The Central Asia Fellowship Papers No

THE CENTRALThe ASIA FCentralELLOWSHIP PAPERS Asia Fellowship NPo. 1a, Octoberpers 2013 No. 1, October 2013 Regional Cooperation in Central Asia: Nurturing from the Ground Up Aitolkyn Kourmanova Aitolkyn Kourmanova is the head of the private consultancy Central Asia Strategic Management Group based in Almaty, Kazakhstan. She specializes in economic and regional issues, risk consult- ing, as well as media and knowledge projects. She was a Hubert Humphrey Fellow in 2011-12, and head of the Central Asia Institute for Economic Strategies from 2007 to 2011, where she launched a popular economic magazine, Vox Populi, and edited a quarterly academic business magazine, Economic Strategies – Central Asia. Aitolkyn holds a bachelor’s degree in international relations and earned her Executive Master of Business Administration degree from École des Hautes Études Commerciales de Paris (HEC Paris). She was a Central Asia Fellow from April to August 2013. THE CENTRAL ASIA FELLOWSHIP PAPERS NO. 1, October 2013 The countries of Central Asia have long been maintain and increase trade dynamics,”1 indi- unable and unwilling to develop regional co- cated a renewed—even if only theoretical— operation. Unwillingness to engage with com- interest of Central Asian elites in regional peting neighbors, inability to address emerg- cooperation. But even more important than ing conflicts around water and land resources, inter-state declarations are grassroots dy- borders or ethnic minorities, and a resulting namics, which will likely drive a more genuine failure to produce any kind of sustainable and powerful demand for regional coopera- regional cooperation platform, should be re- tion. garded primarily as a leadership failure. In- deed, the authoritarian leaders of Central This paper develops three core argu- Asia, in the first stage of post-colonial nation- ments: building, have prioritized insular national 1. Regionalism in Central Asia is one of interests and pursued a narrow definition of the few available instruments to address sovereignty, opposing any kind of suprana- the region’s mounting social and eco- tional authority. In addition, current elites nomic problems. derive significant income from utilizing defi- 2. Regional cooperation is likely to be cient economic structures based on natural driven by bottom-up dynamics rather resources and have been unable to institute than the other way round. structural reforms. 3. New ideas on developing organic regionalism and fostering regional linkag- Two decades after independence the region es will likely be addressed by business remains poorly industrialized, with multiple circles and the next generation of elites. barriers to regional trade, rigid political structures, and an unstable business climate, all of which have failed to attract diversified foreign This paper argues that the countries of the direct investment (FDI). Current economic Central Asia region need to cooperate eco- strategies, mainly based on managing the leg- nomically as this will help to bring tangible acy of Soviet industry and infrastructure, are economic gains to wider groups of the popula- exhausted, and the coming power transfer in tion. It develops three core arguments: 1. Re- Uzbekistan and Kazakhstan is seen as a mo- gionalism in Central Asia is one of the few ment of political fragility that opens the door available instruments to address the region’s to a potentially deeper change in the regimes’ mounting social and economic problems; 2. legitimacy and the intra-elite sharing of re- Regional cooperation is likely to be driven by sources. Meanwhile, the global context is bottom-up dynamics rather than the other changing as well: changing world energy pat- way round; 3. New ideas on developing organ- terns with the shale and fracking revolutions ic regionalism and fostering regional linkages and post-2014 security priorities have made will likely be addressed by business circles the region less important for the West, espe- and the next generation of elites. cially the United States. External actors: allies or adversaries to These developments may impact the way Central Asian regional integration? elites and some social groups in Central Asia perceive the future of regional cooperation. Since the Central Asian countries’ independ- The Kazakhstan-Uzbekistan strategic partner- ence, external actors have been both willingly ship treaty, signed on June 14, 2013, accord- and unwillingly involved in the debate over ing to which the presidents of both countries regional cooperation, and some of them have have indicated that “in the conditions of the continuing world financial and economic cri- 1 sis it is in the interests of both countries to "President Kazakhstana zavershil vizit v Uzbeki- stan", UzDaily, June 15, 2013 http://www.uzdaily.uz/articles-id-16026.htm. 2 THE CENTRAL ASIA FELLOWSHIP PAPERS NO. 1, October 2013 directly participated in fostering it, often with pelling interests in the region.2 With the de- underlying geopolitical agendas that compli- crease of involvement in Afghanistan, post- cate, more than they solve, the issue of re- 2014 American interests will probably focus gional cooperation. again on building democracy and market reforms, but with low political and financial Throughout its history, Central Asia has never direct involvement. A good example of this really displayed political consolidation from evolution is the “new Silk Road” strategy within but, rather, was influenced from the launched in 2011 by State Secretary Hillary outside, being the subject of various con- Clinton, which aims at linking Central Asia quests from the east, south, and north. In with South Asia through Afghanistan’s re- post-Soviet times, the countries of Central gional integration process. Seen as a way to Asia have been subject to complex global geo- indirectly facilitate trade liberalization, so far political forces, primarily with regard to ener- this strategy has lacked the necessary finan- gy and post-9/11security, which has arguably cial resources and other mechanisms to im- drawn the region’s states further apart from plement what could be bold vision. each other, instilling highly complex external vectors into their political agendas. But with For its part, meanwhile, Russia's interests in Western energy markets becoming targeted the region mainly serve to prevent Central more toward unconventional resources, and Asian unity. First, Russia interprets Central the international community’s growing disin- Asian regional integration as subordinate to a terest in Afghanistan’s future, the region is larger Eurasian regionalization under its starting to realize that the conventional “Great leadership. As Uzbekistan and Turkmenistan Game” is probably over, and that, instead, reject the latter, any Central Asian integration regional games will likely become more the project comes up against the relationship with order of the day. These will involve mostly Moscow. Second, Russia’s economic integra- Russia and China, as well as “second-order” tion model is not based on purely economic neighbors, whether close or more distant, grounds, but has political importance in terms such as Iran, the Gulf countries, and South of recognizing Moscow’s leading role. Third, Asian nations. Russia does not offer any clear modernization strategies for the economies of Central Asia, With Western energy markets becoming but it also suggests a mere update of the old targeted more toward unconventional Soviet linkages between the Central Asian resources and the international commu- resource base and Russian processing facili- nity’s growing disinterest in Afghanistan’s ties. This results in less imported technology future, the region is starting to realize from the more technologically advanced Eu- that the conventional “Great Game” is ropean Union and other countries, thus incur- probably over, and that, instead, regional ring a loss in productivity gains in the long games will likely become more the order run. of the day. These will involve mostly Rus- sia and China, as well as “second-order” A suggestion of the head of Russia’s State An- neighbors, whether close or more distant, ti-Drug Committee, Viktor Ivanov, to industri- such as Iran, the Gulf countries, and South alize the region and create jobs by setting up a Asian nations. Central Asia Development Corporation— which would finance and implement a num- The United States has never had a close en- ber of projects in Central Asia in the fields of gagement strategy for Central Asia nor com- energy, food security, construction of new 2 Boris Rumer, ed. Central Asia at the End of the Transition (Armonk-London: M.E. Sharpe, 2005), 29. 3 THE CENTRAL ASIA FELLOWSHIP PAPERS NO. 1, October 2013 industrial enterprises, and training of new backed Customs Union, which seems to be a cadres—could in theory have a modernization closed regional bloc and, as such, is more au- component,3 but it needs a multi-million dol- tarkic than cooperative towards the rest of lar investment which Russia is probably una- the world.5 ble to provide. Moreover, as Beijing is aware of its “neo- That said, Russia is also facing drastic domes- imperial image of a hunter for natural re- tic changes that could impact the future of any sources,” it tries to deflect from such images Eurasian integration. Central Asia is mostly by investing in community development, di- seen as an economic burden by Russia’s new plomacy, soft power, and cultural and intellec- elites. According to Rajan Menon, “even the tual exchanges, which

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