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Central Asian States begin to spread their economic wings

Zia Sarhadi

Like newly-hatched chicks, rulers of the Central Asian republics have been reluctant to stray too far from the cozy warmth of mother Russia even if the bipolar world was dead. But after seven years as independent States, they are beginning to take their first tentative steps.

The Prime ministers of three Central Asian Republics, Kazakhstan, Uzbekistan and Kyrgyzsta, met in Bishkek, the capital of Kyrgyzstan, last month to chalk out a strategy for deepening economic cooperation. The three ‘agreed on priorities to form a single economic space this year that will work for our collective future,’ Uzbek prime minister Utkir Sultanov was quoted by the Russian Interfax news agency as saying on March 17. Kazakh prime minister Nurlan Balgimbayev said the economic union, which would be the most advanced in the region, could serve as a model for the Commonwealth of Independent States (CIS) of which the three are members alongwith nine others.

The three countries also agreed to form several non-economic commissions that would address common regional problems, including a hydroelectric commission to help the region better use its energy resources. During the winter, Kyrgyzstan’s hydroelectric station produces an overflow of water that floods the arable land of its downstream neighbours, Kazakhstan and Uzbekistan.

But at the same time, water is limited during the sowing season because Kyrgyzstan does not need as much water power for its station in the warmer months. To resolve the problem, Kazakhstan and Uzbekistan agreed to buy up the surplus power produced by Kyrgyzstan’s hydroelectric plant to keep water flowing to their fields during sowing season.

To prevent flooding, Kazakhstan will send Kyrgyzstan 560,000 tonnes of coal and supply it with additional electricity to see the country through the winter months.

Balgimbayev, Sultanov and Kyrgyz prime minister Apas Djumagulov also created commissions to review environmental protection, the use of natural resources, the preservation of bio-diversity in the western Tian Shan mountain range and medical research.

Kazakhstan has also suggested the creation of new oil and gas, geological exploration and agro-industrial commissions, which are expected to be approved at the next prime ministers meeting scheduled for June 26, the Interfax news agency reported.

While the three prime ministers were meeting in Bishkek, Russian prime minister Viktor Chernomyrdin held talks with Turkmen president Suparmurat Niyazov on telephone and agree to let Ashgabot export 20 billion cubic metres of gas to Ukraine through its pipelines in 1998. The deal apparently was clinched when Chernomyrdin told Niyazov that Russia would repay a debt of $107 million to Ashgabot in securities and commodities. An earlier agreement, announced in January, had been stalled because demanded too much for transportation. Ashgabot objecting to Russian gas company, Gazprom’s charge of $1.75 per 1,000 cubic metres for every 100 kilometres of its pipeline used.

Interest shown by outsiders in transporting the Turkmen gas may have forced Moscow to reconsider its position or risk losing out completely. Of the Central Asian republics, Turkmenstan has perhaps made the boldest moves trying to entice foreign companies to its rich oil and gas fields. It has also made headway by linking to the outside world with pipelines and rail links through Iran. Across the western shores of the Caspian Sea, Azerbaijan forged ahead, striking deals with American and British companies. Meanwhile, the three Caucasus States, Armenia, Georgia and Azerbaijan, are doing brisk business with Tehran. Despite their close links with the US - Armenia receives about $100 million annually in foreign aid from America - Iran is the number one exporter to Armenia, mainly in food, manufactured goods and machinery. Iran is Armenia’s second biggest export market, mainly in metals and building materials. Iran also supplies some 10 per cent of Armenia’s electricity demands. The other two Caucasus States, Azerbaijan and Georgia, also have considerable trade with Iran. Georgia has recently signed trade agreements with the Islamic State, and a direct rail link is planned.

Tehran has also emerged as an important regional player, acting the role of senior statesman. It has successfully mediated the long-simmering dispute in Tajikistan, has kept on good terms with both Azerbaijan and Armenia, and has tried to bring a semblance of normalcy in relations between the two Caucasus republics despite their dispute over Karabakh. It has also established close economic and political links with its other neighbours. Iran is thus acting as a vital counterbalance to Russia’s continuing influence in the region and helping the Central Asian and Caucasus republics find their feet in the wider world.

This is despite the attempts be Washington to keep Iran out. Immmediately after their unexpected liberation from Russia, the Central Asian and Caucusus states sought shelter with the US as a counterbalance to Russia’s domineering attitude and in recognition of Washington’s supremacy in the unipolar world. But Tehran’s successful diplomacy, combined with regional geographic and economic imperatives realities, frustrated America’s demands.

Muslimedia: April 1-15, 1998

Article from

Crescent International Vol. 27, No. 3

Dhu al-Hijjah 04, 14181998-04-01

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