Water, water everywhere

Aggravation of the water and energy problem (WEP) in Central Asia in the 1990s-2000s is the result of the transition from one energy and water exchange system, created in the Soviet time under the control from Moscow, to new relations in this sector. Moreover, these relations are formed spontaneously, depending on the current economic or political circumstances, without any common and generally recognized concept of the future architecture of the water-energy system of the region.

Aggravation of the water and energy problem (WEP) in Central Asia in the 1990s-2000s is the result of the transition from one energy and water exchange system, created in the Soviet time under the control from Moscow, to new relations in this sector. Moreover, these relations are formed spontaneously, depending on the current economic or political circumstances, without any common and generally recognized concept of the future architecture of the water-energy system of the region.

The WEP has several aspects:

Fragmentation of the Unified Energy System (UES) of Central Asia.

As a result of the transition to the market prices for fossil fuel, on the one hand, and the ambition to fully implement the hydro-energy potential, on the other hand, the upstream states of the Amu-Darya and Syr-Darya Basins (Kyrgyzstan and Tajikistan) set about changing the operation mode of water-energy facilities from irrigative to energy-based, which was not accepted by the downstream states (first of all, Uzbekistan, and also Kazakhstan and Turkmenistan). The system of the water and energy, including power energy, exchange was upset. In 1990-2006 the loads in UES power grids grew up by 5-6 times without any renovation of the infrastructure. Kyrgyzstan and Tajikistan had to pay for transit services. Pleading the necessity for uninterrupted operation of the national power grids and debts under transit payments, Turkmenistan, Kazakhstan and Uzbekistan announced their resignation from the Unified Energy System of Central Asia (CA UES). Following Uzbekistan’s resignation, first, a substantial part of consumers in Kyrgyzstan and Tajikistan found themselves cut off from the generating powers in these countries, and second, it became impossible to transit electric power to these countries from Turkmenistan. As a result, today’s energy exchange volume makes 10% as compared with the 1990 level [1].

Ineffectiveness of use of electric power and water, deterioration of the transport infrastructure, low tariff rates and corruption.

The effects of the climate change and deglaciation may become the key factor of the problem in the mid-term outlook.

By 2050 the river flow capacity may go down by 10-15% in the Amu-Darya Basin and by 6-10% in the Syr-Darya Basin [2}.

The complex of water-energy problems in Central Asia is not unique - there exist examples of how similar issues have been resolved in different regions worldwide. One of the key problems of Central Asia is a low level of economic cooperation and the lack of ability to come to an agreement, primarily, on the level of the leaders of the region’s states. Among political aspects of the “transition period” that influence the prospects of negotiations for solving the WEP and integration in the electric power industry, the following aspects can be singled out:

• Establishment of independent states in the conditions of the escalation of external and internal threats, susceptibility of states and urge to get maximum gains from natural resources within a shortest period of time;
• Ideologization and mythologization of the problem, when turning to a compromise, may lead to the crisis of power, while, on the other hand, the problem of economic management in the water-energy sector acquires ethnic, geopolitical and other dimensions;
• Absolutization of the notions of “sovereignty” and “independence”, including to the extent of isolationism. In the region where the economic management inherently implies close interstate cooperation, the notions of “independence” and “sovereignty” are superficially interpreted as “self-sustainability” and full autonomy in decision-making. As a result, implementation of projects is planned without considering interests of the neighboring states.
• Absence of a universally recognized leader or controlling center, lack of ability to reach agreements and, consequently, no common approaches to solving the WEP;
• Inconsistency of integration projects with the perception of the “real” interests by the political and economic elites.

Photo: Fred Dufour/AFP

All these aspects are inherent and related to the history of the region, its social and political development. Every situation, which, as a rule, was critical, imposed the quickest solutions that did not contribute as such to solving the regional water-energy problem. As a result, much has been done: there are active donors, organizations are set up and forums are organized, there is cooperation on the local level, yet, the key problem remains unsettled and interstate conflicts are only aggravating. There are no major investments in the water-energy sector and no large-scale comprehensive projects in the region.

Ways to solve the problem

We can single out three basic approaches to solving the water-energy problem and ensuring water and energy security, which have been put in practice, to one extent or another, in the recent years.

The first approach is creation of interstate or integration mechanisms aiming either at adapting the Soviet heritage or at uniting the region’s states on other bases. The main mechanism for the joint management of water resources could have become the Interstate Commission for Water Coordination (ICWC), which was created in 1992 and now is incorporated in the International Fund for Saving the Aral Sea. The Commission was intended to maintain the system of relations built in the Soviet time and to adapt it step by step to the new environment. But the fast-growing disaccord between the interests of its members considerably limited efficiency of the ICWC. The functions of the joint UES management were vested with the Coordination Dispatch Center “Energy” created in 1992.

Integration associations in the region, both with and without Russia’s participation, proved to be ineffective, either. EurAsEc cannot be regarded yet as an efficient instrument because the key state – Uzbekistan – is not participating in its work and Russia has displayed no activity so far. For the moment, EurAsEc remains a discussion forum without any leverage over the region’s states.

The second approach is ensuring full independence, self-sustainability and security in the water or energy sectors. This is the approach pursued by the region’s states today. On the one hand, it allows a single country to solve its immediate problems, on the other hand, it aggravates the problem in the mid- and long-term outlooks. This approach seems, first of all, to be costly (there are projects under the implementation that would have been unnecessary in a different political environment: construction of new power transmission lines connecting the north and the south of Kyrgyzstan and Tajikistan; construction of water storages in Uzbekistan and Turkmenistan), and, secondly, it aggravates environmental problems (new water storages reduce the water flow to the Aral Sea, add to fast evaporation of water, dust deposition on glaciers, etc.); third, it appears to be conflictogenic (construction of the Ragunskaya Hydro Power Station and other large hydro power stations aimed at full self-sustainability and development of the export potential conflicts with the interests of the water security of the downstream states).

For example, Tajikistan projects to construct the Rogunskaya Hydro Power Station with a 335 meters high dam, which will enable it to control the flow of the Vakhsh River, whereas Uzbekistan agrees to a 285 meters high dam and is absolutely opposed to building a higher dam. In certain periods the water situation is critically important. Both parties agreed to an international survey under the auspices of the World Bank, which is currently in progress.

The third approach is looking for variants of harmonization of interests, which would accord with the interests of the region’s states and with the present situation. For this approach to become effective, it is necessary that external participants join in as investors, donors and electric power importers. Apart from ensuring the energy, water and food security of each of Middle Asia’s countries, it is about interests of external players, in particular:

• development of the regional cooperation for re-building Afghanistan (among the concerned parties there are foreign investors and international donors, USA and other countries of the international coalition)
• solving the problem of electric power shortage in particular periods in Pakistan, India, Iran, China, etc.
• building a common electric power market within the Common Economic Space, EurAsEc, CIS (Russia).

As the sector is a key one for the region, the players that will manage to domineer in it will for long maintain their positions in the countries of Middle Asia and neighboring regions.

Exporting electric power is an instrument that is used not only to satisfy interests of exporters and importers, but also becomes one of the keys to solving the water-energy problem. Among potential electric power importers are countries located both north- and southwards of Kyrgyzstan and Tajikistan.

Afghanistan and Pakistan, CASA-1000 project. CASA-1000 project implies creating a system of transmitting electricity from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan in 2010-2013. Once implemented, the project is assumed to make up for 5-7 bln kWh of the electric power shortage in Afghanistan and Pakistan. CASA – 1000 will count for solving the WEP when selling electricity in spring and summer when the electric power consumption in Southern Asia usually grows. Preliminary works have been carried out at the expense of the World Bank and the Asian Development Bank; right now investors are being selected.

Iran is one of the countries most concerned in the development of a common electric power market in the region. Teheran has been advocating this position for many years thinking it to be advantageous both economically and politically.

Photo: Igor Kirpatovsky
Syr-Darya River

Iran made an attempt to create a common power market within the framework of the Economic Cooperation Organization established at its initiative. In 2001-2006 the Islamic Development Bank invested in exploring the possibilities of exporting electric power from Central Asia to Afghanistan, Pakistan and Iran. The main project in which Iran participates is the construction of Sangtudinskaya Hydro Power Station-2 with a capacity of 220 mW on the Vakhsh River in Tajikistan.

China. So far China is not active on the hydro-power market, considering the contradictions in the region and Russia’s position. However, a part of China’s Western regions regularly suffer shortages of electric power. China is advancing its investments in the electric power industry of the region, the local power and electric grids; first and foremost, it regards Kyrgyzstan. In particular, China participates in the construction of the Datka 500/220 kv sub-station and the Datka-Kemin line (500 kv), which, on the one hand, increases the reliability of electric power supply of the northern part of Kyrgyzstan, and, on the other hand, is a condition for development of Kyrgyzstan’s export potential, especially with the extension of the line to Alamaty in the north and to Khujand in the south.

It should be taken into account that exporting electric power will be important for solving the WEP if supplies are actually made in spring and summer. Or else, the regional players (Uzbekistan, Tajikistan and Kyrgyzstan) should agree on and build a system of dams and water storages allowing releases in winter and saving water for spring and summer irrigation.

Russia’s interests

Russia’s interests in the water-energy sector in Central Asia have not been laid down anywhere, however they can be deduced from the two variants of understanding Russia’s objectives in the region.

If the area of Russia’s interests is limited to the issues of security and stability, then in the context of water-energy problems it would mean that the topical issues for Moscow are:

• Maintaining the energy and water security in the region in any scenario of the development of the political situation in Middle Asia and Afghanistan;
• Excluding the situation when water and energy contradictions in the region are used for the external players to give practical effect to their geopolitical plans on the divide et impera principle;
• Progressive development of relationships with all the region’s states.

At the same time, if the region’s states are regarded not only as threat sources but also as potential members of the Customs Union, the Common European Space and the Eurasian Union, which is conveyed in V.V. Putin’s program articles, then it is necessary to expand the energy, transport and water infrastructure in the interests of this common space and to ensure coordination of the economic policy in Afghanistan and Southern Asia.

In this case when making Russia’s policy with respect to the WEP the following aspects must be taken into consideration: shortage of electric power in Russia itself and prospects of creating a common electric power market in Eurasia; development of the aluminum and other industry branches in the region’s states with Russia’s participation; strengthening the economic presence in Afghanistan and Southern Asia.

Today there is no common vision of how active should be Russia’s participation in the implementation of hydro-energy projects and export of electric power southwards. Among the “participation risks” are weak legal framework and a constant threat of foreign ownership, as well as obvious politico-military risks.

But non-participation of Russia has its dangers, too. First, the energy and water infrastructure, which is the foundation of Central Asia’s economy, may once and for all go into hands of other external players. Second, it is the restoration of the water-energy system that should give rise to the development of all other branches of industry and agriculture. Otherwise, its final collapse will depress the economy and lead to all the consequences, negative for Russia, relating to migration, advancement of extremism, aggravation of the drug problem, etc.

It should be noted that in the common opinion of Central Asian and Western experts Moscow has distanced itself from the WEP. But it was on the money of Russia and Russian energy companies that the real sector-related projects have been implemented: construction of the Sangtudinskaya Hydro Power Station-1 (launched in 2009, 670 mW, Tajikistan), launch of the first unit of the Kambaratinskaya Hydro Power Station-2 (2010, 120 mW, Kyrgyzstan). Right now negotiations on the construction of the Kambaratinskaya Hydro Power Station-1 and others are under way.

International investors and donors policy

A number of international investors and donors, including development banks (the World Bank Group, the Asian Development Bank, the European Bank of Reconstruction and Development, the Islamic Development Bank, the Eurasian Development Bank, and others), development agencies (from the USA, Germany, Sweden, Japan and other countries), and international institutions (the UN Development Programme), are implementing projects in the water-energy sector of Central Asia.

States that could invest in the development of the water-energy complex are constrained by political strings whereas international financial institutions, before sponsoring a project, need to make sure that concerned parties adhere to the principles and rules resting on the international water law, which is not the case in today’s Central Asia. [3]

As a result, so far international financial institutions and donors either maintain the existing mechanisms of harmonization of interests and develop projects on creating a common market in Central and Southern Asia (as a rule, without Russia’s participation), or finance and implement local projects. These activities create a foundation for solving complex problems, given adequacy of the political dialogue. Core lines of activities of international institutions are shown in Table 1.

Experts of the Eurasian Development Bank initiate legal steps to protect the projects under implementation (for example, the Eurasian Development Bank’s proposal for developing a charter on the environmentally friendly use of water resources), and others.

Potential of Russia’s influence in the water-energy sector

On the one hand, Russia possesses “power” levers as well as investment opportunities. On the other hand, it lacks more delicate instruments. For example, now the role of the arbitrator in deciding on the construction of the Rogunskaya Hydro Power Station has passed, in fact, to the World Bank because the position of investors to the project depends on the results of the bank’s survey. According to the opinion, widely spread both in Tajikistan and Uzbekistan, the survey is a tool manipulated by the USA and the survey results will depend on the position of this country.

Today Russia has neither wish nor resources to independently solve or control the solution of any problems of Central Asia. At the same time, there is growing recognition of the fact that it is no use opposing the threats coming from the region if its social and economic, political and environmental situation continues changing for the worse. Behind the logic of the geopolitical game and security assurance, it is important to see also the potential of Central Asia rich in natural resources as well as in talents.

Russia will have to work out a deliberate integrated policy concerning the region’s development. In the context of the water-energy problem, such an approach would imply:

• Full (investment, HR, technical, etc.) participation in the development of the infrastructure ensuring the energy security of Tajikistan and Kyrgyzstan, regardless of the situation in Afghanistan.
• Initiation of partnership with European and other donors regarding Central Asia (or the water-energy problem). Using the existing international cooperation mechanisms or creating new ones.
• Encouraging the region’s states towards closer cooperation, consolidation of confidence, including signing and ratification of international agreements in the field of transboundary use of water resources by all countries of the region (the Convention on the Protection and Use of Transboundary Watercourses and International Lakes (1992 Helsinki Convention) and the Convention on the Law of the Non-Navigational Uses of International Watercourses (1997). Ensuring free access to the international survey for all participants.

The water-energy problem is one of the key issues in Central Asia. Whether the region will be a source of opportunities for Russia or will it remain only a source of threats will depend on the solution of the problem. Apart from technical and economic aspects, the WEP solution involves exploration of the entire complex of the problems of Central Asia’s development and search for new paths towards harmonization of interests.

1. Presentation. World Bank. Central Asia Energy Water Development Problem. Bishkek. Workshop Regional/trans-boundary co-operation in energy. 19 December 2011.

2. S.R. Ibatullin, V.A. Yasinsky, A.P. Mironenkov. Influence of Climate Change on Water Resources in Central Asia. Industry Survey. Eurasian Development Bank. 2009. P.5

3. 1997 UN Convention on the Law of the Non-Navigational Uses of International Watercourses (among the region’s states only Uzbekistan is a convention party), UN EEC Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Helsinki, 1992, participating states are Kazakhstan and Uzbekistan).

4. CAREC member-countries: Afghanistan, Azerbaijan, the People’s Republic of China, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan. Multilateral institutions – the Asian Development Bank, the European Bank of Reconstruction and Development, the International Monetary Fund, the Islamic Development Bank, the UN Development Programme and the World Bank – participate in the program embracing projects in the energy, transport and commercial sectors.