Master Thesis Dimitrios Psomiadis

Graduate School of Social Sciences Post-Cold War -Uzbekistan Relationship under Bilateral and Multilateral Framework

2006 – 2018

Author: Dimitrios Psomiadis

Student number: 12290866

Thesis type: Master Thesis

Programme: The Political Economy of Energy

Supervisor: Dr. M.P. Amineh

Second Reader: Dr. László Marácz

Date: 24-06-16

Place of Submission: Amsterdam

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Table of Contents

Contents Acknowledgements ...... 5 Map 1: China...... 6 Map 2: Uzbekistan ...... 7 Map 3: Central Asia ...... 8 List of tables and figures ...... 9 List of abbreviations ...... 10 Chapter 1 - Introduction ...... 12 1.1 Objectives ...... 12 1.2 Social and academic relevance...... 13 1.3 Research Questions ...... 14 1.4. Literature review ...... 15 1.5. Delineation of Research ...... 22 1.6. Theoretical Framework ...... 22 1.7. Hypotheses ...... 27 1.8. Operationalization ...... 27 1.9 Data ...... 28 1.10 The organization of the Thesis ...... 29 Chapter 2 - State, Development, Energy Situation and Chinese National Oil Companies ...... 30 2.1 Introduction ...... 30 2.2 Relations between state and market in China ...... 31 2.3 Reform and ‘Opening up’ policies ...... 33 2.4 Energy sector’s overhaul and the National Oil Companies ...... 41 2.5 The ‘Going-Out’ Strategy ...... 43 2.6 Conclusion ...... 44 Chapter 3 - The Post-Cold War Central Asia and its Multi-faceted Importance for China ...... 46 3.1 Introduction ...... 46 3.2 The geostrategic importance of Central Asia ...... 46 3.3 Geoeconomic importance of the Central Asia ...... 48 3.4 The Geopolitics of the post-Cold War Central Asia ...... 49 3

Master Thesis Dimitrios Psomiadis

3.4 China’s national or ‘core’ interests ...... 51 3.5 Central Asia in China’s foreign policy ...... 52 3.6 Conclusion ...... 55 Chapter 4 - The Chinese-Uzbek Relations in Bilateral and Multilateral Framework ...... 56 4.1 Introduction ...... 56 4.2 Uzbekistan’s post-Soviet political economy ...... 56 4.3 China-Uzbekistan cooperation ...... 63 4.4 Bilateral cooperation of China-Uzbekistan in multilateral framework ...... 81 4.5 Conclusion ...... 89 Chapter 5 - The Geopolitical Interaction between Major Powers in Central Asia and in Uzbekistan ...... 91 5.1 Introduction ...... 91 5.2 Geopolitics of Russia’s power projection in Central Asia ...... 91 5.3 United States geoeconomic involvement in Uzbekistan ...... 99 5.4 The European Union’s geoeconomic involvement in Uzbekistan ...... 105 5.5 The geopolitical rivalry in Central Asia and the position of China ...... 108 Chapter 6 - Conclusions ...... 113 References ...... 119 Books and book chapters ...... 119 Journal Articles ...... 122 Internet Sources ...... 130

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Acknowledgements

First and foremost, I would like to express my deep and sincere gratitude to my research supervisor Dr. M.P. Amineh for offering me the opportunity to do this research and providing valuable guidance during this project. His dynamism, motivation, discipline and sincerity have deeply inspired and helped me during my entire research. He has taught me one of the most important and relevant topics of our era: the centrality of energy of modern civilization and the ensuing of fierce antagonism in every means of gaining access to natural resources. Furthermore, he has taught me how to carry out research which was one of the most daunting and demanding undertakings during my masters. It was a great privilege and honor to work and study under his guidance and I am exceedingly thankful for what he has offered me. I was, am and will always be impressed by his willingness and eagerness to put in the additional effort and time needed for any student to complete their research. Furthermore, I would also like to thank Dr. László Marácz for his time and willingness to read and assess my work. Finally, I would like to express my deepest respect and gratitude to my parents, for their love, patience, prayers, and sacrifices they have made for educating and preparing me for my future.

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Map 1: China

Source: University of Texas Library, 2011

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Map 2: Uzbekistan

Source: University of Texas Library, 1994

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Map 3: Central Asia

Source: University of Texas Library, 2009

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List of tables and figures

Tables

Table. 2.1: The 19th PSC (elected October 2017); 32 Table 3.1: Oil and Gas Reserves and share of world total in the Caspian Region-Central Asia (2016-2017); 48 Table 3.2:Export-earning and state-budget based on oil and gas in Russia-Iran-Azerbaijan- Turkmentistan-Kazakhstan and Uzbekistan (2017); 49 Table 4.3: Trade between China and Uzbekistan (2000-2017); 69 Table 5.1: Russian Foreign Direct Investments in Uzbekistan and the CIS Countries; 94 Table 5.2: U.S. foreign direct investment (FDI) in Uzbekistan (stock) in million USD; 101 Table 5.3: U.S. Goods Trade with Uzbekistan in Million USD; 102 Table 5.4: U.S. assistance towards Uzbekistan in Million USD; 103 Table 5.5: Total trade between EU and Central Asia, 2007-2017, in billion USD; 107 Table 5.6: EU trade with Uzbekistan 2008-2018; 107

Figures

Figure 2.2: China’s GDP growth; 35 Figure 2.3: China’s 2017; 38 Figure 2.4: China’s Oil Production and Consumption; 40 Figure. 2.5: The Governance structure of Chinese National Oil Companies; 43 Figure 4.1: «Uzbekneftegaz» National Holding Company Shareholders Capital Structure; 58 Figure 4.2: The structure of Uzbekneftegaz National Holding Company; 59

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List of abbreviations

ADB Asian Development Bank AIIB Asian Infrastructure Investment Bank b/d Barrels per day bcm Billion cubic meter BRI CACO Central Asian Cooperation Organisation CCP CDB China Development Bank CEIB China Export-Import Bank CNOOC China National Offshore Oil Corporation CNPC China National Petroleum Corporation CSTO Collective Security Treaty Organization CIS Commonwealth Independent States CU Customs Union E&P Exploration and Production FDI Foreign Direct Investment EAEC Eurasian Economic Community EEU Eurasian Economic Union EIA Energy Information Administration EU European Union FDI Foreign Direct Investment FTA Free Trade Agreements GDP GUUAM Georgia, Uzbekistan, Ukraine, Azerbaijan, Moldova IEA International Energy Agency IMF International Monetary Fund IOCs International Oil Companies IPE International Political Economy MOFA Ministry of Foreign Affairs mtoe Million tonnes of oil equivalent NATO North Atlantic Organisation NDRC National Development and Reform Commission NEA National Energy Administration NEC National Energy Commission NOCs National Oil Companies OEC Observatory for Economic Complexity OECD Organization for Economic Cooperation and Development PBSC Politburo Standing Committee PCA Partnership Cooperation Agreement PRC People’s Republic of China

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PSAs Production Sharing Agreements RATS Regional Anti-Terrorist Structure SASAC State-owned Assets Supervision and Administration Commission SCO Cooperation Organization SEZ Special Economic Zone SOEs State-Owned Enterprises SREB Silk Road Economic Belt tb/d Thousand barrels per day UN United Nations US United States USD United States Dollar

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Chapter 1

Introduction

1.1 Objectives

The rapid growth of China, since the late 1970s, deteriorated its energy situation, through increasing energy demand that ultimately resulted in oil imports in 1993. The same has happened with natural gas in 2006. As a result, China was forced to implement the ‘going out’ strategy to access the resources of resource-rich countries and markets as well. To achieve these goals China deployed a combination of enhanced bilateral relations with individual countries and build-up of multilateral mechanisms like Shanghai Cooperation Organization (SCO) and Belt and Road Initiative (BRI). The objective of this thesis will be the examination of the post-Cold War China- Uzbekistan relationship in diplomatic, economic and security level in the broader context of China’s strategic interests in Central Asia – regional stability, access to resources and markets to underpin its rapid development and to facilitate China’s peaceful development. Since the collapse of the Soviet Union, China has established and thereafter has been developing strong bilateral relations with Uzbekistan. To create a favorable strategic environment in the Central Asia, co-founded the Shanghai Five in 1996 and with the accession of Uzbekistan in 2001; the Shanghai Cooperation Organisation was established. Although the SCO was initiated as a security platform, cooperation in economic area was gradually incorporated. In 2013, Beijing took a step further toward the attainment of its national development and foreign policy goals by the announcing the Belt and Road Initiative. It can be said that BRI underpins economic integration and development among SCO members. Central Asia plays a key role in China’s attempt to connect the Eurasian landmass because of its strategic location at the center of the super-continent. Uzbekistan was selected because it is the most populous country in the region, due to its rich natural and mineral reserves and strategic position between East and West.

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Summing up, the main focus of this research project is related to the post-Cold War China-Uzbekistan relationships (e.g. diplomacy, economic and security) in the context of China’s strategic interests in Central Asia as they have been served by the SCO and BRI. It is worth mentioning that special attention will be given to the energy dimension with the involvement of CNPC in the energy sector of Uzbekistan. To understand this dimension, it is necessary to examine the relation between the Chinese state and the Chinese National Oil Companies at domestic and international levels. Specifically, the extent will be clarified to which state controls NOCs when they invest abroad. Whether they are pursuing strictly with statist interests or if they are investing having profitability as their primary goal. to put it otherwise, are they simply agents of the state or are they autonomous players? Furthermore, the relation of CNOCs will be examined in regards to economic, diplomatic and security efforts by other Chinese governmental entities in the case of Uzbekistan. It is postulated that they are the main tools that have been facilitated in the Chinese involvement with Uzbekistan. The main social actors and entities under study will be the Chinese and Uzbek political- elite and regarding energy sector in their National Oil Companies i.e. CNPC and Uzbekneftegaz, respectively. CNPC was selected as the main actor because of the Chinese NOC with the most extensive and active presence in Uzbekistan and due to the traditional close relations with the Chinese state. Uzbekneftegaz was selected because it is the only company which is controlling oil and gas fields in Uzbekistan and because it is controlled by the state. The examination of political elites is a crucial step to start with, since they play a vital role concerning the domestic level by controlling their NOCs and at the international level by using the policy tools of economy, diplomacy and security to project power. The time frame ranges from 2006 to 2018. The year 2006 was chosen as a starting point because then CNPC began to invest in the energy sector of Uzbekistan, by exploring and developing oil and gas fields while at that time energy deals relating to the construction of the Central Asia- pipeline with a capacity of 55 billion cubic meters (bcm) were signed with the Uzbekneftegaz .

1.2 Social and academic relevance. In terms of social relevance, this research is relevant because energy resources are considered a strategic commodity in the political economy (Amineh & Yang, 2018, 14) due to

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their finite and non-renewable nature. Hence, the access to oil and gas reserves will continue to play the key role for every industrialized or industrializing country as they struggle to achieve security. According to projections, energy demand will keep increasing (IEA, 2018; 28). Thus, as the world is and will remain dependent on fossil fuels for the foreseeable future, the examination of strategic competition for cross-border access into resource-rich countries between big energy consuming states is the utmost importance for the understanding of international political economy. The stunning growth of China and the ensuing demand for energy has deteriorated the situation and will continue to worsen as China is expected to be the world’s biggest energy consumer till 2040 (BP, 2019). Thus, trying to understand Beijing’s quest beyond its borders for energy resources is a decisive step to depict its willingness to promote domestic growth and provide an alternative world order model. The main contribution of the research stems from the comprehensive examination of diplomatic, economic and security tools in bilateral level which have been deployed by the Chinese state in order to facilitate the involvement of China in Uzbekistan and CNPC in the energy sector of Uzbekistan in particular. Furthermore, the research is centered on the examination of China-led multilateral institutions. Although, SCO is primarily an intergovernmental organisation aiming at the security area, it also has an energy facet; secondly, OBOR albeit is a plan promoting interconnectivity and development, it includes the construction of oil and natural gas infrastructure. Thus, this thesis will contribute in academe by examining and grasping this unexplored connection between bilateral relations and multilateral institutions of China towards a comprehensive engagement with Uzbekistan and its energy sector.

1.3 Research Questions To grasp the reasons of China’s involvement in Uzbekistan in the context of Central Asia the research is based on and revolves around the following research question: Why China’s strategic interests prompted it to get involved in Uzbekistan and how the relations between Uzbekistan and SCO and BRI in the context of the post-Cold War Central Asia facilitate China’s involvement?

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To further elaborate and answer the main question, this thesis will be separated in the following chapters; each of them contains question(s) that need to be answered. The current research proposal is considered as the first chapter thus the following chapters are: Chapter 2. How has China’s growth affected its energy security? Chapter 3. What is the significance of Central Asia for China and what policy tools it has deployed in order to achieve its goals? Chapter 4. What diplomatic, economic and security activities has China's state-class and CNPC implemented in Uzbekistan between 2006 and 2018? Chapter 5. How the Russia, US and the EU are involved in Central Asia and what are the implications for China’s involvement in the region and Uzbekistan in particular? Chapter 6. Conclusion

1.4. Literature review

To place this research into the academic debate the following literature review will embark on with the examination of correlation of China’s economic development and the ensuing resource scarcity and the reasons of the strategic importance of resources. It then proceeds to the discussion of the relation of the Chinese state and the NOCs and the logic behind the actions for access to resources beyond the borders. After that, to specify this broad field of inquiry, the review will focus on the SCO and the Chinese strategy in relation to the Central Asian states. In the final section of the review, the China-Uzbekistan relation in regards to energy cooperation will be discussed.

Energy security After the establishment of independence in 1949, China attempted to reach the level of industrialized Western powers. The new regime was deeply concerned about resources and treated their control as the absolute and ultimate strategic imperative (Jian, 2011: 186). The driving logic behind this decision was the attainment of energy independence, which was achieved during the 1950s by domestic labored efforts and the discovery of oil fields (Meidan, 2016: 4). China thus became self-sufficient and net exporter during the time-span from the 60s until the 90s (ibid, 5; 7), but its tremendous economic growth increased energy demand and, as a

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result, it became a net importer of a variety of energy resources namely oil in 1993, gas in 2007 and in 2007 (Wu, 2014: 4). Beijing is now the biggest consumer of energy in the world (ibid: 5). Development and Resource scarcity Over the last three decades China has managed to achieve an astounding annual growth of roughly 9% in terms of Gross Domestic Product (GDP) and in particular 9.6% and 8.7% in 8% in 2008 and 2009, respectively (IMF, 2010). As a result, 500 million people were lifted out of poverty, and China became the world’s largest exporter and manufacturer and climbed to the second tier of the global economy (World Bank, 2013). Industrialization, urbanization and the growing population boosted the demand for energy over this period especially in oil, along with the emergence of the middle class who was increasingly using energy for daily life., thus boosting the energy demand (Chen, & Qin. 2014; Leung et al. 2014: 319). Leung argues that gas and coal imports are important but not as crucial for the survival of the Chinese regime as oil. For instance, natural gas which the smallest percentage in the energy mix has its secured supply by long-term contracts with Resource-Rich Countries and the fact that it has many substitutes, renders gas a less vital commodity (Leung 2011: 1331). Consequently, oil alone has become a primary concern for the Chinese leadership; a ‘‘strategic material’’ which supports the PRC‟s long-term strategy and the China Communist Party’s core values (ibid: 1332). In order to understand why China is facing resource scarcity, this section of the literature review will examine in detail how this situation emerged. The reforms of Deng Xiaoping opened up China to the world, terminating a long period of isolation from the then- dominant Western System and laying the foundations for its gradual industrialization (McKay, 2016:304; Wang, 2015) which changed and restructured the state, society and had severe, irreversible impact on the global stage, aiming to avoid exclusion and to catch-up with the advanced countries (Amineh and Yang, 2018: 13-14). The strategic cost of this was a growing dependency on imports from abroad. While its economic growth has slowed down in recent years, its energy demand is projected to grow at a lesser pace of 1.5%, accounting for a quarter of the world’s consumption by 2040 (BP, 2018), rendering supplies a strategically important issue (Downs, 2000). After domestic reserves started depleting and China became a net importer, energy security was

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perceived as a primary national security concern by the Chinese ruling elite. Because economic growth cannot be sustainably continued, without affordable and uninterrupted input of energy, the legitimacy of the Communist Party could be ultimately in danger (Cao and Bluth, 2013; Wu, 2014: 5-6). Oil and gas are predominately necessary for a modern country’s transportation system, national, and food sector; neither of them can be replaced in the medium or long term (Cao and Bluth 2013: 382). Finally, as Lee argues, China’s strive for energy security motivated from political and geostrategic imperatives depend on domestic and foreign factors, namely its reliance on State Own Enterprises (SOEs) for the attainment of economic and especially energy goals, due to the dominance of CCP in the state, articulating thus a centralized state-society- complex (Amineh and Yang, 2018:11). Regarding the foreign domain, Beijing participates in international markets, albeit trying to secure its supply by the ‘‘China-first’’ agenda with ‘‘going out’’ strategy of its own NOCs (Lee, 2012: 75; Jakobson and Daojiong, 2006). Last, but not at least, to deal with its increasing dependency on imports China implements a three-pillar strategy based on a) overseas investments in Resource-Rich Countries by its NOCs, b) reinforcement of its strategic petroleum reserves (SPRs) and c) development of unconventional gas (Wu, 2014:7). From the aforementioned, it can be inferred that the public sector dominates, regulates and is involved in the securitization of energy supplies which is highly politicized and became a first priority issue among the energy debate and decision makers of China (Lee, 2012:77).

Energy sector reforms The energy sector has witnessed many centralizations and decentralizations since its founding. The aim of decentralization was to gain greater autonomy in the decision-making process and flexibility to adapt easily to the ‘‘market economy’’, adopting a commercial-driven logic (Yao, & Chang, 2015: 133-134; Meidan, 2016, 55). The successive stages of reforms resulted in the abolition of the Ministry of Petroleum Industry (MPI) (Jiang, 2011: 387), the creation of the three major champion state-led oil companies China National Petroleum Company (CNPC), China Petrochemical Corporation () and China National Offshore Oil Corporation (CNOOC) (Yao, & Chang, 2015: 135), and the decreased control of central government over these NOCs (Kong, 2011, 55; IEA, 2006:50). Now, Beijing is obliged to seek cooperation with local governments and semi-autonomous NOCs, which leads to the lack of a comprehensive approach to deal with its energy demands (ibid: 56). In spite of these efforts and

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reforms, the Chinese regime has set access to oil as a prerequisite for constant and sustainable growth with its legitimacy and longevity. Beijing, as Lee concludes, ‘‘links , regime security, and national interest’’ (2012: 79). All things considered, Andrew-Speed maintains that the persistence of China in its model of development with high growth rates, investments in heavy industry and infrastructure and a preference towards exports has contributed to a structural demand for energy which prohibits policies aiming at reforms (Andrew-Speed, 2010, 37). It is needless to say that energy security is affected by what economic development models China has chosen to implement; thus this utmost goal has not been achieved (Lixia & Youngho, 2015, 137).

The Chinese state and Chinese National Oil Companies Beginning in the 1970s, the inquiry into NOCs was a significant focus for the academic community; which was sought to understand the necessity of the existence of NOCs, their relationship with the government and the modes of their operation. Steele suggested ‘‘a NOC increases a government’s ability to implement a more effective energy policy and environmental protection’’ (Steele, 2003: 8). Other scholars argued that the driving imperative behind the creation of SOEs, such as NOCs, was to attain support domestically, while the profitability goal could be an important reason but it was not the primary concern which led to the formation of these enterprises (Smith and Trebilcock 2001, 218). A third branch maintains that the relation with the government is more blurred. Specifically, in the Chinese case, NOCs derived from the dismantling of Ministries (Jiang, 2011:382, Andrews-Speed, 2012:11) which resulted in a remaining link between the government and the enterprises (Liao, 2014: 47). Thus, as it is argued, the state possesses, in terms of ownership, its NOCs but simultaneously, they have acquired autonomy in pursuit of the two-fold goal granted/assigned by state i.e. securitization of energy supply and efficiency and profitability (Liao, 2014: 47). The result is a vicious circle by the virtue of monopoly status and preferential treatment of the state, as long as enterprises aiming at growth and consequently, the legitimacy of CCP rule (Milhaupt, & Zheng 2015). Last but not least, Amineh and Yang cogently argue that most NOCs are hybrids operating in a perplexed mode of „„corporate governance, public administration and societal regulation‟‟ (Amineh and Yang, 2014: 517). It is, therefore, clear that CNOCs are not functioning in a strictly political-

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driven way and they are not simple political institutions which implement state’s strategies. (Álvarez, 2015: 60).

The ‘going out’ strategy China has been deployed ‘going-out’ strategy in order to increase its energy supply security (Meidan, 2016a: 2; Wu, 2014: 7; Jakobson and Daojiong, 2006: 64). For the realization of this strategy Beijing implements a comprehensive approach, making it easier for its NOCs to invest in a host country (Chalmers and Mocker, 2017), creating a ‘‘good environment for developing overseas oil cooperation’’ (Meidan, 2016b: 21). The state offers trade deals, investments and financial aid in coordination with its NOCs and state-led banks. Examples of this holistic approach are the ‘projects-for-oil’ and ‘loans-for-oil’. Regarding the first model, Chinese banks - China Export and Import Bank (China Exim) or China Development Bank (CDB) offer privileged loans for infrastructure projects in oil-rich countries, which in turn cede access to Chinese NOCs to the host country’s resources, and host countries repay their debts with long-term oil production (Meidan, 2016a, 1). The second model is based on similar loans provision from the aforementioned banks in oil-rich countries which lack capital, and these countries repay again with a concession of long-run oil supplies (Kong, 2011: 60; IEA, 2015). But, all things considered, these Outward Foreign Direct Investments (OFDI) have created skepticism in many host countries among governments, entrepreneurs and civil society (Sauvant and Nolan, 2015: 9-19). This closing section will examine briefly the rationale and motivations behind investments made by NOCs abroad. The literature review splits into two interrelated discussions. The first refers to whether Chinese OFDI is motivated by economic considerations (Chen, 2008; Chen, 2011; Chalmers & Mocker, 2017) or energy supply security considerations (Lai et al., 2014; Ma and Andrews-Speed, 2006) and the second focuses on the effectiveness of conducted OFDI in regard to China’s energy security. In conclusion, many scholars postulate that ‘going-out’ strategy has not achieved its primary target of energy supply security (Lai et al., 2014; Chen, 2011).

SCO and Chinese Central Asia Strategy

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The dissolution of the USSR led to the independence of Central Asian states. The new reality allowed China to implement a new approach which was based on the recognition of newly independent states and the establishment of bilateral relations as well as the SCO (Swanström, 2015; Aris, 2011) Many reasons attributed to the increasing importance of the area. Proximity to China and the existence of vast oil and natural gas reserves rendered Central Asia as an alternative source of supply for energy-thirsty China (Pop, 2010: 197; Song, 2016, 14). Another factor is the urgent will to establish regional stability through stronger statist relations (Sheives, 2006: 222). While Central Asia and Russia are crucial for China’s energy security, overall oil imports cannot be fulfilled from this area, but this route could decrease dependency from Middle East (Ziegler, 2006) and the partial avoidance of the Malacca Strait (Zhang, 2011). With regard to natural gas, Central Asia and Russia present some decisive advantages; the geographical proximity and the fact that natural gas is a regional negotiating commodity (Amineh and Yang, 2014). Therefore, China has developed a pattern of ‘‘strategic relationships’’ with Russia (Røseth, 2017) and the Central Asia democracies in order to maintain regional stability, the defeat of terrorism and separatism and Islamic radicalization and deals with narcotics trafficking (Amineh and Driel, 2018).

China- Uzbekistan strategic relations China and Uzbekistan have established diplomatic relations in the 1990s, after the collapse of the Soviet Union. Since then bilateral relations have strengthened significantly in many sectors such trade, investments and security at bilateral as well as multilateral levels (ÖĞÜTCÜ, 2018: 2; Cheng, 2011) with special emphasis on energy sector (Madiyev, 2017). Uzbekistan is the third natural gas producer in Eurasia with 65 tcf of proven reserves (EIA, 2016). One of the major aims of Uzbekistan’s energy strategy is to preserve its energy independence (World Bank, 2003: 4). Uzbekistan in the international academic literature categorized as authoritarian political system (March 2003; Murtazashvili, 2012; Spechler, 2007) and as patrimonial and rent-seeking regime (Ilkhamov, 2007; Collins, 2009) a signification similar to definition issued by Amineh; this regime namely relies on natural resources for the economic well-being and personal survival of its leaders (Amineh and Van Driel, 2018: 70) and is based on ‘‘a carefully maintained balance of personalities, interest groups, and regional clans’’ (Stronski, 2016).

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The Uzbekistani state created its NOC – Uzbekneftegaz – in 1992, which later transformed to Uzbekneftegaz Corporation in 1993 so as to manage the oil and gas sector implementing the state’s strategy for autarky which had been achieved in four years since the independence (Bayulgen, 2012: 85-86). The ‘Center for State Assets Management’ a governmental entity holds 99.9 percent of the company shares (Uzbekneftegaz, 2017). New legislative framework which was issued in 2001 allowed the participation of foreign companies into the energy sector of the country (Bayulgen, 2012, 86). In 2012, ‘‘Strategic Partnership’’ pact was signed between Beijing and Tashkent (Koparkar, 2017). Many loans have been signed by high-profile Chinese and Uzbek officials. Contracts have been signed between CNPC and Uzbekneftegaz – Uzbekistan’s SOE – related to many oil fields in Uzbekistan, to the amount of US$ 600 million (Madiyev, 2017: 9). Sinopec also signed an agreement with Uzbekneftegaz which concluded to a joint venture for oil exploration and development of oilfields of Uzbekistan that was worth US$ 100 million (ibid: 10). Another important factor in the bilateral relationship is that China is the biggest investor since 2012 and became the biggest trading partner of Uzbekistan in 2018 (Xinhua, 2018). The most prominent project is the pipeline that connects Turkmenistan-Uzbekistan- Kazakhstan-China or the ‘Central Asia-China gas pipeline’. The agreement was signed in 2003 with 25 bcm capacity per annum (Fazilov and Chen, 2013: 42); its second stage was completed in 2011, thereafter Uzbekistan started to export 10 bcm of gas annually. It must be mentioned that the project is a common consortium between CNPC and Uzbekneftgas. In 2012, the construction of Line C began with the capacity 25 bcm delivery. Uzbekistan has China as a dual utility, first for its rich oil resources which can be used as potential diversification source and secondly, it is a transit country which facilitates the transfer of natural gas from Turkmenistan (ÖĞÜTCÜ, 2017).

Assessment of current review

All in all, I postulate that the aforementioned theoretical framework, as well as the concepts, can be perfectly applied in the case of China and Uzbekistan. There are several reasons for this choice. First of all, critical geopolitics provides an adequate explanatory framework that includes the state as an actor in the global economy and international relations, contrary to

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scholars who have been asserting that the role of the state had decreased in a globalized world (see Yeung, 1998). On the contrary, the ‘state-market-military-complex’ allows scholars to take into consideration the state and its vital function for the capitalist economy (Yeung, 1998; Weiss, 1998; Graaff, 2017) in parallel with sub-state actors or market forces i.e. in our case, the Chinese National Oil Companies. Regarding the concepts of Geo-political Economy, the sequential industrialization will enable us to examine in-detail how state-led urban-industrial development led to resource scarcity and how the conditions of lateral pressure obliged China’s state-class to project power by the cross-border activities using diplomatic, economic and security tools in the post-Cold War Central Asia with special focus on Uzbekistan. Finally, power projection with its territorial logic of power and the capitalistic logic of power will provide the research with a clear-cut understanding of China’s efforts to facilitate CNPC’s involvement in the energy sector of Uzbekistan.

1.5. Delineation of Research This research will examine the energy relations of China and Uzbekistan between 2006 and 2018 in the context of Central Asia geographical framework.

1.6. Theoretical Framework Reality is a complex phenomenon, thus its understanding cannot derive from strict dichotomies. Contrariwise the inherent ambiguity must be compartmentalized for the sake of the analysis, understanding and action. I postulate that the most suitable theory for this ambitious undertaking is the Geo-political Economy. But, on the onset, I will look upon previous theories examining the positive facets and limitations emerged in the course of time inside academe, then I will introduce Geo-political Economy and finally, followed by the assessment of its importance for my research.

International Relations and International Political Economy Theories To begin with, structural realism is merely taken as the unit of the analysis state and most importantly, it is assumed that all states are alike as black boxes operating under anarchy, consequently it is expected that they always act in similar and predictable ways (Mearsheimer, 22

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2013). The weakness of this theory has been vividly and convincingly illustrated by the unexpected collapse of the Soviet Union. On the other hand, the so-called domestic schools, namely Liberalism and Marxism, respectively take the business class and workers class as their unit of analysis. Both postulate that the course towards development is inherent. Each of these three theories is considered to be one-sided in the virtue of taking account only one actor and neglecting or downgrading the others. (Houweling and Amineh, 2003: 321). The turning point has occurred by Cox’s recognition that a stark distinction between state and civil society shall be rejected in favor of a more inclusive perspective. (Cox, 1981: 127). That being said, I think that the most suitable and applicable theory to start with is the critical geopolitics. The theoretical roots of this theory can be traced in the critical theory of Frankfurt School in which writers such as Horkheimer, Adorno, Habermas, Foucault, Derrida as well as Gramsci (Gartman, 2012; Kelly, 2006, 28) aimed at encouraging ‘‘an equal chance of self- development’’ given the existing material capabilities (Wellmer, 2014, 706). Emancipatory efforts towards social transformation could be seen as the quintessence of this theory (Kelly, 2006, 28). In the classical phase of geopolitics, it was assumed that geography is a reality and the power structures are thought to be granted. They tried to apply the geographical observations upon the foreign policy analysis and practice. Thus, under this declarative analysis, states have to follow some of the ‘‘geo-imperatives’’ to operate in an antagonistic arena. The world was conceived as objectified – the reality is out there – hence, it was easy for a rational state to analyze, grasp, and interpret it and to act accordingly. Main proponents of this strand were Mackinder, Haushofer, and Spykman. (Ó Tuathail et al. 1998; Tuathail, 1999, 107). The same underlining logic applied to Cold War geopolitics; geopolitics culminated in being synonymous with national security (Kelly, 2006, 27). It was only in the 1970s, when critical geopolitics came to the forefront, as an attempt to contest and to expose the flaws of classical and Cold War geopolitics. Critical theory is thought to be the opposite of ‘‘problem-solving theories’’ since it rejects classical geopolitics’ positivist methodology and its attitude to legitimize existing social and political structures (Cox, 1981). On the contrary, it adopts a post-structural stance, assuming that objective reality cannot exist and political and social structures derive from power relations as well knowledge considered to be embedded into a society (Devetak, 2005, 143). Also, it is important to note that critical

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geopolitics lent from critical theory the Foucaultian concept of discourse, which is now under the label of critical geopolitics is known as ‘‘geopolitical discourse’’ (Agnew and Corbridge, 1995, chapter 3).

Geo-political Economy Critical geopolitics, due to the collapse of the Soviet Union and mainly the dynamics of the global economy, incorporated International Political Economy (Cox and Schechter, 2002, Tuathail, 2000; Dodds, 1998) as well as spatial variables under the scope of the study (Yeung, 1998). This synthesis resulted in Geo-Political Economy. Also, this later strand clearly recognizes the obvious significance of energy for the sustainable survival of an industrialized society (Strange, 1988:186). Unlike the ‘grand’ theories of IR and classical geopolitics, this approach includes states as well as non- or sub-state actors whose influence has been augmented through globalization. Both recognize and facilitate the necessity of capital to expand outward in order to transcend overproduction and devaluation. Following that logic, a web of interdependence and geopolitical order is constructed. Consequently, Geo-political Economy tries to grasp these procedures and interactions which are in a situation of constant flux. It is, therefore, a theory of action. The unit of analysis under this theory is the ‘state-society-military-complex’ which is an institutionalized relation reflecting the existing division of power into a given society (Houweling and Amineh, 2003: 322). It is worth mentioning that Amineh and Guang posit that two ideal types of that concept can be discerned; the ‘‘liberal state-society-complex’’ which is a self-regulating social system allowing private actors – capitalist class – to operate freely and in relative autonomy from the state for the exploitation of human and natural resources. The other social system is the authoritarian or centralized, contender ‘‘state-society-complex’’ in which a sole state-class is exercising centralized power by imposing the regulation context and dictating entirely development from above, in parallel, the civil society is undeveloped (Amineh and Guang, 2017: 12). China matches to the latter ideal type. Below the concepts that are important for the Geo-political Economy will be examined . A crucial concept for the research is that of sequential industrialization or – passive revolution – which is defined as ‘‘a series of interrelated and comprehensive social processes of change and upheavals in state, economy, and in the global system’’ (Amineh and Guang, 2017, 16). Hence,

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it is obvious that changes in social relations at the domestic level have a decisive impact on international or world order level (Cox, 1983: 169). Every society aiming at the implementation of industrialization struggles to catch-up with the advanced economies, because this societal reorganization is firstly perceived as the precondition for closing the ‘‘productivity-power gap’’ and secondly, as the prerequisite of the maintenance of its independence. From the 1970s Chinese state-class from implemented ‘‘opening up’’ and market reforms, having in mind the above twofold objective, which transformed Chinese society from an agrarian to an industrializing one (Roberts, 2011, chapter 8). As industrialization was increasing power through the accumulation of wealth, at the same time, it was creating what it is called ‘lateral pressure’. According to that concept, governments see themselves confronted with population growth, rising incomes, technological change, domestic resource-scarcity, and the social pressure of unfulfilled demands (Amineh and Guang, 2018: 23). At this point, this thesis is concerned about resource scarcity. The extensive usage of fuel fossils for industrialization and their non- renewable nature has as result their treatment as strategic commodity (Amineh and Yang, 2017: 17). Their strategic significance and potential disruption of supply chain trigger fierce geo- political and geo-economic competition for their reach and acquisition by major players at the global level. Resource scarcity is comprised from three types of scarcities; supply-induced, demand-induced and structural scarcity. The first refers to the reserves available that can be recovered by the technology of extraction and the market prices of the refined product. The second is calculated by the pace of population growth, the rising per capital income, and the price substitutes. Supply and demand-induced scarcities combined form the market prices. Finally, structural scarcity can be induced by other actors from such as industrialized states or POCs/NOCs, who could cut-off the supply chain of energy to the final recipient. (ibid: 15-16). The options energy-dependent countries have are; either to reduce its energy dependency or to get access outward. To fulfill the domestic growing demands and deficiencies, countries try to get access to foreign resources and markets. The cross-border activity which connects the domestic ‘state-market-military complex’ with the rest of the world is called “power projection”. (Houweling and Amineh, 2003: 325). The ‘power projection’ refers to two interwoven logics namely that of territorial logic of power (geo-political) and the capitalistic logic of power (geo- economic); both constitute the core of Geo-Political Economy. Simply put, Geo-political Economy is about the examination of these two logics which will be elaborated below.

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The territorial logic of power is political – i.e. politicians exercise it – at domestic and inter-state levels as well as having geographical reach, furthermore it aims at controlling the population through state power and mechanisms and also aims at maintaining international credibility. The capitalistic logic of power, exercised by capitalists, refers to creation, accumulation, and flows of capital across the world in order to deal with overproduction and consequently, devaluation of capital in a territory-bounded basis. Political elite, on the one hand, has a strong interest in maintaining socio-economic stability and revenues creation via taxation of business as well international credibility in terms of the determination of defense of state interests; both of them presuppose long-term policy planning. On the other hand, capitalists are driven by profit-seeking with a short-term horizon, although they need state regulation and protection. (Amineh and Guang, 2017, 28-31; Mercille, 2008; 576, 577-578). All things considered, both social actors operate in a dialectical – interdependent and simultaneously divergent – way.

Assessment of the theory and concepts All in all, I postulate that the aforementioned theoretical framework, as well as the concepts, can perfectly be applied in the case of China and Uzbekistan. Several reasons for this choice exist. First of all, critical geopolitics provides an adequate explanatory framework that includes the state as an actor in the global economy and international relations, contrary to scholars who have been asserting that the role of state had decreased in a globalized world (see Yeung, 1998). On the contrary, the ‘state-market-military-complex’ allows scholars to take into consideration the state and its vital function for the capitalist economy (Yeung, 1998; Weiss, 1998; Graaff, 2017) in parallel with sub-state actors or market forces i.e. in our case, the Chinese National Oil Companies. Regarding the concepts of Geo-political Economy, the sequential industrialization will enable us to examine in-detail how state-led urban-industrial development led to resource scarcity and how the conditions of lateral pressure obliged China’s state-class to project power by the cross-border activities using diplomatic, economic and security tools in the post-Cold War Central Asia with special focus on Uzbekistan. Finally, power projection with its territorial logic of power and the capitalistic logic of power will provide the research with a clear-cut

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understanding of China’s efforts to facilitate CNPC’s involvement in the energy sector of Uzbekistan.

1.7. Hypotheses In accordance with the aforementioned theoretical and conceptual framework everything pointing to the energy supply security thus, two hypotheses emerge: Η1. Strong bilateral relations between China and Uzbekistan facilitate CNPC’s involvement in Uzbekistan’s energy sector and ergo enhanced China’s energy supply security. H2. By using bilateral and multilateral relations China facilitates its involvement in Uzbekistan and thus has acquired a dominant position in relation to other competitor major powers.

1.8. Operationalization Within this thesis, energy supply security is defined as ‘‘the reliable and available energy in various forms, in sufficient quantities and at affordable prices at all times’’ (Amineh and Yang, 2018, 14). Reliability means that the threats to disrupt the energy supply are marginal; availability means that energy can be accessible whether its fossil fuels or renewable sources of energy; sufficiency means that these different forms of energy can cover the demand in a given time period and lastly, affordability means energy prices that can preserve and bolster economic growth. Last but not least, there is a distinction between short-term and long-term, the former refers to abrupt disruption in supply and demand and the latter refers to reliance on fossil fuels for development in the virtue of their finite nature (Cao and Bluth, 2013: 381). For the purposes of this thesis cross-border activities are deemed as CNPC’s involvement in energy sector of Uzbekistan in the form of merges and acquisitions with the aim of financing and investments as well as bilateral relations between the Chinese and Uzbek ruling elites and the establishment of the multilateral institution of SCO. The Chinese state as an authoritarian system controls CNPC and this can be considered as a tool for the ruling elite to project power outward. Regarding the involvement of CNPC in Uzbekistan, this research will look at the aforementioned merges and acquisitions and loans for oil or loans for gas financed by state banks or state-owned and financial institutions. Also, diplomatic means that in the form of agreements, declarations and visits by state-officials in bilateral and multilateral level will be examined. 27

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Furthermore, a very important aspect of power projection is that of security ties between the parties. In this case, the efforts of the Chinese ruling-elite in bilateral and multilateral level are intertwined since one of most prominent goals of SCO is the promotion and enhancement of security. It is not accidental that the headquarters of the anti-terrorist agency of SCO are located in Uzbekistan. All in all, the close examination of the economic, diplomatic and security tools made by the Chinese ruling-elite in the form of bilateral cooperation and multilateral institutions towards the Uzbekistan, the research will provide a clear understanding regarding the China’s efforts to secure its energy supply. The research finally, will try to grasp the challenges that these Chinese efforts face by the intersection of other industrialized countries’ involvement as they attempt to secure their energy supply.

1.9 Data

This thesis will use both primary and secondary data. To analyze the results of domestic overhaul in the Chinese economy and society, primary indicator from IMF, World Bank will be used to analyse the increased wealth in terms of GDP and GDP per capita. Regarding the energy scarcity, data for energy production, consumption, imports and per capita will be retrieved from International Energy Agency, Energy Information Administration and British Petroleum. For the analysis of the Chinese state-class and its relation with NOCs (in particular with the CNPC), official documents such as the Constitution of PRC, the official webpage of the State-owned Assets Supervision and Administration Commission (SASAC) and the annual reports of CNPC will be used. Secondary data will be gained from, among others, the works of Xu (2012, The Political Economy of State-owned Enterprises in China and India, Palgrave Macmillan, Meidan Michal, (2016b), McGregor James, (2012), Ancient Wisdom, No Followers, and Victor et al. 2012, Oil and Governance, Cambridge University Press. Furthermore, sources for the analysis of China’s energy policy will be: The Oxford Institute for Energy Studies. Also, peer-reviewed journals will be used, but not restricted to Energy Policy, Energy and Environment and Journal of Chinese Political Science. To examine SCO primary data will be found in the official webpage of the organization with the most important to be the Charter of SCO. Additional data from the works of Song (2016) and Laruelle and Peyrouse (2012) will be provided. Regarding BRI, the document Vision and Actions on Jointly Building 28

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Silk Road Economic Belt and 21st-Century Maritime Silk Road, the Silk Road Fund, books and peer-reviewed articles will be used. To analyze the political- the Constitution, governmental websites, and several databases – such as the IEA, World Bank and the Observatory for Economic Complexity will be combined with books and peer-reviewed articles from scholarly works, data for the mechanisms of control used in the energy sector will be provided by the official website of Uzbekneftegaz and World Bank’s report: Uzbekistan Energy/Power Sector Issues Note. China-Uzbekistan diplomacy will predominantly be examined by drawing on official documents, such as reports of bilateral visits and policy documents. To analyze bilateral trade and CNPCs acquisitions, joint ventures and operations and state trade and investments in Uzbekistan, several databases, including UN Comtrade, WTO, China Aid Data, OEC and the World Bank, as well as primary reports made by CNPC and Uzbekneftegaz will provide the basis for examination. Finally, for security relations, official reporting through governmental websites and SCO webpage, as well as international databases such as SIPRI, The Central Asia-Caucasus Analyst, and scholarly articles will provide the basis. Finally, a qualitative case study will be used because it permits a strong focus on the unit of analysis for in-depth analysis and inferences. The case study gives the opportunity to the researcher to acquire a holistic view of the research problem by giving adequate explanations.

1.10 The organization of the Thesis This thesis is composed of 6 chapters, apart from the introduction; each of them will answer sub- question(s). Firstly, chapter two examines how China’ s growth affected its energy supply security, also what the relation of the state-market complex in China is, and which is the relation between state-class and NOCs in relation to energy policy. Chapter three examines the significance of Central Asia for China and what policy tools it has deployed in order to achieve its goals. Chapter four examines the diplomatic, economic and security tools of China's state- class and CNPC implemented in Uzbekistan between 2006 and 2018. Chapter five examines how the US and EU involved in Central Asia and what are the implications for China’s involvement in the region and Uzbekistan in particular. Finally, Chapter 6 presents the conclusions of this research.

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Chapter 2

State, Development, Energy Situation and Chinese National Oil Companies

2.1 Introduction This chapter will try to provide a full-fledged answer to the question: how has China’s growth affected its energy security?, thus firstly, it will analyse the state (society)-market relations in China and in particular the relation between state-class and the economy to grasp the power constellation, secondly, as the mode of economic development was a state-led industrialization, at this point of thesis it will attempt to give an overall picture of this transformation – meaning the domestic ‘reconfiguration’ of productive forces from the primary to the secondary sector – mainly by looking at economic indicators of annual growth of GDP, per capita GDP, GDP by sector and finally of specific sectors of economy (industry, and transportation). This radical change had resulted as an augmented demand for energy that forced the Chinese authorities to deal with this ever-growing problem in order to make certain that continuation of development will not be impeded by increased energy consumption. Since the domestic reserves declined and production couldn’t meet the demand, China started importing oil in 1993. Energy-imports rendered Beijing making it prone to challenges in regards to energy supply security and forced Chinese officials to formulate an energy policy (reduction of energy intensity, renewables, strategic reserves, and diversification of imports. Finally, this chapter tries to answer the second question: what is the relation between the Chinese state-class and its National Oil Companies – especially CNPC – in relation to energy policy? The purpose of this chapter is to analyse in-detail the theoretical and conceptual framework of this research by examining the indicators that constitute the concepts. Finally, this chapter will try to examine how the state-led industrialization led to resource scarcity and what policy responses selected and why.

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2.2 Relations between state and market in China After the victorious civil war, China’s Communist Party established the People’s Republic of China in October 1949, commencing the communist period of the long-lasting Chinese history. The starting point of this research is the centralized Chinese ‘state-(society)-market complex’, because as Amineh and Yang have argued that in modern industrialized societies the state-made institutions determine the promotion or restriction of economic growth and connect market at domestic and external level constructing order by their rule-setting capacity (2014: 498). It must be noted that frictions emerge between rival factions and interests inside this strictly centralized complex (ibid: 499; Lawrence, 2013, 1). Thus, Amineh and Yang in order to understand the gravity center and who is wielding the power in China have created the concept of state-class. They assume that state-class or political class exercise power in executive, legislative and judicial branches of government and it is able to overcome civil society demands minimizing the ability and the will to establish free market separate from the state (Amineh and Yang, 2014: 499). The Constitution of PRC explicitly defines the relations between the state and the market as follows: ‘‘The PRC is a socialist state under the people’s democratic Dictatorship […] apply the principle of democratic centralism […] The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production […] The State-owned economy, that is, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy […] Individual, private and other non-public economies that exist within the limits prescribed by law are major components of the ’’1. Thus, according to the provisions of the Constitution it is crystal-clear that political power is centered on the CCP –actually it has the monopoly of power – while it possesses decisive power as decision-maker and it has the authority to intervene into every sphere of political, economic and social issues by the centralized hierarchy.(Heilmann, 2017: 47-48). It can actually be argued that, the power structure in China articulated in what it is called the Party-State as the Party dominates state and society (Lawrence and Martin, 2013: 3). The top State officials hold major Party offices at the same time, to assure Party’s control in every aspect of administration (ibid: 4). By 2017, the CCP was totaled at roughly 88 million members (Heilmann, 2017: 62).

1 Source: Constitution of the People’s Republic of China, combination of article 1, 3, 6, 7 and 11 chapter I, amendments on which were approved in 2004 31

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The Chinese State class

National People’s Congress and its Standing Committee

After the death of Mao Zedong and the initiation of the reforms, the 1982 Constitution, chapter III, article 57, designated the National People’s Congress (3000 members) and its Standing Committee (150 members) as ‘the highest organ of the state’ and ‘exercise the legislative power’ (article 58). When the NPC is not in session2 the Standing Committee (art. 65-78) which convenes every two months has the broad mandate to regulate and influence almost every aspect of public life in China and among others, has the authority to amend the Constitution, to elect (as well as to remove) the President, Vice-President and high ranking officials of the military and of judicial system (article 62 and 63). The Chairman currently is Li Zhanshu; he concurrently holds the third ranking position in the Politburo Standing Committee.

Politburo and Politburo Standing Committee

Table. 2.1: The 19th PSC (elected October 2017)

No. Name Party position (s) State position (s) Portfolio 1st Xi General Secretary of the President of the People's Republic The Communist Jinping Communist Party of China of China Party and foreign Chairman of the Central Military Chairman of the Central Military and military affairs Commission of CPC Commission of PRC 2nd Li Party Secretary of the State Premier of the People's Republic of Government Keqiang Council of the People's Republic China administration and of China the economy 3rd Li Party Secretary of the Standing Chairman of the Standing Legislative affairs Zhanshu Committee of the National Committee of the National People's People's Congress Congress 4th Wang Party Secretary of the Chinese Chairman of the Chinese People's Relations with non- Yang People's Political Consultative Political Consultative Conference communists Conference 5th Wang Top-ranked Secretary of the Party affairs Huning Central Secretariat of the CPC 6th Zhao Secretary of the Central Party discipline and Leji Commission for Discipline fighting corruption Inspection 7th Han Deputy Party Secretary of the First Vice Premier of the People's Assisting the Zheng State Council of the People's Republic of China Premier; the Republic of China economy Source: Cheng 2017 and Lawrence, 2013; Compiled by the author

2 It convenes once per year (article 61 of the Constitution). 32

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Despite the fact that NPC, nominally, exercises power in China, the de facto governing body is the PBSC (7 members). To put it otherwise, the PBSC is the supreme decision-making body and it is considered as the leading body of CCP. The head of Committee is Xi Jinping who is CCP general secretary, president of PRC and chairman of the Central Military Commission (CMC) (Heilmann, 2017: 66-67; Lawrence and Martin, 2013: 2). The second in hierarchy is the Premier of State Council Li Keqiang. The State Council is the Chinese central government and is characterized as the ‘‘executive body’’ of NPC and as the ‘‘highest organ of state administration (article 85; peopledaily.com.cn) and consists of 35 members, of which 25 are ministers and chairs of major agencies3 (Gov.cn). Han Zheng, the 7th ranking official of PBSCs is Li Keqiang’s first vice-premier. Li Keqiang and Han Zheng are considered to be responsible the economy (Lawrence, 2013: 14). The supervision of the State-Owned Asset Supervision and Administration Council (SASAC) is included under the broad mandate of the State Council. Finally, moving down towards the lower echelons of the power structure stands the Politburo which is comprised of 25 members (including the 7 of the PBSC), the Central Committee of the CCP (currently consists of 205 members including leaders of provisional government, military, State-Owned Enterprises (SOEs)) and the National Party Congress. The previous analysis showed that CCP and its cadres infiltrate every level of the political structure in China due to the monopoly of power and thus the lack of division between the executive, legislative and juridicial branches of governance as long as the state class core- elite of Politburo reassures the unitary nature of the Chinese state and its domination upon the state and consequently market (Heilmann, 2017: 61). An additional indicator of the close relation between the party-state and the market is the growing number of entrepreneurs that have joined the CPC (Marquis and Qiao, 2018).

2.3 Reform and ‘Opening up’ policies

Having examined the political power structure in China, it is now imperative to concentrate our attention to the worldwide well-known economic transformation of China over the last 4 decades.

3 The State Council convenes only once every six months and in between it is guided by a Politburo that meets weekly 33

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By 1978, centrally planned economy has wrecked the economy and society in China. Moreover, policy-makers were well aware that China was militarily, economically and technologically behind other major power as well regional countries like South Korea and Taiwan (Garnaut, 2018, 31). This backwardness had made China weak and vulnerable in this dynamic changing strategic environment. After power struggle came to an end, reformists, headed by Deng Xiaoping, initiated reform and opening up policies to connect China with the world economy (Roberts, 2011, 290-291) and to catch-up with the advanced nations. Hongyi argues that Party state has the ability to be flexible and adaptive in many different situations thus, China’s pragmatic authoritarianism aimed at stimulating economic growth in order to maintain primarily CCP’s legitimacy and leadership and social stability (2016: 57, 60). It can thus be inferred that economic development is state-led. This is exemplary in the chosen mode of development which was characterised by gradualism or as Amineh and Yang have coined the term sequential capitalist industrialization. The concept refers to ‘a series of interrelated and comprehensive social processes of change and upheavals in state, economy and in the global system’ (2014: 503). In 1978, the third plenum of 11th Central Committee of the Communist Party of China decided to embark on reform and opening up policies. It is obvious that economic development was state-led as the state took the lead in the initiation of the transition to industrialization. The first experimental sector was the rural economy where market mechanism for pricing of the products and incentives of profit- seeking raised productivity and overall output (Xiaolu, 2018: 170). After the initial success, reforms have expanded in township and village enterprises (TVEs) and in State-Owned Enterprises by introducing market mechanisms, encouraging production and managerial incentives and they started to engage in partial market antagonism. Two other reforms were the establishment of Special Economic Zones (SEZs) and fiscal reforms (ibid: 171). Industry had gained the lion’s share in economic growth; the industrial output between 1981 and 1986 doubled. The SEZ helped China to acquire the sought-after foreign exchange, new technology and managerial practices. (Roberts, 2011: 293). All in all, China’s stunning economic development was based on exports, foreign investment and joint ventures all related to industrial sector (Xiaolu, 2018) Despite this, the government had not abandoned the vital role of central planning, it had recognised the necessity of greater involvement of market forces and thus imposed gradual

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policies towards industry and prices liberalisation and acceleration of opening up reforms (Bramall, 2009: 330). Consequently, the Chinese state-class recognizes the simple fact that the state-driven economic development is closely intertwined with globalisation. The results of industrialization during the past four decades were at a stunning increase of an annual growth of roughly 9.6 percent (Xiaolu, 2018: 167), although in last couple of years the pace has slowed down; in 2018 it achieved an annual real GDP growth of 6.6 percent (IMF, 2019).

Figure 2.2: China’s GDP growth

Source: World Bank, 2019

In the starting year of reforms China’s GDP (in current US$) was 149.541 billion dollars and by 2017 it had skyrocketed to 12.238 trillion. This increase also had an impact on annual GDP per capita which during the time-span between 1978-2017 rose from 156 (current US$) to 8.826 dollars (World Bank, 2018). Also, the portion of population with less than 2$ a day (PPP) declined from 97.8 percent in 1981 to 27.2 in 2009; a 70 percent decline in just 28 years. This achievement has no precedent in modern history (Hongyi, 2016: 22-23). Currently, the Chinese economy in terms of GDP (PPP) is ranked as the biggest of the world.

2.3 The evolution of China’s energy situation 35

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It is claimed that energy consumption had been strictly intertwined with industrialization of China and rising living standards of its citizens (Dong et al. 2017: 214). This part will provide a brief account of key characteristics of the energy sector of China, with a special focus on drivers of rising energy demand, the supply and demand sides and on government’s policies to constrain energy demand and to secure energy supply. Since its establishment the People’s Republic of China has encountered pressuring problems of economic reconstruction and built-up of the industrial infrastructure. Towards these goals it was imperative to raise the energy production again which had fallen by half from its pre-war levels. Thus the Ministry of Fuel and Industry was set up and the 1st Five Year Plan (FYP) was commenced through which the government aimed at focusing on energy production and heavy industry. Industrial output grew faster than anticipated/expected and consequently the government had to meet the demand for energy, imposing greater control in the energy sector and trying to impose energy conservation measures (Zhang, 2017: 635-636). The government’s control upon energy sector became much stricter during the 2nd FYP and its primary goal was for the steel production to become the primary sector which would lead to industrialization and modernization. It was then, 1958-1961, where vast coal and oil reserves were discovered (ibid: 636). By and large, the period between 1949 and 1978 was characterized as the pursuit of self- sufficiency, especially in oil sector, after the Sino-Soviet split in 1959 (Meidan, 2016, 4). Economic reforms and the ‘opening up’ policies of 1978 had considerable impact on every aspect of . As mentioned above China’s economic growth ranged from, on average, roughly between 9.6% and 11% and was led by the industrial sector (Xiaolu, 2018: 167; Andrews-Speed, 2012: 12). The more economy grew the greater the need for energy was. As a result, energy reforms between 1978 and 2000 had the maintenance of government’s prominent role in economic planning and in the energy market; energy production was allowed to be determined by market demand and permitted non-state actors to get involved in the energy market. The outcome of liberalisation, marketization and competition was a reduced governmental control over the energy sector (Zhang, 2017: 637). This reshuffle meant that the government’s authority over energy sector was decentralized between several departments and central government and local authorities (Yao and Chang, 2015: 135). During the same period China introduced several measures and rules to reduce its energy intensity and improve its energy conservation. On the one hand, consecutive FYPs (the 7th, 8th

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and 9th) called for greater development of coal-fired power plants, , nuclear, renewables and environmental protection. On the other, energy intensity reduction could be contributed to measures targeting industries like preferential loans, tax reduction and promotion motives for officials based on the compliance with reduction targets (Andrews-Speed, 2012: 16). Although, the energy production reached 1350 Mtce in 2000 from 627.7 Mtce in 1978, concurrently, the energy mix was changing with the main difference occurring in the increase of oil demand, which rose by 56% (Zhang, 2017: 638). After all, energy intensity declined. After the initial success, energy intensity rose again due to the rapid enlargement of the secondary energy-intensive industry4, technological innovations did not keep pace with the exponential expansion of industry and finally, the increase of the use of coal (Andrews-Speed, 2012: 16). Moreover, China issued the Medium and Long Term Energy Conservation Plan 2004- 2020 aimed at reducing the energy intensity by 20% by 2010, at a rate of 3.6% per annum, and to maintain this reduction at the same pace until 2020 and expecting to reduce energy consumption per 10.000 GDP (1990 price) from 2.68 (tons coal equivalent) tce in 2002 to 2.25 tce in 2010 with an annual rate of 2.2%. By 2020 it is expected to drop to 1.54 tce (Asia Pacific Energy Portal, 2004, 8-9). After the Plan was approved, the government decided to close down illegal coal mines and to limit them. In 2005, the Renewable was passed in order to stimulate the utilization of renewables by introducing measures as a substitute to increased coal consumption and fossil fuels import (Zhang, 2017: 638). During 11th FYP (2006- 2010) it was estimated that roughly US$ 398.8 billion were distributed on energy efficiency and clean energy (Climate Policy Initiative, 2011: 2) between industry, transportation and construction (Andrews-Speed, 2012: 21-22). The orientation towards a low-carbon economy and attempts to reduce energy intensity continued by the following 12th FYP (Zhang, 2017: 639); especially the 13th FYP except from the continuation of the aforementioned targets the plan aiming also at the transition toward a market-driven economy along with the intended shift from an export-oriented growth to a consumer-driven one (Meidan, 2016b, 2).

Current energy situation and lateral pressure

4 Automobiles, steel, cement, glass, housing, power plants, , highways, rail systems, and airports (Zhang, 2017, 638). 37

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Currently, China is the most populous country in the world, with over 1.4 billion people and also the world’s biggest energy consumer (EIA, 2015). Its total supply (TPES) for 2016 has reached 2.958 million tons of oil equivalent (Mtoe) of which China produced 2.360, which meant China has to import 559.3 (Mtoe) of energy that year. China’s proven oil reserves by 2017 were 25.7 thousand million barrels accounting for 1.5% of world’s oil reserves which totaled to 1696.6 tmb (BP, 2018: 12). The same situation pertains to the natural gas. Its proven reserves were by 2017, 193.5 Tcf accounting for 2.8% of world’s total of which the total reserves were 6837.7 Tcf (ibid). Moreover, it must be mentioned that the increase of per capita GDP also boosted the per capita energy consumption to 2.15 toe (IEAa, 2018: 30) far higher than the non- OECD Asia 0.74 toe, although it is below that of OECD countries with 4.11 toe (IEA, 2018: 29). In China total energy consumption hinges on five sources i.e. coal, oil, gas, nuclear and renewables, which are used mainly in industry and transportation.

Figure 2.3: China’s energy mix 2017

Source: BP Statistical Review of World Energy (2018) and National Bureau of Statistics of China (2018)

Coal

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China’s industrialization was based on coal due to the abundant reserves, and it still dominates the total energy mix of the country. Although, the coal share has been decreasing from 87.1% in 1965 to 61 % in 2017, coal demand rose from 955 metric tons carbon equivalent in 2000 to 2.753 mtce, mainly due to the rapid economic development and urbanization (IEA, 2018: 220). Coal production increased from 1.019 mtce in 2000 to 2.538 mtce in 2017 (IEA, 2018: 222). China became a net coal importer in 2009 and remains the world’s biggest producer with 3.376 Mt and accounting for the 44.7% of the world and importer of coal with 263 Mt in 2017 (IEA, 2018a, 7).

Oil

China became the net oil importer in 1993 and now is the biggest net oil importer with 378 Mt in 2016 (EIA, 2018a, 5). As in the case of coal, imports of oil kept increasing since the new millennium. In 2000, China imported 4.7 million barrels per day and in 2017 12.3 mb/d. The main drivers behind the rise of imports were the economic development, rising living standards and predominantly transportation – automobiles and aviation (Dong et al. 2017: 216). EIA projects that by 2040 China will overtake US as the biggest consumer of oil in the world, importing 13 mb/d (IEA, 2018: 133). But, oil is by far the biggest concern of Beijing since it is considered ‘strategic material’ because a disruption could cause serious problems in army’s training and transportation (Leung, 2011, 1332). To make things worse, China is not rich in oil reserves as it accounts only for 2% of world oil reserves. Hence, China is highly reliant on the oil imports, and about 61% of oil consumption was imported in 2015 (NBS 2015). For 2017, China produced 3846 thousand b/d and consumed 12799 thousand b/d a rise of 4% since 2016 (BP, 2018: 15).

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Figure 2.4: China’s Oil Production and Consumption

Source: BP data

Natural Gas

Although natural gas has a small share in China’s total energy mix accounting for 7 %, it has tripled its gas production reaching to 149.2 bcm (billion cubic meters) in 2017 from 69.8 bcm in 2007 while the consumption rose to 240.4 bcm in 2017, from 71.1 bcm in 2007 (BP, 2018). The growth rate per annum rose between 2007 and 2017 by 13.7%. And in the case of natural gas it is obvious that consumption exceeds production and as a consequence China must import it; the main sources are LNG and land pipelines. The government has only recently started to push for greater use of natural gas as substitute of coal due to many problems including air pollution, environmental contamination and CO2 emissions (Dong et al. 2017: 216). As can be inferred from the above mentioned, the Chinese state-class have to deal with the lateral pressure that arises from population growth, rising incomes, technological changes, domestic scarcity of resources and the social pressure of rising demands (Amineh and Yang, 2014: 510). Thus, the state-class has strong interest to address these demands in order to preserve the rapid growth rates and consequently the legitimacy of CCP. Finally, as Yao and Chang (2015) argue that China’s energy security has not been enhanced because the economic reforms aimed at capitalist industrialization has mitigated the effectiveness of energy policies because

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they were mere reactions to energy-intensive economic development and they will continue to be reactionary measures in the foreseeable future (ibid: 131).

2.4 Energy sector’s overhaul and the National Oil Companies

Energy policy retains its importance for China since energy is a fundamental element for its increased economic industrial expansion and household demand, especially oil is considered ‘strategic industry’. This section examines the final phase of the gradual restructuring of the energy sector, the emergence of the NOCs, their relations with the state and finally, the reasons of ‘Going out’ strategy. Specifically, the oil sector underwent reforms as the Chinese government pursued a) the corporatization of energy firms and the separation of government from their management, b) their restructuring c) their commercialisation and listing in foreign exchange stocks rendering them attractive by the separation of the productive assets from the non-productive and social responsibilities (ibid: 164). These reforms aimed at reducing state’s subsidies, permitting autonomy for relative autonomy of investment decision-making (although, under some restrictions), rendering managers responsible for the financial performance of the enterprises linking thus their promotion on firms’ profitability and finally raising the supply level (Andrews- Speed, 2012: 163). All in all, the reforms targeted the ownership and governance system in order to overcome the NOCs poor performance (Taylor, 2012: 69). It is worth mentioning that it is slightly misleading to consider the ownership rights as a safe criterion of autonomy of a firm from the government, because the institutional and regulatory environment as well as the indirect social networks decisively influences the performance of any firm within the Chinese state (Milhaupt and Wentong, 2015: 668). From the dismantling of the Ministry of Petroleum Industry three major oil corporatized companies emerged i.e. the China National Offshore Oil Corporation (CNOOC) in 1982, the China National Petrochemical Corporation (Sinopec) in 1983 and finally the China National Petroleum Corporation (CNPC) in 1988 (Downs, 2010: 122; Meidan, 2016a, 11-13). To deal with the prices volatility and to raise the profitability, the government conducted an asset swap between CNPC and Sinopec creating two vertically-integrated companies. CNPC was held responsible for the north and west focusing on upstream activities and Sinopec for the south and

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east focusing on downstream activities. CNOOC remained focused on offshore upstream activities (Andrews-Speed, 2012: 164). After several reforms the current structure of energy governance and mechanisms of control of the CNOCs are as follows: the preeminent control resides in State Council atop the hierarchy of governance structure followed by National Development and Reform Commission (NDRC) which is responsible of macro-economic development policies. Under the supervision of State Council is the National Energy Commission (established in 2010) that was held responsible for ‘‘produce China’s strategy, review issues of energy security and development, and coordinate domestic energy exploration and international energy cooperation’’ (Bo, 2010: 8; Andrews-Speed, 2012: 146). It was a clear sign that government tried to recentralize the blurred and fragmented energy governance; it is headed by the Premier and amongst its members is the Chairman of the NDRC (State Council, 2018). Directly under the control of the NDRC is the National Energy Administration, having broad authority in every aspect of the energy sector i.e. development of energy strategy, devise plans and policies and supervise China’s oil, natural gas, coal and power industries, to manage the strategic oil reserves among others (Andrews-Speed, 2012: 147). The State Asset Supervision and Administration Commission (SASAC) has the ownership of SOEs although the NOCs influenced concurrently by the NDRC and other ministries. Finally, at the lower levels of government – provinces, cities and districts – play a circumscribed role by implementing the national policies (ibid: 147-148; Andrews-Speed and Ma, 2009: 597). Although the CNOCs have similar structure with the Western private enterprises the deepest and most decisive differences are; the authority of CCP Central Organisation Department (COD) to appoint the personnel and the existence of party committees and party secretaries that operate as chairmen and CEOs of the NOCs (Taylor, 2015: 70-71).

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Figure. 2.5: The Governance structure of Chinese National Oil Companies

Source: Leung et al. Securitization of energy supply chains in China, p. 319

In 1997, as part of CNPC restructuring, the PetroChina Ltd established as a joint stock company in which the parent company transferred all core assets and listed it on New York Stock Exchange, the Kong Stock Exchange and on April 6, 2000, April 7 and 2007, respectively (CNPC Annual Report, 2017). CNPC holds 88.21 percent of shares (PetroChina, 2017). In 2017, CNPC ranked fourth globally in terms of revenue – USD 326 billion (Fortune, The Top 10, 2017). Wan Yilin holds the position of Chairman of CNPC and PetroChina concurrently and was member of the 18th Central Commission for Discipline Inspection of the CCP in 2012 (cnpc.com.cn). Consequently, as Amineh and Yang postulate, the NOCs are a hybrid of corporate governance, public administration and societal regulation (Amineh and Yang, 2014: 517).

2.5 The ‘Going-Out’ Strategy

China launched the ‘Going-Out’ Strategy in the 1990s, primarily to secure its energy supply due to the increasing dependence on oil imports, which was perceived as a serious threat, by investing in resource-rich countries and thus gaining diversification of sources (18). Also, due to the scarce nature of natural resources and their potential depletion, it is seen as safe that CNOCs should increase their share on the global energy stage. Moreover, the greater management

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responsibility and the corporatization led to the NOCs’ greater autonomy and commercial-driven logic for going out (Ma and Andrews‐Speed, 2006, 20; Downs, 2010; IEA, 2015b; Graaff, 2017: 42). It can thus be inferred that the two driving reasons – energy supply security and commercial motives – have been driving the outward expansion of CNOCs. Also worth mentioning, is that since the CNOCs started expanding abroad, they had to operate like IOEs and to cooperate with other NOCs or IOEs in the form of Mergers and Acquitions (M&A) and joint ventures. Thus, they improved their technical expertise and managerial skills (Jiang and Sinton, 2011: 14). When it comes to the outward strategy of the CNOCs, except from the governmental institution mentioned in section 2.4, some additional regulators shall be examined. Regarding the ministries involved in the governance of the NOCs, special attention should be given to the Ministry of Foreign Affairs (MOFA) and the Ministry of Commerce (MOFCOM). The former provide political risk analysis of each country’ environment and support; the latter ‘‘advices on investment opportunities, manages NOCs’ overseas bids and projects, and is in charge of China’s grant and loan projects’’ (Hardus, 2017: 122). In terms of the financing of the investments, the most important state-owned policy banks are the China Development Bank (CDB) and the Export-Import Bank of China (China Exim). These banks provide concessional loans-for-oil and loans-for-gas with the guarantee of the Chinese state (ibid: 114). From 2005 to 2017 both banks have invested USD 150.4 billion for energy, transportation and infrastructure projects; in 2012 only the issued loans for energy projects amounted to USD 43 billion (ChinaPower). According to projections the accumulated OFDI of Chinese firms will reach to USD 1–2 trillion by 2020 (Wang and Hu, 2017: 820).

2.6 Conclusion

In this chapter it has been shown that the center of gravity of the state-market (society) complex is the state-class of China as it manifests itself through the top-down governing bodies of the Politburo Standing Committee, the Politburo, the Central Committee and the National People’s Congress. It has been clarified by the CCP which controls the state and the market through the appointment of its members to senior posts at every sector of administration and through CCP membership and party-units in companies (and lower governmental units) in the private as well

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as the public sector of the economy, including the NOCs as the most vital component of the socialist market economy. Furthermore, it has become apparent that the industrialization resulted in increase of domestic growth and consequently domestic wealth. The increase of energy consumption deteriorated the energy situation by rendering China dependent on energy imports. As this augmenting growth is projected to be continued the government is confronted with lateral pressure and thus policymakers have to deal with the pressure by the ‘going out’ in order to find resources and markets to satisfy the demands. The main actors in charge for this target are the NOCs. As in every aspect of state-market relations, the control over the NOCs is exercised by appointing CCP members in crucial post in terms of the firm’s management and by many government institutions and banks but, as the NOCs investing abroad transformed into hybrid entities because inside China they uphold politically driven functions and internationally they operate like IOCs. The mains reasons behind the ‘Going Out’ strategy were a) the securitization of energy supply in terms of oil and natural gas and b) the commercialisation, the profitability and the technical expertise of NOCs. The next chapter will examine the importance of Central Asia and especially Uzbekistan for China under the broader multilateral context of the Shanghai Cooperation Organisation and the Belt and Road Initiative.

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Chapter 3

The Post-Cold War Central Asia and its Multi-faceted Importance for China

3.1 Introduction

The previous chapter has examined how and why the rapid economic development resulted in the deterioration of the energy situation in China and what response the Chinese political-elite had been deployed. Furthermore, an overview of the way in which China’s National Oil Companies are profoundly directed by the Chinese state-class has been given, in domestic or in the international (-and transnational) sphere, although it has been argued that the CNOCs are hybrids trying to balance between government goals and their commercial logic when they go abroad. Therefore, this chapter will try to grasp the significance of Central Asia in terms of geostrategic position, geoeconomics and geopolitics in the post-Cold War period. The chapter attempts to answer to the following question: What is the significance of Central Asia for China and what policy tools it has deployed in order to achieve its goals? To answer this question, the chapter will start with an analysis of the post-Cold War situation as a result of the break-up of the USSR and thus proceeds to a holistic analysis of the overall geopolitical, geoeconomic and geostrategic significance of Central Asia. Then the chapter will firstly examine the national interests of China and secondly how its involvement in the region serves these interests.

3.2 The geostrategic importance of Central Asia

The unexpected dissolution of the Soviet Union brought rapid and deep changes in the international security architecture terminating half century of bipolar rivalry between the USSR and the USA. From the collapse of the soviet bloc many newly independent states in Central Europe, South Caucasus-Caspian Sea and Central Asia areas emerged. The post-Cold War

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landscape is characterized by complexity which manifests itself in the fierce antagonism and cooperation for the vast resources of these regions due to the natural resources that are scarce in nature and the energy demand kept increasing over the past three decades. In Central Asia (CA) region five new states were established i.e. Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan (Rumer, Trenin and Huasheng, 2007: 3). The newly independent region borders with the Caspian Region in the west, Russia in the north, China in the east and the unstable Afghanistan and Iran in the south. Central Asia possesses a strategic location of great importance (Hiro, 2009: 11) since it lies at the center of Eurasian landmass and connects the energy-thirsty population the centers of Europe, the Indian Ocean and the Asia-Pacific region – predominantly the ascending China – the resource-rich Middle East countries with the preferential access in the Medeteranean Sea and the ever-growing assertive Russia, the erstwhile epicenter of the soviet empire. The importance of Central Asia lies in its utility as trans-regional overland transit corridor (highlighted by the lately China-proposed BRI), its vast natural and mineral resources and its significant infrastructure projects (pipelines, railways, highways, airlines). In general Central Asia serves as trade, energy and infrastructure hub at the heart of Eurasia. It is worth mentioning that Central Asia was the connecting point in the famous ancient ‘Silk Road’ for millennia. Some scholars argue that instead of treating these five states as cloistered and isolated from external influences, we shall grasp the complexity and interactiveness of the region with its adjacent countries by adapting the term ‘‘Greater Central Asia’’ for a proper analysis of the scale of the interdependence between the five states and their neighbors (Menon, 2003: 200-1) and some others examine the region under the lens of Central Eurasian taxonomy i.e. Central Asian and Caspian region states (Amineh, 2003: 1). Every Central Asian country was faced with some pressuring problems. The most daunting of all were the creation of state institutions, nation-building and of economic development. The chosen path was a top-down process made by the ex-communist elites which has been transformed as the new national ruling elites of each country (Akçali, 2003: 95). The selected government model was this of high centralized super-presidential political systems, (Pamfret, 2012: 1) having the maintenance of stability as the highest priority and not the establishment of western style democracy (Amineh, 2003: 39).

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3.3 Geoeconomic importance of the Central Asia

Oil and gas resources in CA

Another crucial reason of Central Asia’s5 great importance is its vast oil and gas resources. Its remaining recoverable reserves of crude oil and natural gas respectively account for roughly 1.9% and 11.3 % of the world’s total reserves (BP, 2018). For reasons of comparison, the Middle East holds 47.6 % of oil and 40.9% of gas total reserves (ibid). It must be mentioned that the CA region has significant exploration and development potential (Hu, 2014: 596). The table below shows the oil and natural gas reserves of Central Asia. Kazakhstan’s oil reserves in Eurasia are second only to Russia, and twelfth in the world ranking, Turkmenistan is ranked forty-third and Uzbekistan is forty-fourth (BP, 2018). In terms of gas reserves Turkmenistan is sixth, Kazakhstan is fifteenth and Uzbekistan nineteenth of the world total (BP, 2018). Thus, as can be inferred Central Asia has great potential as China’s ‘reservoir’.

Table 3.1: Oil and Gas Reserves and share of world total in the Caspian Region-Central Asia (2016-2017)

Oil: mln Russia Iran Azerbaijan Kazakhstan Turkmenistan Uzbekistan World barrels Gas: mln m3 Oil 106.2 157.200 7.000 30.000 600 600 1.696.00 reserves (6.3%) (9.3%) (0.4%) (1.8%) (0.04%) (0.04%) 0 (100%)

Gas 35.000.000 33.200.000 1.300.000 1.000.000 19.500.00 1.200.000 193.500.00 reserves (18.1%) (17.2%) (0.7%) (0.6%) (10.1%) (0.6%) (100%) Daily Oil 11.257 4.98 0.80 1.84 0.26 0.05 92.65 Production (12.2%) (5.4%) (0.9%) (2.4%) (0.3%) (0.01%) (100%) Gas 635.600 223.900 17.700 27.100 62.000 53.000 3.680.400 Production (17.3%) (6.1%) (0.5%) (0.7%) (1.7%) (1.7%) (100%) Net export 1.853.3 766.0 238.1 446.7 18.2 0.0 16100.7 Oil (4.8%) (4.8%) (1.5%) (2.8%) (0.1%) (100%) Net Export 221.923 3.581 8.608 8.809 57.697 11.400 1.233.471 Gas (4.8%) (18.0%) (0.7%) (0.7%) (4.7%) (0.1%) (100%) Source: Reserves and production based on data of British Petroleum, Statistical Review of World Energy. Net exports based on IEA Statistics Browser, available at: https://www.iea.org/statistics/ Note. * = Data on oil and gas reserves, daily oil production and gas production is of 2017. Data on Net export of oil and gas is of 2016. Compiled by the author

5 As Central Asia here is considered the three resource-rich countries of Kazakhstan, Turkmenistan and Uzbekistan due to the fact that the remaining, Kyrgyzstan and Tajikistan lack of significant reserves. 48

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Table 3.2: Export-earning and state-budget based on oil and gas in Russia-Iran- Azerbaijan-Turkmentistan-Kazakhstan and Uzbekistan (2017)

Countries Export Earning State Budget % GDP % GDP % (Oil and Gas) (OIL)** (Natural Gas)*** %* RUSSIA 50.8 2.57 6.43 10.7 IRAN 72 2.57 15.34 17.78 AZERBAIJAN 91.1 2.95 17.87 21 TURKMENISTAN 83 12.39 5.02 17.42 UZBEKISTAN 8.3 6.64 0.86 14.69 KAZAKHSTAN 50.4 1.18 10.19 16.19 Source: OEC and World Bank. Compiled by the author * Observatory of Economic Complexity (OEC) https://atlas.media.mit.edu/el/profile/country/irn/ The calculations are based on the combination of crude oil and petroleum gas OEC indicate. **Οil rent (% of GDP) World Bank https://data.worldbank.org/indicator/NY.GDP.PETR.RT.ZS ***Natural gas rents (% of GDP), World Bank, https://data.worldbank.org/indicator/NY.GDP.NGAS.RT.ZS

According to the table above, all the states of Central Asia as well as Russia and Iran are highly dependent on natural resources for their revenues. The only exception is Uzbekistan due to its important domestic consumption and fact that does not allow Tashkent to export much of its natural gas.

Other resources Furthermore, the Central Asian states are holders of vast mineral deposits i.e. coal, uranium and gold, chromite, lead and zinc. Also, it has great potential for hydropower, wind and solar capacity. It must be mentioned that Kazakhstan is one the biggest coal holders and Uzbekistan is the world’s leader in cotton production (ADB, 2010). As of 2013, Kazakhstan was the biggest uranium producer in the world (Jarosiewicz and Strachota, 2013: 49).

3.4 The Geopolitics of the post-Cold War Central Asia

The Central Asia region has experienced the geopolitical competition, since the 19th century, between the almighty empires of Great Britain and Tsarist Russia on its terrain. The desired goal was the strategic control and hegemony over the region and it is known as the ‘Great Game’

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(Rasizade, 2003: 41). After the collapse of the Soviet Union, the new conditions for the revival of a more complicated ‘New Great Game’ had been set (Freire and Kanet, 2010). In the post-Cold War period, the creation of the five new states set the stage for great and regional powers’ attempts to fill the power vacuum (Huasheng, 2007: 142) of the formerly Soviet-dominated area. Contesting actors ranging from major power such as US, China, Russia, the EU (and its member states) and Japan to regional powers such as India, Iran, Turkey and Pakistan were involved in competition and cooperation over the affairs of the region. The unstable and ragged from the civil war and the external intervention Afghanistan which affects the overall stability and economic development of the region must be included in the equation. The novelty of the new game and the far bigger complexity compared to the old one can be attributed to 1) the transformative effect of the globalised international political economy (rapid expansion of trade and transnationalization of production and finance) and consequently, the active cross-border activities of states, 2) the independence of Central Asian states and 3) the involvement of not solely state actors but also to the inclusion of non-state actors (International Organisations, TNOCs, ethno-religious organized groups mainly the extremist Political Islam, crime groups, NGOs) (Amineh, 2003: 24-25) and 4) importantly, to energy resources extraction, exploitation and control (Lakatos, 2014). It is worth mentioning that antagonism and cooperation is taking place simultaneously. All in all, the significance of Central Asia derives from a) it’s geographical position at the center of Eurasia serving as transit route and land bridge between Europe, China and the Middle East and b) its vast oil, gas and mineral resources in its soil, c) the constantly rising global demand for these resources keep rising d) the limited or even decreasing availability and d) finally the degradation environmental and conflicts over the control of natural resources (including water supply in the area) has become probable (Amineh, 2003: 27). For all these reasons, the region is facing additional friction when it comes to ‘‘contested boundaries and territorial disputes, the prevalence of authoritarian regimes, severe economic disparities, long- standing regional rivalries, and a cauldron of ethnic and religious strife’’ (Klare, 2001: 81). The main problem which Central Asia faces is its landlockedness. Consequently, after independence, all states found themselves confronted with which delivering route should be chosen in order to export their resources to the world markets (Orazgaliyev, 2017: 2). The available options were 1) the existing soviet area pipeline network supported by Moscow 2) the

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western route backed by the US and the EU aimed at reducing the dependence of Europe from Russian supplies 3) the ‘South route’ through Iran and then to global markets but this option never materialized due to US hostility towards Iran and 4) the ‘Eastern route’ backed by China to satisfy its ever-increasing energy needs (ibid: 3). A more in-detail account of geopolitical competition and cooperation in Central Asia in inter-regional and trans-regional levels will be given in chapter 5.

3.4 China’s national or ‘core’ interests

To begin with, China has based its foreign policy on the Five Principles of Peaceful Coexistence6: mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful coexistence. in addition to these traditional principles China adheres to the equality of states7 and emphasizes that it does not seek hegemony and instead strives for a multi-polar order within which it seeks to be a responsible great power and finally claims that disputes should be settled by peaceful negotiations (Nathan, 2009). Alongside with these principles China, its Peaceful Development8 document as it was released by the State Council in 2011, declared and exemplified its national interests that are security, sovereignty and development to the rest of the world. According to the document security as a multi-faceted concept which refers to threats ranging from nuclear-related issues to serious challenges to the nation’s integrity and stability such as those generated by terrorists and separatists. More importantly, security includes the preservation of the political system and the monopoly of CCP in power. Sovereignty encompasses the ability of central government to exercise control over land and sea areas (including Taiwan) and to neutralise the challenges emerging against the sovereignty claims. Development is related to free and uninterrupted access to resources and goods necessary for the continuation of the growth. Disruption of sea lines and

6 MOFA of the PRC, The Five Principles of Peaceful Coexistence, 2004/06/14 https://www.fmprc.gov.cn/mfa_eng/topics_665678/seminaronfiveprinciples_665898/t140589.shtml 7 Continuing to Promote the Noble Cause of Peace and Development of Mankind, in Report of Hu Jintao to the 18th CPC National Congress, 16 November 2012, www.china.org.cn/china/18th_cpc_congress/2012- 11/16/content_27137540_11.htm 8 Information Office of the State Council, “China’s Peaceful Development,” white paper, People’s Republic of China, September 21, 2011. http://english.gov.cn/archive/white_paper/2014/09/09/content_281474986284646.htm 51

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instability of foreign countries are regarded the main threats. Last but not least, China is interested in regaining the international respect and status as a great power (Mazarr, Heath, and Cevallos, 2018, 13) Moreover, regional stability and a favorable periphery are very important features of China’s effort to maintain the high levels of development and to attain the rest core interests. A further element of China’s foreign policy is the close linkage of security and development since underdevelopment generates instability and consequently, hinders development and prosperity (Mariani, 2013: 4). It is obvious that by adapting a comprehensive definition of security deems that economic development China can bring general affluence and in parallel can alleviate political and ethnic conflicts. Beijing deploys a variety of means regarding its foreign policy which extend from economic diplomacy i.e. predominantly trade, investment and finance among to leadership diplomacy namely visits of high rank Chinese officials such as the president, the premier and the head of the NPC in order to develop good personal relations with the leaders of targeted countries, strategic partnership meaning a deep and comprehensive relation but it is not an alliance of classical typology and to multilateral diplomacy and military diplomacy (Medeiros, 2009, chapter 5). Lastly, according to the Peaceful Development document China has prioritized four dimensions in its foreign relations for the 21st century: a new type of relationship between major powers as the key, good relations with the neighboring countries as priority, enhancement of relations with developing countries as the basis and finally multilateralism (Song, 2016: 3-4).

3.5 Central Asia in China’s foreign policy

Central Asia is of primary importance in regards to the aforementioned foreign policy framework because in this specific area China implements all four dimensions; the Beijing identify Moscow as a great power with which they should develop good relations falling under the new type of relationship with great power, it is willing to develop friendly relations with its neighboring countries as they border with China’s westernmost region and considers these countries as developing ones and last but not least, has applied the multilateral dimension mainly through the creation of the SCO (Song, 2016: 6) and lately the BRI.

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The break-up of the USSR and the emergence of the five Central Eurasian states allowed China to pursue a new involvement in the region based on sequential and evolving interests. The main interests of China are security, economic considerations and energy and they are intertwined with China’s domestic issues (Mariani, 2013: 6). Border security and stability was the main priority of Beijing. China shares a 3.000-kilometer border with Russia, Kazakhstan, Kyrgyzstan and Tajikistan and after negotiations between the two parties (China and R.K.K.T.) they reached to consensus and signed two agreements: Deepening Military Trust in Border Regions, 1996, Beijing and Reduction of Military Forces in the Border Areas in 1997, Moscow, (Huasheng, 2007: 140; Dwivedi, 2006: 140-1; Laruelle and Peyrouse, 2012, part 1.1; People’s Daily, 2001). The other major concern for China was the combating of terrorism and separatism especially the ‘East Turkestan Islamic Movement’ (ETIM) and the Turkestan Islamic Party (TIP), in Xinjiang (Dwivedi, 2006: 141; Jarosiewicz and Strachota, 2013: 11; Mariani, 2013: 7). The Xinjiang Autonomous Region borders with Central Asia, covers a sixth of China’s landmass, it s said to contain 30% of China’s oil and 34% of its natural gas reserves, 1-2%, of its population and is home to a minority of Uighur people (Pantucci, 2015; Scobell et al., 2014). This ethnic minority which totals 10 million live in China, a substantial diaspora spread over Uzbekistan, Kyrgystan, Kazakhstan and Turkey (Lal, 2006: 5; Scobell, Ratner and Beckley, 2014: 9). The crux of the problem lies in the proximity of Central Asia with Xinjiang which serves as a base and refuge for terrorists. ‘East Turkestan’ cannot become a dominant movement in China without external support and assistance. Hence, China must confront the terrorism issue in an open internal and external environment (Huasheng, 2007:143). By recognizing the interdependence of Xinjiang with Central Asia (Mackerras and Clarke, 2009: 95), China tried to enhance its cooperation with these states in bilateral basis as well as multilateral framework (SCO) and to stimulate economic growth and cooperation between Xinjiang and Central Asia (Jarosiewicz and Strachota, 2013: 13). Xinjiang also holds importance because it is considered the gate of energy imports from the Central Asia, consequently the stability and security in the province is of utmost significance for China (Lal, 2006: 6). The energy supply security became a strategic concern only after the rise of China’s domestic energy demand during the 1990s, the events of the 9/11 and the rise of oil prices. The response was the adaption of a new energy strategy based on diversification of supply routes and

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the ‘Go global’ policy (Wrobel, 2014: 26). Thus Central Asia acquired an ever-growing significance for China in terms of energy supply due to fact that the region can satisfy a portion of energy imports (Huasheng, 2007: 146; Dwivedi, 2006: 145) and mitigate the dependence on maritime routes, especially on Malacca Strait (Zhang, 2011; Cheng, 2011: 643). In 2017, the Kazakhstan-China oil pipeline delivered 12.3 million tons of oil, while the Central Asia-China natural gas pipeline sent 38.7 bcm of natural gas in 2016. (Stratfor 2018; Bisenov, 2018). According to the CNPC, all three lines are capable of delivering 55 bcm annually providing thus 20% of China’s gas consumption. With the construction of line D capacity of the pipeline will rise to 85 bcm per annum (CNPC official site). In economic terms, trade between China and Central Asian countries has importantly augmented during the past two decades, from 2.22 bn in 2001 to 41.1 bn in 2017 (UN Comtrade), although it still represents a small portion of China’s 3.95 trillion USD overall foreign trade (OEC, China). Thus, Central Asia holds significance for China for another reason: the development of Central Asia can contribute decisively to neighboring Xinjiang prosperity eliminating accordingly the reasons for civil unrest and instability because Beijing recognises the economic complementarities alongside both sides of the border (Huasheng, 2007: 147; Mariani, 2013: 4). This strategy is deployed in accordance with the successful domestic security built-up which was based on the spill-over effect of development. This experience is applied to the external environment of China9 aiming at the structuring of a harmonious world (Poole, 2014). Suffice to say that economic cooperation besides being a goal in itself; it is also a means for security’s consolidation (Cheng, 2011: 647). All in all, economic development of the China’s Western region properly serves the overall and primary strategy of country’s economic development. To summarize, China’s strategy towards Central Asia is aimed at i) establishing stability in its neighborhood thus ensuring domestic stability ii) preventing threats to communist rule and guarding national unity iii) preserving peace and supporting the secular friendly governments of the region iii) expanding its economic interests (trade) iv) importing uninterrupted energy and mineral resources v) utilizing the region’s location as geographical hub for exportation of goods to Europe and Middle East and vi) sealing the region from the ‘malign’ influence of other powers

9 As stated in the 2011 Whitepaper on China’s Peaceful Development the central aim of China’s diplomacy is to create a stale international environment for its development. 54

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(Scobell, Ratner and Beckley, 2014: 9; Cheng, 2011: 632; Song, 2016: 33; Swanström, 2015: chapter 18).

3.6 Conclusion

The preceding analysis has examined that the overall significance of Central Asia stems from a) it’s geographical position, lying in the center of Eurasia serving as transit route and land bridge between Europe, China and the Middle East b) its vast oil, gas and mineral resources in its soil, c) the constantly rising global demand for these resources keep rising d) the limited or even decreasing availability and d) finally the degradation environmental and conflicts over the control of natural resources (including water supply in the area). Despite all these comparative advantages the main problem of Central Asia is its landlockedness. The rise of China resulted in an active role in its neighborhood; one of the most appropriate areas was Central Asia. Consequently, China’s strategy towards Central Asia is aimed at i) establishing stability in its neighborhood and thus ensuring domestic stability ii) preventing threats to communist rule and guarding national unity iii) preserving peace and supporting the secular friendly governments of the region iii) expanding its economic interests (trade) iv) importing uninterrupted energy and mineral resources v) utilizing the region’s location as geographical hub for exportation of goods to Europe and Middle East and vi) sealing the region from the ‘malign’ influence of other powers. Having examined the reasons behind China’s involvement in Central Asia the next chapter will examine the engagement of Beijing in Uzbekistan.

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Chapter 4

The Chinese-Uzbek Relations in Bilateral and Multilateral Framework

4.1 Introduction

After having examined in the previous chapter the post-Cold War Central Asia in terms of geo- strategy, geoeconomics and geopolitics and having analysed the role of the area in the Chinese foreign policy this chapter will provide an in-detail analysis of China-Uzbekistan relations in bilateral and in multilateral framework. This role of this chapter is to explain thoroughly what reasons motivated China to cooperate with Uzbekistan and vice versa. The general question this chapter tries to answer is; What diplomatic, economic and security activities has China's state- class and CNPC implemented in Uzbekistan between 2006 and 2018? To answer this question this chapter will start with an analysis of Uzbekistan’s political economy, which is characterized by a highly centralized political power and strong involvement of the state in the economy and especially, in the energy sector. It will then analyse the motivations and goal of the foreign policy of Uzbekistan since its independence. Furthermore, it will continue by analysing the bilateral relations of China and Uzbekistan in terms of diplomatic relations, which will be analysed through a) visits of high-ranking officials b) agreements signed and c) projects. After that, the chapter proceeds with the examination of trade, investments and finance. Finally, it will examine the multilateral mechanisms, i.e. the SCO through which their cooperation take place especially in the security sphere and the BRI which aims to connect primarily the Eurasian continent by constructing infrastructure projects.

4.2 Uzbekistan’s post-Soviet political economy The Republic of Uzbekistan declared its independence on September 1, 1991. Currently, the Republic has a population of 32 million inhabitants, nearly half of the region’s population, which is comprised of Uzbek 83.8%, Tajik 4.8%, Kazakh 2.5%, Russian 2.3%, Karakalpak 2.2%, Tatar 1.5%, and other 4.4%10. It is worth noting that it is a Muslim-dominated country (89%)11. In

10 CIA Factbook, Uzbekistan, https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html accessed on 10 May, 2019 56

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terms of geography, Uzbekistan lies at the center of the Central Asia and borders all the other countries of the region12 including Afghanistan. The political system of the country can be dubbed as a personalized presidential authoritarian regime (Starr, 2006: 6; Spechler, 2008, 28; Petrov, 2001) with highly centralized (Fazendeiro, 2017: 409) and neo-patrimonial13 power structure in which the president has the power to circumvent the other branches of government by issuing presidential degrees (Amineh, 2003: 48). The ‘top-down’ mode of governance inherited for the Soviet experience (Starr, 2018; 20) but simultaneously, it has allowed the regime to address several and severe self-perceived threats from domestic and external environment. The primary goal of the president Karimov, former leader of Uzbek SSR and first elected president of the country (1991-2016) and his regime was to preserve and strengthen state’s sovereignty against i) the high expectations of the public which were triggered by the collapse of the Soviet Union, ii) Moscow’s attempts to maintain the leading role in the region iii) threats stemming from the Islamic revival and iv) rapid market-oriented reforms (Starr, 2018: 20). Faced with these pressures, the president and his close associates have chosen a rather different path. In terms of economic reforms, the selected path has been dominated by a gradual state-led economic development, rejecting thus the ‘shock therapy’ followed by Russia. This plan of ‘development in stages’ or as it is termed by the president Karimov himself the ‘Uzbek road’ was aiming at absorbing the potential waves of discontent and upheavals while at the same time it was believed that it could preserve the social stability and national unity. Furthermore, the plan called for the preservation of state’s leading role in allocating and financing investments, attainment of energy self-sufficiency; legal protection of property right was issued allowing in that way the establishment of private sector and finally the protection of weak tiers of population came to the forefront (Spechler, 2008: 34). Important to note is that the state maintained its dominant role in the cotton, uranium, gold, natural resources and manufacturing sectors of the

11 World Atlas, Central Asian Countries, https://www.worldatlas.com/articles/the-countries-of-central-asia-by- population.html accessed on 10 May, 2019 12 It borders Kazakhstan in the north, Kyrghyzstan and Tajikistan in the east, Afghanistan in the south and Turkmenistan in the south-west. 13 The leader maintains authority through personal patronage rather than law. Neopatrimonial systems do not rely only on the traditional forms of legitimation, patriarchal values and impersonal rules that characterize patrimonial states, but also on a rationally driven exchange of services, where the patron buys the loyalty of a client, and on formal structures of state bureaucracy and administration diversification from cotton monoculture (Allison 2008, 187). 57

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economy through its state-owned enterprises introducing limited privatization only in mining and manufacturing (Starr, 2018: 21; Markowitz, 2014, 4). A small-scale privatization took place in 1992-4 (Spechler, 2008: 35). At the second stage of reforms, the state initiated market-oriented reforms, invested capital into capital-intensive strategic industries, oil and gas, gold mining non- ferrous metallurgy, chemical automobiles, electronics and airplanes (Spechler, 2008: 39). By and large, the Uzbek state chose a state-led and gradualist path to market economy in order to stimulate growth (Yilamu, 2018: 43) and to preserve sovereignty, national unity and social stability (Spechler, 2008: 34).

State-control in the Hydrocarbon sector

The oil and gas sector of Uzbekistan is owned by the government and regulated by the SOE Uzbekneftegaz. Uzbekneftegaz was created by the abolition of the ministry for oil and gas in 1992 and in 1998 it was restructured as holding company (Broadman, 2000:12). The company is structured as follows: The first level of the system is comprised by Uzbekneftegaz National Holding Company. The second level encompasses six major joint stock companies owned by Uzbekneftegaz. The third level consists of more than 190 enterprises owned by the companies of the second level (Suvanova et al. 2016: 266). The table below shows the shareholders of the Uzbekneftegaz indicating that is fully controlled by the Uzbek state.

Figure 4.1: «Uzbekneftegaz» National Holding Company Shareholders Capital Structure

Source: Uzbekneftegaz official site http://uzneftegaz.uz/en/investors-and-shareholders/capital/

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Figure 4.2: The structure of Uzbekneftegaz National Holding Company

Source: Suvanova et al. 2016: 266

The company is governed by i) a supervisory board, which is chaired by the prime minister Aripov N. and includes other ministers, state officials (including from the bank sector) and ii) a board of directors, which is comprised of six members. The incumbent chairman is Sidikov Bakhodirjon Bakhromovich14. As a national strategic sector, the oil and gas industry has remained under the direct control of the government. The government exercises control via the State Committee for Assistance to Privatized Enterprises and Development Competition15 and the subordinate Center on Management of the State’s Assets16 (US State Department, 2018). In 2017, the State Committee for Assistance to Privatized Enterprises and Development of Competition had been abolished and the National Agency for Project Management was established under the President of the Republic of Uzbekistan17. It has a broad mandate which is centered on 1) business entities with a government share of more than 50 percent 2) supervise economic entities under Cabinet of Ministers of the Republic of Uzbekistan 3) manage state- owned assets 4) conduct of privatization activities 5) leasing of state assets and 6) recovery of

14 Uzbekneftegaz official website, Supervisory Board http://www.ung.uz/en/about/meo/ and Company management http://www.ung.uz/en/about/administration/ accessed on 12 May, 2019 15 State Committee for Assistance to Privatized Enterprises and Development Competition, last updated on October 2014, https://gkk.uz/en/ accessed on 12 May, 2019 16 Center on Management of the State’s Assets, https://gkk.uz/en/about-committee/com-stricture accessed on 12 May, 2019 17 Tashkent Times, Competition Committee split into three, 2019-01-14, http://tashkenttimes.uz/national/3401- competition-committee-split-into-three accessed on 12 May, 2019 59

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economically insolvent business companies and bankruptcy18. The director, currently, is Akhadbek Haydarov, former first Deputy Finance Minister19.

The foreign policy of Uzbekistan

It goes without saying, that domestic politics has a catalytic impact on the Uzbek foreign policy (Kazemi, 2003). The foreign policy, under Karimov, was directed by regime’s insecurity and its national interests. As argued above, the president had a decisive role in the power structure of the state. The president had a dominant position in the policy-making process due to the authoritarian nature of the regime and also due to the Foreign Ministry’s lack of experienced personnel and institutional memory. Consequently, Karimov used the country’s foreign policy as a tool to secure himself politically and his hold on power. (Pikalov, 2014: 301; Lee, 2010: 43). Regarding regime’s (in)security and stability, it was perceived and confronted with an omnipresent legitimation crisis, despite its solid hold on power. The major opposition came from the Erk and Birlik parties which were banned soon after the independence. The suppressive nature of the regime coupled with weak political and economic reform as well as poor living standards (Pikalov, 2014; 301) resulting in the rise of Islamic extremism, mainly by the Islamic Movement of Uzbekistan (IMU) (Starr, 2018: 24-5). In terms of national interests, Karimov’s foreign policy was based on the three main ‘pillars’; 1) ensuring the autonomy and sovereignty of the state 3) promotion of domestic political stability and 3) gradual reform of the Uzbek economy (Kazemi, 2003: 207, Pikalov, 2014; 304-5). When it comes to international relations, the foreign policy of Uzbekistan has been driven primarily from its national interests and security calculations. As president Karimov put it; ‘‘Uzbekistan’s foreign policy priorities are formulated from vital national interests and ensure the security of our country…The essence and content of our foreign policy is the interests of Uzbekistan and Uzbekistan’s alone’’ (in Pikalov, 2014: 301). According to Uzbekistan’s Constitution, article 17: ‘‘Its foreign policy shall be based on the principles of sovereign equality of the states, non-use of force or threat of its use, inviolability of frontiers, peaceful settlement of disputes, non-interference in the internal affairs of other states, and other universally recognized

18 National Agency for Project Management, https://napm.uz/en/about/about-us/ accessed on 12 May, 2019 accessed on 12 May, 2019 19 Tashkent Times, Akhadbek Haydarov becomes Director of State Owned Assets Management Agency, 2019-04- 12, http://tashkenttimes.uz/national/3777-akhadbek-haydarov-becomes-named-director-of-state-owned-assets- management-agency accessed on 12 May, 2019 60

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norms of international law. The Republic may form alliances, join or withdraw from unions and other inter-state organizations proceeding from the ultimate interests of the state and the people, their well-being and security’’.20 (emphasis added). Tashkent has reoriented its foreign policy course several times, due to external threats, though has always been trying to preserve its maneuverability among great powers (Spechler and Spechler, 2010: 163). Thus, Uzbekistan has followed a ‘multi-vectorial’ (Pikalov, 2014: 303; Fazendeiro, 2017; Weitz, 2018, 7) foreign policy by approaching Russia, the US, China, and India and signing ‘strategic partnerships’ with all of them (Tolipov, 2014: 4). It can be inferred that Uzbekistan has prioritized the ‘bilateralism’ rather than regional organisations (ibid), although it did not omit to participate in multilateral mechanisms. Tashkent has joined Russia-led regional institutions i.e. the Collective Security Treaty Organization (CSTO) and the Eurasian Economic Community (EAEC). Moreover, had joined the regional organization GUUAM (Georgia, Uzbekistan, Ukraine, Azerbaijan, Moldova), which aimed at balancing Russia (Starr, 2018; 22-3) but Uzbekistan suspended its membership in every one of these aforementioned organisations. Uzbekistan currently is a member of the CIS, Central Asian Cooperation Organisation (CACO), the Central Asian Economic Union, the Economic Cooperation Organization and the SCO.

Foreign policy under Shavkat Mirziyoyev

The new president, Shavkat Mirziyoyev, served as the country’s prime minister from his appointment in 2003 until 2016. Given his previous post and involvement in the governance, policy continuity was secured. But, a new reform policy was introduced. Two months after his election, he initiated the ‘‘Development Strategy’’ for 2017-2021, introducing thus a far- reaching and a full-fledged reform policy in the political, economic and legal system of Uzbekistan21. The new government has adjusted its tactics in the pursuit of the enduring objectives, as they were analysed above. The foreign policy has also been affected.

20 The Permanent Mission of the Republic of Uzbekistan to the UN, Constitution of the Republic of Uzbekistan, https://www.un.int/uzbekistan/uzbekistan/constitution-republic-uzbekistan accessed on 15 May 2019 21 The Tashkent Times, Uzbekistan's Development Strategy for 2017-2021 has been adopted following public consultation, February 2, 2017, http://tashkenttimes.uz/national/541-uzbekistan-s-development-strategy-for-2017- 2021-has-been-adopted-following- accessed on 13 May, 2019 61

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According to the Ministry of Foreign Affairs of Uzbekistan ‘‘the main goal of the foreign policy of the Republic of Uzbekistan is strengthening of the independence and sovereignty of the state, further enhancing the role and place of the country in international arena, joining the ranks of the developed democratic states, creating security, stability and good neighborliness belt around Uzbekistan’’22. The most prominent change regarding the Uzbek foreign policy course is that Central Asia is considered as an area of high priority (Dadabaev, 2018b: 165) and great importance for the establishment of peace, regional security and stability. President Mirziyoyev from the 72th United Nation General Assembly in 2017, declared that ‘A peaceful and economically prosperous Central Asia is our most important goal and key task’ and for this purpose Uzbekistan ‘is determined to engage in dialogue, constructive interaction and strengthening the good-neighborliness’ ready to make ‘reasonable compromises…on all issues without exception’23. According to the Uzbek Foreign Minister Abdulaziz Kamilov, Uzbekistan aims at transforming the Central Asia into a region of ‘‘stability, sustainable development and good- neighborliness’’24. President Mirziyoyev stressed at a UN conference held in Samarkand, Uzbekistan that ‘‘Central Asia is a region of unique opportunities and huge unrealized potential’’. He also noted that “it is on the basis of the principles of good-neighborliness and mutually beneficial partnership that the states of the region would be able to realize their potential in trade-economic, transport-communication, cultural and humanitarian spheres as well as security and stability issues” in order to construct jointly a ‘‘stable and economically developed region’’25 (emphasis added). Relations with Russia, China (Dadabaev, 2018b: 169) and the US follow those with the Central Asia26. By adapting the new strategy, the new government is trying to deal with, as its predecessor did, the problems of terrorism, narcotics trafficking, unimpeded access to water

22 MOFA of Uzbekistan, Foreign policy, https://mfa.uz/en/cooperation/ accessed on 12 May, 2019 23 The Permanent Mission of the Republic of Uzbekistan to the United Nations, 19 September 2017, https://www.un.int/uzbekistan/statements_speeches/address-he-mr-shavkat-mirziyoyev-president-republic- uzbekistan-unga-72 accessed on 15 May 2019 24 The Tashkent Times, Opening remarks by Abdulaziz Kamilov at Central Asia - Uzbekistan's Top Foreign Policy Priority conference, , 2017-08-11, http://tashkenttimes.uz/national/1287-opening-remarks-by-abdulaziz-kamilov-at- central-asia-uzbekistan-s-top-foreign-policy-priority-conference accessed on 15 May 2019 25 Embassy of Uzbekistan in the New Delhi, President of Uzbekistan Shavkat Mirziyoyev: Central Asia is a region of huge unrealized potential, November 14, 2017, http://www.uzbekembassy.in/president-of-uzbekistn-shavkat- mirziyoyev-central-asia-is-a-region-of-huge-unrealized-potential/ accessed on 15 May 2019 26 Ibid as 6 62

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resources, delimitation-demarcation of border, the Afghan problem and the need to balance external powers (Weitz, 2018).

4.3 China-Uzbekistan cooperation

Uzbekistan used its relationship with China to a) counter Russia’s military/security aspirations through its regional cooperation platforms and also b) it was useful since China adheres to the principle of non-interference and respect for any country’s selected social model (this was against US and EU criticisms for the Andijan massacre and pressure for democratization and human rights; regime change; color revolutions).

Diplomatic relations between 2005 and 2017

China recognised the independence of Uzbekistan in the late 1991 and the two countries established diplomatic relations in early 1992. High profile official visits in bilateral as well as in the multilateral framework of the SCO have taken place between the presidents of China and Uzbekistan in 1992, 1994, 1999, 2005, 2011, 2012 and 2014. In 2001 and 2006 the Uzbek president Karimov visited Shanghai for the SCO summits. In 2012, Karimov visited Beijing for both bilateral and SCO summit concurrently. The newly elected president of Uzbekistan, Savkat Mirziyoyev, paid an official visit to China in 2017. Accordingly, respective Chinese presidents paid official visits to Uzbekistan; Jiang Zemin (1996), Hu Jintao (2004, 2010) and Xi Jinping (2013, 2016). From 2004 to 2017, the Chinese and Uzbeks held 15 rounds of political consultations on the level of Ministries of Foreign Affairs, with focus on the issues of bilateral cooperation and interaction within the SCO (Uzbek MOFA). In the period 1992-2005, although the Chinese-Uzbek bilateral ties were steadily developing, they did not constitute the priority domain for the Uzbek foreign policy. Foreign relations’ priorities in the first years of independence were firstly, the development of close relations with Moscow but after the relation’s restraints in the economic domain (ruble) Tashkent started seeking closer relations with/ turned to the West for economic aid and support (Madiyev, 2017: 7). The turn-around became even prominent as Russia tried to re-establish itself as the dominant power of the region. The terrorist attack of the 9/11 boosted Tashkent’s ties with Washington.

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The bilateral relations reinforced significantly after the state visit of Hu Jintao in Tashkent in 2004. As a result, several agreements were signed on political, economic, military- technical, and cultural cooperation. Specifically, 20 agreements worth 1.5 billion USD on investment, credit and contracts were signed and of which 600 million USD were in the oil and gas industry (Paramonov, 2014: 2). The turning point was the events of 2005 where the Uzbek Interior Ministry (MVD) and National Security Service (SNB) troops opened fire on a crowd of protesters in Andijan on 13 May 200527. The violent crackdown triggered the strident reaction of the US and the EU. On the contrary, China did not condemn the violent overreaction of the Uzbek government and instead expressed full support to the regime (Pikalov, 2014: 307). On the very same day of the events, during his meeting with the First Deputy Prime Minister of Uzbekistan Rustam Azimov, the then Chinese Foreign Minister Li stated that China ‘attaches great importance to its relations with Uzbekistan’ and both parties noted that ‘support to each other on their respective major concerns, share the common interest in maintaining the regional stability and fighting against the "three evils"’28. One month later, on May, 2005, the Uzbek president Karimov paid a state visit in China and the Treaty on Friendly and Cooperative Partnership and 10 documents signed, including China-Uzbekistan Economic and Technical Cooperation Agreement and China-Uzbekistan Mutual Help on Customs Agreement. Both sides pledged to uphold principles of vital importance for each of them29 and to deepen their cooperation on safeguarding regional peace, stability and security and in seeking common development and prosperity. The sectors of common interest included oil, gas, mining, telecommunications, transportation and infrastructure construction, culture, education, health and sports30. For Uzbekistan, China was a ‘reliable friend and friendly neighbor’ and China deems Uzbekistan a ‘reliable friend and important cooperative partner’31.

27 Organisation for Security and Co-operation in Europe, Preliminary Findings on the Events in Andijan, Uzbekistan, 13 MAY 2005, Warsaw. 20 June 2005, https://www.osce.org/odihr/15653?download=true accessed on 13 May 2019 28 Ministry of Foreign Affairs of the People’s Republic of China, Foreign Minister Li Zhaoxing Meets with First Deputy Prime Minister of the Republic Uzbekistan Azimov, 2005/05/13, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t196113.shtml accessed on 13 May, 2019 29 The One-China policy and reunification goal, also China respects the way the Uzbek people choose to develop their country in light of their own reality as well as their efforts in safeguarding national independence, sovereignty and territorial integrity. 30 Ministry of Foreign Affairs of the People’s Republic of China, Hu Jintao Holds Talks with Uzbek President Islam Karimov, 2005/05/25, 64

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In 2007, during the visit of the Chinese Premier Wen Jiabao in Tashkent, he met with the president Karimov and the Prime Minister Shavkat Mirziyoyev and he proposed the further development of bilateral ties in trade, investment, agriculture, transportation, particularly the China-Kyrgyzstan-Uzbekistan highway and railway projects and the opening of aviation transportation market and finally tourism32. Also, a Joint Communiqué signed with respect to mutually recognised national interests i.e. independence, sovereignty and security33. Moreover, the Chinese president Hu Jintao met with the Uzbek president Islam Karimov in 200934, in 2010 prior to the 10th summit of SCO Heads of the States35 and in 2011 the Chinese-Uzbek relations took a step forward towards advancing friendly cooperative partnership based on the Chinese a five-point proposal; 1) strong high level bilateral exchanges (government, parliaments, parties), 2) trade, energy, investments, transport and communications, 3) security cooperation, 4) people- to-people and cultural exchanges and promote non-governmental friendship and 5) multilateral coordination and mutual support36. Finally, in October of the same year, the China-Uzbekistan Intergovernmental Cooperation Committee on trade-economic, investment, security, cultural- humanitarian, energy, transport, and scientific-technical spheres established (Tolipov, 2013). During the official landmark-visit of the president Karimov in 2012, Beijing, both parties agreed to upgrade their relation to the status of strategic partnership raising their cooperation to https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t197389.shtml accessed on 13 May 2019 31 MOFA of People’s Republic of China, Wu Bangguo Meets Respectively with Speaker of the Upper House of the Kazak Parliament and Speaker of the Legislative Chamber of Oliy Majlis of Uzbekistan, 2006/05/30, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t255913.shtml accessed on 13 May 2019 32 MOFA of the People’s Republic of China, Wen Jiabao Holds Talks with His Uzbek Counterpart Mirziyaev, 2007/11/03, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t378346.shtml accessed on 10 May 2019 33 MOFA of the People’s Republic of China, Joint Communiqué Between The Government of the People's Republic of China And The Government of the Republic of Uzbekistan, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t386405.shtml accessed on 11 May 2019 34 MOFA of the People’s Republic of China, Chinese President Hu Jintao Meets with His Uzbek Counterpart Karimov, 2009/12/14, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t645694.shtml accessed on 11 May 2019 35 MOFA of the People’s Republic of China, Hu Jintao Concludes Uzbekistan Trip, 2010/06/11 https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t708490.shtml accessed on 13 May 2019 36 MOFA of the People’s Republic of China, Hu Jintao Holds Talks with Uzbek Counterpart, 2011/04/19, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t817071.shtml 65

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new heights. The Chinese president Hu stressed the importance of the relationship, praised the ‘healthy development’ and the ‘enhanced mutual trust’ of bilateral relations. He issued four proposals for even stronger and deeper cooperation: a) mutual respect for each side’s core interests and support for sensitive high pressuring issues, b) to enhance economic, trade and energy cooperation, c) ‘‘both sides should keep closer law enforcement and security cooperation’’ and d) expansion of cultural and people-to-people interactions37. Karimov pledged to a full-fledged support of China’s positions, to cooperate for the fighting of the ‘‘three evils’’ and to ‘enhance economic, energy and investment cooperation’ as well as in the areas of education and tourism, among others, with China. Finally, he promised to ‘enhance coordination with China within the framework of the SCO’38. The signed agreements totaled 5.3 bn USD (Paramonov, 2014: 1).

The New Chinese Leadership under Xi Jinping

The new president of China visited Uzbekistan in September 2013. Xi stressed the importance of Uzbekistan as it is located ‘at the geopolitical centre of Central Asia’ and thus possesses a position of great importance for the modern Silk Road. The two countries became strategic partners. The Chinese president raised proposals a) bilateral trade, FTA, and investments b) deepen energy cooperation c) promote infrastructure connectivity and d) build special industrial zones and agricultural demonstration parks, to expand local-currency settlement, to beef up cooperation in science and technology and e) promote cultural and people- to-people exchanges39. Karimov stated that China ‘‘has never imposed pressure on the Uzbek side and has never attached any political strings’’ and thus it is a reliable partner. The priority for Uzbekistan is the energy cooperation in the energy sector. During the visit both sides signed

37 MOFA of the People’s Republic of China, Hu Jintao Holds Talks with Uzbek President Karimov, 2012/06/06, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t939578.shtml accessed on 13 May 2019 38 Ibid 39 MOFA of the People’s Republic of China, Xi Jinping Holds Talks with President Islam Karimov of Uzbekistan Further Develop and Deepen China-Uzbekistan Strategic Partnership, 9 September 2013, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1075975.shtml accessed on 16 May 2019 66

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several (31) documents for projects amounted for 15 bn USD40. Furthermore, they signed 14 agreements regarding the establishment of the Special Industrial Zone ‘‘Jizzakh’’ where high- tech products would be manufactured. Last but not least, a Treaty on Friendship and Cooperation and a Joint Declaration “On Further Development and Deepening Bilateral Relations of Strategic Partnership” were signed (Tolipov, 2013). In August 2014 president Karimov paid a visit to Beijing. Both sides confirmed their willingness to promote the bilateral relations in all levels furthermore they signed a joint declaration and several documents in fields of economy, trade, energy and finance41. On the occasion of the SCO Tashkent summit in 2016, China and Uzbekistan upgraded their relation to comprehensive strategic partnership42. They also ‘agreed to take the joint- construction of the "Belt and Road" as the mainline of bilateral practical cooperation’ and signed a Joint Declaration43. Lastly, in his speech at the Supreme Assembly of Uzbekistan president Xi stressed the achievements of the "Belt and Road"44. Finally, in 2017 the newly elected Uzbek president Mirziyaev paid an official visit to Beijing and he reaffirmed the importance of bilateral relations. Both sides adhered to the jointly construction of the "Belt and Road" as the main line of bilateral cooperation45. During the visit both sides signed agreements worth 22.8 billion USD (Hashimova, 2017). The 2017 visit was

40 Trend New Agency, Uzbekistan, China mull prospects for business co-op, 4 May 2016, https://en.trend.az/business/economy/2528839.html accessed on 13 May 2019 41 MOFA of the People’s Republic of China, Xi Jinping Holds Talks with President Islam Karimov of Uzbekistan Stressing to Jointly Build China-Uzbekistan Strategic Partnership of Equality, Mutual Benefit, Common Security and Win-Win Cooperation, 20 August 2014, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1184406.shtml accessed on 16 May 2019 42 China Daily, 2016, China, Uzbekistan elevate ties to comprehensive strategic partnership, http://www.chinadaily.com.cn/world/2016xivisitee/2016-06/22/content_25809843.htm accessed on 16 May, 2019 43 MOFA of the People’s Republic of China, Xi Jinping Holds Talks with President Islam Karimov of Uzbekistan, 22 June 2016, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1375048.shtml accessed on 16 May 2019 44 MOFA of the People’s Republic of China, Xi Jinping Highlights Positive Results of "Belt and Road" Construction in Various Aspects When Delivering a Speech at Legislative Chamber of the Supreme Assembly of Uzbekistan, 22 June 2016, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1375058.shtml accessed on 16 May 2019 45 MOFA of the People’s Republic of China, Xi Jinping Holds Talks with President Shavkat Mirziyoyev of Uzbekistan The Two Heads of State Agree to Carry Forward China-Uzbekistan Friendship from Generation to Generation and Promote China-Uzbekistan Relations to Inherit the Past and Usher in the Future, 12 May 2017, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1464000.shtml accessed on 16 May 2019 67

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also significant by the virtue of the Uzbek president attendance to the inaugural summit of Belt and Road Initiative46.

Bilateral trade relations

Although, the Republic of Uzbekistan was the first country to establish diplomatic relations with China in 1992 and despite the fact that Uzbekistan became a member of the SCO in 2001, it was not until in 2004 that China took the lead to establish stronger economic ties with Uzbekistan. According to statistics from the World Integrated Trade Solution, the trade volume from 1992 to 2002 did not exceed 131 million USD. This was roughly seven times lower than Uzbekistan’s total trade with Russia or with the OECD countries (Madiyev, 2016: 8). Only after 2003 the bilateral trade started to gain momentum (see the table below). A decisive moment was the visit of President Hu Jintao as well as the deterioration of the relation between Uzbekistan and the US/EU after the Andijan incident. Since then the bilateral trade turnover was constantly growing until China became Uzbekistan’s largest trading partner in 2015.47 According to the Observatory for Economic Complexity (OEC) Uzbekistan has ranked 89th out of 185 economies in 2017. The Chinese-Uzbek trade has risen from 680 million USD in 2005 to 4.2 bn USD in 2017. Despite the increase Uzbekistan still represents only the 71st largest export market for China (0.1% of China’s exports) and the 73rd largest import market for China (0.1% of China’s imports) in 2017 and it is the fourth trade partner of China in the Central Asia region (UN Comtrade). China is the biggest trade partner of Uzbekistan; out of its 8.38 bn USD exports $2.7 bn went to China (OEC, UN comtrade). China imported natural gas, cotton and minerals (UN Comtrade) from Uzbekistan and exported mainly nuclear reactors and other industrial products. Uzbekistan exported 85% of its natural gas valued 587 million USD, 38% of its cotton which amounted to 225 million USD and radioactive chemicals which is worth of 95.1 million USD accounted for 66% of total exports of this good (OEC, Uzbekistan) to China. China was the top importer for all the aforementioned goods. China’s natural gas imports from

46 OROReurope, The first “Belt and Road” Forum: Developing new Silk Roads, 16 May 2017, https://www.oboreurope.com/en/first-belt-road-forum/ accessed on 16 May 2019 47 Kelly-Clark V. 2016, Why is Central Asia dumping Russia for China? 23 May 2016, Global Risks Insights, https://globalriskinsights.com/2016/05/why-central-asia-is-dumping-russia-for-china/ accessed on 17 May 2019 68

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Uzbekistan accounted for only 1.9% of its overall needs (OEC, China). It can be inferred that Uzbekistan in terms of trade represents a small percentage of China’s total trade turnover and cannot cover the constantly growing energy needs of Beijing. China currently is the biggest trade partner of Uzbekistan48.

Table 4.3: Trade between China and Uzbekistan (2000-2017)

Overall trade Exports from China to Exports from Uzbekistan to Million USD Uzbekistan China Million USD Million USD 2000 51 39 12 2001 57 50 7 2002 131 104 27 2003 346 146 200 2004 575 172 403 2005 680 230 450 2006 971 406 565 2007 1.127 764 363 2008 1.659 1,277 382 2009 1.909 1,560 349 2010 2.481 1,181 1,300 2011 2.166 1,359 807 2012 2.874 1,783 1,091 2013 4.551 2,613 1,938 2014 4.275 2,678 1,597 2015 3.495 2,228 1,267 2016 3.614 2,007 1,607 2017 4.220 2,749 1,471

Source: WITS (World Integrated Trade Solution), UN Comtrade. Compiled by the author.

Energy-related Investments

Uzbekistan has been vying for foreign capital to develop its economy since its independence. The sector that mostly received foreign capital, through governmental regulation, was the energy sector, following by infrastructure and the textile industry (Metaxas and Kechagia, 2016: 67-70).

48 THE STATE COMMITTEE OF THE REPUBLIC OF UZBEKISTAN ON STATISTICS, FOREIGN TRADE STATISTICS https://stat.uz/en/open-data/economy/435-analiticheskie-materialy-en1/2066-foreign-trade-statistics accessed on 16 May 2019 69

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As of 2016, Chinese investments and loans to the Uzbek economy exceeded 6.5 bn USD and 650 companies with Chinese capital have presence in Uzbekistan49. The increase of China’s imports from Uzbekistan is based on the Chinese Foreign Direct investment (FDI) in Uzbekistan. The main Chinese actor in terms of energy investments and Merges and Acquisitions (M&A) in Uzbekistan is the CNPC. In May 2005, CNPC and Uzbekneftegaz signed an agreement through which CNPC would invest 600 million USD in twenty-three oilfields in Uzbekistan (Huasheng, 2007: 168). One year later, in June 2006, China National Oil and Gas Exploration and Development Corporation (CNODC, subsidiary of CNPC) and Uzbekneftegaz signed an agreement providing that a Joint Venture, the CNPC Silk Road Group IIc, would explore five blocks in Ustyurt, Bukhara-Khiva and Ferghana oil and gas regions for five years with a cost of 260.2 million USD. In 2012, they extended the contract worth 14.9 million USD for another three years 50. Furthermore, in August 2006, the CNPC’s subsidiary CNODC set up the Aral Sea Oil and Gas Development Consortium of Investors with Uzbekneftegaz, Lukoil, Petronas and Korea’s Korea National Oil Corporation (KNOC) and signed a Production Sharing Contract (PSC) with the Uzbek government for oil and gas exploration and development in the country’s section of the Aral Sea51 (12,000 square kilometers), which holds great potentials. Each partner took an equal share52. Regarding this project, after the completion of geologic exploration phase in 2011 with the cost of US$110.2 million within the PSA, new hydrocarbons fields Zapadniy Aral and six perspective structures were discovered. In May 2011, Petronas left the consortium. KNOC also left the project in September 2013. Uzbekneftegaz holds 33.4% stake in the consortium, CNPC and LUKOIL own 33.3% each. According to agreement terms, minimal share of Uzbekistan in the agreement will be 50% in the first stage. In 2015 started exploratory drilling which were conducted by China’s XIBU Drilling Enfineering Company. Finally, during the 2014-2016 period, the consortium invested additional US$30 USD million for exploration53.

49 Uz Daily, Uzbekistan-China: new stage of cooperation, 30/06/2016, https://www.uzdaily.uz/en/post/36270 accessed on 16 May 2019 50 UzDaily.com, CNPC to mine up to 1bn cubic meters of gas in Uzbekistan, 26/12/2014, https://www.uzdaily.uz/en/post/30519 accessed on 16 May, 2019 51 CNPC official website, CNPC in Uzbekistan, http://www.cnpc.com.cn/en/Uzbekistan/country_index.shtml 52 China Daily, CNPC signs second oil exploration deal in Uzbekistan, 2006-09-05, http://www.chinadaily.com.cn/business/2006-09/05/content_681542.htm 53 UzDaily.com, Aral Sea starts exploration drilling in Eastern part of Aral, 04/11/2015, https://www.uzdaily.uz/en/post/34151 accessed on 16 May, 2019 70

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Another indication of the strongest involvement of CNPC in the oil and gas sector of Uzbekistan is the case of the Mingulak oilfield. CNPC and Uzbekneftegaz signed an agreement in 2008 in order to create a new joint-venture named Mingbulakneft (CNODC- Andijanneft54 part of Uzneftegazdobycha, subsidiary of Uzbekneftegaz) on a parity basis and to jointly explore and develop the Mingulak oilfield (Namangan province). Estimated reserves are over 30 million tons and the estimated production capacity 2 million tons. It is worth mentioning that this particular oilfield presents some difficulties due to depths, reservoir pressure and temperature among others55. CNPC and Uzbekneftegaz signed the basic principles cooperation agreement for its development in 2011. The first oil retrieved in 2019. CNPC contribution was a sine qua non for the oil field’s development due to its expertise which is based on the similar fields in the Tarim Basin of China. CNPC is committed to invest 255.3 million USD for the field development56. In 2009 and 2010, CNPC and Uzbekneftegaz agreed to establish a joint-venture for production of oil and gas equipment and signed a framework agreement on purchase and sale of natural gas supply of 10 bn cubic meters per annum to China57, respectively. In September 2013, during the official visit of president Xi Jinping to Uzbekistan, CNPC Chairman Zhou Jiping and Uzbek Deputy Prime Minister Gulomzhon Ibragimov signed an MOU for feasibility study on oil and gas exploration and development in two blocks in Uzbekistan also, CNODC and Uzbekneftegaz agreed to establish a joint-venture on a parity basis, the New Silk Road Oil And Gas Company Ltd, for exploration and development in the Karakul block (Dengizkul, Khojadavlat, and Sharky Alat)58. The company commenced its operation in the second half of 2017. Once the project reaches its designed capacity, the venture will produce 1 billion cubic meters of natural gas and 6,500 tonnes of gas condensate a year. The cost of the project is 377.5 million USD. The project will be financed due to resources of the joint venture funds, as well as Chinese loans under the guarantee of CNPC. China’s China Petroleum Engineering & Construction Corporation (CPECC), XIBU Drilling Engineering

54 UzDaily.com, New Uzbek-Chinese venture to develop Mingbulak deposit, 16/10/2008, http://www.uzdaily.uz/en/post/3724 accessed on 16 May, 2019 55 UzDaily.com, Oil received at Mingbulak field, 06/05/2019, https://www.uzdaily.uz/en/post/49608 accessed on 16 May, 2019 56 The Tashkent News, First oil obtained in Mingbulak field, 2019-05-08, http://tashkenttimes.uz/economy/3868- first-oil-obtained-in-mingbulak-field accessed on 16 May, 2019 57 CNPC official website, CNPC in Uzbekistan, http://www.cnpc.com.cn/en/Uzbekistan/country_index.shtml accessed on 17 May 2019 58 CNPC official website, CNPC signs series of oil and gas cooperation agreements in Uzbekistan, 2013/09/10, http://www.cnpc.com.cn/en/nr2013/201309/411ba848f5da478c8614ed5c2c8f140c.shtml accessed on 17 May, 2019 71

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Company Ltd and China National Logging Corporation have won as the contractors of the project in the result of bid59. The first phase commissioned in 201760. Lastly, on 18 May 2017, Chairmen of CNPC and Uzbekneftegaz, Wang Yilin and Alisher Sultanov respectively, signed the Supplementary Agreement to the Purchase and Sales Contract between CNPC and Uzbekneftegaz and the Memorandum of Understanding on GazilGas Storage Cooperation between CNPC and Uzbekneftegaz. Also, during their meeting the Agreement between China National Petroleum Corporation, Bank of China and Uzbekneftegaz for Financing Loan for New Silk Road Project was signed61.

The Central Asia-China Gas Pipeline

The main gas pipeline which crosses the territory of Uzbekistan is the Central Asia-China Gas Pipeline. The pipeline Lines A, B and C, each running for 1,830 kilometers, start at Turkmen- Uzbek border city of Gedaim and run through central Uzbekistan and southern Kazakhstan before reaching Horgos in China's Xinjiang Uygur Autonomous region. Line D will cross the territories of Uzbekistan, Tajikistan and Kyrgyzstan and is the only branch of the CACGP network that does not cross the territory of Kazakhstan. In April 2008, Uzbekneftegaz and CNPC signed an agreement for the establishment of the Asia Trans Gas joint-venture for the design, construction and operation of the Uzbek section of gas pipeline Turkmenistan-China with 30 billion cubic meters and a length of 530 km. The Line A became operational in 2009, and the Line B in 2010. The overall capacity of these lines is 30 bcm annually. In 2012, CNPC commissioned the construction of the third Uzbek section with a capacity of 25 bcm, length of 529 km62 and cost of 2.2 bn USD63. The overall delivery capacity of the Central Asia-China Gas Pipeline reached 55 bcm per annum. This equals to approximately

59 UzDaily.com, New Silk Road Oil & Gas Company launches gas production project in Bukhara region, 01/06/2017, https://www.uzdaily.uz/en/post/39617 accessed on 17 May, 2019 60 Oil % Gas Journal, CNPC, Uzbekneftegaz start Karakul phase, 12/07/2017, https://www.ogj.com/articles/2017/12/cnpc-uzbekneftegaz-start-karakul-phase.html accessed on 17 May, 2019 61 Shanghai Jingoo Petroleum Apparatus Co., Ltd, A number of cooperation agreements signed between CNPC and its partners, July 02,2017, https://www.jingooapigage.com/News/details/id/103.html accessed on 17 May, 2019 62 World Oil, CNPC to begin field development in Western Uzbekistan, 2/9/2012, https://www.worldoil.com/news/2012/2/9/cnpc-to-begin-field-development-in-western-uzbekistan accessed on 17 May, 2019 63 UzDaily.com, Fourth line of gas pipeline from Uzbekistan to China rated at US$800m, 21/01/2015, https://www.uzdaily.uz/en/post/30771 accessed on 18 May, 2019 72

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20% of China’s annual natural gas consumption64. On 19 August 2014, during Xi Jinping official visit to Uzbekistan, CNPC Chairman Zhou Jiping and Chairman of Uzbekneftegaz Shokir Fayzullayev signed an agreement on Line D of the Central Asia-China Gas Pipeline in Uzbekistan65 with a cost of 800 million USD66. According to the agreement, CNPC and Uzbekneftegaz established a joint-venture company to construct and operate the Uzbekistan section of Line D with an annual capacity of 30 bcm via Uzbekistan, Tajikistan and Kyrgyzstan to China. Upon the completion of Line D, the Central Asia-China Gas Pipeline will have an annual capacity of 85 billion cubic meters67. But, the construction of Line D is faced with difficulties (Michel, 2017). The only publicly known obstacle is a decision made by CNPC and Uzbekneftegaz which halts the construction indefinitely (Pannier, 2017). Interestingly, in 2018 the Tajik energy minister stated that the construction on Tajik section has resumed68.

Transportation Central Asia plays a key role in the connection of China with Europe and the Middle East. Uzbekistan is located in the heart of the region thus plays a crucial role for China’s efforts to develop an alternative land route to congested and sea lines for import and export of raw material and manufactured goods. For the construction of the Tajik-Uzbek highway, China EximBank has offered 7.5 million USD because it was deemed as a project that holds great importance for both countries as well as China since it provides a linking line between the three countries facilitating the trade and economic development69.

64 CNPC official website, CNPC in Uzbekistan, http://www.cnpc.com.cn/en/Uzbekistan/country_index.shtml accessed on 18 May, 2019 65 CNPC official website, CNPC and Uzbekneftegaz sign cooperation documents, 2014/08/21, https://www.cnpc.com.cn/en/nr2014/201408/d4ba677e4fad4b2280f9f1fdf7c1933a.shtml accessed on 18 May 2019 66 UzDaily.com, Uzbekistan to launch projects on oil and gas industry for US$7.1bn, 06/04/2015, https://www.uzdaily.uz/en/post/31775 accessed on 19 May 2019 67 Ibid 42 68 bne IntelliNews, Tajik energy minister confirms work resumed on Central Asia-China Gas Pipeline, February 2, 2018, https://www.intellinews.com/tajik-energy-minister-confirms-work-resumed-on-central-asia-china-gas- pipeline-136162/ accessed on 19 May 2019 69 The State Council of the PRC, China speeds up highway transport with SCO members, 15 June 2006, http://www.gov.cn/misc/2006-06/15/content_311449.htm ; EximBank of China, Pursuing win-win progress with other developing countries by fulfilling assistance pledges, http://english.eximbank.gov.cn/tm/en- TCN/index.aspx?nodeid=653&page=ContentPage&categoryid=0&contentid=24341 accessed on 19 May, 2019 73

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In 2011, Uzbekistan Railways SJSRC signed a contract with the China National Technical Import & Export Corporation, CNR Dalian Locomotive and Rolling Stock Co. consortium in order to purchase of 11 freight locomotives. China Exim Bank issued a preferential 42 million USD loan with 20 year maturity, 5 year grace period and an interest rate of 2.25%. The locomotives delivered in 201370. China is heavily involved in the construction of the railway network of Uzbekistan. First and foremost, in 2013 China EXIM Bank and National Bank of Uzbekistan signed an agreement issuing a preferential loan of 350 USD for a period of 20 years, with a 5 year grace period and an interest rate of 2.25%, for the construction of the 19.1 kilometer long tunnel under the Kamchik pass, part of 123 kilometer long electrified Angen-Pan railway project linking the Central Asian nation populous Ferghana Valley with the rest of the country, bypassing Tajikistan. The project, worth 1.6 bn USD71, is of great significance for the economic development of Uzbekistan because it allows the reduction of transportation expenses, increases the carrying capacity within the country (Rahimov, 2016) and interestingly the tunnel’s construction ‘will help combat terrorism and extremism’. The project was a part of Belt and Road Initiative72. Uzbekistan Railways State Joint-Stock Railway Company signed a contract with China Railway Tunnel Group Co Ltd (SOE) for the construction of the tunnel73. Another project that involves Chinese institutions is the electrified Bukhara-Urgench- Khiva railway. The China-launched Asian Infrastructure Investment Bank (AIIB) finances the project with 168.2 million USD which totaled 339.10 million USD74. The first section was completed in 201875. The conventional phase of the project was completed in 201976.

70 AIDDATA, Exim Bank loans $42.17 million USD for the purchase of freight locomotives, https://china.aiddata.org/projects/40131 accessed on 18 May 2019 71 Reconnecting Asia, Angren-Pap Railway (Construction), https://reconnectingasia.csis.org/database/projects/construction-angren-pap-railway/bbeb669d-55e7-4cfb-87bb- 84c9f4504e24/ accessed on 17 May 2019 72 Belt and Road Portal, Uzbekistan reaps benefits of Belt and Road initiative with construction of first railway tunnel, 2018-05-08, https://eng.yidaiyilu.gov.cn/qwyw/rdxw/54808.htm, accessed on 17 May 2019 73 AIDDATA, China Exim Bank loans Uzbekistan 350 million USD for railway tunnel, https://china.aiddata.org/projects/40325 accessed on 18 May 2019 74 AIIB, Uzbekistan: Railway Electrification Project (Bukhara-Urgench-Khiva), https://www.aiib.org/en/projects/proposed/2018/railway-electrification-project.html accessed on 17 May 2019 75 Railway Gazette, Opening and electrification in Uzbekistan, 16 Jan 2018, https://www.railwaygazette.com/news/infrastructure/single-view/view/opening-and-electrification-in- uzbekistan.html accessed on 17 May 2019 76 Uz Daily, Uzbekistan Railways launches passenger train on route Bukhara - Khiva – Bukhara, 16/01/2019, https://www.uzdaily.uz/en/post/47334 accessed on 17 May 2019 74

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Another ambitious and technologically challenging project is the China-Kyrgyzstan- Uzbekistan railway (Dave and Kobayashi, 2018: 271). Although, this 268 kilometer long railway, estimated at a cost of 2 billion USD, has been discussed since 1996, but never materialized (Smith, 2012). Uzbekistan is particularly interested in the construction of this project because it would shorten the distance to ship its goods into China by bypassing the longer and expensive Kazakh route and it was discussed between Xi and Mirziyoyev during the latter’s visit to China (Dadabaev, 2018: 761-2). Finance

Chinese investments in the economy of Uzbekistan exceed $6.5 billion. More than 600 enterprises in Uzbekistan operate with Chinese capital. Significant joint projects have been implemented, including in the Jizzakh and Angren economic and industrial zones. (Rakhimov, 2016a). Since 2002 and onwards China has signed several agreements providing Uzbekistan with much needed credit line for many vital sectors supporting the developmental strategy of both Karimov and Mirziyoyev governments. The finance cooperation embarked on in 2003 when China granted 1.3 million USD to Uzbekistan77. Furthermore, the Commercial Bank of China provided 32.3 million credit for the construction of the Kungrad Soda Plant in Uzbekistan. Also, the same project involved the Citic Pacific China Holdings Ltd which co-constructed the plant78. Regarding this project, in 2012 the China EXIM Bank and Uzbekistan's Uzpromstroybank signed an agreement of a 50 million USD loan for 20 years with a 5 year grace period to expand the plant. During President Hu's visit to Uzbekistan in 2004, China's EXIM Bank and National Bank of Uzbekistan reached an agreement for 618 million USD at an interest rate of 3% and a maturity of 15 years. The loan will be used to import technology and equipment from China to implement 16 joint projects in the oil and gas sector, the utilities sector, the social sphere, and infrastructure, irrigation projects, a hydropower plant and a potash fertilizers plant79. In the same year, Uzbek Foreign Minister Sodiq Safoyev and the Chinese ambassador to Uzbekistan, Gao Yusheng signed a credit agreement under which China would offer 50m Chinese yuan of

77 AidData. 2017, China grants 5 million in aid to Uzbekistan, https://china.aiddata.org/projects/39940 accessed on 20 May, 2019 78 AidData. 2017, ICBC loans 32.3 million USD for Kungrad Soda Plant in Uzbekistan, https://china.aiddata.org/projects/39943 accessed on 20 May, 2019 79AidData, 2017, EXIM Bank provides $300 million loan to Uzbekistan for various projects, https://china.aiddata.org/projects/39956 accessed on 20 May, 2019 75

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interest-free loan80. In 2006, China Development Bank provided $20 million USD credit line for National Bank of Uzbekistan to support small business with a period of nine years, with a two- year grace period81. One year later, China and Uzbekistan signed MOU under which China offered concessional loans worth 70.1 million USD for purchasing electric locomotives from China, with a five-year grace period, at a rate of two percent per year82. The China Development Bank (CDB) has signed a loan agreement for US $220 million with the State Joint Stock Company Uzbekenergo for the co-financing of modernization of the Tashkent Thermal Power Plant83 (TPP). The government guaranteed the loan for 15 years with a 3 year grace period84. Finally, in 2007 the China National Chemical Engineering Co., Ltd., China Exim Bank, and Uzbekistan signed a contract worth 44.97 million USD for the construction of a water pipeline in Uzbekistan85. An agreement of great importance was the establishment of a high tech park in the Jizzakh region of Uzbekistan under which the Development Bank of China and National Bank of Uzbekistan for Foreign Economic Activity signed a loan agreement for $50 million USD86 in 2011. In 2013 the China Development Bank provided a credit line to the National Bank of Uzbekistan worth of 100 million USD to encourage small enterprise and entrepreneurship development in Uzbekistan87. In 2013 Eximbank signed an agreement with the Uzbekistan’s Industrial Construction Bank (Uzpromstroybank) to issue a loan worth 37.1 million USD for the

80AidData, 2017, China offers 50 million yuan interest-free loan to Uzbekistan in developing agriculture, https://china.aiddata.org/projects/39948 accessed on 20 May, 2019 81AidData, 2017, CDB issues 20 million USD credit line to National Bank of Uzbekistan for small businesses development, https://china.aiddata.org/projects/43202 ; Eximbank of China, Signing of Financing Agreement between The Bank and The Republic of Uzbekistan, 2006/06/08, http://english.eximbank.gov.cn/tm/en- NRD/index.aspx?nodeid=633&page=ContentPage&categoryid=0&contentid=26216 accessed on 20 May, 2019 82AidData, 2017, China loans Uzbekistan $70.11m for purchase of Chinese electric locomotives, https://china.aiddata.org/projects/40070 accessed on 20 May, 2019 83The Times of Central Asia, China Development Bank issues a loan to Uzbekenergo to modernize Tashkent TPP, https://www.timesca.com/index.php/news/7755-china-development-bank-issues-a-loan-to-uzbekenergo-to- modernize-tashkent-tpp accessed on 20 May, 2019 84AidData, 2017, China Development Bank loans Uzbekistan 220 million USD for thermal plant rehabilitation, https://china.aiddata.org/projects/40148 accessed on 20 May, 2019 85AidData, 2017, China EXIM Bank loans 44.97 million USD loan for construction of water pipeline in Uzbekistan, https://china.aiddata.org/projects/40065 accessed on 20 May, 2019 86AidData, 2017, China Development Bank loans $50 million USD to Uzbekistan for high tech park, https://china.aiddata.org/projects/40149 accessed on 20 May, 2019 87 AidData, 2017, China Development Bank loans National Bank of Uzbekistan 100 million USD https://china.aiddata.org/projects/40231 accessed on 20 May, 2019 76

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construction of a high voltage transmission line88; moreover the same Chinese policy bank lent 165.6 million USD to Uzbekistan for the modernization of the Angren thermal power plant (TPP); the China Harbin Electric International Company Ltd has been chosen as the constructor of the project89. The China Exim Bank in 2014 loaned Uzbekistan 89.5 million USD to co-fund a coal production project under which the China Coal Technology & Engineering Group (CCTEG) signed a contract with Uzbekcoal JSC to supply coal machinery and modernize the coal’s transportation system90. During the visit of President Xi to Uzbekistan, China pledged to issue a loan worth of 2.7 billion USD to finance projects of common interest91. Furthermore, in the same year Exim Bank offered a loan 374 million USD for the construction of polyvinyl chloride (PVC) plant in Uzbekistan; the Chinese company CAMC is the contractor of this construction92. In 2017, Uzbekenergo JSC and China’s Zhuhai Singyes Green Building Technology Co. Ltd signed a contract worth $147 million for the design, construction and operation of a solar photovoltaic plant with capacity of 100 megawatts93. Last but not least, Jin Yulong, Commercial Counselor at the Chinese Embassy revealed that as of 2018 over 60 projects with Chinese loans were being funded in electric power industry, industry, hydropower, chemical industry, air communication, railway transport94.

Security and military relations

Uzbekistan considered possessing one of the strongest Armed Forces in Central Asia (CIA, 2019). From the security perspective, the Chinese-Uzbek cooperation takes place under the

88 The Times of Central Asia, China’s Eximbank issues loan to Uzbekenergo for building transmission line, 15 June 2012, https://www.timesca.com/index.php/news/7390-chinas-eximbank-issues-loan-to-uzbekenergo-for-building- transmission-line accessed on 21 May, 2019 89 Tag News The Chinese company will upgrade Angren TPP in Uzbekistan for $243 million, 16 October 2014 https://silkroadnews.org/en/news/the-chinese-company-will-upgrade-angren-tpp-in-uzbekistan-for-243-million accessed on 21 May, 2019 90 AidData, 2017, China Exim Bank & CCETG fund and implement Uzbekistani coal production upgrade project, https://china.aiddata.org/projects/40326 accessed on 21 May, 2019 91 American-Uzbekistan Chamber of Commerce (AUCC), China to issue loan worth $2.7B to Uzbekistan, 30 June 2016, http://www.aucconline.com/news.php?news_id=1297 accessed on 21 May, 2019 92 AidData, 2017, China Exim Bank loans Uzbekistan 300 million USD for PVC plant construction, https://china.aiddata.org/projects/40242 accessed on 21 May, 2019 93 Trend News Agency, Chinese company to build plant in Uzbekistan, 14 January 2017, https://en.trend.az/business/energy/2708904.html accessed on 21 May, 2019 94 Trend News Agency, Number of projects with Chinese loans in Uzbekistan revealed, 6 December 2018, https://en.trend.az/business/economy/2989850.html accessed on 21 May, 2019 77

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framework of the SCO. The establishment of the regional multilateral group launched a platform for security and military between the two states, but Uzbekistan did not have a stable and constant position on these issues as a result of its willingness to stick in the balanced and multi- vectorial foreign policy. For instance, on matters of joint military exercises with SCO member states Tashkent refuses to participate due to its fear that such a move could put in danger its relations with the US and NATO, also this stance indicates the prioritization of combating the security threats related to the safety of the regime. (Song, 2016: 107; Haas, 2016). Hence, Uzbekistan participated for the first time in the ‘East-Antiterror-2006’ exercise which conducted under the auspices of the RATS, secondly in the ‘Issyk-Kul Antiterror-2007’, thirdly in ‘Peace Mission-2007’ (all leaders of SCO member attended), fourthly in ‘East-Antiterror-2012’ under the auspices of the RATS and finally in ‘CentralAsia-Antiterror-2015’ (Hass, 2016: 383-386). In 200595 and 200696 Chinese Defense Minister and vice-chairman of the Central Military Commission Cao Gangchuan and his Uzbekistan counterpart Ruslan Mirzayev met in Beijing agreeing to deepen the relations of the two armed forces. The 2006 meeting took place prior to the summit of defense ministers of the SCO. Three years later, China signed an agreement with Uzbekistan providing equipment of mobile scanning systems worth 3.7 million USD (Peyrouse, 2010). In 2012 Chen Bingde, chief of the General Staff of China's People's Liberation Army (PLA), met in Tashkent with Uzbek Defense Minister Kabul Berdiev and they discussed the level of bilateral ties and relations between the two armed forces97. In 2013, State Councilor and Defense Minister Chang Wanquan met with Uzbek Defense Minister Kabul Berdiev and they agreed to strengthen military-to-military cooperation98. In November 2013, prime ministers of China, Li Keqiang and his Uzbek counterpart Shavkat Mirziyaev hold talks and they decided to enhance their cooperation in law enforcement and defence99. Moreover Uzbekistan received a

95The State Council of the PRC, China, China, Uzbekistan vow to enhance military cooperation, 7 December 2005, http://www.gov.cn/misc/2005-12/07/content_120307.htm accessed on 21 May, 2019 96The State Council of the PRC, China, Uzbekistan to strengthen military ties, 26 April 2006, http://www.gov.cn/misc/2006-04/26/content_265766.htm accessed on 21 May, 2019 97The State Council of the PRC, Senior Chinese military official meets Uzbek defense chief on ties, 31 May 2012, http://www.gov.cn/misc/2012-05/31/content_2150078.htm accessed on 21 May, 2019 98China Daily, China, Uzbekistan to strengthen military ties, 22 September 2013, http://usa.chinadaily.com.cn/china/2013-09/22/content_16984680.htm accessed on 21 May, 2019 99China Daily, Chinese, Uzbek PMs vow to enhance security co-op, 29 November 2013, http://www.chinadaily.com.cn/china/2013-11/29/content_17141709.htm accessed on 21 May, 2019 78

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grant from China worth 4.4 million USD, for modernization of customs equipment100. In terms of military armaments, China delivered to Uzbekistan in 2015, the new generation medium-to- long-range HQ-9 air defense systems as well as one Unmanned Aerial Vehicle (UAV). The deal is part of ‘gas-to-weapons’ cooperation and the delivery of the weapons is related to the Chinese attempts to reduce the price it has to pay for the increasing imported natural gas from Uzbekistan101. Finally, Beijing is willing to expand its presence in the defence market of the country by granting a loan of up to 700 million USD to Tashkent in order to purchase Chinese weapons102.

People-to-people diplomacy

China acknowledges the fact that a stable and secure environment for its peaceful rise can be achieved by projecting its ‘soft’ power (Nye, 2004) which is as important as ‘hard’ power. China relies heavily on the cultural (Nye, 2008: 96) aspect of its civilization to make itself attractive to other societies, since its ideology is deemed obsolete and the governance model authoritarian. The cultural cooperation of China and Uzbekistan takes place under the framework of the SCO and the BRI. At the inaugural summit of the SCO in 2001, China proposed the incorporation of the inclusion of cultural sphere to be considered a major domain of cooperation between the members of organisation. Thus, in the SCO Charter at the St Petersburg Summit in 2002 it was stated that: cooperation in environmental protection, culture, science and technology, education should be implemented as an integral part of the overall SCO cooperation’103. The SCO has two institutionalized mechanisms for cultural cooperation: the SCO Cultural Ministerial Meeting and the SCO Cultural and Art Festival (Song, 2016: 142).

100Uz Daily, Uzbekistan to attract US$24.404m grants to modernize customs service, 10/4/2013, https://www.uzdaily.uz/en/post/22675 accessed on 22 May, 2019 101 Sputnik, China Supplies Air Defense Systems, Unmanned Aerial Vehicle to Uzbekistan, 2 February 2015, https://sputniknews.com/military/201502021017650004/ accessed on 22 May, 2019 102 The Ministry of Defence and Aerospace of the Republic of Kazakhstan, Uzbekistan: Equipping of the Armed Forces on the basis of developing its own defense-industrial complex, 24 July 2017, http://kaspex.kz/en/news/102- uzbekistan-equipping-of-the-armed-forces-on-the-basis-of-developing-its-own-defense-industrial-complex.html accessed on 22 May, 2019 103 The SCO official website, CHARTER OF THE SHANGHAI COOPERATION ORGANIZATION, file:///C:/Users/user/Downloads/Charter_of_the_Shanghai_Cooperation_Organization.pdf accessed on 22 May, 2019 79

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Apart from the multilateral mechanism of the SCO, in order to strengthen their cultural and educational interaction, China and Uzbekistan have undertaken serious efforts towards this direction. To this end, the first Chinese Confucius Institute (not only in Uzbekistan but first in Central Asia104) opened in Tashkent in 2005 and the second opened in Samarkand in 2014 aiming at teaching the Chinese language, familiarizing the Uzbek people with the history and traditions of China and organizing cultural events105. Currently, over 400 students attend classes in Chinese-language and culture106. Accordingly, four Chinese educational institutes began teaching Uzbek language, the Center for the Study of Uzbekistan was established at the Shanghai University and a number of projects in the field of healthcare, archeology, science, education and training are being implemented107. Bilateral cultural and educational relation gained momentum under the Belt and Road Initiative. The 2015 document on Vision and Action108 envisages the ‘‘friendly cooperation of the Silk Road by promoting extensive cultural and academic exchanges, personnel exchanges and cooperation…expand the scale of tourism and increase cooperation in science and technology’’ (emphasis added). Thus, Chinese officials have emphasized that both countries share a common history and civilization as a result of the ancient Silk Road. Hence, in 2015 China establish the University Alliance of the Silk Road109 which encompasses 151 universities from 38 countries and is coordinated by Xian Jiaotong University. Uzbekistan participates with two higher education institutions: the Samarkand State University and the Tashkent Pharmaceutical Institute110. In 2017, for instance, Chinese ambassador to Uzbekistan, Sun Lijie, praised the role of cultural diplomacy in strengthening the bilateral relations by highlighting

104 Yu-Wen Chen J. and Günther O. China’s Influence in Uzbekistan: Model Neighbor or Indifferent Partner? The Jamestown Foundation, 11 November 2016, https://jamestown.org/program/chinas-influence-uzbekistan-model- neighbor-indifferent-partner/ accessed on 22 May, 2019 105 Tag News, Silk Road News, Confucius Institute is opened in Samarkand, 3/12/2014, https://silkroadnews.org/en/news/confucius-institute-is-opened-in-samarkand accessed on 22 May, 2019 106 The Global Times, Confucius Institutes have Uzbek students looking east, 6 June 2014, http://www.globaltimes.cn/content/864211.shtml accessed on 22 May, 2019 107 The Times of Central Asia, Chinese ambassador on relations with Uzbekistan, 05 April 2018, https://www.timesca.com/index.php/news/19575-chinese-ambassador-on-relations-with-uzbekistan accessed on 22 May, 2019 108 The State Council of the PRC, Vision and Actions on Jointly Building Silk Road Economic Belt and 21st- Century Maritime Silk Road, 2015/03/28, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html accessed on 22 May, 2019 109 OBOReurope, Education is a priority of the Belt and Road Initiative, 04/08/2017, https://www.oboreurope.com/en/education-priority/ accessed on 22 May, 2019 110 University Alliance of the Silk Road, Members, http://uasr.xjtu.edu.cn/About_UASR/Members.htm accessed on 22 May, 2019 80

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cultural events as ‘Oriental Rhythm’ music festival, the Sino–Uzbek ‘cultural week’, the Sino– Uzbek ‘film week’ and the annual Chinese New Year celebration in Tashkent, as indications of high and friendly Chinese-Uzbek relations111. In terms of education, the China has granted 300 SREB scholarships to Uzbek students to study in universities of China (Reeves, 2018: 515).

4.4 Bilateral cooperation of China-Uzbekistan in multilateral framework

China and Uzbekistan have developed a multi-faceted relation. Although China and Uzbekistan prefer to develop their relations primarily through bilateral cooperation, they have developed multilateral ties as well. By pursuing the BRI, the Chinese government tries to ‘make full use of multilateral cooperation mechanisms112’ namely it has tried to integrate existing regional cooperation platforms to promote economic and security integration (Hong, 2017: 356). The most important mechanisms involving China and Uzbekistan are the Shanghai Cooperation Organisation and Belt and Road Initiative.

Shanghai Cooperation Organisation

Chinese Premier Li Peng, during his official visit in the region of the Central Asia in 1994, proposed four guidelines on which China-Central Asia relations could be built: (1) peaceful coexistence and good-neighborly relations; (2) promotion of mutually beneficial cooperation; (3) non-interference in domestic affairs; and (4) respect for one another’s independence and sovereignty (Jing-Dong, 2010: 857; McNeal and Dumbaugh, 2002). After the successful negotiations over the century-old border demarcation in the 1990s which were based on the ‘‘Shanghai Spirit113’’ (Pan, 2008/2009; Laruelle and Peyrouse, 2012; chapter 1; Song,

111 MOFA of the PRC, Speech by Sun Lijie, Ambassador of Uzbekistan, at the Round Table on "The Role of Civilian Diplomacy in the Development of the Silk Road", 2017-01-25, https://www.mfa.gov.cn/web/dszlsjt_673036/t1433903.shtml accessed on 22 May, 2019 112 NDRC of the PRC, Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, 2015/03/28, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html accessed on 21 May, 2019 113 Mutual trust, mutual benefit, equality, consultation, respect for cultural diversity, and pursuit of common development. Zhang X. The undying importance of the 'Shanghai Spirit', 2018-06-03, https://news.cgtn.com/news/3d3d774d3263444f77457a6333566d54/share_p.html accessed on 22 May, 2019 81

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2016: 42) and under the frame of the Shanghai Five (1996) the next step was the institutionalisation of the mechanism (Aris, 2013: 1). The SCO established in June 2001 by the governments of China, Russia, Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan (Turkmenistan abstain due to its neutrality policy) succeeded the ‘Shanghai Five’ mechanism. India and Pakistan acceded to the SCO in 2017. It can arguably be said that although the SCO’s Charter pertains to traditional security areas (disarmament and arms control) the organisation is focused mainly on non-traditional security issues (Song, 2016: 30; Jing-Dong, 2010: 857), primarily combating the ‘three evils’ of terrorism, ethnic separatism and religious extremism114, but also the narcotics trade, smuggling and illegal immigration (Cheng, 2011: 638; Aris, 2009: 465; Aris, 2013: 5; Cabestan, 2013: 424). The ‘three evils’ are of paramount importance for the Central Asian elites as well as China’s because they pose a direct and overwhelming threat against the stability of their authoritarian regimes (Aris, 2009: 466). The principles on which the organisation bases its functions are: ‘‘mutual trust, mutual benefit, equality, mutual consultations, respect for cultural diversity, and a desire for common development, while its external policy is conducted in accordance with the principles of non- alignment, non-targeting any third country, and openness’’115. The organization’s main goals are: ‘‘strengthening mutual trust and neighbourliness among the member states; promoting their effective cooperation in politics, trade, the economy, research, technology and culture, as well as in education, energy, transport, tourism, environmental protection, and other areas; making joint efforts to maintain and ensure peace, security and stability in the region; and moving towards the establishment of a democratic, fair and rational new international political and economic order’’116. The novelty of the SCO lies in that the decision-making process is based on consensus symbolizing the equality of its member states, a noteworthy feature given the animosity of past decades, also is not a non-traditional alliance targeting any external identified opponent and has issued a comprehensive concept of security (Aris, 2009: 465) and finally, when it comes to

114 Shanghai Convention on Combating Terrorism, Separatism and Extremism, http://www.fedsfm.ru/content/files/documents/conventions/the_20shanghai_20convention.pdf accessed on 22 May, 2019 115 The SCO official site http://eng.sectsco.org/about_sco/ accessed on 22 May, 2019

116 Ibid 82

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economic integration, the transfer of any part of state’s sovereignty to the organisation is not a prerequisite for participation or further development (Alimov, 2018: 116). By and large, the SCO constitutes a multilateral forum mainly cooperating on the areas of politics and security (anti- terrorism), trade, and investment, energy security, transport, infrastructure, agriculture, custom services, cultural and people-to-people ties (Cheng, 2001: 633; Alimov, 2018: 115-117; Song, 2016: 3) aiming at the structuring of a ‘harmonious region of lasting peace and common prosperity (Bailes et al. 2007: 48). Two of the main permanent bodies of the SCO are: the Secretariat located in Beijing, China and the Regional Anti-Terrorist Structure (RATS) headquartered in Tashkent, Uzbekistan. The latter is responsible for coordinating and harmonizing member’s states resources and actions toward countering the ‘three evils’ (Aris, 2013: 4-5).

China and the Shanghai Cooperation Organisation

From Beijing’s perspective, the SCO holds great importance for multifarious reasons. First of all, as the initiator and founding member of the SCO – it was the first time where it became a member of a regional multilateral organisation which was not solely an economic association (Cheng, 2011: 637) – China has advanced confidence building and mutual trust between itself and other members (Jing-Dong, 2010: 861), this resulted in the securitization of its western and northern flanks, thus allowing it to focus on the important eastern front. Second, under the SCO framework China raises support for its fight against terrorism, extremism, separatism at home (East Turkestan); threats that also are shared among the other member states too. Third, the economic cooperation under the SCO is in line with China’s policy of developing its western regions and furthermore it provides an overland route for energy imports (Zhao, 2013: 437). Fourth, the SCO at present, includes eight members, accounts for 80% of Eurasian landmass, 43% of world’s population117, thus constituting a vast market, with significant portion of global natural and mineral resources and a powerful industrial clusters (Alimov, 2018: 116-7; Bailes et al. 2007: 45-6).

117 IISS, 2018, The evolution of the Shanghai Cooperation Organisation, https://www.iiss.org/publications/strategic- comments/2018/shanghai-cooperation-organisation accessed on 22 May, 2019 83

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Uzbekistan and the Shanghai Cooperation Organisation

As it has been analysed above, the Uzbek foreign policy dictated by the regime’s goal is to preserve state’s independence, security and to promote economic development. As a consequence, Uzbekistan has pursued a flexible foreign policy which was centered on the implementation of these goals. Uzbekistan did not participate in the SCO, at its early stages, because it was focused on cooperation over security and border demarcation but Uzbekistan does not share borders with China. But the Uzbek stance towards the organisation has changed rapidly after the 2005 Andijan incident; since then the country is one of its most prominent supporters of the organisation (Aris, 2011: 68). Having said that, the Uzbek leadership has considered security as a synonym of regime security and thus the participation into the SCO was a useful tool because the main focus of the organisation has been combating the ‘three evils’. In addition, the rhetorical support which is provided by the other SCO members is a significant legitimation source for the regime (Aris, 2011: 69). Since the Uzbek participation into the SCO is mainly focused on the security area, Sino- Uzbek security and military cooperation have taken place under the framework of SCO. The SCO primary purpose is to ensure peace, security and stability by combating the ‘three evils’ i.e. terrorism, separatism and religious extremism, threats that both sides share. As all member states of the SCO suffered from terrorism in their respective territories and due to its transnational nature the parties realized that only jointly could they deal with terrorism (De Haas, 2016: 381). By 2016, the SCO states have conducted 22 military exercises in which Uzbekistan participated only in 2006, 2007, 2012 and 2015 (De Haas, 2016: 383-6; Song, 2016: 95). The military drills can be categorized as merely military and anti-terrorist in nature. An indication of the importance member states have attached to terrorism is that in 2004 they established the Regional Anti- Terrorism Structure (RATS) which is hosted in Tashkent, Uzbekistan. RATS is a permanent and institutionalized mechanism of the SCO with a broad mandate in coordinating the security and action cooperation, intelligence and information sharing and initiation and preparation of policies (Song, 2016: 93; Jackson and Lopez, 2017: 2). Finally, by participating into the SCO Tashkent tries to balance Russia’s military resurgence in the region (Trenin, 2007: 88); furthermore, as SCO incorporates almost all its neighbors (except Turkmenistan) it provides an opportunity to Uzbekistan to take the lead in the

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Central Asia as it aspires to a hegemonic role in the region. Consequently, from the Uzbek perspective, the SCO is considered as a pivotal multilateral platform for the support of regime security and regional stability and as a guarantee of safe transit routes which facilitate its trade constituting a vital source of state revenue (De Haas, 2017: 8-9).

Belt and Road Initiative

The Silk Road Economic Belt (SREB), launched by Xi Jinping in 2013 as the Central Asian component of the Belt and Road Initiative (BRI), offers a multi-billion opportunity for the countries of the region to promote investments in transport and industry while at the same time by investing in transportation infrastructure the inter-regional trade will be boosted. The National Development and Reform Commission (NDRC) released in 2015, the ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road’118. The document elaborated the principles, aims and context the project which president Xi Jinping has made in 2013, in an attempt to deal with the ambiguity that accompanied since then the whole project. According to the document the principles on which BRI is based on are; a) openness and cooperation; b) harmony and inclusiveness; c) market- based operation; and d) mutually beneficial and win-win for all countries (Yiping, 2016: 319). By launching the initiative China aims at 1) sustaining its economic growth; 2) extending its influence and reputation on the international stage; 3) creating a comprehensive model, encompassing five priority areas; policy dialogue, infrastructure connectivity, unimpeded trade, financial integration and people-to-people exchanges;119 and 4) offering opportunities in the underdeveloped regions, (Yiping, 2016: 315). China’s motivations behind the BRI from the economic perspective, serve several goals; firstly, by modernizing the infrastructure (pipelines, railways, highways) and by improving inter-state connectivity Beijing tries to enhance bilateral trade and promote economic prosperity on a ‘win-win’ basis. Infrastructure connectivity will facilitate the importation of intermediate products and resources (energy and raw materials) for its manufacturing industries and in turn finished manufactured products will be exported (Hong,

118 NDRC of the PRC, Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, 2015/03/28, http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html accessed on 22 May, 2019 119 Ibid 85

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2017; 357). Secondly, the BRI countries will serve as new markets for China’s production overcapacity and it will allow Chinese companies to ‘go out’ in order to invest their accumulated capital (Hong, 2017: 358; Yiping, 2016: 315). Thirdly, the Silk Road Economic Belt will permit Xinjiang to develop and incorporate into inter-regional trade. Finally, the Silk Road Economic Belt aims to connect China, Central Asia, Russia and Europe (the Baltic), also seeks to build a new Eurasian Land Bridge as well as the China-Central Asia-West Asia economic corridors ‘‘by taking advantage of international transport routes, relying on core cities along the Belt and Road and using key economic industrial parks as cooperation platforms’’120. To finance the BRI China has established the state-supported121 Silk Road Fund established in 2014, with 40 bn USD and the multilateral Asian Infrastructure Investment Bank (AIIB) established in 2016 with 100bn USD122, in order to fill the Asia’s ‘infrastructure gaps’ by providing capital and technical services (Wilson, 2017: 2). The Bank is the first multilateral development bank which is commenced by China; as of 2017 the AIIB had capital subscriptions of 100 bn USD (ibid). According to Asian Development Bank, Asia needs ‘$26 trillion over the 15-years from 2016 to 2030, or $1.7 trillion per year’ (ADB, 2017).

Belt and Road Initiative and Uzbekistan

Since the inception of the ‘BRI’, the Chinese administration has determined Uzbekistan as a pivotal partner, postulating that its participation into SREB is vital for the initiative’s success due to its position in the heart of Central Asia, holding great potential as a transit bridge for China- Central Asia-West Asia Economic Corridor (Ghiasy and Zhou, 2017: 19; Qoraboyev, 2018: 6). Since 2014, president Xi has pursued stronger policy and economic linkages between the two states in order to build jointly the Silk Road Economic Belt123. Hence, in 2015, the Chinese and Uzbek co-presidents of the China-Uzbekistan Inter-governmental Cooperation Committee signed

120 ibid 121 Its shareholders are State Administration of Foreign Exchange (65%), Exim Bank of China (15%), China Investment Corporation (15%) and China Development Bank (5%), Silk Road Fund http://www.silkroadfund.com.cn/enweb/23775/23767/index.html accessed on 23 May 2019 122 AIIB, Introduction to AIIB, https://www.aiib.org/en/treasury/homepage/index.html accessed on 19 May 2019 123 MOFA of the PRC, Xi Jinping Meets with President Islam Karimov of Uzbekistan, 2014/05/20, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1158604.shtml accessed on 23 May 2019 86

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a SREB cooperation MOU aiming to make full use of the present bilateral economic, security, trade and energy mechanisms and committed to integrate SREB with these sectors124. Construction of transport infrastructure, particularly railways, pipelines and trade is of great importance for both states. Regarding railways construction, China has retrospectively incorporated ongoing rail projects into SREB and categorized them as its main components in the 2014 visit; an example was the Angren–Pap railway (as has been discussed above 4.2) and the electrification of the Bukhara-Misken rail line (Devonshire-Ellis, 2018). The same pattern has been applied for the construction of the Central Asia-China Gas Pipeline. Beijing and Tashkent agreed to build up the Uzbek section of Line C and D of the pipeline under the SREB framework (Reeves, 2018: 514). Moreover, both states decided to utilize the SREB for the set-up of a Special Economic Zone (SEZ) in Jizzakh in 2013; China through the China Development Bank issued a preferential loan worth 50 million USD to help in its construction125. Many Chinese enterprises have invested several million USD in this specific SEZ126 and the ‘industrial leaders’ Huawei, PetroChina, Peng Sheng and ZTE have invested in the country127 promoting the development of telecommunications, information technology and energy industries of Uzbekistan. President Xi confirmed the importance of the Belt and Road for the bilateral relation when he wrote in an Uzbek newspaper; ‘Jointly building the Belt and Road is a highlight and priority in our bilateral cooperation’128. Apart from trade and infrastructure, the SREB is also focused on policy coordination. In 2014, president Xi promised to use the SREB to assist Uzbekistan in increasing its governance effectiveness and state administration by transferring its own experience129. For this purpose, the states agreed to expand political dialogue at all levels, to establish mechanisms to coordinate

124 Ministry of Commerce, China and Uzbekistan Sign Agreement on Jointly Building the Silk Road Economic Belt, June 18, 2015, http://english.mofcom.gov.cn/article/newsrelease/significantnews/201506/20150601016814.shtml accessed on 23 May 2019 125 Gazette of Central Asia, Uzbekistan, China to Develop Special Economic Zone in Jizzakh, 26 January 2013, http://gca.satrapia.com/+uzbekistan-china-to-develop-special-economic-zone-in-jizzakh+ accessed on 20 May 2019 126 Embassy of the Republic of Uzbekistan to the Republic of Latvia, Free Economic Zone “Jizzakh”, July 18, 2018, https://uzbekistan.lv/en/free-economic-zone-jizzakh/ accessed on 22 May 2019 127 Embassy of the PRC in the Republic of South Africa, Belt and Road Initiative accelerates cooperation between China, Uzbekistan 20 June 2016, http://za.china-embassy.org/eng/zgxw/t1373662.htm accessed on 20 May 2019 128 China Daily, Full text of Chinese president's signed article on Uzbek newspaper, 22 June 2016, http://www.chinadaily.com.cn/china/2016-06/22/content_25796225.htm accessed on 23 May 2019 129 MOFA of the PRC, Xi Jinping Meets with President Islam Karimov of Uzbekistan, 2014/05/20, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1158604.shtml accessed on 23 May 2019 87

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their foreign policies (mainly in regard to regional affairs), and to establish institutional channels between China’s National People’s Congress (NPC) and Uzbekistan’s Senate and Legislative Chamber130. Presidents Xi and Karimov also pledged to establish regular meetings of heads of states under the SREB’s auspices—a practice that continues under President Mirziyoyev. Against this backdrop, Sino–Uzbek SREB cooperation also formed the basis for the country’s 2016 agreement to establish a Comprehensive Strategic Partnership. Likewise, Xi and Mirziyoyev mentioned the SREB in their joint 2017 statement, in which both states committed to deepen their non-economic cooperation131. China has a vital role to play in the New Strategy of Development for 2017-2021 of Uzbekistan, an initiative inspired by the new president Shavkat Mirziyoyev which is centered on three directions: political and administrative reforms; economic development and industrial modernization and open-up of foreign policy132. The overall goal of the Strategy is the continuation of macroeconomic stability, economic growth with emphasis on exports (Qoraboyev, 2018: 6). In this regard, it can be argued that the new developmental strategy is complementary with the BRI as it declares ‘cooperation, openness and inclusiveness, mutual learning and mutual benefit’ between China and other participating countries. Uzbekistan is seeking to take advantage of the BRI133 in economic terms due to the fact that China can serve as a source of technology transfer, investments, and as a market for Uzbek resources and manufactured products (Dadabaev, 2018a: 755; Qoraboyev, 2018: 8). In this respect, China’s role has shifted from a security provider to a major partner for the diversification of country’ economy (Dadabaev, 2018b:164). This change in Uzbekistan’s perception of China is a clear sign of the prioritization of economic imperatives over political ones under the new leadership.

130 Xingua, Joint Declaration of the People's Republic of China and the Republic of Uzbekistan (Full Text), 20 August 2014, http://www.xinhuanet.com//world/2014-08/20/c_1112144669.htm accessed on 23 May 2019 131 MOFA of the PRC, Joint Statement of the People's Republic of China and the Republic of Uzbekistan on Further Deepening the Comprehensive Strategic Partnership (Full Text), 2017/05/12, https://www.mfa.gov.cn/mfa_chn//ziliao_611306/1179_611310/t1461149.shtml accessed on 22 May 2019 132 Bowyer C. A. (2018), Political Reform in Mirziyoyev’s Uzbekistan: Elections, Political Parties and Civil Society, Silk Road Paper, Central Asia-Caucasus Institute & Silk Road Studies Program, 69 p. ; Mjusa Sever M, (2018), Judicial and Governance Reform in Uzbekistan, Silk Road Paper, Central Asia-Caucasus Institute & Silk Road Studies Program, 45 p.; Weitz R. (2018), Uzbekistan's New Foreign Policy: Change and Continuity under New Leadership, Silk Road Paper, Central Asia-Caucasus Institute & Silk Road Studies Program, 55 p 133 MOFA of PRC, Xi Jinping Holds Talks with President Shavkat Mirziyoyev of Uzbekistan. The Two Heads of State Agree to Carry Forward China-Uzbekistan Friendship from Generation to Generation and Promote China- Uzbekistan Relations to Inherit the Past and Usher in the Future, 2017/05/12, https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/dozys_664276/gjlb_664280/3255_664392/3257_664 396/t1464000.shtml accessed on 23 May 2019 88

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The 2017 visit marked the most ambitious bilateral meeting. A total of 76 bilateral agreements worth 22.8 bn USD134 signed in regard to resource-related investments, infrastructure construction and manufacturing. The largest agreements centered on the joint production of synthetic fuel (US$3.7 billion), investments in Uzbekistan’s oil industry (US$2.6 billion), investments in new projects (US$2 billion), construction of energy-generation plants (US$679 million), railroad construction (US$520 million), an agreement on the Tashkent-Osh road construction (US$220 million). Moreover regarding establishing manufacture factories in Uzbekistan, agreements were reached to facilitate the facilities for cement (US$153 million in Andijan and US$100 million in Tashkent), textiles (US$200 million), electrical appliances (US$139 million), metal goods (US$115 million) and glass goods (US$83 million) (Dadabaev, 2018a: 761). In addition, other agreements were signed in relation with natural gas (6 billion m3, worth US$ 734 million), uranium (US$ 30 million), textiles (US$ 200 million), leather (US$ 21.3 million), and agricultural products (US$ 1.6 million). Plans have also been articulated for exports of natural gas to reach 10 billion cubic meters135 for the years 2018 to 2020.

4.5 Conclusion

The general question this chapter tried to answer was; What diplomatic, economic and security activities has China's state-class and CNPC implemented in Uzbekistan between 2006 and 2018? To answer to this question in this chapter embarked on with an analysis of Uzbekistan’s political economy, which is characterized by a highly centralized political power and strong involvement of the state in the economy and especially, in the energy sector. Then, the chapter analysed the motivations and goal of the foreign policy of Uzbekistan since its independence. Furthermore, it has examined the bilateral relations of China and Uzbekistan in terms of diplomatic relations, which have been analysed through a) visits of high-ranking officials b) agreements and c) projects. After that, the chapter examined trade, investments and finance of China to Uzbekistan in many sectors. Finally, it has examined the multilateral mechanisms in which China and

134 The Chinese contribution is approximately 10 bn USD and the Uzbek is the rest of them. 135 Interfax-Azerbaijan, Uzbekneftegaz plans to increase gas exports to China to 10 billion cubic meters by 2021. m per year, 06/15/2017, http://interfax.az/view/705802, accessed on 24 May 2019 89

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Uzbekistan participate, i.e. the SCO through which their cooperation takes place especially in the security sphere and the BRI which aims to primarily connect the Eurasian continent by constructing infrastructure projects. Summing up, this chapter has shown that the approach of China through bilateral and multilateral tools, allowed Beijing to develop a stable relation with Tashkent achieving the main Chinese foreign policy goals.

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Chapter 5

The Geopolitical Interaction between Major Powers in Central Asia and in Uzbekistan

5.1 Introduction The previous chapter has analyzed the fashion in which the Chinese state projects power in Uzbekistan. It detected the mechanisms through which Chinese officials try to secure their control over the regime, energy-sector and security apparatus to facilitate China’s involvement in the Central Asian country. This chapter proceeds from bilateral and multilateral relations to geopolitical analysis, by including three geopolitical actors that, try to project power in the region and Uzbekistan in particular, parallel to China’s activities. Hence, this chapter will try to answer the following question: How Russia, the US and the EU are involved in Central Asia and what are the implications for China’s involvement in the region and Uzbekistan in particular? Although there are many powers engaged in Central Asia, this part of research will focus on the following major powers; i) Russia. The Russian factor is intriguing by virtue of the cultural, historical and ethnic relation with the region, due the geographical proximity. Russia is also a resource-rich country, and can be designated as authoritarian state-society complex. The analysis then proceeds with the liberal state-market-military complexes of ii) The United States and the European Union. US governments tried to project power in Uzbekistan with moderate outcomes. Finally iii) the European Union. Although, the EU tries to diversify its energy routes and suppliers, Uzbekistan plays a minor role in regard to this target. But, the Central Asian country being a major player in the region could not be set aside by the EU as it has been deploying a strategy for the region. The three powers will be examined along three levels; a) their national interests regarding the region, b) trade relations with Central Asia in general and Uzbekistan, 3) their security cooperation, including military-to-military cooperation and arms sales to Uzbekistan. The analysis will provide the building block upon which a geopolitical assessment of China’s role in Central Asia, and the intersection of its competitors’ activities facilitate or impede Chinese involvement.

5.2 Geopolitics of Russia’s power projection in Central Asia

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The traumatic experience of the collapse of the USSR forced Russia to redefine its national identity and statehood at a domestic level as well as a foreign policy at an international level. Since then a permanent struggle between the Russian political elites regarding the appropriate approach exist. Despite hotly debated dichotomies, the parameters that form Russia’s national identity and thus its foreign policy aims are based on five components. First, there is a deep-rooted belief across the political spectrum that Russia is a great power and must be treated as such (Trenin, 2007: 81). Second, international politics is, at its core, a permanent struggle between great powers in which a zero-sum is game is dominant. Third, since modern times Russia is struggling to ‘catch-up’ with the advanced western power in terms of economy, technology and military. Fourth, the goal to ‘catch-up’ is connected with domestic economy and politics which are seemed as intertwined with foreign policy. Finally, at the epicenter of the debate regarding the ‘west’ lies the extent to which the western values136 could be appropriate to Russia (Kuchins and Zevelev, 2012: 147-8). Many scholars have studied the different factions inside the political elite of Russia regarding the appropriate stance towards the ‘Russian particularity’ (Amineh, 2003; Tsygankov and Tsygankov, 2010; Kuchins and Zevelev, 2012). The two major blocks could be categorized as the Westernisers and Eurasianists; the former advocate of the western values and postulate that they could be extended to Russia and the latter maintain that, due to special condition, Russia can be considered neither Western nor Eastern, but it is a Eurasian country having interests on both sides (Amineh, 2003: 72). A permanent feature of Russia’s foreign policy, since Putin’s rise to power in 2001, has been the negative, distrustful stance towards (a US-led) unipolar order, postulated as a mechanism to contain Russia (Monaghan, 2008, Morozova, 2009: 684). After the initial positive momentum of Russia-West and Russia-US relation in particular until the first half of the first decade of the 21st century, resentment and mutual suspicion has replace the euphoria due to expansion of the EU and NATO IN Central and Eastern Europe, among others (Monaghan, 2008). As a consequence, Russia embraced wholeheartedly its Eurasian ‘destiny’. Accordingly, in the foreign policy concept of 2008137, Moscow has tried to redefine its own identity. The publication of the concept coincided with the high rate of growth, resulting in increased self-

136 Mainly democracy, human rights and market economy 137 President of Russia, The Foreign Concept of the Russian Federation, January 12, 2008, http://en.kremlin.ru/supplement/4116 92

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confidence in the foreign policy sphere (Monaghan, 2008); Russia pursued to establish itself as a true ‘value center’. The preferential space in which Russia could play a dominant role was the post-Soviet space. Continuity it can be observed in the 2013 foreign policy concept138 following the previous one of 2008 (González, 2013). Amidst domestic and economic turmoil and deteriorating international environment, Russia proclaims itself as a defender of traditional values139 and a genuinely conservative power aiming to resist the decadent and debased West

(Kaylan, 2014). It was claimed as a response to Western ideological aggression185 (Laruelle, 2013; Engström, 2014; Ernst, 2014; Makarychev, 2014). Russia considers itself a unique ideological pole in the world, with a unique civilization, but it will become clear, as it also tries to uphold its military and economic presence to maintain its relation with its most important sphere of influence, the CIS, and as part thereof, the Central Asian states (Engström, 2014). Central Asia is of great importance for the Russian foreign policy, fact that has been recognised soon after the dissolution of the Soviet Union. Even the former President Yeltsin vocalized the need for the respect of Russia’s special rights in the ‘near abroad’ (Amineh, 2003: 74; Rywkin, 2009: 203) meaning Russia’s influence in economic, security and military within the space of the former Soviet neighboring countries in order to reestablish the country’s great- power status. The goal is twofold; preservation of Russia’s integrity and revival of its primacy. To achieve these goals Russia created the Commonwealth of Independent States (CIS)140. The organisation is the primary body through which Russia wields its influence towards, amongst others, the Central Asia States (Morozova, 2009: 671). Other Russia-led regional organisations include the economic-related Eurasian Economic Community (EAEC or EurAsEC) which was terminated in 2015 to be replaced by the Eurasian Economic Union141 and the security-related Collective Security Treaty Organization (CSTO). Uzbekistan was previously a member of the EAEC, however it suspended its membership in 2008.

138 The Ministry of Foreign Affairs of the Russian Federation, Concept of the Foreign Policy of the Russian Federation, 18 February 2013, http://www.mid.ru/en/foreign_policy/official_documents/- /asset_publisher/CptICkB6BZ29/content/id/122186 139 New American, Putin Paints Russia as Defender of Traditional Values, Blasts West, 19 December 2013, https://www.thenewamerican.com/world-news/item/17218-putin-paints-russia-as-defender-of-traditional-values- blasts-west 140 Currently its members are Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Armenia, Moldova, Russia, Tajikistan, Uzbekistan. Georgia withdrew in 2008. Ukraine has never signed the CIS charter 141 Sputnik, Eurasian Economic Community Leaders Sign Group Abolition Agreement, 10 October 2014, https://sputniknews.com/politics/20141010193931058-Eurasian-Economic-Community-Leaders-Sign-Group- Abolition/ 93

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Several reasons necessitate Russia to treat Central Asia as its ‘backyard’, although it had an ambivalent and inconsistent stance toward the region. The most important reasons for Russia’s attempts for power projection in the area are the geographical central location in the Eurasian coupled with the existence of vast natural resources. Furthermore, the region holds significance in terms of politics, security, economy, the presence of Russian-speaking diaspora and finally the neutralization of Islamic threats coming from Afghanistan (Trenin, 2007; Oliphant, 2013; Simão, 2012).

Russia’s geoeconomic involvement in Uzbekistan

Central Asia has restructured its economic link over the past decade, as China has outpaced Russia in terms of trade, investment and infrastructure construction; the same trend has been followed in the case of Uzbekistan. Uzbekistan plays a crucial role in Moscow’s attempt to reestablish its power in the region of Central Asia, as it did, since the soviet era. After the dissolution of the Soviet authority, Russia in terms of trade represented about 55% of Uzbekistan’s turnover (Madiyev, 2017: 16). This was an indication of the high dependency of the Uzbek newly independent state on its former ruler. In 2012, Russia still remained the top trade partner of Uzbekistan with total trade volume 2.4 bn USD (18.1%) following by China with 2.2 bn (16.9%), Kazakhstan with 1.7 bn (13.2%), South Korea with 1.5 bn (11.4%) EU 27 1.4 bn (10.5%). It must be also noted that China was the biggest export destination (17.9%) and Russia was the fourth (12.5%)142.

Table 5.1: Russian Foreign Direct Investments in Uzbekistan and the CIS Countries

Uzbekistan CIS Countries 2007 355 3.6 2008 414 3.5 2009 232 3.8 2010 0 1.3 2011 0 4.4 2012 9 2.2 2013 -12 2.2 2014 17 882 2015 10 2.4

142 European Parliament, Uzbekistan: Selected trade and economic issues, September 2013, http://www.europarl.europa.eu/RegData/etudes/briefing_note/join/2013/491518/EXPO- INTA_SP(2013)491518_EN.pdf 94

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2016 -114 1.8 2017 -77 1.2 2018 0 1.4 Source: The Central Bank of Russia

When it comes to the terms of energy cooperation, Russia has been cooperating with Uzbekistan since the Soviet era. In Soviet times, cooperation between the two countries mainly focused on gas deliveries from Uzbekistan through the Bukhara-Urals pipeline and the Central Asia-Center gas pipeline. This pipeline network has supplied the Urals industrial complex. In 1990, Uzbekistan exported about 10.8 billion cubic meters of gas out of the 46 billion produced (Paramonov et al. 2010) to Russia. In the same year, roughly 54 billion cubic meters of gas was delivered from Turkmenistan crossing the territory of Uzbekistan and Kazakhstan through the Central Asia-Center gas pipeline (ibid). Despite the close cooperation in gas sector, Uzbekistan started reducing the gas deliveries to Russia. As of 2003, Russia has been receiving 1 billion cubic meters of the Uzbek gas per year. This sharp decline can be attributed to the general crisis in Russia-Uzbekistan economic partnership as well as to the absent of a legal framework for gas cooperation; mainly it was the collapse of the Soviet Union that led to the decline of the industrial activity of the Urals which was the major consumer of Uzbek gas. A final parameter for the decline of the Uzbek gas exports was the persuasion of the energy independence strategy which was aimed at accessing cheap energy for the population in general and the reaching of natural gas in rural areas in particular (Paramonov et al. 2010). The situation has changed dramatically since the ascension of Vladimir Putin to power. The two countries signed an agreement on strategic gas cooperation143 in 2002. In particular, Gazprom and Uzbekneftegaz reached a deal providing long-term – 2003-2012 – export of Uzbek gas to Russia. In 2004, Gazprom and Lukoil, the two leading Russian companies in oil and gas sectors, started getting Uzbekistan involved; Gazprom exported 7 billion from Uzbekistan and Lukoil invested 6.2 bn USD for the development of the Kandym natural gas field144; the field produced 4.8 bcm in 2017145. In 2007, Lukoil also signed a production sharing agreement (PSA)

143 Ferghana News, Gazprom signed an accord with Uzbekneftegaz and makes other plans with regard to Ustyurt, 15 April 2004, http://enews.fergananews.com/article.php?id=365 accessed on 27 May 2019 144 Energy Charter, Uzbekistan’s energy sector, Opportunities for international cooperation, October 2018, https://energycharter.org/fileadmin/DocumentsMedia/News/20181004_Uzbekistan_s_energy_sector.pdf 145 Lukoil official website, Kandym-Khauzak-Shady, http://www.lukoil.com/Business/Upstream/KeyProjects/Kandym-Khauzak-Shady accessed on 27 May 2019 95

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for the development of Gissar oil and gas field146 worth 1.7 bn USD; the field produced 3.3 bcm in 2017. Between 2005 and 2009, export volumes ranged from 8 billion to 15.4 billion cubic meters. Last but not least, Russia has increased interest in stable cooperation with Uzbekistan since the country serves as a transit hub of the Turkmen natural gas. In 2005, Gazprom and Uztransgaz (subsidiary of Uzbekneftegaz) signed a long-term agreement on the natural gas transportation in 2006-2010 via Uzbekistan. For instance, in 2008 47 billion cubic meters of gas were pumped through the Uzbek territory but in 2009 supply reduced because of differences between Moscow and Ashgabat over Turkmen gas prices (Shustov, 2017). As is apparent from the aforementioned, Russia tried to regain its leading position in Uzbek energy market – an economic priority for Russia – by exploring and developing the country’s oil and natural gas fields (Paramonov et al. 2010). But, China has overtaken Russia as the leading export destination of Central Asian states in terms of natural gas (Aminjonov, 2018) and Russia has eventually lost its monopoly over the energy sector of Uzbekistan (Paramonov et al. 2010). Tashkent has chosen not to be heavily dependent on Russian companies for the development of its energy sector (Spechler and Spechler, 2009: 369). From the economic perspective, in 2014, during the visit of the President Putin in Uzbekistan, Russia has agreed to write off most of 890 million USD Uzbek debt to Russia and to reinforce the bilateral cooperation in the agricultural sector, in the aftermath of Russia’s ban on imports of agricultural products from the West as retaliatory measure to the Western sanctions over Moscow's interference in Ukraine147. In 2018, the Russian President Vladimir Putin paid an official visit to Uzbekistan. Two parties have signed 785 bilateral agreements worth of 27 bn USD148 and the first Russia-Uzbekistan Interregional Cooperation Forum held. The Uzbek President Shavkat Mirziyoyev stressed during the summit the value of the ‘stable and trustworthy’ bilateral relations and called Russia a ‘strategic partner and ally’149. It is interesting that both sides agreed to construct a commercial nuclear reactor in Uzbekistan in order to boost

146 Lukoil official website, Gissar, http://www.lukoil.com/Business/Upstream/KeyProjects/South-WestGissar accessed on 27 May 2019 147 Radio Free Europe, Putin Meets Karimov; Russia To Write Off Uzbek Debt, 10 December 2014, https://www.rferl.org/a/uzbekistan-russia/26734847.html accessed on 27 May 2019 148 Eurasianet, Putin charms Uzbekistan with big deals, huge delegation, 22 October 2018, https://eurasianet.org/putin-charms-uzbekistan-with-big-deals-huge-delegation accessed on 27 May 2019 149 President of Russia official website, First Russia-Uzbekistan Interregional Cooperation Forum, 19 October 2018, http://en.kremlin.ru/events/president/news/58858 accessed on 27 May 2019 96

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the capacity and thus to underpin the projected economic growth of the country150. It must be noted that Uzbekistan is the world’s seventh largest uranium producer151.

Multilateral cooperation

In terms of regional multilateral cooperation the Russian-Uzbek cooperation has taken or is taking place under the auspices of a nexus of intergovernmental organisations. First and foremost, the Commonwealth of Independent States (CIS) was established in 1991 aiming at providing aim to the newly independent states in the foreign and economic spheres (Sevim and Rozanov, 2014: 25). But the Uzbek leader, Islam Karimov, tried to downgrade its importance and expressed concerns about Russia’s attempts to re-integrate the region through this supranational organisation. He also rejected the CIS customs Union. (Spechler and Spechler, 2009: 363). Secondly, the Collective Security Treaty was signed in 1992 by Armenia, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan in Tashkent constituting the first security-related document in the region (Sevim and Rozanov, 2014: 25). The Treaty stipulated that all participating members a) would abstain from the use of threat of force and b) would not be able to join other military alliances and an attack against one participant would be perceived as an attack against all (Obydenkova, 2011). Later in the same year, the six countries of the Treaty expanded its scope and renamed it into the Collective Security Treaty Organization (CSTO) under which Moscow could train the military personnel and could sell military equipment to the member states at Russian domestic prices (Frost, 2009). However, Uzbekistan withdrew from the CSTO in 1999 because a) Tashkent gained little from its participation b) had an intense fear that its forces could serve CSTO purposes contrary to its national interests and c) it was reluctant to permit the deployment of alliance troops on its soil (Spechler and Spechler, 2009: 363-4; Haas, 2017: 9). Nonetheless, Uzbekistan re-entered CSTO in 2006 after the deterioration of its relations with the US and the EU as a result of western criticism on handling of the Andijan protests in 2005. The Uzbek government demanded US to evacuate the military bases on the territory of the Republic within six months152. The rapprochement with Russia

150 Financial Times, Uzbekistan turns to nuclear energy to power economy, Nastassia Astrasheuskaya, 14 January 2019, https://www.ft.com/content/a99c1b58-0466-11e9-99df-6183d3002ee1 accessed on 27 May 2019 151 Ibid 152 The Guardian, Uzbekistan kicks US out of military base, Nick Paton Walsh, 1 August 2005, https://www.theguardian.com/world/2005/aug/01/usa.nickpatonwalsh accessed on 27 May 2019

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justified by the Uzbek president on the basis of regime’s security against US-orchestrated potential revolutions like the ‘color’ revolutions in Georgia (2003), Ukraine (2004) and Kyrgyzstan (2005) (Kozłowski, 2016). But the relations between Russia and Uzbekistan remain ambivalent and the participation into the organisation was temporary. Uzbekistan suspended its participation in the CSTO in 2012 (Sevim and Rozanov, 2014: 26-7; Indeo, 2018: 7), although it was mostly nominal. Due to NATO’s withdrawal from Afghanistan Tashkent arguably was aimed at securing itself in the imminent new regional environment and enabling it to access military equipment left behind by NATO (Tolipov, 2013; Haas, 2017: 10). Thirdly, Russia and Uzbekistan cooperate under the framework of the Shanghai Cooperation Organisation (SCO) (Haas, 2017: 8). As analysed in chapter 4, the SCO is an intergovernmental organisation for security, political and economic cooperation. As it was declared since its inception the SCO it is not a military alliance and instead it focuses on fighting the terrorism, religious extremism and separatism. All in all, the relations between Russia and Uzbekistan were not stable but rather inconsistent and ambivalent. The main reason was that Tashkent has always viewed itself as the regional leading nation of Central Asia (Pikalov, 2014: 306). Cooperation with Russia was vital for the survival of the new state but since this goal has been achieved, Uzbek leadership sought to balance the Russian power and influence by participating to the pro-Western GUAM153 grouping (Pikalov, 2014: 306). Uzbekistan has conducted an independent multi-vectorial foreign policy seeking to safeguard its national interests and the relation with Russia pertains to this principle.

Military cooperation

Uzbekistan has the second strongest military in Central Asia, after Kazakhstan, but is less equipped in terms of military arsenal and ‘has not modernized its training practices’ (SIPRI, 2014: 10). In the global ranking of military power Global Firepower in 2018, Uzbekistan occupied the 48th154 placement (out of 137). As of 2014, the Uzbek army had 40.000 personnel, consisted of 11 motorized brigades, 1 tank brigade, 3 artillery brigades, an Multiple Rocket Launcher (MRL) brigade, and also

153 Georgia, Ukraine, Azerbaijan, Moldova 154 Global Firepower, Uzbekistan Military Strength, https://www.globalfirepower.com/country-military-strength- detail.asp?country_id=uzbekistan accessed on 29 May 2019 98

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maintains a rapid reaction force (SIPRI, 2014: 10). After the break-up of the Soviet Union, Uzbekistan got access to several units formerly controlled by the Soviet Turkestan Military District including military aircraft (Barabanov, 2018). Consequently, Tashkent has received 2,200 tanks, 1,600 armored fighting vehicles, and 1,100 artillery systems (ibid). Uzbekistan’s armament programs remain small. The largest of them have included the acquisition of 220 BTR-80 armored personnel carriers (APCs) from Russia in 1992-2002 (SIPRI, 2017). Tashkent has also bought Russian small arms, infantry weapons, and several Mi-8 helicopters (ibid). The rest of its imports from Russia and Ukraine include spare parts, repairs, and maintenance services. In 2007, the two countries signed an agreement for Uzbekistan to purchase Strela and Igla man-portable surface-to-air missiles (SIPRI, 2014: 31).Moreover, Russia has been involved in the modernization of military aircraft and defence systems of Uzbekistan, including MiG-29 and Su-27 fighter aircraft (ibid). Uzbekistan armament from Russia is modest (SIPRI, 2014: 31) due to the complex bilateral relations as a result of participation and withdrawal of Uzbekistan from CSTO, as it has been analysed above. Furthermore, Uzbekistan’s participation in the CSTO under President Karimov did not strengthen the country’s military ties with Russia (Barabanov, 2018). Eventually, in 2016 President Karimov persuaded Moscow to built-up their cooperation on bilateral basis, excluding thus the participation in the CSTO; this resulted in a possibility for Tashkent to acquire Russian loans to purchase military equipment from Moscow (Mashrab, 2017) at domestic Russian prices (Khrolenko, 2018). The ascension of President Mirziyoyev to power altered the military aspect of Russia- Uzbekistan relation. In November 2016, Russia and Uzbekistan signed an agreement on military-technical cooperation (MTC) (Barabanov, 2018) which was extended in 2018155. It must also be noted that in 2017 for the first time, since September 2005, joint drills were held between the two countries (Kucera, 2017). Finally, the government of Uzbekistan signed an agreement with Russia to purchase 12 Mi-35M attack helicopters (Daly, 2018).

5.3 United States geoeconomic involvement in Uzbekistan

155 Eurasianet, Uzbekistan and Russia: Chilly weather, warm relations, 17 October 2018, https://eurasianet.org/uzbekistan-and-russia-chilly-weather-warm-relations accessed on 29 May 2019 99

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The sudden and unexpected break-up of the U.S.S.R., caught both the US and the Central Asian states by surprise, in which they reluctantly had to face with the new and unique circumstances since the lack any experience of independent statehood. Geographically remote, it is still unknown to the American public, it is still not easily accessible, and it still has few obvious connections to the United States, all these characteristics have rendered a solid US strategy towards the region demanding a difficult task (Rumer, 2007: 40). In the first years, Central Asia has no priority for the US foreign policy (18). The American approach to the region was based on five principles, proposed by the US Secretary of State James Baker: 1) peaceful self-determination; 2) respect for existing borders; 3) respect for democracy and the rule of law; 4) the acknowledgement and enforcement of human rights; and 5) respect for international law (Rumer, 2007: 20). The newly independent states were approached by the US foreign policy establishment with a Cold War mindset and threatened through the lens of a new relationship with Russia, constituting thus a secondary priority front. The ensuing ambiguity derived from the fact that Central Asia was neither an area of promising opportunities (like Russia) nor a source of emerging threat and anxiety (like China); it was neither a potential ally (like Europe or Japan) nor a fearful adversary (like Iraq or Iran) (Rumer, 2007: 23). Apart from the aforementioned principles, more urgent and pressing issues had emerged from the soviet dissolution. The major source of concern was the remaining nuclear arsenal and weapons of mass destruction (WMD) that found on the soil of Central Asian states, mainly in Kazakhstan. Consequently, the US interest was focused on securing, removing and consolidating in Russia which was designated as the sole nuclear successor state to the Soviet Union (24). The danger of proliferation was high due to the proximity of the region to the Middle East and South Asia. Second, US aimed at inserting the so called Washington consensus as the suitable model for the governance and economic development of the region which include free trade, unimpeded movement of capital, fiscal discipline, and market-driven interest rate policies (Rumer, 2007: 26). Third, integration of Central Asian states with the Euro-Atlantic security organisation was another field in which Washington got involved in by encouraging to establish relations with the North Atlantic Treaty Organization (NATO) through the Partnership for Peace (PfP) program and the Organization for Security and Cooperation in Europe (OSCE) (Rumer, 2007: 27). Fourth, the vast natural resources of the region were an additional reason of the American involvement.

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Last but not least, security concerns were the aspect of US-Central Asia relation that met with success because the leaders feared the potential instability that Islamic terrorism could pose to the regimes stability. The United States also deemed Central Asia as a potential target for the Taliban regime that ruled Afghanistan. U.S. concerns about the Taliban were widely shared in Central Asia (Hill, 2001) and thus it became the building block upon which the security cooperation has been remained stable and consistent.

Economic control beyond borders: trade and investment

To begin with, comparing the United States with the centralized state-market-complexes of China and to some extent of Russia, can be categorized as a liberal state-market complex (Amineh and Yang, 2014), where there is a relative differentiation of state and market. Consequently, a straightforward examination of trade and investments is difficult to be analysed since the US-based companies follow a market-oriented logic taking into account the investment climate and investment restrictions in the case of Uzbekistan156. The US stock Foreign Direct Investments in Uzbekistan was 69 million USD in 2017, a 9.2% decrease from 2016157. According to the U.S. Office of Trade Representative data regarding the distribution of U.S. FDI in the country are not available.

Table 5.2: U.S. foreign direct investment (FDI) in Uzbekistan (stock) in million USD 2009 2010 2011 2012 2013 2014 2015 2016 2017 55 58 63 71 74 56 69 76 69 Source: U.S. Bureau of Economic Analysis

The United States has had a minimal trade with Uzbekistan since its independence (Nikol, 2013: 9). In 2018 Uzbekistan was the 142nd largest goods trading partner with 296 million USD in total goods trade; up 117.8% (160 million USD) from 2017 but down 1.4% from 2008158. Goods

156 US Department of State, 2018 Investment Climate Statements: Uzbekistan, 19 July 2018, https://www.state.gov/reports/2018-investment-climate-statements/uzbekistan/#report-toc__section-13 accessed on 29 May 2019 157 Office of the United States Trade Representative, Uzbekistan, 20 March 2019, https://ustr.gov/Uzbekistan accessed on 29 May 2019 158 See note 25 101

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exports totaled $296 million; goods imports totaled 18 million USD. The U.S. goods trade surplus with Uzbekistan was 278 million USD in 2018. Indicative of small trade relations is the fact that Uzbekistan constituted the 119th largest goods export market for the U.S. The main traded goods were aircraft (172 million USD), special other (articles donated for relief) (51 million USD), machinery (33 million USD), rubber (15 million USD), and electrical machinery (7 million USD). In terms of exports, Uzbekistan was the 159th largest supplier of goods imports in 2018. U.S. imports from Uzbekistan were worth of 18 million USD in 2018, up 28.4% (14 million USD) from 2017, but down 93.7% from 2008159.

Table 5.3: U.S. Goods Trade with Uzbekistan in Million USD

Source: Office of the United States Trade Representative

As can be inferred, in terms of trade and investments Uzbekistan has had minimal significance for the U.S. economic interests. Although, the US economic presence in Uzbekistan has an insignificant impact, the U.S. assistance was not negligible at all. Between 1992 and 2010 the US accumulated assistance towards Uzbekistan was 971.36 million USD (Nikol, 2013: 20). The aid directed in combating the proliferation of weapons of mass destruction, counter narcotics, Partnership for Peace, anti-crime support, food, health, humanitarian assistance and democratization (Nikol, 2013: 20).

159 ibid 102

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Table 5.4: U.S. assistance towards Uzbekistan in Million USD 1992-2010 2011 2012 2013 2014 2015 2016 2017 Uzbekistan 971.36 11.34 16.73 11.37 11.27 10.67 10.63 11.60 Total 5.714 148.91 145.92 131.05 132.206 137.727 (Central Asia) Source: U.S. State Department, Office of the Coordinator of U.S. Assistance to Europe and Eurasia; Foreign Operations Assistance: Uzbekistan, June 2013, https://2009- 2017.state.gov/p/eur/rls/fs/2013/212951.htm ; ibid August 2016 https://2009- 2017.state.gov/p/eur/rls/fs/2016/261463.htm . The total Central Asia is derived from Cordesman, 2017: 135.

Bilateral security ties and multilateral cooperation through North Atlantic Treaty Organisation

Mutual willingness to fight terrorism has been the common ground of their cooperation. Against this backdrop, the US and Uzbekistan started cooperating quietly in 1998, involving training for the Uzbek army, intelligence sharing and operations to oppose the Taliban regime (Rumer, 2007: 37). The turning point was the terrorist attacks of September 11, 2001. After this, the US-Uzbek relations warm up due to the coincidence of terrorist threat that now was shared by both states but most importantly Washington decided to immediately fight the Taliban regime in Afghanistan. The Karimov regime was seeking a new security provider thus it gave overflight rights and stationing permission to the US troops at the Karshi-Khanabad (K2) Air Base near the Uzbek-Afghan border (Akbarzadeh, 2007: 108) and expressed its support to the Operation Enduring Freedom (Bowman and Dale, 2009). Bilateral relations reached a new high by signing the ‘‘Declaration on the Strategic Partnership and Cooperation Framework’’ in 2002 (Rumer, 2007:41; Sönmez, 2012: 36). As a result, Uzbekistan transformed from a secondary foreign policy partner to a strategic ally of the United States on war against terror. But, in 2005 the bilateral relations deteriorated rapidly, after the Andijan massacre (see chapter 3) amid an international outcry due to the disproportionate use of force. Tashkent then withdrew from the anti-Russian GUAM group (Gleason, 2006: 50) and ‘complied’ with the 2005 Declaration of the SCO leaders who were calling for the withdrawal of the American troop on the basis that the mission of the Operation Enduring Freedom was been accomplished (Gleason, 2006: 51).

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The relations between the United States and Uzbekistan have improved in 2009 where the first Annual Bilateral Consultation (ABC) took place. In 2010, during the visit of US Secretary of State Hilary Clinton, she stated that Uzbekistan was ‘crucial’ to the US interests (Nichol, 2013). The second and third ABC took place in 2011 and in 2012, respectively. At the 2011 visit of Secretary Clinton, she unfolded the US-proposed ‘New Silk Road Vision’ according to which Afghanistan was envisioned to be a regional transportation, trade and energy hub connecting Central Asia, Pakistan and India (Zimmerman, 2015: 14). Under the new administrations of Trump and Mirziyoyev in Washington and Tashkent, respectively, the relations were steadily developed resulting in the signing of ‘Launching a New Era of Strategic Partnership160’ during the ‘historical’ visit of President Mirziyoyev at the White House161. Both counties’ corporations signed twenty agreements worth of 4.8 bn USD as well as both presidents extended the bilateral cooperation on the security sphere (Valiyev, 2018). Uzbekistan established relation with NATO in 1991 and has participated in summits of NATO/EAPC (Euro-Atlantic Partnership Council) in Washington (1999), Prague (2002) and Bucharest (2008)162. Since 1994 Uzbekistan cooperates with the NATO-led Partnership for Peace Program which aims to ‘enhance cooperation and stability’ among NATO member and partner nations163. Except from the U.S. (and thus NATO) bases on its soil, Uzbekistan is of great importance for the Atlantic Alliance for an additional reason; the territory of Uzbekistan borders with Afghanistan and furthermore has the most developed railway network in Central Asia thus is a transit hub for the Northern Distribution Network164 through which the troop of the Alliance are supplied165.

160 The White House official website, The United States and Uzbekistan: Launching a New Era of Strategic Partnership, https://www.whitehouse.gov/briefings-statements/united-states-uzbekistan-launching-new-era-strategic- partnership/ accessed on 29 May 2019 161 Radio Free Europe, Uzbekistan's Mirziyoev Meets Trump In 'Historic' White House Visit, 16 May 2018, https://www.rferl.org/a/mirziyoev-us-visit-uzbek-leader-white-house-2002/29230271.html accessed on 29 May 2019 162 Ministry of Foreign Affairs of the Republic of Uzbekistan, Uzbekistan-NATO Cooperation in EARC/PFP framework, https://mfa.uz/en/cooperation/international/380/ accessed on 29 May 2019 163 EUCOM, Partnership for Peace, https://www.eucom.mil/mission/partnership-programs/partnership-for-peace accessed on 29 May 2019 164 Eurasianet, Uzbekistan: Tashkent’s Shakedown Practices Hold Up NDN Traffic – Contractors, Deirdre Tynan, 27 February 2012, https://eurasianet.org/uzbekistan-tashkents-shakedown-practices-hold-up-ndn-traffic-contractors accessed on 29 May 2019 165 NATO official website, Relations with Uzbekistan, 27 March 2019, https://www.nato.int/cps/en/natohq/topics_22839.htm accessed on 29 May 2019 104

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Military cooperation

The bilateral military ties were substantially boosted in the mid-2000s directly linked with the US access to the Karshi-Khanabad (K2) military base. The assistance included river patrol boats, radios, upgrades for helicopters and navigation systems, facilities upgrades, and various training support. But after the Andijan incident the ensuing US criticism towards the Karimov regime led to the eviction of US forces from the base. In response and due to poor human rights record, the US Congress imposed arms embargo (SIPRI, 2014: 52) which lasted until 2012. After the US lifted the ban it has resumed the assistance by sending over 300 armored vehicles to Uzbekistan166. Despite Washington’s decision to carry on the military cooperation with Tashkent it has continued to refrain from sending lethal equipment to Uzbekistan as a policy decision (SIPRI, 2014: 52).

5.4 The European Union’s geoeconomic involvement in Uzbekistan

As it is well known the EU incorporates intergovernmental and transnational elements thus constituting a ‘‘sui generis’’ structure which is a unique phenomenon in the field of International Relations. When it comes to terms of foreign policy, EU presents a complex and intriguing situation. The Lisbon Treaty (2009) provided that the foreign affairs and security will remain under the intergovernmental authority but in order to achieve greater coordination among member states it has created the High Representative of the Union for Foreign Affairs and Security Policy and the High Representative (HR) is in charge of the European External Action Service (EEAS) (Missiroli, 2017). Despite the Treaty’s provisions complexity still remains since a) the European Council – i.e. the heads of states – is responsible for devising strategies and b) the Council of the European Union – the Foreign Affairs Council i.e. the ministers – is responsible for the EU’s external action167. As can be inferred member states are responsible for the Common Foreign and Security Policy- (CFSP) domain.

166 Eurasianet, No Longer Under Sanctions, Uzbekistan Gets 300 Armored Vehicles From U.S., Joshua Kucera, 22 January 2015, https://eurasianet.org/no-longer-under-sanctions-uzbekistan-gets-300-armored-vehicles-from-us accessed on 29 May 2019 167 European Council, Foreign Affairs Council configuration (FAC), https://www.consilium.europa.eu/en/council- eu/configurations/fac/ accessed on 29 May 2019 105

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Although, Central Asia did not fall under the EU’s European Neighborhood Policy (ENP), in European Council’s ‘The EU and Central Asia: Strategy for a new Partnership’’ (EC, 2007) of 2007, it has declared that the EU aims at bringing Central Asia closer to achieve cooperation with the common goal of ‘‘stability and prosperity by means of peaceful interactions’’. This paper paved the way for cooperation with Central Asia, along with other documents, for instance, the ‘Regional Strategy Paper for Assistance to Central Asia 2007- 2013168’. The policy aims of the EU towards Central Asia are predominantly focused on a) promoting regional cooperation and good neighborly relations and b) poverty reduction, increase of living standards including economic reforms since the EU acknowledges that stability and security is intertwined with the level of economic growth. By assisting these states in the energy, infrastructure and agriculture, the EU aims at reducing the possibility of instability spill-over from that region and thus reinforcing its own stability (EC, 2007: 4). Finally, the EU aims at promoting human rights respect and good governance, adhering to rule of law and consolidation of democratization (ibid:7).

Economic control: trade and investment

Analysing trade relations between the European Union and Uzbekistan is far more different than in the case of China, Russia or the United States, because the EU-28 significantly vary in their trade relations with other states. As it became apparent above, the EU is engaged with Uzbekistan through the broad EU-Central Asia framework, as it was defined by the 2007 EU- Central Asia Strategy. A Partnership and Cooperation Agreement (PCA) between the EU and the Republic of Uzbekistan signed in 1996 laid the basis for a broader bilateral relationship; furthermore EU signed the General System of Preferences (GSP) aiming to boost the mutual trade (Rakhimov, 2015: 148) with Uzbekistan. Worth mentioning is that the trade turnover between EU and Central Asia have fluctuated over the last decade. The table below shows that trade between the EU and Central Asia has fluctuated significantly. The years 2011-2014 have

168 The European Council, Regional Strategy Paper for Assistance to Central Asia 2007-2013, https://eeas.europa.eu/sites/eeas/files/regional_strategy_paper_for_assistance_to_central_asia_2007-2013.pdf accessed on 29 May 2019 106

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marked by high turnovers when trade rose after the economic crisis. From 2014 onwards the trade turnover has decreased once more.

Table 5.5: Total trade between EU and Central Asia, 2007-2017, in billion USD Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 22.93 28.42 19.25 24.43 32.68 35.71 35.69 35.13 26.34 22. 26.42 Source: SENECA (2019)

According to the European Commission, trade with Uzbekistan between 2008 and 2018, has steadily grown, in general, following the overall EU-Central Asia trend. The table below shows the trade volume of EU with Uzbekistan. Table 5.6: EU trade with Uzbekistan 2008-2018

% Growth: relative variation between current and previous period % Extra-EU: imports/exports as % of all EU partners i.e. excluding trade between EU Member States Source: The European Commission (2019)

Uzbekistan has mainly exported agricultural products, chemicals and manufactured goods; the EU mainly exported machinery and transport equipment, manufactured goods and agricultural products to Uzbekistan (EC, 2019: 5). In 2017, Uzbekistan was the 85th biggest trade partner for the EU (SENECA, 2019: 8). The statistics of the European Commission show that the biggest trade partner – in both exports and imports – during this period was Kazakhstan; Uzbekistan was ranked by far the second partner (ibid: 7-8). In conclusion, although EU’s trade with Uzbekistan has developed over the last 20 years, it still remains relatively small. On the contrary, for Uzbekistan the trade relation with EU plays a significant role; in 2012 the EU27 was the fifth trade partner of Uzbekistan (European Parliament, 2013: 20). In terms of Foreign Direct 107

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Investment, statistics indicate that situation is similar to trade, namely investments between Central Asia and the EU is heavily directed to Kazakhstan (SENECA, 2019: 8). In 2016, the EU’s FDI stock was 2.3 bn USD and in 2017 it was 800 million USD (EC, 2019b). Last but not least, a very important instrument of the EU is the Technical Assistance to the Commonwealth of Independent States (TACIS) programme established in 1991, which has aimed at implementing economic reforms and maintaining the political relations with Uzbekistan (Rakhimov, 2015: 148). Since 2007, the European Union has launched the Development Cooperation Instrument (DCI) and under this program Uzbekistan has received 29 million USD (2007-2010), 42 million USD (2011-2013), and finally by 2020 will have received 168 million USD (2014-2020)169.

Security and military cooperation

Contrary to other major players and power in this research i.e. China, Russia and US; the EU does not possess security mechanisms to establish security relations with the Central Asian states and Uzbekistan in particular. Although, the European Union does have a Common Security and Defense Policy (CSDP), a European Union Military Committee (EUMC) and the Military Staff of the European Union (EUMS), it is cooperating in the security domain with NATO (European Union External Action, 2018). When it comes to military cooperation with Uzbekistan, individual defence companies have involved Uzbekistan in the post-Soviet period. For example, the French Sagem Corporation modernized 12 Mi-24 helicopters of Uzbekistan and the British Land Rover Defenders provided weapons (SIPRI, 2014: 73). After the 2005 Andijan incident and accusation in regard to human rights violations, the EU imposed embargo on arms exports to Uzbekistan (Gleason, 2003: 51).

5.5 The geopolitical rivalry in Central Asia and the position of China

According to critical geopolitical perspective, a precondition for the survival of any state in the international sphere is the successful industrialization and to ‘catch-up’ with the advanced countries of the world. Crucial role for the overall influence beyond borders is state-led control

169 European Commission, International Cooperation and Development, Uzbekistan, https://ec.europa.eu/europeaid/countries/uzbekistan_en , accessed on 29 May 2019 108

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of trade flows and the FDI (tools for power-projection); this is easier to be achieved by authoritarian state-society-market complexes. Material capabilities also include a state’s ability to possess an internal security apparatus that might operate as a tool for geo-strategic efforts. Furthermore, normative power is also of great importance for any country which aims to establish itself as dominant power in the current world and even to establish world order.

Russia’s relative decline in Central Asia During the period under study, Russia’s development a) augmented its capacity for influence, aiming at establishing Russia’s a normative power in its own right. Notwithstanding b) it has experienced significant calamities during the period under study due to the economic crisis, two wars, international sanctions and a drop in oil prices. As a result, China has surpassed Russia as the biggest trade partner and investor in Uzbekistan. Furthermore, Russia was unable to influence energy prices and thus profits of the RRCs of Central Asia; another factor that diminished Russia’s role was the ability of these countries to diversify their energy export routes. Finally, Russia’s activities established itself as an unreliable partner due to pricing disputes. For its future modernization efforts, Russia will progressively rely on China, as it possesses the means to finance modernization projects. Indicative of Russia’s declining normative power is the fact that in the former Soviet region smaller economic sub-organisations had emerged such as EEU and CU. The reason behind the decline of Moscow’s influence might be that is biased with military-related material capabilities and its attempts to establish an alternative normative system opposing the US hegemony. Consequently, these aims might be at odds with the multi-vector foreign policy of Uzbekistan. Must also be noted that, Central Asian leaders had been supported by Russia when they had disputes with the ‘West’. All in all, Russia lacks the material capabilities and the decisive normative power to establish an appealing hegemonic order in Central Asia. Thus, Russia has accepted China’s presence in Central Asia as can be inferred by their shared leadership of the SCO and is willing to cooperate with China to oppose the US power projection.

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China as a dominant actor in Central Asia

China’s ability to project power beyond its borders has been greatly increased by the mechanisms analysed in chapter two. China’s increasing capabilities centered on the economic field, and its energy imports from Uzbekistan has resulted in an influential position in the energy sector of Uzbekistan; currently China has become the primary destination for the Uzbek natural gas exports. What has rendered China’s involvement in Uzbekistan easy was the exceptionally successful utilization of foreign policy principles through which it has projected its normative power. Generally, the basis of China’s foreign policy, as manifest themselves in its five Principles of Peaceful Coexistence, coupled with the appraisement of sovereignty, can be applied to the Central Asian region. China’s prioritization of sovereignty, serving as the basis of bilateral and multilateral relations, has been viewed by the Central Asian leaders as the building block upon which they could establish stable relations with China. On the contrary, Russia’s declarations on sovereignty were violated by its actions in Georgia (2008) and the annexation of Crimea (2014). China’s pragmatism, based on peaceful coexistence, connects well with Uzbekistan’s multi-vectorial foreign policy. In this regard both Uzbekistan and China share the belief that the foreign policy is a balancing act rather than strictly a top-down relation. As has become apparent, the Karimov’s insecurity triggered by Islamic terrorism and the conflict in Afghanistan has, until now, been one of the dominant reasons for Uzbekistan to participate in security-related cooperation networks. Peaceful coexistence principles are hence a powerful basis for China to establish far-fetching relations with Central Asian countries. China moreover by advancing good leader-to-leader relations, facilitates further cooperation, as it allows direct bilateral relations, without the mediation of civil society actors. All these factors are absent in the cases of the European Union and the United States. As mentioned above, the European Union and the United States have been interfering to the domestic affairs of Central Asian states, rendering themselves less appealing to the leaderships of the countries. The BRI can be seen as the prominent aspect of China’s normative power in the region, and is simultaneously as an ability of China to build order in Central Asia. This was the reason behind the US has failed to promote its Silk Road plan. Also, as the region is viewed as a secondary priority for the US, the consequently, it lacks the commitment to become a dominant power in the region. China’s ability

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to include Russia to the new order by synchronizing the BRI with the Eurasian Economic Union is an indication of successfully implemented Chinese influence. In this respect, the inclusion by the SCO of economic and energy cooperation is a clear sign of the victory of China’s pragmatism against Russia’s one-sided security-related offering and the US and EU’s attempts for democratization and insistence on human rights.

Geopolitical assessment

At the rhetoric level, BRI intends to close the gap in infrastructure and increase interconnectivity among BRI countries. But the ambiguity and lack of a formal definition on the part of the Chinese government and the involvement of a number of actors such as local governments, state- owned enterprises, private enterprises and NGOs make it harder to acknowledge Beijing's goals. The above should be combined with multiple reactions on the part of the US and the EU on BRI, as well as Russia's underlying concern. However, if Moscow consider that Beijing is undermining its national interests, it could then be added to the critics and opponents of the BRI. One clear example is the reactions and suspicions accompanying many Chinese investments in countries such as the US, Canada and Australia, although China has tried to decouple these investments from strategic pursuits and calculations. China's Peaceful Coexistence, Peaceful Rise and win-win cooperation rhetoric has not deterred other power leading by US from seeing China as a rival competitor. As result, the US began a trade war with China with unpredictable consequences for the immediate future. This could confirm the Thucydides' trap where an established power (US) is forcibly declaring war on a rising one (China) to halt its rise. Even in the Central Asia region, despite the support of the leadership to and from China, there are social forces expressing fears of increased Chinese penetration and presence in their countries - either in the presence of Chinese citizens or businesses - a phenomenon that is known as 'Sinophobia'. Nevertheless, China appears to have gained a prominent role and influence in Central Asia in the short term due to enhanced bilateral relations and multilateral relations through the SCO. Its economic presence through the granting of preferential loans by CDB, Eximbank, Asia Infrastructure Investment Bank and the Silk Road Fund as well as increased trade relations and investments has formed a grid that ensures China's short-term and medium- term influence. This trend is expected to increase in the future.

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Despite Beijing's success so far in the region and Uzbekistan in particular, the risks it faces in terms of its presence are: a) first, the risk of internal instability and a hostile attitude towards Chinese investment by the population. For this reason, Beijing is expected to continue to support any regime regardless of performance in the areas of democratization and human rights and to strengthen people-to-people and cultural diplomacy to appease their concerns. Secondly, while Russia has accepted Beijing's increased influence on the economy and energy sector, where its capabilities are weaker than the USSR’s, this could be overturned if China starts to show more active role in security sphere. Thus, the greatest risk to China would be a reversal of the triangular diplomacy of Kissinger, where the US would now be approaching Russia to contain China. Finally, the proximity of Central Asia and Uzbekistan to the volatile region of the Middle East could cause problems either by the dispersion of terrorist actors or by instability caused by the collapse of state structures to the region. One should bear in mind that China and Russia, despite their problems, have now increased material capabilities compared with the early 1990s, when the US imposed their will without reactions. This could also lead to a direct confrontation of the organizations where the three forces, namely NATO, CSTO and SCO, are leading. But the primary frontier where the US and China collide will remain the east coast of China where both forces have vital interests at stake. In the end, as Central Asia and Uzbekistan remain a low priority for the US and the EU and Russia remains occupied by its confrontation with the West, it is expected that China will remain the dominant power in the region and Uzbekistan.

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Chapter 6

Conclusions

This thesis has comprehensively analysed the involvement of the Chinese state in Uzbekistan and in particular the activities of CNPC in Uzbek energy sector between 2006 and 2018. The research thereby provided an examination of the mechanisms used to secure scarce resources abroad, necessary for its domestic growth, which constitutes the legitimation source of CCP-rule in China. Because stability in China, with over 1.4 billion people and the second largest GDP in the world, is of great significance for stability in Asia, and the world at large, China’s energy- security concerns the policy-makers in Beijing. As its National Oil Companies were encouraged to invest abroad by the ‘Going-Out’ strategy, and are increasingly starting to compete with many European and American IOCs, China’s geographic expansion is an issue for major-powers who also need to secure domestic growth to maintain domestic stability, such as once again the United States and the European Union. The study at large thereby tried to provide insight into the mechanisms through which the Chinese state-class and the CNPC have attempted to project power and to secure control over the energy sector of Uzbekistan. According to theory of critical geopolitics, domestic power configurations, high energy demand and scarcity of natural resources resulted in lateral pressure. Thus, Chinese policy makers selected to seek energy supply from Central Asia because of its proximity addressing partly the daunting ‘Malacca dilemma’. But, as this study has shown China’s involvement towards Uzbekistan, except energy-related motivations, has also taken into account security-related considerations as well as economic calculations. Uzbekistan was chosen due to the fact that it is a pivotal state in Central Asia influencing the region in multiple ways, furthermore, the similarity of both regimes was a factor that renders their cooperation easier. Both states are centralized state-market complexes in which the state-class is in charge of politics and economy. China acknowledges the centrality and the importance of Uzbekistan for any sustainable and stable security architecture in the region. As such, this thesis has aimed to study comprehensively the diplomatic, economic and security-related tools of Chinese state-class as

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well as CNPC’s investments in the energy sector of Uzbekistan. This study has examined the China-Uzbekistan relationship in bilateral and multilateral framework. The main question this thesis tried to answer was therefore: why China’s strategic interests prompted it to get involved in Uzbekistan and how the relations between Uzbekistan and SCO and BRI in the context of the post-Cold War Central Asia facilitate China’s involvement? To answer this question, individual chapters answered the following sub-questions:

1. CH2; How has China’s growth affected its energy security? 2. CH3; What is the significance of Central Asia for China and what policy tools it has deployed in order to achieve its goals? 3. CH4; What diplomatic, economic and security activities have China's state-class and CNPC implemented in Uzbekistan between 2006 and 2018? 4. CH5; What are the geopolitical challenges in Central Asia and Uzbekistan that might impede the involvement of China? To answer these questions, the thesis has relied on theory of Geo-political Economy, a theoretical perspective that tries to a) provide a holistic analysis, and b) analyse the origins of the current geopolitical order. To grasp the Geo-political economics this research has used the concepts of “sequential industrialization”, “centralized state-market complex”, “lateral pressure” and “resource scarcity” which have defined China’s cross-border power projection. The most recent strand of Geo-political Economy, which combines International Relations with the study of Global Political Economy, has been used. First of all, Geo-political Economy provided an adequate explanatory framework that includes the state as an actor in the global economy and international relations, contrary to scholars who have been asserting that the role of state had decreased in a globalized world (see Yeung, 1998). On the contrary, the ‘state- market-military-complex’ allows a scholar to take into consideration the state and its vital function for the capitalist economy (Yeung, 1998; Weiss, 1998; Graaff, 2017) in parallel with sub-state actors or market forces i.e. in our case, the Chinese National Oil Companies. Regarding the concepts of Geo-political Economy, the sequential industrialization will enable us to examine how state-led urban-industrial development led to resource scarcity and how the conditions of lateral pressure obliged China’s state-class to project power by the cross-border activities using diplomatic, economic and security tools in the post-Cold War Central Asia with special focus on 114

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Uzbekistan in detail. Finally, power projection with its territorial logic of power and the capitalistic logic of power will provide the research with a clear-cut understanding of China’s efforts to facilitate CNPC’s involvement in the energy sector of Uzbekistan. In this respect, Geo-political Economy has allowed this research to focus on domestic factors (industrialization) as the main transformative force of geopolitical order and in our case of China since the Chinese political and economic forces expanded beyond borders. Moreover, through the lens of Geo-political Economy the research was able to include the China’s National Oil Companies as major actors involving in Uzbekistan under its scope. Furthermore, the state- society complex of Uzbekistan has been analysed and become apparent why the centralized nature of the Uzbek political system facilitated their bilateral and multilateral cooperation as well as China’s. China’s state-led-development, or sequential capitalist industrialization, had resulted in an increase in domestic growth and thus domestic wealth. However, because of this, domestic energy demand is expected to keep on growing during the upcoming decades, creating demand- induced scarcity. Coupled with 1) the depletion of domestic reserves – creating supply induced scarcity- and, 2) increased expectations from society, creates lateral pressure, pressure on policymakers to find external supply-sources. By increasing the imports China is subject to structural scarcity since 1993. The creation of an extensive pipeline structure can be characterized as geo-political economic power projection as it is a conscious strategy of China to diversify supply routes and prevent structural scarcity. Therefore, this research has tried to grasp the significance of the Central Asia in terms of geostrategic position, geoeconomics and geopolitics in the post-Cold War period for China. The main interests of China are security, economic considerations and energy because they are intertwined with China’s domestic stability and development. China’s strategy towards Central Asia was aimed at i) establishing stability in its neighborhood thus ensuring domestic stability ii) preventing threats to communist rule and guarding national unity iii) preserving peace and supporting the secular friendly governments of the region iii) expanding its economic interests (trade) iv) importing uninterrupted energy and mineral resources v) utilizing the region’s location as geographical hub for exportation of goods to Europe and Middle East and vi) sealing the region from the ‘malign’ influence of other powers.

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After the examination of China’s interests and strategy towards Central Asia, the analysis moved on by examining China’s interests in regard to Uzbekistan. The main findings regarding Beijing’s interests in relation to Tashkent, were the geostrategic location of Uzbekistan in the heart of Central Asia bordering with all the other Central Asian countries, natural resources possession, it’s relatively developed economy, it is a market for the export of Chinese products since it has almost half of region’s population and finally it is the most powerful state in Central Asia (Pikalov, 2014; 297). For a comprehensive analysis the research provided an in-detail analysis of China-Uzbekistan relations in bilateral and in multilateral framework and the reasons behind China’s determination to cooperate with Uzbekistan and vice versa. Uzbekistan is characterized by highly centralized political power structure and strong involvement of the state in the economy and especially, in the energy sector. Moreover, a detailed account of the motivations and goals of the foreign policy of Uzbekistan since its independence, has given. Bilateral relations between China and Uzbekistan analysed through a) visits of high-ranking officials b) agreements and c) projects and d) trade, investments and finance. Finally, the extensive nature of China-Uzbekistan bilateral relations is facilitated and consolidated by membership of both states in the multi-lateral organization of the Shanghai Cooperation Organisation and the participation of Uzbekistan in the Belt and Road Initiative since its inception. With regard to geopolitics, China’s increased material capabilities and the appeal of its principles of Peaceful Coexistence, coupled with Russia’s support of a multi-polar order where China deters the US from Central Asia, implies that China currently has the most preferential position in the region. The vital threats to China’s position are domestic instability, the declining support of Russia and the spillover of conflict from the Middle East and Afghanistan into Central Asia, inclining US involvement. All in all, China has been the most successful actor in Uzbekistan due to its unwavering support for the Karimov regime and the shared perception of the commonality of Islamic terrorism as the main threat for domestic stability. Russia failed because it was the occupier of the region for many centuries and Uzbekistan has strived primarily against Russia’s attempts to reestablish a common space of domination through regional mechanisms. The US has also failed, because of criticism of regime’s performance regarding the human rights and the support of the US for the color revolution and the push for democratization. The key of understanding Uzbekistan’s stance towards the foreign powers is the

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regimes insecurity and its willingness to continue to maintain its grip on power. Geo-political Economy was the most appropriate theoretical framework since it took into consideration the state-society complex for the analysis of the external behavior of state; otherwise it could not be explained why Tashkent re-aligned itself with Russia and the US more than once and has maintain steady relations with China. Based on these findings, the first hypotheses with regard to China’s energy supply security can now be tested: Η1. Strong bilateral relations between China and Uzbekistan facilitate CNPC’s involvement in Uzbekistan’s energy sector and ergo enhanced China’s energy supply security. Although the energy relation is the most important element of bilateral relation, the first hypothesis has not been fully confirmed because paradoxically energy imports from Uzbekistan to China were minimal in comparison to other energy partners of China during the period under study. However, China’s energy supply security does not merely consist of raw materials, it is also enhanced by the future availability of import destinations. Thus, CNPCs investment indirectly has helped maintain the ties between China and Uzbekistan. This leads us to the second hypothesis: H2. By using bilateral and multilateral relations China facilitates its involvement in Uzbekistan and thus has acquired a dominant position compared to other competitor major powers. The second hypothesis has been fully confirmed as long as China has maintained the most stable and supportive relation with Uzbekistan. Since this research has shown, the Uzbek regime’s primary target was the preservation of its grip on power coupled with a gradual economic development which was aimed at strengthening the legitimacy of Karimov and now Mirziyoyev’s power. China’s foreign principles of Peaceful Coexistence and the respect for sovereignty were the key for the success in regard to Uzbek partners. On the contrary, the other competitor powers i.e. Russia, the US and the EU, have with their policies put in danger the Uzbekistan’s stability, as it has been perceived by Tashkent itself. The most reliable indicator for the overall success and China’s dominant position is that the bilateral relations have never experienced a single setback such as those occurred with Russia, the US and the EU. All in all, bilateral as well as the multilateral grouping of the SCO and the China-led BRI have reinforced

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and secured China’s involvement in Uzbekistan because Beijing has developed a pragmatic foreign policy stance towards Uzbekistan respecting its deepest concerns.

Recommendations Future studies about the China-Uzbek relation can focus on two interesting areas. First, further research should be conducted in regards to the US recent confrontational stance against Russia and China designating them as serious competitors. The study of repercussions from fierce competition between great powers is of great importance for the stability of Uzbekistan as long as Tashkent heavily relies on good relations with each of them. What would the response of Tashkent be if the antagonism is escalated? Second, further research should be conducted regarding the development of the Belt & Road initiative in the Central Asia. Due to its geo-graphic location Uzbekistan is at the crossroad of Asia and Europe, therefore, Uzbekistan will be an important transit country. The implementation of Belt & Road projects in Uzbekistan could drastically change the country. Lastly, it would be interesting to study whether China can form a policy that is able to deal with the numerous societal and economic challenges in Uzbekistan.

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References

Books and book chapters

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-Akçali, P. (2003), Nation-State Building in Central Asia: A lost Case? In Amineh, M.P., Houweling, (Eds), Central Eurasia in Global Politics: Conflict, Security and Development. Brill, Leiden • Boston

-Amineh, M.P. (2003) Globalization, Geopolitics and Energy Security in the Caspian Region. Den Haag: CIEP. -Amineh, M.P., Yang G.., & AISSR Other Research. (2017). Energy and Geopolitical Economy in China: Theory and concepts. In (pp. 11-41). -Amineh, M.P., Yang, G., & Transnational Configurations, Conflict Governance. (2014). Introduction: Geopolitics of transnationalization of Chinese national oil companies. Perspectives on Global Development and Technology, 13(5-6), 495-535. -Amineh, Mehdi P, & Yang, Yang. (2017). Geopolitical economy of energy and environment China and the European Union (Vol. 76, International comparative social studies volume 36). Leiden: Brill. -Andrews-Speed, P. (2012). The governance of energy in China Transition to a low-carbon economy. Basingstoke: Palgrave Macmillan.

-Aris St. (2011), Eurasian Regionalism, The Shanghai Cooperation Organisation, Palgrave Macmillan

-Bramall Chris, (2009), Chinese Economic Development, Routledge -Cordesman H.A. (2017), Losing the ‘‘Forgotten War’’: The US Strategic Vacuum. In Sten Rynning (Ed) Afghanistan, Pakistan and Central Asia, in South Asia and the Great Powers: International Relations and Regional Security, Retrieved on 15 May 2019 from https://books.google.nl/books?id=qQ1NDgAAQBAJ&pg=PA135&lpg=PA135&dq=State+Department% E2%80%99s+Office+of+the+Coordinator+of+U.S.+Assistance+to+Europe+and+Eurasia+Uzbekistan+20 14&source=bl&ots=4RT3N1- 1v3&sig=ACfU3U1Tlkt9RTdHBQwt5eeqXCqb2LMgeQ&hl=el&sa=X&ved=2ahUKEwjN06fPrMbiAh XDblAKHYhzAS0Q6AEwBXoECAkQAQ#v=onepage&q=State%20Department%E2%80%99s%20Offi ce%20of%20the%20Coordinator%20of%20U.S.%20Assistance%20to%20Europe%20and%20Eurasia%2 0Uzbekistan%202014&f=false

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-Cox Robert and Michael G. Schechter, (2002), The Political Economy of a Plural World, Critical reflections on power, morals and civilization, London and NY, Routledge -de Graaff, N., (2017). The Dual Face of China’s “Going Global”: Transnationalizing National Oil Companies, Elites, and Global Networks. In Amineh, M., & Guang, Y. (Eds), Geopolitical Economy of Energy and Environment: China and the European Union, Brill, Leiden • Boston

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-Harvey D. (1985). The Geopolitics of Capitalism. In: Gregory D., Urry J. (eds) Social Relations and Spatial Structures. Critical Human Geography. London: Palgrave. -Heilmann Sebastian, (2017), China’s Political System, Rowman & Littlefield

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-Houweling, H., & Amineh, M. (2003). Introduction: The Crisis in IR-Theory: Towards a Critical Geopolitics Approach. Perspectives on Global Development and Technology, 2(3), 315-335. -Huasheng Z. (2007), Central Asia in China’s Diplomacy. In Central Asia, Views from Washington, Moscow and Beijing, M.E. Sharpe, Inc

-Jarosiewicz, A., & Strachota, K. (2013). China vs. Central Asia. The achievements of the past two decades. Poland: Ośrodek Studiów Wschodnich im. Marka Karpia. Retrieved from http://www.ceeol.com/search/book-detail?id=550668

-Jiang, B. (2011). China National Petroleum Corporation (CNPC): A balancing act between enterprise and government. In D. Victor, D. Hults, & M. Thurber (Eds.), Oil and Governance: State-Owned Enterprises and the World Energy Supply (pp. 379-417). Cambridge: Cambridge University Press. doi:10.1017/CBO9780511784057.012

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-Klare M.T. (2001), Resource Wars – The New Landscape of Global Conflict, (Markham, Ontario: Metropolitan Books) -Laruelle M., & Peyrouse S. (2012). The "Chinese question" in Central Asia: Domestic order, social change and the Chinese factor. New York: Columbia University Press. -Lim Timothy, 2014, International Political Economy: An Introduction to Approaches, Regimes, and Issues, Saylor Foundation

-Mackerras C. and Clarke M. (2009), China, Xinjiang and Central Asia: History, Transition and Crossborder Interaction Into the 21st Century, Taylor & Francis Routledge, Routledge Contemporary China Series ; 38.38 -McCray R.T. (2004), Uzbekistan, Chelsea House Publishers

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-Ó Tuathail, G., Dalby, Simon, & Routledge, Paul. (1998), The geopolitics reader. London [etc.: Routledge -Pomfret R. (2012) Central Asia after Two Decades of Independence. In: Roland G. (ed) Economies in Transition. Studies in Development Economics and Policy. Palgrave Macmillan, London.

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-Ross Garnaut, (2018), 40 years of and development and the challenge of 50. In Ross Garnaut, Ligang Song and Cai Fang (Eds.), China’s 40 Years of Reform and Development, 1978- 2018, Australia, ANU Press, DOI: 10.22459/CYRD.07.2018

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-Spechler C. M. (2008), The political economy of reform in Central Asia: Uzbekistan under authoritarianism, New York, NY: Routledge,

-Starr S.F. (2018), Change and Continuity in Uzbekistan, 1991-2016. In S. Frederick Starr and Svante E. Cornell (Eds) Uzbekistan’s New Face , Rowman & Littlefield Publishing Group, Inc.

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-Swanström L.P. N. (2015), China and Greater Central Asia. In Carla P. Freeman (Ed) Handbook on China and Developing Countries, Edward Elgar Publishing

-Taylor Monique, (2015), China’s Oil Industry: ‘Corporate Governance with Chinese Characteristics’. In Xu Yi-chong (Ed), The Political Economy of State-owned Enterprises in China and India, Palgrave Macmillan

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-Yilamu W. (2018), Neoliberalism and Post-Soviet Transition, Kazakhstan and Uzbekistan, Palgrave Macmillan

Journal Articles

-Aleksandr Pikalov (2014) Uzbekistan between the great powers: a balancing act or a multi-vectorial approach?, Central Asian Survey, 33:3, 297-311.

-Alimov, R. (2018). The Shanghai Cooperation Organisation: Its role and place in the development of Eurasia. Journal of Eurasian Studies, 9(2), 114-124. -Allison, R. (2008). “Virtual Regionalism, Regional Structures, and Regime Security in Central Asia.” Central Asian Survey 27 (02): 185–202.

-Álvarez, C. (2015). China-Kazakhstan Energy Relations between 1997 and 2012. Journal of International Affairs,69 (1), 57-VI. -Amineh, M. & G. Yang (2014) Geopolitics of Transnationalization of Chinese National Oil Companies. In Perspectives on Global Development and Technology 13 (5-6) pp. 495-535. -Amineh, M. P., & Yang, G. (2018). China's Geopolitical Economy of Energy Security: A Theoretical and Conceptual Exploration. African and Asian Studies, 17(1-2), 9-39. -Amineh, M., & Van Driel, M. (2018). China’s Statist Energy Relations with Turkmenistan and Kazakhstan. African and Asian Studies, 17(1-2), 63-89. -Aminjonov, F. (2018). Central Asian Gas Exports Dependency. The RUSI Journal, 163(2), 66-77.

122

Master Thesis Dimitrios Psomiadis

-Andrews-Speed Philip & Ma Xin (2009) Shaping China's Energy Policy: actors and processes, Journal of Contemporary China, 18:61, 591-616 -Aris St. (2009), The Shanghai Cooperation Organisation: ‘Tackling the Three Evils’. A Regional Response to Non-traditional Security Challenges or an Anti-Western Bloc?, Europe-Asia Studies, 61:3, 457-482 -Bayulgen, O. (2012), Oil Is Not a Curse: Ownership Structure and Institutions in Soviet Successor States by Pauline Jones Luong and Erika Weinthal. Political Science Quarterly, 127(1), 178-179. -Broadman C.H. (2000), Competition, Corporate Governance, and Regulation in Central Asia, Uzbekistan’s Structural Reform Challenges, Policy Research Working Paper 2331, World Bank

-Cabestan, J. (2013), The Shanghai Cooperation Organization, Central Asia, and the Great Powers, an Introduction. One Bed, Different Dreams? Asian Survey, 53(3), 423-435. -Cao, & Bluth. (2013), Challenges and countermeasures of China’s energy security. Energy Policy, 53(C), 381-388. -Chalmers, A., & Mocker, S. (2017). The end of exceptionalism? Explaining Chinese National Oil Companies’ overseas investments. Review of International Political Economy, 24(1), 119-143. -Chen, & Qin. (2014). The emergence of China's middle class: Social mobility in a rapidly urbanizing economy. Habitat International, 44(C), 528-535. -Chen, S. (2011). Has China's Foreign Energy Quest Enhanced Its Energy Security? The China Quarterly, 207(207), 600-625 -Cheng, J. (2011). The Shanghai Co-operation Organisation: China's Initiative in Regional Institutional Building. Journal of Contemporary Asia, 41(4), 632-656. -Ciută, F. (2010). Conceptual Notes on Energy Security: Total or Banal Security? Security Dialogue, 41(2), 123–144. -Cox, R. W. (1981). Social Forces, States and World Orders: Beyond International Relations Theory. Millennium, 10(2), -Cox, R. W. (1983). Gramsci, Hegemony and International Relations: An Essay in Method. Millennium - Journal of International Studies, 12(2), 162-175. -Dadabaev, T. (2018a). The Chinese Economic Pivot in Central Asia and Its Implications for the Post- Karimov Re-emergence of Uzbekistan. Asian Survey, 58(4), 747-769.

-Dadabaev, T. (2018b). Uzbekistan as Central Asian game changer? Uzbekistan’s foreign policy construction in the post-Karimov era. Asian Journal of Comparative Politics. https://doi.org/10.1177/2057891118775289

-Dave Β. and Kobayashi Υ. (2018), China’s silk road economic belt initiative in Central Asia: economic and security implications, Asia Europe Journal, 16(3), 267-281

123

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-De Haas, M. (2017). Relations of Central Asia with the Shanghai Cooperation Organization and the Collective Security Treaty Organization. The Journal of Slavic Military Studies, 30(1), 1-16.

-Dodds, K. (1998). Political geography I: The globalization of world politics. Progress in Human Geography, 22(4), 595-606. -Dong, K., Sun, R., Li, H., & Jiang, H. (2017). A review of China's energy consumption structure and outlook based on a long-range energy alternatives modeling tool. Petroleum Science, 14(1), 214-227.

-Dwivedi R. (2006), China’s Central Asia Policy in Recent Times, China and Eurasia Forum Quarterly, Volume 4, No. 4 (2006) p. 139-159, Central Asia-Caucasus Institute & Silk Road Studies Program

-Fazendeiro T.B. (2017), Uzbekistan's defensive self-reliance: Karimov's foreign policy legacy, International Affairs, Volume 93, Issue 2, 1 March 2017, Pages 409–427.

-Frost, A. (2009), “The Collective Security Organization, the Shanghai Cooperation Organization, and Russia’s Strategic Goals in Central Asia”, China and Eurasia Forum Quarterly, 7(3): 83-102.

-Gleason G. (2006), The Uzbek Expulsion of U.S. Forces and Realignment in Central Asia, Problems of Post-Communism, vol. 53, no. 2, March/April, pp. 49–60.

-González R.J. F. (2013), The Foreign Concept of the Russian Federation: A Comparative Study, Instituto Espanol de Estudios Estrategicos

-Götz, E. (2017). Putin, the State, and War: The Causes of Russia’s Near Abroad Assertion Revisited. International Studies Review, 19(2), 228-253.

-Haas, M. (2016). War Games of the Shanghai Cooperation Organization and the Collective Security Treaty Organization: Drills on the Move! The Journal of Slavic Military Studies, 29(3), 378-406.

-Haas, M. (2017). Relations of Central Asia with the Shanghai Cooperation Organization and the Collective Security Treaty Organization. Journal of Slavic Military Studies, Vol.30, No. 1, 1-16

-Hiro D. (2009), Inside Central Asia, Overlook Duckworth, Peter Mayer Publishers, Inc.New York & London.

-Hong Yu. (2017). Motivation behind China’s ‘One Belt, One Road’ Initiatives and Establishment of the Asian Infrastructure Investment Bank. Journal of Contemporary China, 26(105), 353-368.

-Hu Bin, (2014), Oil and gas cooperation between China and Central Asia in an environment of political and resource competition, China University of Petroleum (Beijing) and Springer-Verlag Berlin Heidelberg -Ilkhamov Alisher (2007) Neopatrimonialism, interest groups and patronage networks: the impasses of the governance system in Uzbekistan, Central Asian Survey, 26:1, 65-84, DOI: 10.1080/02634930701423491

124

Master Thesis Dimitrios Psomiadis

-Jakobson, L., & Daojiong, Z. (2006). China and the Worldwide Search for Oil Security. Asia-Pacific Review, 13(2), 60-73. -Jiang, J., & Sinton, Jonathan. (2011). Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts. OECD Publishing.

-Jing-Dong Yuan (2010), China's Role in Establishing and Building the Shanghai Cooperation Organization (SCO), Journal of Contemporary China, 19:67, 855-869 -John J. Mearsheimer, "Structural Realism". In Tim Dunne, Milja Kurki, and Steve Smith (eds), International Relations Theories: Discipline and Diversity, 3rd Edition (Oxford: Oxford University Press, 2013), pp. 77-93 - Roberts, J. (2011). -Kathleen Collins (2009) Economic and Security Regionalism among Patrimonial Authoritarian Regimes: The Case of Central Asia, Europe-Asia Studies, 61:2, 249-281 -Kelly, P. (2006). A Critique of Critical Geopolitics. Geopolitics, 11(1), 24-53. -Kaylan, M. (2014). Kremlin values: Putin's strategic conservatism. World Affairs, 177(1), 9-17.

-Kazemi, L. (2003). Domestic Sources of Uzbekistan’s Foreign Policy 1991-Present. Journal of International Affairs 56 (02): 205–216.

-Kong, B. (2011). Governing China’s Energy in the Context of Global Governance. Global Policy, 2(S1), 51-65. -Kuchins C. A and Zevelev A. I. (2012), Russian Foreign Policy: Continuity in Change, The Washington Quarterly, 35:1, 147-161.

-Kurkam Suvanova, Changmin Lee, & Hyoung-Goo Kang. (2016). Will Uzbekistan’s oil and gas industry benefit from international listing? Problems and Perspectives in Management, 14(2), 262–271. https://doi.org/10.21511/ppm.14(2-2).2016.01 -Lai, H., O'Hara, S., & Wysoczanska, K. (2014). Rationale of internationalization of China's national oil companies: Seeking natural resources, strategic assets or sectoral specialization? Asia Pacific Business Review, 21(1), 1-19 -Lakatos A., (2014), The New Game for Energy: Geopolitics of Central Asia, Prague Papers on the History of International Relations, Charles University in Prague, Faculty of Arts, Czech Republic -Lal, Rollie, (2006), Central Asia and Its Asian Neighbors: Security and Commerce at the Crossroads. Santa Monica, CA: RAND Corporation

-Lawrence V.S. and Martin F. M, (2013), Understanding China’s Political System, Congressional Research Service

-Lee, J. (2012). China's Geostrategic Search for Oil. The Washington Quarterly, 35(3), 75-92.

125

Master Thesis Dimitrios Psomiadis

-Lee, Ji-Eun (2010) “Foreign Policy Formation of Authoritarian States in Central Asia since 1991: Non- Institutional Domestic Factors in Kazakhstan and Uzbekistan”, The Korean Journal of International Studies, 50(3): 33-71

-Leung, G. (2011). China's energy security: Perception and reality. Energy Policy, 39(3), 1330-1337. -Leung, G., Cherp, A., Jewell, J., & Wei, Y. (2014). Securitization of energy supply chains in China. Applied Energy, 123, 316-326. -Liao, J. (2014). The Chinese government and the national oil companies (NOCs): Who is the principal? Asia Pacific Business Review, 21(1), 1-16. -Lixia, Y. & Youngho, C. (2015). Shaping China’s Energy Security: The Impact of Domestic Reforms. Energy Policy, 77, 131-139. -Ma, X., & Andrews‐Speed, P. (2006). The Overseas Activities of China's National Oil Companies: Rationale and Outlook. Minerals & Energy - Raw Materials Report, 21(1), 17-30.

-Madiyev Oybek, 2017. “Why have China and Russia become Uzbekistan’s biggest energy partners? Exploring the role of exogenous and endogenous factors,” Cambridge Journal of Eurasian Studies, 2017, 1: #QYJ7IT, https://doi.org/ 10.22261/QYJ7IT -March F. A. (2003) From Leninism to Karimovism: Hegemony, Ideology, and Authoritarian Legitimation, Post-Soviet Affairs, 19:4, 307-336

-March F. Andrew (2003) State ideology and the legitimation of authoritarianism: The case of post-Soviet Uzbekistan 1, Journal of Political Ideologies, 8:2, 209-232 -Markowitz P.L. (2014), Explaining Political Order in Uzbekistan, Uzbekistan Initiative Papers No. 3, Barcelona Centre for International Affairs

-Marquis, C., & Qiao, K. (2018). Waking from Mao’s Dream: Communist Ideological Imprinting and the Internationalization of Entrepreneurial Ventures in China. Administrative Science Quarterly.

-Meidan M. (2016a), The structure of China’s oil industry: Past trends and future prospects, OIES Research Associate. Oxford: The Oxford Institute For Energy Studies -Meidan M. (2016b), China’s 13th Five-Year Plan: Implications for Oil Markets, OIES Research Associate -Meidan, M. (2016a). China’s loans for oil: asset or liability? (OIES Paper: WPM70). Oxford: Oxford Institute For Energy Studies. -Mercille, J. (2008). The radical geopolitics of US foreign policy: Geopolitical and geoeconomic logics of power. Political Geography, 27(5), 570-586. - Milhaupt, C. J., & Zheng, W. (2015). Beyond ownership: State capitalism and the Chinese firm. Georgetown Law Journal, 103(3), 665-722. -Metaxas T. and Kechagia P, (2016), FDI in Central Asia: The case of Uzbekistan, Applied Econometrics and International Development Vol. 16-1

126

Master Thesis Dimitrios Psomiadis

-Milhaupt, C., & Zheng, W. (2015). Beyond ownership: State capitalism and the Chinese firm. Georgetown Law Journal, 103(3), 665–722.

-Missiroli A. (2017), The EU and the World: Player and Policies Post-Lisbon, European Union Institute for Security Studies

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-Oliphant C. (2013), Russia’s role and interests in Central Asia, Saferworld

-Omelicheva Y. M. (2016), Authoritarian legitimation: assessing discourses of legitimacy in Kazakhstan and Uzbekistan, Central Asian Survey, 35:4, 481-500

-Oybek Madiyev. (2017). Why have China and Russia become Uzbekistan’s biggest energy partners? Exploring the role of exogenous and endogenous factors. Cambridge Journal of Eurasian Studies, 1(1).

-Pan G. (2008/2009), A New Diplomatic Model: A Chinese Perspective on the Shanghai Cooperation Organization, Washington Journal of Modern China, 9(1): 55-72

-Paramonov Vladimir, 2014, China’s Economic Presence in Uzbekistan: Realities and Potentials, Uzbekistan Initiative Papers No. 5, Barcelona Centre for International Affairs

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-Rajan Menon. (2003). The New Great Game in Central Asia. Survival, 45(2), 187-204.

-Rakhimov M. (2015), CENTRAL ASIA IN THE CONTEXT OF WESTERN AND RUSSIAN INTERESTS, Centre international de formation européenne, No 375, 140-154

-Rasizade, A. (2003). Entering the old "Great Game" in Central Asia. Orbis, 47(1), 41-58. -Reeves J. (2018), China’s Silk Road Economic Belt Initiative: Network and Influence Formation in Central Asia, Journal of Contemporary China, 27:112, 502-518

-Røseth Tom, (2017) Russia‟s energy relations with China: passing the strategic threshold?, Eurasian Geography and Economics, 58:1, 23-55. -Sauvant, K., & Nolan, M. (2015). China’s Outward Foreign Direct Investment and International Investment Law. Journal of International Economic Law, 18(4), 893-934 -Serik Orazgaliyev. (2017). Competition for pipeline export routes in the Caspian region: The new Great Game of the new Silk Road? Cambridge Journal of Eurasian Studies, 1(1), Cambridge Journal of Eurasian Studies, 01 September 2017, Vol.1(1). -Serik Orazgaliyev. (2017). Competition for pipeline export routes in the Caspian region: The new Great Game of the new Silk Road? Cambridge Journal of Eurasian Studies, Vol.1(1).

-Sevim V.T. and Rozanov A. (2014). Ups and Downs in Foreign Policy of Uzbekistan towards Security Approach of Russia, Khazar Journal of Humanities and Social Sciences Vol 17, № 3,

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Master Thesis Dimitrios Psomiadis

-Tolipov F. (2014), Flexibility or Strategic Confusion? Foreign Policy of Uzbekistan, Uzbekistan Initiative Papers, No. 2, Barcelona Centre for International Affairs

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