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No. Regional and Country Profile: Central Asia, Turkmenistan, Kyrgyz Republic and Tajikistan June 2009 Japan Interntional Cooperation Agency OPMAC Corporation 東中 JR 09-004 Outline of the Study 1-1 Backgrounds Bordered by Asia to the east and Europe to the west, Central Asia occupies a vital position in the Eurasian Continent. Possessing abundant underground reserves of petroleum, gas, gold, uranium ore and other underground resources, and occupying a strategically vital geopolitical location, Central Asia has historically been the focus of competing interests by various powers. Central Asia is surrounded by the superpowers of Russia and China, and today is affected by regional instability in the neighboring Middle East, Afghanistan and Pakistan, etc. Especially in the aftermath of the 9/11 terrorist attacks on the United States in 2001, worldwide attention has been directed towards the stability and development of the whole South Asian region including this area and Afghanistan, and vested interests have become increasingly complicated. Moreover, against a background of growing energy demand in China, India and other parts of Asia, the stable supply of petroleum and natural gas from Central Asia helps stabilize the international energy market and enhances regional importance from the viewpoint of energy security too. Following the dissolution of the Soviet Union in 1991, the republics of Central Asia respectively gained independence, and a number of regional organizations, i.e. the Commonwealth of Independent States (CIS), Shanghai Cooperation Organization (SCO) and Eurasia Economic Community (EAEC), etc. were established under a mélange of economic, diplomatic and military interests in Central Asia and environs. Concerning relations with Japan, the concept of Silk Road Diplomacy was enunciated in 1997. In light of the importance of promoting intraregional cooperation in Central Asia taking common issues into account, “Central Asia plus Japan dialogue” was launched in August 2004, and close diplomatic relations have been promoted ever since. Moreover, at the second meeting of foreign ministers under this dialogue held in June 2006, the Foreign Minister of Afghanistan took part as a guest and the consensus was reached that the stability and development of Central Asia are important for the peace and prosperity of the international community in general. It was also agreed to make political dialogue, intraregional cooperation, business promotion, intellectual dialogue and cultural exchange/human resources exchange the main pillars of cooperation in this dialogue framework, and action plans covering nine fields were adopted in respect of these five pillars. The government of Japan support to Central Asia amounted to more than US$2.5 billion over the 10 years from 1997 to 2006. Loan aid amounting to 321.961 million yen has been approved for a total of 26 projects mainly in the transport and telecommunications infrastructure and energy sectors, however, no new projects have been approved following the Tashguzar - Kumkurgan New Railway Line Construction Project in Uzbekistan in 2004. So far no yen loans have been provided with respect to Tajikistan, while there have been no yen loan projects in Turkmenistan and Kyrgyz Republic since 1998, although there have been some limited instances of grant aid and technical cooperation. In particular, concerning Turkmenistan, grant aid has only been provided in 2004, while technical cooperation has been limited to the intake of trainees only. For this reason, when JICA needs to examine conditions regarding debt and economy and aid policies including loan assistance in Central Asia including the above three countries, the required basic information is not sufficiently available. Accordingly, it is essential to implement analysis based on recent trends while paying attention to relations with Russia and China, which are strengthening their political and economic influence in Central Asia, relations with Afghanistan and Pakistan, which are integrally linked to the stability and development of the region, and relations with important donors such as the World Bank, ADB and EBRD, etc., which conduct loan assistance and so on. 1-2 Objectives of the Study In view of the points indicated above, the purpose of the Study is to obtain necessary information concerning loan assistance in Central Asia, in particular to obtain and analyze detailed information concerning Turkmenistan, Kyrgyz Republic and Tajikistan, and thereby to prepare basic data for compiling a policy of support including loan aid by JICA targeting the next five years or so. 1-3 Terms of Reference of the Study [Regional Profileof Central Asia] ◆ Scope of the Study The Study shall cover Central Asia in general as well as Russia, China, Afghanistan and Pakistan. Survey and analysis of China, Afghanistan and Pakistan shall be carried out primarily from the viewpoint of Central Asia. ◆ Study Items 1. Outline survey and analysis of Central Asia Developments and current conditions, etc. concerning politics, society and international relations in Central Asia over the past five years or so shall be surveyed, and future trends shall be analyzed. - Survey and analysis of politics, society and international relations in Central Asia - Survey and analysis of important points concerning diplomatic policy and cooperation in Central Asia with respect to Russia, China, Afghanistan and Pakistan - Survey and analysis of trends of regional cooperation organizations (CIS, SCO, EAEC, etc.) of which the countries of Central Asia are members - Survey and analysis of trends in support for Central Asia by donors (WB, ADB, EBRD, etc. and donors providing loan support) 2. Survey and analysis of the regional economy of Central Asia Regional economic trends over the past five years or so in Central Asia shall be surveyed and future prospects shall be analyzed. - Survey of the state of transition to the market economy (including performance and trends in the private sector, etc.) and analysis of future trends - Survey and analysis of economic relations and impacts and future movements pertaining to surrounding countries (including emigrant workers) - Survey and analysis of investment and trade movements in Central Asia [Country Profiles] ◆ Scope of the Study Field surveys shall be carried out in Turkmenistan, Kyrgyz Republic and Tajikistan. ◆ Study Items 1. Outline survey and analysis of politics and society 2. Review and summary of national development strategy 3. Survey and analysis of macro economic conditions and debt servicing ability 4. Survey and analysis of major sectors (including performance and future trends, etc. of foreign affiliated corporations) 5. Survey and analysis of trends among donors (WB, ADB, EBRD, etc. and donors providing loan support) 6. Survey and analysis of performance and future trends of Central Asian regional cooperation organizations (CIS, SCO, EAEC, etc.) in each country Table of Contents Outline of the Study Table of Contents Abbreviation Outlook of the 5 Central Asian Countries Summary ········································································································································ i Chapter 1 Regional Economy in Central Asia ............................................................................ 1 1-1 Transition Process to a Market Economy........................................................................... 1 1-1.1 Economic Liberalization and Privatization ............................................................ 1 1-1.2 Public Service Reform............................................................................................ 6 1-2 Economic Relations with Surrounding Countries............................................................ 10 1-2.1 International Migration and Remittance............................................................... 10 1-3 Trends in Foreign Investment and Trade in Central Asia................................................. 16 1-3.1 Foreign Investment in Central Asia...................................................................... 16 1-3.2 Trends of International Trade in Central Asia ...................................................... 17 Chapter 2 Development Needs and Issues of Turkmenistan..................................................... 27 2-1 Outline of Development Strategy and Core Sectors ........................................................ 27 2-1.1 Outline of “The Strategy for the Economic, Political, and Cultural Development of Turkmenistan for the Period up to Year 2020”.......................... 28 2-1.2 Development plan for Key Economic Sectors ..................................................... 28 2-1.3 Features of the Development Strategy.................................................................. 30 2-2 Analysis of Major Sectors................................................................................................ 31 2-2.1 Power.................................................................................................................... 31 2-2.2 Transport............................................................................................................... 35 2-2.3 Water and Sanitation............................................................................................. 39 2-3 Macroeconomic and Fiscal Analysis................................................................................ 42 2-3.1 Macroeconomic Conditions................................................................................
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