and Abkhazia to be based on the UN Charter, with its emphasis on territorial integrity, and other fundamental documents of international law, could be considered a rebuff of Russia’s action in recognizing the two break- away regions.

Soon after its formation, there were calls for the services of the CRRF to quell ethnic clashes in Kyrgyzstan in June 2010. Interim Kyrgyz President Roza Otunbayeva requested the assistance of Russian troops, and two previous Kyrgyz presidents, who had both been ousted by popular protests, also urged CSTO intervention. However, Bordyuzha called the violence “purely a domestic affair,” while President Medvedev argued that only in the event of foreign intervention could the dispute fall within the scope of the CSTO. Russia wanted any decision on military aid to be taken collectively to demonstrate the effectiveness of the CSTO, but some members of the alliance had reservations about the interim Kyrgyz leaders who took power after popular disturbances ousted then-president Kurmanbek Bakiyev in April 2010. Equally, some – including Belarus and Uzbekistan – would have been reluctant to establish a precedent for Russian intervention in their internal affairs. Thus, a meeting of CSTO leaders in August 2010 failed to agree to provide military aid for Kyrgyzstan. Speaking at a joint news conference after the meeting, President Medvedev said events in Kyrgyzstan showed the CSTO must become more 314 effective and act quicker.F

While the establishment of the CSTO and the CRRF are a significant collective step in the field of Central Asian security, nonetheless bilateralism remains the dominant approach to regional security issues as it gives each state more room for manœuvre in promoting its national interests. Sébastien Peyrouse argues that the main concern of bilateral cooperation is the protection of the 315 international borders of the former Soviet Union.F

4.5.3 Energy

As was noted earlier, one of Moscow’s two main priorities in Central Asia is to control its energy resources. Initially its activities were limited to Kazakhstan, but in around 2000 Russia also began to make significant inroads in Uzbekistan and Turkmenistan and, since 2005, in Kyrgyzstan and Tajikistan as well. This energy focus is reflected in trade data. The relative proportion of gas and oil exchanges in Russia-Central Asia trade increased from 23 percent of total trade in 2003 to 36 316 percent in 2006. Nonetheless, it is still below the Soviet-era levels.F F Russia consumes only a small quantity of the oil and gas that it imports from Central Asia – the rest it re-exports to Ukraine and Europe. In fact, Russia is highly dependent on natural gas from Central Asia to meet its commitments.

Russian interest in Central Asian energy is not solely motivated by commercial considerations. In his study of Russian foreign policy, Mankoff argues that Moscow’s domination of the energy sector has significantly constrained the Central Asian states’ foreign policy autonomy. This

314 Denis Dyomkin, “Russian-led bloc undecided on aid for Kyrgyzstan,” Reuters, 20 August 2010. 315 Peyrouse, “Russia-Central Asia,” p.17. 316 Laruelle, “Russia and Central Asia,” p.162.

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situation contrasts with the Caucasus, where Azerbaijan and Georgia are able to rely on non- 317 Russian pipelines to export the energy from that region.F

After Russia, Kazakhstan is the largest oil producer of the former Soviet Union but the lack of access to a seaport makes the country dependent on pipelines to transport its hydrocarbons to world markets. Given that Kazakhstan’s main oil reserves are located in the western part of the country, Russia is particularly well-placed to provide the transit for Kazakhstan’s oil. As a result, 318 80 percent of Russia’s investment in Central Asian energy in 2006 went to Kazakhstan.F

The EU and US have aggressively promoted new pipeline deals that would bypass Russia, and Moscow has responded by trying to bottle up Central Asia’s energy in Russian-controlled pipelines. Kazakhstan managed to balance between the competing demands of Russia, the West and China by signing multiple deals. Typically, Kazakhstan has allowed Western companies to develop its major oil fields while Moscow controls much of its export transportation infrastructure.

Of Kazakhstan’s three major oil pipelines, two transit Russia (the third is connected to China). The Caspian Pipeline Consortium (CPC) oil pipeline was commissioned in 2001 and runs 940 miles from the Tengiz oil field to the Russian Black Sea port of Novorossiysk. About 20 percent of the crude transported by the pipeline in 2009 was Russian oil and the rest Kazakh. The other is the Atyrau-Samara Pipeline which connects to Russia's Transneft distribution system, and thence to world markets via the Black Sea. In 2002, a treaty of friendship and cooperation gave Kazakhstan access to Russia’s Baltic pipeline system to Europe. Since then, Lukoil alone has 319 invested over $3 billion in Kazakhstan, and is the largest foreign investor in the country.F F In 2006, Kazakhstan agreed to build a link from the enormous Kashagan oilfield to the Baku-Tbilisi- Ceyhan (BTC) pipeline in Azerbaijan, bypassing Russia. But crucially Kazakhstan made a separate agreement to ship nearly three times as much oil via the privately-owned Caspian pipeline consortium, which crosses Russian territory. In the upshot, the Russia bypass route has been postponed until at least 2018.

For nearly two decades after independence the Central Asia Centre Pipeline was virtually the sole export artery for natural gas from Turkmenistan and Uzbekistan. The two branches of the Central Asia Centre (CAC) gas pipeline, controlled by Gazprom, meet in the southwestern Kazakh city of Beyneu before crossing into Russia at and feeding into the Russian pipeline system. Both branches originate in Turkmenistan. Thus, Russia has been able to trade access to its pipeline system for gas at discounted prices, enabling Gazprom to strike lucrative deals with the Central Asian producers. Moscow wanted to reserve the lucrative European gas market to Russia, and wanted Central Asian gas as an energy lever over several CIS states, notably Ukraine and 320 Georgia.F F In 2002-3 Gazprom signed agreements with the natural gas companies of Kazakhstan,

317 Mankoff, Russian Foreign Policy, p.279. 318 Laruelle, “Russia and Central Asia,” p.162. 319 Mankoff, Russian Foreign Policy, p.272. 320 Martha Brill Olcott, International Gas Trades in Central Asia: Turkmenistan, Iran, Russia and Afghanistan, working paper no.28, Stanford: Program on Energy and Sustainable Development, Stanford University and Houston: James A. Baker III Institute for Public Policy Energy Forum, Rice University, May 2004, p.23.

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Uzbekistan and Kyrgyzstan with a view to establishing a unified gas system across Central Asia, 321 and it established a barter/cash arrangement for the supply of Turkmen gas.F F

In December 2007, Russia, Kazakhstan and Turkmenistan announced an agreement to renovate and expand the western branch of the CAC pipeline and to construct a new Caspian gas pipeline, originally scheduled for completion in 2012, paralleling the western branch. However, construction of the new pipeline was put on hold in 2009 as Turkmenistan sought to diversify its gas export options and Russia to reduce its Turkmen gas imports due to lower European 322 demand.F

Russia has long had essentially a monopoly over Turkmenistan’s pipeline network, controlling 323 that country’s ability to ship its gas to the outside world.F F However, in 2010 Ashgabat started a policy of diversifying export routes for its raw materials. Gazprom is undertaking exploration of gas deposits in Tajikistan (in Sargozan and Rengan) and in southern Kyrgyzstan. Ten percent of Russian investments in Central Asia’s energy sector in 2006 went to Uzbekistan, and Russian companies are involved in developing a number of oil and gas deposits in that country. In November 2007, Lukoil brought online the Khauzak gas field in Uzbekistan and sold its output in advance for 32 years to Gazprom. Moscow has also shown interest in developing the transit infrastructure in Uzbekistan.

Despite this extensive involvement in Central Asian energy, “Moscow has well and truly lost its 324 stranglehold over the region.”F F In the face of rising world demand, regional states are in a position to raise prices and explore pipeline routes that bypass Russia, thereby stripping Gazprom, Lukoil and Rosneft of their quasi-monopoly in Central Asia.

Thus, despite Russia’s efforts to exploit its close diplomatic ties in Central Asia in order to secure an advantage in the lucrative energy field, the leaders of these states seemed determined to widen their options and expand their freedom of action by continuing to welcome competing offers from 325 the West and from China.F F

321Ibid, p.26. 322 “Kazakhstan Under the Spotlight in EIA Energy Report,” OilVoice, 18 November 2010 (http://www. oilvoice.com/n/Kazakhstan_Under_the_Spotlight_in_EIA_Energy_Report/f26373d69.aspx), accessed 29 July 2011. 323 Mankoff, Russian Foreign Polic, p.278. 324 Laruelle, “Russia and Central Asia,” p.167. 325 Donaldson and Nogee, The Foreign Policy of Russia, p.202.

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5 Central Asia

5.1 Historical Background

Geography alone would give Central Asia geopolitical significance. It is situated at the centre of the world’s largest landmass and positioned at the nexus of Russia, China, the Middle East and Europe.

Ecological pressures have played a major role in the development of Central Asia. The region comprises two primary zones – the steppe and the desert oases – resulting in the evolution of two distinct but interrelated cultural identities. The open grasslands, limited rainfall and dispersed utilizable water of the steppe fostered the development of nomadic pastoralism. The existence of the desert zone fostered urban and intensive agricultural settlements. This distinction between the nomadic and the sedentary tribes in Central Asia persisted well into the 20th century.

As far back as the century before Christianity, the oasis states of Central Asia built ties with the Chinese state. By the time that the Roman Empire was at its height, Central Asia was becoming a great crossroads for economic and cultural exchange. The traders of Sogdiana (the city-states in what is now central Uzbekistan) had developed a lucrative trade between China and the Roman and Parthian empires, dealing in silk and many other commodities. For nearly a millennium the city-states of Central Asia, either independently or as part of larger imperial states, controlled the world’s first global trading route. During this period, the Muslim conquest of the region began in earnest, and by 900 AD the oasis centres of Central Asia had been fully incorporated into the Muslim world.

The horse-breeding and highly nomadic pastoralists of the steppe developed strong military skills, such as leadership, constant vigilance, intimate knowledge of animals, mounted archery and stamina, making them formidable foes. As a result from the later centuries of the first millennium AD, waves of Turco-Mongolian peoples from the steppe dominated the history of Central Asia. Indeed, it has been suggested that Central Asia became the pivotal centre of the world from the 5th to the 15th centuries, but lapsed into a “passive” role in world history from 1650 in the face of the 326 expansion of sedentary states (Russia and China, in particular).F F

The Mongol conquest in the early-13th century was one of the most catastrophic events in Central Asian history. No major city escaped the wrath of Genghis Khan, and it took decades to recover, but he did bring the region into a cohesive political structure. The century-and-a-half that followed was relatively peaceful, until around 1370 Amir Timur (Tamerlane) unleashed a new wave of great destruction in his attempt to restore the Mongol empire. In 1404, at the height of his power, Timur launched an attack against the Ming Dynasty, but died soon after it began. In their turn, the Timurids were displaced by the Shaybanids, ancestors of the modern Uzbeks and Kazakhs. The tribes who became Uzbeks were mostly sedentary and urbanized, while those that formed the core of the Kazakh ethnicity remained nomadic. In the 1700s the Kazakhs faced yet another devastating invasion from the east, this time mounted by the Kalmyks (Buddhist

326 Michael Clarke, “The ‘centrality’ of Central Asia in world history, 1700-2008. From pivot to periphery and back again?” in Colin Mackerras and Michael Clarke, eds, China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.28.

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Mongols). As noted earlier, this led to some Kazakhs seeking Russian protection, opening the 327 way for Russian expansion into Central Asia.F F

Between 1700 and 1900 Central Asia was gradually apportioned between the imperial states of Russia and China, which tried to weaken the martial way of life of such nomadic pastoralists as the Mongols and Kazakhs by encouraging religion (Tibetan Buddhism and Islam respectively) and converting the steppe into arable land. Russian Central Asia experienced the classical colonial model, becoming a supplier of raw materials and consumer of Russian products. The imperial orders in these two states suffered nearly simultaneous collapse around 1900, but they became reinvigorated around the mid-20th century, enabling them effectively to insulate Central Asia from external influences. The collapse of the Soviet Union threw Central Asia into a period 328 of transition, forcing it to redefine its relations with the outside world.F F In the two decades since, Central Asia has re-emerged as the centre of geopolitical tension that it was in the 19th century.

5.2 Contemporary Situation

As will be seen in the sections on several of the regional states, Central Asia is characterized by high levels of instability, at the root of which are poor governance, dismal economic performance and corruption. All, with the possible exception of Kazakhstan, have serious political, social and 329 economic problems.F F The institutional capacities of the Central Asian states lag the relatively significant resource endowments of several among them. In these circumstances, there have been no real attempts at region-building or the development of an inclusive Central Asian identity, despite the establishment of numerous regional organizations.

5.2.1 Political Aspects

For all the multilateral initiatives involving regional states, political integration in Central Asia appears to be quite tenuous. During the Soviet era, the regional republics were tightly woven into a single political, economic and infrastructural system, and were obliged to work together. Now 330 they no longer have to, “and usually do not.”F F Laruelle commented that the lack of cooperation 331 between Central Asian states “seems conspicuous.”F F

The divisions and rivalries between the Central Asian leaders themselves are not conducive to the development of a regional identity. Rico Isaacs, a lecturer at Oxford Brookes University, thinks that the unwillingness to cooperate effectively to resolve some of these wider regional issues, such as access to water, reflects both a clash of interests between states and the zero-sum attitude 332 of some of their governing elites.F F For example, there is competition between Uzbek President Karimov and Kazakh President Nazarbayev, both of whom aspire to regional leadership. During

327 Hanks, Global Security Watch. Central Asia, pp.2-16. 328 This historical background is largely drawn from Clarke, “The ‘centrality’ of Central Asia.” 329 Charles E. Ziegler, “Russia and China in Central Asia,” in Bellacqua, ed., The Future of China-Russia Relations, p.237. 330 ICG, Central Asia: Decay and Decline, Asia Report No.201, Bishkek/Brussels: ICG, 3 February 2011, p.i. 331 Laruelle, “Russia and Central Asia,” p.174. 332 Joanna Lillis, “Kazakhstan: OSCE Summit Exposes Central Asian Rifts,” EurasiaNet.org, 9 December 2010 (http://www.eurasianet.org/node/62539), accessed 3 August 2010.

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2010, Kazakhstan occupied the chairmanship of the Organization for Security and Cooperation in Europe (OSCE), and hosted the OSCE summit of heads of state (the first since 1999) in Astana in December 2010. Not only did Karimov not attend (the only Central Asian president not to do so), but his officials undermined the proceedings by criticizing the OSCE’s reaction to the Kyrgyz crisis, by rejecting Kazakhstan’s proposals to reform the OSCE, and by ruling out Tashkent’s 333 involvement in collective efforts to stabilize Afghanistan.F F Isaacs concluded that Kazakhstan’s chairmanship of the OSCE actually crystallized the fault lines in Central Asia, especially with 334 regards to Uzbekistan’s lack of willingness to cooperate with its neighbours.F

Although Kazakhstan helped broker a deal in April 2010 to enable the ousted president, Kurmanbek Bakiyev, to leave Kyrgyzstan after the collapse of his administration, Astana was less helpful to Bishkek in other respects. According to Paul Quinn-Judge, the International Crisis Group’s Central Asia Project Director, “Kazakhstan’s closure of the Kyrgyz border after April 2010 inflicted serious damage on Kyrgyzstan’s already ailing economy, and Kazakhstan's 335 behaviour, in general, during June was unhelpful.”F F Isaacs asserted that Uzbekistan’s attack on the OSCE’s performance in the Kyrgyz crisis was an attempt to take the shine off the prestige Kazakhstan received for holding the OSCE chairmanship and to weaken Kazakhstan’s emerging 336 status as the key Central Asian power.F F At the Astana meeting, Tajik President Rahmon complained bitterly about a de facto Uzbek blockade of rail freight headed for Tajikistan. The blockade was a tactic in a continuing dispute over water rights, primarily between Uzbekistan on the one side and Tajikistan and Kyrgyzstan on the other.

Indeed, relations between the Central Asian states have often been tense. The one country that borders all the others also happens to be the most quarrelsome. Uzbekistan’s neighbours have frequently complained of Uzbek interference in their internal affairs and of occasional violations of their sovereignty. During the Tajik civil war in the early-1990s Uzbek planes bombed targets in Tajikistan, and in 1998 Dushanbe accused the Karimov government of supporting a rebellion, led by an Uzbek, in northern Tajikistan. Turkmenistan alleged that Uzbekistan was involved in an 337 assassination attempt on President Saparmurad Niyazov.F F In 2010 there were approximately two dozen incidents on the poorly-demarcated Kyrgyzstan-Tajikistan border, which have grown in 338 ferocity in 2011, and there have been similar problems on the Kyrgyzstan-Uzbekistan border.F F As will be seen below, access to water is a major source of dispute, with a potential for conflict 339 that appears to be growing yearly.F F

If the leaders of these countries have difficulty in working together, they may be encouraged in this attitude by public opinion. A survey conducted in Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan in 2004 found that the people of Central Asia did not express much trust in each other. Among Tajiks, only 14 percent rated Kyrgyzstan as trustworthy, a proportion that was even lower with regard to Kazakhstan and Uzbekistan (11 percent and nine percent respectively). Kazakhs returned the favour: only 11 percent thought that Kyrgyzstan could be trusted, and eight percent

333 Ibid. 334 Ibid. 335 Lillis, “Kazakhstan: OSCE Summit Exposes Central Asian Rifts.” 336 Ibid. 337 Hanks, Global Security Watch. Central Asia, pp.27-28. 338 Alisher Khamidov, “Kyrgyzstan-Tajikistan: Clashes on Volatile Border Growing Vicious,” EurasiaNet.org, 20 April 2011. 339 Hanks, Global Security Watch. Central Asia, p.31.

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felt the same way about Uzbekistan. The Kyrgyz were better disposed towards Kazakhstan, with 34 percent rating it as trustworthy, but only 13 percent believed that of Uzbekistan. In each of the three Central Asian countries surveyed, respondents expressed greater trust in Russia (80-87 percent) and China (19-38 percent) than they did in their fellow regional states. Uzbeks were not questioned (nor were Turkmen), but their scores among respondents from the other three Central 340 Asian states were 9-13 percent.F F The revolution in information and communication technologies has broken down the isolation and remoteness of Central Asia, and resulted in a freer flow of goods, capital, people, information and ideas. But this survey suggests that it has not conduced to a stronger regional identity. It may, indeed, induce a crackdown by governments as wary of the “Arab spring” as China has been.

In terms of governance in the Central Asian states, an extremely bleak report published by the International Crisis Group in February 2011 warned that after almost two decades of independence, “Central Asian countries have nearly depleted the infrastructure built in Soviet 341 times for education, healthcare, transportation and energy.”F F The study found that Kyrgyzstan and Tajikistan were in the worst shape, with their infrastructure “at the edge of collapse,” while 342 Turkmenistan are experiencing “slow, but consistent decline.”F F It concluded that there is “little 343 hope that the downward spiral in these four countries can be stopped.”F F Largely thanks to its oil money, Kazakhstan – described as the region’s only functioning state – has made patchy progress in some sectors and conserved Soviet endowments in others.

5.2.2 Internal Security Issues

There is a variety of non-state actors that challenge state authority in Central Asia. They include radical Islamist organizations, many of them including veterans of the Afghan war, regional transportation mafia, poppy cultivators, arms dealers, and itinerant merchants engaged in unregulated cross-border commerce. Or populations driven to protest.

5.2.2.1 Popular Unrest

Populations can revolt if repressed or deprived for too long. The latest UN Food and Agriculture Organization (FAO) assessment of food insecurity found that none of the North African countries that erupted in sustained revolt in early-2011 suffered from food insecurity (less than five percent 344 of the populations of Egypt, Tunisia and Libya were classified as undernourished).F F In these cases repression and the lack of political choices were key factors in public anger.

At the same time, it is not a given that appalling socio-economic indicators will provoke an uprising. The atrocious condition of North Korea and of Zimbabwe has sparked revolt in neither. There are no rankings for North Korea on either the FAO food security index or the United

340 Kerr, “Central Asian and Russian perspectives,” p.136. 341 ICG, Central Asia: Decay and Decline, p.36. The reference to energy relates to the domestic availability of power. 342 Ibid, p.36. 343 Ibid, p.36. 344 The State of Food Insecurity in the World. Addressing food insecurity in protracted crises, Rome: Food and Agriculture Organization of the United Nations, 2010, pp.50-52.

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345 Nations Development Programme (UNDP) Human Development Index (HDI),F F but it may safely be assumed it would do very badly on both. As for Zimbabwe, it ranked 169th out of 169 countries in the HDI, and had high levels of food insecurity. On the other hand, some countries that have had very high and persistent levels of food insecurity, and rank in the bottom 13 of the HDI, have been conflict-wracked (for example, the Democratic Republic of Congo, Sierra Leone and Ethiopia).

A discussion paper on food insecurity and conflict observed that, historically, most communities denied access to resources adequate to feed themselves and live with dignity have failed to rebel because they are either insufficiently organized or overly repressed. Crucially, however, “These conditions of unchanneled frustration and hopelessness can lead to violence and conflict once 346 there emerges leadership that can successfully mobilize this discontent…”F

All but one the Central Asian states are marked by repression and lack of political freedoms, classified by Freedom House as “Not Free” (Kyrgyzstan is categorized as “Partly Free”). Turkmenistan and Uzbekistan have the worst ratings, each getting the lowest ranking on a seven- 347 point scale for both political rights and civil liberties.F F

What makes these various rankings interesting in the case of Central Asia is some of their intersections and the presence in two cases of conditions or organizations that have been able to mobilize discontent. The first instance, which will be discussed further in the section on Tajikistan, is the Tajik civil war (1992-97). As will be seen, the epicentre of the revolt against the regime was the province of Gorno-Badakhshan, which is largely covered by the Pamir Mountains. After the collapse of the Soviet Union in 1991, the living conditions of the Pamiris dropped to the level of a poor Sahelian country. Tajikistan had, by far, the highest levels of food insecurity in Central Asia in the period 1990-97, which would almost certainly have been at their worst in Gorno-Badakhshan. At the same time, an organized and armed opposition, comprising Islamists and democratic reformers, appeared to challenge the government. Despite Russian military aid to the Rahmon regime, the opposition was able to prolong the conflict to an extent that suggests that it received substantial support, especially in Gorno-Badakhshan, thus providing some sort of outlet for alienated parts of the population.

The second case involves Kyrgyzstan. In strong contrast with the other four countries of Central Asia, two Kyrgyz presidents have been overthrown by mass public protests. The first uprising, in 2005, was provoked by the increasingly authoritarian behaviour of the Akayev government, which drew a rating of “Not Free” from Freedom House on the eve of the revolt (and a rating of six on political rights). Widespread charges of electoral fraud in the February-March 2005 parliamentary elections provoked ever more assertive public protests until the regime collapsed. The demonstrators lacked an obvious leader or a single candidate who could have inspired people to protest, and the uprising was quite spontaneous, but Kyrgyzstan had a tradition of lively

345 The Real Wealth of Nations: Pathways to Human Development. Human Development Report 2010, New York: United Nation Development Programme, November 2010, pp.145-46. 346 Ellen Messer and Marc J. Cohen, Conflict, Food Insecurity, and Globalization, FCND Discussion Paper 206, Washington, DC: International Food Policy Research Institute, Food Consumption and Nutrition Division, May 2006, pp.15-16. 347 Freedom in the World 2011. The Authoritarian Challenge to Democracy, Washington, DC: Freedom House, 13 January 2011, pp.14-16.

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parliamentary opposition (in the late-1990s several deputies tried to impeach President Akayev) and the country was known in the early-1990s as an “island of democracy” in Central Asia.

Five years after the 2005 uprising, Kyrgyzstan had just earned a Freedom House downgrade from “Partly Free” to “Not Free” when the cycle of public protest and regime collapse was repeated. The overthrow of President Kurmanbek Bakiyev was prefaced by rolling black-outs and heavy increases in energy tariffs. A study by the ICG attributed the overthrow of the Bakiyev government in 2010 to the large-scale protests that were provoked by those increases. The report warned that similar conditions could produce a similar result in other regional countries, notably 348 Tajikistan, in the not-too-distant future. F F

Thus, of these two popular revolts, one was provoked by discontent with authoritarianism finally boiling over, the other by an erosion of living standards. In light of these regional events and of the heightened awareness of popular uprisings occasioned by the “Arab Spring,” the sections on each of the regional states will look at issues relating to living standards and political repression and their potential to effect political change.

The conventional wisdom is that social networks have made regime change easier to organize and execute. Protest movements can reach hundreds of thousands of adherents with a single Facebook post or Twitter feed, launching a massive call to action in seconds. An underlying assumption is that social media is making it more difficult to sustain an authoritarian regime. In Moldova a student organized a flash mob to protest the April 2009 elections, which opponents of the government denounced as fraudulent, and some ten thousand demonstrators attacked the parliament building, burning part of it. The Western media subsequently coined the phrase the “Twitter Revolution” to describe the incident. There was an increased use of social networking media such as Facebook and Twitter during the Tunisian and Egyptian uprisings, to help organize, communicate and ultimately initiate civil-disobedience campaigns and street actions. Likewise, opponents of the Assad regime in Syria have used social media to call for demonstrations after Friday prayers. Finally, social media mobilized some 12,000 demonstrators in the Chinese city of Dalian on 14 August 2011 over fears that the local chemical plant could leak. The message calling for the protest was placed on Renren, China’s equivalent of Facebook. 349 The authorities closed the plant.F F

Some of the countries mentioned here that have had significant protests apparently enabled by social media – Moldova, Egypt, Tunisia, Syria and China – have generally about the same communications coverage (land lines, cell phones and Internet) as Kazakhstan and Kyrgyzstan. Tajikistan, Uzbekistan and, above all, Turkmenistan have much less, and indeed quite limited, coverage.

However, while social media enable opposition activists to disseminate their messages quickly and broadly, they do not by themselves instigate revolutions. Furthermore, governments can use social media against their opponents, as tools in intelligence-gathering, disinformation or disruption. Beyond monitoring movement websites, governments can also shut them down. For 350 instance, China shut down Internet access to all of Xinjiang after the Urumqi riots in 2009.F

348 ICG, Central Asia: Decay and Decline, p.i. 349 Peter Foster, “The march of China’s new middle class,” Daily Telegraph, 17 August 2011. 350 Stratfor, Social Media as a Tool for Protest, Austin: Strategic Forecasting, Inc., 3 February 2011.

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Popular revolts require preconditions or catalysts – normally both. An excellent example of this conjunction was the Tunisian revolution in January 2011. The demonstrations were precipitated by high unemployment and inflation, corruption, and lack of political freedoms. What catalyzed these preconditions into mass street protests was the self-immolation of a street vendor in December 2010. A major catalyst in people power revolts has been perceived election fraud, as demonstrated in Kyrgyzstan in 2005 and Moldova in 2009. The overthrow of President Bakiyev in Kyrgyzstan in 2010 was triggered by a huge spike in electricity prices, although they simply culminated a longer-term process.

Thus, in addition to potential indicators of socio-economic and political rebellion, the sections on the regional states will look at mobilization issues, notably with regard to communications. Governments in the former Soviet Union, including in Central Asia, have increased their online monitoring activities and have sought to inhibit the distribution of news and information. They also block websites and use the Internet to spy on journalists and to incapacitate news websites not controlled by the state. In addition, they monitor and disrupt blogs, chat rooms, and online forums that have, until recently, been free of such surveillance. Nina Ognianova, the Europe and Central Asia Program coordinator for the Committee to Protect Journalists, says that the authorities are also using cybercrime legislation against independent media sites. The overall goal 351 and effect of such measures is to muzzle independent voices in the region.F F

With regard to the catalysts for protest, Central Asian governments are all too aware of the dangers they pose (and the overthrow of Presidents Akayev and Bakiyev have doubtless been a salutary lesson for regional autocrats). This explains President Karimov’s violent reaction both to the Andijan protest and Western criticism of his suppression of it. To obviate election fraud becoming a catalyst of mass protest, the CIS and the SCO have set up a plethora of international election observer missions to try to provide an aura of legitimacy to regional elections which might fall short of OSCE standards.

The issue of public unrest is looked at in some detail here, and further considered in the sections on the individual regional countries, because as both China and Russia increase their geopolitical and economic presence in Central Asia, their interests become more vulnerable to possible “people power” outbreaks. This explains their reaction to the Andijan affair, and China will well remember the cost it incurred from the Tiananmen protest. A well-known example of a Great Power being very negatively affected by a popular revolt in a developing state was the United States in Iran in 1979.

5.2.2.2 Religious Extremism

One of the “three evils” to which members of the SCO subscribe is the threat of religious extremism.

Central Asia is overwhelmingly a Muslim region. Probably well over four-fifths of its population of nearly 62 million people is now Muslim, with nearly nine in ten of the inhabitants of Turkmenistan, Uzbekistan and Tajikistan – the three regional states that border Afghanistan –

351 Nikola Krastev, “Watchdog: Governments Becoming More Skilled At Suppressing Online Press Freedom,” Radio Free Europe/Radio Liberty, 2 May 2011.

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being Muslims. Almost all Muslims in Central Asia are Sunnis, with perhaps one percent of them 352 being Shia.F F

The religious tradition in Central Asia is generally a moderate one, such that the secular leaderships of the region have by and large regarded it as an acceptable practice. The ancestors of the Tajiks and the Uzbeks lived a primarily urban existence, and thus were much more profoundly influenced by Islam than the traditionally nomadic peoples of Central Asia (the Kazakhs, Kyrgyz and Turkmen). However, the rigid, doctrinaire and intolerant strains of Islam held little appeal even among the Tajiks and Uzbeks. Sufism is a key influence on Islam in the 353 entire region, and is viewed as an inherently Central Asian variant of Islam.F

The Soviets tried to purge religion from Central Asia, and thus very few of the inhabitants of the region were particularly observant in the late-Soviet period. However, a surge in religiosity occurred in the dying days of the Soviet Union: a considerable number of mosques and madrassas sprang up in the 1990s, and the numbers making the hajj increased enormously. The revival of Islam in the region was also encouraged by the import of religious literature, contact with foreign religious organizations and the rivalry between the officially-sanctioned clergy and unofficial mullahs.

Although this Islamic recovery was “in no way…a manifestation of ‘Islamic fundamentalism’,” it posed a problem for the new presidents, all of whom (except Askar Akayev of Kyrgyzstan) had, as First Party Secretaries of the Soviet Communist Party, declared themselves to be atheists. In addition, the leaderships of these new countries were anxious not to alienate their Slavic citizens, who played a key role in the economy and other sectors of society. Therefore, while the leaders tried to co-opt Islam as part of the national identity of their states, the constitutions of the Central Asian states all enshrine secularism, at the same time allowing for freedom of religious expression.

Reuel Hanks, the editor of the Journal of Central Asian Studies, has described the level of support 354 for radical philosophies in Central Asia is “abysmally low.”F F Another analyst, writing in 2008, has cited data from the Global Terrorism Database that show that the frequency of terrorism in Central Asia is less than in the majority of other regions in the world. However, regional 355 governments use the spectre of Islamist groups to bolster their own internal legitimacyF F and to strengthen security relations with Russia, China, the EU and the US.

Nonetheless, there have been manifestations of Islamic extremism in the region since independence. The core of the opposition during the civil war in Tajikistan in the early-1990s was the Islamic Renaissance Party of Tajikistan (IRPT). Much of the IRPT leadership took refuge in Afghanistan, and coordinated the guerrilla war from there. At the same time, a branch of the IRP in Uzbekistan was driven underground, which served to radicalize its adherents. Two Uzbeks who fought with the IRPT in Tajikistan founded the Islamic Movement of Uzbekistan (IMU),

352 Data extrapolated from the CIA World Factbook. However, the CIA data for Kazakhstan are at wide variance with official government statistics (see the section on Kazakhstan), which enjoins caution in conflating data for different countries and dates. These numbers are offered as simply a general guideline. 353 Much of this section is taken from Hanks’s chapter on Islam, terrorism and security in Central Asia. Hanks, Global Security Watch: Central Asia, pp. 45-67. 354 Ibid, p.67. 355 Cited in Kerr, “Central Asian and Russian perspectives,” p.143.

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probably in 1998. Disaffected young Uzbeks from the Fergana Valley drifted in to IMU camps in Tajikistan and northern Afghanistan, numbering perhaps several thousand. The Fergana Valley has historically been a centre of unrest. It was where the Islamic Movement of IMU emerged, and in 2006 it was reported that the radical Islamic organization Hizb ut-Tahrir (HuT) was active in 356 the valley.F F

In August 1999 the IMU raided into the Batken region of Kyrgyzstan from their bases in southern Tajikistan. They received little support from the local population, and after several weeks of fighting they agreed to abandon their bases in Tajikistan and were flown to sanctuaries in northern Afghanistan – by the Russian military. In the following summer the IMU again entered Tajikistan and (briefly) Uzbekistan but, lacking numbers and weaponry, were forced to withdraw. American military action in Afghanistan in 2001 and after decimated the IMU, reducing them to random acts of violence. Writing before April 2010, Hanks stated that the IMU has not been able to mount any large-scale operation in Central Asia since 2004, although there have been periodic, 357 but relatively minor acts of violence.F F

The residents of Andijan (in the Uzbek part of the Fergana Valley) have long been regarded as especially devout Muslims, and the Uzbek regime was quick to claim that the IMU organized the 358 May 2005 protest and that the protesters were members of the HuT.F F It is quite possible that such a claim was a pretext to justify a religious crack-down, and the HuT remains a fringe group in Central Asia. However, according to Ahmed Rashid, a respected Pakistani journalist who has written a study of fundamentalism in Central Asia, the violent suppression of the Andijan protest 359 gave a huge boost to recruitment to the IMU and to jihadist movements in general.F F

Events in Tajikistan in the past couple of years are creating concern in and beyond that country. 360 The IMU is said to be active along the Afghan-Tajik border,F F and there have been reports from both Afghanistan and Tajikistan that a small but steady flow of fighters have been crossing that border and heading north. The activities of local warlords and a small group of young insurgents in the Rasht region in 2010-11 – during which three dozen security personnel were killed in an ambush in September 2010 – were only temporarily resolved by a deal cut with the fighters by the Rahmon regime. Also in September 2010, Tajikistan experienced its first suicide bombing when a police station was attacked. The International Crisis Group asserts that the border area of Isfara, 361 in northern Tajikistan, is developing the reputation of being a safe haven for armed militants.F F Isfara is regarded as the unofficial capital of the Tajik part of the Fergana Valley, and its 362 population is considered to be much more religious than in other cities of Tajikistan.F F

There is no evidence that the IMU, the HuT, or any other extremist group enjoys a significant popular following in Kyrgyzstan, where acts of violence associated with Islam typically involve only a few individuals. In Kazakhstan, the south tends to hold a higher proportion of devoted

356

RotarH ,H “Resurgence of Islamic Radicalism in Tajikistan's Fergana Valley.” 357 Hanks, Global Security Watch. Central Asia, p.55. 358 The goal of the HuT, which has a world-wide following, is restoration of the Caliphate. 359 Abubkar Siddique, “IMU’s Evolution Branches Back to Central Asia,” Radio Free Europe/Radio Liberty, 6 December 2010. 360 Karrar, The New Silk Road, p.170. 361 ICG, Tajikistan: The Changing Insurgent Threats, Asia Report No.205, Bishkek/Brussels: ICG, 24 May 2011, p.i. 362

RotarH ,H “Resurgence of Islamic Radicalism in Tajikistan's Fergana Valley.”

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Muslims, but even there religiosity is generally lower than in Uzbekistan or Tajikistan. Hanks stated that post-independence Kazakhstan has not experienced a single significant incident of violence that can be attributed to Islamic radicalism, and the number of “extremists” who have 363 been arrested has been quite small.F F However, in mid-May 2011, a young man killed himself in a suicide bombing (the country’s first) at the intelligence headquarters in Aktobe. One week later a car exploded outside a remand centre operated by the intelligence service in Astana; both occupants were killed. While the government ruled out links to terrorism in both cases, the press was sceptical, and claimed that the perpetrator of the Aktobe attack had been radicalized in a part of the country that analysts have identified as a potential breeding ground for extremism. A number of residents of Kazakhstan have been caught waging jihad in the Russian Caucasus, 364 fuelling speculation that radicalization has been occurring.F F Certainly there has been a massive expansion in the Muslim physical presence, in the form of mosques, in Kazakhstan.

There has been virtually no activity by the HuT or by extremist groups in Turkmenistan, with its strong Sufi tradition. Nor have there been serious incidents of violence. Radical Islam “represents 365 virtually no challenge to the security of the Turkmen state.”F F

Whatever the appeal of extremist religious messages, or the effectiveness of state repression, the ICG worries that the disappearance of basic services in most Central Asian countries will provide Islamic radicals with further ammunition against regional leaders and enhance their ability to 366 develop influential support networks.F

5.2.2.3 Organized Crime

In general criminality is on the increase in Central Asia, much of it to fuel addicts’ habits, with a 367 “drug culture” emerging across the region.F F The problem is emerging as a key security issue. Hanks argues that “the broader decline of law and order in Central Asia is directly or indirectly 368 tied to the narcotics trade.”F F Indeed, some analysts consider that the coordination between 369 terrorists, drug smugglers and organized crime is potentially explosive in Central Asia.F F However, a recent study of the flow of drugs into China via Pakistan and Central Asia found “very little solid evidence” for the view among Chinese law enforcement analysts that there is a 370 significant link between terrorism and drug trafficking.F

In March 2009 a Russian drug official claimed that 60 percent of the heroin consumed in his country entered via Tajikistan, and British agencies estimated that about 90 percent of the heroin smuggled into the UK was refined from Afghan opium much, if not most, of which moved

363 Hanks, Global Security Watch. Central Asia, p.64. 364 Joanna Lillis, “Kazakhstan: Puzzling Blasts Stir Fears of Islamic Radicalism,” EurasiaNet.org, 8 June 2011. 365 Hanks, Global Security Watch. Central Asia, p.66. 366 ICG, Central Asia: Decay and Decline, , p.i. 367 Hanks, Global Security Watch. Central Asia, p.106. 368 Ibid, p.106. 369 Reuel R. Hanks, Global Security Watch. Central Asia, p.101. 370 Murray Scot Tanner, China Confronts Afghan Drugs: Law Enforcement Views of ‘The Golden Crescent’, Alexandria: CAN Analysis & Solutions, CAN China Studies, China Security Affairs Group, March 2011, p.v.

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371 through Central Asia.F F The primary drug route from northern Afghanistan to Europe goes via the Gorno-Badakhshan province of Tajikistan, Osh in Kyrgyzstan, Russia and Belarus. 372 Furthermore, the Central Asian states have themselves begun producing cannabis and hemp.F F

The infrastructure of interdiction in Central Asia – officials, border guards, and police – is riddled with corruption. In Transparency International’s index of corruption perceptions for 2010, the Central Asian countries all scored very poorly. Of 178 countries, Kazakhstan ranked 105th, Tajikistan 154th (tied with Russia), Kyrgyzstan 164th , and Turkmenistan and Uzbekistan tied at nd th 373 172 (only four countries performed worse). China ranked 78 .F F A study conducted by an NGO in Kazakhstan in 2007 found that more than one-third of heroin addicts surveyed reported that their main supplier was a police officer, and that policemen used drug raids to recruit new 374 customers.F

5.2.3 Economic Aspects

According to the World Bank, total GDP for the five Central Asian states in 2007 was $146 billion (70 percent of which was represented by Kazakhstan), less than half that of Denmark and 375 about the same as Ukraine.F

Attempts at creating a unified economic space in Central Asia have sputtered. In 1994 Kazakhstan, Kyrgyzstan and Uzbekistan formed the Central Asian Economic Union. It made little progress towards regional economic integration, which did not deter Tajikistan from joining in 1998. This body evolved into the Central Asian Economic Cooperation, and then into the Central Asian Cooperation Organization (CACO) in 2004, at which time Russia joined it. A year later CACO was absorbed into the Russian-sponsored Eurasian Economic Community (EurAsEC), which itself evolved from a CIS customs union established in 1996. The EurAsEC has successfully usurped previous efforts by the Central Asian states to create a unified market and to dismantle trade barriers. The voting share is determined by the financial contribution to the EurAsEC budget, with Russia having more than twice the number of votes of any other country. Uzbekistan suspended membership in 2008, claiming that the organization was ineffective. In conjunction with the expansion of EurAsEC, in 2006 Russia and Kazakhstan established the Eurasian Development Bank as an alternative to other international financial institutions, such as the Asian Development Bank (of which all Central Asian states are members), the World Bank, and so on. As of 2009 there were only five members, including Russia, Kazakhstan and 376 Tajikistan; almost all the charter capital has been put up by the first two.F

Regional states are also members of other economic groupings, such as the Economic Cooperation Organization, but in general implementation of the lofty goals of all these organizations is hampered by inadequate infrastructure and institutions within most of the member states. Kazakhstan has been an enthusiastic proponent of multilateral economic activity

371 Hanks, Global Security Watch. Central Asia, p.97. 372 Karrar, The New Silk Road, p.67. 373 Corruption Perceptions Index 2010, Berlin: Transparency International, 26 October 2010 (http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results) , accessed 5 August 2011. 374 Hanks, Global Security Watch. Central Asia, p.104. 375 Ziegler, “Russia and China in Central Asia,” p.248. 376 Hanks, Global Security Watch. Central Asia, p.125.

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in the post-Soviet space; Russia has seen in it an opportunity – given the relative scale of its economy – to gain substantial influence over the economic policies of the Central Asian states; and Turkmenistan has not sought closer integration in either Western or post-Soviet organizations. The reality that the great majority of commodities traded by Central Asian countries are directed at external markets beyond Central Asia (and often beyond the boundaries of the former Soviet Union) poses a serious obstacle to the creation of a single economic space. Intra-regional trade is very slight. Extrapolating from data in the CIA World Factbook (estimates for 2009), of the five Central Asian countries, only Kyrgyzstan and Tajikistan – the two with far 377 the smallest foreign tradeF F – did a noticeable proportion of their trade with other Central Asian states, and it was only around 15 percent of their total trade in each case. Reuel Hanks claims that Russian economists recognize that there is no economic basis for transforming the post-Soviet 378 space into a trading bloc similar to the EU or NAFTA.F

As for regional trade with the two giant neighbours, it is fairly limited outside the energy and raw 379 materials sectors.F F Extrapolating from CIA World Factbook trade estimates for 2009, Russia was the top trading partner of only Tajikistan, while China was the top partner of Kazakhstan (far the biggest regional trader) and Kyrgyzstan. The main trading partner of the two other Central Asian states (Turkmenistan and Uzbekistan) was Ukraine. Proximity does seem to be a factor in the expansion of trade between Central Asian states and Russia and China, as the following table suggests. It shows the growth in trade between individual regional countries and Russia and China between l995 and 2001. Russia has one Central Asia neighbour, China has three. Of China’s five relative increases, its immediate neighbours rank at first, second and fourth (only Sino-Turkmen trade bucks the trend). Of Russia’s relative increases, its only neighbour (Kazakhstan) ranks second, behind Kyrgyzstan.

380

Table 1 – Proximity and Trade Expansion F

Relative Increase in Trade, 1995-2007 (x) (neighbours in grey shading)

Russia China

Kazakhstan 3.17 (2) 35.29 (1)

Kyrgyzstan 5.67 (1) 16.36 (4)

Tajikistan 2.16 (3) 21.83 (2)

Turkmenistan 1.67 (4) 19.44 (3)

Uzbekistan 1.86 (5) 9.50 (5)

377 At 4.2 percent and 3.4 percent, respectively, of the regional total. 378 Hanks, Global Security Watch. Central Asia, p.126. 379 Ziegler, “Russia and China in Central Asia,” p.253. 380 Data from Ziegler, “Russia and China in Central Asia,” pp.252-53.

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As will be seen, China is trying to capitalize on its geographic advantage by greatly improving its communications with its neighbours.

While Russia worried during the 1990s about the destabilizing impact of immigration by ethnic Russians in Central Asia, many of the migrants into Russia from Central Asia have been non- Russians. In Uzbekistan, more than two million citizens – close to 12 percent of the working age population – have sought work in Russia and Kazakhstan in recent years, and the official number of Tajik guest workers in Russia in 2008 was put at one million (or nearly 15 percent of the 381 country’s population).F F The dependence on remittances of Kyrgyzstan, Tajikistan and Uzbekistan makes them highly vulnerable to global economic downturns or changes in immigration policies in Russia and Kazakhstan.

5.2.4 Energy Issues

There is a perception that Central Asia is an energy El Dorado that can significantly contribute to meeting China’s voracious appetite for energy. Indeed, the full development of Kazakhstan’s major oilfields could make it one of the world's top five oil producers within the next decade. However, the scale of Central Asia’s total oil and gas production and reserves needs to be placed in context. Karrar observed that the energy reserves of Central Asia and the Caspian, “while not 382 negligible, are modest compared to estimates that were made in the early to mid-90s.”F F In his view, the “hyperbolic estimates of the 1990s” were convenient for puffing the geopolitical importance of Central Asia in pursuit of a forward policy by the US, where influential individuals 383 like Zbigniew Brzezinski viewed the region as critical to the post-Cold War order.F F

Combined, in 2010 the three leading Central Asian oil producers (Kazakhstan, Turkmenistan and 384 UzbekistanF F) produced 2,060 thousand barrels daily (or 2.5 percent of global production). In contrast, China produced 4,071 thousand barrels daily (5.2 percent) and Russia 10,270 thousand barrels daily (12.9 percent). For comparison, Canada produced 3,336 thousand barrels daily (4.2 percent). Thus, Central Asia’s oil production was half that of China and one-fifth that of Russia. In terms of proved oil reserves, in 2010 the three Central Asian states combined had 41 billion barrels, or three percent of the global total (excluding the Canadian oil sands); China had 14.8 billion (1.1 percent), Russia 77.4 billion (5.6 percent), and Canada (excluding the oil sands) had 385 32.1 billion (2.3 percent).F F Hence, Russia’s proved reserves were about twice as large as those of Central Asia.

With regard to natural gas production, in 2010 the same three Central Asian countries, combined, produced 135.1 billion m3, or 4.2 percent of total global output. China produced 96.8 billion m3 (three percent), Russia 588.9 billion m3 (18.4 percent) and Canada 159.8 billion m3 (five percent). Thus, Central Asia’s natural gas production was 40 percent larger than that of China, but less than one-quarter the size of Russia’s. As for proved reserves of natural gas, the Central Asian states had a combined total in 2010 of 11.4 trillion m3 (6.1 percent of global reserves), whereas China

381 Hanks, Global Security Watch. Central Asia, p.141, p.118. 382 Karrar, The New Silk Road, p.90. 383 Ibid, pp.96-97. 384 The output of Kyrgyzstan and Tajikistan is negligible. 385 BP Statistical Review of World Energy, p.6, p.8.

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had 2.8 trillion m3 (1.5 percent), Russia 44.8 trillion m3 (23.9 percent) and Canada 1.7 trillion m3 386 (0.9 percent).F F

After Russia, Kazakhstan is the largest oil producer of the former USSR, and in addition is a key transport route to Europe and Asia. As a landlocked country, Kazakhstan has to rely on its neighbours to export its energy products. Its oil wealth has drawn in massive amounts of foreign direct investment (over $30 billion between 1991 and about 2010) and made Kazakhstan the wealthiest state in Central Asia. However, it is vulnerable to sharp falls in energy prices (as in 2008), as well as being over-reliance on oil and extractive industries, the so-called “Dutch disease,” in response to which the government has embarked on an ambitious diversification programme. Kazakhstan has become a major investor in the economies of its Central Asian neighbours, thereby contributing to regional stability.

It was noted earlier that the dependence of energy producers in Central Asia on the Soviet pipeline system after 1991 enabled Moscow both to drive a hard bargain and significantly to constrict their foreign policy autonomy. Western oil companies were quite willing to use the Soviet pipeline system as being the easiest way to transport their initially low volumes from Central Asia without having to invest in new infrastructure in the short-term. For most of the two decades following independence Russia purchased Central Asian gas at discounted prices, in return for access to Russian infrastructure, and Gazprom has struck lucrative deals with Kazakhstan, Turkmenistan and Uzbekistan. The Putin administration made quite clear its ambition to gain complete control of Central Asia’s gas supplies (for example, by its proposal for a regional gas cartel).

One response has been the search for pipeline routes that are not controlled by Russia. In 1997 Kazakhstan and China agreed to construct a pipeline to take oil from fields in western Kazakhstan to the Dushanzi refinery in Xinjiang. The first section was completed in 2003, and the pipeline reached full capacity in 2010. As noted earlier, in 2006 Kazakhstan agreed to build a link from the enormous Kashagan oilfield to the Baku-Tbilisi-Ceyhan (BTC) pipeline in Azerbaijan, bypassing Russia, but this route has been postponed until at least 2018. However, Kazakhstan delivers oil supplies to the BTC by tanker across the Caspian. In May 2008 it was reported that CNPC had unveiled a plan for a new Kazakhstan-China natural gas pipeline to carry 40 billion m3 per year from the Darhan block on the Caspian Sea. Similarly, in 2006 Turkmenistan and China agreed to construct a pipeline across Central Asia that would enable Turkmenistan gas, supplemented by Kazakh and Uzbek production, to flow to China, with a commitment of 30 billion m3 per year. It began operation in December 2009.

Hanks contends that “The outcome of this ‘battle of the pipelines’ will have profound 387 consequences for the economic and political independence of the Central Asian producers…”F F Perhaps confident of, or hopeful in, the outcome, Kazakhstan has been developing a “multi- vector” foreign policy. Twenty years of independence have also instilled a new political confidence in the energy-rich states of the former Soviet Union, especially Kazakhstan and Azarbaijan. Increasingly they are developing capable state oil companies, such as KazMunaiGaz

386 BP Statistical Review of World Energy, p.20, p.22. 387 Hanks, Global Security Watch. Central Asia, p.80.

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(KMG), and business elites that are no longer prepared to permit foreign states or companies to 388 determine their export routes.F

5.2.5 Water Disputes

One issue that has serious economic implications, and harbours the potential for conflict, is water, the scarcity of which “represents perhaps the most difficult challenge to Central Asia’s long-term 389 prospects for peace and security.”F F Most of Central Asia is arid, and very dependent on rivers like the Amu Darya and Syr Darya to sustain their agriculture. Turkmenistan is almost entirely desert, and wholly dependent on the waters of the Amu Darya to provide water to its oasis agriculture, while Uzbekistan, as one of the world’s largest cotton producers, is equally water- dependent.

In Soviet times the United Energy System of Central Asia (UESCA) provided for the exchange of water and energy between the Central Asian republics. Under this arrangement, Kyrgyzstan and Tajikistan would supply water for irrigation purposes to Uzbekistan, Kazakhstan and Turkmenistan in summer. In winter, Turkmenistan, Kazakhstan and Uzbekistan would supply gas to Tajikistan and Kyrgyzstan to cover their heating needs. However, UESCA began falling apart 390 in 2003 when Turkmenistan declared its exit from the system,F F and there is no regional water strategy.

Tajikistan and Kyrgyzstan control the headwaters of many of the rivers that supply fresh water to Uzbekistan, Kazakhstan and Turkmenistan. Kyrgyzstan holds approximately 40 percent of the region’s water, supplying, for example, the Fergana Valley, the most productive agricultural region in Central Asia. The Amu Darya, and almost all its contributing streams, originates in Tajikistan. A number of hydroelectric dams are located on these rivers, meaning that the Tajiks have a considerable degree of control over the water reaching the downstream countries. Droughts sometimes cause the upstream countries to renege on barter arrangements (coal, gas and oil in exchange for water), generating friction, especially with Uzbekistan.

Uzbekistan uses 50 percent of the irrigation water available in the entire watershed of the Amu Darya/Syr Darya, and in recent years the Uzbek government has continuously complained about Tajik plans to build a massive hydropower plant upstream at Rogun. Tashkent has not limited its response to complaint. In the winter of 2008 Uzbekistan cut the flow of electricity from Turkmenistan to Tajikistan, resulting in complete blackouts in some parts of Tajikistan for almost two months. In exchange for a resumption of electricity to Tajikistan, Dushanbe agreed to provide 391 Uzbekistan with a larger amount of water from reservoirs in northern Tajikistan.F F Dushanbe accused Uzbekistan of trying to undermine the Rogun project by imposing an effective rail blockade in 2010. Tajik officials have also complained about closed Uzbek border checkpoints along the heavily mined 1,160-kilometer frontier. In November 2010, Tajik government officials

388 Chow and Hendrix, “Central Asia’s Pipelines: Field of Dreams and Reality,” p.36. 389 Hanks, Global Security Watch. Central Asia, p.84. 390 ICG, Central Asia: Decay and Decline, p.10 and p.10 fn 117, 118. 391 Hanks, Global Security Watch. Central Asia, p.89.

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announced that trade between the two countries had fallen almost 65 percent over the 2009 level 392 for the same period, linking the decline to the rail delays.F F

There has also been sustained conflict over water policy between Uzbekistan and Kyrgyzstan. In 2002, Kyrgyzstan said it would develop a fee scale for water usage by downstream states. In retaliation, a few months later Uzbekistan shut off natural gas supplies to Kyrgyzstan just as winter was beginning.

5.3 Relationship with China

China shares a 2,805-km border with Central Asia, shared between Kazakhstan (1,533-km), Kyrgyzstan (858-km) and Tajikistan (414-km). This is roughly the same as the border lengths between Mexico and the US, and between Pakistan and India.

5.3.1 History

During ancient times, from roughly 221 BC-329 AD, the Xiongnu nomadic empire which originated in the northern steppes, posed a prolonged challenge to Chinese security, necessitating frequent Chinese military campaigns to drive them back into the Ordos (the great bend of the Yellow River) and, briefly in the 4th century, the Xiongnu established a rival dynasty (the Han 393 Zhao, 304-329 AD) in China’s Shanxi province.F F

In 751 AD Muslim forces met a Tang Dynasty army in battle at Talas, in today’s Kyrgyzstan. Although the Muslim army carried the day, the heavy losses it incurred checked the expansion of Islam eastward. However, Chinese influence in Central Asia was also inhibited. Indeed, from the 10th through the 14th centuries, much of north China was ruled by Inner Asian dynasties: the Khitan Liao Dynasty (907-1125), who originated in northern Manchuria; the Tangut/Tibetan Xixia Dynasty (990-1234); the Tungusic Jurchen Jin Dynasty (1114-1234); and the Turkic Mongol Yuan Dynasty (1279-1368), which reunified China under Khubilai Khan. Later, the descendants of the Jurchen Jin swept out of Manchuria and founded China’s last dynasty, the 394 Qing (1644-1911).F

The Qing emperors celebrated diversity within their empire and, until the 19th century took pride in their Inner Asian heritage, viewing themselves not simply as a Chinese dynasty but also as heirs to a proud steppe tradition of governance over a vast and ethnically diverse empire. During the 17th and 18th centuries the Qing Dynasty incorporated parts of Central Asia into the Chinese empire, but internal turmoil and Russian advances largely halted Chinese expansion in the 19th century. For much of the Qing period, the Chinese conferred economic or trade advantages on the Central Asian khanates in return for security guarantees for China’s position in Xinjiang. With the

392 Konstantin Parshin, “Uzbekistan vs. Tajikistan: Competition over Water Resources Intensifying,” EurasiaNet.org, 8 December 2010. 393 See, Nicola Di Cosmo, Ancient China and its Enemies: The Rise of Nomadic Power in East Asian History, Cambridge and New York, Cambridge University Press, 2002. 394 Christopher I. Beckwith, Empires of the Silk Road: A History of Central Eurasia from the Bronze Age to the Present, Princeton and Oxford: Princeton University Press, 2009, pp. 170-176, 191-195, and 225-226.

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1911 revolution, China went from being an empire, ruled by Inner Asians, to a republic, ruled by 395 Han nationalists.F

5.3.2 General

Michael Clarke, a research fellow at Griffith University (Australia) and a specialist on the history and politics of Central Asia and Xinjiang, suggests that since 1991 Central Asia has emerged as a path of least resistance as it offers China a strategically “safe” axis for the expansion of its 396 power.F

As was noted earlier, Xinjiang has a key role in Beijing’s strategy for Central Asia, which is simultaneously to tie Xinjiang closer to China and to exploit its position to accelerate China’s economic relations with Central Asia – in essence to become the hub of a “New Silk Road.” Beijing has made Xinjiang’s petrochemical industry a “pillar” industry with the primary goal of 397 establishing the region as both a transit route and a refinery zone for Central Asian oil and gas.F F

Chinese officials see Central Asia as a critical frontier for their nation’s energy security, trade expansion, ethnic stability and military defence. Central Asia, says Gen. LiuH Yazhou H of the People’s Liberation Army in an essay published in summer 2010, is “the thickest piece of cake 398 given to the modern Chinese by the heavens.”F F Rather bluntly, Gen. Liu added:

China’s energy cooperation with Central Asian countries began in the 1990s, but in recent years, with the rapid growth of China’s national strength, China took advantage of the lack of initiative in the region by the United States and Russia. 399 China has begun stimulating feverish consumerism in the area.F

China’s attempts to rectify the borders and to settle Chinese farmers on Central Asian land – notably in Kazakhstan and Tajikistan – has provoked a nationalist backlash. The process of settling border issues with China has provoked uproar in the Kyrgyz parliament and large popular demonstrations. Similarly, it has been suggested that proposals to settle Chinese farmers on Central Asian land have created “Sinophobe social pressures, which are quite palpable on the 400 issue of land possession.”F F As mentioned earlier, China fared poorly in a 2004 survey administered in the three Central Asian countries that border it. In answer to the question as to which countries they considered most trustworthy, 38 percent in Tajikistan cited China, along 401 with 19 percent in Kazakhstan and 26 percent in Kyrgyzstan.F F The percentages finding Russia to be trustworthy were 87, 80 and 82 percent respectively.

395 Karrar, The New Silk Road, p.10. 396 Clarke, “China and the SCO,” p.121. 397 Ibid, p.137. 398 Edward Wong, “China Quietly Extends Footprints Into Central Asia,” The New York Times, 2 January 2011. 399 Wong, “China Quietly Extends Footprints Into Central Asia.” 400 Stephen Blank, “Revising the Border: China’s Inroads into Tajikistan,” China Brief (Jamestown Foundation), vol.11, no.14, 29 July 2011. 401 Kerr, “Central Asian and Russian perspectives,” p.137, Table 1.

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In the face of such attitudes, it was reported that at some point before 2007 Beijing undertook a “charm offensive” in an effort to mitigate anxieties in Central Asia about the implications of a “rising China.” In part this meant trying to give practical expression of China’s rhetorical commitment to “common prosperity” through the provision of low-interest loans for local 402 development projects.F

5.3.3 Border Disputes

As was noted in the discussion of the Sino-Russian border dispute, Beijing has shown itself to be prepared to make territorial concessions to its neighbours where it wanted to get external support in its campaigns against domestic ethnic minorities. While the bulk of the undemarcated border in Inner Asia inherited by the Chinese Communist regime was along the border with Russia in the Far East, the “unequal treaties” also affected the western border in Xinjiang. Rectification of this latter problem has allowed Beijing to trade territorial concessions in Central Asia against obtaining the support of Central Asian governments against the “three evils,” and in particular against Uighur “splittism.”

Russia’s rapid expansion into Central Asia during the mid-19th century led St Petersburg to demand more trading privileges in Xinjiang, beginning a pattern of Russian/Soviet interference in the region that lasted until the 1940s. The Treaty of Kulja (1851) allowed for Russian warehouses and residences on Qing territory, and the Treaty of Peking (1860) opened Kashgar to Russian trade. In the quarter-century after 1850, the Qings were distracted by the Taiping Rebellion and by incursions by the ruler of Khokand – who managed to seize much of the Tarim Basin – allowing the Russians to occupy vast tracts of the Ili River valley. The Chinese managed to recover much of the Ili River valley under the Treaty of St Petersburg (1881), which largely delimited the Sino-Russian Central Asian boundary, with the exception of one sector in the Pamir Mountains. A protocol to the treaty, in 1882, delineated the border in this sector, but it was never formally demarcated. In 1892, the Russian empire and the Qing Dynasty had agreed to mark the border along the ridge of the Sarikol Range, but the exact location of the border remained an area of contention throughout the 20th century. This ad hoc arrangement governed the boundaries between China and Russian/Soviet Central Asia until 1991.

Beginning in the 1960s, the Chinese demanded that the Soviet Union evacuate the region. Between 1972 and 1977, China accused the Soviet Union of annexing over 7,000 km2 of territory 403 in Xinjiang.F F

During the 1990s, Beijing took up the issue of border demarcation with the three Soviet successor states on the border of Xinjiang – Tajikistan, Kyrgyzstan and Kazakhstan – and agreements have been reached with each of them, although they have provoked opposition in these states and have not been entirely finalized. The disputed territories are usually in unpopulated areas, and in some areas resolution was based on “splitting the difference.” However, on the whole the Central Asian states appear to have conceded relatively small amounts of territory. For instance, delimitation agreements between China and Kyrgyzstan in 1996 and 1999 required Kyrgyzstan to cede 125,000 hectares of territory in a mountainous region of the country. In response to fierce public

402 Clarke, “China and the SCO,” p.143. 403 Karrar, The New Silk Roa, p.40.

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opposition, the Kyrgyz foreign minister claimed that his country received 70 percent of the 404 disputed territory.F F

In January 2011, Tajikistan’s lower house of parliament ratified an agreement with Beijing to demarcate their shared border. By the agreement Tajikistan ceded 1,122 km2 of remote, mountainous land, or roughly one percent of its territory. This was the third border segment that had been in dispute; the two others were resolved in 1999 when Tajikistan turned over about 200 square kilometres. The country’s foreign minister hailed the latest deal as a “great victory” in that China had previously claimed about 28,500 square kilometres, or roughly 20 percent of 405 Tajikistan’s territory.F F In addition, Dushanbe agreed that 1,500-2,000 Chinese farmers could settle another 2,000 hectares of land inside Tajikistan.

China and Kazakhstan signed a border agreement in 2002, but according to an analyst with Kazakhstan’s Institute of Strategic Studies, Chinese researchers openly demonstrate their claims on some border regions of Kazakhstan, as indicated on a map printed as a supplement to school 406 textbooks in Shanghai in 2002.F F

5.3.4 Security Aspects of Central Asia’s Relationship with China

5.3.4.1 International Relations

China has been quite comfortable with a Russian military presence in Central Asia. Beijing sees that involvement – exemplified by Russian military activities in the Tajik civil war – as a bulwark against instability in the region spilling into Xinjiang. However, it worries that any other outside presence – especially that of the US and NATO – may be part of a strategy to contain China (given the long-term presence of US forces in Japan and South Korea). Thus, although it is widely thought that Moscow played a key role in the expulsion of American service personnel from the Karshi-Khanabad base in Uzbekistan in 2005, Mankoff claims that the initiative came only after Beijing had taken the lead, through the SCO, in trying to push the US out of the 407 region.F F

In February 2009, the US ambassador in Kyrgyzstan told Washington that she had been informed by Kyrgyz officials that China had offered Kyrgyzstan a $3 billion financial package to close the US transit facility at Manas. She claimed that when she confronted her Chinese counterpart with the allegations he became flustered but did not categorically deny the story. He told the American diplomat that Beijing had rejected calls by “some Kyrgyz” for China to set up a military base there to counterbalance Russian and US influence. However, American officials claimed that

404 Alisher Khamidov, “Dispute over China-Kyrgyz Border Demarcation Pits President vs. Parliament,” EurasiaNet, 27 June 2001 (http://www.eurasianet.org/departments/insight/articles/eav062801.shtml), accessed 15 July 2011. 405 “Tajikistan: China’s Advance Causing Increasing Unease among Tajiks,” EurasiaNet, February 14, 2011 (http://www.eurasianet.org/node/62894), accessed 15 July 2011. Alexander Sodiqov, “Tajikistan Cedes Disputed Land to China,” Eurasia Daily Monitor (Jamestown Foundation), vol.8, no.16, 24 January 2011. 406 Farkhad Sharip, “China’s Expansionist Policy Toward Kazakhstan Takes a New Turn,” Eurasia Daily Monitor (Jamestown Foundation), vol.7, no.209, 17 November 2010. 407 Mankoff, Russian Foreign Policy, c.p.265.

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408 China had a very large intelligence presence in Kyrgyzstan.F F The fact that Bishkek was willing to lease Manas – which is only 300-km from the Chinese border – to the US, apparently in the face of greater financial incentives from Russia and China, was a signal to China that Kyrgyzstan (and possibly other Central Asian states) was prepared to incur possible Chinese displeasure in 409 order to retain an American presence in the region.F F (It is noteworthy that this putative Chinese 410 resort to financial incentives to rid Kyrgyzstan of the American military presence – if true F F – came at almost exactly the same time as the apparent use by Russia of the same tactic in alleged pursuit of the same end.)

It does seem that the parochial attitude towards terrorism displayed by China vis-à-vis South 411 AsiaF F is also evident in Central Asia, even though it has made the “three evils” a centrepiece of its security strategy in the region. For instance, despite correlating separatist activity in Xinjiang with the rise of the Taliban in Afghanistan, Beijing was unhappy with Moscow’s decision after 9/11 to support US initiatives in Afghanistan, such as its decision to share intelligence with Washington and to accept the deployment of American troops in Central Asia. From this, it may be deduced that preventing US “containment” in the region is as pressing a goal for Beijing as suppressing Uighur rebellion.

5.3.4.2 Internal Security

The security imperatives in Xinjiang have played an enormous role in Beijing’s overall policy towards Central Asia. The earlier report on South Asia demonstrated that Beijing’s terrorism focus is almost entirely domestic. It also showed that China has been averse to assuming a counter-terrorism burden outside its own boundaries, even in its neighbour Afghanistan (where ISAF has conveniently assumed that encumbrance).

Geographically, ethnically, culturally and historically Xinjiang shares much with its neighbours in Afghanistan, Tajikistan, Uzbekistan, Kyrgyzstan, Kazakhstan and Mongolia. Yet almost no one disputes that the region is part of China. Calls for an independent Uighur state are increasingly 412 rare, even among Uighur émigré groups.F F Nonetheless, Beijing worries greatly about its hold on the region. One piece of evidence for this concern relates to a Uighur musical form, the muqam. Although the muqam belongs to an Arabo-Irano-Turkic tradition that is shared across the Islamic heartland of Eurasia, with no obvious connections with Chinese musical traditions, Chinese musicologists have tried to de-emphasize the Islamic nature of the muqam and to play up 413 evidence of its local origin and connections to Chinese music.F F

When Soviet power retreated from Central Asia in 1991, the Chinese government feared that it might suffer a similar fate in Xinjiang, which had historically resisted Chinese control. At the same time, Muslim sentiment was on the increase in Eurasia, fuelled by the war in Afghanistan

408 Bill Gertz, “Inside the Ring: Counterspies hunt Russian mole inside National Security Agency,” The Washington Times, 1 December 2010. 409 Karrar, The New Silk Road, p.135. 410 Bill Gertz is a strong proponent of a “China threat” to the US, a subject on which he wrote a book as early as 2000. 411 Kellett, China’s Periphery. Part 1: South Asia. 412 Millward, “Positioning Xinjiang in Eurasian and Chinese History,” p.56. 413 Ibid, pp.66-68.

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and the lifting of restrictions on mosques and madrassas in the last years of the Soviet Union. Indeed, pan-Islamic and pan-Turkic identity politics began almost immediately to resonate in Xinjiang. An Islamist uprising, led by Zahideen Yusuf, a Uighur, erupted in Baren Township (near Kashgar) in April 1990. It was inspired by the “holy war” in Afghanistan and the humiliation inflicted on the Soviets. The uprising led to a whole series of disturbances in Xinjiang – especially in Kulja – all of which were violently suppressed. In February 1992 a bomb exploded on a bus in Urumqi, followed by further bombings in February and March. In June 1993 a bomb killed ten people in Kashgar, and was followed by a series of attacks in the western Tarim oases, and the autonomous region faced growing unrest in 1996-97.

From the early- to the mid-1990s there was sporadic agitation for an independent Turkic state in Xinjiang. In addition, Islam was becoming popular at a grass-roots level, and there was an increase in unofficial mosques and madrassas. To the concern of the authorities, even some local Muslim cadres of the Communist Party began to participate publicly in Islamic ritual. These developments were thought to be the result of influence from post-Soviet Central Asia (after 9/11 414 blame was transferred to the Afghanistan-Pakistan border region).F F

In February 1997, demonstrations in the Ili region turned violent, and the subsequent repression was answered with bombs. According to Chinese official estimates, the struggle for greater autonomy or independence in Xinjiang produced over 200 incidents, with 162 deaths and more 415 than 440 injuries, during the 1990s.F F Amnesty International claimed that there were 210 416 executions in Xinjiang between January 1997 and January 1999.F F

Chinese officials and scholars repeatedly correlate separatist activity in Xinjiang with the rise of the Taliban in Afghanistan. During the anti-Soviet campaign in Afghanistan, significant numbers of Uighurs ended up in training camps and religious schools in Pakistan, and some of those that returned to China later took up arms against the Beijing government. China believes that more than 1,000 Uighurs were trained by bin Laden’s forces in Afghanistan, with approximately 110 returning to China, about 300 allegedly captured or killed by US forces in “Operation Enduring 417 Freedom,” and about 600 escaping to northern Pakistan.F F In December 2000, Taliban leader Mullah Omar assured the Chinese ambassador to Pakistan that the Taliban would not support 418 Uighur separatists, but in reality they did so.F F

Beijing was happy to link Uighur violence with al-Qaida, which made Chinese efforts to crack down on Uighur militants simply part of the wider global war on terror. Indeed, Karrar suggests that Beijing’s need to impose an organizational structure on its separatist opponents in Xinjiang, who largely lacked such a structure and were constantly evolving, was behind such classifications as the East Turkestan Islamic Movement (another name allegedly assumed by the Uighur 419 militants was the Turkestan Islamic Party).F

414 Karrar, The New Silk Road, p.7. 415 Haider, “Sino-Pakistan Relations and Xinjiang’s Uighurs, p.523. 416 Karrar, The New Silk Roa, p.110. 417 Van Wie Davis, Uyghur Muslim Ethnic Separatism in Xinjiang, p. 8. 418 Karrar, The New Silk Road, p.114. 419 Ibid, p.130.

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Karrar contends that the Ili demonstrations marked the last “major” episode of unrest in 420 Xinjiang.F F He argues that it would be a mistake, on the one hand, to suggest that Beijing fears waves of jihadists pouring into Xinjiang, and on the other, to see Xinjiang as a tinderbox ready to 421 go up in flames.F F Other analysts share this view. About three years ago Donald H. McMillen, an Australian academic and long-time analyst of China, wrote that “...there has been considerable recent evidence pointing to the fact that for the majority of non-Han peoples in Xinjiang a 422 ‘begrudging accommodationism’ to (Han) Chinese rule has evolved.”F F He attributed the abatement – “for the moment” – of the turmoil of the 1980s and 1990s to greater prosperity and tight security. In a similar vein and at the same time, James A. Millward, a historian and specialist in China, Xinjiang and Inner Asia at Georgetown University, asserted that there are no serious threats to Chinese rule in Xinjiang. On the contrary, in his view Xinjiang has emerged as one of the most stable places in China, having experienced few of the tens of thousands of disturbances 423 that erupt annually in the country.F F

However, it has been suggested that Chinese measures to damp down Uighur separatism, by promoting Han colonization and the increased presence in Xinjiang of security forces, has had the effect of pushing the more nationalist and religious part of the population into greater support for 424 independence.F F In August 2008, two Uighur men used a truck and explosives to attack a group of police officers while they were jogging near Kashgar, killing 16 and wounding as many more (while confirming that a bloody attack on police occurred, eyewitnesses later provided a different 425 version of eventsF F). This was the first in a series of four assaults in August 2009 for which officials blamed separatists in Xinjiang. The attacks left at least 22 security officers and one 426 civilian dead, according to official reports.F F In August 2010, seven Chinese military policemen were killed when a Uighur attacker rammed them with an explosives-laden vehicle near Aksu, and in mid-July 2011 several people died when protesters – apparently Uighur – attacked a police 427 station in Hotan (which, like Aksu, is in Xinjiang).F F At the end of July 2011 two further attacks in Xinjiang resulted in about 20 more deaths, including seven of the alleged attackers.

A series of violent riots broke out in Urumqi in July 2009, when at least 1,000 Uighurs protested a brawl in southern China in which two Uighurs had been killed days earlier. The Urumqi protest escalated into violence that mainly targeted Hans. Chinese state news organizations said that a 428 total of 197 people died and 1,721 others were injuredF F – a higher toll than the official numbers for the unrest during the 1990s, including the Ili incident. Uighur sources claimed a higher number of casualties. Violent protests also occurred in Kashgar at the same time. As in the case of the unrest in the late-1990s, the Urumqi riots were followed by executions.

420 Ibid, p.110. 421 Ibid, p.12. 422 McMillen, “China, Xinjiang and Central Asia,” p.16. 423 Millward, “Positioning Xinjiang in Eurasian and Chinese History,” pp.70-71. 424 McMillen, “China, Xinjiang and Central Asia,” p.9. 425 Edward Wong, “Doubt arises in account of an attack in China,” The New York Times, 29 September 2008. 426 Ibid. 427 “Four dead after attack on police station in China,” The Ottawa Citizen, 19 July 2011, p.A9. 428 Edward Wong and Jonathan Ansfield, “Chinese President Visits Volatile Xinjiang,” The New York Times, 25 August 2009.

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The persistent unrest in Xinjiang disturbs the Chinese leadership, which fears that any weakening of Chinese control in Xinjiang would have negative repercussions in Tibet and Taiwan. Hence Beijing’s security focus on both Central Asia and the Afghanistan-Pakistan border region. The Uighurs form a very small proportion of the Central Asian population. The largest number is found in Kazakhstan, where the 1999 census recorded their numbers at 210,300. The 1999 census in Kyrgyzstan found that there were 46,733 Uighurs living in the country, and the 1989 Soviet census in Uzbekistan put their numbers at 23,000. The Uighur community of Turkmenistan is very small and isolated, and has practically lost all ties with Uighur communities elsewhere. 429 There is no significant number of Uighurs in Tajikistan.F F Thus, the Uighur population of Central Asia seems to be about 0.5 percent of the total population of the region. However, this may be an under-estimate, in that the Uzbek government has tried to avoid causing trouble with China by declaring that there is no Uighur population in the country. In addition, there has doubtless been Uighur emigration from Xinjiang into Central Asia in the last dozen years. Ziegler estimates that 430 there are between 500,000 and one million Uighurs in Central Asia.F F While their numbers may be relatively small, the fact is that the biggest concentrations of Uighurs in Central Asia live in fairly close proximity to Xinjiang.

Many of the Uighurs of Central Asia were immigrants from Xinjiang, and during the 1990s the Chinese tended to attribute unrest in Xinjiang to radicalizing influences in Central Asia. Indeed, Uighur resistance leaders found sanctuary in Central Asia in the early-to mid-1990s. After 1991, Kazakhstan and, to a lesser extent, Kyrgyzstan became centres for anti-Chinese Uighur activities, where previously émigré agitation for independence had been based in Germany and Turkey. One Chinese source claimed that Xinjiang militants had built networks both at home and abroad, and that dozens of Islamic organizations comprised of exiles from China were legally registered in 431 Central Asia.F F The spill-over potential of this agitation was increased by the growth in trade between the Central Asian states and Xinjiang, which brought restive Uighurs in the Chinese region into greater contact with the Central Asian diaspora. In his study of the Uighur diaspora in Central Asia, Kamalov states that a shared trend within the different communities is the 432 restoration of ethnic links with Xinjiang.F

In the early-1990s the Kazakh government allowed émigré opponents of China to operate freely, and there was considerable popular sentiment in Kazakhstan in favour of the Uighur cause. After all, most Central Asians share Turkic roots with the Uighurs. In April 1994 Chinese Premier Li 433 Peng visited Kazakhstan, Kyrgyzstan, Turkmenistan and UzbekistanF F to urge that they crack down on Uighur émigrés on their soil who were advocating independence for Xinjiang. A document supposedly recording a 19 March 1996 meeting of the Standing Committee of the Political Bureau of the Chinese Communist Party, and presided over by President Jiang Zemin, allegedly urged cadres to tighten border control and to prevent “internal and external ethnic

429 Ablet Kamalov, “Uyghurs in the Central Asian Republics. Past and present,” in Colin Mackerras and Michael Clarke, eds., China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, c.p.123. 430 Ziegler, “Russia and China in Central Asia,” p.259, ref.5. 431 McMillen, “China, Xinjiang and Central Asia,” p.15. 432 Kamalov, “Uyghurs in the Central Asian Republics. Past and present,” p.124. 433 It is interesting that he did not visit one of Xinjiang’s bordering states – Tajikistan – while he did visit two countries that do not border Xinjiang. Perhaps this omission reflected China’s reliance on the Russian military presence in Tajikistan (which, as will be seen, would probably be a mistake).

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434 separatists from coming together and joining hands.”F F Apparently, Kazakhstan, Kyrgyzstan and Turkey were identified as countries where Uighur separatists found support.

China was willing to offer carrots as well as sticks to Central Asian governments. At the same time that Beijing deepened security cooperation with the Central Asian states between 1996 and 2001, China took the first steps to develop an energy relationship with the region. Sino-Central Asian trade more than doubled between 1996 and 2000.

In return, by 1997 the Central Asian states were restricting the activities of their Uighur residents. In June 1997, the Uighur Revolutionary Front in Almaty stated that Uighur groups no longer counted on Kazakhstan and Kyrgyzstan to secure the independence of Xinjiang. The Chinese Defence Minister visited the two regional countries in June 1997, and they intensified their 435 surveillance.F F Uzbekistan exercised strict control over Uighurs in the country. In 2002-3 Central Asian states, especially Kazakhstan and Kyrgyzstan, extradited alleged Uighur “separatists and 436 terrorists” to China, on the basis of bilateral security agreements and police cooperation.F F A number of Uighur leaders in Central Asia (including A. Vahidi, N. Bazakov and D. Samsakova) 437 have died violently.F F In their turn, Uighur activists shifted their focus to the Afghanistan- Pakistan border region at the end of the 1990s. The Uighur organizations that still exist in Kazakhstan and Kyrgyzstan are mostly focused on the social, economic and cultural issues facing their communities.

However, Xinjiang rebellion is not necessarily entirely dormant among Uighurs or their supporters in Central Asia. Several violent incidents targeted Chinese nationals in Kyrgyzstan 438 during the early-2000s.F F During the Urumqi riots, over 5,000 Uighurs in Almaty protested the Chinese use of deadly force against the protesters.

Uighur rebellion is not the only manifestation of the “three evils” that Beijing fears in Central Asia. The population of the Fergana Valley is said to be more religious than that of any other region in Central Asia, and the valley has historically been a centre of unrest, notably being the birthplace of the IMU. The Chinese leadership fears that Muslim unrest in Central Asia could spill-over into China. Thus, Beijing was evidently disturbed by the violent protests in Andijan in May 2005. Uzbekistan’s Uighurs live in the Fergana Valley, and are concentrated in the vilayat (administrative division) and city of Andijan. The city of Andijan is only about 500-km by road from Kashgar in western Xinjiang. As was noted earlier, in 1990 an Islamist uprising erupted in Baren Township – just a few kilometres south of Kashgar – influenced by the spill-over effect of Afghanistan. Two weeks after the violence in Andijan the Chinese government greeted Uzbek President Karimov in Beijing with a twenty-one-gun salute and it refused to endorse calls for an independent international investigation into the bloodshed. The SCO characterized the Andijan incident as a terrorist plot.

434 Karrar, The New Silk Road, p.73. 435 Ibid, p.82. 436 Clarke, “The ‘centrality’ of Central Asia in world history,” p.42. For a list of Uighurs extradited or detained by Central Asian countries to China, see Appendix D.2 “Reported or Suspected Extraditions or Forcible Returns Case Chart,” Human Rights in China, 1 April 2011. (http://www.hrichina.org/ cn/node/5237). 437 Kamalov, “Uyghurs in the Central Asian Republics. Past and present,” p.129. 438 Hanks, Global Security Watch. Central Asia, p.134.

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Beijing may not stop at political and economic suasion to convince the Central Asian states to suppress manifestations of the “three evils” on their soil. As will be seen in the section on the SCO (below), there is a military element to that organization’s opposition to the “three evils,” even if the SCO does not have standing forces of its own.

Some Chinese officials and researchers may even contemplate counter-terrorist activity in defiance of Central Asian sovereignty. Shortly after violent protests in Kyrgyzstan overthrew the Bakiyev regime, an associate researcher at the Chinese Institute of Contemporary International Relations called for a “Large Periphery” strategy to safeguard China’s neighbouring areas. At much the same time, senior Chinese military leaders apparently commented on possible 439 intervention in Central Asia.F F Comments such as this should not be taken at face value and, as observed earlier, China has been averse to assuming a counter-terrorism burden outside its own boundaries, even in its neighbour Afghanistan.

However, such comments, no matter how non-authoritative they may be, would be bound to provoke nervousness in Central Asian states. This would be amplified by China’s increased presence in Central Asia, in terms of trade, investment, energy supply, expatriate citizens and so on. Threats to these citizens and interests might be just as compelling to Beijing as signs of Uighur separatist or Islamist activity in any of the Central Asian states. The earlier report on South Asia gave examples of precisely that kind of vulnerability in Pakistan, and of Beijing’s 440 forceful reaction to it.F

5.3.4.3 Organized Crime

The rising flow of illegal drugs from the “Golden Crescent” region – Afghanistan, Pakistan, and Iran – into Xinjiang has caused increasing concern to Chinese law enforcement officials and analysts. They now see “Golden Crescent” trafficking as a major and rapidly growing threat to society. This view reflects a major shift from China’s earlier exclusive focus on the drug threat from the “Golden Triangle” region (Burma, Thailand, Laos). Chinese police sources estimate that between 2005 and 2009 “Golden Crescent” heroin rose from less than one percent of all the 441 illegal heroin seized by Chinese police nationwide to an estimated 30 percent.F F

Chinese law enforcement analysts contend that as opium production in the “Golden Crescent” region overtook production in the “Golden Triangle” in the 1990s-2000s, Central Asian drug rings increasingly sought new markets and new shipment routes to move their opium and heroin out of Central Asia. Xinjiang has emerged as one of these routes. Some police analysts argue that the reason Xinjiang became a major destination for trans-shipment and sales is that Afghan and Pakistan-based drug rings began aggressively pursuing new export markets and routes for their 442 rapidly-growing drug production.F F In the past, traffickers have used Xinjiang overwhelmingly as a transfer point to move drugs to other parts of China such as Guangdong or Shanghai, and

439 Christina Lin, “The PLA’s ‘Orient Express’: Militarization of the Iron Silk Road,” in China Brief (Jamestown Foundation), vol.11, no.5, 25 March 2011. 440 Kellett, China’s Periphery. Part 1: South Asia, pp.48-49. 441 Murray Scot Tanner, China Confronts Afghan Drugs: Law Enforcement Views of ‘The Golden Crescent’, Alexandria: CAN Analysis & Solutions, CAN China Studies, China Security Affairs Group, March 2011, pp.13-14. 442 Tanner, China Confronts Afghan Drugs, pp.6-7.

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Xinjiang continues to be a major conduit for moving drugs to eastern China. But police analysts also contend that in addition to transporting drugs through Xinjiang, traffickers are now also increasingly treating Xinjiang as a final distribution and consumption market for their drugs 443 arriving from the “Golden Crescent.”F F

Chinese analyses indicate that some of the most popular smuggling routes for “Golden Crescent” drugs are highway, air, and rail routes through Pakistan, Kyrgyzstan, Tajikistan and Kazakhstan. The concern is that, as Chinese-Central Asian economic ties expand, the number and variety of transport links from western China into Central Asia will further increase.

Of five major public highway routes into Xinjiang that are used extensively by drug smugglers, 444 three go via Kyrgyzstan and one via Tajkistan (the fifth is from Pakistan).F F Chinese police identity two major railway routes through which illegal drugs have been shipped from Central Asia into Xinjiang in recent years, both of which enter Xinjiang from Kazakhstan. However, Chinese counter-narcotics officials worry that a newly opened China-Kyrgyzstan-Uzbekistan rail 445 extension will provide smugglers with a new route.F F As for air routes, until recently smugglers (using carry-on luggage) have brought drugs into China primarily from Pakistan, Afghanistan and Dubai. However, counter-narcotics crackdowns and arrests in the airports in those countries used by smugglers have led them to develop new air routes. Many of these have gone through intermediary countries in Central Asia or even the Middle East. One of the new preferred routes is 446 from Dushanbe in Tajikistan to Xinjiang.F F Two scholars at the Xinjiang Police Academy have found that Central Asians are playing an increasing role in smuggling drugs into and back out of China.

Because the origins of Xinjiang’s drug problem lie outside the country, police officials and analysts stress the critical importance of regional cooperation. Since 2007 in particular, Chinese authorities have emphasized their increased counter-narcotics intelligence with the members of the SCO. This issue was a major focus of the 2007 and 2009 SCO summits and of the SCO 447 security ministers’ conference in May 2009.F

5.3.5 The Shanghai Cooperation Organization

As the foregoing has demonstrated, Russia and the Central Asian states consider China to be an important ally in preserving the political status quo in the region. For its part, Beijing has been anxious to portray itself as a reliable security partner of the Central Asian states, with the SCO as a key element of this strategy. In addition, Beijing generally treats the SCO as a bridge for expanding its own role in the region, just as Moscow regards the CSTO as an entering wedge to Central Asia. This is why the US involvement in Central Asia after 9/11, and the initial acceptance of it by regional states, was so disturbing to China. They raised questions with regard 448 to China’s “pet regional project,” the SCO.F

443 Ibid, pp.12-13. 444 Ibid, p.18. 445 Ibid, pp.21-22. 446 Ibid, p.23. 447 Ibid, p.30. 448 Clarke, “The ‘centrality’ of Central Asia in world history,” p.41.

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That “pet project” remains in many ways an elusive one. The SCO has been variously described as “the world’s least known and least analyzed” multilateral group; an “OPEC with [nuclear] 449 bombs;” and an “Asian NATO.”F F There is an element of truth in each of these characterizations.

5.3.5.1 History

The 1996 Shanghai Treaty committed the signatories – China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan – to undertake border demarcation, force reductions and confidence-building measures along their mutual borders. The overriding purpose of the “Shanghai Five” was to stabilize the old Sino-Soviet frontier, and there was no mention of regional security. The “Shanghai Five” comprised all the current member states, less Uzbekistan. Since Uzbekistan has no shared boundaries with China or Russia, its inclusion in the “Shanghai Five” would not have conformed to its initial purpose.

In the late-1990s the increase in Islamic radicalism, the growth in weapons and drug trafficking, and the rise of the Taliban produced a shift in the focus of the “Shanghai Five,” from border troop reductions towards combating extremism, separatism and non-traditional security threats. At the 1998 summit the heads of state expressed apprehension over instability in Afghanistan, the first 450 time that a third party had been named in an official communiqué of the “Shanghai Five.”F F

When Uzbekistan joined the group at the June 2001 summit in Shanghai, the “Shanghai Five” formally evolved into the SCO. The leaders were careful not to project the SCO as a bloc or a military alliance. The 2001 summit not only demonstrated that a regional response to radical Islam was a central concern of the SCO but also showed China’s influence by endorsing the “Shanghai spirit.” A year later, in St Petersburg, the heads of the SCO member states signed the SCO Charter, which outlined the organization’s purposes, principles, structures and form of operation, and established it officially from the point of view of international law.

The member states of the SCO are (as they have been since 2001) China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Mongolia, Iran, India and Pakistan were admitted as 451 observer states in 2004-2005. Turkmenistan only attends meetings as an invited guest.F F The presidency and the location of the annual summits rotate between the member states, and the official languages of the SCO are Chinese and Russian. The SCO’s secretariat is in Beijing, and the Regional Anti-Terrorism Structure (RATS) is based in Tashkent. When these two offices were established in 2004, their combined staff was only about 30 personnel, and their budgets 452 were set at $2.6 million and $3.1 million respectively.F F Small as these staffs and budgets were, they are explicable when, as David Kerr recently put it, the SCO’s “main mechanism remains 453 summitry.”F F Kerr argued that as long as the SCO confines itself to declamatory statements of intent and avoids doing things that would bind its members to a particular course of action, it will find it difficult to develop institutional depth.

449 Clarke, “China and the SCO,” p.117. 450 Although the meeting expressed concern over the recent nuclear test in South Asia, the communiqué did not name India and Pakistan. 451 Julie Boland, “Ten Years of the Shanghai Cooperation Organization: A Lost Decade? A Partner for the United States?” Washington, DC: The Brookings Institution, June 2011. 452 Kerr, “Central Asian and Russian perspectives,” p.145. 453 Ibid, p.146.

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Washington’s response to 9/11 initially put the development of the SCO in doubt, when Russia and Central Asia tilted towards the US. Attempts to reinvigorate the SCO between 2001 and 2006 initially made slow progress, owing to the US involvement in Central Asia. The initial decision to base the RATS in Bishkek was reversed in 2004 in an attempt to wean Uzbekistan away from the US, and RATS ended up in Tashkent. However, the “Tulip Revolution” and Washington’s response to the Andijan incident soured the Central Asian states on the US role in the region. Washington’s bid for observer status, at the SCO summit in Astana in July 2005 that followed immediately in the wake of the Andijan crisis, was rejected. At the same time, the SCO passed a resolution calling for a timeline for the withdrawal of US troops from Central Asia. Yet even at that, the regional states had not lost their interest in balancing against the SCO’s giant members. The US-Kyrgyz agreement on the lease of Manas remained unchanged, while at the end of July 2005 (almost immediately after the SCO summit in Astana) Tajikistan extended over-flight and refuelling privileges to the US, possibly motivated by reports that the IMU was then active along the Tajik-Afghan border.

Like the CSTO, the SCO could contribute little to resolution of the Kyrgyz crisis in April 2010 (it was the OSCE that helped to resolve the confrontation through Kazakhstan’s presidency, when a Kazakh plane flew Bakiyev out of Kyrgyzstan). During the crisis, the SCO “remained surprisingly disengaged…even during its most acute phase, when the country looked as if it might 454 descend into civil war.”F F The reluctance of member countries to admit of outside interference in their internal affairs – epitomized by the Andijan affair – may also impede resolution of turmoil on the Kyrgyz model. When Russia intervened in the Tajik civil war in the early-1990s, it was relatively unilaterally. Action by an organization comprising two hegemons and five very small partners in the affairs of one of those minnows might be difficult to set in train.

5.3.5.2 China’s Participation

David Kerr, a British authority on China’s international relations, observed that the SCO provides China with a framework to shape its dealings with a region in which it has little tradition and little 455 in common.F F For Beijing, the SCO has had the merit of institutionalizing its presence in Central Asia, in both economic and security terms. It has worked hard to get its concern over the “three evils” incorporated into the objectives of the SCO and to embed within the SCO a normative structure that supports the political status quo in the region by promoting “stability” and non- 456 interference in “internal affairs.”F F

The membership in the SCO of Central Asian states imposes on them the obligation to assist China in fighting Uighur militancy, by both legislation and practical measures such as the extradition of Uighur leaders. It was after the creation of the “Shanghai Five” that the Central Asian states started to suppress all the Uighur political organizations in their territory, at China’s behest. What the impact of SCO treaty requirements means in practical terms was made evident in the wake of the Andijan incident. A former Kyrgyz official said that his government’s decision to return Uzbeks fleeing the violence – despite the possibility that they could be tortured or executed – was made after weighing the extradition provisions of SCO treaties against the

454 Richard Weitz, “What’s Happened to the SCO?” The Diplomat, 17 May 2010. 455 Kerr, “Central Asian and Russian perspectives,” p.150. 456 Clarke, “The ‘centrality’ of Central Asia in world history,” p.133.

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prohibitions of the (UN) Convention against Torture. Bishkek concluded that the SCO framework 457 took precedence.F F

Yet many of the significant military and security cooperation initiatives between China and the Central Asian states since 2002 have been bilateral ones, in defiance of the multilateral basis of the SCO (a somewhat ironic development, in that Beijing liked to point to the superiority of SCO 458 multilateralism over what it alleged was US unilateralismF F). For instance, there were joint military exercises with, and extension of military aid to, Kyrgyzstan in July 2002 and 2003. A Sino-Kazakh Mutual Cooperation Agreement was signed in December 2003. And in September 2003 China concluded bilateral agreements on fighting terrorism, extremism and separatism with 459 Uzbekistan and Tajikistan.F

Beijing has traditionally been loath to engage with military and security issues on a multilateral basis, and thus China sees the SCO in less military terms than does Russia. In fact, it has been suggested that Uzbek officials, “with low-key Chinese support,” have been leading the effort to 460 resist expanding the SCO’s military functions.F F Whereas Moscow stresses the security and geopolitical aspects of the SCO, China also has economic aspirations for the organization. For example, it has pressed for the creation of an SCO Development Bank, in which it is prepared to invest $8 billion. However, there has been little evidence of cooperation in banking or finance.

5.3.5.3 Russia’s Participation

Russia regards the SCO as essentially a Chinese project (after all, its title incorporates the name of a Chinese city), but membership in it does give Moscow the opportunity to keep watch on Chinese penetration of Central Asia. However, Russia recognizes that China’s influence in Central Asia is a corollary both to its expanding power and to geography (after all, China borders three regional states compared to Russia’s single regional border). Moscow’s backing for the SCO shows that Russia recognizes that China has a legitimate security role in Central Asia. If China’s regional engagement is going to grow, it would be better – from Moscow’s perspective – that an important organizational channel of it be an institution (the SCO) shared with Russia. Besides, in the context of an American presence in Central Asia, Russia clearly prefers an enhanced Chinese presence to increased US influence. Moscow’s primary focus is on the Russian Far East-Manchurian border, whereas Beijing’s is on the Xinjiang-Central Asia borders. In these circumstances, it might be expected that China would place more emphasis on the SCO than 461 would Russia.F

457 Joshua Kucera, “Central Asia: Shanghai Cooperation Organization’s Rise in Popularity Worries Rights Groups,” EurasiaNet.org, 30 March 2011. 458 Karrar, The New Silk Road, p.187. 459 Clarke, “The ‘centrality’ of Central Asia in world history,” p.42. 460 Richard Weitz, “Military Exercises Underscore the SCO’s Character,” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 25 May 2011. 461 Lo, Axis of Convenience, p.47.

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5.3.5.4 Central Asian Involvement

For the Central Asian members of the SCO, the “three evils” are a less pressing concern than regime survival, but they are quite happy to use terrorism, separatism and extremism as euphemisms for challenges to their authority and justification for suppression of those challenges.

The two smallest Central Asian members of the SCO – Kyrgyzstan and Tajikistan – appreciate the security provisions of the SCO (although in practice the SCO, like the CSTO, remained aloof during the ethnic violence in Kyrgyzstan in mid-2010). The larger members see its benefits not just with regard to security but also in terms of prestige, via the organization’s leadership provisions (a rotating presidency) and the opportunity to host summits (also rotating).

In addition, membership in the SCO enables the regional states to manœuvre between Russia and China to maximize their interests (unlike the CIS and the CSTO, the SCO includes two major powers, introducing an element of competition into the organization). This can be seen in the response to the Georgia crisis of August 2008. At the Dushanbe summit in that month, SCO member states refused to endorse Russian military action in the Caucasus, and also snubbed Moscow by their refusal to recognize South Ossetia and Abkhazia. However, the Central Asian leaders clearly did not want to go too far out in a limb. The Central Asian memberships of the SCO and the CSTO are coterminous and only one month after the Dushanbe meeting the CSTO summit in Moscow blamed Georgia and voiced support for Russian actions, even if Moscow failed to persuade the membership to recognize Georgia’s breakaway regions.

Another element in the ability of Central Asian states to balance between different security organizations is the membership of all of them (even traditional hold-out Turkmenistan) in NATO’s Partnership for Peace (PfP). They mostly joined in 1994 (as did Russia, during its Atlanticist phase), two years before the formation of the Shanghai Five (Tajikistan delayed accession to the PfP until 2002). Thus, with Russia, the four Central Asian members of the SCO are also members of the CSTO and PfP, whereas China is a member of neither of the latter. In pursuit of its multi-vector foreign policy, in August 2010 Kazakhstan hosted exercise “Steppe Eagle-2010,” a PfP-supported peacekeeping exercise that also involved troops from the US and Britain. Kazakhstan has been holding such exercises since 2003, with the goal of its troops becoming NATO-qualified in both peacekeeping and humanitarian missions. At the same time as “Steppe Eagle-2010,” Kazakh law enforcement and internal security force personnel held a week- long exercise with their Russian and Kyrgyz counterparts in Russia. And only one month after “Steppe Eagle-2010” the SCO staged its “Peace Mission-2010” exercise, also in Kazakhstan. Uzbekistan was the sole SCO member not to participate in “Peace Mission-2010,” perhaps both 462 to emphasize the independence of its security planning and to retain the West’s favour.F F

5.3.5.5 Economic Aspects of the SCO

There has been a lack of progress on China’s attempt to establish a free trade zone in the SCO. Russia and the Central Asian members are unenthusiastic about removing trade barriers, fearing 463 that the regional economies would become “China-dependent” to an uncomfortable degree.F F At

462 Julie Boland, Learning from the Shanghai Cooperation Organization’s ‘Peace Mission-2010’ Exercise, Washington, DC: The Brookings Institution, 29 October 2010. 463 Lo, Axis of Convenience, p.110.

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the 2007 SCO summit, President Putin called for the creation of “an energy club,” but although at the meeting member states agreed to establish a “unified energy market” for oil and gas exports, nothing substantial has yet eventuated, and regional energy cooperation is mostly occurring 464 outside of SCO auspices.F F Equally, Chinese decision-makers tend to support a higher profile for transport cooperation on the SCO agenda, while being sceptical about the feasibility of a trans- 465 Asian transportation strategy.F

5.3.5.6 Military and Security Aspects of the SCO

Unlike Russia’s plans for the CSTO, China has opposed transforming the SCO into a full-fledged security organization, with a view to avoiding confrontation with the West. The SCO is not a military alliance, and its charter contains no clause dealing with military cooperation should a member state be attacked. Thus, the SCO has not evolved into a collective defence structure like NATO. It lacks dedicated military forces, an integrated command structure, or even a combined planning staff.

In October 2002 there was a joint exercise between Chinese and Kyrgyz troops, China’s first with another country. In August 2003 there were military exercises involving all SCO member states. While they were designed to practice combating and responding to manifestations of terrorism, separatism and extremism, they were also a way of raising China’s profile in Central Asia after it had been overshadowed by the US in the wake of 9/11.

Since 2005 there has been a series of exercises under SCO auspices to test and enhance military inter-operability, and to improve the tactical proficiency of the participants. The first of these was “Peace Mission-2005.” This was primarily a Russian-Chinese event – the first joint military exercise between them – with observers from other member states. There were prolonged negotiations over the location of “Peace Mission-2005.” China wanted to hold them in Zhejiang, which was too close to Taiwan for Moscow’s comfort. The 2005 manœuvres were run as two separate exercises, with no interoperability between Chinese troops (who numbered 7,200) and Russian personnel (1,800 strong).

“Peace Mission-2007” showed a similar guardedness, with China rejecting a Russian proposal that it be held under the combined auspices of the SCO and the Russian-led CSTO, probably out of concern that to do so would expose the greater military capabilities of the CSTO. “Peace Mission-2007” involved the troops of all six full SCO members, to a total of 6,500 troops (including 2,000 Russian and 1,600 Chinese personnel), and it was oriented towards suppressing a major Islamist insurgency or popular rebellion. An interesting feature of “Peace Mission-2007” was Kazakhstan’s insistence that for Chinese troops to reach the training area in Chelyabinsk in Russia, they would have to trek half way round Kazakhstan’s northern border since (Astana claimed) there was no legal provision for foreign troops to traverse the country. Evidently that stipulation no longer applied three years later when “Peace Mission-2010” was staged on Kazakh soil.

464 Andrew Scheineson, The Shanghai Cooperation Organization, backgrounder, New York: Council on Foreign Relations, 24 March 2009. 465 Holslag, “China’s Roads to Influence,” p.656.

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Only Russian and Chinese troops took part in “Peace Mission-2009,” and fewer troops took part than on previous occasions. With the exception of Uzbekistan, which withdrew at the last minute, all the full members of the SCO contributed at least one military unit to “Peace Mission-2010.” The 2010 exercise included 5,000 troops, 300 major combat pieces and over 50 combat planes and helicopters. China transported nearly 1,000 troops to Kazakhstan for the exercise, along with many tons of material, in the process gaining valuable experience in large-scale movements. The difference in rail gauges between Kazakhstan and China complicated the exercise logistics.

It is rare for all full members of the SCO to participate in these exercises. Only Russia and China took part in the 2005 and 2009 manœuvres, all six SCO member states were involved in the 2007 exercise, and all but Uzbekistan participated in the 2010 one. Uzbekistan’s participation in the 2007 exercise comprised staff officer observers, and it was essentially absent from the other three.

In light of recent developments in Afghanistan, Russia has shown an interest in the SCO developing its defensive capabilities, as a hedge against US-NATO failure in Afghanistan.

In the absence of a collective defence structure, the SCO promotes joint counter-terrorism operations. In May 2011 Chinese security forces conducted joint counter-terrorism exercises – “Tianshan 2” – with their Tajik and Kyrgyz counterparts in Xinjiang. The training included the 466 freeing of hostages and “the liquidation of a terrorist training camp.”F F There was a similar exercise – “Tianshan 1” – in August 2006, this time involving China and Kazakhstan.

In 2004 the RATS was established in Tashkent under SCO auspices. It is the only specialized permanent body of the SCO currently in existence, apart from the tiny secretariat. Perhaps because it is the host of RATS, Uzbekistan waived its reluctance to join the “Peace Mission” military exercises in order to participate in an anti-terrorism exercise on its own territory in 2006.

While multilateral cooperation in the region has shown mixed results with regard to the fight against extremism, it has been a failure with regard to combating the narcotics trade. In 2006 the SCO announced its intention of building an “anti-drug belt” around Afghanistan, but the commitment of resources was no match for the rhetoric, and there has been little progress among 467 member states in developing a unified approach to the issue.F

5.3.5.7 Conclusion

One observer of Xinjiang and Central Asian affairs has concluded that the SCO has been much 468 more successful and influential than Washington anticipated it would be.F F In some ways it would be surprising if this were not the case, given that the SCO contains two major powers and represents one-quarter of the world’s population (one-half if observer states are included). Nevertheless, the organization comprises six member states so different that it has not yet developed a genuine collective identity, it has rarely been able to coordinate foreign policy, and it has found it difficult to reach agreement on sensitive issues (such as Uzbek and Kyrgyz

466 ICG, Tajikistan: The Changing Insurgent Threats, p.14. 467 Hanks, Global Security Watch. Central Asia, p.105. 468 Colin Mackerras, “Xinjiang and Central Asia. Views from Beijing and Washington and Sino-American relations,” in Colin Mackerras and Michael Clarke, eds., China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.141.

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differences with regard to ejecting US bases). However, on the whole it has contributed to building security ties between the members, through frequent joint exercises, and has developed a 469 level of collegiality that was missing from the CIS and its constituent bodies.F F Nevertheless, China and Russia currently devote more attention to their relations with individual Central Asian states than to their SCO-mediated multilateral ties, though they strive to give their bilateral 470 activities a multilateral gloss.F

5.3.6 Economic Aspects of Central Asia’s Relationship with China

In addition to the lure of its hydrocarbon resources, with a population of nearly 62 million Central Asia represents a potentially valuable market for China. Indeed, according to Chinese Commerce Ministry statistics, trade between China and the five Central Asian countries totalled $25.9 billion 471 in 2009, up from $527 million in 1992 (a fifty-fold increase).F F This figure represents about 1.2 percent of China’s global trade for that year. According to Clarke, trade relations between China and Central Asia are “increasingly unequal” and a relationship of economic dependency is developing. Eighty-five percent of China’s exports to Central Asia consist of low-priced manufactured goods, while over 85 percent of Central Asia’s exports to China consist of raw materials, petroleum, and ferrous and non-ferrous metals. A significant number of Chinese 472 companies are operating throughout Central Asia.F F In addition, China is investing heavily in the region. At the SCO summit in 2006, China agreed to provide Tajikistan with $600 million in credits and Kyrgyzstan with $300 million in credits. In 2010, China granted $10 billion in loans 473 474 to the SCO nationsF F “to shore up the struggling economies.”F F

Some Chinese officials and analysts hope such aid, along with strengthened commercial ties, will lead to economic growth in Xinjiang and less unrest among Uighurs. Virtually all of China’s trade with Central Asia takes place through Xinjiang, which is one of China’s fastest-growing regions, with growth of over 10 percent in recent years.

Lack of adequate infrastructure linking Central Asia to China, and ongoing trade barriers (such as tariffs and visa restrictions) are among the impediments to even stronger trade between them. A number of infrastructure projects are in the works to address the first issue, among them highways construction, the opening of bus routes, and railway projects. For instance, in November 2010, the Iranian Foreign Minister announced that Iran, Afghanistan and Tajikistan had agreed to cooperate with China to build a rail link from Xinjiang to Iran, passing through Kyrgyzstan, Tajikistan and 475 Afghanistan.F F In a study of Beijing’s promotion of cross-border networks, whether road, rail or air, and of cross-border infrastructure, Jonathan Holslag concluded that markets that used to be 476 inaccessible are now directly connected to China’s rapidly growing economy.F

469 Lo, Axis of Convenience, pp.106-8. 470 Weitz, “Military Exercises Underscore the SCO’s Character.” 471 Edward Wong, “China Quietly Extends Footprints Into Central Asia,” The New York Times, 2 January 2011. 472 Clarke, “China and the SCO,” pp.139-40. 473 Presumably excluding Russia. It is not clear whether the largesse was extended to Turkmenistan, which is neither a member nor an observer of the SCO, but plays a key role in China’s natural gas imports. 474 Wong, “China Quietly Extends Footprints Into Central Asia.” 475 Lin, “The PLA’s ‘Orient Express’.” 476 Holslag, “China’s Roads to Influence,” p.662.

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China has laid a great deal of emphasis on revamping its border gateways with its neighbours. Transport trade through the gateways to Central Asia increased from 3.2 million tons in 1999 to nearly 22 million tons in 2008 and is expected to reach 30 million tons in 2015. Most of this 477 freight went via the Alatau Pass (also known as Alashankou) on the Sino-Kazakh border.F F

As far as trade barriers are concerned, in 2003 Beijing offered the Central Asian states a preferential trade agreement, along the lines of one China had with ASEAN, but the proposal was immediately rejected because of concerns about economic sovereignty and the impact of the Chinese development model on the fragile environmental conditions in Central Asia, particularly 478 water security.F F Beijing supports the accession of Central Asian states to the WTO (only Kyrgyzstan is currently a member, having joined in December 1998), presumably for the same reasons that underlie Beijing’s backing for Russian accession to the WTO: that it would force Central Asian non-member states to bring their tariff regimes in line with WTO standards and to crack down on corruption in their customs services. For their part, the Central Asian states (and also Russia) are unenthusiastic about removing the trade barriers. They fear that the local economies would become “China-dependent” to an uncomfortable degree, following Russia into 479 a “colonialist” relationship with China.F

5.3.7 Energy Aspects of Central Asia’s Relationship with China

Unlike Russia, China was not initially seen as a serious competitor for Central Asian energy, and the first public mention of importing oil from the region was only made in 1996, and until 2001 China’s approach was a gradualist one. By that time, China had missed out on all the big plays in 480 the Caspian and Western companies had a “clear lead in Central Asia.”F F However, 9/11 and, more particularly, the US invasion of Iraq, made China determined to become a major player in 481 Central Asian energy.F F At the time of the Iraq invasion, China imported half of its oil from the Middle East, and it feared both disruption to supply and price rises. In response, Beijing asked Kazakhstan for 50 million tons of oil yearly, a stretch in that the country produced 47 million tons 482 in 2002.F

In its determination to diversify its energy supply China was seconded by the growing resolve of the Central Asian energy states to widen their options beyond the stranglehold Russia wanted to exert by welcoming competing offers from the West and from China. While Beijing has talked about enhancing energy cooperation through the SCO, in practice agreements have been 483 bilateral.F F

China has a considerable investment in Kazakh hydrocarbon resources. Mangistau oil field, in south-western Kazakhstan, is jointly owned by the state-owned Kazmunaigaz and China’s CNPC; it produced 115,000 bbl/d in 2009 and has reserves estimated at 500 million barrels. CNPC acquired a 60.3 percent stake in the Aktobe oil field in northwestern Kazakhstan in 1997 as a

477 Ibid, p.659. 478 Kerr, “Central Asian and Russian perspectives,” p.143. 479 Lo, Axis of Convenience, p.110. 480 Chow and Hendrix, “Central Asia’s Pipelines: Field of Dreams and Reality,” p.36. 481 Karrar, The New Silk Road, p.100. 482 Ibid, p.173. 483 Ibid, p.171.

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result of agreements between the Kazakh and Chinese governments, and another 25.12 percent share was sold to CNPC in 2003 by KMG. Since 1997, oil production has more than doubled and CNPC’s target of 200,000 bbl/d production was expected to be reached by early-2011. All oil output is exported to China through a link from the Caspian Pipeline Consortium pipeline to the Kazakhstan-China oil pipeline. The North and South Kumkol fields are located in south central Kazakhstan; each produced about 65,000 bbl/d in 2008. The South Kumkol fields are shared by CNPC (66.7 percent) and KMG (33.3 percent), while the North Kumkol fields are shared 50-50 by Russia’s Lukoil and CNPC. The oil is exported from these fields via the Kazakhstan-China oil pipeline to China.

In October 2005 CNPC acquired Canadian-owned PetroKazakhstan for $4.2 billion, the largest 484 oil company in Kazakhstan, for well above market price.F F In December 2006 it was announced that the China International Trust and Investment Corporation (CITIC), a government investment company, had acquired the Kazakhstan oil assets of the Nations Energy Company of Canada for $1.91 billion. This acquisition enabled CITIC to develop the Karazhanbas oil and gas field in Mangistau Oblast, which had proven oil reserves of over 340 million barrels and produced more 485 than 50,000 barrels of oil a day.F F

As noted earlier, in 1997 Kazakhstan and China agreed to construct a pipeline to take oil from fields in western Kazakhstan to the Dushanzi refinery in Xinjiang. The first phase of this pipeline was the first oil pipeline constructed in Kazakhstan since independence. When fuel through this pipeline first reached China on 25 May 2006, it represented the first time in Chinese history that 486 the country had imported crude oil by pipeline.F F The Kazakhstan-China oil pipeline spans 1,384 miles, running from Atyrau port in northwestern Kazakhstan to Alashankou in China’s northwest Xinjiang region. It is a joint venture between CNPC and KMG. In October 2009, CNPC and KMG signed an agreement to double the pipeline capacity to 400,000 bbl/d by 2013 under a second phase of development.

As a result of all this activity, currently CNPC operates five oilfield development projects in Kazakhstan, two exploration projects, the Kazakhstan-China crude oil pipeline and the Northwest crude pipeline, and also jointly operates the Kazakhstan-China gas pipeline.

Traditionally, China has had limited resort to natural gas, but has decided that it needs to increase the use of this fuel source. In December 2007, CNPC pledged to invest $2.2 billion in the Central Asia Gas Pipeline (CAGP), which starts at Gedaim on the border of Turkmenistan and Uzbekistan and extends across Kazakhstan to the Chinese border. The first stage of the CAGP transports natural gas from eastern Turkmenistan via Uzbekistan and Kazakhstan to Alashankou, China, where it connects to China’s west-east domestic pipeline system. The Turkmenistan section was completed in October 2009, the Uzbek section in November 2009, and the Kazakh section in December 2009, when gas began flowing through the pipeline. In mid-2010, about half the gas pumped by the CAGP came from Turkmenistan and the rest from Kazakhstan and Uzbekistan. It is expected to reach its full capacity of 40 billion m3 by early 2014, when stage

484 PetroKazakhstan was headquartered in Canada, but its operations were all based in Kazakhstan. A Canadian court approved the deal. 485 “CITIC group acquires Kazakhstan’s oil assets,” China Chemical Reporter, 16 January 2007. 486 Mackerras, “Xinjiang and Central Asia,” p.145.

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487 two, the Kazakhstan-China gas pipeline, is completed.F F Turkmenistan has been contracted to supply China with 30 billion m3 of natural gas per year for 30 years.

CNPC stated that it imported 4.5 billion m3 of natural gas through the trans-Asia pipeline in 488 3 2010.F F According to the data for collected by BP, China imported 16.45 billion m of natural gas in 2010 from a total of 14 countries world-wide, of which 3.55 billion m3 (21.6 percent) came 489 3 from TurkmenistanF F and 0.51 billion m (3.1 percent) from Russia. All the suppliers except 490 Turkmenistan sent the gas in the form of LNG, with Australia being the main provider.F

In 2009, China loaned Turkmenistan $3 billion to help develop the giant South Yolotan natural gas field, among the world’s largest. In July 2006, China gave a loan of $600 million to Uzbekistan for joint exploration of energy deposits in that country, and a joint venture between CNPC and Uzbekneftegaz to build and operate a 530-km section of the Turkmenistan-China natural gas pipeline was reportedly concluded in April 2008. In 2008, CNPC struck a deal with the Uzbek government to extract petroleum from the Mingbulak oil field in eastern Uzbekistan, which was first developed in 1992 but had been abandoned after a massive oil spill. In June 2010, CNPC announced a framework agreement with Uzbekneftegaz to buy 10 billion m3 of natural gas 491 annually, although the date when the gas would start to flow was left unclear.F

5.4 China and Russia in Central Asia: Cooperation and Competition

David Kerr recently observed that ten years ago the idea that Central Asia would become a major focus for the interaction of Russian and Chinese interests would have seemed unlikely. The rise of non-state threats, increasing awareness of Central Asia’s natural resources, and the potential for regime change in the region (epitomized by the “colour revolutions” in the former Soviet 492 space) all combined to confer a new strategic focus on Central Asia.F F As the region attracts increased outside attention, the questions arise as to how far the interests of the two giants on the edge of the region will converge or diverge and whether or not Russia and China will cooperate or compete in Central Asia.

5.4.1 Background

Beijing had neither the desire nor the means to compete with Russia in Central Asia in the decade after independence. Even had China wanted to do so, Russia was in a far stronger position in the region. As has been seen, the Central Asian countries were unenthusiastic about leaving Moscow’s tutelage, their economies and infrastructure were tied to the former imperial power,

487 “Kazakhstan Under the Spotlight in EIA Energy Report,” OilVoice, 18 November 2010 (http://www.oilvoice.com/n/Kazakhstan_Under_the_Spotlight_in_EIA_Energy_Report/f26373d69.aspx), accessed 29 July 2011. 488 “Turkmenistan-to-China gas pipeline exceeds 5 billion cubic meters,” Turkmenistan Newswire, 17 February 2011. 489 This is slightly discrepant with the CNPC statement that it imported 4.5 billion m3 through the trans- Asia pipeline in 2010, but nonetheless conforms to the general picture. 490 BP Statistical Review of World Energy June 2011, pp.28. 491 “CNPC signs gas supply agreement with Uzbek oil company,” Xinhua, 10 June 2010. 492 Kerr, “Central Asian and Russian perspectives,” p.133.

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Russian cultural influences remained strong, and there were still security links between them. Although in the early-1990s Moscow’s attitude towards the Central Asian states was relatively unenthusiastic, after Putin’s accession and the strong rise in global oil prices, Moscow became more energetic in its pursuit of strategic objectives in the region.

After the collapse of the Soviet Union, Russia and China both shared an interest in demarcating the regional borders and reducing troop deployments there (Beijing wanted to shift its strategic focus to the region opposite Taiwan). Weak as Russia was at that time, China was in no position to challenge it in Central Asia. It was subject to a Western arms embargo and had been stunned by the display of Western military firepower during the first Gulf War. Besides, Moscow’s residual influence in that region did not adversely affect China’s interests. On the contrary, Russia was seen as a stabilizing force there, particularly in its military support to the Tajik government in the face of an insurgency with strong Islamist elements. In 1993 China’s trade with Russia was ten times the size of its trade with Central Asia, and Moscow was the source of the modern military hardware China could get from no other source.

China only became interested in Central Asia’s energy in 1997, and it did not try to access it in earnest until 2002. Thus, in the 1990s, it was not in Beijing’s interest to appear to challenge Russia’s position in Central Asia. Indeed, China has been more sensitive than other external powers to Russia’s lingering interests in post-Soviet Central Asia.

However, some of the developments of recent years may corrode Russian ascendancy in Central Asia. The energy export routes are no longer exclusively in Russia’s hands. China’s share of Central Asian trade has caught up with, and probably overtaken Russia’s, facilitated by proximity (as Table 1 showed). China may not participate in the CSTO, but it dominates the SCO, which is playing a more prominent, and growing, role on the international stage. China’s famously rapid infrastructure development is making major inroads into Central Asia. That Beijing’s confidence in its posture in Central Asia is growing was demonstrated by the remarks, made just a year ago, by General LiuH Yazhou,H when he candidly stated that China had taken advantage of the lack of 493 initiative displayed in Central Asia by Russia and the US.F F

5.4.2 Geopolitics

The earlier section on Russia showed that, while it may have lost some of the attributes of global power, it attaches considerable importance to its role as a regional power in the CIS. In recent years there has been greater convergence between Russia and the Central Asian states, with Moscow’s main goals in the region being to control energy resources, maintain regional stability and resist Western intrusion. Russia still has a military presence in regional countries, and is increasing its soft power reach there, but Moscow has lost its stranglehold over Central Asian energy. Yet although Russia’s standing in Central Asia appears to be in flux, Marlène Laruelle contends that:

Since 2000, Russia has once again become a respected power in Central Asia, where it is admired for its economic and geopolitical revival. As a result of these

493 Wong, “China Quietly Extends Footprints Into Central Asia.”

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post-Soviet continuities, Russia has the upper hand over the other great powers 494 rivalling for influence in Central Asia.F

David Kerr likewise concluded that Russia’s strengths in economic complementarity, security 495 “outsourcing,” and ethno-cultural ties make it the “preferred external partner” in Central Asia.F

Hitherto, China has been content to recognize Moscow’s primacy in Central Asia. Indeed, 496 China’s “deference to Moscow” has thus far limited open clashes between the two countries.F F As China increases its economic penetration of the region, especially in the field of energy, this benign situation may not last and Sino-Russian relations in Central Asia could become more tense. The weakness and instability of most Central Asian states may reinforce any such tendency by further drawing in the region’s major powers.

Perhaps surprisingly, given that authoritarian rule is the norm in Inner Asia, soft power may be a significant factor in strategic competition in the region. China was quite happy to contrast Moscow’s heavy-handed approach to Georgia with its own preference for soft power in the CIS 497 region, a contrast not lost on Central Asian states.F F Regional governments may have taken note, but public opinion is not a nugatory force in the region (as Akayev and Bakiyev discovered), and it is not clear whether Russian action in the Caucasus will register among Central Asian peoples, particularly when contrasted with more immediate Chinese behaviour.

In the battle for public opinion, Russia has important advantages vis-à-vis China. As was noted earlier, Russian is the most spoken language in Central Asia, a situation that the Russian government is trying to reinforce with its soft power initiatives. In addition, there is still a significant Russian population in Central Asia, especially in its pivotal state, Kazakhstan. Their number now appears to be about 6.2 million, which represents about 10 percent of the total population of the region.

In contrast, Chinese is very little spoken in Central Asia. Though written in Cyrillic, the Dungan language is closely related to Mandarin (the Dungans – Muslim Hui people – fled China in the late-19th century). Some Mandarin dialects are intelligible to Dungans, although apparently not Beijing Mandarin. In any event, the number of Dungan-speakers in Central Asia (primarily Kyrgyzstan) is very small, having fallen by about one-third since 1989 and now standing at around 41,400. A number of universities in northwest China, and especially Xinjiang, have set up 498 Confucius Institutes in Central Asia to promote the Chinese language and culture.F F

However, China’s attempts to settle its regional borders and settle its farmers in Central Asia have created a negative public image – palpable “Sinophobe social pressures” – in the three Central Asian states that border it, doubtless to Russia’s advantage. The 2004 survey of attitudes in those countries cited above showed that where 38 percent of Tajiks regarded China as being trustworthy, along with 19 percent of Kazakhs and 26 percent of Kyrgyz, the percentages for 499 Russia were 87, 80 and 82 percent respectively.F F These were very large differences in Russia’s

494 Laruelle, “Russia and Central Asia,” p.150. 495 Kerr, “Central Asian and Russian perspectives,” p.151. 496 Rozman, “The Sino-Russian Strategic Partnership,” p.22. 497 Mankoff, Russian Foreign Policy, p.206. 498 “NW China Universities Promote Chinese Culture in Central Asia,” Xinhua, 15 January 2010. 499 Kerr, “Central Asian and Russian perspectives,” p.137, Table 1.

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favour. Furthermore, some of Beijing’s actions since 2004 with regard to rectifying borders and leasing farmland have upset people in the Central Asian states on China’s border. Doubtless they also placed Russia in a more benign light by comparison.

Whatever the state of public opinion, and Russia’s soft power advantages, Central Asian governments are forced to display an “ostensible Sinophilia.” In the words of Marlène Laruelle and Sébastien Peyrouse, this is “precisely because they do not view their troublesome neighbour [China] as simply a power like the others. Central Asia cannot afford to endorse policies that are 500 contrary to Chinese interests.”F

Should a serious geopolitical competition with China develop in Central Asia, Russia’s differentiated interest in the five regional countries might well colour its responses to Beijing’s advances. Kazakhstan is next-door, has a large Russian population, and is an essential economic and political partner for Russia. Kyrgyzstan and Tajikistan are seen as being burdens, and anyway border China. Uzbekistan and Turkmenistan are viewed as being difficult to control.

An open-ended US military presence in Central Asia, whatever it contributes to regional security, is unwelcome to both China and to Russia. However, some regional states – notably Kyrgyzstan and Uzbekistan – welcome an American footprint in the region, to provide some balance, however relatively small, against Russia and China. Thus, despite their shared view on the issue, Moscow and Beijing will have to accept the presence of American forces in Central Asia, at least as long as the US remains in Afghanistan. In this regard, Russia is probably the more flexible of the two. Its more Western-centric perspective, complemented by the parochial attitude towards terrorism displayed by China, meant that Moscow was more prepared to accept a temporary US presence on the Central Asian doorstep of Afghanistan in the fight against Islamist extremism. For Beijing, the fear of US “containment” trumped any beneficial role Washington might play in combating the “three evils.”

5.4.3 Security

Both Russia and China must be watching with growing concern the serious political, social and economic problems that wrack Central Asia. In this regard, Russia’s only Central Asian border is shared with much the strongest regional state (Kazakhstan). China, on the other hand, while it does border Kazakhstan also shares 1,272-km of border with far the weakest of the regional states (Kyrgyzstan and Tajikistan).

China has traditionally been loath to engage with military and security issues on a multilateral basis, and thus Beijing sees the SCO in less military terms than does Russia. Whereas Moscow stresses the security and geopolitical aspects of the SCO, China has resisted expanding its military functions and also has economic aspirations for the organization. As a result, China has hitherto been quite comfortable with a Russian military presence in Central Asia. Beijing sees that involvement – exemplified by Russian military activities in the Tajik civil war – as a bulwark against instability in the region spilling into Xinjiang. China’s scepticism, and reliance on Russian military effort in Central Asia, was doubtless reinforced by the 2010 Kyrgyz crisis, which threatened to turn into an ethnic conflict – neither the CSTO nor the SCO could contribute to the resolution of the violence.

500 Quoted in Blank, “Revising the Border.” Italics in the original.

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Nonetheless, there have been signs that, as the SCO expands and takes on an ever more ambitious agenda, cracks are starting to appear between Moscow and Beijing. This was particularly evident in the debate over the accession of new members. Russia wants Iran and India as full members, whereas China has no interest in the accession of a strategic competitor and long-time ally of Russia (India) or a country (Iran) that would use the SCO to attack the US. Kerr argued that as long as the SCO confines itself to declamatory statements of intent and avoids doing things that would bind its members to a particular course of action, it will find it difficult to develop 501 institutional depth.F

5.4.4 Economic Rivalry

Beijing’s foreign policy has been oriented towards preserving the status quo, to promote strong economic growth and hence social stability at home. However, it is now making major economic inroads in Central Asia that will undoubtedly cause ripples in that status quo, not only by disturbing Russia but also making regional states nervous about developing a neo-colonial relationship with China. Trade rivalry, energy competition, local upset over land leases to Chinese farmers and other potential sources of economic dispute are likely to make China’s profile in Central Asia less “deferential” than it was until quite recently.

In 1995, China’s trade with Central Asia was $783 million. In contrast, Russia’s trade with the region in that year was $7.778 billion, or ten times as much. In 2001 the totals were $1.509 billion and $6.312 billion respectively (the Russian advantage has been reduced to just over four-fold). By 2007, the gap had almost closed, with the totals standing at $19.584 billion and $22.150 billion respectively. In that last year China had far surpassed Russia in trade with Kyrgyzstan, but 502 Russia was still the more important partner for the other four states, though fast losing ground.F F Many parts of Asia are highly dependent on cheap goods from China, and Beijing provides larger loans on more favourable terms than Moscow. Although this means that Chinese traders have become an integral part of Central Asian markets, it does raise the fear among locals (as in the 503 Russian Far East) that they will be submerged,F F compounding the “Sinophobe social pressures” of the land lease issue.

As Beijing exerts ever more economic clout in Central Asia, tension with Moscow may well increase as Russia loses market share. This is likely to be especially the case vis-à-vis Kazakhstan, Russia’s most important partner in Central Asia. As will be seen in the section on Kazakhstan (below), China now seems to have surpassed Russia as a trading partner for Kazakhstan, a huge reversal over the past two decades.

5.4.5 Energy Rivalry

With regard to the pursuit of one of Moscow’s key goals in the region, Russia is rapidly losing ground to China. The significance of energy in Russia’s relationship with Central Asia is demonstrated by the fact that in 2006 gas and oil exchanges constituted 36 percent of total

501 Kerr, “Central Asian and Russian perspectives,” p.146. 502 Ziegler, “Russia and China in Central Asia,” pp.252-53. These data come from different sources (Chinese and Russian statistics), so they are not directly comparable – but the gap is nonetheless instructive. 503 Ibid, p.253.

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Russia-Central Asia trade. Nevertheless, over the past decade Moscow has lost its stranglehold on the routes by which Central Asian energy is exported beyond the region. For instance, Moscow has long urged President Nazarbayev to agree to a long-term deal under which Kazakhstan would commit to exporting more oil via Russian pipelines, but a binding oil transit deal between the two 504 countries has proved elusive.F F When the Canadian court approved the sale of PetroKazakhstan to CNPC in October 2005, at the same time it turned down an attempt by Russian oil firm and rival suitor Lukoil to block the sale. Lukoil had offered to match CNPC’s $4.2 billion offer, but the Canadian court turned down its appeal. The Kazakhstan government backed the sale of PetroKazakhstan, and intended to pay $1.4 billion for a 33 percent stake as part of the deal with 505 CNPC.F

Initially China was not a serious competitor for Central Asian energy, and its approach was a gradualist one. 9/11 and the US invasion of Iraq made China determined to become a major player in Central Asian energy in order to diversify away from its strategically vulnerable Middle Eastern supply. In this policy China was assisted by the resolve of Central Asian suppliers to break Russia’s stranglehold. However, China’s pipelines in Central Asia have a smaller capacity than the ones to Russia, and Kazakhstan and Turkmenistan need to fill long-term supply contracts with Russia and Europe before they can start filling the pipelines to China. But as Central Asian suppliers start to move energy east in greater quantities, it will enable the producers to pit the consumers against each other, generating higher returns and placing a premium on Sino-Russian competition. In 2010, for the first time, China became Kazakhstan’s top export destination, with 17.6 percent of its total exports going to China, compared with 5.9 percent to Russia. Oil and oil 506 products composed 56.3 percent of the Kazakh exports to China.F

Russia is rather ambivalent about the Eurasian source of China’s energy. On the one hand, Moscow would like China to be energy-dependent on Russia. On the other hand, it would not be entirely unhappy if Central Asian energy eventually goes to China in large quantities in that it would to that extent reduce the competition Russia would face in the lucrative European energy market. In addition, Russia has piggy-backed on some Chinese energy projects in the region. For instance, Kazakhstan was unable to produce enough oil to fill the Atasu-Alashankou pipeline between Kazakhstan and Xinjiang, so Russia proposed to top up the Kazakh supply.

Nevertheless, there is an inherent tension in Sino-Russian relations with regard to energy that is 507 less evident where geopolitics and security are concerned.F

5.4.6 Infrastructure

China has been far more effective in developing a transportation infrastructure in its border provinces than has Russia, far outstripping Russia’s obsolete transportation grid in the Far East. Nevertheless, Russia still has more railway connections with countries in the region – seven in

504 Sergei Blagov, “Russia and Kazakhstan Boost Bilateral Trade and Energy,” Eurasia Daily Monitor Jamestown Foundation), vol.8, no.64, 1 April 2011. 505 “CNPC secures PetroKazakhstan bid,” BBC News, 26 October 2005. 506 “China – Now Kazakhstan’s top export destination,” Renaissance Capital, Strategy Equity Research, Strategy Kazakhstan, 19 January 2011. 507 Ziegler, “Russia and China in Central Asia,” p.254.

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508 total – and controls eight important highways to Kazakhstan alone.F F However, China is striving energetically to rectify this imbalance. In a study of Beijing’s promotion of cross-border networks, whether road, rail or air, and of cross-border infrastructure, Jonathan Holslag concluded that markets in Central Asia that used to be inaccessible are now directly connected to China’s rapidly growing economy. Transport trade through the gateways to Central Asia from China increased seven-fold between 1999 and 2008.

5.4.7 Conclusion

In the circumstances of a region rich in energy, weak in security, with ever-deteriorating governance, and surrounded for most of its land borders by two strong powers, it has been perhaps surprising that the record of the past two decades has been one more of cooperation than 509 competition between those two powers. This historically unusual situationF F has owed much to Chinese reticence. However, that appears to be eroding. Nevertheless, both Russia and China have strategic compulsions in common in Central Asia – notably maintaining political stability, countering militancy in whichever form of the “three evils” it assumes, and extruding the American presence as early as can safely be achieved. Where their interests are more likely to diverge with time – particularly in the energy sphere – competition between them is likely to become more spirited, especially vis-à-vis Kazakhstan.

5.5 China and Central Asia: An Entering Wedge?

Land hunger is growing in China, which feeds 22 percent of the world’s population with only 10 percent of the planet’s arable land. Han Jun, a Chinese government expert on rural policy, recently outlined a number of serious issues that are causing declining agricultural production, including deteriorating soil quality caused by inappropriate farming techniques and industrial pollution. He claimed that factory waste had contaminated more than a tenth of China’s 510 farmland.F F As was stated early in this report, Beijing has tried to alleviate employment pressures by encouraging workers to migrate to other countries. Employment concerns and land hunger combined have encouraged China to eye farmland in neighbouring states.

China’s interest in farmland outside its own borders does not stop at the Russian Far East. Farmland is much scarcer in the three Central Asian countries that border Xinjiang than it is in the Russian Far East, but this fact has not prevented Beijing from pursuing land lease agreements in conjunction with the settlement of its long-standing territorial claims.

In 2004, the Ili Kazakh Autonomous Prefecture (in which ethnic Kazakhs are a quarter of the population) in Xinjiang obtained permission to rent 7,000 hectares of agricultural land across the 511 border in Kazakhstan for ten years. It is farmed by about 3,000 Chinese.F F In late-2009 the Kazakh government floated a scheme whereby about two million hectares of uncultivated

508 Holslag, “China’s Roads to Influence,” pp.660-61. 509 One is reminded of the historian H.A.L. Fisher’s famous dictum of the 1930s: “an orderly power ringed round by turbulence always finds itself compelled to establish peace and security upon its frontiers.” 510 Jonathan Watts, “China’s soil deterioration may become growing food crisis, adviser claims,” Guardian, 23 February 2010. 511 Blank, “Revising the Border.”

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farmland would be leased to Chinese farmers, a proposal that generated protests in Kazakhstan 512 even before the full details were publicly known.F F

In January 2011, China and Tajikistan reached an agreement to resolve China’s border claims. In addition, Dushanbe agreed that 1,500-2,000 Chinese farmers could settle another 2,000 hectares of land inside Tajikistan, repeating the pattern in Russia and Kazakhstan. The new land identified in the agreement is in the Kumsangir and Bokhtar districts of southern Khatlon Province, and is 513 not along the border with Xinjiang.F

Although the lease of farmland does not seem to have been connected to the resolution of China’s boundary dispute with Kyrgyzstan, it is likely that Chinese farmers are working land in 514 Kyrgyzstan just as they are in Russia and Kazakhstan (and, prospectively, in Tajikistan).F F They appear to have taken advantage of Bishkek’s mass privatization program, completed in 2003, to 515 lease farms in the country.F F

Some of Beijing’s actions since 2004 with regard to rectifying borders and leasing farmland have not endeared China to Central Asian opinion. In agrarian societies, arable land holds great value in public perceptions, and in Tajikistan about 50 per cent of the Tajik population depends on agriculture for a livelihood. However, arable land there is extremely scarce. According to the Food and Agriculture Organization there was only 0.9 km2 of arable land per 1,000 population in Tajikistan in 2011. The ratio is not much better in Kyrgyzstan (2.3 per km2), although Kazakhstan 2 516 is far better off (at 14.6 per km ).F F There was a strong public backlash against the Sino-Tajik border agreement which Stephen Blank thinks may have been actuated more by the farmland 517 issue than the border rectification.F F The 2004 agreement to rent land in Kazakhstan to a region in Xinjiang similarly provoked scathing attacks on the Kazakh government in the media, which 518 cited the example of the Russian Far East.F

In these circumstances, it has been claimed that proposals to settle Chinese farmers on Central Asian land have created “Sinophobe social pressures, which are quite palpable on the issue of 519 land possession.”F F Laruelle and Peyrouse contend that such attitudes towards China, even if not 520 articulated loudly, are clearly a factor in the domestic politics of Central Asian governments.F

Farming is far from the only type of Chinese economic penetration in Central Asia, although the issue of land somehow seems more neuralgic. Chinese entrepreneurs in Kyrgyzstan have established several large business and trade centres, and Chinese migrant workers in the country

512 Hanks, Global Security Watch. Central Asia, p.108. 513 Bruce Pannier, “Tajikistan Agrees To Allow Chinese Farmers To Till Land,” EurasiaNet.org, 28 January 2011. 514 Watts, “China’s soil deterioration.” 515 Rafis Abazov, “Chinese in Central Asia: Loyal Citizens or Fifth Column?” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 8 February 2006. 516 “Tajikistan,” WorldStat.info, 2011 (http://en.worldstat.info/Asia/Tajikistan/Land), accessed 16 August 2011. The ratios for China, Turkmenistan and Uzbekistan were, respectively, 1.1; 3.7; and 1.5 per km2. 517 Blank, “Revising the Border:” 518 Ibid. 519 Ibid. 520 Cited in Blank, “Revising the Border,” 29 July 2011.

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521 are thought to number between 20,000 and 100,000.F F The director of the Kazakhstan Chamber of Commerce in China recently stated that it is no longer just the big Chinese oil giants that are investing in his country. Hundreds of small or medium private Chinese enterprises are also 522 currently invested in Kazakhstan.F F

As Chinese investment in Inner Asia grows rapidly it might reinforce the negative impression created by the land lease issue – China’s investments in other countries have not always endeared 523 it to the local populations.F F Russians worry about the impact of Chinese migrants in the Far East. There are widespread complaints about the alleged predation of Chinese companies in Africa (Zambia, Ghana, Nigeria, South Africa, the Ogaden and elsewhere), where often the labour force is very largely made up of Chinese and where their business practices can be detrimental to the local economies. Such activities have stoked resentment, protests, riots and even terrorist attacks.

Antagonism towards Chinese investments and citizens in Central Asia might well be reinforced if agitators link local issues with the fate of Xinjiang’s Uighurs, who are both fellow-Muslims and similarly of Turkic origin. The Mingbulak oil field in Uzbekistan has the potential to stir Sinophobia of a religious cast. It is located in the volatile Fergana Valley and is little more than 200-km from the border with Xinjiang. The Fergana Valley is the birthplace of the jihadist IMU, which is growing in strength and may soon be in a position to shift its focus from Afghanistan to Central Asia. It might be harder for Tashkent to restrain Uzbek jihadists than it has been to control the Uighur residents of Uzbekistan. As will be seen below, there are links between the IMU and the Uighur ETIM group.

In a possible harbinger of a potential threat to Chinese citizens and investments in Central Asia, the earlier report on South Asia found that the propensity to civil violence – both Islamist and nationalist – in Pakistan posed a considerable risk to the Chinese workers in the country. They were believed to number around 10,000, many of whom were often located in remote and troubled parts of the country; a number had been killed by militants. The South Asia report noted that in recent years there had been a considerable decline in the number of Chinese companies operating in Pakistan, from about 145 in 2003 (when civil violence was fairly minor) to about 60 in late-2009. This decline appeared to owe a great deal to the deteriorating internal security 524 situation in Pakistan.F

The possibility that investment might be a Chinese entering wedge is also felt much closer to home, in Mongolia:

521 Kerr, “Central Asian and Russian perspectives,” p.137, fn 25. 522 Olia Wang and Yumin Wang, “Deal of the day: Chinese seek Kazakh oil,” Financial Times, 15 February 2011. 523 It is far from unique in this regard. US military personnel in Okinawa have committed a number of criminal acts, and in 2007 a newspaper on the island found that 85 percent of Okinawans polled opposed the continued US military presence. One of the issues behind the near-closure of the Manas facility in 2009 was a number of incidents between NATO personnel and local residents that soured Kyrgyz views of the base (Hanks, p.33). 524 Kellett, China’s Periphery. Part 1: South Asia, pp.49-52.

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There is no question that, as Chinese investment in Mongolia has grown, anti- Chinese feeling has also been on the rise, with the number of xenophobic attacks 525 against Chinese nationals in Mongolia increasing in recent years.F F

And small Chinese entering populations have sometimes grown enormously: a quarter-century ago the Chinese population of South Africa was nearly nil; by 2007 it had reached 300,000; 526 similarly, the migrant Chinese population in Zambia has grown from 3,000 to 30,000.F F Chinese 527 migrant workers in Kyrgyzstan are thought to number between 20,000 and 100,000,F F in a population of just over 5.5 million.

Any such demographic and commercial entering wedge in the three Central Asia states adjoining China, might ultimately provoke resentment and attacks on the Chinese element by local nationalists, as has happened in Mongolia. This might then provoke a response by Beijing if it sees its citizens and interests (trade, investments, energy supply, and so on) in those countries as being under threat. The earlier report on South Asia described the pressure Beijing placed on the Pakistani government when Islamist radicals at the Red Mosque in Islamabad in June 2007 528 kidnapped a number of Chinese workers in the city.F F

Currently, however, China is avoiding intervention in political crises in Central Asia. Beijing was disturbed by the events that culminated in the overthrow of President Bakiyev in Kyrgyzstan in 2010, which came only nine months after the Urumqi riots and which involved some anti-China incidents. While senior Chinese officials rushed to Urumqi, to assess their response to the events in Bishkek, there was no Chinese intervention. Equally, the Chinese-led SCO did not intervene during the ethnic riots that broke out only two months later in Kyrgyzstan. This is despite the fact that the “Peace Mission-2007” SCO exercise was oriented towards suppressing popular rebellion (with Tiananmen and Andijan in mind). The exercise began in Urumqi and ended in Chelyabinsk 529 (in Russia’s Volga-Ural military district), and it involved 1,600 Chinese personnel.F F Both the scenario and the logistical effort involved in this exercise would have matched the situation in Kyrgyzstan in mid-2010. However, planning an exercise, on the one hand, and, on the other, 530 gaining the political and then military support for intervention of fiveF F very disparate nations in a rapidly escalating situation, are quite different things.

It remains to be seen whether growing military power will, in the future, tempt Beijing to follow the “Large Periphery” strategy advocated by Chen Xiangyang in response to crises, such as that in Kyrgyzstan, that directly affect Chinese citizens and interests in neighbouring countries.

There have been precedents for regional hegemons exploiting business interests in small countries as pretexts for involvement in the political affairs of those states. The US-owned United Fruit Company was the archetypal example of the influence of a multinational corporation on the

525 Freeman and Thompson, China on the Edge, p.50. 526 Isaac Idun-Arkhurst and James Laing, The Impact of the Chinese Presence in Africa, London: africapractice, 26 April 2007, pp.17-20; see also Kristin Palitza, “Economies Must Diversify, Reduce Focus on Mining,” Inter Press Service News Agency, 10 June 2009. 527 Kerr, “Central Asian and Russian perspectives,” p.137, fn 25. 528 Kellett, China’s Periphery. Part 1: South Asia, pp.48-49. 529 Weitz, “Military Exercises Underscore the SCO’s Character.” 530 Excluding Kyrgyzstan, which would have hosted any such action and which had asked for CSTO intervention. Bishkek would doubtless have been equally keen to take SCO military support.

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internal politics of small countries (which, as a result, became known as “banana republics”). The company was involved in an invasion of Honduras, a massacre in Columbia and a coup in Guatemala. In the late-1940s and early-1950s the Guatemalan government took actions that essentially placed it in direct competition with the United Fruit Company. In 1953, the US decided to intervene, concerned at what it detected as growing communist influence in the government of President Jacobo Arbenz Guzman (a belief assiduously promoted by the Company). The Company wielded considerable influence in the Eisenhower administration and virtually every major American official involved in the plot to overthrow Arbenz had a family or 531 business connection to the Company itself.F F The CIA provided arms – paid for by the Company – to a group of Guatemalan officers who launched an abortive coup. A year later the CIA spearheaded another, successful, attempt to overthrow Arbenz.

If China needs a more contemporary and geographically proximate precedent for defence of its expatriates Russia has provided one, although not an especially forceful one. Russia’s draft military doctrine, prepared in May 1992 when the CIS countries were newly independent, identified any violation of the rights of “citizens of Russia and people ethnically and culturally identifying themselves with Russia” as a “source of military danger to Russia” and a “serious source of conflict.” The draft doctrine included the defence of those “rights” as one of the basic 532 tasks of the Russian armed forces.F F Russia was then too enfeebled to put that doctrine into practice in most of the CIS, but the actions of its 14th Army in the Transdnestr enclave of Moldova indicate that the defence of expatriates by a former imperial power in Inner Asia is not entirely hypothetical.

An increasingly powerful and confident China may have similar fantasies of a terrestrial, 21st century variant of gunboat diplomacy. Even if it does not, its neighbours might harbour suspicions about the growing Chinese presence in their midst.

531 Daniel Kurtz-Phelan, “Big Fruit.” A review of Peter Chapman, Bananas: How the United Fruit Company Shaped the World, The New York Times, 2 March 2008. 532 John W.R. Lepingwell, “The Russian Military and Security Policy in the ‘Near Abroad’,” Survival, vol.36, no.3, Autumn 1994, p.73.

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6 Kazakhstan

Kazakhstan is right in the middle of the Eurasian land mass. It is the second largest country in Inner Asia after Russia, the ninth largest in the world, and about the size of Western Europe. It is the only country in Central Asia to border both Russia (their joint border is 6,846-km long, the second longest in the world after the Canada-US one) and China (1,533-km). It also borders three other of the Central Asian states, the only one not to be adjacent to Kazakhstan being Tajikistan. The country is well endowed with minerals and raw materials, with large deposits of copper, zinc, 533 rare-earth metals, coal, iron, silver, gold, bauxite, natural gas and oil.F F

According to the 2009 census, the population of Kazakhstan was 16,009,800, the second largest in Central Asia but only around 58 percent that of Uzbekistan. This number is down from 16.2 million in 1989, largely reflecting the migration of many among the ethnic Russian population. Kazakhstan has been Russia’s largest source of migrants, although the improving economy has resulted in a rapid decrease in emigration and an increase in immigration from other Central 534 Asian countries (as well as of a few thousand Kazakhs in Russia).F F Kazakhstan is one of the more heterogeneous countries of the region, although rapidly becoming more homogeneous, while boasting a long tradition of tolerance and secularism. Kazakhs make up 63.1 percent of the population, Russians 23.7 percent. Muslims represent 70.2 percent of the country’s people, while 535 Christians (mostly Orthodox) stand at 26.2 percent.F F The population density – at 5.9 persons per km2 of the land area – is the lowest in Central Asia, and lower than that of Russia (although 536 sparsely-populated Mongolia has an even lower density).F

6.1 Political Stability

Three of Central Asia’s leaders have been in power since independence twenty years ago, and Kazakhstan President Nazarbayev is one of them. In its country profile of Kazakhstan, the US State Department describes some of the flawed elections that have occurred during President Nazarbayev’s twenty years in power and notes his wide-ranging powers under the constitution he had revised. Only he can initiate constitutional amendments, appoint and dismiss the government, dissolve parliament, call referenda, and appoint administrative heads of regions and of Astana and 537 Almaty.F

In March 2011 he won the presidential election with 95.5 percent of the vote in a contest marred by “serious irregularities,” according to the OSCE (which ironically he had chaired only three

533 “Kazakhstan economy,” AboutKazakhstan.com (http://aboutkazakhstan.com/about-kazakhstan- economy), accessed 14 August 2011. 534 Valery Tishkov, Zhanna Zayinchkovskaya and Galina Vitkovskaya, Migration in the countries of the former Soviet Union, Global Commission on International Migration, September 2005, pp.10-11. 535 “The results of the national population census in 2009,” Astana: The Agency of Statistics of the Republic of Kazakhstan, 12 November 2010 (http://www.eng.stat.kz/news/Pages/n1_12_11_10.aspx), accessed 14 August 2011. 536 Entry for Kazakhstan, the CIA World Factbook (https://www.cia.gov/library/publications/the-world- factbook/geos/kz.html), accessed on 14 August 2011. 537Background Note: Kazakhstan, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 20 April 2009 (http://www.state.gov/r/pa/ei/bgn/5487.htm), accessed 20 August 2011.

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months previously). Three opposition parties boycotted the poll, and the three candidates who technically opposed Nazarbayev publicly support him and his policies. The victory secured another five years in office, but Nazarbayev – who is 74 years old – has declared his intention of 538 staying in power until 2030.F F Perhaps because of his longevity in office, and owing to the comparatively positive economic and social position enjoyed by the country, Kazakhstan appears relatively calm.

Nevertheless, the regime is vigilant. A watchdog of government attempts to suppress the free flow of information online has included Kazakhstan among the countries that actively deploy 539 online tools to suppress Internet freedom.F F Like all but one of the Central Asian countries, Kazakhstan is rated “Not Free” in Freedom House’s assessment of political rights and civil liberties in the world (on a seven-point scale it was accorded a six for political rights and a five 540 for civil liberties).F F

However, by regional standards Kazakhstan has a high degree of communications access. The International Telecommunication Union estimates the number of Internet users at 33.89 percent of the total population in 2009 (compared with 78.11 percent in Canada), and fixed line and 541 mobile subscribers in 2007 at 100.89 percent (compared with 117.16 percent in Canada).F

6.2 Economic and Social Situation

While it depicted Central Asian states in extremely negative terms in a report published in February 2011, the International Crisis Group described Kazakhstan as “the region’s only 542 th functioning state,” thanks largely to its oil wealth.F F It ranked 66 out of 169 countries on the UNDP Human Development Index in 2010, far the best of the five Central Asian states, only one th 543 place below Russia and considerably ahead of China, which occupied 89 place.F F By regional standards the proportion of the population living on less than $2 per day – 17.2 percent in 2008, 544 according to the World Bank – is very low.F F Kazakhstan also performs well on the UN Food and Agriculture Organization assessment of food insecurity. No undernourishment was reported 545 for the period 2005-7.F F Kazakhstan also boasts the highest ranking in Inner Asia – though still a rather modest 105th out of 178 states measured – on Transparency International’s corruption 546 perceptions index for 2010, well ahead of Russia.F F

Yet although Kazakhstan has pursued reforms and invested in infrastructure,

538 Muhammad Tahir, “Governments Move to Thwart ‘Arab Spring’ in Central Asia,” EurasiaNet, 28 April 2011. 539 Nikola Krastev, “Watchdog: Governments Becoming More Skilled At Suppressing Online Press Freedom,” Radio Free Europe/Radio Liberty, 2 May 2011. 540 Freedom in the World 2011, p.14. 541 Kazakhstan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/245- kazakhstan-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011. 542 ICG, Central Asia: Decay and Decline, p.i. 543 The Real Wealth of Nations: Pathways to Human Development. Human Development Report 2010, New York: United Nation Development Programme, November 2010, p.145. 544 Kazakhstan Country Report. 545 The State of Food Insecurity in the World, p.50. 546 Transparency International, Corruption Perceptions Index 2010.

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…the outcome has been disappointing. The country will continue experiencing social stratification in access to quality education and good healthcare…social 547 tensions are likely to arise within a growing rural, southern underclass.F F

The country is experiencing a shortage and aging of general practitioners, especially in the countryside, and the education system, while better than those of Kazakhstan’s neighbours, “does not have the capacity to educate a generation capable of making the country one of the world’s 548 most competitive economies, as the government intends.”F F

While the government wants to reposition Kazakhstan as a key transit route between China and Europe, the national transportation system is aging fast and suffers from chronic underinvestment. The government has prioritized fourteen national roads, including the West China-West Europe transit road, which has attracted a lot of foreign funding. Currently there is one rail connection between China and Kazakhstan (Alashankou-Dostyk), which is approaching full capacity. It is 549 planned to open a second railway connection, between Khorgos and Zhetigen in 2012.F F While Kazakhstan, as part of the Soviet Union, used broad gauge, unlike China and most of Europe, the aim is to base this connection, linking China and Southeast Asia to Europe via Turkmenistan and Iran, on standard gauge, avoiding costly delays. It is estimated that it will be possible eventually to ship cargo in 7-10 days (half the current time by rail) from China’s ports to Europe. The railway would also open up areas of Kazakhstan for exploration of minerals and oil. However, it might also spur competition between Kazakhstan and Russia. In January 2008 China and Russia, along with Mongolia, Belarus, Poland and Germany, agreed to collaborate on a train service between Asia and Europe that was expected to transport cargo between Beijing and Hamburg in less than 550 20 days, compared to the 40 days that was then the norm.F

Quite apart from being politically stable itself, Kazakhstan has made an important contribution to regional stability by making significant investments in its neighbours’ economies – particularly Uzbekistan and Tajikistan, and to a lesser degree Kyrgyzstan – offsetting a lack of Western investment in much of the region. It has also provided jobs for large numbers of Central Asian migrant workers, in construction, agriculture and other sectors.

6.3 International Relations

The Nazarbayev government has followed a careful policy of balancing among the Great Powers that are so interested in Kazakhstan’s energy wealth. The success of its “multi-vector” foreign policy was demonstrated when it assumed the chairmanship of the OSCE in 2010. However, the country’s natural inclination is to orient itself first on Russia, the power that shares 56 percent of Kazakhstan’s total land borders and strong ethnic, cultural and historic links.

547 ICG, Central Asia: Decay and Decline, p.28. 548 Ibid, p.33. 549 Ibid, p.35. 550 “Beijing to Hamburg fast cargo rail link planned,” The China Post, 11 January 2008.

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6.3.1 Russo-Kazakh Relations

Kazakhstan arguably suffered more than any other former republic during the Soviet era, when about 40 percent of the population is thought to have perished in the 1932-33 famine, the Kazakh language and culture were repressed and the then-republic suffered severe ecological damage (at 551 the Semipalatinsk nuclear test site, the Aral Sea and Baikonur).F F To add insult to injury, in the early-1990s nationalists in Russia (including Vladimir Zhirinovsky and Aleksandr Solzhenitsyn) proposed re-drawing Kazakhstan’s border to include the “Russian zone” of the country in the Russian Federation. Almaty headed off the issue by its conciliatory stand by, for instance, transferring the capital to Akmola (renamed Astana) in the north of the country and relatively close to the Russian border. It also readily entered mutual security pacts, such as the CIS Collective Security Treaty. At the same time it openly courted security relationships with the West and NATO, paving the way for Kazakhstan’s “multi-vector” foreign policy. The introduction of its own currency enabled Kazakhstan to craft an independent foreign policy, even 552 while promoting regional economic integration and cooperation.F F

In spite of its historical hurt at Russian hands, Kazakhstan has been a key supporter of Moscow in the region. Educated Kazakhs speak Russian, rather than Kazakh, and nearly one-quarter of the population is of Russian origin. The Kazakh government has “enthusiastically” supported Russian attempts to create a single economic space in Central Asia, and Putin’s visit to Astana in 2004 paved the way for Kazakhstan to adopt an “increasingly pro-Russian leaning in its foreign 553 policy.”F F Russia probably rather takes Kazakhstan’s friendship for granted. As was mentioned earlier, four years ago Sergei Karaganov said of China that “No other state in Asia is more 554 friendly to us – apart from Kazakhstan.”F

6.3.2 Sino-Kazakh Relations

Kazakhstan is one of two states in the CIS with which China has strategic partnerships (the other being Russia). A Sino-Kazakh Mutual Cooperation Agreement was signed in December 2003, and the two countries signed a strategic partnership agreement in July 2005. China only shares 13 percent of Kazakhstan’s total border, but as has been seen, that stretch (notably the Alatau Pass- Alashankou gateway) has become increasingly important as a trade route. Holslag reported that China has bridged the 4,000-km between Almaty and Shanghai with “an impressive corridor of 555 railroads, highways, and pipelines.”F F Chinese projects to utilize greater amounts of water from the Ili and Irtysh rivers, which both flow into Kazakhstan and provide vital water to that country, 556 have generated concern among Kazakh officials and scholars.F F

551 Ziegler, “Russia and China in Central Asia,” pp.242-43. 552 Global Security Watch. Central Asia, pp.22-26. 553 Mankoff, Russian Foreign Policy, p.272. 554 Blank, Toward a New Chinese Order in Asia, p.6. As has been seen, four years later Karaganov worries that China will gain political and economic control of Russia east of the Urals (and later the “entire country”), but he seems to attribute this potential threat more to sins of omission by Russia than to hostile intent by China. 555 Holslag, “China’s Roads to Influence,” p.661. 556 Hanks, Global Security Watch. Central Asia, p.72.

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The Kazakhs, like the Russians, also worry about a growing number of illegal migrants from 557 China. In 2005, 34,000 Chinese citizens entered Kazakhstan.F F Perhaps this issue coloured the negative response to the 2004 survey in which respondents in three Central Asian states were asked which countries they found the most trustworthy. Only 19 percent of Kazakh respondents 558 cited China, compared with 80 percent who thought that of Russia.F F As noted elsewhere, Chinese economic penetration might also negatively affect public perceptions of China.

6.3.3 US-Kazakh Relations

The US has played a valuable role in Kazakhstan’s “multi-vector” foreign policy, has been the largest investor in its oil and gas sector (having invested around $15 billion by the end of 2006), and (as will be seen) has shared a mutually beneficial security partnership.

6.4 Energy

It is thought that the full development of Kazakhstan’s major oilfields could make it one of the world’s top five oil producers within the next decade. Oil production reached 1.54 million barrels per day in 2009, more than double the level of a decade earlier, and about six times the level of domestic oil consumption. Kazakhstan is already a major producer, and continued development of its giant Tengiz, Karachaganak, and Kashagan fields is expected to at least double its current production by 2019. In addition, steadily rising natural gas production is transforming Kazakhstan from a net gas importer to a net exporter.

The growth of hydrocarbon exports is written into the Kazakhstan’s national security doctrine. As noted earlier, Kazakhstan is dependent on pipelines that transit other countries – most notably Russia – to transport its hydrocarbons to world markets, but it is itself also a transit state, for exports from Turkmenistan and Uzbekistan. Despite being a significant oil exporter, Kazakhstan experiences regional and seasonal oil product shortages. Because most of the country’s oil and gas is produced in the western part, its industrialized northern and southern regions, lacking pipeline connections to the western oil and gas fields, rely on imports from Russia and Uzbekistan, respectively. Tengiz output is currently exported through the Caspian Pipeline Consortium (CPC) oil pipeline, which runs from Tengiz to Novorossiysk on Russia’s Black Sea coast. The Karachaganak field is in northwestern Kazakhstan, close to the Russian border, and is connected to the Tengiz-Novorossisk pipeline.

In January 2010, it was estimated that Kazakhstan’s proven natural gas reserves were 85 trillion cubic feet. Most of its reserves are located in the west of the country (the two largest natural gas producing fields – Karachaganak and Tengiz – are also the largest oil producing fields). Natural gas development has lagged behind oil due to the lack of domestic gas pipeline infrastructure linking the western producing region with the eastern industrial region as well as to insufficiency in export pipelines. However, Kazakhstan shifted from being a net natural gas importer to becoming a net exporter in 2009, and the Kazakhstan-China gas pipeline will enable the transport of gas to Kazakhstan’s industrial region as well as increased gas exports when it comes online in

557 Kerr, “Central Asian and Russian perspectives,” p.137, fn 25. 558 Ibid, p.137.

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2014. Currently, with regard to export, Kazakhstan serves mainly as a transit state for natural gas 559 pipeline exports from Uzbekistan and Turkmenistan to Russia and to China.F

6.5 Economy

Kazakhstan has far the strongest economy in Central Asia – it is in fact considerably bigger than the other four combined. In September 2002 Kazakhstan became the first country in the former Soviet Union to receive an investment-grade rating from a major international credit rating agency. Kazakhstan’s economy weathered the global crisis in 2009 and resumed fast growth in 2010 when its GDP expanded by 7.3 percent. However, the government worries about the country’s overreliance on oil and extractive industries (the “Dutch disease”), and has embarked on a diversification program, aimed at integrating into the wider global economy and developing targeted sectors, such as transportation, petrochemicals, food processing, pharmaceuticals, and telecommunications.

Kazakhstan faces the prospect of a severe shortage of labour, and its efforts to remedy the problem have geopolitical ramifications. The government has proposed leasing uncultivated farmland to Chinese farmers, and it has launched an initiative to attract the estimated four million Kazakhs living in the surrounding countries. These migrants are then sent to target regions to 560 offset the Slavic presence.F F

6.5.1 Russo-Kazakh Economic Relations

Kazakhstan is Russia’s most important partner in Central Asia, economically as well as politically. Before independence, 90 percent of Kazakhstan’s trade was with Russia; in 1999 Kazakh exports to Russia accounted for 20 percent of all exports, followed by China, which took eight percent of the country’s exports. Trade between the two countries more than tripled between 561 1995 and 2007, from $5.23 billion to $16.576 billion.F F In 2010, trade between Russia and Kazakhstan amounted to some $15.3 billion, with Russia enjoying a surplus of a little over $6.3 562 billion.F F

As other Central Asian states, Kazakhstan has benefited from the remittances sent home by its citizens in Russia, and Russians play a key role in its economy, being heavily concentrated in the scientific and technical sectors. The space launch and missile testing site leased by Russia at Baikonur has been an important economic asset for Kazakhstan.

559 “Kazakhstan Under the Spotlight in EIA Energy Report,” OilVoice, 18 November 2010 (http://www.oilvoice.com/n/Kazakhstan_Under_the_Spotlight_in_EIA_Energy_Report/f26373d69.aspx), accessed 29 July 2011. 560 Hanks, Global Security Watch. Central Asia, p.108. 561 Ziegler, “Russia and China in Central Asia,” p.252. 562 Sergei Blagov, “Russia and Kazakhstan Boost Bilateral Trade and Energy,” Eurasia Daily Monitor Jamestown Foundation), vol.8, no.64, 1 April 2011.

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6.5.2 Sino-Kazakh Economic Relations

Trade between China and Kazakhstan multiplied 35-fold between 1995 and 2007, growing from a 563 paltry $391 million to $13.8 billion,F F an infinitely more impressive performance than the growth in Russo-Kazakh trade over the same period. President Nazarbayev claimed that trade between 564 Kazakhstan and China in 2010 exceeded $20 billion.F F In that year China became Kazakhstan’s top export destination, when 17.6 percent of Kazakhstan’s trade went to China, compared to 5.9 percent that went to Russia. Oil and oil products constituted 56.3 percent of these exports, 565 followed by mining products, copper and brassware.F F In return, China has flooded Kazakhstan with cheap and poor quality Chinese goods. Thus, China seems to have surpassed Russia as Kazakhstan’s top trade partner, a far different situation to that which prevailed a dozen years ago.

In June 2011, Beijing announced the imminent opening of the China-Kazakhstan Khorgos International Border Cooperation Centre, under the auspices of the SCO and covering 5.19 km2 and straddling the border. During a visit to Astana by President Hu Jintao for the SCO heads of state meeting in June 2011 a $1 billion currency swap was agreed, and the China Development Bank loaned $15 billion to a Kazakh mining company to enable it to develop a large copper mine relatively close to the Chinese border. China also indicated that it would support Kazakhstan’s efforts to join the WTO.

In November 2010, Kazakh businessmen were invited to a trade show in Xinjiang. While the results were modest in terms of the contracts signed, they demonstrated the importance for China 566 of developing cross-border trade impacting Uighur- and Kazakh-populated regions.F

6.6 Security

At the time of independence, Kazakhstan was a nuclear-armed state, having been one of only four of the constituent republics where Soviet nuclear weapons had been based. In 1995 Kazakhstan removed its last nuclear warheads and completed the sealing of 181 nuclear test tunnels in May 2000. In this effort, Kazakhstan had a great deal of financial and technical assistance from the US, which also took more than a half-ton of weapons grade uranium from the country. In 1994 Kazakhstan joined PfP (the first regional state to do so), and after 9/11, it provided several facilities for the refuelling of US planes. In 2003 the US and Kazakhstan signed a five-year agreement under which the former would provide military equipment and assistance to modernize Astana’s armed forces. In return, Kazakhstan deployed a small number of troops to support the US effort in Iraq, but like its neighbours it has not contributed troops to the International Security 567 Assistance Force in Afghanistan (Mongolia is, in fact, the only Inner Asian country to do soF F). Since 2001, the US has also assisted Kazakhstan to combat illegal narcotics, improve border security and combat money laundering and trafficking in persons.

563 Ziegler, “Russia and China in Central Asia,” p.253. 564 “China, Kazakhstan eye doubling of trade,” Chinamining.org (China Mining Association), 14 June 2011. 565 China – Now Kazakhstan’s top export destination, Renaissance Capital, Strategy Equity Research, Strategy Kazakhstan, 19 January 2011. 566 Farkhad Sharif, “China’s Expansionist Policy Toward Kazakhstan Takes a New Turn,” Eurasia Daily Monitor (Jamestown Foundation), vol.7, no.9, 17 November 2010. 567 Each one of the six countries that border Afghanistan has been allergic to military participation there.

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6.6.1 Russian-Kazakh Security Relations

For both geographical and demographic reasons, Astana sees Russia, rather than the US, as the 568 main guarantor of its security.F F Since the start of the 2000s, Russia has supplied Kazakhstan 569 with large quantities of military equipment, usually at preferential prices.F

6.6.2 Sino-Kazakh Security Relations

As noted earlier, Kazakhstan has the largest Uighur diaspora in Central Asia, numbering 210,300 in 1999, and therefore comes under close Chinese scrutiny, the more so since the bulk of the émigré community is in the Almaty area, less than 400-km from the Chinese border. In the early- 1990s the Kazakh government allowed émigré opponents of China to operate freely, and there was considerable popular sentiment in Kazakhstan in favour of the Uighur cause. Under Chinese pressure, by 1997 Kazakhstan – in concert with other Central Asian states – was restricting the activities of Uighur residents. In June 1997, the Uighur Revolutionary Front in Almaty stated that Uighur groups no longer counted on Kazakhstan and Kyrgyzstan to secure the independence of Xinjiang. Uighur leaders in Kazakhstan were not safe from attack. Ashir Vahidi, the leader of the Uighur Liberation Organization, was badly beaten by intruders in his home in Almaty in 1998, dying a few months later. Dilbirim Samsakova, the founder of a charitable organization that supported Uighur women from China and Central Asia, disappeared in Almaty in May 2001, and her battered body was found two weeks later. The Kazakh government kept up the pressure on Uighur organizations, and in 2002-3 extradited alleged Uighur “separatists and terrorists” to China.

During President Hu Jintao’s visit to Astana in June 2011, he and President Nazarbayev concluded an “All-Round Strategic Partnership.” In it, Kazakhstan endorsed the Chinese position on Taiwan, and each party affirmed that it would not “permit the establishment on our soil of organizations and groups that seek to damage the other side’s sovereignty, security, and territorial 570 integrity, nor will we permit their activities.”F F A week before this agreement was concluded Kazakhstan extradited to China a Uighur who helped to publicize the Chinese suppression of the 571 Urumqi riots. The Chinese accused him of having links to Uighur and Uzbek militants.F F In addition, Uighurs with Kazakh citizenship were prevented from attending a Uighur conference in Washington and the Kazakh authorities redoubled their efforts to restrict Uighur political, social 572 and cultural activities.F

6.6.3 Internal Security

Southern Kazakhstan contains significant minorities of Uzbeks and Karakalpaks, and tends to hold a higher proportion of devoted Muslims than in the rest of the country. Yet even there

568 Mankoff, Russian Foreign Policy, p.273. 569 Laruelle, “Russia and Central Asia,” pp.166-67. 570 Roger McDermott, “Kazakhstan Looks East: Sino-Kazakh Strategic Partnership Deepens,” Eurasia Daily Monitor (Jamestown Foundation) vol.8, no.128, 5 July 2011. 571 Richard Orange, “Kazakhstan extradites Uighur who helped publicise China’s brutal suppression of riots,” Daily Telegraph, 6 June 2011. 572 Hannah Beech, “China’s Uighur Problem: One Man’s Ordeal Echoes the Plight of a People,” Time, 28 July 2011.

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religiosity tends to be lower than in Uzbekistan or Tajikistan. Although (as noted earlier) the incidence of religious extremist violence has been very low in Kazakhstan, since the late-1990s the government has developed an increasingly oppressive policy towards religion, Islam in 573 particular.F F As noted, the ICG observed that social tensions are likely to rise within a growing rural underclass, and it is precisely in the south that this potential source of unrest is located.

573 Hanks, Global Security Watch. Central Asia, pp.62-64.

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7 Kyrgyzstan

Kyrgyzstan is a much smaller and more volatile country than Kazakhstan. Its longest border is with Kazakhstan, but it also borders China, Tajikistan and Uzbekistan. With the two latter, Kyrgyzstan has sovereignty over part of the unruly and fertile Fergana Valley. The population numbers 5,587,443, with a density of 29.13 people per km2, five times that of Kazakhstan. It is probably somewhat more homogeneous than Kazakhstan, but has a significant and increasingly disaffected Uzbek minority. According to the 2009 census, Uzbeks comprise about 14.5 percent of the population, but all except about 30,000 of them live in the south in fairly concentrated groupings (notably in the city of Osh). Russians constitute 7.9 percent of the population; there 574 were more than twice as many Russians in the country in 1990 as there are now.F F

7.1 Political Stability

Kyrgyzstan has undoubtedly been the least stable country in Central Asia (although Tajikistan began its independent existence with a bloody civil war, it has been stable since). In the early- 1990s, Kyrgyzstan was known as an “island of democracy” in Central Asia – a reputation that attracted foreign investment – but soon deviated into the pattern of authoritarianism typical of the region. However, in strong contrast with the other four countries of Central Asia, two presidents have been overthrown by mass public protests. In addition there has been considerable ethnic conflict in Kyrgyzstan. The International Crisis Group study referred to earlier describes 575 Kyrgyzstan as being “already in dire straits.”F F Most foreign diplomats, international officials and other observers feel that the government has failed to stamp its authority on the country, with 576 the situation being especially bad in the south, which “remains outside of central control.”F

Kyrgyzstan is the only Central Asian country that is not classified as “Not Free” by Freedom House. However, the rating of “Partly Free” is for 2010, when a popular uprising overthrew the president. It remains to be seen whether Kyrgyzstan will revert to its usual rating of “Not Free.” 577 For 2010 it was assessed a four for political rights, and a three for civil liberties. F F The International Telecommunication Union estimates the number of Internet users at 40.03 percent 578 of the total population in 2009, and fixed line and mobile subscribers in 2007 at 49.85 percent.F F Although such numbers put Kyrgyzstan well ahead of all the other Central Asian states apart from Kazakhstan, these communications means do not seem to have played a significant mobilizing role during the 2010 Kyrgyz revolt. Evgeny Morozov, an authority on the new media in the former Soviet bloc, concluded that no one used Twitter to organize anything, noting how disorganized and spontaneous the entire revolution was: “Bottom line: new media played no visible role in organizing the protesters and some role in broadcasting what was happening to the

574 ICG, The Pogroms in Kyrgyzstan, Asia Report No.193, Brussels/Bishkek: ICG, 23 August 2010, p.1 and fn.2. 575 ICG, Central Asia: Decay and Decline, p.i. 576 ICG, The Pogroms in Kyrgyzstan, p.i. 577 Freedom in the World 2011. The Authoritarian Challenge to Democracy, p.14. 578 Kazakhstan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/245- kazakhstan-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011.

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579 th rest of the world.”F F Corruption also takes a severe toll on governance. Kyrgyzstan ranked 164 580 out of 178 countries on Transparency International’s corruption perceptions index for 2010.F

After President Bakiyev’s overthrow his successor, Roza Otunbayeva, took office in April and organized a referendum in June 2010, by which voters approved a new constitution. The 2010 constitution is intended to limit presidential power and enhance the role of parliament and the prime minister. However, the referendum also confirmed Otunbayeva as President until 31 581 December 2011.F

7.2 Economic and Social Situation

Kyrgyzstan’s manufacturing sector never recovered after industrial inputs and export markets disappeared in the wake of the collapse of the Soviet Union, and the country is extremely dependent on the remittances of its migrant workers (as noted, the World Bank estimated in 2008 that remittances accounted for roughly 30 percent of Kyrgyzstan’s GDP). It ranked 109th out of 169 countries on the UNDP Human Development Index in 2010, the second worst of the five 582 Central Asian states.F

Nevertheless, Kyrgyzstan reported a 5-6 percent annual average GDP growth during the period from 2000 to 2008. However, Kyrgyzstan was the only country in the former Soviet Union not to experience a rise in GDP in 2010. Its economy was doing well in the first quarter of 2010 before being decimated by a national uprising in April and the deadly ethnic clashes which followed in June. Yet although the instability destroyed a lot of infrastructure and businesses, in January 2011 the government predicted reasonable growth for 2011. Gold dominates Kyrgyzstan’s exports, which means that the country should benefit from the surge in prices of the precious metal, and significant growth is also hoped for in agriculture and electricity, especially given the high water levels at the Toktogul hydropower plant. Kyrgyzstan also has a unique regional advantage because of its WTO membership, which it can use to attract investment and access a large number 583 of markets.F F There is also a large market for electricity in South Asia, where peak demand is in the summer months when demand happens to be at its lowest in Central Asia.

These optimistic expectations are not universally shared. In December 2010, the Central Asian Free Market Institute (CAFMI) surveyed leaders at 19 of Kyrgyzstan’s largest business and business associations, and concluded that official estimates of GDP growth of 6.1 percent and inflation of 7.5 percent were misplaced. Instead, the respondents predicted that business activity, confidence in the economy and purchasing power would decline. They anticipated that the cost of services could increase by 16.2 percent, industrial products by 14.4 percent, and groceries by 21.3 percent. In December 2010 the cost of flour and bread rose by 25 percent when compared to December 2009, fruits and vegetables by 12.7 percent, and meat by 11.9 percent. The director of research at CAFMI warned that meat would be out of the question for some households,

579 Evgeny Morozov, “Kyrgyzstan’s ‘Analog Revolution’,” Foreign Policy, 8 April 2010. 580 Transparency International, Corruption Perceptions Index 2010. 581 Background Note: Kyrgyzstan, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 18 August 2011 (http://www.state.gov/r/pa/ei/bgn/5755.htm), accessed 21 August 2011. 582 Human Development Report 2010, p.145. 583 Jax Jacobsen, “Kyrgyz economy down but not out, say experts,” Central Asia Economy Newswire, 23 March 2011.

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584 especially in rural areas.F F A UNDP economic expert warned that food prices would still cause problems for many among the urban poor and those poor rural households that do not produce 585 food for the market.F F

Kyrgyzstan performs moderately on the UN Food and Agriculture Organization assessment of food insecurity, rating a three on the five-point scale, and is also in the middle of the pack in Central Asia. According to the FAO, 10 percent of the population was undernourished in 2005- 586 7.F F However, the World Bank stated that 51.9 percent of Kyrgyz lived on less than $2 per day in 587 2008.F F

The social impact of Kyrgyzstan’s economic weakness has already been painfully apparent. Kyrgyz experts say that in the next few years there will be no teachers for the children and no doctors to treat the sick. The shortage of teachers is so acute that already 41.5 percent of educators are retirees, but their job is made harder by the fact that fewer than 40 percent of pupils have textbooks. Unofficial estimates indicate that around 120,000 children do not attend school. One foreign donor says that recent test results show that the longer a pupil stays in school, the 588 worse that pupil becomes.F

Infrastructure is in equally disastrous state, with power failures becoming increasingly common and roads decaying. While Kyrgyzstan has great hydropower potential, it is largely untapped, and the country faces disastrous shortages in power supply. The ICG study attributes the overthrow of 589 the Bakiyev government to large-scale protests against heavy increases in energy tariffs.F F As a landlocked country, Kyrgyzstan is heavily dependent on roads for trade and commerce. Yet one- fifth of all the roads in Kyrgyzstan have deteriorated beyond the point of rehabilitation, and in 2010 the government inspected 43 percent of the national roads and found all of them in an 590 unsatisfactory condition.F

Crucially, the south has been particularly hard-hit economically. The Osh and Jalalabad regions account for 44 percent of the country’s population, and the government classifies half the population of the former, and 40 percent of the latter, as poor (that is, earning less than $38 per month). A 2007 study showed that 55.5 percent of Uzbek heads of household were described as 591 poor, compared to 47 percent of Kyrgyz.F

As has been discussed earlier, one of Kyrgyzstan’s few riches is water, yet even that contains the seed of conflict, especially with Uzbekistan. For instance, when Kyrgyzstan said in 2002 that it would develop a fee scale for water usage by downstream states, Tashkent retaliated a few months later by shutting off natural gas supplies to Kyrgyzstan just as winter was beginning. Kyrgyzstan’s neighbours have been very critical of its efforts to expand the number of its

584 Deirdre Tynan, “Pessimistic Forecast for Kyrgyzstan’s Tattered Economy,” EurasiaNet.org, 18 January 2011. 585Ibid. 586 The State of Food Insecurity in the World, p.50. 587 Kyrgyzstan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/238- kyrgyzstan-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011. 588 ICG, Central Asia: Decay and Decline, p. 10. 589 Ibid, p.i. 590 Ibid, p.16. 591 ICG, The Pogroms in Kyrgyzstan, pp.1-2.

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hydroelectric dams, which they suspect will have the effect of curtailing the water supply to downstream states. Hanks argues that “The potential for conflict over water between Kyrgyzstan and Uzbekistan appears to be growing on a yearly basis, and no legal structure is in place to deal 592 with Central Asia’s water issues.”F

7.3 Internal Security Environment

As the data on poverty cited above clearly imply, there is a serious potential for violence in Kyrgyzstan’s geographic and demographic make-up (especially given that discontent over energy prices generated enough anger to lead to the overthrow of a president). Exemplifying the ethnic tensions in Kyrgyzstan, citizens commonly refer to each other as “northerners” (Kyrgyz) and “southerners” (Uzbeks). Socio-economic and ethnic differences are compounded by religious 593 ones. The Uzbeks have for centuries followed a stricter interpretation of Islam.F F

In June 1990, on the eve of the collapse of the Soviet Union, there were serious ethnic clashes between Kyrgyz and Uzbeks in Osh. At that time, economic discrepancies favoured the Uzbeks, one result of which was that aggrieved Kyrgyz demanded that land belonging to an Uzbek collective farm be redistributed. The situation spiralled out of control and riots broke out, with the 594 worst violence occurring in the cities of Osh and Uzgen; at least 600 people died.F F Almost exactly twenty years later, in June 2010 there was an occurrence of the ethnic violence in Osh and also, to a lesser degree, Jalalabad. By the official count, made two months later, 393 people – mostly Uzbeks – died, and over 2,000 buildings were destroyed. About 120,000 refugees fled into 595 Uzbekistan.F F

Political violence in Kyrgyzstan has not been confined to ethnic clashes. There was no significant violence during the “Tulip Revolution” that overthrew President Akayev in March 2005, simply because by then the regime was utterly enfeebled. However, the street protests that erupted in April 2010 and led to the overthrow of President Bakiyev were much more violent and left at least 86 dead. During that summer, the provisional government “failed signally to reassure the population that it was in charge… As weeks went on, insecurity worsened, with waves of panic 596 passing through Biskek and northern towns.”F F There were a number of bombings, actual and attempted, in Bishkek between September and December 2010 – some in connection with the trial of former members of the Bakiyev government – and alleged militants killed three policemen in January 2011.

The inter-ethnic violence in Kyrgyzstan is not the only non-state threat in the country that is of concern to the international community. The southern part of the country is an established part of the trail of the IMU and its offshoot, the Islamic Jihad Union (IJU), on their way from Afghanistan via Tajikistan and Kyrgyzstan to Uzbekistan and even on to Europe. Western and

592 Hanks, Global Security Watch. Central Asia, p.31. 593 Ibid, p.30. 594 ICG, The Pogroms in Kyrgyzstan, p.1. 595 Ibid, p.i. 596 Ibid, p.5.

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regional security officials have long believed that the Osh and Jalalabad regions have been used 597 by the IMU and the IJU as safe havens.F F

Like water, this issue too has provoked spats between Bishkek and Tashkent. In 1999 IMU fighters entered the Batken region of Kyrgyzstan, adjacent to the border with Uzbekistan. They re-entered Kyrgyzstan the following year. In response, the Uzbek air force bombed some positions held by the rebels, resulting in civilian casualties, and the Uzbeks also mined sections of the joint border, killing several innocent people. Only half of the Kyrgyz-Tajik border has been demarcated, with the natural corollary that it, too, has been a source of strife over land ownership and water access. Kyrgyz officials claim that there were some two dozen incidents of abductions and beatings involving Kyrgyz and Tajik communities along the border, and the situation appears 598 to have deteriorated in 2011.F F This is yet another conflict that can potentially be exploited by militants.

Although to this point there has been no sign that extremist groups enjoy much of a popular following in Kyrgyzstan, and acts of violence associated with Islam have typically involved only a few individuals, the fear is that the spiralling ethnic tensions in the south will turn even 599 moderate Uzbek opinion in favour of groups like the IMU.F

7.4 External Involvement in Kyrgyzstan

Unlike Kazakhstan, Kyrgyzstan’s interest for extra-regional powers is not natural resources or economic prospects, since it has little of any of these, but rather for its instability which it appears incapable of dealing with effectively by itself. The 1990 Osh riots were brought under control because elite Soviet troops were available to quell the unrest. In the current situation, the security forces often take sides. A senior Kyrgyz security official told the ICG in July 2010 that “all aspects of state power are corrupt – police, military, state security, border guards, the prosecutors, 600 the courts, everything.”F

7.4.1 Russian Involvement

601 The ICG condemns the international response to the Osh violence as “inglorious.”F F For Russia, Kyrgyzstan is the weakest link in Central Asia. As was noted earlier, in the discussion of the CSTO, during the ethnic clashes in June 2010, the interim Kyrgyz president asked for help from the Collective Rapid Reaction Force, but was rebuffed. President Medvedev refused to intervene on the ground that the rioting was an internal affair, but Russian officials are said to have been concerned that Kyrgyzstan would become a quagmire. The ICG claims that since the Osh riots 602 “Russia…has predicted the country’s disintegration.”F F A Kyrgyz official noted that both Russia 603 and the US have military bases in his country, but “Neither gave us anything.”F F In the wake of

597 Ibid, p.23. 598 Alisher Khamidov, “Kyrgyzstan-Tajikistan: Clashes on Volatile Border Growing Vicious,” EurasiaNet.org, 20 April 2011. 599 ICG, The Pogroms in Kyrgyzstan, p.ii. 600 Ibid, p.5. 601 Ibid, p.ii. 602 Ibid, p.ii. 603 Ibid, p.21.

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the Osh riots the OSCE offered to send 52 unarmed police monitors to southern Kyrgyzstan, but 604 the initiative was aborted, in part apparently owing to Russian opposition.F

Russia may have taken a hands-off approach to the political violence in Kyrgyzstan, but it has provided bilateral loans – apparently with few conditions or accountability – to enable Bishkek to 605 complete large-scale projects in the energy sector.F F Moscow has also supplied Kyrgyzstan with military equipment in return for being given access to the air base at Kant (where a couple of 606 years ago there were thought to be around 700 Russian personnelF F). From a low base, trade between the two countries more than quintupled between 1995 and 2007, from $206 million to 607 $1.169 billion, Russia’s best relative performance in Central Asia.F

7.4.2 Chinese Involvement

China did not endear itself to Kyrgyz in the late-1990s by its stand on border demarcation, which provoked fierce public and parliamentary opposition. A group of deputies even launched an initiative to impeach President Akayev over the issue. It has been claimed that dissatisfaction with 608 the border demarcation dispute was one of the factors behind the “Tulip Revolution.”F F Time has probably assuaged that anger, but the 2004 survey cited earlier found that only 26 percent of Kyrgyz respondents felt that China was the most trustworthy of the country’s neighbours, far behind the 82 percent who thought that of Russia.

In security terms, China has had a relatively low profile in Kyrgyzstan. In July 2002 and 2003 the two countries conducted joint military exercises, and China also provided military aid. However, when Bishkek most needed the support, China’s reaction to the inter-ethnic crisis in mid-2010 was no more helpful than that of Russia. A senior Kyrgyz official said that China was “silent” 609 during the ethnic clashes.F F As noted earlier, the SCO – which is Chinese-led – remained “surprisingly disengaged” during the crisis. However, China shares an 858–km border with Kyrgyzstan, and Beijing does indeed seem to have been disturbed by the events there in 2010. Beijing had a good relationship with President Bakiyev, who kept the Uighurs in Kyrgyzstan under tight control. In addition, the uprising was accompanied by some anti-China incidents. In 610 its wake, senior Chinese officials rushed to Urumqi to assess their response to the event.F

The Uighur presence in Kyrgyzstan is fairly limited – the 1999 census found that there were 46,733 Uighurs living in the country – but like the one in Kazakhstan, it has also come under pressure. Nigmatulla Bazakov, the president of the Uighur group Ittipak (“Friendship”) in Kyrgyzstan, was shot dead outside his home in Bishkek in March 2000. In May 2002, the Kyrgyz authorities extradited to China two Uighurs who Bishkek claimed were responsible for the attack.

604 Vicken Cheterian, “Kyrgyzstan: Central Asia’s Island of Instability,” Survival, vol.52, no.5, October- November 2010, pp.23-24. 605 ICG, Central Asia: Decay and Decline, p.13. 606 Klein, Russia’s Military Capabilities, p.20. 607 Ziegler, “Russia and China in Central Asia,” p.252. 608 Ann McMillen, “Xinjiang and Central Asia. Interdependency – not integration,” in Colin Mackerras and Michael Clarke, eds., China, Xinjiang and Central Asia. History, transition and crossborder interaction into the 21st century, London, New York: Routledge, 2009, p.98. 609 ICG, The Pogroms in Kyrgyzstan, p.22. 610 Bhaskar Roy, Is China Preparing for Strategic Intervention, Paper No.3807, Noida, New Delhi: South Asia Analysis Group, 12 May 2010.

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A few days later, as an expression of gratitude for their cooperation, the Chinese Public Security Ministry presented the Kyrgyz police with twelve police trucks in a televised ceremony at the 611 China-Kyrgyzstan border.F F In February 2002, fire broke out at the Tour bazaar, which had been a major place of business for Uighur merchants since 1996. Uighur witnesses claimed that fires broke out simultaneously in several different places in the bazaar and that water service to the place had been cut off, making it difficult to fight the blaze. The bazaar had suffered fires in the 612 past.F F Shortly before the SCO meeting in Astana in June 2011, two Uighur activists in Kyrgyzstan were prevented from attending the Uighur conference in Washington, on the grounds 613 that the meeting would harm Sino-Kyrgyz ties.F

As noted, of five major public highway routes into Xinjiang that are used extensively by drug 614 smugglers, three go via Kyrgyzstan.F

On the economic front, China has provided bilateral loans for the energy sector, with the goal of importing electricity to the Kashgar region, although it has raised obstacles to building additional transmission lines. Despite the comparatively lengthy border between China and Kyrgyzstan, in 2008 there were only two major entries from Xinjiang. Kyrgyzstan has secured international loans (notably from the Asian Development Bank, or ADB) to rehabilitate the Bishkek-Naryn- Torugart highway, which carries over half the country’s trade with China, and improve the border 615 infrastructure.F F Progress has been slow, and by July 2011 the ADB reported that the project was 616 only 28 percent completed.F F The other road goes southwest from Kashgar, entering Kyrgyzstan at Irkeshtam and then heading towards a junction where one road leads north to Osh and the other 617 south to Dushanbe in Tajikistan. Beijing has commenced revamping both these roads.F

Initiatives such as these appear to be paying dividends. Trade between the two countries 618 multiplied more than sixteen-fold between 1995 and 2007, from $231 million to $3.78 billion.F F Thus, by 2007 China had far surpassed Russia as a trading partner for Kyrgyzstan, exchanging with it more than three times the value of Russo-Kyrgyz trade. It does appear that proximity to China is an advantage.

7.4.3 US Involvement

As discussed earlier, Washington will share Chinese and Russian concern about the security situation in Kyrgyzstan, although probably on a nearer-term basis: about 50,000 US military personnel pass through Manas airport each month on their way to or returning from 619 Afghanistan.F F Bishkek has leveraged Russian interest in the elimination of the US military

611 James Millward, Violent Separatism in Xinjiang: A Critical Assessment, Policy Studies 6, Washington, DC: East-West Center, 2004, p.20. 612Ibid, p.21. 613 Beech, “China’s Uighur Problem: One Man’s Ordeal .” 614 Tanner, China Confronts Afghan Drugs, p.18. 615 International Crisis Group, Central Asia: Decay and Decline, p.16. 616Asian Development Bank, CAREC Transport Corridor 1 (Bishkek-Torugart Road) Project : Kyrgyz Republic, Manila: ADB (http://pid.adb.org/pid/LoanView.htm?projNo=39674&seqNo=02&typeCd=2& projType=GRNT), accessed 15 August 2011. 617 Holslag, “China’s Roads to Influence,” p.647. 618 Ziegler, “Russia and China in Central Asia,” p.253. 619 ICG, The Pogroms in Kyrgyzstan, p.20.

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presence to get better terms out of Washington, but several incidents involving NATO personnel at the base has not endeared the Western occupancy of the base to local opinion.

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8 Tajikistan

Tajikistan shares two characteristics with Kyrgyzstan that will doubtless concern Beijing: instability and proximity to Xinjiang, with which the Central Asian state shares a 414-km border. Tajikistan borders two other countries, Kyrgyzstan and Uzbekistan, and the three share the volatile Fergana Valley. The population of 7.62 million appears to be reasonably homogeneous. According to the 2000 census, Tajiks constituted 79.9 percent of the population, Uzbeks 15.3 percent, and Russians and Kyrgyz 1.1 percent each. In 2003 it was estimated that 85 percent of 620 the population were Sunni Muslims and a further 5 percent Shia.F

Tajikistan is home to some of the highest mountains in the world, and 93 percent of the country is mountainous, with altitudes ranging from 1,000-ft to 27,000-ft and nearly 50 percent of the country’s territory above 10,000-ft. This difficult terrain is a barrier to economic and political integration. The eastern province of Gorno-Badakhshan, located in the Pamir Mountains, makes up 45 percent of the land area of the country but only three percent of the population, the majority of them Ismaili Shia. The Uzbek part of the population lives near the border with Uzbekistan. These demographic and geographic differences contribute to the volatile political situation of the country.

8.1 Political Stability

Emomali Rahmon first acceded to power in November 1992, at the start of the civil war, and still runs Tajikistan. After the civil war came to a close in mid-1997, the government managed to co- opt many of the opposition leaders, disqualify others from electoral participation and integrate insurgent fighters into the regular armed forces. Since then power has been consolidated into the hands of a relatively small number of individuals. Rahmon has retained power by means of a flawed referendum in 2003 that extended the presidential re-election limits. International observers concluded that the parliamentary elections in 2005 and 2010, and the presidential elections in 2006, failed on many basic democratic standards.

While incumbent longevity implies political stability, if sometimes closer to stasis and brittleness, 621 the ICG has observed “early signs of a succession battle to replace” Rahmon.F F It has also warned that a sharp decline in basic services played a significant role in the unrest that led to President Bakiyev’s overthrow in Kyrgyzstan, and said that it “could well play a similar role in 622 other countries, notably Tajikistan, in the not too distant future.”F F

The risk that protests could erupt and spiral into violence could be compounded by a spill-over of the increasing instability in Afghanistan, with which Tajikistan shares a highly porous border of 1,206-km. However, for the present a combination of harsh repression and extensive labour migration have averted instability on the Kyrgyz model.

620 Entry for Tajikistan, the CIA World Factbook (https://www.cia.gov/library/publications/the-world- factbook/geos/ti.html), accessed on 15 August 2011, 621 ICG, Central Asia: Decay and Decline, p.2. 622 Ibid, p.i.

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The ICG was as excoriating of governance in Tajikistan as it was of Kyrgyzstan, warning that 623 Tajikistan was equally “in dire straits.”F F And the two score almost equally badly with regard to corruption. Tajikistan’s ranking of 154th on Transparency International’s corruption perceptions 624 index for 2010 was rather lowly, but no worse than Russia’s.F F Tajikistan, like all but one of the regional states, is rated “Not Free” in Freedom House’s assessment of political rights and civil 625 liberties.F F In its country profile of Tajikistan, the US State Department points to flaws in recent elections and the 2003 constitutional referendum and adds: “Lack of transparency in the legislative process and significant concerns regarding due process demonstrate the weakness of civil society in the country. Corruption is pervasive, and numerous observers have noted that 626 power has been consolidated into the hands of a relatively small number of individuals.”F

The International Telecommunication Union estimates the number of Internet users in Tajikistan at 10.07 percent of the total population in 2009, and fixed line and mobile subscribers in 2007 at 627 39.93 percent.F F In April 2011, Tajikistan experienced its first Facebook-organized protest when about 30 people took part in a brief demonstration in Dushanbe.

8.2 Internal Security Environment

At the outset of this section it was stated that Tajikistan is unique in the region in its experience of prolonged civil war (1992-97). That conflict is thought to have cost between 50,000 and 100,000 628 lives.F F The war began when Rahmon distributed arms to his supporters and tried to purge his opponents, provoking serious riots.

The two sides were differentiated by ideology and geography. Rahmon’s forces largely comprised former Communist Party officials and supporters, while the opposition was primarily made up of democratic reformers and Islamist groups, although regional and clan loyalties were also a major factor. The pro-regime forces largely hailed from Sughd province (in the north, bordering Uzbekistan and Kyrgyzstan) and the Khatlon region in the southwest, bordering Uzbekistan; they received the backing of Russia.

The opposition was primarily based in the area of Garm (Rasht region) in the centre-east and in Gorno-Badakhshan. It was centred on the Islamic Renaissance Party of Tajikistan (IRPT), which was officially recognized at the end of 1991 and received 30 percent of the vote in elections in November 1991 (two months after independence). The IRPT was the main target of the government crackdown in May 1992, and much of the IRPT leadership sought refuge in Afghanistan, whence they coordinated the guerrilla war against the Rahmon regime. When the civil war broke out the local government in Gorno-Badakhshan declared independence from Tajikistan, and the province became a bastion for the opposition.

623 ICG, Central Asia: Decay and Decline, p.i. 624 Transparency International, Corruption Perceptions Index 2010. 625 Freedom in the World 2011, p.16. 626 Background Note: Tajikistan, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 26 July 2011 (http://www.state.gov/r/pa/ei/bgn/5775.htm), accessed 21 August 2011. 627 Kazakhstan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/245- kazakhstan-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011. 628 Hanks, Global Security Watch. Central Asia, p.35.

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After the Taliban seized Kabul in September 1996, both sides in Tajikistan felt pressured to reach agreement. Most factions feared that a total victory for the largely Pashtun Taliban could threaten the existence of the Tajiks as a people (Tajiks formed the heart of the Northern Alliance opposition to the Taliban). A peace accord was signed in Moscow in June 1997. It provided that 30 percent of government posts would be handed to the United Tajik Opposition (UTO), and that UTO fighters would integrate with government forces. The two sides in the civil war showed a commitment to work together to resolve their differences in the post-war environment, despite the democratic failings in Tajikistan’s electoral process over the dozen years following the peace accord. It had been widely assumed that this conciliatory approach reflected a fear of a renewal of the violence. The ICG argues that the emergence of a new generation of fighters, with little 629 memory of the civil war, punctures that assumption.F F

The ancestors of the Tajiks lived primarily in cities from an early date, and therefore were much more profoundly influenced by Islam than were the traditionally nomadic peoples of the region. Nevertheless, rigid, doctrinaire and intolerant currents in Islam historically found little support among Tajiks. This may well have changed during the past two decades. The ICG has detected a polarization in Tajik society, and observed that the “outward signs of observant Islam are growing 630 rapidly and perceptibly.”F F As elsewhere, another indicator of such a transformation is the first appearance of suicide bombing. A previously unknown Islamist group calling itself Jamaat Ansarullah claimed responsibility for a suicide bombing of a police station in the northern city of Khujand in September 2010.

There have been other, more threatening, signs of a renewed Islamist threat to the government. The ICG reports that for several years there has been a limited infiltration of armed guerrillas from Afghanistan. Their numbers are small, and some pass through to other countries, but some are probing for Tajik government vulnerabilities. These insurgents include a number of fighters from the North Caucasus. In mid-2009 a “limited” incursion from Afghanistan “severely stretched” the government. The situation deteriorated in 2010. A small group of insurgents in the Rasht region took a heavy toll of security forces, notably in an ambush in the Kamarab Gorge in mid-September that killed up to three dozen security force personnel. The government was forced to do a deal with a former UTO commander, who killed a number of the guerrillas in April 2011 to bring a temporary peace to the area.

The Tajik government seems to be doing little more than holding the line, mainly by making deals with the fighters it was trying to dislodge or destroy a few months earlier. In fall 2010, a 631 senior US official said “we thought he (Rahmon) was more in control of his country.”F F An 632 experienced international observer described Tajikistan as an “easy knock-over.”F F In February 2011, Director of US National Intelligence James Clapper commented that Dushanbe had become “potentially more vulnerable to an Islamic Movement of Uzbekistan with renewed interests in 633 Central Asia.”F F However, for now the ICG believes that the IMU has yet to take its fight across

629 ICG, Tajikistan: The Changing Insurgent Threats, p.i. 630 Ibid, p.16. 631 Ibid, p.5. 632 Ibid, p.13. 633 Ibid, p.10.

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the Tajik border, possibly motivated by a belief that Afghanistan is the central international 634 obligation of all jihadists.F

The Rahmon regime has other, less acute, worries with regard to domestic order. As noted in the section on Kyrgyzstan, only half of the Kyrgyz-Tajik border has been demarcated, and one result has been a number of abductions and beatings involving Kyrgyz and Tajik communities along the 635 border, with the situation appearing to deteriorate further in 2011.F F Uzbekistan has tightened its border with Tajikistan over the water issue, which leaves Kyrgyzstan as Tajikistan’s only transit country to Kazakhstan and Russia. Thus, Dushanbe is increasingly dependent on Bishkek’s goodwill, and therefore unwilling to confront Bishkek over the border confrontations, with the 636 risk that Tajik border communities might take the law into their own hands.F

8.3 Economic and Social Situation

Tajikistan is reckoned to be Central Asia’s poorest state and it is the only regional country to have experienced prolonged civil war. As a corollary, its social indicators are very poor. It ranked 112th out of 169 countries on the UNDP Human Development Index in 2010, the worst of the five 637 Central Asian states.F F Although IMF data show that Tajikistan enjoyed real GDP growth averaging eight percent per year between 2000 and 2010, GDP per capita, at purchasing power parity, was estimated by the IMF to be only $2,028 in 2009 (compared with $2,363 in Kyrgyzstan and $13,484 in Kazakhstan). According to the World Bank 50.8 percent of Tajiks lived on less 638 than $2 per day in 2008.F F Tajikistan performs far the worst of the Central Asia countries on the UN Food and Agriculture Organization assessment of food insecurity, rating a four on the five- 639 point scale. According to the FAO, 30 percent of the population was undernourished in 2005-7.F

Tajikistan is precariously dependent upon exports of cotton and aluminum. As noted before, the World Bank estimated in 2008 that remittances from migrant workers accounted for roughly 50 640 percent of the Tajik GDP,F F probably the highest such rate in the world and making Tajikistan vulnerable to the actions taken by other governments. Another population exodus – that of thousands of Russians, many of them skilled – has been less helpful to the economy. Like Kyrgyzstan, Tajikistan has considerable potential for electricity exports, but it is bedevilled by inefficiency and corruption, as well as by opposition from Uzbekistan to the development of hydroelectric dams on Tajik rivers. The classic example of this situation is the Rogun dam, which Tajikistan has struggled to build for over 30 years. It is the pet project of President Rahmon – he sees it as his legacy to the country – and the Uzbek government has warned that its site is one of 641 the most seismically active in the world.F F

634 Ibid, p.14. 635 Khamidov, Kyrgyzstan-Tajikistan: Clashes on Volatile Border.” 636 Ibid. 637 “The Real Wealth of Nations,” p.145. 638 Tajikistan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/165- tajikistan-gdp-country-report.html#axzz1V8QFlT5D), accessed 15 August 2011. 639 The State of Food Insecurity in the World, p.50. 640 Hanks, Global Security Watch. Central Asia, p.107. 641 ICG, Central Asia: Decay and Decline, p.14.

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Much of the administrative dysfunction that was noted of Kyrgyzstan applies equally to Tajikistan. The ICG states that the two governments “cannot tackle the fundamental challenge of managing their own countries.” The Tajik government funds only 18 percent of all healthcare expenditures in the country, with the result that its health system is “entering a steep decline in all respects.” Not only does it face a shortage of medical personnel, it is becoming more vulnerable to epidemics – as a large-scale polio outbreak in 2010 demonstrated. Education is in a similarly parlous state in Tajikistan. In 2007, 80 percent of schools needed major rehabilitation, and up to 100,000 children do not attend school. Infrastructure is in no better shape. In winter 2007-8 the government was unable to provide power for weeks, and the country went pitch dark; there were similar large-scale power failures in 2009. Landlocked like the other regional states, Tajikistan is very road-dependent for trade and commerce, yet the ADB classifies half of the roads in 642 Tajikistan as poor, and the mountainous terrain makes remediation difficult.F

8.4 External Involvement in Tajikistan

8.4.1 Russian Involvement

The Russian army and border forces played a key role in the survival of the Rahmon regime in 643 the Tajik civil war (1992-97).F F The last Russian border troops guarding the Tajik-Afghan border completed their withdrawal in July 2005. However, in October 2004 the two countries signed a ten-year agreement (with options for renewal) that provided for the 201st Motorized Rifle Division – which had been stationed in the country since before independence – to be based at three garrisons, and to have access to three training grounds, in Tajikistan. This conglomeration is now Russia’s largest military base outside its own borders. The IISS Military Balance puts the st 644 201 Division’s strength at 5,000.F F Klein stated that the division’s troops are stationed in Dushanbe, Kurgan-Tube (Qurgonteppa) and Kulab. The two latter bases are within about 80-km 645 of the Afghan frontier.F F Most of the non-commissioned officers and soldiers of the division are Tajiks. A recent assessment of Russian manpower problems, by a senior analyst at CNA, the American think-tank, marked out the 201st Motorized Rifle Division as an exception, saying that it “has long shown itself to have a high level of readiness…and can serve as a model for every 646 unit in the [Russian] ground forces.”F

Moscow has indicated its opposition to any military presence in Tajikistan except that of Russia. In the mid-2000s, India began renovating runways and hangars at the facility, and New Delhi appeared poised in 2006 to announce that the Ayni airfield near Dushanbe had become operational as a station for its fighter jets. But the base is largely dormant, and many in Dushanbe attribute that situation to Russia’s unwillingness for any other country to have use of the base. In 2009 Russian Defense Minister, Anatoly Serdyukov said that Tajikistan and Russia would jointly use the base, but Tajik leaders do not appear to be interested in allowing Russian forces to use the

642 Ibid, pp.2-18. 643 Anthony Kellett, “Soviet and Russian Peacekeeping 1948-1998: Historical Overview and Assessment,” The Journal of Slavic Military Studies, vol.12, no.2, June 1999, pp.26-35. 644 IISS, The Military Balance 2011, p.275. 645 Klein, Russia’s Military Capabilities, p.20. 646 Dmitry Gorenburg, “The Russian Military’s Manpower Problems,” Johnson’s Russia List, 31 July 2011.

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base. President, Imomali Rahmon has suggested that Russia, which does not pay rent for the 201st 647 base, should do so in the future. The two sides agreed to put off that decision until 2014.F

Oddly, given the key role played by Russian army and border troops in defending the Rahmon regime against the Islamist threat during the civil war, and given also the division’s uniquely high state of readiness, the 201st Division appears to be keeping a low profile in the current situation. This despite the fact that, as the ICG points out, the Tajik government has almost no capacity to tackle a dedicated insurgent force. The ICG report on the insurgency makes no reference whatever to the 201st Division. Instead, after the Rasht disaster Tajikistan’s State Committee for National security approached Western diplomats for help in expanding Tajikistan’s counter- 648 st insurgency unit, but seems to have been turned down.F F Why the leadership of the 201 was not asked is unclear. Moscow’s anxiety at the prospect of Islamist fighters and drugs in large quantities seeping through Tajikistan and on into Russia via the nearly 7,000-km border with Kazakhstan adds to the puzzle regarding the apparent inactivity of the 201st Division. The formation tried to fulfill precisely that counter-insurgency role in the early-1990s (although with restraint), which now raises questions about the purpose of the 201st continuing to be stationed in Tajikistan. This enigma suggests that the role of the 201st is more political than military.

Russian trade with Tajikistan more than doubled between 1995 and 2007, from $357 million to 649 $772 million.F F Tajikistan obtains over 90 percent of all its oil products from Russia, a situation characterized by the director of a Dushanbe think-tank as a “threat to stability and security in 650 Tajikistan.”F F However, Russia does not always get its way in the country. Relations with Moscow cooled after Tajikistan cancelled a $2 billion deal with Russian aluminum giant RusAl 651 for the construction of a hydroelectric power station at the Rogun Dam in August 2007.F F Now Russia is trying to reassert itself in Dushanbe, in the face of Chinese competition. In April 2011 Moscow raised its fuel export tariff for Tajikistan, just as Tajik farmers were preparing for the planting season, producing an immediate inflationary effect. At the same time, Russia lifted tariffs on deliveries to Kyrgyzstan after Bishkek told Moscow that it could continue to have access to its military facilities gratis. In that Russia’s much more extensive base in Tajikistan is also rent-free, it is hardly surprising that Tajik leaders see Russia’s action as being a pressure 652 tactic.F

8.4.2 Chinese Involvement

China’s trade with Tajikistan multiplied nearly 22-fold between 1995 and 2007, from $24 million 653 to $524 million, fast closing the gap with Russia.F F It has been claimed that China’s investments in Tajikistan are more than double Russia’s, and that as a consequence it is making inroads on 654 Moscow’s leading role in the country.F F In 2006, for example, Beijing agreed to provide Tajikistan with $600 million in credits. China’s Export Import Bank is the largest investor in

647 Joshua Kucera, “Why is Tajikistan’s Ayni Air Base Idle?” EurasiaNet.org, 9 July 2010. 648 ICG, Tajikistan: The Changing Insurgent Threats, p.15. 649 Ziegler, “Russia and China in Central Asia,” p.252. 650 Konstantin Parshin, “Tajikistan: Dushanbe Feeling an Economic Squeeze,” EurasiaNet, 26 April 2011. 651 Ziegler, “Russia and China in Central Asia,” p.240. 652 Parshin, “Tajikistan: Dushanbe Feeling an Economic Squeeze.” 653 Ziegler, “Russia and China in Central Asia,” p.253. 654Ibid, p.240.

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Tajikistan’s transportation infrastructure: “Any road building in the country right now seems to be 655 done by China.”F F For example, the “Road of Unity” connecting the northern and southern parts of the country has been built with a $280 million loan from China. It is noteworthy that Gorno- Badakhshan, the opposition base in the civil war, is the only part of Tajikistan that borders China. Only one road, from Khorog (the provincial capital) to Tashkurgan via the Kulma Pass, directly connects Gorno-Badakhshan to Xinjiang, and it is very rough. Given the support the Islamist opposition found in Gorno-Badakhshan during the civil war, as well as the province’s proximity to Afghanistan, it is interesting that Beijing has chosen to support the north-south “Road of Unity” (Dushanbe-Chanak) rather (apparently) than improving this route.

This financial open-handedness may partly explain why Tajik respondents in the 2004 survey of attitudes in Central Asia and Russia were considerably better-disposed towards China than were Kazakhs and Kyrgyz. Among the Tajik respondents, 38 percent regarded China as most trustworthy, but Russia had a much more significant image, garnering 87 percent on this 656 question.F F However, this survey has been followed by border agreements that have left many Tajiks with a more negative impression of China.

Dushanbe has trumpeted its three border agreements with Beijing as a “great victory.” However, these deals have provoked a strong nationalist backlash in Tajikistan. The opposition claimed that Tajikistan is becoming increasingly dependent on China economically, due to Beijing’s large investment in the country. It also alleged that the value of the natural resources in the areas ceded 657 to China equalled the entire Chinese investment in Tajikistan to that point.F F

658 There is no significant number of Uighurs in Tajikistan.F F Nevertheless, five days before the Tajik parliament ratified the Sino-Tajik border agreement the Tajik authorities detained three Uighur businessmen with Turkish citizenship, sparking fears that they may have been held due to pressure from China. The three men were not business partners but frequently traveled between Turkey and Tajikistan together for business, and the brother of one of them was executed in 659 Xinjiang during the 1990s on charges of “splittism.” F

As for the growing Islamist threat in Tajikistan, the ICG thought that the China-Kyrgyzstan- Tajikistan joint counter-terrorism exercise “Tianshan 2,” conducted under SCO auspices in Xinjiang in May 2011, was a possible sign of growing Chinese concern about the situation in the 660 country.F

As was noted earlier, Chinese police now see “Golden Crescent” trafficking as a major and rapidly growing threat to society. Billions of dollars of drugs pass through Tajikistan en route to Russia and China every year, and “high-level protection is almost certainly undermining 661 international organisations’ attempts to control the border with Afghanistan.”F F Of the five major public highway routes into Xinjiang that are used extensively by drug smugglers, one goes via

655 ICG, Central Asia: Decay and Decline, p.17 656 Kerr, “Central Asian and Russian perspectives,” p.136. 657 Blank, “Revising the Border.” 658 Kamalov, “Uyghurs in the Central Asian Republic,” c.p.123. 659 “Uyghurs Held in Tajikistan,” Radio Free Asia, 24 January 2011. 660 ICG, Tajikistan: The Changing Insurgent Threats, p.14. 661 Ibid, p.i.

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662 Tajkistan.F F As for air routes, counter-narcotics crackdowns have forced smugglers to develop 663 new ones, and one of the preferred new routes is from Dushanbe to Xinjiang.F

8.4.3 US Involvement

The Tajik authorities have “unfailingly” allowed the US forces in Afghanistan over-flight and transit privileges. A more valuable contribution to the ISAF operation would be domestic stability in Tajikistan, but Washington increasingly worries that the country is heading for the status of a 664 “failed state.”F F

662 Tanner, China Confronts Afghan Drugs: Law Enforcement Views of ‘The Golden Crescent’, p.18. 663 Ibid, p.23. 664 ICG, Tajikistan: The Changing Insurgent Threats, p.10.

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9 Turkmenistan

Turkmenistan has the smallest and most ethnically homogeneous population in Central Asia. According to the CIA World Factbook, 85 percent of the population was Turkmen in 2003, with Russians a distant second at 5.5 percent. Islam was far the dominant religion, with 89 percent of the population being Muslim and 9 percent Eastern Orthodox.

9.1 Political Stability

President Saparmurat Niyazov ruled Turkmenistan from 1985 until his death in 2006, establishing a pervasive cult of personality. He was succeeded by his deputy prime minister, Gurbanguly Berdimuhamedov, whose election in February 2007 was condemned by international observers as fraudulent. Thus, from the perspective of incumbent longevity, Turkmenistan has the post-Soviet stasis evident elsewhere in the region.

In its country profile of Turkmenistan, the US State Department describes Turkmenistan as “an authoritarian state… Neither independent political activity nor opposition candidates are allowed in Turkmenistan.” It notes that the government focuses on fostering centralized state control, that there is virtually no freedom of the press or of association, that the judiciary is subservient to the 665 president and that all citizens have to carry internal passports.F F With Uzbekistan, Turkmenistan ranks worst in Central Asia in Freedom House’s index of freedom in the world. Both countries rate sevens – on a seven-point scale – for political rights and civil liberties, and are characterized 666 as “Not Free.”F F

In the wake of the “Arab Spring” there were expectations that reverberations would be felt in Turkmenistan. However, there have been no actual street protests, in part due to energetic government efforts to prevent any such manifestations. The government has full control of the media and restricts foreign publications. The International Telecommunication Union estimates the number of Internet users at 1.57 percent of the total population in 2009, and fixed line and mobile subscribers in 2007 at 16.22 percent, by far the worst coverage in the region. However, international satellite television is widely available. In April 2011, with the “Arab spring” in full flow, the Turkmenistan government reportedly cancelled a contract with the Russian company MTS, which until then had been the main source of communication for more than 80 percent of 667 all Turkmen cell-phone and Internet users.F

Typically, the government attempted to gloss over a series of massive explosions that struck a military munitions depot in Abadan, near Ashgabat, in July 2011, killing dozens of people. The government shut down the Internet and telephone lines in Abadan, but very unusually for Turkmenistan, ordinary citizens reported the event to the outside world as it was still unfolding. Some of the reporters kept the story going by moving to parts of the country where the Internet

665 Background Note: Turkmenistan, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 31 October 2010 (http://www.state.gov/r/pa/ei/bgn/35884.htm), accessed 21 August 2011. 666 Freedom in the World 2011, p.16. 667 Nikola Krastev, “Watchdog: Governments Becoming More Skilled At Suppressing Online Press Freedom,” Radio Free Europe/Radio Liberty, 2 May 2011.

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and mobile phone networks were still functioning. By the next morning, despite the official 668 blackout, news of the explosion was everywhere except in the Turkmen media.F

Turkmenistan performs very badly (but no worse than Uzbekistan) on Transparency International’s corruption perceptions index for 2010, ranking 172nd out of 178 countries; only Iraq, Afghanistan, Burma and Somalia earned lower ratings than the two Central Asian 669 countries.F

9.2 Internal Security Environment

The population is overwhelmingly Sunni, but it has historically followed a kind of folk Islam, and Sufism has strong roots among the Turkmen tribes, which would make them resistant to the conservative outlook that underpins jihadist extremism. In addition, the government both co-opts Islam and firmly controls it. The result has been that radical Islam “represents virtually no challenge to the security of the Turkmen state,” and there have been no serious incidents of violence from that source. The government has ruthlessly crushed freedom of religion, and during the Niyazov era tried to elevate a book of his thoughts almost to the level of the Koran, a policy almost unique in the Muslim world, and strictly limited the number of Turkmen allowed to make 670 the hajj.F

On 25 November 2002 an armed attack took place on President Niyazov’s motorcade. The 671 Turkmen government alleged that Uzbekistan was involved in the incident.F F The allegations may or may not have been fantasy, but it is the case that Tashkent has made no secret of its claim 672 to border areas in the Tashauz and Chardzhou regions of Turkmenistan.F F In any event, the Turkmen government seized the opportunity to move against perceived sources of opposition and there were widespread reports of human rights abuses committed by officials investigating the attack.

9.3 Economic and Social Situation

Turkmenistan is almost entirely desert, making it wholly dependent on the waters of the Amu Darya River to provide water to its oasis agriculture. Turkmenistan borders neither of the upstream countries (Kyrgyzstan and Afghanistan). Although agriculture accounts for roughly 10 percent of GDP, it continues to employ nearly half of Turkmenistan’s work-force. The production of cotton, which was once a mainstay of the economy, has dropped precipitously in recent years because of poor irrigation and management practices.

Independence is the mantra of Turkmenistan, exemplified in foreign affairs by its doctrine of “positive neutrality.” It is no surprise, therefore, that in its economic policies Ashgabat would also

668 “Citizen Journalism Scores Breakthrough in Turkmenistan,” RFE/RL (Prague: Radio Free Europe/Radio Liberty), 16 July 2011. 669 Transparency International, Corruption Perceptions Index 2010. 670 Hanks, Global Security Watch. Central Asia, p.66. 671Ibid, p.28. 672 Murad Esenov, “Turkmenistan and Central Asian Security,” in Gennady Chufrin, ed., The Security of the Caspian Sea Region, Oxford: Oxford University Press, 2001.

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purse a policy of “self-sufficiency.” Although over 80 percent of Turkmenistan is covered by the Karakum Desert, one of the driest in the world, and the country receives little rainfall, nonetheless the government artificially sustains the cultivation of inefficient crops such as wheat and cotton. Under Niyazov, fiscal mismanagement and poorly conceived development policy led to serious economic decline in the 1990s. Industry in Turkmenistan is almost entirely dominated by government or government-owned entities, and the private sector is insignificant. World Bank data show how dependent the Turkmen economy is on the sale of gas: in 2009 exports composed 673 75.6 percent of GDP, more than twice the rate of Canada.F

Turkmenistan performs moderately on the Human Development Index, ranking 87th out of 169 674 countries assessed, ahead of Uzbekistan, Kyrgyzstan and Tajikistan.F F The role of energy wealth in the rankings of Central Asian states is shown by the fact that Kazakhstan stood highest (just one place below energy-rich Russia) and Turkmenistan second, quite far ahead of the other three. Relative to the rest of the region, Turkmenistan performs quite well on the UN Food and Agriculture Organization assessment of food insecurity, rating a two on the five-point scale, and is also in the middle of the pack in Central Asia. According to the FAO, six percent of the 675 population was undernourished in 2005-7.F

Turkmenistan’s statistics are closely held state secrets, and published GDP and other figures are subject to wide margins of error. Nonetheless, it appears that Turkmenistan’s socio-economic indicators are very poor. According to the World Bank, 49.6 percent of the population were living on less than $2 per day in 2008, despite average annual growth (reported by the IMF) of 13.5 percent from 2000 to 2010. Current data on unemployment are unavailable, but the US State Department recently estimated that unemployment and underemployment rates may be as high as 676 70 percent.F F

The ICG describes a “deep corrosion of human and physical infrastructure” in Turkmenistan and Uzbekistan alike, with education paralyzed by ideology, health care divorced from reality, and declining levels of service in the energy and transportation sectors. Secrecy and data falsification are widespread, making it difficult to address the problems in these areas. Turkmenistan is short of healthcare professionals, and standards are said to take second place to political loyalty. The ICG asserts that President Niyazov “dismantled” the modern education system between 1991 and 2006, schools are almost certainly overcrowded, textbooks are in short supply, and there have been reports of a growing exodus of teachers from rural regions and hardship areas. The country has been living off the energy-generating capacity built in the 1960s and 1970s, but this infrastructure is reaching its limits. Roads in Ashgabat, major tourist areas and international 677 corridors receive priority, and the deterioration elsewhere has been “precipitous.”F

673 Turkmenistan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/156- turkmenistan-gdp-country-report.html#axzz1VXN4JrLv), accessed 19 August 2011. 674 “The Real Wealth of Nations,” p.144. 675 The State of Food Insecurity in the World, p.50. 676 Background Note: Turkmenistan. 677 ICG, Central Asia: Decay and Decline, pp.19-28.

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9.4 Energy

Turkmenistan has huge natural gas deposits. In 2008, a British company revealed that the Yolatan gas field probably contained close to six trillion m3 of gas, one of the largest deposits in the world. The country’s total gas reserves may be more than 20 trillion m3, putting Turkmenistan in the top five globally. Thus, the country has the potential to be an energy broker to Russia, the Middle 678 East, Europe, and Asia.F F Europe alone offers Central Asian gas producers (Turkmenistan, Kazakhstan and Uzbekistan) the prospect of a market that is expected to exceed 500 billion m3 by 679 2015, an increase of about 40 percent from its 2010 levelF F (assuming that an economic downturn and shale gas do not change the equation too dramatically).

Russia has long had essentially a monopoly over Turkmenistan’s pipeline network, controlling that country’s ability to ship its gas to the outside world as well as forcing down the price 680 Gazprom paid for Turkmen gas.F F Turkmenistan’s two easiest routes to energy markets were through two large gas-producing states (Russia and Iran) that had a strong interest in piggy- backing on Turkmenistan’s supply. In the early-1990s, the Central Asia Centre (CAC) Pipeline was the principal export route for the export of Turkmen gas. In a 2003 deal Gazprom purchased Turkmen gas on a half barter (consumer goods and technical assistance), half cash basis, with, of course, access to the Russian pipeline system.

In December 1997, Turkmenistan opened a small pipeline to Iran. It was intended eventually to be part of a joint Iranian-Turkmen system connecting with Turkey and Europe, but the project foundered on US opposition to Iran. At the beginning of 2010 Turkmenistan opened its second gas pipeline to Iran, further eroding Russia’s historical domination of its energy sector. The new pipeline will eventually more than double Turkmenistan’s annual gas exports to Iran, to 20 billion m3. In 2006 Turkmenistan and China agreed to construct a pipeline across Central Asia that would enable Turkmenistan gas, supplemented by Kazakh and Uzbek production, to flow to China, with a commitment of 30 billion m3 per year. It began operation in December 2009.

Turkmenistan is also exploring other export routes that would bypass Russia. These projects include the White Stream Pipeline, the Nabucco Pipeline, and the Trans-Caspian Pipeline. The two former would initially rely on gas supplies from the western side of the Caspian, which would not meet the full requirement of the destination markets: “all planners agree that Turkmenistan, and to a lesser degree Kazakhstan, must supply the pipelines with sizable 681 quantities of gas.”F F The White Stream would supply Eastern European countries, lessening their dependence on Russia, and while initially supplied with Azerbaijani gas, would become economically viable only with the addition of Turkmen gas. Nabucco would be expensive and would therefore need an adequate supply of gas, which the West does not want to come from Iran. However, “Turkmenistan’s stated policy of developing additional routes and partners has 682 breathed new life into the Nabucco project…”F F

678 Hanks, Global Security Watch. Central Asia, p.39. 679 Ibid, p.79. 680 Mankoff, Russian Foreign Policy, p.278. 681 Hanks, Global Security Watch. Central Asia, p.82. 682 Ibid, p.81.

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The Trans-Caspian Pipeline would effectively tap the abundant supply on the eastern side of the Caspian, “and should Ashgabat and Astana seriously commit to the idea, Russia’s hold on Central 683 Asian gas would be seriously shaken, if not completely broken.”F F There are major legal, financial and environmental obstacles to a pipeline running beneath the Caspian, but firm Turkmen support of the project would probably persuade Western governments and companies to proceed. Over the past two years, negotiations between Azerbaijan and Turkmenistan have made progress on the Trans-Caspian Pipeline issue, and in December 2010 President Berdimuhamedov declared in Baku that he did not think permission for construction of a Trans-Caspian Pipeline was required from any other Caspian Sea littoral states. He followed this up with a decree, signed in May 2011, stating that companies from Turkmenistan will build an internal East-West gas pipeline allowing the transfer of gas from the biggest deposits in Turkmenistan (Dowlatabad and Yolotan) to the Caspian coast. The East-West Pipeline could be connected up to a Trans-Caspian 684 Pipeline.F F

Turkmenistan’s new gas export policy is multi-vector and looks south as well as north, east and west. The idea of a Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline route was first broached at a meeting between President Niyazov and Pakistani Prime Minister Nawaz Sharif in May 1992, and in March 1995 a memorandum of understanding was signed between Turkmenistan and Pakistan for a trans-Afghan pipeline project. The main obstacle to this route has always been the chronic instability in Afghanistan, and the project has languished. The TAPI project is still far from realization, but an important step occurred in December 2010, when the leaders of the four countries concerned met in Ashgabat and approved the go-ahead. The ADB intends to fund one-third of TAPI’s estimated cost, which should help to unlock funding from the multilateral financial organizations and the private sector.

Although the Trans-Caspian and TAPI projects would come to fruition a considerable time in the future – if at all – they would add a third and a fourth export route for Turkmen gas exports, to supplement the existing China and Iran ones, further reducing Russia’s stranglehold and giving Turkmenistan a much stronger hand in negotiating price.

9.5 External Involvement in Turkmenistan

Turkmenistan is a reclusive country that almost from independence has adhered to a state of “positive neutrality,” which was recognized by the UN in December 1995. Essentially it was intended to underwrite Turkmenistan’s territorial integrity, its security and its ability to exploit its raw materials. However, in practice the Niyazov regime was prepared to deviate from strict neutrality in its efforts to find pipeline routes that were not controlled by Russia. Evidence of this posture was provided by the regime’s Afghan policy. At the outset of the Taliban movement, Turkmenistan and Pakistan were its only foreign partners. The Turkmen regarded the Taliban as offering the security needed to build the TAPI pipeline. This policy put Turkmenistan at odds with the other Central Asian states and Russia, which were alarmed by the threat posed by the Taliban. President Niyazov ignored an invitation to join Russia, Kazakhstan, Kyrgyzstan,

683 Ibid, p.82. 684 Robert M Cutler, “TAPI deals nudge pipeline nearer reality,” Central Asia Newswire, 18 August 2011.

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Tajikistan and Uzbekistan in an emergency meeting in Almaty in October 1996 to coordinate 685 action in light of the Taliban’s capture of Kabul.F F

Much like Kazakhstan, the government of President Berdimuhamedov has adopted a multi- vectored foreign policy, with the goal of attracting foreign investment and technology. In an example of this approach, Turkmenistan attended the NATO summit in Bucharest in May 2008.

686 Given the small scale of Turkmenistan’s overall economy,F F its energy riches, and its sturdy defence of its independence, the primary area in which Russia and China can be involved in the country’s affairs is through tapping its natural gas supply. Ashgabat’s increasing efforts to diversify its pipeline system inject much greater competition into the effort to influence Turkmenistan’s policies.

9.5.1 Russian Involvement in Turkmenistan

What is now Turkmenistan was the last part of Central Asia to fall under Russian sway. The Turkmen resisted Russian encroachments fiercely, and in 1879 inflicted a severe defeat on the Russian army at Geok Tepe. Two years later the Russians returned and destroyed Turkmen resistance, finally completing the conquest of Central Asia. The past two decades have been an echo of the late-19th century, with Turkmenistan being as independent-minded as reliance on the Russian pipeline system for its main export permitted. Laruelle describes Turkmenistan as being, 687 with Uzbekistan, one of the two regional states most resistant to Russian influence.F F The ideology of the Niyazov regime was both nationalist and anti-Russian.

Earlier in this report it was stated that Russia is losing its stranglehold over the export of Central Asian energy, and Kazakhstan’s success in breaking the grip of the Russian pipeline system was described. Turkmenistan provides another example of that loosening grip. For the first eighteen years of Turkmenistan’s independence, Gazprom essentially had a monopoly on Turkmen gas. Export routes from the region are no longer exclusively in Russia’s hands, and Turkmenistan is now exporting natural gas directly to Iran and to China, with ambitions to supply the EU and (a much longer shot) South Asia.

Just before he died, in December 2006, President Niyazov told Russia he shared its opposition to an undersea trans-Caspian pipeline. His reward from Moscow was a considerable increase in the gas price paid by Russia. His successor, President Berdimuhamedov, confirmed the commitment in spring 2007, but within months Turkmenistan reversed its position and joined Azerbaijan and Kazakhstan in welcoming an American offer to fund a feasibility study for trans-Caspian oil and gas pipelines. Russia, of course, has put major obstacles in the way of the Nabucco and Trans- Caspian projects, which would deprive Moscow of much of its ability to use energy as a tool of influence in Europe (and especially Central and Eastern Europe).

685 Esenov, “Turkmenistan and Central Asian Security.” 686 CIA World Factbook estimates for 2010 show China’s economy (GDP at PPP) to be 280 times, and Russia’s 62 times, the size of that of Turkmenistan. Within Central Asia, Kazakhstan’s economy is 5.3 times larger and Uzbekistan’s 2.3 times. The same source estimates Turkmenistan’s bilateral trade for 2010 at $19 billion, far below Kazakhstan (at $93 billion) and just behind Uzbekistan ($20 billion). 687 Laruelle, “Russia and Central Asia,” pp.159-60.

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The new pipelines have given Turkmenistan more power in negotiations with Russian energy giant Gazprom, which has now had to agree to pay higher prices for Turkmen gas. A dispute over pricing, and a pipeline explosion – which Hanks described as “mysterious” and which Ashgabat 688 blamed on GazpromF F – in eastern Turkmenistan in April 2009 caused the shut-off of Turkmenistan’s gas supply to Russia. Later in April President Berdimuhamedov stated that his government intended to diversify its export pipeline routes. The gas supply to Russia was only resumed in December 2009, after an eight-month hiatus. However, Russia would now take a 689 reduced supply.F

In October 2010 Itera, an independent Russian oil and gas producer, opened a $176 million natural gas pipeline in Turkmenistan, linking gas deposits in the Karakum Desert with the CAC pipeline system running from Turkmenistan via Uzbekistan and Kazakhstan to Russia. The expectation was that the new pipeline would help increase supplies of Turkmen natural gas to Russia to three billion m3 per year and later to five billion m3. In that Turkmenistan produced 42.4 billion m3 of gas in 2010, of which 22.6 billion m3 went to domestic consumption, leaving 19.8 3 690 billion m for export,F F this projection – if realized – suggests that Russia’s near-term goal is 15 691 percent of Turkmenistan’s gas exports.F

Russia’s trade with Turkmenistan grew fairly anaemically between 1995 and 2007, from $272 692 million to $453 million.F F As Table 1 showed, this was the lowest relative increase in trade with Russia among the Central Asian states, although the Turkmen figure apparently excludes gas deliveries. In 2009 Russian-Turkmen trade turnover (excluding gas deliveries) exceeded $1 693 billion.F F According to the Turkmen Economics Ministry Russia is Turkmenistan’s second largest export trading partner and third largest importer of Turkmen products. Turkmenistan has 694 registered more than 100 Russian companies, including Gazprom and the truck-maker Kamaz.F F

9.5.2 Chinese Involvement in Turkmenistan

China’s trade with Turkmenistan multiplied nearly twenty-fold between 1995 and 2007, from $18 695 million to $350 million, fast closing the gap with Russia.F F According to a statement issued by the Turkmen embassy in Beijing in July 2011, bilateral trade now exceeds $1.5 billion, a forty- 696 fold increase since 2000.F F

688 Hanks, Global Security Watch. Central Asia, pp.80-81. 689 “Turkmenistan opens new Iran gas pipeline,” BBC News, 6 January 2010. According to the BBC story, Russia’s supply would be 30 billion m3 annually, a decline from 50 billion m3 before the supply shut-down. In that BP statistics point to total Turkmen exports of about 20 billion m3, and China looks set to take about 10 billion m3 in 2011, the BBC figure seems to be erroneous, but the general point is that Russia will get less. 690 BP Statistical Review of World Energy June 2011, pp.22-23. 691 “Russia’s Itera launches gas pipeline in Turkmenistan,” RIA Novosti, 16 October 2010. 692 Ziegler, “Russia and China in Central Asia,” p.252. 693 “Russia, Turkmenistan to discuss bilateral relations,” RIA Novosti, 21 October 2010. 694 Joao Peixe, “Russia and Turkmenistan to Deepen Energy Cooperation,” OilPrice.com, 16 August 2011. 695 Ziegler, “Russia and China in Central Asia,” p.253. 696 The Turkmen-Chinese Relations, Beijing: Embassy of Turkmenistan to China, 28 July 2011 (http://www.lookwe.com/templates/t_em_content/index.aspx?nodeid=945&page=ContentPage&contentid= 2337), accessed 19 August 2011.

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The idea of building a pipeline from Turkmenistan to China goes back to the early 1990s, but a number of obstacles stood in the way. One of these was the isolation imposed by President Niyazov who showed no inclination to pursue any international pipeline projects (apart from the minor one to Iran), despite the low prices that dependence on Russia enforced. However, by April 2006 Niyazov was ready to proceed with a Turkmenistan-China gas pipeline, and the agreement for the pipeline’s construction was signed in July 2007, by his successor, with a commitment of 30 billion m3 per year. The Trans-Asia gas pipeline opened in December 2009. The Turkmen segment runs 190-km from the Bagtiyarlyk gas fields in the eastern part of the country to the border with Uzbekistan, then 520-km across Uzbekistan, and another 1,300-km through 697 Kazakhstan to the Chinese border, then through Xinjiang all the way to Shanghai.F

The cooling in Russo-Turkmen relations that followed the April 2009 pipeline explosion led to a drop in the amount of Turkmen gas imported by Russia, freeing up supplies that were swiftly bought up by China, and CNPC stated that it imported 4.5 billion m3 through the trans-Asia 698 pipeline in 2010.F F In June 2011, the Turkmen embassy in Beijing reported that Turkmenistan had exported over 10 billion m3 of gas to China through the Trans-Asia gas pipeline since its 699 opening in December 2009, reflecting a doubling of capacity at the outset of 2011.F F

China allegedly pays lower prices for Turkmen gas than are paid for Russian gas in Europe, but had to pay high costs for access to it, both in the pipeline’s construction and in upstream 700 development.F F China’s provision of a loan to help develop the South Yolotan gas field would seem to be a major achievement by CNPC, given Turkmenistan’s desire to retain full control of its major onshore projects and its reluctance to allow international companies to secure anything more than service contracts onshore.

697 Robert M. Cutler, “Turkmenistan-China Gas Pipeline Becomes a Reality,” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, vol.12, no.2, 3 February 2010 22 June 2011. 698 “Turkmenistan-to-China gas pipeline exceeds 5 billion cubic meters,” Turkmenistan Newswire, 17 February 2011. 699 Turkmenistan enhances gas exports to China, Beijing: Embassy of Turkmenistan to China, 9 June 2011 (http://turkmenembassy.cn/newspage.asp?types=English&ID=446), accessed 19 August 2011. 700 Itoh, “The Geopolitics of Northeast Asia’s Pipeline Development,” p.26.

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10 Uzbekistan

Uzbekistan is the only Central Asian country that borders all the others. With Turkmenistan it shares the distinction of bordering neither Russia nor China. It is also by far Central Asia’s most populous country, which is presumably a factor in President Karimov’s claim to regional leadership. In the words of the US State Department, Uzbek government statistics “are not consistently reliable,” as a result of which the only data on ethnicity date from an estimate made in 1996. At that time, Uzbeks were thought to comprise 80 percent of the population, Russians 5.5 percent, Tajiks five percent and Kazakhs three percent. Given the migration of Russians from the other Central Asian states, the border quarrels with Kyrgyzstan and Tajikistan, and Kazakhstan’s aggressive campaign to lure Kazakhs back to their homeland, it seems likely that the minority populations will have declined and the Uzbek one risen, possibly quite appreciably. Muslims are estimated to comprise 90 percent of the population and Eastern Orthodox five 701 percent, but these numbers also seem likely to have tilted further in favour of the former.F F Whatever are the actual ethnic and religious proportions, it seems safe to assert that Uzbekistan is a very homogeneous country. The population of Uzbekistan is heavily rural, and concentrated in the south and east of the country.

10.1 Political Stability

Like the other regional countries (with the notable exception of Kyrgyzstan), Uzbekistan has had the same leadership for over two decades. In fact, Islam Karimov has led the country since March 1990, 18 months before independence. (Perhaps regional incumbent longevity may be ascribed to Soviet political training: the only Central Asian leader to lose office in the past two decades – apart from Niyazov, who died – has been Askar Akayev, who was not a career Communist Party politician.) In its country profile of Uzbekistan, the US State Department described a situation where the executive holds almost all power, the judiciary lacks independence, and the legislature has limited power to shape laws. Independent political parties have been effectively suppressed since the early-1990s, and the “government severely represses those it suspects of Islamic extremism... The police force and the intelligence service have used torture as a routine 702 investigation technique. A large number of prisoners have reportedly died in custody…”F

With Turkmenistan, Uzbekistan, ranks worst in Central Asia in Freedom House’s index of 703 freedom in the world, getting the lowest rating possible and being characterized as “Not Free.”F F Equally with Turkmenistan, Uzbekistan shares the dubious distinction of being very nearly bottom of Transparency International’s corruption perceptions index for 2010, ranking 172nd out 704 of 178 countries.F F

701 Estimates from Background Note: Uzbekistan, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 20 June 2011 (http://www.state.gov/r/pa/ei/bgn/2924.htm), accessed 20 August 2011. 702 Ibid. 703 Freedom in the World 2011, p.16. 704 Transparency International, Corruption Perceptions Index 2010.

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The International Telecommunication Union estimates the number of Internet users in Uzbekistan at 17.06 percent of the total population in 2009, and fixed line and mobile subscribers in 2007 at 705 28.17 percent.F

10.2 Internal Security Environment

Mackerras argues that, of all the Central Asian states, Uzbekistan has been the one most seriously 706 affected by Islamism.F F It is an interesting argument, given the legacy of the Tajik civil war, but the general point is that religious extremism has strong roots in the country. Like the Tajiks, the urban-dwelling Uzbeks were historically more profoundly influenced by Islam than were the traditionally nomadic people of Central Asia.

The Karimov government bases its claim to legitimacy on anti-Islamism and on ethnic identity, which ensures that the battle between the two sides in Uzbekistan will be unrelenting and, given the expanding insurgency in Afghanistan, likely to escalate. From the outset, the Karimov government crushed signs of political Islam, and a branch of the Islamic Renaissance Party, which played such a key role in the Tajik civil war, was declared illegal and driven underground. In the nature of these things, this only served to radicalize its adherents. The Law on Freedom of Conscience and Religious Organizations, passed in 1998, is considered to be one of the most 707 restrictive statutes regarding religious behaviour in the world.F

The two most prominent Islamist groups in Central Asia in the period leading up to 9/11 were the Hizb ut-Tahrir (HuT) and the IMU. The IMU receives all the publicity, perhaps because of its activities in Afghanistan, but Ahmed Rashid claims that by the beginning of the 21st century the 708 HuT were the most popular underground movement in Uzbekistan, Kyrgyzstan and Tajikistan.F

The IMU was founded by two Uzbeks who fought in the Tajik civil war, and they soon attracted disaffected young Uzbeks from the Fergana Valley into their ranks. In summer 2000 the IMU briefly entered Uzbekistan but, lacking numbers and weaponry, were forced to withdraw. The IMU was decimated by the Americans in Afghanistan in and after late-2001, which reduced the group to random acts of violence.

The security threat reached a height on 15 February 1999 when a series of six car bomb explosions occurred in Tashkent, one of them near the headquarters of the Council of Ministers where President Karimov was to preside over a cabinet meeting. The government claimed that 16 people were killed by the bombs, but unofficial estimates of the fatalities (including subsequent shootouts with alleged bombers) put them as high as 200. No group claimed responsibility, but Karimov and the government were quick to put the blame on Islamists. This is a view shared by 709 some analysts.F F However, Russian experts on Uzbekistan, while not ruling out Islamist

705 Uzbekistan Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/149- uzbekistan-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011. 706 Mackerras, “Xinjiang and Central Asia,” p.136. 707 Hanks, Global Security Watch. Central Asia, p.52. 708 Mackerras, “Xinjiang and Central Asia,” p.136. 709 Richard Weitz, “Terrorism in Uzbekistan: The IMU Remains Alive but not Well,” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 5 May 2004.

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authorship of the attacks, thought that they could have been mounted by political opponents of the 710 president, through the medium of local mafia groups.F F The possibility has even been floated that 711 they were organized by the government itself, to justify the mass arrests that followed them.F F

In July 2004 there were shootings and bombings in Tashkent and Bukhara, along with well- coordinated suicide bomb attacks on the US and Israeli embassies in Tashkent. As in the wake of the 1999 car bombings, the Uzbek government was quick to attribute the Andijan incident in May 2005 to the IMU and the HuT, a claim used in justification for a religious crack-down. Whether true or not, in the view of Ahmed Rashid the violent suppression of the Andijan protest gave a 712 huge boost to recruitment to the IMU and to jihadist movements in general.F F In late-May 2009, the National Security Service and Internal Affairs Administration buildings in Khanabad, a city in the Andijan region, were attacked. A border post on the frontier with Kyrgyzstan also came under attack. Later during the same day a suicide bombing took place in Andijan itself. That attack was claimed by the IJU, which said that the bombing was directed at President Karimov and his actions against the Muslims of Uzbekistan. The Uzbek authorities appear to have believed that members of IMU were responsible, but local witnesses stated that the attackers spoke a foreign 713 language and had a translator. There were an unknown number of casualties in the incident.F

10.3 Economic and Social Situation

Like other regional countries, Uzbekistan has suffered a post-Soviet decline in its socio-economic fabric. In his 2010 survey of Central Asia, Hanks adverted to “a social and economic environment 714 that appears to be steadily declining.”F F The available data confirm his observation. Uzbekistan’s ranking on the Human Development Index was 102nd out of 169 countries, in the middle of the 715 regional pack.F F According to the World Bank, fully 76.7 percent of the population lived on less than $2 per day in 2008. Uzbekistan performs poorly on the UN Food and Agriculture Organization assessment of food insecurity, rating a three on the five-point scale. According to 716 the FAO, 11 percent of the population was undernourished in 2005-7.F F

Uzbekistan is one of the world’s leading cotton producers, produces considerable amounts of oil and natural gas, and has substantial deposits of gold and other precious metals. Manufacturing has become increasingly important, particularly in the automotive sector, which is aimed primarily at export to the Russian market. Since independence, the government has followed a policy of gradual transition to a free market economy but most large enterprises are still state owned or controlled. Economic growth has been strong in the past few years, but wealth is strictly held by 717 the elite.F F

710 B. Raman, Explosions in Tashkent, Noida: Uttar Pradesh, 8 March 1999. 711 Hanks, Global Security Watch. Central Asia, p.54. 712 Abubkar Siddique, “IMU’s Evolution Branches Back to Central Asia,” Radio Free Europe/Radio Liberty, 6 December 2010. 713 Erkin Akhmadov, “Attacks in Khanabad and Andijan: What Is True?” CACI Analyst, Washington, DC: Johns Hopkins University, Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 3 June 2009. 714 Hanks, Global Security Watch. Central Asia, p.30. 715 “The Real Wealth of Nations,” p.144 716 The State of Food Insecurity in the World, p.50. 717 Background Note: Uzbekistan.

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Given its resource wealth, Uzbekistan should be relatively wealthy but standards of living have declined, economic growth has been stagnant for many years, and independent estimates of unemployment are as high as 20 percent. The relatively high birth rate further pressures the 718 economy.F

The ICG has pointed to a similar “corrosion of human and physical infrastructure” in Uzbekistan as that it detected in Turkmenistan, although the paucity of reliable government data complicates 719 attempts to assess the extent of the deterioration.F F

Many of the Russians and other Slavs in the country in the late-Soviet era held positions in education, business, medicine and engineering. After independence large numbers of them felt threatened by the elevation of Uzbek to the status of official language and by the rise of religious observance among Uzbekistan’s Muslims population. As a result, tens of thousands of highly- trained professionals left the country, with negative social and economic consequences.

Hospitals and clinics suffer from chronic under-investment, and many clinics in rural areas – where the bulk of the population lives – are said to be in “dire shape,” and their water supply is often polluted. The quality of primary healthcare is so low that doctors almost automatically refer people to state secondary or tertiary clinics, where most services are too expensive for the majority of rural residents. Healthcare professional are in short supply and inadequate in their medical skills. The education system in Uzbekistan has not been as terribly mismanaged as in Turkmenistan, but is undermined by the extremely low quality of teachers and a heavy emphasis on ideology. The proportion of school-aged persons enrolled has been dropping, and text-books and other school supplies, teaching methods, curricula and educational institutions are outdated and poorly kept. The energy generating capacity developed under the Soviets is deteriorating, and while the situation is less bad than in Kyrgyzstan and Tajikistan, power cuts in cities are already 720 constraining business development.F

10.4 Energy

As noted in an earlier section, Uzbekistan is a participant in the trans-Asia pipeline between Turkmenistan and China. Uzbekistan’s oil production in 2010 was 40 percent that of Turkmenistan and less than one percent of Russia’s. Its oil reserves are equally small by comparison with the other two CIS producers (at 21 percent and less than one percent respectively). In 2008, CNPC struck a deal with the Uzbek government to extract petroleum from the Mingbulak oil field in eastern Uzbekistan. While CNPC recently increased its stake in the 721 field, it appears that it will be several years before it becomes fully operational again.F F

The field is located close to Namangan in the politically volatile Fergana Valley, the birthplace of the IMU. The field is also little more than 200-km from the Chinese border and 400-km from Kashgar. Thus, it could represent one of those foreign interests that might stir Chinese

718 Hanks, Global Security Watch. Central Asia, p.27. 719 ICG, Central Asia: Decay and Decline, p.19. 720 Ibid, pp.19-28; Background Note: Uzbekistan. 721 Recovery and Reform. Transition Report 2010, Country Assessment – Uzbekistan, London: European Bank for Reconstruction and Development (EBRD), 27 November 2010, p.155 (http://www.ebrd.com/ downloads/research/transition/assessments/uzbekistan.pdf), accessed 27 August 2011.

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protectiveness as growing IMU strength and a burgeoning PLA ability to project military power coincide with the Mingbulak field becoming operational.

In recent years, oil and gas pipelines have been attacked in Turkey, Russia, Iraq, Nigeria, Yemen, and Colombia, and it has been a top priority for al-Qaida to strike oil targets. An essay entitled “Al-Qaida and the Battle for Oil” began circulating on radical Islamist websites in June 2008. Its author went so far as to claim that al-Qaida’s strategy to defeat the United States rested on 722 bankrupting America by driving up oil prices by any means necessary.F F There is some evidence that Chinese authorities are concerned about pipeline security. For example, one official stated that the West-East gas pipeline, from Xinjiang to Shanghai, “is going underground to escape both 723 the extreme climate and its potential as a target for terrorist attack”.F

In 2010, Uzbekistan produced 59.1 billion m3 of natural gas (about 40 percent more than Turkmenistan), of which it consumed 45.5 billion m3, leaving some 13.6 billion m3 for export. However, its proved reserves in 2010 – 1.6 trillion m3 – were less than one-fifth the size of 724 Turkmenistan’s and four percent those of Russia.F F

10.5 External Involvement in Uzbekistan

As noted in earlier sections, Uzbekistan’s relations with its neighbours in Central Asia are frequently tense, engendered in part by its aspirations to regional leadership, by its urgent need for water, by payments for Uzbek natural gas, and by border demarcation disputes. During the civil war in Tajikistan, Uzbek aircraft bombed targets in that country, leading Dushanbe to protest. The Tajik government also accused Tashkent of supporting a rebellion in northern Tajikistan that was led by an Uzbek; this episode created considerable bilateral tension. Uzbekistan’s neighbours have frequently complained about Tashkent’s interference in their 725 internal affairs and occasional violations of their sovereignty.F F The Uzbek government has shown itself quite ready to use its energy riches as levers against its hydrocarbon-poor eastern neighbours.

At the same time, the Karimov regime’s preoccupation with domestic stability was evident in its response to the ethnic violence in Kyrgyzstan in mid-2010. Although most of the victims were Uzbeks, and a large number of Uzbek refugees entered Uzbekistan, Karimov reportedly took measures to ensure that no unofficial volunteers from his country joined the fighting in Kyrgyzstan to assist their fellow-Uzbeks. It is even claimed that he discreetly expressed his opposition to calls advanced by Uzbeks in southern Kyrgyzstan for linguistic or cultural recognition, presumably from a concern not to allow a dangerous precedent in Uzbekistan, with 726 its own substantial minorities (particularly of Tajiks).F F

722 Chris Zambelis, “Attacks in Yemen Reflect al-Qaeda’s Global Oil Strategy,” Terrorism Monitor (Jamestown Foundation), vol.6, no.17, 4 September 2008. 2008. 723 Emmanuel Karagiannis, “China’s energy security and pipeline diplomacy: assessing the threat of low- intensity conflicts,” Harvard Asia Quarterly, 24 December 2010, 724 BP Statistical Review of World Energy June 2011, pp.22-23. 725 Hanks, Global Security Watch. Central Asia, p.28. 726 ICG, The Pogroms in Kyrgyzstan, p.23.

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From the perspective of extra-regional states, particularly Russia and China, the fact that Uzbekistan is the only Central Asian country to border all the others, and has a history of religious extremist activity, is worrisome, since militancy and instability there could quickly spread.

10.5.1 Russian Involvement in Uzbekistan

Around 2002, President Karimov began courting Russia, in an effort to get Moscow’s support following the disruption of relations between Uzbekistan and the European Bank for Reconstruction and Development. In 2002, the EBRD accused Tashkent of human rights 727 violations and the use of torture in prisons.F F Subsequently, the Uzbek authorities decided to improve relations with those who were less critical of the situation in Uzbekistan. This rapprochement culminated in a strategic partnership agreement between the two countries, signed in June 2004. Previously Uzbekistan’s strategic partnerships had been with the US and Ukraine, so its improved relations with Moscow indicated a significant realignment in Tashkent’s relations, and notably one that pre-dated the Andijan affair.

Security was a key element in the Russo-Uzbek détente. A regional security expert on the CIS at Jane’s Sentinel indicated that the notable increase in cooperation, especially in the area of intelligence, had begun in 2003. The Uzbek security service helped the Russian foreign intelligence service to block Gulf Arab funding for the Chechens, and in return the Russian Federal Security Service clamped down on Uzbek opposition leaders living in Russia. Equally, the deterioration in Uzbekistan’s relationship with the US encouraged Tashkent to boost its ties to Russia. Within months of the Andijan affair, Russia and Uzbekistan signed a mutual defence agreement, and Uzbekistan withdrew from GUUAM and joined the CSTO.

The new cooperation extended beyond security. The strategic partnership agreement included a production-sharing agreement between Uzbekneftegaz and Lukoil, worth some $1 billion, to 728 develop gas fields in the southwest of Uzbekistan.F

However, Uzbekistan has been wary of falling too far under Russian influence, and when Tashkent started to improve relations with the West, it accompanied the move with a withdrawal from EurASEC, a body dominated by Russia, in late-2008, following the Uzbek practice of signalling its favours among extra-regional powers by joining and withdrawing from multilateral organizations in the post-Soviet space. At the same time, Russia has not been allowed to establish a base in Uzbekistan, beyond being given access to Navoi airfield in emergencies.

10.5.2 Chinese Involvement in Uzbekistan

David Kerr points to the paradox that the one Central Asian country that might share Beijing’s level of concern about the “three evils” – Uzbekistan – is “the one upon which Beijing can rely

727 Craig Murray, Karimov looks to China and Russia for support, blog, 28 May 2005 (http://www.craigmurray. org.uk/archives/2005/05/karimov_looks_t/), accessed 22 August 2011. Craig Murray was British ambassador to Uzbekistan, 2002-4. 728 Antoine Blua, “Russia/Uzbekistan: Presidents Sign Strategic-Partnership Agreement,” RFE/RL, Prague: Radio Free Europe/Radio Liberty, 17 June 2004.

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729 least.”F F Despite the multiple security challenges confronting the Karimov government, it “has been more interested in manœuvring a path through the Moscow-Washington rivalry than in 730 forging any close partnership with Beijing.”F

According to a former British ambassador to Uzbekistan, President Karimov began pushing for “active friendship” with Beijing about two years before the Andijan massacre. China was the first country that President Karimov decided to visit in the wake of the Andijan affair, going there just two weeks after the massacre and being received with full honours. China’s stance on that event was based primarily on Kyrgyzstan’s “Tulip Revolution,” which occurred just seven weeks before Andijan and which Beijing did not wish to see repeated elsewhere in Central Asia. Possibly of concern to China was a belief among analysts that Kyrgyzstan’s new rulers were 731 mostly anti-Chinese and pro-Moscow.F F Despite Karimov’s rush to Beijing, Kerr concluded that it was Moscow, and not Beijing, that was the prime beneficiary of the attempt to eject the US 732 from Central Asia, and in particular from Uzbekistan.F

The benefits to China of Karimov’s 2005 visit were probably more economic than strategic (after all, only three years after the US was expelled from Uzbekistan it was allowed back in). The oil industry is central to Chinese economic interests in Uzbekistan, and a number of deals seem to have been promoted during the visit (they were discussed in the section on the energy aspects of Central Asia’s relationship with China). Bilateral trade between China and Uzbekistan reached 733 $1.91 billion in 2009, an increase over the previous year of 18.9 percentF F and a far cry from the $119 million reported for 1995.

Uzbekistan’s Uighur population is quite small – the 1989 Soviet census in Uzbekistan put their numbers at 23,000 – but it is concentrated in the restive Andijan region. Perhaps for its own internal security reasons, or perhaps to mollify China – as noted earlier, the Uzbek government pretends that there is no Uighur population in the country – Tashkent has exercised strict control over the Uighurs in the country. In March 2006, the Uzbek authorities arrested Huseyin Celil, a Canadian of Uighur origin travelling on a Canadian passport and in Uzbekistan with his wife to visit her family. Celil was apparently arrested at the request of China, and he was quickly extradited there. He is serving a 15-year sentence.

Beijing accuses the East Turkestan Islamic Movement of maintaining links with the Islamic 734 Movement of Uzbekistan.F F In the late-1990s the IMU was calling for the establishment of an Islamic Caliphate in Central Asia consisting of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – and Xinjiang. It was also recruiting Uighurs from Xinjiang. The Uighur members of the IMU constituted themselves into ETIM in June 2001. The ETIM and the IMU often exchange their training facilities, with the IMU training the Uighurs and the ETIM training 735 Uzbeks.F F It was recently reported that after the death of the IMU leader Tahir Yuldashev in

729 Kerr, “Central Asian and Russian perspectives,” p.144. 730Ibid, p.144. 731 Murray, Karimov looks to China and Russia for support, blog, 28 May 2005. 732 Kerr, “Central Asian and Russian perspectives,” p.144. 733 “Hu’s visits to improve ties with Uzbekistan, Kazakhstan,” Xinhua, 4 June 2010. 734 Chris Zambelis, Uighur Dissent and Militancy in China’s Xinjiang Province, West Point: Combating Terrorism Center, 13 January 2010. 735 B. Raman, “Violence In Xinjiang: ISI Chief Rushes To Beijing To Address Chinese Concerns – Analysis,” Eurasia Review, 1 August 2011.

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2009, many of his supporters left the IMU and the organization experienced financial troubles. According to a regional security analyst, “The IMU decided that merging with the ETIM would help resolve the recruitment problem and financial issues… (Its) close ties with the IMU granted the ETIM access to Tajikistan, Uzbekistan and other countries of Central Asia, as well as Russia. And the IMU got access to the extremists of Xinjiang, China. The aims of these organisations are 736 similar, so their merger makes sense.”F F Another analyst, who has met with several arrested ETIM members, said the IMU had influenced their activities: “(They had) the same tactics, the 737 same incredible cruelty toward all who oppose them.”F

10.5.3 US Involvement in Uzbekistan

As noted earlier, after 9/11 the US and Uzbekistan quickly became partners in the anti-Taliban fight. The relationship was formalized in 2002 with a strategic-partnership agreement which, in part, promoted internal reform within Uzbekistan. When very little reform ensued, the Karimov regime increasingly became an embarrassment for the US, and by mid-2004 there was debate in Washington as to whether aid to Uzbekistan should be cut off because of human rights concerns. 738 The deterioration in US-Uzbek relations was strongly reinforced by Andijan.F F Two months after the Andijan massacre the Uzbek government told the US to vacate Karshi-Khanabad, and by November 2005 the US military had left the base. As related in the section on the US military presence in Central Asia, a thaw began to set in after 2008, with Tashkent recognizing the strategic and economic benefits that might flow from cultivating the West as well as Russia. The Uzbek government badly needs Western investment and worries about the security consequences of a NATO withdrawal from Afghanistan.

736 Shakar Saadi, “East Turkestan Islamic Movement threatens Central Asia,” Central Asia Online, 9 August 2011. 737 Ibid. 738 Blua, “Russia/Uzbekistan: Presidents Sign Strategic-Partnership Agreement.”

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11 Mongolia

Mongolia is unique in Inner Asia in having only two neighbours, with each of which it shares extremely long borders: Russia (3,543-km) and China (4,766-km). That Mongolia is landlocked only adds to this picture of strategic vulnerability.

As was noted in the section on Inner Mongolia, the Qing encouragement of Han colonization in that region ensured that the more “Mongol” outer region following the path to independence. Thus, its population is almost entirely homogenous. According to the US State Department, in 2004 about 95 percent of the population was Mongol (predominantly Khalkha), some five percent Turkic (mainly Kazakh), and much of the rest Buriat (the major northernmost sub-group of the Mongols, most – probably 90 percent – living in Russia). Nearly half of the people live in urban centres, but semi-nomadic life still predominates in the countryside, although settled agricultural communities are becoming more common. Mongolia is the most sparsely populated country in the world.

Although homogeneous in ethnicity (more so than any other nationality in Inner Asia), Mongols are much less so in religion, with 50 percent adhering to Buddhist Lamaism and 40 percent 739 having no evident religious affiliation.F F These data probably reflect the fact that religion was suppressed under the communist regime, with only one showcase monastery allowed to remain, but Buddhism has enjoyed a resurgence since independence and is an integral part of national 740 identity.F F The government has incorporated Buddhist symbols into the national emblems as a way of reconstructing Mongolian national identity.

11.1 Political Stability

Unlike China and all the other countries of Inner Asia, Mongolia earns a rating of “Free” in Freedom House’s assessment of political rights and civil liberties in the world for 2010. It received a two for political rights and a two for civil liberties, putting it on the same level as a 741 number of countries, including Argentina, Brazil, Serbia, Romania and South Africa.F F The International Telecommunication Union estimates the number of Internet users in Mongolia at 13.10 percent of the total population in 2009, and fixed line and mobile subscribers in 2007 at 742 34.87 percent.F F Mongolia has a free media, and no blocking of Internet access.

Mongolia ranks a modest 116th on Transparency International’s corruption perceptions index for 2010, out of 178 countries, but still ahead of all the Central Asian countries but Kazakhstan and th th 743 equidistant between China (78 ) and Russia (154 ).F F The current president ran on an anti- corruption platform in the May 2009 elections.

739 Background Note: Mongolia, Washington: U.S. Department of State, Bureau of South and Central Asian Affairs, 8 March 2011 (http://www.state.gov/r/pa/ei/bgn/2779.htm), accessed 22 August 2011. 740 Ibid. 741 Freedom in the World 2011, p.14. 742 Mongolia Country Report, Global Finance (http://www.gfmag.com/gdp-data-country-reports/218- mongolia-gdp-country-report.html#axzz1Vh7GqCCk), accessed 21 August 2011. 743 Transparency International, Corruption Perceptions Index 2010.

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The parliamentary elections at the end of June 2008 were followed by major riots on 1 July, provoked by opposition claims that the ruling party had rigged them (a claim disputed by international observer teams who applauded the rigour of the voting process). The fact that the opposition was able to capture the presidency in 2009 and that the new president came from a minority ethnic sub-group demonstrated both that Mongolians were overcoming tribal differences in favour of national unity and that public confidence in the two major parties had been 744 restored.F

11.2 Economic and Social Situation

Mongolia’s socio-economic indicators are relatively low. It ranked 100th out of 169 countries on the UNDP Human Development Index in 2010, behind China, Russia, Kazakhstan and 745 Turkmenistan.F F According to the World Bank, 49 percent of the population lived on less than $2 746 per day in 2008.F F Mongolia performs quite poorly on the UN Food and Agriculture Organization assessment of food insecurity, with a rating of four on the five-point scale. According to the FAO, 26 percent of the Mongolian population was undernourished during the 747 period 2005-7.F F Mongolia’s mining boom has yet to trickle down to much of Mongolia’s population, more than a third of which continues to be dependent upon semi-nomadic livestock 748 herding. Unemployment in Ulaanbaatar also remains high.F

Economic activity in Mongolia has traditionally been based on herding and agriculture, although development of extensive mineral deposits of copper, coal (Mongolia has the world’s largest deposit), molybdenum, tin, tungsten, and gold have emerged as a driver of industrial production. Mongolia is also reputed to have significant reserves of oil and natural gas, and possibly rare earth. This was apparently recognized by Stalin, but due to Soviet incompetence never actually realized. “Stalin’s Lost Oil” may yet give another boost to a nation finding itself suddenly awash in mineral wealth. Mongolia is now one of the 50 countries globally that are dependent upon 749 natural resources to stimulate growth and development.F

Over the past ten years the economy has been growing at an annual average rate of six percent, but with quite severe fluctuations, from 10 percent in 2007 to minus 1.6 percent in 2009 (Mongolia was one of the Asian countries hardest hit by the global downturn). Growth has been affected by severe winters, a collapse in copper prices, and the global financial crisis. However, as large mining projects begin production, the IMF predicts that economic growth could surge to 750 23 percent in 2013.F

744 Uradyn E. Bulag, “Mongolia in 2009. From Landlocked to Land-linked Cosmopolitan,” Asian Survey, vol.50, no.1, January/February 2010, pp.97-98. 745 “The Real Wealth of Nations: Pathways to Human Development,” p.144. 746 Mongolia Country Report. 747 The State of Food Insecurity in the World, p.50. 748 Freeman and Thompson, China on the Edge, p.47. 749 Chris Devonshire-Ellis, “China Woos Mongolia as Australia of North Asia,” China Briefing, 2 March 2011. 750 Yuriy Humber and Daniel Ten Cate, “Mongolia Rail Boom Seen Breaking China’s Rare Earths Grip: Freight Markets,” Bloomberg, 21 April 2011.

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As will be seen in the sections below, Mongolia’s economy continues to be heavily influenced by its neighbours. Mongolia purchases nearly all of its petroleum products from Russia. From China it acquires machinery, consumer goods, food products, and so on. As the debate over selection of export routes for coal from the Tavan Tolgoi coal mine shows (see below), there is little doubt that the Mongolian government is willing to pay a very hefty price for economic independence. That willingness to defy apparent economic logic possibly explains why Mongolia was voted as the second worst country in the world for mining investment according to a survey of mining companies in 2010, published by the Fraser Institute, a Canadian think-tank (out of 29 countries, 751 only Ecuador fared worse, but Russia and Kazakhstan were also in the bottom seven).F

11.3 Energy

As noted elsewhere in this section, Russia supplies almost all Mongolia’s petroleum products. As will be seen below, Mongolia wants Russia’s energy and natural gas lines to pass through the territory of Mongolia, but this seems unlikely to occur.

11.4 Internal security

Mongolia has the reputation of a peaceful country with few incidents of serious political violence or civil unrest. The four previous elections since 1992 had usually been accompanied by minor violence, but the riots that followed the 2008 parliamentary election were on an altogether different scale. They involved thousands of protesters and left five dead and hundreds of injured, and the president imposed a state of emergency. The rioters attacked the headquarters of the ruling party and the neighbouring national art gallery, and more than 1,000 pieces of artwork (one-fifth of the collection) were destroyed, damaged or looted. The riots were without precedent in independent Mongolia, and brought people up short.

Domestically, as will be seen, there has been an increase in nationalist aggression against Chinese residents. On the international scene Mongolia is in the enviable position of largely escaping notice in the annual US State Department country reports on global terrorism. For instance, the report for 2009 stated that “there were no known terrorist groups operating in Mongolia and no 752 known bases of support.”F

The successful adaptation to democracy, and the country’s tradition of non-violence, suggest that Mongolia is less likely than most countries in Inner Asia to be afflicted with political instability and disorder.

11.5 External Involvement in Mongolia

The earlier report on South Asia noted the competition between the regional hegemon (India) and 753 China in the buffer states that separate them, Bhutan and Nepal.F F Mongolia is similarly caught

751 Fred McMahon and Miguel Cervantes, Survey of Mining Companies 2009/2010, Vancouver: The Fraser Institute, August 2010, p.12. 752 Country Reports on Terrorism 2009, Washington, DC: United States Department of State, Office of the Coordinator for Counterterrorism, August 2010, p.52. 753 Kellett, China’s Periphery. Part 1: South Asia, pp.69-71, p.77.

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between two giants, China and Russia, and, like the Himalayan states, has found that its geographical location can be equally a source of opportunity and of danger.

For most of the past four centuries Mongolia has been dominated by one of its giant neighbours, although this was not always the case. After the collapse of the Soviet Union, Mongolia began to pursue an independent and nonaligned foreign policy. Mongolia is trying to balance the overwhelming proximity of China and Russia by increasing its ties to the West and Asia-Pacific countries (notably Japan and South Korea). Ulaanbaatar calls the approach the “third neighbour” 754 concept, and it is very similar to Kazakhstan’s multi-vectored foreign policy.F F

Mongolia joined the ASEAN Regional Forum in 1998, and has been actively participating in its activities as a means of getting closer to ASEAN nations. It also joined the Asian Cooperation Dialogue in 2004. Although Mongolia has historical grievances with the Republic of China, it nonetheless would like to improve its economic links to Taiwan, in part motivated by a desire to gain access to the latter’s huge reserves, the fifth largest in the world. In September 2002, Mongolia and Taiwan established reciprocal trade offices, to increase trade and investment.

11.5.1 Chinese Involvement in Mongolia

11.5.1.1 Background

The proximity of the Mongol and Chinese peoples has ensured that much of their history has been shared, and China was not always the dominant force. The Mongol leader Khubilai Khan conquered China and established the Yuan Dynasty (1279-1368). By 1691 much of Mongol territory had been made into administrative regions of China by the Qing Dynasty, and all of Mongolia was conquered by the Chinese when Outer Mongolia became a province, which it remained until the overthrow of the Qing Dynasty in 1911. For nearly eight years Mongolia retained its autonomy with Russian support, but was reincorporated into China as a province in 1919. Two years later Soviet forces helped to eject the Chinese administration. From 1921, Mongolia was theoretically independent but was in fact a client state of the Soviet Union.

As long as Mongolia was in the Soviet orbit, and garrisoned by Soviet troops, its relations with China were pretty slender. On instructions from Moscow, China finally gave up its claim to 755 Mongolia in 1945, a stance reaffirmed by Mao Zedong in 1950.F F However, Sino-Mongolian relations during this period were not entirely non-existent. In rhetoric surrounding its “good neighbour” relationship with Mongolia, China emphasizes its early recognition of Mongolia as an independent state, having officially established diplomatic relations with Ulaanbaatar in 1949, as well as its efforts to resolve the mutual border dispute, resulting in a 1962 treaty whereby it 2 756 relinquished its claims on around 12,000 km .F F However, at the height of Sino-Soviet strains, during the 1960s, tens of thousands of ethnic Chinese were expelled from Mongolia. In 1918 757 there were 100,000 ethnic Chinese Mongolians. By 1989 there were (officially) 247.F F

754 Joshua Kucera, “China Eyes Bite of Mongolia?” Diplomat, 19 March 2010. 755 Clarke, “The ‘centrality’ of Central Asia in world history,” p.34. 756 Freeman and Thompson, China on the Edge, p.51. 757 “Letter from Ulan Bator: Steppe Dancing,” The Economist, 20 January 2000.

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Sino-Mongolian relations began to improve in the mid-1980s when consular agreements were reached and cross-border trade contacts expanded. In May 1990, a Mongolian head of state visited China for the first time in 28 years, and in 1994 the countries signed a Treaty of Friendship and Cooperation. There are regular high-level visits. President Hu Jintao visited Mongolia in 2003 (his first international visit as China’s President). President Bagabandi visited China in 2004, President Enkhbayar visited in 2008, and Prime Minister Bayar met Premier Wen Jiabao in Beijing in April 2009. Premier Wen visited Ulaanbaatar in June 2010 to open a new cultural centre, announce new educational scholarships for Mongolians, and discuss cooperation 758 on infrastructure projects.F

Since 1990 the Dalai Lama has visited Mongolia a half-dozen times, most recently in 2006. Although the Mongolian government tries to keep these events low-key, China objects strongly to them. After the 2002 visit, China disrupted railroad links for two days, supposedly for “technical” reasons.

11.5.1.2 Economic Relations

China has been Mongolia’s top trade partner since 1998, as well as its largest source of foreign investment twelve years in a row. Between 1990 and 2010, China invested $2.468 billion in Mongolia, mostly in its mineral resources. It is by far the largest foreign investor in Mongolia 759 (Canada is second), with 50.99 percent of the total.F F In March 2010, Beijing gave Mongolia a 760 $3 billion loan to develop its roads.F F Bidding to operate the Tsankhi block of the Tavan Tolgoi coal mine, the world’s biggest undeveloped surface mine, has been opened up to international competition by the Mongolian government. The three leading consortiums are China’s Shenhua, the US firm Peabody Energy and Russian Railways, but a decision is not expected before 2012. Given China’s competitiveness for nearby energy resources and its willingness to pay above market prices, evident in some of its acquisitions in Kazakhstan, the competition for Tavan Tolgoi is likely to be fierce.

Bilateral trade between Mongolia and China was just $24 million in 1989, but by 2010 had 761 reached $3.3 billion,F F with Mongolia enjoying a healthy surplus of about $1.4 billion in 762 estimates for 2010.F F Bilateral trade between Mongolia and China is about three times the size of that between Mongolia and Russia, in which Mongolia suffers a deficit almost as large as its surplus with China. The bilateral relationship has converged so much that in 2004, a senior 763 Mongolian official referred to his country as “China’s Canada.”F

China imports coal, metals and oil from Mongolia while selling Mongolia foodstuffs, clothing, electronics and construction goods, as well as offering that landlocked country port access at

758 Background Note: Mongolia. 759 2011 Mongolian Investment Climate Statement, 28 February 2011, Ulaanbaatar: Economic and Commercial Section of the U.S. Embassy in Ulaanbaatar, Mongolia, p.79 (http://mongolia.usembassy.gov/ root/media/pdf/mongolia-ics-2011.pdf), accessed 24 August 2011. 760Ibid, p.46. 761

1989U :U Kondapalli, “Stabilising Borders: Sino-Mongolian Relations,” p.218; 2010U :U Devonshire-Ellis, “China Woos Mongolia.” 762 Extrapolating from CIA World Factbook data. 763 Kondapalli, “Stabilising Borders: Sino-Mongolian Relations,” p.218.

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Tianjin. Mongolia’s coal is the high-quality “coking” variety vital to steel production, and low “strip ratios” (the amount of waste that must be moved) means that it can be produced cheaply. In 764 contrast, China’s coal reserves are generally low-quality and much more expensive to mine.F

The Renminbi is widely circulated in Mongolia, and is called by some the “second Mongolian dollar.” China is also a main source of the “shadow” – largely cash – economy, which is estimated to be at least one-third the size of the official economy, although difficult to quantify 765 since the money does not pass through the hands of tax authorities or the banking sector.F

Earlier sections of this report have discussed Chinese land hunger, and Beijing’s efforts to persuade neighbouring countries to accept Chinese farmers, usually on land leased for a fixed term. Mongolia would seem well-suited to a similar land probe, even though almost 90 percent of the country’s land area is pasture or desert, of varying usefulness, nine percent forested and just one percent arable. According to the Food and Agriculture Organization there was only 2.7 km2 of arable land per 1,000 population in Mongolia in 2011, substantially more than Tajikistan (0.9 km2) and Kyrgyzstan (2.3 km2), which both seem to have attracted the attention of Chinese farmers.

11.5.1.3 Infrastructural Links

Between 1999 and 2008, as many as 3,000-km of railway lines were added in China’s northern provinces of Inner Mongolia, Jilin and Heilongjiang. In 2007, plans were revealed to extend three railway sections from these provinces to Yirshi, Xilinhot and Mandula, all of them heading 766 towards major coal reserves and mining areas.F F China has also helped to build airports in Mongolia.

The Trans-Mongolian railway is the only significant transportation link between the Russian Far East and Inner Mongolia and Heilongjiang. It is connected to the Trans-Siberian railway at Ulan- Ude, and joins the Chinese railway system at Jining. Since Mongolian trains run on the Russian gauge, which differs from that of China, through carriages between the two countries must have their bogies changed at the Sino-Mongolian border. Each carriage has to be lifted in turn to have its bogie changed and the whole operation, combined with passport and customs control, can take several hours.

A recent study drawing on images from Google Earth of China’s construction of roads and additional railroad routes produced by an environmental consultancy based in Ulaanbaatar warned that Mongolia is in imminent danger of losing “its once impregnable natural barriers to the west, south and east.” Three border regions in Mongolia are close enough to China that trucks can connect to China’s national expressways within no more than an hour of crossing the border. Many trucks are already doing that across makeshift roads to haul coal or minerals into China. The study argues that it is not so much construction of roads and other transportation networks to access Mongolian minerals by China that Mongolia should be concerned about; rather it is China’s own infrastructure development on its side of the border to manage its own resources,

764 Liam Halligan, “China and Russia drive mineral-rich Mongolia to join the mining elite,” The Telegraph, 11 September 2010. 765 Background Note: Mongolia. 766 Holslag, “China’s Roads to Influence,” p.647.

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people and defence that will have an impact on Mongolia. Mongolia’s periphery, the study argues, will now interconnect to China’s periphery, integrating Mongolia’s southern border regions into China in a way that challenges Mongolia’s sovereign control over their destiny. The implication is thus that, while Mongolia’s political leaders may seek to limit the country’s economic dependence on China by connecting the Tavan Tolgoi mine via rail to Russia rather to 767 China, this will have only a limited real effect.F

In his study of China’s cross-border transport networks, Jonathan Holslag summarized Chinese infrastructural initiatives on its various borders as follows:

China seems thus to have been successful in putting the infrastructure in place that was needed to tap its neighbourhood’s vast reserves of natural resources and 768 to gain access to the more limited opportunities in nearby consumer markets.F

11.5.1.4 Mongolian Response to China

Mongolians continue to worry about the potential for an influx of Chinese citizens and investment into their country, with the precedent of Inner Mongolia very much in mind. Despite Beijing’s assurances that it respects Mongolia’s independence and sovereignty, some Mongolians fear that 769 China could once again seek to annex Mongolia as a “lost Chinese territory.”F F In mid-2009 it was reported that there were three ultra-nationalist groups in Ulaanbaatar, claiming a combined membership of several thousand, a not inconsiderable number in a country of three million 770 people.F

Violence against Chinese, or Mongols who associated with them, was not considered a major societal problem until Chinese workers began coming to Mongolia in large numbers to work in the past 20 years. The past two years has seen a rise in press reports of ultra-nationalists boasting of beating Chinese, people suspected of associating with Chinese, and even cab drivers who pick up Chinese passengers. Mongolian press accounts and US State Department and local embassy reporting on anti-Chinese hostility, incidents of racist attacks, and improper seizure of property in 771 which Chinese invested seem to lend credence to the notion that racial violence is on the rise.F

That nationalism can directly affect Chinese-Mongolian trade was made clear in the parliamentary debate on how to exploit Tavan Tolgoi. The easiest and cheapest option to connect the mine to existing railway lines would be the construction of a spur-line, compatible with China’s railway gauge, just 80-km to the Chinese border, an approach proposed by a German railway company and endorsed by the World Bank and the Asian Development Bank. The alternative would be to connect with a Russian-gauge line 400-km away. Despite the economic merits of the first option, it drew opposition from Mongolia’s National Security Council and the government, which saw linking the mine to the Chinese railway system as being counter to the

767 Freeman and Thompson, China on the Edge, pp.62-63. 768 Ibid, p.659. 769 Freeman and Thompson, China on the Edge, p.47. 770 Mitch Moxley, “The Neo-Nazis of Mongolia: Swastikas Against China,” Time, 27 July 2009. 771 Alicia Campi, Mongolia’s Uneasy Relationship With China, AsiaFinest.com, 26 May 2010 (http://www.asiafinest.com/forum/index.php?showtopic=233772), accessed 2 June 2011.

DRDC CORA TM 2012-009 163 772 national interest,F F giving China too much effective control over the mine. In the upshot, parliament approved the line that would ultimately connect with the Trans-Siberian network, and while new lines to China are still planned, the priority has been given to the Russian line as 773 opposed to the one proposed by the Germans.F F This decision indicates that Mongols’ traditional nationalism and prejudice against the Chinese can still trump potential economic benefits and the urgings of the World Bank and the Asian Development Bank. However, little or no progress seems to have been made with regard to connecting Tavan Tolgoi to the Russian railway, and the meeting between the Mongolian and Russian leaders in Moscow at the end of May 2011 does not 774 appear to have produced results.F F

11.5.1.5 Geopolitical and Security Aspects of the Sino-Mongolian Relationship

In a reprise of China’s attitude towards the US/NATO presence in Central Asia, Beijing became concerned with growing US-Mongolian ties, marked by President Bush’s visit to Mongolia in November 2005. Beijing saw this development as part of an American plan to contain China, and some Chinese scholars have been arguing that Mongolia-US defence relations, relations with Taiwan and the periodic visits of the Dalai Lama cause problems for Sino-Mongolian 775 cooperation.F F Beijing obtained from Mongolia a joint statement that neither country would engage in an alliance that would negatively affect the other’s interests, implying Mongolia’s 776 relationship with the US was threatening to China’s interest.F F

Sino-Mongolian ties have been strengthened in such areas as joint UN peacekeeping military drills. In July 2009, 45 soldiers from each side met for six days of training at a Beijing base, China’s first joint peacekeeping exercise with any foreign nation. In 2004 Mongolia was admitted as an observer state to the SCO, which – as has been noted earlier – is essentially a Chinese-led multilateral security organization.

11.5.2 Russian Involvement in Mongolia

11.5.2.1 Background

During the late-Qing period, Chinese pressure on what was then Outer Mongolia led it to seek Russia’s protection, a process that intensified after the Bolshevik seizure of power in Russia. For seven decades after 1921 Mongolia was a client state of the Soviet Union, an unofficial “sixteenth Soviet republic.” Reliance on the Soviet Union, was seen by Mongolia’s leadership as preferable 777 to Chinese intervention and a loss of independence.F F The development strategies pursued in the

772 Ibid. 773 Jeff Dyer, “Can Mongolia retain its economic independence from China, using railways as a political tool,” Financial Times, 19 January 2011. 774 P. Shinebayer, “During hard times, Mongolia will always choose Russia as its primary partner,” M.A.D. Investment Solutions, 3 June 2011 (http://www.mad-mongolia.com/news/mongolia-news/during-hard- times-mongolia-will-always-choose-russia-as-its-primary-partner-5897/), accessed 23 August 2011. 775 A. Tuvshintugs, “Mongolia’s National Security: Past, Present and Future,” in K. Warikoo and Sharad K. Soni, eds., Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, pp.81-82. 776 Ibid, p.64. 777 Freeman and Thompson, China on the Edge, p.48.

164 DRDC CORA TM 2012-009 USSR were similarly followed in Outer Mongolia, including the collectivization of the nomadic, pastoral economy, the suppression of Mongolia’s Tibetan Buddhist institutions, and the elimination of the lay and Buddhist aristocracy. The country even adopted the Cyrillic script 778 (ironically, the non-independent Khalkha in Inner Mongolia still use the Mongolian script).F F During the 1930s and 1940s Mongolia was essentially isolated from the outside world, apart from the USSR, which helped it to remain relatively untouched in the Second World War.

Following the war, the Soviet Union reasserted its influence in Mongolia. Secure in its relations with Moscow, the Mongolian government shifted to postwar development, focusing on civilian enterprise. International ties were expanded, and Mongolia established relations with North Korea and the new communist governments in Eastern Europe. It also increased its participation in communist-sponsored conferences and international organizations. In the early 1960s, Mongolia attempted to maintain a neutral position amidst increasingly contentious Sino-Soviet polemics; this orientation changed in the middle of the decade. Mongolia and the Soviet Union signed an agreement in 1966 that introduced large-scale Soviet ground forces as part of Moscow’s general buildup along the Sino-Soviet frontier (they stayed until the early-1990s). J. Enkhsaikhan, a Mongolian lawyer with extensive experience in international relations (he was a former permanent representative to the UN for Mongolia), claims that during the Soviet era, weapons of 779 mass destruction were based in Mongolia.F

During the period of Sino-Soviet tensions, relations between Mongolia and China deteriorated. In 1983, Mongolia systematically began expelling some of the 7,000 ethnic Chinese in Mongolia to China. Many of them had lived in Mongolia since the 1950s, when they were sent there to assist in construction projects. At its height, Soviet assistance constituted one-third of Mongolia’s GDP, and this support disappeared almost overnight when the Soviet Union collapsed, leading to a very 780 deep recession.F

After the disintegration of the former Soviet Union, Mongolia was once again open to non- Soviet/Russian influences. Yet while most Russians left the country following the withdrawal of economic aid, continued links with Russia were essential to the stabilization of the Mongolian economy. In 1991, Mongolia and Russia concluded both a Joint Declaration of Cooperation and a bilateral trade agreement. This was followed by a 1993 Treaty of Friendship and Cooperation establishing a new basis of equality in the relationship. There was an exchange of presidential visits in 1999 and 2000, and on the latter occasion the two sides signed the Ulaanbaatar Declaration, which reaffirmed Mongol-Russian friendship and pledged cooperation on numerous economic and political issues. In December 2003, Mongolia believed it had settled the Soviet-era debt it owed to Russia with a negotiated payment of $250 million. In 2009 the Russian government stated that hundreds of millions of dollars in debt remained unpaid, but the debt was declared settled in December 2010 when Prime Minister Batbold visited Russia and met with Prime Minister Putin and President Medvedev.

778 Clarke, “The ‘centrality’ of Central Asia in world history,” p.34. 779 J. Enkhsaikhan, “Single-State NWFZs – a response to NWFZ blind spots,” The Mongolian Journal of International Affairs, no.14, 2007, p.34. 780 Background Note: Mongolia.

DRDC CORA TM 2012-009 165 Despite these initiatives, a Russian academic has concluded that “the position of Russia in 781 Mongolia is now noticeably weaker then the positions of the USA and China.”F

11.5.2.2 Economic Relationship

Soviet assistance, representing at its height one-third of Mongolia’s GDP, disappeared almost overnight in 1990-91 at the time of the dismantlement of the USSR, leading to a very deep 782 recession.F F The current trade balance between Russia and Mongolia is extremely unbalanced in Russia’s favour ($1 billion against $40 million), but it is only about one-third the size of Sino- 783 Mongolian trade.F F To some extent Russia’s relatively low share of Mongolia’s trade is a result 784 of the small population and low productivity of the Russian regions along Mongolia’s border.F F One Mongolian academic recently asserted that during the past few years (possibly referring to the whole period from 1991) Russian investment in Mongolia had “basically stopped.” Nevertheless, there were still nearly 300 economic ventures in the country with 100 percent 785 Russian investment.F

On 31 May 2011, the presidents of Russia and Mongolia signed a joint statement on promoting bilateral ties, with a particular emphasis on economic and trade relations. Although Russia enjoys a massive trade surplus with Mongolia, it was noteworthy that President Medvedev asserted that trade should move beyond a reliance on petroleum products, and called for the diversification of bilateral trade, in the hope that Mongolia would buy goods as well as raw materials from its 786 northern neighbour.F F

The issue of ownership of Mongolia’s only railway, Ulaanbaatar Railway, was also discussed at the meeting. The company is 50 percent owned by state-owned Russian Railways, with the rest of the ownership of Ulaanbaatar Railway in the hands of the Mongolian government. The railroad agreement was never revised since it was signed in 1949, and since the 1990s the Mongolian side has repeatedly tried to change the ownership ratio. Russia has proved obdurate, and no progress on the issue was made in May 2011 meeting. To prove that Russia offers a realistic outlet for Mongolian minerals, in October 2010 trucks filled with coal from Tavan Tolgoi drove to Ulaanbaatar, where their cargo was loaded onto a train for the journey to Russia’s biggest Far East port, Vostochny. That port lies 5,069-km from Tavan Tolgoi, whereas the nearest Chinese 787 port to the mine, Huanhua, is only 1,638-km away, one-third of the distance.F F However, as the

781 Elena Boykova, “Russia-Mongolia Relations in the 21st Century,” in K. Warikoo and Sharad K. Soni, eds., Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, p 782 Background Note: Mongolia. 783 Shinebayer, “During hard times, Mongolia will always choose Russia.” 784 Ilyas Kamalov, “Mongolia-Russia Relations: Some Perspectives,” in K. Warikoo and Sharad K. Soni, eds., Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, p.239. 785 Luvsan Khaisandai, “Contemporary Mongolia-Russia Relations,” in K. Warikoo and Sharad K. Soni, eds., Mongolia in the 21st Century. Society, Culture and International Relations, New Delhi: Pentagon Press, 2010, p.230. 786 “Medvedev wants Russia-Mongolia trade to go beyond petroleum,” Mongolia News (Asia-Pacific Securities), 2 June 2011 (http://www.mongolia-investment.com/en/news/mongolia-economic-news/2583- medvedev-wants-russia-mongolia-trade-to-go-beyond-petroleum), accessed 23 August 2011. 787 Humber and Ten Cate, “Mongolia Rail Boom.”

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example of Russia and Turkmenistan shows, China can dictate price if it has a monopoly on Mongolia’s export routes.

11.5.2.3 Energy Issues

In bilateral discussions in Moscow at the end of May 2011, the Mongolian president emphasized his government’s interest in the ambitious infrastructure projects in the region. Mongolia wants 788 Russia’s energy and natural gas lines to pass through the territory of Mongolia,F F which would doubtless earn the country transit fees as well as construction jobs. At present, the spur of the ESPO oil pipeline, from Skovorodino to Daqing, bypasses Mongolia to its east (Daqing is about 400-km from the Mongolian border) and is already in operation. As matters now stand, the route of the proposed 2,800-km Altai natural gas pipeline from Western Siberia to Urumqi would enter China via the Kanas Pass, which is about 30-km to the west of Mongolia. However, the earliest date that it could begin operating would be about 2016, and even that timeline is in doubt. This would give Mongolia time to negotiate a deviation of the route, or perhaps other routes, but already the existing plan is likely to prove extremely expensive, and possibly uncompetitive with Central Asian gas. In the circumstances, a diversion plus possible transit fees would seem unlikely to tempt both the Russians and the Chinese.

11.5.2.4 Military Ties After nearly two decades of inactivity, Russia is renewing military ties with the Mongolian armed forces through military education and training exchange programs, as well as joint exercises focused on the repair of Mongolia’s Soviet-built equipment. As part of the December 2010 visit, Russia announced it would increase the number of training positions available to Mongolian military officers.

11.5.3 US Involvement in Mongolia

As noted, Beijing worries that growing US-Mongolian ties – symbolized by President Bush’s visit in November 2005, the first ever by an incumbent American president – are part of a policy in Washington to contain China. For its part, Ulaanbaatar has gone to considerable lengths to reciprocate US interest. A contingent of about 150 Mongolian soldiers carried out perimeter security duties at Camp Echo in Iraq – the country’s first combat operation since the Second World War – until Ulaanbaatar ended the deployment in 2008. In March 2010 Mongolian troops 789 started a deployment with ISAF in Afghanistan; they currently number 114 personnel.F F Their mission is to help train the Afghan National Army in mobile field artillery techniques (at the former Canadian-run Camp Julien outside Kabul). Mongolia has received a financial reward for its support to US-led military operations, including a $285 million aid package from Washington 790 and the establishment of annual joint peacekeeping exercises, called “Khaan Quest.”F

788 Shinebayer, “During hard times, Mongolia will always choose Russia.” 789

ISAF, Troop Numbers and Contributions. Mongolia (http://www.isaf.nato.int/troop-numbers-and-H contributions/mongolia/index.php),H accessed 24 August 2011. 790 Joshua Kucera, “China Eyes Bite of Mongolia?” Diplomat, 19 March 2010.

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12 Implications for Canada

It might be anticipated that developments in the relations between Inner Asia and China could affect Canada in a number of areas, both directly and indirectly. Such areas might include domestic security in Canada, drug trafficking, the security of Canada’s allies, Canada’s commercial interests, bilateral military relationships with Inner Asia, and the impact of regional events on Canadian residents.

The primary focus here will be on Inner Asia, and this section will not concern itself with those aspects of affairs in both China and Russia that have little or no bearing on Inner Asia.

12.1 Canadian Domestic Security

The purpose of “Operation Enduring Freedom” in 2001 was, in Defense Secretary Donald 791 Rumsfeld’s words, to “drain the swamp they [al-Qaida] live in” in Afghanistan.F F

Canada, of course, has strongly seconded the US-led NATO mission in Afghanistan, and in large measure for the same homeland security reasons, if also to honour the country’s obligations under NATO Article 5 and its ties to the US. Government websites are reticent in defining the reasons for Canada’s participation in ISAF. However, in the past there was some official concurrence that participation in ISAF helped to protect Canadians from terrorist attack. For example, a story on then-Minister of International Cooperation Josée Verner’s visit to southern Afghanistan in October 2006, on the Conservative Party’s website, was headlined “Protecting Canadians, 792 Rebuilding Afghanistan.”F F It stated that the Canadian Forces mission “protects Canadians by clearing out terrorist sanctuaries in Afghanistan.” A Department of National Defence backgrounder of 15 September 2006 echoed this view. It stated that Canadian Forces personnel were in Afghanistan at the request of the Afghan government and to:

• help the government of the Islamic Republic of Afghanistan and its people to build a stable, peaceful and self-sustaining democratic country; • provide the people of Afghanistan with the hope for a brighter future by establishing the security necessary to promote development; and, • defend Canadian interests at home and abroad by preventing Afghanistan from relapsing 793 into a failed state that provides a safe haven for terrorists and terrorist organizations.F F

The “swamp” infested by al-Qaida and affiliated groups has now transferred to Pakistan’s tribal areas. After ISAF ends its mission it could be resurrected in Afghanistan as well as continuing in Pakistan. And eventually, when groups like the IMU are less focused on Afghanistan, it may spread into Central Asia.

791 Kellett, China’s Periphery. Part 1: South Asia, p.100. 792 “Protecting Canadians, Rebuilding Afghanistan,” Conservative Party of Canada website, 23 October 2006 (http://www.conservative.ca/EN/2459/56683). 793 “Military Strengthens its Reconstruction and Stabilization Efforts in Afghanistan,” Backgrounder BG- 06.027, Ottawa: Department of National Defence, 15 September 2006.

168 DRDC CORA TM 2012-009 If Central Asia develops as a sanctuary of Islamist groups like the IJU – particularly in the wake of a draw-down in the Coalition campaign in Afghanistan – it will undoubtedly have ramifications for the West, but possibly more so for Europe than for Canada. The IJU has primarily operated against Coalition forces in Afghanistan, but it has also planned and carried out attacks in Central Asia, particularly in Uzbekistan. It has also been associated with attempted attacks in Europe, notably with an alleged conspiracy against targets in Germany, including Frankfurt International Airport and US military facilities such as Ramstein Air Base. In this case, the would-be attackers (the “Sauerland cell”) had received training at an IJU camp in North Waziristan. The IJU remains active in Germany, where they have made inroads, are recruiting 794 locals, and have been planning attacks within Europe.F

Militants in the Muslim world who move to the West often choose where they go on the basis of issues such as language, which enable them to feel more comfortable in an otherwise alien 795 environment.F F The people of Central Asia are typically Turkic-speaking. The native language for IMU and IJU members is Uzbek, which belongs to the Turkic language family. Thus, it is comparatively easy to understand for Turkish-speakers, who make up the majority of the German Muslim community. It is therefore no surprise that many of the Turkish-German jihadist recruits joined the Uzbek groups, where they could communicate much more easily than in the 796 predominantly Arab groups of al-Qaida.F F Of the four members of the Sauerland cell, two were of Turkish descent (and two were German converts).

Hence, if Central Asia ever develops into the kind of base for global terrorism that Afghanistan was prior to 2001, and Pakistan has been since about 2003, the focus of the groups and individuals involved appears more likely to be Europe than North America. In 2006 there were 23,355 individuals in Canada who claimed to have only Turkish ethnic origin, and another 20,340 who claimed Turkish roots among two or more ethnic origins provided, for a total of 43,695 residents who claimed some Turkish origin, about one-third of the number claiming some Pakistani origin. This is a relatively small population among which to find militants willing to launch terrorist attacks here, and of the 13 individuals convicted of jihadist-type terrorism in Canada since 9/11, none has been of Turkish (or Central Asian) origin.

Beijing’s pursuit of individuals it alleges are Uighur militants periodically involves Western countries (notably the US). Canada has not been immune from this pursuit. In November 2006 Prime Minister Stephen Harper brought up the case of Huseyin Celil in discussions with President Hu on the sidelines of the Asia-Pacific Economic Cooperation summit in Hanoi. Three months later, during Celil’s trial, a Chinese official warned that Canada’s strong human rights criticism of Beijing could threaten future trade between the two countries, provoking a strong response from

794 Country Reports on Terrorism 2010, Washington, DC: United States Department of State, Office of the Coordinator for Counterterrorism, August 2011, p.222. 795 For instance, jihadists from French-speaking countries like Algeria go to France (or Québec, in the case of Ahmed Ressam). Extremists from countries with a Spanish-speaking heritage would go to Spain (as did the Moroccan perpetrators of the Madrid bombings). English-speaking militants would go to Britain (Pakistanis like Abdul Rahman and Sohail Qureshi), the US (Ramzi Yousef), or Australia (Pakistani Fahim Khalid Lodhi). As for Canada, five men convicted in recent years on terrorism charges have been of Pakistani origin (Momin Khawaja, Saad Khalid, Saad Gaya, Amin Durrani and Asad Ansari). 796 F.W. Horst, Salafist Jihadism in Germany, Hezliya: International Institute for Counter-Terrorism, 12 January 2011.

DRDC CORA TM 2012-009 169 797 the Prime Minister.F F In February 2009, China urged Canada not to take in up to three Uighurs being held at Guantanamo Bay. The three, whose lawyers had filed applications for refugee status in Canada, were among a group of 17 Uighurs captured in the wake of the US invasion of Afghanistan and held at Guantanamo since then. Most of them had been cleared for release by the US government, which wanted to find a country willing to take them rather than return them to 798 China.F F Canada ultimately declined to take the men. However, the example of Celil and others seems likely to deter Uighur residents of Canada travelling in Central Asia, where they would risk rendition to China. Thus, the situation of Uighurs in Inner Asia and Xinjiang is unlikely to have significant implications for Canada.

12.2 Drug Trafficking

After years of declining use in the 1990s, heroin and other opiates have made a startling resurgence around the globe – thanks in large part to a 37-fold increase in Afghan opium production since 2001. According to a UN report in 2009, “The number of people who die of heroin overdoses in NATO countries per year (above 10,000) is five times higher than the total number of NATO troops killed in Afghanistan in the past eight years.” British agencies believe 799 that much, if not most of the heroin smuggled into the UK moves through Central Asia.F

Canadian police seized 92 kilos of heroin in 2008, up from 67 kilos in 2001 – a 38 percent increase, according to Health Canada. They also seized 67 percent more raw opium. RCMP reports say the main heroin entry points are Toronto, Vancouver and to a lesser extent Montréal. It comes in concealed on passengers and in courier parcels, by air cargo, regular mail and ship 800 cargo.F F Traditionally, Afghan opium was trafficked through Pakistan and Iran. Both countries remain important export routes. Russia and Europe, rather than Canada, appear to be the destination of the narcotics smuggled via Central Asia. According to the RCMP,

Opium, rarely imported directly from a source country, is generally smuggled into Canada via a number of transit countries, many located in South and Southwest Asia. Authorities believe that a large majority of the opium smuggled into Canada originates in Afghanistan... In 2009, Iran, which borders Afghanistan, emerged as the primary source/transit country for opium entering the Canadian market, 801 followed by Turkey and the Netherlands.F

Thus, although Inner Asia is heavily penetrated by narcotics smuggling and use, that situation seems to have relatively limited repercussions for Canada.

797 “Harper warns China as rights dispute threatens to expand,” Taipei Times, 11 February 2007. 798 “China urges Canada not to accept Guantanamo Uighurs,” Agence France-Presse, 5 February 2009. 799 Hanks, Global Security Watch. Central Asia, p.97. 800 Alex Roslin and Bilbo Poynter, “Afghan heroin glut hits home,” The Gazette, 11 December 2010. 801 Report on the Illicit Drug Situation in Canada – 2009, Ottawa: Royal Canadian Mounted Police (http://www.rcmp-grc.gc.ca/drugs-drogues/2009/p7-eng.htm), accessed 29 August 2009.

170 DRDC CORA TM 2012-009 12.3 Bilateral Military Relationships

Naturally, Canada has military relationships with a number of Inner Asian countries, but with the possible exception of Mongolia (and that in a very small way) it would be hard to disaggregate them from the context of this report, namely, the relationship between regional countries and the rise of China. For example, Canada has a wide-ranging military relationship with Russia, ranging from the NATO-Russia Council (which Canada played a leading role in establishing) to the trilateral Arctic SAREX, to cooperation in reducing the threat from weapons of mass destruction. However, these areas have little relevance for China-Inner Asia relations and their impact on Canada. The Directorate of Military Training and Cooperation provides some support to countries in Inner Asia. Four of the Central Asian countries (the exception being Turkmenistan) are classified as “Category B” countries in their region (which in this case is classified as Europe). This means that they receive 15 percent of the funds allocated to the region. Essentially, this entails support for courses in Canada dealing with peacekeeping, staff training and above all language training.

Mongolia is classified as a “Category A” country, those which qualify for 85 percent of the allocation for their region. Given the geopolitical significance of Mongolia and its attempt to reach out to the West (including in ISAF), defence relations between that country and Canada are of relevance to this report.

Although defence relations between Canada and Mongolia are limited, their nature is such that this country is well positioned to leverage them in support of broader political and economic objectives in Mongolia. Colonel Jargalsaikhan Mendee, a former Mongolian defence attaché in Canada, recently commented that the lack of a substantial Mongolian immigrant community in Canada, allied with geographic distance, makes it difficult to get Ottawa’s attention. However, the Canadian government supported Mongolia’s integration into such regional organizations as the ASEAN Regional Forum, and Mongolia has taken phased steps toward joining the Ottawa Convention on anti-personnel mines. Mendee thought that growing trade and investment ties between Canada and Mongolia were increasing interest in his country on the part of the Canadian government, and noted that the opening of the Canadian embassy in Ulaanbaatar in September 2008 would speed the process.

Mendee observed that bilateral ties in the security and defence arena are new. The Mongolian military was built upon Soviet military doctrine and strategy to interoperate with Soviet military units. Mongolia’s international security focus is now peace support operations, and with its extensive experience in this field Canada has played a role - albeit quite a small one - in the doctrinal and practical transformation from Soviet military practice to peacekeeping. He noted that Mongolia’s sensitive geo-strategic location made it imperative that efforts to increase bilateral military relations should focus on peacekeeping.

Bilateral defence ties between the two nations were established in 1996, but developed very slowly. However, the first batch of Mongolian officers participated in training courses in Canada in 2004, and a number of bilateral initiatives in the field of peacekeeping have occurred since, including the attachment of Canadian observers to the “Khaan Quest” exercises. Mongolia was first included in the Military Training and Assistance Program as a ‘Tier-One’ country in October 2004. MTAP provides both an excellent environment for Mongolian military personnel to learn the complexity of contemporary peace support operations, and a venue for understanding

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Canadian culture and civil-military relations during training in Canada. Colonel Mendee concluded that due to the scale and nature of civil-military relations, the Canadian model and 802 experience are more applicable than the US model for developing countries like Mongolia.F

12.4 Security Implications for Canada’s Allies

While bilateral military relationships with Inner Asia are of limited relevance to this report, Canada does have a significant continuing role (“Operation Attention”) in the Coalition efforts to stabilize Afghanistan and also an interest in our allies’ success there. Developments in Central Asia could be of importance to the ISAF mission in Afghanistan.

Militant attacks on NATO supply routes across Pakistan have led NATO gradually to abandon the Pakistan logistics route to Afghanistan, and increasingly to send supplies via the NDN. In August 2011 it was reported that about 40 percent of supplies were going by this route, and it was hoped that by the end of 2011 this figure would rise to 75 percent, and that within a year all of it 803 would go via the NDN.F F

As militant groups, such as the IMU and the IJU, grow in strength along the border between Afghanistan and Central Asia, it would not be surprising if they decided to try to repeat the strategy that worked in Pakistan, only further north. As noted, the ICG believes that the IMU’s strategy may be influenced by a belief that Afghanistan is the central international obligation of all jihadists, in which case it could be of great help to the Taliban if it cut or restricted the NDN. In the section on Tajikistan, it was noted that a major factor in the warring sides agreeing to end the civil war in 1997 was fear for the Tajik people if the Pashtun-based Taliban were victorious. Concern for the minorities in Afghanistan may now be less of a factor among their ethnic brethren in Central Asia than it was fourteen years ago. For example, although Afghanistan’s Uzbeks largely fought on the side of the Northern Alliance, and the Taliban made two bloody attacks on Mazar-e-Sharif, a city with a large Uzbek population, in 1997 and 1998, the IMU has developed close ties to the Taliban in recent years, and some of the group’s top leaders have integrated into the Taliban's shadow government in the three northern provinces of 804 Afghanistan.F F In these circumstances, jihadists from Central Asia and the North Caucasus may sooner or later be tempted to attack NATO’s lines of communications.

Attacks on NATO’s logistics chain in Central Asia are relevant to Canada mainly insofar as they affect our allies (and especially the US). Canada will not have the same reliance as the US and other NATO partners on the NDN, since it recently signed a memorandum of understanding with Kuwait to provide logistical support to the new training mission in Afghanistan (“Op Attention”).

802 Colonel Jargalsaikhan Mendee, “The Military Training assistance program (MTAP): merging interests of Mongolia and Canada,” Canadian Military Journal, vol.10, no.1, 2009, pp.30-37. 803 “Afghanistan Turns To The Northern Distribution Network,” Strategy Page, 26 August 2011. 804 Bill Roggio, “Special operations forces target IMU-linked Taliban commander in Afghan north,” Long War Journal, 10 March 2011.

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12.5 Canadian Commercial Interests

As a trading nation, whose exports accounted for about 30 percent of GDP in 2010, Canada has a strong commercial interest in China but a considerably lesser one in Inner Asia (Russia ranked 25th as an export partner in 2009). However, the nature of the Canadian economy, with its natural resource riches and expertise, makes Inner Asia a much more attractive investment location.

Two-way trade between Canada and Central Asian countries amounted to just under $2.3 billion in 2010. However, 98.8 percent of it was with just one country – Kazakhstan – with the other four sharing combined bilateral trade with Canada of only $30 million. Canada had a deficit in its 805 trade with Central Asia of $2.12 billion.F F Thus, Canada’s trade with Central Asia represents just 806 0.28 percent of its total global trade of $818.2 billion in 2010.F F Canada’s cumulative foreign direct investment (FDI) in Kazakhstan in 2010 was $2.3 billion, but there appears to have been little or no Canadian FDI in the other regional countries.

Canada’s trade with Mongolia in 2010 amounted to $258.5 million, of which 90 percent took the 807 form of imports, leading to a trade deficit of $205 million.F F In 2010 Canada’s FDI in Mongolia was $148 million. As of the end of 2010, Canada was the second-largest source of foreign investment in Mongolia in the period since 1990, a long way behind China. By that time, Canada had invested $400 million in the country (8.26 percent of FDI). China’s direct investment there was growing rapidly, and constituted 50.99 percent of the total; the US ranked 9th, with $116 th 808 million (2.39 percent) and Russia 10 , with $108 million (2.24 percent).F F Nevertheless, there are obstacles to investing in Mongolia, which was voted as the second worst country in the world for mining investment, according to a survey of mining companies in 2010 published by the 809 Fraser Institute.F F

Canada’s trade with Russia in 2010 totalled $2.83 billion, not a lot more than that with Kazakhstan. Canadian FDI in Russia in 2010 was $560 million, one-quarter that invested in 810 Kazakhstan.F F For the purpose of this study, the real interest is that part of Russia which is effectively in Inner Asia, but the available data cannot be disaggregated to show the extent of Canadian trade and investment in the eastern part of Russia most directly connected with China. Thus, Canada’s total trade with all the seven Inner Asian countries combined in 2010 was $5.38 billion (0.06 percent of Canada’s global trade).

805 Fact Sheets: Kazakhstan (May 2011), Kyrgyzstan (May 2010), Tajikistan (May 2010), Turkmenistan (May 2010), Uzbekistan (May 2010), Ottawa: Department of Foreign Affairs and International Trade (http://www.international.gc.ca/international/index.aspx), accessed 24 August 2011. Global trade figures from CIA, World Factbook, accessed 30 April 2010. 806 “Canada’s trade deficit hits $9 billion in 2010,” The Canadian Press, 7 April 2011. 807 Fact Sheet: Mongolia, Ottawa: Department of Foreign Affairs and International Trade, May 2010 (http://www.international.gc.ca/international/index.aspx), accessed 24 August 2011. 808 2011 Mongolian Investment Climate Statement, Ulaanbaatar: Economic and Commercial Section of the U.S. Embassy in Ulaanbaatar, Mongolia, 28 February 2011, p.79 (http://mongolia.usembassy.gov/ root/media/pdf/mongolia-ics-2011.pdf), accessed 24 August 2011. 809Fred McMahon and Miguel Cervantes, Survey of Mining Companies 2009/2010, Vancouver: The Fraser Institute, August 2010, p.12. 810 Fact Sheet: Russia, Ottawa: Department of Foreign Affairs and International Trade, May 2010 (http://www.international.gc.ca/international/index.aspx), accessed 24 August 2011.

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A good example of Canada’s extensive mining interests in Inner Asia is Ivanhoe Mines Ltd, a 811 Canadian mineral exploration and development company based in Vancouver.F F The company has a 66 percent interest in the world-scale Oyu Tolgoi copper and gold mine development project in southern Mongolia. Ivanhoe discovered the site in 2001, and is expecting it to go into initial production in late-2012 and to ramp up to commercial production in the first half of 2013. The mine is located some 100-km north of the border with China, giving the company ready access to the huge Chinese commodities market. Ivanhoe has the right initially to connect with the Chinese power supply, but after four years is expected to source its power from within Mongolia. SouthGobi Resources, a subsidiary of Ivanhoe, owns or controls coal licenses for several blocks in the Tavan Tolgoi area.

A map on the Ivanhoe company website shows road links from Oyu Tolgoi to the Chinese border and to Tavan Tolgoi, some 100-km to the northwest. It also shows planned railways to both Tavan Tolgoi and the border. The southern route would connect at the border with a Chinese railway already under construction and scheduled for completion in May 2012. That line would join an existing railway at Baotou (a steel-making industrial centre) which itself connects with Jining and Beijing. The planned line in the direction of Tavan Tolgoi would then link to another planned railway that is to connect with the Trans-Mongolian Railway at Sainshand, where it can 812 go north to join the Trans-Siberian or south to Jining.F F Whether Ivanhoe and other investors will be affected by the commercial and geopolitical contest over export routes remains to be seen, but the government and parliamentary rejection of advice from the World Bank and the Asian Development Bank suggests that strategic as well as economic factors are at play in mining issues in parts of Mongolia, as they are elsewhere in the world.

SouthGobi Resources, of which Ivanhoe owns approximately 57 percent of the issued and outstanding shares, operates a large coal mine at Ovoot Tolgoi in southern Mongolia. The mine is in production and selling coal to customers in China. The mine is very close to the Chinese border, with which it is connected by road. At the border the road meets several existing railway lines, one of which connects to the steel-making centre of Jiayuguan.

Prophecy Resource was the second Canadian company to obtain a mining permit in Mongolia, but as yet is operating on a small scale there. It owns the rights to mine two deposits in the country, Ulaan Ovoo and Chandgana. Ulaan Ovoo is an hour by truck from Sukhbaatar railway station, which is just one station away from the Russian border, so the company plans to use the Russian Railway to transport its coal, since the Mongolian railway system is overloaded. Prophecy intends to use the coal from its Chandgana mine in a power plant it expects to build at the mine site, so at that location the company is more interested in building transmission lines 813 than roads.F F This strategy appears to respond to the substantial increase in demand for electricity in China, noted earlier, along with the slowdown in electricity production at China’s coal- operated power plants.

Investments such as these enable Mongolia to lessen its dependence on China, and Canada is well positioned, as a country with extensive mining experience, to assist in the development of

811 Former Prime Minister Jean Chrétien is a special advisor to the company. 812 See map in Oyu Tolgoi (copper-gold), Mongolia, Vancouver: Ivanhoe Mines Ltd, (http://www.ivanhoemines.com/s/Oyu_Tolgoi.asp?ReportID=379189), accessed 29 August 2011. 813 John Lee, “We want to grow together with Mongolia,” interview with John Lee, CEO of Prophecy Resource Corp., 12 April 2011 (http://www.prophecycoal.com/index.php).

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Mongolia’s mining sector, which absorbs the vast majority of Canadian investment in the country. There are over 25 Canadian mining firms operating in Mongolia, making Canada by far 814 the largest and most visible foreign presence in mining in that country.F F

Russia is one of the world’s leading producers of oil and gas, and Canadian oil service companies are experiencing substantial growth in Russia. There is considerable potential for further growth in the development of offshore deposits, notably in the Sakhalin region of the Far East. A Canadian company, Kinross Gold Corp, is playing a major role in gold exploration and production in Chukotka province in the Far East. The company owns the right to develop Kupol, Russia’s second-largest gold mine, and is exploring a highly promising deposit called Dvoinoye in the same region. Uniquely, the Russian government allowed Kinross to acquire Dvoinoye without having to team up with a Russian partner. Kinross is now the largest taxpayer in 815 Chukotka and the largest gold producer in Russia.F F

Apart from Kazakhstan, Canada’s commercial interests in Central Asia are very limited. In January 2010 Foreign Affairs and International Trade reported that the stock of Canadian 816 investment in Kazakhstan was close to $5 billion, the lion’s share of it in the mining sector.F F For example, Ivanhoe has a 50 percent interest in the Kyzyl gold mine in northern Kazakhstan.

As for China itself, trade and investment with that country dwarf the amounts involved in Inner Asia. In 2009, bilateral trade between Canada and China was $57.6 billion (or about 7.7 percent of Canada’s global trade for that year and over ten times as much as Canada-Inner Asia trade). In 2009, Canada’s FDI in China stood at $3.35 billion, a slight decline over the previous year, but 817 China’s FDI in Canada was more than double that amount, at $8.85 billion.F

There are also domestic aspects to Canada’s economic relationship with China and Inner Asia. A report by the Asia Pacific Foundation of Canada, released in mid-September 2009, concluded that Canada has the potential to attract billions of dollars in investment from Chinese companies: “Chinese companies perceive Canada as one of the most open economies in the world,” it stated. In recent years, Chinese companies have sought to buy into Canada’s resources sector, especially mining and energy, in a bid to lock in future supplies of oil and key metals for its booming 818 economy.F F For instance, in February 2011, PetroChina announced that it would buy a 50 percent $5.4 billion stake in Encana Corp’s Cutbank Ridge shale gas assets in Alberta and BC. While PetroChina seems to have paid a considerable premium for the assets, it was motivated by a

814 International Trade: Fast Facts on Canada-Mongolia Commercial Relations, Ottawa: Department of Foreign Affairs and International Trade 18 July 2011 (http://www.international.gc.ca/commerce/visit- visite/china-chine/mongolia-mongolie.aspx?lang=en&view=d), accessed 25 August 2011. 815 Paul Christopher Webster, “Good times in the gulag,” The Globe and Mail, 28 March 2011. 816 Trade with Kazakhstan, Ottawa: Department of Foreign Affairs and International Trade, January 2010 (http://www.tradecommissioner.gc.ca/eng/document.jsp?did=101259&cid=20H&oid=467), accessed 25 August 2011. This total incorporated investment in Kyrgyzstan and Tajikistan, but it is unlikely that the amounts invested in those countries were very significant. 817 Fact Sheet: China, Ottawa: Department of Foreign Affairs and International Trade, March 2011 (http://www.canadainternational.gc.ca/china-chine/bilateral_relations_bilaterales/China-FS-Chine-FD aspx? view=d), accessed 24 August 2011. 818Colin Perkel, “Execs talk Canada-China trade,” The Star, 15 September 2009.

DRDC CORA TM 2012-009 175 819 desire to gain expertise in the shale gas field.F F The Alberta energy minister recently predicted 820 that “at some point China will take every drop of oil that Canada can produce.”F

As an exporting nation with major overseas investments, Canada has a strong interest in political stability. Instability in the Inner Asian region, and especially in Central Asia, would have a very small impact on our overall trading interests, given that it represents only 0.6 percent of our total trade. However, to the extent that it is economically disruptive for China, it could have a greater impact. At the same time, an economy as large as that of China ought to be able to withstand any political shock emanating from Inner Asia, since the region accounts for only around 2.2 percent of China’s total trade.

Political instability and geopolitical rivalry in Inner Asia might be somewhat more of a problem (or perhaps an opportunity) for Canadian investments, although they appear to represent little more than one percent of Canada’s stock of foreign direct investment abroad. Two major Canadian investments in Kazakh energy – PetroKazakhstan and Nations Energy – were picked off by Chinese companies in 2005-6 as part of China’s rush to establish a foothold in Kazakhstan, after a late start. A Canadian court had to adjudicate the sale, and a competing Russian offer, and the Canadian company received a price well above the market value. The situation in Mongolia might be even more geopolitical, with strategic factors having a significant influence on decision- making in Ulaanbaatar.

12.6 Impact on Canadians

The earlier report on South Asia concluded that, with one in fourteen Canadians being of Chinese or South Asian origin, there would doubtless be consequences for the personal and economic ties they enjoy with their countries of origin in the event of a serious confrontation involving both 821 China and South Asia (and particularly India).F F

The same would probably not be true with regard to Inner Asia, unless there were a serious confrontation between China and Russia, a highly unlikely eventuality in the foreseeable future. There are strong personal links between Canada and China, but quite limited ones between Canada and the countries and regions that make up Inner Asia (even including Russia).

Statistics Canada reported that in 2006 there were 1,135,365 individuals who claimed only Chinese origin, and another 211,145 who claimed Chinese roots among two or more ethnic origins provided, for a total of 1,346,510 residents in Canada claiming Chinese origin, 4.3 percent of the total population. The comparable numbers for Inner Asia were much lower. There were 98,245 individuals who claimed only Russian origin, and another 402,355 who claimed Russian roots among two or more ethnic origins provided, for a total of 500,600 residents in Canada claiming Russian origin, 1.6 percent of the total population. What proportion of these has roots in the Russian Far East is not known. No one self-identified as being of Central Asian origin, and

819 Chen, “China set to unearth shale power,” p.3. 820 Ian Austen, “Forget Global Warming: Oil Sands Boom Full Steam Ahead,” The New York Times, 7 June 2011. 821 Kellett, China’s Periphery. Part 1: South Asia, p.100.

176 DRDC CORA TM 2012-009 only 3,965 reported that they had Mongolian roots (1,015 single responses and 2,950 multiple 822 responses).F F

Given the huge differences in national power between China, on the one hand, and Central Asia, Mongolia and the Russian Far East on the other, it is difficult to envisage developments in Inner Asia that would greatly affect many Chinese-Canadians in the foreseeable future. Therefore, despite their large numbers, the impact of turmoil in Inner Asia seems likely significantly to impact relatively few in the Chinese community here, and any effect on the Inner Asian community would be muted by that population group’s small scale.

One group of Canadian residents that will unquestionably be affected by events in China and 823 Inner Asia will be the Uighurs living in this country, who are thought to number about 1,000.F F They have periodically mounted protests against China, notably in connection with the Celil affair and the Urumqi violence. The Uighurs are a Turkic people, and thus probably have the support of the considerably larger Turkish community in Canada. Nevertheless, combined they represent about 0.14 percent of the population of Canada.

Canadians rank third, after Americans and Irish citizens, in adopting children from Kazakhstan. There is growing interest in Canadian educational institutions among Kazakh students, and the Kazakh government has a scholarship programme for post-secondary study abroad which might 824 facilitate study here.F F Any turmoil involving Kazakhstan would affect these areas of contact, but the numbers involved are far too small to have an impact on Canada at a national level.

12.7 Summary

On the whole, developments in Inner Asia, and their interplay with the rise of China, seem likely to have a relatively limited impact on Canada. Perhaps the more significant implications for Canada would include the potential threat to ISAF’s strategic rear in Central Asia and for Canadian investment in Inner Asia as a whole, but neither of these concerns seems likely to eventuate for a quite considerable period. The potential impact on Canadian commerce and on groups within Canada from developments in the region seems likely to be quite low. So too, probably, would be the terrorist and narcotics trafficking threat emanating from Inner Asia.

822 Statistics Canada, “Canada,” in Ethnic origins, 2006 counts, for Canada, provinces and territories – 20% sample data, Ottawa: Statistics Canada (http://www12.statcan.ca/census-recensement/2006/dp- pd/hlt/97-562/pages/page.cfm?Lang=E&Geo=PR&Code=01&Data=Count&Table=2&StartRec=1&Sort= 3&Display=All&CSDFilter=5000), accessed 24 August 2011. 823 Haroon Siddiqui, “Siddiqui: Dragon Slayer still fearless,” The Star, 6 December 2009. 824 Trade with Kazakhstan, Ottawa: Department of Foreign Affairs and International Trade, January 2010 (http://www.tradecommissioner.gc.ca/eng/document.jsp?did=101259&cid=20H&oid=467), accessed 25 August 2011.

DRDC CORA TM 2012-009 177 13 Conclusions

In the two decades since independence in 1991, Central Asia has re-emerged as the centre of geopolitical tension that it was in the 19th century, a product of its energy wealth and instability. The former makes the region a tempting target for Beijing as it tries to maintain its economic momentum and hence, possibly, the legitimacy of Communist Party rule. The latter represents a threat to Xinjiang.

Obviously, China’s main rival in Inner Asia is Russia. Of Moscow’s primary goals in Central Asia – control of its energy resources and regional stability – it is in competition with China on the first but cooperates on the second. China’s influence in Central Asia has been growing rapidly, and it has helped to break Russia’s energy stranglehold there. In the process, it has enlisted Central Asia in its efforts to secure Xinjiang, a role that the regional states are well- placed to fulfill. Beijing has been less successful in its attempts to extrude the American presence in Central Asia, but time is clearly on its side.

In Mongolia and the Russian Far East, as in Central Asia, China’s presence is growing rapidly, and in all those places nationalist resentments, possibly fuelled by religious differences, might well increase. In turn, this could possibly put Chinese citizens and interests at risk and potentially draw China deeper into Inner Asia than its current profile, which is almost entirely economic. However, it is important to put these trends in perspective. In 2009, China’s trade with Inner Asia (including Russia as a whole) was less than three percent of its global trade. Thus, any disruptions to this trade would likely have a relatively marginal impact on China’s overall economic growth. In these circumstances, whether or not Beijing would react to comparative pinpricks by nationalist or religious elements in Inner Asia may well depend on factors beyond the expatriate, investment or trade interests under attack in the region. Such factors may include, for example, the security of Xinjiang.

Developments in Inner Asia, and their interplay with the rise of China, seem likely to have a relatively limited impact on Canada. The potential impact on Canadian commerce and on groups within Canada from developments in the region seems likely to be quite low. So too, probably, would be the terrorist threat emanating from Inner Asia. Events in Inner Asia may make a bigger – but still limited – impression on Canadian investments there. The potential threat to ISAF’s strategic rear in Central Asia would have a more immediate impact on Canada’s allies than on Canada, but would be important for any negative effect it might have on those allies and on the mission that Canada undertook in Afghanistan.

178 DRDC CORA TM 2012-009 List of acronyms

ADB Asian Development Bank

ASEAN Association of Southeast Asian Nations

BRIC Brazil, Russia, India, China

BTC Baku-Tbilisi-Ceyhan oil pipeline

CAC Central Asia Centre (gas pipeline)

CACO Central Asian Cooperation Organization

CAFMI Central Asian Free Market Institute

CAGP Central Asia Gas Pipeline

CGNPG China Guangdong Nuclear Power Group

CIA Central Intelligence Agency (US)

CIS Commonwealth of Independent States

CITIC China International Trust and Investment Corp

CNA Non-profit think tank in Alexandria, Virginia

CNPC China National Petroleum Corp

CPC Caspian Pipeline Consortium

CRRF Rapid Reaction Force of the CSTO

CSTO Collective Security Treaty Organization

EBRD European Bank for Reconstruction and Development

EIA Energy Information Administration (US)

ESPO Eastern Siberia-Pacific Ocean oil pipeline

ETIM East Turkestan Islamic Movement

ETR East Turkestan Republic

EU European Union

DRDC CORA TM 2012-009 179 EUCERS European Centre for Energy and Resource Security

EurAsEC Eurasian Economic Community

FAO Food and Agriculture Organization (UN)

G-7/-8 Group of 7/8

GDP Gross Domestic Product

GUAM Georgia, Ukraine, Azerbaijan, Moldova Organization for Democracy and Economic Development (GUUAM when Uzbekistan a member, 1999-2005)

HDI Human Development Index (UN Development Programme)

HuT Hizb ut-Tahrir (radical Islamist organization)

ICBM Intercontinental Ballistic Missile

ICG International Crisis Group

IEA International Energy Agency

IISS International Institute for Strategic Studies

IJU Islamic Jihad Group

IMF International Monetary Fund

IMU Islamic Movement of Uzbekistan

IRPT Islamic Renaissance Party of Tajikistan

ISAF International Security Assistance Force (Afghanistan)

KMG KazMunaiGaz (state-owned oil and gas company in Kazakhstan)

LNG Liquefied Natural Gas

MTAP Military Training and Assistance Programme (NDHQ, Ottawa)

NAFTA North American Free Trade Agreement

NATO North Atlantic Treaty Organization

NGO Non-governmental organization

NDN Northern Distribution Network

180 DRDC CORA TM 2012-009 OECD Organization for Economic Cooperation and Development

OSD Office of the Secretary of Defense (US)

OSCE Organization for Security and Cooperation in Europe

P-5 Five permanent members of the UN Security Council

PfP Partnership for Peace (NATO)

PCC Production and Construction Corps (Xinjiang)

PLA People’s Liberation Army (China)

PLAN PLA Navy

RATS Regional Anti-Terrorist Structure (SCO)

RCMP Royal Canadian Mounted Police

RIFIAS Research Institute for Inner Asian Studies

SAREX Search and rescue exercise

SCO Shanghai Cooperation Organization

SIPRI Stockholm International Peace Research Institute

SSBN Nuclear-powered ballistic missile submarine

TAPI Turkmenistan-Afghanistan-Pakistan-India gas pipeline (proposed)

UESCA United Energy System of Central Asia

UK United Kingdom

UN United Nations

UNDP United Nations Development Programme

US United States of America

USNS United States Navy Ship

USSR Union of Soviet Socialist Republics

UTO United Tajik Opposition

WTO World Trade Organization

DRDC CORA TM 2012-009 181

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10a. ORIGINATOR'S DOCUMENT NUMBER (The official document 10b. OTHER DOCUMENT NO(s). (Any other numbers which may be number by which the document is identified by the originating assigned this document either by the originator or by the sponsor.) activity. This number must be unique to this document.) DRDC CORA TM 2012-009

11. DOCUMENT AVAILABILITY (Any limitations on further dissemination of the document, other than those imposed by security classification.) Unlimited

12. DOCUMENT ANNOUNCEMENT (Any limitation to the bibliographic announcement of this document. This will normally correspond to the Document Availability (11). However, where further distribution (beyond the audience specified in (11) is possible, a wider announcement audience may be selected.)) Unlimited 13. ABSTRACT (A brief and factual summary of the document. It may also appear elsewhere in the body of the document itself. It is highly desirable that the abstract of classified documents be unclassified. Each paragraph of the abstract shall begin with an indication of the security classification of the information in the paragraph (unless the document itself is unclassified) represented as (S), (C), (R), or (U). It is not necessary to include here abstracts in both official languages unless the text is bilingual.) This study forms part of the broader investigation of China’s re-emergence as a key great power and its impact on regional and global security, with a view to exploring the potential implications of developments around China’s periphery for Canada and its key alliance relationships. This report examines all the states that constitute Inner Asia (the five Central Asia countries, Russia – particularly its eastern part bordering China – and Mongolia) in the context of their relations with China. Particular emphasis is placed on issues relating to energy and security and to the potential geopolitical competition between Russia and China.

Le présent rapport s’inscrit dans le cadre d’une vaste étude sur la réémergence de la Chine en tant que grande puissance et sur les répercussions de cet essor sur la sécurité régionale et mondiale. L’étude a notamment pour visée d’explorer les effets potentiels de l’évolution des pays voisins de la Chine sur le Canada et ses principales alliances. Dans le présent document, nous examinons les États qui forment l’Asie intérieure (les cinq pays de l’Asie centrale, la Russie – en particulier la partie est du pays qui borde la Chine – et la Mongolie) dans le contexte de leurs relations avec la Chine. Nous accordons une attention particulière aux questions d’énergie et de sécurité et à la concurrence géopolitique qui pourrait s’installer entre la Russie et la Chine.

14. KEYWORDS, DESCRIPTORS or IDENTIFIERS (Technically meaningful terms or short phrases that characterize a document and could be helpful in cataloguing the document. They should be selected so that no security classification is required. Identifiers, such as equipment model designation, trade name, military project code name, geographic location may also be included. If possible keywords should be selected from a published thesaurus, e.g. Thesaurus of Engineering and Scientific Terms (TEST) and that thesaurus identified. If it is not possible to select indexing terms which are Unclassified, the classification of each should be indicated as with the title.) China, Asia, Central Asia, Russia, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan