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Central Asia: Energy Meadow – Dr. Rico Isaacs Interview

February 18, 2013
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Dr. Rico Isaacs is an expert in Central Asian politics and a senior lecturer in International Studies at the Oxford Brookes University. His research concerns the political sociology of Central Asia in particular the interaction between formal and informal politics, institutions and practices and the discursive construction and interpretation of power and authority in the region. Dr Isaacs is the author of Party System Formation in Kazakhstan: Between Formal and Informal Politics (2011, Routledge) and has published numerous articles in journals such as Democratization, Europe-Asia Studies, Electoral Studies and Studies in Ethnicity and Nationalism. Rico has undertaken media work commenting on Central Asian politics and often consults companies on political risk in the region. 

 

 

 

 

What are the main political, military and economic interests of the Russian Federation in Central Asia? Do these interests align or conflict with the regional interests and how have they affected relations?

 

The main interests, diverge in a number of ways, all have historical foundations as Russia has a strong and evident historical position in the region.

 

Firstly, there are large groups of ethnic Russians in Central Asia and in particular Kazakhstan – with around 34% of the overall population claiming to be Russian, which is quite a high figure. So the Russian population in Central Asia is the key political interest of Russia, with the other interest being of course energy. The integrated transportation system for oil and gas, which existed since the Soviet period, still mainly runs through Russia and it is very keen on maintaining this system. In regards to the Central Asian interests, most states wish to diversify their transportation of energy away from Russia, because this would mean that they can open up to more markets in the rest of the world.

 

Secondly, Russia’s main military interest is in relation to security and border control, in particularly in relation to Tajikistan and Afghanistan. It relates to drug trafficking with the issue of influx of drugs from Northern Afghanistan, which flows up to Russia through Central Asia and then onto Europe. Also, linked into that is the relationship between drug trafficking routes and locally established fundamentalist groups which are allegedly controlling some of these routes; thus Russia is interested in securing the border. Further, Russia is interested in maintaining its military base in Kirgizstan so it maintains a regional presence. It has had troops on the ground for some years in Central Asia, in particularly in Tajikistan, due to the civil war there and the fact that Russia was acting as a peacekeeping force. So its overall military interest is to continuously have a foothold in the region. However, the role of China in the region, the American war in Afghanistan since 2001 and the European Union which has been gaining an interest there since 2006-2007 in an attempt to exploit Central Asia’s need to diversify its energy exports – have impacted upon Russia’s position. Moreover, the E.U. in particular wants access to Turkmen gas and Kazakh oil and gas, as a way to diversify its energy imports and rely less on Russia. 

 

However, the Central Asian states will remain allies of Russia. The ties between the two regions are so close – one must remember that these states did not exist until the Soviet Union created them in the 1920’s. Political leaders, in particular Nazarbaev and Putin are fairly close, but there are tensions between some of the other leaders. In particular, Putin’s relationship with Berdimuhamedow [2nd President of Turkmenistan], which is probably tenser than it used to be. Turkmen’s can now rely on exporting gas to China and Iran. But that said they share a lot of commonalities: culturally, politically and regime type, and Central Asia would perhaps rather be dealing with someone like Russia or China, in contrast to the US or countries that will ask difficult questions about democracy or human rights.

 

 

Some Russian experts and leading academics would argue that politics and energy trade do not interlink or interrelate with each other. Do you agree with their views, and what do you think we ought to expect in the future?

 

Energy and politics is absolutely interrelated; energy trade is political economy. The Russian economy has been dependent upon its oil and gas exports for its revenues. Its whole economic model, under Putin, has been built on it and we know this as Putin’s PhD thesis is based on it. So the notion of trying to disentangle politics and economics or politics and energy just does not work, but of course they are interested in profit as that goes without saying. Its also probably a bit of both, political considerations come into it, but its got to be profitable, as otherwise there is no point of getting involved with other countries, unless there is at least a bit of profit. Also, we know Russia is a massive producer in terms of oil and gas, but it does have a problem. Russia does not actually have enough (oil and gas) to meet domestic demand as well as its contractual obligations it has already signed, particularly with the E.U., without having to raise prices domestically which causes political problems. This is why Russia wants to maintain access to Central Asian oil and gas, because it is a way for it to uphold its contractual obligations and to meet domestic demand at a certain fixed price. So this is how economics and politics interrelate.

 

Future wise, it has been evident for a long time and I think the Russian policy makers have been aware for a long time that they need to diversify the economy – this was more evident after 2008 [financial crisis]. It is the same in Kazakhstan, as there have been attempts to try to move away from the economy that is dependent on the exports of oil and gas.

 

The recent relationship amid Russia and certain European states has soured leading to arguably an anti-Russian stance, particularly in regards to energy policies. Has this occurred due to European attempts to lower gas/oil import prices or more stern underlining issues? E.U. works with ‘sheikh style’ regimes of Central Asia – so additionally does the model of governance influence relations?  

 

That is a good, but difficult question as there have been evident tensions with a lot of it around energy, as E.U. has been trying to lower gas prices whilst Russia has cut off gas supplies to Ukraine and Belarus [not helping the relationship]. Also, a lot of it has to do with psychology of the Russian foreign policy. Russia [believes it] should be a superpower and it should be able to throw its weight across the world. In a sense with the issue of energy, particularly between E.U. and Russia, this is a way it can reclaim some of that great power play it had during the Cold War. So I do think there is a lot of foreign policy psychology involved, but at the same time the E.U. probably does have a tendency to criticise Russia too much: around the Assad regime and democratisation of human rights. Thus, the E.U. antagonizes the political leadership of Putin who has a very particular image of himself, as a Russian leader. It is the same with Central Asia, these regimes do not like to be told that they are not democracies and they do not like to be told that they should live up to the standards of the West. If you speak to many of them, they would say – ‘how long did it take for Europe or any European State to become a democracy, more than around 200 years, well why can’t we have 200 years, why do we have to do it now?’. The whole issue of human rights and democratisation is a tension for sure [for Central Asia]; in terms of Russia, it does not help that it has a certain foreign psychology that it does not take kindly to criticism and at the same time it wants to assert its power and authority.

 

Further, I would not refer to that side of governance in that manner [sheikh style], to me, one is dealing with authoritarian states with very personalised types of regimes, as power is centralised in one person, and these regimes are quite frankly inherited from the Soviet model. The type of regimes will not affect business relations with Russia. As mentioned Russia has an advantage in contrast to the USA and European Union; the [Central Asian] regimes will be more willing to deal with more flexible regimes of similar type who do not ask difficult questions around the issues of human rights or democracy promotion. Hence, I do not see regime type negatively affecting business relations with Central Asian states.

 

In addition, the deal around South Ýolöten gas field between China and Turkmenistan is very interesting and significant. It tells us a lot about the changing nature of relations between China and Central Asia, and Russia and Central Asia. I think the tensions between Russia and Turkmenistan have been ongoing since the first President Niyazov died in 2006 and was replaced by Berdimuhamedow. The tension we see is because Russia is still perceived by the Central Asian leaderships, as the older brother, and there is always going to be this kind of a residual threat to Central Asian sovereignty from Russia. In one sense being able to do these deals with China – who have no claims of sovereignty in any of the Central Asian Republics – is a way of Central Asian states to be able to declare sovereignty and independence from Russia. The problem is that Russia often goes into the region with a fairly arrogant attitude towards these countries, Central Asia is called the “near abroad” – which is quite offensive to some of the regional leaders. So in one sense, Russia’s belief that Central Asia is its backyard or a near abroad, and that it should have priority and primacy in the region above other states, is only going to antagonise some of the leaderships; as it has particularly antagonised Turkmenistan. The personal relationship between the Turkmen leader and Putin has not been the best – which actually illustrates the extent which personal relationship between these leaders are quite important when some of these deals are done. China’s work in Turkmenistan at the moment around the Ýolöten gas field (one of the biggest gas reserves in the world) is significant for them in terms of their own economic growth, but it is also significant for Turkmenistan in terms of being able to guarantee its export of gas or production of its gas. It could turn Turkmenistan into a major country, similar to United Arab Emirates; thus maybe it will be like a Sheikh regime after all.

 

What impact should we expect from the new regional organisations (SCO, CES & EAU) in Central Asia? Moreover, who should we expect to lead them in the near future? 

 

The SCO I think is an organization which will be growing in significance and importance, in the region. One of the problems Central Asian states had in the post-Soviet period is that there have been difficulties around regional cooperation and integration. Central Asian states tried setting up small regional organizations, but what it became evident that they needed to be in a larger organization with other major powers: either Russia or China. Further, it is clear to me that China is a growing influence in the region. But Russia does not necessarily see China as a competitor as they both have many shared interests: energy being one of them as both need energy and access to Central Asian energy. The other being the issue of security, vis-à-vis potential for Islamic terrorism and the drug trade; both countries suffer from this as Russia has the Caucasus region whereas China has the Western Xinjiang province with its separatist movements. So the whole issue of security and border control is essential for both Russia and China, and obviously it relates to Central Asia as they share borders with them. Therefore, the Shanghai Cooperation Organization has become increasingly important; firstly in relation to issues of security, and secondly it will become increasingly important in relation to trade, energy and economic cooperation. Its role will grow, and it will be this organization as opposed to some of the others which will be the most significant in the region – I know there has been talk about a Common Economic Space and the Eurasian Union – but I am not convinced to the extent of these organizations to have genuine ability to survive in the long-term.

 

[In terms of leadership in these organisations] I think it will be China and Russia, as China is keen not to antagonise Russia, as it understands that Central Asia is Russia’s region traditionally. Further, I think there will be a lot of scope for both countries working together and brining in other smaller states on key issues of security, trade, energy and so on. However, again it is difficult not to see China as the leading player due to its economic strength.

 

What kind of foreign and economic policy (i.e. energy policy) will the Central Asian states apply in regards to relations with Russia and China?

 

It will be a trend that has been already set. As for example Nazarbaev in Kazakhstan prides himself on having a “multi-vector foreign policy”; and what it means is that he will deal with all sorts of countries as long as it meets the national interests of Kazakhstan. Nazarbaev will deal with Russia and Gazprom on certain projects, but at the same time he will deal with CNPC and China. What this illustrates is a trend where Russia’s influence in the region will decrease over time and Russia has to get used to not being the prime player in the region. It will be China, and Russia still, plus European Union and perhaps some American companies. So its influence will decline over time, but it will still remain important, it has to remain important, because it shares a border with the region and there are many cultural and political legacies that exist with the region. There is nothing that Russia can do to stop this trend, if there are Russian elites or Russian foreign policy experts, sitting there thinking that we must do something to stop this trend, then no, in fact it illustrates the problem in the first instance. Russia does not have control over Central Asia or its foreign policy, the fact that Central Asian states are now being able to cut deals with other states in order to diversify transportation of their natural resources to wider markets means that Russia’s kind of last leverage of control is finally being removed. Russia may find itself having better relations with Central Asian states once a lot of these projects are complete, and once pipelines are running; when Kazakhstan, Turkmenistan and Uzbekistan are able to get their exports out to wider markets like: Europe, Iran and China. Russia might find it easier to deal with them and have more opportunities with them as there will be less threat from Russia [in terms of sovereignty claims]. I think Turkmenistan will be the country to watch out for in Central Asia, especially as it just launched a privatisation campaign (exc. the energy sector), and its prospects as a big player in the energy game are high.

 

Igor Ossipov

Oil & Gas Eurasia Correspondent, Oil/Diesel Broker and RIAC Blogger.

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