Engaging Central Asia: Empowering the Regional Transformation

EVENT TRANSCRIPT: Engaging Central Asia: Empowering the Regional Transformation

DATE: 14.30 – 16.00 UK, 16th April 2024

VENUE: Henry Jackson Society and Online

SPEAKERS: Ariel Cohen, L.L.B., Ph.D., Dr Vladislav Inozemtsev, Ambassador Douglas Townsend, Daniel A. Witt

EVENT CHAIR: Dr Taras Kuzio


Taras Kuzio  00:04

Hey, thank you for attending in person and online for our event today to discuss, criticise and add to a paper which I found fascinating by Vladislav Inozemtsev on Central Asia. He’ll be our first speaker, we are hoping, if not Ariel will start and then Vladislav will join us. So, just to give a bit of background to each speaker, I’ll do that before they talk, Vladislav Inozemtsev is a Russian economist with a background in economics, PhD in economics, is the Director of the Centre for Post-Industrial Studies, which he founded in 1996. For a very long period of time, 10 years, 2000 to 2012, he was editor-in-chief of I guess, would be an opposition publication for Svobodnaa Mysl’, and the publisher of the Russian edition of Le Monde, the French newspaper, Le Monde diplomatique. That’s about as much French as I know from 2011-2014, he was a professor at Moscow State University, I’m sure he’s glad he’s not there anymore, doing economics in Moscow, and he’s had a range of positions since then. The Institute for Human knowledge in Vienna, the Centre for Strategic International Studies in Washington, a well-known Think Tank where [Inaudible] Brzezinski used to be, also John Hopkins University, Washington, and the Policy Institute for Advanced Studies in Warsaw. He’s the author of more than 20 books, 500 publications in academic journals, and we have him online hopefully.These four speakers are going to be talking and I’ve specifically asked is this an Anglo Saxon or Central Asian 10 minutes? It’s an Anglo Saxon ten minutes. We also have three other speakers including our colleague from Washington, Daniel A. Witt, Douglas Townsend, to my right, and Ariel Cohen to my left, but not ideologically, to my left. And so, Vladislav let’s start, please ten Anglo Saxon minutes, not Russian minutes.

Vladislav Inozemtsev  03:03

Okay, thank you so much for inviting me and letting me talk about the main topics of my report, which was published by the Free French Institute for International Relations around, say three months ago. So my major points were about the developments in Central Asia, after the collapse of the Soviet Union, I will not focus so much on the historical part of my inquiry and we’ll maybe jump more to the current geopolitical and economic situation in the region, and what the challenges are, and what the best from my mind might do about the ongoing process in the region and in the purpose of this space, as well. So, as we know, after the Russian aggression against Ukraine, the whole economic relationship in Eurasia has profoundly changed. Russia was and became a subject of numerous Western sanctions and became the most sanctioned country in the world and therefore, one of the most important issues these days for the European Union, for Western world in general. There are two issues, first, how to substitute the resources which were formerly imported from the Russian Federation. And the second question is how to counter the geopolitical influence of Russia in what was called for many years it’s near abode of Soviet space, and in Eurasia in general. And so I will say that in both respects, Central Asia is becoming a crucial region for European and the West, because for most of its post-Soviet period of history, it became, I would say, a natural ally to Europe, because most of these countries, most notably  Kazakhstan, had not only proclaimed the multi vector foreign policy, which was put forward by first President Nazarbayev, but nevertheless, they clearly made the choice in favour of deep cooperation in the West. Because when Kazakhstan as Central Asian countries emerged as independent states, after the Soviet Union collapse, the Western companies became the major source of productive investment, of technologies, of knowledge, and of business practices as well. And already by the late 90s, Kazakhstan became the country that attracted the most foreign investment in foreign direct investment among all the post-Soviet countries per capita except Estonia. And since that time, both Kazakhstan and other countries of the region have been quite solidly connected via investment flows and trade. First of all, zero because Kazakhstan until 2017 remained a country which sent more than half of its exports to the European Union nations, which was unique in the post-Soviet space. Even Russia exported less at the time. So, and once again, after Russia invaded Ukraine, the region became Putin’s focus for almost all great powers of today’s world. Of course, Russia remains a clear and most influential player in the region because most of these countries are part of both the Eurasian Economic Union, which was orchestrated and created by Moscow in 2014 after it was highly advocated by Kazakh leaders and first of all, Nazarbayev for dozens of years and of security organisation of Collective Security Treaty. Russia leads the leading military bloc, of course the United States and Europe also base its attention to the region because it can become a substitute for many resources which were previously imported from Russia and because of its geostrategic importance as a country, which as a region, which is situated just between Russia and China, two major geopolitical contenders to the current Western order. And of course, China itself, is also very active because it started its infiltration in the region, beginning from 2013 when Chairman Xi presented his historic speech on One Belt, One Road at Nazarbayev University, Astana. So anyway, all the major power interests are colliding here these days. So, the major points, which I would like to repeat for my report was that for Europe, first of all, Central Asian region is now becoming a point of place of critical importance for two major reasons. First of all, of course, these countries cannot fully substitute, the Russian exports to Europe, but they can be very much useful as providers of critical resources, like first of all oil, which Kazakhstan is the largest exporter in the region of natural gas, which may come from Uzbekistan, and of course, Turkmenistan, and of uranium, Kazakhstan is largest world’s largest producer, rare earth metals and many other commodities. Because if combined, all these countries are in top, inside the top 10 of global producers in gold, uranium, and many other resources. But I would mention, during the post-Soviet years, many trade floors were actually diverted from going to the west, to going to the east, because for example, if you look on Turkmenistan gas exports around 1995, they were predominantly directed to Ukraine, as a Russian pipeline system, now, around 80% of our gas goes to China. And so therefore, the most important issue here is just you know, to seduce the western countries to engage in more cooperation, economic cooperation in Central Asia, may be neglecting or putting aside for a while many cultural issues like human rights problems like quasi authoritarian, or even authoritarian kind of leadership in the region. But for the sake of economic development of Western Europe, for the sake of energy security, the West should do its best for first of all, once again, secure its presence in the uranium market in the region to divert the main flows of oil from the Russian territory from the Caspian pipeline Consortium, which ends overseas on the Russian Black Sea Coast, to some other alternative [inaudible], maybe South Caucasian countries, and back and forth. So, the first point is to invest as much as possible, into developing the resource sector in Central Asia, and actually to develop production facilities there, for example, uranium enrichment factories, which doesn’t exist in Kazakhstan, making as a country quite dependent from the Russians. The second point of the issue is the geopolitical one, and of course for years the West declared its close cooperation in Central Asian countries because of global water. Because all these countries, they are quite close to Afghanistan, and to other, I would say, unsafe region, on the greater Middle East. But what is crucial today is that if the West wants to confront Russia, even in Ukraine, it should look further and undermine as much as possible from the Russian so called integrational experiences in the post-Soviet countries. Because Kazakhstan, Armenia, many other countries, which are part of the Eurasian Economic Union, are now often criticised as being a part of the chain which allows Russia to import sanctioned goods, or do use products and whatsoever, which is either prohibited to be imported from Russia, for the products of the companies, which left or supposedly left the Russian market. So my point here is that the West shouldn’t press too strongly on the standards except it proposes something in exchange, for example, if you look in Armenia, if you look on Kazakhstan, but the West should have a huge deal, propose a huge deal to those countries definitely showing the possible, I would say benefits for them, which can happen, which can be offered, if they will move, I would say away in some kind from Russia. So, this is once again, two major issues the West will be preoccupied with in the region, because the territory is very crucial for both dealing with Russia and China, and for securing the global war on terror, the global war, next to me in the whole Eurasia. So, these are the major points, and I will conclude that, to my mind, the investment and efforts which can be directed towards Central Asia are much less these days than both the results that can be achieved in the future and the efforts which should be invested in five or 10 years from now. If today, the West still stays as I will say indifferent to the region as it still politically in the last for example, that 50 years. Thank you so much.

Taras Kuzio  14:50

Thank you Vladislav that was slightly over, but very, very interesting and thank you for putting everything into perspective. And to basically be arguing your case for greater Western interest and activity in the Central Asian region. The suggestion now is we go over to Washington to Daniel A. Witt, who is the President of the International Tax and investment Centre in Washington, which he helped found 30 years ago, three decades ago in the early 90s. It’s, as described here, a global brand that is trusted as a reliable source of tax and investment policy and administration expertise. Bringing his connections to Central Asia, The Republic of Kazakhstan has recognised Mr. Witt for his contribution to economic development and in 1999, Mr. Daniel Witt was elected as honorary professor of economics at the Kazakh State Academy of Management. And in 2011, then Kazakhstan President Nursultan Nazarbayev presented Mr. Witt with the order of friendship, the highest honour bestowed to any non-Kazakh foreigner. He is a major contributor to international local NGOs, currently a G100 Denim Partner and part of the group of 100 HeForShe champions advocating for gender equality and economic empowerment of women. And just on a paper I’m writing on Kazakhstan, I note that Kazakhstan has done tremendously well in promoting women into the Kazakh parliament, actually. And it’s not that much lower than Britain, which is supposed to be or claims itself to be the oldest democracy in the world. He also was the Vice Chairman of the Board of Trustees of the Eurasia foundation and advisory board member of Crystal Energy. The floor is yours, Daniel, I hope you heard all that. All that praise for you.

Daniel A. Witt  17:24

Yeah, thank you. I’m sorry, I’m not with you to be showered with such praise in person. But we’re well represented with my dear colleagues, Doug Thompson, and Ariel Cohn. But it’s a great pleasure for ITIC to be joining with the Henry Jackson Society for today’s event and Dr Inozemtsev, it’s a pleasure to have you present your paper at our forum today. It’s an incredibly important paper and I want to express my gratitude, your paper, talking about the need for further strengthening the West ties in some way underscores the work in the mission of ITIC and our long-standing commitment to economies in transition starting in Russia, Kazakhstan, Ukraine, the rest of Central Asia and Azerbaijan. For over 30 years, we’ve been promoting free markets, lowering trade and investment barriers, and fostering collaboration across public, private sectors and academia and having started in the post-Soviet space our work has now touched 85 countries. I think a couple of points I just want to highlight to stimulate further discussion and reinforce the key conclusion of Dr Inozemtsev’s paper, there is an urgency for change, we cannot ignore the return to history. Geopolitical tensions are redefining global relationships, the West in Central Asia must work together and develop a clearer path during these turbulent times, Central Asia needs further reforms. Kazakhstan is a template, but the West also needs strategic realignment. This is an opportunity but let’s be candid, it’s a necessity and I think that was one of Vladislav’s key recommendations. Now, the West has many advantages and I think we need to further build upon them. Our core strength lies in economic engagement, we don’t have geography obviously, the West’s involvement is already pivotal for Central Asia. You look at the accumulated FDI over the past three decades, 60% comes from the West into Kazakhstan, Uzbekistan, and Kyrgyzstan. But there is room to go deeper and forge mutually beneficial partnerships. Now Kazakhstan stands out as an early adapter of investor friendly policies under the leadership of President Nazarbayev, and these were reinforced shortly after the June 2019 election of President Tokayev. He reaffirmed his commitment to free markets and open investment policies and continuing that close relationship with the many investors from the West. Also, you think about political and diplomatic partnerships again, Kazakhstan is a template with its multi-vector multi-directional foreign policy. And it started with President Nazarbayev, and it’s been reinforced and strengthened by President Tokayev, those are anchors to be built upon. Let’s think about, again, building on Vladislav’s conclusions, reducing dependency, creating win-win opportunities. Central Asia has a number of vulnerabilities, I think the obvious one is geography. Look at the shared border, the longest border in the world, between Russia and Kazakhstan. But the West can play a key role in creating alternatives. I think one of the most exciting developments over the last two years has been the middle corridor, something talked about, something that we’ve seen countless World Bank feasibility studies. Well, necessity due to the war between Russia and Ukraine have forced this to come to life and this has become real. Look at the quantity, look at the Delta from 23 to 22 of tonnes shipped through that middle corridor and it’s a gateway that is reducing central Asia’s dependency or chokehold on Russia infrastructure. And this is a win-win, Central Asia gains new export routes and Europe gains new sources of energy and new supply chains. I read a statistic, a month or so ago, in February, goods shipped from China reached Europe through the middle corridor by land in 10 days, the land and sea routes that normally would have been used for the shipments were 43 days. This is a game changer, and let’s also recognise that there is a fair amount of transportation infrastructure that’s in place that we’re looking for alternatives, but also the economic frameworks, the Eurasian Economic Union. I think we’re starting to hear some candid assessments, that this may not be delivering the benefits to the non-Russian partners, and I know from working with our Central Asian colleagues for over 30 years, results matter. So, I think perhaps a future analysis of our distinguished colleagues who are gathered today should look at the costs and benefits of the Eurasian Economic Union of which I strongly supported at its genesis. A couple more words, we all know Russia’s economy is highly dependent on commodity exports. Let’s not kid ourselves, this mirrors central Asia’s. This is competition, not a partnership. So, what can we in the West offer; alternative paths toward economic diversification, value added production rather than just raw materials coming out of the country and again, let’s further expand that middle corridor. We must build alternate routes and supply chains. Europe’s need for new energy sources aligns with central Asia’s resources. This is win-win, it diversifies Europe’s supplies and Central Asia has new markets. And let’s not just think of fossil fuels, let’s not forget the vast minerals that Kazakhstan has and many of the other Central Asian Republics have, and I can’t help but think of the vast uranium reserves in Kazakhstan that represent an important source of energy for Europe. So, in closing, let’s remember, we’re gathered here today, not just to learn about Vladislav’s interesting paper but let’s look at it as an indispensable roadmap for action. It provides a path where real reform and real change, let’s not just look at us having an interesting talk. But what can we do to spur action that will have a historic and lasting transformation in Central Asia. Vladislav, congratulations on an incredibly thoughtful paper. Thank you to Henry Jackson Society, for providing this forum to socialise it, and hopefully coming up with a set of actionable steps. Doug, it’s always a pleasure to be with you. I’m looking forward to seeing you in person and Ariel, thank you for your leadership with today’s programme.

Taras Kuzio  27:12

Thanks very much, Daniel. And thanks very much for keeping on time and our next speaker Douglas Townsend who was just mentioned is an advisor and the British representative to the International Tax and Investment Centre, in which capacity he coordinates its activities and initiatives in Eurasia. He’s previously served in quite a number of diplomatic posts, both as ambassador and presumably other positions in Kazakhstan, of course, where he’s now representing, Hungary, Switzerland, Senegal, Austria, Vietnam, Ireland, and Pakistan. That’s quite a lot of countries. He’s also got a background as the Australian investment commissioner in Europe, Australian nuclear industry negotiator and the Australian steel industry. That’s quite a record, the floor is yours and let’s hear what you have to say.

Douglas Townsend  28:30

Thank you very much and many thanks to Henry Jackson Society for this opportunity. I actually want to congratulate Vladislav on his paper, but also want to focus on his point that we should look at the current situation or focus on the historical situation but look at now and what comes next. In that regard, and I wanted to focus on the conclusions that he has proposed in his paper, section entitled some urgent steps, and I wanted also to mention some of the difficulties that we might confront taking those steps as well as the activities that are being undertaken, countries that I know in Europe, UK and EU and so on, that are already taking such steps. For example, now, Vladislav says that we unleash the energy resources, and we talk about uranium and oil and gas and so on and so on. In this regard, I was greatly impressed by the work undertaken by EBRD, in junction with the EU and others, and also the work being undertaken by OECD, and if any of you have the time and access via internet, these are papers that really should be studied, particularly the EBRD paper, which was published in June of last year, because these documents lay out not only the geography, some of the history and the possibilities, but also the network that is required in order to translate the middle corridor into an efficient, efficient operation. So, for example, with the energy resources, maybe Caspian pipeline project that has been talked about forever, I want to draw your attention to the potential negative operation of the 2018 Aktau agreement relating to the arrow to the Caspian Sea, and also to the early Tehran convention relating to the protection of the ecological resource of the Caspian Sea and the latter agreement is already in force and again, for those that wish to pursue the subject further, this is a document that really needs to be studied. But particularly the Aktau agreement 2018 is to my mind, a very important document, it’s not yet in force. Iran has not yet ratified it, it’s been kicked around in Tehran for some time and Iran has a particular attitude towards the operation of this agreement, which is to say it’s comprehensive in scope, and deals with all sorts of activity in the Caspian Sea, including not only pipelines, but also such things as marine transport, protection of the marine resource and so on. So, insofar as Vladislav has pitched this point about energy resource as a priority, which I agree, we need to be aware that there can be some complications involved in the behaviour of other members of this agreement. Then again, referring to his esteemed paper, there’s a recommendation for a high level, joint Western institutional arrangement involving North America and EU and then UK as a means of consolidating and coordinating the activities of Western countries towards the countries offset from Central Asia. And I think that there’s already quite a degree of active cooperation on the part of the EU. We have seen the partnership agreement concluded, the high-level summit meeting between EU and Central Asian leaders,  I think that the engagement of the EU is very strong. In relation to engagement of UK post-Brexit, as you remember, there was a fixation on UK joining the Asia Pacific trade partnership, which have been achieved. And more recently, the Select Committee on Foreign Affairs has published a very important report on engagement with Central Asia, which was published in February, this year. This report picked up on many of the points that Slava has made in his paper and, again, a report I commend you all to read, but certainly, it’s arguing for a much, much more clinical approach on the part of the UK to Central Asia and a much greater engagement in all sorts of areas. Again, though, this is one aspect where the intent is there, but the intensity of the interaction is, to my mind, might still be lacking and given all the competing international activities and incidents at the moment, it’s hard to see how we can elevate the significance of Central Asia in public debate. There’s further reference to as part of this closer engagement and here the UK is working quite hard in conjunction with Kazakhstan, for example. President Tokayev has sought to have a greater intellectual connection with the West through higher education, and a number of universities from UK but also Germany, Canada, US are entering into partnership agreements with various universities in Kazakhstan and based on a certain selectivity. For example, Dutch University cooperating with a top University in Kazakhstan. So, I think that, again, Vladislav’s point has been taken, but the but implementation is still slightly below par. I hope I haven’t rambled too much. While filming with my phone shows my age and my technical ability. But I think that Vladislav’s message has been taken on board, in my experience with European governments, universities and the like the question to my mind is to try to intensify that as the potential for the middle corridor, say, is real, as Dan pointed out in terms of the figures and the volumes of trade and so on. Also, in terms of the institutional arrangements, which are being made sort of a trade, but I do think we need to be alert to the possibility for some inspired sort of interference with the development of the corridor closely watch how the Tehran convention, Aktau agreements and other institutional arrangements for the Caspian area are sort of affected by the behaviour of the parties. Thank you.

Taras Kuzio  39:48

Our final speaker is Ariel Cohen and he’s a renowned expert on energy policy. Russia, Eurasia, eastern central Europe, Middle East, in areas such as political security, risk management, economic development, investment policy, crime and corruption and market entry strategies and other types of state business relationship. He is a senior fellow with the International Tax and Investment Centre, Managing Director of the Energy Growth and Security programme there. And he’s also a non-resident senior fellow at the Atlantic Council, the US based in Washington. He’s a member of the prestigious Loisach Group. I knew Ariel in the 2000s when I was working in Washington, he was then at what was one of the best think tanks in Washington, the Heritage Foundation, it’s a separate panel to discuss what’s happened to the Heritage Foundation, but the floor is yours. Thank you, Ariel. We have approximately half an hour maybe a bit more for question and answers. I just want to throw in three quick comments. Where I would argue these three comments show to what degree Central Asia in many ways has a good opportunity now to be more engaged with the West. Firstly, I’d kind of disagree with light about this and to some degree, I think Russian influence in Eurasia is on the decline since the invasion of Ukraine. And I won’t go into this, we can discuss it maybe, but this is seen in all sorts of ways, including votes at the UN. Russia has become de facto China’s younger brother. In the post-Soviet space, and generally, Russia’s a declining great power, China is a rising great power. Second point is that Russian, Central Asia or Russia and Kazakhstan are not really competitors now because Kazakhstan is interested in modernization, as is China, Russia’s new ideology, if you want to call it that is de-modernization. So, there’s no competition on foreign investment, Russia’s going back to the dark era in that sense. My third point is a bit more controversial, but I think we see this both with the US politics, I think more generally, is that democracy promotion as a Western policy objective is now in the past. I just don’t see that, the last kind of time we really saw this was the Bush-Cheney era, because Obama never really pursued this, as we saw in Syria. And Biden’s talked about it, but has not been serious, as we see on the case of Ukraine. So, I think that also means that, you know, we’re only going to be engaging with you if you open up and do democratisation, those days are gone. So, I think those three points are also worth too. I’ll open the floor now to questions, anybody wants to go first, say who you are, as well.

Ariel Cohen  40:58

Tara’s and I are always committed to independence in defence of Ukraine, from which our roots come. I was listening very carefully, both to Slava and to Dan, and Doug and struggling with a balance between the geopolitical pressures and the economic opportunities that Central Asia in general, and the middle order present to us. In the ideal world, in which countries don’t attack other countries with 300 rockets and drones in one-night, Central Asia, would have developed as one of the success stories because Kazakhstan since independence, is overall, an economic success story. It was occupied by the Russian Empire by the Soviet Union, it was a dumping ground for everything from political prisoners to nuclear waste, in the Soviet times, and with independence and succession of those that will survive. It was developing very much economically along the lines we saw elsewhere in Asia, creating a climate for foreign investment, sending 1000s of its young, to the West, to learn everything from the law to econ to business administration to engineering. And after the demise of the Uzbek President, Islam Karimov in 2016, Uzbekistan woke up and started following the model of Kazakhstan and is doing quite well thank you very much. But we’re not living in the ideal world, originally, Kazakhstan received the multi vector policy which Russia, China, Europe, and the US are more or less will engage, which meant that US invests billions of billions into oil and gas sector, Europeans are investing also, and the Chinese are basically playing catch up. Just like that since 1990, Russia did not win one bid for oil developments, the developments all went to China. But in the real world, Russia is under sanctions, the tension between the US and China is simmering and growing. We need to think how we engage this region, because it is sandwiched between Russia and China and Afghanistan in the south. So, in the United States, the idea of a landlocked region is something very few people [inaudible]. However, in the real-world China and Russia will not feel very comfortable with that. But French investment, their enrichment and production of nuclear fuel which now is all processed in Russia. As someone who spends a lot of time looking at energy, Kazakhstan, Uzbekistan and other Central Asian Republics have a lot of sun exposure, a lot of wind exposure and are potentially great places to invest in renewables as we saw the Arab Gulf money going to Uzbekistan on two projects that have very, very low profitability points, in other words, at 1.5-1.7 to 3.5 US cents per kilowatt. This is very competitive by any standards and that, as far as I understand, it wasn’t even subsidised. Central Asia is still writing in part on its infrastructure from the Soviet times, and it needs desperately billions of dollars to rebuild its infrastructure, power stations, transmission lines, the grids, water works, etc. And at the same time, we’re talking about the middle corridor, railroads ports. The port of Aktau, and its counterpart of the port of Baku, create this sea bridge in the Caspian Sea, bridge between Kazakhstan and Baku that you can ship oil, minerals, grain, you name it, you can ship it to Baku, put on the rail, send it to the Black Sea or to Turkey and other Turkish ports and ship it out to the global markets. So, the idea is how do you keep the geopolitical balance there without upsetting the applecart? How do you increase a high-level diplomatic engagement? Everybody talks about the C5+1 that is five Central Asian heads of state and the President of the United States. The first meeting in that format on the presidential level happened in the fall in New York, at the UN General Assembly. But Putin and Xi Jinping met with the leaders of the regional countries many, many times. Every year, there’s several meetings between Russia and the five heads of state and they went to Xi’an and met with Chairman Xi , and goodie bags, billions, and billions of investments. And I raised the question how we are going to compete with the two neighbours with historic memory, both Russia and China either dominating or engaging on the Silk Road 2000 years ago, the biggest countries. Some of the answers are the B5+1, is the initiative of business engagement of the US businesses with the five states that recently they had a meeting in Almaty, the largest Kazakh City. I recommend that someone who worked on most favoured nation status for a number of post-Soviet countries to lift finally, the PNTR the most favoured nation status that is denied to Kazakhstan, and Uzbekistan under the Jackson Vanik Amendment. It’s a trade regulation from 1974 when I was a kid, and it was about facilitating Jewish emigration out of the Soviet Union to the West, there’s no Soviet Union there’s no limits on Jewish immigration and the Jackson Vanik is still on the books just tells you what it tells you about Washington. What I’m trying to say is the West collectively, US, Europe, UK, need more, not less engagement in Central Asia, not just on investment, not just specifically on the middle corridor and transportation, but also in the soft areas such as education, health care, you name it. And if we don’t do it, there are at least two other powers, who will do it. And also on the horizon, the rise of India, which will be more and more engaged. I was in Tashkent in 2021, on the big conference that was trying to help Afghanistan too little too late and there was a delegation of 800 Pakistani businesspeople trying to do business in Uzbekistan. So, there are volunteers to engage these areas if we don’t, somebody else will. Thank you.

Question 1  57:16

My name is Anthony Robinson, I used to be a Moscow correspondent with [inaudible]. I was also editor of an investment guide to Kazakhstan for several years. Thank you all for your contributions, which I found fascinating, and I’d like to just look a bit deeper into the middle corridor, which, of course, you know, on the map looks great, because actually, it’s not very far from the West. Most of the oil and gas is concentrated in Western Kazakhstan, as you know, that is close to the Russian border, which was why Chevron and the others insisted on building a pipeline, which when they initially conceived the pipeline, it would have been under Chevron’s control because Chevron was paying the money. That didn’t last very long, soon as it was built, the Russians, of course, took their share of it and basically, as ever, put their foot on the neck. So, we have a situation now where you’ve got something like I think, a capacity of 67 billion tonnes of oil to pass through the CPC pipeline into Russian territory, cutting that, of course, will be an absolutely massive strategic loss and financial loss for Russia. And if one looks again, there’s been a lot of money, a lot of Chinese money, not only the roads, they run out through the south of Kazakhstan, but you know, the modernization of the railways, the extension from the central to the desert, that copper mining town in the middle of the desert, down to Aktau means that there is now a rail and road link down to Aktau and it’s developing. And you just got to look at the map and you can see from Aktau to Baku is not very far if it weren’t for the problems of the Caspian Sea legislation and so on. So, if we all became friends with Tehran, the world would certainly be a lot easier. That is unlikely however so we’re in a situation where there are potential ways of limiting Russia’s influence over Kazakhstan, certainly, economically. However, how would they react if one looks at the map and unlike you, were you decided not to talk about history. But unfortunately, as you know, this part of the world history is important. There is that Mr. Stalin is the man who tapped southern Siberia and northern parts of Kazakhstan, where the uranium and lots of the oil and gas and Western Kazakhstan. This was never part of Turkistan, the Czarist empire in that area of northern Kazakhstan was tacked on to the Soviet Republic of Kazakhstan by Stalin, because he wanted to have a Slav majority over the native population of Kazakhstan, which he then proceeded to eliminate, to the tune of over a million people who died in the famine, similar to the ones we hear in Ukraine, rather than saying. So, the Kazakhs presumably, will be in favour of extending the length of the corridor, so how will Russia react? Will it react as it has done with Ukraine by taking back the western province of Western Kazakhstan, which is where the oil fields are.

Vladislav Inozemtsev  1:01:44

Yeah,  thank you so much, I got the questions and I got some of them, which were posted online, which also are very interesting. So, I would focus on several points. First of all, I would say that almost everybody concentrated on economic issues, and this is maybe a good approach. But we are now living in times when the politics is merged and geopolitics and even military politics. So, I would say that, of course, economic issues are very important but nevertheless, first of all, we should precise what kind of economic problems we are debating. And the second point is we should make some correction on the military-political situation in the region. So what about the economic issues, I would say that the importance of the Western countries for all the Central Asian states lies in the fact that only the West can provide the Central Asians with industrial technologies and industrial investment, because the Chinese they will with big pleasure invest into the elaboration of natural resources into extraction in the states and into the infrastructure like pipelines, even maybe railways, or something like this, but not in a processing of the natural resources. As Mr. Khan mentioned, there is no uranium enrichment facility in the country. It’s all about in Russia or elsewhere, so my first point would be that the West should present a strategy of industrial development for these countries because they want to modernise and China never modernised any foreign country, and Russia is definitely unable because of its own de-modernisation. The second point was about the military aspect of all this grand, large game, because look, no one mentioned the countries of Central Asia are very weak militarily, their armies, the standing armies are very small. The biggest one is less than 100,000 people, but even I’m not sure that the official figures reflect this illustration. The whole military equipment, all the armament and ammunition are Soviet, even not Russian. It’s Soviet. It’s very old and out of date and with no Western supplies to the region, it’s 100% controlled by Russia, either with military supplies or, for example, education officers. So therefore, I will say is that the military engagement, the military cooperation between the West and regional powers is essential. If we want to put, you know, foothold in the region. To three small questions which were posed online. First, it was a question about what’s the  best way to engage in bilateral negotiations with the countries because they’re very diverse. Or try to find out some kind of universal approach, coordinated approach to the region, I am definitely for the second option, because yes, there is some kind of experience when five presidents five chief of states are working together with Western leaders. They were in New York, as I mentioned, meeting with President Biden’s everywhere in Berlin meeting with Chancellor of Germany. So nevertheless, my point would be that the West should avoid a unified approach, and even to try to promote some regional integration between Central Asian countries without Russia. Because the virtues of European Economic Union were well mentioned, they are vicious for the biggest player for Russia, first of all, not so much for Central Asian countries. So maybe the West would be able to propose some kind of Western sponsored, regional integration project. The second question was about whether it was better to engage immediately after the collapse of the Soviet Union, or now is the best possible timing, of course, I will decrease the time after the Soviet collapse was much better because Russia, at the time was too weak, you know, to provide any kind of assistance to the region. And of course, it was the best possible time, and the West did a lot during this time and Kazakhstan leadership, for example contributed greatly to this integration and to this cooperation at the time. And more, I would remind that Uzbekistan and the president Karimov also was quite professional at the time when it cooperated with the United States on the war on terror. And it was actually kind of, you know, of absence of Western leadership, or maybe Western mistake, which led Uzbekistan out of GUAM, which was an organisation which brought together Uzbekistan, Pakistan, Azerbaijan, even Ukraine, and Moldova, which was a good action lever to the region. So nevertheless, so many mistakes were already made, and we shouldn’t miss this particular chance, which is opening today. And the last small question is about the middle corridor, because it was mentioned by almost anybody on the panel and so our question of the middle corridor, how it can be advanced? But I would be very careful on this issue because the middle corridor, is a corridor, which leads from China to South Caucasus to Turkey. But it absolutely shows that China will be present as a partner in 10 years from now, I would rather suppose that Central Asia can actually be a dead end in the global geopolitical game, surrounded by revisionist China and Russia. And it might be not about corridor between China and Europe, it should be of decent and internal value of itself, and the West should cooperate and should communicate with the Central Asia, not as just a route from China to Europe. It’s very necessary to think this situation because Central Asia is a very valuable asset as it is, as a source of human resources, natural resources and has many other opportunities except of being bridged to China or Russia. Thank you.

Ariel Cohen  1:09:59

I would like to first appreciate a detailed comment by Mr. Robinson, thank you very much and warn that taking Russian historical revisionism on the New Russia territory in Ukraine. Donbass is allegedly Russian territory, the Crimea my birthplace is allegedly Russian territory, because why? Because Catherine the Great, grabbed it from Bakhchysarai, and before that, it was a fiefdom of the Ottoman Empire. If anything, it should go to the Crimean Tatars, they had the longest dwelling in the Crimea. The conquest of Siberia, all together was a colonial land grab by the Russian Empire, or by the Duchy of Muscovy and then if we start revising, post-Soviet borders, in the case of Ukraine, in the case of Kazakhstan, or anybody else, this is the path that will lead us to warfare, to 1000s and hundreds of 1000s of casualties, and to unending grief. The Soviet Union collapsed, independent states emerged, they became the UN members and in case of Kazakhstan and Ukraine, there were valid agreements ratified by Parliament’s in Kyiv, and Moscow, and in a statement of border demarcation and border recognition, and any revisionism by Russia, in case of Ukraine, or in case of Kazakhstan, everybody, including China should push back from that. Thank you. I’ll take about two questions. So first, you and then and then the lady in front.

Taras Kuzio  1:09:59

Quick comment and then we’ll move on.

Question 2  1:12:24

My name is Richard Thomas, I finance infrastructure, especially across central transit and infrastructure. I just want to pick up on remarks about the middle corridor. I think it’s an entirely legitimate point, you say that you’re trying to make the point that it’s not going to continue to grow the way it did. But to extend that and say that, actually, therefore, the middle corridor doesn’t make that much sense. Which I know it’s an exaggeration of what you said, I would disagree with because actually I think the opportunity is about Eurasia. It’s about linking Europe and Asia as a whole. So already, we’re seeing freight assets going from India, through Afghanistan into the old Silk Road with that T junction at Samarkand while there are wider links being put in place. And then, of course, the Silk Road, it’s not a single thing it’s a multimodal thing, and therefore the need for investment to develop that to become something functioning and I strongly agree, what about helping the regions to develop GPA locally and not just be a transit route is absolutely there. The challenge is actually how to finance it, I think it’s no question that I again, agree with the general premise of this talk. That, you know, there’s a strong geopolitical reason for everybody to be much more focused on its region. But how do you actually attract foreign capital? It’s my job, I think it’s an incredibly difficult thing to do. Apart from the fact that you’ve got major problems with currency, I think the fundamental problem is in an environment where you have autocracies, it’s awfully difficult to get long term decisions made in a coherent way. You can say it’s very difficult for the British government to build anything with our infrastructure policy. When you look at other countries, it’s incredibly difficult, countries where the Minister of x, y&z and flowing down into the CEO of State-Owned Enterprise ABC changes every year, it’s really, really difficult to get anything done. I think oil and gas is misleading because that looks after for itself, that pays for itself, that’s kind of a separate universe. When you look at infrastructure, it’s awfully difficult to finance.  That’s it without that kind of direction. So, I guess my question is what can be done in that environment to provide some kind of coherent, consistent decision making that facilitates infrastructure. In my case, something like the Bakad highway look at Kazakhstan, the only piece of infrastructure developed on a PPP basis over the last 10 years, one highway, and it took a lot of a lot of hanging together. So, I think it can be done. It must be done, but the question is how to address those points?

Taras Kuzio  1:14:50

In the case of Ukraine, it was the European football tournament, that got the most infrastructure built. Sorry, I don’t know your name.

Question 3  1:15:04

Yeah, my name is Anastasia, I’m an assessor and I work at a company intelligence firm in London. My question kind of has to do with the nature of this economic engagement that we’re talking about. I know that one of the speakers talked about the Belton Road initiative, and China’s investment in general. But as I understand it a lot of Belton Road initiative projects in Central Asia have been quite controversial, both public and non-public service projects. And I know that one of the speakers mentioned, kind of Western angle to focus on processing rather than just extraction. Is this a way to kind of avoid this pitfall or just one of the risks of being an investor in this region?

Taras Kuzio  1:15:45

 And the final one from this round, you had your hand up? Yeah.

Question 4  1:15:54

Thank you. Yes, Simon Anglin Kings Studies. Two quick geopolitical questions. Is there a role for Mongolia in all of this? After all we’re talking about states in the region, it’s moving towards being a working democracy, and it is a NATO partner state. Is there a role for Turkey in all of this given cultural and linguistic ties? Would this work better with or without Mr. Erdogan?

Ariel Cohen  1:16:23

As if we didn’t have enough minefields. Now we’re bringing Mr. Erdogan in. Let me sort of go in the reverse direction. Of course, there’s a role, too, for Mongolia. It’s a cornucopia of minerals and metals and as you pointed out, it is getting to a democratic model with the two parties, but there’s still a lot of corruption going on and when you’re so close to China and Russia, corruption will be encouraged, not discouraged by your neighbours. On mining versus processing, yeah, I think the West should insist on environmental standards, on good governance, on all this good stuff that we’re waving the flag for and demonstrate project after project to the locals that our way to do business is better than their way to do business. Not there, the locals, but other competitors we have. And finally, I think an absolutely fascinating question about how do you attract investment? And I’ll answer your question with a question. What about EBRD? What about Asia Development Bank? What about all these parastatal investment authorities that somebody’s financing to the tune of billions of dollars? They’re there, they’re all-over Central Asia like a rash. They’re all there but what they don’t have is Western development and technology. No one’s investing time to the structure. So, if you’ve got a good project, you could get money out of EBRD, these are water projects. The problem is actually having a coherent specified project that people believe in and are going to attract developers to build them. Are you asking do they have enough? How do you develop local capacity? That is that is a, you know, a billion-dollar question in every developing country. I was evaluator for the World Bank, I was evaluator for USAID and the failure of local capacity was the number one issue in the project, a relatively small project that I evaluated.

Question 2  1:18:56

Yeah, it is an emerging market. Right, and it’s an issue, the specific point is in an autocracy like this, you have a rotation of people, that makes it awfully different. A lot of these countries have highly educated young people who actually do know stuff about financing and contracting.

Ariel Cohen  1:19:12

They’re getting older, actually.

Question 2  1:19:14

Actually, when you look at the track record of specifying and delivering projects, it’s really poor. And I think it’s because of this kind of rotation, you talked about railways. It’s very, very difficult to get railways projects done, because you keep changing the people running the rail.

Ariel Cohen  1:19:34

Very, very interesting.

Douglas Townsend  1:19:35

I refer again to the EBRD report that I mentioned June 2023. I don’t know whether you’ve had the chance to read it, but to this question of raising 80.5 billion on the elaboration of the preferred middle route, being the middle corridor. So that’s one comment and then also, you mentioned about processing and financial engagement that, and in particular, this latest possibility with enrichment and nuclear enrichment in Central Asia, I think is, you know, really, it’s really, difficult to see that happening, in part because you’re going to have the political overlay, the non-proliferation aspect of enrichment, as has been demonstrated by Iran on the JCPOA. And how the international community would be able to supervise that notwithstanding the role played so far by being a company, entity agency, and so on. A lot of people would be sort of raising their hands and saying, well, this is a bit awkward. But I think, particularly for the financing, I don’t want to sound like a crack record, but I was impressed by that EBRD report, and I think it may answer a lot of the questions that you have, and there was something else sorry. I just wanted to refer back to something that Slava mentioned, which was about military capability and I thought that actually, the Central Asians are quite well connected with NATO, for example and in terms of annual exercises, down in the hills of West Wales, in the Brecon Beacons near where I live. We have Kazakhstan, Uzbeks participating every year in the Cambrian mountains challenge, I thought that connection was already functioning again, it may be a question of scale. And then also with Slavs point about the approach to be taken. I think again, that, his message is being is being heeded, again, it’s maybe early days that you’re having this multilateral approach. I recall, regional approach on tax reform, beginning in 1993, with all the Central Asians plus all the former Soviet states, and this continues. So that in terms of let’s say, soft tissues, such as the infrastructure, the investments for tax structure in Central Asia, including Mongolia, as a party to this ITRC has very well-developed dialogue with promoting tax reform, including reform of VAT which the eyes glaze over of course.

Taras Kuzio  1:23:58

We’ve had quite a few questions online. Most of them have been answered, but there’s one I’m going to read out in a minute. Just a quick point on the military side. For Kazakhstan, going back to the question of using or having a mainly Soviet military inventory of military equipment. It is worth taking a look at what happened between Armenia and Azerbaijan. One reason Azerbaijan defeated Armenia in the second Karabakh war in 2020 wasn’t just because of the different size of the population it’s because Azerbaijan has Western military technology, including Israeli not just Turkish, and Armenia is totally reliant on Russian. And if anything has shown the war in Ukraine that Russian military equipment is pretty poor quality. Russia has actually lost a lot of its export routes for Russian military equipment; countries don’t want to buy it anymore because of what they’ve seen in both the Azerbaijan-Armenian war and in and in Ukraine.

Ariel Cohen  1:25:04

I did ask around and also had friends, working professors not military, but working in Central Asia on military policy issues. They’re telling me that the Russian presence, if anything, is growing in the security establishment, and Russia is still the major provider of security and military education. In other words, if you want a career in investment, you go to Harvard Business School, London School of Business, etc. If you, on the other hand, come from a military family or a security family, and want to become an officer and have your career in Central Asia. You go to Moscow, you go to the Frunze Academy for military with Red Banner Institute for Security Services, and they’ll teach you how to do it.

Question 4  1:26:13

Some countries from the region, particularly Azerbaijan, I believe Kazakhstan are now sending people to the UK Defence Academy where I work. And Azerbaijan has been sending people to Sandhurst for the last 10 years.

Taras Kuzio  1:26:31

With good results as we’ve seen. Right, we have one last question, which was sent online, and I’ll read it out. How will all the further development of the middle corridor reshape trade relations between Central Asia and Europe. What logistical and infrastructural challenges need to be addressed? Let’s go to Slava. Did you hear that Slava, or should I read it out again?

Vladislav Inozemtsev  1:27:05

Yes, of course, of course, I hear. Look, once again, my point is that we should, or the West should pay great attention for providing alternative goods. But once again, be that this alternative should be first of all, promoted for Kazakhstan, in oil, for Turkmenistan, in gas, for all others commodities like uranium, like gold, like iron ore, whatever is extracted and produced in Central Asian countries, it’s more crucial for the West to have an alternative resource base, secure and connected to the European markets, then to have another line for producing for shipping Chinese goods. And it seems to me that in coming years, the biggest European wish vis-a-vis China will be the company as well as the United States. And so, the idea of developing the middle corridor for getting more Chinese goods, it’s a little bit outdated, to my mind. But anyway, Central Asia should be linked to Europe, much more intensively and much more effectively. We have different transportation routes, first of all, for producing an alternative, a viable alternative to no [inaudible] for sale, which more than 90% of Kazakhstan involve is important. It’s a vital necessity for the country. Definitely. So, this should not be a corridor, it should be some, I would say, a highway to Central Asia, not a corridor to China.

Taras Kuzio  1:28:58

Yeah, and just a final point on China. I tweeted it yesterday, I think new information is just coming out. China, stood on the side lines of the war in Ukraine during the first two years of the war but it now seems to be joining the war on the side of Russia. The US government has been talking about a whole list of different types of military equipment that China is sending to Russia and working together with Russia and building new equipment. This is a new development and this I can envisage that this is going to lead to a deterioration of relations between China and the West. And of course, it means it’s not only dangerous for Ukraine but dangerous for Taiwan, which is eagerly watching what’s happening in Ukraine and it’s something we should keep an eye on, I think definitely on this. But anyway, I leave on that point. Thank you very much for turning up. Thank you for a very interesting discussion. Thank you to the four speakers and thank you to Henry Jackson society for hosting this.


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