China hosted an international conference for the ambitious One Belt, One Road (OBOR) trade transportation network on May 14-15.
The conference brought together leaders from 30 different countries, including three presidents from Central Asia -- Kazakhstan’s Nursultan Nazarbaev, Kyrgyzstan’s Almazbek Atambaev, and Uzbekistan’s Shavkat Mirziyaev.
Central Asia borders China, and one could say Chinese projects in Central Asia were a basis for the concept of OBOR.
OBOR’s promise of enhanced trade and greater global connectivity is enticing but there are many aspects of OBOR that remain unclear. For example, who is paying for it.
On this week's Majlis podcast, we discuss Central Asia’s role in OBOR.
Moderating the discussion was RFE/RL Media Relations Manager Muhammad Tahir. From Bishkek, Przemtslow Ozierski, the deputy director of the Central Asia Strategic Center for Analysis, Dialogue and Development took part in the talk. From London, Dr. Raffaello Pantucci (@raffpantucci), director of International Security Studies at the Royal United Services Institute, joined in. From Spain, Nicolas de Pedro (@nicolasdepedro), a research fellow in charge of the post-Soviet space at the Barcelona Centre for International Affairs, contributed his insight to the discussion. And I really enjoy the big picture stuff, so I said something also.
OBOR seeks to link more than 60 countries by road, rail, and sea in a new global trade network. Beijing has estimated some $1 trillion will be invested into developing this network.
Chinese President Xi Jinping first announced plans for OBOR in September 2013, but its origins go back to the 1990s when Beijing decided to develop the oil-rich Tarim Basin in China’s western Xinjiang region.
Pantucci recalled, "There was this huge push to develop the west because the Chinese thought they needed to develop their western regions, so the investment and the attention was really in Xinjiang, but then there’s no kind of logic to developing Xinjiang if the regions around it aren’t [developed]."
China made its first widely publicized entry into Central Asia in 1997, when it signed an agreement with Kazakhstan to construct an oil pipeline from western Kazakhstan to Xinjiang.
Between 2000 and 2010, fueled by Chinese loans and investment, a network of roads, railway lines, and pipelines was built between Central Asia and China.
OBOR already existed in Central Asia before Xi articulated it as a much grander project.
OBOR would enhance this infrastructure and turn Central Asia from an end-of-the-line region for trade with China into a transit region for trade extending from China into the Middle East and Europe.
In one of the promotional videos released ahead of the May OBOR conference, one actor says OBOR is "China’s idea… but it belongs to the world."
De Pedro said, "The Chinese are saying that the project is really neutral from a geopolitical and if you want from an ideological point of view." But he added, "It’s mainly perceived, at least by the Central Asians, Russia, and Western Europeans, as a project which has huge geopolitical and strategic implications.”
Central Asia does not have much choice except to open the region’s doors to OBOR. The discussion noted that since the Central Asian states became independent in late 1991 upon the collapse of the Soviet Union, only China has really stepped in economically.
Speaking about Kyrgyzstan, Ozierski noted, “"t’s very important for Kyrgyzstan to…use the OBOR projects...to escape from its landlocked perspective and open for the world.”
That is true for all the Central Asian states, and new routes to China have already opened up new possibilities for trade.
But it comes at a cost.
Central Asia’s infrastructure has improved and continues to improve with Chinese help. But the Central Asian governments have been taking huge loans from China to implement these projects.
Pantucci said in some cases "these loans are being taken on with a certain level of care and attention and there’s a thought to how are we going pay it back." But he added, "In some Central Asian contexts, you do question how ultimately that money is going to get paid back."
Kyrgyzstan’s Finance Ministry just reported the country’s debt to China’s Exim Bank is some $1.54 billion, some 40 percent of Kyrgyzstan’s foreign debt and an amount Kyrgyzstan will be hard pressed to repay.
Similarly, China is Tajikistan’s biggest creditor, with Dushanbe now owing more than $1 billion, more than 40 percent of that Central Asian country’s external debt, and again a sum that seems beyond Tajikistan’s ability to pay back.
Ozierski said he believed there would come a time when China would have to write off some of this debt. But with China already having extended billions of dollars of loans for projects around the world and preparing to make another $124 billion available to help finance OBOR, writing off debts could spark a financially disastrous domino effect from poor nations involved in OBOR.
And de Pedro referred to an article from Pakistan’s Dawn newspaper last October that looked at Chinese projects and funding in Pakistan, taking the view of "the China-Pakistan corridor as a sort of new East India company, basically meaning that the pattern is a very colonial pattern."
There is another aspect of massive Chinese investment in Central Asia that now seems unavoidable and that is what security role China might play in the region in the interests of protecting its investments.
De Pedro said, "At some point, China will need to take a bigger role" in Central Asian security, despite distrust from not only the Central Asians but Russia as well.
The panel noted that China has been slowly increasing its security cooperation in Central Asia, particularly in Kyrgyzstan and Tajikistan, despite larger regional organizations already involved in the region, such as the Russian-led Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO).
Pantucci pointed out China has some doubts about the ability of the CSTO or the SCO to stem the problems of Islamic extremism in South and Central Asia. So, in August 2016, China created a new group with Afghanistan, Pakistan, and Tajikistan to fight terrorism, an organization Pantucci said that was "very much focused around China’s concerns in those countries."
Pantucci said that despite what many think about China’s intentions with the trade routes or OBOR in general, "I don’t think this has all been very centrally planned out from Beijing."
"What is the consequence of when you, as a country, go into a country like Kyrgyzstan or Tajikistan and become suddenly within the space of a short period of time the biggest sort of economic player in this country?" Pantucci asked.
The Majlis podcast looked at these matters in greater detail and discussed several other important facets of Central Asia’s growing connections to China and OBOR.
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