1 Analysis from the East-West Center China and Central Asia’s Volatile Mix: Energy, Trade, and Ethnic Relations JAMES P. DORIAN BRETT H. WIGDORTZ DRU C. GLADNEY ISSUES Analysis from the East-West Center SUMMARY Reports of ethnic separatist violence in China are focusing renewed No. 31 May 1997 attention on Xinjiang province, an area famous as the site of the ancient “Silk The U.S. Congress established the East-West Center in 1960 to Route.” The recent clashes result in part from efforts by China and the five fledg- foster mutual understanding and cooperation among the govern- ling republics of Central Asia to promote economic and political ties. Central Asia ments and peoples of the Asia Pacific region, including the United seeks a counterweight to continuing Russian influence. China, whose northwest- States. Funding for the Center comes from the U.S. government ern Xinjiang province borders Central Asia and contains large numbers of with additional support provided by private agencies, individuals, Muslims, wants the assurance of Central Asian leaders that they will not support corporations, and Asian and Pacific governments. separatist movements. Both want markets for their exports, including vast, largely The AsiaPacific Issues series contributes to the Center’s role as undeveloped oil, gas, and coal reserves. China also seeks new sources of energy. a neutral forum for discussion of issues of regional concern. The But increased investment and cross-border trade are producing more than just views expressed are those of the author and not necessarily those economic development: links between Muslims in Xinjiang and those in Central Publishedof the Center. with the support of the Hawaii Pacific Rim Society Asia are being reestablished and, within Xinjiang, the uneven benefits of develop- ment are aggravating rivalries between local Muslims and the large Han popula- tion (China’s official majority nationality). The increasing political unrest is threat- ening the region’s promising energy and economic development. 2 Analysis from the East-West Center Situated in the extreme northwest corner of China, monwealth of Independent States’ (CIS) crude refin- the area now known as Xinjiang Uyghur Autono- ery capacity is in Russia. Not wanting to loosen its mous Region has long been famous as the site of the grip on the region’s oil, Russia has moved to exert ancient Silk Route and other East-West trading control over large resource projects in Central Asia routes. Lately, Xinjiang is in the spotlight for a dif- and elsewhere. A high-stakes power struggle is under ferent reason: increasingly frequent accounts of in- way between Russia, Turkey, and Iran, with each terethnic violence. country vying for rights to transport oil output from Xinjiang is China’s largest and most ethnically Azerbaijan and Kazakhstan. Russia is also insisting diverse region, with 47 different ethnic groups dis- on joint development of the huge oil and gas reserves Xinjiang is the last persed across 617,760 square miles. Its per capita in the Caspian Sea which some countries feel they Muslim region gross domestic product of US$598 makes it one of are entitled to develop independently. under communist the least developed areas in China. The region, how- Russia’s efforts to assert authority over the “near ever, has substantial, largely undeveloped, oil, gas, abroad” extend beyond energy dependency and in- control and coal resources, as well as abundant gold ore. clude military, economic, and political measures. Ev- Thanks to Chinese and foreign investment, the area ery former Soviet republic, except for Azerbaijan and is now experiencing rapid growth.1 The capital city, the Baltic states, has permitted a Russian military Urumqi, is prospering, with 80 new skyscrapers built presence on its soil. Azerbaijan, however, may soon in the past 15 years. The boom in Xinjiang is partly allow Russia to establish two military bases on its the result of China’s ambitious Eighth Five-Year territory, as well as locate troops along its southern Plan (1991–1995), which targeted western energy border with Iran. resources for development. The Soviet Union, in contrast, made little effort to Loosening Russia’s grip. Russia is not alone in its in- develop the enormous energy resources of the five na- terest in the Central Asian republics. To the south, tions of Central Asia (Kazakhstan, Uzbekistan, Turk- Turkey promotes itself as a secular model by empha- menistan, Tajikistan, and Kyrgyzstan) which it ruled sizing its ethnic and linguistic links with most of the until 1991. As a result, many of these republics export countries. It argues that it has successfully managed mostly agricultural products such as cotton and are the transition from a command economy to the free dependent upon imported energy and minerals. The market system that Central Asia is attempting. Iran republics taken together contain about seven billion stresses its Islamic path and ethnic ties and presents barrels of proven oil reserves and at least 236.6 trillion its northern region as an ideal market for Central cubic feet of natural gas reserves. Turkmenistan’s gas re- Asian exports, especially oil. Pakistan also emphasizes serves are estimated to be the world’s third largest, after historical and ethnic relationships. India hopes to Russia and Iran. Like Xinjiang, these nations now view build upon its long-standing ties through trade and their resources as key to long-term economic growth, contributions to infrastructure development. and are taking steps to woo foreign investors and in- The Central Asian countries are also establishing crease international trade. ties both outside of the region and among them- selves. Kazakhstan and Kyrgyzstan have joined Russian Domination of Central Asia NATO’s “Partnership for Peace,” allowing military and political cooperation without security guaran- Several years after the collapse of the Soviet Union, tees. All of the Central Asian republics are members Russia still dominates its independent communist of the London-based European Bank for Recon- neighbors both economically and politically. Nearly struction and Development (EBRD). Kazakhstan, three-fourths of the former Soviet Union’s extensive Kyrgyzstan, and Uzbekistan are all members of the pipeline network for crude oil, oil product, and gas Asian Development Bank, while Tajikistan is cur- lies in Russia. Belarus, Georgia, Lithuania, Ukraine, rently seeking membership. The two largest repub- and Uzbekistan remain largely dependent on Russia lics, Kazakhstan and Uzbekistan, along with for crude oil supplies. And 65.7 percent of the Com- 3 Analysis from the East-West Center Kyrgyzstan, have formed an economic and defense products to Kazakhstan, as well as to Uzbekistan, union. And in April 1997, Russia, China, Kazakh- Kyrgyzstan, Russia, and Ukraine. Increased eco- stan, Kyrgyzstan, and Tajikistan reached an agree- nomic cooperation with China is providing Central ment in Moscow calling for a reduction of military Asia with additional options for markets, trade forces along the countries’ common border and routes, and technical assistance. long-term joint coordination of activities. Ethnic ties and tensions. Cross-border ethnic ties China as a Counterweight to Russia and interethnic relations within Xinjiang have tre- mendous consequences for development in the re- China is an important competitor for influence in gion, which has a history of ethnic migrations and Central Asia and is expected to serve as a counter- conflicts. Muslims comprise nearly 60 percent of weight to Russia. Calling for a new interregional Xinjiang’s population, and most of them are Uyghur. “Silk Route,” China is already constructing such a The Uyghurs are Turkic and as such share a common link with rails and pipelines. Trade between Xinjiang Islamic, linguistic, and pastoralist heritage with the and the Central Asian republics has grown rapidly, peoples of the Central Asian states. Turkic national- reaching US$775 million in 1996, and the number ists proclaimed an “East Turkestan Republic” in of Chinese-Kazakh joint ventures continues to rise, Kashgar, China, in 1933, and another one in Yining, now approaching 200. Xinjiang exports a variety of China, in 1944.2 Both republics were short lived. 0 500 km BELARUS 0 500 Mi RUSSIA RUSSIA MONGOLIA UKRAINE KAZAKHSTAN Lake Balkhash Caspian Aral Sea Sea Urumqi Almaty Yining Black Sea GEORGIA KYRGYZSTAN Xinjiang Kara Beijing ARMENIA AZERBAIJAN UZBEKISTAN Baren Gulf Osh TURKEY TURKMENISTAN TAJIKISTAN Kashgar CHINA CYPRUS SYRIA Qinghai KASHMIR LEBANON IRAQ IRAN AFGHANISTAN Med. Sea ISRAEL JORDAN Tibet (Xizang) PAKISTAN KUWAIT P NEPAL e rs ia n G BHUTAN u lf SAUDI ARABIA QATAR INDIA Red Gulf of Oman BANGLADESH EGYPT Sea U. A. E. OMAN Central Asian republics, Xinjiang, China, and neighboring countries 4 Analysis from the East-West Center The Uyghurs and other Turkic groups in the re- estimated size of the Basin’s reserves. Ten years ago, gion are also closer culturally and linguistically to estimates put these at 482 billion barrels, “among their Central Asian neighbors than they are to the the largest oil bearing areas in Asia.”5 Today, even Han Chinese. The Han (the official majority nation- the president of China National Petroleum Corpora- ality of China), are also relatively recent immigrants tion admits that “the expected big discovery has not to Xinjiang. The beginning of this century marked [been] met yet,”6 with known reserves at only 1.5 an enormous movement of Russian and Han Chi- billion barrels. nese settlers to outlying Central Asian regions. From The second factor is the region’s remoteness and 1949 to 1979, China sent Han professionals to lack of a solid transportation system to move the oil Xinjiang to help “open the Northwest.” In 1990, es- to market. timates put the Han Chinese at 38 percent of Xin- The third factor is China’s retention of the best jiang’s population, up from five percent in 1949.