Wednesday, 07 January 2015

Central Asian Union and the Obstacles to Integration in Central Asia

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By Nurzhan Zhambekov (01/07/2015 issue of the CACI Analyst)

After the fall of the Soviet Union, the two largest Central Asian states of Kazakhstan and Uzbekistan took the initiative for Central Asian integration. In January 1994 an agreement was signed in Tashkent for the creation of a Central Asian Union, with Kyrgyzstan joining shortly thereafter. This marked the start of Central Asia’s integration process, aiming to develop and implement projects to deepen economic integration. Today, the idea of Central Asian integration is considered dead, despite numerous attempts primarily by Kazakhstan to revive it. The internal differences between Central Asian states, and their subjection to the influence of external powers, has made the prospect of regional integration increasingly remote.

BACKGROUND: The Central Asian Union established working entities of the integration body and set up an Intergovernmental council. The Central Asian Bank of Cooperation and Development was established in Bishkek with the initial capital of US$ 9 million. In 1998, three ministers, one from each country, met and addressed the major issues of water sharing, environment, migration policy, and economic development. Tajikistan joined the grouping in 1998, thereby increasing the number of Central Asian Union states to four. That grouping became officially known as the Central Asian Economic Community (CAEC). Turkmenistan maintained its neutrality and remains outside any integration initiatives in Central Asia.

The most substantive result of the CAEC was agreement on the joint fight against terrorism, political and religious extremism, transnational organized crime, and security issues. Participating countries signed a document on the strategy of integration by 2005. At the initial stage, countries planned to create a common free market and then subsequently a customs and currency union. This move was triggered by the events of 9/11, after which the military and political situation in the region changed dramatically. Participating parties agreed on a common statement regarding joint responses against terrorism and political extremism.

Although all Central Asian states with the exception of Turkmenistan participated in these initiatives, the declarations were never properly implemented. Major obstacles included rivalry between Kazakhstan and Uzbekistan for the regional leadership, as well as Uzbekistan’s lack of interest in intraregional cooperation and integration, since its major trading partners are outside of Central Asia. In addition, Kyrgyzstan and Tajikistan felt that their interests were not being taken into account because of their relatively small size compared to their larger neighbors.

The common economic space in the region was forming slowly and with difficulty, and it has proven impossible to achieve common customs, anti-dumping, tax policy, and currency convertibility. There was no concept or program of collective promotion of interests in energy exports and other natural resources. The water issue has always been a major stumbling block for regional cooperation. Kyrgyzstan and Tajikistan have a surplus, whereas the other three do not get their share from the region’s great rivers Amu Darya and Syr Darya. The Central Asian countries could not maintain the resource-sharing mechanism that was in place before 1991 whereby Kyrgyzstan and Tajikistan provided water to Kazakhstan, Turkmenistan and Uzbekistan in summer and received Kazakh, Turkmen and Uzbek gas, coal and electricity in winter.

IMPLICATIONS: Central Asia’s integration project has undergone three major phases. From 1990 to 1993, following independence from the Soviet Union, there was a common awareness of the need for a process of integration – to form a union to survive as independent states. There was a mutual understanding that it was not possible to develop successfully as individual countries and that there was safety in numbers. The Union existed primarily as a somewhat hazy idea during this time.

1994 to 2005 can be characterized as the period of ineffective implementation. Numerous declarations resulted only in slow integration with no tangible results. The organization’s name changed from the Central Asian Union to Central Asian Economic Community, and later to Organization Central Asian Union. Throughout the Union’s existence, its major issues remained sharing water resources effectively and equitably and removing trade and custom barriers.

2005-present instead represents a period of disintegration. The Central Asian Economic Community ceased to exist when it became part of the Russia-dominated Eurasian Economic Union. However, despite the failure of the Central Asian Economic Union, attempts to create new forms of cooperation have emerged. In particular, Kazakhstan has continued negotiations with Kyrgyzstan, Uzbekistan, and Tajikistan on a bilateral basis, which facilitated the subsequent process of economic and political cooperation. In 2007, Kazakhstan’s President Nazarbayev attempted to again renew the idea of a Central Asian Union, including all five countries of Central Asia during his annual national speech. In his vision, the union would involve free movement of goods, services, capital and people. The union’s mission would be to increase regional security, economic growth, political stability, and prosperity in the region.

However, despite Nazarbayev’s attempts to push for economic cooperation with his Central Asian counterparts, there was no interest from other leaders except Kyrgyzstan’s then-president Kurmanbek Bakiev. Uzbekistan’s President Islam Karimov stated bluntly that the creation of a Central Asian Union is premature, given the differences in economic and social development among the countries, and that the past attempts to create the union were not productive and did not bear results. Central Asian leaders were not willing to cooperate on any of their major issues. There is growing suspicion among the leaders of Kyrgyzstan, Tajikistan and Uzbekistan. In particular, relations between Tajikistan’s President Emomali Rakhmon and Karimov have been frosty for years.

The Central Asian Union did not work for two main reasons. First is the infighting between states, in particular the rivalry between the most populous, Uzbekistan, and the wealthiest, Kazakhstan, for regional dominance. Elites in Uzbekistan were uninterested in the idea from the beginning. Kazakhstan’s leadership was interested, but other countries did not want to be dominated by Kazakhstan economically. Second, smaller states wanted to retain their independence from larger neighbors, whose interests they did not share.

Despite attempts by regional leaders to create a union in practice, most of the initiatives and declarations were not translated into real action. Water and border issues have been major stumbling blocks among and between countries, and remain potential sources of conflict in Central Asia. In the last two decades, no mechanism between these countries has been established to resolve the water issue. In this perspective, the Central Asian Union could have presented an effective platform for preventing potential conflict and increase cooperation among countries particularly in water sharing and border issues. The only exception to the failure of cooperation and integration without the direct participation of external actors in the region was the establishment of a nuclear-free zone in Central Asia set up in September 2006 at the Semipalatinsk (Semey) test site in Kazakhstan, known as the Treaty of Semey. The treaty was ratified by all countries of Central Asia, and entered into force on March 21, 2009.

Rivalry between external players, particularly between China and Russia, for influence and dominance in the region will increase, as it is far easier for Russia to dominate one country at a time than the Central Asian states together. One primary example is Russia’s success in compelling Kazakhstan to join the Eurasian Economic Union (EEU), with Kyrgyzstan about to join later this year. China’s ascent as an economic superpower has increased its ability to draw Central Asia into its orbit through regional integration.

While Russia wants to keep Central Asia as a satellite by pushing the regional countries to join the Russia-led EEU, China wants to transform the region into a natural resource provider. One example is China’s president Xi Jinping’s initiative “The Silk Road Economic Belt,” implying the creation of a US$ 40 billion fund to develop infrastructure in neighboring countries, including Central Asian states. The infrastructure will help move energy to China from Central Asia. Moscow is steadfastly opposed to the idea. Previously, China was primarily concerned about security in the region, and was instrumental in the creation of the Shanghai Cooperation Organization, a Central Asia-focused security organization, of which China and Russia are both members. The region now has two competing projects: the EEU led by Russia; and the Silk Road Economic Belt led by China.

CONCLUSIONS: The Central Asian Union failed for several reasons. Infighting, distrust, and diverging interests between the prospective members precluded strong relations among the Central Asian countries, while external actors, namely Russia and China, desired to bring Central Asia into their respective orbits. The Central Asian Union is dead despite attempts by Kazakhstan and other countries in the region to revive it. It primarily consisted of declarations, initiatives, and intensions but no real traction. Unresolved issues persist between the countries, including like border disputes, water sharing, and trade barriers.

AUTHOR’S BIO: Nurzhan Zhambekov is an independent economic and political analyst. He holds a master’s degree from the Edmund Walsh School of Foreign Service, Georgetown University. 

(Image Attribution: Kremlin.ru, via Wikimedia Commons

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