MARLENE Laruelle STRATEGIC editor NODES Central Asia Program REGIONAL Institute for European, Russian and Eurasian Studies and INTERACTIONS Elliott School of International SOUTHERN A airs The George Washington University in EURASIA STRATEGIC NODES AND REGIONAL INTERACTIONS IN SOUTHERN EURASIA Marlene Laruelle, editor Washington, D.C.: The George Washington University, Central Asia Program, 2017 www.centralasiaprogram.org The volume provides academics and policy makers with an introduction to current trends in Southern Eurasia. At the collapse of the Soviet Union, Western pundits celebrated the dramatic reshaping of regional interactions in Southern Eurasia to come, with the hope of seeing Russia lose its influence and be bypassed by growing cooperation between the states of the South Caucasus and Central Asia, as well as the arrival of new external powers. This hope has partially failed to come to fruition, as regional cooperation between the South Caucasus and Central Asia never started up, and cooperation within these regions has been hampered by several sovereignty-related and competition issues. However, a quarter of century after the disappearance of the Soviet Union, strategic nodes in Southern Eurasia have indeed deeply evolved. Some bottom-up dynamics seem to have taken shape and the massive involvement of China has been changing the long-accepted conditions in the wider region. Islamic finance has also emerged, while external actors such as Turkey, Iran, the Gulf countries and Pakistan have progressively structured their engagement with both Central Asia and South Caucasus. Another key node is centered in and around Mongolia, whose economic boom and strategic readjustments may help to shape the future of Northeast Asia. Central Asia Program Institute for European, Russian and Eurasian Studies Elliott School of International Affairs The George Washington University For more on the Central Asia Program, please visit: www.centralasiaprogram.org. © 2017 Central Asia Program, The George Washington University. All Rights Reserved. Cover design: Yaroslav Kozhevnikov. No part of this publication may be reproduced or transmitted in any form by any means, electronic or mechanical, including photocopy, or any information storage and retrieval system, without permission from the Central Asia Program. ISBN 978-0-9988143-2-2 Washington, D.C.: The George Washington University, Central Asia Program, 2017 CONTENTS PART I. CENTRAL ASIA AND THE CASPIAN REGION Regional Cooperation in Central Asia: Nurturing from the Ground Up Aitolkyn Kourmanova 1 Connecting Entrepreneurs in Central Asia Aitolkyn Kourmanova 10 Discussing Eurasianism and Eurasian Integration within the Azerbaijani Context Farhad Aliyev 23 Caspian Triangles: Azerbaijan’s Trilateral Diplomacy—A New Approach for a New Era Richard Weitz 26 PART II. THE ISLAMIC FINANCE LINK The Development Space(s) of Non-OECD Aid Donors in Southern Eurasia: A Look at the Islamic Development Bank Bruno De Cordier 37 Islamic Finance in Central Asia: A Religious or Political Influence? Sebastien Peyrouse 43 The Politics of Islamic Finance in Central Asia and South Caucasus Fuad Aliyev 48 PART III. THE WIDER REGION’S IMPACT: TURKEY, IRAN, PAKISTAN, GULF COUNTRIES The AKP/Gülen Crisis in Turkey: Consequences for Central Asia and the Caucasus Bayram Balci 51 The United Arab Emirates as an Alternative Trade and Investment Partner in Central Asia Sebastien Peyrouse 55 Pakistan and the GCC Countries: Complementarity, or a Center-Periphery Tale? Bruno De Cordier 59 When Tehran Looks at Its Regional Environment. Iranian Think Tanks and Their Analysis of Central Asia Clément Therme 68 Russia, Iran, and Central Asia: Impact of the U.S. Withdrawal from Afghanistan Mark N. Katz 76 PART IV. MONGOLIA, THE OTHER EURASIA Landlocked Assertiveness: Mongolia’s Restructured Realism in a More Complex World Mathieu Boulègue 79 More Than a Boon: Mongolia’s Troubled Mine Sector Mathieu Boulègue 85 Unkept Human Security Promises in Developing Countries: The Case of Mongolia Mendee Jargalsaikhan 89 Finally a New Era in NATO-Mongolia Relations Mendee Jargalsaikhan 101 Factoring Mongolia’s Non-Membership in the Shanghai Cooperation Organization Mendee Jargalsaikhan 105 Lingering Anti-Sinic Sentiments in Post-Communist Mongolia: Why Dislike the Chinese? Mendee Jargalsaikhan 109 About the Central Asia Program (CAP) 120 PART I. CENTRAL ASIA AND THE CASPIAN REGION Regional Cooperation in Central Asia: Nurturing from the Ground Up financial and economic crisis it is in the interests of both Aitolkyn Kourmanova1 (2013) countries to maintain and increase trade dynamics,”2 indicated a renewed—even if only theoretical—interest of Central Asian elites in regional cooperation. But even The countries of Central Asia have long been unable and more important than inter-state declarations are grassroots unwilling to develop regional cooperation. Unwillingness dynamics, which will likely drive a more genuine and to engage with competing neighbors, inability to address powerful demand for regional cooperation. emerging conflicts around water and land resources, This paper argues that the countries of the Central borders or ethnic minorities, and a resulting failure to Asia region need to cooperate economically as this will produce any kind of sustainable regional cooperation help to bring tangible economic gains to wider groups platform, should be regarded primarily as a leadership of the population. It develops three core arguments: 1. failure. Indeed, the authoritarian leaders of Central Regionalism in Central Asia is one of the few available Asia, in the first stage of post-colonial nation-building, instruments to address the region’s mounting social and have prioritized insular national interests and pursued a economic problems; 2. Regional cooperation is likely to be narrow definition of sovereignty, opposing any kind of driven by bottom-up dynamics rather than the other way supranational authority. In addition, current elites derive round; 3. New ideas on developing organic regionalism significant income from utilizing deficient economic and fostering regional linkages will likely be addressed by structures based on natural resources and have been business circles and the next generation of elites. unable to institute structural reforms. Two decades after independence the region remains External Actors: Allies or Adversaries to Central poorly industrialized, with multiple barriers to regional Asian Regional Integration? trade, rigid political structures, and an unstable business climate, all of which have failed to attract diversified Since the Central Asian countries’ independence, external foreign direct investment (FDI). Current economic actors have been both willingly and unwillingly involved strategies, mainly based on managing the legacy of Soviet in the debate over regional cooperation, and some of industry and infrastructure, are exhausted, and the them have directly participated in fostering it, often with coming power transfer in Uzbekistan and Kazakhstan is underlying geopolitical agendas that complicate, more seen as a moment of political fragility that opens the door than they solve, the issue of regional cooperation. to a potentially deeper change in the regimes’ legitimacy Throughout its history, Central Asia has never really and the intra-elite sharing of resources. Meanwhile, the displayed political consolidation from within but, rather, global context is changing as well: changing world energy was influenced from the outside, being the subject of patterns with the shale and fracking revolutions and various conquests from the east, south, and north. In post-2014 security priorities have made the region less post-Soviet times, the countries of Central Asia have been important for the West, especially the United States. subject to complex global geopolitical forces, primarily These developments may impact the way elites and with regard to energy and post-9/11 security, which has some social groups in Central Asia perceive the future arguably drawn the region’s states further apart from of regional cooperation. The Kazakhstan-Uzbekistan each other, instilling highly complex external vectors strategic partnership treaty, signed on June 14, 2013, into their political agendas. But with Western energy according to which the presidents of both countries have markets becoming targeted more toward unconventional indicated that “in the conditions of the continuing world resources, and the international community’s growing 1 GW’s Central Asia Program Fellow, now Central Asia Program Assistant, and Chief Editor of Central Asian Analytical Network. 2 “President Kazakhstana zavershil vizit v Uzbekistan,” UzDaily, June 15, 2013 http://www.uzdaily.uz/articles-id-16026.htm. 1 Regional Cooperation in Central Asia: Nurturing from the Ground Up disinterest in Afghanistan’s future, the region is starting and training of new cadres—could in theory have a to realize that the conventional “Great Game” is probably modernization component,4 but it needs a multi-million over, and that, instead, regional games will likely become dollar investment which Russia is probably unable to more the order of the day. These will involve mostly Russia provide. and China, as well as “second-order” neighbors, whether That said, Russia is also facing drastic domestic close or more distant, such as Iran, the Gulf countries, and changes that could impact the future of any Eurasian South Asian nations. integration. Central Asia is mostly seen as an economic