What's new

Economic Corporation

EagleEyes

ADMINISTRATOR
Joined
Oct 3, 2005
Messages
16,774
Reaction score
25
Country
Pakistan
Location
United States
ECONOMIC COOPERATION BETWEEN PAKISTAN AND THE CENTRAL ASIAN REPUBLICS
azmat

Columnist Dr AZMAT HAYAT KHAN sees commercial opportunities in the region that can be profitably exploited by all the countries
With the dissolution of the Soviet Union and opening up of the Central Asian Republics, the whole Geo-political scenario has changed. The Central Asian Republics have more importance now, in the strategy of the world, especially in Asia than any other region of the world.

Economically this region has bypassed the Middle East, for this region has more oil than the entire Middle East. It contains some of the rarest metals which are not found anywhere in the world. Its land is among the most productive agricultural lands in the world.

All the Western countries are now rushing in to exploit the resources of Central Asia, and to set up joint ventures. As the cold war has ended, economic warfare has now taken its place. There are no super powers in the field, nor any buffer zones left.

Before we discuss Pakistan's policy regarding Central Asia, we have to consider certain factors. They are as follow:

1. The Central Asian republics are still tied to the other Republics of the defunct Soviet Union, and there is no question of any republic breaking up in the future.

2. The system they had during the communist period is still intact, and the communist bureaucracy, the KGB, the Soviet Army, and their nuclear arsenals are all intact.

3. The Central Asian Republics have a 100% literacy rate; they are secular, and are closely tied to the economy of the other Republics in the former Soviet Union, and they have a very strong industrial base. What they need at the moment is modern technology, for which they are looking towards the West, rather than the South and for their government structure their model is secular Turkey rather than Iran, Pakistan or Saudi Arabia.

Each president of the Central Asian Republics heads a country whose economy is still fully intertwined with those of its neighbours. Only the U.S.S.R. has collapsed. Its inter-regional economic links, though damaged, still remain. Southern Kazakhstan still gets its electricity from Kyrgyzstan, while northern Kazakhstan helps service Siberia's energy grid. Turkemenistan still sends part of its oil to Russia to be made into jet fuel, but it processes Siberian oil in its own refineries. While each new nation continues to depend on its neighbours' basic inputs - fuel, energy and raw materials - the coordinating structures that regulate such commerce have shrunk or have entirely disappeared.

The first-order challenge now facing the states of Central Asia, therefore , is to emerge from political obscurity and economic isolation. Nationhood has been reluctantly accepted. It has carried with it enormous burdens - mostly economic - for which none of the region's leaders could have been prepared and which even the most able have consistently tried to avoid.

The Central Asian Republics have a 100% literacy rate; they are secular, and are closely tied to the economy of the other Republics in the former Soviet Union, and they have a very strong industrial base. What they need at the moment is modern technology, for which they are looking towards the West, rather than the South and for their government structure their model is secular Turkey rather than Iran, Pakistan or Saudi Arabia.

As head of a republic with several thousand miles of common border with Russia and whose population is almost evenly divided between Kazakhs and Slavs, Nazarbaev was anxious to minimize a potential split between Kazakhstan and Russia. Then, as now, his position has been that Kazakhstan is unique - a link between Central Asia and Russia - and its strategic role would be enhanced if the union preserved.

Central Asia's leaders were also aware that, although each republic was named for a local nationality, none was a national homeland. The Kirghiz, Uzbeks and Tajiks all have border claims on one another - and large irredentist populations on which to base them - as do Uzbeks, Turkmen and Kazakhs. Stalin's map-making skills were sufficient to ensure that no Soviet republic would have an easy transition to nation-statehood. There is no historically recognized border between Russia and Ukraine, certainly none between Armenia and Azerbaijan, and Russian migrants make up a far greater percentage of the population in the three Baltic republics than they do anywhere in Central Asia, other than Kazakhstan.

There is, however, one striking difference between those cases and the republics of Central Asia. The popular movements for independence that paralyzed the communist-led governments of Latvia, Lithuania and Estonia in the late 1980s, then Moldavia, Armenia, Georgia and finally Azerbaijan and Ukraine in the early 1990s, did not exist in Central Asia prior to the August coup.

Given the intertwined nature of the party, local economy and traditional society, these republics communistelites can fall only when attacked from within. That was precisely what happened in Kyrgyzstan and Tajikistan.

In Kazakhstan, Turkmenistan and Uzbekistan the communists, now renamed socialists, democrats and national democrats, pressed for independence, with only minimal public support. It was rumored that support for Uzbekistan's independence bill was so lukewarm, in fact, that President Karimov had to make a formal motion to mark its passage with applause. Although the Communist Party technically no longer existed, most Uzbekistan legislators voted for independence simply to tow the party line. For some the vote was an expression of support for the goal of eventual independence. But few, if any, who gathered in that Tashkent hall believed that Uzbekistan had succeeded from the U.S.S.R. by virtue of its own legislation.

Uzbekistan's leaders were using independence as a synonym for full economic autonomy. With substantial shortfalls in Russian deliveries of grain, wood, construction materials and oil, President Karimov was looking for new legal grounds to deny Russia the cotton and gold that Uzbekistan was required to supply U.S.S.R. enterprises. The logic behind the independence decree of Turkmenistan - rich in oil and natural gas -was similar.

Thus even before the collapse of USSR central structures the republics had received a degree of economic autonomy. They had been given the right to negotiate directly with foreign governments and companies, provided that plans were deposited with central banking institutions. The Republics could also invite foreign banks in - as Kazakhstan did with Saudi lenders in 1990. But they could not use those banks as repositories for foreign earnings. Moscow still owned the natural resources and finished goods that the republics produced, and so the earnings went to the centre.

None of the Central Asian republics yet has complete control of her economy. To some degree this is the product of confusion over the purpose of the Commonwealth itself - whether it is designed to be a coordinating body between the republics or a device for preserving an integrated economic zone on the territory of the former U.S.S.R. Adding to that confusion from the outset was the nature of Russia's relationship to the CIS - whether it was an equal partner in the union, first among equals or the inheritor of the U.S.S.R.

Russia's leadership has variously played each of those roles; Russian President Boris Yeltsin was quick to take control of the U.S.S.R's foreign holdings and ministries and to use economic blackmail to press republics to accept Russia as the centre of a single financial system and currency zone. When CIS republican presidents gather, Yeltsin makes symbolic gestures to reinforce the image that all are on an equal footing. Yet everyone knows that Yeltsin does not treat them as equals.

Though each president must now defend the national interests of his republic, all are expected to allow Russia's interests to take precedence over their own. This has been a particular problem in a number of Central Asian republics, where the leadership's limited foreign policy experience may have made them appear pliable to economic pressure from Moscow. Central Asia's leaders, however, have proven less malleable than expected. Rather than ceding power back to Russia, Central Asian presidents have increasingly sought foreign partners to help them develop their economics in ways that are beneficial to their own republics but of little advantage to Russia.

Turkmenistan, for example , which produces just over ten percent of all natural gas exported by the former USSR temporarily shut down foreign gas shipments in early 1992, the Russian successor to the USSR Ministry of Oil and Gas was not passing on hard-currency earnings to a now independent and sovereign Turkmenistan, which still shipped all its oil and gas through Russia. Turkmenistan is obviously still sensitive to Russian pressure. In April 1992 Moscow got Turkmenistan to cut off gas shipments to Azerbaijan, and some see the Turkmen decision to increase by more than ten fold the price for natural gas shipments to Ukraine as a concession to Russia as well.

At the same time Turkmen president Saparmurad Niazov is pursuing a strategy independent of Russia, depositing his 1992 oil profits in a New York bank that has no ties with Russia or the former U.S.S.R. Moreover he has listened with great interest to the propositions of neighbouring Iran. Since 1990 the two states have signed nine bilateral agreements containing plans for joint development of some of Turkmenistan's oil and gas reserves, including construction of a pipeline across Iran to ship gas to Turkey, Pakistan and parts of Iran.

Moscow has also held Kazakhstan to tighter definition of shared mutual self-interest than the region's other republics. When Kazakhstan carved out a degree of financial autonomy for itself in December 1991, Russia began to boycott the republic. A month later, with many of Kazkhstan's key industries standing idle , Nazarbaev caved in. The two neighbouring republics signed an agreement calling for full coordination of their financial and trade policies. Goods priced in rubles were guaranteed free movement between the two republics, but each would pay in hard currency for transit shipments. While seemingly equitable, the agreement worked to Russia's advantage; Kazakhstan sends a much larger percentage of its transit goods across Russia than vice verse. The financial agreement also puts Kazakhstan under enormous pressure to join Russia in a convertible rouble. Given Kazakhstan's greater isolation and generally low standard of living, the agreement could lead to disproportionate hardship.

Not withstanding the ambiguous status of former Soviet forces in the region, Russia's presence in Central Asia is constant. Even with the formation of national armies, Russia will remain an over-shadowing military and economic power. And for at least the immediate future Russia will also remain Central Asia's main link with the outside world.

The problem of physical, rather than diplomatic, isolation is even more serious. These new states are still fully dependent on the old Moscow based USSR transportation and communication grids which control international mail, telephone and telegraph links and most international travel. Those nearby states that help the Central Asian republics emerge from that physical isolation will eventually enjoy a foreign policy advantage. A number of neighbouring states realize this fact and are seeking to capitalize on new opportunities.

There is also the promise of new international rail connections through Iran. That project has the full support of all five Central Asian republics; it will create a direct rail link that stretches from Urumchi to Ankara. Ultimately the accessibility of an expanded Central Asian market depends on a resolution with Russia of questions of railway ownership and maintenance. The nationalization of rail and rolling stock has begun throughout the region and has progressed furthest in Turkmenistan, in large part to avoid any ownership ambiguity of the planned rail-road to Iran.

Central Asia's physical isolation and continued access mainly through Russia highlights an even greater problem. The international community has formally accepted the independence of the Central Asian republics - granting them membership in the United Nations and even honorary status in Europe through participation in the Conference on Security and Cooperation in Europe and the NATO advisory council. Yet there is no interest in championing the cause of Central Asia, lest Russia be offended. This is true of Muslim and Western states alike. Despite its crippled economy Russia is still regarded as a greater power. For many states it is a potential arms broker of considerable importance. For others Russia is a vast market ripe for development - potentially far larger than the whole of Central Asia.

Kyrgyzstan is also sensitive to the Islamic state issue, especially since president Akaev enjoys strong support from a large Russian minority. Kyrgyzstan joined the Economic Co-ordination Council, but Akaev would not permit the republic to enter the Islamic Conference Organization, precisely because its membership was explicitly restricted to Muslim states.

Jews in Central Asia are particularly concerned. If these republics become Muslim states, Jews fear, they will also turn anti-Israel and, by extension, anti - Jewish. Contrary to such fears, however, the new Central Asian states, seem eager to pursue close ties with Israel. Israel has open its second CIS embassy in Tashkent, and plans full diplomatic representation throughout the region. Uzbekistan is interested in Israel's drip - irrigation technology and hopes to encourage investment by those Jews who have left the republic to live in Israel. Returning Jews, however, have complained that they are sometimes roughed up by nationalist Uzbek youths.

Regional cooperation in Central Asia was always more ideal than real. But the post-Soviet diplomatic strategies of the Central Asian leaders have pushed their republics even further apart. When Central Asian leaders meet among themselves, as they did in April 1992 in Bishkek, they find little of substance on which to agree. Under Soviet rule the leaders competed for Moscow's favour. Now they are competing for investment from a far greater pool, and each is striving to define the uniqueness of his republic.

Nabiev decided to emphasize a Persian model in Tajikistan. As head of a republic whose main export is electricity - and which sometimes lacks even that - Nabviev could only play the cards in hand. Iran has provided Tajikistan with financial infra-structure, air links and satellite communications, as well as text-books written in Persian script. Iran says it has no interest in missionary work among Tajikistan's overwhelmingly Sunni Muslim population. As proof, Iran is exporting Persian soap operas for local consumption rather than the religious broadcasting that dominates its own television. But the presence of religious activists in the Tajik government could make Iran a more attractive ideological model, especially if the new regime in neighbouring northern Afghanistan proves to be pro-Iranian as well.

With the end of Cold War and super power rivalry, Pakistan's geo- strategic location is no longer important to the U.S. or the West, Afghanistan is no longer a buffer zone nor the Soviet Union a threat. What the world needs now is a country having a stable government, plenty of natural resources, economic or technological know-how, and Pakistan lacks in all.

The situation in the Central Asian Republics is presently quite fluid. Each of the six countries has its own arms, ambitions and problems. They are keeping their options open and assessing a wide variety of alternatives available to them including creating an economic union of their own. They have no inhibitions in dealing with nations diametrically opposed to each other. Investments from USA and China are both welcome and visitors from Iran and Israel are treated alike. Pakistan and India can both enter the Central Asian market while opportunities for other nations to establish mutually beneficial relations with these newly independent countries exist irrespective of their religious or cultural affiliations. Pakistan, along with a host of other countries, can help in the economic development of the Central Asian States during this transition phase. Presently, however, Pakistan does not enjoy the advantages which the other two Muslim neighbours have. Pakistan is not geographically linked with them. Until peace and stability returns to Afghanistan Islamabad cannot reach out meaningfully to its northern neighbours.

These countries urgently need foreign exchange and appropriate technology which is hard to come by in Pakistan. Competition with Iran and Turkey and of course with the industrialize world in assisting the Central Asian States will not be easy. Pakistan has, however, done well in establishing diplomatic relations with most of these countries. The Quetta plan of Action, which was formulated by ten ECO members, if implemented would go a long way in achieving the desired co-operation. But dreams will only come true if Pakistan plays its cards well,

1. Pakistan must put its own house in order. The uncertain political future is least conducive to entering into long term arrangements with these countries.

2. Every effort must be made to get the Afghan leaders to settle their differences so that a secure route to Central Asian can be assured.

3. A check must be exercised on those political parties whose religious activities run counter to the policies of the Muslim Republics.

4. Emphasis must be on establishing mutually beneficial economic relations only.

5. Russian susceptibilities must be kept in mind.

6. Healthy competition with Turkey and Iran must not be allowed to end up in rivalry.

7. In addition to state to state relations greater people to people contacts would prove useful.

8. Building of infrastructure on the Pakistan side must be expedited to give an outlet to the sea to the land locked Central Asian States.

The ingredients which Pakistan puts into the melting pot of Central Asia must be such that it results in shaping a mutually beneficial relationship. Any input which detracts from this aim must be nipped in the bud. The privatization of foreign policy must not be allowed, was an apt remark by a well known columnist.
 

Back
Top Bottom