Analytical Articles

In 2009, Kazakhstan emerged as the world’s leading producer of uranium ore, outpacing long-time leaders Canada and Australia. Kazakhstan will probably close 2011 with a production of uranium ore reaching 20,000 tons, roughly a third of the world’s production.   Kazakhstan’s state-run producer of uranium, Kazatomprom, has its sights set on moving beyond Kazakhstan’s historical role of being a raw materials supplier by transitioning into the more advanced role of processing uranium and selling nuclear reactor fuel.  Kazatomprom’s business model is focused on winning a major share of the growing nuclear fuel market in Asia. However, a newly emergent form of uranium enrichment technology threatens to undermine Kazakhstan’s ability to compete in the high-tech market.  

On November 22, a court in Tajikistan released two foreign pilots, including a Russian citizen, whose imprisonment on questionable charges two weeks earlier had infuriated the authorities in Russia and prompted them to respond in a way that threatened to ruin Tajikistan’s economy. Moscow’s harsh reaction to the incident appears to have been motivated mainly by the ruling party’s calculations ahead of the elections. Although Russia’s punitive action that focused on Tajik migrant workers was mainly designed for domestic consumption, it angered a large part of Tajikistan’s population and the political elite.

Turkmenistan is once again at the focus of Central Asian energy geopolitics. While the country’s capital Ashgabat hosted its annual international forum Oil and Gas of Turkmenistan – 2011, President Berdimuhammedov embarked on a quick succession of visits to Pakistan and China. In mid-November, he visited Islamabad to keep Turkmenistan in the game for entering the fast-growing energy markets of Pakistan and India. Only a week later, he went on a four-day visit to Beijing, Guandong and Hong Kong, where he agreed to expand the volumes of natural gas supplied to China. Turkmenistan’s strategic push to diversify its gas exports has already produced shifts in the power balance in Central Asia and beyond.

Azerbaijan and Turkey have announced plans to construct a pipeline from the South Caucasus across Turkey to carry natural gas from Azerbaijan’s offshore Shah Deniz Two deposit to Southeastern Europe. At first glance, this would seem to leave Nabucco and two other candidate pipeline projects that have already submitted bids, out in the cold. However, what is involved is the creation of a format for bargaining where Azerbaijan can assert its strategic interests more convincingly against the pipeline consortia, which by their project-oriented nature have not been inclined to take a broader view.

One reason why the Russian and Central Asian governments have become increasingly supportive of NATO’s mission in Afghanistan is their concern regarding the export of Afghan narcotics into and through their countries. These governments have become increasingly worried that NATO’s ongoing withdrawal of combat troops from Afghanistan will result in their having to confront the problem of narco-trafficking largely by themselves. Mutual concerns about Afghanistan are helping to drive Moscow and Washington to cooperate despite their persistent differences over other issues, but major disagreements over the U.S. role in Central Asia continue.

With economic recovery, the governments of Armenia and Georgia managed to reduce budget and current account deficits; however, the gross government and external debts still remain to be significant.  To reduce the debt risks, their governments need to increase attractiveness of their economies for investments and boost exports. The other Caucasian republic, Azerbaijan, due to high oil revenues, does not experience any problem with balancing its budget and maintaining external sustainability. However, in order to secure fiscal and external sustainability in future, the Azerbaijani government has to accelerate the diversification of the national economy. 

In a lengthy newspaper piece published in early October, Russian Prime Minister Vladimir Putin unexpectedly called on the former Soviet republics to join Moscow and create a Eurasian Union. Russia is already consolidating its recently formed Customs Union with Belarus and Kazakhstan. Now the intent seems to be to expand the number of its members as well as to enlarge its functions and powers into something like the European Union. But major obstacles stand in the way of Putin’s project, and the prospects of a new Eurasian Union emerging anytime soon in the former Soviet Union are small.

Kazakh law enforcement recently claimed to have broken up a “terror group” in a Kazakh town. While jihadist terrorism has been a part of the Central Asian political landscape for a long time, these events deserve special attention. This is not only because several similar events have recently taken place in Kazakhstan, but also due to the country’s special conditions where jihadism has previously been a most marginal occurrence. The emergence of jihadism in Kazakhstan therefore indicates that the ideology has begun to spread in areas of the former USSR where it has not previously been present.

Boris Yeltsin, president of Russia from 1991 to 1999, famously urged the various ethno-jurisdictions in the Russian Federation to “take all the sovereignty you can swallow.” At the time, the political leadership in Chechnya took this exhortation literally, an interpretation that contributed to the outbreak of war between the secessionist regime in Grozny and the Russian state in 1994. Since 1999, Vladimir Putin has replaced Yeltsin’s controversial sovereignty mantra with one that might be articulated as follows: “take all the subsidies you can swallow.” The extent of the Russian government’s continued subsidization of the North Caucasus has become a matter of serious political debate in recent months.  

The introduction of additional legal restrictions on “family hire” in public service and the recent warnings by senior officials against nepotistic practices in government indicate that the Tajik authorities recognize the political risks stemming from nepotism. This recognition appears to be linked with the political upheavals in Kyrgyzstan and, more recently, the Arab world. However, a genuine anti-nepotism agenda of the Tajik government is unlikely because President Rahmon himself has virtually monopolized political and economic power in the hands of his family. Therefore, the government’s declared anti-nepotism crusade appears to be designed for public consumption.