LONG READ: Afghanistan key to uncorking Russia's access to South Asia

LONG READ: Afghanistan key to uncorking Russia's access to South Asia
Russia is turning east and south. / Photo by Monstera: https://www.pexels.com
By bne IntelIiNews April 4, 2022

Russia has definitively broken with the West. Its war on Ukraine will permanently wreck its trade relations with the EU, collectively its biggest trade partner, and to a lesser extent with the US. Russia’s trade relations with China have blossomed in recent years but in its hunt for new markets it needs to uncork the southern route out of Eurasia and into the massive markets of Pakistan and India. Afghanistan is the key and for the first time in over a century Central Asia has become central to geopolitics.

In 2021, the total trade in goods between the EU and Russia amounted to €257.5bn. The EU's imports were worth €158.5bn, of which fuels accounted for just under €100bn. In the same year, trade turnover with China topped $141bn, after rising by just under a third year on year, putting it on course to hit the $200bn target the two countries have set.

The war in Ukraine will change Russia’s trade calculus dramatically. Last year, Russian President Vladimir Putin was actively pushing the EU to sign off on new long-term gas supply contracts and give permission for the Nord Stream 2 gas pipeline to be put into action. But following Russia’s attack on Ukraine launched on February 24, the EU is now committed to stopping all imports of Russian hydrocarbons as soon as 2025. That will knock a €100bn hole in Russia’s EU trade regime, a regime that has already lost €100bn after Russia banned EU agricultural imports in tit-for-tat sanctions imposed in 2014.

One option to fill the hole is to boost trade with China and in particular sell Beijing more gas. Russia signed a new gas deal with China in February to boost volumes, but currently Russia only sends 13bcm of gas a year to China compared with the 155bcm it sold Europe in 2021.

And even under the new deal the volumes will not increase significantly from that level. Russia’s national gas company Gazprom announced on February 4 that it had agreed on the annual sale of 10bcm per year of natural gas to China’s CNPC over a 30-year period. The agreement underpins the development of a new export route for Russian gas to China in the Far East.

Part of the problem is that the massive Yamal gas fields in Russia’s Arctic regions were targeting European markets and there are no pipelines connecting Yamal to the new Power of Siberia pipeline that serves China from Russian gas fields in Siberia. New and expensive infrastructure will have to be built.

The story is very different in Central Asia, which has been hooked into the Russian pipeline network since Soviet times. Both Russia and the five 'Stans' have long had their eye on the lucrative markets that start in Islamabad and stretch beyond, but have been locked off from Eurasia by instability and then a 20-year occupation of Afghanistan by the US. As bne IntelliNews has reported, the departure of the US from Afghanistan in July last year has changed the game and Afghanistan is back in play. Having longstanding relations with Kabul, Moscow has gone out of its way to cosy up to the resurgent Taliban in an effort to open up the country to trade. Last week, Russia announced a Taliban envoy already active in Moscow had been officially accredited.

Getting Afghanistan off its knees

Russia and its partners in Central Asia are actively working to open Afghanistan up to trade and transit. In the midst of the Ukraine war, Lavrov found time to fly to China to discuss Afghanistan with his fellow foreign ministers from the region.

Lavrov took the opportunity to fire broadsides at the international community but the Uzbek delegate pleaded that the rest of the world should not forget Afghanistan.

“In connection with known events in the world, we are unfortunately observing a certain decrease in the international community’s attention to Afghanistan,” Vladimir Norov, Uzbekistan’s deputy foreign minister said. “The Afghan question has basically taken a back seat in world politics. This cannot be permitted.”

The foreign ministers from Afghanistan, China, Russia, Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan all met in Tunxi for the talks. China also took some potshots saying that the US and Nato should “assume the primary responsibility for the reconstruction and development of Afghanistan,” The Associated Press reported, quoting its Foreign Ministry.  

The main message from the meeting in Tunxi was that the West should take an active lead in helping Afghanistan to get off its knees. China led calls for the return of frozen assets to Afghanistan and Uzbekistan has been pushing for sanctions relief since soon after the Taliban takeover. Tashkent recently joined forces with Pakistan to lobby for the lifting of sanctions.

"Afghanistan is now at a decisive stage," Norov warned. "Either this country will, with the assistance of the international community, create the pre-conditions to lay the foundations for a normal economy and development, or it will again become a refuge for terrorist and extremist organisations."

Opening up trade

Russia’s war in Ukraine has plainly, to varying degrees, unnerved the leaders of the five Stans. Despite the Kremlin's substantial economic, political, military and soft-power capital in the region, keeping these nations on side will be no mean feat. The West's attempt to sideline Russia with heavy sanctions has and will cause enormous disruption and economic losses to Central Asia. Staying close by a new-era Russia's side will not be an easy road to travel, though when it came to the vote in the UN General Assembly vote on March 3 to condemn Russia’s invasion of Ukraine, all of the Central Asian states chose to abstain. Keeping their relations sweet with Russia was clearly more important to them than standing with the international community’s condemnation of the unprovoked attack on Ukraine.

Securing trade and energy infrastructure routes between Russia, Central Asia and South Asia is a major plank of Uzbekistan’s foreign policy. Even before the US withdrawal, Uzbek president Shavkat Mirziyoyev used his first speech at the UNGA to call for an international committee to be set up under the auspices of the UN to improve Afghanistan’s security and help it along with its economic development. Mirziyoyev identified Afghanistan as the major security issue in his region but at the same time has promoted business and trade, building a power line over the border amongst other things.

Since last year, the Uzbeks have announced modest, incremental but meaningful progress in working with the Taliban-regime in Afghanistan and Islamabad in developing rail and road trade corridors linking Uzbekistan to Pakistan via Afghan territory.

In mid-March, for the first time, Indian cargo, mostly sugar, transited to Uzbekistan via Pakistan and Afghanistan. The Uzbeks are also looking at completing a rail link to China, via Kyrgyzstan, and reaching Iran's sole oceanic port of Chabahar on the Indian Ocean via Turkmenistan and Afghanistan. Pakistan's Gwadar port on the Arabian Sea is a rival.

No doubt Moscow in its new reality would like to piggy-back on the success achieved in developing these trade routes so far and back negotiations to achieve an extensive opening up of the opportunities.

Russian foreign minister Sergei Lavrov already started actively courting Pakistan last year, perhaps in preparation for the collapse of relations with the West he must have been aware was on the cards. He visited Islamabad in April 2021 for two days in his first visit to Pakistan since 2012, arriving from a trip to India previously. Afghanistan topped the agenda in talks with his Pakistani counterpart, Shah Mehmood Qureshi, but the two foreign ministers also discussed bilateral ties and economic cooperation.

Russia has also already been actively preparing another key strategic energy transport route that runs across Mongolia to tap the northern Chinese market. In late February, Russia and Mongolia signed a project plan for the Soyuz/Vostok gas pipeline that would run from Russia to China via Mongolian territory.

Also, in mid-February, Pakistan's energy minister said the South Asia country had been holding talks with Russia on the potential construction of a Kazakhstan-Pakistan gas pipeline. Then there is the perennial question of whether the planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline will ever be completed. Perhaps with its new need to integrate the economies of Russia, Central, South and East Asia, Moscow could even take a stake in this project. The Taliban, eager to secure some recognition and economic stability for their Islamic Emirate of Afghanistan, are keen on TAPI and have already provided the Turkmens with security guarantees for the infrastructure.

Hesitant Stans

An open question remains: How much political resistance might there be in Central Asia to playing a crux role in helping Moscow realise its new trade and economic ambitions?

Uzbekistan became the first former Soviet Central Asian country to properly distance itself from Russia's invasion of Ukraine. It said it insists on Ukraine's territorial integrity and will not recognise Russia's puppet republics in Luhansk and Donetsk on March 18, three weeks into the war.

"Uzbekistan recognises the independence, sovereignty and territorial integrity of Ukraine. We have not recognised the Luhansk and Donetsk People's Republics," Foreign Minister Abdulaziz Kamilov stressed as he addressed a Senate session on March 17.

"Uzbekistan has historically had traditional comprehensive ties with both Russia and Ukraine,” the minister said. "Last year, the trade turnover with Ukraine exceeded $704mn, which is 60% more than in 2020. Co-operation for the current year included a plan of various events in Tashkent and Ukraine.”  

The Kazakhs have since followed suit. On April 1,m Timur Suleimenov, deputy chief of the Kazakh presidential office, told Euractive that Kazakhstan will not help Russia to evade Western sanctions imposed over its ongoing invasion of Ukraine.

Kazakhstan "will continue to invest in Russia and attract investment for Russia: there is no way for our economy to do it differently," he said in an interview. "But we will do our best to control the sanctioned goods. We will do our best to control any investment from a sanctioned person or entity in Kazakhstan, and this is something we wanted to convey to Europeans openly.”

Suleimenov then went further in setting Nur-Sultan apart from Vladimir Putin's Russia, saying: "Kazakhstan is not part of this conflict. Yes, we are part of the Eurasian Economic Union [EEU] but we are an independent state with our own system, and we will abide by the restrictions imposed on Russia and Belarus. We don't want and will not risk being placed in the same basket.”

Given that Kazakhstan is a member of the Russia-led EEU—the other members being Belarus, Kyrgyzstan and Armenia—and as recently as January saw its president, Kassym-Jomart Tokayev, invite in Russian troops in an urgent move that appeared aimed at saving his presidency from a coup, Moscow might be somewhat anxious that the Kazakhs are not proving more amenable.

As Russia tries to remodel its trade relations in its now dollarless world, Moscow may be disappointed with the less than helpful attitudes of some of its partners. EEU members Kazakhstan and Kyrgyzstan both recently refused to accept customs duties from Russia in rubles, a decision echoed by Armenia.

Paul Stronski, a senior fellow at think tank Carnegie Endowment for International Peace, said the refusals raise “questions over the cohesion of the bloc, which has long been Putin’s pet initiative to integrate the region, although it has not progressed far since its 2014 launch”.

Other actions, observed Stronski “suggest greater [post-invasion] resistance to Moscow than initial diplomatic statements indicated. “Kyrgyzstan, Tajikistan, and Uzbekistan have disputed Kremlin readouts of bilateral presidential phone calls that suggested greater support for the war than Central Asian leaders were willing to acknowledge,” he said. “As the Russian military campaign struggled and the extent of human suffering in Ukraine became increasingly evident, the governments of Kazakhstan, Kyrgyzstan, and Uzbekistan moved beyond muted expressions of concern to more open critique. They allowed some anti-war protests, permitted civil society groups to collect humanitarian assistance for Ukraine, and clamped down on local displays of the 'Z' sign used by supporters of the war. Those three governments also reiterated their commitment to Ukraine’s territorial integrity. The overlaps and variations of the shifting Central Asian responses to the war illustrate each nation’s delicate navigation of the crisis.”

Mirziyoyev’s first foreign trip as president was to Moscow as Russia remains the dominate force in the region, but at the same time the Uzbek president would prefer to keep Russia at arms length. Despite pressure from Moscow, Tashkent has never committed itself to one day joining the EEU and has always made it clear its foreign policy is aimed at retaining good and constructive relations with all the major players including Russia, the US, the EU and China.

“Like other Central Asian states, the government in Tashkent remains hesitant to assign blame for the war. It has expressed its 'deep concern' and urged a diplomatic solution to end the 'military activity and aggression' to distance itself from Moscow’s actions. An authoritarian country, Uzbekistan has not sanctioned anti-war rallies and has reined in independent coverage of the war on social media. Yet it has allowed subtle demonstrations of support for Kyiv, including displays of the Ukrainian flag at prominent locations in Tashkent and Samarkand, and tolerated small gatherings outside the Ukrainian embassy. Neither could happen without official sanction,” said Stronski.

Stronski also noted that as the Russian military has struggled in Ukraine, Tashkent has grown more vocal in its support for Kyiv. “During a March 17 address to parliament, Uzbekistan’s long-serving foreign minister, Abdulaziz Komilov, declared that Uzbekistan would not recognize the Russian-controlled portions of eastern Ukraine as independent states and reiterated its commitment to Ukrainian territorial integrity.”

Support from Kyrgyzstan

Perhaps the strongest support from Central Asia for Russia since it launched its war on Ukraine has come from Kyrgyzstan's populist strongman Sadyr Japarov, an autocrat who had to work hard to gain Vladimir Putin's endorsement after he ascended to the Kyrgyz presidency following an uprising at the end of 2020, amid accusations from the West that his proposed administration might provide rather too many openings for organised crime.

Before the invasion, Japarov mimicked Russian talking points to suggest Moscow’s recognition of the self-proclaimed republics of Donetsk and Luhansk in eastern Ukraine may have been justified. “Reportedly under pressure from Moscow, the Japarov government also banned anti-war protests in Bishkek and levied fines against protesters as of mid-March, although that has not stopped demonstrators from gathering or civil society actors from speaking out,” said Stronski. “However, public discussion of Kyrgyzstan’s future in Russian-based regional organizations is ongoing.”

Tajikistan and Turkmenistan, meanwhile, are two Stans that have said almost nothing about the war. The former at the end of February received a visit from Valentina Matviyenko, chair of the Russian Federation Council, who held public and private discussions on the rationale behind Russia’s invasion. However, the Tajik government still kept its counsel. Turkmenistan, the remote, tightly controlled ‘Stan that says little to nothing about world affairs, has upheld its principle of “permanent neutrality,” avoiding all public comment on the Ukraine crisis.

EEU in trouble

Might Russia's economic isolation and the collapse of the ruble even lead to the disintegration of the EEU?

This point is taken up by Olga Gulina, director and founder of the Institute on Migration Policy, a member of the EU-Russia Civil Society Advocacy Group.

“The search and introduction of new export routes from the countries of Eurasia to the West, bypassing Russia, against which Western countries have imposed broad economic sanctions, and the ongoing devaluation of the ruble, and the commission on currency exchange introduced by the Russian government, among other things, can become factors contributing to the collapse of the [EEU],” said Gulina.

“With such a development of events, the Russian ruble will cease to be a liquid currency for trade within the Eurasian Union. Russia will cease to be a country of reception of labour migrants. Most of the 2.4mn citizens from Tajikistan may leave; [and of the] 4.5mn citizens of Uzbekistan; 884,000 citizens of Kyrgyzstan; 163 thousand citizens of Kazakhstan; 7 thousand citizens of Turkmenistan; 240,000 citizens of Ukraine; 174,000 citizens of Belarus working in Russia today, all these people, with the exception of citizens of Ukraine, Belarus and Turkmenistan, will be forced to leave Russia and return to their countries of origin,” she added.

Serious difficulties, forecast Gulina, will hit Kyrgyzstan and Tajikistan, with 30.1% and 27.8% of their GDP, respectively, consisting of remittances from labour migrants, mainly working in Russia. “Unemployment and demographic pressure in the countries of Central Asia, especially Uzbekistan, Kyrgyzstan and Tajikistan, will increase incredibly, which can lead to increased discontent, social protests and political instability in the region. Such internal challenges in the countries of the region, along with the weakening of Russia, will lead to major transformation processes and a drop in interest in any form of integration, including the [EEU],” she concluded.

In mid-March, describing how it was up to “true patriots” to help pull Russia through its difficult times, a belligerent Putin did not mince his words, referring to so-called non-patriotic Russians as “scum and traitors” whom patriots would simply “spit out like an insect in their mouth onto the pavement”. Countries that lie in Russia's sphere of influence will be wary of Putin starting to make the same kind of distinction when it comes to Russia's allies.