Russia, China and The Geopolitics Of Energy In Central Asia

ABOUT THE AUTHORS

Alexandros Petersen researches the intersection of energy and geopolitics. He is an advisor to the European Energy Security Initiative (EESI) at the Woodrow Wilson International Center for Scholars in Washington DC. His latest book is ‘The world island: Eurasian geopolitics and the fate of the West’, Praeger, 2011.

Katinka Barysch is deputy director of the Centre for European Reform, where she covers Russia, Turkey, energy questions and European economics. Among her recent CER publications are (as editor) ‘Green, safe, cheap: Where next for EU energy policy?’ (September 2011); ‘The EU and Russia: All smiles and no action?’ (April 2011); ‘Turkey and the EU: Can stalemate be avoided?’ (December 2010)

Energy has come to symbolise the geopolitics of the 21 st century, reflecting countries’ diminishing reliance on military and political power. Today, energy is an instrument of geopolitical competition, like nuclear weapons or large armies were during the Cold War. The means of international influence have become more diverse and sophisticated, but the goals remain much the same: national security, power projection, and control over resources and territory. In different ways energy is fundamental to the rise of Russia and China as great powers. For Russia, possession of vast oil and gas resources fulfils a function similar to its nuclear weapons in the Soviet era. The post-1999 boom in world oil prices has underpinned Russia’s re-emergence as a great power. The combination of the country’s abundant energy reserves and fast-growing world demand for such resources has given Russia the opportunity to play a more influential role in global politics.


When Kremlin officials speak of Russia being an ‘energy superpower’, they are really saying that it is back as a global, multi-dimensional power. Energy is seen not simply as an instrument of influence in itself, but as underpinning other forms of power: military, political, economic, technological, cultural and soft power.
Energy is no less vital to China, but from the opposite standpoint. China’s modernisation and rise as a superpower depends on securing reliable access to natural resources. Beijing has responded to this imperative by making the worldwide search for energy one of foreign policy priorities. Just as Russia will rely on energy exports for the foreseeable future, so China will remain a net importer of oil and other sources of energy, such as gas and nuclear fuel. Energy and geopolitics are as closely intertwined in China’s case as they are for Russia, except that for Beijing energy is not an instrument ofgeopolitical ambition, but a key driver of an ever more assertive foreign policy.


From an energy perspective, the relationship between Russia and China should be straightforward. Russia is the world’s biggest hydrocarbon producer. China is one of the world’s biggest and fastest growing energy markets. Moreover, the two are neighbours, which means that energy transport is relatively straightforward, without the need for either risky sea shipments or pipelines that transit several countries. A long-term strategic energy relationship between the two looks not only commercially viable but almost inevitable. European policy-makers have in the past reacted with concern whenever Russian leaders alluded to the option of ‘turning to the east’ by redirecting oil and gas flows away from Europe and towards emerging markets in Asia, principally China. For the EU, which relies on Russia for a third of its oil imports and some 40 per cent of its gas imports, such a shift could pose a threat to energy security. The US is equally concerned about an energy link between Russia and China, but for different reasons: it fears that energy could be at the heart of a strategic rapprochement between Beijing and Moscow.  However, as this report shows, the energy relationship between Russia and China is a lot more complex than their respective positions as producer and consumer would imply. In fact, the bilateral   energy  relationship between the two countries is remarkably underdeveloped. Their main energy interaction is an indirect one, through competition in Central Asia.

RUSSIA, CHINA AND THE GEOPOLITICS OF ENERGY IN CENTRAL ASIA

India to set up transportation network in Central Asia via Iran

Πηγή: Economic Times
March 13 2012

NEW DELHI: India is making a concerted push into Central Asia by taking charge of a crucial transportation network through Iran into the region and beyond.

After getting an enthusiastic thumbs up from 14 stakeholder countries in the region in January, experts from all the countries will meet in New Delhi on March 29 to put final touches to the project known as the International North-South Corridor.

The project envisages a multi-modal transportation network that connects ports on India's west coast to Bandar Abbas in Iran, then overland to Bandar Anzali port on the Caspian Sea; thence through Rasht and Astara on the Azerbaijan border onwards to Kazakhstan, and further onwards towards Russia.

Once complete, this would connect Europe and Asia in a unique way -- experts estimate the distance could be covered in 25-30 days in what currently takes 45-60 days through the Suez Canal.

In the January meeting, Sanjay Singh (secretary east, MEA) and Rahul Khullar ( commerce secretary) told Iran that India would take charge of the project, including building the missing sections of the railway and road link in Iran.

Thanks to US sanctions on Iran's oil sector, India is finding it difficult to pay for its oil imports with hard currency. One of the best ways of paying for Iranian oil is through infrastructure projects like the corridor, which serves economic and strategic interests of all states concerned.

This has been a win-win proposition for India since the North-South Corridor agreement was signed between India, Iran and Russia in September 2000. But over the years, the project fell into disuse. Iran made little attempt to complete construction on its side, expending little political or administrative energy.

Neither did Russia or India, which preferred to talk about it but did little to push it. Meanwhile, 11 other countries, including all the Central Asian states, joined up.

Several recent developments have changed India's timid approach. First, China has been building an extensive road and railway network through Central Asia, aiming to touch Europe. It's fast, efficient and already on the ground. While this has made Central Asia accessible to China and others, it is worrying these countries no end.

Over the past few years, Central Asian states have repeatedly approached India to play the balancing role. Nursultan Nazarbayev of Kazakhstan actually gave an oil block, Satpaev, to India on strategic considerations.

Second, with Pakistan in a state of almost chronic instability, India can never hope to access Central Asia through Pakistan. Its best bet remains Iran. While India will have to reduce oil imports from Iran, building a big-ticket infrastructure corridor is a reaffirmation of its commitment to the relationship.

Meena Singh Roy, senior fellow at IDSA, who is closely connected with the project, said, "The potential of this corridor will be manifold with India, Myanmar and Thailand getting linked by road. This will boost trade between Europe and South East Asia as well."

The North-South Corridor, which can be described as part of the "new great game", is now a battle for "power, hegemony, profits and resources", as a senior official put it. Quite apart from opening up new markets for India, the corridor could also be used to transport energy resources to India -- from oil, gas to uranium and other industrial metals.

In the forthcoming expert-level meetings in Delhi, Indian officials expect to finalize issues of customs and other commercial infrastructure. India has now agreed to provide all this expertise.

Simultaneously, India is eyeing two other transit and transportation networks from Central Asia -- all of them going through Iran. One is a Kazakhstan-Turkmenistan Corridor -- a 677-km railway line connecting these countries with Iran and the Persian Gulf. It will link Uzen in Kazakhstan with Gyzylgaya-Bereket-Etrek in Turkmenistan and end at Gorgan in Iran's Golestan province.

The second comes in from Uzbekistan through northern Afghanistan, known as the Northern Distribution Network through which the US and NATO currently route 70% of their supplies for the ISAF forces. But after the US and NATO exit Afghanistan in 2014, India plans to extend this route to link up with the Zaranj-Delaram road that enters Iran.

India has been pushing Iran to complete construction of the Chahbahar port, which is crucial for these corridors to work to India's advantage. Iran has been notoriously slow in taking these up but India expects that in its current isolation, Iran could do a rethink.

Central Asia to nearly double pipeline gas exports to China

China is increasing its imports of Central Asian gas

Πηγή: Central Asia Newswire
Friday, August 26, 2011

The gas-rich republics of Central Asia will nearly double their 2012 pipeline capacity on exports to China by 2015, China’s state-owned gas major said Friday.

The China National Petroleum Corporation (CNPC) projected pipeline flows from Central Asia to be 30 billion cubic meters (bcm) in 2012.

China has received 13.68 bcm of Central Asian gas as of Thursday morning since the first pipeline was inaugurated in late 2009, the China Petroleum Daily cited CNPC, according to the Reuters news agency Friday.

A pipeline beginning at massive gas fields in western Turkmenistan winds through Uzbekistan and Kazakhstan, where it sources Kazakh gas, before crossing into China’s northwestern Xinjian region. There it splits into eight sub-lines to supply around 400 million Chinese in 15 southern regions.

Central Asia Gas, a subsidiary of CNPC, plans to operate two new gas pipelines by 2013 to further reduce the energy-hungry giant’s reliance on coal.

The company plans to lay another 4,350 miles of pipeline across Central Asian territory by 2015, providing an annual capacity of regional gas amounting to 55-60 bcm, China Petroleum Daily said.

China Winning the Race for Central Asia’s Energy Riches

Πηγή: Oilprice

Written by John Daly

Thursday, 23 June 2011 12:50


Many western analysts have described the post-Soviet tussle for Caspain and Central Asian energy reserves as the new “Great Game, except this time around, Russia is facing the U.S. rather than the British empire.

To a dispassionate outside observer however, what is most striking about the prolonged wrangle between Moscow and Washington for hydrocarbons, military bases and influence is the emergence of an understated sly newcomer who has managed to bag many of the region’s assets – China.

There are many reasons for this, despite the fact that both Russia and the U.S. both seemed to hold winning hands.

For Moscow, quite aside from its colonialist legacy was the fact that it controlled the Truboprovodnaiia sistema Sredniaia Aziia-Tsentr (the Central Asia-Center, or SATS, pipeline system.) Russia’s natural gas monopoly Gazprom controls the SATS complex of pipelines, which run from Turkmenistan via Uzbekistan and Kazakhstan to Russia. The SATS eastern branch consists of SATS-1, 2, 4 and 5 pipelines, which were built between 1960 and 1988. Construction began after the discovery of Turkmenistan's Dzharkak field, with the first SATS section coming online in 1960, while SATS-4 was commissioned in 1973. Simply put, after the 1991 collapse of the USSR, Central Asia’s only opportunity for energy exports was controlled by Russia, which was determined to obey its new-found capitalist mantra of “buy cheap and sell dear.”

And where did Gazprom sell its Central Asian natural gas?

Europe, or course.

In 2008 Gazprom's sales to the European Union were nearly 170 billion cubic meters (bcm) out of a production of 550 bcm. Gazprom's share in the global and Russian natural gas production is 17.3 percent and 85 percent, respectively. Turkmen exports represent a quarter of Gazprom's EU exports, but the company also buys 15 bcm of Kazakh gas and 7 bcm of Uzbek gas.

The boulder in Gazprom's shoe is that the Russian domestic market, which is heavily subsidized, now accounts for about 70 percent of the company's production, with domestic consumption rising by more than 3 bcm a year. Accordingly, to free up as much indigenous production as possible for export, one-third of Russian internal gas usage has to be supplied from non-Gazprom sources.

And the Americans?

Well, after 1991 they showed up, checkbooks and democracy and human rights lectures in hand, determined as much as Moscow to buy local assets at fire-sale prices. Unlike oil, natural gas can only be pipelined or, in an expensive procedure, liquefied for transport.

Which left the Central Asians irritated at both parties.

Enter Beijing – cash to hand and no annoying lectures about political systems or human rights.

On 14 December 2009 China and Turkmenistan formally opened the first section of a 1,139 mile-long, 40 bcm per year natural gas pipeline, financed by China National Petroleum Corporation (CNPC), China's largest oil and gas producer and supplier. The Turkmenistan-China pipeline has since been expanded to carry Uzbek and Kazakh natural gas.

More pipelines flowing eastwards from Central Asia are under construction.

The moral of this story seems clear – those who simply show up with cash and sign mutually beneficial contracts are likely to prevail over Kremlin denizens expecting gratitude for a century of servitude, much less Yankee Wall St wizards seeking to screw the locals whilst prattling on about free markets and democracy. The final race for Central Asian energy is far from over, but at the moment, Beijing’s mandarins are winning.

Russia and Central Asia fight the Arab revolutions

Sergey Bondarenko/Bolatbek Otarbayev - KzPravda/CAN

Russia is pushing for Central Asian stability over democracy (pictured L-R: Russian President Dmitry Medvedev, Turkmen President Gurbanguly Berdimuhamedov, Kazakh President Nursultan Nazarbayev)

Πηγή: central asia newswire
By Stephen Blank (CACI Analyst/CAN)
WEDNESDAY, July 20, 2011

WASHINGTON, DC - Tuesday, July 19, 2011 - During Russian President Dmitry Medvedev’s visit to Tashkent on June 14, he and Uzbek President Islam Karimov indicated the need for joint approaches to deal with the common threat posed by the Arab revolutions to their rule and that of their neighbors. According to Medvedev, Russian national interest deemed it necessary “that (future) events develop along scenarios that are understandable and predictable for us”. Subsequently at the Tenth Summit of the Shanghai Cooperation Organization, the members expressed the need to tighten security, with President Hu Jintao of China even advocating improved measures for rapid responses to crises. Undoubtedly revolutions along these lines featured prominently in their thinking.
BACKGROUND: These reactions to the Arab revolutions are the latest in a series of responses since those upheavals began in January. They have followed predictable lines whose origins were already visible in early 2011. Moscow has been concerned about the spread of these revolutions for several months. Anxiety about the Arab revolutions spreading to Central Asia was the topic of a public discussion in the Duma on April 13, 2011. Duma members and Deputy Foreign Minister Grigory Karasin urged these states to make timely reforms from above, lest they be swept away like the regimes in North Africa. Russia’s goal is stability, without which these states cannot draw closer to Russia. Karasin thus recommended the top-down formation of a civil society, international and inter-religious peace, improving the population’s standard of living, the development of education and work with youth.

They should thus follow the example of Russian policies to counter the specter of the 2003-2005 color revolutions and emulate what Moscow is currently doing, e.g. creating governmental “opposition parties”. This essentially involves creating a Potemkin democracy to forestall genuine reform and control political developments from above by giving governments more instruments with which to maneuver. This clearly does not suffice to ensure stability and no mention is made of economic development, freedom, or genuine political reform. Karasin’s recommendations showed that Russia can only tolerate cosmetic reforms and it is doubtful that Central Asian leaders will surpass those limits even if they approach them. Indeed, none of them harkened to Moscow’s recommendations.

IMPLICATIONS: Kazakhstan’s President Nursultan Nazarbayev indeed preempted them by promulgating an instant election rather than a stage-managed referendum to give him life tenure, because that latter option was too egregious a move in the current climate. Western opposition made it clear that this referendum would incur unneeded criticism and it was equally certain that he would win any election no matter what its provenance. The election was nevertheless reported to have major shortcomings and Nazarbayev’s political advisor, Yermukhamet Yertysbayev, told reporters that “I think the president is going to run the country for ten years more, and if someone in the West doesn’t like it, they’ll have to get used to it.”

Meanwhile, a game of balancing rival clans and factions continues while members of the inner circle, especially his daughter and son-in law, Timur Kulibayev (who are worth an estimated $2.5 billion) become targets of corruption investigations abroad. Under these circumstances it is not surprising that after his election, Nazarbayev announced his intention to strengthen the Parliament and regional governments while deconcentrating central executive power. Whatever the democratizing implications of his plan, or the ambitions for democracy Nazarbayev has, this move widens the circles of elites, dilutes the clans and factions close to him, and strengthens his hand to pick his successor while diffusing power so that nobody can amass too much power in the future.

Nazarbayev’s charge to his new government is to reduce corruption although that is difficult given the corruption at the top. Second, Yertysbayev apparently envisages reforms from the top to create state-led parties of power and of opposition. This system would allegedly be a “Presidential-Parliamentary system” able to function in Nazarbayev’s absence. There are rumors that Kulibayev would duly lead the opposition party, thus confirming the continuation of a kind of Potemkin democracy of the sort Karasin recommended.

While this plan has apparently infuriated the regime's opponents, they cannot stop it. Nazarbayev’s concept of reform is evidently to ensure a smooth transition to his successor, whoever that will be, not to strengthen the overall system’s responsiveness to society. Instead, he apparently aims to build a relatively closed but seemingly self-sustaining system of presidential-parliamentary relationships. But this will be a chimera in the absence of the rule of law, governmental accountability, and genuine reform. Indeed, it may lead to new authoritarianism or to sustained political strife after Nazarbayev leaves the scene. Since the succession remains unresolved and nobody can stop the ruling family’s machinations to revise the constitution whenever it likes, it is doubtful that genuine democracy can be initiated from the top or that the nature of the state will change substantially as long as Nazarbayev rules and possibly for some time after that. This and other trends in Kazakhstan highlight the unresolved nature of the succession and the fact that the astute economic policies followed until now depend too much on one man’s wisdom. Despite his great achievements, this is not the best augury for the future.

In other examples, Uzbekistan took control over cellular phone companies, instructing them to report on any suspicious actions by customers and on any massive distributions of text messages through their cellular lines. Uzbekistan and Turkmenistan have also instituted news blackouts, while Azerbaijan too has targeted Facebook and Skype. In Russia, the FSB (Federal Security Service) and Ministry of Interior (MVD) reacted to the revolutions by proposing to amend the criminal code, making owners of social networks responsible for all content posted on their sites and forcing them to register with the state. The regime also has its own cadre of bloggers like those who launched cyber-strikes against Estonia in 2007 and Georgia during the 2008 war, and is clearly prepared to use force if necessary. Central Asian leaders may have drawn hope from that. As the revolutions continued they, like Karimov, sought to harmonize their approaches against them with Moscow. As one Russian official stated at the recent G-8 summit in Deauville, “We support stability, not regimes”.

CONCLUSIONS: It seems unlikely that Central Asia will move further towards liberalization and de-concentration of power. Indeed, few analysts believe that a revolutionary wave is imminent there. Any reforms that are made will come from above to provide a minimum standard of living balanced by repression to keep the masses in line. These regimes can rely on Moscow and Beijing for support, possibly even military support given the talk of creating mechanisms for rapid response. But this also means that the underlying causes for explosion in these regimes will not be dealt with. Indeed, as compared to Kazakhstan and Russia, in Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan there is not even much of an effort to advance reforms.

It is nevertheless clear that struggles for power and position exist within the inner circles of these regimes. The point is that these regimes are very aware of their inherent fragility, knowing that the spread of democracy or even of reform, not to speak of revolution in any one nearby state, immediately puts them all at risk. To them there is ultimately no difference between the spread of democracy or military defeat in their peripheries because it will amount to the same thing: the loss of their power.

We can therefore expect more resistance to U.S. calls for democratization and human rights, which have in fact been attenuated under the present administration. It makes no sense to demand that states like Turkmenistan conform to human rights obligations when we refuse to press China or Russia, the latter being a signatory of the Helsinki treaty, to uphold their treaty commitments. Indeed, Russia and to a lesser degree China are in many ways an alibi for other Eurasian states who are merely adding to their ultimate insecurity by these practices.

Consequently, to the extent that the Arab revolutions continue and possibly become more violent, and to the degree that other governments fall victim to this tide, e.g. Libya and Syria, it is likely that repressive measures directed against these democracy promotion programs will grow. This will be the case even if it seems to local rulers like pressure for reform is growing in their own countries. But by squashing demands for reform, these regimes are paradoxically ensuring that when the dam breaks it will more likely be a violent flood than a more manageable flow. It may then be too late for them, and even Moscow and Beijing acting together, to restore the broken structures.